HL Deb 28 March 1983 vol 440 cc1345-58

3 p.m.

Read a third time.

Clause 2 [Financial duty of Executives]:

Lord Underhill moved Amendment No. 1:

Page 2, line 35, at end insert— ("( ) Where the plan prepared by the Executive under section 3 below and approved by the Authority under section 4 below so provided, subsection (1) above shall apply to the relevant period described in subsection (1) of section 3 below instead of to any accounting period").

The noble Lord said: My Lords, this is the third endeavour to introduce some business common sense in relation to the period in which to balance revenue against charges. Perhaps I may recount to your Lordships a brief history of the amendments. In Committee an amendment was introduced to provide that instead of any deficit being met in the next accounting period—that is, in the following year—it should be made up within the period of three years by reference to "the relevant period" of the three years for the plan, provided for in Clause 3(1). On that occasion the noble Lord, Lord Bellwin, said that although subsection (2) of this clause provides that any deficit shall be made good in the following year, this duty "does not provide a financial straitjacket". He stressed that the requirement on the executive to break even so far as is practicable did not mean that if an executive was faced with an unavoidable deficit it would he forced, come what may, to make good that deficit in the following year if it was impracticable to do so. The noble Lord, Lord Bellwin, went on to say that if the deficit arose from circumstances beyond the control of the executive and the authority, the authority might decide that some increased revenue support was necessary to make good the deficit in the following Year, and the Secretary of State will take that into account when considering his guidance on the level of protected expenditure."—[Official Report, 28/2/83; col. 968]. As the Minister suggested that there was some flexibility, the amendment was withdrawn so that the position could be considered.

On Report a different amendment was brought forward to the effect that, instead of making good any deficit in the following accounting period, this should be changed to "three … accounting periods." On that occasion it was stressed that any assurance that the Secretary of State will take any unavoidable deficit into account when considering the guidance on the level of protected expenditure for the following year (which was the statement made by the Minister) is not statute law. That provision is not in the Bill; it is an assurance given by the Secretary of State. On that occasion the noble Lord, Lord Lucas of Chilworth, again stated that any deficit which arose because of an emergency, could be covered either by the executive borrowing on the open market or 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. This could be done by raising fares or, alternatively, it could be adjusted by the planned use of reserves."—[Official Report, 17/3/83; col. 852].

At that stage other noble Lords emphasised that it would be good common sense to allow a deficit to be cleared within the three-year period of the plan. My noble friend Lord Sefton of Garston suggested that to meet the Government's view of the need for financial discipline an amendment was needed which would give an executive the freedom to clear a deficit in the three-year period of the plan but at the same time would give the Government the power to restrict any abuse. The noble Lord, Lord Lucas of Chilworth, as the Minister, said he would consider what had been said. I said that, likewise, on this side we would consider the position, and as there was one further stage of the Bill we would see what could be done. Since then a letter has been sent by the Minister to my noble friend Lord Sefton (I should say that the Minister kindly sent me a copy, for which I am grateful) explaining the situation but again emphasising that there was no need to defer for three years when the courses available include the power to vary fares, costs, grant and use of reserves.".

The proposed amendment now before your Lordships refers to the procedure under Clause 3 for the preparation of the plan to cover the next three years and the approval of that plan under Clause 4. The amendment then states that references to the relevant period in those clauses—that is, Clauses 3 and 4—shall be to the next three years, stated in Clause 3(1) as being "the relevant period", and not to any accounting period, which is for one financial year.

I believe that the amendment will meet what the executives want and will also meet the concern of the Government. The amendment in no way interferes with the provision for the preparation of the plan by the executive and that for its approval by the authority. It does not interfere with the power, which the Secretary of State wants, to give advice and guidance under the various stages of the process; nor with his power to give advice on the protected expenditure level. Therefore, any suggestion that it will encourage financial indiscipline does not arise. In our view the amendment will make for business common sense. It will enable the executive and the authority to plan so that any unexpected deficit could be cleared over three years, instead of the following year, without removing any of the other powers contained in Clauses 3 and 4. I beg to move.

