Lords Sitting of 8 May 1984

Preamble
The House met at half-past two of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Peterborough.
The Earl of Buckinghamshire—Sat first in Parliament after the death of his kinsman.
The Marquess of Normanby—Took the Oath.

Food Prices
Lord Sandys: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what has been the annual increase in food prices and in retail price index since 1977.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead): My Lords, between March 1977 and March 1984 the average annual rate of increase for the food component of the retail price index was 8·2 per cent.; that for the index as a whole was 10·1 per cent.
Lord Sandys: My Lords, may I thank my noble friend for that reply. Is it not the case that this is a most encouraging answer, and it reflects particularly well on British agriculture and home-produced food on a diminishing acreage?
Lord Belstead: My Lords, I am grateful to my noble friend for that Question. I think my Answer indeed reflects well on the agricultural industry of this country. Over the period 1977 to 1983—not quite the period my noble friend had asked for in his Question—self-sufficiency in all foods has increased in this country from 48 per cent. to 60 per cent., and in indigenous type foods the increase has been from 63 per cent. to 76 per cent.
Lord Leatherland: My Lords, does not the Minister think that this calls for an improvement in the standard of living and the rate of wages of agricultural workers?
Lord Belstead: My Lords, the wages of agricultural workers are decided by the Agricultural Wages Board.
Lord Bruce of Donington: My Lords, in order to complete the picture, can the noble Lord give the House the information as to how many thousands of millions of pounds have been paid out of taxpayers' pockets in support of the agricultural programme?
Lord Belstead: My Lords, I do not think it is profitable to start trying to weigh the costs of the common agricultural policy—and they are considerable—with the benefits. But the benefits are there and I have enumerated just a few of them. In
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addition, it might be of interest to the House that over the past six years our exports of foods from this country have increased in volume terms by 35 per cent. There are really enormous savings, both from the self-sufficiency and from the increase in exports points of view, in our balance of payments.
Lord Collison: My Lords, I thank the noble Minister for what he has already said, and have listened to his replies, particularly about the agricultural workers' wages. But would he not agree that this is a great success story in agriculture which could well set an example to the other industries? Would he not agree that the agricultural workers, together with the farmers, have played a magnificent part in achieving such a good record?
Lord Belstead: My Lords, I agree with the noble Lord, Lord Collison, who, from his experience, knows far better than I that in terms of productivity and of industrial relations British agriculture has a very fine record over the years. Of course those who are to be thanked are all who work in the industry and not least those who are employed upon our farms and in our horticultural enterprises around the country.
Lord Gisborough: My Lords, can my noble friend say how this rise in the retail index compares with the rise in the previous period of 1974 to 1979 of which I believe he has been given notice?
Lord Belstead: My Lords, I think the answer to my noble friend's question is that from February 1974 to May 1979, if that is the information that my noble friend is after, retail food prices rose by 16·4 per cent. per annum. Since then the increase has been 7·9 per cent. per annum. I must be fair in giving those figures. There obviously was a very considerable readjustment in food prices when we entered the Community. On the other hand, as I am sure my noble friends on this side of the House will agree, we have a splendid Government at the moment which of course is keeping food prices down.
Lord Beswick: My Lords, if we were able to import New Zealand produce without quota or without levies, would that increase have been more or less?
Lord Belstead: My Lords, I do not know because that is a hypothesis which is never likely to be realised.
Lord Beswick: My Lords, but is the noble Lord not aware that it would have been considerably less if we had been able to import New Zealand butter and New Zealand lamb without the levies and without the quotas?
Lord Belstead: My Lords, it would very likely mean a return to deficiency payments and guaranteed prices, and probably the end result would be all the worse.
Lord Diamond: My Lords, am I right in assuming that the answer which the noble Lord gave in his first Answer refers to the average consumer and does not therefore specifically refer to the budget of pensioners, who generally buy in small quantities and find that the cost of food is somewhat higher? Has he any figures which specially refer to that standard of living?
Lord Belstead: My Lords, I am afraid that I do not have figures which relate specifically to pensioners.
The Earl of Radnor: My Lords, will my noble friend agree that if this good performance is to continue it would be helpful for the agricultural industry to have a little more forewarning of the drastic changes in prices, quotas and so on, that it has suffered this year? Will he not agree that it is hard to maintain the efficiency that has I think been maintained so far when things happen as they have happened in the farming industry this year?
Lord Belstead: My Lords, my noble friend refers of course to dairying. I think that we are getting on to another question, however deeply felt may be one's views on the issues. So far as this Question is concerned, the effect of the price fixing of the common agricultural policy should I think exert some downward pressure on food prices. That is something that the whole House would welcome, I would have thought.
The Duke of Norfolk: My Lords, is my noble friend aware that the New Zealand Government are making considerable progress in their trade with Japan and doing very well in the export of both lamb and butter?
Lord Belstead: My Lords, I would not wish my noble friend the Duke of Norfolk to think that the replies which I felt I needed to give to the noble Lord, Lord Beswick, showed any unfriendliness towards New Zealand. It is the policy of Her Majesty's Government to see that the 18th Protocol is faithfully carried out by the Community and that the Dublin declaration of 1975 is adhered to. It is of course we in this country who take the New Zealand produce. We are ready and we are proud to do so. Having said that, I do not think—if I may say so to the noble Lord, Lord Beswick, arising from my noble friend's question—that we can unwind the clock and go back to the old system of deficiency payments and guaranteed prices, even if we wished from a national point of view, to take more food from New Zealand. We have to live with the world as it is. The world as it is means that we are taking what we feel we can from New Zealand with the agreement of our Community partners, which is not always easy to come by.
Lord Beswick: My Lords, is the noble Lord aware that he is mistaken when he says that we are taking what we can? We are in fact taking what the Community says we can take.
Lord Belstead: My Lords, that is correct. We are taking what we can get agreement to take. That is the way that the Community works.

