Local Government Finance (No. 2) Bill

HL Deb 10 June 1982 vol 431 cc361-89

Further considered on Report.

Lord Beliwin moved Amendment No. 24: After Clause 7, insert the following new clause: (" Certification of information submitted by local authorities. 1980 c. 65.

. The Secretary of State shall have power to require any information submitted to him by a local authority under section 65(1) of the Local Government, Planning and Land Act 1980 (information for purposes of block grant) to be certified under arrangements made by the Audit Commission established under Part III of this Act.").

The noble Lord said: My Lords, in moving Amendment No. 24, I am also speaking to Amendment No. 54 which makes a consequential change in the Long Title of the Bill. This is a minor, and I hope uncontroversial, amendment, designed, quite simply, to allow the present arrangements for the certification of block grant claims to continue under the Audit Commission.

There is, I imagine, general agreement that the final calculation of grant entitlements must be based on audited figures. No Government could allow public money to be distributed without a formal independent check on the figures on which entitlements are based. In the past, arrangements have been made for the district auditor to certify rate support grant claims. This has not only provided the necessary audit check on the figures; it has also provided a means of ensuring that all claims are made on a consistent basis. These arrangements have proved wholly satisfactory, and it is in the interests of both authorities and the Govern ment for them to continue; there can be no argument about the importance of consistency of treatment in the distribution of grant. The provision is needed to give a specific statutory basis to what it has hitherto been possible to do by administrative arrangment. Consistency and continuity can be achieved in the future by arranging for the Audit Commission to certify claims in the same way as the district auditor does at present. This, quite simply, is what the amendment provides for, and in moving it I commend it to your Lordships.

Lord Bruce of Donington

My Lords, I willingly concede to the noble Lord the necessity of making new arrangements, following the appointment of the Audit Commisson, for the continuation of audit policies that have hitherto taken place under the audit directorate. As the noble Lord has said, this is undoubtedly a matter of some importance—so much so that one wonders why it was not in the Bill in the first place or why, if it is so important, it was not introduced at the Committee stage. But I suppose we cannot cavil at that. The noble Lord's department has been under considerable pressure—as have all departments. However, it lends some colour to the belief that we have expressed from time to time, and shall probably express again at Third Reading, that this Bill has been very hurriedly cobbled together. This matter is of such importance that of course it should have been incorporated in the original Bill. It does, however, raise certain questions.

When the noble Lord takes power for the certification to be made by the Audit Commission he is placing on the Audit Commission, which is no longer his creature, as was the district audit directorate, a new responsibility. What kind of discretion are they going to have? They will have to appoint auditors for this purpose. Will they have complete discretion to appoint one of their own staff, a former member of the Audit Inspectorate, to do the job? Or are they going to ask the auditor ultimately appointed to audit the authority's accounts to do the job? If the latter is the case, obviously it is convenient. It means that the auditor responsible for the audit of the authority's accounts under the provisions of Part I II of the Bill will also have the responsibility of certifying certain information provided to the Secretary of State. Obviously this would be convenient and would probably avoid duplication. It is highly desirable that any auditor appointed to audit the accounts of the authority should be able not only to audit its expenditure but also, as is customary in private industry and elsewhere, to audit its receipts.

Is the noble Lord therefore saying that in addition to the responsibilities under Clause 10 of the Bill which the auditor ordinarily has he is to have the additional responsibility of certifying the information necessary for the determination of block grant? If he is not to have that responsibility and it is to be a responsibility of the former district auditor—presumably recruited, under the provisions of Schedule 2, on to the staff of the Audit Commission—that is one thing. If it is to be the same auditor as audits the authority's accounts, that is another. We should be greatly obliged if the noble Lord could inform us about that, because there are other implications.

The noble Lord will recall that at the Committee stage, and roughly paralleling the penalties that were to be imposed on auditors if they gave away confidential information, I sought to introduce an amendment which made it an offence for any local official of a local authority or one of his servants to give false information to the auditor. However, the noble Lord was quite explicit in his reply and I deeply sympathise with it. He said that cases of this kind simply do not arise; no official of a local authority would dream of giving false information to an auditor; consequently, the introduction of the penal clause, as proposed by me, to parallel the clause already operating in the event of a deficiency of auditors was unnecessary. So I am bound to ask the noble Lord, applying the same criteria, why he should not be able to rely upon the accuracy of the information provided to him by the officials of the local authority. Obviously, in his view, it requires an audit. That is all very well.

The information required under Section 65(1) of the Local Government, Planning and Land Act 1980 to which the amendment refers says this: each local authority shall submit to the Secretary of State or the Minister of Transport in respect of each year, by such date as he may specify, such information as he may from time to time require for the purposes of sections 53 to 64 above and to Schedule 11 to this Act in connection with the total expenditure to be incurred by them during the year". As your Lordships are aware, the matters covered by Sections 53 to 64 are very wide indeed.

Could the noble Lord give the House in the case of an average local authority (if, indeed, such an animal there might be) or, shall we say, an average metropolitan borough, some idea of the number of hours per annum which are spent by that authority upon providing the Secretary of State with the information that he requires? It would be useful to obtain that information because then we should know approximately how many man hours are required in order to audit the information that is sent to him. I am sure he will be able to reply to that.

This brings me to a larger question, which I hope will not be dealt with before Second Reading by the introduction of a further amendment bringing the Bill up-to-date. Which reminds me—what is going to happen to the Audit Inspectorate anyway? Under Schedule 2 to the Bill the noble Lord has given the Audit Commission the power to recruit such members of the Audit Inspectorate as now exist. I have no doubt that in conformity with the Government's commitment, which some of us think is sometimes half-hearted, to full employment, presumably most of the members of the Audit Inspectorate, whether they are at Bristol or elsewhere, will be absorbed into the Audit Commission—in which case, what is going to happen to the entire organisational structure of the Audit Inspectorate? How are surpluses or deficits on the existing Vote at the time of transfer going to be dealt with? How is the establishment going to be dealt with? These are other questions which have not been dealt with so far in this Bill, but which obviously arise from the latter thoughts of the noble Lord.

That leads me to a further question. If there has been an afterthought in respect of the audit responsibilities in regard to the provision of information in Section 64(1) of the Local Government, Planning and Land Act 1980, what about the responsibilities under other sections of the Local Government, Planning and Land Act which have not so far been mentioned in the current Bill? Are we going to have further afterthoughts? What about the audit information that has to be provided under Sections 10, 11, 12, 13, 14, 15, 16 and 17 of the Local Government, Planning and Land Act 1980? Are they going to be separate audit arrangements for them, or will they come under the ambit of the Audit Commission? We do not want anymore afterthoughts on this.

Finally, under Section 62(3) of the Local Government, Planning and Land Act 1980, which comes within the ambit of the amendment because Section 65 refers explicitly to the previous sections that I have mentioned, states: The Secretary of State may, for the purpose of the adjustment required by this section, make a fresh calculation of the entitlement of each local authority to block grant, substituting the total expenditure actually incurred by that authority during the year for the figure calculated as the authority's total expenditure under Section 56 above". The question I wish to ask the noble Lord is, is the Audit Commission going to be invited to check the Secretary of State's calculations? It is not only the local authorities who want watching—it is also the Secretary of State. Secretaries of State have been known to behave somewhat capriciously. In fact, they have been known to behave benignly towards some of the shires. They are capricious people, evidently. If it is a good thing for the accounts of local authorities to be audited, and if it is a good thing for the information provided by local authorities to the Secretary of State for grant determination purposes also to be subject to audit then why, in order to protect the interests of local authorities (of which the noble Lord is such a devout if nostalgic supporter), should not the Audit Commission be required to check the Secretary of State's own calculations? These are important matters.

We on this side of the House do not resist the amendment which the noble Lord is putting forward. He is seeking to continue the same kind of arrangements which have been in force in the past. But he himself has brought a new situation and a new perspective into the picture. Instead of the Audit Inspectorate which was formerly responsible to him and which appears in his own departmental directory, he has created a new creature which is an independent Audit Commission—and which he assures us repeatedly is completely independent in order that the public may be safeguarded. But justice is a two-way traffic. The noble Lord has taken powers to ensure that justice is accorded to his department. He gets every conceivable kind of return under the Local Government, Planning and Land Act 1980 and under numerous other Acts, including this proposed one. He has all the information at his disposal—it is all checked and audited. What about the decisions that he makes? What about the calculations that he makes? Should they not be subject to audit also? In logic, there would appear to be no reason why they should not be. In order that we may not have to return, perhaps even more vigorously, on Third Reading to this very aspect of the matter which the noble Lord has unearthed—and for which we are in- deed grateful—I hope the noble Lord will be able to answer some of the questions which I have posed to him.

