HL Deb 01 March 1983 vol 439 cc1036-102

2.59 p.m.

The Minister of State, Department of the Environment (Lord Bellwin)

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 Bellwin.)

On Question, Motion agreed to.

House in Committee accordingly.

[The EARL OF LISTOWEL in the Chair.]

Clause 4 [Approval of financial plans and determination of revenue grants]:

Lord Underhill moved Amendment No. 26:

Page 4, line 26, leave out from ("shall") to end of line 27 and insert ("include among the matters to which they shall have regard").

The noble Lord said: It may be for the convenience of the Committee if, as well as speaking to Amendment No. 26, I speak also to Amendment No. 27. Although these deal with different issues, I believe that it will be advisable to discuss them together, although one is not dependent on the other.

Subsection (3) of Clause 4 provides that when determining whether to approve a plan which would involve the making of revenue grants the authority shall have "particular regard" to matters listed in paragraphs (a), (b) and (c). The phrase "particular regard" could exclude other matters—traffic management, and all the other related responsibilities which impinge on the duties of a passenger transport authority—many of which have been debated on previous amendments. As has been mentioned time and time again in our debates, there are important duties placed upon both passenger transport authorities and passenger transport executives by the 1968 and 1969 Acts.

The issue was considered at Report stage in another place, when an amendment was proposed to leave out the word "particular" so as to leave merely the word "regard". At that stage the Under-Secretary of State said that if the word "particular" were omitted it would enable the clause to be interpreted as meaning that only the matters in the three paragraphs could be considered, and other matters would be excluded. To meet the concern of the Government as expressed by the Under-Secretary, my noble friends and I are now tabling Amendment No. 26, which would remove the words "have particular regard" and replace them by "include among the matters to which they shall have regard". After reading again what the Under-Secretary of State said—it is at columns 246 and 247 on 1st February—it seemed that this amendment would fit in with what the Government want; we have tried to accommodate the Government's view.

The second amendment, No. 27, would leave paragraphs (a), (b) and (c) as matters to which the authority shall have regard, but will add that when considering the plan the passenger transport authority shall have regard to the general duty of the PTA and the PTE under the specified sections of both the 1968 and 1969 Acts as the case may be. Hitherto, the duty to provide a transport system to meet the needs of the area, which of course is laid down in the 1968 and 1969 Acts, has been considered absolutely paramount. That must remain, and that is the purpose of the second amendment. The present wording of the clause would subordinate this duty to the other items in paragraphs (a), (b) and (c), to which I have referred. To include the reference to the general duty under the respective Acts would again be in keeping with the views expressed by the Under-Secretary of State. Therefore, although the two amendments need not be tied together they should be considered together. I beg to move.

Lord Bellwin

Clause 4(3) sets out the matters to which the authority is to have particular regard in assessing the executive's plan. These are: (a) the cost of provision of services and facilities, the level of demand and benefit to users; (b) and advice given by the Secretary of State to the executive on the appropriate amount of revenue support, on methods of determining benefits derived from revenue support, on the form and content of the plan and on the methods of determining costs, levels of demand and benefits to potential users; (c) the need to achieve a proper balance between the interests of ratepayers and users. These are important issues, and we are concerned that authorities should pay special attention to them, although they can, of course, have regard to other issues if they wish to do so.

The problem with this amendment, and the reason why we are not able to accept it, is that it weakens the specific requirement of the Bill as drafted to have "particular regard" to these matters. Authorities would still be required to have regard to these factors, but would be free to give them a low importance, along with a whole host of other factors. This is not what we want. We are concerned that particular emphasis should be given to the issues listed; and the word "particular" has been used quite deliberately.

Furthermore, Amendment No. 27, which requires authorities also to have regard to their and the executives' general duties under Sections 9(3) of the 1968 Act and Sections 1 or 5(1) of the 1969 Act is. I submit unnecessary. These provisions have not been repealed by this Bill. The general duties still apply, and authorities and executives are still required to have regard to them when carrying out their duties under this Bill, particularly when preparing their plan. Indeed, this is emphasised by the requirement imposed on the Secretary of State under Clause 4(6), when giving guidance to authorities, to have regard to these general duties. In view of that explanation, I wonder whether the noble Lord will feel able not to press this amendment.

Lord McIntosh of Haringey

The difficulty with the statement of the noble Lord the Minister is that the general duties under the 1968 and 1969 Acts are still on the statute book, and they are still, therefore, incumbent upon the passenger transport authorities and the Greater London Council. The noble Lord referred to the importance, in particular, of paragraph (a), and there is no attempt whatever on the part of those who support the amendments to remove that. It is a proper decision of government to say that the authorities should have regard to these matters.

But what we are saying is that there is potentially—probably more than potentially; it is very likely to be happening already—a conflict between the general duties under the Acts, which have, as rate precepts are now being taken into consideration, the support of the Divisional Court and the support of the court under Mr. Justice Woolf, and the particular duties which are now being imposed on the authorities. The question is, as Humpty Dumpty said, which is to be master?—and the noble Lord has not answered that.

Lord Campbell of Alloway

I wonder whether my noble friend the Minister might possibly give consideration to Amendment No. 27. It has merit. It provides an enforceable measure of protection to the subject if proceedings arise on judicial review. It is not just, so to speak, an amendment which carries nothing with it. From a legal point of view it carries, or could carry, a great deal, without in any way doing violence to the spirit of this clause, and could operate in favour of the liberty of the subject. I merely ask my noble friend if he could possibly keep an open mind, and at least consider that aspect.

Lord Tordoff

I think we are grateful to the noble Lord, Lord Campbell of Alloway, for that intervention. This was the line which I was proposing to take. We have heard frequently in this Committee stage that the object of the Bill is to give certainty to local authorities up to the level of the amount of grant which the Secretary of State is going to authorise. Surely, it is beyond that point that the local authorities need to look for some sort of guidelines as to what is permissible and what is not permissible. If the Government's attitude is that under no circumstances should any local authority ever go beyond those guidelines, that is somewhat at variance with some of the messages that have been coming from the Government Front Bench during this Committee stage. If at some stage these things are to be tested in the courts, it seems to me that the guidelines ought to be within the terms of the 1968 and 1969 Acts.

Lord Bellwin

I wonder whether I could return the noble Lord, Lord Underhill, to the reference he made to columns 246 and 247 of the proceedings in another place. In fact there is no inconsistency between the words of the Under-Secretary of State on that occasion and what I am saying now. It will save the noble Lord from looking if I read out exactly what he said: In response to a question asked by the honourable Member for Rotherham, I should add that the word 'particular' is important for two reasons. First, the matters listed are those to which the authority should pay special regard. Secondly, 'particular' makes it clear that if the authority wishes to have regard to other matters, it is free to do so. The omission of the word 'particular' could mean that the authority was excluded from considering other matters. For those reasons, the amendment must be resisted." [Official Report, Commons, 1/2/83; cols. 246–7.] That is what I was saying, and why I still feel, certainly as far as Amendment No. 26 is concerned, that that is as far as we are willing to go.

I was interested in what my noble friend Lord Campbell of Alloway said, and certainly would want to consider that. As the noble Lord, Lord Underhill, will know, and indeed I am sure my noble friend will accept, today I can make no commitment or go further. But I certainly want to talk about it and, as far as Amendment No. 27 goes, that I am prepared to do if it is of help to the noble Lord.

Lord McIntosh of Haringey

I take the liberty of returning to one particular point still not made clear. In a conciliatory speech yesterday, in response to an amendment moved by the noble Lord, Lord Teviot, the Minister was good enough to say that he recognised the limitations of restricting the analysis of benefits to potential users. Yet, in what he said today, he spelled out what the clause says, unamended. It refers back to subsections (4) and (5) of Clause 3 and to the additional paragraph. There must be a simpler way of saying that.

In all of the guidelines, objectives and criteria which the Minister set out there is reference only to the interests of the ratepayers and potential users of public transport. There is no reference at any stage to the interests of the public as a whole, the others who share road space with public transport services or, indeed, to the necessity for taking into account the economy of the metropolitan areas, the environment of the metropolitan areas and all the other aspects of public transport which we on this side and, I understand, the noble Lord, Lord Teviot, as well, believe should be taken into account in assessing the plans of public transport authorities. How, with the wording he has if he successfully resists this amendment, will the Minister achieve the concessions which he hinted might be made to the noble Lord, Lord Teviot, only yesterday?

Lord Bellwin

If the record needs to be put straight, and I do not think it does, I am sure my noble friend Lord Teviot will confirm, not least because of his very great knowledge in this whole field, that I feel obliged, as I do with most of your Lordships with special know-how, if I may use that term, on matters of this kind, to take note of what he said and to look carefully in case there might be something we ought to be doing. After all, the main purpose of your Lordships' House is to revise, to look at and get the best Bill that we can. That is what I said I will do, and I will. If, in referring to those who were affected by the Bill, I did not mention every category I would have assumed that it was implied. I referred to the interests of the ratepayers and users and of course, this includes others who are affected by the Bill. I think that is implied in what I say all along. If the noble Lord wishes me to. I will gladly reel off a lengthy list each time I refer to these in the remaining stages of the Bill.

I stand by what I said. There is an importance here in line with what my honourable friend said in another place so far as Amendment No. 26 is concerned. I said that I would look at Amendment No. 27 in view of what had been said, and that I am still prepared to do.

Lord Teviot

Before the noble Lord, Lord Underhill, replies, I have been more or less driven to my feet. I stand by what I said yesterday. Like the noble Lord, Lord Underhill, and the noble Baroness, Lady Fisher, I also went to Tyne and Wear. I think it is this part of the Bill dealing with the plans with which they are particularly concerned. I do not wish to make a Second Reading speech on that particular point or to be particularly regional, but if my noble friend can look into it that will be splendid.

Lord Underhill

I am sorry that the Minister adheres to his original remarks because his reference to the columns in the Commons Hansard, to which I referred, and the Under-Secretary of State's statement, does not go much further beyond what I said. What the Under-Secretary of State said is that to take out the word "particular" just leaves "regard," and that could exclude other issues. But we have not done that. We have gone beyond that. We have taken out the word "particular" and put in: include among the matters to which they, shall have regard". That makes it perfectly clear that one can look at other issues. I was rather disappointed that the Minister said that paragraphs (a), (b) and (c) are important, and we are not challenging that they are important issues; but then he said that the word "particular" is used because other issues would be of lower importance. I believe that is more or less what he said, although I am paraphrasing it. But the other isues to which we want consideration given are not of lower importance. They may be of equal importance to paragraphs (a), (b) and (c), but they are certainly not of lower importance. Therefore, we want these other issues properly considered at that particular stage.

The Minister said that under subsection (6) reference is made to the issues which he said he would look at; that is, the provisions of the 1968 and 1969 Acts. But I must draw your Lordships' attention to the fact that subsection (6) contains the matters which the Secretary of State must consider when he is giving guidance about the plan. The amendment which we have tabled is what the authority must consider when it is approving the plan given to it by the executive. That is totally different. The authority—that is, the Passenger Transport Authority—has to approve the plan and must have freedom to consider all the important issues: the duties under the 1968 or 1969 Acts, as the case may be, and the type of important issues to which my noble friend Lord McIntosh of Haringey referred. That is why we wish to have the amendment.

I am very pleased that the Minister is going to look at Amendment No. 27, but in looking at that amendment I hope he will do so in the context of where we want it to be put in: that is, at the stage when the authority has to approve the plan. The authority should have to take into consideration its own duty laid down under the Act, which the Minister has made clear is not repealed by the provisions of the Bill now before us. That is where we want the amendment to go in.

I should like to ask the Minister once again why he considers that our widening phrase, include among the matters to which they shall have regard", is not a good amendment? It is not sufficient to say that we are denigrating paragraphs (a), (b) and (c). We are not. We are saying leave them in and do not interfere with them, but make it quite clear that there are other issues which the authority should also look at, bearing in mind that at a later stage, under subsection (6), the Minister has the authority to consider the plan. Even under subsection (5) he has the authority to consider modifications to the plan. Therefore, what we are talking about is the important stage at which the authority considers the plan from the executive, and whether or not it is to approve it.

Yesterday we were told time and again by the Minister that the final decision rests with the authority. If the final decision rests with the authority, put in our words and let it have the authority to consider not only paragraphs (a), (b) and (c) but other issues which it considers to be of vital importance, including the provisions we suggest in Amendment No. 27. Before I take any further action, could the Minister say whether he will look at the words which we have used as well as looking at the points in Amendment No. 27?

Lord Bellwin

Certainly the authority can, and indeed hopefully will, look at everything, and as widely as possible, but we want, as is written into the Bill at the moment, the emphasis to be on the use of the word "particular", because that directs the authority towards these issues, which we again say that we particularly want them to do. That does not prevent them from looking at other things as well. That is up to them. But certainly one could not write into the Bill such a wide generality. We are concerned in the Bill to have the word that directs them particularly to these factors. That is really why we do not want to change the drafting of the Bill.

Lord McIntosh of Haringey

May I ask a very simple question of the Minister? I will not allow myself to concede that there might be a conflict between the advice or guidance given by this Government and the duties laid upon local authorities by the 1968 or 1969 Acts. I am sure that they are far too conscious of their responsibilities. We have heard from the noble Lord the Minister over and over again of his concern for the independence of local government, and we take him at his word. Therefore, from this Government there can be no conflict, but from a possible future Government there might be conflict. In these circumstances, may I repeat the question: which is to be master? Is the particular regard which is to be paid to these provisions in this Bill to take precedence over the general duties under the 1968 and 1969 Acts or not?

Lord Bellwin

I am glad to hear the confidence that the noble Lord shows. He shows confidence in the present Administration—we will have no problems with that. I assume, therefore, that he would certainly not expect to have problems with another Administration which might perhaps be closer to his heart. Either way he has to win. He has it covered both ways. I only want to say again that it is not a question of a restriction on the authority; it is a question of the emphasis and why we want the wording to refer to the use particularly in this way. I really cannot go further than that.

Lord Sefton of Garston

I do not want to bother the noble Lord, Lord Bellwin. I only want to ask him a simple question—the one that I asked yesterday. Is he yet in a position to answer me as to whether or not consultations took place with the executives on this matter, and whether any meetings took place with the executives at all, of which the local authorities were not notified?

Lord Bellwin

I have made no further inquiries since 10 o'clock last night along the lines that the noble Lord mentions. But I repeat that, to the best of my knowledge, there were in fact consultations in so far as the Government were able to have them, but the noble Lord knows as well as I do that the local authority associations as such, who have a great deal of expertise and input in these matters, chose for whatever reason not to be involved at that stage. I understand that now there will be consultations before the Bill is passed, and hopefully even at later stages.

Lord Sefton of Garston

More for the sake of brevity, may I assume that the Minister will write to me and tell me about the meetings with the executives?

Lord Bellwin

The noble Lord knows that I always delight in writing to him.

Lord Underhill

I am very sorry that the Minister will not move on this. As my noble friend Lord McIntosh inferred—I think he actually said—this shows a lack of confidence in the authority. I must emphasise that it is the authority that is elected, it is the authority that has to approve the plan, and it is the authority which the Minister says has the last word. He told us this time and time again. Therefore, why not use the words that we are suggesting: among the matters to which they shall have regard shall be these three matters? We are not deleting those three matters. The authority then would know that it must look at those three matters but can look at any other issue which it considers important. That seems common sense to me.

I am sorry that the Minister will not move on this. I am delighted that he is going to have a look at Amendment No. 27. But we believe that we ought to show our confidence in the elected local government bodies which are the county councils acting as the PTAs. Therefore, I would like the Committee to give its expression as to whether it supports confidence in the PTA or has the suspicions which the Government have on this matter. I beg to ask the Committee to divide on Amendment No. 26.

3.23 p.m.

On Question, Whether the said amendment (No. 26) shall be agreed to?

Their Lordships divided: Contents, 69; Not-Contents, 111.

Airedale, L. Kilbracken, L.
Amherst, E. Kilmarnock, L.
Amulree, L. Leatherland, L.
Ardwick, L. Listowel, L.
Aylestone, L. Llewelyn-Davies of Hastoe, B.
Banks, L.
Beaumont of Whitley, L. McIntosh of Haringey, L.
Beswick, L. Mackie of Benshie, L.
Bishopston, L. Milford, L.
Brooks of Tremorfa, L. Mishcon, L.
Bruce of Donington, L. Nicol, B.
Cledwyn of Penrhos, L. Oram, L.
Collison, L. Pitt of Hampstead, L.
Cooper of Stockton Heath, L. Plant, L.
Ponsonby of Shulbrede, L.
Crook, L. Prys-Davies, L.
David, B. [Teller.] Rathcreedan, L.
Davies of Leek, L. Roberthall, L.
Davies of Penrhys, L. Ross of Marnock, L.
Denington, B. Sefton of Garston, L.
Diamond, L. Serota, B.
Elwyn-Jones, L. Simon, V.
Ewart-Biggs, B. Stedman, B.
Fisher of Rednal, B. Stewart of Alvechurch, B.
Gaitskell, B. Stewart of Fulham, L.
Gladwyn, L. Stone, L.
Grey, E. Taylor of Blackburn, L.
Hanworth, V. Tordoff, L. [Teller.]
Hatch of Lusby, L. Underhill, L.
Houghton of Sowerby, L. Wallace of Coslany, L.
Hunt, L. Wells-Pestell, L.
Ingleby, V. Whaddon, L.
Jacques, L. White, B.
Jeger, B. Winterbottom, L.
Kearton, L. Wootton of Abinger, B.
Kennet, L.
Airey of Abingdon, B. Gisborough, L.
Atholl, D. Glanusk, L.
Auckland, L. Glasgow, E.
Avon, E. Glenkinglas, L.
Belhaven and Stenton, L. Gridley, L.
Bellwin, L. Hailsham of Saint Marylebone, L.
Beloff, L.
Belstead, L. Halsbury, E.
Berkeley, B. Harvington, L.
Boyd-Carpenter, L. Hayter, L.
Campbell of Alloway, L. Hives, L.
Campbell of Croy, L. Home of the Hirsel, L.
Carnegy of Lour, B. Hornsby-Smith, B.
Cathcart, E. Hunter of Newington, L.
Clancarty, E. Hylton-Foster, B.
Clifford of Chudleigh, L. Kemsley, V.
Cottesloe, L. Killearn, L.
Crawford and Balcarres, E. Kilmany, L.
Cullen of Ashbourne, L. Kinloss, Ly.
Daventry, V. Lane-Fox, B.
Davidson, V. Lauderdale, E.
De Freyne, L. Lawrence, L.
Denham, L. [Teller.] Long, V.
Derwent, L. Lucas of Chilworth, L.
Drumalbyn, L. Luke, L.
Duncan-Sandys, L. Lyell, L.
Ebbisham, L. Mackay of Clashfern, L.
Ellenborough, L. Macleod of Borve, B.
Elliot of Harwood, B. Mancroft, L.
Enniskillen, E. Mansfield, E.
Ferrers, E. Margadale, L.
Ferrier, L. Marley, L.
Forbes, L. Merrivale, L.
Fortescue, E. Mersey, L.
Fraser of Kilmorack, L. Milverton, L.
Gainford, L. Molson, L.
Montagu of Beaulieu, L. Seebohm, L.
Morris, L. Selborne, E.
Mottistone, L. Selkirk, E.
Newall, L. Sempill, Ly.
Northchurch, B. Shaughnessy, L.
Nugent of Guildford, L. Skelmersdale, L.
Onslow, E. Somers, L.
Orkney, E. Spens, L.
Orr-Ewing, L. Swinton, E. [Teller.]
Porritt, L. Taylor of Hadfield, L.
Portland, D. Thomas of Swynnerton, L.
Rankeillour, L. Thorneycroft, L.
Redesdale, L. Tranmire, L.
Rochdale, V. Trefgarne, L.
Rugby, L. Trumpington, B.
St. Aldwyn, E. Vaux of Harrowden, L.
St. Davids, V. Vivian, L.
Saltoun, Ly. Wakefield of Kendal, L.
Sandford, L. Young, B.
Sandys, L.

