Rates Bill

HL Deb 18 June 1984 vol 453 cc95-134

Consideration of amendments on Third Reading resumed.

Lord Skelmersdale moved Amendment No. 11:

[Printed earlier.]

The noble Lord said: My Lords, my noble friend has already spoken to this amendment in the group of amendments beginning with Amendment No. 5. I beg to move.

On Question, amendment agreed to.

[Amendment No. 12 not moved.]

Clause 4 [Determination of maximum rate or precept]:

Baroness Birk moved Amendment No. 13:

Page 5, line 20, insert— ("Provided that such an order does not—

1. (i) relate to authorities in more than one of the classes set out in section 2(5) of this Act; and
2. (ii) relate both to authorities which respectively have and have not been designated under section 2 of this Act in the previous financial year.").

The noble Baroness said: My Lords, what I am attempting to do in this amendment is to ensure greater parliamentary invigilation of the final stage of rate limitation. Unfortunately, previous attempts to get separate reports for authorities have failed. The last time we voted on this at Report stage the amendment was lost by six votes only and it had tremendous support from all sides of the House.

This amendment which I am bringing forward tonight requires separate reports by class of authority. In this context class means those classes listed in Clause 2(5) of the Bill: councils of metropolitan counties, non-metropolitan counties, metropolitan districts, inner London boroughs, and outer London boroughs. This means that the classes will be listed, plus dividing each class according to whether or not the authorities have been designated in the previous year. Therefore separate reports will be made, for example, for previously designated metropolitan counties, non-metropolitan counties, and so on. This would mean that there would be 12 categories plus separate reports for the GLC, ILEA, the City of London, and the Isle of Scilly. It also takes account of what the noble Lord, Lord Boyd-Carpenter, said on 5th June, at columns 557– 8 when we were discussing the previous amendment. He said: There will be no basis of comparison. It will not be possible to say, for example, that the GLC has been badly treated compared with South Yorkshire, or whatever example one may give, because one will not have the South Yorkshire figures for comparison.

This amendment would allow comparisons within the different classes. My argument is that at each step of designating authorities and determining their expenditure limits the Government may have recourse to 16 different sets of principles. Those I have worked out. They are the six which you double between non-designated and designated, and the four others. These principles are not required to be approved by Parliament when they are used. The Government have restricted parliamentary approval to only one state of rate limitation: the final step.

Given the misgivings expressed in the House about principles and the potential abuses of them they should require parliamentary control. This amendment, if accepted, would ensure that the different sets of principles used by the Government to discriminate against previously designated authorities would be subject to scrutiny. It would also enable the other place to accept or reject the case for the rate limitations against each class of authority, and thus it would provide for a little more discretion than the present approach of an omnibus report.

I should have thought that this would have been a more attractive proposition to the Government than the original amendment on a separate report for each authority which, as I pointed out, was lost by only a very slim margin. I hope, therefore, that in reply the Minister will be able to say, just briefly, that, yes, the Government accept this. I beg to move.

Lord Skelmersdale

My Lords, Hope springs eternal. In considering this amendment it is only fair, I think, to point out that this is well trampled ground. We have debated several times the parliamentary procedures for imposing rate limits on authorities with which the Secretary of State cannot come to an agreement. I believe that earlier amendments at successive stages on this particular point have been withdrawn without debate.

This amendment would require rate limits to be specified in separate orders for separate classes of authorities under both the selective and the general scheme. It would also require separate orders for authorities which had been designated in the preceding year and for those which had not.

I recognise the argument that the disagreed rate limit order is the point in the procedure at which Parliament has its principal opportunity to scrutinise the Government's proposals. But I believe that this can be done adequately within a composite order procedure. Although the Secretary of State will be looking at authorities' individual circumstances in considering applications for derogations, he will nevertheless have to take all his decisions on a basis that is generally consistent for all authorities. If two authorities had the same individual circumstance in some particular respect, the Secretary of State could hardly allow for that circumstance in different ways. I am sure that Parliament will be concerned especially with scrutinising this aspect of the handling of the procedures. In other words, the Secretary of State would otherwise be in trouble. The other place will want to ensure that there has been fair and balanced treatment between authorities. It seems to me this is the proper supervisory role of the other place, rather than the substitution of their individual judgments for those of the Secretary of State.

The procedures of the other place provide that orders must be approved or negatived as a whole. But I am not convinced that the procedure under Clause 4 would prevent proper discussions. As my noble friend has previously noted, that is certainly not the experience on the rate support grant report debates in the other place. That covers a far larger number of authorities than the 12 to 20 that could at most be involved under the selective scheme which is what we are talking about here. Yet individual views are able to come through clearly. Often debate is concerned with general principles, as illustrated by the case of particular authorities, rather than with the detailed circumstances of those authorities.

I recognise, naturally, that this is a compromise proposal. The supporters of the amendment have accepted that it would be impractical to have separate orders for each authority. They seek, nevertheless, to provide for some limit on the number of authorities covered by each order. But it is an unsatisfactory compromise. It increases the number of orders to be considered; but to what end? It does not allow individual circumstances to be separately considered; and there is no more reason to believe that the circumstances of all authorities in the same class will be identical to the extent that their rate limits should stand or fall together.

The order-making power allows the other House the opportunity to consider the circumstances and the decisions of the Secretary of State as a whole and to satisfy themselves that he has acted reasonably, consistently and fairly in exercising his statutory discretion. Erskine May describes the affirmative order procedure as being intended to be used where "special scrutiny" of subordinate legislation is appropriate. Under the Bill, the Secretary of State is not required to make composite affirmative orders, but I believe that, if he does, the procedure as it stands is an adequate safeguard. I hope that the noble Baroness will see that my noble friend and I have studied this with enormous care but still regret being unable to suggest that your Lordships accept the amendment.

Baroness Birk

My Lords, it is not really very much comfort to know that the noble Lord and his noble friend have discussed this and considered it with great care. When replying, the noble Lord said that I and my supporters recognised that to have a report for each authority was not satisfactory. That is absolutely not true. I will reiterate that we consider that that is by far the best, most important and safest way to have parliamentary scrutiny. That was entirely supported by the very large vote and the very near miss when we put this to a Division on Report. The only reason I have not put it hack is, partly, the convention that one does not put down exactly the same amendment when it has been voted on at a previous stage and partly because it is clear from the size of the House at the moment that I should not win it if I did so.

The compromise was also intended to meet some of the Government's objections. I thought that the contribution from the noble Lord, Lord Boyd-Carpenter, which I brought in aid, was very much on the lines of the amendment I put forward. It is clear that once again the Government have no intention of increasing the amount of parliamentary scrutiny that is essential if these rather dreadful propositions are put into practice. Therefore, I withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 9 [Power to introduce general control]:

Lord Henderson of Brompton moved Amendment No. 13A: Page 8, line 16, after ("shall") insert ("(a)").

The noble Lord said: My Lords, we now come to the first of the amendments on Third Reading to Part II of the Bill. My Amendments Nos. 13A and 13B are extremely simple and I can explain their purpose briefly.

Amendment No. 13B: Page 8, line 18, at end insert— ("; and (b) after such consultation, lay before Parliament in a White Paper the text of the draft Order which he proposes to lay under subsection (3) below, in sufficient time for both Houses of Parliament to take it into consideration and to suggest amendments thereto.").

However, before doing so I should like, if I may, to thank the Secretary of State, Mr. Patrick Jenkin, and the noble Lord, Lord Bellwin, for giving me the time to talk over with them an earlier amendment which I had in mind; a time limiting amendment designed to give a greater degree of parliamentary control over Part II, but which they found unacceptable. I should like to say that the Secretary of State himself voluntarily explored another way of strengthening the affirmative resolution procedure— a way which I had not thought of and he did— but found that that would be too complicated a change at this stage of the Bill.

It is those consultations for which I believe the Secretary of State and the noble Lord, Lord Bellwin, should receive credit, if I may say so, but which have caused a delay in my tabling these amendments for which I apologise to the House. These amendments have now come forward and, as I said, they are simple and uncomplicated and I hope that the House will understand the reason why they are so late.

I should also like to say that I put these forward from an entirely non-party political stance and I ask that there be a party political truce while they are considered— if such a thing is possible. I will refrain from all consideration of the merits of Part II and I shall be delighted if others who follow me on this amendment will refrain likewise.

My amendment seeks to amend Clause 9 so that, after the consultations by the Secretary of State with the local authority associations, as mentioned in subsection (2), and before the Secretary of State lays a draft order for affirmative resolution to activate Clauses 10 and 11, there shall be interposed an extra requirement on the Secretary of State so that there is an opportunity for both Houses to consider the text of the draft order which he proposes to lay under subsection (3) in sufficient time for both Houses to consider that text and, if they feel it desirable, to suggest amendments to it. My submission is that, unless this is done, Parliament will be presented with an order which it will have very little time to consider and no power to amend, or even to suggest amendments.

I think that it is indisputably the case that the local authority budget cycle is such that, when an order is presented to Parliament for approval under Clause 9, for all practical purposes it would be impossible to reject such an order. It would be impossible for the Government even to make any adjustments to the order in the light of parliamentary debate. The local authority budget cycle is such that most major decisions are taken between late December and mid-March; perhaps earlier in the case of county councils. I am sure the House is full of experts on local government and if I say anything wrong about the budgetary cycle I shall no doubt be corrected at once. This timing arises because final decisions cannot be made until the rate support grant settlement is made in December. The process for settling the maximum rate level for a year under Part II may not be completed in time for an authority to set its rate or precept. In that case there is provision for an interim maximum rate and I believe that is to be set under Clause 5. At a later date, after 1st March, a final maximum rate would be set.

Only when all the final maximum rates or precepts have been set could an order be laid under subsection (3) of Clause 9. If there is even one straggler, as in the case of Liverpool this year, that could cause delay in the laying of the order until after the start of the financial year. If the order were to be laid even as early as late March— and, as I have already explained, the Secretary of State may well find it difficult to be able to do so that early— it would be impossible for the Government to accept any adjustments whatever to the order without throwing the budgets of the local authorities into uncertainty, to say the least.

I draw a distinction between orders under Clause 9 and the rate support grant process, which is well established, where there is sufficient time for adjustments after the annual debate in another place in January each year and the beginning of the ensuing financial year.

Thus, for all practical purposes, Clause 9 as drafted would box Parliament in and make it impossible for either House to comment effectively, if only because the financial year to which the order relates will already have started. For that reason, the purpose of my amendments is to allow both Houses an early opportunity to discuss what the Government propose to do after they have consulted with local authorities, and thus to give both Houses, if they so wish— not to require them— time in which to debate the text of the order and to suggest amendments.

I would ask the House to note that my amendments place no obligation on Parliament whatsoever. It is nearly always undesirable for an Act of Parliament to lay down parliamentary procedures other than those that are well known and follow prescribed forms. What another place would do if it had the kind of opportunity which I hope these amendments would present to it by the White Paper procedure is entirely a matter for that House. Equally, this House might just decide, if it was satisfied with the text of the proposals in the White Paper, that it might be prepared just to look at it and not to take it into consideration. But if it wished to take it into consideration, it could well have a debate on it; and it might even, if it wished, invoke Standing Order No. 60, whereby this House can go into Committee on a Motion, and that would give an opportunity for amendments to be suggested.

Just in case there are those who think that suggested amendments are a new concept unknown to Parliament, I remind the House of Section 2(4) of the Parliament Act 1911, where there is a suggested amendments procedure. It is in a proviso. It is highly complicated— far too complicated for me to attempt to explain it to the House in a short time, let alone at this hour of the night. I may say straight away that my proposals contain no such complications as exist in that proviso.

