Transport Bill

HL Deb 03 March 1983 vol 439 cc1222-82

3.53 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 LORD ABERDARE in the Chair.]

Lord Underhill moved Amendment No. 53:

After Clause 6, insert the following new clause:

("Withdrawal of bus services.

An Executive shall not withdraw any bus service which has been the subject of a proposal by the British Railways Board or London Transport Executive to discontinue any rail services specified in section 56(7) of the Transport Act 1962, unless the Executive has referred any such proposal to withdraw a bus service to the appropriate Area Transport Users Consultative Committee and such committee has confirmed the proposal.").

The noble Lord said: It may be for the convenience of the Committee if, with Amendment No. 53, I speak also on Amendments Nos. 69 and 70. Yesterday we debated the Serpell Report, and that report contains a chapter in which it argues that there is a case for the substitution of buses for train services on lightly-used rail lines. I am not asking your Lordships to debate that principle today, but the position that arises when a bus service has been so substituted. There is the important paragraph 16.4 in the Serpell Report which states: Many people are understandably unhappy about … the alternative bus services because of their experience of the rail replacement services during the 'Beeching' closures in the 1960s".

The paragraph refers also to the lack of financial support and other factors, and that many of the substitute bus services disappeared after no more than two years. This last paragraph of this chapter of the Serpell Report, paragraph 16.14, contains the following sentence: But the strongest assurance of continuity would be to subject the replacement services to an appropriate form of TUCC-type closure procedure".

The Central Transport Consultative Committee submitted evidence to the Serpell Committee, and in one part of its evidence said that in practice, bus replacement has been a disaster in the past".

The committee's evidence on this point set out six matters which it considered to be essential for any future replacement bus services. One of the items was that, in future, any substitute bus services must be subject to a transport users' consultative committee-type closure procedure. This is exactly what is proposed in the two amendments.

Noble Lords may wonder why there are two amendments, Nos. 53 and 69, which noble Lords may feel deal with the same principle. Amendment No. 53 proposes that where a rail service has been discontinued in the area of the passenger transport executive and a substitute bus service has been provided, the executive shall not withdraw that bus service subsequently unless the proposal to withdraw has been referred to the appropriate area transport users' consultative committee and that committee has confirmed the proposal. Amendment No. 69 serves just the same purpose, but instead of confining it to the area of a PTE, which would cover only part of the country, would apply the principle which I have just explained to the whole of the country. In other words, it would not just be confined to the metropolitan counties and the GLC, as would be the case with Amendment No. 53, but would cover the shire counties as well, and the Welsh counties. If the latter amendment were agreed to it would require an amendment to the Long Title, and this is the reason for Amendment No. 70.

I hope noble Lords will see what is actually being proposed. If a rail service has been discontinued and it has gone through the proper procedure, and if within a short period the bus service which has been substituted is taken off without an appeal procedure of any kind, as has been suggested, it would seem that somehow the original decision has been set on one side.

I should like the Minister to say whether the Government can accept either proposal. The reason for the first proposal is that the primary purpose of the Bill is to deal with the position of transport executives. The second amendment has been put down because if the Minister considers that the proposal is one which the Government can support—and I hope they will—it might be suitable for it to apply to the whole of the country and not just to those rail services which are substituted in the areas. I beg to move.

Lord Bellwin

I appreciate the concern of the noble Lord, Lord Underhill, in tabling these new clauses. Of course, he will know that the Serpell Committee, in Chapters 15 and 16 of its report, discussed the whole question of rail closures and bus substitution procedures. The report commented on the unsatisfactory nature of alternative bus services provided in the 1960s, and proposed a new approach to the routine financing of replacement services with the railways board responsible for the provision, with services provided under contract by NBC or other contractors, and with the financing of unprofitable services provided by central Government to channel through the board. The report noted that local anxieties about the long-term future of replacement bus services are a critical factor in rail closures, and suggested that these anxieties would be reduced if any proposal to close replacement bus services were subjected to a form of transport users' consultative committee procedure.

The Government are giving careful consideration to these issues, although clearly I cannot predict what view they might take. In these circumstances, I think the noble Lord, Lord Underhill, would agree that while these issues are being reviewed in relation to much wider considerations it would be improper to amend the Bill by the inclusion of these new clauses. Nevertheless, I want to assure the noble Lord that the Government will consider the objectives behind them when considering the Serpell Report. As my noble friend Lord Lucas of Chilworth said in the debate yesterday on the Serpell Report, the Government have not reached decisions on all the issues raised by Serpell, or on the wider issues, come to that, which Serpell did not consider. Nor are the so-called network options described in the Serpell Report any kind of closure proposals.

No closure proposals arising from Serpell are before the Government, and we have made it very clear that we shall be making no hasty decisions on the longer term. We shall be establishing all the facts and considering all the issues before reaching decisions. Our aim is to achieve a modern and efficient public transport system, and I undertake that we shall be giving careful consideration to the issues raised by these amendments. In the light of that I wonder whether the noble Lord will feel able to withdraw the new clauses and the consequential amendment to the Title.

Lord Tanlaw

I would like to speak strongly in support of the noble Lord, Lord Underhill, in the thinking behind these two clauses being put down for consideration by the Committee. In the debate which we had only last night we had a definition of "integration" from the noble Lord, Lord Lucas of Chilworth, which I am sure the noble Lord, Lord Bellwin, will recall. Transport integration was considered to be something which divided us, depending upon where we sit in your Lordships' House. I am glad that the situation has been clarified because that is not, as I understand it, the Government's view and they are going to consider integration between bus and rail services.

But I do not believe that the noble Lord has clarified the Government's thinking quite enough. If the Serpell formula on cost effectiveness or mere straight cost is to be applied to this kind of service, it will fail. Therefore, the worry that many people have, and certainly we on these Benches have, is that such a concept of bus/rail integration may fail due to Serpell formula reasons. We need some reassurance that the local people—be it through a PTE or any local community that wishes this form of integration, even though it is costly—should be allowed to have it, even though it may not fit in with the Government's cost-cutting procedures which arise from the Secretary of State in the Department of Transport. That is why I am pleased to hear the noble Lord say that he will consider the clauses put forward by the noble Lord, Lord Underhill.

Lord Campbell of Alloway

Surely we must all be in agreement that one day—and one day, one hopes, soon—there must be a new approach to the bus/rail integration problem, and that this will involve central financing, and indeed central control. But surely this veto at this stage in the hands of this Committee and as proposed in this amendment could well stultify that long-term approach. Although this, in submission, is valuable thinking contributed by the noble Lord, Lord Underhill, in these amendments, surely, with respect, at this stage it is premature?

Lord Howie of Troon

I think that most members of the Committee would welcome the sympathetic response of the noble Lord the Minister to my noble friend's amendment and would be sympathetic to the request of the noble Lord the Minister that the amendments should be withdrawn. Yet I hesitate just for a moment if only because when the noble Lord the Minister said that these matters were under consideration, he did not make any attempt to tell us when there might be a result coming from those deliberations. If the noble Lord the Minister could say that the Government will present a fairly firm view, or at any rate as firm a view as seems reasonable, before we reach the end of the proceedings on the Bill in this House, I would then be very strong in my support for the idea of withdrawing the amendments. But in the absence of any hint as to a time-scale from the Government, I rather think that my noble friend should resist these blandishments. I see that the Minister is beaming in his normal kindly way. It may be that he is about to say that we shall in fact have word from the Government long before we have finished with the Bill in this House.

Lord Bellwin

If beaming it is, then I am doing so because, as so often, the noble Lord, Lord Howie of Troon, started so well in what he said and then spoiled it at the end. I did indeed, I hope, respond to the noble Lord, Lord Underhill, in a not unsympathetic way because there is room for great debate here. I understand the concern about the debate going on and on. After all, we are not talking about a new situation: this is a situation that has pertained for so long. There has to come a time when someone comes forward with firm proposals and makes decisions, and we seek not to turn away from that at all. However, in terms of the amendments today, I am sure the noble Lord, Lord Underhill, does not expect me to be able to accept them, and nor do I. I referred earlier to the Government's general intentions and to the fact that we want to look not just at Serpell but at issues which he did not cover, but which must be important as well.

I am so grateful to my noble friend Lord Campbell of Alloway who said that what the noble Lord, Lord Underhill, has said—and, indeed, what was said yesterday in what I thought was a very good debate—and what may yet be said, must all he taken, and will be taken, into account. That is an assurance that I give. But I cannot accept the amendments as they are today, as I am sure the noble Lord, Lord Underhill, will appreciate.

Lord Underhill

I can understand and appreciate the sympathetic reply from the Minister but I still cannot understand why the Government cannot accept these very simple amendments. I should like to point out to the noble Lord, Lord Campbell of Alloway, that the rail/bus situation has nothing whatever to do with these amendments. We are not in these amendments asking the Government to settle whether we should have buses or whether we should have railways—that is completely irrelevant and it is not in the amendments. We have a system now, under existing legislation, whereby rail routes can be closed; and we have a system whereby they can be substituted by bus services. We are not arguing about that; indeed, it is in the Bill now, and there is a proper procedure that has to be gone through. I would have brought these amendments forward even if we had not had Serpell because this is only a small part of what Serpell is proposing. It has absolutely nothing to do with whether we are going to close the railways or not.

All we are saying is that if a railway service is closed—any one railway service; it may be a small railway service and in fact in my own area the LTE have closed one down in peak periods—and a bus service is substituted, it would be absolutely wrong, as both the Central Transport Users' Consultative Committee and also Serpell have said, if later on the bus service is taken off. In such a situation we would not only have the rail service taken off but also the bus service taken off and there would be no voice at all from the consumers. The amendments are saying that in such a case, before the bus service, which has been substituted for the rail, is taken off, the matter should go through the procedure of the area Transport Users' Consultative Committee. I believe that that is such a common sense principle.

As much as my noble friend Lord Howie tempts me, this is not a matter on which I want to divide the Committee because the Government have said that they are syrnpathetic. But we were told last night at the end of the Serpell debate that there are matters on which decisions have already been taken or will be taken as regards Serpell. This has nothing to do with the broad case of Serpell and the Government could accept these amendments in the interests of consumer consultation. That is all that these amendments are seeking.

I should like to ask three questions of the Minister. First, are we to understand that before the Government make up their mind on Serpell—and I am sorry that they are going to take the question of bus substitution into consideration as regards the broad principle of the future of the railways under Serpell, because it seems to me to be completely unnecessary for the Government to do that—there will be not a single rail closure substituted by buses? Secondly, are we to understand that there will be no cancellation of a bus service that has been substituted until the Government have made up their mind? Thirdly, when can we have some idea of timing? The Minister may say that that is difficult, but does it mean that we have got to wait for another Transport Bill next year before this provision is brought in? That will be the fifth time that the noble Lord and I will have faced each other. This is such a simple issue that, irrespective of the broad principles of Serpell, cannot the Government say that there is a force in this—the consumers' consultative voice—and so enable me to withdraw the amendment, after which the Government can have a look at the matter before the Report stage? I will go even further than that and let him have a look at it before the Third Reading, because he can always bring something forward himself on Third Reading. I ask him those three questions.

Lord Bellwin

The noble Lord knows that I cannot give those undertakings; there is no way in which I can. I cannot tell him when there will be a decision on Serpell. I cannot say to him, "No, there will be no closures of this kind"; nor can I answer the other point. In my answer I have tried to indicate that the Government are not unsympathetic to what the noble Lord says, but, as regards giving him undertakings, I cannot, and I suspect he knows that I cannot.

4.10 p.m.

Lord Mishcon

The Government are sluggish indeed, if I may use that phrase in regard to transport. It has been made perfectly clear that public disquiet and public inconvenience will be caused to a tremendous degree if you have a situation of a railway closure with a substituted bus service and you then get a bus closure in regard to the substituted service without mandatory consultation with the transport consultative committee of the area.

My noble friend said perfectly fairly that at this stage he asks for no more from the Government than an answer to the following effect. Although there is urgent need for it, we are not pressing the Government for immediate conclusions on the Serpell Report or outside the Serpell Report. We are concerned with the narrow issue of safeguarding the public to whom transport is so essential in so many areas. What we are asking for—and I can simplify it—is at least an undertaking from the Government in the terms that my noble friend mentioned quite clearly until the Government have come to their broad decisions in regard to Serpell. If my noble friend will permit me, I would ask for an alternative undertaking—if that undertaking cannot be given—that, until Serpell is, in fact, acted upon by the Government, the Government will adopt as their general policy that there will be no closure of a substituted bus service in these circumstances without that consultation, and that the Government will so announce.

I hope that the noble Lord the Minister—and I call him that only because he has that beaming smile, to which reference has been made; I very nearly called him "my noble friend", and from my point of view it would be very pleasant so to call him, but he too has to make a bit of a transport move in order for me to do it officially—can at least say that he sympathises with this principle (indeed, he has said that) and that he will carry his sympathy to the practical stage and say that it will be the policy until the report is acted upon that there will be this consultation, otherwise the substituted bus service will not be closed down.

Lord Howie of Troon

I do not think that we should go too far in reacting to the beaming countenance of the noble Lord the Minister, attractive as it may be. He has an almost bottomless well of sympathy, as we have noticed, but he does not really give very much away. I think that there is one question which my noble friend Lord Underhill asked which the Minister can answer. We all understand that there are limits to the undertakings which he can give from the Front Bench, and we certainly do not want to push him to a position where he might feel embarrassed among his colleagues—we would never think of doing that. But there is one question which he can answer and it is a very simple one. It arises from my remarks and from the questions of my noble friend. It is this. If my noble friend withdraws his amendments today, does the noble Lord the Minister expect us to wait until there is yet another Transport Bill in the next Session? That is a question which I think he can answer, and it is a question which I think he should answer.

Lord Bellwin

I just cannot say whether it will be a matter for another Transport Bill in the next Session or whatever. Would that I could, but I cannot. I understand everything that is being said and I can only say—as I do very often and in good faith—that, of course, we shall consider very carefully what has been said. I recognise that that is unsatisfactory in many ways to the noble Lords, Lord Mishcon and Lord Underhill, and, come to that, the noble Lord, Lord Howie of Troon. But the fact is that I am in no position to go further than that and I just cannot do so.

Lord Underhill

I can understand the Minister's position, but we have other stages in this Bill. I do not want to embarrass the Minister; I do not want to take the time of the Committee. But we cannot have a situation in which, over a period, say, of 12 months before another Transport Bill, there could be a number of substituted bus services closed without any appeal of any kind. That would be absolutely wrong. We can understand that the Minister cannot do anything about the Serpell position, but if he will only undertake to have a careful look at what has been said and give some undertaking before the Report stage as to when this matter can be dealt with, then frankly I would go along with him and not press the amendment. However, there is much feeling about this and we are not asking for a great deal. We are asking for a simple consultative machinery in order to avoid any one bus service, which has already been substituted, being closed down before we have another Transport Bill. That is what we are asking for. If the Minister can just say something to appease the troops behind me who want action, then I shall readily go along with him.

Lord Bellwin

It is not the fear of the action to be taken that moves me as much as the merit of the case that has been made. I can go so far as to say that we will certainly consider what has been said. I give that undertaking. But it may well be that if we come to a later stage and we come back with nothing that will satisfy the noble Lord, he will have to do what he has to do. That may or may not satisfy him today; I hope that it will.

Lord Teviot

Before the noble Lord, Lord Underhill, replies, this situation arose in the Beeching era when railway lines were closed and bus services were substituted. He was dealing with railway lines that were built 100 years ago in the days of railway mania. Can my noble friend say whether there have been any such closures recently? I cannot recall any. The noble Lord, Lord Underhill, and the noble Lord, Lord Mishcon, who spoke most eloquently, carried me more or less with them, but I do not think that there is a great danger of this happening now. If my noble friend has in his brief any case histories where this sort of thing has happened recently or where there is any likelihood of it happening, rather than it all crystallising, it might bring a breath of fresh air to the Committee's proceedings.

Lord Bellwin

I cannot give instances. I understand that there have been one or two situations; they have not been many and I do not know when they took place. Hopefully, they have not occurred very often and, even more hopefully, not very recently. But I do not know and I cannot say. Of course, I will happily write to my noble friend Lord Teviot, and I shall also send a copy of the information to the noble Lord, Lord Underhill.

Lord Cledwyn of Penrhos

This is perhaps where I can be of some small assistance, because it is well within my knowledge that in the post-Beeching period, after the closure of some railway lines in Wales, where bus services were brought in as a substitute, after a passage of time it was argued that the bus services were not making a profit and in due course they were closed as well, leaving vast rural areas without any public transport at all. That is what my noble friends are afraid of now.

Lord Underhill

I am putting a lot of faith in the Minister's statement because I know he will try to do his best. In the light of the fact that he will take a look at this I beg leave to withdraw the amendment, but make two points. I should like the Minister to communicate with me before the last opportunity to put down amendments at Report stage as to what may be his conclusions. If there is no satisfactory answer, either this amendment or an improved amendment will be put before the House at Report stage. This is such a simple matter that we should not be spending too much time on it, and it ought to be possible for the Minister to come along at least part of the way on this amendment. On those conditions, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 7 [Review of managerial organisation]:

4.21 p.m.

Lord Underhill moved Amendment No. 54: Page 6, line 27, leave out from ("whenever") to ("cause") in line 28 and insert ("they so resolve")

The noble Lord said: In the original Bill there was provision that upon the coming into force of the Act there would have to be an automatic review of every passenger transport executive. The Government realised that that was going too far, and at the Committee stage they produced an amendment. There was no debate on that amendment. In fact, there was no debate on any other amendment because none was called. Neither was there any debate on the clause in the other place. The wording of the amendment which the Government introduced is still, in our view, gross interference with the executives in so far as the Secretary of State may call for a review whenever he thinks fit.