Resolved in the negative, and amendment disagreed to accordingly.

[Amendments Nos. 27 and 28 not moved.]

The Deputy Chairman of Committees

Before I call Amendment No. 29, I should point out to the Committee that if this amendment is agreed to I cannot call Amendment No. 30.

3.30 p.m.

Lord Underhill moved Amendment No. 29:

Page 4, line 42, leave out subsection (5) and insert— (" (5) Where plans are submitted to the Secretary of State under subsection (4) above he may give guidance as to the general principles on which revenue grants shall be based having regard to general economic conditions.")

The noble Lord said: For the convenience of the Committee I suggest that with Amendment No. 29 I also speak on Amendment No. 33. May I again remind your Lordships that most of these amendments have wide cross-party support. That is not only because of the principles contained in the amendments, but I would remind the Committee that once we pass Clause 2 all the other clauses are those which had very limited consideration in the other place due to the operation of the guillotine machine, which I shall not comment upon—I am merely making a statement of fact. That is why it is so important that the amendments we are submitting to the Government are properly put forward and debated.

These amendments deal with the question of revenue grants and the guidance that the Secretary of State may give. I want to emphasise, though, that they do not deal with the general principle of fixing the revenue grants. That is an issue which we shall come to in a later amendment. But Clause 4(5) allows the Secretary of State to give guidance to an authority as to the maximum amount of revenue grant which, in his opinion, the authority should make in any year to the passenger transport executive, and to tell the authority of any modifications that the authority should make in its plan. The following subsection, subsection (6), sets out paragraphs (a), (b) and (c)—not the same paragraphs (a), (b) and (c) to which we referred in the previous amendment, but different paragraphs—by reference to which the guidance of the Secretary of State may be given. That is a narrowly drawn list.

The first concern arising from these two subsections is the theme running throughout the Bill to which noble Lords have referred time and time again, not only at Second Reading but in debates, as to the level of detail in which the Secretary of State seeks to involve himself in the affairs of the executives and the authority. That is evident in the clause we are debating at the moment. That concern was voiced, I would remind your Lordships, in the letter from the Chartered Institute of Transport, to which I referred yesterday and which I will not go over again. But the references to it, for those who did not hear the debate yesterday, are mentioned in our own Hansard report. For instance, paragraph (b) provides that the Secretary of State may give guidance by reference to his opinion—I emphasise "to his opinion"—as to what benefits should result from the making of such revenue grants to executives. His opinion will not be based on the opinions of the elected authority or people of the area.

Remember, in our very last debate last night on Amendment No. 22, when we listed in the amendment all the bodies which should be consulted, that the Minister said it was the duty of the authority to consult all these bodies, so it is after consultation with all these bodies that the authority will make its plans. Yet later the Secretary of State will come along and in giving his opinion, without any consultation with these bodies, ignoring all the consultations that the authority has had with these various bodies, will then say how the plan should be modified.

The second matter of concern is that subsection (5) contains that provision which allows the Secretary of State to prescribe the actual amount of the revenue grant, and I quote: which it would in his opinion be appropriate for the authority to make.

Amendment No. 29 seeks to move away from the prescription of a maximum figure of grant and interference in matters of detail. I do not think any noble Lord can deny that the measures in this clause and in the Bill generally would not mean interference in matters of detail. It is quite apparent that the Secretary of State cannot arrive at his decisions unless he does interfere in matters of detail. But the amendment would provide that the Secretary of State may give guidance. We are not saying that he should give guidance, but the amendment says that he should "give guidance on the general principles on which revenue grants shall be based", but those general principles should have regard to general economic conditions. To give guidance without any acknowledgment of the economic conditions at the time would be nonsense. We are not ruling out guidance, and the type of guidance which we are proposing in the amendment would, I think, be helpful and I believe would be welcomed by the authority: general guidance as to general principles which should have regard to the economic conditions prevailing.

To enable that principle to be followed, Amendment No. 33 would remove the references in paragraphs (a), (b) and (c) to the three specific matters. This is another amendment which attempts to be helpful in carrying out the Government's desire to give guidance, but we say it should be proper guidance, once again to restore the confidence that the authorities must have which, frankly, is being demolished by many of the provisions in the Bill.

Lord Bellwin

We have already debated under Amendment No. 19 and the related amendments the effects of removing the Secretary of State's power to give guidance to the authorities as to the maximum amount he considers appropriate for revenue support. I do not wish to repeat all those arguments again, but Amendment No. 29 would, in essence, have the same effect. It would limit the Secretary of State's guidance simply to the broad economic principles on which revenue support should be based, leaving authorities to determine the levels of revenue support by reference to any other factors they choose. The Government cannot accept this proposal.

As regards Amendment No. 33, one of the principal tasks for any Secretary of State must be to exercise his functions with due regard to the national resources available for items of expenditure. It is proper that he should take such a view, both in relation to his direct functions and in relation to his role in influencing the policies and expenditure of other bodies, such as local authorities. As I have said in the past, the level of subsidy by the metropolitan authorities for passenger transport has increased very rapidly in the last three years from £200 million to £400 million. Forecasts last summer were showing £700 million for 1983–84. With the ever-increasing burden of funding these subsidies being met by taxpayers and ratepayers, the Secretary of State must take a view, as successive Governments have done.

Equally, with such large sums of taxpayers' and ratepayers' money involved, surely it is only right and proper that an overall view should be taken by the Secretary of State of the benefits which result from the use of their money. There is some evidence to suggest that the higher the subsidy, the more inefficient the transport undertaking becomes. As I said on Second Reading, the fact is that since 1970 the costs in real terms have increased by over 50 per cent. and I repeat that that is the increase in real terms. Many would want to know where the benefit is received for the extra cost of the 50 per cent. That is why it is essential that we ensure that this money is put to good use and that taxpayers and ratepayers get good value for their money. That is why the Bill refers to the benefits of subsidy.

The reference to the past and present levels of authorities' expenditure on revenue support is also an important factor for the Secretary of State to consider when setting his guidance. This will ensure that, in the light of their past policies, authorities are not given guidance figures which could require major and unrealistic change to their fare and service levels. Wild fluctuations in policies would simply disrupt the transport undertakings and benefit nobody and that is not what any one wants to see. Therefore, we recognise that changes cannot be made overnight so, in the interest of stability, past policies must be taken into account. Removing this provision would not, I suggest, be in the authorities' best interests.

The amendment would leave matters so that the Secretary of State had to have regard to the general duty of the authority and the executive, while leaving out the matters set out in Clause 4(6)(a), (b) and (c). These are all important issues to consider when the guidance figures are set. I just do not think that the interests of the authorities, the transport users or the ratepayers and taxpayers would be best served by these amendments, and I would hope that the noble Lord may, on reflection, agree with me.

3.44 p.m.

Lord Sefton of Garston

I do not think that the noble Lord, Lord Bellwin, has done himself a service by reading some of the briefs that have been given to him. It would be better for democracy as a whole if the noble Lord, Lord Bellwin, stuck to his first statement this afternoon—namely, that he will not repeat the arguments that he used on other occasions. Indeed, he really should not do so. The justification that the noble Lord, Lord Bellwin, and all the speakers on the Government Front Bench put forward was that these subsidies were of such a proportion that they were endangering the proper running of our economy. I hold second fiddle to no one as regards that principle. As a member of a local authority for many years I always subscribed to the view that the national economy—macro-economics—was a matter for central Government. Even though it may be taken as a criticism of some local authorities at the moment, I still adhere to that view. The Government have a right to say what is the maximum, but the brief which has just been read and which was closely followed by other noble Lords, goes further than that.

If we look at the Bill we see that it is not a question of central Government defending the economy. The figures that were given for total subsidies to transport are not the effective figures. The effective figures, in so far as they may have any consequences on the national economy, are the difference between the protected expenditure level and the total subsidy that may be given, and that would be less than the figures quoted by the noble Lord, Lord Bellwin. If we examine those figures we find that they come nowhere near the expenditure that this nation incurred on the Falklands exercise which the Chancellor of the Exchequer said that he could pick up quite easily in the scope of our economy. He said that he really would not have to adjust his Budget to deal with that massive expenditure. Yet we are being told that this matter of subsidy is having such an effect on our national economy that the Government should step in and prevent local authorities from doing it.

That was the argument put forward right at the beginning as a justification for the Government's taking these powers and I did not disagree with it. But what do we get now?—the brief talks about other things. Let us go to the Bill and see what it says. If a local authority does not comply with the limits and exceeds the expenditure which, in the opinion of the Secretary of State, would be appropriate for the Authority to make in the year in question, and if the amount proposed by them would be greater than that amount, he may indicate what a gentle word to the Authority the respects in which the plan or any modification proposed by them would need to be altered to take account of his guidance". What on earth does that mean? It means in the case of Merseyside that the Minister is to become involved in the question of transportation costs between the Wirral and the north bank of the Mersey. It means that the Minister is to become involved in the question of whether a subsidy should be paid in greater proportion to people travelling from the older areas of Liverpool and the newer areas of Liverpool where most of the unemployed are to be found. It means that the Minister will be involved in the question of how much subsidy should be given to the people in Kirkby and other districts entirely different from Liverpool in order that they can maintain necessary social and economic contacts with the place where they were born. That is what it means if it means anything at all.

I can tell the Minister from my experience in Merseyside that no transportation plan was ever drawn up in Merseyside that did not have at its very root the consequences of that plan upon the social life of Merseyside. As I said on Second Reading, Liverpool was once the council that operated the transport undertakings for Merseyside. It did not stop at Liverpool's boundary; it went through Bootle and into Lancashire and into Widnes. The Liverpool transport undertaking served all of those areas. We were compelled to move our population into some of those areas because of the terrible congestion that existed in the centre. Liverpool as a local authority then deliberately embarked upon the step of subsidising people in other districts because they realised that even if local government boundaries were well out of date as regards matching the economic and social needs of an area, they did not have to be out of date with their thinking.

The Minister must take all those factors into account under this clause if he is to deal with any modifications in the plan. I submit again, as I submitted on Second Reading, that it is criminal lunacy to expect that anyone in Whitehall can possibly settle those questions. The amendment moved by my noble friend Lord Underhill is clear and explicit. It agrees with what the noble Lord, Lord Bellwin, has always held to be a tenet of good government—that in fact the job of central Government is to look at the picture as a whole and to declare a limit and to give reasons.

There is one other factor. I would like to know from the Minister when he does give his reasons and when he does decide between the local authority and Whitehall—because what it boils down to in the end is the Minister deciding between the local authority and some moguls in Whitehall—whether he will give that information to the House of Commons? Will he give it to this House? Will the democratic machinery on a national level—we shall already have eliminated the local level—be taken into consideration and will he give his reasons to the House of Commons and to this Chamber when he takes that decision?

Lord McIntosh of Haringey

I will go along this far with the noble Lord the Minister; that, although he did not observe his own self-denying ordinance, it would be undesirable to repeat the arguments which we had yesterday. Therefore, I shall not concentrate on that part of the amendment which refers to the guidance which it is proposed that the Secretary of State should give on acceptable levels of revenue grant.

Lord Bellwin

In case it will help the noble Lord, I had thought that it might be helpful to the Committee in response to the noble Lord, Lord Sefton, if I were to go over those points again. So the noble Lord may wish to refer to them.

Lord McIntosh of Haringey

By all means. What I wanted to do—and I am sure that the Minister will be able to respond to both points at the same time—was to refer to the last few lines of the subsection which it is proposed should be replaced by the words in the amendment. I would remind the Committee of them. The Secretary of State shall indicate to the authority: the respects in which the plan or any modification proposed by them would need to be altered to take account of his guidance. We know what those words mean. They do not simply mean that the Secretary of State will write a sentence or two saying, "We think you are a bit above here or there", or, "There is something funny about your reasoning somewhere else".

What it means—and it has been made quite clear already—is that the Secretary of State and his civil servants will take a very detailed look indeed at the operations of each passenger transport executive. Indeed, they say so quite explicitly, because one of the five points of information which will be required from the executive is explicitly a disaggregated analysis of the performance of particular groups of services. That is spelt out as saying that it could provide an analysis of financial performance by time of day, peak, off-peak and evening, between weekday, Saturday and Sunday services, giving details of the percentage of revenue support going to each service group, the percentage of passenger miles and vehicle miles which they represented, and their revenue cost ratios. It might also provide a similar analysis for, say, the 10 per cent. of services which have the highest and lowest revenue cost ratios.

These are perfectly proper things for someone to investigate. They are certainly matters which the passenger transport executive ought to be responsible for producing. They are also matters which it is right that the authority should take into consideration when considering its revenue grant. But surely it cannot be right for three different groups of people to analyse all these disaggregated data: for us to have the executive, the authority and the Department of Transport all making the same analyses in parallel.

As my noble friend Lady Denington will remember, in the Greater London Council in the mid-1970s we had about 20 people involved in transportation planning, of whom I think six were specifically dedicated to the consideration of plans, estimates, capital proposals and so on of London Transport. That was a modest figure. I hope that the figure has not increased since then. In contrast, the London Transport Executive itself had a very much larger traffic planning department, or whatever its name was. Indeed, it was so large that in County Hall we used to call it the Congolese Army.

What is now proposed, if the Bill is accepted unamended, is that we shall have a third large group of people doing the same job over in Marsham Street. I suspect that if the Government persist in rejecting this amendment and amendments of this kind, they will come under the very critical scrutiny of the successor of the noble Lord, Lord Rayner, because inevitably they will employ more civil servants to duplicate the work which is being done—and being done quite properly—by the executives and by the authorities.

I appeal to the Government in self-defence, if they are to escape the censure of the Civil Service Department and of the Prime Minister's Office, will they not reconsider the extent of the detail which they are now proposing both in administrative letters to the executives and in what is permitted by this Bill—that is, the amount of information which they will be demanding of these other authorities?

Lord Boyd-Carpenter

The noble Lord, Lord McIntosh of Haringey, carries a certain amount of conviction, with me at any rate, when he talks about the danger of accumulating excessive staffs at different levels. But to my mind he spoilt that argument when he said that the job was at present being done perfectly properly by the authorities and the executives. If that were really so, there would have been no need for this Bill. It is because of the failure of those authorities and executives to keep their demands on the ratepayers down to a reasonable level that the Government have thought fit—and in my view very rightly, and perhaps even a little belatedly, thought fit—to bring forward this Bill to introduce a measure of control. It is because of the failure of the local authorities properly so to control.

Lord McIntosh of Haringey

I wonder whether the noble Lord would recognise a distinction between the analysis, about which I was talking, and the political decisions resulting from that analysis. He is, of course, at liberty to criticise the political decisions, but surely he is not advocating a duplication of the analysis?

Lord Boyd-Carpenter

The authorities to which the noble Lord refers are the bodies that take the political decisions as well as making the analysis, if indeed, from looking at some of them, they make any analysis at all and do not simply rely on political decisions, which may be an unworthy but I am not sure is a necessarily unjustified suspicion. I am afraid that we cannot get away from the fact that he said to your Lordships that this work was being done properly at the moment. It is quite clear that the work of analysis must be done now by people, not necessarily responsible to the authorities, not liable to be told what to do by them, but responsible to central Government. If his concern about the accumulations of staff is real (as I am sure it is) I would suggest that the sensible thing would be to reduce those staffs at local level. Perhaps I might make one general observation.

Lord Tordoff

If the noble Lord will allow me—

Lord Boyd-Carpenter

Perhaps I may just finish this sentence. Unless, indeed, local authorities make reductions in their staffs overall, the burden of the rates will be very excessive indeed. If the noble Lord, Lord Tordoff, is becoming excited, I will gladly give way to him.

Lord Tordoff

I am grateful to the noble Lord. Did I hear the noble Lord aright when he suggested that we should actually demolish the staff of the local authorities and centralise them in the Department of Transport? I thought that that was what I heard him say.

Lord Boyd-Carpenter

I did not use the word "demolish"; even on a Liberal interpretation of what I said, that word cannot be intruded. But what I would say, and certainly in reply to the noble Lord, Lord McIntosh of Haringey, is that I see no reason for transport staffs to be in the Greater London Council at all. I would far rather that, as under the system which I administered many years ago, London Transport was answerable directly to the Department of Transport, thereby obviating—and I hope that I carry the noble Lord, Lord McIntosh, with me—any need or, indeed, excuse for the Greater London Council to have transport staffs at all.

In that sense, in reply to the noble Lord, Lord Tordoff, I would see the abolition of a local authority transport staff and, in the case of Greater London—let us be quite clear that this is what I am talking about—I would see that controlled from the central Government department by the same staffs as manage and look after the other forms of transport, such as the railways, with which London Transport competes. Indeed, the noble Lord is tempting me to open up on a line to which I have given some thought in recent years, but I must resist that temptation because its relevance to this amendment appears to be slightly tenuous, which is always the danger when responding to a Liberal intervention, as you are almost always enticed into irrelevance. But I hope that I have reassured the noble Lord.

To return to the amendment, the second amendment, No. 33, seeks to take out of the Bill words which seem to me to be absolutely vital, that is, considerations as to what the national economy will stand, which noble Lords opposite associated with local government always seem to brush aside. The noble Lord, Lord Sefton, does not seem to think that they are important at all. He brushes them aside: if people cannot get in from Kirkby, or wherever it is, comfortably, then the money has to be found anyhow. He entirely disregards the fact that all these resources compete with other demands for a limited level of national wealth. It is that which the central Government must defend, even if in so doing it diminishes the convenience of travel in various areas.

I should like to follow that a little further. It seems to be treated as axiomatic that large subsidy will produce better services. I express grave doubt as to whether that is so. Few things are more demoralising to anybody running an organisation, be it a transport organisation or anything else, than the knowledge that it does not matter how much you lose because somebody will come along and make up the difference by subsidy. That would demoralise the best of us.

If I may draw on my own experience in another form of transport, civil aviation, it is interesting to see how British Airways for years has been considerably overmanned until this was tackled, as it is being tackled most courageously, by Sir John King at the moment, because it had ultimately in one way or another the support of the British Government behind it, whereas its competitor, British Caledonian, which had no subsidy, has relied entirely on its own efforts, cut its staff heavily during the depression of 1973 when oil prices rose and, as a result, restored itself to full prosperity and has continued even in these difficult days for aviation to make a profit. There is an example there. It is dangerously easy thinking to believe that subsidy, and ever increasing subsidy, is a guarantee of efficiency. There is a considerable body of evidence to the contrary.

I am sure that my noble friend the Minister will not let me down on this. I very much hope that he will resist these two amendments, however agreeably and tactfully they have been put forward, as they always are by the noble Lord, Lord Underhill, who always moves his amendments in a way that suggests that involved is a trifling improvement which will make the Bill a bit better without affecting its main purpose. I hope your Lordships will have in mind that I am not exaggerating that the acceptance of these amendments would tear some of the guts out of the Bill.

4.3 p.m.

Lord Sefton of Garston

I am completely amazed, every time the noble Lord, Lord Boyd-Carpenter, speaks in this Committee, as to how he can develop a speech by making a false assumption first and then building a whole edifice on that false assumption.

