Rates Bill

HL Deb 05 June 1984 vol 452 cc506-60

3.49 p.m.

Consideration of amendments on Report resumed.

Lord Sandford moved Amendment No. 2: Page 2, lines 36, at end insert— ("( ) The Secretary of State shall, before the commencement of each financial year by an order made by statutory instrument increase the amount specified in subsection (2)(a) above by not less than the increase (or decrease the amount specified in subsection (2)(a) above by not more than the decrease) in the sum of total expenditure (as defined by section 56(8) of the Local Government, Planning and Land Act 1980) used as the basis of expenditure guidance to local authorities between the financial year in which authorities are to be designated and the sum of total expenditure used on the basis of expenditure guidance in the previous year, calculating the resulting figure to the nearest £00,000.").

The noble Lord said: My Lords, this amendment refers to that part of Clause 2 which one can describe as the £10 million threshold. It is very advantageous to the Association of District Councils—whose president I have the honour to be—in that it exempts some 320 of the total of 333 members from the operation of this part of the Act, and for that they are grateful.

When I moved a similar amendment on this point at Committee stage, my noble friend on the Front Bench chided me with behaving like Oliver in that, having been given an exemption of such value, I was coming back for more. But I was not doing that. In moving the previous amendment (at column 245 of the first day of the Committee stage) and now in moving this one I am seeking to ensure that what has been offered does not become less with the passage of time.

My noble friend went on—I was grateful for this—to accept the principle of the amendment that I then moved. He accepted the fact that, having established the threshold and measured it in terms of £ 10 million, that measure should be kept up to date from time to time to keep pace with changes in the value of money. However, he then went on to criticise my previous amendment for using as a measure the retail price index which he thought—I see with some justification—to be unsuitable for measuring the kind of finance with which we are concerned in the Bill. He also said that my amendment, as then drafted, introduced too great a precision for the purposes for which it was required.

In the light of all that I withdrew the amendment at the time. I am now returning with a further amendment which I hope is an improvement on my previous amendment, in that it uses a measure which is appropriate for the kind of finance we are talking about. As your Lordships will see, at the end the amendment makes clear that no excessive precision is sought.

I now hope that my noble friend will see that I am not behaving like Oliver and that he will feel that my amendment is appropriate in all circumstances and he will be able to accept it. My Lords, I beg to move.

Lord Bellwin

My Lords, I recognise that this amendment responds to the criticisms, which I made at the Committee stage, of the proposal routinely to increase the amount which authorities must spend in order to be eligible for selection by reference to the retail price index. We have not disguised the fact that the proposal to exclude small authorities has been based on the desire to avoid the considerable effort required to rate limit a large number of authorities whose spending does not significantly contribute to the problem of overspending. We have provided for the cut-off level to be increased and we have accepted that it would be necessary from time to time to uprate the £10 million figure.

I understand the concern which exists that there was, however, no guarantee that this uprating would take place. I am glad to say, therefore, that I can accept the principle set out in this amendment, because it provides an acceptable basis for uprating as well as reassurance for a very large number of small authorities. However, I am concerned that the drafting of the amendment is not without problems. First it assumes that we shall be setting expenditure guidance for local authorities in every year. That is not an assumption I should want to make. Indeed, we have said that we hope to move eventually to a position where it will be possible to do away with targets.

Secondly, as I understand the amendment, the timing is not right. Without going into the details too widely, I am glad to say that I can, and do, accept the principle of the amendment, but not the detailed drafting. If my noble friend would be prepared to withdraw his amendment, I would undertake to come back at Third Reading with an improved version for the House to consider. I hope that this will be acceptable.

Baroness Birk

My Lords, I had intended to speak immediately after the noble Lord, Lord Sandford, and support his amendment, and that would have been at slightly more length than I shall now speak. But wisely I waited to hear what the Minister had to say and since he is taking it back, he has the support of my noble friends and myself.

Lord Sandford

My Lords, I am most grateful to my noble friend and in view of his acceptance of the principle and his undertaking to produce yet a further amendment, though to be drafted by the Government, I am delighted to be able to withdraw my own amendment.

Amendment, by leave, withdrawn.

Lord Graham of Edmonton moved Amendment No. 3: Page 2, line 43, leave out from ("and") to ("those") in line 1 on page 3.

The noble Lord said: My Lords, with the permission of the House, I should like to speak also to Amendments Nos. 5 and 6. Amendment No. 5: Page 3, line 2, leave out from ("authorities") to end of line. Amendment No. 6: Page 3, line 3, leave out subsection (5).

Clause 2 provides the mechanism and the language used in designating authorities. These amendments seek to ensure that the principles used to designate authorities are the same for all authorities.

At the Committee stage on 26th April the Minister said, at col. 248: In other words, to meet technical differences between the different classes we might need to use different principles. Different principles would ensure the same, equal treatment. I believe that this is the only circumstance in which we could use different principles without facing challenge in the courts.

From previous debates we know that when we are talking about principles that can literally mean anything. We have had arguments about whether we are talking about criteria or bases, and really it depends upon who interprets the principles as to precisely what the effect of them will be.

So far the Government have used 11 different combinations of criteria to determine the principles that will be used. We must bear in mind the small number of authorities in some of these classes. I remind the House that in Clause 2(5) the classes referred to are: councils of metropolitan counties;…councils of non-metropolitan counties;…councils of metropolitan districts;… councils of non-metropolitan districts;…councils of inner London boroughs; and …councils of outer London boroughs. There are only six metropolitan counties and only 12 inner London boroughs, excluding the City of London. The City of London, the GLC, and the ILEA are each in a class of one, and so special principles could apply to each individually.

We are strongly suspicious of the ability, not necessarily the intention, of a Minister, if he so wished, to use this terminology in order to be vindictive or punitive, or to treat unfairly authorities which, in our view, will already be in enough trouble with the problems they will have if they are to be subject to the procedures.

The object of the amendment is to ensure that all authorities are treated carefully. One only has to look at the principles for different classes which are needed to cope with the different mix of functions and the difference involving pay and price changes, in terms of economic conditions, to see the limitations which can apply. But there is a way out, because at col. 248 the Minister went on to say: There are precedents for providing for principles to apply separately to separate classes of authority. The multipliers set for block grant are a good example.

That is the example that the Minister chose to use. But the Local Government Finance Act 1982 provides that in issuing expenditure guidance targets the Secretary of State shall act in accordance with the principles applicable to all authorities. I want to put to the Minister and to the Government the point that the designation of authorities for rate limitation is of equal gravity to, or greater gravity than, the mechanisms which are used for determining the block grant. The precedent to be followed is that in the 1982 Act of principles applicable to all authorities, and not the criteria which the Minister is using. That is the purpose of the amendments. I beg to move.

4 p.m.

Lord Bellwin

My Lords, your Lordships will remember that these amendments were considered at the end of the first day in Committee, when the noble Lord, Lord Graham, withdrew them and promised to come back at a later stage—which he now does. Both he and the noble and learned Lord, Lord McCluskey, spoke forcibly on the amendments. However, if my reading of Hansard is right, it was the nature of the principles by which local authorities would be designated which most concerned them. Although it is at the heart of the amendment, the question of whether these principles should be common to all authorities or capable of application differently to different classes of authority was, I think, secondary. I will return to that later because I ought to say a little more about the principles themselves.

I should say first of all that the various phrases we have used—"the criteria for selection", "the principles", "the basis of designation"—all amount readily to the same thing. I know that Lord Graham was concerned that these different phrases could confuse our interpretation of the meaning behind them, and so I shall stick with the word "principles". One charge which was levelled was that the "principles" used to designate authorities for rate limitation could be concocted arbitrarily to suit the Secretary of State. The noble and learned Lord, Lord McClusky, in particular, suggested this. He did not say that it would be done but that it could be done; and has returned to the point in correspondence with me. In fact, the principles of designation cannot be plucked from the air; they must give flesh to the provision in Clause 2(2)(b) that the spending of designated authorities must, be excessive having regard to general economic conditions". It is clear to me that the principles must be an expression in concrete terms of what excessive expenditure means.

My right honourable friend produced in another place a table exemplifying various principles which could have been applied to local authority expenditure in 1983–84. Each of these sets of principles included a comparison with an authority's grant-related expenditure assessment. We have said from the outset that GRE would be an important indicator. In the exemplification, the GRE principle was grouped with others—for example, percentage over target, percentage increase in current expenditure, percentage rate increase and so on. Until now we have not been able to be more specific about which principles we would use. Indeed, we have said that the principles might well vary from year to year depending on the economic circumstances against which excessive expenditure would be judged. But, as my right honourable friend has made clear in another place, we can say now that we expect comparisions and expenditure against GRE and against target to play a very important part in our selection decisions.

My Lords, I am anxious to help the House in this by explaining precisely what we mean by "principles". I hope I have dispelled the notion that the principles could be arbitrary—picking out authorities by political colour, the part of country, or whatever. But, in turning to the amendment which is before us, I should like to refer to the need for fairness in applying these principles. I thought that the noble Lord, Lord Graham, summed up this point well when he spoke in Committee of the need for "equal treatment before the law". It is certainly our intention that the expenditure of every authority should be judged fairly. Indeed, it is precisely because in some circumstances an across-the-board comparison of spending might be unfair to a particular class of authority, that we are taking the power which this amendment seeks to remove.

I do not believe that we shall need to make different comparisons between different classes of authority this year. However, it remains the case that different classes of authority perform a different mix of functions. Their costs may, in some circumstances, be affected to different extents by differences in the planned level of provision for different services. Equally, they could be affected differently by changes in pay and prices because of different ratios of manpower to running costs and different pay settlements.

There was, I think, some misunderstanding in Committee about these different pay and price indices. They are not principles by which we would designate authorities; they are facts which might justify rather higher expenditure by one type of authority than by another. As a result, it could conceivably be neccessary to vary the principles between classes in order to arrive at similar treatment overall of the different classes. In other words to meet technical differences between the different classes, we might need to use different principles. Different principles would then ensure equal treatment.

I also mentioned before 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. A change in the discount of rateable value allowed for the block grant of London authorities would affect rate poundages, so that comparisons of rate increases over a period of years could be distorted. It would be our intention to operate, so far as possible, on generally applicable criteria. But I still cannot agree that the Secretary of State should be restricted in that way.

My Lords, I have gone to some trouble to try to clarify this point. It sounds very complex when saying it, and I shall understand if there are noble Lords who perhaps feel that it is not all that clear. What we are seeking to do here is to make quite clear that the Bill allows for what we are seeking to achieve. I take the point that the noble Lord made—that "your intentions may be honourable, but perhaps some other Minister or set of Ministers might be able so to use it as to disadvantage a particular authority or authorities". That, I understand, is the main concern in this amendment. I really do not believe that that is so, for the reasons I have given and which I shall not repeat. It is important that the principles be understood. The intention for using them in the way suggested, I think, will lead us to the conclusions that are necessary for this to be an equitable basis which all will be able to understand at the end of the day.

Lord McCluskey

My Lords, I must confess that the noble Lord the Minister has not allayed my anxieties in this regard. I do not have a copy of the correspondence that we have exchanged, but, as I recall it, from the examples that he was able to give me from the courts I was able to instance the normal situation in which a mother says to her child, "James, don't do that!"; James replies, "Why not?"; and mother replies, "Because I say so". Then the "because I say so" in terms of the authority in the courts is a self-justifying proposition which qualifies the name of principle. That is what the Secretary of State means in this Bill by the word "principle"—"you will do it because I say so".

The noble Lord advances the highly illogical proposition which is that sometimes the same principles can produce different results so we will apply different principles and thus produce the same results. That is not a logical proposition and it is one of which the Minister ought to be ashamed. Furthermore, the words "having regard to" have been interpreted in the courts both in England and in Scotland as meaning simply this: that a Minister who has to have regard to something must have regard to it. My Lords, I shall shortly be travelling to Heathrow. I shall have regard to the bus timetables; but I shall travel by Tube.

Lord Graham of Edmonton

My Lords, this has been a useful exercise. The Minister persists in saying that we need to be quite clear as to what we mean by "principle" and what the principles are. What we are saying is that there is no better way of being quite clear than by writing them into the face of the Bill. The Minister persists in allowing himself, the Secretary of State, alone, to determine the principles. Clause 2(4) says: The power to designate an authority shall be exercised in accordance with principles determined by the Secretary of State …". What we are saying is that, in a matter which is of such momentous import to the authorities concerned, we ought to expect there to be more on the face of the Bill than that. The Minister has pointed out that he certainly does not intend to be punitive or to be unfair.

The Minister will of course be aware that, with regard to the authorities which have received the greatest stricture, it is from his side of the House that there have come such adjectives as "Marxist", clearly indicating what noble Lords on the other side of the Chamber have in mind when they want to be quite pointed in a general criticism of, and attack on, authorities which they believe are ones that are going to be dealt with. It is quite unfair on authorities that the impact of the legislation, which will be so detrimental and devastating, will be in accordance with what the Minister determines to be excessive and in accordance with the general economic conditions and his interpretation of them.

I believe that we have gone as far as we can. Authorities and councillors outside will have to be content to await the event so as to see whether the way in which the Bill will work turns out to be as the Minister says or as they fear. In the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Speaker (Lord Aberdare)

My Lords, Amendment No. 4. I have to point out that if this amendment is agreed to, I cannot call Amendment No. 5.

Lord Bellwin moved Amendment No. 4: Page 3, line 2, leave out ("for all authorities falling within that class") and insert ("either for all authorities falling within that class or for all of them which respectively have and have not been designated under this section in the previous financial year.").

The noble Lord said: My Lords, in moving this amendment I should like to link it with Amendment No. 13. Amendment No. 13: Clause 3, page 3, line 27, leave out ("for all authorities falling within that class") and insert ("either for all authorities falling within that class or for all of them which respectively have and have not been designated under section 2 above in the previous financial year."). This amendment raises an identical point in relation to expenditure levels.

The purpose of Amendment No. 4 is to allow separate criteria to be applied to the selection of authorities for rate limitation if those authorities have been selected for limitation in the previous year. The necessity for this amendment arises from the way in which we have said we wish to make selections for rate limitation.

We have always said that the purpose of the scheme will be to identify those high spending authorities which are not responding to the calls which have been made for restraint in spending. We have therefore proposed to look at authorities' expenditure in relation to their grant related expenditure assessment as the best available basis for assessing expenditure which is excessive compared to other similar authorities.

We shall also be looking for some measure of how authorities are responding to the need for economies. In the first year at least, as I have indicated, we expect to have regard to performance against expenditure targets. We are not yet in a position to say precisely how we shall set out the criteria, but in the other place my right honourable friend gave some illustrative samples of selection criteria. One of those would have selected authorities spending more than 20 per cent. over GRE and more than 2 per cent. over their target.

For the purposes of explaining this amendment I should like to refer to this example. The problem which the amendment addresses is that in the second year of the selective limitation scheme authorities which were limited in the first year would have had their expenditure effectively limited by their rate or precept limit. In general, I would expect those authorities to be constrained to spend very close to their expenditure targets. So, if it was desired to use the same selection criteria in year two as in the first year, many of the authorities previously selected might escape selection because it appeared they had met the criteria of having shown restraint in their spending. A moment's thought shows how contrary to common sense that would be.

Those authorities may well remain high spenders compared with other authorities, on the GRE test, and be capable of making substantial further economies. The expenditure target, after all, is directed only at the expenditure of a single year; and since the performance in relation to target results directly from the rate limit, it reflects no credit on the authority and says nothing about their attitude to spending in the future. There would be no sensible grounds for not selecting authorities in those circumstances.

I anticipate, of course, the criticism that, as a result of the amendment, it might be possible to continue selecting authorities even if there was no longer any reason to do so when their situation is compared with that of other local authorities. I have to say that is not our approach. We shall want to release authorities from rate limitation as soon as it is appropriate to do so. One way in which we might reach such a view would be if the authority concerned had established a spending level which no longer put it among the high spenders.

Otherwise, we should look for evidence that there had been a fundamental change in the authorities' spending behaviour. That might mean establishing criteria for selection which required previously selected authorities to have reduced their rates to levels more typical of other authorities in their class, or to have made specified reductions in manpower which would be evidence of fairly long-term expenditure reductions.

