Commons Sitting of 15 September 2003

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
Oral Answers to Questions
  CULTURE, MEDIA AND SPORT
  The Secretary of State was asked—
  CULTURE, MEDIA AND SPORT

    Historic Royal Palaces
    Dr. Vincent Cable: What recent advice she has given to Historic Royal Palaces regarding the imposition of charges to the public. [129551]
    The Minister for Sport and Tourism(Mr. Richard Caborn): My noble Friend Baroness Blackstone told the trustees of Historic Royal Palaces that they have the power to introduce charges for entry to the gardens at Hampton Court palace provided that the cost is reasonable, related to upkeep, and not at a level that effectively restricts public access.
    Dr. Cable: Does the Minister have any constructive proposals to deal with a basic inequity, arising from a ruling of the European Court of Justice, that local people who use royal palaces—Hampton Court gardens in the case that we are considering—or other national monuments cannot be exempted from or given any sort of preference with regard to charges, which are designed to apply to tourists who visit those places perhaps once in a lifetime?
    Mr. Caborn: I know that the hon. Gentleman and some of his colleagues will meet my right hon. Friend the Minister with responsibility for media and heritage on Friday and I am sure that they will be able to hold a dialogue. I assure him that no final decision has been made about the subject. "Not to be announced" appears more times on the briefing sheet than I have previously seen since becoming a Minister. That is unfortunate, but I am sure that all will be revealed to the hon. Gentleman. I hope that what is under discussion will be helpful in dealing with not only the concern that he raised directly, but others.
    Sir Patrick Cormack: Does the Minister know what happens in royal palaces in other countries? For example, visitors to Swedish royal palaces properly pay, but do local people have free access to the grounds? Can the Minister find out?
    Mr. Caborn: Royal palaces in other countries probably experience the same problems with visitor
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    numbers as those here. That is why they are revisiting the issue of charging. However, I do not have the information that the hon. Gentleman requests to hand.

    Mind Sports
    Dr. Evan Harris: Whether it is the Government's policy to seek to legislate to permit certain mind sports to be recognised as sports for the purpose of receiving national lottery funding. [129552]
    The Minister for Sport and Tourism(Mr. Richard Caborn): The Government recognise the benefits of participation in chess and other mind games and continue to look at the case for amending the Physical Training and Recreation Act 1937. That could allow the sports councils to fund mind games. It would then be for the councils, including those of the devolved Administrations, to decide whether to recognise individual mind games as sports for funding purposes.
    Dr. Harris: I am grateful for that response and the moral support that the Minister and the Secretary of State for Education and Skills have given to chess and bridge. However, will the right hon. Gentleman acknowledge the unfairness, which means that British top-class and world-class players, especially juniors and disabled players, are sometimes unable to access the international competition that we should like them to experience because, consequent on the 1937 legislation, they cannot get lottery funding?
    Mr. Caborn: I understand the hon. Gentleman's point, but chess is funded directly by the Exchequer to the tune of £50,000. Indeed, in 2003, the figure will be £60,000. It has also received just under £500,000 directly since the lottery's inception. Funding streams can therefore be accessed for chess and other mind games. I am aware of the world-class performance, but until the problem of the 1937 Act is resolved and chess is included in the definition of sport, it cannot have access to direct funding from the Sports Councils.
    Mr. Tony McWalter: I wish to support the line of questioning of the hon. Member for Oxford, West and Abingdon (Dr. Harris), who is my bridge partner in the House of Commons team. However, my question does not constitute special pleading because although I do not believe that the House of Commons team will apply for any grants, we are considering a serious issue. In my constituency many people play contract bridge, but travel to events, booking halls and so on are restricted to those who are reasonably wealthy. Recent studies clearly show that Alzheimer's and such conditions can be ameliorated by engagement with mind sports. I therefore urge my right hon. Friend to continue to use his best efforts to widen the canvas on which his brush is currently painting.
    Mr. Caborn: Notwithstanding all those points, I suggest that my hon. Friend gets a partner from either Scotland or Wales who could put some pressure on the respective Sports Councils. I have raised the matter at the sports cabinet, which Sports Ministers of the devolved Administrations attend. I am bound to say

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    that there is currently no appetite for change. Unless there is such appetite in Scotland, Wales and Northern Ireland, it will be difficult to proceed with changes to the 1937 Act.

    Performing Art
    Mr. Eric Illsley: If she will make a statement on the most recent funding settlement from the Arts Council for the performing arts in the regions. [129553]
    The Minister for the Arts(Estelle Morris): While the allocation of funding is a matter for Arts Council England, I am pleased that so many arts organisations in all regions of England are benefiting from the increased funding that we secured for the arts in the last spending review. This will see arts expenditure increase to £410 million by 2005–06, a 117 per cent. increase since 1997.
    Mr. Illsley: I am grateful to my right hon. Friend. She will be aware that theatre provision in my constituency has been inadequate since the closure of the Barnsley Civic theatre several years ago due to the necessity for structural repairs. Unfortunately, successive bids for lottery funding have failed, and the Arts Council obviously now has less money available to distribute to such causes. Will my right hon. Friend examine this situation to see whether any further assistance can be given to my local authority, so that it can provide a theatre in my constituency?
    Estelle Morris: I have a great deal of sympathy with what my hon. Friend says, in view of the fact that the theatre in his constituency has now been dark for some years and was unsuccessful in the last bidding round. It is not for me to say whether any help can be given, because it is important that the allocation of funds by Arts Council England is independent of the Government. I note, however, that Barnsley is one of the priority areas in Yorkshire for development by the Arts Council, which recently funded a development officer in the town to help with cultural regeneration. I am delighted that culture is forming such an important part of the economic regeneration there. I would also point out to my hon. Friend that it is possible to bid again, and I hope that careful contact with the Arts Council prior to the bid being put in will secure a better result next time. If that were the case, I would join him in being absolutely delighted.
    Michael Fabricant: Is it not the case that the Arts Council and other organisations expected additional money when the Millennium Commission was wound up? Notwithstanding that, is the right hon. Lady aware that the Arts Council has given a generous grant to the Garrick theatre in my constituency, which the Secretary of State opened when she visited Lichfield recently? Does this not just go to show that when bodies have decent organisation and make decent applications, money can sometimes be found?
    Estelle Morris: The hon. Gentleman is right to say that many good quality bids have been funded. I was delighted, on my only other appearance at DCMS
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    questions, to celebrate with him what has happened at the theatre in Lichfield, which my right hon. Friend the Secretary of State opened the following day. I would, however, question something that he said. I do not think that he meant to give the impression that the bid from Barnsley was no good. I am sure that in Yorkshire, as in the west midlands, Humberside and other regions, there are good quality bids. I am pleased to say that the bids coming in from cultural organisations for investment in regeneration are now of such quality that it is becoming difficult to make final decisions. I agree with the hon. Gentleman, however, that we should always ensure that we have as much money as possible to fund good bids, as such projects form an essential part of the economic infrastructure of the country and provide for people to enjoy their leisure time.

    Athletics (North-East)
    Mr. Stephen Hepburn: If she will make a statement on Government-funded provision for athletics in the north-east. [129554]
    The Minister for Sport and Tourism (Mr. Richard Caborn): Since 1998, a total of just under £2.8 million has been awarded to athletics in the north-east by Sport England from Exchequer or lottery programmes, comprising four community capital programme awards totalling just over £2.5 million, one award of £50,000 through the community athletics refurbishment programme—part of the legacy money given to UK Athletics—and 33 Awards for All grants totalling£113,000.
    Mr. Hepburn: I know that the Minister is looking forward to doing the great north run next week. When he does so, he will pass Gateshead stadium, which he will see is in dire need of investment. Is he aware that the stadium has been turned down for an £11 million lottery bid, while at the same time the Duke of Northumberland, one of the richest men in the north-east, received an £11 million grant from the lottery for some old painting that he did not want any more? When the Minister is up there, will he intervene in this matter and get some public resources in so that we can get this worthwhile scheme going?
    Mr. Caborn: I can assure my hon. Friend that when I am doing the great north run on Sunday, I shall be keeping my eyes in front and looking for the 13-mile marker. Seriously, though, my hon. Friend raises an important question. Sport England's review has been looking at the facilities for elite development, and it took the decision in July to review that. I was up there a few weeks ago, and it was pleasing to see how all the parties involved have come together. A meeting was called by Sport England, which has given a commitment that there will be some elite facilities there, and the development agency, the Government office and the universities are all now involved, together with the local authorities. I hope, therefore, that in the next few weeks or months, there will be a resolution to the problem to which my hon. Friend refers.
    Mr. Malcolm Moss: Notwithstanding what the Minister has just said about

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    funding for athletics, I assure him that athletics clubs in the north-east, in common with sports clubs throughout the country, will react with shock-horror at his decision, as outlined to me in his letter of 20 August, that clubs will have to pay the full fee for alcohol licences in future. In Committee on the Licensing Bill, his predecessor, the hon. Member for Pontypridd (Dr. Howells), said in response to the three amendments that I had tabled to reduce licensing fees payable by voluntary sports clubs in the north-east:
    "Having regard to the strength of the argument that the hon. Gentleman has presented to the Committee"—[Official Report, Standing Committee D, 6 May 2003; c. 4021—
    Mr. Speaker: Order. The question is out of order, so I cannot allow the Minister to answer.

    Lottery Funding
    Mr. Peter Luff: If she will make an assessment of the criteria used by the lottery funding bodies to distribute their resources to applicants. [129555]
    The Minister for the Arts(Estelle Morris): The criteria vary from distributor to distributor, but they are based on national lottery financial and policy directions issued to distributors by the Department, and on distributors' own strategic plans and funding policies.
    Mr. Luff: Does the Minister share my concern that the current use of highly selective types of disadvantage and deprivation by many lottery funding bodies to target their funding is causing frustration, disillusion and even anger among many other groups facing similar levels of deprivation, but who feel excluded from access to lottery funds?
    Estelle Morris: I am grateful to the hon. Gentleman for raising this matter with me. He has sent a letter to the Department, which we will reply to shortly. I took the trouble to look into the background of that letter, because I thought that it may have been the reason for his question. On the face of it, the matter that came before his constituent has been clumsily dealt with by Awards for All in the west midlands. I agree with the hon. Gentleman about that. I have no control over what Awards for All writes in letters, but had I been the hon. Gentleman's constituent and read about the priority for funding as explained to him, I may have had the same response as he had. I hope that that message gets back.
    The letter to the hon. Gentleman's constituent was clumsily written, but the policy is not clumsy or ill-thought-out. It is important that all lottery distributors examine how money is being distributed and ensure that under-represented groups are assisted to make better quality applications or to get their fair share. The letter was a reflection of that. The groups that were highlighted in the letter have been significantly under-represented in applications and awards from the Awards for All lottery fund. The issue could have been described in a much better way that would not have antagonised people.
    Groups other than those highlighted receive funds from Awards for All. May I compare the hon. Gentleman's constituency with mine as an example? His
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    constituency has had £500,000 in 147 awards, whereas my constituency has had £31,000 in eight awards. On that basis, perhaps it is me rather than him who should be complaining about the criteria and the priorities.
    Tony Lloyd: Will my right hon. Friend pause to consider the winner of last night's "Restoration" programme? Victoria baths, which lies between my constituency and that of my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman), was refused lottery funding on a number of occasions. That does not necessarily reflect on the lottery per se, but it shows that the people sometimes have very different priorities from those of the lottery. Will she join me in congratulating Gill Wright and all the many people who made the bid for Victoria baths so successful?
    Estelle Morris: Of course I will join my hon. Friend. With my connections, affection for the city and knowledge of the area, I am delighted that the people expressed that view. In the consultation paper on the national lottery, we are looking for ways in which the general public can make clear their priorities. Perhaps there is a message from last night, which may reach the ears of those who make the decisions. If so, I would be thrilled.
    Mr. Adrian Sanders: We could argue until we are blue in the face about the distribution of lottery funds. Is not the issue the reduction in sales of lottery tickets, as a result of which less money is available to distribute? When the lottery began it was supposed to be a competition with one big jackpot. Since then it has fragmented. What proposals does the Minister have to increase lottery sales that do not involve further fragmentation?
    Estelle Morris: Ours is still the most successful lottery in the world. Since it was launched in the mid-1990s, £14.77 billion has been raised. If the hon. Gentleman looks at the pattern of sales and receipts for lotteries elsewhere in Europe and beyond, he will find that sales fall off and plateau after a number of years, and new games are needed. I have no plans to launch new games because that is not my responsibility, but the hon. Gentleman will know from an announcement made last week that Camelot has launched its first new game for some years, and it plans to diversify the games over the next few years to increase funds. I agree with the hon. Gentleman that more sales mean more money for good causes.

    Olympic Bid
    Mr. Cohn Challen: What benefits for UK regions she estimates will accrue from the London Olympic bid. [129556]
    The Secretary of State for Culture, Media and Sport(Tessa Jowell): Hosting the Olympic and Paralympic games in London in 2012 should provide benefits throughout the UK as a whole. Some events, such as sailing and shooting, require specific venues and are therefore likely to be staged outside London. The Olympic football competition is also likely to be held in

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    stadiums around the country. In addition, there will be opportunities to secure investment in improved sporting facilities around the country by some of the visiting teams as they arrive for training and preparation in the year leading up to the games. We intend to do all we can to ensure that as much of the country as possible benefits from the opportunities that the games will create.
    Mr. Challen: I thank my right hon. Friend for that helpful reply. I am sure that the whole country will take great pride in a successful London bid for 2012, but that pride might just turn to resentment if people in the regions feel that more money is being sucked into London's infrastructure when London already receives more per capita funds by a mile than any other region. I am particularly anxious that lottery money used for the bid should be seen to be distributed equitably. As my right hon. Friend knows, a number of Members on both sides of the House have campaigned for a fairer share of lottery money, and I hope that she will give special attention to that aspect.
    Tessa Jowell: I shall certainly do that. I pay tribute to the efforts, led by my hon. Friend, to focus on the problem that lottery money is not always distributed equitably.
    As for the balance between London and the rest of the country, it should be remembered that a substantial part of the estimated cost of hosting the games will be met from London as well as the lottery and income from the International Olympic Committee. While preparing the detailed case for bidding, however, the Government consulted all the regional development agencies to test the very issue raised by my hon. Fiend. The response was unanimous across the country: RDAs recognised that hosting the games in London had the potential to benefit every region if it was done properly. We need to ensure that those benefits are realised in practice wherever people may be.
    Mr. Greg Knight: I can confirm that the official Opposition support the bid and expect the UK regions to benefit if it succeeds. But should not the House be more than a little concerned about the fact that the Government have still not appointed a chief executive officer, while Paris has more than 100 people working full-time on its bid? It appears that our preparations are behind even those of Havana. If the Government are serious about the bid, should not senior Ministers be treating the matter with far more urgency?
    Tessa Jowell: I welcome the right hon. Gentleman to his Front-Bench responsibilities. I also welcome the cross-party support for the bid. However, it is not the Government's job to appoint the chief executive of the bidding company; that is the job of the bidding chair, and she has that process in hand. She is determined to recruit the best possible person—[Interruption] That is a judgment that she will make, with great respect. On Friday she announced the names of board members, and I think all who have seen them will recognise the strength of the sporting interests involved and the commitment to representing and promoting regional interests, as well as drawing on the experience of the very successful Commonwealth games in Manchester last year.
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    Therefore, progress is being made, greatly helped by the very detailed preparation that was undertaken in advance of the Government's decision to bid. In addition to the announcement of the board, the bidding chair has announced the name of her chief operating officer, so the organisation is being put together. The work is proceeding and the important thing now is that hon. Members on both sides of the House do not simply talk about support, but deliver it in practice at every turn.
    Mr. Derek Wyatt: Can my right hon. Friend shed some light on why neither of the two candidates for the post of chief executive took the job? Can she explain why that was the case?
    Tessa Jowell: No, these are decisions for the chair of the bidding company and I do not think that it is right that I should speculate on the reasons why Barbara Cassani is continuing to interview candidates for chief executive.
    Bob Spink: Does the Minister accept that the eastern region and Essex in particular have a major part to play in the London Olympic bid? Will she ensure that the Government bring forward resources and co-operate with Essex to ensure that Essex can benefit from the bid and that the bid is successful?
    Tessa Jowell: I understand why the hon. Gentleman, as a diligent constituency MP, wishes to highlight the interests of his constituents but I do not have anything to add to the answer that I gave to my hon. Friend the Member for Morley and Rothwell (Mr. Challen), which is to state in broad terms the Government's commitment to ensuring that the whole country benefits as much as possible from the investment in the Olympics.

    Analogue/Digital Television
    David Cairns: What responsibilities the Government have regarding the availability of (a) analogue and (b) digital television services in Greenock and Inverclyde. [129557]
    The Minister for the Arts(Estelle Morris): The Independent Television Commission and the BBC are jointly responsible for television broadcasting in the UK. As my hon. Friend knows, analogue coverage is provided in Greenock and Inverclyde by the Rosneath and Rothesay transmitters. However, reception in parts of Greenock and Inverclyde is affected by local topography.
    David Cairns: I am grateful to my right hon. Friend for that answer. As she knows, many of my constituents in Inverkip cannot get an analogue signal, so they have subscribed to BSkyB Digital. Now, on a Saturday afternoon when they want to watch on the BBC a live football match, they get a blank screen with a sign saying, "Switch to analogue to watch this match because of other contractual arrangements." That is not an option for them. Should there not be one simple principle written into the new BBC charter that, if one

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    pays one's licence fee, one should be able to watch the BBC, irrespective of any other commercial or technological impediments?
    Estelle Morris: Obviously, comments about the future of the BBC charter will be for my right hon. Friend the Secretary of State in future months and years, but I have some sympathy with my hon. Friend's constituents. Less than 1 per cent. of people in the United Kingdom cannot receive analogue television, but for his constituents it is 100 per cent. I can imagine their dismay at not being able to watch Scottish football on a Saturday afternoon. He makes a powerful point. All I would say is that the rights and ability to watch analogue television are as important to his constituents as they are to anyone else's throughout the UK. We will do as much as we can to put pressure on the relevant authorities. We will take up his point with them.

    BBC
    Hugh Bayley: If she will make a statement on the (a) governance, (b) independence and (c) accountability of the BBC. [129559]
    The Secretary of State for Culture, Media and Sport(Tessa Jowell): We are committed to a BBC that is independent of Government and accountable to Parliament and licence fee payers and to a governance regime that delivers on those requirements. The forthcoming charter review will provide the opportunity for a full public and industry debate about those issues.
    Hugh Bayley: When does my right hon. Friend intend to launch the review of the charter of the BBC and what form will it take? Who, for example, will undertake it? Will it be civil servants in her Department or an independent commission? Among other things, will the charter review look at the proposition that the BBC should be regulated in terms of the quality of its programmes by Ofcom, in the same way that ITV and independent radio are?
    Tessa Jowell: There are two answers to my hon. Friend. First, when I spoke recently at the Edinburgh television festival, I made it clear that, over the next few weeks, I would set out in detail the way in which the Government intended to approach the charter review, which will run over a period of time. The present charter is in place until 2007. I repeat today that I attach enormous importance to the charter review involving public consultation in every way that we can. That will be one of the features and I will make the announcement over the next few weeks.
    Previous charter reviews have coalesced in about four areas. Governance, funding and the BBC's position as a monopoly—less the case now, but certainly an issue in the past—have always been issues. Also, building on the
    Communications Act 2003, we will want to look at the BBC's role in a multichannel world. These questions are not new and recur every time the BBC charter is up for
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    renewal. We are strongly of the view that the voices of the people of this country, who pay for the BBC, should be powerful in shaping the charter review argument.
    Mr. John Whittingdale: Does the Secretary of State accept that despite her assurances that the charter review will not be influenced by the Government's arguments with the BBC about Andrew Gilligan and the "Today" programme, the process has not been helped by the reports of threats against the BBC from Ministers and, indeed, former Ministers? Does she agree that it is all the more important that the process is seen to be objective and transparent? Given that we have known for 10 years that the review is to happen, why is she not in a position today to announce how the Government intend to go about it?
    Tessa Jowell: On the hon. Gentleman's first point, I can state categorically that the conclusions of the Hutton report will impinge on the charter review only where any conclusions are relevant to the process of the charter review. I have made that clear and the position has not changed. There have been no threats, nor anything else that would undermine the integrity of the process, which is crucial. Given that the charter review process will take up to three years, it is right that all the preliminary work—leading on from the Communications Act, which received Royal Assent in the summer—is done properly. We will make an announcement when the work has been undertaken, rather than at the prompting of the Opposition.
    Mr. Whittingdale: The report of the Secretary of State's interview in The Times said:
    "Ministers have long favoured handing the board of governors' regulatory responsibilities over to Ofcom."
    That came as news to the Opposition, as we argued that case throughout the passage of the Communications Act. Does she accept that the events of the summer have once again highlighted the need for the BBC to be made accountable to an external and independent body, rather than the rather cosy arrangement that exists at present?
    Tessa Jowell: During the passage of the Communications Act, it was clear that the issue of governance would be revisited at the time of the charter review, but that the Act represented a broad settlement for now. As I said in response to my hon. Friend the Member for City of York (Hugh Bayley), that is not new. There will always be malicious forces seeking to misrepresent and distort, but I restate that decisions about the future funding, organisation and governance of the BBC will be affected by the outcome of the Hutton inquiry only where there is clear and direct relevance. That is the position, whatever kind of mischievous or malevolent spin Opposition Members try to put on it.
    Mr. Gerald Kaufman: Is not the current state of the governance and accountability of the BBC utterly unacceptable when the head and deputy director of BBC News and the editor of the "Today" programme are allowed to get away with colluding in the back-door briefing of members of the Foreign Affairs Committee, and that editor is able to get away

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    with approving a contentious article written by Andrew Gilligan for The Mail on Sunday? Apart from the resignations at all levels that we need to expect from the BBC, is it not time that, instead of buckets of whitewash, the BBC's accountability should be the sole responsibility of the new body, Ofcom, as recommended by the Culture, Media and Sport Committee?
    Tessa Jowell: My right hon. Friend has set out some of the evidence received by the Hutton inquiry. I do not intend to be drawn into that—we will wait until the inquiry has concluded before making any judgment on any of the points that he raises. My right hon. Friend refers also to the governance of the BBC. His Committee's view is well known, but the Communications Act 2003 takes a different view. However, none of us must forget the BBC's importance not just in this country, but in term; of the way that the rest of the world sees us. That is why it is so important that we get the charter review right, and that at its outcome we have a BBC that is strong and independent of government, and that does the job for the people of this country, and across the world, for which it is so respected and admired.
    Mr. John Bercow: Leaving aside the Hutton inquiry, and given that members of the public both abhor fence-sitting by politicians and applaud those politicians of all parties who say openly what they think, can the right hon. Lady tell the House this afternoon, on the criteria of governance, independence and accountability, what marks she would award the BBC on a rising scale of one to 10?
    Tessa Jowell: With great respect, that was an elegant but insubstantial question. The hon. Gentleman has repeated the framework of first-stage questions for charter review, which we will engage with over the next two to three years.
    Mr. John Grogan: Does my right hon. Friend agree that through their recent actions, the BBC governors have in fact confirmed the value of their role, independent of government and of commercial regulators, first by stoutly rebutting claims of anti-war bias; secondly, by instituting a review of the rules on BBC journalists writing for newspapers; and thirdly, by upholding a complaint about the use of footage of two dead British soldiers during the "Correspondent" programme—a complaint which, unlike that of Mr. Alastair Campbell, was formally made to those governors?
    Tessa Jowell: My hon. Friend will be aware that the duty of impartiality and accuracy defines the governors' regulatory responsibility. The contributions that we have heard give a flavour of the debate to come, in the context of charter review, on the future governance, funding and nature of the BBC.
    Mr. Boris Johnson: Notwithstanding what the right hon. Lady says about her willingness to consult the people about their continuing desire to pay £116 a year for the privilege of watching "Fame Academy" and
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    so on, can she say whether she and the Labour Government remain committed in principle to the licence fee as the means of funding the BBC?
    Tessa Jowell: Again, the charter review will address that issue. As I have said on many occasions, we want the review to be wide-ranging and fundamental, so it would be wrong at this stage for the Government to express a view that would constrain a debate that is just beginning. No doubt the hon. Gentleman, in his characteristic way, will have many robust contributions to make in the months ahead.

    Amateur Sports Clubs
    Mr. Huw Edwards: If she will make a statement on her policy on rate relief for amateur sports clubs. [129561]
    The Minister for Sport and Tourism(Mr. Richard Caborn): I am pleased that the Government were able to introduce an amendment to the Local Government Bill on 10 September. The amendment will provide mandatory rate relief for registered community amateur sports clubs. That further demonstrates the Government's commitment to supporting our 110,000 amateur clubs, and I believe that it is excellent news for sport.
    Mr. Edwards: I thank my right hon. Friend for that excellent news and for the Government's commitment to supporting grass-roots sport. I can assure him that the secretary of Chepstow rugby club, whom I spoke to this morning, knows that 80 per cent. rate relief on the £4,000 that the club currently pays to Monmouthshire county council will be immensely beneficial. Will my right hon. Friend ensure that all the amateur sports clubs that stand to gain from this excellent policy will be informed and encouraged to apply?
    Mr. Caborn: Very much so. I received a letter congratulating the Government—such letters are not very common these days—from the National Playing Fields Association. It reminded me of the association's annual report of 1930 and provided rather more detail than appeared in the Hansard when the matter was discussed at the time. That letter also referred to the annual report of 1931, which referred to efforts made
    "to obtain rate relief from the additional rate burdens that now oppress sports clubs".
    That letter continued:
    "70+ years later you deserve the credit for introducing something very simple, obvious and helpful to community sports".
    From time to time the National Playing Fields Association has bashed the Government. but on this occasion I thank it for congratulating us.
    Mr. James Paice: The Minister's announcement and the amendment to which he referred are extremely welcome, as his hon. Friend the Member for Monmouth (Mr. Edwards) rightly said. However, will he ensure that his definition of registered

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    community sports clubs leaves no room for political correctness and, in particular, allows target-shooting sports access to the rate relief?
    Mr. Caborn: We provided a definition of community amateur sports clubs, or CASCs, about 12 months ago and we have sent out 110,000 leaflets to the nine regions, establishing a one-stop shop for any amateur sports club that wants information on the subject, so it is not the burden that some people have suggested. We agreed the definition with the Treasury and that definition has been sent out to the clubs. I do not know whether the shooting fraternity has applied for CASC relief, but I shall look further into it and write to the hon. Gentleman.

    Free-to-view Television
    Mr. Russell Brown: What discussions she has had with (a) ITV, (b) Channel 4, (c) Channel 5 and (d) BSkyB regarding their policy on free-to view access to their services on digital satellite television. [129562]
    The Secretary of State for Culture, Media and Sport(Tessa Jowell): I accept that this question deals with a serious matter that many constituents have raised with their MPs of all political parties. The position is that, until May, the BBC provided Solus viewing cards to satellite viewers who did not have a subscription to a pay-TV service. That allowed them to receive BBC, ITV, Channel 4 and Channel 5 free-to-view. In May the BBC moved its services to a new satellite, which meant that viewers could receive them without any viewing card. The BBC ended payment to BskyB for the provision of the cards, and it is now for ITV, Channel 4 and Channel 5 to find an arrangement to ensure that customers continue to receive their public service channels without the need to subscribe to Sky. I have written to the chief executives to ask about their intentions and their responses indicate that the broadcasters are considering various options. I am closely monitoring the discussions, which I understand are making progress.
    Mr. Brown: I thank my hon. Friend for her efforts thus far. In common with my hon. Friend the Member for Greenock and Inverclyde (David Cairns), I know that this is a serious issue. The problem is not just the lack of an analogue signal in some localities, but the lack of cable and free-view in rural parts of Dumfries and Galloway. The recent decision to broadcast unencrypted on satellite and to withdraw support from free-to-view viewing cards means, as my right hon. Friend rightly says, no signal for ITV, Channel 4 or Channel 5 unless people subscribe to Sky. Will she therefore highlight to broadcasters the complete lack of access to free-to-view channels for those viewers and, if broadcasters are not prepared to find an answer, will she use the provisions of the Communications Act 2003 to empower Ofcom to insist on finding an answer?
    Tessa Jowell: I thank my hon. Friend for posing that question on behalf of his constituents. It is important to be clear that we are not at that stage. Negotiations are proceeding and we are optimistic that the broadcasters
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    will develop a solution. As I have made clear, we will keep the situation under review and we recognise the concern and anxiety that it causes to the thousands of people who are directly affected.

  ELECTORAL COMMISSION COMMITTEE
  The hon. Member for Gosport, representing the Speaker's Committee on the Electoral Commission, was asked—
  ELECTORAL COMMISSION COMMITTEE

    Marked Electoral Registers
    Kevin Brennan: To ask the hon. Member for Gosport (Mr. Viggers), representing the Speaker's Committee on the Electoral Commission, what discussions the Committee has had with the Electoral Commission on the use of marked electoral registers in political campaigning. [129572]
    Mr. Peter Viggers: The Speaker's Committee has had no such discussions. However, I am informed by the commission that it is currently reviewing the use and supply of, and access to, marked electoral registers and intends to make recommendations to Government when its review is complete.
    Kevin Brennan: I thank the hon. Gentleman for that reply. In any discussions he has with the Electoral Commission, will he remind it that the Chartists campaigned for the fundamental human right to vote, and in secret, not for the fundamental human right to keep secret whether one voted or not? If the Electoral Commission did not allow marked registers to be made available to political parties, would not that represent yet another erosion of the idea of voting as a duty, rather than just another lifestyle consumer choice?
    Mr. Viggers: I hear the representation made by the hon. Gentleman, but issues of law and principle, human rights and data protection are involved, as well as practical issues about the provision of an accurate register, especially during the campaign period itself. The commission is assessing those issues alongside the views of political parties and the public.
    Mr. Harry Barnes: Will the hon. Gentleman put the other side of the argument to the Electoral Commission, especially with regard to Northern Ireland? En the past it has been the practice of certain political parties in Northern Ireland to make use of marked registers to see who has not voted for the purpose of personation.
    Mr. Viggers: The Electoral Commission is considering all those matters, but it takes the view that if the marked registers can be made available—subject to the caveats that I have just described—it would be in the general public interest for them to be made available.

  The hon. Member for Middlesbrough, representing the Church Commissioners, was asked—
  CHURCH COMMISSIONERS

    Sexual Orientation (Employees)
    Dr. Evan Harris: Whether the Church Commissioners have set or intend to set a requirement relating to sexual orientation for any of their employees in non-proselytising roles; and if he will make a statement. [129573]
    Second Church Estates Commissioner(Mr. Stuart Bell): Good afternoon, Mr. Speaker. The Church Commissioners and the other national Church institutions are committed to an equal opportunities policy that provides comprehensive safeguards against discrimination on those and other grounds. The policy is currently being examined to ensure that it is consistent with the two new sets of employment regulations that will come into force in December. It is unlikely to need fundamental change.
    Dr. Harris: The hon. Gentleman will be aware that the sexual orientation employment regulations were changed at a late stage to allow organised religions to set an employment requirement on grounds of sexual orientation in order to comply with religious doctrine or to avoid offending the religious susceptibilities of a significant number of their followers. That exemption has been questioned by the Joint Committee on Statutory Instruments as possibly being ultra vires, and a judicial review is threatened by the trade unions. Therefore, how can he say what he has just said and how does he justify his remarks earlier this year, when he said that the Church
    "is opposed entirely to discrimination of any sort and, in particular, to the discrimination of the sort to which my hon. Friend refers."?—[Official Report, 30 June 2003; Vol. 408, c. 17.]
    Furthermore, a letter from the Archbishops Council, dated 23 January, requests the Government to add to the regulations the very words that I have cited.
    Mr. Bell: I surmise that that supplementary was written before the hon. Gentleman heard my reply. All anti-discrimination legislation carries the scope for organisations to apply genuine occupational requirements to jobs for which it can be objectively demonstrated that a person with or without a particular characteristic is required. Our policy is comprehensive, and it covers discrimination on the grounds of gender, race, nationality, colour, culture, sexual orientation, disability or age.
    Mrs. Ann Cryer: I wonder, therefore, whether my hon. Friend will comment on the fact that at present the Church is able to discriminate on the grounds of gender against its women employees taking high office in the Church?
    Mr. Bell: There is no such discrimination in the Church and I beg to differ from my hon. Friend. She will be aware that 2,000 women have been ordained in the Church of England since the Priests (Ordination of
    586
    Women) Measure 1993. As I have already pointed out, we are anti-discriminatory in our Church and will continue to be so.
    Mr. Chris Bryant: I am grateful to my hon. Friend for his answer; it is about as clear as it can be that dinner ladies employed in Church of England schools are not going to be sacked because they are lesbian and that caretakers are not going to be sacked because they are gay. Could the Church also take on something of a proselytising role and persuade other Churches to follow its example and, for that matter, in its own proselytising jobs, including bishoprics, could it adopt the same policy?
    Mr. Bell: I am always grateful for interventions from my hon. Friend. He relieves me somewhat, however, as the question dealt only with non-proselytising roles.

    Church Access (Disability Discrimination)
    Mr. Huw Edwards: What plans the Church Commissioners have to comply with the Disability Discrimination Act 1995 with regard to access to churches and church buildings. [129574]
    Second Church Estates Commissioner(Mr. Stuart Bell): The Council for the Care of Churches and the Cathedrals Fabric Commission, within whose remit those matters lie, has issued a guidance note which explains the Act and its ramifications for the Church. That document can be found on the Church Care website.
    Mr. Edwards: I am grateful to my hon. Friend. Does he agree that churches and chapels should not feel threatened by the Act, as it requires that reasonable steps be made and in fact many churches and chapels make reasonable steps? However, given the age and design of many churches and chapels, it would be a great help if they were able to apply for public moneys to adapt churches and church entrances for the benefit of people with disabilities.
    Mr. Bell: I am grateful to my hon. Friend. The question of public moneys is for the Chancellor of the Exchequer and not for the Church, but the Church takes reasonable steps to ensure that any disabled person who has difficulty can take communion. There is also provision of auxiliary aids, such as hearing loops, large-print hymn sheets and handrails. We are careful to ensure that there is no discrimination as regards worship or access to churches.
    Sir Sydney Chapman: While of course we all support, in spirit and in law, the provisions of the DDA, will the hon. Gentleman confirm that it is his hope that there will be a light touch where meeting those provisions involves serious alterations to buildings of outstanding architectural merit? As many of our churches are among our country's 500,000 listed buildings, it would be wrong deleteriously to affect their

    587
    design by meeting the provisions of the Act, so a sensible compromise is needed, such as that we have found, I hope, in the Palace of Westminster.
    Mr. Bell: I am grateful to the hon. Gentleman. Modifying churches to allow access is relatively inexpensive, although lack of funds is never an excuse to ignore the requirements of the Act. However, awareness of our heritage and of the number of buildings that are either listed or extremely old is a point well worth making.
    Mr. Tom Clarke: Is my hon. Friend aware that many churches have an outstanding record in responding to the needs of people with disabilities, especially in the provision of hearing loops, to which he referred? Will they continue to do that in the interest of best practice in public buildings?
    Mr. Bell: I am grateful to my right hon. Friend. I, like many other hon. Members, remember his sterling work for disabled people over many years and of the particular private Member's Bill that he put through. His point is well taken and will be well received in the Church.
    Mr. Andrew Mitchell: Further to the hon. Gentleman's reply to my hon. Friend the Member for Chipping Barnet (Sir Sydney Chapman), does he agree that, although it is essential that our churches are available to everyone who wants to visit them or worship in them, it would be wrong for structural changes to compromise the outstanding beauty and architectural merit of some of the historic churches that are part of our national heritage?
    Mr. Bell: That point was well made. However, we would not wish to deny any member of our society—disabled or otherwise—access to holy communion, so any necessary steps should be taken to allow participation. In fact, to act to the contrary would be unlawful.

  ELECTORAL COMMISSION COMMITTEE
  The hon. Member for Gosport, representing the Speaker's Committee on the Electoral Commission, was asked—
  ELECTORAL COMMISSION COMMITTEE

    Postal Votes (Intimidation)
    Mr. Andrew Turner: If he will make a statement on the commission's assessment of measures necessary for the prevention of intimidation of postal voters. [129575]
    Mr. Peter Viggers: In its reports, "Absent Voting in Great Britain" and "The Shape of Elections to Come", which were published earlier this year, the Electoral Commission has recommended a range of measures designed to reinforce the arrangements to prevent the abuse of postal votes.
    Mr. Turner: I thank my hon. Friend for that answer. I am sure that he will be aware that our forebears fought
    588
    for the secrecy of the ballot and that that secrecy would be compromised by having to mark ballot papers or being able to mark them in public, whether in the presence of a landlord, a trade union official or the head of a household. What is the Electoral Commission doing to ensure that no undue influence is exercised on people because of the requirement for them to mark their ballot papers in public?
    Mr. Viggers: My hon. Friend makes a very important point. Of course, the Electoral Commission has to balance that against the clear advantage of the increase in voter participation with postal ballots. The commission has recommended a wide range of measures, including replacing the current declaration of identity with a new security statement, signed by the voter; new secrecy warnings on postal voting literature and ballot papers; more effective tools for prosecutors; a new police power of arrest on reasonable suspicion of personation at any location, not just at polling stations; a marked register, showing who has cast a vote by post, available after elections; and a new code of practice on handling postal ballot papers by candidates and party workers.
    Mr. Peter Pike: The hon. Member will recognise that most recent election disputes have been over postal and proxy votes. As we are increasingly moving into an era of all-postal votes, is he absolutely certain that local police, local authorities and returning officers will have adequate powers to ensure that votes are in fact cast in the way that was intended by the said voters, so that the voting is not a sham?
    Mr. Viggers: The Electoral Commission will propose that we move forward on the basis that I have just described, but of course, it will keep the situation under review, and I am sure that, if further action is required, it will be anxious to proceed with that as quickly as possible. I have to inform the House that, having examined the operation of the pilot schemes, the commission has recommended that all-postal voting, if backed by changes in the law to minimise the risk of electoral abuses, should become the standard approach at local elections. That is the commission's proposal; it will be for the Government to decide whether to act on it; and then, of course, ultimately for the House to implement any change.

