Transport Bill

HL Deb 17 March 1983 vol 440 cc891-919

Further considered on Report.

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

Lord Underhill moved Amendment No. 15: Page 4, line 26, leave out ("have particular regard") and insert ("be satisfied that they and the Executive have had proper regard to such matters as they consider to be relevant and they shall include among such matters the general duty of the Authority and the Executive under section 9(3) of the Act of 1968 or sections 1 and 5(1) of the Act of 1969, as the case may be and").

The noble Lord said: My Lords, I think it will be for the convenience of the House if in moving Amendment No. 15 I speak also on Amendments Nos. 17, 19 and 20, although I should like to emphasise that Amendments Nos. 19 and 20 could each stand on their own. I make that statement right at the outset because if the Government feel disposed to accept Amendments Nos. 19 or 20 they do not have to accept the others, whereas Amendments No. 15 and 17 are to be considered together.

Clause 4, with which we are now concerned, deals with the approval of financial plans and the determination of revenue grants. Subsection (3), which involves the making of revenue grants, states: the Authority shall have particular regard to the matters listed in the three paragraphs (a), (b) and (c). The purpose of the four amendments is to vary the matters to which the authority must have regard in approving a plan. The three paragraphs in subsection (3) contain no reference whatever to the general duty of both the authority and the executive to which they must have regard when approving a plan. On previous amendments we have debated the general duty of the authority under the 1968 and 1969 Acts. However, that point is still relevant in discussing this clause. That is why we have this amendment before your Lordships this evening.

The first amendment provides that the authority must be satisfied that it and the executive have had proper regard to those duties placed on them by the 1968 and 1969 Acts. That is rather important. The third amendment seeks to insert an additional subsection, subsection (7), and this will provide that when the Secretary of State has required a management review to be carried out, in accordance with the provisions of Clause 7, the authority or the executive shall inform the Secretary of State of the estimated cost of that review and that the Secretary of State shall take that estimated cost into account when he gives guidance for the following year as to the protected level of revenue grant for that year.

I should like to thank the noble Lord, Lord Lucas of Chilworth, for the letter he sent to my noble friend Lord Mishcon, of which he kindly sent me a copy, which set out the different alternative steps which may be taken in meeting the costs of the review, but I should like to know whether the Minister feels it would be good to put in this amendment because it will ensure that the cost will be met in the PEL for the following year.

The final amendment will provide that, before giving guidance or advice under the Bill, the Secretary of State shall consult the relevant local authority associations and also the authorities and executives with whom consultation appears desirable. In the light of what the noble Lord, Lord Bellwin, said on a previous amendment, I must emphasise that the wording of this final paragraph is taken, except for the nine opening words, from Section 8(2) of the Local Government Finance Act 1982. If I read that, your Lordships will see the relevance of that subsection to this amendment. Section 8(2) of the Act says: Any guidance issued for the purpose of subsection (6)(c) above shall be framed by reference to principles applicable to all local authorities: and before issuing any guidance for those purposes the Secretary of State shall consult such associations of local authorities as appear to him to be concerned and any local authority with whom consultation appears to him to be desirable".

Therefore, on this occasion, I am sure that the Minister will not say that he is bringing forward something new, because the present Government introduced the Local Government Finance Act 1982. It was introduced less than a year ago. Therefore, we are not bringing forward a new feature and there would appear to be no reason, whatever the Government may feel they wish to do with the other three amendments, why that one in particular should not be accepted. I beg to move.

Lord Bellwin

My Lords, this amendment would require the authorities when considering executives' plans not only to have regard to the matters listed in Clause 4(3)(a) to (c), but also to have regard to their and the executives' general duties under Section 9(3) of the 1968 Act and Section 105(1) of the 1969 Act.

Once again I have to question the extent to which these amendments are necessary. These provisions have not been repealed by the Bill. The general duties still apply and authorities and executives are still required to have regard to them when carrying out their duties under the Bill, particularly when preparing their plan. Indeed, this is emphasised by the requirement imposed on the Secretary of State under Clause 4(6) when giving guidance to authorities to have regard to these general duties. Therefore, for these reasons I hope the noble Lord, Lord Underhill, will, on reflection, agree that there is no need for the amendments.

The fact is, if I may go further, that executives and authorities will continue to be under the general duties and the question is: is there any need—and we think there is not—simply for the Bill to remind them of the fact? On the other hand, because the Secretary of State is not himself under these duties there is a need to remind him to take account of them when giving his guidance, as Clause 4(6) does.

I very much understand the concern which the noble Lord, Lord Underhill, and others have expressed that the costs of a management review under Clause 7 should be included in the Secretary of State's guidance figure. We had a similar discussion in Committee, although the intention of the amendment then under discussion was to exclude the costs of such a review from the PEL. Nonetheless, the intention of this and the previous amendment is clear: that the executive should not in any way be penalised financially because the Secretary of State has required it to undertake a review. I do not believe that there is a need to make a special provision in the Bill on this matter. I assure your Lordships that it will be the normal practice of the Secretary of State to consider whether a review is necessary when he considers the authority's plan. It is at this stage that he will expect to have the information on which to judge whether a review is required. If a review is then considered to be necessary he will call for it when setting his guidance, and I assure your Lordships that he will take into account any costs which fall on the executive as a result when setting his guidance.

My noble friend Lord Lucas of Chilworth has indeed written to the noble Lord, Lord Mishcon, with a copy to the noble Lord, Lord Underhill, giving this same assurance following our debate in Committee. In the light of what I consider to be a positive assurance—I am sure the noble Lord will tell me it is not the same as having it written into the Bill, but nevertheless it is a positive assurance—I hope that the noble Lord might feel, as I do, that the amendment is not necessary.

I think that the assurance I have given is positive and helpful. There is no intention to allow an authority required by the Secretary of State to carry out a review to force an executive into a review halfway through a year after the plans, the guidance and the final determination of grant by the authority have been set. I think that my assurance will be of value to the authorities and the executives, and of more value than the amendment because the costs of any review will be taken into account when setting the PEL for the same year, whereas under the amendment the executive would not receive financial cover for the review until the next year.

Under this amendment the authorities and executives would still have to find the funds to cover the cost of the review to tide them over until the next year's guidance is set. As I promised during our lengthy discussion in Committee on the subject of consultation, I have given careful thought to the points made then by several noble Lords. The amendment now tabled by the noble Lord, Lord Underhill, concentrates on the main issues which were highlighted in our previous debate. The question now is: should the Secretary of State be required to consult with local authority associations, executives and authorities before giving his initial advice or before he sets the PELs?

Much as I respect the principles involved in requiring the Secretary of State to consult the associations and individual executives and authorities, I must, I fear, come back to the two principal reasons cited for resisting the previous amendments. First they would considerably delay the announcement of the Secretary of State's guidance and thereby hinder the authorities and executives in their effective forward planning. There would be uncertainty while the consultations took place. That cannot be a good thing.

Secondly, any consultations with the local authority associations are a matter for the authority. It is for them to decide who should be consulted over their proposals. The amendments would seriously undermine the responsibilities and accountability of the authorities for their plans and the provision of local public transport, if the Secretary of State was required, quite independently, to consult local authority associations on an authority's plan. And if I were a member of the authority I frankly would resent the Secretary of State consulting the association about my authority's individual problems. This would, as I said in Committee, seriously undermine the responsibilities and accountability of each individual authority over planning and provision of local transport. I am perfectly sure this is what the noble Lord opposite really wants.

Before sitting down, I will just add that there may be matters related to the Bill on which it will be desirable for the Secretary of State to consult. As I have said before, on three occasions since the legislation was announced, we have tried to do just that—first seeking views on the broad structure of the proposals and, more recently, seeking views on the details, including the cost benefit model. But the Secretary of State can of course consult on such matters without specific provision in the Bill.

We have had throughout our discussions on this Bill frequent allegations of attacks on local democracy; yet I respectfully suggest that this amendment tends to do just that and, as I say, I do not think it is what the noble Lords opposite really want. I wonder, when they consider carefully what I have said, whether they would not be inclined to agree with me that whether or not that is the intention of the amendment, that would be its effect.