I ask the Minister why is this considered necessary? Does the Secretary of State assume that reviews are not undertaken? The management of a passenger transport executive is the responsibility of that body and also of its elected PTA. PTAs regularly review the management of their own executive, and there is no need for Clause 7 in our view. In addition—and brief mention was made of this at Second Reading—in the recent period three of the six passenger transport authorities which will be affected by this Bill have initiated their own reviews already. West Midlands set up a working party to examine other transport authorities not only in the United Kingdom but also abroad in order to study various issues. West Yorkshire engaged professional consultants to undertake a management study of its passenger transport executive. Tyne and Wear appointed consultants to consider the management structure, operation and efficiency of the passenger transport executive, and also of the National Bus Company subsidiaries which act in consultation and in arrangement with the Tyne and Wear PTE.

Three of the six transport executives in recent times have initiated their own reviews, realising that they need to have efficiency and need to have a proper management structure. Therefore, why do the Government want to have this provision that whenever the Minister so desires there can be a review? There is clearly no need for this kind of interference. It is another item of a bureaucratic nature from the Government over this Bill. PTAs are responsible bodies. They are elected bodies. They are accountable to the local people who elect them. The provision we are attempting to amend suggests that in the Government's view the PTAs have no responsibility and are not prepared to look at the proper management of their executives.

What the amendment does is to change the provision in the Bill, that there should be a review whenever the Secretary of State so requires, to the words: An authority shall, whenever they so resolve, cause a review to be made".

I conclude by saying that any responsible body such as a county council wants to have efficiency, wants to have a proper management structure and to see in these cases that its transport executive is operating efficiently. I ask the Minister why is it necessary to have this interference, and will the Minister, at least on this one occasion, because we have had nothing at all during the Bill, show some confidence in local government and in the work of the passenger transport authorities?

Lord Lucas of Chilworth

Before coming to the substance of the amendment, I should say that the general aim of the clause is to ensure that each authority and executive thinks hard about whether that executive's activities could be better operated as smaller units. There is evidence that large monopolies have a tendency to allow costs to increase rapidly, particularly when the only control over them is by a subsidising local authority. Between 1970 and 1981 bus costs per vehicle mile rose by more than 50 per cent. in London in real terms, and the increase for the PTEs was about 30 per cent.

It is true that enterprises subject to contraction of demand find it difficult to reduce overheads in line with reduced activity. Breaking the management of the executives down into smaller accountable units would show more clearly where activities are efficient and where there is room for improvement. A reduction of 5 per cent. in costs would, on average, allow subsidy to be reduced by about 15 per cent. Average costs per vehicle mile for bus services in 1981 were about £2.18 in London as against £1.65 in the PTEs, £1.47 for municipal operators, and as low as £1.06 for the NBC.

Of course I appreciate that these differences in part reflect difficult and different operating conditions in the major cities but I do not believe that that is the whole story. I remain convinced that significant savings could be realised by greater efficiency within the transport executives. This Bill provides and includes the power for the Secretary of State to require a review of the managerial organisation. The authorities have under the 1968 Act powers to cause reviews, but only on general matters. It is this provision that gives the Secretary of State the authority to require a review of the managerial organisation within the authorities and the PTEs.

Lord Underhill

The noble Lord the Minister has brought in some points on Amendment No. 56, which we were considering as a separate matter. In the light of what the Minister has said, it might be in the interests of the Committee if we spoke also to Amendment No. 56. That seems to be the Minister's view in the light of his comments, in which case that will be done and my noble friend Lord Mishcon will address himself to Amendment No. 56.

Lord Mishcon

Indeed, he will try to do so. I wonder whether we can combine our thoughts and concentrate on Amendments Nos. 54 and 56? It is the hope of this Committee, I believe, not to make local authorities the office boys of the Secretary of State. We have gone a long way to doing so. We have said that their plans for transport—and they are the transport authorities—are made subject to the advice and requests for modification of the Secretary of State. That deals with questions of social policy, and indeed some questions of administration. We have said in this Bill—on the Government side it is their clear intention—that the finances in regard to transport shall be subject to the dictates of the Secretary of State in that there will be a limit set by the Secretary of State, and if the authority goes beyond that limit—and it is empowered to do so—it runs the risk of being brought before the courts at the instigation of a ratepayer, or any other person who feels aggrieved and can therefore have some sort of right of representation, and of being told that the authority has acted illegally, with all that flows from that.

Thus, in regard to social, environmental and financial matters the Secretary of State is the party who directs and the local authority is at the receiving end of the direction. How far along that path does the Committee intend to allow the Government to go? When it comes to the question of administration, is it not proper that it is the authority which shall have the right and power, not only to call for a review on general matters in regard to transport—as the Minister correctly said, it already has that power—but on any specific matters which the authority might see as suitable subject matter for a review?

Are we to have another provision directing the authority that if the Secretary of State cares to decide that there shall be a review the authority has, like an office boy, to carry out the direction of the Secretary of State? I repeat the question—it has been asked often, and I hope I do not bore the Committee by repeating it: what sort of people shall we get on transport authorities and local authorities if they are pushed down the ladder of dignity, initiative and right of understanding and decision? This is, therefore, a serious matter.

Under the clause as drafted the Secretary of State has not only the right to direct a review but the right to tell the authority on what basis the review is to be conducted and what is to be the ambit of the review. It is not only on any question of general managerial efficiency: it is a directive to the authority that, whether it wants to do it or not, it shall, cause a review to be made of the organisation of the Executive for the purpose —not for any general purposes but for a specific purpose, and that is, of determining whether, in the interests of managing the interests of the Executive in the most efficiency manner, any particular activities of the Executive should be managed as separate units with separate accounts". That is an open invitation to anyone reading the clause to take it for granted that a transport authority is not capable of making up its own mind as to the subjects with which the review should deal. Therefore, the amendment says that the review which the authority has the power and right to call for shall be in regard to, what steps if any may be taken to improve the manner in which the activities of the Executive may be managed". That does not in any way stop a report coming to the conclusion, by way of that review, that there should be separate units and separate accounting. But it is intentionally not worded in order to apply the clause to one dogmatic belief alone—that there should be the power in regard to any matter affecting efficiency for the authority to call for such a review.

The amendment would not defeat the ability of a review to cover the very matter which appears to be so much the concern of the Government; namely, the separation into units and the separation of accountancy. It is included in the general ability to review in order to look at efficiency. Much more important than that, it relies on the function of local government to govern. Unless we go through the Bill with some moderation in regard to what we are inflicting by way of the overall authority of the Secretary of State over local government, an amendment shall have to be put down (I say this in all seriousness) somewhere in the Bill, at some stage, to amend the words "local government" wherever they occur in the measure to read "local agency of the Secretary of State".

Lord Sefton of Garston

The clause refers to "any particular activities of the Executive". May I ask the Minister to say what he takes that to mean?

Lord Campbell of Alloway

As I understand it, Clause 7 as drafted is a requisite part of the machinery of control of local authorities in the sphere of transport; that is, if one accepts the general principle of the Bill. Of course, if one does not then one does not, and one would not support the amendment all the way along the line for the reasons advocated cogently by the noble Lord, Lord Mishcon. The amendment would substantially weaken the concept, if one examines the matter objectively, and for that reason, supporting the principle of the Bill, I am driven to oppose the amendment.

Lord Tordoff

It was interesting that the noble Lord, Lord Campbell, should have stated the principle of the Bill so clearly, because Clause 7 is an integral part of Clause 8. It is a neat way by which the Secretary of State can divide up, or force a local authority to divide up, a transport undertaking into small bite-sized pieces so that the Secretary of State can subsequently force it to sell them off by tender. He is right to say that this is a crucial part of that chain of command, as it were, and for that reason we on these Benches support the amendment.

Lord Lucas of Chilworth

Of course, the Government would welcome, and have welcomed, those authorities and executives which have carried Out reviews—the three the noble Lord, Lord Underhill, mentioned—and those reviews covered the matters which the Government have in mind in Clause 7, of bringing some parts of the operations of executives into smaller groups. That could be carried out under the terms of the general review which is permitted under the 1968 Act; and we are all agreed on that. It would not be necessary for the Secretary of State to require an authority to carry out a review, if, under the general powers, such a review had taken place. The aim is to ensure that the authorities which would not otherwise carry out a review of this kind could be asked to do so.

The whole purpose of Clause 7 is not to coerce authorities, not to impose further obligations upon them. It is not to reduce—as the noble Lord, Lord Mishcon, suggested—their dignity, nor to reduce them to a status below that which they enjoy. Rather, it is to encourage them to seek ways to improve efficiency in providing value for money. The authorities' powers under the earlier Act to review the organisation are left untouched; so they can go on with their business. The powers under the clause are specifically intended to find out whether an executive could be better managed as a small unit. Indeed—

4.40 p.m.

Lord Mishcon

Before the Minister goes on to another matter, would he mind dealing with this point? If it is merely an act of courtesy to the authority, in case it might have forgotten its powers to have a review, why has the Minister not included in the clause—though one imagines that as a matter of law the Secretary of State could do it—a provision stating that the Secretary of State "may request" the authority, instead of stating that the Secretary of State can require the authority? That follows logically from the noble Lord's obeisance to the idea of giving some respect to authorities.

Lord Lucas of Chilworth

In specific answer I would say that I cannot see that in fact it makes a great deal of difference which words are used. The Bill states: An authority shall, whenever the Secretary of State so requires, cause a review to be made". So, if the Secretary of State says, "Under certain circumstances. I should like a review to take place", that does not seem to be very unreasonable.

Lord Mishcon

I do not want to set any traps for the noble Lord the Minister; that is the last thing that I should ever do. But is he really saying that if, at a later stage, there was put down an amendment using the word "may", so that the matter was permissive, instead of mandatory, the Government would, as he has just said, regard it as being exactly the same, and therefore would agree to the amendment?

Lord Lucas of Chilworth

No, I did not say that at all. What I am suggesting, with respect, is that the noble Lord is playing with words. There are a number of enactments that "require" various bodies to do various things; and this is not greatly different.

The noble Lord, Lord Sefton of Garston, asked me specifically, what particular matters might be broken down—

Lord Sefton of Garston

I was specific. I asked, what are "particular activities"? What does the Bill mean by "particular activities"?

Lord Lucas of Chilworth

That is exactly what I said. I said that the noble Lord asked me whether I could demonstrate, whether I could tell him, what are "particular activities". Bus divisions in London, smaller self-accounting units (indeed, there are two of them), split-up of operating centres, geographical operating centres, profit/cost centres—those are the kind of particular activities to which we would refer.

The noble Lord, Lord Tordoff, went a little further—really into Amendment No. 58. He suggested that the provisions of Clause 8—which no doubt we shall reach quite shortly—were a stepping stone towards privatisation. But that is not the case, because, if one looks at Clause 8, one will see that it does not provide for any intervention by the Secretary of State, which would be required if compulsory privatisation measures were to be introduced by the Government. The Secretary of State has no power in Clause 8 to require tendering; but I think that we shall return to that point.

In regard to Amendment No. 56, which we have now tied in with Amendment No. 53, I can only say—

Lord Mishcon

Amendments Nos. 54 and 56.

Lord Lucas of Chilworth

I beg the noble Lord's pardon, with regard to Amendments Nos. 54 and 56, the Government are concerned that executives should look further than those points of general note, and see what advantages could be gained, such as some of the advantages which I tried to explain to the noble Lord, Lord Sefton. I believe it is quite right and proper that in the Bill there should be power in these specific instances to cause reviews to take place. These are the managerial organisations. That is what Clause 7 is about—

Lord Campbell of Alloway

Since the Bill is to have further stages, may I respectfully suggest that the intervention of the noble Lord, Lord Mishcon, might perhaps—and I say this with respect—have been taken a little more seriously? He was not playing with words. I agree that as used in this context the word "requires" is probably very much the same as the word "requests" but neither of those terms is an invitation to dance; each is a command to dance.

Lord Sefton of Garston

I am still not very clear about the reply that I received from the noble Lord to my earlier question. I think that he referred to "geographical centres", as being one of the particular activities that were referred to in the clause. Am I right? The term used was "geographical centres". I must be right—but I thought that I was hearing things.

Lord Lucas of Chilworth

I said, "geographical areas", and I quoted London as an example. What I said was "a geographical area". So splitting a bus service into geographical areas, into self-accounting areas, could be an activity—rather than perhaps leaving a large mass. That could be a part of a managerial organisation.

Lord Sefton of Garston

I wonder whether it is in fact possible to define what is meant by "geographical areas". I should imagine that the only organisation which could properly define "geographical areas" in relation to the one place that I think is the best area in the United Kingdom would be the Merseyside County Council, or the transport executive.

Having stated that view, I should like to suggest to the noble Lord that if geographical areas are used in Merseyside, they must include cross-river traffic, the immediate city centre area, and the immediate area around the terminal of the cross-river traffic. I should have thought that one could not possibly rule that out as a geographical area for the purposes of a transport function. Admittedly, if one so wished, one could then divide the rest of the area into zones. If that is what is meant by the Bill, then I think it is about time that the Government paid the local authorities the courtesy of telling them what they mean. If, as the clause seems to provide, an authority is to be asked to organise an efficient transport system, and the Ministry is to have the right at any time to call for a review of it, the Government have a responsibility to state in the Bill exactly what they mean. A schedule could be drawn up, or a clause could be included by the Government. All of that leads me to ask one question: is the noble Lord prepared to give us an assurance that he will look at the matter of defining the terms and put in the Bill an amendment that makes quite clear what they are?

4.50 p.m.

Lord Lucas of Chilworth

The noble Lord, Lord Sefton, knows very well that I cannot give him that assurance. He picked up "geographical areas" and then applied it to Merseyside. Then he made one little change and started talking about zones. He shakes his head but he did talk about zones. I do not know how a geographical area breakdown might or might not apply in Merseyside. However, if the Secretary of State asked Merseyside to make a review with that in mind, no doubt they would follow some of the points the noble Lord himself has made. The point that only the Merseyside County Council or PTE could find suitable areas is not necessarily so. That they have done so is evident in their plan. Perhaps they are in front on that.

I can see very little point this afternoon in picking out a number of other areas and debating them in detail; because that is what Clause 7 is requiring the authority and the executive to do. It is requiring them to look hard at their management and organisational set up and there is a power which requires the authority so to do. It is hoped that a good, sensible authority—and. no doubt, Merseyside is that as represented certainly by the noble Lord—would not require such a request or requirement to be made from the Secretary of State.

Lord Sefton of Garston

With respect, the noble Lord should read the clause. It does not say that. It says: managing the activities of the Executive in the most efficient manner, any particular activities of the Executive should be managed as separate units with separate accounts". This is the first time in my life that I have heard anyone quarrel with the definition of a zone as a geographical area. If it does not mean a geographical area, it means nothing. The point I made specifically was that if you look at the central geographical area of a place like Merseyside in regard to management, then because of the interchange of passengers, because of the interchange of tickets, because of the interchange of schedules, and the cross-river traffic, then the city centre zone and the zone immediately prior to the cross-river traffic must be looked at as one geographical area. This Bill says that they, should be managed as separate units with separate accounts". I say that that is a physical impossibility and that if you attempted to do it you would get into such a bother with the accounts that you would not know where you were from one to the other.

Lord Lucas of Chilworth

This Bill does not put an obligation, as of now, upon that authority to do anything that the noble Lord suggests might be done. He has just read out the first subsection of the clause. That reads: An Authority shall, whenever the Secretary of State so requires, cause a review to be made of the organisation", and so on—as the noble Lord read out. It does not say that because a review has been required somebody is going to impose some plan; because the authority may in the course of their review look at it and find that it is not practical because the river runs across. The whole of this clause is to encourage authorities to look at matters of this kind. That is all there is to it.

It is not unreasonable in any large organisation for the management from time to time to look at that organisation to see whether it can be broken down into smaller, more accountable units, units which are more easily managed, which have a greater cash account ability and public and social accountability. If an authority do not wish to do this and decides that they are not going to do this, then the clause and subsection (1)—the part which we are debating—provides that the Secretary of State can require the authority to make such a review. That is all that it does.

Lord Tordoff

Yes, in this particular clause; but as we have seen in earlier clauses there are other penalties which can accrue from not doing what the Secretary of State wishes. May I turn to something different and ask the Minister whether he can assist us? I assume that at the end of the day the Secretary of State will be interested in the results of such a review. If that is the case, I am not clear what the reporting mechanism is—and, indeed, I am surprised that this question has not been asked from the Government Back-Benches—and, to that end, in order that the quality of the review can be thought about by the Secretary of State, presumably this will require some further Civil Service back-up in the Department of Transport. We heard the other day of the large increases in staff which will be required. The noble Lord, Lord Boyd-Carpenter, I think, said that it would be a good idea if, so far as the GLC was concerned, all these civil servants were transferred into the central department. Can the Minister give any idea of the increase in size of the Civil Service as a result of this?

Lord Lucas of Chilworth

I cannot tell the noble Lord if there is to be any increase in the number of civil servants employed. If the question that the noble Lord asked is in relation to what happens to the review afterwards, then I think that that is contained in subsection (2) of Clause 7.

Lord Underhill

The more one listens to Government arguments about aspects of this Bill, the more one is mystified and, I am certain, the more supporters of the Government on the Back-Benches must be absolutely mystified, also. Subsection (2) does not talk about a report to the Secretary of State. It says that the authority shall inform the executive of its conclusions about the review. That is where it finishes. The Minister, in reply to my comments about the reviews which have been undertaken, said that he welcomed those reviews and that they covered the matters that the Government have in mind. Is that so? They went far beyond the narrow point that the Government had in mind. They dealt with the whole running of their transport system, with the whole management of their transport executive. If one looks at the words of the proposed Amendment No. 56, one sees that we want a review into, what steps if any may be taken to improve the manner in which the activities of the Executive may be managed. The whole of the activities—that is how the executive will manage itself, how the services will be managed, how the whole operation will be managed. The Government want the review to look into the question purely of whether or not there can be separate units. The Government may say that that is not what the Bill says. It does say that. It says: cause a review to be made of the organisation of the Executive for the purpose of determining … any particular activities of the Executive should be managed as separate units with separate accounts". That is the purpose of the review and not to look into the whole running of the PTE and all its services.