I have argued the case for these amendments on purely parliamentary, procedural and practical grounds, and, I hope your Lordships will agree, in a low key and without discussing the merits of Part II of the Bill at all. I hope that the amendments are acceptable to individual Members of the House on all sides and not least to Her Majesty's Government. I cannot see any reasonable arguments against them. No doubt the Minister will attempt to adduce such arguments: but, if he could agree to these amendments, or perhaps send them to the House of Commons, where they might be slightly modified if there were some technical detail which was wrong in them (which the House of Commons would be perfectly capable of doing), well, then, I think that in this year of what the Speaker calls "The Frustration Parliament" this Parliament would, at least for the remainder of the Session, be a little less frustrated than it has been hitherto. I beg to move.

8.54 p.m.

Baroness Birk

My Lords, the amendments moved by the noble Lord, Lord Henderson of Brompton, are an extremely ingenious way to deal with a problem that has been troubling us all. He is quite right when he says that they are purely non-party amendments. Obviously what they seek to do is to improve parliamentary invigilation of the implementation of the general scheme of rate limitation. The noble Lord is absolutely right. He explained the position thoroughly, so it does not need very much more explanation from me or from anyone else.

Although the affirmative resolution of both Houses, which is at present in the Bill, is a major step, it does not offer very much opportunity for Parliament to change the Government's mind when it wishes to do so. The noble Lord's amendment introduces a White Paper stage, and that would mean that things could be more easily changed if Parliament were to express the view that the general scheme was wrong. That proposal seems to me to be a more than adequate halfway house towards what we have been trying to get from the Government and the Government have been totally resisting. It would enable discussion to take place and opinions to be given. It would be a very much more flexible procedure. Another place would also be able to comment on the scheme generally if it felt that amendment was necessary or the Government had gone wrong. I and my noble friends would certainly support these amendments.

Lord Chelwood

My Lords, the noble Lord, Lord Henderson of Brompton, has put some powerful arguments to the House. I, for one, strongly support his amendments. I hope that he will not feel I am breaking the party-political truce in any way by supporting him. I think that Amendments Nos. 13A and 13B march pretty obviously with Amendment No. 13C, because they deal with the question of parliamentary control and influence over Part II of the Bill. I see these amendments, therefore, as a last line of defence to try to avoid a breach of long-standing and widely accepted parliamentary practices.

Part II of the Bill is of course a very different kettle of fish from Part I. The attempt to delete Clause 9 during the Committee stage failed only rather narrowly. I think that the vote was 140 to 130, so the Government had a narrow squeak. Part II, as your Lordships know, can be activated only by affirmative orders which cannot be amended, which would not be negatived in present circumstances in another place and which should not be negatived in the Upper House— although it seems to me where this last point is concerned that we have been put in a false position by the Government.

At the very least, therefore, I feel that the Government ought to accept these two amendments and the following one. If they are not passed, I feel that we shall be forging a weapon that could all too easily be fired by a Government with extreme views, who were not sufficiently interested in democratic niceties, at targets for which it was never intended. Therefore, I feel that, without these amendments, Part II is setting a dangerous and bad precedent. The classic excuse for shooting the wrong person has always been, "I didn't know it was loaded". But Part II, unamended, I think, is heavily loaded. I feel very strongly indeed— and I believe that many noble Lords in all parts of the House would agree with me— that loaded weapons should not be left lying around indefinitely.

There was a very important all-party committee which reported to Parliament in 1932. It was the Scott Committee, of which Lord Donoughmore was a distinguished member. Its view was that discretionary powers given to Ministers through delegated legislation can all too easily threaten the sovereignty of Parliament and the jurisidiction of the courts. The committee recommended that a time limit of one year should be the limit for what it called— and what have often been called before and since— "Henry VIII clauses". Clause 9 is surely a "Henry VIII clause". I should be very grateful indeed to my noble friend Lord Bellwin when he comes to reply if he would comment on that point.

After all, the following amendment, which marches with these two, is asking only that Parliament should review those powers in five years and, if it does not pass affirmative orders, that those powers should lapse. That is not asking very much. It is asking only for a review after five years and not one year. If the noble Lord, Lord Henderson of Brompton, will forgive me for saying so, Amendments Nos. 13A and 13B are a device, but Parliament perhaps has to resort to falling back on devices when normal procedures seem to be being short-circuited.

The noble Lord said in moving these amendments, and I want to emphasise, that there could be no rush to activate Part II if Part I had failed or looked likely to fail during the next four years, or perhaps it might be seen to be failing in three years. There would be ample time, in either the 12 months or the two years available, for consultation to take place on the widest possible scale. That is something about which I am sure my noble friend will be telling us more, because some of us are anxious about the scale of it and how it would take place. There would be ample time for a White Paper to be published, as is suggested, on which both Houses could express their views and suggest amendments; and there would also be ample time for the laying of affirmative orders.

So, rather than speak too long at this hour of the night, I shall skip some other remarks I had thought of making and come to my conclusion. When the White Paper was presented on 1st August last year we were told by the Secretary of State that it had green edges. There was something in that, because where Part II is concerned there have been two valuable smallish concessions made— not all that smallish, but valuable concessions— one with regard to charities, which today is something that I think noble Lords in all parts of the House welcomed, and one about low-spending councils, a promise being made, as far as that is concerned, in another place. Surely now is the time for another minor concession; in other words, the acceptance of these three amendments.

Throughout part II my noble friend Lord Bellwin has put up a doughty defence for what I frankly regard as the indefensible. No one could have done it better than he has, and I admire him for what he has done. I cannot quite see it from here, but if his brief says "Resist" I am going to ask him to take it out of that red file and tear it up, now that he has heard the arguments of the noble Lord, Lord Henderson of Brompton, and is about to hear the arguments of my noble friend Lord Sandford on the next amendment. I ask him to tear it up and to agree to these minor procedural suggestions, which I think are very important. I therefore beg the Government to treat parliament with the respect that it deserves by accepting these three amendments.

Lord Mottistone

My Lords, perhaps I might briefly intervene to say that the principle of the amendments of the noble Lord, Lord Henderson— and I am not talking about the third one— seems to me to be very necessary to this House. Like the noble Lord, Lord Henderson, I am not talking about principles: I am talking on an all-party basis as far as I can. However, I think we have all found it most frustrating that you cannot amend orders. I think there should be an intervening stage at which it can be. wherever it is introduced. The noble Lord, Lord Henderson, is seeking to introduce it in this Bill, but I am not particularly arguing for that. I think it is worth all of us giving encouragement to the thought that there is a way of resenting an order so that it can be amended. It does not happen all that frequently. I have felt it very strongly, and so have several of my noble friends, when we have been in opposition, let alone when we are in Government on the Back-Benches.

I think it is very important to have, as it were, an intervening stage which enables one to amend an order. I think we should encourage that. Whether my noble friend will produce a good argument against not encouraging it in this particular Bill, I am not sure; but I think the principle that the noble Lord, Lord Henderson, with his great knowledge and experience, has introduced is absolutely splendid. I hope we shall have other opportunities for including it in Bills in appropriate places.

Lord Bellwin

My Lords, before I go any further, may I say to my noble friend Lord Chelwood that a Henry VIII clause is generally understood to provide a general power by subordinate legislation to amend primary legislation. Part II of this Bill is not, therefore, a Henry VIII clause. Before I comment specifically on the amendments, perhaps I should say one or two words about the policy thinking behind Part II and the safeguards that are built into it. I want first to make it clear that this Bill represents a single Government policy. The selective and general schemes on rate limitation are complementary. They represent a single policy for combating excessive local authority spending and rating. That policy was included explicitly in the manifesto on which we were elected.

The Government have always acknowledged that the implementation of the powers in Part II would be a significant change in the balance between central and local government. That is why we have always said that we would much rather never implement those powers. We would far prefer it if the operation of selective rate limitation on the small number of the highest spenders, together with the pressures which are already exerted on spending through the grant system and through targets, were adequate to ensure that our public spending policies were achieved.

There is not a case at present for introducing the general scheme. Nevertheless, as I have said in earlier debates, there are scenarios in which we could need the general powers in Part II, and need them quickly. In those circumstances we could not afford the time that it would take to process fresh legislation and then implement the scheme. While we were going through those steps, local authority spending might again be going out of control. That is the basic reason why we have thought it right to include Part II in the Bill and to discuss it in Parliament together with the powers in Part I. That is the straightforward thing to do. The powers are then on the statute book as a reserve basis, available if needed. Furthermore, they act as an influence on local authorities which might otherwise start spending.

We are not here talking about powers that impose penalties in retrospect on people who do not behave as desired. What we are talking about here are powers held ready in reserve in case the situation changes. There is a good analogy with the default powers included in many pieces of legislation but rarely used. They are there as an essential long stop in case the basic policy proves inadequate or is ignored by those concerned. For example, in the housing or education field there are general default powers that enable the Secretary of State to step in and carry out certain functions if a local authority itself fails to carry them out.

Of course, no Government would want to use such powers. Indeed, they are only rarely used; but it is generally recognised that any prudent and far-sighted Government should take steps within the statute, to cater for the situation where the law is not obeyed. That is really what we are about here. We hope that selective limitation will prove adequate, and under present circumstances we believe that it will. But circumstances might change and other authorities might begin to spend. We need reserve powers in order to be able to cater for that situation.

Although the noble Lord, Lord Henderson, has, I know, severe reservations about it, I want to stress the safeguard of the affirmative resolution procedure in both Houses. I know that there is at the present time a large majority in the other place, and that your Lordships do not by convention vote against subordinate legislation agreed by another place. Nevertheless, I am sufficiently old-fashioned, if you like, to believe that a debate and vote in either House of Parliament is a genuine way of measuring opinion on an issue and that if the powers sought are thought not to be justified either House might well find ways of making that position clear. Surely, the effectiveness of this check on the Government does not actually rely on the determination of the House to vote an order down but in the fact that the Government must bring the order to the House in the first place.

I think I can also say not unreasonably that there is nothing unparliamentary or undemocratic about a large majority in another place. It represents the will of the people. That is part of our democratic system. That is why we abide by that decision. All this convinces me, first, that the powers in Part II are not unparliamentary, and, secondly, that they are thoroughly hedged about with suitable safeguards which, I believe, in practice. would be meaningful. To argue that the safeguards are not meaningful is in a sense to argue against our whole system. There is nothing unprecedented about reserve powers. All this explains why I am satisfied with the safeguards in the Bill regarding the introduction of Part II.

The noble Lord, Lord Henderson, as I would have expected, put his case extremely fairly and reasonably. But his amendments would appear to add a further safeguard, as I think he would be the first to say, by requiring the Government to issue a White Paper incorporating the draft order under Clause 9(3). I am not sure whether such a provision, which at least would be unusual, would add to the accountability within the Bill. I have already explained that I believe that the affirmative resolution procedure represents a very real safeguard. Certainly, consultation with the associations is a further safeguard, but since such consultation could hardly be held in private it amounts to ensuring a degree of public debate about any intention to make the major move of introducing Part II.

I can assure the House, and do, that the Government would not seek to conduct such consultation in a secret way; so there would be opportunity to discuss publicly the principle of introducing Part II without the amendment. Let me clarify the timing problem. There is a practical concern about the amendment. We would not know in a given year until we had the budget of authorities for that year whether or not there were signs of major overspending. If there were, and we therefore needed to introduce the general scheme for the next year, we would need to move quickly in order to be able to announce proposed expenditure levels before the summer holidays. There is time to consult the associations, but I doubt whether there is time to issue a White Paper and hold a more formal consultation exercise. There is therefore a danger of missing a whole year of rate limitation, during which spending could get further out of control.