Torus Project: EC Finance
2.45 p.m.
Lord Gridley: My Lord, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is the total sum of money provided to date by the
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European Community to finance the Torus Project at Culham.
The Parliamentary Under-Secretary of State, Department of Energy (The Earl of Avon): My Lords, since the establishment of the Joint European Torus Project in 1978, the total sum of money provided by the European Community up to 31st December 1983—the latest year for which figures are available—was £174·4 million.
Lord Gridley: My Lords, is not this scientific research which is being carried out at Culham, which could one day assemble the sun's rays for the production of energy and unlimited supplies of electricity, one of the wonders of this age which should be made public in some degree to the people of this country? As to what my noble friend says about the finance available for the research, do the Government consider that this is at present adequate?
The Earl of Avon: My Lords, I am all for the public being aware of what is going on. So far as I know, nothing has been hidden in this context. The Government consider that the present financing is adequate.
The Earl of Bessborough: My Lords, are there not a number of benefits accruing to this country as a result of our having the Joint European Torus Project located here, especially in regard to contracts for British firms and research establishments? Secondly, if I might ask another question, would my noble friend not agree that, as I have an Unstarred Question set down on this subject, it might be appropriate for us to have a short debate, perhaps before the Summer Recess, when we could compare our efforts with those in the United States, Japan and the Soviet Union?
The Earl of Avon: My Lords, in answer to my noble friend's first supplementary to the end of 1983 some 43 per cent. of the contracts, by value, had been let to United Kingdom firms and organisations. So far as his second supplementary is concerned, I should be only too happy to have a debate on this subject, if neccesary before the Summer Recess. I shall rely on the normal channels.
The Earl of Halsbury: My Lords, would the noble Earl agree that when the JET project was set up at Culham we already had available the most advanced theoretical design team in Europe? Is it not very satisfactory that our partners in Europe have put up £174·4 million to keep it going.
The Earl of Avon: My Lords, I think it was extremely satisfactory that the Culham development came to this country in the first place, and it is one from which Culham itself has benefited.
Lord Stoddart of Swindon: My Lords, I wonder whether the noble Earl can answer two questions. Can he say what is the total cost to the British taxpayer of the project—which, incidentally, I support—bearing in mind the 10 per cent. direct cost that we pay, and of course, our contribution to the European Community? Secondly, may I ask whether there are

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other forms of research into fusion which are going on? Would he agree that the Torus Project is not necessarily the only route, nor that it will perhaps prove to be the best route? Are we, for example, experimenting in laser technology to obtain fusion?
The Earl of Avon: My Lords, in answer to the noble Lord's first question, the total estimated cost to 1990 is about £600 million at current rates, and the direct United Kingdom financial contribution to JET is approximately 12 per cent. in addition to our share, which is currently 20 per cent., of the European Commission's 80 per cent. support of JET. Other research is going on. I believe we have a debate next week on the other alternatives, when we can perhaps pursue the subject.