    Boundary Reviews
    Mr. Bill O'Brien: What provision is made to assist stakeholders interested in local government and boundary reviews to obtain information to help them to make submissions to the boundary committee: and if he will make a statement. [129576]
    Mr. Peter Viggers: The boundary committee provides a wide range of information to assist stakeholders in making submissions, including leaflets, information in the local press and through the committee's website. The committee also holds briefing meetings in the areas under review.
    Mr. O'Brien: I am sure that the hon. Gentleman is aware of the report that the Select Committee on the

    589
    Office of the Deputy Prime Minister issued after taking evidence from the chairman of the boundary commission and the boundary committee which identified that people in the wards under review are at a disadvantage because maps, statistics and professional help are not available to them, but are available to the local authority. I am disappointed with the hon. Gentleman's response because the real issue has apparently not been addressed: the need to give that information to stakeholders to help them to submit an alternative to the boundary committee's proposals. That lack of information denies many people their democratic right to have some say in their own destiny. Will the hon. Gentleman relay that point to the boundary committee and ensure that information is made available to stakeholders, so that they can compete with local authorities when submitting a response to the boundary committee?
    Mr. Viggers: I am instructed that the Electoral Commission and its boundary committee give equal
    590
    consideration to all submissions that are received. Where appropriate, it requests that the local authority provide interested parties with further detailed information and some assistance. The boundary committee will also make its information available to interested parties. The main consideration is always the argument and evidence that accompanies any submission.
    Mr. George Osborne: I am sure that my hon. Friend is aware that the boundary committee is in the process of a major review of local government boundaries in three regions in this country, including the north-west, which I represent, as a result of the proposed referendums on regional government. In terms of providing information to stakeholders and others, will the committee publish how much that review will cost?
    Mr. Viggers: I must say to my hon. Friend that the work undertaken by the boundary committee is at the instruction of the Office of the Deputy Prime Minister, to which any questions on that subject should be put.

Points of Order
3.30 pm
Mr. Michael Ancram: On a point of order, Mr. Speaker. I am confident that it will not have escaped your notice that yesterday's edition of The Mail on Sunday set out in terms a personal minute from the Foreign Secretary, dated 17 March this year, to the Prime Minister, in which he urged the Prime Minister to stop short of military engagement in the Iraq war. As you will be aware, the very next day, on 18 March, at column 901 of the Official Report, the Foreign Secretary told the House on a Government motion authorising United Kingdom military engagement in Iraq:
"I am as certain as I can that the Government's course of action is right."—[Official Report, 18 March 2003; Vol. 401, c. 901.]

Given the apparent irreconcilable contradiction between the Foreign Secretary's personal minute and his statement to this House, has he requested to come to the House to make a personal statement to explain why he expressed one view on this major issue to the Prime Minister on one day and a totally opposite view to the House on the next day, and to clear up which of them accurately reflected his view?
Mr. Speaker: It is for any Minister to decide when he or she wishes to make a statement. It is not a matter for me to be drawn into at this stage.
Mr. Tam Dalyell: Further to that point of order, Mr. Speaker. On a House of Commons point, when such grave charges as these are laid, do not Ministers owe it to the House to say one thing or the other, whether it is true or false, because it is deeply unsatisfactory that such grave charges should be left in limbo?
Mr. Speaker: I have already said to the right hon. Member for Devizes (Mr. Ancram) that this is not a matter for the Chair.
Mr. Andrew Mitchell: Further to that point of order, Mr. Speaker—
Mr. Speaker: I have said to two Members that this is not a point of order, but I will listen to the hon. Gentleman.
Mr. Andrew Mitchell: Further to that point of order, Mr. Speaker. Can you confirm that although the information that my right hon. Friend the Member for Devizes (Mr. Ancram) has just used came to us from only one source, that would not have been a bar from the Government making a statement?
Mr Speaker: As I said, I will not be drawn into this matter.

Programme Motions

  WATER BILL [LORDS] (PROGRAMME) (NO. 2)
  Motion made, and Question put forthwith, pursuant to Orders (28 June 2001 and 29 October 2002).
  That the programme order of 8th September 2003 in relation to the Water Bill [Lords] be amended by the substitution in paragraph (2) (time for conclusion of proceedings in Standing Committee) for the words 'Tuesday 21st October' of the words `Thursday 23rd October'.—[Mr. Ainger.]
  The House divided. Ayes 240, Noes 98.

  Division No. 308]

  [3:32 pm

  AYES

  Abbott, Ms Diane

  Cunningham, Jim (Coventry S)

  Ainger, Nick

  Dalyell, Tam

  Ainsworth, Bob (Cov'try NE)

  Davey, Edward (Kingston)

  Allan, Richard

  Davey, Valerie (Bristol W)

  Allen, Graham

  Davies, Geraint (Croydon C)

  Armstrong, rh Ms Hilary

  Dean, Mrs Janet

  Atherton, Ms Candy

  Denham, rh John

  Atkins, Charlotte

  Dhanda, Parmjit

  Austin, John

  Dismore, Andrew

  Baird, Vera

  Dobbin, Jim (Heywood)

  Banks, Tony

  Doran, Frank

  Barnes, Harry

  Drew, David (Stroud)

  Barron, rh Kevin

  Eagle, Angela (Wallasey)

  Bayley, Hugh

  Eagle, Maria (L'pool Garston)

  Beard, Nigel

  Edwards, Huw

  Bell, Stuart

  Ellman, Mrs Louise

  Berry, Roger

  Etherington, Bill

  Best, Harold

  Farrelly, Paul

  Blunkett, rh David

  Field, rh Frank (Birkenhead)

  Borrow, David

  Flint, Caroline

  Bradley, rh Keith (Withington)

  Flynn, Paul (Newport W)

  Bradley, Peter (The Wrekin)

  Foster, rh Derek

  Bradshaw, Ben

  Foster, Don (Bath)

  Breed, Colin

  Foster, Michael (Worcester)

  Brennan, Kevin

  Foster, Michael Jabez (Hastings & Rye)

  Brooke, Mrs Annette L.

  Brown, rh Nicholas (Newcastle E Wallsend)

  Gardiner, Barry

  George, Andrew (St. Ives)

  Bruce, Malcolm

  Gerrard, Neil

  Bryant, Chris

  Burgon, Colin

  Gibson, Dr. Ian

  Burnham, Andy

  Gilroy, Linda

  Burstow, Paul

  Green, Matthew (Ludlow)

  Byers, rh Stephen

  Griffiths, Jane (Reading E)

  Cable, Dr. Vincent

  Griffiths, Nigel (Edinburgh S)

  Caborn, rh Richard

  Grogan, John

  Cairns, David

  Hain, rh Peter

  Calton, Mrs Patsy

  Hall, Mike (Weaver Vale)

  Hall, Patrick (Bedford)

  Campbell, Mrs Anne (C'bridge)

  Hamilton, David (Midlothian)

  Campbell, rh Menzies (NE Fife)

  Caplin, Ivor

  Hancock, Mike

  Carmichael, Alistair

  Hanson, David

  Cawsey, Ian (Brigg)

  Harris, Dr. Evan (Oxford W & Abingdon)

  Challen, Colin

  Chapman, Ben (Wirral S)

  Harris, Tom (Glasgow Cathcart)

  Clark, Mrs Helen (Peterborough)

  Havard, Dai (Merthyr Tydfil & Rhymney)

  Clark, Dr. Lynda (Edinburgh Pentlands)

  Heath, David

  Clark, Paul (Gillingham)

  Henderson, Ivan (Harwich)

  Clarke, rh Tom (Coatbridge & Chryston)

  Hepburn, Stephen

  Heppell, John

  Cohen, Harry

  Heyes, David

  Corbyn, Jeremy

  Hill, Keith (Streatham)

  Cousins, Jim

  Hodge, Margaret

  Cox, Tom (Tooting)

  Hood, Jimmy (Clydesdale)

  Cryer, Ann (Keighley)

  Hope, Phil (Corby)

  Cunningham, rh Dr. Jack (Copeland)

  Hopkins, Kelvin

  Hoyle, Lindsay

  593

  Hughes, Beverley (Stretford & Urmston)

  Quinn, Lawrie

  Rammell, Bill

  Hughes, Kevin (Doncaster N)

  Rapson, Syd (Portsmouth N)

  Humble, Mrs Joan

  Raynsford, rh Nick

  Hurst, Alan (Braintree)

  Reed, Andy (Loughborough)

  Hutton, rh John

  Reid, rh Dr. John (Hamilton N & Be11shill)

  Iddon, Dr. Brian

  Illsley, Eric

  Rendel, David

  Ingram, rh Adam

  Robertson, John (Glasgow Anniesland)

  Irranca-Davies, Huw

  Jackson, Glenda (Hampstead & Highgate)

  Roche, Mrs Barbara

  Rooney, Terry

  Jamieson, David

  Ross, Ernie (Dundee W)

  Jenkins, Brian

  Ruane, Chris

  Johnson, Miss Melanie (Welwyn Hatfield)

  Ruddock, Joan

  Russell, Bob (Colchester)

  Jones, Helen (Warrington N)

  Ryan, Joan (Enfield N)

  Jowell, rh Tessa

  Sanders, Adrian

  Joyce, Eric (Falkirk W)

  Savidge, Malcolm

  Kaufman, rh Gerald

  Sedgernore, Brian

  Keeble, Ms Sally

  Sheerman, Barry

  Khabra, Piara S.

  Sheridan, Jim

  Kidney, David

  Simon, Siôn (B'ham Erdington)

  King, Ms Oona (Bethnal Green & Bow)

  Simpson, Alan (Nottingham S)

  Skinner Dennis

  Knight, Jim (S Dorset)

  Smith, Geraldine (Morecambe & Lunesdale)

  Kumar, Dr. Ashok

  Ladyman, Dr. Stephen

  Smith, Jacqui (Redditch)

  Lammy, David

  Smith, Sir Robert (W Ab'dns & Kincardine)

  Lazarowicz, Mark

  Levitt, Tom (High Peak)

  Soley, Clive

  Linton, Martin

  Spellar, rh John

  Lloyd, Tony (Manchester C)

  Squire, Rachel

  Love, Andrew

  Starkey, Dr. Phyllis

  McAvoy, Thomas

  Steinberg, Gerry

  McCabe, Stephen

  Stewart. David (Inverness E & Lochaber)

  McDonagh, Siobhain

  McDonnell, John

  Stoate, Dr. Howard

  McFall, John

  Stringer, Graham

  McIsaac, Shona

  Sutcliffe, Gerry

  McKechin, Ann

  Taylor, rh Ann (Dewsbury)

  McNulty, Tony

  Taylor, David (NW Leics)

  McWalter, Tony

  Taylor, Matthew (Truro)

  Mahmood, Khalid

  Thomas, Gareth (Clwyd W)

  Mahon, Mrs Alice

  Tipping Paddy

  Mallaber, Judy

  Todd, Mark (S Derbyshire)

  Mann, John (Bassetlaw)

  Trickett, Jon

  Marsden, Gordon (Blackpool S)

  Turner, Neil (Wigan)

  Marshall, David (Glasgow Shettleston)

  Twigg, Derek (Halton)

  Twigg, Stephen (Enfield)

  Marshall, Jim (Leicester S)

  Vaz, Keith (Leicester E)

  Marshall-Andrews, Robert

  Vis, Dr. Rudi

  Meacher, rh Michael

  Walley, Ms Joan

  Merron, Gillian

  Ward, Claire

  Michael, rh Alun

  Wareing, Robert N.

  Miliband, David

  Watson Tom (W Bromwich E)

  Miller, Andrew

  Watts, David

  Moffatt, Laura

  Webb, Steve (Northavon)

  Moonie, Dr. Lewis

  Whitehead, Dr. Alan

  Moran, Margaret

  Williams, rh Alan (Swansea W)

  Morley, Elliot

  Williams, Roger (Brecon)

  Murphy, Denis (Wansbeck)

  Willis, Phil

  Norris, Dan (Wansdyke)

  Winnick, David

  Oaten, Mark (Winchester)

  Winterton, Ms Rosie (Doncaster C)

  Organ, Diana

  Osborne, Sandra (Ayr)

  Woodward, Shaun

  Palmer, Dr. Nick

  Wright, Anthony D. (Gt Yarmouth)

  Perham, Linda

  Pickthall, Colin

  Wright, David (Telford)

  Pike, Peter (Burnley)

  Wyatt, Derek

  Plaskitt, James

  Pollard, Kerry

  Tellers for the Ayes:

  Pound, Stephen

  Vernon Coaker and

  Prosser, Gwyn

  Ms Bridget Prentice

  594

  NOES

  Ainsworth, Peter (E Surrey)

  Lansley, Andrew

  Ancram, rh Michael

  Lewis, Dr. Julian (New Forest E)

  Atkinson, David (Bour'mth E)

  Liddell-Grainger, Ian

  Atkinson, Peter (Hexham)

  Lidington, David

  Bacon, Richard

  Loughton, Tim

  Baldry, Tony

  Luff, Peter (M-Worcs)

  Baron, John (Billericay)

  McIntosh, Miss Anne

  Bellingham, Henry

  McLoughlin, Patrick

  Bercow, John

  Malins, Humfrey

  Beresford, Sir Paul

  Mawhinney, rh Sir Brian

  Blunt, Crispin

  Mercer, Patrick

  Brady, Graham

  Mitchell, Andrew (Sutton Coldfield)

  Brazier, Julian

  Browning, Mrs Angela

  Moss, Malcolm

  Burns, Simon

  O'Brien, Stephen (Eddisbury)

  Burt, Alistair

  Osborne, George (Tatton)

  Cameron, David

  Page, Richard

  Chapman, Sir Sydney (Chipping Barnet)

  Paice, James

  Pickles, Eric

  Chope, Christopher

  Prisk, Mark (Hertford)

  Collins, Tim

  Redwood, rh John

  Cormack, Sir Patrick

  Robathan, Andrew

  Curry, rh David

  Robertson, Laurence (Tewk'b'ry)

  Davis, rh David (Haltemprice & Howden)

  Roe, Mrs Marion

  Rosindell, Andrew

  Djanogly, Jonathan

  Shephard, rh Mrs Gillian

  Evans, Nigel

  Simmonds, Mark

  Fabricant, Michael

  Soames, Nicholas

  Fallon, Michael

  Spink, Bob (Castle Point)

  Field, Mark (Cities of London & Westminster)

  Spring, Richard

  Steen, Anthony

  Flight, Howard

  Syms, Robert

  Flook, Adrian

  Tapsell, Sir Peter

  Forth, rh Eric

  Taylor, John (Solihull)

  Fox, Dr. Liam

  Taylor, Sir Teddy

  Gale, Roger (N Thanet)

  Thomas, Simon (Ceredigion)

  Garnier, Edward

  Turner, Andrew (Isle of Wight)

  Gillan, Mrs Cheryl

  Tyrie, Andrew

  Goodman, Paul

  Viggers, Peter

  Gray, James (N Wilts)

  Walter, Robert

  Grayling, Chris

  Waterson, Nigel

  Green, Damian (Ashford)

  Watkinson, Angela

  Greenway, John

  Whittingdale, John

  Hague, rh William

  Wiggin, Bill

  Hammond, Philip

  Wilkinson, John

  Hawkins, Nick

  Willetts, David

  Hoban, Mark (Fareham)

  Wilshire, David

  Horam, John (Orpington)

  Wishart, Pete

  Jack, rh Michael

  Young, rh Sir George

  Jenkin, Bernard

  Key, Robert (Salisbury)

  Tellers for the Noes:

  Knight, rh Greg (E Yorkshire)

  Mr. Mark Francois and

  Lait, Mrs Jacqui

  Mr. John Randall

  Question accordingly agreed to.

  LOCAL GOVERNMENT BILL (PROGRAMME) (NO. 4)
  Motion made, and Question put forthwith, pursuant to Orders (28 June 2001 and 29 October 2002).
  That the following provisions shall apply to the Local Government Bill for the purpose of supplementing the Orders of 7th January 2003, 28th January 2003 and 25th February 2003:

  LOCAL GOVERNMENT BILL (PROGRAMME) (NO. 4)

    Consideration of Lords Amendments
    1. Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption at this day's sitting.
    2. Those proceedings shall be taken in the order shown in the first column of the following Table, and each part of those proceedings shall (so far as not previously concluded) be brought to a conclusion at the time shown in the second column.

    TABLE

    Lords amendments

    Time for conclusion of proceedings

    Nos. 3, 6, 19 and 20

    2½ hours after the commencement of proceedings on the Motion for this Order

    Nos. 1 and 2, 4 and 5, 7 to 18 and 21 to 56

    The moment of interruption

    Subsequent stages
    3. Any further Message from the Lords may be considered forthwith without any Question put.
    4. The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—[Mr. Raynsford.]
    The House divided: Ayes 237, Noes 140

    Division No. 309]

    [3:46 pm

    AYES

    Abbott, Ms Diane

    Cunningham, rh Dr. Jack (Copeland)

    Ainger, Nick

    Ainsworth, Bob (Cov'try NE)

    Cunningham, Jim (Coventry S)

    Allan, Richard

    Dalyell, Tam

    Allen, Graham

    Davey, Edward (Kingston)

    Armstrong, rh Ms Hilary

    Davey, Valerie (Bristol W)

    Atherton, Ms Candy

    Davies, Geraint (Croydon C)

    Atkins, Charlotte

    Dean, Mrs Janet

    Austin, John

    Denham, rh John

    Baird, Vera

    Dhanda, Parmjit

    Banks, Tony

    Dismore, Andrew

    Barnes, Harry

    Dobbin, Jim (Heywood)

    Barron, rh Kevin

    Doran, Frank

    Bayley, Hugh

    Drew, David (Stroud)

    Beard, Nigel

    Eagle, Angela (Wallasey)

    Bell, Stuart

    Eagle, Maria (L'pool Garston)

    Berry, Roger

    Edwards, Huw

    Best, Harold

    Ellman, Mrs Louise

    Blunkett, rh David

    Etherington, Bill

    Borrow, David

    Farrelly, Paul

    Bradley, rh Keith (Withington)

    Field, rh Frank (Birkenhead)

    Bradley, Peter (The Wrekin)

    Flint, Caroline

    Bradshaw, Ben

    Flynn, Paul (Newport W)

    Breed, Colin

    Foster, rh Derek

    Brennan, Kevin

    Foster, Don (Bath)

    Brooke, Mrs Annette L.

    Foster, Michael (Worcester)

    Brown, rh Nicholas (Newcastle E Wallsend)

    Foster, Michael Jabez (Hastings & Rye)

    Bruce, Malcolm

    Gardiner, Barry

    Bryant, Chris

    George, Andrew (St. Ives)

    Burgon, Colin

    Gerrard, Neil

    Burnham, Andy

    Gibson, Dr. Ian

    Burstow, Paul

    Gilroy, Linda

    Byers, rh Stephen

    Green, Matthew (Ludlow)

    Cable, Dr. Vincent

    Griffiths, Jane (Reading E)

    Caborn, rh Richard

    Griffiths, Nigel (Edinburgh S)

    Cairns, David

    Grogan, John

    Calton, Mrs Patsy

    Hain, rh Peter

    Campbell, Mrs Anne (C'bridge)

    Hall, Mike (Weaver Vale)

    Campbell, rh Menzies (NE Fife)

    Hall, Patrick (Bedford)

    Caplin, Ivor

    Hamilton, David (Midlothian)

    Carmichael, Alistair

    Hancock, Mike

    Cawsey, Ian (Brigg)

    Hanson, David

    Challen, Colin

    Harris, Dr. Evan (Oxford W & Abingdon)

    Chapman, Ben (Wirral S)

    Clark, Mrs Helen (Peterborough)

    Harris, Tom (Glasgow Cathcart)

    Clark, Dr. Lynda (Edinburgh Pentlands)

    Havard, Dai (Merthyr Tydfil & Rhymney)

    Clark, Paul (Gillingham)

    Heath, David

    Clarke, rh Tom (Coatbridge & Chryston)

    Henderson, Ivan (Harwich)

    Hepburn, Stephen

    Cohen, Harry

    Heppell, John

    Corbyn, Jeremy

    Heyes, David

    Cousins, Jim

    Hill, Keith (Streatham)

    Cox, Tom (Tooting)

    Hodge, Margaret

    Cryer, Ann (Keighley)

    Hood, Jimmy (Clydesdale)

    596

    Hope, Phil (Corby)

    Prosser, Gwyn

    Hopkins, Kelvin

    Quinn, Lawrie

    Hoyle, Lindsay

    Rammell, Bill

    Hughes, Beverley (Stretford & Urmston)

    Rapson, Syd (Portsmouth N)

    Raynsford, rh Nick

    Hughes, Kevin (Doncaster N)

    Reed, Andy (Loughborough)

    Humble, Mrs Joan

    Reid, rh Dr. John (Hamilton N & Bellshill)

    Hurst, Alan (Braintree)

    Hutton, rh John

    Rendel, David

    Iddon, Dr. Brian

    Robertson, John (Glasgow Anniesland)

    Illsley, Eric

    Ingram, rh Adam

    Roche, Mrs Barbara

    Irranca-Davies, Huw

    Rooney, Terry

    Jackson, Glenda (Hampstead & Highgate)

    Ross, Ernie (Dundee W)

    Ruane, Chris

    Jamieson, David

    Ruddock, Joan

    Jenkins, Brian

    Russell, Bob (Colchester)

    Johnson, Miss Melanie (Welwyn Hatfield)

    Ryan, Joan (Enfield N)

    Sanders, Adrian

    Jones, Helen (Warrington N)

    Savidge, Malcolm

    Jowell, rh Tessa

    Sedgemore, Brian

    Joyce, Eric (Falkirk W)

    Sheerman, Barry

    Kaufman, rh Gerald

    Sheridan, Jim

    Keeble, Ms Sally

    Simon, Siôn (B ham Erdington)

    Khabra, Piara S.

    Simpson, Alan (Nottingham S)

    Kidney, David

    Skinner, Dennis

    King, Ms Oona (Bethnal Green & Bow)

    Smith, Geraldine (Morecambe & Lunesdale)

    Knight, Jim (S Dorset)

    Smith, Jacqui (Redditch)

    Kumar, Dr. Ashok

    Smith, Sir Robert (W Ab'd'ns & Kincardine)

    Ladyman, Dr. Stephen

    Lammy, David

    Soley, Clive

    Lazarowicz, Mark

    Spellar, rh John

    Levitt, Tom (High Peak)

    Squire, Rachel

    Linton, Martin

    Starkey, Dr. Phyllis

    Lloyd, Tony (Manchester C)

    Steinberg, Gerry

    Love, Andrew

    Stewart, David (Inverness E & Lochaber)

    McAvoy, Thomas

    McCabe, Stephen

    Stoate, Dr. Howard

    McDonagh, Siobhain

    Stringer, Graham

    McDonnell, John

    Sutcliffe, Gerry

    McFall, John

    Taylor, rh Ann (Dewsbury)

    McIsaac, Shona

    Taylor, David (NW Leics)

    McKechin, Ann

    Taylor, Matthew (Truro)

    McNulty, Tony

    McWalter, Tony

    Thomas, Gareth (Clwyd W)

    Mahmood, Khalid

    Tipping, Paddy

    Mahon, Mrs Alice

    Todd, Mark (S Derbyshire)

    Mallaber, Judy

    Trickett, Jon

    Mann, John (Bassetlaw)

    Turner, Neil (Wigan)

    Marsden, Gordon (Blackpool S)

    Twigg, Derek (Halton)

    Marshall, David (Glasgow Shettleston)

    Twigg, Stephen (Enfield)

    Vaz, Keith (Leicester E)

    Marshall, Jim (Leicester S)

    Vis, Dr. Rudi

    Marshall-Andrews, Robert

    Walley, Ms Joan

    Meacher, rh Michael

    Ward, Claire

    Marron, Gillian

    Wareing, Robert N.

    Michael rh Alun

    Watson, Tom (W Bromwich E)

    Miliband, David

    Watts, David

    Miller, Andrew

    Webb, Steve (Northavon)

    Moffatt, Laura

    Whitehead, Dr. Alan

    Moonie, Dr. Lewis

    Williams, rh Alan (Swansea W)

    Moran, Margaret

    Williams, Roger (Brecon)

    Morley, Elliot

    Willis, Phil

    Murphy, Denis (Wansbeck)

    Winnick, David

    Norris, Dan (Wansdyke)

    Winterton, Ms Rosie (Doncaster C)

    Oaten, Mark (Winchester)

    Organ, Diana

    Woodward, Shaun

    Osborne, Sandra (Ayr)

    Wright, Anthony D. (Gt Yarmouth)

    Palmer, Dr. Nick

    Perham, Linda

    Wright, David (Telford)

    Pickthall, Colin

    Wyatt, Derek

    Pike, Peter (Burnley)

    Plaskitt, James

    Tellers for the Ayes:

    Pollard, Kerry

    Vernon Coaker and

    Pound, Stephen

    Ms Bridget Prentice

    597

    NOES

    Ainsworth, Peter (E Surrey)

    Lansley, Andrew

    Ancram, rh Michael

    Lewis, Dr. Julian (New Forest E)

    Atkinson, David (Bour'mth E)

    Liddell-Grainger, Ian

    Atkinson, Peter (Hexham)

    Lidington, David

    Bacon, Richard

    Loughton, Tim

    Baldry, Tony

    Luff, Peter (M-Worcs)

    Baron, John (Billericay)

    McIntoth, Miss Anne

    Bellingham, Henry

    McLoughlin, Patrick

    Bercow, John

    Malins, Humfrey

    Beresford, Sir Paul

    Mawhinney, rh Sir Brian

    Blunt, Crispin

    Mercer, Patrick

    Brady, Graham

    Mitchell, Andrew (Sutton Coldfield)

    Brazier, Julian

    Browning, Mrs Angela

    Moss, Malcolm

    Burns, Simon

    O'Brien, Stephen (Eddisbury)

    Burt, Alistair

    Osborne George (Tatton)

    Cameron, David

    Page, Richard

    Chapman, Sir Sydney (Chipping Barnet)

    Paice, James

    Pickles, Eric

    Chope, Christopher

    Prisk, Mark (Hertford)

    Collins, Tim

    Redwood, rh John

    Cormack, Sir Patrick

    Robathan, Andrew

    Curry, rh David

    Robertson, Laurence (Tewk'b'ry)

    Davis, rh David (Haltemprice & Howden)

    Roe, Mrs Marion

    Rosindell, Andrew

    Djanogly, Jonathan

    Shephard, rh Mrs Gillian

    Evans, Nigel

    Simmonds, Mark

    Fabricant, Michael

    Soames, Nicholas

    Fallon, Michael

    Spink, Bob (Castle Point)

    Field, Mark (Cities of London & Westminster)

    Spring, Richard

    Steen, Anthony

    Flight, Howard

    Syms, Robert

    Flook, Adrian

    Tapsell, Sir Peter

    Forth, rh Eric

    Taylor, John (Solihull)

    Fox, Dr. Liam

    Taylor, Sir Teddy

    Gale, Roger (N Thanet)

    Thomas, Simon (Ceredigion)

    Garnier, Edward

    Turner, Andrew (Isle of Wight)

    Gillan, Mrs Cheryl

    Tyrie, Andrew

    Goodman, Paul

    Viggers. Peter

    Gray, James (N Wilts)

    Walter, Robert

    Grayling, Chris

    Waterson, Nigel

    Green, Damian (Ashford)

    Watkinson, Angela

    Greenway, John

    Whittingdale, John

    Hague, rh William

    Wiggin, Bill

    Hammond, Philip

    Wilkinson, John

    Hawkins, Nick

    Willetts David

    Hoban, Mark (Fareham)

    Wilshire, David

    Horam, John (Orpington)

    Wishart, Pete

    Jack, rh Michael

    Young, rh Sir George

    Jenkin, Bernard

    Key, Robert (Salisbury)

    Tellers for the Noes:

    Knight, rh Greg (E Yorkshire)

    Mr. Mark Francois and

    Lait, Mrs Jacqui

    Mr. John Randall

    Question accordingly agreed to.

Orders of the Day

  Local Government Bill
  Lords amendments considered. [Queen's consent, on behalf of the Crown, signified.]
  Mr. Speaker: I draw the House's attention to the fact that privilege is involved in Lords amendments Nos. 3, 6, 18 to 22, 27, 47 to 49, 53 and 54, which are to be considered today. If the House agrees to these Lords amendments, I shall ensure that the appropriate entry is made in the Journal.

  Local Government Bill
    Clause 11

      USE OF CAPITAL RECEIPTS
      Lords amendment No. 3
      3.58 pm
      The Minister for Local Government, Regional Governance and Fire(Mr. Nick Raynsford): I beg to move, That this House disagrees with the Lords in the said amendment.
      We are considering a vital issue. Agreement with the amendment would undermine one of the fundamental principles of housing finance, which allows the redistribution of housing capital receipts to the areas of greatest need. Accepting the amendment would deprive housing authorities in areas of high housing stress of the resources that they need to fulfil pressing demands for housing. Simply letting housing authorities keep their housing capital receipts, irrespective of need and of how they intended to apply them, would be an unfair and irresponsible way of allocating limited resources.
      We have always taken the view that the proceeds from the sale of council housing should be used to help the areas in which housing need is greatest. That is the purpose of redistribution, and was indeed the principle underlying the legislation introduced by the previous Conservative Government and operated since 1990. The Bill repeals the part of that legislation governing the current—redistribution system—the set-aside mechanism. The drawback to set-aside, as we have said many times before, is that it does not apply to all authorities. Redistribution must apply equally to all, if it is to be fair to all. This is the anomaly in the present system that our pooling proposals address.
      It is simply wrong that some authorities should have more resources than others, regardless of need, simply because they happen to be rich in right-to-buy receipts or debt-free. I stress that we are not talking about funds generated by good financial management or good planning, but those generated simply because tenants have decided to buy their own house in areas where house prices are buoyant. The local authority cannot determine or manage such sales and, contrary to what was said in another place, they cannot claim any credit for them.
      Mr. John Bercow: I am grateful to the right hon. Gentleman for giving way. Before thirsting to reduce local authority autonomy in such a way as to allow him to pursue his redistributionist agenda, it is

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      incumbent on him first to consider the efficacy or otherwise of existing policy. In that context, will he oblige the House by telling us what assessment he has made of the effect of the change in the rules on the use of capital receipts from the sale of council houses in the last Parliament on the size of interest repayments on local authority debt?
      Mr. Raynsford: Approximately £1.2 billion received from the sale of council houses is currently brought within the overall framework, which allows the pooling to take place through the set-aside mechanism. The problem with that mechanism is that it does not apply to those authorities that are debt-free; that is just the nature of the mechanics involved. The principle of redistribution, which was argued strongly by the hon. Gentleman's own party when it was in government, and part of the approach that it adopted in the 1990 legislation, was to ensure that the receipts would be distributed to meet housing need rather than simply lying arbitrarily where they arose because of the vagaries of the housing market or the whims of tenants in particular areas.
      Mr. Bercow rose—
      Mr. Edward Davey rose—
      Mr. Raynsford: I give way to the hon. Member for Kingston and Surbiton (Mr. Davey).
      Mr. Davey: In the Minister's opening remarks, he tried to suggest that all the councils that are debt-free were just lucky, because they were in areas where house prices were high and had received a large windfall from right-to-buy receipts. Surely some of those councils have managed their finances prudently, however, and worked hard to become debt-free. In some cases, they may have taken painful decisions to reach that point. Should they not now be allowed the chance to benefit from the freedoms that they have won after going through the pain of putting their finances in order?
      Mr. Raynsford: Lots of other authorities have worked extremely hard to run their finances in the most efficient way possible, but, because they happen to be in areas with low house values, where capital receipts do not generate the same amount of money, they have not been able to reach the same position as those lucky enough to be located predominantly in the south-east. Frankly, it is curious for the hon. Gentleman representing the Liberal Democrats to be advocating a policy that would have a strongly redistributive effect, which favoured the affluent areas, rather than the areas of greatest need. That would be the effect of the policy that he is advocating. I can understand why the Tory party would pursue that line, but it is strange, to say the least, that the Liberal Democrats should do so.
      Mr. Philip Hammond: The Minister quoted a figure to my hon. Friend the Member for Buckingham (Mr. Bercow). Will he confirm for the record that the sum involved in relation to debt-free authorities—the only ones that will be directly
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      affected in cash terms by the measure—is about —120 million, and not £800 million, £1.8 billion or any other exaggerated figure?
      Mr. Raynsford: The figure that I quoted was the total sum that we estimate will be brought within the pooling arrangements. That is similar to the set-aside. The figure for debt-free authorities is £120 million, as the hon. Gentleman rightly said. That is a significant sum, and can contribute substantially to meeting housing needs. I remind him of a little debate that we had in Committee. He will recall that I flourished a Liberal Democrat "Focus" leaflet. I do not usually do that.
      Mr. Bercow: Where is it?
      Mr. Raynsford: I am afraid that I put it in the bin. I am sure that the hon. Gentleman will agree that, on the whole, that was the right course of action. The Liberal Democrats in Mole Valley argued that it was scandalous that Mole Valley council had received substantial capital receipts—probably not through any great effort of its own, but because housing in the area has a high value—but was not proposing to use those receipts to meet housing need. Instead, it intended to spend the money on other things. The Liberal Democrats in Mole Valley said that that was monstrous and wrong.
      It is typical of the Liberal Democrats to say one thing to one group of people and something else to another. In Mole Valley they said it was monstrous and wrong not to spend the money on housing, but when they are confronted with a Bill that ensures that capital receipts are used for housing where the need is greatest, they oppose it, because they want to say something different to a different audience.
      Mr. Edward Davey: I thought that we had educated the Minister on this point in Committee. We said that it was about local democracy. The Liberal Democrats in Mole Valley were right to fight elections in that constituency on the proposition that housing receipts raised locally should be spent locally on affordable housing. That was a fair point, and it is consistent with the Liberal Democrats saying that the council should be allowed to do that. The Government want to take away the right of local authorities to spend receipts in their local area. The Minister is the one who is inconsistent. He is going against his policy of so-called new localism.
      Mr. Raynsford: That was a pretty feeble effort. In Mole Valley, the Liberal Democrats campaigned on the simple principle that money from housing receipts should be used for housing. As soon as the Liberal Democrats have a chance to give effect to that principle in the House, they take a different view. It is the same old story.
      Mr. Barry Gardiner: Does my right hon. Friend agree that the Liberal Democrats have the opportunity to set the record straight? With respect to national policy, will my right hon. Friend confirm that the effect on the borough of Brent of this Liberal Democrat and Tory sponsored amendment would be to take away £2.1 million from the people of Brent? What the Liberal Democrats are saying on the doorsteps about investment in local housing would drive a coach

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      and horses through what Brent council could do, unless it was prepared, as a matter of national policy, to say that Brent people should pay higher taxes to receive the same level of service, because the Bill would put £2.1 million on to its budget.
      Mr. Raynsford: My hon. Friend has hit the nail on the head. In Brent, the Liberal Democrats no doubt claim that they would do many things to help Brent, but at the same time they actively supported an amendment in the House just last week that would have exactly the effect that my hon. Friend describes. It would take £2.1 million away from the London borough of Brent that could and should be used to meet housing needs in that borough, which has enormous pressures.
      Matthew Green: The Minister should be careful about what he says. We cannot take away something that is not there. Language needs to be used more carefully. Is he saying that Brent is an area of low house prices, which is why it is where it is? His argument was that places in London and the south-east would be the beneficiaries of the Opposition's amendment. Is he suggesting that house prices in Brent are very low?
      Mr. Raynsford: I am afraid that the hon. Gentleman does not understand the issue. There is a relationship between house prices and house values, and that is one of the important elements, but there is also housing need. Brent is an area of enormous housing need. The scale of the capital receipts that the borough receives is not proportionate to the scale of housing need in that area. Brent is one of the boroughs that will gain substantially from our proposal for a proper redistributive system that applies universally.
      It should be remembered that the redistribution mechanism already applies. It applies to all authorities except those that are debt-free. The Liberal Democrats are essentially saying that they want to help very affluent, mainly Tory authorities in the south-east at the expense of areas such as Brent and a number of others. That is an extraordinary comment on a party that tries to claim that it has some pretensions to a concern for social justice.
      Mr. Hammond: The Minister will recall that in Committee we offered an opportunity to ensure that right-to-buy receipts were recycled into housing in the local authorities involved, and he rejected that opportunity.
      Does the Minister at least accept that at a time when one of the most pressing housing issues facing the Government and authorities in the south-east is affordable housing for key public-sector workers, there is a close correlation between high house prices and the need for such housing?
      Mr. Raynsford: Indeed. That is exactly why we have increased investment by two and a half times the amount we inherited, and why we have been concentrating on the provision of new housing in areas of stress—particularly in areas where that can be achieved with good use of brownfield sites, such as the Thames gateway—while also investing in improving
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      housing stock in areas of less demand, where serious problems are caused by property in poor condition and the fact that people are living in unsatisfactory houses. We have a responsibility to do both those things.
      We are certainly keen to expand the housing supply in areas of need, and that is part of the programme. Our objective, however, is to be fair in the allocation, not arbitrary. The problem with the hon. Gentleman's position and that of his party is that the allocation system that the Conservatives supported—although they did not support it in 1990—would arbitrarily give huge buckshee benefits to certain areas simply because they happened to be receipt-rich and with relatively low needs, while denying other areas that were receipt-poor or whose needs were too high to be met from the receipts that they had.
      Mr. Hammond: Is the Minister suggesting that, having sequestered my local authority's right-to-buy receipts, he expects nurses, policeman and school teachers who are needed in Surrey to commute daily from the Thames gateway around the M25? Is that his grand strategy for the future of the south-east?
      Mr. Raynsford: No, it is not. As the hon. Gentleman will recall, I used the Thames gateway as an example to highlight the importance of using brownfield sites: but of course we are looking at brownfield sites elsewhere. What I am sure the hon. Gentleman does not want is indiscriminate building on greenfield sites in his area. That would be an entirely undesirable policy—a policy that was, as it happens, supported by the hon. Gentleman's party when it was in government: it let rip with development by private developers throughout the south-east, and particularly in the Thames valley.
      Dr. Phyllis Starkey: Will my right hon. Friend confirm that one of the areas that would be disadvantaged by this measure is Milton Keynes? Will he join me in urging Milton Keynes council, which is of course controlled by the Liberal Democrats, to devote some of its efforts to educating Liberal Democrat Front Benchers here, to ensure that the party is not saying one thing in Milton Keynes and another in Westminster?
      Mr. Raynsford: My hon. Friend is absolutely right. Milton Keynes is another of the areas that stand to lose if the amendment supported by the Liberal Democrats is passed. Of course, it is not the only one; a number of other areas stand to lose. Liverpool stands to lose substantially, as do Sutton and Basildon.
      I can understand the Tories' supporting the amendment, as it will generally favour their affluent south-east strongholds, but I fail to understand why the Liberal Democrats want to harm so many areas that they control. It is either the result of a sudden burst of masochism, or an example of their being highly confused and not quite knowing what they are doing. Because they are saying one thing to one group of people and something else to another group, they forget the plot and vote for something that will have catastrophic consequences for many Liberal Democrat authorities—including Milton Keynes.
      4.15 pm
      Mr. Bercow: It is always a particular pleasure to joust with the Minister but the endless tergiversations and chameleon-like behaviour of the Liberal Democrats could readily absorb all the time available for debate today, and it does not seem very profitable for us to allow that to happen. The question that I would like answered is the question that I did ask, not that which I did not. Can the right hon. Gentleman simply tell me on a non-partisan basis what assessment he has made of the effect of the change made in the previous Parliament on policy towards the use of capital receipts from the sale of council houses on the level of interest repayments on local authority debt?
      Mr. Raynsford: I cannot because the hon. Gentleman is asking some rather odd questions. There was no change of policy in the previous Parliament on the application of right-to-buy receipts. We have constantly said that it is right that right- to-buy receipts should be made available for and used for housing need to the extent that we operate a redistributive system, a system that, as I have said, we inherited from the previous Government. That system has remained in place since 1990. It is now being changed because of this Bill, but there has been no other change in policy.
      There may have been changes in policy on some of the detailed points about the level of discount that will apply. Of course, there have been significant changes in interest rates because of the Government's prudent management of the economy, which results in a substantially better position in terms of all those people paying interest. That is to everyone's advantage. All those matters can be taken into account by economists, who will no doubt come up with a sophisticated answer to the hon. Gentleman's question, but there is no policy change along the lines that he has proposed.
      Mr. Hammond: Before we move on, can the Minister confirm who he thinks controls Basildon council?
      Mr. Raynsford: I was referring to a number of authorities. There are many areas that are affected, including some Tory-controlled areas. Of course, the Tories are being a bit foolish in favouring the interests of their south-east heartlands at the expense of some of their other councils, which happen to have rather greater housing needs. No doubt the voice of Essex will be heard in due course, telling us that we should be fairer to Essex and insisting on the redistribution of capital receipts to favour Basildon. That is certainly a policy I would be happy—
      Several hon. Members rose—
      Mr. Raynsford: I must make progress.
      The amendment would remove the proposed replacement for set-aside and end redistribution. We would, therefore, no longer be able to recycle housing capital receipts fairly. The alternative to a redistribution system is higher taxes, less investment or cuts in other programmes. Affordable housing for key workers, decent homes, market renewal in low-demand areas would all be put at risk. Without redistribution, the majority of local authorities—those with debt, with
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      lower capital receipts and with greater housing investment need—will lose out. That would be irresponsible and indefensible.
      Without pooling, we would probably have to continue to operate a mechanism based on the principles underlying the current system. That could be only a partial solution and would lack the transparency and simplicity of pooling. Debt-free housing authorities rich in right-to-buy receipts would retain the benefit of their housing capital receipts regardless of housing need and be able to use receipts for whatever purpose they saw fit. I mentioned earlier the interesting example of Mole Valley being a classic illustration of that.
      Agreeing to the Lords amendment would perpetuate the anomaly inherent in the current system and disadvantage most of the nearly 260 local authorities with housing stock. I have quoted a number of the authorities that are affected. Let me repeat that there are currently around 40 debt-free authorities with housing stock in England. Under our proposals, pooling will apply to a proportion of their housing capital receipts, not all of it, and it will not apply to other capital receipts.
      That does not mean that those authorities will have no resources to use. On the contrary, they will have access to all their other receipts and indeed to 25 per cent. of their housing capital receipts, and they will have the additional allocations that come through the new framework for distributing funding. Those depend on decisions by the regional housing boards, which will make recommendations to Ministers in a month or so, so I am not able to anticipate the precise allocations at this stage, but additional sums will be allocated in relation to need and some of those debt-free authorities will certainly be likely to qualify to some extent under those rules.
      Mr. Hammond: The Minister has said that authorities will continue to have access to 25 per cent. of their right to buy receipts. For clarity—and for those who have not gone through the tortuous Committee process—will the Minister confirm that he is quoting the draft regulation that he has published, but that the Bill allows the Secretary of State to take up to 100 per cent. of receipts?
      Mr. Raynsford: We specify amounts by regulation rather than putting them in the Bill; therefore, there is that power. But, on a number of occasions, I have made it clear that our policy intention is not to change the percentage from the 75 per cent. that currently applies to the great majority of authorities in the country. It is an anomaly that a relatively small number of debt-free authorities get preferential treatment and it would be quite wrong for that to be perpetuated. That would be the effect of the amendment, which is why we ask the House to reject the Lords amendment and to restore the Bill's provisions as originally presented and discussed in Committee.
      Mr. Hammond: The Minister is talking as if it were counter-intuitive that debt-free authorities should be allowed to keep their capital receipts. To most people, it would be intuitive that somebody in debt should use their capital receipts to offset their debt and that