Lord Bellwin

My Lords, I do not know whether the noble Lord's suggestion that he may have to return to the charge is a threat or a promise. When he said that he may have to do more vigorously—well, he was not doing so badly this time, was he? I think he does himself less than justice when he talks about my having afterthoughts. There was he, the great advocate, asking, "Will you take this away to consider it? Will you look at it again?" And when we do so and come forward with something, he then complains that we are having afterthoughts. The noble Lord really cannot have it both ways and must make his mind up on what it is he really wants.

In fact, of course, the observations made by the noble Lord, Lord Bruce of Donington, were in the main very valid. Indeed, in a section of the Bill dealing with a technical subject on which the noble Lord clearly has expert knowledge, he is quite right to question and raise the points he has. The fact that 1 do not agree with most of them is perhaps secondary. Nevertheless, he is right to bring them up and I hope I will be right to knock them down if I think they are wrong.

I will try to answer at least some of the points he raised. I cannot cover all of them—how could I, because no one could write as fast as the noble Lord spoke and get it down. But if there is anything I do not cover which continues to trouble the noble Lord, he knows that all he has to do is get in touch or I will get in touch with him afterwards. The noble Lord asked what is going to happen to the Audit Inspectorate. The staff of the district audit will generally transfer to the commission. It will be for the commission to decide the staffing structure, but no doubt it will have regard to the present arrangements. Certainly, everyone has paid tribute to the quality and calibre of the people who come to work in the district audit service.

The noble Lord also made a point about the cost of auditing the block grants. Your Lordships may be interested to know that the cost of auditing rate support grant claims is something less than £100,000 for the whole country at present, and I do not anticipate that it will be significantly if at all greater in future. As the amendment does nothing more than make statutory provision for the present certification arrangements to continue under the Audit Commission, how naive I was (was I not?) when I said in introducing the amendment that this would prove wholly non-controversial. Non-controversial it may he, but the noble Lord, Lord Bruce of Donington, found plenty to talk about.

The noble Lord said the Secretary of State will want watching. Well, I hope that all Secretaries of State always want watching, need watching. That is what I understand the PAC is all about and the Comptroller and Auditor General. The noble Lord knows much more about it than I do; he was in another place, so he should not ask me who will overlook a Secretary of State. He knows the extent to which Secretaries of State are accountable and have to be the whole time.

The noble Lord made a point about false statements. All sorts of things require an audit for reasons of conventional propriety, but questions of false statements are a different point. The purpose of this certification is simply to assure the Secretary of State that central Government grants are properly disbursed. There surely is nothing surprising in that; I am sure your Lordships would expect it. I am not going to make a meal of it. We are in technical country now. if I have not covered any point the noble Lord thinks really ought to be brought out again, 1 will certainly do so. I am glad that in principle he accepts that this is an improvement on what we are proposing.

On Question, amendment agreed to.

Baroness Gardner of Parkes moved Amendment No. 25: After Clause 7, insert the following new clause: (" Block grant for Receiver for the Metropolitan Police District. .—(1) Schedule (Block grant: Receiver for the Metropolitan Police District) to this Act shall have effect for enabling block grant to be paid to the Receiver for the Metropolitan Police District. (2) This section has effect for any year beginning on or after 1st April 1983.").

The noble Baroness said: My Lords, I beg to move the amendment standing in my name. I would like to point out that I would have put this amendment down at Committee stage, but, as your Lordships will remember, there was a change of date; we had a Falklands debate on the date that had been arranged. This is why I have brought it forward at this late stage.

This is very much a matter of common sense. It is the London Boroughs Association that have particularly asked me to move it, because this is a situation which affects all the London boroughs, and uniquely only the boroughs that are involved in the Metropolitan Police area; in no other part of the country is a similar situation in existence. This amendment, if accepted, would make it much more simple for the local authorities to estimate the rate that they need to raise in the year. At the present time the estimates of block grant are continually changed throughout the year, and it means that if they estimate that they might get less grant, they might need to raise a greater rate; if it works the other way, that they are expecting more in block grant and do not get it, then they find themselves short of finance and having to clip into reserves or raise funds in some other way. This is really a very simple amendment but it would make a very big difference to the authorities involved, and I would ask the House to support it.

To save speaking at a later stage, I would mention that there would be consequential amendments, Nos. 44, 50, 52 and 54. They are simply a matter of tidying up the procedures and they would come up at a later stage. But at the moment I beg to move Amendment No. 25.

Lord Bellwin

My Lords, may I start by thanking my noble friend, not only for what she has said and the clear way in which she said it, but for the brevity with which she said it, which is most appreciated at this hour. This is, as she said, a complex series of technical amendments moved on behalf of the London Boroughs Association. They follow a similar one moved during Report stage in another place. My honourable friend the Under-Secretary of State said on that occasion that, although he could not accept the new clause then proposed, he would look at it closely and consider the problem that had been raised.

I am happy to say that the Government have honoured my honourable friend's undertaking and that we can accept these amendments in the form in which they are now moved by my noble friend. I have in front of me a long, detailed list of reasons why we are happy to accept these amendments, but I suspect I would not be too well received if I went into it. However, if anyone would wish for more information I will certainly give it. Otherwise, I happily confirm our acceptance of this amendment.

On Question, amendment agreed to.

Clause 8 [Establishment of Audit Commission]:

8.25 p.m.

Viscount Ridley moved Amendment No. 26: Page 7, line 25, leave out from (" State ") to end of line 27 and insert (", of whom two shall be nominated by the Association of County Councils; two by the Association of District Councils; two by the Association of Metropolitan Authorities; and the rest shall be appointed after consultation with ").

The noble Viscount said: My Lords, we have just seen that brevity brings its own reward. Perhaps I might just simply move this amendment and hope that the Government will follow suit and take my hint. This point was discussed at some length at Committee stage. The object of this amendment is to ensure—and the Government's own words can be quoted—that the Audit Commission should be totally independent of Government influence. We wish to see that the commission, if we are to have one, should be as independent as possible. At the moment the Bill provides that the whole of the membership of the commission is in the gift of the Secretary of State. I do not think that we could, therefore, say that this is truly independent of the Government at the time. I believe that the commission's successful functioning requires the development of a real partnership between local government and the commission, and that will enable the commission to use the experience of local government people who will become members.

By this amendment we are providing that a proportion of the membership of the commission is appointed on the nomination of the local authority associations. That seeks to lay down the foundation of such a partnership, at the same time ensuring the independence of the commission. I realise it may he that my amendment may be defective in that the associations are mentioned by name.

The noble Lord, Lord Evans, who is a much better lawyer than I am—indeed, everybody is a much better lawyer than I am—has put down a manuscript amendment to this amendment, and it may well be that his suggested alteration, which is totally acceptable to me, would meet better favour with the Government. The point really is that the local authority associations should have as of right some membership that they appoint from their ranks. We do, however, realise the vital importance of the relationship between the Secretary of State, local government and the commission, and therefore there is on question but that the Secretary of State should appoint the majority of this commission. We are only seeking to have six people appointed by the local authority associations; the majority would be appointed by the Secretary of State.

I know my noble friend will say that the membership of the commission is appointed by the Secretary of State and that 'the Secretary of State is answerable to Parliament; therefore it is totally democratic. But I think we all have enough experience to realise that the Secretary of State is responsible to a Parliament to which the Whips are applied and he may not necessarily be as independent as he would like to be. I think this small amendment would go a long way to making the commission acceptable and workable. I beg to move.

Lord Bellwin

My Lords, I must admit that the amendment to Amendment No. 26 does go some way towards removing some of the objections which I voiced.

The Deputy Speaker (Lord Drumalbyn)

My Lords, I think the amendment to the amendment should be moved before the noble Lord replies.

Lord Evans of Claughton moved, as an amendment to Amendment No. 26, Amendment No. 26A. Line 2, leave out from (" whom ") to (" and ") in line 4 and insert (" no fewer than six shall be nominated by such associations of local authorities as the Secretary of State shall from time to time determine; ").