It is further the case that the draft order required under Clause 9(3) would not contain anything surprising. It is, in effect, a commencement order for Clauses 10 and 11 of the Bill. In itself, therefore, the draft order does not contain important material. It is unlikely that amendments would be appropriate. Its importance is that it is the trigger for the affirmative resolution procedure debates on the principle. Those are the real parliamentary safeguards and the source of accountability on this issue.

I recognise the concern of the noble Lord, Lord Henderson, about a possible precedent for other Bills. As I have said, I believe that these provisions are like the default powers, for which there are already many precedents. I do not think that the amendment which the noble Lord has moved would in practice increase the degree of accountability that is already povided for within the Bill, or the degree to which the Secretary of State would have to convince both Houses of Parliament of the wisdom of his proposal to implement the general scheme.

I have listened carefully to what the noble Lord has said both today and during the discussions to which he has again, typically and fairly, referred. I have also listened to my noble friends who have spoken on the issue. I respect their views as well in the matter. However, to interpose at this stage yet a further step in the proceedings would have a disadvantageous effect which, I know, is not the intention of the noble Lord, Lord Henderson. I feel, though, that it would have that effect. I feel also that there is scope for debate. After all, what are we actually talking about? We are talking here about the possibility of the implementation of Part II— a general scheme. We have said again and again that this would be a most major measure which would have a significant effect on the change in the relationships between central Government and local government. We would not embark upon that without the most careful and exhaustive of debates and consultations. It would be a major measure.

While most certainly I understand and respect the concern and vehemence with which my noble friend Lord Chelwood put it, I believe that here we have a situation where in those circumstances— and that is what this amendment is about— the whole issue would be such that the requirement here would not be necessary, but if we had it in this way it could have a really disadvantageous effect. It is not because of what it says on the paper in front of me, but because of those arguments, that I feel unable to accept the amendments.

Lord Bruce of Donington

My Lords, before the noble Lord sits down, will be answer one question? Albeit perhaps unknowingly, he has raised a very important constitutional matter. He has referred repeatedly to the affirmative resolution procedure through both Houses as being a safeguard. On at least two occasions he has said that it would require the approval of both Houses of Parliament. Are we to take it that if we on these Benches, together with noble Lords on all sides of the House, were to vote against an affirmative resolution, it would be acceptable to the Government and would not be regarded by them as a breach of the ordinary rules by which the House is governed?

The Lord President of the Council (Viscount Whitelaw)

My Lords, I think it is important for me, as Leader of this House, to answer that particular question. We had this question which came up once before on another order. I answered it then and I shall answer it now. It has been the case, I understand— I am a novice in these matters, as I consistently say, and it is important for me to say it— that normally your Lordships have decided not to vote directly against orders. That has been a convention which is thought to be right. Therefore, in answer to the noble Lord, I have to say that normally that would be regarded to be the position.

Both parties have accepted this over a period of time, and there are considerable problems if that were to be changed. So I would hope that it would be regarded that, while this House is totally entitled, I understand, to do so, nevertheless, as a matter of convention, it has not done so. If it has thought to do so, it has done it by expressing an opinion on the order, without actually going any further. I understand that has been the position and I think that, probably on both sides of your Lordships' House, it would be thought that was a reasonable position for us to be in.

Lord Henderson of Brompton

My Lords, I must confess to being disappointed with the Minister's answer. I do not really believe— and I doubt whether the House believes— that he really addressed himself to my important point about the local authority budget cycle and the constraints which it imposes upon the parliamentary time table. Under this procedure I fully recognise that in ordinary circumstances, the affirmative resolution procedure for bringing Part II of the Bill into operation is quite formidable; but in this particular case it suffers from the very grave disadvantage that it is constrained by the local authority budgetary cycle. That may mean, especially under the provisions of this Bill, that the affirmative resolutions cannot come before either House of Parliament until either just before or immediately after the beginning of the new financial year. In those circumstances, the affirmative resolution procedure has no value whatsoever. If either House chose to vote against it or had any kind of delaying tactic it would be pretty well tantamount to a vote of no confidence in the Government, and local authority finances would be in a state of chaos. It is that which makes me regard this as of special importance in this particular case.

I value very much the support which I received from the noble Lord, Lord Chelwood. He used arguments which I would not care to deploy, because they have a party political connotation. He is worried about long-term considerations of one sort and another. I am grateful also to the noble Lord, Lord Mottistone, for what he said. I am not asking for any kind of general power for an amendment to be introduced for affirmative resolutions or delegated legislation as a generality. But in this particular instance, because of the local authority budgetary cycle, I think there is a special case for the interposition of a White Paper consultative stage for Parliament. On those special grounds I would ask the House to support me in this amendment, irrespective of where Members of the House may sit.

9.20 p.m.

On Question, Whether the said amendment (No. 13A) shall be agreed to?

Their Lordships divided: Contents, 57; Not-Contents, 75.

DIVISION NO. 5
CONTENTS
Airedale, L.	Irving of Dartford, L.
Attlee, E.	Jeger, B.
Aylestone, L.	John-Mackie, L.
Barnett, L.	Kilmarnock, L.
Bernstein, L.	Kirkhill, L.
Birk, B.	McCarthy, L.
Briginshaw, L.	McCluskey, L.
Brockway, L.	McIntosh of Haringey, L.
Brooks of Tremorfa, L.
Bruce of Donington, L.	Northfield, L.
Carmichael of Kelvingrove, L.	Onslow, E.
Chelwood, L.	Pitt of Hampstead, L.
Cledwyn of Penrhos, L.	Ponsonhy of Shulbrede, L.
Collison, L.	Rochester, L.
Darcy (de Knayth), B.	Sandford, L.
David, B.	Seear, B.
Dean of Beswick, L.	Shaughnessy, L.
Denning, L.	Stewart of Alvechurch, B.
Evans of Claughton, L.	Stewart of Fulham, L.
Faithfull, B.	Stoddart of Swindon, L.
Gladwyn, L.	Stone, L.
Graham of Edmonton, L.	Taylor of Blackburn, L.
Grey, E.	Tordoff, L.
Hampton, L.	Underhill, L.
Hanworth, V.	Vickers, B.
Harris of Greenwich, L.	Walston, L.
Henderson of Brompton, L.[Teller.]	Wedderburn of Charlton, L.
	White, B.
Houghton of Sowerby, L.	Winstanley, L.
Howard of Henderskelfe, L. [Teller.]

NOT-CONTENTS
Airey of Abingdon, B.	Beloff, L.
Avon, E.	Belstead, L.
Bauer, L.	Brabazon of Tara, L.
Bellwin, L.	Brougham and Vaux, L.

Broxbourne, L.	Hood, V.
Bruce-Gardyne, L.	Hornsby-Smith, B.
Buckinghamshire, E.	Inglewood, L.
Caithness, E.	Ingrow, L.
Campbell of Alloway, L.	Kitchener, E.
Campbell of Croy, L.	Lane-Fox, B.
Carnock, L.	Lindsey and Abingdon, E.
Cockfield, L.	Long, V.
Coleraine, L.	Lucas of Chilworth, L.
Colwyn, L.	Lyell, L.
Cottesloe, L.	McFadzean, L.
Craigavon, V.	MacLehose of Beoch, L.
Craigmyle, L.	Macleod of Borve, B.
Crathorne, L.	Mancroft, L.
Croft, L.	Margadale, L.
Davidson, V.	Murton of Lindisfarne, L.
De La Warr, E.	Orr-Ewing, L.
Denham, L. [Teller.]	Pender, L.
Dilhorne, V.	Penrhyn, L.
Elles, B.	Peyton of Yeovil, L.
Elliot of Harwood, B.	Renton, L.
Elton, L.	Rodney, L.
Fisher, L.	Saltoun, Ly.
Fortescue, E.	Savile, L.
Gardner of Parkes, B.	Sharpies, B.
Glanusk, L.	Skelmersdale, L.
Glenarthur, L.	Swinton, E. [Teller.]
Gowrie, E.	Tranmire, L.
Grantchester, L.	Trefgarne, L.
Gray of Contin, L.	Trumpington, B.
Greenway, L.	Vaux of Harrowden, L.
Gridley, L.	Waldegrave, E.
Hailsham of Saint Marylebone, L.	Whitelaw, V.
	Wynford, L.

Resolved in the negative, and amendment disagreed to accordingly.

9.29 p.m.

[Amendment No. 13B not moved.]

9.30 p.m.

Lord Sandford moved Amendment No. 13C:

Page 8, line 21. at end insert— ("( ) This Part of this Act shall continue in force until the end of the period of 5 years from the passing of this Act and shall then expire but at any time before the expiry of this Part the Secretary of State may by order, to be approved by a resolution of each House of Parliament, direct that it shall continue in force for another period of one year.").

The noble Lord said: My Lords, I beg to move Amendment No. 13C. Your Lordships will see from the text of this amendment that it is the last in a long series of amendments of many different kinds moved from many different parts of the House, all of which have been designed to set some limits on the duration or the operation of this part of the Bill. I should have much preferred this amendment to be an amendment moved by Her Majesty's Government. During the whole of the period between Report stage and this stage I had some reason for hope and expectation that it would turn out to be that way.

The noble Lord, Lord Henderson, has indicated to your Lordships some of the discussions that were going on last week which gave grounds for that hope. It was only last Thursday that my noble friend who sits on the Front Bench spoke to me on the telephone and explained that although he and his colleagues—the Secretary of State and others—had been searching for a formula of this sort, they had not been able to arrive at one. In those circumstances, I felt obliged to put down this amendment. Your Lordships will see that it is in the mildest possible terms. It is far milder than anything that has been moved hitherto. It allows this part of the Bill— which the House has already agreed is necessary— to operate for a full period of five years, and even then to be extendable by reference to Parliament.

There are two separate sets of argument that can be advanced in favour of this amendment. One is the kind of argument which the noble Lord, Lord Henderson, used to support his amendment just now; namely, the appropriateness, or otherwise, of the executive asking for, and Parliament giving to the executive, powers as extensive, unlimited, unfettered and untrammelled as the ones for which they are asking. The House has already agreed that they should have these powers and I do not want to go over the arguments for that at all. What I suggest is that there are arguments for setting some limits to them.

Those arguments are not ones that I am going to advance. I believe there are others of your Lordships' House who will want to do so. The other set of arguments are that these powers in the whole of this Bill— and in Part II in particular— are needed because the state of local government finance has sunk to such a low ebb that powers of this sort are required in order to prevent anything worse going wrong and until such time as local government finance can be properly reformed.

Everybody can see that it is the lack of accountability of the councillor to his electorate, the lack of responsibility among the electorate who can vote for all sorts of expensive schemes without having to pay for them (thanks to a whole variety of situations in local government finance, which again we need not go into) which make it necessary for that reform to be carried out, and if it is carried out properly none of this legislation in Part II will be needed, and that is why I am moving this amendment. It is to give the Government time to introduce those reforms and then, after that lapse of time, to take what will then be a redundant piece of legislation off the statute book.

It is possible to argue that five years will not be enough. If it is not enough then this amendment provides for the Secretary of State to come back to Parliament and explain why it has not been long enough and to ask for more time. I do not think I need say any more. All the subsidiary arguments have been rehearsed over and over again at different stages of the Bill. It is for those two main reasons— and particularly from the latter point of view— that I want to move this amendment. My noble friend Lord Ridley, who is president of the Association of County Councils and who would wish to have been here, has asked me to say that this amendment has his strong support also from his position as president of that association. I beg to move.