8.4 p.m.

Lord McIntosh of Haringey

My Lords, I wish to refer to Amendment No. 20, which my noble friend is asking your Lordships to consider together with No. 15. I should like to refer to what the noble Lord the Minister has said in reply on this. He said that it would be an infringement of the rights of an individual local authority if the Secretary of State were to consult the association of local authorities before giving advice or guidance. That could conceivably be the case if the intention of the amendment were that the Secretary of State should consult the association about the advice or guidance given to a single authority. But that surely is not the intention of the amendment or what the amendment actually says.

The advice or guidance is given to the passenger transport authorities as a whole. It is specified as between one passenger transport authority and another, but I have assumed all the way through the discussion on the Bill that the Secretary of State was going to announce a total amount of money which he considered was appropriate for passenger transport authorities in metropolitan authorities to have as revenue grant to executives for a year and the division of that total amount of money as between different authorities. I never understood that there was going to be separate advice or guidance—in March to the GLC, in May to the West Midlands County Council, or whatever it may be. There is no infringement at all of the rights of an individual authority if the local authority association is consulted, as is proposed in the amendment, on the total amount of money which is to be the permitted expenditure level for revenue grants. Have I misunderstood the noble Lord?

Lord Bellwin

My Lords, I think the noble Lord has misunderstood me, but if he wishes to continue I can assure him that I am listening very carefully to what he is saying.

Lord McIntosh of Haringey

My Lords, that was the point I wished to raise.

Lord Underhill

My Lords, I continue to be disappointed and, for the record, when one looks at Amendments Nos. 15 and 17, we are not really asking for anything revolutionary there. All we are proposing is to take out the words "have particular regard" and to insert wording so that the authority must be satisfied that they and the executive have had proper regard to such matters as they consider to he relevant and they shall include among such matters a general duty under the 1968 or 1969 Acts. We are not removing the three sub-paragraphs (a), (b) and (c) which the Government regard as important. They are still there, and therefore I cannot understand why this is resisted.

On Amendment No. 19 the Minister said that the Secretary of State will take this cost into account. It depends what the amendment asks for—that when the estimated cost of the review is given the Secretary of State shall take that estimated cost into account. I readily accept what the Minister says about the positive assurance being given, which will be of value. But the present Secretary of State may not be there for long; the present Government may not be there for long; but the Bill will be there. If it is the intention of the present Secretary of State that he will take into account the estimated cost of review, then surely we ought to put it into the Bill so as to ensure that another Secretary of State adheres to that. It seems to me such plain logical common sense that I shall be almost lost for words if I cannot get it accepted by the Government.

When we come to No. 20, I am even more mystified as to why that cannot be accepted. I know that the noble Lord is very genuine when he says he respects the principle; but when I respect a principle I like to act upon it and I should like the Minister himself to act upon this. I do not see how this can delay the chronological process of planning for the whole of this procedure, which we have heard before would undermine it.

He says that anyone who wished to support that would resent the local authorities undermining the authority of their own organisation, but I must remind noble Lords opposite and the Minister of the section I read out from the Local Government Finance Act 1982, where the precise words that we want to put in under Amendment No. 20 are used in subsection (2) of Section 8 of that Act. I would suggest to the Minister that he knows where this guidance was derived from because Section 6 deals with the making of the amount of block grant payable to the authority. What is the difference between having consultations with the associations and with the authority concerned on the question of block grant and asking that it should go in on the question of guidance and advice dealing with PEL under this Transport Bill?

I cannot see, if the Minister cannot accept the other one, why he cannot accept No. 20. Even if he does not like the wording of it, that wording comes, as I say, from the 1982 Act; and if it is good enough for that Act why is it not good enough for the 1983 Transport Act which is doing the same thing? I would ask that if the Minister cannot accept the other three he would at least give an undertaking to look again at No. 20 and, before Third Reading, let us know what the reactions of his colleagues are.

What the Government thought fit to put in the 1982 Act they do not think is fit to be put into this Bill. There can be no reason why it should not be done—unless, of course, the Government do not want to see the slightest amendment to this measure, because there could be some hiccups. But there need be no hiccups so far as your Lordships' House is concerned because the Minister, with his colleagues, is in charge of the timetable; they could make us sit up all night, if they wanted to, in order to get the Bill through. Therefore I see no reason why Amendment No. 20 should not be accepted—I look forward to hearing the Minister's observations on that—even if he cannot accept the other amendments.

Lord Bellwin

My Lords, with regard to giving guidance, there is not a division of a total sum of money in the circular; rather, there will be a letter to each authority setting out the PEL and giving other indications. It has not yet been decided what will be the form of the initial advice for 1984–85. An analogy with block grant, as I said earlier when we were discussing rate support grant, is not really applicable. It is true that there is an in-depth and long-running consultation period with the local authority associations on rate support grant which concerns block grant as well, and that, as the noble Lord will be aware, is quite an involved procedure, so I do not see the analogy with what we are discussing here.

Regarding Amendment No. 20, that is designed to require the Secretary of State to consult with the associations, executives and authorities first, before he gives advice to executives under Clause 3(5)—that is, as to the initial guidance and on methodology—and, secondly, before he informs the authorities of the PEL under Clause 4(5). I submit that the amendment would considerably circumscribe the Secretary of State's power to give advice and guidance. The consultation procedures envisaged by the amendment would seriously delay the announcement of both the intitial and final guidance figures, which in turn would adversely affect any effective forward planning by the authorities. The proposed consultations with the local authority associations are, in reality, properly matters for the authorities to undertake, if they believe them to be necessary. Again, it seems that what we felt to be not necessary, noble Lords opposite feel is very important—almost fundamental, it would seem—from the way they have put their case. It is clear that what seems simple is not simple and that there is a real difference between us on this issue. I regret to say that, but it seems to be the case.

Lord Underhill

The Minister always sounds plausible, my Lords, but we have still not received an answer to the question why, if, in relation to block grant—in the process of block grant, far larger amounts are involved (the whole question of the financing of a local authority is involved in the block grant) whereas we are concerned here with just one part of the financing—it was good enough and there was no possibility of delay, it should not be appropriate here. Apart, therefore, from the fact that such a provision is in the 1982 Act, one would have thought that here was an issue which was so plain and simple that our views would be taken into account. This is not a question of simply pacifying the Opposition in your Lordships' House but a way of showing that there is concern for the situation of local authorities.

I am extremely tempted to divide the House on the amendment, but at this hour on a Thursday I will not do so. Nevertheless, I hope the Minister will read what we have said—I will certainly read what he said—and accept that if the plainest piece of common sense will not under any circumstances be accepted by the Government, we might as well finish the Report stage now. I am not asking the Government to accept everything we propose, but if our most logical arguments are to be blocked, even though what we propose has been incorporated in measures within the last 12 months, this Report stage will become pretty useless. Having said that, I beg leave to withdraw the amendment.

Amendment, by leave,withdrawn.

8.15 p.m.

Lord Underhill moved Amendment No. 16: Page 4, line 26, leave out ("have particular regard to") and insert ("include among the matters to which they shall have particular regard").

The noble Lord said: We battle on, my Lords, and we might strike fertile ground sooner or later. Subsection (3) provides that when determining a plan which would involve an authority making a grant, the authority shall have regard to the three items listed in paragaphs (a), (b) and (c). In Committee a similar amendment was tabled, but it proposed to leave out the phrase, "have particular regard to" the three points and replace it with, include among the matters to which they shall have regard". The Minister said on that occasion that the items in (a), (b) and (c) were so important that the authorities should pay special regard to them. He added that by removing "have particular regard to", the amendment we then moved would weaken the provision and authorities would be free to give matters of this sort very low importance. He said repeatedly that the emphasis was on the word "particular", though he agreed to look further at what was Amendment No. 27, which would have provided that regard should be paid to the general duty as specified in the Acts of 1968 and 1969. Perhaps we may be told the Minister's reaction to that now.

