Lords Sitting of 10 May 1982

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

Turkey: Arrest of Peace Association Members
Lord Jenkins of Putney: 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 information concerning the fate of members of the Turkish Peace Committee and whether the continued membership of NATO of Turkey under its military regime does not bring into question the democratic pretensions of NATO.
The Minister of State, Foreign and Commonwealth Office (Lord Belstead): My Lords, the Government share concern at the arrest of members of the Turkish Peace Association. We do not yet know the exact nature of the charges involved, but we are watching developments closely. We believe that the Turkish Government's commitment to restore democracy, and the steps that they are taking towards that end, are wholly compatible with Turkey's continued membership of NATO.
Lord Jenkins of Putney: My Lords, I am grateful to the noble Lord for that Answer, but will he say why it is that he appears to have so much confidence in the Turkish junta? Is there not here a strong contrast in the Government's attitude in that it seems
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that Turkish aggression is acceptable to the Government, whereas Argentinian aggression, quite properly, is not?
Lord Belstead: My Lords, we continue to believe that the Turkish Government will honour their commitment to restore democracy. That is why we take the view that was contained in the Answer that I gave to the noble Lord.
Lord Paget of Northampton: My Lords, will the noble Lord make it clear not only to Turkey, but to the other members of NATO, that we are far less concerned with their democratic pretensions than we are with their willingness to stand by their allies in difficulties?
Lord Belstead: My Lords, I agree with the noble Lord that Turkey occupies a most important strategic part of the world, and is therefore an important member of NATO. At the same time we, and other member states of the Community, continue to make the Turkish Government aware of our concern over alleged human rights violations.
Lord Campbell of Alloway: My Lords, does my noble friend the Minister agree that the reference in the Question to "democratic pretensions" really constitutes a form of insult to all members of NATO?
Lord Belstead: My Lords, if one looks at the NATO Treaty, one will see that the reference in the Question is not very happily phrased.
Lord Davies of Leek: My Lords, may I ask the noble Lord—there is no ulterior motive—whether Turkey now has any representation at all in the CENTO organisation, or is that organisation on the point of being completely extinguished?
Lord Belstead: My Lords, the noble Lord is right that the reference to CENTO is no longer relevant.
Earl Alexander of Tunis: My Lords, is my noble friend aware that the Turkish Government have brought law and order to that country?
Lord Belstead: I did not hear my noble friend's question, my Lords.
Earl Alexander of Tunis: My Lords, I was wondering whether my noble friend is aware that the present Turkish Government have brought law and order to that country.
Lord Belstead: My Lords, I agree with my noble friend that it is the case that the amount of violence in Turkey has enormously reduced under the Government of General Evren.
Lord Brockway: My Lords, the Minister says that the Government have confidence in Turkey's Government restoring democracy. May I ask the Minister, are not the Government blind to all recent history, in which claims of that kind have been made and repeatedly denied? Cannot the Government begin to look at the problem of human rights from the point of view not of whether the parties are allies or are opposed, but of the important principle of human rights itself?
Lord Belstead: My Lords, if the alliance, of which Turkey and the United Kingdom are two of the members, did not exist, the question of human rights would very probably become academic, because Russia would occupy Europe. With regard to the confidence of this country in the future of Turkey, General Evren has announced a timetable for a constitutional referendum before the end of November this year, or in spring 1983, and parliamentary elections in autumn next year, or in spring 1984 at the latest.
Lord Leatherland: My Lords, when the noble Lord said that law and order were being restored in Turkey, did he mean by that that in future Turks will be able to have only one wife?
Lord Belstead: No, my Lords; I meant that the number of violent deaths in that country has very much decreased.
Lord Jenkins of Putney: My Lords, is it not the case that Turkey remains in forceful occupation of that part of Cyprus which she occupied by aggression —and what does the noble Lord say about that?
Lord Belstead: My Lords, in answer to this Question, I do not know that I am required to say anything.

Spain and Gibraltar
2.41 p.m.
Lord Merrivale: 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 on what date Spain will become a full member of NATO; and
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whether they will stress to our NATO allies that the strategic value of Gibraltar is of primary importance to this country and that the future of a British Gibraltar, as a strategic component in NATO defence, is of concern to all NATO nations.
Lord Belstead: My Lords, Spain will become a member of NATO when ratification of the protocol to the North Atlantic Treaty has been completed by all existing member countries. Her Majesty's Government hope that this process will be completed within the next few weeks. I can assure my noble friend that the strategic importance of Gibraltar to the alliance, and to Britain as a member of the alliance, will be taken fully into account in discussions within the alliance after Spain's entry to NATO and in the negotiations with Spain on Gibraltar envisaged by the Lisbon agreement.
Lord Merrivale: My Lords, I thank my noble friend very much for that Answer. In view of Gibraltar's strategic position, recognised by Her Majesty's Government, will Her Majesty's Government raise with NATO, either inside that organisation or in bilateral discussions with NATO members, the issue of full naval facilities—a naval base and a modernised dockyard—still being of considerable value to Britain and to its NATO allies?
Lord Belstead: My Lords, so far as the proposed closure of the naval dockyard is concerned, I replied to a Question which my noble friend put to me on this matter about a week ago. I do not think that I really have anything to add to what I said on that occasion, which was to the effect that the Government felt that the decision must stand, but that within that context we would be as flexible and helpful as possible so far as the interests of Gibraltar are concerned.
Lord Peart: My Lords, may I ask the Minister whether the Government still intend to close the naval dockyard in Gibraltar, and whether they will take into account the role played by the dockyard in converting the "Uganda" to enable it to join the Falklands fleet?
Lord Belstead: My Lords, I repeat that the decision to close the naval dockyard will stand, but, of course, as the noble Lord, Lord Peart, will know, the Government, with the Government of Gibraltar, are actively pursuing what opportunities there could be for the dockyard to be run commercially.
Lord Merrivale: My Lords, may I ask my noble friend whether he is aware of the fact (I am sure he is) that during the course of an adjournment debate on 1st April in the Canadian House of Commons the question of the future of Gibraltar within NATO arose? May I ask him, therefore, whether this question could be raised, either bilaterally or with the allies, by Her Majesty's Government, as the Canadian Government felt it was not a matter for them?
Lord Belstead: My Lords, I was not aware that this had been discussed in the Canadian Parliament. I agree with my noble friend that the position of Gibraltar is important within the NATO alliance, but I do not think there is anything else I can add at the moment about the position as to the naval dockyard.

Home Improvements
2.45 p.m.
Baroness Lane-Fox: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To àsk Her Majesty's Government what action they are taking to help private home owners to improve their properties.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Bellwin): My Lords, this is a wide-ranging Question. The range of home improvement grants was extended and revised in the Housing Act 1980, and the limit of grant payable for the rehabilitation of houses in bad condition was raised to a more realistic level. The Government have also promoted initiatives in low-cost home ownership, notably the homesteading and improvement-for-sale schemes. My right honourable friend the Chancellor of the Exchequer announced further short-term measures in the Budget through local authorities amounting to £79.3 million.
Baroness Lane-Fox: My Lords, following that very positively encouraging reply, may I ask my noble friend the Minister to say how many local authorities are making improvement grants to first-time buyers who are willing to undertake homesteading?
Lord Bellwin: My Lords, I understand that so far 89 local authorities in England have sold or intend to sell unimproved houses for improvement by the purchaser. During the calendar year 1981, 1,455 dwellings were sold. I would expect all the local authorities involved to be offering purchasers improvement grants for renovating the houses they buy. Furthermore, 10 of those authorities sold the properties with the aid of a local authority mortgage with agreement from my right honourable friend to waive interest payments on the mortgage for a period as an even greater incentive to buy and improve.
Lord Hylton: My Lords, in relation to elderly owner-occupiers, can the noble Lord say whether his department is studying the very important experiments carried out recently in Rhondda and Tyneside, and elsewhere, by voluntary bodies; and would he agree that the level of bureaucratic complexity combined with personal poverty means that many elderly owner-occupiers are not getting the help they need with repairs, insulation and improvement?
Lord Bellwin: My Lords, I would hope that the noble Lord would bring to my notice any cases of the kind that he describes, so that one can look at them carefully and see whether the procedures are too tortuous, or whatever, with a view to improving them. As to the two schemes that he mentioned, I had heard of them. It will be interesting to know more of what they bring forth as time goes on.
Lord Mowbray and Stourton: My Lords, bearing in mind the enormous cost of new housing and also of
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improving old housing stock, is there not possibly a case for increasing the basic sum of money on which the grant for improvement can be given?
Lord Bellwin: My Lords, it depends in each case on what the figures show. In fact, the grants now go up to 90 per cent., which is very significant indeed; and the Government are absolutely determined to do all they can to improve this aspect of housing, within which we feel there is such great opportunity.
Lord Northfield: My Lords, can the noble Lord say what is the present position on insulation grants? Are they being taken up; and could not a lot more propaganda be carried out to encourage people to insulate their houses? This is one improvement which is very much in the national interest and is badly needed for the millions of houses constructed between the two wars.
Lord Bellwin: My Lords, the noble Lord is absolutely right, and we are very keen indeed. That is why we have allocated much larger funds than ever before for insulation grants. It may well be, as the noble Lord says, that even greater publicity ought to be brought to bear on this. He will know that already there is much more than ever before, but, nevertheless, the underlying point of his question is very valid. We must look all the time to see that we are bringing this grant to the notice of people.
Baroness Lane-Fox: My Lords, may I ask my noble friend the Minister to return to his answer to my supplementary question and tell us how many local authorities are improving properties for sale to first-time buyers?
Lord Bellwin: My Lords, the improvement-for-sale scheme under the Act came into effect in November 1980. I understand that since then approximately 79 local authorities have undertaken or are intending to undertake improvement-for-sale. Authorities do not have to offer dwellings to first-time buyers, but the sale price of such dwellings is relatively low, they are an attractive proposition for such purchasers and some local authorities give first-time buyers priority when offering such dwellings for sale.

Botswana Drought: Aid
2.51 p.m.
Lord Alport: 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 assistance is being provided for Botswana in order to offset the effects of the very serious and prolonged drought in that country.
Lord Belstead: My Lords, the Botswana Government has been informed that up to £200,000 of additional financial assistance will be made available in the current financial year for drought relief measures

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to be agreed with them. In the meantime, three 5-ton 4-wheel-drive lorries have been presented to the Botswana Government for the transportation of food supplies to drought stricken areas.
Lord Alport: My Lords, while thanking my noble friend for his Answer, may I ask whether the Government will bear in mind that this small country deserves our assistance on the basis of its admirable record of constitutional stability since its independence, and that the continuance of this constitutional and social stability is of importance to the stability of the whole of southern Africa?
Lord Belstead: My Lords, I agree with what my noble friend has said. If I may add to what my noble friend has said from his experience of this country, I realise that Botswana is going through a difficult patch at the moment because of the fall in commodity prices, apart from this tragedy of drought which has struck the country. It is worth bearing in mind that, in addition to the Answer that I gave my noble friend about extra aid, there is the Government's bilateral aid, there is bilateral aid from other countries and, also, multilateral aid. The total of all this means that Botswana is receiving very considerable aid compared with many other African countries.
Lord Oram: My Lords, was it not in Botswana that the late Dr. Schumacher, the originator of the concept of intermediate technology and author of the phrase, "Small is beautiful", did pioneering work in the construction of small, easily constructed rainwater tanks? Would the noble Lord inquire as to whether that pioneering work has been followed up recently and, if it has not, will the Government enter into discussions with the Botswana Government as to whether that would not be a very good way of expending some of the additional grant to which the noble Lord referred?
Lord Belstead: My Lords, I will certainly look into the very interesting piece of information that the noble Lord, Lord Oram, has given to the Government. I think that it is worth adding that, as to how the additional aid to help relieve the drought is to be used, it is, I understand, to be decided by the British High Commissioner acting on the advice of the British Development Division in southern Africa based in Lilongwe, in consultation, of course, with the Botswana Government.
Lord Somers: My Lords, has the Government any information as to whether the main source of water in Botswana could be expanded?
Lord Belstead: My Lords, I am afraid that I cannot answer that specific question. There is no doubt that what has happened in this case is that the rains, when they were supposed to come at the end of last year and the beginning of this year, failed. I believe that some rain has now begun, but, of course, very late.
Lord Wells-Pestell: My Lords, may I ask the noble Lord whether he can indicate to the House how the
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amount which the Government will give, to which he has referred, is likely to be spent? May I ask whether there are any schemes for the digging of wells? When I myself was in Botswana a few years ago I was given to understand that there is a fair amount of water in places where there is a drought at some 100 ft. to 120 ft. below ground level. The problem was the cost of constructing the wells. I wonder whether noble Lord has any information on that.
Lord Belstead: My Lords, I do not want to cut off the noble Lord with my answer, but I do not think that I can add to what I have just said about the way in which the uses to which extra aid will be put would be decided. In essence, it will be by discussion and consultation between us and the Botswana Government. It is worth adding that, in addition to trying to go to the root of the problem, to which the supplementary questions of the noble Lords, Lord Oram and Lord Wells-Pestell, are directed, there is the matter of immediate relief. This is where aid not only from us but from other countries, including the USA, Norway, Sweden and the Federal Republic of Germany, will come in very useful.
Lord Brockway: My Lords, while welcoming the additional aid that has been offered and the assurance by the Minister that he will consider the constructive proposals made from this side of the House, may I ask this question: Will the Government keep in consideration the fact that Botswana is now a frontline state for democracy in Africa and that the success of democracy in Botswana will largely depend upon the economic assistance which it receives? Will the Government bear that worldwide principle in mind?
Lord Belstead: Yes, my Lords, the Government will bear that in mind.

Business
Lord Denham: My Lords, it may be for the convenience of the House if I announce that dinners will be available this evening at the usual time. Subject to the progress of business, the Committee stage of the Local Government Finance (No. 2) Bill will be adjourned at approximately 7 p.m. for approximately one hour. During this adjournment, the Committee stage of the Social Security and Housing Benefits Bill be continued.
Planning Inquiries (Attendance of Public) Bill
Brought from the Commons; read a first time, and to be printed.

Local Government Finance (No. 2) Bill
2. 57 p.m.
Lord Bellwin: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Bellwin.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clause 1 [Limitation of rating powers.]:
Baroness Birk Baroness Birk moved Amendment No. 1:
Page 1, line 7, at beginning insert ("Except as provided in subsection (4) below").
The noble Baroness said: Before I move this amendment I think that there is something I must say by way of protest. The Government have tabled a number of very complicated amendments which we had sight of (those of us who managed to be here) only on Friday morning. During the Second Reading of the debate the Minister very clearly and frankly said at col. 627:
"Before I move on to Part II of the Bill, your Lordships may be aware of the commitment made by the Government during the course of the Bill's Committee stage in another place to bring forward amendments to clarify the position of rating and precepting authorities, and of ratepayers, in the light of the complicated rating issues which were raised by this House's ruling in the GLC/Bromley case."
He went on to say:
"I will be tabling the necessary amendments in good time for our discussion in Committee of Part I of the Bill".
I must put it to the Minister, although I do not think for a moment that it was his own personal fault, that it is extremely difficult, with Government amendments of this complexity and importance, to have them available only on Friday—while most of us have seen them only today.
Having said that, I now move the first amendment that stands in the name of my noble friend and the noble Lord, Lord Evans of Claughton. The purpose of this amendment is to try to deal with a situation which was raised—I remember raising it myself—on Second Reading where a local authority has to deal with emergencies of different kinds and would, as the Bill stands, be prohibited from doing so without either getting express permission and a grant from central Government, via the Secretary of State, or having the opportunity to borrow money, which is going to become more and more difficult for local authorities.
In moving this amendment, with the Committee's permission, I should like to speak to Amendment No. 12 as well. These amendments would give power to a local authority to make a supplementary rate or precept in cases where emergency expenditure is required or expected income is significantly reduced. This is extremely important for several reasons. First, in the past year alone we have witnessed a number of severe natural and also man-made disasters from flooding, snow and rioting. We are also going to see local authorities having to undertake a great deal of extra preventive and other expenditure if the Pope's proposed visit takes place to this country. The cost to local authorities is going to be very considerable in those places which the Pope will visit. In other years, we have seen on the coast that sea defences have been broken.
When exceptional expenditure has been incurred by local authorities affected by such events, they have had to go cap in hand to the appropriate Government department to seek financial assistance. Such assistance is by no means certain and depends on a number of variables which are not always relevant to the predicament in which the local authorities find themselves. Sometimes the extra assistance is not forthcoming at all. As a result of the Government's economic policies, local authorities—as we are well aware—are also experiencing significant reductions in anticipated income. Examples of losses of income in this category are as follows: reduced rateable values —for example, where steel mills and aluminium smelters are being closed and where other industrial projects have been discontinued; falls in the numbers of those able to afford school meal charges and a reduction of course, in the employees concerned; reductions in the numbers of bus passengers, causing a drop in fare income on buses; reduced income from trade waste. Leisure facilities have been affected. For example, some local authorities have found it difficult to use swimming pools. Where they had plans to build them, they have now found it impossible to do so.
Therefore, with expenditure rising, with cuts in public expenditure and with their disposable income being reduced, local authorities are being put in a far greater squeeze than ever before. The power to levy a supplementary rate in exceptional circumstances such as those I have outlined—but they are by no means definitive—would allow local authorities to react to local needs. Local authority members, I suggest, are in a much better poition to assess local needs than central Government and could react more sympathetically and more quickly, and, in the end, more economically to local circumstances.
This is not to say that local ratepayers should be called upon to meet all the cost of emergencies or loss of income in their own areas. Government grants will normally be forthcoming, one hopes, either through block grant or as special additional grants related to emergencies. However, this will not normally cover the full cost of the emergency, as we have seen happening on various occasions during the year, particularly in the aftermath of the riots in London and Liverpool. The power to levy a supplementary rate in these circumstances would be well understood and appreciated locally and would enable the local community to help itself in the way and to the extent that it thought best. I beg to move.
Lord Evans of Claughton: We entirely support the amendment which noble Baroness has so ably moved. It should be underlined that the levying of supplementary rates up to the point of this Bill has been perfectly legal and has been very rarely used. That ought to be underlined. It is not as though local authorities have been wildly creating supplementary rates year in and year out. It has been a very rare occurrence. I suggest that in the future it will remain such, particularly if the limited rights that the noble Baroness mentioned are granted.
One is very conscious of the type of problem to which she refers. We in Merseyside have been particularly the victims of disasters and have been required to spend unexpected sums of money as a

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result of rioting. There has been a loss of passenger transport users and we have been the subject of a great number of closures of factories and commercial premises. As a result, there has been a great loss of income. Merseyside, and many urban areas of that kind, are particularly exposed to the special difficulties that might arise with a problem of the nature that we are discussing.
In my opinion, the power would not be used irresponsibly, because, if it were, the ratepayers, quite properly, would react. It is very important that there should be this reserve power in the case of the extreme emergencies of the kind that the noble Baroness mentioned. No doubt it will be argued by the Government that if there are exceptional expenditures of this kind they will be met by grants from central resources. But we all know that when there are grants given after riots and that kind of occurrence, the grants are never sufficient to cover the full cost that they have occasioned. Consequently, if local authorities are to maintain their responsibility for local crises and local problems, this is a very important amendment which should be carried and which will improve the Bill.
3.8 p.m.
Lord Leatherland: I feel that the Bill is taking the wrong line. We read from day to day about wage rises. Usually they can be looked forward to but sometimes they are bigger than expected. We also have to bear in mind the possibility of rises in the rate of interest. The payment of interest on loans is a very, very big item in the budgets of local authorities. I feel that it would be a mistake to prohibit this supplementary rate. If the Bill's proposal is adopted it will mean that councils at their annual budget meetings will fix their local rates at a higher level than would otherwise be the case. If they are prohibited from introducing a supplementary rate during the year then they must budget for the very worst outlook that exists at the time of the budget.
If the accounts of the council result in a surplus, this cannot go back to the ratepayers. Any surplus on a year's revenue account of a local authority has to be transferred immediately to the capital account. So the immediate result to the ratepayers is that they are suffering. I feel therefore that it would be better to leave matters exactly as they are. I had to encounter consideration of this question in earlier times when I was finance committee chairman of one of the biggest county councils in the country. Therefore I feel I know what I am talking about on this occasion.
Lord Bellwin: I assumed that we would be speaking to a number of amendments because so many are very similar, but as the noble Baroness specifically stated she was covering Amendments Nos. 1 and 12 I will do the same and reserve my observations on others, because I think the points may come in a little later. In the main the noble Baroness spoke about her concern for emergencies that can arise. I understand the cause of the concern: for example, the bad weather last winter did much damage and authorities were put to considerable extra work, but as far as is known no local authority has ever levied a supplementary rate or a supplementary precept to finance expenditure
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dealing with an emergency caused by bad weather. Moreover, Scottish local authorities—and they are not without their share of climatic difficulties and the ensuing problems—have managed quite adequately without any power to levy supplementary rates.
Faced with the need to find money quickly for unforeseen items of expenditure within the year, local authorities normally rely on revenue balances or allowances they have made for contingencies in fixing the main rates, or they rely on temporary borrowing in anticipation of revenue due in the same financial year, or a combination of all these sources, all of which will continue to be available after the Bill comes into effect. In any case, if any local authority wished to borrow temporarily to finance unforeseen items of expenditure during the year they would be able to seek the Secretary of State's consent to do so. My right honourable friend the Secretary of State has made it clear that consent will be given in cases of genuine emergency, on condition that the money borrowed is repaid out of revenue income within the quarter of the following year.
For 1981–82, any authority forced to spend more than the product of a 1p inclusive rate on emergency work made necessary by adverse weather conditions can claim specific Government grant totalling up to 75 per cent. of the net additional expenditure. This scheme is similar to schemes operated under a Labour Administration in 1977–78 and 1978–79. Under those earlier schemes, claims were submitted by seven local authorities in 1977–78 and there were 16 in 1978–79. Special assistance was offered under a similar scheme in 1979–80 but no claims were submitted.
As regards the cost of riot damage last year, I appreciate this could not have been foreseen, but central Government is bearing 60 per cent. of the cost, some £16 million out of a total of some £26 million falling on local authorities. I do not know whether your Lordships are aware that my right honourable friend the Home Secretary is currently reviewing the Riot (Damages) Act of 1886 to see whether anything needs to be done about that.
Referring to unanticipated losses of income on which the noble Baroness touched, there are a number of reasons why a local authority might lose income it has expected to receive, but perhaps that is one of the parts of this debate in Part I that we might come across later. The noble Baroness specifically referred to authorities suffering a loss of income as a result of a sharp decline in rateable value, for example, presumably as a result of the closure of a factory or plant. Normally the grant system compensates for rateable value deficiencies but in England this does not flow through until the following year because the rateable value data used in the grant calculations, though revised annually, are frozen for the whole year. There is thus the potential for a sharp and uncompensated loss of income by an authority for part of the year until the new data come into effect.
The problem could be overcome by unfreezing the data, thus allowing mid-year revisions to an authority's rateable value and hence to its grant entitlement. Indeed, I understand this happens in Wales. The Government are quite prepared to consider this, but traditionally this is a matter on which they are guided by the views of local authority associations, and in

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England they favour keeping the data frozen because they provide greater certainty for local authorities' grant entitlements generally. This is a subject on which there is clearly a difference of opinion: it is a party political difference, I think.
The noble Baroness said that the amendment would allow local authorities to react to local needs. I would just pick up the point made by the noble Lord, Lord Evans, when he said how infrequently this power was used in the past. One can use that argument either in support of the amendment or against it. I would use it very strongly against it because, as I have said before to your Lordships, in all the years I was in local government I knew there was such a thing as a supplementary rate but we never ever contemplated it at all. It was just one of those things that one knew existed. But when you come to fix your rate at the beginning of the year it is quite true, as the noble Lord, Lord Leatherland, said, that you take into account likely movements in interest rates—they may well go up as well as down during the year—and you take into account the Government's suppositions about inflation on which they have given their grant. You come to your own conclusions and decide the rate, but it does not follow that you make it higher. You put into contingencies those elements which cover the kind of possibilities you fear may come about. That is what you do and that is how you do it. One does not say: "We had better rate higher than that because, if we do not, we may get caught out". The fact is that you may well get caught out the other way because interest rates can come down as well, and often do.
I can remember that, when first charged with budgeting on this very point, I tried to find out how accurate had been the forecasting by the officers in the past, so I took 10 years as a sample to see how accurate the various forecasts of interest rates and so on had been. I found that in nine years out of ten they had overestimated. They were prudent and thought they were being wise. But in the main that is where you put your allowances to cover what may happen, and certainly you never contemplate supplementary rates; so I do not think it needs to be a factor in any way as to how you fix the rates.
The noble Lord, Lord Evans, said that if there were this power it would not be used irresponsibly, but of course the whole reason why it is here in this Bill now is that the power has been used irresponsibly. It was never used for years, as I have said, but during the last year or two the fact is that a number of authorities have decided to use it, and to use it so as to increase their spending, against the Government's specific wishes. That is again something that brings into question the whole of the central and local government relationship. I am as sad as anyone that this should have to be so, but no Government are going to stand by and see this ignored in the way that has happened in the past.
Therefore, with only one more observation to make, I would say to the noble Baroness that the Government cannot accept these amendments. The one example I would give is that if this is going to cause the problems that she envisages, I would refer her to Scotland, where they have not had this power before and it has not led to problems of this kind there. So
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on all counts, as your Lordships will gather, the Government are strongly opposed to these amendments.
Lord Bruce of Donington: We on this side are a little disappointed with the noble Lord's response to the very reasoned arguments put forward by my noble friend and also by the noble Lord, Lord Evans of Claughton. The noble Lord addresses himself to this amendment with an air of almost injured innocence. He looks back nostalgically on the days when there was no such thing as a supplementary rate, and indeed, the noble Lord, Lord Evans, referred to this specifically.
What has been the change? The change has been the attitude of his right honourable friend the Secretary of State towards local authorities and, indeed, towards local authority spending. Under the auspices of his right honourable friends, grants to local authorities—central Government support—have been progressively cut down, at the same time as the demands on local services have been rising, partly as a result of the increase in the cost of the performance of their statutory obligations under conditions of inflation which, in spite of three years of the dubious blessings of Her Majesty's present Government, still remains at slightly above what it was when they took over. Moreover, owing to the industrial devastation which they have caused throughout the country, and in some of the big cities in particular, the rateable income from industrial properties has progressively declined. Therefore, local authorities have been faced with the job of performing their statutory and local responsibilities under conditions of ever-increasing stringency.
It is no answer to my noble friend to say that there have been a number of irresponsible local authorities. We on this side are just as much in favour as anybody else of proper economies and the elimination of waste in the provision of all local authority services. But we are bound to note that much of the reaction that has proceeded from certain local authorities, who have been grievously struck by the economic and monetary policies of the Government, has been against the harsh and uncompromising attitude of the noble Lord's right honourable friend the Secretary of State. In subsequent amendments, some references will be made from, I think, all sides of the Chamber to the growing tendency, particularly under this Government, of arbitrary restrictions being placed on the powers of local authorities, and since the argument will arise in its acute form then I shall refrain from enlarging upon it here.
But as the noble Lord, Lord Evans of Claughton, pointed out—and we might do well to remember it—if local authorities behave irresponsibly, then the electors of the authorities' areas have a right and an opportunity of changing the councils' policies by changing their political complexion, and this is what has happened in the case of various local authorities. Sometimes, local electors and some substantial ratepayers have chosen—and chosen quite deliberately—in spite of the insidious propaganda that all public expenditure is essentially evil, to elect back to office those whose deliberate policy, upon which the electorate has had a chance of voting, has been to increase public expenditure on services in the locality, at levels determined by the councils themselves, after consultation