Lord Northfield

My Lords, the noble Lord, Lord Bellwin, knows that I have not been hostile to this Bill. Indeed, as he knows, I firmly recognise the problems which the Government have with certain high-spending local authorities. At Second Reading I ventured to suggest that any Government would have had to rein back the expectations that we had built up in the 1970s about local government activity and local government spending. I suggested that I was shocked that many of these high spenders have not used LAMSAC, the local authority management body, to get their costs under control. I said that I could not find that the rate capping of 12 authorities out of 450 was some kind of constitutional scandal.

But while I said that, I also said— and perhaps the noble Lord will recall this— that I thought that we needed a clearer understanding about the powers, duties and finances of local government to take us on to the next stage. When at the Report stage we looked at the issue of limitation I pointed out that in a Legislature we need some prodding of the Government to get on with the business of reviewing these matters and getting them right. I shall come to that in a moment.

Secondly, I said at Second Reading that I found it unacceptable to have this kind of legislation in Part II permanently on the statute book since, while it is not exactly unconstitutional, it upsets the understanding underlying our constitution, it upsets the balance and the dispersal of power— and the noble Lord said that himself in his speech replying to the amendment of the noble Lord, Lord Henderson— and it would be wrong, in my view, to see that kind of power on the statute book, available in the future to wrong hands, to be misused. That is the important point that I want to make.

It is a power that we could perhaps trust for the moment. I am not trying to say that I particularly trust any Government at any time, but it certainly ought not to remain a power way into the distant future when there exists any kind of elective dictatorship, as the noble and learned Lord the Lord Chancellor called it. We must look at this issue rather carefully.

After we had exchanged some views about this at the Report stage, the noble Lord, Lord Bellwin, wrote to me, and I know that he will not mind if I quote what he said in parts of his letter. He said that he regards Part II as reserve powers and— and I go on to quote him: this is important as a deterrent to the sort of behaviour which might make their use necessary. A time limit on the duration of those reserve powers would simply undermine the credibility as a deterrent and that is at the heart of our resistance to the idea of time limitation". My Lords, we answer that point very simply. It is a deterrent because the Government can continue to renew the power. It is no longer, under this amendment, a power that automatically and finally lapses. They would have the power by order to continue the Bill for a further period. So I hope that we have scuppered that argument which the noble Lord put to me in his letter.

In his second and third paragraphs, the noble Lord wrote: I understand the argument you make that time limiting of the powers might hasten a broader review of the rating system. But I do not accept this. I have acknowledged that the possibility of a full review of local government finance cannot be ruled out for all time.". If I may say so, those of us who have been in Whitehall for a long time would recognise the phrase, "Cannot be ruled out for all time" as meaning, "We've not the slightest intention of doing anything about it for quite a long time". With the greatest of respect to the noble Lord, that phrase almost betrays the remainder of the letter. It indicates no sense of urgency on the part of Government on this issue and it must arouse fears in all parts of the House.

I come back to the second point that I made at Second Reading; namely, that we need something to prod the Government. If the Government continuously came forward under this amendment to renew the legislation, it would be for Parliament in both Houses to say, "Well, what are you doing about the reform of local government powers and local government finance?" That is the importance of it— not for the Government, but for Parliament to have the opportunity to say, "We shall not continue to renew these powers unless within a reasonable time you come forward with a real reform."

My last point is that I regard Part II as emergency legislation, and I think it should be regarded as such. It is not right to leave on the statute book for all time a Bill which in effect gives civil servants wide powers over the fixing of rates and thus the powers, the duties and the activities of local authorities. That is what would begin to happen. The balance of power, the shift from the pluralistic society that we have in these matters, would be more marked than ever if it got into dangerous hands. For all these three reasons— that we can meet the point of the noble Lord about its being a deterrent because it can be renewed; that we do need to be able to prod by refusing or debating each year if the Government do not bring forward the reform that is needed; and because it really is emergency legislation— I support this amendment.

9.41 p.m.

Lord Evans of Claughton

My Lords, I feel very strongly that this amendment and the previous one are of crucial importance, even for people who broadly agree with the thrust of the legislation, in trying to put it in a more acceptable form; a form which will enable people in local government to have some hope that their future so far as finance is concerned will not be governed by Whitehall civil servants. That is what is happening at the moment, with the fixing of GRE, with the fixing of targets, and so on. Decisions are being made by central Government in Whitehall of a kind which up to now have been made and should be made by local authority councillors, aided and advised by their treasurers and directors of finance. It is significant that the local government accountants are totally opposed to this legislation.

I am speaking as one who is totally opposed to Part II of the Bill. I think it is an outrage. But it is important to realise that even people who have admitted that they are not totally opposed to Part II still feel that there should be some restraint, and some carrot, as it were, to the Government to do something about the legislation. As long as local government finance is dependent on rates, so long will local government be dependent on hand-outs and grants from central Government. Consideration has been given to this for many years. and if one takes the number of years that the reform of local government finance has been considered and add five years to it, one has had something like 20 to 25 years for civil servants and Ministers to come up with some kind of additional revenue for local government.

As I have said frequently in your Lordships' House, I have been on working parties and on other bodies of my own party, aided by the advice of experts. and we have had indicated to us that there is no reason at all, if there is the will, why a form of local income tax coupled with rates should not be the main way of financing local government in the future, thereby reducing local government dependence on central Government grants to a manageable and healthy 30 per cent. or even less. They manage these things on the continent; and I have always taken the fairly chauvinistic view that we should be able to manage our finances at least as well as foreign countries, and should be able to set them an example. In countries such as Denmark, tiny little local authorities the size of parishes have a local income tax to assist them in financing themselves.

This amendment is moderately worded and is put forward with great moderation; it is supported by the noble Lord. Lord Northfield, with great moderation; and it is put forward by the president of one local authority association supported, in his absence, by the president of another local authority association, neither of which is famous for its dominance by the extreme Left-wing but are broadly speaking representative of Conservative-led authorities. Why in heaven's name are the Government proposing to do this? Perhaps they are not; I may be speaking too soon. The noble Lord, Lord Bellwin, is smiling happily there, and perhaps he is about to give way to the entreaties of the noble Lord, Lord Sandford. But on the assumption that he is not and will not— and I think I am entitled to make that assumption from the way he has behaved up until now; I was almost going to say "the pigheaded way", but I will not; I will keep that for my speech at the end, on the Motion, "That the Bill do now pass"— in the belief that perhaps he may be willing to consider this last opportunity to do something to moderate the effect of Part II of the Bill, I hope that the entreaties he has already heard and those that he will hear in the next few minutes will enable the Government to give serious consideration to this very modest but very useful and important amendment.

Baroness Birk

My Lords, following what the noble Lord, Lord Evans, has just said, I should also like to stress that this is an extremely moderate and mild amendment which has been very moderately moved by the noble Lord, Lord Sandford, and my noble friend, Lord Northfield. Personally I prefer the amendment in the names of myself and my noble friends that I moved on Report, which covered a time limit for both parts of the Bill, because I think there is a strong argument for Part I also having a time limit, just to see how it works out, especially as we have been unable to get from the Government any idea of the numbers that they consider will be among those in the first part of the selective scheme.

I would also be rather happier with a three-year trial rather than with five years. Nevertheless, any amendment that limits part of what could become an extremely damaging course which is being pursued by this Bill and which has been opposed by many people all over the House, and in particular Part II, which has been opposed quite strongly by many Members opposite, is better than none. Therefore the time-limiting of any part of the Bill must be a "good thing", so to speak, in what is a not very happy Bill (to put it at its mildest and being very mild and moderate myself at this moment) or indeed a good Bill at all.

Also, I think the time-limiting factor would be an incentive for the Government to think about the longer-term review of local government finance, which was mentioned in one particular context by the noble Lord, Lord Evans. Therefore this amendment, I should have thought, ought to have all-round support. It is something on which I fear I rather take the view of the noble Lord, Lord Evans, that the Minister does not look as though he is going to accept it— on the basis that, if he were, he would have jumped up rather quickly or indicated to the noble Lord, Lord Sandford, before hand.

This is something which I think really is not a very great concession for the Government to make. It is restricted to Part II of the Bill and does not interfere with Part I, which they evidently consider to be sacred. It gives them another two years, compared with the three years suggested in the amendments which have been moved during the passage of this Bill, which have come from all over the House and not just from these Benches. I think it is a generally held feeling, that the Government really must get down to considering once again the whole question of local government finance, and this will act as an incentive. My noble friends and I certainly support this amendment.

Baroness Faithfull

My Lords, I rise very briefly to support this amendment. In dealing with Amendment No. 11, moved by my noble friend, Lord Bellwin, he said that there were two aims underlying this Bill: the restraint of high spenders and at the same time the retention of local authority freedom of decision. The present world recession has forced the Government to restrain high spenders, but we sincerely hope that the world recession and the need to enforce rate capping will, in the years to come, diminish and perhaps disappear. Therefore it seems to me that we should have written into this Bill a review of the situation, so that ultimately local authorities will be given back their freedom of decision.

Lord Henderson of Brompton

My Lords, I wonder whether I may speak before the noble Lord the Minister replies. I would not have spoken if my amendments had been successful, but I feel compelled to do so as they were not. I attempted to have a time limit put on to this Part II for many of the reasons— but, in addition, some others— adduced by the noble Lords, Lord Sandford and Lord Northfield. I must say that if this general scheme in Part II had been, as seemed to have been envisaged at the time of the White Paper, activated more or less forthwith in the event of the selective scheme not working, that would have been in accordance with precedent— the sort of thing one would have expected and that one is perhaps used to.

But what I find unprecedented and find very difficult to accept, except in times of emergency, is this extraordinary business of legislating for cold storage. You put this on ice and then, suddenly, at some time in the future you take it out of the ice box and warm it up by statutory instrument, perhaps years later when the circumstances might have changed remarkably. That really goes against the Donoughmore Committee's Report of 1932 which should be required reading for everyone nowadays, as it used to be.

Here there is no time limit of any sort, and as I think has been said by the noble Lord, Lord Chelwood, this represents a very dangerous precedent, which, in the hands of an extreme government, could be a most convenient instrument. I regard this Administration as very moderate. Let me say that I am not speaking in qualitative terms; I am speaking in terms of the political spectrum and I regard them as fairly near the middle.

Another point that I should like to make at this stage is in answer to the noble Lord, Lord Bellwin, on my previous amendment. He said that Part II is the equivalent of a default power. I think that that is stretching the concept of a default power beyond what is commonly accepted in ordinary parliamentary parlance. This is a far more far reaching and searching reserve power than anything I have known as a default power. If he can give me examples of an equivalent, then I should be very happy to hear of them in one sense, though not happy in another. As I say, I know of no substantial piece of legislation of a non-emergency nature— and Ministers have gone out of their way to stress that this is not an emergency piece of legislation and therefore not suitable for time limitation— that is expressed to come into operation at an indeterminable date in the indeterminate future and in circumstances which cannot be foreseen. I would be very unhappy that this should go on the statute book without any form of time limitation, and for that reason I should like to support the amendment of the noble Lords, Lord Sandford and Lord Northfield.

Lord Bellwin

My Lords, if we are talking on the broader front— and it seems as if we are— may I just say that we ought to consider how we reached this position in the first place. We reached this position because, despite the attempts by not just this Government but previous governments to exhort local government for years and years to say— remember, was it Crosland?— "The party's over", the fact is that current spending in local government has been running out of control; quite the opposite to the capital spending side. It is a question of what can be afforded, and local government simply refused from 1979 to do anything about it. I am talking not of the majority of people in it— quite the contrary. I am talking of perhaps 20 per cent., but as it happens that 20 per cent. are among the largest spenders and the impact of what they do tells for all. Did we not say many times during the debates we have had that, perhaps, 16 authorities have accounted for—

Baroness Birk

My Lords. I am sorry, but it does not seem to us that this has anything to do with the amendment that is before us. The amendment that is before us is a time limitation on Part II of the Bill. It is not to do with the selective scheme or rate capping generally.