Today's amendment would retain the word "particular" but in a context which, I feel certain, the Minister will be willing to accept. The amendment leaves open the items to which the authority shall "have particular regard", including the three items mentioned in (a), (b) and (c). We are, therefore, trying to leave the position open and not be so restrictive as the Minister thought we were being in Committee. I beg to move.

Lord Bellwin

My Lords, following our discussion in Committee I have, as I promised my noble friend Lord Campbell of Alloway and the noble Lord, Lord Mishcon, looked again at the wording of Clause 4(3). It might be helpful if I began by reminding your Lordships of the purpose of the subsection. It sets out the matters to which the authority is to have particular regard in assessing the executive's plan. These are: first, the cost of provision of services and facilities, and the level of demand and benefit to users; secondly, any advice given by the Secretary of State to the executive on the appropriate amount of revenue support, on methods of determining benefits derived from revenue support, on the form and content of the plan and on the methods of determining costs, levels of demand and benefits to potential users; and, thirdly, the need to achieve a proper balance between the interests of ratepayers and users.

These are vitally important issues, and we are concerned that authorities should pay special attention to them and that they do not in any way get overlooked when authorities are assessing the proposals in the plan. Authorities are, of course, free to look at whatever other issues they wish, and I recall our debate on the word "particular". I am glad to see that the noble Lord, Lord Underhill, has accepted the need to put some stress on the points listed in this subsection and, in his new amendment, has retained the word "particular". But I am afraid that there still remains a significant difference between the text of the Bill, which says the authority must have particular regard to three specific issues, and the amendment, which says that included among the matters to which the authority must have particular regard are three issues. The amendment would very much weaken the stress which we wish to place on those three specific points. There is, of course, nothing whatever to prevent the authority having regard to other issues if they wish to do so. But we are concerned that particular emphasis should be given to the three issues listed; and that is why I have difficulty with the amendment. But there is nothing to prevent authorities from having regard to such other issues as they feel are appropriate. I do not know how the noble Lord, Lord Underhill, and I can differ about that.

Lord Underhill

My Lords, I have one difference with the Minister about what the ultimate effect is on the Secretary of State when he gives his guidance. In the amendment we are saying that, instead of having particular regard only to the three items mentioned, there are other matters to which particular regard should be paid. The Minister says that there is nothing to prevent an authority from having regard to other matters. Before Third Reading we shall consider whether or not to move an amendment which refers to having particular regard to these three points, notwithstanding other points to which particular regard can be paid. We want to be assured that when regard is given by the authority or executive to other matters, neither this nor a future Secretary of State will be able to say that these are not matters to which particular regard can be paid and that he is going to knock them out of the plan. The Minister may say that although they cannot be knocked out of the plan the Secretary of State will advise the authority or the executive to knock them out, and that if they do not it will affect his decision on guidance.

One wants to remove the atmosphere of suspicion which has been built up. I am certain that the metropolitan authorities want that suspicion to be removed. The more the Government resist simple amendments of this kind and do not come forward with an alternative form of words which would go some way towards adjusting the situation, the longer that suspicion will remain. However, I shall read what the Minister has said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 17 not moved.]

Lord Underhill moved Amendment No. 18: Page 5, line 15, leave out ("have regard to") and insert ("if requested to do so by the Authority or the Executive take account of information provided by them concerning").

The noble Lord said: This amendment relates to Clause 4. Subsection (6) sets out the matters by reference to which the Secretary of State shall give guidance. The last few lines of subsection (6) read: In giving the guidance the Secretary of State shall have regard to the general duty of the Authority and the Executive under Section 9(3) of the Act of 1968 or Sections 1 and 5(1) of the Act of 1969, as the case may be". The Secretary of State cannot comply with his obligation to have regard to the general duties of the authority or the executive without investigating the needs of the area and the other matters set out in those two Acts. Clause 4(5) sets out an extensive range of matters about which guidance can be given. There are powers to call for information under Clause 6. The existing wording of Clause 4(6) could be used in a way which subordinated the local decision-making bodies to the Secretary of State's guidance. I am certain the Minister will agree that this is undesirable. There has been criticism of it at various stages of the Bill. We do not want local decisions always to be subordinated to the Secretary of State's guidance.

The Bill changes the position so that, if requested by the authority or the executive, the Secretary of State shall take account of information provided by them concerning the general duties under the two Acts. This is a simple matter. If one looks carefully at the wording of the amendment, we leave out "have regard to" and insert, if requested to do so by the Authority or the Executive take account of information provided by them concerning". the point contained in the subsection. I beg to move.

Lord Bellwin

My Lords, the general duties of the authority and the executive, set out in the 1968 and 1969 Acts, are very important. It is right that when the Secretary of State is considering his guidance he should have a specific remit to take account of these general duties. I am sure that the noble Lord, Lord Underhill, and those noble Lords who sit opposite would have criticised the Government very strongly had the Government suggested that the Secretary of State should ignore or override these general duties in setting the PEL. Yet here noble Lords opposite seem to be saying that one should not take into account the general duty unless the authority or executive specifically request it and that even then one should take account only of what information they give about the duty. If that is not so, the noble Lord, Lord Underhill, will tell me. However, this seems to me to be very confused.

The Secretary of State must take an overall view of the general duty. He would be open to criticism if he did not do so. As the Bill stands, the Bill requires the Secretary of State to have regard to the general duty of the authority and the executive. There is nothing to prevent the authority or the executive from drawing the Secretary of State's attention to any particular point that they wish to make. With this in mind, again rather like the last amendment, it would be simple to say that we shall read carefully what has been said and see if there is sufficient merit in it for us to make what seems, on the face of it, to be a simple adjustment. But surely the noble Lord, Lord Underhill, must in turn take heed of what I have just said, which is absolutely valid. One would need to be convinced before taking what, on the face of it, seems to be an unremarkable step by way of an amendment.

Lord Underhill

My Lords, once again we meet a brick wall. The amendments which we are putting forward have been considered by the representative body of the bodies which are affected by the Bill. They are troubled by the provisions in the Bill and want assurances. Many of the amendments are directed towards that end, but once again the Minister, speaking on behalf of the Government, is definite in resisting this amendment. Again, therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 19 and 20 not moved.]

Clause 5 [Payment of revenue grants]:

8.28 p.m.

Lord McIntosh of Haringey moved Amendment No. 21:

Page 5, line 19, leave out subsection (1) and insert— (" (1) Subject to subsection (1A) below, an Authority shall not in any year make any revenue grant to an Executive except in accordance with a determination made by the Authority under section 4(1) above. (1A) An Authority may in any year make a revenue grant or grants to an Executive by way of increase over the amount of revenue grant determined under section 4(1) above at such time or times as they think fit having regard to their duties under this Act, the Act of 1968 or the Act of 1969 and to circumstances not provided for in a plan prepared under section 3 above; subject to such circumstances being agreed between the Authority and the Executive as being circumstances of an emergency nature.")

The noble Lords said: My Lords, by leave of my noble friend, I beg to move Amendment No. 21. This amendment, in a wider form, at the Committee stage drew great rage—or, rather, I may not use that word, may I?—so let me say indignation from the Government Benches when it was suggested that it was opening the door to all sorts of financial irresponsibility even to admit the possibility that there might be emergencies which would require financing in between the annual determinaion of revenue grant. When I suggested, moving Amendment No. 35 at that time, that it was not the most businesslike procedure to force an executive to borrow to meet genuine emergencies such as the effects of bad weather in the winter, the noble Lord, Lord Bellwin, described the amendment as an incitement to deficit financing and said that it would open the possibility of financing proposals not provided for in the plan. This amendment crawls back on its hands and knees in an attempt to convince the Government that when we spoke about genuine emergencies we meant genuine emergencies and were not intending to ride roughshod over the intentions of the Bill—much though, in other ways, we should like to do so.