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with all interested parties and, indeed, contact with the electorate.
At other times, it has gone the other way. Sometimes, localities have had the dubious pleasure of changing the policy the other way and it has been decided by a majority of the electorate to restrict and, in some cases, to cut back local expenditure. But in all cases the decision has been made by the electorate under conditions which, mainly owing to the climate of social opinion that is determined largely by the media, have been favourable to the arguments put forward by the party opposite.
All one is asking for here, and asking for reasonably, under the conditions that are laid down in Amendment No. 12, is for a local authority, without having to have recourse to borrowing at interest rates at the exorbitant levels that have been very largely determined by the party opposite, to be able to make proper revenue provisions. Indeed—and we shall return to the theme in more detail later, because it is not suitable for this amendment—the present policy seems to be to deny a local authority the exercise of its ordinary democratic right, and to substitute the centralised direction from the state which is so vehemently put forward by the noble Lord's right honourable friend. Therefore, we hope that this amendment, which has been put forward in good faith and with adequate explanation by my noble friend, will commend itself to noble Lords on all sides who believe in local democracy and in the exercise of powers through local authorities.
Lord Mottistone: If I may help my noble friend, it seems to me, despite the honeyed words of the noble Lord, Lord Bruce of Donington, and other spokesmen opposite, that, bluntly, this is a wrecking amendment. It is against the principle of the Bill, it does nothing at all about democracy and I do not think it commends itself to anybody. My noble friend made a very good case and that is where the matter should rest.
Lord Bellwin: Just very briefly, may I say in reply to what the noble Lord, Lord Bruce, said about the increased cost of statutory provisions, that I am sure he knows that the levels of statutory provisions are very flexible indeed. They are really for interpretation by individual authorities, and I assure the noble Lord that many authorities interpret them in very different ways. He said, not unfairly, that the local electorate can give a view on an authority's performance and, in theory, that is right. I should be much happier, so far as rates levels and services are concerned, if the people who pay 60 per cent. of the rates—industry and commerce—had a vote of some kind which was meaningful. Unhappily, they do not and therefore, to some extent, it diminishes the case for that.
The noble Lord also asked why we do not accept that authorities should be allowed to make proper revenue provision. But there is nothing whatsoever in these proposals that in any way prevents them from making proper revenue provision. All we are suggesting is that they make provision in the right way, which is by contingencies, in the same manner as they always did in the past, until it was felt by some authorities that they wanted to overturn the previous administration's rates and come in on top and charge everybody more. We are very much concerned about the effects
16
of that on the ratepayers; and, as my noble friend Lord Mottistone said, in the context of the ban on supplementary rates that we are proposing in this Bill, we could not accept these amendments, which would drive a coach and horses through the Government's efforts to combat inflation and to protect ratepayers from unexpected demands for supplementary rates part way through the year.
Baroness Birk: I am glad that the Minister thought his noble friend Lord Mottistone was such a help to him. It seemed to me that he was not. He called this a wrecking amendment. I do not think that the noble Lord can have read it very carefully because the amendment makes it quite clear that this is in order to raise revenue to meet expenditure incurred or to be incurred in the exercise of powers under Section 138 of the Local Government Act 1972 (measures with respect to emergencies or disasters) or under the Riot (Damages) Act 1886. I shall not read any more of the amendment because I am sure that the noble Lord will have great pleasure in reminding himself of it when he reads it.
The answer which the Minister gave is completely unconvincing. His argument was: because supplementary rates are levied so seldom, why not get rid of them? Surely the right way to look at it is the other way round: if they are there to be used but will, according to the amendment, be restricted in their use in this way, then why not leave them alone? The noble Lord talked about what happened in the past, but he was talking about a completely different local government ball game. Local authorities are being squeezed very hard. As we heard from all sides of the House on Second Reading, the Minister got very little, if any, support, for the Government's case. His noble friends were asking him to change the Bill all the way through. So there is a difference in the money which local authorities are receiving. There is a difference in their disposable income, some examples of which I pointed out. The Minister's answer was that the problem could be overcome by unfreezing the data. Perhaps we can look at that, but it is not the answer when we are in the middle of dealing with a Bill of this kind which relates to supplementary rates.
The important point is that local authorities are highly disenchanted—that is a great meiosis—with the Government's attitude towards them. They see it as another way of strangling the life out of them and of again bringing everything back to central Government. There is lack of understanding—not understanding, even, but appreciation or acceptance of this point. My noble friend Lord Bruce of Donington was absolutely right when he said that the Secretary of State is anxious not to let a single inch go. It is a complete obsession. We saw it in the case of the Housing Bill and in the case of every other Bill to do with local government. This is how authorities throughout the country, whether they are Labour, Conservative or Liberal authorities, feel. They feel that local authority life is being squeezed out of them. Since the Minister was unable to give a satisfactory answer and was not prepared to consider this amendment at all, I must ask the Committee to divide upon it.
Lord Bellwin: Before the noble Baroness sits down, she said that we are in a new ball game—that local government is now being squeezed. I should like to remind her of Circular 45/1976, under which the then Labour Government imposed upon local government the instructions of the International Monetary Fund: a cut in expenditure—an immediate cut—of 3 per cent. within that one year. If that was not being squeezed and if it was not the same ball game as the noble Baroness thinks we are in now, I do not know what is.
Baroness Birk: Of course it was a squeeze then, and it was tied to the national economy, as it is now. But since then we have had cuts on that cut. Local authorities today are very much worse off. If he can do so, let the Minister tell me where services have not been cut almost to the bare bone: the education services, the social services. Let him try to prove that they were worse off in those days than they are today. It is getting worse and worse. The noble Lord knows that as well as I do.
Lord Bellwin: The noble Baroness had better try to prove that they are better off as a result of the extra rates which are being charged.
Lord Harris of Greenwich: If the noble Lord, Lord Bellwin, and the noble Baroness, Lady Birk, will forgive me for intervening in this extremely interesting series of exchanges between them, may I raise one or two slightly broader questions and explain why my noble friends and I will be voting for this amendment, though without necessarily the same degree of enthusiasm as the official Opposition? Most of us recognise that there is a real problem.
First, the noble Lord, Lord Bellwin—who always speaks with great fairness in this House—rather overstated his case, as did his noble friend behind him, when it was suggested that there were going to be very substantial economic effects one way or the other if this amendment was or was not carried. The effect of this amendment, were it to be passed or rejected, would be fairly marginal, for the simple reason that the number of occasions upon which supplementary rates have been imposed in the past has been very limited in number.
Secondly, if the noble Lord, Lord Bellwin, will forgive me for saying so, I was surprised to hear him use the argument about the instructions of the International Monetary Fund in 1976. I have had the pleasure of listening to Mr. Wedgwood Benn using that argument and I find it mildly surprising to hear it coming from the Government Front Bench. Having had some dealings with the matter in the past, may I say that the International Monetary fund, as the noble Lord, Lord Thorneycroft, will probably confirm, does not give instructions to British Governments about the way in which they should handle local authority expenditure in the way that the noble Lord, Lord Bellwin, seems to imagine.
On the broader question, may I make two points: First, the noble Lord, Lord Bellwin, has for the argument he has put this afternoon one justification with which I agree. I believe that there is a very different type of local authority now existing in some areas of this country. These authorities are composed of
18
people some of whom do not have a great deal of enthusiasm for parliamentary democracy and who are hankering for confrontation with central Government. Like the noble Lord, Lord Bellwin, in the past I, too, had the fortune of being a member of a local authority. When I was the leader of the Labour group on that authority, although we had major disagreements with the Conservative Government when they were in office the idea that we were going to spend the whole of our time trying to undermine the elected Government of this country would have been regarded with astonishment by the overwhelming majority of my colleagues on that authority
Unhappily, that situation now arises, as we all know perfectly well. There are examples which we can see in the Greater London Council, in Lambeth and in quite a few other authorities where people are being elected to those authorities who see this as a way of pursuing some form of pan-Marxist revolution. This is a real issue and it creates real problems for the Secretary of State, be he a Conservative or a Labour Secretary of State, or the Secretary of State of any other party. There is a new problem and we have to recognise it as such.
But where both the present Government and the present official Opposition are in total agreement in this debate—this matter has not yet been raised today, but it has been raised before in this House—is in maintaining a local authority voting system which encourages precisely what they profess to object to. If we look at the local authority election results in most of the London boroughs, with the very small exception of a few boroughs in the East End of London and one or two, I suspect, on the fringes of London in the opposite direction, the fact is that the overwhelming majority of the people who voted, voted against the party which is now in control of those boroughs.
If the noble Lord, Lord Bellwin, and his colleagues and other members of the Committee are disturbed by what is going on in local government, as I believe they have every right to be, I very much hope they will pay some attention to the voting system in local government which is just as objectionable—indeed, in some respects far more objectionable—as it is in central Government.
Baroness Fisher of Rednal: I think that the last speaker exaggerated what he said about local government. It is very easy to pick out two London boroughs and speak as though they are representative of local government throughout the country. As the noble Lord is fully aware, I come from the Birmingham local authority, with a great deal of experience in that city. Birmingham was one of those cities which decided to charge lower bus fares within the confines of the West Midlands public transport area. By no stretch of the imagination was that local authority Marxist or anything like that. For us to use such arguments to put over the power of changing the voting system is, with all due respect to the noble Lord, Lord Harris of Greenwich, a little unfair.
As my noble friend Lady Birk rightly said, this is a different ball game. In the inter-war years, it was very often local government which set the pace. Central Government took up local government ideas and helped them along with the finance, because it was local government ideas which were being brought

19
forward more and more. It is quite understandable that local authorities now find that they are not in that position; that they cannot be the innovators any more, because they are curtailed by all kinds of financial limitations. This makes them have to think seriously—and I accept that local government have to work within the confines of the economy—because if local government want to introduce a new service or extend an existing service, they can only do so by cutting back services already in operation. Central Government are persistently asking local government to cut back their number of employees, but this can only be done to a certain level. One must have a certain number of people to look after elderly person in social services' homes; one must have people to teach the children; and one must have people to undertake other social services. There is, therefore, a limit to the number of people to which one can cut back in local authorities.
I do not know whether I heard the noble Lord, Lord Bellwin, correctly when he spoke of the cost to industrial ratepayers. I have in front of me the City of Birmingham's budget, 1982–83, which shows that 38 per cent. of the money which the Birmingham local authority gets comes out of the rates. Of this 38 per cent., domestic ratepayers are paying 16 per cent. and industrial ratepayers 6 per cent. I would not have thought that the deputy city treasurer and the chief executive officer of the Birmingham local authority would issue figures like that in a publication which goes to the press unless they were correct. I would not have thought that they would publish anything which is incorrect. I will pass this document to the noble Lord, Lord Bellwin, afterwards, if he thinks that I cannot read, but the budget states quite clearly that domestic ratepayers pay 16 per cent., commercial ratepayers 10 per cent., industrial ratepayers 6 per cent., other ratepayers 4 per cent., and nationalised industries 2 per cent. That makes a total of 38 per cent. of the 100 per cent. rates which the city obtains from various types of ratepayers.
More often than not, when the domestic ratepayer is being levied a higher charge, I do not believe there is as much grumbling about the increased rate or supplementary rate that might be raised as there is about services not being provided. If any of your Lordships stand in bus queues when there is a gap of three-quarters of an hour between each bus, you will know that there is always much more grumbling about that—or when a 20-minute service is cut to a 35-minute service. If local government must continue to provide those services with a cutback from central Government, it behoves us to let progressive local authorities have the power to levy a supplementary rate, if they need to do so.
3.45 p.m.
Lord Bellwin: I am absolutely certain that the noble Baroness, Lady Fisher of Rednall, is not wrong about the figures she has read out—but in her interpretation of them she is absolutely wrong. The fact is that industry and commerce pay an average percentage rate throughout the country of about 60 per cent. of all the rates which are paid. The noble Baroness has quoted a figure of 6 per cent., but she may be looking in the wrong column or on the wrong page.
Baroness Fisher of Rednal: It is shown on a big graph.
Lord Bellwin: I do not want to go on at length about that point, but we will go into it later on, I am quite sure. I do not want to go on at length about this amendment, because we are slowly moving into other areas which are completely off the subject. The subject of this amendment is really supplementary rates. I will make only one brief observation, which is to say why both my noble friend Lord Mottistone and I feel that this is indeed a wrecking amendment that does drive a coach and horses through the Bill—despite what was said by the noble Lord, Lord Harris of Greenwich. Paragraph (c) of the suggested new subsection (4) would allow local authorities to continue to raise a supplementary rate or precept, for any and I quote: "unanticipated loss of income". That is so wide that clearly it is impossible, in view of what has happened, not in years gone by, but in the last year or two. This is a safeguard that we are bringing about for ratepayers who cannot accept the unanticipated burden which could come upon them suddenly for whatever reason. That is why I strongly oppose the amendment.
3.47 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 60; Not-Contents, 98.

DIVISION NO. 1

CONTENTS

Amulree, L.

John-Mackie, L.

Ardwick, L.

Leatherland, L.

Bacon, B.

Leonard, L.

Banks, L.

Listowel, E.

Beaumont of Whitley, L.

Llewelyn-Davies of Hastoe, B.

Birk, B.

Lovell-Davis, L.

Bishopston, L. [Teller.]

McCarthy, L.

Blyton, L.

Mais, L.

Boston of Faversham, L.

Mayhew, L.

Briginshaw, L,

Noel-Baker, L.

Brockway, L.

Oram, L.

Bruce of Donington, L.

Paget of Northampton, L.

Burton of Coventry, B.

Peart, L.

Byers, L.

Phillips, B.

Caradon, L.

Plant, L.

Collison, L.

Ponsonby of Shulbrede, L. [Teller.]

Crowther-Hunt, L.

David, B.

Sainsbury, L.

Davies of Leek, L.

Stedman, B.

Denington, B.

Stone, L.

Donnet of Balgay, L.

Strabolgi, L.

Evans of Claughton, L.

Strauss, L.

Fisher of Rednal, B.

Taylor of Mansfield, L.

Foot, L.

Underhill, L.

Gosford, E.

Wallace of Coslany, L.

Hall, V.

Wedderburn of Charlton, L.

Hampton, L.

Wells-Pestell, L.

Harris of Greenwich, L.

White, B.

Howie of Troon, L.

Wigoder, L.

Jacques, L.

Wootton of Abinger, B.

Jenkins of Putney, L.

NOT-CONTENTS

Ailesbury, M.

Alport, L.

Alexander of Tunis, E.

Ampthill, L.

Allerton, L.

Auckland, L.

21

Avon, E.

Lucas of Chilworth, L.

Belhaven and Stenton, L.

Luke, L.

Bellwin, L.

Lyell, L.

Beloff, L.

McFadzean, L.

Blake, L.

Mackay of Clashfern, L.

Campbell of Alloway, L.

Macleod of Borve, B.

Campbell of Croy, L.

Mancroft, L.

Cathcart, E.

Margadale, L.

Clwyd, L.

Marley, L.

Constantine of Stanmore, L.

Massereene and Ferrard, V.

Cottesloe, L.

Mersey, V.

Craigton, L.

Morris, L.

Cullen of Ashbourne, L.

Mottistone, L.

Daventry, V.

Mowbray and Stourton, L.

Davidson, V.

Murton of Lindisfarne, L.

De Freyne, L.

Norfolk, D.

Denham, L. [Teller.]

Northchurch, B.

Derwent, L.

Nugent of Guildford, L.

Dilhorne, V.

Orr-Ewing, L.

Drumalbyn, L.

Pender, L.

Dudley, B.

Penrhyn, L.

Duncan-Sandys, L.

Porritt, L.

Effingham, E.

Rankeillour, L.

Ellenborough, L.

Robbins, L.

Elles, B.

Saltoun, Ly.

Ely, M.

Sandford, L.

Enniskillen, E.

Sandys, L. [Teller.]

Glenkinglas, L.

Savile, L.

Gore-Booth, L.

Sempill, Ly.

Gormanston, V.

Skelmersdale, L.

Gridley, L.

Somers, L.

Grimston of Westbury, L.

Spens, L.

Hailsham of St. Marylebone, L.

Stamp, L.

Strathcona and Mount Royal, L.

Halsbury, E.

Hastings, L.

Strathspey, L.

Hill of Luton, L.

Sudeley, L.

Home of the Hirsel, L.

Terrington, L.

Hunter of Newington, L.

Thomas of Swynnerton, L.

Hylton-Foster, B.

Thorneycroft, L.

Ilchester, E.

Trefgarne, L.

Kinloss, Ly.

Vaux of Harrowden, L.

Kinnaird, L.

Vivian, L.

Kinross, L.

Wakefield of Kendal. L,

Lane-Fox, B.

Ward of Witley, V.

Long, V.

Willoughby de Broke, L.

Loudoun C.

Windlesham, L.

Resolved in the negative, and amendment disagreed to accordingly.
3.55 p.m.
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 2:
Page 1, line 7, at beginning insert ("Except as provided in subsection (5) below").
The noble Lord said: I beg to move Amendment No. 2 which, with the Committee's permission, I will take with Amendments Nos. 13 and 16, together with some consequential amendments to Schedule 4. The purpose of this amendment is to give a local authority the power to raise a supplementary rate, where the Government themselves reduce the amount of grant made available to the local authority, in order that it may meet what it considers to be the proper needs of the community; that is, the correct and reasonable balance between social and service needs and the interests of those who provide the money for the provision of those services. The noble Lord when he was speaking to the last amendment made some reference to the fact that the previous Administration made certain cuts in public expenditure, including that of local authorities, at a time when the balance of payments position of this country most certainly needed a tight rein back under all heads.
We are not talking under the same circumstances at all; we are talking in terms of a country which is enjoying one of the largest balance of payments surpluses that it has had in years, for which the Government claim some credit, at the same time, of course, inflicting on the country, quite unnecessarily, the burden of an extra 2 million unemployed. How can he compare this with those circumstances of a very substantial balance of payments deficit, before the benefits of North Sea oil mysteriously proceeded to weave their way into the economy shortly after, but not consequential upon, the Government of the noble Lord opposite coming into office in May? They have been blessed by the biggest bonus in monetary and economic terms the country has ever had. Despite that they have adopted an economic policy—by the exercise of a dogma that is now discredited in practically every academic and economic circle outside his right honourable friend the Chancellor, inevitably the noble Lord, Lord Cockfield, and one or two hangers-on—completely discredited, a monetarist theory completely discredited, which even the Government themselves no longer believe in at all; and yet they still proceed with this policy of constriction.
The noble Lord, Lord Mottistone, put forward his usual, very understandable and very reasonable, plea for industry, pointing out how industry is not represented in local authority affairs. Well, I suppose it is the right honourable gentleman the Minister himself who compensates so weightily on his side to try to redress the electoral balance which he alleges exists. Local enterprise and commerce, after all, still need very good roads maintained, they still need refuse collected, they still need the provision of the police, they still need the provision of the fire services, they still need street lighting, and a whole series of other services provided by the local authority. Of course, unlike the domestic ratepayer who pays his or her rates out of taxed income, industry and commerce are allowed to deduct their rate contributions for tax purposes—a substantial relief that is not available to the domestic ratepayer.
Surely it must now be acknowledged by the Government—and I appeal to them to allow the rays of enlightenment to penetrate the prejudices under which they have so long laid—that their monetary and economic policies are as dead as a dodo and have no relevance any more? What is required is a resurgence in this country, not an ungoverned resurgence and not an ungovernable resurgence, no exercise of wild excess of slinging one's hat into the air and yelling "Alleluia" although I suspect that on the demise of the Government there would be expressions of pleasure that bordered upon those signs of exuberance. No, we do not require that. What surely is required, and what surely should be restored to the local authorities, is the means. If for any reason central Government decide that the contribution of the taxpayer in general to local authority revenues should be cut, and that should not be done by reasons of dogma but only by a careful consideration of the balance of where taxes should be borne, then surely in those circumstances a responsible local authority in close contact with its electorate ought to be able to do just exactly that. If it does it wrongly it will incur the opprobrium of its

23
electorate and will in due course be slung out. If it does it reasonably it will be sustained.
On the performance over the last two or the three years I think that it is abundantly clear that there are quite a large number of ratepayers in the United Kingdom—and they are not all confined to the wealthy, the very rich, or the industrial commercial companies—who see it as a matter of common, social necessity for the benefit of the community in which they live that certain expenditures should be increased in certain sections of the local authorities' activities. They should be the final arbiters in this matter.
I know that the noble Lord will describe this as a wrecking amendment. Of course, any Government do not like to have their own will challenged politically. I confess to admitting that I think that a reasonable person is a person who agrees with me, and I think that the noble Lord thinks likewise. The time has come for us to behave like reasonable and sensible people, without showing any vindictiveness to anybody, and to adopt common sense solutions and to restore to the local authorities the powers which they had and with them that degree of tranquillity in past local government affairs to which the noble Lord referred so nostalgically in his speech on the last amendment. I beg to move.
Lord Mottistone: I hope that the noble Lord, Lord Bruce of Donington, will not mind if I defer following him on the parts of his comments which referred to business rates until I come to my own amendments a little later on to which they are totally relevant. All I would say now is that the noble Lord was quite right when he said that this was a wrecking amendment, because, of course, it is. I had a better simile—namely, that he had harnessed a new set of horses to his coach to drive through the Bill and I think that they are much more dangerous horses. I really cannot understand how he thinks for one minute that the Government will accept the amendment and perhaps the sooner we get over this amendment, and get it out of the way, the better.
Lord Evans of Claughton: It seems to me from discussing this Bill with borough treasurers, directors of finance or whatever they are now called, that they regard—and they are of course non-political, publicly anyway—the proposal enshrined in the amendment as being one of some importance because if local authorities can be subject to decisions to reduce the amount of grant after a local authority has fixed its rates, it puts the director of finance, quite apart from the council, in a very considerable difficulty. I know that the right honourable gentleman the Secretary of State, when the Bill was going through another place, did away with differential super holdback at that time. But is it not correct that differential holdback is still possible? Is it not right that non-differential super holdback is still possible? I hate this jargon but they are the words that are bandied about the corridors of town halls with a frisson of fear at the moment.
If those penalties can be imposed it would seem to me that, unless the amendment is passed, local authorities have no certainty at all about what their grant will be or how much money they will be given by the
24
Government in any one year. If a local authority is not in any certainty, if a local authority is to have penalties imposed upon it retrospectively, it seems to me that it is very unfair and very difficult for local authorities to organise their affairs and they should, under those circumstances, be allowed to raise supplementary rates to cover those kind of circumstances.
I shall no doubt have the opportunity later on to express my views about the amendments of the noble Lord, Lord Mottistone. I do not regard this as a wrecking amendment; I regard it as a useful implement with which a responsible local authority will be able to make predictions about the kind of money that will be available to it in any one year from Government resources. I agree entirely that for local authorities to be much less dependent on grants, and for local government to be allowed to raise money from other sources, would be the healthiest thing of all. I hope that soon the Government will be putting forward proposals for changing the rating system completely. In the meantime, while local authorities are so dependent on grants, it seems to me that they must have some protection against the great uncertainties of this legislation; and this amendment seems to me a useful way of creating some certainty in these uncertain conditions.
Lord Bellwin: Before I respond to the amendment, I should like to say a few words in reply to the point that the noble Baroness made prior to introducing Amendment No. 1, when she referred to the problems of herself and her colleagues as regards the amount of time they had to look at amendments. Let me say at once that I very much regret that. As she knows, one tries very hard to ensure that all information, Notes on Clauses and anything else that noble Lords opposite feel they would need to enable them properly to study, to comment on and to criticise and to move amendments to the Bill, is made readily available. When amendments come in late, I am as sorry about it as anyone else, but the fact is that on this occasion it was not least at the behest of her colleagues in another place that, first, there should be amendments; secondly, specifically that they should be very carefully considered and gone into in detail; and, thirdly, that there should be as much consultation with the associations as possible. I assure the noble Baroness that that has, in fact, been done, but it has taken time—admittedly, longer than one would have hoped. I can only apologise to the noble Baroness and her colleagues on that.
I know she will not mind my saying that sometimes we on this side have also to deal with amendments at short notice, even manuscript amendments. But in no way is that an attempt to do other than to say that I regret the lateness of the tabling of some amendments. The noble Baroness will know from her own experience that that was ever thus. I think she will probably acknowledge that that is so; but that does not mean that it is right, and I agree with that.
Baroness Birk: Before the Minister replies to the debate, I should like to thank him for that very generous apology. I know that he always does all he can to help. But, of course, as he perhaps appreciates, when you are in Opposition and amendments go down late, you do not have at your disposal the resources of a great department that you would have when in

25
Government. Looking to the future of the Bill, I was concerned that, as we understand, amendments will be tabled on, for instance, Clause 4, and perhaps on later clauses in the Bill, and it was in order to ensure that they are tabled that I raised the matter. As regards new clauses, will Notes on Clauses be made available? However, they will not be of much use unless the notes take in the new clauses that are being put down now.
Lord Bellwin: I am happy to say that so far in your Lordships' House I have never been in Opposition, and I hope it will be a long time before that unhappy state of affairs comes about. Nevertheless, I hope that I can comply with the noble Baroness's request. I confess that I have some doubts about amendments being tabled late. Certainly, for what they are worth, Notes on Clauses will be available at all times. If the noble Baroness would like clarification and explanation, I shall readily make that available through the department, because we are all concerned to get as good a Bill as possible. This is not about scoring points. If it means that we get meaningful debate, then I am absolutely content as to that.
Would that I could be as relaxed on the points which the noble Lord, Lord Bruce, made as I am on this latter point. I do not want to enter into a general economic debate with the noble Lord. I had to smile when he said that the country was enjoying one of the largest balance of payments surpluses that we have had for years, but he hastened to say that it was because of the good fortune of North Sea oil. I suppose that that is fair comment; it is a political game. I wonder what he would say if I reminded him that since the Government came to office, certainly within the first year, oil prices rose 100 per cent. I understand that they trebled at one stage. How does one cope with that? May I also remind him—and this is all that I had better say on this, otherwise we shall be digressing—that in 1976 the then Government had been in office for some 2½ years, and it was then that they were in the pickle in which they found themselves from policies which they had been pursuing. But I shall not pursue this as it is somewhat off the subject.
Lord Jacques: Perhaps the noble Lord would give way on two points before he leaves that matter. First, the increase in the price of oil increased the balance of payments surplus. It was something that occurred, which the Government did not expect. Secondly, would the noble Lord bear in mind that when we were in office, instead of having the benefits of exporting oil, we had to import the capital equipment which was necessary to produce the oil?
Lord Bellwin: I said that I would not enter into a debate and nor shall I, but I should like to comment on the first point which the noble Lord made. The noble Lord, Lord Bruce, made the point that it was the result of the economic situation—he was picking up something I said on the earlier amendment—that led to the whole problem of shortage of funds and economic difficulty. In fact he referred—and I wrote it down, as he knows I always do—to economic policies as dead as a dodo, and so on. I shall say only this, and this will be my
26
last word on the subject. One observes the near panic with which those in the City and elsewhere contemplate even the possibility of an Administration other than a Conservative Administration being in power. So those are the discredited policies to which the noble Lord referred.
However, let us return to the point of the amendments. I would simply say—and this is very important—that a survey carried out not very long ago here in London of 500 firms by, I think, the London Chamber of Commerce, showed that as many as threequarters of those 500 firms said that they had either had to close plants or branches, had moved out of the area or had reduced staff solely because of the impact upon them of rates. I do not think that anyone would want to belittle that because it is an important factor in what happens to industry and commerce.
I thought that the noble Lord, Lord Evans, got to the point of the grant entitlements, which I understand is the first of these particular amendments. But the mid-year changes in grant are not new at all. Under the previous rate support grant system it was always necessary to adjust or to close-end grant entitlements in order to match them to the total of grant available for distribution. Authorities were able to plan for that contingency. As we have said before, there was no widespread recourse to supplementary rates. The new grant system retains this feature of the old, except that it now permits a fairer method of close-ending by adjusting the poundage schedule rather than by making the percentage reductions which were so unfair on those authorities which had low rateable values and which are so dependent on grant aid.
There will continue to be the need to adjust grant claims to match the grant available; but especially now, after a year's experience of the new grant system, I believe that local authorities will be able to anticipate the likely extent of such adjustments and provide for this in their initial rate demands, as they have always done in the past. I shall not resort to my long speaking note on this, because I am sure that the Committee would not want me to; it becomes a technical subject. But I have to go back to my own experience, and I hope that the noble Lord, Lord Bruce, will not deny me that.
One of the great grievances we had was the fact that what was then the resources element of the multiple regression analysis of the basis of the rate support grant settlement—the resources element—was always subject to clawback and you never knew what it would be. One could make one's rate and all of a sudden find that for no reason that affected you, but simply because another authority, or series of authorities, had decided to increase their rates, there had to be a deduction from your allocation of the resources element. That was unfair, yet we just did not know. Again, if we are not careful, we shall go into a great deal of complexity that is not necessary.
Whether or not this is a wrecking amendment, whether or not it drives a coach and horses through the Bill, whether or not they are the kind of horses which one of your Lordships thinks is more appropriate than another, I do not know. But what I do know is that the Government very strongly cannot accept the amendments.
Baroness Birk: The temperature goes down enormously directly you return to differential super holdbacks and things like that. It is very much more interesting to talk in a wider cosmos of events than on this, but this is what the amendment is about. It is true that the Secretary of State went back on the differential super holdback because he conceded that local authorities should have some certainty about grants, especially if they lost the power to levy supplementary rates. When we spoke about the past, clawbacks and so on, it was always in the context of authorities being able to levy supplementary rates if they wished to do so. The fact that very often they did not do so is quite another matter. To know that you have an opportunity is one thing, but not to have it at all is entirely different. Even now, without the super holdback, it still legalises a differential holdback by way of a system of expenditure targets and grant penalties. But the rules must be known before the start of the year so that the local authority can rate accordingly.
However, in spite of this, the Secretary of State can still make a change during the year. He can reduce everyone's grant across the board. This is the non-differential super hold, without reference to spending targets. He can also make the adjustment to authorities' grant claims to bring total claims in line with the national total in a penalising way. So there is a differential clawback.
To put it in a nutshell, the position is then that a local authority does not have certainty about its grant for any year and it has no fallback by way of being able to levy a supplementary rate at all. The Secretary of State certainly retains considerable powers to reduce grant, and we come back again to the same point of these amendments, and these powers need to be balanced by local revenue raising powers if programmes for spending on essential services are not to be at the whim of the Secretary of State. Therefore, we come back once again to the nub of the problem that in these various fairly extraordinary circumstances local authorities should still be able to have the power to levy supplementary rates.
I was impressed by what the noble Lord, Lord Evans, had to say about this. He has long and direct experience of this and he generally takes a relaxed and liberal—with a capital "L" and a small "1"—line on these matters and speaks both as a local authority man as well as a legislator in this House. I think that the arguments he put on this from his experience on the ground, so to speak, were entirely convincing.
4.21 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 65; Not-Contents, 99.

DIVISION NO. 2

CONTENTS

Airedale, L.

Banks, L.

Amherst, E.

Birk, B.

Amulree, L.

Bishopston, L.—[Teller.]

Ardwick, L.

Boston of Faversham, L.

Bacon, B.

Briginshaw, L.

Balogh, L.

Brockway, L.

28

Brooks of Tremorfa, L.

Lovell-Davis, L.

Bruce of Donington, L.

McCarthy, L.

Byers, L.

Mais, L.

Collison, L.

Mayhew, L.

David, B.

Molloy, L.

Davies of Leek, L.

Noel-Baker, L.

Denington, B.

Oram, L.

Donaldson of Kingsbridge, L.

Paget of Northampton, L.

Peart, L.

Elwyn-Jones, L.

Phillips, B.

Evans of Claughton, L.

Plant, L.

Fisher of Rednal, B.

Ponsonby of Shulbrede, L.

Foot, L.

Ross of Marnock, L.

Gosford, E.

Sainsbury, L.

Hall, V.

Seear, B.

Hampton, L.

Stedman, B.

Hanworth, V.

Stone, L.

Harris of Greenwich, L.

Strabolgi, L.

Hooson, L.

Strauss, L.

Houghton of Sowerby, L.

Taylor of Mansfield, L.

Howie of Troon, L.

Underhill, L.

Jacques, L.

Wallace of Coslany, L.

Jeger, B.

Wells-Pestell, L.

Jenkins of Putney, L.

White, B.

John-Mackie, L.

Wigoder, L.

Leatherland, L.

Wootton of Abinger, B.

Listowel, E.

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

NOT-CONTENTS

Airey of Abingdon, B.

Lucas of Chilworth, L.

Alexander of Tunis, E.

Luke, L.

Allen of Abbeydale, L.

Lyell, L.

Allerton, L.

McFadzean, L.

Ampthill, L.

Mackay of Clashfern, L.

Auckland, L.

Mancroft, L.

Avon, E.

Margadale, L.

Belhaven and Stenton, L.

Marley, L.

Bellwin, L.

Massereene and Ferrard, V.

Beloff, L.

Merrivale, L.

Blake, L.

Mersey, V.

Campbell of Alloway, L.

Mills, V.

Campbell of Croy, L.

Morris, L.

Cathcart, E.

Mottistone, L.

Clwyd, L.

Mowbray and Stourton, L.

Constantine of Stanmore, L.

Murton of Lindisfarne, L.

Cottesloe, L.

Norfolk, D.

Craigton, L.

Northchurch, B.

Cullen of Ashbourne, L.

Nugent of Guildford, L.

Daventry, V.

Orkney, E.

Davidson, V.

Orr-Ewing, L.

Denham, L.—[Teller.]

Pender, L.

Dilhorne, V.

Penrhyn, L.

Drumalbyn, L.

Plummer of St. Marylebone, L.

Ellenborough, L.

Elles, B.

Porritt, L.

Ely, M.

Rankeillour, L.

Enniskillen, E.

Redcliffe-Maud, L.

Glenkinglas, L.

St. Davids, V.

Gormanston, V.

Saltoun, Ly.

Gridley, L.

Sandford, L.

Grimston of Westbury, L.

Sandys, L.—[Teller.]

Hailsham of Saint Marylebone, L.

Savile, L.

Sempill, Ly.

Halsbury, E.

Skelmersdale, L.

Hastings, L.

Somers, L.

Hayter, L.

Spens, L.

Hill of Luton, L.

Stamp, L.

Holderness, L.

Strathcona and Mount Royal, L.

Home of the Hirsel, L.

Hunter of Newington, L.

Strathspey, L.

Hylton-Foster, B.

Sudeley, L.

Kinloss, Ly.

Swinfen, L.

Kinnaird, L.

Terrington, L.

Kinross, L.

Teviot, L.

Lane-Fox, B.

Thorneycroft, L.

Long, V.

Trefgarne, L.

Loudoun, C.

Vaux of Harrowden, L.

29

Vivian, L.

Westbury, L.

Wakefield of Kendal, L.

Willoughby de Broke, L.

Ward of Witley, V.

Windlesham, L.