The effect of authorities' rate limits would be to compel them to spend at, or about, the expenditure level set for them. We do not want to give authorities credit for that, but if authorities are able to go further and realise savings more quickly, that could be valid evidence of a change of attitude by them. In the example I used earlier, if authorities generally were to be selected for exceeding their target by 2 per cent. or more and expenditure levels would generally take selected authorities below that 2 per cent. figure, it might be appropriate to set the alternative criteria for those authorities that they should not have exceeded their targets at all.

I cannot be firm about this. We do not know how events will develop in the first year. One problem we must bear in mind is that it is often possible for authorities, by simple accounting devices, to make short-term improvements in their apparent expenditure performance. We should want to be sure that any alternative criteria did not give scope for manipulations of that kind. It may be that the evidence of more than one year might he required. But I can be firm about our intentions not to keep authorities in rate limitation longer than it is necessary so to do.

I now turn to Amendment No. 13, which is similar in origin to the previous one. It recognises that if an authority has already been selected for rate limitation, then for the purposes of further rate limitation action it is effectively in a different class from an authority which has not.

In this case we are concerned that authorities which are selected for rate limitation in more than one year will enter the later year with a history of already having made some economies. It may be that those authorities will find it more difficult to achieve further savings than will authorities selected for rate limitation for the first time. The search for economies may become harder—perhaps not immediately but later. We could of course rely on the redetermination procedures to respond to difficulties faced by authorities which have already had to make significant savings. But if this could be a more general problem, as we believe it could, it is sensible to make some provision for the matter to be dealt with so far as possible in the principles for the initial determination.

We have considered very carefully whether it would be possible to avoid making these amendments; we have concluded that we should not. The amendments provide for a genuine area of difficulty and it is proper that some provision should be made. On that basis I commend them to the House. I beg to move.

4.18 p.m.

Baroness Birk

My Lords, this is quite a complicated and very worrying amendment. The first point I must make is that it is very late in the day for the Government to have put down amendments of this nature to a Bill which has only 19 clauses. We saw it for the first time only yesterday and its Report stage is today. It is really very difficult to deal with it at such short notice.

The Government seem more and more to be approaching the Bill in the manner of somebody who, with one lock on a door, then puts a bolt on the door, then puts on another lock and another bolt, and then a screw lock in order to get double security. It really is an extension of the braces and belt principle. The substance of the amendment is extremely disturbing because, as the Bill is drafted at the moment, the Government can designate authorities only in accordance with principles. I do not think I can improve on what my noble and learned friend Lord McCluskey has said about the principles as incorporated in the Bill. But these principles, such as they are, must be the same for all authorities falling within the six classes specified in Clause 2(5). Therefore separate principles may apply to the GLC, the ILEA, the City of London, and the Isles of Scilly. Thus it is possible, as the Bill is presently drafted, without this amendment, for there to be 10 different sets of principles used in determining whether or not authorities should be designated. The principles themselves, as we are all by now well aware, are not defined on the face of the Bill, and experience with the rate support grant has shown that "principles" can be a term used to encompass almost anything.

As the Bill is presently drafted the Secretary of State has a very wide discretion in selecting authorities for rate limitation. But the Government appear now not to be satisfied with the wide discretion which the Bill presently gives, and are therefore asking Parliament to approve a doubling in the number of different sets of principles to be used in designating authorities by class. This amendment says that principles should be set by class, or within each class, by whether or not the authority has been designated in the previous year. Six sets of principles by class will therefore become twelve sets of principles by class and by whether or not the authority was previously designated. Adding to those 12 sets of principles the principles to be used for the GLC and so on, the result becomes 16 different sets of principles to be used for designation.

My Lords, the mind boggles. It is really almost impossible to see how this could be worked out, apart from the main—I was going to say "principle" but I feel that that is a word that we cannot use any more, like the word "gay" in the old sense.

The Government's main argument in favour of this amendment, as I understand it, is that it would not be fair for an authority to be excluded from designation by virtue only of the previous year's designation having brought about its expenditure reductions. Therefore, different principles will be needed for those authorities which have been designated in the previous year.

The Government's argument, I submit, is flawed in several respects. First, the criterion of whether or not an authority has been designed is not the one to adopt for this purpose. Designation is only the first step in the process. It might well be that an authority had convinced a Secretary of State of the merits of its case under the redetermination procedure, or it could be that expenditure reductions had been made voluntarily. Designation per se should not give the Secretary of State any right to treat the authority differently from other authorities in a future year.

Rate limitation, the only stage at which parliamentary approval is necessary for the Government to act, should be the criterion; and it is not. There would be a stronger case for saying that if the authority has reduced its expenditure by virtue of a rate limitation order then perhaps it should be subject to different principles to determine designation in the next year. Secondly, it does not seem to be a very strong argument to say that somehow a forced expenditure reduction does not count for the purposes of determination of good or bad behaviour. It still counts so far as reduced service levels are concerned.

Thirdly, one year's expenditure reductions are not likely to have changed an authority's expenditure so much that it is no longer, in the eyes of the Secretary of State—and I quote—

excessive, having regard to general economic conditions.". If one year's expenditure cuts can change an authority from being "excessive" to complying, then either very large expenditure reductions would have been imposed that would create massive damage upon local services or the Secretary of State would be using selective rate limitation against authorities which are only marginally overspending.

I think probably the most worrying aspect of this amendment is that it opens up the possibility of authorities being on a permanent hit-list. Designation in the first year could lead to them always being designated, no matter what their spending record, because the principles can now be set each year to ensure that that happens. I would add that it also adds to the confrontational aspect of this whole Bill.

If I may turn very briefly to Amendment No. 13, which is linked with this and, as the Minister said, is similar, in that it envisages special treatment for authorities which have been designated in the previous year, I should like to ask the Minister what factors the Government will take into account in fixing an expenditure limit. On 30th April last, at col. 338, he said this: Each [authority] will be asked to make similar savings—although allowances may be made for differences in the services provided by different classes of authority. It would be wrong to depart from the fairly applied principles in setting the expenditure levels.". On the same day, this time at col. 350, he said: As I have said, it is also important that the expenditure level set should reflect fully the expenditure to be financed in the coming year. There seems nothing here to justify different reductions to previously designated authorities. The Minister dealt with an earlier amendment which was moved by the noble Lord, Lord Sandford, and he has taken that back and reconsidered it. I suggest, going by the timing when this was put down, that he should now think of taking back his own amendment and having another look at it. I am quite serious about this, because I really think the effects of this could be much wider and much more dangerous than perhaps the Minister himself realises.

Lord Kilmarnock

My Lords, I shall not go over the ground that the noble Baroness has so ably covered but we are really not at all happy with the Government's Amendments Nos. 4 and 13. This one, so far as I can see, would allow any authority which has been designated for ratecapping in one year to be ratecapped in the next year even though it had behaved as the Government would wish. The amendment would make it possible simply to redesignate all ratecapped authorities year after year without any effort.

When we turn to the question of principles, it seems to me we are entering the realm of total chaos. The numbers so far bandied about this afternoon have been 10, 11, 12—I think somebody mentioned 16. I submit that this kind of amendment shows that the Government still have not found a workable scheme of rate limitation and are simply weaving the mesh of an all-purpose net based on a multiplicity of principles which, by definition, are not principles at all but simply expedients.

I find it quite genuinely difficult to accept the noble Lord's explanations on the matter of principles. I heard fall from his lips the extraordinary statement that.

different principles will ensure equal treatment. That may be acceptable in politics but I cannot conceive that any philosopher would accept it. Would J. S. Mill have accepted it? Would Kant have accepted it? It is a most extraordinary statement to fall from the lips of a Government Minister on the Front Bench. Unless some better explanation is forthcoming, we on these Benches cannot accept this amendment.

Lord Bellwin

My Lords, I would advise the noble Lord to study carefully the whole of what I said when talking about principles, because whether he considers it an extraordinary statement or not, in the context of what I said it makes very good sense and perhaps he will have a better appreciation of that when he reads the whole of what I have said. I am the first to acknowledge that it is not easy to take on board: it is not easy, and I would say that to the noble Lord.

The noble Baroness makes fair comments in what she has said. I have to fall back, as I did before, on the fact that there are still matters as regards the selection criteria and so on—call them principles if you like—that as yet are not resolved, for the reasons which have been given. We said all along that that would be so. The example which I used for illustration was only an example. When I talked of 20 per cent., 2 per cent., targets, and so on, that was only an example to illustrate a particular point. But I understand the concern.

I cannot, nor do I want to, take back this amendment but what I will do is to study carefully all that the noble Baroness has said. It is, as she very fairly put it, something which has come to her and to the House at very short notice. I think it proper that perhaps another opportunity to look closely at it should be given. I am quite happy about that. Clearly I cannot say today that I will take back the amendment, but I do acknowledge what she has said and I confirm my willingness to look to make sure that we are completely satisfied. I cannot hold this up now and I want to see that the amendment goes forward, but I will give an assurance that if, as a result of what transpires, based on what the noble Baroness has said, we should be less than completely happy about this, then at the last stage I would want to look at it again. But for the time being I must ask your Lordships to accept the amendment as it is.

Baroness Birk

My Lords, by leave, I should like to welcome the Minister's statement that if he considers that an amendment is necessary he will bring one back at Third Reading. Before Third Reading, perhaps we shall be able to discuss the matter, so that if the Minister feels unable to do so I can put down an amendment.

On Question, amendment agreed to.

[Amendments Nos. 5, 6 and 7 not moved.]

Clause 3 [Expenditure levels]:

4.31 p.m.

Baroness Faithfull moved Amendment No. 7: Page 3, line 21, after ("expenditure") insert ("except any expenditure incurred by a designated authority on charities registered in accordance with the Charities Act 1960").

The noble Baroness said: My Lords, this amendment means that voluntary organisations registered with the Charity Commission would be outside local authority rate capping. In moving the amendment, I am only too well aware that it may appear to cut across the principles which underlie the Bill: the first is the wish of Her Majesty's Government to curtail local authority expenditure, thus bringing down the rates which are a heavy burden upon so many. Secondly, the Minister repeatedly said at Second Reading that local authorities should be responsible for the allocation of their resources. Thirdly, if there were more efficient and, in some cases, less extravagant management, the Government believe that more money would be available for essential services. I believe that the amendment complies in part with these principles.

First, perhaps I may deal with expenditure. At the Committee stage the noble Lord, Lord Seebohm, said that the work of the voluntary sector was cost-effective. Let me take some examples. In Birmingham, there are 250 volunteers, seven full-time staff and seven part-time staff running an outstanding citizens advice bureaux service. Between 1982 and 1983 the number of inquiries increased by 60 per cent. Any local authority which either withdrew its grant or tried to do that work would find itself in financial difficulties.

Let me take a different example. Leicester City Council is likely to be rate capped. In a report on the immediate effects of reducing the council's expenditure to the Government's grant related expenditure assessment, consideration is being given, To [abolishing] certain miscellaneous grants aimed at providing services to the community, law centres, citizens advice bureaux, community service volunteers, and reduction of grants provided for hostels [in the city] by 50 per cent.". Let me take another authority which is also likely to be rate capped—Newcastle-upon-Tyne. The social services committee has a good track record of working with and funding local charities—some 60 in all. Substantial cuts have already been made. For example, there has been a 10 per cent. cut in the grant to the local council for the disabled, a 9.6 per cent. cut in the grant to the local NSPCC and a 9.4 per cent. cut in the grant to the local family service unit. Further cuts to these and other organisations will threaten their very existence.

Let me turn to the Greater London area. There are, for instance, 99 citizens advice bureaux, staffed by 300 staff and 675 volunteers. The total number of inquiries was 1,083—a 4 per cent. increase on the previous year. The majority of funding for local bureaux comes from local authorities. There is a very real anomaly here. Following an inquiry, it was recommended that a grant of £1 million should be made by the Government to the headquarters of the Citizens Advice Bureaux. If, therefore, local authorities were to cut their grants to local CAB offices while the Government were giving a grant to the central office, there would be a disparity of approach.

I turn to choice. I suggest that not only should local authorities have a choice as to what they should do. The community—that is, the clients—should also have a choice. To take one example, the London Borough of Merton withdrew its grant to the family service unit. Some vulnerable clients seek help from local authorities while others seek help from voluntary organisations. Of the families being supported and helped by the family service unit in Merton, 12 have not sought the help of the local social services department. These are vulnerable families. Should the families break up and the children come into care, the expenditure burden on the local authority would be heavy.

Various families are dealt with by a movement called the ATD. It supports very vulnerable families who would not go to a statutory body. It is a matter of style and ethics. Who are we to say that they should not have a choice when seeking help? In some areas where there is likely to be rate capping, consideration has been given to cutting the grant to the NSPCC.

What does the amendment mean? It means that voluntary organisations can be considered for grant over and above rate capping, but a grant would be made only to those charities which are registered with the Charity Commission. As your Lordships know, the Charity Commission do not register any charity which uses its funds for political ends. I have a list of grants made by the Greater London Council to voluntary organisations. Of the 140 organisations, only two are registered with the Charity Commission. It has been said that the amendment would cut out some good and valuable voluntary organisations. The answer is that such organisations should seek to be registered with the Charity Commission.

I am grateful to my noble friend the Minister, who generously gave much of his time to me last week. He listened to the arguments with sympathy and very real understanding. When he replies I believe that he may well be prepared to take back this amendment for reconsideration. If he does so, I shall not press the amendment—at any rate, not at this stage. When my noble friend the Minister replies I am sure he will show that he is appreciative of the spendid tradition in this country of the partnership between the statutory and the voluntary sector. I beg to move.

Lord Ennals

My Lords, first I most warmly congratulate the noble Baroness, Lady Faithfull, for the way in which she moved the amendment. It is an admirable refinement of an amendment which I moved in Committee. The amendment which I moved deserved to be defeated because it was drawn too wide. On 30th April, in winding up roughly an hour's debate on the subject, I said: I can give an assurance…that at Report stage…it will be possible to bring back an amendment which will make it absolutely clear what it is that we are talking about".—[Official Report, 30/4/84; col. 367.] This is such an amendment. I said that because there were some doubts cast. I myself mentioned (in col. 355) organisations such as the Spastics Society and MENCAP, and I might also have cited the Royal Society for the Prevention of Cruelty to Children, Dr. Barnardo's, the National Children's Home, or the Children's Society. All are service providers doing jobs on behalf of not only their own members, but also often local authorities in the communities they serve.

The noble Baroness, Lady Gardner, with her usual perception, politely said about the amendment I moved at Committee stage: I find it is very dangerous because it has been presented in such a charming and eloquent way"— and I want to thank her very much for those kind words. But she went on to say— yet it completely conceals the hidden pitfalls which really alarm me".—[Official Report, 30/4/84; col. 361.] She went on to speak about the GLC and grants to anti-police bodies, extremist political groups, "gays" and lesbians. I can assure the noble Baroness and the whole House that I am not a lesbian and I am not "gay". I give no particular support to any of the organisations she listed. But it was perfectly clear—and the noble Lord, Lord Kilmarnock, repeated this point—that my amendment was drawn too wide. This is the great advantage of having a Committee stage and a Report stage. The present amendment is drawn as narrowly as it can be. It specifies registered charities, and as the noble Baroness, Lady Faithfull, said, it would exclude all those organisations which worried the noble Baroness, Lady Gardner. I hope, therefore, that we shall be able to satisfy her.

The case for this amendment is an overwhelming one. I hope that the noble Baroness, Lady Faithfull, is right, and that the Minister will look most sympathetically upon it. He must know that deep anxiety is felt not only among the voluntary organisations themselves—not those concerned with "gays" and lesbians, but the others to which I have referred—but also in the community and in the local authorities which help the voluntary organisations do their work.