The noble Lord said: My Lords, I totally agree with the amendment that the noble Viscount, Lord Ridley, has put down. The reason I move my amendment to that amendment is that I was warned by lawyers far better qualified than I that possibly the amendment put down by the noble Viscount might be defective because the local authority associations he mentions are not statutory bodies; they have a tendency to change, both in the people the authorities represent and in the size, shape and name. The amendment I suggest is to leave out from the word"whom" in line 2 to the word "and" in line 4, and insert the words: no fewer than six shall be nominated by such associations of local authorities as the Secretary of State shall from time to time determine ".

It would seem to me that if there is a technical fault in the noble Viscount's amendment it might remove that. I think the concept the noble Viscount puts forward is extremely important. I should not wish that it might be in any way tarnished by its being suggested that it was not in proper form. That is the only reason why I move my amendment—not in any way to obstruct the noble Viscount's amendment but possibly to assist it. It is on that basis that I move.

Baroness Platt of Writtle

My Lords, I should like to support the spirit of this amendment, though whether it is the amendment or the amendment to the amendment, I am not sure; but the most important thing is to foster the spirit of partnership between the Secretary of State and the local authorities. Therefore, whichever way is more convienient I would be in favour of, and I would very much support this.

Lord Bruce of Donington

My Lords, we on this side of the House would like to say ditto to what the noble Viscount, Lord Ridley, has said, and what was said by the noble Lord, Lord Evans of Claughton. In the interests of speed we say no more; we support it.

Lord Bellwin

My Lords, it does not work every time! May I begin again at the beginning with the original Amendment No. 26. The question of membership of the Audit Commission has been very thoroughly debated during the passage of this Bill, both in your Lordships' House and in another place. Perhaps there is now an element of repetitiveness about the discussion, but of course that only reflects the importance, quite properly, which everyone attaches to this issue.

I again listened carefully to what was said by my noble friend Lord Ridley in supporting this amendment, but I fear I am still not persuaded that it would be right to accept it. Let me say why. I recognise its particular features. I acknowledge that the number of local authority nominees would be less than one-half of the commission and that there is a simplicity of two nominees for each association and that the associations' members would he nominees with the actual appointment made by the Secretary of State but we are still left with the issue of principle; that is, that the appointment of members is a matter of great importance and it is constitutionally right that it should rest with the Secretary of State. He is—as my noble friend Lord Ridley quite rightly assumed that I would say, and I do—a Member of one or other House of Parliament, and therefore will be answerable to Parliament for the appointments, which I believe is as it should be.

The fact has to be faced that the local authority associations are themselves interested parties to the work of the commission. The associations are certainly responsible bodies and they are rightly well respected, but despite the careful arguments I cannot avoid the conclusion that if the associations were to make appointments to the commission, or nominations—and there is little difference in substance—no real degree of extra independence in any real sense would have been achieved. Moreover, the associations are not answerable to Parliament as is the Secretary of State. Might I remind your Lordships of the assurances I have already given at earlier stages of the Bill that local government will be well represented on the commission; and I would suggest that in practical terms flexibility over appointments is desirable.

Nobody doubts that there is a great deal of talent and ability in local government, but it would perhaps be unduly inflexible if appointments were to be tied by statutory formula to two people from each association. I respectfully submit that it would be better if the Secretary of State were left able to appoint the very best available persons although bearing in mind the need to balance broadly the various interests within local government. There is a whole mass of precedent in this field of appointing to bodies of this kind, and I believe in the main it would be fair to say that it works fairly well. Those who are charged with the responsibility of making appointments are themselves responsible people and understand that there has to be a sensible degree of representation and a sensible balance. That has always pertained to my knowledge. I see no reason why it should not continue to pertain in the future.

Coming to the amendment to the amendment, I must admit that it goes some way towards removing some of the objections I have just mentioned, but by allowing the Secretary of State to decide how the six local authority nominations should be divided between the associations, the amendment would introduce an element of flexibility. Your Lordships will recall that I felt that this was lacking originally, in what I have just said about Amendment No. 26. I say again that to that extent the amendment becomes marginally more acceptable, but I come back yet again to the issue of principle and would want to say the Secretary of State's hands should not be tied in any way when he comes to what will be a difficult task in appointing a commission with the right balance of experience and ability.

There should be, and I say now that I am sure there will be, wide consultation. That is provided for in the Bill, but the Government strongly feel that there should not be a tying to a particular nomination, however flexibly the provisions may be drawn. This is an overriding reason. I conclude by saying again that in practice when we look at what happens in boards of this kind, it works because the people who make the appointments are themselves responsible. I have confidence that it will go on being that way. I know that that is not the same, as I have been told over the last three years, as having it on the face of the Bill, but the quid pro quo is the flexibility that it needs. I believe that it is worthy. I have the confidence. This is an extremely important commission that will be set up and I am sure it will be set up with people whose appointments will recognise that importance.

8.37 p.m.

On Question, Whether the said amendment to the amendment shall be agreed to?

Their Lordships divided: Contents, 23; Not-Contents, 50.

DIVISION NO. 5
CONTENTS
Airedale, L.	Lovell-Davis, L.
Birk, B.	Peart, L.
Bishopston, L.	Platt of Writtle, B.
Blease, L.	Ridley, V. [Teller.]
Bruce of Donington, L.	Stamp, L.
Collison, L.	Stewart of Alvenchurch, B.
Drumalbyn, L.	Stewart of Fulham Stone, L.
Elwyn-Jones, L.
Evans of Claughton, L.	Tordoff, L. [Teller.]
Gainsborough, E.	Underhill, L.
John-Mackie, L.	Winstanley, L.
Llewelyn-Davies of Hastoe, B.

NOT-CONTENTS
Abercorn, D.	Elles, B.
Ailesbury, M.	Elliot of Harwood, B.
Avon, E.	Elton, L.
Bellwin, L.	Ferrers, E.
Beloff, L.	Gainford, L.
Belstead, L.	Gardner of Parkes, B.
Boardman, L.	Boyd-Carpenter, L.
Brougham and Vaux, L.	Haig, E.
Campbell of Alloway, L.	Henley, L.
Cullen of Ashbourne, L.	Hornsby-Smith, B.
Davidson V.	Kemsley, V.

Kinross, L.	Pender, L.
Long, V. [Teller.]	Rankeillour, L.
Lyell, L.	Rochdale, V.
McFadzean, L.	St. Aldwyn, E.
Mackay of Clashfern, L.	Sandys, L. [Teller.]
Macleod of Borve, B.	Skelmersdale, L.
Marshall of Leeds, L.	Stradbroke, E.
Massereene and Ferrard, V.	Suffield, L.
Mersey, V.	Thorneycroft, L.
Monk Bretton, L.	Trefgrane, L.
Mottistone, L.	Trenchard, L.
Mountevans, L.	Trumpington, B.
Onslow, E.	Young, B.

Resolved in the negative, and the amendment to the amendment disagreed to.

8.45 p.m.

The Deputy Speaker

My Lords, the Question now is, That Amendment No. 26 be agreed to? As many as are of that opinion will say, "Content"; to the contrary, "Not-Content? I think that the Not-Contents have it. The Not-Contents have it.

On Question, amendment negatived.

Lord Bellwin moved Amendment No. 27: Page 7, line 31, after (" shall ") insert (", after the like consultation,").

The noble Lord said: My Lords, I beg to move Amendment No. 27. There is little for me to say about this amendment, which I trust will meet with wide support. Your Lordships will recall that I undertook to introduce an amendment along these lines during the Committee stage. These are vital appointments and we are happy to make them subject to the same consultation requirements as those governing the appointment of members in subsection (2). I beg to move.

Baroness Birk

My Lords, I moved a similar amendment in Committee, and the Minister undertook to look into the matter and to produce an amendment. I am very grateful to him because this amendment does meet the point entirely.

On Question, amendment agreed to.

Clause 9 [Accounts subject to audit]:

Lord Bruce of Donington moved Amendment No. 28: Page 7, line 40, leave out (" Commission ") and insert (" body whose accounts are to be audited from the list of auditors approved for the purpose by the Commission in accordance with the next following section ").

