Lords Sitting of 27 October 1980

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Norwich.

RPI INCREASES AND THE NATIONALISED INDUSTRIES
Lord ORR-EWING: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what, during the last 12 months, has been the percentage rise in the retail price index in wholesale prices and in nationalised industry prices.
The MINISTER of STATE, TREASURY (Lord Cockfield): My Lords, in the 12 months to September the retail price index rose by 15·9 per cent. and wholesale prices rose by 14·8 per cent. Nationalised industry prices included in the RPI have risen by 25·1 per cent. over the same period.
Lord ORR-EWING: My Lords, do not those figures illustrate the fact that the private sector, through better use of
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manpower and higher productivity, has been substantially more successful in keeping prices down than the public sector?
Lord COCKFIELD: My Lords, my noble friend draws attention to a point of great importance. Many of the nationalised industries are not subject to the same pressures of the market place as are industries in the private sector, and too often this has meant that their costs have increased and their prices have increased to a far greater extent than has occurred in the private sector.
Lord LEATHERLAND: My Lords, does not this show how very badly indeed the Government have looked after the nationalised industries during the last 12 months?
Lord COCKFIELD: My Lords, I do not know whether the noble Lord is suggesting that the Government should intervene in the conduct of the nationalised industries. That is not our policy. We believe that the nationalised industries ought to be conducted efficiently and well, and it should be possible—indeed, there is a very heavy duty resting upon them—greatly to moderate the level of their price increases.
Lord ROBERTHALL: My Lords, is it not something of a contradiction in the Government's anti-inflation policy that monopoly industries should be allowed

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to pass on prices, which accentuate the squeeze on the private sector, where most people would think that they have gone far enough already?
Lord COCKFIELD: My Lords, there is a great deal in what the noble Lord says. Many of the nationalised industries are in a monopoly position and, as with all monopolies, this enables them to pass on excessive cost increases and excessive price increases. It is the Government's policy to reduce the monopoly of the nationalised industries wherever this can sensibly be done; where the monopoly continues, it has been the Government's policy to refer some of these monopolies to the Monopolies and Mergers Commission for a report.
Lord LEE of NEWTON: My Lords, will the noble Lord say that it is because of the Government's policy of non-intervention in nationalised industries that they have lost two highly capable chairmen of nationalised industries in the last few months?
Lord COCKFIELD: My Lords, the present Question relates to the prices charged by the nationalised industries. I do not know whether the noble Lord is trying to suggest that the high level of these price increases is due to the loss of the two chairmen in question.
Lord BOYD-CARPENTER: My Lords, does my noble friend recall that when the post-war Government nationalised these industries they did so on the grounds that they alleged that they were failing the nation? Do not the figures which my noble friend has just given to the House suggest that, applying that logic, they had better be very speedily de-nationalised?
Lord COCKFIELD: My Lords, I would not go quite as far as my noble friend suggests, but where they can sensibly be privatised we are following that policy. But there may always be a residual core of industries which remain in the public sector, and we believe that it is in the interests of everybody—not least in the interests of the nationalised industries themselves—that they should be conducted efficiently, that they should restrain their cost increases, and that they should keep their price increases down to more reasonable levels.
Lord IRVING of DARTFORD: My Lords, nevertheless, will the noble Lord accept that, in requiring the British Gas Corporation to bring the level of gas prices up to the price of oil, the Government are interfering in the conduct of a nationalised industry, and would they cease to do so?
Lord COCKFIELD: My Lords, in regard to gas prices the noble Lord is not entirely on a good point. For the period covered by the Question and the reply, gas prices rose by just over 16 per cent., which is substantially less than the increase in other nationalised industry prices. Therefore, if we excluded gas prices the position would look worse and not better.
Lord BYERS: My Lords, can the noble Lord say what instructions the Government gave to the Gas Corporation on prices?
Lord COCKFIELD: My Lords, that goes wide of the present Question.
Baroness VICKERS: My Lords, can my noble friend say by how much the prices of household goods, particularly those of food and clothing, supplied by the private sector have risen?
Lord COCKFIELD: My Lords, food prices have risen by about 11 per cent. compared with an increase of 15.9 per cent. in the RPI. Clothing and footwear prices have risen by 8 per cent. and household durables have risen by about 9 per cent. The position is that shop prices generally have risen substantially less than the RPI.
Lord BRUCE of DONINGTON: My Lords, is the noble Lord aware that some of his replies went very wide of the original Question that was asked? Is he further aware that the main price rises which have already taken place and which are due to come have been due to the results of direct Government intervention?
Lord COCKFIELD: No, my Lords, that is not true. There are of course some price increases which are due to factors outside the control of the individual nationalised industry. This is particularly true in the case of energy prices. But far too often the excessive rise in

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nationalised industry prices is due to the fact that their pay settlements have run at a significantly higher level than pay settlements in the private sector.
Lord DRUMALBYN: My Lords, will the Government intensify their references to the Office of Fair Trading to investigate the price of monopolies in general, and also in particular of the nationalised industries?
Lord COCKFIELD: My Lords, I note the point that my noble friend makes.
Lord PLANT: My Lords, does the Minister agree that the directive that the Government have issued to the water industry to use current cost accounting next year will increase prices to the water user?
Lord COCKFIELD: My Lords, current cost accounting itself goes somewhat wide of this Question but it represents a sensible advance in accounting methods.

WIND-ASSISTED COMMERCIAL SHIPS
2.45 p.m.
The Earl of LINDSEY and ABINGDON: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have any plans regarding the development of sail driven ships for commercial uses.
Viscount LONG: No, my Lords. Her Majesty's Government have concluded from several reviews that the considerable expenditure involved in the necessary research, development and design of wind-assisted commercial ships is not justified at the present time. Should a commercial organisation decide to undertake the design and construction of a sailing ship of novel design, it could apply to the Department of Industry for support for the research and development aspects of the project.
The Earl of LINDSEY and ABINGDON: My Lords, while thanking my
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noble friend for that reply, may I ask him whether he is aware that our main maritime trading competitors, such as Japan, are giving serious consideration to the development of these ships as an alternative means of saving fuel? Further, as we are an island where large tankers and so forth come into deep water ports such as Milford Haven, could not the Government give serious consideration to the financial feasibility of developing smaller container ships and tankers for transportation of commodities from these large deep water ports to other destinations in the United Kingdom and the Continent of Europe?
Viscount LONG: My Lords, it is quite true that other countries are examining the question, as we have done, but, apart from a Japanese case, no owner or operator has been prepared to place an order for a wind-assisted ship. In Japan a shipping company has fitted a small tanker of 1,600 tons with unconventional sails controlled by a computer. It is estimated that a 10 per cent. fuel saving will be achieved. This has yet to be proved in practice, as has the efficient and effective operation of the sails. If I may go further, I would add that if there were such a ship then no doubt this method would be a great help in bringing such a ship into port, but as yet there has not been enough experimental work done in this matter.
Viscount ST. DAVIDS: My Lords, has the noble Viscount seen the papers as issued as pre-prints for the symposium on wind propulsion of commercial sailing ships which is taking place under the auspices of the Royal Institution of Naval Architects next month? Is he aware that on first sight it appears that the conventional sailing ship is never likely to return as a cargo carrier because her manning would be too costly; but that there is a considerable chance that by automation and with the aid of computers a sailing ship without a crew, or with a very small crew, might indeed be viable?
Viscount LONG: Yes, my Lords, there is to be a three-day symposium on sail and wind-assisted commercial ships to be opened by His Royal Highness the Duke of Edinburgh in the early part of next month. It has been arranged by

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the Royal Institution of Naval Architects from the 4th to the 6th November and a wide range of papers will be presented. This will no doubt cause a flurry of interest in the press. It represents a serious attempt to examine a wide range of topics relevant to the use of wind assistance in the light of current technology. Your Lordships will see from the programme, however, that most of the papers are academic studies and that they are not presented by owners or operators.
Lord ELWYN-JONES: My Lords, is the noble Viscount aware that a sailing ship without a crew is my idea of ideal sailing in the North Sea in rough weather?
Viscount LONG: Yes, my Lords, I go along with the noble and learned Lord.

CANADIAN CONSTITUTION: PATRIATION PROPOSALS
2.48 p.m.
Lord AVEBURY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what proposals were made, or information given, by Mr. Mark McGuigan, Canadian Minister of External Affairs, and Mr. John Roberts, Minister of Science, Technology and the Environment, concerning the patriation of the Canadian constitution during their recent meetings with the Prime Minister and the Secretary of State for Foreign and Commonwealth Affairs.
The LORD CHANCELLOR (Lord Hailsham of Saint Marylebone): My Lords, the two Canadian Ministers came as emissaries of the Canadian Prime Minister to tell Her Majesty's Government of the intentions of the Canadian Government on this subject.
Lord AVEBURY: My Lords, does the position of Her Majesty's Government remain as stated by the noble Lord, Lord Trefgarne, on 25th July 1979, that if a request to patriate the Canadian Constitution were to be received from the
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Parliament of Canada it would be in accordance with precedent for the Government to introduce in Parliament, and for Parliament to enact, appropriate legislation complying with that request, as we have done on the 14 occasions since Confederation when the Federal Parliament has made such requests? Has the noble and learned Lord noted that the Canadian House of Commons voted by 156 to 83 in favour of the proposals presented to it by Mr. Trudeau? Would the Government publish a document setting out the basis on which the Canadian Legislature is asking us now to act?
The LORD CHANCELLOR: My Lords, no request has been received as yet from the Canadian Legislature and I notice from the public prints that it is still going through that Legislature. So far as I know, there is no change in the constitutional position since 27th July. It so happens that the Parliamentary Answer I have was given in another place by my honourable friend Mr. Luce; it would surprise me if it were different from that which was given by my noble friend Lord Trefgarne.
Lord GARNER: My Lords, are the Government satisfied that Canadian Ministers are sufficiently alive to the embarrassment which might be caused to this Parliament if proposals which were controversial inside Canada were to be put forward?
The LORD CHANCELLOR: I do not as yet feel any embarrassment myself, my Lords.

"THE WAR GAME" AND BBC TELEVISION
Lord NOEL-BAKER: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether, in view of the public interest in civil defence, and in view of the fact that numerous copies of the film "The War Game" have been sold by the British Broadcasting Corporation to private organisations, they will

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advise the Director General of the BBC that it would be in the national interest that the film should be shown on the corporation's television programmes.
The PARLIAMENTARY UNDERSECRETARY of STATE, HOME OFFICE (Lord Belstead): My Lords, the broadcasting authorities are responsible for the content of their programmes. It is for them to decide what programmes to broadcast and it would be contrary to long-established practice, endorsed by successive Governments, for Ministers to seek to influence their decisions. It is therefore for the BBC alone to decide whether to show "The War Game" on their television programmes.
Lord NOEL-BAKER: My Lords, while thanking the Minister for that reply, may I ask whether he is aware that 12 years ago, when the BBC first suppressed this film, the director wrote to me saying that the impact would be so terrible that if they showed it, fathers would kill their children and mothers would jump out of windows? However, that did not prevent the BBC from selling the film to private societies for exhibition. Is the noble Lord aware that it has now been seen by perhaps half a million people, and no fathers have killed their children or mothers jumped out of windows? Is he further aware that it has been sold to the German education authorities who have made a German soundtrack, and every school now sees this film every year in Germany? Is it not the right of British citizens to see what a nuclear war would be like, if it is possible for German children to see it?
Lord BELSTEAD: My Lords, I am aware that the noble Lord wished this film to be shown and I am also aware that the BBC have not shown it. I have not seen copies of correspondence between the corporation and the noble Lord. There are other ways than seeing this particular film that the people of this country can become acquainted with the possible effects of nuclear war.
Lord GLADWYN: My Lords, irrespective of the merits or otherwise of showing this film, do the Government realise that no effective civil defence against nuclear bombardment of this
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country is possible and that it is gravely misleading the public to suggest otherwise?
Lord BELSTEAD: My Lords, we believe that to be seen to be as much prepared at home as possible, as well as capable of military deterrence and defence, will make war less likely, and that is the policy the Government intend to pursue?
Lord ORR-EWING: My Lords, may I ask my noble friend to say whether his departmental officials have vetted the film for accuracy about civil defence, bearing in mind the great expertise in his department? Will he bear in mind that the BBC is not always accurate, as it was not on the one o'clock news when it announced that Parliament would reassemble today?
Lord BELSTEAD: My Lords, I am not aware whether officials of my right honourable friend's department have either seen or vetted this film. I have myself not seen it.
Lord BROCKWAY: My Lords, following the supplementary question asked by the noble Lord, Lord Gladwyn, may I ask the Minister whether he appreciates the widespread concern about the ineffectiveness of any civil defence against a nuclear attack, as illustrated yesterday by the largest demonstration there has ever been in this country? Is he aware that wherever "The War Game" is shown it is wanted to be seen not merely by crowded audiences but by hundreds who cannot obtain admission? Will the noble Lord at least send to the BBC the Official Report of these discussions so it may be aware of our desire to see that this matter of public interest is shown on the BBC?
Lord BELSTEAD: My Lords, the noble Lord asks me whether I am aware of a variety of things. I am aware that since 1945 the peace of this country has been kept by the contribution which we have made to the North Atlantic Treaty Organisation. Part of that contribution means being prepared, so far as we can be, both at home and abroad. In answer to the second part of the noble Lord's supplementary question, of course I reply, yes; I shall indeed draw the attention of the BBC to the exchanges in your Lordships' House on this issue.
Lord AVEBURY: My Lords, if a new information film were to be made on the same lines as "The War Game", in colour and brought up-to-date with the most recent knowledge on the effects of a nuclear bombardment, would the Minister give an undertaking not to interfere with the making of such a film or the showing of it on television?
Lord BELSTEAD: My Lords, the whole basis of all the answers I have given in the last few minutes is that the Government do not interfere with what is actually broadcast.
Lord STEWART of FULHAM: My Lords, in view of the Minister's reference to NATO, may I ask him to assure us that it is the Government's policy to continue to fulfil the pledge about the increase of our defences that was made to that organisation?
Lord BELSTEAD: I think that is going very wide of the original Question, my Lords.

BUSINESS
Lord DENHAM: My Lords, with the leave of the House, at a convenient moment after 3.45 my noble friend Lord Belstead will be repeating a Statement on the prison officers' dispute. That will be followed by a Business Statement by my noble friend the Leader of the House.
It may also be for the convenience of your Lordships to know that dinner will be available this evening. It is expected that the Report stage of the Local Government, Planning and Land (No. 2) Bill will be adjourned at approximately 7 p.m. for approximately 40 minutes.

LOCAL GOVERNMENT, PLANNING AND LAND (No. 2) BILL
2.58 p.m.
Further considered on Report.
Clause 15 [Rates of return: powers of Secretary of State]:
Lord BRUCE of DONINGTON Lord BRUCE of DONINGTON moved Amendment No. 43:
Page 15, leave out lines 19 to 22.
The noble Lord said: My Lords, this amendment seeks to delete from Clause 15 the provisions which specify that a rate of return shall be shown in respect of any description of work specified in regulations under the relevant subsection. It will be within your Lordships' recollection that when we were discussing the earlier provisions of this part of the Bill relating to accounting matters I sought to demonstrate that it was quite impracticable to obtain a rate on the capital employed in each of the particular sections which, as the House will recall, relate to work on the highways, contracts above and below £50,000 and maintenance work.
I thought that my arguments at that time found favour with your Lordships, because of course in order to determine a rate of return on capital employed for each description of work, one has to ascertain the capital relating to each particular degree of work. As I explained, where a direct labour organisation has its own warehouses, stores, and plant and machinery of a wide variety, it is common for that organisation to use that equipment generally. It may at very short notice be switched from one description of work to another, and consequently, as we discussed in earlier clauses, it is not possible to prepare a balance sheet in respect of each particular description of work carried out. I believe that when it came to the accounting provisions the noble Lord was constrained to accept that amendment on the grounds that it is not possible to prepare a balance sheet in respect of each particular description of work.
Arising from that point (in which I was sustained by the noble Lord, Lord Avebury, who is not present at the moment) it would follow that it is not possible, with any reasonable degree of accuracy, to determine the amount of capital employed in terms of division of assets, stock in trade, or whatever it may be, spread over the four headings. Of course, I am well aware that by means of very considerable analysis, and a great amount of extra clerical labour, it is possible to ascertain the number of hours that an individual machine, formally belonging to the whole of the direct labour organisation, is used in any particular category of work. Therefore one could arrive at

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a rough—and it would be very rough asset utilisation factor which would produce a result showing so much capital consumed during the period under review. But that is not the same as a return on capital employed, because as I say even though it is possible to work out in meticulous detail machine usage, there would be very lengthy periods of time when the capital was not in use by any of the five departments at all, and so the result would be completely artificial.
This part of Clause 15 which insists on the calculation of a rate of return for each description of work is completely unrealistic. If there is any endeavour to enforce it, it will involve a number of assessments and approximations and some crystal gazing that would make the result quite meaningless, and indeed it is to be hoped that the Government will take that into account.
There is another reason involved. Your Lordships will recall that under Clause 8 of the Bill the local authority, when determining the cost of the service being provided, actually fixes the price. It must in advance make a written statement of the amount that corresponds to the selling prices, and under the Bill the Minister himself has power—because he can do virtually anything—to vary that. If the Minister does not like the selling price that goes into the accounts for the purpose of determining the rate of return, he can alter it. In short, within the provisions of this part of the Bill, the Minister himself can virtually determine in advance what would be the rate of return on capital employed, always on the assumption that he could go through the contortive calculations, to which I have ventured to draw your Lordships' attention, which would involve a very considerable waste of time and extra expense within the local authority.
On the assumption that it is feasible and indeed desirable for the Secretary of State to fix a rate of return on capital employed—and this is a very large assumption—it is practicable to do so only on the DLO as a whole rather than on the individual descriptions of work, and I should have thought that commonsense would have dictated such a course. It is in order that even at this late hour the Government may quit what I shall call nit-picking at the local authorities,
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insisting upon some detail of this kind, which as I have said, is entirely worthless, that I hope that the House will support the amendment. I beg to move.
3.6 p.m.
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Lord Bellwin): My Lords, we discussed most of the arguments involved in this matter when we were considering Amendment No. 41, which the noble Lord, Lord Bruce of Donington, moved to Clause 14. The Government's case is that we must prevent the risk of cross-subsidisation. We must therefore require authorities to calculate separately the rate of return that their DLOs are earning on the separate parts of their business. We must have information available in as clear a form as possible, so that councillors and ratepayers can see just where their operations are succeeding and where they are failing.
We have looked at the arguments so very well put by the noble Lord, Lord Bruce, at this stage, and in Committee, too. We have looked at the arguments and have weighed the objections, and in the end have concluded that notwithstanding the points that he makes—and some of them have some validity in themselves—in the context of the totality of what we are seeking to achieve by these measures, we cannot accept the amendment. Clearly we could debate this question at greater length, but I fear that we should not get very far in so doing. Since the last stage we have discussed this matter with the institutes, the professional bodies, to which the noble Lord, Lord Bruce, referred earlier. While certainly they do not say that what we are requiring is easy, nevertheless, as the noble Lord himself has said, the view is that, yes, it can be done. We recognise the possible difficulties, but on balance we feel that the weight of the argument is such that we cannot accept the amendment.
Lord BRUCE of DONINGTON: My Lords, I very much regret that the noble Lord cannot accept the amendment. I feel that I must correct him ever so slightly; I do not think that he in any way sought to mislead the House. He referred to the professional bodies and I think that I ought to speak for my own

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Institute of Chartered Accountants in this particular respect. The institute said—and I have the correspondence—that segregation in this way, and the requirement of a rate of return on capital employed on each description of work, would produce a very considerable degree of approximation. I think that I ought to make that clear. My Lords, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The DEPUTY SPEAKER (The Earl of Listowel): My Lords, before I call the next amendment, I should point out that if it is agreed to I cannot call Amendment No. 44.
3.10 p.m.
Lord SANDFORD Lord SANDFORD moved Amendment No. 43A:
Page 15, line 38, leave out ("shall have power at any time, if he thinks fit, to") and insert ("may, if the rate of return on the capital employed is less than the required rate,").
The noble Lord said: My Lords, we were brought to this point in the Bill at the Committee stage by a wide-ranging debate opened by a powerful speech from the noble Lord, Lord Sefton, and then, immediately before this point, a rather more precise amendment was moved by my noble friend Lord Renton—and I am sorry that neither of those noble Lords are present. I am sorry; I am glad to welcome my noble friend Lord Renton to his place at this propitious moment, because he moved an amendment in much the same words as the one I am now moving. Incidentally, I think it would be convenient if at the same time I spoke to Amendment No. 48A. That had the effect of obtaining from my noble friend Lord Bellwin an assurance that he would look at this matter again and see whether the purpose sought by my noble friend Lord Renton and now by myself was in fact achieved by the Bill as drafted, or whether, as I still believe, an amendment of this kind is needed in order to restrict the powers of the Secretary of State to the purposes which he is setting out in the Bill, not only in this clause but in the Explanatory Memorandum to the Bill itself. I beg to move.
Lord RENTON: My Lords, I wonder whether I may briefly support my noble
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friend Lord Sandford, and thank him for mentioning that I raised this matter at the Committee stage. I am thankful to say that I arrived here just in the nick of time. A point which I think should be stressed is that the Bill as originally drafted and the Bill as still drafted fails to carry out the intentions of the Government as declared in the Explanatory Memorandum. If noble Lords would turn to col. 251 of the Official Report, or, indeed, to the Explanatory Memorandum attached to the Bill as it came to us, they will find that paragraph 4 of that Explanatory Memorandum said, relation to Part III, that it:
"enables the Secretary of State to deprive authorities of the power to maintain direct labour organisations where a prescribed rate of return on capital has not been achieved …".
I would suggest, bearing in mind that that is clearly the purpose, that the purpose should always be stated where it is clearly the intention of the Government and of Parliament, and that should be done in this particular case; and that therefore this simple amendment—either my noble friend's or mine, which differ only to the extent that he has the word "and" in front—should be accepted. Accordingly, I am thankful to be able to support him.
Lord EVANS of CLAUGHTON: My Lords, I think your Lordships will recall that at the Committee stage of the Bill the noble Lord, Lord Bellwin, conceded, as reported in cols. 247, 248, 249 and 251 of Volume 413, No. 184, of the Official Report, that there was considerable concern about the Secretary of State's unrestricted and, some people would suggest, unprecedented powers in this clause, first, to call for a special report under subsection (4) and, secondly, to require cessation of operations of a direct labour organisation under subsection (5). As the noble Lord, Lord Renton, has said, it does not even carry out the wishes or the intentions as set out in the Explanatory Memorandum. I had hoped, and I am sure several of your Lordships had hoped after the encouraging words of the noble Lord the Minister, that there would have been some amendments put down to this Bill; but I hope that, in the absence of that, your Lordships will be willing to accept this amendment, which I think goes most of the way to settling the doubts, the problems and the reservations which were expressed at Committee stage.
Lord BRUCE of DONINGTON: My Lords, the powers taken by subsection (4) are very wide indeed. They provide:
"The Secretary of State shall have power at any time, if he thinks fit, to direct a local authority or development body to make and submit to him, within such time as he may specify in the direction, a special report …";
and then the remainder of the subsection covers that. These are very wide powers. Indeed, on the receipt of the special report required under this particular subsection he may, under the current drafting of the Bill, order the closure of all or any part of a local authority's direct labour organisations even if there are no irregularities in the accounts which are produced.
These are very wide powers indeed, and, if I may say so, they highlight the whole of the Government's attitude towards local authorities. Their attitude is based on the assumption that local authorities do not know what they are doing, that their electorates are not informed and that they are not subject to any of the ordinary democratic checks. This is a direct taking of power by the central Government on the basis that the central Government know best, and they can exercise it precisely as a matter of caprice or personal whim of the Minister and the local authority has got to come to heel.
I understand that, if Amendment No. 43A is carried, then Amendment No. 44, which is in the names of my noble friends Lady Fisher of Rednal and Lord Sefton of Garston and myself, will not be able to be called. I am bound to say on behalf of myself and my noble friends that we much prefer Amendment No. 44 to Amendment No. 43A, which has been moved by the noble Lord, Lord Sandford. Undoubtedly, however, the amendment moved by the noble Lord, Lord Sandford, is much better than the existing wording of the section, and for my own part I am constrained to support it on those grounds—that it is better, and in politics it is sometimes better to have half a loaf than no loaf at all. So we shall wait to see what happens to the amendment moved by the noble Lord, Lord Sandford, and shall reserve our rights accordingly.
Lord BELLWIN: My Lords, when we had quite a lengthy discussion on this in Committee I undertook to have another look at the drafting, but I hope I was
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careful to say that that re-examination would be limited to the wording and would not extend to the substance, because quite clearly there is a difference between the noble Lord, Lord Bruce, and myself as to the intentions of what we are proposing here; and I am not so sure that the same is the case in relation to the points raised by my noble friends Lord Sandford and Lord Renton.
The Government have always envisaged that it would be failure to earn the rate of return which would precipitate the call for a special report, and it was on that basis that the clause was drafted and the Explanatory Memorandum was drafted, too. Meanwhile, however, it has been pointed out that there are other circumstances where action might be necessary; for example, in relation to abuses of the tendering procedure. Thus, although the Explanatory Memorandum remains a substantially true description of our purposes, it is not necessarily an exhaustive one. There is, of course, no opportunity to amend the Explanatory Memorandum at this stage; it is not part of the Bill, and has served its purpose of giving a general description of the effects of the Bill. I understand very well the arguments put forward in support of this amendment, and, as I undertook at Committee stage, we have examined the drafting very carefully indeed. At that stage it was obvious on all sides that there was much concern over the words
"the Secretary of State shall have power at any time if he thinks fit".
At first glance, it could look like a very autocratic discretion. Both my noble friends in moving this amendment have done us a service in pointing out how little difference there is between this formula and the familiar phrase, "the Secretary of State may".
My noble friend's amendment as a whole, however, makes a real change in the meaning of the provision. It seeks to restrict the power of the Secretary of State to call on an authority to prepare a special report to those circumstances in which there has been a failure to earn the required rate of return. At earlier stages in the development of our policy I might have found it easy to agree with him. Certainly, a failure to make the return has been the trigger that we have always envisaged as the most important and

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likely occasion for a request for a report. I have no doubt that, in practice, the Secretary of State will be looking for that very thing.
It has been pointed out with some force that there are, as I have indicated, other circumstances in which it might be useful to be able to ask an authority to justify itself. For example, an authority might be tempted to comply with the letter of the tendering provisions but to avoid its merits. There is no requirement, and we do not seek to impose one, that authorities should always accept the lowest offer received as a result of the invitation issued under Clause 8. It would be open to an authority to continue to give work to its direct labour organisation in the face of the evidence of competition that there were cheaper and more efficient alternatives. It would be easy to fix direct labour organisation prices on this basis to ensure an apparently satisfactory rate of return, but such a case would cry out for investigation.
We have been persuaded that we need the power for this purpose as well as to look at the failures in purely accounting terms. I hope that my noble friend may feel that his amendment goes further than at first sight seems to be a simple and logical attempt to take away an autocratic power such as the words "as he thinks fit" would seem to indicate. If so, no doubt he will not pursue his amendment.
Lord SANDFORD: My Lords, it is certainly true that there may be circumstances other than a failure to achieve the rate of return required which may cause the Secretary of State to want to have a report submitted to him or to investigate a matter. If the situation is that with my amendment he could not do that, there may be a case for leaving these very wide powers in the opening sentence of subsection (4). To that extent my amendment goes further than the amendments of my noble friend, Nos. 47 and 48, which only restrain the power of the Secretary of State to the purposes set out in the Explanatory Memorandum and in the first subsection of the clause.
I think that the sweeping powers given to the Secretary of State to cause an investigation to be carried out or to call for a report need to be limited, as I have
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argued and as my noble friends and others have argued, before he is able to take the action prescribed in subsection (5)(b); namely, that of requiring a local authority to cease to operate a direct labour organisation. Before that happens, I think it is necessary for him to be satisfied that the rate of return has not been achieved.
Unless my noble friend wants to make any further comments, I would now propose to withdraw my amendment but to suggest to my noble friend that his rather more limited amendment should be discussed again when we reach No. 47. If he is disposed to press it, then I would certainly be disposed to follow him. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
3.25 p.m.
Baroness FISHER of REDNAL Baroness FISHER of REDNAL moved Amendment No. 44:
Page 15, line 38, leave out ("if he thinks fit") and insert ("where a local authority has failed to conform with the appropriate statutory provisions").
The noble Baroness said: This amendment that I move on behalf of myself and my noble friends follows the discussion that we have been having but perhaps does not require emphasis on just one point; that is, the capital employed. What we say is that, if local authorities fail to conform with any of the statutory provisions, obviously that will be when the Secretary of State could quite likely call for a special report. But, as my noble friend Lord Bruce was saying, the whole clause is drafted in a very wide way; and we have to recognise, in my view and in that of my noble friends, that all the way through the direct labour part of this Bill the drafting shows quite clearly that the dice is loaded against direct labour organisations. If there are no irregularities in the accounts, if there is nothing that a local authority has done wrong, still the Secretary of State can demand a report. It is this that worries me particularly. Here again we have directly elected representatives on local authorities who are having power taken away from them whether they have a direct labour organisation or not.
What is particularly worrying—and I should be glad if the noble Lord when he answers would give some indication of what actually constitutes a direct labour

21
organisation so that all noble Lords will understand what we are talking about—is that I believe that many noble Lords think that a direct labour organisation is some adjunct to a housing department and that during the winter months they sweep the snow from the roads. To cite the example of the authority I know best, it has three large direct labour organisations, but they are not so named. The actual DLO which was set up was completely disbanded when the Conservatives took control of the city. The very large organisation which is called the city engineer's department has a direct labour organisation; the education department of that city, because it has such a lot of schools and colleges to look after, again has a direct labour organisation; and the housing department, which has the largest number of council houses of any city in Great Britain, has a very large direct labour organisation which is called the city maintenance department for housing.
These are not small departments employing 30 or 40 people. These are huge departments in the local authority. What is worrying is that it might be that one of those departments of the direct labour organisations is not showing a true return on capital or it is not fulfilling some obligation and this may mean that the whole DLO of the city would have to be closed down because one of the large component parts of it was not doing everything that was asked for in this particular clause. Therefore, our amendment is clear, and is something which I think will be acceptable to all local authority associations, bearing in mind that they are keeping to the letter of the law. I beg to move.
Lord BELLWIN: My Lords, I will do my best to answer the points the noble Baroness made when she referred to the different bodies. So far as I am aware, there is not in the Bill a definition of DLOs as such, but I think that what a DLO is will be obvious to most people. Here I am taking a chance in giving my definition, but it seems to me that it would be a unit of people employed directly by the local authority themselves to carry out certain works. We know that in practice what that usually means is either works of maintenance or, in some cases, of new building, or whatever.
22
It is quite true, as the noble Baroness said, that some authorities have departments which themselves employ a direct labour organisation. Some housing departments do it. They employ their own staff who do maintenance and so on. Certainly my former authority, which was only marginally smaller in terms of having a housing section, did not have a separate section at all. There was just the one organisation within the city. But there will be various types.
I do not think that what the Bill requires matters so much. Indeed, I think the noble Baroness made my case very well for the need for a separate return in the case of separate sections of a DLO, so that it will be possible to ascertain the facts. If I were a ratepayer in that authority I should very much want to know that one part of the organisation was perhaps doing badly. I might also be happy to know that another part was doing well. But the only way I could know would be if separate returns were required.
This amendment seeks to limit the power of the Secretary of State to call for a special report in those circumstances explicitly set down under the Bill or its orders or directions; but this is too narrow. As I think I indicated when speaking to the last amendment, there could be other circumstances where the spirit if not the letter of the legislation is being broken. I mentioned then the persistent failure to choose the lowest tenderer under Clause 74. To take another example, there could be such a margin of failure by a DLO that a special report became imperative before matters got out of hand. We are living in a world where waste cannot be allowed to go unchecked, and the Secretary of State must be given discretion to step in and at least ask for an explanation. That is the first such step, and I do not think many people quarrel with that as a philosophy on its own.
This is not an unfettered power. There is protection at all times in the courts. If it is found that the Secretary of State has exercised his power for an improper purpose or on legally irrelevant grounds, the courts can order such action to be quashed. I appreciate the concern on this matter, particularly from noble Lords opposite, but at the end of the day it

23
comes back to the whole issue of everybody knowing, and knowing of the success or failure of the component parts, if I may put it that way. I see no harm at all in that; quite the contrary. I think it is long overdue.
Lord BOWDEN: My Lords, I should like to make one small observation. I myself was responsible for an organisation which, by comparison to those which have been mentioned was very small; nevertheless from my own point of view it was a very important part of the university of which I was in control at one time. The point which bore itself on me, time after time, was the appalling complexity involved in making realistic comparisons between costs of work done in different ways. If one had a works department one had to carry the overhead costs of it whether it was being employed or not. Very often it is more important, in the interests of the efficiency of the work, that the date at which the work begins should be convenient rather than that the actual total cost of the measured work should be low.
All of these points constantly obtruded on attempts made by accountants to assess the efficiency of our works department, and I came to the general conclusion that acccounting in not the precise, determinate enterprise that people think. It is arbitrary; it involves an enormous number of assumptions and it is very easy grossly to oversimplify the apparent costing concerned and come up with arguments which are most misleading. For that reason I hope that some form of amendment, which does not give the Secretary of State too sweeping powers to intervene in what may be a much more complicated matter than he has any reason to understand, will somehow be in this Bill.
Lord BRUCE of DONINGTON: My Lords, your Lordships will be grateful to my noble friend Lady Fisher of Rednal for having elicited from the noble Lord the fact that a direct labour organisation as such has been nowhere defined. My noble friend drew his attention to the fact that the provisions of the Bill might very well apply to the city engineer's department or that part of that department which was concerned with maintenance
24
of schools. In short, it may well be that the application of this Part of the Bill goes far wider than would ordinarily appear from the contents of the Bill itself, together with its explanatory notes. It is all very well for the noble Lord, in the exercise of his usual personal charm, to indicate to the House that of course all these powers will be used very reasonably. In fact, he was talking in such modest terms that one would wonder whether it was likely they would ever be used at all, so amenable was his whole attitude towards this application.
Here we have to be concerned with the text of the Bill. It says quite clearly that
"The Secretary of State shall have power at any time, if he thinks fit …".
These powers cannot be mitigated, and certainly would not be mitigated in law, by any statement of the noble Lord that they will always be exercised reasonably and perhaps very rarely. The words are what they are, and we in this House must be concerned with them; and we must be concerned also with their consequences.
One of the consequences of allowing this phrase to remain in the Bill is that it will also enable the Minister's right honourable friend Mr. Heseltine to order the closing down either of a direct labour organisation as a whole or of that particular section which gives offence. He can do that, if necessary, without giving any reason. It is all very well for the noble Lord to say, "Well, if the local authority is aggrieved it can bring an action in the courts". In these circumstances, is it not better that the other side of the coin should be shown? If the Minister has any reason to believe, or the reports show, that the local authority has broken the law, then of course it is always open to the noble Lord's department to go to the courts and show due cause.
This is a matter of balance: what can be done one way can also be done by the other way. We are dealing with two democratically elected organisations. On the one hand, a Government deriving their responsibility from Parliament democratically elected; and, on the other hand, a local authority which is dependent on its local franchise. In regard to the affairs which it is actually administering under the very noses of its constituents, the

25
local authority is much more closely linked with the people that elected it than Parliament themselves.
Therefore we think that it is very unreasonable that this power should remain. The noble Lord, in the course of replying to my noble friend, threw more interesting light on the operation of the clause as a whole. He mentioned that it would of course be possible to close down one department that was not paying its way in terms of yielding the rate of return, calculated on a current cost accounting basis, determined by his right honourable friend.
May I invite the noble Lord to contemplate the results of that? It would mean that if one type of work was closed down, it would no longer have any share in the assets of the direct labour organisation as a whole. Therefore if one department was closed down, and on the assumption that the direct labour organisation owned all the assets that were used—plant and machinery, cranes, bulldozers, joiners' shops and all the rest of it—then the remaining three descriptions of work would have to be reapportioned out. That would throw up the actual capital employed by the remaining three, so that one or two of the remaining three would then find their rate of return on capital employed diminished by the same proportion as that obtaining in the one that was closed down. In short, the noble Lord has revealed that if he took action in regard to one department, it would have a domino effect and would be very likely to put one, two or the remaining departments into the red so far as the rate of return is concerned.
I have said on previous occasions—and I will not weary your Lordships—that this part of the Bill is a hodge-podge. It is going to work with a degree of approximation that involves the undue use of astrology and crystal ball gazing. It is going to waste an enormous amount of time of the local authorities. If the various provisions of this clause are going to be checked thoroughly at the Minister's headquarters in Marsham Street, he is going to have to engage many more accountants and staff there. I would have preferred him to abandon this part of the Bill, which is largely irrelevant except that it seeks to protect local private building interests rather more
26
than it does the actual ratepayer. However, he is not prepared to do that and, at this stage, I would not press him to do so. But he would be well advised to accept Amendment No. 44. If he does not, I am afraid that I must ask the House to divide upon it.
3.44 p.m.
Lord EVANS of CLAUGHTON: My Lords, may I follow one point that the Minister has made which was mentioned by the noble Lord, Lord Bruce of Donington: the right of the local authority to resort to the courts if they think that the Minister has not behaved reasonably. The words used by the Minister of Housing in another place were that the Minister would have to show good cause. The only way a local authority can challenge the Secretary of State in this is that he has acted either in bad faith or fraudulently. As I said in Committee, I do not believe that any Government would be likely to act fraudulently or unreasonably.
Several noble Lords—particularly noble and learned Lords—will tell your Lordships that unreasonableness is something that is very narrowly constructed by the courts. A local authority, in taking proceedings against the Secretary of State, will have to be placed in the position of proving a negative: namely, that the Secretary of State has not acted properly. That is an extremely difficult, onerous and almost impossible basis for a local authority to proceed upon.
What worries me—and I regard it as an unprecedented invasion of the liberty of local authorities—is that the procedure is activated by the Secretary of State calling for a report. All he has to prove is that he has considered that the direct labour organisation needs to be considered in depth. He cannot prove that it has been considered in depth until he has called for the report. Once he has the report, he can close the organisation down. This seems extremely arbitrary.
On those two grounds, I am concerned—as I am sure several other noble Lords are—about the arbitrary powers that this clause in its present form gives. I hope that the Government might be prepared to consider some form of amendment.
3.48 p.m.
Lord MISHCON: My Lords, I wonder whether I might present to the House a somewhat different angle although it leads to the same conclusion. As I understand it, this House has always been keen to prevent the use of dictatorial powers, from whatever source they may come. Therefore, this House—without regard to the political complexion that a Minister might have—is anxious not to give him too many powers over the citizen over which the Government have jurisdiction in so many respects.
Obviously, there is an even greater need to restrict that power when one is dealing with an authority that the citizens have elected regarding the decisions that they have made. Therefore I ask the House to consider carefully the words:
"if he thinks fit".
That is the sole discretion which the Minister has to exercise, if it be a discretion at all.
There is another principle that this House holds dear—indeed, we hold it dear as a nation; that is, no man shall be judge in his own cause. We are so careful in all our legislation, in all our provisions of justice, to see that the person who calls for a report, the person who has the power to decide, shall not always be the judge in his own cause; that there shall always be a right for a third party to look at his judgment and question it.
There is no right of appeal here at all. There are two principles which are very sacred to us which, in my submission, are very relevant to this matter. There is a third point and, having made it, I will sit down. The whole of the atmosphere of this Bill, we were told, was to create a better relationship between central and local government because restrictions on local government were in many cases being decreased. I do not ask the House to go into a dialectical debate at this moment—we have had it before—as to whether that is the effect of the Bill. But I do not have to go that far in suggesting to the House that the words
"if he thinks fit",
which enable him to close the department, are not only worsening the relationship between central and local government, but lead into a situation about which the
28
noble Lord the Minister in this House and indeed the Minister of Housing in another place have said: "The local authority can go to the courts and challenge the decision of the Minister to close it down".
Are we looking at a Bill regarding the relationship of central and local government, and doing it as we should do, when we lead ourselves to the stage that if a Minister's power is to be challenged at all it has to be challenged in a law case where the local authority is the plaintiff and the Minister at the central Government is the defendant? Is that the way we are looking at this Local Government Bill?—because if so, if I may say so, we are looking at it in a myopic condition which is not worthy of us. That is why I ask the noble Minister to look very carefully at these three points and to see whether rather radical principles are not at stake. I hope that he would have valued all those principles, or if not all three at least one of them, and that he would find it possible to soften and therefore yield in some measure to this amendment.
Lord BELLWIN: My Lords, I think what we have to do immediately is to get this whole thing into perspective. What are we talking about? So far as this amendment goes, we are talking about calling for a special report. We are talking about the Secretary of State calling for a special report to consider the position in a direct labour organisation where, for the reasons we have talked about before or indeed for any other reason, he feels he ought to look at exactly what is going on in that organisation. With that as the basic fundamental point, everything else falls into place, because not only can I see no harm in that but I think it is eminently desirable and, indeed, long overdue, that there should be such an interest taken, in the interests of those people who are not always able properly to see that their interests in this way are looked after.
I think it is right and proper that there should be such a power to call for a report to highlight the position and see if there have been shortcomings in procedures, performance or anything else on the part either of a direct labour organisation in its entirety or indeed in any separate part of such an organisation.
Therefore, my Lords, although I

29
subscribe to the generality of what the noble Lord, Lord Mishcon, said about principles as a whole, when we apply them to what we are talking about in this amendment, then I think that the case rests, and I think it is important that we should not accept this amendment and that we should not seek to diminish in any way that which the Secretary of State is trying to ensure is done on behalf of
every body in these whole proposals about direct labour organisations.
3.53 p.m.
On Question, Whether the said amendment (No. 44) shall be agreed to?
Their Lordships divided: Contents, 78; Not-Contents, 111.