Therefore, one must ask why the Government want this narrow review. I am pleased that the noble Lord, Lord Campbell of Alloway, took the view that my noble friend Lord Mishcon was not playing with words when he raised this question of "require". It is not only the question of "require" to which exception is taken; it is whenever the Secretary of State so desires. So that, even though there may be a review being undertaken by the West Yorkshire PTE now into certain operations, if the Secretary of State so desires, they stop that and go into this one question of the review as to whether they want separate units for certain things with separate accounts. I am surprised that a Government is so insensitive to the feelings of people in the field. It was always my job in the Labour Party to have some sensitive feeling for the people doing the work down below. There is no regard here to the people who are slogging it out on the authorities, doing the work, and they are the elected bodies.

Frankly, I believe that the Government's replies on these amendments are so unsatisfactory that although it was not my intention to divide on this issue—because the Government will not budge one bit, they will not say "We will take this back and have a look at it"—I believe the Committee ought to give its view on Amendment No. 54, with which we associate Amendment No. 56.

5 p.m.

On Question, Whether the said amendment (No. 54) shall be agreed to?

Their Lordships divided: Contents, 73; Not-Contents, 101.

DIVISION NO. 1
CONTENTS
Airedale, L.	Hanworth, V.
Ardwick, L.	Harris of Greenwich, L.
Aylestone, L.	Hatch of Lusby, L.
Balogh, L.	Howie of Troon, L.
Bancroft, L.	Hughes, L.
Beaumont of Whitley, L.	Jacobson, L.
Beswick, L.	Jacques, L.
Birk, B.	Jeger, B.
Bishopston, L.	John-Mackie, L.
Boston of Faversham, L.	Kagan, L.
Briginshaw, L.	Kennet, L.
Brockway, L.	Kilmarnock, L.
Brooks of Tremorfa, L.	Leatherland, L.
Bruce of Donington, L.	Llewelyn-Davies of Hastoe, B.
Caradon, L.	Lloyd of Kilgerran, L.
Collison, L.	Longford, E.
Cooper of Stockton Heath, L.	McCarthy, L.
David, B.	Mayhew, L.
Denington, B.	Mishcon, L.
Diamond, L.	Molloy, L.
Elwyn-Jones, L.	Nicol, B.
Ewart-Biggs, B.	Oram, L.
Fisher of Rednal, B.	Peart, L.
Garner, L.	Phillips, B.
Gladwyn, L.	Pitt of Hampstead, L.

Ponsonby of Shulbrede, L. [Teller.]	Stewart of Alvechurch, B.
	Stewart of Fulham, L.
Rathcreedan, L.	Stone, L.
Rochester, L.	Strabolgi, L.
Ross of Marnock, L.	Tanlaw, L.
Rugby, L.	Tordoff, L.
Sefton of Garston, L.	Underhill, L.
Segal, L.	Wallace of Coslany, L.
Shackleton, L.	White, B.
Shinwell, L.	Wigoder, L. [Teller.]
Simon, V.	Willis, L.
Stedman, B.	Wootton of Abinger, B.

NOT-CONTENTS
Aberdeen and Temair, M.	Long, V. [Teller.]
Airey of Abingdon, B.	Lucas of Chilworth, L.
Alport, L.	Lyell, L.
Ampthill, L.	McAlpine of Moffat, L.
Atholl, D.	Malmesbury, E.
Auckland, L.	Mancroft, L.
Avon, E.	Marley, L.
Belhaven and Stenton, L.	Massereene and Ferrard, V.
Bellwin, L.	Merrivale, L.
Beloff, L.	Mersey, V.
Belstead, L.	Milverton, L.
Bessborough, E.	Molson, L.
Caccia, L.	Mottistone, L.
Caithness, E.	Moyola, L.
Campbell of Alloway, L.	Norfolk, D.
Cathcart, E.	Nugent of Guildford, L.
Cockfield, L.	O'Brien of Lothbury, L.
Cork and Orrery, E.	O'Hagan, L.
Cottesloe, L.	Onslow, E.
Craigavon, V.	Orkney, E.
Cullen of Ashbourne, L.	Pender, L.
Daventry, V.	Penrhyn, L.
Davidson, V.	Porritt, L.
Derwent, L.	Quinton, L.
Dilhorne, V.	Rankeillour, L.
Drumalbyn, L.	Romney, E.
Ellenborough, L.	St. Aldwyn, E.
Elliot of Harwood, B.	St. Davids, V.
Elton, L.	St. John of Bletso, L.
Enniskillen, E.	Sempill, Ly.
Ferrers, E.	Skelmersdale, L.
Ferrier, L.	Soames, L.
Fortescue, E.	Somers, L.
Fraser of Kilmorack, L.	Spens, L.
Gainford, L.	Stamp, L.
Gisborough, L.	Strathclyde, L.
Glanusk, L.	Sudeley, L.
Glasgow, E.	Swansea, L.
Glenarthur, L.	Swinton, E. [Teller.]
Glenkinglas, L.	Taylor of Hadfield, L.
Greenway, L.	Terrington, L.
Harvington, L.	Thomas of Swynnerton, L.
Hives, L.	Trefgarne, L.
Home of the Hirsel, L.	Trumpington, B.
Hornsby-Smith, B.	Tweedsmuir, L.
Hunt of Fawley, L.	Vaux of Harrowden, L.
Hunter of Newington, L.	Vickers, B.
Killearn, L.	Vivian, L.
Lane-Fox, B.	Wakefield of Kendal, L.
Lauderdale, E.	Westbury, L.
Lawrence, L.

Resolved in the negative, and amendment disagreed to accordingly.

[Amendments Nos. 55 and 56 not moved.]

5.9 p.m.

Lord Underhill moved Amendment No. 57:

Page 6, line 43, at end insert— ("( ) Where a review is made pursuant to this section, for the purposes of section 2 above combined charges shall not include the cost of such review.")

The noble Lord said: I shall be most surprised, astounded and flabbergasted if the Government do not accept this amendment because it is really saying that if a review has to be conducted then costs will arise, and I am certain costs will not be the £650,000 that we are told Serpell cost. But it could attract some cost, and it is saying that such costs should not be included in the combined charges such as revenues and grants which the PTA has to take into consideration in connection with its grant.

As the Bill will now keep in the wording which we tried to change, that they will have to carry out these reviews as and when the Secretary of State requires, I should have thought that the Government would readily accept that the cost of carrying out a review would not fall on the combined charges to be considered for the revenue grant. It is such a logical and sensible one, and I do hope that the Government will accept this amendment. I beg to move.

Lord Lucas of Chilworth

When I first looked at this amendment I really was not quite clear what the noble Lord had in mind to achieve by it. I must say that I still am not really sure what the noble Lord hopes to achieve by it. As far as I can see, the effect of the amendment would be to permit the authority to exclude payment for the cost of the review from its revenue account. Clause 7 does not specify who shall pay for the undertaking of the review. If the amendment proposed to remove the cost of undertaking the review from the execútive, I could understand it, but the amendment says something rather different.

Clause 2, which requires the executive to balance its books on the revenue account, after taking account of all the grants, says that the cost of the management review shall not be included in the charges to revenue account. In other words, the amendment seeks to exclude from the requirement to balance the books the cost of that review. There is a risk that the amendment would leave in very great doubt whether an executive could properly incur the costs of a management review, since such costs could properly be charged only to revenue account and could not be counted as capital expenditure. Nor could the cost of such a review be left in the accounts as a deficit and be carried forward, because that would destroy the purpose of Clause 2: the financial duty of the authority to break even.

If the noble Lord's intention is that the cost of the review should fall outside the expenditure to which the protected expenditure level relates, the amendment would not achieve that objective. Even with the amendment, an authority could pay the executive for the cost of the management review only by making themselves a revenue grant, and a revenue grant would come within the scope of the Bill. If, on the other hand, the authority wanted to avoid the cost of the review falling on the executive and therefore counting towards the protected expenditure level, it could do so by carrying out the review with its own staff or by employing consultants and footing the Bill itself. This would be absolutely in line with what has happened in West Yorkshire and Tyne and Wear, which commissioned consultants to review their passenger transport executives. I wonder quite what the amendment achieves and whether it achieves anything at all.

Lord Mishcon

Upon which despairing note of the Minister I rise in order to try to tell him what, although we may not have achieved it, is the intention of the amendment. If I can explain to the Minister in the same gentle language as he used to us on this side of the Committee what that intention is, it may well be that he can accommodate us and that we shall be able to put down at Report a proper amendment or have the pleasure of seeing a Government amendment.

The idea of the exercise is that under the Bill you have a Secretary of State who requires a review. Not having asked, if I may use the colourful language of the noble Lord, Lord Campbell of Alloway, the authority to dance but having commanded the authority to dance with him, the authority has to incur an expenditure which it may think is not warranted in the slightest; but, under the Bill, the exercise has to be carried out. That exercise, whether it is carried out by the authority's own staff, or by independent people, or with the aid of consultants, is bound to cost something. The employees who are undertaking the review would otherwise be spending their time on other activities of the authority.

The sole purpose of the amendment is that the authority shall not be burdened with the cost of a review which is required by the Secretary of State when the Secretary of State comes to fix the limit of the authority's expenditure. In other words, the authority is told that it can spend so much in the following year and that this will be lawful but that anything above that figure will be unlawful. The intention of the amendment is that the cost of the review shall not fall within the limit set by the Secretary of State but will fall outside it, so far as the lawful purposes of provisions of the Bill are concerned. If, because of its wording, the amendment does not carry out that intention, I apologise to the noble Lord the Minister, but at least he knows now the intention. If he is able to say he favours that intention, either we or the Government will be able to put down a satisfactory amendment.

Lord Campbell of Alloway

I support wholly, without qualification, the idea behind the amendment, as expressed by the noble Lord, Lord Mishcon. I agree that perhaps the amendment, as drafted, does not give effect to the concept which the noble Lord has advocated and which, as a matter of broad principle, I am bound to support. If the executive demands that something must be done which is going to cost money, it is manifestly unfair, as I see it, that this should be taken into account for the purpose of fixing the grant. I beg my noble friend the Minister to have regard to the broad merits of this plea, since it is one which, if not met, could perhaps give rise to a feeling of slight oppression.

Lord Tanlaw

I, too, support the principle behind the amendment. It applies far beyond the scope of the Bill. The problem with two bureaucracies—one centralised, the executive, and one decentralised—is that when conditions like this are called upon, nobody knows into which column the money should go. This matter should be cleared up, because exactly the same relationship occurs with the Department of Transport, the British Railways Board and a hundred and one other matters, where many questions are asked. Unless those questions are answered correctly, it is made quite clear that the body concerned does not receive the money for which it is waiting. A great deal of expense and time is often involved. I believe that the principle underlying the amendment is very fair and that it has far wider application than the scope of the Bill.

Lord Lucas of Chilworth

The noble Lord, Lord Mishcon, endeavoured to explain the intention of the amendment. I believe I answered the point that he made. If the intention is that the cost of the management review should fall outside the expenditure to which the protected expenditure level relates, the amendment does not achieve that aim. Even with the amendment, the authority could pay the executive for the cost of the management review only by making a revenue grant, and any revenue grant comes within the scope of the Bill. The rather more general point is, who is to bear the cost? The whole purpose of the management review is to encourage research into improving efficiency and attaining better value for money. If a commercial concern decided that, "Yes, we must carry out a management review", the cost of this will fall absolutely upon the company. This happens whether the review is initiated by management itself or by the shareholders. Perhaps the Government are shareholders in that they are finding from central funds and from the taxpayer enormous sums of money.

Having undertaken a review, the commercial concern just cannot slide the costs away into some suspense account. It has to be paid for and it has to be shown as part of the debit items in the accounts. So it is with the transport executives. Although my noble friend Lord Campbell of Alloway sees broad merits in the arguments put forward by noble Lords opposite, I have to tell him that I see no merit whatsoever in an authority not having to bear the cost of a review that becomes necessary. If we go all the way back, somebody is almost bound to say to me, "Ah, but it is the Secretary of State who is going to require this". The Secretary of State may very well require it because, unlike the three authorities which have been mentioned, there is perhaps something that needs looking into further.

Lord Pitt of Hampstead

If the Minister requires a review, then he should meet the cost of that review. The Minister can meet that cost through the transport supplementary grant. That is all that is required. It is in effect a review demanded by central Government and its cost should be met by central Government, through the grant that central Government normally make to the transport authorities.

Lord Mishcon

My noble friend Lord Pitt of Hampstead is always helpful, but he has not—if I may say so—been as helpful as I and my other noble friends are prepared to be. We are not at the moment arguing that the Secretary of State should himself have to bear the cost of the review. We are in fact saying something that the noble Lord, Lord Campbell of Alloway, caught immediately; and I believe it to be true that not only lawyers in your Lordships' Committee are anxious to see that justice is done. We are asking for justice. It is something that is common cause between all sections of this Committee, and we have no difficulty as a rule in realising that principle.

As I see it—and I ask the noble Lord, Lord Lucas of Chilworth, to correct me if I am wrong—the limit for a year's expenditure is set prior to the expenditure being made. If, during the course of the period where a limit has been set beyond which it may be unlawful for the authority to go, the Secretary of State requires the expenditure of a review to be incurred, I was making the point on behalf of my noble friends that that cost must not be taken into account in regard to observing the limit. That is the point—otherwise, the authority is becoming an unlawful authority, as it were, in regard to that expenditure, not only through no fault of its own but by virtue of the fact that it is bound to obey an order of the Minister in incurring expenditure that was not taken into account when the Secretary of State fixed his limit.

That case is so just, and so transparently just, that I must say to the noble Lord that, if this point is not one that he has considered, then I invite him frankly to say so. There are many points on which many of us, when in Committee, have not considered beforehand, and we readily admit that. The noble Lord may wish to say that he wants to go away and consider this point, the justice of which prima facie he can see (and I will not even ask him for a commitment). If, on the other hand, the noble Lord says that he has already considered this point and finds it one that meets with his sense of justice and with the Government's sense of justice, then he can at once concede it and together we can co-operate in ensuring that a proper amendment is put down to cover that point. The one thing I beg of the noble Lord not to do is to repeat—and he will not consider me to be disrespectful if I say this—a brief that may have been prepared on an entirely different basis and which merely negates even the principle of this amendment, because it will be no credit to the Government if he does so.

Lord Lucas of Chilworth

I am sorry, but I will not go away with this. It is for the authority to decide on the precise form of the review. If the authority pays for a review by consultants or on its own it does not come within the PEL anyway. If, however, it decides that the executive shall pay—and it is for the authority to decide who pays—then the noble Lord is—

Lord Mishcon

Horrified.

Lord Lucas of Chilworth

The noble Lord may be horrified, but he is trying to suggest to me that the cost of the review can disappear out of the revenue accounting.

Lord Mishcon

I am not.

Lord Lucas of Chilworth

Of course he is, because where else can the charge be met but in the revenue account? It is an expenditure on the business and on the operation. It has to be paid for by the operation. If a review is called for during the course of a year in which the PEL has been fixed—and we discussed much earlier, on Monday, what other sources of financing an authority might have such as borrowing, use of reserves, and so on—then that is taken account of within the bid or the fixing of the PEL for the next year. It is basically wrong to suggest that the cost of a review should not be borne within the executive.

Lord Campbell of Alloway

May I respectfully beg my noble friend to take this away and reconsider it, to receive representations with an open mind, and to take a little more time on this one?

Baroness Denington

May I plead with the noble Lord, Lord Lucas of Chilworth, not to be so adamant and so unyielding as the Government have been right through this Bill? I welcome the intervention of the noble Lord, Lord Campbell of Alloway. Is it not possible that the cost of such a review which the Minister himself insists should be undertaken could be regarded a cost above the legal limit set for the local authority? It is quite plain that the authority, if there is money to be saved, will be very hard pressed to offer the service that ought to be run. Any small extra cost—and although this review would not be a vast extra cost it would be an extra cost—will make the transport authority's difficulties even greater. Can the noble Lord not take this away, as we are pleading with him to do, to see what arrangement can be made so that the cost of the review is not a part of the legally laid down limit within which the authority must work?

Lord Somers

I am no lawyer, but an essential quality is justice, as the noble Lord, Lord Mishcon, has said. The Secretary of State lays down a limit above which the local transport authority may not go in expenditure. He then forces the authority to have this inquiry, which is going to cost a good deal of money, and which will force the authority to go beyond the limit which he has already set. Is that justice?

Baroness Nicol

It is not clear from the noble Lord's answer whether he had given thought to this point before today. Can I ask him again whether this actual point as put forward by the noble Lord, Lord Mishcon, had been considered by him in those terms and whether he is making his answer in the full knowledge of what it implies? This was not clear from the answer he gave.

Lord Lucas of Chilworth

Indeed consideration has been given to it, but certainly I cannot resist the blandishments of the noble Baroness, Lady Nicol, and the noble Baroness, Lady Denington, in support of what the noble Lord, Lord Somers, says, or in support of what the noble Lord, Lord Mishcon, said. All I can do is to promise to go away, having in my mind all that has been said, and give it some further consideration. I certainly undertake to do that and to write to the noble Lord, Lord Mishcon, and to other interested noble Lords.

Lord Mishcon

I am much obliged.

Lord Underhill

I think the Committee will be very grateful for that in view of the pressure from all parts of the Committee. It is a completely non-political issue. I am delighted that the noble Lord has said that, and in the circumstances I am happy to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 7 agreed to.

Clause 8 [Tenders for carrying on activities of Executives]:

Lord Underhill moved Amendment No: 58: Page 7, line 1, leave out subsection (1).