Resolved in the negative, and amendment disagreed to accordingly.
4.29 p.m.
Lord Bruce of Donington Lord Bruce of Donington moved Amendment No. 3:
Page 1, line 7, at end insert ("except as provided in subsection (6) below").
The noble Lord said: I beg to move Amendment No. 3, and with the permission of the Committee should like to take Amendment No. 14 with it. Amendment No. 14 is the substantive amendment with which the other is associated, and it reads:
("(6) A local authority shall have the power to levy a supplementary rate where it appears to the local authority that the level of prices, costs and remuneration payable by that authority and any future variation in that level that to that authority appears to be likely are in excess of the determination made by the Secretary of State in setting the level of grants under sub-section (4)(d) of section 54 of the Local Government Planning and Land Act 1980").
The Local Government Planning and Land Act 1980 requires the Secretary of State to take into account levels of inflation when setting the total of the rate support grant. The way in which, or the effect of the way in which, the levels of inflation have been taken into account by the Secretary of State has been diminished by three factors. The first is the tendency for the state to set cash limits on pay as a preface to the national pay round negotiations; the Government state a figure (it has been 4 per cent. in the present pay round) which tends to be treated as the minimum by negotiators. The Government know that to be the case and set a low figure to take account of it. Secondly, the Government tend to mask intended cuts in volume behind inadequate cash limits and build those into cash planning, thus shifting the blame for public expenditure reductions on to pay negotiators. The third factor is the move towards cash planning generally, which in many cases cuts completely across the whole trend of inflation.
If the Government had been able to live up to their electoral promises—not always incorporated in their manifesto but certainly well set out in speeches at election time—progressively to bring down, or even stabilise, the rate of inflation, the necessity for this amendment probably would not have arisen. But as everybody knows, only a short time after they returned to office they deliberately put up the rate of inflation by a series of measures, until ultimately it reached a peak of 22 per cent., and even today it is not down to the level at which it stood when they took over. I do not seek to make a political argument about that, because I have addressed your Lordships on a number of occasions when debating the question with the noble Lord, Lord Cockfield, and it would be inappropriate to rehearse those arguments now. But undoubtedly it has had an uncovenanted effect on the finances of local government. The rates of inflation which they have had to take into account have varied considerably, compared with the cash constraints to which they have been restricted, and the total effect has been to injure local government finances.
The amendment would give local authorities the
30
right to protect their services from inflation caused, first, by the general mismanagement of the economy—to which I have referred and which I do not want to labour because the noble Lord, Lord Bellwin, is well conscious of it—and, secondly, by the Government themselves being a party to special case pay awards, such as to the police and firemen. We on this side are second to none in stating emphatically that the police and firemen—and, I would add in parenthesis, the nurses—are entitled to reasonable pay awards. But the Governments have been party to special pay award which local authorities had not taken into account in advance but which they must satisfy by complying with the statutory obligations placed on them. As the Minister knows, and as the Home Secretary, reminds us, there is increased recruitment in to the various police forces, which tend to become more costly following the events in Toxteth and elsewhere, and there must be increases in equipment and so on.
The amendment would also protect local authorities further against the effects of generally inadequate cash limits set to 18 months before the end of the financial year to which they relate. Your Lordships will recall that the 4 per cent. policy was first announced in September 1981 by the Chancellor of the Exchequer to cover the year to 31st March 1981, six months later. That cannot be satisfactory. While to a minority on the Benches opposite this may appear to be a wrecking amendment, it is in fact put forward with all the reasonableness which the noble Lord, Lord Bellwin, would express if he were in my place. We therefore hope that noble Lords in all parts of the Committee will agree that it is a reasonable amendment, and I trust that Lord Bellwin will not recommend his noble friends to vote against it. I beg to move.
Lord Mottistone: It is interesting to hear the noble Lord, Lord Bruce, using Section 54(4)(d) in almost exactly the reverse way to that which I shall use when I move a later amendment; he is seeking to use it to allow local authorities to spend as much as they wish, while I shall seek to use it to restrict the amount of expenditure they can make. The noble Lord's blandishments are excellent; he is talking very well today and one might almost get carried away, even fooled, by him. As it happens, I am afraid the amendment is another wrecker, and I hope my noble friend Lord Bellwin agrees with me on that.
Lord Evans of Claughton: I have pleasure in disagreeing with the noble Lord, Lord Mottistone; I do not think this is a wrecking amendment. The problem Lord Mottistone has—I suspect it is a problem, to which we shall come later, which he and the CBI have—is that the rating system should be changed. However, at present we are not changing the rating system but trying to do something to make it a little more possible for local authorities to carry out the instructions given to them by Government. The present Government have agreed a formula by which the police and firemen get an increase in salaries on a regular basis. I am not quarrelling with that, certainly not so far as the police are concerned.
If the noble Lord asks any county treasurer, he will be told that this is the most difficult part of the situation. There are imposed regular increases for the police and

31
fire service, in order to meet inflation. The county treasurer is not allowed to take any steps to cover expected increases of that kind or unexpected increases imposed through a wage settlement, which might come at any time. God knows that the amount already put in by a county for contingencies is large enough, but I suppose that it will have to put in a much larger sum. When I was on Merseyside County Council I spent a lot of time suggesting that we lop £7 million or £8 million off contingencies. It now seems that county councils will have contingencies of much larger amounts, though I should not think that that would be the Government's wish.
The point that I am trying to make is that the Government impose on local authorities duties regarding wage settlements and then take away the means by which the authorities can carry out the duties. I hope that the amendment will receive the support of the Committee, though I have a nasty feeling that my hope will not be fulfilled.
Lord Bellwin: I really must smile at the noble Lord, Lord Bruce of Donington, who today seems to be beginning his speech on each amendment with an all-out attack on the Government's economic policies. He then slowly swings to the subject of the amendment, which I entirely agree he puts in the most reasonable of terms. Would that the content of his remarks was as reasonable as the way he makes them! That would make me much happier, but perhaps it is too much for which to hope.
The noble Lord knows that of course I would not agree with him in the view that the Government deliberately put up the rate of inflation. He would expect me to say, as I certainly do say, that it was the previous Administration who carefully sowed the seeds whereby, when we took over, the inflation rate was inevitably bound to go up, as it did. But now, when it comes down, it will stay down, and it will go lower than it has ever gone before. However we shall come to that point as we proceed.
I really cannot accept that supplementary rates or precepts should be permitted where an authority budgets in line with Government assumptions on pay and price increases, as embodied in the RSG settlement, but which then turn out in practice to be lower than the actual level of inflation. The pay and price increases assumed in the rate support grant settlements, including those made by the previous Administration, are as much a discipline and a guideline for local authorities as they are a forecast.
That must be so, since a large element in the assumption is pay, where the matter lies in the hands of the authorities themselves. Indeed, the Labour Government's last settlement, as I well remember, and as the noble Lord will no doubt recall, included a provision for pay increases of 5 per cent. and an 8 per cent. provision for prices, which was strictly in line with their pay policy. Members of that Government—most prominently the then Prime Minister and Chancellor—made it plain that pay increases in excess of the Government's guidelines would have to be met by cuts in services and jobs. Although authorities at that time had the power to levy supplementaries, it cannot have been within the contemplation of the
32
then Government that they should use those powers to make good any squeeze that may have arisen if the guidelines proved too tight.
No one whom I ever knew, of any political colour, in local government, ever talked of supplementary rates. We used to laugh at the then Government's suppositions and assumptions of what pay and prices would be. We simply listened, we went away, and we did what had to be done regarding our contingencies and balances. I would say that the realities of the actual out-turns are now very much nearer than they used to be in those times, and I forecast that they will become so near that they will be pretty much on the nail, certainly so far as inflation goes, and I am hoping that the same, or, if not exactly the same, something very near to it, will apply in regard to prices.
For the same reason, the present Government, in the context of the ban on supplementaries proposed in the Bill, cannot accept the amendments. I shall not any more talk about coaches and horses, but quite clearly the amendments are against what we are trying to do in the whole of this Part of the Bill, and it is for that reason that I cannot accept them.
Lord Bruce of Donington: I am very sorry that the noble Lord cannot accept the amendment that I have moved. In the course of his remarks he referred to the disciplines and said that if we had supplementary estimates, we could not possibly keep the disciplines. Example would be a very fine thing, if the noble Lord's Administration showed some signs of keeping to the disciplines that they are seeking to impose upon local authorities. I have here the supplementary estimates of Her Majesty's Government for 1981–82, which propose an increase of £1,459 million, or 2 per cent., on the total estimates previously made. This does not sound like frightfully good discipline for the moment, does it?
It is only an increase of 2 per cent., but if, for the moment I may anticipate the noble Lord, I would say that it goes to show that in government, whether national or local, there is no such thing as certainty. One is blown off the course. The estimates of central Government for the year may be, and I have no doubt are, made in perfectly good faith, after taking into account all the known factors; but as the year progresses things have to be changed, people are blown off course, all kinds of catastrophes occur. I sincerely trust that situations such as that in the Falklands will not recur many times, but it will have an impact on estimates.
So in suggesting that a local authority should have the powers that are proposed all one is really saying is that, subject to local democratic control, the authority should be entitled to just that kind of latitude that central Governments take to themselves, sure in the knowledge that they are sustained by a party majority for at least four years in the normal way.
Lord Bellwin: I must say that, coincidentally, the amount which I think the noble Lord referred to as an overspending equates almost exactly to the amount by which local government as a whole has overspent its budgets. We are talking of about £1.5 billion, which is a horrific figure. We used to talk of £50,000, £100,000, or £200,000. They were enormous amounts at one time, but here we are faced with an overspend by

33
local government of £1½ billion. No Government can stand by and do nothing about that.
As the noble Lord knows, I am as concerned as anyone that local government should not be hampered more than it need be. I shall not now go into that debate, but I could give many examples of how I consider that it is not hampered, despite what might be said. Nevertheless, there is a problem here. We are talking about something that never used to apply. In the past there was never an inhibition or a restriction on local government; it never even came into the reckoning. But all of a sudden the matter is assuming proportions as though it were of great moment, as though it concerned local democracy and the rights and freedoms of local government. I must say that there is being made here a case that is not so. It is not the use of the powers, but the abuse of the powers that has led to the present situation. That is why there is concern; that is why there is the necessity for this Part of the Bill, and that is why we cannot accept the amendment.
4.49 p.m.
On Question, Whether the said amendment (No. 3) shall be agreed to?
Their Lordships divided: Contents, 64; Not-Contents, 98.

DIVISION NO. 3

CONTENTS

Airedale, L.

Jenkins of Putney, L.

Amherst, E.

John-Mackie, L.

Amulree, L.

Kaldor, L.

Ardwick, L.

Leatherland, L.

Bacon, B.

Listowel, E.

Balogh, L.

Llewelyn-Davies of Hastoe, B.

Banks, L.

Beaumont of Whitley, L.

Longford, E.

Birk, B.

Lovell-Davis, L.

Bishopston, L—[Teller.]

McCarthy, L.

Boston of Faversham, L.

Mayhew, L.

Briginshaw, L.

Molloy, L.

Brooks of Tremorfa, L.

Northfield, L.

Bruce of Donington, L.

Oram, L.

Byers, L.

Peart, L.

Caradon, L.

Phillips, B.

Collison, L.

Plant, L.

David, B.

Ponsonby of Shulbrede, L.—[Teller.]

Davies of Leek, L.

Denington, B.

Ross of Marnock, L.

Donaldson of Kingsbridge, L.

Seear, B.

Stedman, B.

Elwyn-Jones, L.

Stone, L.

Evans of Claughton, L.

Strabolgi, L.

Ewart-Biggs, B.

Strauss, L.

Fisher of Rednal, B.

Taylor of Mansfield, L.

Foot, L.

Underhill, L.

Gosford, E.

Wallace of Coslany, L.

Hall, V.

Wells-Pestell, L.

Hampton, L.

White, B.

Hooson, L.

Wigoder, L.

Howie of Troon, L.

Wootton of Abinger, B.

Jacques, L.

Young of Dartington, L.

Jeger, B.

NOT-CONTENTS

Airey of Abingdon, B.

Belhaven and Stenton, L.

Alexander of Tunis, E.

Bellwin, L.

Allen of Abbeydale, L.

Beloff, L.

Allerton, L.

Bessborough, E.

Ampthill, L.

Blake, L.

Avon, E.

Campbell of Alloway, L.

Balerno, L.

Campbell of Croy, L.

34

Cathcart, E.

Merrivale, L.

Colwyn, L.

Mersey, V.

Constantine of Stanmore, L.

Mills, V.

Morris, L.

Cottesloe, L.

Mottistone, L.

Craigton, L.

Mowbray and Stourton, L.

Cullen of Ashbourne, L.

Murton of Lindisfarne, L.

Daventry, V.

Norfolk, D.

Davidson, V.

Northchurch, B.

Denhatn, L.—[Teller.]

Nugent of Guildford, L.

Dilhorne, V.

O'Neill of the Maine, L.

Drumalbyn, L.

Orkney, E.

Ellenborough, L.

Orr-Ewing, L.

Enniskillen, E.

Pender, L.

Glenkinglas, L.

Penrhyn, L.

Gormanston, V.

Plummer of St. Marylebone, L.

Gridley, L.

Hailsham of Saint Marylebone, L.

Rankeillour, L.

St. Davids, V.

Halsbury, E.

Saltoun, Ly.

Hastings, L.

Sandford, L.

Hayter, L.

Sandys, L.[Teller.]

Hill of Luton, L.

Savile, L.

Holderness, L.

Sempill, Ly.

Home of the Hirsel, L.

Sherfield, L.

Hunter of Newington, L.

Skelmersdale, L.

Hylton-Foster, B.

Somers, L.

Kilmany, L.

Spens, L.

Kinloss, Ly.

Strathcona and Mount Royal, L.

Kinnaird, L.

Kinross, L.

Strathspey, L.

Lane-Fox, B.

Sudeley, L.

Long, V.

Swinfen, L.

Loudoun, C.

Terrington, L.

Lucas of Chilworth, L.

Teviot, L.

Luke, L.

Thorneycroft, L.

Lyell, L.

Trefgarne, L.

McFadzean, L.

Vaux of Harrowden, L.

Mackay of Clashfern, L.

Vivian, L.

Macleod of Borve, B.

Wakefield of Kendal, L.

Mancroft, L.

Ward of Witley, V.

Margadale, L.

Westbury, L.

Marley, L.

Willoughby de Broke, L.

Massereene and Ferrard, V.

Windlesham, L.

Resolved in the negative, and amendment disagreed to accordingly.
4.57 p.m.
Baroness David Baroness David moved Amendment No. 4:
Page 1, leave out line 8.
The noble Baroness said: In speaking to this amendment I shall also be speaking to Amendments Nos. 17 and 20. The purpose of Clause 1, according to paragraph 1 of the Notes on Clauses, is to require rating authorities to make a single rate to cover their estimated spending needs for a whole financial year without further recourse to their ratepayers during the year once their rates have been set. The Government's policy objective is declared to be that authorities may make only one rate for the year and shall contain their expenditure to the level that can be financed by that rate without further recourse to the ratepayer; and in order to achieve that objective (I am quoting from paragraph 5 of the Notes on Clauses):
"it is necessary to provide that not more than one rate shall be made for each financial year. Authorities will therefore no longer have discretion as to the length of the rate period; it will in all cases be 12 months".
There is no definition of "supplementary rate" in Clause 1, although the clause prohibits the making of a supplementary rate.
Clause 2 is exactly parallel with Clause 1 in dealing with precepts. However, in Clause 2 "supplementary precept" is defined. The reason given for this in paragraph 6 of the notes on Clause 2 is that some of the precepting powers do not refer to supplementary precepts. Reference is made to paragraph 4 of the notes, and paragraph 4 states:

(a) parish and community councils do not have power to issue supplementary precepts;

(b) the Receiver of the Metropolitan Police and Joint Boards under the 1936 Public Health Act do not have express powers to issue supplementary precepts, but there is nothing to stop them issuing successive precepts in a financial year;

(c) water authorities may issue supplementary precepts during the course of a financial year".

However, at the moment the Bill does not apply to water rates. It appears, therefore, that a definition of "supplementary precept" is included only to clarify the position in regard to authorities other than the main precepting ones.
It is difficult to understand the inclusion of a ban on both the making of a supplementary rate or precept and the levying of a rate or precept for a period other than a financial year. There would appear to be two cases with which the Bill is intended to deal. First, the levying of rates or precepts for periods of less than a year—that is, for example, for two half-years—or, second, the levying of a supplementary rate or precept during the course of a year. But as by definition the second case is for a period of less than a full financial year, it is difficult to understand why it needs to be dealt with separately. Both cases appear to be dealt with by prohibition (b), so that the Government's stated objective seems to be accomplished fully and simply by that prohibition.
The only reason given for the inclusion of the definition of a supplementary precept is a rather obscure technical one and appears to be adequately covered by the general prohibition in (b). One is driven to the conclusion that prohibition (a) in Clauses 1 and 2 is superfluous for reasons of economy and clarity and should be dropped. If (a) in Clause 2 is dropped (as Amendment No. 7 suggests) there is no need for the definition in the last three lines of subsection (2); and that makes up Amendment No. 20. I beg to move.
Lord Bellwin: It has to be said that these amendments would wreck Part I of the Bill. As we now know, the object of Part I is to ban supplementary rates and precepts, and all other aspects of Part I follow from that and exist to ensure that it will be satisfactorily achieved. If these amendments were to be accepted, there would be nothing to stop local authorities from making a supplementary rate or precept. There would be little point in proceeding with the rest of Clauses 1 and 2, since this would simply ensure that any supplementary rate or precept would have to be made, like the original rate or precept, for the whole year. The value of Clause 3 would be undermined and there would be no purpose in extending, for example, the Greater London Council's power to borrow with the Secretary of State's approval.
I made it clear at Second Reading why we propose to ban supplementary rate and precept. We have talked about it for a long time today—for two hours—and I
36
am sure that I should not be thanked for repeating all the arguments. I would say that we are not prepared to see a repetition of some of the problems which led to this whole situation in the past, that have put and are putting an intolerable burden on hard-pressed rate payers, domestic and non-domestic, many of whom can ill afford further, heavy, unexpected—and that is the operative word—demands for supplementary rates. Therefore, we cannot accept the amendment.
Baroness David: May I ask the Minister why the situation is not covered by (b)?
Lord Bellwin: I am not quite sure what the noble Baroness means by "covered by (b)".
Baroness David: I do not understand the necessity to have (a) because (b) says the rating authority shall not have power to make a rate for any period other than a financial year. Does that not cover the whole thing?
Lord Bellwin: A supplementary rate would always be for less than a whole year.
Baroness David: But (b) says that you cannot have a rate for any period other than a financial year. I should have thought that that covered the situation.
Lord Bellwin: I think not. As always, I will look into the point that the noble Baroness makes and, should it be otherwise, I will come back to her. My interpretation is that there is not this problem at the point she makes. I will undertake to look at it.
Baroness David: If the noble Lord says that he will look at it, then I shall be happy to withdraw the amendment.
Amendment, by leave, withdrawn.
5.5 p.m.
Baroness Birk Baroness Birk moved Amendment No. 5:
Page 1, line 9, leave out second ("a") and insert ("the").
The noble Baroness said: In moving Amendment No. 5, it may help the Committee and the Minister if I speak to Amendments No. 7, 8, 9, 10, 18, 21 and 22. They are all concerned with the question of the duration of this piece of legislation if it unfortunately gets on to the statute book. Incidentally, the Minister said (and he was right) that he was always anxious to be helpful. I would say that he could be a little more helpful if he accepted some amendments—not every one, but the odd one. This may be a good place to start because this is something that has been mentioned by the Government: the question of the duration of this legislation.
Notwithstanding the general opposition to the constitutional changes in this Bill, what we feel is that the restriction on supplementary rates and precepts should be expressed to be of a temporary nature only and limited to one year. I think that, if that were so, my noble friend Baroness David would feel happier if she and many of us knew that this was going to be of a temporary nature. The Association of Metropolitan Authorities and, I think, the other local authority associations are concerned about the length

37
of time for which this legislation may be in force. The AMA does not accept the need for restriction at all but, even if a need for some restraint on local revenue-raising powers of local authorities can be shown to be justified—and I do not think that anybody believes on any side of the Committee that local authorities should be encouraged or allowed to go haywire in financial matters—the measures in this Bill are of such magnitude as to be out of all proportion to the problem which is said to exist. The Government have stated that on many occasions. Every time we move an amendment to let things remain as they are and allow the local authorities to have their right to levy supplementary rates, the Government say that this is seldom done. This large hammer is being used in a very crashing manner.
Also, it involves major constitutional changes in the role of local government and therefore the point of these amendments is that, if they are to be introduced at all, they must be temporary in nature so that their effects can be judged after a period of trial. As the Government imply from time to time that this is to get over a particular economic hill, then it should not be necessary to have permanence for this Bill. A trial period is essential because of the haste with which the changes are being introduced and because of their fundamental nature.
We know there were certain changes in the other place and then, as the Minister explained this afternoon in answer to my complaint about the late arrival of the amendments here, a great deal of work had to go into that and it was difficult to be able to produce the changes here before last Friday. The problems encountered by Lothian in Scotland, for example, in not being able to raise additional revenue while faced with massive grant cuts are an example of the problems which will be forced upon many local authorities in England and Wales and the effect of these problems must be reassessed before making the restriction permanent.
Another reason for arguing for the restrictions to be temporary is the Government's own intention with regard to review of the rating system in total. The Green Paper, Alternatives to Domestic Rates, was presented by the Secretary of State in December. The paper concludes that the Government,
"wishes to move ahead as quickly as possible".
The intention is therefore that a new system for financing local government be introduced as soon as possible, and this may involve the abolition of the rating system in total. We do not yet know what the Government have in mind. Even if they were going to leave the situation as it is, they still have to go into these matters and examine them and realise what has happened in the process of consultation.
Therefore what is the point in creating problems and constitutional changes involved in the proposed restrictions that are now before us if the whole system is conceivably going to be altered very shortly in any event? If the restrictions are to come into effect, then they should be clearly limited so that they do not hinder the consideration of alternative financing arrangements, and also so that they clearly come to an end when the new financing arrangements come in.
The Secretary of State has certainly made it clear that he considers the restrictions to be of a temporary nature only. During the debate on 12th November
38
1981 on the Opposition Motion on encroachments on local government autonomy, the Secretary of State stated that he regarded the original Bill as an interim measure, related only to the short term. In fact, he further indicated that a limitation on the powers to three years would be,
"a sensible amendment to consider".
If he thinks that, why should not the temporary nature be explicit in the legislation? In fact, it is essential that it be written into the legislation itself. I also understand that the Secretary of State considers that the use of the restrictions in existing powers for one year would bring local government spending into line with the Government's wishes for the foreseeable future. Again, if this is his view, and he feels that he has confidence in the Government dealing with the economy and that what is being done here will do the trick that he wants done so far as local authorities are concerned, then it would be quite wrong not to limit the restriction to one year instead of creating major problems for local government and the constitution of the country for all time.
There are many precedents where controversial or constitutional legislation has been subject to renewal every year or is given a life of only one year. My friends and I believe that three years is too long for a piece of legislation of this type. The provisions in it are highly sensitive to and responsive to what is happening in the economic and social fields at any time. They should respond to the temperature of what is going on. The only way that can be done is by restricting the legislation to one year. When the Government are in power with a majority they can always introduce it again. It gives an opportunity and also acts as an incentive that the Government would want to use rather than always returning to the use of a blunderbuss which upsets more people than it cures, knocks more heads down and makes more people unconscious in this manner than encourages them to do what the Government want.
If I may give the Minister some examples so that this is not something taken out of the blue, the prices and incomes legislation was renewed every year; sanctions imposed on Rhodesia were renewed every year; and the Prevention of Terrorism Act comes up every year. Although it may be in a different category, this would seem a particularly good and right candidate for treatment of this sort. I do not believe for one moment that the Minister could answer that this is a wrecking amendment. It is not.
We have had now three divisions to try to get some "give" in the legislation on the levying of supplementary rates, and if the Government do not give on that, and we do not manage to get any further on that, then at least they can and should do—and it would be following the intentions, as we understand it, of the Secretary of State—is to make the legislation viable and valid for only one year and then review it and reassess the position again. I should have thought that this was not only sensible and reasonable but a beneficial addition to a piece of legislation of this sort. I beg to move.
Lord Evans of Claughton: From these Benches we support the amendment moved by the noble Baroness.

39
It seems to me a pity to create a huge upheaval in local government and its relationship with central Government and to emasculate it in the way that has been proposed. It is said that this is for reasons of financial control at a time when the Government propose in the Green Paper to proceed speedily with the introduction of new systems of local government finance. To destroy the independence of local government or make incursions or restrictions on that independence at a time when the root cause is the raising of the money and the level of public expenditure involved is a great pity. This is particularly so when creating this huge machine to do this at a time when, if the Government are telling the truth and if their intentions are accurately expressed, that they intend to amend the system to bring in new types of means of financing local government, local income tax, whatever causes they have to do this.
So if they are on the point of introducing legislation—perhaps the noble Lord the Minister can reassure us on this—to change the nature of local government finance, then surely it is good that this kind of legislation should be of a temporary nature. I would have thought that the noble Lord and his right honourable friend the Secretary of State would welcome this amendment because it is along the lines that his right honourable friend has been talking about for some months. I hope that the Government will on this occasion save us the inconvenience of trooping through the Division Lobbies again.
5.18 p.m.
Lord Bellwin: I think that the exercise is not doing any harm. Maybe I shall have to have some more of it because I fear that I cannot accept this amendment. The noble Baroness said—as has been said a few times today—that the supplementary rate is seldom used. The point is that the supplementary rate was seldom used. Unhappily, it is because in the last year or so it has not been seldom used that we are dealing with this whole matter today in the way that we are. I do not see the problem to which the noble Baroness refers. If it were so, then what has been going on in Scotland all these years? They have not had all this trauma and drama that we hear about.
When the noble Baroness refers to the observations of my right honourable friend, I would in turn have to quote back to her that he also said on 16th December:
"I do not believe that we should take a decision on the limitation of time on banning the supplementary rate. It was a commitment that I gave very much in the context of the referendum provisions. The case is different when one comes to judge supplementary rates".
The fact is that ratepayers must not lose protection from fear of heavy and unexpected supplementary rate demands and risk destruction of their budget after 31st March 1983. Confining operation of Clauses 1 and 2 to 1982–83 would mean that after only a year's brief but well earned respite for ratepayers they would again be at risk from this minority of authorities who levy supplementary rates to increase spending apparently—it has to be said—regardless of the burden on domestic ratepayers, industry and commerce.
In any event, the ban on supplementary rates and precepts is not intended to be a temporary measure.
40
We have made it clear that in the non-domestic sector, where rates will remain for the foreseeable future, the ban will continue. The ban could, however, be an interim measure in the domestic sector pending the proposals for the reform of the domestic rating system, to which we remain committed. It is too soon to say exactly when this will be. The timing of reform must depend upon the outcome of the consultations on the Green Paper and on the decisions on which options should be adopted; but I can and do assure the Committee that we want real reform just as quickly as circumstances allow and we are very seized of the importance of the time factor.
I am sorry I cannot be more precise. The noble Lord knows I would like to be more precise but I cannot be today. However, we are very much seized of the importance of the matter. All in all, I cannot accept that operation of Part I of the Bill should be limited as proposed by the amendment. I recognise the way in which noble Lords opposite are at least trying to get some mitigation of the underlying purpose of Part I but we feel very firmly that this is really important and we cannot shift on it. Whether or not we can do so on later amendments, we shall have to see as we go along.
Lord Bruce of Donington: I hope the noble Lord will assure himself that what we are really trying to do is to see that he himself does not stand in the way of his own creativity. We are trying to do him a favour. The noble Lord knows perfectly well, as indeed do noble Lords in all parts of the Chamber, that the Conservative Party were committed in their manifesto, which has a degree of importance, I would suppose, to people who profess themselves to be bound by it and who wave it on every conceivable opportunity as a justification of their actions. But the noble Lord ought to be proceeding with this review of the way in which local authorities can be financed.
He has correctly referred to the Green Paper, but the Green Paper has been about for a long time and the noble Lord knows perfectly well that phrases such as: "We are leaving no stone unturned"; "We are keeping the matter under close and continuous review"; "We intend to give it the utmost priority"; "We are deep in thought about the matter" and so on, have been made very popular indeed by the recent television series, "Yes, Minister". We know the jargon. All it really means is that you really have not the remotest intention of doing anything about it and are explaining why.
If the noble Lord set himself a target by which he had to do something then I am quite sure his ingenuity, his influence within his department and the deep arguments and conversations with his Minister would produce a solution on the basis of the alternatives, not only in the Green Paper but also in the Layfield Report. If he sets himself a target, I have the utmost confidence in the noble Lord that he would do it and proposals would be laid before us setting out different suggestions for financing. I implore him to set himself a target and to challenge himself; and there is no better way of doing it than by making this part of the Bill really temporary and lasting only for one year.

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I am quite sure his department would be galvanised into action if he accepted this amendment, because they would know that time was ticking on and they would have to produce proposals of a constructive kind for a complete reorganisation of the way in which local authorities get their money. I implore the noble Lord to look to his own reputation and the magnificent achievement he would ensure if only he made it possible and gave his department and everybody else the incentive to work to a time. We invite your Lordships to support us on this amendment.
Lord Bellwin: Before the House decides to do so, perhaps I should just say that, first, I hope the noble Lord knows that the consultation date finished at the end of March. There was the most extensive consultation on the Green Paper, although there were those who said they needed longer—but there would always be those who said that. The noble Lord could be surprised on this, whether pleasantly or not will depend upon the form it takes, and I am not going to be drawn today, however much I am tempted—and I am tempted—to put a time on it. The noble Lord knows it does not work like that. The fact is that we are now analysing the results of the consultation. We are seized, as I said before to the noble Lord, Lord Evans, of the importance of this. He is quite right: there is a commitment in the party manifesto. We are well aware of that and we understand the importance of it. More I will not say today, despite the great temptation to do so, because if it were that easy, it would have been done years ago.
The Layfield Report was published years ago and the debate has continued for as long as I can remember. I look round in the Committee today and see many people who have had years in local government: some of them are nodding their heads, because they know that "it ain't that easy", otherwise it would have been done. There needs to be change—that is beyond question—but what it should be is another matter, and one has to be very careful about how one goes about it.
If it in any way comforts the noble Lord, Lord Bruce, I tell him again that we are very alert to the need for some urgency in this matter, and that is what it is receiving. He said that we have not the remotest intention of doing anything about it. I trust he will make a careful note of today's date in his diary, and that when something is done he will refer to what was said today. I have said why we cannot accept this amendment. It may be that as we go along, to pick up a point made by the noble Baroness, there may be ways in which we shall be able to move—who knows? One always tries to do the best one can. We want the best Bill we can get, but I fear this amendment would not help to that end.
Baroness Birk: The noble Minister has concentrated on the question of when, where and how the Government will come to some conclusion on the domestic or general rating system, on its abolition or whatever. But this is not the whole point of the amendment. We can go back to what the noble Lord's right honourable friend said—it is true it was then in the context of a referendum, but he knows as well as I do that the whole thing was to deal with the question of authorities raising supplementary rates, either through a referendum
42
or in any other way. That is what this Bill is about. Therefore, the question of reassessment is a different factor from that of what is going to happen in future to the rating system. It is on that point, which should carry equal weight, that I have been pressing the Minister as well as on the question of the Government making up their mind. And I agree that is very difficult, because I do not deny that the previous Administration also found it a difficult and complex measure.
As far as legislation is concerned, all Governments legislate far too much. We get lumbered with legislation which becomes almost as obsolescent as yesterday's washing machine when you try to get it repaired, and repairing legislation is extremely difficult. It would be a good thing if, very much more often, legislation was contained for a year and then had to be reassessed to decide whether it should continue. This is an extraordinarily good vehicle in which to do that. It is for those reasons, as well as the question of the Government coming forward with their proposals on rating, that we should give very serious consideration in this Bill to the question. I shall not repeat all the points I raised in moving the amendment.
The amendment is not saying that it should only last for a year and that would be the end of it: that would be a definite date with a time limit. What the amendments are saying is that after a year there should be a reassessment and a monitoring during that year, and the Government would then have the opportunity to decide whether it is necessary to continue with something which after all has created great antagonism among local authorities. If it is not absolutely necessary, it need not be restored for another year. If it is made permanent, as it is in the Bill at the moment, it is very much more difficult to get a change, which the Minister knows as well as I do. You then have to bring in new legislation; and why should the Government, Parliament and everybody else be put through that hoop? We know that they will not, and that the legislation will go on and on, however unnecessary it is.
It is for those reasons that, in spite of what the Minister has said, I ask him quite seriously whether he will take this back, have a look at it and discuss it with his right honourable friends to see whether he can find some way of giving on this point. The arguments that have been put forward from this side, as well as by the noble Lord, Lord Evans, have not really been answered in a convincing way by the Government, and I still think that there is room for more thought and manoeuvre on this point.
Lord Bellwin: The noble Baroness knows that I should like to help and that I should like to say, "Yes, we will have a look at it." But I must be honest about it and say that, although I will talk—I always do in any case about matters that are raised where there seems to be some concern on a matter which is not absolutely cut and dried—when I contemplate what it would mean to have it for a year, with all the difficulties that would impose, I do not think we can do anything. What would be the situation if we said that we would have it for a year and then, if there were no problems, no supplementary rates and so on, we said that we would therefore no longer insist on this? Those who had been doing

43
these things would say "Now it is all right and we can come back again." We should be back to square one. That is why, in truth, I do not think we can do anything. But we will talk about it and, if I have anything helpful to suggest, I will do so. But I must be frank and say that I doubt very much whether we can get to where the noble Baroness wants to be.
Baroness Birk: Before I decide, may I say that I appreciate that the Minister is trying to be helpful and is always ready to talk. But I must get this really clear because I do not want to do him an injustice, nor do I or my noble frineds want to assume something which is misleading. If he is saying that he will be happy to continue just talking to me about it in a rather philosophical way, that is one thing. But if he is saying that the Government are still prepared to think about a limitation of a year that is another. If he cannot say that there is really room for consideration of this matter, then I really must divide the Committee. I do not want to do it, but I must have a little more than what he has just said, although he said it with his usual courtesy and in a very pleasant way. But this is a very important and practical point.
Lord Bellwin: I understand what the noble Baroness has said. I cannot give her the absolute assurance that she wants, much as I understand the point that she is making. Therefore, I cannot go any further.
5.34 p.m.
On Question, Whether the said amendment (No. 5) shall be agreed to?
Their Lordships divided: Contents, 59; Not-Contents, 91.