The noble Lord said: My Lords, I beg to move Amendment No. 28 standing in my name and that of my noble friend Lady Birk, the noble Viscount, Lord Ridley, and the noble Lord, Lord Evans of Claughton. With your Lordships' permission, I should like to speak also to Amendments Nos. 29, 32, 33, 34, and 43. Having said that, I am bound to say that most of the ground in support of these amendments—although the wording is slightly different—has already been covered in Committee. I do not propose to repeat to your Lordships tonight the same observations that I made on the same points in Committee. I would only wish to say that the whole object behind them is to give the local authorities or other bodies the opportunity of choosing their own auditors. That is the purport of the amendment to Clause 9, from which it follows that Amendment No. 29 amends appropriately Clause 10, in such a way that the Audit Commission has the power to compile a list of auditors from whom local authorities themselves may choose.

Of course, there are arguments on both sides as regards this matter. The noble Lord will aver that his right honourable friend the Secretary of State very much prefers that the Audit Commission, which he himself appoints will themselves appoint auditors to local authorities. Those that represent the local authority interests and those that believe in local government in the sense that I am quite sure the noble Lord himself believed in it when he was a prominent member of a local authority, prefer that the local authorities should retain that liberty.

All the arguments so far as I can see, one way or the other, have already been enumerated and have already been uttered in the House on Second Reading and in Committee. I do not propose to add to them. I do not think that anybody who has the ultimate interests of local authorities at heart and wishes them to retain their freedom, can in any way reject the notion that they should be entitled to select their own auditors.

This, indeed, is the principle that runs throughout these amendments. But I shall not repeat the arguments. Others may wish to add to the arguments which they made in Committee. For our part, we have nothing more to say on them than what we have already said, and I think that what we have already said has been fairly widely assimilated and needs no repetition. In that sense we commend the amendments to the House. I beg to move.

The Deputy Speaker

My Lords, is it the noble Lord's intention to consider all these amendments, up to and including No. 34, together?

Lord Bruce of Donington

My Lords, yes.

The Earl of Avon

My Lords, I think that there are two breaks in the middle, so we have to move one amendment at a time.

The Deputy Speaker

My Lords, in that case I shall put the Question, That Amendment No. 28 be agreed to?

Viscount Ridley

My Lords, I put my name to this amendment because I think that I spoke at some considerable length on this matter in Committee. Like the noble Lord, Lord Bruce, I believe that everything has been said and probably we are banging our heads against some sort of brick wall. Even so, I still think that it is an important issue. I feel strongly enough to hope that the Government at this very late hour may have a change of mind, because I think that this is important. However, as the arguments have all been made and it is late, I shall not repeat them but just support what the noble Lord, Lord Bruce, has said, and wish him well.

Lord Bellwin

My Lords, I do not feel like a brick wall and I am sure that my noble friend is not banging his head against me. But perhaps I can say straight away that I very much appreciate the practical way in which we are looking at this matter. Clearly, we have a difference of view. We have been round the track very extensively on a number of amendments in Committee, and there is just a difference in the way in which we see this.

I recognise that in fact the amendments ensure that the commission has to approve the auditors before they go on the list. I also accept that it is important to establish a harmonious relationship between the auditors and the audited body. But I submit that the Bill tackles this problem the right way round, by providing for the commission to make the appointment after consultation with the body concerned. This is the practice adopted widely elsewhere in the public sector and I am confident that it will work for local government.

Clearly, we have a difference of view here. A matter like this is a judgment; that is all it is. Like so many of these issues, it is a judgment of view. It is not political; it is simply how someone sees something working in practice. There is simply a difference of view here, and I am sorry that I cannot accept the noble Lord's point of view, not least because of the way in which both the noble Lord, Lord Bruce, and my noble friend have briefly spoken to it. I hope that at least they will understand the reasons. Certainly if they do not, they have only to refer to the earlier debates in Hansard—it will all be there, but they know this anyhow. Therefore, I cannot accept the amendment.

On Question, amendment negatived.

[Amendment No. 29 not moved.]

Clause 12 [General duties of auditors]:

8.54 p.m.

Lord Bruce of Donington moved Amendment No. 30: Page 10, line 33, leave out ("resources") and insert ("revenue and loans").

The noble Lord said: My Lords, I beg to move Amendment No. 30, which seeks to effect an amendment to Clause 12. It will be recalled that Clause 12 lays down the duties of auditors in statutory form. The House has already debated these issues at considerable length. Indeed, through the courtesy of the noble Lord opposite, I have had the opportunity of seeing both himself and his officers on some of the principles that are involved, which I am quite sure he realises are of considerable importance. Indeed, they are of very great importance to those of my professional colleagues as well as to the new district auditors who will take auditing responsibilities and prepare certificates under this clause.

If one passes to Clause 12(1)(c), it will be found that an auditor: shall by examination of the accounts and otherwise satisfy himself— (c) that the body whose accounts are being audited has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources ".

The amendment seeks to eliminate the word "resources" and to insert instead the words "revenue and loans". On the face of it, this may appear to be nit- picking, but in point of fact it raises very considerable questions of principle.

As I sought to explain to your Lordships at the Committee stage—and I believe that I did hint at it or possibly more than hint at it on Second Reading—a certification of this kind on the lines of Clause 12(1)(c) is not possible because the local authority itself does not have an accounting record of all its resources. It does not account for capital assets.

As t sought to explain to your Lordships in Committee, when I ventured to quote from the Layfield Report, which I shall not repeat to your Lordships tonight because it is all on the record, local authorities do not, in fact, adopt the system of accounting that is normally adopted in commercial or professional firms, of accounting for assets and liabilities as well as accounting for receipts and expenditure. They do not adopt that method of accounting at all, any more than the Government do; all capital expenditure is written off immediately as cash expenditure. It may well be that records are kept of the way in which loans are applied for the redemption. Such records as that are kept. But there is no record of assets as such. In fact, I think that only the Government of the Netherlands actually keep their accounts on a double entry basis, and that Government keep records of their assets, their liabilities as well as their receipts and expenditure. But we do not do so here, nor do local authorities.

Whether accountants are amateur or professional, qualified or unqualified, on one thing they are all agreed: that resources include assets. There can be no question about that. Here we have a situation where, as applicable to a local authority, it is not possible for any auditor to certify that a local authority has made the best use of its resources, or has arrangements to make the best use of its resources, when he does not know what those resources are.

Perhaps I may give an illustration. Some local authorities have tracts of land which remain unused, which they may have acquired many years ago. Those assets stand at no valuation whatever in the local authorities' accounts. A local authority may have land worth £20 million or £30 million, or very often more. That land does not stand in its books at a valued figure and, as the Layfield Commission points out, quite correctly, it would involve the local authority in some trouble to have its assets valued. I am not talking of its plant and machinery, for which there are separate provisions under the Local Government, Planning and Land Act 1980. I do not mean that; I mean its landed property, its assets in the larger sense of the term. For an auditor to certify that an authority has made satisfactory arrangements for the best use of its resources, he would have to know what those resources are.

If, for example, a local authority has £20 million-worth of land scattered in one part or other of the authority, an auditor required to satisfy himself under this particular clause in order to render a certificate might say to himself, after consultation with his colleagues and with the local authority, "Wouldn't it pay you to sell a plot of land at X price, and redeem some loans that you already have outstanding, because you are not going to put this land to use for many years, so far as one can understand? Would it not be far better to reduce your local rate burden that arises from the interest charged on loans by realising this land for the purpose of loan redemption and the reduction of the rates?" An auditor might think, on examining all those circumstances, that this was a prudent thing to do. But he has no knowledge of the resources.

In the course of the Committee stage—and I shall not repeat the arguments here—if the local authority themselves were required either in this Act or in another Act, and a beginning was made in connection with direct labour organisations to account for their assets, then it will be correct for the auditor to be able to satisfy himself as to the use of resources. In my respectful submission, an auditor at the moment cannot do that because the local authority does not know what it has in value terms, and we are progressively being steered, however wrongly or rightly, towards current costs accounting. We are already being steered for the purposes of determining profitability and efficiency to current cost accounting. If there are no assessments, there are no records of assets, how can he do it? If an auditor cannot do it, it is wrong that it should be in the Bill. For that reason this amendment has been put down to eliminate "resources".

