HL Deb 30 April 1984 vol 451 cc403-55

House again in Committee on Clause 3.

The Deputy Chairman of Committees (Lord Wells-Pestell)

In calling Amendment No. 40A, I should inform the Committee that the name of the noble Baroness, Lady David, was printed in error in respect of this amendment.

Viscount Ridley moved Amendment No. 40A: Paged 3, line 22, at end insert— ("( ) In prescribing a maximum the Secretary of State shall exclude from consideration exceptional expenditure incurred on the enforcement of law and order.")

The noble Lord said: I am sorry that the noble Baroness, Lady David, has deserted me and so, apparently, has everyone else. I was a little surprised to see her name underneath mine and I understand that her other interests are paramount. This is the last English sacred cow to be paraded before the Committee tonight, although there may be a Welsh one to follow. It is in the nature of a probing amendment.

Your Lordships will doubtless be aware that outside London police expenditure is subject to a 50 per cent. grant from the rate support grant fund. Your Lordships will also be well aware that expenditure of the rate support grant is a finite sum of money. However, the operations which the police are required to carry out are not in any sense under the control of the local authority which pays half the bill. In my opinion, that is perfectly right and it is not a matter of dispute at the moment. However, it does mean that there is possibly a very large bill for exceptional and unforeseen expenditure on police forces generally which could not have been foreseen by a local authority. Therefore, that is quite unlike all the other amendments in the group which we have been discussing, where all the various expenditures are matters within the discretion of the local authority to support, or not to support, as it may wish. Authorities have no option but to pay for a share of the police bill as the Home Office may decide.

In discussing Amendment No. 36 my noble friend Lord Bellwin said that the decision for specific spending will be that of the authority itself and no one else. This does not apply to police force spending, and, as I have said, by its very nature it is likely to come after the GRE has been decided and, therefore, the rate capping possibilities have also been decided, or so we are led to believe. It may even come after the local authority has fixed its rate for the year.

I give only one example. Again, let us not be drawn into a dispute which has nothing to do with this Bill. The county of Nottingham—much in the news at the moment—publicly stated last week that its bill for excess police costs up till tonight, 30th April, was expected to be £ 15 million, which it had not budgeted for. Of that, 50 per cent. is likely to come from the Government as a 50 per cent. grant out of the finite rate support grant fund. The other will have to be found—or so I assume, and the council assumes; and it is very worried—from the rates. It might be said that this sum will be saved by the other police forces which have sent men, at the request of the Home Office, to Nottingham or elsewhere. But that is not entirely the case because in the other counties the policemen who remain are running up a substantial bill for overtime in order to carry out normal duties. Therefore, there is still a large bill to be met for them.

It is probably true to say, when we talk about targets, that the Government will "disregard"—another word that I dislike—excess police expenditure for the purpose of grant penalties under the 1982 Act. They will not be penalised. However, we are talking about the Bill now before us and not the 1982 Act. What will happen if Nottingham, or any other authority, is faced with unexpected and substantial expenditure and receives a bill of this kind for extra police activities for which it had not budgeted? If it is on the verge of being rate capped for other reasons would this put it over the brink, so to speak, so that it is capped and everything else suffers? What are the Government prepared to do about this, bearing in mind that I must again say that expenditure incurred is totally outside or, as the Scots would say, outwith the control of the local authority? I hope that the Government can reassure us that they will take special steps to help.

I should like to see at some stage, somewhere, special provision for such expenditure written into the Bill. There may well be—I hope there never will be—a possibility of a future Government who are less sympathetic to police activities of this kind and would not exclude a council which had to pay such a bill. All sorts of possibilities arise. It is worthy of consideration that we should try to find some way in which expenditure of this nature could be exempted from all possibility of penalties under this Bill. I beg to move.

Baroness Birk

If for no other reason—although there are reasons—I rise to support the amendment so that the noble Viscount does not feel totally deserted. In the final analysis he is absolutely right that law and order must be a national responsibility. In spite of there being local police powers, of which we are all well aware, law and order is nationally defined. As a priority of the present Government I should have thought that this is one area where the Government would accept an amendment. The amendment is entirely different, as the noble Viscount explained, from the other amendments which we have discussed and which, unfortunately, received rather a shabby reception from the Government.

As matters stand at the moment, we have seen many instances where exceptional expenditure has had to be provided for policing, and it is absolutely wrong that the local authorities should be landed with this expense. In this instance it seems to me that it is not possible to say "Well, the authorities have a choice", as the Minister said concerning the other services which we have suggested should be excluded from the expenditure constraints. There is no choice in this case. These are occasions when the police are called out and moved from one place to another and where considerable expenditure can be incurred which falls on the local authority. Therefore, we on these Benches certainly support the noble Viscount on this amendment.

8.10 p.m.

Lord Harris of Greenwich

I say right at the outset, and the Minister may be about to say this for all I know, that this is not a new issue. Local authorities have felt for a long time that when issues of this sort arise in their areas and the chief constable decides that he must bring in a substantial number of policemen from other forces that it is quite unreasonable that that local authority should have to pick up the bill.

I remember dealing with just such an issue in the North of England when a very long trial took place which required very heavy policing because of the character of the charges facing the people who were standing trial. I remember that I then received very strong representations from the local authority concerned, saying it was quite unreasonable that their ratepayers should pick up the bill, particularly in view of the character of the charges which the people concerned were facing. I had to resist it for what I then regarded as good and sufficient reasons.

But what is involved in this Bill raises wholly different issues. Of course, what we are facing here is the possibility that a local authority could find itself rate capped as a result of something over which, as the noble Viscount pointed out, they would have no control. Let me give two or three examples—two of which have indeed already been touched on today. Applications have already been made made to the Home Secretary concerning the expenditure of the Thames Valley Police. I know there was some contact involving the Thames Valley Police Authority and I believe some undertakings were given by the Department of the Environment. But the fact of the matter is that the Thames Valley Authority, by definition, is not a local authority; it is a police authority. It simply passes on the bill to the shire counties which are constituent parts of that force's area. In the light of such a situation it seems to me that there could be created an entirely intolerable situation in which, as a result, the local authorities concerned could find themselves rate capped under other provisions of the Bill.

The noble Viscount has touched on the case of Nottinghamshire. Nottinghamshire, of course, is not by any means alone. The same problem is going to arise in Derbyshire; and it is going to arise so far as a number of other police authorities are concerned, too. Perhaps I may just put this point to the Minister. It is not even for the police authority, in the final analysis, to make these decisions. It is entirely a matter for the chief officer of police. Indeed, it is essential that it is a matter exclusively for the chief officer of police; otherwise one can imagine arising an extremely dangerous situation where a police authority—which in one or two cases could be a committee of a county council, with the appropriate numbers of magistrates—could attempt to give instructions to the chief officer on how he should, in fact, carry out his policing responsibilities. I hope that the Minister will be sympathetic to the case put by the noble Viscount. I very much hope that, if this amendment is not phrased in appropriate language, at a later stage the Government will come forward and deal with this question because it raises anxieties involving not only the local authorities, but many chief constables, too.

The Earl of Onslow

I should like very much to support my noble friend Lord Ridley on this matter. I think the reasons are three-fold. First, as has already been said, the use of the word "exceptional" in the amendment takes it outside the scope of the other amendments which we have been discussing, which basically, were concerned with whether a normal ongoing situation should be exempt from expenditure controls.

I heard on the wireless on Saturday, driving wherever I was driving, a discussion about the Nottinghamshire police. They have had to cancel all their capital expenditure, unless they get their money paid. They have had to cancel orders for pieces of equipment for which they are very pushed. That is something which really should not arise because of an industrial dispute or any law and order situation.

There have been strains on the police budget for Greenham Common. It is a very happy situation for the Surrey police, who do not have an American nuclear base or any coal mines in their area. They are less likely to have those sorts of exceptional circumstances. So why should the ratepayers of the Thames Valley area, or Nottinghamshire, be penalised because of what are quintessentially national problems? That is the first point.

The second point is this. If my noble friend the Minister says, "Ah, but we will make a special grant," and if we allow discretion in this matter, there is liable to be an element of financial control over the actual deployment of the police. It is possible to think of a case where a massive police presence is needed because of what the law says. There may be a need for a change in the law, or the Government may be in sympathy with the people who are pressing for it; and I am specifically avoiding saying one party or another, because that would be unfair.

But if we allow this particular amendment to go through—and I hope that it does—or something very like it, we shall take away an element of political choice from the deployment of the police; and this is so important. It makes it much easier for people to take decisions. We should always remove any temptation to apply political control to the police; it is too dangerous a concept in this country.

Lord Hooson

I want to speak very briefly in support of this amendment because it seems to me that unless this amendment, or something like it, is passed, with the present pressures upon our society we shall get that much closer to a national police force, which I think would be highly regrettable. One of the unperceived achievements of Mr. Arthur Scargill is that he has almost built a national police force single handed in our country, which is one of the things I do not think he had in mind when he began his present action. But one can see that unless the local authorities know where they are in relation to the kind of pressures and the kind of demands that are undoubtedly made, we shall have the alternative demand, which is for a national police force. For a variety of reasons, which I do not have to go into now, I think that would be a highly regrettable step.

Lord Bellwin

There is no question about the Government being sympathetic to what is being said here; they are very much so. May I say at once that we shall always be prepared to look carefully at any case put to us for special treatment for exceptional items of expenditure on law and order. For example, my right honourable friend the Secretary of State has announced that additional expenditure on the costs of policing the current industrial action in the coalfields which actually fell in 1983–84, will be exempted from grant holdback, and that he is now considering further representations from the local authorities that such expenditure in 1984–85 should also be exempted; and he will reach a decision on that before implementing holdback for this year.

The Government have also had representations about the cost of policing Greenham Common. There we have decided it would be appropriate to pay the police authority £1½ million from the contingency reserve, since it was not possible to give that expenditure, which is occurring in just one area, the exemption from grant penalties which must be on generally applicable principles. In short, our view is that the case for providing assistance for any particular circumstance, and, if there is a case, the type of assistance, should be looked at on its merits. But the problem arises in trying to provide a general exemption of the kind which the amendment envisages for exceptional events which, by their nature, could take any number of unpredictable forms. As it happens, Clause 3 does provide for individual circumstances to be taken into account in considering applications for a redetermination of an expenditure level, and in our view that is the way forward in these circumstances.

May I just put the record straight. It cannot be right to say that an authority may be rate capped because of unforeseen expenditure on policing. Decisions on rate capping will be made on the evidence of budgets, and by common consent the expenditure concerned here is not budgeted for. Therefore, I cannot see that a problem arises specifically in relation to rate capping. I acknowledge, as I have just said, a problem in relation to targets I have said—or, if I have not, I am saying it now—that we are in fact considering the representations which we have received on that matter. As my noble friend Lord Ridley rightly says, there is a point here, and it is not in the same area as the earlier ones. We think at the moment that Clause 3 does take care of it, for the reasons I have given, and certainly it is not a reason for rate capping. Authorities which have that fear do not need to have it.

It might also be said that the police authorities, too, have to be concerned about looking for efficiencies. For example, the Audit Commission showed the possibility of civilians doing certain routine jobs, which could save individual police authorities quite substantial sums. That is in general terms. The important points are, first, that the situation cannot lead to rate capping for the reasons that I have given; and, secondly, of course we would always look at the special circumstances which no one can foresee. The records show that we look at such cases with great sympathy and understanding, as we do not want to impose a burden on an authority for events which are outside its control, as has rightly been said.

I hope with that assurance my noble friend will feel reasonably satisfied. If he would like to take the matter further in discussions, I shall be pleased so to do.

Viscount Ridley

I am grateful to those who have spoken in this brief debate. I wish personally to emphasise what has been said by my noble friend Lord Onslow and by the noble Lord, Lord Hooson. Whatever we do, let us not move any closer than we must to the national police force. That really is a thing that we all wish to avoid.

As I said, this is a probing amendment. I should like to take up my noble friend's offer of further discussions. I am sure that he and his Government would be utterly reasonable. What we are worried about is a future Government. That is why a safeguard seems to us to be necessary. My noble friend spoke about rate capping on the evidence of budget. We accept that. But the next year the budget will be increased in order to provide for that which has been lost. As my noble friend said, Nottingham has failed to do whatever it could not do and therefore it will recoup next year, and that will bring it into the orbit of rate capping. I am not totally happy, but I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

8.21 p.m.

Lord Prys-Davies moved Amendment No. 40B: Page 3, line 22, at end insert— ("( ) In prescribing a maximum the Secretary of State, having regard to the special needs of Wales in respect of bi-lingual education in its schools, shall exclude within the Principality of Wales expenditure incurred in this connection.")

The noble Lord said: I believe that I am the last in the line in this batch of amendments, so I hope that the noble Lord the Minister can see his way clear to meet the principle embodied in this amendment without others coming along and citing it as a precedent.

It is not clear to many of us in Wales why this Bill should apply to the Principality. According to the latest Public Expenditure White Paper, local authority expenditure in Wales has conformed more closely to the Government's targets than have the English and Scottish authorities' expenditure. The Welsh local authorities have behaved very well financially. But the Secretary of State for Wales made it clear in the other place that Wales is not to be exempt from the provisions of the Bill. The reasoning for that decision is not at all clear.

Be that as it may, this amendment calls attention to a particular Welsh interest. It is a problem different from the problems facing any other part of the United Kingdom, apart possibly from the Highlands and Islands of Scotland. We are dealing with a national asset in this amendment—not simply with a client group or with another service but with a national asset. I think that the Welsh Office is fully aware that the cost of maintaining the Welsh language and supporting education through the medium of the Welsh language is not reflected in the rate support grant. I want a recognition of this problem to be brought to bear in this Bill.

There is a strong body of opinion in Wales which considers that additional expenditure necessarily incurred in implementing education through the medium of the Welsh language in Wales should not be taken into account in arriving at the local authority's maximum expenditure.. Governments over the past quarter of a century have accepted that they have a national duty to legislate for and to support the Welsh language. That is not simply an ideal but it has been for the past 25 years an aim of policy. I would accept that this Government, up to a point, have not been unsympathetic to the claims of the Welsh language.

To weigh up the pros and cons of this amendment, it is essential to get an idea of the background against which any judgment must be made. All the official documents and surveys relating to the Welsh language published during the past 84 years show that it is facing a crisis not of confidence but of existence. Will this supreme asset—we in Wales regard it as a supreme asset and I am sure that there are many in the United Kingdom who do, too—survive or wither away? Legislation over the centuries, up to about the past 25 years, and the economic factors of this century have all, in one way or another, had an adverse effect on the Welsh language. But, nevertheless, there are some grounds for thinking that we may in Wales be arresting the decline of centuries.