Lord Lucas of Chilworth

My Lords, as the noble Lord, Lord Underhill, has reminded us, we have had some interesting and really quite long discussions on this point during previous stages, particularly on the financial duty imposed on an executive under Clause 2. Amendments have been put down to enable an executive to make good deficits over a three-year period rather than in the next year, and we have explained on a number of occasions why such loose financial management is unacceptable. This amendment is only slightly different from the others we have considered in that it enables an executive to break even over a three-year period ("the relevant period" to which the noble Lord referred) rather than on an annual basis, provided that this is proposed in the annual three-year plan.

There might appear to be some logic in applying a break-even duty to the same period as that for the plan provided that the executive adopt that course at the time. Nonetheless, the amendment is quite unacceptable because in practice it would enable an executive to circumvent completely its financial duty. It would enable that executive to accumulate larger and larger deficits. As I said, an executive might propose in, say, its first three-year plan that it needs to break even only by the end of the three-year period. Then the following year when they renew the plan they could propose again to break even only at the end of the next three years. Deficits therefore under this kind of arrangement—the arrangement which is suggested certainly to me by the amendment—could be rolled forward quite indefinitely. Indeed, one might go so far as to suggest that a deficit could deliberately be created and rolled forward indefinitely. At the same time they could incur further deficits in each succeeding year.

That is briefly why we could not accept the amendment. I hope that I have shown that the amendment would enable an executive to accumulate ever-increasing deficits without, in practical terms, any obligation on them to make good. The amendment would be a recipe, as I have said, for loose and, indeed, profligate financial management. It cannot be in the interests of the executives, the authorities, and equally—if not more importantly—the ratepayers and the taxpayers, who might find their money wasted on excessive subsidies and increasingly inefficient services. It is not unreasonable, I suggest to your Lordships, to expect executives to exercise that taut financial control which is such a part and a requirement of this Bill.

Lord Underhill

My Lords, the Minister has repeated many of the arguments which we had at the Committee and Report stages, but the House will notice that the Minister agreed that there is a change in this amendment—that the three-year period would apply by providing for it in the three-year plan. The Minister has said that this will circumvent the whole idea of financial control; but how could this be, as the Minister has agreed that it is a provision to be put in the three-year plan? Therefore, at the end of that three-year period the position has to be corrected and the deficit has to be cleared by then. His argument on that point falls completely to the ground. It surely is business common sense, as I am certain many noble Lords would agree, that where there is an unavoidable deficit, it is better to spread it over a period where you can plan ahead than having to adjust things quickly for the following year, which is what the Bill at present provides.

There is always this suspicion in statements from Ministers opposite on this matter about profligate activity and profligate expenditure. But we should bear in mind that this is what the executives and the authorities want and the authority is responsible to its ratepayers. Nevertheless, the Government seem determined not to move on this matter, and therefore I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3 [Preparation and submission of financial plans]:

3.13 p.m.

Lord Underhill moved Amendment No. 2: Page 3, line 24, after ("determine") insert ("after consultation with the Authority").

The noble Lord said: My Lords, this amendment relates to Clause 3 and in particular to subsection (3) of that clause. This particular subsection provides that the executive may prepare its plan: on the assumption that the Authority will … make revenue grants of such amounts as the Executive may determine". It will be recalled that at the Report stage an amendment was brought forward to leave out the words: of such amounts as the Executive may determine". That amendment was proposed on the grounds that the executive is the operating body—the unelected body—and is responsible to the elected body, which is the public transport authority or, in other words, the county council. It was argued that the authority has the responsibility for making the grant to the executive and therefore it was wrong to place on the executive the obligation to work on an assumption that the authority would pay an amount which the executive may determine on the grounds that it had no authority so to do. The argument referred also to aspects of the procedure. I shall not go into those.