      605
      somebody not in debt should be free to use their capital receipts as they wished. Surely that is how the great majority of people would see it.
      Mr. Raynsford: I disagree profoundly. In my view, it is counter-intuitive to argue that one relatively small group of authorities should be given preferential treatment and should not be required in any way to make use of capital receipts for housing purposes when all other authorities are required to do so. That is the anomaly that we are putting right.
      I am glad that the hon. Gentleman raised the question of incentives for prudent financial management; we are keen on them. The new borrowing regime in part 1 will help by enabling authorities to take a broader view of their finances and to borrow without having to get Government approval at any point. They can take regular decisions as to the advantage of borrowing on a particular project or financing it by other means without their decisions being distorted by an arbitrary factor; that is, if they remain debt free, they get a particular benefit. If they are able to organise their finances while looking at the respective merits of financing and new investment, they can take sensible decisions without being precluded from considering the borrowing option.
      Matthew Green: If it were the Minister's intention that debt-free authorities with housing stock should spend their money on housing, why did he not make that the law instead of taking 75 per cent. away from an authority such as Bridgnorth in my area, which is debt free and has its housing stock? If Bridgnorth undertook large-scale voluntary transfer, 75 per cent. of receipts would be taken away and spent in other local authorities elsewhere. That cannot be right.
      Mr. Raynsford: Once again, the hon. Gentleman is very confused. He and his party believe that it is right to spend money on housing; we wholly agree. It is also right to ensure that allocations should reflect the needs of different areas. If the hon. Gentleman is arguing that the right way is to leave the receipts where they lie, irrespective of need, inevitably that will disadvantage substantial numbers of areas with high needs and low receipts. If he is arguing that, I wish him luck; the people of Liverpool will have an extremely jaundiced view about the Liberal Democrat proposal to take £1.5 million away from that city and from many other areas that would be badly affected by the arrangements that his party has suggested in the Lords.
      Mr. Andrew Turner: Liverpool, of course, has a declining population in comparison with many areas of the south-east. However, is not the process that the Minister is introducing analogous to saying to someone who has paid off their mortgage that they must now hand some of their money to others to help them pay off their mortgages?
      Mr. Raynsford: No, it is analogous to an arrangement in which someone has provided the finance for an asset. All these houses were built with very substantial Government subsidy—in many cases, meeting the full costs—and national Government have a right to have
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      an interest on the disposal of that asset. That would be regarded as an absolutely normal principle in any commercial operation, or, indeed, in any public service operation.
      Mr. Bercow: Unfortunately, the right hon. Gentleman's position will not do; it is as perverse as his appetite for nationalisation of local decision making seems insatiable. Does he not at least concede that where a local authority has substantial debts and some resources from the sale of council houses, it has a responsibility to use the latter to pay off the former, before benefiting from other councils' legitimately acquired funds?
      Mr. Raynsford: No, the right position is that every authority—not just those that the hon. Gentleman gives as examples—should have a framework that provides an incentive to repay debt and to act prudently. That is part of the framework that we are introducing, which will be reinforced by the housing revenue account subsidy system. It will enable authorities to repay debt, but it will also recognise that many authorities still have very high housing needs that must be met. It is quite wrong that areas with high needs and few resources from receipts should be penalised, as the amendment passed in another place would do. This is a matter of social justice and fairness, and of ensuring a decent housing policy that looks after the interests of people throughout the country, rather than favouring just a limited number of areas that happen to have the good fortune of substantial receipts.
      I want to put the arrangements for receipts in context. The Government are now providing some £2.5 billion in investment each year, to be allocated on the advice of the regional housing boards. Some £2.5 billion in investment—more than two and a half times the amount that went into housing in 1997–98—will address the needs in all authorities, not just in some.
      Finally, we have recognised the level of concern expressed by debt-free authorities about the introduction of pooling. That is why we offered them the reimbursement of a reducing proportion of the estimated £120 million in capital receipts that they would be required to pool for the next three years: 75 per cent. in 2004–05, 50 per cent. in 2005–06, and 25 per cent. in 2006–07.
      Mr. Hammond: The Minister said a moment ago that this large sum would be allocated on the advice of the regional housing boards. Will he confirm who advises on the distribution of that sum between the boards? I assume that he was referring to distribution within a region by the boards.
      Mr. Raynsford: The hon. Gentleman is absolutely right. We seek a national framework to ensure a fair regional distribution overall, and we will then invite regional housing boards to make recommendations within their regions about actual distribution. The decision on the allocation between regions is ours. The regional housing boards make recommendations on decisions within regions, but they are obviously subject to the agreement of my right hon. Friend the Minister for Housing and Planning.
      Mr. Hammond: So that we can see what the flow of funds looks like, can the Minister explain the

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      distribution between the eight English regions, by percentage, of those funds, and the distribution by region of the £120 million in capital receipts taken from debt-free authorities? If he does not have the figures in his voluminous folder, perhaps he can get hold of them.
      Mr. Raynsford: I will happily provide the hon. Gentleman with answers to both those questions by writing to him. But to ensure that he has a full and fair picture, I should remind him of a third element: what the allocations are following the recommendations of the regional housing boards. That information will complete the picture by showing where the money is going to, as well as where it is coming from.
      The arrangement that I have described, which gives generous transitional support to enable debt-free authorities to adjust rationally over time, is the right way forward, rather than the removal of these important provisions. I trust that, as when the House previously debated this issue, it will recognise that it is both fair and right to continue with the framework of redistribution of capital receipts, which should apply to all authorities, rather than just to an arbitrary group that happens not to be debt-free. I ask that the House resist this amendment.
      Mr. Hammond: We are now 45 minutes into the allocated time, and hon. Members will have noticed that the long summer recess has not increased the Government's appetite for the proper scrutiny of their business. We have the three most controversial groups of amendments to consider in a time-limited period of two and a half hours, and the remainder of the evening for—
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      The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister(Phil Hope): So get on with it.
      Mr. Hammond: The Under-Secretary says, "Get on with it," but I want to get on with placing on record our perplexity at the allocation of time as between the first three groups of amendments and the remainder. Why the Government could not have allowed us three, four or even five hours to debate the first three groups is completely beyond Conservative Members.
      The amendment carried by the Lords was originally moved in Committee by my hon. Friends and me and was supported by the Liberal Democrats—[Interruption]—and I am grateful for that support. I described clause 11 as one of the most important in the Bill. It is also the clause that gives the lie to the Government's intentions. The Minister likes to describe the Bill as conferring new freedoms and flexibilities on local authorities, but, as drafted, the clause gives the Secretary of State the power to force local authorities to hand over to him some or all of their capital receipts, principally gained through right-to-buy sales. It is a central Government tax on local authority capital receipts: however the Minister chooses to dress it up, that is precisely what it is.
      We are not talking about a tax of 10, 20 or 30 per cent. The Minister has already told us about—and the regulations that he has circulated already show—the
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      intention to tax the receipts at 75 per cent. As I said in an earlier intervention, there is nothing in the Bill to prevent the Secretary of State from increasing the take-up to 100 per cent.
      The Minister calls that "pooling", but the word does not appear anywhere in the Bill. He says that it is redistribution of capital receipts. Of course all taxation is potentially redistributive, depending on how the Secretary of State chooses to exercise his discretion in distributing the proceeds of this tax on local authorities. Undoubtedly it is a redistribution of power away from local authorities to the Secretary of State. No matter how the Minister tries to dress that up, local authorities, the Local Government Association and Opposition politicians of all parties clearly recognise that the measure goes directly against the thrust of the policy that the Government profess to be implementing through the Bill.
      Mr. Gardiner: In many respects, the hon. Gentleman may be said to be making a powerful case about how moneys should not be redistributed and about local democracy, but he is suggesting that the policy is being implemented by the Government to change the status quo. It is not. In fact, the previous Conservative Administration introduced the policy and decided that that was the way to pool and redistribute moneys
      Mr. Raynsford: And the 75 per cent.
      Mr. Gardiner: As my right hon. Friend rightly says, they also introduced the 75 per cent. figure. Will the hon. Gentleman therefore explain to the House why there is so much outrage about what the Government are supposed to be doing, when what they are actually doing in this instance is maintaining the status quo and when it is the hon. Gentleman who wants to change it?
      Mr. Hammond: That is an extraordinary argument. The hon. Gentleman should ask the Local Government Association why there is so much outrage. If we take his point literally, he is suggesting that if we accept the Government's proposals, nothing will change. That is simply not true. Local authorities that have been free to spend their capital receipts because they are debt-free will find that 75 per cent. of those receipts will be sequestered by the Secretary of State. They will also potentially be exposed to a 100 per cent. sequestration of their right-to-buy capital receipts. In particular the 34 debt-free authorities, which have been ably represented by the capital receipts group over the course of this long battle, will feel the impact. Other local authorities do not have access to their capital receipts in the same way, precisely because they are indebted. That is another example of the Government's determined assault on well-managed, prudent councils in order to prop up their favoured authorities, including—I have to say—the odd basket case. It is also a frontal assault on the principle of localism.
      The Minister's first, and rather lame, argument, which he has already deployed this afternoon, is that local authority housing stock should somehow be seen as a national rather than a local asset. The Minister says that it was originally built, all those years ago, with central Government subsidy. He is of course right, but

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      it was also built with borrowings which, by definition, debt-free authorities have repaid. The stock's value has also been maintained and enhanced by maintenance and improvements carried out at the expense of tenants and council tax payers in many of those local authorities that have been in nil or negative housing subsidy for many years.
      Mr. Raynsford: Will the hon. Gentleman confirm that the authorities would have received Government subsidy both for the repayment of the debt, because that was taken into account, and also—in many cases—for the renovation and improvement of the properties?
      Mr. Hammond: Some of the authorities may have done so, but many—as the Minister well knows—have been in negative housing subsidy. The value of the housing stock has been enhanced by the care and maintenance of the local authorities and their tenants over the years. It is those tenants and council tax payers who should benefit from a capital receipt by their local authority.
      Mr. Edward Davey: I shall address this issue in greater detail when I make my speech, but I am sure the hon. Gentleman would agree that we should not let the Government get away with the notion that all those houses were built and maintained solely by central Government subsidy and the taxpayer. Many of them were built under local authority initiative, decades and sometimes centuries ago, as local communities acted to provide homes for the needy in their areas. The Government are trying to rewrite history, and we should not let them get away with it.
      Mr. Hammond: The hon. Gentleman is right, but even if the Minister has a point about the original financing of the housing stocks, it is bizarre to try to rewrite the rules 30 or 40 years later by saying what was given as a grant is now subject to a clawback: it is as if the Government were saying, "Sorry. we forgot to tell you at the time."
      Mr. Raynsford: If that is bizarre, can the hon. Gentleman tell me what was the logic of his party when it introduced this arrangement in 1990?
      Mr. Hammond: I do not suggest that authorities that have access to their capital receipt s should be subject to a retrospective clawback, which is what the Minister's argument appears to be.
      My noble Friends targeted their amendment precisely. They sought to remove the Secretary of State's power to levy a tax on capital receipts, but would have left in the Bill the power to direct the use of receipts, either for debt reduction or for capital expenditure. We can effectively demolish the Minister's second line of argument, which he deployed extensively in Committee, that many local authorities have not used their capital receipts to the full for housing or urban regeneration. We have some sympathy with that argument. Of course, to restrict those local authorities in the use of their capital receipts would be a restriction on local freedom, but—in the spirit of compromise—we were prepared to
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      meet the Minister halfway on that. We tabled an amendment that would have allowed the Minister to direct that those receipts retained by local authorities should be used for specified purposes—housing investment and urban regeneration—which would have entirely addressed the concern that the Minister outlined. The amendment was also supported by the Liberal Democrats, but the Government rejected it.
      It is a fact that it is often the areas with high property values, and thus buoyant right-to-buy capital receipts, that have the greatest need for affordable housing. I make no bones about the fact that I am thinking of constituencies such as mine and that of the hon. Member for Kingston and Surbiton (Mr. Davey) in making that statement; we know that we are not in areas that are likely to be favoured by the Secretary of State's largesse when he redistributes the so-called pooled receipts. We know that as a consequence public services in our constituencies will suffer, as our public authorities are unable to employ the teachers, nurses, social workers and police officers whose employment our constituents have a right to expect so that they, too, can enjoy decent public services notwithstanding the high cost of delivering such services in the south-east. If the Minister thinks about it, he will find that there is a strong correlation between buoyant right-to-buy receipts, which, as he correctly says, indicate high housing demand and high house prices, and real need in the present context for the delivery of affordable housing.
      At present, the most pressing housing issue facing both the country and the Government—who will be judged on whether or not they can improve public service delivery—is to provide affordable housing for people who will work at the kind of nationally negotiated salaries that the public services are able to offer. As the hon. Member for Brent, North (Mr. Gardiner) knows, that is a real problem in the south-east and it is worse outside than inside London, because our public sector workers do not have the benefit of London weighting, yet they often face higher living and housing costs than people who live in the outer London boroughs.
      Matthew Green: I would not like the hon. Gentleman to leave the list of areas that suffer a shortage of affordable housing without mentioning places like Shropshire and Cornwall where shortages exist for different reasons. Shortages in those areas are due to people either buying holiday homes or retiring to the area, yet local salaries are much lower than nationally agreed pay settlements for the public sector. There are good public sector jobs in Shropshire, but houses cost £200,000.
      Mr. Hammond: I acknowledge the hon. Gentleman's point. It is important to recognise that the issue is not confined to the south-east of England; there are other areas with buoyant right-to-buy receipts and buoyant housing markets. They all have one thing in common: they suffer from the problem of how to provide affordable housing for public sector workers.
      Mr. Gardiner: May I respond to the serious comments that the hon. Gentleman makes about house prices in the south-east by reference to my borough of Brent? I

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      understand perfectly that the south-east is a high house price area, but I hope that the hon. Gentleman will reflect on and take to heart the fact that inner-city and outer-London boroughs such as Brent are subject to peculiar pressures in attracting key workers, which are not simply mirrored in house prices. The pressures of working in those environments are a disincentive to workers, so if we are to address the problems of public service delivery and key worker housing, which he rightly highlights, boroughs such as Brent, where key sector workers face complex difficulties, need the sort of investment that has meant £2.1 million to meet Brent's housing needs.
      Mr. Hammond: I do not for a minute suggest that there are no problems in boroughs such as Brent. We are all aware of the broader issues of dealing with inner and outer-city deprivation; the list of problems is endless. However, it is wrong for the Minister to characterise areas that will have that money—the 75 per cent.—taken from them as areas that do not have a problem. They are leafy, they have buoyant housing markets
      Phil Hope: They may have high housing need.
      Mr. Hammond: In Standing Committee, I cited Lord Rooker who said outside the House that it was likely that only one authority—Barking and Dagenham—of the then 34 debt-free authorities with housing stock was likely to be regarded by the Government as in housing need—[Interruption.] No doubt the Minister will correct me if that is incorrect.
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      Let me just tell the Minister how this looks from the point of view of an authority that will lose 75 per cent. of its capital receipts and that will have to change its plans accordingly. Runnymede borough council—my local authority—is debt free, with housing stock and good right-to-buy receipts, but it is in desperate need of investment to improve pre-war, inter-war and immediate post-war system-built housing, some of which the Minister knows about, and I am pleased to say that he has recently approved such a scheme. There is a desperate need to invest in improving the quality of some of that, frankly, life-expired housing stock, as well as a desperate need to invest in new affordable housing, precisely to allow the area's economy and public services to continue to function. Local people do not understand why the Government apparently do not recognise that need and are apparently hell bent on taking such money away from our communities and redistributing it elsewhere. We believe that there is a clear need for that housing investment to take place locally.
      The proceeds of this tax on local authorities will be used to finance Government dirigisme, channelling development to specific areas. The Minister has already mentioned the Thames gateway. [Interruption.] I do not know why the Minister is shaking his head, because that information is in the public domain. The money will be spent in Ashford, the Thames gateway and Milton Keynes; it will not be spent in Runnymede. If the Minister has some good news that I was unaware of, I should be very pleased to hear it, but that looks like channelling development to the Government's priority
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      areas at the expense of local solutions to local problems. The Minister denied this when I put it to him earlier, but I am afraid that, from where I sit in north-west Surrey, the Thames gateway looks like a massive dormitory at the end of a 40-mile stationary car park called the M25, which key workers in Surrey will have to travel to and from to find affordable housing.
      The Government can go on all they like about decentralisation and local authority freedom and flexibility, but we will judge the Government by their actions, not their words. This confiscatory swipe at the capital receipts of some of the best-run local authorities in England, including those under the control of all the parties and none, shows us the Government's true colours. We had it right when we previously debated this issue in the House, when we proposed to scratch that confiscatory power from the Bill. The Lords have got it right now in deleting from the Bill a power of confiscatory taxation, which we know full well the Secretary of State proposes to use to reduce to local discretion, to fuel the redistribution pork barrel and to reinforce his wider attack on the right to buy. [Interruption.] The right-to-buy policy has given real hope and opportunity to millions of hard-working families over the past decade or so—something that the Labour party obviously cannot abide and that the Minister appears to find funny.
      I urge my hon. Friends to resist the Government's crude attempt, in pursuit of their centralising and confiscatory agenda, to ignore the collective wisdom of all the Opposition parties in the House and of the majority of the House of Lords.
      Mr. Edward Davey: This issue has been debated more than any other during debates on the Bill in both Houses. The arguments have been explored in great detail, and the Opposition have had to think hard about the Government's arguments. The Minister will admit that the Opposition have tested the Government's arguments and thought hard about them. The Minister's problem seems to be that we have reached a different conclusion from him, and I shall set out the principles of why we have done so shortly.
      The Minister sometimes cites councils and which parties control them. There is almost a scorecard, as though such things will be done by partisan analysis. [Interruption.] The Minister shakes his head, but that sounded like the point he was making in his opening remarks. That is not the right approach, and it is not one that we have adopted. The Liberal Democrat group on the Local Government Association, which I consulted widely—including representatives from all the councils that the Minister mentioned and many more—debated the matter at length before taking its decision. It knew that some councils would win and some would lose, but it wanted to decide on the right principle for the financial mechanism.
      Another case in point, which the Government have mentioned, is that of Brent. For obvious reasons, Brent has raised its very pretty head in this debate [Interruption.] I should make it clear that I was not referring to the hon. Member for Brent, North (Mr. Gardiner). The Government should be careful, however, before they make opportunist points about Brent. Labour has been running Brent for a long time and has piled up some of the debts, and in recent years

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      the Labour Government's local government finance settlements for Brent have not exactly been generous. I am sure that the hon. Member for Brent, North would concede that point, because I know, as Hansard will show, that he has not been very happy with Ministers' settlements for Brent.
      Mr. Gardiner: I am sure that the hon. Gentleman will recall that Brent's 1998 local government settlement for children's personal services was indeed not generous and that it had a bad effect on Brent. If we look at the Government's record, however, specifically on housing and capital allocation over the past six years, we find that the Labour council in Brent has begun the rebuilding of houses, which was left in abeyance for years by the Conservative administration in Brent and by the then Conservative Government. The record of the Labour local authority in Brent, supported by the Government, in delivering on housing need in Brent is absolutely exceptional. Last year, we had one of the largest capital allocations that we could have had. I therefore hope that the hon. Gentleman will now address the real question—
      Mr. Deputy Speaker(Sir Michael Lord): Order. I hope that the hon. Gentleman will now conclude his intervention.
      Mr. Davey: You are probably right, Mr. Deputy Speaker, to admonish the hon. Gentleman, but perhaps I, too, should be admonished for giving him the opportunity to make that party broadcast. At least he confirmed, however, that he was not happy with Brent's local government finance settlement from this Government.
      The Government say that the proposals will get rid of an anomaly, but the anomaly can also be seen as an incentive to reduce debt and to become debt free—a sensible element to have in the local government finance system. The Government are rightly getting rid of a lot of the nonsense that they inherited from the Conservatives—the central capital controls, supplementary credit approvals and so on—and are introducing what is more or less Liberal Democrat policy: the prudential capital regime for local authority borrowing. We wholeheartedly support the Government's welcome move in that direction, which provides greater opportunities for local authorities to manage their capital affairs well. The key question, however, is whether the Government are still allowing, within those many changes, opportunities and incentives for local government to make sure that it is managing its debt well. Let us have freedom to borrow when it is appropriate, but do we really want to take away the significant incentive to run down debts? We all agree that encouraging local authorities to reduce their debt is sensible, and I do not understand why the Government are getting rid of that important incentive. That is one issue of fiscal principle.
      The other issue relates to localism and centralism. The Government say that the Bill is about freedoms and flexibilities for local authorities and that it will empower and free up local authorities. They also talk about new localism. This policy goes completely in the opposite
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      direction. The Government justify that by saying that they have to redistribute, and the two parties do not disagree on the need to redistribute; the question is how that is done. [Interruption.] The Minister points to Conservative Members, but I was not including the Conservatives in that argument. Perhaps we should do so these days, but we never quite know.
      Labour and the Liberal Democrats certainly agree that it is important that central Government should be used to redistribute resources around the country, but that is not the question. The question is how we do that, and it is clear in my mind that this is not the right way to do it. National Government could provide the resources for housing in Brent and other areas, should they choose to do so, but the question is whether they should take that money off other authorities that have housing needs and that have managed their financial affairs well. Should the Government be penalising them or should they be coming up with money from elsewhere?
      I want to press the Government on the idea that all council housing has somehow been funded solely by central Government. Lord Rooker was at it in the other place when he said:
      "Council housing is a national asset."—[Official Report, House of Lords, 4 June 2003; Vol. 648, c. GC 198.]
      I have heard council houses called many things, but I have never heard them called a national asset. It is as though council housing is some sort of nationalised industry that central Government have provided and that local authorities have nothing to do with. That is clearly not the case, whether it is on the financial level or on the level of the entrepreneurship, vigour and dynamism of the local communities that have made the provision of social housing possible.
      It is all very well for the Government to say, "This money came out of the central pot." However, they decided where the central pot began and ended and where the local pot began and ended. The boundaries between national and local government funds have been vague at times and have moved over the decades. Liberal Democrats believe that local authorities should have much greater financial powers, and we would like the boundaries to be shifted from central Government and more to local government. That is one reason why we think that this measure is wrong. There should be redistribution, but there should be greater autonomy, too. This measure is a step in the opposite direction to greater autonomy.
      Matthew Green: Earlier, the Minister shook his head when my hon. Friend said that some of the properties go back for centuries. Many boroughs in mediaeval market towns built properties that came into the hands of councils, which turned them into flats and houses. Those properties often realise the highest possible values if they are sold. They were funded not by central Government in the 20th century, but by locally raised money or by charitable money in the 19th century.
      Mr. Davey: I am grateful to my hon. Friend for making that point. Two councils in his constituency—South Shropshire and Bridgnorth—are debt free and will be affected by the measure, but they have real housing need.

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      That brings me to my third point of principle against the Government's proposal. Housing need is sometimes a relatively subjective concept. The Government say that they have housing need indicators, but the housing need that the hon. Member for Runnymede and Weybridge (Mr. Hammond) mentioned—the need for affordable housing for key public sector workers—is a key issue. We do not know how authorities will meet that need when the money is taken from them. The Minister may say that we do not know because the Government have set up regional housing boards—a step in the right direction—which have yet to report. However, he is asking the House to take a decision on one side of the equation when we do not know the information on the other side of the equation.
      The hon. Member for Runnymede and Weybridge says that he is privy to the information that Lord Rooker has said that only one of the debt-free authorities that are losing out will receive money through this process. I am not sure how Lord Rooker knows that if the regional housing boards will provide and allocate the funds. Perhaps he knows something that we do not.
      Mr. Gardiner: I have tried to follow the hon. Gentleman's argument closely, but I do not understand his point about the regional housing boards. Surely if those boards are to be the arbiter of genuine housing need, it is absolutely right that we take the decision on one side of the equation and not on the other. That is precisely because of the point that the hon. Gentleman made at the beginning of his remarks: this process should be free of partisan judgment and based on objective criteria. That is exactly what the regional housing boards are supposed to provide.
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      Mr. Davey: The hon. Gentleman cannot have it both ways. The Minister was trying to say that some authorities that do not have housing needs will lose and that other authorities with housing needs will win. We want to know about and to understand the housing needs, because we know from our constituencies, from which much of our information for such debates comes, that there are housing needs in the so-called leafy boroughs of suburban London. There are housing needs in rural areas such as that of my hon. Friend the Member for Ludlow (Matthew Green) and in parts of Surrey. The Government cannot have it both ways. We want to know where housing need will be met before the money is taken away. Perhaps that information should come from the regional housing boards—I do not disagree with that. The process should be less partisan and should be based on objective criteria. However, we are being asked to make a decision before we know about the need.
      Matthew Green: Surely it is unlikely that there will be sufficient money to meet all the housing needs in a given region, even with the pooling of money. There will be priorities. In the west midlands, it might well be decided that Birmingham needs an extra 20,000 houses. We need only 1,500 more affordable homes in South Shropshire district council, but the district contains only 30,000
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      people. The suspicion in South Shropshire is that it is likely that the money for the west midlands will go to areas other than South Shropshire or Bridgnorth.
      Mr. Davey: Over the weekend, I talked to several council leaders and councillors who will be affected by the decisions to check whether they were still happy with our position, because this is a serious moment during the passage of the Bill. They were clear that they managed their budgets and forward planning in the knowledge that when they became debt free, they could use the moneys as they wanted.
      Three Rivers district council is desperately keen to meet the decent homes standard that the Office of the Deputy Prime Minister gave it and to build more affordable housing with housing associations to address its affordable housing crisis and to house some of its key public sector workers. However, it will not be able to do so because the money will be taken away and it does not think that it will be on the regional housing board's list. Councils have planned for years in the expectation that they will receive money to meet the housing needs that they know exist in their communities, but they will no longer be able to do that.
      The situation is retrospective in many ways. Councils have planned and hoped for freedom so that they may make essential investment. They have even told their communities that they were making preparations, but suddenly, and without too much warning, the Government are taking the money away, which is why people are so cross. The Government and hon. Members such as the hon. Member for Brent, North must understand that.
      The Government say that the transitional scheme may cushion the blow for some of the affected authorities, and indeed it will. The problem is that the scheme will last for only two or three years, after which all the money will be taken from the authorities. The situation affects not only the 38 or 40 debt-free authorities with capital receipts that the Minister mentioned. Local authorities that have been working towards becoming debt free have gone through some of the pain but will discover that the freedom that they worked for and looked forward to will be taken away.
      I say to the Minister, in as friendly a way as possible, that Liberal Democrats have thought hard about the matter, as is our duty. As he said, £120 million is up for grabs throughout the country, so the way in which it is distributed and allocated is important. However, if one considers the principles of fiscal prudence and incentives to become debt free, localism versus centralism, the way in which housing needs are defined and the way in which local authorities have worked towards becoming debt free, the Minister has not made his case and we shall vote against him in the Lobby.
      Mr. Raynsford: We have had a good debate on an important subject, although the hon. Member for Runnymede and Weybridge (Mr. Hammond) made several rather curious allegations, the most frequent of which was that the measure is confiscatory. By that logic, the Conservative Government who introduced the whole set-aside regime were confiscatory. He alleged that the measure represents heavy-handed government forcing local authorities to do undesirable things, yet his

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      party, when in government, introduced measures that required local authorities to set aside capital receipts. I cannot accept his latter-day expressions of support for the idea of greater freedom for local government without reminding him of the actions of Conservative Governments.
      The fundamental difference is that today we are talking about housing capital expenditure of £2.5 billion a year—two and a half times the level that we inherited when we came to power. At that stage, the redistributive mechanism that the hon. Gentleman's Government had introduced was virtually the only means of getting capital into housing.
      Mr. Davey: If so much new money is available for housing needs, why is it necessary to take £120 million from the debt-free authorities that have worked so hard to become so?
      Mr. Raynsford: If the hon. Gentleman bears with me, I will give him a full answer that deals with the inherent contradiction in his case. He seems to believe, as Liberal Democrats generally do, that it is possible to find ways out of difficult conflicts without any pain, but it is not. It may be so in the Liberal Democrat Valhalla, where everyone debates everything ad nauseam and outcomes are always pain free, but in the real world there are hard choices that require decisions. There is conflict between allowing receipts to remain where they fall and ensuring a fair allocation of housing resources. This is a testing moment for Opposition Members to show where they stand. Are they in favour of simply letting things lie according to the accidents of history, or do they want a fair distribution based on principle, not accident?
      Mr. Davey: Is taking money away from Tory and Liberal Democrat councils and giving to it to Labour ones the hardest decision that the Minister has ever had to make?
      Mr. Raynsford: It is not like that at all. It is interesting that the hon. Gentleman proposes to take money away from a substantial number of Liberal Democrat authorities. I understand exactly why Conservative Members support the measure—because, in general, Tory councils will benefit from it; it is self-interest on behalf of predominantly Tory authorities. I find it extraordinary, however, that the Liberal Democrats should argue against the interests of many of their own authorities. That is an example of the curious stance that they often take by standing on their heads on certain issues. [Interruption.] I shall come back to the hon. Member for Kingston and Surbiton (Mr. Davey) in a moment. I want first to respond to the hon. Member for Runnymede and Weybridge.
      The difference between the actions of his Government and our proposal is that we are ensuring that the principles of fair distribution apply to all local authorities, which will all be part of the same mechanism. He proposes giving special benefits to a small number—around 40—that are debt free. As we know, that is because Conservative Members see that as being in the financial interests of predominantly Conservative authorities. Let me test him on this. Why
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      should mid-Devon be treated differently from east Devon? Why should Milton Keynes be treated differently from Watford? Why should Maidstone be treated differently from Dartford? In each case, one will lose and one will gain. Can the hon. Gentleman tell me which will be the gainers and which will be the losers? We know about Milton Keynes, because we have rehearsed that already, but can he genuinely tell me what the outcome will be in the other two cases? Of course not. We know that those authorities are in broadly similar circumstances. It just happens that one has the advantage of being debt free and the other not. Why should there be an arbitrary benefit for one as against another? That is the fatal weakness of the Opposition's position. They are proposing special treatment for a small group of authorities merely on the accident of which one happens to be debt free. Why should one authority have unrestricted access to capital receipts while the other is required to set aside 75 per cent? That is the question that I must put, and there is no credible answer to it. It illustrates the confusion of both opposition parties.
      Mr. Davey: The Minister is taking a static one-year view when we are talking about housing and capital finance. These things do not happen from one year to the next. The span is 25 or 30 years plus, as we have discussed. The Minister cannot say that what he has said justifies his case. He must take a much longer-term view. If he did that, he might win more of us over.
      Mr. Raynsford: The hon. Gentleman, for whom I have great respect, could not have made my case better. Essentially, he is arguing for special treatment for a few authorities that happen at this moment to be in a favourable position. We are taking the longer-term view and saying that there should be a framework that applies fairly throughout all authorities and ensures that resources are allocated according to need. Surely the Liberal Democrat party would say that that is a fair principle, and it is the principle that underpins our policy.
      The Liberal Democrats are caught on the horns of a dilemma. On the one hand, they argue for the use of resources to meet local housing needs, but they are not prepared to follow logic and say that that means that we cannot live with the accidents of history and geography and allow buckshee gains for some authorities that at this moment have the advantage of being debt free with substantial receipts, and needs that do not outweigh their receipts.
      I am not sure what my noble friend Lord Rooker said in the other place—the hon. Member for Runnymede and Weybridge quoted him—but some authorities that are debt free have significant needs that will be taken into account in the allocations that will be considered by the regional housing boards. Other authorities will have lesser needs. In our view, it is right that every authority should be assessed on the basis of needs, on the simple principle that housing allocations should be determined by need. That should not be based on the simple accident, as it were, of where the receipts arise.
      Mr. Hammond: I have listened to everything that the Minister has said. Does he understand how he is undermining the sense that he wants to convey that he is

      619
      granting freedom to local authorities? Does he understand also the psychological significance of the provision? We are talking of only 40 authorities, but a message is being sent to all authorities and to the Local Government Association that the Government do not really want to let go and allow local authorities to manage their own affairs. Instead, they want to control what they do.
      Mr. Raynsford: I hope that we shall shortly come on to the next group of amendments, which deals with financial management and accompany all the provisions that change radically the capital allocations system. The provisions will remove Government controls and will free local authorities to take decisions on capital allocations. The Government are making substantial moves towards giving local authorities greater freedom and flexibility. We are also a Government who have principles. One of those principles is that fairness in the allocation of resources to meet needs should be paramount. We are not resiling from that. It is sad that the other parties are prepared to argue for a framework that will give special advantage on the basis of accidents of history and geography to a few authorities, rather than taking the more rounded view.
      We have offered generous transitional arrangements. We are prepared to help those authorities that are debt free because, as the hon. Member for Kingston and Surbiton said, some of them have made plans. We want to ensure that those plans are not disrupted unduly by these changes. Therefore, there was opportunity for substantial help for the impact on debt-free authorities to be smoothed over for a significant time. We remain willing to assist those authorities, but that must happen in a framework that ensures fairness to all authorities, and not be a purely arbitrary benefit for a small number that will have adverse consequences for the majority.
      5.15 pm
      With those thoughts, I trust that hon. Members will vote to resist the amendment.
      Question put, That this House disagrees with the Lords in the said amendment:—
      The House divided: Ayes 258, Noes 154.