A limited renaissance may be under way, but it has to be fully supported in the schools of Wales. That renaissance could be weakened substantially, or possibly even crippled, if the rigid provisions of this Bill as they stand were to be implemented against any one or more of the Welsh local authorities. As I said, there are many people in Wales who see this Bill as a substantial threat to the Welsh language. A week ago the president of the National Union of Welsh Teachers was reported in the Western Mail as saying: Cuts in the education services, including those threatened by the Government's rate-capping plans, will curtail the amount of Welsh taught in schools".

He feared in particular that the local authorities would be tempted to implement cuts in school transport and staffing levels in particular, and these would have particularly adverse effects on the teaching of the Welsh language, as many of the schools, particularly the secondary schools, are centralised. If this situation were to come about, the effects of this Bill would have fallen disproportionately heavily on Wales. It would build up a crop of problems for the Home Secretary and the Secretary of State for Wales which would not be underestimated. Certainly this amendment is calling for a separate and a different treatment; but then we call for that treatment to deal with a genuine Welsh interest. If the Government were to accept the principle, or to assure us that the principle accepted in this Bill is taken into account, that would not be establishing a precedent. The recognition of specific Welsh interest has emerged in a number of Acts of Parliament during the past 25 years and it emerges very clearly in at least half a dozen provisions in the Local Government, Planning and Land Act, 1980. Again, if the principle in this amendment were to be accepted, the total expenditure would be modest and it would not affect in any way the macro-economic management of the economy.

I hope that I have done justice to this amendment. There is no one to desert me but there are a number of local Peers here to support me. I hope that I have given expression to a deep anxiety that is felt in many parts of Wales, particularly in those parts where the Welsh language is still at its most polished. I beg to move.

8.32 p.m.

Lord Hooson

The noble Lord, Lord Prys-Davies, has done a service to Wales by raising this particular problem in this Committee in relation to this Bill because the maintenance of minority culture at a time of modern mass communications is a very, very difficult one, as we have known in Wales for centuries. The English are now experiencing it in relation to Americanism in their own lives. But in fact one of the remarkable features of Welsh society where you have this determination, quite rightly, to maintain Welsh culture and the Welsh language on which it is based, is that it has gone on for so many years with so little dissention. As a matter of fact, the scope for dissention in Wales on this subject has been enormous. It is to the credit of the present Government—and I do not often pay them compliments—that one of the better aspects of their policies has been the way it has assisted in the Welsh language, on television, radio and in the publication of Welsh books. Its efforts there compare very favourably with any previous Government.

Having said that, it would obviously leave possibilities of dissention within local government, if special provision is not made for the considerable additional expenditure which bilingual education involves. It would be a very short sighted government indeed which would allow that to happen. I think the noble Lord, Lord Prys-Davies, has, in a very short space of time, adumbrated the reasoning that is behind his thinking on this amendment. I entirely support it. The Government would be very wise to take on board what he has said today and to make special arrangements for this particular problem in Wales.

Baroness White

I think I should also add a word briefly in support of my noble friend Lord Prys-Davies because as he and the noble Lord, Lord Hooson, have made quite clear this is a particular problem of the Principality. It affects no other part of the United Kingdom. As my noble friend Lord Cledwyn of Penrhos knows very well indeed—he having been a Secretary of State for Wales—the two languages have equal validity in the Principality, and official documents are all produced in both languages. It is part of the recognised education system that Welsh should be taught at the primary level, even in areas like the County of Gwent, for example, where there is a very small minority of Welsh speakers and where it is recognised that children there should also have an opportunity of learning the language.

My one hesitation about the amendment proposed by my noble friend Lord Prys-Davies is that it is too narrow because it refers specifically only to education in schools, whereas if the education in schools is to be thoroughly successful then there has to be a measure of education in the Welsh language also for adults. By happy coincidence it so happens that this very morning there is a very lengthy review in the South Wales newspaper, the Western Mail,of the report of the Welsh Office plainly just issued in time for this brief debate of ours. It is a report on the teaching of Welsh as a second language to adults. Most people who have studied the progress of Welsh language education in the Principality will recognise that, while a great deal of time and effort is put into teaching at primary level, unless there is some support in the home background, it is very difficult for children to maintain the proficiency which they have achieved in the early stages.

Therefore, as the report on teaching Welsh to adults stresses, it is of considerable value in buttressing the formal education in the schools if adult education, adult classes, are provided for patents. There is an increasing demand, particularly, I am interested to notice, among women, who outnumber the men on these courses. I am sure that it is because mothers in particular are aware that their children will not maintain adequately what they have learnt in school unless they can have some understanding and support in the home. I speak with experience. My father was Welsh speaking; my mother was not, and when you are small it is your mother who counts. Had she been Welsh speaking—had it been the other way round—I am quite sure my proficiency in Welsh would be greater than it is. But there is no doubt at all that this is a special additional expense for Welsh education authorities—and, I repeat, not only in the schools but in teaching Welsh to adults as well.

I therefore hope that the Minister will appreciate that we need reassurances on this matter and that the additional expenditure falling at both school and further education on the local education authorities should be regarded as an additional expenditure in any comparisons which are made with the English local education authorities.

Lord Cledwyn of Penrhos

The noble Lord's attitude to this group of amendments, which argue for exclusion and exemption, has so far been negative. My noble friends, in very persuasive speeches, have explained to him why on this occasion he should accept one of these amendments. The reason is not that this amendment is necessarily better than the others but that it is different. My noble friend's speeches have covered the ground admirably. I will therefore summarise very briefly what I think they said.

First, this amendment is different because it relates to a country and not to a county. It does not relate only to a local authority area. In Welsh terms, as the noble Lord, Lord Hooson, said, its implications are national. As has been said, its implications are profound. Secondly, the Government's obligation to the Welsh language is laid down by statute, by the Welsh Language Act of 1967, which I had the privilege of steering through the other place when I was a Minister in the administration of my noble friend Lord Wilson of Rievaulx. The struggle to sustain the language has been long and hard. May I read to the House very briefly what the Act of 1536 said: henceforth no person or persons that use the Welsh speech or language shall have or enjoy any manner of office or fees within this realm of England, Wales or other of the King's Dominions upon pain of forfeiting the same offices or fees unless he or they use and exercise the speech or language of English. But the Welsh language has survived despite such legislation. That it still shows vigour over four centuries later is a fact upon which to ponder.

The third point was well made by my noble friend Lord Prys-Davies in moving the amendment so ably, when he said that Welsh authorities have been efficient and responsible. There can be no possible justification for penalising them or for preventing them from helping their native language. Lastly, the amount of money involved would be small compared with other expenditure. But the consequences of cutting on Welsh education at this time would, in my view, be serious. On these grounds, I appeal to the noble Lord to consider the amendment very carefully, for the implications of failing to respond to its importance could be very serious.

8.40 p.m.

Lord Bellwin

Faced with such an array of eloquence, my task is not easy. The noble Lords Lord Hooson, was kind enough to say that the Government have been very supportive. Certainly we feel this to be the case, and I am personally a very strong advocate of a language which, if I may be allowed to say so, happens to be a particularly beautiful language. We have no wish to do or see anything that would have any adverse impact on the teaching of it. I make that point unreservedly. Noble Lords, who have presented this argument very fairly, will, I hope, equally fairly, allow me to make the points that I wish, and will then come to their own conclusions on the actual issue. I am sure that your Lordships will do that with equal fairness, and will understand the reasons for the line that I take. I shall take a few moments extra to put my argument because I think that I should.

I start with the basic premise. We are talking in this part of the Bill of the selective rate limitation scheme, which aims at a small number, 12 or 20, of high spending authorities. I wish to say immediately—this puts the amendment in perspective—that out of 45 Welsh authorities, 40 are automatically excluded from this part of the Bill anyhow because their spending is under £10 million a year. Let us get that in perspective. In the fair way that noble Lords put their case, I think that they will be equally fair in accepting from me that this is a fact. So there are only five authorities even on the team sheet, if I may so express it, before I go any further.

Secondly, there is no mechanism in the Bill to direct certain money to be spent on certain projects, however worthwhile. As I have stated repeatedly, the choice of priorities remains with the local authorities concerned. In saying this, I am not implying that bilingual education or any other service should not be supported by local authorities. I am simply saying that it would be wrong in principle and inhibiting in practice to make exceptions for particular items. Even if it was thought desirable in principle to discount expenditure on bilingual education, it simply would not be possible to do so since the costs of bilingual education are not separately identified by either the Government or authorities. I am sure that the noble Lord, Lord Prys-Davies, would be the first to accept the severe conceptual difficulties facing anyone attempting to do so. For this reason, public expenditure provision for education in Wales, with one exception on which I shall touch in a moment, does not distinguish between expenditure on bilingualism and expenditure on education generally. I think personally that that is a good thing. I do not see why it should be so singled out, except for one reason which I shall mention in a moment.

Similarly, in the distribution of rate support grant to authorities, the GRE assessments include no direct or indirect factors relating specifically to bilingual education. If any of your Lordships think that this is because of a Government decision, I can assure you that it is not so. GRE assessment formulae used for the distribution of RSG in the Principality have been endorsed by the two Welsh local authority associations every year since the inception of the separate Welsh rate support grant system in 1981. The Secretary of State has always been able to accept in their entirety the GREA formulae proposed by the Welsh associations. I think it is fair to say that if the Welsh counties had wanted to include some special factor for bilingual education it would already have been present in the counties' GREA formulae.

That is not to say, of course, that there is no special support for bilingual education in the Principality. Under the provisions of the 1980 Education Act, the Secretary of State for Wales can make payments to local education authorities and other persons or bodies of grants in respect of expenditure incurred with the teaching of the Welsh language or the teaching in that language of any other subject. These specific grants were introduced for the first time—I suspect that this is what the noble Lord, Lord Hooson, had in mind, if he will allow me to put one or two numbers to it—in 1980–81, when the total stood at £515,000. They have been increased annually ever since, amounting to about £940,000 in the current year, of which an estimated £622,000 will go to the local education authorities.

My other point, which is very significant, is that the rate of grant is very substantial. It is 75 per cent. of expenditure and can in some circumstances be an even higher rate. Thirdly, and somewhat paradoxically since it meets at least part of the objective of the amendment, some account is already taken since expenditure on Welsh language teaching is substantially grant aided at the rate of 75 per cent, and it is only the remaining 25 per cent. that will count against the expenditure level. This is entirely consistent, since it is only that 25 per cent. which falls to be met by ratepayers.

If, therefore, I fall back on pleading fair acceptance of the case I make, I am, in effect, saying that we are at the most dealing with a handful of authorities. In this case, it is literally a handful. I cannot go beyond that because I have not looked at their individual figures. But that is all we are talking about. Secondly, we are talking about a total of 25 per cent. of the cost of those authorities for this function, if that is the right term, which it probably is not. I am as sure of this as of anything that I have said today: that there really cannot be said to be an adverse impact on the teaching of the language as a result of anything that this Bill does. If your Lordships feel that this is not a fair presentation of the case, you will tell me. I rather hope that you will not.

Viscount Ridley

Before my noble friend sits down, would he not agree that there are, in fact, eight Welsh counties, all of them education authorities and all of them not exempt under Clause 2? All spend more than £10 million, not £5 million, as the noble Lord said.

Lord Bellwin

My information is that there are 45 Welsh authorities and that 40 will be excluded. As my noble friend raises that question I shall, of course, check it out carefully. I am not in the business of giving wrong information, willingly or unwillingly. It might well be the districts that this applies to.

Lord Lloyd of Kilgerran

May I follow my noble friend Lord Hooson in saying how grateful we as Welshmen are for the attitude that the Conservative Government have taken towards these problems of language in Wales. Nevertheless, may I be the first to express my deep disappointment over the very Anglicised theme developed by the Minister in his concluding remarks to deal with this national problem.

Some time ago, when the Labour Government were in power, I found myself in some difficulty with the then Front Bench. If the noble Lord, Lord Wells-Pestell, will not mind me reminding him, I was able to get some sympathy from him as a distinguished Minister at the time by reminding him that as he had so many double Ls in his name he would surely have sympathy with Welsh problems. I am not in so strong a position vis-à-vis the Minister on this occasion, but he has firmly resting in the middle of his name a double L, and a double L is a characteristic of so many great Welsh names.

However, I am disappointed that once again the Government, whatever their hue (if that is the correct word to describe a Government), have misunderstood and failed to realise the significance of a very important phrase in the amendment. I refer to the phrase: having regard to the special needs of Wales". In dealing with many social, economic and cultural matters, the special needs of the nation of Wales are often overlooked. I have said before that many Members of this Committee know far more about Spain or other European countries than they know about Wales. It is the reference to the special needs of the nation of Wales that differentiates this amendment from the previous amendments and, as I said, from the somewhat Anglicised theme of the conclusion of the Minister.

The noble Lord, Lord Cledwyn, commenced to develop a theme by pressing the significance of the special needs of Wales. The Minister referred to generalisations in regard to the various counties and districts in Wales and said that many of them would not be subjected to any rate capping because of the way in which they conduct their business. As an example, I will mention the county of Gwent. It would be putting Gwent into a very difficult position to decide on a minority situation to make representations for money to be applied for the small minority in that area who are speaking Welsh.

I do not want to take up the Committee's time on this matter, but I want to say that we are now dealing not with the special needs of adult education—a matter we are concerned with generally in this country—but with the special needs of a nation, as the noble Lord, Lord Cledwyn, emphasised. It is that aspect of the matter that is important. I am not going to develop any argument based on statutes or anything like that. I am basing my argument on the general theme that the special needs of Wales as a nation should evoke the sympathy of this Government at least sufficiently for them to take away this amendment and think about it again.

In its totality it is different from the previous amendments to which the noble Lord's speech has been applied so eloquently. He has forgotten the significance of the fact that we are now dealing with the special needs of a country. I do not want to interrupt the conversation that is going on between the Minister and the Chief Whip, but to Welsh people this is a very significant matter and, to quote what my noble friend, Lord Hooson, said, it would be very short-sighted of the Government merely to dismiss this amendment, as of course they can. They should take it back and consider it once again at a later stage. I should be very much obliged if the noble Lord could see his way to make that little gesture to the great nation of Wales.

Lord Bellwin

In the intervening moments I have checked and found that I was correct. As I think your Lordships know, the exclusion is either £10 million or the below-GRE exemption. It is on that basis that 40 out of the 45 authorities are excluded automatically.

At the beginning I appealed to your Lordships' fairness on this amendment; not least did I appeal to the noble Lord, Lord Lloyd. At one time we used to cross swords quite frequently, although recently it has not happened often. He said that I should take special note of the special need of the nation of Wales. Let us put this in perspective. We are talking about five authorities. I have not got the figures for each of them. If the noble Lord wants me to do so, I will take that away to look at those five authorities remaining. The 25 per cent, is all that we are talking about, and it is not even the whole of the contribution of those local authorities. And this is the special need of the nation of Wales!