CONTENTS

Airedale, L.

Gaitskell, B.

Mishcon, L.

Amherst, E.

Garner, L.

Noel-Baker, L.

Amulree, L.

Gladwyn, L.

Oram, L.

Ardwick, L.

Gordon-Walker, L.

Pargiter, L.

Bacon, B.

Gosford, E.

Peart, L.

Balogh, L.

Greenwood of Rossendale, L.

Ponsonby of Shulbrede, L. [Teller.]

Banks, L.

Grey, E.

Beaumont of Whitley, L.

Hale, L.

Reilly, L.

Beswick, L.

Halsbury, E.

Ross of Marnock, L.

Birk, B.

Hampton, L,

Segal, L.

Blyton, L.

Hayter, L.

Shinwell, L.

Boston of Faversham, L.

Henderson, L.

Stamp, L.

Bowden, L.

Houghton of Sowerby, L.

Stedman, B.

Brockway, L.

Ilchester, E.

Stewart of Alvechurch, B.

Brooks of Tremorfa, L.

Jacques, L.

Stewart of Fulham, L.

Bruce of Donington, L.

Kilbracken, L.

Stone, L.

Byers, L.

Kilmarnock, L.

Strabolgi, L.

Collison, L.

Kirkhill, L.

Strauss, L.

Cooper of Stockton Heath, L.

Leatherland, L.

Taylor of Gryfe, L.

Crowther-Hunt, L.

Lee of Newton, L.

Taylor of Mansfield, L.

David, B. [Teller.]

Listowel, E.

Underhill, L.

Davies of Leek, L.

Llewelyn-Davies of Hastoe, B.

Walston, L.

Davies of Penrhys, L.

Lloyd of Hampstead, L.

Wedderburn of Charlton, L.

Donaldson of Kingsbridge, L.

Longford, E.

Whaddon, L.

Elwyn-Jones, L.

Lovell-Davis, L.

Wigoder, L.

Evans of Claughton, L.

Maelor, L.

Wilson of Radcliffe, L.

Fisher of Rednal, B.

NOT-CONTENTS

Abercorn, D.

Denham, L. [Teller.]

Hill of Luton, L.

Abinger, L.

Derwent, L.

Hylton-Foster, B.

Addison, V.

Digby, L.

Keyes, L.

Alexander of Tunis, E.

Dormer, L.

Kinloss, Ly.

Allerton, L.

Drumalbyn, L.

Kinnaird, L.

Alport, L.

Dudley, B.

Kinross, L.

Ampthill, L.

Ebbisham, L.

Lindsey and Abingdon, E.

Auckland, L.

Effingham, E.

Long, V.

Avon, E.

Ellenborough, L.

Loudoun, C.

Barnby, L.

Elliot of Harwood, B.

Lucas of Chilworth, L.

Belhaven and Stenton, L.

Evans of Hungershall, L.

Luke, L.

Bellwin, L.

Exeter, M.

Lyell, L.

Belstead, L.

Faithfull, B.

Mackay of Clashfern, L.

Berkeley, B.

Ferrers, E.

Macleod of Borve, B.

Bessborough, E.

Fraser of Kilmorack, L.

Mansfield, E.

Boardman, L.

Gage, V.

Marley, L.

Boyd-Carpenter, L.

Gainford, L.

Middleton, L.

Bridgeman, V.

Glenkinglas, L.

Milverton, L.

Buckinghamshire, E.

Gormanston, V.

Minto, E.

Caithness, E.

Gowrie, E.

Monk Bretton, L.

Chelwood, L.

Grimston of Westbury, L.

Montgomery of Alamein, V.

Clancarty, E.

Haig, E.

Morris, L.

Clwyd, L.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Mottistone, L.

Cockfield, L.

Murton of Lindisfarne, L.

Coleridge, L.

Harmar-Nicholls, L.

Northchurch, B.

Cottesloe, L.

Harvington, L.

Nugent of Guildford, L.

Cullen of Ashbourne, L.

Hatherton, L.

Nunburnholme, L.

Davidson, V.

Hemphill, L.

Orr-Ewing, L.

de Clifford, L.

Henley, L.

Penrhyn, L.

Pritchard, L.

Skelmersdale, L.

Trefgarne, L.

Radnor, E.

Soames, L. (L. President.)

Trenchard, V.

Redmayne, L.

Somers, L.

Vaux of Harrowden, L.

Reigate, L.

Spens, L.

Vickers, B.

Renton, L.

Stanley of Alderley, L.

Watkinson, V.

Roberthall, L.

Strathspey, L.

Willoughby de Broke, L.

St. Davids, V.

Teviot, L.

Wynford, L.

Sandys, L. [Teller.]

Torphichen, L.

Young, B.

Savile, L.

Resolved in the negative, and amendment disagreed to accordingly.

4.2 p.m.
Baroness FISHER of REDNAL Baroness FISHER of REDNAL moved Amendment No: 45:
Page 15, line 43, leave out ("three") and insert ("five").
The noble Baroness said: My Lords, in moving Amendment No. 5, I am asking that we delete three years and insert five years. It is proposed that the special report, for which the Secretary of State can ask, will be based upon the preceding three years' accounts. But I and my noble friends are of the firm opinion that this period is not long enough to judge the performance of a direct labour organisation, bearing in mind the peaks and troughs of the building industry.
I hope that the Minister will take into consideration the fact that, in the private building industry, which he sees as something that is highly competent and something to be copied by direct labour organisations, companies maintain a rolling programme of work. Anybody who knows anything about the building and construction industry knows that private companies are tendering constantly and are being awarded contracts which keep them in operation over a long period of time. This rolling programme, which makes them able to sustain their financial status, is not available in the same way to direct labour organisations, though they have to be comparable with outside builders and contractors. To give them a greater degree of fairness, since they do not have the same rolling programme, we are asking that three years should be replaced by five years. My Lords, I beg to move.
Lord BELLWIN: My Lords, we agree that DLO performance must be judged over a reasonable period and we think that three years is a fair minimum. There is, of course, nothing to stop a local authority from preparing a report which covers a period longer than three years.
32
But we must all remember that here we are speaking of ratepayers' money, which is tied up in a DLO—risk capital, one might say, involuntarily collected and applied. The period must be as short as is reasonably practicable. Shareholders in a company would be asking their directors to report if things went wrong over a much shorter time-span than that. In our view, three years is a generous minimum, in that light.
I recall discussing this point at some length in Committee and, if I said anything more now, I should have to go over those arguments once again. I understand exactly what the noble Baroness seeks to achieve by this amendment, but we feel that three years is a fair minimum.
Lord HARMAR-NICHOLLS: My Lords, I think it ought to be on the record that I think three years is too long. If you want to remedy something that is going wrong, the sooner you know about it and can apply a remedy the better. The indication that something is going wrong is generally within two years and, in order to support my noble friend's reply to the noble Baroness, I would say that, if anything, he is being generous in the direction for which she argues.
On Question, amendment negatived.

PRISON OFFICERS' DISPUTE
4.6 p.m.
Lord BELSTEAD: My Lords, with the leave of the House, I shall now repeat a Statement which is being made in another place by my right honourable friend the Home Secretary. The Statement is as follows:
"With permission, Mr. Speaker, I shall make a statement about the current dispute in prisons in England and Wales.
"I should like to emphasise that this is not a dispute about pay. It arises from a claim by the Prison Officers'

33
Association for two allowances for meal breaks. The May Committee was set up by the right honourable Member for Leeds South to consider, amongst other things, the whole question of allowances for meal breaks. Its recommendations on pay and allowances were immediately accepted and implemented by the Government. This was, by any standards, fair and generous treatment for the prison service. A number of claims, including this present one, were examined but not supported by the May Committee. Having found the money to pay for what May did recommend, the Government cannot now accept and finance further and consequential claims built on the foundation of what was recommended and accepted.
"The Prison Officers' Association have asked for arbitration. As the Prison Officers' Association themselves recognise, the matter lies outside the terms of the Civil Service Arbitration Agreement. Nor could the Government agree to put to arbitration an issue which was considered by the May Committee last year.
"As I said in my statement to the House on 31st October last year, this country has been fortunate in the men and women it has secured to run its prison system. Their duty is to protect the public, to serve the courts and to care for the inmates in their charge. This duty is arduous, difficult and sometimes dangerous. I therefore regret all the more the action which the Prison Officers' Association have chosen to take in pursuit of their claim. This has included a refusal not only to allow contractors to work in prisons, but also to undertake certain other duties which are necessary to maintain conditions for prisoners, and to provide the facilities to which they are entitled.
"Even more seriously, prison officers at many establishments have refused to receive prisoners remanded or sentenced by the courts. This action amounts to a deliberate and unacceptable disruption of the criminal justice system. As a result, this morning about 3,500 prisoners who would otherwise be in prisons are now being held in police cells, many of which are unsuitable for this purpose. The police have coped magnificently with the additional
34
demands which have been made on them, but the number of people in their custody is approaching the limit of the available accommodation. The police are also being diverted from their primary tasks. The inevitable result of this is to place the public at risk.
"The Government must do all they can to fulfil their responsibility to protect the public and ensure the functioning of the criminal justice system. The House will be aware that, following consultation with my noble and learned friend the Lord Chancellor and the Lord Chief Justice, I arranged for a circular to be issued to magistrates' courts last Tuesday seeking their understanding of the problems we face.
"We need to do more than that, however. Measures will be taken to provide additional accommodation with the help of the Army. I am now arranging for the new high security prison which is nearing completion at Frankland near Durham to be brought immediately into use to provide emergency accommodation to relieve the pressure on police cells. It will have a governor, assistant governors and administrative and specialist staff from the prison service and a police presence to assist with security; but otherwise it will be manned by servicemen. We may also need to use military camps.
"For these and other purposes I shall need to ask the House to agree to immediate emergency measures to relieve the criminal justice system of some of the burdens placed on it by the prison officers' actions. I intend to present a Bill tomorrow. For the convenience of honourable Members I shall be arranging for typescript copies of the draft Bill to be made available later this evening.
"The measures I seek will include provisions to cover the approval of places other than prisons for the detention of prisoners. I shall seek provisions to cover the position of those who care for prisoners in these circumstances. Other provisions will be designed to provide relief for the police in the very difficult circumstances they face. In particular, I shall propose that the requirement that remand prisoners be produced regularly before the courts shall temporarily be suspended. I do

35
not, however, propose to alter the normal requirement for the courts periodically to review remands in custody. I shall seek powers to order the temporary release on my authority, if it is absolutely necessary to do so, of selected prisoners who have been remanded in custody or committed in custody for trial or sentence. This is a power I would use, with every feasible safeguard, only to ensure that custodial places were available, in police cells and elsewhere, for dangerous offenders. I shall also need power, for the time being, to order the early release of sentenced prisoners nearing the end of their sentences. I shall ask for a power to restrict magistrates' courts, if necessary, in committing people to prison for such matters as non-payment of fines or rates.
"All these provisions will be temporary and will be allowed to lapse when the present dispute is resolved. In addition, the measures will include a permanent provision putting it beyond doubt that it is lawful for the police temporarily to hold people committed to prison custody, when it is for any reason not practicable to secure their admission to prison.
"I am satisfied that these powers, regrettable as they are, are necessary in the situation which has been caused by the prison officers' industrial action, which goes well beyond the limits of what is acceptable. But there is an alternative. I cannot look back; I want to make it very clear that I am determined to look forward. That is why discussions are far advanced between the Home Office and the Prison Officers' Association on a new duty system which would eliminate the anomalies which gave rise to this dispute. The early introduction of such a system would far better serve the interests of prison officers than the dangerous course on which they are now embarked.
"This industrial action by prison officers is all the more regrettable because it comes at a time when, following the May Committee, so much constructive work is going on to improve the prison service for the future.
"In view of all this, I invited the Prison Officers' Association, when I
36
met them last week, to reconsider their action. I still hope that they will not persist in it while these negotiations continue. Of course, I remain ready to see the Prison Officers' Association at any time".
That, my Lords, is the Statement.
4.16 p.m.
Lord BOSTON of FAVERSHAM: My Lords, I should like to thank the Minister, the noble Lord, Lord Belstead, for repeating the Statement. It is a sombre statement and a very serious one indeed. I would say, first, that it is absolutely right for the Government to give priority to safety and to preserving and protecting the criminal justice system and, indeed, to give priority to the care for inmates. But it is of vital importance, first of all, to regard public safety as of paramount importance.
May I also ask the Minister to find some means of conveying thanks to the police for the way in which they are coping with their extra tasks in this very difficult situation? The Statement itself reflects the deteriorating situation in our prisons: people are not being allowed in on remand and police cells, as the Minister has indicated this afternoon, are being filled up.
So far as this particular dispute is concerned, as I think has been clearly indicated in the Statement, it is one which began concerning continuous duty credits—a matter which was fully and thoroughly considered by the May Committee of Inquiry, a most authoritative body, widely representative, and presided over by a most distinguished judge. There have been indicated in the Statement observations with which I can only fully agree as to the thoroughness with which this particular matter was considered, by the May Committee among others.
So far as the future is concerned, your Lordships will have noted the discussions which have been referred to in the Statement about a new system of allowances to replace the continuous duty credits system and other allowances. What I would ask the Minister to consider is this: why should those details not now be published? It would, I suggest, be of great public interest and, indeed, it would be appropriate to do so.

37
So far as the powers envisaged are concerned, and in particular the role of the Army, I would ask the Minister to accept, if not now then in the very near future indeed, that we would need to know precisely how they are going to be used, though clearly within the obvious limits of the need for security. What is their role going to be? And are any special instructions, particularly about training, to be issued to the Army, bearing in mind that they are hardly experienced, most of them, in dealing with a role of this particular kind?
Finally, I would ask the Minister to accept that I should certainly join in calling upon the Prison Officers' Association, who have over the years undertaken arduous tasks in the public interest and have, most of the time, received precious little thanks for the difficult duties that they perform—duties which I am sure we should not be very happy to have to deal with—to consider again very seriously indeed, in the public interest, their actions, and the course of those actions, and to decide where it is that their duty lies and where it is that the public interest itself lies.
Lord WIGODER: My Lords, everyone in your Lordships' House must deplore the prospects of a confrontation between the Government and the Prison Officers' Association, a body of men and women who not only carry out a difficult, important and dangerous task but very often have to carry it out in wholly intolerable working conditions. Therefore I think it is for all of us to see whether it is not possible to suggest some way out of the present difficulties.
As I understand it, the prison officers' claims were examined by the May Committee. There were in fact 16 claims in all which related to meal breaks, continuous duty credits in one form or another, and it appears from the report that the May Committee came down against nine of those. In relation to three they found in favour of the Prison Officers' Association and the Government have implemented the findings on those three, but, as I understand it—and I may be wrong about this—the present dispute arises largely out of a disputed interpretation of one of the three in which the May Committee found in favour of the Prison Officers' Association.
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There were a further four findings on which the May Committee clearly sympathised very strongly with the case put forward by the Prison Officers' Association and suggested that equity was on their side. I would respectfully agree that where the May Committee has considered these claims in such detail it would now be quite wrong to refer them to some other arbitrator. But there is (is there not?) something to be said for the suggestion that the May Committee might be asked to reconvene to clear up the matter of the interpretation of the one finding which at the moment is in issue and to make specific recommendations about the four claims where they clearly sympathised strongly with the case made by the Prison Officers' Association.
I suspect that if that course were taken it could be taken without any loss of face by the Government in the present situation and it would be sufficient to enable the Prison Officers' Association to abandon their present action while the negotiations for new terms of service were brought to a satisfactory conclusion.
I should like to make two other brief observations. First, the Statement refers to the circular sent round to magistrates by the Lord Chancellor and the Lord Chief Justice, which has met with some criticism. May I venture to say that such criticism appears to me to be entirely ill-conceived and that the Government would be failing in their duty if they did not bring to the attention of the judiciary at all levels the purely practical difficulties which face everybody at the present time.
Secondly, there is a series of courses proposed towards the end of the Statement which might lead to some diminution of the prison population. In many ways this is the crux of the problem, because the conditions in which prison officers have to work are bound to encourage intransigence in claims of this sort rather than sensible, moderate, levelheaded negotiations. May I urgently ask that the Government should look again at the proposal which many of us have made on many occasions that the remission rate should be fixed at a half rather than at a third? This would immediately lead to a substantial reduction in the number of people in our prisons and would therefore make their working conditions far more tolerable for the

39
Prison Officers' Association. The noble Lord will no doubt be aware of the recent research into these issues, which suggests that if that course were taken it could be done without any danger being created for the public.
Lord BELSTEAD: My Lords, perhaps I may just reply to the two Front Bench spokesmen. The noble Lord, Lord Boston asked me if I would draw to the attention of my right honourable friend the desirability of thanking the police for the work that they are doing. My right honourable friend did indeed see the Association of Chief Police Officers in this regard last week and the Superintendents' Association and the Federation representatives this morning. I am grateful to the noble Lord, though, for what he said in that regard.
I am also grateful to the noble Lord for his confirmation from his Front Bench that meal break payments were thoroughly investigated by the Committee which his right honourable friend the former Home Secretary set up in difficult circumstances in 1978. I agree with the noble Lord, Lord Boston, that the report of the May Committee is the final word on meal break payments, and of course the Government accepted immediately all the recommendations for improvements in pay and allowances which were made by the May Committee.
The noble Lord asked me whether details of the new duty system should not now be published. The discussions have been going on at official level between the Prison Officers' Association and the Home Office and, as I understand it, until now there has been agreement that the details should be published as soon as both sides feel that they are ready. My understanding is that that will be very soon.
The noble Lord asked me a specific question about the use of the Army, saying to your Lordships that of course soldiers are not trained for working with prisoners. So far as any of the plans for the use of Frankland Prison are concerned, at the moment the prison service will provide governors, assistant governors, administrative and specialist staff. I think that at the moment I should leave it at that, and no doubt I shall be reporting again to your Lordships about how that
40
particular project is going to work out in practice.
The noble Lord, Lord Wigoder, asked me in essence about reconvening the May Committee in order to look at this aspect of Claim 16, and I hope the noble Lord will not think that I am being deliberately unhelpful if I say that I feel that I have answered that question in one of my replies to the noble Lord, Lord Boston. The claim which the dispute is about was put in as a claim to the May Committee. The May Committee considered it and did not recommend that meal break payments should be made for this particular aspect of what is known as Claim 16. As I have already reminded your Lordships, as soon as the May Committee reported, my right honourable friend accepted absolutely and in full the recommendations for the improvements in conditions and pay which the May Committee made.
I am grateful to the noble Lord for what he said about the circular which was sent out by the Home Office last week, and I should like to meet the point which the noble Lord made to me. Of course at the Home Office we shall be only too ready to look at the noble Lord's recommendations about remission, but I know that my right honourable friend always beats in mind the dangers of the executive action which he is now being forced, most regretfully, to take so far as the judiciary are concerned.
I shall end my first answer by repeating what my right honourable friend has said in another place. We believe that this can be solved by the new duty system and by looking forwards and not backwards, and we think that this is the way in which a resolution can be reached.
Lord BROCKWAY: My Lords, the Minister has made a serious statement about a very serious position. Is it not the case that the tension in the prisons today is much deeper than this conflict with the Prison Officers' Association? Is not the tension also among the prisoners themselves and have they not suffered most from this conflict in being confined to their cells for 23 hours out of 24 in the prisons and by the intolerable conditions which there have been in many of the police cells? Therefore, in looking at

41
this problem, will the Minister look at it rather more comprehensively than concentrating on this immediate conflict?
If I may ask the Minister first about this conflict, as the spokesman from the Liberal Benches said, have not the Prison Officers' Association doubted the interpretation of the May Report? I have listened to what the Minister has said about it, but surely, if the sensible men and women who are in charge of the Prison Officers' Association come to that conclusion, it would be reasonable for the Government to seek the view of the May Committee upon that problem.
May I also ask the Minister whether the Bill that is to be introduced tomorrow will give authority for troops to be used in prisons other than the new prison which is now to be opened? If so, would he consider that very carefully indeed? Has he seen the governor's report, which actually used these words: that with the use of troops there would be "the probability of both staff and prisoners being killed"? I hope that is an exaggeration, but it does indicate the situation.
The LORD PRESIDENT of the COUNCIL (Lord Soames): My Lords, I wonder whether the noble Lord will forgive me, but I think questions and answers after a Statement should not go too far into the subject matter. I hope noble Lords will keep their questjons as brief as possible. A very good example was set by the noble Lord, Lord Boston.
Lord BROCKWAY: My Lords, I take heed of what the noble Lord the Leader of the House has said. I put my last question very briefly indeed. In view of the necessity for shorter sentences—I welcome what the Minister has said—would he not, very generously indeed, seek to end the long sentences, in view of the fact that the Home Office inquiry has said that short sentences do not increase crime in the country?
Lord BELSTEAD: My Lords, I agree with a great deal of what the noble Lord has said about prison conditions which have built up over the years. It is for this reason that we now have a realistic prison building programme, and this is another reason why it is most regrettable
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that this dispute is occurring at the present time. With regard to the noble Lord's point about the May Committee's reconvening, I have nothing to add to what I have already said. The noble Lord asked me one specific question about using places in other prisons. This was not exactly the form of words I used in the Statement. I suggest that the noble Lord, and I think all of us, would do well to wait for a short time until copies of the draft are available, and then I know it will be possible for this point to be debated in your Lordships' House
Lord ELWYN-JONES: My Lords, is the noble Lord aware that we on this side of the House certainly give priority to the protection of the public and to ensuring the function of criminal justice in this very grave crisis in prison administration? The proposals mentioned in the Statement for the new powers to be given to the Home Secretary are unprecedented, and noble Lords will not be surprised if I indicate that we shall, of course, examine them in detail when the Bill is presented to the House on Wednesday. But may I make one general comment? Would this not be a good moment to examine the whole question of the fact that in this country there are more people per head of the population in prison than in any country in western Europe? Is there not now an urgent need to examine how many of the people in prison need to be there and to consider once again proposals of the kind the noble Lord, Lord Wigoder, has mentioned about remission of sentences?
Of course, we must ensure that violent prisoners who have committed offences of violence must be kept in gaol and must be seriously punished. But now would be an excellent moment to examine the intolerable situation that has grown in the prisons. We may perhaps have been a little remiss in the last Administration, and so far in this one, in not looking at some of the deeper issues that underlie the present crisis in prison affairs.
Lord BELSTEAD: My Lords, the noble and learned Lord has said that the proposals for powers to be taken in emergency legislation would be unprecedented. I do not differ from the noble and learned Lord's use of wording. But the proposal is that those powers shall be

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temporary and they are being taken for the public safety, and that intention is also being written into the draft legislation. The noble and learned Lord has made the point that now would be the moment to look also with the greatest seriousness at reduction of the prison population. I should like to put on record that my right honourable friend the Home Secretary has, since he came to office, consistently sought ways of increasing the alternatives to imprisonment available to the courts and has not lost any opportunity to show his support for the use of shorter sentences for non-violent offenders.
Lord RENTON: My Lords, is my noble friend aware that all who have been involved in the prison administration in the past and have admired the prison service will greatly regret the nature of this dispute and the fact that such a narrow dispute should have such wide implications. Is he also aware that the Government will have as they have had in this House today, the full support, of people throughout this country when they find themselves forced, because there is no alternative, to seek the approval of Parliament for such wide powers as are now proposed? Can my noble friend say how soon he hopes to get the Bill on to the statute book?
Lord BELSTEAD: My Lords, my noble friend, with his experience of these matters at the Home Office in previous years, has referred to a narrow dispute with wide implications. I have to say, with regret, that I regard the action which has been taken by the prison officers as going indeed far beyond the limits of what is permissible in the cause of an industrial dispute, let alone an industrial dispute on this particular subject, and wholly disproportionate to what is in issue. My noble friend asks when the Government would hope to get these proposals, if Parliament agrees, on to the statute book. I think this is the moment when my noble friend the Leader of the House would like to make a Business Statement.

BUSINESS
4.24 p.m.
Lord SOAMES: My Lords, in the light of the Statement which my noble friend Lord Belstead has just repeated, it might
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be for the convenience of the House if I make a statement of the Government's intentions on the proposed Bill on imprisonment to which my noble friend referred in his Statement. Copies of the typescript of the Bill should be available in another place later today. I have arranged that further copies should be available in the Printed Paper Office tonight, I hope, from 7 p.m. onwards. It is expected that another place will complete their consideration of the Bill tomorrow. Depending on what time the Bill is brought from another place, it will receive a First Reading in your Lordships' House either tomorrow night or at the beginning of business on Wednesday. We would then intend to take the Bill through Second Reading and remaining stages in this House as first business on Wednesday.
The fourth day on Report of the Local Government, Planning, and Land (No. 2) Bill will, therefore, be taken on Thursday of this week and not on Wednesday as previously planned. The Report stage of the Broadcasting Bill, at present on the order paper for Thursday of this week, will now take place on Monday, 3rd November.
Any further changes to next week's business resulting from this alteration of business will be reflected on tomorrow's Order Paper. I would add that, in these exceptional circumstances, the Public Bill Office will accept amendments with reference to the Bill as printed in the Commons in the course of tomorrow, Tuesday. I regret very much any inconvenience which this alteration in business will cause Members of this House. I hope that the House will appreciate from my noble friend's Statement the urgency, as has indeed been reflected from the Opposition Front Bench, of the legislation which the Government propose.
Lord PEART: My Lords, may I thank the noble Lord for explaining to the House how the business will be altered. Of course, this means a great upheaval, but we understand the emergency under the present circumstances. I believe that the House will accept the necessity for the change. I do not think I need go beyond that.
Lord WIGODER: My Lords, we entirely accept the need for urgency in

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this matter, although clearly the Bill will need to be scrutinised with care. Can the noble Lord say when he anticipates the Royal Assent will be given?
Lord SOAMES: My Lords, I think it is a little early for me to say that, but obviously from the Government's point of view it will be the sooner the better after the Bill has passed through both Houses.

LOCAL GOVERNMENT, PLANNING AND LAND (No. 2) BILL
4.40 p.m.
Consideration oil Report resumed: Clause 15.
Lord RENTON Lord RENTON moved Amendment No. 47:
Page 16, leave out lines 8 to 11.
The noble Lord said: My Lords, I beg to move Amendment No. 47. This is principally a drafting amendment and I suggest that the words which I propose to leave out are not necessary. It is certainly not intended as a paving amendment for Amendment No. 48: the two matters are quite separate. I should like your Lordships to turn to page 16 of the Bill, subsection (5)(b) where your Lordships will see that the Secretary of State, if he has given a direction under Subsection (4) and:
"either—

(i) he has received a special report within the time specified in the direction; or

(ii) he has not received a report within that time",

may give certain directions. We could quite easily paraphrase those words, which seem to me to cancel each other out, by saying that he may give a direction whether he has received a special report in the time specified or not. In other words, in law, those words all taken together are a nullity, they are of no legal effect at all. I suggest that we should not enact words which are of no legal effect, certainly not unless there is a very good reason for doing so.
In Committee my noble friend Lord Bellwin said of this amendment—and I moved it then as well—that it would
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remove the requirement that the Secretary of State should give an authority the chance to explain itself and would allow him to close down a direct labour organisation on the sole grounds that the target rate of return had not been met. With great respect to my noble friend, I do not think that that was an accurate statement.
If we read the Bill, we see that the truth is that the local authorities are given the chance, anyway, of making a special report—they are given the chance by subsection (4) of this clause and, indeed, it could be said that that is confirmed by subsection (5)(a). Therefore, it seems to me that subsection (5)(b) is quite unnecessary. If anything, the inclusion of those words would seem to nullify the chance, but I do not wish to push my case as far as that. I merely say that these words are of no legal effect and are better left out. I beg to move.
Lord BELLWIN: My Lords, of course, following the discussions in Committee we have examined very closely the drafting of this clause to which my noble friend spoke in Committee. We agree with him that these two paragraphs look odd—they certainly do to me, as a layman. Nevertheless, having looked at it carefully, it seems that they do serve a useful purpose.
The Secretary of State, in directing an authority to prepare a special report, is obliged to set them a time limit within which to prepare that report. Subsection (4) does that. But, having set that time limit, must not both he and the authority be bound by it? In other words, the Secretary of State must be prevented from taking any further steps before that time has elapsed, or at least until the authority have effectively signalled their readiness by submitting their report. On the other hand, the authority must not be allowed to thwart the Secretary of State by more inaction. If they refuse to prepare the report in the time required, the Secretary of State must be allowed to proceed and that is what these two paragraphs do—they interpose a further step in the process to close down or limit. After the call for the special report, there must follow either the report, or the deadline for its completion, before the Secretary of State can consider exercising his powers to limit an authority's direct

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labour activity. This seems to us to be a sensible and, indeed, welcome safeguard. In those circumstances, I wonder whether as regards this at least, my noble friend may feel able to accept my explanation.
Lord RENTON: My Lords, I am grateful to my noble friend. His fuller explanation on this occasion was less unconvincing than the previous one. In the circumstances, I would not divide the House, but would beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord RENTON Lord RENTON moved Amendment No. 48:
Page 16, line 11, at end insert—
(" ( ) the rate of return on the capital employed is less than the required rate.").
The noble Lord said: My Lords, I beg to move Amendment No. 48. This is an amendment of substance. Quite frankly, I should tell your Lordships that I do not mind whether direct labour organisations are discontinued either generally or in particular cases. But I do mind when a matter is left vague or uncertain in an Act of Parliament, as seems to me to be the case here—as I shall explain in a moment—and I do mind when what appears to be the intention of Parliament, as requested by the Government, is not made clear, especially when it affects the exercise of ministerial powers, and affects them in this case in relation to the activities of local authorities—sometimes very important activities.
The whole tenor of Part III of the Bill is that works contracts may be carried out by direct labour organisations in a general way, but that where the Secretary of State directs otherwise they shall be discontinued. It was made clear in the Explanatory Memorandum—and I suggest that it is clear from the whole of the preceding part of Part III of the Bill—that the intention was that the power of the Secretary of State to suspend direct labour organisations should be used only when the required rate of return on capital has not been achieved.
Quite frankly, it would not worry me very much if directions could be given on other grounds. But if it is intended that they should be or could be given on other grounds, then I suggest that it should be stated. If it is not stated, and
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if subsection (6) of Clause 15—which is the most operative part of Part III of the Bill—is left as it is, it seems to me that there is a very serious risk that if the Secretary of State gave a direction on a ground other than the ground that the required return on capital had not been achieved, then a local authority could dispute his direction and take him to court for a declaration. There would be a wrangle as to the vires of the matter and, of course, the public would pay for a dispute between the Secretary of State and local authorities—the public would inevitably pay the whole of the expenses of both parties. There might be several million pounds involved. I would not like to anticipate such wrangles.
That is why I think that I should again ask my noble friend if, having had a chance to consider the matter, he has any clear statement to give to your Lordships' House of the Government's intention as to the exercise of this power, if it be the Government's intention only to use the power where the required rate of return on capital has not been achieved, then let that be clearly said. However, if it is the Government's intention that the power may be used in other circumstances, then I suggest that those circumstances should be specified. Frankly, speaking for myself, I do not mind which way it is decided, so long as it is made clear.
I move this amendment in the hope of enabling your Lordships to carry out what seems to be the intention. Of course, if the intention was mistakenly put in the Explanatory Memorandum, if it was too narrowly expressed, or if a reading of the earlier clauses of Part III gives rise to a false assumption as to the interpretation of Clause 15(6), that is another matter, and a further amendment would be required. My amendment has been tabled in almost exactly the same form by my noble friend Lord Sandford, perhaps for a different reason. His amendment is No. 48A, the next one to be dealt with. If neither his amendment nor my amendment is accepted, then the matter will be left vague and open, and that does not seem to me to be a satisfactory situation.
Lord SANDFORD: My Lords, I rise to support my noble friend—which will not surprise the House—because, as he

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said, I have tabled an amendment in almost similar terms. Like my noble friend—although my interest in them is perhaps greater—I do not rise to defend direct labour organisations. In fact, I should like to preface my remarks by saying that I agree with the Secretary of State in the purposes which he seeks to achieve in this part of the Bill; because I think that there are direct labour organisations which need to be improved, controlled, curbed and made subject to the requirements imposed on them in the Bill.
However, my reason for supporting this amendment is not precisely the same as that of my noble friend. I think that he made a cogent legal point that this Bill is defective if an amendment to this effect is not moved into it. I moved an earlier amendment, Amendment No. 43A, which went rather further than these amendments because it fettered the otherwise unfettered power of the Secretary of State to interfere in the affairs of local authorities and their direct labour organisations in particular, to the extent of requiring him to investigate matters or call for reports only when it was clear that the prescribed rate of return on the capital employed was not being achieved.
But in this part of the Bill—over the page as it were—we come to the Secretary of State's "ultimate sanction", to use the phrase employed in the Notes on Clauses. He seeks the power to use the "ultimate sanction" of requiring local authorities to close down and cease operations with their direct labour organisations. I rise to defend local authorities, and in particular district councils, against the use of this undifferentiated and unlimited power of the Secretary of State to interfere in their affairs.
If we have, established by statute, local authorities with particular functions, duties and powers to perform, so far as possible they must be left free to exercise those powers in accordance with their discretion. If Parliament decides that there are circumstances in which the Secretary of State has a right—indeed, a duty or a power—to interfere, those must be carefully prescribed. At the present moment the point at which he exercises his ultimate sanction of closing down an organisation within a local authority is not so prescribed. It is for
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that reason—in order to defend local authorities from an unfettered power by the Secretary of State—that I join my noble friend in supporting this amendment.
If by any chance my noble friend cannot accept this amendment as it stands, I have to say that for my part he will have to give us a very firm assurance that this time, when he takes the matter away, he will return with some further amendment or have something to say to us which will go a good deal further than he was able to go in Committee, when he raised our hopes, and further than he has so far gone today.
Lord UNDERHILL: My Lords, on this side of the House we support the amendment so ably moved by the noble Lord, Lord Renton, in a very concise and cogent manner. It qualifies an arbitrary power given under this subsection to the Secretary of State. It lays down an essential qualification before the Secretary of State acts to direct a local authority that it shall cease work with its direct labour organisation. Your Lordships will see that we have tabled Amendment No. 49A, which argues the whole case. It is not my intention at this stage to argue the case for that amendment. However, the amendment in the name of the noble Lord, Lord Renton, will well fit in with our amendment, Amendment No. 49A. Therefore, for the reason that it limits the arbitrary power of the Secretary of State, we will support Amendment No. 48.
Lord BOYD-CARPENTER: My Lords, I fully support my noble friend Lord Renton in this part of his tireless crusade for the better drafting of legislation. I yield to no one in my admiration for him over that. But certainly I could not support this amendment as it stands, as, although he indicated that he did not care one way or the other whether its effect would be to restrict the powers of the Secretary of State to cases in which the return on capital was below the prescribed rate, I am bound to confess that I do. I should be very disappointed if at this stage we sought to limit the Secretary of State solely to acting on that consideration. There may well be other cases in which it would be right for the Secretary of State so to act. One obviously would be if a direct labour organisation was

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riddled with corruption. Another, and perhaps more likely, case is where the tendering policies of the local authority concerned, by way of favouring the direct labour organisation, were such that there was a perfectly adequate return on capital, but very gross unfairness to the private sector of the building industry with which it competed. I do not believe that cases of that kind would be at all frequent. However, I think it would be valuable for local authorities, which might be tempted so to act in respect of their direct labour organisations, to know that this ultimate sanction lay in the hands of the Secretary of State.
I should be very interested—as I think will be my noble friend—to hear from my noble friend the Minister what is the intention. It certainly appears that the wider interpretation, which I hope is right, seems to be inconsistent with the Explanatory Memorandum attached to the Bill as originally presented to us. But that obviously is not conclusive. Indeed, we had a case earlier this afternoon in which that situation had arisen. Therefore, I rise particularly to ask my noble friend whether it is the Government's intention to exclude all possibility of action, save where the prescribed rate of return on capital is not achieved, and—if that really is their intention—to argue why this power, which is being taken, should be so restricted. Until I hear some argument that convinces me, I shall be very much against my noble friend's amendment if it has the effect of that exclusion.
5 p.m.
Lord BELLWIN: My Lords, as my noble friend Lord Boyd-Carpenter said, whenever my noble friend Lord Renton speaks on these matters one has to listen particularly carefully because of his obviously great expertise and, indeed, interest and background in all such matters. Because of that, I say that not only have I listened carefully to what he has said now, but I also listened carefully in Committee the other week, as indeed I did when my noble friend Lord Sandford was moving his amendments both on this and on past occasions. In other words, this was the amendment to impose the same restriction on the Secretary of State's power to call for a special report.
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I have looked again at ways of reducing the Secretary of State's discretion in these matters while at the same time preserving his right to intervene in the public interest if things are going sadly wrong and public resources are being wasted and misapplied. I have had to conclude that the public interest cannot be measured merely in accounting terms, which is the point to which my noble friend Lord Boyd-Carpenter referred, and that therefore the discretion cannot be fettered strictly to a failure to earn a specified rate of return. There are wider considerations. I mentioned earlier possible tendering abuses. There are others. The key to this is that this must all be seen in the context of the legislation as a whole. These intentions in this clause as regards direct labour organisations must also relate to such matters as efficiency, fairness or competition—and tendering policies I have mentioned. There may indeed be other things of which I do not know readily.
I take the point that my noble friend Lord Renton makes as to the unsatisfactory nature of the vagueness, if you like. Is it too wide a power. I am asking him to consider it within the context of what the legislation seeks to achieve, with what the intentions are. It may be that that is not enough in strict terms. It may be that that is too wide, and he will have to decide if that is so.
My noble friend Lord Sandford asked whether I would give a firm assurance more clearly than I had done before that we will come up with something more specific, narrower, perhaps better, to meet the points raised. I cannot say that I am able to do this. The only thing I can say, because I have such respect for the great knowledge of my noble friend Lord Renton and for the views of my noble friend Lord Sandford, is that I cannot accept this amendment, and indeed we must stand on it, for the reasons I have given.
I do not want to make another speech about the principles underlying what we are seeking to do with this section of the Bill as regards direct labour organisations, or why we consider it is so very necessary that there should be material changes. If we divide on the issue, well then, so be it, and I can do no more. If we do not divide, all I can do is to say that of course

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we will look carefully at everything my noble friends have said, and not least on the point of vires, which I think must be always something which should concern us carefully. That of course I will do. But I should also not want to mislead. After all, we are coming now to the last stages of this Bill and I do not want to give any wrong, impression that I am going to go away and come back at Third Reading with something else. I cannot promise that. I undertake, because I consider it so important, that we will look closely at the wording, and I will discuss it again and do all that I can to take advice, but, as it stands at the moment, I would have to say that I could not accept the amendment.
Lord RENTON: My Lords, before seeking leave to withdraw the amendment, may I thank my noble friend for his offer of further consideration? As I said, when I moved the amendment, I do not mind very much what the powers are so long as they are clearly stated. I entirely take the point made by my noble friend Lord Boyd-Carpenter that there might well be other circumstances justifying the exercise of the power, but the whole tenor of Part III is such as to lead at the moment to a wrong climax in subsection (6). If we could have the climax more clearly stated, then I should be happier. In these circumstances, I think the right thing for me to do is to withdraw my amendment, by leave.
Amendment, by leave, withdrawn.
[Amendment No. 48A not moved.]
5.5 p.m.
Lord UNDERHILL Lord UNDERHILL moved Amendment No. 49A:
Page 16, line 12, leave out from ("that") to end of line 17 and insert ("the local authority or development body shall conduct a comprehensive review of the Direct Labour Organisation and publish the report of such review").
The noble Lord said: My Lords, this continues in a different form the discussion the House has just been having on subsection (5). As has been made clear, this gives authority to the Secretary of State to direct that a local authority shall cease in effect all work by its direct labour organisation. It is one thing to encourage efficiency; it is one thing to demand accountability; but surely it is another thing to give this arbitrary power to the
54
Secretary of State, as has been made clear on the previous discussions, with no qualifications and no criteria laid down at all before the Secretary of State so acts. It is far more serious than a question of, "If he thinks fit, he shall ask for a report". It enables him, either having had or not having had a report, to tell a local authority to cease work with its direct labour organisation.
The noble Lord, Lord Bellwin, said at the Committee stage that this was not an unfettered power. He said:
"There is protection at all times in the courts".
The noble Lord has reiterated that statement this afternoon. I am sure there will be a general feeling, as my noble friend Lord Mishcon said, that this was surely a sorry way to treat local authorities; that the only recourse was to the courts, which of course local authorities generally would not wish to make use of.
This provision is an interference with the right of a local authority to determine whether it is in the interests of its own people that it should continue with its direct labour organisation. The local authority is accountable to its local community, but this subsection removes all the authority of the local authority. We have often heard talk in this House about manifesto commitments. Some of these local authorities have given a manifesto commitment with regard to their direct labour organisation. There is no consideration being given to any dislocation of the work of a local authority that this arbitrary provision may cause. I have already mentioned that there are no criteria laid down. There is no provision made even for consultation with the local authority before the Secretary of State takes this arbitrary power. There is no provision for the local authority to make representations before this arbitrary power is carried out. There is no right of appeal whatever, and no report to Parliament before the Secretary of State takes this very unusual arbitrary power upon himself.
The amendment gives the local authority opportunity, the Secretary of State having considered any report or not considered a report, to conduct a thorough review of its direct labour organisation. But it is not to leave it there; it must actually publish details of the report.