Lord Bellwin

My Lords, I sit for hours and hours and days and days and virtually never interrupt anyone. My fate seems always to be interrupted. The fact is that it was not I who started talking about the background to this amendment. The noble Lord, Lord Evans of Claughton, spoke about it. I wrote down what he said. He talked about the future not being governed by Whitehall and about handouts and grants from central government. I was doing the very same thing and commenting on that. I do not see why I should be taken to task for trying to do that when presenting my reasons for not being able to accept the amendments. That is a perfectly proper thing to do.

We are talking about the time— that is the purpose of the amendment— when this legislation will not be required. Therefore I am entitled to say that just how we got into this position in the first place is a clue as to how we shall get out of it. That is a perfectly proper point to make. We got into this position because there was overspending to an extent which, it was felt, could not be afforded. It was felt to be an imposition upon the ratepayers of very many authorities. The way to get out of it in future may well be, as the Secretary of State said, if we never say never. That is right. However, we have to get to the situation where the totality of spending by local government is within the bounds of what can be afforded. One way to do that would be through the selective scheme. That tackles the very authorities which have got us into this position. It is not wrong to make that point. It is perfectly proper.

Turning to the amendments, I have to resort basically to the same arguments as I used when responding to the noble Lord, Lord Henderson of Brompton. The fact is, as has been made clear throughout the passage of the legislation, the Government recognise the very wide-ranging implications of the general powers. As I said before, to introduce them would bring about a change in relationships. That is why we have made it clear that we hope they will never have to be introduced. But the Government are also aware that their hopes in the past for achieving their objectives in respect of local government spending have not been realised. We tried the grants system. We tried targets. We tried a whole new panoply of names. I never heard such names in the years that I was in local government. Now we have it all. The only way to get out of it will be when we get onside— to the level which can be afforded and where spending is at reasonable levels, and rates likewise.

Therefore, the general powers which are included in the Bill are emergency ones justifying a time limit. They are there to guard against overspending on a wider scale and therefore to provide a deterrent against such a change in the behaviour of local authorities. They form a kind of default power. However, these powers will be of no use unless they are available. It is for that reason that the powers are included in the Bill. If they were not on the statute book and ready for use, there would be a substantial time delay before they could be introduced. This would give time for substantial overspending and for the exploitation of ratepayers.

For the same reason the Government have resisted any form of time limitation on the powers either before their introduction or on their duration. Any such limitation would substantially weaken the effects of the powers by giving local authorities a clear indication either that the powers are not available for use or that in two, three or five years' time the Government will no longer have the powers available, so local government need only wait for that period of time before they begin to spend up.

The degree of overspending by some authorities is such that it is bound to take several years to retrieve the situation. One cannot return to reasonable levels of spending in some of these authorities within a year, or even two. Their spending is so way above what any similar authority spends that to expect them to do it in the short term is not practicable. We could be challenged in the courts if we were to give them targets that were unattainable. That is why it is so hard to try to impose time limits. Even if the five-year period were capable of being extended, as has been suggested, by affirmative resolution, such a provision must cast doubt on the long-term need for the availability of the general powers and would give an indication that the Government are not full-hearted in their desire to maintain the downward pressure on spending and rates.

The Government are clear that their basic strategy requires the presence of these powers on the statute book. Their use will be greatest if they never have to be employed. In our view, to put any kind of time limit on the power will, paradoxically, increase the likelihood of its being used. These are the reasons why I cannot accept the amendment. I say that not without some reluctance because I understand exactly what my noble friend is trying to do. I am not without sympathy as to where, at the end of the day, he wishes to be. I would want to be in the same position, but I feel that we have more likelihood of being there if the provision remains in the Bill without a time limit. Let us earn the point where we can say that we are entitled to look at something else.

Lord Peyton of Yeovil

My Lords, I hope that my noble friend will forgive me if, briefly, I make one or two comments on the reply that he has just given. The Government have persuaded themselves and many of their supporters, including me, that because some local authorities persistently break the rules, they must resort to some extraordinary measures. I accept that. But I also find it very difficult to disagree with the arguments of the noble Lord, Lord Northfield, that this is emergency legislation in some shape or form.

The assumption that some local authorities, no matter what the circumstances are, will continue to break the rules is, I believe, unacceptable pessimism. We must try to improve upon that by one of two ways. The first way is by introducing, at long last, some more satisfactory ways in which local government can be financed. In all the years that I have been in Parliament I cannot recall any sortie into the area of local government by central government which has been particularly helpful to the common weal, or indeed, has forwarded the cause that the Government of the day had in mind.

The second alternative— and one which is offered by this amendment— is that this temporary provision should have its life extended by a resolution of both Houses of Parliament. That seems to me to remove so much of the force which would otherwise have been behind the arguments of my noble friend who, as a Minister, has spoken on behalf of the Government.

I hope that he will think again about this question. I speak as one who has little sympathy with that minority of local authorities which have thoroughly misbehaved, which have outraged both the rules and the basis of consent on which, in a free country, all our affairs have to be conducted. I believe that a Government with a very substantial majority ought still to show some restraint and care before they behave in the same way to those who outrage every canon of democracy.

Lord Chelwood

My Lords, perhaps I may make a brief comment on my noble friend's reply, which I found extremely disappointing. All that the amendment is seeking is something quite simple— that the Government of the day should come to Parliament in five years' time if they wish to renew these powers; nothing more, and nothing less. Assuming that these powers are necessary— I do not think they are, and I have explained why during the committee stage, and again today— why are Her Majesty's Government not willing to accept an amendment which asks simply that they should be renewed in five years' time if they are still needed? My noble friend has not answered that point; he did not address himself to the amendment. I shall vote for it without any hesitation at all.

Lord Sandford

My Lords, my noble friend said at the beginning of his remarks that local government finance was running out of control; and so it is. One of the reasons is that there are certain units of local government which are being led by irresponsible, defiant and extravagant leaders. Another of the reasons is that successive governments, ever since 1974, have failed to keep local government financial arrangements a match for the situation with which they have to deal. We are now in the position where the local electorates— who are the right people to control local government finance— do not have the mechanisms available with which to do so. It is that which has to be put right.

I agree with my noble friend, Lord Peyton when he says that to enact legislation on the assumption that it is impossible to put power hack into the hands of the local electorate is really to sink to depths of pessimism which are not justified. It will be difficult to reform local government finance. It is not going to be impossible. But I believe it is necessary for Parliament to introduce some mild spur, on government, central government, whichever party it might be, to get on with the task and make a proper job of it.

The second point that my noble friend makes is that it is necessary for him, and other Ministers in the Government, central government, to have an essential longstop to operate behind Part I of this Bill; to have some sort of nuclear deterrent— those were the words he used at Committee stage— to have an ultimate sanction which can be brought out from cold storage and into action. I think all those phrases are unfortunate because in a democracy there is surely only one ultimate sanction, only one nuclear deterrent, only one essential longstop: that is the ballot box. We are introducing the ballot box for the control of industrial relations. We rely on the ballot box to decide which Government will be elected, and we ought to be relying on the ballot box to decide how the finances of local government should be controlled.

It is because my noble friend gives no hope that the Government are in earnest in getting on with this essential reform, and because I have had nothing but support from the entire House, that I feel I must press this amendment to a Division.

10.7 p.m.

On Question, Whether the said amendment (No. 13C) shall be agreed to?

Their Lordships divided: Contents, 51; Not-Contents, 66.

DIVISION NO. 6
CONTENTS
Attlee, E.	Collison, L.
Aylestone, L.	David, B.
Bernstein, L.	Dean of Beswick, L.
Birk, B.	Elliot of Harwood, B.
Brooks of Tremorfa, L.	Evans of Claughton, L.
Broxbourne, L.	Faithfull, B.
Bruce of Donington, L.	Graham of Edmonton, L.
Chelwood, L.	Grey, E.
Cledwyn of Penrhos, L.	Hanworth, V.

Harris of Greenwich, L.	Rodney, L.
Henderson of Brompton, L.	Sandford, L. [Teller]
Houghton of Sowerby, L.	Seear, B.
Howard of Henderskelfe, L.	Sharples, B.
John-Mackie, L. [Teller]	Shaughnessy, L.
Kilmarnock, L.	Stewart of Alvechurch, B.
McCarthy, L.	Stewart of Fulham, L.
McCluskey, L.	Stoddart of Swindon, L.
McIntosh of Haringey, L.	Stone, L.
MacLehose of Beoch, L.	Taylor of Blackburn, L.
Molson, L.	Tordoff, L.
Northfield, L.	Underhill, L.
Onslow, E.	Vickers, B.
Peyton of Yeovil, L.	Walston, L.
Pitt of Hampstead, L.	Wedderburn of Charlton, L.
Ponsonby of Shulbrede, L.	White, B.
Rochester, L.

NON-CONTENTS
Airey of Abingdon, B.	Grantchester, L.
Avon, E.	Gray of Contin, L.
Bauer, L.	Hailsham of Saint Marylebone, L.
Bellwin, L.
Beloff, L.	Hood, V.
Belstead, L.	Hornsby Smith, B.
Brabazon of Tara, L.	Ingrow, L.
Brougham and Vaux, L.	Lane-Fox, B.
Bruce-Gardyne, L.	Lindsey and Abingdon, E.
Caithness, E.	Long, V.
Campbell of Alloway, L.	Lucas of Chilworth, L.
Campbell of Croy, L.	Lyell, L.
Carnock, L.	McAlpine of West Green, L.
Cockfield, L.	Macleod of Borve, B.
Coleraine, L.	Margadale, L.
Colwyn, L.	Maude of Stratford-upon-Avon, L.
Cottesloe, L.
Craigavon, V.	Mottistone, L.
Craigmyle, L.	Murton of Lindisfarne, L.
Crathorne, L.	Orr-Ewing, L.
Croft, L.	Pender, L.
Davidson, V.	Penrhyn, L.
De La Warr, E.	Renton, L.
Denham, L. [Teller]	Saltoun, Ly.
Denning, L.	Savile, L.
Dilhorne, V.	Skelmersdale, L.
Elles, B.	Swinton, E. [Teller]
Elton, L.	Tranmire, L.
Fisher, L.	Trefgarne, L.
Fortescue, E.	Trumpington, B.
Gardner of Parkes, B.	Vaux of Harrowden, L.
Glanusk, L.	Waldegrave, E.
Glenarthur, L.	Whitelaw, V.
Gowrie, E.	Wynford, L.

Resolved in the negative, and amendment disagreed to accordingly.

10.16 p.m.

Lord Ponsonby of Shulbrede

My Lords, before we take the next amendment, I wonder whether the Government Chief Whip could make a statement as to whether it is proposed to commence the Committee stage of the Trade Union Bill this evening.

Lord Denham

My Lords, I am most grateful to the noble Lord, Lord Ponsonby. I think that it has been generally agreed, having consulted various channels outside that it would probably be inappropriate to proceed to the Trade Union Bill this evening, as we have a full day for it tomorrow. We shall of course be finishing the business that we are on at the moment, but after this present item of business is over, we shall be adjourning the House for the evening.

Clause 10 [Authorities subject to general control]:

Lord Evans of Claughton moved Amendment No. 14:

Page 9, line 4, at end insert— ("Provided that where, in any financial year, the Secretary of State has, pursuant to sections 57(1) and 61(3) of the Local Government, Planning and Land Act 1980, made two or more determinations of an authority's grant-related expenditure, for the purposes of this subsection account shall only be taken of the higher or highest amount so determined.")