DIVISION NO. 4

CONTENTS

Airedale, L.

Jenkins of Putney, L.

Amherst, E.

John-Mackie, L.

Amulree, L.

Kaldor, L.

Ardwick, L.

Leatherland, L.

Bacon, B.

Llewelyn-Davies of Hastoe, B.

Balogh, L.

Banks, L.

Longford, E.

Beaumont of Whitley, L.

Lovell-Davis, L.

Birk, B.

McCarthy, L.

Bishopston, L —[Teller.]

Mayhew, L.

Boston of Faversham, L.

Molloy, L.

Brooks of Tremorfa, L.

Northfield, L.

Bruce of Donington, L.

Ogmore, L.

Byers, L.

Oram, L.

Caradon, L.

Peart, L.

Collison, L.

Perry of Walton, L.

David, B.

Phillips, B.

Davies of Leek, L.

Ponsonby of Shulbrede, L.

Donaldson of Kingsbridge, L.

Ross of Marnock, L.

Stedman, B.

Elwyn-Jones, L.

Stone, L.

Evans of Claughton, L.

Tanlaw, L.

Fisher of Rednal, B.

Taylor of Mansfield, L.

Gosford, E.

Underhill, L.

Hampton, L.

Wallace of Coslany, L.—[Teller.]

Hanworth, V.

Hooson, L.

Wells-Pestell, L.

Houghton of Sowerby, L.

White, B.

Howie of Troon, L.

Wigoder, L.

Jacques, L.

Wootton of Abinger, B.

Jeger, B.

Young of Dartington, L.

44

NOT-CONTENTS

Airey of Abingdon, B.

Mackay of Clashfern, L.

Alexander of Tunis, E.

Macleod of Borve, B.

Allen of Abbeydale, L.

Mancroft, L.

Allerton, L.

Mansfield, E.

Auckland, L.

Margadale, L.

Avon, E.

Marley, L.

Balerno, L.

Massereene and Ferrard, V

Belhaven and Stenton, L.

Merrivale, L.

Bellwin, L.

Mersey, V.

Blake, L.

Morris, L.

Boardman, L.

Mottistone, L.

Campbell of Croy, L.

Murton of Lindisfarne, L.

Cathcart, E.

Norfolk, D.

Colwyn, L.

Nugent of Guildford, L.

Constantine of Stanmore, L.

Orkney, E.

Orr-Ewing, L.

Craigton, L.

Pender, L.

Cullen of Ashbourne, L.

Penrhyn, L.

Daventry, V.

Plummer of St. Marylebone, L.

Denham, L — [Teller.]

Eccles, V.

Rankeillour, L.

Fortescue, E.

Ridley, V.

Fraser of Kilmorack, L.

St. Davids, V.

Gainford, L.

Sandford, L.

Glenkinglas, L.

Sandys, L.—[Teller.]

Gormanston, V.

Savile, L.

Greenway, L.

Seebohm, L.

Gridley, L.

Sempill, Ly.

Hailsham of Saint Marylebone, L.

Skelmersdale, L.

Soames, L.

Harmar-Nicholls, L.

Somers, L.

Hastings, L.

Spens, L.

Hayter, L.

Strathspey, L.

Hill of Luton, L.

Sudeley, L.

Holderness, L.

Swinfen, L.

Hylton-Foster, B.

Terrington, L.

Ironside, L.

Thorneycroft, L.

Kinloss, Ly.

Trefgarne, L.

Kinnaird, L.

Trumpington, B.

Kinnoull, E.

Vaux of Harrowden, L.

Kinross, L.

Vivian, L.

Long, V.

Wakefield of Kendal, L.

Loudoun, C.

Ward of Witley, V.

Lucas of Chilworth, L.

Westbury, L.

Luke, L.

Willoughby de Broke, L.

Lyell, L.

Windlesham, L.

McFadzean, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
The Deputy Chairman of Committees (Baroness Wootton of Abinger): I have to point out that if Amendment No. 6 is agreed to I shall not be able to call Amendments Nos. 7 to 11 inclusive.
5.42 p.m.
Lord Bellwin Lord Bellwin moved Amendment No. 6:
Page 2, line 1, leave out from beginning to end of line 13.
The noble Lord said: I beg to move Amendment No. 6 and with it I wish to speak to Amendments Nos. 9, 25, 26, 29, 71, 85 and 87. These amendments are a package, designed to clarify the position of rating and precepting authorities and of ratepayers, particularly where a precept or rate has been found to be unlawful. Your Lordships will, I am sure, be aware of the questions which arose out of their Lordships' decision in the GLC v. Bromley case that the GLC supplementary precept, levied last year, was invalid. Questions were raised relating to the powers of local authorities to reduce a partly invalid rate and their ability to refund ratepayers who had already made payments to meet the invalid precept.
These amendments seek to make a new statutory provision to deal with the complicated rating issues which arose. But your Lordships are aware that the Bill has always made invalid supplementary rates or precepts relating to 1982–83 and all future financial years, regardless of the date on which those rates or precepts were made or issued.
The Bedfordshire County Council, as I know your Lordships are also aware, issued a supplementary precept for 1982–83 in the mistaken belief that this would stand after the Bill becomes law. However, as we have made clear many times, it will fall on Royal Assent. As a result of this misunderstanding about the effect of the Bill, the authorities and ratepayers of Bedfordshire have been in some confusion as to their obligations and duties before and after the passing of this Bill. We have therefore ensured that these new statutory provisions provide authorities with the power to substitute for rates and precepts and a duty to make refunds to ratepayers, where appropriate, will apply equally to the ratepayers of Bedfordshire.
Since my right honourable friend announced in another place the Government's intention to table these amendments we have had useful discussions with the local authority associations on both the principles and the details of the amendments. It might be helpful if I outlined for the Committee what these amendments are designed to achieve.
New Clause 25 gives rating and precepting authorities the power to substitute rates and precepts for those previously made for the year, whether valid or invalid. This would, for example, enable an authority whose rate has been quashed by the courts to make a new one or, indeed, to substitute its rate in anticipation of it being quashed. The new rate or precept must not of course be higher than the one for which it is substituted, since this would defeat the object of the ban on supplementary rates and precepts. The new clause also provides that ratepayers and rating authorities who have paid sums to the rating and precepting authorities are entitled to get back their excess payments if they want them. Otherwise it is left to the discretion of the authorities whether to repay or credit the excess.
New Clause 26 provides, in the light of the GLC v. Bromley case and a number of other recent cases, that the validity of a rate or precept can, on the grounds specified, be challenged only in the High Court, and that where relief is granted the court shall quash the rate or precept entirely. This latter is necessary for the operation of the substituted rate procedure which I have just described. By providing that appeals against a rate in its general application to ratepayers should go to the High Court, we are again trying to clarify matters. Doubts have arisen recently as to whether the Crown court has jurisdiction to decide such appeals. We think that the High Court is the appropriate forum, leaving the Crown court with jurisdiction to decide appeals against the rate as it affects individual ratepayers.
New Schedule 71 comprises transitional provisions to deal with any supplementary rate or precept, or a rate or precept made for a period other than a year, made before the Bill is enacted, and whether before or after 1st April 1982, in respect of a period beginning on or after that date. These would in any case fall on Royal Assent, and the schedule covers the repayment of sums paid in respect of supplementary rates and precepts.
46
It also provides that a rating authority whose main rate is partly to meet a supplementary precept shall make a new rate, lower by the amount of the supplementary precept. In that event, the provisions of new Clause 25 ensure that sums paid in respect of the supplementary precept can be repaid. The schedule also provides that if a rate or precept is made for other than a financial year, a new one must be substituted for the complete financial year.
Finally, new Clause 29 consolidates all the provisions relating to the interpretation and commencement of Part I. The amendments to the title, Clauses 1 and 2 and to Schedule 4 are consequentials. These amendments are designed to clarify a complex area of rating law and I commend them to your Lordships. I beg to move.
Lord Bruce of Donington: The Committee will be indebted to the noble Lord for having explained the new clauses to which Amendment No. 6 is a lead-in—which we have not had very much opportunity to consider, for reasons which the noble Lord has given an indication that he immediately recognises.
These are very important amendments, which arose originally from the famous case of the Bedfordshire county council who made what I shall describe for the moment as an initial precept, prior to 1st April, at a lower level than the majority party at that time, which was the Labour Party, wanted. There was then another meeting of the full council at which a supplementary precept was made in order to bring it up to the level at which the majority party had made the political decision that the rate should be set. Both of these events took place before the strategic date of 1st April. As a consequence, two district councils to whom precepts were sent at the old rate proceeded to sit on theirs. And when the supplementary precept went out, two others decided to raise a levy on their ratepayers. So we have a situation where two district councils have not passed on the precept to their ratepayers and two district councils have done so. That has produced the situation of which the noble Lord complains.
But Amendment No. 25 has nothing to do with the validity of the precept. I will come back to that point presently, because it has been implied—although I am sure that the noble Lord did it quite unwittingly—that Amendment No. 25, which deals with the substitution of one precept for another, was somehow connected with the validity of the precept which it replaced. It is, of course, nothing of the kind. Amendment 25, whether or not the validity of any precept is being challenged, gives the power to an incoming council, newly elected at an election after 1st April, which wants to reduce the rate set out in the budget, and indeed the rates of its predecessor, to reduce the rate, if it so wishes. One might have the circumstance in which a Conservative authority makes its appropriate rate and issues its appropriate precepts on 1st April and an election takes place after then, in May. A Conservative council may thereupon be elected and this amendment, Amendment No. 25, gives the incoming council the authority to substitute a new precept and a new rate budget altogether.
On the other hand, it applies only in that way. If, for example, there was a Conservative council up until the election in May which had already made

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its budget—one would assume on a basis friendly to the diktats of the noble Lord's right honourable friend, the Minister of the Environment—and then a Labour authority was elected in May which wanted to increase the rate or precept, it would not have the power to do so. This is all that the clause really means. It is a way of ensuring almost on a ratchet basis that the rate can always be driven down on a change of political authority but can never be raised.
A political party that goes to the electorate may for perfectly good reasons say that, in view of the circumstances of the population, which it knows quite well; in view of the social circumstances of many of its aged inhabitants; and in view of circumstances relating to housing, roads and other things, it thinks that more should be spent during the forthcoming year. It tells the electorate that that is what it proposes to do because it believes that expenditure within the borough will serve a very useful purpose to the benefit of the majority of the population of that borough. If the party goes to the polls on that sort of programme—having explained it quite clearly, concisely and reasonably—and wins the election, then it will be inhibited by this clause from carrying out the mandate for which it was elected.
I do not call that democracy. The noble Lord, Lord Bellwin, can call it what he likes—but it is a complete violation of local democracy. The noble Lord himself made use of the mandate when his party was returned to power in May. He said that his party had a mandate to do things, and therefore, they could do them; they promised to do them, they were elected to do them, and were going to do them. Is that not so? Why then, if any Labour, Liberal or Alliance party goes to the polls and explains its policies, and succeeds in convincing the electorate that its proposals are more reasonable, wider and better for the locality than those of the Conservative party, will it under this particular clause be inhibited from carrying out what it said it was going to do?
If this clause is carried all the way through, local councils might as well pack up, because there is no further function for them to perform. They are inhibited from obtaining a mandate from the electorate because they know perfectly well that they cannot carry it out. I am quite sure the noble Lord is not really that kind of man. Perhaps owing to the way in which this work was done—to the consultations which had to be held and the legal opinions which were required to be assessed—this clause as set out in its present legal form does not meet the true wishes of the noble Lord. Maybe the noble Lord will wish time for reflection and will be able to say to us, "Now look, my civil servants cannot take me this far. This is really a bit too much. We will come back to it on Report". The noble Lord will readily have seen the manifest way in which a legal diktat can be used to gag the electorate and to gag a political party with which the noble Lord's party happens to disagree.
I pass to Amendment No. 26, which has been dealt with by the noble Lord. There are two ways of dealing with an alleged validity of a particular precept that has been made. The way that has hitherto been used is for an application to be made to the courts and then for the courts to decide, as in a recent
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case, that perhaps part of the precept was invalid. If it is a comparatively small amount the court might decide to declare that part invalid—but in such a way that it did not need the setting-up of a completely new precept, but merely carried over the balance for adjustment in the next period. That seems to be a very sensible way of dealing with it. Now we have a really heavy one. If the precept in any one, small, material particular can be declared upon application to the High Court to be invalid, one is faced with the necessity for invalidating the whole precept, even though the amount involved might be quite trivial.
Consider what that is going to mean for a local authority. It means that it will have to send out a corrective precept. It means that those who act upon that precept and proceed to levy rates on their individual citizens and business enterprises will have to send out an amended precept to each, involving repayment or otherwise of money, and so on. This will be an enormous administrative problem. On balance, I would have thought it was far better to leave the position as it was.
But then, of course, the noble Lord had the Bedford Council position to deal with, and perhaps this was the only way he could conceive of dealing with it, in spite of the fact that his right honourable friend in another place thought that the clause as it stood before was quite capable of dealing with the Bedford situation. Evidently it was not. I do not see why the House should be impaled because of the legal difficulties in which the noble Lord and his department have found themselves. These two amendments—and they are consequential amendments—are not acceptable to us on this side of the Committee. We shall certainly seek to obtain the support of all democrats for the particular repudiation of Amendment No. 25, but we shall of course vote against the others because, as the noble Lord has described them, they are all part of a package—rotten though that package may be.
Lord Bellwin: If I were to use the same kind of emotive language throughout this whole Committee stage, I am sure we would not get as far as we ought to get. I can use words like "rotten package" and all the rest. I do not think it really advances the noble Lord's case, and I do not intend to do that kind of thing. So far as my experience goes, it was always understood that whether you won or lost—I come from an authority where control changed very often—if you gained control when the Opposition had made the rates you stuck with that rate. There are always balances; there are always contingencies; there are always things you can do during the year. That is what all reasonable authorities do, regardless of how far control changes. That is the practicality of it. It is quite wrong to say that, after coming in with a mandate, having said you would spend more on this or that service, you are then prohibited from so doing. The fact is that there is great scope within local authority finance, to shuffle around from one vote head to another; there is freedom to spend more or less on education, housing, social services or whatever you like to do, despite what you might have committed yourself to spending at any moment in time. So there is no case for the emotive argument which the noble Lord makes implying that this is some great new

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suppression of local authority freedom. It is nothing of the kind. It is really a red herring.
What we are really trying to do with these amendments, especially Amendment No. 25, is to clarify the position, which clearly has to be clarified because there is uncertainty and concern. The noble Lord, Lord Bruce, knows that is one of the objects of this particular exercise. The amendments are not intended specifically for Bedfordshire County Council. Many of your Lordships will know that my right honourable friends made a commitment to make these amendments before Bedfordshire took their decision to levy a supplementary rate; the commitment was made during Committee stage of this Bill in another place. They were inspired by the position which arose from their Lordships' decisions in the GLC—Bromley case.
It would clearly be inconsistent with the ban on supplementary rates and precepts if it allowed an authority to make a substituted rate or precept higher than the previous one. It is as simple as that. It is an attempt to make clear what is the position as regards people and companies who have paid a rate in good faith and then find that there is a changed situation; how do they restore the position? That is the point of the clarification. I close on the point I have made; if I were as concerned as the noble Lord, Lord Bruce, is—and I know his concern is very genuine; I appreciate that and he knows that I understand that—but I would really say to him that in practice the real practical possibilities are that all reasonable authorities who are not committed to go from one extreme to another will live with the rates of their predecessors. It was always thus and many in your Lordships' House will surely confirm that this was so. If it was not so, how on earth have they managed in Scotland in the past when there have been changes of control there? How is it that we are only talking about supplementary rates here for the first time; we are told it has been seldom used. So what happened before when control changed hands? It was never such a catastrophic situation before, and it will not be again.
Lord Hill of Luton: If I may help to bring the discussion down to earth, at Second Reading I urged upon the Minister that he should make absolutely clear whether the relevant clauses in this matter were retrospective or not. As your Lordships would expect, he has carried out that undertaking to the full. This is clearly, like it or not, retrospective.
There is just one mercenary element in this that I must mention. If I quote the case of Luton, noble Lords will understand. They have got to return money to the ratepayers, having secured the return of money from the county council raised on its supplementary precept. It is a very difficult problem. There are, of course, those who have paid in full; they are relatively easy. There are those who have begun to pay in instalments; there are those who have not paid at all; there are those who are paying as part of a total weekly payment for a council house. Indeed, there are those who began the year in Luton, during which they paid an instalment or indeed the full rates, and have now moved somewhere else. And there are those who come in during the rating year. It is a very difficult matter, but it has got to be done. Money has been taken from them which by this retrospective decision is now illegal.
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But it is going to cost a lot of money. I understand Luton expects it to cost £50,000 to ascertain who are the potential recipients and what they are entitled to. It is a very expensive business. Who is going to pay? I am not going to destroy the peace that prevails by suggesting where the payment should be made, but it should not be made by Luton ratepayers. Why should they lose £50,000 by this sequence of events? It really is not good enough. If they have no balances they have to cut some services, or borrow, with the consent of the Minister.
I really think that where an authority has in no way misbehaved, has in no way done less than or more than it should have done, it should not be fined to the tune of £50,000. It is not for me to say who should pay, except that there is no decent or respectable case for the ratepayers of Luton to pay this extra money, probably £50,000. So while thanking the Minister warmly for establishing, one way or the other, the retrospective principle, and so clearing away a lot of doubt, I would ask him to give his mind between now and the next stage as to who should pay the additional cost of returning this money, instead of leaving it, as the Bill seems to leave it, for the ratepayers of Luton, who have done nothing naughty, broken no law. Rather than leave it to them I think the burden should be placed elsewhere.
Lord Bellwin: The noble Lord raises a very interesting point and I would like to look into it carefully. I understand that in Brent, for example, only about 300 of the 80,000 ratepayers in the borough asked for a refund of sums paid in connection with the GLC precept. If it should be that Luton and Bedfordshire have a special situation that is a problem for them which involves costs of the kind the noble Lord mentions, I would want to have a look at it and see what the implications are. I do not know what one could do or how to do it, but I certainly accept the point and would want to see exactly what it is. I assure the noble Lord, Lord Hill, that I will do that and see what one is able to report as we go along.
Baroness Fisher of Rednal: I have a great deal of sympathy with what the noble Lord, Lord Hill, has just said. That is aggravated in those local authorities that also had the county precept to repay. They will have to repay the county precept as well as the rate increase that they levied, which places a double burden on those local authorities.
If I could follow on what my noble friend Lord Bruce said, I do not want to get into a long political discussion about it, but does the noble Lord see problems because political parties have different philosophies? I use the example of privatisation, which is the nice word that we use now. Many local authorities say that they will save, for example, £½ million on privatising refuse collection and another £¼ million on privatising something else. An election address that came through my letterbox said that there would be a saving of about £1¼ million on privatisation. Does the Minister see that as a problem? If a local authority goes in for extensive privatisation and saves all the money which we are led to understand it will save, but it then loses at the next election, what it has decided its rate will be

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will obviously take into consideration a lesser amount because of privatisation.
Let us suppose that the Labour Party took control, or it might even be the Alliance, and decided that it did not want to privatise refuse collection—I take that as an example: it might find itself short of £¼ million or £½ million. Does the noble Lord see that as a problem? This follows on from what my noble friend has just been saying. I see it as a serious problem. As the noble Lord has said, Leeds is no different from Birmingham; it swaps and changes like the weather and next year there might be a complete change of party with a different political philosophy.
Lord Bellwin: If it should be that an authority does privatise its refuse collection (to use the example which the noble Baroness gives) and saves £1 million or £¼million—I have heard the figure for Birmingham talked of as £4 million, but I do not know what it is—and if it should be that it provides a satisfactory level of service and saves its ratepayers some millions of pounds, can the noble Baroness really envisage a situation where a party would come back to power and say, "We do not want to make that saving. We want to pay more"? With respect, I cannot see where that would ever be likely to arise.
If the noble Baroness had said that the authority had said that it would privatise and that it would save £X million or whatever, but had not achieved that, then it would be another matter. But if it does achieve it—and although I would love to go into that debate now, in view of the time I do not think that I ought to do so—then I assure the noble Baroness that there would be no problem, because I cannot see how any party could then say, "Well, it is true that we are now saving all this amount of money, but we do not think that we should save it and, therefore, we shall go back to the other system". I do not think that that would be the problem.
Baroness Fisher of Rednal: Perhaps I did not put the case as clearly as I ought to have done. As the noble Lord said, if the services that were being provided were equal, then I would support the noble Lord's case. But more often than not the new service will be a lesser service. I use the example of local governments that have decentralised their housing repairs. They have very good housing repair depots on all their large council housing estates. The tenants are in direct contact with the man who sits in a little shed and the work is carried out. Therefore, there is an excellent service. I was saying that if that excellent service were taken away and privatised, and there is a worse service, there would be difficulty in getting the original service back. I go along with what the noble Lord says in the case where a better service is provided, but I doubt whether that would be so.
Lord Bellwin: I did say that I did not want to go into a whole debate on this matter. However, if I did do so then I would want to say one thing; namely, the that record so far shows in the main that where the kind of service that the noble Baroness mentioned is done by the private sector, the standard of service—I shall say no more—is every bit as good as it was.
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I shall not make the claims for it that others do. But certainly it is as good, so I do not think that we shall have that problem.
But if in the hypothetical case which the noble Baroness put forward there was a diminished service, a worse service—and I think that is the only situation in which her point comes forward—then it would be for the party taking over to say, "Look what our service was before; look what it is now". Therefore, on the merits of the case they would have a very powerful argument. They would then do what I have said has always pertained in the past: they would say, "We will now find ways of doing things within our estimates"—and there are all the balances, the contingencies, the right to vire, the opportunities to manoeuvre. I am sure that they would find a way if they really wanted to do so, but, by Jove!, it would be a very bold authority which was saving money and was prepared to say, "We do not want to save this money"—unless the case was as the noble Baroness said.
Viscount Ridley: Would my noble friend care to speculate whether the promise of privatisation in Birmingham resulted in that city becoming Tory controlled last week?
Lord Bellwin: No, I would not want to speculate because I know somewhere where the promise was made and it did not result in the same thing—would that it had!—but it did result in some gains, for what it is worth.
Baroness David: I should like to go back to the main purpose of these clauses. I believe that the main purpose is to get at Bedfordshire and to deal with the Bedfordshire problem. I do not think that we would have had all these clauses if it had not been that the Government wished to right that situation. They have shown an extraordinary lack of confidence in their own Bill. I read through the Committee sittings in the Commons—the 20th and 21st—which dealt with the Bedfordshire situation. The Minister said with confidence on a number of occasions that the Bill as drafted would deal with the situation. Clearly the Government have decided that it does not do so if they have to bring in these new clauses to cover it. Admittedly they do a few other things as well, but I believe that this is the main thing they do.
There is real danger in having retrospective legislation. The noble Lord, Lord Hill of Luton, has made some of my points for me. There is the complication of claiming back the rates and the trouble that it makes for the rating authority. I am told that all the London treasurers are tearing their hair because of all the time they have to spend on getting the money back because of the judges' decision on the GLC transport case. It is so very difficult practically, and it takes up a great deal of officers' time. Retrospective legislation is a great mistake. The cost of the collection, as the noble Lord, Lord Hill, said, is the district's affair and has nothing to do with the county which is the precepting authority.
Again, this is another change. We have had so many changes. A number of officers have said to me that it is the constant changes which are wearing them out. So many local authority officers are now retiring

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early or at the first possible opportunity because the job is no longer the pleasure that it used to be. They are having to cope with these evermore numerous changes which are very difficult for them. The noble Lord, Lord Hill, has mentioned the difficulties about the many ways in which rates can be collected—instalments, annually, biannually and so on. In my view, these clauses are very bad indeed and I shall have very great pleasure in voting against them.
Lord Hill of Luton: Is the noble Baroness suggesting that the money that has been legally extracted from the pockets of the ratepayers of Luton should not go back to them?
Baroness David: This Bill is not law as yet and there has been a dispute as to whether the Bill as it originally stood would make Bedford's extra rate illegal. It certainly is not illegal at this moment.
Lord Bellwin: I want to repeat what I said before. These amendments are not specifically intended for Bedfordshire County Council. Your Lordships should bear well in mind that my right honourable friend gave a commitment to make these amendments before Bedfordshire made its decision to levy a supplementary rate. To me that is very significant. I shall say no more.
Baroness Birk: We seem to be coming to the end of a long debate on this subject. The outstanding matters that concern us on this side of the Committee are the question of what I would call the one-way democracy—that rates can be lowered but cannot be increased even if a party has a manifesto to do so; the question of the retrospective attitude in respect not only of Bedfordshire but of anywhere else, if the noble Lord so wishes; and the whole question of appeals—that it would now have to go to the High Court, and what was found was pointed out by my noble friend Lord Bruce over the Kensington and Chelsea case.
All this seems to be a mixture of a very illiberal and undemocratic approach. It certainly increases bureaucracy, although I should not have thought that that was the Government's intention. The whole thing appears to have been worked out in an extremely awkward but certainly painstaking way. I can now quite understand why it took so long to get these wretched amendments before us at all. It took a lot of doing and I think that the officials should be congratulated on so doing, although what they did is an unhappy thing. Nevertheless, it is done, and it is there. But it combines a whole package of more bureaucracy, fewer liheral attitudes and an extraordinary attitude towards the courts. This is all in aid of trying to strengthen the Bill. At least we are seeing this in its virgin state and, on this side of the Committee, I do not think that we like it very much at all.
6.22 p.m.
On Question, Whether the said amendment (No. 6) shall be agreed to?
Their Lordships divided: Contents, 83; Not-Contents, 52.

DIVISION NO. 5

CONTENTS

Airey of Abingdon, B.

Ampthill, L.

Alexander of Tunis, E.

Auckland, L.

Allerton, L.

Avon, E.

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Balerno, L.

McFadzean, L.

Belhaven and Stenton, L.

Mackay of Clashfern, L.

Bellwin, L.

Macleod of Borve, B.

Bessborough, E.

Mansfield, E.

Blake, L.

Margadale, L.

Boardman, L.

Marley, L.

Caithness, E.

Merrivale, L.

Campbell of Croy, L.

Mersey, V.

Cathcart, E.

Morris, L.

Cockfield, L.

Mottistone, L.

Constantine of Stanmore, L.

Murton of Lindisfarne, L.

Nugent of Guildford, L.

Craigavon, V.

O'Neill of the Maine, L.

Cullen of Ashbourne, L.

Orkney, E.

Denham, L—[Teller.]

Pender, L.

Ebbisham, L.

Penrhyn, L.

Eccles, V.

Plummer of St. Marylebone, L.

Elton, L.

Enniskillen, E.

Rankeillour, L.

Fortescue, E.

Ridley, V.

Fraser of Kilmorack, L.

St. Davids, V.

Gainford, L.

Sandford, L.

Gormanston, V.

Sandys, L.—[Teller.]

Greenway, L.

Savile, L.

Gridley, L.

Seebohm, L.

Harmar-Nicholls, L.

Skelmersdale, L.

Hastings, L.

Spens, L.

Hill of Luton, L.

Strathspey, L.

Holderness, L.

Sudeley, L.

Hylton-Foster, B.

Swinfen, L.

Kinloss, Ly.

Terrington, L.

Kinross, L.

Trefgarne, L.

Lane-Fox, B.

Trumpington, B.

Lauderdale, E.

Vaux of Harrowden, L.

Lindsey and Abingdon, E.

Wakefield of Kendal, L.

Long, V.

Ward of Witley, V.

Lothian, M.

Willoughby de Broke, L.

Loudoun, C.

Windlesham, L.

Lucas of Chilworth, L.

Young, B.

Lyell, L.

NOT-CONTENTS

Airedale, L.

Kaldor, L.

Ardwick, L.

Kilmarnock, L.

Aylestone, L.

Llewelyn-Davies of Hastoe, B.

Bacon, B.

Balogh, L.

McCarthy, L.

Banks, L.

Mishcon, L.

Beaumont of Whitley, L.

Molloy, L.

Bernstein, L.

Northfield, L.

Birk,B.

Ogmore, L.

Bishopston, L.—[Teller.]

Oram, L.

Boston of Faversham, L.

Peart, L.

Brooks of Tremorfa, L.

Perry of Walton, L.

Bruce of Donington, L.

Phillips, B.

Chitnis, L.

Ponsonby of Shulbrede, L.

Collison, L.

Ross of Marnock, L.

David, B.

Stedman, B.

Davies of Leek, L.

Stone, L.

Elwyn-Jones, L.

Strabolgi, L.

Evans of Claughton, L.

Taylor of Mansfield, L.

Fisher of Rednal, B.

Underhill, L.

Hampton, L.

Wallace of Coslany, L.—[Teller.]

Harris of Greenwich, L.

Houghton of Sowerby, L.

Wells-Pestell, L.

Jacques, L.

Whaddon, L.

Jeger, B.

White, B.

Jenkins of Putney, L.

Winterbottom, L.

John-Mackie, L.

Wootton of Abinger, B.