Lord Boyd-Carpenter

Will the noble Lord allow me? I learned that from the noble Lord.

Lord Sefton of Garston

I did not quite hear that. At any rate, it was not important to what I am about to say. The false assumption about which the noble Lord on the Front Bench will disabuse your mind was that in some way I attach no importance to central Government deciding total figures. I said exactly that, and I am glad to see that the noble Lord agreed, because sometimes I have doubts whether the noble Lord, Lord Boyd-Carpenter, can understand Scouse. I said I agree with you. But the logic of your argument, if one listened to it, is that you should be moving an amendment to this Bill to exclude London from the contents of the Bill. All you have addressed yourself to is what the position was with you and London years ago.

There are six other metropolitan authorities. You got dangerously near agreeing with the Liberal spokesman by saying that he was right when he suggested that what you were talking about was the abolition of the section of the executive that dealt with planning in local transport, and you would want to leave it to Whitehall.

Lord Boyd-Carpenter

Would the noble Lord allow me again? He is always courteous. I would remind the noble Lord, if he is chiding me with not putting down an amendment to remove London from this Bill—and I doubt whether it would be within the scope of the Bill—that if he would be good enough to read the report of the Second Reading, he would see that on Second Reading I devoted at least a third of my speech to expressing my great disappointment that my noble friend had not included the removal of London Transport from the Greater London Council. I thought that I got a not wholly unsympathetic reply from my noble friend.

Lord Sefton of Garston

I agree with you. I disagree with you that you cannot move an amendment. There is nothing to prevent you moving an amendment.

Lord Boyd-Carpenter

It is outside the scope.

Lord Sefton of Garston

Perhaps we could have a conversation with somebody who knows more about Parliament than either you or I. I am assured that it would be possible to delete from the provisions of this Bill a place like London.

Lord Boyd-Carpenter

Well, move it.

Lord Sefton of Garston

You move it. You said logically that that is what you wanted. Let me come back to the other point about you wishing that the planning section of the executive in London should not be there and it should be done by central Government; in other words, by Whitehall. If you apply that argument to the other authorities included in the Bill, would you then wish that the section of their planning in the executive should be done by Whitehall? I am quite willing to give way if you would like to reply. You do not want to reply? I must imply that that means that you would not want—

Lord Boyd-Carpenter

The noble Lord must not tempt me, because he knows I always yield to temptation. As Oscar Wilde put it, I can resist anything except temptation. My argument was directed to Greater London. I have made no argument on the point of the provincial authorities, although I am quite happy to be persuaded by the noble Lord—and I think he is rather having that effect on me—that we should go further. My advocacy, however, at the moment relates to London.

Lord Sefton of Garston

I wonder whether your advocacy in regard to London is not also apparent in the Government's mind about the rest of the transportation authorities. I believe it very much is. On the point about whether or not that should be done at Whitehall, I do not know, and I am not prepared to get into an argument about London; but I know that it would be criminally wrong to take away from local authorities in the northern parts of this country the ability to plan.

You implied that I was not sympathetic to the approach that the Government should be in control of the overall figure. I have established that you were wrong in that. You then went on to say that that was the purpose of the Bill. You seem to have read the amendment, because in fact what you were doing was putting forward the case for the amendment. You were saying in no mistaken terms that that is the job of the Government; that you agreed that it was the job of the Government to discuss the effects on the national economy, and you went no further than that. That is what you said. Yet in fact the amendment says that it is the job of the Government to put forward figures on a global figure; but the Bill says that the Government may indicate to the authority the respects in which the plan, or any modification proposed by them, would need to be altered. That is minutiae. It is the details of planning in the other authorities. I would like to hear you say whether or not you agree that those details should be determined in Whitehall.

Lord McIntosh of Haringey

I was directly challenged by the noble Lord, Lord Boyd-Carpenter, to say whether I went along with him in his assertion that it would be right to avoid duplication, or triplication, of analytical work, and that this should be taken away from the local authorities and the executives. The answer is that I do not go along with him. If he is suggesting that, I hope he will be repudiated by the Government Front Bench. What he is proposing is an incitement to illegal action by the Greater London Council and the metropolitan authorities, as I think he very well knows. It is the duty of the authorities to consider, and take into account, all the factors which are put forward by the executive for the proper running of a public transport system. It is then their duty to take into account the other things which are within their remit—the issues of road policy, of other transportation expenditure, and so on—and to come to a conclusion about it in terms of the revenue grant that they propose to make.

The noble Lord may not like the conclusions they come to; that is his privilege. But if he is suggesting that, in a choice between who does the work, that it should be done by central Government rather than by local government, I hope that not only this side of the Committee but also the Government Front Bench and other members of the Conservative Party will firmly repudiate that extreme centralist dogma.

Lord Bellwin

I suggest that the noble Lord, Lord McIntosh, considering the authority from which he comes, should not be talking too much about extreme political dogma. And when he talks about incitement by my noble friend to the GLC in respect of illegalities—well, need I say more?

I listened with interest to the remarks of the noble Lord, Lord Sefton, and his comments about matters receiving long consideration. I am sure my noble friend Lord Boyd-Carpenter will agree that it should be central Government who decide the overall parameters. The noble Lord was a staunch advocate of that on many occasions when I was with him in years gone by. I am sure nothing has changed that, and therefore I make that observation without hesitation.

While accepting that the noble Lord, Lord Sefton, always make his observations—and he made some fervent ones today—with a sincerity which I respect, I wonder whether he always gives the same respect to those who feel equally fervently but who hold an opposite point of view. I say that because we must ask why we are in the present situation and why are we talking about subsidies. The answer is that, as with so many things, some local authorities have not been prepared in the slightest to take into account the overall parameters suggested to them by the Government. Some have not been concerned in the slightest to maintain a balance of reasonableness as between what people should pay and what they can afford to pay for using the service.

When I hear people talking about local autonomy and democracy, I sometimes feel sad because of some of the things that are happening in local government today—the extremes to which many authorities are going and which are leading to the very factors which, in the end, compel central Government to come in and take steps to protect those who otherwise cannot be protected. Therefore, it is no good complaining and tirading against the Government for being compelled to do things as a result of certain actions by some; and I say that with the same conviction as the noble Lord, Lord Sefton, makes his comments.

Having said that, I wish immediately to reassure my noble friend that I shall not let him down in relation to the Government's attitude to the amendment. However, it might be helpful—perhaps I should have done this yesterday—if I were to spell out in rather more detail, if the Committee will bear with me, the bases, factors and criteria which will be applied. I feel that I should spell those out carefully so that they are in Hansard and then my remarks can be read, quoted and used in any other way your Lordships may wish.

The basic point about the provisional figures in the White Paper is that they are provisional. The Secretary of State has no power to set figures before the Bill is enacted. When the AMA came to see him last autumn, they pressed for advance indications to help them in preparing their budgets, and that is what he gave them. But he made it clear that he was ready to consider any relevant material supplied by authorities before he set the actual figures. How those will be set will be governed by the Bill, in particular the considerations in Clause 4(6), besides the national considerations he envisaged, taking into account the type of information suggested in the two planning documents which have been circulated widely to authorities for their comments. I doubt if those contain any surprises for authorities; it is material they need in order to reach judgments themselves about fares, services, cost savings and subsidies.

Hitherto, the main provision of data for proposed subsidies has been set out in authorities' transport policy and programme documents. As a basis for indicating provisional figures, my right honourable friend studied those documents and the other information that authorities and executives provided about their proposals for public transport provision to meet the needs of their areas. That enabled the Secretary of State to take account of the position in each authority; the level of subsidy being paid, the specific benefits expected to result, the present level of fares and the history of recent changes, together with such factors as the demand for services, the level of services provided, the cost of providing them and the actual income derived from fares.

The other part of the equation is the national subsidy picture and, within that—given that resources are not unlimited—how effectively each authority is using those resources. One tool which the department has been developing for some time—and is anxious to share with local authorities—is a set of techniques for assessing the benefits of subsidy. These can be used, first, to suggest what combination of fare and service levels would present the most appropriate use of subsidy in each area. Secondly, they can be used to suggest how a given level of resources at the national level could be distributed between the different authorities so as to provide comparable value for money in each case. Details of the cost benefit analysis method on which we are working have already been sent to local authorities, and we hope to develop that further in collaboration with those working in the field.

Useful though they are, what techniques of that kind cannot do is provide an automatic answer as to what level of subsidy is right in each case. They cannot, of themselves, take account of all the relevant factors relating to the individual circumstances of each area, a point to which I have referred. For example, the actual position in which each authority finds itself today will inevitably affect the pace at which adjustments can be made, and that will have to be reflected when the Secretary of State gives his guidance.

The context of that process must be how much is appropriate within the total national resources, for which there are a myriad competing claims. The Government could not endorse the kind of plans that the local authorities were putting forward. I have already said that we have been talking about subsidies which have doubled in the past three years; and it was being proposed that they should be put up to £700 million. That, clearly, would be out of all proportion.

The provisional guidance figures published in the White Paper represent a reasonable balance between the value for money that can be achieved for the use of transport subsidies in our major cities and the many competing demands on the national economy. The proposed PELs total £436 million, including £95 million for depreciation and renewal for London Transport. That is considerably in excess of the £330 million which corresponds to the level of expenditure accepted for TSG in 1982–83.

I hope the Committee feels it was useful for me to have given that information, and I hope I have set the position out clearly. I suppose that to some extent the noble Lord, Lord Underhill, will be entitled to say that we have moved away from parts of the amendment, but I do not think that is the case from the point of view of the principle of the matter. We have had a long debate on this amendment. If nothing else, that has brought out the great concern everyone has about the whole matter. However. I must say again that there are views other than those expressed by noble Lords opposite, however sincerely they express them—as I know they do—but the fact remains that the Government cannot accept the amendment because there must now be a greater clarification of the issues and steps to bring the whole situation back to reasonableness.

4.18 p.m.

Baroness Fisher of Rednal

It is rather worrying for some of us that we should constantly be debating London Transport services. They are only one of the undertakings in this country and it is unfortunate that they are always used as an example. I come from the West Midlands and we have nothing to hide. Indeed, it might be well for the noble Lord, Lord Boyd-Carpenter, to come to Birmingham and the West Midlands to see what goes on with an intergrated service.

The Monopolies and Mergers Commission was asked to look at the provision of services by the West Midlands Passenger Transport Executive, and the commission was reported to have said, among other things, in its findings: The executive did not operate its position of monopoly provision against the public interest. It was criticised, however, for being overzealous in the changes it was bringing about in the lines of communication, with a faster response to operational problems and with a better service being provided". In other words, they were criticised for being over-efficient, and even that was just a passing remark. There was certainly no suggestion that the West Midlands executive was operating against the public interest.

I should like to follow up what the noble Lord the Minister has just said about concern. Of course there is concern—and again I refer to the West Midlands figures. I asked for this information during the Second Reading. The figures in the White Paper show that the estimate for the West Midlands is £28 million, which is equivalent to £11 per head. The average amount that the Secretary of State is giving to metropolitan counties outside London—that is, every metropolitan county except the West Midlands—is £19 per head of the population. Is an executive that has been praised by the Monopolies and Mergers Commission to be penalised by receiving less because it has been proved efficient? Therefore, as the noble Lord the Minister said, there is concern about the figures that are in the White Paper, and I would say on behalf of the West Midlands that that concern is very great.

There has been discussion about cost analysis and people in Whitehall going into the details. Is it necessary for people in Whitehall to ask about the intervals of time between each bus on a particular route, especially when eventually, about four buses converge on the same route? Is it important for them to ask at what time of the day most of the fares are collected, when in fact the majority of passengers use cards which they buy and which enable them to get cheap fares for periods of a month, three months, or six months? Is it important that the people in Whitehall should know the shift patterns of each individual bus crew? Is it important for the civil servants to know such things? Are they going to dissect every ticket thrown on to the floor of the bus as passengers get off? If those are the kind of questions that are now being asked, we are getting into a ridiculous situation; and I have been given that information. Thus there is concern.

In conclusion, I would say that in the Bill let us concentrate on transport undertakings. Let us bear in mind Tyne and Wear, where there is an excellent integrated transport system. I know full well about the West Midlands, and I realise that the noble Lord, Lord Sefton of Garston, would say that the transport undertaking in his part of the world is competent. So let us concentrate upon the great number of transport executives and the authorities that are doing a good job of work, and make quite sure that the Bill fits those bodies.

Lord Mishcon

I would not have intervened on what I suppose is really a Second Reading point had the noble Lord the Minister and the noble Lord, Lord Boyd-Carpenter, not seen fit to make to the Committee speeches which attacked and wounded, but which did not have sufficient courage to carry through their reasoning to any logical conclusion. I assure your Lordships' Committee that were it not for that, I would not have intervened. But it is an extraordinary Government and, bearing in mind his courage, it is an extraordinary Lord Boyd-Carpenter.

On this side of the Chamber we have said that local government, its dignity and powers, are being strangled by central government. The noble Lord the Minister gets up and says, "Oh well, there are certain authorities that have brought this upon themselves", and presumably the good ones have to suffer for the bad. One answers the noble Lord the Minister by saying, "Democracy—a precious, wonderful flower of this country—is something that is nurtured at the elections which are held". The Minister then says, "Ah! but you see this is not true, because there are so many people who pay rates"—and apparently rates are an iniquitous way of raising the money. "We are dealing with rates here, not tax. When people go over the limit, it is all wrong. Some ratepayers do not have a vote".

In a manifesto years and years ago the Conservative Party stated: "Abolish rates—that is what we will do". Yet here we are in 1983 and rates have not been abolished. But the Government are abolishing local authorities' powers and dignity. They say that the wrong people are voting for local authority representatives. There is no commercial vote. Do not the Government have time for this in their legislative programme, bearing in mind that in this Session and the last Session so many fiddling Bills—I ask your Lordships' Committee to forgive me for putting it that way—have gone through? What about a Bill—let us see whether the country would wear it—in which the commercial vote is given? The Government have the right to do it.

The extraordinary cowardice and inertia of the Government are exemplified by the noble Lord, Lord Boyd-Carpenter. He is an absolute expert on legislation—and I mean that with respect. There is not a note of sarcasm in my voice—and I hesitate only because I am lost for words, and not for any dramatic effect. The noble Lord knows how important is the wording of the Long Title of the Bill—and I had better read it out: An Act to make further provision which respect to the finances and management of certain Transport Executives". There was nothing—and I say this having received certain advice—to stop the Government, and there was nothing to stop the noble Lord, Lord Boyd-Carpenter, had he had the courage, to put down an amendment, providing that the management, financial control and all the rest of it in regard to transport in London should be taken away from the GLC. There was nothing to stop the noble Lord putting down such an amendment. There was nothing to stop the Government providing for that in the Bill. Why did they not do it? They did not do it because they have been told—and this is the one bit of very good advice that has been given by their administration and those whom I know serve them loyally as their civil servants—"For heaven's sake! don't touch London Transport. It is a financial burden. It has terrible problems. Leave it to the Greater London Council, and bash the Greater London Council".

As I said, I would not have intervened, but it is such a sad sight to see so many gallant people lacking in courage, except in the use of words during a debate at the Committee stage of the Bill.

4.29 p.m.

Lord Bellwin

I have to smile when the noble Lord accuses us of indulging in Second Reading debating points. Yes, we sometimes rise to the bait. The noble Lord, Lord Sefton of Garston, smiles unapologetically for making such points all the time, and I certainly do not object to them, so long as we recognise them for what they are; and, I suppose, why not make them on a Bill of this kind which concerns people so deeply? For myself I make no real complaint as to that, provided that I am not criticised when in return I respond in like kind.

The noble Lord, Lord Mishcon, always puts his points so eloquently. When he talks about rates and rate reform, I say, "You have to have patience". We are still in 1983, and perhaps I should say no more than that. otherwise I shall be in very big trouble. The noble Lord spoke about people saying, "Bash the Greater London Council". My goodness! there art many more people apart from those of us on this side of the Chamber who would like to do that in more ways than one, and in regard to more than one subject. The noble Lord also spoke about people saying, "Why not take transport away from the GLC?" Again he tempted us so greatly, but all I can say is that we shall have to wait and see as to that.

The fact is that the Bill has been drawn up for specific purposes that are clearly laid down. It is to do with restoring some kind of sense in terms of subsidy. It is there to provide a greater clarity than at present exists. None of your Lordships opposite has said other than that there is a need for clarification and clarity and a level beyond which there will be no legal challenge. I should have thought that that was a great plus for everybody concerned. If to arrive at that point means getting into the nuts and bolts in a way that, on the one hand, noble Lords seem to like and, on the other, some seem not to like, then so be it. The fact is that, if I dare bring the noble Lord, Lord Underhill, back to the amendment after one hour, I would have to repeat what I said at the beginning: that the Government have to resist the amendment.

Lord Sefton of Garston

Is it the intention of the Government, under Clause 4(5), when they have finalised their decision, to report that decision to Parliament?

Lord Bellwin

I should be rather astonished if the Government has to bring back to Parliament every note of guidance to every authority. I should have thought not. Should it be otherwise, I will tell the noble Lord.

Lord Underhill

I do not think that the noble Lord the Minister has to tempt me to get back to the amendment, because no one can complain that I have given a Second Reading speech in the course of dealing with any of the amendments I have moved. The hour's debate that we have had has been very valuable—not just on these amendments but in showing a difference of outlook between those of us who believe in transport for the community and those who have other outlooks on it; and also, frankly, (despite all the words that have been used) for the outlook upon confidence in local bodies to take local decisions. Running through this Bill and through what has been said this afternoon—and I do not want to tempt Lord Boyd-Carpenter to speak again, but he as good as said it—is that these bodies should no longer continue the analysis of transport issues. Take it away from them—that is what he said. It is no good the Minister tut-tutting—

Lord Boyd-Carpenter

The noble Lord has tempted me because he has misrepresented me. I answered a question from one of his noble friends explicitly to say that I favour taking away transport from the Greater London Council. I very much hope that my noble friend and the Government in due course will take action to do that. Precise methods of doing it are a matter of judgment and tactics. I expressly said that I did not include in that hope the other metropolitan authorities. If the noble Lord will look at Hansard tomorrow he will see that that is the case.

Lord Underhill

If I have misquoted the noble Lord, I shall apologise. He said that if the authorities were doing their job there would be no need for the Bill. That was in the plural and not the singular. I accept what he has said about not knowing about the other areas. The only trouble is that this Bill does concern other areas. It concerns Tyne and Wear, West Yorkshire, South Yorkshire, West Midlands, Merseyside and Greater Manchester. These are vast areas. Frankly, if we are not going to take them into consideration, then we ought to have had a separate Bill dealing only with London and leaving the other areas alone. Otherwise, frankly—and I am not going to tempt Lord Boyd-Carpenter again—one should be very careful about coming to any amendment to this Bill without the prefacing words: "I am talking only about Greater London". Otherwise, noble Lords will get a false impression of what Members are saying.

As my noble friend Lord Sefton has said, we are not challenging the right of central Government to fix the national grant for any service. In this case, it fixes it under TSG. We are not arguing that at all. What we are arguing is that when a local body responds to the pressures from its own people, when it responds to the needs of its own people, and says, "We must do this and we will pay for it", the Government start interfering. Some interesting things were said in this debate. Higher subsidies mean more inefficient undertakings. You can toss that off as a phrase; but it is said. But I want proof; I want evidence. My noble friend Lady Fisher quoted the West Midlands. Later on upon another amendment we shall tell you of the consultations which some of the PTEs and PTAs have carried out into their own workings. They are not just spending money for the sake of it. Let us remember that all these people are themselves ratepayers.