The eloquence of noble Lords who have spoken about this has no bounds for me; I have already paid tribute to it. It is not without some temerity that I respond in this way. I will have a look at this matter, as I have been asked to do, and I will do it on the grounds of looking at those five authorities. I may well then come back and, if the matter is raised again, make the point; or I will do it in correspondence with noble Lords. I will look into it further if that is what noble Lords wish me to do, but it will be on the basis I have explained.

Lord Hooson

I hesitate to interrupt again but I want to say that I am almost certain the Minister will find that on their expenditure those five authorities cover the majority of the population of Wales. Therefore we are talking about a matter that is very important to the country. If I understand him correctly, the mover of the amendment has it in mind to avoid the kind of competition that would occur in local authorities between those who are pressing for money to be expended on the Welsh language education and those who want to improve the education generally. In the county in which the noble Lord, Lord Gibson-Watt and I live, a relatively small minority are Welsh speaking, and most of them are in my areas of the county rather than in his. The Powis County Council would be faced with an impossible competition and it is that which the mover of the amendment is seeking to avoid.

Lord Gibson-Watt

The noble Lord referred to Powis County Council. That is one of the councils the Minister has mentioned which would be under £10 million.

Lord Prys-Davies

I am grateful to noble Lords who have spoken in support of this amendment. I am also grateful to the Minister for his comprehensive response. I am sure that many people in Wales who read carefully the Minister's response will be interested to learn—perhaps they will be surprised—that expenditure on education through the Welsh language is not identifiable in the expenditure and in the rate support grant. I am sure that many people in Wales will be interested in the implications of that statement.

I am greatly relieved that the Minister seems to have assured the Committee that for 40 of the local authorities in Wales there is no risk of expenditure on the Welsh language having to be curtailed. I am not sure whether he goes beyond that and gives an undertaking that in those 40 authorities, which as yet have not been named, expenditure on Welsh language education will not be at risk. If I have not got an undertaking it seems to me that certainly I have got an assurance. In the light of the Minister's response, I beg leave of the Committee to withdraw the amendment.

Amendment, by leave, withdrawn.

8.58 p.m.

Lord Underhill moved Amendment No. 41: Page 3, line 25, after ("State") insert ("in consultation with, and after taking into account any representations received from 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").

The noble Lord said: We have considered previous amendments related to the question of consultation, but those dealt with the designation of the authorities to be in the selected scheme or determining the level of expenditure. In the course of those debates and in other debates, numerous references have been made to principles. The amendment which I am now moving relates to subsection (2), which places on the Secretary of State the sole responsibility for determination of the principles for deciding the total expenditure of a designated authority.

Earlier, the Minister said that he was sad if there were misunderstandings. I believe this amendment can help to remove misunderstandings, if there are any. It is essential that the Secretary of State should consult as to what these principles should be. The local authority associations could play a major role in this consideration. They could help to ensure that local authorities are treated fairly and that account is taken of their differing circumstances. What is even more important is that they feel that they are being fairly treated. That is an important point.

As noble Lords will know, there is already consultation with the local authority associations over a very wide range of local government finance. For example, there is consultation on the rate support grant and on local authority expenditure in general. There is consultation through a series of working groups, steering groups and sub-groups. But those consultations are prior to the Government taking their decisions on these matters. Why on this particular matter do the Government consider that the issue of principles for determining the expenditure of authorities is one as regards which they know best? Why did they not use all the experience that exists in the local authority associations? In saying that I am referring not to myself as the figurehead president of the associations, but to all the experience that exists in the associations and in their associates.

The Bill as drafted does very little to allay the fears of local government that individual local authorities will be at the mercy of the Secretary of State, who will have at his elbow pressure from the Treasury. Nothing put forward by the Government so far will remove those fears. The Minister has said time and time again that Part I is aimed at only a handful of authorities. There is nothing in the Bill that says that. The determination of the principles may help to resolve the matter. Therefore, the question of principles is of the utmost importance.

In previous debates references have been made to the inability of civil servants to assess the detailed requirements for the expenditure of individual authorities. In saying that I am not being critical of civil servants; they have been asked to do a task which is beyond them. The noble Lord, Lord Sandford, in an earlier speech drew attention to the problems that exist and that have been shown to exist with regard to GREA. In debates in another place example after example was given of the contradictions between authorities when they lay their expenditure solely on the basis of the grant-related expenditure assessments.

The amendment has no sinister intention. It has only one purpose: the Secretary of State is being given the sole responsibility for determining these principles. Noble Lord after noble Lord has asked: What are the principles? What we are trying to do is to give the Secretary of State assistance by making it essential that he shall consult with the local authority associations in drawing up these principles. I hope that the Government will realise that as regards this issue it is sensible that they should accept the amendment. There is expertise waiting to be used and I hope that the Government will insert this into the Bill. I beg to move.

Lord Mottistone

I should like briefly to intervene. It seems to me that this clause, and in particular this subsection, is referring to total expenditure; they are not referring to detailed expenditure. Surely the principles upon which total expenditure is decided are ones which really ought to be determined by the Secretary of State in consultation with those who are concerned with total expenditure. To widen the provision so as to require him to consult statutorily with the local authorities is surely not correct in regard to total expenditure. If we were talking about detailed expenditure it would be a different matter altogether. But here we are talking about maximum sums. This must be a matter of basic policy for the Government—and the Secretary of State is the person concerned in this respect—and it seems to me that the argument that the noble Lord Lord Underhill has just put forward talks about not total expenditure but detailed expenditure, which is a different matter altogether.

I should have thought that it was perfectly proper for the Secretary of State to determine these principles. The question of whether or not other people should put their views to him is another matter, but I do not think that it should be part of the statute.

Lord Underhill

I should like briefly to intervene again because I have both the Bill and the Notes on Clauses in front of me. I ask the noble Lord, Lord Mottistone to look at Clause 3(1), which says: For the purpose of enabling the Secretary of State to prescribe a maximum under section 1 above for the rate made or precept issued by a designated authority the Secretary of State shall determine a level for its total expenditure". Therefore, I was referring to the total expenditure of "a" local authority that is designated; it says "its total expenditure". That is also what the Notes on Clauses say.

Lord Bellwin

Amendment No. 41 seeks to extend the degree of consultation with the local authority associations. It would require the Secretary of State to consult the associations before determining the principles upon which their expenditure level will be set. This amendment is very similar to Amendment No. 35, which proposed consultation with individual authorities, but it also raises other objections.

There are important matters where consultation with the local authority associations would be both proper and helpful. But I do not think that this is an appropriate matter for consultation. It would require, as I have said, the Secretary of State to consult with the associations about the principles according to which he will determine the expenditure levels of designated authorities. But it would be inappropriate for the associations to become embroiled in decisions about what will be a very small and particular group of member authorities. Where this consultation would be appropriate is in deciding the principles for setting expenditure levels under the general scheme of rate limitation, if that ever were to come about, and we have provided for full consultation in that connection, should it ever be necessary.

As I said earlier, local authorities will have ample opportunity to discuss their special local circumstances if they apply to have their expenditure levels redetermined. That is the appropriate form of statutory discussion where it is necessary under the selective scheme, and it is already provided for. To build in a new consultation procedure with local authority associations would simply delay the setting of the original level. We must give the local authorities concerned the earliest possible notice so that they can plan for expenditure savings and/or make a case for redetermination. This measure would eat into the time allowed for this.

Let me make it absolutely clear that, by not wishing to accept this amendment, we do not, of course, restrict the ability of any association or any authority to make representations to the Secretary of State about the principles for setting expenditure levels. But we think that a binding requirement to consult would be unnecessary and inappropriate as an insertion at this point in the rate limitation process.

I am sorry that we have had an argument about this, because for some time I was one of those making the representations for one of the local authority associations—the one with which the noble Lord, Lord Underhill, is concerned—and I appreciate the importance of this. But what we are talking about here is fair. There will be no lack of opportunity to make the representations, but I readily accept that that is different from the requirement being written into the Bill in this way.

Lord Pitt of Hampstead

When all is said and done, this amendment provides the Government with an opportunity to have the co-operation of the local authority associations in determining the principles on which the expenditure of individual local authorities will, in fact, be determined. Unless the Government believe that they must dictate and that nobody else must interfere, I find it difficult to understand why the Minister is not prepared to accept this particular amendment, which will allow for co-operation. When local authorities have been consulted, the principles on which action is to be taken about the expenditure of any individual authority will have been determined not only by central government but by central government in agreement with local government. Therefore I find the attitude of the Government difficult to understand.

Lord Bellwin

I do not think that I can help on this at all. As I have said, it is a question of decision. As I said many times when we discussed earlier amendments, there are no secrets about the criteria generally. My right honourable friend in another place spelt out at considerable length the types of factors that will be taken into account in determining the principles. We have spoken about it again today. What we have now to be resolved are the final determinations based upon the 1984–85 Budget. Once those are made, I am quite sure that not only will the authorities themselves wish to make observations, but the associations will probably also want to comment. As I have emphasised as strongly as I can, the door is most certainly open at any time for individuals or associations to come and talk to the Secretary of State.

Lord Underhill

I am certain that I have not succeeded in removing any misunderstandings to which the Minister referred in an earlier address. Perhaps that is due to my inability to explain the position. The noble Lord, Lord Bellwin, referred to there being no consultations before designation. We are not worried about designation. That was dealt with in a previous amendment. We are not asking for consultation about designation to go on the selective list. We are not asking about consultation as regards the level of expenditure of any particular authority. That amendment was not accepted. We are talking about the principles on which these decisions will be taken. At one moment the Minister refers to principles and at the next to criteria. They are the same, although I believe that one noble Lord argued that there was a great difference between them. We are trying to ascertain the principles, the criteria, on which the Government will determine the levels of expenditure for the different authorities.

I believe that the noble Lord, Lord Sandford, referred to various lists and said that on one list there was one group of authorities, on another list, another group of authorities, and that all told there could be some 11 or 12 different lists. Therefore, we are arguing about the principles. For the life of me I cannot understand why the Government do not say to the associations "Yes, you are welcome to come and talk about the principles". We are not arguing about the ability of an authority to come in afterwards and discuss whether the level of expenditure fixed for that authority is right or wrong. It is the principles that we wish to have discussed first.

The Minister has suggested that the local authorities can make known their views at any time. Surely it would be far better if it were regarded as a duty on the Secretary of State not merely to rely upon his own information, not merely to rely upon Civil Service knowledge, but to obtain information from people in the field who work in local government every day, and to discuss with them what should be the principles on which this particular clause should be based. The Minister has rejected that. He has rejected every suggestion that I have made for consultation.

I think I must do the same as with the other amendments; read carefully what the noble Lord has said and possibly come back at Report in the hope that the Minister will understand that we are not trying to throw anything at the Bill in this matter but trying to be helpful. If the Minister wants this done, let him discuss with the associations, let him work out the principles, and, while that may not satisfy everybody people will at least have been consulted in advance as to what should be the criteria or principles in this matter. Under the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

9.15 p.m.

Baroness Stedman moved Amendment No. 42: Page 3, line 25, after ("State") insert ("and embodied in an Order made by statutory instrument and no such Order shall be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament").

The noble Baroness said: This is an important amendment. In this amendment we return to the question of parliamentary judgment and scrutiny. Having designated the authorities in accordance with the principles determined by himself, the Secretary of State then determines the maximum levels, again in accordance with principles that he, the Secretary of State, will determine. The principles, or the criteria, are not written into any part of the Bill and presumably are not to be discussed by Parliament.

The Bill gives to the Secretary of State the power not only to apply the principles, but also to determine those principles themselves. Therefore, this Bill makes a mockery of Parliament and of parliamentary scrutiny. The principles are not there for Parliament to determine, or even for it to see. Merely at some later stage, long after the authorities have been designated, the expenditure levels set, and the principles determined by the Secretary of State, will Parliament in effect be asked to give retrospective approval to some arbitrary ministerial decisions.

The designation will probably be made in July. The elected local authorities will be subject to budget preparations and to the results of the Secretary of State's determination of principles and criteria, and with luck some six months later the other place will have a report laid before it. Our amendment seeks to stop the excessive discretion which this Bill gives to the Secretary of State and to avoid the inadequate parliamentary scrutiny and approval, by including the words we have proposed. I beg to move.

Lord Graham of Edmonton

I very much hope that the Minister will agree with the Committee that number 10 is the lucky number tonight. This is the tenth amendment. When we got to the fifth amendment the Minister said that the night was young. Although he had resisted every amendment up to the fifth, we had not exhausted the opportunities. We have now reached the tenth amendment. The Minister has batted with a very straight bat. Not only is it the tenth amendment tonight; it is also about the fortieth amendment since we started.

I am prepared to reflect—and I am giving no assurances—that at some time in the future it will be possible to think that what we are really after tonight is some big gesture by the Minister. The big gesture is to treat this Committee seriously. If the Minister and the Government are to be fair to the parliamentary procedures, then they ought to acknowledge that it is making a farce of parliamentary procedures if noble Lords behind the Minister act in a certain way. We understand the nature of party support; blind loyalty in this particular instance—

Noble Lords


Lord Graham of Edmonton

The loyalty may not be so blind. If we look at the merits of the argument, we see that what the Minister is inviting his colleagues behind him to do is, first, to give powers to the Secretary of State, and for the House to rubber-stamp the decisions of the Minister on serious matters. My noble friend Lord Underhill, in the previous amendment, and the noble Baroness, Lady Stedman, have carefully tried to point out what this Committee will be allowing if it fails to approve the amendment.

One needs to read Clause 3(2) with care. It states: The power to determine a level for the total expenditure of a designated authority shall be exercised in accordance with principles determined by the Secretary of State". We are not for a moment arguing that those principles shall not be determined by the Secretary of State. Last week the Minister was frank enough to point out that they had not yet determined what will be those principles. They are still in the process of codifying them. Once they have been agreed, we want them to be brought before both Houses, so that an opportunity can be given for discussion. If noble Lords behind the Minister are saying, "We are not prepared in this Chamber or in the other place to provide ourselves with the opportunity of saying 'yea' or 'nay' to the principles", then that is a retrograde step.

More than once the Minister has told us that there is a timescale and that we are eating into the time that is allowed for this. What time, I would ask, are we allowing for proper parliamentary scrutiny? What the Minister is talking about is the Government's timescale in respect of achieving a financial and economic imperative. If Members opposite are prepared to set that aside because they are not prepared in fact to do what I consider to be the proper job of a revising Chamber, then I think this is a very sad day indeed. "Unnecessary" and "inappropriate" are words that have been used in the past ten minutes by the Minister. I fail to see what is unnecessary or inappropriate in this Chamber and another place having the opportunity to look at the principles that are going to determine what are, I repeat, matters of life and death so far as some authorities are concerned.