I have received a stack of letters and I am sure that the Minister must have done so, too. I received the latest of them only this morning. It came from the London Churches Group. I have not before referred particularly to churches. The London Churches Group represents the Baptist Church, The Church Army, the Church of England, the Jewish community, the Methodist Church, the Roman Catholic Church, the Salvation Army, the Society of Friends, et cetera. They say how deeply worried they are by the effect that this legislation might have on the work they do. In particular they say: Borough councils on their own will be unable, even if they are willing, to shoulder important community responsibilities at the moment carried"— that is, in this case— by the GLC. Our experience has shown that the boroughs have a poor record of dealing with groups such as ethnic minorities and with those in particular and desperate need, such as the homeless". This is a simple amendment. I believe it will appeal to noble Lords and noble Baronesses in all parts of the House. It would be appalling if this Parliament were to take action which significantly weakened the magnificent work done by charitable, service-providing organisations at a community level to meet the needs of the most deprived in the community. I warmly support the amendment.

Baroness Gardner of Parkes

My Lords, I should like to support this amendment for two reasons. The first is that the first amendment, as has been mentioned, was so widely drawn. It used the phrase, "non profit-making organisations". That has now been refined down to specific bodies registered with the Charities Commission, and that is a very good qualification.

It should be made clear also that this amendment would in no way inhibit the freedom of local authorities to make their own decisions as to those organisations to which they will give their money. I would caution the charities against thinking that this provision would immediately provide them with a large volume of additional funds, because there is no way of knowing whether that will be so. But the amendment will remove the discouragement that would otherwise exist in the Rates Bill and which would almost he enough to prevent any authority from giving to a charity because of the fear that it would lose the right to its own expenditure. It is a good amendment in that sense.

In response to the noble Lord, Lord Ennals, I would say that though he quoted me, I do not believe that I did refer to "gays" and lesbians as he has done, several times. I thought that in my comments I did not detail the type of organisation; and today the noble Baroness, Lady Faithfull, has explained how two bodies would have been registered charities.

Lord Ennals

My Lords, if the noble Baroness refers to column 362 of the Official Report for 30th April, she will find that I was quoting directly from her words.

Baroness Gardner of Parkes

In that case, my Lords, I apologise to the noble Lord. I must re-read the comments in question, but I thought that I had been less specific than that. In any event, I support this amendment as I believe it would give local authorities the option to support the charities and, through the use of charitable associations of the type which my noble friend has mentioned, to multiply the benefit of the money that is made available, in having work done by a great number of volunteers. This is in itself a very cost-effective way of operating, especially in the social services.

Lord Maude of Stratford-upon-Avon

My Lords, I, too, should like to support the principle of the amendment moved by my noble friend Lady Faithfull—and in my case, for one particular reason. The list of proposed and actual cuts made by local authorities to charitable grants had a very familiar ring. We have seen this whenever cuts have been mentioned for many years now. We have seen it on the part of departmental officials. We have seen it on the part of doctors and administrators in the health service. Above all, we have seen it from officials of local government bodies. Whenever there is any talk of cuts and any kind of squeeze is put on them, they invariably respond by recommending cuts in the most popular, sensitive and vulnerable services. As my noble friend has said, in this case they have invariably started with certain grants to charities which are performing useful work which local authorities would otherwise have to do themselves.

Because it has been so narrowly and skilfully drawn, this amendment, or something like it, could make it possible to prevent that kind of response. Otherwise, whenever any pressure is put on local authorities they will invariably, for propaganda and political purposes, go for the most sensitive and popular services, which in many cases involve charitable grants. This is perhaps the best of all reasons for protecting such grants by an amendment of this kind.

Baroness Elliot of Harwood

My Lords, having spent a large part of my life working with voluntary organisations, I should like to support this amendment very strongly. The amount of money saved by ratepayers through the work done by voluntary organisations must run into millions of pounds. It would be crazy for anyone to think that economies can be made by cutting down on the grants made to voluntary organisations, because the local authorities would then have to provide goodness knows how many more services to make up for the loss of those previously provided by voluntary organisations for nothing, or for very little money.

It would be most short-sighted and very unfortunate if we lost the good feeling we have in this country—more than in any other country in the world. The voluntary organisations play an enormous part in the community, in bringing people together, in making new friendships, and in creating new interests. It would be a thousand pities if that were to be interfered with, and I hope that the Minister will agree that this is one of the aspects we must stick to. It is most important that we do nothing to break down the co-operation between local authorities and voluntary organisations.

Lord Seebohm

My Lords, I shall not repeat the arguments that I put forward at Committee stage. The noble Baroness, Lady Faithfull, has enlarged on the most important of them and I only want to point out that this amendment would in no way restrain local authorities from looking at charities with an eagle eye and supporting those which are genuinely giving a service to the community and ensuring that they are still aided. I strongly recommend this amendment.

4.50 p.m.

Lord Marsh

My Lords, the degree of unanimity on this amendment is so unusual and so total that it is with great trepidation that I even ask the Minister questions. I clearly misunderstood the amendment in terms in the same way that the amendment of the noble Lord, Lord Ennals, was clearly misunderstood when we discussed this matter in Committee. I am puzzled. In the arguments which I hear the sincerity is beyond question. No one in this House or in most other places would question the good work done by most of these charities most of the time, some quite outstandingly so. But, while I can understand, and share in, the sincerity of approach to this matter and the concern, for the life of me I cannot understand the logic. This is where I should be grateful if the noble Lord the Minister would enlighten me so that I can join the unanimity and avoid even the faintest suspicion of a jarring note.

It seems to me that, if the purpose of the legislation is to control local authority expenditure, you cannot logically say that certain types of expenditure are sacrosanct. It is not impossible for charities to be profligate any more than it is impossible for anybody else to be profligate. As I thought I understood the legislation—and I stress again that I clearly do not understand it properly—the local authority is still entitled to make grants to charities if it so wishes. It can do so by cutting back in other areas of waste, which is the whole basic purpose of the legislation.

I can totally understand the argument against the legislation. It is very controversial legislation. The opposing arguments to that legislation are perfectly understandable and easily followed. But I cannot understand how one can accept the legislation and then argue this particular amendment. At the end of the day it is for local authorities to run their affairs within the legislation in such a way as to enable them to do that which is necessary by avoiding expenditure which is unnecessary. To suggest that there are certain areas which should be exempt, however good the purpose—because one comes back to the point which I made in Committee—and argue that everything which is desirable is affordable is economic nonsense. That is true of every housewife. She is perfectly aware that she cannot afford to do everything that is worth doing.

What I should like the noble Lord to do is to remove this sense of not belonging which I now suffer from in this gathering—well, I think that I have ceased belonging to part of this House for quite some time past—and to clear my mind of some of these misunderstandings so that I can be taken along the paths of righteousness and shown the truth. As I say, at the moment I understand the sincerity totally, but the logic bewilders me equally totally.

Lord Kilmarnock

My Lords, my name appears on the amendment and I want to say just one or two words. It is very good to know that the noble Baroness, Lady Gardner of Parkes, now gives the amendment her blessing. It is rather sad that the noble Lord, Lord Marsh, has not felt that he can join the rest of us. I do not know whether what I am going to say will help him to belong, but that is what I should like to do.

As I see it, the problem is as follows. The problem of registered charities providing valuable back-up to the social services will stem partly from this Bill and partly from the abolition of the GLC and the MCCs, because the two interact. After 1974, the then Government encouraged the voluntary services to organise on a county basis. The present Government have encouraged the expansion of the voluntary sector, too. But, given the cuts in public expenditure and the rate capping proposed in this Bill, it is most unlikely that district councils will be able to take over the funding of voluntary sector bodies. The effect of the Bill as it stands will be to restrict the capacity of metropolitan district councils, for example, to take up the demands which will be made on them when and if the MCCs are abolished. There are really only two answers to this in my submission. One is to make more central Government money available to charities, and the other is the one proposed in this amendment, which is to exempt local authority contributions to registered charities from rate capping.

It is interesting to note that at a recent voluntary sector organisation conference held in the Grand Committee Room of the House of Commons on 14th March it was a Conservative MP, Mr. Lawler, who said that it was quite wrong that a local authority should be penalised for expenditure on something which eventually saves central Government money—that is the point which I am trying to make to the noble Lord, Lord Marsh—for example, the taking over of the care of long-stay patients, thus enabling the closure of an old and uneconomic hospital. We all know that voluntary sector activities on behalf of local authorities in this field are of the greatest importance. There are of course many other activities which are important, too, but this is simply one instance that I give. The point that I am trying to make is that this type of expenditure, undertaken by local authorities through voluntary organisations, is very often directed at the long-term aim of saving central Government money in other departments; for example, the NHS. On those grounds and on many others, we on these Benches most certainly support this amendment.

Lord Somers

My Lords, I am sorry; I shall not keep the noble Lord, Lord Bellwin, for more than one moment. I am no financial expert, but surely is not the logic of the amendment just this? Local authorities will have to pay for the various services that the charitable organisations are providing. They will have to pay for most of them because most of them are essential to a civilised society, and they will have to pay a great deal more than they would be giving in the way of a grant. I think that that should surely settle the anxieties of my noble friend Lord Marsh as to the logic of the thing. If you are paying less than you would otherwise, then you are saving.

Lord Bellwin

My Lords, I, too, begin by saying that of course the Government support the work done by voluntary bodies. I think that we show that in a very practical way. We fund a large number of voluntary bodies to the extent of £ 150 million a year. There can be no question about it. The amount of Government funding has shown the great, not willingness, but wish that we have for them to continue to extend their activities. But it cannot in any logic be said that all voluntary organisations are equally worthy. We have to consider the kind of voluntary organisations that we are talking about. My noble friend Lady Faithfull talked of the registered charities. So far as this Bill is concerned I think that that is a category about which we have to think carefully.

I very much want to deal with the point raised by the noble Lord, Lord Marsh. It is absolutely apposite to this legislation. But the fact is that I am not without sympathy for the amendment. I say right now that I would propose to take it away and consider what we might come up with at the final stage. The noble Lord is absolutely right. Either you believe that local authorities have the right to decide what they spend their money on or you do not believe that. By taking any particular item out in any way, you are deciding at a central point the priorities for authorities' spending.

My noble friend Lady Faithfull mentioned Leicester, which says that it will have to cut by 50 per cent. its aid to certain charities. It is a very good example. In fact Leicester spent 28 per cent. over GRE and 5 per cent. over its target, so it must be in the range of possible selectees. I do not say that it is, because the final criteria have not been set, but it is that kind of authority.

By definition, the fact that we are talking of high spending authorities shows they have scope to decide, as the noble Lord, Lord Marsh, so properly said, on what they spend. Why when making the great case which we all make—and I join in making it—on behalf of the charities and the voluntary bodies do we have to assume that the authorities will say that the first thing they will decide to reduce is not what it costs them to operate, they will not look at anything on that, but the first thing will be that they will reduce their spending on the voluntary sector? That is what is being said. Because I know the local authorities concerned, I do not happen to believe that when the chips are down that will be their decision. I do not think it will. But I fully understand why, at this stage, they say that this is what they might very well have to do and that is a reality of it.

I think my noble friend Lady Faithfull, as always, makes a powerful case. We discussed this together in some detail. I am concerned for her concerns. She makes a case as well as anybody ever does, especially on this subject. I wanted to say what I have just said because it applies not just to this amendment but to very many others that may well come before your Lordships' House in the next month or two. The fact is that the local authorities are themselves the ones who must decide on what they spend. The fact is if we are talking about high spenders, by definition they have the most room of all. There are other authorities providing the same support for the voluntary sectors, who are not high spenders, who do manage their affairs in certain ways. If we have to go over again the opportunities that exist for some of these authorities who will have to explain why they provide certain services at a cost one, two, three or four times that of like authorities, I must say again that this is where we should be looking when we are talking about the ability to provide services, whether in relation to voluntary bodies or any other.

Having said all that, I think my noble friend makes a good case in many ways. I accept the concern. I said that I would undertake to take this away to see if we could bring back an amendment that would perhaps go, if not all the way then at any rate perhaps some of the way. I cannot make a promise, and that is the way of it, as your Lordships know. But I am certainly sufficiently impressed and I want to look at some way of finding answers. However, as I sit down I say—perhaps for the third time, because at Report stage we do not stand up again and repeat ourselves—that the point I have been making about the opportunities for certain local authorities themselves is a very, very valid one indeed. I hope, if it does nothing else, it will at least have explained to some extent to the noble Lord, Lord Marsh, how come we are following the two paths which do seem to meet at one point.

Baroness Faithfull

My Lords, may I thank the Minister for his reply. We take note of what he says. Indeed, I think I referred to the principles behind the Bill when I introduced this amendment. May I turn to what I might term our rejected and deprived peer, the noble Lord, Lord Marsh, I am glad he has the Minister to support him because I fear he has nobody else to do so, and as an ex-Director of Social Services I really feel I ought to offer him care.

Lord Marsh

My Lords, if I might say so to the noble Baroness, I am grateful for her concern but after the first 20 years or so one gets used to it.

Baroness Faithfull

My Lords, yes, May I say to the noble Lord, Lord Marsh, that I am, as an ex-Director of Social Services and as a member of the Conservative Party, anxious to cut back and for local authorities to keep within a reasonable expenditure. But I would like to take up a point made by my noble friend Lady Elliot: it is cost-effective to support the voluntary organisations. I think this is the point that perhaps the noble Lord, Lord Marsh, has missed out. It is not only financially cost-effect. We are not a completely materialistic world and there are other qualities of life and living which voluntary organisations, in partnership with local authorities, can engender in our society. We would be a poorer country if we had not got the ethics and the ways of the voluntary organisations. Good as the local authorities are, voluntary organisations are able to do things of an innovatory nature which the local authorities cannot. Obviously the noble Lord, Lord Marsh, does not wish to be accepted into care, and therefore I withdraw the offer.

My noble friend the Minister has said that he will take this away and think about it. We will consider carefully what he has to say at the next stage. Therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

5.5 p.m.

Lord Kilmarnock moved Amendment No. 8: Page 3, line 21, after ("expenditure") insert ("excepting any expenditure incurred by a designated authority on the Urban Programme").

The noble Lord said: My Lords, after what the noble Lord, Lord Bellwin, has said about his reluctance that central Government should make any exemptions under this Bill, that it is really a matter for local authorities to decide on their own priorities, perhaps it might appear rather difficult for me to move this amendment at all compellingly, as it strives to make an exemption in favour of the Urban Programme. However, in extenuation of what I seek to do, I would like to point out to the House and to the noble Lord that there are, of course, various areas of local authority expenditure which are already, under existing legislation, exempted from penalty. I refer to police pay and to partnership authorities and in addition to these there are activities which are funded to a very large extent by central Government and therefore may be assumed to have the approval and firm support of central Government. In these cases, the central Government contribution is usually a great deal larger than the local authority contribution, but the local authority contribution is equally vital.

In the case of the Urban Programme, as I am sure your Lordships will all be aware, this is run by the Department of the Environment and it brings central and local government, private and voluntary organisations and local people together to combat social, environmental and economic deprivation in urban areas. In the case of this scheme, the DoE contribute 75 per cent. of the costs of the Urban Programme projects and the local authorities the other 25 per cent.

Many of the inner city authorities which are likely to have their rates capped are among those which the DoE have singled out as being particularly deprived and which have made imaginative and effective use of Urban Programme funding. As the Bill stands, projects at risk include Project Full Employ in Brixton and the Play and Learn project in Sheffield; both aim at ethnic minorities and were recently praised by the DoE in their recent publication, Tackling Racial Disadvantage. Project Full Employ helps young people prepare for and find employment, while Play and Learn draws in West Indian mothers who are deterred from sending their children to established pre-school play groups. Other projects in danger are the Brent Kids' Scrap Bank and North Tyneside's Key Enterprises Workshop, which provides therapeutic employment for mentally ill people, as well as many other projects which the Government have encouraged voluntary and statutory agencies to undertake. In addition, the Urban Programme has encouraged co-operation over inner city policy. This co-operation is unlikely to continue if rate capping blocks the authorities' power to contribute.

I do not think I will go into any more detail at this stage about the Urban Programme, but I think I must really reiterate the point with which I started, which is that if we are talking about exemptions from the rate-capping provisions under this Bill, surely the prime candidates for such exemptions must be those activities and programmes the value of which is clearly already recognised by central Government and which are very largely supported by them. I would like to ask the noble Lord, Lord Bellwin, if he would not agree that it would be a tragedy if some of these things which are really beginning to get off the ground and make some headway against the terrible problems confronted by inner cities should fall through lack of the local authority contribution. I beg to move.