Generally I do not disagree with the points made by the Minister about the procedure, but he did make one statement: Nothing would be achieved by preparing a plan based on only one proposal from the authority, which is what would result from the amendment".—[Official Report, 17/3/83; col. 859.]. In my view that was an absolutely misleading account of that particular amendment and what it meant. That amendment would not have interfered with the provision that: the plan may be formulated on the assumption that the Authority will in the relevant period make revenue grants". That assumption would be all right; but what we suggested was wrong was that there should be an assumption that the authority would make revenue grants of such amounts as the executive would determine. As we said at the Report stage, the executive has no real authority to make such a determination.

As the Government for some completely unfathomable reason did not like that particular common sense amendment at the Report stage, this present amendment provides that, if that determination is to be made by the executive, then it must be made on some firm basis. Therefore, the amendment provides that this assumption of the amount the authority shall pay shall be determined by the executive after consultation with the authority. That seems a very common sense basis. If the Government wish to leave in the Bill that the assumption of the amount that the authority will pay can be determined by the executive, surely the executive should do that after consultation with the authority, which is the body which has to pay. I therefore have pleasure in moving the amendment.

Lord Lucas of Chilworth

My Lords, again I remind your Lordships' House that we have had some amendments put down at previous stages of this Bill in similar vein which we have resisted as being unnecessary and because, frankly, they would have added nothing to the Bill. I have to resist this amendment as well, both because it is unnecessary and also because it actually repeats a provision that is already in the Bill.

Under Clause 6(1) an executive is already required to consult the authority before it prepares the draft plan. At that stage, the authority will be able to give the executive advice on the level of grant that it proposes to make, and the executive will obviously have that in mind, and it will also have the advice from the Secretary of State under Clause 3(5) when determining the assumption about the level of grant for the purpose of the plan. If the authority decline to give such advice, then that is their choice. But under Clause 4(2), the authority can ask at that later stage for alternative proposals. So the Bill already provides the consultation procedure that this amendment seeks to achieve. It really is not good sense, I suggest to your Lordships, to accept amendments which are simply duplicating existing provisions.

I recognise, however, the concern that the noble Lord has raised that an executive might determine an assumed level of grant before they consult the authority on the plan preparation. I can hardly conceive that this would be likely; even in that unlikely happening, it would be a most unwise practice to adopt. Nonetheless, if this does occur, the authority will still be free, when considering the executive's draft plan, to tell the executive to produce alternative proposals, to which I have referred, based on perhaps different levels of fares, services and facilities and on different levels of grant, as they may then specify. So the problem that this amendment seems to try to rectify, again, is already covered in that clause.

Lord Underhill

My Lords, I am certain that if one made reference to all the subsections to which the noble Lord has referred one would find that it is not as simple as it seems. We can trace this on various previous amendments. The danger in leaving the Bill as it is, is that it leaves in quite clearly the words: as the Executive may determine". That means that the executive will proceed to work its plan on that basis. Any attempt later on by the authority to modify that surely is delaying the whole thing. I will not go now into the chronological process which the Minister kindly supplied, but that is so tight that any hold-up could defer a plan being properly made. The present provision will enable the executive to determine what amount it is going to assume the authority will pay. It is plain common sense to qualify that. That is what the amendment sought to do. That was such a common sense amendment that the Government prefer not to accept it. That will be borne in mind when we come to a later important amendment on this Bill. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Undernhill moved Amendment No. 3: Page 3, line 33, after ("to") insert ("existing and").

The noble Lord said: My Lords, this is an important amendment because Clause 3 deals with the preparation and submission of a plan, which must be prepared annually by the executive to cover the next three years. The amendment relates to subsection (4) of the clause. The subsection provides that the plan must be accompanied by various estimates, which are set out in paragraphs (a), (b) and (c). Paragraph (a) relates to the cost of providing the services and facilities described in the plan. Paragraph (b) relates to the level of demand for the services and facilities. Paragraph (c), which is the important paragraph and the one to which the amendment is directed, refers to, the benefits to potential users of those services and facilities". The amendment proposes that paragraph (c) should read: the benefits to existing and potential users of those services and facilities".

