Commons Sitting of 21 January 1987

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
Oral Answers to Questions
  FOREIGN AND COMMONWEALTH AFFAIRS

    Philippines
    Mrs. Shieldsasked the Secretary of State for Foreign and Commonwealth Affairs what steps he intends to take to support the Government of the Philippines in their attempt to establish lasting peace and democracy.
    The Minister of State, Foreign and Commonwealth Office (Mr. Tim Renton): We continue to offer our strong support to President Aquino and her Government in their efforts to consolidate democracy and to bring about national reconciliation in the Philippines.
    Mrs. Shields: In view of the pressure from some quarters to make the Government of the Philippines abandon negotiations and opt for a military solution to their problems, will the Minister say that the Government fully support the process of negotiation? Will he also ask his EEC colleagues to make a European statement of support for that process?
    Mr. Renton: We fully support the process of negotiation in which President Aquino is currently involved. We also fully support her efforts to bring the Philippines back to being a fully democratic state and the process of national reconcilation in which she is engaged. This was very much the spirit behind the statement issued by the Community last November, and we will certainly consult our European Community colleagues if a further statement along the lines suggested by the hon. Lady will be helpful.
    Mr. Soames: In acknowledging the importance of the Philippines in the general region, does my hon. Friend agree that it is vital that, if possible, Britain should be able to contribute through the Overseas Development Agency to any development projects that may seem to be to our advantage?
    Mr. Renton: Yes. My hon. Friend will be pleased to know that since President Aquino's Government came to power we have doubled our bilateral aid to the Philippines to about £425,000 for the current year and are planning to increase it to £545,000 for the year ahead. We are especially looking for projects such as consultancies in agriculture and development through which we can help the Philippines. I am sure that that is exactly in line with what my hon. Friend would like us to do.
    Mr. Forth: Can my hon. Friend confirm that the so-called President of the Philippines lost the only election
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    ever held and has not been legitimately elected, and that the best solution to the problems of the Philippines would be a legitimate and proper election?
    Mr. Renton: With respect to my hon. Friend, I do not think that his comments are helpful. A plebiscite is to be held on 2 February on the new constitutional developments in the Philippines and at that time the people of the Philippines will have the opportunity to give their verdict on the reforms that President Aquino has introduced.
    Mr. Anderson: As opposed to the Marcos tendency on the Government side, may we give our full pledge of support by any means to strengthen democracy in the Philippines? As the Minister is aware that the Government of the Philippines are seeking to diversify their foreign relations because of their very pervasive dependence on the United States of America, will he take further initiatives in the EEC as a partial counterweight to that United States influence? Given the importance of multisectoral organisations in the Philippines and their wide spread, will the Minister try, in our aid policies, to use the non-governmental organisations in the United Kingdom?
    Mr. Renton: I know that the hon. Gentleman has just returned from the Philippines, and I hope that he had a useful and constructive visit. From that recent experience of the Philippines he will be aware of the great and continuing importance of the Americans there. They give large amounts of aid and there is also the militarily important presence of their bases at Clark Field and Subic Bay, particularly as a counter-reaction to the Russian base at Cam Ranh in Vietnam.
    The European Community's aid has already increased substantially, and I understand that Commissioner Cheysson is looking at means of increasing it further. The hon. Gentleman's point about the involvement of non-governmental organisations is a good one, and I shall certainly pass it on to my hon. Friend the Minister for Overseas Development to see whether the NGOs can be used further.

    Argentina
    Mr. Meadowcroftasked the Secretary of State for Foreign and Commonwealth Affairs if he has taken any steps to improve relations with the Government of Argentina since the announcement of the Falkland Islands exclusive fishing zone.
    The Secretary of State for Foreign and Commonwealth Affairs (Sir Geoffrey Howe): While making it plain that sovereignty is not for negotiation, I have repeatedly reaffirmed our willingness to work for a multilateral solution on fisheries and for progress on other practical issues.
    Mr. Meadowcroft: Is it not within the great traditions of British diplomacy and foreign policy that if, when faced with a change of Government towards democracy in a country with which we have been in conflict, and with a conciliatory and flexible response such as we had from that Government on 17 November, we should be prepared to make a detailed form of response to that Government to engage in discussions? Should we not contemplate a solution to an intractible problem that is costing the country many millions of pounds each year?
    Sir Geoffrey Howe: It would be in accordance with the high traditions of diplomacy, to which the hon. Gentleman has kindly referred, and in the tradition of sensible diplomacy, not to embark on any discussions on the basis of any false premise or false expectations, which is why we have always excluded from the agenda negotiation on sovereignty. Beyond that, the tables of my opposite number, Foreign Minister Caputo, and of President Alfonsin, are positively groaning with proposal after proposal for discussion of all the other issues of a wholly constructive kind.
    Mr. Crouch: May I suggest to my right hon. and learned Friend that he should continue to stress the importance of our willingness to re-establish friendly relations with Argentina, notwithstanding our understandable—they should understand this too—feelings that there can be no question of discussion of sovereignty of the Falkland Islands at this stage? But a reiteration of our willingness to re-establish friendly relations with Argentina should continue, and I believe that it could be successful.
    Sir Geoffrey Howe: I entirely agree with the approach commended by my hon. Friend. Our position has consistently been that the intractible question of sovereignty should not stand in the way of the development of more normal relations in every other respect. Throughout my recent visit to Mexico, Columbia and other countries in the region I emphasised time and time again the approach commended by my hon. Friend. I think that our approach is widely and increasingly understood.
    Mr. Haynes: Does the Foreign Secretary know what is going on down there? Is he aware that, unfortunately, I had to make a visit to the Falkland Islands where I met councillors who want to go back to the pre-1982 situation. If that is the case, why are we spending hundreds of millions of pounds down there, but refusing pensioners a free television licence?
    Sir Geoffrey Howe: It is always encouraging to receive a message from the hon. Gentleman couched in characteristically straightforward terms. The inhabitants of the Falkland Islands recognise that Argentina's actions in 1982 destroyed the foundations of the good relations that previously existed, and they look to Her Majesty's Government to provide defence on the basis on which we are prepared to go on doing so.
    Mr. McLoughlin: Will my right hon. and learned Friend reiterate today that the British Government would not have taken the action that they did in the exclusion zone if the Argentine Government had not steadfastly refused to have a multilateral agreement?
    Sir Geoffrey Howe: Indeed. My hon. Friend is right. We emphasised over a long period our willingness and desire to establish a multilateral system of conservation. That is why we took the matter to the Food and Agriculture Organisation. We still want to move on from the present position to a more broadly agreed system of fishery conservation.
    Mr. Foulkes: Will the Foreign Secretary confirm that the American Government are worried about dangers that arise from the Soviet's failure to recognise the unilateral fisheries regime that he has declared? As the Foreign Secretary has reaffirmed that he would prefer a
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    multilateral agreement, why did he rebuff Argentina's approach of 17 November? Why is he not taking up the offer for informal talks in the United States now? Will he talk seriously with Mr. Habib, who, it is reported, will want to discuss the issue? What practical action will he take to obtain some agreement on this which will prevent the possibility of some clash arising with the Soviet vessels in the south Atlantic, which all of us want to avoid?
    Sir Geoffrey Howe: I am sure that everyone is anxious to avoid any clash arising in relation to fisheries conservation in the south Atlantic. That is why the clash that occurred between Argentine and Taiwanese vessels last year was a matter of such great regret. It is for that reason that we have been in touch with all the nations concerned in the region, including the Soviet Union. The Soviet Union has said that it will conduct itself in a fashion not inconsistent with our claims in the area, and a large number of nations, including, for example, Poland, have already, through their firms, applied for and been granted licences.
    Beyond that, we are, of course, anxious to respond sensibly to any possibility of moving towards the establishment of a multilateral regime. It is a topic on which we make our view clear to many nations, as I have already said, and on which we hearken to the possibility of progress, but where we have to proceed with prudence if we are not to run the risk of abortive contact of the kind that took place in Berne some two years ago.

    Falkland Islands
    Mr. Campbell-Savoursasked the Secretary of State for Foreign and Commonwealth Affairs if he has given any consideration to a scheme to compensate any Falkland Islanders wishing resettlement following the conclusion of an agreement with Argentina on the future of the Falklands.
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Tim Eggar): No. The Falkland Islanders have consistently made clear through their elected representatives their wish to remain in the Falklands under British sovereignty.
    Mr. Campbell-Savours: In so far as we shall be spending one third of a million pounds this year for every Falkland Islands citizen, that we shall have spent since 1982 nearly £2 million on every Falkland Island citizen and we simply cannot afford it, is it not now about time that we considered some sort of resettlement grant for people in the Falkland Islands, giving them the option either to stay or to emigrate from those islands under a negotiated settlement with Argentina?
    Mr. Eggar: The hon. Gentleman is well aware that the Falkland Islanders wish to remain in the Falklands under British sovereignty. They have always had the option to leave the Falkland Islands and come to this country if they so wished. The fact is that they have not wished, and, indeed, the population in the Falklands has increased, not decreased, since the conflict.
    Mr. Bill Walker: Does my hon. Friend agree that in a world where democracy is in a minority it would be a mistake ever to give up simply because the balance sheet said that we could not afford it? If we could not afford a democracy, we would never have had it. It is not something on a balance sheet.
    Mr. Eggar: I entirely agree with my hon. Friend.
    Mr. Canavan: Could the Foreign Office not take some steps to resettle Sir Rex Hunt in some remote territory, because, despite being deprived of his colonial governor's hat, he seems to be strutting around all over the place making stupid statements and doing his best to torpedo any chance of a reasonable, peaceful negotiated settlement betwen Britain and Argentina on the future of the Falkland Islands?
    Mr. Eggar: Sir Rex Hunt gave distinguished service in the Falkland Islands and I am frankly amazed that the hon. Gentleman believes in curtailing the freedom of speech.
    Mr. Stokes: Is my hon. Friend aware that the previous question was, typically, most mischievous? [Interruption.] Is there no question of the Falkland Islanders living there if they wish to, or going elsewhere if they wish to? Why such a defeatist question? Whose side is the hon. Member for Workington (Mr. Campbell-Savours) on—England's or Argentina's?
    Mr. Eggar: It is both mischievous and typical, and the House in its response to my hon. Friend's question has given its answer.

    Chile
    Mr. James Lamondasked the Secretary of State for Foreign and Commonwealth Affairs if he will recall Her Majesty's ambassador to Chile for consultations on United Kingdom relations with opposition parties there; and if he will make a statement.
    Mr. Eggar: No. Our policy is to bring about the early restoration of democracy in Chile; to maintain close contact with opposition leaders; and to encourage Opposition leaders' efforts to open a full dialogue with the Chilean Government.
    Mr. Lamond: What is all this about our ambassador interfering in the internal elections of the Chile Christian Democratic party by trying to push the chances of the extreme Right-wing contestant, unsuccessfully as it happened? There are even rumours that the Right-wing party has been obtaining money from the British Tory party. Which side are we on, Pinochet's or Britain's?
    Mr. Eggar: The hon. Gentleman has a fertile imagination. We are on the side of improving human rights within Chile. We have consistently backed support for the national opposition parties.
    Mr. Wilkinson: Does my hon. Friend agree that it would be much better for our excellent ambassador to remain in place to monitor that Government's decision last week to allow political parties again, after 13 years without them, to monitor a return of exiles to Chile, and to improve our already good relations with that country, which has a serious terrorist threat fomented and actively supported by Cuba and other countries?
    Mr. Eggar: I entirely agree with my hon. Friend. The presence of an ambassador in Santiago is the best way available to us of ensuring that pressure for change can be applied at the highest levels. I notice that the views of Labour Members contrast significantly with the way in which they constantly urge us to increase our representation in Managua.
    Mr. Tony Lloyd: In the light of an earlier supplementary question, will the Minister take this chance to deny categorically that the ambassador was involved in paving the way for the rumoured coup against Pinochet, in which the United States is supposed to have been involved, in order to replace him with a Christian Democrat?
    Mr. Eggar: That is a purely hypothetical question. I am not even aware of the reports.
    Mr. Foulkes: Does the Minister recall that the Prime Minister recently invited released Soviet dissidents to No. 10 Downing street? Will the Minister therefore encourage the Prime Minister to demonstrate her evenhandedness by also inviting to No. 10 Downing street Pedro Fernandez Lembach, who arrived back in the United Kingdom last year after a campaign here to get him released from Pinochet's jail? Now that he is back in the United Kingdom he should also be welcomed to No. 10 Downing street like the Soviet dissidents.
    Mr. Eggar: May I wish the hon. Gentleman a happy birthday. I shall not divulge his age to the House. We very much appreciate the role that he, among other hon. Members on both sides of the House, played in urging the Chilean Government to release Pedro Lembach. I have made clear to the Chilean Government our welcome for that release.

    EC (United Kingdom Presidency)
    Mr. Jacksonasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on progress made during Britian's presidency of the European Community in promoting the Community's position in international affairs.
    Mr. Knoxasked the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had with his European Community partners concerning the development of common European foreign policies.
    Sir Geoffrey Howe: The Twelve spoke and acted together on a wide range of international issues during the British presidency. Significant achievements during the period included: common action against Syria's involvement in terrorism, which I announced on 10 November; active co-operation on East-West issues, in particular, in achieving the successful outcome of the Stockholm Conference; and a common position on South Africa based on promoting peaceful change through national dialogue. A fuller list of presidency achievements has been placed in the Library of the House.
    Mr. Jackson: My right hon. and learned Friend knows well that Conservative Members appreciate the success of the British presidency and, notably, the contribution of the Foreign and Commonwealth Office. Is he satisfied that the European voice is being heard with sufficient clarity and weight in the great debate about arms control between the United States and the Soviet Union?
    Sir Geoffrey Howe: The answer to that is yes. The Community voice speaks on defence issues outside its constitution, but it speaks on security questions, including arms control aspects of that through political co-operation and, beyond that, through the participation of 11 of 12 members in the councils of NATO. In all those ways, not

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    least through the contribution made by the United Kingdom, the voice of the Community on these important questions is being heard loud and clear.
    Mr. Knox: Will my right hon. and learned Friend confirm that greater co-operation within the Community on foreign affairs remains the Government's principal foreign policy objective?
    Sir Geoffrey Howe: Yes, I can confirm that. On a large range of issues the position that we wish to make clear and assert is likely to be more effectively asserted and maintained by presenting it in a Community context.
    Mr. Ernie Ross: Will the Foreign Secretary tell us what successes the European Community has had in resolving the Arab-Israeli conflict?
    Sir Geoffrey Howe: I do not think that the European Community has been more successful than any of the other parties concerned with that tragic conflict, which has continued for many years. We have certainly been applying our attention to measures that can improve the situation. It was as a result of a British initiative during the British presidency that the Community adopted measures to enhance Community aid and Community trade access for those living in the occupied territories on the West Bank.
    Mr. Deakins: Have any of the anodyne statements made by the EEC in recent years under the heading of political co-operation led to the resolution of any international problem?
    Sir Geoffrey Howe: To take one example to which we have been referring, the position adopted by the Community on the Arab-Israeli dispute, as set out in the Venice declaration, has represented a continuing lodestone of guidance for the many who have tried to advance the position. It has been a significant and sustained contribution.
    Mr. Walters: I recognise the advances on many issues which have taken place during my right hon. and learned Friend's presidency, but the progress in the middle east has been disappointing. Will he take the opportunity of Mr. Peres's visit to reaffirm that British policy and European policy have not changed, that we appreciate that there cannot be a settlement in the middle east without recognising Palestinian rights, and that the continuing Israeli occupation of the West Bank is illegal?
    Sir Geoffrey Howe: I shall certainly be taking the opportunity of discussing these matters with Foreign Minister Peres during his visit to London, on the basis of the well-established principles of the right of the state of Israel to secure a peaceful existence and the right of the Palestinian people to self-determination and proper representation in any discussion of the future.
    Mr. Healey: In the right hon. and learned Gentleman's new capacity as a pedler of lodestones of guidance, does he believe that it would be wise for the Community to take a much more public and consistent line on the major issues of arms control that are now under discussion between the United States and the Soviet Union? Can he explain why the Prime Minister did not follow Chancellor Kohl's lead in deploring President Reagan's decision to violate the SALT 2 agreement and welcoming Mr. Gorbachev's decision not to follow President Reagan's lead?
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    Secondly, on the strategic defence initiative, on which I believe the European countries have a consistent and common view that is very different from that of the present American Administration, can the right hon. and learned Gentleman allay some of the disquiet that is felt on the Opposition Benches and elsewhere at the Prime Minister's recent retreat from her initial agreement at Camp David on SDI with President Reagan? Can he say that Her Majesty's Government unequivocally expect the United States to observe the ABM treaty in its pursuit of its star wars initiative in the restricted interpretation which has been endorsed by those who negotiated the treaty in the United States?
    Thirdly—[HON. MEMBERS: "Too long".] These are possibly the most important issues which this or any other Government are likely to face over the next few years. Thirdly, will the right hon. and learned Gentleman seek an agreement with his Community colleagues to take an initiative towards achieving agreement on a comprehensive ban on nuclear tests by seeking an agreement which, by stages, would progressively limit the yield and frequency of such tests?
    Sir Geoffrey Howe: The right hon. Gentleman has resorted—understandably, and I make no criticism—to asking a question about arms control as an earlier question was not asked.
    Mr. Healey: Where was the alliance spokesman when he should have asked his question?
    Sir Geoffrey Howe: The right hon. Gentleman and I are on common ground.
    With regard to progress on SALT 2, the Prime Minister confirmed to the House on 18 November last that, in our judgment, the SALT agreement should continue to be observed by both sides. That remains our decision.
    With regard to SDI, one of the components of the first Camp David agreement is that that programme should be pursued in accordance with the provisions of the ABM treaty. United States policy is that the broad interpretation is justified. However, SDI research is being continued within the restricted interpretation, and that should be welcomed.
    On the right hon. Gentleman's last point about the test ban treaty, we welcome the specific progress made at Reykjavik, which provided, in our judgment rather hopefully, for a phased approach to nuclear tests. That was consistent with our policy. That approach will start with the threshold test ban treaty and the peaceful uses of nuclear energy treaty and beyond that to the remaining stages on verification issues. That is how such progress should be made.

    Afghanistan (Chemical Weapons)
    Mr. Brightasked the Secretary of State for Foreign and Commonwealth Affairs whether he has any evidence of the use of chemical weapons by the Soviets in Afghanistan; and if he will make a statement.
    Mr. Renton: We are aware of reports of use of chemical weapons by the Soviet Union in Afghanistan. We regret that independent investigation of reports of use of chemical weapons in that country has not proved possible, but we believe that at least some form of incapacitating agent has been used by Soviet forces there. This underlines

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    the importance of early agreement on a comprehensive and global chemical weapons ban, and, of course, the early withdrawal of Soviet troops from Afghanistan.
    Mr. Bright: Bearing in mind the attitude of the Soviet Union towards chemical weapons and the growing concern about their use, especially in the middle east, can any light be shed on some general progress towards the control of those weapons that are especially nasty? Most people certainly believe that it is as important to control chemical weapons as it is to control nuclear weapons.
    Mr. Renton: I agree with my hon. Friend that any report of the use of chemical weapons is very disturbing, especially in the middle east, and their use in the Iran-Iraq war. We are slowly making progress in Geneva towards a comprehensive ban on the production and stocking of chemical weapons. My hon. Friend will be aware that the British Government, at that conference last summer, tabled their own initiative on the crucial question of challenge inspection. There is still a great deal of hard pounding to be done about the detail of our proposals and we shall continue to discuss those matters in the weeks and months ahead in the hope of making further progress.
    Mr. Ron Brown: While Afghanistan has suffered from black propaganda in the past, which has alleged all sorts of atrocities—many people suffer in a civil war—may I ask the Minister at least to welcome Dr. Najib's ceasefire proposals, which would lead to an early withdrawal of Soviet troops? Will he go further and invite the Afghan leaders to London to discuss and encourage that initiative? If the Minister wants peace, why does he not encourage it?
    Mr. Renton: The hon. Gentleman can accuse us of many things, but I do not think that he can accuse us of controlling Jane's Defence Weekly, including the issue of 22 November, which reported the further use of chemical weapons by Soviet troops in Afghanistan.
    With regard to the hon. Gentleman's wider point, the Soviet ambassador came to my office yesterday afternoon to discuss the recent proposals surrounding the ceasefire. I made it abundantly clear that we would welcome any move that could lead to the halting of the bitter fighting in Afghanistan over the past seven years. At the end of the day, we trust that those moves will lead to a Government in Kabul who are truly representative of all the Afghan people and not just of the Communist party, and that they will also lead to the early and complete withdrawal of Soviet troops.
    Mr. Lawler: When my hon. Friend next meets the Soviet ambassador, will he draw to his attention—indeed, I draw this to the attention of Opposition Members—the experience directly related to me last week by an Afghan refugee of the use of chemical weapons by Soviet forces? When my hon. Friend meets the Pakistan ambassador on his arrival in this country in the next few weeks, perhaps he could discuss with him the level of British aid to Afghan refugees, given that they are still arriving to the tune of about 79,000 a month.
    Mr. Renton: I note carefully what my hon. Friend has said. We have contributed many millions of aid to the Afghan refugees over the last six years, and I should like to take the opportunity to express the support that I am sure the whole House feels for the very great effort that Pakistan has made to take Afghan refugees, notably into
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    the North-West Frontier Province, where there are more than 3 million refugees. That is one of the largest settlements of refugees in the world.
    Mr. Winnick: As a sponsor of the early-day motion in January 1980 opposing Soviet military intervention in Afghanistan, may I point out to the Minister that I have not changed by view and that I, for one, am very pleased that what the Russians have done in that country has not succeeded? If the new Soviet leadership wants to show good faith, it should withdraw completely from Afghanistan, but does the Minister agree that it is somewhat odd for people who defended and justified the Suez aggression and what the Americans did in Vietnam to be critical of the Soviet Union in Afghanistan?
    Mr. Renton: I am pleased to find myself in unusual agreement with the hon. Gentleman on the first part of his question. Perhaps he will make his point of view better known to his hon. Friends further down the Benches so that they, too, may have an unusual alliance. I agree that it is extremely important that the Soviet troops should withdraw totally as part and parcel of the movement towards a genuinely representative Government in Kabul. On the second part of his question, I do not agree with him. I cannot see any analogy in what he says. Let me remind him that the Soviet invasion of Afghanistan has caused 5 million people to leave that country. There has been no such exodus of refugees elsewhere in recent times. That is one reason why we look very much at the moment for a total withdrawal of the Soviet troops.

    EC (United Kingdom Presidency)
    Mr. Cashasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on achievements made during Britian's presidency of the European Community.
    Dr. Michael Clarkasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on achievements secured during Britain's presidency of the European Community.
    The Minister of State, Foreign and Commonwealth Office (Mrs. Lynda Chalker): A full account of achievements under the United Kingdom presidency has been placed in the Library of the House. Among the most important, I would emphasise the crucial importance of agreement on common agricultural policy reform; the adoption of more internal market measures than in any previous half year; and the adoption of an action programme for employment growth and agreement on measures to help small businesses.
    Mr. Cash: Will my hon. Friend accept the congratulations of the Government side of the House on the very significant achievements made by herself and by the Secretary of State and other Ministers during the extremely important period of our presidency? Will she also accept our congratulations on developing the action programme for small and medium-sized businesses to promote enterprise and employment both in this country and in the Community as a whole? In regard to African affairs, does she agree that the progress on relations with the front-line states has made a significant contribution to stability in that region?
    Mrs. Chalker: I am grateful to my hon. Friend for his kind remarks to my right hon. and learned Friend, myself

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    and other Ministers who have been in the forefront of activity during the last six months of the British presidency. I am particularly glad that the help for small businesses, which my right hon. and learned Friend the Paymaster General has pushed so hard, has been agreed and that Finance Ministers were able in November to make available new loan facilities worth over £1 billion for small firms to help them get access to the new technology which they so much need. Proposals have also been made for the VAT threshold for small businesses to be increased, making it easier for small firms to establish themselves. The action programme on employment which was adopted in December will also help people starting their businesses and provide assistance with training and counselling for the long-term unemployed.
    On South Africa, the United Kingdom presidency led the 12, in their wish to take positive measures, to help the front-line states by co-ordinating our activity. We have, of course, announced additional help of over £15 million over five years for southern Africa and £12 million for black South Africans. I might add that the European Community allocation for 1987 is 15 mecu compared with 10 mecu in 1986.
    Dr. Clark: I, too, would like to congratulate my hon. Friend and her colleagues on their achievements during the British presidency, especially on the 48 achievements which are listed in the document which is to be found in the Library. May I ask where there was any achievement to ease the movement of commercial vehicles across internal frontiers and customs posts in the Community?
    Mrs. Chalker: I am grateful to my hon. Friend for his remarks. Achieving 48 measures concerning the internal market was a record that has never been equalled by any other presidency. [Laughter.] As the aim is to help business and employment throughout the Community, I should have thought that this was a serious matter, not a humourous one. Progress has been made with border facilities, in that we shall reduce the number of documents needed from 17 to 1. We hope that further improvements will be made during the next few months under the Belgian presidency.
    Sir Russell Johnston: Does the Minister agree that the British presidency would have been greatly enhanced if it had been marked by British entry to the exchange rate mechanism of the European monetary system and by a clear commitment to proportional representation for the next European elections? Has the Minister observed that both those propositions are strongly supported by the President of the European Parliament, Sir Henry Plumb, who I should like to congratulate?
    Mrs. Chalker: I am sure that the whole House will join the hon. Gentleman in congratulating Sir Henry Plumb on his election as President of the European Parliament. [Interruption.] As for the exchange rate mechanism, of course the Government recognise the European and national political and economic advantages of joining it, but the Government have made clear their wish to do so when the balance of the argument is in favour of entry. The hon. Gentleman must recognise that one of the difficulties is that sterling, like the German deutschmark, is a widely traded currency. There is at present only one such currency in the exchange rate mechanism, and the introduction of
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    a second could put it under strain. That would be damaging to the whole of the European Community. That is why we need to be sure that the circumstances are right.
    I note what the hon. Gentleman said about proportional representation. I have noted carefully the views of the President of the European Parliament, and I shall see him tomorrow to discuss his views further.
    Mr. Madden: Does the Minister not believe that Britain's reputation in Europe and elsewhere has been seriously damaged by the Foreign Office spending British taxpayers' money on inviting two South African Nationalist Members of Parliament to visit Britain? They represent a country which has detained hundreds of people, including young children, which has a propaganda regime that would be the envy of Dr. Goebbels, and which has launched aggressive acts against neighbouring, independent and sovereign states.
    Mrs. Chalker: The hon. Gentleman and the House will know that I hold no brief for the South African Government. I have to say, however, that the Central Office of Information has a number of sponsored visits, which are to exchange information. They are made available widely to a large number of people with whom the Government would not necessarily agree. Following the policy that, to extend dialogue and to try to influence cannot be a bad thing, I think that the exchanges which those two people have obviously had with people in the United Kingdom will have been nothing but a force for good to help impress on the South African Government the views of the British Government and people about that Government's actions at present.
    Mr. Temple-Morris: Were any steps taken during our presidency to achieve a common European view towards encouraging some sort of compromise between the United States and the Soviet Union over the strategic defence initiative, bearing in mind that, in the end, strategic arms control and disarmament depend on such a compromise?
    Mrs. Chalker: As my right hon. and learned Friend said this afternoon, this matter does not fall within the competence of European political co-operation or the European Community. Obviously, Ministers have had discussions in Western European Union and other forums. We work closely together on issues of such major importance to every country concerned. We shall continue to do so, but within the European Community this aspect does not arise.
    Mr. Pike: How can the Minister claim that reforms of the common agricultural policy are an achievement when the majority still view the common agricultural policy as a disaster, damaging to the economy, and a lead weight around the neck of the Common Market, dragging it down to bankruptcy? When will the Government take positive steps to reform that policy?
    Mrs. Chalker: I am not sure where the hon. Gentleman has been recently, but my right hon. and learned Friend and I and many other Ministers have repeatedly said that reform of the common agricultural policy was not only urgent but vital for the future of the Community. That is why, at the December meeting of Agriculture Ministers, we agreed on an 8·5 per cent. cut in milk quotas over the next 15 months, plus a further 1 per cent. to be taken out

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    of production through the increase in the super levy and the tighter application of quota arrangements. We will make a total cut of 9·5 per cent. in the milk quota.
    Further, we have agreed that, with that reduction in milk production, there will be a major stock disposal scheme for 1 million tonnes of butter, and we shall cut back by about 165,000 tonnes the amount of beef being brought into intervention. These measures will save £1·3 billion over the next three years. That was done under the British presidency. We are determined to reform the common agricultural policy, and we had agreement in the Community, under our presidency, to do so.
    Sir Anthony Kershaw: Is my hon. Friend aware that if the hon. Member for Bradford, West (Mr. Madden) had cared to attend the Foreign Affairs Select Committee session this morning he would have heard a fruitful and honest discussion with one of the South African Members of Parliament to whom he referred, which might lead towards a peaceful and amicable solution to the South African problem in due course?
    Mrs. Chalker: I am delighted to hear from my hon. Friend that such a discussion took place during the Foreign Affairs Select Committee meeting this morning. It entirely bears out my answer to the hon. Member for Bradford, West (Mr. Madden) that discussion should take place and that we can influence matters if we lift our eyes above the low parapet at which he sets his.
    Mr. George Robertson: Is not the legacy of the British presidency of the European Community a financial shambles, which means that the European Community still has no agreed budget for 1987? A trade war with the United States of America is looming and it threatens to cause long-term damage to European and United States relations. [Interruption.] When Conservative Members do not want to hear certain points, the heckling starts. The superficial deal on agriculture prices has still not spared us the spectacle of huge stocks of cauliflowers being destroyed simply to hoist their price to the consumer. Is that not the real, poor record to set against the 48 propaganda points that have been circulated among Conservative Members?
    Mrs. Chalker: There is no time when the hon. Gentleman is less convincing than when he tries to pull holes in a real and certain achievement. Indeed, there have been achievements. It is right that there is no Community budget for 1987 at present. The Council of Ministers has refused to agree a budget that exceeds the minimun rate of increase laid down in the budgetary procedure. A budget cannot be adopted in the absence of Council agreement. We can proceed on the basis of one twelfth, which allows the Community at least to get on with some of its business. The Community has taken a firm stand over United States trade relations. The Commission has our full support in the present negotiations. We shall do our level best to reach a negotiated agreement that will make retaliatory measures unnecessary.
    Sir Anthony Grant: Now that my right hon. and learned Friend the Secretary of State has finished a most distinguished period in the presidency of the Community, will the Foreign and Commonwealth Office apply its mind to the broader Europe of the 21 countries of the Council of Europe, which are very much concerned with the problem of human rights—in fact, much more so than
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    the Community? Will my right hon. and learned Friend persuade his colleagues in the Council of Ministers to be much less stingy with the amount of money that they make available to that important organisation?
    Mrs. Chalker: We are extremely appreciative of the excellent work that the Council of Europe has done, not only on human rights, but on the drugs issue. I shall carefully bear my hon. Friend's comments in mind.

    Afghanistan (Human Rights)
    Mr. Rostasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about human rights in Afghanistan.
    Mr. Eggar: Large-scale violations of human rights continue. These are documented in the recent report of the United Nations special rapporteur. A report by Amnesty International includes accounts of the complicity of Soviet personnel in the torture of prisoners. We are deeply concerned at these allegations and have made that concern clear to the Soviet Government.
    Mr. Rost: What representations can my hon. Friend make about the dreadful, shameful plight of the refugees?
    Mr. Eggar: We have obviously given considerable assistance to Afghan refugees. There are 5 million refugees outside Afghanistan—more than one third of the population in 1979. We are continuing to assist in meeting their needs. Of course, the answer to the refugees' plight is the withdrawal of the occupying Soviet forces which still remain in Kabul and outside it.
    Mr. Heffer: Although I totally accept the idea that we must make it absolutely clear to the Soviet Government that we are in favour of human rights in Afghanistan and elsewhere in eastern Europe, will the Minister assure us that the Government will not adopt a double standard but will be in favour of human rights in places such as Chile, Guatemala and South Africa, and that they will not take a one-sided view of human rights, as Conservative Members often do?
    Mr. Eggar: If the Soviet Union and the Kabul regime now wish to permit a genuine settlement to bring peace and freedom to the Afghan people and to enable them to determine their own future, we, of course, would welcome that change of heart, but so far we have little evidence of a determination to bring about a final, peaceful settlement in Afghanistan.
    Mr. Heffer: Give us the answer.
    Mr. Eggar: With regard to the second part of the hon. Gentleman's question, we condemn human rights violations wherever they may take place.
    Mr. Terlezki: In relation to the violation of human rights in Afghanistan and the 5 million refugees in Pakistan who are sheltering there and are not able to return to their own country, does my hon. Friend agree that at the Vienna conference the Soviet Union must be reminded time and time again that the 5 million refugees in Pakistan must all be able to return home and that the 5 million people in the Soviet Union who are in slave labour camps and psychiatric hospitals must also be released?
    Mr. Eggar: I entirely agree with my hon. Friend. I assure him that at the Vienna CSCE conference our

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    delegation and I—I was there just before Christmas—have taken every possible opportunity to bring the attention of the Soviet authorities to human rights abuses in the Soviet Union and elsewhere.

    Vietnamese Refugees
    Mr. Dubsasked the Secretary of State for Foreign and Commonwealth Affairs how many Vietnamese refugees there are in Hong Kong; how many landed there in 1986; and how many are in closed camps.
    Mr. Renton: On 1 January 1987 there were 8,039 Vietnamese refugees in Hong Kong, of whom 4,527 were in closed camps. There were 2,074 arrivals in 1986, and 3,816 refugees from Hong Kong camps were resettled elsewhere, so that the number in the camps fell by 1,742 in the course of the year.
    Mr. Dubs: Does the Minister agree that there is an urgent need for further international discussions to get people out of those camps, and that other countries can be expected to accept some refugees only if Britain sets a lead? Will the Minister confirm that there is no intention of repatriating those Vietnamese refugees who are in the camps in Hong Kong, and that there is no intention of ever turning away any further refugees who arrive by boat in Hong Kong?
    Mr. Renton: I should like to stress that Britain has a good record for accepting refugees from Indo-China. We have accepted almost 20,000 refugees, including 12,000 from Hong Kong. However, I agree with the hon. Gentleman that the continuing arrival of refugees in Hong Kong is a matter of great concern to the people and the Government of Hong Kong. Therefore, we are consulting other major resettlement countries and the United Nations High Commission for Refugees to see what can further be done at present.
    The issue of repatriation to Vietnam was mentioned in a recent debate in the Legislative Council in Hong Kong. The hon. Gentleman and I will agree on the fact that repatriation to Hong Kong can take place only when we and other major resettlement countries are much more convinced than we are now about, for example, human rights in Vietnam and how such migrants would be treated and looked after if they went back to Vietnam.
    Mr. Bowen Wells: Can my hon. Friend tell the House how many of the refugees in Hong Kong are fleeing from the unemployment and depressed economic conditions in Vietnam and are not, in any way, political refugees? Having made that assessment—I hope that he has made it, and if he has not I hope that he will do so—will he arrange for those people quickly to be returned to Vietnam with guarantees from the Vietnam Government about their human rights? It is clearly wrong for Hong Kong to accept people who are fundamentally seeking economic relief from their conditions, and not political relief.
    Mr. Renton: The situation is not quite as simple as my hon. Friend has set out, although I know of his deep interest in the problem. At present there is no screening of Vietnamese refugees entering Hong Kong. It would be possible to establish those refugees who are economic migrants, to use a jargon phrase, and those who are genuine political refugees only if there was such a process of detailed screening. However, even then it is questionable whether one would necessarily arrive at
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    totally correct answers. That is one of the problems facing all the major resettlement countries. I have already discussed the situation in Vietnam when I answered a previous question, but I am sure that we could be satisfied with the prospect of returning to Vietnam those who were not political refugees only if we were more satisfied than we are now about human rights conditions in Vietnam.
    Sir Russell Johnston: Does the Minister agree that even if he were successful, as the hon. Member for Battersea (Mr. Dubs) has suggested, in improving the quota of refugees accepted by different countries, including our own, there would still be a number who, because of age, lack of linguistic knowledge or narrow work experience, would find it very difficult to be resettled anywhere? What will happen to those people when the transfer of power takes place?
    Mr. Renton: That is still 10 years away. However, the hon. Gentleman has put his finger on a very sensitive question. That is precisely what is worrying Hong Kong, and it is because of that problem that we are currently having further discussions with the major resettlement countries and talking to the UNHCR, which has a new dynamic commissioner, about how we shall deal with those problems in the long term.
    Mr. Sims: Does my hon. Friend agree that there is a moral obligation on the part of the people of the free world in Asia, as well as in America and Europe, not only towards the Vietnamese refugees, but towards the people and Government of Hong Kong, who have fed and sheltered every refugee who has appeared there and who have not turned a single one away? Is it not now time for a positive initiative to be taken by Her Majesty's Government to get international co-operation to relieve Hong Kong of the unreasonable burden that that country has had to shoulder for far too long?
    Mr. Renton: I accept what my hon. Friend said. However, one should never underestimate what the major resettlement countries have done in recent years in taking refugees out of the Hong Kong camps. For example, there were 24,000 departures in 1979 and 3,800 last year. Every year a great quantity of refugees have been accepted by the major resettlement countries precisely for the reason mentioned by my hon. Friend—a sense of obligation. Obviously, we now have to look at what to do with the 8,000 refugees who remain in the camps. That is a matter of great worry to Hong Kong, as expressed in the recent Legislative Council debate, and that is precisely what we are consulting about at present.
    Mr. Anderson: May I advance what was said by my hon. Friend the Member for Battersea (Mr. Dubs) about the case for seeking to trigger a response from our allies by our own example in relation to the Vietnamese refugees? If, as the Minister says, the long-term key to the problem lies in Hanoi, why have the Government not taken any initiative with our United States allies in seeking to open negotiations with the Vietnamese Government?
    Mr. Renton: I am somewhat surprised by that question from the hon. Gentleman, who knows the situation in south-east Asia well. He knows the position on human rights in Vietnam, and he knows that Vietnam is currently supporting an invasion of Cambodia and that there are more than 100,000 Vietnamese troops in Cambodia. Therefore, it is rather ridiculous to chide us for not yet

    889
    making direct approaches, with or without other countries, to Hanoi when such an intolerable human rights situation remains in Vietnam. We have to consider with other major resettlement countries whether there is a process of pressure that we can bring to bear on Vietnam under which conditions will so improve in that country,
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    for example, by the withdrawal of Vietnamese troops from Cambodia, that it might be possible to suggest that refugees could go back. If they were sent back at present, I am sure that no one would object more strongly than the hon. Gentleman.