So I would say to the Minister: let us hope that number 10 is the lucky number here tonight. He is doing nothing except to agree to the request by the local authority associations. They are asking for this, so that ought to commend itself to the Minister. He is saying to your Lordships and to another place: "Not only do I respect and trust you to listen to what I have determined"—that is, the principles—"but also I am sufficiently confident, having done that, that I can persuade you to support me in carrying this by a vote".

What is there of such enormous stature in that request that we are making to the Minister that—and I listened to the Minister very carefully—he appears to be saying, "I am sorry; once I have the power I will determine the principles and I will not bring them to the House so that the House can discuss them before they are put into effect"? I believe that in this amendment the Minister has the opportunity to assist a great many people outside this Chamber to have more confidence in his impartiality.

Lord Bellwin

I wish the noble Lord, had not talked about blind loyalty. When I think over the 5,000-plus amendments to which I have spoken in the last five years—it is five years next week—and I think of the occasions on which noble Lords opposite have trooped into the Division Lobbies against me, and when I compare that to how many times some of my noble friends behind me have deserted me on many occasions, I am bound to say that I really do not think we can talk of "blind loyalty". Loyalty, certainly, but blind, certainly not. That, I am sure, is as it should be. The noble Lord also asked me to treat this Chamber seriously. I always treat this Chamber seriously, and I do not think anyone would say otherwise.

The purpose of this amendment is to require that the order containing the principles upon which the Secretary of State will determine expenditure levels for designated authorities should be laid before Parliament and debated in both Houses of Parliament. Let me remind your Lordships of the purpose of expenditure levels. Once an authority is designated, the Secretary of State will propose an overall expenditure level to cover all of its spending. That expenditure level must be determined according to general principles, but the expenditure level proposed at that stage is only the beginning.

First, it is open to the authority to come back to the Secretary of State and apply for a derogation from that expenditure level on whatever grounds it has available to justify the need for a different expenditure level; and, in considering that application, which is bound to refer to the specific circumstances of the authority, the Secretary of State is specifically permitted to depart from general principles. Secondly, the expenditure level is only a stepping stone in the legislation process because, when agreed, it will form the basis of the calculation of the rate limit and it is that rate limit which will have statutory force and will indicate to ratepayers whether or not the rate being levied from them is legally valid. The expenditure level in itself is not an end, but simply a means to an end.

Therefore, if Parliament were to debate the initial expenditure levels and the principles upon which they are based, it might well be debating levels which would not be in force for more than a few months and which would not be the levels on the basis of which the rate limits would be calculated. The derogation procedure and the fact that the final rate limits can be debated by the House of Commons if they are not agreed by the authority are major and very genuine safeguards for the authority concerned and a more appropriate framework of parliamentary answerability by the Secretary of State.

Amendment No. 42 also suggests that this House as well as another place should be involved in discussions. I have already explained why I do not think there is a need for a discussion of expenditure levels by Parliament at this very early stage in the procedure. Also, I do not think that the detailed question of levels at which local authorities spend is the kind of issue on which your Lordships' House normally holds debates. That is the kind of issue of local taxation which, it is generally recognised, falls within the privileges of another place; and that is another reason why we cannot support this amendment.

I might mention that a requirement to debate the expenditure levels could well act against the best interests of authorities by introducing a delay into the rate-limitation procedure. It is very important that authorities should know of their selection and proposed expenditure levels before the holiday season if the derogation procedure is to have sufficient time allowed for it. To introduce a need for a parliamentary debate at that stage could delay matters in such a way as to hamper local authorities in their preparation of applications for derogation. This is the tenth amendment and after some six or seven hours of proceedings. I am sorry that this cannot be the one which rings the bell—or rings the Bellwin, if you like. But for the reason which I have explained, I feel that we cannot go further with this one.

Lord Broxbourne

Before we pass from this amendment, may I be allowed for a brief moment to put a question to the noble Lord, Lord Graham? I put it, as he knows, as somebody who over the years has been an enthusiast for parliamentary control, which is the objective of his amendment. Can he tell the Committee what was the practice of the Governments of which he was a distinguished ornament in this regard during their period of office? If the noble Lord, Lord Graham, should be at all diffident in answering this question and looks for somebody with higher authority to respond to my request, we are indeed fortunate and privileged this evening to have among us the noble Lord below the Gangway who, as he knows, I hold in the highest regard and respect and have always done so. Nobody could speak with greater authority on this than he; so perhaps he could vouchsafe that information to the Committee.

Lord Graham of Edmonton

We are, in fact, making fresh legislation. I am not competent to go back over every piece of legislation in which I had a part, ornamental or otherwise. So far as I am concerned, there are very serious constitutional implications in this Bill. What I am saying to the Committee is that, in these circumstances, what the Committee is invited to do is either to leave this to the Secretary of State and give more and more power to the centre or to take the opportunity—which it can; for nobody is arguing that the amendments are out of order or unconstitutional—to accept or reject the amendments. If the drift of the noble Lord, Lord Broxbourne, is that if this amendment were to be passed it would be breaking new ground, then I say, "So be it."

Viscount Hanworth

Some of us, even on these Benches, feel that this Bill may be necessary. But we are extremely concerned that the Government are taking what we would consider draconian powers, and that apparently every amendment which seeks to give Parliament some control over this is negatived for reasons which I think are wholly inadequate. This is being put to the country by a Government who have far too large a majority for really getting a useful parliamentary feeling on matters, and they are simply saying that the Secretary of State will decide. If noble Lords on the Government side want this Bill to get a certain measure of approval by the country, they will be wise to consider amendments of this sort.

The Deputy Chairman of Committees (Lord Renton)

The Question is, That this amendment be agreed to. As many as—

Baroness Stedman

I should like to thank the noble Lord for his answer to the case we have made. I do not accept it. I think that the time has come for much more parliamentary scrutiny. I think that this Bill would be a much better Bill if we were satisfied when it left this House that we and the local authorities were going to know just what were the principles, the criteria or whatever you like to call them, against which they are to be judged. Until we have that sort of thing written into legislation, I am afraid that we shall have to continue to keep putting down this kind of amendment. I regret that I cannot withdraw it and I must ask the Committee to express a view on it.

9.32 p.m.

On Question, Whether the said amendment (No. 42) shall be agreed to?

Their Lordships divided: Contents, 57; Not-Contents, 80.

Airedale, L. Briggs, L.
Attlee, E. Carmichael of Kelvingrove, L.
Aylestone,L. Chandos, V.
Birk, B. Cledwyn of Penrhos, L.
Collison, L. Ogmore, L.
David, B. Pitt of Hampstead, L.
Dean of Beswick, L. Ponsonby of Shulbrede, L.
Denington, B. Prys-Davies, L.
Diamond, L. Rhodes, L.
Ennals, L. Ridley, V.
Evans of Claughton, L. Robson of Kiddington, B.
Fisher of Rednal, B. Ross of Marnock, L.
Fitt, L. Seear, B.
Fulton, L. Sefton of Garston, L.
Graham of Edmonton, L. Serota, B.
[Teller.] Shannon, E.
Hanworth, V. Simon, V.
Harris of Greenwich, L. Stallard, L.
Irving of Dartford, L. Stedman, B. [Teller.]
John-Mackie, L. Stoddart of Swindon, L.
Kilmarnock, L. Stone, L.
Kinloss, Ly. Tordoff, L.
Llewelyn-Davies of Hastoe, B. Underhill, L.
Lloyd of Kilgerran, L. Walston, L.
Loudoun, C. White, B.
McCarthy, L. Wilson of Rievaulx, L.
McNair, L. Winchilsea and Nottingham,
Massereene and Ferrard, V. E.
Meston, L. Winstanley, L.
Nicol, B.
Airey of Abingdon, B. Hornsby-Smith, B.
Avon, E. Inchcape, E.
Belhaven and Stenton, L. Ingrow, L.
Bellwin, L. Kaberry of Adel, L.
Beloff, L. Kitchener, E.
Belstead, L. Lindsey and Abingdon, E.
Boardman, L. Long, V.
Bolton, L. Lucas of Chilworth, L.
Brabazon of Tara, L. Lyell, L.
Brookes, L. McAlpine of West Green, L.
Brougham and Vaux, L. Mackay of Clashfern, L.
Broxbourne, L. Macleod of Borve, B.
Bruce-Gardyne, L. Margadale, L.
Campbell of Alloway, L. Marsh, L.
Carnegy of Lour, B. Maude of Stratford-upon-
Cathcart, E. Avon, L.
Cockfield, L. Merrivale, L.
Coleraine, L. Mersey, V.
Cullen of Ashbourne, L. Monk Bretton, L.
Davidson, V. Mottistone, L.
De La Warr, E. Murton of Lindisfarne, L.
Denham, L. [Teller.] Peyton of Yeovil, L.
Digby, L. Portland, D.
Drumalbyn, L. Rankeillour, L.
Eden of Winton, L. Renton, L.
Elles, B. Rochdale, V.
Elliot of Harwood, B. Rodney, L.
Elton, L. Romney, E.
Ferrier, L. Sharpies, B.
Gardner of Parkes, B. Skelmersdale, L.
Gibson-Watt, L. Swinton, E. [Teller.]
Glenarthur, L. Townshend, M.
Gowrie, E. Tranmire, L.
Grantchester, L. Trenchard, V.
Gray of Contin, L. Trumpington, B.
Greenway, L. Vaux of Harrowden, L.
Gridley, L. Vickers, B.
Hailsham of Saint Waldegrave, E.
Marylebone, L. Whitelaw, V.
Halsbury, E. Windlesham, L.
Hood, V. Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

9.39 p.m.

Baroness Fisher of Rednal moved Amendment No. 43: Page 3, line 25, leave out from ("and") to end of subsection (2) and insert ("those principles shall be the same for all authorities.")

The noble Baroness said: In moving this amendment I would draw the attention of the Committee to the fact that in it the principles are once again being discussed. We are trying to ensure that those principles shall be the same for all local authorities. As the Bill stands, two authorities with the same expenditure performance against target and GRE, for example, could be set entirely different expenditure limits because they are different classes of authority. This is an unfairness that we cannot accept.

The discrimination is all the more likely because only a few authorities—and the Minister used his hands to indicate a handful of authorities—will be designated, and so subject to this clause. It makes it that there will be no principles involved in some of the decisions. At the previous stage of the Committee I used the GLC to show that a set of principles was set up specifically to catch just that one local authority. This point concerns us: that one can bend the principles according to the wishes of the Secretary of State. In other words, no principles will be used and the Secretary of State will be able to set an authority's expenditure limits at any level he wants.

We on these Benches believe that the principles should be the same for all local authorities, so that no unfairness is created. This afternoon we heard from the Minister when the subject of Cambridge was raised. After about ten minutes' debate we found that Cambridge is not to be a rate-capping authority—or might not be. It so happens that the Secretary of State for the Environment visited Birmingham on Friday. He spelt out quite clearly that the West Midlands County Council will most likely join the Government's "hit list" for rate-capping. That is what he said when he got to Birmingham, so he must have set some kind of principles. No doubt the principles set on the way to Cambridge are different from the principles set on the way to the West Midlands.

If only the Minister would say, "These are the principles we are going to adopt and carry out", then we should know quite clearly what the difficulties will be between various local authorities. What concerns us more is that there is nothing in the Bill which requires the Secretary of State to have the principles approved by Parliament. In the Select Committee in another place, a table was provided which illustrated the Government's approach to preventing high spending authorities by reference to their grant-related expenditure in combination with some other indicators. It showed the extent to which authorities would have to try to restrain their spending. That table showed 11 different formulae which could be used, and 33 authorities were exemplified. The number of authorities selected on the principles there varied between 12 and 28. This illustrates the scope of the Secretary of State selectively to choose the principles he wants, to achieve any desired result.

We feel that the general principles should be applicable to all authorities, to prevent the Secretary of State (could I use the phrase?) "picking off" individual authorities. I beg to move.

Lord Bellwin

There is no question of the Secretary of State picking off anyone at all. There is no great secret about this matter. My right honourable friend the Secretary of State referred time and again, when these debates were held in another place, that the kind of criteria will be the spending against GRE and spending against target permutations on these things yet finally to be decided in the light of 1984–85 budget. There is no great mystery.

Amendment No. 43 is concerned with the principles which will underly the setting of expenditure levels for rate limitation. The issue is whether those principles should be common to all authorities or, as I believe, it should be possible to apply different principles to authorities in different classes. That is totally different from picking off an authority. It has to be authorities in different classes. The arguments are the same as those we encountered when discussing a group of similar amendments in relation to the designation of authorities, but I should remind the Committee of what those arguments are.

First, I made it clear that there are precedents for providing for principles to apply separately to separate classes of authority. The multipliers set for block grant are the main example. I said that, ideally, we should prefer to use the same principles for all authorities and we shall do so as far as possible; but that does not recognise the differences which affect the different classes of authority. They perform a different mix of functions. Their costs may, in some circumstances, be affected to different extents by changes in pay and prices because of different ratios of manpower to running costs and different pay settlements.

As I made clear earlier, expenditure changes are also affected by differences in the planned level of provision for different services. Between 1982–83 and 1984–85 we have seen, for example, relatively large increases in the planned expenditure on the police as a result of our commitment to improved law and order services; and a slightly larger increase in the provision for personal social services in response to our ageing population. On the other hand, provision for education has increased much more slowly to recognise the savings from falling school rolls. It is possible to see that in some circumstances the balance of service provision could be sufficiently weighted towards some classes of authority that it would be appropriate to take account of that in setting the expenditure levels from which rate limits are to be calculated.

It would be our intention to operate, so far as possible, on genarally applicable principles. But I could not agree that the Secretary of State should be restricted in that way. Indeed, it is so that we can treat authorities in a comparable manner—fairly and equally—that we need a power to operate on principles applying to classes of authorities. In other words, to meet technical differences between the different classes we might need to vary the principles to arrive at similar treatment overall. I believe that this is the only circumstance in which we could use different principles without facing challenge in the courts. That is always something to be considered. It has to be on a basis recognised as being to concern classes. One cannot, as the noble Baroness suggested, pick out individual authorities. I cannot accept the amendment for the reasons stated.