Some of the things that have been said disregard the need for some of the services. I will give one figure, and one figure only, off the top of my head. I believe that we were told that at Tyne and Wear 40 per cent. of the people have to use public transport to go to work—that is, those who are working. That affects the employers. In London prices could affect London weighting and the cost of salaries and wages in London. Transport, therefore, is not something just quoted in the sky. It affects ordinary people's lives, industry and commerce. That is why the various PTAs and PTEs feel it necessary to respond to the needs of their people. That is what we are arguing about.

I listened very carefully to the noble Lord the Minister outlining the criteria. I prefer to read in Hansard what he has said, but I have a pretty good idea that he said what he said at Second Reading. If they are merely going to interfere in the plan after all the discussions the authority would have had and are going to propose modifications, then we propose taking that part out of the Bill. I come back to the question of how the Secretary of State is going to interfere and say, "You must change the plan this way or that way". Local details. Local information. No PTE is going to run services for the sake of running services—with nobody on them. I have heard comments in this Committee suggesting that because a bus is only one-third full, it should be taken off. What do people do? Do they walk for four, five or six miles? No service is to be provided. That is what the PTEs and the PTAs are doing. We have had an interesting debate and some disclosures on the Government side which may be very helpful in looking at other proposals in the Bill, but I would prefer to read what has been said. I think that the best service I can do is to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.38 p.m.

Lord Underhill moved Amendment No. 30:

Page 5, line 2, leave out from ("question") to end of line 5.

The noble Lord said: I will not continue with the previous arguments. We are proposing to delete certain words from Clause 4. We emphasise that there is nothing in the Bill which prevents a PTA from exceeding the guidance figures but, as we have heard in the previous debate, Clause 4(5) provides that when the PTA submits its three-year plan to the Secretary of State, he shall give his guidance figure for the first year of the plan; and if the proposals in the first year of the plan involve a figure of revenue support greater than the guidance figure then the Secretary of State can tell the PTA in what respect the plan, needs to be altered to take account of his guidance".

As I said in the last debate, this power may be used for very detailed interference in the plan. It still gives more encouragement to challenge any determination in excess of guidance. Let us remember that, while we have had assurance after assurance given that the decisions are to be taken locally by the authorities, there is always the threat—and the threat is made as completely as you want in the Government's White Paper, on which there was no consultation and which was issued at the same time as the Bill—that if an authority does not accept the guidance it lays itself open to court action. That is quite clear. There is encouragement after encouragement given in the Bill for people to take that action.

If there is this encouragement for a determination in the courts in excess of the guidance, it further indicates the reality that—while it is a plan to be worked out solely by the PTE in the first instance and then given to the PTA for approval—the Secretary of State at the end of the day is to have powers to tell a PTA to change its plan. That is what the Bill says. The clause reads: any modification proposed by them would need to be altered to take account of his guidance. That brings in all the detailed points to which my noble friend Lady Fisher referred.

The amendment leaves the provision that, when the plan is presented to the Secretary of State, he may give guidance on the maximum amount of revenue grant. The amendment would delete that part of subsection (5) under which he can indicate to the PTA where the plan should be modified. And, make no mistake about it, it is clear from the Bill that, if a PTA did not take notice of his suggestions to change this or that, it could be held as an excess of its power, and it could be challenged in the courts and have action taken against it, or even, as the White Paper states, a surcharge on councillors.

Therefore, the Secretary of State has this power. I hope that the Minister will tell us quite clearly, if the Secretary of State is to retain this power in the subsection to indicate where modifications should be made in the plan, how he will do the things which my noble friend Lady Fisher raised? How is he to say that things should be changed? How is he to say: "You should not run this number of services?" That is what it means. How is he to say that services are being run too frequently?

I hope that the Minister will not say that all this will be talked about on a later clause, when we discuss more efficiency. He can say to the PTA what modifications there can be in their plan. I should like to know how he will do this, how he will collect the information, how many civil servants there will be to analyse this and how decisions will be taken without regard to the needs of people in the locality. I beg to move.

Lord Bellwin

I do not think that this amendment is in the best interests of the authorities, and I am sure that it stems from a misapprehension as to the Secretary of State's power in Clause 4(5) to suggest modifications to the plan. The purpose of that power is to enable the Secretary of State, where his guidance differs from the levels of subsidy which the authority propose in their plan, to suggest to the authority ways in which their plan might be changed in order to comply with his guidance. But, just as the authority can ignore the guidance, so, too, can they ignore these suggested amendments to their plan. The authority are not bound to the modifications suggested. Because the provision appears near the end of the clause, your Lordships might feel that it is the last step in the proceedings. This is not so. The last step occurs, in fact, under the provisions of subsection (1), where the authority are left free to decide the plan and the level of subsidy.

Having said that, it must be helpful to authorities to know the views of the Secretary of State on their plans, and his view of the ways in which they might be adapted to accord with his guidance. How else can they decide whether or not to keep within that guidance? They may, nevertheless, decide to keep within the guidance, but not to adopt the Secretary of State's modifications; they are able to make alternative changes of their own. So the authorities are left with complete freedom to decide matters under Clause 4(1). The amendment would not serve a useful purpose. Worse, it would leave authorities unclear about the Secretary of State's view on the way in which the plan might be adopted to accord with his guidance. Indeed, I think the amendment would be a hindrance to the authorities and that is why we cannot accept it.

Lord McIntosh of Haringey

I have noted that, in his speeches on the last amendment and in his reply to my noble friend on this amendment, the noble Lord the Minister has not made any attempt to deny the allegations made by my noble friend Lady Fisher. If the Committee will remember, she gave examples of the kind of inquiries which are already being demanded of passenger transport executives—inquiries about lead times and about routes. She even talked about examining the stubs of bus tickets. If that is not the case, and if the civil servants are not getting into that sort of detail, surely it is incumbent on the Government to deny it and to give some convincing evidence that these allegations are untrue. As it is, I am afraid that the Minister's response to this amendment is quite unsatisfactory, and it is not any good pretending that it is in the interests of the authorities that these words should remain. If it is really the intention of the Government to fulfil their proper responsibilities with regard to the control of central Government expenditure on public transport, then we must accept that there is a limit to central Government subsidy which is to be devoted to that purpose.

I have to say, again, that that is not what this Bill is about. This Bill is about the level of revenue grants given by local authorities, and not about the level of subsidy given by central Government. If it is the intention—and I would not accept that that was reasonable—to control the level of revenue grants to local authorities, on the grounds that it is alleged that some authorities have been extravagant in their revenue grants, no matter that they are making their grants after submitting themselves to election by the people of their area, then it is proper that the Government should give some guidance as to the maximum amount of the grant.

What cannot be proper, and what does not follow in any way from the arguments that have been made so far, is that the Government should intervene in the detailed running of the executive, and should give detailed indications to the authority on the respects to which the plan, or modification proposed by them, would need to be altered to take account of his guidance. That is saying, again, that the civil servants will do these detailed jobs about local transport planning, which ought to be done by the professionals and which ought to be controlled by the politicians, who are responsible in their own area. There should not be a single civil servant in Marsham Street concerning himself, or herself, with these matters. Until the Government are able to give us the assurance that there will not be that sort of detailed intervention, that sort of detailed sloughing around in matters of local responsibility. Otherwise they will not carry conviction in their opposition to this amendment.

Lord Teviot

Before my noble friend replies, I should like to answer one or two points made by the noble Baroness, Lady Fisher, and the noble Lord, Lord McIntosh. I cannot see anything too terrible about the Ministry of Transport knowing details of passengers carried and so on. If they do not know the nuts and bolts, how on earth can they give an opinion at all? As regards central Government knowing about passengers carried, I think that the people, too, should know how many passengers are carried on certain routes, because people need to understand why certain things are done.

I know that people feel very strongly in certain areas where services are working well, such as the West Midlands and Tyne and Wear, which have integrated transport systems. What is wanted are very full services. We want people to travel on them. If central Government know the details, that does not mean that they will cut out buses on Sundays or in the early evenings, just for the sake of doing it. At the end of the day, the buses must carry more people, and it is better to maintain a service than to cut it out altogether. I do not think that this amendment would help the Bill at all. As regards counting the number of tickets on the floor, an authority will want to know the way in which drivers and conductors work. I do not see anything too upsetting about that. Everyone should know, and not only central Government.

Lord Sefton of Garston

Was the gist of the noble Lord's speech that central Government will not insist on getting these details and going into them?

Lord Teviot

No. I said that if central Government are to give an opinion they should know about everything that is going on. If they do not know what is going on, we might as well not have the Bill.

Lord Tordoff

This is a circular argument. If the Bill is to work there will have to be an enormous number of civil servants. It goes back to the point made by the noble Lord, Lord Boyd-Carpenter: the only way to get out of that is to demolish local government. That is the track we are going down.

Lord Bellwin

On the point which has been made about information, may I say that, rightly or wrongly, information is not being demanded of PTEs. My noble friend Lord Teviot made a good case as to why it is necessary to have certain information. I doubt whether many would quarrel with that argument. However, the fact is that a consultation document is in existence. It sets out proposals for the content of the plans. We are looking forward to receiving the views of the PTAs and the PTEs on it, which indicates that we want it to make sense to them as well as to the Government and to everybody else concerned.

Lord Sefton of Garston

I have in front of me a document which the Government Front Bench did not have before them yesterday. It is the Department of Transport's revenue support assessment model. This model will be used to determine the protected expenditure level. I should like the noble Lord to stop me if I am wrong. I have only just seen this document—the Government Front Bench did not get it until yesterday—so I may have it wrong. One of the questions they will ask—the noble Lord seems to know what they will ask—is: changes in fares, to the extent that this is not a simple transfer. Could the noble Lord explain to the Committee just what that means in relation to the information that the department is going to insist on?

Lord Bellwin

One of the great weaknesses throughout has been the refusal of the association even to talk about this matter. The noble Lord says that there has been no consultation on the White Paper. They did not respond to the wish for consultation. This document says quite clearly: "These are proposals. Come on, PTAs; come on, PTEs. We want your suggestions about what should be in the plan. Make your suggestions. Then let us talk about them and agree them together". That, to me, makes sense, and I am sure that it makes sense to the noble Lord, Lord Sefton of Garston.

Lord Sefton of Garston

What does it mean?

Lord Bellwin

That we should discuss it—"and if you do not like what it says, let us see what else you suggest." That is what it means.

Lord Sefton of Garston

But what does this mean?

Lord Bellwin

What is the noble Lord referring to?

Lord Sefton of Garston

I have just read it out: changes in fares, to the extent that this is not a simple transfer. I take the noble Lord's point, that they will need information, but what does that particular information convey to the noble Lord or to them?

Lord Bellwin

Probably it conveys as much to me as it does to the noble Lord, Lord Sefton. But that is not going to help either him or me. It is there for discussion, and that is what I expect to take place.

Lord Underhill

The noble Lord has referred again to the AMA. He should not say that the AMA did not want consultation. They were not given a chance to consult on the White Paper. It was published on the same day as the Bill. They were not asked to support the framework of the Bill or to criticise it and put forward alternative suggestions. I was at the offices of the AMA when we collected copies of the Bill and the White Paper. They had no chance to consult. Until the Bill is passed, why should they discuss how it is going to be implemented? They were prepared to discuss the framework of the Bill and they had one meeting with the Secretary of State. I believe the noble Lord referred to that meeting earlier this afternoon. Therefore, they were prepared to meet him. And there was another meeting at which the Under-Secretary of State at the department was present.

Lord Mishcon

May I take the Committee down a different path? This is not because I do not follow the same path as my noble friends who have already participated in the debate: it is because I want to take a different route in recommending the amendment to the Committee.

The procedure we are discussing is that the Secretary of State fixes, on advice, an amount, and the authority fixes an amount which is above that fixed by the Secretary of State. The amendment we are dealing with relates to words in the Bill which provide that if that happens the Secretary of State may point out to the authority, no doubt in some detail, the way in which he considers they ought to modify their plan in order to get either to his figure or nearer to his figure. The amendment seeks to delete that provision from the Bill, since it is a power given to national Government at the centre to do just that. In concentrating upon the other path, the members of the Committee are omitting, in my view, the major path towards a decision as to whether or not this amendment should be agreed to.

The Minister has said throughout that in his view the Bill is unlikely to worsen the relationship between central and local government. If these words are in the Bill, there will be an official document, which everybody can read, which points out that central Government differ from the transport authority and have made recommendations to it (I put it no higher than that) to alter its plan and its budget. Perhaps noble Lords would take it for granted that the authority does not agree with central Government. From that, two things flow. First, because the document is issued by the Secretary of State and therefore carries that amount of weight, it is an open inducement to anybody with knowledge of that document to charge the transport authority with expenditure which has gone unreasonably above the limit. The evidence of the Secretary of State's own document will be used. It will be said that the authority was warned about excessive expenditure and acted unreasonably because it did not accept what had been advocated in order to bring down its budget, if I may use that loose phrase.

What happens? The ratepayer, so incited, or the political person who wants to damage the authority because he does not like its political complexion, thereupon takes the authority to court. What does the judge do then? The judge is presented with an argument on behalf of the disgruntled ratepayer or the individual about whom I have spoken. The advocate before the judge says, "You can see how unreasonable the authority is. Central Government advocated modifications to this plan, and did so under the Act". The authority then says to the court, "We think that the Government did not take into account the social, environmental and other local considerations. That is why we did not want to follow the Government's amendments". The Committee is inviting by these words a conflict or an argument—possibly even a battle, and most likely it would be that—between central Government and the local authority in our courts. I am not overstating this; I respectfully submit to the Committee that I am not overstating this point in any way at all.

Your Lordships may ask, "If this were not in the Bill, what would be the reasonable position? Must central Government be quiet and not say a word?" Not a bit of it. We have been having the relationships of central Government and local authorities for goodness knows how many years now. There are local authority associations, and there are ways of dealing with the matter at local government level, both generally and particularly. If this clause were not in the Bill, there would be informal discussions between central Government and local government. Some of us might object to that but obviously it would be perfectly proper to say, "You're wrong. There are ways of doing this otherwise."

This would be done in the normal, informal way without any evidence being produced and without any document of this kind, which could be used. I shall not say that the present Secretary of State would use it, and I hope that I am right in having that confidence in him. But another Secretary of State might use it. He could say, "Don't think I am playing politics here; I am carrying out a duty—certainly a permissive power—that was imposed upon me under this Bill. It is an official document."

I do not wish to exaggerate this point because, as I have said, I always feel that one loses strength if one exaggerates. But I do ask the Committee to pause and consider this matter. I have made this point before, and we have our allies in various parts of the Committee. I am not on the point now of the complete independence of wild and woolly authorities. I am referring to the point that we must not legislate so as to see that the very words we use—and these are the words we are trying to remove—would permit the Secretary of State to invite alternative plans to bring the amount up; and would even indicate that a Secretary of State was lacking in his duty if he did not take advantage of that provision. We are walking into the arena of the unreasonable amount spent; the unreasonable charge upon the ratepayer by the authority. We are setting central Government against local government, not in the open arena of politics but in the courts. Is that what we want?

On Question, amendment negatived.

5.3 p.m.

Lord McIntosh of Haringey move Amendment No. 31:

Page 5, line 5, at end insert— ("( ) Any guidance given by the Secretary of State under this Act shall be given not later than the 31st December of the year preceding the first year of the relevant period")

The noble Lord said: By leave of my noble friend Lord Underhill, I am encouraged in moving this amendment by the words of the noble Lord the Minister when responding to Amendment No. 21 yesterday. Perhaps I may remind the Committee of that which the amendment sought and what it was that the noble Lord said. The amendment sought that any advice given by the Secretary of State in the preparation of a plan should be given not later than 31st March of the year preceding the first year of the relevant period; that is, the first year of the three-year period for which the plan is produced. Replying, the noble Lord, Lord Bellwin, said: While I cannot accept the amendment I offer the Committee the assurance that the Secretary of State will do his best to meet the time-table it would require. If there is concern that the executives, for example, may find themselves held up in carrying out their duty to prepare their plan by delay in the giving of advice by the Secretary of State, I would point out that they are required only to take into account any advice given. If advice is not given then they can proceed without it. If it is given very late in the day, then probably not much account can be taken of it".—[Official Report, 28/2/83; col. 10141]

That amendment referred to the period available to both the executive and the authority to consult together and prepare the plan, which they would then submit to the Secretary of State in order to secure his guidance. Presumably the words "advice" and "guidance" mean very different things, otherwise different words would not have been used in different parts of the Bill.

It was reasonably said by the noble Lord the Minister that there were matters in the preparation of the advice which could be out of the control of the Secretary of State, and that the Secretary of State could find himself in an impossible situation if he were obliged by statute to respond to a particular date. On that basis, and on the basis of the other statements made by the noble Lord, Amendment 21 was withdrawn.

The situation with regard to this amendment is rather different, because here we are asking that there should be a fixed date for the preparation and publication of guidance to the authority in order that the authority may set its precept for the following year. I do not need to remind the Committee that the time available between 31st December and the precept, and then the rate-setting time, is very short. There is a serious danger, if guidance arrived later than 31st December, that the authority may find itself giving inadequate consideration to the guidance; inadequate for the proper preparation of its precept in time that it may go to the district and borough councils for them to prepare their rates, and for it then to be promulgated in time for the rates to be collected from 1st April.

There are, therefore, extremely serious constraints on the time of the authorities after 31st December. Indeed, recent action by the courts has shown that unless authorities give the most detailed line by line, clause by clause, consideration to their budgets—can show that they have given them that degree of consideration—and can show that they have paid attention to all the legal advice which they are forced nowadays to take into consideration when preparing their budgets, then they are liable to have even the most reasonable budget overturned in the courts. It is ludicrous, but that is the case.

It is for that reason that the very least of the help that can be given by Government is to agree on the date of 31st December for final receipt of guidance from the Secretary of State. There is nothing very outlandish about that. After all, the transport support grant and other grant decisions are normally indicated before Christmas and, if possible, well before Christmas. Certainly the housing grants can be given and should be given as early as October. We are not asking for anything that is out of line with Government practice in other respects in their relationship with local authorities. This legislation represents the first occasion on which the new protected expenditure level will be enacted and will have to be taken into consideration by local authorities, and we are simply asking that local authorities shall be given the same opportunity and courtesy to act responsibly and within the law as they ought to be and are in respect of the transport supplementary and other grants.

There have been occasions when these other grants have been given late. There have even been occasions, not only under a Conservative Government, when the grants have been given after Christmas. It will be difficult for Government to comply with a statutory provision such as that proposed in this amendment; I accept that. But unless we have that degree of protection in the new circumstances in which the metropolitan authorities find themselves, then there is a serious risk that we shall be engaging in the kind of damaging and non-productive legislation to which my noble friend Lord Mishcon has just referred. I move this amendment in the hope that the Government will see it as something that is in keeping with the spirit of much of the rest of this Bill. I beg to move.

Lord Bellwin

May I say first of all, as I did when Amendment No. 21 was moved, that the Government are very sympathetic to the point the noble Lord is making. Indeed, we fully accept that the Secretary of State must issue his guidance in good time for authorities and executives to take account of it. My goodness! I have been in many situations myself when I needed that kind of guidance or decision far sooner than I was able to get it. So I certainly appreciate the point the noble Lord makes.

As a target the date is not at all unreasonable; it is a perfectly reasonable one that the noble Lord suggests. For 1983–84 the Secretary of State did issue his provisional guidance—and of course his guidance could be only provisional in advance of the passing of the legislation—but he did issue it on 5th November.