Therefore, the amendment which I am moving refers specifically to "circumstances being agreed between the Authority and the Executive as being circumstances of an emergency nature." My assurances, and those of my noble friends, to the Government in Committee that that was what was intended cut no ice whatsoever. It cannot be said now that any executive or authority will declare a genuine emergency without due reason. It would be an admission of bad management and of bad financial control. People do not do that kind of thing unless they must. The noble Lord the Minister suggested in Committee, at col. 1077 of Hansard for 1st March, that under those circumstances: Such a deficit could be covered either by the executive borrowing on the open market or from the authority by the unplanned use of reserves, The problem with that answer is that when this Bill is enacted, there will be less scope for a passenger transport executive to make emergency financial arrangements than there is for any other local authority service. In other local authority services it is recognised that there are cases—for example, national wage settlements which cannot be foreseen, bad weather, and so on—for which an authority keeps contingency reserves and where the possibility of virement still exists. Those possibilities, as I understand it, are not permitted to a passenger transport executive. Instead, under those circumstances, the passenger transport executive is required to borrow—as the noble Lord the Minister said—on the open market or to make an unplanned use of its own reserves; note, my Lords, the executive's reserves and not the reserves of the authority as a whole.

In the wording we have now, there is no intention to weaken the financial control of the Secretary of State over the authority or of the authority over the executive. What is intended is to have a more businesslike recognition of the kind of emergencies which occur in the best enterprises and which ought not to be provided for either by borrowing on the open market or by the use of unplanned reserves. They ought to be treated in the same way as other emergencies arising in local authority work. I beg to move.

Lord Bellwin

My Lords, I recall our interesting discussion in Committee on a similar, albeit wider, amendment. Then, the noble Lords, Lord McIntosh and Lord Sefton of Garston, eloquently put the case for the authority to be able to make more than one grant determination in the year. We felt then that we had to resist because this struck at the heart of the Bill. We have here basically similar amendments which allow for an authority to pay additional grant where the authority and executive consider that this is necessary because of circumstances of an emergency nature.

I made the point in Committee, as the noble Lord, Lord McIntosh, fairly said, that any deficit that arose because of an emergency could be covered either by the executive borrowing on the open market, from the authority or by the unplanned use of reserves. Such a deficit could then be made good in the following year's plan by making an appropriate adjustment to the amount of revenue grant provided by raising fares, or by the planned use of reserves which would then, by virtue of Clause 2(3), relieve the executive from the duty to break even so far as the deficit was covered by that planned use of reserves.

Let me stress again that the executive are only required to break even "so far as practicable"—and this is a fundamental response to this particular point. If because of an emergency it was completely impracticable to break even, then this will provide the flexibility for which your Lordships have pressed. This flexibility applies both to the year in which the deficit first arose and also to the next following year—during which the deficit should, so far as practicable, be made good. Let me assure your Lordships again that there are remedies available to executives to cover unforeseen circumstances arising during the year without the need for increasing grant in that year.

I appreciate that these amendments are less far-reaching than that previously tabled, and I have listened with care, as I hope I always do, to that which the noble Lord has said in support of them. But again, I have to say that this amendment—unlike the previous two—really does strike at the heart of the Bill and would provide a loophole which I am sure some may wish to exploit. There is no definition of … circumstances of an emergency nature. Indeed, I totally accept that it would be impossible to define—and the impossibility of defining it strengthens the Government's objection to this amendment. The Bill makes fully adequate provision for flexibility in the event of an emergency, and surely that is what the noble Lords, Lord McIntosh and Lord Underhill, are seeking to achieve. If I can assure them, as I do again, that it does achieve that which they are seeking, perhaps they will feel happier about withdrawing this amendment.

Lord Sefton of Garston

I rather suspect that, if this Bill had been considered for a longer period and in more detail in another place, the two opposing sides—if I may put it that way—would have been able to reach an accommodation in the form of an amendment. On one side, we have the executive and the authority saying that an emergency should be tackled immediately and that one should not have to go to the money market and have interest levied on the money borrowed to help in an emergency. However, good management would say that one should do that in agreement with the authority and the executive, so that it is not carried on.

If an emergency occurred in Merseyside, say, between the two modes of transport used for crossing the river, and there was a long industrial dispute, it would throw a tremendous burden on the other form of transport. If, as the noble Lord the Minister said, the local authority considered that to be an emergency and that it needed more money because the services had already been cut to a minimum under this Bill, and that it was not right to call in service from elsewhere in order to deal with that particular emergency, the local authority would have to go to the money market to borrow money. That may lead to an objection; it may also provide the trade union concerned in the strike with a good reason to go to the courts and dispute the ability of the local authority to accede to the PEL in this particular emergency. Again, we shall be into legislation because it may happen that the authority will spend money over and above the PEL and therefore give the trade union the right to go to the courts.

The Government for their part say there is a difficulty in establishing that which is … of an emergency nature. I agree that there is a difficulty in defining that. But just assume that the Secretary of State could agree on what constituted matters of an emergency nature. The other side could be accompanied by writing into this amendment a requirement that the … circumstances of an emergency nature must also be agreed by the Secretary of State. If that was done, everyone could be satisfied: the local authorities would be satisfied. The executives would certainly be satisfied, not having to go to the money market because the best way of meeting this is by direct grant from the local authority. And the Minister would be satisfied, according to what has been said by the noble Lord, Lord Bellwin, because he himself had agreed on that particular emergency.

Such an amendment would again restore some of the confidence that has drifted away between local authorities and central Government. I cannot see any reason why this should not be done. We are not speaking for ourselves but are speaking for the representatives of the transport executives and the authorities. They do not like this kind of legislation to leave your Lordships' House. They mean it; and they mean it in the interests of good management. They mean it in regard to an emergency. If the Secretary of State had the final, overriding say over what constituted an emergency, then I cannot see why there should be any objection to such an amendment.

If the noble Lord, Lord Bellwin, with the permission of the House, was able to tell your Lordships that he will consider that, perhaps we can agree upon an amendment that will satisfy all the differences on this point at Third Reading.

Lord Underhill

My Lords, before the Minister replies may I say that it so happens that just before my noble friend Lord Sefton spoke I had written down exactly the same words on my pad. I took note of what the Minister said, that there is no definition of "circumstances of an emergency nature", and I immediately wrote, "Say we inserted 'subject to the approval of the Secretary of State' ". That suggests that there are at least two people thinking on sensible lines, and I think that there are others as well. I will dispense with the rest of the notes I have here, because I believe that is the cardinal point which has been put to the Minister. He can cut out a lot of the other parts of the amendment, but if we could have written in, circumstances being agreed between the Authority and the Executive as being circumstances of an emergency nature, subject to approval of the Secretary of State", that would meet the point, and would also help to undo some of the feelings of suspicion which have gathered. Perhaps the noble Lord the Minister would like to reply to that.

Lord Bellwin

My Lords, with the leave of the House, perhaps I can comment on that. On the particular point we are talking about—that is, the definition of an emergency—what the noble Lords suggest is not without its attractions. If one took that by itself, perhaps not that formula but something like it, it might be possible to cover such a definition of what is an emergency. Certainly I undertake to talk to my colleagues about that.

I am indeed very anxious to take up the point the noble Lord, Lord Sefton, makes about building back a few bridges, although he knows that he and I would differ—perhaps less than some; perhaps the noble Lord, Lord McIntosh, and I would differ more—as to why the need for bridges is there in the first place. But that is not the point now. I am very attracted by anything that would do that. The fact is, as I said in the first half of my remarks, I believe that with the caveat that there is, that the duty is to break even so far as is practicably possible", in what really was an emergency there could be no possible complaint, there could be no possible expectation of the authority having to do something that was not practicably possible, for whatever reason. I think that really is the nub of it.

Again in an attempt to be helpful—I am sure noble Lords know that I mean that when I say it—I will look at that other point to see if there is the kind of merit in it that noble Lords feel is there. I suspect a formula might he found. But I do not know whether that overcomes the other basic obstacle; namely, the duty to break even so far as is practicably possible, with the other opportunity which exists if it is not practicably possible—and to borrow is not the only alternative; there are others. I do not know, but I suspect I would come to the conclusion that the one does not override the other; but I am certainly attracted to the possibility of doing something of that kind. I can go as far as that, but I am afraid no further than that.

