Rates Bill

HL Deb 05 June 1984 vol 452 cc575-613

8.32 p.m.

Consideration of amendments on Report resumed.

[Amendment No. 23 not moved.]

Clause 9 [Power to introduce general control]:

Lord Kilmarnock moved Amendment No. 24: Page 8, line 14, at end insert— ("the date to be specified under subsection (1) above shall not be less than three years from the date of operation of an Order laid by the Secretary of State pursuant to section 2(1) of this Act").

The noble Lord said: My Lords, I move this amendment on behalf of my noble friend, Lord Evans of Claughton, who is unable to be here tonight. This is similar to an amendment which was moved at Committee stage by the noble Lord, Lord Sandford. It must be a compliment to him that my noble friends have chosen to take it up and to run it again at stage of the Bill.

The important point is that here we move on to Part II of the Bill. The object of the amendment is clear. It is to provide what one might call a cooling-off period of three years preceding the bringing into force of the general powers after the selective provisions of Part I have been introduced. This would give the Government the opportunity to discover whether the selective scheme, on which they have staked so much, would work.

The Secretary of State has himself agreed that during the past three years the cumulative effect of the reduction of a proportion of the RSG and the introduction of targets and penalties have brought local authority spending more into line with Government and public spending guidelines. He has argued that such reductions could not be achieved overnight: therefore it would be unrealistic for the Secretary of State to expect the provisions of Part I to operate to secure the reductions required by him in. say, one year. Indeed, the statements by Ministers have made it clear that they would not seek to reduce the spending of any one authority by more than 5 per cent. in any one year, and that is reflected in the target methodology which no one authority is expected to reduce its spending by more than about 6 per cent. in one year.

In short this amendment gives Part I, the selective scheme, time to operate. It will be a matter of time before we see whether it works as the Government intend. As I have said we also hope that this amendment will provide a cooling-off period so that the Government can contemplate and assess the results that they have achieved as a consequence of Part I.

One other point is that there still remains no definition in the Bill—we have discussed this under earlier amendments this evening— or in the notes on clauses or in ministerial statements on the criteria which will be used to decide when it will be necessary to introduce general powers. On all these grounds we feel that a delay in their introduction is desirable. and I beg to move.

Viscount Ridley

My Lords, I should like to support the amendment, to which I have added my name on behalf of the Association of County Councils. My noble kinsman Lord Kilmarnock has said everything that needs to be said; and, indeed, it was brought up at Committee stage before your Lordships. But I should like to crave your Lordships' indulgence by referring briefly to the debate which we had on Clause 9 at Committee stage because this is the first opportunity to do so at this stage of the Bill. During the debate on Clause 9 stand part, my noble friend Lord Chelwood— who, unfortunately, owing to family problems, is not able to be here tonight—referred in his speech to many things in opposing the Bill. When he was answered by my noble friend Lord Bellwin the impression was given that the Association of County Councils had refused offers of consultation on certain aspects of the Bill before it came before this House. I should have intervened at that stage to deny this allegation as the president of the association. Indeed, I should have liked to do so, but I was not sure of my facts; I was not likely to have been involved in any such consultations, and I do not think quickly enough when I am here.

However, subsequent research and a good deal of correspondence among all concerned leads me to think that there has been a genuine and very simple misunderstanding which I think should be put right on the record and the impression should be corrected. The Association of County Councils has always been ready to consult on local government matters, and always will be. No offer to do so was refused or ever will be in the future. I want to make this quite clear beyond all doubt.

I am very well aware that my noble friend Lord Bellwin was in fact referring to an invitation to discuss technical matters at officer level, which all three associations refused as being inappropriate on the date suggested last September. This is a quite different matter. I am also quite certain that my noble friend Lord Bellwin would agree that this is a misunderstanding which can be laid to rest here and now. I know that were my noble friend Lord Chelwood here he would not wish to pursue the matter any further. His statement was in effect largely, if not entirely, accurate and I think we owe it to him to put this right.

I know that my noble friend Lord Bellwin in dealing with all these matters is extremely courteous and diligent and all his responses to all these problems are greatly valued by all involved. I know he would not refuse any consultation which was necessary, nor has he ever done so over five long years of very hard work in the interests of local government and of this House, nor would the ACC ever wish it to be said that they had refused to talk to him.

This may be the last word I shall say on this matter, I would only add that if when all such legislation came before us it were possible for more talks to be held between the Government and their genuine friends it is possible that not so much legislation would be put before us. I hope that we can put this matter straight. I wish to support the amendment.

Lord Bellwin

My Lords, if I may, I begin by responding to my noble friend Lord Ridley on the latter point that he makes. I am glad to have the opportunity of saying exactly what happened over the question of consultation. The Government have always been extremely anxious to proceed in respect of its local government policies in consultation with local government and with the local authority associations. That is usually what that means. To that end, I wrote to each of the associations on 12th September, 1983, offering a meeting at official level to discuss without commitment the practical operational implications of our policy proposals on rate limitations. This offer, of course, was against the background that at that time we were in the middle of a large consultation exercise on our Rates White Paper and we were awaiting the comments of the association on the basic policy.

The response to the offer of working level discussions was immediate but negative. However, I think it fair to say—and this is a point that I did not mention at the Committee stage— that the ACC response included the sentence: I imagine that we will be having further discussions with you and your colleagues after you have considered our response to the White Paper proposals". It is against that background that, when the noble Lord, Lord Chelwood, suggested that there had been no consultation with the ACC, I responded by saying that the opportunity for consultation had been offered but had been turned down.

May I say that I appreciate very much the way in which my noble friend Lord Ridley brings up his point tonight. I say unhesitatingly that in the times of debate when one is first in consultation and when there is a broad area of discussion and not discussion— if I can put it that way— it is very difficult to say what has happened and what has not happened. But certainly no wrong implication was intended. If the ACC feel that they are unhappy about it, I would not want that to be the case, so I would readily concede the point to them in the hope that they, too, would understand how this matter came about in the way that it did. I hope that my noble friend Lord Ridley will feel that that covers the point properly. He is right that the record ought to be put straight.

So far as this amendment goes, it was moved during Committee. It was said then to be a probing amendment, and it produced a very full debate during which I gave a brief description of the sort of circumstances which might give rise to our need to invoke the general powers. I said then, and I make no apology for saying again, that it is our sincere hope that these powers never have to be used. One of the reasons I am optimistic on this score is because of the deterrent effect that the very existence of the general power will have on local authorities. But that deterrent effect will be lost for three years if this amendment is accepted. For that reason, I cannot accept this amendment. As I said during Committee, the selective and general schemes are complementary, and it could be dangerous if one of them were unavailable for a fixed period.

Furthermore, although I regard it as highly unlikely, I could not accept the situation where we should be unable to respond to a significant breakdown in the pattern of largely responsible behaviour in financial matters by local government before the financial year 1988–89. It may well be that we shall want to see how the selective scheme works before the question of any wider measures arises. But local government could pre-empt us if we deprived ourselves of the situation of a deterrent. I feel that in practical terms this is just not a starter. I could not accept it during Committee and I still do not feel that there is any case at all of our accepting it now. I am sorry that that is so. I respect the manner in which it was moved and the support that I know it has, but I feel that as the noble Lord, Lord Kilmarnock, said in his opening remarks and as it was said earlier on today, we have to see the legislation in place and working. The Government are optimistic about its effects. Only when we actually see what it produces will we have a better ability to judge its effectiveness.

Baroness Birk

My Lords, it is quite extraordinary that we were told all the time on the discussion of Part I of this Bill that there would be just a handful of authorities (between 12 and 20) and we have never got beyond this rather mythical approach to it. Then, when it came to Part II, we were assured on so many occasions that the Government did not expect ever to have to invoke the general powers but just wanted them, as I understood it, in reserve. I think I am right about that. If that is so, it seems to me quite extraordinary that they cannot accept an amendment of a pause (if you like) of three years. What do they expect to happen? Either they are expecting a complete avalanche of authorities to be ratecapped under the scheme or they are expecting to vote for the general powers much more readily than they have let on so far. Either way, it does not seem to me that the case against this is at all convincing.

Lord Bellwin

My Lords, I do not find it contradictory in any way. What we have said we have believed and we still believe. The general scheme is a deterrent, it is a reserve power. We do not expect that we would have to invoke it. The very fact that it is there, in place, is, as we believe, a deterrent. We are talking of between 12 to 20 authorities for selection. As I said when we were discussing this matter in Committee, what we cannot preclude is that there are things happening today in local government that have not happened before. There are people running authorities on an ever-growing scale and we just do not know what the position will be. We firmly believe that the legislation as we are now putting it in place will get us and the authorities concerned and the ratepayers where everyone needs to be. That is the hope and, we believe, the effect. Without having the deterrent there, we feel that it would not be as effective and, in the long run, therefore, would be a disadvantage to local authorities as a whole. That is why we cannot accept it.

Lord Kilmarnock

My Lords, what the noble Lord has said does not seem to me satisfactory. As the noble Baroness, Lady Birk, has pointed out, and as I did earlier, the Government are getting into logical difficulties again and again in this Bill. On the one hand, they say that there are only 12 to 20 authorities likely to suffer under the Bill, and then in the next breath they go on to say that all the other authorities, who hitherto had been presumed to be good, need to be deterred. I should have thought it a fairly simple matter that you do not need to deter the good; but only the bad. I did not follow that line of argument. If we leave Part II of the Bill as it stands, all that is happening is that a vast number of local authorities are going to enter a minefield in the dark without maps. I do not think this is good enough for a Bill which is going through your Lordships' House. I think that I should test the opinion of the House.

8.48 p.m.

On Question, Whether the said amendment (No. 24) shall be agreed to?

Their Lordships divided: Contents, 37; Not-Contents, 75.

DIVISION NO. 4
CONTENTS
Airedale, L.	Nicol, B.
Attlee, E.	Northfield, L.
Birk, B.	Phillips, B.
Brookes of Tremorfa, L.	Pitt of Hampstead, L.
Carmichael of Kelvingrove, L.	Ponsonby of Shulbrede, L.
David, B.	Robson of Kiddington, B.
Dean of Beswick, L.	Seear, B.
Elwyn-Jones, L.	Sefton of Garston, L.
Falkender, B.	Stallard, L.
Graham of Edmonton, L.	Stoddart of Swindon, L.
Hanworth, V.	Stone, L.
Harris of Greenwich, L.	Taylor of Blackburn, L.
Henderson of Brompton, L.	Tordoff, L. [Teller.]
Hooson, L.	Underhill, L.
Houghton of Sowerby, L.	Wells-Pestell, L.
Kagan, L.	Whaddon, L.
Kilmarnock, L. [Teller.]	White, B.
McCarthy, L.	Winstanley, L.
McNair, L.