However, the amendment goes further than setting a target: it would create a statutory limit. Once again, that could be dangerous. Whatever the circumstances, the Secretary of State would be bound to issue his guidance, even if all concerned were agreed that it might be better, in some circumstances, for there to be a delay. For 1983–84, the amendment would prevent the Secretary of State from setting PELs at all, since he would have to have done so before the end of last year, before the legislation was even in effect.

I cannot accept the amendment, but I want again to offer your Lordships and the noble Lord, Lord McIntosh, the assurance that the Secretary of State will of course do his utmost to meet the timetable required. We would normally expect that the guidance should be given in October or November; that is certainly the intention. But to have a statutory requirement for the unforeseen is further than one would want to go.

Lord Underhill

The Minister has had much experience of local government legislation in this House. May I ask him whether the House has passed legislation on matters where datelines of this kind have been inserted? Surely it is not wrong to have a statutory date, because then the Government know how they have to act and the local authorities know.

Lord Bellwin

The noble Lord asks me a very good question. I really cannot think offhand of an example; of course I may have egg on my face for saying that. I shall certainly check and I shall write to everybody who ought to know, not least because I am fascinated myself. I do not think there is such a case, but I shah certainly be in touch and let the noble Lord know.

Lord McIntosh of Haringey

Even assuming the noble Lord's memory is correct, that there are no references to statutory dates in legislation so far as it affects the Government, I do not think he will deny that there are statutory limitations on what local authorities must do. They certainly have fixed dates by which—for administrative reasons, if not for legal reasons—they have to declare a precept and declare a rate in order that the business of local authorities may proceed.

The noble Lord also said that there might be occasions when all concerned might be agreed that delay beyond 31st December would be desirable. I frankly cannot conceive of such a situation, and I very much doubt whether the noble Lord can. It cannot conceivably be in the interests of local authorities to have guidance delayed, unless—I put it to the noble Lord that maybe he means this—it is intended that the guidance should arrive so late that it should not be, in accordance with his speech on Amendment No. 21, taken into account. I do not think he meant that; I think he meant that guidance should arrive in time to be taken into account. I do not think he can imagine a single circumstance in which the local authorities would wish for delay.

I really wonder whether he is not protecting the Secretary of State too much against possible delays within his own administrative machine, and whether the Secretary of State would not wish to have this statutory stick with which to ensure that those reporting to him do come up to scratch and produce the results on time. However, because the Minister has been so conciliatory about this, and in view of what he has said, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

5.14 p.m.

Lord Underhill moved Amendment No. 32:

Page 5, line 5, at end insert— ("( ) When the Secretary of State gives any guidance under subsection (5) above he shall indicate to the Authority what maximum amounts of revenue grants it would in his opinion be appropriate for them to consider making to the Executive for the second and third years of the relevant period.").

The noble Lord said: We are still dealing with subsection (5) and the power of the Secretary of State to prescribe the maximum level of revenue grant which in his opinion is appropriate to be made in the year in question. This amendment seeks to provide that if the Secretary of State is to have this power it should not be confined just to the one year. I say that because under the Bill the Secretary of State will require the PTE to prepare each year a plan for a three-year period. That plan of course has to go to the PTA for approval. I suggest that there is little value in having a three-year plan if the decision on amount of revenue grant is to be given only for the first year. The Minister has emphasised that one of the features of this Bill is to achieve stability. If there is to be stability, it is reasonable to expect the Secretary of State to give an indication of what he is prepared to allow over the whole of the three-year period of the plan.

I know that the Minister may say that we cannot prejudge events. Of course, we have said that in regard to other amendments, and therefore we have asked for power to be able to increase the amount of revenue grant; we have also said that account should be taken of the economic conditions prevailing at the time. We recognise that a clear determination may be difficult. The amendment would require the Secretary of State to give an indication of the revenue support which a passenger transport authority may expect for the second and third year of the plan as well as for the first year. This seems so reasonable. If the authority has to produce a three-year plan, each year a rolling programme for the next three years, then the authority must have some indication of what is going to be the amount of revenue grant.

Having prepared a three-year plan and had it approved, if the Minister is to have the power to make modifications to that plan, and in the second or third year the revenue grant is slashed by 25 per cent., then the whole three-year plan is just useless, because it will mean a great deterioration of services. Therefore, this seems to me a commonsense proposal. We have not had one amendment accepted. I hope this may be such a sensible amendment that the Minister will feel he can accept it.

Lord Bellwin

I think that it would be true to say that the wording of the amendment bears two interpretations. One might be that when the Secretary of State gives his guidance as to the maximum amount of subsidy which would in his view be appropriate for the coming year under Clause 4(5), he should also give directly comparable guidance as to the amount of subsidy that would be appropriate for the two following years. I would hope that there was general acceptance that such an approach would import far too great an element of inflexibility into the planning process.

If the indication as to levels of subsidy for the second and third years were to stand firm and determine the level of protection to be afforded to such expenditure in those years, as the guidance given under Clause 4(5) determines it for the immediately following year, the Secretary of State would surely be placed in an impossible position. How can anyone in the circumstances of today hope to fix three years in advance a level of subsidy which would be able to weather all the vicissitudes of the developments of the national economy over that period? Clearly one needs to plan ahead. As the noble Lord, Lord Underhill, says, that is the whole essence of the Bill. But, equally clearly, one could not hope to set a figure which would have all the consequences of the guidance given under Clause 4(5) so far in advance.

I take it that what is really intended is that when the Secretary of State sets the PEL for the first year of the three-year planning cycle he should also give an indication of the kind of way in which he believes expenditure should move over the whole of the cycle. I have a great deal of sympathy for this proposition. But here again I believe the amendment, if interpreted in this way, would be too inflexible in its implications and might in the event have the effect of making things more difficult for the authorities and their executives rather than making life easier.

Clearly the Secretary of State has a duty to give advice on the kind of figures that they should take into account when compiling the plan. There is express provision for this in Clause 3(5). The question is: how specific should be this advice and what timescale should it cover? I believe that the amendment will leave too little scope in this respect for a flexible response to the actual needs of the situation. It may well be, for example, that advice given in the autumn, when the PEL for the following year is set, should relate only to the first two years of the planning cycle, leaving authorities and executives scope to put forward their own proposals for the third year, which could then be taken into account by the Secretary of State when deciding on his guidance in response to the plan. Alternatively, it might be appropriate for him to give more positive advice on later years of the cycle at a slightly later stage of the planning process.

In other words, a number of approaches are possible. However, I must say that in my opinion the amendment would foreclose those options in a way that would cause more problems than it solved. The noble Lord, Lord Underhill, always thinks carefully about such matters, but I wonder whether he would be inclined to agree with me that, if not the intention, that is the effect of the amendment.

Lord McIntosh of Haringey

I confess to some puzzlement at the Minister's reply. He has constantly said, in defence of earlier clauses, that the words "advice", "guidance", and "indication", mean no more than that; that they are not compulsions and that the final decision rests with the authority. In particular, when I used the words "weasel words" in referring to guidance, he objected and thought that I was being unreasonable in reading into the words "advice" or "guidance" more than was intended. Yet here he is looking at similar words: indicate to the Authority … maximum amounts … it would in his opinion be appropriate". There is no inflexibility in that, and no fixing in advance. All the amendment says is: "You, Secretary of State, have looked at our three-year plan. You have had all your detailed investigation which we have failed to object to"—that is, we on this side of the Committee have failed to object to—"so it is all there. All the inquiries have been made and all the figures have been disaggregated and aggregated again". The Secretary of State now knows as much about the local transport service as the locally elected representatives or the passenger transport executive, but the Minister is saying that he is not prepared to give an indication of his conclusion from all that detailed investigation. He is saying that he is not even prepared to indicate what amount in his opinion would be appropriate for the second and third years.

However, the whole tendency of local government has been to try to plan on a longer basis than one year. Indeed, the noble Lord has committed himself to higher financial horizons on more than one occasion and said that the proper planning of services which involve both capital and revenue expenditure should be longer than on a one-year basis. Why, then, are the Government not prepared to participate in this by giving an indication of the amount which, in the Secretary of State's opinion, would be appropriate? That, surely, is the least that an authority can ask if it is seeking to make sensible decisions about financial planning over a period of more than 12 months.

Lord Bellwin

I understand the thrust of the argument and obviously, from the authority's point of view, it would be very useful to have this. But, as the noble Lord knows himself, in so many other directions when it would be helpful—in fact, in capital matters it would be even more helpful, and some might say necessary—it is not possible to anticipate three years ahead because the figure that one gives by way of guidance is a figure to which there can be no legal challenge.

Lord McIntosh of Haringey

If the Minister will forgive me, I refer back to the TPP and transport support grant. He referred to capital expenditure. It is true that the period for which capital expenditure is authorised has gone down from the five years when TPP was first introduced, but it is still a two-year period and still more than 12 months. If it is possible for TPP, why not under these procedures when it is only guidance and not a statutory requirement?

Lord Bellwin

I was about to continue and say that here we are dealing with something which would be a figure excluding the authority from legal challenge. So clearly it needs to be as close as it can be. No figure given could be taken lightly. It is a guidance figure but it is a very important figure. To try to put this two or three years ahead is something I doubt any Secretary of State, regardless of political complexion, would ever want to do. The noble Lord should put himself in that position. After all, who knows, the noble Lord may have the problem to decide one day. The noble Lord should think of himself in the position of a Secretary of State setting figures below which there can be no legal challenge and being asked to state those figures for two or three years ahead. I think that is a nonstarter.

I have said from the beginning that from the authority's point of view it would be useful to have this, and I accept that, but I do not think in practical terms that it is possible.

Lord Sefton of Garston

Will the Minister compromise a little? We designed a railway system on Merseyside. It is not quite complete. There is another branch to be completed to make it serve the whole of the Merseyside area properly. If we do that, and, everybody knows that there are fixed track kinds of transportation which need a specific subsidy in order to bed in, will the Minister go so far as to consider the question of the first year's figures being fixed and the second and third year figures being provisional?

Lord Bellwin

The noble Lord knows how tempted I always am by a suggested compromise. Clearly, we will look at what he says, but I think that we shall still come back to the basic problem I mentioned. What we actually intend is to give advice in the spring, under Clause 3(5), in relation to the plan and the amount of grant which, in the Secretary of State's view, is appropriate for the executive to determine as the basis for its plan. At that time we shall give any advice which we are prepared to give in relation to the second and third years. When the guidance is set in the autumn the authority and the executive will know of any such advice. Because I know how useful it would be I say what I do about it, but I think that in practical terms to give a figure in one year which, two years later, could be used when it comes to challenges or whatever (if that unhappily should turn out to be the case), is going further than anyone would be willing to do.

Lord Underhill

I appreciate the points which the Minister has made. I appreciate what he said in his opening speech. If the amendment can be read two ways obviously we must look at it again, because we must not leave a situation where it can be read two ways. However, what comes out from what the Minister said is that we cannot tie down the Secretary of State, and one can understand the arguments that he put forward. But the local authority, the PTA, when it works out its plan will cover three years. I know nothing about the actual detailed workings that the executive will have to carry through, but I suggest that it cannot do this on a year by year basis. It has to plan services and the whole of its resources.

What the Minister's reply does show is the weakness throughout this Bill. We had an amendment, which the Minister rejected, that this should take account of the economic circumstances at the time. If the Government, because of economic circumstances, have to deal with their own central grant the Bill will stop the local authority from doing what it ought to do to keep its three-year plan going, because it is liable to have legal penalties. The whole purpose of the Bill will destroy the three-year plan.

We shall have to look carefully at this amendment, but I hope that when we come to another amendment noble Lords will bear in mind what the Minister said in reply to this one and the comments I have just made. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 33 and 34 not moved.]

Clause 4 agreed to.

Clause 5 [Payment of revenue grants]:

5.30 p.m.

Lord McIntosh of Haringey moved Amendment No. 35:

Page 5, line 19, leave out subsection (1) and insert— ("(1) An Authority may in any year increase the amount of any revenue grant determined under section 4(1) above at such time or times as they think fit having regard to their duties under this Act and the Act of 1968 or the Act of 1969.").

The noble Lord said: By leave of my noble friend, I rise to speak on this amendment. I will not claim that this is an insignificant amendment. I will not claim that its only intention is to clarify inconsistencies in the Bill. I will not claim that it does not have a wider implication than perhaps the Government might wish uncontentious amendments to have. I will claim, however, that this is an amendment which is in accordance with the best business principles and the best chance of running passenger transport services in our cities economically and effectively, as the passenger transport authorities are required by statute to do.

The Bill at the moment in Clause 5(1) says: An Authority shall not in any year make any revenue grant to an Executive except in accordance with a determination made by the Authority under section 4(1) above". That allows no flexibility whatsoever to an authority to deal with the unforeseen circumstances which arise in any business in the course of a twelve month.

Let nobody think that in passing this amendment we would be encouraging authorities to make additional grants, still less that we would be encouraging local authorities to raise supplementary precepts for the purpose. I have been involved in the raising of supplementary precepts. Your Lordships will know that there is nothing more unpopular in the world than a supplementary precept. Nobody would do it unless they absolutely had to in fulfilment of some previous commitment or in the face of some unanticipated disaster. Politically a supplementary precept is death, as was proved to the Greater London Council less than two years ago.

There is no temptation for authorities to raise supplementary precepts for the fun of it, but authorities do, in their consideration of all other services, have some flexibility about the amount of moneys which they allocate to a particular service. They have that flexibility in two ways. I am sorry to repeat what are very simple points but I think that they are necessary in view of the very inflexible terms of this clause.

Authorities are able to allocate more money to one service at the expense of another by virement within the terms of the local government Acts and they are able to do so by using contingency reserves, which can be revenue or capital, which they maintain for those purposes. In that way—for example, if there is a very hard winter and they have to spend 10 times as much on salt or on road clearing—they are able to protect the lives or safety of their citizens by keeping the roads clear in times of adverse weather. They do not always do that but that at least is possible to an efficient and flexible local authority, and there is nothing illegal about it.

Just as it is necessary to adapt to circumstances in the course of a year for one service, so it could well be necessary in the course of a year so far as the public transport service is concerned. The very example that I gave of bad weather, which costs the local authority more in keeping the roads clear, will also cost a public transport authority more. It will lose passengers and have greater difficulty in maintaining its services and service obligations, and it may find itself in financial difficulties as a result of a perfectly laudable attempt to continue services under severe conditions.

I hope that no authority would go as far as London Transport did once when I was involved with it, when it forgot to put anti-freeze in the bus engines and found itself with a large proportion of buses off the roads as a result of that and a considerable expenditure on repairing the engines. That is not the kind of emergency which we would hope to see, but nevertheless, there are genuine emergencies.

There are occasions when it will be necessary for a passenger transport executive to incur additional expenditure to meet its other obligations. The amendment which is proposed is that: An Authority may in any year increase the amount … determined under section 4(1) … at such time or times as they think fit having regard to their duties under this Act and the Act of 1968 or the Act of 1969".

That is not an open invitation to spend more money, because it is spelt out that there should be the limitation of it not only in terms of the Acts of 1968 and 1969—we are well aware that those Acts have been somewhat downgraded in the course of the last few months by the debates on this Bill—but also by the provisions of the Bill itself. In other words, every bit of financial control which the Government are claiming to bring into the public expenditure on the transport service will apply also under this clause.

There is under this amendment very strict legal constraint on the ability of authorities to make such extra grants and there is, as I have said, very severe political constraint. because no authority will do so unless it is absolutely forced to do so. But to deny a transport authority the same ability to use virement or contingency financing for genuinely unforeseen contingencies in order to meet their other obligations would be perverse.

I very much hope that, even if the exact wording of this amendment does not commend itself to the Government, the Minister will be able to say that the principle—one which is well accepted throughout local government—is agreeable to him and that he will find some way with us of including it in the Bill. I beg to move the amendment.

Lord Sefton of Garston

May I spend a few minutes supporting this amendment. We have a situation on Merseyside where the cross-river traffic is by private cars, the railways and, to a lesser extent, the ferries and we also use buses through the tunnel. We could have a situation where labour disputes, which are not unknown on Merseyside, could stop one of those forms of traffic. At that time it would be essential that the local transport authority should spend more money on providing an alternative. That is the kind of emergency that may well go on.

If this clause does anything it pinpoints the dilemma that the Government are in when they say, "We do not want to get into detail. We only want to look after the national economy. We do not want to bring any undue pressure on local authorities. We really want to leave them free. We are not even saying that they can only spend, in the case of Merseyside, say, £40 million. They can spend more if they want. All they have to do is to take a chance, go into court and pay the surcharge". That is what the Government are saying. This provision does not say that. This clause in the Bill puts a specific prohibition on the spending of any more money other than that agreed at the beginning of the year. It does not even leave the authority open to go to court and be summonsed to be surcharged.

I think that the noble Lord should, if he thinks about it, at least look at this clause again if he is not prepared to accept the amendment now. All that this amendment does is to give a local authority the possibility of finding a little more money in one year and even then taking a chance of surcharge.

Lord Bellwin

The problem here is that the noble Lord, Lord McIntosh, is quite right when he says that this amendment would defeat a principal objective of the Bill to provide stable, efficient and cost-effective local transport. The amendment would enable an authority during the year to redetermine and increase the amount of revenue support to its executive. We designed the Bill to provide for only one grant determination each year quite intentionally, so that the determination is based on the three-year plan and is properly related to well-thought-out policies. Services can be planned and provided for on a stable and rational basis. But the amendment would enable an authority to provide further subsidy during the year, perhaps to finance proposals not provided for in the plan, and so the effect would be to bypass the certainty and stability of the planning procedure. An executive would be able, for example, to negotiate high wage settlements or, for whatever reason, increase its services, covering the cost by further subsidy from the authority rather than, say, by reducing costs elsewhere or financing or increasing fares. I think that is not good financial practice. It would certainly encourage inefficiency and poor financial control. It is deficit financing.

The noble Lords, Lord McIntosh of Haringey, and Lord Sefton of Garston, suggested—not unreasonably—that serious problems could arise if an authority was not able to provide additional revenue grant during the year to cover unforeseen circumstances, which would otherwise result in a deficit, because it was not practicable for the executive to adjust its revenues and make changes to meet its statutory duties to break even. Such a deficit could be covered either by the executive borrowing on the open market or from the authority or by the unplanned use of reserves. This would then be made good in the following year's plan by making an appropriate adjustment to the amount of revenue grant provided, by raising fares or, alternatively, by planned use of reserves which would then, by virtue of Clause 2(3), relieve them from the duty to break even so far as the deficit was covered by that planned use of reserves.

It is important that I assure your Lordships that there are remedies available to executives to cover unforeseen circumstances arising during the year without the need for increasing grant in that year. Our objection to the amendment is that it would enable an authority to increase its subsidy to finance proposals not provided for in the plan. That is the dilemma. I do not think I can help with this amendment. It is fundamental to the Bill and I fear I cannot go further with it.

5.43 p.m.

Lord Underhill

Before my noble friend replies, will the Minister take into consideration that the procedure by which the guidance grant is eventually reached is a long, protracted procedure? He will agree that it is very detailed. The whole possible timetable over a long period was set out by a member of the Standing Committee and the Minister who was handling the Bill in another place did not comment on or criticise the timetable which had been advanced—a very long procedure. Therefore it means that at the start of the procedure factors will not be dreamed of when the Government are considering the guidance at the various levels. We have this situation where, as we saw from the previous debate on the other amendment, we must not put the Secretary of State into an inflexible position; but now the authority will be put into that inflexible position.