Lord Ennals

My Lords, the noble Lord, Lord Kilmarnock, has made an excellent case. I shall be extremely brief because he has employed all the arguments that I would have used. This initiative was started nearly 20 years ago when I was deeply involved as a Minister at the Home Office. It has been supported by successive governments. If the local authority is unable to pay its 25 per cent., the project simply falls apart. As this is a project initiated by government, it would be a tragedy if that possibility was even contemplated. I therefore warmly support—my name is on the list—the amendment that has been moved.

Lord Beaumont of Whitley

My Lords, I should like to intervene at this moment. Obviously, the whole of this area impinges on the arguments put forward by the noble Lords, Lord Marsh and Lord Bellwin, on the last amendment. I must confess that I had some sympathy with the case that they put forward believing, as I do, wholeheartedly in the giving of as much freedom as possible to local authorities. However, on this amendment, it seems to me that the noble Lords, Lord Kilmarnock and Lord Ennals, have a strong case for putting forward the idea that there should be a special exemption from this general principle.

I repeat that I have sympathy with the principle that the Government are putting forward. It seems to me that there are moments when Parliament is entitled to say that there is a whole area of expenditure that is the province of local government, that it may not spend more than a certain amount but within that amount it has freedom to choose how the money is spent—or not necessarily complete freedom but very large freedom. That is the case, I take it, put forward by the noble Lords, Lord Bellwin and Lord Marsh. It seems to me, however, that Parliament also has the right to say that there are certain specific areas of activity which should not be liable to this, which fall outside the area that we hand over to local government and which we keep in an area that is joint local government-central government. It is therefore subject to a completely different set of rules.

I suggest that the immense priorities that are involved in the urban programme and the need to relieve the poverty and the growing deterioration of our inner cities fall into that category. If the noble Lord, Lord Bellwin, was intending—I do not imply that he necessarily was—to produce the same arguments for this amendment as for the last, I do not think that it will do. This is a different case and a much more powerful one. It is a case that the Government should accept.

Lord Bellwin

My Lords, I certainly agree that it is a different case. I do not agree that it is a more powerful one—quite the opposite. I happen to know a great deal about the urban programme. It is one of my departmental functions. I respectfully suggest that I have been more involved in the past five years with individual schemes of the voluntary sector than most people one might meet walking around the streets, if I may put it that way. I had anticipated that once I had indicated a willingness to consider further the concerns of my noble friend Lady Faithfull about support for registered charities that I should immediately be pressed to look at other cases. This is one of four areas due for discussion on amendments today. One we have dealt with. Another is MENCAP, which is an amendment to be moved by the noble Lord, Lord Ennals. There is the amendment now before the House dealing with the urban programme. Another refers to the probation service.

I say here and now, although not to pre-empt any discussion that might take place, that in the case of MENCAP, which is also a registered charity, I shall take exactly the same approach as I did to the amendment proposed by my noble friend Lady Faithfull. When the noble Lord, Lord Ennals, comes to the amendment, he will know that he does not have to press the case very hard because that is what I propose to do.

However, in the case of the urban programme, and also the amendment that pertains to the probation service, it is my intention, as the noble Lord, Lord Beaumont, rightly presumes, to fall back upon the arguments that I used previously. I consider that argument a very fundamental one. The noble Lord will have recognised I hope the fervour with which I made my case. I believe passionately that in all this the priority of spending must be the local authority priority especially in this case when, as the noble Lord, Lord Kilmarnock, fairly stated, we are talking of a 25 per cent. contribution. Government put up 75 per cent. of the cost; the local authority 25 per cent. only.

I simply do not believe that, having worked so closely over the past five years with almost every authority within the urban programme to which this percentage pertains, they will decide that this is not a priority for them and that they will say that they are unwilling. I remind your Lordships that it is only those authorities that come to be selected. It is not all authorities. It will not be the case that all the authorities that receive funds under the urban programme are those which will necessarily be selected. Far from it—very far from it, come to that.

At the end of the day, they have to decide what is their priority. They have to decide whether there are not ways in which they can find resources by doing things another way. Are we really saying, my Lords, that these authorities, the high spenders, have no possibility of doing what others can do, that they will be so wicked as to say, "We will show them by cutting the deserving voluntary bodies to whom we only pay 25 per cent. rather than that we will look to see why we cannot do things like other people". At least, that is the case for those affected by the amendment. It is a very sad reflection on the opinion that some may have of local authorities. It is not mine. I am still satisfied that, at the end of the day, they will do it that way.

However, it would defeat the whole object of the exercise and the whole object of what we are seeking to do if we were to specify a series of exemptions for local authorities. For us to decide here the priorities for them would be quite wrong. I cannot accept the amendment. I shall accept that put forward by the noble Lord, Lord Ennals, for the reason I have given, to the extent that I shall want to take it away and see what I can come back with, hoping that it will be satisfactory. For the others, it would be wrong. It breaks a fundamental lying behind the whole Bill. For that reason, I cannot accept the amendment.

5.18 p.m.

On Question, Whether the said amendment (No. 8) shall be agreed to?

Their Lordships divided: Contents, 107; Not-Contents, 128.

DIVISION NO. 1
CONTENTS
Airedale, L.	Jeger, B.
Allen of Fallowfield, L.	Jenkins of Putney, L.
Ardwick, L.	Kaldor, L.
Attlee, E.	Kennet, L.
Aylestone, L.	Kilmarnock, L. [Teller.]
Banks, L.	Kirkhill, L.
Beaumont of Whitley, L.	Kirkwood, L.
Bernstein, L.	Leatherland, L.
Beswick, L.	Listowel, E.
Birk, B.	Longford, E.
Blyton, L.	McCarthy, L.
Boston of Faversham, L.	McCluskey, L.
Briginshaw, L.	McIntosh of Haringey, L.
Brooks of Tremorfa, L.	Mackie of Benshie, L.
Bruce of Donington, L.	McNair, L.
Burton of Coventry, B.	Mayhew, L.
Caradon, L.	Milford, L.
Carmichael of Kelvingrove, L.	Molloy, L.
Chelmsford, Bp.	Nicol, B.
Chichester, Bp.	Northfield, L.
Chitnis, L.	Oram, L.
Cledwyn of Penrhos, L.	Phillips, B.
Collison, L.	Pitt of Hampstead, L.
Darling of Hillsborough, L.	Ponsonby of Shulbrede, L.
David, B.	Raglan, L.
Dean of Beswick, L.	Rathcreedan, L.
Diamond, L.	Rhodes, L.
Donaldson of Kingsbridge, L.	Robson of Kiddington, B.
Donnet of Balgay, L.	Rochester, Bp.
Elwyn-Jones, L.	Rochester, L.
Ennals, L. [Teller.]	Sainsbury, L.
Ewart-Biggs, B.	Seear, B.
Ezra, L.	Sefton of Garston, L.
Falkland, V.	Serota, B.
Fisher of Rednal, B.	Shackleton, L.
Fitt, L.	Stallard, L.
Foot, L.	Stamp, L.
Gallacher, L.	Stewart of Alvechurch, B.
George-Brown, L.	Stewart of Fulham, L.
Glenamara, L.	Stoddart of Swindon, L.
Graham of Edmonton, L.	Taylor of Blackburn, L.
Grey, E.	Taylor of Mansfield, L.
Grimond, L.	Tordoff, L.
Hale, L.	Underhill, L.
Hampton, L.	Wallace of Coslany, L.
Hanworth, V.	Walston, L.
Harris of Greenwich, L.	Wells-Pestell, L.
Hatch of Lusby, L.	White, B.
Houghton of Sowerby, L.	Wigoder, L.
Howie of Troon, L.	Willis, L.
Hughes, L.	Winchilsea and Nottingham, E.
Hunt, L.
Jacobson, L.	Winstanley, L.
Jacques, L.	Young of Dartington, L.

NOT-CONTENTS
Abercorn, D.	Chelwood, L.
Airey of Abingdon, B.	Cockfield, L.
Alexander of Tunis, E.	Coleraine, L.
Ampthill, L.	Constantine of Stanmore, L.
Avon, E.	Cork and Orrery, E.
Bathurst, E.	Cox, B.
Belhaven and Stenton, L.	Crawshaw, L.
Bellwin, L.	Cullen of Ashbourne, L.
Belstead, L.	Daventry, V.
Boyd-Carpenter, L.	Davidson, V.
Broxbourne, L.	De Freyne, L.
Bruce-Gardyne, L.	De La Warr, E.
Caccia, L.	Denham, L. [Teller.]
Caithness, E.	Digby, L.
Campbell of Croy, L.	Drumalbyn, L.
Carnegy of Lour, B.	Eccles, V.
Chelmer, L.	Elliot of Harwood, B.

Elton, L.	Morris, L.
Faithfull, B.	Mottistone, L.
Ferrers, E.	Mountgarret, V.
Ferrier, L	Mowbray and Stourton, L.
Fortescue, E.	Napier and Ettrick, L.
Fraser of Kilmorack, L.	Newall, L.
Gainford, L.	Nugent of Guildford, L.
Gardner of Parkes, B.	O'Brien of Lothbury, L.
Gisborough, L.	Orkney, E.
Glanusk, L.	Peyton of Yeovil, L.
Glenarthur, L.	Plummer of St. Marylebone, L.
Grantchester, L.
Gray of Contin, L.	Porritt, L.
Grey of Naunton, L.	Portland, D.
Gridley, L.	Radnor, E.
Hailsham of Saint Marylebone, L.	Rankeillour, L.
	Renwick, L.
Halsbury, E.	Richardson, L.
Hanson, L.	Rochdale, V.
Hayter, L.	Rodney, L.
Hemphill, L.	Romney, E.
Henley, L.	St. Aldwyn, E.
Hertford, M.	Saint Brides, L.
Hives, L.	St. Davids, V.
Holderness, L.	Saint Oswald, L.
Hylton-Foster, B.	Saltoun, Ly.
Inglewood, L.	Sandford, L.
Ingrow, L.	Sandys, L.
Kinloss, Ly.	Sempill, Ly.
Kintore, E.	Skelmersdale, L.
Lane-Fox, B.	Somers, L.
Lauderdale, E.	Strathclyde, L.
Lawrence, L.	Strathspey, L.
Long, V.	Swinton, E. [Teller.]
Loudoun, C.	Terrington, L.
Lucas of Chilworth, L.	Teynham, L.
McAlpine of Moffat, L.	Thomas of Swynnerton, L.
McAlpine of West Green, L.	Tranmire, L.
MacLehose of Beoch, L.	Trefgarne, L.
Macleod of Borve, B.	Trenchard, V.
Mancroft, L.	Trumpington, B.
Margadale, L.	Vaizey, L.
Marsh, L.	Vaux of Harrowden, L.
Maude of Stratford-upon-Avon, L.	Vickers, B.
	Waldegrave, E.
Merrivale, L.	Whitelaw, V.
Mersey, V.	Wise, L.
Milverton, L.	Wynford, L.
Molson, L.

Resolved in the negative, and amendment disagreed to accordingly.

5.27 p.m.

Lord Hunt moved Amendment No. 9: Page 3, line 21, after ("expenditure") insert ("excepting any expenditure incurred by a designated authority on the Probation Service.").

The noble Lord said: My Lords, this amendment has the same general sense and purpose as the two previous amendments and it occurs at the same point in the Bill. Its purpose is to make an exception—I should like to have the attention of the Minister—to the general effect of rate capping on certain vital services. I propose to deploy the arguments in support of this amendment, notwithstanding the logical spanner handed to the Minister by the noble Lord, Lord Marsh, and wielded by the Minister with such passion that he went some way to pre-empt this amendment. If the Minister does not mind my saying so, I take mild exception to that. Under those circumstances it is difficult to press on. I can only say that I am grateful to my noble friend Lord Beaumont for producing what I thought was a very telling argument. The voting on the last amendment gives me some cause for encouragement.

Noble Lords will have noticed that this amendment is not only in my name;it has support and sponsorship from all quarters of your Lordships' House. It relates specifically to the vital role of the probation service in our criminal justice system and the provision of social services which are linked with, and essential to, its tasks within that system. It is our contention that its work must not be restricted by its being required to bear the penalty of rate capping imposed on the expenditure of a local authority designated under the terms of this Bill.

Perhaps I should explain to those of your Lordships who are not familiar with the funding of the probation service that the expenditure is met in two parts, with 20 per cent. being met by the local authority and the remaining 80 per cent. coming from central Government under the rate support grant settlement, with the exception of certain items which are funded 100 per cent. by central government. One example is the cost of seconded probation officers in our prisons, and another example is probation hostels.

If the probation service is not specifically excluded from the consequences of rate capping, it can be taken as virtually certain that their estimates will suffer a share of the cuts made in a designated local authority estimate—indeed, county treasurers will insist upon it—during the negotiations preceding approval by the local area committee. I have very good reason to be aware of the stringencies imposed upon several probation services at the present time, with which I make no quarrel. But the addition of rate capping could make the situation in those designated authorities very serious indeed.

The responsibilities of the probation service have been considerably increased following the Criminal Justice Act. The Home Secretary—and I should like to stress the part of the Home Secretary in this argument—has emphasised the importance of the service in avoiding resort to custodial measures wherever possible. He has recently defined the objectives and priorities for the service and announced a 3 per cent. growth in staffing during this financial year to meet these commitments which include supervision of very many more offenders in the community following his decision to lower the threshold for parole. Your Lordships will remember that we had a recent debate on that subject. My forecast is that it will be the resources to meet those commitments which will be denied or severely restricted by rate capping. I am referring to premises; to transport and fuel; to equipment of very many different kinds for day centers; to community service orders; to intermediate treatment schemes, and lastly—but perhaps not least—statutory support for volunteers engaged in supporting the probation service in carrying out its tasks.

It simply does not make sense to make it possible for a designated local authority to shortchange its probation service to the detriment of law and order, and all the less so because those areas upon which rate capping is likely to be imposed by designation are those very areas of greatest social need where the problems of delinquency and crime loom largest. They are the very areas where the work of the probation service is of the most vital importance, the very areas where volunteer support for the service and making provision for the cost of that support is most needed for intermediate treatment schemes, for example, with which I have a great deal to do. That support would be the very first casualty of cuts in probation budgets in designated authority areas. That is just one example of the social harm that would be inflicted if this amendment were not agreed to.

It is worth remembering that this service is part of our law and order system. Unlike the police service, its finances are not safeguarded—those of the police service are safeguarded under the Police Act 1964 and the Local Government Finance Act 1982—and it is very important that they should be safeguarded. We must remember that the central government contribution is 80 per cent. in most cases and 100 per cent. in others and that should not be touched or affected in working out agreed local budgets by county treasurers and local finance and general purposes committees. I cannot help feeling that this amendment is of a different order—if my noble friend Lord Kilmarnock will forgive me for saying so—from even that which concerns the urban programme. Law and order is not a local matter; it is a matter of national concern, and for that reason I hope that the amendment will command support in all quarters of the House. I beg to move.

Baroness Faithfull

My Lords, I rise to support this amendment but in a slightly different way from that put forward by the noble Lord, Lord Hunt, Managerially, the funding of the probation service is, to put it mildly, a muddle. First, as the noble Lord, Lord Hunt, has said, the local authority pays 20 per cent. and the Home Office pays 80 per cent. Meanwhile, the local authority has no jurisdiction—and rightly so—over the probation service. In many areas there is a local authority representative on the magistrates' committee, which is the committee which controls, helps and guides the probation officers. Therefore, there is no sense of accountability from the point of view of the local authority to the probation service.

Like the noble Lord, Lord Hunt, I very much fear that, as there is no accountability and as managerially the local authority has no say in the way in which the probation service is run, it is possible that it may well cut that 20 per cent. It seems to me that it would be quite wrong for the probation service to be cut. But let us suppose for argument's sake that the local authority does cut by 20 per cent. What will the Home Office do? Will the Home Office agree—in fact it has no option but to agree—if the local authority cuts by 20 per cent.? What will the Home Office do if the probation service is not able to carry out the duties which were laid down and brought out by the Home Office only a very short time ago? Will not the Home Office be in a very serious dilemma?