NOT-CONTENTS
Airey of Abingdon, B.	Henley, L.
Avon, L.	Hives, L.
Bathurst, E.	Inglewood, L.
Bellwin, L.	Ingrow, L.
Belstead, L.	Lindsey and Abingdon, E.
Bolton, L.	Long, V.
Boston, L.	Lucas of Chilworth, L.
Boyd-Carpenter, L.	Macleod of Borve, B.
Brabazon of Tara, L.	Margadale, L.
Broadbridge, L.	Marshall of Leeds, L.
Brougham and Vaux, L.	Massereene and Ferrard, V.
Broxbourne, L.	Maude of Stratford-upon-Avon, L.
Caithness, E.
Campbell of Croy, L.	Middleton, L.
Carnegy of Lour, B.	Morris, L.
Coleraine, L.	Napier and Ettrick, L.
Colwyn, L.	Orkney, E.
Cork and Orrery, E.	Portland, D.
Cox, B.	Rankeillour, L.
Craigmyle, L.	Renton, L.
Cranbrook, E.	Rochdale, V.
Cullen of Ashbourne, L.	Rodney, L.
Davidson, V.	Rugby, L.
De Freyne, L.	Saltoun, Ly.
Denham, L. [Teller.]	Skelmersdale, L.
Digby, L.	Stamp, L.
Drumalbyn, L.	Swansea, L.
Elton, L.	Swinton, E. [Teller.]
Faithfull, B.	Thomas of Swynnerton, L.
Ferrier, L.	Trenchard, V.
Fortescue, E.	Trumpington, B.
Gibson-Watt, L.	Vaizey, L.
Gisborough, L.	Vaux of Harrowden, L.
Glanusk, L.	Waldegrave, E.
Grantchester, L.	Westbury, L.
Gray of Contin, L.	Windlesham, L.
Gridley, L.	Wise, L.
Hailsham of Saint Marylebone, L.	Wynford, L.

Resolved in the negative, and amendment disagreed to accordingly.

8.58 p.m.

Lord Underhill moved Amendment No. 25: Page 8, line 14, at end insert— ("( ) On the making of an order under this section, sections 10 and 11 below shall remain in force for the period of twelve months from the date specified in such order and shall thereafter cease to be in force but without prejudice to the Secretary of State's power to make a further order or orders with like to which the provisions of subsections (2) and (3) below shall apply.").

The noble Lord said: My Lords, in Committee the noble Lord, Lord Bellwin, was unable to accept an amendment which was similar to this one in so far as its purpose was to restrict the life of a general rate limitation order for one year. Your Lordships may recall that that particular amendment was technically deficient and was withdrawn. Naturally, I hope that the amendment now before the House, Amendment No. 25, is in order.

Unless some time limitation is placed on such an order, it will remain active until there is further legislation to repeal it. The issue with which we are faced is whether a general rate limitation order should have a life of only one year at a time. I would emphasise that, although the order would expire at the end of 12 months, new primary legislation will not be necessary, for the amendment, it will be noted, includes the provision that the time limitation is without prejudice to the power of the Secretary of State to make a further order or orders; that is, he may renew that particular order.

When this matter was dealt with in Committee the noble Lord, Lord Bellwin, made three particular points. These are set out in column 822 of the Official Report for 8th May. I shall refer to these three points because, apart from the amendment's technical deficiency, it was because of these points that the noble Lord said he could not accept it. First, he said that the suggested annual renewal of powers is, more appropriate to emergency legislation which might be expected to lapse quickly or to be replaced by more permanent provisions.

Obviously my first question is: in what category of permanency do the Government regard this particular provision in the Bill? The second question is: are the Government really saying that the Rates Bill will not be replaced by more permanent powers which could set up a more healthy and more accountable system of local government finance? If so, that must be a very gloomy prospect for any noble Lords who thought that this Rates Bill, though undesirable, was a necessary expedient.

Secondly, the noble Lord the Minister said that the general powers under Part II of the Bill would be sought only where, substantial numbers of authorities are ignoring the spending guidelines of the Government.". He added: It would surely be unreasonable then to expect that matters could be put back to rights in so short a period as one year.".

That particular point can be dispensed with quite easily because if the Minister would accept the principle that there should be a time limit on any order under this reserve scheme, and if he considers that a year is too short, I ask him (as I asked him at Committee stage and got no answer): do the Government accept that another period would be acceptable to them? If so, I hope that they will accept this amendment and they can adjust the time limit— providing it is a reasonable time limit— at the Third Reading stage.

The third point made by the noble Lord, Lord Bellwin, was that the order would be introduced only after proper scrutiny by both Houses of Parliament. I am sure that the Minister will appreciate, first of all, that no order can be amended by either House: they accept or reject. The Government have made much of the need for both Houses to approve this particular order, but no doubt the noble Lord the Minister will recall a Question on this very matter, which was asked by his noble friend Lord Chelwood as recently as the 14th May. The Lord President of the Council on that occasion replied (at col. 1268): There is a well-established convention that the House of Lords does not vote against the Second Reading of a mandated Government Bill … it might be regarded as inconsistent … to reject an affirmative instrument to implement Part II of the Rates Bill". So on the question of parliamentary scrutiny, even the Lord President told the House that really this was against the conventions and could not be done in this House. Therefore, the safeguard of scrutiny to which reference was made at the Committee stage does not really hold good, and unless a time limitation is placed on a general rate order it will be there permanently. I am certain that is not what the House would wish to be allowed.

Lord Sandford

My Lords, I should like, if I may, to intervene on this amendment, not so much to support the amendment itself as the idea behind it. I should like to start by thanking my noble friend for sending me a copy of the letter which he wrote to the noble Lord, Lord Northfield, after the debate which we had on the 8th May during the Committee stage where we were discussing this matter.

I think it would be true to say— and I believe the House would agree with me— that nobody is particularly glad to see this Bill. The Government themselves have introduced it with reluctance and Parliament is passing it with reluctance in order to deal with a situation in which the conventions which have hitherto governed local government finance have broken down. We hope that situation is temporary. I think there is recognition that permanent remedies lie in the improvement and fundamental reform of local government finance; and our hope and expectation is that when this Bill is on the staute book the Government will buckle down to the reform of local government finance. To the extent that that succeeds—and it must succeed— the need for these general powers will in due course lapse. I therefore think it would be undesirable to have them permanently on the statute book.

On the other hand, if the situation deteriorates from that existing now, when only the selective powers are thought to be necessary, to the point where general powers are needed, then I cannot see that it will be appropriate for this part of the Bill to lapse after so short a period as a year. Therefore, I would like to commend to my noble friend a formula roughly along these lines: This part of the Act shall continue in force until the end of the period of X years"— and we can discuss how long X should be but it should be longer than one year— beginning with the passing of this Act. It should then expire, but at anytime before the expiry of this part Her Majesty may, by order in council, direct that it shall continue in force for another period of one year, provided that Her Majesty shall not be recommended to make an order under this section until a draft of this order has been approved by resolution of each House of Parliament". This phrasing is precedented in a number of other pieces of legislation of this character. It is something more permanent than purely emergency legislation, but not so permanent as to remain on the statute book after it has ceased to be necessary. I think the whole House believes that Part II of this Bill should not remain on the statute book for longer than is necessary. Therefore, my question to my noble friend is this: would he be prepared to consider something along the lines that I have indicated in substitution for what is being moved at the moment, and be prepared to discuss what length of time X should be?

Lord Bellwin

My Lords, perhaps I may first respond to my noble friend Lord Sandford. Of course I will, as always, read carefully what he has said. However, I am bound to say that the reasons which I shall give for being unable to accept this amendment will apply to what he has proposed.

The amendment takes into account what was debated in connection with a similar amendment in Committee. This amendment seeks to time-limit an order introducing general rate limitations, and, unlike the amendment we discussed in Committee, the order would relate to Clauses 10 and 11. However, the purpose is basically the same: to require the Secretary of State to seek annual renewal of the powers in both Houses of Parliament.

I still cannot accept this amendment. My reasons are exactly the same as those given when we discussed Amendment No. 79 in Committee: namely, that the annual renewal of powers is more appropriate to emergency legislation such as the Prevention of Terrorism Act. I just cannot accept that general rate limitation powers are in any sense similar to such emergency legislation. However much noble Lords opposite, and indeed my noble friends, are worried about this and however much they may not like it. the fact is that the powers have been specifically endorsed before in our election manifesto and the legislation is being subjected to proper scrutiny by both Houses of Parliament. Furthermore, the decision to seek to activate Part II will have arisen only in circumstances where the previous convention on local government spending has clearly broken down. Should that situation ever arise—and I say again and again that I sincerely hope and believe it will not— it would be quite unreasonable to expect matters to be put right in one year.

Nor could I accept a biennial renewal of powers. nor triennial, nor, for that matter, any other fixed period of time. At this time it is simply not possible to say how long it might take to put matters right. If, however, after a period of time it is felt that circumstances have changed so that the form of the general limitation powers, or the need for them, is brought into question, I see no difference between this legislation and, frankly, most of the other legislation considered by this House. That is why I believe that there is no basis on which to accept the time limiting of these powers, whether on annual renewal or any other fixed period.

As to the point which was made by the noble Lord, Lord Underhill, about affirmative procedures in the House, I agree that it would, indeed, be exceptional for the House to reject an affirmative resolution order, particularly where it related to a specific manifesto commitment of the Government. We are all familiar with the controversy which surrounded the rejection in 1968 of the order relating to the Rhodesian sanctions, but it is certainly not unknown for the House to divide on contentious pieces of subordinate legislation. I am informed that since 1968 there have been a score of occasions on which opposition to Government orders has been pressed to Division, on a Motion to approve the order, or on an amendment to the Motion, or on a related procedural Motion. This record shows that the House has always been cautious in the use of its powers, but it also shows that the powers exist.

I regret that we are not getting any further, because I know your Lordships believe that, with a time limit, it would not be open-ended. If the circumstances come about—as I sincerely hope they will—then, just as with other legislation, there will be no difficulty. That is why I have to say that I cannot accept the amendment.

Lord Underhill

My Lords, needless to say. I am disappointed with the Minister's reply. We took the three reasons why the Minister could not accept the amendment at the Committee stage and incorporated them in an amendment which is no longer technically deficient; at least, we believe that it is no longer technically deficient. The Minister has indicated that he believes it is in order. Having therefore, dealt with those points, we hoped that the Minister would either accept the amendment or make a reasonable suggestion about how to amend it.

I am grateful for what was said by the noble Lord. Lord Sandford. I do not understand why the Government cannot impose a time limit of some kind on the order, bearing in mind that our amendment provides an opportunity for renewal by affirmative resolution, whenever the Minister wishes. The view of local government—this view is. I am sure, shared by my two fellow presidents of the associations—is that central control of local government will become a permanent fixture. That is what local government now believe and they will continue to believe it. That belief can be removed not only by consultation, but by the Government fixing a period.