55
In other words, it has to let its own community know; to let everybody know precisely what it proposes to do. The point of the amendment is to prevent the authority being given to a Secretary of State—any Secretary of State, not just this one Secretary of State—to take this arbitrary power. I believe that all the local authority associations have expressed concern about this particular feature. I hope that your Lordships may feel disposed to accept this amendment. I beg to move.
Lord BELLWIN: My Lords, the ultimate sanction against an authority which fails to get its DLO operations under firm continuing control will be an intervention by the Secretary of State to remove or restrict its powers to use direct labour. Such action can come only after the submission of a special report required under subsection (4) and cannot therefore happen until the authority has had an opportunity to explain itself. Closure or restriction will not follow automatically. There may be special circumstances which explain an unsatisfactory performance, or there may be a need to retain a small direct labour force to deal with certain sorts of work—for example, winter highway maintenance in remote areas—for which no contractors can be found, and the decision of the Secretary of State will be able to take account of those factors. Furthermore, the close-down or restriction will not necessarily take even immediate effect. The subsection allows the Secretary of State to set the effective date so that authorities would have time to make the necessary alternative arrangements to enable them to fulfil their statutory duties by means other than through their own directly employed labour force.
But at the end of the day the Secretary of State must have power to act, to end the wasteful use of ratepayers' money and the nation's resources if failure persists. We expect public opinion to play its part. Local democracy is important in this respect and Clause 15 provides for information to be publicly available. Without an ultimate sanction, and when all else has failed, an awkward DLO might still
just cock a snook and carry on in its unreformed way. It is surely not unreasonable, albeit in these unlikely and extreme circumstances, to have in effect a weapon of last resort.
I note what the noble Lord, Lord Underhill, says, but this must be put into the context of all we are seeking to do in the Bill. The time really has come for there to be accountability and a greater emphasis on efficiency and achievement than ever before. That is all we are seeking to do throughout the Bill, and, while I understand the concern the noble Lord has expressed, we cannot accept the amendment.
Lord UNDERHILL: My Lords, I am sorry the Minister cannot accept the amendment because we want to give an opportunity for local public opinion to play its part. The Minister says this will happen when all else has failed, but there will have been no opportunity for all else to fail; no consultation, no opportunity for representation, only the demand for a report, and on that report the Secretary of State will take this arbitrary power. It is not a weapon of last resort but of second resort, the first being to demand a report and the second to act—without any conditions, not even an attempt to state in the clause that there must be opportunity for consultation and representation by the local authority.
A similar amendment was tabled in Committee, and withdrawn because the Minister said he wished to reconsider the wording of subsections (4) and (5) and we have heard the Minister's argument today. But this matter has never been tested in your Lordships' House. In our view, this arbitrary power should not be given to any Secretary of State of any Government, and for that reason we must press the amendment.
5.14 p.m.
On Question, Whether the said amendment (No. 49A) shall be agreed to?
Their Lordships divided: Contents, 73; Not-Contents, 118.

CONTENTS

Airedale, L.

Banks, L.

Blyton, L.

Amherst, E.

Beaumont of Whitley, L.

Boston of Faversham, L.

Bacon, B.

Beswick, L.

Bowden, L.

Balogh, L.

Birk, B.

Brockway, L.

Brooks of Tremorfa, L.

Kirkhill, L.

Ross of Marnock, L.

Chitnis, L.

Leatherland, L.

Segal, L.

Collison, L.

Lee of Newton, L.

Shinwell, L.

Cooper of Stockton Heath, L.

Llewelyn-Davies of Hastoe, B.

Stamp, L.

David, B. [Teller.]

Lloyd of Kilgerran, L.

Stedman, B.

Davies of Leek, L.

Longford, E.

Stewart of Alvechurch, B.

Davies of Penrhys, L.

Lovell-Davis, L.

Stewart of Fulham, L.

Donaldson of Kingsbridge, L.

McCarthy, L.

Stone, L.

Elwyn-Jones, L.

Maelor, L.

Strabolgi, L.

Evans of Claughton, L.

Meston, L.

Taylor of Gryfe, L.

Evans of Hungershall, L.

Mishcon, L.

Taylor of Mansfield, L.

Fisher of Rednal, B.

Noel-Baker, L.

Underhill, L.

Gaitskell, B.

Ogmore, L.

Wade, L.

Gladwyn, L.

Oram, L.

Walston, L.

Gosford, E.

Paget of Northampton, L.

Wedderburn of Charlton, L.

Greenwood of Rossendale, L.

Pargiter, L.

Wells-Pestell, L.

Hale, L.

Peart, L.

Whaddon, L.

Hampton, L.

Phillips, B.

Wigoder, L.

Houghton of Sowerby, L.

Ponsonby of Shulbrede, L. [Teller.]

Wilson of Radcliffe, L.

Howie of Troon, L.

Wynne-Jones, L.

Jacques, L.

Rhodes, L.

NOT-CONTENTS

Abercorn, D.

Gainsborough, E.

Montgomery of Alamein, V.

Abinger, L.

Garner, L.

Morris, L.

Addison, V.

Glenkinglas, L.

Mottistone, L.

Ailesbury, M.

Gormanston, V.

Murton of Lindisfarne, L.

Airey of Abingdon, B.

Gowrie, E.

Newall, L.

Allerton, L.

Grimston of Westbury, L.

Northchurch, B.

Alport, L.

Haig, E.

Nugent of Guildford, L.

Ampthill, L.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Orkney, E.

Atholl, D.

Orr-Ewing, L.

Auckland, L.

Halsbury, E.

Penrhyn, L.

Avon, E.

Harmar-Nicholls, L.

Radnor, E.

Barnby, L.

Hatherton, L.

Rawlinson of Ewell, L.

Bellwin, L.

Hemphill, L.

Redmayne, L.

Belstead, L.

Henley, L.

Reigate, L.

Berkeley, B.

Hill of Luton, L.

Renton, L.

Bessborough, E.

Holderness, L.

St. Davids, V.

Boyd-Carpenter, L.

Hornsby-Smith, B.

Sandford, L.

Bridgeman, V.

Ilchester, E.

Sandys, L. [Teller.]

Brookes, L.

Kemsley, V.

Savile, L.

Cathcart, E.

Keyes, L.

Seafield, E.

Cockfield, L.

Killearn, L.

Shannon, E.

Colville of Culross, V.

Kinloss, Ly.

Skelmersdale, L.

Cottesloe, L.

Kinnaird, L.

Soames, L. (L. President.)

Craigavon, V.

Kinross, L.

Spens, L.

Croft, L.

Lindsey and Abingdon, E.

Strathcona and Mount Royal, L.

Cullen of Ashbourne, L.

Long, V.

Strathspey, L.

Davidson, V.

Loudoun, C.

Swinfen, L.

de Clifford, L.

Lucas of Chilworth, L.

Torphichen, L.

De Freyne, L.

Luke, L.

Tranmire, L.

Denham, B. [Teller.]

Lyell, L.

Trefgarne, L.

Digby, L.

Mackay of Clashfern, L.

Trenchard, V.

Dormer, L.

Macleod of Borve, B.

Vaux of Harrowden, L.

Drumalbyn, L.

Mancroft, L.

Vernon, L.

Ebbisham, L.

Mansfield, E.

Vickers, B.

Ellenborough, L.

Marley, L.

Watkinson, V.

Elliot of Harwood, B.

Middleton, L.

Willoughby de Broke L.

Exeter, M.

Milverton, L.

Wise, L.

Ferrers, E.

Minto, E.

Wynford, L.

Freyberg, L.

Monk Bretton, L.

Young, B.

Gage, V.

Monson, L.

Resolved in the negative, and amend-ment disagreed to accordingly.
Clause 18 [Interpretation of Part III]:
5.22 p.m.
Lord ROSS of MARNOCK Lord ROSS of MARNOCK moved Amendment No. 50:
Page 19, leave out line 6.
The noble Lord said; My Lords, this is a very simple amendment. By deleting the line referred to in the amendment we leave out of the definition of development body the Scottish Special Housing Association. There has been controversy over direct labour organisations but, as I mentioned on Committee, I have heard

59
little, if any, controversy over the activities of the Scottish Special Housing Association, and your Lordships will recall that the noble Earl, Lord Perth, the noble Baroness, Lady Elliot of Harwood, and other noble Lords from Scotland paid tribute to the work of the Scottish Special Housing Association.
In fact the association has one job, and that is to build houses. It was given that job by Parliament. The association was created by a Conservative Government. I hear Ministers speaking about waste of public money, and saying that the Secretary of State must act. Parliament has created the Scottish Special Housing Association, but it is the Secretary of State for Scotland who appoints all the members and the chairman. They must report to him every year. He can see them at any time he wishes, and he agrees their programme with them annually. The association's finance is controlled by Parliament and by the Secretary of State for Scotland.
So whatever may be said about the direct labour organisations and local authorities cannot be said about the Scottish Special Housing Association. One reads of the powers that the Secretary of State takes. He already has all these powers with regard to the Scottish Special Housing Association. The only thing that he cannot do without parliamentary approval or new legislation is wipe out the association, but with the powers that he has here he virtually could stop the association from functioning. I am perfectly sure that that is not the Government's intention; the Government would be much more honest and would come forward with a clause in this Bill or in some other Bill simply to wipe out the association. On Committee I could not obtain any justification of the reason why the Scottish Special Housing Association is included in this way. I suggest that it would be sensible to omit the association from the definition of development body. That is the effect and the purpose of the amendment. I beg to move.
The MINISTER of STATE, SCOTTISH OFFICE (The Earl of Mansfield): My Lords, as the noble Lord, Lord Ross of Marnock, has said, there was a short but comprehensive debate on this matter in Committee. Your Lordships
60
will recall the interesting exposition given by the noble Lord, Lord Ross, during that stage, and you might also well recollect the perfectly adequate explanation given by my noble friend Lord Bellwin. The point is that this provision does not in any way reflect adversely upon the SSHA, nor is there any criticism of the SSHA. As the noble Lord, Lord Ross, said in effect in Committee, the Secretary of State can obtain information on the SSHA's DLO activities by means of the existing arrangements under the terms of its formal agreement with the Secretary of State for Scotland.
However, that is not the point of this provision, and it is not the reason why the clause is to extend to the SSHA. The main purpose of this part of the Bill is to improve the efficiency and accountability of all public sector direct labour organisations. The SSHA is part of the public sector, and in the interests of equity I could not agree with the noble Lord that it should be excluded from this part of the Bill. In other words, we want to make it plain that the same tests of efficiency and the requirements of responsibility shall apply to the SSHA as apply, for instance, to the Scottish local authorities. So there it is. It is a matter of policy and equity as to why the SSHA is treated in the way that it is under the Bill.
Lord ROSS of MARNOCK: My Lords, that reply was very disappointing indeed. There is no equity or equality involved in respect of the treatment of local authorities and the Scottish Special Housing Association. As I pointed out, the association is the creature of the Secretary of State. He appoints the members, he can sack them, he can direct them. He sits down with them every year and decides which programmes should go on. If he is not satisfied with their efficiency, he just says, "You will not build this, you will not build that".
With regard to the point about cornpetitiveness—and this is part of the so-called efficiency test—one reason for the association being set up was so that it could build in places where there were no other builders. That was the job that it was given, to build in the Highlands and in other areas. In those days when there were local authority areas which formed small borough a penny rate would produce perhaps £500, and

61
in many cases less than that. Those boroughs had housing powers, but they could not possibly build, and so the association was created by a Tory Government to do that, and to introduce an clement of competition in some areas.
The association was told to go in and build, and so it set a standard. The Act that set up the association also contained a provision to enable it to build with experimental materials; to use Highland materials in the Highland area. Think of the cost of building in the Highlands and Islands—in many cases building perhaps only three or four houses in a rural area where no private builder wants to look at the job. I do not know whether the Minister of State realises it, but where possible private builders are used. There is simply no justification for this proposal. There is no logic in comparing the association with the local authorities; there is no comparison whatever. The Scottish Office should think again. Has there been any single complaint regarding the building efficiency of the Scottish Special Housing Association?
I see pictures of Ministers opening houses all over the place for the Scottish Special Housing Association. They are proudly paraded in the Scotsman and the Glasgow Herald—pictures of the Minister of State, or the Under-Secretary for this and that. Yet here, despite all their smiles, all their plaudits and all their congratulations, they come along and say, "Ah!—we do not think you are all that efficient; we do not say that you are not efficient, but we do not exactly trust you"; and for no reason at all, or for the rather specious reason of equity—comparing them with a local authority where there is no comparison whatever—they say, "We must have them in this Bill". My Lords, I think they should not be in this Bill, and I am afraid I have to press the amendment.
5.31 P.m.
On Question, Whether the said amendment (No. 50) shall he agreed to?
Their Lordships divided: Contents, 72: Not-Contents 117.

CONTENTS

Airedale, L.

Greenwood of Rossendale, L.

Phillips, B.

Bacon, B.

Gregson, L.

Ponsonby of Shulbrede, L. [Teller.]

Balogh, L.

Hale, L.

Banks, L.

Hampton, L.

Rhodes, L.

Beaumont of Whitley, L.

Hatch of Lusby, L.

Ross of Marnock, L.

Beswick, L.

Houghton of Sowerby, L.

Shinwell, L.

Birk, B.

Howie of Troon, L.

Stedman, B.

Blyton, L.

Jacques, L.

Stewart of Alvechurch, B.

Boston of Faversham, L.

Kilmarnock, L.

Stewart of Fulham, L.

Bowden, L.

Kirkhill, L.

Stone, L.

Brockway, L.

Leatherland, L.

Strabolgi, L.

Brooks of Tremorfa, L.

Lee of Newton, L.

Strauss, L.

Chitnis, L.

Llewelyn-Davies of Hastoe, B. [Teller.]

Taylor of Gryfe, L.

Collison, L.

Taylor of Mansfield, L.

Cooper of Stockton Heath, L.

Lloyd of Kilgerran, L.

Underhill, L.

David, B.

Longford, E.

Wade, L.

Davies of Leek, L.

Lowell-Davis, L.

Walston, L.

Davies of Penrhys, L.

McCarthy, L.

Wedderburn of Charlton, L.

Donaldson of Kingsbridge, L.

Maelor, L.

Wells-Pestell, L.

Elwyn-Jones, L.

Minto, E.

Whaddon, L.

Evans of Claughton, L.

Mishcon, L.

Wigg, L.

Fisher of Rednal, B.

Noel-Baker, L.

Wigoder, L.

Gaitskell, B.

Ogmore, L.

Wilson of Radcliffe, L.

Gladwyn, L.

Oram, L.

Wynne-Jones, L.

Gosford, E.

Peart, L.

NOT-CONTENTS

Abercorn, D.

Barnby, L.

Chelwood, L.

Abinger, L.

Bellwin, L.

Cockfield, L.

Addison, V.

Belstead, L.

Colville of Culross, V.

Airey of Abingdon, B.

Berkeley, B.

Cottesloe, L.

Allerton, L.

Bessborough, E.

Craigavon, V.

Alport, L.

Boyd-Carpenter, L.

Craigmyle, L.

Ampthill, L.

Bridgeman, V.

Croft, L.

Atholl, D.

Brookes, L.

Cullen of Ashbourne, L.

Avon, E.

Cathcart, E.

Davidson, V.

De Freyne, L.

Keyes, L.

Radnor, E.

Denham, L. [Teller.]

Killearn, L.

Rawlinson of Ewell, L.

Digby, L.

Kinloss, Ly.

Redmayne, L.

Dormer, L.

Kinnaird, L.

Reigate, L.

Drumalbyn, L.

Kinross, L.

St. Davids, V.

Ebbisham, L.

Lindsey and Abingdon, E.

Sandford, L.

Ellenborough, L.

Long, V.

Sandys, L. [Teller.]

Elliot of Harwood, B.

Loudoun, C.

Savile, L.

Exeter, M.

Lucas of Chilworth, L.

Seafield, E.

Faithfull, B.

Luke, L.

Shannon, E.

Ferrers, E.

Lyell, L.

Skelmersdale, L.

Freyberg, L.

Mackay of Clashfern, L.

Spens, L.

Gage, V.

Macleod of Borve, B.

Stamp, L.

Gainsborough, E.

Mancroft, L.

Stanley of Alderley, L.

Gormanston, V.

Mansfield, E.

Strathspey, L.

Gowrie, E.

Marley, L.

Swinfen, L.

Grimston of Westbury, L.

Middleton, L.

Torphichen, L.

Haig, E.

Mills, V.

Tranmire, L.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Milverton, L.

Trefgarne, L.

Monk Bretton, L.

Trenchard, V.

Halsbury, E.

Montgomery of Alamein, V.

Trumpington, B.

Harmar-Nicholls, L.

Morris, L.

Vaux of Harrowden, L.

Harvington, L.

Mottistone, L.

Vernon, L.

Hatherton, L.

Mowbray and Stourton, L.

Vickers, B.

Hemphill, L.

Murton of Lindisfarne, L.

Watkinson, V.

Henley, L.

Newall, L.

Willoughby de Broke, L.

Hill of Luton, L.

Northchurch, B.

Wise, L.

Holderness, L.

Nugent of Guildford, L.

Wynford, L.

Hornsby-Smith, B.

Orkney, E.

Young, B.

Ilchester, E.

Orr-Ewing, L.

Kemsley, V.

Penrhyn, L.

Resolved in the negative, and amendment disagreed to accordingly.

[Amendment No. 50ZA not moved.]
Clause 19 (Exemption of small direct labour organisations from requirements of Part III]:
5.39 p.m.
Lord SANDFORD Lord SANDFORD moved Amendment No. 50A:
Page 20, line 11, leave out ("less") and insert ("other").
The noble Lord said: My Lords, I beg to move Amendment No. 50A and, at the same time, to speak to Amendment No. 50B. I must apologise to the House for my inconsistency, for having spent the earlier part of the day complaining that the Secretary of State was taking greater powers than he needed to achieve his purpose, I am here suggesting that he should have some more. We greatly welcomed, I think, Clause 19 when it was introduced as a new clause at Committee stage allowing direct labour organisations below a figure of 30 to be exempted from the provisions of this part of the Bill. The Secretary of State has taken power to amend that number by order should he see fit to so do, but only downards. I am suggesting that he should have power
64
to vary either upwards or downwards at his discretion. His discretion will be controlled by the need to lay regulations, and for those to be laid before Parliament and to be subject to the Negative Resolution procedure. I would have thought that under those circumstances this would be a sensible adjustment, and I beg to move.
Lord BELLWIN: My Lords, the Government have recognised that there is a point at which the full benefits to be gained from the Bill will not be realised. It is a matter of judgment to decide where that point comes. We believe that point is reached when an authority employs 30 or less in its direct labour organisation. By building industry standards, an organisation employing 30 operatives and with an annual turnover of about a quarter of a million pounds is quite big. The clause will permit those organisations which are genuinely minimum-level DLOs to escape the rigours the Bill imposes. We should not wish to see a higher figure. I recognise that what my noble friend suggests gives a certain discretion; but we have been assailed on all sides for precisely the opposite reason. I do not think that at this moment we should depart from the path on which we have embarked. Therefore, perhaps he may not feel so deeply about it as to wish to press the amendment.
Lord SANDFORD: My Lords, I cannot press the Secretary of State to take powers if he does not want them. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 50B not moved.]
Lord UNDERHILL Lord UNDERHILL moved Amendment No. 51:
After Clause 19, insert the following new clause:
("Works undertaken on behalf of an authority
.—(1) Notwithstanding anything in section 101(10) of the Local Government Act 1972, the Local Authorities (Goods and Services) Act 1970 or any other enactment, a local authority may enter into arrangements for the construction of buildings, or the carrying out of other works by them on behalf of an authority to which this section applies.
(2) This section applies to—

(a) another local authority within the county or adjoining county

(b) the water authority

(c) the police authority

(d) the Passenger Transport Executive

(e) the Health Authority (within the meaning of section 128(1) of the National Health Service Act 1977) in the county.").

The noble Lord said: My Lords, an amendment similar to the one which I am moving this evening was moved at the Committe stage but it was caught up in a debate on a number of amendments and the discussion on this particular one was very brief. At the Committee stage, the noble Lord the Minister said that authorities must first prove that direct labour is the better way of doing work in their own areas. If commercial competitiveness is proven, why should not a local authority undertake work for other public bodies and for other nearby local authorities? I would ask what principle is involved in refusing this provision if competitiveness and accountability are observed.
The noble Lord, Lord Bellwin, at column 265 of the Official Report for 7th October, said:
"They"—
the local authorities—
"must keep their accounts clearly on a trading basis, earn a return on capital and prove all this before they can think of expanding".
He was not opposed, I gather, to the principle which we are advocating in this amendment. Therefore, I ask what
66
principle is involved in refusing the amendment.
At Committee stage, my noble friend Lord Bruce reminded the Committee that the working party on direct labour organisations which reported in August 1978 recommended that direct labour organisations should be permitted to undertake work outside, as well as inside their parent local authorities, for other local authorities and for public bodies. The terms of the amendment provide a new clause which will enable this to be done. This extension would help direct labour organisations to make their position more viable. It would further assist them to serve the desired aim of the return on capital—and this was the principle, your Lordships will remember, in the relevant clause of the Greater Manchester Bill which was approved by this House, and approved after consideration by your Lordships' Select Committee which went into this particular clause in that Bill with great care and decided that the Greater Manchester Authority should be allowed to have that extension which we are asking for in this particular amendment.
This provision would also help continuity of work and it would help to prevent decasualisation. It is one of the evils of the building and construction industry that when the job is done men are just pushed out. Continuity of work is an aim which I am sure this House will wish to have achieved. It will enable local authorities to be ready with adequate staff for emergencies—and we discussed the question of emergency work on an amendment last Friday. Clause 15 gives the Secretary of State control if the finances get out of hand and, therefore, there is that safeguard to what we are proposing. There is that reserve power and, while we opposed it, the House has now agreed to it; therefore there is that reserve power.
Lastly, there are accidents of geographical boundaries which should not prevent a local authority asking another local authority to do work for it. If the amendment is rejected, it would stop a local authority from doing that. I am sure that many noble Lords could think of examples where geographical boundaries would make it common sense that one authority should ask another with an

67
adequate direct labour organisation to do work for it. The Minister has on other matters appealed for flexibility and has justified flexibility. That has been argued in other Bills before this House. This is an example of common sense and flexibility which I hope your Lordships will agree to accept. I beg to move.
Lord EVANS of CLAUGHTON: My Lords, I should like to support the amendment moved by the noble Lord, Lord Underhill. It does not seem that there can be any political or philosophical reason why the Government should not give the direct labour organisations a wide discretion to carry out new work and maintenance, unless they are saying that they want to reduce direct labour organisations to mere emergency services, which I gather they do not. It seems to me, for the reasons the noble Lord has given, that for convenience and flexibility the only way a direct labour organisation can become competitive is if they can commercially tender for a wide variety of jobs and public and various works for the list of bodies mentioned in the amendment. I think it is a valid point that, from the experience of many noble Lords, a road or something like that would pass in and out of two or three local authorities. It would be more convenient and cheaper if one direct labour organisation was allowed to deal with that, rather than that two, three or four different bodies should deal with small pieces of the work.
Finally, and probably most importantly, your Lordships will remember a certain Friday morning not long ago when we had a very rumbustious debate about the Greater Manchester Bill. It was an occasion when I saw angry passions rise to a higher point than I remember and where a number of noble Lords on the Government side voted in favour of this very principle being enshrined in the Greater Manchester Bill. As this Bill is drawn, it seems that the Local Government, Planning and Land (No. 2) Bill could overtake the Manchester Bill and undo all the work that was done by your Lordships on that occasion. Therefore, I should have thought that on grounds of flexibility, of economy and of logicality this amendment should be supported.
Lord BELLWIN: My Lords, I must
68
say that I do not quite know what to make of what the noble Lord, Lord Evans, has just said, but I think I should put him right on one point. The debate on the Greater Manchester Bill was not on this issue at all; it was on the issue of constitutionality—as to whether or not something which has been decided by a Select Committee of your Lordships' House should later he reversed. It was not at all on the merits or otherwise of the particular point. I wonder also if the noble Lord quite appreciated what he was saying when he said that only if this amendment is approved can direct labour organisations become competitive. We have been hearing talk for so long now telling us how competitive they already are. I have no wish to attack direct labour organisations as such, but I hope that they have not had to rely on this type of possibility to be competitive in all they have been doing over the years.
My response to the noble Lord, Lord Underhill, is to ask what are the basic objectives? Why are direct labour organisations set up in the first place? Surely it is to carry out a function within their own authority, using their ratepayers' money, as I have said more than once, willingly subscribed as risk capital. Here we are contemplating their going into speculative ventures in competition with the private sector. I just do not see how that does other than destroy the whole argument to justify direct labour organisations being set up by an authority. They are not there to go into business as such. They are set up for a specific purpose, and if we accept, as I accept, that certain functions that they carry out are special to them—emergency situations, certain other maintenance work, and so on—then provided they are competitive, provided they fulfil the requirements of this Bill, I accept them and think there is a place for them. Noble Lords are contemplating widening this whole area of operation in this way. I must say, without going on about it, that we find the amendment quite unacceptable.
Baroness FISHER of REDNAL: My Lords, it really is not extending the Bill in any way. It is putting into the Bill what local authorities have been doing for quite a long time. Many local authorities, on what one might call the periphery of their area, have need for

69
something to be done when it would be quite expensive for them to put it into operation because it is perhaps 10 or 12 miles from the base at which they normally operate, and so they ask the adjoining authority to take on the task for them. This weekend I was travelling in a part of the country and I came across a big hoarding which said, "Road improvement scheme being carried out on behalf of such and such county council". It gave the name of the local authority. This is the kind of thing that local authorities are doing. All we are asking is that it should be legalised by putting it into the Bill.
Lord BROOKES: My Lords, I want to refer to the underlying concern, perhaps the unspoken concern. We are talking about the capacity to be competitive; we are talking about direct labour organisations. In truth, whether they are or are not competitive is always going to be open to question. That is the underlying concern, because if one has six competitors and five can go broke by reason of their irresponsibility, and one cannot, that is not competition in terms that business understands it. I think it is best to out with these truths. We might try to rest upon return on capital employed and our accountants might like to finesse and say, "Do you mean return on capital employed? Do you mean return on assets employed? Do you mean return on assets managed?" We all know that in large organisations—not merely local authorities but large businesses—there are vested interests who commit themselves to an activity because it creates managerial status, managerial salary and privilege. Therefore, one sets up a situation which is full of inequality and which cannot, beyond all reasonable doubt, satisfy the test that it is competitive, because it lacks the ultimate sanction.
Lord UNDERHILL: My Lords, I am grateful for the support of the noble Lord, Lord Evans of Claughton, and of my noble friend Lady Fisher. I believe they have put forward common-sense arguments as to why this amendment should be carried. It does seem so much common sense. A local authority may say, "Look here, you can do this job better for us; you are nearer or you have got a more effective organisation. Do it for us". Leaving out the public
70
bodies, that would appear to be a commonsense argument for approving this amendment.
I should like to give my impression of what took place on that Friday morning on the Greater Manchester Bill. If your Lordships will recall, your Select Committee was given instructions to look at a particular clause which was inserting similar powers in the Greater Manchester Bill. It was told to look carefully at this clause to see whether or not the provisions were unfair to the private sector. Your Committee reported that they were not unfair to the private sector. Admittedly there was a constitutional argument on the floor of this House, but there was also an amendment moved to delete that clause. The House refused the amendment to delete that clause; therefore in the Greater Manchester Bill there is this provision, approved by Parliament, and we were asking this afternoon for its extension. I think we are in a situation where, unless the building is almost going to fall down, we are not going to get amendments accepted by the Government, who seem to be in this situation because of the timetable and do not have regard to the common sense and the sensibility behind any amendment. It is not my intention to divide the House, but a principle is involved here and I will ask that the amendment be negatived.
Lord BOYD-CARPENTER: My Lords, before the House negatives the amendment, I think noble Lords will want to note the quite extraordinary argument used a moment or two ago by the noble Baroness. She said that at present DLOs were doing jobs which required legalisation. If that is true, it seems to me the worst possible argument for extending their powers.
Baroness FISHER of REDNAL: My Lords, I think the words were taken out of context.
On Question, amendment negatived.
Clause 20 [Consequential repeal or amendment of local statutory provisions]:
5.55 p.m.
Lord UNDERHILL Lord UNDERHILL moved Amendment No. 52:
Page 21, line 7, leave out from ("to") to end of line 8 and insert ("an affirmative resolution of both Houses of Parliament").
The noble Lord said: My Lords, at the Committee stage, when a similar amendment was proposed, I asserted that this was another example of the sweeping power being given under this Bill to the Secretary of State—another example of an arbitrary power. I would remind your Lordships that it is a power given to the Secretary of State to repeal or amend a local Act; in other words, a power to vary an Act of Parliament; power to amend or repeal legislation which has been approved by Parliament; and it can be amended or repealed by the Secretary of State. The amendment endeavours to preserve fully the authority of Parliament on legislation which has been approved by Parliament. I was grateful to other noble Lords who, in that debate at the Committee stage, came in to support the view of the seriousness of this power being given to the Secretary of State. I am pleased that the noble Lord, Lord Boyd-Carpenter, is with us this afternoon because he said to his noble friend—it is at column 269:
"It is, it seems to me, quite a serious matter for a Minister to repeal part of a statute, be it a public or a local statute".
The noble Lord, Lord Bellwin, said that there was a safeguard that under subsection (3) the Secretary of State would be required to consult the local authority.
However, what type of safeguard is that? Let us say that the local authority concerned argues that there should not be repeal or amendment of its local Bill. That could be set on one side by the Secretary of State. There is no provision for any appeal, and the Secretary of State can decide, irrespective of the representation that may be made to him, that he will proceed with action by order to repeal oramend. Therefore, there are good reasons why any action of this kind should be by Affirmative Resolution and not the Negative Resolution procedure as is provided in the Bill.
Your Lordships will recall that there were serious arguments advanced for this. I was pleased that at the Committee stage the noble Lord, Lord Bellwin, was able to say that he would think very carefully about this and see what we might or might not do about it. On that basis, the amendment was withdrawn. This is such a serious matter, affecting the repeal or amendment merely by Negative Resolution procedure of any Act of Parliament
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that has been approved, that I hope that the Minister will be able to say that on reflection he will agree to what we are asking in this amendment; that is, that we change the Negative Resolution procedure to an Affirmative Resolution. We are not arguing a great principle about the Bill but one of the authority of Parliament to take what is a rightful procedure in a matter of this kind. I beg to move.
Lord BELLWIN: My Lords, it is quite true that I promised the Committee that I would examine this provision and look into the procedures. I assure your Lordships that I have done exactly that and very carefully. But I have to advise that I see no case for it. Before I say anything else, I ought to say that I have been impressed by exactly what is involved in the Negative Resolution procedure. I have heard it diminished in its importance so often in your Lordships' House that I assumed, in my ignorance, that only the Affirmative Resolution procedure could be the real safeguard. But the more that one looks at exactly what is involved, the more one realises that it is indeed very much a safeguard. I think it was my noble friend Lord Boyd-Carpenter who said something on those lines not long ago. Having had a look at it, I endorse that.
This clause is very much a reserve power. It will allow the Secretary of State to repeal any part of a local Act of Parliament whose provisions are inconsistent with this one. This provision is a standard one. There is nothing unusual about this. It is a perfectly proper way of ensuring that new requirements determined on by Parliament prevail over inconsistent provisions which may exist in local Acts. I have examined the precedents and there are many. The Administrations of both parties have provided recent examples. Section 262 of the Local Government Act 1972 is one. Section 81 of the Local Government (Miscellaneous Provisions) Act 1976 is another. There is in the Health and Safety at Work Act 1974 a power of this kind which is subject to no parliamentary procedure at all.
In the clause before us now the orders will be used to amend or repeal local Act powers which are inconsistent with the provisions of Part III of this Bill. They will not remove any power to carry out