Baroness Fisher of Rednal

I have listened to the noble Lord, but there are very serious differences. If one looks at the various tables provided and at the needs assessments, they lead to very serious inconsistencies between authorities. Perhaps I can give an example of one local authority, which the Minister will know very well indeed, and another which I know very well indeed. A comparison of the social and economic factors affecting the populations of Sheffield, which the Minister must know well, and of Solihull, which I know very well, shows that Sheffield has much more serious problems than Solihull, but Sheffield's GRE per head of population for 1983–84 is only £318.64 compared with that for Solihull of £331.10. You have only to get out of the station to see the difference between Solihull and Sheffield. If we can raise Sheffield's up to Solihull we shall be doing something. It is these kinds of inadequacies which need to be ironed out. I am not suggesting that Solihull gets some preferential treatment. Far be it from me. I should not have thought that Sheffield gets any. But I was interested because when I mentioned the way people are picked off I was hoping, to be quite truthful, that the Minister would tell me that the West Midlands county council had not been picked off. A Minister of Her Majesty's Government, the Secretary of State for the Environment, tells them that almost as soon as he stands on the platform. They might not be in existence next year to be rate-capped; I do not know what happens then but no doubt the Government will make all those things clear. But it is I think unfair, particularly between those in metropolitan districts and those in non-metropolitan districts. I think it is there where we find the unfairness. I have listened to what the noble Minister has said. I know very well that he is not going to give way on any of the amendments and in this case I shall not be pressing for a Division.

The Deputy Chairman of Committees

Does the noble Baroness withdraw the amendment?

Baroness Fisher of Rednal

I do withdraw it.

Amendment, by leave, withdrawn.

Baroness Stedman moved Amendment No. 44: Page 3, line 28, at end insert ("and shall include consideration of the demographic, economic and social conditions in the area of a designated Authority and to the requirements for that authority to discharge its statutory duties.")

The noble Baroness said: This rather follows on the theme of the previous amendment by the noble Baroness, Lady Fisher, because this is the clause which enables the Secretary of State to determine the maximum expenditure level for an authority which is to be rate-capped. As it stands at present, there is not a requirement for the Secretary of State to make this level reasonable, to take into account not only the needs of the authority's area, but also its statutory duties. What we are trying to do here is to ensure that the Secretary of State takes accounts of these factors when he makes his judgment and that he can be challenged in the courts if he fails to do so. Account should be taken of the population changes and of the variation of the mix of ages within a population. The pensioner services have to be protected. The meals-on -wheels, the lunch club, the day centres, the transport and the needs of the housebound must have proper consideration in fixing the maximum level of rate. The economic situation can also affect and create a real necessity for local services. There are much greater demands for social services and recreational facilities in times of recession and there is a need to use more public transport to travel to work, or, if you are unfortunate, to get out and look for work. The social conditions of the area have a very significant implication for the local authorities' level of services. If they have bad housing conditions, if there is a large ethnic population, if there are low socio-economic groupings in expanding areas of new towns, all these factors affect the services that an authority has to provide.

We know that the Secretary of State consults the local authority's consultative committee before implementing the rate support grant measures, but there is no compulsion on him to ensure that any particular authority has adequate provision to perform its statutory duties. This is hardly tolerable now, where, penalties notwithstanding, the targets at least are not compulsory. But, if rate-capping is implemented, then this compulsory action could leave the local authorities quite incapable of raising sufficient funds to fulfil their statutory duties. We are trying to ensure that the Secretary of State must take account of the cost of meeting the needs of the authority's area and its statutory duties before he sets the expenditure level of any rate-capped authority. I beg to move.

Lord Bellwin

The first part of the amendment is inconsistent with the purpose of this subsection because it tries to bring local circumstances into the reckoning when the Bill provides for all designated authorities to be treated similarly. If there are special local circumstances which mean that an authority is not able to meet an expenditure level derived from principles which are reasonable in the case of comparable authorities, then the Bill provides for the special procedure for a redetermination of its expenditure level.

Clause 3 not only provides for expenditure levels to be set on general principles; it also provides a procedure for an authority to apply for a higher expenditure figure if it believes the general principles should not apply in its circumstances. Of course authorities are entitled to expect some safeguards. The first, and most obvious, is that the Secretary of State will be able to depart from the general principles only if he is invited to do so by the authority itself.

Secondly, although freed from the requirement to observe the general principles applying to other selected authorities, the Secretary of State will not be empowered to act arbitrarily. He will have to act reasonably, or face legal challenge. That means behaving consistently in his treatment of the applications of different authorities where similar circumstances affect more than one council.

On Question, amendment negatived.

9.57 p.m.

Baroness Fisher of Rednal moved Amendment No. 45: Page 3, line 28, at end insert— ("( ) The principles referred to in subsection (2) of this section shall not be so framed as to have the effect of causing the determination of a level of expenditure which, after allowing for any actual or expected variations in the level of prices, costs and remuneration, would have the result that, if an authority's total expenditure in the immediately preceding financial year was equal to or lower than such level as aforesaid, that authority would not have been designated for the purposes of this part of this Act.")

The noble Baroness said: On this amendment we come again to principles. A problem could easily arise. A designated authority could be forced to reduce expenditure below the level at which it is designated. It would clearly be inequitable if an authority were designated and forced to keep its expenditure below the level of other authorities which have not been designated. It is a little complicated. An authority may be forced to spend below its previous expenditure because it has been designated and may find that other authorities which are not designated and are in the same category can spend more. That would be most unfortunate.

This is a probing amendment. We wish to know whether the Minister has taken the point on board. We want to be assured that the Secretary of State will not set the limit regardless. We move this amendment to make sure that there is a safeguard for the designated authorities, so that their expenditure is not below that of other authorities which are not designated just because the Secretary of State has taken that decision. I beg to move.

Lord Bellwin

I should like, briefly, to remind the Committee of the purpose of Clause 3(2), to which this amendment relates. It provides that the power to determine a level for total expenditure (from which a rate limit will later be calculated) must be exercised according to principles determined by the Secretary of State. In the case of an authority falling within one of the classes which are set out in Clause 2(5), those principles are to be the same for all authorities falling within their class.

Amendment No. 45 is intended to prevent expenditure levels being set at a point below that at which the authority became within the general principle leading to its designation. A major purpose of the Bill is to protect ratepayers from excessive spending and rates. We shall be selecting, as has been said many times, in the first instance only from 12 to 20 of the highest spending authorities. If one of those authorities is capable of making economies such that it takes itself out of that group of the highest spenders, I see no reason why it should not do so, and I see no reason to impose such a constraint on the operation of the scheme.

I accept of course that once the authority has taken itself out of the small group of the highest spenders, it should expect not to be selected subsequently, providing it remains a lower spender. But that is not the object of this amendment, and that is why I cannot support it.

Baroness Fisher of Rednal

I did not follow the Minister's argument. No doubt I did not make my point clear enough when I was putting my point of view. I do not understand the answer he gave me. Perhaps that is my fault because I did not put the question properly; but it would mean a difficulty. Perhaps this is the point: it would mean that authorities who are designated could be forced to make expenditure reductions below the level of authorities who have not been designated, even in their own group. That was the cause of concern. I will read what the Minister has said, and at this stage I beg leave to withdraw.

Amendment, by leave, withdrawn.

Lord Graham of Edmonton moved Amendment No. 46: Page 3, line 33, after ("notice") insert ("(which shall not be less than three months)")

The noble Lord said: This is a simple amendment. I am sure that in the context in which the Minister has more than once said that he wants to be fair to local authorities, he must agree with what it is that we are after. With respect, if I could take the House through the face of the Bill, Clause 3(4) reads: Any authority on which a notice is served under subsection (3) above may, within the period specified in the notice,

there is no time specified and we are saying, (which shall not be less than three months)".

The reason why we want a period of time is that the Minister time after time has said, "How the local authority manages its money is a matter for local decision. Once these determinations and designations have been made then it is up to the local authority; the Government will not interfere".

But from the Minister's experience he must know that it is an agonising period and process in any council when, from whatever source, someone says, "You have to make priorities and choices". The Minister knows from his experience what those choices are likely to be: "Shall we decide to close the swimming pool which we have been managing to keep open for the past two or three years?" Someone says, "No, I think we ought to close the old people's home." Someone else says, "Well, that is not fair. We ought to consider whether the meals-on-wheels service should go." Perhaps someone says, "What about the libraries?"

The Minister says that the choices are endless; it is up to the local authority. I accept the Minister's third alternative, that there is a better way of doing it: you do not have to chop off anything; you can just do it cheaper or more efficiently—which really means cheaper.

There will be some authorities that can perhaps take lessons from others; but I am prepared to say that since this Government came into power there have been a number of initiatives and a number of pieces of legislation, statutory obligations. There can be very few authorities that have not combed, time after time, the range of things that they have. I can only speak for my authority in Enfield, for my Labour colleagues who come back from various meetings and tell us what they have gone through. This process has been going on. What we are saying is: is it not right and reasonable? Three months may be the wrong period, but there should be a period.

The Minister might tell us that when we are talking about "specified in the notice", he has in mind a period of time that will be allowed during which the authority can act because the local authority has to be able to deal with a number of aspects. It has to react properly to an expenditure limitation notice and not merely panic and make the wrong decision. It has to decide whether it is going to risk having a lower limit set. It has also to work out what cuts need to be made.

The Minister has more than once told us that it is not his intention to save any money disbursed to the boroughs—money, for instance, which is spent by the GLC. I should like to give the Minister the illustration of the Lea Valley regional park. I am delighted to see the noble Baroness, Lady Gardner, in her place. The Lea Valley regional park, which the noble Baroness knows well, is something which I feel absolutely certain it is the intention of the Minister and the Goverment to continue moneywise. This means that the same money is to be made available, but that it will be given to the various authorities. The Minister has to be kidding if he believes that when the Enfield council receives its part of the GLC money for the Lea Valley it will say, "We have no other priority for that money. It will go towards continuing to fund the Lea Valley regional park". Enfield, like every other authority, will say, "How can we best use this money?" It will want to continue the Lea Valley regional park. It will want to continue meals on wheels, and everything else. But this Government, more than any other, are forcing councils to reappraise almost every month how they will use their money. The council will say that it is sorry, that it should like to put its £100,000 which it may now be spending through the GLC into a new Lea Valley authority, but it has to make decisions.

We are therefore asking the Minister to examine a timescale that will allow the authority to act properly. I am not too optimistic. The Minister, in reply to an earlier amendment, did not use the word "procrastination", but that would be a fair description of what we have been talking about. The Minister said that it would be eating into the time allowed. This is, of course, against the imperative of the designation sometime in July and the timescale thereafter. If three months is the wrong period, I should like the Minister to address himself to what he has in mind when talking about any time at all for the authority to do its job properly.

Lord Evans of Claughton

I know that the noble Lord the Minister is amazed that I have not said a word all evening. I should like briefly to say that I strongly support the noble Lord, Lord Graham of Edmonton, in the moderate way that he has moved the amendment, partly because we want his support for Amendment No. 70 when that is reached. That amendment is very similar to his. I support the noble Lord mainly on the basis that it seems natural justice that local authorities should have fixed a date and a time during which they have to work out their response to the Government initiative. It seems natural justice that any document should always state a time limit during which an authority has to deal with the matter. The Government have often said—it may be rhetoric, I do not know—that it is part of their philosophy to get central Government off the backs of people. This is one of the ways in which the local authorities might be given at least three months to know how long they have before the Government jump on their backs. I think that, in all natural justice, a time limit, whether of three months, as the noble Lord, Lord Graham, said, or some shorter or longer period, should be set and that this matter should not be left entirely to the whim of the Minister. I strongly support the amendment.

Lord Bellwin

We accept that authorities need a reasonable amount of time to prepare an application for a redetermination. We shall see that they are given good time to do this if they think that an application is necessary. But the Committee will, I think, realise that authorities will need adequate time to present and discuss their case with the Secretary of State. The statutory three-month minimum proposed by the amendment is, I think, too long a period as a minimum. We expect that we would normally notify expenditure levels around the end of July, at much the same time as provisional expenditure targets for the coming year are announced. The annual RSG settlement normally takes place in mid-December, as the noble Lords will know. We would want to have discussions on expenditure levels largely settled by then. Between those two events there is a gap of four and a half months in which discussions can take place. It seems over-balanced to allow two-thirds of the available time to elapse before authorities must even declare their intention to apply.

I recognise that authorities will want to consider very seriously the case they make in support of their application. But I do not see why that should prevent them from indicating much earlier that they will be making an application. My view is that it will be in everyone's interests to get the process under way and preferably resolved as quickly as possible. But an earlier application need not prevent an authority from submitting supplementary material and, of course, that would have to be considered before my right honourable friend could exercise his statutory discretion.

This is not one of the matters of great moment: it is a question of thinking it through in a practical way. Although I stand on what I have said, if the noble Lord will promise not to be too astonished by what I am about to say I can tell him that certainly I will think about whether or not the time is right. It seems to me to be right but, as is often said to me, I will read what the noble Lord has said and I will think carefully about it. I cannot accept the amendment, but certainly I want to read what he has said. If we think that we are cutting it fine we will want to take note of that.

Lord Graham of Edmonton

I am grateful to the Minister. I want to be quite clear that I understand what he has said. He accepts the premise on which our case is made: that there ought to be some time which it is understood is allowed for the authority to react to the determination, the designation, and to decide its next steps. The Minister has said clearly that three months is too long and has given us a global timescale. If three months is too long, perhaps the Minister will specify, either in the Bill or otherwise, a shorter period of four weeks, six weeks or eight weeks. On the basis that we will hear further from the Minister on this matter, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

10.12 p.m.

Baroness Nicol moved Amendment No. 46A: Page 4, line 2, leave out ("or smaller").

The noble Baroness said: I hope it is my good fortune to find the Minister in a mellow mood, since he almost gave way on the previous amendment. This amendment affects a situation where an authority has been designated and has undergone the scrutiny of the Secretary of State, who has made a determination. It is a situation, therefore, where the authority has already incurred the displeasure of Whitehall.

The authority decides that it cannot manage within the limit, and so it makes an application for a redetermination, furnishing, such information in such form as the Secretary of State may require".

The determination has been made on a set of principles not yet established and based on, the best information available to him", though we are not permitted to establish any guidelines on reasonableness. By its application the authority in question forfeits its right to be protected by these undefined principles and places itself in the unfettered hands of an already disapproving Secretary of State.

However, if the Secretary of State decides that the authority's case is good and redetermines at a higher level, how is the authority to raise the difference without the power to levy a supplementary rate? Will the Minister please answer that in his reply? On the other hand, if the Secretary of State decides to punish the authority for questioning his decision, what is to prevent him? The Bill as drafted requires the Secretary of State to give reasons for redetermining a greater amount, but not a smaller amount. Is there not a real danger that he may decide to discourage other applications by a punitive use of this power?

It is unlikely that an authority which was unable to keep within its original determination could actually be found to need even less. This power is open to abuse and should be removed. I have not heard or read any arguments for the retention of the words "or smaller" and I should be interested to hear the Minister's reply. I beg to move.

Lord Bellwin

I would invite your Lordships to take a careful look at this proposition. We are setting up a procedure in Clause 3 to allow us to take account of the particular circumstances of a local authority—if, and only if, the authority chooses to put those circumstances before the Secretary of State. They are not compelled to do so. Authorities will have the option of living within the original expenditure levels. These will be set on general principles which must be reasonable.