The Government say that the period of one year contained in the amendment is insufficient. However, they could fix a not unreasonable period, bearing in mind that there will still be the power to renew by order, if they so wish, at the end of that period. The Minister has said exactly what he said at the Committee stage, even though I have attempted to answer the points which he made then. However, I do not think that it would be right to divide the House at this stage. We ought to look very carefully at what the Minister has said and also at what the noble Lord, Lord Sandford, has said, bearing in mind that there will be a further stage of the Bill when something can be done to restore the confidence of outlook which is missing in local government at the moment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

9.13 p.m.

Viscount Ridley moved Amendment No. 26: Page 8, line 14, at end insert— ("( ) No order shall be made under this section unless at least 50 authorities have been designated under Part I of this Act in relation to the financial year immediately preceding the date on which such order is made.").

The noble Viscount said: My Lords, I admit that this amendment ought properly to have been moved at the Committee stage and that it is being raised a little late in the day. I hope, however, that that will not prevent a short consideration of the point which I wish to make. Earlier in our proceedings today Part II of the Bill was likened to the nuclear deterrent—to be used only when conventional weapons have failed. The question is, when would such a situation be triggered off and what would trigger it off when the conventional Part I of the Bill failed? Nobody wants to pull the nuclear trigger in this Bill, or in any other sphere. However, the Government have frequently said that they will introduce a general scheme only when all the specific weapons at their disposal have failed to bring about the desired result. But they have been diffident in saying how and when they would define that situation as having arisen, despite the pressure in another place and here to do so.

The Government have said also— and my noble friend Lord Bellwin himself has said— that Part II will be introduced only if 60, 80, or 100 authorities are spending excessively. In the amendment, I have chosen the much more modest figure of 50 local authorities, so I hope that the House will not regard this as wrecking the Bill but as helping the Bill. I hope it will require the Government to be a little more specific about the conditions in which the general powers will be invoked. It will only be effective, as I have said, when Part I has failed.

This provision would mean that adherence to Part II on the horizon can be seen to be coming forward by all concerned and that the country will realise that Part I has not been a success. Therefore, for all I know, Part II may well be justified in the future. This amendment will not stop the Government's purpose, nor hinder what the Government are doing. I believe it would be helpful to define the position where, as my noble friend Lord Bellwin said in respect of the previous amendment, the situation "has clearly broken down". I hope that this amendment will be given sympathetic consideration.

Should the figure of 50 local authorities be wrong, I shall be quite happy not to stick to it; I shall be willing to accept a figure of 49 or 51. The point I wish to make is that there has to be a minimum number of local authorities attacked under Part I before Part II should be brought into being. I beg to move.

Lord Bellwin

My Lords, may I say, first, that at present we do not envisage a situation in which 50 local authorities might qualify for selective action. Although I seem to have failed to convince noble Lords opposite that that is so, I want to repeat that point. When we keep speaking of from 12 to 20 local authorities, that is exactly what we mean. It will not be too long before we are able to show that that is so.

I have listened carefully to what has been said by my noble friend in support of the amendment. I believe there is still some confusion as to the Government's position. Throughout, we have said that the general rate limitation scheme is not applicable in present circumstances and that it does not apply at the present time. At present, we have a small minority—I say again. a small minority—of grossly overspending councils which account for the great proportion of total overspending.

In these circumstances, we have argued that selective rate limitation is adequate since the large majority of authorities are spending at or close to their expenditure targets. We have gone on to ask, "What if the picture changes? What if, despite capping the rates of the present minority of irresponsible authorities, we continue to experience significant overspending because a large number of local authorities spend well above their expenditure targets?". That would be a different situation and one that could occur without a large number of authorities actually spending so much that, individually, they would qualify for selective action. We have said that in those circumstances, the different approach of general rate limitation might be appropriate.

I have consistently resisted— I acknowledge—all attempts to impose artificial constraints on the introduction of a general rate limitation scheme. I have done so for two reasons. First, we believe that such constraints will only weaken the deterrent effect of the powers. If authorities know that there are procedural hurdles in the way to a general limitation, they will be less concerned about the possibility of its introduction.

Secondly, I cannot accept that it is sensible to try to restrict the scope for action in the case of powers, which, if they are used at all, would only come into effect at an uncertain point in the future. However sensible or realistic a constraint may seem to be now, there can be no certainty that it will look the same when and if the time ever came to apply it.

We have provided already for a very important restraint on the Secretary of State's freedom of action, by requiring the approval of both Houses to an order to bring Part II into effect. The important point is that if and when the time ever came, the Government would have to make their case in Parliament. I am sorry because I know that this does not satisfy my noble friend; it is not without reluctance that I cannot accept this amendment, but I hope he will feel able to withdraw it.

Baroness Birk

My Lords, before the noble Viscount replies, I fear that I must intervene. If it were not so serious, this Bill would be absolutely hilarious. It is incomprehensible. As my noble and learned friend observed, it is full of gobbledegook. The drafting is absolutely appalling. Its intentions are not known. The motivations are all mixed up. We see this all the way through the Bill. The Minister is doing the best that he can with, honestly, almost the worst possible piece of legislation that he could have had thrust on him. In that way I feel very sorry for him about it all.

It is not now really a question of whether the noble Lord accepts this particular amendment which has been moved by the noble Viscount. It is a question of the whole see-saw. I repeat this once again; we are all having to repeat the same things, and that applies also to the Minister. On the one hand, we are told that the Government do not expect to invoke the general power. We, therefore, argue that they could at least give this lapse of three years. We are told, no, they cannot do that because something dreadful may happen and we have to be ready for it. The noble Viscount then suggests that we give a number of authorities. The Government say, no, they cannot do that, because we do not know the number. We are talking, of course, of a handful, say, 12 to 20. When we ask whether it is a big or a little handful, we get no answer at all. As I say, the whole thing is absolutely ludicrous. It is like being Alice in Wonderland. It is absolutely appalling. The more we go on, and the Government bring forward more and more amendments—Amendment No. 4 was, unfortunately, an oustanding example—the more completely incomprehensible, intricate, introverted and tied up the whole thing becomes. It is an insult to both Houses of Parliament that we should have been presented with this Bill.

Viscount Ridley

My Lords, I have no intention of pushing this amendment. I am sorry that the Government cannot see the logic of my argument that it is better to have Part II defined than not defined. As the noble Baroness, Lady Birk, said with great eloquence, the Government have refused all efforts to define matters when they were bringing in Part II. I have said before, and I say again, that I think they will live to regret that attitude, but I shall not press the amendment. I beg leave to withdraw it.

Amendment, by leave, withdrawn.

Clause 10 [Authorities subject to general control]:

The Deputy Speaker (Lord Renton)

My Lords, if Amendment No. 27 is agreed to, I cannot call Amendments Nos. 28 to 31 inclusive.

[Amendment No. 27 not moved.]

Viscount Ridley moved Amendment No. 28: Page 8, line 31, leave out ("each of the three") and insert ("the").

The noble Viscount said: My Lords, I hope that it will be convenient for the House to take with this amendment, Amendments Nos. 29, 30 and 31, as they all refer to the same point. Amendment No. 29: Page 8, line 31, leave out ("years") and insert ("year"). Amendment No. 30: Page 8, line 34, leave out ("each of the three") and insert ("the"). Amendment No. 31: Page 8, line 34, leave out ("years") and insert ("year").

We were presented at Committee stage with a considerable concession by the Government in that certain authorities were to be exempt from Part II of the Bill if they fulfilled certain conditions. I think that the House, and I am sure local authority associations, welcomed that very important concession—provided of course that the authorities concerned have proved their good behaviour for a certain period of time. I think we had a debate on that on that occasion. The trouble is that in order to qualify for that exemption an authority has to get over two hurdles. First, it has to be below its GREA, and, secondly, it has to be below its target. As we said at the time, both are movable hurdles which can be shifted at any period. Therefore, to avoid what is, in effect, jumping twice through two hoops on four occasions can be quite a process; so perhaps, on closer thought, the concession is a little less generous than we might have expected.

In order to qualify for the concession an authority has to obey the conditions for not less than four years—that is to say, the three years preceding and the year for which it has budgeted. If the concession is to mean anything, it should be reduced in period. The amendments seek to say, in effect, that an authority has to prove its fulfilment of the conditions for the first year—that is, the year just ended— and to be budgeting below the targets and the GREA for the second year. The authority could then say to its ratepayers, "We are no longer in fear of rate capping and we can go ahead and do what we promised to do".

I believe that the amendment is a modest improvement which would make the Government's concession more realistic and more acceptable and, hopefully, would come into life before this Government disappear and perhaps the Government after them. Otherwise, the legislation will be with us for so long that the concession will be meaningless. It may be wrong that it should be a total of two years, rather than four. It could be a compromise, which is not difficult to see, to cover three years; that is to say, to be good boys for two years and to promise to be good boys for a third year. But I believe that the concession the Government gave would not be seriously weakened by this group of amendments.

I think there was a considerable attempt among Conservative Members of Parliament in another place to move in this direction, but of course they did not have this amendment because it did not come before them. If I remember rightly, it appeared, or saw the light of day, only a very short while before our Committee stage and I do not think we had enough time to consider it, though, as I said on that occasion, and as I am sure we all agree, it is a considerable and generous concession to a process which nobody really enjoys. In that light I hope that the Government will consider it most seriously. I beg to move.

Lord Bellwin

My Lords, it is certainly not the Government's intention that prudent authorities with a consistent record of good management in compliance with our spending guidelines should be set a rate limit were a general power of rate limitation ever needed. Indeed, our purpose in amending Clause 10 in Committee was to provide for the exclusion from the operation of a general rate limitation scheme authorities with an established record of responsible self-restraint. We recognise the strength of feeling on this issue both in this House and in another place. We have now provided that should general rate limitation ever prove necessary, rate limits will not be set for authorities which have not exceeded their GRE in each of the previous three years and which are so budgeting again in the year in which the question of exemption falls to be determined, or which have budgeted similarly in relation to their expenditure target.

The amendment before us seeks to cut down the period during which an authority must demonstrate its self-restraint to just one year, and the year in question. I cannot accept that an authority could demonstrate consistency over such a short period of time. It would be perfectly possible for an authority to manipulate its budgeted total expenditure by the use of special funds, to give an impression of prudence which would allow it to avoid a rate limitation. Two years is too short a period to judge whether an authority is really complying with the guidelines. It is only if we are sure of that, that we can justify giving an authority the special treatment provided for in Clause 10, as amended. If we were not sure, the consequences for ratepayers in these areas would be serious. An authority which had manipulated its budget to secure exemption could be expected to make a particularly heavy demand on its ratepayers during a year when it had an unrestricted rate to refinance its balances.

I gather from what my noble friend Lord Ridley said that in some ways we have weakened; we have not gone as far as was proposed in another place by the honourable Member for Honiton and others. While what was talked of there did suggest that expenditure should be considered only over a two-year period, it is also true that it would have provided only for the exemption of authorities which had met their targets consistently. So long as targets continued there would have been no GRE exemption.