Devonport Dockyard
3.32 pm
The Parliamentary Under-Secretary of State for Defence Procurement (Mr. Archie Hamilton): With permission, Mr. Speaker, I should like to make a statement on the Devonport dockyard.
My right hon. Friend the Secretary of State announced yesterday, in following up an answer to a question from my hon. Friend the Member for South Ribble (Mr. Atkins), that the Government are now satisfied that there exists the basis for an advantageous contract to be placed for the future operation of Devonport dockyard with Devonport Management Limited, which is a company formed by Brown and Root (UK) Limited, the Weir Group plc and Barclays de Zoete Wedd Ltd. I am sorry that the Official Report has not yet printed my right hon. Friend's answer. However, I did write yesterday to those Members most concerned.
All three companies in the consortium are British, but Brown and Root is a United Kingdom subsidiary of the United States Halliburton company. As the hon. Member for Clackmannan (Mr. O'Neill) will recall from our discussions of the Dockyard Services Bill, the upper limit which we set for foreign shareholding in the companies bidding for the contracts was 30 per cent. In determining whether a particular shareholding should be considered foreign, account is taken of the parent companies. On that basis, Brown and Root's share in Devonport Management Ltd. has been set at 30 per cent.
The House will recall that, in our paper to the trade unions of 4 December, we announced our preferred contractor for Rosyth. My right hon. Friend is at this moment chairing a meeting with general secretaries of eight unions to hear their views on that paper, before he takes a final decision.
In forwarding the paper on Devonport to the unions yesterday, my right hon. Friend proposed a meeting with them on 13 February to discuss that paper. No contract has yet been placed, and my right hon. Friend has said that he will do so only when the unions have had an opportunity to give him their views.
Mr. Martin J. O'Neill: I am grateful to the Minister for making that statement. I wish that he had been able to do so for Rosyth as well when the occasion arose. However, we are disappointed—and I am sure I speak not only for Opposition Members but for the people of Devonport, who I imagine will not be represented here this afternoon. None of us is convinced by any of the claims made by the Government on the future of the dockyards. Will the Minister confirm the story in the Western Mail this morning that the number of redundancies likely to follow the change of contractor will be about 4,000?
Will the Minister further confirm that, although Brown and Root has only a 30 per cent. share, that is the highest possible share that it could have, given that it is American-owned, and that its secondary position in the consortium is little better than a financial fiction, as everyone knows that it will be the lead in the contractor consortium? Will the hon. Gentleman elucidate and give some information on why the Lazard group withdrew at the last possible minute—only yesterday morning—from the consortium, and was replaced by Barclays de Zoete Wedd?
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Does the Minister recognise that the work force at Devonport will be angered almost beyond belief by that American takeover of their yard, and that those are loyal men, who have served their Queen and country for decades, and who resent being reduced to the level of chattel slaves, to be handed over to the Americans? That is what the transfer of undertakings involves. It is the selling of the work force; it is nothing more nor less than that. It will be opposed, as it has been throughout the campaign by both the work force and Opposition Members.
Mr. Hamilton: I shall deal first with the withdrawal of Lazard from the consortium. That must be the concern of the consortium—it must be up to the consortium to decide who its financial backers are. However, there have been changes in the make-up of all the different consortia that have been bidding for the contract.
On foreign control, as I said, we set the level of foreign shareholding for companies bidding for the dockyard contract at 30 per cent. If a foreign shareholding exceeds that level, my right hon. Friend the Secretary of State will have the power, under the contract, to act where circumstances are contrary to the essential interests of security. My right hon. Friend could terminate the contract if he felt that to be necessary. However, we do not say that a 29 per cent. shareholding would be acceptable in all cases or that a 31 per cent. shareholding would be unacceptable. We can think of examples where even a tiny foreign shareholding would be unacceptable and where a shareholding above 30 per cent. would be acceptable.
Protection of security has always been and always will be a paramount consideration. Devonport Management Ltd is a list X company. That means that, in order to undertake classified defence work, the company has to satisfy the Government's stringent security, physical and personnel requirements, which have existed under successive Governments. There are, of course, many foreign firms that satisfy the Government's security rules.
On manpower levels, in the paper that we issued on the Government-owned plc option in September, we said that, under that option, there were likely to be reductions over a seven-year period of some 5,000 jobs in Devonport and 1,200 jobs in Rosyth. Obviously, those calculations were based on assumptions about possible improvements in efficiency and on forecasts of the amount of unallocated naval and commercial work that the company might secure. It is of significance that the preferred contractors at Devonport believe that, under their management, reductions will be measurably less.
Mr. Keith Speed: My hon. Friend will be aware that under the Admiral Rickover rules, non-United States citizens are not allowed to have any contact with United States navy nuclear propulsion systems. Is it correct that under the contractual arrangements that my hon. Friend has announced, there is a possibility that not only United States companies but United States citizens will be relating directly to our nuclear propulsion systems, and the SSN refitting capability at Devonport dockyard, and thus will be at a considerable advantage from a defence and commercial point of view compared with United Kingdom citizens and the United States nuclear propulsion system, with which we are not allowed to have any interface at all?
Mr. Hamilton: United States personnel might be involved, but they would be security cleared.
Mr. John Cartwright: Will the Minister assure the House that the proposed vesting date of I April for the takeover by the new contractors is not set in stone? If, as seems highly unlikely, all the complicated transitional arrangements are completed by that date, will the hon. Gentleman assure the House that he will delay the takeover until all the problems can he properly sorted out?
Mr. Hamilton: I can assure the hon. Gentleman that the vesting day is 6 April. We have every hope of being able to meet that date.
Sir Peter Emery: Will my hon. Friend assure the House that the major concern of Her Majesty's Government is the essential and successful future operation of the dockyard in relation to the work that has to be carried out? If that is the case, has not Brown and Root played a major part in other British developments, particularly in the North sea? It is an expert in this area. Can my hon. Friend give an assurance that, when considering the future work force, those who are already employed will be given, as far as possible, first preference for the jobs that have to be filled?
Mr. Hamilton: Yes, of course I can give my hon. Friend that assurance. It is quite true that Brown and Root is bringing in great expertise from outside. If we consider the development of the oil potential of the western approaches, I am sure that this will be of enormous benefit to Devonport. It will remain the most important dockyard dealing with Royal Navy refits, which still remain an absolutely essential part of our capacity to keep our ships afloat.
Mr. Michael Foot: Will the hon. Gentleman take into account the fact that this proposal, as originally put to the House of Commons, was bitterly opposed in different parts of the House and that it would have been all the more bitterly opposed on Second Reading and during the other stages if it had been suggested then that a very powerful foreign holding was to play a part in the final result? The hon. Gentleman referred to the meeting with the unions. In the light of the Government's humiliating defeat when this measure went through the House of Commons and the other place, will he give an absolute assurance that, if the work force is still opposed to this proposition, the Government will not go ahead with it, at least until the electorate has had a chance to pronounce upon it? The people of this country are not prepared to see Devonport dockyard handed over to profiteers and people who will not be able to serve the country as they have done for generations.
Mr. Hamilton: I cannot give the right hon. Gentleman that assurance. The House has made its position quite clear on this issue. I am afraid that I do not go down the road of sharing his paranoia of anything to do with the Americans. I believe that Brown and Root will have a great contribution to make to the management of these dockyards.
Mr. Robert Hicks: Is my hon. Friend aware that the Plymouth sub-region already has very severe economic and social problems, sadly comparable to those in any part of the United Kingdom? In view of this increased job loss, what efforts will his Department make to alleviate the position, in terms of job
894
training and the attraction of alternative industry to the area? Does my hon. Friend not agree that his Department—not just the Departments of Employment and of Trade and Industry—has a responsibility, in view of the decision that has been taken this week?
Mr. Hamilton: I sympathise with my hon. Friend on that point. But the difficulty is that the work load in the Devonport dockyard is falling. Therefore, I do not think that it is the job of the Ministry of Defence to subsidise jobs in Plymouth. The fact is that my right hon. Friends the Secretaries of State for Employment and for Trade and Industry are mainly concerned with Government support for the area. I believe, however, that the preferred contractor whom we have selected will provide the best possible opportunities for work to be brought into the dockyard.
Mr. Gordon Brown: Are we now to have Trident courtesy of the American Government, helicopters courtesy of Sikorsky, early warning aircraft courtesy of Boeing, and the refit of the majority of our naval frigates and submarines courtesy of Brown and Root of Delaware? Will the Minister tell us exactly how many jobs will be put at risk by subordinating the interests of national security to those of commercial gain? Will he not realise even at this late stage that the defences of this country should be under the control of this country?
Mr. Hamilton: I do not believe that the United States would feel that it is subordinating its national interests by accepting weapons systems from here. There is a two-way trade, and I welcome it.
Mr. Robert Atkins: As one whose great great great grandfather was party to building the Plymouth-Devonport dockyard and as, therefore, I have an interest in it, may I ask my hon. Friend to confirm that the contract that his right hon. Friend has negotiated is a very tight one, giving the company the responsibility to find the money for redundancies and to ensure that there is not an excessive profit on non-competitive naval work? Will my hon. Friend also confirm that this contract, if it is completed, will provide, through the company. A much wider range of job opportunities, in that the company will have much wider world wide support, which will enable it to put contracts the dockyard's way?
Mr. Hamilton: That is absolutely true. The dockyards will be much more competitive if they become more efficient, because they will be able to get work from outside. I am convinced that Brown and Root has every opportunity to bring in such work. It is worth making the point that the combined savings of the two dockyards at Devonport and Rosyth will be about £320 million over 10 years.
Mr. Dick Douglas: Will the Minister take cognisance of the point made by his hon. Friend the Member for Ashford (Mr. Speed) about the personnel who may be in control of this consortium? What information can he give the House about the dominant role that Brown and Root will play in the selection of top personnel? Will he ensure that these top personnel are United Kingdom citizens so that vital information is not leaked across the Atlantic to a company that is highly engaged in defence contracts, especially in the Houston area? Will he not confirm that, despite all the protestations of unions and others, the Government have rolled on in

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their merry way with the idea of keeping to the vesting date of 1 April 1987 that they originally had in mind and that the whole process of consultation has been nothing but a farce?
Mr. Hamilton: The process of consultation has not been a farce. The unions have had six weeks in which to consult their members and that was on an extended timetable which the unions proposed. I understand that they have finished their consultations in Rosyth. It is unfortunate that they left their Devonport consultations until the last of these six weeks. Be that as it may, last week's weather may have made consultations more difficult. In the circumstances, we are prepared at today's meeting to consider Rosyth and the preferred contractor for it that we announced in December. We shall shortly issue a further paper on Devonport about the way negotiations have proceeded there and we shall invite the unions' views on that when they have considered that paper. I hope the House will agree that this is a sensible way to proceed.
Mr. Gerrard Neale: I regret that I cannot report to the House the occupation of my great great grandfather. There is a common view in Devon and Cornwall about the need for a good future for Devonport, but there is no common view that what my hon. Friend is doing is wrong. Many people feel that it is perfectly sensible for him to look into proposals of this kind, which offer a better guarantee for the introduction of new work to the dockyard.
Mr. Hamilton: That is really the significant point, and I am grateful to my hon. Friend for making it. If the Devonport dockyard remains in the ownership of the taxpayer as a Government-owned plc, there will be significant job losses—5,000 of them in Devonport. The deal that we have made with Brown and Root says that the job losses will be somewhat less and the company offers the opportunity of bringing in more work.
Mr. Tam Dalyell: It would not be doing the Minister an injustice to suggest that he was a bit vague about the whole matter of foreign shareholdings. He said that it might be 29 per cent. and that that might not be acceptable, but that 31 per cent. might be all right. How do the Government know the exact foreign shareholding, given that there are nominee shareholders, which may make it difficult to know the percentage? Is not this all a bit of a farce?
Mr. Hamilton: It is not at all a farce. There is always difficulty about knowing precisely the number of shareholders in any company, but we will do our best to monitor that.
Mr. Patrick Nicholls: Does my hon. Friend agree that the immoderate way in which American involvement is attacked by the Opposition will cause a great deal of fear to the many tens of thousands of people in Britain who derive their living from working for American companies or for companies with American involvement? Does he also agree that the 45 per cent. of the shares held by Barclays de Zoete Wedd would be available for take-up by British companies, including the local dockyard management consortium, and that that shows that the overwhelming influence will be national and not international or American?
Mr. Hamilton: I can certainly confirm that. The Barclays de Zoete Wedd holding is 45 per cent. and, with the agreement of the Government, some or indeed all of that may be made available to British companies and, I hope, employees as well.
Mr. D. N. Campbell-Savours: Will not the people of Plymouth be very angry tonight when they find out that not a single Member of Parliament from Plymouth is in the Chamber when D-day, D for Devonport, is being debated? When the Minister says that fewer jobs will be lost, will he give us a time-scale? The Minister said that the in-house offer was a loss of 5,000 jobs over seven years. Is it not possible that 4,000 jobs will go within two years under the proposals that the Government have accepted? Can we have a straight answer to that question?
Mr. Hamilton: The scale of job losses and what period they are spread over are confidential matters between the Government and the contractor. I am afraid that I am unable to answer for the people of Plymouth.
Mr. Tony Marlow(Northampton, North): As I understand that NATO, which includes the United States, has kept the peace for the past 40 years or more, why is it that the knee-jerk reaction of the Opposition is one of rampant, paranoid, negative and spiteful hostility to the United States?
Mr. Hamilton: As my hon. Friend says, it is remarkable that we are keen to attract American investment into Britain, but when a good company comes in to take over the management of this dockyard, there is this extraordinary reaction, which will do nothing but damage to the prospects for jobs in this country.

Pilkington plc
Mr. Kenneth Hind: On a point of order, Mr. Speaker.
Mr. Speaker: Does it arise out of questions?
Mr. Hind: No, Sir, it arises out of yesterday's business, and it is of some importance. Yesterday, in the debate on the north-south divide, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) said:
"after Pilkingtons had been forced to take a number of decisions to protect itself against the merger, which are deeply damaging to the long-term interests of that company."—[Official Report, 20 January 1987; Vol. 108, c. 768.]
What was suggested by the right hon. Gentleman—
Mr. Speaker: Order. There must be a point of order that I can answer. I am not responsible for what is said in debate in this place.
Mr. Hind: Pilkington's management has told me that no such—
Mr. Speaker: Order. The hon. Gentleman will have to find other ways of raising the matter. It is patently not a matter of order for me.
Mr. Patrick Nicholls: On a point of order arising out of questions, Mr. Speaker. Bearing in mind the point made by the hon. Member for Workington (Mr. Campbell-Savours) about the lack of Members representing Plymouth in the House—
Mr. Speaker: Order. That is not a matter of order, either.

Rent Control (New Lettings) Abolition
3.52 pm
Mr. Michael Brown: I beg to move,
That leave be given to bring in a Bill to amend the Rent Acts to permit new lettings to be free of rent controls.
The Bill is designed to enable more people in Britain to be housed. One of the problems of housing in Britain is homelessness. Empty homes, whether in the public or private sectors, are a waste.
It has been said:
"Local authorities estimate—these are the only estimates we have—that in England 545,000 private sector homes were empty in April 1985. Nearly 100,000 of them were in London, where the problem of homelessness is greatest. Many of those homes, but not all—even some needing refurbishment—could be let to people who need them if landlords were not inhibited by the effects of the Rent Acts."—[Official Report, 19 February 1986; Vol. 92, c. 381.]
Those are not my words, but the words of my hon. Friend the Minister for Housing, Urban Affairs and Construction, who spoke so eloquently on 19 February 1986. How right he was.[Laughter.] Opposition Members may scoff at those words, but they were true then and, if they were true then, they are even more true today.
We all recognise that there is a problem of homelessness, and that over 500,000 homes are available in Britain. Surely there is little doubt, even among those blinkered Opposition Members, that if we seriously want to do something about the problem of homelessness, it is the Rent Acts which are standing in our way.
I acknowledge that there are people who benefit from the Rent Acts. Indeed, my Bill specifically excludes, by both its short and long titles, those people who benefit from the Rent Acts. But there can be little doubt that at present in Britain there is a demand for rented accommodation which is not being met because of the Rent Acts, which have been on the statute book for several decades.
Surely the time has now come for us to give the British people the right to rent. There are people in Britain who want to be tenants in council houses and they still have that right. There are many people who wanted the right to become home owners, and my hon. Friend and his predecessors gave them that right. But there are single people in Britain who come to London for the first time to start their working career, as I did in the early 1970s: I must be typical of many hundreds of thousands of single people who, in their early twenties, leave the provinces for London and face the problem of a shortage of accommodation. They would be willing customers of the suppliers of private rented accommodation.
I recognise that one must go slowly in such matters, but, heaven knows, we have gone at a snail's pace in the past in addressing ourselves to this delicate problem. I also recognise that it would be unfair at this stage to include within the scope of my Bill those who are at the moment beneficiaries under the Rent Acts. But there is little doubt from the statistics of comparison available between Britain and other countries that Britain has a low level of supply of rented accommodation. In West Germany, 36 per cent. of households rent from private landlords; in France, the figure is 32 per cent., and in the United States it is 33 per cent. In Britain it is just 9 per cent. In those other countries, private renting is not the major political issue that it is in the United Kingdom.

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We must ask—the question is posed not by me but by my hon. Friend the Minister for Housing, Urban Affairs and Construction in his excellent speech last year—why we in the United Kingdom seem to concentrate on just two types of tenure—home ownership or council tenancy. There must be an alternative middle way to supply accommodation for those people who wish to have the right to rent.
We know that more than 500,000 homes in Britain are empty. They must be empty because of the restrictions of current and previous legislation. I believe that there is a willingness on the part of the Government to address themselves to the problem of homelessness in a way that no other Government have done in the past.
It may be possible for the Bill to reach the statute book in the present session of Parliament. However, I recognise that that is a big step. If the Bill is given a fair passage this afternoon, it is more likely that it will be a spur to my hon. Friend and his colleagues to ensure that it is included as a firm commitment by the Government in the Conservative party's next election manifesto. The people in Britian who are homeless and looking for rented accommodation and who want to exercise that right to rent will be able to do so only with a Conservative Government.
If I am successful this afternoon, I would dearly wish my hon. Friends in the Department of the Environment to ensure that Government time is made available so that the Government's clear wish can come to pass before the next election. I recognise, eternal optimist though I am, that that might be difficult. I note that my right hon. Friend the Leader of the House is here and he might wish to make Government time available. But if, by chance, there is some difficulty, I urge my hon. Friends to pick up the Bill immediately they are re-elected after the next general election.
3.59 pm
Mr. David Winnick: I begin by congratulating the hon. Member for Brigg and Cleethorpes (Mr. Brown) on raising this matter. He has done us a service by spotlighting what would certainly occur if, by some mischance, this Government were reelected. I remind him that, when the hon. Member for Eastbourne (Mr. Gow) was Minister for Housing, Urban Affairs and Construction, he tried to persuade the Cabinet, of which he was not a member, to bring forward legislation along the lines advocated by the hon. Gentleman today. The hon. Member for Eastbourne was reported in the press as having been quite upset when the Cabinet told him that no action would be taken in that Parliament.
The Cabinet is no less keen and enthusiastic in wishing to see the decontrol of the privately rented sector than the hon. Members for Eastbourne and for Brigg and Cleethorpes. The Prime Minister and her Cabinet colleagues simply consider it unwise to take any action before the next election. That is why, unlike last Friday, the ministerial payroll will abstain today. Eighteen months ago, when I opposed a private ten-minute Bill, it was lost by one vote. I am sure that the ministerial payroll will abstain today and that I shall be proved right.
The present Housing Minister, as the hon. Member for Brigg and Cleethorpes said, has made the Government's
900
position perfectly clear. In February last year, he said that there was little point in putting forward major legislation halfway through a Parliamentary term because of what he described as the destructive attitude which the Labour party was sure to take. If by "destructive attitude" he means that the Labour party would defend the right of private tenants to have protection on rents and security, we plead guilty. We are not ashamed of that.
Moreover, in his speech at the party conference on 7 October last year, the Minister made it clear that the Government, if re-elected, would remove controls and security of tenure from new lettings.
The Minister referred during that speech and on other occasions to "Socialist controls" in the privately rented sector. If they are "Socialist controls" why have they not been removed in nearly eight years of a Right-wing Conservative Administration? Why were these "Socialist controls" agreed to by the Conservatives when the Labour party was in office? The Conservatives made it clear that they would not oppose the Rent Acts being restored?
The hon. Member for Brigg and Cleethorpes was right in one respect—there is an acute housing crisis, but deregulating the privately rented sector would make it far worse. The Conservatives use the same argument that was used when the Rent Act 1957 was going through. In 1956 the right hon. Member for South Down (Mr. Powell), when he was a junior housing Minister said that deregulation would provide more tenancies and more flexibility. The same argument is used today by the housing Minister, other Ministers and the hon. Member for Brigg and Cleethorpes today.
In June 1956, before the 1957 Act came on the Statute Book, there were 6·5 million private dwellings. In 1961, after four years of the Act, there were 5 million. Where were the further dwellings?
The truth is that, once the places became vacant, many of the owners simply sold them off. Therefore, the Act which provided for decontrol led not to more but to substantially less rented accommodation. The Rent Act 1957 led to something else. It led to great homelessness, misery and injustice for many many private tenants and to Rachmanism. It led to the terror that existed in parts of London and other places, where Rachman and his agents were even willing to use Alsation dogs to force tenants out.
When the hon. Member for Brigg and Cleethorpes says that existing tenants will be protected, I say that, if deregulation came along, there would be great harassment and intimidation of sitting tenants, in order to get them out so that the places would become decontrolled and the landlord could let those places without any limits on rent and without any security. Hundreds of thousands of existing private tenants would be greatly at risk if this Government were re-elected and they introduced another Act like the 1957 Act. I say to the Labour Front Bench and to the Labour party nationally that we have a duty and a responsibility to ensure that, during the election campaign, we warn private tenants what is likely to happen if the Tories win.
Many, many people are desperately in need of accommodation, but they will not find that accommodation at a reasonable rent in any deregulated private sector. That is why it is so necessary for local authorities to start building once again. This year, there will probably be even fewer than 30,000 new dwellings built by local authorities and housing associations. So many of our people are

901
desperately in need of housing. They want rented housing, but they will get adequate rented housing at a reasonable rent and with protection only from the public sector.
I call on my right hon. and hon. Friends to oppose this Bill, to ensure that, even in this Tory-dominated House of Commons, private tenants will continue to have that protection.
Mr. Speaker: The question is that the hon. Member—
Mr. Tony Marlow: On a point of order, Mr. Speaker.
Mr. Speaker: Order. I must put the Question.
Question put, pursuant to Standing Order No. 15 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business):—
The House divided: Ayes 132, Noes 144.

Division No. 62]

[4.06 pm

AYES

Alexander, Richard

Hill, James

Amess, David

Hind, Kenneth

Ashby, David

Holland, Sir Philip (Gedling)

Atkins, Rt Hon Sir H.

Holt, Richard

Atkinson, David (B'm'th E)

Hordern, Sir Peter

Batiste, Spencer

Howarth, Gerald (Cannock)

Beaumont-Dark, Anthony

Howell, Ralph (Norfolk, N)

Bellingham, Henry

Hubbard-Miles, Peter

Bendall, Vivian

Irving, Charles

Best, Keith

Jessel, Toby

Bevan, David Gilroy

Johnson Smith, Sir Geoffrey

Biggs-Davison, Sir John

Jones, Gwilym (Cardiff N)

Blackburn, John

Jones, Robert (Herts W)

Bottomley, Mrs Virginia

Kershaw, Sir Anthony

Bowden, Gerald (Dulwich)

King, Roger (B'ham N'field)

Brandon-Bravo, Martin

Knight, Dame Jill (Edgbaston)

Brinton, Tim

Latham, Michael

Brown, M. (Brigg & Cl'thpes)

Lawler, Geoffrey

Bryan, Sir Paul

Leigh, Edward (Gainsbor'gh)

Buck, Sir Antony

Lewis, Sir Kenneth (Stamf'd)

Butterfill, John

Lilley, Peter

Carlisle, John (Luton N)

Lloyd, Sir Ian (Havant)

Churchill, W. S.

MacKay, Andrew (Berkshire)

Clark, Dr Michael (Rochford)

McLoughlin, Patrick

Clark, Sir W. (Croydon S)

McQuarrie, Albert

Cockeram, Eric

Marlow, Antony

Colvin, Michael

Mather, Sir Carol

Coombs, Simon

Meyer, Sir Anthony

Corrie, John

Monro, Sir Hector

Dickens, Geoffrey

Montgomery, Sir Fergus

Dicks, Terry

Morris, M. (N'hampton S)

Dover, Den

Mudd, David

Emery, Sir Peter

Neale, Gerrard

Eyre, Sir Reginald

Nicholls, Patrick

Fallon, Michael

Page, Sir John (Harrow W)

Farr, Sir John

Pawsey, James

Finsberg, Sir Geoffrey

Peacock, Mrs Elizabeth

Forsyth, Michael (Stirling)

Powley, John

Fox, Sir Marcus

Proctor, K. Harvey

Galley, Roy

Raison, Rt Hon Timothy

Goodhart, Sir Philip

Rhys Williams, Sir Brandon

Gower, Sir Raymond

Roe, Mrs Marion

Griffiths, Sir Eldon

Ross, Stephen (Isle of Wight)

Griffiths, Peter (Portsm'th N)

Rossi, Sir Hugh

Grist, Ian

Rost, Peter

Ground, Patrick

Rowe, Andrew

Hamilton, Neil (Tatton)

Sayeed, Jonathan

Hannam, John

Shaw, Sir Michael (Scarb')

Harris, David

Shelton, William (Streatham)

Harvey, Robert

Shersby, Michael

Hawkins, Sir Paul (N'folk SW)

Soames, Hon Nicholas

Hawksley, Warren

Speed, Keith

Hayes, J.

Stanbrook, Ivor

Hayward, Robert

Stern, Michael

Heathcoat-Amory, David

Stewart, Andrew (Sherwood)

Higgins, Rt Hon Terence L.

Stokes, John

902

Stradling Thomas, Sir John

Watts, John

Tapsell, Sir Peter

Wells, Bowen (Hertford)

Taylor, John (Solihull)

Whitfield, John

Terlezki, Stefan

Wiggin, Jerry

Thomas, Rt Hon Peter

Wilkinson, John

Thorne, Neil (Ilford S)

Wolfson, Mark

Thurnham, Peter

Wood, Timothy

Townend, John (Bridlington)

Yeo, Tim

Vaughan, Sir Gerard

Walker, Bill (T'side N)

Tellers for the Ayes:

Ward, John

Mr. Eric Forth and

Warren, Kenneth

Mr. Allan Stewart.

NOES

Adams, Allen (Paisley N)

Home Robertson, John

Alton, David

Howell, Rt Hon D. (S'heath)

Anderson, Donald

Howells, Geraint

Archer, Rt Hon Peter

Hughes, Robert (Aberdeen N)

Ashdown, Paddy

Hughes, Roy (Newport East)

Ashton, Joe

Hughes, Sean (Knowsley S)

Atkinson, N. (Tottenham)

Hughes, Simon (Southwark)

Bagier, Gordon A. T.

Jenkins, Rt Hon Roy (Hillh'd)

Banks, Tony (Newham NW)

John, Brynmor

Barron, Kevin

Johnston, Sir Russell

Beckett, Mrs Margaret

Jones, Barry (Alyn & Deeside)

Bell, Stuart

Kaufman, Rt Hon Gerald

Bidwell, Sydney

Kennedy, Charles

Blair, Anthony

Kirkwood, Archy

Boothroyd, Miss Betty

Lambie, David

Boyes, Roland

Lamond, James

Bray, Dr Jeremy

Leighton, Ronald

Brown, Gordon (D'f'mline E)

Litherland, Robert

Brown, Hugh D. (Provan)

Lloyd, Tony (Stretford)

Brown, Ron (E'burgh, Leith)

Lofthouse, Geoffrey

Buchan, Norman

McDonald, Dr Oonagh

Caborn, Richard

McKay, Allen (Penistone)

Callaghan, Jim (Heyw'd & M)

McNamara, Kevin

Campbell-Savours, Dale

McWilliam, John

Canavan, Dennis

Madden, Max

Cartwright, John

Marek, Dr John

Clarke, Thomas

Marshall, David (Shettleston)

Clay, Robert

Mason, Rt Hon Roy

Clwyd, Mrs Ann

Maynard, Miss Joan

Cook, Frank (Stockton North)

Meacher, Michael

Corbett, Robin

Meadowcroft, Michael

Crowther, Stan

Michie, William

Cunliffe, Lawrence

Millan, Rt Hon Bruce

Cunningham, Dr John

Morris, Rt Hon A. (W'shawe)

Dalyell, Tam

Oakes, Rt Hon Gordon

Davis, Terry (B'ham, H'ge H'l)

O'Brien, William

Deakins, Eric

O'Neill, Martin

Dixon, Donald

Orme, Rt Hon Stanley

Dobson, Frank

Park, George

Dormand, Jack

Parry, Robert

Dubs, Alfred

Patchett, Terry

Eadie, Alex

Pendry, Tom

Eastham, Ken

Pike, Peter

Evans, John (St. Helens N)

Powell, Raymond (Ogmore)

Fatchett, Derek

Raynsford, Nick

Fields, T. (L'pool Broad Gn)

Redmond, Martin

Fisher, Mark

Rees, Rt Hon M. (Leeds S)

Flannery, Martin

Richardson, Ms Jo

Foot, Rt Hon Michael

Roberts, Allan (Bootle)

Forrester, John

Roberts, Ernest (Hackney N)

Foster, Derek

Robertson, George

Foulkes, George

Rooker, J. W.

Fraser, J. (Norwood)

Ross, Ernest (Dundee W)

Freud, Clement

Sheldon, Rt Hon R.

Garrett, W. E.

Shields, Mrs Elizabeth

George, Bruce

Shore, Rt Hon Peter

Gilbert, Rt Hon Dr John

Short, Ms Clare (Ladywood)

Godman, Dr Norman

Skinner, Dennis

Golding, Mrs Llin

Smith, C.(Isl'ton S & F'bury)

Gould, Bryan

Smith, Rt Hon J. (M'ds E)

Hamilton, James (M'well N)

Soley, Clive

Hardy, Peter

Steel, Rt Hon David

Harrison, Rt Hon Walter

Stott, Roger

Haynes, Frank

Strang, Gavin

Hogg, N. (C'nauld & Kilsyth)

Straw, Jack

Holland, Stuart (Vauxhall)

Thomas, Dafydd (Merioneth)

903

Thomas, Dr R. (Carmarthen)

Wigley, Dafydd

Thompson, J. (Wansbeck)

Williams, Rt Hon A.

Thorne, Stan (Preston)

Winnick, David

Wainwright, R.

Woodall, Alec

Wallace, James

Wardell, Gareth (Gower)

Tellers for the Noes:

Wareing, Robert

Mr. Terry Lewis and

Welsh, Michael

Mr. David Clelland.

Question accordingly negatived.

Orders of the Day

  Local Government Finance Bill
  COMMITTEE [Progress 19 January]
  [MR. ERNEST ARMSTRONG in the Chair]
  4.17 pm
  Dr. John Cunningham: On a point of order, Mr. Armstrong. I seek your help and guidance on a point of order which is somewhat complex and crucial to the future consideration of the Bill. I gave you prior notice of my intention to raise this point of order, Mr. Armstrong, as I did to the Office of the Secretary of State for the Environment. I am grateful that the right hon. Gentleman is in his place on the Treasury Bench.
  There remains a major difference of opinion about the legal implications of powers in the Bill. The Secretary of State has courteously advised my hon. Friends and myself, both publicly and privately, that our interpretations of the Bill were wrong in law, and we thought it appropriate, therefore, to seek counsel's opinion. That we have done. We have sought two independent opinions on the implications of the powers that the Secretary of State is asking the House of Commons to grant him under the Bill.
  Clause 4(6) provides that subsection (1)
  "shall have effect notwithstanding any decision of a court (whether before or after the passing of this Act) purporting to have a contrary effect."
  Subsection (1) provides:
  "Anything done by the Secretary of State before the passing of this Act for the purposes of the relevant provisions in relation to any of the initial years or intermediate years shall be deemed to have been done in compliance with those provisions."
  The definition of the relevant provisions is to be found in clause 4(2) of the Bill:
  "Part VI of the 1980 Act, section 8 of and Schedule 2 to the Local Government Finance Act 1982, sections 2 and 3 of the Education Act 1986 and section 2 of the Rate Support Grants Act 1986."
  Our advice is that four other statutes are affected and:
  "Accordingly, anything done by the Secretary of State before enactment for the purposes of these provisions is deemed to be done in compliance with their requirements. There is nothing limiting the deeming provision to errors arising out of the erroneous definition, and therefore calculation of relevant and total expenditure."
  We believed that the provisions of the Bill went much wider than that from the outset and the opinion we have received confirms that:
  "The present wording appears quite clearly to cover any procedural impropriety, failure to consider a matter rationally, or other unlawfulness in respect of anything done by the Secretary of State for those statutory purposes."
  During the discussions on 19 January the Secretary of State explained his view as follows:
  "It depends on the subject of the litigation. If it has to do with total expenditure or involves the definition of total expenditure, the Act will prevail over any decision of the court."—[Official Report, 19 January 1987; Vol. 108, c. 643.]
  He went on at some length to support that view.
  It is our view, and that view has been confirmed by counsel's opinion, that that statement is based on a misinterpretation of the clause as it stands. To be

  905
  consistent with the Secretary of State's statement a substantial amendment to the Bill would be required, relating the deeming provisions solely to calculation of total and relevant expenditure otherwise reasonably made under the previous understanding of those terms.
  A similar point arises in clause 6(2) which states:
  "Anything done by the Secretary of State before the passing of this Act for the purposes of Part I of the 1984 Act in relation to the financial year beginning in 1985 or that beginning in 1986 shall be deemed to have been done in compliance with the provisions of that Part."
  Our legal advisers state:
  "This is not restricted to issues arising from total and relevant expenditure, but once more covers other procedural impropriety, irrationality and illegality. By sub-clause (3) any designation of an authority is deemed to have been made in compliance with Part I, even if otherwise unlawfully made, including unlawfulness in no way connected with errors arising from the interpretation of total and relevant expenditure."
  I am setting this out in some length and I apologise but this is a complicated matter. We consider it is impossible to continue discussion on a reasonable, rational or coherent basis unless the Secretary of State's—[Interruption.] The Secretary of State laughs, but we are in this position today only because of the incompetence of the Secretary of State and his predecessors concerning such matters. Shortly we shall come back to discuss the continuing incompetence over which the Secretary of State is presiding.
  It is important to have a full explanation of the retrospective and respective provisions. We have taken this matter very seriously and I seek your help, Mr. Armstrong, concerning the future proceedings of the Committee. We consider that the Committee should not proceed to a final consideration and vote on clause 1 until it has had an opportunity to hear from the Attorney-General about these matters. With regard to discussions of clause 4 and clause 6 of the Bill, it would be appropriate for the Attorney to be in attendance throughout the Committee's considerations. [Interruption.] The Secretary of State is not bothering to listen to what we have to say.
  The Secretary of State for the Environment (Mr. Nicholas Ridley): On a point of order, Mr. Armstrong—
  The First Deputy Chairman of Ways and Means (Mr. Armstrong): Order. I cannot have a point of order on a point of order.
  Dr. Cunningham: I am grateful to you, Mr. Armstrong. Apart from a lack of normal relations between the Secretary of State and the Labour party, the Secretary of State is apparently unwilling to listen to serious arguments about the Bill.
  The Secretary of State's remarks in respect of the Greenwich case which is again due to come before the courts—
  The First Deputy Chairman: Order. The hon. Gentleman is aware that the Committee has already discussed the judicial review. We shall come to clause 4 and clause 6 in due course. The hon. Gentleman may raise those matters at that time, but up to now I have not been aware of any point of order for me.
  Dr. Cunningham: I said at the beginning that this is a complicated matter and I do not apologise for seeking to get it right. It is crucial to the whole discussion of the Bill.
  906
  My point of order is first to seek your guidance, Mr. Armstrong, and to safeguard the Committee's rights in this matter.
  Is it appropriate that we should proceed with consideration of those matters without clarification and is it not in the interests of the Committee that the Attorney should be present to give his view on them? The Secretary of State's remarks and his interpretations made during debate on a previous group of amendments is at issue. I seek your help and guidance.
  The First Deputy Chairman: The interpretations made by the Secretary of State are, of course, matters for debate. The presence of the Attorney or any other Government Minister is not a matter for the Chair. I have no jurisdiction over that.
  Mr. Allan Roberts: On a further point of order, Mr. Armstrong. It appears to us that the purpose of this unique and unprecedented Bill is to validate decisions of the Secretary of State that were deemed illegal by the Attorney-General. The Secretary of State's interpretation of the Bill, in trying to validate his previous illegal action, is wrong. If this legislation becomes an Act, the House of Commons, and indeed the Government, will end up with exactly the same position that we are now trying to correct. My point of order is that the Attorney-General is not just a Government Minister who advises the Government in his official and legal capacity. He also advises the House. It is in order to move, on a point of order, that the Attorney-General should come before a Committee. That has been done in other Committees—not in a meeting of the full House in Committee. It has been moved, on a point of order, that the Attorney-General be required to come to a Committee to give advice. That is what we are seeking today. If that does not happen and we proceed we may finish up in a very difficult situation. We are already trying to put a difficult situation right through this legislation.
  It seems to me that the Secretary of State continually makes illegal actions and mistakes. He cooks the books and asks—
  The First Deputy Chairman: Order. The hon. Gentleman ought to know that, however important the issue may be, the presence of the Attorney-General is not a matter for me. The hon. Gentleman can request, and he has made his request, but he cannot move that the Attorney-General be present. Quite frankly, he has not raised a point of order with me.
  4.30 pm
  Mr. Ridley: Further to that point of order, Mr. Armstrong. I hope that you will be able to protect the Committee from dubious and spurious arguments, based on unnamed legal advice on a point to be raised on a later clause, being trumped up as a spurious and bogus point of order by the hon. Gentleman. We have a lot of work to do and I should like to make progress with the real business of the Committee. The hon. Member for Copeland (Dr. Cunningham) has been wasting the time of the Committee raising matters of substance under a point of order. I hope that you will be able to protect the Committee so that orderly progress can be made.
  Mr. Allan Williams rose—
  The First Deputy Chairman: Order. I listen to all hon. Members who wish to raise a point of order. I am bound

  907
  to say that no point has been raised that is a matter for me. The matters raised are for debate and will come up at the appropriate time.
  Dr. Cunningham: Further to the Secretary of State's point of order, Mr. Armstrong, which he thinks is a genuine point of order. As he has challenged apparently the bona fides of what I was saying, may I point out that the opinion was provided by Mr. Roger Henderson QC?
  The First Deputy Chairman: The hon. Gentleman has raised the matter and I accept that. Even so, it is a matter for debate and not a matter for the Chair.
  Mr. Williams: Further to the point of order, Mr. Armstrong. The important point for hon. Members is that during the debate we have to determine whether we will give the Secretary of State a certain range of powers. In determining whether to give him those powers, the judgment of the Committee will be influenced by whether those powers are being given purely in relation to the future or whether they are also being given retrospectively. We cannot continue with a meaningful debate on the range of powers until we have had legal clarification as to precisely what it is that we are giving the Secretary of State. It is from that point of view that my hon. Friend has said that we need clarification from the Attorney-General as to precisely which range of powers is covered by the retrospective clearance.
  Mr. Andrew F. Bennett rose—
  The First Deputy Chairman: Order. Let me reply to the point of order. The right hon. Gentleman has raised a matter which is a matter for debate. If the right hon. Gentleman or any other hon. Member is not satisfied with the explanation from the Front Bench, he has the opportunity to debate and to vote against it, but it is not a matter for me.
  Mr. Bennett: Further to that point of order, Mr. Armstrong. I appreciate the point that you have just made, but may I put it to you that your duty in the Chair is to try to ensure the orderly consideration of the Bill. As an Opposition, the only way in which we can press the Government for information is by the threat to delay proceedings. I am sure you are aware that regularly in Committee the Opposition have to mount delaying tactics so as to press the Government to make a statement. If we want to make good progress, it would be helpful if the Government would tell us that, when we get to the two clauses where the extraordinary powers for judges are to be debated, they will arrange for the Attorney-General to make a statement. If we are told at this stage that the Attorney-General will be here to make a statement and will confirm either that the legal advice that we have received is correct or that the interpretation of the Secretary of State is correct, it would be possible for us to make fairly rapid progress. But if the Government are not prepared to give that undertaking, the traditional response for the Opposition is to delay and to do everything they can to press the Government to produce a statement.
  I should have thought that you, Mr. Armstrong, were in a position at least to give the Government the opportunity to facilitate progress by finding out whether they wish to say that the Attorney-General will be here to
  908
  make a statement on the legal implications of the points raised by my hon. Friend the Member for Copeland (Dr. Cunningham) a few moments ago.
  The First Deputy Chairman: I am sure that no hon. Member needs permission from me to make his position clear. It is a matter for the Government whether a statement is made. Fortunately, it is not my job, but anyway I do not need to advise the hon. Gentleman about delaying tactics.
  Mr. John Heddle: On a point of order, Mr. Armstrong. Is it not right that the Government seek your protection in this regard, and that now is the opportunity for my right hon. Friend the Secretary of State to put right something that the Opposition have ignored for the last four or five years and to bring the rate support grant that is due shortly into line with the law? Further to that, is it not right that if the hon. Gentleman is demanding the presence in the Committee of my right hon. and learned Friend the Attorney-General at least he should have the shadow Attorney-General with him on the Front Bench?
  The First Deputy Chairman: As the hon. Gentleman knows, these are not matters for me. We ought to proceed.
  Mr. Tony Banks: On a point of order, Mr. Armstrong. Can you advise me whether there is a parliamentary precedent whereby a Standing Committee has moved a motion, debated it and voted to request a Government Minister to attend the Committee to give advice? I should like to know whether there is any precedent which would enable us to move a motion, to vote on it and, if we succeeded in getting sufficient votes, to request a Minister or an Officer of the House to come and advise us.
  The First Deputy Chairman: All Members of the House are members of the Committee and are entitled to come. Fortunately or unfortunately, I cannot command either their presence or their absence. The matters which have been raised are very important but they are matters for debate and not matters for the Chair. I think we should proceed.

  Local Government Finance Bill
    Clause 1

      RATE FUND REVENUE ACCOUNTS
      Dr. Cunningham: I beg to move amendment No. 19, in page 2, line 26, at end insert—
      '(6A) The Secretary of State shall lay before Parliament an annual report on any specification made in respect of subsection (6) above.'.
      The First Deputy Chairman: With this it will be convenient to take the following amendments: No. 20, in page 2, line 26, at end insert—
      '(6A) Specifications made under subsection (6) above must be contained in an Order under this Act which shall be subject to annulment in pursuance of a resolution of either House of Parliament.'.
      No. 21, in page 2, line 26, at end insert—
      '(6A) Specifications made under subsection (6) above must be contained in an Order under this Act and no Order under this subsection may be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament.'.
      No. 48, in clause 2, page 3, line 14, at end insert
      `provided only that any such specification shall require an affirmative resolution of both Houses of Parliament.'.

      909
      No. 51, in page 3, line 14, at end insert
      `Specifications made under this subsection must be contained in an Order under this Act, and no Order under this subsection may be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament.'.
      No. 52, in page 3, line 14, at end insert
      `Specifications made under this subsection must be contained in an Order under this Act which shall be subject to annulment in pursuance of a resolution of either House of Parliament.'.
      No. 71, in clause 3, page 4, line 14, at end insert—
      '(7A) Specifications made under subsection (7) above must be contained in an Order under this Act which shall be subject to annulment in pursuance of a resolution of either House of Parliament.'.
      No. 72, in page 4, line 14, at end insert:
      `(7A) Specifications made under subsection (7) above must be contained in an Order under this Act and no Order under this subsection may be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament.'.
      No. 154, in clause 9, page 7, line 44, at end add—
      '(7) The power may only be exercised provided that there shall have been an affirmative resolution of both Houses.'.
      Dr. Cunningham: There remains, as we have just been demonstrating, considerable concern about the power of the Secretary of State in respect of the Bill. One concern is about the power of the Secretary of State to make specifications regarding local authority accounting practices for the purposes of clause 1. Amendment No. 19 makes the minimal requirement that, once specifications have been made in a given year, the Secretary of State should lay an annual report before Parliament setting out the details. That is not only a reasonable but a sensible requirement. It would give Parliament the opportunity to consider and review what had happened.
      It would also provide a means for Parliament at least to be informed of the implementation of subsection (6) in practice. It would also provide an opportunity for local government accountants to examine the Government's intentions in the exercise of proper professionalism, which we presume this is all about. The accountants would no doubt want to ensure the Government's interventions were met with the most appropriate and uniform response in accordance with accountancy practice. As the Government talk about good and proper practices, presumably they intend also to try to seek uniformity. It is, I understand, at least in part the Government's case that lack of uniformity is one thing that they want to bring to an end.
      Amendments Nos. 20 and 21 call for any specification made under subsection (6) in respect of local authority accounting to be made the subject of an order. Amendment No. 20 provides for a negative order and amendment No. 21 for an affirmative order subject to approval by both Houses. The alternative proposals spring in part from the difficulty of trying to find out the Government's intention and, therefore, the likely importance of any specifications to be made. The Government's attitude is obscure, to say the least. Some of the specifications are likely to be of considerable significance to local authority accounting practice and to the financial circumstances of the authorities concerned.
      Other specifications may be trivial, but at least in the case of more important ones it is important to have some safeguards to allow for parliamentary scrutiny. If no such scrutiny is provided for, it seems clear that the Secretary of State could make changes which have a substantial
      910
      impact on an authority in the forthcoming financial year without there being any recourse to Parliament. That seems unfair and a significant departure from previous practice.
      The power to specify extends to naming additional accounts against which expenditure or income is to be disregarded for purposes of calculating block grant, and possibly even wider purposes. From the point of view of authorities that are under financial pressure, the power in respect of income definitions in particular could have major implications. If our guesswork is right, it is incumbent on the Minister for Local Government to be candid with the House and say what the implications are.
      Other amendments, which we would have liked to have been selected, deal with related matters. Amendments Nos. 50 and 51 would require the affirmative and the negative resolution procedure respectively for orders. Amendment No. 50 would preserve the opportunity of Ministers to make specifications, but require a local authority to have regard to any specification only when determining what to count against its rate fund revenue account.
      Amendments Nos. 71 and 72 would limit the power of the Secretary of State to specify adjustments upwards or downwards to calculations of authorities' total expenditure in any year from 1987–88. The power is a further example of the way in which the Bill goes beyond the simple technical requirement to clarify the law. Amendments Nos. 71 and 72 would require the making of a negative and affirmative order respectively before any such specification could be effective. They seek the kind of safeguards that I spoke of a little while ago.
      I have been brief because, in spite of what the Secretary of State said earlier, it is not any part of our purpose to talk just for the sake of it or unnecessarily to delay the Bill. I hope that I have said enough to allow the Minister to take more time to reply in detail to our fears.
      4.45 pm
      Mr. Michael Meadowcroft: I wish to speak to amendments Nos. 48 and 154. I agree with the hon. Member for Copeland (Dr. Cunningham). I am not anxious to delay the Committee unduly.
      Mr. Tony Banks: Drag it out.
      Mr. Meadowcroft: The hon. Member can speak for himself.
      Much of what we are discussing goes beyond simply rectifying the law. The Government are trying to take powers to determine what should go in what accounts. If the Government want to force through more centralising powers over local government, those powers must lie as far as possible with Parliament rather than with the Government or, still worse, the Secretary of State.
      The alliance amendments are like those proposed by the hon. Member for Copeland. We say in amendment No. 48 that the items that the Government believe should be put in or deleted from a local authority rate fund revenue account should be considered by the House on the affirmative resolution procedure. We have proposed the same, with miscellaneous specifications, under clause 9.
      The House should retain those powers because of the distinction that we would make between accounting techniques or systems employed by local authorities that are legitimate or illegitimate. It is perfectly legitimate for

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      a local authority to do things which it believes are genuinely acceptable in terms of its fiduciary powers and which are what the Government of the day wish to do, and not to rely on a change of Government retrospectively to put money into its funds again.
      A local authority which says that, bearing in mind its understanding of existing Government policy towards local government, it should be able to sort out its accounts to the best advantage of people in its area and pursue what it understands to be Government policy, is acting legitimately. If, however, it decides to do various things with its account in the hope that, before it goes bankrupt, a new Government will be returned and retrospectively put money back into the account, it is acting illegitimately.
      It is important that Parliament should retain its powers of scrutiny and not allow a Government to overrule one course of action and allow the other. If we are to have such centralising powers, Parliament must have powers of scrutiny. I do not want to scrutinise such matters, but that is better than leaving it to the Government.
      Mr. Peter Pike: I hope that amendments Nos. 20 and 21 are carried. In this group of amendments, we have given the Government a choice between them and a more moderate line. Amendment No. 19 is a much more modest version, and the Government should be prepared to accept it if they are at all reasonable.
      I am anxious that we are increasingly taking powers from local government and limiting the powers of Members of Parliament to be aware of what the Secretary of State decides. The present Secretary of State is fond of introducing legislation which gives him powers. He did that with the Transport Act 1985. Here, in clause 1(6)(b), the right hon. Gentleman is empowering himself to change what is not concluded in schedule 1.
      One can assume that, if the accounts already exist and the Government wish to specify them at some future date, they will be included in schedule 1. We have the right to debate schedule 1 and to decide whether we agree with what is included in it. Clause 1(6)(b) gives the Secretary of State power at any future date to add without reference to the House items of which he may now be aware. If he wishes he could name them at this stage.
      I recognise that, because of the haste with which the Bill has had to be prepared and the wide diversity of local government, the Secretary of State may not be aware of everything that should be taken into account. Of course, circumstances change. A future Secretary of State, whether Conservative or Labour, may consider that certain matters should be included in the provision and may want to add to the list of items already included in schedule 1. Our principal point of difference concerns the way in which that is to be done, if we accept that it might be necessary.
      My hon. Friends and I believe that it is totally wrong that the Secretary of State, without any reference to the House, may change a specified account and thereby change the way in which local authorities can administer their services and meet the needs of their communities. Government Members must remember that it may not be long before my hon. Friend the Member for Copeland (Dr. Cunningham) is the Secretary of State. If the Bill as it stands is passed, he may wish to take some action without reference to the House.
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      The amendments have been tabled in a reasonable manner. It is right that we should include those provisions. If amendments Nos. 20 and 21 are not agreed, amendment No. 19 is the absolute minimum that the Government should be prepared to accept. If Conservative Back Benchers respect their positions as hon. Members, if they believe that there is any point in being Members of Parliament and do not wish power to be continually eroded and given to Secretaries of State who will not have to answer for their decisions—this clause will give increased power to a Secretary of State—they should join Labour Members in the Division Lobby and vote for one or other of the amendments.
      Mr. Peter Hardy: I shall make basically the same point as was made by the hon. Member for Leeds, West (Mr. Meadowcroft) who considered that Parliament should be concerned about legitimacy. My hon. Friend the Member for Burnley (Mr. Pike) properly spoke about the need for Parliament to have an adequate opportunity to press important matters. This week, I received a letter from the Under-Secretary of State for Employment—the hon. Member for Rossendale and Darwen (Mr. Trippier)—which led me to make my brief contribution in support of amendments Nos. 19 to 21. Parliament must have an opportunity to challenge not only illegitimate but unreasonable Government actions. One of my constituents, who is developing a small business, wrote to me about problems that he encounters. He made a passing reference to rates. The Minister's reply, in part, states:
      "The whole issue of business rates is of major concern to the Government and it is a matter which has to be tackled at the roots by encouraging value for money and discouraging excessive spending by individual authorities. The Government have already introduced a number of measures to ease the rates burden on business."
      The Under-Secretary's letter contains not one word about the fact that businesses must bear a £6 billion burden because of the Government's action in reducing central support and forcing local authorities to increase rates. Parliament will be put in a bad position if it is denied an opportunity to challenge the irresponsible and unreasonable comments by Ministers who write letters such as this to my constituents and disregard the truth, the reality and the record. The Minister must understand that the House of Commons needs an opportunity to challenge illegitimate and unreasonable Government actions.
      I am not a lawyer and I do not have the expertise to determine which Government actions are illegitimate. But, as an ordinary citizen and an experienced Member of Parliament, I can say with absolute confidence that the Government's actions are entirely unreasonable and that Parliament will greatly be at fault if it does not take sufficient power to challenge irresponsible and unreasonable attitudes.
      Mr. Tony Banks: During the speech of the hon. Member for Leeds, West (Mr. Meadowcroft) I intervened to the effect that I certainly wished to drag out the debate on the Bill for as long as I possibly could. I part company, perhaps, with my hon. Friends on the Front Bench in that respect. By nature, I am far more of a kamikaze Member of the House. I shall be quite clear about this matter. As long as I stay within order, if I can inflict some damage on the Government, if only by the boring nature of my speeches—if that is the only recourse that I have—that is what I shall do. Therefore, I make no apologies.