      Division No. 310]

      [5:15 pm

      AYES

      Ainger, Nick

      Borrow, David

      Ainsworth, Bob (Cov'try NE)

      Bradley, rh Keith (Withington)

      Alexander, Douglas

      Bradley, Peter (The Wrekin)

      Allen, Graham

      Bradshaw, Ben

      Anderson, Janet (Rossendale & Darwen)

      Brennan, Kevin

      Brown, rh Nicholas (Newcastle E Wallsend)

      Armstrong, rh Ms Hilary

      Atherton, Ms Candy

      Brown, Russell (Dumfries)

      Austin, John

      Bryant, Chris

      Baird, Vera

      Burden, Richard

      Banks, Tony

      Burgon, Colin

      Barnes, Harry

      Burnham, Andy

      Barron, rh Kevin

      Byers, rh Stephen

      Bayley, Hugh

      Caborn, rh Richard

      Beard, Nigel

      Cairns, David

      Bell, Stuart

      Campbell, Alan (Tynemouth)

      Benn, Hilary

      Campbell, Mrs Anne (C'bridge)

      Benton, Joe (Bootle)

      Campbell, Ronnie (Blyth V)

      Berry, Roger

      Caplin, Ivor

      Best, Harold

      Casale, Roger

      620

      Cawsey, Ian (Brigg)

      Hoyle, Lindsay

      Challen, Colin

      Hughes, Beverley (Stretford & Urmston)

      Chapman, Ben (Wirral S)

      Clark, Mrs Helen (Peterborough)

      Hughes, Kevin (Doncaster N)

      Clark, Dr. Lynda (Edinburgh Pentlands)

      Humble, Mrs Joan

      Hurst, Alan (Braintree)

      Clark, Paul (Gillingham)

      Hutton, rh John

      Clarke, rh Tom (Coatbridge & Chryston)

      Iddon, Dr. Brian

      Illsley, Eric

      Clwyd, Ann (Cynon V)

      Ingram, rh Adam

      Coffey, Ms Ann

      Jackson, Glenda (Hampstead & Highgate)

      Cohen, Harry

      Cook, rh Robin (Livingston)

      Jackson, Helen (Hillsborough)

      Corbyn, Jeremy

      Jamieson, David

      Corston, Jean

      Jenkins, Brian

      Cousins, Jim

      Johnson, Alan (Hull W)

      Cox, Tom (Tooting)

      Johnson, Miss Melanie (Welwyn Hatfield)

      Cruddas, Jon

      Cryer, Ann (Keighley)

      Jones, Helen (Warrington N)

      Cunningham, rh Dr. Jack (Copeland)

      Jones, Lynne (Selly Oak)

      Jowell, rh Tessa

      Cunningham, Jim (Coventry S)

      Joyce, Eric (Falkirk W)

      Dalyell, Tam

      Kaufman, rh Gerald

      Darling, rh Alistair

      Keeble, Ms Sally

      Davey, Valerie (Bristol W)

      Keen, Alan (Feltham)

      Davies, rh Denzil (Llanelli)

      Khabra, Piara S.

      Davies, Geraint (Croydon C)

      Kidney, David

      Dean, Mrs Janet

      King, Andy (Rugby)

      Denham, rh John

      King, Ms Oona (Bethnal Green & Bow)

      Dhanda, Parmjit

      Dobbin, Jim (Heywood)

      Knight, Jim (S Dorset)

      Dobson, rh Frank

      Kumar, Dr. Ashok

      Donohoe, Brian H.

      Ladyman, Dr. Stephen

      Doran, Frank

      Lammy, David

      Dowd, Jim (Lewisham W)

      Lazarowicz, Mark

      Drew, David (Stroud)

      Lepper, David

      Dunwoody, Mrs Gwyneth

      Levitt, Tom (High Peak)

      Eagle, Angela (Wallasey)

      Lewis, Ivan (Bury S)

      Eagle, Maria (L'pool Garston)

      Lewis, Terry (Worslsey)

      Ellman, Mrs Louise

      Linton, Martin

      Etherington, Bill

      Lloyd, Tony (Manchester C)

      Farrelly, Paul

      Lyons, John (Strathkelvin)

      Field, rh Frank (Birkenhead)

      McAvoy, Thomas

      Flint, Caroline

      McCabe, Stephen

      Flynn, Paul (Newport W)

      McCafferty, Chris

      Foster, rh Derek

      McDonagh, Siobhain

      Foster, Michael (Worcester)

      McDonnell, John

      Foulkes, rh George

      McFall, John

      Gapes, Mike (Ilford S)

      McIsaac, Shona

      Gardiner, Barry

      McKechin, Ann

      Gerrard, Neil

      McKenna, Rosemary

      Gibson, Dr. Ian

      Mactaggart, Fiona

      Gilroy, Linda

      McWalter, Tony

      Godsiff, Roger

      Mahmood, Khalid

      Goggins, Paul

      Mahon, Mrs Alice

      Griffiths, Jane (Reading E)

      Mallaber, Judy

      Grogan, John

      Mann, John (Bassetlaw)

      Hain, rh Peter

      Marsden, Gordon (Blackpool S)

      Hall, Mike (Weaver Vale)

      Marshall, David (Glasgow Shettleston)

      Hamilton, David (Midlothian)

      Hanson, David

      Marshall, Jim (Leicester S)

      Harris, Tom (Glasgow Cathcart)

      Marshall-Andrews, Robert

      Havard, Dai (Merthyr Tydfil & Rhymney)

      Martlew, Eric

      Meacher, rh Michael

      Hendrick, Mark

      Merron, Gillian

      Hepburn, Stephen

      Michael, rh Alun

      Heppell, John

      Miliband, David

      Heyes, David

      Miller, Andrew

      Hill, Keith (Streatham)

      Moffatt, Laura

      Hood, Jimmy (Clydesdale)

      Moonie, Dr. Lewis

      Hoon, rh Geoffrey

      Morley, Elliot

      Hope, Phil (Corby)

      Murphy. Denis (Wansbeck)

      Hopkins, Kelvin

      Murphy, Jim (Eastwood)

      Howarth, rh Alan (Newport E)

      Norris, Dan (Wansdyke)

      Howarth, George (Knowsley N & Sefton E)

      O'Brien, Bill (Normanton)

      O'Hara, Edward

      621

      Organ, Diana

      Soley, Clive

      Osborne, Sandra (Ayr)

      Speller, rh John

      Palmer, Dr. Nick

      Squire, Rachel

      Perham, Linda

      Starkey, Dr. Phyllis

      Pickthall, Colin

      Steinberg, Gerry

      Pike, Peter (Burnley)

      Stevenson, George

      Plaskitt, James

      Stewart, David (Inverness E & Lochaber)

      Prentice, Gordon (Pendle)

      Primarolo, rh Dawn

      Stoate, Dr. Howard

      Prosser, Gwyn

      Stringer, Graham

      Purchase, Ken

      Sutcliffe, Gerry

      Quin, rh Joyce

      Taylor, rh Ann (Dewsbury)

      Quinn, Lawrie

      Taylor, David (NW Leics)

      Rammell, Bill

      Thomas, Gareth (Harrow W)

      Rapson, Syd (Portsmouth N)

      Tipping, Paddy

      Raynsford, rh Nick

      Todd, Mark (S Derbyshire)

      Reed, Andy (Loughborough)

      Touhig, Don (Islwyn)

      Reid, rh Dr. John (Hamilton N & Bellshill)

      Trickett, Jon

      Truswell, Paul

      Robertson, John (Glasgow Anniesland)

      Turner, Dennis (Wolverh'ton SE)

      Turner, Neil (Wigan)

      Roche, Mrs Barbara

      Twigg, Derek (Halton)

      Rooney, Terry

      Twigg, Stephen (Enfield)

      Ross, Ernie (Dundee W)

      Vaz, Keith (Leicester E)

      Ruddock, Joan

      Vis, Dr. Rudi

      Ryan, Joan (Enfield N)

      Ward, Claire

      Salter, Martin

      Wareing, Robert N.

      Savidge, Malcolm

      Watson, Tom (W Bromwich E)

      Sawford, Phil

      Watts, David

      Sedgemore, Brian

      Whitehead, Dr. Alan

      Sheerman, Barry

      Williams, rh Alan (Swansea W)

      Sheridan, Jim

      Wills, Michael

      Simon, Siôn (B'ham Erdington)

      Winnick, David

      Simpson, Alan (Nottingham S)

      Winterton, Ms Rosie (Doncaster C)

      Singh, Marsha

      Skinner, Dennis

      Wood, Mike (Batley)

      Smith, rh Andrew (Oxford E)

      Woodward, Shaun

      Smith, rh Chris (Islington S & Finsbury)

      Woolas, Phil

      Wright, Tony (Cannock)

      Smith, Geraldine (Morecambe & Lunesdale)

      Wyatt, Derek

      Smith, Jacqui (Redditch)

      Tellers for the Ayes:

      Smith, John (Glamorgan)

      Vernon Coaker and

      Smith, Llew (Blaenau Gwent)

      Ms Bridget Prentice

      NOES

      Ainsworth, Peter (E Surrey)

      Calton, Mrs Patsy

      Allan, Richard

      Cameron, David

      Amess, David

      Campbell, rh Menzies (NE Fife)

      Ancram, rh Michael

      Carmichael, Alistair

      Atkinson, David (Bour'mth E)

      Cash, William

      Atkinson, Peter (Hexham)

      Chapman, Sir Sydney (Chipping Barnet)

      Bacon, Richard

      Baker, Norman

      Chope, Christopher

      Baldry, Tony

      Clappison, James

      Baron, John (Billericay)

      Collins, Tim

      Beith, rh A. J.

      Cormack, Sir Patrick

      Bellingham, Henry

      Cotter, Brian

      Bercow, John

      Curry, rh David

      Beresford, Sir Paul

      Davey, Edward (Kingston)

      Blunt, Crispin

      Davis, rh David (Haltemprice & Howden)

      Boswell, Tim

      Bottomley, Peter (Worthing W)

      Djanogly, Jonathan

      Bottomley, rh Virginia (SW Surrey)

      Doughty, Sue

      Duncan, Alan (Rutland)

      Brady, Graham

      Duncan Smith, rh lain

      Brazier, Julian

      Evans, Nigel

      Breed, Colin

      Fabricant, Michael

      Brooke, Mrs Annette L.

      Fallon, Michael

      Browning, Mrs Angela

      Flight, Howard

      Bruce, Malcolm

      Flook, Adrian

      Burns, Simon

      Forth, rh Eric

      Burnside, David

      Foster, Don (Bath)

      Burstow, Paul

      Fox, Dr. Liam

      Burt, Alistair

      Gale, Roger (N Thanet)

      Butterfill, John

      Garnier, Edward

      622

      George, Andrew (St. Ives)

      Osborne, George (Tatton)

      Gibb, Nick (Bognor Regis)

      Ottaway, Richard

      Gidley, Sandra

      Page, Richard

      Gillan, Mrs Cheryl

      Paice, James

      Goodman, Paul

      Pickles, Eric

      Gray, James (N Wilts)

      Price, Adam (E Carmarthen & Dinefwr)

      Grayling, Chris

      Green, Damian (Ashford)

      Prisk, Mark (Hertford)

      Green, Matthew (Ludlow)

      Randall, John

      Greenway, John

      Redwood, rh John

      Grieve, Dominic

      Rendel, David

      Hague, rh William

      Robathan, Andrew

      Hammond, Philip

      Robertson, Laurence (Tewk'b'ry)

      Hancock, Mike

      Roe, Mrs Marion

      Hawkins, Nick

      Rosindell, Andrew

      Hayes, John (S Holland)

      Ruffley, David

      Heath, David

      Russell, Bob (Colchester)

      Heathcoat-Amory, rh David

      Sanders, Adrian

      Hoban, Mark (Fareham)

      Shephard, rh Mrs Gillian

      Horam, John (Orpington)

      Simmonds, Mark

      Howard, rh Michael

      Simpson, Keith (M-Norfolk)

      Jack, rh Michael

      Smith, Sir Robert (W Ab'd'ns & Kincardine)

      Jenkin, Bernard

      Kennedy, rh Charles (Ross Skye & Inverness)

      Soames, Nicholas

      Spelman, Mrs Caroline

      Key, Robert (Salisbury)

      Spink, Bob (Castle Point)

      Knight, rh Greg (E Yorkshire)

      Spring, Richard

      Stunell, Andrew

      Lamb, Norman

      Taylor, Ian (Esher)

      Lansley, Andrew

      Taylor, John (Solihull)

      Laws, David (Yeovil)

      Taylor, Matthew (Truro)

      leigh, Edward

      Taylor, Sir Teddy

      letwin, rh Oliver

      Thomas, Simon (Ceredigion)

      Lewis Dr Julian (New Forest E)

      Tonge, Dr. Jenny

      Liddell-Grainger, Ian

      Turner, Andrew (Isle of Wight)

      Lidington, David

      Tyrie, Andrew

      Lilley, rh Peter

      Viggers, Peter

      Llwyd, Elfyn

      Walter, Robert

      Loughton, Tim

      Waterson, Nigel

      Luff, Peter (M-Worcs)

      Watkinson, Angela

      McIntosh, Miss Anne

      Webb, Steve (Northavon)

      Maclean, rh David

      Whittingdale, John

      McLoughlin, Patrick

      Wiggin, Bill

      Malins, Humfrey

      Wilkinson, John

      Mawhinney, rh Sir Brian

      Williams, Roger (Brecon)

      Mercer, Patrick

      Willis, Phil

      Mitchell, Andrew (Sutton Coldfield)

      Wilshire, David

      Yeo, Tim (S Suffolk)

      Moore, Michael

      Young, rh Sir George

      Moss, Malcolm

      Norman, Archie

      Tellers for the Noes:

      Oaten, Mark (Winchester)

      Mr. Mark Field and

      O'Brien, Stephen (Eddisbury)

      Mr. Mark Francois

      Question accordingly agreed to.
      Lords amendment disagreed to.

    Before Clause 25
    Lords amendment No. 6
    530 pm
    Mr. Raynsford: I beg to move, That this House disagrees with the Lords in the said amendment.
    The amendment would insert a new clause at the beginning of part 2. The new clause says that part 2 can be applied only to an authority that has been identified by the Audit Commission as being at risk of overspending its total budget by more than 10 per cent.
    I need first to explain the perverse and highly undesirable effects of such an overspending test. It requires the Audit Commission to undertake an entirely

    623
    new task, which would be costly and potentially very hazardous. In effect, it would require the commission to create what would be a blacklist of authorities that had agreed budgets that were likely to be seriously overspent. How would that be done? The factors that lead to an overspend are extremely diverse and difficult to predict. The commission would have to examine the budget of every authority, consider the various contingencies that might affect it and their likelihood, and from that try to predict whether the outcome would be a 10 per cent. overspend. The scope for disagreement would be immense, and inclusion in the list would be highly likely to be challenged in the courts. A major input of audit resource would be required, which would be reflected in an increase in audit fees for all authorities.
    What would be the effect of an authority's inclusion? It should be borne in mind that this is not a general assessment concluding that an authority is a poor performer, but, specifically, a supposedly authoritative statement that it is likely to spend at least 10 per cent. more than it put in its budget. If the authority had reserves of less than 10 per cent., that would effectively mean that it had set an illegal budget. On the other hand, if it had reserves of more than the expected overspend, it would be on the blacklist but not at any financial risk. Its reputation would be compromised for no reason.
    The purpose of the amendment is apparently to apply part 2 to authorities that have unsound finances. When Hackney's chief finance officer issued his section 114 report in October 2000, he was estimating an overspend of between £14.5 million and £22 million. The reserves were £6.5 million. The general fund budget for the year, however, was £264 million. The reserves were insufficient, but the projected overspend was less than 10 per cent. of the budget.
    Even if it could have foreseen that development, the Audit Commission would not have identified Hackney under the new clause. The part 2 provisions would not have applied in one of the most serious financial crises to have hit a local authority in recent years. This arbitrary test would not guarantee the identification of authorities facing financial crises, while running the risk of needlessly tarnishing the reputation of an authority with sound finances.
    The new clause would have another serious consequence. Much has been made of the opposition to part 2 in local government, but one clause, clause 30, has been universally welcomed. It helps an authority to take rapid remedial action when a section 114 report has been issued. The amendment would perversely deny au authority the use of that facility unless it was on the Audit Commission list—but unexpected financial crises can affect many authorities. It is absurd that only projected overspenders would be allowed the means to take immediate action to deal with such a crisis.
    Those are the reasons for our belief that this is a perverse and unworkable amendment, but there are more fundamental issues at stake. The purpose of part 2 is to reinforce important aspects of sound financial management in local government. It does that mainly by requiring authorities to follow proper procedures and have regard to appropriate considerations, while leaving the substance of the decisions to authorities themselves. This is all part of our programme to extend freedom, and flexibilities to local authorities—in this case, by repealing the restrictive policies relating to capital
    624
    spending that were introduced by the last Conservative Government. I am interested to see the right hon. Member for Wokingham (Mr. Redwood) laughing at the fact that his party was responsible for the introduction of those measures.
    Mr. Hammond: The Minister is going into chapter and verse about his technical objections to the amendment, but he knows that the underlying principal concern was clause 26, which, in contrast to what he has just said about giving local authorities freedom and allowing them to manage their affairs in accordance with generally accepted accounting practice, gives the Secretary of State the power to dictate reserves. Why did not the Government take the opportunity to accept the Opposition amendment that would have struck out clause 26, and then everyone would have been happy?
    Mr. Raynsford: If the hon. Gentleman bears with me, I will come on to precisely that issue. I emphasise that the Bill is part of a programme to extend freedoms and flexibility but, as all sensible people recognise, with freedoms come responsibilities, and the part 2 provisions are sensible safeguards to ensure that the new freedoms are applied responsibly. Clause 26 provides a fall-back power to require an authority to budget for a minimum level of reserves but we have made it clear on many occasions that we would use that power only in very limited circumstances. We have said on the record, and I repeat tonight, that we will set a minimum only if an authority is disregarding the advice of its chief finance officer and is heading for serious financial difficulties. In deciding the level of the minimum, we would take account of the advice of the chief finance officer and any observations of the auditor.
    Mr. John Redwood: I was laughing because the Minister was purporting to say that this is a liberalising Bill when, as my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) has pointed out, there is a very strong measure of centralisation. Before the Minister suggests that I should not be making this point, he should remember that, when I was the Minister with responsibility for local government, the only changes I made liberalised. I would have liked to liberalise more. I wish this Government would liberalise more. This is not the measure that is going to do it.
    Mr. Raynsford: I remind the right hon. Gentleman that, when he was a Minister, there was a capital control regime in place that involved central decision taking about every local authority's borrowing—every local authority's borrowing was determined by central Government. That was the policy that he followed. That is what we are doing away with by giving local authorities freedom to take decisions based on a sound prudential assessment of what they can afford to borrow. The only safeguard that we have put in is the safeguard that I have been referring to, which ensures that, in the event of an authority disregarding the advice of its chief finance officer and heading for serious financial difficulties as a result of that, there is a fall-back. I think that any sensible person would recognise that that is prudent and a necessary safeguard, but I hope that we will have to use it very rarely, if ever.
    Mr. Edward Davey: The Minister knows that we disagree with the policy as embedded in clause 26 but

    625
    can he elucidate a little more about when he thinks the power could be used? He said that it would be used on very rare occasions, if ever. Have his officials given him a list of occasions over the past few years when the power might have been applied, given the undertakings that he has just given?
    Mr. Raynsford: As I have already said, we hope that we will never have to use these powers. There have been very infrequent occasions where authorities have disregarded the advice of their chief finance officer. There were cases some years ago where authorities got into imprudent financial arrangements, disregarding official advice, but thankfully they have been very few and infrequent, and we hope that they will not happen at all in future. That is why I can say with some confidence that I hope that we will never have to use the powers, but it is a foolish Government who do not make provision for the possibility of one rogue authority taking irresponsible decisions against the advice of its chief officers in certain unforeseen circumstances. If that were to happen and we did not have the power to intervene, I would be surprised if there were not some Opposition Members saying, "How is it that the Government have got into a position of giving these freedoms to local government without any ability to step in and to prevent the people of that area suffering as a result of irresponsible behaviour by the local authority?"
    Mr. Hammond: Since the Minister places so much stock on the advice of chief finance officers, will he take some advice from the Society of County Treasurers, which told the Select Committee that the proposals for the Secretary of State to specify that local authorities maintain their reserves at a minimum level seemed to be "particularly problematic and unnecessary"?
    Mr. Raynsford: I hear what the society says, and I know that local government is generally hostile to the proposal. But the hon. Gentleman should reflect on the circumstances that I am describing, in which, at some unforeseen future date, an elected authority disregards the advice of its chief finance officer and undertakes highly imprudent borrowing, putting the authority's finances at risk. If that situation arose and the Government had no means whatever to deal with it, would he and the Opposition really be silent? On reflection, he will realise that this is a sensible safeguard that is there for extreme circumstances. We hope that we will never have to use it, but it is a necessary concomitant of a policy of liberalisation that is extending substantially greater freedom to local authorities over their borrowing decisions.
    Mr. Redwood: In those circumstances, the Opposition would be saying that the councillors should be changed. We want the council to be accountable. It would doubtless be a Labour or Liberal Democrat council that got into that financial pickle and we would have strong advice for the electors—choose a better council next time.
    Mr. Raynsford: I do not have the right hon. Gentleman's party political certainties. I know well that
    626
    the authorities in difficulty with which I have been engaged over the last two years have been under the control of all political parties. Fortunately, none is in the kind of circumstances that we are envisaging in the Bill, but it would be imprudent not to allow for the possibility that, at some future date, that might happen. This is simply a safeguard that we believe to be necessary.
    We have set out in the House and in another place the evidence on which we concluded that the powers were necessary, including the findings of the Audit Commission on current levels of reserves in individual authorities. We take the point that the provisions will apply to all authorities when problems are confined to a minority. We would have sympathy with the point made if the effect of the provisions was to impose added burdens, but it is not. All that these clauses do is to give statutory backing to what is accepted as good practice that all authorities should follow.
    The clauses in part 2 were debated in detail in this House and in no case was a Division called against them. I like to think that that was because, when all factors were considered, Members of this House appreciated the importance of sound financial management. Unfortunately, those considerations apparently did not carry the same weight in another place.
    The Government are not prepared to take risks on the issue. If the new freedoms in the Bill are to be given to local government, we regard it as essential that the force of statute be given to these basic rules of prudence. The new clause would prevent that from happening and should be removed.
    Mr. Hammond: The amendment addresses part 2 of the Bill. It is clear that, even more than in part 1—dealing with capital receipts—the provisions in part 2 are offensive to local government and undermine the Government's claim to want to free it.
    We explained to the Minister during the Commons consideration—Members on both sides of the other House also tried to explain it—that the appropriate relationship between central and local Government is not, as the Government seem to think, that of a parent and a child, where freedoms are given conditionally and are undermined by the keeping of reserve powers to step in whenever local authorities do not behave exactly as central Government wish.
    Baroness Hamwee described the approach as undermining the capacity of individuals within local authorities. In Committee, the hon. Member for Southport (Dr. Pugh) said that the real test of the Government's commitment to freedom was whether local authorities were to be free to go against the Government's wishes, not merely whether they were to be free to comply with them.
    The Minister knows well that the earlier amendments in the House of Lords sought to delete clause 26—the power to dictate minimum reserves. That is the key issue. The amendment represents a different approach to achieving that, by leaving the power in the Bill and limiting its application to councils at particular risk. It is an attempt by our noble Friends to meet the Government's concerns while lifting the implied slur on all local authorities that this part of the Bill, as drafted, contains.

    627
    5.45 pm
    There is a real problem about the message that this part of the Bill, particularly clause 26, sends to local government. Seen through the Government's eyes and as expressed by Lord Rooker in the other place—this is a frankly astonishing quote—
    "the bonfire of red tape goes beyond the wildest dreams of those in local government as regards what they will be able to do with their new freedoms—without government interference or diktat. That is the whole thrust of the Bill and there is wide consensus on it between all the parties concerned in both Houses of Parliament as well as outside in local government."—[Official Report, House of Lords, 16 July 2003: Vol. 651, c. 902.]
    I do not know where Lord Rooker gets his intelligence from, but I can assure him that he is wrong on all counts. There is no consensus between all parties in this House or in the other place, nor does it exist outside in local government—not a good start for ministerial connection to the real world. As Lord Hanningfield helpfully pointed out to Lord Rooker just a few moments after he made those startling assertions, all parties in the Local Government Association had unanimously condemned clause 26.
    We can cast the net a little wider to test qualified opinion. The Society of Local Authority Chief Executives, in its evidence to the Select Committee, said:
    "The prevailing attitude of mistrust of local government, however, is revealed once again in the Bill's clauses on financial administration".

    The Chartered Institute of Public Finance and Accountancy—the very body on which the Government are depending, in terms of defining proper practice in the prudential borrowing regime—said:
    "specifying a 'minimum level of reserves' for local authorities is impracticable and should be left to local judgment and good professional practice".
    I am sure that the Minister is taking note. Not much support there, then, for the assertion of the Minister in the other place. That last quote is particularly telling. The Bill relies heavily on the principle of using standards and codes of accounting practice. They will provide the guidance on proper reserve practices, which will differ from authority to authority. The Secretary of States having a power to override proper accounting practices and standards is inimical to the whole system that he is seeking to put in place.
    The Audit Commission said:
    "To date Auditors have resisted making recommendations about minimum levels because it is rightly the responsibility of local authorities to determine this for themselves based on a risk assessment of their operational and business models".
    We agree with the Audit Commission, the Chartered Institute of Public Finance and Accountancy, the Society of County Treasurers—which I quoted earlier—the Society of Local Authority Chief Executives and the Local Government Association. We disagree with the Minister, and with no disrespect to him, I am afraid that the calculation of the balance of collective wisdom— with Ministers from the Office of the Deputy Prime Minister on one side and all those professional bodies ranged on the other—has not taken me long to perform. The Government are utterly friendless on this issue, as on so many others.
    628
    Early amendments focused on clause 26; this amendment, carried on Third Reading, uses a different approach, imposing an admittedly arbitrary threshold to try to limit the provisions' scope to local authorities that are judged to be vulnerable. In the other place, Lord Bassam quoted all sorts of technical objectives in terms of the criterion selected and the threshold chosen, but the Government understand very well the objection. They had plenty of opportunity to address it, in this place and during the Bill's passage in the Lords, but did not. My colleagues in the other place—and, I believe, Liberal Democrat peers—were prepared to agree to a sensible compromise with the Government. What they are not prepared to accept is a set of clauses that take back, via reserve powers, all the so-called freedoms that Ministers are so keen to emphasise, for use in circumstances that, by the Minister's own admission, he cannot currently foresee. In keeping those reserve powers, he has underlined how little real freedom local government is being given, how little trust this Government place in local authorities—especially their own—and how far out of touch they are with local government opinion and practice. I urge my hon. Friends to resist the Government's attempt to overturn not only the decision of the other place, but the clear view of all the qualified outside bodies who have opined on the matter.
    Mr. Edward Davey: The Government are introducing some good measures on capital finance for local government. We urged them on the Conservatives, who were deaf to our calls, and we are pleased that the Government are adopting a prudential capital regime. That is very good, but having made those advances through liberalising measures, which the right hon. Member for Wokingham (Mr. Redwood) failed to do, the Government have now added a centralising measure. They have thus spoilt what would have been a good story for them to tell.
    We argued in Committee, and it has been argued in the other place, that the Government have not convinced anyone that the power is necessary. The reason is that other powers are already on the statute book to ensure that, if a local authority is managing its finances imprudently, the amber and the red light will be turned on and warning given. That applies to the requirements on chief financial officers, district auditors and so forth to report, so we were left bemused about why the extra power was needed. The only answer that the Government have offered is the case of Hackney.
    It is worrying when the Government have only one example to justify a new wide power. Although the Minister has offered some assurances—I accept that they are good and I am sure that they will be heard in the other place—local government and other bodies still feel that the powers may be misused. That is the worry. When the Government say that a power has been used only rarely or in one case and then use that case to justify the power, there is a danger that people will not quite trust them. That is the problem.
    I would have liked to think that the Minister would learn from the mistakes of the Conservatives. The Conservative Government legislated for local government on the basis of a few rogue councils. They were partisan in pointing to a few loony left councils that they then used as an excuse for imposing huge

    629
    centralised controls on all the good local government of the period. That was the Tory mistake, and I am surprised that the Government, despite the good aspects of the Bill, are making the same mistake in respect of this clause. I hope that the Minister and his noble Friend Lord Rooker will repeat their assurances because it is important to have them on the record. Unfortunately, they are not in the Bill, and the Minister should understand that that is why so many people are concerned.
    Tonight, the Liberal Democrats will have to disagree with the Government, who will need to show in proceedings over the next few days that they are listening and taking our points into account. The Minister will not win the argument for new localism and empowering local government if the Bill that is intended to accomplish those objectives also moves in the opposite direction. He must make a stronger case than he has hitherto provided.
    Mr. Redwood: I have had recent experience in my own area of Wokingham of the problem that the Minister has highlighted this evening and during the progress of the Bill. The principal unitary council, Wokingham district council, got into budgetary difficulties a couple of years ago. The council started to spend way beyond the levels laid down in its budget and was unable to increase the tax within the year, so that when the budgetary overspend became pronounced and the financial controls did not work, it ran down its reserves to pay for the spending.
    When that happened, I did not ask the Minister to intervene because I happen to believe in local democracy. I felt that the answer to the problem lay in regular elections and taking the case to the electorate. The Minister may be surprised but not pleased to learn that the electorate was capable of sorting the problem out in exemplary fashion—by deciding that the Liberal Democrats who were overspending and running down the reserves were not running the council well. The electorate threw the Liberal Democrats out and put in a Conservative administration. Over the months that have passed since that election of May last year, the Conservative administration has brought spending and taxation more into line and rebuilt the reserves to a much more prudent level. It made the issue of the reserves one of the main issues of the election.
    To be fair to the Liberal Democrats—not something that I am usually able to do—the Liberal Democrat councillors in Wokingham would probably say that part of the problem was due to the fact that their officers wrongly advised them. I do not believe that that is a satisfactory defence. Ministers have to take the blame for their officials, and councillors have to take the blame for their officers. I dwell on that because it goes directly to the issue raised by the Minister. He believes that there are wonderful finance officers in local government who always get it right and on whom we can entirely rely. In my view, however, councillors, like Ministers, have to make judgments based on the best available advice. The Liberal Democrat testimony from Wokingham should make us pause and consider whether the council's problems were a combination of political misjudgment and advice from finance officers who had lost control of
    630
    the budget in trying to implement the policies that were pursued. One cannot always expect finance officers to get all the forecasts right. Sometimes, they may not be aware of the spending pressures that build up in some departments, which are not always under their immediate control.
    My conclusion from the Wokingham experience is threefold. First, we should not rely entirely on officers of the council; it has to be a collective judgment. Secondly, such matters can be sorted out perfectly well by the electorate and by the free flow of ideas and criticisms between the political parties fighting for control of the council. It is much easier if, as in Wokingham, there are annual elections, so that issues can be dealt with even more quickly. Thirdly, I see no need to appeal to Ministers to become involved, and there is no guarantee that Ministers' judgments on these matters would be any better than those of the chief finance officers or councillors. Indeed, it would take some time for a Minister to read all the documents and get up to speed in making a difficult judgment about future revenue flows and costs and therefore about what constituted a safe level of reserves.
    The Minister and the Liberal Democrat spokesman referred to my role as Minister for Local Government. I freely confess that I did not bring before the House the big liberalising measures that I would have liked, but I reassure the Minister that I tried to. He will know that in a collective and busy Government, it is not always possible to win colleagues over to all that one would like. I have always been against capping and in favour of giving local authorities much more control. I would like to see the current Minister live the brand because, after all, Labour made strong criticisms of the Conservative Administration when they were in opposition, and it is deeply disappointing that they have not lived up to all the fine rhetoric.
    Local government does not mean anything unless it has reasonable power of the purse. Often local government will choose to spend more than I would like it to spend, but I believe that it is my democratic task, together with other interested groups from my party, to make the case against overspending and to seek to win elections on that basis. If every major decision is to be second-guessed or overridden by Ministers, it is hardly surprising that people do not take much interest in local government or actively participate in local elections. The Minister should trust rather more to regenerate the interest in local elections that we all want.
    Finally, I am sure that the large power assumed in the clause overrides and outweighs all the freedoms that the Minister is granting. It is a clever power: in operating on one element of the budget—but an important swing element—it gives the Minister power to intervene whenever he does not like the budget of a local authority, because he can always say that the reserves are going to be taken down to too low a point and effectively force the local authority either to cut expenditure or increase its tax by rather more at a future budget round. It is an undesirable power, so I urge the Minister to think again.
    6 pm
    Mr. Raynsford: I feel a sense of unreality about this debate, because we have heard three speeches from Opposition Members that have not been about the new

    631
    clause that we are debating but about something that they would have preferred as an alternative—the removal of clause 26. We debated clause 26 in detail in Committee. An amendment was moved for the Liberal Democrats by the hon. Member for Southport (Dr. Pugh), who was quoted by the hon. Member for Runnymede and Weybridge (Mr. Hammond) in effusive terms. Indeed, his colleague, the hon. Member for Cotswold (Mr. Clifton-Brown) said at the end of the debate:
    "We must all accept that there will be occasions when elected representatives will get it wrong. The problem arises when they get it so badly wrong that the authority cannot deliver its statutory level of services. The higher authority, the Secretary of State, and the district auditor have a role to ensure the continuation of the services…I hope that he"—

    the hon. Member for Southport—
    will not press it to a division."—[Official Report, Standing Committee A, 30 January 2003; c. 249.]
    That was the Conservative position in the Commons.
    When the debate was held in the other place, clause was debated and an attempt to remove it from the Bill was defeated. That is the outcome for that clause. We have had a wholly different debate this evening about the new clause that has been inserted, which would have several perverse and undesirable consequences. It would create a huge new bureaucracy, requiring the Audit Commission to do a vast amount of speculative work in making guesses about the future budgets and viability of every local authority in the country.
    The hon. Member for Runnymede and Weybridge pretended that the Government were friendless on the issue, but in fact the Audit Commission has made it clear that it shares our concerns about the new clause on grounds of practicality and the added regulatory burden that it would impose on all authorities. In the nicest possible way, I put it to all Opposition Members that they are supporting a new clause that would substantially increase the regulation of local authorities, impose a whole new bureaucratic framework for examining the budgets of local authorities and result in some perverse outcomes, as I identified in my opening speech.
    Mr. Hammond: The Minister is keen to quote the Audit Commission selectively. Will he confirm that he understands that the Audit Commission believes it to be the responsibility of local authorities to determine their reserve levels, based on a risk assessment of their operational and business models?
    Mr. Raynsford: I happily agree that that is the responsibility of local authorities. Clause 26, which we are not debating tonight, will simply put in place a reserve power that, as I have already made clear, we see as a long stop that we will be reluctant to use, and that we will use only in certain extreme circumstances. The new clause, which we are debating tonight, does not find favour with the Audit Commission, for obvious reasons I am surprised that the hon. Gentleman should advocate something that is both bureaucratic and burdensome to local government.
    Mr. Redwood: The Minister is addressing an important point and it would assist the House and government interest in the debate if he could be more
    632
    specific about the extraordinary circumstances that would trigger an investigation and possible action under clause 26, because I am not sure how he would do it.
    Mr. Raynsford: I am not sure that the right hon. Gentleman was listening carefully when I outlined the situation. As I explained, the new clause would oblige the Audit Commission to form a judgment in respect of every local authority about its circumstances and budgets, and the circumstances that might lead it to overspend by 10 per cent. That would have some perverse consequences, because it would be unlikely to catch all those authorities that were genuinely in difficulty, while at the same time, it could tarnish the reputation of well run authorities that happened technically to breach the regulations. That cannot be a sensible framework. It is a bureaucratic and centralising proposition and I am astonished that Opposition Members should support such absurd proposals when they claim also to support our decentralising agenda of giving more freedom to local authorities, which the Bill will achieve.
    Mr. Redwood: That is an interesting answer to a question that I did not ask. I asked about what the Government propose in the Bill, which is the subject of the amendment tonight. I still do not understand what work his Department will do to foresee the authorities that might get into difficulty. How bureaucratic will that be? Will there be more forms or requests for information? What would trigger an investigation and what would trigger action?
    Mr. Raynsford: As I said earlier, we gave an undertaking to act only in circumstances in which two tests were passed. The first was that the chief finance officer of the local authority had given advice that was ignored by the council and, secondly, that the authority was, as a consequence, moving towards serious financial difficulties. That will not apply on very many occasions and we have no intention of employing any new staff to monitor the situation. We already have good arrangements for helping those authorities classed as "poor" under the comprehensive performance assessment. The engagement arrangements are working well and, in many cases, authorities are showing real signs of improvement. That is the way in which we will continue to work to support and help authorities in difficulties to recover. We will continue with that work, but we see the need for a long stop to guard against the extreme cases that I described earlier.
    The hon. Member for Kingston and Surbiton (Mr. Davey) argued that the powers in the Bill might be misused. However, the powers in the new clause are certainly capable of being misused and they should be removed from the Bill. I hope that he will agree that the powers requiring the Audit Commission to carry out an extensive survey of the finances of every local authority to guess whether it might overspend by 10 per cent. are wholly undesirable. I hope that he will not support the new clause because it is arbitrary, perverse in effect,

    633
    expensive and undesirable. It is also highly centralising. which would go against everything of which he is in favour.
    Mr. Edward Davey: We want to give the Minister one more chance to think again on clause 26.
    Mr. Hammond: Yes.
    Mr. Davey: I am glad to have the hon. Gentleman's assent. We understand some of the imperfections of the amendment, but the Minister has an opportunity to accept the principle that underlies clause 26, which is the main driver behind the amendment. We will support the amendment tonight so that it can go back to the Lords and the Government can think again.
    Mr. Raynsford: Clause 26 is not before us, but the new clause is. We debated clause 26 in Committee. Perhaps his party did not advocate it sufficiently forcefully, but I have cited the view of the Conservative spokesman from the Front Bench in Committee, who advised the Liberal Democrats not to press the amendment. I also reminded Members that the other place voted on clause 26 and the Opposition were defeated. We are not debating clause 26, because it has been debated in both Houses. We are now debating a separate new clause that would have the undesirable consequences that I have outlined.
    Mr. Hammond: The Minister has said several times that we are not debating clause 26. However, the new clause seeks to limit and define the circumstances in which powers bestowed by that part of the Bill, including clause 26, could be applied. It is wrong for the Minister to say that our debate tonight should not include clause 26.
    Mr. Raynsford: I did not say that we should not debate matters that might incorporate provisions that might affect clause 26; I said that we are not debating clause 26. We are debating the new clause, which would have a much wider effect because it applies to the whole of part 2, including the provisions that allow greater flexibility in responding to circumstances after the serving of a notice under section 114. That is widely welcomed by local government but would be perversely hindered by the new clause, because only those authorities that had been fingered by the Audit Commission could benefit from that provision. That is an absurd and perverse outcome. The hon. Gentleman knows that the new clause is nonsense. I am sorry that the Opposition have not yet recognised the absurdity of their position and have not withdrawn the new clause.
    In response to the right hon. Member for Wokingham (Mr. Redwood), I agree wholeheartedly that it is always desirable that financial difficulties should be remedied by an electoral rather than an imposed outcome. I simply put it to him that quite a lot of authorities hold elections only once every four years, so it is a bit tough to tell the long-suffering citizens of an area that they have to wait three years to remedy a serious financial crisis that could have a damaging impact on services in their area because there is no provision to act in an emergency to deal with extreme circumstances. I repeat
    634
    that it is only in such extreme circumstances, where the chief finance officer has given advice that has been disregarded and the authority is seriously heading for the rocks, that we envisage using those powers. I hope that it will never be necessary to do so.
    We are committed to giving local authorities more freedom; all the provisions in part 1 give substantial additional spending freedoms, in relation not only to borrowing but also in a number of other aspects. This modest provision in part 2 ensures that that freedom is matched by an accompanying safeguard against extreme circumstances. I hope that it will never be needed, but if it is needed I—and, I suspect, those who follow us in this place—will be pleased that it is there to guard against such circumstances. I hope that Members will agree that the proposed new clause, which is unworkable and undesirable, should be deleted.
    Question put, That this House disagrees with the Lords in the said amendment:—
    The House divided: Ayes 256, Noes 144.