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work which may exist in local Acts, but simply ensure that when carrying out such works, the financial requirements of this Bill bite just as they do on "works contracts" and "functional work".
I said that before the Secretary of State could make an order, he would be required under subsection (3) to consult the local authority concerned. I repeat that again because I think it is important. With this safeguard, and Parliament having signalled its approval of the requirements for competitive tendering and proper accounting set out in this part of the Bill, we believe that it is unnecessary to require specific parliamentary approval of every application of these principles to individual authorities. To do so we feel would not be an appropriate use of Parliament's time. With my other observations on the Negative Resolution procedure, I ask the noble Lord not to press the amendment.
Lord UNDERHILL: My Lords, the noble Lord said that it is a reserve power; but then he said that he could not ask that Parliament shall waste its time on all the applications. Therefore, there is a possibility that there may be a number of applications, not merely just a reserve power. I can recall the arguments at Committee stage about the difference between Negative and Affirmative Resolution procedures by noble Lords with far greater experience than I who came down in favour of using the Affirmative Resolution procedure in a case like this. I have looked through the Bill and there are numerous examples of where the Affirmative Resolution procedure is being proposed by the Government, and I should have thought that this is one which is of great importance. It affects the repeal or amendment of legislation. The Minister has made his position quite clear. Therefore, I will not withdraw, but I will ask this amendment to be negatived and will not call for a Division.
On Question, amendment negatived.
Clause 21 [Part III—supplementary]:
6.7 p.m.
Baroness FISHER of REDNAL Baroness FISHER of REDNAL moved Amendment No. 53:
Page 21, line 23, at end insert—
("Provided that no such order shall specify a date prior to 1st April 1982".).
The noble Baroness said: My Lords, in moving this particular amendment, it is true to say that all the local authority associations, the Association of Municipal Authorities, the Association of County Councils and the Association of District Councils, while they may not be exactly agreeing to the words of the amendment, have the same feeling that there is a need to give local authorities more time than is specified by the Secretary of State when he has given a date for commencement. That is, so far as I understand it, to come into operation on 1st April next year.
All the local authority associations have drawn attention to the Minister the fact that there is a great deal of work to be done on the implementation of the procedures to do with accountancy. These have not yet really been worked out. There are all the regulations and directions. Heaven knows! there are enough regulations to keep the Civil Service happy for years, I should imagine, in this first part of the Bill. All those have to be put to the local authorities. The Minister said in Committee that they would continue to listen to further arguments from the local authorities on what they wanted to put in on timing, but they would have to see how things went. They would need good, hard evidence if they were to move away from the targets set for this Part of the Bill.
The progress of the Bill—and I do not need to remind your Lordships about this—has been very, very seriously altered. The Bill will not get the Royal Assent until practically at the end of this session. Therefore, this gives perhaps four months for local authorities to start changing over their procedures, especially those matters that are to do with maintenance. This is going to be a new set of documentation; a new set of alterations; and it will be of profound importance to local authorities that, to start with, they get this right. The tendering documents that will have to be issued for maintenance are something that the local authorities have to feel their way on and make sure that the right action is taken in the beginning, bearing in mind that that depends on whether or not they stay in business. If they do not get the tendering documents correct to start with, that might be a future hazard for them.
So I would ask the Minister to recognise the great difficulties that local authorities are to be placed in and some of the difficulties that are being put in their path. I would ask the Minister whether he would look again at this matter and make sure that all the negotiations have been gone through with the local authority associations. What we are asking for in this amendment is for the date to be delayed for 12 months. That will obviously help those local authorities which are going to work with the Secretary of State to try to make this work. The three-year period in earning a rate of return on capital will be much easier for them if they are given that 12 months' grace. I beg to move.
Lord SANDFORD: My Lords, I again rise to support this amendment, as I did in Committee and as did my noble friend Lord Ridley on behalf of the Association of County Councils, because it is perfectly true that all the associations feel that this part of the Bill is being thrust upon them. On the other hand, I have an amendment of my own shortly to be considered and I should like to speak to that now, because it seeks to apply this delay in respect of this Part of the Bill in connection with one or two items. As my noble friend said at Committee stage, it is true that the authorities know what is to be contained in the regulations to control tendering, as set out in Clauses 5 and 7. I still think the time is short to get all this into operation, but the Government have made that clear.
On the other hand, when we turn to the accounting and financial side of the matter, my noble friend said in Committee that the Chartered Institute of Public Finance and Accounting is developing, with the Department of the Environment's support, a standard computer system to enable authorities to meet the requirements laid down in the Bill. That may be so, but I am advised that it will not be ready in time to meet the requirements of the Bill that come into force in April 1981. It may be ready at some time after that and will then be useful, but it is certainly not going to be available and put into effect by the introduction date of April 1981. Although it is true to say that a draft code of practice prepared by the same Chartered Institute has been
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available since July, a draft is not the same thing as a settled set of regulations approved by Parliament. Therefore, for those two reasons I think there is a case to be made for considering delay in introducing the accounting parts of this procedure, even if there is not quite such a strong case for delaying the tendering arrangements. I shall be interested to hear how my noble friend justifies the introduction of the accounting and financial side of this matter when the preparations are at this early stage.
Lord DIGBY: My Lords, the county councils have only a small number of direct labour organisations, but we have done a survey of our members and this shows that this part of the Bill will result in the need for 331 new technical officers and 54 new accountants. These will be required regardless of when it comes into force, but in the first year it is obviously going to be that much more difficult to get the organisation going. I should particularly like to support my noble friend Lord Sandford, who says that the CIPFA computer accounts programme will not be ready until probably next year. The noble Lord, Lord Bell-win, said that we had had lots of warning, but when you are talking of this number of staff, surely you cannot employ them in advance of a code of practice which has not yet been approved and the form of which you do not exactly know. Most local authorities do not have surplus manpower.
Lord BELLWIN: My Lords, I do not know where this figure of 331 technical officers comes from and, with great respect to my noble friend, I just do not accept it at all. I should want a lot more information (a) as to exactly how the figure is arrived at, and (b) how this work would fit into the existing work which such officers already carry out; because time and time again when new requirements have been put upon local authorities and when so many of them have said: "That's going to need so many extra staff" I have heard them go on to say, "How are we going to absorb this with our present staff"? It means everyone pushing up; it means looking again at the distribution of work; it means considering doing exactly what a private business would do, faced with extra work imposed upon it. So while I do not for a

77
moment say that my noble friend is wrong—and indeed how can I, when I do not even know the basis of how he makes it up?—I must nevertheless put a reservation on it as such.
I fully understand the local authorities' wish that the implementation of this part of the Bill should be delayed. On the other hand I am equally conscious of the strength of the concern in the building industry and among ratepayers who foot the bills for DLOs that we should act as soon as possible to ensure that no further public money is wasted by inefficient building departments. In saying that, I do not mean all of them. The noble Baroness and I had a little interchange on that point the other day and I think we probably agreed at least upon this point between us: that they were not all inefficient and that they were not all efficient. How could they be?
But, my Lords, we have to strike a balance. We believe that the authorities have had time to put their houses in order, though not, as my noble friend Lord Digby said, to be able to look at the nuts and bolts of exactly what is required: that is understandable. But the fact is that we are going back in time to August of last year, and I should have thought that responsible local authorities would have started moving in the right direction. Indeed I am sure that most of them have, and that implementation is still possible. We have made concessions to ease the burden of starting the new system, with easier tendering requirements—particularly the freeing of all maintenance work below £10,000 and of all highway authorities' winter maintenance programmes from compulsory tendering, together with de minimis exemption for the smallest authorities.
There have been concessions also in one or two other minor ways. But we really cannot offer further relaxations. Whenever the time comes, it is always at that moment that you have to get to it. I believe this is what local authorities will do, because in matters of this kind the track record is a very good one. I have seen so many things brought in that had to be taken on board, and were taken on board. My goodness me! I pay a tribute to many of them for the way they have done those things. I am sure they will do this the same way.
Lord DAVIES of LEEK: My Lords, may I ask the noble Lord for a little information? Having declared a moratorium on all building, where is the opportunity for all this wastage that is somewhere in the lost horizon? What would it do to the Government to delay the implementation, as asked for by a number of experts, and give the local authorities a chance to think about how to get the increased staff they will need? There will be a need for increased staff, and I sincerely ask him whether he can say if the moratorium on housing has altered the meaning of this clause and its implementation and purpose.
Lord BELLWIN: My Lords, by leave of the House, may I say not in the slightest.
Baroness FISHER of REDNAL: My Lords, I am sorry that the Minister has given the reply that he has. As the noble Lord, Lord Sandford, said, together with the noble Lord who spoke on behalf of the ACC, these are the local authority bodies speaking for the whole of the country. I might have thought that the Minister would not accept it because I was speaking: that might be the voice of the Association of Municipal Authorities and therefore not perhaps particularly important to his party's thinking. I should not have disagreed with that. But the fact that all the local authority associations are concerned about the starting date shows that the Government think very poorly of those who serve on local authorities up and down the country, and take no notice of those officers who guide and give information to councillors.
The noble Lord who spoke on behalf of the ACC gave some figures. I should be the last one to challenge those figures, but the authorities themselves would challenge them, especially the ACC. They would want to make sure that they were doing their best for the Government and helping to get the Bill through. It seemed quite serious for those figures to be challenged.
I must remind the Minister that all local authorities have been trying to cut back their staffs. That is what the Government have told them to do, so that is what they have been doing. They have been doing their very best to cut back. I want to make particular reference

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to the maintenance departments. Their whole revamping will have to be looked at in a different light. People will not follow the normal pattern of costing and there will be a completely new accounting procedure. I am sorry that the Minister cannot accept the amendment and I intend to press it to a Division.
6.22 p.m.
On Question, whether the said amendment (No. 53) shall be agreed to?
Their Lordships divided: Contents, 71; Not-Contents, 108.

CONTENTS

Airedale, L.

Gregson, L.

Oram, L.

Bacon, B.

Hale, L.

Peart, L.

Beaumont of Whitley, L.

Halsbury, E.

Phillips, B.

Bernstein, L.

Hampton, L.

Ponsonby of Shulbrede, L. [Teller.]

Beswick, L.

Hanworth, V.

Birk, B.

Hatch of Lusby, L.

Rhodes, L.

Blyton, L.

Houghton of Sowerby, L.

Ridley, V.

Boston of Faversham, L.

Howie of Troon, L.

Ross of Marnock, L.

Bowden, L.

Jacques, L.

Sandford, L.

Brockway, L.

Kilmarnock, L.

Segal, L.

Brooks of Tremorfa, L.

Kinloss, Ly.

Shinwell, L.

Chitnis, L.

Kirkhill, L.

Stamp, L.

Collison, L.

Lee of Newton, L.

Stedman, B.

Cooper of Stockton Heath, L.

Llewelyn-Davies of Hastoe, B.

Stewart of Alvechurch, B.

David, B. [Teller.]

Lloyd of Kilgerran, L.

Stone, L.

Davies of Leek, L.

Loudoun, C.

Strauss, L.

Davies of Penrhys, L.

Lovell-Davis, L.

Taylor of Mansfield, L.

Digby, L.

McCarthy, L.

Underhill, L.

Elwyn-Jones, L.

Maelor, L.

Wade, L.

Evans of Claughton, L.

Milverton, L.

Wells-Pestell, L.

Fisher of Rednal, B.

Minto, E.

Whaddon, L.

Gainsborough, E.

Mishcon, L.

Wigoder, L.

Gaitskell, B.

Noel-Baker, L.

Wilson of Radcliffe, L.

Greenwood of Rossendale, L.

Ogmore, L.

Winstanley, L.

NOT-CONTENTS

Abercorn, D.

Ellenborough, L.

Mancroft, L.

Abinger, L.

Elliot of Harwood, B.

Mansfield, E.

Airey of Abingdon, B.

Exeter, M.

Marley, L.

Allerton, L.

Freyberg, L.

Middleton, L.

Alport, L.

Gage, V.

Mills, V.

Atholl, D.

Gainford, L.

Monk Bretton, L.

Avon, E.

Glenkinglas, L.

Montgomery of Alamein, V.

Barnby, L.

Gormanston, V.

Morris, L.

Bellwin, L.

Cowrie, E.

Mottistone, L.

Belstead, L.

Grimston of Westbury, L.

Mowbray and Stourton, L.

Bessborough, E.

Haig, E.

Murton of Lindisfarne, L.

Birdwood, L.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Northchurch, B.

Boardman, L.

Nugent of Guildford, L.

Boyd-Carpenter, L.

Harmar-Nicholls, L.

Orkney, E.

Brabazon of Tara, L.

Harvington, L.

Orr-Ewing, L.

Bridgeman, V.

Hatherton, L.

Pender, L.

Brookes, L.

Henley, L.

Penrhyn, L.

Brougham and Vaux, L.

Hill of Luton, L.

Radnor, E.

Campbell of Croy, L.

Holderness, L.

Rawlinson of Ewell, L.

Cathcart, E.

Hornsby-Smith, B.

Reigate, L.

Chelwood, L.

Inglewood, L.

Renton, L.

Cockfield, L.

Kemsley, V.

St. Aldwyn, E.

Colville of Culross, V.

Keyes, L.

Sandys, L. [Teller.]

Cottesloe, L.

Killearn, L.

Savile, L.

Craigavon, V.

Kinnaird, L.

Seafield, E.

Craigmyle, L.

Kinross, L.

Skelmersdale, L.

Croft, L.

Lindsey and Abingdon, E.

Soames, L. (L. President.)

Croham, L.

Long, V.

Spens, L.

Cullen of Ashbourne, L.

Lucas of Chilworth, L.

Stanley of Alderley, L.

Davidson, V.

Luke, L.

Swinfen, L.

de Clifford, L.

Lyell, L.

Torphichen, L.

Denham, L. [Teller.]

Mackay of Clashfern, L.

Tranmire, L.

Drumalbyn, L.

Macleod of Borve, B.

Trefgarne, L.

Trenchard, V.

Vernon, L.

Wise, L.

Trumpington, B.

Vickers, B.

Wynford, L.

Vaizey, L.

Watkinson, V.

Young, B.

Vaux of Harrowden, L.

On Question, amendment agreed to.

6.30 p.m.
Lord SANDFORD Lord SANDFORD had given notice of his intention to move Amendment No. 53A:
Page 21, line 23, at end insert ("provided that no such order in respect of the accounting and financing provisions shall specify a date prior to 1st April 1982.".).
The noble Lord said: My Lords, I had intended to move this amendment, but in the light of the result of the Division all I wish to say is that I think that that decision will in the end lead the Government to recognise that it will be a case of more haste, less speed, and, I am afraid, much greater cost.
[Amendment 53A not moved.]
Clause 22 [Right of councillor to opt for financial loss allowance]:
The Earl of MANSFIELD The Earl of MANSFIELD moved Amendment No. 54:
Page 22, line 33, leave out ("(7)") and insert ("(3)").
The noble Earl said: My Lords, this amendment is necessary to correct either a printing error or a drafting mistake. It is designed to ensure that the Bill is internally consistent and also to clarify any doubts about the application of this clause to Scotland. The effect of the amendment is to create a new subsection within the clause which explicitly disapplies the whole of the clause to Scotland. I beg to move.
Lord ROSS of MARNOCK: My Lords, this is a very important amendment. I am vet y glad that the Scottish Office was awake at the time that I made the point at the Committee stage: that to put in that it would not apply to Scotland when what we are seeking to do is to put a new clause into a purely English Act, was otiose. But I hope that the Scottish Office realise what they are doing. We cannot make one amendment without making sure that all the consequential amendments are also made. If any Scot wants to know how much of this applies
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to Scotland and starts at the beginning of the Bill and reads it through, he will have a devil of a job. No Scottish Act of Parliament should be dealt with in this particular way. But if he does want to find out, he goes to Clause 185, whose rubric is "Scotland". Subsection (1) says that Parts V, IX, XIV, XV and XVII of this Act apply to Scotland to the extent specified in so-and-so. And subsection (2) says that Parts VI, VIII, X and XII of this Act do not apply to Scotland. This means that those parts which are not mentioned there apply entirely to Scotland. Noble Lords will notice that Part IV is not mentioned there at all and it is Part IV that we are now dealing with. We have just left out one subsection of Part IV, so obviously Part IV applies to Scotland only in part. When they come to it, will the Government undertake to amend Clause 185 so that simple-minded Scotsmen who have the sense to look it up as one thing which guides the application to Scotland will be able to he assisted in respect of Part IV? Otherwise, the amendment is impeccable.
The Earl of MANSFIELD: My Lords, I am happy to give the undertaking that the Scottish Office, whenever it arises from its slumbers, will pay regard to the more tautologous arguments of the noble Lord. It always does so.
Clause 23 [Amendments relating to allowances to members of local authorities and other bodies]:
[Amendment No. 54A not moved.]
The Earl of MINTO The Earl of MINTO moved Amendment No. 55:
After Clause 24, insert the following new clause:
("Vice-Chairmen of councils in Scotland and application of Part IV to Scotland
.—(1) The following section shall he inserted after section 3 of the Local Government (Scotland) Act 1973:—
"vice-Chairman
3A.—(1) A council may appoint a member of the council to be vice-chairman of the council.

83
(2) The vice-chairman shall hold office until the expiry of the term of office of the council.
(3) A person holding the office of vice-chairman shall be eligible for reelection as vice-chairman but shall cease to hold that office upon ceasing to be a councillor.
(4) Subject to any standing order made by council, anything authorised or required to be done by, to or before the chairman may be done by, to or before the vice-chairman.
(5) A council may pay the vice-chairman, for the purpose of enabling him to meet the expenses of his office, such allowance as the council think reasonable."
(2) Section 22 above does not extend to Scotland, and this section extends to Scotland only.").
The noble Earl said: My Lords, during the Committee stage I moved a very similar amendment whose object was to bring Scotland into line with England and Wales and to allow it to have the same privileges and provisions. During the Committee stage the amendment was very much shorter. It was that a council in Scotland may appoint a member of the council to be vice-chairman of the council and then, having appointed him for the purpose of enabling him to meet the expenses of his office, to claim such allowance as the council may think reasonable.
This provision already exists in the Local Government Act 1972, but it does not exist in the Local Government (Scotland) Act 1973. There is no doubt whatsoever in my mind that it should, for at present the chairmen of the councils in Scotland are immensely overworked and rely entirely upon vice-chairmen, who are technically not vice-chairmen although they are carrying out the jobs of vice-chairmen. They also rely upon the good will of those people, since the councils are not able in any case to make suitable allowances to them. In making that particular amendment during the Committee stage, I was very grateful to receive support from all parts of the Committee. The noble Earl the Minister of State was kind enough to say that in view of that lie would take back the matter and have another look at it. On that understanding, I withdrew the amendment.
Since that time I have received a letter from the noble Earl the Minister and
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Amendment No. 55 is a copy of a suggested draft that the Minister sent to me. It is slightly longer than mine was originally, for the simple reason that I had automatically assumed that if one retired from a council one would no longer be vice-chairman of it, and one or two other small items like that. But the draftsmen must be safe. Consequently, the amendment has become longer.
However, subsection (1) is entirely in keeping with my original amendment, and I am most grateful to the noble Earl for having sent this advice to me. Subsection (2) touches a little upon a matter which the noble Lord, Lord Ross of Marnock, commented upon a moment ago. It is a tidying-up purpose. By including in subsection (2) that Section 22 above does not extend to Scotland, and that this section only extends to Scotland, it is hoped that simple-minded Scots like the noble Lord and I will understand what does and what does not apply to Scotland.
In conclusion, the amendment in subsection (1) is something which I genuinely believe that councils in Scotland require. As we all know, at present they are overburdened. Individuals are unquestionably carrying a great responsibility upon their shoulders. I trust very much that this amendment may meet with the approval of your Lordships' House. I beg to move.
The Earl of MANSFIELD: My Lords, as the noble Earl has said, this amendment is acceptable to the Government. I should like to take this opportunity of thanking the noble Earl for drawing the anomaly to our attention and for providing the means of rectifying it. The second part of the new clause, subsection (2), will require a consequential amendment to Clause 185, which has been tabled in my name.
The Earl of MINTO: My Lords, may I thank the noble Earl for his response and for kindly explaining the consequential aspect of subsection (2).
Clause 25 [Disclosure of information]:
6.40 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 56:
Transpose Clause 25 to after Clause 175.
The noble Lord said: My Lords, this amendment transposes Clause 25 from Part IV of the Bill, which deals with local government allowances, to which it is not relevant, to a more appropriate place in the Bill. I beg to move.
Clause 26 [New Valuation lists]:
Baroness BIRK Baroness BIRK moved Amendment No. 57:
Leave out Clause 26.
The noble Baroness said: My Lords, this matter was discussed and voted on at Committee stage, but we are still not happy about the arrangements that are laid down in this clause; neither are the local authorities nor the local authority associations. I am moving the deletion of the clause to give the Government the opportunity once again to have a look at this point.
Briefly, what the clause does is to remove the statutory requirement for five-yearly rating revaluations and replace it with the power for the Secretary of State to order, with the agreement of both Houses of Parliament, a revaluation from time to time. This again is giving a particular power to the Secretary of State and, as was pointed out at the Committee stage by, I think, the noble and learned Lord the Lord Advocate, there have been only three revaluations since the war, and all under Conservative Governments. Therefore, it seems odd to celebrate this by abolishing the necessity to have a look every year to decide whether there should be revaluation.
Under the existing law, without this clause Parliament has to agree every year if a revaluation is to be postponed, whereas under Clause 26, if this were enacted and became part of the Bill (which we hope it will not) Parliament would hear of rating revaluations only when a Secretary of State saw fit to order revaluations. If revaluations are not carried out regularly the tax base is held at an artificially low level and anomalies in valuations arise both between different classes of property within a local authority area and in the level of valuations between local authorities themselves. As a result the tax base can become extremely unfair
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as well as outdated, and can also distort the distribution of Government grants to local authorities.
For these reasons, in company with many local authorities and certainly the Association of Metropolitan Authorities, we believe that Clause 26 should he deleted from the Bill. I hope that in the intervening time since the Committee stage the Government have been able to take the opportunity to look into this subject and to see the really telling arguments in favour of the deletion of this clause, which are certainly not on a party political basis. I beg to move.
Baroness STEDMAN: My Lords, I should like to support my noble friend. We dealt with this matter at some length in the Committee stage and we are still concerned that while this clause remains in the Bill Parliament will hear about rating revaluations only as and when the Secretary of State sees fit to order such a revaluation. We all know that if revaluations are not carried out at regular intervals the tax base is held at an artificially low level and it becomes unfair and out of date, which in turn affects and distorts the distribution of Government grants to the local authorities. That in turn gives rise to substantial injustices between individual ratepayers in the size of the rate burden that they are all asked to bear.
Nothing that has been said from the Government Benches so far during the progress of this Bill has detracted from the suspicion that the clause may be a prelude leading to the abolition of domestic rates and towards a total dependence on Government block grant. If and when that happens it will be the end of democratic local government as we know it, because unless the revaluations are kept up to date the local authorities will be put to very serious disadvantage. We said, both at Second Reading and at Committee stage, that noble Lords opposite do not seem to appreciate that rates are the tax base of the local authorities. They base their revenue estimate upon rates; rates are all that local authorities have to live on to survive, and every time revaluation is postponed it means a greater burden on local authorities to finance those services that they have to provide. Then along comes a Bill like this one,

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seeking to introduce a system obliging the local authorities to hold their rates down to the levels prescribed by the Secretary of State. We shall go on in Part IV of the Bill to look at the reformed type of the grant, which is very much dependent on rateable value. We maintain that the block grant cannot be fairly and equitably determined unless there is a regular revaluation. I hope that since the Committee stage the Government have had time to think and to decide that this clause could go.
The LORD ADVOCATE (Lord Mackay of Clashfern): My Lords, as has been said, we had a fairly full debate on this clause in Committee and in fact the Committee divided on the Question whether this clause should stand part of the Bill before it decided to retain it in tit, Bill. I accept, of course, that the valuation lists provide the tax base for the local authorities. I also accept that the longer the time between one revaluation and the next the more there is risk of anomaly growing up, but one has to balance that against the cost of mounting a revaluation. I mentioned at the Committee stage that the party of the present Government had a reasonable record in this connection as compared possibly with that of the party opposite, not to make any political point but just to underline that the Government would not willingly depart from a system of revaluation at fairly regular intervals unless there was good reason; and we consider that there is extremely good reason in the present circumstances.
The present circumstances are that the Government are engaged in a fundamental review of the rating system and alternatives to domestic rating. While this is going on it would be quite inappropriate to proceed with a revaluation previously planned for 1982. For the future it seems appropriate to keep the position flexible, as proposed in this clause and in Clause 28. Under the provisions of these two clauses we should be able to mount a revaluation in the future if that seemed desirable following our review; and under Clause 28 such a revaluation might be either across the board, or for one class of property only; for example, for non-domestic or domestic property. These possibilities exist but it would be quite wrong to seek to tie the position down more tightly
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before the review is complete. I think that also implicit in that is that the review is going on, no decisions on this matter have yet been reached, the review has entered a very difficult stage and there is no truth at all in the suggestion that the Government have already decided what is to be the outcome of the review. Accordingly, I ask your Lordships not to agree with this amendment.
Lord DAVIES of LEEK: My Lords, may I ask a question? What I find difficult is this. We are having rapid and short-term increases in everything from postage stamps onwards and now this Bill seems to he abolishing altogether the quinquennial system while we are searching for a necessary new system of rating. The frenetic changes of costs upset more than ever the lower income groups in the case of heating, lighting and rates. In a depression period I think a little stability in this area would be worth while. My idea is that this Bill will increase instability in local rates and will cause much dissension.
Lord MACKAY of CLASHFERN: On the contrary, my Lords, there will perhaps be even more stability available in the valuation list than under a revaluation system.
Lord BOYD-CARPENTER: My Lords, may I say how much I welcome the indication my noble and learned friend has given that the Government are reviewing the rating system, because the rating system is. I think rightly, extraordinarily unpopular, very unjust in its incidence, and if a better system can be evolved, as personally I believe it can be, this will be a very great improvement indeed. May I add one further thing. If another system is evolved I hope it will take into account the impact of the rating system on industry and business. In industry we carry very heavy rate liabilities, and of course we have no local government vote. It is a classic example of taxation without representation.
Baroness BIRK: My Lords, I think we have had from the Minister an admission that the Government are considering the abolition of the domestic rate, and in the questions that followed both my noble friend Lord Davies of Leek and the noble Lord, Lord Boyd-Carpenter, were really making the same sort of point from perhaps

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a slightly different standpoint. It seems to me what they were saying, and what I am saying in winding up on this amendment, is, if the Government are intending to change the rating system then they have no right, in our opinion, to change what is happening at the present time unless they are bringing forward a viable alternative. If they are considering changing it, then why not leave well alone at the present time?
My noble friend Lord Davies was absolutely right. The Government do not seem to appreciate that this is going to mean either a 5 per cent. increase in income tax or 5 per cent. on VAT. There really has been no argument put forward by the Minister which really substantiates what is Clause 26, and we have gone quite a bit further than at Committee stage. It does seem to me quite extraordinary that the Government should be pressing on with this when they admit that they are reconsidering the whole subject and every argument put forward has been for leaving things as they are at the moment while considering what to do in the future. If the Minister cannot now say that he has seen the point, and there seems to be a reason for looking at it again on Third Reading, I am afraid I shall have to press this amendment for the deletion of the clause.
Lord BEAUMONT of WHITLEY: My Lords, I find it slightly difficult to follow every single clause through all the stages of this very complicated Bill. Did I understand the Minister to say that on this
particular clause we had had the same amendment and divided on it at Committee stage?
Lord MACK AY of CLASH FERN: Yes, my Lords.
Lord BEAUMONT of WHITLEY: My Lords, I do not think that in the 11 years I have been in the House I have ever known the House divide on exactly the same amendment at two successive stages. I do not think that this is a precedent we should set, and I ask the Opposition Front Bench to think again.
Baroness BIRK: My Lords, if, with the leave of the House, I may reply, it is not quite the same amendment, because this amendment is to delete the clause and I think I am right in saying that the amendment on Committee was to alter the words. If the noble Lord, Lord Beaumont, thinks it is improper for the House to do this, he is wrong. This is something of such consequence—and we have heard what the Minister has now admitted, so the answer is different from the previous answer—that the House should have an opportunity to vote again. It is put in a different way.
6.54 p.m.
On Question, Whether the said amendment (No. 57) shall be agreed to?
Their Lordships divided: Contents, 52; Not-Contents, 111.

CONTENTS

Airedale, L.

Greenwood of Rossendale, L.

Oram, L.

Bacon, B.

Hale, L.

Peart, L.

Beaumont of Whitley, L.

Hatch of Lusby, L.

Phillips, B.

Bernstein, L.

Houghton of Sowerby, L.

Ponsonby of Shulbrede, L. [Teller.]

Birk, B.

Howie of Troon, L.

Boston of Faversham, L.

Jacques, L.

Rhodes, L.

Bowden, L.

Kilmarnock, L.

Ross of Marnock, L.

Brockway, L.

Kirkhill, L.

Segal, L.

Brooks of Tremorfa, L.

Lee of Newton, L.

Stedman, B.

Bruce of Donington, L.

Llewelyn-Davies of Hastoe, B. [Teller.]

Stewart of Alvechurch, B.

Chitnis, L.

Stone, L.

Collison, L.

Lloyd of Kilgerran, L.

Strauss, L.

David, B.

Lovell-Davis, L.

Taylor of Mansfield, L.

Davies of Leek, L.

McCarthy, L.

Underhill, L.

Elwyn-Jones, L.

Maelor, L.

Wade, L.

Evans of Claughton, L.

Mishcon, L.

Welis-Pestell, L.

Fisher of Rednal, B.

Noel-Baker, L.

Wilson of Radcliffe, L.

Gaitskell, B.

Ogmore, L.

Wynne-Jones, L.

NOT-CONTENTS

Abercorn, D.

Allerton, L.

Barnby, L.

Abinger, L.

Alport, L.

Bellwin, L.

Airey of Abingdon, B.

Avon, E.

Belstead, L.

Bessborough, E.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Murton of Lindisfarne, L.

Bethell, L.

Newall, L.

Boardman, L.

Halsbury, E.

Northchurch, B.

Boyd-Carpenter, L.

Hanworth, V.

Nugent of Guildford, L.

Brabazon of Tara, L.

Harmar-Nicholls, L.

Orkney, E.

Bridgeman, V.

Harvington, L.

Pender, L.

Brookes, L.

Hatherton, L.

Penrhyn, L.

Brougham and Vaux, L.

Henley, L.

Radnor, E.

Caithness, E.

Hill of Luton, L.

Rawlinson of Ewell, L.

Campbell of Croy, L.

Holderness, L.

Reigate, L.

Cathcart, E.

Hornsby-Smith, B.

Renton, L.

Chelwood, L.

Kemsley, V.

Ridley, V.

Colville of Culross, V.

Keyes, L.

St. Aldwyn, E.

Craigmyle, L.

Killearn, L.

Salisbury, M.

Croft, L.

Kinloss, Ly.

Sandys, L. [Teller.

Cross, V.

Kinnaird, L.

Savile, L.

Cullen of Ashbourne, L.

Kinross, L.

Soames, L. (L. President.)

Davidson, V.

Lindsey and Abingdon, E.

Spens, L.

de Clifford, L.

Long, V.

Stamp, L.

Denham, L. [Teller.]

Loudoun, C.

Stanley of Alderley, L.

Digby, L.

Lucas of Chilworth, L.

Strathcona and Mount Royal, L.

Drumalbyn, L.

Luke, L.

Swinfen, L.

Ellenborough, L.

Lyell, L.

Torphichen, L.

Elliot of Harwood, B.

Mackay of Clashfern, L.

Tranmire, L.

Faithfull, B.

Macleod of Borve, B.

Trefgarne, L.

Ferrers, E.

Mansfield, E.

Trenchard, V.

Gage, V.

Marley, L.

Trumpington, B.

Gainford, L.

Mills, V.

Vaizey, L.

Gainsborough, E.

Minto, E.

Vaux of Harrowden, L.

Glcnkinglas, L.

Monk Bretton, L.

Vernon, L.

Gormanston, V.

Montgomery of Alamein, V.

Vickers, B.

Gowrie, E.

Morris, L.

Watkinson, V.

Grimston of Westburv, L.

Mottistone, L.

Wise, L.

Haig, E.

Mowbray and Stourton, L.

Wynford, L.

Young, B.

On Question, amendments agreed to.

Resolved in the negative and amendment disagreed to accordingly.
7.2 p.m.
Lord TREFGARNE: My Lords, I beg to move that further consideration on Report be adjourned until 7.45 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.2 until 7.45 p.m.]

LOCAL GOVERNMENT PLANNING AND LAND (No. 2) BILL
Lord TREFGARNE: My Lords, I beg to move that this Bill be now further considered on Report.
Moved accordingly, and, on Question, Motion agreed to.
Clause 28 [Valuation and adjusted valuation]:
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 58:
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Page 29, line 14, at end insert—
(" (4) Before exercising his powers under this section the Secretary of State shall consult with such associations of local authorities as appear to him to be concerned and with any other bodies with whom consultation appears to him to be desirable.").
The noble Baroness said: My Lords, I think that this is one of the amendments which was discussed rather late at night in Committee, where we were somewhat sidetracked in a discussion as to how the Bill should be printed, how wide the margins should be and whether we ought to be introducing Keeling schedules. All that we were asking for then and all that I ask again now is that we should know the outcome of the promise given in another place by the noble Lord's honourable friend, who said that he would look at the possibility of making statutory provision for consultation. All we ask is that before exercising his power under this very important clause and Section 22 of the 1967 Act, the Secretary of State shall consult with the local authority associations and such local authorities as he considers it desirable to consult.
When this Government first took office they made a decision about revaluation without adequate consultation with the

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local authorities. The local authorities did not expect the announcement that was then made, and they think that they should at least be brought into discussions before a decision is taken. The councils, the councillors and the ratepayers all have to be taken along when we are considering these matters, because revaluation, in whole or in part, affects the level of rates and on what they ought to be spent. Therefore, it is a matter of considerable interest to all those who are involved in local government.
The local authority associations have all supported us in this amendment. They do not want to be a party to the decision itself, but they want it written into the Bill that they shall be consulted before decisions are made. Perhaps with the scarce attendance in the House we shall not get sidetracked into Keeling schedules, et cetera, tonight and we might be able to deal with this matter. I beg to move.
Lord MACKAY of CLASHFERN: My Lords, I hope that I do not carry any responsibility for sidetracking the noble Baroness. The amendment is very similar to one moved in Committee, but, with respect, I think it has been improved by reference to "other bodies" as well as to local authority associations. Notwithstanding that improvement, which I acknowledge, the Government, having considered the matter, remain opposed to this amendment. In practice we should, of course, in the event of a partial revaluation, expect to consult widely on many aspects. But the nature and timing of the consultation that might be needed must depend on the circumstances and the way in which the revaluation proposals are developed. It would tie things down too tightly to insist on statutory consultation before any exercise of powers under this clause. In the Government's view it is better to leave the clause as it stands and to rely on the assurances that I have given, that when the time comes there will be full consultation on all appropriate aspects when the powers of the clauses are exercised.
In a way, I think that to put statutory consultation into certain clauses may affect the general policy, which must be to consult with all those who have anything to contribute whenever any statutory power of this sort is to be exercised. Some
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reference was made to the decision with regard to the revaluation. I think that I dealt with that before by pointing out that a decision on the revaluation was required very quickly after the Government took office. I hope that in the light of those assurances the noble Baroness will feel able to withdraw this amendment.
Baroness STEDMAN: My Lords, naturally I am a little disappointed that the noble and learned Lord will not go a little further. Last time we had complaints that we were being rather too limiting in just restricting consultation to the local authority associations. As he said, we have widened it a little now and left him a great deal of discretion as to which other bodies he should consult. But I am sure that the local authority associations will read Hansard with care and will see the assurances that the noble and learned Lord has given, that wherever possible there will be consultations with them on these important matters. Again, with the proviso that I am a little disappointed that we have not got any further, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7.49 p.m.
The Earl of RADNOR The Earl of RADNOR moved amendments Nos. 58A and 58B:
After Clause 28, insert the following new clause:
("Rating exemption for fish farms
. After section 26 of the 1967 Act there shall be inserted—
"Fish farms.
26A.—(1) Neither of the following—

(a) land;

(b) buildings (other than dwellings), shall be liable to rates or to be included in any valuation list or in any rate if used solely for or in connection with fish farming.

(2) The gross value for the purposes of section 19(2) of this Act of a house occupied in connection with land or buildings used solely for or in connection with fish farming and used as the dwelling of a person who—

(a) is primarily concerned in carrying on or directing fish fanning operations on that land or in those buildings; or

(b) is employed in fish farming operations on that land or in those buildings in the service of the occupier thereof and is entitled, whether as tenant or otherwise, so to use the house only while so employed,

95
shall, so long as the house is so occupied and used, be estimated by reference to the rent at which the house might reasonably be expected to let from year to year if it could not be occupied and used otherwise than as aforesaid.

(3) In determining for the purposes of this section whether land or a building used for or in connection with fish farming is solely so used no account shall be taken of any time during which it is used in any other way, if that time does not amount to a substantial part of the time during which the land or building is used for or in connection with fish farming.
(4) In this section—

"building" includes a separate part of a building; and

"fish farming" means the breeding or rearing of fish or the cultivation of shellfish (including crustaceans and molluscs of any description) for the purpose of producing food for human consumption or for transfer to other waters but does not include the breeding, rearing or cultivation of any fish or shellfish—

(a) which are purely ornamental, ornamental, or

(b) which are bred, reared or cultivated for exhibition." ").

Insert the following new clause:
("Rating exemption for fish farms in Scotland
. After section 7 of the Valuation and Rating (Scotland) Act 1956 there shall be inserted—
"Provisions relating to lands and heritages used for fish farming and dwelling-houses occupied in connection there with.
7A.—(1) For the purpose of any valuation roll in force for the year 1981–82 or any subsequent year or for the making up of any valuation roll for any subsequent year the following provisions of this section shall have effect regarding lands and heritages to which this section applies and dwelling-houses occupied in connection therewith.
(2) This section applies to—

(a) lands and heritages (other than dwelling-houses) used solely for or in connection with fish farming; and

(b) lands and heritages consisting of—

(i) one or more buildings (other than dwelling-houses) used solely for or in connection with fish farming; or

(ii) any land occupied together with and used solely in connection with the use of such building or buildings.

(3) No lands and heritages to which this section applies shall be entered in the valuation roll, and any reference in any enactment to the person appearing from the valuation roll to be the owner or the occupier of any lands and heritages shall on and after the first clay of April nineteen hundred and eighty-one, have
96
effect in the case of lands and heritages to which this section applies as if the reference to the valuation roll were omitted.
(4) Subsections (5) to (8) of section 7 of this Act shall have effect in relation to the gross annual value of any dwelling-house which—

(a) is occupied in connection with lands and heritages to which this section applies; and

(b) is used as the dwelling-house of a person engaged primarily in carrying on or directing fish farming operations on these lands and heritages or employed in connection with fish farming thereon; and

(c) is suitable in character and size for such use in connection with those lands and heritages

as they have in relation to the gross annual value of any dwelling-house referred to in subsection (4) of that section, and in that connection any reference in the said subsections (5) to (8) to agricultural lands and heritages shall be construed as a reference to lands and heritages to which this section applies.
(5) Where part of lands and heritages consists of one or more buildings and one or more parts of buildings (being a part of lands and heritages which is used for such a purpose that if it were in separate occupation it would be lands and heritages to which this section applies), then that part of the lands and heritages and the remainder shall each be treated as respects the year 1981–82 and subsequent years for the purposes of the Valuation Acts as if it were lands and heritages in separate occupation.
(6) In subsection (5) above, any reference to a building or part of a building shall be construed as including a reference to land occupied together with and used solely in connection with the use of such building or part.
(7) In determining for the purposes of this section whether during any year a building used for or in connection with fish farming is solely so used, no account shall be taken of any time in that year during which it is used in any other way, if that time does not amount to a substantial part of that year.
(8) In this section—

"fish farming" means the breeding or rearing of fish or the cultivation of shellfish (including crustaceans and molluscs of any description) for the purpose of producing food for human consumption or for transfer to other waters but does not include the breeding, rearing or cultivation of any fish or shellfish—

(a) which are purely ornamental, or

(b) which are bred, reared or cultivated for exhibition." ").