In preparing the plan the executive must take into consideration what benefits will be given to existing users. If it is considered that it will be of importance to give estimates of benefits to potential users, surely it must also be appropriate to give details of the benefits to the existing users. In Committee the noble Lord, Lord Bellwin, said that it would be wrong to widen the benefits of which estimates will have to be supplied under the subsection. At different times in our debates the Minister referred to the fact that in various places in the Bill the word "benefits" can be used to refer to any benefit. In fact, on one occasion he went so far as to say that he would readily consider any benefit not covered and decide whether an amendment should be made to the Bill.

The amendment now before the House does not seek to define what is meant by "benefits" in formulating the plan or resulting from the plan. The subsection relates only to the submission by the executive of estimates relating to various matters, and the benefits to other than potential users are not included. As reported at column 865 of the Official Report for 17th March, Lord Bellwin, in referring to Clause 3(4), said that it is concerned with the duty of the executive to submit precise estimates of those factors which are directly related to the services which they provide—their cost, the level of demand for them and the benefits they produce". I suggest that those estimates will not be complete unless they include benefits to existing users, as well as benefits likely to accrue to potential users.

At a previous stage the Minister could not accept deletion of the term "potential users". I think that such a proposal was moved at the Committee stage by the noble Lord, Lord Teviot. The Minister said that that would widen the benefits and it would not be appropriate for the submission of estimates. The present amendment does not widen the meaning of the word "benefits" in that way. All it suggests is that if the estimates of the plan are to have a common sense meaning, they must refer to the benefits to existing users as well as to potential users. That is what the amendment seeks to do. I beg to move.

Lord Lucas of Chilworth

My Lords, I of course accept that the amendment has nothing to do with the benefits. However, I wonder whether the amendment results from perhaps a slight misunderstanding of the reference to "potential users" in Clause 3(4)(c). What we are saying here is that the executive must consider the benefits that potential users will receive from the proposed services and facilities. In this context everybody would be a "potential user"—even if they currently use local transport—because we are talking about future services in the years ahead. Existing users who then continue to use the services will form part of the potential user force. So a separate phrase adding existing users is really quite inappropriate. Perhaps I should emphasise that, by that, I do not mean that an executive cannot have regard to the benefits that existing users receive from existing services. Of course it can: and I am sure that it would be helpful if the executive were to take that factor into account.

However, surely in this instance the term "potential users" covers everybody who is expected to use—who might use—the service, whether or not an existing user, because we are concerned about future transport plans for future years. How can one have an existing user of a proposed service—a service which has not yet come into being? I suggest that that is quite impossible. The addition of existing users is therefore quite inappropriate. I hope that the noble Lord can accept that and will not press his amendment.

Lord Underhill

My Lords, I am happy to accept the statement made by the Minister. However, I should have thought that since he has said that there has been a misunderstanding, the opportunity could have been taken here to remove the misunderstanding by making quite clear what is meant. The very fact that there is a misunderstanding seems to suggest that the text of the clause could be improved. However, I am delighted to have the assurance of the Minister. I only hope that the courts, too, will accept the assurance of the Minister. What is important is what the courts will decide on the wording of the Bill, not (I say with all due respect) on what any Minister may say. Having had the Minister's assurance, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

3.26 p.m.

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

Lord Underhill moved Amendment No. 4:

Page 4, line 6, at end insert— ("(1) If the Authority have modified the plan submitted to them under section 3 above, in circumstances where they are satisfied that a particular passenger transport service which the Executive have power to provide is required to meet the needs of their designated area, but the Executive are not willing to provide it or to arrange for its provision because they consider that the cost of providing it would be too high in relation to the contribution which it would make to the needs of the area, the Authority may give the Executive a direction requiring the Executive to provide or secure the provision of that service, and the Executive shall comply with that direction.").