The noble Lord said: My Lords, I should like in considering this amendment also to consider Amendment No. 15, as they are on the same problems.

Amendment No. 15: Page 9, line 9, at end insert— ("disregarding any expenditure by that authority, which, by virtue of section 8(4) of the Local Government Finance Act 1982 is to be disregarded for the purposes of the said section 59(6)(cc) of the said Act of 1980 and section 8(3)(c) of the said Act of 1982.")

The first amendment seeks to provide that, of the number of GREs issued to an authority in respect of any year, the highest GRE shall count as the only one for the purpose of deciding whether an authority's expenditure is within its GRE and thus whether an authority becomes eligible for exemption from the general scheme of rate limitation. For the year 1981– 82, it is possible that an authority would have had five different GREs. I shall not bore your Lordships by going through them, because, with my sensitive ear to your Lordships' House, I feel that noble Lords are now anxious to be getting home after all the earlier excitements and disappointments.

There are very good reasons for there being possibly five different bases for a GRE. Some depend upon actual expenditure data— education poolings; others depend upon interest rate charges, and so on— contributions to the housing revenue account, amended supplementary reports to reflect boundary changes, and so forth. In our submission, it is right for the purpose of grant distribution that GRE should continue to be updated for some time after the end of the year to which it refers. Local authority treasurers can at least anticipate those changes and account for them accordingly.

But the point at issue in the first amendment comes from the fact that, among all those changes, there will be gainers and there will be losers. Some authorities will find that they end up with a higher GRE and others with a lower one. Without this amendment, an authority could find itself in the position of planning to spend just below its GRE, or even closing its expenditure accounts on the basis of spending just below it, and then being presented in a late supplementary report from the Government with a lower GRE which had turned it into an overspender, as it were, overnight. That does not seem equitable.

There is a precedent for adopting that approach. For 1982– 83 an authority which spent above target but below GRE was, as the noble Lord the Minister knows, not penalised. In defining GRE for that purpose, the Government used the highest of any GRE given in a main or supplementary report. Therefore, it is a precedented use for resolving what count be extremely unfortunate circumstances, impossible 'to predict, for some local authorities which are doing their best to comply with the Government's targets, and so on. The second amendment which I said I would speak to relates to the concession granted by the present Government in respect of the general scheme of rate limitation. That concession means that either a four-year run of complying with the expenditure target; or a four-year run of complying with grant related expenditure, would secure an exemption from the general scheme or rate limitation.

Therefore the point of this amendment is to make it clear that disregards— a very unpleasant non-word which relates to items of expenditure on which local authorities are not penalised— are taken into account when determining compliance with the target for the purposes of this Bill. The Government say, and I think the noble Minister has said, that disregards will be taken into account, but this has not been made clear in the Bill itself. It is for this purpose that the second amendment has been put down.

I hope, with that optimism which keeps Liberals going over the years, that on this occasion the Minister will gracefully say how much he admires the superb way in which I have delivered this very boring speech, and that he will give way and incorporate my proposal in legislation. I beg to move.

Lord Pitt of Hampstead

My Lords, before the Minister replies I think this is a good occasion on which to raise the whole question of the grant-related expenditure assessment. Most noble Lords will remember that during consideration of the 1980 Bill I expressed concern about the grant related expenditure assessment. Everything that has happened since has worried me more.

Yesterday I picked up the Observer and I saw on the front page that there were 15 suggested authorities for possible rate capping. Eight of them were in London, in addition to the GLC and the ILEA. What is more, six of those authorities I well know are in very deprived areas. It seems to me quite incredible that authorities in very deprived areas should be accused of spending too much in order to look after their areas. Therefore I wonder about the criteria that are used for the grant-related expenditure assessment.

We have not yet reached the stage of passing this Bill, but it will in fact give much greater authority in regard to GREA than was first proposed when it was merely intended to be a rough guide for the rate support grant award. I want to hear what the noble Lord the Minister has to say about this. I want to ask the Minister whether the Government will look again at the criteria that are used for determining grant related expenditure assessments.

I notice that another of the boroughs that I regard as being very deprived was also named as a possible rate capping area. So if seven of the most deprived areas are being rate capped, there must be something wrong. I should be glad if in his reply the Minister would take this point on board.

Lord Bellwin

My Lords, if the noble Baroness, Lady Birk, will promise not to question my speaking so off the subject, I should be very glad to comment on what the noble Lord, Lord Pitt, has said. But first I must have at least a nod of acquiescence from her that indicates that this is all right, because I should like nothing better than to respond to the last points made.

But, before I do so perhaps I may just say to the noble Lord, Lord Evans, who earlier referred to me in a certain way, that I rather liken him to General Custer at this stage, because it looks to me as if this is his last stand on this matter.

The noble Lord, Lord Pitt, is of course right to raise the question of GREs. The fact is that what the noble Lord, Lord Pitt, refers to as the deprived areas, those in the greatest need, are exactly those that have the highest GREs. As I pointed out in debating the Bill in Committee, the personal social services GRE factor, for example, in Hackney is four times higher than in like authorities. It is, I think, the highest in the whole country. That is exactly why it has the highest GRE.

As to the complaint about why such authorities come to be within the rate capping areas, the reason is that, despite the extra amount they receive through having the highest GREs, their spending is still way above that of like authorities. To find out why it is so high you have to be willing to examine what they spend their money on. Then you begin to get the answers to your own question. It is at that time that you find things that no one in this House would try to justify.

Among authorities that are short of resources, where are the priorities? Are the priorities in the large personnel departments and in the public relations departments? Or are they with people who need better housing, repairs and improvements? That is what the noble Lord should be concerning himself with, not the system. The system is all right. Perfect, it is not. There has never been a perfect way to distribute ₣ 12 billion or ₣ 13 billion of grant in order to equalise payment among like authorities. At least, however, it is a darned sight better than anything we had before. The noble Lord will know that there is the option at any time within the grants working group to make those GREs better, You can lay them out, the 63 or so that there are, and improve them. I am for that, by all means. But do not blame the system because there are people who work outside it and abuse it. That is where matters go wrong.

Lord Pitt of Hampstead

All right, you have given them four times the GRE for personal services—

Noble Lords

Third Reading!

Lord Denham

My Lords, will the noble Lord give way? It is not in order for any noble Lord to speak more than once on a Third Reading Motion.

Lord Pitt of Hampstead

I am not speaking, my Lords. I am putting a question to the noble Lord. What is wrong with that?

Lord Denham

My Lords, if the noble Lord, Lord Pitt, will use the formula "Before the noble Lord sits down" he will then be in order.

Lord Pitt of Hampstead

My Lords, he was not sitting down: I am sorry. I am not accepting that; he had not finished. He was in the middle of his speech. I was asking a question.

Lord Denham

My Lords, if that is the case, I can only beg the noble Lord's pardon for misunderstanding him.

Lord Pitt of Hampstead

My Lords, I was merely asking a question. The noble Lord said that he has given Hackney— he chose Hackney— four times the GRE for its personal social services that he has given other territories. I am saying that he should have possibly given it six times more. That is all that I am saying.

Lord Bellwin

My Lords, clearly, I should love to debate this issue, but your Lordships will expect me to answer some of the other points, so I cannot do so tonight. I must deal with amendments, specifically despite the latitude that the noble Baroness gave me. These amendments are designed to stretch the benefit of the concessions that we have made.

I do not wish to detain the House with some of the finer points of the RSG system. One really needs to look at why GREs may change after the year has started. There are three principal reasons. First, the GREs include an element which is intended to reflect the cost of financing the allocation of capital expenditure made to each authority in relation to that year. In practice, it has always proved impossible because of timing difficulties to incorporate into the RSG settlement the figures for actual capital expenditure. It has been the practice, therefore, to make the settlement on the basis of estimated allocations and to update those at a suitable later date in a supplementary report. The noble Lord, Lord Evans, is aware of this. He has known the system for long enough.

The second reason why GREs change is that the grant system still allows for the fact that interest rates vary throughout the course of the year. GREs and grant go up if interest rates increase, and vice versa. Again, these changes are made from time to time in supplementary reports. The third reason for some changes lies in simple computational errors made either by the department or by local authorities themselves. That is quite a mixture of reasons, and each has different implications. Unless the noble Lord wishes me to do so, I will not go into depth on each of those: I do not think they call for that.

In my view, Amendment No. 14 is too heavily conditioned by the uncertainties which arose in the early stages of the new grants system. The later record is much more stable and should give no difficulty to an authority which keeps a close watch on its spending. The real answer to the problem of variability in GREs is to find ways to further reduce the scope for mid-year variation. We are very interested in such possibilities, and would welcome discussions with the associations. That is something to which we might look forward.

Amendment No. 15 seeks to ensure that any expenditure disregarded for the purposes of expenditure targets under the 1982 Act should also be disregarded for the purposes of deciding whether or not an authority has complied with its expenditure target, and thus is entitled to exemption from rate limitation under the terms of Clause 10. I think the noble Lord will be interested when I say that this amendment is unnecessary. My advice is that Clause 10, as drafted, already provides for disregarded expenditure to be allowed for in decidng whether or not an authority has complied with its expenditure target for these purposes. The amendment is unnecessary because it would only duplicate an existing provision in the Bill. With that explanation, I hope the noble Lord will feel able to withdraw his amendment.

Lord Evans of Claughton

My Lords, with practically any explanation I would probably not proceed any further with these amendments at this hour of the night. I must say that I think they are both important points. What the Minister said about the second amendment, Amendment No. 15, will cover the matter adequately, because we can wave his Ilansard speech at him in future if he tries to go back on it. He said— I hope he is right— that it is already covered in the Bill.

On the first point, I understand why there are different GREs. As I said, there were up to five in 1981– 82. All I was trying to persuade the Minister to agree was that it is fairer, more equitable and more understandable if the local authority knows that it is going to have only one of those— the highest— upon which it has to rely, and does not continually find itself having a different GRE against which it has to make its target.

I consider that, on the whole, the purpose of moving the amendments— to find out the views of the Government, and particularly their belief that the second one is covered— has been met and is sufficient ground to enable me to ask your Lordships' permission to withdraw Amendment No. 14.

Amendment, by leave, withdrawn.

[Amendment No. 15 not moved.]

Clause 14 [Provision of information to ratepayers]:

10.33 p.m.

Lord Underhill moved Amendment No. 16: Page 11, line 13, after ("to") insert ("or levy imposed upon")

The noble Lord said: My Lords, on behalf of my noble friend Lads' Birk I rise to move Amendment No. 16, which is supported also by the noble Lord, Lord Evans of Claughton. It will be convenient for the House if I speak also to Amendments Nos. 17 to 22.

Amendment No. 17: Page 11, line 16, after ("to") insert ("or levies imposed upon")

Amendment No. 18: Page 11, line 18, after ("precepts") insert ("or impose levies")

Amendment No. 19: Page 11, line 22, after ("issued") insert ("or levies imposed")

Amemhnent No. 20: Page 11, line 28, after second ("to") insert ("or impose levies upon")

Amendment No. 21: Page 11, line 33, after second ("to") insert ("or impose levies upon")

Amendment No. 22: Page 11, line 34, after ("precepting") insert ("or levying")

Clause 14 was added to the Bill in Committee by Government amendment. The clause extends the Secretary of State's power to make rules governing what shall be contained in the rate demand note. The clause provides that the demand note shall include clear information as to how the rate bill is apportioned between the rating and precepting authorities. It will also cover information relating to expenditure, financing and changes in the rate or precepting levels. To the extent that this increases accountability, this clause is to be welcomed.