I have spoken to the noble Lord, Lord Allen of Abbeydale, who we all respect and know as a former head of the Home Office. I know that were he here he would be speaking along the same lines as I am speaking, because he feels that managerially the probation service needs to be looked at, and looked at again. I would ask my noble friend the Minister whether it is not possible to take this opportunity to put the probation service on a proper footing such as that of the police, not necessarily by the 20 per cent. being paid by the local authority, but by the Home Office. I end by asking—as I did earlier—what would the Home Office do if the local authorities cut by 20 per cent. and the probation service was unable to meet its responsibilities as laid down in the paper which the Home Office has just issued?

Lord Boyd-Carpenter

My Lords, there is a common thread running through this and one or two previous amendments, and it is a rather curious thread in view of the general attitude of noble Lords opposite as defenders and supporters of local government. It is the clear implication of all these amendments that a local authority, if it is ratecapped, will immediately concentrate the reduction of its expenditure on these particularly worthwhile areas.

It may be that there are local authorities which, in a wholly cynical way, would decide to continue their many extravagances. Indeed, there is hardly a local authority in the country which does not have extravagances that it could well cut and should cut. But to the suggestion that these local authorities would prefer, as a matter of deliberate policy, to cut the worthy objects mentioned in these amendments, I can only say that if that view of local government mentality is right, it knocks a good deal of the glamour off the appeal to protect local democracy. I hope and believe it also means that local authorities who behave like that will be out on their neck after the next local government elections, because it would be outrageous behaviour and behaviour which I do not think the electors would be prepared to support.

Therefore, I suggest to your Lordships that if we move—and I think that we are bound to do so—under this Bill to control local government expenditure, then to take out of the area that is controlled various worthy causes in the fear (and it is no more than the fear) that local authorities, or some of them, will act so irresponsibly as to cause them to cut this rather than their other manifold expenditures, would seem to indicate that we are conveying from this House a very severe stricture and a very severe criticism on the whole operation of local government in this country. In other words, these amendments suggest a lack of confidence in local authorities and a lack of confidence in their desire to do the right thing. Noble Lords who take that view may turn out to be right, but I think we should allow this matter to be put to the test. I do not go along with my noble friend Lady Faithfull in the belief that every penny spent on the probation service is sacred. I am sure that there could be some economies there, too.

Lord Somers

My Lords, I sympathise with the attitude of the noble Lord, Lord Bellwin, that he does not want to interfere with local government decisions as to what they should spend their money on. The noble Lord, Lord Boyd-Carpenter, has just referred to several worthy objects. That may be so, but surely there is a difference here. The probation service represents the law of the land and surely that is something that overrides local borders altogether. I should have said that in this particular instance there is something that local government opinions or decisions should not be allowed to influence. I hope that the Government will decide to accept the amendment.

5.42 p.m.

Lord Wells-Pestell

My Lords, I hope that the noble Lord the Minister will make amends for making a decision in respect of this amendment before he had heard the arguments. I believe that the best way to do that—and I say this with great kindness—would be for him to take back this amendment, as he has taken back Amendment No. 7, and have another look at it. It is quite clear that anyone who supports this amendment to the point of saying that the probation service must suffer along with other organisations clearly does not know the structure of the probation service and the contribution that it is making to the people of this country.

We have a Home Secretary who, in his statement of priorities and objectives, has made it perfectly clear what he wants to see the probation service do. The noble Baroness knows that local authorities will be tempted; she said that as they had no authority, they could well cut their contribution to the probation service by the whole of the 20 per cent. that they give, and some of us know that there are local authorities which will do so. It is no good we, as a society, grumbling, moaning and complaining about the crimes being committed by young people in the community unless we provide this service to help them overcome their anti-social behaviour.

My noble friend Lord Hunt mentioned community service orders. If ever anything has been successful in the treatment of young delinquents it has been the community service order. These young delinquents could well suffer—and the noble Lord the Minister knows that this is right—if fewer community service orders are made. They are the one thing that stands out as a success. My noble friend Lord Hunt has said all that needs to be said, and I shall not take up any more time other than to ask the Minister to take back this amendment and see whether the Home Office would welcome this happening to the probation service. I do not think it would for one moment. The Home Office is much more likely to say that such expenditure ought to be exempt in view of the fact that local authorities contribute only 20 per cent. as it is.

Lord Bellwin

My Lords, first, I ought to put one or two matters straight; but before doing so, I certainly take the point made by the noble Lord, Lord Hunt, when he objected to my having referred to this amendment and enveloping it with the others. I certainly apologise. I think that everyone would agree that the four amendments cover the same general ground. My enthusiasm carried me away. Certainly, the noble Lord's point is valid and I accept it, and I apologise unreservedly to him.

However, here we are talking of a service, and there there is no question about its desirability. Until I came to your Lordships' House I was an active magistrate for 15 years, so I know better than most the value of the probation service. There is no question at all but that the Government are whole-heartedly in favour of the work that it does, and they understand what it does. There is no argument at all about that. In many ways, we have shown firm evidence of our support for the service, and we stand by that. But, as my noble friend Lady Faithfull reminded us, the Home Office provides 80 per cent. of the cost of running the probation service. So we are talking here of 20 per cent. which the local authority provides. All else apart, it means that for every ₣1 which a local authority would want to save, it would have to cut ₣5. If it decided that this service was such a low priority that it would do away with it rather than anything else, it would have to find ₣5 for every ₣1 that it wanted to save. However, it goes further than that.

Lord Ennals

My Lords, I should like to ask the Minister a very simple question. Let us suppose that a local authority decided that it would not pay the 20 per cent. Would the Home Office pay 100 per cent., or would it allow a local authority to do without the probation service altogether?

Lord Bellwin

My Lords, that is the very point to which I was about to come. This is a matter which is very much misunderstood. The fact is that in this case a local authority cannot unilaterally decide to cut the probation service budget. It cannot do that. The budget is a matter for the local authority to agree with the probation committee, which is a statutory committee of magistrates, and the authority may only appeal to the Home Secretary if it is then dissatisfied with the decision. This is one particular area that falls almost outside all that we are talking about. It is only inside it to the extent of 20 per cent.; but, as I have been reminded, it is a fact that a local authority cannot act unilaterally in that way, even as regards the 20 per cent. of spending. I wonder whether your Lordships know that that is so, because all else apart it is very relevant.

I return to my earlier point of the degree of central intervention that it is felt proper to make. It is in no way to do with the desirability of this service, which we wholeheartedly support. The fact is that central government do not want to be entangled even deeper in local affairs. We think that the results of rate limitation will not be the kind of cuts set out here, but the saving of the cost of operating by this small number of from 12 to 20 authorities throughout the whole of the country. I take the point made by the noble Lord, Lord Hunt, that they would tend to be those authorities where the probation service is most active; but it is a small number of authorities. I do not think that we need this amendment to protect the probation service—not least because of the points I have made, especially about the practical way in which it works and in which its function is directed through the magistrates' courts.

Baroness Fisher of Rednal

My Lords, briefly, I should like to ask the Minister seriously to consider this matter, bearing in mind the probation services which are being run by the metropolitan counties. I have great knowledge of the West Midlands, where the probation service is now a West Midlands county service. There is grave concern not only that rate capping will apply to the probation services but, with the abolition of the metropolitan counties, the services will have another serious concern. We cannot do anything about that through the ballot box, with all due respect to the noble Lord. Lord Boyd-Carpenter, because we know that we shall have a paving Bill soon which will do away with a vote regarding the metropolitan counties. If the Minister is not accepting the amendment, I would ask him to consider the serious concern that is felt in the metropolitan counties regarding the probation services.

Lord Bellwin

My Lords, by leave of the House—and we must remind ourselves that we are on Report stage—in fact that will not need to be a concern. We shall come to that when we debate the paving Bill, but the same funds and grants which would at present go to the metropolitan counties for the provisions of services at that time will go to the district authorities, who will then have the same ability to decide whether that is what they want to decide as a priority. But I would come back in the case of the probation service to the point I made a moment ago, that in this one particular function the authority is not entirely as free as some might think it ought to be.

Lord Jacques

My Lords, while the authority is not free, in practice it has a great deal of influence. When the local authority has to economise, it circulates the spending committees and tells them they have to economise. Since the probation committee is a spending committee it would come under that pressure. What we are trying to do is to take it away from that pressure for the reasons which have been given.

Lord Hunt

My Lords, we have had a useful debate on this amendment, and I am grateful to all those who have contributed. I should like to preface any brief remarks that I have to make by thanking the Minister for his fulsome apology, which I gratefully accept. It must have been that logical spanner which it must have been tempting to wield to bash amendments in all directions, past and present.

It is clear from the tenor of the interventions made that there is a lot of support for this amendment. I turn to the noble Lord, Lord Boyd-Carpenter. He includes, embraces, this amendment concerning the probation service with "other worthy causes". I think that that is the understatement of the century. This is an essential element in our law and order system in which the Home Secretary has a vitally responsible role to play, which he does by laying down the priorities and by contributing largely from the Home Office to the costs of that service; in some cases 100 per cent. I am grateful to the noble Lord, Lord Somers, for making that point for me, but I make it again.

I agree with my noble friend opposite—if I may call her so—Lady Faithfull, that the funding of the service is illogical and in that sense in a muddle. Of course it perhaps does not strictly affect this amendment. I should like to comment on the Minister's reference to the appeal that is open to the probation committee—composed, as he says, of magistrates, an independent committee—to the Home Secretary if they cannot get agreement on the budget drawn up between the committee and the finance committee of the local authority.

I should like the Minister to tell me, if he can, of any single instance within the span of this and the last Government where such an appeal has been upheld by the Home Secretary. I believe there to be no such instance. It is almost axiomatic that an appeal, in the circumstances of present financial stringency, for the probation committee's budget to be larger than the local finance committee wishes would undoubtedly be turned down by the Home Secretary. Therefore, I have no confidence in that.

The noble Lord, Lord Boyd-Carpenter, suggests that from this side there is lack of confidence in the discretionary good sense of local authorities. I would rather say that our concern in this amendment stems from our deep concern about law and order. That is the whole point of it.

Lord Boyd-Carpenter

My Lords, would the noble Lord allow me? If the noble Lord's concern stems from a deep concern about law and order, is he saying that he has no confidence that the local authorities concerned would have a similar concern?

Lord Hunt

My Lords, under severe pressure, as has been said for me, they may well make cuts which are detrimental to law and order in areas of great social need, which has to do with the background of the rate-capping designation. I think there is nothing more for me to do—and I have a duty to do it—except divide the House on this amendment.

5.56 p.m.

On Question, Whether the said amendment (No. 9) shall be agreed to?

Their Lordships divided: Contents, 110; Not-Contents, 117.

DIVISION NO. 2
CONTENTS
Airedale, L.	Fitt, L.
Allen of Abbeydale, L.	Foot, L.
Allen of Fallowfield, L.	Gallacher, L.
Ardwick, L.	Glenamara, L.
Attlee, E.	Graham of Edmonton, L.
Auckland, L.	Grey, E.
Aylestone, L.	Grey of Naunton, L.
Banks, L.	Grimond, L.
Beaumont of Whitley, L.	Hale, L.
Bernstein, L.	Hampton, L.
Beswick, L.	Hanworth, V.
Birk, B.	Harris of Greenwich, L.
Blyton, L.	Hatch of Lusby, L.
Briginshaw, L.	Henderson of Brompton, L.
Brooks of Tremorfa, L.	Hooson, L.
Bruce of Donington, L.	Houghton of Sowerby, L.
Burton of Coventry, B.	Howie of Troon, L.
Caradon, L.	Hughes, L.
Carmichael of Kelvingrove, L.	Hunt, L. [Teller.]
Chelmsford, Bp.	Jacobson, L.
Chichester, Bp.	Jacques, L.
Chitnis, L.	Jeger, B.
Cledwyn of Penrhos, L.	Jenkins of Putney, L.
Collison, L.	Kagan, L.
Darcy (de Knayth), B.	Kennet, L.
Darling of Hillsborough, L.	Kilmarnock, L.
David, B.	Kinross, Ly.
De Freyne, L.	Kirkhill, L.
Diamond, L.	Kirkwood, L.
Elwyn-Jones, L.	Leatherland, L.
Ennals, L. [Teller.]	Listowel, E.
Ewart-Biggs, B.	Loudoun, C.
Ezra, L.	McIntosh of Haringey, L.
Faithfull, B.	McNair, L.
Falkland, V.	Masham of Ilton, B.
Fisher of Rednal, B.	Mayhew, L.

Milford, L.	Stewart of Alvechurch, B.
Molloy, L.	Stewart of Fulham, L.
Morris, L.	Stoddart of Swindon, L.
Mulley, L.	Taylor of Blackburn, L.
Nicol, B.	Taylor of Gryfe, L.
Oram, L.	Taylor of Mansfield, L.
Phillips, B.	Tordoff, L.
Pitt of Hampstead, L.	Underhill, L.
Ponsonby of Shulbrede, L.	Wallace of Coslany, L.
Raglan, L.	Walston, L.
Rathcreedan, L.	Wells-Pestell, L.
Rhodes, L.	Whaddon, L.
Rochester, Bp.	White, B.
Rochester, L.	Wigoder, L.
Sainsbury, L.	Willis, L.
Saint Brides, L.	Winchilsea and Nottingham, E.
Seear, B.
Sefton of Garston, L.	Winstanley, L.
Serota, B.	Young of Dartington, L.
Stallard, L.

NOT-CONTENTS
Airey of Abingdon, B.	Lindsey and Abingdon, E.
Alexander of Tunis, E.	Long, V.
Avon, E.	Lucas of Chilworth, L.
Bathurst, E.	McAlpine of Moffat, L.
Belhaven and Stenton, L.	McAlpine of West Green, L.
Bellwin, L.	MacLehose of Beoch, L.
Bestead, L.	Mancroft, L.
Bolton, L.	Margadale, L.
Boyd-Carpenter, L.	Marsh, L.
Brabazon of Tara, L.	Massereene and Ferrard, V.
Brougham and Vaux, L.	Maude of Stratford-upon-Avon, L.
Broxbourne, L.
Caccia, L.	Merrivale, L.
Caithness, E.	Mersey, V.
Campbell of Croy, L.	Middleton, L.
Carnegy of Lour, B.	Milverton, L.
Chelmer, L.	Mottistone, L.
Chelwood, L.	Mowbray and Stourton, L.
Cockfield, L.	Napier and Ettrick, L.
Coleraine, L.	Nugent of Guildford, L.
Colwyn, L.	O'Brien of Lothbury, L.
Constantine of Stanmore, L.	Orkney, E.
Cork and Orrery, E.	Pender, L.
Cox, B.	Peyton of Yeovil, L.
Cullen of Ashbourne, L.	Platt of Writtle, B.
Daventry, V.	Portland, D.
Davidson, V.	Radnor, E.
De La Warr, E.	Rankeillour, L.
Denham, L. [Teller.]	Reay, L.
Dilhorne, V.	Renwick, L.
Drumalbyn, L.	Richardson, L.
Eccles, V.	Rochdale, V.
Elton, L.	Rodney, L.
Ferrier, L.	Romney, E.
Fortescue, E.	St. Aldwyn, E.
Fraser of Kilmorack, L.	St. Davids, V.
Gainford, L.	Saltoun, Ly.
Gardner of Parkes, B.	Sandford, L.
Gisborough, L.	Shannon, E.
Glanusk, L.	Skelmersdale, L.
Glenarthur, L.	Stamp, L.
Grantchester, L.	Strathclyde, L.
Gray of Contin, L.	Strathspey, L.
Gridley, L.	Swinton, E. [Teller.]
Hailsham of Saint Marylebone, L.	Terrington, L.
	Teynham, L.
Halsbury, E.	Thomas of Swynnerton, L.
Hanson, L.	Tranmire, L.
Harmar-Nicholls, L.	Trefgarne, L.
Hemphill, L.	Trenchard, V.
Henley, L.	Trumpington, B.
Hives, L.	Vaizey, L.
Holderness, L.	Vaux of Harrowden, L.
Hylton-Foster, B.	Waldegrave, E.
Inglewood, L.	Westbury, L.
Ingrow, L.	Whitelaw, V.
Kintore, E.	Windlesham, 1.
Lane-Fox, B.	Wise, l.
Lauderdale, E.	Wynford, L.
Lawrence, L.