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      Provided I always stay within order—I know that you, Mr. Armstrong, will guide me in this respect—I may delay the Committee to exact some form of retribution on the Government. Two hon. Members, who are not here at the moment but are standing by, fully armed and ready to rush in at a moment's notice—my hon. Friends the Members for Newham, North-East (Mr. Leighton) and for Newham, South (Mr. Spearing)—and I are so outraged at what the Government are doing to our borough that we shall do anything we can to deny the Government this legislation and to deny Conservative Members their sleep or dinners, always, of course, staying within order.
      It has been said that amendment No. 19 is the minimum requirement. All that we ask of the Secretary of State is that he brings a report to Parliament giving details of what changes have been made in local authority accounting practices for the purposes of clause 1. That is a perfectly reasonable demand. Amendments Nos. 20 and 21 go slightly further, but in the same direction. They call for any specification made under section 1(6) in respect of local authority accounting to be made the subject of an order. Amendment No. 20 will provide for a negative order and amendment No. 21 will provide for one subject to the affirmative procedure, requiring approval by both Houses. With two forms of order, one can choose that which is most suited to the provision being introduced by the Government. That merely underlines how reasonable and flexible we are, and we invite the Government to join us.
      Ministers cannot have it both ways. If Ministers insist on interfering in the day-to-day affairs of town halls and county halls, and insist on dragging unwilling Members of Parliament into the affairs of local authorities, making this the place in which decisions that previously were taken by democratically elected local councillors are now taken, we should have the right to interrogate them and to ask for reports from them in much the way that local councils do in respect of their leaders, chairs of committee and chief officers. If we are to turn this place into a mega town hall, we might as well import many of the practices followed in town halls and county halls. I do not welcome that development. It is deplorable that a local authority's decision-making responsibilities are constantly reduced by a Government who have repeatedly said since 1979 that they intend to take Whitehall off the backs of town halls.
      5 pm
      The effect of all the local government Bills since 1979 has been contrary to the Prime Minister's stated intention in 1979. Parliament is interfering in and deciding matters that used to be the day-to-day concern of democratically elected local councillors. That is to the disadvantage of local authorities and Parliament. Hon. Members are not really interested in getting so close to the detailed financial provisions of local authorities. In this part of the Bill we can see just how detailed we are becoming in our consideration of local authority matters. I can prove the point that Parliament—meaning its Members—is not happy about these activities by once again pointing at the deserted Conservative Benches. Conservative Members are simply not interested. We realise that these proposals are neither of interest nor of close concern to Conservative Members.
      In these amendments we are saying that, if the Secretary of State insists that Parliament should take over many of the responsibilities now exercised by local government,
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      Parliament must have the right to examine all the Government's proposals in detail. I have pointed out more than once—I suspect that, if I am fortunate enough to catch your eye, Mr Armstrong, during the many hours that we shall no doubt consider the Bill, I shall do it again—that, if we are to interfere in the affairs of local authorities, we must have the power to ensure that we exercise those functions in the best possible and most efficient manner.
      These amendments are reasonable. I am surprised that the Government are resisting them so strongly. I shall wait to hear the Minister and perhaps, if I can catch your eye, Mr. Armstrong, I may even speak again on this clause.
      Mr. Stuart Holland: I support amendments Nos. 19, 20 and 21. The Committee will be aware that the vagaries of local government finance have been well known for many years to Secretaries of State of more than one party. Indeed, the black box of the rate support. grant system is such that I understand that at least one former Secretary of State held his head in his hands waiting for the result of the programme which showed the various weightings, allocations, cross-references of individual items, and so on.
      This is a very complex business. It is hardly surprising that many people in our constituencies do not understand the vagaries of the rate support grant system or why they are being shot in the hip on the housing investment programme, and cannot follow all the arguments in detail. If there is anyone who should be following all the arguments in detail, it is the Secretary of State responsible for those matters. It is incumbent on him to make apparent and transparent to the House of Commons precisely what kind of expenditure and what kind of criteria are involved.
      A major parliamentary principle is involved in these issues, and it concerns retrospective legislation. In the past, hon. Members have taken extra-parliamentary action to oppose the principle of retrospective legislation. It is crucial that the Secretary of State should be accountable in the manner recommended by amendment No. 19, which states:
      "The Secretary of State shall lay before Parliament an annual report on any specification made in respect of subsection (6) above."
      Why is the Secretary of State not prepared to make an annual report? Is it the simple fact that he has got it wrong so often that he does not have the self-confidence to work out the figures accurately, even once a year, and present and defend them in the House of Commons? What are the rights of the House in relation to the scrutiny of public expenditure if it cannot get a statement from the Secretary of State concerned? This legislation combines with the measures that the Government have taken in depriving some 11 million people of the vote in the metropolitan authorities and in abolishing the metropolitan authorities. It takes further powers from the House, just as the Government have abolished the powers of elected government in metropolitan counties and the right of people through their elected representatives to see what is happening.
      Mr. Tony Banks: I should like to correct my hon. Friend in one respect. The number of people who lost the vote through the abolition of the GLC and the metropolitan county councils was not 11 million but 18 million. I am sure that my hon. Friend would want to be corrected.
      Mr. Holland: I am grateful to my hon. Friend for reminding me of that figure.
      As for accounting procedures, the Government have maintained repeatedly from the Front Bench, with vociferous support from their Back Benches—fuller than they are today—that they wish commercial practices to be introduced into local authority finance; that they wish to see entrepreneurship flourish and would like to see the same in local authorities. The Government have claimed—one Conservative Back Bencher did so during Monday's debate—that local authorities are in some sense bureaucratic and hamstrung and cannot respond with initiative to problems as they arise. As it happens, last week several of the London boroughs responded to the very cold weather that we were facing in London. In Lambeth, meals on wheels were increased to more than 15,000 a day, emergency heating repairs were carried out—250 in one day—and provision was made for assisting the elderly who were faced with a crisis.
      How will a local authority—whether Lambeth or Camden or one in Liverpool or any other part of the country—be able to be confident that it can fulfil its obligations to those in need during such a period under the emergency powers which at present in principle obtain to it if the Secretary of State rules retrospectively that these powers are out of order? What will the liability be, for example, in relation to surcharging? It is bad enough that councillors have to face the prospect of surcharging when Ministers certainly do not. For example, the Chancellor of the Exchequer has got his sums wrong by several thousand million pounds a year in every medium-term financial forecast. Perhaps it would be a good idea if he were personally liable for that surcharging.
      It is intolerable that not only should elected councillors face the risk of surcharging for defending the interests of those who elected them, or even for fulfilling their statutory obligations, but that it should be open to the Secretary of State to revise the basis of what is or is not legitimate expenditure, and to do so without bringing the matter before the House of Commons.
      The Government laud certain kinds of commercial practice. There has recently been a spate of takeover bids in the City of London. Many of the companies involved, such as BTR, are classic conglomerates. Their aim is to enlarge their sphere of profit rather than the sphere of public service. But they take over the headquarters of a building and then sell it off or lease it out or lease it back in much the same manner as has been done with certain town halls where local authorities are seeking to be able to match appropriate income to appropriate expenditure.
      That is highly relevant to the matters that are before us, in as much as the circumstances of individual local authorities differ so much. We know very well that very few inner-city constituencies are represented by Conservative Members, very few Conservative Members do more than, for example, live in an inner-city constituency within easy reach of this House. Many of them pride themselves on the fact that they live in the borough of Lambeth, thinking that they somehow have expertise in the problems of that borough.
      Mr. Heddle: Where does the hon. Gentleman live?
      Mr. Holland: Let me identify the sort of problems that are relevant to the amendments.
      Mr. Tony Banks: I do not know whether my hon. Friend heard the comment that has just been made by the hon. Member for Mid-Staffordshire (Mr. Heddle). I suggest that my hon. Friend asks that hon. Gentleman, who just wanders in and out as if this was a buffet meal rather than the House of Commons, to repeat the remark that he made. The hon. Member for Mid-Staffordshire asked my hon. friend what bourgeois suburb of London he lives in. Perhaps my hon. Friend would like to tell him.
      Mr. Holland: Perhaps the hon. Member for Mid-Staffordshire (Mr. Heddle) would care to get to his feet on that matter. I do not happen to live in a bourgeois suburb. I live in my constituency. I do not know where the hon. Gentleman lives.
      The reality is that many Conservative Members have walked into the debate as did the hon. Member for Eastbourne (Mr. Gow) on Monday, who got to this feet and started to talk about the Soviet borough of Lambeth, saying, apparently supporting his knowledge of the matter, that he lives there. It is not enough simply to live in a constituency to understand what its problems are.
      In the London borough of Lambeth, for example, over half of the council housing is pre-1919. Now what does that mean in terms of the renewal expenditure undertaken by the council? It means not only that the expenditure per flat for modernisation is higher than other expenditure figures but quite simply that there comes a critical time in the life of housing stock when one cannot remedy a problem by replacing slates on the roof, or clearing the drains; one actually needs new roofs, new heating systems and new drains.
      Therefore, there are indivisibilities in the expenditure that individual councils face. If they are to be able to fulfil their obligations to maintain a decent stock of housing, they will incur more expenditure when housing in that stock has come to the end of its natural life than those councils in other boroughs which have hardly any multistorey tenancies and where there is detached council housing. In that respect, it is really quite wrong for Ministers to set down general guidelines without reference to the special needs that are accounted for and represented by that particular character of housing stock.
      The argument that, in principle, rate support grant takes account of that is simply not supported by the overall figures that come out of the black box in the Department. I see that an official is quite desperate to get a message to the Minister. Perhaps the Minister is interested in replying on that, or perhaps he is not. It would be very interesting if he was to get his briefing on it, since clearly he does not know how to reply on the matter himself.
      The reality is that, for example, in the London borough of Lambeth, with very special housing needs because of the age of the housing stock, the actual cuts that have occurred in the rate support grant system since 1979 have been well in excess of a single year's total annual revenue, including rate support grant systems.
      5.15 pm
      I put it to the Minister: what private company—if one wants to apply commercial criteria to the funding of local authorities—could possibly survive if it were to be deprived over five, six or seven years of resources and investment resources equivalent to a year's total income? No such company would be able to do that. Many companies in recent years have been offsetting the relative

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      squeeze on their profits by resorting to techniques such as creative accounting. They are able to get away with creative accounting without being challenged by Ministers, so why are councils challenged on their use of accounting to meet the expenditure needs which they must incur to fulfil their obligations?
      By steamrollering the procedures of the House and by not being prepared to come forward with either an annual statement or a statutory instrument, affirmative or negative, the Government will be depriving the House of the right to debate these issues. However, there are also the social services obligations on local government. I will certainly admit that one thing is wrong in the borough of Lambeth—overcrowding. There is overcrowding in the borough and I not only admit but advertise to the House that the London borough of Lambeth is in breach of statutory obligations. It has a statutory obligation to ensure that teenage children of both sexes do not share the same bedroom. But it does not have the alternaive housing into which to put the children concerned.
      The Government have compounded the problems with which we are faced by the abolition of the strategic housing role of the GLC. When I became the Member for my constituency we used to move between 1,500 and 2,000 families a year out of Lambeth. The door was slammed on that by what people now regard, quite rightly, as the farce of inter-borough nominations. The Government's population projections were for a falling inner-city population, but since the abolition of the GLC, which permitted that falling inner-city population, the demand for housing has been rising. Over the past few years, between 6,000 and 8,000 additional persons have been put on our books in Lambeth who otherwise would have been able to gain alternative housing outside the London borough of Lambeth and who therefore would not have been a claim on its charges.
      In relation to the rate support grant system, how are we going to be able to raise such issues, of what is or is not a due expenditure by a local authority, if the Minister is not going to enable us, as provided in amendments Nos. 19, 20 and 21, to lay before Parliament an annual report or to ensure that the expenditure rules by which local authorities may spend their money are brought before this House?
      Mr. Heddle: We have already heard that the hon. Gentleman lives in his constituency and has an intimate knowledge of his constituency. No doubt an examination of "Who's Who" and "Dod's Parliamentary Companion" will show whether he gives his address as the House of Commons, or as an address in his constituency, or the address where he resides at the weekend.
      Because of the comprehensive knowledge that the hon. Gentleman has of his constituency, perhaps he would now tell the Committee how many houses in his constituency—he mentioned overcrowding in his constituency—have been vacant for three months in the London borough of Lambeth and how many have been vacant for six, nine or 12 months. Will the hon. Gentleman now admit to the Committee that over 1,378 houses in his constituency have been vacant for more than 12 months?
      The First Deputy Chairman: Order. I have allowed the intervention because the hon. Gentleman was talking about overcrowding and so on, but we are getting away from the amendments, which concern parliamentary control.
      Mr. Holland: I think I am grateful to you, Mr. Armstrong, for allowing an intervention and then deeming that it may be out of order.
      Mr. Tony Banks: I do not want to spoil my hon. Friend's flow, but would he be interested to know that the intervention that he has just had to suffer was based not upon the intimate knowledge of Lambeth of the hon. Member for Mid-Staffordshire (Mr. Heddle), but on information from civil servants, via the Front Bench, via the gofer to the hon. Member for Mid-Staffordshire?
      The First Deputy Chairman: The hon. Gentleman knows that that is not at all relevant to anything that we are discussing.
      Mr. Holland: What surprises me about the intervention of the hon. Member for Mid-Staffordshire (Mr. Heddle) is that for some reason he actually suggested that I do not live in my constituency. He then claimed that the proof of whether I live in my constituency is not whether I am actually there, whether I pay any rates, or whether any of my constituents know that I am there, but whether it is published in "Dod's Parliamentary Companion" or in "Who's Who", the very mirror of "Spitting Image", the one entry which hon. Members—some of them admiring their own images so much—write for themselves. I am sure that the hon. Gentleman has pinned his "Who's Who" entry to his shaving mirror. I can tell the hon. Gentleman that I do live there. I am proud to live there and I enjoy living there. I do not know whether it is listed in "Dod's Parliamentary Companion" and I do not give a damn, because I do not spend all my time reading my own entries in "Who's Who" or Dod's.
      The hon. Gentleman's second point was relevant and I am grateful to him for raising it. The reality is that Lambeth's record on lettings for an inner-city borough with a housing stock of the character I have described is no worse than any other pressured inner-city borough. We know what the Tory party is up to. We know that there is a target list of boroughs. We know the sort of sophisticated, scalpel-like and incisive parliamentary language Conservative Members use such as, "loony Labour borough lock-outs." If they can rise above that gutter language and address the issues, they will address the points that I have made.
      When over half of one's public housing stock dates from the first world war, it is extremely difficult to pursue the necessary modernisation programmes. There is a great deal of housing stock in Lambeth that has not been re-let because the resources have been taken away by the cuts in the housing investment programme, so that the houses cannot be brought up to a decent standard. That is item one. The second item relates precisely to the point I made on the abolition of the strategic housing role of the GLC. If one takes away mobility and cannot take the pressure off inner-city boroughs, one does not have the mobility necessary to reallocate the appropriate housing. For example—
      The First Deputy Chairman: Order. Before the hon. Gentleman gives his example, I must say that I am trying hard to relate what he is saying to the amendments before the Committee. He must direct his remarks to the amendments.
      Mr. Holland: It would be useful to have an assurance from the Minister that what I am saying will not be

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      relevant to the part of the Bill we are discussing and that it will be possible for any hon. Member to raise those issues on the Floor of the House regardless of what the Government deem to be an appropriate specification.
      Mr. Straw: Does my hon. Friend agree that clauses 1(6)(b), 2(4), 3(7), 3(8) and 9 give wide powers of specification in relation to the accounts of local authorities? For example, under clauses 3(7) and 3(8) the Secretary of State has powers to specify additions or subtractions from relevant expenditure. As the Bill is currently drafted, that can be done without parliamentary scrutiny. If such subtractions or additions are made, it might seriously affect the ability of a borough such as Lambeth to raise funds and to spend them.
      Mr. Holland: I agree with my hon. Friend. One could look at areas with desperate social needs such as homelessness. The propaganda from the Conservative Benches about the number of inner-city boroughs that are providing bed-and-breakfast accommodation to their constituents directly relates to whether it is possible to provide decent alternative housing for them in the inner-city area. As my hon. Friend the Member for Blackburn (Mr. Straw) said, what happens if the Minister were to deem that it was inappropriate for any borough to spend more than X per cent. on bed-and-breakfast accommodation for more than a given period, without it being possible for us to debate such matters in the House? In Lambeth, homelessness and bed-and-breakfast accommodation went up by over 130 per cent. in 1986 at a time when Lambeth is not open to seek re-determination and when it cannot argue its specific needs to Ministers unless amendments Nos. 19, 20 and 21 can be accepted.
      The European Community has precious few clear criteria in any area, but at least, on the use of public funds, articles 85 and 86 stress the importance of transparency. We are not getting from the Bill any transparency in the use of public funds or what may be deemed an authorised expenditure. We had a shambles of a performance from the Minister on Monday. Even when he was in the Committee it was difficult to extract appropriate answers from him. We certainly will not be in a position to extract such answers if we do not have the formula recommended in amendment No. 19 for an annual report to the House or if we cannot get the matters debated in the House through the use of statutory instruments.
      I am sure that it will be enlightening for you, Mr. Armstrong, if I talk about the propaganda from the Conservative party in terms of the rates burden breaking the back of businesses. A written answer that I extracted from the Chancellor of the Exchequer shows that rates in this country are less than 1 per cent. of the total cost of industrial enterprise. Of course there is a rates burden. My hon. Friend the Member for Wentworth (Mr. Hardy) was right to say that rates revenue has had to rise to enable councils to offset the cuts in rate support grant and central expenditure. However, to argue that rates alone are penalising the inner city defies imagination when there is a decline in employment and therefore in the taxable base of pay-as-you-earn in the inner cities. More than a third of my constituents living in council housing are drawing supplementary benefit. Those people would be glad to
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      work were it not for the fact that the centre of London has been de-industrialised, compounding the problems facing inner cities.
      Mr. Tony Banks: Since my hon. Friend is talking specifically about financial and accountng practices of local authorities, will he say that it is probably true that local authorities have had to get themselves more involved in the special accounting methods so that in certain cases they can do something about rates of interest? Those interest rates are caused directly by Government policy. Surely, in terms of business, the consideration that weighs most heavily is not the rates but the rates of interest. That is entirely within the power to the Government to determine.
      Mr. Holland: I am glad that my hon. Friend has raised that point. A definitive study about to be published by Croom Helm on the life and birth of small firms does not stress rates as a problem, but the imposition of interest rates and the high cost of bank lending. Private banks are making a claim on the assets of the enterprise and if a small private firm is in difficulties it could find itself in the hands of the liquidator. More small firms fail than succeed as a result of those policies. That is where the Government have got it wrong, and that is why it is vital that we should have a proper framework for debate of these issues on the Floor of the House.
      I hope that the Government will reconsider. I hope that some Conservative Members will be prepared to think again before they make sweeping and uninformed criticisms of local councils such as my own. We can assure them, as they continue to do so, that they write off their support in inner-city areas. What is important is that they should not write off the inner city areas themselves. They cannot close the door on inner cities in such a way. By their high-handed and arrogant action of removing from the House a scrutiny of expenditure they are not only ignoring the problems and the right of elected representatives to address them, but are slamming the door on the inner cities.
      There has been a strange change. Earlier today, I was in Birmingham town hall looking at a portrait of Joseph Chamberlain. He would have spun in his grave to see what the Conservative party is doing by undermining the right of local authorities to determine their own expenditure. It is one of the key rights in democratic procedure that those who are taxed have the right to representation. It should also be the case that those who have the right to representation should be able to determine their own level of local taxation. It is certainly the case that they should not be subject to retrospective legislation without any apparent principle. If there is any principle, the Minister should tell us what it is.
      The Government get it wrong time and again. They never get it right. It is time they recognised as much and, with a little humility, offered themselves to further scrutiny by the House in the manner proposed by the amendments.
      5.30 pm
      Mr. David Clelland: The most worrying aspect of this part of the Bill is that it implies that further dictatorial powers will be conferred on the Secretary of State. Clause 1(6)(b) refers to
      "any other account specified in respect of the year concerned by the Secretary of State."
      Such statements can be found throughout the Bill, and, indeed, this Government's history is riddled with such

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      statements, giving more powers over local authorities to the Secretary of State for the Environment. The paragraph does not state what account the Secretary of State will specify and when he will do so. Will it be at the beginning of the financial year or halfway through it? Perhaps the Secretary of State will specify something that should be designated as a special account, and local authorities will have to look at their accounts in retrospect rather than for the following year. There is nothing in the Bill to say how the clause will operate in that respect.
      The Bill has continued the Government's tradition of centralising powers and weakening local democracy, under which local people can develop their own services and priorities in the way that they think fit. That tendency is dangerous, and threatens the very basis of our democracy, local government. The system of local government was not imposed on the people by Parliament. It was not invented by Parliament. It developed through history out of necessity, although its structure has been altered from time to time by Parliament. The Bill is only the latest example of how Parliament interferes with local democracy. At no time in history has local government been interfered with more than during the term of office of this Government.
      It is not often appreciated that local government is older than Parliament itself. Forms of local government can be traced back to the Anglo-Saxons. If one traces the history of local government, one sees that, in Anglo-Saxon times, a "tunscipe" was developed. That was a small community that governed its own affairs. Around that time the "burghs" also developed. Those have become familiar terms today, although the English language is now different. The "tunscipe" has become the "township", the "burgh" has become the "borough" and the robber baron has become the Secretary of State for the Environment. The desire of and need for local communities to develop their own services in their own way and meet local priorities can be traced back long before the history of the House. Thus it should be looked upon with a little more respect than that which the Government accord it. Different conditions in different parts of the country have emerged, so different priorities are perceived by local communities.
      We saw how those differences have developed during yesterday's debate on the north-south divide. My constituency of Tyne Bridge has an unemployment rate of about 28 per cent., and the needs and priorities of such a community will be different from those in constituencies represented by Conservative Members.
      Local communities must have a right to develop in their own way, but the clause assumes that the Secretary of State knows better than the local councillors who live among the people in the communities, who make demands of the councillors. The Secretary of State knows better than the local treasurers and finance officers, as well as the Chartered Institute of Public Finance and Accountancy, the local government treasurers' organisation. The Secretary of State and his civil servants are apparently the only people who understand the system. Opposition Members would certainly contest that. It has been evident from the statements made by the Secretary of State himself and his Ministers when discussing the Bill that the right hon. Gentleman and his Ministers, and, indeed, some of their civil servants, do not understand local government
      922
      finance. Had they understood it, they would not have got into the trouble that they are in today, having to put the law right in retrospect.
      The amendments at least give the House of Commons, this elected body, some power to see what the Secretary of State intends to do. They make him accountable to a democratically elected body rather than give him further dictatorial powers.
      The Minister for Local Government (Dr. Rhodes Boyson): We have had a fairly wide-ranging debate on the amendments. I am sorry that the hon. Member for Newham, North-West (Mr. Banks) is not here. He said that the empty Conservative Benches were symptomatic of possible disinterest. I think that it is a vote of confidence, in that my hon. Friends feel that they can visit their constituents knowing, with a sense of total satisfaction, that the Bill is going through the House so well. If they had all poured in and intervened, that would have been a sign that we were in trouble. From time to time it is nice to see people such as my hon. Friend the Member for Mid-Staffordshire (Mr. Heddle), but it is nice to have that total vote of confidence. I am sure that the Opposition Front Bench would like to think the same from time to time, that there was nobody sitting behind them.
      The hon. Member for Vauxhall (Mr. Holland) referred to Joseph Chamberlain in the great civic city of Birmingham, and to the history of that city. I do not think that Joseph Chamberlain would have involved himself in creative accountancy, passing bills on to the next generation. That is basically what it is—
      Mr. Meadowcroft rose—
      Dr. Boyson: We shall now hear the authoritative statement from the hon. Gentleman. As with one chief constable, it may be direct from the other world.
      Mr. Meadowcroft: It is only from the history books. The Minister must know that one of the things that was deliberately set up in Birmingham for that purpose was a municipal bank, to finance local authority expenditure and avoid the problem of having to go into the ordinary money market.
      Dr. Boyson: I welcome the hon. Gentleman's intervention, which broadens the debate. I must be careful that I am not tempted to go too far to one side or the other, particularly the Left. There is a difference between selling something one that has and then paying for it over 20 years and banking something that one has and having the interest. There is no comparison. I take as an example the mutual funds of the 19th century—[Interruption.] I was linked with a co-operative society—I was a member of its management board before I came to London. That is totally different from selling the furniture. The dividend number was 1723. If anyone returns to that town and puts money into that number, I shall realise that I have the confidence not only of my hon. Friends but of Liberal Members.
      I return to the amendment. I sometimes think that Opposition Members are reading into the Bill things that are not there. My right hon. Friend the Secretary of State had the same experience two days ago when we put a Bill together to deal, in a limited fashion, with a particular problem, at the same time as bringing it into line with the rest of the legislation. Wherever possible, we have kept the situation as it was before. As I said on Monday, as far as

      923
      possible, local authority accounts will be kept in the way in which the majority of the local authorities have kept them instead of having to turn the system upside down.
      The amendments seek to subject to some form of parliamentary control or scrutiny the exercise by my right hon. Friend of his powers to make specifications under clauses 1(6), 2(4), 3(5) and 3(7). Given the matters covered by the specifications, that could be contrary to all precedents under the Local Government, Planning and Land Act 1980, and would be an inappropriate use of parliamentary time. Specifications under clause 3(7) on total expenditure marry with the present powers of direction under section 56(8) of the Local Government, Planning and Land Act 1980, and specifications under clause 3(4) and (5) are broadly analogous to those on relevant expenditure under section 54(5) of the 1980 Act. Wherever possible, it is in parallel with the previous legislation.
      As the Committee will be aware, we are seeking to amend clause 3, but we are proposing to maintain a power of specification on relevant expenditure. Similar specifications to those under clause 1(6) and clause 2(4) are indeed not to be found in the 1980 Act, as they relate to the rate fund revenue account which is a new concept in statute, but as they relate to detailed accounting matters it is entirely appropriate that they should be treated in the same way as the other specifications.
      The reports will be laid before the House for approval. They will be supplementary reports, but we cannot deal with them until the Bill becomes an Act. I remind the Committee that before making any specifications my right hon. Friend must consult such local authority associations as appear to him to be concerned and with any local authority with which consultation appears to him to be desirable. It is true that for the rate support grant reports that are to be made immediately after the passing of the Bill we are seeking to have the consultation requirement waived, but we shall still be open to representations on all specifications. The Bill keeps the question of specifications and their laying before Parliament as before, apart from the fact that we have to hurry on this year because the local authorities need their money on 1 April. I am glad that we are making faster progress today than on Monday. Unless the Bill is passed, the local authorities will have no money for the rate support grant on 1 April. That would cause serious problems for local authorities. For this year, therefore, we have to make special arrangements. Consultation has taken place—
      Mr. Straw: Will the hon. Gentleman give way?
      Dr. Boyson: No, I shall not give way. I must finish my sentence or I may forget what it is and the Committee will be deprived for ever more of this particular thought. No Government have ever before consulted to such an extent before a rate support grant decision has been taken as have this Government. Two consultation documents have been sent out. Moreover, hon. Members have come to see me and other Ministers.
      Mr. Straw: The Minister is suggesting that the powers of specification are relatively small. That may or may not be the case, but will he illustrate the kind of specifications that could be made under clause 9? The Minister has the
      924
      power both to bring things into account and to take them out of account. What kind of things does the Secretary of State have in mind?
      Dr. Boyson: I prefer not to deal with that point now. When we consider clause 9 I shall give illustrations of our intentions. I do not want to wander from one clause to another.
      5.45 pm
      Any exercise by my right hon. Friend of his power to make specifications will be subject to the requirements of the general and administrative law to act reasonably, and it will be reviewable by the courts. That applies equally to the specifications for future years and intermediate years that are made after the passing of the Bill. It applies also to any specifications in the reports and supplementary reports that we are planning to make immediately after the passing of the Bill. For those reasons, I urge the Committee to reject this set of amendments.
      Mr. Straw: This has been an entertaining debate. My hon. Friend the Member for Vauxhall (Mr. Holland) referred to the damage that is being done to his borough by the Government's rate support grant policies, and in an intervention the hon. Member for Mid-Staffordshire (Mr. Heddle) referred to the residence of Members of Parliament. I am pleased to be able to tell my hon. Friends that the hon. Member for Mid-Staffordshire does not live in Lambeth. According to "Dod's Parliamentary Companion", the hon. Gentleman lives at flat 21, 73 St. James's street, London SW1.
      Mr. Heddle: During the last six years I have grown to respect the hon. Member for Blackburn (Mr. Straw) for quoting in full anything that he may read out in this place. Will he now tell the Committee precisely what "Dod's Parliamentary Companion" says and not quote selectively from it? Will he read correctly the lines that appear in italics? He had the benefit of a public school education and he then went to a well-known university. He can read. Perhaps he will read those lines in full.
      Mr. Straw: I am pleased to be able to tell the hon. Gentleman that I was taught to read some time before I reached the age of 11. I mean to do no injustice to the hon. Gentleman. Therefore, I shall read out the two and a half lines.
      The First Deputy Chairman: Order. The Committee has access to "Dod's Parliamentary Companion", if it is interested. However, this exchange shows that my tolerance earlier in the debate was unwise. We ought to return to the amendments.
      Mr. Heddle: On a point of order, Mr. Armstrong. The hon. Member for Blackburn (Mr. Straw) was seeking to answer an earlier intervention by me. May I ask you, Mr. Armstrong, to ask the hon. Member for Blackburn to confirm that "Dod's Parliamentary Companion" also says that my address is 14 The Close, Lichfield, which is in the heart of my Mid-Staffordshire constituency?
      The First Deputy Chairman: That is now on the record. I think that we ought now to deal with the amendments.
      Mr. Straw: The amendments relate to whether the decision of the Secretary of State on specifications should or should not be subject to parliamentary scrutiny. It is conceivable that the wide power under clause 3 might be used to exclude from account the rate income from 14 The

      925
      Close, Lichfield, Staffordshire, or, indeed, from the Carlton club, which is also referred to in "Dod's Parliamentary Companion". Were that to be the case, the Committee would wish closely to scrutinise that decision.
      This is a relatively narrow issue: whether the specifications made by the Secretary of State should be subject to scrutiny in this place. The Minister said that such scrutiny would be contrary to all precedents. I accept that it has not been the practice up to now for such specifications to be discussed in this place under the order-making procedure. However, the Minister accepted that there is no detailed definition of a rate fund revenue account in any previous statute, and the Bill is seeking to put into better order the structure of local government finance that was established in 1980. To some extent we are dealing with a future that had no past. This is a complex matter. The powers given by clause 3 in conjunction with clause 9 can be fairly wide. Clause 3(7) gives the Secretary of State power to specify additions to or subtractions from a council's total expenditure for any year. I shall be glad when we debate clause 3 stand part. I accept that the Minister has had no notice of my next point, but perhaps he could give us examples of where such power might be used.
      The Minister asks us to take what he says at face value. However reasonable a Minister may seem to us, seven years' experience of ministerial decisions on local government finance do not lead us to believe that local authorities, especially Labour local authorities, are always treated fairly. Let me he blunt. We are suspicious about the way in which the power could be used and think that there ought to be proper provision for scrutiny by the House.
      The Minister's last point was that it would be a wrong use of parliamentary time if the specifications were always subject to parliamentary scrutiny. The amendments provide two ways of scrutinising these matters in the House. The first is by the affirmative resolution procedure and the second by negative resolution. If the Minister had been willing to meet us on this we would have been willing to accept that the negative resolution procedure would be appropriate in most cases. I am sorry that he is not prepared to do that and regret that we must press the amendment to the vote.
      Question put, That the amendment be made:—
      The Committee divided: Ayes 191, Noes 243.

      Division No. 63]

      [5.44 pm

      AYES

      Abse, Leo

      Brown, N. (N'c'tle-u-Tyne E)

      Adams, Allen (Paisley N)

      Brown, R. (N'c'tle-u-Tyne N)

      Alton, David

      Bruce, Malcolm

      Archer, Rt Hon Peter

      Buchan, Norman

      Ashdown, Paddy

      Caborn, Richard

      Ashley, Rt Hon Jack

      Callaghan, Rt Hon J.

      Ashton, Joe

      Callaghan, Jim (Heyw'd & M)

      Atkinson, N. (Tottenham)

      Campbell, Ian

      Bagier, Gordon A. T.

      Campbell-Savours, Dale

      Banks, Tony (Newham NW)

      Carter-Jones, Lewis

      Barron, Kevin

      Cartwright, John

      Beckett, Mrs Margaret

      Clark, Dr David (S Shields)

      Bell, Stuart

      Clarke, Thomas

      Benn, Rt Hon Tony

      Clay, Robert

      Bennett, A. (Dent'n & Red'sh)

      Clelland, David Gordon

      Bidwell, Sydney

      Clwyd, Mrs Ann

      Blair, Anthony

      Cocks, Rt Hon M. (Bristol S)

      Boyes, Roland

      Coleman, Donald

      Bray, Dr Jeremy

      Conlan, Bernard

      Brown, Gordon (D'f'mline E)

      Cook, Frank (Stockton North)

      Brown, Hugh D. (Provan)

      Cook, Robin F. (Livingston)

      926

      Corbett, Robin

      Marek, Dr John

      Cox, Thomas (Tooting)

      Marshall, David (Shettleston)

      Craigen, J. M.

      Martin, Michael

      Crowther, Stan

      Mason, Rt Hon Roy

      Cunningham, Dr John

      Maynard, Miss Joan

      Dalyell, Tam

      Meacher, Michael

      Davies, Ronald (Caerphilly)

      Meadowcroft, Michael

      Davis, Terry (B'ham, H'ge H'l)

      Michie, William

      Deakins, Eric

      Mikardo, Ian

      Dewar, Donald

      Millan, Rt Hon Bruce

      Dixon, Donald

      Morris, Rt Hon A. (W'shawe)

      Dobson, Frank

      Morris, Rt Hon J. (Aberavon)

      Dormand, Jack

      Oakes, Rt Hon Gordon

      Douglas, Dick

      O'Brien, William

      Dubs, Alfred

      O'Neill, Martin

      Dunwoody, Hon Mrs G.

      Orme, Rt Hon Stanley

      Eadie, Alex

      Park, George

      Eastham, Ken

      Parry, Robert

      Evans, John (St. Helens N)

      Patchett, Terry

      Fatchett, Derek

      Pavitt, Laurie

      Field, Frank (Birkenhead)

      Pendry, Tom

      Fields, T. (L'pool Broad Gn)

      Pike, Peter

      Fisher, Mark

      Powell, Raymond (Ogmore)

      Flannery, Martin

      Prescott, John

      Foot, Rt Hon Michael

      Radice, Giles

      Forrester, John

      Randall, Stuart

      Foster, Derek

      Raynsford, Nick

      Foulkes, George

      Redmond, Martin

      Fraser, J. (Norwood)

      Rees, Rt Hon M. (Leeds S)

      Freeson, Rt Hon Reginald

      Richardson, Ms Jo

      Freud, Clement

      Roberts, Allan (Bootle)

      Garrett, W. E.

      Robertson, George

      George, Bruce

      Rogers, Allan

      Gilbert, Rt Hon Dr John

      Rooker, J. W.

      Godman, Dr Norman

      Ross, Ernest (Dundee W)

      Golding, Mrs Llin

      Ross, Stephen (Isle of Wight)

      Gould, Bryan

      Rowlands, Ted

      Gourlay, Harry

      Sedgemore, Brian

      Hamilton, James (M'well N)

      Sheerman, Barry

      Hardy, Peter

      Sheldon, Rt Hon R.

      Harrison, Rt Hon Walter

      Shields, Mrs Elizabeth

      Haynes, Frank

      Shore, Rt Hon Peter

      Healey, Rt Hon Denis

      Short, Ms Clare (Ladywood)

      Heffer, Eric S.

      Short, Mrs R.(W'hampt'n NE)

      Hogg, N. (C'nauld & Kilsyth)

      Silkin, Rt Hon J.

      Holland, Stuart (Vauxhall)

      Skinner, Dennis

      Home Robertson, John

      Smith, C. (Isl'ton S & F'bury)

      Howell, Rt Hon D. (S'heath)

      Smith, Rt Hon J. (M'ds E)

      Howells, Geraint

      Soley, Clive

      Hughes, Robert (Aberdeen N)

      Spearing, Nigel

      Hughes, Roy (Newport East)

      Steel, Rt Hon David

      Hughes, Sean (Knowsley S)

      Stewart, Rt Hon D. (W Isles)

      Hughes, Simon (Southwark)

      Stott, Roger

      Jenkins, Rt Hon Roy (Hillh'd)

      Straw, Jack

      John, Brynmor

      Thomas, Dafydd (Merioneth)

      Johnston, Sir Russell

      Thomas, Dr R. (Carmarthen)

      Jones, Barry (Alyn & Deeside)

      Thompson, J. (Wansbeck)

      Kaufman, Rt Hon Gerald

      Thorne, Stan (Preston)

      Kennedy, Charles

      Wainwright, R.

      Kinnock, Rt Hon Neil

      Wallace, James

      Kirkwood, Archy

      Wardell, Gareth (Gower)

      Lambie, David

      Wareing, Robert

      Lamond, James

      Weetch, Ken

      Leadbitter, Ted

      Welsh, Michael

      Leighton, Ronald

      White, James

      Lewis, Terence (Worsley)

      Wigley, Dafydd

      Litherland, Robert

      Williams, Rt Hon A.

      Livsey, Richard

      Wilson, Gordon

      Lloyd, Tony (Stretford)

      Winnick, David

      Lofthouse, Geoffrey

      Woodall, Alec

      McCartney, Hugh

      Wrigglesworth, Ian

      McDonald, Dr Oonagh

      Young, David (Bolton SE)

      McGuire, Michael

      McKay, Allen (Penistone)

      Tellers for the Ayes:

      McNamara, Kevin

      Mr. Lawrence Cunliffe and

      McTaggart, Robert

      Mr. John McWilliam.

      Madden, Max

      927

      NOES

      Adley, Robert

      Garel-Jones, Tristan

      Aitken, Jonathan

      Glyn, Dr Alan

      Alexander, Richard

      Goodhart, Sir Philip

      Amess, David

      Goodlad, Alastair

      Ancram, Michael

      Gow, Ian

      Ashby, David

      Gower, Sir Raymond

      Atkins, Rt Hon Sir H.

      Grant, Sir Anthony

      Atkins, Robert (South Ribble)

      Greenway, Harry

      Atkinson, David (B'm'th E)

      Griffiths, Sir Eldon

      Baker, Nicholas (Dorset N)

      Griffiths, Peter (Portsm'th N)

      Baldry, Tony

      Grist, Ian

      Banks, Robert (Harrogate)

      Ground, Patrick

      Batiste, Spencer

      Grylls, Michael

      Bellingham, Henry

      Gummer, Rt Hon John S

      Best, Keith

      Hamilton, Hon A. (Epsom)

      Bevan, David Gilroy

      Hamilton, Neil (Tatton)

      Biggs-Davison, Sir John

      Hampson, Dr Keith

      Blackburn, John

      Hanley, Jeremy

      Body, Sir Richard

      Hargreaves, Kenneth

      Bonsor, Sir Nicholas

      Harris, David

      Boscawen, Hon Robert

      Harvey, Robert

      Bottomley, Peter

      Haselhurst, Alan

      Bottomley, Mrs Virginia

      Havers, Rt Hon Sir Michael

      Bowden, A. (Brighton K'to'n)

      Hawkins, C. (High Peak)

      Bowden, Gerald (Dulwich)

      Hawkins, Sir Paul (N'folk SW)

      Boyson, Dr Rhodes

      Hawksley, Warren

      Brandon-Bravo, Martin

      Hayes, J.

      Bright, Graham

      Hayhoe, Rt Hon Sir Barney

      Brinton, Tim

      Hayward, Robert

      Brittan, Rt Hon Leon

      Heathcoat-Amory, David

      Brown, M. (Brigg & Cl'thpes)

      Heddle, John

      Browne, John

      Henderson, Barry

      Buchanan-Smith, Rt Hon A.

      Hicks, Robert

      Buck, Sir Antony

      Higgins, Rt Hon Terence L.

      Bulmer, Esmond

      Hill, James

      Butler, Rt Hon Sir Adam

      Hind, Kenneth

      Butterfill, John

      Hirst, Michael

      Carlisle, John (Luton N)

      Holland, Sir Philip (Gedling)

      Carlisle, Kenneth (Lincoln)

      Holt, Richard

      Cash, William

      Hordern, Sir Peter

      Channon, Rt Hon Paul

      Howard, Michael

      Chope, Christopher

      Howarth, Gerald (Cannock)

      Churchill, W. S.

      Howell, Rt Hon D. (G'ldford)

      Clark, Dr Michael (Rochford)

      Hubbard-Miles, Peter

      Clark, Sir W. (Croydon S)

      Hunt, John (Ravensbourne)

      Clarke, Rt Hon K. (Rushcliffe)

      Irving, Charles

      Cockeram, Eric

      Jessel, Toby

      Colvin, Michael

      Johnson Smith, Sir Geoffrey

      Conway, Derek

      Jones, Gwilym (Cardiff N)

      Coombs, Simon

      Jones, Robert (Herts W)

      Cope, John

      Jopling, Rt Hon Michael

      Corrie, John

      Joseph, Rt Hon Sir Keith

      Couchman, James

      Kershaw, Sir Anthony

      Critchley, Julian

      King, Roger (B'ham N'field)

      Crouch, David

      King, Rt Hon Tom

      Dickens, Geoffrey

      Knight, Greg (Derby N)

      Dicks, Terry

      Knowles, Michael

      Douglas-Hamilton, Lord J.