The noble Lord, Lord Bellwin, said that this kind of information on the demand note will be particularly useful in ensuring accountability of the proposed new joint hoards. He said on 8th May, at col. 896, that this is important, because ratepayers will be less well acquainted with the role of these upper tier authorities".

I hope that that will be kept in mind when we are considering the purpose of the amendment. That led my noble friend Lady Birk to inquire whether the relevant Ministers will provide similar information on the Metropolitan Police and the London Regional Transport precepts for inclusion in the rate demand notes. It has become very clear from subsequent correspondence between the noble Lord, Lord Bellwin, and my noble friend that the new levy from London Regional Transport will not be included in the ambit of the information to be given to ratepayers. In fact, the Minister stated in his letter that the clause did not apply to that: because it is a levy and not a precept".

It is surely only right for London ratepayers to be given the same information in respect of their payments towards public transport, as is given to ratepayers in the rest of the country. If the Government's proposals for abolition are approved it will include joint boards acting as public transport authorities in those particular conurbations.

It will not be good enough for the Government to argue that London Regional Transport will be a nationalised undertaking. As we have debated for many hours on the London Regional Transport Bill, up to two-thirds of the cost will fall upon the ratepayers of London. Therefore, there is no reason why this information should not be given in the rate demand note.

The Minister also argues that the order for the London Regional Transport levy will be the subject of an affirmative resolution in both Houses and therefore the Government do not consider it appropriate to include the LRT levy within the scope of Clause 14. That is no argument for not giving ratepayers information. I ask your Lordships to remember the quotation that I gave regarding what the noble Lord, Lord Bellwin, said at the last stage of the Bill. The noble Lord said that ratepayers will have little information on these top tier authorities. It can also be said that ratepayers will have little information about the expenditure and financing of London Regional Transport as regards which they will be meeting up to a maximum of two-thirds of the cost. The same argument could be advanced for the rate determination of authorities designated under Part I. There is an order for the maximum rate, which will also be the subject of affirmative procedure. Therefore, one can argue— using the Minister's argument— that there is no need therefore to give that information on the rate demand note.

We want the maximum information. The inclusion of the London Regional Transport levy will be in keeping with the spirit in which the Government have put forward Clause 14. The amendment will require that the rate demand notes to ratepayers shall include information on levies, such as that as regards LRT, as well as precepts. I hope that the Minister will feel that this is a simple, common-sense amendment which does not touch on party politics at all. It gives the ratepayers the maximum possible information, which is something that we all want. I hope that the Government will accept this amendment.

Lord Bellwin

My Lords, this is indeed a question of accountability. Under the LRT Bill my right honourable friend the Secretary of State for Transport is seeking powers to recover from London's ratepayers, by means of a levy, up to two-thirds of the grant which he will pay each year to LRT to support London's public transport services. Certainly— and I make no hones about it— he must be required to account for that levy, and there is nothing between us in that respect. The question is: to whom?

Constitutionally, my right honourable friend the Secretary of State is accountable to Parliament. Clause 13 of the London Regional Transport Bill requires him to lay an order each year in another place specifying the amount in the pound to be levied, the factors which he has taken into acount in fixing the levy, and the means by which it has been calculated. As the noble Lord, Lord Underhill, rightly mentioned, I referred to the fact that this annual order is subject to an affirmative resolution. So there is likely to be a full debate on all aspects of the ratepayers' levy, including the policies which underlie it. This means that my right honourable friend will have to account to Parliament fully and specifically for this levy each year.

Clause 14 of the Rates Bill is intended to apply to rating and precepting authorities, which are accountable to ratepayers and not directly to Parliament. I hope that the noble Lord will accept that the constitutional position of my right honourable friend the Secretary of State for Transport is quite different and that appropriate provision is being made for him to account for the levy for LRT in another place. For this reason I do not consider that it would be appropriate to extend the provisions of Clause 14 to enable my right honourable friend to make rules about the provision to ratepayers of information on levies, a power which, for the reasons that I have outlined, he would not in any case wish to use.

Here we must be sure that we are getting accountability. The type of accountability that we are discussing through this levy and through the parliamentary proceedings is a far greater and more exposed kind than anything we get in any of the other procedures that pertain. Although I entirely accept the point that the noble Lord, Lord Underhill, makes as to desirability (I am all for it and with him on that), I believe that in this case the amount of accountability will be much more— and there is no harm in that— than anything we might have had under any other method.

Lord Underhill

My Lords, I am disappointed with the Minister's reply. He puts the question: to whom shall the Secretary of State be accountable? He argues the case that the affirmative resolution procedure is sufficient. But surely under Clause 14, when we talk about accountability we mean accountability to the ratepayers, bearing in mind that the ratepayers are to meet two-thirds of the cost of LRT. Therefore, they should have information as to how that money is being spent. That is all we are asking for. Bearing in mind what I said in my opening remarks, the maximum rate to be determined by the Secretary of State under Part I is also the subject of the affirmative resolution procedure.

However, that information is to be given on the rate demand note. Why should not that apply as regards LRT? Obviously, at 10.40 at night I shall not divide the House on an amendment of this kind; but I believe that common sense is on the side of the amendments. There is no other stage in this House when we can debate this matter; but I hope that the Government will recognise that we are not just putting forward amendments for the sake of putting them forward. We are concerned that the maximum amount of informamation should be given to ratepayers. In the circumstances, I have no alternative other than to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 17 to 22 not moved.]

Lord Mottistone moved Amendment No. 23: After Clause 15, insert the following new Clause:—

Hereditaments for storage.

(" . There shall be inserted after paragraph 2(f) in Schedule 1 of the principal Act— (g) the hereditament is held for the purpose of being available for the storage in the course of any trade—

1. (i) of goods or materials which are to be used in the manufacture of other goods or materials, or
2. (ii) of goods or materials which are to be subjected, in the course of a trade, to any process, or
3. (iii) of goods or materials which, having been manufactured or produced or subjected, in the course of a trade. to any process, have not vet been delivered to any purchases. or
4. (iv) of goods or materials on their arrival by sea or air into any part of the United Kingdom.".")

The noble Lord said: My Lords, the purpose of this amendment is to remove from a local authority the right to levy rates on empty warehouses. As your Lordships know, I am advised on this point by the CBI. I welcome the recent order which has removed the right of local authorities to charge rates on empty industrial premises. However, I do not believe that this goes far enough to alleviate the burden on business. Rates can continue to be required to be paid on empty warehouses, which is contrary to that basic concept of rates as a tax on beneficial occupation.

The rating of empty warehouses, even at the present maximum of 50 per cent. of the full rate, has caused considerable financial hardship for many businesses, particularly those in areas hardest hit by recession. On average, rates represent about 10 per cent. of the total cost of running a warehouse; but in some cases they are as much as 30 per cent. This is a heavy burden to face at a time when the ability of firms to pay rates has been reduced and at the same time the demand for premises has fallen and it has become increasingly difficult for warehouses to be let or sold.

I believe that perhaps the major consideration that influenced the Government to limit suspending empty property rating to industrial premises alone was concern at the loss of revenue that was caused for local authorities. It is difficult to know what the loss would be if the suspension was extended to cover warehouses, because it is estimated that it could be as little as ₣ 10 to ₣ 15 million in terms of actual lost revenue, given that about half the local authorities— and I think that includes my noble friend's late local authority of Leeds, as he has told us in the past— already exercise their discretion not to levy empty-property rate. Compared with the total local authority income of ₣ 25 billion, this loss of revenue to councils will be tiny, under 0.05 per cent., yet the benefit to the businesses concerned in the jobs they do, and could provide, would be considerable.

The amount that the Government or local authorities will lose is tiny, but the important thing is that the benefit to individual businesses, particularly ones which may be hard hit or ones which may be in areas where they are being rated in such a way, can be proportionately very high. It is the unfairness of the spread, and the amount that it may hit the individual company as compared with the amount that the Government as a whole might forfeit, which makes it seem to me reasonable that this amendment should be accepted.

It is unfortunate that it is late in the stages of the Bill and that the wording may not be perfect, but I hope that perhaps my noble friend might have some way in which he can sort this out and work in my direction. Unfortunately it is so late that it may be that I cannot have the support from all sides of the House that I was hoping for, but perhaps I may get a little just to show my noble friend that it is a point which is widely accepted as being reasonable. I beg to move.

Lord Evans of Claughton

My Lords, very briefly, I should like to support the amendment set down in Lord Mottistone's name and in my own name. In his excellent speech he has said nearly all that needs to be said. All I need to do, I suppose, is to declare an interest in that I am president of the National Association of Warehouse Keepers, and they are completely, 100 per cent., in support of this amendment.

I think that the noble Earl. Lord De La Warr, and possibly one or two other noble Lords, may wish to speak on this debate, and all that I need to add is that in addition to the difficulties that the noble Lord, Lord Mottistone, described, many warehouses and hereditaments of this kind are in areas adjacent to the new free ports and the enterprise zones, where they are being confronted by competitors having rate-free occupation while they have to pay a rate, which seems unfair in view of the Government's generosity to industrial premises generally.

In view of the small cost it would be to the Government and of the great benefit it would be to the hard-pressed owners and tenants of these buildings, I should have thought that it would be in the Government's interests to encourage the industries to embark on a more prosperous period again by giving them the same kind of benefits as their competitors often enjoy just across the road. I support the amendment.

Earl De La Warr

My Lords, I, too, should like to support my noble friend's amendment. Today, when manufacturing industry is still heavily pressed, there is a great need for increased profits and, more than that, for increased capital formation so that industry may do its best to reinvest, particularly in places where it is needed. It is for that reason that I am interested in this amendment.

If it be true— and I have no doubt that it is— that on average the cost of warehousing can be 10 per cent. of the costs and sometimes up to 30 per cent., that cost is part of industry's prices. That is what they have to charge the customers, and that is why it would be a good thing, in view of the minimal cost to the country, if my noble friend could accept this modest but important little proposition.

Lord Rochester

My Lords, the noble Lord, Lord Mottistone, has asked for support, and if the House will forgive me, as I have not once spoken during the course of this Bill until this almost last moment of the Third Reading, I should like to say just a word in support. I am sure that it is true that in some cases the cost to individual businesses of the rating of these warehouses can be crippling. As the noble Lord, Lord Mottistone, and my noble friend have said, the loss of revenue to the Government is relatively small, and I should like to add my voice to those who have urged the Government, even at this late stage, to accept this amendment, if they possibly can.

Lord Bellwin

My Lords, certainly, I am in considerable sympathy with the point that has been raised. The warehouse industry, in particular, in circumstances such as those described by the noble Lord, Lord Evans, has had problems and has been making overtures for a long time. The amendment, as such, is seriously defective because the definition of the property to be covered seems to be likely to be unworkable. I could say much more about this, but the hour is late.

However, in all the circumstances, because the Government sympathise with the case in point, what I can do is to undertake to consider again whether we can do anything to help by way of extending our 1984 regulations to cover also those properties which are concerned, perhaps in the next rating year. I think this is a way in which I could make a move which would be helpful. I gladly undertake to have a look at that matter in that way and, perhaps, with that, my noble friend will feel able to withdraw his amendment.

Lord Mottistone

My Lords, I am indeed grateful that at this late hour my noble friend should be concessionary and should be prepared to take us a long way. I hope that he is successful with his inquiries and will get the matter in question into his order for next year. With that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 19 [Short title, interpretation and extent]:

Lord Bellwin moved Amendment No. 24:

[Printed earlier: col. 63.]