Resolved in the negative, and amendment disagreed to accordingly.

6.5 p.m.

Lord Graham of Edmontonmoved Amendment No. 10: 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 the House of Commons").

The noble Lord said: My Lords, Amendment No. 10 substantially returns to the issues we had earlier concerning the new attempt to obtain some kind of parliamentary approval in respect of the orders. At Committee stage the series of amendments were related to approval in both Houses. This is another attempt concerning approval which is being sought for only the House of Commons. The Minister has been at pains more than once, and in many of the debates, to indicate the principles that the Government have in mind, and yet has refused to have them written on the face of the Bill. We are still puzzled as to why the Minister, having used certain words about having confidence in local government, is unwilling to have that tested on the floor of the Commons whereby, quite clearly, with parliamentary arithmetic being what it is, there is little danger of the Government of the day having their will overturned: but there would be the opportunity of having these matters debated, if not at length because that is a question of negotiation. I very much hope that the Minister may have some kind words to say concerning this.

The Minister has more than once talked in terms of delay or the difficulty and the burdensome nature of these amendments in another place. I simply want to say to the Minister that it is much better to get it right than to get it quickly. Even if we are talking in terms of 10 or 12 authorities, a maximum of perhaps 20 hours of parliamentary time, we think that that is a small price in order to justify these matters outside the House. I beg to move.

Lord Bellwin

My Lords, this amendment is very similar to Amendment No. 42 which was negatived in Committee. The only change that has been made is that the amendment no longer requires the approval of this House to the principles on which expenditure levels are set but only the approval of the other place. It would have been objectionable to involve this House in matters which are the privilege of another place, but that was not the main ground on which I opposed the earlier amendment in Committee. There were other reasons. One was practical; the other a matter of principle.

I made a fairly long statement on an earlier amendment about the desirability of involving Parliament in the many decisions leading up to the final process of rate limitation, and I do not want to detain your Lordships with a repetition of that statement. The essence of it was that it is wrong to provide for detailed statutory scrutiny of these decisions. The Secretary of State must be held to account in the usual way for what he does.

I believe it would be particularly inappropriate to require the other place to become involved at this stage. We are proposing that authorities should have their expenditure levels determined according to general principles. The principles will have been chosen on an objective basis, and in our view the right time for Parliament to be involved in the process is when there is disagreement over the rate limit proposed to be set.

What is more, the expenditure levels will not be the last word. The amendment asks for parliamentary endorsement of them. But the expenditure levels will be open to discussion with authorities through the derogation procedure. They could be changed by agreement between the Secretary of State and the local authority concerned. Only after this stage comes the calculation of a rate limit. If that is not agreed it will then have to come to Parliament. That is the right stage for the other place to consider an order.

If I may, I turn to practicality—and may I remind your Lordships of the severe timetable problem? Selection of authorities and thereafter the determination of expenditure levels will depend crucially on the budgets for the relevant rate limitation year. My department does not receive these till May, and they have to be checked. The selection process itself is bound to take a little time. But it is very important that authorities should know of their selection and proposed expenditure level before the holiday season if the derogation procedure is to have sufficient time to allow for it. To impose a need for a parliamentary debate would cause timing difficulties, giving the local authorities less time than we should like for them to make their case. I do not believe this amendment is justified and I hope that the noble Lord will feel able to withdraw it.

Lord Graham of Edmonton

My Lords, I am far from satisfied because the Minister again pleads shortage of time. The timetable is made by the Minister. He points out quite rightly that in the earlier part of the year there are certain deadlines to be met, but frankly I believe that the timetable is not one that cannot be adapted. The Minister also makes great play about the time-honoured way in which the Secretary of State has always had powers of this kind. There have previously been no powers of this kind. We are treading new ground in respect of the sovereignty of Parliament over local government. I am not arguing about the order or the hierarchy or, ultimately, who has the right to lay down that local government, if not an instrument of Parliament, is certainly inferior when the parliamentary process is superior in respect of many of these matters. When the Minister and the Government are breaking new ground they should be prepared to consider a new device. We are far from satisfied. We shall consult others outside, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Ennals moved Amendment No. 11: Page 3, line 25, after ("State") insert ("which shall include a Statement exempting from calculation any expenditure on social services to those groups which the Secretary of State for Health and Social Services shall define from time to time as priority groups, but which shall include people with mental disorder, as defined in section 1 of the Mental Health Act 1983, and elderly people over 75").

The noble Lord said: My Lords, I believe it would be for the benefit of the House if I spoke also to Amendments Nos. 15 and 19: Amendment No. 15: Page 4, line 10, after ("requirements") insert ("including the expenditure on priority groups as set out in subsection (9) below.").

Amendment No. 19: Page 4, line 22, at end insert— (" (9) The Secretary of State shall exempt from calculations all expenditure by a local authority on social services to the priority groups, including services provided by registered charities as its agents. The local authority shall raise the rate as agreed with the Secretary of State under subsection (1) above and in addition a rate at the local authority's own discretion to cover its expenditure on the priority groups.").

These amendments go together. I am extremely grateful to the Minister for having said in advance that he would take this amendment away and see whether at Third Reading he could come up with something which embodied the principle, even though the words were different. Therefore, that means that I do not need to make a speech. I sense that if I were to make a speech it is always possible that I might say something with which he disagreed. Therefore, I shall say nothing with which he can disagree, except to make one simple request.

He has said that he will bring back something which deals with the problems of people with mental disorders and elderly people over the age of 75. If he were prepared to consult me, I should be delighted to have the opportunity of an exchange with him so that we do not need to have any argument when we reach Third Reading. I am most grateful to the noble Lord, I beg to move.

Lord Kilmarnock

My Lords, I was delighted to hear the news that the noble Lord, Lord Ennals, had to give us. On the same grounds I will say extremely little, although there is one point I should like to make seriously to the noble Lord, Lord Bellwin. Care in the community, which is the real objective of this series of amendments, is a policy which has been promoted by successive Governments, as we very well know, since 1959. The priority groups mentioned in this group of amendments are those chosen for this purpose and singled out in the Care in the Community document of 1981. They are the mentally handicapped, the mentally ill and the elderly. The document is well known. The objective is praiseworthy. I think we all agree with it and it was originally thought that there would be some overall savings. This was one of the objectives.

In the long run this is likely to be the case, but what is increasingly emerging in this transfer from the old long stay hospitals back to the community is that, in the short run and before the old hospitals can be fully closed and while new community facilities are being built or converted, in the world outside almost inevitably there will be an increase in cost. This is something that we have to face: to get this more humanitarian, more acceptable provision for these people off the ground and to make long-term savings in the old National Health Service stock there is bound to be some increase in costs in the intervening period. It is not only I who make that point but the National Association of Health Authorities has been into the matter carefully and has made it also.

Joint finance has helped and that is why we proposed at Committee a string of amendments exempting joint finance arrangements. The Government did not like that, but in 1983 the health and social services and social security adjudications legislation eased the joint finance conditions by extending the tapers and by admitting voluntary organisations to the joint consultative committees. All that was fine; it was a progressive step in itself in that Act, but all this will be lost, it will be useless, if local authorities are reluctant to come forward for fear of rate capping when the tapering period is over. Voluntary organisations will be unable to come forward if they have to go out of business.

That is the essence of the case. The Government themselves have backed this policy which has support in all parts of the country and in all parts of your Lordships' House. It is simply a question of trying to reconcile two different arms or strands of the Govenment's policy. On the one hand, the Government want to go ahead with care in the community, and on the other hand certain byproducts of this Bill are likely to inhibit this development in a way which I am sure the Government do not want. This is the basis of our case in these amendments and I was delighted to hear a hint from the noble Lord, Lord Ennals, that the noble Lord. Lord Bellwin, may have some good news for us.

Lord Bellwin

Yes, my Lords, I said earlier what we proposed about this amendment and the one which my noble friend Lady Faithfull mentioned. In making the point that the noble Lord, Lord Kilmarnock, does, I have to say that it is not so much for this amendment as for the underlying theology of what we are talking about that I still believe firmly that the opportunities that will exist for authorities who will be selected by definition will be greater than for other authorities, to enable them not to have to say that they cannot afford to spend money on some of these so worthwile functions which in no way do I belittle. Quite the contrary; I help to work within them so I would hardly do that.

But they will have to make decisions about what they really want to do. If we succeed in that we shall have taken everyone a long way down the road and we do not have to lose good services or any part of them. Indeed, I want them to expand more if the need is more. That is the point that the noble Lord, Lord Kilmarnock, has just made.

I, too, feel that I have to restate the principles; but having said that, the noble Lord, Lord Ennals, like my noble friend Lady Faithfull, knows that I want to take this back to consider it and have some further thought. I cannot make a commitment for that is not how it works, but we are seriously willing to consider this for the registered charities. Your Lordships will have to see what we come back with. I will certainly talk to the noble Lord about it beforehand and to my noble friend as well. But a commitment I cannot make. We are certainly sympathetic and that is why we want to deal with it in the way we are suggesting.

Lord Broxbourne

My Lords, I wonder whether my noble friend would consider this possible suggestion in relation to this amendment? This is an amendment with two prongs: those suffering from mental disorder as statutorily defined, and elderly people over the age of 75. These two categories are very different in many respects. Mental disorder is something which makes those who suffer from it a uniquely vulnerable section of the community. If my noble friend is not able to give effect to the whole of a suggestion such as this, he might consider severing it and simply confining the directions which he is asked to give in respect of priority groups to those suffering from mental disorder. It would obviously have a very substantial financial effect in the way that my noble friend would wish and it would also limit the curtailment of local authority discretion to that extent. I simply throw this out as a consideration to which my noble friend may be good enough to give some thought.

Lord Bellwin

My Lords, by leave of the House, my difficulty with what my noble friend Lord Broxbourne has said is that I am thinking along rather different lines. I am thinking more to the principles concerned in this particular category of services. Registered charities is the area of which we are thinking. At the end of the day we still do not want to be in the business of deciding what specific services should or should not be favoured (if that is the right word, which I suspect it is not) but we want rather to look at it on a broader front. That is why if I am slightly hesitant my noble friend will bear with me. But I think that this is the proper way to do what we have in mind if it meets the bill and if I am able to do it—and I cannot guarantee that I am. But we shall try. I am sorry to be so vague on this. It is because we are in an area of some uncertainty.

Lord Kilmarnock

My Lords, when the noble Lord undertakes his deliberations will be bear in mind that this amendment specifies, in the case of the elderly, those over 75 and not those over 65? This, as he will be well aware, is the age at which the cost to the National Health Service escalates enormously; it goes up to about six times that for a young or middle-aged person. Will be bear that in mind?

Lord Ennals

My Lords, in view of the noble Lord's helpful remarks, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Speaker (The Earl of Listowel)

My Lords, before I call the next amendment, I should point out to the House that if Amendment No. 12 is agreed to I cannot call Amendment No. 13.

6.23 p.m.

Lord Graham of Edmonton moved Amendment No. 12: 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 Lord said: My Lords, with respect, I think that the noble Earl the Deputy Speaker will be calling Amendment No. 13, because I do not think that No. 12 will be agreed to. Amendment No. 12 is comparable to the earlier Amendments Nos. 3, 5 and 6 and relates to the vexed question of the Minister and the Government being unwilling to be more precise concerning the principles that will be applied to authorities. We still maintain that there ought to be maximum safeguards for local authorities against excessive use of the Secretary of State's discretion—and I say this candidly—in a politically biased fashion, certainly excluding from that charge the Minister who is answering these debates.

Members of the Government Benches in debates have been quite clear in indicating their detestation of the manner in which some local authorities have carried out their duties and have tarred them—and they have used the word more than once—by calling them Marxist councils. In my view, this is a clear indication of the way in which some people might be thinking in terms of exercising what I should have thought was a bad discretion. We come back to the point that there is a need to apply the same principles to all authorities. As far as we are concerned, our amendment would seek to do that. I beg to move.

Lord Bellwin

My Lords, I do not want to say too much on this, although if the noble Lord, Lord Graham of Edmonton, wishes to go into it deeply I will have to do so. We have been over this argument several times before. It is our intention to operate so far as possible on generally applicable principles, but the Secretary of State, we believe, should not be restricted in that way and the fact is that we could need a power to operate on principles applying to classes of authorities so that we can treat all authorities fairly and equally. That is really what we are all about in this. I believe that the amendment is founded on a fear, which I believe is a misplaced fear, that we wish to treat some authorities unfairly. That just is not the case. What we wish to do is to be able to take account of all the factors involved—which I will elaborate upon if your Lordships feel I ought to do so—and it is for this reason that the noble Lord, Lord Graham, predicted when moving the amendment that we should be unable to accept it.

Lord Graham of Edmonton

My Lords, I intend to withdraw this amendment; but the Minister tempts me to point out that the history of the Government in attempting to refashion and redesign their legislation in the rates field over the past three to four years since the Local Government Planning and Land Act 1980 is studded with new formulae which appeared to meet the case and then, exceptions having been found, amendments were made to it.

I would say simply that if one Conservative authority was the sole representative of its class having been caught as an over-spender by some fluke or because of a change in political control, that authority could not be let off just because it was the only representative of its class among the designated authorities. Flukes have happened before and we have seen the way in which the Government have sought to get themselves off the hook with their own supporters by bringing forward to Parliament amendments which on the face of them were designed to be general but which collectively have not been beneficial politically. We are strongly suspicious that that sort of thing can happen again. With those words, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Bellwin moved Amendment No. 13: [Printed earlier: col. 512.]

The noble Lord said: My Lords, I have spoken to this, and beg to move.

On Question, amendment agreed to.

Baroness Nicol moved Amendment No. 14: Page 4, line 2, leave out ("or smaller").

The noble Baroness said: My Lords, with the leave of the House and the support of others who have put their names to the amendment, I should like to move this Amendment No. 14 and to speak to Amendments Nos. 16 and 17. Amendment No. 16: Page 4, line 18, at end insert— ("( ) Where pursuant to subsection (5) above the Secretary of State has re-determined a level at a greater amount the authority in question may elect that for the purposes of this Act the level originally determined shall be applicable and on its making such an election as aforesaid the provisions of subsections (6) and (7) of this section shall be deemed not to apply to that authority."). Amendment No. 17: Page 4, line 20 at end insert ("together with (in the case of a decision to re-determine the level at a smaller amount) a statement as to the considerations leading to such decision and a statement as to whether, or the extent to which, such decision shall affect that authority's ability to fulfil its duties under any other Act or Acts (whether or not passed before the passing of this Act)").

In Committee the noble Lord, Lord Bellwin, drew attention to the possibility of an authority saying that it had nothing to lose by appealing for a redetermination if the right of Government to redetermine at a lower level were deleted. In a subsequent letter to me he said—and I should like at this stage to thank him for a very helpful letter—and I quote: We will not use this power to punish authorities nor is it our intention to discourage authorities with a genuine case to make. They need have no worry on that score. What we sought to avoid is simply providing a positive encouragement for authorities to pursue a frivolous application on the view that they had nothing to lose". Very few authorities have the time or the manpower to undertake frivolous applications. The Minister constantly tells us that the majority of authorities are reasonable and willing to try to co-operate. Why can we not accept this as true, and proceed from that point? We are being asked to take on trust the good intentions of this Secretary of State—and I am sure that we do—but we are also having to take on trust at the same time the good intentions of future Secretaries of State. This is perhaps something which should give us pause for thought. The danger of leaving in the power to reduce the determination is that authorities in genuine difficulty will be deterred from making an application for a redetermination because of the implied threat of reduction and because by renegotiation of even a small amount they will lose whatever protection the, as yet, undefined principles may offer.