If there were no power to reduce an expenditure level in the light of an application, what would be the reaction of each designated authority? They would say, "Let us apply. We have nothing to lose". They would then divert their energies into mounting a detailed case for a higher expenditure figure rather than into the far more beneficial outlet of searching out the economies which would allow them to achieve the expenditure level and reduce the rates.

Consider also what would happen if, in the course of considering an application from an authority, it became clearly apparent that not only could the authority easily manage the original expenditure level, but could go further and bring about a bigger reduction in the rate. The ratepayers would be justifiably enraged if, knowing that for a fact, it was impossible to bring about those savings.

The objects of this Bill are to bring local government expenditure under control and to bring some relief to hard-pressed ratepayers. We are providing a procedure to ensure that the special circumstances of authorities can be taken into account. It is up to the authority to decide whether to initiate the procedure. But once it has decided so to do we cannot overlook the main purposes of the legislation.

The noble Baroness has asked me: what would be the position if the expenditure level were set at a higher level? The fact is that as a result the rate limit would be correspondingly higher and, therefore, there would be no need for a supplementary rate. A supplement would not apply because all of the procedure is settled before the final determination of the level. But I hope that it will not surprise the noble Baroness too much if I also say that I want to read what she has said about this particular point, because in view of our earlier considerations I think that there may be one or two points here that we may want to look at again. I cannot accept the amendment, and I know that the noble Baroness understands that. But I do want to say—as in the last amendment—that I shall certainly want to read carefully what the noble Baroness has said.

Baroness Nicol

I am grateful for the Minister's reply. It would meet many of the difficulties if, when he is considering the situation, he could be persuaded that it might be necessary for the Secretary of State to give reasons for fixing a smaller determination as well as a larger one. That to me was the sinister aspect of the matter—the Secretary of State is required to give reasons for determining a higher sum, but not a lower one. That course would overcome the difficulties. However, at this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Stedman moved Amendment No. 47: Page 4, line 4, at end insert— (" ( ) Where pursuant to subsection (5) above the Secretary of State re-determines a level at a greater amount he shall, as soon as it is practicable thereafter, lay before Parliament a Report stating his reasons for such re-determination.")

The noble Baroness said: Again we are back to trying to ensure proper parliamentary control over the process of rate capping, including the extent to which the Secretary of State exercises his power of derogation. As the Bill stands at present, the Secretary of State can designate authorities according to principles as yet not stated, and is required to report to Parliament. He then goes on to determine, according to the same unknown and unapproved, as yet, principles, the expenditure limitations for the designated authority. But at that stage Parliament has no role in the determination. Nor has Parliament any role in a possible redetermination of expenditure limit on appeal to the Secretary of State, who can depart from the principles that he has already used. Finally, the imposed expenditure limit can be translated into a maximum rate, and at that stage an affirmative resolution of the House of Commons is necessary.

We should like to see more parliamentary oversight at all stages, but redetermination in its present form allows the Secretary of State to act in a covert and secretive manner; and to excuse an authority once it has been designated is just as much an exercise of his discretion as is the initial designation. Yet there is no reference to Parliament having to approve, or even to receive, a report on this part of the exercise.

We want the Secretary of State to be explicitly accountable to Parliament for his action. Not only is the original determination made in accordance with principles decided by the Secretary of State, but, when he comes to redetermination, he can vary those principles and can depart from those which he originally used. The Secretary of State has this great arbitrary power not only to devise the principles, but also to decide whether or not to abide by them in redetermination. Any sense of justice goes out of the window when that sort of thing is allowed to happen. I beg to move.

Lord Bellwin

This amendment would require the Secretary of State, when redetermining an expenditure level at a higher level, to lay a report before Parliament stating his reasons. A determination at a higher level is of course in the authority's favour, and has followed discussion with the authority. The finally determined level is, however, only a stepping stone. It will be translated into a rate limit following the RSG settlement, and that limit, if it is not agreed to by the authority, will be submitted for debate and approval by the other place. So under the Bill as drafted, there is an opportunity for the House to discuss, in effect, the redetermined expenditure level.

If the expenditure level, and subsequently the rate limit, are agreed by the authority, of course, there will be no need for parliamentary debate. So it is a matter for the authority if it wishes to enter an agreement. Conversely, if it wishes to ensure that the matter is debated, it has only to indicate dissent with the rate limit.

The amendment does not propose any parliamentary debate of the proposed derogation report. If there were debate at that stage, there would be serious consequences for the overall rate limitation timetable. I hope that that explanation is satisfactory to the noble Baroness. This, again, is one of the procedural safeguards which I think concerns her.

Lord Underhill

Before the noble Baroness replies, I should say from these Benches that we support this amendment. Has the Minister considered that, in all the discussion we have had on principles (where we have been rejected) Parliament might wish to know what might have been wrong with the principles which caused the Secretary of State to give a greater amount of expenditure? Surely that is a matter which Parliament ought to be able to discuss and arrive at the answer. If we left it at the procedure which the Minister has outlined, that would not be done. It is this failure to have proper consultation on principles that makes this amendment really important.

Baroness Stedman

I am grateful to the Minister. I was hoping that the conciliatory attitude of the last two or three amendments might have carried on for just a little longer. Perhaps the noble Lord the Minister will still consider what the noble Lord, Lord Underhill, and I have said in support of this amendment. For our part, I am sure that we shall read what he said in reply. At this stage I should like to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees (Lord Murton of Lindisfarne)

The next amendment is Amendment No. 48. I should inform your Lordships that if this amendment is agreed to, I shall not be able to call Amendment No. 49.

10.25 p.m.

Lord Graham of Edmonton moved Amendment No. 48: Page 4, line 5, leave out subsections (6) and (7).

The noble Lord said: The reason for this amendment is, it says here, that it seeks only to limit in the following year the undertakings the Secretary of State can extract from a local authority in return for a higher expenditure limit. As presently drafted the Bill gives the Secretary of State power to impose a higher expenditure limit on an appellant authority and then make almost any imposition on that authority without time limits. We are concerned with what is reasonable.

The amendment refers to subsections (6) and (7) of Clause 3. These two subsections relate to the powers to be afforded to the Secretary of State in the event that, following an application for redetermination by a local authority, he redetermines the expenditure limit at a higher level. As the Bill is presently drafted the Secretary of State may, in determining at a higher level, impose on the authority such requirements as he thinks appropriate in relation to its expenditure or financial management.

One first needs to ask the question why the Secretary of State should require such powers, and indeed whether the Secretary of State is in a better position to take decisions as to the financial management of the local authority than the members of that authority. Perhaps the Minister will be able to tell the Committee in what circumstances the Secretary of State would require to use such powers, and, secondly, the Secretary of State's justification for thinking that he can be more effective in local financial management than the local authority.

The Committee knows that Clause 3 is concerned with the determination of a maximum level of expenditure prior to setting a maximum for the rate or precept. The important feature is the setting of a reasonable expenditure level. It is not a matter of whether the correct level is set at the first, second, or even the tenth or twentieth attempt. If the Secretary of State assesses the wrong level at the outset—and this Minister is no different from many others; he is guided by ordinary mortals who are looking at measuring rods which are called GREAs, and we know that that is an imperfect tool, criticised all round the Committee—and, after he has determined it in that way and after listening to the representations of the local authority, he then agrees to increase the level, why should the powers under subsections (6) and (7) be necessary?

If it is going to be revised, it will have been the Secretary of State who made the wrong initial assessment, not the local authority, and yet, in correcting his error, the Secretary of State will impose requirements on a local authority which has, under the terms of Clause 3, been guilty of no more than appealing for justice to be done. We ask the Minister, in the light of our interpretation—and not only our interpretation but that of authorities and associations outside the House, and their understanding of what subsections (6) and (7) mean—to take this opportunity either to say that we are wrong, as is quite likely, or to explain to us what it is that the authorities have got wrong in their interpretation of subsections (6) and (7). I beg to move.

Lord Bellwin

This subsection provides for cases where an authority, in seeking a redetermination of its expenditure level, produces evidence of local circumstances which prevented it making quickly enough, all the necessary economies to meet the level. The Secretary of State, if he was satisfied by the arguments, could then decide to redetermine the authority's expenditure level at a higher amount. Subsection 3(6) allows him in doing so to impose requirements on the authority and call for reports on the extent to which the authority has complied with them.

Subsection 3(7) provides the remedy should an authority, having taken the benefits of a redetermination expenditure level, fail to meet the requirements imposed on it. The Secretary of State may enforce the requirement in the courts, or alternatively he may select an authority in a subsequent financial year though it might not quite meet the usual criteria for selection.

Essentially our purpose in including the power to impose requirements is to ensure that a means will exist to remove obstacles in the way of savings being made. Without this power the same arguments could be presented repeatedly by an authority which remains selected as reasons why it could not make the necessary expenditure savings. I accept that until the requirement is discharged the authority will remain at risk of selection, but there is no duty to designate an authority for failing to fulfil a requirement; only a power to do so. I can say that we should not want to enforce this where the authority had failed for reasons beyond its control but only where it has made insufficient efforts to achieve what had been asked of it.

I could talk at some length about remedies in the courts, of power to reselect and so on, but I doubt whether this is what noble Lords will wish to hear from me at this moment. If it is felt that this is a cause for concern and that greater explanation is required, I shall be happy to write to the noble Lord in a way that he can then show and discuss with others who might be similarly interested.

Lord Graham of Edmonton

I am grateful to the Minister. The Minister used the phrase: "the authority had made insufficient efforts". As I understand it, what that means is reducing the expenditure levels; in other words it has to produce savings which would satisfy the Minister that it has done its best. If that is the interpretation, we are not arguing about the wider principles of the whole raison d'être of the Bill; but if in fact, when the appeal is made, the Minister agrees that the levels are inappropriate in the light of the representations and the authority then goes through everything with a small toothcomb and produces a satisfactory figure so that the Minister can say in all good faith, if he is satisfied that the authority has done its best, that he is prepared to make the necessary adjustments, that seems to me to be a reasonable way to proceed.

I accept the Minister's offer. When Hansard is read in a day or two, the matter will be looked at; we shall get what I expect to be a two-page letter of explanation; I will consult with colleagues and come back at the next stage if need be. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 49, 50 and 51 not moved.]

Baroness Gardner of Parkes moved Amendment No. 51A: Page 4, line 18, at end insert— ("( ) The Secretary of State's decision under subsection (5) and any requirements imposed by him under subsection (6) above shall be stated in a notice served by him on the authority concerned.")

The noble Baroness said: I rise to move this simple amendment to Clause 3 in order to fulfil what seems to me to be an obvious gap in its provisions. At present the Secretary of State will be required in the first instance to notify in writing each selected authority of the expenditure level which he has set; but there is no comparable obligation on the Secretary of State to renotify the authority in the event of his agreeing to redetermine the expenditure level as a result of an application made by that authority to the Secretary of State under Clause 3(4).

The Bill also provides in Clause 3(6) that where the Secretary of State has redetermined the expenditure level at a greater amount, he can place on the authority such requirements as he thinks appropriate in relation to their expenditure or financial management. That point has just been mentioned by a noble Lord opposite. Sanctions are provided where those require-ments are not observed. But the Bill does not provide for the authority concerned to be notified of the decisions taken under this power either. That seems to me to be extremely odd—so odd that I cannot believe any Secretary of State would want to do other than notify an authority of his decisions as soon as he has taken them. This omission in the Bill must surely be unintentional. An authority which has applied to the Secretary of State for an increase in the expenditure level surely must be entitled to know when the Secretary of State has considered its application and what the outcome is. Unless they are told that, they cannot get on with the important business planning their budgets and deciding on what economies or changes must be made. Unless the end of the Secretary of State's consideration is formally marked, there will be continuing uncertainty in the mind of the authority about the status of its application. Similarly, if the authority is to have requirements placed upon it, it cannot possibly conform to them unless their nature is clearly stated in writing, so allowing any necessary work to be put in hand.

The simplest way to deal with both these points is to provide in the Bill for the decisions of the Secretary of State to be notified in writing to the authorities concerned in the same way as his initial determination under Clause 3(3) is to be notified to them. This amendment provides for that. It does not in any way, as I see it, go against the principles of the Bill but seeks merely to promote greater certainty. I hope that my noble friend will consider the point that I have made and that he may be prepared to accept this practical amendment.

Lord Bellwin

There is something of a gap in the provision of the Bill at this point. I think that my noble friend accepts that it would be the Government's intention to inform an authority of the outcome of an application for a redetermination and of any require-ments imposed on it if its expenditure level were increased. I must say that this has a ring of common sense about it. It is right that we should remove any uncertainty on this point by placing a duty on the Secretary of State to inform an authority formally of his decisions. The amendment will establish a clear end point to the procedure by which an authority may apply and have its expenditure level redetermined. It will also ensure that where an authority is to have a requirement placed on it, it will receive a clear, written notice of what is required. This is a useful amendment and I gladly accept it on behalf of the Government.

Baroness Gardner of Parkes

I thank the Minister. I am delighted.

On Question, amendment agreed to.

10.38 p.m.

On Question, Whether Clause 3, as amended, shall stand part of the Bill?

Lord Sandford

Before we leave this clause, I feel obliged to ask the Committee to reflect on two very undesirable features which the debate on this clause has revealed. First of all, we spent the early part of this Sitting on the Bill discussing a number of proposals by different noble Lords to give special emphasis to a number of such factors as support for charities, adult education, bilingual education in Welsh schools, and so on. These are the kind of things that are bound to happen if we have legislation of this kind when such issues, which are supremely a matter for local decisions, get debated here in the national Parliament and in ways in which, if any of those amendments had been carried, would have seriously distorted and impaired the power of the local authorities who are elected to take decisions on those matters. I was glad to support the Government for the reasons given by my noble friend Lord Ridley in resisting those.

On the other hand, we are no further forward in getting from the Government any indication of the kind of criteria, principles or guidelines by which the national decisions for the selection of the authority in its determination of expenditure levels are to be arrived at. All that we have is this schedule, which many noble Lords have seen, of the 11 possible criteria which, the Secretary of State indicated to the Committee in the Commons, might be used in order to get 28, 24, 27, 17, 15 or 12—a variable number of authorities—by 11 different possible combinations of criteria. We are no wiser as to which of these will be adopted, and that, too, is undesirable. After all this debate on this clause, we are no wiser in that respect. We have spent a lot of time discussing things which ought to be discussed locally, and we have spent a lot of time discussing—and getting nowhere—matters which ought to be determined nationally before this Bill proceeds any further.

Clause 3, as amended, agreed to.

Clause 4 [Determination of maximum rate or precept]:

Lord Stallard moved Amendment No. 52: Page 4, line 29, after ("any") insert ("as adjusted pursuant to the provisions of section 62 of the Local Government Planning and Land Act 1980.")