      Latham, Michael

      Dover, Den

      Lawrence, Ivan

      Edwards, Rt Hon N. (P'broke)

      Lennox-Boyd, Hon Mark

      Eggar, Tim

      Lester, Jim

      Evennett, David

      Lightbown, David

      Eyre, Sir Reginald

      Lilley, Peter

      Fairbairn, Nicholas

      Lloyd, Sir Ian (Havant)

      Fallon, Michael

      Lloyd, Peter (Fareham)

      Farr, Sir John

      McCrindle, Robert

      Favell, Anthony

      MacKay, Andrew (Berkshire)

      Fenner, Dame Peggy

      MacKay, John (Argyll & Bute)

      Fletcher, Sir Alexander

      Maclean, David John

      Fookes, Miss Janet

      McNair-Wilson, M. (N'bury)

      Forman, Nigel

      McQuarrie, Albert

      Forsyth, Michael (Stirling)

      Malone, Gerald

      Forth, Eric

      Marlow, Antony

      Fox, Sir Marcus

      Mather, Sir Carol

      Franks, Cecil

      Maude, Hon Francis

      Fraser, Peter (Angus East)

      Mawhinney, Dr Brian

      Galley, Roy

      Maxwell-Hyslop, Robin

      Gardiner, George (Reigate)

      Meyer, Sir Anthony

      Gardner, Sir Edward (Fylde)

      Monro, Sir Hector

      928

      Montgomery, Sir Fergus

      Stern, Michael

      Moore, Rt Hon John

      Stevens, Lewis (Nuneaton)

      Morris, M. (N'hampton S)

      Stewart, Allan (Eastwood)

      Neale, Gerrard

      Stewart, Andrew (Sherwood)

      Neubert, Michael

      Stewart, Ian (Hertf'dshire N)

      Nicholls, Patrick

      Stokes, John

      Ottaway, Richard

      Stradling Thomas, Sir John

      Pawsey, James

      Sumberg, David

      Peacock, Mrs Elizabeth

      Tapsell, Sir Peter

      Pollock, Alexander

      Taylor, John (Solihull)

      Portillo, Michael

      Temple-Morris, Peter

      Powley, John

      Terlezki, Stefan

      Prior, Rt Hon James

      Thomas, Rt Hon Peter

      Proctor, K. Harvey

      Thompson, Donald (Calder V)

      Raison, Rt Hon Timothy

      Thompson, Patrick (N'ich N)

      Rhys Williams, Sir Brandon

      Thorne, Neil (Ilford S)

      Ridley, Rt Hon Nicholas

      Thornton, Malcolm

      Rifkind, Rt Hon Malcolm

      Townend, John (Bridlington)

      Roberts, Wyn (Conwy)

      Townsend, Cyril D. (B'heath)

      Roe, Mrs Marion

      Trotter, Neville

      Rossi, Sir Hugh

      Twinn, Dr Ian

      Rost, Peter

      van Straubenzee, Sir W.

      Rowe, Andrew

      Viggers, Peter

      Sackville, Hon Thomas

      Waddington, Rt Hon David

      Sainsbury, Hon Timothy

      Waldegrave, Hon William

      Sayeed, Jonathan

      Walker, Bill (T'side N)

      Shaw, Giles (Pudsey)

      Waller, Gary

      Shaw, Sir Michael (Scarb')

      Ward, John

      Shelton, William (Streatham)

      Wardle, C. (Bexhill)

      Shepherd, Richard (Aldridge)

      Watts, John

      Shersby, Michael

      Wells, Bowen (Hertford)

      Silvester, Fred

      Wells, Sir John (Maidstone)

      Sims, Roger

      Whitfield, John

      Skeet, Sir Trevor

      Wiggin, Jerry

      Smith, Tim (Beaconsfield)

      Wolfson, Mark

      Soames, Hon Nicholas

      Wood, Timothy

      Speed, Keith

      Woodcock, Michael

      Speller, Tony

      Yeo, Tim

      Spencer, Derek

      Young, Sir George (Acton)

      Spicer, Jim (Dorset W)

      Younger, Rt Hon George

      Spicer, Michael (S Worcs)

      Squire, Robin

      Tellers for the Noes:

      Stanbrook, Ivor

      Mr. Tony Durant and

      Steen, Anthony

      Mr. Richard Ryder.

      Question accordingly negatived.
      Mr. John Fraser: I beg to move amendment No. 22, in page 2, line 27, leave out subsection (7).
      The First Deputy Chairman: With this it will be convenient to discuss the following amendments: No. 23, in page 2, line 28, leave out 'does not' and insert 'shall'.
      No. 24, in page 2, line 32, leave out subsection (8).
      No. 25, in page 2, line 33, leave out 'does not' and insert 'shall'.
      No. 26, in page 2, line 33, leave out 'unless' and insert 'whether or not'.
      6 pm
      Mr. Fraser: This set of amendments omits the special provisions which are made for the City of London in the Bill. I am not sure why they are there. I understand that the City of London does not receive any block grant. It is affluent enough to look after itself, as well as other parts of London.
      Although it may not be of any practical importance to the City of London, the amendments raise matters of principle that we should explore. They relate to the different views that the Government take about public expenditure. For instance, if a firm spends £25 million upon the professional fees involving a takeover, it is not a matter of concern for the Government because that is private expenditure, with which they do not interfere.

      929
      However, if a smaller amount of money is spent by a local authority on the provision of blankets or heating for the poor during the inclement weather they do need to interfere. In the same way, the Government are unconcerned that people come and go at salaries which were reported in the paper this morning of between £200,000 and £300,000 per annum. That is of no consequence to the Government because that is private expenditure, but the Government sit heavily on local authorities that employ people to look after those who are poor, deprived and need the assistance of their local authority. That difference of opinion between public and private expenditure illustrates and underlines the difference between the Opposition and the Government.
      However, there is an even more bizarre example of that difference of opinion in clause 1. The Government are saying that if any local authority, apart from the City of London, uses special funds the expenditure that is saved by the income from those special funds going into the general rate account should be left out of the account altogether, but that that should not apply to the City of London.
      I understand the reason that lies behind that. The City of London is enormously rich because it has accumulated funds over hundreds of years for various special purposes. Once a year, the City of London is good enough to invite Members of Parliament to discuss the way that the City of London is run as a local government unit. The City of London explains to us—I make no complaint about this—that the City's great celebrations and displays of pomp and circumstance do not cost the taxpayer or the ratepayer a penny because of the accumulated funds. The City of London must have approached the Government and asked that their special funds be treated differently from those of any other local authority. The Minister will not disagree that the result of the Bill is that the City of London is treated differently from any other local authority.
      How does that work in practice? It means that if the City of London uses special funds—as I believe it does—to have a banquet at the Mansion house or to entertain the Chancellor of the Exchequer, the Prime Minister, a foreign statesman, or a foreign dictator at the Guildhall, as it does by tradition, and if it serves the traditional boeuf en croute or smoked salmon mousse, those matters are not of concern to the Government or matters that should be restrained by any local government legislation, and the City of London should be able to continue with that kind of expenditure untrammelled.
      However, if a local authority does not want to provide banquets for foreign statesmen—least of all for the Chancellor of the Exchequer—but does, as its main priority, want to provide a meals on wheels service for the indigent people of its borough, the Government take a different attitude and say that any kind of device that a local authority employs, or any kind of creativity within its accounts, is to be dealt with by the draconian provisions of the Bill.
      In the City of London there is a hands-off attitude to expenditure on boeuf en croute or smoked salmon mousse, but meals on wheels for the poor is a different matter. I have heard criticism of the use of race relations advice in Lambeth over the meals-on-wheels service to ensure that moslem constituents are not offended by being sent roast
      930
      pork in their meals on wheels. That is just as ridiculous an expenditure as providing a seven-course meal for Dr. Hastings Banda.
      Let us have another example. The City of London has a bridge fund. The Government do not want to interfere in the expenditure of that bridge fund. Its purpose is to replace London bridge. That expenditure on the rates has, I think, led the City of London to have an expenditure above its target and GREA. It is always top of the league—my hon. Friend the Member for Blackburn (Mr. Straw) says 300 per cent.—in overspending. The Government want to ignore that. But once the bridge is built and people are sleeping beneath the arches of the bridge in winter, if Southwark, on the south side of the river, wants to assist with blankets those people beneath the bridge which was built with City funds, its expenditure will be penalised under the rating system, yet it is only caring for the poor and disadvantaged of the borough.
      Another example is expenditure on the Barbican. I enjoy going to the Barbican, when I can find it. I enjoy its theatre and music. I understand that much of that is also provided by special City funds. I make no complaint about the City's contribution to Britain's arts. It subsidises the Royal Shakespeare theatre and Shakespeare said that music soothes the savage breast. But there are a good many savage breasts in other parts of Britain—people who are unemployed, people who have suffered grave discrimination and people who have little chance of getting on in life. Some local authorities want to provide art at a different level for such people. They want to provide music, instruments and tuition for such people. That is lumped on to their general expenditure and can incur the penalties which are visited upon people by the rate support grant system, and that is to be treated entirely differently. One could go on.
      My complaint is not about the City of London's expenditure—some of us may be a little envious of its funds—but that the Government do not judge according to need but according to affluence. They say that because the City of London has accumulated moneys, whatever the nature of its expenditure, no matter how flamboyant or extravagant it might appear to the outside world, it is not to be constrained or dealt with in any way at all under Government legislation relating to local government finance. But if, on the other hand, a borough is less affluent than the City of London, if a local government district has great deprivation, poverty and need within its boundaries but it is not an affluent borough, the Government say that borough should be dealt with in an entirely different way.
      Therefore, I move the amendment not in any sense of envy or complaint about the City of London's expenditure under these circumstances, but to underline what we regard as a discriminatory attitude between one local authority and another. It is to underline that point of principle that I move the amendment today.
      Mr. Tony Banks: I support amendments Nos. 22 to 26 in respect of the City of London.
      The City of London already enjoys too many privileges and rights which are not extended to other authorities. I do not see why the City should be treated as an exception yet again in this legislation. I assume that the reasons are as stated by my hon. Friend the Member for Norwood (Mr. Fraser)—that the City has special cash funds and resources that place it in a different position from other

      931
      local authorities and the Bill therefore seeks to allow the City to continue to enjoy those additional and unique funds and does not want to tax them. That is wrong."/>
      If the City wants to remain part of Britain's local government structure, it must suffer the same problems and burdens as the rest of local government in terms of interference by the Government. The City should share the misery that all other local authorities now have to suffer as a result of Government legislation.
      I have a great deal of respect for the City of London as an institution. I do not want my remarks to be misunderstood or misinterpreted. While I was chairman of the Greater London council I enjoyed a great deal of the hospitality of the City corporation, particularly the Lord Mayor and the sheriffs. It was an amiable period. One tried to reciprocate as best one could, but one could never hope to emulate the City's hospitality. Indeed, no local authority would even attempt to do so because it would be rightly castigated by its ratepayers and the press for a great waste of money. However, it is difficult when one receives the hospitality of the City to know how to respond. One perhaps should not respond by continually attacking it, but when I do, I do so as someone who believes that the City of London has no place within the democratic structure of London's local government and, indeed, local government nationally, although it has a role and a history that one must respect.
      6.15 pm
      Mr. Allan Roberts: Is it not the case that when a Labour-controlled local authority provides hospitality it is vilified by the media for wasting ratepayers' money, and when a radical Labour local authority gets rid of such things it is attacked for destroying the customs and traditions of the area?
      Mr. Banks: What my hon. Friend is adequately demonstrating is that Labour local authorities cannot win. Whatever they do, they will be attacked and vilified by the press, egged on by the Conservative party. We understand the point. That is what offends. In many cases the press and the Conservative party are one and the same thing. However, it still offends what little sense of natural justice a Member of Parliament can maintain after three years in this place.
      Effectively, the City of London exists today as an unreformed ancient municipality. It was granted privileges by King John in 1215 and until 1948 it returned its own Member of Parliament. To demonstrate the way in which it is treated as an exception in London—the Bill wants to continue to treat it as an exception—the City retains its own police force. It has its Lord Mayor and a bench of aldermen. Aldermen were abolished elsewhere in local government some years ago, I think by the legislation of 1972. That would not be so bad, but it goes much further than that. Those aldermen—there is a bench of 25—are elected for life. How can the City postulate in any credible fashion that it is a democratic structure when it still has aldermen in it who are elected for life.
      It is from the aldermanic bench that the Lord Mayor is elected. Until quite recently, that bench made sure that no women were elected. Although Edwina Coven—a name remarkably like that of a Conservative Member—won elections she could not take her seat because the sexist
      932
      rules of the City prevented her from doing so. That has now passed, but it took until recent years for that particular rule to be broken down.
      I am seeking to demonstrate that the City is continually treated differently from every other local authority in terms of its structure, practices and procedures and now its financial accounting. I really cannot see that this is a defensible position within the context of Government policy towards local government generally or in terms of the specific requirements of the Bill.
      The matter has best been summed up by the Herbert commission which sat between 1957 and 1960 and studied the structure of London local government. Indeed, it was the Herbert report which was used as the basis of the London Government Act 1963 which set up the GLC. These words will keep coming back because they are amazing. When the Herbert commission looked at the structure of London local government it said:
      "If we were to be strictly logical we should recommend the amalgamation of the City and Westminster. But logic has its limits and the City lies outside them."
      That was a Royal Commission saying, in effect, that the City was too powerful and was served by too many vested interests.
      That is an amazing statement on the way in which the City has always resisted the logical restructuring of local government and any changes in the way in which the electoral processes of local government are administered.
      When we refer to the City of London many foreigners and people from outside London assume that we mean just the greater London area. So that hon. Members are clear about it, I must say that it relates only to the square mile.
      In the 19th century a number of Prime Ministers, especially Gladstone, tried to get the City of London to assume responsibility for the whole of the wider London area, but it steadfastly refused to do that. I realise and respect the fact that many Londoners like the City's traditions, especially the Lord Mayor's show. Therefore, it would be unwise of a Labour Government to confront the City head on and say, "Let us abolish the City of London." After all, we have just fought many battles over abolition. That word does not commend itself to Labour Members in respect of local government, and it will not commend itself to us when we are in power.
      We must ensure that we are consistent. We have said that we shall look at local government structures and be objective in our assessment. When we are in government we must not abolish the City but incorporate it so that the Court of Common Council could become in effect the equivalent of the Greater London council. Each member on it could stand as an elected member for each of the London parliamentary constituencies. They would then all be democratically elected for a four-year term. The bench of aldermen in the City of London would be abolished, along with a number of other practices.
      The Court of Common Council would be made up of the elected representatives from the 92 London constituencies who would elect the Mayor. We would retain the Lord Mayor's show, but he would be the Lord Mayor of Greater London and could speak as the number one citizen of Greater London. That would ultimately fulfill the historic role that Gladstone offered the City in the 19th century.
      I remind hon. Members that, although at present the City only covers one square mile, it is the richest of all the local authorities in London. It contributes a massive

      933
      amount to the other London boroughs and to the equalisation system. We accept that fact. The City of London has benefited disproportionately from the abolition of the Greater London council, especially where new schemes have been set up which are based on a contribution on a per capita basis because it has a farcically low number of electors. The most recent register of electors that I have comprises an electorate of 4,811. There is massive wealth in the hands effectively of an electorate of 4,811.
      The City of London's ward lists record an electorate of 14,189 for the 25 wards, of which 4,760 are resident voters and 9,439 non-residents. Those lists are used when electing aldermen and members of the Common Council. The resident electorate is small. Therefore, its demands on the City's services in terms of social services, education or housing are, indeed, minute, hence the fact that the City must contribute so much to the other parts of London. We must bear in mind the fact that the City of London is surrounded by some of the poorest boroughs in London, such as Tower Hamlets and Hackney, to name but two. Hackney is the most deprived local authority area in the whole of England and Tower Hamlets comes third.
      Mr. Gerrard Neale: Does the hon. Gentleman accept that, to a large extent, those councils have been the victims of their own problems in that they have been most obstructive to any attempts made to try to improve the rateable values of those areas? The Government have brought forward such areas as the docklands and helped many of the London boroughs to obtain better rateable value in the future.
      Mr. Banks: The hon. Gentleman's point leads on to a whole area of argument on the impact on the east end of the docklands area and, especially, its impact on Tower Hamlets. I am delighted to enter that argument if I can stay within order. Whatever additional benefit may come to Tower Hamlets or to Newham through activity by the London Docklands development corporation area, the impact on property prices has been so dramatic as to remove that area from its residents. The traditional residents, the east enders, are effectively being forced out of the east end.
      Mr. Allan Roberts: It is true that the Tower Hamlets council, which is now under Liberal control, but even previously when it was Labour controlled, adopted a policy of selling estates to the private sector and encouraged—some Labour Members thought wrongly—the City to move into Tower Hamlets. The council even kept the rates down to encourage that. Tower Hamlets is one of the lowest rated London boroughs. I, as a resident there, am aware of those matters. I do not necessarily agree with those policies, but the council did that, contrary to what the hon. Member for Cornwall, North (Mr. Neale) said.
      The First Deputy Chairman of Ways and Means (Sir Paul Dean): I hope that the hon. Gentleman will not be tempted to stray from the Common Council, which is what the amendment is about.
      Mr. Banks: Whenever an hon. Member gets involved in a discussion about the City of London such matters tend to arise. The City of London is a speck of enormous affluence in a great sea of poverty in the east end. It will cause a great deal of controversy as long as it continues to
      934
      exist, in terms of its peculiar position in relation to local government democracy and the inordinate concentration of wealth that it has at its disposal. The City has for many years resisted attempts to reform it by powerful politicians in this place. They do not come much more powerful than W. E. Gladstone. The City even resisted his attempts to reform its structure and its system. The City can still draw enormous power from within the Conservative party.
      I know that the City is proud of saying, "We are totally democratic. We have elections and, after all, we are nonparty political." That is absolute nonsense. The City is the ultimate Tory authority. It has reached a point where the Conservative party so controls everything in the City that it can declare itself to be non-political. The City has effectively made it impossible for anyone other than someone of Conservative politics to gain control in the City.
      Before Conservative Members jump up and remind me, I know that there are Labour party Members on the Court of Common Council. But no one who is honest enough to declare himself as a Labour party candidate can get elected. We are discussing the most undemocratic local government institution in the country bar none. The day of the City is fast approaching. A Labour Government will adopt a solution for the City, perhaps broadly along the lines that I described a little earlier.
      6.30 pm
      Mr. Meadowcroft: If the hon. Gentleman is relying on a future Labour Government, the City is fairly safe.
      Mr. Banks: It was not worth giving way to the hon. Gentleman to allow him to make that intervention.
      An interesting report was published by the London Labour party in 1974 following the setting up of a working party. It makes extremely interesting reading and the hon. Gentleman might care to exchange notes with his Social Democratic party colleague, the hon. Member for Woolwich (Mr. Cartwright), about some of the things that he was saying at that time about the City, with which I agreed entirely. I hope that he still holds those views, but I do not know what the alliance's policy is on the City of London. I hope that the hon. Member for Woolwich is as forthright today as he was in 1974.
      There is no such thing as a free lunch, although this place would believe that it has found the source of all free lunches. Someone has to pay in the end. There is no such thing as a free lunch in the City. Although the City can say that the great civic events that it provides—for example, the Lord Mayor's show and many other services—are paid for out of City cash, the moneys came from somewhere. The moneys are the product of someone's efforts, or were filched from a group of industrious workers in the City of London or thereabouts. The moneys still belong to the public. They cannot be private moneys, and no local authority can say that it has access to private moneys. All local authority resources and finance are public money by definition.
      Although the City of London may be able to pay for magnificant banquets at the Mansion house and the Guildhall out of City cash, it is still using public money. If the Government are opposing the amendments because of the existence of City cash, they are wrong to do so. I shall listen with great interest to what the Minister says about the amendments I am supporting.
      Dr. Boyson: I was delighted two days ago to see that the hon. Member for Newham, North-West (Mr. Banks) had in his possession a copy of the Sunday Telegraph.
      Mr. Tony Banks: I still have it.
      Dr. Boyson: A vintage copy. I would not agree necessarily with the line that the hon. Gentleman has advanced. Indeed, I am sure that he would be disappointed if I did. He has referred to the famous free market doctrine that there is no such thing as a free lunch. Day by day I see the improvement of the hon. Gentleman, who is a regular attender of our debates. Milton Friedman's book is on my shelf, and I am sure that by now it is on the hon. Gentleman's shelf. This shows what time in the House of Commons, or advanced age as we approach it, does to us all. The hon. Gentleman has dined at the Guildhall, and I did so last night. I did not realise yesterday that I would be replying to the debate that has taken place on the amendment. I am sure that huge sums would have been paid to enable individuals to hear the speech which I delivered last night. It would seem that I have shared City hospitality with the hon. Gentleman.
      I was interested in the remarks of the hon. Member for Bootle (Mr. Roberts) about local authorities maintaining tradition or destroying it. I like tradition. I would never attack a local authority or any other authority for maintaining it. I never agreed—this shows how reactionary I must be—with the destruction of the alderman tradition. Many aldermen carried out useful functions and served in that capacity for a long time. Some authorities, thank goodness, retained aldermen.
      I shall not take up all the remarks which have been made about the City. It should be remembered that it brings about £7·5 billion a year into the balance of payments. That is a sum that any Labour Government would be glad of, never mind a Conservative Government. Certainly, any Chancellor of the Exchequer would be glad to have it. About 1 million are employed in the financial services sector, it being the sector that has expanded the most.
      It has been accepted that the Common Council of the City of London has a number of unusual funds for historic reasons. It does not act like a normal local authority and it has taken on responsibilities that go wider than those which local authorities normally assume. The purpose of subsections (7) and (8) is to ensure that the revenue expenditure and income do not have to be shown in the rate fund revenue account. If the expenditure and income were shown there, it would have to be taken into account in calculating the Common Council's relevant and total expenditure for rate support grant purposes although it receives no RSG. In existing legislation "relevant expenditure" is defined as all expenditure falling to be defrayed out of the rate fund, and the rate fund is defined in relation to the Common Council in section 54 of the Local Government, Planning and Land Act 1980 as a general rate. Thus under existing legislation only expenditure and income that is defrayed out of the general rate is taken into account for relevant and total expenditure purposes. Subsections (7) and (8) of clause 1 preserve the present position and Opposition Members know that amendments Nos. 22 to 26 would change it. I ask my hon. Friends to resist the amendment and allow the position to be left as it is.
      Amendment negatived.
      Mr. John Fraser: I beg to move amendment No. 27, in page 2, line 36, leave out
      `in relation to future years'
      and add
      'only in relation to the financial year 1977–78'.
      The Second Deputy Chairman: With this it will be convenient to take the following amendments: No. 28, in page 2, line 36, leave out 'future years' and add
      'the year beginning in 1988 and subsequent years'.
      No. 57, in clause 3, page 3, line 18, leave out 'any future year' and insert
      'the year beginning in 1988 and subsequent years'.
      No. 76, in page 4, line 19, leave out 'any future year' and insert
      'the year beginning in 1988 and subsequent years'.
      No. 186, in schedule 4, page 15, line 39, leave out from 'Schedule' to end of line 45 and insert
      'shall have effect in relation to the financial year beginning in 1988 and subsequent financial years'.
      There is a misprint in amendment No. 27. The financial year should be 1987–88.
      Mr. Fraser: I move amendment No. 27 for the purpose of introducing a discussion on the amendments that are grouped with it. I realise that amendment No. 27 contains a misprint.
      We are dealing with emergency legislation to deal with a situation which has come to the attention of the Secretary of State relatively recently, and he must act quickly before local authorities make decisions about rating next year. Our initial reaction was to apply a restriction to 1987–88 but not thereafter. When we gave the matter further thought, we came to the conclusion that the clause should be amended with a provision that should apply to 1988 and future years, and I shall tell the Committee why we took that view.
      Clause 1 attempts to make considerable alterations in the way in which the rate fund is calculated and there is no disagreement across the Floor of the Chamber about that. The Government wish to control the rate fund much more diligently, including those items that are to be debited and those that are to be credited to the rate fund account. We shall debate this issue at greater length when we come to the Birmingham case and other cases. We know that the Government's proposals fly in the face of the advice that local authorities have received from private auditors, including some of the largest firms of auditors and accountants in the world. They fly in the face of the advice that has been given to Birmingham, for example. We know that the Government are seeking to change the practices which have been authorised, perfectly properly, by district auditors as well as by private accountants. They propose making such fundamental changes in the way in which the rate fund account is calculated that we believe that it is wrong that they should proceed without consultation with those concerned.
      I do not think many people would quarrel with the proposition that there is a good deal of probity and integrity among those who deal with local accounts whether they prepare them as part of the staff of the finance department of a local authority, or those who audit those accounts. However, I am not saying that such people should have exclusive wisdom on such matters. The public have a right to know how such accounts are kept.
      One should defer the operation of this part of the Bill until 1988. That would allow for a year of consultation between the Government, accountants, auditors and those

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      in local government on how matters should proceed. No doubt there is a measure of agreement about the changes that should be made to the calculation of accounts. If this amendment were passed, there would be about 12 months available to consult the various parties about the changes.
      We are not proposing any different practice from that which would be followed if one proposed changing the format of company accounts, corporation tax or any similar fiscal measure. Why should local authorities be treated in this peremptory fashion when those in commerce and industry would be treated with much more consideration? There would also be more consultation with those parties than is proposed with local authorities.
      I ask for this amendment to be carried so that there can be adequate consultation. Such consultation would mean that the Government could reach a decision about the proper way in which to conduct local government accounts.
      Mr. Meadowcroft: I support the proposal to postpone the introduction of these rules for one financial year.
      I sometimes wonder what knowledge Conservative Ministers have about local government processes. It is assumed that the proposed changes can be introduced rapidly. However, local government budgeting processes for the next financial year are well under way. That budgeting commenced in late autumn. The various spending departments have put forward their proposals and they have been considered by the finance and policy committees. The final decisions on budget will be reached shortly. Therefore, it is a devastating thing to suggest that the accounting basis on which a local authority prepares the future year's spending should be changed at this stage.
      I hope that Ministers recognise that local government does not cover some small parish council but vast cities and huge counties with complex financial arrangements. It would be very difficult for local government to institute proper budgetary plans if it faced the prospect of the Government altering, in detail, its accounting processes. Any changes would abide in the next financial year. Therefore, it is perfectly logical and reasonable to suggest to the Government that, if they wish to carry the Bill in its present form, they should be sensitive to the needs of local government and avoid imposing new plans at short notice.
      Dr. Boyson: The Bill is necessary because the total expenditure definition contained in the Local Government, Planning and Land Act 1980 that we presumed meant one thing turned out to mean no such thing. That is why action had to be taken and quickly. That mistake had put at risk the whole settlement.
      The 1980 Act was based upon the recommendations made by the local authority associations but I do not blame those associations. Certain advice came from ministerial advisers within the Department and from the local authorities, but the local authorities were mistaken about the definition.
      The purpose of the Bill is to put back the definition exactly to what was presumably meant in 1980 and had been recommended by the associations. If there had not been any doubt about the definitions, this Bill would not he before the House and we would not have the pleasure of one another's company today and on Monday.
      Amendment No.27 should refer to 1987–88; there is a misprint in its reference to 1977–78. The amendment would
      938
      mean that, in the years after 1987–88, we would have no means of calculating relevant or total expenditure and the rate support grant system could not be operated for those years.
      The House is aware that we have had to rush through this Bill so that we can validate the methods of distribution of rate support grant to enable local authorities to receive the money from the 1 April without a challenge being put down that could stand in the courts against the basis of that distribution.
      6.45 pm
      Opposition Members who have been present for the debate will be aware that my—right hon. Friends and I have no love for the present system of local government finance—[Interruption.] We are proposing a Green Paper on the subject. Therefore, will we have the support of the Opposition?
      Mr. Straw: Ministers are now saying that they have no love for the present system, as if that system had nothing to do with them. I am glad they have no love for it because it is a mess, but will Ministers have the humility to recognise that they set it up?
      Dr. Boyson: Lucky is the man who has never made a mistake in his life. There have been clashes within the Labour party when some consider it has made a wrong decision.
      There is a general feeling within the Conservative party that the present system of local government finance is unsatisfactory. That is why we have suggested the move to the community charge, which has met with Labour party opposition, and the centralisation of the business rate. Both suggestions are in the Green Paper. We already have a Bill going through regarding finance in Scotland and a commitment that we shall introduce a similar Bill affecting the English and Welsh rate support grant and how it is distributed. That Bill will be introduced in the near future.
      Mr. John Fraser: Next week?
      Dr. Boyson: No, not next week but it will be introduced, at the latest, in the first Session of the next Parliament.
      Mr. Allan Roberts: Will the Minister undertake that the Government will not abolish rates in Scotland and then seek to introduce the poll tax after the general election? Will they have the full system working before the general election so that people can decide at the ballot box whether they prefer what has been introduced or what the Government have abolished?
      Dr. Boyson: If the hon. Gentleman is suggesting—it is an interesting proposition—that we delay the general election for five years to enable us to vote on the working of the poll tax he may well have my support.
      Mr. Allan Roberts: The Bill before Parliament will, in theory, abolish the rating system in Scotland and it should be passed before the general election. However, if the general election is called within a certain length of time after the Bill has been passed, the rating system will be abolished but no one will yet have been required to pay the poll tax or community charge. Will the Government delay the general election or speed up the introduction of the payment of the poll tax to apply a true test of which method the electorate prefer?
      Dr. Boyson: Given a choice, I would choose to delay the election. That is much more attractive.
      Mr. Fraser: I believe that the Minister misunderstood my question. I wanted to know whether we would have another local government finance Bill next week on grant recycling and whether it will run in tandem with this Bill.
      Dr. Boyson: I am aware that there is another Bill coming forward. We shall all meet again, of that I am certain, in the House and in Committee upstairs. We can look forward to the same cast and we shall have many performances—not necessarily as many as the Windmill. I cannot pre-empt the Leader of the House or the usual channels to say when that Bill will come forward. I know that there is great zeal on the Labour Benches for that Bill to be introduced, but I must not be distracted any more by interventions from Labour Members.
      It is impossible for the systems that we prefer—centralised business rate and community charge—to be brought in before the next general election. That is why we have to introduce this measure, which will validate existing practice. That is what we are doing throughout. Amendments Nos. 25, 57, 76 and 186 would mean that the new provisions will not apply to 1987–88. Amendment No. 27 would mean that we could not make any reports and supplementary reports for 1987–88 using current practices on total and relevant expenditure. The result would be chaos for local government, so I urge hon. Members to reject the amendment.
      Amendment negatived.
      Question proposed,That the clause, as amended, stand part of the Bill.
      Several hon. Members rose—
      The Second Deputy Chairman of Ways and Means: I will call hon. Members who are rising. Perhaps I should remind the Committee that it is not in order to cover ground that has already been covered in the debate on the amendments.
      Mr. Nigel Spearing: If I trespass on that ruling, Sir Paul, I am sure you will tell me. I want to refer to exchanges between myself and the Secretary of State in the debate on Monday on the first group of amendments in relation to the powers of the Secretary of State over the courts. I submit, Sir Paul, that any matter covered in that debate which was not satisfactorily concluded because of differences of opinion must, under the rules of the Committee, be in order now. In particular, I draw your attention to the exclusion of clause 6(4) which was considered with the first group of amendments.
      On Monday the Secretary of State intervened in my speech and said;
      "I do not know whether the hon. Gentleman was here when I spoke to the amendment, but, even if he was, he does not seem to have heard me. I think that, if he had listened, he would agree that he has the wrong brief."—[Official Report, 19 January 1987; Vol. 108, c. 657.]
      I went on to make some remarks to which the Secretary of State obviously took exception. I have read the debate several times and I wish to respond to what the Secretary of State said. What I wish to say may overlap some of the points of order that were raised earlier today. I apologise to the Committee for not being here but I was upstairs at the time chairing a Select Committee.
      There are three strands to the Bill, as is recognised by everybody—validation of previous practice into statute,
      940
      further measures in respect of rate limitation, and restriction of court jurisdiction. I have sent a letter to the Secretary of State setting out the points that I am now bringing to the attention of the Committee. The Secretary of State must reply to those points at the end of the debate, at a future date or by letter. I am glad to see the Minister assenting to that.
      On the first point, the validation of previous practice in statute, we all agree that that is necessary. In his statement to the House on 16 December, the Secretary of State made it clear that that was what the Bill would be about. He said that it would
      "validate for England and Wales all past decisions involving the use of relevant or total expenditure and allow decisions to be properly taken for the remainder of the present rate support grant system, in line with the practice that has hitherto been adopted."—[Official Report, 16 December 1986; Vol. 107, c. 1051.]
      I emphasise the last words.
      When we came to it, the Secretary of State himself admitted in the debate on Monday that there was an addition to that. He said:
      "I plead guilty, if guilt is involved, in that the Bill goes further than pure validation in regard to rate limitation."—[Official Report, 19 January 1987; Vol. 108, c. 640.]
      So we have a second element in the Bill which does not just restore the status quo ante but sweeps away the whole area of negotiation and determination which has been embarked on with several local authorities.
      The third element, the one where I differ most strongly with the Secretary of State, is on restrictions on court jurisdiction. The Secretary of State says that because court cases are still to be concluded on the basis of the law as it stands, but not after the Bill gets Royal Assent, he thinks that it is necessary, in respect of the measures covered by the validation procedure, to ensure that the determination of the court will be consistent with the law as it will be after the Bill becomes an Act, rather than with the law as it stood when the case was being heard. He seeks to make that change by clause 4(6). That provision needs to be prospective, as well as retrospective, since it will be possible for a judgment to be made before or after Royal Assent. However, it has further consequences. First, it reduces the effective power of the courts over matters that would have been justiciable even if no fault had been found in the legislation. Secondly, it applies to a range of matters in the additional provisions of the Bill. It is the retrospective aspects that are unacceptable.
      In respect of the matters to whose addition the Secretary of State pleaded guilty we have prospective jurisdiction as well. I accused the Secretary of State of court-capping in that he was covering not only the cases where hearings are completed but in which no judgment has been made, but future cases. Clause 6(4) applies to clause 7 and to schedule 2 which covers the designated authorities for which complicated formulae are set out. That stems from the additional powers that the Secretary of State requires. Of course, there could be litigation in respect of those.
      Determination and notification are very important. In clause 6(4) the Secretary of State rules out anything which will have a contrary effect on such notification and determination. By putting clause 6(4) into the Bill he is saying that his executive power will be without the jurisdiction of the court because the words "contrary effect" do not have an obverse effect but an effect different

      941
      from the notification and determination by order or by whatever executive means the Secretary of State wishes to use.
      The Secretary of State clearly thought that I was wrong in what I said on Monday. I am justifying and showing the Committee where I think he is wrong. In the closing part of that debate a remarkable exchange took place between the Secretary of State and my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith). The Secretary of State had talked about retrospective powers for the courts. I interrupted to remind him that it was to be a matter of prospective executive limitation of the courts as well. In reply he said:
      "Therefore, any concept that there can be a challenge to decisions in the courts is a challenge to Parliament because Parliament will have enacted the legislation and these will be the provisions."
      My hon. Friend the Member for Islington, South and Finsbury rose immediately and said:
      "Any subsequent challenge to the designation or rate capping of a specific authority would be a challenge not to Parliament but to the exercise by the Secretary of State of general powers that are given to him by this statute and, in part, included in schedule 2, which does not specify individual authorities, except in a number of specific cases. It does not specify actual figures but it specifies formulae that will be subject to a report or an order to be tabled by the Secretary of State giving his administrative decision."—[Official Report, 19 January 1987; Vol. 108, c. 671.]
      It is therefore clear that the Secretary of State is indeed taking unprecedented executive powers by virtue of clauses 4(6) and 6(4). The Secretary of State does not know what is in his own Bill or he does not know the British constitution or, conceivably, he knows neither.
      7 pm
      As I understand it—it has not been challenged—the liberty of the subject in this realm depends partly on the separation of the powers of the Executive, the legislature and the judiciary. Once the Executive begins to encroach on powers of judicial determination which are properly those of the judiciary, it is taking the judiciary's powers as well as its own.
      I have telescoped somewhat the terms of the letter that I have written to the Secretary of State, but I think that I have incorporated all of its essentials. I hope that the Minister for Local Government will feel able to reply. The Secretary of State is wrong in terms of the constitution. He is wrong to take powers which he must not and should not have if the liberty of the individual and corporate subject is to be protected.
      Mr. Meadowcroft: Although it is quite true that the more objectionable clauses which insert wholly new matter into local government finance come later, there are aspects of clause 1 which make it unacceptable. If we were simply making the law what we thought it was, we would accept clause 1, but subsection 6(b) goes way beyond what is required to validate the existing law. It is a catch-all subsection and makes the clause unattractive.
      The Government are saying that they made a mistake and that they are determined to get the law right. In so doing, however, they have inserted subsection (6) which means that it will not be possible for local authorities to conduct their business legitimately and properly in terms of their powers and their constitution as corporate bodies.
      We object to other aspects of the Bill, but on those grounds we would not want clause 1 to be incorporated into the Bill.
      Dr. Boyson: I shall be brief because we have spoken at length on the amendments.
      I have listened to the hon. Member for Newham, South (Mr. Spearing). His letter was delivered today, I believe, and I have a copy of it with me. I believe that a reply, which will be with the hon. Member shortly, is being prepared. What he has said is fairly technical, but clause 4 is substantially involved.
      Clause 1 requires local authorities to keep for the financial year 1987–88, and in all subsequent financial years, a rate fund revenue account. It provides for certain items of account which must be included in the rate fund revenue account and provides that expenditure and income debited or credited to the accounts that are listed in schedule 1, or to any other account specified by the Secretary of State, should not be debited or credited to the rate fund revenue account.
      The rate fund revenue accounts that we are requiring will be similar to, if not the same as, the traditional non-statutory rate fund revenue accounts which authorities have kept until now. As I have said, we shall keep the present system as far as possible.
      The rate fund revenue account is fundamental to the method of calculating total and relevant expenditure as laid down in clause 1. I hope that the Committee will accept the clause.
      Mr. Straw: My hon. Friend, the Member for Newham, North-East—
      Mr. Spearing: Newham, South.
      Mr. Frank Dobson: Keir Hardie's old seat.
      Mr. Straw: And also the area where my mother was the headmistress of a school, so I ought to remember it. My hon. Friend the Member for Newham, South (Mr. Spearing) and the hon. Member for Leeds, West (Mr. Meadowcroft) have made our objections to clause 1, and we shall divide the Committee.
      Mr. Kenneth Hind: Some of us feel that clause 1 must be part of the Bill. I fully support what my hon. Friend the Minister said.
      I referred on Monday to the Audit Commission report on the London boroughs. It speaks of had management and poor industrial relations. There is a need for proper accounting procedures in many Labour-controlled authorities, especially those which have been criticised often in the House, which cover 5·8 million people.
      The problems were described in the Evening Standard of 2 December under the heading, "London is going bankrupt." The article said:
      "London is heading for bankruptcy, the head of the local government finance watchdog warned today".
      Mr. Tony Banks: Will the hon. Gentleman give way?
      Mr. Hind: Poor management and bad control over expenditure are at the root of those comments. The vast majority of local authorities do not need the clear guidelines that are laid down in clause 1.
      Mr. Tony Banks: Will the hon. Gentleman give way?
      Mr. Hind: Many Labour-controlled authorities need it spelling out. People who expect local authorities to collect and spend money responsibly will respect that point of view.

      943
      Housing has been mentioned. Some authorities are not collecting money from their tenants. Liverpool has arrears of £7·5 million.
      The Second Deputy Chairman: Order. I am finding it difficult to relate what the hon. Gentleman is saying to clause 1. He must speak to clause 1.
      Mr. Hind: I apologise if I have drifted. The structure that clause 1 lays down is badly needed in many local authorities because of their failure simply to collect the rent. In June last year, Southwark had arrears of £24 million.
      Mr. Dobson: On a point of order, Sir Paul. The clause does not relate to housing accounts. The hon. Gentleman referred to housing accounts.
      The Second Deputy Chairman: Order. I shall give the hon. Member an opportunity to relate his remarks to the clause. I am sure that he will do so.
      Mr. Hind: I shall follow your ruling on this matter, Sir Paul. Deferred payments have enabled local authorities to get around the structures of the previous legislation. Again, this needs to be sorted out. We do not wish to saddle our children with burdens caused by the inefficient, poor management of Labour authorities who borrow money today. Money should be properly collected. Lambeth Council has 64,000 unprocessed housing benefit claims, and 923 are more than three years old.
      The Second Deputy Chairman: Order. I am sorry to interrupt the hon. Member again. This is not a general debate; it is a clause stand part debate. The hon. Member's remarks must relate directly to clause 1.
      Mr. Hind: Proper accounting practices are required. Many local authorities do not follow proper accounting practices. It is necessary to impose them upon them. For that reason, I welcome this clause.
      Question put, That the clause, as amended, stand part of the Bill:—
      The Committee divided: Ayes 224, Noes 190.

      Division No. 64]

      [7.10 pm

      AYES

      Aitken, Jonathan

      Brandon-Bravo, Martin

      Alexander, Richard

      Bright, Graham

      Amess, David

      Brinton, Tim

      Ancram, Michael

      Brittan, Rt Hon Leon

      Ashby, David

      Brooke, Hon Peter

      Aspinwall, Jack

      Brown, M. (Brigg & Cl'thpes)

      Atkins, Rt Hon Sir H.

      Browne, John

      Atkins, Robert (South Ribble)

      Bruinvels, Peter

      Atkinson, David (B'm'th E)

      Bryan, Sir Paul

      Baker, Rt Hon K. (Mole Vall'y)

      Buchanan-Smith, Rt Hon A.

      Baker, Nicholas (Dorset N)

      Buck, Sir Antony

      Baldry, Tony

      Budgen, Nick

      Banks, Robert (Harrogate)

      Burt, Alistair

      Batiste, Spencer

      Butcher, John

      Bellingham, Henry

      Butler, Rt Hon Sir Adam

      Bendall, Vivian

      Butterfill, John

      Best, Keith

      Carlisle, John (Luton N)

      Bevan, David Gilroy

      Carlisle, Kenneth (Lincoln)

      Biffen, Rt Hon John

      Cash, William

      Blackburn, John

      Chope, Christopher

      Body, Sir Richard

      Churchill, W. S.

      Bonsor, Sir Nicholas

      Clark, Dr Michael (Rochford)

      Boscawen, Hon Robert

      Colvin, Michael

      Bottomley, Peter

      Coombs, Simon

      Bottomley, Mrs Virginia

      Cope, John

      Boyson, Dr Rhodes

      Corrie, John

      944

      Couchman, James

      Kershaw, Sir Anthony

      Critchley, Julian

      King, Roger (B'ham N'field)

      Crouch, David

      Knight, Greg (Derby N)

      Dickens, Geoffrey

      Knight, Dame Jill (Edgbaston)

      Dicks, Terry

      Latham, Michael

      Douglas-Hamilton, Lord J.

      Lawrence, Ivan

      Dover, Den

      Lester, Jim

      du Cann, Rt Hon Sir Edward

      Lewis, Sir Kenneth (Stamf'd)

      Dunn, Robert

      Lightbown, David

      Durant, Tony

      Lloyd, Sir Ian (Havant)

      Edwards, Rt Hon N. (P'broke)

      Lloyd, Peter (Fareham)

      Evennett, David

      MacKay, Andrew (Berkshire)

      Eyre, Sir Reginald

      Maclean, David John

      Fallon, Michael

      McNair-Wilson, M. (N'bury)

      Farr, Sir John

      McQuarrie, Albert

      Favell, Anthony

      Malone, Gerald

      Fenner, Dame Peggy

      Mates, Michael

      Fletcher, Sir Alexander

      Mather, Sir Carol

      Fookes, Miss Janet

      Maude, Hon Francis

      Forman, Nigel

      Mawhinney, Dr Brian

      Forsyth, Michael (Stirling)

      Meyer, Sir Anthony

      Forth, Eric

      Moore, Rt Hon John

      Fox, Sir Marcus

      Morris, M. (N'hampton S)

      Franks, Cecil

      Norris, Steven

      Fraser, Peter (Angus East)

      Peacock, Mrs Elizabeth

      Freeman, Roger

      Pollock, Alexander

      Gale, Roger

      Portillo, Michael

      Galley, Roy

      Powley, John

      Gardiner, George (Reigate)

      Rifkind, Rt Hon Malcolm

      Gardner, Sir Edward (Fylde)

      Rippon, Rt Hon Geoffrey

      Garel-Jones, Tristan

      Roberts, Wyn (Conwy)

      Glyn, Dr Alan

      Roe, Mrs Marion

      Goodhart, Sir Philip

      Rossi, Sir Hugh

      Goodlad, Alastair

      Rost, Peter

      Gow, Ian

      Sackville, Hon Thomas

      Gower, Sir Raymond

      Sainsbury, Hon Timothy

      Grant, Sir Anthony

      Sayeed, Jonathan

      Gregory, Conal

      Shaw, Giles (Pudsey)

      Griffiths, Sir Eldon

      Shaw, Sir Michael (Scarb')

      Griffiths, Peter (Portsm'th N)

      Shelton, William (Streatham)

      Grist, Ian

      Shepherd, Richard (Aldridge)

      Gummer, Rt Hon John S

      Silvester, Fred

      Hamilton, Hon A. (Epsom)

      Sims, Roger

      Hamilton, Neil (Tatton)

      Skeet, Sir Trevor

      Hampson, Dr Keith

      Smith, Tim (Beaconsfield)

      Hanley, Jeremy

      Soames, Hon Nicholas

      Hannam, John

      Speed, Keith

      Hargreaves, Kenneth

      Speller, Tony

      Harris, David

      Spencer, Derek

      Harvey, Robert

      Spicer, Jim (Dorset W)

      Haselhurst, Alan

      Spicer, Michael (S Worcs)

      Havers, Rt Hon Sir Michael

      Squire, Robin

      Hawkins, C. (High Peak)

      Stanbrook, Ivor

      Hawksley, Warren

      Steen, Anthony

      Hayes, J.