    Division No. 311]

    [6:11 pm

    AYES

    Adams, Irene (Paisley N)

    Clarke, rh Tom (Coatbridge & Chryston)

    Ainger, Nick

    Ainsworth, Bob (Cov'try NE)

    Clwyd, Ann (Cynon V)

    Alexander, Douglas

    Coaker, Vernon

    Allen, Graham

    Coffey, Ms Ann

    Anderson, Janet (Rossendale & Darwen)

    Cohen, Harry

    Cook, rh Robin (Livingston)

    Armstrong, rh Ms Hilary

    Corbyn, Jeremy

    Atherton, Ms Candy

    Corston, Jean

    Austin, John

    Cousins, Jim

    Baird, Vera

    Cox, Tom (Tooting)

    Banks, Tony

    Cruddas, Jon

    Barnes, Harry

    Cryer, Ann (Keighley)

    Battle, John

    Cunningham, rh Dr. Jack (Copeland)

    Bayley, Hugh

    Beard, Nigel

    Cunningham, Jim (Coventry S)

    Benn, Hilary

    Dalyell, Tam

    Benton, Joe (Bootle)

    Davey, Valerie (Bristol W)

    Berry, Roger

    Davies, rh Denzil (Llanelli)

    Best, Harold

    Davies, Geraint (Croydon C)

    Blears, Ms Hazel

    Dean, Mrs Janet

    Borrow. David

    Denham, rh John

    Bradley, rh Keith (Withington)

    Dhanda, Parmjit

    Bradley, Peter (The Wrekin)

    Dismore, Andrew

    Bradshaw, Ben

    Dobbin, Jim (Heywood)

    Brennan, Kevin

    Dobson, rh Frank

    Brown, rh Nicholas (Newcastle E Wallsend)

    Donohoe, Brian H.

    Doran, Frank

    Brown, Russell (Dumfries)

    Dowd, Jim (Lewisham W)

    Browne, Desmond

    Drew, David (Stroud)

    Bryant, Chris

    Dunwoody, Mrs Gwyneth

    Burden, Richard

    Eagle, Angela (Wallasey)

    Burgon, Colin

    Eagle, Maria (L'pool Garston)

    Burnham, Andy

    Ellman, Mrs Louise

    Byers, rh Stephen

    Etherington, Bill

    Cairns, David

    Farrelly, Paul

    Campbell, Alan (Tynemouth)

    Field, rh Frank (Birkenhead)

    Campbell, Mrs Anne (C'bridge)

    Flint, Caroline

    Campbell, Ronnie (Blyth V)

    Flynn, Paul (Newport W)

    Caplin, lvor

    Foster, rh Derek

    Casale, Roger

    Foster, Michael (Worcester)

    Cawsey, Ian (Brigg)

    Foulkes, rh George

    Challen, Colin

    Gapes, Mike (Ilford S)

    Chapman, Ben (Wirral S)

    Gardiner, Barry

    Chaytor, David

    Gerrard, Neil

    Clark, Dr. Lynda (Edinburgh Pentlands)

    Gibson, Dr. Ian

    Gilroy, Linda

    Clark, Paul (Gillingham)

    Godsiff, Roger

    635

    Goggins, Paul

    Mann, John (Bassetlaw)

    Griffiths, Jane (Reading E)

    Marshall, David (Glasgow Shettleston)

    Griffiths, Nigel (Edinburgh S)

    Grogan, John

    Marshall, Jim (Leicester S)

    Hain, rh Peter

    Marshall-Andrews, Robert

    Hall, Mike (Weaver Vale)

    Martlew, Eric

    Hamilton, David (Midlothian)

    Meacher, rh Michael

    Hanson, David

    Michael, rh Alun

    Harris, Tom (Glasgow Cathcart)

    Miliband, David

    Havard, Dai (Merthyr Tydfil & Rhymney)

    Miller, Andrew

    Moffatt, Laura

    Hendrick, Mark

    Moonie, Dr. Lewis

    Hepburn, Stephen

    Morley, Elliot

    Heyes, David

    Murphy, Denis (Wansbeck)

    Hood, Jimmy (Clydesdale)

    Murphy, Jim (Eastwood)

    Hope, Phil (Corby)

    Naysmith, Dr. Doug

    Hopkins, Kelvin

    Norris, Dan (Wansdyke)

    Howarth, rh Alan (Newport E)

    O'Brien, Bill (Normanton)

    Howarth, George (Knowsley N & Sefton E)

    O'Hara, Edward

    Organ, Diana

    Hoyle, Lindsay

    Osborne, Sandra (Ayr)

    Hughes, Beverley (Stretford & Urmston)

    Palmer, Dr. Nick

    Perham, Linda

    Hughes, Kevin (Doncaster N)

    Pickthall, Colin

    Humble, Mrs Joan

    Pike, Peter (Burnley)

    Hurst, Alan (Braintree)

    Plaskitt, James

    Iddon, Dr. Brian

    Pond, Chris (Gravesham)

    Illsley, Eric

    Prentice, Ms Bridget (Lewisham E)

    Jackson, Glenda (Hampstead & Highgate)

    Prentice, Gordon (Pendle)

    Jackson, Helen (Hillsborough)

    Prescott, rh John

    Jamieson, David

    Prosser, Gwyn

    Jenkins, Brian

    Purchase, Ken

    Johnson, Alan (Hull W)

    Quin, rh Joyce

    Johnson, Miss Melanie (Welwyn Hatfield)

    Quinn, Lawrie

    Rammell, Bill

    Jones, Helen (Warrington N)

    Rapson, Syd (Portsmouth N)

    Jones, Lynne (Selly Oak)

    Raynsford, rh Nick

    Jowell, rh Tessa

    Reed, Andy (Loughborough)

    Joyce, Eric (Falkirk W)

    Reid, rh Dr. John (Hamilton N & Bellshill)

    Kaufman, rh Gerald

    Keeble, Ms Sally

    Robertson, John (Glasgow Anniesland)

    Khabra, Piara S.

    Kidney, David

    Roche, Mrs Barbara

    Kilfoyle, Peter

    Rooney, Terry

    King, Andy (Rugby)

    Ross, Ernie (Dundee W)

    King, Ms Oona (Bethnal Green & Bow)

    Ruddock, Joan

    Ryan, Joan (Enfield N)

    Knight, Jim (S Dorset)

    Salter, Martin

    Kumar, Dr. Ashok

    Savidge, Malcolm

    Ladyman, Dr. Stephen

    Sawford, Phil

    Lammy, David

    Sedgemore, Brian

    Lazarowicz, Mark

    Sheerman, Barry

    Lepper, David

    Sheridan, Jim

    Levitt, Tom (High Peak)

    Simon, Siôn (B ham Erdington)

    Lewis, Ivan (Bury S)

    Simpson, Alan (Nottingham S)

    Lewis, Terry (Worsley)

    Singh, Marsha

    Linton, Martin

    Skinner, Dennis

    Lloyd, Tony (Manchester C)

    Smith, rh Andrew (Oxford E)

    Lyons, John (Strathkelvin)

    Smith, Geraldine (Morecambe & Lunesdale)

    McAvoy, Thomas

    McCabe, Stephen

    Smith, John (Glamorgan)

    McCafferty, Chris

    Smith, Llew (Blaenau Gwent)

    McDonagh, Siobhain

    Soley, Clive

    MacDonald, Calum

    Spellar, rh John

    McDonnell, John

    Squire, Rachel

    MacDougall, John

    Starkey, Dr. Phyllis

    McFall, John

    Steinberg, Gerry

    McIsaac, Shona

    Stevenson, George

    McKechin, Ann

    Stewart, David (Inverness E & Lochaber)

    McKenna, Rosemary

    Mactaggart, Fiona

    Stoate, Dr. Howard

    McWalter, Tony

    Straw, rh Jack

    Mahmood, Khalid

    Stringer, Graham

    Mahon, Mrs Alice

    Sutcliffe, Gerry

    Mallaber, Judy

    Taylor, rh Ann (Dewsbury)

    636

    Taylor, David (NW Leics)

    Whitehead, Dr. Alan

    Thomas, Gareth (Clwyd W)

    Williams, rh Alan (Swansea W)

    Tipping, Paddy

    Wills, Michael

    Todd, Mark (S Derbyshire)

    Winnick, David

    Touhig, Don (lslwyn)

    Winterton, Ms Rosie (Doncaster C)

    Trickett, Jon

    Truswell, Paul

    Wood, Mike (Batley)

    Turner, Dennis (Wolverh?ton SE)

    Woodward, Shaun

    Turner, Neil (Wigan)

    Woolas, Phil

    Twigg, Derek (Halton)

    Wright, Tony (Cannock)

    Vis, Dr. Rudi

    Wyatt, Derek

    Ward, Claire

    Wareing, Robert N.

    Tellers for the Ayes:

    Watson, Tom (W Bromwich E)

    Gillian Merron and

    Watts, David

    Mr. John Heppell

    NOES

    Ainsworth, Peter (E Surrey)

    Gillan, Mrs Cheryl

    Allan, Richard

    Goodman, Paul

    Atkinson, David (Bour'mth E)

    Gray, James (N Wilts)

    Atkinson, Peter (Hexham)

    Grayling, Chris

    Bacon, Richard

    Green, Damian (Ashford)

    Baldry, Tony

    Green, Matthew (Ludlow)

    Baron, John (Billericay)

    Greenway, John

    Barrett, John

    Grieve, Dominic

    Beith, rh A. J.

    Hague, rh William

    Bellingham, Henry

    Hammond, Philip

    Bercow, John

    Hancock, Mike

    Beresford, Sir Paul

    Harris, Dr. Evan (Oxford W & Abingdon)

    Blunt, Crispin

    Boswell, Tim

    Hawkins, Nick

    Bottomley, Peter (Worthing W)

    Hayes, John (S Holland)

    Bottomley, rh Virginia (SW Surrey)

    Heath, David

    Heathcoat-Amory, rh David

    Brady, Graham

    Hoban, Mark (Fareham)

    Brake, Tom (Carshalton)

    Horam, John (Orpington)

    Brazier, Julian

    Howard, rh Michael

    Breed, Colin

    Jack, rh Michael

    Brooke, Mrs Annette L.

    Jenkin, Bernard

    Browning, Mrs Angela

    Kennedy, rh Charles (Ross Skye & Inverness)

    Bruce, Malcolm

    Burns, Simon

    Key, Robert (Salisbury)

    Burt, Alistair

    Knight, rh Greg (E Yorkshire)

    Calton, Mrs Patsy

    Lamb, Norman

    Cameron, David

    Lansley, Andrew

    Campbell, rh Menzies (NE Fife)

    Laws, David (Yeovil)

    Carmichael, Alistair

    Leigh, Edward

    Cash, William

    Lewis, Dr. Julian (New Forest E)

    Chapman, Sir Sydney (Chipping Barnet)

    Liddell-Grainger, Ian

    Lidington, David

    Chope, Christopher

    Llwyd, Elfyn

    Clappison, James

    Loughton, Tim

    Collins, Tim

    Luff, Peter (M-Worcs)

    Cormack, Sir Patrick

    McIntosh, Miss Anne

    Cotter, Brian

    Maclean, rh David

    Curry, rh David

    McLoughlin, Patrick

    Davey, Edward (Kingston)

    Malins, Humfrey

    Davis, rh David (Haltemprice & Howden)

    Mawhinney, rh Sir Brian

    Mercer, Patrick

    Djanogly, Jonathan

    Mitchell, Andrew (Sutton Coldfield)

    Duncan, Alan (Rutland)

    Duncan Smith, rh lain

    Moore, Michael

    Evans, Nigel

    Moss, Malcolm

    Fabricant, Michael

    Norman, Archie

    Fallon, Michael

    Oaten, Mark (Winchester)

    Field, Mark (Cities of London & Westminster)

    O'Brien, Stephen (Eddisbury)

    Osborne, George (Talton)

    Flook, Adrian

    Page, Richard

    Forth, rh Eric

    Paice, James

    Foster, Don (Bath)

    Pickles, Eric

    Fox, Dr. Liam

    Price, Adam (E Carmarthen & Dinefwr)

    Gale, Roger (N Thanet)

    Garnier, Edward

    Prisk, Mark (Hertford)

    George, Andrew (St Ives)

    Redwood, rh John

    Gibb, Nick (Bognor Regis)

    Rendel, David

    Gidley, Sandra

    Robathan, Andrew

    637

    Robertson, Laurence (Tewk'b'ry)

    Thomas, Simon (Ceredigion)

    Roe, Mrs Marion

    Tyler, Paul (N Cornwall)

    Rosindell, Andrew

    Tyrie, Andrew

    Ruffley, David

    Viggers, Peter

    Russell, Bob (Colchester)

    Walter, Robert

    Sanders, Adrian

    Waterson, Nigel

    Shephard, rh Mrs Gillian

    Watkinson, Angela

    Simmonds Mark

    Webb, Steve (Northavon)

    Simpson, Keith (M-Norfolk)

    Whittingdale, John

    Smith, Sir Robert (W Ab'd'ns & Kincardine)

    Widdecombe, rh Miss Ann

    Wiggin, Bill

    Williams, Roger (Brecon)

    Soames, Nicholas

    Willis, Phil

    Spink, Bob (Castle Point)

    Wilshire, David

    Spring, Richard

    Yeo, Tim (S Suffolk)

    Stunell, Andrew

    Young, rh Sir George

    Taylor, Ian (Esher)

    Taylor, John (Solihull)

    Tellers for the Noes:

    Taylor, Matthew (Truro)

    Mr. Mark Francois and

    Taylor, Sir Teddy

    Mr. John Randall

    Question accordingly agreed to.
    Lords amendment disagreed to.
    It being more than two and a half hours after the commencement of proceedings on the programme order, MR. DEPUTY SPEAKER proceeded to put forthwith the Questions necessary for the disposal of business to be concluded at that hour, pursuant to Orders [28 June 2001, 29 October 2002 and this day].
    Lords amendment No. 19 disagreed to.
    Lords amendment No. 20 and Government amendments (a) and (b) thereto and consequential Government amendments (c), (d), (e) and (f) agreed to.

    Clause 3

      DUTY TO DETERMINE AFFORDABLE BORROWING LIMIT
      Lords amendment No. 1
      Mr. Raynsford: I beg to move, That this House agrees with the Lords in the said amendment.
      Mr. Deputy Speaker (Sir Alan Haselhurst): With this it will be convenient to consider Lords amendments Nos. 4 and 5.
      Mr. Raynsford: These Government amendments to clauses 3, 15 and 21 were made on Third Reading in the other place. All three clauses include powers for the Secretary of State to make regulations referring to published codes of practice and requiring authorities to have regard to them. [Interruption.]
      Mr. Deputy Speaker: Order. I am sorry to interrupt the Minister. Hon. Members who are not taking part in the debate should leave quickly and quietly, as they are disturbing the order of the House.
      Mr. Raynsford: Thank you, Mr. Deputy Speaker.
      The provisions are crucial to our aim of basing the new capital finance system on independent codes of practice and accounting standards. The Lords amendments will ensure that any revised editions of such codes are covered by the regulations.
      Clause 3 will establish the prudential borrowing system. Authorities will be required to determine their own affordable borrowing limits and in doing so may be required to have regard to codes of practice specified in
      638
      regulations. We have of course specified the prudential code for capital finance in local authorities, which is being specially prepared by the Chartered Institute of Public Finance and Accountancy.
      The regulations under clauses 15 and 21 also refer to CIPFA codes. Clause 15 provides a power to specify general guidance and, in this case, we have named CIPFA's Treasury management code. The code is already widely used by authorities and sets out practice in areas such as investment and the management of debt.
      Clause 21 deals with the accounting practices to be followed by authorities. It will enable the Secretary of State to specify proper practices, and the regulations identify two other well-established CIPFA codes—the statement of recommended practice and the best value accounting code—which together lay down the basis of local government financial management and accounting.
      We always intended that the regulations should refer automatically to new editions of those codes as they were published. It would be undesirable to have to make amended regulations whenever one of the codes was reissued, as that could create uncertainty about the legal status of a new edition of a code. Also, the need for each revised edition to be approved by Government might cast doubt upon our commitment to accounting practice as the basis for the capital finance system. Our approach in that respect has the full support of local government and was endorsed in Committee.
      On reviewing the drafting of those three clauses, we considered that the treatment of new editions should be clarified. These technical amendments therefore expand each clause to state that the references to codes are not limited to the existing editions.
      Mr. Hammond: I wonder whether I am the only hon. Member who is completely unenlightened by the reference, used in the title of this group in the provisional groupings list, to "ambulatory references" in part 1 regulations. I have no idea why a provision that allows a regulation to refer to future versions, rather than just the existing version, should be thought an ambulatory reference, but, no doubt, some civil servant with a first class honours degree—in classics, probably—was responsible for the title and will enlighten the Minister in due course, and perhaps he will then enlighten me when the opportunity arises.
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      The amendments clarify the power to make regulations. The Minister talked about clarifying the scope of the regulations, but the regulation was clear. The draft regulation was already before the Committee when we looked at the matter, and it clearly included the phrase:
      "shall have regard to any current prudential code for capital finance".

      The Minister is therefore clarifying the power of the Secretary of State to make the regulation that he intends to lay by ensuring that the Bill says clearly that a regulation can embrace future changes to a code. The Minister played down the issue and said that the Government always intended it in that way.

      639
      The Minister's noble Friend Lord Bassam said in the other place that the amendment merely clarified the original intention. I must question slightly that interpretation of events. It is my understanding that the Minister of State is the lead policy Minister in this area. We had an exchange in Committee in which the Minister said in answer to a question:
      "The code will be issued under regulation, so a revision to the code would require the same procedure."
      I queried that response, saying:
      "as the CIPFA code was introduced by regulation, it would be appropriate for any amendment to that code to be introduced by regulation. Surely, that is incorrect, because regulation 2 states that a local authority should have regard to any current prudential code for capital finance … I understand that to mean that if CIPFA revises its code, in the absence of a regulation de-specifying it, that code will automatically be incorporated."

      The Minister, who has lead policy responsibility, replied:
      "The hon. Gentleman may well be right. I will look further into the matter and give him a detailed response."—[Official Report, Standing Committee A, 21 January 2003; c. 63–64.]
      That suggests to me that it is not clear that it was always the Government's intention.
      I am happy, however, that we now have on the same page the idea that CIPFA will define from day to day the code of practice that is in force and to which regard must be had, although of course we would expect CIPFA to liaise with the Government to ensure that the code met everybody's requirements. Via this rather tortuous ambulatory route, however, we are at last back to where I thought we were in Committee. I am pleased that the Secretary of State's power to make the regulation that he intends to make is now enshrined in the Bill beyond any reasonable doubt, and we have no problem with the amendment.
      Matthew Green: This amendment is a straightforward clarification and makes a great deal of sense. I see little point in saying a great deal more about it other than that we support it.
      Mr. Redwood: I hope that when the Minister replies he will clarify some of the uncertainties in my mind and in the minds of some of those who work in local government.
      I understand that my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) agrees that this legislation should allow the House to grant that local authorities must have regard to regulations and guidance that have not yet been formulated, and I understand that the Minister wants to avoid coming back to this House in the event that guidance needs to change. The power that we are granting is therefore quite wide-ranging. Before the House grants the power, would it not be wise to make sure that we know what the Minister thinks "having regard to" means? How strong is it? Is the Minister saying to local government that it should read it, discuss it and put something on file to show that it knows it exists, but that it does not have to follow every dot and comma—that it can exercise its judgment? Alternatively, are the Government saying that under this wide-ranging power they will in future be
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      able to set out prescriptive guidance that effectively gives them detailed control over important parts of local authority activity?
      Mr. Hammond: My right hon. Friend probably knows from having looked at the debates on this subject in the other place that Lord Simon of Glaisdale was quoted as opining that the phrase "having regard to" meant precisely nothing.
      Mr. Redwood: I did not know that, but it is one possible interpretation. I suspect that with this Government it means rather more than nothing. I think what the Government have in mind is to have more and more influence over local government by means of guidance. We are asked in these amendments to strengthen the Government's hand, and to bind local government in this rather vague way in three different types of guidance, and we are asked by the amendments to say that any future guidance should be covered by this legislation, even though the House does not have the advantage of foresight and does not know exactly what future guidance that might be. It is an all-embracing power, if the Government wish to use it in that way. I heard the Minister in the previous debate make it clear that he would like to be a liberalising Minister, leaving local government freer. That is where I become suspicious.
      It would help the debate on these amendments if the Minister were to make it clear that a local council can properly have regard to guidance but ignore it—that it can properly say that it has met and considered it, that it thinks that it is very interesting and fine guidance, but that on this occasion it wishes to deviate from it, ignore it or do something better, because it believes that it is in the interests of its council tax payers and of the public that it serves that it does not follow the guidance on this occasion. If the Minister is saying that "having regard to" is strong, and that all the actual and future guidance must be followed almost to the letter, it is a prescriptive measure, and I would not share my hon. Friend's ease and comfort in welcoming it.
      Mr. Raynsford: We have had a short and interesting debate. I am pleased to tell the hon. Member for Runnymede and Weybridge (Mr. Hammond) that the word "ambulatory" was inserted at the instigation of parliamentary counsel, who clearly understand the significance of these forms of Latin, which, I suspect, elude most Members. As the hon. Gentleman rightly pointed out, the need for further regulations was debated in Committee, and it is true that as a result of reflecting on the exchanges that we had in Committee, we felt that there was a case to clarify and to take beyond all reasonable doubt the fact that future editions of codes would be covered without the need for new regulations, which I feared might be necessary. I am grateful to the hon. Gentleman for highlighting the point in Committee, and I am pleased that he agrees with the approach that we have now adopted.
      The right hon. Member for Wokingham (Mr. Redwood) raised the interesting question of the meaning of "have regard to". He will know as a former Secretary of State that a great deal of government is based on the concept of having regard to. He will know that the nuance of that phrase lies between the absolute

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      requirement of a direction, which requires someone to do something, and the entire discretion to do whatever they wish. Clearly, it would not be appropriate for an authority to act without considering the message contained within the relevant guidance. It is generally understood good practice that when an authority that is subject to a duty to have regard to something chooses not to follow any specific advice, it must have good reasons for doing so. That is normally understood. It does not, however, require the authority in all circumstances to follow the guidance precisely to the letter if it has good reason for departing from it.
      That is my understanding of the general framework, and I notice that the right hon. Member for Wokingham is nodding and probably has a similar understanding of the force of that particular phrase. It is certainly our wish that this guidance should be considered carefully by local authorities, not as a straitjacket but as helpful advice to ensure good administration. On that understanding, I hope that the hon. Member for Runnymede and Weybridge and his right hon. and hon. Friends can agree to the amendments. I am grateful for the support of the Liberal Democrats.
      Lords amendment agreed to.

    Clause 8

      CONTROL OF CREDIT ARRANGEMENTS
      Lords amendment No. 2
      Mr. Raynsford: I beg to move, That this House agrees with the Lords in the said amendment.
      The amendment relates to clause 8, which deals with credit arrangements such as leasing and hire purchase contracts. The clause ensures that such transactions can be brought under the prudential limit and any national limit. The amendment removes the power in clause 8(4) to impose additional restrictions on credit arrangements. The only restriction that we had in mind was to stop the use of credit for anything other than acquiring capital assets. We now accept that accounting practice offers sufficient safeguards against such practices. Accordingly, clause 8(4) is unnecessary.
      Mr. Hammond: Clause 8(4) gives a broad power to the Secretary of State to vary by regulations the restrictions on local authorities in relation to credit arrangements. Regulation 7 is the one that the Government have in mind for this case and it was laid in draft before the Commons Committee that considered the Bill. It is clear that the basic purpose is to exempt private finance initiative projects from the ban on credit arrangements that would otherwise prevent local authorities from using arrangements that are a hybrid of revenue and capital provision to circumvent the prudential code restrictions on borrowing or other credit arrangements.
      In Committee, we moved an amendment calling for the deletion of clause 8(4) but the then Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister, the hon. Member for Shipley (Mr. Leslie), made an appearance at the Dispatch Box and vigorously resisted the deletion of the subsection. A pattern will emerge in our debates. It will become apparent to the
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      Minister which of clauses that were vigorously defended were later abandoned. The Under-Secretary replied to the debates on them.
      We argued that it was wrong to put a general catch-all subsection in a clause that specifies precise limitations. We lost the vote. We moved the same amendment in Committee in the other place and, once again, the Government rejected our proposal to delete clause 8(4). However, in time-honoured fashion, the Government moved the exact same amendment on Report. They usually try to rework Opposition amendments by changing a few words so that they can claim that they have at least contributed something. However, this amendment was rather concise and Precise and it was not possible for the Government to create that smokescreen.
      This case should provide us with some confidence in the system. We raise the issue once and one Minister tells us that we are talking rubbish and that it is essential for the future of democracy and civilised government as we know it that the provision remains in the Bill. We raise it a second time and a different Minister in another place says precisely the same thing. Then the Government realise that we were right all along. That tends to suggest that the system works even if the Ministers operating it are thick-skinned.
      The amendments served to focus the Government clearly on the issues, and they have decided that not only the subsection but draft regulation 7 are unnecessary. We strongly support the view that local authority finances should follow generally accepted accounting practice and that it is unhelpful for the Secretary of State to have the power to impose, by regulation, additional restrictions over and above those that generally accepted accounting practice would dictate.
      The Minister in the other place said that regulation 7 was unnecessary because of generally accepted accounting practice as it would ensure that credit transactions of the type of which the Government are so afeared would not be used for revenue items. That is fine; we have no problem with that. We have got what we wanted, but perhaps I have missed something. I am left asking the Minister, "What about PFI projects?"
      6.45 pm
      I understand that the original purpose of regulation 7 was to allow PFI projects to fall within the permitted category for credit arrangements. It was never clear to me quite what that would mean. It seemed to me at the time that the correct accounting procedure for a PFI project would be to distinguish the capital element of a PFI charge from the finance cost element and any service provision elements and that, in the absence of the regulation, there would be no difficulty in dealing with PFI projects. In a practice that is well understood to accountants and those who prepare business accounts all the time, the different components of a single charge would be analysed to their separate heads and dealt with accordingly.
      As I read it, the Government's proposed regulation 7 would have exempted PFI projects from the restriction on credit arrangements. My understanding was that they were effectively to be given an advantage over other forms of arrangement and were to be allowed to go through without being treated as an entry against a

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      borrowing limit in the full amount of the total cost of the PFI charges under the project. What is the position now that that draft regulation has been dropped?
      Clause 8(2)(a) still provides that the cost of the arrangement—I take it that this would now include a PFI arrangement—is to be set against borrowing limits. It does not say anything about the capital element of the cost or the capital and finance charge element. It refers to
      "the cost of the arrangement".
      In a PFI transaction, my understanding is that that would be the total stream of payments to be made under the PFI arrangement. That is the wrong way to go about things from the standard accounting practice point of view if the stream of payments represents the provision of a capital asset, the financing charges for that capital asset and the provision of some revenue services that are being provided, such as building maintenance in a classic property PFI that would normally be a revenue charge for the account of the occupier.
      Adopting the generally accepted accounting practice approach should mean that the cost of the arrangements should be apportioned between capital financing and revenue costs. However, my understanding is that, without the benefit of regulation 7, we are back to the position in which the whole PFI charge would be charged against the borrowing limit of the authority. That seems perverse. Does the Minister understand that to be the case? What does he understand regulation 7 would have done in such PFI arrangements?
      The Minister who moved the amendment in the other place said that the Government had satisfied themselves that the regulation, and thus the power to make it, were not necessary because of generally accepted accounting practice and that the matter would be taken care of. He did not deal with the question whether clause 8(2)(a) will effectively intervene to disapply such accounting practice. The Government might be intending to use their powers under clause 8(3) to make further regulations that we have not yet seen to resolve the matter. They clearly could make powers under clause 8(3) to determine what would and would not count as the cost of a credit arrangement so that only part of PFI charge fell into the calculation of the cost of the credit arrangement. It would help the House to hear an explanation.
      To summarise, the question is whether PFI projects are now to be treated as all other credit arrangements, whether that means that all costs will be applied against the borrowing limits and whether regulation 7 was designed to prevent the outcome that all PFI charges would be regarded as charges against borrowing limits. If the Minister is now relying on accounting practice to prevent avoidance, which would generally seem to be the correct approach, why will regulation 3 remain in the draft regulations— and as far as I am aware he has no intention of dropping it? It says:
      "A lease which, apart from this regulation, would not be a credit arrangement shall be treated as falling within section 7(2)(a)".

      In Committee, I drew attention to the similarities of leases and PFI arrangements and asked why the Government were exempting PFI but not leases. They are changing the arrangements for PFI by deleting the power to make regulation 7, so I ask again why leases should be treated differently and why the Minister
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      cannot rely on generally accepted accounting practices to prevent any abuse of a lease mechanism to provide a covert route for financing revenue expenditure.
      Of course I support the amendment because I moved it in Committee. However, I am puzzled about the Government's rationale for agreeing to it now and abandoning regulation 7 without addressing the issues dealt with by regulation 3. Given the effect of clause 8(2)(a), it is not clear that regulation 7 has become redundant for the purposes of avoiding an unfair treatment of costs under PFI schemes, unless the Minister's explanation is that he intends to make regulations under clause 8(3) to clarify the treatment of PFI charges.
      Matthew Green: We have discovered a new Tory tactic: they say, "If you score a victory, milk it." However, to take things a bit more seriously, we welcome the removal of clause 8(4). It would have given the Secretary of State apparently wide-ranging powers, although I know the Minister said that they were unlikely to be used in such a way. We welcome the amendment because there are too many occasions on which the Secretary of State accrues powers and too few occasions when such powers are removed, so this is a rare and welcome occasion.
      Mr. Raynsford: I am delighted that there is broad support for the amendment, which simply reflects our growing appreciation of worries that were voiced during the passage of the Bill in both Houses about clause 8(4) and the scope for achieving by other means the policy objectives for which we had framed the provision. Our overall objective has been to maintain the prohibition on using credit for anything other than the acquisition of capital assets. Long-term credit such as borrowing should be used only to meet capital needs and not to pay for running costs. Such a restriction has existed since 1990 and currently exists in primary legislation, but it has given rise to technical difficulties. We therefore concluded that a rule could be dealt with more flexibly in regulations, so we drafted clause 8(4) to give us the power to make such regulations. However, the debates in this House and the Grand Committee in the other place convinced us that there were genuine concerns about the measure because it was drafted in broad terms and could conceivably have been used in ways that were different from what we intended.
      Of course, we have tried to base the capital regime in the Bill on accounting principles as much as possible. We therefore checked whether modern accounting practice might offer a sufficient safeguard against the use of credit for revenue purposes. After careful consideration, we concluded that there was such an accounting safeguard. An authority that received a form of service and had the fees deferred for several years would be required to make a charge to revenue during those years, so there would be no perverse incentive to acquire services on credit. That means that regulation 7 may be deleted from the draft capital finance regulations, and as the power to make such a regulation is no longer needed, clause 8(4) may be removed.
      I shall now address the other issues raised by the hon. Member for Runnymede and Weybridge (Mr. Hammond). I make it clear that private finance initiative projects will follow accounting practice. If the deals are

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      off balance sheet, they will not score as credit, and, conversely, if they are on balance sheet, they will score as credit—that is the key distinction.
      The issue was debated in detail for some time in the other place at the instigation of Lord Hanningfield. Our understanding is that accounting practice is highly relevant to PFI and that we can achieve everything necessary by using regulation 5 in the draft capital finance regulations, which deals with PFI contracts, by implication, and other forms of long-term credit. Its effect is that for the purpose of the new capital finance system, such transactions should be treated in accordance with proper accounting practice. If a contract has to be recognised on a local authority's balance sheet, it must be treated exactly like borrowing and count against the borrowing limits that apply to the authority. If it does not fall to be recognised on the balance sheet, it will not score as a credit agreement and, therefore, will not count against an authority's borrowing limits.
      Mr. Hammond: The Minister has partly addressed my worry, but I was concerned that there seemed to be an all-or-nothing approach: a PFI charge must count either wholly against a borrowing limit or not at all. I am not an accountant—I usually stand up to say that I am not a lawyer—but it is likely that in a complex PFI deal, part of the charge would fall to be treated as a balance sheet item to finance a capital asset and part would fall to be treated as a revenue item. Does the Minister acknowledge that that could be proper practice?
      Mr. Raynsford: I am in the same position as the hon. Gentleman because I am not an accountant. I have to ask for advice on such matters and I am told that PFI revenue costs are treated as part of the total package, which is what accounting practice requires. Revenue and capital costs cannot be split up in a proper PFI deal.
      Mr. Hammond: Is the Minister concerned that that will create a perverse incentive not to do PFI deals and that such deals will become less attractive to local authorities, which would go against the grain of what the Chancellor has tried to encourage? Was the purpose of regulation 7, which will not be made, to exempt PFI transactions from counting against borrowing limits altogether because that appeared to be the case?
      Mr. Raynsford: No. As I have already explained, the purpose of regulation 7 was to provide a safeguard against the possible perverse treatment of expenditure for revenue purposes under the capital framework, which would not be appropriate. There are separate rulings on PFI and I have spelled out my understanding of the treatment of PFI projects. I do not believe that there will be a perverse incentive not to undertake PFI projects, although if a local authority undertakes a PFI project that falls on balance sheet, it will have to take account of the obvious consequences for its finances, which is right and proper.
      The hon. Member for Runnymede and Weybridge also asked about regulation 3, which relates to leases. We conclude that the regulation will not be needed, so it
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      will be deleted. Accountancy practice supplies all that is required to provide necessary safeguards. With those assurances, I hope that the House will support the amendment.
      Lords amendment agreed to.
      Lords amendments Nos. 4 and 5 agreed to.

    Clause 31

      POWER TO PAY GRANT
      Lords amendment No. 7.
      Mr. Raynsford: I beg to move, That this House agrees with the Lords in the said amendment.
      Mr. Deputy Speaker: With this it will be convenient to consider Lords amendments Nos. 8 to 12.
      Mr. Raynsford: Lords amendment No. 11 will remove clause 32, which would enable a Minister or the National Assembly for Wales to seek any information necessary when considering the award of a grant to an authority under clause 31. It will also allow Ministers to require retrospective information on the way in which a grant has been used. Clause 32 provides that a local authority must supply such information. In the light of concerns expressed in Committee and in another place about the wide scope of that power, we agreed to look at it again.
      7 pm
      By contrast, clause 31(3) allows conditions to be attached to the payment of grant. Such a condition could be that the receiving authority must supply certain information, if ever necessary. That power is much more limited in scope, as it is linked to the actual payment of the grant. It is also entirely in keeping with our policy of removing unnecessary restrictions and burdens on local authorities. The provision makes a separate clause unnecessary. To enable the National Assembly for Wales to use the grant-making power, it makes sense to remove clause 34 and to include its provisions in clause
      31.
      Mr. Hammond: The deletion of clause 32 is welcome. It was an unnecessary additional power for the Secretary of State to require information to be delivered by local authorities. As Lord Rooker said in the other place, and the Minister repeated, there are other ways of securing information, if it is really required, after a grant is paid rather than at the time when the Secretary of State is merely contemplating payment under the powers in clause 31(4). We have no problem with that.
      Perhaps I am having a bad day, but I have a little more difficulty in understanding the logic of the Welsh provisions. Lord Rooker told the House of Lords that because of the deletion of clause 32 there was no longer any need for clause 34, which, in respect of Welsh local authorities, extended the definition of "Minister" to include the Welsh Assembly. If the essentially technical changes that remove clause 34, and insert the relevant amendments in clause 31, are intended to tidy up the Bill so that there is not a separate reference to Wales in

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      clause 34, I have no objection to them—but that is not what Lord Rooker and the Minister say. They say that it is a change consequential upon the deletion of clause 32—in other words, that clause 34 is no longer needed owing to the deletion of clause 32. I am afraid that I have not been able to work out how the one follows logically from the other. Will the Minister explain how the wholly laudable decision to drop clause 32 makes clause 34 redundant in such a way as to make the other amendments consequential on the deletion of clause 32 instead of mere redrafting and tidying amendments? As I cannot see the chain of causality, I am worried that I may be missing something important. If so, no doubt the Minister will enlighten me.
      Matthew Green: We welcome the removal of clause 32, which was triggered by amendments tabled by my hon. Friend the Member for Kingston and Surbiton (Mr. Davey). The clauses provided for powers on the requiring of information that, with the benefit of time over the summer, the Minister rightly decided were not needed. The Welsh provisions are merely a tidying exercise; as such, we are happy with them.
      Mr. Raynsford: The hon. Member for Ludlow (Matthew Green) is right that this is purely and simply a tidying measure in respect of Wales.
      I can understand why the hon. Member for Runnymede and Weybridge is confused about the interrelationship of references to a Minister of the Crown and to the National Assembly for Wales in the four clauses, so I shall try to clarify the consequences of the amendments. Originally, clause 31 gave powers for Ministers to pay grants to a local authority, clause 32 gave additional powers for Ministers to require information in that respect, and clause 34 extended references to a Minister to include the National Assembly for Wales. The new provisions of clause 31 make it clear that Ministers can make grants to local authorities in England and that Ministers or the National Assembly for Wales may pay grant to local authorities in Wales. There is therefore no need for the separate provisions of clause 34, which essentially imply that a reference to a Minister should be taken to cover the National Assembly for Wales. I hope that that clarifies the provision and puts the hon. Gentleman's mind at rest.
      Mr. Hammond rose—
      Mr. Raynsford: I fear that it does not.
      Mr. Hammond: If the Minister is acknowledging that the demise of clause 34 is in no way consequent upon the demise of clause 32, I will be happy. However, Lord Rooker clearly stated that clause 34 was no longer necessary as a result of the deletion of clause 32. It seems to me that clause 34 and the changes to clause 31 are self-contained, but clause 32 is a different matter.
      Mr. Raynsford: I thought I had explained that the two were interdependent. We decided that clause 32 could be removed from the Bill only when we were satisfied that the powers under clause 31, specifically subsection (4), would enable Ministers or the National Assembly for Wales to obtain the information necessary to satisfy
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      them when making a grant. Clause 34 extended to the Welsh Assembly the powers that were otherwise granted only to the Minister. That is the nature of the interrelationship.
      I accept that it is a complex matter, and I understand the hon. Gentleman's difficulties, but I hope that he agrees that the outcome is better. The change reduces by two the number of clauses, reduces an unnecessary burden on local authorities and streamlines the procedure for ensuring that grants can be paid in a suitable framework with the ability of the grant-giving body—a Minister or the National Assembly for Wales—to obtain the information that it needs to satisfy himself or itself that the grant will be spent for the purposes for which it is made. I hope that the hon. Gentleman agrees and that the amendments can be accepted.
      Lords amendment agreed to.
      Lords amendments Nos. 8 to 12 agreed to.