Resolved in the affirmative, and amendment agreed to accordingly.
[Amendments Nos. 7 to 14 not moved.]
6.30 p.m.
On Question, Whether Clause 1, as amended, shall stand part of the Bill?
Lord Sandford: I do not think I can let Clause 1 go by without making one or two observations on the matters we have been discussing. I think it is true to say that most local authorities have accepted that central government have the right to impose financial constraints on public expenditure, and the great majority of them have succeeded in bringing their expenditure within those constraints. The situation last summer was that the great majority had achieved that, but by the autumn the efforts of the great majority had been completely set at nought by the irresponsibility of a few authorities led by the notorious Greater London Council. It is for that reason that we are having to deal with this sort of legislation, and it really is hypocrisy for the party opposite to pretend otherwise.
I look forward, as we all do, to the introduction of radical and fundamental changes to the financing of local government, and we have just had a good example of the absolute necessity to do away with precepting altogether. That is one of the features. But, in addition to that, it will be necessary before local Government can be made to work again properly for the irresponsible element that were responsible for what happened in the GLC, and have just been responsible for what has just happened in the Bedfordshire County Council where a combination of Liberal and Social councillors overturned the decision of the main budget meeting of the council a fortnight later, to be stopped by the political parties. We shall never get any progress until that kind of thing is stopped.
Lord Bruce of Donington: I really think I have to respond to the noble Lord who has just spoken on clause stand part. It is all very well for members of any political party to declare that the actions of their opponents, or any section of their opponents, are irresponsible. I will not go into the merits of the GLC case for the moment, save to point out that the mandate that the GLC obtained for what it did was quite decisive and perfectly open.
Furthermore, members of the legal profession, who tend to be in profusion, and deservedly so, in your Lordships' House, gave conflicting advice on this. It is not as though the GLC were not advised with the best quality legal advice that could be obtained as to the legality of what they did. I must tell the noble Lord that at any rate among the legal circles with whom I have the privilege of associating from time to time there is some dubiety as to where the law really stands anyway following the particular judgment to which he refers. Therefore, I do not think that we ought to talk in those terms.
The whole series of amendments that we on this side of the Committee have endeavoured to persuade your Lordships to agree with has been put forward with one aim only, and that is to endeavour to restore responsibility to local authorities, comprising the elected representatives of the people—the responsibility for carrying out the policies on which they were elected and for raising the funds for that purpose. Sometimes I think that all of us—I include myself in this—tend to take a hostile attitude towards rates. I had a rate demand dropped in my letter box a while back the contents and amount of which frankly appalled me. Therefore, as a person who has to pay out of his own pocket a rate demand—and I perhaps ought to inform
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your Lordships that I have a personal interest in this in that I pay rates within the Royal Borough of Kensington and Chelsea, and that from what I can gather I am paying at about roughly double the rate of the average for Kensington and Chelsea—my immediate response to it was to say, "Well, hang it, this is a wee bit high".
Then I endeavoured to analyse the services that we all, as ratepayers, get from our local authorities. I believe the average weekly rate payment in Chelsea is some £13, which means that the lowest must be somewhere in the region of about £6 or £7, and the higher ones, including regrettably myself, pay roughly double the average, or possibly even more. But on looking through the services provided by the local authority—and the Royal Borough of Kensington and Chelsea were kind enough to send me a copy of how they spent their money and what proportion they spent on the police, magistrates, probation and after-care—I said to myself, "Well, after all, is the police service in London, and in my own particular borough, satisfactory? I am bound to say it is, and I am bound to say that I derive some personal benefit from it".
I am talking only on my own account, but I can go all the way through and say that possibly the better-off people in London, or elsewhere in the boroughs, are probably spending less a week on their rates than they pay for a perhaps once a week visit to a restaurant for a dinner at current prices, and yet they complain. We have no business to complain. The benefits that the ordinary ratepayer gets from his local authority—and I speak without reference to any party in particular—are pretty good value for money anyway.
I know we are coming at a later stage in Part III of the Bill to those clauses that deal with audit, and checking for waste and so on. So be it. We all desire to see that. But sometimes when we are discussing rates I think that we ought to remember that all of us, at whatever income level we are and whatever rates we pay, are in any event getting very good value for money indeed. It is high time that the snide attacks, the press attacks—from editors who probably get twice as much on their expenses allowances as they even pay on rates—on all public expenditure, as being essentially something that is bad and anti-social, stopped.
It would be far better if, instead of regarding rates as some kind of despicable burden which everybody pays with reluctance—and of course nobody likes shelling out money of any kind, wherever one goes—one kept the matter in proportion regardless of the inequalities and inequities that exist within the existing rating system. As I say, the value as a whole is good. Our regret is that the liberty of local authorities and their councillors to react to the moods, wishes, desires and needs of their citizens as they see them are being eroded by the Bill, in particular by this clause. We very much regret that and assure the Minister that we shall return to the matter again.
Viscount Ridley: I have not been able to take part in the debates on this part of the Bill but I feel strongly that the Government are right to abolish the supplementary rate and I am glad that Clause 1 does so. I equally strongly support my noble friend Lord Sandford in that the time has come to end the system of precepting. It is responsible for the troubles of

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Luton and many other places and it must be the Government's aim now to move as soon as possible to some system whereby each tier has its own source of finance.
Baroness Stedman: The debates today have ranged wide and over many subjects, but I feel that we cannot let this part of the Bill pass without reminding noble Lords opposite that there is still considerable disquiet among local authorities and their members about the effects of the Bill and the fact that although very few of them have used the supplementary rate, there has always been that safety net there. I and my colleagues in the SDP and the Alliance want to see local authorities budget carefully and prudently. but Governments do not always interpret what they see in the crystal ball in the right way. They do not always get their answers right about what will be the level of inflation, what will be the possible salary and wage rises or what will be the material costs in which local authorities must deal, and until now the local authorities have had the safety net of the supplementary rate, albeit very few of them have had to use it. The Bill as drafted allows the Government to get their sums wrong, but if the local authorities also get them wrong through following the Government's advice, they no longer have the guaranteed safety net of a possible supplementary rate under them to get them out of difficulty. I believe there is still a case for the availability of the supplementary rate to be retained.
Clauses 1 and 2 should be deferred until 1983, and I am still unhappy about the new clauses which the Government have just carried in a Division because the retrospective element of legislation is still in the Bill. We should not let the Bill go as it is; we should make our protest, although it will make no difference to the Bill and this part will, no doubt, go through. The alternative which the Government are suggesting—of special borrowing powers—goes against the established principle in local government that the relevant finance should be in the same operation as the determination of the expenditure. If that is no longer to be allowed, it involves central Government's interference in local affairs, and that is regrettable.
Lord Bellwin: I do not want to go yet again round the track we seem to have been circling for the last few hours. Perhaps I should comment, on the general philosophical points, that as the Committee will be aware, I by no means see the bogies that concern noble Lords opposite. There is no shortage of precedent; the Scottish situation does not throw up the kind of concerns that have been expressed today. The supplementary rate, as has been said, was hitherto almost unknown, used only in the last year or so. It was never even contemplated before and there was no need for it, despite the fact that there have for years been situations where pay and prices have been quite different from what successive Governments forecast they would be. Despite all of that, authorities did not have to resort to a supplementary rate, nor in my view was it necessary.
It becomes necessary not as part of something you did not expect or foresee but when you are determined and massively to increase your expenditure; as I say, not because events have overtaken you but
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because that is your positive decision. That is how we have, for the first time—or in practical terms for the first time—come into this whole area, which has become such a burden to so many people. It cannot be wrong, in my view, to protect people from it, not least businesses, and it is at our peril that we simply shrug off business and commerce as being of little consequence. If we are genuinely concerned about employment and jobs, as we all say we are, we cannot turn away from the fact that in a survey of 500 companies in London, three-quarters of them said they reduced, closed down, or moved out because they could not afford the rates. How many retail people are saying the same? That represents jobs too; people work in shops just as they work in other places. We must therefore be concerned about what happens to rates, and simply to impose a supplementary rate on people who are not anticipating it can be devastating in its impact, and unhappily the number of jobs lost for that reason is there to be seen if one wants to analyse the figures.
As I said at the outset, we have been round this track a few times already today. Clearly there is a a difference of view. I do not see the sinister aspects of what we are proposing. On the contrary, it is protective of people and need not be the problem of which noble Lords have spoken. What my noble friend Lord Ridley said about precepting is all part of the debate in relation to local government. Some would say the debate is only just beginning. That is for another day, and I urge support for the clause.
Clause 1, as amended, agreed to.
Baroness Stedman Baroness Stedman moved Amendment No. 15:
After Clause 1, insert the following new clause:
"Duration of Part I of this Act
.—(1) The provisions of Part I of this Act shall cease to have effect at the expiration of one year from the date on which it comes into force unless extended by order of the Secretary of State made by statutory instrument.
(2) No statutory instrument containing such an order shall take effect until it has been approved by resolution of the House of Commons."
The noble Baroness said: I shall be brief because we have not got far with the Bill yet, though we have been at it a long time. The amendment is straightforward. It simply asks that the duration of Part I shall be for 12 months from the time the legislation comes into force, and it gives the Government, as the noble Baroness, Lady Birk, was asking earlier, the opportunity to renew Part I and look at it to see if it is really working, and that can be done by statutory instrument subject to the affirmative procedure.
The Secretary of State and his Ministers have said in another place that it is an interim measure. Local authorities and their associations do not like the Bill, but they might be a little happier about it if it were treated as legislation lasting for only one year, and would then be reconsidered. It would also enable the Government to decide what action they are proposing to take on the rating system and for those proposals also to be considered by Parliament as a whole. Many of us feel that the legislation would be better introduced as an interim measure and not as primary legislation for all time. Parliament would then have an opportunity to review these major changes annually,

59
and the amendment would allow for just that. I beg to move.
Lord Bellwin: We debated an amendment similar to this on Report and I am not sure I can add a great deal to what I said then, except to repeat that this is in no way a temporary expedient. Nor is it intended to avoid the need for the fundamental reform of the domestic rating system to which, I repeat, we are committed. The ban on supplementary rates and precepts could indeed, therefore, be an interim measure in the domestic sector, pending our proposals for reform. But as regards the commercial and industrial sector, where rates will remain for the foreseeable future, the ban will continue.
I hope it is clearly understood that authorities remain free to plan their expenditure and initial rate levies as they think fit. The effect of the ban on suplementaries is simply and solely to oblige them to live within their means once they have set the rate or precept for the year. That is what it is about. It is not in any way as onerous as noble Lords opposite feel, and I therefore hope the noble Baroness, Lady Stedman, who knows so much about the whole scene, will, at least in time if not now, say, "It really was not as bad as we thought".
Baroness Birk: I should like to support the noble Baroness, Lady Stedman, in what she said on both the amendment and Clause 1 stand part. The Minister is uite right in saying that we had a debate on the earlier amendment that I moved, but the present amendment involves a slightly different approach to the matter, and perhaps the Minister will consider that it has a greater attraction for him and for the Government, since it would involve a statutory instrument, rather than legislation having to be renewed each year. The amendment makes a very specific suggestion. It lays down a way of dealing with the matter. It makes it quite clear that the statutory instrument would have to be approved by resolution of the House of Commons. It proposes the use of the statutory instrument, which is a much less cumbersome way of doing things than having to bring in new legislation in order to change, or get away from, old legislation.
I must reiterate what the noble Baroness said about a safety net. This is the point that we have been trying to get across, but unfortunately it does not seem to have made any impact at all. It is so important that authorities should know that there is this safety net for use where needed. It need not be used all the time; it has not been used all the time in the past. But there is a feeling among local authorities that their safety net is being taken away, that they are being stripped to the bone, and that they are not being trusted at all. As so many of us have said during the many long hours spent on amendments this afternoon, this feeling is causing so much anguish among local authorities.
It is not good enough merely to point out that some authorities behave irresponsibly. The noble Lord who said that is not in his place at the moment, but I would say that I suppose there are authorities that behave irresponsibly, there are individuals who behave irresponsibly, there are businesses which behave irresponsibly, and there are Government departments
60
which sometimes behave irresponsibly; but because of that there is not imposed an overwhelming rule, thus making it impossible for anybody to have any breathing space. We have seen all the way through the Bill what amounts virtually to a complete shutdown, and that is what we all find so objectionable. We have tried to make the point by many different means and proposals, some of which I should have thought the Government would have been able to consider. We have now reached the stage after the first clause of the Bill and have got nowhere; it is very sad.
Baroness Stedman: I have listened to what the Minister has said, and I am grateful to the noble Baroness, Lady Birk, for her support. I really consider that I must test the feeling of the Committee on this amendment. Members on the other side of the Committee know of the disquiet that there is on this side about the effects of the Bill and the clause. Surely it is not too much to ask that the Government come back in a year's time with a statutory instrument, and I should be delighted if I were able to be the first to say to them, "It has worked, we were wrong, and you were right". I now say please, let us have one more chance, let the Committee agree that the Government should come back with a statutory instrument for affirmative resolution in both Houses. Then we can be quite sure that we have got it right. I am sorry, but I must ask the Committee to vote.
6.54 p.m.
On Question, Whether the said amendment (No. 15) shall be agreed to?
Their Lordships divided: Contents, 46; Not-Contents, 67.

DIVISION NO. 6

CONTENTS

Airedale, L.

Jenkins of Putney, L.

Aylestone, L.

John-Mackie, L.

Bacon, B.

Kaldor, L.

Banks, L.

Kilmarnock, L.

Beaumont of Whitley, L. [Teller.]

Llewelyn-Davies of Hastoe, B.

Bernstein, L.

Lloyd of Kilgerran, L.

Birk, B.

Oram, L.

Bishopston, L.

Perry of Walton, L.

Boston of Faversham, L.

Phillips, B.

Brooks of Tremorfa, L.

Pitt of Hampstead, L.

Bruce of Donington, L.

Ponsonby of Shulbrede, L.

Chitnis, L.

Reilly, L.

Collison, L.

Ross of Marnock, L.

David, B.

Stedman, B. [Teller.]

Davies of Leek, L.

Stone, L.

Elwyn-Jones, L.

Strabolgi, L.

Evans of Claughton, L.

Taylor of Mansfield, L.

Fisher of Rednal, B.

Underhill, L.

Hampton, L.

Wallace of Coslany, L.

Harris of Greenwich, L.

Wells-Pestell, L.

Houghton of Sowerby, L.

White, B.

Jacques, L.

Winterbottom, L.

Jeger, B.

Wootton of Abinger, B.

NOT-CONTENTS

Airey of Abingdon, B.

Avon, E.

Alexander of Tunis, E.

Balerno, L.

Allerton, L.

Belhaven and Stenton, L.

Ampthill, L.

Bellwin, L.

61

Birdwood, L.

Lindsey and Abingdon, E.

Blake, L.

Long, V.

Boardman, L.

Loudoun, C.

Caithness, E.

Lyell, L.

Campbell of Croy, L.

McFadzean, L.

Cathcart, E.

Mackay of Clashfern, L.

Cockfield, L.

Mansfield, E.

Constantine of Stanmore, L.

Margadale, L.

Marley, L.

Craigavon, V.

Mersey, V.

Cullen of Ashbourne, L.

Morris, L.

Denham, L. [Teller.]

Mottistone, L.

Eccles, V.

Murton of Lindisfarne, L.

Elton, L.

Orkney, E.

Enniskillen, E.

Pender, L.

Fortescue, E.

Penrhyn, L.

Fraser of Kilmorack, L.

Plummer of St. Marylebone, L.

Gainford, L.

Gormanston, V.

Rankeillour, L.

Greenway, L.

Ridley, V.

Gridley, L.

St. Davids, V.

Hailsham of Saint Marylebone, L.

Sandford, L.

Sandys, L. [Teller.]

Harmar-Nicholls, L.

Savile, L.

Hastings, L.

Shannon, E.

Hill of Luton, L.

Skelmersdale, L.

Holderness, L.

Somers, L.

Hylton-Foster, B.

Trefgarne, L.

Kinloss, Ly.

Vaux of Harrowden, L.

Kinross, L.

Ward of Witley, V.

Lane-Fox, B.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
Lord Denham: I think this is probably a suitable moment at which to break off this Committee stage before going on to the next one. For the convenience of your Lordships, perhaps I could suggest that we should not come back to this particular Committee stage before eight o'clock. I beg to move the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Social Security and Housing Benefits Bill
7.3 p.m.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Trefgarne): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Trefgarne.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD AMPTHILL in the Chair.]
Clause 29 [Up-rating of needs allowances]:
Lord Wallace of Coslany Lord Wallace of Coslany moved Amendment No. 29:
Page 23, line 45, leave out paragraph (a).
The noble Lord said: I understand that in relation to the previous Bill the Committee has adjourned during pleasure, but so far as I am concerned it is during displeasure because it is regrettable that the Committee
62
stage of an important Bill like this should be the odd job done during the dinner break for noble Lords. However, I shall refrain from calling a Division so as not to upset noble Lords while they are having their meal.
This amendment is in fact a probing amendment. I passed that news on, and I hope that Government Ministers received the information. It goes back to Clause 28. Subsection (4) of Clause 29, which relates to the uprating of needs allowances following a review period, states that the Secretary of State must lay a report before Parliament explaining why he is not awarding an appropriate increase in the needs allowance, if that is his decision,
"unless in his opinion the amount by which those elements will not have retained their value or, as the case may be, the amount by which the increase is less than the appropriate amount is inconsiderable …".
This would mean that if the Secretary of State felt that a 1 per cent. or 2 per cent. rise was inconsiderable he could avoid having to make it, and need not explain himself to Parliament. Such a decision would effectively erode over a period of time the difference between the supplementary benefits scales and the needs allowance reducing the rebates available.
While I fully understand that there is no statutory obligation on a Government to operate the needs allowance in any case, the custom has always been for it to rise by the same amount (not percentage) as the retirement pension. I make no bones about this because Age Concern have raised the issue. The point itself was raised in another place, but no satisfactory response was received from the Minister, who so far had managed to get away without saying anything about this aspect either in Committee or on Report. Looking at the Bill it seems to me that there is a complete get-out of parliamentary protection, because the Minister, if he thinks an increase in inconsiderable, need not bother. This is something that worries a number of people very much indeed. As the Minister in another place "dodged" the issue in Committee and on Report, I am now hoping that the noble Lord will be able to come forward with something a bit better than what happened in another place. I beg to move.
The Earl of Avon: I think I can set the noble Lord's mind at rest, and I shall try to do so. The Government freely put down what is now Clause 29 in the other place to make provision for the uprating of housing benefits, and I am sure the Committee will understand why we could not mortgage the future by making provision for automatic index-linking of the needs allowances. But the Government freely put down a provision that where the Secretary of State considers that some or all the needs allowances have not retained their value over the course of a year, but decides not to increase some or all allowances, or only to increase some or all of them by part of the amount required to restore their value, then he must report his reasons to Parliament. I feel that this is surely what the Opposition would most wish us to do, and it is in fact what this clause does do.
The noble Lord may perhaps have misunderstood the clause. Deleting it will not oblige the Secretary of State to uprate the needs allowances each year. All

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that will happen is that the Secretary of State will no longer have to table a report if he decides no increase is appropriate. I hope that that has satisfied the noble Lord and that he will be able to withdraw his amendment.
Lord Wallace of Coslany: It satisfies me to the extent that I shall have something to read in Hansard tomorrow; and, having read that, I shall decide what action to take on Report. But, at this stage, and in the circumstances under which we are regrettably operating, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Lord Wallace of Coslany Lord Wallace of Coslany had given notice of his intention to move Amendment No. 30:
Page 24, leave out line 27.
The noble Lord said: This amendment was dealt with together with my Amendment No. 25. I spoke about it then and I do not intend to do so now, so I will not move it.
[Amendment No. 30 not moved.]
Clause 29 agreed to.
Clause 39 [Local schemes]:
Lord Kinross Lord Kinross moved Amendment No. 31:
Page 25, line 38, at end insert—
("( ) Without prejudice to the generality of the powers conferred by subsection (1) above, a variation under that subsection of the statutory scheme, may provide that in ascertaining for the purposes of a rate rebate, a rent rebate and rent allowance the weekly income of a person to whom this Part of this Act applies and his spouse, if any, there is a total disregard of war disablement pension and war widows pension.").
The noble Lord said: I beg to move the amendment which stands in my name and in that of Lord Haig, who had hoped to be here tonight but who, in his capacity as President of the Royal British Legion (Scotland), is attending a function in Glasgow at the opening of an ex-servicemen's sheltered housing scheme.
The aim of this amendment is to re-enact certain of the provisions of existing legislation concerning the total disregard by local authorities in Scotland of war disability pensions and war widows' pensions in assessing entitlement to rates and rent rebates and rent allowances. The current legislation is contained in two Scottish Acts. The first is the Housing (Financial Provisions) (Scotland) Act 1972, Section 18 of which authorises local authorities to make variations in what the Act describes as their "model" schemes for rent rebates and allowances; and the second is the Local Government (Scotland) Act 1973, Section 114 of which authorises local authorities to make variations in what that Act describes as their "standard" schemes for rates rebates. Both sections have a subsection in substantially similar terms, to the effect that, in assessing the income of a person to whom the scheme applies,
"there is a total disregard of war disablement pensions and special war widows pension".
There is a definition of "war disablement pension" and "special war widows" in both statutes, but suffice it to say that the term "special war widow" includes a war
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widow and is also wide enough to include a serviceman disabled or killed in the service of his country in the past or the future; and wide enough to include Falkland Island casualties.
The reason behind this authority to disregard war pensions is that these are paid in compensation for loss of the amenities of life and not as a supplement to income. For the same reason, war pensions and war widows' pensions are not subject to income tax. Perhaps I should declare that I am myself a war pensioner, although I am not in receipt of a rent or rates rebate, as yet. Before 1972, a local authority had a general discretion to decide what, if any, part of a war pension to disregard and certain of the more enlightened local authorities disregarded part of the pension and, some of them even the whole, sometimes at the request and with the encouragement of the British Legion. But it was only after the specific authority contained in the 1972 and 1973 Acts to operate a total disregard was promulgated, that local authorities made wide use of the power to do so.
Today, the position in Scotland is that all nine regional, three island and 53 district councils operate a total disregard, as do five new town development corporations and the Scottish Special Housing Association. I am confident that this situation, so advantageous to the war pensioner and the war widow, would not obtain were it not for the specific reference to total disregard in the two statues. Certainly, their existence very greatly helped the Royal British Legion Scotland to bring to the attention of local authorities the very special position—and it is a very special position—of those ex-servicemen and ex-servicewomen who suffered wounds or disease in two world wars and later. We must not forget that, even now, the services are suffering casualties in the South Atlantic, some of whom may be glad of the total disregard of rates should they be looking for a rate rebate pension in years to come.
The concern of the Royal British Legion Scotland is that the 100 per cent. disregard should continue to be brought to the attention of local authorities—which was why we wanted to see the appropriate subsections of the two statutes carried forward into this Bill. But, alas! we find that, instead of being reenacted, they are actually repealed by Clause 28(5)(b) of the Bill. Surely, this is a retrograde step. It is one which my amendment seeks to remedy. It has been said by the Minister of State for Social Security and the Disabled that, while he appreciates the concern of the British Legion that authorities in Scotland should continue to operate a total disregard, he does not accept that a specific reference to it in the new legislation is necessary. His reason is apparently that under the existing provisions Scottish local authorities cannot vary their local schemes without the consent of the Secretary of State and that, under the new scheme, no such consent is required. This, to my mind, is quite irrelevant, and successive Secretaries of State for Scotland have always willingly given their consent. It is further said that this amendment is unnecessary because local authorities will have the discretion anyway.
But a new generation of councillors is emerging who know nothing of war and of its aftermath of suffering. The Legion cares for ex-servicemen from the First World War whose average age is 82 and from

65
the Second World War whose average age is 64—and much younger for subsequent conflicts. The need to keep the needs of the pensioners before councillors will therefore still subsist well past the year 2000. I suggest that for this reason it is desirable that specific attention should be drawn in the Bill to the war pensioners and war widows. My amendment seeks to do this I beg to move.
Lord Campbell of Croy: May I support my noble friend? He has very ably stated the purpose of his amendment and I am very glad that he and my noble friend Lord Haig have enabled this matter to be clarified. I know that the British Legion are much concerned about these matters, because they have been in touch with me about them in my capacity last year as chairman for Scotland of the International Year for Disabled People. As my noble friend Lord Kinross has said, parts of the 1972 Housing (Financial Provisions) Scotland Act and of the 1973 Scottish Local Government Act are being repealed; and they are the ones which, in Section 5, are described as entries relating to rent rebates and rent allowance subsidies. I, as Secretary of State for Scotland, introduced both those Bills and was responsible for them going through Parliament and, in particular, the other place, where I was at that time.
I made certain that there were the proper disregards for war disabled pensioners. I introduced rent rebates and allowances into Scotland for the first time ever. in that 1972 Bill, which became an Act. There may be some satisfactory explanation which the Government can give us. I entirely understand that it may not be necessary to put words in the Bill, as my noble friend has suggested, but I think we need this to be carefully explained. Certainly, there will be numbers of people in Scotland who will need to be satisfied that the Bill continues the disregards and also makes sure that all local authorities concerned are informed about these disregards. I must declare an interest in case I have been successful in disguising the fact that I myself am in the category of 80 per cent. war disabled—although I do not ever intend to apply for a rebate or allowance myself.
I am sure that the Government are not intending to take away any benefit which war disabled people have been eligible for. It is not an expensive matter. The war disabled are a small and diminishing band of people in our population. We sincerely hope that that will continue to be the case and that there will be no future world war which would add to their numbers, and so we hope that this trend will continue and that it is a known and comparatively small part of our population who are affected. But T must reinforce what my noble friend has said. That is that, with the onset of old age, their problems and their situation have become more serious. The very large majority of the people we are considering are over 60, many in the late 60s and 70s. Their state is not improving either medically or in other ways.
Knowing that this is a Committee stage and that one can speak more than once, I will not say any more now. I think the situation has been described very well by my noble friend. I will await the explanation of the Government and then, depending upon that
66
explanation, will add any points that may need to be made.
The Earl of Avon: Perhaps it would be helpful if I intervene now. Clause 30 carries forward authorities' discretionary powers to make, at their own expense, more generous local rebate/allowances schemes than the provisions of statutory schemes. May I first make it clear to the Committee that the Government wholeheartedly agree with my noble friends that authorities should be able, as now, to disregard war pensions completely when they assess claimants under local schemes. Nothing in the housing benefit scheme will prevent authorities from doing so. In fact, local authorities will have power under Clause 30 to frame more generous schemes within their areas which disregard war widows and disablement pensions completely.
What concerns the Government about the amendment is, first, that it is both unnecessary and declaratory and I know that this kind of legislation disturbs some noble Lords. Secondly, we do not think that this kind of provision is the most effective way of achieving the aim of my noble friends, that is to bring the power of disregarding war pensions to the attention of authorities. So it is a question of method and perhaps I may explain.
First, I said that the amendment is unnecessary. That is because Part II of the Bill essentially sets out enabling powers to set out the details of the housing benefits scheme in regulations. The enabling powers are sufficiently wide to provide for total disregards of war pensions so no further primary legislation is required.
My noble friends cited a precedent for their amendment, the existing Scottish legislation; but, with respect, I hope to show that is not relevant. The current legislation was framed in this way—as my noble friend Lord Campbell of Croy told us—because Scottish authorities must seek the Secretary of State's approval before making enhancements to the national schemes. In England and Wales prior permission is not required. That is why the Scottish provisions at present give authorities power to disregard war pensions—otherwise permission would be required in individual cases. We have decided for housing benefits to bring Scotland into line with the simpler English and Welsh provision. They will no longer need the Secretary of State's permission to make local modifications, so no general legislative clearance is required.
My noble friends have argued that, despite the points, the amendment is still desired to draw the provision to the attention of authorities. They have indeed advocated this approach in preference to the alternative proposed by my honourable friend the Minister for Social Security that attention should be given to this point in the major advisory circular that will be issued by DHSS in connection with the new scheme. My honourable friend the Minister suggested his approach because this seems to be the most effective way to bring the matter to the notice of authorities. Few officials are likely to study the primary legislation when it only gives enabling powers. They will, rather, concentrate on the regulations and the parallel guidance issued by DHSS. That is why my honourable friend made his proposal—he wanted the provision to get the widest publicity. I am sure all those noble Lords

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who have experience of local government matters will agree that clerks and other officers dealing with rebates and allowances will look to the circulars for guidance rather than to a subsection of the Act.
In addition, if authorities did not wish to make this provision, I fear that they are just as likely to ignore declaratory phrases in an Act as they are advice in a circular. The special nature of war disability and war widows' pensions has always been recognised by the rent and rates assistance schemes. A partial (£4) disregard is included in the schemes. This disregard will be carried forward into housing benefit. I know how strongly my noble friends feel about this, but I hope I have reassured the Committee that the Government are anxious to do the best by war pensioners. We believe that the amendment is unnecessary to this end and I would therefore ask my noble friends to consider my remarks.
Lord Campbell of Croy: Perhaps I should speak before my noble friend decides what to do and closes the debate. I am grateful to my noble friend for giving that explanation of the Government's reason for not including specifically the wording or something like it that appears in the Scottish legislation. For my part, I should like to examine what my noble friend on the Front Bench said and ask advice from legal experts and those who are concerned about this matter in Scotland. So I hope my friend may decide not to press his amendment at this stage.
May I give one warning. It was stated at one period when this matter was being discussed that the Minister for the Disabled would send a letter or circular round to local authorities. The Minister for the Disabled appears to have functioned only for England. He may function for Wales too, I do not know. There was a debate last year in another place on the whole question of the International Year for Disabled People during which the Minister for the Disabled announced a competition. Everybody taking part in that debate—and certainly the newspapers—thought that it was a competition for the whole country. I was a little suspicious because the judges' names were given and there was not a single one from north of the border. When I inquired in correspondence, the Minister, Mr. Rossi, kindly replied but said that of course I was right. It was limited to England. I do not think that it even covered Wales. I am sure nobody taking part in the debate realised that at the time.
In the same way, I suggest that if the Minister for the Disabled is going to write to local authorities, he should remember that means either he has to extend his normal remit as DHSS Minister dealing with health, and also take in other local authorities in the United Kingdom or else his counterparts, including the Parliamentary Under-Secretary concerned in the Scottish Office and the other Ministers in the other parts of the United Kingdom, will need to do the same. Otherwise the same trap could be fallen into as was in that debate in another place.
Lord Kinross: Having heard the Minister's reply, for which I am very grateful, I concur with my noble friend Lord Campbell of Croy in saying that we should like to take this amendment away and consider his
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reply in greater detail. There is one point that I should like to make. He referred to a circular to be sent to all local authorities—in Scotland presumably as well as in England—advising them of the necessity to consider 100 per cent. disregards for the war pensioners and war widows. The objection to that is the same as I have to not carrying this provision forward into legislation, because councillors change. We have a generation now of councillors who were not in the last great war and some of them do not have very much sympathy therefore for war pensioners, and that situation will increase. Circulars get pigeon-holed. They get thrown away and they get filed, whereas if the provision is in an Act of Parliament, it is less likely to be overlooked. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 30 agreed to.
Clause 31 agreed to.
Clause 32 [Subsidies to authorities]:
7.28 p.m.
Lord Wallace of Coslany Lord Wallace of Coslany moved Amendment No. 32:
Page 26, line 22, leave out from ("be") to end of line 24.
The noble Lord said: This is a probing amendment. This should be fairly simple for the Government to answer, if in fact they have the information to give me in an answer. The purpose of the amendment is to receive from the Government information on what basis local authority costs will be calculated. Will the total be aggregated on a national basis or shared among local authorities? If so, on what basis would the division be made—on the total amount the authority pays out or the number of cases dealt with? On the other hand, would it be the amount paid in housing benefits together with administrative costs? This is something that everybody—in the local authority world anyway—is waiting to find out.
In another place, indication was given by the Minister that negotiations were proceeding with local authority associations and therefore my question to the noble Earl and the Government is this: Have these been finalised and, if so, what is the position? I beg to move.
The Earl of Avon: The Government's position is that local authorities will be fully compensated for additional costs incurred as a result of the provisions of this Bill. That remains our intention and I have no hestiation in repeating that pledge. The order to be made under Clause 32 in due course will ensure that authorities receive full reimbursement not only for the extra benefit costs arising from the new scheme but also for any additional expenses in administration which they need to incur in dealing with the extra work which the new scheme brings them. This clear undertaking could be no more generous than this. Where authorities' costs are forced up by this Bill, they will be met in full by central Government. But nothing in the Bill provides any justification for increasing the rate of subsidy for existing cases or for those cases which will be dealt with by an authority irrespective of the new scheme.