The noble Lord said: Here again I must say what I have said on other clauses: this clause received very little attention in the other place. In fact, looking at the Hansard of the Standing Committee I find that just one Government amendment was put without discussion; then the Question that the clause as amended should stand part was considered again—but without any discussion at all because of the procedure which had to be followed. I am just making that statement because it explains why there are a number of amendments on the Marshalled List dealing with this question.

This first amendment, No. 58, is to leave out subsection (1). I must ask first of all why this provision is inserted in the Bill. It says: An Executive shall, in the case of such activities carried on by the Executive as they may determine to be appropriate, invite other persons to submit tenders to carry on those activities for such period and on such basis as the Executive may specify in the invitation to tender".

Precisely why is that provision inserted in the Bill? Some PTEs already do this in certain limited spheres of their activities. In asking this question one must look at subsection (5) of this clause, which says that every report which is made on this must contain a statement showing the steps the PTE has taken to comply with subsection (1), the one I have just read out.

Notes on Clauses suggest that this invitation to tender should include both certain peak hour provision and services late at night and at weekends. It is not in the Bill, but that is what the Notes on Clauses say and that is obviously the Government's intention. Therefore, as to the presentation of the report on what has been done, either the Notes on Clauses are a waste of time or presumably the Government will ask, "Why have you not tendered for peak hours? Why have you not tendered for services late at night and at weekends?" Otherwise, there is no point in putting that comment in the Notes on Clauses.

We are grateful for the Notes on Clauses because sometimes they tell us more about the Government's intentions than the Bill does or the Government's statements do. Notes on Clauses also say: Under Section 10(1)(xv) of the 1968 Act Executives already have power to enter into agreements with any other person for that person to carry on any of their activities".

In other words, provision is already there. I can recall a number of occasions during the passage of this Bill when Ministers opposite have said to me, "There is no need for you to move your amendment because provision is already there and if the law is there why put it into the Bill?" The Notes on Clauses say that this is already lawful. Therefore, why do the Government put it in the Bill?

This report is sought as to how far an authority has gone to comply with subsection (1), and if the executive or the authority, in the Government's view, have not satisfactorily carried out subsection (1) this could affect their grant for the next year. The Government may say we should not be suspicious about this. But the Government are doing their best—they call it cost-effectiveness—to ensure that the position of the PEL is made rigid and that the PTAs and PTEs are going to be kept in something of a straightjacket. Therefore, we have to look at this as a whole, although at this moment I am just moving Amendment No. 58, which is to delete subsection (1).

Lord Lucas of Chilworth

The purpose of the clause is to reinforce the requirement that executives should have regard to cost effectiveness. It does this by requiring them to seek and accept tenders for suitable activities that might be more cheaply and effectively provided elsewhere, and we instance, for example, late night or weekend services. When the noble Lord, Lord Underhill, read out the Notes on Clauses he said that this would include both certain peak hour provision and services late at night or at weekends. Had he gone further, he might have added competition for other activities of the executives, such as maintenance work or ancillary services such as cleaning or catering, that could also help to reduce costs. The Notes on Clauses gave him an indication of the areas in which one might expect an authority to seek outside tenders. The move towards the provision of more cost-effective and efficient services just has to be in everybody's interest, and executives must be placed under a firm obligation to ensure that activities are carried out by others where they can do so more cheaply and efficiently.

Sometimes the PTEs need to test their own costs, their own methods, and a very easy way of doing this is to invite tenders for a similar service; they can then measure up their own activities. The Government frankly would not wish to accept any amendment that might weaken the requirement for an executive to look at its costs and methods by way of using the tender system.

Lord Mishcon

I am a little mystified, if I may say so, and I am trying awfully hard to equate the provisions of this clause with the way in which efficient business would be carried on in a private company. I think possibly noble Lords opposite would regard that as a fair way of assessing the value of an efficiency clause. I can understand the Government saying, if it is what they wish to say, that from time to time it is a very good idea to find out what you are paying for an activity carried on within your organisation—what it costs you—one should find out what it costs somebody else, and compare the two. Then possibly, if the two do not equate and there is a very substantial difference, it might be decided that there is something wrong with the executive's organisation and that it ought to put it right. I understand that.

If that is the sole purpose of the exercise, it is an extraordinary thing to talk about the tendering procedure. One would imagine that one merely tells the executive, "Please try and find out, if you can, how much it costs other organisations carrying out similar activities". I have always thought that the object of an honest tendering exercise, if someone took the trouble to tender, was that when a tender arrived which was the most satisfactory, one gave the work to that person, if satisfied that he could carry it out efficiently. To do anything else is to put other people to an unnecessary expense and, I should have thought, encourages the belief that the executive is not acting with commercial integrity, if that is not the object of the exercise.

If there is this obligation on the executive to carry out an honest exercise and from time to time to seek tenders in a bona fide way from people carrying on the various activities, of which examples were given by the noble Lord the Minister, I am inclined to wonder what will be the position of the employees in this organisation—the executive—in regard to any sort of loyalty that they are supposed themselves to have towards the executive, and, indeed, regarding their whole sense of security. If it be a fact that there is an obligation placed upon the executive to put out their activities to tender, and then to accept a tender which may mean that that activity closes down and there will be redundancy in the organisation, I would have said that anyone who walks into the executive's employment in those circumstances, if he has any sort of experience at all or if he happens to be getting on in years, would be very well advised not to do so at all but to go to people who have a better sense of continuity and loyalty as regards employer/employee relationships.

In these circumstances I look at this subsection and say that this cannot be the way in which properly to carry on activities. I can well understand the Secretary of State, if he wanted to, saying, "I am dissatisfied". It would not be a philosophy with which I would necessarily agree, but I find it logical to say, "What I require the executive to do is submit its accounts and I, the Secretary of State, will make my own inquiries as to whether the whole or part of the activities of the executive is being carried on efficiently. If I find that they are not being carried on efficiently, what I am going to do in those circumstances is see whether I cannot provide that other organisations carry out those activities". But to put this upon the executive—the employer—and to insist on tendering in regard to the various activities and such activities as it may determine to be appropriate (executives have already been told what the Government regard as appropriate) is not satisfactory; if it is to be a bona fide tendering exercise it would, I should have thought, be absolutely disastrous in regard to employer/employee relationships. Possibly worse than that, it would be disastrous if one is trying to get the right type of employee in the right type of department, both in a managerial capacity and otherwise.

Lord Campbell of Alloway

May I say a brief word in opposition to this amendment. Clause 8 must be read as a whole, albeit that we are only dealing with subsection (1) of it. Private contracting surely must now have its part to play in the new transport system. I agree that this is a politically sensitive issue but I have no doubt that the view reflected in this clause is right. Naturally, noble Lords opposite may take a different view, but it is essentially one of political judgment. Notwithstanding the reservations expressed by the noble Lord, Lord Mishcon. I would wholly support the clause as it stands, in its entirety, and for those reasons oppose the amendment.

Lord Lucas of Chilworth

I think that I should remind the Committee that this Bill is very much about efficiency. It is absolutely essential that all authorities and the PTEs look very hard in the future to ensuring that they get real value for money. It is not unreasonable, therefore, to see if there is a contractor outside who can undertake a service or an activity better and cheaper. If necessary, they are then empowered to enter into an agreement.

The noble Lord, Lord Mishcon, took a very different lane when he talked about potential redundancy, employers' loyalty, and so on. If, as my noble friend Lord Campbell of Alloway suggested, we look at Clause 8 as a whole and if we look specifically at subsection (3)—and we come to subsection (3) later—we see that it says: An Executive shall accept a tender invited pursuant to this section if it appears to them that to do so would result in the relevant activities being carried on in a satisfactory manner and at less cost to them". The executive may find that the tender is cheaper, but it may not be as satisfactory. I commit no executive to this course of action, but if I were in business and I found that the tendering company said, "Oh, and by the way we shall take on board all the cleaners in the workshop. They can come on similar terms", I would say "That is absolutely fine; splendid." No question of redundancy occurs. So it is not necessasry to suggest that by going out to tender, and by accepting a tender, a redundancy would necessarily occur. Indeed, one can perhaps think of other reasons where it should.

I do not believe that the noble Lord, Lord Mishcon, has made too much of the point with regard to employee loyalty. The tendering system would be a normal commercial activity. Let us see whether someone can undertake this activity better and cheaper than we can. That is all that Clause 8(1) invites an executive to do.

Lord Underhill

I continue to be disappointed with the Minister's stand on this, as on other issues. Reference was made to taking Clause 8 as a whole and we may have an opportunity later to do so. For the moment we are dealing with subsection (1). I have already stated in my opening remarks that there are some authorities who already invite tenders for certain of their operations. But it is no good the Minister just talking about cleaning and similar items, when I am reading from the Government's own Notes on Clauses. Perhaps I should quote from them again: Activities where Executives need to test their costs of provision compared with those of an outside undertaking include both certain peak hour provision and services late at night and at week-ends". Surely the point that my noble friend Lord Mishcon raised will come in there.

If employed busmen know that there is to be tendering for peak hour provision what kind of an attitude will that produce from employees? Nobody could believe that that will not cause some breakdown of loyalty. But that is what the Government say in the Notes on Clauses. It is not in the Bill, but it is pretty clear that when the report, which has to be produced under Section 16 of the 1968 Act, is presented, the Government will take a look and ask, "What have you done?", and then we may find pressure brought to bear. The whole point of the Bill, in order to get what the Government want—cost-effectiveness—is pressure on the authorities, the elected bodies, and not always in the right way.

I do not want to bore the Committee but I am looking at the Transport Act 1968. The Notes on Clauses state that under Section 10(1)(xv) of that Act executives already have power to enter into agreements with any other persons for that person to carry on any of their activities. There are about 15 lines in the 1968 Act under that provision. I shall not weary the Committee by reading them, but if people feel that I am not telling the correct story I shall read the lot. It means that there is the provision, which is set out in Clause 8(1), in the 1968 Act.

The Minister has not replied to this, and I must ask him again: if there is already legal power for an executive to enter into agreement with people, why do we have this subsection (1) in Clause 8? If I do not get a reply to that, I shall never accept from a Minister, in reply to any amendment that I put forward, the answer: "Why are you bringing forward this amendment? There is already legislation to cover it in another Act". I may be wrong in my interpretation, in which case I shall readily acknowledge it. But I ask again, why, if there is that provision in the 1968 Act (which the Notes on Clauses says that there is, so I am not deceiving the Committee), are the Government putting the provision in subsection (1)? What precisely is the purpose? I should like, if I may, to ask the Minister for a reply before we decide what to do on this.

5.52 p.m.

Lord Lucas of Chilworth

The noble Lord, Lord Underhill, is quite right.There are powers under Section 10 of the 1968 Act and passenger transport executives are free to enter into agreements. Although London Transport has power to enter into agreements with the NBC, its current powers are not so wide as those provided by Section 10, so a similar power is made available to London Transport under Clause 8(6).

The purpose of the clause is to reinforce the requirement to have regard to cost-effectiveness by a requirement to seek and accept tenders for suitable activities. The noble Lord, Lord Underhill, read out the Notes on Clauses. He read out part of the paragraph. A few moments ago I read out the second part. Perhaps it might be useful to remind the Committee that the heading on the top of that page is "Comment". These are the kind of things that are written. What is written down are the things for which the Government would expect executives to go out to tender. All that we are doing is to ask them to go out to tender and to look at exactly what it is that other people might be able to provide.

The words in the subsection are: An Executive shall, in the case of such activities carried on by the Executive as they may determine to be appropriate,"— "as they may determine"—never mind about the Notes on Clauses. The executive will determine those activities which it carries out and for which it thinks it appropriate to invite other people to submit tenders. There is nothing sinister about that at all. It is a very reasonable requirement to put on an executive.

Lord Mishcon

I wonder whether the noble Lord the Minister, in order to clairfy at least one humble mind on your Lordships' Committee, would answer this question? Is it the intention of the Government to leave the discretion completely—I am sure that he meant what he was saying in all candour—with the executive as to whether, having regard to all the social and other factors, efficiency may not be properly answered by accepting the tender which is obtained by the executive; or is it within the purview of the Secretary of State to say, "I disagree with the authority and with the executive in not having accepted that tender. I do not like their arguments on efficiency or social advantage in refusing it, and therefore when it comes to fixing my limit I shall fix a limit which will take into account what it would have cost if only that tender had been accepted"?

In other words, is the Minister being open with the Committee? When he emphasises the provision, which the executive thinks is appropriate, is he saying that the Secretary of State will accept the view of the executive and the authority as to whether a tender should be accepted and will not take the decision by the executive not to accept a certain tender against it in fixing the limit or indeed the budget which he advocates for the authority to accept?

Lord Campbell of Alloway

May I ask the noble Lord, for clarification, whether he is saying that, as a matter of construction of the Act as a whole, it is the latter interpretation? If he is, I think that I agree with him; that is, the interpretation that it lies within the Secretary of State's remit rather than exclusively within the executive's.

Lord Sefton of Garston

May I ask the noble Lord a question? I accept what in effect the noble Lord has just told us from the Front Bench, that the decision on whether to ask for tenders will be a matter for the executive and that there is nothing sinister in it; in other words, it was no intention of the Government in any way to take away from the executive the free choice as to whether to accept a tender or even to go out to tender in that regard. That is what I took the noble Lord to say. I hope that I am not being unfair. Clause 3(5) says: In preparing the plan the Executive shall take into account … and generally as to the form and contents of the plan". In view of what the noble Lord said in regard to the clause under discussion now, do I take it that under no circumstances will the Government include in the plan against the wishes of the executive that it should go out to tender for a particular service?

Lord Mishcon

I hope that the noble Lord. Lord Campbell of Alloway, did not think me discourteous when I failed to rise again. I thought that he was supporting me if my construction was right. If that was so, I was really waiting for the noble Lord the Minister to reply and say whether my construction was right or wrong.

Lord Campbell of Alloway

I am very much obliged.

Lord Lucas of Chilworth

I think that the only answer that I can give the noble Lord, Lord Mishcon, is that the discretion lies with the executive under subsection (1) of this clause and with the authority under subsection (2). The Secretary of State does not have discretion by anything written in Clause 8 with regard to going out to tender. The law, if the Bill passes into law, would just require the executive to go out to tender, as it may determine. The Secretary of State has no discretion in this matter.

Lord Mishcon

The noble Lord is most courteous, but I am afraid that he has not understood my point. It may very well be that it is my fault for not having put it clearly enough. May I put it to him I hope a little more clearly in these circumstances? I appreciate that it is within the discretion of the executive to decide what activities should in fact be made the subject of the tender procedure. I accept that. The Minister has said it and repeated it and it is within the section. The question I asked of him was this: are we to take it also that it lies within the discretion of the executive (on matters of efficiency and cost and so on) to make the decision for itself as to whether or not, having received various tenders, it accepts any one of them in respect of those activities? The Minister nods his head and says, "yes".

I then went on to the third point and asked whether, if it exercises discretion in that way, which the noble Lord the Minister affirms it may, he is also saying that the Secretary of State, when fixing the limit, will honour the decision of the executive and will not seek when fixing the limit to substitute his own discretion as to whether the executive should or should not have accepted one of the tenders for any of those activities. That was the third question which the noble Lord the Minister did not answer, and I believe, if I may say so, though it is for him to assent or not, that that too was a matter to which the noble Lord, Lord Campbell of Alloway, was addressing his mind following my earlier speech.

Lord Lucas of Chilworth

I think I have to answer only the one point from the noble Lord, Lord Mishcon, and that is, will the Secretary of State take into account when fixing the PEL whether the executives have gone out to tender or not? That is the gist of his question. Of course the Secretary of State will take account of anything that appears in the plan that requires his consideration, so that if the plan includes a certain area of activity which it is proposed should go out to tender, which may cost x, y or z, that will have to be taken into consideration.

Lord Underhill

The first point is that the Minister said that the subsection and paragraph of the Transport Act 1968 to which I referred is repeated in the Bill to reinforce the requirement. I think I have it correct. That is absolutely contrary to statement after statement made by the Ministers on the opposite side of the House when we have attempted to put safeguard provisions into other Bills. It will obviously have to be thought about in future. When we have tried to insert something to clarify it, to make certain that there is no misapprehension, we have been told "Do not worry. It is something in the 1910 Act". The 1968 Act gives exactly the power to the executives which subsection (1) is requesting. Naturally there must be some feelings on our part as to why this is being done.

In the last statement by the Minister, I think he let the cat out of the bag. When the rolling three-year plan which has to be presented each year is presented, the Secretary of State will look at it, and there are provisions in the Bill that we argued about the other day. The Secretary of State can indicate where it ought to be modified. The Secretary of State can say, taking the comments of the noble Lord the Minister, "What have you done about peak hours? What have you done about getting other people to run the peak hour services instead of your own?" He can give instructions to modify the plan. If the PTE does not modify the plan, that will be taken into consideration later on, because it is all in there. What is called guidance and advice is all linked to the PEL, and the Minister knows it is. Therefore, although he has said that the executive will decide at the end of the day, the executive will not finally decide.

What I think it is best for us to do on this amendment is to read carefully what various noble Lords have said on this. I am pleased to see the support which has emerged. The observations and questions by my noble friend Lord Mishcon have not been fully answered, but it may be that a better form of amendment than merely deleting subsection (1) can be brought forward when we consider later the whole question of Clause 8. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6.5 p.m.

Lord Underhill moved Amendment No. 59:

Page 7, line 14, at end insert (", but shall not be bound to accept the lowest, or any, tender so invited.").

The noble Lord said: Would it be for the benefit of the House if we also took Amendment No. 61? That was not my original intention, but these two amendments I put down to ascertain the Government's view because Clause 8 was not discussed in the other place at all. Therefore we want to know what the Government's view is.