It may well be that the noble Lord's legal department can think of better words than this. Indeed I myself have been a little doubtful as to the precise wording since I put it down. It might in fact have been good enough to have incorporated "income and loan" before "resources" so that it then would have been "in its use of income and loan resources" and that might have covered the point. All I wanted to do was to ventilate the principle, which is of some importance. I gave the noble Lord notice of the fact that I was going to raise this, and we had some discussions in his department on it, and I would hope that his legal department and his officials may find some form of words that does not impose on auditors a responsibility that, on the strict reading of the particular clause, they cannot possibly perform. I beg to move.

Lord Bellwin

My Lords, I certainly do not consider that the amendment is nit-picking or that what the noble Lord says is nit-picking. The point he raises is a fair one, and it is important. But I wonder whether it would be helpful if I briefly, at this hour, reminded your Lordships of the purpose of Clause 12(1)(c). It is concerned with the auditor's role in relation to the local authority's arrangements for ensuring economy, efficiency and effectiveness in its use of resources. The auditor does not have to make the arrangements. Nor does he have to ensure value for money. Rather he must direct his attention to whether the local authority has made arrangements for obtaining value for money in the use it has made of its resources.

The amendment would narrow down the auditor's interest to the use of revenue and loans. It would have the effect of removing from the auditor's purview the whole area of the arrangements made by local authorities and other bodies for the effective utilisation of their assets and of their manpower resources. The noble Lord, Lord Bruce, is quite right: local authorities have vast amounts invested in capital assets—houses, schools, land, plant and equipment and so on. They also have large labour forces carrying out administration and the provision of services. The effective use of these resources is a matter of great importance. It is right that the arrangements for ensuring that effective use are reviewed by the local government auditor.

I recognise that local government arrangements and conventions about capital accounting are different from those of companies. There are valid reasons for these differences. For example companies should, as part of their obligation to shareholders, make proper provision for replacement of profit-earning assets. Local authorities, on the other hand, have rather different objectives, and therefore need to approach capital provision in a different way. It is arguable that it is wrong to charge ratepayers now for replacement of assets which the electorate may, when the time comes for decision, decide should not be replaced anyway. Present ratepayers are already providing through payment of loan charges for assets now being used.

But this is a many-sided matter, and I readily acknowledge that there is room for more than one point of view. This is not perhaps the time to go into complex accounting issues. I would only suggest that this is not the occasion to consider changing the law which underlies the local authority arrangements. I say this especially because I understand that the Chartered Institute of Public Finance and Accountancy is currently considering the question of the possibilities and implications of using the companies type arrangements for capital accounting. I would prefer to see what comes out of that review and out of CIPFA's discussions with the other accountancy bodies before seeking to change the present basis of local authority capital accounts.

Again, as I have with other things, I could go on in some depth, but I suspect that again it would not be the right thing to do. Everything that the noble Lord, Lord Bruce, said about the position as it now pertains itself is right. I would perhaps differ from him on the approach to what an authority does or does not do, or what it should or should not do, with its assets. I am quite sure that if we were debating that together he and I would have different views about this, because then we would come into the whole area of taking a fixed asset, say, land that may have lain derelict for years. I would want to see it converted into a liquid asset by selling it so that it could then be developed or used in some way, and the money I would get I would want to apply to whatever purposes I wanted, either to reducing loan debt or to providing some provision for which I did not want to go to the ratepayers. In other words, capital receipts. But then we are really into a somewhat different area.

It is encouraging that this whole area of capital assets in local government is being looked at now for the first time ever. When I first went into local government my first question on looking at accounts was, "At what rate do you write off the capital assets?" It was explained to me that it did not work that way. It is a good thing that there is to be a look at the matter, and I hope that will take care of the fears expressed by the noble Lord, Lord Bruce. He will understand that I cannot take the point on board in this measure. However, that is by no means the end of the story; changes will, I think, be coming along and 1 look forward to seeing what they will be, but I hope he will understand why I cannot take it on in this Bill.

On Question, amendment negatived.

Clause 14 [Public inspection of accounts and right of challenge]:

9.9 p.m.

Lord Bruce of Donington moved Amendment No. 31: Page 11, line 31, at beginning insert (" Subject to the provisions of section 27 below.").

The noble Lord said: My Lords, the clause deals with the public inspection of accounts and the right of challenge by individual electors. Your Lordships will recall that we discussed this at some length in Committee when, supported by a number of noble Lords, I pointed out what an inconvenience the provision could be to the orderly conduct of an audit if individual electors had the right to inspect books, documents and so on, and indeed to question the auditor himself, on the accounts of the authority. I was assurred by the Minister that it was a right that was not abused, and I understand there are a number of local authorities where this right is exercised to a considerable extent.

Clause 27, on the other hand, binds the auditor to security. It says: No information relating to a particular body or other person and obtained by the Commission or an auditor, or by a person acting on behalf of the Commission or an auditor, pursuant to any provision of this Part of this Act or in the course of any audit or study thereunder shall be disclosed ".

There are then a number of conditions under which it can be disclosed, and then subsection (2) says: Any person who discloses any information in contravention of subsection (1) above shall be guilty of an offence ", and be liable to certain penalties. The House will recall that when I dealt with Clause 27 on the previous occasion 1 suggested it should be removed because auditors could be trusted to be just as confidential as local authority officials could be trusted to be honest. The Minister had resisted the insertion of a similar provision regarding local officials which would have made it an offence for them to give false information to auditors.

The position remains unsatisfactory. If Clause 27 is to remain intact and it is to be an offence to reveal confidential information, it follows that at the beginning of Clause 14, where the provisions for a public inspection are laid down, we should insert the words: Subject to the provisions of section 27 below ".

That would ensure that an elector would not have the right to demand information from the auditor or obtain the sight of documents in the possession of the auditor which would bring the auditor into conflict with Clause 27. The House will be well seized of the point and I will not detain your Lordships. I hope the Minister will accept the amendment, which would in no way vitiate the purposes of the Bill or detract from its efficient operation, but would merely give protection where protection is due.

Lord Bellwin

My Lords, the amendment presupposes that there is a conflict between Clause 14(1) and Clause 27, but that is not so. Clause 14(1) enables any person interested, during the course of the audit, to inspect the accounts and other documents. I should point out that those documents are all documents in the possession of the local authority, or other bodies subject to audit, not in the possession of the auditor. The auditor himself has to be given access to them in the hands of the body, and that is done by Clause 13(1). But they do not leave that body's possession. Indeed, as between the public and the authority, in relation to Clause 14(1), the auditor has no role to play. If a person thinks that he is being improperly denied access, the auditor cannot help him; he must pursue his remedy through the courts. As the auditor has no function under Clause 14(1), he can make no disclosure under it, and there is no room for any potential conflict with Clause 27, which is concerned with guarding against improper disclosure of information gained during the audit.

I shall want to read what the noble Lord, Lord Bruce, has said this time, and in turn I hope that he will perhaps consider the point that I have just made about the fact that the amendment presupposes a conflict. If either he or I feel it necessary to move in a different direction, then his position would be much easier than mine. If he feels that what I am saying is correct and that therefore it assuages his concern, that would be the end of it. If I feel that there is here something more that we should be looking at, I assure him that we shall come back to him again. With that explanation of why I cannot accept the amendment as it is, I hope that the noble Lord will feel able to withdraw it.

Lord Bruce of Donington

My Lords, there is just one point that I should like the noble Lord to cover before he sits down. He seems to think that during an audit the auditor and the books and records are in separate rooms, that the books, accounts and documents are in the possession of the local authority, not in the possession of the auditor at the time that he audits them. As a matter of practice, that is not the case. When an auditor or his staff are engaged on the books, the audit staff have in front of them the books, documents and everything else. So during the time of the audit the auditor himself has the effective custody of the documents, because otherwise he cannot audit them.

It is the impingement of the elector on the auditor while the audit is still taking place, and while the documents are still in the auditor's possession, that I am concerned about, and of course I am also concerned about the information given by the auditor in response to any question arising from the elector. So I hope the noble Lord will realise that in practice it is not quite so compartmentalised as he would think; it is much more closely intermingled than that. That is why I wanted the words inserted at the beginning of Clause 14, and for no other reason. If the noble Lord can address himself to that point, then 11 should be very greatly obliged.

On Question, amendment negatived.

[Amendments Nos. 32 to 34 not moved.]