On Question, amendment agreed to.

Schedule 1 [Miscellaneous amendments and repeals]:

Lord Bellwin moved Amendment No. 25:

[Printed earlier: col. 61.]

On Question, amendment agreed to.

Lord Bellwin moved Amendment No. 26:

[Printed earlier: col. 62.]

On Question, amendment agreed to.

Lord Bellwin moved Amendment No. 27:

[Printed earlier: col. 62.]

On Question, amendment agreed to.

Lord Bellwin moved Amendment No. 28:

[Printed earlier: col. 62.]

On Question, amendment agreed to.

Lord Bellwin moved Amendment No. 29:

[Printed earlier: col. 62.]

On Question, amendment agreed to.

10.54 p.m.

Lord Bellwin

My Lords, I beg to move that the Bill do now pass. It is a controversial measure which has raised strong feelings, but I am glad to say that, despite the controversy, the debates have been very much up to the highest standards of your Lordships' House. Perhaps I may say to our opponents that I suppose this is one issue on which we shall certainly have to differ. But I beleive that over the next two years the proof of the pudding will be in the eating. There is no doubt that a small minority of authorities have oppressed their ratepayers, and the object of this Bill is to protect them through limiting the rates, in regard to that small number. I do not want to make a long speech, but I think it would be wrong to let the Bill leave this House without, very briefly saying, a word of thanks to my noble friends Lord Avon and Lord Skelmersdale for their help in sharing the burden of presenting the Bill to your Lordships' House. I have benefited greatly, as always, from their help and advice. Perhaps I may also thank noble Lords on the Front Bench opposite, who have been fair minded, while they have presented their arguments in a telling and eloquent way. It would be an understatement to say that this is not the first time I have been opposed by the noble Baroness, Lady Birk, whose efforts have brought zest, enthusiasm and not inconsiderable skill to the presentation of her arguments— and, one day, she will let me conclude mine, I am sure. Nevertheless, I am grateful to her.

Also, I would thank the noble Baroness, Lady Nicol, and the noble Lords, Lord Underhill and Lord Graham, for their own brand of opposition. They have, as always, been persistent and doughty opponents, and yet their mixture of insight and courtesy has done much to enable us to pilot through the Bill.

There are others I should mention: there is my noble friend Lord Sandford, with whom I never seem to get through a Bill on local government matters, without at least one or two Divisions. He and my noble friend Lord Ridley always put their cases extremely well. Lucky indeed are the associations to have them as advocates. I should like to thank my noble friend Lady Gardner, who always helps me, for her many interventions in the Bill. I should like also to thank my noble friend Lady Faithfull, who also at times feels obliged not to let me go through with everything that I do. But she is never less than helpful and it is always a pleasure, if I may put it this way, to do business with her. I should like to thank in his absence my noble friend Lord Broxbourne for his legal expertise and, as always, my noble friend Lord Mottistonc. I am glad that at the very last gasp it looks as though we might be able to do something to help him.

I should like also to thank the noble Baroness, Lady Stedman, and the noble Lord, Lord Evans, and also, in his absence, the noble Lord, Lord Kilmarnock. I am sorry that I have not been able to be more helpful to them. On the Cross-Benches, of course, I should like to thank in his absence the noble Lord, Lord Marsh, who was a great support to us. I was appreciative of that. Finally, I am grateful to all who have taken part in what has not been an easy Bill to take through your Lordships' House. I say again that I am sure that in the course of time it will do all that we hope of it. While I recognise the concern that has been expressed, I think that we now have to see what the Bill produces at the end of the day.

Moved, That the Bill do now pass.— (Lord Bellwin.)

Baroness Birk

My Lords, at this late stage— today it has certainly seemed as though we were spending all day on rate capping, and indeed I think we were— I should like to thank the noble Lord the Minister for his cheerfulness and courtesy and even his long suffering when I tried— this time it was on only one occasion— helpfully to keep him to his point. I thought I was helping him and enabling him to undress what he was trying to save from the clothing that had been supplied, no doubt, by the department— I am sure not by himself. I am also very grateful for the help of the Front Bench team over here and for the help of other noble Lords who have supported us in our opposition to the Bill.

As we come to the end of its passage through the House, I really must express great disappointment and frustration in our having achieved practically nothing right across the House, despite the unity of the three local authority associations and their dislike of the Bill, despite the criticism not only from these Benches, from the Alliance and from the Cross-Benches, but also from the many Tories whose loyalty to their party has never been in doubt but who obviously felt very strongly about the Bill.

Very little in it has been changed. Indeed, when the Minister starts off by saying, "I am in considerable sympathy", my heart sinks because I know that that is another turn down and he is saying it with courtesy. I hope that sometimes he is saying it with regret because I should like to feel that there are parts of the Bill which he has disliked perhaps as much as we have. Indeed, the more we have examined the Bill in detail, the more seriously we are worried about one unhappy aspect of it: the accretion of power to the Secretary of State. Our concern is not just with the power being given to the Secretary of State at the expense of local councillors, although that is worrying enough, but with the lack of accountability of the Secretary of State in the exercising of his power. One theme running through very many of the hundred or so amendments which we have unsuccessfully tried to make to the Bill is that very accountability. It ill befits the Government to berate local authorities for lack of accountability when the Government themselves resist all attempts to increase the Secretary of State's accountability.

Time and again the Government have refused amendments which would have inserted more parliamentary approval and more explicit reporting to Parliament into the Bill without in any way cutting across their own objectives, even though those might be objectives with which we do not agree. This evening we had two outstanding examples. First, there was the amendment moved by the noble Lord, Lord Henderson of Brompton, which was a clever, careful and moderate way to deal with supervision by Parliament of the Bill. Then there was the amendment— there was a Division upon it— moved by the noble Lord, Lord Sandford, and supported by my noble friend Lord Northfield. Again, there was this very moderate amendment which received a response of very great feeling and some passion from many Peers opposite, which was reflected in the voting figures.

Furthermore, we have not managed to improve the drafting, which on the whole I must say is absolutely ghastly, but having been a Minister myself I know that Ministers are not responsible for the drafting and often have to mouth the un-understandable for the incomprehensible muddle— anyhow, it is very, very bad indeed. For example, I need not remind the House of the mental gymnastics we have had to perform to understand what is meant by "principles" and the logical paradox of how many different "principles"' are needed to ensure equal treatment. I use the word "principle" with quotation marks, since this Bill really debases the hitherto accepted meaning of that word.

Another leit-motif has been the need to do something about local government finance. No one is happy with the present mess, which will be exacerbated rather than helped by this Bill. In the space of four years the Government have prescribed three different spending reforms for a local authority: GREA, target and expenditure limit. How many councillors, let alone electors and ratepayers, will be able to understand these?

This Bill is a child of the Treasury, nurtured by the Department of the Environment and not, in this context, a very healthy heritage: yet the Government have resisted all attempts to establish a review of local government finance or the rating system. The argument used was that a further review would impede the progress of this Bill. If it had, what a good thing that would have been, even though our amendments scrupulously avoided any element of delay. I have said enough at this time of night, so I will just finish by saying that the Bill is ill-judged, hugely unpopular, probably unworkable and a disgrace to parliamentary and local democracy.

Lord Evans of Claughton

My Lords, may I be associated briefly with the remarks that have been made. The thing that pleased me most about the debates during the various stages of the Bill was that I was able to go away for a holiday to Ireland in the middle of it all, which I could not get out of. I am very glad that they did move the dates for the debates on part of the Bill to a date on which I had already arranged to be away— because one feels that this has been going on for ever and I must say, with all seriousness, that I have been very heavy-hearted over many parts of the Bill. I have had a very great deal of support from my noble friends here, particularly from the noble Baroness, Lady Stedman, who is now away and also from many other noble friends. I think we have worked constructively with the main Opposition party and with many Cross-Benchers. One has felt at times that, however rational and reasonable was the proposal one was making, it was falling on deaf ears.

I do not blame the noble Lord the Minister for that. He has a job to do and I think that within the limitations of his remit he has done it very fairly and reasonably and as kindlily as he can. I have to say this in view of the concession that we have enjoyed in the last minutes. I suppose it is only a coincidence that the noble Lord's right honourable friend the Secretary of State is our guest of honour at the National Association of Workhouse Keepers annual luncheon this year? I was going to withdraw it if he had not made some kind of concession there. To be fair, there have been one or two other concessions made— but very, very few. Even people who are used to accepting crumbs, like Members from these Benches, have been virtually starved during the course of the past few weeks. What concerns us are the matters which other noble Lords and Peeresses have mentioned— for example, the appalling nature of the withdrawal of responsibility from local authorities.

I am not one of those who believe that the high-spending local authorities are without blame. I am a ratepayer in Liverpool, and I know the kind of problems there. The cleansing services in Liverpool cost 29 per cent. more than the same services cost in Sheffield— another Labour-controlled authority. So I am not unaware of the position. But as the noble Lord the Minister will know, I think that the way they have gone about it has done what I fear is irreversible harm to the balance between central Government and local government, and I hope that some future Government (perhaps of the complexion of my party: who knows?) will do something to undo many of the worst features of this legislation.

I wish it well in one respect. I wish it well in the respect that I hope it creates a sense of responsibility among some of the less responsible local authorities; but I feel that this could have been done in a more constructive and less brutal way. I only wish that I could be more warm in my good wishes to the Ministers. I wish them well for the way they have presented the Bill and for the way they have tried not to answer our questions. But I really cannot give an ounce of support to the general tenor or philosophy of the Bill, and I fear that Her Majesty's Government will in the future regret the damage and the injury that they have done to local government.

Lord Sandford

My Lords, the Minister has done his best throughout the passage of this Bill, but I think, so far as the two Conservative presidents of the Associations of District Councils and County Councils are concerned, the less said about the Bill the better. The Secretary of State is coming to our annual conference next week, and I think I shall leave it till then.

Lord Henderson of Brompton

My Lords, may I say a final word about Part II of the Bill, which has agitated Members of both Houses of Parliament during its passage? There were two notable speeches during the Second Reading debate in the House of Commons, one by a former Prime Minister and one by a former Secretary of State for the Environment, Mr. Geoffrey Rippon. They both expressed extreme unease as to the parliamentary propriety of proceeding by way of Part II for the general scheme. That unease has been echoed in this House and re-echoed right to the very last stage, and the Government have not seen fit to agree to any of the many alternative proposals which have been put forward. That is regrettable. But I must once again express my gratitude to the noble Lord, Lord Bellwin, and the Secretary of State himself, for at least considering carefully all the suggestions which have been put before them.

I wonder whether I might make a last plea to the Secretary of State, in view of all the criticisms which have been made from start to finish, not against the Bill itself but about parliamentary impropriety— I put it no higher than that; I do not use grand words like "unconstitutional"— and the dangers of proceeding as the Government are proposing in Part II of this Bill. If it is necessary in the future to bring in general limitation, will be consider bringing it in by fresh legislation, instead of by activating Part II of this Bill? This would show strength, not weakness, on the part of the Administration, and it would not in any way go against the Government's commitment in their manifesto.

If you read that manifesto commitment, and if you read the speech of Mr. Tom King, which he made in Bridgwater soon after the manifesto was published, and which was put out officially by the party, you will see that it could well be taken that it is the Government's intention to legislate, first, for selective limitation and, secondly, when the time comes, if necessary, for general limitation.

So if the Government could be big enough to accept that there is parliamentary impropriety in proceeding as they are now proposing to do by way of Part II, they could retrieve it, if unfortunately it is necessary to bring in general limitation, by legislating afresh instead of activating Part II.

On Question, Bill passed, and returned to the Commons with the amendments.