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Rebates and allowances granted in these case already attract a central Government subsidy of 90 per cent. and administration costs are reflected in the rate support grant arrangements. There can be no question of transferring responsibility for the balance of expenditure to the Exchequer. In terms of benefit costs alone, this amounts to about £100 million for 1981–82, and it would not be right to transfer to the taxpayer the financial stake which the ratepayer has always had in schemes of housing assistance administered to the benefit of the local population. Without this degree of commitment, authorities will simply become agents of central Government in the matter and it does not seem right to down grade their standing in this way.
There is an important distinction between the new responsibilities of authorities and those they have held for the last 10 years. The former represents a duty transfered to them from central Government and the supplementary benefits scheme; and it would clearly be unreasonable to expect authorities to take this on without full recompense. But in the latter case there is no such justification and the Government cannot contemplate an additional charge. I hope I have satisfied the noble Lord and that he will feel able to withdraw his probing amendment.
Lord Wallace of Coslany: I thank the noble Earl for the extremely lengthy reply he has given. I think he has given me a little more detail than was given in another place. That, after all, is something that we all expect from this Chamber. Therefore, I will beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 32 agreed to.
Clauses 33 to 35 agreed to.
Clause 36 [Other supplementary provisions]:
The Earl of Avon The Earl of Avon moved Amendment No. 32A:
Page 31, line 6, leave out ("the use of furniture or").
The noble Earl said: This amendment simply tidies up the legislation following the announcement of my noble friend Lord Bellwin during the Committee debate last week that furniture charges would become eligible for help under housing benefits. Furniture charges are not assisted under the current rebate and allowance schemes and to save authorities granting rebates or allowances having to do a second assessment of the ineligible furniture charges where the rent has already been assessed for rent registration purposes rent officers and rent assessment committees are required to note separately in the rent register:
"amounts fairly attributable to the use of furniture".
Now that the Government have decided to make furniture charges eligible for housing benefit, these charges will no longer be noted separately on the rent register. This amendment simply removes the requirement. I beg to move.
Lord Wallace of Coslany: I think I can be satisfied with the Government's amendment because, if I remember correctly, it followed an undertaking given by the noble Lord, Lord Bellwin, who gave me a very broad hint of possible action later. This appears to be
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the Government's reply, which is extraordinarily good because it is a starred amendment; so they have come to a conclusion very quickly. What is the cost of this? I suppose it would be about £1 million: have the Government estimated it?
The Earl of Avon: I have not got that figure with me but I am told that the amount suggested by the noble Lord is correct.
Lord Wallace of Coslany: I am very grateful to the noble Earl, and also to the noble Lord, Lord Bellwin.
On Question, amendment agreed to.
Clause 36, as amended, agreed to.
Clause 37 [Sick pay to count as remuneration for principal Act]:
Lord Cullen of Ashbourne Lord Cullen of Ashbourne moved Amendment No. 33:
Page 32, line 2, at end insert—
("(2) In any case where regulations made under subparagraph (1) above have the effect of requiring a registered friendly society (within the meaning of the Friendly Societies Act 1974) to make amendments to its rules, the amendments may, notwithstanding any provision of those rules, be made in accordance with the procedure prescribed by regulations made by the Chief Registrar of Friendly Societies for the purposes of this paragrph.
(3) Regulations made under sub-paragraph (2) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.").
The noble Lord said: This is essentially a technical and beneficial amendment. The regulations which it will allow would enable friendly societies to change their rules to comply with regulations made under Clause 37(2) without going through the elaborate procedures which such a change would normally require.
Clause 37 brings into the definition of "earnings" liable for contributions sickness payments made to employees, where the secondary contributor (normally the employer) has paid towards their provision. Typically these would be where an employer has made arrangements, by taking out a policy with an insurance company or setting up a trust fund, for an employee to receive payments when he is off sick.
As these payments will attract liability for contributions, the secondary contributor will need to know about them so that he can calculate the contributions due. This may also involve aggregating the sickness payments with any other earnings paid for the same period before working out what contributions should be paid. So Clause 37(2) enables regulations to be made prescribing how and through whom these sickness payments are to be made. This will enable the Secretary of State to require them to be routed through the employer, who will then be in a position to calculate contribution liabilities.
Clause 37(2) has been generally welcomed by the friendly societies, who are involved in some of the schemes which it will catch. But to comply with a statutory requirement to route payments through employers they would need to change their rules. This is a long and expensive business, involving consultation with all their members. So a simplified procedure for changing their rules specifically to comply with regulations under Clause 37(2) would obviously help

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them, and this is what the Amendment would make possible.
Regulations made under this provision could enable the rule change to be made by the approval of the societies' committees of management, subject to endorsement by the Registrar of Friendly Societies. There is a precedent for this, where the change in rules was needed purely to comply with a statutory provision. The Amendment would therefore be of real help to friendly societies and would not have implications for other bodies. I beg to move.
On Question, amendment agreed to.
Clause 37, as amended, agreed to.
Clauses 38 to 41 agreed to.
Lord Banks Lord Banks moved Amendment No. 34:
After Clause 41, insert the following new clause:
("Up-rating of sickness and unemployment benefit.
. The Secretary of State shall in preparing any increase in sickness and unemployment benefit in November 1982 include in it such sum as is necessary to make good the effect of section 1(1) and (2)(a) of the Social Security Act 1980 upon these benefits.").
The noble Lord said: I beg to move Amendment No. 34 in the name of my noble friend Lord Kilmarnock and myself. The Social Security Act (No. 2) of 1980 provided for short-term national insurance benefits, including unemployment benefit and sickness benefit, to be increased by 5 per cent. less than the increase in prices. It was argued in support of this that this was purely an interim measure designed to fill the gap until these benefits were brought into tax. However, the five per cent. abatement was suffered by those who would have paid no tax as well as by those who would have paid tax.
To that extent, it was exceedingly unfair. The abatement was only applied in one year but of course the effect is cumulative. Further increases in subsequent years were calculated on the reduced figure. Provision is being made for these benefits to be taxed, but even when that is established the cumulative effect of the abatement will be continued. Now that the Government are to receive the benefit of a reduction in costs through taxation, it is only right and proper that the effect of the abatement should be removed. This the proposed new clause would do for sickness and unemployment benefit. I understand that the taxation of unemployment benefit will raise some £525 million in a full year, and that to restore the abatement for unemployment benefit would cost £60 million in a full year. I imagine that the relationship of the figures is not very different for sickness benefit, so that the money will be there to meet the cost. An impression was undoubtedly given, however unintentionally, that the abatement would be made good when benefits were brought into taxation. This was an expectation supported by logic and by a sense of fairness, and I hope that the Government will recognise this. I beg to move.
Lord Kilmarnock: I wish very strongly to support the noble Lord, Lord Banks, in this amendment which he has outlined with his usual thoroughness. In the other place there were debates at Second Reading and on Report on this issue. In the latter, on 18th March,
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1982, it was shown conclusively that the Minister for Social Services had said on 9th February in Standing Committee:
"The abatement will be restored as soon as benefits are brought into taxation. That undertaking is unqualified".
Mr. Douglas Hogg, for the Government, strove to override this retrospectively by referring to what the Minister had said in 1980, when introducing the abatement measure. He even turned to this House in his distress, quoting from the noble Baroness, Lady Young, when she said on 2nd June 1980, at col. 1190:
"I should like to make it clear … that we have taken no decision at all on the 5 per cent. abatements in the following years 1981 and 1982".
But that, at least, leaves the matter open, and might well be taken to imply that the introduction of taxation would be taken into account. At any rate, it was not sufficient to reassure all the Government's supporters and a number of them went into the Division Lobby against the Government, and in favour of the new clause to restore the abatement. One of them said that it was a matter of principle and conscience.
So far as I am concerned, that is what it remains. It is quite simply unfair to perpetrate what is, in effect, double taxation on the unemployed. The 5 per cent. abatement was further compounded by a 2 per cent. shortfall in the up-rating in 1981. The cumulative loss of unemployment benefit from November 1982, if the abatement is not made good—and this is not counting the shortfall—will be £1·05 a week for a single person and £1·70 for a married couple. If the married man has two children, the cumulative loss rises to £5·50, as a result of the continuing application of the November 1980 formula to the calculation of child dependency addition. That cannot be right.
If the Government seek to justify themselves on the grounds that they agree in principle, but that present constraints will not permit them to repair this injustice, they really cannot be allowed to get away with that, as it has been calculated by the Social Security Advisory Committee that the social security savings made by measures introduced since the Government came into office—and I am not including the SSP which is not yet law—amount to approximately £1·4 billion. Furthermore, it has been calculated that the taxation of unemployment benefit will yield something like £500 million—though I think that the noble Lord, Lord Banks, said £525 million—in a full year; whereas the restoration of the abatement would cost, on my figures, only £50 million, although the noble Lord, Lord Banks, said £60 million (there is not a great deal of difference) some of which would also return home in tax.
It is surely relevant, also, to look at the advice of the Social Security Advisory Committee on page 26 of their first report, where they say:
"The growth in numbers of people unemployed long term, the entry into unemployment of young people who have paid too few or no contributions, the 5 per cent. cut in the real value of unemployment benefit and the abolition of the earnings-related supplement are all increasing dependence on supplementary benefit".
So all that will happen if the abatement is not restored is that more and more short-term unemployed are going to be thrust on to supplementary benefit, which

73
was never intended to play the massive role which it does today in our social support mechanisms.
I do not object, in principle, to the taxation of benefits, as that it is a first step towards a tax credit scheme in which I, like our Liberal allies, believe. I am not quarrelling with that. What I am quarrelling with is this constant raiding of benefits, snatching a percentage point here and a percentage point there and even, in this case, a whacking 5 per cent., in the hope, presumably, that no one will notice. The trouble is that they do. Watchdogs like the SSAC notice, pressure groups notice, back-bench Conservative MPs notice and, above all, people themselves notice. A pound or two a week makes a great deal of difference if you are trying to survive on, for example, £30 a week. The Government are harming people and they are harming themselves. Their honour and reputation are at stake here. I beg them to think again on this issue. I warn them that if they do not, we shall lose no opportunity to return to it.
Baroness Jeger: May I associate my noble friends on this side with the amendment that has been put forward. Many quotations have been brought before us about statements from various Ministers on the question of bringing taxation into benefits when benefits were up-rated. But what we are dealing with tonight in this amendment is the situation where it is proposed to tax these benefits without up-rating them. This seems to us absolutely wrong and we therefore support the amendment. We very much hope that the Government will abide by the indications which they gave in the other place, that there was to be a link between the taxation of benefits and the up-rating of benefits.
Lord Molloy: The proposal of this new clause is of fundamental importance to your Lordships' House on two counts. One has been mentioned by the noble Lord, Lord Kilmarnock, who pointed out that in another place, and indeed in this House, promises were made by Government spokesmen. Now is the opportunity for those promises to be redeemed and, if Government spokesmen cannot do that this evening, no one in this Chamber will be able to take too seriously anything that is said from the Front Bench opposite. The noble Baroness, Lady Young, was mentioned, not in her capacity as Lord Privy Seal, when she was answering a debate on this issue. Noble Lords on the Front Bench opposite might do well to read the Hansard report of what was said at that time.
The other point which I should like to make is that, as my noble friend Lady Jeger has said, this is bound to cause great upset to all kinds of organisations, because there are very many people who believe that the massive total of unemployed has been an act of deliberation on the part of this Government; that they have set out to create unemployment. Whether or not that be true, the test will come with regard to this new clause, because they will be adding a new distasteful feature. If they have assisted in the creation of unemployment—though I am bound to say that the world recession has made a large contribution as well—the failure of the Government was in not recognising that recession. But if, in addition to that, they are now going to add penalties on the unemployed, that
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is highly distasteful, and what this new clause does is to give the Government an opportunity to maintain promises that were made, and not to make any unjustified attack upon the unemployed of our country.
Lord Trefgarne: The noble Baroness, Lady Jeger, and other noble Lords and Ladies who have spoken, will probably not be surprised to hear that the Government cannot accept this amendment. The 5 per cent abatement of short-term benefits and invalidity benefit in November 1980 was part of a package of measures designed to secure essential public expenditure reductions. It was carried out in anticipation of the taxation of these benefits, and it takes from claimants overall very much less than the tax would have yielded. We have given a commitment that the 5 per cent. abatement of invalidity pension will be restored when the benefit is brought into tax, but we have said on many occasions that the restoration of the abatement in the case of the other benefits would have to he considered in the light of the economic and other circumstances prevailing at the time that each benefit was to be brought into tax. Proposals for taxing sickness benefit have not yet been brought forward and we have no plans to restore the abatement of this benefit.
As regards unemployment benefit which will be taxed from July 1982, we have reviewed the abatement but in the present difficult economic circumstances we have been unable to restore it. We are up-rating unemployment benefit fully in line with estimated price increases in November 1982, and in addition we are making good the 2 per cent. shortfall in last year's up-rating. Restoration would cost £60 million in a full year and we have decided that further resources cannot be made available for this purpose. We shall, however, continue to keep the matter under review and, when circumstances allow, the claim will be considered, along with other priorities for the available money.
Much has been made, in particular by the noble Lord, Lord Molloy, of various Government pronouncements on this matter. May I draw your Lordships' attention to the words of my honourable friend the Minister of State for Social Security. Speaking during the Report stage of this Bill in the other place on 18th March my honourable friend said:
"We have said the abatement will not be a permanent reduction. It is equally clear that the abatement cannot be made good now, but it will be made good. My right honourable friends have the matter under review. At the right time it will be made good".
Lord Banks: I am grateful to the noble Lord, Lord Kilmarnock, to the noble Baroness, Lady Jeger, and to the noble Lord, Lord Molloy, for the support which they have given to this amendment. And I thank the noble Lord, Lord Trefgarne, for his reply, which he will not be surprised to know I find very unsatisfactory. He said that the abatement was designed to get reductions in expenditure. Well, they got them, and they have had the reduction over the years since it was reduced. Now that they are going to have a reduction through taxation, which is going to give them a bigger reduction than the one they have obtained through the abatement, it seems right at this point to restore the cumulative effect of the abatement. I am quite sure that all logic and all fairness is on the side of that argument.

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Because of that, I should like to test the opinion of the Committee.
7.53 p.m.
On Question, Whether the said amendment (No. 34) shall be agreed to?
Their Lordships divided: Contents, 41; Not-Contents, 55.

DIVISION NO. 7

CONTENTS

Ardwick, L.

John-Mackie, L.

Aylestone, L.

Kaldor, L.

Banks, L.

Kilmarnock, L.—[Teller.]

Beaumont of Whitely, L.—[Teller.]

Kirkhill, L.

Llewelyn-Davies of Hastoe, B.

Birk, B.

Bishopston, L.

Molloy, L.

Boston of Faversham, L.

Northfield, L.

Brooks of Tremorfa, L.

Peart, L.

Bruce of Donington, L.

Pitt of Hampstead, L.

Chitnis, L.

Ponsonby of Shulbrede, L.

Collison, L.

Ross of Marnock, L.

David, B.

Stedman, B.

Davies of Leek, L.

Stone, L.

Elwyn-Jones, L.

Strabolgi, L.

Evans of Claughton, L.

Tanlaw, L,

Fisher of Rednal, B.

Underhill, L.

Hampton, L.

Wallace of Coslany, L.

Harris of Greenwich, L.

Wells-Pestell, L.

Houghton of Sowerby, L.

White, B.

Jeger, B.

Winstanley, L.

Jenkins of Putney, L.

NOT-CONTENTS

Airey of Abingdon, B.

Lane-Fox, B.

Allerton, L.

Lindsey and Abingdon, E.

Avon, E.

Long, V.

Bellwin, L.

Lyell, L.

Belstead, L.

McFadzean, L.

Boardman, L.

Mackay of Clashfern, L.

Brougham and Vaux, L.

Mansfield, E.

Campbell of Croy, L.

Margadale, L.

Cathcart, E.

Marley, L.

Coleraine, L.

Mersey, V.

Craigavon, V.

Mottistone, L.

Craigmyle, L.

Mountevans, L.

Cranbrook, E.

Murton of Lindisfarne, L.

Cullen of Ashbourne, L.

O'Neill of the Maine, L.

Denham, L.—[Teller.]

Pender, L.

Drumalbyn, L.

Plummer of St. Marylebone, L.

Eccles, V.

Elton, L.

Rankeillour, L.

Enniskillen, E.

Ridley, V.

Fortescue, E.

Sandford, L.

Fraser of Kilmorack, L.

Sandys, L.—[Teller.]

Gainford, L.

Savile, L.

Gardner of Parkes, B.

Skelmersdale, L.

Gridley, L.

Trefgarne, L.

Harmar-Nicholls, L.

Vaux of Harrowden, L.

Hastings, L.

Ward of Witley, V.

Holderness, L.

Windlesham, L.

Kinross, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
Clauses 42 to 46 agreed to.
Clause 47 [Short title etc.]:
Lord Cullen of Ashbourne Lord Cullen of Ashbourne moved Amendment No. 35:
Page 40, line 13, leave out from beginning to ("and") in line 16 and insert—
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("(3) The following provisions come into force on the passing of this Act—

(a) sections 7, 26, 40, 42 and 44 to 46;

(b) paragraphs 1 to 4, 7, 10, 13(1) and (3), 15, 19, 21 to 23, 28 to 32, 35 and 36 of Schedule 4; and

(c) subsections (1) to (4) and (7) of this section and subsection (5) of this section so far as it relates to the provisions mentioned in paragraph (b) above").

The noble Lord said: This is a technical amendment. Its effect is to include subsection (5), which gives effect to Schedule 4 to the Bill, among those provisions which take effect immediately on Royal Assent. It will be obvious to noble Lords that this amendment is not introducing anything new but is intended to correct a defect in the Bill. As presently worded, subsection (3) brings specified paragraphs of Schedule 4 into effect on Royal Assent. However, it does not bring subsection (5) into effect at that time. As it is subsection (5) which gives effect to Schedule 4, the legal unsoundness is clear and I commend this amendment to the House. I beg to move.
Baroness Jeger: This amendment is so technical that my noble friends and myself could not possibly have any objection to it.
On Question, amendment agreed to.
Clause 47, as amended, agreed to.
Schedules 1 to 3 agreed to.
Schedule 4 [Amendments and transitional provisions]:
Lord Trefgarne Lord Trefgarne moved Amendment No. 36:
Page 59, line 3, leave out paragraph 36 and insert—
("36.—(1) Neither section 141(2) of the principal Act nor section 10(1) of the Social Security Act 1980 (duty of Secretary of State to refer proposals for regulations to Industrial Injuries Advisory Council and Social Security Advisory Committee) shall apply to any regulations contained in a statutory instrument which states that it satisfies the requirements of this paragraph.
(2) A statutory instrument satisfies the requirements of this paragraph if it contains only one or more of the following—

(a) regulations made under or by virtue of any provision of this Act and before the expiry of the period of six months beginning with the commencement of that provision;

(b) regulations made under any enactment in consequence of a provision of this Act, or in consequence of any provision made by virtue of a provision of this Act, and before the expiry of the period of six months beginning with the commencement of the relevant provision of this Act;

(c) regulations proposals for which are not subject to the requirements of section 141(2) or section 10(1).").

The noble Lord said: This amendment substitutes for paragraph 36 of Schedule 4 to the Bill before your Lordships a slightly longer paragraph with exactly the same objective in view but rather better designed to achieve that objective. Usually, social security regulations have to go to one or other of the two independent advisory committees. In most cases, it is the wide-ranging Social Security Advisory Committee. The traditional view, reflected in a succession of social security Bills, is that where a social security change is being effected by main legislation and by regulations made under that legislation, and within six months of Royal Assent to it, then the regulations are part and parcel of what Parliament has discussed already and it is not sensible to refer them to an advisory committee for further discussion. In some cases the timetable for carrying through the Bill changes would

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make a reference to the advisory committee difficult or impossible in any event.
Paragraph 36 follows the usual practice but elaborates a little on the original text simply because the lawyers have spotted that we had not got quite what was needed and intended. In particular, one set of regulations may be made under the Act but this in turn will require a consequential amendment of another set of regulations. Social security regulations tend to interact with one another because we have an overall system with various benefits within it. So the chain of causation from the Act itself is unbroken; it is just a little longer than the Act to initial regulations link on which the original draft focused. I hope therefore that your Lordships will agree to this modest change. I beg to move.
Baroness Jeger: We cannot understand why this was not properly set out at the previous stage, but as the Government have obviously recognised that there were mistakes and have now brought the matter to us in a more proper way, we will certainly agree. We hope this amendment will now pass.
On Question, amendment agreed to.
Schedule 4, as amended, agreed to.
Remaining schedule agreed to.
Title agreed to.
House resumed: Bill reported with the amendments.

Local Government Finance (No. 2) Bill
8.6 p.m.
House again in Committee.
Clause 2 [Limitation of precepting powers]:
[Amendments Nos. 16 to 18 not moved.]
Lord Bellwin Lord Bellwin moved Amendment No. 19:
Page 2, line 18, leave out subsections (2) and (3).
The noble Lord said: I spoke to this amendment earlier and I beg to move.
On Question, amendment agreed to.
The Deputy Chairman of Committees (Lord Wells-Pestell): As Amendment No. 19 has been agreed to, I cannot call Amendments Nos. 20 to 23.
[Amendments Nos. 20 to 23 not moved.]
[Amendment No. 24 not moved.]
Clause 2, as amended, agreed to.
Lord Bellwin Lord Bellwin moved Amendment No. 25:
After Clause 2, insert the following new clause:
("Substituted rates and precepts.
.—(1) Subject to subsection (2) below—

(a) a rating authority may make a rate for a financial year in substitution for a rate previously made by it for that year; and

(b) a precepting authority may issue a precept in respect of a financial year in substitution for a precept previously issued by it in respect of that year.

(2) The estimated product of a substituted rate or precept shall not exceed the estimated product of the rate or precept for
78
which it is subsitituted (the "original" rate or precept); and for the purposes of this subsection the product of a substituted rate or precept shall be estimated by reference to the same gross rateable value as the product of the original rate or precept.
(3) Section 12(6) of the General Rate Act 1967 (which requires a precept to be issued or notificed before the beginning of a financial year) shall not apply to a precept issued by virtue of subsection (1)(b) above.
(4) Where a precept is substituted by virtue of this section any rating authority which has made a rate by reference to the original precept shall under subsection (1)(a) above make a substituted rate by reference to the substituted precept and in relation to that substituted rate the estimated product of the original rate shall for the purposes of subsection (2) above be treated as reduced by the difference (if any) between the estimated products of the original and the substituted precepts.
(5) Where a rate or precept is substituted by virtue of this section any sum paid to the rating or precepting authority in respect of the original rate or precept (including any sum paid by way of an instalment or other part payment) shall—

(a) to the extent to which it would have been payable if the original rate or precept had corresponded to the substituted rate or precept, be treated as paid in respect of the substituted rate or precept; and

(b) as to any excess, be repaid if the ratepayer by whom that sum was paid or, as the case may be, the authority to which the precept was issued so requires.

(6) Where repayment of any amount is not required under subsection (5)(b) above that amount shall, as the rating or precepting authority may determine, either be repaid or—

(a) in the case of an amount paid in respect of a rate, be credited against any subsequent liability of the ratepayer for rates in respect of the hereditament in question;

(b) in the case of an amount paid in respect of a precept, be credited against any subsequent liability of the authority to which the precept was issued in respect of precepts issued to it by the precepting authority.

(7) This section applies whether or not the original rate or precept was validly made or issued but shall not be construed as authorising the substitution of a rate or precept for one made or issued after the passing of this Act in contravention of section 1 or 2 above.").
The noble Lord said: I spoke to this amendment earlier and I beg to move.
On Question, amendment agreed to.
Lord Bellwin Lord Bellwin moved Amendment No. 26:
After Clause 26, insert the following new clause:
("Proceedings in respect of rates and precepts.
.—(1) The validity of a precept shall not be questioned except by an application for judicial review; and the validity of a rate shall not be questioned except as aforesaid on any of the grounds mentioned in subsection (2) below.
(2) The grounds referred to in subsection (1) above in the case of a rate are—

(a) that any part of it was made for financing expenditure which the rating authority could not lawfully incur;

(b) that it was made by reference to a precept which was wholly or partly invalid; or

(c) any other ground not based on facts relating to a particular hereditament or to the inclusion or exclusion of any particular person in or from the rate.

(3) If on an application for judicial review the court decides to grant relief in respect of a rate or precept it shall quash the rate or precept whether the ground of invalidity relates to the whole or only to a part of it.
(4) Subsection (1) above is without prejudice to the making of an application for judicial review in any case in which it could be made apart from that subsection.
(5) Section 7 of the General Rate Act 1967 (appeal against rate) shall have effect subject to the foregoing provisions of this section, and accordingly the court shall not under that section amend or quash a rate except in relation to a parricular hereditament.").
The noble Lord said: I spoke to this amendment earlier and I beg to move.
On Question, amendment agreed to.
Lord Mottistone Lord Mottistone moved Amendment No. 27:
After Clause 2, insert the following new clause:
("Limit of increase in rates for non-domestic sector.
.—(1) Where the rating authority makes an increase in the rate the percentage of this increase shall not in respect of non-domestic hereditaments exceed any percentage increase provided for by the Secretary of State under the Rate Support Grant in accordance with section 54(4)(d) of the Local Government Planning and Land Act 1980.
(2) In this section "rate" and "rating authority" has the same meaning as in section (1) above, "non-domestic hereditament" means a hereditament which is not a domestic hereditament as defined in section 48 of the General Rate Act 1967.").
The noble Lord said: With the permission of the House I should like to speak also to Amendment No. 88. Before starting to speak to my amendment, I should like your Lordships to recall the remarks of my noble friend Lord Bellwin with regard to the business rate, when he was speaking to Clause 1 stand part, many of the points of which thoroughly endorse the fact that the business rate must receive proper consideration at this stage. The other point made by my noble friend —to my surprise, although perhaps I have been missing things—was in relation to Amendment No. 15, when he said;:
"Business rates will continue for the foreseeable future".
So I believe we have a problem. As was said in the Green Paper, the rates under consideration are only those for domestic rates and that we therefore have to think rather carefully how the business rates are dealt with.
The purpose of my Amendment No. 27 is to restrict the rates for buisness, to limit them each year to the Government's inflation assumption in the rate support grant settlement. It is referred to in Section 54(4)(d) of the Local Government Planning and Land Act 1980. The CBI, who advised me on this amendment, have been discussing with the Government for some time the case for imposing such a limit. Their representations have been prompted by rapidly rising rates, which have increased as a proportion of the real inflation-adjusted profits in recent years and particularly since 1980–81.
The noble Lord, Lord Bruce of Donington, when speaking on Amendment No. 2 incited me to respond by talking about business rates—and I am sorry not to see him in his place. I remember that among other things he said that the business rates, after all, had to pay for the roads and refuse collection and all sorts of things. Well, that is true, but the business ratepayer pays at a higher poundage than the domestic ratepayer, yet he benefits less from the provision of services. In addition he usually has to pay relatively more for the services he uses, such as refuse collection, than his domestic counterpart.
I will not go over the pros and cons of this amendment because I did so at Second Reading in columns 653–4 of Hansard of 22nd April. Perhaps I may conclude my introduction of this amendment by saying that the arguments used against the proposal for a ceiling on business rate increases have in the past been that it reduces local autonomy and that it would result in an intolerable burden on the domestic ratepayer. However, the counter-arguments run, the ability of local authorities to collect rates from the domestic ratepayer will not be affected, and the fact that the cost of marginal expenditure decisions will fall on domestic ratepayers will in fact greatly enhance local accountability. In
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practice, it is unlikely that there will be a large increase in the burden on domestic ratepayers, as the increased accountability that arises will be a powerful influence in limiting excessive expenditure.
I am sure that the philosophy behind that remark will appeal to the Government, who repeatedly on other amendments have been making the point that it is necessary in certain areas where local authorities have gone off on a trip to restrict their excessive expenditure. For authorities where the domestic contribution to total rate income is small, the possibility of large increases falling on the domestic ratepayers could be softened by the use of an equalisation grant. I think that is enough to demonstrate the importance of this amendment in supplementing what I said on Second Reading. I beg to move.
Lord Bellwin: I wonder whether my noble friend would permit me—but, if he thinks it would be confusing, of course I will not do so—in speaking to this Amendment, No. 27, and to No. 88, to cover also Amendments Nos. 30,31 and 89.
Lord Mottistone: I would in fact find it confusing. I do not want to offend my noble friend, because I hope he is going to agree, but the subject matter of the other amendments is really quite different and they need fighting on their own account.
Lord Bellwin: Of course, I entirely accept that. May I say that underlying all these new clauses is the point that high rates can harm employment and development prospects in the areas where they are levied? My noble friend has very commendably looked at ways in which the impact of these high rate levels on the business community can be reduced. I suspect he will not be surprised that I cannot say today that the principle and the drafting of his new clauses are acceptable and that I commend them to the House. But I should like to establish clearly—and indeed I hope that all that I was saying earlier established clearly—that we take very seriously the plight of commerce and industry in some areas and that we take very much to heart what is said to us on the subject by the CBI, by firms and individuals, and indeed by my noble friend this evening.
However, I am not convinced that a ceiling on business rates, as proposed in the new clause in Amendment No. 27, would achieve our aim of getting very high-spending authorities to cut back. The effects of a single percentage limit on increases in business rates would be diverse and could mean cuts in expenditure for some authorities but increases in others. Moreover, it could in some cases put an intoleable burden on domestic ratepayers, who would have to finance the balance of an authority's expenditure.
The abolition of supplementary rates and precepts will enable both non-domestic and domestic ratepayers to plan their budgets free of any fears that they may be faced later in the year by heavy, unexpected demands for supplementary rates. This measure, together with our determined efforts to secure continued reductions in local authority spending, should benefit all ratepayers, including those in the business sector.
The point to remember, though, is that extra protection for some ratepayers inescapably means an extra