The noble Lord said: Clause 4, to which this amendment refers, gives the Secretary of State yet more power. Under this clause he is empowered to set a rate maximum for selected local authorities based upon the appropriate expenditure level and any block grant entitlement and equalisation contribution. The clause enables him, in so doing, to take into account any financial resources that the local authority may have. Those are very sweeping powers, yet there is no parliamentary procedure specified in the clause. He merely serves notice on the local authority of the proposed maximum rate or precept limit as soon as possible after the rate support grant report.

In previous debates today noble Lords have mentioned this absence of parliamentary procedure on what are, in our opinion—certainly in my opinion—fundamental changes affecting the relationship between central and local government. We saw in a previous debate on Clause 2 that a report has simply to be laid before the House of Commons, and the Minister was as unclear as the rest of us on the precise details of that procedure. That is no criticism of the Minister; it is simply that the matter is complicated and no details were available.

Under Clause 3(2), principles determine whether the Secretary of State is to set expenditure limits, and there is no parliamentary procedure specified; under subsection (1) of Clause 4 there is no parliamentary procedure specified; under subsection (3)—again, dealing with the agreed rate maximum—there is no parliamentary procedure specified; and there are other examples later in the Bill. This amendment is, therefore, an attempt to seek further information about how the Government will estimate the block grant for the purposes of rate limitation. The amendment is based on Section 62 of the 1980 Act, and I know that I do not have to remind the Minister and noble Lords who were here at the time of the long and tortuous progress of that Bill through both Houses of some of the arguments put forward then. Noble Lords are, I am sure, all too familiar with the Act, and the hour is late.

But now, as I understand it, when translating an expenditure limit into a rate limit, the Government will take into account the amount of block grant, if any, that an authority is likely to receive. But how can the Secretary of State estimate, with the accuracy required for rate limitation, an authority's block grant entitlement until every authority—not just the designated ones—has made its spending decision? Is it not a fact that the block grant is fixed in aggregate, but that each authority's block grant depends on its level of spending? Is it not also a fact that the process of reaching these spending decisions is long and complex, entailing a great deal of consultation among the various local authorities, through the authority treasurers' network, and that the information gathered and considered as a result of this process could not possibly be available to the Government at the time when the rate limitation process is decided?

In the past, the Government have estimated block grants on two assumptions; namely, a target or a GRE or a target plus some percentage suggested by the local authority side. But as earlier debates this afternoon have shown, neither of those assumptions will be good enough for the purpose of a legally imposed maximum rate where there is no room for error. From studies and reports that I have read so far, it would appear that the main criteria to be used in setting the block grant will be the GREA but, as the Society of Metropolitan Treasurers and others have pointed out, GREAs are not so objective as they ought to be, since the factors in the unit costs used to calculate GREAs are at best approximations of local needs. Examples have been given. I could give many more.

The inaccuracies, the discrepancies, and the likely errors which could arise have also been mentioned by the association; so much so that the then Secretary of State for the Environment was moved to say, on 8th July 1980, in the debate during the passage of the Local Government Planning and Land Bill: It makes clear that this"— that is, the grant-related expenditure— is in no sense a prescriptive definition by central Government of what the local authorities should spend, but is a basis on which grant will be distributed".

Out of a long list I could give three other short points about the inadequacies of the GREs. The noble Lord, Lord Sandford, mentioned earlier today a great number of others. My recollection, too, is that these GREs do not take account of legal and moral commitments such as debt charges—an important consideration. Nor do they take account of past Governments' selective encouragement of services in particular areas. I know that the Minister will share with me the memories of frustration that this kind of Government procedure can cause to local authorities where they select certain areas for attention, but fail to supply the resources. That has always been a difficulty. GREs do not take account of that, nor of the differences in the economic viability of service provision in urban and rural areas. It may be that it was right that they should not, given the original purpose of the GREs, but surely that goes to support the arguments which have been put forward by noble Lords on the previous clauses. Therefore I submit that we are entitled to know a little more about how the Secretary of State will adjust the block grant with the degree of accuracy required in the time limit set by the clauses in this Bill.

Before I sit down, I should like to have the comments of the Minister on another problem. The Government have said that a designated authority could have three spending norms. It could have the GREA, it could have a target, or it could have an expenditure limit. This means in practice, judging from discussions I have had with a number of people in local government, that a designated authority, spending at its limit, could still possibly incur grant penalties. If the Government fix the maximum expenditure for a designated authority above its target, assuming the system is the same as before, grant penalty would be incurred. In other words, penalties could be incurred for spending at a Government-imposed level. That is a possibility, and I would ask the noble Lord the Minister to confirm my interpretation. It would be open to the Government to change the system yet again. Earlier this afternoon there was an announcement about a minor change in relation to Cambridgeshire's future. The Government could change the system again so that designated authorities did not have targets and therefore did not suffer grant penalties for spending at the prescribed levels.

I have rushed through this because of the time, but this does not mean that the subject is any the less important. When he makes his comments I hope that the Minister will be able to enlighten us and, in view of the fact that no parliamentary process is specified, give us further information about how the Secretary of State intends to make the adjustment to the block grant to which I have referred. I beg to move.

Lord Evans of Claughton

In order to save time at this hour of the night, may I briefly speak in support not so much of the amendment moved by the noble Lord, Lord Stallard, but rather of the following amendment, Amendment No. 53, which is grouped with Amendment No. 52. Amendment No. 53: Page 4, line 34, at end insert—("; and (d) the annual rate of inflation.") In supporting what the noble Lord has said, I would remind him that in another place there was not quite the sweetness and light that subsists in your Lordships' Committee between the Social Democrats and the Labour Party, who fought in rather an unseemly way over which of them was fathering which of these amendments. In this particular case we are working together and confirming the worst suspicions of the noble Lord, Lord Denham.

We are concerned—I believe quite rightly—about the way in which these rate limits are going to be settled after designation. We are moving Amendment No. 53 in a spirit of co-operation and enlightenment because we believe that what should be taken into account is the annual rate of inflation and not the rate of inflation of local government, in determining what may happen between designation and the setting of rate limits.

Your Lordships will be aware that the rate at which local government inflation increases is usually greater—through no fault of local government—than that of national inflation because of the fact that wage settlements are made on a national basis, with the approbation of Her Majesty's Government, and many local government employees are people who are low wage earners. It is a widely-accepted philosophy in all parts of all political parties that the lower paid workers should receive greater wage increases than people in other parts of the economy.

We are suggesting that the rate of inflation taken into account should not be based on the inflation of wages in local government but upon the general rate of inflation affecting the whole of society. At the moment it would not be a problem, in the sense that the rate of inflation is being reasonably well-controlled. But it could be quite an important factor at some time in the future, when the rate of inflation may increase markedly between designation and the fixing of limits.

We believe very strongly that the annual rate of inflation should be one of the factors taken into account in coming to a settlement on rate limits. In supporting the amendment moved by the noble Lord, Lord Stallard, I believe that it would be wise and to the benefit of the business of this Committee if we considered also Amendment No. 53, which is based on the same principle.

10.53 p.m.

Lord Bellwin

It may help if I briefly explain the way in which we envisage that Clause 4 will operate. For all authorities, the rate or precept income they require is determined by their total expenditure for the year less any block grant payable, and adjusted by net contributions to or from internal funds. In addition, authorities in London may have to provide for payments into or out of the London rate equalisation scheme. In setting a maximum, we shall have to follow the logic of that relationship.

The level of expenditure to take into account will be the expenditure level determined or redetermined under Clause 3. As with present expenditure targets, that will be a cash figure covering the whole of the financial year, and it will include all items of expenditure falling to be met from the rate fund or from block grant. Because the figure will relate to the whole of the relevant year, it will be necessary to build in some assumption about the rate of local authority price increases—and this will be done. It will be quite unnecessary to allow for it separately at the stage of calculating the rate limit, as Amendment No. 53 proposes.

The second item is the estimate of the amount of grant payable in the year. Here, the Secretary of State will be in a similar position to the local authority treasurer in having to make an estimate of how grant will vary during the course of the year. Amendment No. 52 proposes that the grant estimate should take account of grant close ending. But it would be impossible to do that in any exact way. Close ending adjustments are determined by authorities' expenditure decisions collectively. We cannot know what those will be in December-January, when the rate assessing calculations will be done. The facts will not be known until March-April.

Grant may also vary in respect of supplementary reports from earlier years; for example, when there are adjustments to hold-back in the light of out-turn expenditure. The estimate of grant payable will, therefore, have to take account of many factors. But these are the judgments local authority treasurers routinely make every year.

Typically, treasurers would look to see whether they could cover the extent of grant uncertainty from their internal balances. If they cannot they would make extra provision for it in the rate. In determining rate or precept maxima, therefore, the Secretary of State would make a similar judgment. I accept that those judgments will be difficult ones, and for that reason we would provide for a period in which authorities could make representations about the proposed rate limit.

The noble Lord, Lord Stallard, has given a dissertation on the reasons why he believes the grant calculations are not an accurate reflection of what authorities ought to receive. They were telling me that when we were introducing the 1980 Bill. They were comparing it with the multiple regression analysis basis. As I have said in your Lordships' House and in Committee many times, I would give way to any noble Lord who could explain exactly how the multiple regression analysis basis worked for the calculation and distribution of grants. There were no takers. That is because it truly was so obscure that no one could understand it. As noble Lords have heard me say before in the House and in Committee, there are now some 63 factors which can all be debated and agreed or disagreed. Precise and exact it is not; being refined continually every year it is. Better it will become, and certainly better it is than what we had before.

For the purpose we are debating now it is not necessary for us to be satisfied that the grant allocation for any authority is right in an ideal sense; only that it is correctly calculated on the rules which are set in the annual rate support grant settlement. The question is whether we are able to assess accurately enough the likely grant entitlement of a designated authority. I believe that we can do that within the usual degree of certainty accepted by council treasurers.

This is a complicated and somewhat technical area. If the noble Lord feels that he would like to discuss it further with me outside the Committee, I shall be pleased to do so.

Lord Stallard

I am grateful to the Minister for his reply and for his offer to discuss it. I will certainly consider taking up that offer. Meantime, I do not think that he has gone as far as I should have liked him to go. He has given as much information as I expected to get, but not as much as I wanted. I will study his reply and, hopefully, come back at a later stage in our Committee proceedings. In the meantime, I do not intend to push this amendment to a Division.

Amendment, by leave, withdrawn.

[Amendment No. 53 not moved.]

The Deputy Chairman of Committees

Perhaps I should mention that if Amendment No. 54 were to be agreed to I would not be able to call Amendment No. 55.

Lord Graham of Edmonton moved Amendment No. 54: Page 4, leave out lines 35 and 36.

The noble Lord said: With respect, I take the point that has just been made; the three amendments are somewhat related to each other. Clause 4(2) provides that the Secretary of State may, in determining a maximum rate for a selected authority, take into account any financial reserves available to the authority. The Bill itself does not define "financial reserves", nor is there any definition of this term contained in existing statute. There are two major objections to this provision. First, as it stands the clause is imprecise and is bound to give rise to uncertainly over what is meant by the term. More importantly, the prospect of a central judgment being made over the level of financial reserves in individual local authorities carries grave risks for the efficient financial management of those authorities.

At present the judgment about the levels of rate income and reserves rests upon the recommendation of the chief financial officer. In making this overall judgment a whole range of factors must be taken into account. The approved expenditure for the year is only the starting point. A view must be arrived at on the levels of interest rates, volume of demand-led services, capital expenditure programmes, pay awards, price changes, block grant close-ending adjustments, and levels of fee income over the whole range of local authorities. What all these factors have in common is that none of them is wholly within the control of the local authority.

Arriving at the budget judgment therefore relies heavily on the skill and experience of the local authority treasurer. The Secretary of State, assisted by senior civil servants, could not hope to match the quality of the local decision. It would be far safer from the point of view of sound financial management if the Secretary of State was not permitted to "second guess" from afar local authority treasurers. These amendments seek to bring about that constraint. I beg to move.

Lord Evans of Claughton

Since the noble Lord, Lord Graham, said that these three amendments (Nos. 55 and 56) are really on the same theme, it might be better if I were to speak briefly to Amendment No. in which by changing the word "may" to the words "shall not" we seek to prohibit the Secretary of State from taking account of balances and reserves in making his decision. Amendment No. 55: Page 4, line 35, leave out ("may") and insert ("shall not"). We all know that there are at least two basic reasons for building up reserves and balances; one reprehensible, and the other perfectly supportable. The reprehensible one is when you get into office and see that you have two, three or fours years ahead of you, you build up enormous balances and at the end of the third year you use all the balances to reduce the rate. This has been done consistently by Labour-controlled and Conservative-controlled authorities; not by the Liberal-controlled authorities. I am sure that we would have done it if we could have done. That is the reason involved here. There is no question about that. I think everyone recognised that that has been done.

The defendable reason is that, of course, any sensible treasurer, or director of finance, as he is now called, would want to advise his finance committee that it is important to have some reserves to meet accountable crises or problems, and that no sensible housekeeper would ever leave the cupboard entirely bare of reserves or balances for an eventuality which cannot be immediately calculated. Therefore, I should have thought that it is wrong that reaching his decision the Secretary of State should take any account at all of the balances. That is why we seek to change the word "may" into the very clear and positive phrase "shall not" when it comes to taking balances into account in reaching his determination. Therefore, whether or not I beg to move the amendment, I am certainly speaking to it.

Lord Bellwin

The scenario the noble Lord describes pertains only where you have elections every four years. If one worked in a climate where one had elections every year, there would be no such thing as building up balances. One would be on parade every single year and there would be great merit in that.

There is another important point about reserve funds. These funds are not the authorities' money at all. It is money which is taken from ratepayers, and that is how you build up the reserves. I never believed, nor do I now believe, it is right to maintain great reserves of money at the ratepayers' expense, simply to have a nice comfortable ride. I think that is quite wrong. I have accepted that authorities need reasonable balances to cover themselves from uncertainties, but unusually large balances mean merely that the council is holding on to ratepayers' money, as I say, unnecessarily. The whole purpose of this Bill is to reduce unreasonable burdens on ratepayers. We cannot therefore, when setting rate limits, ignore the money which authorities have in reserve.

There are two basic reasons for rejecting these amendments. The first is to ensure the good financial standing of the authority in view of the uncertainties which all authorities face. The second is to ensure that, where large balances are held at the ratepayers' expense, excessive rate limits are not set so that ratepayers do not see the full benefit of the intervention. This could then be used to maintain an even higher level of spending. This is why I ask the Committee not to accept the amendments.