The noble Earl said: My Lords, I beg to move Amendment No. 58A and, if it is convenient to your Lordships, Amendment No. 58B at the same time, because the two are completely interrelated. If it is also convenient, perhaps I could speak to Amendments Nos. 74A and 74B, which are also related to the timing of the two amendments which I have already mentioned. Amendment No. 58A concerns the derating of fish farms in England and Wales, and Amendment No. 55B the same subject only in Scotland. Your Lordships will probably remember that there was a fairly full discussion on this subject in Committee. A number of noble Lords spoke in favour of derating fish farms throughout the British Isles, and straightening out this strange anomaly which has arisen where they are not considered as agriculture really because the industry arose since the time of the 1967 and 1971 rating Acts.
A number of noble Lords spoke in favour and no one spoke against it. The Government assured us that they on the whole were sympathetic to the idea of derating fish farms but that the wording of our amendment as then put down was not quite suitable. I believe that the wording is now suitable to the Government, and I hope that they will be able to accept these two amendments which will give the industry a chance to go ahead and fulfil its proper role in this country, and, quite honestly, give them a chance to operate on a level basis with foreign competitors who are putting fish into our markets. I was asked by the noble Viscount, Lord Thurso, and the noble Lord, Lord Cledwyn of Penrhos, to say that they are both sorry they are not able to be here. They are here in spirit, and I know that they feel strongly about this matter. I beg to move.
Baroness ELLIOT of HARWOOD: My Lords, may I support this amendment. Last week we had a debate on the fisheries industry. Although the question of fish farming did not arise, it is obvious that this is a vital food for the Community. The problems of fisheries in the EEC, particularly of our own fishing industry, are very great indeed. The question offish farming is vital. Certainly when speaking for Scotland I know that there are many interests there, and that fish farming would develop considerably if it had the
98
opportunities that we ordinary farmers have in relation to rating. I hope that this matter will be dealt with favourably by the Government.
This is perhaps not actually the moment to do it, but I should like to add that the late Lady Emmet's great subject was fish farming. She spoke more often in this House on that subject than on almost anything else. I should like to pay a tribute to her work in this House, and to the fact that on this particular subject she was one of the people most enthusiastic about it. I should just like to mention that. I hope that the Government will see in this not only an important subject but one that is vital, which could be developed far beyond what it is now if given some aid.
Lord DE CLIFFORD: My Lords, may I also support this amendment. This is a young industry which needs every encouragement. Its future is absolutely vital to the food supplies of this country, and it is an industry on which we may well have to rely in times of crisis. This matter has been going on for a number of years now, and it is about time it was settled.
7.53 p.m.
Lord COLLISON: My Lords, may I in a few brief words add my support to this amendment. I am concerned with agriculture, as your Lordships know, and fish farming is a new development in the industry. I can well remember the first time that I went to India and I saw what was being done there by way of providing fish for human consumption, and in this country too this developing industry could do so much more than it is doing. It deserves support.
Baroness VICKERS: My Lords, I should like to thank the noble Lord the Minister for agreeing to this amendment, and I also congratulate the noble Earl on the fact that he raised it. It is nice to see that we have England, Scotland and Wales getting together on these amendments at this time. I should like to ask about one or two points that I am not sure about. In Amendment No. 58B it says: Provisions relating to lands and heritages used for fish farming and dwelling-houses occupied in connection therewith. Does this deal with rating?

99
I have read Amendment No. 58A and, if I understand it aright, in both sections there will be no rates on the dwelling-houses if they are occupied by people actually employed in the fishing. It is essential, particularly at night when there can be a lot of stealing from some of these fish farms, and I should like to know if I have read this correctly because it would be of very great help.
When I spoke in the previous debate I brought up a question concerning a fish farm which was in an old mill and had a roof of two acres. That was rated at £13,000. I should like to know whether under these amendments we are clear of the rates in that higher proportion.
7.56 p.m.
Earl FERRERS: My Lords, in a relatively thin House it would be dangerous for a Minister to decline to accept an amendment which has had the support of every noble Lord who has spoken so far in this debate. I am grateful to my noble friend Lord Radnor for saying that he would couple with Amendment No. 58A Amendments Nos. 58B, 74A and 74B because they are all closely connected and tie up England, Wales and Scotland.
When the noble Viscount, Lord Thurso, moved an amendment with similar intent at Committee stage I said that the Government were urgently considering this matter, and that we would wish to consider it further and that was the reason why I could not accept the amendment at that particular stage. If the noble Baroness, Lady Stedman, was disappointed—and it surprised me that she was disappointed—with Lord Mackay's answer to the last amendment, that he was not able to accept it, I hope that she realised that f would be about to commend to the House that we should accept three pages of amendments, which is quite a substantial advance even on what my noble and learned friend Lord Mackay has done.
In saying this I would re-echo totally what my noble friend Lady Elliot of Harwood said about Lady Emmet. She was a forthright pursuer of fish farming interests. Since I have held this particular office she has, if I may mix my metaphors, badgered us consistently about fish farming. Indeed, she was sorry that she was
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unable to be present at the Committee stage which was just about two days before, alas, she died. I am able to tell your Lordships that the Government have decided in favour of the derating of fish farming throughout Great Britain. We have therefore been able to offer my noble friend Lord Radnor and the noble Viscount, Lord Thurso, some help in trying to draft this new clause. I can say on behalf of the Government that we would be glad to see it added to the Bill.
It might be helpful if I were to say a brief word about some of the provisions in the clause. In general, it follows corresponding provisions for agricultural derating as closely as possible, and I am sure that this is right in the interests of equity. I would say to my noble friend Lady Vickers when she asks whether dwelling-houses are derated, she will of course know that in agriculture agricultural land is derated, agricultural buildings are derated, but agricultural dwelling-houses are nevertheless rated but in a special category peculiar to themselves. That applies, and will apply, with dwelling-houses related to fish farming. They are not derated as such but they will be rated on the same basis as those dwelling-houses used in agriculture.
The rating exemption will extend to the farming of all kinds of fish for human consumption and indeed those which may relate to sporting interests. It will not, however, extend to the rearing of ornamental fish or to research establishments. Nor will it extend further down the chain to food processing establishments; in other words, factories which produce fish fingers will not be derated under the amendments. I think those are the correct parameters to be used and I commend the new clause and the amendments which go with it to the House.
The Earl of RADNOR: My Lords, I thank my noble friend for his remarks, having been forced into accepting such an enormous acreage of amendments all in one go, and echo what has been said about Lady Emmet, who was a tremendous fighter for this very new industry.
The DEPUTY SPEAKER (Lord Nugent of Guildford): My Lords, it may be convenient to take the amendments together, Nos. 58A and 58B; there is a small drafting amendment to be made to

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58B; in subsection (5) on page 7, in the second line, "and" should read "or". That correction should be made.
Clause 43 [Commencement and extent]:
The DEPUTY SPEAKER: I will now put Amendments Nos. 74A and 74B en bloc:
Amendments moved—
Page 41, line 6, at end insert
("(1A) Section (Rating exemption for fish farms) above shall have effect for any rate period, within the meaning of the 1967 Act, beginning on or after 1st April 1981.").
Page 41, line 42, leave out ("Section 42 above extends") and insert ("Sections [Rating exemption for fish farms in Scotland] and 42 above extend ").
8.2 p.m.
Baroness VICKERS Baroness VICKERS moved Amendment No. 59:
Before Clause 29, insert the following new clause:
("Rate relief for unoccupied property
In paragraph 1(1) of Schedule 1 to the 1967 Act (which provides for the rating of certain unoccupied property), for the words "three months there shall be substituted the words "one year".").
The noble Baroness said: My Lords, since the Local Government Act 1974, local authorities have been free to levy up to 100 per cent. rates on property after it has been empty for three months. A number of local authorities have used this discretion to levy between 8 per cent. and 100 per cent. on empty properties. This has created real hardship for small landlords and for people who have bought a house but have had to sell the house in which they have been living before they can move in. This has meant them paying rates on their new home before being able to take up residence. It is said that one of the reasons for this is that, although they are empty and bring no income for the owner, they still get the benefit of the services of the fire brigade and police if necessary, and it is therefore suggested there should by a payment.
There are at present in certain areas thousands of empty properties. In Devon and Cornwall, it is stated that there are as many as 24,000, and even the Borough of Islington, so I read in the newspapers,
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has 100 empty council houses. In reply to a Question, my noble friend Lord Bellwin said there were 22,700 vacant houses belonging to the Ministry of Defence, and I understand that area health authorities and water authorities have empty properties. I should like to know whether they are exempt. I know that many buildings belonging to the Ministry of Defence are exempted. In other words, is this payment intended only for private persons owning residential accommodation?
Nobody wants their property left empty and most would like to sell if possible. Another difficulty is that when a private landlord obtains possession of previously rented premises and decides to improve the property, possibly with a grant from the local authority, it would appear to me to be impossible to prepare plans, specifications, estimates and obtain approval for grant all within three months, let alone get the work done, particularly if the property needs a great many repairs. I understand that one authority has decided not to impose rates on empty houses because they have discovered that they would receive only £4,800 in rates—and of course they are not absolutely certain of obtaining that figure because some may have changed hands mean-while—but the cost of an inspector with a travel allowance would be about £7,000.
My reason for inserting one year in the amendment—of course I should like to see such properties not rated at all—is that it would give landlords a chance to make the necessary arrangements. I gather that many councils are looking for extra revenue, which is why local government may decide to take action in this sphere whereas they may not have done so up to now. For this reason I urge my noble friend, if he cannot in present circumstances waive the entire rating system in this respect, to agree that residential property should be relieved for one year instead of three months, which would give those concerned a better opportunity to get their property in order. Property left empty for some time deteriorates very quickly, which is another reason why many repairs may have to be done. I therefore hope my noble friend will accept the amendment. or even include a longer period if he thinks that is possible.
Baroness ELLIOT of HARWOOD: I support the amendment, my Lords. May I ask my noble and learned friend to say what the situation is in Scotland? In my experience empty dwelling-houses there are not rated, provided they are completely empty—that is, not containing furniture and so on—and pay rates only when they are inhabitated by people using the facilities provided by the local authority. It seems most unfair that if one has an empty house which one cannot let—one might like to but there is no possibility of so doing—one should be charged rates when one is not using any of the services supplied by the local authority. I hope the Government accept that people will be very upset if they suddenly find, through no fault of their own—because they cannot let a house—that they must pay rates on it.
Lord MOTTISTONE: My Lords, I too support the amendment, which is in keeping with Amendment No. 60, to which I shall be speaking at much greater length in due course. The basic principle, as has been said, is that it is not fair to have to pay rates on an unoccupied building. It is as simple as that and I hope the Government will take this extremely seriously.
Lord MACKAY of CLASHFERN: My Lords, the present situation in England and Wales—and it is not very different in Scotland so far as I recall—is that statutes give local rating authorities full discretion to levy rates on empty property at up to 100 per cent. of ordinary rates, subject to an initial free or grace period of three months; the amendment would increase that to one year. I should add that so far as current legislation is concerned, newly-erected dwelling-houses have a six-month period of grace. The Government are far from unsympathetic towards those whose property stands empty longer than they would wish and who must pay rates they can ill afford. Such problems are all the greater, especially for industry and commerce, in times of economic difficulty. Noble Lords will know, however, that the Government have taken steps in the Bill to improve their situation.
Clause 38 provides for the maximum level of the rates on unoccupied property and the initial grace period to be varied
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by the Secretary of State by order. Noble Lords have already heard that the Government intend to use the order-making power to reduce, with effect from 1st April 1981, the empty property maximum to 50 per cent. of ordinary rates for non-domestic property. The maximum rate for domestic property and the length of the grace period will be kept under review. I therefore hope your Lordships will agree that this is the right approach and that it is not right to get by statute a generous and unvariable grace period, as the amendment would provide. In contract, we would say that the correct approach is to put some flexibility into the scheme so that it may respond to changing circumstances in the property market. The Bill as drafted has this flexibility. The Secretary of State would have the power to come forward to Parliament with an order to vary the grace period when it seems timely to do so. I hope that, in the light of that explanation, my noble friend will feel able to withdraw the amendment, which has very much the same purpose as the more flexible approach which the Bill adopts.
Baroness VICKERS: My Lords, may I remind the noble and learned Lord of one question that he has not answered?—that relating to property belonging to the Ministry of Defence, as well as other Government property. Is this property going to go rate free?
Lord MACKAY of CLASHFERN: My Lords, I am obliged to the noble Baroness for reminding me of that point which I should have answered earlier. The situation regarding Crown property is that technically it is not liable to rates, but the Government pay a contribution in lieu of rates to the rating authority, and the same sort of situation would apply so far as they are concerned.
Baroness VICKERS: My Lords, I am obliged for that answer, though I am not very happy about the whole situation. The other point that I do not like is that relating to powers of the Secretary of State. I am on the Statutory Instruments Committee, and tomorrow we have 111 Statutory Instruments to go through. It seems that in more and more Bills the Secretary of State of whatever department is concerned is empowered to decide this and that. I am not very happy about all

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the powers given in this Bill to the Secretary of State. In the other House I was able to vote against an earlier local government Bill. I have not voted against this one entirely; I did not think there is much good going on doing such a thing. In all these Bills Secretaries of State are being given far too much power. I shall withdraw my amendment in the hope that my words have not fallen on deaf ears and that in future we shall have less of this situation of the Secretary of State ruling our lives. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
8.12 p.m.
Lord MOTTISTONE Lord MOTTISTONE moved Amendment No. 60:
After Clause 29, insert the following new clause:
"Rating relief for hereditaments which are (partly used
. There shall be added after section 25 of the 1967 Act the following new section—
"25A.—(1) This section applies where—

(a) the whole or part of any hereditament, which has been and remains constructed or adapted for use as a factory, mill or other premises of a similar character for use wholly or mainly for industrial purposes, is not so used (the unused part); or

(b) the whole or part of a hereditament comprising a commercial building is not used for the purpose for which it has been used remains constructed or adapted for use (the unused part)

provided that in either case no other use is made of the unused hereditament, but notwithstanding that the building or plant or machinery therein, or appurtenant land is or continues to be maintained in a workable condition.
(2) In this section, references to a hereditament comprising a commercial building are references to a hereditament (not being a dwelling-house or a hereditament having a floor space not exceeding 240 square feet and used as a lock-up garage) whose net annual value falls to be ascertained under section 19(2) of this Act.
(3) If the rating authority is satisfied upon application in the prescribed form being made to it that

(a) either paragraph (a) or (b) of subsection (1) above applies in respect of a hereditament, and

(b) the unused part under the said subsection (1) is sufficiently identified in the prescribed form then it shall request the valuation officer to apportion the rateable value of the hereditament between the unused part and remaining part of the hereditament; and if the
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apportionment made by the valuation officer is agreed by the authority and the occupier, then as from—

(1) the date upon which the unused part became unused; or

(2) the commencement of the rate period in which the request was made whichever is the later, until the event in subsection (4) below occurs the value apportioned to the remaining part shall be treated for rating purposes as if it were the value ascribed for the hereditament in the valuation list.

(4) The event referred to in subsection (3) above is whichever is the first to occur of the following:

(a) any of the unused part becomes used;

(b) a further apportionment of the value of the hereditament is made;

(c) the person in occupation of the hereditament at the time that the apportionment under this section is made ceases to be in occupation.

(5) (a) In determining whether the unused part is sufficiently identified for the purpose of paragraph (b) of subsection (3) above the rating authority shall have regard to the requirements of the valuation officer in determining whether he could reasonably carry out the apportionment mentioned in subsection (3) above if requested so to do and if either the applicant or the valuation officer is dissatisfied with the decision of the rating authority he may apply to the local valuation court who on hearing the applicant, the rating authority and the valuation officer or such of them as choose to appear before it may confirm or reverse the decision of the local authority.
(b) No appeal shall lie from the decision of the local valuation court.
(6) Without prejudice to any other statutory rights vested in any person where an application has been received by a rating authority the valuation officer may at any time enter upon the relevant hereditament to satisfy himself that the unused part is or has been or is likely to remain unused and such right of entry shall continue until any of the events mentioned in subsection (4) above occurs.
(7) (a) Where at any time in any period during which it has been represented to the rating authority that part of a hereditament is, was or will be an unused part as defined above that part or any of it was not in the opinion of the rating authority unused as so represented the authority may require rates to be paid in respect of whole hereditament as if none of it is, was or had been during the relevant period an unused part and may require interest to be paid on the said amount of rates at such reasonable rate as may from time to time be prescribed by the Secretary of State as if the whole of the said amount of rates had been due on the first day upon which any part of the rates in respect of the unused part would normally have fallen due if no application under section (1) above had been made.

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(b) Where a rating authority requires an amount to be paid by way of rates under paragraph (a) above the said sum shall be paid, without any option to pay by instalments under section 50 of the 1967 Act, on such date following the notification by the rating authority to the person liable for the rates on the hereditament upon which the next normal payment of rates on that hereditament falls due or if there is no such date on the thirty-first day after the said notification and allowance shall be made for any rates already paid on the part of the hereditament which was not represented to be unused.
(c) Where an amount falls to be paid under this subsection all rights and remedies shall be available to all parties concerned as if the said amount was a normal amount of rates and all time limits shall apply having due regard to the date for payment specified in paragraph (b) above.
(8) In this section

(a) the prescribed form shall be such form as the Secretary of State shall from time to time prescribe as being necessary for the proper application of this section.

(b) The Secretary of State shall issue regulations governing proceduses for appeals under subsection (5) above.

(c) The Secretary of State shall exercise his powers under this section by Statutory Instrument which shall be of no effect until laid before and approved by a resolution of both Houses of Parliament.".").

The noble Lord said: My Lords, in moving Amendment No. 60, with the leave of the House I should like to speak also to Amendments Nos. 72 and 72A, which are consequential on this amendment. A similar amendment on what we call "mothballing relief" was tabled in Committee and withdrawn. In the meantime we have endeavoured to improve the wording to meet the points made by my noble and learned friend at the Committee stage. At that time my noble and learned friend made a persuasive case for the earlier amendment and then sought to destroy his own argument for three main reasons. I hope to try to persuade your Lordships, and indeed the Government, that the reasons given at that time are in fact answerable; and where perhaps they were not previously answerable, they are now.
The first point made was that of the so-called
"fundamental principle that the use of part of a hereditament constitutes occupation of the whole "—
and I quote exactly my noble and learned friend's words as reported at column 340
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of the Official Report. I find that a hard fact to accept, since I have endeavoured to read the General Rate Act 1967, and it seems to me that within that Act there is provision for this so-called fundamental principle not in fact to be such.
I would go further and say that I remember an occasion back in the 1940s when my own noble father had part of his property derated because he completely evacuated it and took all the furniture, et cetera out of that part of it. As I understand it, it is still the law that one can do that. Therefore it seems to me odd that it should be regarded as a fundamental principle that the use of part of a hereditament, presumably the part one is living in, constitutes the occupation of the whole when I have had practical experience of that not having been so, at any rate in the 1940s.
Secondly, my noble and learned friend referred to the question of definition, interpretation and enforcement. We fully recognise that those three points are valid, and indeed we have attempted to deal with them in the extensions to the amendment, and it is in this area that the amendment differs from the earlier one. I shall come back to that. The third point is that in effect my noble and learned friend said that industrial and commercial judgments would be seriously affected, and, he implied, detrimentally affected, by the fact that if the amendment were passed, businesses would be enabled to reduce the rates that they paid on part of their property.
I have sought not to labour your Lordships with the argument that I produced at the Committee stage, since I think that to do that is terribly dull, though one often hears it from noble Lords opposite. I try to avoid it myself. However, I must refer back slightly to the extent that the whole point of my argument on Committee was concerned with firms making judgments on properties. At the moment businesses are having to operate in rather adverse circumstances, with high interest rates et cetera. If possible they should be helped to make a judgment in which they can say, "Don't sell that property", or "Don't vandalise this property "—and both those things have happened in order to get over this very point—so that they could feel that at least payment of rates will be cased during this time of difficulty. When

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things look up in the next couple of years, as I am fully confident they will, the firms can then use that part of their premises and the plant within it which had been taken out of use, and they would then pay rates on that part as heretofore.
But all this is a matter of commercial judgment and of encouraging the wealth-earning part of our overall industry to take not snap decisions, but longer-term decisions. Therefore, I should have thought that that third argument of my noble and learned friend was not wholly reasonable.
Fourthly, there was the argument of who pays if the business does not pay the full rates even though it is not occupying all the premises? I found it extraordinary that a responsible Government, a reasonable Government, even a Conservative Government, could put forward such an argument. Surely it must not be a fact of life that industry must be clobbered somehow, and that if it is not clobbered in this way, it will be clobbered in another way. That is an upside down way of looking at things. Surely what the Government are saying in all kinds of other areas, what I am endeavouring to support them in saying, is that wealth-earning productive industry needs encouragement at every corner, whether it is small businesses or large ones. Without that all the services provided—whether they be service industries, local authorities, or central government itself—have nothing on which to build.
This is a very fundamental point. To ask, who pays for the relief if someone is being encouraged to keep his business going when otherwise he might have to go to the wall, strikes me as an argument which I am sure my noble and learned friend would not put forward if he stopped to think, and an argument of which the Government could never be proud.
My noble friend Lord Harmar-Nicholls gave great point to the fact-I am delighted to see my noble friend enter the Chamber as I mention his name—that basically all the arguments that my noble and learned friend Lord Mackay of Clashfern put forward were those of the bureaucrat, and that the bureaucrat is here to serve us, to do his best to make life easy for people. It is not for him to say, "Oh, we can't do that
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because it is bureaucratically difficult." I think that that is the sense of the argument that my noble friend put forward.
I would repeat that and add not merely is that the case, but really the Government must recast their approach to this question. I realise that the situation can be difficult, with a long Bill and with many things to think about when one is trying to balance everyone's efforts. But, in terms of being a responsible Government, it is going a bit far to be taken for a ride by people who might find things administratively difficult.
To come back very briefly to the points on which we have sought to amend this amendment in order to take care of the Government's points, which were obviously very sensible ones—I say that hesitantly—the identification and definition of the particular types of property are spelled out within the added subsections. There are only two points, really, that I would make. One is that it is so written that if the valuation officer feels that he cannot reasonably identify the part of the property which is to have its rates reduced or be de-rated, then it is not a starter. It entirely depends on the valuation officer's being confident that he can do this, and that is taken care of in (I think it is) subsection (5)(a).
The second point we make, which is a point of which my noble and learned friend made quite a lot, is that the valuation officer may at any time—and this is in subsection (6)—enter upon the relevant hereditament to see that it was not being used; in fact, that people were not cheating. I should like to think that those supplements, coupled with the fact that on reflection my noble and learned friend may think that his earlier and other arguments do not really stand up as those of responsible government, may enable him to see his way to accepting my amendment. I beg to move.
Lord MACKAY of CLASHFERN: My Lords, my noble friend has come back to this point with his usual vigour, and has provided a new clause which attempts to deal with some of the matters I raised—which I must say I do not regard as bureaucratic, or as irresponsible. The main provision that is made for dealing with the definition of an unused part of a hereditament is by providing that the rating authority:
"shall have regard to the requirements of the

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valuation officer in determining whether he could reasonably carry out the apportionment".
My Lords, I do not think that this has achieved its purpose. There are very real difficulties in defining an unused part of a hereditament, and the amendment would do nothing to overcome them. I shall come a little later to my noble friend's experiences of the 1940s, because I think that is a slightly different point. The amendment would leave these difficult issues to the local valuation courts to resolve, which is a formula for uncertainty, inconsistency, and a great number of contested appeals. Nor am I happy about the provision in subsection (5)(a) for there to be no appeal beyond the decision of the valuation court. If the solution proposed is that of leaving it to the courts to settle all the difficulties, then I should have thought that the possibility of appealing to a higher court would require to be brought in—not that I am suggesting that that would be satisfactory, either.
However, this is simply to find fault with the clause as drafted, and my noble friend might, with justice, feel that if there is a way to overcome these practical difficulties then it is for the Government to find it and draft a suitable clause. Let me therefore return to the nature of these difficulties and ask your Lordships to consider whether a satisfactory formulation could be found.
I would suggest in relation to what has been criticised as bureaucratic that one commonly finds in legislating or devising rules for rates and other taxes that each attempt to bring relief to one group of people brings into question the fairness with which one is treating closely analogous cases. With exemptions and reliefs from taxes, the borderline can be shifted this way or that in response to pleading on behalf of particular groups. What is generally needed is a line drawn where it is most readily understood and defended, and where it gives rise to the least number of anomalies and inequities. The difficulty with this sort of relief is that it erases what is currently a clear line in rating; that is, that the occupancy of a hereditament is the unit, and that something less than a hereditament is not really a unit which is recognised for rating purposes. In place of this fundamental principle the clause would give relief to an office occupier who left much of his office empty, but not
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to an old person living now in only part of a house. The line would bring relief to a firm that was able to close down specific areas of floor space, but would leave fully rateable another whose factory was now at less than full production but operational in all its parts.
It may help to consider some examples. Imagine a large steel works that has two boiler houses; one is used throughout the year, but the other provides supplementary heat for only three winter months. Consider blast furnaces at a steel works where a furnace is put out of action for nine months or more so that it can be relined but perhaps not all of that time is needed for re-lining work. Consider factories for sugar beet processing, where plant is used only from September to January; and so on. One could multiply examples fairly readily. I should like to emphasise that it is not my intention to say that a statute could not distinguish between one case and another. Rather, my point is that in attempting such fine distinctions as this the statute would give rise to new anomalies, new grievances, new accusations of unfair treatment. In comparison, the present concept has served for many years without a great deal of complaint, is readly understood and, I hope, reasonably readily defended.
My Lords, I have been speaking of the difficulties of defining an unused part of a building. We should not forget the cost to the public sector of reasonable steps to police such an exemption. As drafted, the amendment would provide that the valuation officer should inspect premises when called on to do so; and it appears from subsection (5)(a) that either the ratepayer or the rating authority may take the initiative in asking for a reassessment to be made. It is easy to imagine that in major industrial or commercial centres, with hundreds of business hereditaments, the valuation officer and his staff will be kept very busy just making inspections in response to claims, both from ratepayers and from rating authorities, either side claiming that a floor area has changed or a piece of equipment has been switched on or switched off.
I should also say, as I did in Committee, that no one knows what the cost of these proposals would be, and the proposers themselves have so far not produced any figures. I think the cost would probably

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be quite substantial, not only of the actual relief but of the steps necessary under this amendment for setting it up; and all these costs would have to fall on other ratepayers or national taxpayers. My noble friend refers to the wealth-producing part of our economy, and, of course, I go along with him a great deal in that; every possible encouragement is needed to the wealth-creating sector of our economy. But the burden would fall on other wealth-producers if his particular proposal were accepted.
Perhaps I could say in conclusion that my noble friend's experience to which he refers in relation to the 1940s is, I think, a reference to the present law under which the clearer cases of mothballing are already catered for. Where it is possible for a building or a part of a building to be rendered suitable for separate occupancy, then the unused area can legitimately be described as a distinct hereditament and valued accordingly. Of course, if that distinct hereditmant is not in use, then the exemption applies. What my noble friend is trying to do, with respect, is to extend that principle into a completely uncharted area, where the difficulties of definition to which I have referred would be substantial. Where they are not substantial you can get relief just now. The ratepayer has the right to propose that a hereditament should be split in this way, and many cases arise. At one end of the spectrum there may be a shop with an unused flat above: at the other end, we find the office block with unused floors or the factory with unused units. Finally, may I remind noble Lords that in regard to the new provisions for empty property rating in this Bill the Government will bring forward an order under Clause 38 to ensure that wherever a hereditament as a whole is empty rates will be kept below a ceiling of 50 per cent. This will be to the benefit of many non-domestic ratepayers. Therefore, as before, I am very sympathetic to the point behind this amendment, but, for the reasons that I have given, we do not feel able responsibly to accept it. I hope that the noble Lord will withdraw it.
Lord BOYD-CARPENTER: My Lords, I do not think that my noble friend Lord Mottistone would claim that his carefully
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drafted amendment was free from flaws. But, with respect, I do not feel that my noble and learned friend the Lord Advocate has done justice to the very important issue of principle which arises from it. I could not help feeling during some parts of my noble and learned friend's speech that if the rating system necessarily involved such injustices and anomalies as exist at present there was a very strong argument relating to an earlier discussion for getting rid of the rating system itself.
There is here a very practical problem which anyone with connections with industry or commerce knows only too well is very relevant at the moment. Great firms, famous companies, are closing parts of their plants or of their offices and if one simply leaves the position as at present one is presenting them with the alternative of having to pay heavy rate payments when they are, as a matter of definition, earning no profits out of that part of the premises, or, as my noble friend has said, selling them or vandalising them, hereby excluding the possibility of putting them back into use when times get better.
Everybody in this House, and, I know, in the Government, is desperately concerned about levels of employment. If plants can be kept (although they cannot be used at the moment) in possession of their owners and ready to be put back when demand increases, the problem of unemployment will be of shorter duration. But if the whole force of the rating system is to be used—and that is how it works in many cases at the moment—to compel them to get rid of the unprofitable burden of a partially empty building attracting high rate payments, it will take all the longer to find appropriate premises when things get better, in which to give additional employment.
Therefore, notwithstanding all the difficulties I hope that my noble and learned friend will look at this further. I know very well from my own experience during two stints at the Treasury that my noble and learned friend is right when he says that when you try to remedy anomalies it is only too easy to create further ones and that the pursuit of some improvement can carry compensating disadvantages. All of us who have been involved in these things know that that is so. But I do not

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think that that dismisses the strength of the case of my noble friend Lord Mottistone. I hope that the Government, even at this stage of the Bill, can offer a little more than my noble and learned friend the Lord Advocate has offered us.
Finally, he used the argument which my noble friend Lord Mottistone anticipated which, if I may say so with respect, seems a poor one. He said that if you exempt these parts of these buildings from rates then the burden will fall on somebody else. Let us analyse that. If a local authority finds that the rateable value subject to its imposts is reduced, it is up to that local authority to reduce its own expenditure pro tanto and not simply to transfer the burden on to its otherwise heavily-burdened ratepayers. Every local authority in the country knows that it has to some extent to adjust its expenditure to the amount of rateable value available to its imposts. This, with respect, is what local authorities should do, and, I believe, could do, if they tried.
I do not know what my noble friend Lord Mottistone is going to do on this amendment, but I should like my noble and learned friend on the Front Bench and the House to realise that in the present state of industry and commerce this is an issue of much greater importance probably than anything else we have discussed this evening and does demand, if he will allow me to say so—and I have the greatest admiration for him—a rather more understanding and sensitive treatment than he has so far given it.
Lord HARMAR-NICHOLLS: My Lords, the noble and learned Lord the Lord Advocate said that he was not being bureaucratic; but I thought that his answer was the most obviously bureaucratic answer that I have heard from the Dispatch Box for a long time. In effect, he said, "We recognise that something should be done in this field"—that is surely what he meant when he said that he had a certain sympathy with the idea behind it—"but we must not make any attempt to do it now because, by moving the dividing line, it may create anomalies somewhere else; we must let everybody suffer because in relieving people who deserve relief from it it may be that other people will not be having the same advantage ". I do not think that anybody
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expects in this world that in remedying what is an unfair state of affairs one can put it right for everybody. I should have thought that where there is an opportunity to put it right even for a few, that ought to be done. The words that my noble friend Lord Mottistone has on the Marshalled List may not be the right words, but if the noble and learned Lord's department and his colleagues in Government really want to turn that sympathy which he said he had into real effect, they could find acceptable words which would fit into this Bill as it now stands.
I would re-echo the point made by my noble friend Lord Boyd-Carpenter. If we are not going to recognise now that industry and commerce deserve special thought and special aids if they can be given I tremble to think what the situation will be that we are going into over the next 12 months or two years where we know we shall have real problems. Commerce and industry can do nothing about the world recession. That is not within their parameters. I think they recognise that they cannot do anything about the interest rates which are so great a burden on running their businesses, but in order to defeat inflation they accept that they must remain. They do not now expect any drastic reductions in general tax, because they know we are committed to defence and to maintaining the general standard of living in this country which people expect.
But they are entitled to think, when it comes to the level of rates where they are being asked to pay for something they are not using, that the Government (and particularly a Conservative Government who are supposed to have sympathy and understanding for the problems of private enterprise) ought to go to a great deal of trouble to find words which will give relief—and it will be only a modest relief—against all imposts and expenses that commerce and industry have to pay today.
I was not at all impressed when he said that we may want extra values in order to justify the expenses. As I said at Committee stage, there is no need for that. The Government are prepared to accept a certificate issued by a chartered accountant as to what the profitability of a company is and on which tax would be levied. Why cannot the same accountants whose integrity and understanding is high

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because their very existence depends on their integrity issue a certificate, to say that this part and other parts of premises have not been used in the course of a particular year. I believe that this is an occasion where the sympathy which my noble and learned friend expressed could be translated into practical action. It would be fair, but even above fairness, I think it would be letting commerce and industry know that where help could be given this Government would be prepared to give it at a time when they are asking them in the national interest to accept many other imposts, which it is not within their power to do anything about.
Lord MORRIS: My Lords, in supporting my noble friend Lord Mottistone and other noble friends on this particular issue, which I supported also at Committee stage, I would ask Her Majesty's Government to consider it very carefully indeed. As noble Lords are aware, my noble and learned friend in no way proferred an argument against the principle. He mentioned the difficulties in definition, the difficulties about location, the difficulties of policing. As my noble friend Lord Harmar-Nicholls so rightly said, there will be no difficulties at all if the hereditament is properly metered for power, for water, for electricity. These are matters of fact, and it can be evidenced quite clearly that if the power charges are not paid it is because the building is not occupied. I cannot see the difficulty there at all. If this particular point became law it might have the extremely healthy effect of concentrating the minds of local authorities on their industrial ratepayers' needs rather more than is the case nowadays, if a monetary proportion of their rates were not paid because of non-occupation. I would implore my noble and learned friend to consider these issues with his normal great care.
Lord MACKAY of CLASHFERN: My Lords, by leave of the House, I should like to say that I certainly do not wish to give any impression that I am not sympathetic to the matter which has been raised by my noble friends; I hoped I had said that on the earlier occasion. But I do believe that what is proposed here involves a fundamental difficulty of principle in giving this kind of relief through the rating system, for the reasons I have sought to explain. Taking the
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example that my noble friend Lord Boyd-Carpenter mentioned, I think that where there is an identifiable area of a factory which is not used and that can properly be regarded as capable of separate accommodation, then relief is available. That is as far in this direction as it is possible to go under the present system of rating. But, as noble Lords know, the Government are very much committed to examining the rating system with great care to see whether there is some better system available, because the rating system in its nature must build on units which are hereditaments, and if one once goes beyond that one is into a very uncertain area indeed, a very difficult area to define.
I should like to pay tribute to the care with which my noble friend Lord Mottistone has proposed this amendment. He has endeavoured to grapple with the difficulty, but in grappling with it he is forced to a situation where it is entirely a matter of discretion for the local valuation officer. With all my noble friend's care, I am sure that if a better definition, a more satisfactory principle were available to separate out from others the cases he wants to benefit, he would have found it. The very fact that with all his care and all his attention to the matter this is the best he is able to do indicates the difficulty in principle that we face in this area. The point is not a bureaucratic one. It is a point about the limitations of differential relief which the rating system, as presently constituted, is capable of producing. The Government are heavily committed to try to improve on that rating system. It is not easy to see how to do it, but this is something that certainly we are endeavouring to pursue.
I shall read very carefully all that has been said, as I read what was said on this amendment at Committee stage, but knowing the situation as I do it would be quite unfair on my part if I were to give the House any impression that I was in a position to give anything on this particular matter. We have thought about it very deeply. I personally have thought about it a great deal, not without some experience in practice of trying to operate the rating system in a professional capacity. It is against that background that I say very seriously to my noble friends that we have thought about it very carefully indeed and it is with the greatest regret that I do not feel able to commend it.
Lord RHODES: My Lords, before the Lord Advocate sits down, may I ask him if he would examine what the Italians and the Japanese do in similar circumstances? In those countries, when there is a depression the unit of production is the one that is dealt with and the mothballing is commanded by the Government. It is the unit of production on which they give relief; it is not the building.
Baroness VICKERS: My Lords, when my noble and learned friend replied a few minutes ago to my question about the Ministry of Defence property I thought he stated that there were special arrangements for empty houses. The figure I was given the other day was 22,700. Whose word do they take that these are all empty? It has been suggested that the auditor could do it. Whose word is taken that there are 15,000 or 20,000 empty houses?
Lord MACKAY of CLASHFERN: My Lords, with the leave of the House, I should like to answer that question. So far as Government property is concerned, the situation is that being in the possession of the Crown it is not subject to the rating law, as that is laid down by statute, but by agreement the Government make a contribution in lieu of rates to the appropriate rating authority. These matters are much more capable of being dealt with by a discretionary arrangement of that sort than they are under the terms of the statute. Of course, the statute applies generally indiscriminately to all ratepayers and potential ratepayers. The difficulty of applying that system, the statutory system, to the situation my noble friend Lord Mottistone has raised is our fundamental difficulty here.
Lord MOTTISTONE: My Lords, I am not in the least bit satisfied, though I fully see my noble and learned friend's difficulty. He did not take up the point
that my noble friend Lord Boyd-Carpenter made and which my noble friend Lord Harmar-Nicholls endorsed. This is a special situation; it is not normal. We are in an altogether abnormal situation. We must encourage productive industry. There is an attitude of mind and a steady looking at things from the point of view of the administrators, who do not want to have things untidy, do not want to be faced by the fact that whenever one produces a borderline one creates anomalies and difficulties. I know that from practical experience. My noble friend Lord Boyd-Carpenter was saying how he knew it. I know it, too, but the fact of the matter is that we must get through to the Government the realisation that this is of much greater importance than just an amendment to a Local Government Bill. It is a matter of attitude of mind which is fundamental not just to the administrators of the country but to the country as a whole.
We have got to earn our living, and until we are really earning our living we cannot face up to the world; we cannot pay for all the splendid things we would like, including local government. With that in mind and with the thought that. with a push, perhaps the Government might come back at Third Reading with something of their own, which is what I was hoping my noble and learned friend would offer to do, rather than just to look at things—we are too far down the road for that-I must test the feeling of the House and see what it feels about this amendment and about the need to encourage productive industry.
8.49 p.m.
On Question, Whether the said amendment (No. 60) shall be agreed to?
Their Lordships divided: Contents, 59; Not-Contents, 61.

CONTENTS

Airey of Abingdon, B.

Elliot of Harwood, B.

Houghton of Sowerby, L.

Birk, B.

Elwyn-Jones, L.

Howie of Troon, L.

Boardman, L.

Gage, V.

Kaldor, L.

Bowden, L.

Gainford, L.

Kemsley, V.

Boyd-Carpenter, L.

Gainsborough, E.

Killearn, L.

Brooks of Tremorfa, L.

Gaitskell, B.

Kirkhill, L.

Bruce of Donington, L.

Greenway, L.

Lee of Newton, L.

Chelwood, L.

Haig, E.

Llewelyn-Davies of Hastoe, B.

Collison, L.

Hanworth, V.

Lovell-Davis, L.

David, B.

Harmar-Nicholls, L.

Macleod of Borve, B.

Davies of Leek, L.

Hatch of Lusby, L.

Maelor, L.

Ellenborough, L.

Hill of Luton, L.

Mishcon, L.

Peart, L.

Stedman, B.

Monk Bretton, L.

Pitt of Hampstead, L.