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burden for those who do not benefit from the ceiling, or the relief or the exemption involved. Any such large-scale relief as those proposed by my noble friend for non-domestic ratepayers in the new clauses in Amendments Nos. 27, 30 and 31, would mean that the extra burden would fall on the domestic ratepayer, who himself will he hard-pressed in many instances. For this reason alone, I fear I could not agree this afternoon to the principle of relief for commercial hereditaments proposed in the new clause in Amendment No. 30, which we will come to later. Also, as drafted, the new clause would provide relief for commercial but not industrial premises. I am not convinced that that distinction, whether or not deliberate on my noble friend's part, could be justified.
Nevertheless, the Government have already taken some comparatively small but, we hope, useful measures to give specific assistance with non-domestic rate bills in the Local Government, Planning and Land Act 1980. Using order-making powers under the Act, the Government have reduced the amount of empty property rates chargeable on non-domestic property to 50 per cent. of the normal rate; and have given a range of smaller businesses the right, which previously only domestic ratepayers had, to pay rates by instalments. These powers also give us the flexibility to vary further the ceiling on rates on unoccupied property and to increase the number of businesses eligible to pay by instalments in response to changing circumstances.
Just a word on the Green Paper to which my noble friend made reference, Alternatives to Domestic Rates. It is true, as I said earlier, that this applies to the domestic sector, but we have always said that whatever measures are taken—and there will be measures taken—we should have to ensure that business ratepayers were safeguarded from any authority which, following reform of the domestic rate system, sought to maintain excessive spending policies by loading the marginal cost on to the non-domestic rate poundage. We will certainly have this very much in mind. In the light of what I have said, I hope my noble friend will accept that the Government are keeping the problems and needs of business ratepayers very much in mind. We are anxious about it, and I hope that what I said earlier will illustrate this. Perhaps in those circumstances he may feel able to withdraw his amendment.
Baroness Birk: I listened very carefully to what the noble Lord, Lord Mottistone, said and what the Minister said in reply. Indeed, from the reply, the noble Lord, Lord Mottistone, might have felt that perhaps he should have supported the amendments moved from my Bench and also by the Alliance relating to considering the Bill and reassessing the legislation every year in relation to this part of the Bill as well. The Government would have had a chance to look at it and it would also have furthered the noble Lord's case as regards the Government getting on with their assessment of what local financial policy should be.
The Minister quite rightly made various points on the Green Paper as regards the rates and also the services provided to industry. One point which he did not make, and which I think is very relevant in this area, is that the domestic rate increases have been rather greater than the non-domestic rate increases. We have seen a decline in real value of the domestic rate
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relief grant. This would put an unfair impact on domestic ratepayers in authorities which have a high percentage of non-domestic rateable values, for example, Westminster and the City of London.
Although we are not anxious just to squeeze industry, which would be wrong and in any case an extremely unproductive view to take, I think we must agree that the amendment tabled by the noble Lord, along the lines of the Minister's reply, is right at that point, but its effect as regards domestic rate increases and industrial rate increases puts the whole matter rather out of focus at the moment. Until the Government, or a Government, come up with a new and fresh look at the whole situation it would be wrong to take the amendment in its present form on its own. So if the noble Lord is thinking of dividing the Committee on this amendment, I think I ought to break the news to him that my noble friends and I find reluctantly that we shall not be able to support him.
Lord Evans of Claughton: Briefly, I appreciate the problems that industry and commerce suffer under the present rating system. Until comparatively recently it could be said that the level of rates was not a problem for industry. I still think that the level of interest charges is probably a greater problem for industrial concerns than the level of the rates. I do understand the situation. In the part of the world where I live we are continually receiving deputations and delegations from commercial, industrial and shopping interests asking that something be done about the very high level of rates which commercial and industrial hereditaments have to pay.
I do not think that the proposal that the noble Lord puts forward is one that we could support at this stage. The Green Paper is, of course, about domestic rates and not about non-domestic rates. However, I am chairman of a working party within my own party on the subject of financing local government and one comes back, I am afraid, all the time to the point that the remedy for the industrial ratepayer—as it is, I think, for the domestic ratepayer—is a change in the way in which we finance local government. I really cannot see that the rating system can be tinkered with much more to produce the kind of results that the CBI and, indeed, all kinds of interests want. I think that there must be a root and branch reform of the rating system.
I suspect, from my own researches, that one of the big difficulties will be encountered, in finding a fair way in which to require industry and commerce to pay for the services they receive without imposing too heavy a burden upon them. I suspect that this will be a very difficult and more serious problem than finding remedies like local income tax for the domestic ratepayer, and whether it be by addition or a supplement to the corporation tax I do not know.
I have a great deal of sympathy with the desire of the noble Lord to reduce the burden that industry and commerce suffer. But I do not think that this proposal would be fair in relation to other ratepayers. We will have to wait to find some form of reform of rating which would be fairer to industry and to all people who pay rates. Quite frankly, that must be the only way out. As the noble Baroness, Lady Birk, has said, one could not support this amendment in its present form.
Viscount Ridley: I should like to add that I agree with the last speaker. We come back to the reform of the whole system of local government financing. The amendment is in a sense premature. Although we have enormous sympathy with the business ratepayer who is literally being squeezed very hard, I think that Members on the Benches opposite and members of the Labour party have not realised how serious this squeeze is—they may deny that, but it is I am sure a fact. I hope that the Government, while not accepting the amendment, will take the opportunity yet again to reinforce their wish to those who make the decisions to get on with the root and branch reform of local government finance, otherwise we are all wasting our time.
Lord Molloy: We in the Labour party understand very well the predicaments of local government because we have been more involved in local government throughout the length and breadth of Great Britain than at any time when the Tory party were—
Lord Mottistone: Perhaps the noble Lord would address his remarks to business in local government and not just to local government itself.
Lord Molloy: I was just coming to it. The point I was trying to make is that I hope it will not be considered audacious for me to defend my party from the Benches opposite in this noble House, because I shall carry on doing that as long as God gives me breath. Noble Lords opposite must realise that and the quicker they do so the better. I shall continue with what I have to say. I have as much right to be here as any noble Lord opposite.
What gives us very grave concern is the massive interference in local government which existed on these islands before there was a national Government of the present Conservative Administration. What is worrying many businessmen, small factory owners and small businessmen, is that they are seeing the rate support grant cut, which is, roughly speaking, a fair method of taking money from taxpayers and ratepayers to assist local authorities, particularly those which are in very difficult circumstances. Local businessmen and local industrialists realise that their local authority, to make good some of the cuts imposed on them by central Government, will have no alternative but to raise the rates both for the industrial ratepayer and the domestic ratepayer. Until we understand that and get that quite clear, the very good points made by the noble Lord, Lord Mottistone, will not really be understood.
I have a great deal of sympathy with the noble Lords' submission, but the problem has been put not only on the domestic ratepayer but also on the industrial ratepayer. The men in industry understand, company directors understand that they have to find the money for some of the things that they wish to do in their local authority. The money has been taken away from the central grant by Mr. Heseltine and therefore their local authority will look for other ways and naturally they are looking to local industry to make a bigger contribution. I should like to say this to the noble Lord, Lord Mottistone. He wants to put the blame
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fairly and squarely where it belongs and that is on the shoulders of this Conservative Government.
Lord Bellwin: The noble Lord will not be surprised if I spring up to tell him that I, too, will speak as often as I like and whenever I like to defend the policies of my party. The fact is that I disagree with him absolutely and totally. It is not grant that decides the level of funds that are available to a local authority; it is the rate at which it spends. I can recall having served—the noble Lord may sneer, but I can recall being in local government when our rate support grant was reduced from 66 per cent. down to 61 per cent., an enormous reduction of 5 per cent. The fact is that it was always those same authorities who managed, who somehow ordered their affairs, who did things better, who got better value for money, who went on providing services at a rate which did not impose upon their industry and commerce the kind of burdens that were being imposed upon them by other authorities who did not care so much about value for money and those things that some Members opposite care about so little. So when we discuss matters in this Bill, as we are doing, and try to make progress, I suggest that it helps if we do not start to make political party points, because I can assure the noble Lord that on this subject I know every bit as much about it as he does.
Lord Molloy: Before the noble Lord sits down, I would point out that the point was made by his noble friend behind him and I believe that he had every right to make his attack on the Labour Party. I committed the grave offence in the noble Lord's mind of defending the Labour Party. When this country was in similar circumstances in the 1930s under Conservative Governments, there was, and there had to be, a release of rates up to 50 per cent. for industrial ratepayers. In other parts of the country there were queues of domestic ratepayers miles long, as in Merthyr Tydfil, where it took people eight or nine hours queueing outside the county court to answer summonses for not paying their rates. That is a situation which I do not want to see arise in this country again, and that is why I made the points that I made in response to the very able and sensible way in which the amendment was moved by the noble Lord, Lord Mottistone.
Lord Underhill: There are two brief points that I should like to make on this amendment. I agree with practically every criticism that has been made on the amendment put forward by the noble Lord, Lord Mottistone. But, in considering the whole question of the difficulties of commercial and industrial ratepayers, one other matter has been overlooked. The lack or absence of adequate services and facilities provided locally can itself have an effect upon the position of employment in particular areas. That must be taken into consideration. The criticism that I would make of the noble Lord, Lord Bellwin, is that he continually refers to extravagance in local government. We know that there must be some tightening up, and there will be subsequent clauses which deal with this. But we must not get away from the fact that local government has cut its real spending by 21

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per cent. in the last five to six years, whereas central Government have increased their expenditure by 8 per cent.
The noble Lord ought not continually to knock local government as if it is the only extravagant spender, whereas we know that the services provided by local government are of the utmost importance, not just to members of the Labour Party, but to the whole community, and that local government services must be kept at a sufficient level which can not only affect the livelihoods of people, but which can also have some effect on their employment.
Lord Bellwin: I do not knock local government. First, I query very much the figures that the noble Lord mentioned, but apart from that I do not continually knock local government. Quite the contrary, I have every bit as much interest in local government as has the noble Lord—some might think even more so. But I am concerned when I see things happen within local government that I know are harming it and harming its future. When there is this inability of central and local government to work together, then it is local government as well as central Government that is harmed. At the end of the day it is central Government that prevails to the detriment of local government. I did not talk about extravagance; I talked about levels of spending what we can afford and what ratepayers can afford. The ability to pay does not come into this whole debate at all, but it is certainly having its effect upon business and commerce. It is at our peril that we fail to recognise this.
I want local government to work better. All those I know on all sides—and I know very many leaders on the Labour side—are also concerned, but they are equally concerned—and I hope that the noble Lord will take this from me—about some of the activities of their own colleagues in other authorities who make it hard for everyone who has the interests of local government at heart, as I certainly do.
8.35 p.m.
Lord Mottistone: Perhaps I may conclude this debate around my amendment because, with the greatest possible respect to all sides, there has been quite a lot of talk which has had nothing to do with it. Perhaps noble Lords and the noble Baroness, Lady Birk, will forgive me if I do not respond to her points, which I do not think were strictly on the lines of the amendment.
The particular points that I should like to make are general. One of the dangers of high business rates is that they are moving the businesses away from the big cities. That is bad for life in the big cities. I hope that local government in cities will realise that the more they squeeze financially the small businesses in particular, and the not-so-small businesses, the more they will send away the available jobs within their area and the more they will make themselves destitute. Whether this is the right answer is another matter, but I honestly think that the Government on the one hand and the local authorities on the other must watch the implications of squeezing businesses.
I was very much concerned about two things. The first was the fact that my noble friend's advisers had put my three amendments together. Perhaps I
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may say to him that if I think they can be taken together, I shall always tell him. If this happens again, perhaps he could note that, because I think that they are separate points. Furthermore, it is bad news for me because it sounds as though he has a brief to turn them all down and I thought that I might get one out of three. Apart from anything else, I think that that is bad debating. I am sorry to have to criticise the way this has been handled, but perhaps my noble friend will note that I shall always let him know if I think amendments can be taken together, unless, of course, it is absolutely obvious, as in the case of a consequential amendment.
What I did not like was the fact that he said this amendment—I think it was this amendment, but it may have been one of the others—related to commercial and not industrial ratepayers. It is not supposed to. If that is so, perhaps he will be good enough to let me know where it is wrong. When my noble friend specifically answered this amendment, he in fact answered many points which I had already made; that is, I had provided the answer to what he was saying to me. Therefore, if he could look at the earlier part of his speech against what I said, he might find that there is a bit more in this which he could accept than he thinks. I am quite prepared to accept that the wording could be improved, but I should have thought that, whatever other noble Lords may have said, there was room here for something on these lines to provide this limit so that there is some sort of a future.
We, as domestic ratepayers, live in our houses and, because there are many of us, when the rates go up they are relatively shared. But some of the businesses unexpectedly get tremendously clobbered, regardless of supplementary rates: as from one year to the next they get clobbered and they do not know what will happen next. So it is very difficult for them to work out a five-year plan as to how they will develop their business if, shall we say, in year three there is a substantial increase in rates, which is a substantial cost. I know that they can be set off against tax, as the noble Lord, Lord Bruce, said, but it is all part of the cost. It does not of itself mean that there is not money to be spent out. Therefore—and I am not trying to incite the noble Lord, Lord Molloy, to his feet—one of the underlying feelings about having a restraint on the non-domestic rates is in order that businesses can plan. I should like to suggest to my noble friend that he makes some sort of slightly more encouraging answer to me on this particular point. I shall then—with the aid of a letter telling me why I am commercial and not industrial—table another amendment at the next stage of the Bill and have a bash at that.
Lord Bellwin: I do not know about this having a bash at things—it is getting very close! Of course, I shall certainly write to my noble friend and we will sort out this business of commercial and industrial. I think that we had better sort out also the particular amendments on which we are speaking, because, so far as I am concerned, I confess that there is some confusion, although I am sure that that is not the case for my noble friend—he obviously knows exactly what he has in mind.
I stated in general where we stood on this whole matter. In fact, everyone who has spoken, regardless

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of the politics, has an understanding that this is something that we had better recognise. I think we do recognise it because it concerns everything that we are all troubled about. There is no lack of sympathy—I hate to use the word because that implies that you just brush it off, and I do not mean that at all.
I said that in any review, and indeed the review that is going on now, we would have to keep in mind the position of the business and commercial ratepayer. The noble Lord, Lord Evans, rightly said how hard it is, and yes, it is, but even so, we cannot walk away from it; it is part of this whole scene. I assure your Lordships and my noble friend Lord Mottistone that we are thinking of it in that way, and if we have to get down to splitting out these amendments I shall do everything I can to try to be helpful.
Lord Mottistone: I thank my noble friend. With the proviso that if the picture looks right I shall perhaps come back again at Report stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3 [Borrowing powers]:
Lord Mottistone Lord Mottistone moved Amendment No. 28:
Page 2, line 29, leave out from ("(2A)") to end of line 33 and insert ("The reference in sub-paragraph (1) above to money borrowed by a local authority includes a reference to the interest for the time being payable in respect of that money.").
The noble Lord said: This is a different subject, so do not think that it is all back to the same argument. My amendments which relate to the last one come later. Clause 3(1) of the Bill provides that interest payable on local authority borrowing is a first charge on local authority revenues. It does so by adding to paragraph 11 of Schedule 13 to the Local Government Act 1972, where money borrowed is already secured as a charge on a local authority's revenues.
In making this addition I understand that the Government's purpose has been to reinforce and maintain the existing excellent credit-worthiness of local authorities as borrowers, given that after the passage of this Bill they will no longer have the ability to raise revenue by way of supplementary rates at any time in the year. I wholeheartedly support this objective; whether noble Lords opposite do is another matter. Indeed, I would suggest that we all ought to support it. However, I wonder whether interest should be preferred to principal.
The majority of prospectuses issued assume "money borrowed" in the 1972 Act covers interest as well as principal debt, and that these two elements are secured as equal charges on a local authority's revenues. Since the 1972 Act does not specifically mention interest, it might be useful to clarify this point, and the amendment I have tabled does exactly that. My amendment would underline the credit-worthiness of local authorities and would be acceptable and welcome to the lending institutions. It also has the merit of being simple. Since it would have the same effect in meeting any anxieties about local authorities' future credit-worthiness as the Government's original subsection, I would ask my noble friend to consider accepting my amendment to the Bill.
Lord Bellwin: I am grateful to my noble friend for the careful thought he has clearly given to this matter. As he rightly says, our intention has been to ensure that no doubt should arise as to the credit rating of local authorities. Money borrowed, as my noble friend has said, is secured as a charge on local authority revenues by the 1972 Local Government Act. It is not entirely clear whether interest as well as principal debt is covered by the term "money borrowed", although I am aware that many existing prospectuses state as much because the term "interest" is not specifically used.
The need for local authorities to be seen to be absolutely credit worthy, as indeed they are seen to be in this country, is not contentious, and considering what steps might be taken to reinforce this standing the Government had, as the Committee will have seen, adopted the Scottish model for securing interest as a first charge on revenues. I have certainly been interested in studying the amendment proposed by my noble friend. On reflection, it seems to have several advantages. First, it clarifies and confirms the position which many had thought already existed, fitting in neatly with the existing legislation. As a result, it avoids any problem of discrepency between existing and future prospectuses for stock issues. Thirdly, I understand that it would be seen by those who are interested to provide all necessary guarantees of local authorities' credit-worthiness. For these reasons, I thank my noble friend for helpfully putting this forward, and I am pleased to be able to tell your Lordships that the Government can, and will, accept my noble friend's amendment.
Lord Bruce of Donington: We are very pleased to note that the noble Lord opposite has been, for the first time this evening, a little amenable to some suggestion from the Back Benches; of which side, for the moment, is immaterial for our purposes. We most certainly felicitate the noble Lord, Lord Mottistone, on obtaining this concession from the Government. I was a little curious to know why this amendment was put down at all. So far as I am aware, the credit-worthiness of British local authorities throughout the United Kingdom has never been subject to question.
Local authorities throughout the United Kingdom enjoy a very high credit rating indeed, in contrast to perhaps some of the less fortunate cities in the United States who have been in some difficulties. I just wondered why there should be this sudden anxiety that possibly our own local authorities might perhaps be subject to the same kind of economic circumstances that obtain, or did obtain, for example in the state of New York. I should be glad if the noble Lord would give the backing to what I think I now assert correctly, that local authorities in the United Kingdom are of the utmost credit-worthiness in any event, and that in all save the theoretical sense the assurance given in this amendment is not really necessary at all.
If the noble Lord will restrain himself for just a little longer, might I suggest more particularly that one way in which the credit rating of local authorities could be established and seen on a firmer basis—and we shall come to this in Part III of the Bill—is if it were a requirement for local authorities' accounts to incorporate an account of the assets that they actually possess

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and which are in the ownership of the people of the local authority, in fact governed by the local authority.
So far, as the noble Lord knows perfectly well and it has been pointed out in the Layfield Report, the existing form of accounts does not require any accounting for assets possessed by a local authority in a balance sheet form. I do not want to raise the matter any further now, because it will arise in Part III of the Bill, but I should like the noble Lord to give some assurance to the public at large that, by and large, and with obvious varying fortunes, our local authorities in the United Kingdom have a credit rating second to none in the world.
Lord Mottistone: Perhaps my noble friend would allow me to bring us back to my amendment. The main point is that the paragraph we have sought to remove had interest as the first charge on the revenues. My amendment sought to make it even handed between the prinicpal and the interest, and that is the only purpose of it. This great long political speech, all about Second Reading, is no doubt relevant, but it is not relevant to my amendment.
Lord Bellwin: That is the point. It is really a question of putting the interest and principal as equal charges on local authority revenues for all loans. This removes any ambiguity that there may be in the 1972 Act, which in fact does not mention interest specifically, and reproduces existing practices. I understand that the money market now considers this amendment acceptable and indeed preferable to the original proposals they were making. Of course, as I sit down, I endorse what the noble Lord, Lord Bruce, says. It does no harm to reiterate that because, as there are changes, even restrictions on supplementary rates and so on, people wonder, sometimes worry; so it does no harm to restate the position.
Baroness Birk: My noble friend Lord Bruce was making a relevant point, not a political speech, because when he spoke of the credit-worthiness of local authorities, he was pointing out that because one of their revenue-making possibilities is being taken from them—they cannot levy supplementary rates—people who are in a position to lend them money are becoming scared. That is why the provision was in the Bill and has now been polished up a little by the noble Lord, Lord Mottistone. In other words, it is not so much his amendment against which we are arguing—he has made it neater and more polished—but the original clause, and my noble friend was right in what he said about that.
Lord Bellwin: We could spend all night discussing a point of that kind, so I shall be brief. I am sure the noble Baroness, Lady Birk, is not seriously suggesting that the raising of a supplementary rate in one year would seriously affect the credit-worthiness of a local authority; and the noble Lord, Lord Bruce, explained how credit-worthy local authorities really were. I agree, and of course we are talking about something which has a year's run. It is a point—I made it myself a few moments ago—in terms of the totality of creditworthiness, and I do not think I need say more.
On Question, amendment agreed to.
Clause 3, as amended, agreed to.
8.52 p.m.
Lord Bellwin Lord Bellwin moved Amendment No. 29:
After Clause 3, insert the following new clause:
("Interpretation and commencement of Part I.
.—(1) In this Part of this Act—
"financial year" means a period of twelve months beginning with 1st April;
"gross rateable value", in relation to a rating or precepting authority, means the aggregate of the rateable values of the hereditaments in the authority's area;
"precepting authority" means an authority having power to issue a precept either to a rating authority or to a county council;
"rate" means a general rate except that—

(a) in the case of the City of London, it includes the poor rate; and

(b) in the case of the Inner Temple and the Middle Temple, it means any rate in the nature of a general rate levied in the Inner Temple or the Middle Temple, as the case may be;

"rating authority" means any authority having power to make a rate under section 1 of the General Rate Act 1967;
"supplementary precept" means a precept which is issued by a precepting authority—

(a) in respect of (or of part of) a financial year in respect of which it has already issued a precept; and

(b) by way of addition to and not in substitution for that previous precept.

(2) Sections 1, 2 and (Substituted rates and precepts) above have effect in relation to any financial year beginning on or after 1st April 1982.
(3) Schedule (Rates and precepts: transisitional provisions) to this Act shall have effect in connection with the coming into force of sections 1 and 2 above").
The noble Lord said: I have spoken to this. I beg to move.
Lord Hill of Luton: For clarification, I would refer the Minister to subsection (2) of the proposed new clause, which says:
"Sections 1, 2 and (Substituted rates and precepts) above have the effect in relation to any financial year beginning on or after 1st April 1982".
Does that mean that it has effect in dealing with any action taken before 1st April, or that it affects anything which may have been done before 1st April but which does not come into effect until after 1st April? I should be grateful for his advice on that because a good deal hangs on it.
Lord Bellwin: As soon as the noble Lord said "a good deal hangs on it" I began to wonder; one must double check everything in that situation, and I know he would want me to do that. My interpretation—I think this touches on the point we were discussing earlier—is that it is what was in effect before the date 1st April 1982, but I shall confirm that and contact the noble Lord.
On Question, amendment agreed to.
8.54 p.m.
Lord Mottistone Lord Mottistone moved Amendment No. 30:
After Clause 3, insert the following new clause:
("Rate relief for commercial hereditaments.
.The following section shall be inserted after section 19 of the General Rate Act 1967:—
"19A.—(1) The rateable value of commercial hereditaments shall, for the purposes of valuation lists in force at the appointed day as from that day, and for the purposes of subsequent valuation lists, be ascertained as follows:—

(a) In the case of a commercial hereditament shown in a valuation list as being occupied and used wholly for

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commercial purposes, the rateable value of the hereditament shall, subject as hereinafter provided, be taken to be eighty-five per cent. of the net annual value thereof:—

(b) in the case of a commercial hereditament shown in a valuation list as being occupied and used partly for commercial purposes, the rateable value of the hereditament shall, subject as hereinafter provided, be taken to be an amount equal to eighty-five per cent. of the net annual value shown in the list as apportioned to the occupation and user of the hereditament for commercial purposes, together with the whole of the net annual value so shown as apportioned to the occupation and user of the hereditament for other purposes.

(2) Where before the appointed day a rate has been made for any rating area in respect of a period beginning before, but terminating on or after, that day, the amount of the rate payable in respect of the occupation of a commercial hereditament shall be calculated as if the rate made had been two rates, the first being a rate in respect of the part of the period terminating on the day preceding the appointed day, and the second being a rate in respect of the remainder of the period, and as if the amount in the pound of the rate made had been apportioned between those two rates, in the case of a rate made in respect of a year in equal parts, and, in any other case in the proportion which the number of days in the first part of the period bears to the number of days in the remainder of the period.
(2) In this section references to a commercial hereditament are references to a hereditament (not being a dwelling house with or without any garden, yard, forecourt, outhouse or other appurtenance belonging thereto) whose net annual value falls to be ascertained under section 19(2) or (3) of this Act."").
The noble Lord said: With the permission of the Committee, I will speak at the same time to Amendment No. 89. This is another way of approaching the subject we have been discussing, but it is not to be viewed with disrespect for that reason. It is being suggested here—again, I am advised by the CBI—that there should be 15 per cent. de-rating for business. Though we believe there is a case for total de-rating for business, like there is for agriculture—and in particular for small businesses, who have to compete on level terms with agriculture—we recognise there would be funding difficulties, as business is expected to contribute about £5·9 billion to the rates in 1982–83. De-rating of 15 per cent. would cost approximately £850 million in that financial year and would have the effect of putting the business ratepayer on a par with his domestic counterpart, who benefits from the present subsidy to the domestic sector, which is known as domestic rate relief.
At present, business ratepayers pay at a higher poundage and in general benefit less, as I said in relation to my last amendment, from the provision of services from local authorities. The CBI's view is that if the finance could not be raised in any other way, the subsidy to the domestic ratepayer should be reduced and spread evenly between the business and domestic ratepayer. I cannot say whether there is any noticeable fault in the amendment as drafted, but with a long amendment of this kind, expert parliamentary draftsmen might find other ways of doing it, and if my noble friend does not wish to accept the amendment on those grounds, he might be able to give assistance to produce another amendment to be tabled at the later stage of the Bill.
Lord Bellwin: As I intimated when discussing the previous amendment in the name of my noble friend Lord Mottistone, we are in some difficulty because this
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proposed new clause as drafted would provide relief for commercial but not industrial premises, which is not what he has in mind. However, I said when we spoke of this before that I would clarify the position for him, and that I have done. For the reason I gave earlier—our concern because when someone somewhere gets relief, somebody else has to pay for it—relief of 15 per cent. for commercial hereditaments would throw an extra burden on the domestic ratepayer.
That brings us back to the whole debate regarding the reform of the system and the position in which we find ourselves now. I am sure my noble friend would wish to look at the amendment again, in view of what I have said about it, and while I in turn undertake to do the same—so we can get the amendments in this sphere clarified—I must intimate that what I have said represents the philosophical concern we have at this time, not least bearing in mind the question of looking at the whole scene (as I have mentioned more than once today) which is perhaps the most important aspect of it.
Lord Bruce of Donington: I need not delay the Committee on this. I am sure the noble Lord, Lord Mottistone, will take it from me—I am sure he is well aware of the fact—that rates in the commercial profit and loss account or commercial trading account, whichever it may be, are in the nature of a fixed charge. Although, like other charges, they go up with the rate of inflation, they are classified as a fixed charge. From that it follows that if the turnover of one's enterprise is continually expanding, or is even maintained, the rates, together with other fixed charges, are a far less proportion of the burden.
Would not the noble Lord agree that very largely it has been the stagnation of consumer demand, reflecting itself in manufacturing output in this country, that has led to lower turnovers? Consequently, lower turnovers mean that the fixed charge operates at a far greater proportion of the company's gross profitability than it otherwise would. Would he not also agree that if it were possible to produce an expanded demand in all sections of commerce and industry in this country—which the pursuit of sane economic and monetary policies would produce—the problem to which he has very rightly drawn attention would largely disappear?
Is not the noble Lord aware that even as we are sitting here this evening there are very many commercial firms busily trying to move into London, despite the high rates here? If he looks at the property sections of the Financial Times, he will find that the phenomenon to which he is referring is limited mainly to those areas where the Government's economic policy itself has caused local devastation.
Lord Mottistone: I would take issue with the noble Lord on two points. First, in concentrating on the question of whether or not a business is doing well, he has said that rates go up only in proportion to inflation, but the fact of the matter is—and this is the problem—that rates have been going up very much more than that. That is exactly what the whole of the Bill is about, so far as I can guess. In certain parts of the country rates have gone up by a considerable amount. They might be shown by the accountants in the fixed parts of a firm's obligations, but in fact

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the rates have crept out of that classification and have become a particularly serious factor—
Lord Bruce of Donington: I thank the noble Lord for permitting me to interrupt him. Is he not aware that since the year 1975–76 it is precisely the domestic rates which have risen at a higher rate than those in the commercial and industrial sector? Is the noble Lord aware of that?—because unless he is aware of it, he cannot approach this question in the right way. I must remind the noble Lord—though I am quite sure that he realises it—that whereas the domestic ratepayer has to pay rates out of taxed income, commercial and industrial enterprises are allowed to charge their rates for income tax or corporation tax purposes, whichever is the most appropriate to the circumstances.
Everybody would like to see the commercial and industrial ratepayers relieved and see them be more profitable. I should like to be able to follow economic policies that would help to restore their turnover, but one must have a sense of proportion, as the noble Lord, Lord Bellwin, has already pointed out. One must study the interests of the domestic ratepayers as well. I hope that the noble Lord, Lord Bellwin, who is of notoriously generous sentiment, will not succumb too much to the very attractice blandishments offered to him by his noble friend this evening.
Lord Bellwin: I shall not say much on this point, but I believe that in all fairness it should be remembered that if a domestic ratepayer cannot afford to pay his rates, he can obtain a rate rebate. If an industrial or commercial person cannot afford to pay his rates, then he must cut back his staff and his business, move to another area where the rates are lower, or go out of business. So I must say in all fairness that the matter is not quite so simple, as I am sure the noble Lord knows.
Lord Mottistone: Perhaps I will be allowed to continue with my speech, having given way to the noble Lord. If he wishes me to give way to him in future, perhaps he will not go on for quite so long, because it is rather irritating to find that one has forgotten what he said and so one cannot properly reply to him. However, based on what I do remember of what he said, I would say that it is all very well bringing in the domestic ratepayer, but everybody is in favour of the domestic ratepayer. I am in favour of him because I, too, pay rates. But in fact people do not secure the right balance of the problem of staying in business as a business ratepayer. That is what the argument is all about. It is a matter of getting that into the right proportion and I suggest that the basis of my amendment is to try to ensure that the matter is dealt with fairly in the future.
I do not think that my noble friend gave me a terribly good answer, though it was fairly good, considering his brief. As I understand it, this was the amendment that covered commercial, but not industrial, businesses, and perhaps he is going to get me right on that. Perhaps we shall come back to the charge at the next stage of the Bill, with an improved amendment on which we shall have been advised by my noble friend. We can then tackle the matter on its own account. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
9.6 p.m.
Lord Mottistone Lord Mottistone moved Amendment No. 31:
After Clause 3, insert the following new clause:
("Rating relief for hereditaments partly used.
.There shall be added after section 25 of the 1967 Act the After Clause 3, insert the following new clause:
"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 adopted 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 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 it or the valuation officer or both of them may at any time enter upon the relevant hereditament to satisfy itself or himself or themselves 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

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rates to be paid in respect of the 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.
(b) Where a rating authority requires an amount to be paid by way of rates under subparagraph (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 procedures 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 approved by a resolution of both Houses of Parliament."").