I think your Lordships will accept that we have gone slightly further in one important respect because we have provided for authorities which have consistently spent below GRE to be excluded, even if they have exceeded target. As I said in Committee, we certainly do not condone any spending over target but it is very unfair to suggest that our amendment was less satisfactory for the authority which has truly exercised self-restraint.

I should like to take the opportunity, during debating this amendment, to revise the statement I made in Committee about the amendment which we then agreed to on Clause 10. I said that, using the pattern of local government expenditure over the past three years and budgets for the current one, 208 English authorities might have been exempted if that question fell to be decided now. In fact, it appears that the correct number would be 220. I apologise for not having that figure right before, but I think the difference does not significantly alter the situation. Certainly, it does not worsen it.

Of course, we must continue to be wary of reading too much into the evidence of past years. We have made and we meant to make a significant concession to the reasonable concerns of the prudent authorities. What we are being asked to do in the amendment now before us is to take a chance with the protection that we are offering the ratepayers in higher spending areas. I fear that this is something that we cannot do.

I feel that this is an attempt to meet some of the concerns expressed although I do not have any of the fears to which the noble Baroness in particular referred when we were discussing the last amendment. I have much more confidence than that. Having said that, I hope that my noble friend will understand why I am not able to accept the amendments.

Viscount Ridley

My Lords, I am grateful to my noble friend, and I certainly shall not push the amendments. However, I should like, by leave, to make two points. I should have said of course that four years is the life of a council. If you have to be good boys for four years, someone else will reap the reward of your good behaviour or otherwise because there will then be an election and someone else may take over. In two years, you can show results that you could not otherwise do. My noble friend's defence was not as strong as that which he normally deploys, and I am sorry that he has lapsed from his high standards. He said that if you were very good boys for two years, you could then be very naughty after escaping the Bill and get it all back in the third. That, applied after four years, means that you can get even more back in the fifth. I do not accept the force of my noble friend's argument, but I am wasting time and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 29, to 31 not moved.]

9.33 p.m.

Lord Kilmarnock moved Amendment No. 32: Page 9, line 4, at end insert— ("( ) The Secretary of State shall by notice in writing served on an authority exempt it from the operation of subsection (1) above in relation to the next financial year if he is satisfied that, in relation to that authority, one or more of the following conditions apply, namely—

1. (a) that the authority has exercised its best endeavours with a view to ensuring—
1. (i) that its expenditure in the previous financial year has not exceeded the grant related expenditure (as defined in section 56(8) of the Local Government, Planning and Land Act 1980) of that authority, and
2. (ii) that its expenditure in the previous financial year has complied with any guidance issued by the Secretary of State under section 59(6)(cc) of the said Act of 1980;
2. (b) that the authority is a designated authority for the purposes of the Inner Urban Areas Act 1978;
3. (c) that the authority has entered into arrangements with the Secretary of State or Ministers pursuant to section 7 of the said Act of 1978;
4. (d) that all or any part of the authority's area has been designated a special area pursuant to section 8 of the said Act of 1978;
5. (e) that any increase in the total expenditure of that authority or in any rate levied or precept issued by it, as between the last but one financial year and the financial year immediately following that financial year has been less than the increase in the Index of Retail Prices in the same period.")

The noble Lord said: My Lords, this rather bulky-looking amendment which I move on behalf of my noble friend Lord Evans of Claughton, seeks to pin down the Government to give a definition of how a local authority wishing to conform in every way with the Bill could achieve exemption from subsection (1). If an authority is to avoid the sin of overspending, it would help if we had a definition of what this sin in reality is, or, alternatively, of what virtue is. The amendment would protect local authorities by making sure that a local authority would not be penalised if it complied with the Government's 1980 Act and if it is a designated authority for the purposes of the Inner Urban Areas Act 1978. If the area in question already has special problems, what is the point of giving with one hand and taking away with the other? The amendment would simply let local authorities know where they stand by giving guidelines for the criteria of designation or exemption from designation.

Looking at the amendment in detail, paragraph (e) provides for exemption if the total expenditure of the authority in preceding years has been less than the increase in the retail price index. This would make it supremely virtuous. As we have already heard from the noble Lord, Lord Beaumont of Whitley, local authority expenditure is almost inevitably normally above the RPI rate of increase.

The amendment, in essence, asks the Government to define a virtuous authority rather than leaving everyone in the dark. The noble Lord I think on a number of occasions during the Committee stage and possibly today, has referred to reasonable expenditure. The question really is, "What is reasonable expenditure?" At present, we have no definition of this at all. It is like asking the Government how long is a ball of string and getting no answer. This is a probing amendment. We want some clarification from the Government of what a virtuous authority is, and what reasonable expenditure can be expected to be. I beg to move.

Lord Bellwin

My Lords, this amendment, too, is exactly the same as one tabled during Committee stage and seeks to introduce further exemptions from the operation of the general scheme. Obviously, the statement I made during the Committee stage has not satisfied noble Lords opposite. The first part of the amendment again seeks to exempt authorities which have tried to meet GRE and target in the previous financial year. However, as your Lordships know, the Government have already amended the Bill to exempt authorities with a proven record of responsible spending. This is now incorporated in subsections (2), (3) and (4) of Clause 10.

In my view, the Government's amendment, with the specific criteria that we have adopted, will be much easier to operate than what is advocated in the first part of this amendment. I cannot see how it would be possible to establish that an authority had used its best endeavours to reduce its spending. How can one measure a best endeavour? In my view the Government's approach is much preferable and I could not support the first part of the amendment.

The next three exemptions in the amendment, dealing with partnership and programme authorities, overlap substantially since all partnership and programme authorities must also be designated authorities for the purposes of the Inner Urban Areas Act 1978 and a special area cannot be defined except for a partnership or programme authority. We have heard once more how inner city authorities ought to be exempt from rate limitation because of their special problems, but, for the reasons we debated at great length in earlier stages, I cannot accept that view. We know that inner city areas do have special problems and that is reflected in their GRE assessments. I have before me a lot of figures to illustrate that.

I have already explained in Committee that the Government willingly support programmes of action through the partnership and programme authority machinery. I said earlier today that for five years I myself have been deeply involved in that work, so I know that that is so. But that does not give them carte blanche to spend money. The arguments which I advanced then still hold good now. I do not propose to detain your Lordships by repeating them again. Suffice it to say that we already have in mind the special needs of inner city areas. But inner city status is not inconsistent with responsible control over expenditure and—I repeat this and say it carefully—the search for economies.

The final exemption in this amendment would exclude any authority which between one year and another increased its total expenditure or its rates by less than the rate of inflation. Again, I explained in Committee why I could not accept this. Nothing has been said in the meantime to make me change my mind. Such an exemption would still be open to considerable manipulation by those willing to exploit it. Furthermore, it would require us to exclude any authority which was standing still in volume terms. The purpose of this Bill is to secure real reductions in spending, particularly from the high spenders. None of the proposed exemptions in this amendment is acceptable to the Government, and in those circumstances I hope the noble Lord will be able to withdraw it.

Lord Kilmarnock

I am grateful to the noble Lord, Lord Bellwin, for covering all the specific points in the amendment. Tomorrow I shall read with great care what he has said. He has indicated that the Government are alive to inner city problems, although I must say that in my opinion they do not seem to be going about dealing with them in quite the right way.

I am slightly confused by his claim that the RPI or the matter referred to in the last subsection could be manipulated. I was not quite clear what he meant by that. As for standing still, I should have thought that if in some areas expenditure could stand still while needs and problems were increasing—demographic problems and social problems of various types—those authorities would be doing very well indeed. I will read carefully what the noble Lord has said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Sandford moved Amendment No. 33: Page 9, line 13, leave out from ("exceed") to ("by") in line 15 and insert ("£10 million, he shall").

The noble Lord said: I move this amendment for the same good reasons that the Government have introduced into Part I of the Bill a threshold of £10 million: that is to say, to avoid a lot of bureaucratic investigation, calculation, review and negotiation over amounts of public money which are not material when compared with the budgets of those authorities who are spending sums several times in excess of this amount. I move it for the additional reason that the authorities to whom this threshold applies—namely, the 333 members of the Association of District Councils—have, in aggregate, been within the Government's targets not only last year but also this year, and show no signs of going outside them. Therefore, there really is no need for this part of the Bill, any more than the previous part, to bear upon these authorities and to cause all the extra work that would be involved.

I should also like to speak to Amendment No. 34:

Amendment No. 34: Page 9, line 17, at end insert— ("( ) The Secretary of State shall before the commencement of each financial year by an order made by him increase the amount specified in subsection (5) above by not less than the increase in the retail price index for the preceding calendar year."). I certainly do not want to press either of these amendments now, and particularly not Amendment No. 34 because we have already agreed in the course of dealing with Amendment No. 2 that there is a better formula for indexing the threshold than the one now proposed in this amendment. So what I am moving is an amendment along the lines of Amendment No. 33 to introduce the threshold into this part of the Bill for the reasons that I have just given, and to attach to it a further amendment along the lines of that which I proposed and which the Government accepted in principle when I moved Amendment No. 2 earlier this afternoon. I beg to move Amendment No. 33.

Lord Bellwin

My Lords, as I seem to have said time and time again in discussing this Bill, the circumstances which would lead to an introduction of a general limitation scheme would have to be substantially different from those pertaining today. Whereas we regard the £10 million exemption limit as appropriate for the purposes of the selective scheme, we simply cannot possibly know at this time what might be appropriate as an exemption limit for a general scheme. Indeed, it might not be appropriate to have any exemption along these lines, especially since we have already included in subsections (2), (3) and (4) of Clause 10 specific exemptions for authorities with a proven record of responsible spending.

The Bill as presently drafted allows us some flexibility over the operation of the general scheme. Not only will it allow us to exclude authorities in a similar fashion to the selective scheme, but it would also permit us to exempt authorities spending less than amounts which could be related to GRE or targets. But that flexibility would be lost if these amendments were accepted. I wonder whether my noble friend quite takes that point on board. Furthermore, £10 million might be too low a figure if at any stage in the future we had to introduce these powers. And under this amendment we would have no way of increasing the figure save by annual inflation increases, but those could not start to apply until Part II is brought into effect.

For all those reasons I believe that the subsection as presently drafted would allow us the right degree of flexibility to operate a general scheme in a way appropriate if at any time it became necessary. I have difficulty with the amendments, and in accepting them, because to do so would, in my view, deny us that flexibility of approach. I wonder whether my noble friend, on reflection, would not be inclined to agree with me.