Clause 23 [Studies for improving economy etc. in local authority services]:

[Amendment No. 35 not moved.]

9.18 p.m.

Viscount Ridley moved Amendment No. 36: Page 18, line 35, at end insert— (" Provided that the Commission shall not in any such report refer to the affairs of any individual authority in a way which identifies that authority by name or otherwise").

The noble Viscount said: My Lords, we had considerable debate on the value for money clauses, which were introduced at Committee stage, and your Lordships will recall that there were two clauses, then Clauses 20 and 21, about neither of which was I particularly enthusiastic. So far as I read it, the debate which took place on what is now known as the "Joel Barnett clause"—which was Clause 21 and is now, I think, Clause 24—was very much on the side of the amendment which I then moved, to ensure that such reports as were made by the Audit Commission would be made in an anonymous way, and that no authority should be identified, as I say in the amendment, "by name or otherwise".

During the debate my noble friend Lord Bellwin said that I had been inconsistent in not applying such anonymity (if that is the right word) to the then Clause 20, and Amendment No. 36 seeks to do just that and to say that in either or both clauses there should not be the naming of any individual authority in a report which is published on the subject.

It is probably appropriate that, for the sake of speed, we discuss Amendments Nos. 36 and 40 together, because they are identical in wording, and they apply to both the two clauses, which, as I have just said, involve two attempts at seeking to achieve value for money in local government. There was previously a very full debate on both clauses, and I think it only fair to say that there was considerable, unanimous, support from all sides of the Chamber, even for once from behind me, for the amendment which sought anonymity. As I said at that time it was—and I still think that it is—the desire of another place that such reports should not name individual authorities.

At the end of the Committee stage I sought to withdraw the amendment, and therefore I have no guilt about putting it down for the second time. The real point is that what I say should apply to Amendment No. 40, as well as to Amendment No. 36. I commend Amendment No. 36 to the House because I believe that its objective is the desire of another place. It will seek to ensure that the commission does its job properly, and that it is able to act without trying to interfere in the affairs of individual local authorities, because if it is going to start naming individual local authorities, then I think we are in for considerable problems in the future. It could well be said, and may well be said, that the commission, possibly aided or otherwise by the Government, is taking away the freedom of local authorities in yet another respect. I know my noble friend will disagree with that, as he always does, but there is a danger here, and this is what I am trying to point out to your Lordships. This anonymity is something which I think is very important. Other noble Lords on all sides supported it, and I beg to move Amendment No. 36.

Lord Bellwin

Yes, my Lords, it is quite true, as my noble friend says, that here, too, we do not see it in quite the same way. I certainly understand the fears behind this amendment. In recent years local authorities themselves have begun to publish more information on their own performance in response to the codes of practice which have been produced under the 1980 Local Government Planning and Land Act. Publication of this information is an important step in our campaign to increase public awareness of local government activities.

Furthermore, CIPFA now produces a whole series of statistical publications, including one entitled Comparative Statistics. The whole purpose of this publication is to compare the performance of individual authorities, and it would clearly lose its point if the authorities were not identified.

I know it is slightly oblique to the subject, but I always felt that one reason why LAMSAC did not achieve what many of us hoped it would achieve was precisely because it did not disseminate its information. It has been so anxious, and is still so anxious, not to reveal the names of the authorities whose studies it carries out, and not to give this information to any one unless they specifically come and ask for it, that it becomes far less effective than it would otherwise be.

This amendment, as such, is sweeping. Not only does it prevent the commission from publishing information it collects in a way which identifies the authorities, but, as I hope my noble friend appreciates, it also prevents the commission from identifying authorities in reports under the clause in any way whatsoever. This means that the commission cannot quote information relating to an individual authority which the authority itself may publish. This restriction seems unnecessary.

The aim of comparative studies—and the name itself makes the point—is to provide information for use by local government on good practice in local authorities. I do not believe that maintaining the anonymity of the authorities concerned in such studies is consistent with the aim of encouraging a free exchange and dissemination of information. I have said it before, and I make no apology for repeating it: the efficient authorities not only have nothing to fear from such comparisons; they are proud to have comparisons made. The less efficient may well learn something. I, in a former capacity, wanted to know what others were doing, and if it was better than I was doing then I wanted to learn from them. Surely this can only be for the benefit of ratepayers and electors.

I am glad my noble friend moved on to Amendment No. 40. I will not speak at length on that because we went round that track at Committee stage at some length. We divided on it, and there was much feeling and much difference about it; and certainly there is no point in doing that again tonight.

Viscount Ridley

My Lords, may I interrupt my noble friend? We did not divide on Amendment No. 40 last time; that is why I put it down again.

Lord Bellwin

My Lords, I am grateful to my noble friend. I apologise for that; he is quite right. I am sure he will accept from me that we did divide on many occasions—almost as many, I think, as the number we have divided upon today—so if I get one wrong it is one out of many and I hope my noble friend will forgive me.

I understand the concern of the authority is to preserve their constitutional position vis-à-vis their electors. Can I say again, that the Comptroller and Auditor-General will not have privileged access to information about individual authorities, and this I think is an adequate safeguard. The commission will be a responsible body and will have a large number of local authority members. Surely, we can rely on the commission to decide, in doing a study under this clause (or under Clause 23) whether or not it is appropriate to identify individual authorities. It is not necessary in my view, or appropriate, to prevent them from doing it, if in their judgment it will be beneficial. The fear of the authorities that in some way this power will he used to clobber them, or pillory or put them in dock, I think is misplaced. If we are really as concerned as your Lordships tell me you are, and as I know you are, that the local authorities should be seen to be getting better value for money all the time and giving more services because of improved efficiency, there is nothing to fear in this.

Baroness Birk

My Lords, may I put a question on that? At the Committee stage, when we discussed this—and I cannot remember whether it was the old Clause 20 or the next one, which is now Clause 24—the Minister said that the new clause does not make the local authorities accountable to Parliament. Later, he said that the local authorities had nothing to lose from being identified in the commission's report. I raised this point myself and I pointed out that the Minister appeared to have made some contradictory statements. We were left unsure whether the local authorities would be identified or whether, if they were identified, there was any harm in it. I think there were two different points.

I do not think that we have had a clear answer. Listening to the Minister, I am still not sure what he means by this.

Lord Bellwin

My Lords, I am happy to give a more detailed explanation. Like most other noble Lords, 1 am trying not to go into depth but, if the point is raised, I must explain. I will set out briefly how Clause 24 will operate. After the necessary consultations, the commission will embark on its studies under this clause. They will be designed to enable it to prepare reports on the impact of statutory provisions on ministerial guidance on value for money in the provision of local government service. They will have to publish or otherwise make available a report on each study and send the report to the Comptroller and Auditor-General. It will be open to the commission, as the clause now stands to identify individual authorities in this report if it so wishes. This follows the form adopted in the original amendment which was put down for the report stage in another place.

Clause 24 then goes on to provide that when the Comptroller and Auditor-General gets his copy of reports produced under this clause, he may require information about the report from the commission, but he may not require information about individual authorities. I repeat that he may not require information about individual authorities. There is nothing in Clause 24 to prevent the Comptroller and Auditor-General from identifying individual authorities in his report to Parliament. He cannot have access to privileged information held by the commission, but he can quote published information. If the commission identifies individual authorities in its reports, the Comptroller and Auditor-General can quote that. He can quote information from any other source, such as CIPFA or the local authority itself. This must be right. It would be nonsense to prevent the Comptroller and Auditor-General using information already published. What the present amendment—and this is Amendment No. 40—seeks to do is to prevent the commission from identifying individual authorities in the reports. It does not prevent the Comptroller and Auditor-General from doing so by using CIPFA or local authority information. This is why we think the amendment is unnecessary.

I know that the authority associations are worried about the involvement of the Comptroller and Auditor-General and, hence, Parliament. I think that it is quite clear that the Comptroller and Auditor-General's role in all this is to secure better ministerial accountability to Parliament, and it seems unnecessary to prevent the commission identifying individual authorities in the studies under this clause. In our debates on the previous clause I explained why a similar amendment to that clause was unacceptable, and the same applies to this clause. I repeat, the efficient authorities have nothing to fear and the others should benefit.

I do not know whether that adequately covers the point that concerns the noble Baroness. We are into an area which is quite complex and where clearly there is some different thinking. I feel that the fears which have been expressed will prove to be groundless in practice. If I truly did not think that I could not argue the case as I hope I am doing.