The noble Lord said: My Lords, your Lordships will recall that on the first day of the Committee stage an amendment, Amendment No. 4, sought to exclude from revenue grants those grants made by an authority to enable an executive to carry out an instruction from the authority under the provisions of Section 15(3) of the 1968 Act. That subsection provides that where an authority considers a particular service to be essential, but the executive cannot meet the cost of providing it, the authority may give the executive instructions to provide the service and undertake to meet the cost that may arise. The earlier amendment was rejected by the Government at the Committee stage, and the noble Lord, Lord Lucas of Chilworth, explained that the Bill leaves the power of Section 15(3) in place only until April 1984, after which it will be repealed.

So at the Report stage there was brought forward a different amendment, which proposed that an authority may exercise its powers under Section 15(3) only where no increase in the amount of revenue grants will result. I stated that if that amendment were carried I would bring forward a consequential amendment to adjust a later clause. The Minister, the noble Lord, Lord Bellwin, again pointed out that after the first year Section 15(3) of the 1968 Act would be repealed, and he explained that the power in that provision would be replaced by means of part of the annual planning process. Under the Bill the authority has responsibility to approve the plan prepared by the executive, and, if considered necessary, to approve it with modifications.

However, there is no provision which specifically replaces the power contained in Section 15(3) of the 1968 Act. At Committee stage I referred to the judgment given by Mr. Justice Woolf when he dismissed the appeal of Great Universal Stores against the Merseyside County Council and emphasised the importance of the provisions of Section 15(3) of the 1968 Act. That point was again stressed at the Report stage by my noble friend Lord McIntosh of Haringey. Ministers have argued that the power of Section 15(3) is covered by Clause 4(2) of the present Bill, and they have also claimed that the provision in the Bill does a bigger job in that respect—I use words used by the Minister. However, what Clause 4(2) provides is that, the Authority may require the Executive to supply them with …". alternative proposals, estimates of particular benefits, and such other information as the Authority may specify". That in no way relates to the provisions of Section 15(3) of the 1968 Act.

The amendment before you provides that, if the authority has modified the plan submitted by the executive by including a service that the executive is not willing to provide because it may consider the cost to be too high, the authority may give a direction to the executive to provide that service and the executive must comply with the direction. It is important that this power remains with the authority. The amendment makes no reference to Section 15(3) of the 1968 Act, so the argument about repeal under the Bill does not arise. The words in the amendment are precisely those taken from Section 15(3) of the 1968 Act.

There is, however, one point that I must emphasise. The plan in Clause (3)(1)(a) of the present Bill refers to the general level of transport services, whereas the amendment relates to a particular service. The difference will therefore be apparent. At the Committee stage, I quoted from letters received from the solicitor-secretary of the Merseyside Passenger Transport Executive and from the solicitor-secretary of the West Yorkshire Transport Executive each of which emphasised the importance of this provision being in the Bill.

I repeat that Section 15(3) of the 1968 Act is not mentioned in the amendment. There will therefore be no argument this time from the Minister about the provisions of the Bill relating to its repeal. As pointed out, the provisions of Clause 4(2) of the Bill cannot be used as an argument against the objectives of the amendment. This is an instruction to an executive that should be retained. I have pleasure in moving the amendment.

Lord Lucas of Chilworth

My Lords, this amendment would, in effect, put back into the Bill a provision similar to Section 15(3) of the Transport Act 1968. With the amendment, we return to the subject of that section that was discussed in some detail in your Lordships' House and in another place—that of the authority's power to direct an executive to provide a loss-making service. As the noble Lord, Lord Underhill, explained, the authority has power under Section 15(3) of the 1968 Act to direct its executive to provide this loss-making service on the condition that it provides the necessary grant. It is the case that Section 15(3) is to be repealed in April next year because its provisions, as we have previously made clear, will be effectively replaced by Clause 4, especially subsection (2) and, to an extent, subsection (1).

I believe that noble Lords have not attached sufficient importance to the real powers available to authorities under these subsections. The provisions enable an authority to require its executive to supply alternative proposals based on different levels of services and facilities. Of course, the authority has in clause 4(1) the final word on the content of the plan. So these subsections provide the authorities with an effective alternative power. They are similar to those currently available under Section 15(3) of the 1968 Act. In our view, Section 15(3) of that Act is made redundant by the provisions of this Bill. That is why we propose to repeal it. Clause 4 provides a perfectly good alternative.