Lord Evans of Claughton

I was a member of an authority which had annual elections. I have also been a member of authorities which had four-yearly elections. Every year when I was a member of the county council I moved that we should dispose of our balances and was always treated with the most appalling derision by either the controlling Conservative or Labour interest who said that I was doing so for electoral purposes and those funds were there so that the county council had a reserve. I used to say what the noble Lord the Minister is now saying—those reserves belong to the people. I used to be treated with appalling derision. I am sorry that the noble Lord is now using my arguments against me and I am using their arguments against noble Lords on that side of the Committee.

I see the point, but, quite honestly, I feel that there is a serious point about not interfering too much with the balances in coming to a determination. Every authority needs some balances, as the Minister has admitted.

On Question, amendment negatived.

[Amendments Nos. 55 to 58 not moved.]

The Deputy Chairman of Committees

Amendments Nos. 59, 60 and 61 are, I understand, alternatives and presumably can be debated together if your Lordships so wish and then one or two of them not moved or withdrawn.

Lord Graham of Edmonton moved Amendment No. 59: Page 5, line 12, leave out ("may relate to two or more authorities") and insert ("shall apply to one authority only").

The noble Lord said: I appreciate the guidance that the Deputy Chairman has given the Committee. The purpose of Amendment No. 59 and the others in the group is to make sure that only one authority is contained in each report to Parliament on rate limitation. The Minister will be aware of the arguments and of the fairly generous time that we took in arguing these matters at an earlier stage. Therefore I do not intend to proceed with the matter further, and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 60 and 61 not moved.]

Clause 4 agreed to.

Clause 5 [Interim maximum]:

11.8 p.m.

Baroness Stedman moved Amendment No. 62: Page 5, line 18, at end insert ("and set out in a Report laid before both Houses of Parliament").

The noble Baroness said: Now we have come to this clause, the procedure on which the Secretary of State makes his decision has become very complex. There is no guarantee that it can be completed by the time the local authority has to approve its budget and set its rate. Therefore, the Secretary of State is to be allowed to set by direction an interim maximum which does not require the direct approval of Parliament but nonetheless will limit the level of rate which can be set by the local authority in its normal budget.

If at a later date Parliament approves a higher final maximum expenditure level, in effect, a supplementary rate will have to be levied. Eighteen months ago supplementary rates were abolished by Parliament, yet, because the Secretary of State presumably accepts that he cannot guarantee to reach a conclusion by the time the local authority has to complete its budgetary process, supplementary rates will presumably once more become legal.

Another danger of the Secretary of State setting an interim maximum is that he can then delay the necessity for parliamentary approval, since that is required only when he sets the final maximum. There is no limit to the time that may elapse before the final maximum is set and before the order is laid before Parliament. However, at this stage this is only a probing amendment in order to find out the views of the Government on whether supplementary rates are now legal, and how they propose to deal with them. I beg to move.

The Earl of Avon

May I just remind the Committee, to start with, of the purpose of Clause 5(1) to which this amendment relates, and try and make clear to the Committee the effect that this amendment would have. Clause 5(1) is essentially a technical provision, as the noble Baroness has hinted. It provides for the most difficult cases; for example, where an authority has made an application for a redetermination of its expenditure level under Clause 3 and, despite its best endeavours, it has been unable to agree a maximum for the rate or precept of the authority and the Secretary of State may have decided he is not yet able to prescribe one by order.

The position could then be that the authority's power to levy a rate would be subject by virtue of Clause 1 to a maximum, but no maximum would have been set. Clearly the authority could not be left with its power to levy a rate of precept in suspension, and a stop-gap would have to be provided. Clause 5(1) provides that stop-gap—an interim maximum which allows an authority to levy a rate while negotiations continue. It is because this interim is a stop-gap—it might be in place for only a few weeks—that I believe the noble Baroness's amendment is unnecessary.

The Secretary of State will be required by Clause 5(3) to replace any interim maximum with a final maximum as soon as reasonably practical. It is not appropriate for the Secretary of State to have to make a report to the House of Commons on interim maxima, which would soon be superseded either by a rate limit specified simply in a direction in writing, where the Secretary of State and the authority are in agreement, or, alternatively, by an order subject to a full scrutiny of that House where the two cannot agree.

I shall have something to say on the supplementary propositions of the noble Baroness in the debate on the amendment after next, if I may leave them until then. But I hope that with this clarification I have removed some of her doubts and she might be prepared to withdraw her amendment.

Baroness Stedman

I am grateful to the noble Earl. At this time of the night I will withdraw the amendment, with the leave of the Committee, and read what the noble Earl has said. Perhaps it will be clearer to me when I see it in writing in the morning, in the clear light of day, than it is at this time of night. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Nicol moved Amendment No. 63: Page 5, line 22, leave out paragraphs (a) and (b) and insert ("1st December").

The noble Baroness said: This is a perfectly straight-forward amendment and it is hoped one that the Minister will feel minded to accept. The date specified in Clause 5(2) by which either a maximum or interim maximum must be specified is too late. It arises in a situation where relationships between the authority and the Secretary of State are likely to be a little strained. It makes it unlikely that acceptance or agreement to the proposed maximum will be readily or speedily forthcoming. In these circumstances, it is vitally important that the strict timetable for the issue of rate demands is not threatened by the need to allow time for proper discussion and exchange of information concerning the appropriate rate or precept level.

This amendment seeks to allow a more realistic time-scale for such decisions. I remind the Committee that the amendment is simply to substitute "1st December" for the dates given in the Bill. I beg to move.

The Earl of Avon

Clause 5 provides a power to prescribe interim maxima for rates and precepts in the most difficult cases. As I have said, interim maxima are a stop-gap to ensure that no authority is left unable to raise a rate because of delay in setting a rate limit for it. They would be prescribed only if time was running short and the beginning of the rating year was approaching. That is why we have provided in the Bill as presently drafted that interim maxima should be set, if it proves necessary, by 1st March, in the case of a rate, and 15th February, in the case of a precept.

Precepting authorities have to issue their precepts to the rating authorities which will levy them 21 days before the beginning of the rating year; that is to say, 10th March. We propose that interim maxima should be set well before this. Rating authorities would get either a final or an interim maximum a month before they had to make a rate. I believe the dates already provided in the Bill therefore strike a good balance between giving the authority adequate notice of the maximum while avoiding setting an interim maximum unless it is really necessary to do so.

If the noble Baroness's amendment were carried, interim maxima would have to be prescribed on 1st December in the year before a rate limit was to take effect. This would change completely the nature of interim maxima. In practice, they would be set for every designated authority as a matter of course, because we should never be in a position to propose maximum rates by 1st December.

We hope that the dates provided in the Bill as drafted will give authorities adequate time in which to fix their rates if it has not proved possible to fix a maximum before the financial year begins. It ensures that no authority will have to do without rate income at the start of the year. I hope that on this rather complicated clause this explanation will have assisted the noble Baroness and that she will not feel it necessary to press the amendment.

Baroness Nicol

I understand the answer that I have been given, but it does not really meet the point. All three local authority associations have come to the same conclusion: that the time suggested is too late. However, I should like to think that the Minister would at least consider whether, if 1st December is too early, there might not be some time in between that would allow a little more flexibility. At this stage I do not propose to press the amendment, but I should like further time to think about it.

Amendment, by leave, withdrawn.

Baroness Stedman moved Amendment No. 64: Page 6, line 4, at end insert— ("( ) If by the relevant date (as defined in subsection (2) above) the Secretary of State fails to prescribe either an interim or a final maximum for a financial year he shall cease to have the power to prescribe a maximum rate or precept for that authority in that financial year. ( ) If an authority makes a substituted rate or precept pursuant to subsection (4) of this section, the Secretary of State shall pay to that authority its expenses incurred in making and collecting such substituted rate or precept.").

The noble Baroness said: This amendment is designed to make clear what happens if the Secretary of State is unable to meet the timetable for the rate limitation as set out in Clause 5. It means that in such an event the authority is removed from rate capping. The Bill says that the Secretary of State must issue a final or interim maximum rate. But it is unclear from the Bill so far what procedure is to be adopted if the Secretary of State fails to do so. The authority would have been designated, would have had an expenditure limit prescribed but would have had no rate prescribed. The precepting authority has to levy its rate 21 days before the beginning of the financial year. So what is the position if the Secretary of State does not issue a maximum statement to a precepting authority, thus putting the authority in breach of its statutory duty to levy its rate 21 days before the beginning of the financial year?

The first part of the amendment avoids any uncertainty and litigation by giving the Secretary of State a clear incentive over and above his statutory duty to issue the maximum rate on time. The second part of the amendment deals with the situation where the Secretary of State has finally decided on the maximum rate or precept which a rate-capped authority may levy and he is allowed to specify an interim maximum and change his mind subsequently. The rate-capped authority will have to act on the interim maximum and levy a rate accordingly. But when the final or revised maximum is issued, then the rate-capped authority may well wish to revise the rate or precept which it has already issued.

Having acted on the first ruling and issued rate demand notes, it may then have to issue a revised rate demand. In that way, it will incur additional costs in collecting the rates which will be significantly additional. The rating authority, we feel, should be reimbursed by the Secretary of State for this additional expenditure. There is a precedent for this in the Local Government Finance Act 1982 under Section 3(4)(b), where a rating authority is entitled to recover from the precepting authority the administrative and rate collection expenses where a precepting authority issues a substituted rate under that section. What we should like to see is the same facility written into this Bill. I beg to move.

11.20 p.m.

The Earl of Avon

I believe the noble Baroness's amendment could be based on a misunderstanding of what the interim limits are about, and if I may I shall try to explain. Interim limits are a complication which we should much prefer to avoid in practice. But we think it necessary to provide for them in order to safeguard the position of the authority which, for whatever reason, has not had a final maximum set by the due date. As I said, those dates have been carefully chosen to strike a reasonable balance between allowing the maximum time for discussion and giving the authority sufficient time to take account of the limit set in determining its rate or precept.

The authority will already of course be generally aware of what will be expected of it under rate limitation because of the expenditure limit which the Secretary of State will have proposed for it. Therefore it is not the case that the final or interim rate or precept limit will be an essential piece of information for the authority in deciding on its spending policies. But they are essential in the technical process of setting rate or precept levels. We hope that in most cases it will be possible to move straight to final limits. Interim limits would only be set as a last resort, and only if it became clear that a final limit could not be set in time so that an authority, without an interim limit, would be unable to fix its rate or precept. That is why the wording of Clause 5(1) is permissive: may prescribe an interim maximum". We believe that the interests of authorities will be best served by knowing clearly where they stand. Interim limits will only be set if all other efforts to set a final limit have failed. The amendment, by bringing forward the date by which an interim maximum would have to be set, would operate against that basic objective—an objective which seems to me to be helpful to authorities rather than the reverse.

I turn now to the second part of the amendment, and what has been portrayed as the unfair costs which could be imposed on ratepayers if an authority were to issue a substitute precept or make a substitute rate under subsection (4). One thing we can be sure of is that any costs incurred by it will be small indeed when compared with the spending.

The noble Baroness talked earlier about substitute rates, and perhaps at this stage I may say a few words about that. I should like to dispel any suggestion that substitute rates and precepts are in any way a resurrection of the old power to raise a supplementary rate, which was done away with under the Local Government Finance Act 1982. Supplementary rates were a hangover from the way the rating system used to work, with periodic issuing of a rate as and when it suited an authority.

As modern methods of accounting and financial planning developed, the annual cycle of budgeting and rating became accepted as the best way to manage an authority's financial affairs. Authorities still retained, however, the power to make a rate at any time. This enabled some authorities to break out of the constraints of a properly managed annual budget by issuing supplementary rates to make a mid-year boost in their spending. In our first term of office we put a stop to that.

In contrast, substitute rates at a higher level will be permitted only in exceptional circumstances, when the Secretary of State has agreed to a higher figure and not at the sole discretion of the authority. There will be an adjustment to take account, if necessary, of the final settling of negotiations between an authority and the Secretary of State on the maximum prescribed for its rate or precept. We can assume that any substitute rate or precept will be a good deal lower than what would have been set had rate limitation not been introduced.

I am conscious that the noble Baroness gave a very lucid description when she moved her amendment. I have spoken at some length in reply to her, and perhaps we can both look at what has been said. If she wishes to come back to it, of course she is at liberty to do so.

Baroness Stedman

I am grateful to the noble Earl, Lord Avon. I should like to read what he said; it is a little complicated. I still think that if we have a substitute rate it is perhaps a supplementary rate by another name. I should have liked a little more satisfaction about the reimbursement of the cost if a second rate has to be sent out. Even though it may be small, it may be a lot to an authority which is being rate capped. I shall look at what the noble Earl has said and if necessary will come back to it at a later stage. For the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 agreed to.

Clause 6 agreed to.

Clause 7 [Certificates of compliance]:

[Amendments Nos. 65 to 68 not moved.]

Clause 7 agreed to.

Clause 8 [Information]:

[Amendments Nos. 69, 70 and 71 not moved.]

Lord Skelmersdale moved Amendment No. 71A: Page 7, line 34, at end insert— ("( ) For the purpose of enabling him to prescribe a maximum for a precept under this Part of this Act the Secretary of State may require each rating authority to which the precept can be issued to furnish him with an estimate of the amount, calculated in the manner prescribed under the General Rate Act 1967, which would be produced in the year in question by a rate of a new penny in the pound levied in its area or any part of it; and if any such estimate is not furnished within such time as the Secretary of State may require he may himself make the estimate for that purpose.")

The noble Lord said: This is a technical amendment concerned with the calculation of precept limits of designated precepting authorities. I think it would assist the Committee if I described briefly the context in which the amendment is set.

Clause 8 is not itself concerned with the calculation of rate or precept limits, but one of its purposes is to ensure that the Secretary of State can require all the necessary information to be supplied to him so that he can determine a maximum. The clause as drafted requires any designated authority to supply the Secretary of State with information he may require for the purpose of exercising his powers under Part I of the Bill.

However, on closer examination it has become clear that the powers in Clause 8 may not in certain circumstances be quite adequate. This amendment seeks to extend the powers to require information.

Clause 6, over which we have just rapidly passed, provides for the way in which a maximum precept will be presented. A maximum precept will be expressed as: a limit on the amount in the pound of the precept".

That is the figure which appears on our rate bills and when multiplied by the rateable value of our property tells us how much we must pay to the county council or whoever. The figure is calculated by dividing the county's precept by an estimate of the amount raised by a rate of one new penny across the county in every district.

However, the basis of the amendment is that it will not be sufficient for the Secretary of State to have information only on a designated authority; he will also need it for all authorities where it is a precepting authority itself which is to be designated. I beg to move.

On Question, amendment agreed to.

Clause 8, as amended, agreed to.

Lord Denham

I think that we have now reached the stage at which it is generally agreed that we should resume the House again. I beg to move that the House do now resume.

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

House adjourned at twenty-nine minutes past eleven o'clock.