Lord McIntosh of Haringey

My Lords, the noble Lord the Minister appears to take two steps forward and 1.9 steps back again. I do not think we are getting a great deal further, because I do not think the nature of the issue has been fully comprehended, with great respect. The provision in the Bill that authorities shall be required to work within the grants so far as is practicable is still subject to the provision that the protected expenditure level shall be considered taking one year with another; in other words, one year with the next. If an executive overspends in one year the presumption must be that the PEL will be reduced for the following year by a comparable amount. If I am wrong about that, I will gladly give way.

Lord Bellwin

My Lords, if I may intervene very quickly, I would not have thought that necessarily follows. I am open to correction. When I look at the other points I will look at that, too, but I would not have thought it was necessarily so. I could be wrong.

Lord McIntosh of Haringey

My Lords, I think it is a very important point which does need to be clarified. I would be grateful if the noble Lord would agree, as I am sure he will, to find some way of clarifying it before the Bill leaves your Lordships' House.

Lord Bellwin

My Lords, I am assured that I am right in what I say. I hope that is helpful.

Lord McIntosh of Haringey

Does the noble Lord mean that any overspending is not necessarily taken off the protected expenditure level for the following year?

Lord Bellwin

Yes.

Lord McIntosh of Haringey

My Lords, that is certainly helpful. That certainly was not clear to me; I do not know whether it was to my noble friends. That encourages me to think that perhaps the noble Lord the Minister has taken only 1.8 steps back. Under those circumstances, in view of what the Minister has said to my noble friend about considering the possibility of an amendment which would have the further proviso that the certification of an emergency would be subject to the approval of the Secretary of State, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

8.47 p.m.

Lord McIntosh of Haringey moved Amendment No. 22:

Page 5, line 21, at end insert— ("An Authority may after consultation with the Secretary of State increase the amount of any revenue grant in any year where the amount determined under section 4(1) above becomes inadequate due to circumstances which are beyond the ability of the Executive and the Authority to control.").

The noble Lord said: My Lords, I beg to move Amendment No. 22. I think it would be unreasonable to detain your Lordships too long with this amendment. It is another attempt to do the same thing. The Government do not appear to like the phrase "circumstances of an emergency nature". The other phrase which we are proposing here is "circumstances which are beyond the ability of the executive and the authority to control". I anticipate that in this case, as in the last, the Minister will say that these circumstances are not defined. I would be the first to say that if he will agree to give the same consideration to the possibility that the definition of circumstances beyond the ability of the executive or the authority to control shall be subject to the approval of the Secretary of State, I think we might make progress.

I do not think it can seriously be said, first, that there are no circumstances which are beyond the ability of the executive or the authority to control, or, secondly, that the recognition of the fact that there are likely to be such circumstances is a true breach of the intentions of the Bill. It must be right to have flexible financing for this type of circumstance. It must be right to have the alternative of additional revenue grant, in addition to the borrowing powers the Government are proposing. I think the same argument would apply here for this quite modest amendment. I beg to move.

Lord Bellwin

My Lords, I actually have more difficulty with this, because although the amendment is very similar in purpose, the fact is that it would provide for the opportunity to make more than one grant determination, where the existing grant becomes inadequate because of circumstances beyond the ability of the executive or the authority to control. This again provides an opportunity to circumvent the planning procedures, and, indeed, it has to be said, even an excuse for slack management, which is just what the Bill is trying to prevent.

The amendment really worries me because what it says in effect is that an authority can increase the grant where the amount becomes inadequate due to any—I underline "any"—circumstances beyond the ability of the executive or the authority to control. I am sure that with their ingenuity some authorities could, if they wished, find examples of circumstances beyond their control. Would there not then be never ending approaches to and discussions with the Secretary of State?

If I am right in what I said on the previous amendment, at least with regard to the first part of it—namely, what happens if a situation arises which is beyond the control of the authority and how they deal with it—then surely the same applies to this amendment, which is so similar in many ways. There is a point that I have already said I wanted to look at—picking up the point made by the noble Lord, Lord Sefton, in particular—because I am indeed anxious to see where it might prove to be possible to build bridges, if I may use the term, or whatever, with local authorities. That is one thing that I undertook and I will certainly do that. I am not sure where it will get me but I promised and I should like to see what might come from it. But here I feel that we are into something else and I cannot accept the amendment.

Lord McIntosh of Haringey

My Lords, I find it very difficult to understand why this alternative wording, which is not more loose than the wording in Amendment No. 21, should be more objectionable to the Government than the previous one. No authority or executive wants to admit that there are circumstances beyond its control, just as no authority or executive wants to admit that it has to spend money on items of an emergency nature.

The Minister emphasised the word "any" in the phrase "due to any circumstances beyond the ability of the Executive or the Authority to control". The amendment does not actually say that. The word "any" does not appear in that context. It is certainly not the intention of the amendment to try to widen the breach or break down the annual financial control which is proposed.

It does look as if we are not going to get any further with this series of amendments. With the advantage that I believe we have gained on the assurance that overspending is not necessarily set against the protective expenditure level for the next year, I ask only this of the Government: When these genuine one-off emergencies occur—I am talking about such one-off emergencies as, say, the Mersey Tunnel falling in or snow blanketing our major cities rather than the kind of continuing expenditure as, for example, a higher wage settlement than had been anticipated—can some way be found of recognising in legislation that these one-off emergencies "will not" be set against protected expenditure levels for next year rather than "may not" be? If we can make some progress on that—and I am not asking for an answer now—I am prepared to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn,

The Deputy Chairman (Earl Cathcart)

In calling Amendment No. 23, I remind your Lordships that if this amendment is agreed I cannot call Amendment No. 24. Amendment No. 23, Lord McIntosh of Haringey.

8.52 p.m.

Lord McIntosh of Haringey moved Amendment No. 23: Page 5, line 22, leave out subsection (2).

The noble Lord said: My Lords, by leave of my noble friend I shall speak to this amendment. This is a much more important amendment than those which we have attempted to put before your Lordships in the last few minutes. I make no bones about it, but here we come back to what is to us one of the most objectionable features of the Bill. The Bill says, not openly, "If you spend more you are in trouble" but, negatively and by the backdoor, "If you spend within this arbitrary limit, you are not in trouble", and therefore, by implication, "If you spend more you are likely to be in trouble".

I must avoid making a Second Reading speech, despite the fact that the issue is so fundamental, but this is the place where we have the willingness of the Government to wound but the unwillingness of the Government to strike. In other words, the Government are proposing to achieve an objective which is profoundly abhorrent by giving the Secretary of State the right, entirely without let or hindrance, to approve expenditure and to say to the courts, "Under these circumstances which I alone, the Secretary of State, have determined, expenditure will be considered to be safe."

We know that there have been many problems with the law on public transport expenditure over the past few years. There is no denying that. I appreciate that one of the reasons for the Government introducing this legislation is that there has been this measure of confusion. The decision in the Greater London Council case, and the situation of the legal advice being given to the metropolitan authorities in the case now before Mr. Justice Woolf, have given rise to a great deal of anxiety and expenditure on legal advice and assistance to local authorities, and no doubt to the Government as well. Legal uncertainty of that kind certainly is undesirable. There can be no doubt of that.

However, the legal situation which affected both the Greater London Council and the metropolitan authorities has in large measure been resolved before the passage of this Bill. The decision of the Divisional Court earlier this year and the decision of Mr. Justice Woolf have in fact relieved the anxieties both of the Greater London Council and of the metropolitan authorities. In that sense there is no need for this legislation if its purpose is to clear a legislative confusion. Indeed, the matter is worse than that because what the legislation now proposed is doing is to cobble on to the 1968–69 Acts, which still remain in force, a new series of criteria and of rules for local authorities to work to.