If the authority is faced with such a situation, what the Minister is saying to us is, irrespective of circumstances, "borrow". That may be considered by the council to be uneconomic. Alternatively, he is saying "Use the reserves" but the council may not have adequate reserves. Or he is saying "Cut your services". That is what he meant. I suggest that he is being inflexible and I wonder whether he would take into account the fact that the procedure goes over a long period before the eventual decision is taken.

Lord McIntosh of Haringey

I fear that the Minister's reply has gone some way to shake my faith in his understanding of the running of an efficient business. I deliberately did not refer, when I moved the amendment, to the possibility of a local authority borrowing in order to meet unforeseen emergencies. I did not actually think that the Minister would be so unwise as to recommend that that is what an executive should do. It seemed to me to be self-evident that that would be an unbusinesslike procedure for most of the kinds of unforeseen emergencies which I envisaged when I moved the amendment. Yes, one might say that a hard winter is a one-off occasion and one might say that a borrowing in one year would be a proper way to deal with the additional expenditure incurred. One is taking the risk that there would be a mild winter next year; but let us take that risk and let us not have any new elaborate procedures for extra financing for that purpose.

However, that is not the only kind of unforeseen expenditure which may arise. In particular, there are certain kinds of unforeseen expenditure which are completely outwith the control of a passenger transport executive or a passenger transport authority. I refer to things which the noble Lord the Minister knows very well from his own time in local government. At the time when one is preparing the estimates one does not know what the settlement will be for local authority wages or salaries. For a transport undertaking the cost of fuel is a major element which cannot be well forecast in advance. There are years when it may appear that the cost of fuel may go down; but there have been far more years over the past 10 years when the cost of fuel has risen enormously. It surely would be extremely unbusinesslike to borrow to meet the additional costs of fuel in one year when it is known that in the following year the costs of fuel will still be high and the borrowing will have to be repaid. The Government will be unsympathetic, we assume (from the indications we have had from the Government) to any demands for additional revenue grants to meet that kind of cost.

The alternatives which the Minister has referred to are there. They are the short-term alternatives of raising fares and cutting services. If that is what the Government are recommending, the Government should say so because I believe that we are coming now to the nub, the very basis of the misunderstanding of the Government about the economics of public transport operation.

The point about the operation of public transport in this country is that it is and has been over the past 30 years working in an uneconomically favourable environment—the environment of increasing car ownership, of increasing difficulty in having some of the necessary services run economically. Yet, at the same time, there has been the social requirement for an effective public transport service; the requirement, which is not reflected in revenue receipts, of a public transport undertaking; the requirement, for example, to use our road space effectively and not spend more capital expenditure on roads by increasing the utilisation of public transport as opposed to private cars for certain kinds of journeys. These are factors which all public transport undertakings have to take into account, and there is no escape for any city in this country from that kind of problem.

That kind of problem is exacerbated if and when short-term decisions required by short-sighted and inflexible legislation, of the kind that this promises to be, are made to cut services or to increase fares. It is the experience of public transport undertakings that when services are cut in this way it is very difficult for them to re-establish themselves; it is very difficult to get the passengers back.

People go on to using cars and it is difficult to get them back to public transport again. That is the experience not just of the London Transport Executive but it is the experience, I am sure many noble Lords will agree, throughout the country. At the same time it is the experience over and over again that when fares increase beyond the rate of inflation—as they have been, despite what the Government have been saying over a number of years, including in London—passengers are lost and it is very difficult to get those passengers back.

A gallant attempt has been made in London to do this. I apologise to my noble friends who object to continual reference to London; they have their chance to widen the area of debate. But when passengers are lost in this way attempts can be made to get them back. The Fares Fair attempt did get some passengers back, but it is an extraordinarily difficult process. If the only alternative open to an undertaking in the course of one year is to raise fares or to cut services then it is in danger of taking decisions which are made necessary in the short term by the kinds of obligations, which no private business would accept, of making decisions which would be to the long-term damage of the undertaking.

It may be that the wording of my amendment does not meet the needs of the Government. They may feel it goes too far in some way, although I noticed that the noble Lord the Minister did not take up my remarks that the additional grants which are made possible are constrained by this legislation, by former Acts and also politically constrained by the undesirability, from a political point of view, of an authority making extra grants. He might like to refer to that again.

However, some way must be found of allowing public transport undertakings to run as a business in the way that any private business or other local authority service would run. It would not do any damage to the type of control which the Government seek to impose over the total amount of expenditure; on the contrary, it would increase the efficiency and economy of public transport undertakings which I understand to be one of the Government's objectives.

I wonder whether the Minister can give us any undertaking, if the wording is not right, as to how he sees the type of business-like flexibility which is necessary, being achieved?

Lord Bellwin

There is not a lot that I want to add to what I said previously, but there are one or two points which are pretty fundamental to the debate on this amendment. The Secretary of State of course will take into account all representations before he sets PELs. The Bill specifically says that the financial duty is to break even, "so far as practicable". The special circumstances to which the noble Lord, Lord McIntosh, refers might well result in a proposal for increased grant in the following year. In my view the Bill is in fact flexible when it says, "so far as practicable". There is a whole host of flexibility in that phrase and I am sure that the noble Lord will concede that point to me.

Anyway, the further point is that what the Bill proposes is precisely the same as applies to the National Bus Company operating outside the metropolitan areas at present. Many points are brought out in the various debates on these amendments: sometimes there is a philosophical difference, sometimes a political difference and sometimes a difference as to administration. All kinds of differences arise. But here we have one which should not be a cause for concern because there is included the phrase, "so far as practicable", which I did not mention when I first responded to the noble Lord but which perhaps I should have done. If something came up which could not have been taken into account, I should have thought that any reasonable Secretary of State in making the arrangements for the following year would certainly take that into account. So far as I am concerned, that really is an answer.

Lord McIntosh of Haringey

I would be more convinced by that answer if the noble Lord had not insisted on defeating a previous amendment which enabled the next accounting period to be extended and to have a rather longer and more realistic financial horizon for the undertaking. However, I accept that there may be difficulties about the wording. We shall have to find some way of achieving the very essential objective of this amendment without arousing the fears which the Government have expressed as regards its implications. I beg leave to withdraw the amendment on that basis.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees (Baroness Wootton of Abinger)

We now come to Amendments Nos. 36 and 37, which appear to be alternatives. The noble Lord will presumably speak to both and move whichever he prefers, but if either of these amendments is agreed to I shall not be able to call Amendments Nos. 38 or 39.

5.53 p.m.

Lord Underhill moved Amendment No. 36:

Page 5, line 22, leave out subsection (2) and insert— (" (2) In the event that the amount of revenue grants made in any year by an Authority in accordance with any such determination exceed the amount specified in guidance given by the Secretary of State under section 4(5) above in relation to that determination, the making of those grants shall, without prejudice to any other proper exercise of the power of the authority to make revenue grants, be regarded for all purposes as a proper exercise of that power where in the opinion of the Authority those grants were necessary for the discharge by the Authority and the Executive of their general duties under section 9(3) of the Act of 1968 or sections 1 and 5(1) of the Act of 1969, as the case may be.").

The noble Lord said: The intention was that I would move Amendment No. 36 and speak to Amendment No. 40 and then when we come to Amendment No. 37 we would take also Amendments Nos. 38 and 39 according to which way the voting goes. Therefore, I am dealing at present with Amendment No. 36 and speaking also to Amendment No. 40, which has somewhat the same principles within it.

We are moving now to Clause 5(2) which contains the provision that if an authority does not exceed the amount of revenue grant specified in the guidance given by the Secretary of State, the making of such grants shall be regarded as a proper exercise of the authority's power to make grants. That, as we have been told, is the real purpose behind the Bill. In fact, the amendment which we are now discussing is one of the most crucial amendments before us tonight. We have had a number of Second Reading speeches from various noble Lords but it is really upon this amendment that we ought to have the Second Reading speeches because it deals with the whole principle behind the Bill. What it really says is that, irrespective of how the Secretary of State arrives at his guidance, it will be considered lawful if observed by the Secretary of State. There is reference in the subsections to, "in his opinion" and "what appears to him". On that basis guidance is given and any breach of that guidance could put the authority in an unlawful position.

The Notes on Clauses put the situation quite clearly. They say that this subsection: puts beyond doubt the lawfulness of grants paid to an executive where they do not exceed the amount specified by the Secretary of State". Therefore we know quite clearly the purpose of this subsection.

Amendment No. 36 replaces that subsection by a more reasonable one. It will provide protection from any challenge to a PTA which exceeds the Secretary of State's guidance on revenue grant provided it does so in the circumstances set out in the wording of the amendment. If the authority is of the opinion that the guidance of the Secretary of State has to be exceeded if it wants properly to discharge its general statutory duties, such payments will be regarded as a proper exercise of its power. An authority and an executive have their general duties—as we have been reminded time and time again by the Minister, by myself and by other noble Lords—defined under Section 9(3) of the 1968 Act or, in the case of London, by Sections 1 and 5(1) of the 1969 Act. The Minister has emphasised that these provisions are not repealed by the Bill.

The amendment would ensure that the appropriate revenue grant can be made to comply with those general duties without its being held to be unlawful. This is set out quite clearly in the wording of the latter part of the amendment. It says that revenue grants shall: be regarded…as a proper exercise of that power"— to make grants where they are made to carry out the general duties placed on the authority and the executive by the provisions of the 1968 and 1969 Acts to which I have referred.

I cannot see how the Minister can oppose this amendment and I must point out the reference in Clause 4(6) where, in giving guidance in the three-year plan, the Minister, shall have regard to the general duty under those same sections of the 1968 and 1969 Acts. Therefore, if the Minister, in giving his guidance on the plan, has to take regard of those two important sections, surely if the local PTA find it necessary to exceed the guidance grant to carry out those same principles, that should not make them unlawful? I hope that the noble Lord, Lord Campbell of Alloway, who knows more about the law than I do, will see what, in my view, is the common sense of that particular point. If the Secretary of State has to have regard to those duties, then surely we ought to put the authority in the same position so that it would not be liable for action if it should exceed the guidance grant of the Secretary of State because it wants to carry out the statutory duties under those same provisions of which the Secretary of State must have note in giving his guidance.

Amendment No. 40 has just the same principles but it adds a similar provision to the end of subsection (2). However, it does not delete any part of that subsection. It stresses that should the authority find it necessary to incur the grant over and above the Secretary of State's guidance, regard must be paid to the general duty under the two Acts to which I have referred. The common sense and the reasonableness of trying to put the PTA in a position of being lawful when it is carrying out statutory duties is the purpose of the amendment and should be supported by the Committee.

Lord Bellwin

The only thing reasonable about this amendment is the way in which the noble Lord presented it. One of the main purposes of the Bill is to provide legal protection to a reasonable level of subsidy while leaving ratepayers with their present rights to challenge excessive levels of subsidy. It could be said that the Bill actually reduces the rights of ratepayers in relation to challenging levels of revenue grant at or below the guidance. This is what the present Clause 5(2) does, in the interests of providing stability and protection from challenge to authorities if they choose to keep within the protected expenditure level.

The amendment, on the other hand, would allow the authority to decide for itself on any level of grant, irrespective of the Secretary of State's guidance, and it would receive full protection for that amount of grant. This is absolutely fundamental to the Bill. This amendment totally wrecks the whole essence of the Bill. The only condition would be that the authority must believe that grant of that amount was necessary in order for the authority and executive to meet their general duties.

The amendment would indeed clarify the law, but at what a cost! The cost would be of protecting any level of subsidy from challenge. If this amendment were to be accepted, the GLC (dare I now mention them again?) could have implemented Fares Fair without ratepayers or auditors even having a right to challenge. Indeed, if this amendment were accepted, the GLC and the metropolitan counties could, after enactment, introduce fare levels as low as those in force in South Yorkshire, or indeed lower, and simply transfer the burden of cost from those who use the transport onto the shoulders of ratepayers and taxpayers, and they could do this with complete protection from challenge. This could throw an extra burden of cost onto ratepayers and taxpayers of £500 million or more a year. The amendment would allow the authority to spend whatever it chose and not be accountable to its ratepayers. It would provide a blank cheque to the authorities. Clearly, the Government cannot accept the amendment.

As regards Amendment No. 40, I do not think that this amendment would achieve the result intended. It would introduce the yardstick of the general duty by which authorities might justify expenditure over and above the Secretary of State's guidance. There is of course no need to justify expenditure below the protected expenditure level, since that would be protected from legal challenge. The Bill as drafted does not impose any yardstick by which the expenditure above the PEL is to be justified. Authorities can make up their own minds about the amounts of revenue support to provide. If the amount is greater than the PEL, they should be ready to justify the amount in court if challenged, on whatever basis they wish. While the Bill as drafted extends protection to grants up to the level of the Secretary of State's guidance, nonetheless the protection provided by Clause 5(2) does not prejudice any other proper exercise of the authority's power to make grants.

The amendment would require a court to have regard to the general duties of the GLC or metropolitan authority in considering the propriety of expenditure above the PEL. This amendment is unnecessary because Clause 5(2) shows quite clearly that the fact of protecting expenditure at or below the guidance level does not prejudice any other proper exercise of the power of the authority to make revenue grants. So the court would be able to take account of the general duties of the authority, and indeed of all the circumstances. For these reasons we cannot accept the amendments.

Lord McIntosh of Haringey

I am very new in your Lordships' House, and I have not found my way around the Palace of Westminster as well as some other Members here. When I try to escape from the building I take different routes, and when I leave the Peers' entrance I go through a door, I find myself going past some dustbins and I land up in a court which is called Star Chamber Court. This brings back to me memories of the early 16th century, when it was possible for the sovereign to by-pass all the normal legal constraints which had been built up throughout the previous centuries and simply to say, "If I say this is illegal, it is illegal".

My ignorance of the Palace of Westminster is such that I have not learned enough about the Library to go and look up the appropriate references, but my memory of the Star Chamber Court is enough to convince me that what we have here is very much the same thing. What we have here (only we have it turned on its head, but it has the same effect) is that the Secretary of State can say to any authority attempting to act within the law—because all these passenger transport authorities, whatever Members may think about their political judgment, are attempting to act within the law; they may not always succeed, but they try—"Whatever I decide is proper is lawful. Therefore, whatever I do not decide is proper runs the risk of being unlawful".

If the Secretary of State were to say, and if the Bill were to say. "Whatever I decide is lawful and whatever I do not authorise is unlawful", we would at least know where we stand. We would know that, after nearly four years of attacks on local authorities, the Government were at last grasping the nettle and saying, "Anything you spend above a certain level will not only lose you grant, it will not only lose you the grant that you would have on the rest of your expenditure. but it will actually be forbidden by law". Therefore, presumably one would have to repeal various parts of the Local Government Acts 1933 and 1948 and the other enactments which control local government. That is not how it is expressed in this Bill, but that is the intention, and it is intended that that should be achieved by the back door.

Earlier on this afternoon the noble Lord the Minister said that if a local authority exceeded the guidance amount it would be "ill-advised" to do so. What did he mean? What is its ill-advice? What he meant was a threat, which he is not prepared to spell out, that he would be delivering that local authority into the hands of the litigious both in the area and elsewhere. He would be opening up to the courts a whole new area of litigation, which is litigation by default. It is not that you have done something wrong; it is that when you have been told in a totally arbitrary way—and all the evidence we have about the Secretary of State's advice and guidance is that it will be arbitrary—and when you have acted in this way, even though you have done your best to adhere to the statutory obligations upon you under the 1968 and 1969 Acts and, indeed, under other conditions of this Bill, you are still at risk legally.

That is not a serious attempt to remove litigation from local government and from the conduct of passenger transport undertakings. It is a back door attempt to increase the amount of litigation that will take place and it is an attempt to drive fear into the hearts of local councillors—those who have the responsibility of meeting their local obligations—without actually having the courage to say so openly. This is a Bill which is willing to wound but afraid to strike openly. It is abhorrent to all constitutional precedent in this country. This particular clause—and I apologise if I am making a speech which appears to be a Second Reading speech but I think we have come to the nub of the matter now—is the essence of that constitutional outrage. I commend the amendment to the Committee.

Lord Campbell of Alloway

As I was invited by the noble Lord, Lord Underhill, to give my support to this amendment, may I say with respect that I am wholly unable to do so because, although it is put forward in the worthy cause of clarification, nonetheless it does total violence to the principles of this Bill such as were accepted on Second Reading. I shall not detain your Lordships for long, but to suggest that this Bill is designed to create some new area of litigation is about as sterile a concept as to suggest that the noble Lord, Lord Underhill, has designed this amendment as a wrecking amendment. Of course he has not. It is an amendment put forward because of views sincerely held, but opposed owing to views equally sincerely held on this side of the Committee.

It is surely not desirable, in answer to the noble Lord, Lord McIntosh, that I should repeat anything that I said on Second Reading about the charge, a false charge, that this is designed to create and encourage a new area of litigation. Repetition is rather boring. But to suggest, as has been suggested today, that there is something rather furtive about this Bill, that it is some sort of a back door attempt without the courage to strike, I wholly fail to understand. I should have thought that from the way in which the amendments have been put down it is plain that this Bill sets out openly to do what it proposes to do. Noble Lords on the Benches opposite and elsewhere can table amendments to meet the Bill at its face value. There is nothing furtive about it.

Neither is there anything unconstitutional. I fail to understand how it can be seriously suggested—apart from mere advocacy, which is really in the air, unrelated to any understanding of the constitution in this country—that this Bill is abhorrent to constitutional precedent. I oppose this amendment, and I would oppose the suggestion that there is anything furtive, despicable or objectionable about the principles that the Bill has already adopted.

6.13 p.m.

Lord Sefton of Garston

I have been attending this Chamber now for four years. I bow to the knowledge of my noble friend in regard to the Star Chamber. I did not even know there was one. I can well imagine the frustration of some people who appeared at the time of the Star Chamber in front of that body, because to some extent I feel it now. We get a statement from the noble Lord that he does not understand when people refer to the constitutional issues raised by this Bill. It is something that members of local authorities have felt for a long time. They have felt for a long time that constitutionally under our democratic system they had a right to take certain decisions subject, of course, to the fact that overriding all that was the question whether they had exercised their powers properly in relation to a certain Act of Parliament.

They see this Bill as an affront to that constitutional position. The noble Lord may disagree with their interpretation, but I think I have portrayed clearly enough how they feel. When the noble Lord, Lord Bellwin, was replying to the amendment he said that the situation from the Government point of view was that the Fares Fair policy could not have been challenged if this amendment had been in existence. I think I am interpreting him aright. This amendment restricts the powers of the local authorities, and gives them the right to exercise those powers under the Acts of 1968 and 1969. That is all it says. It does not mention any other Act. So if this amendment was carried into this Bill it would clearly give the local authorities powers to act under those two Acts of Parliament.

I seem to be right so far, because nobody is jumping up and saying that I am wrong. May I go forward on the assumption that I am right? Surely the challenge to the Fares Fair policy took place since those Acts of Parliament became law. If that is true, then this amendment repeats the same position, and they would be open to challenge.

On the question of whether or not the Government were furtive, local authorities have a point of view and the point of view is that the way this Bill was prepared so suddenly after the White Paper, which was prepared without any consultation, and the way it was thrown at them, and the way the Government want to fix the PEL for the first year, leads them to believe that the Government were not being open with them. Amazing as it may sound, I share that point of view. If somebody says that that is not a fair description of being furtive, well I think it is. The local authorities have that feeling.