Viscount Ridley

My Lords, before my noble friend sits down, may I say what enormous pleasure it gives me to agree with him for once in the arguments which he has just advanced. I referred a few minutes ago to Part II as a nuclear deterrent. I cannot see that district councils can claim exemption from nuclear deterrents; it is like the GLC calling itself a nuclear-free zone—such a thing does not exist. I hope that this amendment will not proceed any further.

Lord Sandford

My Lords, I think that it is an excellent amendment and it does nothing at all to upset the flexibility which my noble friend requires. But unless I manage to collect some support from either the AMA or the ACC I shall obviously not have any luck. Therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 34 not moved.]

9.45 p.m.

Lord Kilmarnock moved Amendment No. 35: After Clause 11 insert the following new clause:

("Guidance under s. 59(6)(cc) of 1980 Act.

Where the Secretary of State has—

1. (a) issued guidance to a local authority pursuant to section 59(6)(cc) of the Local Government and Planning Act 1980 (in this section referred to as the 1980 Act); and
2. (b) determined a maximum expenditure level for an authority pursuant to this Act,

then notwithstanding the provisions of the 1980 Act for the purpose of the issuing of guidance to an authority and the determination of an authority's maximum expenditure as aforesaid, the higher of the figures shall be used for both purposes.")

The noble Lord said: My Lords, this amendment is similar to one that was put down by my noble friend Lady Stedman during the Committee stage. The difficulty that it seeks to reduce is the apparent contradiction of issuing rate-capped authorities with a spending limit which is different from the two benchmark figures which are currently used in the block grant.

At present— that is, in 1984–85—each authority has a "grant-related expenditure assessment" and a "target". These are different figures calculated in different ways. In fact, at various stages in the Bill we have heard about these extraordinary discrepancies. If rate-capping is introduced under this Bill each authority whose rate is to be limited will also have a third, and a different, spending norm.

Authorities cannot possibly be expected to understand which of three spending benchmarks they should, in fact, be spending near. It would be likely that an authority spending at its rate-cap spending limit would be penalised for overspending its target, and this is obviously ridiculous.

This amendment would oblige the Government to use the higher of each authority's "target" and "rate-cap expenditure limit" for both purposes. That is, if an authority had a "target"of £50 million and a rate-cap expenditure limit of £60 million, then £60 million would also be used as the target. Surely it is desirable to reduce the elements of doubt in the shifting sands of this Bill.

This could be accommodated within the existing law for target-setting. It could be a principle used in setting the target that it could not be lower than the rate-cap spending limit. The effect of the amendment should be to reduce confusion and contradiction, and to introduce much-needed simplicity into a deplorably complex system, while not challenging the Government's objectives. I beg to move.

Lord Bellwin

My Lords I do not accept that expenditure levels and targets should necessarily be set at the same level. They have different purposes and there could be good reasons for determining them in different ways. It would not be surprising therefore if the numbers differed in the end. I explained these differences in Committee when we considered a similar amendment. Perhaps it would help your Lordships if I set out our thinking again in the light of this modified amendment.

Looking at targets first, they are set by formula and, subject to that important limitation, they reflect the Secretary of State's judgment of the amounts he could reasonably ask each authority to aim at in order that the Government's overall expenditure plans should be met. But they are not individually tailored figures, and authorities have the ability to overspend the target figure—at the cost of grant holdback and therefore higher rate bills. Unlike targets, expenditure levels feed straight into the rate limit, which means that, effectively, authorities cannot exceed them. So, whereas targets can be exceeded, albeit at the cost of higher rates, expenditure levels cannot.

Secondly, precisely because these levels cannot be exceeded, we have provided in the Bill for a redetermination procedure which allows the Secretary of State to take account of particular local circumstances of individual authorities. In setting targets, by contrast, he cannot do that: he is statutorily obliged to calculate targets on principles applicable to all authorities.

So an authority's target must be based on general principles and can anyway be exceeded. Its expenditure level under the Bill can take account of its particular circumstances and cannot be exceeded. Those important differences may well result in different target and expenditure level figures for an authority, and with good reason.

It has been suggested that it would be illogical to provide for authorities spending at the expenditure level set by the Secretary of State to face the possibility of grant holdback if that level happens to be higher than its target. I disagree. As I have explained, the expenditure targets and expenditure levels serve two purposes and are derived in different ways. The expenditure level will not be an approved minimum expenditure level but a statement of the maximum spending level to be taken into account in setting a rate limit. There is no reason why an authority spending at that level should not decide to make the extra effort to get down to its target and avoid holdback. And it would be quite unfair to ratepayers in authorities which are not selected if they had to bear the cost of lost grant in the event of overspending, if authorities which had worse spending records were to be exempted.

The new clause ignores the two essential differences between targets and expenditure levels, and that is why we cannot accept it.

Lord Kilmarnock

My Lords, I am grateful to the noble Lord for that extremely ingenious explanation. I am not sure that I am able to accept it, but for ingenuity it was almost matchless. The fact still remains that the general principles of the Government's public expenditure objectives which are embodied in the targets may take no account whatsoever of the expenditure levels which the Government agree are needed by certain local authorities to maintain their services. I must have a simple mind because I find that surprising.

When there is the further complication of the rate-capping limit and there are these three possible figures juggling around in the air, it seems to me that confusion is worse confounded. It is strange the analogies that come to one's mind in this Bill. I think I used "minefield" when movng the last amendment. This time I used the words "shifting sands". They are all appropriate. They underline the imperfections and unsatisfactory nature of this Bill. I shall read with my usual care what the noble Lord has said, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 36 not moved.]

Clause 18 [Commencement]:

Baroness Birk moved Amendment No. 37: Page 12, line 30, at end insert— ("( ) Part I of this Act shall not come into force unless and until the principles referred to in subsection (4) of section 2 have been approved by each House of Parliament.")

The noble Baroness said: My Lords, the Government are asking Parliament to give them a blank cheque with this Bill, as has been pointed out before. Selective rate limitation is a major accretion of power to the centre, yet the amount of parliamentary control over rate limitation is minimal. Soon after this Bill is enacted the Government will announce their first hit list. The first batch of authorities will be designated for selective rate limitation; but despite probing in this House and also in the other place we do not know on what basis those authorities will be designated. We know only that they will be designated in accordance with principles; that there is scope in the Bill for 16 different sets of principles to be drawn up to ensnare local authorities; and that more principles will be the subject of a report to Parliament. That is all we know for certain, because that is all the Bill says.

During the Bill's passage the Government have attempted to assuage Parliament's fears about this aspect of the Rates Bill by publishing a putative hit list based on 1983– 84 data. Ministers have used this to illustrate two points. First, they claim that whatever the criteria the same authorities appeared on the hit list. Secondly, they used it to illustrate the sort of criteria—a word the Government use interchangeably with principle, and incidentally define neither—that might be used to designate authorites, but we were not reassured by the Government's illustrative hit list.

The Government's statisticians used 11 different combinations of 11 different factors to produce a hit list of 33 authorities. Each of the combinations caught between 12 and 28 authorities. Only five authorities appeared on every one of the 11 combinations of criteria. For other authorities their inclusion on the hit list, their designation as an overspender, depended critically on the criteria, or principle, chosen. The City of London, for example, managed to appear as an overspender on three of the 11 combinations of criteria.

One of the worrying aspects—the whole thing is a nightmare—has thus been illustrated by the Government's own statements. Just what principles are used will be crucial in determining the fate of individual authorities. We cannot give Government such unbridled powers. It would be quite wrong and quite contrary to our Parliamentary democracy. Parliament should see the principles for clarifying overspenders before the Government use this Bill's powers. Hence the purpose of Amendment No. 37 which makes sure that the principles have been approved by each House of Parliament. In approving the principles somebody will then have to get down to defining them so that we shall at least start at the beginning once again. I beg to move.

Lord Bellwin

My Lords, this amendment seems to re-open the debate which we had earlier on Amendment 12 in Committee, about the provision for parliamentary scrutiny of the process of selection for rate limitation. The amendment seeks to prevent Part I of the Bill coming into effect until the principles on which selections will be made have been approved by both Houses of Parliament. I hope that, following certain correspendence I have been having, and my earlier remarks, your Lordships are now clear about what we mean by "principles" in this context. I should like to repeat some of the facts for the record.

We are proposing no formal procedure for the approval of the report mentioned in Clause 2(1), which will set out the names of the authorities designated and the principles on which designation would take place as provided in Clause 2(6). That report will be laid before the other place and we have undertaken that a copy of it will be sent to each authority named. The Secretary of State's decisions and the basis on which they have been taken will therefore be set out formally and in the public domain.

As I have said before, members of the other place may pursue the interests of their own constituencies by correspondence, or by bringing deputations from the authorities concerned to see Ministers to explain their case. They may also pursue the matter by parliamentary Question or adjournment debate. If the feeling in the other place was that there was a need for more general debate of the principles on which the Secretary of State had acted then there are procedures for achieving this. The Environment Select Committee could determine that it would investigate the report and call for Ministers and officials to give evidence.

There are additionally other opportunities available and Governments can always make time available. I have always said that if there were a general desire for debate and there was a danger that it could not otherwise be arranged, no doubt the Government would consider sympathetically a request for assistance through the usual channels. I am convinced that there will be adequate opportunities for consideration of the Secretary of State's determinations in Parliament without the necessity for the statutory procedure envisaged by this amendment.

We have discussed the idea that the designation report should require the approval of both Houses. We have rejected that notion in Committee by voting against Amendment 12. This amendment differs only in proposing that an approval should be given once only to a set of principles before Part I comes into effect. That seems to me rather odd since there is no provision in the Bill for the principles to remain the same each year. And I am advised that it is technically defective to require the approval of the principles before Part I can come into effect when those principles cannot statutorily exist until Part I comes into effect. For all the reasons given, I cannot support the amendment.

Lord Beaumont of Whitley

My Lords, are we to understand the Minister to be saying in the last part of that reply that the principles referred to in Clause 2(4) are likely to change from time to time, because if that is what he is saying it becomes even more of the nightmare—as my noble friend Lord Kilmarnock was trying to put together—of the two ideas of shifting sands and the minefield. If you can think of anything more of a nightmare than a minefield and shifting sands, I cannot. I think that this Bill is that.

It seems to me that this is an extremely good amendment. The noble Lord the Minister produced all sorts of other ways in which its ends could be achieved, but none as simple and as effective, it seems to me, as this particular single method, whereby, as is only right, Parliament should approve what this Bill is about before it comes into force. Unless it has the opportunity to examine those principles and to vote on them it will be voting on a Bill based on principles about which it does not know and which will change, it is now informed, from time to time. I cannot think of anything more unsatisfactory than that.

Perhaps this time of night is not the moment to try to force this amendment to a Division. Nevetheless, I do not think this amendment should be abandoned because it seems to me to go to the heart of the matter.