Amendment No. 59 is following up a point which, in reply to my noble friend Lord Mishcon, the Minister made when he said that the PTE would be free to decide on the results of any tender. What we are suggesting in Amendment No. 59 is that the PTE shall not be bound to accept the lowest or any tender so invited. In other words, it must not be bound to accept a tender because it is the lowest. There are other factors to be taken into consideration, which I think the noble Lord will readily recognise. Therefore, in the light of what has been said, we should like to know whether the Government can accept that amendment or something similar to it.

Amendment No. 61 says something which I hope the Government will recognise—that nothing in this clause will authorise the executive to break any existing contractual arrangement. I mentioned that the 1968 Act already gives the executive power to make arrangements. Some have made certain arrangements and, again to use the words of the Minister, "to reinforce the requirement" we propose to put in these words to ensure that the position of the executive will be safeguarded as regards any existing contractual arrangements. Perhaps the Minister will give us his observations on those two amendments. I beg to move.

Lord Lucas of Chilworth

I am quite happy to talk to both amendments, Nos. 59 and 61, if that is the wish of the Committee. Dealing first with Amendment No. 59, where an executive has sought tenders and a tender shows that a particular activity can be satisfactorily and more cheaply carried out other than by the executive, surely the executive should be under a duty to accept it. The duty that an executive has to ratepayers and to the travelling public is to provide services as cheaply and efficiently as possible. That is exactly what Clause 8(3) seeks to achieve.

I think, however, that I can reinforce what I said earlier and make it quite clear that we are not requiring an executive to accept any or simply the cheapest tender. It will only have to accept tenders where it appears to the executive that the activity can be more satisfactorily and more cheaply carried out by another body. In other words, there has to be a positive improvement in the position then obtaining. I could not countenance an amendment like this which really weakens this spur to executives to strive constantly to provide that more efficient and better service to their ratepayers and the travelling public.

As far as Amendment No. 61 is concerned, I am advised that there are existing contractual arrangements already protected in law. While one would want to support the general spirit of Amendment No. 61, my understanding is that it is quite unnecessary.

Lord Tordoff

With regard to the first amendment, I had intended to come to this matter at a later stage when dealing with the clause as a whole, but it seems to me that it is not so simple as accepting a tender, because the executives have the problem that separately identifiable parts of their business do not necessarily stand on their own in relation to the totality of the service being provided.

The thing which worries me about the route that the Government are taking here is the disintegration—if that is the right word—which could occur if executives are placed in a position where they have to put sections of their business out for tender and accept those tenders. What worries me is the deleterious effect on other parts of their operation. I hope that the Minister takes the point. If, for example, Tyne and Wear have a section of their activity put out to tender and it can be shown that that part of the business can be run more cheaply by a private concern, they would be in a position not where they were forced by edict of the Secretary of State, but where they would incur penalty on the PEL at a later stage if they did not accept that tender. Consequently, damage might be done to another part of the totally integrated transport arrangements in, for example, the Tyne and Wear area if the provisions of this clause were to go through as they stand in the Bill at present.

Lord Lucas of Chilworth

I think that I can answer the noble Lord quite simply. Quite obviously a tender that has a counter effect upon another activity in tandem or in harness would not be satisfactory. So the executive or authority would be perfectly within their rights under the terms of this Bill not to accept it.

Lord Tordoff

I am grateful to the noble Lord the Minister for that comment. Perhaps we might consider coming back at a later stage of the Bill with an amendment to cover this particular point. But I am most grateful to him for what he has said.

Baroness Nicol

There is nothing unusual about the phrase that is suggested in the amendment. It is used quite commonly as regards a large number of organisations and it is a protection for the organisation concerned. There may be reasons for not accepting the lowest tender; there may be reasons why it is considered unsatisfactory, which they do not nececessarily want to discuss in public. It is useful to have the inclusion of this protection to prevent argument—that is unless there is to be selective tendering which would remove many of the dangers for them. I cannot see why the Government are resisting this amendment. It seems to me to be a sensible business precaution to include it at the end, as is done in so many places.

Lord Mishcon

I should like to add one or two short sentences to what has been said. I ask the Minister kindly to consider the following point which has not yet been advanced except by my noble friend who has just spoken about this being a usual clause by way of protection. In my submission, the reason for putting it in is that you wish to avoid embarrassment as an authority because you have a particularly persistent tenderer who says, "I happen to know that my figure was the lowest tender. I happen to know that under the Act you are instructed to accept the lowest tender, provided that the tenderer is satisfactory. Where am I unsatisfactory? I demand to know this because otherwise you are not carrying out your duty under the Act and you must have some reason for saying that I am unsatisfactory". It is a good thing that the authority concerned is able to say, "Ah, we are not under a duty to accept necessarily the lowest tender. If you look at the Act you will see that that is so". That may get the authority out of the very embarrassing position of having to argue that the contractor who is tendering is not indeed able to supply a satisfactory service. Therefore, it can do no harm but only good.

Lord Campbell of Alloway

I suggest that there is a sane, practical reason for the inclusion of Amendment No. 59 to which other noble Lords have spoken. Its inclusion does no violence to the spirit of any principle in the Bill. As regards Amendment No. 61, I should have thought, with the greatest respect to the noble Lord, Lord Underhill, that it really adds nothing to the Bill and I would oppose it because it would not be appropriate.

Lord Lucas of Chilworth

I can only reiterate what I said previously, namely, that the executive only have to accept tenders where it appears to them—and I repeat, "where it appears to them"—that the activity can be satisfactorily and more cheaply carried out. In view of what has been said, I am quite happy to go away and read and consider again what noble Lords have said with regard to this matter.

Lord Underhill

I am grateful to the Minister for that because in the light of the points that have been made it would seem completely unreasonable not at least to have a look at it. I ask him also to consider what was said previously; that to use his own words, this would reinforce a requirement. It seems a most sensible thing to do and I am grateful that he is going to look at the matter. I am prepared to accept what he said about Amendment No. 61; namely, that if there are existing contractual arrangements in law which would safeguard the situation, then that amendment is not required. Therefore, I beg leave to withdraw Amendment No. 59 while the Minister considers the matter.

Amendment, by leave, withdrawn.

[Amendments Nos. 60 and 61 not moved.]

On Question, Whether Clause 8 shall be agreed to?

Lord Underhill

Time and time again it has seemed as if noble Lords wished to discuss the whole spirit of Clause 8, and in my view the Committee should have that opportunity, especially as in the other place they never had such an opportunity. Therefore, we have a chance here to take a look at the whole clause. Frankly, it is a clause that we feel should not be in the Bill for various reasons, some of which have already been advanced. In case the Minister should say, "But you will be taking out subsection (6) which gives London Transport the same powers as other bodies already have under the 1968 Act", I give a firm undertaking that if the Committee does not support Clause 8 staying in the Bill I shall bring forward an amendment at the Report stage to put back subsection (6). I cannot make a fairer statement than that because I want to see the requirements now being given to other authorities being given to London also under the 1968 Act.

But, for reasons which have been advanced on other amendments, we regard this clause as unnecessary and provocative to the executive and to the authorities. I cannot believe that there is any executive which, when it considers that it can do something better in another way, will not look at its functions. But bearing in mind that no Government put items in Notes on Clauses just for the sake of making friendly comments, the items which have been put in as comments on this—and admittedly they are comments and not law—are those at which the Secretary of State will be looking. When he considers the three-year plan he will, as the Minister says, obviously look to see what has been done under Clause 8(1). We shall have the position of the authorities and the executives being challenged and they will be made to look not the free bodies that they should be.

I come back to the point which other noble Lords have raised—the question of loyalty of staff. How does one build up the loyalty of an operating staff when they know that the Government are going to look over their shoulders to see what they are doing about peak hour tendering and about week-end tendering? You will not build up a healthy, happy staff in that way. Because of the general content of the clause, the fact that the powers are already there, as the Minister agrees, under the 1968 Act for an executive to do these things makes one ask: What is the purpose? The Government will say that the purpose is cost effectiveness and efficiency. We believe that it goes deeper than that. It is an objectionable clause which we do not think the Committee should approve. But I would remind noble Lords of what I said about subsection (6). As subsection (6) will go out with the clause, I shall bring forward an amendment to reinstate subsection (6) at the Report stage.

6.20 p.m.

Lord Tordoff

From these Benches I think I should say, first, that we have no dogmatic objection to private services being intermingled with public services. But we would object to the Secretary of State and the Department of Transport telling local authorities that they must do these things. The Minister has said on a number of occasions, in response to both myself and others, that there is no compulsion within Clause 8. No, there is no compulsion within Clause 8. As the noble Lord, Lord Sefton of Garston, rightly says, the compulsion lies within Clause 3. It is a financial compulsion. When the PEL is being drawn up, all these matters will be taken into consideration, and an executive will not know at the time when it has to make some of these decisions what impact it will have on the setting of the PEL. It is left in the dark until the end of the year when these matters are discussed. Then it finds out the penalty for having taken or not taken certain steps.

As I say, I have no dogmatic objection to privatisation on its own account; but, as the right reverend prelate the Bishop of Durham said yesterday in the middle of the Serpell debate, it is important that when these things are done they are done fairly. It is not right that the private sector should have all the cream and all the jam off the bread, and that the public sector should be left with the stale crusts. There are many activities within the public transport sector that can only be dealt with by the local authority. It simply is not right that, when they are running efficient and profitable sectors, these should be creamed off and handed to the private sector. That is what we fear will happen here.

The noble Lord, Lord Campbell of Alloway, takes a perfectly logical and straightforward view of this Bill and I respect his attitude to it more than I do that of the Front Bench of the Government, who have been trying to draw something of a smokescreen around it. The noble Lord takes a very clear, straightforward view of it. It is a view with which I disagree. But I think that it would be a much better viewpoint coming from the Front Bench than the one we have had.

I think that this is a very brutal clause which will do great damage to our public service transport sector, particularly in those areas that have made progress, and again I mention Tyne and Wear. Certainly from these Benches we will oppose Clause 8 standing part of the Bill.

Lord Campbell of Alloway

I should like wholly to support Clause 8 of the Bill. In my submission, the principle is right. The sanction of course lies with the Secretary of State under Clause 3. To avoid repetition, the role of private contracting must be recognised. Briefly in reply to the noble Lord, Lord Tordoff, why should he fear that this would not be done fairly—that the cream or the jam would go to the private contractors? There is not time to examine his fear, but I suggest to your Lordships that it is not a fear that is likely to materialise at all.

Secondly, the noble Lord, Lord Tordoff, objects to the principle of control by the Secretary of State but not to the introduction of private contracting. The principle of control by the Secretary of State is the crucial principle of the Bill, which I wholly support, and that is where we differ.

Lord Sefton of Garston

I thought that the noble Lord asked the question: why should the noble Lord, Lord Tordoff, be worried that the private sector would cream off the best and leave the rest for the local authority? If that was the question, surely the answer is obvious. The private sector will only tender for the cream. Surely nobody in this Chamber forgets one of the simple factors that put our railway undertaking into such difficulties. It was because the law of the land laid down that railways should be common carriers and they had to carry all kinds of distasteful loads. At one time British Rail, and the railways before it as common carriers, had to carry distasteful loads. At the end of one particular journey they almost had to scrap the railway wagon because it was not fit to be used for anything else. The private sector would never tender to do a thing like that. The answer is obvious: it is within the very nature of private enterprise that it will go for the profitable, and to hell with the needy.

Lord Mishcon,

I should like to add a few brief comments in regard to this clause. The noble Lord the Minister has concentrated all his fire on answering the various amendments that have been moved on the principle that unless the tender happens to be satisfactory and an economically sensible tender, the executive can refuse it. Of necessity that means, if you turn the coin over, that if it is satisfactory in regard to an activity and it is at a lower cost than the activity which is being carried out, then it is the duty of the executive to accept it.

My noble friend has dealt with the question of loyalties of employer and employee, as I tried to do earlier. Because we have dealt with it before, there is no point in repeating it; the point has been made. But I wonder whether noble Lords, who are all of middle age and certainly not of an old age, would allow me, as a person of middle age, to reminisce? That reminiscence takes me back to the days of pirate buses in London. I would assure your Lordships that as a child I used to catch buses to school in the days of pirate buses. Noble Lords may remember that, apart from the great speed with which pirate buses travelled, largely because they decided that it was sensible to go in front of the publicly-owned buses, ignore all request stops and get to the main stop as soon as possible, pirate buses had one thing in common with the public buses: they ran only at peak hours. That was the only interest they had.

I hope that quotations from the Notes on Clauses by the Opposition will not inhibit the courtesy of the Front Bench from extending those Notes on Clauses in future. It is a tradition which has existed, whoever has been in charge of the Front Bench opposite, that Notes on Clauses should, where possible, be supplied to those in Opposition who have to deal with the various debates. However, in the Notes on Clauses is the very question of the peak hour activity. If one wants to walk into chaos, which in my submission will be created by this clause (which puts the obligation to accept satisfactory and economic tenders upon any activity, which could include a peak hour activity). I am saying that quite apart from the loyalty point, there is also the point that quite obviously the net cost which will fall upon transport authorities will, if we are not very careful, be the net cost of unsocial hours in regard to transport.

By "unsocial hours" I do not mean that they are carrying out an unsocial activity; I mean that they are carrying it out as a social duty but nevertheless at a time when quite obviously the activity does not pay. Then we shall come across the injustice of the limit, and then other injustices. This is a bad clause, and deserves to be taken out of the Bill.

Lord Lucas of Chilworth

May I ask the noble Lord, Lord Mishcon, whether it is not a fact that the PTEs have a duty to their ratepayers and the travelling public to provide services as cheaply and as efficiently as possible? That is their duty. This clause goes some way towards assisting them in discharging that duty. The clause is not a new concept. Nothing new has been introduced in this clause. The best executives already sub-contract work. The provision merely encourages the other executives to search for areas, and then to search for tenderers to meet those areas where it could lead to savings.

I am most grateful to my noble friend Lord Campbell for putting so succinctly exactly what this clause aims to do, and he is quite right. I have said that we would look at a number of points throughout this afternoon's discussion on Clauses 7 and 8, and I can do no more for your Lordships' Committee.

6.31 p.m.

On Question, Whether Clause 8 shall be agreed to?

Their Lordships divided: Contents, 83; Not-Contents, 56.

DIVISION NO. 2
CONTENTS
Airey of Abingdon B.	Ferrier, L.
Atholl, D.	Fraser of Kilmorack, L.
Avon, E.	Garner, L.
Belhaven and Stenton, L.	Glanusk, L.
Bellwin, L.	Glasgow, E.
Beloff, L.	Glenarthur, L.
Belstead, L.	Greenway, L.
Bessborough, E.	Hailsham of Saint Marylebone, L.
Caithness, E.
Campbell of Alloway, L.	Hayter, L.
Carthcart, E.	Hives, L.
Colwyn, L.	Home of the Hirsel, L.
Cottesloe, L.	Hornsby-Smith, B.
Craigavon, V.	Hunt of Fawley, L.
Davidson, V.	Ingleby, V.
Denham, L. [Teller.]	Lane-Fox, B.
Digby, L.	Lauderdale, E.
Dilhorne, V.	Lawrence, L.
Drumalbyn, L.	Lindsey and Abingdon, E.
Elliot of Harwood, B.	Long, V.
Elton, L.	Lothian, M.
Enniskillen, E.	Lucas of Chilworth, L.
Ferrers, E.	Lyell, L.

Mackay of Clashfern, L.	St. John of Bletso, L.
Mancroft, L.	Sandford, L.
Marley, L.	Sempill, Ly.
Massereene and Ferrard, V.	Skelmersdale, L.
Molson, L.	Somers, L.
Mottistone, L.	Strathclyde, L.
Mountevans, L.	Sudeley, L.
Napier and Ettrick, L.	Swansea, L.
Newall, L.	Swinfen, L.
Nugent of Guildford, L.	Swinton, E. [Teller.]
Onslow, E.	Terrington, L.
Orkney, E.	Teynham, L.
Pender, L.	Thomas of Swynnerton, L.
Penrhyn, L.	Trefgarne, L.
Platt of Writtle, B.	Vaux of Harrowden, L.
Quinton, L.	Vickers, B.
Romney, E.	Vivian, L.
St. Aldwyn, E.	Wakefield of Kendal, L.
St. Davids, V.	Young, B.

NOT-CONTENTS
Airedale, L.	Kilmarnock, L.
Ardwick, L.	Leatherland, L.
Aylestone, L.	Llewelyn-Davies of Hastoe, B.
Banks, L.	Longford, E.
Beaumont of Whitley, L.	Mayhew, L.
Beswick, L.	Milner of Leeds, L.
Boston of Faversham, L.	Mishcon, L.
Briginshaw, L.	Nicol, B.
Brooks of Tremorfa, L.	Ogmore, L.
Bruce of Donington, L.	Oram, L.
Collison, L.	Phillips, B.
David, B. [Teller.]	Pitt of Hampstead, L.
Denington, B.	Plant, L.
Diamond, L.	Ponsonby of Shulbrede, L.
Elwyn-Jones, L.	Ross of Marnock, L.
Evans of Claughton, L.	Sefton of Garston, L.
Ewart-Biggs, B.	Simon, V.
Fisher of Rednal, B.	Stewart of Alvechurch, B.
Gregson, L.	Stewart of Fulham, L.
Hanworth, V.	Stone, L.
Hatch of Lusby, L.	Strabolgi, L.
Howie of Troon, L.	Tordoff, L. [Teller.]
Hughes, L.	Underhill, L.
Jacobson, L.	Wallace of Coslany, L.
Jacques, L.	White, B.
Jeger, B.	Wigoder, L.
John-Mackie, L.	Wilson of Langside, L
Kennet, L.	Wootton of Abinger, B.

Resolved in the affirmative, and Clause 8 agreed to accordingly.

Clause 9 [Repeals and minor amendments]:

6.40 p.m.

Lord Underhill moved Amendment No. 62: Page 7, line 44, leave out ("subsections (3) and ") and insert ("subsection").