We have spent a long time this afternoon discussing principles and what they might be, and I took out my pen prepared to delete that paragraph but as time went on it appeared that, to say the least, the principles were still very flexible and so we do not know whether or not they will provide protection in these circumstances. As the redetermination process is now drafted, the local authority has nothing to gain and everything to lose by asking for a redetermination. The problem is though that if an authority were not to apply for a redetermination it could prejudice its chances of any action against the Secretary of State for acting unreasonably in the use of his rate limitation powers. Natural justice demands that a designated authority should not have to confront this double jeopardy.

I should like now to move on to Amendment No. 16. Another aspect of the redetermination process that gives local authorities cause for concern is that the Secretary of State could grant a small higher expenditure limit and then impose: such requirements relating to its"—

the authority's— expenditure or financial management as he thinks appropriate". This is a very wide-ranging power and could cover almost any aspect of the local authority—for example, compulsory privatisation or asset stripping. The redetermination process is very biased towards the Secretary of State and local authorities could run great risks if they appealed to him. The amendment seeks to ensure that if an authority does not like the requirements imposed by the Secretary of State in return for a higher limit it can at least reject them and stick with the first figure determined in accordance with those general principles referred to earlier.

Amendment No. 17 is a further attempt, although slightly different from the previous ones, to remove some of the double jeopardy from the redetermination process. The Government have said that the power to redetermine expenditure of appellant authorities at a lower amount is necessary, "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."—[Official Report, 30/4/84; col. 436.] Those were the words of the Minister during the Committee stage of the Bill. It is unlikely that any authority in this situation could easily reduce expenditure, but all this amendment seeks to do is to ensure, if a lower limit is set, the effect of that lower limit is clearly apparent and does not affect that authority's ability to fulfil its statutory duties. I beg to move.

Lord Bellwin

My Lords, Amendment No. 14 seeks to remove the power to set a smaller expenditure level, if after considering the case made by an authority for a redetermination it seems possible to identify additional savings. This amendment was moved and withdrawn in Committee by the noble Baroness, Lady Nicol. Following our brief debate, I wrote to the noble Baroness and tried to explain in more detail why we could not accept it. It may help the House if I briefly set out the reasons I gave, which are still valid.

First, I pointed out that the right of every designated local authority to seek a redetermination of its expenditure level is an important one. It will ensure that where there are special local circumstances, an authority can put the facts before the Secretary of State. He will be able to depart from the general principles on which the authority's expenditure level was first determined, if he is persuaded that this is justified.

An authority will not be compelled to put those circumstances before the Secretary of State. They will have the option of living within the original expenditure level. It will be set on general principles which—I say this not for the first time today—must be reasonable. What we are talking about is the situation where an authority has applied for a higher expenditure level and, when all the facts have been considered, it is clear that far from needing a higher level it could make greater savings than were first proposed on general principles. The ratepayers would be justifiably angry, if knowing that for a fact, it was impossible to bring about those savings.

I went on to assure the noble Baroness that we will not use this power in any punitive sense, nor is it our intention to discourage authorities with a genuine case to make—they need have no worry on that score. What we sought to avoid is simply providing a positive encouragement for authorities to pursue a frivolous application on the view that they' had nothing to lose. It is more important that they set about making the savings which are achievable. And, we all know that significant savings do need to be planned for. Amendment No. 16 is concerned with the circumstance where a redetermination is at a greater amount than the original expenditure level and the Secretary of State is able to impose requirements on the authority where it is appropriate. The amendment would enable an authority which obtained a derogation but had requirements placed on it under Clause 3(6) to opt instead for its original expenditure level and avoid the requirements. It seems unlikely that these circumstances would arise. for we would not expect to grant a more relaxed expenditure level unless the authority could satisfy us that it could not meet the level first proposed. Nor would we expect requirements to be excessively onerous or directed to detailed policies. We see requirements more as a method of ensuring that work is undertaken towards securing longer-term savings—for example, putting value-for money studies in hand—particularly where the case for a determination rests on the need for more time to make savings. It would be thoroughly inconsistent for the Secretary of State to accept that, where he had granted a redetermination on the grounds that some increase was essential, he should then accept that the authority could, after all, manage with the lower figure.

Finally, the purpose of Amendment No. 17 is to require that, where the Secretary of State has redetermined an expenditure level at a smaller amount, the notice required under Clause 3(8) includes a statement of his reasons for that lower level and also a statement of how his decision would affect the authority's ability to fulfil its statutory duties. I fear that I cannot accept this proposal either. We have said time and again that it is not our intention to tell selected authorities where savings should or should not be made; that is for the locally elected members to decide. The Secretary of State is concerned only with stipulating total expenditure levels. If as a result of an application for derogation it is clearly apparent to the Secretary of State that not only could the authority manage within the original expenditure but could bring about a bigger reduction in the rate, I believe it must be equally apparent to the authority. Indeed it would no doubt have been an integral part of the negotiations leading to the redeterminations. A formal statement of the reasons for the lower expenditure level would therefore be unnecessary. Furthermore if the Secretary of State were to identify where he thought savings could be made, it could be construed as requiring savings to be made in that area.

That is not what we are about. Local authorities are the ones who will have to decide. But of course any decision that the Secretary of State makes on expenditure levels, whether originally or following an application for a redetermination, must be reasonable. If he acts unreasonably, that decision could be open to legal challenge in the courts. On the question of the effect on the authority's ability to fulfil its statutory duties, it is my view that such a statement is unnecessary. Statutory duties have to be fulfilled and expenditure levels will have to be sufficient to allow for that. In any case, selected authorities will all be high spenders. I cannot see any danger of their being brought by rate limitation into any risk of not carrying out their statutory duties.

The objects of the 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 circumstances of authorities can be taken into account. We have heard a lot of criticism of the procedures for seeking a redetermination, but we must not lose sight of the fact that this part of the Bill will assist authorities with genuine problems to discuss. 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. I hope that the noble Baroness will give careful thought to what I have said, and even if we cannot agree entirely, I hope that she will at least feel able to withdraw the amendment.

Baroness Nicol

My Lords, it is not my intention to press the amendment, but I must say that the Minister puts a very plausible case. However, it does not accord with the wording of the Bill. The Secretary of State will have the power, once the redetermination is made, to impose such requirements as he wishes, and we are being asked to take on trust that he will not intervene to too great an extent in local authority affairs. That is asking rather a lot, in view of the history over the past two years or so in relation to local government. However, at this stage, I shall not press the amendment, and I beg leave to withdraw it.

Amendment, by leave, withdrawn.

[Amendments Nos. 15 to 17 not moved.]

6.41 p.m.

Baroness Nicol moved Amendment No. 18: Page 4, line 22, at end insert— ("( ) Any decision of the Secretary of State under subsection (5) above, together with a statement of the considerations leading thereto and particulars of any requirements imposed by him pursuant to subsection (6) above, shall be set out by him in a report laid before the House of Commons within three months of such decision and any such report may relate to two or more authorities.").

The noble Baroness said: My Lords, this amendment seeks to make the Secretary of State more accountable to Parliament in the use of his discretion in redetermining the expenditure limits for individual authorities departing from general principles and imposing requirements on local authorities as to their expenditure or financial management. That is a phrase which could encompass almost any aspect of a local authority's work. We have been over very similar ground to this on a number of occasions, and basically I shall put forward the amendment without a great deal of hope. However, put it forward I shall.

In his letter, which was referred to earlier, and from which he kindly quoted, while he admitted that the Secretary of State would not have to give reasons for redetermining limits, whether up or down, the noble Lord the Minister went on to say that the local authority will be aware of the points of agreement and disagreement on this matter with the Secretary of State, as it, will have been engaged in detailed discussions with the Secretary of State over a long period".

But it cannot be right, in terms of natural justice, that the Secretary of State does not have to give reasons to the local authority for any redetermination, and it should not be accepted that just because detailed discussions have been taking place the local authority will be aware of what was in the mind of the Secretary of State when he took the decision. Parliament should wish to see the reasons for a local authority being given a higher or lower limit, to prevent the Secretary of State using his discretion in a biased way by giving some authorities a higher limit if they happen to have been caught by selective limitation, with that higher limit being given for no reason other than that the authority had found favour with him, for whatever reason. Departure from the general principles of expenditure determination, for whatever reason, is not just a matter for the Secretary of State and the authority concerned; there is a wider interest.

This amendment deals with one other aspect of the redetermination. As has been said, the Secretary of State can grant a higher limit and then impose undertakings upon the local authority. The Bill provides that the undertaking shall relate to the authority's expenditure or financial management; that is to say, almost anything could be imposed upon a local authority.

In the White Paper the Government said that such undertakings could involve value-for-money audits; but the Audit Commission was not informed of this at the time the White Paper was published. Privatisation, sales of assets, and so on, have already been mentioned. This amendment seeks to ensure that these undertakings are placed before Parliament. It does not require Parliament to approve them. It does not delay the process, as the report can be after the imposition of undertakings, and it allows the courts to deal with more than one authority. Therefore it would not involve a cumbersome process. The amendment attempts only to make the process more open to scrutiny and I beg to move.

Lord Bellwin

My Lords, as the noble Baroness so rightly said, we are going over ground that we have covered before. The main point of this amendment once again is parliamentary involvement in the rate limitation procedures, and we certainly talked about it in Committee. However, I remain of the view that the setting of expenditure levels is a matter between the authority concerned and the Secretary of State. The derogation application and its outcome will be matters for long discussion. There will be negotiations, come to that, and Parliament need not be concerned at that stage. Expenditure levels in fact are but a steppingstone to rate limits.

I have said before, in regard to other amendments, that the proper time for Parliament to become involved is when it comes to the question of the rate limit. The debate on the rate limit order will give a suitable opportunity for the expenditure levels to be discussed. So, all else apart, I cannot see any advantage in the amendment. Without elaborating on what I have said, if the noble Baroness will so agree, that is the Government's position and it is one that I would try to develop in discussion with her, in written form, and whatever. I am sorry that I cannot accept the amendment.

Baroness Nicol

My Lords, I think that we are talking about a different stage in the process. I was talking about after the redetermination had been made. The Secretary of State should then publicise his reasons for the redetermination, which is a different aspect of it. Does the noble Minister wish to comment on that, or was he aware of that aspect when I spoke?

Lord Bellwin

My Lords, I did not cover that point when I responded. Of course I shall consider what the noble Baroness has said. I doubt very much whether it basically changes anything, but of course I would want to consider this. I did not cover it when I responded.

Baroness Nicol

My Lords, I thank the noble Lord, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 19 not moved.]

Clause 4 [Determination of maximum rate on precept]:

Lord Beaumont of Whitley moved Amendment No. 20: Page 4, line 38, at end insert— ("(d) the annual rate of inflation").

The noble Lord said: My Lords, this amendment relates to the annual rate of inflation. It asks the Secretary of State, in determining the rate limit to be placed on a local authority, to have regard to the annual rate of inflation, seeing that that may have changed since the local authority's expenditure limit was first designated.

In a way, I think that this is a very modest amendment because it simply states that it is the annual rate of inflation which should be taken into account, and not the annual rate of local authority inflation. We all know that the costs incurred by local authorities are inevitably and frequently higher and that they rise at a faster rate than does the average retail price index. For example, over the past 15 years the rise in wage levels has consistently outstripped the rise in pure price inflation. That has been at a considerably greater rate, and of course a larger proportion of the local authority's costs is in its wage bill. As a result, the impact of inflation on a local authority tends to be greater than the impact of inflation as recorded in the RPI. Because local authorities spend so much of their overall budgets on the levels of salaries and wages, the level of wages in local authorities' costs will almost inevitably be higher than the retail price inflation. Some local authorities are frequently affected by increases in interest rates, which have fluctuated over the years and which, in spite of the Prime Minister's statement over the last couple of days, look as though they may well be going up in the near future. Local authorities' costs may be influenced by factors outside the normal inflation rate which affects most household domestic budgets and which therefore govern the RPI.

I would hope that the Government might accept this modest amendment, because Clause 2 says that the Secretary of State should take account of the general economic conditions that appertain at the time. Surely one of those indicators would be the level of inflation. But let us suppose that the level of inflation changes between the time of designation and the time of rate limitation. If when he designates the Secretary of State takes into account a rise in inflation, surely he should take any change into account when he sets a limit on an authority's rate. The logic of this sensible argument will, I hope, appeal to the Government. It seems only right and fair that the level of inflation should be taken into account if it changes significantly between the first and last steps of the process. I beg to move.

Lord Bellwin

My Lords, this is indeed a narrow and modest amendment. We touched upon it during the Committee stage. I shall explain why we feel that it is not necessary. For all authorities, the rate or precept income which they require is determined by their total expenditure for the year, less any block grant payable, and is 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 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 the present expenditure targets, that will be a cash figure covering the whole of the financial year and 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 of course be necessary to build in some assumptions about the rate of local authority price increases. That will be done. Therefore the necessary inflation factor will already have been built into the calculations and it will not be necessary also to specify it in the legislation. I am wondering whether the noble Lord, Lord Beaumont of Whitley, is aware that this is so. If he agrees with me, perhaps the noble Lord will be prepared to withdraw his amendment.

Lord Beaumont of Whitley

But what happens, my Lords, if the basis of the assumption has changed in the interim? The figures are worked out for the whole year on a basic assumption, but by the second stage that basis may have changed, particularly in view of the fast increase in the rate of inflation which has occurred at certain periods during the past few years—not least during certain periods of the present Government's rule. The rate of inflation does change. The basis, therefore, changes. Surely, therefore, the remedy which the Government are producing should also change. I do not know whether the noble Lord would care, by leave of the House, to comment on what I believe to be a perfectly valid point.

Lord Bellwin

With the leave of the House, yes, my Lords. The noble Lord is of course right that the rate of inflation can change. It can go down as well as go up. I have served in situations where settlements have been made on one basis—I hope in good faith—and the rate of inflation has gone up. But recently we have, happily, been in a situation where the rate of inflation has gone down. However, the Government have not turned round and said that they want something back because the position has improved. I understand what the noble Lord has said. It would be astonishing if the rate of inflation were not to change at all. However, that does not alter the basic point that a reasonable figure has to be struck. As long as that is done, I believe that it works.

Baroness Birk

My Lords, before the noble Lord sits down, may I ask him a question? The noble Lord, Lord Beaumont of Whitley, quite rightly agreed that inflation can go down as well as go up. In that situation, there is even less reason, it seems to me, not to accept the amendment because, as the noble Lord has agreed, it works both ways. The amendment does not refer only to a rise in the rate of inflation. It would deal with a situation where the rate of inflation went either down or up. I should have thought that the Minister ought to consider having another look at this, for it is a small, harmless but very practical amendment.

Lord Lloyd of Kilgerran

My Lords, I intervene to point out that the Minister opened his remarks by saying that my noble friend's amendment was unnecessary. The Minister then gave as his reasons a recital of subsection (2)(a), (b) and (c) of Clause 4. He said that the Secretary of State will determine that maximum by reference to a number of variables which are set out in that subsection. The Minister paraphrased those variables. Is the Minister saying, in effect, that when paragraphs (a), (b) and (c) of subsection (2) are under consideration the Government will be taking into account the annual increase or decrease in the rate of inflation? If he is not saying that, his argument in support of the Government's position seems to be a complete non sequitur. I would ask the Minister at least to take back the amendment and reconsider the position.

Lord Bellwin

My Lords, we have to recognise that we are speaking here of cash planning. We are setting out in cash terms what the country can afford. It cannot be adjusted for subsequent inflation. It is the same basis as that on which we operate targets when we are dealing with that aspect of local government finance. The noble Baroness, Lady Birk, is right when she says that it is a very narrow point. I shall read carefully what has been said, in case something has been missed. I do not believe that we have missed anything, but if we have we shall look at it.

Lord Beaumont of Whitley

My Lords, may I, with the leave of the House, say that I believe we have won the basic logical argument on this point? However, the cash argument which the noble Lord the Minister produced—the difference made because of the fact that we are talking about cash limits—is one which I should like to study. The Minister has said that he, too, will look at the arguments. Therefore at this stage I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 21 not moved.]

6.58 p.m.

Baroness Birk moved Amendment No. 22: Page 5, line 17, leave out ("may relate to two or more authorities") and insert ("shall apply to one authority only").