The legislation proposes giving the Secretary of State the power, entirely of his own accord and without any reference to further authority, to say "If you local authorities obey my financial guidance you are protected under the law". That is not just in what it does but in what it does not do. It is an abhorrent principle. The way to maintainj financial control of public transport does not lie through means of that sort. I beg to move.

Lord Sefton of Garston

My Lords, I wish to support the amendment but I would not want to make a Second Reading speech. That is going to be a difficult problem. I can see that immediately. But it is quite simply resolved because in fact the Bill proposes that the Government should have the power to restrict the spending of local authorities on transport. They have chosen this method, contained in this clause as one method by which that control can be exercised. So if I address myself to alternative methods of control of that expenditure I do not think that could be interpreted as a Second Reading speech. I would therefore like to apply myself to that problem.

I made the point in Committee and on Second Reading that the real damage that this Bill does is in the relationship between central and local government, as opposed to the developments in democratic states throughout the world where in some, because of the peculiar nature of the difficult economic environment, they are moving towards one-party states. No democracy is static. Developments must take place and it is very important to see which way those developments are tending to go.

In this country, because of an economic policy accepted by the present Government the emphasis is now coming—I do not think anyone will deny it—on more central control being exerted on local authorities and on the local part of our democratic system than existed before. We have seen it in many instances. Not only is it extended on the question of finance; it is also extended on the question of administration.

I said at Second Reading that water was once in the main democratically controlled by many local authorities; it has now become the prerogative of the Secretary of State, completely removed from any democratic control of any elected people except through the other place and perhaps this place. So the trend is towards more centralisation. That is not only seen in water and transport, Very shortly if I read the Sunday Times right—and it sometimes gets it right, as it got the Budget right—in education there are moves afoot to begin to centralise power, centralise direction and to tell local authorities where to go for the best bargain in the educational field. Of course there are.

As I said on Second Reading, perhaps one of the most glaring examples of the centralisation of our democratic system is in the question of how we handle that very important affair of law and order. I do not think that anybody will deny on the issue of law and order that we have certainly moved towards central control. We have certainly moved towards the most effective policing authority being a regional task force, which is not answerable to any democratic body at all but takes very important decisions and perhaps influences national policy in policing more than any other organisation in the country. So the centralisation is there.

If we go back to the principle of the Bill, this Bill at the moment is supposed to be aiming only at financial control. If in fact the Government really only mean that, and they do not mean they want to extend power generally over transport decisions in the country as a whole, then there are other ways of doing it. I said before, and I still say, that this clause means in effect that the people who are going to decide transport policy locally are those people who take the local authority to court. Under this Bill they are going to be able to take the local authority to court for an entirely different reason than they did before. The reason that they took a local authority to court before was an issue of common law as to whether or not the local authority was carrying out its duties in a proper and reasonable manner in accordance with the dictates of local government. That was the reason before. Now a new idea is being entered. Now it will be seen that people will be taking local authorities to court because of the fixing of the PEL. That will be used as the bench mark as to what is the right amount.

Why do the Government not come forward with an amendment that really is the heart of the Bill? Why do they not come forward with proposals for block grants to be fixed by the Secretary of State without any recourse to law at all? They shy away from that and the reason is that they do not want to appear to be in fact controlling local authority transport matters, when the truth is that this Bill will lead them inexorably in that direction. It will go from determining the PEL to then determining the situation in regard to any individual part of a transportation plan. The Government will insist on having all the information necessary for them to declare a PEL. In the end what we shall have is a duplication of services.

I would not know whether it is in order to put down an amendment that has not been submitted in writing. I rather suspect that it is, although this is not the custom and practice. I have been sitting here trying to think of how I could amend this amendment or put an amendment in the other way which would enable the Government to have their way in regard to the limitation of the final amount that would be spent by local authorities as a PEL but would remove the incitement of people to take local authorities to court. I think that there are 101 ways of doing it, and I think that the Government have to demonstrate that they are perfectly willing to look again at that clause. I think that this clause should be defeated on the grounds that we start de novo, looking again at other ways in which the Government can meet their intended purpose in this Bill without introducing the courts into the matter.

9.4 p.m.

Lord Underhill

My Lords, before the Minister replies, may I make just two or three points. I have been looking very carefully at all the Second Reading speeches which were made on this subsection in the Committee stage, but I certainly do not want to repeat any Second Reading speeches. But time and time again the Ministers opposite say that the final decision rests with the authority, which is free, so we are told, to make up its own mind about the amount of revenue grants to be paid. As my noble friends have emphasised quite strongly, the freedom is there but with an iron glove behind it. So long as the local authority does what the Secretary of State says in his guidance, it is free to do what it likes. But if it does not accept the Secretary of State's guidance, there is almost an encouragement—we mentioned this at Second Reading—in the White Paper for people to go to court. Therefore, there is no freedom of the authority when one comes to the last analysis. The freedom is there so long as it accepts the advice and guidance of the Secretary of State.

We were also told by the Minister—and I have looked at the last debate—that there is an attempt to ignore many of those who live in the areas of the authorities concerned and who are affected by what happens. But I thought that that was why we had elections. That is why we have local council elections; that is why we have metropolitan county elections and why we have metropolitan district elections. When one puts before the electors a transport plan which takes into consideration the needs of the people and planning needs and it is made a focal point of the election, the people say they will support this and the authority then says, "This is what we want to do", but the Minister says, "You are free to decide to do it but we are not going to give you the money to do it, and if you dare go above the guidance figure for revenue support then there is every encouragement for people to take legal action against you", where is the freedom and where is the flexibility? This goes against the wishes of local people who declare, "This is what we want in our transport plan".

Every single effort that has been made from this side of the House to put into the plan social needs and planning needs has been turned down. Therefore, there is no flexibility; there is no freedom for the authority to make up its own mind so long as we keep subsection (2) of this Clause in being.

Baroness Gardner of Parkes

My Lords, I am slightly puzzled by the comments that have just been made by the noble Lord, Lord Underhill. He seemed to imply that if an authority is elected, not just on one point of policy, then that gives that authority an automatic mandate. It was quite apparent in the case of the Fares Fair Scheme that in London the people who elected the authority were quite stunned when they found that they were getting a supplementary rate demand. That was when all the letters started flowing in, protesting on that basis.

It is very important to retain this subsection in the Bill because this is the subsection that makes clear how much you can spend and that there can be no legal challenge within that limit. I understood that this was one of the main purposes of the Bill. To delete it now would be returning us to exactly the same position as previously. To act in that way and to say that this gives no flexibility is pretending that there is no approved amount for the present London Transport grant; whereas instead we have had a figure of £115 million put to us which I understand we would be able to spend. That is a not inconsiderable sum by anyone's standards. It is very wrong to adopt the attitude that this is removing democracy. I cannot accept that, and I hope that the Minister will retain this part of the Bill.

Lord Bellwin

My Lords, let me say at once that, of all the amendments, we clearly cannot accept this one. I am in exactly the same dilemma as the noble Lord, Lord Sefton: how do I avoid making Second Reading points and yet answer what has been said? I shall try and do as the noble Lord did—and I think he did it very well. He did it fairly shortly, and I shall try to do the same. I shall try, as he did, to contain the depth of feeling which I have on this subject.

I, too, am desperately anxious about what is happening to local government. Of course, the noble Lord, Lord Sefton, is right in saying that there is a move taking place—there has been a move taking place for the last 25 years—for the centre to take more and more control. I know that there are members on all sides who could weep as to what local government is doing to itself by confronting and taking on central Government and, in effect, by challenging central Government. There are those not far from here who wholly delight in challenging central Government.

What are the Government to do in a situation like that? With respect to the noble Lord, Lord Underhill, it is not good enough to rest on the mandate of a local election. There is a national mandate which must always override the local mandate. As your Lordships have heard me say before many times in this House—and none more so than the noble Lord, Lord Sefton—local government was proud of the fact that it worked within the parameters set down by the centre. That is what government is all about. It is more important to all of us in your Lordships' House than any local mandate, whatever it may be.