The noble Lord said: I think it would be to the advantage of the Committee if I spoke at the same time to Amendment No. 63. Both amendments may seem obscure, but they relate to the proposal in the Bill which will lead to the repeal of Section 15(3) of the 1968 Act. Noble Lords will recall that this has been referred to on a number of occasions in debating the Bill. Briefly, that provision in the 1968 Act gives the PTA power to direct a transport executive to provide a specific service or services, and there is provision for the PTA to underwrite the cost of that service where the executive is not willing to provide it on the grounds of cost.

The Secretary of State has argued that, once the Bill has become an Act, Section 15(3) of the 1968 Act will no longer be required because the PTA will be able to ensure that the three-year plan includes such services as it would require through the use of the power contained in Section 15(3). The amendment seeks to delete the reference to Section 15(3) from the Bill so that that provision will remain in force. I am tempted to use a phrase used by the Minister when replying to a previous amendment; namely, we shall thereby be helping to reinforce the requirement.

It may be said that that section of the 1968 Act has not hitherto been used a great deal. Nevertheless, it is potentially a very useful provision, in that it enables a PTA to react to circumstances which may have been unforeseen at the time when the plan was prepared, and it enables the executive to provide a much-wanted service with the guarantee that money will be found to pay for it.

I have with me a copy of a letter sent as recently as 24th February to the Association of Metropolitan Authorities by the Solicitor-Secretary of the Merseyside Passenger Transport Executive. That officer, referring to Section 15(3) of the 1968 Act, said: It has in fact been very useful in Merseyside to enable the Passenger Transport Authority to identify special needs and to give the Executive directions to provide specific services to meet them in circumstances where their operation could not otherwise be justified.

He went on: Four such directions have been given since the Bromley and Merseyside judgments"—

in other words, fairly recently— established the nature and extent of the Executive's own fiduciary duty and its obligation to operate in accordance with ordinary business principles. Each required the Executive to provide an enhanced or additional bus service and guarantee a specific grant for that purpose. Given the limitations on Passenger Transport Authority and Passenger Transport Executive powers, the retention of Section 15(3) is essential because there is no statutory recognition elsewhere that overriding social needs do sometimes justify hopelessly uneconomic services".

That is the view of one of the six metropolitan authorities to which we have referred. I quote from another letter, this one from the Solicitor-Secretary of the West Yorkshire Passenger Transport Executive: On about a dozen occasions, a course of action has been taken by the PTE with the provisions of Section 15(3) of the 1968 Act in mind". Those letters suggest that, in the interests of the PTEs and of providing proper services, it would be unwise to repeal the important provisions contained in Section 15(3) of the Act, and it is to prevent their repeal that I move the amendment.

Lord Bellwin

As the noble Lord, Lord Underhill, explained, the effect of this series of amendments would be to allow the authorities' powers under Section 15(3) of the Transport Act 1968 to stand, rather than be repealed by the Bill. This provision was discussed at great length by the Standing Committee in another place and, in particular, the date of the repeal. However, let me set out the effect of this section and the purpose of the repeal.

Under Section 15(3) of the 1968 Act, an authority which wishes to see an unwilling executive provide a loss-making service may direct the executive to provide that service, and the authority must then provide a specific grant to the executive to meet the costs. Section 15(3) is to be repealed by the Bill because the planning procedure which the Bill introduces will allow an authority to require the executive to include in the plan any service or facility it considers necessary. Section 15(3) will therefore become superfluous. But, as the planning procedure will not be fully implemented before 1st April, 1984, we do not intend to remove this power until that date.

The second amendment would result in the repeal of Section 15(3) of the 1968 Act on Royal Assent, rather than on 1st April, 1984, as we intend. Section 15(3) will be superseded by Clause 4(1) of the Bill, but 4(1) does not itself come into effect until 1st April 1984, so we have no intention of repealing Section 15(3) before then. I am sure also that that is not the noble Lord's intention.

Under the Bill, the authority may, under Clause 4(2), require the executive to add to their plan the provision of an unremunerative service; and the authority will in each year approve the plan with or without modifications and determine the amount of revenue grant it gives the executive. The power contained in Section 15(3) will, therefore, be fully replaced by the Bill as part of the annual process. I accept the point of the noble Lord that this is a somewhat complex matter. It therefore requires the same careful thought by him as he said it would require by me. As I say, however, we cannot accept the amendment.

Lord Mishcon

I wish it were a complex matter and I wish that, as a result of it being so complex, one could accept with satisfaction the Minister's answer. It is a simple and important matter. Up to the moment of the repeal of Section 15(3), an authority could lawfully and without fear of being challenged exercise a statutory power and tell the executive to carry out a loss-making but nevertheless essential social exercise, provided, of course, that the authority paid for it. That is perfectly just and acceptable.

The planning behind the Bill is that the authority can, if it wishes, include such a matter in its plan, but the Secretary of State can, when he gets the plan, decide that that loss-making but nevertheless essential social exercise will not be put by him in his calculation for the limit. The result of that will be that, because of the repeal of the provision from the Act to which the authority could previously refer, the authority will because of that repeal now be left naked and able to clothe itself only in the provisions of the Bill. Therefore anybody can take the authority to the courts, and say, "Oh! the old section has gone. You might have been able to do that by paying out of your own resources under the old section. But now you have gone above the limit, because the Secretary of State is now the adjudicator of what is the social need in the way in which he sets his limit. Quite right—the authority can pass the plan. But I now challenge you before the courts—you should not have told the executive to carry out that necessary social but loss-making exercise".

So the matter is not as complex, nor is it as simple, as might be thought. It is not as the noble Lord the Minister put it. I am sure that he was not in any way trying to deceive your Lordships' Committee. He is completely incapable of such a thing, and would never attempt to do it. But all he has done in order to explain the matter to the Committee has been to use language which happens to have omitted that very essential difference. So I repeat, the authority is now left naked, and is unable to clothe itself in anything other than the provisions of the Bill. Those provisions state quite clearly, "Lawful expenditure by the authority, provided you are within the limit. You could be held to be unlawful if you are outside it, and because you gave the executive an instruction to carry out a necessary social, but loss-making, exercise, which the Secretary of State did not think was essential, you can be hauled before the courts for unlawful expenditure". That is what the Bill means.

6.52 p.m.

Lord Sefton of Garston

I should like to intervene for a few moments. When the present Government were elected, they took away from Merseyside 3,500 Civil Service jobs. They had their reasons for doing so, I suppose—but I shall not go into that. Then there was some trouble in Liverpool, and so they sent there the "Minister for Merseyside". His first act was to suggest an international garden festival, and that is to take place in 1984. Nobody knows whether or not it will be a success. But one thing is quite certain. There will be a necessity for travel in the district where the garden is to be laid down, and as the event unfolds the transport authority in the area will have to take a decision on expenditure to be incurred on transport. But under the Bill the authority will not be allowed to do that, because it will have to make up its mind before March 1984 as to what its spending is going to be. If, due to unforeseen circumstances, the authority tries to spend any more in order to make the garden festival a success, it will be liable to be dragged through the courts. That is a small example of the flexibility that is required in transport planning. The noble Lord, Lord Underhill, has already given examples of four cases, and I urge the Government to be slightly more flexible than they have been until now—and they would not have to be very flexible to achieve that.

Lord Campbell of Alloway

Yes, the expenditure is lawful within the limits, but there is a query as to whether it is unlawful outside the limits. However, that is the whole concept of the Bill. That is the principle, and in order to achieve it there must be the requisite control under the Bill. As we see it, that involves a clarification of the law; and in order to achieve that clarification we must use this Bill, not another Act. That is in essence the structure, right or wrong. I submit that it is right.

Lord Bellwin

There is not much that I can add to what I said earlier. As always, the noble Lord, Lord Mishcon, makes the matter sound very straightforward, and I am sure that from where he sits it appears so. Would that it were all so straightforward to the rest of us! I said, as indeed did the noble Lord, Lord Underhill, that we thought that it was a matter that was not so easy to understand and appreciate, and I am sure that when I read it in due course I shall still think the same. But the fact is that one has to take a view at the end of a day.

The noble Lord, Lord Sefton, referred to the necessity of transport in connection with the Liverpool garden festival. I am not quite sure just how that event got into the debate. The noble Lord knows that I always give way to him when he says anything, and I will give way again if he wishes. I know exactly the point that he is making. On it I would say that the transport authority will have to make its decision and reach its own conclusions as to how to deal with the situation. The authority has already had a lot of notice of the event, and I know that discussions have been taking place precisely on the point that the noble Lord mentions. It is of course a very important aspect of what I know the noble Lord and everyone else hopes will be a great success for Liverpool. But I think that that is slightly off the point.

I do not think that I can be of any help here. I shall read what has been said, as I always do, and if we think that there is justification for the concern that has been expressed, we shall do something about it, but I can make no commitment this evening to that effect.

Lord Sefton of Garston

Arising from my intervention, before the noble Lord sits down will he please tell me whether, when the garden festival is proceeding, if the committee responsible (a committee of the local authority) finds that more transportation is needed than was allowed for in the plan, it will be able to hire buses?

Lord Bellwin

I should have thought that if such a situation presented an opportunity to provide buses, earn revenue and, one hopes, make a little more for the festival, what the noble Lord has mentioned would be a most desirable thing to do.

Lord Sefton of Garston

I am not asking whether it would be desirable. Is the principle agreed that a local authority can hire buses for an extra-special occasion?

Lord Bellwin

The Bill states all along that there is a duty on the authority to break even so far as is practicably possible. I should have thought, subject to anything that I may later come back to, that if the provision of extra buses in the kind of circumstances that the noble Lord envisages has an effect on the outcome on the authority's financial requirements, that would be perfectly in order. But I should not think that the situation would arise, because I should imagine that the authority will be taking such a point into account long before the festival starts and people begin to arrive.

Lord Underhill

The noble Lord the Minister said that what an executive can do under Section 15(3) of the 1968 Act it can do under Clause 4(2) of the Bill now before us. But is that so? Let us look to see what Clause 4(2) states. It deals with the power of an authority to approve the plan which will be submitted to it by the executive. Subsection (2) states: For the purposes of this section the Authority may require the Executive to supply them with"— and the important item is— …alternative proposals based on different levels of services, facilities, fares or other charges, or on the assumption that the Authority will in the relevant period make revenue grants of such amounts as the Authority may specify". The rest of the subsection deals with estimates and other information.

That is not what Section 15(3) of the 1968 Act states. That provision states that if the authority should consider that a service is absolutely essential to meet the needs of the people in a particular area, it can say to the executive, "You must run this service". If the executive says, "We can't afford it", then the authority says, "Yes, you will run this service, but we will provide the money for it". That is not what Clause 4(2) provides. I am certain that the noble Lord, Lord Bellwin, has no wish to deceive your Lordships' Committee; but I repeat, that is not what Clause 4(2) provides. We regard the provision contained in Section 15(3) as vital. The PTAs also regard it as vital. That is why two of them have taken the trouble to write to us, saying, "Please keep this important statutory power that we have". The Minister has as good as said that that would ruin what the Government are after, and that he cannot be of help. This is one of those occasions when we should like a firmer undertaking that the Minister will look further at the matter, rather than merely look to see what has been said. I do not believe that he believes that he can do anything. Unless he can say that the arguments put forward are such that he will look to see whether they need to change the Bill, then I believe that this is an important matter of principle on which the Committee ought to divide.

7 p.m.

On Question, Whether the said amendment (No. 62) shall be agreed to?

Their Lordships divided: Contents, 47; Not-Contents, 61.

DIVISION NO. 3
CONTENTS
Airdale, L.	Kilmarnock, L.
Ardwick, L.	Llewelyn-Davies of Hastoe, B.
Aylestone, L.	Longford, E.
Banks, L.	Mayhew, L.
Beaumont of Whitley, L	Milner of leeds, L.
Beswick, L.	Mishcon, L.
Boston of Faversham, L.	Nicol, B.
Briginshaw, L.	Ogmore, L.
Brooks of Tremorfa, L.	Oram, L.
Collison, L.	Phillips, B.
Darcy (de Knayth), B.	Pitt of Hampstead, L.
David, B. [Teller.]	Ponsonby of Shulbrede, L. [Teller.]
Denington, B.
Diamond, L.	Ross of Marnock, L.
Evans of Claughton, L.	Sefton of Garston, L.
Ewart-Biggs, B.	Stewart of Alvechurch, B.
Fisher of Rednal, B.	Stewart of Fulham, L.
Hatch of Lusby, L.	Stone, L.
Hughes, L.	Strabolgi, L.
Ingleby, V.	Tordoff, L.
Jacobson, L.	Underhill, L.
Jacques, L.	Wallace of Coslany, L.
Jeger, B.	White, B.
John-Mackie, L.	Wilson of Langside, L.

NOT-CONTENTS
Airey of Abingdon, B.	Campbell of Alloway, L.
Atholl, D.	Cathcart, E.
Avon, E.	Colwyn, L.
Bellwin, L.	Craigavon, V.
Beloff, L.	Davidson, V.
Belstead, L.	Denham, L. [Teller.]
Bessborough, E.	Drumalbyn, L.
Caithness, E.	Elliot of Harwood, B.

Elton, L.	Massereene and Ferrard, V.
Enniskillen, E.	Molson, L.
Ferrers, E.	Mountevans, L.
Ferrier, L.	Napier and Etterick, L.
Glanusk, L.	Onslow, E.
Glasgow, E.	Orkney, E.
Glenarthur, L.	Pender, L.
Greenway, L.	Penrhyn, L.
Hailsham of Saint Marylebone, L.	Quinton, L.
	Romney, E.
Hayter, L.	St. Aldwyn, E.
Hives, L.	St. John of Bletso, L.
Hornsby-Smith, B.	Sandford, L.
Hunt of Fawley, L.	Skelmersdale, L.
Lane-Fox, B.	Strathclyde, L.
Lauderdale, E.	Sudeley, L.
Lawrence, L.	Swinton, E. [Teller.]
Lindsey and Abingdon, E.	Thomas of Swynnerton, L.
Long, V.	Trefgarne, L.
Lucas of Chilworth, L.	Vickers, B.
Lyell, L.	Vivian, L.
Mancroft, L.	Wakefield of Kendal, L.
Marley, L.	Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

Clause 9 agreed to.

Clause 10 [Commencement of Part I and transitional provisions]:

[Amendment No. 63 not moved.]

7.9 p.m.

Lord Underhill moved Amendment No. 64:q Page 8, line 33, leave out subsection (2).

The noble Lord said: For the convenience of the Committee, I should like to move Amendment No. 64 and to speak at the same time to Amendment No. 65. One amendment proposes to leave out subsection (2) of Clause 10 and the other to leave out subsection (4) of the same clause. The meaning of these amendments may be a little obscure and I must first explain that subsection (2) provides that an authority shall not make any grant for the year 1983–84, that is, beginning on 1st April, which is very near us now, except in accordance with a determination made after the passing of the Act. It also provides that determination of grant must be made in accordance with the guidance of the Secretary of State and that that guidance must be taken into account. Subsection (4)—the best explanation is that given in Notes on Clauses—is a specific provision to regulate the payment of grants for the year commencing 1st April 1983, because the full planning procedures which would normally precede the payment of the grant will not yet be in operation.

The amendments in effect would defer application of the Secretary of States guidance from taking effect from 1st April 1984 instead of 1st April of this year. The Bill was published, I think, on 5th November. Why did the Government wait until 25th January this year before introducing the amendment which made the determination and guidance apply from 1st April this year? Why was it not in the original Bill and what caused the Government's change of heart? The Under-Secretary of State, Mr. Reginald Eyre, speaking in Committee in another place on 25th January—and here I paraphrase—said that, although the executives and authorities might not have carried through for 1983–84 the full planning process provided for in the Bill, it was necessary for the coming year that an authority should not be allowed to make a grant unless it had made a determination on revenue grant, and in doing so it had to have regard to the Secretary of State's guidance.

Subsection (5) of the Bill, which in effect provides for the protection under the protected expenditure level, is not to come into effect until 1st April 1984; not for the forthcoming financial year. That is understandable, because the full planning process has to be carried through under the provisions of subsection (5). I must ask the Minister: will the protection of PEL apply for 1983–84?—because we have been told that protection is the important thing in this Bill. If so, will the Minister state precisely where the legal provisions to that effect are to be found in the Bill? If that is not the case and PEL protection will not apply for 1983–84, what is the purpose of not allowing the authority to make a grant in 1983–84 except in accordance with a determination on which the Secretary of State will give guidance after the Bill becomes law?

If the planning process is considered absolutely essential, how will the Secretary of State give almost immediate guidance after the Bill becomes law? This surely must be a hit-or-miss business—either that or really the planning process detailed in the Bill cannot be all that important, even though we are told it is the prime feature of the Bill. Is not the Secretary of State saying something like this?—"I gave provisional guidance in the schedule to the White Paper, but please ignore that because the Bill, when it becomes an Act, will insist that the grant shall not be determined by an authority for 1983–84 unless it is in accordance with my guidance, which the Act will say I shall not give until after it becomes law, and it is not law yet."

What is the certainty that the Bill will become law by the start of the financial year on 1st April? We are now at the 3rd March. We have not yet had the Report stage or the Third Reading, so what guarantee is there? If that does not happen, perhaps the Minister could tell us what will be the legal position, and, perhaps even more importantly, what is going to be the administrative position of an authority? The authorities are now well ahead with the preparation for their budgets for 1983–84 and next week they will have to tell their districts about the precepts they have fixed for that year.

Some of the authorities may have worked on the guidance figures in the White Paper but I would myself ask: why should they? Those figures were fixed, and must have been fixed, long before the Bill was published. No one knows the criteria by which they were fixed and they were given merely as provisional figures in a White Paper on which there was no consultation whatever, because the White paper was published on the same day as the Bill. The Bill says that the guidance of the Secretary of State shall be given after the Bill becomes law, and only then shall the authority determine the level of grant. Where does the Bill say that an authority, when making its determination of grant for 1983–84, must do so in accordance with the provisional guidance figure which is not in the Bill but which is mentioned in the White Paper published some months before the Bill will become law? Mr. Eyre, the Under-Secretary, said in another place at col. 1027: The actual PELs will, as we have said during the course of our debates, be given after the date of Royal Assent.