It is going to be difficult to talk about this clause and not be accused of making a Second Reading speech, because my Second Reading speech dealt with this clause and I believe that this clause is the wicked part of the Bill. A noble Lord opposite referred to being "violent to the principles of the Bill". I am hard pressed to find where the principles of the Bill are. On the one hand we are told by Government that the Bill was introduced in order to establish some fairness between different taxpayers and ratepayers, and told that it is to look after the minority interests. That is a quotation—and I apologise—from a speech made at Second Reading by the noble Lord, Lord Bellwin. Who is going to look after these minorities?

If that is the principle, what it means is that all the constitutional rights of democratic elections in this country have been wrong, and that it is not good enough that a local authority should make its decision in regard to an Act that has stood the test of time, and in fact has been tested in the courts. In the case of Merseyside it was tested in the courts. I do not accept the argument that, just because it has not been appealed, we are not going to take any notice of it. It has been tested in the courts, and in the case of Merseyside the court said that Merseyside was right and was exercising its proper responsibilities under the Act of Parliament that existed then. This amendment merely puts us back to that situation.

The question that is facing us all on constitutional matters is whether or not we are really going to go forward and place the local authorities under the control of the courts of law. Some people say that we are not. A noble Lord over there thinks that we are exaggerating when we say that this will lead to a spate of legislation, and that it will produce uncertainty in local government circles because they will never know when they are going to have to prepare briefs, pay counsel, and go to the courts to defend a decision which for years and years historically they have been able to take in the proper exercise of their duties under the two Acts mentioned in this amendment.

There is no doubt that there are plenty of people who do not accept the democratic right of people to elect an authority and give it a job to do. There are hundreds of them in our community. They do not accept the right of local authorities to govern. If that becomes any more prevalent what will happen is that local government will go down and down in the estimation of people until, at the end of the day, we shall have a rump that is no good at all in our democratic system. What we shall have is a centralised governmental system which people in the northern parts of the country will consider is away, in isolation, in another country.

One of my noble friends suggested that a certain noble Lord opposite should visit the West Midlands to see what was going on there. I made an aside which, if it was not heard, I will repeat. I suggested with humility that it was no good asking him to go there because he would not know his way past Watford Gap. That is the sort of situation that exists. I do not object to London being discussed here; in fact, the more it is discussed the better because I believe the Fares Fair policy was right. It was a policy aimed not at subsidising passengers but at trying to get a correct balance of transport distribution in the capital city, thus leading to a proper organisation of transport in the city.

In the northern parts we have the same kind of problem. Time and again the Government have been telling me and local authorities that transportation would not be considered in isolation from the rest of the community; that it should be seen as a vehicle by which we can improve the environment and the economic circumstances of people and enable them to have a proper social life. Governments have been saying that all along. Am I now to take it that that policy has changed and that transport is to be seen only in the context of pounds, shillings and pence? When one reads the documents that are circulating between the Ministry and local authorities, one must come to that conclusion. One of the documents actually states that in considering the benefits of any transportation plan we should not include its effects on society, the environment and the economy of a particular area.

I repeat—I feel that I must, although it has been said ad nauseam, including in several Second Reading-type speeches that should not have been made at this stage—that it has been said that the Government are not taking away the powers of local authorities and that they are not forcing authorities into the law courts. In fact, they are. That will be the net result. The road to hell is paved with good intentions—and the road to hell is where Britain's transport undertakings, and their relationship with local government, are going on the vehicle of this Bill. If the Government really want to demonstrate that all they are concerned about is the handling of the national economy, then in the clause they should do what they say they want to do, which is to take away from the courts the power to determine an act of difference between a local authority and the Government on the figure fixed by the Government.

Lord Bellwin

The Bill is not only about the national economy. That is part of it. I wish, first, to comment on the remark of the noble Lord, Lord McIntosh, that we are debating the nub of the Bill. The noble Lord, Lord Underhill, said it was just another amendment. It is absolutely the nub of the Bill, and I agree with Lord McIntosh about that. However, I could not agree with some of his observations when he spoke of a constitutional outrage. If anyone had to be concerned about an outrage in reference to local government, they do not have to look far from this building to be outraged at what is happening in local government. As my noble friend Lord Campbell rightly said, there is nothing "back door" about these provisions, and I do not think the noble Lord, Lord Sefton, suggested it was that.

The noble Lord spoke about four years of attacks on local authorities. I would remind him of the four years of attacks on local government by some of those practising local government. And as for the remarks of the noble Lord, Lord Sefton, about no notice having been taken of what has been happening, I want to know who is taking notice now of what has been happening these past few years in local government. I assure him that I know the way north beyond Watford Gap—I go there all the time, as he knows. I know what is happening there, too, and I know the contempt with which many people there—people not of my political persuasion—look on what is being done today in the name of local government.

When noble Lords talk about fears for its future, I would say that it is things of that sort about which they should be concerned. They should be concerned about what is happening every day in some councils—again, not far from this building—and how they are turning on its head the whole of the reputation of local government.

Lord Sefton of Garston

May I ask the Minister—

Lord Bellwin

I did not once try to interrupt the noble Lord while he was speaking. Perhaps he will allow me to complete my argument, and then I am sure he will have his chance to comment. I feel every bit as passionately as he does, and as does his noble friend Lord McIntosh, about local government and its future. I am very anxious about what I see is happening, and nothing we are proposing openly in the Bill is in any way—I say this again—to the detriment of local government. On the contrary, it makes clear beyond doubt exactly where they will stand and what they may do. At present, it is not clear what they may and may not do.

It cannot be justified in this whole debate to ignore the fact that for the last few years there has been a blatant attempt, not just to ignore what Government have said should be done by way of subsidies but to ignore many of those people who live in the authorities concerned and who are affected by what happens. I challenge any noble Lord to justify keeping the same rate for fares for nine years and charging ratepayers and taxpayers within the authority the price for so doing. That is what has happened in South Yorkshire, and is happening today, and they were talking about a subsidy to them in the current year of £70 million.

I am entitled again to make the point that noble Lords must consider what that does to the districts within their authority. It takes away from those districts the democratic opportunity to charge a reasonable rate because the precept on them is based on the decision of those in the county authority that the subsidy goes to users of bus transport, and never mind all the other services. That, to them, is their major decision. One may reply, "They were elected to do that", and the noble Lord, Lord Mishcon, commented, "It is not good enough to say that the people who pay are not the ones who vote", but I believe that is an important factor.

I prefer to come back to the basic philosophy, which I believe is right; namely, when you are the elected member of a local authority, you must represent everyone in that authority, not just one section. You must be concerned about the impact of your policies on everybody in that authority. And if you know that many of your policies are harming other people, you are obliged in all fairness to take account of that and to act accordingly. When local government moves away from that, as it is doing, there is need for concern about the future because, sooner or later, we must see what we are seeing today in this Bill. There was a revulsion to the extent that somebody had to do something, and that is exactly what we are proposing in the Bill.

Clearly, the two sides of the Committee are as much apart on this amendment as perhaps on any other. If the noble Lord, Lord Underhill, decides that the issue must be put to the Committee, that is up to him. He and I have done four Transport Bills together in this Parliament, if I may use the word "done" in this context. We went through most of those measures and, of course, we differed on many aspects of them. However, we generally agreed to differ; and I know that, for example, the noble Lord, Lord Sefton, is an adherent to the policy that the Government of the day must govern. The Government feel deeply that the Bill proposes the way that we should go. If we are debating the nub of the Bill—and I think we are—then clearly Lord Underhill will decide what action to take. I have made it clear why we could not possibly accept the amendment.

Lord Sefton of Garston

Perhaps I may be allowed to tell the Minister before he sits down that that speech was not a speech concerned primarily with this Bill, although it could well have been a Second Reading speech on the measure which carried out the last reform of local government. I do not think that consideration of this Transport Bill warrants an attack such as has just been made on the whole of local government. Under no circumstances should it warrant such an attack. But the attack has revealed quite clearly the real reason behind the Bill. As I said on Second Reading, the real reason behind the Bill is the Government's determination to show that body over the water who really rules. It was from that motive that the Bill sprung, it was from that motive that it originated, and that was when it got into the hands of bureaucracy.

On three occasions during the Committee stage I have revealed that the Government Front Bench did not know of some of the things that the ministry is doing in consultation with the executive. Noble Lords on the Front Bench did not even have some of the documents that we had received from the local government side. Bureaucracy had let them down. I admit that some things should never have been done, but I look for the reasons, because I am very jealous about preserving the basic foundation of our democratic government. That does not mean only local government; it also means central Government, all the bodies that Government set up, and the whole paraphernalia of our state. With 3½ million people on the streets those institutions are in danger.

Let me tell your Lordships' Committee what happened to local government. It is written across my whole being, because I fought like mad to prevent a Government from carrying out the reform of local government which in essence took away something that had been built up over countless years, even going back years before I was born. I defended to the death the aldermanic bench in local government. I am glad that the noble Lord nods his head. It was his party that abolished the aldermanic bench and threw into local government a completely new string of members, who had power thrust upon them.

In the case of Liverpool—I make no apologies for going along this lane; I am replying to the noble Lord, Lord Bellwin—there were, I think, 38 committees. In the 38 committees in the authority that was set up in Liverpool alter the reform of local government, which in the main was carried out by bureaucrats, at the instigation of the Tory Party—the Government of the day—there were only two members who had had previous experience of chairmanship of anything. That was the kind of government system that was created. What can one expect but that sometimes they will go to excess, that sometimes they will get in their heads an idea that subsidising transport systems is good not just for one section but for the whole community, because it affects the whole community? Of course they will get that kind of idea.

The danger is—and let me conclude on this point—that that lesson will not be learned, and in a transient period of local government there will be brought in a Bill such as the one before us that will destroy any hopes of local government regaining the expertise and experience that there used to be on the town hall benches. That expertise and experience enabled local authorities to work with central Government, even where one was opposed to the other, and to reach amicable solutions to problems that were affecting the life of the nation. That is the damage that the Bill is doing.

The trend that was started when all the expertise was got rid of, simply because central Government and bureaucracy would not listen to local government, and the damage that was then done, is being perpetuated and compounded by the Bill. The Bill is not bringing local government closer to central Government: it is forcing local government along the path that takes it further and further away from co-operation with central Government. As I have previously said, the result of that will be a highly concentrated form of government, which ultimately could lead to things of the kind that were experienced in other parts of Europe, and could well create the same type of sedition to which so many people object in Eastern European states.

Lord Tordoff

I do not think that I have made a Second Reading speech since 14th February, and I do not intend to begin another one now. I should like to return to the amendment, and make one or two simple points. From this side of the Chamber it seems clear that it is the Government's intention to take away from local authorities such protection as they had under the 1968 and 1969 Acts if there is any spending above the level determined by the Secretary of State. The Minister has several times talked about local authorities having the right to determine the level of grant to the executive. But there is no indication that he really means that—and I do not mean the noble Lord personally; I mean the Government's thinking behind the Bill. There is every indication that it is the Government's belief that the figure that the Secretary of State sets shall be the ceiling figure. If the Minister is serious in believing that there might be occasions when the authority would find it right and proper to go over that figure and be challenged in the courts, there should be some criteria relating to that position. It seems that to restore the position of the Acts that are still in existence in relation to cases of that kind is what the amendment is about.

Those Acts have now been tested in the courts. We have seen that the Greater London Council has been defeated in the courts. As the noble Lord, Lord Sefton of Garston, has said, we have seen that Merseyside has been upheld in the courts. So there is an area of understanding of what the Acts mean which perhaps did not exist two years ago. As I said in my Second Reading speech, local authorities are clear about it.

I am prepared to support the amendment because I believe that it gives the right degree of flexibility. The Government will get the Bill. The Secretary of State will be able to issue edicts to local government. But I believe that even in that case it is wise that in certain instances there should be a degree of flexibility within the duties laid down in the 1968 and 1969 Acts in which local authorities should be able to operate and be challenged in the courts if necessary, but where they know the degree of flexibility on the basis of the court rulings that have already been made. That is why I support the amendment.

Lord Underhill

I am certain that your Lordships' Committee would like this debate to be drawn to a conclusion. The discussion has revealed some very interesting points. The Minister said that he and I had been associated with four Transport Bills. He said that we had "done" Transport Bills, but in fact we have "done" public transport in Bill after Bill. Knowing the Minister's affection for local government, frankly, I was very surprised by some of the things that he said about certain local authorities and local government. I wonder whether, when he reads Hansard, he may regret some of the things he has said. I say that because it means that he has no faith in the electorate.

In debates on Monday night there were rather cynical references to the fact that we know what takes place at elections, as though it were being said, "Take no notice of them, because what you put before the electors does not really matter". But these authorities have put their transport service plans before the electors; they have had them approved. Not only that, but after running the services for a period the local authorities have gone back to the electors. They have not shilly-shallied about it. They have not tried to hide what they have been doing, or what they propose to do. They have openly put their plans before the electors, and the electors, rightly or wrongly, have approved them. Let us not develop a cynical belief that the decision of the electors does not matter, because that belief would attract comments and actions of the kind my noble friend spoke about in his last speech.

I should like to go into the question of the needs of public transport, but I do not think that time allows for that. There is a difference between this side of the Chamber—by which I mean practically everybody on this side—and the Government side about what are the needs of public transport. There is also a deep difference of view on how we should meet those needs. There must be effective transport services, but one has to pay for them. I completely agree with the Minister: there cannot be efficient services unless one pays for them. In many instances, if one does not pay for the services they will be inadequate, and indeed people will not have services.

I recall what my noble friend Lady Bacon said when she drew our attention to the fact that some metropolitan counties include vast rural areas. If they are treated purely on a pounds, shillings and pence basis, whole communities will have no transport at all, or they will have to wait hours for transport. One thing particularly impressed me when I visited Tyne and Wear last Tuesday. It was claimed that no one in Tyne and Wear country has to walk and wait for more than 15 minutes, and then they have public transport. Some people might ask: what right is there to provide a bus when only 10 or 12 people use it? That is a public service. You are not going to leave those 10 or 12 people to walk five or six miles. I would love to have a deep debate on the needs of public services and how to meet them—because this is what this amendment is about.

I do not know whether the Minister suggested that I introduced this in a very calm way. Perhaps I did; I do not know. But I said that this was the crucial issue before the Committee and I repeat it. Let us remember that the Secretary of State, when he gives guidance to the authority, has to have regard to the general duty of the provisions of the 1968 or 1969 Act. It is written into the Bill that the Secretary of State must have regard to those provisions.

We are saying in this amendment that the authority may find that the Secretary of State has made a mistake—and do not tell me that Ministers cannot make mistakes. Even departmental officials, as good as they may be, can make mistakes. It is because they do not have the local information, because they are not living there, do not know the needs of the people and do not work among them. If the PTA, in order to carry out its statutory duties, believes that the Secretary of State's guidance is not sufficient, then the amendment says that so long as they increase the grant in carrying out those statutory duties, they should not be regarded as unlawful. That seems to be an honest, straightforward case. That is what the amendment is saying. I believe that it is such a fundamental issue of fairness to the authority that I must ask the Committee to make known its view on this by a Division.

6.42 p.m.

On Question, Whether the said amendment (No. 36) shall be agreed to?

Their Lordships divided: Contents, 70; Not-Contents, 112.

Airedale, L. Lloyd of Kilgerran, L.
Aylestone, L. Lovell-Davis, L.
Beaumont of Whitley, L. McGregor of Durris, L.
Beswick, L. McIntosh of Haringey, L.
Birk, B. Mackie of Benshie, L.
Bishopston, L. McNair, L.
Boston of Faversham, L. Masham of Ilton, B.
Brooks of Tremorfa, L. Milner of Leeds, L.
Chitnis, L. Mishcon, L.
Clifford of Chudleigh, L. Molloy, L.
Collison, L. Nicol, B.
David, B. [Teller.] Northfield, L.
Davies of Penrhys, L. Oram, L.
Denington, B. Peart, L.
Diamond, L. Phillips, B.
Elwyn-Jones, L. Pitt of Hampstead, L.
Ewart-Biggs, B. Ponsonby of Shulbrede, L.
Fisher of Rednal, B. Prys-Davies, L.
Gladwyn, L. Rochester, L.
Glenamara, L. Ross of Marnock, L.
Gregson, L. Seear, B.
Hall, V. Sefton of Garston, L.
Hampton, L. Serota, B.
Harris of Greenwich, [Teller.] Stedman, B.
Hatch of Lusby, L. Stewart of Alvechurch, B.
Hooson, L. Stewart of Fulham, L.
Irving of Dartford, L. Stone, L.
Jacques, L. Taylor of Blackburn, L.
Jeger, B. Tordoff, L.
John-Mackie, L. Underhill, L.
Kennet, L. Wade, L.
Kilmarnock, L. Wallace of Coslany, L.
Kirkhill, L. Wells-Pestell, L.
Lee of Newton, L. Whaddon, L.
Llewelyn-Davies of Hastoe, B. Wigoder, L.
Abinger, L. Ferrier, L.
Airey of Abingdon, B. Fortescue, E.
Alexander of Tunis, E. Fraser of Kilmorack, L.
Allerton, L. Geoffrey-Lloyd, L.
Atholl, D. Gisborough, L.
Avon, E. Glanusk, L.
Belhaven and Stenton, L. Glenarthur, L.
Bellwin, L. Gridley, L.
Beloff, L. Hailsham of Saint Marylebone, L.
Belstead, L.
Bessborough, E. Harvington, L.
Boyd-Carpenter, L. Hayter, L.
Brougham and Vaux, L. Henley, L.
Caccia, L. Hives, L.
Campbell of Alloway, L. Home of the Hirsel, L.
Campbell of Croy, L. Hornsby-Smith, B.
Carnegy of Lour, B. Inglewood, L.
Cathcart, E. Ingrew, L.
Chelwood, L. Kemsley, V.
Coleraine, L. Killearn, L.
Colwyn, L. Kilmany, L.
Cork and Orrery, E. Kinnaird, L.
Cottlesloe,L. Kinnoull, E.
Cullen of Ashbourne, L. Lane-Fox, B.
Davidson, V. Lauderdale, E.
De La Warr, E. Lindsey and Abingdon, E.
Denham, L. [Teller.] Long, V.
Dilhorne, V. Lucas of Chilworth, L.
Dormer, L. Luke, L.
Drumalbyn, L. Lyell, L.
Ellenborough, L. McAlpine of Moffat, L.
Elliot of Harwood, B. Mackay of Clashfern, L.
Enniskillen, E. Mackintosh of Halifax, V.
Fairfax of Cameron, L. Macleod of Borve, B.
Faithfull, B. Mancroft, L.
Mansfield, E. St. Davids, V.
Margadale, L. Saltoun, Ly.
Marley, L. Sandford, L.
Merrivale, L. Skelmersdale, L.
Mersey, V. Soames, L.
Mills, V. Somers, L.
Molson, L. Spens, L.
Mottistone, L. Stamp, L.
Mountevans, L. Stradbroke, E.
Napier and Ettrick, L. Swinfen, L.
Northchurch, B. Swinton, E. [Teller.]
Nugent of Guildford, L. Terrington, L.
Onslow, E. Teviot, L.
Orkney, E. Tranmire, L.
Orr-Ewing, L. Trefgarne, L.
Portland, D. Trumpington, B.
Radnor, E. Vaux of Harrowden, L.
Rankeillour, L. Vivian, L.
Reay, L. Wakefield of Kendal, L.
Redesdale, L. Wise, L.
Rochdale, V. Young, B.
St. Aldwyn, E.

Resolved in the negative, and amendment disagreed to accordingly.

6.51 p.m.