    Clause 49

      BID REVENUE ACCOUNT
      Lords amendment No. 13
      Phil Hope: I beg to move, That this House agrees with the Lords in the said amendment.
      Mr. Deputy Speaker: With this, it will be convenient to consider amendments Nos. 14 to 17, 22 to 25, 29, 30, 33 to 35, 45, 46, 50 and 55.
      Phil Hope:: This large group of amendments is significant because it implements recommendations made in the 16th report of the Delegated Powers and Regulatory Reform Committee. As such, I am sure that the whole House will welcome it. We accepted the Committee's recommendations on business improvement districts; provision of information in respect of non-domestic rates; adaptation of enactments with regard to housing revenue accounts; charging and trading; and clause 122, which makes standard provision for orders and regulations in the Bill.
      Mr. Hammond: Ministers have developed a new technique—rapid fire.
      This large group of amendments reflects the observations of the Delegated Powers and Regulatory Reform Committee, an admirable body that has helped to ensure that legislation avoids some of the pitfalls that it can often encounter as a result of the inadequacy of the time that we have to scrutinise Bills in detail in Committee. I hope that the Government are learning how to filter out some of the unnecessary and inappropriate provisions at an earlier stage so that they do not have to wait until the Delegated Powers and Regulatory Reform Committee, rather publicly, recommends that they do so. If we see a reduction in these catch-all clauses in future and more requirements for affirmative resolutions where it is appropriate in the original drafts of Bills, that will be a good thing.
      Lords amendment No. 13 removes the odious provision in clause 49 that allows regulations under subsection (4)—I am about to fall into the trap of which

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      I cautioned the Minister of using the wrong clause references because we are working with two different editions of the Bill. There is the Bill as it went from this place and the Bill as amended on Report in the House of Lords. The issue is the power that is being given by regulations to amend any enactment. There are always questions both in this place and in the other place about the use of secondary legislation to amend primary legislation. That has to be the position so long as our arrangements for scrutinising secondary legislation are such as they are. In this instance, however, we are discussing the breadth of the power. It is a power to amend any enactment past or future. In other words, no matter what a future Parliament were to legislate, the powers under this Act would enable a Secretary of State by statutory instrument to amend legislation in the interests of his regime under this regulation. It is absolutely right to remove that power.
      I must check my clause numbers and not go wrong again. If it is right to remove the provision at clause 49, why is it not also right to remove the provision at clause 58(2), where a similar provision to make regulations amending any enactment is included? Baroness Hanham moved an amendment in another place. We know that proceedings in the other place are slightly different from those in this place. Rather curiously, Lord Rooker, the Minister of State, signed my noble Friend's amendment. Later, they had a slight disagreement over whose amendment it was. Lord Bassam of Brighton seemed to take the slightly imperial view that notwithstanding the fact that my noble Friend had tabled the amendment, the mere fact that his noble Friend had signed it made it the Government's amendment.
      After Lady Hanham had thanked the Government for accepting her amendment, Lord Bassam said, rather churlishly:
      "We could haggle over whose it is, but I will not do so. We are grateful for the noble Baroness's support for our amendment"— [Official Report, House of Lords, 11 June 2003; Vol. 649, GC 142.]
      We could go on endlessly. The fact is that in the Bill the Government attempt to give themselves sweeping powers. The Delegated Powers and Regulatory Reform Committee cries foul and my noble Friend proposes an amendment to implement that illustrious Committee's recommendations. A Minister then signs the amendment and tries to claim the credit for amending the Bill. Perhaps the best solution would be if, next time, the Government try to anticipate the Delegated Powers and Regulatory Reform Committee and get the Bill right the first time round. Let them be a little more circumspect in the granting of sweeping powers to themselves.
      7.15 pm
      I move on to Lords amendments 14 to 16, and 29 and 30, which are consequential. We welcome the inclusion of a requirement for affirmative resolutions to confirm regulations made under these sections. This is a great step in the right direction. As the Minister knows, all Ministers who have to deal with the Opposition in Committee know that we greatly prefer affirmative procedures to negative procedures. All that we need to
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      do now is to implement an effective process for scrutiny of secondary legislation. At present, all a Minister has to do in a Standing Committee—I am not suggesting that the present Minister would do so—is to keep his head down and blather for 90 minutes, and then write a letter afterwards correcting what he said. I emphasise that I am not referring to the Minister of State. However, I could name Ministers who adopt that approach.
      Mr. John Horam: It is interesting to hear my hon. Friend. He is doing what perhaps the Minister should have done, which is to explain fully what is happening in this instance. Does not this example demonstrate the utility of the House of Lords not only in itself but in improving democracy in this place?
      Mr. Hammond: As my hon. Friend rightly observes, we have come to a sorry state of affairs when our democracy and our democratic scrutiny in this Chamber is so severely curtailed by the extensive use of timetable motions—
      Phil Hope: Oh, come on.
      Mr. Hammond: The Minister says, "Oh, come on." We have seen a classic example of that process this evening. It seems unlikely that the debate will reach the moment of interruption, yet we have been deprived of an opportunity to talk about quite an important set of amendments in respect of which there has been a meeting of minds. The Government have come some way to meeting the Opposition's proposals in the other place. There has been an informative and constructive suggestion, and we could have asked the Minister to explain further the Government's position. That debate will take place tomorrow in the other place because we have not been able to clarify exactly what the compromise means in this place.
      I think that all right hon. and hon. Members would recognise that this type of minor tidying and correction of a Bill—improving future scrutiny of secondary legislation—is increasingly being left to the House of Lords and the Select Committee on Delegated Powers and Regulatory Reform. I suspect that it is only a matter of time before the Government seek to impose the same kind of inflexibility on the House of Lords to curtail debate there, as they have already curtailed debate in this place.
      I am not sure that merely moving from a negative procedure to an affirmative procedure in relation to clause 58 answers or meets my objection to clause 58(2). Clearly, the affirmative procedure rather than the negative is always to be preferred.
      Amendment No. 17 removes the references in clauses 54 to 56 to the affirmative provision for Wales. It is clear that Wales cannot be subject to the regime because of devolution. Welsh matters that come properly within the jurisdiction of the Welsh Assembly cannot be subject to an affirmative resolution in this place. The effect of the resolution, however, is to deny to Welsh business ratepayers the additional protection that the affirmative procedure provides in respect of any modifications that are proposed by the Secretary of State in England to their English counterparts. It may be that the Minister can clarify the procedure in Wales.

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      Welsh Assembly regulations are not even subject to the negative procedure. It appears, therefore, that there would be a serious lack of scrutiny in respect of Wales I do not claim to be an expert on the procedures of the Welsh Assembly. Perhaps it has procedures in place that give effective scrutiny of regulatory proposals by the Executive; if so, there is no mention of them in the Bill. I would be interested to know what the procedures are.
      Mr. Raynsford: It is a devolved matter.
      Mr. Hammond: That should not stop hon. Members, when dealing with matters that will be devolved, expressing an interest in the existing arrangements in the Welsh Assembly. We could thus perhaps draw conclusions about the scrutiny available for corresponding English measures through our rather weak secondary legislation procedure.
      Amendment No. 22 places a minor limitation on the Secretary of State's sweeping power to amend part VI of the Local Government and Housing Act 1989. I do not want to sound churlish because any limitation is welcome even if it is a minor reduction in a wide power. None the less, the Secretary of State retains a substantial power.
      Amendments Nos. 23 to 25 are tidying provisions, although I should have preferred the Government to use amendment No. 24 to clarify matters by ruling out instead of confirming the ability to amend future legislation across the board consistently. As I understand it, the other amendments in the group are minor and consequential.
      The group is wide ranging. I should be grateful if the Minister dealt with the specific issues that I raised. If he wants to display some generosity of spirit and confirm, as Lord Bassam refused to do, that my noble Friend Baroness Hanham should receive the credit for amendment No. 13, I should welcome that.
      Mr. Edward Davey: I congratulate the hon. Member for Runnymede and Weybridge (Mr. Hammond) on speaking for 12 minutes on the group. I was at a loss to find much to say because the Government have moved in the right direction. Before the Minister gets too happy, I should say that I emphasised on Second Reading that the Government were taking many more regulatory powers while telling people that the measure would remove the burden from local government. The amendments would not remove the powers but ensure that they were subject to affirmative procedure, as the hon. Gentleman said. That shift is welcome and reflects the opinion of all parties in the other place and some comments made in Committee. Frankly, that is all that needs to be said.
      Phil Hope: The hon. Member for Runnymede and Weybridge (Mr. Hammond) is right to describe the group as large, wide ranging and detailed. However, it is not necessary to divide the House on the amendments. He is right that making law is a learning process; we are a listening and learning Government, as today's proceedings demonstrate. I regret that the hon. Gentleman defended the role of the reformed House of Lords—a measure that the Conservative party vigorously opposed when it was discussed in the
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      previous Parliament. However, I shall linger on neither that point nor the debate between different Lords about whose amendment it is. I do not want to enter such territory.
      Let me deal with the hon. Gentleman's substantive points. We shall not remove clause 58(2) because the Delegated Powers and Regulatory Reform Committee's 16th report did not recommend its deletion. It therefore remains.
      The decisions of the Welsh Assembly are a matter for that body. That is the nature of devolution. Earlier, the right hon. Member for Wokingham (Mr. Redwood) bemoaned the Government's retention of reserved powers, yet now the hon. Member for Runnymede and Weybridge appears to want us to retain more. However, I welcome the hon. Gentleman's support and that of Liberal Democrat Members.
      Lords amendment agreed to.
      Lords amendments Nos. 14 to 17 agreed to.

  After Clause 65
  Lords amendment No. 18
  Phil Hope: I beg to move, That this House agrees with the Lords in the said amendment.
  The Government have always supported the important role that sports clubs play in promoting health and well-being and encouraging social cohesion. We believe that sports clubs would have benefited from the small business rate relief. With the additional assistance of local authority discretionary relief, it would have provided a generous package for sports clubs.
  We have also promoted the opportunity that has existed for sports clubs to register as charities to obtain mandatory 80 per cent. relief. However, we accept the widely held belief that that route can be onerous for small, voluntary sports clubs. The amendment offers a simple route for registered community amateur sports clubs to qualify for the mandatory 80 per cent. relief.
  Mr. David Heath: I wholeheartedly welcome the Government's acceptance of the argument, which hon. Members of all parties, including my noble Friend, Lord Phillips of Sudbury, presented. However, does the Under-Secretary accept that amateur sports club officials became frustrated by the charity route, found that they were increasingly hitting a wall of bureaucracy and that now it is important that the message gets through to them that there is an easier route that will greatly benefit the relevant clubs?
  Phil Hope: I thank the hon. Gentleman for those comments. The onerous nature of the transition to charitable status was one of the reasons for the amendment and the change.
  Mr. Edward Davey: Following my hon. Friend's point, what steps will the Government take to ensure that sports clubs know that they are eligible for the relief? Will the Under-Secretary write to every sports

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  club on the register and use various bodies and foundations to promote it? How can we ensure maximum benefit from the new relief?
  Phil Hope: The hon. Gentleman makes a good point. Since the amendment became public, the widespread response from sporting associations suggests comprehensive take-up. However, the Department for Culture, Media and Sport will handle most of the marketing of the new relief.
  Mr. Andy Reed: As my hon. Friend knows, people were slow to take up the tax exemptions under the Finance Act 2002. He will be pleased to know that Sport England, among other agencies, has been undertaking regional roadshows to ensure that sports clubs are aware of them. Since then, the take-up of additional benefits through the tax exemptions has increased. I hope that he will use his influence to ensure that the same happens with the relief that we are considering. However, as my hon. Friend said, sports clubs know that the relief is coming and have been waiting for it for years.
  Phil Hope: My hon. Friend makes an excellent point about Sport England's work to promote a range of reliefs that we are establishing to help local sports clubs. I want to put on record my thanks to Members of Parliament such as my hon. Friend for not only their work in raising the issue and pressing hard during the Bill's passage but their work with their community amateur sports clubs. That applies especially to my hon. Friend, who does such work not only in his constituency but throughout the United Kingdom.
  Mr. Malcolm Moss:Conservative Members obviously welcome the rate relief, which we have requested for many years. Does not the Under-Secretary believe that perhaps its advantages will be nullified by the decision of the Department for Culture, Media and Sport not to give any relief to sports clubs for the licensing fees that the Licensing Act 2003 will introduce, despite the assurance that the then Minister gave me in Committee that he would take a positive view of the amendments that we tabled?
  7.30 pm
  Phil Hope: Having stood beside the hon. Gentleman on a tennis court—regrettably not very successfully—;in another kind of amateur sports club, I am very pleased to hear his enthusiasm for this measure today. It is a matter of regret, of course, that the previous Conservative Administration did not see fit to offer these rate reliefs to community amateur sports clubs.
  In terms of the holistic picture of community amateur sports clubs having greater flexibility and more resources, and being able to grow as a result of this measure, I am confident that the complete package—which will include this rate relief and others—will provide a huge incentive for local clubs to develop, to recruit and to provide better sporting facilities for people of all ages in the community. I am not persuaded by the case briefly put by the hon. Gentleman today that
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  other measures might hinder that. There is an across-the-board position in government to promote community amateur sports clubs effectively because of the wider benefits that they bring, not just in terms of sport and of raising performance and participation, but in terms of what that means for the community and for the health of the individuals who get involved.
  Amendment No. 18 would amend the Local Government Finance Act 1988 and provide mandatory rate relief at both the occupied and unoccupied rates for registered community amateur sports clubs, under schedule 18 to the Finance Act 2002. Registered community amateur sports clubs can also have this relief increased at the discretion of local authorities. Sports clubs that do not meet the requirements for community amateur sports club registration—and, therefore, for mandatory rate relief—will still remain eligible for discretionary rate relief. Of course, the decisions on the award of discretionary rate relief are, and will remain, a matter for individual local authorities.
  I hope that this provision demonstrates to hon. Members that we have listened carefully to the representations of the many people, both inside and outside the House, who support this important measure. I am very pleased to announce that we are introducing this relief. It represents a great opportunity for small community sports clubs, which I know that my colleagues in the Department for Culture, Media and Sport have strongly welcomed. It has also been widely welcomed by the sports bodies and, in particular, by the Central Council of Physical Recreation, which has, along with many other bodies, sought support for this measure for some time.
  Mr. Hammond: I, too, am delighted to welcome the extension of the rating relief enjoyed by charities to community amateur sports clubs, so that those that are unable or unwilling to adopt charitable status because of the burdens mentioned by the Minister can benefit none the less. The issue of rate relief was most recently raised in relation to the Finance Act 2002, when other taxation reliefs were extended to the newly defined community amateur sports clubs. There was all-party consensus on the matter at that time.
  The matter was also raised at the Committee stage of this Bill in the Commons by the hon. Member for South Ribble (Mr. Borrow), a Labour Back Bencher. His initiative at that time received support from the official Opposition and from the Liberal Front-Bench team. When the same issue was raised in the other place by Lord Phillips of Sudbury, it was again supported by all sides, and Lord Phillips aptly described the measure as an amendment "with no enemies"—[Interruption. The Minister mentions the Treasury, and I shall come to that issue in a moment.
  When the hon. Member for South Ribble raised the issue in Committee, it will surprise no one who has attended the earlier parts of these debates that it was the Under-Secretary of State for Constitutional Affairs, the hon. Member for Shipley (Mr. Leslie) who had to stand up robustly to resist the suggestion that the Government might extend business rate relief to community amateur sports clubs. He basically told the Committee that the reliefs provided in the Finance Act 2002 would do the trick for sports clubs, if only they were given a chance. He must be feeling a little sheepish now about having so

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  slavishly read out what was obviously a pretty dud brief. Lord Rooker was a little quicker to ad lib his total support for the measure when he sensed the mood in the other place, before reverting to reading out his brief explaining why he could not accept it. He then had the pleasure of collecting the plaudits for introducing it on Third Reading in the Lords. It might be thought that a matter effectively dealing with taxation such as this would have been better introduced and dealt with in the House of Commons. We are all glad that it has got here in the end, but it would have been preferable had it been inserted into the Bill initially in this place.
  I do not doubt for a moment that, behind the smooth consensus, there have been detailed discussions with the Treasury, and I have two questions for the Minister on this issue. In the House of Lords, the question of who would actually pay for the relief was raised almost as an aside. Those who regularly go into the other place to be entertained when Lord Rooker is speaking will know that he is not the most slavish adherent to the conventions of parliamentary procedure and language and his reply to that question was, "Who cares?" Once he had recovered his composure slightly, however, he said that it would be the Treasury. That issue was not probed further in the other place, but I would be keen to learn from the Minister the mechanism by which the Treasury will pay, because there remains a lurking concern that, while the Treasury claims credit for providing the largesse, it will be other business rate payers—albeit spread very thinly across the board—who will pick up the tab. Perhaps the Minister could explain the mechanism by which a specific grant from the Treasury will fill the gap.
  Secondly, will the Minister confirm that we are now left with a somewhat anomalous position in Northern Ireland? Ironically, sports clubs there have enjoyed mandatory relief at 80 per cent. for some time. They will continue to do so, but there is no provision in this measure to give local authorities there the discretion, which will exist in England, to extend 100 per cent. discretionary relief to sports clubs. Do the Government have any plans to address that anomaly? This issue was raised during the Lords debate last week, and I would be interested to know what the Government intend to do about it.
  I do not want to dwell on technicalities. This is a tremendous victory for the will of Parliament over the instinctive parsimony of the Treasury, and congratulations are due to Members on both sides of this House and the other place who have fought for this new clause, and to the Ministers, who have no doubt had to fight long and hard behind the scenes against the Treasury to achieve such an excellent result. I know that amateur sports clubs throughout the country—I think it is safe to say in every single constituency represented in the House—will be extremely grateful for the effort that everyone involved has made.
  Mr. Reed: I rise to welcome the measure as one who introduced a ten-minute Bill three or four years ago to define community amateur sports clubs. Its purpose was to allow the tax reliefs to be brought in, and I always envisaged that, when we talked about tax relief, it would include not only the package in the Finance Act 2002 but rate relief as well. When the Minister informed me a couple of weeks ago that this measure was to be
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  introduced, I thought that there would be a big hole in my life. Community amateur sports clubs seem to have been a part of everything that I have done in this place over the past three or four years, so I am not quite sure what I shall do with my winter evenings now that I no longer need to discuss the benefits of tax relief for those clubs. However, it is a hole that I am very happy to accept into my life.
  When we were talking about tax relief for community amateur sports clubs as part of the Finance Act, those of us who were lobbying behind the scenes were not expecting a package to come forward. Even the evening before the Budget, we had no indication whatever. I wish that the Treasury and the Department would ensure that we did not have such cliffhangers. In this instance, the will of Parliament was well known in plenty of time. People had been discussing this measure for a long time, and it had cross-party support.
  I do not want to be churlish, but I noted that Opposition Members made the point that this proposal has been around a long time. It was not introduced by the Conservative Government, and it is a shame that it has taken so long to get this far. However, I do not want to sound like a Liberal Democrat whinger—they always want a bit more and argue that something should have been done sooner. To be fair to those in the Chamber and outside, there has been genuine cross-party support for this measure. We always joke about such things, but it is worth noting that, although the cost to the Treasury could be small, the benefit to community amateur sports clubs, especially those that are currently struggling, could be enormous. According to research carried out by the Central Council of Physical Recreation and Sport England, it could be the difference between clubs going under or staying afloat.
  I declare a sort of interest. I played for my rugby club, Birstall, on Saturday, and within the first five minutes of the first part of the season I managed to dislocate my little finger. We do not have our own premises, so we will not necessarily benefit from this measure, but the clubs that we play against across the county will benefit from the tax reliefs. I know that currently they struggle from week to week with a reduced numbers of players in individual clubs. I hope that this measure will allow them to invest and turn around the steady decline in participation rates at community amateur sports club level, which is what it is all about.
  Money has gone into the elite sports. In Loughborough, almost £35 million has gone into the English Institute of Sport. The elite athletes have fantastic facilities, but insufficient numbers of people have participated at community amateur sports club level. In the recent world athletics championships, Sweden did particularly well. The participation rate of the Swedes is more than 60 per cent., whereas in this country it is between 30 and 40 per cent., and there is a strong decline in that figure as the age profile increases, especially among women. This measure is to be welcomed.
  I want to thank the individuals who have played an important part in introducing this measure. It is a fitting retirement present for Nigel Hook of the CCPR, who has been battling to achieve this for about 20 years. As hon. Members know, he retired in September, so perhaps this was a thank you present for all his hard

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  work in supporting Members and community amateur sports clubs up and down the country. If it is, it is a fitting tribute to his hard work.
  In the past three or four years, I have had the pleasure of working with Lord Phillips of Sudbury. He has brought a sense of urgency, a sense of purpose and the single-mindedness that has helped to drive this measure through in the other place.
  What encouragement will there be for local authorities to go even further than the 80 per cent.? There is a discretionary level, but local authorities always argue that they never have enough resources, so I suspect that 80 per cent. will become the norm. Will the Minister ensure that there is some incentive for local authorities to go that extra mile. That leads on to the question put by the hon. Member for Runnymede and Weybridge (Mr. Hammond). Who pays? It is important to know where the money is to come from, so that we know that it is for the long term and not just a short-term fix. I am sure that it is not, but it would be reassuring to know that.
  This is a welcome change of mind. I never mind when people climb down or do U-turns—call it what you like. As long as we get the right result, I care not what has happened over the past three or four years. This campaign has been worth fighting. It has been carried out in the best of humour, and those of us who believed that the arguments were right were confident that the Government would listen. They have, and that deserves a big thank you.
  7.45 pm
  Mr. Edward Davey: Members have already mentioned that many people from across the parties have been involved in this long campaign, not least the hon. Member for Loughborough (Mr. Reed). Despite his comments about the Liberal Democrats, I congratulate him. I also congratulate Liberal Democrat peers, most notably my noble Friend Lord Phillips of Sudbury, who moved the amendment in the other place. He got the Government worried that the House of Lords was going to push this amendment. Although we had the amendment from the hon. Member for South Ribble (Mr. Borrow), we could not persuade the Government. However, there was the will to push the issue in the other place, and the Government had to face up to that. My noble Friend deserves great credit for getting that coalition together and, given that votes do not always go the Executive's way, ensuring that pressure was put on the Government.
  We should also pay tribute to Ministers. They have had to argue long and hard for this measure. Whether it was the Minister or his predecessor who pushed it—I am sure that it was the hon. Member for Corby (Phil Hope) who really pushed it—they have done their job, and that is welcome. The Treasury is a difficult animal to move. I am surprised that the Chancellor of the Exchequer has not issued a press release. He is not modest about coming forward to take credit for such measures. In the press release for the Finance Bill 2002, when the initial steps were taken, he suggested that that was all that was needed: it was such a generous relief that everyone would flock to this new creation and shift over, so the
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  problem was solved. The Liberal Democrats and, I am sure, the Conservatives and probably some Labour Back Benchers said that we did not think that that was right. The situation created by the Chancellor was not powerful enough to persuade people to shift. They had the difficult choice between the bureaucracy of the charity route, which many people did not want, as was shown by the figures, or the community amateur sports club route, which was a nice new creation, but did not provide sufficient incentive for people to move. With this amendment, we have the critical mass of a meaningful incentive. If there is encouragement from the Government and organisations such as Sport England, there will be a major shift.
  I hope that the Minister will reassure the House that he will talk to his colleagues in the Department for Culture, Media and Sport to ensure that they play a positive part, with the Office of the Deputy Prime Minister, in ensuring that this measure becomes well known and that there is a quick shift.
  This is a significant measure. The amounts of money involved for the Exchequer are small, but the difference that it will make to small sports clubs is huge. It is disproportionate to the cost to the central purse. That has been one of the strong arguments used by campaigners. I am sure that, when Members go round their constituencies, they see the typed up accounts of the local cricket, rugby or football club. Those accounts are often done by an elderly member on a typewriter not a word processor, and show the rates as a significant amount on the expenditure side. With that cost gone, those clubs will use the money entrepreneurially and encourage youngsters and new activities. They could use it to lower the fees that they have to charge, and thus ensure greater access to the sporting facility. It is a good measure for social inclusion.
  This important measure will have a benefit way above the actual cost. I hope that the Minister will answer the questions posed by the hon. Members for Runnymede and Weybridge (Mr. Hammond) and for Loughborough about where the money is to come from, because it is important for the House to dwell on that. We should also dwell on the benefits, which will be huge.
  Mr. David Borrow: It is not often that we move an amendment in Committee, back down to the Government on it and accept that no action could be taken, but find several months later that the Government have moved on the issue. The fact that the Government have changed their view on a measure that involves the Treasury in a major way is a sign that Parliament is working. When the amendment was debated in Committee months ago, if Government Back Benchers had accepted that that was the will of the Government and that it could not change, nothing would have happened. We constantly lobby behind the scenes in the hope that eventually the will of Parliament will prevail on the Treasury and other Departments. That is what seems to have happened in this case. It did not happen overnight, and the amendment that I tabled in Committee did not emerge from thin air; the idea had been discussed for years before I had the privilege. A number of people in Parliament and outside worked for a long time to achieve that.
  Mr. Hammond: I am sure the hon. Gentleman is right, but does he agree that the bit of Parliament that has been

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  shown to be working in this instance is the cross-party consensus in the House of Lords—the one thing in this place that is guaranteed to put Governments in fear?
  Mr. Borrow: I am certain that if the Treasury had not wanted to make the money available, it would have continued to block it, and would have prevailed over the House of Lords in the end. The hon. Gentleman is right about the cross-party consensus in this case. The result. that we have secured is, I think, due to the fact that there has been no battle on a purely party issue: members of all parties, and those who belong to no party, have worked and lobbied together for many months and years.
  I have only one question to ask my right hon. Friend. Is he certain that all the clubs in the country that could have access to this assistance will be able to do so, and will every measure to secure that be taken? What will he and his Department do to ensure a 100 per cent. take up?
  Phil Hope: I am pleased to learn that Members on both sides of the House welcome the amendment. My grateful thanks are due to, among others, my hon Friend the Member for South Ribble (Mr. Borrow). who pushed the case for it.
  My hon. Friend the Member for Loughborough (Mr. Reed) mentioned the number of clubs that would benefit. I know from my constituency experience that during a weekend in Corby up to 2,000 young people may be out on football pitches with their mums and dads helping out, acting as referees, washing the kit and so on. All that excellent community activity will be reinforced by the 80 per cent. relief for qualifying clubs.
  Mr. Reed: My hon. Friend is right, but when it comes to the role of amateur sports clubs, it never seems to be realised that some 27 per cent. of volunteers support them. We often forget that when we talk about the voluntary sector. A wealth of talent is involved: some 1.5 million people give up their time freely to help clubs throughout the country.
  Phil Hope: My hon. Friend is right to mention that important statistic. We use jargon about building social capital, and ensuring that communities flourish, thrive and are successful and inclusive. Sport plays a critical role in that, and I hope that the measure will contribute to the wider agenda of community and civic renewal and urban regeneration for which so many of us are working so hard.
  A number of speakers asked who would pay. Inevitably, there is a degree of uncertainty about the cost, because it depends on the take-up that Members want to see. The Treasury has been mentioned. Support for the idea that clubs should qualify for 80 per cent. relief has already been agreed. What we are doing is changing the mechanism to make it less onerous, allowing community amateur sports clubs to qualify without having to become registered charities. The Government, of course, will pay for the relief, and both Liberal Democrats and Conservatives will know that we are one Government. I can give an assurance that there is no intention of imposing additional costs on ratepayers; this resource, like others, will come from the centre.
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  The hon. Member for Runnymede and Weybridge (Mr. Hammond) raised an interesting point about Northern Ireland, which I will draw to the attention of my colleagues in the Northern Ireland Office.
  We have experienced a bit of a cliffhanger in order to arrive at this point, but I think that in this case it has been better to arrive than to travel. We now have an excellent new measure that will widen the base of the pyramid of participation and support, thus raising levels of achievement. That is important to a nation such as ours, which is so aspirational when it comes to sport. As I said earlier, the amendment will have huge implications not just for the healthy lives of the many people who become involved in community sport, but for community development and regeneration as a whole.
  Lords amendment agreed to.

  Clause 76

    SECOND AND EMPTY HOMES: ENGLAND
    Lords amendment No. 21.
    Mr. Deputy Speaker: With this it will be convenient to consider Lords amendments Nos. 36, 37, 41, 42, 47 to 49 and 54.
    Phil Hope: I beg to move that this House agrees with the Lords in the said amendment.
    The amendments deal with the fear that, if we passed clause 76 in its original form, Welsh authorities would have a less flexible power to provide council tax discounts on second homes than would English authorities. The principal amendment, Lords amendment No. 21, will replace the existing provision in Wales and give the National Assembly for Wales the ability that we are giving the Secretary of State to prescribe classes of dwellings in the case of which billing authorities can reduce or remove the nationally set discounts.
    Subsections (3), (4) and (5) of the new section 12 to be inserted in the Local Government Finance Act 1992 are transitional provisions. They preserve the effect of existing regulations prescribing classes of dwellings for which Welsh billing authorities can reduce the 50 per cent. discount to 25 per cent. or zero, and preserve the effect of any existing determinations to reduce discounts made by Welsh authorities. While the new section 12 will give Welsh authorities more flexibility, the transitional provisions ensure that Welsh authorities are not forced to make new decisions if they would not have decided differently under the new powers.
    The other amendments, with the exception of Lords amendment No. 43, are consequential on Lords amendment No. 21. It should be noted that Lords amendments Nos. 36, 37, 41 and 42 amend clause 127, enabling the National Assembly for Wales to choose when to begin the new powers in Wales.
    Lords amendment No. 47 is merely a consequential amendment to clause 76, to ensure that in England any reductions in council tax liability under regulations made under section 13 of the 1992 Act—for instance, reductions relating to disabilities—are additional to any discounts under the section 11A inserted by clause 76.
    Mr. Hammond: I assume that the Welsh Assembly has asked for the inclusion of this measure, and did not ask

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    for its inclusion at the time of the Bill's original publication. It would be interesting to hear from the Minister by what process the Assembly either determined that it needed the primary legislation to do what it wanted to do, or decided that it wanted a power that it had not wanted previously.
    If I read them correctly, Lords amendment No. 21 and the consequential amendments simply place Wales on the same basis as England following the changes in the 1992 Act made by clause 76.
    I was not involved in the Committee stage, but I have the impression from reading the reports of it that what little consideration was allowed for this part of the Bill—given the desperately inadequate time allowed owing to the knives introduced by the timetable motion—focused principally on the issue of who would keep any extra money that was raised. The answer, as we might have anticipated, is the Government, rather than the local authority. However, it seems entirely reasonable to give similar powers to Welsh authorities, although I assume that it is a matter for the Welsh Assembly, as it seems to be more about housing policy than about revenue raising; clearly, the authorities themselves will not benefit in terms of the additional revenue but they will be able to use the provision as a tool of housing policy. I for one am very happy for Wales to have equality of treatment with England.
    8 pm
    The job of the Opposition is to find something to say about all these things, even when there is not obviously anything much to say, but I have found something to ask the Minister, he will be pleased to know. I understand that the title of the clause is not technically a part of the Bill but it seems a little odd that the clause is headed "Second and empty homes: England" when the second part of it will deal with second and empty homes in Wales. Perhaps he can confirm that it is within the scope of minor amendment, printing or whatever for the heading, "Second and empty homes: England" to be changed to "Second and empty homes: England and Wales" or possibly just "Second and empty homes." It would be a little anomalous if we passed a measure headed "Second and empty homes: England" when the second half of its text was devoted to second and empty homes in Wales.
    Mr. Edward Davey: I do not think that there is much to say on these amendments. I think that the National Assembly for Wales has asked for them. It is important to devolve more power to it. We on the Liberal Democrat Benches would like the Government to go even further. I would certainly like the National Assembly to have the power to determine the form of local taxation. I know that there is a movement in Wales against the unfair council tax and that many people in Wales would like a tax related to ability to pay. If anything, while these are welcome powers, they do not go far enough because they do not devolve further powers to the National Assembly over the local government finance regime for Wales. However, that is perhaps going wide of the debate and I am conscious that you, Mr. Deputy Speaker, may bring me to order. There is nothing wrong with the amendments. They go
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    in the right direction and I just hope that the Government will go even further on the path of devolution at a later date.
    Mr. Elfyn Llwyd: I too welcome the amendments. Clearly, they are necessary and it is right that there should be parity with our friends in England. I never understood the logic behind allowing a discount for a second home. It beat me throughout the years that I thought about it. I am pleased that it is being dealt with. The provision can be used as a tool in housing policy and so on. I am pleased, therefore, that the Government are going to extend the provisions to Wales.
    I echo what has just been said. I hope that there will be further devolution, stronger devolution, and that these matters will come within the ambit of the National Assembly without having to be referred to this Chamber. That said, I am pleased that the proposals are on the table and I am sure that they will pass into law without much hindrance from anyone in the Chamber.
    Phil Hope: I am grateful to hon. Members who have supported the proposals, including the hon. Members for Kingston and Surbiton (Mr. Davey) and for Meirionnydd Nant Conwy (Mr. Llwyd). Two questions have arisen. One was, how did the Welsh Assembly change its mind? That is devolution for you. It is up to the Members of the Welsh Assembly. If the hon. Member for Runnymede and Weybridge (Mr. Hammond) wants to write to them, he is perfectly entitled to do so.
    Mr. Hammond rose—
    Phil Hope: I knew that I should not have suggested that he write to them.
    Mr. Hammond: I am sorry but it is just that the Minister said on the question of why the Welsh Assembly changed its mind, "It just did." If that is the answer, that is fine, but it is not necessarily obvious that the Welsh Assembly has changed its mind. It might be that it always wanted these powers, and it became evident that there was a need for primary legislation to get them, as opposed to the Assembly deciding after the legislation had been published that it wanted to go down that route.
    Phil Hope: I understand the point that the hon. Gentleman makes. "Do not know" still has to be my reply. He will have to ask the Welsh Assembly whether it was something that it always wanted to do, whether it changed its mind or whatever. Thankfully, the measure is in the Bill.
    The hon. Gentleman raised a technical point about a clause headed "Second and empty homes: England" referring to Wales. That will obviously be a matter for the parliamentary draftsmen, who will no doubt note what he said.
    Lords amendment agreed to.
    Lords amendments Nos. 22 to 25 agreed to [One with special entry].

  Clause 117

    LOCAL POLLS
    Lords amendment No. 26
    Mr. Raynsford: I beg to move, That the House agrees with the Lords in the said amendment.
    Clause 117 confirms the right of a local authority to conduct an advisory poll. The provision creates an express power and removes doubt about the freedom of local authorities to hold advisory polls. It gives councils maximum flexibility on who is polled and how the poll is conducted.
    We carefully considered the points raised in the Lords Committee on requiring local authorities to have regard to guidance about making local polls accessible to local people and in particular to people with disabilities. We have tabled the amendment in order to provide for the Secretary of State in England and the National Assembly for Wales in Wales to be able to issue guidance to which local authorities must have regard on facilitating participation by disabled people in a local poll. I am sure that that will be widely welcomed and I hope that no one will object to its becoming part of the Bill.
    Mr. Hammond: The Minister is right. No one, I am sure, will object to the amendment, but that does not mean that no one will have any questions about it. The provision allows guidance to be issued on disabled access to local polls—polls for the purpose of testing local opinion by local authorities, as distinct from local election polls. It looks like mum and apple pie. I agree with the Minister: who could possibly be against it? My question relates to the fact that the guidance referred to here must be in respect specifically of the local advisory polls; the right to conduct them is confirmed by clause 117.
    The thrust of the Bill is to be decentralising; the Minister keeps reciting the mantra of freedom and flexibility. It would be odd if the appropriate person, the Secretary of State in England and the relevant Minister in the Welsh Assembly, could issue guidance to local authorities in relation to section 117 polls which did not have to be complied with in relation to elections or referendums conducted out of the same polling stations. We are all for access but the obligations on local authorities conducting section 117 polls must not be more onerous than in the case of the arguably more important elections and referendums that will often take place in the same buildings.
    I am hoping and expecting that the Minister will tell me that he will undertake that the guidance that will be issued in relation to section 117 polls will reflect only requirements that are imposed on returning officers in relation to elections and referendums. It would be entirely appropriate if this measure were seen as a way of ensuring that the good practice that the Government will, I hope, seek to impose in terms of ensuring disabled access to polling stations for referendums and elections will be carried over into these local polls that local authorities hold. I would not like to see a more onerous obligation in respect of those polls than those imposed
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    in respect of elections and referendums. The sentiment behind the amendment is sound, but I seek reassurance from the Minister that the bizarre circumstances that I postulated will not arise and that he will issue guidance to ensure that that does not occur.
    Mr. Edward Davey: I support the amendment, which was presaged by an amendment tabled by Baroness Hamwee on 24 June in the other place. She tabled the amendment following discussions with the Royal National Institute for the Blind, which felt that this would be a useful move. The Government have clearly responded to that positively, which is to be welcomed.
    In passing, it is interesting to note that we did not have a chance to debate the clause in Committee. We could have a spat about whether it was the Government or the Opposition who were to blame. However, there were a number of long and tedious speeches that went off the point—
    Mr. Hammond: The hon. Gentleman will recall that we voted against the timetable motion in Committee.
    Mr. Davey: I do recall that. The point I was making was that we did not get to examine the clause the first time around. No doubt we could have raised points about it and other matters that have not been debated.
    The new power under the clause is clearly to be welcomed. It is important that disabled people are able to participate in polls, and I hope that we can move on.
    Mr. Raynsford: There was no intention to impose requirements in respect of local polls more onerous than those that apply to elections or referendums conducted other than under the provisions of the clause. However, during the Lords debate, questions were raised as to whether the Disability Discrimination Act 1995 applied in this area. Under the Act, it will be unlawful from October 2004 for service providers, including public authorities, to discriminate against a disabled person in how the provider provides services. There has been some doubt as to whether "services" includes the provision of polling facilities for local and national elections or local polls. We expect the future extension of the Act to cover local authority functions to clarify whether it applies to local polls. This will not come into force until 2006. In that situation, we felt it sensible that guidance should be extended to ensure that what applies in relation to elections—for example, guidance issued by the Electoral Commission—should also apply to local polls.
    Mr. Hammond: The Minister is coming to the key point. He referred to the expectation that the Disability Discrimination Act will be extended to cover local authority functions and, thus, local polls. Does the Act already cover elections and referendums? If not, does he expect it to be extended to cover those services?
    Mr. Raynsford: My understanding is that the guidance issued by the Electoral Commission ensures that there are suitable arrangements that would comply with the requirements of the Act. I have said that there is some question as to whether the Act applies. We want to make sure that there is a consistency of approach between local polls, national elections and referendums

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    and that there should be an easy passage from where we are now to the future position if the Act is extended. I hope that that satisfies the hon. Gentleman.
    Lords amendment agreed to.