The noble Baroness said: My Lords, in this clause we are dealing with the final stage of selective rate limitation. It is imperative to give to Parliament maximum control over rate limitation so as to ensure that parliamentary rather than executive discretion will replace local discretion. Yet this final step in rate limitation is the first time that the Government are obliged to seek explicit parliamentary approval for their actions.

In the earlier stages of rate limitation—we have been through this in various ways in Committee—there has been the occasional requirement for Parliament to receive a report. Those reports must contain the principles upon which local authorities have been designated. But those reports need not be debated. As we are now well aware in this context, principles can mean almost anything. I shall not labour that point, because it has been raised by many other people.

Today the Government have amended the Bill to give them even greater discretion in the use of principles. None of this can possibly be described as any check upon the actions of the executive. The Bill, as drafted, gives to the Government even more discretion in the redetermination process. An authority might be tempted to appeal to the Secretary of State for a higher expenditure limit. It is possible that a higher expenditure limit could be granted, but it is also possible that a lower limit would be imposed or that demands might be made on an authority regarding its future policies. This appeals system is loaded against any applicant authority and it would indeed be surprising if any authority did apply to the Secretary of State. Its fear would be rather like that of the person appealing in some cases to a court of criminal appeal, who is frightened that his sentence will be increased rather than lessened.

The point is that the provision for redetermination is in the Bill and it is not subject to parliamentary check. Nor is it a substitute for parliamentary control of the rate-fixing of individual authorities. It is what the Bill says that counts—not, with great respect, what the Minister or anyone else says may be the intentions of the Secretary of State or of any other person.

Currently, the Bill clearly gives Parliament only minimal control of the whole process. It is only at this

final stage that those parliamentary checks begin to have more teeth—although they are more in the nature of milk teeth at the moment than the second growth of teeth. The Government have said that control of this final stage of rate-capping is sufficient. Yet even if we were to agree with that proposition—which we do not—the control provided in that last part of the process is grossly insufficient. As matters stand, the Government will be able to wrap up all the rate-capped authorities in one report. We do not know how many there will be.

At an earlier stage, when we were discussing Part I of the Bill in Committee, the Government mentioned a figure of 12 to 20 authorities. But the Bill does not provide for these or any other limits, and all attempts to smoke the Government out were of no avail. The number of rate-capped authorities appearing in one report coming before Parliament could be 50 or 100. The House of Commons would have to approve or reject the report in its entirety. The individual circumstances of individual authorities would not be permitted to influence that decision.

The whole report would be voted through on a Whip and local democracy would be overturned in batches. This is not the way for the only elected tier of domestic government outside Parliament to be treated. Nor is it proper to attempt to treat Parliament like a rubber stamp. Parliament should be given the power to make decisions about individual authorities, and those individual authorities should be given the right to put their case via their Members of Parliament. It is only by having separate reports from each authority that this process will have any meaning.

In response to earlier doubts expressed in Committee, but in respect of a differently-drafted amendment, the Minister attempted to reassure me. He stated in a letter that he wrote to me: The House of Commons and not the Executive should finally determine the level of local tax in any local authority area where that is in dispute". It is only where the level is in dispute that there will be a report. If the Minister believes that the House of Commons should finally determine the level of tax in any local authority area, that could be read as supporting the proposal I am making now; that there should be a report for every individual authority. When I received the Minister's letter I was reassured; he can reassure me even more tonight by accepting this amendment.

This amendment will provide for the rate in any one area to be fixed by the House of Commons. The Bill does not do that. The Bill makes mention of parliamentary sovereignty—or at least the Minister has done so. I am sometimes quite confused by what we are told by the Minister compared with what one finds in the Bill, because they are often quite different. The Bill requires Parliament to approve a list of rates in an indeterminate number of areas. It seems to us that this amendment would achieve what the Minister, erroneously in my view, assumed the Bill would achieve. We hope to see his acceptance of it.

Perhaps I should add that this is not a party political point. It is one that has the support of all the local authority associations. It is important to both local democracy and parliamentary democracy. This legislation is extremely controversial and is the subject of views strongly held and expressed. I put it to the Government that they should be bending over backwards to make the Bill as democratic as it can be and enable Parliament—and, in this case, the House of Commons—both to be seen to be doing and actually to do what is correct, in order that each authority will have the right to have its report discussed—instead of having all the reports bundled up in one.

We are surely all aware that if that happens, proper attention will not be paid to the reports. It is no use saying that MPs can ask questions. If nobody wishes to question a report and it is acceptable, then it will be in order for it to be approved. But among all the different local authorities, there must be many different reasons why they have taken the actions they have. They must have different needs and different demands. It is only right that Members of Parliament should feel that they have had a fair crack at the legislative whip. I beg to move.

Lord Bellwin

My Lords, this amendment would specifically limit an order to one authority only. I recognise the argument that the disagreed rate limit order is the point in the procedure at which Parliament will have their principal opportunity to scruitinise the Government's proposals. But I believe that this can be done adequately within a composite order procedure. Although the Secretary of State will be looking at authorities' individual circumstances in considering applications for derogations, he will nevertheless have to take all his decisions on a basis that is generally consistent for all authorities. If two authorities had the same individual circumstances in some particular respect, the Secretary of State could hardly allow for that circumstance in different ways.

I am sure that Parliament will be concerned especially with scrutinising this aspect of the handling of the procedures. The other place will want to ensure that there has been fair and balanced treatment between authorities. It seems to me that this is the proper supervisory role of the other place, rather than the substitution of their individual judgments for those of the Secretary of State.

If I understood the noble Baroness correctly, she suggested it might be possible to have a single order but with perhaps even voting permitted separately on the constituent parts of the order—but the procedures of the other place do not provide for that. Orders must be approved or negated as a whole.

Baroness Birk

My Lords, if the Minister will allow me to intervene, I did not mean on the constituent parts of the order. Every report would be the subject of one particular order.

Lord Bellwin

In that case, my Lords, the noble Baroness was not making the point I suggested—I accept that. In any case, I am not convinced that a composite order procedure under Clause 4 would prevent proper discussion. That is certainly not the experience with the rate support grant report debates in another place. They cover a far larger number of authorities than the 12 to 20 authorities which could at most be involved under the selective scheme. And yet their individual views come through very clearly indeed. Often, debate is concerned with general principles as illustrated by the cases of particular authorities, rather than with the detailed circumstances of those authorities.

I should like to reassure all those who are worried about these orders being pushed through another place late or only after a short debate. If we face the situation of having 15 or 20 local authorities rate capped, and their rate limits coming before another place for approval, then there will be no intention by the Government to compress debate. I am sure that that does not arise at all.

I understand the fears of the noble Baroness and her great concern. Equally, I think that we are entitled to point to the real example of what happens with rate support grant settlement report debates and how they enable an individual authority's case to be made quite clearly and to be debated. I do not have the fears that the noble Baroness has. As she rightly says, this is not so much a party point as a point which we should all be concerned to get right. I think that what we propose does get it right, even if the end objectives may not be acceptable to everyone.

7.10 p.m.

Lord Kilmarnock

My Lords, may I suggest to the noble Lord, Lord Bellwin, that the Government are now in a logical difficulty on this point? On the one hand, throughout the passage of the Bill, they have told us that only a few authorities are likely to be designated. That is certainly an argument in favour of separate reports, so that the particular circumstances of particular authorities can be separately considered by Parliament. I think that the Government play into our hands, or into the arguments of the noble Baroness, under that heading.

The noble Lord then goes on to say that, if there are two authorities with similar problems, there is no reason why they should not be discussed together. That also flies in the face of his earlier contention that there should be a multiplicity of criteria available for the Government in order that they can take each local authority's special circumstances into account. That is the second logical fallacy in the Government's position.

The third logical fallacy in the Government's position is the following. The noble Lord is perfectly correct in saying that if you have several authorities on one report they can be discussed separately: those who are interested in one authority can talk of that authority, and those who are interested in another can talk of that other authority. But the important point to be borne in mind is that the vote on that particular report will be taken as a whole. Therefore, these shades of difference cannot be taken into account in the vote. As I hope I have made clear, there are three logical fallacies in the Government's case.

Lord Boyd-Carpenter

My Lords, I think that there is a certain lack of logic in the argument of the noble Lord, Lord Kilmarnock. After all, if we are envisaging debate in another place on these orders, there will really be only two points for debate—first, the general policy of rate capping, on which probably by then both Houses will have exhausted every conceivable argument, and, secondly, and perhaps more relevantly, the argument as to whether a particular local authority has been treated fairly in comparison with other local authorities.

If you have each one in a separate order, then in the case of the first order the figures for the others may not even be available. There will be no basis of comparison. It will not be possible to say, for example, that the GLC has been badly treated compared with South Yorkshire, or whatever example one may give, because one will not have the South Yorkshire figures for comparison. Indeed, looked at from the point of view of another place, where their rules of procedure are strict, I suppose if one were dealing with an individual order put down on an individual night, one might be ruled out of order for referring to a decision on another order because that order would not be before the House at the time.

Therefore, if one is to have an effective debate on whether the Secretary of State has treated particular authorities fairly within the ambit of the legislation—whether he has acted fairly, given the structure of the thing—surely one would want to have as many decisions as possible before one at the same time so that one could ask him, "Why on earth have you treated Little Puddleton so badly whereas Puddleton Parva has been treated more generously?" The Secretary of State would be able, if he had an answer, to give an answer.

If one is really concerned, as I know noble Lords opposite are—I think we all are—that when these cases come to another place they should be fairly and effectively debated, there is surely almost everything to be said for all of them, or at any rate a lot of them, being in the same order.

Lord Diamond

My Lords, it is so obvious to all of us here that the simple answer to the difficulties which have just been put before us is for the Government to arrange that all the statutory orders are before the respective Houses at one and the same time.

Baroness Birk

My Lords, I really do not find that the Minister's reply has been satisfactory at all. He compares rate capping to a discussion on the rate support grant. They are not at all the same thing. The rate support grant is something that the Government decide they will do out of their own public expenditure and from the way that they see things. Rate-capping is a strongly penal process which we have not seen before. That is why I am moving the amendment. It is even more important that on this the Government should be seen to be bending over to give the widest possible opportunity for each authority's report to be discussed individually. It is surely important not only that Members of Parliament should feel that, but that the individual authority should again feel that it has had a fair hearing. It cannot if there is to be this cluster of authorities. We do not even know how many there will be. A later amendment mentions the figure 50, but we do not know. We have not been told. The Government do not know. I do not think they are hiding a figure from us. But, as that is the case, each authority should be dealt with individually.

The noble Lord, Lord Boyd-Carpenter, said that there would be no basis for comparison. With great respect, that is not really the point. First of all, the authorities will be known, because it will only be the authorities that are in dispute with the Government. If the authorities accept their rate-capping quietly, presumably everybody will be happy.

The point surely is that it is on what is done within a particular authority that the decision will be made as to whether that authority should be rate-capped. There is no advantage, and in fact great disadvantage, in being one of an enormous bunch, batch or whatever, rather than being discussed separately. This seems to me to be the way to start out. If it is found in the future that that is not necessary, it does not work properly or the authorities can be bunched together, that is a different thing, but we are embarking into what is partly the unknown. It is a matter about which authorities understandably have many fears. The Association of County Councils, the Association of District Councils and the Association of Metropolitan Authorities are all concerned and have joined together in their support for this amendment, and the Government should pay attention. The amendment does not fundamentally alter anything. It does not affect rate capping. It gives proper parliamentary control and sovereignty, instead of merely paying lip service. Therefore, I intend to press this amendment to a Division.

7.18 p.m.

On Question, Whether the said amendment (No. 22) shall be agreed to?

Their Lordships divided: Contents, 84; Not-Contents 90.

DIVISION NO. 3
CONTENTS
Ardwick, L.	Gallacher, L.
Attlee, E.	Graham of Edmonton, L. [Teller.]
Aylestone, L.
Beaumont of Whitley, L.	Grey, E.
Bernstein, L.	Grimond, L.
Beswick, L.	Hampton, L.
Birk, B.	Hanworth, V.
Boston of Faversham, L.	Harris of Greenwich, L.
Briginshaw, L.	Hatch of Lusby, L.
Brooks of Tremorfa, L.	Hooson, L.
Bruce of Donington, L.	Howie of Troon, L.
Caradon, L.	Irving of Dartford, L.
Carmichael of Kelvingrove, L.	Jacobson, L.
Chitnis, L.	Jacques, L.
Cledwyn of Penrhos, L.	Jeger, B.
Collison, L.	Jenkins of Putney, L.
David, B.	John-Mackie, L.
Dean of Beswick, L.	Kagan, L.
Diamond, L.	Kaldor, L.
Donaldson of Kingsbridge, L.	Kilmarnock, L.
Donnet of Balgay, L.	Kirkhill, L.
Elwyn-Jones, L.	Kirkwood, L.
Ennals, L.	Lloyd of Kilgerran, L.
Falkender, B.	Longford, E.
Falkland, V.	McIntosh of Haringey, L.
Fisher of Rednal, B.	McNair, L.
Fitt, L.	Meston, L.
Foot, L.	Molloy, L.
Gainsborough, E.	Mulley, L.

Nicol, B.	Stone, L.
Oram, L.	Taylor of Blackburn, L.
Phillips, B.	Thurso, V.
Pitt of Hampstead, L.	Tordoff, L.
Ponsonby of Shulbrede, L.[Teller.]	Underhill, L.
	Wallace of Coslany, L.
Raglan, L.	Wells-Pestell, L.
Rhodes, L.	Whaddon, L.
Rochester, L.	White, B.
Serota, B.	Wigoder, L.
Shackleton, L.	Winchilsea and Nottingham, E.
Stallard, L.
Stewart of Alvechurch, B.	Winstanley, L.
Stewart of Fulham, L.	Young of Dartington, L.
Stoddart of Swindon. L.

NOT-CONTENTS
Airey of Abingdon, B.	Hylton-Foster, B.
Auckland, L.	Inglewood, L.
Avon, E.	Ingrow, L.
Bathurst, E.	Kintore, E.
Belhaven and Stenton, L.	Kitchener, E.
Bellwin, L.	Lane-Fox, B.
Beloff, L.	Lindsey and Abingdon, E.
Belstead, L.	Long, V.
Bolton, L.	Loudoun, C.
Boston, L.	Lucas of Chilworth, L.
Boyd-Carpenter, L.	McAlpine of Moffat, L.
Brabazon of Tara, L.	McAlpine of West Green, L.
Brougham and Vaux, L.	Macleod of Borve, B.
Bruce-Gardyne, L.	Margadale, L.
Caccia, L.	Masham of Ilton, B.
Caithness, E.	Massereene and Ferrard, V.
Campbell of Croy, L.	Maude of Stratford-upon-Avon, L.
Carnegy of Lour, B.
Coleraine, L.	Middleton, L.
Colville of Culross, V.	Monson, L.
Colwyn, L.	Morris, L.
Constantine of Stanmore, L.	Mottistone, L.
Cork and Orrery, E.	Orkney, E.
Cox, B.	Peyton of Yeovil, L.
Cullen of Ashbourne, L.	Platt of Writtle, B.
Davidson, V.	Rankeillour, L.
Denham, L. [Teller.]	Reay, L.
Digby, L.	Renton, L.
Drumalbyn, L.	Rochdale, V.
Elton, L.	Rodney, L.
Faithfull, B.	Romney, E.
Ferrier, L.	Rugby, L.
Fortescue, E.	St. Davids, V.
Gisborough, L.	Saltoun, Ly.
Glanusk, L.	Skelmersdale, L.
Glenarthur, L.	Stamp, L.
Gowrie, E.	Swinfen, L.
Grantchester, L.	Swinton, E. [Teller.]
Gray of Contin, L.	Trenchard, V.
Gridley, L.	Trumpington, B.
Hailsham of Saint Marylebone, L.	Vaizey, L.
	Vaux of Harrowden, L.
Hanson, L.	Waldegrave, E.
Henley, L.	Windlesham, L.
Hives, L.	Wise, L.
Holderness, L.	Wynford, L.

Resolved in the negative, and amendment disagreed to accordingly.

7.27 p.m.

Lord Denham

My Lords, I think this is probably a convenient moment to break for the adjournment business. I beg to move that further consideration on Report be now adjourned until 8.30 p.m.

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