Stewart of Alvechurch, B.

Monson, L.

Ponsonby of Shulbrede, L.

Stewart of Fulham, L.

Morris, L.[Teller.]

Radnor, E.

Stone, L.

Morris of Kenwood, L.

Renton, L.

Strauss, L.

Mottistone, L. [Teller.]

Rhodes, L.

Underhill, L.

Mountevans, L.

Ross of Marnock, L.

Vickers, B.

Northchurch, B.

Spens, L.

Wynne-Jones, L.

NOT-CONTENTS

Abercorn, D.

Ferrers, E.

Reigate, L.

Airedale, L.

Gowrie, E.

St. Aldwyn, E.

Alport, L.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Sandford, L.

Avebury, L.

Sandys, L. [Teller.]

Avon, E.

Harvington, L.

Savile, L.

Beaumont of Whitley, L.

Hatherton, L.

Soames, L. (L. President.)

Bellwin, L.

Holderness, L.

Stanley of Alderley, L.

Belstead, L.

Hooson, L.

Strathcona and Mount Royal, L.

Brabazon of Tara, L.

Hornsby-Smith, B.

Torphichen, L.

Brookes, L.

Lloyd of Kilgerran, L.

Tranmire, L.

Brougham and Vaux, L.

Long, V.

Trefgarne, L.

Campbell of Croy, L.

Lucas of Chilworth, L.

Trenchard, V.

Carr of Hadley, L.

Lyell, L.

Trumpington, B.

Cockfield, L.

Mackay of Clashfern, L.

Vaizey, L.

Cullen of Ashbourne, L.

Mansfield, E.

Wade, L.

de Clifford, L.

Marley, L.

Watkinson, V.

Denham, L. [Teller.]

Middleton, L.

Winstanley, L.

Digby, L.

Mowbray and Stourton, L.

Wise, L.

Drumalbyn, L.

Murton of Lindisfarne, L.

Wynford, L.

Evans of Claughton, L.

Nugent of Guildford, L.

Young, B.

Faithfull, B.

Pender, L.

On Question, amendment agreed to.

8.58 p.m.
Clause 30 [Payment by instalments]:
Lord MOTTISTONE Lord MOTTISTONE moved Amendment No. 61:
Page 31, leave out lines 7 to 10 and insert—
("(5) This section shall extend to all hereditaments provided that in the case of a hereditament (not being a domestic hereditament) whose rateable value exceeds a prescribed sum the date from which under subsection (1) above rates fall to be paid by instalments shall be 12 months later than the date which would apply but for this proviso.").
The noble Lord said: My Lords, this amendment is also an improvement on an earlier one moved at Committee stage in which we were seeking to get instalment payments for all industry and not just for the smaller firms for which the Government, most wisely, have made or are planning to make provision. Indeed, my noble and learned friend at Committee stage said that he hoped that what the Government were proposing to do would extend instalment payments to 85 per cent. of non-domestic ratepayers. Business must be grateful for this. It certainly gives encouragement to small businesses.
However, there is a principle involved,
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as I have just tried to persuade the House. The principle here is of interest to productive industry. I will not run over the whole background again; but surely it is right that if we are to have payment by instalments, the interests of industry should come first and local authorities should adjust themselves to it. My amendment proposes that there should be a delay period of 12 months in which local authorities can adjust their administrative procedures to take care of instalment payments for all industry and not just for the smaller firms. I hope that this modification will appeal to the Government and that they will feel that this time they can accept the amendment. I beg to move.
Lord MACKAY of CLASHFERN: My Lords, as my noble friend has reminded your Lordships, we believe that the provisions already in the Bill will benefit most of the business sector but that some limits are necessary to balance the help to businesses against the risk of damage to local authorities' cash flow, which in turn will affect their ratepayers.
The Government believe it is right for limits to be set by the Secretary of State and that the minimum and maximum proposed are the best in present circum-

123
stances. That does not mean that the limits, and indeed the need for them, will not be reviewed. It is a matter of judgment and the Government believe they have got it right at the present time. My noble friend's amendment would go further. It would extend the right to pay by instalments to all properties after 12 months, irrespective of the effect of its limited operation on local authorities' finances during those 12 months.
As I have explained, I think this goes too far, and I must advise the House against accepting this amendment. However, I can assure my noble friend that the Government will keep the proposed limit under review and indeed also the need for maxima of any sort. We shall be in a better position in a year or so to assess how the new provisions are working out and whether there is scope for any adjustment. I hope that, on this understanding, my noble friend on this occasion will feel able to withdraw his amendment.
Lord MOTTISTONE: My Lords, that indeed was a much more satisfactory undertaking than the noble and learned Lord was prepared to give me before. I am most grateful to him, and I understand that, as things progress and as the country does better, there will be an opportunity for this gradually to be extended until all industry is involved. With that, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn,
9.3 p.m.
Baroness BIRK Baroness BIRK moved Amendment No. 62:
After Clause 36, insert the following new clause:
("Abolition of rating surcharge on unused office etc. property
.—(1) Subject to subsection (2) below, sections 17A and 17B of the 1967 Act (rating surcharge on unused office etc. property) shall cease to have effect on 1st April 1981, and accordingly no person shall be liable to pay any surcharge under the said section 17A in respect of any period after 31st March 1981.
(2) Subsection (1) above shall not affect—

(a) any liability for a surcharge in respect of any period before 1st April 1981; or

(b) any offence under section 82, as applied by section 17B(1), of the 1967 Act committed before that date.").

The noble Baroness said: My Lords, this amendment was tabled very rapidly after the Committee stage and, because of the lack of time and the size of the Bill, it was tabled before we were really able to go over very carefully what had been said at Committee stage. I think it was the noble Earl. Lord Ferrers, who said that the Government did intend to include in the order the necessary provisions to achieve the effect that we wanted to achieve through the amendment. In view of that, unless the Minister is going to whittle away any of that or erode those assurances, I would be quite happy to withdraw the amendment at this stage.
Lord MACKAY of CLASHFERN: My Lords, in view of the attitude taken by the noble Baroness on the matter, I think it would be best for me to say nothing at all.
Amendment, by leave, withdrawn.
Clause 37 [Suspension of provision for liability to progressive surcharge in respect of unused office etc. property]:
Lord RENTON Lord RENTON moved Amendment No. 62A.
Page 35, line 25, leave out ("direct that") and insert ("suspend the operation of").
The noble Lord said: My Lords, I beg to move this amendment, and I suggest that in discussing it we should refer also to Amendment 62B which is over the page. This is a short and technical point, and I can ease the minds of the Government in these perilous times by saying that I do not intend to divide the House. It is a rather strange position that is produced by Clause 37, subsections (1) and (2), because we find that the Secretary of State "may by order direct" that certain provisions of a previous Act (the 1967 Act) "shall cease to have effect". That is said in subsection (1), but when we come to subsection (2) we find that he may bring them into force again. The words "shall cease to have effect", as the noble and learned Lord the Lord Advocate will remember from an interchange we had earlier this year on another Bill, are the words invariably used by the draftsmen when what they really mean to say is "repeal". I do not know why they go on using the expression "cease to have effect"—"repeal" or "be repealed" is

125
much shorter—but here it happens that they have used it when it seems to mean that they do not mean it or ought not to mean it. What they mean is that the Secretary of State may by order suspend the operation of these provisions of the 1967 Act, and that is what I think we ought to say. That would be the effect of my two amendments taken together. Accordingly, I beg to move.
Lord DAVIES of LEEK: My Lords, very briefly, I support the noble Lord, Lord Renton, as before. With his trained mind, he eliminated phraseology that was in the imperative mood. The mood of language is one of the things that I object to through much of this Bill, and I wholeheartedly support him here because there is this tendency to over-centralise and to put things all the time in the imperative mood with Government. I hope sincerely that this amendment will be accepted because it is modified and yet it brings about what the Government want.
Lord MORRIS: My Lords, I believe that the draftsmen, wittingly or unwittingly, are supporting the noble Lord, Lord Renton. If one looks at the side-note it says, "suspension of provision …", which directly ties in to the improved drafting of the noble Lord, Lord Renton.
Lord MACKAY of CLASHFERN: My Lords, the object of this provision is to suspend the operation of the provisions in a sense, but I think it is wise in this particular area to use words which have themselves a definite effect. What we want to achieve is that once the order is made the sections in question are treated as if they were repealed. In the future it may be necessary to revive them, in which case an order-making power is provided. But the advice I have been given—and I believe it is correct—is that the wording that we have used here follows well-established precedent for a situation of this kind and that it would be undesirable to depart from it without justification. I therefore hope that my noble friend will feel able to withdraw this amendment, in the light of that assurance.
Lord RENTON: My Lords, I begin to wish that I had not said that I would not divide the House. But I still have no intention to do so, in spite of the answer which has been given by my noble and
126
learned friend, which seems to be based on the proposition that because a thing has been done frequently before it was necessarily always right. That is often the case and, as Conservatives, we often think that. But I must confess that this particular drafting gambit is one which cannot appeal to reason. I really think it is time that the parliamentary counsel abandoned it, although I realise that on this occasion I have not succeeded in getting them to do so. Sadly, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 62B not moved.]
Baroness DAVID Baroness DAVID had given notice of her intention to move Amendment No. 63:
After Clause 37, insert the following new clause:
("Repeal of s. 21 of Local Government Act 1974
. Section 21 of the Local Government Act 1974 (valuation lists not to be altered on account of minor structural alterations to dwellings) shall cease to have effect.").
The noble Baroness said: My Lords, rather reluctantly, particularly in the light of the decision of the House on Clause 26, I shall not move this amendment.
Clause 38 [Rating of unoccupied property]:
9.9 p.m.
Baroness BIRK Baroness BIRK moved Amendment No. 63A:
Page 36, line 1, leave out subsection (2).
The noble Baroness said: My Lords, if I may, I will speak to Amendments Nos. 63A, 63B, 68 and 69. These are all concerning Clause 38 which is a new clause introduced by the Government. If enacted, it would increase the Secretary of State's power to prescribe how the empty property rate provisions of the General Rate Act 1967 may be used.
The Act of 1967 provides that a local authority may not levy empty property rate until a property has been empty for three months. After that period has elapsed, the authority may levy an empty property rate as it considers appropriate. Subsections (2) and (3) of Clause 38 would enable the Secretary of State to vary the time for which a property may remain empty before a local authority may levy

127
empty property rate, and would also enable the Secretary of State to set different time limits for different classes of property.
The local authority associations have always argued that individual local authorities are in a better position to determine the needs and problems of their area than central Government. This is as true when the issue is the use, or non-use, of empty property rate, as it is for decisions on the level of services provided. If subsections (2) and (3) of Clause 38 are enacted, the Secretary of State will in effect be able to say that he knows better than any local authority whether, for example, a commercial property should be exempt from empty property rate for a period of six months or a year, while exempting industrial property for three months or three years.
This is yet another example of central Government, particularly the Secretary of State—and the noble Baroness, Lady Vickers, drew very emphatic attention to this on an earlier amendment—attempting to erode the autonomy of local government in a field where central Government or the Secretary of State are not really equipped to take decisions. This ties up—without my repeating it all over again—with the argument for subsections (2F) and (2H), which are covered by Amendments Nos. 68 and 69. My Lords, I beg to move.
Lord MACKAY of CLASHFERN: My Lords, the purpose of the various provisions against which these amendments are directed is to give the Secretary of State some flexibility to help those whose property stands empty for longer than they would wish, and who must pay rates that they can ill afford. Such problems are all the greater, especially for industry and commerce, in times of economic difficulties. Noble Lords will appreciate that the Government have taken steps in this Bill to improve the situation. Although no immediate change is proposed, the length of the grace period will be kept under review and I hope your Lordships will feel that this is the right approach.
This does not destroy the discretion of the local authority. All it does is give power to vary the grace period, and power to vary the maximum which may be im-
128
posed, leaving the local authorities with their discretion to apply these periods or these maxima to particular situations. This, indeed, was one of the matters that my noble friend Lord Mottistone was anxious to secure in the amendment on which we divided a little while ago, in which noble Lords opposite supported him. I find it difficult to see how, in that situation, they could support this amendment.
Lord MONSON: My Lords, as we appear to be speaking on three amendments, I should like to support the noble Baroness, Lady Birk, in Amendment No. 69. When we discussed this clause in Committee I drew attention to the evident unfairness in the Government's intention not to grant relief in respect of domestic properties which remain vacant. The noble Earl, Lord Ferrers, talked about sticks and carrots and said that this was the necessary stick to induce landlords to let empty properties. However, it has been drawn to my attention since then that in a Commons reply on 15th May the Minister, Mr. Tom King, said that the Government had reached the conclusion that this was not an effective way of inducing landlords to let, which seems to contradict entirely what the noble Earl said in Committee. For that reason I am reinforced in my contention that this claim is unfair to owners of domestic property, and certainly so far as Amendment No. 69 is concerned I hope that the Government will think again.
On Question, amendment negatived.
[Amendment No. 63B not moved.]
9.15 p.m.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 64:
Page 36, line 21, at end insert ("and the amount of any rates payable by the Corporation in respect of office premises not situated on operational land shall be the specified proportion of the amount which would be payable if the Corporation were in occupation of them.").
The noble Baroness said: My Lords, may I at the same time speak to Amendment No. 65, because both amendments are similar. In each case they are only fairly small points. Amendment No. 64 is to enable the sub-paragraph as printed in the Bill to close a loophole in the General Rate Act 1967 whereby local

129
authorities are unable to charge rates on unoccupied gas board showrooms. The local authorities also have had difficulty in collecting rates on unoccupied gas board offices as distinct from showrooms. One London borough has just lost such a case in the magistrates' court. If the noble and learned Lord were to accept Amendment No. 64 it would allow authorities to charge rates on empty office accommodation belonging to the gas corporation. If he were extremely generous and accepted Amendment No. 65 as well, that would refer to the electricity boards rather than to the British Gas Corporation. I beg to move.
Lord MACKAY of CLASFIFERN: My Lords, in the situation which exists here I certainly undertake to look at this matter urgently, to see whether we can do anything to meet the wishes of the noble Baroness on this point and, if necessary, table an appropriate amendment at Third Reading. I hope that this generous attitude will be appreciated.
Baroness STEDMAN: My Lords, I do not know whether I shall stay the course until 12 o'clock if the noble and learned Lord becomes so generous. I am most grateful to him and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 65 to 69 not moved.]
Lord MONSON Lord MONSON moved Amendment No. 70:
Before Clause 39, insert the following new clause:
("Rates not to be increased above 1979 levels in real terms, except with approval of the House of Commons
. After section 3 of the 1967 Act insert the following new section:—
"Rates not to be increased above 1979 levels in real terms except with approval of the House of Commons.
3A.—(1) Save as hereinafter provided, no rating authority shall, after 31st December 1980, have power to make or levy a rate higher than that sufficient to ensure that the total rates receivable by that authority in that year exceed the total rates received by the same authority in the selected base year (as hereunder denned) by a percentage identical to the percentage rise in the Retail Price Index during the intervening period.
(2) For the purposes of this section "base year" shall be whichever of the years 1977, 1978 or 1979 as each rating authority shall separately select.
130
(3) The Secretary of State may by order permit a greater increase in the rate which can be made and levied than that provided for under subsection (1) above.
(4) An order under this section shall be laid before the House of Commons and shall not have effect until approved by a resolution of that House."").
The noble Lord said: My Lords, I beg to move Amendment No. 70, which is an improved version of the amendment which I moved in Committee, the improvement being stimulated by a specific criticism made by the noble Lord, Lord Bellwin, to whose views on these matters we naturally pay great attention. The purpose of the amendment is fairly self-evident. I would guess that at least 98 per cent. of local authorities would be unaffected by the amendment if it were to be passed, but it is not too melodramatic to say that the amendment is designed to protect the ratepayer in the remaining 2 per cent. or thereabouts of rating authorities from the possibility—I put it no higher than that—of tyrannical extortion, a possibility that arises because of the idiosyncrasies of our method in this country or raising local authority revenue.
My Committee stage amendment came up well after midnight, and inevitably not many noble Lords were present. However, I do not want tonight to repeat the arguments in detail. Suffice it to say that I tried to show that because in certain districts and certain boroughs local government electors who are not liable for rates, or who are not liable to pay them in full because of rent rebates and so on, outnumber the electors and their immediate families who are liable for rates in full, effective local democracy does therefore not work in those areas. In essence, in the relatively small number of areas concerned there is representation without taxation which is almost as troublesome as taxation without representation. I backed up this argument with quotations from recent articles by the former leader of the Liberal Party, Mr. Jo Grimond, the leader of the Greater London Council, Sir Horace Cutler, and from articles in the Daily Express, the Evening News, the Daily Telegraph and the Economist.
The noble Lord, Lord Bellwin, criticised my amendment on three grounds. I quote from column 363 of the Official Report of 8th October: He said:

131
"To begin with, would not a ceiling become a national norm? We have all seen what happens with pay norms in incomes policies when they tend to become pay minima. A ceiling on rates of the kind proposed would be interpreted by some local authorities as a recommendation, and we could actually see authorities rating up to the 1979 level where otherwise they might have rated lower".
(My previous amendment gave a single base year of 1979, against which rises were to be limited.)
I submit that that is not really a valid argument. The difference is that when individuals are pressing for higher pay they are doing so because they wish to achieve a higher standard of living. Their motives are fairly simple and straightforward. Where local democracy works effectively, that is to say where the parties are fairly evenly balanced—as, for instance, in Leeds—or where most electors or their families pay rates, then there is every incentive for local councillors to try to keep rates down to the rise in the cost of living, or even below if they can achieve it. I do not think that is a valid argument; the two things are not quite the same.
The second criticism made by the noble Lord, Lord Bellwin, was that his argument was:
"likely to be strengthened by the knowledge that in the following year the discipline would be repeated. Treasurers would advise their councils to stoke up balances to guard against any shortfall in income in the next year, or the year after".
Again, for the reasons which I have put before, I do not think that is likely in practice, and those who are much more experienced in local government than I am—in fact I have no experience in local government—confirm that that is likely to be the case.
I must admit that the third argument raised by the noble Lord, Lord Bellwin, struck a chord and I concede that it has a certain validity. He concluded by saying:
"Worse still, a ceiling would be discriminatory and would penalise all those authorities that in 1979 had low rate poundages, while favouring any that rated highly in that year. And this discrimination would continue indefinitely, for year after year".—[Official Report, 7/10/80, col. 363.]
That of course is an absolutely valid and correct criticism which is why I have now altered the amendment to give local authorities the choice of three possible
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base years. It may not be particularly elegant phraseology, but legally I think it is a perfectly acceptable way of phrasing the subsection: to say that local authorities could choose whichever year—1977, 1978 or 1979—was most favourable from their point of view.
The Government will of course argue that the block grant will do the trick: I think the phrase used was that it will punish the overspending councils. Of course it will not; it will punish their ratepayers. The councils will not be hit; they will go on spending freely, as before. We have a duty to protect the hard-pressed ratepayer, particularly those on fixed incomes. And it is not only the ratepayer's purse we have to think about, but the wellbeing of the country as a whole. The London Chamber of Commerce has been drawing attention to the appalling effects that high rate increases will have on certain boroughs. We all know which they are, there is no need to name them. Of what use is it to allow councils to milk their ratepayers so that they may employ an additional leisure and amenity co-ordinating officer, Grade III, or whatever it might be, at the expense of driving firms out of business, which are employing workers making goods for export? Is this desirable from the point of view of the country as a whole? I think not. Therefore I urge the noble Lord to think carefully about this amendment. I beg to move.
Lord BELLWIN: My Lords, I can assure the noble Lord, Lord Monson, that indeed we do think very carefully about this particular aspect, because it goes to the heart of the whole rates debate, but as the noble Lord said, when we debated this at the Committee stage, I argued then that putting a freeze on all rates at the levels pertaining to 1979 would penalise those authorities that in 1979 had low rate poundages, while favouring any that rated highly in that year. As the noble Lord has said, this is an attempt in this new amendment to try to make some allowance for that; it attempts to overcome it by allowing rating authorities to select at which of the three years they would wish to see the levels frozen.
However, I cannot see that such a change will have the desired effect. Local

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authorities which consistently set low rate poundage will be discriminated against just as much under the proposal contained in this clause as in the previous one. Conversely those authorities which have shown a consistent tendency to rate highly would be favoured by the clause. However, I do not wish to dwell overlong on the technicality of a part of this new clause as I still feel we cannot accept it. As I said during debate in Committee, the Government believe that their block grant proposals, together with measures to provide full information to ratepayers (both of which are included in this Bill) will be successful in combating the worst excesses of local government expenditure.
We believe not in controlling overall spending through ceilings on rates, but in relating the very substantial grant to an objective assessment of need to spend. This places the onus firmly and progressively on each authority for financing from the rates any spending above that level. This will strengthen their local accountability for expenditure decisions. And it will focus the attention of elected members, officers, and ratepayers alike on the need for value for money and economy.
I know that there is concern that a few local authorities may continue to ignore our requests for financial constraint and will feel themselves secure from electoral pressures and therefore able to get away with high rates. My view, however, is that it is much too soon to reach that conclusion. We should not forget that block grant comes into effect for the first time next April, and that it will have an educative effect upon local authorities. They have not yet experienced the discipline of knowing that very high expenditure will lead to a tapering away of grant and a heightening of the recourse to rates. In addition there will come into effect Clause 2 of the Bill, which will strengthen accountability through giving ratepayers—and I mean all ratepayers, including council tenants—a full explanation for rate increases. It is surely preferable to exhort local authorities to tailor their budgets to meet national priorities and to strengthen the discipline of electoral accountability than to make central Government take over the rate-making responsibilities and usurp the traditions of local democracy.
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As the noble Lord, Lord Monson, rightly said, this is the great debate, if you like, as to where do we go in the future with rates. I choose my words very carefully in what I say here because it is no secret that the Government are looking at alternatives because of many of the anomalies and unsatisfactory situations we find in the present rating scene. I do feel that we have to see the effects of block grant. I do very fervently believe it will take us a long way in the direction we want to go.
I think that the vast majority of local authorities will want to take cognisance of the Government's exhortations about the national situation. Most of them are responsible. It is only a very small number who cock a snook, if you like, and could not care less about their ratepayers or anybody else. We have to take this very carefully and very steadily.
What this amendment calls for is so far reaching as to be beyond what one would want to be doing at all until one has seen, if ever, that there is no way at all in which local government responds. Frankly I believe local government will respond because it has a good record of responding in the past, as has been said here many times, and I have to remain confident that it will do so again. In those circumstances, while I pay tribute to the noble Lord, Lord Monson, for raising this issue as he has done, because it is a very important matter, nevertheless I hope he will be able at least to say well, let us wait and see; and, if so, perhaps he will not press the amendment.
9.30 p.m.
Lord ELLENBOROUGH: My Lords, perhaps I might briefly intervene because this amendment is also in my name as well as that of the noble Lord, Lord Monson. It is of course very similar to the one which was proposed in Committee. That came up very late at night, after midnight, whereas this time it has come up at the fairly sprightly hour of half-past nine. So possibly one may be able to say a few words without rather intimidating frowns from one or two Members of the Front Bench, such as one received on that occasion, if I may say so.
I am rather disappointed with what my noble friend the Minister has just said, because I feel that the plight of ratepayers

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is becoming an increasingly serious matter. I should have thought that this clause or something very akin to it was a necessary safety net for hard-pressed ratepayers who are increasingly resentful of the unfair burden that that part of the population bears as against that proportion which does not pay rates.
On 7th October my noble friend Lord Bellwin said:
"Block grant plus full information to ratepayers should bring a new dimension to the local taxation issue because it will highlight and focus on what local councils are doing".
That may be so, but it seems to me that there is altogether far too great an element of "Trust to luck, hope for the best and all will be well", about it. After all, there is a great deal of talk of 50 per cent. or more increases in rates coming along during the course of the next year. The fact is that the block grant—or even financial penalties—does not limit the amount of money that councils can raise in rates. Whatever financial penalties, no matter how severe, are imposed on the most extravagant councils, there is still no protection in the final analysis for that proportion of the population who are ratepayers, because local authorities can still raise additional monies by supplementary rate demands.
I, therefore, feel that my noble friend the Minister is missing his target and, worse than that, he is hitting the wrong one; he is hitting the unfortunate ratepayer. One has only to look across the Thames to the Borough of Lambeth—I do not particularly want to single out Lambeth but it has been mentioned previously—which was mentioned in a report in a recent issue of the Economist, which said:
"The leftish leader of Lambeth, Mr. Ted Knight, claims he has jacked-up local spending on 'socialist' principles in order to defend his poor electors' standards against the wicked Tories. Whereas in reality, practically all Lambeth's financial problems arise because the Council has botched the building of a sports centre in central Brixton".
There is far too much of that type of thing going on in various councils, not necessarily all Labour councils by any means. There is far too much talk of increases of 50 per cent. or more in rates next year.
I do not think that the Government have any conception of the anger that is being expressed by very many ratepayers'
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associations throughout the country. The crux of the matter is that under the existing rate system—about which the Government I understand now say they can do nothing for years to come; I thought that Mr. Heseltine made it abundantly cleat that nothing would be under review for 10 years or so—far too much revenue is drawn from too few electors, many of whom are ratepayers on fixed incomes eroded by escalating inflation over the years, and who now find that any benefits derived from national tax cuts are more than offset by savage increases in local taxes, that is to say, the rates. Of course, and that is the point—many of these people are just outside the limits of the rate rebate schemes.
Therefore, I feel that, because there is nothing in the Bill that brings any guaranteed safeguard to ratepayers against the worst excesses of spendthift councils and the apparent inability of the Government to recognise the plight of ratepayers who are being forced indefinitely to shoulder grossly unfair burdens, this clause is necessary, because at the very least it sets some limit as to what ratepayers may expect to pay. So I hope that the Minister will look a little more sympathetically at the amendment of the noble Lord, Lord Monson.
Lord BELLWIN: My Lords, by leave of the House, I thought that in responding to the noble Lord, Lord Monson, I had in fact expressed considerable sympathy with the motives behind the amendment—and I do so again. I entirely accept what my noble friend has just said, that there will be even deeper resentment if, despite the block grant, we see rate increases of the kind that some threaten they will punish their ratepayers by imposing. What they fail to appreciate is that industry and commerce pay 60 per cent. to 65 per cent. of all rates, anyhow. The people they are punishing most are those who are there to provide employment, and that is why it is not uncommon now—in fact, it is beginning to be more and more common—to see people moving away from areas precisely because rates are becomng so punitive that they simply cannot afford to carry on.
So when my noble friend wonders whether the Government understand and know what is going on, may I assure him

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that we understand and know very well indeed. In that to him it may be only something that he thinks about from time to time, when events presumably press upon him, I can assure him that it is not only the Government's job; but the whole time we are thinking and talking about this whole issue, and we are very well aware of all that is implied in what some people say they intend to do. However, there is a long history of people saying one thing and doing another, and it would be precipitate to presume what people might do in the future. It is not unreasonable for the Government to say that the block grant must have its chance to show what it can do.
However, all else apart, the block grant will ensure a fairer distribution of grant, which is what it is there to do. It is not there by itself to impose ceilings upon spending or on rates. To the extent that it is criticised for that by the noble Lord, Lord Monson, I accept the criticism. Indeed, it is a point that I have made all along. Therefore, without prolonging the proceedings, for we have so much to do, let me say "Yes, I am aware of the points that my noble friend raises, but I still think that it would be quite wrong at this stage to accept this amendment".
Lord MONSON: My Lords, I am grateful to the noble Lord, Lord Bellwin, for having given what is obviously serious consideration to this amendment. He expressed the view that this whole matter should be left to local accountability and local democracy. Of course, in theory that is an admirable principle. It would be splendid if it could be applied across-the-board. Unfortunately, because of the idiosyncrasies of our means of raising money for local authority purposes in this country, as he himself said, it cannot be applied quite across-the-board. As he said, there are a small number of local authorities which are likely to cock a snook at the Government's wishes in this matter. Indeed, we have learned only recently that the Labour Party in Greater London intend to double rates if they win control of the Greater London Council, no doubt confident that those who will benefit from the largess which they intend to distribute outnumber those who actually pay rates.
I do not think that my proposal is a very radical one. In the United States,
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after all, it is common for any local authority which wishes to raise rates by more than 10 per cent. to have to call a local referendum to approve such a rise. Given the rate of inflation in this country we should have had referendums all over the place had this been a rule here. Speaking of referendums, I have no doubt that if my amendment, or something very like it, were put to a referendum, it would be heartily endorsed by the people of this country.
It is sad, indeed, that the other place may not have a chance to debate this issue. Of course, if they reject it out of hand, well and good. I certainly do not intend to force a Division as such at this late hour, but I should like to hear what the House thinks of my amendment. Therefore, I do not propose to withdraw the amendment.
Lord MISHCON: My Lords, the noble Lords, Lord Monson, and Lord Ellen-borough, are perhaps content with the remarks that they have made and to which the House has listened. But in view of the fact that some political considerations have just been brought into the argument, I think that the record ought to be clear from the point of view of these Benches. That is the only reason I rise to speak. It is all very well for a Government to talk in terms of a reduction in taxation and lead the citizen to believe that that is really what is happening, when, with the other hand, as it were, a provision is written out for a VAT which has had a substantial rise and which is costing ordinary little people a dreadful amount because of the necessity of the purchases that they make day by day.
It is all very well for a Government to talk in terms of reducing grants to local authorities—and the noble Lord, Lord Monson, is responsible for my rising on this occasion—and then refer to authorities which he said have threatened to increase rates. Does anyone who has ever been in local government think that that is the way a local authority political party chooses in order to try to get votes? I can only say as a local authority member of some years' standing that the allegation was always made, "I know what they are going to do in the last year of their office. They are going to offer to reduce rates. That is the way they're going to get back."

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Does any Member of this House think that any political party go out on a platform of raising rates unless they have found that the vast majority of the citizens within their borough were suffering deprivation as a result of the lack of social services and therefore had to go out, in spite of the fact that they might lose votes, and say with honesty, "We may well have to raise the rate because we cannot get the money from government." Only last week, if I may give the House an example, and I promise at this late hour not to make a long speech—
A noble Lord: Hear, hear!
Lord MISHCON: I am sure that the noble Lord will forgive me if I say that I think this is of some importance. I had to try to look after a very old couple who could no longer look after themselves and who wanted to go into a home which was prepared to take them. They had not got the money, and, as noble Lords will know, there is a local authority grant that is made on some occasions. I had to apply for them to this local authority. I say at once so that it is seen immediately that I am not trying to make any political point on this, that the local authority happened to be a Conservative authority and I spoke to a welfare officer who was full of understanding. The need of these old people was to be somewhere near their own family outside the boundary of this Conservative authority. The Conservative authority had to say to me, "We are sorry. If you had come to us two years ago, we would have been able to give this grant in spite of the fact that the home is outside the area, and we would have done it on compassionate grounds. But under present restrictions we cannot do it, and we are therefore having to turn down old people—and doing it in a very substantial way—because of the limitations that have been placed upon us."
No noble Lord in this place gets any rejoicing out of this, and no local authority does either. But if you cannot get the money from central Government for these essential services, where are you going to get it from? Day after day we have been listening here to speeches from the Government Benches opposite as to the sheer necessity for all the restrictions
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that are being imposed. I know perfectly well that the Front Bench opposite gets no joy out of having to announce these restrictions. But I repeat that if you have elected representatives who are supposed to do a social duty, what do you think they can do except increase rates? What is the point of a motion like this if the central Government finds it cannot supply the money? Before we make political points, let us at least make sure that we are being honest with ourselves.
On Question, amendment negatived.
9.45 p.m.
Lord MOTTISTONE Lord MOTTISTONE moved Amendment No. 71:
After Clause 39, insert the following new clause:
("Removal of local authorities' rights to be a party to valuation appeals for their own properties
.—(1) In section 69 of the 1967 Act (proposals for alteration of current valuation list)—

(a) in subsection (1) for the words "including a rating authority" there shall be substituted the words "not being a rating authority unless it is the occupier or tenant of the hereditament in question";

(b) subsection (3) shall be deleted.

(2) In section 70 of the 1967 Act (provision for objections to proposals)—

(a) in subsection (1) paragraph (b) shall be deleted;

(b) in subsection (2) the words "or the rating authority for the area in which the hereditament is situated" and the words "or, in the case of the rating authority (where they are not the occupier) on the rating authority" shall be deleted.

(3) (a) In section 72 of the 1967 Act (agreed alterations after proposals) paragraph (e) shall cease to have effect.
(b) This subsection has effect in relation to proposals made after the passing of this Act.
(4) In section 76 of the 1967 Act (appeals to local valuation courts against objections to proposals) paragraph (d) of subsection (4) shall be deleted.").
The noble Lord said: My Lords, this amendment is the repeat of one I moved in Committee. I have repeated it at the invitation of my noble friend Lord Ferrers, who said that on this point the Government had not made up their mind and that if I cared to table it again I could find out whether they had done so by now. Perhaps I should remind the House of what it is all about. Back in 1949 the power of local authorities to do their own valuation was removed from them and put in the hands of valuation

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officers working for the Inland Revenue. I understand that was done because there were several areas in which the local valuation led to certain difficulties and people were not satisfied that locally the job could be done fairly.
In 1949 the power of a local authority to be a party to valuation appeals, which is the subject of the amendment, was left with them, and that has led on various occasions to local authorities getting themselves involved in valuation appeals as a party by right, and it is not thought that is fair from the point of view of the ratepayer—particularly if it is a business ratepayer, and I suppose also for a personal domestic ratepayer—and that it would be much better to carry the principle of the 1949 legislation right through and allow local authorities to be involved in valuation appeals only if the property is their own or if they occupy it or have a personal right themselves to the property. The point of the amendment is to remove this special privilege for local authorities.
It may be said that local authorities should have some sort of right on behalf of the ratepayers, but looking at it from a different point of view, a local authority is really not in the relationship that a ratepayer is to the valuation officer, who is specially established as being an independent body to adjudicate on these matters, and it seems right that if the property belongs to somebody, whether a person or a business, he should have a right to deal direct with the valuation officer on the issue. The local authority may seek, if it is involved, to put a different impression on the matter in question and it may hope to be viewed by everybody as a rather superior sort of body, in the way that central Government sometimes like to think of themselves as a superior sort of body who can give advice to everybody else.
In that respect local authorities are not seen by businesses at any rate as being anything different from a trader with whom they are doing business. The difference in this respect is that the local authority has a special privilege which a trader in the ordinary circumstances would not have. That is the purpose of the amendment, and I hope the Government may now have made a decision on the matter. I beg to move.
9.50 p.m.
Viscount COLVILLE of CULROSS: My Lords, I am sorry to prevent my noble friend Lord Bellwin from answering at once, but when my noble friend Lord Mottistone moved this amendment or an equivalent amendment at the Committee stage, I stayed silent for the very good reason that I have been involved professionally in the main cases that have given rise to the amendment that he has put down. Therefore, for the very good reasons that this House lays down, I cannot discuss those. Nevertheless, I very much hope that the Government will be very careful before they fall for the invitation that has been put forward in this amendment, not least because they have said that for the moment there is to be no revaluation, at any rate not until an order is brought in, we know not when.
The situation in particular is as follows. Under the 1973 revaluation, there were a number of properties, rather over 100, which were valued by a section of the Inland Revenue called the Special Properties Section, which has since then been disbanded. That section dealt with a collection of extremely complicated and difficult properties, the assessment of which did not come before the courts for the most part for quite some time. It is perhaps indicative that one local authority on the south bank of the Mersey has properties in this category which amount to 20 per cent. of its total rateable value. Therefore, it is not wholly surprising that local authorities with these very large properties within their areas are interested in seeing that the rateable value finally decided upon is correct.
What my noble friend has put forward is an amendment which will not entirely draw the teeth of the rating authorities. By his amendment my noble friend prevents them having as of right the opportunity to be heard in the local valuation court and subsequently in the Lands Tribunal. What he does not do is to prevent them from objecting to a proposal put forward by either the valuation officer or the ratepayer for an alteration in the valuation list.
These properties that we are talking about are premises such as oil refineries and steelworks. Every year a change in the structure takes place and a proposal is put forward. Such proposals, because