Never mind all the talk about the GLC: there are authorities like the South Yorkshire Authority which for nine years has not put up its fares one penny and which is now raising a subsidy on its people of £60 million. How long before it is £70 million, or £80 million? When we talk about the issue of local government and the feelings that we all have for it, we cannot turn away from what it is doing to government. One may say, "Why should it be so important to government that they should want to take this kind of action when local people act in this way?" I shall not repeat all the points I made on Second Reading. But one has to be concerned about the people who are affected; that is what it is all about.

The noble Lord said, "Why not block grant?" He made what I know he thinks is a constructive suggestion. But let me tell him that block grant has its weakness, too, or its strength, depending on whether you are buying or selling. Block grant sets out to give grant; it does not set out to limit expenditure. It does not stop an authority from deciding, if it wishes, to go to its ratepayers and apply a precept or a rate. It can do whatever it likes above block grant. We can look at some of the effects of that. On Second Reading my noble friend Lady Gardner gave an impressive list of the impact of that upon prosperity and upon people's businesses.

I have before me a whole clutch of letters that have come from different businesses and concerns within the authorities that we are talking about. I shall not read them out but if any noble Lord asks me later I shall gladly show them to him. Some of them are so sad as regards what is happening to the people in these areas. So when the Government are challenged on their basic philosophy in bringing forward a Bill of this kind, which I know the noble Lords opposite dislike so much, noble Lords must recognise why this comes about. If we fail to recognise that, truly in terms of debate all is lost, because we shall never convince anyone as to what we are doing there. I do not know what more I can say on this without going into much greater length than I think is proper at the Report stage of this Bill.

Perhaps noble Lords would bear with me because I want to put something on the record; I think that the noble Lord, Lord Underhill, in particular will be pleased if I do so, and it is right that I should. At Second Reading I said something which was not strictly speaking correct. I am always at great pains to put right something that is wrong. At the time I said that the AMA had spent money on the campaign by way of advertisements, leaflets and so on. It must be said that they had a great deal to do with that campaign and, so far as I know, still have. But the record shows that they did not spend money. It is proper that I should put that on the record. It is to be regretted, and it is not my way to say something that is not true. I said it in good faith because of information that I was given. However, the chairman of the association wrote to me and properly drew my attention to this. I wanted to take this, my first opportunity, to put the record straight. It would be wrong it I did not do so. It is a slight digression, but I wanted to make that statement.

Clearly, we do not go along with the amendment. It needs a much longer debate. The feelings are deeply held on both sides. The noble Lord, Lord McIntosh, referred to the proposals as abhorrent. From where he sits, I understand what he says. In return, I ask him to understand that, with my tremendous concern for local government, I feel equally deeply that if things are not done, we shall only fall deeper and deeper into the mire. That is not what this Government are about to allow to happen.

Lord McIntosh of Haringey

My Lords, first, on behalf of my noble friends, we are grateful to the Minister for the correction of an earlier, obviously inadvertent, misstatement and we accept entirely what he has just said.

I described an earlier amendment as being on its hands and knees in the sense of coming back with a more modest proposal for something which we tried to achieve in broader terms in committee. This amendment is not on its hands and knees. It stands on its two feet and must be defended on that basis, because at the Committee stage my noble friend Lord Underhill moved an amendment with such complex wording that I am not sure that I fully understood it at the time or that I understand it now. The amendment attempted to give some protection to local authorities in making revenue grants on the basis of their general duties under the 1968 and 1969 Acts. The Government did not like that amendment. It was rejected, partly on the broader grounds to which the noble Lord, Lord Bellwin, has referred, but partly also because the wording itself was difficult.

Therefore, we come to the conclusion that we have no alternative but to put forward the full and proper amendment here and now, which is to delete any of this protection for compliance with the Government's wishes under all circumstances. Those are the words used. I shall not repeat the reasons why we find this to be abhorrent. But I think I ought to correct the noble Baroness, Lady Gardner, because she specifically referred to the supplementary precept levied by the Greater London Council in October 1981 as if that were something which had not been anticipated. That is not the case. In fighting and winning the election in 1981, the Labour Party specifically said that fares would be reduced by 25 per cent.—and I believe that that was as late as 4th October 1981—and that a supplementary precept of 6p would be raised for that purpose. It was in our election manifesto; it was made widely known to the people of London; and the Labour Party was elected on that basis. What then happened was that, completely beyond the control of the Greater London Council, the Government decided that it would be appropriate to penalise the Greater London Council further and to save the taxpayers' money at the expense of the ratepayers. So there was no increase in public expenditure as a whole, but the supplementary precept which had to be levied in October was twice the amount which had been anticipated. However, the principle is absolutely clear. The Greater London Council knew what it had to do, had declared it to the electorate in advance of the election, and in fact carried that out.

I move as rapidly as I can away from the question of the GLC because I know it gives great offence, not least to my noble friends. I do not see how we on this side of the House could let a Report stage go without seeking to remove this legal monstrosity of the protected expenditure level. I shall not repeat the arguments again except to say that it is only in the interests of the relatively small number of people here and the time of night that I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 24 not moved.]

9.21 p.m.

Lord Underhill moved Amendment No. 25:

Page 5, line 29, at end insert— ("An Authority may only excercise their powers under section 15(3) of the Act of 1968 where no increase in the amount of the revenue grants determined by section 4(1) above will result.").

The noble Lord said: My Lords, this is quite a simple amendment. I am certain that the Minister will not say that it is in any way an attempt to wreck the Bill, because it provides that there will be no increase in the amount of revenue grant. It refers to Section 15(3) of the 1968 Act. We debated the principles of Section 15(3) of that Act a number of times at Committee stage. Where an authority considers a particular service is essential but the transport executive considers that the cost is prohibitive and it cannot meet it, the authority may instruct the executive to operate that sevice but gives an undertaking to meet the cost involved. That is paraphrasing the provisions of Section 15(3) of the 1968 Act.

This amendment says that the authority should have the power to exercise that authority under Section 15(3) of the Act but only … where no increase in the amount of the revenue grants determined … will result. We want the authority to have that power, but it is not seeking to make it an additional charge over and above the determined revenue grant. I shall be interested to see whether the Minister will accept this amendment. The only differences can be whether they want the Section 15(3) powers to continue. We hope they will. I beg to move.

Lord Bellwin

My Lords, in Clauses 9(2) and 10(1)(c) of the Bill, there are provisions to repeal Section 15(3) of the 1968 Act. This amendment must, I think, assume the continuation of Section 15(3). To clarify matters 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 the authorities 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. Section 15(3) will be superseded by Clause 4(1) of the Bill. But as the first plan under Clause 4(1) does not itself come into effect until 1st April 1984, of course we have no intention of repealing Section 15(3) before then.

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. During 1983–84 before Section 15(3) is repealed the situation will be exactly as described in the amendment. An authority will only be able to exercise this power within the amount of grant they have determined. So, my Lords, I think that the noble Lord will surely agree that this amendment at least is unnecessary because for 1983–84 Section 15(3) remains. Since in subsequent years Section 15(3) will no longer be in existence, the amendment is inappropriate.

Lord McIntosh of Haringey

My Lords, I believe there are two principal reasons why the House should not accept the advice of the noble Lord, Lord Bellwin, about Section 15(3) of the 1968 Act. First, although it is undoubtedly the case that in the early years relatively little use had been made of Section 15(3), it became an issue in the Merseyside judgment of Mr. Justice Woolf. I should like to quote from the judgment: While the Executive's duty is the same as that of the Authority, they have to form an independent judgment and, if they come to the conclusion that the cost of a possible policy is too high, they should not adopt it but leave it to the Authority if they think differently to use their power under Section 15(3)". So certainly in that case Mr. Justice Woolf felt that it was desirable to remind the executive and the authority of the existence of Section 15(3), and of the powers available to an executive to demand that the authority should use that section of the 1968 Act in order to provide unremunerative services. We are now talking about the kind of services comparable to those which can be provided by British Rail under the public sector obligation, which part of the Act, I understand, is not to be repealed.