I am just wondering what the courts will make of everything I have said. I am sure that what I have said is not completely clear, and is almost as confusing to me, saying it, as it must be to your Lordships listening to it. In the interests of sensible local government and in order to clarify the position for 1983–84, I do hope that the Government will accept these amendments, because the position is in such a state of chaos that the proper planning process cannot be carried out; the Secretary of State cannot give his guidance on the determination until after the Bill becomes law; the Bill has not yet become law and yet the financial year for the authority starts on 1st April this year. I beg to move.

7.19 p.m.

Lord Tordoff

This clause reminds me of a piece of A. P. Herbert in, I think, Uncommon Cases of the Common Law, when he said of a totally different occasion that it was like the 13th chime of a crazy clock, which was not only wrong in itself but cast doubt on the veracity of all its previous assertions. Many noble Lords may have wondered at the inflexibility of the Government Front Bench during this Committee stage. One is driven to the awful conclusion that in fact there is some urgency to get this on to the statute book in order to make this clause less draconian than it would otherwise appear.

It is clearly nonsense to suggest that any planning process has gone on in relation to the provisional figures that have so far been produced; and, if other figures are to be produced, on what basis will that be? Are we to be faced with a situation where the Government will say to local authorities and local executives: "Unless you can prove differently by producing a plan rather quickly, then these are the figures that will stand"?

If the Government really had any respect for many of the things that have gone before in this Bill, then this clause would not be in it. As I said at a much earlier stage, clearly it is the determined intention of the Government to force this measure through and to force it through quickly. I believe that this clause gives substance to that thought, and therefore I support very strongly the amendment of the noble Lord, Lord Underhill.

Lord Sefton of Garston

We are near the end of what to me has been a somewhat frustrating exercise. In view of the fact that the Bill was not debated properly in another place, we thought when we set out on this exercise that there would be some give and take and that the Government would wish to take into consideration the points which have been made on the various amendments. But I have reached the conclusion that the Government do not intend to give way and that on this clause they will insist upon their right to carry the day. This means that the Government will insist on having their way against the wishes of every local authority and against the wishes of all the passenger transport executives, none of whom supports the point of view of the Government. Passenger transport executives were set up to apply expertise to a public service. This, therefore, is a great tragedy. At this stage of the Bill our thanks, and those of every local authority, ought to be extended to the noble Lord, Lord Underhill, for all his work. It is essential that this should be pointed out before the Bill becomes law.

Despite the conclusion I have reached that the Government will not give way, may I appeal to the noble Lord, Lord Bellwin, to make one last attempt to introduce into the Government's thinking some regard for the long history of local government. Perhaps we could leave out of account what is going to happen after 1984. We accept that the democratic wish, expressed through a democratically elected Government, is that this is what should happen, although it was not included in any programme or manifesto which was put to the people. Because the Government are elected to be the steward of the nation's interests, we accept that planning, and all the rest, should follow and that the Government should determine the limit after 1984. But that does not apply to the first year. The fallacious reason which the Government have advanced for the Bill—I repeat what has been said over and over again—is that the economic interests of the country are endangered because of the irresponsible activities of some local authorities. But what is that danger? It is supposed to be the expenditure on public transport. Noble Lords on the Front Bench have quoted over and over again the total subsidy given by local authorities to transport. That is not the real figure. The figure we have to consider is the difference between the amount which central Government allow and the amount local authorities wish to spend. The difference between the two is very small.

Another aspect of the problem is that for as long as I have been able to read newspapers, every Government has thoroughly detested retrospective legislation. When we discussed current affairs at school it was held to be a violation of our democracy that a person could be guilty of a crime if he committed it before a law was made. But the principle involved in this clause is that local authorities will be accused of a crime and considered to be guilty if they took a certain decision before the law was made. It is worse than that. Through the official machine the Government are already telling local authorities what they should do. That is not only disrespectful of local authorities but completely disrespectful of this Chamber, the other place and Parliament as a whole. That is why I stand here and firmly believe that, regardless of the debates and the points made, the Government are determined to have their way. That is the very negation of what I, as a simple, naïve child, was taught was the backbone of our parliamentary system.

I have already said that the gap between what local authorities intend to spend and the amount which the Government would wish them to spend is very small. I have said previously that if that gap is to be measured against the statement made by the Chancellor of the Exchequer—that the expenditure on the Falkland Islands campaign was not so great as to affect his Budget—surely it is common sense to say that this minimum amount is not worth saving if it is to be saved at the expense of relationships between local authorities and central Government deteriorating still further. I have already said that I accept that some local authorities have gone "over the top". I do not think anybody could deny that. But one should look at the reasons for it. I have outlined some of them. Within local Government we have a very young, enthusiastic democracy which has been reared on the principle that if a locally elected, democratic body takes a decision, after telling the electors what it was going to do, it should be allowed to do it, provided that it is within the law. If the electors do not like it, the remedy is in their hands. Because local government is occupying that stance, they are now being penalised, and to do it by means of the retrospective legislation contained in this clause is the worst thing that I have ever experienced.

If I was speaking personally to the noble Lord, Lord Bell win, I am convinced that if there was no question of government involvement or of the noble Lord doing the job he has been appointed to do, he would agree with me that the Government are attempting to restrict local government transport subsidies and have to consider how to implement that political decision. But there is another way. The Government could have said that the operating date should be a further 12 months hence and that in the intervening period local authorities should be given the opportunity to debate political principles with the Government before the Government issued their White Paper. Furthermore, regardless of what has been said by the Government Front Bench, local authorities have never been sufficiently persuaded to join the Government in a real debate.

But that debate could not have taken place in the time scale allowed by the implementation of the Bill. If every local authority had said that it wished to talk to central Government about the matter, there would not have been time to consider all the implications. But if they had wanted to do so, the Government could have said that the first year could be forgotten, that from the point of view of the economy it did not matter and that they could afford to wait for another 12 months: therefore they could enter into discussion with local authorities. At the end of that 12 month period a compromise might have been reached between local authorities and central Government. Until the Government are prepared to adopt that common sense point of view, they will never know the answer. And if they do not know the answer it will be a tragedy if they go ahead and stampede their way through all the local authorities in this country.

7.29 p.m.

Lord Bellwin

As always, the noble Lord, Lord Sefton of Garston, speaks with great eloquence and sincerity. I respect that very much. Unhappily, the fact is that there has been very little dialogue with the authorities concerned on this subject. As the noble Lord knows, the subsidies have gone on rising quite dramatically over the period: £200 million, £400 million, and £700 million! They were talking of over £1,000 million in 1985. The noble Lord cannot claim truly that we are talking about authorities which have the slightest intention of having a serious dialogue along the lines which the Government envisage.

Here we have the GLC—one of the local authorities concerned in this current year: £300 million over the Government's target figures. Instead of the figure being £566 million it is £800 million; a clear £300 million over. Then there is West Yorkshire. The noble Lord, Lord Sefton of Garston, once sat in the same room as I did and heard in the AMA policy committee as it was, at a time when the subsidy was £10 million, protestations by the then Labour Administration—and I believe that Mr. Rodgers was the Minister concerned—pleading with the South Yorkshire authority to do something at least. No, not one single inch. That was £10 million and to day we have a £70 million subsidy from them. These are not authorities which have the slightest interest in having a reasonable dialogue.

Anyway, through the AMA the Government did invite them to talk about this. They did not want to know anything about it. They refused even to discuss it as an association. Much as I feel for what the noble Lord has said, and although he and I would be together because we believe that is the way in which things ought to be done, there was no alternative because they did not want to know. Not only did they not wish to discuss it but they went further and further to greater and greater extremes. The pressures on the people and all concerned became greater and greater until, in the end, enough was enough and something had to be done.

It is, if you like, protecting part of the total economic structure. But I would be the first to say that that is not the whole of the matter. I have said that all along. It is an important part but there is also the other aspect of protecting the people who, at the end of the day, have to pay; and of protecting the impact of the precepts and therefore the rates upon businesses and upon everyone else. We cannot walk away from this whole situation, deplorable though it is. I am happy to think that the noble Lord believes that even now there would have been an opportunity. I know the people concerned. Some of them are very nice and are people I have known for years, but on this they have very closed minds, and they say so without any hesitation. What are the Government to do except that which we are proposing to do?

It is very tempting to say, "Maybe we should wait another year," as has been suggested. Whenever one hurries on to get things through, there is always a chance of accusations such as those which have been made tonight. Some of it has a lot of justification in terms of the impact, and so on, in the short term, but in practical terms it is not such an imposition. What we really want to do is to provide protection under the Bill in this, the first year, 1983–84. The fact is that there is not time after Royal Assent for the plan to be made—and no-one says there is. That is why the arrangements allow for guidance in the absence of a plan.

The Government are concerned that the determination should only be made by the authority in the light of guidance given by the Secretary of State. We have of course already announced provisional guidance in the White Paper entitled Public Transport Subsidy in Cities, and we have since been having discussions with most of the authorities concerned about this. The revision to the wording of Clause 10(2) accepted at Report stage in another place made it quite clear that authorities can only make a grant determination for 1983–84 when they have both received final guidance from the Secretary of State and also taken that guidance into account. That amendment did not in any way alter the spirit of the clause, but it made it absolutely clear what is intended. Authorities will of course still be free to exceed the guidance if they wish. But the subsection as it stands makes it quite clear what process is to be followed if the authority is to comply with the law and, if it wishes, adopt the protection provided by Clause 5(2), without having first gone through the planning cycle.

The noble Lords, Lord Underhill and Lord Sefton of Garston, were very concerned about the position if Royal Assent is not forthcoming until after 31st March. The Bill will provide the Secretary of State with retrospective powers in Clause 10(2), particularly as authorities will have set their precept before the Bill is enacted. However, the authorities have known since the Bill and White Paper were published of the Government's intentions and of the provisional protected expenditure levels. In setting their precepts they cannot fail to take the Bill and the expected PELs into account. They know that they cannot issue a supplementary precept; and they also know that they can substitute a lower precept, but that the rating authority may recover its administrative expenses under Section 3 of the Local Government Finance Act 1982.

It was pointed out in Committee in another place that, as drafted, Clause 2(3) only operated in relation to a plan. There will not of course be a plan for 1983–84 and so a specific provision was necessary to enable the planned use of reserves in 1983–84, and in respect of such use we needed to disapply the duty to break even and the duty to make good a deficit in the following year. That is the purpose of this subsection, which the Government added at Report stage in another place. It requires executives to notify the Secretary of State of any intention to use reserves before he gives his guidance to the authorities. This is an important provision and one I am unable to agree to remove.

May I say that the drafter accepted a point made by the member of Parliament for Penistone, Mr. Alan McKay, in Committee in another place, which was intended to ensure that the provisions for 1983–84 were suitable for the Secretary of State, first, to give guidance, and then for the authority to determine its grant in the absence of a plan for this the first year.

Again, as with so many earlier amendments with which I was dealing, I understand the feelings that there are on this point; I truly do. But we have to go still further back to see how this situation arose and to see how one might do something about it without further delay. It is the old story. When one has to move in and do something in order to protect and to achieve all the other things I have mentioned, it creates difficulties and makes it hard for everyone. I understand that, but in terms of getting on with this and making it happen, this is the point that we have reached.

7.37 p.m.

Lord Beswick

The noble Lord, Lord Bellwin, makes a very severe criticism of local authorities. Some of his criticisms may be justifiable but I believe he went a little far in some of the descriptions he gave us of the way in which they work. We are looking at the actual wording of a Bill and we have to consider whether this particular wording is such that a responsible House of Parliament can accept it. I am bound to say that I thought the noble Lord was being a little lighthearted when he referred to some of the dating in this matter.

Looking at this simply as a matter of practical administration, how can the noble Lord really say that the wording of this part of the Bill can be implemented? Subsection (2) states … no such determination shall be made by an Authority"— that is, for the very beginning on 1st April— unless they have been given guidance by the Secretary of State … Can the noble Lord tell me how many people he has working in his department assessing the situation in these various transport areas? How is he gathering all the information that is necessary in order to make a sensible judgment on what the needs are and what the costs are going to be? Has all that been done, irrespective of what the Bill might be when it finally receives Royal Assent? Have the Government been working on the assumption that no amendment in Parliament is possible? That does not indicate that the Government take the process of Parliament very seriously.

If we are to work on the assumption that a Bill does not become law until it receives Royal Assent, then the noble Lord is actually telling us that between now and the time this Bill receives Royal Assent, there are some energetic civil servants in his department who are able to go to each of the transport authorities of this country, who are able to assess their transport needs, who are able to put a cost on them, and who are able to give guidance—and then, after that guidance has been given, that the transport authority can decide what grant it is going to make? That just does not make sense. I know there are many of us who have stood at that Box and had reservations about a piece of legislation we have had to move, but I really feel the noble Lord ought to be a little more apologetic about this. I cannot see how a sensible democratic Parliament could accept wording of this kind.

Lord Pitt of Hampstead

Might I try to see whether I can get the Minister to look at this again. We have been through all the provisions about the planning process culminating in the PEL. As noble Lords know, I do not quite agree with what has been decided so far, but leaving that aside, what is required by Clause 10(2) is that the whole of this process will wait but that the Minister will in fact give guidance as to a level without the plan, without any of the previous processes. I do not know whether he will pick the sum out of a hat or out of the air. There is not time for him to do the work which is required to make a proper guidance. I cannot see what the Government will lose by having the Bill come into effect on 1st April 1984 while having the planning process start in April 1983, so that in 1984 the Government can give proper guidance having had the proper planning process.

Is the Minister saying that the gain in financial terms that will accrue from being able to declare a level in 1983 is so great that it is worth sacrificing the whole basic process on which the Bill has been built in order to do it? Is that what he is telling us? I cannot really believe that. Therefore, I am asking him to think again, to consult again with his colleagues about Clause 10, particularly subsection (2), as to whether it would not be better, in the interests of the country as a whole but also in the interests of the good and smooth working of this Bill, if it is delayed until 1st April 1984 and the planning process starts on 1st April 1983, so that when the Minister gives guidance he gives it with the right degree of knowledge. I really do beg the Minister to look at this.

Lord Bellwin

Again I say that I understand the sincerity with which the points are made, but I am sure that noble Lords—certainly the noble Lord, Lord Beswick, with all his great experience—would be the first to acknowledge that a Government could not put off for a year what is being proposed here. It is fair to say that the Secretary of State has been considering the relevant material, as I described to your Lordships on a previous day of the Committee; the authorities have known the provisional guidance figures and in fact they have known them since 5th November last year.

Lord Beswick

May I just say that I did not actually say that it should be put off for a year; the proposal was made by others but I did not say that. But I would have thought in common sense and everything else that it would be possible to have some words in here which would indicate a period of negotiation.

Viscount Massereene and Ferrard

The noble Lord is out of order; this is the Report stage of the Bill—

Lord Bellwin

No, this is the Committee stage.

Viscount Massereene and Ferrard

Yes, so it is; I am sorry.

Lord Bellwin

The point I want to make is that in fact the authorities have known since November last year. They have been asked whether there are other matters they want the Secretary of State to take into account. So by the time the Bill is enacted the authorities will have had many months to submit material to us and the Secretary of State will be ready to issue his guidance. The basic point about the provisional figures in the White Paper is that they are just that, provisional. The Secretary of State has no power to set figures before the Bill is enacted. In fact, when the AMA came to see him last autumn they pressed for advance indication to help them in preparing their budgets and that is what he gave. But he made it clear he was ready to consider any relevant material supplied by authorities before setting the actual figures.

How those figures will be set will be governed by the Bill, in particular the considerations in Clause 4(6). Besides national considerations he envisages taking into account the sort of information suggested in the two planning documents circulated to authorities for their comments. I doubt if they contain any surprises for the authorities. I say gladly that this is material which they need themselves to reach judgments about fares, cost savings and subsidies. I have to keep coming back to make the same point.

The noble Lord, Lord Beswick, made the point about how many people will be engaged on the work. Again I would say that this is not starting from scratch; there were provisional figures put into a White Paper and to reach the provisional figures certain information was necessary. But there are always returns which enable provisional figures to be given. The figures were given in reply to the request by the authorities to have some indication. The final figures will be in the form of a guidance, without a plan for the first year. I readily accept that that is not as ideal as when it is done on the basis of a plan. But the Government feel that they are not willing to wait for another year, and that the circumstances are—without going all over it again, as we have done for so many hours now—that there is an urgency, and this is why we take the line that we do.

Lord Tordoff

May I ask the noble Lord this. These are provisional figures. Can we then take it that the final figures could be lower than those shown in the White Paper?

Lord Bellwin

I suppose in theory they could. In practice it is not very likely.

Lord Underhill

I do not want to inflict another speech on your Lordships, but there are a few points that must be made. We have again had it repeated by the Minister that the authorities have not been prepared to consult with the Minister. It happens that I have in my hand a copy of a letter sent by one executive, the chief executive of South Yorkshire, which has been strongly criticised this evening. It is a letter to the department, dated as recently as 8th February, in which the chief executive takes up the point that they had been criticised because they had not been prepared to discuss matters.

The chief executive points out that there have been meetings on three occasions during the last five months. One was an occasion to which I drew attention the other night, when the Association of Metropolitan Authorities' Public Passenger Transport Sub-Committee met the Secretary of State to discuss the proposed legislation; that was on 27th September last year. On 20th October the Under-Secretary of State visited South Yorkshire with officials of the department, and they discussed matters for about 1½ hours. On 5th November the county engineer wrote to the deputy secretary at the department—this is rather important—and said to him that the whole integrated policy of South Yorkshire obviously was not understood by the Ministry and asked if there could be a visit in order to have further informal discussions. Up to 8th February there had been no further reply on that point. Again on 19th November the deputy leader and chairman of the Passenger Transport Committee formed part of an AMA delegation which met to discuss the Bill with the Secretary of State, the Under-Secretary of State and departmental officials.