Lord Mottistone

My Lords, there is another side to what my noble friend has been saying. I am sorry if I do not entirely agree with him, because I so often do. The way that Clause 23(3) is worded is that the commission shall publish or otherwise make available its recommendations. I will not say that I entirely agree with my noble friend Lord Ridley, but if the words "with discretion" were added I think that would help. The blunt statement says that it shall publish its reports.

I am not arguing at all about Clause 24(2) and reporting to the Comptroller and Auditor-General. I think that is reasonable. But one thinks of the local newspaper printing that their county is bottom of the league for something. This may be very bad locally but very good centrally. It is easy to see circumstances in which it is very bad to have a public league table of how everybody has come out on, say, the transport side or the social services side—" Your county is bottom in social services but top in transport ", that type of situation. That is bad.

If there was a qualification within the clause to say that the commission has to use its discretion, that would help. The commission will not include people from all the local authorities. It could be that some of them will be deeply hurt because of particular things going on in the county at the time, if they were badly shown up in a particular area at a particular time and they do not have a representative on the commission.

Therefore it will be bad news for this table to be produced. Perhaps it can be somehow qualified that the commission has to use its discretion and be sensible about it. I should like to see something in the Bill—I will not say that I go along with my noble friend Lord Ridley—which gave guidance to the commission to make sure that it uses its common sense which, in the nature of things, collectively it will not have.

Lord Bellwin

My Lords, with the leave of the House, may I say to the noble Lord, Lord Mottistone, that the commission has discretion as to what should be published. It does not have to identify individual authorities. Regarding the league tables, it depends on what is published. If you publish and decide that an authority is good or bad because it spends more or less—and this has so often been the case in the past—that in no way should he a measure of whether it is efficient or otherwise. When the previous Labour Government were in power, if a list was published that showed a local authority spent little—the lowest if you like—it was frowned upon as not doing its job. Today, in the same list if the same authority is spending least, then it is applauded as doing very well.

The real answer is that neither of those interpretations is correct. What really matters is: What are they achieving for what is being spent? It is not just the amount of money spent; it is a question of, what do you get? There are authorities who spend half what other authorities spend and achieve twice as much—and that statement is not a distortion. Therefore, what one would hope to see published eventually is: why does it cost Authority A so much to provide a service when it has for example, pupil-teacher ratios in education that are very much better in the sense there are fewer pupils per teacher, while at the same time the total cost of its education provision may be less than other authorities?

If information of that kind is published it is good that people should say: Tell me why? There may be very valid reasons why. I can think of all sorts of reasons. If you have many children who, for example, are under-privileged or who may come from immigrant homes and who need more basic teaching, it is bound to cost you more. That is a proper explanation. On the other hand, it may be that if you spend a lot of money you may be carrying too heavy back-up staffs. So what is wrong in publicising information?

If we believe—and I keep coming back to this point—that we want to see a better local government and one that everyone will respect, and not, as now, although many are respected there are others which are not—and if we want to see a raising up of standards—there should be no fear about publication. I have no fears about it. As it happens, the commission has the discretion, as I have said. There is not the power of the Comptroller and Auditor-General to indentify individual authorities in this way; so in fact there is not the total disclosure of comparatives that some people wish to see. That is why I think that my noble friend is over-concerned about this and that is why we cannot support him.

Viscount Ridley

My Lords, if I may speak again, with the leave of the House, I am sorry that my noble friend Lord Bellwin has not seen fit to meet me on this one. I do not somehow think that the arguments are hitting each other: they are flying round the room but not contacting the different points being made.

I quite agree with my noble friend that CIPFA and other bodies have published vast statistics which have been made available to the public. I have spent many hours studying these to see what benefit can be got from them. But it is quite another matter to have it written into an Act of Parliament that some outside body, which is already viewed with some suspicion, should come in and do this. I think we are laying ourselves open to great trouble in the future. I think there is a great danger, with all these clauses in this part of the Bill and failure to achieve anonymity, that we are taking away the job of the elected councillors to see that money is wisely spent. if we are not careful we are going too far down this road and we could end up in a situation where nobody of value or quality will stand for local government to be shot at by the Audit Commission, or by the newspapers as my noble friend Lord Mottistone says. You are going to get second-rate local government in the long run. I believe that we are in great danger of overdoing this "value for money" idea. However, I have no intention of pressing this amendment. I think the point has been made and I hope that one day the Government will see the value of what I am trying to say. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 37 not moved.]

Clause 24 [Reports on impact of statutory provisions etc.]:

9.39 p.m.

Baroness Birk moved Amendment No. 38: Page 19, line 2, leave out (" shall ") and insert ("may ").

The noble Baroness said: My Lords, this question came up in Committee but it all got rather confused with the clause following it, I seem to remember. It really is a very simple point: the commission should not be under this order. Perhaps it is the fashionable difference, between "totalitarian" and "authoritarian", but I think that this is both totalitarian and authoritarian.

I think that the noble Lord, Lord Mottistone, had a very real point which he put forward. It looks extraordinarily abrupt—I think he used the words "rather blunt". I would have thought that if you set up a commission of the calibre which the Minister has assured us of, you should leave it to them to undertake or promote comparative and other studies rather than legislate this very dictatorial "shall". It not only goes against any democratic aspects of local government but it is entirely against the British character as well. I find it rather abhorrent. It is not euphonious; it is rather unpleasant and it is totally unnecessary,

I hope that the Minister has given this matter more thought. I must have been able to get a little hope from what was said earlier. I know that we did not take the amendment to a Division. I think that there was a certain amount of confusion about both clauses being taken together. But if the subsection is left with the word "shall", it means that a Minister of the Crown can come crashing down with statutory provisions. The commission will be completely boxed in and almost imprisoned in imperatives. If a commission of this calibre is worth its salt, it will most certainly undertake anything that it wants to do.

I always feel that, if you say to people that they shall do something, they feel that they are under instructions to undertake things which they should not have to undertake. The word "shall" here gives no choice or discretion to the commission and it is quite wrong, whether in the case of the Audit Commission or anything else. If you arc setting up a commission of this kind, you must give it an opportunity to take decisions. Whether it is something concerned with private business, public expenditure or whatever it is, the same rule applies.

You must give people a choice, if you give them a responsibility of this kind and they are worthy of that responsibility. If they are not worthy of that responsibility, then they should not be there. Therefore, they should not have to be told that they shall do something. If they have to be told, then they arc not the right people to do the job. If they are the right people, then they should he allowed to decide for themselves. I fear that I know what the Minister will say, but this is something that the Government really ought to think again about. My Lords, I beg to move.

Lord Mottistone

My Lords, may I intervene to tell the noble Baroness that I am sorry that I do not support her in this amendment, because there is nothing to tell the commission what it is to promote studies about. It can choose what it makes it studies about. What still gets in my gullet—though I do not want to go back to the other amendment, which was withdrawn—is that it must then publish all that it has found out. That is different. The use of the word "shall" is part of the normal practice. The parliamentary draftsman forces us into that corner, so that we get used to the "shall" and "may" argument. But, in this case, the subsection does not tell the commission what it has to do in detail. It just says that it must do it as a general principle. I think that that is perfectly acceptable and I hope that my noble friend will say something similar.

Lord Bellwin

My Lords, I am grateful to my noble friend Lord Mottistone, because that is precisely what I was going to say. Although Clause 24 states that the commission shall do the studies, it does not say how many or on what subjects. That is for the commission to decide, as it has a great deal of discretion and choice. I would only repeat to my noble friend, that the commission still has its discretion as to what shall be published. It does not have to publish. We discussed in some detail earlier the principles underlying the new clause, and I then sought to explain why I thought that local government's doubts about the clause will not be borne out in practice. I would only repeat that Members of another place attached great importance to these studies and for that reason, too, I cannot recommend your Lordships to weaken the clause by substituting "may" for "shall". It would not be productive, even if desirable. For that reason alone, I would not be able to accept the amendment.

Baroness Birk

My Lords, I do not intend to press this amendment to a Division because it would be futile at this time of night. I hold different views about this. I am not against the commission undertaking studies, but I am still against the word "shall". With great respect, it is not true that they will have the opportunity to choose. Because of the way it is written it follows that whatever a Minister of the Crown deems to be a direction or guidance to those ends must be the object of such a study, whether or not that is the purpose of the particular direction or guidance. This is the way in which it can most certainly be interpreted.