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of Section 20 of the 1967 Act, will fall to be determined by the value that applied when the 1973 valuation list was originally compiled—the "tone of the list". Therefore, one has every time to reopen the question of what was the basic valuation of all these properties?
In view of what has happened—and I say in particular—I would venture to guess that, if the amendment is passed, the rating authorities concerned will simply take the course of putting in a formal objection, which they are not in any way prevented from doing, to every single proposal from now on made in respect of these properties. That will do exactly the opposite of what my noble friend wants. It will redouble the problems of trying to seek and find a solution, because then they will be entitled to be heard; they will be entitled at least in the Lands Tribunal to obtain all the details of what it is that is being valued.
Perhaps, in general, I can say that I do not accept the point that has been made by my noble friend that when the Local Government Act 1948 transferred the duties of revaluation from the local authorities to the Inland Revenue, but at the same time left the powers of the rating authorities to be heard as of right at the subsequent hearings, that was some kind of oversight. I would suggest to this House that if Parliament is to remove that right, which is what my noble friend is trying to do, it should not do so at the tail end of a very long and very complicated Session in a Bill of this complexity, without the consultations that I should have thought my noble friends on the Front Bench would have thought to be quite essential to this matter.
I do not know, and I doubt whether any of your Lordships would know, what would be the outcome of placing this particular restriction upon the powers of rating authorities, with the inevitable result that those who thought that there might be something wrong would automatically have to object to every single proposal made by either the valuation officer or a ratepayer in their area. I should have thought that this was entirely counter-productive to the sort of solution that my noble friend has, I think, tried to suggest to your Lordships, and I very much indeed hope that my noble friend
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Lord Bellwin will not accept this because it requires a great deal more thought.
Lord BELLWIN: My Lords, I am grateful for that really impressive contribution from my noble friend Lord Colville. As I explained to my noble friend Lord Mottistone at an earlier stage when he raised the subject, Sir Derek Rayner has been conducting a review of the procedures governing valuation lists, and the statutory position of rating authorities is being covered in that review. I also said that I did not wish to reach a premature conclusion about this matter. I am afraid I can still go no further than that. The Government have yet to complete their wide consultations on this subject, and their examination of the issues, and, therefore, no conclusions have yet been reached. I hope that, as before, your Lordships will agree not to take this amendment further, but to await the outcome of the review.
I may say that the observations made by my noble friend Lord Colville will be looked at very closely indeed. They seemed to me to be not only cogent but very apposite; and the warnings he gave, I thought, were very serious ones. Nevertheless, I would say to my noble friend Lord Mottistone that I cannot go any further, as he will have gathered, at this time, but we will still ensure that what he has said, both on this occasion and in Committee, will be considered carefully and passed on to those who are looking into the matter.
Lord MOTTISTONE: My Lords, I had hoped that the inquiries that the Government were conducting might be further advanced, at any rate before this Bill leaves Parliament. It looks as though this is most unlikely, and it is obviously not particularly of value to pursue the matter at the moment. I will not accept all that my noble friend Lord Colville has had to say on this matter, but there is not time tonight to enter into a special little argument; I will go back to that outside the Chamber. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 72 and 72A not moved.]
Clause 43 [Commencement and extent]:
9.57 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 73:
Page 40, line 34, leave out ("and 33") and insert ("33 and 40").
The noble Lord said: My Lords, this is the first of two amendments to make necessary changes in Clause 43, the commencement provision for Part V of the Bill. This first amendment deals with Clause 40 of the Bill, which provides that where a new rate is made the rating authority shall give publicity to it, through newspapers and so on, within 21 days. Schedule 32 contains a consequential repeal of a few words in Section 4 of the General Rate Act 1967. The new provision and the repeal ought to have effect at the same time, but as drafted they would not. The amendment ensures that both will be brought into effect, for a new rate period, by the Secretary of State by order. Our intention is that this should happen with effect for the rate year beginning 1st April 1981. I beg to move.
Lord BELLWIN Lord BELLWIN moved Amendment No. 74:
Page 40, line 39, leave out ("Schedule 2") and insert ("Schedules 1 and 2").
The noble Lord said: My Lords, this is a second amendment to correct Clause 43. This second amendment deals with Clause 38, the new provision for empty property rating. This clause contains a minor provision, in sub-paragraph (2C), to the effect that domestic rate relief shall not be granted on empty property, which at present is to be found in Schedule 1 to the General Rate Act. In consequence, the present reference in Schedule 1 to the Act should be repealed, and Schedule 32 to the Bill does this. Clearly the clause and the repeal should commence at the same time, but under the present draft of the Bill they would not. The amendment will provide for them both to have effect on Royal Assent. I beg to move.
The Earl of RADNOR The Earl of RADNOR moved Amendment No. 74A:
Page 41, line 6, at end insert—
("(1A) Section (Rating exemption for fish farms) above shall have effect for any rate period, within the meaning of the 1967 Act, beginning on or after 1st April 1981.").
The noble Earl said: My Lords, I beg to move Amendment No. 74A and, with leave, to speak to No. 74B at the same time. These two amendments are consequential on Amendments Nos. 58A and 58B, and pinpoint the time from which fish farms in England, Scotland and Wales will be derated as being the 1st April 1981. I think this is the only logical dale from which to work. I beg to move.
The Earl of RADNOR The Earl of RADNOR moved Amendment No. 74B:
Page 41, line 42, leave out ("Section 42 above extends") and insert ("Sections [Rating exemption fur fish farms in Scotland] and 42 above extend").
The noble Earl said: My Lords, I thought I had covered this point. It is the same. This applies to Scotland and pinpoints the date from which fish farms in Scotland will be derated as the 1st April 1981. I beg to move.
Clause 44 [General potter to reduce rate support grant]:
Baroness DAVID Baroness DAVID moved Amendment No. 75:
Page 42, line 4, after ("may") insert ("after consultations with that authority").
The noble Baroness said: My Lords, we now move to a different Part of the Bill, to the penal clause, so-called. If such drastic powers as are given to the Secretary of State by this clause are to be wielded from on high, if the chopper is to come down on certain authorities, it would seem right and just that there should be consultations with those authorities before the axe falls. As there is no rational way to penalise authorities—different criteria can produce different results and the choice of the criteria is arbitrary—authorities must have the opportunity to

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put their case. There was no consultation with the 14 local authorities before the Secretary of State announced that they were to be penalised this year. That cannot be right. If there is no statutory obligation for consulting with local authorities, on whose advice will the decision be taken? On what basis will the Secretary of State make those decisions? Will it be on the advice of civil servants without local councillors having a chance to make their case? Will officers in Marsham Street consult with council officers? If a county overspends, will the districts within it be penalised although they have been frugal? Will there be any right of appeal?
As my noble friend Lady Stedman said at Committee stage, it is hard to play the game when there are no consistent rules. I hope that I have said enough to persuade noble Lords that consultation prior to action by the Secretary of State is fair, just and sensible. The noble Lord, Lord Bellwin, said a few minutes ago in reply to Lord Monson that the local authorities have a good record of responding. I beg to move.
Lord BELLWIN: My Lords, this amendment is identical to one that was put down in Committee and was rejected. It would impose on the Secretary of State a duty to consult with every authority whose grant was to be reduced as a result of the provisions of the clause before making the reduction. Although the amendment stems, I believe, from a concern that the Secretary of State might act arbitrarily under the powers of this clause, this is precluded by the fact that under Clauses 45 and 46 the Secretary of State is required to specify in an order the principles upon which he proposes to reduce grant under the transitional arrangements. This order is then subject to the Affirmative Resolution of the House of Commons. As I have made clear before, this in no way precludes an individual local authority making representations to the Secretary of State. I went into this subject at considerable length in Committee. I have in front of me copious notes indicating how all the authorities had every indication of the situation. I have no intention, unless pressed, to do the same thing all over again, and therefore I cannot accept the amendment.
Lord MORRIS: My Lords, the noble Baroness, Lady David, in suggesting that this clause is a penal clause, is performing a semantic handstand. It is to the benefit of the general taxpayer in this country.
Baroness DAVID: My Lords, I cannot agree with that, and the authorities that have been penalised would not agree with the noble Lord. I do not agree either with what the noble Lord, Lord Bellwin, has said; but the hour is late and I shall not press the amendment.
Amendment, by leave, withdrawn.
10.5 p.m.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 77:
Page 42, line 8, at end insert ("and if that authority has been informed that such a reduction will be made and of the size of that reduction by 1st July in the relevant financial year,").
The noble Baroness said: My Lords, again this deals with the clause which throughout the Bill we have made clear we do not like, but if we have to have it we would rather it were understandable and workable and would let the local authorities do their job. We think the addition of this amendment would be a sort of safeguard to the local authorities, in that they would know that the Secretary of State believed they were overspending and their rates would be higher than he would accept, and they would know in time to be able to do something about it if they felt that was possible. I beg to move.
Lord BELLWIN: My Lords, again, this amendment is identical to one that was put down at the Report stage in another place and was rejected. It is intended to prevent the transitional arrangements from being used this year. As I tried to emphasise in Committee, this is the one year and, after the introduction of the block grant, the only year in which they will exist, because they will then lapse. The amendment will not be necessary and hence we cannot accept it.
Amendment, by leave, withdrawn.
10.7 p.m.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 78:
Leave out Clause 44.
The noble Baroness said: My Lords, I know we discussed this as well and voted on it at the Committee stage, but we on this side of the House are still concerned at the inclusion of this clause in the Bill. We do not like this legislation, which in November can penalise councils and councillors for what they did absolutely lawfully last April. We are alarmed that there is no obligation, and the Government are not prepared to accept that there should be an obligation, on the Secretary of State to consult with the local authorities before coming to a decision. We still have not been given satisfactory answers to all the questions we posed as to who will advise the Secretary of State, what powers these advisers will have and on what basis or judgment the Secretary of State will determine the needs of any or of all the local authorities. Who did advise the Secretary of State which of the 14 authorities he should penalise? What information was requested from them and given, and what regard was paid to the circumstances of each and every authority on that list? How did the Secretary of State decide which authority was a profligate one and a high spender and what steps did he take to search out why that authority had higher rates? What were its special difficulties in meeting the statutory responsibilities laid on local authorities by successive Governments? And what right of appeal was open to them?
On the last occasion the noble Lord, Lord Bellwin, argued very persuasively that there was not a need to write consultation into the Bill because his door was always open. We said at the time that that was not our interpretation of consultation, and my noble friend's amendment sought to write consultation into the Bill. The noble Lord said his door was always open. I understand that when Islington, which was the second highest overspender in the "hit" list, found that they were in that list they wrote asking for a review of their position on the basis, first, that they had met one of the two sets of criteria the Minister had laid down; and, secondly, that in taking away the money which they had been given for the urban development the Government had included Government money in their expenditure and therefore were penalising Islington for having spent the Government money which they had been given.
I understand that the Islington Council sent a letter to the department on 18th September, that they had a meeting with the Minister for about five minutes on 2nd October, and on 10th October they received a waiver because their claim had been agreed. But that can only add to our suspicions as to how many other people could make out the same sort of case. Is this not the sort of thing that is inherent in any such arbitrary system of penalties as those that have been named with these 14 authorities? Some days ago one of the national papers reported that the Secretary of State was poised to transfer tens of millions of pounds from London and other big cities to the Tory-controlled shires. I understand the Secretary of State met the local authority associations about a week ago. We talked in the Committee stage about the "hit" list. According to the papers for that meeting, I understand that three different options were presented to the local authority associations. According to press reports, each one was capable of working in nine different ways. That means that something like 27 options are open to the Secretary of State. He can choose which one he wants to catch different authorities.
How is he going to choose which option to go for? What homework will be have done on these authorities? What advice will be have taken and from whom? Who did he set out to catch? Did he set out to catch the high spenders? Those who had high rates? Those who refused to cut back services? Or was it just to catch those Labour-controlled "baddies" on the "hit" list? That is the kind of power that this clause gives to any Secretary of State. We still maintain that it is not the power that should be given to any Secretary of State and this clause should be deleted. I beg to move.
Lord EVANS of CLAUGHTON: My Lords, it is a great pity that such an important matter as this should be considered at this hour. I concede that the matter was discussed at Committee. Nevertheless, it is a matter of great importance to those concerned about the independence of local government. I understand that both the Association of County Councils and the Association of Metropolitan Authorities feel this clause should not

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be included in the Bill. It is unique in that it enables the Secretary of State (and if the Secretary of State were the noble Lord, Lord Bellwin, perhaps we would not be quite as worried as we are) to intervene directly in the financial policies of individual local authorities.
In our opinion, it raises fundamental and deeply important constitutional issues about the financial responsibilities of local authorities; and, perhaps more important, their accountability to their ratepayers. Also, it is unfair in that it fails to distinguish between, as the noble Baroness, Lady Stedman, said, "baddies"; it fails to distinguish between county councils and district councils. There may be a naughty district council which is spending wildly and a perfectly well-behaved county council which is not, or vice versa. Under this clause, so far as I can see—and I hope that the Minister can correct me—the innocent will suffer with the guilty. It is arbitrary because the Secretary of State, once he has determined the notional rate referred to in the clause, has complete discretion to limit the application of the scheme by setting levels to catch a few authorities that he chooses to pick on.
It seems to me that he has picked on one authority which is under Conservative/Liberal control, and he has appeared to be continuing a personal vendetta against Mr. Knight in Lambeth. He seems to be taking draconian powers to continue what appears to many of us watching from the outside to be a private row. It seems very, very worrying because in general—and I make no apology for repeating what has been said previously—local authority expenditure is not out of control.
Since 1974–75 central Government expenditure has increased and is increasing—as we learned from our newspapers only last week—by 8 per cent. in that period. In the same period local authority expenditure has decreased by 14 per cent. I cannot understand why the Secretary of State—unless he is in pursuit of some extraordinary private vendetta—should have gone to this trouble to produce these clumsy and draconian measures to deal with a short-term problem.
10.14 p.m.
Lord DAVIES of LEEK: My Lords, what is difficult to understand—and I will be brief—is that on both sides of the House we have received documents galore from local authorities throughout Britain. In the majority of cases, the Association of County Councils is represented by the party of noble Lords opposite. They put forward their point of view in as constructive a way as possible, and the first fact that comes out—all of us have noticed this over the long time we have spent on this Bill—is that the Bill has been too rapidly pushed forward. It should be five or six different Bills. The system is ill-defined in the Bill and the widest powers are sought through secondary legislation, which is dangerous, without adequate safeguards against possible misuse. Also, in the view of the Association of County Councils the new proposals have significant disadvantages which Members on both sides of the House could talk about for another hour. I will not do it, because this is a well-informed House.
All this well-informed and constructive criticism has come in from people who have given their lives to the heart of democracy in local government, and hardly one iota of these constructive protests has been taken notice of. With that, and with a tired House, I think it would be unfair to try to belabour the point. I believe that we should have listened to the people who know what they are talking about throughout the country: those who have given their lives to local democracy.
Lord BELLWIN: My Lords, I would, I suppose, have to trot out a list of people who come in the category mentioned by the noble Lord but who feel precisely opposite to the way he does. I could produce such a list. The fact is that I would commend the House to read very carefully exactly what I said on this subject in Committee, because to do justice to what has been said this evening I should have to go over that almost word for word. But I will refrain from the temptation and perhaps comment upon one or two of the observations that have been made.
First I would refer to those which were made by the noble Baroness, Lady Stedman, who talked about the various per

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mutations of the three options, the fact that they multiply themselves and that this means that you can do what you like. That is not so, for the reasons that I have given previously. But I wonder whether the noble Baroness appreciates—this is a point I have made before—exactly how the current rate support grant distribution has been made. I would tell her, as one who was engaged for many years in the calculations on behalf of the AMA, my own authority and so on, that that was exactly how it was done before. Alternative options were put forward, but there were many permutations to each option, and at the end of the day it was the Secretary of State who pulled the levers—I used that term before—and came out with the answer that he wanted.
The difference between that and what will transpire in the future is this. Your Lordships will remember that I referred to a "black box". In the future the bits and pieces within the black box will be laid out on the table, so that everyone will be able to see exactly what is there, whereas now the levers are pulled and no one knows what is in the box. In the future, everything will be far clearer. If, therefore, it seems more complex, that is only because the elements will be there for everyone to see, whereas now they are not so seen. The noble Baroness wondered how these figures were arrived at and what was magic about the notional uniform rate. That was a very fair question to ask and I answered it in detail on Committee stage. I tried to explain then, and I repeat now, that it was essentially an arithmetical calculation. If I am pressed tonight, by leave of the House I will go into exactly how that calculation is arrived at; but I would ask your Lordships to accept from me that that is exactly what it is.
Lord AVEBURY: My Lords, if the noble Lord will allow me to intervene, rather than ask him to go into the arithmetical calculation which I am sure the House would not want at this hour of the night, may I ask whether it is not possible for the consultation document to which the noble Baroness referred to be made available in the Printed Paper Office, so that everybody can study how the calculations are supposed to be performed?
Lord BELLWIN: My Lords, first I
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would suggest that the noble Lord, Lord Avebury, reads what I said on Committee stage. If thereafter he still feels that he would like to have more information, may I say that this is the kind of subject that is very hard to absorb. I mean no disrespect, but it is very hard to absorb just by listening. Therefore, if the noble Lord would still like further clarification, it will be available to him or anyone else who cares to get in touch with me and asks for it. It is no secret. It is an absolutely open calculation for everyone to see.
It was accepted that, however arithmetical it may be, there will always be elements which are inexact. We took 30 per cent. and then came down to a handful of authorities—14 out of some 450. That is a small enough number, goodness knows! The noble Baroness gave the example of Islington. They simply came along and told us that they had made some changes. It is not for me to go into at what stage they made them. Suffice it to say that they did and they came within one of the waivers, about which the Government were very pleased.
The noble Baroness will be pleased to know that other authorities—at this moment, I do not want to say exactly how many—have since come along. But there will be some others of the remaining 13 who will be outside the penalty area—which is a term that I prefer to use—and the Government are very pleased as to that. I repeat, again, that the money that is withheld from these authorities will not be kept by Government, but will go back to all the other authorities. There is no intention here to keep such money; it is there for everyone.
The noble Lord, Lord Evans, again referred to the arbitrariness of this whole thing. I tried to assure him in Committee that, whatever it was, it was not arbitrary. You can work out exactly how this is arrived at and anyone can do the sums. So I do not see how, on that basis, it can be said that it is arbitrary, or that it is set to catch a particular person. It is nothing of the kind.
I am sure that the House does not want me to go into the pages and pages of matter which I have here, which I have spent so much time studying carefully and

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talking about. Therefore, I propose not to do so. The noble Baroness may feel able in the circumstances not to press the amendment. I hope that she will not press it. But I would tell her that if, by way of explanation and in written form, she would like much more than I said in Committee—and I say this to all of your Lordships—I shall gladly provide it for her or for anyone else.
Baroness STEDMAN: My Lords, the noble Lord is always courteous when he replies to criticism of the Government and we appreciate that from these Benches. No, I shall not divide the House tonight. I should like to do so, but I do not think that we are likely to convince any other people to come with us than those who came with us before, and at this time of the night it may be rather unproductive to try to divide the House.
I am not particularly consoled by what the noble Lord has said and I am not really convinced by his arguments. I know that there has always been an element of rough justice in the way the rate support grant has been administered and worked out at council level. But the noble Lord has got me a little more concerned, now he has told me that not only Islington, but others on the "hit" list, have now come within the scheme and are able to get the waiver. That makes one wonder whether the criteria were right to begin with, and whether they were the right 14 authorities.
As I say, we are still concerned about it. We still think it is a very sad day for local government when a Secretary of State has the, power to fire these penalties at authorities—if the noble Lord prefers to talk about penalties rather than a "hit" list. We think it is a very sad day. We regret that it has come to that, but in the circumstances we are not prepared to push the amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 45 [Reduction of resources element]:
10.24 p.m.
Baroness DAVID Baroness DAVID moved Amendment No. 79:
Page 43, line 16, at end insert—
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("In making a determination under this section the Secretary of State must demonstrate that those authorities whose grant is to be reduced have acted unreasonably.").
The noble Baroness said: My Lords, with this amendment I should also like to speak to Amendment No. 80 as the same principle applies. Consultation with local authorities before their rate support grant is reduced has been refused, as my Amendment No. 75 has not been accepted. Therefore, it is all the more important that these amendments should be accepted. The local authority associations are deeply concerned about the proposals for the transitional arrangements, and I think that there has been general agreement on this. The proposals in these three clauses can be exercised only by applying arbitrary criteria to local authority budget decisions.
The Secretary of State should in all fairness have to give some explanation as to why he has selected certain authorities to be penalised, so that they have a chance to explain their position and their reasons for their expenditure—why they have acted in certain ways—and also so that the Secretary of State can show to the council and to the people in the area of that council that he has behaved in a reasonable and fair manner. If he has to give some explanation for his actions and how he came to decide upon them, it will be possible not only for the local authority but for Parliament also to judge how the Act is working and how he is carrying out his responsibilities.
In replying to me when I moved this amendment during the Committee stage the Minister complained that the wording was ill-defined: that presumably the Secretary of State would have to demonstrate that an authority had acted unreasonably in overall levels of spending. I disagree. Councils would want to know in what areas they had acted unreasonably and in more detail—whether on education, roads, social services, or whatever. I decided that a very lengthy amendment would not be welcome, but I consider that in fact this amendment is perfectly clear and I beg to move it.
Lord EVANS of CLAUGHTON: My Lords, I apologise for speaking so late at night, but to me these are extremely important provisions which have a fundamental effect on local government. The noble Lord the Minister in dealing with

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this matter in Committee explained at considerable length—at col. 593 of Volume 413, No. 186—that it was a question of judgment as to the transitional arrangements in identifying authorities which would be caught under this system. He described the notional, uniform, arithmetically calculated rates and went on to speak about ample allowance being made for the unsatisfactory character of existing needs assessments. He said that it was a question of arithmetical calculation and that judgment was not needed. But arithmetical calculation is only one of the factors involved in reaching a decision. Therefore, it seems to me that the local authorities whom he is seeking to deal with under these arrangements should have an opportunity of understanding and having explained to them what are the reasons and the problems and the basis upon which the assessment is made for their being found guilty. Therefore, I should have thought that again this amendment would do something to ameliorate the lot of the allegedly guilty authorities.
Lord BELLWIN: My Lords, I do not take the point at all. The authorities concerned know quite clearly where they do or do not stand in relation to the calculations. There is nothing secret about it. They knew all along exactly where they stood. They have had the chance and they have the chance to this day to come along—there is still time—and, as I tried to say to the noble Baroness, some of them are indeed doing just that. And when they do come along they know quite clearly where they have to get to and what they have to do. The last thing we should want to do, as the noble Baroness, Lady David, said, would be to say, "You should spend more on education and less on housing, or less on social services ". That is the very last thing that they would ever want central Government to do. It is not our job to do it, nor would we try.
This amendment is identical to the one which was put down in Committee and subsequently withdrawn. The movers of the amendment intimated that it would be their intention to reintroduce it at this stage, having considered whether they wished slightly to change the wording. In the event, the wording has not been changed. For the reasons which I gave
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in Committee, I consider that the amendment is impracticable and undesirable.
So far as Amendment No. 80 is concerned, again it is identical to the amendment which was put down in Committee and subsequently withdrawn; and it, too, is identical to the amendment which was put down in relation to Clause 45. For the same reasons as I suggested then that we could not accept it, I say the same now. I am sorry to seem to be so categorical, but we debated the matter at length. There is nothing new here at all which we have not been over before, and that is why I fear we cannot accept the amendment.
Baroness DAVID: My Lords, I am afraid that the Minister did not listen to what I said. I did not say that the local authorities would expect to be told how much to spend on education, or social services, or whatever, but, if they were accused of overspending, that they would wish to know in what areas, such as education and so on, they had overspent. I do not think the two are quite the same. I hope noble Lords will realise that on this side of the House we are still extremely unhappy about these provisions, and clearly the Liberal Benches feel exactly the same. So I make no excuse for putting this forward. We did not divide on these amendments before, but I appreciate that the hour is extremely late and, although I personally would be keen to divide on this, I will respect the general feeling and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 80 not moved.]
Clause 47 [Supplementary grants for transport purposes]:
10.31 p.m.
Lord UNDERHILL Lord UNDERHILL moved Amendment No. 82:
Page 44, line 10, leave out from ("paid") to end of line 12 and insert ("except in respect of expenditure specified in the order which shall include such expenditure as is referred to in subsection (5) of the said section 6").
The noble Lord said: My Lords, even at this hour I make no apology for returning to the question of the transport supplementary grants. The provisions in subsection (2) were considered at the

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Committee stage and in the amendment that I proposed then I sought to delete the whole of subsection (2), which provided not only for the possibility of ending transport supplementary grants but of changing the basis for them. The noble Lord, Lord Bellwin, gave an assurance, which I accepted, that no decision had been taken on the question of ending the transport supplementary grant.
This is a different amendment. I recognise that it may be desirable to amend the items of expenditure on which TSG may be based. That is proposed in the subsection. The amendment would still enable that to be done. Grants would be paid only on expenditure as set out in an order which would be tabled by the Secretary of State, but there would be added an important qualification that such expenditure shall include the transport expenditure set out in the 1974 Local Government Act, Section 2 of which defines the expenditure of the county councils and the GLC. The headings are set out in Section 1 of the 1974 Act as the estimated expenditure on public transport, highways, regulation of transport and the provision of parking places. Whatever other changes may be proposed by order, we regard it as essential that these headings of estimated expenditure of the counties and the GLC should remain.
Another effect of this amendment would be to remove the possibility of the transport supplementary grant being ended. As stressed at the Committee stage, TSG brings together both capital and revenue expenditure of transportation and generally I think opinion is that this has worked well and is invaluable. Informed opinion is that any adjustment by the incorporation of TSG within a block grant system just could not work and could not meet the needs of transport as the present TSG does.
The noble Lord, Lord Bellwin, has stressed that this is a reserve power. Frankly, I am not too happy with reserve powers because reserve powers usually mean that somebody has it in mind to use them. We consider TSG to be so important to our transport policies and to the programmes of the county council that we would like it to be made clear by our amendment, which would take away any possibility of TSG being abolished under
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this Bill. It would require separate legislation and we think that is the way to deal with it. I beg to move.
Lord BELLWIN: My Lords, I wonder whether the noble Lord, Lord Underhill, would mind very much if I spoke also to Amendment No. 82A?
Lord UNDERHILL: My Lords, if may say one word on that I think it would be helpful. All I am saying in Amendment No. 82A is that, if there is to be an order which is going to change the basis of the expenditure items, then there should be consultation with the local authority associations and representatives of passenger transport operators. I know that the noble Lord has said to me and to the House on a number of occasions, Why should we have statutory provision for such consultations? All I would say on that is that there are quite a lot of occasions in this Bill where provisions for consultation are written in. Why not do it on this occasion?—because it would be absolutely important, in my view, that if there are to be changes in the items of expenditure for TSG the associations of local authorities ought to be brought into consultation, as should the passenger transport operators.
Lord BELLWIN: My Lords, I will try not to make that particular point when replying. At Committee stage of the Bill, amendments were proposed which would have had the effect of preventing orders from being made abolishing TSG completely, and would have ensured that the grant had to continue at least for a more limited range of expenditure, or for fewer than the total number of counties. On that occasion I gave a number of reassurances. These amounted to the fact that any decision to abolish TSG would not be taken lightly, and would be made only if the Government were satisfied that whatever arrangements succeeded it met the objectives of TSG. Moreover, I pointed out that under existing legislation it was already possible to pay TSG to fewer than the total number of counties.
In fact, because of some deficiencies in the drafting, it is far from clear that this latest amendment would have the intended effect. But that is really a side issue. I do not stand on that. The main point is that the fears which have been expressed

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are without foundation. I hope that the reassurances which have been given, and which I have summarised again now, provide proof of that, and are perhaps sufficient for the amendment to be withdrawn. There has already been extensive consultation over the last year or two with local authority associations about the future of TSG. They have made clear what their various views are about the grant. The Government certainly have it in mind that, before any order was made under this section, the associations would be consulted about the proposal.
Some local authorities are themselves passenger transport operators. But there are also private operators, nationalised industries and so on. Like RSG, TSG is intended to help local authorities in financing the subsidies and grants they pay to operators. Neither RSG nor TSG is paid direct to the operators themselves. For this reason they would not normally be consulted about changes in the method of grant-aiding local authority expenditure. Operators are, of course, consulted about grants—like New Bus Grant—which are paid direct to them by Government. But the main point is that we shall continue to discuss with the local authority associations any proposal we have for changing TSG.
I recognise the concern the noble Lord expresses, as he has done on a number of occasions throughout this Bill, particularly on this point. I have tried to assuage his fears by saying what I have said, and I still think those fears are unnecessarily borne; I do not think there will be the problem he anticipates. I recognise that that is not the same as not having the amendment in the Bill; how could it be? Nevertheless it is a question of a view, a judgment, and I hope the noble Lord will at least accept the position as I see it at the present time.
Lord UNDERHILL: My Lords, I naturally accept the statements made by Lord Bellwin. The problem is that the Government may take a slightly different view eventually from that expressed by the noble Lord here tonight. Our fears are that in any attempt at cutting down this may be one item the Government see the possibility of cutting, by abolishing TSG, merging it in some form of block grant, and we may find that a handicap to our
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transport needs. But in view of the statement made by the Minister and the lateness of the hour, I will beg leave to withdraw the amendment, making quite clear that we on this side, and I am certain many on the Government side as well, consider that the question of TSG is tied up very closely with the important question of road passenger transport and transport needs in general. We shall, therefore, be watching any orders very closely. I hope the consultations the Minister says will continue will have regard to the point we are making in this amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 82A not moved.]
10.40 p.m.
Clause 49 [Introduction of new system of rate support grants]:
Baroness DAVID Baroness DAVID moved Amendment No. 84:
Page 45, line 14, at end insert—
(" ( ) The commencing year for the purposes of this part of the Act shall not begin earlier than 1st April 1982.").
The noble Baroness said: My Lords, I beg to move Amendment No. 84. The proposals set out in Part VI of the Bill are opposed still, I think, by all the local authority associations. If a block grant system is to be introduced it should not be done hurriedly and before the system has been fully developed or, indeed, before its complexities are fully understood. The associations are concerned that the grant-related expenditure assessments which will underly the new grant system are very suspect. They have all, for varying reasons, expressed serious concern about the quality of the assessments, and for that reason it seems sensible to ask the Government to delay the implementation of this Part of the Bill for at least one year to enable the worst defects of the grant-related expenditure assessments to be overcome. Even the Minister in Committee admitted at col. 632 of the Official Report on 9th October that there would be some
"rough edges which will need improvement once the system is in operation".
Would it not be wiser to do some smoothing of the rough edges before rather than after the new system starts?
This Amendment was supported in Committee by the noble Lord, Lord Sandford, and from the following amendment I presume that it has the support, even though it does not go so far, of the Liberal Benches. I beg to move.
Lord EVANS of CLAUGHTON: My Lords, it may be for the convenience of the House if, in speaking to this amendment, I also speak to my Amendment No. 85 which, as your Lordships will see, is dramatically more radical than that moved from the Labour Benches and is, of course, by referring to 1st April 1984, pregnant with symbolism! First, I am grateful to the noble Lord the Minister for the very helpful and considerate letter which he sent me about an amendment that I moved in Committee in connection with per capita grants. I shall not detain your Lordships on that aspect except to say that I had suggested that per capita grants might be improved or considered on the basis of a weighted per capita grant. That is the only point to be made in that connection.
However, I think that there are strong arguments for delay of the introduction of the block grant. The general arguments against block grants are well known and have been underlined by a report in today's newspapers of a speech made by the noble Lord's right honourable friend Mr. Geoffrey Rippon, a former Secretary of State, who has spoken most movingly about this subject and about the whole philosophy of the Bill being contrary to Conservative Party philosophy. It will destroy the capacity of individual local authorities to make decisions about what they will spend and the rate that they will raise; it is more obscure and complicated than the system it replaces; and it will increase the dependence of grant on expenditure, which is the opposite to that which the Government say that they desire.
The specific arguments, therefore, for delay in implementing the block grant are threefold. The first is that the Government themselves appear to have little confidence in it. The noble Lord, Lord Bellwin, said in Committee at col. 632, Volume 413 of the Official Report, that he recognised:
"that block grants would probably not be the final solution … to grant distribution, but
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certainly we would expect that it would last for some time until we come up with something better ".
That is not a very enthusiastic way in which to introduce a block grant. It is reminiscent, indeed, of the introduction of the rate support grant itself in 1966 as a temporary measure "to prop up the present system" again until something better came along. Instead, rate support grant has, by general consent, become progressively worse, and no doubt this is the reason for the Government's introducing the block grant proposals.
But if we were to have a delay of perhaps one, two or even three years, as I suggest, it would give the Government time to bring forward a considered basis for making Government grants to local authorities which had some hope of permanence and formed part of a general reform of local government finance. Nothing would be lost by continuing the present system, bad as it is, until acceptable changes could be made.
The second argument is that the Government are clearly not ready for this changeover in a technical sense. At an early stage in the consideration of the Bill the Secretary of State said that the regression analysis would not be used in determining grant-related expenditure. He now appears to have discovered that there is no alternative to regression analysis; the schedules on which grant-related poundages are to be based have still not been made public. It was quite wrong of the Government to introduce a measure of this importance when its technical basis is still so very clearly incomplete. As the noble Lord, Lord Bellwin, should well know, no local authority in the country would dare behave as irresponsibly as this.
The third argument for delay is that Ministers themselves are labouring under such misapprehension about the Bill—with the greatest possible respect to the noble Lord the Minister—that they ought to be given the chance to understand it and its implications. I hope that noble Lords will not think that I am being unduly arrogant because the noble Lord, Lord Bellwin, said in Committee, again at col. 625, that the objective of the existing and block grant arrangements is:
" to enable all authorities to provide a comparable level of services for a similar rate in the pound ".

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This he described as the "equalisation principle" and the "pursuit of equity ".
It is true that the same or a similar rate poundage in every authority represents equalisation of a tautologous kind. It does not, however, lead to equality of rate burdens, for the obvious reason that rateable values differ from one part of the country to another, as I mentioned during the Committee stage. There is no equalising there. It might be argued that since rateable values represent wealth, the inequalities in rate burdens are somehow "fair", and that the concept of equity, rather than equalisation, is thus served. But this idea of fairness is scarcely apparent to ratepayers. Figures given in Committee, as I have said, show that the domestic ratepayers of Warwickshire pay an average of £240 a year on their property, and the domestic ratepayers of Tyne and Wear an average of £185 a year. The burdens are certainly not equalised, and can they really be said to serve equality?
Secondly, the Government appear to believe that the block grant arrangements are objective, and this comes back to an argument which we had at an earlier amendment. For example, at col. 591 the noble Lord the Minister said that the notional uniform rate:
"is the product of arithmetic, not of judgment".
This I submit is not the case. While there is arithmetic in it—indeed, a very complicated regression analysis is suggested—the factors which go into the analysis are matters of judgment and decision. Under the block grant the multipliers which will be used for such purposes as the Secretary of State may determine are also matters of judgment. It is absurd for the Government to claim that the block grant formulae will be the result of pure arithmetic, untouched by human hand or unsullied by human wickedness. There will be judgment and decision at every stage in the implementation of the block grant, and Secretaries of State will manipulate block grant even more than they manipulated the previous arrangements.
Thirdly, I think that the most frightening claim of the Government is that the block grant arrangements are less complex and more open. The noble Lord the Minister said, again at the same volume of Hansard at col. 646:
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"The fact that it looks more complicated even than before is simply due to the point I made earlier. The black box is open, the numbers are on the table, the formulae are on the table and the whole basis is there to be seen".
But the noble Lord the Minister then went on to say that:
"The mind starts to boggle"—
as I am sure your Lordships' minds are all boggling at the moment—
"because one begins then to discuss such things as needs assessment, standard expenditure, grant-related expenditure, national uniform rate, notional uniform rate, uniform rate. One could go on and on, so complex it is".
And he offered not one word of explanation of why this was.
As we discussed earlier, we on this side of the House still do not know what the formulae are. My noble friend Lord Avebury asked that this should be put in some simple form for us to understand. But I think we are entitled to know what will be the formulae used for calculating grant-related expenditure assessments. Will the Minister be able to give an example of an actual rate poundage schedule to be used for a class of authorities in 1981–82? In conclusion—and I apologise for making a long speech at this time of night—I think that the Government should be apologising to us for letting their programme bring us to perhaps the most important part of this Bill at this time of night.
It is the part that most concerns ratepayers, the public at large, local authorities and all local authority associations. The Government think that the block grant would mitigate the defect of the existing system that it relies heavily on actual past expenditure. The noble Lord said in Committee at col. 641:
"The formulae that it produces are a self-fulfilling prophecy … the more an authority spends the higher its assessed needs and the more grant it gets".
This is not quite true. The only part of the existing arrangements that is tied directly to the expenditure of individual authorities is the resources element which makes up only a quarter of the total grant. It is ironical that most of the 14 "guilty" authorities singled out by the Secretary of State do not attract the resources element because of their high rateable values, so whatever has encouraged them to spend it has not been existing grant arrangements.
The irony is that the block grant

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arrangements tie the whole of the grant (not just the resources element) to expenditure, so that in so far as the previous arrangements were objectionable the block grant must itself be equally objectionable, or even more so. In other words, what the Government are doing is tying their grants to expenditure to a greater extent than before, and then trying to mitigate what they believe will be the consequences by removing responsibility from local authorities for the proper management of their finances.
In my humble opinion this is typical of the lack of consideration of the Government in introducing this system. It is significant that there has been no exemplification of the consequences that may be expected from the introduction of the block grant. In Committee I introduced some amendments designed to give some effect to a population based grant, and I had a helpful and interested reply from the noble Lord the Minister. Some of the consequences of this have been worked out in a book called Ten Billion Pounds, the authors of which are Mr. Tyrrell Burgess and Tony Travers, which I think would be useful for consideration. I am glad to say that further work of a more detailed exemplification of their proposals has now been undertaken. It is in these kind of bases that everyone is having to work in more detail to find out exactly what the block grant arrangements will produce, that we are justified in begging your Lordships' House to put off the implementation of the block grant for at worse one year but, better still, for three years so that the implications of the grant system can be properly worked out and that people will know what they are up against and what the provisions are going to be. I should have thought that either the amendment moved by the noble Baroness or my amendment should receive the support, approbation and enthusiastic encouragement from Her Majesty's Government. I support the amendment moved by the noble Baroness.
10.53 p.m.
Lord BELLWIN: My Lords, I suppose I had better deal first with the noble Lord, Lord Evans, and the various points he made. I would start by referring him to what I said before except that he has quoted so extensively that I have to assume that
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he has read it. But from some of the deductions he has made from it, I would have to suggest a further reading might be called for because the key point I made initially was about the complexity of the present arrangements. I only wish that the noble Lord had been as assiduous in pressing the previous Government for an explanation of how rate support grant settlements were arrived at during the five years or so they were doing it as he is now in pressing us.
Lord EVANS of CLAUGHTON: My Lords, owing to the vagaries of the honours system, I have not been here long enough to do that.
Lord BELLWIN: My Lords, I do not know for how long the noble Lord has been there, but I assume that it is longer than I have and he must have been there for some time while the previous Administration were there. Therefore, I hope that for the whole of that time he was pressing them to explain exactly how rate support grant settlement was arrived at. The fact simply is, and it seems I am saying it again and again, that the previous system, based as it was in the main upon the multivariant regression analysis, was so very involved and was so very much a secret within the black box, as I referred to it, that no one did understand it at all. The levers that were pulled produced the answers that you wanted. As I have said time and again, the present system differs from that. Simple it is not, because any system that sets out to distribute grant to equalise among some 450 authorities cannot be a simple calculation. But at least we are going much further than anyone has ever gone before in bringing into the open what it is all about and how it works. Indeed, this will be debated in Parliament in a way that has never taken place before; it was not possible for it to take place because the information simply was not there.
The noble Lord said that the details of the GRE and other aspects of the grant machinery have not been revealed. With respect, I must remind him that the reports of the Grants Working Group, the official central and local government negotiating body, on the mechanics of the new system and the options for the first rate support grant settlement, have been placed in the Libraries of both Houses and thus made

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available. The formula, finally settled, will be published in the Secretary of State's report to Parliament. There is now a greater degree of openness in the whole matter than ever before, and for that we should be commended; it should certainly not be used against the Government.
The noble Lord, Lord Evans of Claughton, then pointed to rate bill discrepancies when we were talking of equalisation. The rate support grant system is concerned with equalising rate poundages, not rate bills; we are equalising the rate of tax, not the local tax bill. He said a Secretary of State could manipulate block grant more than was possible under the existing arrangements, and I have already pointed out that that would not be so. I think, with respect, that he was confusing the notion of uniform rate calculation, which is concerned in the main with the transitional arrangements, with block grant itself, which is a rather different matter, but I can well understand that.
When the noble Lord said that the Government had little confidence in block grant—because I had said we hoped eventually to come up with something better—that was not really fair. One always expects to come up with something better and we have said all along that we would go on trying to improve the system, and that we will do. Because we said that, it is not fair to say that we have no confidence in it. I have referred to the question he raised about obscurity, and I need not go over that again.
As for the points raised by the noble Baroness, Lady David, we discussed this amendment fully in Committee and rejected it. But several speakers have again maintained that the implementation of block grant should be deferred until 1982–83 to enable further development work to take place and to allow for further consultation with the local authority associations on the mechanics of the new system. As I said, and I repeat, I fully acknowledge that we have developed the system at a pace, but I cannot accept that there has been inadequate consultation. There have been extensive and continuous consultations with the local authority associations since the beginning of this year. Besides that, of course, there have been numerous informal meetings between
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Government officials and local authority advisers, as well as regular contacts between Ministers and the leaders of the associations.
At the end of this period the Government's view is clear. As I said in Committee, we believe that a workable system has been developed, a system which will allow an equitable grant distribution to be made for the next financial year. Of course development work will continue. As with any new system there will be some rough edges which will need improvement, but the fact is that the system is in operation. To defer the introduction of block grant would in my view be running away from the problem. The present rate support grant system suffers from serious defects; it is unfair and, by the encouragement it gives to ever higher levels of expenditure, it conflicts fundamentally with our commitment to sustained reductions in public expenditure. It must therefore be replaced at the earliest practicable moment. That moment has now arrived and I must ask your Lordships to reject the amendment.
Baroness DAVID: My Lords, I think the noble Lord protests too much. I should like to remind him of what a noble Lord from his Benches said when we were discussing this matter in Committee, as reported at col. 639 of the Official Report:
"the block grant will be completely and totally complicated—much more complicated than multi-variational regression analysis".
That was said by the president of the Association of County Councils, who added, at col. 640:
"It is a bitter pill that local authorities are being asked to swallow".
I am very sorry that we have not heard that noble Lord speak this evening. We feel very strongly about this matter. We are not in the least convinced by what the noble Lord has said, and clearly the noble Lord, Lord Evans of Claughton, is not convinced, either. So, despite the number of Peers who have come in on the other side, I think I shall press the amendment to a Division.
11 p.m.
On Question, Whether the said amendment (No. 84) shall be agreed to?
Their Lordships divided: Contents, 16; Not-Contents, 67.