  After Clause 117
  Lords amendment No. 27
  8.15 pm
  Mr. Raynsford: I beg to move, that the House agrees with the Lords in the said amendment.
  The new clause tabled by the Government on Report gives the Secretary of State in England and the National Assembly for Wales power to amend or repeal by order any enactment relating to a local authority in the light of generally accepted accounting practice as it applies to local government. The new clause was tabled partly in response to the Liberal Democrat amendment to clause 18 tabled in the House of Lords Grand Committee.
  Clause 18 concerns the definition of a local authority company and the Opposition amendment reflected the pressure from local government for a modern, all-purpose definition of such a company. In resisting the amendment, we acknowledged that it raised an important issue and we promised to bring forward our own measure. The new clause enables the definition of a local authority company to be brought into line with accounting practice at the earliest opportunity. The timetable for that will depend on the work being done by the Chartered Institute of Public Finance and Accountancy. CIPFA is currently working on a revision to its standard local government accounting code to incorporate a group accountancy requirement for companies. As soon as the CIPFA code is ready, the new power will be used to substitute the accounting definition for the one now in clause 18.
  The immediate need to update the definition arises from work being taken forward on the Treasury-led whole of Government accounts exercise, in which the Audit Commission and CIPFA are closely involved, along with officials from our Department and the Welsh Assembly. The aim of the initiative is to produce a consolidated set of accounts for the whole public sector. It must encompass all central and local government bodies, including not only local authorities but those companies in which authorities have a major interest.
  The definition of a local authority company used in the Bill for the prudential borrowing system is not based directly on accounting principles. That means that it would not meet the needs of the whole of Government accounts exercise. Authorities would have to follow two different accounting procedures in relation to their companies. This would be onerous, unwelcome and confusing, so the new power will solve that problem. However, the new clause will also allow any other aspect of the local government finance system to be harmonised with accounting practices and to be adapted to reflect future developments without the need for primary legislation. Such a move would implement the Government's policy objective of bringing public sector accounting more into line with standard accounting practices.
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  In leaving the term "generally accepted accounting practice" undefined, we were aware of a precedent. The Government Resources and Accounts Act 2000 requires the Treasury to use its powers to ensure that departmental resource accounts comply with "generally accepted accounting practice" subject to adaptations that are necessary in the context but no definition is given. In fact, the expression has a well-established meaning. In the UK, it covers the aggregate of the accounting practices that companies are required to follow in preparing their accounts. It has as its principal source the practices recommended by the Accounting Standards Board, a body independent of Government. For local government, accounting practice is established by a code issued by CIPFA, which is recognised as a statement of recommended practice within the Accounting Standards Board framework.
  It might be helpful if I explained the difference between the new power and the one already provided for under clause 21. The latter enables the Secretary of State to specify codes that are to count as proper practices. The two powers work in different ways. Clause 21 ensures that local government accounting practice is compliant with appropriate professional codes, namely those issued by CIPFA. However, the clause 21 power could not be used to amend existing legislation that might be acting as an obstacle to the adoption of proper practices.
  In the next few years, there are likely to be major developments in national and international accounting practice to improve transparency and reduce the scope for the kind of "creative" accounting highlighted in the Enron affair. For example, there could be fundamental changes in the treatment of borrowing and investments, the full implications of which may not become clear for some time. The changes would need to be applied in local government. Clause 21 is unlikely to be adequate on its own for that purpose, but we are confident that the new clause would make it possible.
  I should also like to comment on the breadth of the power, which can be used only to change legislation to which accounting practice is relevant. When the power is used, the Secretary of State gives up his own freedom to devise accounting practices and relies instead on standards imposed by the independent accounting bodies. In all cases, the relevant provisions of a published accounting code or standard that lie behind the order should be readily identifiable. However, since this is a power to amend primary legislation, we have recognised that orders exercising it should be subject to the approval of both Houses of Parliament. The approach was endorsed by the House of Lords Committee on Delegated Powers and Regulatory Reform.
  Mr. Hammond: I am grateful to the Minister for his full and explanatory speech, and I congratulate his Department on its economy in the use of civil servants' time. Anyone who also sat through the debate in the Lords the other night will have noticed a marked similarity between his speech and that delivered by his colleague in the other place. One Government, one set of briefings, one speech template—that is commendable economy.
  We Conservatives are generally wary of extending the powers of the Secretary of State to amend primary legislation by order, but in this case we can see the merit

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  of the Government's proposal. I understand—the Minister has confirmed this—that the original issue was specifically concerned with local authority companies: the possible need to produce consolidated accounts for local authorities and their companies, to avoid off balance sheet scams of the type that we have become rather familiar with in the past few years; and the need to support the whole of Government accounts exercise. CIPFA, as the Minister said, identified the need possibly to amend definitions in clause 18(2) to deal specifically with local authority companies and preparing consolidated accounts for local authorities.
  The Government went on to identify a possible broader need, and the Minister's speech dwelt greatly on local authority companies and the whole of Government accounts exercise. To my mind, the perhaps more important issue is the ongoing question of the rapid evolution of UK generally accepted accounting practice, partly in response to the demands of legislators and investors for greater transparency in the wake of Enron, WorldCom and other well-documented accounting scandals. We support moves to bring public sector accounting as far as possible into line with GAAP. For the record, the Committee that deals with matters relating to local government and the regions has also clearly endorsed that position. We therefore have to trade off the benefits of the rapid implementation of further moves in that direction. That necessarily means amending obstructing legislation, whereby procedures to be followed in local authority accounting have historically been prescribed in statute—against the objection in principle, which a diligent Parliament ought to start from, to granting the Government powers to amend primary legislation through secondary legislation.
  The Government's amendment, which was accepted in the Lords, has been reviewed by the Lords Delegated Powers and Regulatory Reform Committee, which found it acceptable. Any orders made under it will be subject to affirmative resolution, as the Minister said, which always helps to reassure any sceptics in this place. However, as I have said the weakness in resorting to that procedure to tighten scrutiny is the feebleness of the scrutiny process itself. We are certain to reach a 90-minute Committee debate when we have an affirmative procedure, rather than a negative one. But as anyone who has taken part in such debates—as we all have—will agree, once we reach that stage we are a very long way away from really effective scrutiny of the Executive, because of the time limitations that such debates entail. But on balance, we believe that this is a justified measure and we will support it, particularly given that the power to amend is strictly limited to cases in which it is appropriate to do so in the light of the GAAP of the time.
  It is important, however, that we recognise that we are agreeing to quite a wide power. It is not, as Lord Rooker appeared to suggest in Grand Committee, merely a power to alter definitions across a wider range than just clause 18(2). It is a power to amend any Act that requires amending in order to bring local authority accounting procedures into line with GAAP. So any statute that prescribes a different procedure, or which inhibits the adoption of GAAP, could be amended by this measure. This is an appropriate provision to include in the Bill, but the House should be in no doubt that it does give the
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  Government significant powers—rather more significant ones that the Minister's colleague suggested during the Grand Committee debate. However, we will support this measure tonight.
  Mr. Edward Davey: As the hon. Gentleman has just suggested, this is a significant power. It is interesting to see how the parliamentary process sometimes works. In Committee, we were unable properly to analyse the charging and trading provisions in chapter 1 of part 8 of the Bill because of lack of time. We wanted to make some of the points that were made in the other place in order to try to examine the framework around trading companies that the Government were introducing. I am delighted that Baroness Hamwee was able to make those very sensible points in Committee, and the Government have reacted to them by going much further.
  The amendment certainly deals with some of our concerns about local authority trading by making sure that local authority companies will have to abide by proper accounting practices; indeed, the Government now have the power to ensure that they do so. That is important, because it will put to rest the concern of small businesses that such companies will be trading unfairly against the private sector. Some small businesses are still sceptical about what the practice will involve, but the provision does help them, because they can be reassured that the Government have the power to intervene if any local authority is trading unfairly through its trading arms. That point of detail has now been met, but it is interesting to note that the provision is wider and therefore affects the entire system.
  Mr. Hammond: I am not sure that I understand that point. We are not talking about a provision that will give the Government the power to intervene if they thought that a local authority company was trading unfairly; rather, it will pave the way for consolidated accounts to be produced, which will prevent local authorities from using companies for inappropriate purposes. I doubt whether it will give the Government the power to intervene to prevent unfair trading.
  Mr. Davey: The hon. Gentleman rightly picks me up—I think my use of language was slightly loose. There could be examples of unfair trading that are not covered by the new power. Some representations from small business organisations that I received related to how the accounts of these small companies will be drawn up, and how they will relate to local authority accounts; however, that concern appears to be covered. I can imagine contracts being given in an unfair way that is, however, completely unrelated to accountancy practices, so the hon. Gentleman makes a fair point.
  On how this wide power will apply more generally, as a veteran of the Committee that considered the Government Resources and Accounts Bill—GRAB, as it was unfairly known—I can tell Members that this power was included then. The power was welcomed on both sides at the time as it applied to central Government Departments, so there is a corollary to read across—that it should now be applied to local government. I am sure that the Chartered Institute of Public Finance and Accountancy and other bodies will welcome it.

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  8.30 pm
  Will the Government comment on a point of detail? When we debated the Government Resources and Accounts Bill in Committee in 1999, we obviously devoted time to the views of the Accounting Standards Board and its role in the UK's generally accepted accounting practice. We also talked about the Financial Reporting Council, an independent body set up to advise the Government on the adoption of resource accounting for all Departments. That relates to Government accounts, and the body has to take account of the special circumstances that apply in the public sector. Although GAAP is sensible for many aspects of public sector activities, some fall outside normal commercial pressures and considerations. That is why the body was set up—to ensure that public sector accounting standards and practices take into account the special aspects of the public sector.
  We raised in Committee the classic example of how to value an account for nuclear weapons. Some assets belonging to local authorities would not be marketised, so GAAP would not necessarily apply. The private sector has never considered accountancy practices as they relate to such assets. Will the Government comment on that problem and explain the inter-relation between the amendment and clause 21, to which the Minister referred? Those parallel provisions are designed to achieve different objectives. They do not necessarily compete with each other, but it is important to be careful about how Governments use the two different powers, because one could envisage them coming into conflict in certain circumstances.
  Mr. Raynsford: The hon. Member for Kingston and Surbiton (Mr. Davey) raised some interesting questions relating to trading, but I have to say that I am advised that his concerns are unfounded because trading will have to be carried out through a company. As he knows, that is the provision in this part of the Bill, and anything done by a company will be caught by companies law, which provides the essential safeguard. The new clause will not change it. Group accounting comes in at a later stage when a local authority amalgamates its accounts.
  I have explained that we originally believed that clause 21 would provide us with powers to achieve the wider aims that I mentioned in my opening statement on the amendment. I went on to explain that, in the context of the application of the whole of Government accounts exercise and other potential changes that might arise, we were conscious of potential needs that went beyond the powers contained in clause 21. That is why the additional powers in the amendment were necessary and why we want to include them in the Bill.
  Lords amendment agreed to [Special entry].

  After Clause 119
  Lords amendment No. 28
  Phil Hope: I beg to move, That this House agrees with the Lords in the said amendment.
  Mr. Deputy Speaker (Sir Michael Lord): With this, we may discuss Lords amendment No. 44.
  Phil Hope: The amendments meet a Government commitment to give local authorities outside London
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  specific powers to regulate cosmetic body piercing and micro-pigmentation businesses. London local authorities already have such powers under private legislation.
  The new clause would amend the Local Government (Miscellaneous Provisions) Act 1982 to bring cosmetic body piercing and micro-pigmentation businesses under the regulatory framework of registration and byelaws that already applies to ear piercing, tattooing, acupuncture and electrolysis. Under that framework, local authorities would be able to require cosmetic body piercing and micro-pigmentation businesses to register with them and observe byelaws on hygiene and cleanliness in order to prevent the transmission of infection. For example, businesses would be required to use sterile instruments for each client. It would be an offence to trade without registration or to breach byelaws.
  The term "cosmetic piercing" is used to include cosmetic body piercing and ear piercing, which are both forms of skin piercing to allow the insertion of jewellery into the skin. That is the approach taken in the London legislation. "Semi-permanent skin colouring", which means the insertion of semi-permanent colouring into a person's skin, is used to include micro-pigmentation and related activities such as semi-permanent make-up and temporary tattooing. The use of that umbrella term should stand the test of time if further activities of this type come into fashion.
  The schedule will allow a smooth transition when local authorities adopt the new legislation. The transitional provisions provide that the amendment does not affect businesses already registered for activities covered by section 15 of the 1982 Act—tattooing, ear piercing and electrolysis. The amendment does not affect pending local authority resolutions to apply section 15 of the 1982 Act in its area. If a local authority has already resolved that section 15 of the 1982 Act should be brought into force in its area for tattooing, ear piercing and electrolysis, the local authority will be automatically enabled to apply the registration and byelaws regime to cosmetic piercing and semi-permanent skin colouring. A person and premises already registered for ear piercing shall be counted as registered for cosmetic piercing until cosmetic body piercing is subsequently provided, when a new registration would be required.
  Mr. Hammond: I am grateful to the Government for eventually managing to introduce this provision, but I have some questions about the way in which it will work. I noted that the Minister referred to registration of persons and premises, and I may wish to probe him further on the distinction between the two.
  I first raised the issue in Commit tee when I attempted to insert an admittedly clumsy new clause that sought to extend the London Local Authorities Act 2000, which was private legislation and not susceptible to such extension. I have been getting some strange looks from colleagues ever since, but I assure the House that I have nothing to hide and no personal direct interest in the matter. I regularly pass through airport metal detectors without any trouble.
  I do not claim to be a great expert on the subject, but I was alarmed by the more revelatory nature of the remarks made by Lord Rooker in the other place last

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  week. He confirmed that he keeps a catalogue of body adornments, as he describes them, which he collected some years ago. Therefore, he said, the prices were out of date. While one can understand a passing interest in such an item, one is bound to say that keeping it on one's bookshelf for several years raises a few questions—certainly in my mind. Lord Rooker also told the other place that as it is a family place—I suppose it still is, in a sense, although it may not remain so much longer—he could not give their lordships full details of everything that was available in his catalogue.
  The serious point is that whether we subscribe to body piercing and semi-permanent skin colouring or not. many people undergo it and it is an invasive procedure. It involves piercing the body and thus creates an obvious risk, at the least, of infection.
  The matter first came to my attention through a constituency case, of which I became aware about this time last year. A constituent was concerned because her daughter, who was under 16, had been able to get her navel pierced without parental consent. After visiting the establishment that carried out the piercing, my constituent made some investigations and discovered that there was no system of control in place. She felt that that was wrong. Indeed, when I checked what Ministers had said, I discovered that Health Ministers—most recently, the hon. Member for Pontefract and Castleford (Yvette Cooper)—had made clear statements on several occasions that the Government intended to legislate to allow regulation of such practices to be extended to local authorities outside London. The current state of the law is rather curious. In London, local authorities have that power, but local authorities in the rest of the country do not. All that we want to do is to create a level playing field and to address some of the concerns that have arisen.
  After the case in my constituency was brought to my attention and I had already agreed with my colleagues that we would table an attempt at a new clause in Committee, a tragic case in Sheffield was reported. As a result of body piercing, a 17-year-old man died in unusual circumstances. He suffered from a congenital heart abnormality and was unaware that it made him especially vulnerable to septicaemia. He died over Christmas last year, which gave additional poignancy to the calls for new legislation.
  I freely admit that our amendment was clumsy, but the Government were on record as saying that they intended to legislate on the matter as soon as a legislative opportunity arose. The Bill offers such an opportunity, yet I am bound to ask the Minister what arrangements exist for cross-departmental liaison when Bills such as this one are being drawn up. When Ministers—in this case, Health Ministers—give commitments that they will implement legislation of this nature when an opportunity arises, there needs to be a simple database recording such commitments so that they can be included when another Department draws up an appropriate measure. It should not be left to Opposition Members to draw the attention of Ministers in one Department to the fact that commitments given by Ministers in another Department can appropriately be incorporated in a measure. There needs to be some joined-up government. Indeed, the Minister is in an
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  ideal position to spearhead such an initiative and ensure that his colleagues are properly up to speed as to their responsibilities.
  When we raised the issue in the Standing Committee, and when it was raised in the House of Lords, I was slightly alarmed by the Minister's reluctance to commit the Government to the measure that they have now introduced. Indeed, we were kept on tenterhooks until Third Reading in the House of Lords, so I am delighted that the Government have taken action. However, it would have been a disgrace if they had not introduced the provision, given that the Bill offers a perfect vehicle for it and that Ministers have made commitments to do so on several occasions.
  The new clause will provide a registration regime by including premises and people carrying out cosmetic body piercing and semi-permanent skin pigmentation under the provisions for tattooing and ear piercing in the 1982 legislation. The issues that most concern me are, first, hygiene standards, although I know that they fall within the scope of the legislation into which the provisions will be inserted; secondly, checks on health background, emphasised by the problems in the Daniel Hindle case; and, thirdly, consent.
  I have seen various premises that operate with proper hygiene, follow-up procedures and consent forms. They have rules that require a parent to be present if the patient is under a certain age. However, many operators do not conform to such standards. The effectiveness of the new clause in achieving a resolution to the issues that I have raised, and to which other Members have subsequently drawn attention, will depend on the conditions that local authorities are able to impose prior to registration.
  It seems to me, from my reading of the 1982 legislation, that local authorities can make byelaws only in respect of hygiene in registered premises. Of course, hygiene is very important and aseptic procedures are vital where such invasive procedures take place, but that is only one of the issues. I very much hope that the Minister can confirm that it will be possible for local authorities to introduce a requirement to adhere to some form of code of conduct before they are required to register premises to carry out such procedures; otherwise, the problems encountered by Daniel Hindle will not be addressed at all. A mechanism is needed to require people who submit themselves to such procedures to answer a basic set of health questions.
  8.45 pm
  I hope that the fact that the Under-Secretary, not the Minister of State, will reply does not mean that I will be disappointed by being told that those issues are not adequately covered. I hope that the Minister can explain how it will be possible for local authorities to ensure that premises will operate according to proper codes of conduct before they are registered, so that everyone entering them is warned of the specific health risks that people with certain conditions, such as congenital heart abnormalities, might face from undertaking such procedures.
  I hope that the Minister will also tell us that local authorities will be able to put in place appropriate regimes to deal with consent. I am not about to say that everyone under the age of 18 must always have a

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  completed parental consent form. I am not sure whether that is appropriate in all cases, but some sort of cut-off age is clearly needed.
  Matthew Green: The hon. Gentleman is sitting on the fence.
  Mr. Hammond: I am not going to take from a Liberal Democrat the accusation that I am trying to sit on the fence. That would be too much to bear. It is pretty clear to everyone that there must be an age—perhaps 16—below which parental consent is appropriate.
  Lord Rooker raised in the other place a very interesting additional consent issue, which certainly had not occurred to me. He explained that, in some cases, the parents of very small children have their children pierced for their own gratification because they think that it is fashionable. Of course, those children have absolutely no opportunity to consent. Parental consent is clearly not an adequate safeguard in those circumstances. Perhaps an absolute prohibition on certain types of piercing is needed for very young children.
  I do not claim to have precise answers. The intention is to give a power to local authorities—the proposal is permissive—so that they can establish a regime to regulate such premises. I want to be sure that local authorities can regulate those premises in relation to mandatory health questionnaires, appropriate procedures for obtaining consent and perhaps an absolute prohibition on performing piercing operations on children below a certain age.
  If it is possible under the Bill for local authorities to require establishments to have regard to a code of practice, will the Minister tell the House whether he or his colleagues in the Department of Health are inclined to publish a standard draft code of practice, so that every local authority in the country does not have to start from scratch in trying to draft an appropriate code of practice?
  The Minister will know that the hon. Member for Birmingham, Edgbaston (Ms Stuart) recently received leave from the House to introduce a private Member's Bill that appears to be redundant before it starts because of this Bill. I am one of the supporters of that Bill. I very much hope that it will not turn out to be the case that the concession that the Government have made does not enable local authorities to deal with the real issues of health warnings, health checks and parental consent, in which case that private Member's Bill would be needed to broaden local authorities' powers. I hope that the Minister will reassure us that following the tragic death of Daniel Hindle this Bill will enable Sheffield and other local authorities to introduce a registration regime that will prevent similar tragedies in the future and ensure that people who submit to these kinds of procedures are properly informed about the risks and know that the procedures are being undertaken in aseptic conditions by properly qualified people. I also hope that we will have an assurance that local authorities will be able to deal with the issue of parental consent.
  Mr. Edward Davey: I welcome this amendment. It deals with an important public health issue, and I am
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  glad that the Government have agreed to use the Bill to enable us to move forward. The House should be made aware, however, of the fact that the hon. Member for Runnymede and Weybridge (Mr. Hammond) has been rather modest. He has been a prime mover behind this proposal. I witnessed in Committee how he engaged in debate, how thoroughly he had done his research and how he persuaded the Minister to talk to civil servants not just in his Department but in the Department of Health about the matter. The House should therefore pay tribute to him. He should also make sure that we all see copies of the press release that he sends to his constituents explaining how he has achieved this step forward. I am sure that the local papers in Surrey will be keen to hear about such a parliamentary success, of which he should be proud.
  Mr. Hammond: In case the hon. Gentleman thinks that I am hiding any light under a bushel, I have put out press releases previously, I have visited local piercing establishments, and it was a leading light in the local Conservative association who first brought this matter to my attention.
  Mr. Davey: Clearly, the Conservative party is modernising before our eyes. At one point in the hon. Gentleman's remarks, however, despite all his research, he was not quite capable of coming out completely on this issue. He was, as my hon. Friend the Member for Ludlow (Matthew Green) said, sitting on the fence. I would therefore like to put on record the fact that Liberal Democrats believe that parental consent should be needed for those under the age of 16. On this issue, as on all issues with respect to age, it seems to us that the House should see that people effectively become adults from the age of 16. That would be the appropriate age.
  Mr. Hammond: I am sure that you, Mr. Deputy Speaker, would not want me to widen this discussion into a debate about the slightly strange views of the Liberal Democrats about what people should and should not be able to do at the age of 16. The hon. Gentleman is in danger, however, of tripping over his arguments in earlier debates this evening. What we are doing is empowering local authorities. If we mean what we say when we talk about empowering local authorities, it must be for individual local authorities, having regard to their individual circumstances, to make that decision. This is not prescriptive legislation; it is permissive legislation.
  Mr. Davey: I am not sure that the hon. Gentleman's argument is terribly consistent. While we certainly want to empower local authorities to take control of their own areas and of their own communities, that does not apply to issues such as age. Age is an issue that we debate nationally, and the application of age limits should be a national issue. It is not suitable for devolution, as it is an issue of rights. I do not want to quibble too much with the hon. Gentleman, however, as he has made a serious contribution, and I know that my hon. Friend the Member for Somerton and Frome (Mr. Heath) has real experience of this matter from his constituency.
  Mr. Heath: I am not sure about the depth of my experience but, like the hon. Member for Runnymede

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  and Weybridge(Mr. Hammond),I have knowledge of a constituency case in which parents were distressed by the fact that their child had been to such an establishment without their knowledge and permission. When I undertook a little more research on the subject, I was astonished to find that no registration system existed outside London. Therefore, as the law stands, the local authority in Somerset is incapable of doing anything about the problem.
  I welcome the Government's proposals for registration and I am grateful to the hon. Member for Runnymede and Weybridge for his response to the Minister's comments. However, unless I have missed the point—it is entirely possible that I have, so I look forward to the Minister's reply—what we have today is an extension of the registration scheme. It will allow those who visit the establishments that undertake this business to do so with a degree of confidence that the person operating on them knows what he is doing, is working with sterile equipment and has taken appropriate health precautions. That is welcome, and whether adults choose to have such operations is entirely their affair. I do not wish to take part in their decision-making process.
  However, several points about minors remain to be answered. It is not clear from the Minister's comments whether the Government's proposal changes the position of minors in any way. I do not accept the argument that it should necessarily be a matter for local authorities to have individual registration arrangements. The House is usually clear that we decide on such matters and there is no logic in having variations in the arrangements around the country. The circumstances that apply to 12-year-olds in one part of the country apply to 12-year-olds in another part. If they require protection, they require protection. I understand that the code of practice makes provision for parental consent but if adherence to that code is not part of the registration process, it should be. I hope that local authorities will be empowered to make that a requirement.
  The hon. Member for Runnymede and Weybridge made another extremely important point. I am worried by cases in which there is parental consent but the child is below the age at which he or she can consent in any real way to a procedure that effectively involves their mutilation. In other circumstances and irrespective of the views of the parents, that might be treated as common assault. However, if there is specific legislation, it might be argued that the law's silence on such cases might mean that a common assault cannot be deemed to have occurred. The Government might like to do a little more thinking on the age limit for children who can be operated on in this way for purely cosmetic purposes and with no possible advantage to them. The Government should also consider the role of parental consent in the cases of slightly older children who may strongly support the idea of being pierced so that they conform to the latest fashion trends.
  The provisions are silent on those two issues and I hope that the Minister will be able to elucidate the position. If there is no provision for minors, the issue will have to be revisited if the House is to do its job properly and the Government are to have the effective registration process that my constituents and those of other hon. Members want.
  9 pm
  Phil Hope: We have had an important debate. As the hon. Member for Somerton and Frome (Mr. Heath) said, the existing registration scheme will be extended to local authorities outside London. I am happy to tell the hon. Member for Runnymede and Weybridge (Mr. Hammond) that the behaviour of their lordships on body piercing is a matter for them rather than me.
  I fail to understand the relevance of the criticism that we are not joined-up in our thinking because we are doing something that is clearly joined-up. In parliamentary terms, the question whether the measure fell within the ambit of the Bill was marginal, although we now know that it does. I am delighted that we are able to take the measure forward.
  We are aware of the tragic case of Daniel Hindle, who died from septicaemia in December 2002 after having his lip pierced, which the hon. Member for Runnymede and Weybridge mentioned. Sheffield city council is conducting a thorough and detailed investigation of the circumstances surrounding his death and I understand that there will be a coroner's inquest. It would therefore be premature for me to comment on the points that the hon. Gentleman raised but it will be important to consider whether there are general lessons to be learned in due course. I understand that the Department of Health is exploring the feasibility of conducting a study on the risks of infection that are associated with cosmetic body piercing in England and that it is requesting advice from the British Society for Antimicrobial Chemotherapy and the British Cardiac Society on the health risks of cosmetic body piercing and other types of skin piercing for people with congenital heart disease.
  The hon. Gentleman asked several other questions. He asked about the standards of body-piercing practice before, during and after piercing. We believe that such detailed information is best provided by guidelines and several publications already provide such advice. For example, the Health and Safety Executive produced updated guidelines for local authorities on skin-piercing activities and enforcement as recently as October 2001. The guidelines are designed to assist the local authorities to which we are now extending powers to advise businesses on such issues as hygiene practice, aftercare and how to adopt a reasonable approach to issues surrounding the age of consent—I shall say a little more about that in a moment. Additionally, local authorities such as Bury metropolitan borough council, Rochdale metropolitan borough council, Sheffield city council and Southampton city council have produced good practice guidelines.
  Mr. Hammond: I am grateful to the Minister for that information. Will it be lawful for a local authority to withhold registration from an establishment because it does not adhere to the good practice guidelines?
  Phil Hope: I made it clear earlier that if a business fails to take account of guidelines, such as those on using sterile instruments, it would be an offence for it to trade without registration, or if it were in breach of byelaws. The wider guidelines about which the hon. Gentleman talks do not exist in legislation—they have been developed by the HSE. Local authorities throughout the

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  country have produced good practice guidelines and the European Professional Piercers Association and the Association of Professional Piercers have produced guidance on safe and hygienic body-piercing techniques. I understand that the hon. Gentleman is trying to press me to go further and suggest that the law should provide that local authorities could enforce such standards, but we are extending the registration scheme that applies in London, so that is not the case. However, we would expect local authorities to use good practice and apply the guidelines to the businesses that they register.
  Mr. Hammond: If I have understood the relevant section in part VIII of the Local Government (Miscellaneous Provisions) Act 1982 correctly, the byelaw-making power relates only to hygiene, so the Minister is right to cite the example of sterile needles. However, a local authority has no power to withhold registration from somebody who is complying with the byelaws, which cover only hygiene, but failing to comply with any other codes that relate to parental consent and health warnings. Is that correct?
  Phil Hope: We do not believe that pre-registration assessment of a practice is necessary. It would only add burdens to businesses and local authorities and extra costs to customers. Registration offers an opportunity for local authorities to establish a constructive relationship with businesses; that includes providing advice on hygienic practices. If a business refuses to heed that advice, the authority has the option of prosecuting it under the new legislation or using health and safety at work provisions such as improvement or prohibition notices and, ultimately, prosecution. There are measures that local authorities can take without amending the Bill as the hon. Gentleman suggests.
  Mr. Hammond: I am sorry to have to proceed by intervention, but that is the only method that is open to us.
  How does the Bill empower a local authority to prosecute a business for failure to comply with anything other than byelaws relating to hygienic practice? We are in danger of congratulating ourselves on having addressed the problem that was highlighted by the death of Daniel Hindle, while leaving local authorities utterly powerless to deny registration to an establishment that persistently refuses to give health warnings or to complete basic health questionnaires before carrying out piercing operations.
  Phil Hope: The hon. Gentleman is labouring the point. The Bill allows local authorities to prosecute a business that fails to register with it or to operate in observance of byelaws on health and cleanliness. The job of local authorities, which the Bill will allow those outside London to do, is to build up their relationship with businesses. If a business continues to refuse to heed the advice given by the local authority, the authority can prosecute it under the new legislation—essentially on the key theme of failing to address hygiene and cleanliness as required. The local authority can also use the health and safety at work provisions if that is appropriate to the kind of offence that they believe the
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  business to be committing. It is completely untrue to say that local authorities have no powers whatever to intervene. The Bill extends to local authorities outside London the ability to intervene when required.
  Mr. Heath rose—
  Phil Hope: If the hon. Gentleman wants to ask about consent, I am about to deal with that.
  We have no plans to introduce a minimum age of consent for body piercing. However, the Health and Safety Executive has issued guidelines to local authorities to assist them in encouraging businesses to adopt a reasonable attitude to the age of consent. Although the Department of Health has not given a commitment to legislate, it has said that it will keep the matter under review with ministerial colleagues in the Home Office as the new measures take effect. Setting the age of consent at 16, which was mentioned by the hon. Member for Somerton and Frome (Mr. Heath), could lead to children under that age piercing themselves or each other in an unsafe and unhygienic way, or even to their going to disreputable businesses. We prefer that businesses carrying out ear piercing and cosmetic body piercing should be subject to local authority control so that those activities can be undertaken in a safe and hygienic manner.
  The hon. Member for Somerton and Frome raised the wider question of common assault. Body piercing, particularly for sexual gratification, is unlawful. Children under the age of 16 are unable to consent lawfully to what would be regarded as indecent assault and, as such, a matter for the courts. To that extent there is definite protection for children under the age of 16. The only other question is about the piercing of ear lobes—
  Mr. Hammond: In the case of one of my constituents, which I quoted earlier, the person concerned was informed that she could bring a prosecution for common assault against the person who pierced her daughter, but that that would be a private prosecution because the police would not become involved. Does the Minister think that that is a satisfactory state of affairs?
  Phil Hope: I do not know the details of the case that the hon. Gentleman is describing. However, I can understand his concern on behalf of his constituents to ensure that an improvement is made. I regret that I cannot comment on a case when I do not have any of the details.
  Mr. Heath: I am sorry that we are delaying the Minister's progress.
  I now understand that the registration scheme as it is framed does not provide for local authorities to do anything about these age-of-consent issues. Secondly, setting aside the sexual offence to which reference has been made, in the case of common assault—even on a toddler who was mutilated, and whether or not the parents consented—it would be unlikely that the police or the public prosecutor would bring a prosecution on that basis. That is not entirely satisfactory.
  Phil Hope: I understand the concerns that the hon. Gentleman is raising. The guidelines issued to local

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  authorities to assist them refer to them adopting a reasonable attitude to the age of consent. I have listed the guidelines that already exist—they have been published by a number of authorities and agencies—on the specific point that the hon. Gentleman is making.
  Mr. Hammond: The Minister says that the guidelines issued to local authorities talk about them adopting a reasonable attitude to the age of consent. That is great. They may adopt a reasonable attitude, but what is their sanction? What do they do with the business that complies with the hygiene byelaws, but does not comply with the local authority's reasonable attitude on age of consent? Can it deny registration or can it not?
  Phil Hope: I might be going through a time loop when I return to a point that I have made already. I understand the hon. Gentleman's question. The answer is that the guidelines are not a matter of law. They are guidelines for local authorities to use. They apply them by building a relationship with businesses that come within the registration scheme. In building that relationship, they can make judgments about whether the businesses are operating hygienically with due regard to cleanliness, and conform with other guidelines. By building up good practice in that relationship, it can be ensured that the widest possible take-up of good standards beyond and above hygiene and cleanliness are in place. If a business then fails to conform with hygiene and cleanliness regulations, registration can be withdrawn. A prosecution could be brought if the business were to break any further byelaws that the local authority had put in place. By extending these powers to other local authorities outside London, we are extending protections.
  The hon. Member for Somerton and Frome mentioned toddlers and abuse. If there are any grounds for believing that a child may be suffering or at risk of serious harm from ear piercing, for example, let alone other forms of piercing, the local authorities' social services department could be approached about the matter. The National Society for the Protection of Children also has powers to investigate and intervene in these circumstances. These points go way beyond the focus of the amendment, but I hope that they are responses to some of the key points that the hon. Gentleman has raised.
  Matthew Green: In the case of a two or three-year-old child, surely the social services department should not be called in because someone thinks that a child's ear might be infected. Surely the simple approach is to introduce a minimum age below which body piercing should not take place. Perhaps that should be eight, nine or 10 years, something like that.
  Phil Hope: Again, I do not know whether the hon. Gentleman has been present throughout the debate, but we made the point earlier that we were not minded to introduce an age of consent. The guidelines to local authorities state that they must pay due regard to reasonable age of consent issues, including that which the hon. Gentleman described. Through those guidelines, local authorities build a relationship with their businesses. They have the power to deregister businesses that do not conform to basic standards of
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  cleanliness and hygiene. They also have recourse to other measures such as the Health and Safety at Work, etc. Act 1974.
  Without repeating myself for a third time, I hope that I have made the Government's position clear. Although questions about the extent to which the powers may affect hon. Members' constituents are right, I hope that the consensus in the House is that the provision is important and will provide added protection, help prevent the transmission of infection and raise standards of hygiene and cleanliness for such businesses throughout the country.
  Lords amendment agreed to.
  Lords amendments 29 and 30 agreed to.

Clause 127

  COMMENCEMENT
  Lords amendment No. 31.
  9.15 pm
  Phil Hope: I beg to move, That this House agrees with the Lords in the said amendment.
  Mr. Deputy Speaker: With this, we may discuss Lords amendments Nos. 32, 38, 39 and 53.
  Phil Hope: The group consists of miscellaneous commencement and drafting amendments. Lords amendments Nos. 31, 32 and 39 will enable clause 73, entitled "Provision of information" and clause 111, entitled "Financial year" to commence on Royal Assent. Lords amendment No. 53 simply tidies up a reference in schedule 7 to clause 70 and removes the power to prescribe rateable values. Lords amendment No. 38 relates to council tax and removes a reference in schedule 7 to a non-existent repeal.
  Lords amendment agreed to.
  Lords amendments 32 to 39 agreed to.

Clause 127

  COMMENCEMENT
  Lords amendment No. 40.
  Phil Hope: I beg to move, That this House agrees with the Lords in the said amendment.
  The amendment would solve problems that the London Assembly has experienced with timetabling the 10 mayoral question time meetings that it must hold each year.
  Matthew Green: We welcome the amendment because Baroness Hamwee raised the matter in another place through an amendment that she withdrew for technical reasons. However, it clearly brought the matter to the attention of Ministers, who subsequently moved to deal with the matter. We are glad that they have done so.
  Lords amendment agreed to.
  Lords amendments Nos. 41 and 42 agreed to.