      Stern, Michael

      Hayhoe, Rt Hon Sir Barney

      Stevens, Lewis (Nuneaton)

      Hayward, Robert

      Stewart, Allan (Eastwood)

      Heathcoat-Amory, David

      Stewart, Andrew (Sherwood)

      Heddle, John

      Stewart, Ian (Hertf'dshire N)

      Henderson, Barry

      Stokes, John

      Hickmet, Richard

      Stradling Thomas, Sir John

      Hill, James

      Sumberg, David

      Hind, Kenneth

      Taylor, John (Solihull)

      Hirst, Michael

      Temple-Morris, Peter

      Holt, Richard

      Terlezki, Stefan

      Hordern, Sir Peter

      Thomas, Rt Hon Peter

      Howard, Michael

      Thompson, Donald (Calder V)

      Howarth, Alan (Stratf'd-on-A)

      Thompson, Patrick (N'ich N)

      Howarth, Gerald (Cannock)

      Thorne, Neil (Ilford S)

      Howell, Ralph (Norfolk, N)

      Thornton, Malcolm

      Hubbard-Miles, Peter

      Thurnham, Peter

      Hunt, David (Wirral W)

      Townsend, Cyril D. (B'heath)

      Hunt, John (Ravensbourne)

      Trotter, Neville

      Irving, Charles

      Twinn, Dr Ian

      Jessel, Toby

      van Straubenzee, Sir W.

      Johnson Smith, Sir Geoffrey

      Viggers, Peter

      Jones, Gwilym (Cardiff N)

      Waddington, Rt Hon David

      Jones, Robert (Herts W)

      Wakeham, Rt Hon John

      Jopling, Rt Hon Michael

      Waldegrave, Hon William

      Joseph, Rt Hon Sir Keith

      Walker, Bill (T'side N)

      945

      Waller, Gary

      Yeo, Tim

      Ward, John

      Young, Sir George (Acton)

      Wardle, C. (Bexhill)

      Younger, Rt Hon George

      Watts, John

      Wells, Bowen (Hertford)

      Tellers for the Ayes:

      Wells, Sir John (Maidstone)

      Mr. Mark Lennox-Boyd and

      Whitfield, John

      Mr. Richard Ryder.

      Woodcock, Michael

      NOES

      Abse, Leo

      Freeson, Rt Hon Reginald

      Adams, Allen (Paisley N)

      Garrett, W. E.

      Alton, David

      George, Bruce

      Anderson, Donald

      Gilbert, Rt Hon Dr John

      Archer, Rt Hon Peter

      Godman, Dr Norman

      Ashdown, Paddy

      Golding, Mrs Llin

      Ashley, Rt Hon Jack

      Gould, Bryan

      Atkinson, N. (Tottenham)

      Gourlay, Harry

      Bagier, Gordon A. T.

      Hamilton, James (M'well N)

      Banks, Tony (Newham NW)

      Hardy, Peter

      Barron, Kevin

      Harrison, Rt Hon Walter

      Beckett, Mrs Margaret

      Haynes, Frank

      Bell, Stuart

      Healey, Rt Hon Denis

      Bennett, A. (Dent'n & Red'sh)

      Hogg, N. (C'nauld & Kilsyth)

      Bidwell, Sydney

      Holland, Stuart (Vauxhall)

      Blair, Anthony

      Home Robertson, John

      Boyes, Roland

      Howell, Rt Hon D. (S'heath)

      Bray, Dr Jeremy

      Howells, Geraint

      Brooke, Hon Peter

      Hoyle, Douglas

      Brown, Gordon (D'f'mline E)

      Hughes, Robert (Aberdeen N)

      Brown, Hugh D. (Provan)

      Hughes, Roy (Newport East)

      Brown, N. (N'c'tle-u-Tyne E)

      Hughes, Sean (Knowsley S)

      Brown, R. (N'c'tle-u-Tyne N)

      Hughes, Simon (Southwark)

      Brown, Ron (E'burgh, Leith)

      Janner, Hon Greville

      Bruce, Malcolm

      Jenkins, Rt Hon Roy (Hillh'd)

      Caborn, Richard

      John, Brynmor

      Callaghan, Jim (Heyw'd & M)

      Johnston, Sir Russell

      Campbell, Ian

      Jones, Barry (Alyn & Deeside)

      Campbell-Savours, Dale

      Kaufman, Rt Hon Gerald

      Carter-Jones, Lewis

      Kennedy, Charles

      Cartwright, John

      Kinnock, Rt Hon Neil

      Clark, Dr David (S Shields)

      Kirkwood, Archy

      Clarke, Thomas

      Lambie, David

      Clay, Robert

      Lamond, James

      Clelland, David Gordon

      Leadbitter, Ted

      Clwyd, Mrs Ann

      Leighton, Ronald

      Cocks, Rt Hon M. (Bristol S)

      Lewis, Terence (Worsley)

      Coleman, Donald

      Litherland, Robert

      Conlan, Bernard

      Livsey, Richard

      Cook, Frank (Stockton North)

      Lloyd, Tony (Stretford)

      Cook, Robin F. (Livingston)

      Lofthouse, Geoffrey

      Corbett, Robin

      McCartney, Hugh

      Cox, Thomas (Tooting)

      McDonald, Dr Oonagh

      Craigen, J M.

      McGuire, Michael

      Crowther, Stan

      McKay, Allen (Penistone)

      Cunningham, Dr John

      McNamara, Kevin

      Dalyell, Tam

      McTaggart, Robert

      Davies, Ronald (Caerphilly)

      Madden, Max

      Davis, Terry (B'ham, H'ge H'l)

      Mallon, Seamus

      Deakins, Eric

      Marek, Dr John

      Dewar, Donald

      Marshall, David (Shettleston)

      Dixon, Donald

      Martin, Michael

      Dobson, Frank

      Mason, Rt Hon Roy

      Dormand, Jack

      Maynard, Miss Joan

      Douglas, Dick

      Meacher, Michael

      Dubs, Alfred

      Meadowcroft, Michael

      Dunwoody, Hon Mrs G.

      Michie, William

      Eadie, Alex

      Mikardo, Ian

      Eastham, Ken

      Millan, Rt Hon Bruce

      Evans, John (St. Helens N)

      Morris, Rt Hon A. (W'shawe)

      Fatchett, Derek

      Morris, Rt Hon J. (Aberavon)

      Field, Frank (Birkenhead)

      Nellist, David

      Fields, T. (L'pool Broad Gn)

      Oakes, Rt Hon Gordon

      Fisher, Mark

      O'Brien, William

      Flannery, Martin

      O'Neill, Martin

      Foot, Rt Hon Michael

      Orme, Rt Hon Stanley

      Forrester, John

      Park, George

      Foster, Derek

      Parry, Robert

      Foulkes, George

      Patchett, Terry

      Fraser, J. (Norwood)

      Pavitt, Laurie

      946

      Pendry, Tom

      Soley, Clive

      Pike, Peter

      Spearing, Nigel

      Powell, Raymond (Ogmore)

      Steel, Rt Hon David

      Prescott, John

      Stott, Roger

      Radice, Giles

      Strang, Gavin

      Randall, Stuart

      Straw, Jack

      Raynsford, Nick

      Thomas, Dafydd (Merioneth)

      Redmond, Martin

      Thomas, Dr R. (Carmarthen)

      Rees, Rt Hon M. (Leeds S)

      Thompson, J. (Wansbeck)

      Richardson, Ms Jo

      Thorne, Stan (Preston)

      Roberts, Allan (Bootle)

      Torney, Tom

      Roberts, Ernest (Hackney N)

      Wallace, James

      Robertson, George

      Wardell, Gareth (Gower)

      Rogers, Allan

      Wareing, Robert

      Rooker, J. W.

      Weetch, Ken

      Ross, Ernest (Dundee W)

      Welsh, Michael

      Rowlands, Ted

      White, James

      Sedgemore, Brian

      Wigley, Dafydd

      Sheerman, Barry

      Williams, Rt Hon A.

      Sheldon, Rt Hon R.

      Wilson, Gordon

      Shields, Mrs Elizabeth

      Winnick, David

      Shore, Rt Hon Peter

      Woodall, Alec

      Short, Ms Clare (Ladywood)

      Young, David (Bolton SE)

      Short, Mrs R. (W'hampt'n NE)

      Silkin, Rt Hon J.

      Tellers for the Noes:

      Skinner, Dennis

      Mr. Lawrence Cunliffe and

      Smith, C.(Isl'ton S & F'bury)

      Mr. John McWilliam.

      Smith, Rt Hon J. (M'ds E)

      Question accordingly agreed to.
      Clause 1, as amended, ordered to stand part of the Bill.
      Schedule 1 agreed to.

    Clause 2

      RATE FUND REVENUE ACCOUNTS: FURTHER PROVISIONS
      Mr. Allan Roberts: I beg to move amendment No. 33, in page 3, line 6, leave out second 'the' and insert 'any'.
      The Second Deputy Chairman: With this it will be convenient to take the following amendments: No. 34, in page 3, line 6, after second 'practices', insert
      '(which may be practices which are alternatives to each other, which authorities may elect to use and which have been approved by an authority's auditors)'.
      No. 35, in page 3, line 6, leave out from second `practices' to end of line 10 and insert
      `to be observed in compiling accounts at the date the debit or credit is to be made.'.
      No. 36, in page 3, line 6, after 'practices', insert 'for the time being'.
      No. 37, in page 3, line 7, leave out
      'for the year beginning in 1986'.
      No. 38, in page 3, line 8, leave out from 'items' to 'in' in line 9.
      No. 39, in page 3, line 9, leave out from 'accounts' to end of line 10.
      Mr. Roberts: The title of clause 2 is
      "Rate fund revenue accounts: further provisions"—
      an ominous title. The fact that the title is ominous leads one to inquire in some detail about the implications of the clause, especially in the light of the fact that its provisions follow those in the 13 pieces of local government legislation to deal with housing and local government finance which have been introduced by the Government since 1979. We have been promised a 14th only next week. The Government have still not got it right.
      I want to know when reading
      "Rate fund revenue accounts: further provisions",
      what those further provisions are. The history of legislation under this Government has been one of trying

      947
      to impose central Government's will on democratically elected local government to force them to cut services and make people redundant and one of central Government taking powers to interfere even in the minute details of local government finance and the way in which local authorities organise their accounts and financial affairs. This clause is no exception. The amendments try to do something about that.
      We are again considering "proper practices"—the new concept dreamed up by the Government to enable them to impose their will on the way in which local authorities keep their accounts. Not only the whole of local government, whether Conservative, Labour or alliance authorities, but professional people involved in local government finance—auditors and others—are worried about this.
      The Government's stated purpose in clauses 1 to 3 is to change the method of calculating relevant and total expenditure for rate support grant purposes to bring the law into line with the practices followed since 1981. The Minister has again spelt that out. Transfers of cash from the rate fund revenue account to other accounts or special funds are classed as expenditure and transfers from such accounts back to the rate fund revenue account are classed as income.
      However, clause 2(4) goes well beyond that purpose, just as every aspect of the Bill goes beyond the purposes that the Government claim for it. It gives the Secretary of State unfettered powers—once again—now and in the future to specify what will count as income and expenditure for rate fund revenue account purposes. The Government are taking unto themselves, outside Parliament's control, the power to specify what will count as income and expenditure for every local authority. As we heard in the previous debate, that includes giving the Secretary of State the power to look at the smallest type of account kept by local authorities as well as the rate fund revenue account.
      One of the creative accountancy devices that local authorities have used commonly in recent years, rightly, to keep their expendiure above the level required by the Secretary of State while avoiding massive penalties—there is nothing wrong with that as long as it is within the law—has been the transfer of money to special accounts for use in special years. It is good housekeeping to save up this year so that one can spend the money next year. If a householder did that, the Prime Minister and the Minister would compliment him on being prudent and on thinking of the future, but if a local authority does that it will now be penalised. This subsection could be used to block off those devices, prevent local authorities saving for the future and could force authorities to impose massive rate rises, if they can, or, if they are rate-capped, to make cuts.
      7.30 pm
      The powers that are sought in the subsection go well beyond the stated intention of the Bill and the Government should come clean about the legislation and admit what they are doing. This is another piece in a long line of 12 pieces of legislation to control and to take more powers over local government. The powers are subject neither to parliamentary scrutiny nor to consultation with
      948
      authorities. We were at least given those assurances by previous Secretaries of State for the Environment when they passed their rate-capping and other legislation.
      The powers are left totally at large and it is not clear whether internal transfers of cash from account to account are caught by the procedures specified in clause 2(4). It is clear that transfers of cash from an external source to the rate fund revenue account are caught in that way, if the Secretary of State says they are.
      The legislation does not just validate what has happened in the past. It alters the way in which things happened because it gives the Secretary of State power to alter the practices of the past and to prevent local authorities from taking advantage, as they have been able to in the past, of those transfers, which were legal, and had been validated, but which will now be made illegal if the Secretary of State so determines, not if Parliament so determines. On Second Reading, the Under-Secretary of State for Scotland hinted that some internal transfers "may be caught". However, it appears that all internal transfers will be caught, if the Secretary of State so deems.
      Income from external sources to the rate fund revenue account often emanates from sources that may be treated, in professional accountancy terms, as capital or revenue. There are a number of different professional practices on that issue. The power that the Secretary of State is taking under clause 2(4) holds out the possibility of him making unlawful only a certain number of the professional practices that are currently used. That is bad legislation, because it is unclear from the Bill what use the Minister will make of those sweeping powers. By ministerial diktat, many local authorities could be deprived of many millions of pounds of revenue income. If the Secretary of State has total discretion, and if past performance is anything to go on, he will deprive Labour local authorities of millions of pounds of income and turn a blind eye to Conservative local authorities, or even to some hung councils and Labour local authorities in areas in which some of his hon. Friends have marginal seats. The Minister should give clear assurances as to how that power will be used.
      Amendments Nos. 33, 36, 38 and 39 deal with the new concept of "proper practices", which will be used to enable Ministers to interfere in even more detail with local authority financial activities. The amendments seek to restore some discretion to local authorities. Any true believer in local government and in the need for people to be able to alter the nature of and the way in which their local authority is run by voting in a local election should support the amendments. We are restoring discretion to local authorities in relation to accounting practices which are heavily circumscribed by clause 2(3). That subsection fails to give a fair definition of "proper practices".
      My hon. Friends and I have asked the Minister four or five times, in Committee and on Second Reading, to define the words "proper practices". We still have not received that definition. The subsection still fails to give a clear definition, although it seeks to describe those practices as being applicable to the entry of the sort of income and expenditure that the Bill requires to be charged against a rate fund revenue account. What on earth does that mean? The Government should clarify the meaning of those practices, and our amendments give the Government that opportunity.
      The amendments would also broaden the definition to cover any practices applicable for the time being for the entry of items of account into such a fund. In other words,

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      local authorities would be allowed to continue acting, in the same way as in the past, which has been legal and proper, and which internal and external auditors have already validated. That would give local authority treasurers some opportunity to exercise professional judgment in the application of accounting practices in areas that are covered by the Bill.
      Amendment No. 37 is significant because it would remove the retrospective element from the definition of "proper practices". Retrospective provisions and retrospective legislation are, all other things being equal, bad legislation. If the legislation validated the previous custom and practice as legal—as everyone believed—and merely corrected that, as my hon. Friends and I have said earlier, there would not be a problem. However, it does not. The retrospective elements concerning the definition of "proper practices" introduces an entirely new concept.
      At present, clause 2(3) applies the rather vague definition of the practices as being
      "for the year beginning in 1986"—
      or, in other words the financial year 1986–87. Amendment No. 37 would remove those words, with the result that the definition of requirements flowing from it would take effect from the date of Royal Assent. Therefore, the retrospective nature of the legislation would be removed, without any detriment to local or central Government.
      We do not see any reason why there should be retrospection when it is not necessary, or even why it should be applied at all. It is not designed to prevent the retrospective validation in law of what has happened, nor does it alter the difficulties that central and local government now face in paying out rate support grant if the Bill becomes an Act. On the contrary, it seeks to further certainty in local government finance by preventing the retrospective application of proper practices. The authority requirements of clause 1 are intended to take effect from 1987–88 onwards. The Government should explain why those proper practices should take effect from 1986–87 when there is no need for the entirely new concept that has nothing to do with validating what has previously happened.
      Opposition Members, and, I am sure, some Conservative Back Benchers, are amazed at the nature of the legislation and at the outrageous statements that Ministers are making to justify it. Ministers have staggered from one disaster to another. Unless they take on board the intent of our amendments and accept some of the constructive points made by Opposition Members, and if the legislation reaches the statute book without serious amendment, Ministers will be setting themselves up for another series of disasters and will be in the same difficulties in future as they are now.
      As I have said, that all goes to prove that central Government cannot run the affairs of local government as well as the locally elected councillors and their chief and other officers.
      Mr. Meadowcroft: I shall concentrate briefly on two amendments in this group. I agree entirely with the hon. Member for Bootle (Mr. Roberts) that amendment No. 37 contains no requirement whatever for retrospection. The subsection concentrates on the issue of proper practices, which seems to be an obsession with the Government. As there is no requirement for the validation of the £70 billion
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      of local government expenditure to have retrospection in relation to proper practice, I accept the terms of amendment No. 37.
      One issue that has been hardly touched on by hon. Members either on Monday or today is that the profession of the auditor appears to be called into question by the way in which the Government have presented the legislation. In that context, amendment No. 34 is extremely important. I have a high regard for the internal audit of local government. In my time in local government, I have known many auditors employed by the local authority who exercised their authority to point out bad practices and to ensure that they were rectified without fear or favour from departments within the local authority.
      The provision also demeans the practice of external auditors. It does not matter whether they are professional or district auditors: the fact is that the external audit of local government is held in high regard and should not be diminished by the Government's proposals.
      The way in which the Government take powers to themselves says to auditors, "We do not trust you and we alone will be the arbiters of what is proper practice; we will set the one route down which you must go." It is saying to the external auditors, "We do no even accept your high standards."
      As I said in an earlier debate, the distinction between what is legitimate accounting, which seems to make the cost advantageous use of local authority resources, and what I would regard as improper practice, is whether a course of action can be sustained within the policies of the Government of the day. If it cannot and it has to be rescued by some future Government, then I would regard it as improper. The interesting thing is that case after case that has fallen into the latter category has been picked up by external audit. It is not something that has been hidden. It has been pointed out, and some cases have gone to the courts. The report to which the hon. Member for Lancashire, West (Mr. Hind) referred, however badly or incorrectly, has come into the public eye. It was not hidden.
      The present practices and methods of audit have all served to expose that which ought to be exposed. There is no necessity for the proposals on proper practice in clause 2. That is why amendment No. 34 is important. It accepts the professional standards of the auditors and says that there can be alternative practices, as long as they are approved by the auditors. That is where the responsibility properly lies. It should not lie prescriptively with the Government to say that there is one narrow road down which we must go and that there is no diversion from it. Therefore, the important aspects of this group of amendments are that they remove retrospection, which is not necessary, and trust the powers and professional standards of the auditors.
      Mr. Pike: These amendments are important. They seek to bring the position as close as possible to that which we understood to be in existence prior to the legislation being introduced. The way in which the clause is worded could lead to a retrograde step. It challenges not only the political judgment of local authorities, of whatever party, but the professional judgment of officers, whether the chief executive officer, the borough treasurer, the internal audit system or, as the hon. Member for Leeds, West (Mr, Meadowcroft) pointed out, even the external audit system. It is left solely to the Government to decide what they

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      determine to be "proper practices". I wonder why we should believe that the Government are the only people who have the ability to determine what is proper practice. It is the wrong direction in which to be moving.
      7.45 pm
      The phrase "proper practice" appears in the clause on several occasions. It is very vague and does not say what the Government mean. However, we know that the Government are trying to prevent what they see as creative accountancy. However, creative accountancy has come into being only because of the actions of the Government and the way in which they have dealt with local government in recent years. I have been connected with local government for many years in one way or another. Ten years ago the phrase "creative accounting" had not even been heard of. I am sure that many people who served on local councils never got to know what the phrase meant.
      I have always accepted that, at the end of the day, the Government have the right to determine how much money they are prepared to give to local government. I believe that the House and local government have the right to argue about whether that amount is sufficient to meet the needs of local areas. I believe that the Government have gone wrong by failing to make sufficient money available. I accept, although I do not like it, that they have the right to determine that figure. However, they have tried to deprive councils of the freedom to raise locally what people are prepared to pay in additional income to the council to enable it to provide the services that are required.
      I believe that when councils provide the necessary services they are looking responsibly at the needs and requirements of the communities they represent, whether that be domestic ratepayers, industry or commerce. All councils know that if their areas are to survive they must maintain industry and commerce. No council puts up rates deliberately to punish industry or anybody else. Domestic ratepayers have a direct say in whether they are satisfied that the council is doing its job correctly and meeting the needs of the community.
      As councillors we found it difficult every year. We knew what we wanted and needed to do to meet the needs of the community, but that had to be balanced by what we could do and by what we could ask the ratepayers to pay. If the clause is not amended it will limit the power of councils to try to get the best possible deal for the people they represent. It is the duty of councillors, from whichever party, to do their best for the people in their communities. That is not only the responsibility of the councillors, but it is the task of the officers. As long as councils work within the law and are acting in the interests of the community I believe that they will be using "proper practices" to protect the interests of those they represent.
      While I was the leader of the council I had to take the chairmanship of the local authority finance committee for a year because the chairman of finance became the mayor of the borough. We set up a fund to finance a project to convert an existing listed building next to the town hall into an arts centre and theatre. That opened last year. The officers said to the leaders of the council that if we put a certain amount into a special fund we would incur penalities because we would spend more than the
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      Government would permit. However, they said that we would receive grant at a higher level then the penalties. Therefore, we decided to put money into the fund because that was in the best interests of the people we represented. I am sure that the Minister will say that we were wrong to do that. However, I would argue that we were acting in the best interest of the community by putting the money to one side, benefiting the ratepayers in future years by the equivalent of a penny rate.
      If the clause stands in its present form, I am sure that the Government will be able to decide that what we did was not proper practice and that it would be outside the provisions of this legislation. That is just one example. I could give many others, but I do not intend to do so because we wish to make progress.
      If the Government are not prepared to accept one or more of the amendments and to try to move in the direction that we seek, it will be yet another blow to local government, another restriction, another limitation on the ability of local authorities to meet the requirements of the people whom they represent. At the end of the day, it is local government that knows what is best for the people in the area. Before 1979, the Government said that they would give freedom to local government, which has been referred to many times in earlier debates. Everything that the Government have done has been in the opposite direction.
      We believe that local authorities should have more powers and the ability to finance what they do, although I accept that, while we may argue strongly about the figure that the Government say they are prepared to put in, the Government have the right to determine exactly what they wish to pay. The clause should not remain as drafted. It was unnecessary for the Government to draft it in that way to deal with the problem that has arisen as a result of their own legislation. The Government are wrong, yet once again they are striking a blow at local government.
      Mr. Clelland: It is not only unreasonable and unfair but unnecessary for the Government to impose these further restrictions on local authorities. After all, in their accounting practices and finances, local authorities are more open than any other organisation, probably including even central Government. Local government accounts can be scrutinised by electors and auditors. They are run in a professional manner by the treasurers and finance officers who are responsible for them. Therefore, one must ask why the Government feel it necessary to introduce the concept of "proper practices" into rate support grant law.
      We know that "proper practices" are already exercised by the auditor, or at least he has to see that the authority has observed proper practices in compiling its accounts, but apparently the Government now wish to apply the concept also to rate support grant law. It is not as if that was the only thing that the Government were doing. Apart from imposing the concept of proper practices in the clause, they intend to provide the Secretary of State with yet more power to specify expenditure or income that is to be regarded as of a revenue nature. Thus there is a double-pronged attack on local authorities. The Opposition think that that is unnecessary. The Minister should explain the necessity for the provision, if the Government feel that it is necessary.
      A full explanation would be appreciated, particularly in the light of the Government's record of explaining their

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      decisions. The Minister will recall that I have had considerable correspondence with the Department about the reason why Newcastle city council was refused disregards. I appreciate the reply that I received yesterday to a letter that I wrote to the Department in October last year. The reply has taken a long time to come to me; it arrived yesterday and tells me no more than what the Minister's predecessor told me, which is that the Minister will not tell me anything. If that is the practice that will be adopted, not only will local government have to observe proper practices that are not defined, but it may not even be given an explanation of why it is in breach of proper practices that were not defined in the first place, after the Minister imposed them. That is the ridiculous maze that local government finance is entering.
      I support the amendment. I hope that, in his reply, the Minister will explain to the House a little more fully exactly what the proper practices are intended to be.
      Mr. Tony Banks: I wish to speak to the various amendments on proper practices. I should like, first, however, to take the opportunity to correct something said by the hon. Member for Lancashire, West (Mr. Hind) when he spoke in the clause stand part debate. It relates to the financial practices of local authorities. He said that the Audit Commission chief, John Banham, had suggested that Labour local authorities in London were heading towards bankruptcy. In justification of that accusation, he quoted a story in an edition of the London Evening Standard in December. He could have gone on to quote a story that appeared on Sunday in the Sunday Telegraph, a newspaper that I have been keeping about my person since the debate started, drawing some comments from the Minister for doing so.
      We must get the record absolutely straight. The stories that have appeared in the Tory newpapers such as the London Evening Standard and the Sunday Telegraph bear little relation to what John Banham actually said. We know that the stories are all part of the generalised Tory onslaught on Labour local authorities. In particular, inner London Labour-controlled authorities have found themselves virtually sinking below the financial waters because of Government policies, loss of rate support grant and so on—all the things that we keep discussing in the House. In various ways they have tried to mitigate the impact of Government policies, and in doing so have become involved in several accounting practices that the Government now wish to proscribe.
      It must be said that none of the things that local authorities have done in creative accounting have been declared illegal. That is the important point. It is the Secretary of State's practices that have been effectively declared unlawful or illegal, hence the need for the Bill. Before one starts throwing accusations around about the special accounting practices of Labour-controlled authorities, one should bear it in mind that at no stage has anyone been able to say that those are illegal practices.
      Following the story that appeared in the London Evening Standard, councillor Margaret Hodge, who chairs the Association of London Authorities, wrote to John Banham and asked him for his comments. The hon. Member for Lancashire, West used the comments in the London Evening Standard as a rerun of his speech on Second Reading and of that which he delivered on the First
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      day of the Committee stage. He has only one speech, and I suspect that we shall hear it time and again before we reach the end of the Bill.
      Mr. Martin M. Brandon-Bravo: The hon. Gentleman has only one speech.
      Mr. Banks: My speeches vary.
      Mr. Brandon-Bravo: Only marginally.
      Mr. Banks: My speeches vary in content and pitch, and in the general level of boredom, hysteria, humour, intelligence or whatever, so at least I can say that I vary the pace somewhat. But the hon. Member for Lancashire, West has a line and he sticks to it. He ain't ever going to give way to anyone. He is deliberate in his policy. Obviously, he pursues a policy of cerebral hygiene. He does not want to be given information, so he ploughs on. I am prepared to give way to any Conservative Member who wishes to intervene.
      I return to the article that the hon. Member for Lancashire, West quoted from the London Evening Standard and the comments ascribed to John Banharn, the chief of the Audit Commission. Mr. Banham described the report as "inaccurate", and said:
      "My paper made it clear that the commission was not in favour of privatisation as a universal prescription.
      At no time did I suggest that there was any possibility of local authorities in London or anywhere else becoming technically bankrupt.
      Indeed I made the point explicitly that borrowing ratios in local government were relatively modest by private sector standards."
      That is what John Banham said in response to the stories that appeared in the London Evening Standard. Some hon. Members might have heard the erudite speech by my hon. Friend the Member for Vauxhall, who probably has a far greater grasp of economics than anybody else in the House. He made precisely the same point. The Secretary of State laughs. He is not the person to go around bragging about his economic prowess. I suggest that if he wants to challenge my hon. Friend the Member for Vauxhall to a debate about economics, he will get the whipping of his life.
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      Mr. Meadowcroft: The hon. Gentleman rightly referred to what Mr. Banham said and the correction that he made. The hon. Gentleman is also aware that I am no lover of the line purveyed in this Chamber regularly by the hon. Member for Lancashire, West (Mr. Hind). Does he accept that Councillor Mrs. Hodge has also written a long article in the current edition of New Socialist in which she refers explicitly to the accounting practices of Islington and makes the point very straightforwardly that unless a future Labour Government were to do something retrospectively about money, the so-called dented shield that she and her colleagues in the Labour party have been urged to hold up would be unable to survive? The accounting practices in Islington have fallen on the wrong side of the division to which I referred earlier and cannot be sustained within the philosophy of the Government of the day. To my mind, therefore, they are improper.
      Mr. Banks: The hon. Gentleman is correct in part. Local authorities that have attempted to defend jobs and services—they are probably the most hard-pressed local authorities in the country—have been caught up in a major problem. In attempting to defend jobs and services

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      they have involved themselves in financial accounting practices that would be difficult to sustain if there were another Conservative Government.
      Labour local authorities, in particular Labour local authorities in London, are doing certain things upon the assumption that there will be another Labour Government. I do not believe that the structure of local authority finance can survive another Conservative Government. Those local authorities have taken a risk. It is a high risk strategy, but it is justifiable in terms of what they are seeking to do. I am very honest and straightforward about what is going on in local authorities in London, and their high risk strategy requires a Labour Government. If we do not have another Labour Government, local authority finance will be destroyed. It will be the Government's baby.
      I have suggested that we should say to the Government, "It is impossible for us financially to manage this local authority; the Government must now take over the running of the local authority so that the people in the area will see who is truly responsible for the impact on the services within the area." One of the problems that the dented shield philosophy poses for Labour authorities is that they are blamed by the local electorate for the decline in the standard of services, although the blame should be laid firmly at the Government's door.
      Mr. Ridley: Is the hon. Gentleman aware that his hon. Friend the Member for Copeland (Dr. Cunningham) and the leadership of the party to which he belongs have made it clear that they will not bail out the Labour authorities? It is indeed an extremely high risk strategy. If it is not right for the Labour party to bail out these authorities, why does the hon. Gentleman suggest that the Conservatives should bail them out? If all parties—including, I believe, the party of the hon. Member for Leeds, West (Mr. Meadowcroft)—are of this opinion, the risk is so high that it must have been absurdly reckless to undertake it.
      Mr. Banks: No, I do not agree. It does not greatly surprise me that my views and those of my hon. Friend on the Opposition Front Bench are different. I am not aspiring to high office. Therefore, I can preserve the degree of personal candour that perhaps cannot be retained by others—[HON. MEMBERS: "Oh."] I make that point in a friendly and amicable fashion, but I can stand up and speak my mind in this place without fear or favour.
      It is not a question of bailing out the local authorities. I understand that a Labour Government will restore the relationship between centrally funded services and locally funded services. They will return the rate support grant to the point where it bears some relationship to the position that existed before 1979. That would solve the majority of the financial problems that are now faced by Labour local authorities.
      It goes much further than that. Labour local authorities are not involved merely in trying to get round this or that specific Act in terms of their accounting practices. They also have to deal with the impact on their local communities of central Government policies across the whole spectrum. For example, the Government's economic policies have a major national impact on unemployment.
      The Chairman of Ways and Means (Mr. Harold Walker): Order. The clause relates to accountancy
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      methods, not to how the money is counted. We are now talking about the amount of money and how it is distributed. We ought to return to the clause.
      Mr. Ridley: The hon. Member for Newham, North-West (Mr. Banks) is now suggesting that a future Labour Government would restore rate support grant to the 64 or 65 per cent. level of 1979.
      Mr. Banks: It was 61 per cent.
      Mr. Ridley: Very well, 61 per cent. I could not remember the exact fgure. I wonder whether the Opposition Front Bench would confirm that suggestion. It is important that the local authorities should be aware of precisely what the position is.
      The Chairman: Order. Important though it may be, I do not think that its importance is related to the substance of the clause that is before the Committee. I hope that we shall return to accountancy.
      Mr. Banks: Indeed, Mr. Walker. I am exploring the areas of broader concern and interest in order to explain why local authorities have become involved in special accounting practices. I take your point that that relates to counting the money. However, one needs to know how much money one has before one starts to allocate it. Local authorities find that they do not get the same sort of money as they used to get from central Government. I am as interested in the reply to that question as is the Secretary of State: whether the next Labour Government will be taking rate support grant, in terms of central Government contribution, back to the percentages that were achieved during the period of the last Labour Government. I shall willingly give way to my hon. Friend the Member for Blackburn (Mr. Straw) if he wishes to confirm the point.
      I rose merely to correct a very misleading newspaper story that was quoted by the hon. Member for Lancashire, West. I am afraid that it will be necessary on a regular basis to correct the distortions of Conservative Members about the policies and the financial practices of Labour local authorities. They are staying within the law. That is why the law keeps being changed. If the local authorities were acting unlawfully, the district auditor would be able to move in on them, the ratepayers would be able to take them to court and they could be accused of not fulfilling their fiduciary duties in respect of rate-borne expenditure. None of that has happened. It is the Secretary of State, not Labour local authorities, who is in the dock. Therefore, it is absolutely misleading and incorrect for Conservative Members to start pointing the finger at Labour local authorities when the real lawbreakers, the real recidivists, are sitting on their own Front Bench tonight.
      The Parliamentary Under-Secretary of State for the Environment (Mr. Christopher Chope): We have had two debates on this group of amendments. The latter debate, initiated by the hon. Member for Newham, North-West (Mr. Banks), gave us a fascinating and candid insight into the debate taking place in the Labour party about the extent to which inner London councils run by that party are already bankrupt or about to become bankrupt, and about the extent to which any future Labour Government would be prepared to bail out those councils. We have also heard about the philosophy of the dented shield. The hon. Member for Blackburn (Mr. Straw) ought to reply to that debate and I hope that in due course he will have an

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      opportunity to explain where he stands on the important issues raised by the hon. Member for Newham, North-West.
      Probably much less interesting to hon. Members but nevertheless important for people outside who are trying to follow the proceedings on this Bill has been the main debate on this group of amendments which was initiated by the hon. Member for Bootle (Mr. Roberts). I noted that most of his remarks were addressed to clause 2(4) which is the subject matter not of this group of amendments but of the next group. For that reason I hope that he will forgive me for not replying in detail to the points that he made. He said that clause 2 was ominous. It is ominous only to someone who does not understand it. With the indulgence of the Committee, I shall read some quite lengthy notes on what clause 2 is all about.
      These amendments relate to the rate revenue account, and it may assist the Committee if before dealing with the detail of the amendments I explain the general approach that we are adopting in the Bill to the rate fund revenue account.
      Clauses 1 and 2 of the Bill set up in statute the rate fund revenue account for the purposes of the new statutory definition of relevant and total expenditure which is in keeping with the current approach that in practice we have adopted for relevant and total expenditure. Although not required to do so by statute, local authorities have in general kept an account of their main revenue transactions—an account which has often been known as the rate fund revenue account. Current practice on relevant and total expenditure, as distinct from the statutory provisions in the Local Government, Planning and Land Act 1980, has been to calculate relevant and total expenditure by reference to these traditional rate fund revenue accounts, Therefore, the provisions in the Bill, which are designed to maintain the status quo on relevant and total expenditure, introduce into statute the concept of the rate fund revenue account.
      I must stress that this concept is introduced solely for the purposes of providing a statutory definition of relevant and total expendiure. It is not an attempt to control local authority spending, nor is it an attempt to regulate local authority accounting. As mentioned in earlier debates in Committee, my right hon. Friend already has powers under section 23 of the Local Government Finance Act 1982 to make regulations about such matters as the form of accounts and statements of accounts. I remind the Committee that my hon. Friend the Minister for the Environment, Countryside and Planning, when he was Minister for Local Government, announced on 28 February 1986 that we had decided not to make new regulations on local authority accounts, but to invite the local authority associations in conjunction with the Audit Commission and accountancy bodies to set up their own arrangement for dealing with accounts. This remains the Government's position, and I am pleased to tell the Committee that the Chartered Institute of Public Finance and Accountancy together with officers of the Audit Commission have now prepared a draft code of practice on local authority accounts on which they are currently seeking comments from local government and other interested parties.
      The provisions of the Bill are designed so that the statutory rate fund revenue account which authorities will be required to keep for 1987–88 and subsequent years will
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      be very similar, if not the same, as the traditional non-statutory rate fund revenue accounts which authorities have in general been keeping. The starting point is that in clause 1 the rate fund revenue account is identified as the account to which all revenue expenditure and income must be debited or credited—with the exception of that revenue expenditure or income which is properly debited or credited to certain other accounts. The revenue expenditure and income to be excluded is not simply that which is properly debited or credited to any other account kept by the authority, since expenditure and income included in memorandum accounts—such as the account for section 137 expenditure—should also be included in the rate fund revenue account. This is the way the non-statutory rate fund revenue account has traditionally been kept. The main accounts, the expenditure and income of which are to be excluded from the rate fund revenue account, are specified in schedule 1. The power for my right hon. Friend to make specifications under clause 1(6)(b) will enable us to cope with any other such accounts, including any such accounts established by local Acts.
      8.15 pm
      In addition to revenue expenditure and income, other items of account can be included in the rate fund revenue account, such as contributions to special funds or certain capital expenditure, where this conforms to proper accounting practices. Clause 2 provides that these practices are any practices drawn from the practices applicable to the traditional non-statutory rate fund revenue accounts in 1986–87, but taking into account variations in practice occurring from time to time. I should say something about proper practices. Local authorities prepare their accounts according to proper practices and a local authority's auditor is required to satisfy himself under the Local Government Finance Act 1982 that proper practices have been observed in the compilation of the accounts. These practices are not set out in statute, and accountants and auditors—in particular the professional accountancy institutes—have developed, and continue to develop, accounting practices which are considered proper for local authority accounts. The Bill does not specify precisely what the proper practices are. As I have already made clear, it is not our intention to interfere with local authority accounting. Clause 2 of the Bill provides that the practices to be applied to the statutory rate fund revenue accounts are those applicable in 1986–87 to traditional non-statutory rate fund revenue accounts, but will take account of variations of practice occurring from time to time.
      Mr. Meadowcroft: Has the Minister seen the draft code prepared by CIPFA? It looks at the points that we have been debating about the difference between reserving money and providing for committed expenditure. The Minister talks about things being included in the rate fund account and ordinary practice, but they are already contained in the code. I am baffled as to why he has to go through this great rigmarole when what has been proposed and sent out for consultation covers the points that he is making.
      Mr. Chope: I shall come to the point about why it is necessary to set out in this clause the relationship with proper practices. I have not read the detail of the substantial volume that has been produced as a code of

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      proper accounting practice. If in this clause the Government were defining one sort of proper practice and saying that no local authority could adopt any other practice, perhaps even one which had hitherto been regarded as proper, then local government would have cause for complaint.
      In order to emphasise that the status quo has been maintained we say that anything which has been proper accounting practice can be taken into account. We say that when the authority compiles its rate fund revenue account for 1987–88 it can select such practices as it considers appropriate from the body of practices that were applicable in 1986–87. That is why amendments Nos. 33 and 34 are unnecessary. I ask the Committee to reject them.
      Allegations were made that amendments Nos. 35 to 39 were sinister because they were retrospective. I hope that I can demonstrate to the Committee that the only way in which they are retrospective is that they refer back to proper accounting practices being used at present. If we do not refer back to those practices it is hard to know what they are when we talk about defining them in the Bill.
      Amendments Nos. 35 to 39 seek to remove any connection between the practices to be used for compiling statutory rate fund revenue accounts with the practices applicable in 1986–87 to non-statutory rate fund revenue accounts. The result of that would be that the practices to be used for compiling the new statutory rate fund revenue accounts would merely be practices properly applied to that new account.
      As the statutory account is a new entity, no one would know what these practices are. The point that the Opposition have made is that by the issue of these accounts we are creating a situation whereby local authorities will not know where they stand. If the amendments proposed by the Opposition were to be passed, local authorities would indeed be able to complain that they were in the dark, because no one would know what the practices were.
      If the statute is to provide for the new rate fund revenue account to be like the traditional rate fund revenue account, we must refer to the practices that apply to that traditional account. This is best done by referring to the practices that are applicable to the traditional non-statutory accounts kept for 1986–87, which is the last year before authorities are required to keep the new statutory accounts, and take account of variations in practices occurring from time to time.
      This is a complicated subject, but it has been made more complicated by the failure of Opposition Members to understand what it is about, and their attempts to raise the spectre that this is introducing something sinister. This clause is designed to help local authorities prepare for the new definition set out in this Bill, and I hope that the Committee will reject the amendments.
      Mr. Allan Roberts: What a tangled web we weave. The purpose of this complicated legislation, in the words of the Minister, is to enable local authorities to know where they stand. The Minister's explanation was about as lucid and illuminating as the clause itself. If, after reading it in Hansard and studying the clause, local authorities know where they stand I shall be amazed.
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      In this clause, the Secretary of State is taking powers unnecessarily to legislate retrospectively. As he is to interfere in the day-to-day detail of local authority accounts this complicated plethora of measures is needed to hedge everything about, to make this or that account clear, to put in to legislation, so that the Government can validate their own mistakes, what local authorities do now anyway. The clause and speech of the Minister are hallmarks of the Government's approach to local government. All of this is needed because the Government have decided that they can run local government better than the people who know their own communities and who are accountable to their own electorate.
      We shall not push these amendments to the vote. The Minister has attempted to some extent to explain what the Government mean by proper practices. He has said that local government is carrying out proper practices. If that is so, why do we need this legislation? We need this detailed, interfering legislation because the Government want to control the details of local government and interfere. I honestly believed, when some Conservatives said that they did not believe in bureaucracy, that they meant it, but I am beginning to doubt that.
      Amendment negatived.
      Mr. Straw: I beg to move amendment No. 40, in page 3, line 11, after 'any', insert 'initial or intermediate'.
      The Chairman of Ways and Means: With this it will be convenient to take the following amendments: No. 41, in page 3, line 11, after 'year', insert
      'commencing not less than twelve months after the date of specification.'.
      No. 42, in page 3, line 11, leave out subsection (4) and insert—
      '(4) The Secretary of State may specify in respect of any initial or intermediate year, kinds of expenditure or income from an internal source which are to be regarded as of a revenue nature for the purpose of debiting or crediting items of account to a rate fund revenue account.'.
      No. 43, in page 3, line 11, leave out subsection (4).
      No. 45, in page 3, line 12, leave out 'are to' and insert `in his view should'.
      No. 47, in page 3, line 14, at end insert
      'and a local authority shall have regard to any specification made under this subsection in determining whether or not to debit or credit items of account to its rate fund revenue account'.
      No. 49, in page 3, line 14, at end insert
      'but any such specification shall not override any decision by a local authority as to any expenditure or income regarded by it as of a revenue nature for such purpose where that decision is in accordance with the practices mentioned in subsection (3) above.'.
      No. 50, in page 3, line 14, at end insert
      'and any authority shall have regard to any such advice from the Secretary of State in determining the form in which to maintain its account'.
      No. 53, in page 3, leave out line 16.
      No. 56, in clause 3, page 3, line 46, at end insert
      'commencing not less than twelve months after the date of specification'.
      No. 73, in page 4, line 14, at end insert
      'commencing not less than twelve months after the date of specification.'.
      New clause 6—Consultations—
      'No specification under section 2 above shall be made before the Chartered Institute of Public Finance and Accountancy and the local authority associations are consulted.'.
      Mr. Straw: These amendments relate to the powers of the Secretary of State to specify income and expenditure items. The amendments seek to circumscribe the power given to the Secretary of State in clause 2(4) to specify the kinds of income or expenditure that are to be regarded as revenue for the purposes of the rate fund revenue account. Some authorities fear that that power may lead the Secretary of State to take measures by use of the specifications to restrict special accountancy techniques to maintain spending levels.
      Ministers have come to Parliament over the last couple of years and given notice that they consider that a particular arrangement should no longer apply. I recollect that that was the case with section 7 of the Rate Support Grants Act last year. As I recall—I stand to be corrected—we did not object to that clause. Do the Government intend—the Minister can inform us when he replies—to deal with special or creative accountancy techniques? I hope that the Minister will make that clear, because, while he may take exception to some of those techniques, they have been accepted by auditors and the district auditor as legitimate in the past, and it is important that authorities should understand their position.
      The problems of local authority accounting techniques have changed in the last seven years. They have changed out of all recognition, not just because of the cuts in the absolute level of rate support grant from 61 per cent. to 47 per cent., but because of the impact of target and penalty and the penalty-related block grant that authorities receive.
      Once they spend over a certain level they get less rather than more. That has meant that what is brought into account on the revenue side in any given year is of far more critical importance to its revenue than it ever was in the past, when the amount of grant that they received was only broadly related to their expenditure, as was the system before 1980. Marginal changes in given revenue expenditure did not produce the dramatic differences in income through block grant that the system now produces. I hope that the Minister takes that point on board. It is the introduction of these penalty systems—not just the changes of absolute income—that has led authorities to search for other devices to transfer revenue expenditure into forms of capital expenditure.
      Amendment No. 41 would impose a 12-month period on any specification issued by the Secretary of State. That is to enable local authorities to have some warning of the terms of any changes in the rules—a point that I have just referred to. It is important that authorities are given breathing space and given notice of the effect that new technical accounting specifications may have on their levels of real income, and therefore expenditure.
      Amendments Nos. 45 and 49 would remove the mandatory nature of a specification by the Secretary of State, and in its place he would be entitled to issue advice, which local authorities would have a duty to regard. The Minister will recall that when he was a humble Back-Bencher during the course of proceedings on the Local Government Bill in 1985 there was a lengthy debate—I think it was that Bill and not one of the other endless pieces of local government legislation to which it has been my lot to devote the last four years—[Interruption.]
      Mr. Tony Banks: My hon. Friend has done very well.
      Mr. Straw: I wish to place on record, for the avoidance of any doubt, that my hon. Friend the Member for
      962
      Newham, West (Mr. Banks) says that I have done well. I take the compliment in the manner in which it was intended.
      We have had many discussions about the nature of a "have regard" duty upon authorities. It is not a light duty. It may not be mandatory, but if anybody ignores a duty to have regard to some requirement in the law, that is actionable. An obvious case is the "Highway Code", to which every driver must have regard, and the code which will be provided at some stage under the Local Government Act 1985.
      8.30 pm
      A "have regard" duty under amendments Nos. 45 and 49 would not make the Bill unenforceable, but would provide some flexibility so that authorities would have regard to what the Secretary of State was asking, but they would, at the margins, be allowed some freedom of choice in allocating, for example, financial transactions between capital and revenue spending. However, if they went beyond that margin, their decision could be challenged by the auditors and ultimately in the courts.
      The hon. Member for Leeds, West (Mr. Meadowcroft) has tabled amendment No. 48, but that has not been called so I shall deal with the other amendments. Amendment No. 49 would provide an opportunity for councils to resist a specification. Councils would not be obliged to regard a specification as overriding where their previous decision on whether an item of expenditure or income was revenue was in accordance with the proper practices as defined in the Bill.
      Amendment No. 50 would preserve Ministers' opportunities to make specifications, but would only require a local authority to have regard to any specification in determining what to count against its rate fund revenue account.
      New clause 6, to which the hon. Member for Leeds, West will no doubt address himself, is designed to provide for consultation with the Chartered Institute of Public Finance and Accountancy and local authorities. He will no doubt also wish to speak on amendment No. 73.
      To return to the point that I made at the outset, all of us wish to see local authority accounts, as with company accounts or any other institution's accounts, in proper order. There is a clear distinction between some capital expenditure and some revenue expenditure. A major housing scheme is plainly capital expenditure. Refuse services are plainly a revenue expenditure. However, many items of expenditure do not have a clear dividing line. For example, at what point does a repair to a property become a major repair which enhances the capital value of a property and could reasonably be regarded as capital expenditure? There are many other areas in which there should be some flexibility.
      There is also the matter of into what year certain expenditure should be put. Again, local authorities should be allowed some discretion in that matter, just, as the Minister will know, people who pay tax under schedule D are allowed some discretion, particularly on the opening and closing of a business, as to which year income should be brought into account.
      We seek to improve and to introduce greater flexibility into the scheme proposed in clause 2.
      Mr. Meadowcroft: I want—as my warm-up man, the hon. Member for Blackburn (Mr. Straw), said earlier—