The noble Lord, Lord Mishcon, made the point during our Committee stage on 3rd March. I readily accept that. The difficulty, in his view, arises because the Secretary of State, when setting his guidance, could decide that the kind of loss-making service envisaged is not essential and that he would therefore not include the cost of its provision when setting the guidance. If the authority still wished to provide the service, it would have to do so only by exceeding the guidance and would therefore run the risk of challenge in the courts.

There are two points that I should like to make. First, the authority, as all of us know, has freedom to exceed the guidance if it feels that it is justified in doing so, and if it feels able, should the need arise, to justify that decision before the courts. So, it is for the authority itself to decide if it wishes to provide a loss-making service and exceed the guidance. This, it seems to me, is no different from the situation that authorities are already in. At present, they risk challenge in the courts for any level of service and grant.

Perhaps more important, it is for the authorities to decide on their priorities. The authority would not necessarily have to exceed the PEL if it was to provide a loss-making service that the Secretary of State, in setting his guidance, had felt was unnecessary and which he would not, of course, have taken into account when setting that power. The authority might, for example, reassess its priorities in the light of the PEL if it wished to keep within it. If it feels that a particular loss-making service is absolutely essential and must be provided without exceeding the PEL, it can do so, but at the expense of other less important services. To me, that seems a fairly proper discipline to impose upon the authority.

Clause 4(2) allows the authority to ask for alternative proposals; for example, for a loss-making service, and then Clause 4(1) allows the authority to decide the final form of the plan. It is the authority that decides the final form of the plan. That may well include a decision that the executive must run a particular loss-making service. My Lords, I can see no need for the amendment. The Bill provides a new and fully adequate financial planning procedure that should not provide undue difficulties—indeed, any difficulties—between the executive and the authority.

3.37 p.m.

Lord McIntosh of Haringey

My Lords, in resisting the amendment, the noble Lord, Lord Lucas, is really trying to spring a trap not just for the Opposition but also for the authorities and executives. I invite the House to examine the issue from the point of view of the authority. The authority has responsibility under Clause 4 to produce the best transport plan it can, at the best possible price, taking into account the needs of the mainstream transport users in its area. It has all sorts of hoops to jump through to reach that stage, going backwards and forwards between the authority and the executive and having to take heed of the guidance of the Secretary of State. In doing so, the interests of what I call the mainstream users of the basic services must be paramount. The best possible service at an acceptable price must be provided for those users.

It is, however, recognised and has been recognised since the 1968 Act and before, that there are certain kinds of service that do not readily fit into that pattern. There are, for example, services to hospitals on visiting days, services to rural areas that are included within metropolitan authorities, and various social bus services that are no different from any other kind of local authority social service expenditure. There is no difference between providing a bus to a hospital on visiting day and providing a wheelchair for the patients. It is the same kind of public expenditure and should not be treated in a different way at the expense, as is now to be the case, of the mainstream public transport users.

Therefore, if the authority does what the noble Lord is suggesting, it will be doing so not at the public expense generally but at the expense of the general public transport users. In other words, it will be producing a less than optimum general public transport service in order to provide those particular social bus services which are considered to be necessary. That cannot make sense, particulary when we have the situation that the threat which hangs over the authority is that of a challenge in the courts by a ratepayer. It is a particularly severe threat on this occasion because by their nature those special social bus services will be required for a minority of people and will be useless to the vast majority of ratepayers in the area.

Therefore, those ratepayers who are not influenced by the need to visit a hospital and by not having their own car, will be particularly prone to take this opportunity to challenge the authority in the courts, sometimes for selfish reasons and sometimes for straightforward political reasons. Therefore, the sanctions to be applied against the authority are that much greater in this case and the distortion which is proposed by the noble Lord the Minister is that much more dangerous. I hope that those arguments will not prevail against the amendment proposed by my noble friend.