Clause 127

  COMMENCEMENT
  Lords amendment No. 43.
  Mr. Raynsford: I beg to move, That the House agrees with the Lords in the said amendment.
  Mr. Deputy Speaker: With this, we may discuss Lords amendment No. 51 and amendments (a) and (b) thereto.
  Mr. Raynsford: Lords amendments Nos. 43 and 51 deal with sections 45A and 45B of the Schools Standards and Framework Act 1998, as amended by sections 41 and 42 of the Education Act 2002. Under these provisions, the Secretary of State for Education and Skills and the National Assembly for Wales have a reserve power to set a minimum schools budget for a local education authority when that authority's proposed schools budget is considered inadequate in all circumstances.
  Lords amendment No. 43 is concerned with the commencement by the National Assembly for Wales of the amendments made to the Education Act 2002 by Lords amendment No. 51. Lords amendment No. 51 is concerned with two relatively minor changes to these provisions. First, it brings forward by one month to 31 December the schools budget deadline by which local education authorities in England are required to notify the Secretary of State for Education and Skills and their schools of their proposed schools budget for the following financial year.
  In his statement to the House on 17 July, my right hon. Friend the Secretary of State for Education and Skills acknowledged that the changes in school and LEA funding arrangements introduced this year led to real difficulties for many schools. As he said, the difficulties have arisen from the coincidence of a number of significant changes to the local government and schools funding systems, and as a result of decisions made at both national and local levels. The House has, of course, discussed the issues in detail on a number of occasions. Everyone has agreed that the current timetable for setting individual schools' budgets simply does not allow head teachers enough time for sensible planning.
  On 17 July, my right hon. Friend the Secretary of State set out the measures that he proposed to take to ensure greater stability in school funding for 2004–05 and 2005–06. In doing so, he made it clear that one of the key principles underpinning that work is that central and local government should achieve earlier announcements of the financial allocations to schools, so that heads have greater certainty and more time to plan. As part of delivering that undertaking, my right hon. Friend has given a commitment that, well in advance of the announcement of the provisional local government finance settlement, his Department will provide local authorities with key information on the minimum increase in funding per pupil, on the floor increase in resources for local authorities that will underpin that guarantee, and on the distribution of standards fund grants.
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  The Government are also firmly committed to bringing forward the date of the provisional local government finance settlement as early as is practicable. We will do everything that we can to ensure that the announcement can be made by the middle of November this year. Such early announcements of key information will make it possible for local authorities to decide by the end of December what schools budget they are going to propose. The effect will be to give schools much greater certainty about their funding earlier in the year, so that they can plan more effectively for the following year. The deadline for authorities in Wales will remain 31 January.
  The second effect of amendment No. 51 will be to change the deadline by which the Secretary of State for Education and Skills or the National Assembly for Wales must give notice of their intention to use reserve powers to 14 days from the schools budget deadline, instead of 14 days from the date of each individual authority's notification of its proposed school budget. That will ensure a common timetable for consideration of all authorities' proposed schools budgets, which I am sure Members will accept as a more sensible arrangement.
  Although we appreciate the helpful intent behind amendments (a) and (b), we cannot support them. As I said, the Government are committed to bringing forward the date of the provisional local government finance settlement to mid-November. We will do everything possible to fulfil that commitment. It is vital that schools receive information about their budgets in good time, and delaying the determination of proposed schools budgets to 31 January would not be in the interest of schools or local authorities, not least because if it were necessary to decide to use the reserve power to set a minimum schools budget for an authority, that authority's actual schools budget might be determined only after the deadline for the authority to set its council tax for the following financial year. Amendment (b) is unnecessary, and would remove from the provisions helpful clarification about financial years. For those reasons, I urge the House to reject those two amendments.
  Mr. Graham Brady: I come to the consideration of the Local Government Bill somewhat late in its passage, but I hope that hon. Members will forgive me, given that I have been dealing with the issue under discussion for a little longer, having served as a Back Bencher on the Committee for the Schools Standards and Framework Bill in 1998, and a Front Bencher on the Committee on the Education Bill last year.
  This business is just another chapter in the sorry saga of the Government's mishandling of school funding this year. In spite of the Minister's emollient words—in his usual reasonable tone, he presented this as merely the product of coincidences of various changes in procedure—it is a great shame that hon. Members and schools in our various constituencies have little reason to be confident that this will be the final chapter in that sorry saga.
  This year, the Department for Education and Skills guaranteed a minimum increase in education formula allocations for each local education authority area. None the less, we have seen the worst schools funding

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  crisis in decades. On 17 July, the Secretary of State sought a guarantee at the level of the individual school. He said:
  "I will confirm the minimum percentage increases for 2004–05 and, provisionally, for 2005–06, by the time of the provisional local government finance settlement in November"—[Official Report, 17 July 2003; Vol. 409, c. 455.]
  We must ask whether this year's guarantee will prove any more durable than that which went before it.
  The crisis that has afflicted schools this year was all the worse because it was unnecessary. The Department for Education and Skills was warned in good time by heads and by hon. Members, but was too arrogant or too intransigent to act. Ministers ignored repeated warnings about the effect of increases in employers' national insurance contributions, increases in the superannuation contributions for teachers, and the removal of elements of the standards fund. They did nothing.
  It is also true that the specific proposals in the amendment could have been dealt with much earlier. On 8 January 2002, in Standing Committee G on the Education Bill, the hon. Member for Harrogate and Knaresborough (Mr. Willis) and I moved amendments that sought to deal with this precise problem. The hon. Gentleman sought to fix a later end date for the budget round, and suggested that 15 February would be appropriate. I tried to fix the end date as a period of not more than 21 days after the teachers pay review had reported. Either arrangement might have helped had Ministers been prepared to listen to the arguments being advanced. The proposal was one of the unfortunate casualties of the heavy-handed, unnecessary timetabling of our considerations in Committee.
  The perfectly sensible arguments that were advanced by members of the Committee on behalf of outside interest groups that had seen clearly what would happen as a result of the arrangements that the Government were implementing were not fully considered. Had they been, it might have obviated the need for these exchanges. Sadly, Ministers would not listen. As a consequence, they have presided over utter chaos in school funding this year.
  This measure is a belated attempt to resolve a problem that we foresaw and about which we warned Ministers almost two years ago. The House should turn its attention to whether this belated attempt to solve the problem will work. On 17 July, the Secretary of State set out an approach that depends on a number of different strands: a two-year teachers' pay settlement, an earlier provisional local government settlement and how local authorities choose to fund their local schools. Even so, on 17 July, the Secretary of State accepted that there may be exceptional circumstances in which local education authorities would not be expected to—in the jargon—passport 100 per cent. of the increase in schools formula spending share to the schools budget. That was confirmed in a written answer to me on 8 September from the Minister for Lifelong Learning, Further and Higher Education. I asked for clarification of those exceptional circumstances. I received the following response:
  "In considering whether or not to use his reserve power to set a minimum schools budget for the following financial year for any LEA proposing not to passport, the Secretary of State will
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  consider all relevant circumstances including the reasons put forward by the LEA. He has made no pre-judgment on what would be considered exceptional."

  So we already have from the Secretary of State an acceptance that there may be exceptional circumstances in which 100 per cent. passporting may not be appropriate or necessary, but no indication as yet of the circumstances in which that judgment would be made.
  9.30 pm
  What would happen in that event? Would the minimum percentage per pupil increase in the school budget be honoured if, it being considered an exceptional circumstance, the powers to require the 100 per cent. passporting were not implemented? If so, would it be done through direct payment? Is the Minister confident that the amendment would allow sufficient time for the school to be notified if such measures were taken?
  On 8 January, I attempted to give Ministers powers to do precisely what they now say they want to do. My amendments would have allowed minimum per pupil funding to be specified for each school or category of schools. It is not clear to me how, without those powers, Ministers will fulfil the aspiration set out in the statement of 17 July of a minimum per pupil increase.
  As can be seen from a written answer that I received last week, Ministers do not know how they will fulfil their aspirations either. When I asked the Secretary of State whether the guaranteed minimum per pupil increase would take account of the restoration of standards funds payments or would apply only to the age-weighted per pupil funding, I was told:
  "The Department is working with local education authorities on the methodology for the guarantee, and aims to issue draft regulations and guidance during the autumn."
  Ministers do not yet know how they will achieve their aim in procedural terms; nor do they even yet know on what baseline the guaranteed increased school funding figure will begin. Another written answer from the Minister for Lifelong Learning, Further and Higher Education stated:
  "local education authorities and schools will work together through their Schools Forums to agree the funding baseline to which the guaranteed per pupil increase will be applied. We aim to issue guidance and draft regulations on this during the autumn."—[Official Report, 8 September 2003; Vol. 410, c. 132W, 140W.]

  One would have thought it a fairly simple matter to look at a pledge to increase per pupil school funding from one year to the next, and that the baseline must necessarily be the sum per pupil spent the previous year. I have half the answer so far. I do not criticise the Department, because I think that it was impossible to print the other half of the figures that I asked for. I am talking about the per pupil expenditure figure for every school in the country for the current financial year. It is contained in a fairly substantial document, which is in the Library of the House. I am sure that Members on both sides of the House will want to hurry there to consult it. They will find interesting variations in not only the per pupil funding of schools in different parts of the country and different constituencies, but per pupil funding in different parts of the same LEA area.

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  The remarkable thing is that those figures are not the baseline on which the pledge to increase per pupil funding is to be based. I do not understand how anything other than per pupil funding in the present year can be used as the baseline. We have the guarantee of 17 July but, as yet, no methodology, no regulations and no guidance. We do not even know the baseline funding figure on which a school's guaranteed increase will build.
  The measures before us are a belated attempt to deal with the problems that have afflicted schools during the current financial year. If the Government had perhaps been a little more willing to listen to rational argument and to be open-minded in their consideration of previous legislation, the measures might already have been in place, or indeed been unnecessary because more effective measures could have been enacted already. We are left with an attempt to improve the position, which is an honest attempt that we welcome. I give full credit to the Minister for that but it leaves us with some serious questions.
  The Minister for School Standards(Mr. David Miliband): The hon. Gentleman is still on the Committee of the 1998 Bill.
  Mr. Brady: The Minister comments that he thinks that I am still on the Committee of the 1998 Bill. If Ministers at the time had got more right in the passage of the School Standards and Framework Bill and had listened to argument, schools would be the better for it and we would not be picking up the pieces many years on.
  We have had an assurance from the Minister for Local Government, Regional Governance and Fire that everything possible will be done by the Government to ensure that the local government settlement will be brought forward by mid-November. That is extremely welcome. We will, of course, seek to hold the Government to that. I ask for further assurances or clarification on the exact status of the provisional settlement, and how certain schools can be that they are working from a solid foundation in looking at the provisional figures. Can he give the House a clearer idea of the status of negotiations regarding the teachers' pay settlement? I would welcome some further assurance on those points and look forward to the Minister's comments.
  Mr. Edward Davey: The amendment, which we will not oppose, tries to deal with a problem that the Government have made for themselves in a number of areas, not only by taking the power to set minimum budgets but by the way in which they approached last year's local government finance settlement and failed to deal with the school funding crisis that we saw as a result of that settlement. What happened last year—I will not give a complete detailed account, as the hon. Member for Altrincham and Sale, West (Mr. Brady) has just done that—was that a number of Departments took different decisions that would affect schools' budgets and no one in this so-called joined-up government put them all together and worked out the net effect on different schools. That was the problem.
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  What we should be hearing from the Government is that they will not allow that situation to arise again—that Whitehall Departments will talk to each other and that a Minister's local government finance settlement announcement in which the Government praise themselves and say how they are going to give local authorities more flexibility will not again be followed the next day by a letter from the Minister for School Standards—who I am delighted to see on the Front Bench—telling local head teachers what they must expect their local education authority to pass to them. We had one Department saying that it was all about flexibilities and freedoms and that authorities would be able to make choices, and another saying that a large slug of the money that had just been announced was earmarked and had to be passported through and that head teachers should expect and demand it. That is not the sign of a Government who believe in localism, or of a joined-up Government in which Departments of State are talking to each other. That was the major problem with the local authority finance settlement last year, and that is why the Government got into such a mess.
  The question is whether the amendment and some of the other measures announced by the Secretary of State for Education and Skills earlier this year are up to the job of putting the problems right. I remain unconvinced. The measure may be taking a small step forward; it is clear from what the Local Government Association and others have said that it may help. The question is whether the Government will be able to deliver on the rules that they are setting themselves, but the proposal does not deal with the underlying issues; for example, the balance of funding issue, where if there is a shortfall, the effect on the council tax or on spending on services is so great. Those issues have not been dealt with. I know that a review is on the way but clearly it will not inform this year's settlement. These are fundamental issues with which we must grapple, but what we have are very much sticking plasters and second-best solutions. The Government have not grappled with the fundamental problems.
  I agreed with a lot of what the hon. Member for Altrincham and Sale, West said in his castigation of the Government, but it was rich of him to say that this year's funding crisis was the worst for decades. Some of us can remember many funding crises in our schools under the Conservative Governments of the 1980s and 1990s, some of which were far worse than last year's. That does not excuse the Government and two wrongs do not make a right, but it ill behoves Conservative Front Benchers to make such remarks without apologising for their appalling record.
  We will support the Government on the Lords amendment, which goes some way towards making a bad situation a little better, but we hope that the Government will learn the lessons from the chaos of last year. We look forward to seeing whether they learn the lessons in this year's local government finance settlement in terms of what it does for schools. Schools need that money, but the Government have to provide a framework and a joined-up approach to enable it to get through.
  Mr. Raynsford: This has been a short but useful debate on an important subject. The hon. Member for

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  Altrincham and Sale, West (Mr. Brady) stressed that he came late to the Bill; some would say that he comes at the eleventh hour. We welcome him none the less. He emphasised his involvement in earlier education issues, but I understand that he was not able to attend last week's debate on the very issues we are debating tonight.
  I agree with the hon. Member for Kingston and Surbiton (Mr. Davey) that those with longer experience of education will know of the considerable difference between the financial problems that have occurred in the course of the current year—about which we have been open—as against the position when the Conservatives were in government, when schools, local education authorities and teachers faced much larger genuine crises in terms of inadequate funding.
  The huge increases in funding for education introduced by the Government have made a difference. and everyone in education knows that only too well. My wife, a teacher, has shown me her new laptop, provided as a result of a Government initiative. That is an interesting indication of the way in which new investment is creating new technology opportunities to improve the ability of, if I may say so, excellent teachers to deliver high standards of education to their pupils [Laughter.] I will say no more than that.
  This year's settlement ensured an overall increase of some £2.7 billion in education funding—far higher than the sums that used to be available in the years of the Conservative Government.
  9.45 pm
  Mr. Brady: But at this point in this year's funding crisis, the Minister must surely acknowledge that nearly all of that money was taken out again through increases in taxation, and through changes in the standards fund and in the pension arrangements.
  Mr. Raynsford: None of that money was taken out by the Government through changes in the standards fund; that was the increase available. A range of factors led to difficulties in distribution, when the funds that were available to education authorities were then transmitted to schools. These issues have been debated in this House in the past few months, and we reached an understanding of what the changes were. They were the result of a number of different factors coming together to create what was clearly a period of turbulence.
  I shall describe some of those factors, the first of which was the change to local authority distribution of grant. It had been promised for some time, and lengthy consultation had taken place on that complex issue. The change happened to be introduced last year, which created a degree of turbulence in the system. However, every local authority in the country received an above-inflation grant increase—not something that they used to experience when the Conservatives were in power.
  Secondly, there were changes to the standards fund. and I should like to highlight some of the issues involved. The standards fund has been hugely important in helping to drive improvement in a range of areas in schools, but it has been ring-fenced. That has had specific advantages in terms of enabling funding to be targeted at individual schools, but ring-fencing does have a downside. When sums have to be earmarked for specific programmes, it creates inflexibility and
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  difficulties for local authorities in managing their wider responsibilities. So it is this Government's policy objective to reduce the degree of ring-fencing, while recognising the importance of what it can achieve in certain circumstances. This involves a difficult balance. In the course of this year, we sought to reduce the overall amount of ring-fenced funding.
  Mr. Edward Davey: I have never understood the difference between ring-fencing and passporting; can the Minister help me by explaining it?
  Mr. Raynsford: Let me run through the various components. Ring-fencing involves a clear insistence that sums allocated by Government for a particular purpose are used solely for that purpose. The objective is to ensure that those funds are made available for the purpose for which they were granted, and cannot be used for any other purpose whatsoever. The benefit is that that ensures input control, whereby those funds will go to the designated purpose; the downside, as the hon. Gentleman knows well, is that local authorities' freedom to use their overall funds in the most flexible way, taking account of the many pressures that they face, is inhibited.
  Passporting has been a mechanism through which the Department for Education and Skills has sought to indicate the funding that should be passed on from local authorities to schools in any one year. As the hon. Gentleman is an expert in local government finance, he will know that that sum is largely made up of Government grant, but that it also includes an amount assumed to be raised by local authorities through their own council tax. That is the basis on which the formula spending share, which used to be known as the standard spending assessment, was constituted. So the passporting figures for the current year included the assumption that authorities would pass on to education sums related to the FSS for education, which embraced both sums made available by the Government in grant and those that might be raised by authorities from their own council tax, according to the assumption.
  The hon. Gentleman knows very well that the difficulties occurred, in the main, when the total sum of Government grant made available to local authorities was less than the sum that they expected to passport on in education. That is one of the tensions, which I have already exposed, in the relationship between specific funding for a particular subject—in this case, education—and the wider issue of local government finance. That is why tensions are inevitably associated with ring-fencing and passporting, and why it is necessary to approach these issues in a sensible and consultative way.
  I was talking about some of the changes that occurred this year. We know about increases in teachers' pay, which had a differential impact, with some schools facing more significant burdens than others. There were increases in teachers' pensions and increased pressures on some local authorities for special needs obligations for example, for children with special educational needs and pupil referral units. All of those had differential impacts and the combination of all those factors resulted in some schools not receiving the level of increase that they had anticipated and in some authorities finding it difficult to ensure that education

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  was funded to the extent that the Government wanted without a disproportionate impact on the council tax. We have been open about that and explored the issue in lengthy discussions with representatives of local government, head teachers, the unions and others to get to the bottom of what went wrong this year in order to ensure that it will be put right in future.
  Matthew Green: With the benefit of hindsight—I acknowledge that the Minister did not set out to create this year's problems—would he say that making so many changes in one year should be avoided in future because of the problems that it has created now?
  Mr. Raynsford: It has always been our objective to try to provide local government with as much certainty as possible. I am saying clearly to local government that we do not intend to make any changes to the methodology of the grant distribution formula—other than where it is absolutely necessary when a change of service occurs for the next two years, which should provide a period of consistency and certainty. However, the hon. Gentleman will recall the strong calls to change the old standard spending assessment. The SSA was discredited; people knew that it was not an accurate reflection of the need to spend; there was a strong argument for a review. Such reviews are always difficult because of the different competing claims from different elements among the local government family. There is a huge amount of lobbying with all groups seeking their own advantage, and it is hard to find a way through. In fact, it is difficult to please anyone because almost everyone finds something wrong with what is finally proposed.
  We do not relish making such changes often and I am pleased to say that there will not be another change of that nature for some time. I accept the hon. Gentleman's point that the change happened at the same time as the other changes that I have described and that it contributed to the turbulence that caused the difficulties. We are now trying to minimise the risk of it happening again.
  Mr. Brady: One of the reasons that the Minister advanced to explain the difficulties in some local education authority areas was the above-inflation increase in the cost of special needs education, which is a significant problem. Are the Government proposing to ring-fence provision for special educational needs funding, given that measures are being taken to require a per pupil increase in mainstream schools? Is there a danger that it might squeeze special needs education?
  Mr. Raynsford: No, the Government want to see funding for special educational needs, pupil referral units and so forth continue to grow where there is a demand for it. However, the Secretary of State for Education and Skills has made it absolutely clear that the increase in funding for that sector should not exceed the increase in funding for schools. That is a perfectly fair wish—to ensure that schools funding is not used to fund central services, but that there should be scope for both to continue to rise in line.
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  I was dealing with our attempts to tackle the problems of the current year and to ensure that next year's arrangements work much better and provide the greater certainty to schools—and, indeed, to local authorities—that we all want to see. One key element will flow from the lack of change to the local government formula, which I described in response to the question asked by the hon. Member for Ludlow (Matthew Green). That will help. Further certainty will be provided by the commitment of my right hon. Friend the Secretary of State to continue the standards fund. We have accepted that it will involve the continuation of a ring-fenced grant. That is a concession on our part, because our objective is to reduce the overall level of ring-fencing—[Interruption.] No, it is a pragmatic approach to deal with a problem that inevitably caused difficulty. A ring-fenced grant such as the standards fund is targeted specifically at a certain area. If it is rolled into the general grant, the distribution is inevitably different. That was one of the problems that caused last year's difficulties. Recognising that fact, we want to ensure that the problem is not replicated. That is why we are going to continue with the grant for the moment.
  A third element is giving earlier indications of the minimum per-pupil increases. That is a clear commitment by my right hon. Friend the Secretary of State for Education and Skills to ensure that schools have much greater certainty at an earlier stage, because last year the figures emerged relatively late in the budget-making process and that was a difficulty for schools. Of course, we also want to see earlier decisions on the local authority settlement. That is difficult, because—as with so many other issues, a tension exists.
  Local authorities tell us repeatedly that they want the earliest possible indication of the provisional settlement. That is not surprising. They also tell us that they want us to use the latest available data. However, much of the data only becomes available late in the process. One of the key elements, from the education point of view, is the secondary school pupil numbers, which are being collated only now. By the time they are collected, checked and passed to us, it will be later in the process, and that is an inevitable constraint.
  We could, of course, give earlier provisional settlement figures if we worked on figures that were a year out of date, but local government wants us to use up-to-date figures. I understand that. It is a reasonable request and we try to accommodate it. That is why our aim will be to produce the provisional settlement by the middle of November. We are working hard to make that possible. It will not be easy and it will require enormous hard work by my officials to achieve it, but we are committed to do it to help to provide greater certainty.
  Additionally, my right hon. Friend the Secretary of State for Education and Skills has pledged additional funding and we have given a similar pledge to ensure that all authorities are able to passport 100 per cent. of the schools funding requirement without having to take funding from other areas or increase council tax disproportionately. Increases in council tax have been far too high in recent years and it is essential that councils moderate their demands in future. The public

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  are far from happy with the excessive increases, which came predominantly from Conservative authorities. We will watch very closely the average increase in council tax, which was significantly higher—by five or six percentage points—in Conservative areas than in Labour areas and, indeed, Liberal Democrat areas. It is Conservatives who have driven up the council tax, and we will watch that closely in the coming months.
  Mr. Edward Davey: Will the Minister give way?
  Mr. Raynsford: I do not have time to give way.
  All the issues that I have mentioned have involved detailed discussion with local education authorities, schools, local authorities and relevant Departments. For those reasons, we have not been able to make full announcements on all the points about which the hon. Member for Altrincham and Sale, West asked me. We are discussing them with local authorities and schools. That is the right approach to ensure agreement and engagement, and to get the mechanisms right.
  The hon. Gentleman acknowledged—I thank him for doing so—that we are making an honest attempt to ensure that the problems that occurred this year will not he repeated next year. That is what we are determined to do. He asked about the certainty of the provisional settlement. The answer is that we publish the provisional settlement and give local authorities a period of time to respond to it and make submissions. We will consider those and then confirm the final settlement. However, I can say that the practice in recent years has been that the final settlement has not differed from the provisional settlement to any marked degree. I hope that that provides some certainty.
  We have also introduced a system of floors and ceilings to give local authorities confidence that they will not face a wide variation in the amount of funding with which they have to budget. All those changes are designed to improve the arrangements and give a better settlement in the coming year. The final question the hon. Gentleman asked was about the teachers' pay settlement. That is still in the hands of the School Teachers Review Body and we are awaiting the outcome.
  The hon. Member for Kingston and Surbiton raised wider issues of local authority finance. He knows that we are conducting the balance of funding review, and that is the right formula to address those wider issues. This year, we are not concentrating on the longer term issues but on getting the mechanisms right to overcome the practical problems that occurred with the distribution of the 2003–04 settlement and the impact on schools. Getting that right for 2004–05 is our fundamental objective. We are working hard at it and we will continue to do so. Our aim is to achieve a proper framework that provides certainty for schools and ensures that the additional money that the Government are putting into education finds its way to the right places.
  Lords amendment agreed to.
  Lords amendments Nos. 44 to 56 agreed to [One with Special entry].
  Committee appointed to draw up Reasons to be assigned to the Lords for disagreeing to their amendments Nos. 3,6 and 19: Paul Clark, Mr. Edward Davey, Linda Gilroy, Mr. Philip Hammond and Phil Hope; Phil Hope to be the Chairman of the Committee; Three to be the quorum of the Committee.—[Paul Clark.]
  To withdraw immediately.
  Reasons for disagreeing to certain Lords amendments reported, and agreed to; to be communicated to the Lords.

DELEGATED LEGISLATION
Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6)(Standing Committees on Delegated Legislation),
DELEGATED LEGISLATION

  NORTHERN IRELAND
  That the draft Northern Ireland Act 2000 (Modification) (No. 2) Order 2003, which was laid before this House on 3rd July, be approved.—[Gillian Merron.]
  Question agreed to.

EUROPEAN COMMUNITY DOCUMENTS
Motion made, and Question put forthwith, pursuant to Standing Order No. 119(9)(European Standing Committees),
EUROPEAN COMMUNITY DOCUMENTS

  MARITIME TRANSPORT SECURITY
  That this House takes note of European Union Document No. 8566/03, Commission Communication on enhancing maritime transport security and draft Regulation on enhancing ship and port facility security; and supports the Government's continuing commitment to working with the European Union to that end.—[Gillian Merron.]
  Question agreed to.

EUROPEAN SCRUTINY COMMITTEE
Ordered,
That Miss Anne McIntosh be discharged from the European Scrutiny Committee and Mr David Heathcoat-Amory be added.—[Gillian Merron.]

STANDING COMMITTEE ON THE INTER-GOVERNMENTAL CONFERENCE
Ordered,
That—
(1) There shall be a standing committee, called the Standing Committee on the Inter-Governmental Conference on the Future of Europe.
(2) At any sitting of the standing committee, the chairman may permit a Minister or Ministers to make statements on the Inter-Governmental Conference, and questions may then be put thereon by Members:
Provided that no proceedings under this paragraph may continue after the expiry of a period of one and a half hours from their commencement, except with the leave of the chairman.
(3) At the conclusion of proceedings under paragraph (2), the committee may consider either of the following—
(a) when a written report has been laid before Parliament by a Minister or Ministers, a Motion proposed from the chair 'That the committee has considered the report of [date] on the Inter-Governmental Conference'; or
(b) a Motion for the adjournment of the committee, provided that a Minister of the Crown has given notice of a subject relating to the Inter-Governmental Conference for the debate on the adjournment not later than five days before the sitting.
(4)(a) The chairman shall put any Questions necessary to dispose of the proceedings on any Motion under paragraph (3)(a), if not previously concluded, when the committee shall have sat for two and a half hours; and the chairman shall thereupon report that the committee has considered the report of [date] on the Inter-Governmental Conference, without putting any further Question;
(b) in case of a Motion under paragraph (3)(b), the chairman shall adjourn the committee without putting any question, not later than two and a half hours after the committee has begun sitting.
(5)(a) Notwithstanding Standing Order No. 86, the standing committee shall consist of those Members of the House nominated for the time being to the European Scrutiny Committee (appointed under Standing Order No. 143) and to the Foreign Affairs Committee (appointed under Standing Order No. 152); and
(b) any Member of the House, not being a member of the committee, may take part in the proceedings of the committee and be counted in the quorum, but shall not vote or make any motion, except that any member of the government may move a Motion under paragraph (3)(b).
(6) Members of the House of Lords may participate in the committee's proceedings, but no member of that House may vote or make any motion or be counted in the quorum.
That this Order be a Standing Order of the House until the end of the next Session of Parliament.—[Gillian Merron]

DELEGATED LEGISLATION

  WORKING TIME REGULATIONS
  Ordered,
  That the Working Time (Amendment) Regulations 2003 (S.I., 2003, No. 1684), be referred to a Standing Committee on Delegated Legislation.—[Gillian Merron.]

  CARE STANDARDS
  Ordered,
  That the Care Standards Act 2000 (Domiciliary Care Agencies and Nurses Agencies) (Amendment) (England) Regulations 2003 (S.I., 2003, No. 2323), be referred to a Standing Committee on Delegated Legislation.—[Gillian Merron.]

PETITION

  New Town
  10.3 pm
  Mrs. Angela Browning: In 1997, I gave evidence at the examination in public in the city of Exeter on behalf of my constituents opposed to the building of a new town in the east Devon part of my constituency.
  Since that time, the district council and many constituents have tried to make their views known. Although they agree that there should be some building—perhaps a small settlement—a whole new town is not in the local interest.
  I am pleased that at the recent, new examination in public the chairman revisited the question of whether such a town was needed at all—something that we all welcome. I am pleased to present to the House the petition of Councillor Ruth Burrow and more than 15,000 residents of east Devon.
  The petition declares:
  We object to a new town being built in East Devon and therefore request that the House of Commons recognises the view of local residents that new development should be proportionate to identified local need, should provide a mix of housing and that new build should not just be concentrated in one location but should be spread throughout the County to ensure future viability of village and market town communities.
  And the Petitioners remain etc.
  To lie upon the Table.

  Probate Services
  Motion made, and Question proposed, That this House do now adjourn.—[Gillian Merron]
  10.5 pm
  Mr. Win Griffiths: I raise an issue this evening about what I admit I thought was an entirely natural view of one of my constituents. As he had been appointed with enduring power of attorney over his aunt's financial affairs, he thought he would automatically become the administrator of the estate when she died, as there was no will. He found that he did not have that right, so I should like to consider that issue, as well as how the probate office deals with approaches for the administration of estates. I have already corresponded with the then Lord Chancellor's Department about the issue.
  The story starts on 24 February 2000, when one of my constituents, John Weaver, was appointed with enduring power of attorney for his aunt, Enid Jenkins. In September 2000, Enid Jenkins was admitted from hospital to Darren Court residential home in Baglan, Port Talbot, run by David Weaver, her nephew, and an elder cousin of John Weaver. Within weeks, on 19 November 2000, a letter, purportedly signed by Enid Jenkins, claimed that she had never asked anyone to look after her financial affairs and did not want John Weaver to look after them. On 10 January 2002, she had purportedly signed another letter, claiming that John Weaver had got her to sign a form when she was most unwell—in fact, so unwell that she could not remember being in hospital, let alone signing his form. It was her intention to attend the Court of Protection hearing in February.
  On 8 February 2001, the Court of Protection hearing took place. By 1 March, the Court of Protection confirmed that John Weaver was the person who had enduring power of attorney and that everything had been done properly. Unfortunately and sadly, a couple of days later, on 3 March, Enid Jenkins died. On 6 March, John Weaver registered her death and went about arranging the funeral. On 14 March, he received a letter from another relative informing him that David Weaver had become the administrator of their aunt's estate after applying to the probate office. David Weaver was not the closest relative of Enid Jenkins, and I should like to know whether it is on record that the eldest cousin ceded his right to be the administrator of the estate.
  Two years and six months later, despite the house of the late Enid Jenkins being sold more than 14 months ago, the accounts of the estate have not been settled and published. Moreover, the house was sold by the administrator, David Weaver, to the eldest cousin who had given up his right to be administrator, either officially or otherwise: he certainly did not take up that right. In January and February of this year, I wrote to David Weaver on behalf of John Weaver, seeking information about the estate, but I did not even get the courtesy of an acknowledgement, let alone an answer to any of the questions.
  John Weaver feels very strongly that, as his aunt, Enid Jenkins, had given him the power to look after her financial affairs when she was alive, it would have been natural for him to become the administrator of her
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  estate when a will could not be found. It is particularly galling to my constituent that the person who was the prime mover in the effort to get him removed from his power of attorney on behalf of Enid Jenkins should, in effect, have taken over that role on her death by becoming the administrator of the estate.
  The issue is simple. I share my constituent's concern about these issues, and I look forward to my hon. Friend's response as to why the apparently natural move from power of attorney to administrator of the estate does not take place. I would also be interested to know exactly what steps were taken to make sure that David Weaver was in fact the proper person to be the administrator of the estate, given that he was not the closest relative of Enid Jenkins. I look forward to my hon. Friend's reply.
  10.10 pm
  The Parliamentary Under-Secretary of State for Constitutional Affairs(Mr. David Lammy): I congratulate my hon. Friend on securing this short debate.
  I thank my hon. Friend for raising issues surrounding the granting of letters of administration to Mr. David Weaver. Mr. David Weaver wished to administer the estate on behalf of his aunt, Miss Enid Jenkins. In essence, my hon. Friend raises matters of principle relating, first, to enduring powers of attorney and, secondly, to the administration of intestate estates. Perhaps he will therefore excuse me if I outline briefly what those two things are.
  A power of attorney is a power to act on behalf of someone else. The person may be temporarily physically incapacitated and need someone to conduct business on their behalf, or they may be due to go abroad for a long period and need someone to collect rents, pay taxes and so on. It is entirely a matter for the individual to decide to whom to give power and what powers the attorney can have. That sort of power of attorney ceases to have effect if the person who made it dies or loses mental capacity. An enduring power of attorney differs from an ordinary power, as it can survive the loss of an individual's mental capacity provided that it is registered with the Court of Protection.
  When a person dies intestate—without leaving a will—his or her estate is distributed according to a scheme laid down by the section 26 of the Administration of Estates Act 1925, as amended. Entitlement under this scheme, which is designed to reflect the wishes of the average person, varies according to which relatives, if any, survive the deceased. The estate is distributed in a strict order of priority: to the spouse; to children of the deceased and the issue of any who has predeceased that person; if none, to the parents of the deceased; if none, to the brothers or sisters of the deceased; if none, to the grandparents; and if none, to uncles or aunts. When there are no relatives, or none can be found, the estate passes to the Crown, the Duchy of Lancaster or the Duchy of Cornwall.
  There is a distinction between attorneys and the administrator of an estate. The attorney acts on behalf of the person who chooses them. The administrator must act according to a set of rules, because the deceased person did not make a will.
  As I said, my hon. Friend raises these issues on behalf of his constituent, Mr. John Weaver. Mr. John Weaver is a relative of Miss Jenkins. Miss Jenkins appointed him

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  to act for her, as her attorney, by an enduring power of attorney in February 2000, which allowed him to deal with her assets during her lifetime. That is very important.
  In order for an enduring power to be used during the mental incapacity of the person, it must be registered with the Court of Protection. The attorney applied to the Court of Protection to register the enduring power of attorney in July 2000. As part of the process, he had to give notice of the application to certain relatives. Mr. David Weaver and most of the other nieces and nephews objected to the application on various grounds.
  The objections were considered by the master of the Court of Protection at a hearing on 8 February 2001. John Weaver, David Weaver and other relatives attended the hearing. The court carefully considered all the evidence, but it decided to dismiss the objections and ordered that the enduring power of attorney be registered. The attorney was also ordered to account to solicitors annually.
  As I have said, an enduring power—like any power of attorney—lasts only for the lifetime of the person who made it. It is automatically revoked on death, and the Court of Protection cancels a registered power when the person has died. The estate of the deceased is then dealt with under probate law in the way that any other person's estate is dealt with.
  A few weeks after the hearing about the enduring power, Miss Jenkins passed away. This ended the Court of Protection's jurisdiction over her affairs. As no will was found, Miss Jenkins died intestate. Mr. John Weaver, as her former attorney, felt that it would have been appropriate that he be granted letters of administration so that he could administer her estate. He was entitled to apply; he did not apply. Mr. David Weaver applied and obtained them.
  I come now to the issue of the letters of administration in this case. Miss Jenkins died on 3 March 2001 and on 12 March of that year, David Victor Weaver applied to the Probate Registry of Wales for a grant of letters of administration of Miss Jenkins's estate. Mr. Weaver applied personally, without the assistance of a solicitor. In his application, David Weaver swore upon oath that Miss Jenkins died without leaving a will, and that she was a spinster whose closest living relatives were the seven children of her five half brothers and sisters. All her half brothers and sisters had predeceased her.
  In these circumstances, any of Miss Jenkins's half-nieces and nephews are entitled to apply for letters of administration of her estate. When there is any dispute between persons interested in an estate, the issue of probate or letters of administration may be delayed until those disputes are resolved, by any of the parties entering a caveat. No caveat was entered in Miss Jenkins's estate.
  On 29 March 2001, letters of administration of Miss Jenkins's estate were granted to David Victor Weaver on the basis that he was the son of Ivor Weaver, one of Miss Jenkins's half-brothers, who had died in her lifetime. His entitlement to take letters of administration was equal to that of Miss Jenkins's other half-nieces and nephews and there was no need for him to notify or obtain the agreement of any of the others. If my hon.
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  Friend is suggesting that there are closer relatives to the deceased than the half-nephews and nieces, it is a serious matter about which the probate registrar should be notified. However, he should be clear that age is not a criteria for the order in which the hierarchy should work.
  As the administrator of Miss Jenkins's estate, David Weaver is required by the Administration of Estates Act 1925 to collect her assets, pay her debts and distribute the remainder of her estate among those entitled to it. In these circumstances, the estate falls to be divided equally among her half-nephews and nieces. David Weaver gave a sworn undertaking to administer the estate according to the law and, when required, to supply a full inventory of the estate and give an account of that to the court.
  On 8 April 2001, John Weaver, who had been Miss Jenkins's attorney under an enduring power of attorney, as my hon. Friend said, entered into correspondence with the Probate Registry of Wales and expressed concerns that he had not received his proper share of Miss Jenkins's estate. If a beneficiary has concerns about the administration of an estate, he may issue a summons requesting an order that requires the administrator to file in court an inventory and account of his administration of the estate. That will usually provide sufficient information to the beneficiary either to set his mind at rest or to suggest that further action should be taken. On four occasions, the deputy district probate registrar of Wales suggested to John Weaver that he should consider issuing a summons for an inventory and account of the estate, but he has not, as yet, done so.
  As far as the administration of an estate is concerned, it is assumed that those who stand to inherit from an estate should have a vested interest in seeing that it is promptly and properly distributed. The law therefore provides that the order of priority for those eligible to make an application for letters of administration is the same as for those who benefit. The law also provides that if there are no surviving relatives or if surviving relatives do not wish to take out a grant, a grant may be issued to the Treasury Solicitor on behalf of the Crown. The present law therefore provides adequately for the issue of a grant and for the estate to be administered. The process is clear, tried and tested and works well. It is our view that it is unnecessary to change it.
  It is difficult to understand what purpose would be served by joining holders of an enduring power of attorney to the eligible class of those who may apply to administer an intestate estate. A person with an EPA could bring nothing extra to the administration that the present class cannot provide, especially because he might not be a relative of the deceased. Unless there is agreement to the contrary from beneficiaries, there is no room for discretion when administering the estate—it must be administered as set out in the intestacy rules. In addition, if the EPA holder were not a beneficiary, it would produce a situation in which a person from outside the family administered the estate for family members. That would be against the whole policy intention behind the intestacy rules, which limit involvement in administration to the family of the deceased who are beneficiaries. In addition, the only logical place to put attorneys is between family members and the Crown. However, their function would then be only to distribute the estate to the family or simply to pass the estate to the Crown.

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  Finally, as I have already said, the purpose of an EPA and that of a grant of representation are quite different. The first is used to look after the affairs of people during their lifetime in such a way as to benefit them most. The purpose of letters of administration is to distribute the deceased's estate among the beneficiaries in accordance with rules laid down by law. They are separate functions; it does not follow that because a person holds an enduring power of attorney they are automatically suitable to be granted letters of administration.
  The review of probate services that was conducted in 2001 made recommendations for the modernisation of certain aspects of the service, including the conduct of personal applications such as Mr. Weaver's. A public consultation on the main recommendations concluded on 28 February 2003; officials are analysing the responses.
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  The whole thrust of Government policy in this area is, properly, to encourage people to make wills—to set out their precise intent during their lifetime to avoid family disputes. Where disputes arise, family members must make their application for the grant on the basis of the intestacy laws.
  I hope that I have explained to my hon. Friend why there is a clear distinction between having an enduring power of attorney during someone's lifetime—whereby one is clearly aware of that person's intent, having been asked to do a job of work for them—and a situation in which someone dies having failed to make a will, whereupon the state takes over and the estate is administered under the intestacy laws.
  Question put and agreed to.
  Adjourned accordingly at twenty-seven minutes past Ten o'clock.