CONTENTS

Beaumont of Whitley, L.

Evans of Claughton, L.

Pitt of Hampstead, L.

Birk, B.

Hooson, L.

Ponsonby of Shulbrede, L.[Teller.]

Bruce of Donington, L.

Llewelyn-Davies of Hastoe, B. [Teller.]

David, B.

Stedman, B.

Davies of Leek, L.

Morris of Kenwood, L.

Stone, L.

Elwyn-Jones, L.

Peart, L.

Underhill, L.

NOT-CONTENTS

Airey of Abingdon, B.

Faithfull, B.

Marley, L.

Alport, L.

Ferrers, E.

Monk Bretton, L.

Avon, E.

Gage, V.

Montgomery of Alamein, V.

Bellwin, L.

Gainford, L.

Morris, L.

Belstead, L.

Gibson-Watt, L.

Mottistone, L.

Bessborough, E.

Glenkinglas, L.

Mowbray and Stourton, L.

Boardman, L.

Gowrie, E.

Murton of Lindisfarne, L.

Brabazon of Tara, L.

Greenway, L.

Radnor, E.

Bridgeman, V.

Grimston of Westbury, L.

Renton, L.

Campbell of Croy, L.

Harvey of Tasburgh, L.

Salisbury, M.

Carr of Hadley, L.

Harvington, L.

Sandys, L. [Teller.]

Cathcart, E.

Hatherton, L.

Savile, L.

Chelwood, L.

Hill of Luton, L.

Soames, L. (L. President.)

Colville of Culross, V.

Holderness, L.

Spens, L.

Craigmyle, L.

Hornsby-Smith, B.

Strathcona and Mount Royal, L.

Croft, L,

Kemsley, V.

Torphichen, L.

Cullen of Ashbourne, L.

Killearn, L.

Trefgarne, L.

Denham, L. [Teller.]

Long, V.

Trumpington, B.

Digby, L.

Lucas of Chilworth, L.

Vaizey, L.

Drumalbyn, L.

Lyell, L.

Vernon, L.

Ellenborough, L.

Mackay of Clashfern, L.

Vickers, B.

Elliot of Harwood, B.

Mansfield, E.

Wynford, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
[Amendment No. 85 not moved.]
Clause 50 [The aggregate amount of rate support grants]:
11.8 p.m.
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 86:
Page 47, line 24, at end insert—
(" (4A) The level of expenditure of local authorities on capital account in the (five) years preceding the grant year, and the consequences of that expenditure for authorities' expenditure on revenue account (including debt charges resulting therefrom and the likely costs of staffing and maintenance).
(4B) In taking into account future variations in the level of prices, costs and remuneration under subsection (4)(d) above, the Secretary of State shall have regard to the latest forecasts for movements in indices of prices and of earnings within the national economy produced by the Treasury under the Industry Act 1971, and by the National Institute of Economic and Social Research and other similar bodies.
(4C) A Rate Support Grant Report shall specify:

(i) the level of relevant expenditure upon which the Secretary of State is basing his determination of the amount available for
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grants and the date by reference to which the level of prices, remuneration and other costs is applied for this purpose;

(ii) the estimate of future variations in the level of prices, costs and remuneration taken into account under subsection 4(d) above;

(iii) the differences (if any) between the estimate referred to in (ii) above and those indicated by the forecasts referred to in subsection (4B) above, and the general considerations which have influenced the Secretary of State in arriving at the estimate under (ii) above if such differences exist.").

The noble Baroness said: My Lords, at Committee stage we put this amendment down as a probing amendment and received some qualified support from the noble Lord, Lord Sandford, to the extent that he asked Lord Bellwin whether he would consider it carefully. But then the Minister took exception to the fact that we had limited our named bodies to the National Institute of Economic and Social Research, so we have resubmitted the amendment. We have widened it to include other, similar bodies provided they are independent bodies and the Secretary of State does not just have to rely on Government forecasters and forecasting.
My Lords, we do not want to go over all the ground. I believe the acceptance

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of this amendment could lead to a much fairer settlement on the block grant because everyone will know on which specific considerations it will be based; and whatever guidance is given to the Secretary of State must also be understood by him and by the local authorities. I also think that if the Government were to accept this amendment then it would make it difficult for any Government to deliberately set the grant cash limit at a level which was markedly below that which was required to make adequate provision for the prevailing inflation rates. I beg to move.
Lord BELLWIN: My Lords, the fact is that the Secretary of State already has to have regard to the current levels of pay and prices and likely future movements as they will affect local authorities in the grant year. In so doing he has to consult the local authorities, whose representatives are quick, I assure your Lordships, to draw attention to all factors which they think will affect authorities. Subsection (4C) largely recognises present practice in preparing RSG settlements and reports. The level of relevant accepted expenditure and the price base are specified. So is the general allowance to be made for pay and price movements in the grant year. The present requirements of subsection (4)(d), and the established practice of RSG reports and settlements, already allow a responsible Government to make fair and realistic allowances for inflation during the grant year. We did this for 1980–81 and will be doing the same for 1981–82. With respect, this was more than the previous Government did for grant year 1979–80. I take the point that the noble Baroness makes about the fact that previously there were the limitations to which she referred and they are no longer the basis of the amendment. But I cannot help her with this, and I hope she may feel able to withdraw the amendment.
Baroness STEDMAN: My Lords, I am grateful to the noble Lord. We tried and it did not work. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 87 not moved.]
Clause 51 [The domestic rate relief grant]:
11.12 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 88:
Page 48, line 43, leave out (" determined ") and insert (" calculated ").
The noble Lord said: The use of the word "determined" in Clause 51(2) will require the amount of domestic rate relief grant payable to every local authority to be specified in the rate support grant report under Clause 56(6) of the Bill. This, of course, was never intended and would be quite impossible because the relevant rateable values cannot be precisely known in advance.
On Question, amendment agreed to.
Schedule 9 [Domestic rate relief grant]:
Lord BELLWIN Lord BELLWIN moved Amendment No. 89:
Page 176, line 39, leave out (" determined ") and insert (" calculated ").
The noble Lord said: I beg to move this amendment, for the same reasons.
On Question, amendment agreed to.
Clause 52 [The block grant]:
[Amendment No. 90 not moved.]
Lord BELLWIN Lord BELLWIN moved Amendment No. 90A:
Page 50, line 15, after (" means ") insert (", subject to paragraph 6 of Schedule [Metropolitan Police District] below,")
The noble Lord said: My Lords, I think it will be for the convenience of the House if I were to speak to Amendments Nos. 92B, 94A, 94B and 95A. Amendment No. 94A would insert a new clause in the Bill and that new clause introduces a new schedule. Together they are designed to deal satisfactorily with the special position of the Receiver for the Metropolitan Police District, in a manner which will be acceptable both to the Government and to the local authority associations. As your Lordships will know, the expenditure of the Metropolitan Police is funded partly by specific grant (as with all police expenditure) and partly by a precept on the local authorities, the level of which is set by the Receiver, subject to the approval of my right honourable friend the Home Secretary as police authority. The fact that my right honourable friend is police authority means that, although local authorities

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are fully consulted by the Receiver before the precept is set, they are not in a position directly to influence or control the force's expenditure. It would therefore clearly be wrong if the local authorities in the Metropolitan Police District either suffered, or indeed benefited, under block grant as a result of Metropolitan Police expenditure, and the purpose of the amendments is to ensure that this will not happen. Without going into more detail unless called upon to do so, I beg to move.
On Question, amendment agreed to.
[Clause 53 Determination of grantreletted poundage and grant-related expenditure]:
[Amendments Nos. 91 and 91A not moved.]
Baroness STEDMAN Baroness STEDMAN moved Amendment No. 91B:
Page 51, line 34, at end insert—
(" ( ) The principles on which the grant related poundage and the grant related expenditure are determined shall be such that when an Authority's population increases its grant shall not in consequence decrease.").
The noble Baroness said: At Committee stage the noble Lord promised to look at our amendment to see if population numbers are given as much weight in the calculations as they should be. I handed him a document prepared by the council treasurers in support of my argument at Committee stage. Like the rest of us, he has not had much time since Committee stage to study a book of rather close figures, but I have considered what he said then. In his reply to me at Committee he referred to the fact that the resources element of the rate support grant system responds properly to population change. He is correct, but there is little controversy about this element of the rate support grant which, unlike the larger needs clement, treats all areas equally. But, under the block grant, this element will disappear, and in future it will be the change in standard expenditure or grant-related expenditure given by a highly complex formula which will determine how the grant responds to any democratic change.
I based my arguments previously on Cambridge. I believe this is the first time
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today we have even mentioned Cambridge, for which no doubt noble Lords will be very grateful. But on past formulas the factors did change from year to year. What we are suggesting does not mean that the standard expenditure of Cambridgeshire and similar centres of population will not be able to rise by the amount that is necessary to maintain their services for an expanded population, and it would leave Cambridgeshire with the choice of either reducing the services or increasing their rates. I hope the noble Lord would like to ponder on a question; I do not necessarily expect an answer straight away. How will the standard expenditure per head respond to population growth? If the new population is of identical composition to the existing population, then standard expenditure per head should remain the same. But if the new population is more needy then standard expenditure per head should increase. The worry of Cambridgeshire and counties with fast-growing populations like Cambridgeshire is that, as in the past, population growth may cause standard expenditure per head to fall to a degree which really does defy commonsense. We have found over the years that our population has gone up and our grant has gone down. I beg to move.
Lord BELLWIN: My Lords, when we discussed this amendment at Committee stage the noble Baroness argued that it would be quite wrong if authorities which have increasing populations were to experience a decline in grant. I explained then that this would only be wrong if block grant were to be paid out on the basis of so much per head of population. But this is not the case. Block grant is an equalising grant and authorities receive sufficient grant to enable them to levy the same rate poundage as authorities providing services at comparable levels. This may mean more or less grant for expanding authorities, depending upon how the increase in population affects the overall balance between their needs and resources. I said then that this amendment, by seeking to establish a direct relationship between population and grant, would undermine the equalisation objective of block grant and was incompatible with the block grant system. This remains the case.
The noble Lord, Lord Greenwood, also raised this issue in Committee and I

177
undertook to consider the question of population weighting under the new grant system. This I have now done. It appears that there is no easy answer to this question because of the range of factors involved and because the Government have yet to reach final decisions on the form of next year's grant distribution. With these caveats in mind, it seems that under all the options for assessing authorities' grant-related expenditure considered in the consultations between central and local government upwards of about a half of the value of the assessments is likely to be based on population or population-related factors, such as school pupil numbers and numbers of elderly people, the balance being based on other indicators of relative need between authorities. I must emphasise that this is not a commitment about the amount of grant a growing authority might receive but the best provisional estimate 1 can make at this stage about the extent to which population-based factors may be taken into account in the calculations. As such, I hope the noble Baroness finds it helpful. Certainly it must be the case that population is a very important factor when we consider the expenditure needs of authorities, and we intend that the new grant arrangements will give full weight to it.
11.20 p.m.
Baroness TRUMPINGTON: My Lords, I think I am right in saying that my noble friend the Minister during the Committee stage agreed with me that an increased population did not necessarily result in an increase of resources. Since then I have had the opportunity to check up on this point with regard to the situation. I am sorry to bring back Cambridgeshire, but it was bound to crop up again. Although I use that county as an example, surely the same circumstances must apply to other counties—for instance, Buckinghamshire.
To cite examples: it is true that there will be an increase in ratepayers. But those new ratepayers who are the residents of Cambridgeshire bring with them their grand-fathers, their grand-mothers and their elderly relatives. Hence extra health care is needed. Their children will immediately increase the education costs. Crime, I am told, is significantly increasing and hence extra courts and secure accommodation. In the present economic
178
climate there may be an increase in unemployment. All these and other matters will require extra resources. In due course resources may outstrip expenditure, but not now, especially when Cambridgeshire is still expanding. What I am actually trying to make sure of, when my noble friend replies finally to this amendment, is that when an authority's population increases, it shall not necessarily follow that its grant shall, in consequence, decrease.
Lord RENTON: My Lords, I wish to support the plea by the noble Baroness, Lady Stedman, and my noble friend Lady Trumpington. This amendment is really inspired, I am sure the noble Baroness will agree, by the experience that we had in Cambridgeshire in recent years of rapid increase in population due to five or more town development schemes, the enormous new town development, Peterborough, and a very high natural birth rate. Experience has shown so far that although a rapid increase in population gives rise to increased financial burdens, especially in education, the rate support grants have either not taken account of that or done so two or three years too late.
My noble friend has given us the hope that in the way that the Bill will be administered by his department this factor of population increase will be taken into account. But even he admits that it will be taken into account only to a certain extent. He said 50 per cent. or thereabouts. Whereas in Cambridgeshire the rapid increase has led to such a tremendous increase in educational expenditure, I am wondering whether the undertakings that my noble friend has given about the way in which the Secretary of State intends to operate his new powers will be sufficient. He has said that he is making no commitment, and I think that that is unfortunate.
Also, it did not seem to me, listening as carefully as I could to my noble friend when he was giving his answer rather rapidly, that he answered the question put by the noble Baroness, Lady Stedman, as to how standard expenditure per head will respond to population growth. I still feel in the dark on that important and specific point. I feel that whether this amendment is the right way to do it or not, it should somehow be written into the Bill that it is an obligation on the part of the Government to give not belated effect but immedi-

179
ate effect each year as the matter arises to population increases which have taken place in the previous 12 months. That is the crux of the matter. I hope that my noble friend, who will have an opportunity to address the House again, will bear in mind that if we are to have the services which necessarily flow from rapid population increases, we would wish him to agree that something should be put into the Bill and not merely left to ministerial discretion, as he said, without commitment.
The Duke of ATHOLL: I know nothing about Cambridgeshire—I was an Oxford man myself—but I should like to ask the noble Baroness whether her amendment is not really meant to be situated at the end of line 33 rather than line 34, as published on the Marshalled List. It seems to make no sense at the end of line 34, whereas it would fit in at the end of line 33.
Lord BELLWIN: By leave of the House, may I say to my noble friend Lord Renton that I cannot go any further than I have. The fact is that population is a factor. I indicated that it will be more of a factor than it has been in the past, but it cannot be the only factor and, in my view, it would be wrong to write it into the Bill, because if you can think of a large population in an area of great need and a small population in an area of relative wealth, and then transpose them, you will quickly see why population can never be the only factor in this whole matter of assessing need for grant purposes. That is why, while I tried to explain and indeed to emphasise that we took very much to heart the importance of the point which was made by the noble Baroness, I do not think anyone would want to argue beyond that. I have just given the assurance I have as to the weight the Government propose to attach to this in the future, which is a change from the past, but it cannot be the sole, the major element in the sum.
Baroness STEDMAN: I am grateful to the noble Lord. In passing, I think the noble Duke is right: we have got this in the wrong place, but we obviously all know what we are talking about. I accept what the noble Lord says. I understand the difficulties: we found it difficult enough to find an amendment that might be
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acceptable. I see the dangers of writing into the statute specific groups of people when others' needs may be greater and thus may not get dealt with.
Our problem in Cambridgeshire, so my county treasurer tells me, is that every time we have one of these specific groups of people coming in, we have one single family first, and if we have one child we lose £142 of our grant. When we have a new town expanding at the rate of Peterborough and when we have town expansion schemes in Huntingdon and various other places in the county, it raises tremendous problems. When this all coincided with local government reorganisation in 1974 it raised even more problems, because when we only had money to deal with roofs over heads all the new projects came to Peterborough and we were in the black books of everybody else in the county, because no one else could even get a roof put back on their school if one blew off. Everything had to come into Peterborough. There are tremendous problems over it and I accept in good faith what the noble Lord has said. We shall certainly come back at him after the next one if we feel we have not been fairly treated.
In passing, he rebuked the noble Lord, Lord Evans, earlier for not trying to pester the previous Government about the rate support grant and how it was made up. I started off life in this House by doing that, and all it did for me was to make me a junior Minister in the Department of the Environment! I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 55 [Adjustments of distribution of block grant]:
Lord BELLWIN Lord BELLWIN moved Amendment No. 91C:
Page 52, line 38, leave out from (" authorities ") to end of page 53, line 14, and insert—
(" (4A) Except as provided by subsection (4C) below, the power—

(a) may only be exercised—

(i) in accordance with principles to be applied to all local authorities; or

(ii) in accordance with principles to be applied to all local authorities belonging to the appropriate class; and

(b) may only be exercised for any such purpose as is specified in paragraphs (a) to (d) of subsection (4B) below.

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(4B) The purposes mentioned in subsection (4A) above are—

(a) limiting the change in the amount of block grant payable to an authority for the year from the amount payable in the previous year;

(b) taking account of less than the gross rateable value of an authority or group of authorities in calculating the amount of block grant payable;

(c) reducing, whether in whole or in part, disparities in the rates levied in different rating areas of Greater London other than the Temples; and

(d) any such other purpose as the Secretary of State may determine.

(4C) The power may also be exercised in accordance with principles to be applied to the councils of counties to whose police expenses section 57 of the Police Act 1964 applies (counties falling partly within the Metropolitan Police District).".)
The noble Lord said: My Lords, I should like to make it clear that in moving this amendment I am speaking to Amendments Nos. 91C and 92B on the second Marshalled List, which replace Nos. 92 and 92A, which I shall not be moving.
When I accepted the amendment of the noble Viscount, Lord Ridley, to this clause, I said that I welcomed it in principle but that some technical tidying-up might be necessary. So it has proved, and this is the purpose of this amendment. Except for subsection (4C) of the amendment, which I shall come to in a moment, the amendment is consistent with the purpose of Lord Ridley's original amendment and simply clarifies that all the specified purposes for the use of multipliers must be applied in accordance with general principles, both where they are determined for all authorities or for all authorities in a class.
Subsection (4C)is a technical amendment designed to enable the Government to modify the grant payable to home counties where part of their area is served by the Metropolitan Police rather than the county force. We have already had a discussion on the special arrangements for the Metropolitan Police under block grant on amendment to incorporate the new schedule. My Lords, I beg to move.
Viscount RIDLEY: My Lords, may I just thank my noble friend the Minister for tidying up my amendment, which I gratefully accept.
On Question, amendment agreed to.
[Amendments Nos. 92 and 92A not moved.]
11.31 p.m.
Lord BELLWIN Lord BELLWIN moved Amendment No. 92B:
Page 53, line 33, leave out from ("(e)") to end of line 35 and insert ("were omitted").
The noble Lord said: My Lords, I spoke to this amendment with No. 90A. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 93 and 94 not moved.]
Lord BELLWIN Lord BELLWIN moved Amendment No. 94A:
After Clause 59, insert the following new clause:
("Special provision for Metropolitan Police District
. Schedule [Metropolitan Police District to this Act shall have effect in relation to block grant payable—

(a) to the council of a London borough; or

(b) to the council of a district whose area is wholly or partly within the Metropolitan Police District.").

The noble Lord said: My Lords, I spoke to this amendment with No. 90A. I beg to move.
On Question, amendment agreed to.
Lord BELLWIN Lord BELLWIN moved Amendment No. 94B:
After Schedule 10, insert the following new Schedule:—

SCHEDULE METROPOLITAN POLICE DISTRICT
  PART I

    INTERPRETATION
    1. In this Schedule—

    "gross rateable value", in relation to the Metropolitan Police District, means the aggregate of the rateable values of the hereditaments in that District;

    "rateable values", in relation to hereditaments in that District, means, subject to paragraphs 2 and 3 below, rateable values ascribed to them in the valuation lists on a date to be specified for each year in the Rate Support Grant Report;

    "the Receiver" means the Receiver for the Metropolitan Police District;

    "Receiver's grant-related poundage" means a poundage determined by the Secretary of State and related—

    (a) to a given ratio between the Receiver's total expenditure and the Receiver's grant-related expenditure; or

    (b) to a given difference between his total expenditure divided by the

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    population of the Metropolitan Police District and his grant-related expenditure so divided;

    "Receiver's total expenditure" means that part of the Receiver's expenditure for a year which falls to be defrayed out of the Metropolitan Police Fund and which is not met by any such grant as is mentioned in section 50(7)(a) or (b) above but reduced by the amount of any payments of such descriptions as the Secretary of State may specify which fall to be paid for that year into the Metropolitan Police Fund;

    "Receiver's grant-related expenditure" means a sum determined by the Secretary of State as being the aggregate for the year of the Receiver's notional expenditure having regard to his functions;

    "relevant authority" means—

    (a) the council of a London borough; or

    (b) the council of a district whose area is wholly or partly within the Metropolitan Police District; and

    "relevant portion" means the portion of the Receiver's total expenditure for a year which bears to that total the ratio which the gross rateable value of the area of a relevant authority, or the part of that area within the Metropolitan Police District, bears to the gross rateable value of that District.

    2. The reference to hereditaments in the definition of "rateable values" in paragraph I above includes a reference to a notional hereditament which a body is treated as occupying by virtue of any enactment.
    3. A Rate Support Grant Report may provide that for the year to which it relates the rateable values of hereditaments in the Metropolitan Police District falling within any class of hereditaments shall be ascertained for the purposes of this Schedule otherwise than by reference to the values ascribed to them in the valuation lists.

PART II

  SPECIAL PROVISIONS RELATING TO BLOCK GRANT
  calculation of block grant
  4. Paragraph 5 below shall have effect in relation to the calculation of the amount of block grant payable to a relevant authority instead of section 52(6) above.
  5.—(1) The amount of block grant payable to a relevant authority is the aggregate of the two amounts specified in sub-paragraphs (2) and (3) below.
  (2) The first amount is an amount calculated by deducting from the relevant portion of the Receiver's total expenditure for the year the product arrived at by multiplying the Receiver's grant-related poundage by the gross rateable value of the authority's area, or, if their area is not wholly within the Metropolitan Police District, by the gross rateable value of that part of their area which is within that District.
  (3) The second amount is an amount calculated by deducting from the total expenditure to be incurred by a relevant authority during the year—
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  (a)the relevant portion of the Receiver's total expenditure for the year; and

  (b) the product arrived at by multiplying the authority's grant-related poundage by the gross rateable value of their area.

  Special meaning of "grant-related poundage"
  6. For the purposes of this Part of this Act, section 52(8) above shall have effect, in relation to a relevant authority, as if in the definition of "granted-related poundage" the references to total expenditure were references to total expenditure after deducting the relevant portion of the Receiver's total expenditure for the year.
  Adjustments of distribution of block grant to relevant authorities
  7. The distribution of block grant to relevant authorities shall be adjusted in accordance with paragraph 8 below instead of section 55 above.
  8.—(1) Subject to the following provisions of this paragraph, the Secretary of State may provide in a Rate Support Grant Report that the amount to be deducted under paragraph 5(2) or (3) above in respect of block grant payable to a relevant authority for a year shall not be the relevant product but that product multiplied by a multiplier determined by the Secretary of State.
  (2) In sub-paragraph (1) above "the relevant product" means the product mentioned in paragraph 5(2) or (3) above, as the case may be.
  (3) Except as provided by sub-paragraph (4) below, the power conferred by sub-paragraph (1) above may only be exercised in relation to either of the relevant products for the purpose of increasing the amount of block grant payable to a relevant authority.
  (4) The power may be exercised for the purpose of decreasing the amount of block grant payable to a relevant authority if the Secretary of State is satisfied that there will be an unreasonable increase, unless he exercises it, in the amount of block grant payable to the authority for a year compared with the amount payable to them for the previous year.
  (5) The power may only be exercised in relation to the product mentioned in paragraph 5(2) above so as to determine one multiplier and to determine it in accordance with principles to be applied to all relevant authorities.
  (6) The power may be exercised in relation to the product mentioned in paragraph 5(3) above so as to determine different multipliers for different relevant authorities.
  (7) The power may only be exercised in relation to that product—

  (a) for any such purpose as specified in paragraphs (a) to (d) of section 55(4B) above; and

  (b) in accordance with sub-paragraphs (8) to (11) below.

  (8) The power may be exercised in accordance with any principles to be applied under section 55(4A)(a)(i) above to all local authorities.
  (9) In relation to relevant authorities who are the councils of non-metropolitan districts the power may be exercised in accordance with any principles to be applied under section 55(4A)(a)(ii) above to all councils of non-metropolitan districts.
  (10) In relation to relevant authorities who are councils of inner London boroughs the power may be exercised in accordance with principles to be applied to all such councils.
  (11) In relation to relevant authorities who are outer London boroughs the power may be exercised in accordance with principles to be applied to all such councils.
  (12) If the Secretary of State exercises the power in relation to either of the products, the principles on which he exercises it shall be specified in the Rate Support Grant Report.
  (13) In its application to block grant payable to a relevant authority for the commencing year sub-paragraph (4) above shall have effect as if there were substituted for the reference to the amount of block grant payable to the authority for the previous year a reference to an amount determined by the Secretary of State.
  Supplementary reports
  9. In the application of section 57 above to the Receiver's grant-aided poundage and the Receiver's grant-related expenditure subsection (5) shall be omitted.
  Adjustment of block grant total
  10. Section 58(3) above shall have effect in relation to relevant authorities as if for the purpose of making a fresh calculation of the entitlement of each relevant authority to block grant it authorised the Secretary of State to substitute the total of the Receiver's expenditure actually defrayed out of the Metropolitan Police Fund for the figure calculated under paragraph 1 above as the part of the Receiver's expenditure which falls to be defrayed out of that Fund").
  The noble Lord said: My Lords, I spoke to this amendment with No. 90A. I beg to move.
  On Question, amendment agreed to.
  Clause 60 [Adjustment in connection with education etc.]:
  Lord BELLWIN Lord BELLWIN moved Amendment No. 95:
  Leave out Clause 60.
  The noble Lord said: My Lords, the present Clause 60 sought to apply the pooling provisions of the Local Government Act 1974 subject only to a simple change in nomenclature. This has since been found to be inadequate, and new Clause 59 was inserted into the Bill at Committee stage to replace Clause 60. Clause 60 should therefore be left out of the Bill. My Lords, I beg to move.
  On Question, amendment agreed to.
  Clause 61 [Submission of information]:
  Lord BELLWIN Lord BELLWIN moved Amendment No. 95A:
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  Page 56, line 10, leave out ("60 above") and insert ("[Special provision for Metropolitan Police District] above and to Schedule [Metropolitan Police District] to this Act").
  The noble Lord said: My Lords, I spoke to this amendment with No. 90A. I beg to move.
  On Question, amendment agreed to.
  Clause 63 [Changes in rateable values]:
  Lord BELLWIN Lord BELLWIN moved Amendment No. 96:
  Page 57, line 2, leave out ("determined") and insert ("conclusively calculated").
  The noble Lord said: My Lords, this is a technical amendment. The use of the word "determined" in this clause suggests, quite wrongly, that the amount of block grant payable to a local authority for any year will actually be specified in the rate support grant report. The use of the words "conclusively calculated" is consonant with Clause 62(2), which requires the Secretary of State to make a conclusive calculation and notify the result to each local authority. My Lords, I beg to move.
  On Question, amendment agreed to.
  Lord SANDFORD Lord SANDFORD moved Amendment No. 96A:
  After Clause 65, insert the following new clause:
  ("Grants in respect of rate relief for buildings occupied for charitable purpose
  . For the year beginning 1st April 1981 and each subsequent year the Secretary of State shall pay out of money provided by Parliament to any authority giving relief from rates under section 40(1) of the General Rate Act of 1967 (mandatory relief for charities) in that year a grant equal to 100 per cent. of the aggregate amount of relief given.")
  The noble Lord said: My Lords, in moving this amendment I should declare an interest, because it was first proposed to me by the City of Westminster, one of whose ratepayers I am. It concerns a cost to the ratepayers of no less than £4·3 million, and I shall be very directly benefiting if we succeed in getting the amendment accepted. But the principle has since been strongly supported by the Association of District Councils. It has to do with the relief in rates accorded to properties occupied for charitable purposes, and it seems to me that if relief can be given in the case of properties occupied by the disabled, then there is certainly a case in logic for relief to be given in respect of properties occupied by charities.
  There is a mandatory requirement under the General Rate Act 1967 on all rating authorities to afford relief to those charities. My contention is that when relief is so given, those authorities should be fully compensated for the relief that they give in accordance with that Act and in accordance with any other discretion that they exercise on top of it. The national status of charities—it is not a local matter—and the properties that they occupy fall quite arbitrarily. The national charities are concentrated rather heavily in the City of Westminster, and the fact that the City of Westminster has rather more resources than most other local authorities should not, in my view, be a reason barring them from the receipt of this relief, or barring any other local authority that happens to house a considerable number of charities. I beg to move.
  Lord BELLWIN: My Lords, I am in absolute sympathy with the new clause, but when one looks closely at this matter it can be seen that the case for a specific grant of this kind is at best a marginal one. Under the resources element of the present rate support grant, almost all rating authorities receive compensation for the relief that they must give. Under our new block grant, even more authorities will receive compensation. There will only be a handful of authorities at most which do not receive grant because they have such large resources of their own. That would appear to give adequate recognition to the authorities' loss of income.
  It is true that this compensation is given within the total of rate support grant, whereas under Clause 65 the new relief to the disabled is to be compensated outside rate support grant. That, however, reflects the innovation of a new form of rate relief to the disabled, only operative from 1st April 1979. In that case a new specific grant serves to give encouragement to local authorities to get the new scheme off to a flying start.
  Charities relief is different. It is long-established and no relief at all was given until 1978. In our view it is entirely reasonable that a form of relief as well established as this should be compensated for by redistribution within the rate support grant total. Finally, I should mention
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  the question of expense. To create a new grant as proposed would cost some £35 million a year.
  Lord SANDFORD: My Lords, that is all very well, but the bill is large when it is totted up, and this falls much more unfairly and unevenly on the local authorities than it does on the central Exchequer. I cannot say that this is a particularly convincing argument, but at this hour of the night I shall not press the amendment but will beg leave to withdraw it.
  Amendment, by leave, withdrawn.
  [Amendment No. 96B not moved.]
  Schedule 11 [Prescribed expenditure under Part VIII]:
  11.37 p.m.
  Baroness STEDMAN Baroness STEDMAN moved Amendment No. 96C:
  Page 182, line 9, leave out sub-paragraph (c) and insert—
  ("(c) the improvement or laying out of land other than the reclamation of derelict, neglected or unsightly land;").
  The noble Baroness said: My Lords, Clause 113 of the Bill extends the powers to make grants for the reclamation of land. Unfortunately, the very future of this reclamation programme is under threat because the expenditure upon it will have to be part of the capital allocation for an individual authority. Thus reclamation will have to compete with many other proposals in the same block within that allocation. Local authorities over the years have got a proven record of effective and substantial reclamation of derelict land, and I believe it would be a disaster if this were to change.
  The Government's intentions so far on this point are all the more paradoxical because in the same Bill they also emphasise the importance of identifying and making surplus land available. Much of the land in the metropolitan and in the older urban areas is land which needs to be reclaimed, and such land must take first priority. But national resources are essential over and above the capital spending allocations that will be granted under the powers embodied in this Bill I beg to move.
  Lord BELLWIN: My Lords, when expenditure on the reclamation of derelict

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  land was discussed in Committee, I tried to express my own conviction of the immense importance of this kind of work. I also tried to make it clear that the Government have no intention of withdrawing the 100 per cent. grant which is available to support local authorities' efforts to clear land which has fallen into disuse and dereliction. The amendment seeks to make special provision for this kind of expenditure by removing it from the control system altogether. In effect, we would be saying to local authorities—"The total amount that you spend on housing, education, transport, personal social services, libraries, sport and recreation, old people's homes and most of your other functions must not exceed such and such; but on derelict land reclamation, you can spend as much as you like and we shall do nothing to keep that spending within bounds".
  My Lords, I have asked myself whether that exclusion would be to the advantage of anybody. Obviously, it would result in an increase in the amount of derelict land clearance being practised by local auththorities. But think of the other inevitable implications. If the amount of public expenditure on derelict land reclamation goes up, then we must take steps to see that public expenditure on all other local authority services goes down by the same amount. The only way in which we could do that would be to reduce the expenditure allocations to be made for all the other services. That would not only reduce authorities' discretion to decide for themselves on which services to spend the resources that are available to them—it would be grossly unfair on authorities with no derelict land problems, who would find themselves with less resources with which to undertake other services which may be just as beneficial and socially desirable as derelict land clearance. I continue to believe that the disadvantages of accepting this amendment would outweigh the advantages, superficially attractive though the latter may be, and I wonder whether the noble Baroness may therefore feel able not to press this amendment?
  Baroness STEDMAN: My Lords, my Chief Whip says that the noble Lord's sweet smile is irresistible and therefore I must withdraw.
  Amendment, by leave, withdrawn.
  Lord BELLWIN Lord BELLWIN moved Amendment No. 97:
  Page 182, line 11, at end insert—
  ("(dd) the repair or maintenance—

  (i) of land (including dwelling-houses and other buildings) held under Part V of the Housing Act 1957; and

  (ii) dwelling-houses held otherwise than under that Part of that Act,

  to the extent that the expenditure is defrayed by borrowing;")
  The noble Lord said: My Lords, this amendment brings within the scope of "prescribed expenditure" such repairs to housing as are financed by loans known normally as "capitalised repairs". It thus aligns the Bill with current practice in the housing sector. The capital allocations which my right honourable friends the Secretary of State for the Environment and Wales make at present under the Housing Investment Programme system cover "capitalised repairs", and it is our intention that this established practice, already familiar to local authorities, should continue. I hope that noble Lords will accept that this is a sensible amendment designed both to maintain continuity and to fit in with the new housing subsidy system. I beg to move.
  On Question, amendment agreed to.
  [Amendment No. 98 not moored.]
  Lord EVANS of CLAUGHTON Lord EVANS of CLAUGHTON moved Amendment No. 98A:
  Page 182, line 23, at end insert—
  (" Expenditure in connection with the reclamation of derelict land which is to be grant aided by the Secretary of State under the provisions of the Local Government Act 1966, as amended by the Local Employment Act 1972 and this Act, shall not be prescribed expenditures for the purposes of this Part of this Act.")
  The noble Lord said: My Lords, at this late hour I do not think I need any encouragement from your Lordships to be as brief as possible. The reason I have once again to move this amendment, which is couched in the same terms as the amendment I moved in Committee, is that in a very charming letter the noble Lord the Minister admitted that, like me, he had misunderstood the position. This appears at col. 777 of Hansard. I think at that time it was believed by the noble Lord that the whole allocation system would be based upon local authorities making a hid. Those bids for derelict land grants would be considered on their merits and, as such, Merseyside

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  having a very considerable derelict land problem, this would be reflected in the eventual allocation.
  I understand that the position as described in the debate at the Committee stage is, in fact, wrong. The bid system will work for four out of the five proposed blocks, but there is an exclusion on the "other services" block, under which derelict land is one of the headings.
  I understand that the department of the noble Lord the Minister have confirmed that the Association of Metropolitan Authorities will be given a total allocation based on the public expenditure White Paper Guidelines for Capital Expenditure on those services falling within the "other services" block. As I understand it, the Association of Metropolitan Authorities would then derive a distribution formula for a distribution between its constituent members; in other words between metropolitan councils.
  Therefore, I think it will be seen that the Association of Metropolitan Authorities with the best will in the world are unlikely to be able to introduce a degree of objectivity in making allocations based on the objective need for derelict land treatment by some of their members, and will inevitably be restricted to a crude population/past spend apportionment which would be grossly unfair (I apologise for the technicality of this) to a metropolitan county council which has a special derelict land problem, as Merseyside does with the considerable dereliction left over from the 19th century and, for historical reasons, not dealt with. I think your Lordships are probably aware that areas such as St. Helens and other inner urban areas of Liverpool have an enormous and probably unique dereliction problem which has been reflected in the 100 per cent. grants made available.
  The fear of the Merseyside County Council is that this advantage they receive because of the peculiar nature of their problem will be lost because allocation in future will be on a crude population basis. I wonder if I could get some kind of assurance from the noble Lord the Minister, who, I understand, to be very sympathetic to the problem I have outlined. I beg to move.
  Lord BELLWIN: My Lords, this amendment is very closely related to Amendment No. 96C. I do not think that your Lordships would thank me for repeating at length my reasons for believing that it would not be right to exclude from control expenditure on derelict land clearance. The fact that this expenditure is grant-aided, in some cases up to 100 per cent., is strictly speaking irrelevant, because the main objective of Part VIII of the Bill is to introduce an effective, fair means of keeping local authorities' total capital spending within planned levels, no matter whether the expenditure is financed out of Government grant, local rates, borrowing, leasing or whatever other source of money.
  In my judgment, it is right that under the new system of capital expenditure control, each local authority should be free to spend up to an overall ceiling on whatever services they themselves choose—it is not for central Government to make up local government's mind about what services are more or less deserving of support than others. Of course, I believe in derelict land clearance and I would like to see more of it. But local decisions should be taken locally. I am not prepared to accept the reduction of local democracy which this amendment would entail. I am sure it is not at all what the noble Lord, Lord Evans, intends, knowing him and his involvement in local government as I do. But I think that would be the effect of it, and I hope he will feel able to withdraw it.
  Lord EVANS of CLAUGHTON: My Lords, at a quarter to twelve at night suppose I am not left with very much choice. Perhaps I have acquired the contagion of the Government, who claim to be in favour of local independence and then produce legislation which is not that way. I suspect that in my concern for the problems of Merseyside I have departed from my principles about equality, but I feel very deeply that areas with special difficulties, such as Merseyside has with dereliction, should have special treatment. But in the circumstance and because of the hour and the fact that I value my life—and I recommend Lord Bellwin, if he values his, not to come to Merseyside—I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Lord DENHAM: My Lords, I think we have probably reached the stage where it might be right to adjourn consideration of the Bill.
  I beg to move that further consideration on Report be adjourned.
  Moved accordingly, and, on Question, Motion agreed to.