Lord Bellwin

My Lords, with leave of the House, I should like the noble Lord, Lord Beaumont of Whitley, to read carefully Hansard for the debate which we had on Amendment No. 3. That debate went to some length and went round the whole of the matter. Although tempted, I feel it would not be appropriate for me to go over that again now, but that explains more clearly than may have come out in the debate on this amendment the matter of the principles, how and what they are and how they would operate.

Baroness Birk

My Lords, I thank the noble Lord, Lord Beaumont of Whitley, for his stalwart support. He is quite right, as my noble friend Lord Graham of Edmonton was when he moved Amendment No. 3 earlier this afternoon. Since principles in this Bill are such a movable feast I do not see why the Minister should be so exercised about whether one set is referred to in one lot or in different lots. As the noble Lord, Lord Beaumont, pointed out, there is little point in pressing this to a Division tonight, and we shall have to find another way of approaching it, perhaps in the last stages of the Bill. Nevertheless, the only way we can get any solace from all this is that when the Government find, unfortunately, that they get into the muddle which we have all foreseen they will have on record the much stronger straws at which they can clutch than those with which they are building the Bill at the moment. i beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Birk moved Amendment No. 38: Page 12, line 30, at end insert— ("( ) Parts I and II of this Act shall continue in force for the period of three years beginning with the date of the passing of this Act and shall then expire.")

The noble Baroness said: My Lords, this amendment is an attempt to limit the life of rate limitation to only three years. There was much feeling about this both on Second Reading and in Committee. This is now another version which is trying to obtain the same objective.

We have heard again and again during the Bill's passage that the system of local government finance is riddled with anomalies, inequities and complexities. The present Government have legislated in an attempt to solve the problem of local government finance three times in the last five years. They have also withdrawn two Bills on the same subject. I must, in all fairness, say that the previous Government also found difficulty in dealing with local government finance. That is not the monopoly of one party: I say that right away.

However, the Government have created a nightmare now for those elected councillors and officials who have to try to deliver services against the background of shifting targets, changing rules and nine different grant sytems in five years.

On top of this wholly unintelligible mess, the Government have superimposed rate capping, which we are engrossed in tonight. In one blow they have added to the complexity of local government finance and, worse, confused the already tenuous accountability of local councils to their electorates. The Government had two chances; one on Second Reading in a reasoned amendment and one again at Committee stage, to try to do something to sort out this financial muddle in local government, but they turned it down on both occasions. Nobody, not even the Government, I am sure, will say that the system of local government finance we shall have when the Bill is enacted will be anything other than a tremendous mess. In fact the Government have now superimposed one big mess on an already enormous mess. We cannot countenance this system continuing in this way unamended. Local government would atrophy and gradually be taken over by the DoE in the same way that the DHSS runs the Health Service. I really think that the DoE is changing from the days when I was there, and I hate to think what that machine is like now.

Lord Beaumont of Whitley

Hear, hear!

Baroness Birk

My Lords, the noble Lord may well say "Hear, hear!" I am sorry for all those who work in that building and who also have to look at it. The Government will try again to liquidate their way out of the chaos. I would guess that in about 18 months' time we shall see again further local government legislation. But this need not be the case. Why do the Government not say now that enough is enough? They now have their manifesto commitment to "protect the ratepayers". though one must ask at what cost in terms of the damage to local democracy. One must also ask whether, when it comes out in the wash, it will, in fact, protect the ratepayers.

Why do the Government now not concede that the Rates Bill is not a long-term solution and recognise—though I do not expect them to do so—its naked expediencies and say that the search will continue in a vigorous manner for a better way of financing local services, encouraging local participation in Government, and letting local committees have a proper say in the levels of services that they would want to see? That can be done by putting a time limit on Parts I and II which would encourage that to take place. Rate capping is not the answer. If the Government were to see it—as, at times, they keep saying that they see it—as only a stop gap, then, by accepting this amendment, they would be coming part of that way and would be giving themselves a chance to rethink and to reknit the whole thing, which is what they will have to do in the future. I beg to move.

Lord Bellwin

My Lords, I listened with interest to the noble Baroness's dissertation and her cri de c œur as regards the state of local government finances— the same thing that I have been hearing for about 20 years. The tune is slightly different each year, but the song underneath is pretty much the same. There is no doubt that whenever you seek to have a system which tries, on the one hand, to distribute several billion pounds' worth of grants among some 450 authorities on the principle of equalisation, you are bound to have problems and difficulties, for wherever there are winners so there are losers; that some get more means that some others get less. In the past we had a convention that everyone more or less followed and worked within Government outline parameters for spending; and that seemed to work more or less all right.

What the noble Baroness was fair enough to remark upon—and I remember it so well, for I was making representations from the other side of the table at the time—what a complexity it always has been; and, I suspect, always will be. I do not think that the amendments to this particular part of the Bill get us much further forward. For the time being the urgent problem is to carry on dealing with the problem of excessive spending and rating which, happily, so far is confined to a relatively small number of authorities. If that problem can be dealt with and the traditional relationship between local government spending and central Government's responsibilities for economic policy can be re-established, then I believe that we shall have gone a long way to improving the climate of relations between central and local government.

That is something to which I hope we shall be moving. I am still convinced that the bottle is half full and not half empty and that there is opportunity. I know that there is cynicism and I know of the concern expressed, but I feel that we cannot accept these amendments. I do not think that time-limiting is the answer. It may be, as I said at Second Reading, that the time will come for something else. In all truth, it never seems to stop being something else; but when that time comes is a matter for further debate.

Lord Henderson of Brompton

My Lords, I wonder whether I may say something at this stage. I have not so far spoken on this Bill. In a way this amendment is a modification of the amendment in Committee of the noble Lord, Lord Chelwood. He moved to leave out Clause 9, I think it was—the first of the clauses in Part II. That was defeated in Committee. This is a lesser amendment in that it seeks to limit both Parts I and II to a life of three years, which I do not think the House as a whole would support. But I wonder whether the noble Baroness would consider at a later stage moving an amendment to limit the life of Part II to three years. With regard to Part I, I think the majority of the House feels it is necessary, although I do not expect that the Opposition would agree to that. But Part II is contingent and involves reserve powers and perhaps there are certain dangers, so there is something to be said for limiting the powers of Part II to a specific period of time. That suggestion might find favour with the noble Baroness at a later stage.

Viscount Ridley

My Lords, I hope that the Government will give serious consideration to the suggestion that has just been made. I am sure that this is a compromise which could well find considerable acceptance in the country.

Lord Bellwin

My Lords, I was lost in fascination listening to the noble Lord, Lord Henderson of Brompton. It really is a delight to hear him speak. I cannot answer clearly as to what one might do. I suspect that, having come all this way, we could not now decide to put a time limit on the general scheme. I am well aware of the concern, and the Government have spoken again and again—and I have done so too—of the great reluctance with which we have this in the Bill at all. But either it is a deterrent or it is not. Only time will tell how effective is Part I of the Bill. I believe that it will be effective and successful; time will tell. As to whether or not one does anything else with Part II, I am bound to say that, although I sympathise very much with the motivations of the noble Lord, Lord Henderson of Brompton, I must question that. But I shall think about what he says.

Baroness Birk

I listened with great interest to what the noble Lord, Lord Henderson of Brompton, said and I shall want to give it some thought. I am grateful to him for his suggestion. In the meantime, I beg leave to withdraw Amendment No. 38.

Amendment, by leave, withdrawn.

Clause 19 [Short title, interpretation and extent]:

10.12 p.m.

Lord Monson moved Amendment No. 39: Page 13, line 3, after ("Rates") insert ("(Protection of Ratepayers)").

The noble Lord said: My Lords, may I first of all explain that because of a misprint somewhere along the line the name of the noble Lord, Lord Harris of Greenwich, has been erroneously included on the Marshalled List in support of this amendment. The name that should have appeared is of course that of my noble friend Lord Harris of High Cross.

The purpose of the amendment is to alter the Short Title of the Bill so that it would read: "Rates (Protection of Ratepayers) Bill". The purpose of this Bill is to protect the ratepayer". Those are not my words but those of none other than the noble Lord, Lord Bellwin, speaking on the 26th April at col. 166 of the Official Report. Identical assertions were made at various times by many other Ministers and other senior Conservatives both in this House and in another place. Even a noted Conservative opponent of the Bill, Mr. Geoffrey Rippon, speaking on the "World at One" on 28th March conceded that the Bill would "protect most ratepayers." He then went on to attack the general powers in Part II of the Bill which he particularly disliked. The Secretary of State for the Environment, Mr. Patrick Jenkin, defending the Bill in the Observer of 29th April explained: Where the system allows ratepayers to be exploited, the Government must step in to protect them. Nobody else can. That was backed up in greater detail a week later by the chairman of the Ratepayers' Action Group for the Lothian Region, writing in the Daily Telegraph on 4th May. He explained that without the effective form of rate capping which applies in Scotland. the regional rate would be more like 200 pence in the pound than the 96 pence in the pound that applied as a result of the de facto rate capping.

Despite all this, the Bill is strangely unpopular with the general public, as a number of quite separate public opinion polls have revealed. This unpopularity would seem to stem from what most people, and most outside commentators, agree to be poor presentation on the part of the Government, and ineffective public relations. A bland and uninformative Short Title is symptomatic of the poor presentation, in my submission. It is no business of mine, speaking from these Benches, to boost the Government's image. On the other hand, I do not want to see a government of a different political persuasion coming to power, as is bound to happen one day, and rates soaring astronomically, way above the rate of inflation, simply because the public have not been won over to the undoubted overall merits of this Bill, despite a number of imperfections. I also believe that accuracy and precision in a Short Title are desirable in themselves. I therefore beg to move.

Lord Bellwin

My Lords, one can begin to respond to that by asking, what's in a name? I am bound to say that I am not without some sympathy for what the noble Lord, Lord Monson, says about this. He says the public have not yet been won over. I think it would take more than a name to do that. What matters is not the name, but the outcome and how effective the legislation is. That is what will decide at the end of the day whether or not the Bill is successful and whether the public are really won over. I believe in fact that the Bill is very much welcomed by those who actually pay the rates, and I have no reason to think otherwise.

I am afraid that I cannot accept the change in the Title of the Bill, though I thank the noble Lord for his motivation in proposing it, which I know is very supportive. But as well as protecting ratepayers, there are many other substantial provisions in the Bill which would not be covered by this proposed Title. Your Lordships will have noted that these provisions make up more than half the Bill, in terms of pages of text. So although the Bill certainly does protect ratepayers, that is not all that it does. That is why I think we have to stick with the Title "Rates Bill", and for me it will have to be a case of a rose by any other name smelling as sweet.

Viscount Ridley

My Lords, is it not true that there is a further danger in accepting this proposal, in that if the Title were to be changed, every ratepayer in the land would think that his rates would be protected? Ratepayers would think that it was about rate capping, and therefore if the rates were to go up at all, they would blame the Government for allowing them to do so and for not capping them; and the Bill would not work. We are told that only between 12 and 20 authorities are affected. What would happen to the other 429 who are not affected if it were to be called the Protection of Ratepayers Bill? They would think that their rates would not be protected, by the Government's own admission. Therefore I think it would be very unwise for the Government to accept this proposal. however desirable it may be.