Although I concede to the noble Lord, Lord Mottistone, that that is a different point, this is an absolute directive. Let us be absolutely clear about that. This is very unfortunate, because a political element is brought into something which we are all agreed ought to be non-political, whatever Government are in power, when the Commission decides what studies it will make. To make it imperative and then to link it up--which it is—with the directions or guidance given by a Minister of the Crown and the operation of any particular statutory provision brings it into the political arena, whether or not that is intended. It is the word "shall" which exacerbates the position.

The Minister is right. We have been down this road before. However, I thought it to be an important enough road to traverse again. I see that there is nothing I can say which will persuade the Government about it, but it is very unfortunate that it should be left as it is. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Bellwin moved Amendment No. 39: Page 19, line 14, leave out ("any report prepared by it") and insert ("its report of the results of any study").

The noble Lord said: My Lords, in moving Amendment No. 39, may I speak also to Amendment Nos. 41 and 42. In moving these amendments I shall refrain from going over the background to this clause. The amendments are intended to improve the clause and, as such, I commend them to the House. If any noble Lord would like me to go into detail, I shall be very happy to do so; otherwise I beg to move.

Lord Bruce of Donington

My Lords, we on this side of the House welcome Amendment No. 39. It is a distinct improvement. If one looks at Clause 24, line 13, it says that: The commission shall publish or otherwise make available any report prepared by it…". I was a little apprehensive, knowing how voluminous reports are, that they would have to publish a colossal document. The amendment moved by the noble Lord is much more practicable and we are very grateful to him for having incorporated it. As the other amendments were also the subject of debate during the Committee stage, I propose to offer no comment upon them. We shall not resist the amendments.

On Question, amendment agreed to.

[Amendment No. 40 not moved.]

Lord Bellwin moved Amendment No. 41:

Page 19, line 24, at end insert— (" ( ) The Comptroller and Auditor General shall from time to time lay before the House of Commons a report of any matters which, in his opinion, arise out of any studies of the Commission under this section and ought to be drawn to the attention of that House").

The noble Lord said: My Lords, I have spoken to this amendment and beg to move.

On Question, amendment agreed to.

Lord Bellwin moved Amendment No. 42:

Page 19, line 26, at end insert— (" ( ) the Comptroller and Auditor General;").

The noble Lord said: My Lords, I have also spoken to this amendment and beg to move.

On Question, amendment agreed to.

[Amendment No. 43 not moved.]

Clause 35 [Repeals]:

The Earl of Avon moved Amendment No. 44:

Page 24, line 22, at end insert— (" ( ) The repeals in Part IIA of that Schedule have effect for financial years beginning or on after 1st April 1983").

The noble Earl said: My Lords, my noble friend has spoken to this amendment. I beg to move.

On Question, amendment agreed to.

Schedule 1 [Rates and precepts—transitional provisions]:

[Amendment No. 45 not moved.]

Lord Gainford moved Amendment No. 46:

Page 25, line 29, at end insert— (". Where a person as tenant or licensee of any premises—

1. (a) is liable to make payments (whether as part of his rent or otherwise) which vary or may vary according to the rates chargeable in respect of those premises; or
2. (b) is entitled to make deductions from his rent in respect of those rates,

he shall, where a rating authority has made a supplementary rate falling within pargraph 1(a)(i) above which affects those premises, be entitled to recover or, as the case may be, liable to make good any payment or deduction which he would not have been liable or entitled to make if that rate had not been made; and any sum which he is entitled to recover as aforesaid may, without prejudice to any other method of recovery, be deducted by him from any rent payable by him to the person by whom that sum was received").

The noble Lord said: My Lords, I spoke to this amendment when I moved Amendment No. 2. I beg to move.

On Question, amendment agreed to.

Lord Bellwin moved Amendment No. 47:

Page 26, line 12, at end insert— (" ( ) Where the precept by reference to which the original rate was made fell within paragraph 1(a)(ii) above and was issued under section 150(4) of the Local Government Act 1972 (expenses of parish and community councils) sub-paragraph (1) above shall not require the rating authority to make a substituted rate unless it considers that a substituted rate will be required for meeting the precept substituted pursuant to paragraph 5 above").

The noble Lord said: My Lords, these amendments deal with the transitional schedule, specifically with 1982–83. As with the other amendments, I shall not detain your Lordships unless more detail is requested. The amendments are generally sensible. I apologise for having to make such amendments at this stage to meet a problem which may not even exist, but given the difficulty of knowing exactly what is being done at the level of the thousands of parish and community councils, I hope that noble Lords will welcome what is in effect a small element of flexibility. I beg to move.

Baroness Birk

My Lords, unless I have got it wrong, this is not as simple as the Minister has made it sound. This is an addition to Schedule 1 and therefore it is connected with the whole Bedfordshire case. What it appears to be doing is relaxing the requirement to make a substituted rate where a precept has been made for less than a financial year. Parish councils do actually precept on rating authorities. I dare to presume that a parish council in Bedfordshire has actually done this. I would like to know from the Minister what the reason is for this particular amendment. Is it connected with a particular case of a parish council in Bedfordshire?

Lord Bellwin

Yes, my Lords; I will certainly answer the noble Baroness. I was trying to move on, but since the noble Baroness has asked me, [will answer that the Transitional Schedule deals with 1982-3 and sets out what should follow where a supplementary rate or precept, or a rate or precept made for less than a full year, made or issued at any time before the Bill is enacted, in relation to a period beginning on or after 1st April 1982, falls on Royal Assent.

Paragraph 6(1) puts an obligation on any rating authority whose main rate is partly to meet such a precept to make a new rate according to certain rules set out in paragraph 6(2) if the original rate referred to a supplementary precept and must be reduced, and paragraph 6(3) if the original rate referred to a precept made for less than a year and therefore must be increased. The purpose of these rules is to ensure that the ratepayers receive the full benefit of the reduced rate, in the first instance, and in the second to ensure that there is no leeway to increase the rate by more than is needed to cover the extension of the precept to the whole year.

As noble Lords know, we did discuss this schedule and the related Clause 3 dealing with substituted rates and precepts very fully with the local authority associations before they were incorporated in the Bill, to ensure that the provisions would be workable and would make sense to those who will have to use them. However, in what noble Lords will know is never idle time between Committee and Report, we have double and treble checked the way the clauses will work and have, for our labours, uncovered one point which might give rise to unnecessary problems, and that is the possibility—and it is only a possibility—that a few parish councils may still be precepting on a half-yearly basis. That in itself is not a problem. They will simply issue substituted precepts to cover the full year after Royal Assent, and their rating authorities will undoubtedly have sufficient reserves to cover their parish precepts for the full year. Unfortunately, as the Bill stands, subsection 6(1) would require the rating authority to rate again even though that might not be necessary. Clearly, this would be a waste of time and money. I can go still further into detail if the noble Baroness wishes me to do so and if your Lordships' House will give me leave so to do.

On Question, amendment agreed to.

The Earl of Gainsborough moved Amendment No. 48:

Page 26, line 12, at end insert— (" 6A.—(1) Where a rating authority has made a supplementary rate falling within paragraph 1(a)(i) above by reference to a supplementary precept falling within that provision it shall be entitled to recover from the precepting authority—

1. (a) its administrative expenses in making repayments or allowing credits under paragraph 3 above in respect of the supplementary rate; and
2. (b) its rate collection expenses in respect of that rate.

(2) Where a rating authority has made a rate falling within sub-paragraph (a)(ii) or (b) of paragraph 1 above by reference to a supplementary precept or precept falling within sub-paragraph (1)(a) of that paragraph it shall be entitled to recover from the precepting authority—

1. (a) its administrative expenses in making repayments or allowing credits under section 3(5) and (6) of this Act in respect of that rate; and
2. (b) any increase attributable to paragraph 5 or 6(1) above in its rate collection expenses for the financial year.").

The noble Earl said: My Lords, this matter was discussed when we debated Amendment No. 1. I beg to move.

On Question, amendment agreed to.

[Amendment No. 49 not moved.]

9.55 p.m.

Baroness Gardner of Parkes moved Amendment No. 50: After Schedule 1 insert the following new schedule—