What they never had an opportunity to discuss was the White Paper, because the White Paper come out at the same time as the Bill, and that must be emphasised time and time again, The Minister has also referred to the guidance figures. The South Yorkshire chief executive wrote this to the department on 8th February, in this same letter: We still do not have a breakdown of the provisional guideline figure of £40 million although I asked for this in my letters of 30th November and 22nd January. The Council cannot provide relevant further information about their position when they do not know the basis of the Secretary of State's provisional figure. That is the criticism that is met everywhere; that the authorities have not known how the provisional figure is to be drawn up. But they are supposed to accept the provisional figure as a legal basis on which to proceed after the Bill becomes law.

We are not talking about the general principles of the Bill. We are not arguing about that at the moment. We are arguing about the effort of the Government to introduce this for 1983–84 when the financial year of the councils starts on 1st April. The Government will be lucky if they have got Royal Assent by that date. They might just about achieve it, I do not know. Yet the authority is supposed to work on and take into consideration guidance figures which have not been the subject of the plan which the Government regards as so important. That is illogical.

I do not want to speak for too long on this, but the Minister refers us back to the protection of Clause 5(2). If one looks at Clause 5(2), that refers again to the provisions of Clause 4(5). So back we go to Clause 4(5), and Clause 4(5) relates to the plan. There ain't no plan! Therefore, what is the good of talking about the protection of Clause 5(2)? It does not apply. It is almost incomprehensible that the Government should attempt to go backwards after the Bill becomes law and attempt to carry this out.

We are not asking for any arguments on the principle. That has been debated elsewhere and will no doubt be debated again. All we are saying is that there is an illogicality and an unfairness to the authorities, not only the PTAs and the county councils, but the district councils which should be precepted next week before the Bill becomes law.

I must take up the point made by other noble Lords. It is an affront to have discussions with authorities on what they are going to do before we have even finished with the Bill in this House, and even before it came into this House. I regard that as something wrong.

Those are the points on which we are very concerned. I should like to feel that the Minister will say that the Government will have another look at this, but, in the light of the discussions that I read, the statements by the Under-Secretary of State in another place and the statements we have had today, it seems that the Minister is not going to move. It is illogical and it is unfair. Therefore, even at this late hour we should like the Committee to determine its view on the matter.

7.52 p.m.

On Question, Whether the said amendment (No. 64) shall be agreed to?

Their Lordships divided: Contents, 33; Not-Contents, 46.

DIVISION NO. 4
CONTENTS
Airedale, L.	Boston of Faversham, L.
Aylestone, L.	Broadbridge, L.
Beaumont of Whitley, L.	Collison, L.
Beswick, L.	David, B.

Denington, B.	Ogmore, L.
Evans of Claughton, L.	Pitt of Hampstead, L.
Ewart-Biggs, B.	Ponsonby of Shulbrede, L. [Teller.]
Fisher of Rednal, B.
Hatch of Lusby, L.	Ross of Marnock, L.
Hayter, L.	Sefton of Garston, L.
Hughes, L.	Stewart of Alvechurch, B.
Jeger, B.	Stewart of Fulham, L.
John-Mackie, L.	Stone, L.
Llewelyn-Davies of Hastoe, B.	Tordoff, L. [Teller.]
Mishcon, L.	Underhill, L.
Mountevans, L.	White, B.
Nicol, B.	Wilson of Langside, L.

NOT-CONTENTS
Airey of Abingdon, B.	Killearn, L.
Atholl, D.	Lauderdale, E.
Avon, E.	Lawrence, L.
Bellwin, L.	Lindsey and Abingdon, E.
Beloff, L.	Long, V.
Belstead, L.	Lucas of Chilworth, L.
Bessborough, E.	Lyell, L.
Campbell of Alloway, L.	Marley, L.
Carr of Hadley, L.	Massereene and Ferrard, V.
Cathcart, E.	Napier and Ettrick, L.
Craigavon, V.	Pender, L.
Davidson, V.	Quinton, L.
Denham, L. [Teller.]	St. Aldwyn, E.
Drumalbyn, L.	St. John of Bletso, L.
Elliot of Harwood, B.	Sandford, L.
Elton, L.	Skelmersdale, L.
Enniskillen, E.	Swinton, E. [Teller.]
Ferrers, E.	Thomas of Swynnerton, L.
Ferrier, L.	Trefgarne, L.
Glanusk, L.	Vickers, B.
Glenarthur, L.	Vivian, L.
Hives, L.	Wakefield of Kendal, L.
Hornsby-Smith, B.	Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

8.1 p.m.

[Amendment No. 65 not moved.]

Clause 10 agreed to.

Lord Underhill moved Amendment No. 66:

After Clause 10, insert the following new clause:

("Revenue surpluses

.—(1) Nothing in this Act shall affect the powers of an Executive and of an Authority as the case may be—

1. (a) so to arrange the affairs of the Executive and any of its subsidiaries as to achieve a surplus of revenues to aid the efficient operation of the Executive during such period as they determine to be appropriate; and
2. (b) to retain any such surplus or proportion of such surplus as is referred to in paragraph (a) above for use for such purpose and at such time as they think fit.

(2) Where any Executive retains such surplus as is mentioned in subsection (1)(b) above, the Secretary of State in giving guidance under section 4 above shall not be entitled to take into account the amount of any such surplus.").

The noble Lord said: The purpose of this new clause—the amendment is instituting a new clause—is to enable a passenger transport executive to accumulate a surplus and retain that surplus for its own needs at such time as it thinks fit. I think noble Lords will agree that most businesses set aside sums against future needs; for example, they may set aside sums for the purchase of a particular asset, and in that respect a PTE is not exceptional.

In one of our debates on Tuesday, the Minister said that if unforeseen circumstances arose an executive could use reserves. The Bill as drafted requires the PTE to balance its books or to make up a deficit the following year or to make it up from funds earmarked in the three-year plan. There is no acknowledgement in the Bill that a surplus may be made and accumulated. Presumably, any surplus that may be incurred will be taken into account by the Secretary of State when he issues his guidance. No doubt such guidance in the following year will be proportionately lower to take account of the surplus.

The amendment seeks to enable a PTE to make a surplus and to keep it outside the proposals of the three-year plan. I would suggest, that that makes business common sense and I hope that the Government may see fit to accept this last but one amendment that will come before the Committee.

Lord Bellwin

May I just say again that the main purpose of Clause 2 and the redefined financial duty is to strengthen the financial disciplines on the executive to operate commercially. This new clause would enable an executive to use ratepayers' money to build up nest eggs and to use them to cushion itself from the normal vicissitudes of a trading operation. The PELs will be set to reflect the appropriate level of support needed from the authority by the executive to cover a deficit. It surely cannot be right for the Secretary of State to ignore the extent that the deficit is to be covered by appropriation of reserves. That would result in reserves supplementing revenue grants instead of substituting for them.

Of course the unexpected may happen inconveniently near the end of the financial year, running the executive into deficit. If so, the executive can borrow or use any reserves, but it will then have to make good that deficit the following year. There is therefore no need to build up additional reserves as a contingency measure, I would respectfully submit. Where a deficit does occur, the authority may then be persuaded to authorise the use of reserves or to pay additional revenue grant the following year to enable the executive to make good the deficit, but I cannot accept the proposed loosening of the financial disciplines on the executive during the year which this new clause is intended to achieve.

I have not a lot to say on this, but perhaps I may just add before I sit down that the Bill does require the executive to break even—I remind the noble Lord, Lord Underhill, of the term—"so far as is practicably possible". I think that that is operative here when we are talking about a situation going on from one year to another.

Lord Underhill

I am disappointed with the Minister's reply. Frankly, there is no encouragement here for business efficiency or business acumen. One would think that it would be regarded as good business if an undertaking created a surplus which it kept in reserve to buy equipment. But there is no encouragement here. The Minister has as good as told us that if there is a surplus then that will be taken into account in connection with the revenue grant for the following year.

However, as this was an involved amendment and it is rather late, I think that the best thing to do is to look carefully at what the Minister has said and consider whether we shall come back to the matter at the Report stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Underhill moved Amendment No. 67:

After Clause 10, insert the following new clause:

("Travel concessions for unemployed persons, etc.

. Section 138 of the Act of 1968 (travel concessions for the elderly, blind and disabled) shall be amended by inserting after subsection (5)(c) the words—

"(d) unemployed persons and persons training for employment under arrangements approved by the Manpower Services Commission.".").

The noble Lord said: Your Lordships will be pleased to know that this is the last amendment on which I shall be speaking tonight. It is a very important one, but I shall speak very, very briefly. We have the provisions of Section 138 of the 1968 Act which permit authorities to give travel concessions. We have all accepted the statements which have been made by the Secretary of State, the Under-Secretary of State and by the noble Lord, Lord Bellwin, himself, saying that such concessions are excluded from consideration of the revenue grant. What we are now suggesting is that Section 138 of the 1968 Act should be amended so that local authorities would be free to give concessionary fares also for travel for unemployed persons and for persons training for employment.

I need hardly emphasise—it should not require anyone to stress the importance of this—that the unemployed need to have all the assistance that we can give them. If an authority feels that it is possible to give grants to enable them to travel, surely that is in the interests of society as a whole; people should not be pinned down because they cannot afford travel. Also if we can assist persons undergoing training under the MSC, we should encourage that. We are not talking about travel down to London, as one noble Lord said yesterday on another matter. We are talking about travelling within the area of the PTE. I would have thought that that would be common sense and a good social measure. I hope that the Government will support the amendment.

Lord Tordoff

I think that there is a particular case for including this provision. Unemployed people have to travel to seek work. They do not all have bicycles. Persons under training may well have to travel some distance. It is surely in the interests of the country as a whole that this provision should be agreed to.

Viscount Massereene and Ferrard

I have always thought that if the unemployed are going for an appointment for a job they get travel vouchers. I have always understood that. I know from my experience that one paid for their travel. Even today if one is going to employ people who are not in fact unemployed, the average private employer, so far as I am aware—at any rate, an employer in the circle that I am in—does give them their travel money.

We had a debate yesterday when we were told by the noble Lord, Lord Marsh, that the subsidy for the railways is £900 million a year. Of course, we cannot expect the railways to be too generous with free travel. I agree that the unemployed ought to have preference where free travel is concerned. But what happens when they have cars, as of course many of them do? Would there be some arrangements for them to have free petrol or something akin? I just throw that out for consideration. It is really nothing to do with this Bill but it is a point. I always understood that people got free vouchers if they were going for a job, but not if they are going off for a holiday abroad, as of course some of them may.

Lord Sefton of Garston

Someone suggested to me once that the House of Lords is not of this world. That speech has just demonstrated it.

Baroness Hasham of Ilton

I would be very grateful if the Minister would tell the House what the present position is. The last but one noble Lord who spoke seemed to indicate that there is some query about this. How can an unemployed person who claims unemployment benefit and has no money, after paying for his maintenance, for stamps to write for a job or for fares to go to interviews, get a job? Can he claim this on social security?

The people who are not mentioned in this amendment (but I think that perhaps they should be) are young people who are on certain apprentice schemes. I was talking to a young hairdresser apprentice who had to travel from Hampshire to London. He could not use a rail card as to be in time for his job he had to travel at times not allowed on the rail card. After the train he then used the tube. His travel cost him more than he was paid. He got up at 6 a.m. to get to work. Surely these enthusiastic, dedicated young people who work for a pittance should be given some travel help, either by the firms employing them or a travel grant from the local authority, even if they have to pay it back when they have completed their apprenticeships. I should be very grateful for the Minister's view on this as I think he is a reasonable and understanding person.

Lord Campbell of Alloway

Having had the advantage of listening to most of what has been said on this clause, I wonder whether your Lordships do not begin to wonder whether this Bill is an apt vehicle to carry such a clause, irrespective of its merits. I most seriously suggest that it is not. This should be the subject matter of some other provision or some other Act. I suggest that it is a clause that should be opposed.

Lord Mishcon

May I help the noble Lord, Lord Campbell of Alloway, because he very often is kind enough to help me? As I understand it, the relevance of this provision to the Bill is that there are certain concessions which do not come within the budget which will be considered for the upper limit—the "lawful upper limit" as we have called it in some of our speeches.

What we are saying here is this: that included with the disabled and the others who come outside the budget, if concessions are given by the local authority—they do not have to be, this is permissive, not mandatory—there shall be included the category referred to in the amendment; namely the unemployed and young people training for employment. The clause says to the authority "In your wisdom, having regard to the social conditions in your area—especially at this time—you can give these concessions if you find that those conditions are there". That ought to be done and that will not be included in the budget to which the limit will be applied.

Lord Campbell of Alloway

Before the noble Lord sits down, may I thank him very much for the clarification for which I am most grateful. But, with the utmost respect, I should have thought that the whole concept of the Bill was to exclude concessionary fares from its ambit generally. Without wishing to take time on this occasion, I remain unconvinced.

Lord Tordoff

Very briefly I must follow that point of the noble Lord, Lord Campbell of Alloway, because if it is true for the elderly, the blind and the disabled there are concessions already in the Bill. This is the point that the noble Lord, Lord Underhill, is making.

8.12 p.m.

Lord Bellwin

May I first assure your Lordships that the Government look with favour on any measures designed to help the unemployed and young people involved in the Youth Opportunities Programme. The problem is this: is this an appropriate means, as my noble friend Lord Campbell of Alloway says, of achieving that objective? We do not think it would be appropriate to include people in these two categories, the very restricted group of people, for whom local authorities have the power to provide concessionary fares under Section 138 of the Transport Act 1968. That section gives local authorities the power to provide concessions for three groups who have already been talked about so I will not go over that again.

The Govenment believe that it is possible—indeed necessary—to draw a valid distinction between those who are unemployed and those who are eligible for concessions under the 1968 Act. If we were to extend it beyond these categories, we would immediately be faced with the difficulty of finding criteria for deciding between all the different groups who might have an equal claim for assistance by way of concessionary fares. I shall not read out the long list which I have of such examples; but in answer to the noble Baroness, Lady Masham of Ilton, I think it would help her if I were, as she requested me, to read out the circumstances in which assistance with travel costs are available to the unemployed from the DHSS.

First, claimants must be unemployed and receiving supplementary benefit. The benefit offered is assistance with travelling expenses, mainly paid in full; (a) to seek work in another area of Great Britain, if there is a reasonable prospect of finding a job there; and (b), if successful, they would have to move house; and (c), if not eligible for assistance from the MSC. I will return to that in a moment. Secondly, assistance is there to attend interviews more than 10 miles from home if not receiving assistance from MSC or the prospective employer. Thirdly, when seeking a job within 10 miles of home if the interview arrangements are made by the DHSS. Fourthly, when starting a new job, until the first wages are received, up to a maximum of 14 days. In addition, any person receiving supplementary benefit is eligible for assistance with fares: for example, hospital visiting, journeys arising from domestic crises, visiting a child in custody of another parent or attending a funeral.

From the MSC there are interview expenses from the job search scheme. Claimants must be unemployed or threatened with redundancy; they must be attending a definite job interview; the prospective employer must confirm a reasonable chance of success in the job application; there must be no expenses contribution available from the employer and, again, there must be no reasonable prospects of a job in the home area. There the benefits offered are fares and subsistence for pre-arranged interviews.

There was only one category that the noble Lord, Lord Underhill, mentioned that I would want to have another look at. I am not sure about training under the MSC so I would want to have a look at that. As this is a very important subject, if the noble Lord, Lord Underhill, has any other categories that he thinks ought to be covered, that he feels are not covered, between now and the next stage I should be glad to have them. I entirely take the point. We must do whatever we can, consistent with the reservation I have expressed—one has to draw a line somewhere. Nevertheless, we are in special times at the moment and sometimes one has to make arrangements, even if only for a time. If the noble Lord would care to consult with me I should be glad to look at it. Indeed, that is so if the noble Baroness wishes to bring specific instances to my attention, or any of your Lordships. I should be glad to look at them to see what might be done. In return I ask your Lordships to bear in mind the problem of the constraints to which I have referred.

Lord Underhill

I am very grateful for the offer made by the noble Lord, Lord Bellwin. In reply to the noble Viscount, Lord Massereene and Ferrard, who referred to the unemployed travelling in cars, to my knowledge only one section of the unemployed community travel in Rolls-Royces and they are those who live on unearned income.

I will look at the points that the noble Lord, Lord Bellwin, has suggested, but I emphasise, both to him and to the Committee, that I was not referring to just travelling in connection with applications for new jobs or training. I was concerned, in addition, with the social needs of the person who is unemployed. I am a lucky man. I am 69 this year and have never been out of work, even though I started work at a young age. I picture the situation of a young man, or anyone who is out of work; and the number of people out of work now for 12 months or more is growing and growing. It is not just a question of assisting them to go to work; it is assisting them to live a normal life. We are not talking about travelling from London to Blackpool for enjoyment; we are talking about travelling within a reasonable area. This would be permissive for a local authority. Concessionary fares for pensioners and the disabled are permissive for a local authority, and not mandatory.

Therefore, I will consider the points which the noble Lord has made, but we may want to come back to the general principle of assistance as regards social needs and as regards the needs to which reference has been made. My noble friend Lord Molloy will be coming back to this matter because he has a Private Bill dealing with this very point. We may look at that and also at what has been said tonight and consider whether we shall have a suitable amendment on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 68 not moved.]

Clause 11 agreed to.

[Amendments Nos. 69 and 70 not moved.]

Clause 12 agreed to.

The schedule agreed to.

House resumed: Bill reported without amendment.

House adjourned at twenty-two minutes past eight o'clock.