Lord Bellwin

My Lords, by leave of the House, the point is that 80 per cent. or more of authorities try very hard to keep their rates down to reasonable levels—and likewise their spending. That is why the thrust of the Bill is with the minority of high spenders. That is where the emphasis has to lie.

Lord Henderson of Brompton

My Lords, I should like to support the Minister in resisting the amendment. There is a touch of frivolity behind the seriousness with which the amendment has been moved. I recall that the late Lord Conesford moved a similar amendment to a Bill which was entitled the Park Lane Improvement Bill. A dual carriageway was made and part of Hyde Park was taken for the purpose. Lord Conesford's amendment to the Short Title was to substitute "Hyde Park Diminution Bill". That amendment was resisted on the grounds of frivolity.

Lord Monson

My Lords, I am afraid that I am not entirely convinced by the arguments that I have heard against the amendment. Some of the Government's support has been of a rather barbed nature; but if they do not wish to accept a helping hand, who am I to press it upon them? I can only beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 1 [Miscellaneous amendments and repeals]:

10.22 p.m.

The Parliamentary Under-Secretary of State, Department of Energy (The Earl of Avon) moved Amendment No. 40: Page 14, line 30, at end insert—

(" Part of hereditaments temporarily unoccupied

3A.—(l) In subsection (1) of section 25 of the principal Act for the words from "until" to "subsection" there shall be substituted the words "until whichever of the events specified in subsection (1 A) of this section first occurs".

(2) After that subsection there shall be inserted— (1A) The events mentioned in subsection (1) of this section are—

1. (a) the reoccupation of any of the unoccupied part;
605
2. (b) the ending of the rate period in which the request was made;
3. (c) a further apportionment of the value of the hereditament taking effect under that subsection.

(1B) Where an apportionment of the value of a hereditament under subsection (1) of this section has taken effect in a rate period and, in that or a subsequent rate period, it appears to the rating authority that the part of the hereditament which was unoccupied at the date of the apportionment has continued to be unoccupied but will remain so for a short time only, the rating authority may give further effect to the apportionment by making a determination under this subsection in relation to a specified rate period.

(1C) From the commencement of the rate period to which a determination under subsection (1B) of this section relates until whichever of the events specified in subsection (1D) of this section first occurs the value apportioned to the occupied part shall be treated for rating purposes as if it were the value ascribed to the hereditament in the valuation list.

(1D) The events mentioned in subsection (1C) of this section are—

1. (a) the reoccupation of any of the unoccupied part;
2. (b) the ending of the rate period to which the determination relates;
3. (c) a further apportionment of the value of the hereditament taking effect under subsection (1) of this section."

(3) In subsection (2) of that section for the word "subsection" there shall be substituted the word "subsections".

(4) This paragraph shall have effect for any rate period beginning on or after 1st April 1984; and any apportionment which has taken effect under subsection (1) of section 25 of the principal Act before this paragraph comes into force shall cease to have effect on 31st March 1985, unless it has previously ceased to have effect under that subsection or it is the subject of a determination made by virtue of this paragraph in relation to a rate period beginning after that date.")

The noble Earl said: My Lords, this amendment relates to Section 25 of the General Rate Act 1967. It enables rating authorities to provide at their discretion rate relief on parts of premises which are temporarily out of use. The amendment we are proposing would make the provision more workable by setting a time limit on the relief. I hope your Lordships will agree that it is a sensible amendment. I beg to move.

On Question, amendment agreed to.

The Earl of Avon moved Amendment No. 41: Page 15, line 20, after ("hotel") insert (",shop, museum")

The noble Earl said: My Lords, paragraphs 4 and 5 of Schedule 1 provide powers for the Secretary of State to bring operational land and properties of the British Railways Board, London Transport Executive and the British Waterways Board—the transport boards—into the rating system by means of statutory formulae. At present these premises are excluded from rating by Section 32 of the General Rate Act 1967, and instead the boards pay contributions in lieu of rates set down in statutory formulae. Non-operational property, such as hotels, offices, places of public refreshment and premises let out by the boards are, however, rated normally.

The provisions in the Bill include powers to vary the coverage of the formulae by order. Should any further refinements, additions or deletions be necessary in the light of consultations with the organisations which will take place before any use is made of these powers, we could redefine the coverage, as required. I commend this amendment to your Lordships' House.

On Question, amendment agreed to.

The Earl of Avon moved Amendment No. 42: Page 19, line 14, at end insert—

("Non-domestic hereditaments not in active use

7A.—(1) After section 46 of the principal Act there shall be inserted— Relief for non-domestic hereditaments not in active use 46A.—(1) For the purposes of this Act a hereditament to which this section applies shall be treated as unoccupied if, apart from this section, it would fall to be treated as occupied by reason only of there being kept in or on the hereditament plant, machinery or equipment—

1. (a) which was used in or on the hereditament when it was last in use; or
2. (b) which is intended for use in or on the hereditament.

(2) This section applies to a hereditament which is not a dwelling-house, a private garage or private storage premises; and in this subsection—

1. (a) "private garage" means a building having a floor area not exceeding 25 square metres which is used wholly or mainly for the accommodation of a motor vehicle; and
2. (b) "private storage premises" means hereditament which is used wholly in connection with a dwelling-house or dwelling-houses and wholly or mainly for the storage of articles of domestic use (including bicycles and similar vehicles) belonging to persons residing there.

(3) For the purposes of subsection (2) of this section a hereditament that is not in use shall nevertheless be treated as a dwelling-house, a private garage or private storage premises if it appears that, when next in use, it will be a hereditament of that description. (2) This paragraph shall have effect for any rate period beginning on or after 1st April 1985.")

The noble Earl said: My Lords, my noble friend Lord Mottistone tabled an amendment at the Committee stage which would have provided what is commonly referred to as mothballing relief for parts of premises which were unused. We were unable to accept his amendment, but I believe that this amendment, together with Amendment No. 40 to which I have already spoken, should go some way towards the same objective of helping businesses which are suffering from the recession. I hope that the House will welcome this amendment, as well as Amendment No. 40, as a valuable package for industry and commerce. I beg to move.

Lord Graham of Edmonton

My Lords, can the noble Earl tell the House whether any estimate has been made of the rates which would be forgone by local authorities in the event of this amendment being implemented?

The Earl of Avon

My Lords, the limits already imposed by the Government on the level of empty property rates which can be levied by rating authorities mean that after the three-month rate-free period such unused industrial premises would receive 100 per cent. rate relief, and that any other non-domestic premises would receive 50 per cent. rate relief. The amendment will help businesses which have to close down but which do not wish to strip out plant and machinery. I cannot give the noble Lord a figure such as that for which he asks, but if I can have one discovered I shall let him have it.

Lord Graham of Edmonton

My Lords, I am grateful but when it is suggested to the House that this will be of considerable help to industry, although that may very well be so, it must be because someone in the Ministry has taken that view. If the extent of that help turns out to be minuscule, then we shall want to draw that fact to the attention of the wider public. On the other hand, if a reasonable figure can be found, then, as far as I am concerned, it is certainly acceptable.

On Question, amendment agreed to.

10.26 p.m.

Lord Stallard moved Amendment No. 43: Page 23, line 48, at end insert— ("( ) At the end of sub-paragraph (1)(c) of paragraph 2 of Schedule 13 to the principal Act there shall be added:— (d) occupied by persons as their homes in respect of which they are liable to make payments by way of rates (whether to rating authorities or to other persons);" ".)

The noble Lord said: My Lords, I beg leave to move the amendment standing on the Marshalled List in the name of my noble friend Lady Birk. This amendment seeks to draw attention to an anomaly in the rating system which affects tenants in some multi-occupied properties and non-self contained homes. Since this amendment comes right at the end of the Marshalled List and is sandwiched between a number of amendments which seem to be automatically accepted, I suppose there is not much danger that this amendment will not be accepted as well—so I shall be brief.

Amendment No. 43 refers to Schedule 13 to the 1967 Act, which deals with the use of premises as private dwellings and lists a number of exceptions to the hereditaments being used as private dwellings. Our amendment seeks to add yet another exception to deal with these particular tenants.

At present, the rating authorities are required to levy the non-domestic rate poundage on such properties; that is, before deducting domestic rate relief grant. As I recall it, local authorities, borough treasurers and directors of finance throughout the country are usually guided by the description of property put out by the valuation officer at the time of revaluation or when some other procedure has to be gone through. We all know that that is not a very regular occurrence. The last revaluation was in 1973, or about then, and so the descriptions are not necessarily always accurate or up to date. This situation creates the anomaly to which the amendment refers.

The effect of the anomaly is a considerable cost to tenants in such homes. I understand that from information compiled by the Westminster City Council rent officer—which must be fairly impartial—it is possible to ascertain the effect of this inequity upon individuals. The total commercial rate payable on one such house in multiple occupation in the W.2 district of London for 1983– 84 was £2,472.16. In this property, there were 20 non-self contained bedsitters, making an average rate payable per bedsitter off 123.60. If the domestic rate poundage were payable in respect of that property, each tenant would pay only £103.19, thus saving £20.41. That is quite a saving for people in those circumstances.

Such tenants are very often the most vulnerable members of the community. They often do not qualify for points under the various points scheme and so they have no chance of securing a permanent council dwelling. Very often, they are people who cannot afford to purchase in the market. They are vulnerable to that extent. There are people, I imagine, living in parts of Westminster who are affected by the Rachman exposé of a few years ago. They are certainly people who are not very often protected by the rent Acts. They are in a category which requires special attention. It is true that they may qualify for housing benefit, but they may not. Even if they do, that does not detract from this failure to treat all domestic ratepayers alike.

As I speak, I am reminded of, I think, the 1980 Act, where we decided to apply the domestic rate poundage to private garages. I know that that is not perhaps exactly relevant, but if in that context it can be applied to private garages, I think that now we should apply it to these very vulnerable people living in such circumstances. I hope, therefore, that the noble Earl will see fit to accept the amendment. I beg to move.

The Earl of Avon

My Lords, I am grateful to the noble Lord for moving this amendment because it gives me the opportunity to explain to the House why the existing legislation concerning the provision of domestic rate relief is framed in the way it is. Section 48 of the General Rate Act 1967 requires rating authorities to provide domestic rate relief of 181/2 pence in the pound on domestic hereditaments which include dwelling-houses as defined by Schedule 13 to the Act, which the noble Lord mentioned. Schedule 13 specifically states that where the whole, or substantially the whole, of the available accommodation is used for the letting of rooms singly for residential purposes then, except in certain special circumstances, the hereditament shall be deemed not to be used for the purposes of private dwelling or private dwellings. Effectively this means that domestic rate relief is not available for hotels, guest houses or houses in multiple occupation.