      963
      to comment on amendments Nos. 56 and 73, in my name and the names of my hon. Friends, and new clause 6 on consultation.
      The first two amendments deal with timing. Those of us who are worried about local government structure and methods of working are anxious to protect the integrity of local government and to assist it to make the changes which will be forced on it by the Bill. I am surprised that the Minister, who has had a long career in local government, is not prepared to accept the need to move slowly from one system to another. There is no way in which it is possible for local authorities suddenly to switch course in midstream and to change their accounting practices—to change the way in which they organise their rate fund revenue accounts. There is no way that they can accommodate such matters simply by diktat overnight. It is arrogant of the Government to say that they do not care about that and will simply order that it be done.
      Our amendments, like some of those moved by the hon. Member for Blackburn, seek to say that, if the Government are to force this measure on local government, at least they should give some breathing space during which time local government can organise its accounting practices to cope with the pressures created by the Government. If adequate time is not given to local authorities to make such changes, there are likely to be problems within local authorities, not caused by some malevolent view from within local authorities, but caused by the pressures put on them to make the changes too hastily. We are talking about bodies which spend vast sums of money and employ large numbers of people. Therefore, it is important to make sure that they can carry out such changes in their practices and that due regard is taken of the time it will take.
      New clause 6 on consultations is straightforward. The Bill, as now drafted, has consultation with local authority associations written into it. The new clause seeks only to put into a particular part of the Bill, and also to include in the consultation written into the Bill, the Chartered Institute of Public Finance and Accountancy. I think that there is a misspelling but that is of no crucial importance. It seeks to put CIPFA into that process as a body specifically engaged in accountancy and the practice of accountancy within local authorities. If we do not recognise the status of the profession, we do a disservice to the whole practice of local government. Therefore, it is our wish to write into the Bill the principle of consultation with local authority associations at that point, together with CIPFA. I hope that the Minister, with his experience of local government, will accept the new clause.
      Mr. Chope: Amendments Nos. 40 to 43, 45, 47, 49, 50, 53 and 56 all relate to clause 2(4). They all seek to modify or delete the provisions in the Bill relating to my right hon. Friend's powers to make specifications that certain kinds of expenditure and income are to be regarded as of a revenue nature and hence are to be included in the rate fund revenue account unless they should be included in accounts referred to in schedule 1 or specified under clause 1(6). I recommend that all the amendments should be rejected and it may assist the Committee if I explain the background to clause 2(4).
      964
      The purpose of these powers is to enable my right hon. Friend to specify that some item of expenditure or income is of a revenue nature where there may be some doubt. For example, all rate income is normally credited to the rate fund revenue accounts which authorities traditionally have kept. We might wish to see that practice continued even though it might be argued that that part of rate income used to pay for capital expenditure is not of a revenue nature. In those circumstances, a specification might be made stating that all rate income is of a revenue nature. We would need to do this for each year for which it is intended that further supplementary reports should be made, as well as for 1987–88 and subsequent years.
      The powers of clause 2(4) do not permit my right hon. Friend to specify that some item of expenditure is not revenue—that is, that it is capital—nor do they provide for specifications about items which are not expenditure or income, such as transfers between accounts. I can assure the Committee that my right hon. Friend has no intention of attempting to say that something is revenue which the whole world thinks is capital.
      Mr. Straw: Will the Minister explain the example that he gave a moment ago—I realise that it is rather technical—of expenditure that is paid for out of the rate fund in support of a capital scheme? Did he say that that would count as revenue or as capital? How would the specification work in those circumstances?
      Mr. Chope: I said that if rates were levied to finance a capital project, it might be argued that the rates were income of a capital nature. That power would enable the Secretary of State to specify that all rate income was of a revenue nature.
      We propose to make specifications simply to clear up doubts in such a way as to ensure that all new statutory rate fund revenue accounts will be in the form in which authorities have kept their traditional revenue accounts. I urge the Committee to reject these amendments.
      We are also debating amendment No. 73 and new clause 6. Amendment No. 73 would prevent us from making specifications in relation to total expenditure for 1984–85 to 1986–87 in Wales and for 1983–84 to 1986–87 in England and for 1987–88 in both countries. To maintain the status quo, we need to make specifications for those years that will reflect directions we have made on total expenditure under the existing statutory provisions for 1986–87 and previous years. I therefore recommend the Committee to reject amendment No. 73.
      Mr. Tony Banks: Would a local authority have recourse to the courts for a decision taken by the Minister under this subsection of clause 2?
      Mr. Chope: This clause does not restrict the right of any individuals to seek their remedies in the courts, as they have always sought to do and regularly do. Normally, the courts decide that the Government have exercised their discretion reasonably and properly.
      New clause 6 would add CIPFA to those to be consulted before a specification is made under clause 2(4). That would be inappropriate. Although I recognise the professional expertise of CIPFA, that institute does not represent the local authorities that are affected by block grant. The authorities and their associations have the necessary expertise to respond to any consultation on the

      965
      matter. Moreover, the consultation provisions in the Bill relating to specifications are in line with all the other consultation provisions relating to rate support grant.
      We would not wish, nor is there any need, to change well tried precedents. I recommend that the Committee rejects new clause 6.
      Amendment negatived.
      Mr. Allan Roberts: I beg to move amendment No. 54, in page 3, line 16, at end add—
      'An item of account shall not be held to be contrary to law for the purpose of section 19 of the Local Government Finance Act 1982 by reason only of its being debited or credited to any account of a local authority where by virtue of this section it is required to be debited or credited to another account of that authority.'.
      I shall speak briefly about amendment No. 54 as it relates back to a previous debate about what the Government are generally trying to do in this clause. This amendment is designed to give protection to local authorities that continue to make up their accounts in ways other than those prescribed in the Bill. As the Minister has already said that the legislation is not intended to do anything but prescribe what is already local authority practice, there is no reason why he should not accept this amendment, which writes his statement into the clause.
      The provisions in the clause are mostly unnecessary, except for the validation of previous practice that has been deemed to be unlawful. As we have said, the provisions are necessary only because the Government now have, and want even more, detailed control of local authority expenditure.
      8.45 pm
      We want to know what is wrong with the present position—what is unlawful in items of local authority accounts and why the legislation is necessary. The law is clear, and deals with the misuse of money. Without this legislation, expenditure may have been unlawful because the local authority had no statutory power to incur it or because it was incurred as a result of an abuse of discretion. A particularly fine distinction in law has already been drawn between items of account that are on their face unlawful and those items that the council may lawfully incur, but which in a particular case might be tainted by illegality. An example is Beacham v. Metropolitan Auditor in 1976, where the Divisional court upheld the auditor's refusal to declare unlawful the expenditure incurred by an authority for demolishing some buildings, notwithstanding the argument that the demolition had required planning permission that had not been obtained. The court held that an item of account would be unlawful only if, by law, it should not have appeared in the accounts. That is an item of expenditure that the council has no power to incur.
      The present position is that an item of account need not relate only to expenditure; it may be an item of either expenditure or income. An item of income might be unlawful because, for example, it came from an illegal source or it was for an illegal purpose.
      If there are any "crooks"—the word used by the Conservative party chairman on television last night—in local government or in the City of London, they should be brought to book and prosecuted. Labour Members are totally against people behaving illegally and corruption in local government. The Labour party has more to lose from corruption and inefficiency in local government because it
      966
      is the party that believes in local government, public expenditure and local authority public services. Therefore, we believe that such things should be adequately and forcibly dealt with.
      We do not understand why the present law needs amending. What is wrong with the present definition of legality and illegality? We should like to put into the legislation protection for local councillors and local authority officers to carry on with the accounting practices in the way that they have done according to the current law of the land. As the Minister said previously that the Government's intention is to allow existing practices to continue, that must be in keeping with the thrust of that argument. I commend the amendment to the Minister.
      Mr. Chope: I hope to persuade the Committee that the amendment is unnecessary. In answer to the point made by the hon. Member for Bootle (Mr. Roberts)—if it is unnecessary there is no harm in including it—I must point out that if we were to include it, it would make things worse for local authorities. The amendment seeks to provide that where an item of account is debited or credited to an account contrary to the provisions of clause 2, it is not to be held contrary to law for the purposes of section 19 of the Local Government Finance Act 1982.
      Section 19 of the 1982 Act is all about ultra vires expenditure—surcharge and disqualification. It deals with those circumstances where an authority has incurred expenditure without the power so to do, or which it has incurred through an abuse of its powers by acting unreasonably.
      I am advised that reference to items of account that are contrary to law under section 19 would not include references to items of account that have simply been debited or credited to a different account from that to which statute provides they should have been debited. Accordingly, as I have said, the amendment is unnecessary and I recommend the Committee to reject it.
      Were the amendment to be carried, it would cause problems because it would suggest that any other expenditure that should have been shown in some other account, such as an account under section 137 of the Local Government Act 1972, would be contrary to law for the purpose of section 19 of the 1982 Act if not shown in that account. I hope that with that explanation the hon. Gentleman will withdraw the amendment.
      Amendment negatived.
      Question proposed, That the clause stand part of the Bill.
      Mr. Allan Roberts: As none of the amendments has been accepted—and, therefore, the clause stands unamended—I urge the House to reject the clause. As I said in my opening remarks,
      "Rate fund revenue accounts: further provisions"
      still sounds ominous, despite the Minister's attempts to reassure us. The clause still contains major pieces of retrospective legislation that we believe to be unnecessary. It introduces new provisions as well as validating past practices. It still includes the provision of extra powers that the Secretary of State will be able to exercise dictatorially without the scrutiny of Parliament and without consulting local authorities through their associations or individually.
      These powers are being given to the Secretary of State in a clause that we consider to be bad legislation. This proposed legislation seeks to enshrine into law more

      967
      powers to enable the Government to be involved in the detailed running of local authorities' internal affairs and internal accounting procedures. The clause is opposed by Labour in local government, by alliance councillors, independent councillors and, even more significant for the Government, by Conservative councillors and those who help the Conservative party in local government through their local authority housing associations.
      Beyond that, the clause is opposed by the Chartered Institute of Public Finance and Accountancy and by others who are involved professionally in dealing with local authority accounts. In short, it is bad legislation. It flows from previous pieces of bad legislation, and this is the 13th Local Government Finance Bill that the Government have introduced. At each stage, they have assured us that their purpose is to clarify the law in protecting local government and simplifying procedures for it. At each stage, however, the law has become less clear, more complicated, more bureaucratic and more centralist. Clause 2 is no exception to that process.
      We tried to amend the clause in a way that would have prevented the need to vote against it. Our amendments sought to give more rights and freedoms to local democratically elected councils. We sought to amend it in a way that would prevent state interference with one of Britain's finest democratic institutions—local government. Our intention was to amend it in a way that would make retrospection unnecessary. If our amendments had been accepted, it would not have been necessary for Ministers to say, "We are seeking to set out in legislation the good practices that local government already observes." Local government follows those practices and has done so for many years.
      If these good practices exist, why do we need to introduce bureaucratic legislation on to the statute book? Unfortunately, it is necessary to take that course because the Government find themselves in a mess through their own desire to interfere. They wish to cut services and to cause local authorities to make their employees redundant. The Government find themselves in a mess because of their attempt to reduce services and public expenditure through cutting local authority expenditure. They have had to erect a panoply of legislation to enable them to interfere.
      The clause will not clarify the issue, nor will it simplify it. If it becomes part of an Act, it will prove to be as unworkable as every other piece of local government legislation that the Government have introduced. Every piece of their previous legislation has been circumvented because of local government's ingenuity. As that has happened at every stage, the Government have introduced another Bill, but local government chief officers and treasurers have been able legally to defend jobs and services in their areas. They have circumvented previous legislation and they will circumvent the Bill. Further legislation will be needed, especially as the Bill has been hurried and is ill thought out. It is not understood even by the Secretary of State for the Environment, let alone by local government. I hope that the Committee will reject the clause.
      Mr. Chope: I hope that the Committee will allow clause 2 to remain in the Bill. It is an important clause. I note that the Opposition did not have the courage of their
      968
      convictions to call a Division on any of their amendments. Perhaps they were not quite sure whether any of them were adequate.
      Mr. Allan Roberts: If we receive challenges of that sort, we shall vote on every amendment. We are well aware that the Government have a majority, that the Government Whips are on and that the payroll vote is in the House of Commons. By voting against the clause standing part of the Bill, we are dividing on a matter of principle. We had hoped that by reasoned argument we would persuade the Government to accept some of our amendments.
      Mr. Chope: My right hon. Friend the Chancellor of the Duchy of Lancaster has pointed out to me that perhaps—
      Mr. Walter Harrison: On a point of order, Mr. Walker. If the Minister wishes to challenge the Opposition, we can divide on all our amendments and every Government amendment. The ability to do so was illustrated in 1971, and that illustration can be repeated. If the Minister provokes the Opposition, he will get that irrespective of what the Opposition Front Bench says. Let the Minister know that.
      Mr. Chope: I would not wish to pick an argument with someone who has had the experience of being an Opposition Deputy Chief Whip. I am advised by my right hon. Friend the Chancellor of the Duchy of Lancaster that perhaps the Opposition have not voted on their amendments to clause 2 because they do not have their troops here. I do not know whether there is any truth in that piece of advice.
      The clause, along with clause 1, introduces into the Bill the concept of the rate fund revenue account so that relevant and total expenditure can be defined in statute and the new statutory definition is that which in practice has been adopted since 1981.
      Question put, That the clause stand part of the Bill:—
      The Committee divided: Ayes 240, Noes 178.

      Division No. 65]

      [8.55 pm

      AYES

      Aitken, Jonathan

      Brinton, Tim

      Alexander, Richard

      Brittan, Rt Hon Leon

      Alison, Rt Hon Michael

      Brooke, Hon Peter

      Amess, David

      Brown, M. (Brigg & Cl'thpes)

      Ancram, Michael

      Browne, John

      Ashby, David

      Bruinvels, Peter

      Aspinwall, Jack

      Bryan, Sir Paul

      Atkins, Robert (South Ribble)

      Buchanan-Smith, Rt Hon A.

      Atkinson, David (B'm'th E)

      Buck, Sir Antony

      Baker, Rt Hon K. (Mole Vall'y)

      Budgen, Nick

      Baker, Nicholas (Dorset N)

      Bulmer, Esmond

      Baldry, Tony

      Burt, Alistair

      Banks, Robert (Harrogate)

      Butcher, John

      Batiste, Spencer

      Butterfill, John

      Bellingham, Henry

      Carlisle, John (Luton N)

      Bendall, Vivian

      Carlisle, Kenneth (Lincoln)

      Benyon, William

      Cash, William

      Best, Keith

      Chapman, Sydney

      Bevan, David Gilroy

      Chope, Christopher

      Biffen, Rt Hon John

      Churchill, W. S.

      Blackburn, John

      Clark, Dr Michael (Rochford)

      Body, Sir Richard

      Clark, Sir W. (Croydon S)

      Bonsor, Sir Nicholas

      Clarke, Rt Hon K. (Rushcliffe)

      Boscawen, Hon Robert

      Colvin, Michael

      Bottomley, Peter

      Conway, Derek

      Bottomley, Mrs Virginia

      Cope, John

      Bowden, Gerald (Dulwich)

      Corrie, John

      Boyson, Dr Rhodes

      Couchman, James

      Brandon-Bravo, Martin

      Crouch, David

      Bright, Graham

      Currie, Mrs Edwina

      969

      Dicks, Terry

      Knight, Greg (Derby N)

      Dorrell, Stephen

      Knight, Dame Jill (Edgbaston)

      Douglas-Hamilton, Lord J.

      Latham, Michael

      Dover, Den

      Lee, John (Pendle)

      Dunn, Robert

      Lennox-Boyd, Hon Mark

      Durant, Tony

      Lester, Jim

      Edwards, Rt Hon N. (P'broke)

      Lloyd, Sir Ian (Havant)

      Eggar, Tim

      Lloyd, Peter (Fareham)

      Evennett, David

      Lord, Michael

      Eyre, Sir Reginald

      MacKay, John (Argyll & Bute)

      Fairbairn, Nicholas

      McQuarrie, Albert

      Fallon, Michael

      Malone, Gerald

      Farr, Sir John

      Mather, Sir Carol

      Favell, Anthony

      Maude, Hon Francis

      Fenner, Dame Peggy

      Mawhinney, Dr Brian

      Fletcher, Sir Alexander

      Mayhew, Sir Patrick

      Fookes, Miss Janet

      Monro, Sir Hector

      Forman, Nigel

      Moore, Rt Hon John

      Forsyth, Michael (Stirling)

      Morris, M. (N'hampton S)

      Forth, Eric

      Moynihan, Hon C.

      Franks, Cecil

      Neubert, Michael

      Fraser, Peter (Angus East)

      Newton, Tony

      Freeman, Roger

      Nicholls, Patrick

      Gale, Roger

      Norris, Steven

      Galley, Roy

      Pattie, Rt Hon Geoffrey

      Gardiner, George (Reigate)

      Pollock, Alexander

      Gardner, Sir Edward (Fylde)

      Portillo, Michael

      Garel-Jones, Tristan

      Powley, John

      Glyn, Dr Alan

      Price, Sir David

      Goodhart, Sir Philip

      Raison, Rt Hon Timothy

      Goodlad, Alastair

      Rathbone, Tim

      Gower, Sir Raymond

      Rees, Rt Hon Peter (Dover)

      Grant, Sir Anthony

      Rhys Williams, Sir Brandon

      Gregory, Conal

      Ridley, Rt Hon Nicholas

      Griffiths, Sir Eldon

      Rifkind, Rt Hon Malcolm

      Griffiths, Peter (Portsm'th N)

      Rippon, Rt Hon Geoffrey

      Grist, Ian

      Roberts, Wyn (Conwy)

      Ground, Patrick

      Roe, Mrs Marion

      Gummer, Rt Hon John S

      Rossi, Sir Hugh

      Hamilton, Hon A. (Epsom)

      Rost, Peter

      Hamilton, Neil (Tatton)

      Rowe, Andrew

      Hampson, Dr Keith

      Sackville, Hon Thomas

      Hanley, Jeremy

      Sainsbury, Hon Timothy

      Hannam, John

      Sayeed, Jonathan

      Hargreaves, Kenneth

      Shaw, Giles (Pudsey)

      Harris, David

      Shaw, Sir Michael (Scarb')

      Harvey, Robert

      Shelton, William (Streatham)

      Haselhurst, Alan

      Shepherd, Richard (Aldridge)

      Havers, Rt Hon Sir Michael

      Silvester, Fred

      Hawkins, C. (High Peak)

      Sims, Roger

      Hawkins, Sir Paul (N'folk SW)

      Skeet, Sir Trevor

      Hawksley, Warren

      Smith, Tim (Beaconsfield)

      Hayes, J.

      Soames, Hon Nicholas

      Hayhoe, Rt Hon Sir Barney

      Speller, Tony

      Hayward, Robert

      Spencer, Derek

      Heathcoat-Amory, David

      Spicer, Jim (Dorset W)

      Heddle, John

      Spicer, Michael (S Worcs)

      Henderson, Barry

      Stanbrook, Ivor

      Hickmet, Richard

      Steen, Anthony

      Hind, Kenneth

      Stern, Michael

      Hirst, Michael

      Stevens, Lewis (Nuneaton)

      Holland, Sir Philip (Gedling)

      Stewart, Allan (Eastwood)

      Holt, Richard

      Stewart, Andrew (Sherwood)

      Howard, Michael

      Stokes, John

      Howarth, Alan (Stratf'd-on-A)

      Stradling Thomas, Sir John

      Howarth, Gerald (Cannock)

      Sumberg, David

      Howell, Rt Hon D. (G'ldford)

      Taylor, John (Solihull)

      Howell, Ralph (Norfolk, N)

      Taylor, Teddy (S'end E)

      Hubbard-Miles, Peter

      Tebbit, Rt Hon Norman

      Hunt, David (Wirral W)

      Temple-Morris, Peter

      Hunt, John (Ravensbourne)

      Terlezki, Stefan

      Hunter, Andrew

      Thomas, Rt Hon Peter

      Irving, Charles

      Thompson, Donald (Calder V)

      Jackson, Robert

      Thompson, Patrick (N'ich N)

      Johnson Smith, Sir Geoffrey

      Thorne, Neil (Ilford S)

      Jones, Gwilym (Cardiff N)

      Thornton, Malcolm

      Jones, Robert (Herts W)

      Thurnham, Peter

      Jopling, Rt Hon Michael

      Townsend, Cyril D. (B'heath)

      Joseph, Rt Hon Sir Keith

      Trotter, Neville

      King, Roger (B'ham N'field)

      Twinn, Dr Ian

      970

      van Straubenzee, Sir W.

      Wheeler, John

      Viggers, Peter

      Whitfield, John

      Waddington, Rt Hon David

      Whitney, Raymond

      Wakeham, Rt Hon John

      Wolfson, Mark

      Walker, Bill (T'side N)

      Wood, Timothy

      Waller, Gary

      Woodcock, Michael

      Ward, John

      Yeo, Tim

      Wardle, C. (Bexhill)

      Young, Sir George (Acton)

      Warren, Kenneth

      Watts, John

      Tellers for the Ayes:

      Wells, Bowen (Hertford)

      Mr. Richard Ryder and

      Wells, Sir John (Maidstone)

      Mr. David Lightbown.

      NOES

      Abse, Leo

      Foster, Derek

      Adams, Allen (Paisley N)

      Foulkes, George

      Alton, David

      Fraser, J. (Norwood)

      Anderson, Donald

      Freeson, Rt Hon Reginald

      Archer, Rt Hon Peter

      Garrett, W. E.

      Ashley, Rt Hon Jack

      George, Bruce

      Atkinson, N. (Tottenham)

      Gilbert, Rt Hon Dr John

      Bagier, Gordon A. T.

      Godman, Dr Norman

      Banks, Tony (Newham NW)

      Golding, Mrs Llin

      Barron, Kevin

      Gould, Bryan

      Beckett, Mrs Margaret

      Gourlay, Harry

      Bell, Stuart

      Hamilton, James (M'well N)

      Benn, Rt Hon Tony

      Hancock, Michael

      Bennett, A. (Dent'n & Red'sh)

      Hardy, Peter

      Bermingham, Gerald

      Harrison, Rt Hon Walter

      Bidwell, Sydney

      Haynes, Frank

      Blair, Anthony

      Heffer, Eric S.

      Boyes, Roland

      Hogg, N. (C'nauld & Kilsyth)

      Bray, Dr Jeremy

      Home Robertson, John

      Brown, Gordon (D'f'mline E)

      Howell, Rt Hon D. (S'heath)

      Brown, Hugh D. (Provan)

      Howells, Geraint

      Brown, N. (N'c'tle-u-Tyne E)

      Hoyle, Douglas

      Brown, R. (N'c'tle-u-Tyne N)

      Hughes, Robert (Aberdeen N)

      Bruce, Malcolm

      Hughes, Roy (Newport East)

      Buchan, Norman

      Hughes, Sean (Knowsley S)

      Caborn, Richard

      Janner, Hon Greville

      Callaghan, Jim (Heyw'd & M)

      John, Brynmor

      Campbell, Ian

      Jones, Barry (Alyn & Deeside)

      Campbell-Savours, Dale

      Kaufman, Rt Hon Gerald

      Carlile, Alexander (Montg'y)

      Kirkwood, Archy

      Carter-Jones, Lewis

      Lambie, David

      Clark, Dr David (S Shields)

      Lamond, James

      Clarke, Thomas

      Leadbitter, Ted

      Clay, Robert

      Leighton, Ronald

      Clelland, David Gordon

      Lewis, Terence (Worsley)

      Clwyd, Mrs Ann

      Litherland, Robert

      Cocks, Rt Hon M. (Bristol S)

      Livsey, Richard

      Cohen, Harry

      Llyod, Tony (Stretford)

      Coleman, Donald

      Lofthouse, Geoffrey

      Conlan, Bernard

      McCartney, Hugh

      Cook, Frank (Stockton North)

      McDonald, Dr Oonagh

      Cook, Robin F. (Livingston)

      McGuire, Michael

      Corbett, Robin

      McTaggart, Robert

      Cox, Thomas (Tooting)

      McWilliam, John

      Craigen, J. M.

      Madden, Max

      Crowther, Stan

      Marek, Dr John

      Cunningham, Dr John

      Marshall, David (Shettleston)

      Davies, Ronald (Caerphilly)

      Martin, Michael

      Davis, Terry (B'ham, H'ge H'l)

      Mason, Rt Hon Roy

      Deakins, Eric

      Maynard, Miss Joan

      Dewar, Donald

      Meacher, Micheal

      Dixon, Donald

      Meadowcroft, Michael

      Dobson, Frank

      Michie, William

      Dormand, Jack

      Millan, Rt Hon Bruce

      Dubs, Alfred

      Mitchell, Austin (G't Grimsby)

      Dunwoody, Hon Mrs G.

      Morris, Rt Hon A. (W'shawe)

      Eadie, Alex

      Morris, Rt Hon J. (Aberavon)

      Eastham, Ken

      Nellist, David

      Evans, John (St Helens N)

      Oakes, Rt Hon Gordon

      Fatchett, Derek

      O'Brien, William

      Field, Frank (Birkenhead)

      O'Neill, Martin

      Fields, T. (L'pool Broad Gn)

      Park, George

      Fisher, Mark

      Parry, Robert

      Flannery, Martin

      Patchett, Terry

      Foot, Rt Hon Michael

      Pendry, Tom

      Forrester, John

      Pike, Peter

      971

      Powell, Raymond (Ogmore)

      Spearing, Nigel

      Prescott, John

      Steel, Rt Hon David

      Randall, Stuart

      Stewart, Rt Hon D. (W Isles)

      Raynsford, Nick

      Stott, Roger

      Redmond, Martin

      Strang, Gavin

      Rees, Rt Hon M. (Leeds S)

      Straw, Jack

      Richardson, Ms Jo

      Thomas, Dr R. (Carmarthen)

      Roberts, Allan (Bootle)

      Thompson, J. (Wansbeck)

      Roberts, Ernest (Hackney N)

      Thorne, Stan (Preston)

      Rogers, Allan

      Torney, Tom

      Rooker, J. W.

      Wainwright, R.

      Ross, Ernest (Dundee W)

      Wardell, Gareth (Gower)

      Ross, Stephen (Isle of Wight)

      Wareing, Robert

      Rowlands, Ted

      Welsh, Michael

      Sedgemore, Brian

      White, James

      Sheerman, Barry

      Wigley, Dafydd

      Sheldon, Rt Hon R.

      Williams, Rt Hon A.

      Shields, Mrs Elizabeth

      Wilson, Gordon

      Shore, Rt Hon Peter

      Winnick, David

      Short, Ms Clare (Ladywood)

      Woodall, Alec

      Short, Mrs R.(W'hampt'n NE)

      Young, David (Bolton SE)

      Silkin, Rt Hon J.

      Skinner, Dennis

      Tellers for the Noes:

      Smith, C.(Isl'ton S & F'bury)

      Mr. Allen McKay and

      Soley, Clive

      Mr. Lawrence Cunliffe.

      Question accordingly agreed to.
      Clause 2 ordered to stand part of the Bill.

    Clause 3

      MEANING OF LOCAL AUTHORITIES EXPENDITURE
      Dr. Boyson: I beg to move amendment No. 58, in page 3, line 19, leave out from 'year' to end of line 20 and insert—

      '(a) reduced by the aggregate of the credit items of account for the year, and

      (b) adjusted by making such additions or subtractions (or both) as are specified in respect of the year concerned by the Secretary of State.'.

      The Second Deputy Chairman of Ways and Means (Sir Paul Dean): With this amendment it will be convenient to discuss Government amendments Nos. 59 to 63, 65 to 67, 74, 89, 150 and 152.
      Dr. Boyson: These are amendments to the power of my right hon. Friend to make specifications in relation to relevant expenditure. They bring this power into line with the power to make specifications on total expenditure in clause 3(7).
      It may assist the Committee if I indicate how we intend to use this power of specification. First, my right hon. Friend intends to make specifications so that relevant expenditure in future will be in essence the same as it has been taken to be in the past. That is, relevant expenditure will be broadly the net expenditure of an authority, excluding certain items such as mandatory student grants which are financed by specific and supplementary grants, rate support grants, rate or precept income, and balances.
      Secondly, we intend that specifications should provide that, when an item of account has been entered in the rate fund revenue account contrary to proper practice applicable to that account, it is excluded from relevant expenditure. The amendments are necessary to deal with that latter point.
      These matters have not arisen with the existing statutory specification in the 1980 Act because the statute does not refer to accounts or accounting practices although, in practice, we have operated as if it did.
      Under our current approach, if we considered that total expenditure, and hence relevant expenditure, which
      972
      authorities submitted to us improperly omitted an item of account, or improperly contained such an item, we would adjust the submitted figures after giving the authority an opportunity to comment on what we propose.
      Thirdly, we intend to make specifications so that, if an authority includes in its rate fund revenue account transactions that involve putting more money into special funds, and if there is no specific liability against which the money is being provided—what we colloquially call deficit financing of special funds—the transactions will be excluded from relevant expenditure and hence total expenditure.
      If we had not been advised that our general approach to total and relevant expenditure was incorrect in law, we would have sought to exclude such transactions from any figures of expenditure submitted by authorities, following our normal practice of dealing with figures which appear to my right hon. Friend to be improperly compiled.
      Under the powers that we are now taking, we intend to deal with all such situations by means of specification. I should add that, before making specifications, my right hon. Friend will consider carefully all of the representations that he receives and consult when he is required to do so. To make specifications here, his powers will have to be exercised in accordance with principles that must be applied to all local authorities.
      Any decision to make a specification must be exercised in accordance with general and administrative law principles, so the Secretary of State cannot make unreasonable decisions. His decisions will be answerable to the courts.
      Mr. John Fraser: The central objection to clause 3 is not that Parliament is seeking the power to regulate what should or should not go in or out of a local authority's account, as we have to concede that Parliament takes powers from time to time to regulate the contents of accounts. I have referred frequently to the Companies Acts. There is no disagreement in that regard. Our objection is that the power to determine what should be omitted from or included in a local authority's revenue account is to be specified by the Secretary of State. The Minister made no secret of that. However, he said two things which I welcome.
      First, the Minister said that, when making specifications, he would consider representations made by the relevant authority. I take it that he will give us an assurance that, when he makes any general specification about what should be included in or omitted from a local authority's account, he will consider the representations of local authorities generally, as expressed by local authority associations. It would be helpful if the Minister was able to give an assurance that general representations will be received in addition to the representations that I believe he referred to.
      The second assurance that the Minister has given is that the principles on which the specifications are applied will be general, and will not differentiate between local authorities. We understand that future decisions will be challengeable in the courts. I am sure that if the Minister chose to discriminate between one authority and another, the courts would not be slow to intervene under the principles of administrative law. It will be helpful—perhaps the Minister will reply constructively—if the Minister will accept an amendment on Report that would incorporate the obligation to consult to which the Minister

      973
      adverted. If he is willing to do that, it will go at least some way towards assuring local authorities that they will be consulted about these matters and will not be dealt with differentially.
      9.15 pm
      Mr. Dobson: I should be grateful if the Minister will answer some questions arising from the probing Opposition amendments. I should like clarification from the Minister, particularly in view of his earlier interest in education, of the status of payments made and income received by education authorities when they provide education for pupils from other areas. Will the Minister give us some information about the income that the Inner London education authority receives from, say, the London borough of Barnet, which is represented by the Prime Minister? In 1986, the parents of 780 children so recognised the superiority of the education provided by the Inner London education authority that they sent their children from Barnet to Inner London education authority schools. Even allowing for those who go the other way, there is a net inflow of 332 children from Barnet schools into ILEA schools. Is that income reckonable and does it fall within clause 3 as a credit item?
      If the Minister thinks that I singled out the borough that the Prime Minister claims to represent, where parents overwhelmingly voted with their children's feet to get a better education from the Inner London education authority, he might prefer to look at the example of the London borough of Brent, part of which he claims to represent. Before any of the Minister's more ignorant hon. Friends suggest that the London borough of Brent was Labour-controlled, I remind the Minister that, in 1985, when the London borough of Brent was Tory-controlled, no fewer than 1,924 children from the London borough of Brent were sent by their parents to Inner London education authority schools because they recognised the superiority of the service that the Inner London education authority was able to offer at that time.
      I shall be grateful if the Minister will tell us exactly what will happen to the income that will accrue to the Inner London education authority in those circumstances. I hope that he will persuade one or two of his colleagues, should any actually turn up for the debate, to recognise that parents, particularly those in the outer London boroughs and the overwhelming majority living on the borders, recognise the superiority of the service provided by the Inner London education authority, despite the adverse publicity that he, his hon. Friend, the London Evening Standard and other obnoxious journals constantly pump forth.
      Mr. Hancock: I should like the Minister to clarify the point raised by the hon. Member for Holborn and St. Pancras (Mr. Dobson) on Government amendment No. 58. This set of Government amendments gives the Secretary of State enormous powers. I believe that local government is worried about the proposed change. The Bill as it stands allows the Secretary of State to exempt items from the expenditure of a local authority, if he wishes. These provisions allow him to add items, if he wishes.
      Many local authorities, for various reasons, run reserve funds which come within the categories covered by schedule 1. It could be a vehicle reserve fund, in which the local authority saves money to buy new vehicles, or a
      974
      general reserve fund. My local authority of Portsmouth has a reserve fund. It would be worried if a Secretary of State had the discretion in one year to add its reserve fund to or exempt it from the general way in which its expenditure is reckoned for rate support grant in a subsequent year.
      Will local authorities be treated differently? Many hon. Members and I fully accept the Government's fear of the creative accounting that has taken place. Many people believe that this will lead to problems when local authorities are finally brought to book and made to account in real terms. Many local authorities are afraid that items over which they have little control will be added to or exempted from their accounts. They may have great difficulty, therefore, in operating their budget for the coming year. Will the Secretary of State have the discretion to pick on a particular local authority and put it in this category?
      I should be afraid if the Committee supported the Government's amendments. Many questions arise as to what can and what cannot be covered. I am concerned about the discretionary power being wheeled in, somewhat like a guillotine, whenever it suits the political climate. If I read the legislation correctly, it could lead to the Secretary of State inflicting a mini-budget on a local authority half-way through the year and suddenly adding an item that had not previously been included. That must send shivers down the spines of many local treasurers, if not local councillors. The legislation gives enormous powers to the Secretary of State and we are entitled to a full explanation of how it will operate and exactly what it will cover.
      Dr. Boyson: I shall try to deal as adequately as I can with the important questions that have been raised on this technical matter. If I cannot deal with all the questions, I shall write to the hon. Members concerned.
      On the point raised by the hon. Member for Norwood (Mr. Fraser), I give the commitment that the local authority associations will be seen. Further, I can say that decisions will be challengeable in the courts. I therefore give affirmative answers on those two points.
      If I could have the attention of the hon. Member for Holborn and St. Pancras (Mr. Dobson), I shall answer his points.
      Mr. Dobson: I hang on the hon. Gentleman's every word.
      Dr. Boyson: I am grateful to the hon. Gentleman. I trust that he is still doing so when I have finished speaking about the matter which he raised.
      There is much movement of children between one authority area and another in London. I do not want to make a party point, but I must say that the movement of children out of Brent has increased greatly. For two and a half years the Conservative party had control over Brent with the Liberal party. But the movement out of Brent had occurred before then. Next week, I shall find out the movement from ILEA to Brent and Barnet. I trust I hat I shall be able to get the figures to send them to the hon. Member for Holborn and St. Pancras. I know that he is a seeker after truth.
      Mr. Dobson: On the assumption that the hon. Doctor is a seeker after the truth, why did only 1,783 come into

      975
      ILEA schools in 1982 and why did the number increase to 1,924 after the Conservatives and the alliance had been in charge in Brent for two years?
      Dr. Boyson: As I said to the hon. Gentleman, I shall look at the figures. I have not the slightest doubt that those figures are correct. However, I shall consider them.
      The hon. Gentleman must remember that ILEA schools were built up to a high standard. I served as a headmaster in ILEA schools for 14 years. Therefore, I can see both sides of the issue. However, the hon. Gentleman would probably not have appointed me had I applied when he was the chairman of the governors. My school was the most over-subscribed in London, and still has the longest waiting list in London. Therefore, I am aware of the movement between schools.
      I do not doubt the hon. Gentleman's word when he speaks about education, but I shall consider the figures and pass them on to him because I know that he would like to have them, and so would I.
      This year, 25·6 per cent. of children in Brent are going to independent schools or to county schools elsewhere in London. That is a very large figure and it is four times the average for London.
      The hon. Gentleman asked me about the status of the recoupment passing from one authority to another. I must advise the hon. Member that in 1980 I took a Bill through its Committee stage which gave parents more choice of schools and gave them the right to cross boundaries. Therefore, the hon. Gentleman should worship at my shrine. The ingratitude of the hon. Gentleman is like a charcoal biscuit—it is very difficult to absorb. I do not expect the hon. Gentleman to join my party immediately although, obviously, he should be influenced by that fact.
      The expenditure on recoupment payments between Brent and ILEA, or between ILEA and any of the London education authorities, would come from the rates fund revenue account for Brent and it would be income for ILEA. That is the way in which the payments would move between the two bodies. The expenditure would come out of the rate fund revenue account for Brent and would be counted as income for ILEA. As I have said, there is much movement in London between one authority and another.
      A moment ago I knew the answer to question raised by the hon. Member for Portsmouth, South (Mr. Hancock), but it has just slipped my memory for the moment. I shall include it in one of my later answers to the hon. Gentleman.
      Mr. Hancock: The question referred to the reserve funds operated by many local authorities, and whether those funds could and would be brought in and out at the Minister's discretion, and how those reserve funds would be allowed to operate in those local authorities in years to come and whether that discretion would be reflected across the board or whether individual local authorities would be picked out.
      Dr. Boyson: I presume that that would apply to all authorities and it would actually count as a special fund. Obviously, we have had to legislate identically for all authorities. The legislation is difficult enough now without discriminating between one local authority and another.
      Mr. Hancock: The way in which the provision is worded at present, especially with amendment No. 74,
      976
      gives, if I am reading it correctly, the Minister of State the ability, if he so desires, to say, for example, to Portsmouth city council, "You must include, in this year's reckonable expenditure any reserve fund that you are holding." However, at the same time, if I am reading the legislation and the amendment correctly, he could not, if he so chose, push that same commitment on other local authorities. We must watch that ability to choose and we should also consider whether it covers, for example, the reserve funds that many local authorities operate.
      Dr. Boyson: The reserve funds will count as special funds. I shall check and write to the hon. Member so that I can give him a full reply on the question whether they are universal. That is a serious question that affects all authorities throughout the country.
      Mr. John Fraser: The Minister gave an assurance that there would be general consultation with authorities, as well as with individual authorities, and I am grateful for that. However, it is by no means unusual to have an obligation for the Government to consult included in the statute.
      Apart from our fundamental objections to the Bill, my hon. Friends and I believe that the power to specify is one over which Parliament should have some control and that therefore it is a matter that, at least, should be dealt with by statutory instrument so that when the Minister comes forward with a set of specifications he will have to seek the consent of the House of Commons and the other place. We shall table an amendment that will deal with that. At the very least, will the Minister accept on Report an amendment to place a statutory obligation on the Government at least to consult before making a specification? May we have an assurance that such an amendment, if tabled, would be accepted?
      Dr. Boyson: As I said to the hon. Gentleman earlier, the Secretary of State will consult local associations and the specification is answerable to the courts. I cannot give a commitment to the hon. Gentleman that we will accept any amendment. We shall look at all the amendments on Report, as we are doing now. I can say no more than that at this stage.
      Mr. Fraser: We were invited to divide on every amendment when the Minister spoke earlier. We will not divide on every amendment and I do not propose to advise the Committee to divide on this. However, that does not mean that we are simply allowing this matter to pass. We want to make some progress. I hope that, with your permission, Sir Paul, we will have a debate on clause stand part and we shall express our dissatisfaction in the appropriate way when we reach that point.
      Question put, That the amendment be made:—
      The Committee divided: Ayes 234, Noes 171.