The second reason why the House should not accept the advice of the noble Lord is that there is a difference between the planning powers given in Clauses 3 and 4 of the Bill and the powers under Section 15(3) of the 1968 Act. That difference is an extremely valuable one in relation to the 1968 Act, the point being that it is open to an executive to identify not just a general level of service but particular services which will be unremunerative, which will be too expensive for it to run within its normal financial remit from the authority, and yet which it is recognised should for social reasons be maintained. There are, for example, services operated at hospital visiting times, and services in rural areas. As we have heard from a number of noble Lords, there are a considerable number of rural areas within the boundaries of the metropolitan authorities.

It is important that individual decisions should be made by local people when they want to have unremunerative services preserved and are willing to pay the price for them. This has nothing do with general financial irresponsibility; it has nothing to do with the issue of the general level of fares. It is provided for under Section 15(3) of the 1968 Act, and it would not be available to an executive or an authority if, after 1983–84, Section 15(3) were to be repealed. For those two reasons I consider it is important that we should retain these provisions under the 1968 Act, and that the amendment should be accepted.

On Question, amendment negatived.

Lord Underhill moved Amendment No. 26:

Page 5, line 29, at end insert— ("(3) To the extent to which the amount of revenue grants made in any year by an authority in accordance with any such determination exceeds the amount specified in guidance given by the Secretary of State under section 4(5) above in relation to that determination, the making of those grants up to and including the amount so specified shall, without prejudice to any other proper exercise of the power of the Authority to make revenue grants, be regarded for all purposes as a proper exercise of that power.").

The noble Lord said: My Lords, this is the final amendment under Clause 5, and I would remind your Lordships that subsection (2) seeks to give protection to a transport authority from any challenge in the courts where it makes revenue grant up to the guidance level set by the Secretary of State. That is the point that we have been discussing for the last half-hour or so. The amendment seeks to deal with the question of what is the legal position if the guidance level is exceeded. In such circumstances the amendment seeks to protect the expenditure up to the guidance level.

Let me put it in the following way. Let us say that £30 million is the guidance level fixed by the Secretary of State, and that, due to unforeseen circumstances, it is exceeded. Will the £30 million level be protected? This is not an academic question. It was raised in Standing Committee in another place and is referred in columns 321 and 322. The Under-Secretary of State, Mr. Reginald Eyre, was asked whether in the light of the discussion, he was saying that, if an operating authority for operational reasons exceeds its budget during a financial year and the authority subsidises the operation over and above the guidance of the Minister, not only the additional expenditure but all expenditure is challengeable in the courts. The Minister said that he would like to reply to the matter when Clause 5 was reached. When pressed further, the Minister asked that this matter be not pressed because he wanted to deal with other matters raised during the debate. He said: I shall be glad to return to the matter on Clause 5 and properly answer then". Unfortunately, Clause 5 was not reached. There was no debate on this. The other place had no reply from Mr. Eyre or from any other Minister. We have put down this amendment because we want this legal matter clarified. I hope that the Minister can do it this afternoon.

Lord Bellwin

My Lords, I suppose that, in a way, this is a probing amendment; for, ironically, what was said was never actually reached in another place.

The amendment, as I understand it, seeks to ensure that if an authority exceeds the Protected Expenditure Level, then the grant which it pays to the executive up to the PEL will still be fully protected. Any challenge would therefore be restricted to the excess above the PEL. Lord Underhill has explained that this results from the way that, under the Bill, protection is afforded only if the authority keeps wholly within the PEL. If an authority exceeds the PEL, then the amount up to the PEL will still benefit from the protection afforded by Clause 5(2). Clause 5(2) clearly states that, to the extent to which the amount of the revenue grants … does not exceed the amount specified in guidance given by the Secretary of State, the making of those grants shall be regarded as a proper exercise of [the Authority's] power". The crucial phrase is "to the extent", which I interpret to mean that payments up to that extent are protected; but that on any payments over that amount the excess would not be protected. I think that that is pretty categorical. I hope it will reassure the noble Lord, Lord Underhill, and noble Lords opposite so that they may feel able to withdraw this amendment.

Lord Sefton of Garston

My Lords, may I ask the noble Lord where the Bill mentions the excess? Where does it say in the Bill that the disqualification applies only to the excess over the PEL?

Lord Bellwin

My Lords, while my noble friend turns the pages, perhaps I can repeat the point which I think states it clearly, which is the statement that: to the extent to which the amount of the revenue grants … does not exceed the amount specified in guidance given by the Secretary of State, the making of those grants shall be regarded as a proper exercise of [the Authority's] power". I said that the crucial phrase was "to the extent". Of course I will give the noble Lord the detail he requires if he will bear with me for a moment.

Lord Sefton of Garston

My Lords, perhaps I may make a point while this is being looked at. I accept what it says in the clause, but it does not specifically say subsequently that only the excess is to be applied. We can all imagine what is going to happen. It will not be just a question of a local authority and somebody discussing with the Minister what the excess will be. What will happen is that both sides will employ barristers and will go to court and then will have a field day. Somebody will be saying that the law is an ass; because a barrister will be arguing whether, once the amount has been exceeded, that makes the whole payment invalid. That is what he will argue. The barrister on the other side will argue against it and, at the end of the day, the judge will decide. That could be the scenario. What that implies is, as I said earlier in Second Reading, that the judge is sitting before two barristers hearing the arguments and then deciding whether the Bill allows him to say that the rest of the payment even up to the PEL is invalid. Having made that point, that is what could happen. A simple amendment that makes that crystal clear, which will not cost the Government anything, is surely reasonable and will remove all our arguments in the courts.

Lord Bellwin

My Lords, the fact is that the Bill states the amount up to that which is legal, and the noble Lord, Lord Sefton, is right that beyond that, if challenged, the authority have to have a case to justify to the courts that above that figure was reasonable, and so on.

I do not know whether there is a case for looking for further clarification. I have not the slightest doubt in my mind—indeed I have said so—and when the noble Lord reads Hansard he will see I chose my words carefully to try to reassure your Lordships. When we too consider what has been said and we feel that there is not absolute crystal clarity, we will see what has to be done. That is the best I can do with this matter for tonight.

Lord Underhill

My Lords, as the Minister said in his first statement, this was partly a probing amendment because we wanted a ministerial statement about why, for various reasons, such was not forthcoming in the other place. But the point which my noble friend Lord Sefton of Garston makes is one to which I hope the Government will give some attention. The Minister just used the words "if challenged". We want to avoid anybody being challenged and to avoid the necessity of local authorities having to go to court or being taken to court. This is not in any way attempting to sidetrack the Bill. I think that the Minister agrees. We are not arguing about the Government's or the Secretary of State's power to fix the guidance level.

Our amendment may not be properly worded, but we are saying that if, for any reason, the authority finds it necessary to exceed the revenue grant, the expenditure up to the figure which is permitted shall be regarded as a proper exercise of the authority's powers. That would avoid anybody taking the authority to court except for a balance above that figure. That is not clearly stated in the Bill. It may well be that there will be legal argument one way or the other but I ask the Minister, as I know he will, to note carefully what has been said. There is not a great deal of time before Third Reading, but it would be helpful if there could be a legal discussion on this to decide whether it would be better to put something into the Bill which the Law Officers can determine to avoid the possibility of challenge. That is what we want to do on all sides of the House.

Lord Bellwin

My Lords, with leave of the House and if the noble Lord will allow me, I think it may be helpful if I were to write to him and to the noble Lord, Lord Sefton of Garston, on the legal interpretation as we see it, to see where it takes us.

Lord Underhill

I thank the Minister for that. So long as, with all due respect, it is a legal interpretation that holds water; because we must bear in mind that the London Transport Executive and the GLC both had a legal interpretation, but that did not avoid a court case. Therefore, if a few words in the Bill will clarify the position then I think it is best to have them. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Denham

My Lords, I think we have made quite satisfactory progress today, and perhaps this is a good time at which to finish tonight. I beg to move that further consideration on Report he now adjourned.

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

House adjourned at twenty minutes before ten o'clock.