Lord Underhill moved Amendment No. 37:

Page 5, line 22, leave out subsection (2) and insert— ("(2) Without prejudice to any other powers under which an Authority may make grants to an Executive, the power to make revenue grants in pursuance of this Act shall, if exercised for the purpose of implementing proposals approved under section 4 above, be regarded for all purposes as being properly exercised.")

The noble Lord said: With the leave of the Committee, I should like to discuss Amendments Nos. 38 and 39 with this amendment. I do not want to repeat all the arguments on the previous amendments, but, in effect, this is a change from the amendments with which we have just dealt. What Amendment No. 37 proposes is to replace the same subsection (2) with a provision to the effect that a public transport authority will have protection from challenge in the courts, on the grounds that the grants were made in pursuance of any of the proposals included in the three-year plan.

Some noble Lords may ask, "Why waste our time putting forward this amendment, since the last one was defeated?" The last one had to do with whether the authority were carrying out their statutory duties. If we have a three-year plan which has gone through the whole process which the Minister has outlined to us—the executive has taken the plan to the authority; the authority has had guidance from the Secretary of State; the Secretary of State has even suggested modifications of the plan (in other words, he has gone into details) and eventually the plan is there and approved—but the authority then find it necessary to go beyond the guidance given by the Secretary of State, is it right that that authority should be held to have acted unlawfully?

It must never be forgotten—this arose on the previous amendment, too—that, at the end of the day, there is still the question of the fiduciary responsibility of a local authority to hold the balance between the ratepayers and the users of any service. That is always there, but the Government are not satisfied with that. What we are saying is that, if a plan is approved after considering the advice of the Secretary of State, that should be regarded as a proper exercise if the grants have to be increased in order to carry out that plan.

Amendments Nos. 38 and 39 are slightly different, in principle, but I think that they should be discussed at the same time, because Clauses 3 and 4 of the Bill lay down the procedural programme both for achieving the final plan and also for the determination of revenue grants. The effect of those amendments is that, so long as the final determination by the authority of the amount of revenue grant has been determined in accordance with the procedure set out in Clauses 3 and 4, it should be regarded as a proper exercise of the power given to the authority.

What we are trying to do by these amendments is to minimise the number of occasions on which an authority can be taken to court by a body of ratepayers, so long as the authority acts in a proper way, either in carrying through the procedures laid down in Clauses 3 and 4—which is the point of Amendments Nos. 38 and 39—or in carrying out, quite properly, the three-year plan which has been approved by the authority and which, at the end of the day, has really been approved also by the guidance of the Secretary of State. I beg to move.

Lord Bellwin

We have said that we introduced the Bill, in part, because of the legal challenge made to the authorities' powers to give revenue grants to their transport executives. Those challenges pointed up the differences and obscurities in the legislation governing the GLC and the metropolitan county councils. Subsection (2) of the existing Clause 5 at once removes that lack of clarity and puts the GLC and the metropolitan councils on a common footing. These amendments would seem to aim to achieve those same effects, but less clearly, and with one difference: they would provide legal protection to any level of subsidy determined by the authority in accordance with the planning process, rather than to expenditure up to the level of the Secretary of State's guidance. That is a very fundamental difference.

In other words, the authority could spend whatever amount of grant they determined and not be accountable to either ratepayers or auditor. That cannot be right. The new planning procedure is intended to increase the authority's accountability to ratepayer, taxpayer and user alike. Setting out the proposed services and facilities, and their likely benefits, will enable both the executives and the authorities to provide, with maximum efficiency, the best services possible within the resources available. The amendments would remove any constraint to efficiency or value for money, by sanctioning any expenditure determined by the authority.

Clause 5, as drafted, will ensure, first, that authorities follow the new planning procedure before determining the amount of revenue grant they give to their transport executives; and, secondly, that in providing subsidy up to the level advised by the Secretary of State, authorities are protected from legal challenge, by having such expenditure clearly defined as a proper exercise of their powers to give revenue grants to their transport executives. That seems to be pretty clear. I do not know whether the noble Lord, Lord Underhill, would say other than that, in a way, this is not dissimilar to the preceding amendment—not in its content, but in its attempt to go right to the root of what this Bill tries to do; and it highlights, again, the difference between the two sides.

Lord Mishcon

I believe that the main reason for this amendment, or any similar amendment, is not to drive a coach and quite a few horses through the principles of the Bill, but to try very hard to save the courts from being brought in to decide upon whether or not a local authority has behaved lawfully. The noble Lord the Minister has spoken in terms of this Bill clarifying the issue. I wonder whether I can best deal with that point by asking your Lordships' Committee to imagine for one moment that you are members of a transport authority.

You are independent people and are proud of the fact that you are endeavouring to carry out a public duty, for which you have been elected in that locality. Of course, you have a national conscience, but your whole purpose as a councillor is to look after your local people. You disagree with central Government, acting upon the advice of bureaucrats—I do not use that term offensively; we could not get on without them and we could not govern without them—but the policy decision is, obviously, vested in the Minister. What then happens is that you carry through a plan, which differs from what the Secretary of State has approved, and you have your own modifications.

The present position, which the noble Lord the Minister defines as unclear, is that if you know that you have properly carried out your fiduciary duties and held the balance, the clear judgment of the court—if you have taken into account all the things you should have done, have consulted properly and come to a conclusion, even though the public auditor or anybody else may decide that you have been a little extravagant—is that you cannot be brought before the courts on the same basis as the Greater London Council and another authority were brought before the courts. If you have consulted properly and have exercised proper consideration, you can then make your decision. You are not subject to the courts and to an open battle with central Government.

The amendment makes it perfectly clear that every litigant who wants to do so cannot bring the local transport authority before the courts merely because that local transport authority has exceeded the limit set down by the Minister. Far from making things certain, at present anybody can take the view that the transport authority has gone beyond the limit and that therefore he is entitled to challenge the transport authority in the courts. This amendment says that if you have properly carried out your duty regarding a programme which has been approved by the authority—obviously the auditor can deal with matters of extravagance, or whatever else it might be—you cannot be accused of acting unlawfully under the provisions of the Bill.

Your Lordships will forgive me if I quote again a magazine like the Economist. There was also an article in The Times along the same lines. They said that this Bill is inviting litigation. If the Minister had said that this amendment goes too wide, that he was prepared to take it back and at least consider whether or not there should be something in the Bill which did not leave a local authority naked, as it were, before litigants who might want to chase it into the courts—that there ought to be some provision in the Bill which meant that a local authority would not be left in the position of, prima facie, acting unlawfully if it went above the limit—a gesture along those lines would have been greatly admired. If he does not do so and the litigation which many of us forecast takes place, the noble Lord may regret the moment—and your Lordships may regret it, too—when this opportunity was allowed to slip by.

Lord McIntosh of Haringey

My noble friend invited your Lordships to imagine that they were members of local transport authorities. It is appropriate that I should rise immediately afterwards, having been until today a member of a transport authority and having resigned from that authority only this morning. Therefore I have a keen awareness of being and of not being a member of such an authority. I leave your Lordships to guess as to the complexity of my feelings at no longer being such a member.

I wish to say something about the statement of the noble Lord the Minister in reply to my noble friend Lord Underhill. There are similarities between the previous amendment and this one. Since we are dealing with the same clause of the Bill, the obvious intention is to do something to improve it. This is an attempt to do exactly that. In his reply the Minister said something which he had not said before: that the intention here is to clarify the law and to make life easier, legally, for passenger transport authorities. I suggest that the reverse is actually the case. Thanks to the decision of the Divisional Court in January of this year on the case put to it as between the Greater London Council and the London Transport Executive, the law is very clear. I shall return to that point. Thanks to the decision in the case of Great Universal Stores v. Merseyside County Council the law is pretty clear, although that case referred only to Merseyside, so far as the other metropolitan authorities are concerned.

If its purpose is to clarify the law, there is no need for the Bill. Indeed, the Bill takes us backwards rather than forwards. I have no particular knowledge of the Merseyside case, and I am sorry that my noble friend Lord Sefton of Garston is not here to explain it, but I have some knowledge of the case before the Divisional Court. Although it might be thought of as a friendly action between the Greater London Council and the London Transport Executive, I can assure your Lordships that that case had very profound implications, some of which I hope will survive the passing of this legislation, if it is passed. Those implications have cropped up over and over again as we have dealt with the Bill in Committee. Let me take one or two examples.

First, we have talked about the time available to the executive in preparing its plans and about the time available to the authority in considering those plans and reaching a conclusion. It was an important part of the case before the Divisional Court that the authority had taken adequate time to listen to the views of the executive and to consider the options put forward by the executive and that it had taken those options seriously in the light of its other responsibilities. In that sense, if I follow the argument which has been made on this side of the Committee on previous amendments, the Bill makes things worse and the protection given by the court is diminished.

Secondly, one of the issues before the court was that of proper consultation with all those affected. They included representatives of the passengers and of other operators, the authorities in the immediately surrounding counties, and so on. The amendments we have sought to make to the Bill have all attempted to write into it the kind of consultation which was taken seriously by the Divisional Court, but they have been rejected by the Government. In that sense, too, the Bill goes backwards from the clarity achieved by the Divisional Court in only January of this year.

Let us take the issue of the authority's other responsibilities. One of the issues before the Divisional Court was whether it was proper for the Greater London Council, when considering the options placed before it by the London Transport Executive, to take into account its other obligations under the 1969 Act: its obligations, for example, under the development plan. The wider benefits—the economic, social and other benefits, which do not relate just to passengers but to all the people of London—were an issue before the Divisional Court. The court decided in favour of the Greater London Council on those issues. The attempts which have been made to amend the Bill to reflect that decision have been rejected by the Government. In that sense, too, the Government have gone back and muddied the waters which were made clearer by the Divisional Court.

I shall not attempt to go over the whole debate, although I could go on to show that virtually every debate we have had on detailed items in the Bill—I include some of the debates we shall have later in Committee—contradicted the judgment of the Divisional Court, a judgment which has not been challenged. It is extant as being the legal situation as I, a non-lawyer, understand it to be. We are in fact doing the opposite of that mentioned by the noble Lord; we are making life more difficult for a local authority. As a member of the Greater London Council, I have over the past two months been very conscious of the lifting of a burden of insecurity and uncertainty which had been over us for a couple of years previously. This burden was lifted by the decision of the Divisional Court. The situation will be distinctly worse if this Bill is enacted unchanged, without this amendment. With this amendment, there is at least the start of recognition that the advances which have been made in the avoidance of litigation can be maintained.

Lord Boyd-Carpenter

If I may invite the Committee to return to the narrow question of the amendment itself, I can only urge upon my noble friend Lord Bellwin that if he were to accept this amendment he will be creating a loophole in the provisions of the Bill. How big or how small that loophole will be in practice is a matter on which there can no doubt be legitimate argument; but it would be a loosening of the controls on expenditure—rate-borne expenditure by way of subsidy—which the Bill proposes. For that reason, I must confess that I look upon it with a measure of suspicion.

It is all very well to say, as noble Lords opposite have said, "It is only expenditure following on the approval of an approved three-year plan". But those of us who have been in administration, central or local, know that where one has a three-year plan the amount of money actually spent under the plan can vary enormously. It can vary in the light of the degree of strictness of economy which one exercises or in the degree of laxity of control on expenditure which arises. Indeed, when I was at the Treasury under my noble friend Lord Home of the Hirsel, and charged by him with control of public expenditure, I remember that the rule we used was that with any proposed public expenditure spread over a number of years if one was really to assess the likely cost, one took the figure that the proposing department put forward and then trebled it. On the whole, experience showed that that was about right. But to say, as this amendment does, that as long as one is carrying out a scheme one is still protected from being taken to the courts by the ratepayers whom one has wronged—however much one may have spent additional to the guidance laid down by the Secretary of State—is very much to weaken one of the main and perhaps the most important provisions of this Bill.

It is all very well for the noble Lord, Lord Mishcon, to say, with an expression of soulful solemnity, that his purpose is simply to reduce the amount of litigation. Coming from a most distinguished member of his profession, that remark carries, of course, enormous conviction with me. I share his view, perhaps even more enthusiastically than he does, that litigation is not to be promoted. There is surely one very simple way by which the local authority concerned in this measure can avoid being taken to the courts; and that is, to so control its expenditure that it keeps the amount of that expenditure within the figure laid down in the Secretary of State's guidance.

Lord Mishcon

Before the noble Lord, Lord Boyd-Carpenter, sits down, may I point out that the Committee has been listening to a distinguished member of the Bar. I am sure that he keeps the traditions of the Bar, as I do on my side of the profession, which is to keep people away from litigation wherever possible and to see whether one cannot achieve an amicable and sensible settlement of differences. This is what I, together with my noble friends, was trying to bring to this debate. Would the noble Lord care to say whether his advice, with regard to his previous experience in the Treasury, is that the Secretary of State should take the figure that his civil servants bring to him in respect of these grants and multiply it by three?

Lord Boyd-Carpenter

I am not quite sure what the proposition of the noble Lord, Lord Mishcon, is, but I do say that the Secretary of State, in assessing the likely expenditure under any scheme, should approach the matter with the detached scepticism and cynical clarity of view which one would expect of a Minister in this present distinguished Administration.

On the noble Lord's other point, it is a matter for his profession and for mine to try to prevent unnecessary litigation. But when that litigation comes, it is equally our interest and our duty to win it. It seems to me that if one is to win a case such as this, one must have the law clear cut. There is nothing more clear cut than the position in this Bill, which the noble Lord is seeking to erode, that if one keeps within the figure in the Secretary of State's guidance one is covered—but if one goes outside it one does so at one's peril. That seems to me to be a clear cut provision under which no one but a fool would involve themselves in litigation accidentally.

7.17 p.m.

Lord Bellwin

It has been very fascinating listening to such eminent members of the legal profession, and it makes my own legal qualifications seem very humble. On the point of the law as it stands at present, following on that which was said by the noble Lord, Lord McIntosh of Haringey, the noble Lord was saying that the GLC's new proposals are legal. I must point out that in the recent action between the GLC and London Transport, the judges found that the GLC's proposals for a 25 per cent. fares reduction were a valid exercise of its powers; but the court did not explicitly decide whether the proposals struck a reasonable balance between the interests of transport users and the interests of ratepayers. Lord Justice Kerr said: Whether the balance has been struck at the best point, and even at a permissible point, is not a matter which this court can evaluate. The judgment was very much in line with the approach adopted in this Bill, for this time the GLC had prepared a reasoned plan, exactly as we had urged them to do all last year. But there are still counties paying revenue subsidies with no proper demonstration of the benefits. The fact that the GLC has had to go to court twice in little over a year shows how much we need a Bill that will provide absolute protection from legal challenge to reasonable levels of subsidy.

The noble Lord, Lord Mishcon, seductively persuasive as very few people I have ever known can be, always tempts me. I almost have to tie myself to the mast every time he speaks to make sure that I do not go beyond. The fact is, as the noble Lord understands very clearly, this particular clause is at the nub of the Bill and I cannot agree to depart from it. I understand exactly what the noble Lord has said and the sincerity with which he said it, but I cannot accept this amendment, as it is now, in any way. Therefore, I have to say that I am sorry but on this occasion, even for the noble Lord, Lord Mishcon, I have to say no.

Lord Underhill

It has been said that there is something of a similarity. The only similarity is that we are attempting to remove certain penalties which could be placed against a PTA. As my noble friend Lord McIntosh of Haringey has said, this amendment is attempting to improve the Bill. Also, on all these different matters we want to learn the Government's view, for the simple reason that these points were not fully debated in another place. Therefore, it is essential that we hear the Government's view on all these different variations, because that will enable us to shape our view for the next stage. I am very pleased that the Minister takes that view and does not take the view that we are wasting time; we are ventilating important issues.

The Minister said that if this amendment were carried it would give an authority power to spend whatever it wishes and not be accountable to the auditor. I bow to people who know better than I do, but surely no authority can act irresponsibly, neither can it act without due regard to its fiduciary responsibility towards the ratepayers and the users of the service. Also, we must remember that the authority is finally responsible to a very important body, and I do not regard that accountability as being cynical; it is accountable to the people who elected them; it has to go back to them.

If we do not accept that principle then we do not deserve to say that we believe in local government, because local government can only survive on going back to the electors. That is why, as I said in the debate the other day, I am one who believes in annual elections and not three-yearly or four-yearly elections. We agree on that. That gives an opportunity for accountability every year. So long as we believe in accountability, if an authority is acting irresponsibly it can be called to book. Therefore, there is that accountability to the important people, the electors, and that must be kept in mind in considering this amendment.

The noble Lord, Lord Bellwin, also said that the amendment would remove all constraints. But would it? Amendment No. 37 would mean that the authority would have to convince people that it had acted properly to carry out the principles of the three-year plan. It cannot be irresponsible about it; it has to carry out the principles of the three-year plan. On the other amendment it has to convince that it has acted fully in accordance with the procedure laid down for determining the level, the plan, et cetera. The noble Lord, Lord Boyd-Carpenter, said it would be creating a loophole. Well, I believe my noble friend Lord Mishcon dealt with that. If by a "loophole" he means that we are going to avoid a PTA, properly carrying out its statutory duties, not being irresponsible, being taken to court, surely that is not a loophole; it is providing proper justice to an authority which is trying to do its duty to the people who elected it.

The noble Lord referred to the necessity to keep expenditure down to the figure of the guidance. I come back to what I said on the previous debate; I must repeat this. If the guidance figure does not enable the authority fully to carry out the three-year plan which has been approved, and on which there might have been modification at the Secretary of State's request, surely it should have the right to proceed with a further grant.

The Minister also said that the purpose is to clarify the law. Who has asked for this legislation? Not one of the PTAs or PTEs have asked for this legislation. I can assure the noble Lord that the AMA, which represents all these bodies, has not asked for this legislation. I would remind noble Lords that they were not even asked to say what they thought about the White Paper, which I held up in a previous debate, because the Bill was published at the same time as the White Paper was issued. So they have not asked for this Bill.

I must stress what my noble friend Lord McIntosh said, first of all about the second GLC case. What we want to ensure is that if an authority can properly show a court that it has acted, as did the GLC on this occasion, to carry out its responsibility under its plan, then it should not be regarded as being unlawful. Remember the Merseyside case. I will not go into the details, but it made it quite clear that it did not automatically follow that the setting of fares at a level which resulted in a deficit was unlawful. That is what the Merseyside case decided. I can assure noble Lords that the metropolitan authorities outside London have been reasonably satisfied with the law as reflected by the Merseyside case; the judgment given by Mr. Justice Wolfe.

Therefore, they have not asked for this legislation. The legislation has come about because the Government believe they know best what is required; they are going to decide what are the benefits in the area and what are the needs in the area. I cannot ask the Committee to divide on this issue, but I do urge that the principles behind the amendment are correct, and I do not propose to withdraw it.

On Question, amendment negatived.

[Amendments Nos. 38 to 40 not moved.]

On Question, Whether Clause 5 shall be agreed to?

Lord Underhill

I am wondering whether we should speak on this Question before adjourning the Committee. We were intending to speak and divide on the Question whether Clause 5 shall stand part. In the face of the comment made by the noble Lord, we must ensure that the Committee fully discusses the whole of Clause 5.

Lord Denham

In view of the fact that it is Tuesday and there are slightly limited time facilities, perhaps we ought to adjourn for dinner before we discuss the Question that the clause stand part. I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.

Lord Ponsonby of Shulbrede

My Lords, before we take the next business, I wonder whether the noble Lord, Lord Denham, can give an indication of when we shall return to the business of the Transport Bill?

Lord Denham

My Lords, I am most grateful to the noble Lord, Lord Ponsonby. We will not return to the Transport Bill before half past eight.