      Division No. 66]

      [9.30 pm

      AYES

      Aitken, Jonathan

      Batiste, Spencer

      Alexander, Richard

      Bellingham, Henry

      Alison, Rt Hon Michael

      Bendall, Vivian

      Amess, David

      Benyon, William

      Ancram, Michael

      Best, Keith

      Ashby, David

      Bevan, David Gilroy

      Aspinwall, Jack

      Blackburn, John

      Atkins, Robert (South Ribble)

      Body, Sir Richard

      Atkinson, David (B'm'th E)

      Bonsor, Sir Nicholas

      Baker, Rt Hon K. (Mole Vall'y)

      Boscawen, Hon Robert

      Baker, Nicholas (Dorset N)

      Bottomley, Peter

      Banks, Robert (Harrogate)

      Bottomley, Mrs Virginia

      977

      Bowden, Gerald (Dulwich)

      Harris, David

      Boyson, Dr Rhodes

      Harvey, Robert

      Brandon-Bravo, Martin

      Haselhurst, Alan

      Bright, Graham

      Hawkins, C. (High Peak)

      Brinton, Tim

      Hawkins, Sir Paul (N'folk SW)

      Brittan, Rt Hon Leon

      Hawksley, Warren

      Brooke, Hon Peter

      Hayes, J.

      Brown, M. (Brigg & Cl'thpes)

      Hayhoe, Rt Hon Sir Barney

      Browne, John

      Hayward, Robert

      Bruinvels, Peter

      Heathcoat-Amory, David

      Bryan, Sir Paul

      Heddle, John

      Buchanan-Smith, Rt Hon A.

      Henderson, Barry

      Buck, Sir Antony

      Hickmet, Richard

      Budgen, Nick

      Hind, Kenneth

      Bulmer, Esmond

      Hirst, Michael

      Burt, Alistair

      Hogg, Hon Douglas (Gr'th'm)

      Butcher, John

      Holland, Sir Philip (Gedling)

      Butterfill, John

      Holt, Richard

      Carlisle, John (Luton N)

      Hordern, Sir Peter

      Carlisle, Kenneth (Lincoln)

      Howard, Michael

      Cash, William

      Howarth, Alan (Stratf'd-on-A)

      Chapman, Sydney

      Howarth, Gerald (Cannock)

      Chope, Christopher

      Howell, Ralph (Norfolk, N)

      Churchill, W. S.

      Hubbard-Miles, Peter

      Clark, Dr Michael (Rochford)

      Hunt, David (Wirral W)

      Clark, Sir W (Croydon S)

      Hunt, John (Ravensbourne)

      Clarke, Rt Hon K. (Rushcliffe)

      Hunter, Andrew

      Colvin, Michael

      Irving, Charles

      Conway, Derek

      Jackson, Robert

      Cope, John

      Johnson Smith, Sir Geoffrey

      Corrie, John

      Jones, Gwilym (Cardiff N)

      Couchman, James

      Jones, Robert (Herts W)

      Crouch, David

      Jopling, Rt Hon Michael

      Currie, Mrs Edwina

      Joseph, Rt Hon Sir Keith

      Dicks, Terry

      King, Roger (B'ham N'field)

      Dorrell, Stephen

      Knight, Greg (Derby N)

      Douglas-Hamilton, Lord J.

      Knight, Dame Jill (Edgbaston)

      Dover, Den

      Latham, Michael

      Dunn, Robert

      Lennox-Boyd, Hon Mark

      Durant, Tony

      Lester, Jim

      Edwards, Rt Hon N. (P'broke)

      Lightbown, David

      Eggar, Tim

      Lilley, Peter

      Evennett, David

      Lloyd, Sir Ian (Havant)

      Eyre, Sir Reginald

      Lloyd, Peter (Fareham)

      Fairbairn, Nicholas

      Lord, Michael

      Fallon, Michael

      MacKay, John (Argyll & Bute)

      Farr, Sir John

      Maclean, David John

      Favell, Anthony

      McQuarrie, Albert

      Fenner, Dame Peggy

      Major, John

      Fletcher, Sir Alexander

      Mather, Sir Carol

      Fookes, Miss Janet

      Maude, Hon Francis

      Forman, Nigel

      Mawhinney, Dr Brian

      Forsyth, Michael (Stirling)

      Monro, Sir Hector

      Forth, Eric

      Moore, Rt Hon John

      Franks, Cecil

      Morris, M. (N'hampton S)

      Fraser, Peter (Angus East)

      Moynihan, Hon C.

      Freeman, Roger

      Neubert, Michael

      Gale, Roger

      Newton, Tony

      Galley, Roy

      Nicholls, Patrick

      Gardiner, George (Reigate)

      Norris, Steven

      Gardner, Sir Edward (Fylde)

      Peacock, Mrs Elizabeth

      Garel-Jones, Tristan

      Pollock, Alexander

      Glyn, Dr Alan

      Powley, John

      Goodhart, Sir Philip

      Raison, Rt Hon Timothy

      Goodlad, Alastair

      Rathbone, Tim

      Gower, Sir Raymond

      Rhys Williams, Sir Brandon

      Grant, Sir Anthony

      Ridley, Rt Hon Nicholas

      Greenway, Harry

      Rifkind, Rt Hon Malcolm

      Gregory, Conal

      Rippon, Rt Hon Geoffrey

      Griffiths, Sir Eldon

      Roberts, Wyn (Conwy)

      Griffiths, Peter (Portsm'th N)

      Roe, Mrs Marion

      Grist, Ian

      Rossi, Sir Hugh

      Ground, Patrick

      Rost, Peter

      Grylls, Michael

      Rowe, Andrew

      Gummer, Rt Hon John S

      Ryder, Richard

      Hamilton, Hon A. (Epsom)

      Sackville, Hon Thomas

      Hamilton, Neil (Tatton)

      Sainsbury, Hon Timothy

      Hanley, Jeremy

      Sayeed, Jonathan

      Hannam, John

      Shaw, Giles (Pudsey)

      Hargreaves, Kenneth

      Shaw, Sir Michael (Scarb')

      978

      Shelton, William (Streatham)

      Thompson, Patrick (N'ich N)

      Shepherd, Richard (Aldridge)

      Thorne, Neil (Ilford S)

      Silvester, Fred

      Thornton, Malcolm

      Sims, Roger

      Thurnham, Peter

      Skeet, Sir Trevor

      Twinn, Dr Ian

      Smith, Tim (Beaconsfield)

      van Straubenzee, Sir W.

      Soames, Hon Nicholas

      Viggers, Peter

      Speller, Tony

      Waddington, Rt Hon David

      Spencer, Derek

      Walker, Bill (T'side N)

      Spicer, Jim (Dorset W)

      Waller, Gary

      Spicer, Michael (S Worcs)

      Wardle, C. (Bexhill)

      Stanbrook, Ivor

      Warren, Kenneth

      Steen, Anthony

      Watts, John

      Stern, Michael

      Wells, Bowen (Hertford)

      Stevens, Lewis (Nuneaton)

      Wells, Sir John (Maidstone)

      Stewart, Allan (Eastwood)

      Wheeler, John

      Stewart, Andrew (Sherwood)

      Whitfield, John

      Stokes, John

      Whitney, Raymond

      Stradling Thomas, Sir John

      Wolfson, Mark

      Sumberg, David

      Wood, Timothy

      Taylor, John (Solihull)

      Woodcock, Michael

      Taylor, Teddy (S'end E)

      Yeo, Tim

      Tebbit, Rt Hon Norman

      Young, Sir George (Acton)

      Temple-Morris, Peter

      Terlezki, Stefan

      Tellers for the Ayes:

      Thomas, Rt Hon Peter

      Mr. Gerald Malone and

      Thompson, Donald (Calder V)

      Mr. Michael Portillo.

      NOES

      Abse, Leo

      Dormand, Jack

      Adams, Allen (Paisley N)

      Dubs, Alfred

      Alton, David

      Dunwoody, Hon Mrs G.

      Anderson, Donald

      Eadie, Alex

      Archer, Rt Hon Peter

      Eastham, Ken

      Ashley, Rt Hon Jack

      Evans, John (St. Helens N)

      Atkinson, N. (Tottenham)

      Fatchett, Derek

      Bagier, Gordon A. T.

      Field, Frank (Birkenhead)

      Barron, Kevin

      Fields, T. (L'pool Broad Gn)

      Beckett, Mrs Margaret

      Fisher, Mark

      Bell, Stuart

      Flannery, Martin

      Benn, Rt Hon Tony

      Foot, Rt Hon Michael

      Bermingham, Gerald

      Forrester, John

      Bidwell, Sydney

      Foster, Derek

      Blair, Anthony

      Foulkes, George

      Boyes, Roland

      Fraser, J. (Norwood)

      Bray, Dr Jeremy

      Freeson, Rt Hon Reginald

      Brown, Gordon (D'f'mline E)

      Garrett, W. E.

      Brown, Hugh D. (Proven)

      George, Bruce

      Brown, N. (N'c'tle-u-Tyne E)

      Gilbert, Rt Hon Dr John

      Brown, R. (N'c'tle-u-Tyne N)

      Godman, Dr Norman

      Bruce, Malcolm

      Golding, Mrs Llin

      Buchan, Norman

      Gourlay, Harry

      Callaghan, Jim (Heyw'd & M)

      Hamilton, James (M'well N)

      Campbell, Ian

      Hancock, Michael

      Campbell-Savours, Dale

      Hardy, Peter

      Carlile, Alexander (Montg'y)

      Haynes, Frank

      Carter-Jones, Lewis

      Heffer, Eric S.

      Clark, Dr David (S Shields)

      Hogg, N. (C'nauld & Kilsyth)

      Clarke, Thomas

      Home Robertson, John

      Clay, Robert

      Howell, Rt Hon D. (S'heath)

      Clelland, David Gordon

      Howells, Geraint

      Clwyd, Mrs Ann

      Hoyle, Douglas

      Cocks, Rt Hon M. (Bristol S)

      Hughes, Robert (Aberdeen N)

      Cohen, Harry

      Hughes, Roy (Newport East)

      Coleman, Donald

      Hughes, Sean (Knowsley S)

      Conlan, Bernard

      Janner, Hon Greville

      Cook, Frank (Stockton North)

      John, Brynmor

      Corbett, Robin

      Jones, Barry (Alyn & Deeside)

      Cox, Thomas (Tooting)

      Kaufman, Rt Hon Gerald

      Craigen, J. M.

      Kirkwood, Archy

      Crowther, Stan

      Lambie, David

      Cunliffe, Lawrence

      Lamond, James

      Cunningham, Dr John

      Leadbitter, Ted

      Dalyell, Tam

      Leighton, Ronald

      Davies, Ronald (Caerphilly)

      Lewis, Terence (Worsley)

      Davis, Terry (B'ham, H'ge H'l)

      Litherland, Robert

      Deakins, Eric

      Livsey, Richard

      Dewar, Donald

      Lloyd, Tony (Stretford)

      Dixon, Donald

      Lofthouse, Geoffrey

      Dobson, Frank

      McCartney, Hugh

      979

      McDonald, Dr Oonagh

      Rogers, Allan

      McGuire, Michael

      Rooker, J. W.

      McKay, Allen (Penistone)

      Ross, Ernest (Dundee W)

      McTaggart, Robert

      Ross, Stephen (Isle of Wight)

      McWilliam, John

      Rowlands, Ted

      Madden, Max

      Sedgemore, Brian

      Marek, Dr John

      Sheldon, Rt Hon R.

      Marshall, David (Shettleston)

      Shields, Mrs Elizabeth

      Martin, Michael

      Shore, Rt Hon Peter

      Maxton, John

      Short, Ms Clare (Ladywood)

      Maynard, Miss Joan

      Short, Mrs R.(W'hampt'n NE)

      Meacher, Michael

      Silkin, Rt Hon J.

      Meadowcroft, Michael

      Skinner, Dennis

      Michie, William

      Smith, C.(Isl'ton S & F'bury)

      Mikardo, Ian

      Soley, Clive

      Millan, Rt Hon Bruce

      Spearing, Nigel

      Mitchell, Austin (G't Grimsby)

      Steel, Rt Hon David

      Morris, Rt Hon A. (W'shawe)

      Stewart, Rt Hon D. (W Isles)

      Morris, Rt Hon J. (Aberavon)

      Stott, Roger

      Nellist, David

      Strang, Gavin

      Oakes, Rt Hon Gordon

      Straw, Jack

      O'Brien, William

      Thompson, J. (Wansbeck)

      O'Neill, Martin

      Thorne, Stan (Preston)

      Park, George

      Torney, Tom

      Parry, Robert

      Wardell, Gareth (Gower)

      Patchett, Terry

      Wareing, Robert

      Pendry, Tom

      Welsh, Michael

      Pike, Peter

      White, James

      Powell, Raymond (Ogmore)

      Wigley, Dafydd

      Prescott, John

      Wilson, Gordon

      Randall, Stuart

      Winnick, David

      Raynsford, Nick

      Woodall, Alec

      Redmond, Martin

      Rees, Rt Hon M. (Leeds S)

      Tellers for the Noes:

      Richardson, Ms Jo

      Mr. Walter Harrison and

      Roberts, Allan (Bootle)

      Mr. Tony Banks.

      Roberts, Ernest (Hackney N)

      Question accordingly agreed to.
      Amendments made: No. 59, in page 3, line 23, leave out `or parts of items'.
      No. 60, in page 3, line 27, leave out 'or parts of items'.
      No. 61, in page 3, line 30, leave out or parts of items'.
      No. 62, in page 3, line 33, at end insert 'and'.
      No. 63, in page 3, line 36, leave out from 'courses)' to end of line 38.
      No. 65, in page 3, line 40, leave out 'or parts of items'.
      No. 66, in page 3, line 41, at end insert 'and'.
      No. 67, in page 3, line 43, leave out from 'authority' to end of line 46.—[Dr. Boyson.]
      Mr. Roland Boyes: I beg to move amendment No. 68, in page 4, line 1, leave out subsection (6).
      The amendment seeks to delete subsection (6). It appears to be another example of the Secretary of State building legal safeguards and judge-proofing into the Bill. It is surprising that the Secretary of State has found it necessary to include this catch-all subsection. He has had at least three months in which to draft the legislation.
      Clause 3 defines what is meant by local authorities' expenditure for the purpose of part VI of the 1980 Act's support grant. It is acceptable to us, so far as it goes, subject to the safeguards that we are trying to build into clause 3. However, clause 3(6) says:
      "Subsection (1)…shall have effect subject to any enactment (whenever passed)".
      Will the Minister explain what this phrase means and tell the Committee what was the Government's intention in including this phrase? Is it retrospective?
      Will the Minister also list the Acts to which the phrase refers? The Committee is being asked to give a blank cheque to the Secretary of State. How are hon. Members
      980
      to know whether the redefinition of "relevant expenditure" is appropriate in the context of other enactments? Does the Secretary of State know what they are? If so, will he list them, or is this a manifestation of legal paranoia?
      9.45 pm
      Dr. Boyson: I am grateful to the hon. Member for Houghton and Washington (Mr. Boyes) for his comments. This is a technical matter and I shall answer as best I can about what this amendment would do and why we are resisting it. The amendment would mean that the definition of relevant expenditure in the Bill would exclude certain items that we do not want excluded. It would delete clause 3(6) which provides that the definition of relevant expenditure is
      "subject to any enactment (whenever passed) having the effect that anything is or is not to be treated…as relevant expenditure".
      An example of such an enactment is the Social Security and Housing Benefit Act 1982, which provides that if an order is made—and one has been made—certain contributions to the housing revenue account are not to be treated as relevant expenditure. It is on this basis that our current practices on rate support grant have been operated. The effect of the amendment would be that in any rate support grant reports and supplementary reports made after the passing of the Bill those contributions would no longer be excluded from relevant expenditure.
      It is right that the provisions which provide that certain items are not part of relevant expenditure should continue to have effect. I need hardly remind the Committee again that the purpose of the Bill is to enable us to continue current practice and, as far as possible, clause 3 and the rest of the Bill will ensure a continuance of current practice. I hope that the Opposition will not press the amendment to a vote, because it would undermine part or all of clause 3.
      Mr. Hancock: This amendment is a challenge to the Minister because he must tell the Committee what it means. Let me put myself in the position of a local government treasurer reading this legislation and being asked by his members to explain what it means. What does this cover and what does it not cover? It is not good enough for us glibly to push aside an amendment which is not only a probing amendment but one which means something. It means that in future the Government will have to spell out exactly what they mean by it. It is not good enough for us to be told time and time again that these matters will be open to challenge in the courts. That is not a fair basis upon which local government should have to work in the next 12 months after the Bill receives Royal Assent.
      We need specific answers to those points. I am sure that with the best will in the world the Minister will say that in time he can give those answers. I look forward to that time and to the correspondence. This debate is sparsely attended, but there is a wider audience outside which has some enthusiasm for local government expenditure. Such enthusiasm is hard to engender in the Committee, but in the months ahead many people will have a difficult time if we do not get some clarification of exactly what is meant by the Minister's statements.
      I am sure that Hansard will be read by those treasurers and councillors who care about what is happening to local government finance. They will wonder what the Minister meant in his reply to the hon. Member for Houghton and

      981
      Washington (Mr. Boyes), who moved the amendment. The Minister must spell out what is covered and what is not. What areas of expenditure does he want to see included but which are not specifically mentioned in the Bill? May we please have answers to those questions?
      Dr. Boyson: I shall reply briefly to the questions asked by the hon. Member for Portsmouth, South (Mr. Hancock). I shall have to be careful with the words because all these words mean something and have to be interpreted. [Interruption.] I try to interpret them for myself at the same time as I interpret them for the Committee and five minutes later I wonder if I have. I should prefer to write to the hon. Member about this, because I do not want to be tied to what I say is the interpretation. For example, I have written down for my own reference the definitions for net expenditure and total expenditure. I have written that net expenditure is, first, from the rate support grant, secondly, from the rate and precept income, thirdly, from balances and, fourthly, from specific and supplementary grants. Total expenditure, which one would expect to be more, is all these without specific and supplementary grants. Having understood that, I think that I had better be careful on the other definitions.
      Amendment negatived.
      Mr. Boyes: I beg to move amendment No. 69, in page 4, line 12, leave out paragraph (b).
      The Second Deputy Chairman: With this amendment it will be convenient also to take amendment No. 70, in page 4, line 12, leave out from 'by' to end of line and insert
      "the addition or subtraction of such descriptions of expenditure or receipts."
      Mr. Boyes: Clause 3(7) allows the Secretary of State to adjust the definition of total expenditure given in the Bill by adding or subtracting items in any future year. The definitions of relevant and total expenditure form the basis of the legal difficulty currently facing the Government in their rate support grant and Rates Act policy. That power will give the Secretary of State a substantial measure of control in the future to affect the basis of local authority spending policies.
      In his statement to the House on 16 December 1986, the Secretary of State said:
      "The Bill is designed to make no changes in policy, but as far as possible to apply existing policy within a tight timetable."—[Official Report, 16 December 1986; Vol. 107, col. 1051.]
      In fact, the Minister is taking several opportunities in the Bill to augment his powers, as in this case. Clause 3(7)(b) contains unspecific and sweeping powers for the Secretary of State to reduce or increase an authority's total expenditure, which is used to calculate its entitlement to grant. There is no sign of how the power will be used or by what criteria that use will be governed. Given that it may be used arbitrarily to deprive local authorities of millions of pounds, it is essential that Parliament retains an ability to scrutinise the use of the power rather than leaving such general powers in the hands of the Executive. Our amendment will delete paragraph (b), which includes these extra powers.
      Dr. Boyson: Section 56 (8) of the 1980 Act provides that total expenditure is relevant expenditure reduced by the amount of specific and supplementary grants, and adjusted by the addition or subtraction of such
      982
      descriptions of expenditure or receipt that the Secretary of State may direct. Directions were made under this power for each of the years 1983–84 to 1986–87. It is intended to make specifications under clause 3(7)(b) which broadly will reflect the directions made in the past.
      The effect of amendment No. 69 is that total expenditure will be relevant expenditure reduced by the amount of specific and supplementary grants. Total expenditure will not therefore be the same as in the past. The basis of the Bill is to put in definitions that will stand up that we presumed from 1980 to 1986 were the definitions on which so much local government financing went ahead.
      Amendment No. 70 will replace the power to make specifications in clause 3(7)(b) with a power in the same terms as the present power in section 56(8) of the 1980 Act. The purpose of the amendment is to find out why the terms of the power have been changed. The reasons are that the existing power allows adjustment to be made only in respect of expenditure—that is, expenditure incurred in respect of third parties—and receipts which are, income from third parties.
      Some of the adjustments made in the past were not, or might not, be expenditure or receipts. I am sure that the Committee is following this very carefully. Clearly, the hon. Member for Houghton and Washington (Mr. Boyes) is. For example, directions were made so that discounts for prompt payments of rates should be added—something that has been discontinued in most parts of Britain, but we used to have discounts for rates if they were paid by a certain time.
      It is only arguable that that is expenditure. Directions were also made that certain reductions in block grant as a result of regulations under schedule 10 of the 1980 Act—that is, the Act on educational pooling—should be added. But those reductions in block grant were neither expenditure nor receipts. Unless the power is in the terms of that in clause 3(7)(b), it will not be possible to reproduce what has been the practice for 1983–84 to 1986–87 in the future. One will realise what a disaster that would be for the country.
      Mr. Pike: By his comments the Minister showed that there might be a case for not pressing the amendment. However, rather than giving one example, he needed to give more details about why it was essential that the clause should not be amended.
      On amendments Nos. 69 and 70 the Minister said that the Government's intention is, as far as possible, to try to maintain the status quo in all respects. However, we would argue that that is not the case. Burnley borough council, on which I used to serve, still gives 2·5 per cent. discount for the prompt payment of rates. That is highly successful, although whether it is worthwhile is considered every year by the council when it fixes the annual rate. The council must calculate how much discount it will give and provide extra income to cover that. The prompt payment of rates means that it can save on interest payments and gain income from investing money for a short period.
      However, I doubt whether clause 3(7)(b) means exactly what the Minister says it does. If it really does mean what the Minister is saying, I could accept the logic of leaving it as it is, although, obviously, we do not like many of the provisions in the Bill.
      I would argue that the clause gives the Secretary of State scope beyond what the Minister was saying and that

      983
      is the danger. If the Minister is sincere in what he has just said, and if the Secretary of State is also sincere—he is in the Chamber—they should tell the House tonight that they are prepared to amend the clause on Report in order to clarify it because it can be interpreted in a different way.
      I strongly believe that it is not what a Minister says, whether in Committee upstairs or on the Floor of the House, that makes the law; it is the Bill as it is written which will have to be interpreted in the courts. Even if we are prepared to be generous to the present Secretary of State, another Secretary of State could use this in a different way at a later stage.
      In all seriousness, if the Minister really believes what he said to us, let him prove his good faith by saying that the Government are prepared to look at this again and return on Report with something which will make it clear that what he said is what the clause actually means. At the moment, I believe that it can be interpreted in a different way and others will also believe that. If that is the case, it is not acceptable. I hope that the Minister will be prepared to look at the clause in that spirit and say that the Government are prepared to think again.
      Dr. Boyson: I am grateful for the speech of the hon. Member for Burnley (Mr. Pike). I am glad to know that the 2·5 per cent. discount is still paid in the hon. Gentleman's constituency. I come from the next valley, the Rossendale valley, and a 2·5 per cent. discount was always paid there. I never understand why authorities in London do not have discounts to get their money in more quickly. If there is a north-south divide, it seems to be that discounts are paid in the north but not in the south.
      This week we in the Government have been blamed for the number of amendments that we have put down because of the speed with which we have had to bring this Bill before the House. If we started putting down more amendments on the suggestion of the hon. Member for Burnely, honest as I am sure he is in the desire for further clarification, we would have to be careful what we did.
      We shall consider what the hon. Gentleman said and what is contained in the clause. If it is then our conviction that the amendments can be expressed more clearly and will stand up in the courts—
      It being Ten o'clock, THE CHAIRMAN left the Chair to report Progress. and ask leave to sit again.
      Committee report Progress

  BUSINESS OF THE HOUSE
  Motion made, and Question put,
  That at this day's sitting the Local Government Finance Bill may be proceeded with, though opposed, until any hour.—[Mr. Ryder.]
  The House divided: Ayes 250, Noes 10.

  Division No. 67]

  [10.01 pm

  AYES

  Aitken, Jonathan

  Aspinwall, Jack

  Alexander, Richard

  Atkins, Robert (South Ribble)

  Alison, Rt Hon Michael

  Atkinson, David (B'm'th E)

  Alton, David

  Baker, Rt Hon K. (Mole Vall'y)

  Amess, David

  Baker, Nicholas (Dorset N)

  Ancram, Michael

  Baldry, Tony

  Arnold, Tom

  Banks, Robert (Harrogate)

  Ashby, David

  Batiste, Spencer

  Ashdown, Paddy

  Bellingham, Henry

  984

  Bendall, Vivian

  Forth, Eric

  Benyon, William

  Fox, Sir Marcus

  Best, Keith

  Franks, Cecil

  Bevan, David Gilroy

  Fraser, Peter (Angus East)

  Biggs-Davison, Sir John

  Freeman, Roger

  Blackburn, John

  Gale, Roger

  Body, Sir Richard

  Galley, Roy

  Bonsor, Sir Nicholas

  Gardiner, George (Reigate)

  Boscawen, Hon Robert

  Gardner, Sir Edward (Fylde)

  Bottomley, Peter

  Garel-Jones, Tristan

  Bottomley, Mrs Virginia

  Glyn, Dr Alan

  Bowden, Gerald (Dulwich)

  Goodhart, Sir Philip

  Boyson, Dr Rhodes

  Goodlad, Alastair

  Brandon-Bravo, Martin

  Gower, Sir Raymond

  Bright, Graham

  Grant, Sir Anthony

  Brinton, Tim

  Greenway, Harry

  Brittan, Rt Hon Leon

  Gregory, Conal

  Brooke, Hon Peter

  Griffiths, Sir Eldon

  Brown, M. (Brigg & Cl'thpes)

  Griffiths, Peter (Portsm'th N)

  Browne, John

  Grist, Ian

  Bruce, Malcolm

  Ground, Patrick

  Bruinvels, Peter

  Gummer, Rt Hon John S

  Bryan, Sir Paul

  Hamilton, Hon A. (Epsom)

  Buchanan-Smith, Rt Hon A.

  Hamilton, Neil (Tatton)

  Buck, Sir Antony

  Hancock, Michael

  Budgen, Nick

  Hanley, Jeremy

  Bulmer, Esmond

  Hannam, John

  Burt, Alistair

  Hargreaves, Kenneth

  Butcher, John

  Harris, David

  Butler, Rt Hon Sir Adam

  Harvey, Robert

  Butterfill, John

  Haselhurst, Alan

  Carlile, Alexander (Montg'y)

  Havers, Rt Hon Sir Michael

  Carlisle, John (Luton N)

  Hawkins, C. (High Peak)

  Carlisle, Kenneth (Lincoln)

  Hawkins, Sir Paul (N'folk SW)

  Cash, William

  Hawksley, Warren

  Chapman, Sydney

  Hayes, J.

  Chope, Christopher

  Hayhoe, Rt Hon Sir Barney

  Churchill, W. S.

  Hayward, Robert

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

  Heathcoat-Amory, David

  Clark, Dr Michael (Rochford)

  Heddle, John

  Clark, Sir W. (Croydon S)

  Henderson, Barry

  Clarke, Rt Hon K. (Rushcliffe)

  Hickmet, Richard

  Colvin, Michael

  Hind, Kenneth

  Conway, Derek

  Hirst, Michael

  Cope, John

  Hogg, Hon Douglas (Gr'th'm)

  Corrie, John

  Holland, Sir Philip (Gedling)

  Couchman, James

  Holt, Richard

  Crouch, David

  Hordern, Sir Peter

  Currie, Mrs Edwina

  Howard, Michael

  Dorrell, Stephen

  Howarth, Alan (Stratf'd-on-A)

  Douglas-Hamilton, Lord J.

  Howarth, Gerald (Cannock)

  Dover, Den

  Howell, Rt Hon D. (G'ldford)

  Dunn, Robert

  Howell, Ralph (Norfolk, N)

  Durant, Tony

  Howells, Geraint

  Edwards, Rt Hon N. (P'broke)

  Hubbard-Miles, Peter

  Eggar, Tim

  Hunt, David (Wirral W)

  Emery, Sir Peter

  Hunt, John (Ravensbourne)

  Evennett, David

  Hunter, Andrew

  Eyre, Sir Reginald

  Irving, Charles

  Fairbairn, Nicholas

  Jackson, Robert

  Fallon, Michael

  Johnson Smith, Sir Geoffrey

  Farr, Sir John

  Jones, Gwilym (Cardiff N)

  Favell, Anthony

  Jones, Robert (Herts W)

  Fenner, Dame Peggy

  Jopling, Rt Hon Michael

  Fletcher, Sir Alexander

  Joseph, Rt Hon Sir Keith

  Fookes, Miss Janet

  King, Roger (B'ham N'field)

  Forman, Nigel

  Knight, Greg (Derby N)

  Forsyth, Michael (Stirling)

  Knight, Dame Jill (Edgbaston)

  Lang, Ian

  Meadowcroft, Michael

  Latham, Michael

  Mitchell, David (Hants NW)

  Lennox-Boyd, Hon Mark

  Monro, Sir Hector

  Lester, Jim

  Moore, Rt Hon John

  Lloyd, Sir Ian (Havant)

  Morris, M. (N'hampton S)

  MacKay, John (Argyll & Bute)

  Moynihan, Hon C.

  Maclean, David John

  Neubert, Michael

  Major, John

  Nicholls, Patrick

  Malone, Gerald

  Norris, Steven

  Maude, Hon Francis

  Pollock, Alexander

  Mayhew, Sir Patrick

  Portillo, Michael

  985

  Powley, John

  Stokes, John

  Raison, Rt Hon Timothy

  Stradling Thomas, Sir John

  Rathbone, Tim

  Sumberg, David

  Rees, Rt Hon Peter (Dover)

  Taylor, John (Solihull)

  Rhys Williams, Sir Brandon

  Taylor, Teddy (S'end E)

  Ridley, Rt Hon Nicholas

  Tebbit, Rt Hon Norman

  Rifkind. Rt Hon Malcolm

  Temple-Morris, Peter

  Rippon, Rt Hon Geoffrey

  Terlezki, Stefan

  Roberts, Wyn (Conwy)

  Thomas, Rt Hon Peter

  Roe, Mrs Marion

  Thompson, Donald (Calder V)

  Ross, Stephen (Isle of Wight)

  Thompson, Patrick (N'ich N)

  Rossi, Sir Hugh

  Thorne, Neil (Ilford S)

  Rost, Peter

  Thornton, Malcolm

  Rowe, Andrew

  Thurnham, Peter

  Ryder, Richard

  Trotter, Neville

  Sackville, Hon Thomas

  Twinn, Dr Ian

  Sainsbury, Hon Timothy

  van Straubenzee, Sir W.

  Sayeed, Jonathan

  Waddington, Rt Hon David

  Shaw, Giles (Pudsey)

  Walker, Bill (T'side N)

  Shaw, Sir Michael (Scarb')

  Wallace, James

  Shelton, William (Streatham)

  Waller, Gary

  Shepherd, Richard (Aldridge)

  Wardle, C. (Bexhill)

  Shields, Mrs Elizabeth

  Warren, Kenneth

  Silvester, Fred

  Watson, John

  Sims, Roger

  Watts, John

  Skeet, Sir Trevor

  Wells, Bowen (Hertford)

  Smith, Tim (Beaconsfield)

  Wells, Sir John (Maidstone)

  Soames, Hon Nicholas

  Wheeler, John

  Speller, Tony

  Whitfield, John

  Spencer, Derek

  Wilkinson, John

  Spicer, Jim (Dorset W)

  Wolfson, Mark

  Spicer, Michael (S Worcs)

  Wood, Timothy

  Squire, Robin

  Woodcock, Michael

  Stanbrook, Ivor

  Yeo, Tim

  Steel, Rt Hon David

  Young, Sir George (Acton)

  Steen, Anthony

  Stern, Michael

  Tellers for the Ayes:

  Stevens, Lewis (Nuneaton)

  Mr. Peter Lloyd and

  Stewart, Allan (Eastwood)

  Mr. David Lightbown.

  Stewart, Andrew (Sherwood)

  NOES

  Banks, Tony (Newham NW)

  Redmond, Martin

  Brown, Ron (E'burgh, Leith)

  Skinner, Dennis

  Caborn, Richard

  Wilson, Gordon

  Clay, Robert

  Lamond, James

  Tellers for the Noes:

  Maynard, Miss Joan

  Mr. Walter Harrison and

  Pike, Peter

  Mr. Donald Coleman.

  Question accordingly agreed to.

  Local Government Finance Bill
  Again considered in Committee.
  Question again proposed, That the amendment be made.
  Dr. Boyson: In conclusion, I recommend to my hon. Friends that we vote against this amendment and keep the clause as it is.
  Amendment negatived.
  Amendment made: No. 74, in page 4, line 17, leave out from 'subsection' to end of line 18 and insert—
  '(1) or (7) above shall be calculated; and an addition or substraction specified under subsection (1) or (7) above may or may not represent an item of account debited or credited to the authority's rate fund revenue account for the year.'.—[Mr. Lennox-Boyd.]
  Mr. Meadowcroft: I beg to move amendment No. 77, in page 4, line 23, leave out '(b) or (c)'.
  I hope that the amendment's import becomes clear. If the wording is not exactly correct it must be remembered that we do not have the great parliamentary draftsmen at our disposal. I am sure that wording could be corrected in another place if we convince the Committee, by our eloquence, to accept the principle.
  986
  The crucial point concerns the amounts which are available under central funding through grants to local government and which are constrained by the provisions in the clause that we seek to amend. The amendment seeks to take out the provision for the transport supplementary grant—to take out subsection (b) or (c) in section 54(2) of the 1980 Local Government, Planning and Land Act. That would give local government some £7 million of transport supplementary grant and national parks supplementary grant.
  Since the advent of deregulation, the transport problems, especially in urban areas, have been more acute. This is of no surprise to many hon. Members. Local government has to subsidise transport to ensure a proper transport system is available but providing that service has become a serious problem because of lack of resources. I hope, therefore, that the Government will recognise the problem and recognise that this sum of money should go back into the amount for local government. We will then have some extra help, small though it may be, to deal with local government problems.
  10.15 pm
  Dr. Boyson: The amendment would mean that relevant expenditure would be a figure net of transport supplementary grant and national parks supplementary grant unless my right hon. Friend makes specifications to avoid that. According to current practice, relevant expenditure is not a figure net of these supplementary grants. We wish that to continue. Therefore, the amendment serves no purpose and I recommend hon. Members to resist it in spite of the oratory of the hon. Member for Leeds, West (Mr. Meadowcroft) which I found slightly persuasive if I could have been persuaded.
  Amendment negatived.
  Question proposed,That the clause, as amended, stand part of the Bill.
  Mr. Boyes: Clause 3 is intended to give the Minister effective power to rewrite the definitions when it suits him. New powers may be given to the Minister in subsections (4)(c), (5)(c), (7)(b) and (8). He may adjust the basis of calculation of debit and credit items of account; he may adjust up or down the basis of calculation of total expenditure for any local authority; he may specify the manner of calculation of total expenditure and the factors to be taken into account. For practical purposes, the Secretary of State will gain control of local authority expenditure calculations and definitions with the clear intention of using the power to restrict spending. There is no limitation in the Bill on the manner of calculation or factors which may be relevant. The power is not subject to parliamentary scrutiny and there is no requirement to consult affected parties, despite the fact that large amounts could be involved. It is normal practice in relation to grant matters to consult at least the local authority associations. Finally, I agree with the remarks of the hon. Member for Portsmouth, South (Mr. Hancock) and with the remarks that I made myself on other amendments which demonstrate that certain clauses are completely incomprehensible to the people who have to administer local government finance.
  Dr. Boyson: I must not be tempted by the last point made by the hon. Gentleman. I was glad to hear that he

  987
  still agrees with himself and with what he said on earlier amendments, which shows consistency that all of us should follow. Certainly I try to be consistent.
  The clause defines for the year 1987–88 and subsequent years the relevant expenditure and total expenditure of local authorities for the purposes of part VI of the 1980 Act. The clause is a key provision in providing a new statutory definition of relevant and total expenditure and follows the practice adopted since 1981. So once again we are trying to continue a practice that we believe should remain.
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  The clause provides a definition which refers to items of account debited or credited to the rate fund revenue account set up by clauses 1 and 2. Those items of account include as debit items transfers from the rate fund revenue account to special funds such as reserve funds, and as credit items transfers to the rate fund revenue account from special funds. In short, the clause is the key to setting up in statute the practical method of calculating relevant and total expenditure which we have been operating since 1981. The definitions in the Bill will validate them for the past, and also, we trust, for the future.
  Question put and agreed to.
  Clause 3, as amended, ordered to stand part of the Bill.

  Cause 4

    VALIDATION FOR PAST AND GENERAL PROVISION FOR FUTURE
    Dr. Boyson: I beg to move amendment No. 79, in page 4, line 43, leave out from first 'of' to end of line and inset 'an amount of block grant payable'.
    The Second Deputy Chairman: With this it will be convenient to consider Government amendments Nos. 9 and 187.
    Dr. Boyson: These are technical amendments to the provisions dealing with the calculation of relevant and total expenditure for certain previous years. They are necessary if we are to be able to make the conclusive calculations of block grant payable and further supplementary reports for years as intended.
    For England, supplementary reports intended to be the final ones have been made for 1981–82 and for 1982–83. All that is intended for the future for those years it to make a conclusive calculation of block grant payable to each authority. Clause 4 provides for that to be done. For other previous years for England, further supplementary reports are intended—clauses 4 and 5 provide for that.
    When conclusive calculations for supplementary reports are made for years before 1986–87, the authorities to be covered by the calculations and reports include the metropolitan county councils and the Greater London council.
    The conclusive calculations for 1981–82 and for 1982–83 will simply confirm entitlements that have already beet notified to authorities, but if, as a result of further reports, the grant entitlement of those authorities is different from the grant that has already been paid, any adjustment will be made with the appropriate residuary body it accordance with the Local Government Act 1985. The effect of any adjustment will thus be shared among the district councils in a metropolitan county area or among the boroughs in London.
    The amendments will enable clauses 4 and 5 to cater for the GLC for years before 1986–87. I know that there are hon. Members who served on that council. Without the amendments, we could not proceed as we intend, and the status quo would not be maintained. I commend the amendments to the Committee.
    Mr. John Fraser: If I have understood the Minister correctly, there could be a retrospective change in the accounts of the GLC which would affect local authorities that have no control whatever over the decisions that have been made. One cannot possibly attribute to Southwark, Lambeth, Merton or Sutton the consequences of decisions made by the GLC.
    The very least that one ought to ask is that the Minister should give assurances that, if he is thinking of making any substantial changes retrospectively in the construction of the GLC's accounts, he will consult the London authorities about the consequences of those decisions, as they could be adversely affected by decisions in which they play no part.
    Mr. Tony Banks: Will the Minister explain how he would intend to do what he has just outlined with regard to any interpretation of the GLC's accounts? I do not know how it will be done. I do not know where all the
    990
    information about the GLC's accounts is held. I assume that the Department of the Environment has a fairly shrewd idea what went on in the days of the GLC. I hasten to add that there was nothing improper.
    The London residuary body is still in the process of winding up the affairs of the GLC's various committees but, I understand, is making fairly slow progress. I listened to what the Minister said, but I am not sure how he would obtain the information with which to do what he says he would do. I should be most grateful if the Minister could assist me in that respect.
    Dr. Boyson: The Government amendments make any required action possible. I cannot this evening refer to the details of that action. I should not like to delay the Committee with the details at this late hour. They may be more difficult to understand than some of the amendments. The hon. Member for Newham, North-West (Mr. Banks) raised an interesting point. The hon. Gentleman often raises interesting points. I am quite prepared to see the hon. Gentleman or to write to him about the details. There is no question of changing our re-interpretation of the GLC accounts. The information about the GLC expenditure is submitted by the London residuary body. I know that the hon. Gentleman is concerned about the matter. I certainly did not wish to disturb his sleep this evening.
    Question put and agreed to.
    Mr. Straw: The Committee has caught me on the hop. I shall endeavour to follow in the rhetorical footsteps of the Minister. I beg to move amendment No. 80, in page 4, line 44, leave out subsection (5).
    Subsection 5 states:
    "In relation to any intermediate year—

    (a) after the passing of this Act relevant and total expenditure of a local authority shall be calculated for the purposes of Part VI of the 1980 Act in accordance with section 5 below, and

    (b) anything done (including an adjustment made) after the passing of this Act for those purposes shall, to the extent that it involves relevant or total expenditure of a local authority, be done by reference to expenditure so calculated."

    In a moment we shall have an opportunity to debate the wider issues raised by the clause. The Opposition moved this amendment to get an explanation from the Minister about the operation of the subsection.
    Dr. Boyson: I shall attempt to give an explanation to the hon. Member for Blackburn (Mr. Straw) about why we reject this clause. It will damage the Bill. I am sorry, we must not reject the clause.
    Ms. Clare Short: Why not?
    Dr. Boyson: I was looking forward to the debate. The hon. Lady may participate in it. We have not heard the hon. Lady's voice today in the stand part debate. With some of these figures, she may be thinking of standing fast.
    The amendment will have the effect that relevant and total expenditure for the so-called intermediate years—that is the years 1983–84 to 1986–87 in England and 1984–85 to 1986–87 in Wales—could not be calculated for any of the purposes for which such figures of expenditure will be needed after the passage of the Bill. Thus, the amendment will prevent my right hon. Friend from making any further supplementary reports for these years. They could not continue to act in the way intended and as local government expects.