Lord Lucas of Chilworth

My Lords, with the leave of the House, it is not I who am springing a trap: it is the noble Lord, Lord McIntosh, who is making quite unwarranted and quite uninvited assumptions. He has said that the responsibility of the authority is to provide the best transport plan possible. He said that that may well include a number of headings which he mentioned among them social needs. Of course that is so; that is absolutely right. But he then assumed that those social needs—which may only meet the needs of a small number of people—would be provided at the expense of the mainstream service. That is as an assumption with which I cannot agree because it need not necessarily be so.

The noble Lord has perhaps forgotten that when the executive and the authority deal with their plan, they have an overriding consideration—that of taking into account the interests of both user and ratepayer. Indeed, that is really what the Bill is all about. A fair balance has to be struck. In order to assist the authorities the PEL three-year plan system has been evolved.

The noble Lord implied that the financial planning procedure, which is really what the Bill is all about, provides that the authority ought to be able, the day after it has approved a plan, to change that plan by adding a service or by removing another or, in fact, by increasing the grant. While I do not accept for a moment his argument as to where the interests are going to lie as regards social need at the expense of mainstream or otherwise, certainly there is nothing in what the noble Lord has said that makes me think that we ought to accept this amendment.

Lord Sefton of Garston

My Lords, before the noble Lord sits down, I should like to ask him a question arising from a matter which I raised on Second Reading and to which the noble Lord, Lord Bellwin, said that he would refer when replying but in fact he did not do so. I raised the question of whether or not this Government wanted the courts to decide about the balance between fares and grants. That question has not been answered. I raised it twice in Committee. I should like to ask the noble Lord whether or not it is the Government's intention that the courts should decide whether the balance of money is to come from grants or from fare-paying passengers?

Lord Lucas of Chilworth

My Lords, with the leave of the House, I am sorry that the noble Lord, Lord Sefton, has not received a particular response to that question. What I can tell him is that it is the Government's intention to defend, to protect, the authority up to the protected expenditure level outside of which, if an authority wished to proceed, it would then be for the courts to decide.

Lord Sefton of Garston

My Lords, that does not answer the question. May I repeat—

Lord Derwent

My Lords, I am sorry to interrupt, but this is not a Committee stage and the noble Lord is clearly out of order. We cannot expect the Minister to get up several times.

Lord Underhill

My Lords, if your Lordships look carefully at Amendment No. 4 you will find that there is nothing in there which refers to a change in the guidance level. There is nothing in there which refers to a change in the protected level of expenditure. The Minister said that this would be putting back Section 15(3) into the Bill. I have already admitted that that is what it intends to do. But we have not referred to Section 15(3) of the Act; we have referred to what we want to do. I have already said that the wording of this amendment is precisely the wording taken from Section 15(3) of the 1968 Act.

Why do we want this? I have referred already, as I did during the last stage of the Bill, to a letter from each of two solicitor-secretaries of two passenger transport executives. There are only six passenger transport executives and two of them took the trouble to write to say that they wanted this provision in the Bill. Yet they are the ones who will have the direction given to them by the authority. They believed that this was very important. Surely the authority is the elected body, the body which the ratepayers have put in to control local affairs and if they want a particular service to be run but the executive says, "Sorry, we cannot do it because it is too costly", the direction must remain with the authority to instruct the executive to do this. That is what the amendment wants—the elected representatives shall have the authority to say what should be done in their area. The question of PEL and guidance levels on revenue support comes afterwards.

This direction is vital. The PTEs want it and the Government for some strange reason will not put it in. Yet they say that it is in Clause 4(2). If any noble Lord looks at Clause 4(2)—I shall not trouble to read it out—and suggests that that is the same as this amendment, then he is not reading the same language as I am reading. We regard it as an important principle that the elected body must retain the authority to decide that a certain service shall be run. Let us leave alone the question of the PEL because that will come after the decision has been taken. In view of the importance of this subsection we ask the House to make a decision upon it.

3.48 p.m.

On Question, Whether the said amendment (No. 4) shall be agreed to?

Their Lordships divided: Contents, 70; Not-Contents, 97.