This amendment is intended to ensure that houses in multiple occupation, such as hostels and buildings divided into bedsits, are covered by the definition of a dwelling-house and are hence eligible for domestic rate relief. I must say at once that it is not clear that the amendment would do this in all cases, because it would seem to be necessary for any agreement between the tenant or licensee and the landlord to include specific provision in respect of payment of rates. That is not the point.

The reason why such types of property are excluded from the definition of "private dwelling" is that they are normally let out on a commercial basis. The courts have taken the view in various contexts that eligibility for domestic rate relief should be related to the use made of the hereditament by the rateable occupier. In the case of hostels and buildings divided into bedsits, as well as hotels and guest houses, that rateable occupier is likely to be the owner or landlord rather than the tenant or licensee. In these circumstances, it is the landlord who will receive the benefit of any domestic rate relief, and there is nothing in this amendment that would require him to pass this benefit on to his tenants. I am sure that this is not what the House would wish.

The only way of ensuring that tenants do benefit from domestic rate relief is to make it available to them directly, and this can be done only where the building is divided up in such a way that separate rateable hereditaments can be defined and individually assessed. In these circumstances the tenants can be rated separately, and they will then receive domestic rate relief. But in many houses in multiple occupation this is not a practical proposition, particularly when certain facilities are shared. Perhaps more importantly, in many cases it is likely that assessment of the house as a whole will give a lower rateable value than if it were assessed in parts. This will often more than compensate for the loss of domestic rate relief.

I have gone into some detail in response to the noble Lord. I hope that he will agree that these are good reasons for not extending domestic rate relief to such accommodation and for leaving the law as it now stands. I hope that my explanation has helped and that the noble Lord will be able to withdraw his amendment.

Lord Stallard

My Lords, I am grateful to the noble Earl for his lengthy reply. I must confess that I am not convinced that his replies meet the up-to-date situation as we know it in local authorities at this moment. In boroughs like my own—certainly in Camden and many other inner London boroughs—many properties fall into the category that I described. They have not been reassessed or revalued for many years. If they were revalued in the way that I have suggested, they could be covered by the amendment.

In many ways I expected some of the responses that the noble Earl made. I expected him to say that there would be difficulties in assessment because of shared facilities, and so on. It is precisely because of those difficulties that our amendment seeks to rerate the whole house—in other words, to apply domestic rating to the whole house. That would take care of that point. I expected that the noble Lord would say that this would have an effect on the revenue. I can only say that that is conjecture. The noble Lord did not give any statistics about how much it would affect it and so on, and we could probably argue as good a case the other way.

I thought that the noble Lord might well deal at length with the position of hostels and guesthouses, which he did. Of course, we accept that and we did not include those in the amendment. So I feel that, while his reply may have been relevant some years ago, it is no longer relevant given the amount of development and redevelopment that has gone on inside houses, and the number of changes that have taken place that have not been funnelled through the local authorities, their treasurers, and so on. So although I expect and understand that he is not going to accept the amendment, I am disappointed with his reply. Nevertheless, I beg to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Avon moved Amendment No. 44: Page 25, line 27, at end insert—

("Substituted rates and precepts

.—(1) After subsection (8) of section 3 of the Local Government Finance Act 1982 there shall be inserted—

"(9) Where the original rate or precept has been quashed because it is insufficient to meet the expenditure required to be taken into account under section 2 or 11 of the said Act of 1967, subsection (2) above shall not prevent a substituted rate or precept being made or issued which is sufficient to meet that expenditure.

(10) Where, whether by virtue of this section or otherwise, a precept is issued to a rating authority after it has made a rate for the financial year to which the precept relates, subsection (2) above shall not prevent a substituted rate being made by the authority for giving effect to the precept; and a rating authority which makes a substituted rate by virtue of this subsection shall be entitled to recover from the precepting authority in question any increase in its administrative or rate collection expenses which is attributable to that rate."

(2) This paragraph shall have effect in relation to any financial year beginning on or after 1st April 1984.")

The noble Earl said: My Lords, this amendment stems from a commitment given in another place. The new subsection (10) of Section 3 of the 1982 Act is to a large extent in response to a commitment given by Ministers in a Commons Committee when Amendment 100, which was tabled by the Opposition, was withdrawn on an indication being given that the matter would be considered. This amendment is a result of that consideration, and I very much hope that the House will approve it.

On Question, amendment agreed to

Schedule 2 [Rating of moorings]:

Lord Skelmersdale moved Amendment No. 45: Page 25, line 29, at end insert—

("PART I

EXEMPTION OF CERTAIN MOORINGS

.—(1) No mooring to which this paragraph applies shall be liable to be rated or to be included in any valuation list or in any rate.

(2) This paragraph applies to any mooring—

1. (a) used or intended to be used by a boat or ship; and
2. (b) equipped only with a buoy attached to an anchor, weight or other device—
1. (i) which rests on or in the bed of the sea or any river or other waters when in use; and
2. (ii) which is designed to be raised from that bed from time to time.

(3) This paragraph shall have effect for any rate period beginning on or after 1st April 1985.

PART II

RATING OF MULTIPLE MOORINGS")

The noble Lord said: My Lords, this amendment ensures that certain types of mooring, commonly referred to as swinging moorings, are not liable to be assessed for rates. This is something that was asked for in another place and has been generally welcomed, both inside and outside Parliament. I beg to move.

Lord Graham of Edmonton

My Lords, is the Minister prepared to elaborate the definition of a swinging mooring?

Lord Skelmersdale

Yes, my Lords, most certainly. Swinging moorings are those moorings which are unattached to land and which can be temporarily removed for servicing. Generally speaking, they are those to which the boat or vessel is attached. The boat or vessel is attached by a buoy to the mooring at the bottom of the seabed. The weight to which the buoy is attached is attached by a line to the shore, otherwise it would float away. Therefore, the moorings being temporary, it was thought desirable that they should no longer be liable to be used for rating purposes.

Lord Graham of Edmonton

My Lords, I appreciate the explanation, but I do not think it is good enough simply to advise the House that this is in pursuance of an undertaking given in another place. I think this House is entitled to have an explanation given to it as to the merits of the amendment.

Lord Skelmersdale

My Lords, with the leave of the House, perhaps I should explain that Schedule 2 deals with the rating of moorings and has been the subject of a very large number of representations, mainly from yacht clubs and owners. Among these there is widespread and, I have to say, mistaken belief that the schedule places a new tax on yachting. Let me say quite clearly that the schedule as it currently stands in no way affects the basic rateability of moorings, which has existed for a very long time. In practice, however, many moorings have escaped rating because of the difficulty of identifying occupiers, while others have had to pay rates. This is clearly unfair. Schedule 2 therefore ensures that that liability can be better enforced by providing valuation officers with discretion to assess a group of moorings in separate occupation as a single hereditament in the occupation of the owner.

I quite understand the concern of the yachting community that this may lead to additional financial burden for some of them. Much of that concern is focused on whether it is proper to rate one particular type of mooring, commonly known as a swinging mooring, which, as I sought to explain earlier, consists of a buoy attached to an anchor or weight which lies on the seabed and is designed to be raised from time to time—for example, in the winter or for maintenance. There is some doubt about the rateability of such moorings, many of which may not be sufficiently permanently fixed to the seabed to satisfy the basic criteria for rateability. We therefore agreed in another place to bring forward an amendment to remove any such doubt by making clear that this type of mooring is not liable to be assessed for rates. The amendment that we are now considering does just this. I hope that your Lordships will agree that this is both sensible and pragmatic.

It is sensible from the point of view of the yachtsman because his position is now made entirely clear. It is sensible from the point of view of the rating authority because it will now know exactly on which moorings it can realistically collect rates, whereas up to now the situation has been at the very least indistinct. I do not think that it is appropriate at this time of night to go into details of the way in which the amendment is drafted. We have consulted the main interested parties on its terms, including the Royal Yachting Association, which, I understand, is content with it. Again, I referred to this earlier. The remainder of Schedule 2 is not altered and will apply to all moorings that are not exempted from rates by this amendment.

I hope that it will be thought appropriate for the House to accept this amendment. If not, I shall be happy to answer any further questions which your Lordships may feel, within the bounds of order of the Report stage, should be addressed to me. In the meantime, I beg to move.

Baroness Birk

My Lords, I thank the noble Lord for that absolutely fascinating and very detailed explanation. As one who has spent a certain amount of time on boats but who has never got to mooring them and who has also had the experience, on going through a lock, of being unable to jump from the boat to the shore, whereupon my husband fell in due to my efforts (that was the end of our going through locks!), I found the noble Lord's remarks extremely interesting and extremely educative.

Can the noble Lord say whether this applies not just to swinging moorings but to the very smart fixed moorings that one sees around—those with telephones attached, electric light and fresh water that can be connected? If so, is there an exemption for them? Or is this just an exemption for these particular moorings? Can be also say whether the yachting clubs are completely happy about this, and what representations the Government have received? I accept that it is a compromise, and what I would consider a reasonable compromise, but it would be interesting to know how it affects those people who actually use the moorings. I wonder if the Minister would be kind enough to prolong his contribution by giving those answers.

Lord Skelmersdale

My Lords, with the leave of the House, as one who spent a great portion of the Easter Recess sailing and, when I was not sailing, attaching the boat to a swinging mooring, I shall be delighted to answer the noble Baroness's intriguing questions. My honourable friend the Under-Secretary of State has received more than 100 letters in the department on the subject of this amendment or rather, should I say, on the subject of a concern which I suspect the noble Baroness and the noble Lord, Lord Graham, well understand. As a result of answering those letters, I should say that he has been able to convince those members of yachting associations and private boating associations of the justice of the measure that the Government are seeking to bring forward in Schedule 2 to the Bill.

I have never met a swinging mooring that has a telephone or electricity attached to it. If I were to meet such a thing, I would immediately invoke the wrath of the local environmental health officer because it would be a great danger to the public.

Baroness Platt of Writtle

Hear, hear!

Lord Skelmersdale

My Lords, it was the wrong noble Baroness behind me who happened to say, "Hear, hear" at that moment, because I would have expected my noble friend Lady Vickers, who in this House and outside it is a great champion of the environmental health officers, to respond to the remark that I have just made.

I hope that with those few remarks I will have satisfied the concerns of the noble Baroness and the noble Lord opposite. I think for the third time this evening on this particular amendment, I beg to move.

On Question, amendment agreed to.

Lord Skelmersdale moved Amendment No. 46: Page 28, line 12, after ("this") insert ("Part of this").

On Question, amendment agreed to.

Lord Skelmersdale moved Amendment No. 47: Page 28, line 23, after ("this") insert ("Part of this").

The noble Lord said: My Lords, I spoke to this amendment also with Amendment No. 45. I beg to move.

On Question, amendment agreed to.