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    In short, the amendment would prevent us from achieving our aim of maintaining the status quo. Even Labour Members, I hope, would not wish us to depart from that. I recommend that the Committee reject the amendment. Basically, in this clause we are following, as far as one can, preceding practice.
    Ms. Clare Short: We are constantly told that the Bill is about validating the past. The Minister tells us that, if the amendment were passed, the Government could not interfere with settlements for 1984–85. That is a long time ago. I am surprised that the Government need take powers back that far. Will the Minister explain more thoroughly, rather than just reading from the brief, exactly what the effect would be if the amendment were passed?
    10.30 pm
    Dr. Boyson: I shall answer the hon. Lady without reading the brief. Let me put it on the record so that lawyers do not need to fight about the next definition.
    Supplementary reports are made. Each year the Government give a rate support grant settlement to each authority and it then knows what it will receive. But, as the year passes, the data change—population, rateable values, the number of children under five, the number of old people, and so on—and there is continuing updating, so that, by the end of the year, the position of the 485 local authorities has changed. A reassessment occurs from time to time, including one of expenditure.
    I have referred to the intermediate years of 1984–85 to 1986–87, the present year. Supplementary reports are required to let the local authorities know the exact position. We cannot obtain those supplementary reports until we get the legislation and our definitions right. Every Government have used supplementary reports from previous years so that they continually bring up to date the amount of money that goes to each local authority.
    Amendment negatived.
    Question proposed, That the clause, as amended stand part of the Bill.
    Dr. Boyson: Clause 4 validates all those things done by the Secretary of State for rate support grant purposes under the provisions described in clause 4(2). It also provides that for those years for which rate support grant supplementary reports have been made which are intended to be final, the conclusive calculations of block grant are to be made on the basis of the supplementary reports and the information that the Secretary of State took into account in making them. The clause provides that the future decisions on supplementary reports for 1983–84, for 1984–85, and for 1985–86, which do not yet exist, and for 1986–87 shall be taken in line with the provisions of clause 5.
    Clause 5, when we come to it, provides that expenditure shall be defined for those years in the same way as for 1987–88. The supplementary reports will contain a definition of total and relevant expenditure and all the other information, just as is being done for the 1987–88 report.
    Mr. Tony Banks: The Minister will be aware that the London borough of Newham has seen his Department a number of times to try to do something about the problems that were first encountered through the creation
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    of special funds in the 1982–83 accounts which, in effect, were disallowed by the Department of the Environment. Those contributions were neglected in the 1983–84 accounts and, due to additional grant penalties, this resulted in a deficit of about £4 million. I could go into some detail about Newham's current position following its position in 1982–83 and the creation of special funds. However, it has been reflected since then in all the settlements we have had. I should like to know whether there is still a chance for Newham's case to be rectified before the Bill becomes an Act. Is there any point in going to see the Minister yet again in order to explain Newham's case and to see whether we can get some redress, or is he now saying that with the passage of the clause, and eventually the Act, we might as well forget about the problems that arose in 1982–83 and that we have no redress either in law or by appeal to the Minister?
    Dr. Boyson: I understand why the hon. Gentleman raised that issue, which is a source of concern for Newham. However, that is involved in schedule 2 and I would prefer to deal with it then. I am aware of the hon. Gentleman's point.
    Mr. Spearing: I appreciate what the Minister says. We are to deal with amendment No. 132, on schedule 2. As I understand it, the Minister is saying that any adjustment will have to be taken account of within the formula of schedule 2 and cannot be in any way adjusted under the terms of clause 4 because it is a rigid clause. Will the Minister confirm that? That is, in effect, what he said but I would like him to be explicit.
    Dr. Boyson: The hon. Gentleman is correct: it does fall under schedule 2. If there is any disagreement, there is nothing to stop the hon. Gentleman from tabling an amendment on this matter. However, as it stands it will be under schedule 2.
    Mr. Straw: As the Minister has explained, clause 4 validates past Acts and makes general provisions for the future. It seeks to clear up the mess of the past seven years of rate support grant and local government finance regimes which the Government have created. During the course of the debates we have had statements from the Minister and the Secretary of State trying to disclaim all responsibility for the 1980 Act, and every amending Act since then. We have had one every year. It is typical of the Government that whenever anything goes wrong they pretend that somehow they had nothing to do with it.
    The financial regime of local authorities is based upon the 1980 Act. I am glad to see the hon. Member for Hornchurch (Mr. Squire) agreeing with that. That Act was the creation of the right hon. Member for Henley (Mr. Henseltine) and it was supported enthusiastically by every Conservative Member of the time. It was the Labour Opposition who opposed that Act on the grounds that it was impractical, and incomprehensible and would lead to serious problems for local authorities. By this Bill we have been proved right and the Government have been proved wrong.
    I hope that the Minister and the Secretary of State show some humility. They keep coming to the Dispatch Box saying that they dislike the present local authority financial regime. That may be the case but why did they vote for it and why do they, no doubt, support it within

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    Government? We are seeing a latter-day conversion. What guarantee do we have that the new system will be any better than the present system?
    Our real concern about clause 4 is not that it seeks to validate past Acts, which people had thought were valid anyway, but about the way in which it seeks to do that, especially, as we discussed under the group of amendments including No. 2A, the fact that, in order to validate the provisions, the Secretary of State seeks to make himself immune from court action. We had a detailed debate on that on Monday and I do not intend to repeat it.
    However, I wish to ask the Secretary of State two sets of questions. Is he willing to consider—I have not given him notice of this—having the clause amended to bring it into line with what he said it meant when we discussed it on Monday? I refer in particular to clause 4(6). The matter was first raised on Monday by my hon. Friend the Member for Birmingham, Ladywood (Ms. Short). The Secretary of State quoted subsection (1) which refers to
    "Anything done by the Secretary of State before the passing of this Act".
    The right hon. Gentleman said:
    "It is only in relation to actions taken before this Act was published that anything I do escapes challenge."
    My hon. Friend the Member for Newham, North-West (Mr. Banks) said:
    "Passed not published."
    The Secretary of State replied:
    "The hon. Gentleman is wrong, because since the Act was published I have done nothing nor will I do anything in the sense of this clause. I have taken no actions whatever in relation to the rate support grant settlement since the time that I realised it would be illegal for me to do so."
    Therefore, my first question to the Secretary of State is: is he willing to consider writing into the opening part of the clause a replacement for the phrase
    "before the passing of this Act"
    using the words, "before 18 December 1986", which is the day that the Bill was published?
    My second question is more substantial, although the first was not insubstantial. During his first speech on Monday, the Secretary of State sought to explain that, in his view, the Opposition were wrong to believe that subsection (6), which makes the clause judge-proof, was wide in its effect. I asked what effect subsection (6) would have. The right hon. Gentleman replied:
    "It depends on the subject of the litigation. If it has to do with total expenditure or involves the definition of total expenditure, the Act will prevail over any decision of the court…Where a matter has nothing to do with the definition of total expenditure or with the rate support grant calculation based on it, it is judiciable but it might be better for the court to await the passage of the Bill so that it knows the definition of total expenditure."—[Official Report, 19 January 1987; Vol. 108, c. 643–70.]
    I accept that if the Bill as drafted was so narrowly defined as the Secretary of State said in that statement, at least there would be less to argue about than we think there is now. Our problem is that clause 4, as drafted, appears to be wide. I do not want to repeat what I said on Monday, but anyone who looks at part VI of the 1980 Act realises that it covers not just definitions of total expenditure or the rate support calculation based upon it, but a wide area—the whole scheme of block grant as set down in that Act. That is reinforced and buttressed by provisions such as section 8 and schedule 2 to the Local Government Finance Act 1982, sections 2 and 3 of the Education Act 1986 and section 2 of the Rate Support Grants Act 1986.
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    If the Secretary of State only wishes the clause to be as narrow as his statement to the House, is he willing to see it amended so that, under clause 4(1), it would read:
    "anything done by the Secretary of State before the passing of this Act for the purposes of the relevant provisions in relation to any of the initial years or intermediate years and only in relation to the definition of total expenditure or the rate support grant calculation based upon it".
    I am quoting from the words that the right hon. Gentleman used. If he means what he says, I can see no reason why that clause should not be limited as he said.
    The Secretary of State says that our concern about the judge-proofing of this clause and clause 6 is unjustified. Earlier today my hon. Friend the Member for Copeland (Dr. Cunningham) quoted respectable legal advice to the effect that our fears are justified. It would be a measure of the Secretary of State's true intentions if he agreed to consider the two points that I have raised and to make a substantive reply on Report.
    10.45 pm
    Ms. Clare Short: There is another very important point. The Secretary of State claims that the Bill is necessary to validate action that he took when he thought he was acting according to the law. We have said all along that if that were all, it would not be controversial. However, we know that in the past local authorities have taken action that, on good legal advice, they thought was lawful, but which is being made unlawful by the Bill. We must ask that the protection that is to be accorded to the Secretary of State should be accorded to local authorities. Their actions should also be validated and made judge proof. If he were an honourable Secretary of State and if he were honourably trying to extricate himself from a legal difficulty, he would extend this protection to local authorities. He should explain why he is unwilling to do so.
    Mr. Straw: I am grateful to my hon. Friend. When we debate amendment No. 87 there will be an opportunity to raise the Birmingham point at much greater length. However, I accept the point that, if the Secretary of State is seeking indemnity for past unlawful actions, what is sauce for the goose is sauce for the gander and the indemnity should apply equally to authorities like Birmingham.
    Mr. Ridley: Since the hon. Member for Blackburn (Mr. Straw) has asked me to respond to two specific questions, I shall have great pleasure in doing so. It gives me an opportunity to clear up the slight misunderstanding which the hon. Member for Copeland (Dr. Cunningham) was in such a ferment about and which he raised on a point of order. As one who purports to put legal challenges before the Committee, he might at least realise the difference between a point of order and a point of substance. But we live in hope.
    The hon. Member for Blackburn first asked the Government to substitute an earlier date—18 December—for the validation. One minute's thought will make him realise that the period between 18 December and the passing of this Bill would be a period when there was no proper definition of rate support grant. The old definition would remain in force. It would be possible for authorities to bring a mass of legal cases, on the basis that at present the law is as it is under the 1980 Act and that the definition was not valid for the period covering the passage of the

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    Bill. He must realise that that would not be a sensible solution. Law suits can arise not only from actions taken by the Secretary of State; they can arise on any matter that an authority chooses to pick upon at any time.
    Secondly, the hon. Gentleman asked about the letter that his hon. Friend the Member for Copeland read out from the Association of Municipal Authorities. I am grateful to the association for sending me a copy of that letter. As I said on Monday, the provisions of clause 4(6) and clause 6(4) validate decisions and actions under those parts of existing legislation that involve total or relevant expenditure. I said that anything that is wholly extraneous to total or relevant expenditure and hence is not within those parts of the existing legislation that are specified in the Bill is not covered by the validation.
    If we did not make the position on those past decisions absolutely clear, it would be a recipe for costly and unnecessary litigation. I hope that the Opposition do not believe that such litigation flowing from the technical flaw which we are here putting right would be in anybody's interest.
    Mr. Straw: The Secretary of State is repeating what he said on Monday. Does he not accept that part VI of the Local Government Planning and Land Act 1980 goes far wider than simply to define total expenditure?
    Mr. Ridley: That is exactly the point that the hon. Gentleman has not grasped, that total expenditure or relevant expenditure is endemic in all of the sections of those Acts that are quoted in the Bill. It is impossible to disentangle some parts of any conceivable court case from those parts that relate to total expenditure. That is exactly what I said on Monday and that is the hon. Gentleman's answer.
    Mr. Straw: It is true that total expenditure pops up in a number of sections in part VI of the 1980 Act, but that is not the exclusive concern of part VI. In order to bring the law more into line with the Minister's statements we have not suggested that there should no longer be any reference to part VI of the 1980 Act, but that that reference should be limited to references to total expenditure. What is wrong with that, since that is exactly what he told the House on Monday?
    Mr. Ridley: I was right on Monday and I am right again today. It is impossible to distinguish some parts of part VI of the 1980 Act about total or relevant expenditure from other matters in that Act. It is the foundation upon which the whole of rate support grant and rate limitation have been calculated and one cannot, as it were, divide the foundations into some parts which are faulty and have to be validated and other parts which are not. If the hon. Gentleman will think about it, he will discover that such a distincition is virtually impossible.
    Mr. Dobson: Will the right hon. Gentleman give way?
    Mr. Ridley: This validation concerns only past decisions. When I come to make further decisions for all the years from 1983–84 to 1986–87 on which there are outstanding supplementary reports to be made, my decision—
    Mr. Dobson: Will the right hon. Gentleman give way?
    Mr. Ridley:—will be subject to the normal review of the courts. My decisions on the rate support grant for 1987–88 and on reports and supplementary reports thereafter will be subject to review by the courts.
    Mr. Dobson rose—
    Ms. Clare Short: The right hon. Gentleman should give way.
    Mr. Ridley: Under the formula in schedule 2, my determination of rate limits for 1987–88 will be subject to review by the courts. Decisions on future years' rate limitation will, of course, also be subject to review by the courts. I hope that puts to rest the misunderstanding which Opposition Front Bench speakers have brought to the debate.
    Mr. Spearing: I would not have risen had the Secretary of State had the courtesy to give way when I or my hon. Friend—
    Mr. Ridley: That is what I have done: I have given way to the hon. Gentleman.
    Mr. Spearing: I hope that I can be as polite or even improve on the politeness of the right hon. Gentleman.
    Mr. Dobson: My hon. Friend could scarcely fail to do that.
    Mr. Spearing: The Minister spoke about clause 4(6) applying to definitions of expenditure. He implied that that court capping, as I have nicknamed it, applied only to definitions of expenditure. However, later he said—I paraphrase—that everything is so intermingled that it is impossible to separate one element from another. He thus appeared to validate the point made by my hon. Friend the Member for Blackburn (Mr. Straw) that clause 4 has a wider ambit that the Secretary of State planned.
    Earlier in the debate, the Minister for Local Government assured me that the Secretary of State had earlier today received a letter from me about these very matters and that I would receive a reply. I rose on that point. I invite the Secretary of State to intervene in my speech, because I will gladly give way to him. I rose to ask if the reply to that letter would come from him and would cover these points at issue. If we went into the points in detail tonight we would not be popular with other hon. Members. I want an understanding from the Secretary of State that not only will I get a reply—I have received that assurance already from the Minister of State—but that that reply will be signed by him and will address the matters that we have been discussing.
    Mr. Ridley: I shall send the hon. Gentleman a signed copy of Hansard with the speech that I have just made, which is a full answer to the letter from the AMA. It quotes me as saying:
    "If it has to do with total expenditure or involves the definition of total expenditure, the Act will prevail over any decision of the court."
    The Acts specified in the Bill all involve the definition of total expenditure, and that is inseparable from all the matters concerned in those Acts. What I said was perfectly valid. I invite the hon. Gentleman to repeat what I said as well.
    Mr. Spearing: I think that the Secretary of State has misunderstood me. The letter that I referred to was not the letter that I read out earlier today by my hon. Friend the Member for Copeland (Dr. Cunningham); it was a letter

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    that I wrote yesterday which the Secretary of State received this morning. The right hon. Gentleman may not have seen it yet, but his hon. Friend the Minister has assured me that I will receive a reply, and I am grateful for the assurance that it will be signed by him.
    Mr. Ridley: I shall be happy to sign the letter myself, having checked it carefully, it if will help the hon. Gentleman.
    Mr. Dobson: Will the Secretary of State tell the Committee whether the legal interpretation that he is now giving, partly in response to the representations from the AMA, is the interpretation that he has arrived at himself, or whether he has received legal advice from the officials of his Department to that effect? If it is the latter, are they the people who drafted the offending legislation in the first place?
    Mr. Ridley: I must be responsible for my words at the Dispatch Box. I would not seek to hide behind the advice or assistance that I receive from others.
    Mr. Tony Banks: Will the Secretary of State carry on from his quotation from Hansard of 19 January? It says:
    "It depends on the subject of litigation. If it has to do with total expenditure or involves the definition of total expenditure, the Act will prevail over any decision of the court…Where a matter has nothing to do with the definition of total expenditure or with the rate support grant calculation based on it, it is judiciable but it might be better for the court to await the passage of the Bill so that it knows the definition of total expenditure."—[Official Report, 19 January 1987; Vol. 108, c. 643.]
    Since the Secretary of State has told us that they are so closely interwoven, can he—so that we can move on—give us a good example of some other form of definition that could be challenged in the courts along the lines that he gave in his speech on 19 January?
    Mr. Ridley: It is like Question Time, Mr. Walker, but I am happy to continue as long as the Committee wishes.
    A possible parallel would be the rateable value of an authority, which is nothing to do with the definition of total expenditure, but is a matter concerned in those Acts.
    Another case that I cited on Monday was the Greenwich case, which concerns the multiplier. I do not want to prejudice that case, but the multiplier has not yet been the subject of a decision because it might be embodied in the first supplementary report for 1986–87, and therefore will be subject to a final decision by me at a stage later than the passage of this Act. I do not want to prejudge the decision of the court, but that matter may be open to judicial review, as I said on Monday in response to the hon. Gentleman.
    I have given him two examples of matters that are not within the scope of the Bill or proof against action by the courts. I am sure that with his great legal knowledge and ingenuity he can think of many more examples of the same sort.
    11 pm
    Mr. Straw: We have all listened with care to the Secretary of State, but the truth is that the assurances that he sought to give on Monday do not square with the wide terms of the Bill as it is drafted. As the letter from the legal adviser to the Inner London education authority points out:
    "There is nothing limiting the deeming provision to errors arising out of the erroneous definition, and therefore calculation, of relevant and total expenditure."
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    Our point is that the present wording clearly appears to cover any procedural impropriety, failure to consider a matter rationally or other unlawfulness in respect of anything done by the Secretary of State for those statutory puposes.
    It is no good the Secretary of State seeking to be patronising with the Committee. I am afraid to say that we have been here before. Ministers have too often given bland assurances about the nature of legislation which have turned out not to be the case. Indeed, if the assurances that were given by his ally the right hon. Member for Henley (Mr. Heseltine) had been correct, the Government would not be in their present mess. It is precisely because Acts have turned out to be something quite different from that which Ministers promised the House that we are in this mess.
    What is more, Labour Members are aware of the fact that Conservative Members of Parliament pay scant regard to the rule of law. For them, it is simply an instrument to use or to discard as it suits them. It is all right for them to lecture us on the rule of law when it suits them, but when they make unlawful Acts, they come to the House to seek wide immunity from the law, and immunity not only in respect of Acts which everybody thought were valid in the past, but from errors, mistakes or acts of unfairness. It is that which we wish to pursue. It is on that that the Secretary of State has given no proper explanation and it is for that reason that we shall seek to vote against clause 4.
    Question put, That the clause, as amended, stand part of the Bill:—
    The Committee divided: Ayes 217, Noes 169.

    Division No. 68]

    [11.02 pm

    AYES

    Aitken, Jonathan

    Budgen, Nick

    Alexander, Richard

    Burt, Alistair

    Alison, Rt Hon Michael

    Butcher, John

    Amess, David

    Butler, Rt Hon Sir Adam

    Ancram, Michael

    Butterfill, John

    Ashby, David

    Carlisle, John (Luton N)

    Aspinwall, Jack

    Carlisle, Kenneth (Lincoln)

    Atkins, Robert (South Ribble)

    Carttiss, Michael

    Atkinson, David (B'm'th E)

    Cash, William

    Baker, Rt Hon K. (Mole Vall'y)

    Chope, Christopher

    Baker, Nicholas (Dorset N)

    Churchill, W. S.

    Baldry, Tony

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

    Banks, Robert (Harrogate)

    Clark, Dr Michael (Rochford)

    Batiste, Spencer

    Clark, Sir W. (Croydon S)

    Bellingham, Henry

    Clarke, Rt Hon K.(Rushcliffe)

    Bendall, Vivian

    Cockeram, Eric

    Benyon, William

    Colvin, Michael

    Bevan, David Gilroy

    Conway, Derek

    Biffen, Rt Hon John

    Cope, John

    Biggs-Davison, Sir John

    Corrie, John

    Blackburn, John

    Couchman, James

    Body, Sir Richard

    Crouch, David

    Bonsor, Sir Nicholas

    Currie, Mrs Edwina

    Boscawen, Hon Robert

    Dickens, Geoffrey

    Bottomley, Peter

    Dorrell, Stephen

    Bottomley, Mrs Virginia

    Douglas-Hamilton, Lord J.

    Bowden, Gerald (Dulwich)

    Dover, Den

    Boyson, Dr Rhodes

    Dunn, Robert

    Brandon-Bravo, Martin

    Durant, Tony

    Bright, Graham

    Edwards, Rt Hon N.(P'broke)

    Brinton, Tim

    Eggar, Tim

    Brittan, Rt Hon Leon

    Emery, Sir Peter

    Brooke, Hon Peter

    Evennett, David

    Brown, M. (Brigg & Cl'thpes)

    Fairbairn, Nicholas

    Browne, John

    Fallon, Michael

    Bruinvels, Peter

    Farr, Sir John

    Bryan, Sir Paul

    Favell, Anthony

    Buck, Sir Antony

    Fenner, Dame Peggy

    999

    Forman, Nigel

    Morris, M. (N'hampton S)

    Forsyth, Michael (Stirling)

    Neubert, Michael

    Forth, Eric

    Nicholls, Patrick

    Franks, Cecil

    Norris, Steven

    Fraser, Peter (Angus East)

    Portillo, Michael

    Freeman, Roger

    Powley, John

    Gale, Roger

    Rhys Williams, Sir Brandon

    Galley, Roy

    Ridley, Rt Hon Nicholas

    Gardiner, George (Reigate)

    Rifkind, Rt Hon Malcolm

    Gardner, Sir Edward (Fylde)

    Roberts, Wyn (Conwy)

    Garel-Jones, Tristan

    Roe, Mrs Marion

    Glyn, Dr Alan

    Rossi, Sir Hugh

    Goodlad, Alastair

    Rowe, Andrew

    Grant, Sir Anthony

    Sackville, Hon Thomas

    Greenway, Harry

    Sainsbury, Hon Timothy

    Gregory, Conal

    Sayeed, Jonathan

    Griffiths, Sir Eldon

    Shaw, Giles (Pudsey)

    Griffiths, Peter (Portsm'th N)

    Shaw, Sir Michael (Scarb')

    Ground, Patrick

    Shelton, William (Streatham)

    Grylls, Michael

    Shepherd, Richard (Aldridge)

    Gummer, Rt Hon John S

    Silvester, Fred

    Hamilton, Hon A. (Epsom)

    Sims, Roger

    Hamilton, Neil (Tatton)

    Skeet, Sir Trevor

    Hampson, Dr Keith

    Smith, Tim (Beaconsfield)

    Hanley, Jeremy

    Soames, Hon Nicholas

    Hargreaves, Kenneth

    Speed, Keith

    Harris, David

    Speller, Tony

    Harvey, Robert

    Spencer, Derek

    Haselhurst, Alan

    Spicer, Jim (Dorset W)

    Havers, Rt Hon Sir Michael

    Spicer, Michael (S Worcs)

    Hawkins, Sir Paul (N'folk SW)

    Squire, Robin

    Hawksley, Warren

    Stanbrook, Ivor

    Hayes, J.

    Stern, Michael

    Hayhoe, Rt Hon Sir Barney

    Stevens, Lewis (Nuneaton)

    Hayward, Robert

    Stewart, Allan (Eastwood)

    Heathcoat-Amory, David

    Stewart, Andrew (Sherwood)

    Heddle, John

    Stradling Thomas, Sir John

    Henderson, Barry

    Sumberg, David

    Hickmet, Richard

    Taylor, John (Solihull)

    Higgins, Rt Hon Terence L.

    Taylor, Teddy (S'end E)

    Hind, Kenneth

    Tebbit, Rt Hon Norman

    Hirst, Michael

    Temple-Morris, Peter

    Hogg, Hon Douglas (Gr'th'm)

    Terlezki, Stefan

    Holland, Sir Philip (Gedling)

    Thomas, Rt Hon Peter

    Holt, Richard

    Thompson, Donald (Calder V)

    Hordern, Sir Peter

    Thompson, Patrick (N'ich N)

    Howard, Michael

    Thorne, Neil (Ilford S)

    Howarth, Alan (Stratf'd-on-A)

    Thornton, Malcolm

    Howarth, Gerald (Cannock)

    Thurnham, Peter

    Howell, Rt Hon D. (G'ldford)

    Townend, John (Bridlington)

    Howell, Ralph (Norfolk, N)

    Trotter, Neville

    Hubbard-Miles, Peter

    Twinn, Dr Ian

    Hunt, David (Wirral W)

    van Straubenzee, Sir W.

    Hunt, John (Ravensbourne)

    Viggers, Peter

    Hunter, Andrew

    Waddington, Rt Hon David

    Jackson, Robert

    Waller, Gary

    Johnson Smith, Sir Geoffrey

    Wardle, C. (Bexhill)

    Jones, Gwilym (Cardiff N)

    Watts, John

    Jones, Robert (Herts W)

    Wells, Bowen (Hertford)

    Jopling, Rt Hon Michael

    Wells, Sir John (Maidstone)

    King, Roger (B'ham N'field)

    Wheeler, John

    Knight, Greg (Derby N)

    Whitfield, John

    Knight, Dame Jill (Edgbaston)

    Wilkinson, John

    Latham, Michael

    Wolfson, Mark

    Lennox-Boyd, Hon Mark

    Wood, Timothy

    Lester, Jim

    Woodcock, Michael

    Lloyd, Sir Ian (Havant)

    Yeo, Tim

    Lloyd, Peter (Fareham)

    Young, Sir George (Acton)

    Malone, Gerald

    Mates, Michael

    Tellers for the Ayes:

    Maude, Hon Francis

    Mr. David Lightbown and

    Mayhew, Sir Patrick

    Mr. Richard Ryder

    Moore, Rt Hon John

    NOES

    Adams, Allen (Paisley N)

    Ashley, Rt Hon Jack

    Alton, David

    Ashton, Joe

    Anderson, Donald

    Atkinson, N, (Tottenham)

    Archer, Rt Hon Peter

    Bagier, Gordon A. T.

    Ashdown, Paddy

    Barron, Kevin

    1000

    Beckett, Mrs Margaret

    John, Brynmor

    Bell, Stuart

    Jones, Barry (Alyn & Deeside)

    Benn, Rt Hon Tony

    Kaufman, Rt Hon Gerald

    Bermingham, Gerald

    Kirkwood, Archy

    Bidwell, Sydney

    Lambie, David

    Blair, Anthony

    Lamond, James

    Boyes, Roland

    Leadbitter, Ted

    Bray, Dr Jeremy

    Leighton, Ronald

    Brown, Gordon (D'f'mline E)

    Lewis, Terence (Worsley)

    Brown, Hugh D. (Provan)

    Litherland, Robert

    Brown, N. (N'c'tle-u-Tyne E)

    Lloyd, Tony (Stretford)

    Brown, R. (N'c'tle-u-Tyne N)

    Lofthouse, Geoffrey

    Bruce, Malcolm

    McCartney, Hugh

    Buchan, Norman

    McDonald, Dr Oonagh

    Caborn, Richard

    McGuire, Michael

    Callaghan, Jim (Heyw'd & M)

    McKay, Allen (Penistone)

    Campbell-Savours, Dale

    McNamara, Kevin

    Carlile, Alexander (Montg'y)

    McTaggart, Robert

    Clark, Dr David (S Shields)

    McWilliam, John

    Clarke, Thomas

    Madden, Max

    Clay, Robert

    Marek, Dr John

    Clelland, David Gordon

    Marshall, David (Shettleston)

    Clwyd, Mrs Ann

    Martin, Michael

    Cocks, Rt Hon M. (Bristol S)

    Maynard, Miss Joan

    Cohen, Harry

    Meacher, Michael

    Coleman, Donald

    Meadowcroft, Michael

    Conlan, Bernard

    Michie, William

    Cook, Frank (Stockton North)

    Millan, Rt Hon Bruce

    Cook, Robin F. (Livingston)

    Mitchell, Austin (G't Grimsby)

    Corbett, Robin

    Morris, Rt Hon A. (W'shawe)

    Cox, Thomas (Tooting)

    Morris, Rt Hon J. (Aberavon)

    Craigen, J. M.

    Nellist, David

    Crowther, Stan

    O'Brien, William

    Cunliffe, Lawrence

    O'Neill, Martin

    Cunningham, Dr John

    Orme, Rt Hon Stanley

    Dalyell, Tam

    Park, George

    Davis, Terry (B'ham, H'ge H'l)

    Parry, Robert

    Deakins, Eric

    Patchett, Terry

    Dewar, Donald

    Pendry, Tom

    Dixon, Donald

    Pike, Peter

    Dobson, Frank

    Powell, Raymond (Ogmore)

    Dormand, Jack

    Prescott, John

    Douglas, Dick

    Radice, Giles

    Dubs, Alfred

    Randall, Stuart

    Dunwoody, Hon Mrs G.

    Raynsford, Nick

    Eadie, Alex

    Redmond, Martin

    Eastham, Ken

    Rees, Rt Hon M. (Leeds S)

    Evans, John (St. Helens N)

    Richardson, Ms Jo

    Fatchett, Derek

    Roberts, Allan (Bootle)

    Field, Frank (Birkenhead)

    Roberts, Ernest (Hackney N)

    Fields, T. (L'pool Broad Gn)

    Robertson, George

    Fisher, Mark

    Rogers, Allan

    Flannery, Martin

    Ross, Ernest (Dundee W)

    Foot, Rt Hon Michael

    Ross, Stephen (Isle of Wight)

    Forrester, John

    Rowlands, Ted

    Foster, Derek

    Sedgemore, Brian

    Foulkes, George

    Sheerman, Barry

    Fraser, J. (Norwood)

    Sheldon, Rt Hon R.

    Freeson, Rt Hon Reginald

    Shields, Mrs Elizabeth

    Garrett, W. E.

    Shore, Rt Hon Peter

    George, Bruce

    Short, Ms Clare (Ladywood)

    Gilbert, Rt Hon Dr John

    Silkin, Rt Hon J.

    Godman, Dr Norman

    Skinner, Dennis

    Golding, Mrs Llin

    Smith, C. (Isl'ton S & F'bury)

    Hamilton, James (M'well N)

    Soley, Clive

    Hancock, Michael

    Spearing, Nigel

    Hardy, Peter

    Steel, Rt Hon David

    Harrison, Rt Hon Walter

    Stott, Roger

    Haynes, Frank

    Strang, Gavin

    Hogg, N. (C'nauld & Kilsyth)

    Straw, Jack

    Holland, Stuart (Vauxhall)

    Thompson, J. (Wansbeck)

    Home Robertson, John

    Thorne, Stan (Preston)

    Howell, Rt Hon D. (S'heath)

    Wardell, Gareth (Gower)

    Howells, Geraint

    Wareing, Robert

    Hoyle, Douglas

    Weetch, Ken

    Hughes, Robert (Aberdeen N)

    Welsh, Michael

    Hughes, Roy (Newport East)

    Williams, Rt Hon A.

    Janner, Hon Greville

    Winnick, David

    1001

    Woodall, Alec

    Tellers for the Noes:

    Young, David (Bolton SE)

    Mr. Ron Davies and

    Mr. Sean Hughes.

    Question accordingly agreed to.
    Clause 4, as amended, ordered to stand part of the Bill.
    Motion made, and Question proposed, That the Chairman do report Progress and ask leave to sit again.—[Mr. Ridley.]
    Dr. Cunningham: On a point of order, Mr. Walker. I wish to make it clear that we do not intend to oppose the motion to report Progress, but out of that motion arises a legitimate question that I hope it is appropriate to raise on a point of order. I shall raise it in whatever way is appropriate—
    The Chairman of Ways and Means (Mr. Harold Walker): Order. The question is debatable. If the hon. Gentleman wishes to speak to the question before the House that is perfectly in order.
    11.15 pm
    Dr. Cunningham: I think that I shall continue with my point of order, Mr. Walker.
    We are entitled to have a statement from the Government about their intentions on this business. We have just concluded discussion on clause 4. The Bill, as it now stands, has 17 clauses and five schedules. That was at the last count, but we have difficulty keeping up with the Government changes. Do the Government intend to table any further amendments or new clauses? When do they intend to bring the business back to the Floor of the House? Do they intend to introduce a timetable motion for further discussion of the Bill?
    Mr. Ridley: The hon. Gentleman has not correctly counted the number of clauses and schedules—[Interruption.] It sometimes helps to see what we have done rather than work on last year's "Bradshaw".
    There is a possibility of one further Government amendment at some stage in the Bill's progress. It is not yet ready to be tabled. I have not counted the amendment's words any more than the hon. Gentleman has counted the clauses in the Bill.
    We have made a little progress today, although not as much as we had hoped. I shall consult my right hon. Friends about the Government's intentions, and no doubt in due course the hon. Gentleman will come to know them through the usual channels.
    Mr. Tony Banks: I wish to push the Secretary of State a little further. When can we expect an announcement? I have twice brought my sponge bag, and twice I have returned home early. My wife clearly thinks that I am having an unsuccessful affair.
    Mr. Ridley: I really do not think that I can be held responsible for the disappointment of Mrs. Banks.
    Question put and agreed to.
    Committee report Progress; to sit again tomorrow.

  Mr. J. J. Murray and Mr. J. J. Calvey
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Durant.]
  11.18 pm
  Mr. Stan Thorne: I am glad of the opportunity to raise this matter, and a little surprised that I do so somewhat earlier than I had expected.
  James John Murray and John Joseph Calvey were arrested on 24 June 1985 and, despite five bail applications, remained in custody until acquitted after a trial lasting seven working days. They spent 16 months in prison.
  On 7 October 1986, both men faced an indictment returned to the Old Bailey in London. There were two counts on the indictment against each man. One count alleged offences of wrongly withholding information under section 11 of the Prevention of Terrorism (Temporary Provisions) Act 1984, and the second alleged a conspiracy to pervert the course of justice. The evidence against the men was that they had assisted two known terrorists to evade arrest by driving them out of the area of Leyland to south Wales at a time when they knew that the police were anxious to arrest them because they had been involved in a proposed act of terrorism.
  The proposed act of terrorism was to cause an explosion at the Eagle and Child public house at Weeton. Throughout intense questioning Joseph Calvey denied any knowledge of the act of terrorism and only after James Murray had been questioned at great length over a period of several days did he make an admission, under duress, which he immediately retracted when solicitors were able to take his instructions. By virtue of their acquittal it is argued that a jury recognised that these men were innocent throughout and that their involvement in providing transport for terrorism was done innocently or, at the very worst, under duress.
  Both men were refused costs at the end of the trial. That was especially harsh in the case of Calvey, because he contributed several thousand pounds towards his own costs, the burden of which would otherwise have fallen on the state. Both men had a record in the Preston and Leyland area as diligent and hard working. They often worked seven days a week. They were family men highly respected within the communities in which they lived. James Murray was known by his neighbours as a quiet, gentle man. Unfortunately, it may be said that he had a "wrong" relative whom, of course, he had not chosen.
  Originally the men were detained at Risley remand centre where their families and friends had access to them and could give them moral support. In the case of Mr. Murray, this also enabled him to see his children. The committal proceedings into which the men were joined took place at Lambeth magistrates' court. Following the committal, they were remanded to Wormwood Scrubs. Despite entreaties, both on an emotional and financial basis, efforts to have the men returned to Risley failed. Their solicitors made repeated written requests and I made representations on humanitarian grounds to the Home Secretary for Murray in particular to be returned north to enable his wife and children to see him. This was refused.
  It is my considered opinion that any claim for an ex gratia payment for compensation must be based on assurances the men received prior to them being charged with the offences. Whilst in custody James Murray was

  1003
  given promises. The first assurance Mr. Murray received was on page 85 of the handwritten depositions. It is as follows:
  "Answer: Look I have got to go back there.
  Question: What do you mean?
  Answer: If they found out that I had been talking then that's it. I don't want knee-capping. That's if I'm lucky.
  Question: So you do know something?
  Answer: Remained silent.
  Question: Its up to you Jim, only you know the truth about these matters. What you tell us does not get repeated anywhere else."
  The second assurance Mr. Murray received is on page 107 and is in the following terms:
  "Question: Right Jim let's carry on.
  Answer: You don't know what they're like. I'm going to get a bullet in the back if I'm not careful.
  Question: Try not to worry Jim. I have told you before what you tell us does not go anywhere. It is between the three of us."
  Whilst not specifically recited in written evidence, Calvey was also given similar assurances. The effect of those assurances was that the information being provided by the men would go no further than the police officers to whom they were talking.
  Contrary to this, not only was the information they were providing used to found an indictment on which they were acquitted, but it was published in the most detailed and graphic terms to those whom the men feared most and with whom, until a late stage in the proceedings, they shared the dock. To give the information provided to known and dangerous members of the IRA, despite their custody, is a breach of confidence of the gravest possible terms.
  The purpose underlining the Anglo-Irish Agreement is that there should be co-operation between Irish nationals and British nationals to curtail the activities of terrorists. It is a tragedy that, when requested to provide information, and so doing on the basis that it is to be held in confidence, not only is that information used to prosecute but it is also published to those whom these men and their families most fear. This is surely entirely contrary to the spirit of the Anglo-Irish Agreement and, accordingly, it can be argued that these men are entitled to some ex gratia payment for the abuse of their trust evidenced above.
  They have lost their livelihood and suffered considerable personal anguish and pain although they are innocent of any offence. The men were requested to provide information. On expressing fears for their safety before doing so, they were assured that the information they gave would be treated confidentially. Not only was it not treated confidentially, it was used to base a prosecution against them, the result of which was that they spent the equivalent of what was almost a two-year prison sentence in custody prior to being acquitted by a jury. If people are to be encouraged to provide evidence concerning acts of terrorism, this can hardly be described as an encouraging way of dealing with them.
  I hope that the Home Secretary will consider these representations in depth and find it possible to make an ex gratia payment to Murray and Calvey in view of the special circumstances that I have briefly outlined.
  I should be glad, Mr. Deputy Speaker, if you would allow the hon. Member for Chorley (Mr. Dover) to contribute to the debate.
  Mr. Deputy Speaker (Mr. Harold Walker): Does the hon. Member for Chorley (Mr. Dover) have the consent of the Minister?
  The Parliamentary Under-Secretary of State for the Home Department (Mr. Douglas Hogg): By all means.
  11.27 pm
  Mr. Den Dover: It gives me great pleasure, on this matter of major concern, to support the hon. Member for Preston (Mr. Thorne), who has spoken well on behalf of his constituent, Mr. Murray. I rise to speak on behalf of my constituent, Mr. Calvey. I am delighted to see my hon. Friend the Member for South Ribble (Mr. Atkins) present, because he covers the border between the hon. Member for Preston and me.
  The hon. Member for Preston has explained our anxiety. I wrote to my right hon. Friend the Home Secretary on 16 December outlining the case. It involves a major breakdown of confidence, as these two gentlemen have been let down badly. They were given assurances by the police. They could not have been more worried about their future and the possibility of IRA retribution, yet their confidence was betrayed.
  The hon. Member for Preston has emphasised the fact that the men have lost their livelihood for two years. They have also suffered mental agony and torment at having themselves and their families associated with the activities that have been spoken about.
  I wrote often to the Home Office Ministers to try to get Mr. Calvey moved from Wormwood Scrubs to the local prison at Risley, to no avail. It was extremely inconvenient and expensive for Mrs. Calvey to travel down to Wormwood Scrubs to see her husband for only, literally, 15 minutes at a time. She did that regularly. She had full confidence in her husband. I have met and spoken to Mr. Calvey about the circumstances relating to his detention. I am convinced that he is an absolutely straight up and down member of the community and that he is doing his level best to get back into the construction industry. I am delighted to say that he is taking steps in that regard.
  Therefore, it gives me great pleasure fully to support the hon. Member for Preston who admirably laid out the matter. I sincerely believe that, in this case, an ex gratia payment is the only way to compensate these two gentlemen.
  11.35 pm
  The Parliamentary Under-Secretary of State for the Home Department (Mr. Douglas Hogg): I thank my hon. Friend the Member for Chorley (Mr. Dover) and the hon. Member for Preston (Mr. Thorne) for having put the case for their respective constituents so clearly. Obviously, this is a matter of concern to them and to their constituents. Both my hon. Friend and the hon. Gentleman have put the case lucidly and persuasively. I am not in a position to give, and shall not give, a final reply to the matter. I propose to set out some considerations. I make it plain that, as yet, no final conclusion has been reached. The points made by the hon. Member for Preston and by my hon. Friend the Member for Chorley will most certainly be taken into account and given the weight that they so evidently deserve.
  For reasons that I hope the House will understand, I do not have a full knowledge of the case as yet. We have asked the Lancashire police for a full report, and I

  1005
  anticipate receiving one. It may be necessary to read the transcript of the case. The hon. Member for Preston, supported by my hon. Friend, referred to some of the major facts, but they bear repeating, at least in part, so that the case is put into its proper perspective.
  Mr. Murray and Mr. Calvey were arrested in June 1985. The charges, as the hon. Member for Preston said, were under section 11 of the Prevention of Terrorism (Temporary Provisions) Act 1984—namely, withholding information and perverting the course of justice. The charges relate to a period in 1983, when it seems clear that both Mr. Murray and Mr. Calvey gave assistance to Patrick Magee and Mr. Murray's brother, Patrick Murray, in particular by driving them to various destinations. As I understood the hon. Member for Preston, the issue is not whether the assistance was rendered—I think it is accepted that it was—but, rather, whether it was done with the necessary criminal intent. That seems to be the main issue with which we are concerned. They were committed for trial on 20 November 1985. The trial took place between 7 and 15 October 1986. As we have heard, they were acquitted.
  It is regrettable that these men should have been held in custody for such a long time. It is a great misfortune for them and it is an unsatisfactory aspect of our criminal system that, from time to time, events such as this happen. The Government are conscious of the need to tighten these periods. The House will know that, under the Prosecution of Offences Act 1985, we took power to enable us to impose time limits. Without going into detail—this is not the most appropriate time to do so—we are about to apply statutory limits in three areas to try to combat the problem.
  My hon. Friend the Member for Chorley also made a point about location. It is true that he wrote to the Home Office a number of times to make representations on behalf of his constituent to the effect that he should be held in the north and not in the south. Prisoners remanded in custody to await trial at the Central Criminal Court—where these two gentlemen were tried—are normally located in or near London. The Home Office explored the possibility of making an exception on compassionate grounds, but I am afraid that it was not possible because the establishments in the northern region were severely overcrowded and were simply unable to take prisoners from other regions. I pay tribute to my hon. Friend the Member for Chorley for his steps to promote his constituent's interests.
  While the two gentlemen were in custody, and as the hon. Member for Preston has reminded the House, applications for bail were made on no fewer than five occasions—once to the justices, twice to Preston Crown Court and twice to the Central Criminal Court. It is perhaps useful and necessary to note that the applications for bail were refused. The House, and you in particular, Mr. Deputy Speaker, know the circumstances in which applications for bail are refused. It is a matter for the court, not for Ministers or the Executive. It would be wrong for me to comment, save to say that on five separate occasions a court with jursidiction declined to grant bail.
  It is being said that the two men require and deserve compensation. It is important that we should determine the circumstances in which compensation is paid. As a general proposition, there is no statutory right to compensation in cases of this kind. People who feel that they have been done an injustice in terms of false
  1006
  imprisonment or malicious prosecution can commence civil proceedings. I recognise that, in many cases, that is an illusory remedy, in the sense that it is not one that they are likely to pursue. My right hon. Friend the Home Secretary has made a statement by way of a written answer setting out his approach to ex gratia payments and compensation. The circumstances in which compensation is payable are set out in Hansard in a written answer on 29 November 1985.
  I shall summarise the points that must be made. We are dealing with a number of classes of cases. Let us begin with those cases where there has been a conviction—which is not the case here—and it has gone to appeal. There is a power and discretion, and it has been the practice, to grant compensation where there has been a free pardon or where the conviction is quashed by the Court of Appeal or the House of Lords following a reference of the case under section 17 of the Criminal Appeal Act 1968 or where the conviction is quashed by the Court of Appeal or the House of Lords following an appeal out of time. But the quashing of the conviction must be founded on some new fact which shows conclusively that there has been a miscarriage of justice. I appreciate that this case does not fall within those criteria. I mention it so that the House has this matter in the proper perspective.
  A different situation arises where, as in the present case, there was an acquittal. It is not my practice to read from the Dispatch Box, but this point perhaps needs stating. It is important that we should have the phraseology in mind. I would like to remind the House of the principles that apply in cases where there has been an acquittal. The written answer to which I have referred states:
  "There may be exceptional circumstances that justify compensation in cases outside these categories"—
  largely those to which I have referred.
  "In particular, facts may emerge at trial, or on appeal within time, that completely exonerate the accused person. I am prepared, in principle, to pay compesation to people who have spent a period in custody or have been imprisoned in cases such as this. I will not, however, be prepared to pay compensation simply because at the trial or on appeal the prosecution was unable to sustain the burden of proof beyond a reasonable doubt in relation to the specific charge that was brought."—[Official Report, 29 November 1985; Vol. 87, c.689–90.]
  It is plain from that answer, which reflects settled Government policy, that the mere fact that there has been an acquittal does not give rise to any claim for compensation. That may be wrong as a matter of principle, but if we want to change it we must do so by statute and the House must decide that that is what we want to do. However, that is not the law as it stands at present. The fact that someone has spent a long time in prison on remand is not a justification for claiming compensation. It must go beyond that. My right hon. Friend the Secretary of State said that the facts must, for example, "completely exonerate" the accused person. Although I am the first to realise that when a person is acquitted he is in one sense exonerated, it is quite plain that that phrase in my right hon. Friend's answer is different from a mere acquittal. If we do not like it, we have to change it by statute, but we have not, as a House, done that.
  The mere fact of the acquittal does not bring the case within the range of those that have an obvious claim for compensation. The mere fact of this length of time in custody on remand does not do so, although I accept that it is regrettable that that should have happened. The

  1007
  representations to which the hon. Member for Preston referred do not fall obviously within the scope of the written answer and certainly the loss of income, to which my hon. Friend the Member for Chorley referred, does not.
  Mr. Stan Thorne: I am following closely what the Minister is saying. I appreciate the points that he has made. Would he consider that the circumstances in this case, which arise from the Prevention of Terrorism (Temporary Provisions) Act 1984, the questioning by the police and the comments made by the men in terms of what happened, would be embraced by the references he has made in regard to the prospects for compensation?
  Mr. Hogg: No, I would not. I accept that it is a discretionary remedy and it does lie within the power of my right hon. Friend the Secretary of State to go beyond what he has already said. However, what he has said in his written answer shows clearly his approach. It is an exceptional remedy that can arise only in exceptional circumstances. The circumstances that I for one would contemplate are when it is wholly plain that the person
  1008
  could not have committed the offence, because, for example, an offence was never committed, or it could not have been committed by the defendant because he was in France when the offence happened in Brighton.
  That is not the case here. This case is an acquittal, the jury, as I understand it, having determined that they were not satisfied that the defendant, who did certain admitted acts, had the necessary criminal intent. On the face of it, that does not fall within the scope of the discretionary power that my right hon. Friend the Secretary of State has described.
  I should like to say to the hon. Member for Preston and my hon. Friend the Member for Chorley that we shall give very serious consideration to the points that they both put so clearly, but at first blush, and without having had the full police report, and without having had the transcript, I have to say that it is not obvious to me that the case falls within the accepted parameters. The representations so carefully and persuasively put will be considered carefully, but I cannot in all honesty go beyond that.
  Question put and agreed to.
  Adjourned accordingly at fifteen minutes to Twelve o'clock.