Aberdeen and Temair, M. Jenkins of Putney, L.
Airedale., L. John-Mackie, L.
Amherst, E. Kearton, L.
Amulree, L. Kennet, L.
Ardwick, L. Kirkhill, L.
Avebury, L. Leatherland, L.
Aylestone, L. Listowel, E.
Bacon, B. Lloyd of Hampstead, L.
Banks, L. McIntosh of Haringey, L.
Beaumont of Whitley, L. Mayhew, L.
Beswick, L. Oram, L.
Bishopston, L. Peart, L.
Blease, L. Phillips, B.
Blyton, L. Ponsonby of Shulbrede, L. [Teller.]
Briginshaw, L.
Brockway, L. Rathcreedan, L.
Bruce of Donington, L. Rugby, L.
Burton of Coventry, B. Sainsbury, L.
Byers, L. Sefton of Garston, L.
Caradon, L. Shackleton, L.
Chitnis, L. Sidmouth, V.
Colliston, L. Stedman, B.
Cooper of Stockton Heath, L. Stewart of Alvechurch, B.
Crook, L. Stewart of Fulham, L.
David, B. [Teller.] Stone, L.
Denington, B. Strabolgi, L.
Donaldson of Kingsbridge, L. Tanlaw, L.
Elwyn-Jones, L. Taylor of Gryfe, L.
Ezra, L. Taylor of Mansfield, L.
Gaitskell, B. Tordoff, L.
Grey, E. Underhill, L.
Hale, L. Wallace of Coslany, L.
Hampton, L. Wells-Pestell, L.
Hatch of Lusby, L. White, B.
Houghton of Sowerby, L. Wooton of Abinger, B.
Hunt, L.
Adeane, L. Gray, L.
Airey of Abingdon, B. Hailsham of Saint Marylebone, L.
Ampthill, L.
Avon, E. Henley, L.
Balfour of Inchrye, L. Hylton-Foster, B.
Belhaven and Stenton, L. Ilchester, E.
Blake, L. Jessel, L.
Boyd-Carpenter, L. Killearn, L.
Campbell of Croy, L. Kilmany, L.
Carnegy of Lour, B. Kinloss, Ly.
Cathcart, E. Lane-Fox, B.
Chorley, L. Lauderdale, E.
Cockfield, L. Lawrence, L.
Constantine of Stanmore, L. Long, V.
Cork and Orrery, E. Loudoun, C.
Cottesloe, L. Lucas of Chilworth, L.
Cox, B. Lyell, L.
Cullen of Ashbourne, L. McFadzean, L.
Daventry, V. Macleod of Borve, B.
Davidson, V. Mancroft, L.
De Freyne, L. Margadale, L.
De La Warr, E. Marley, L.
Denham, L. [Teller.] Merrivale, L.
Derwent, L. Mersey, V.
Drumalbyn, L. Milverton, L.
Dudley, B. Molson, L.
Eccles, V. Montgomery of Alamein, V.
Effingham, E. Mottistone, L.
Ellenborough, L. Newall, L.
Elliot of Harwood, B. Northchurch, B.
Elton, L. Nugent of Guildford, L.
Fortescue, E. Orkney, E.
Gibson-Watt, L. Orr-Ewing, L.
Gisborough, L. Penrhyn, L.
Glenarthur, L. Plummer of St. Marylebone, L.
Glenkinglas, L.
Gormanston, V. Porritt, L.
Portland, D. Strathspey, L.
Rankeillour, L. Sudeley, L.
Ridley, V. Swinfen, L.
Romney, V. Swinton, E. [Teller.]
St. Davids, V. Taylor of Hadfield, L.
Saltoun, Ly. Teviot, L.
Sandys, L. Trefgarne, L.
Shaughnessy, L. Trenchard, V.
Shuttleworth, L. Trumpington, B.
Skelmersdale, L. Vaux of Harrowden, L.
Somers, L. Vivian, L.
Spens, L. Westbury, L.
Stamp, L.

Resolved in the negative, and amendment disagreed to accordingly.