The noble Lord said: I should have thought that this amendment was not quite in the same class as the last two amendments, and I am particularly sorry that my noble friend's advisers bracketed it with the others. This amendment seeks to achieve what we tried to persuade the Government to adopt in the 1980 local government Bill—that there should be "moth-balling", or a means of not paying rates on unoccupied business buildings, with the specific object of ensuring that factories, parts of which had to be shut down, could at least remain part of the business and not be sold off. They could be opened up again when business improved. People can do this in relation to their own houses, and it seems only reasonable that it should apply to businesses, too, in particular in these times when businesses are finding the general situation difficult, and when we all hope—I imagine even noble Lords opposite hope—that things will get better as times goes on. It seems to me that what we have here is a very reasonable type of argument, and what is more, the amount of money involved is no where near as great as the several hundred thousands, or the millions, of pounds that we were talking about in relation to the earlier amendments.
The other feature about this new clause is that the earlier part of it, up to and including subsection (4), explains the rules under which it should work. Then, subsections (5), (6) and (7) go into some detail by way of giving powers to the local authority to recover unpaid rates on any business which cheats. There is a lot of it there to make quite certain, because it would be quite easy to cheat inadvertently, in that you might re-occupy part of your factory and forget that you were not paying rates on it, and then have to come up for air and decide upon it. Subsections (5), (6) and (7) make that extremely clear.
Finally, it gives power to the Secretary of State to
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embody these rules in regulations and to make sure that the thing is kept under what might be called his day-to-day control. I would have thought, therefore, that of all the amendments (in addition to the one that my noble friend accepted) that I have laid before your Lordships' Committee today, this is the one which deserves the most favourable consideration. I beg to move.
Lord Bellwin: I am sorry I have to disappoint my noble friend. I think the "moth-balling relief" suggestion is really a very interesting one, and I know that my noble friend feels very strongly that such measures would do much to mitigate the effects of economic recession on industry and commerce. But, likewise, he will know from the debates of his proposals on this subject during the progress of the Local Government Planning and Land Act 1980 through your Lordships' House that although the Government, as I have said more than once this evening, are more than sympathetic to the plight of businesses which are forced to shut down all or part of their premises temporarily, we do not consider that this measure is one which will be workable in practice.
I have already referred to the question of the cost to the remainder of giving relief to selected ratepayers. I do not think it would be helpful to dwell in detail upon the other reasons why we have doubts about this measure—my noble friend will recall them only too well from our previous debates—but there are difficulties in the fact that the relief proposed would cover all industry and all commerce, not only those in need; and there would be a conflict with fundamental rating principles making for inconsistency, not to say inequity. Then there are the practical difficulties of defining "out of use" and of inspection and enforcement. which I submit would be formidable.
I think—in fact, I know—I understand exactly what my noble friend is trying to achieve with this, and I really do have great concern for the situation which he describes, because so many people are now raising it all over the country at all levels. But I just do not think that this is a way to go about it. It may well be that we ought to talk more, perhaps, about other options or whatever, but I fear I could not accept this amendment from my noble friend, although in saying that I hope he realises my sharing with him of the concern.
Lord Bruce of Donington: I rise merely to say that on this matter the noble Lord, Lord Bellwin, has expressed sentiments identical to my own. It will therefore be unnecessary for me to detain the Committee further. I entirely agree with his approach to this, and I would suggest respectfully to the noble Lord, Lord Mottistone, that this is just one of the factors that one has to consider when one tries to formulate proposals for a new method of raising revenue for local authorities.
Lord Mottistone: I listened with great care to what my noble friend had to say, an I am sorry that his noble friend opposite (who I must so describe as he had the same viewpoint), Lord Bruce, took the same view. I know the arguments against it—unfairness, difficulty to enforce and all that sort of thing—and we should not

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forget the fact that ordinary domestic occupiers of premises can have reduced rates for unoccupied premises, so there is a precedent for how to run these things; but I took the trouble to draw particular attention to subsections (5), (6) and (7), because I think that when you look at it through the eyes of the central, official world of Westminster you probably do not think of it in terms of real people.
Real people, confronted with one or two severe cases drawn under subsections (5), (6) and (7) for somebody who has cheated, as published in the local newspaper, will think twice before they apply for this if they are not absolutely certain that they are going to apply fairly and correctly and not cheat—because that is really what my noble friend was talking about, in the politest language. So I would suggest that this really deserves another look. It may be difficult to quantify cost in this area, but as it will be very selective at given parts of given local authority areas, I would have thought that the relative costs will not be too much. However, they might make all the difference to the small or medium business which needs to survive and could just be helped to do so by being able to shut down half a factory or even a whole one because half a factory is difficult to define, but something manageable, and then this would be something which could make a great difference. It would be a good gesture on the part of the Government towards business to say, "We cannot give you reduced rates or put a ceiling on your rates but we can give you this which shows an earnest of our intention". If I could leave that thought with my noble friend, and in the meantime let us talk about this and see whether we might tighten up in certain areas to make it a starter, I would beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 [Adjustments of distribution of block grant.]:
Lord Evans of Claughton Lord Evans of Claughton moved Amendment No. 32:
Page 3, line 10, after ("any") insert ("increase or").
The noble Lord said: It is a pity that we are coming to Clause 4 at this fairly late hour for I suspect that in many respects this is the most controversial and serious clause in the whole Bill. All the amendments here in Part II of the Bill are to do with the adjustment of the distribution of block grants, in other words, holdback. In moving my first amendment, Amendment No. 32, I shall speak to Amendment No. 33. They seek to amend the power which the Government are seeking to give themselves and to any future Government to penalise authorities for overspending and also to give the noble Lord the Minister and his right honourable friends the flexibility to take sanctions against authorities that are spending too little; and I am sure that this will commend itself immediately to the present Government.
Frankly and seriously, while there are authorities, a small minority of them, that overspend and against whom the whole panoply of' this power is sought, there are also authorities which grossly underspend. I have been speaking at meetings with chief executives of some authorities—I should not dare to mention which they are—who are concerned about the extremely low level
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of spending in which some of the more rural authorities are engaged, almost to the point where they are not fulfilling their statutory or common law duties. I think that the Secretary of State should have this flexibility if he is seeking—I am opposed to the whole concept of holdback as being too centralist—to have the power of holdback; he should also have the power of imposing penalties against authorities that underspend.
At the moment, Her Majesty's Inspectorate of Schools have identified in a report, which was published in the last few days, four education authorities who are not complying with or providing an adequate education service. I know that there is a great guessing game going on as to which those authorities are. I mention that as an example. I think that the Government should seriously consider not only that there are overspending authorities, which I say are not as many as the Minister believes, but also authorities where the residents, the people living in the authorities, are suffering, from an authority which has been overenthusiastic in cutting back local services. I beg to move.
Lord Bellwin: As the noble Lord says, these amendments would allow Clause 4 to be used to encourage increases in local government spending as well as reduction. As such, I should have thought that they were probably unnecessary. Local authorities, in my experience, were never backward at coming forward when it came to increasing their expenditure. I should have thought that these amendments were perhaps redundant in view of the noble Lord's great support for local government independence. I am surprised that he is moving these amendments. They would enable a future Government to determine exactly the level of service that each authority should provide and, despite the criticisms made constantly to me over the last three years that that is what we are trying to do, I have argued staunchly, and would argue, that that is not what we are trying to do. Quite the opposite.
While the overall level of public expenditure is, I am sure, the proper concern of central government—that is at the nub of so many present problems—I am equally sure that local government must be given the greatest possible freedom within that constraint to reach its own responsible decisions. Provided proper attention is paid to the interests of the national economy and so long as local government stays within the parameters set down by central Government, authorities are free to establish their own priorities in the light of local circumstances. Whatever their intention, I think that the noble Lord will concede that these amendments will take away that freedom and will quickly condemn local authorities to be the local agents of central policy. I wonder whether I am missing the point. If so, the noble Lord will tell me. Certainly the amendments indicate that that is so and I would not think that he will want to press them.
Baroness Birk: From what the noble Lord, Lord Evans, said about his amendment, and reading from it, he is saying that the central Government are now tying down local authorities so strictly so far as expenditure is concerned and certainly so far as any increases in expenditure are concerned that he is worried about the level of services that some authorities

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may be giving or not giving. There may be some truth in that.
We hear stories of tremendous variations which would not appear to be absolutely necessary so far as the authorities are concerned. If that is so, it seems to me that he is saying that if we have this financial straitjacket then the quality of the services ought to be preserved in those authorities which are not spending the amount that they should spend, and people are not getting the value that they should from their local authority.
If that is so, and if I am right in my interpretation of what the noble Lord is seeking to do by his amendment, then it seems to me that the Minister should look at it. Otherwise, the Government should unknit a great deal in this Bill so that there is not the same tight hold on this. What the noble Lord is doing is trying to get the right balance. If you are going to be so strict on any increases, then you ought to be a bit more careful about authorities which are reducing what they are doing for the community. I doubt if the noble Lord is going to press the amendment, but it seems to me there is something in it that perhaps ought to be considered.
Lord Bellwin: If I may come back on this, the fallacy of the point that the noble Baroness makes is that it should not be the amount of money that is spent that itself decides the level of services—least of all by comparison, one authority with the other. So often in the past we have fallen into that trap of deciding that an authority is profligate or the opposite, parsimonious, or providing a good or bad level of service, on the basis of what it spends.
If one looks at the statistics, there are many authorities that provide a very good level of service. If one looks at what they actually spend, it is often far less than others are spending on the same basis. If we take only that criterion of spending, then we often miss the boat and we often label authorities "good" and "bad"in the wrong areas.
The converse is that if you find an authority which is spending a great deal of money on a particular service by comparison with the average or like authorities, it does not necessarily follow that it is giving better services. I shall not go into this now because we are on the fringe of a great subject; but I know many authorities who by any standards—and everybody within local government knows—do not provide a good service in particular areas. Yet their spending is so high. That is all about value for money. That is why it is so difficult, leaving apart the other objections that I made a moment ago. This is a complex subject which we cannot dispose of in the simplest of terms.
9.25 p.m.
Lord Beaumont of Whitley: Of course it is a complex subject. My noble friend's amendment, which no doubt is slightly lighthearted in its intention, nevertheless exposes a very real flaw in the thinking behind this Bill and the various steps the Government are taking. The steps to which the noble Lord on the Government Front Bench is driven in trying to answer this amendment really amount to an attack on his own policies. If we must attack over-spending, why should we not
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attack under-spending? If money is an important measure, as it apparently is, at the top of the scale, why is it not important at the bottom? We on these Benches would accept that it is not a good measure from either point of view but, if it is not, this Bill should not have been put forward.
I think the first reaction to this amendment of the noble Lord, Lord Bellwin, really underrated the extent to which some services are suffering in the country through under-spending. If you take the report by Her Majesty's Inspectors on the effect of local authorities' expenditure policies, there one is talking not just about what is happening in education but, as they say in the title, the effects of local authority expenditure. That is exactly the point that we are making and which the noble Lord, Lord Bellwin, is trying to brush under the carpet. They say in paragraph 14:
"In over one-third of the authorities, and especially in the shire counties, district inspectors report changes in the curriculum for secondary school pupils in the form of reduction of range of courses offered. These changes affected pupils of all abilities to some extent, but particularly the less able".
If this is happening at a time of growing unemployment, and particularly growing unemployment for the less highly educated and possibly even the less clever in our population, it is something extremely serious. And whereas I am sure my noble friend does not intend to press this amendment, it is in fact pointing out a very real and important flaw in the Government's thinking on this matter, and one which has been underlined by the response from the Government Front Bench.
Viscount Ridley: I am sure that my noble friend Lord Bellwin is right to try to divorce expenditure from efficiency because it is not always a correlation that can be followed; but I wonder whether some of his words will have to be eaten when we reach Clause 20 later tonight.
Lord Evans of Claughton: The prediction made by my noble friend and others is correct: I do not intend to press this amendment to a Division; but philosophically I felt bound to raise this matter, because we have been taken down the road to democratic centralism by the noble Lord, Lord Bellwin, and the Government in this Bill and, going down that road, what is sauce for the goose is sauce for the gander. If you tell people you are going to interfere with their spending plans if they are over-spending, you should also be willing to interfere if you think they are not providing adequate services.
Lord Bellwin: May I intervene briefly to make just one point? I should like to make one point very clear. The Government are not saying they will curtail spending plans at all. What they are saying is, "If you spend beyond certain levels, it is the grant that will be reduced"—because those are the levels decided, whether on the basis of the grant related expenditure assessments or other criteria which we need not go into at the moment; and it is the grant which is being reduced. The authority at the end of the day still has its power, if it so wishes, to spend and to rate. That is where we are today.
Lord Evans of Claughton: I accept that it is hold-back of grant: I do not dispute that. The point I was making in this amendment was the error in the concept of interfering with the independence of local government. I am suggesting that one should carry it to the reductio ad absurdum of saying that if you are going to interfere for over-spending by hold-back then you ought to interfere for under-spending. You should, in fact, be leaving local government alone. But having said that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 33 not moved.]
Lord Evans of Claughton Lord Evans of Claughton moved Amendment No. 34:
Page 3, line 14, after ("conditions") insert ("and having regard to the ability of every local authority to carry out its duties imposed by or under any enactment or at common law").
The noble Lord said: If I may, I should like, with your Lordships' permission, to speak also to Amendment No. 37. With these amendments I seek to provide an opportunity for the Secretary of State, when reducing grants payable to a local authority because of what he considers is over-spending, to take account not only of the general economic conditions, which are mentioned in subsection (1)(cc), but also of each local authority's requirement to carry out certain duties under the law.
The best example of this is the conflict between non-metropolitan counties and non-metropolitan districts about the duty to provide a satisfactory education service, and the present Government's continued demand that many of these authorities make what I regard as continued and unacceptably large cuts in spending. Over many years Parliament has placed a vast range of duties upon local authorities to provide education and social services, to maintain the highways et cetera, and the great bulk of local authority expenditure is directed towards fulfilling statutory obligations.
The second of these amendments, No. 37, seeks to ensure that, in exercising his powers to withdraw grant from local authorities and to prevent them from levying supplementary rates or precepts, the Secretary of State must not by holdback prevent local authorities from carrying out their statutory duties and obligations. Unless this amendment, or some other form of words which is satisfactory to the Government's advisers, is carried, it is possible that under Clause 4 many local authorities will be faced with the position where they have no choice but to break the law for not carrying out their statutory duties. Therefore, I hope that Government will take very seriously the amendments which I have put down to ensure that, not only general economic conditions but the obligation to obey their statutory duties are taken into account on the question of the holdback. I beg to move.
Baroness Birk: I thought the idea was that the amendments were being grouped together. Perhaps we can find another copy of the grouping list, which seems to have disappeared. In moving amendment No. 35, I should like to speak to No. 36 as well, because No. 35 paves the way to No. 36—
Lord Evans of Claughton: If I may interrupt, what I was trying to do was to move Amendment No. 34 and speak to No. 37.
Lord Bellwin: I must confess that there is certainly confusion here. The grouping has gone adrift and that is causing difficulties. If the fault is on this side, then I readily apologise. It is important to get it right, if we can.
Lord Bruce of Donington: If I recall correctly, the noble Lord, Lord Evans of Claughton, moved Amendment No. 34 and spoke to No. 37 and, so far, Nos. 35 and 36 have not been called.
Lord Evans of Claughton: No. Amendment No. 34 is in my name. I thought that it would be wise in moving it to consider the same point which comes under Amendment No. 37, which is also in my name. I should not have the temerity to seek to move Amendments Nos. 35 and 36, which are in the name of the noble Baroness, Lady Birk.
Baroness Birk: I am going to have the temerity to move them because they are in my name and that of my noble friend. If the noble Lord agrees, Amendments Nos. 36 and 37 are very much on the same lines. If he does not agree with me, perhaps he will interrupt me now. I am moving Amendment No. 35, if he will agree, and speaking to Amendment No. 36 as well.
The Earl of Avon: If the noble Baroness would speak to those amendments rather than move them, it would be helpful.
Baroness Birk: Yes.
Lord Evans of Claughton: Very well.
Baroness Birk: I am following the suggestion which we received this afternoon from the Government side. As Amendment No. 36 is very similar to Amendment No. 37, it seemed to me that it would save some time if I spoke to them both. I shall speak very briefly, as the noble Lord, Lord Evans of Claughton, has covered the ground.
The way that this block grant works out fails to take regard of the conduct of local administration both in relation to their efforts to control expenditure and in relation to local economic conditions which may well have unequal effects on an individual authority. Legislation imposes responsibilities on local authorities on two levels: first, in those areas in which they are under a duty to provide an efficient service, irrespective of cost, and, secondly, in those areas which local authorities have the power to provide and in which they may operate their discretion regarding the level of provision. The imposition of the Bill in its un-amended form (the wording of the two amendments is different, and I will explain in a moment why I prefer the wording standing in my name and that of my noble friend, as well as the noble Lord, Lord Evans of Claughton, who has his name to Amendment No. 37 as well, which is the alternative wording) could lead to an adverse effect on essential services. Either amendment would serve to retain a high level of central control without unreasonable restriction on local administration when operating in a reasonable and prudent manner in the service of the population in their areas. Without an amendment along these

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lines, the Bill will ultimately lead to further erosion of local democracy and perpetuate the inequalities in local services. The reason why I prefer the first amendment, Amendment No. 36, is that there the wording is:
"The local authority have taken all reasonable and prudent steps to avoid an unreasonable increase in expenditure",
which is probably marginally better than "an acceptable level" in Amendment No. 37, which also specifically says that the local authority will notify the Secretary of State, whereas Amendment No. 36 leaves it more open. Obviously, the motivation behind both amendments is exactly the same and what they are trying to achieve is the same. Therefore, I shall not say any more about it at this point.
Lord Bellwin: I should like to cover Amendments Nos. 34 and 37 and also to comment on Amendments Nos. 35 and 36. I am glad to have the opportunity to discuss these amendments, which are expressed in similar terms to ones which were negatived during the Committee and Report stages of the Bill in another place. I agree that Clause 4 is concerned with the proper relationship of central and local government and, above all, with central Government's right to determine the overall level of public expenditure and the level of grant support provided by central taxpayers to local services. These are important questions, and I do not want to be accused of failing to address myself to them.
It should be axiomatic that the control of public expenditure is an essential tool of economic management and is the proper concern of those responsible for the national economy. There is nothing new in local government being set expenditure targets. What is new—or, rather, what was new in 1980–81—is the failure of local government as a whole to meet those targets, sometimes by a wide margin. This year initial budgets indicate, as I said earlier today, aggregate overspending of £1½ billion. Faced with an aggregate overspend, the Government reduced the aggregate amount of rate support grant payable in respect of 1980–81 by £200 million. The effect of this was felt by all local authorities, irrespective of whether or not they had met their individual targets, for there was no power to distinguish between them under the 1974 Act.
The 1980 Act, which came into force in 1981–82, provided for multipliers to be determined, which will have the effect of adjusting the grant entitlements of individual authorities. My right honourable friend the Secretary of State therefore made it clear that, if there was continued general over-budgeting in 1981–82, he would once again reduce the grant aggregate, but would use multipliers to make sure that the effects of any general grant reduction were felt only by those authorities which had individually over-budgeted. A similar proposal has since been announced for 1982–83.
It is with this use of multipliers that Clause 4 is concerned; a discriminatory use, certainly—but equally certain, in my opinion, is that it is not an unreasonable one. Nor is it an unreasonable extension of the powers of central Government, for it has only become necessary with, I am sad to say, the failure of local
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government to maintain the tradition of voluntary adherence to public expenditure guidelines.
I do not wish to repeat the remarks I was making during the passage of the Local Government (Planning and Land) Bill 1980, but I said then, on more than one occasion, how proud we always were that, year after year, local government got, at worse, within 1 per cent. of the national guidelines laid down, and often much closer than that. We managed to achieve that year after year because we felt, and I used to say this when talking to Labour colleagues on the AMA, that Governments have to govern. That was a basic tenet which we all accepted. But now we see, for the first time, a whole new scene—and no Government can let that go by.
The noble Baroness Lady Birk, said that we must look at these amendments in this context. Of course, they sound eminently reasonable; reasonable steps to avoid an unreasonable increase. But their purpose is to undermine Clause 4 and to make the Government's policy unworkable. Who is to say what are reasonable steps? We would say: those steps which are taken to achieve the small, overall reduction in expenditure that is required of local government. Remember, we are talking here of 5½ per cent. over a three-year period. I cannot help but equate that with the 3 per cent. we were given to achieve in one year, in 1976. That puts it into perspective.
Amendments Nos. 35 and 36, as they stand, would make it impossible to ask local authorities to make any expenditure reductions at all. Amendment No. 36 says that reasonableness must be judged:
"…having particular regard to local economic conditions".
But we are concerned with grant. I would argue that the amount of grant support to local revenues is something that must be judged in regard to national, not local, economic considerations. We cannot allow political disagreements to obscure this fact. I will say again that we were always so proud of the fact in local government that we worked within the parameters even if we did not like them—and be reassured that there were times when we hated them. But there it was—Governments had to govern and that is a tradition to which I would like to return.
The second amendment in the name of the noble Lord, Lord Evans of Claughton, seems on the face of it to be eminently reasonable—but only if one forgets that grant is only one source of an authority's income and that statutory services form only part of their expenditure. Authorities can and should take their probable grant entitlement into account when setting their rate. This Bill does not in any way diminish the duty or the right to do so. Councils also have to consider the level of provision of discretionary services, and the Bill does not take away anything from that responsibility either. And above all, because it is the ratepayers' money that they are spending and not their own, they have the duty to see that their services are provided in an efficient and economical way. I simply do not believe that the cuts for which we have asked should be made entirely at the cost of service levels. Most of them—well, I qualify the "most", but a considerable percentage—can, in my submission, be absorbed simply by running the business of the authority more economically.

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In conclusion, therefore, I say to your Lordships that these amendments, despite their innocent appearance—I use the word not in any offensive way—would undermine the purpose of the clause; and that the clause and the holdback scheme for which it provides are not at all unreasonable, as these amendments would suggest. Therefore, I ask your Lordships not to approve them.
9.46 p.m.
Viscount Ridley: Before we decide this matter I would like to say something about Clause 4. I think it has given local authorities a great deal of worry since it first saw the light of day. I believe it was substantially amended in another place due to the objections of the local authority associations and might be regarded as possibly a sensible compromise now. I am delighted that my noble friend the Minister has not accepted these amendments, because I think they would destroy this rather fragile compromise between all the interests involved. I do not think anybody would disagree with the Minister's targets, the desire to loose his missiles into the total exclusion zone of overspending authorities to hit the right targets if not to hit everybody. I hope he is successful.
He said something on Second Reading, although I am afraid I was not here to hear it, about which subsequent correspondence leads me to think that he is himself preparing a number of amendments to Clause 4 which may achieve a good deal of the purposes of the amendments we are discussing. Whether he is laying minefields for his own torpedoes, or whether he is trying to destroy the arguments he has just put forward, or whether he is supporting the noble Lord, Lord Evans, I do not know. We have not seen these amendments; they have not been published. It seems to me to be leaving them rather late to leave them to the Report stage in this House in a matter of this great importance.
I hope that what he has himself said may lead him to feel that these amendments are not really necessary. I am bound to say that the Association of County Councils are gravely disturbed at the thought of any amendments to Clause 4. They believe it to be a workable compromise which has been achieved in the other place and that it would be wrong to tinker with it, if only because some of the exclusions to holdback and some of the powers which the Secretary of State is asking for in the suggested amendments would, as I think, open all sorts of doors and be wrong. I hope my noble friend might agree that it would be better to leave Clause 4 entirely alone for the very reasons that he has just given to the Committee.
Lord Evans of Claughton: I am not dealing with Amendment No. 36, although I know we have discussed it. I am dealing with Amendments Nos. 34 and 37. I can see the argument the noble Lord puts about Amendment No. 36 being a difficult one to enforce and destroying the whole of his holdback proposals, but I really cannot see why he should take this rather unhelpful attitude to Amendment 34. Surely nobody, of whatever political affiliation, would seek to put a local authority in the position where to carry out its duties it had to break the holdback provisions in Clause 4. I hope the noble Lord can assure us that he is going to put down further amendments, or reassure me that my
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belief is wrong; I hope he can reassure me that local authorities would not be put in the position of having to break the law.
If they were having holdback imposed on them which reduced the level of services they are required by law or by common law to carry out, they would have their grant reduced, they obviously could not impose a supplementary rate, they could not borrow the money because they would have no legal authority; and so if they did make the reduction of expenditure required under holdback, it would be open to individuals to take action against the council for failing to meet their statutory obligations.
I referred to the example that my noble friend mentioned and that I spoke of earlier, of four unidentified local authorities either obviously non-metropolitan counties or metropolitan districts which are being criticised by the inspectorate of schools for not providing an adequate or satisfactory service. If he can reassure me that they would never get into the legal difficulty that I have described of having to break the law in order to comply with Section 4, then I shall withdraw the amendment.
Baroness Birk: Before the Minister replies, I think that we ought to get something clear now. Are the Government going to put down amendments to Clause 4 or not? During his Second Reading speech, the Minister, after referring to Part I, then said on Part II that the Government would possibly be bringing forward amendments. Earlier this afternoon when I complained about the lateness of the putting down of amendments that we were discussing today, I asked the Minister whether any amendments that were going to be put down to Clause 4 would be put down in plenty of time. At that point I must confess that I did not think that we would get as far as we have got this evening.
We are now discussing Clause 4 and spending a considerable amount of time on it. A number of noble Lords have taken part in the debate including the noble Lord, Lord Evans of Claughton, and the noble Viscount, Lord Ridley. It is, apart from anything else, a tremendous waste of everybody's time, if amendments are, at a subsequent stage, going to be moved by the Government and we are all just talking around the subject tonight without knowing what is going to happen. Therefore, I would ask before we go any further whether we can have a straight answer on this question.
Lord Bellwin: I shall comment on the matter raised by the noble Baroness in a moment. But, so that it does not slip my mind, I should like to say this to the noble Lord, Lord Evans, on his point about the statutory duties and his concern that, of course, the statutory duty is so often very flexible: one decides oneself what will be its level. It is always arguable—it is open to challenge if you put it too low, and conversely it could be open to challenge by those who are paying more if it was felt that it was too high. This is a judgment which the local authorities take. Therefore, in my experience, it is not an exact science, if I may put it that way. Also, I make the point that I made earlier—namely, that it might be said that there is an authority which has education as a function.

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It might be considered by some that it was not achieving the levels that it should be. The noble Lord will please note that I am not saying that that is because of what it is spending, but because of what it is actually achieving. One could argue that possibly it was, therefore, using money for some other service that ought to be going for the provision of that one. It is a view which it must take itself, based upon the totality of the grant or its rates; or however it raises its income. Therefore, it is hard to say. I do not know in all the years of my experience—and I am open to be guided on this or to be told something on this—of a situation where an authority has been specifically pinpointed as failing in its statutory duty to provide its service levels. I am open to further debate on that.
I turn to the point made by the noble Baroness who categorically asked whether we are moving an amendment to Clause 4. I understand that we are doing so at Report stage. The great difficulty here—I tried to make it clear earlier on when the noble Baroness was pressing me about why amendments have come down so late, and I expressed my concern about that as well—is that we have been under great pressure from another place to do things and to consult. That is the point: it takes time to consult. As the noble Baroness must know from her own very considerable experience of seeing goodness knows how many Bills through this House when she was this side of the Dispatch Box, the parliamentary counsel has to have his say, he has to go through it carefully word for word and then there are colleagues in the departments—the noble Baroness probably knows the drill better than I do. It is a regrettable point. But again one has to offset the point with where we do not make amendments. We really cannot have it all ways. Unless someone tells me something in the next few minutes that I do not know now, my information is that an undertaking was given in another place that by the Report stage there would be an amendment to Clause 4. That is my guidance, but, if I am wrong, someone will tell me in the next few minutes.
Baroness Llewelyn-Davies of Hastoe: I think that I ought to ask the noble Lord the Chief Whip whether he was aware of this undertaking, apparently given in another place, that there would be amendments to Clause 4 at the Report stage, because this is the important point. When we were discussing how far we would try to get with the legislation tonight, we were told first that the department hoped to go to Clause 3, which we agreed. We were then told that we would go to Clause 4 if there was time and if the debate fitted in properly. We now find that we have been debating Clause 4 under a total misapprehension. We did not expect to debate a clause which would subsequently be amended. This is not the way in which Bills are carried through. I know that my noble friend Lady Birk never did this kind of thing when she was in charge of Bills from the Government Bench. I really must ask for an explanation.
Lord Denham: The noble Baroness has asked me to comment on the business aspects of this. I must say at the beginning that never at any stage have we agreed that we would not go beyond Clause 3 today. From
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business arrangements we were certainly hoping to get up to but not including Clause 5. It is not unusual to make an offer to consider amending a Bill at a future stage, and, equally, it is not unusual, if the consultations have not reached any agreement, not to be able to do it at this particular stage of the Bill. I do not think it would have made a lot of difference whether we reached this particular point tonight or the next day we deal with the Bill. I cannot see what the noble Baroness is worried about.
Baroness Llewelyn-Davies of Hastoe: I am worried about your Lordships' Committee considering a clause which the Government have every intention of altering later on. Surely this is a waste of the Committee's time.
Lord Bellwin: I said during the Second Reading debate—it is obviously on the record—that it might be necessary to introduce Government amendments to ensure that the amendments introduced in another place did not, by accident, prevent us from making those exemptions from holdback that we had already announced for 1981–82. We are very anxious to get this right, and to find a form of words which in no way goes back on assurances given by my right honourable friend in another place and which will ensure that no future Government could use Clause 4 in an arbitrary or capricious way.
Having said that, I understand the point that is being made. I think it is something that everyone would want to see. Clearly, we would want to carry out what we said we would do, but I certainly take the point that I do not know how we can discuss further a clause which I am saying will be altered at a later stage. But then, I do not know how we proceed beyond that.
Baroness Llewelyn-Davies of Hastoe: I am most grateful to the noble Lord. With his usual fairness, he appreciates the point that we are making—not in any antagonistic spirit at all. We understand the haste with which the Government have had to prepare their case, but that is not the fault of the Opposition. I think that I must ask the noble Lord the Chief Whip what he proposes to do now. I should have thought the thing to do would be to stop.
Lord Denham: I cannot quite see the concern tonight over the progress of this particular Bill. I understand that the amendments which we are now discussing are not affected, or are not necessarily affected, by changes that may be made at another stage. Of course, all Governments consider Bills all the way through. The commitment has been given to consider how this particular clause is going to be affected. If the noble Baroness is suggesting that until we know how eventually we might wish to amend this Bill we should put it into cold storage, so to speak, I think that would be an odd way of proceeding. I really cannot see why we cannot discuss these amendments that we are discussing at the moment and take my noble friend's undertaking in the spirit in which it is meant.
Baroness Birk: May I come in on a point of the substance of these amendments. There is a tremendous difference. My noble friend the Opposition Chief Whip

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is right. If in another place you say that you are going to amend a Bill, it is usually taken for granted that the amendments will be placed before the Committee stage of this House. I really have thought back about this in Government, and I have no recollection of ever having brought forward amendments on Report, having gone through a Bill on Committee which had already been discussed in another place, and when it was known that we were going to bring forward amendments which would have forced this House to miss a stage altogether. This is the point about the discussion. If these amendments are going to be brought forward on Report, we lose a stage entirely.
If it was decided in another place, it really has come as quite a surprise to us tonight to find that we are discussing Clause 4 and amendments will come. It is not correct for the Chief Whip to say that it would not have made any difference to these amendments, because we do not know. We might want to amend the Government amendments, and then we are left with just Third Reading. I do not think that that is good enough. I do not want to put the Minister in a difficult position, but we are being put in an impossible position over this Bill.
Viscount Ridley: May I just add the Minister's own words? He said at Second Reading that he might find it necessary to introduce further amendments in Committee. I agree with the noble Baroness, Lady Birk, that we cannot discuss this clause without those amendments, because I feel strongly on them.
Baroness Llewelyn-Davies of Hastoe: I think that the noble Lord, Lord Bellwin, has a clear understanding of the situation on the Bill and where we are in this particular clause. Might I suggest respectfully to the noble Lord the Chief Whip that the whole Committee would find the situation clearer when we start again if we finished discussing, I think it is, Amendments Nos. 34, 35, 36 and 37, and started again with a clear slate.
Lord Denham: If this is clearly the feeling of the Committee, I shall certainly agree to that.
Baroness Llewelyn-Davies of Hastoe: That is very generous of the noble Lord, and we are grateful.
Lord Denham: I beg to move that the House do now resume.
Lord Evans of Claughton: With respect, I was at the tail end of moving an amendment. Whether that is suspended until Thursday I do not know, but I was in the middle of moving an amendment—extremely well, I thought.
Lord Denham: I think that Lord Evans's amendment is the one over which we are having this difficulty, in which case we will adjourn in the middle of the debate on this particular amendment.
I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Port of London Bill
Reported from the Unopposed Bill Committee with amendments.
Epsom and Walton Downs Regulation Bill [H.L.]
The Examiner's Certificate that the further Standing Orders applicable have been complied with was ordered to lie on the Table and the Bill was committed to a Select Committee.