Iran: Human Rights
2.49 p.m.
Lord Molloy: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make representations to the Government of Iran about the human rights situation in that country; and whether they intend to support the Iranian Government in exile in Paris.
The Paliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne): My Lords, we have on many occasions made clear to the Iranian authorities our concern about violations of human rights. We co-sponsored the resolution on this question which was adopted by the United Nations Commission on Human Rights on 14th March. We avoid taking any action involving Iranian exiles which might be misconstrued as interference in the internal affairs of Iran.
Lord Molloy: My Lords, is the Minister aware that his reply will give great encouragement to many people involved in this Question and that it is a proud thing that our Government have given such a lead in what is now becoming a horrendous situation? Is he further aware that following the earlier reporting in the British media the terrible atrocities in Iran have been highlighted again this weekend in an article in the Observer? Is he further aware that the exiled National Council of Iran, led by Masuud Rejavi, is the only beacon of hope that many thousands of Iranians have? Will the Government continue in their efforts to bring this terrible situation to the notice of world governments? Not only will that do the Government great credit, but I am sure that it will be applauded by the people of our country.
Lord Trefgarne: My Lords, the noble Lord may be further encouraged to know that the European Community have made a number of demarches to the Iranians. I think that the most recent one was in July last year, but there were no fewer than four previous ones.
Lord Cledwyn of Penrhos: My Lords, is it not the case that the United Nations Commission on Human
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Rights asked for a representative to be appointed to make contact with the Government of Iran on this issue? Can the noble Lord say what progress has been made in the appointment of such a representative and what further steps Her Majesty's Government are proposing through the United Nations to seek some amelioration of this terrible situation?
Lord Trefgarne: Yes, my Lords, the noble Lord is quite right. The resolution of the United Nations Commission on Human Rights, to which I referred, called for the appointment of a rapporteur to look further into this matter. But we have yet to hear what will be the reaction of the Iranian Government to that appointment.
Lord Molloy: My Lords, is the Minister aware that Iran has been very short on human rights ever since the last war? Nevertheless, bearing in mind the appalling increase in atrocities in Iran, if our Government will continue to give their lead and perhaps even call a conference, that could help at least to ease off the atrocities and then perhaps allow pressure to be applied, so that democracy can be returned to Iran.
Lord Trefgarne: My Lords, I hope that our representations will have some effect upon the situation, but I have to say that, following previous experience, I doubt whether they will.
Viscount St. Davids: My Lords, are not the noble Lord the Minister and the House interested to see that the noble Lord who asked this Question, and those with whom he sits, are precisely those who asked an identical Question to that which is now on the Order Paper at the time when the Shah ruled in Iran and it was the Ayatollah who formed the government in exile in Paris? Does this not show that, however gently unsatisfactory a situation may be, it is always possible, with a good, firm push, to make it a great deal worse?
Lord Trefgarne: My Lords, I leave to your Lordships the conclusions to be deducted from the parallel which the noble Viscount draws.
Lord Molloy: My Lords, this is an appalling situation in which literally millions of human beings are being done to death and I do not think it would become this House to leave the matter in a spirit of merriment. The Ayatollah certainly received some support to go back to Iran because the ordinary people of Iran were under the heel of the Shah. Then they were double crossed by people who meant well and thought that there was going to be a reintroduction of decent human rights. That has not taken place. Will our Government continue to make the remarkable endeavours they have undertaken since the Ayatollah went back?
Lord Trefgarne: My Lords, I am not sure that it profits us much to hark back too far in these matters, but certainly the present situation is totally unsatisfactory and that is why we have made the representations that we have made.

Madagascar: Cyclone Disaster Relief
2.54 p.m.
Lord Merrivale: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make a statement on their response to the serious damage recently caused by cyclone "Kamisy" in Northern Madagascar and notably in the towns of Diego Suarez and Majunga.
Lord Trefgarne: My Lords, under disaster relief arrangements Her Majesty's Government are providing medicines valued at £27,000 and are contributing £55,000 to the cost of transporting relief supplies donated by other agencies. Our share of the emergency aid provided by the European Development Fund, totalling some £200,000, is about £37,000.
Lord Merrivale: My Lords, I should like to thank my noble friend for those figures. Will he recognise that, with winds of up to 250 kilometres per hour and a rainfall in 48 hours of 700 millimetres, 70,000 people were made homeless, mainly in the towns, and that 20 per cent. of the agricultural land in the area is unusable for the next crop? Will he also take into account the fact that there is a shortage of building materials in Madagascar and that economic communications in the island are severely affected? Roads and homes definitely need rebuilding.
Lord Trefgarne: My Lords, my noble friend is quite right; this was a very serious matter. I hope that the damage that has been done can be put right. As I say, we are making available such assistance as we can.
Lord Merrivale: My Lords, I should like to ask my noble friend one further question. Would he agree that, in effect, this disaster was not publicised to any extent in this country? It is much worse cost-wise than the disaster of January 1982. May I ask him whether Her Majesty's Government are prepared to consider further requests to deal with the problems caused by this very important cyclone?
Lord Trefgarne: My Lords, certainly we shall look at whatever further requests may be put to us, but I suspect that the best way forward for the Malagasys would be through some of the multilateral agencies I have referred to, including, for example, the European Development Fund.

Business
Lord Denham: My Lords, it may be for the convenience of the House if I announce that the Committee stage of the Rates Bill will be adjourned for dinner at approximately 7.30 this evening, for approximately one hour, and that during this adjourn-ment the Gas (Amendment) (Northern Ireland) Order 1984 and the Third Reading of the Straw and Stubble Burning (Control and Licensing) Bill will be taken.

Hereford City Council Bill [H.L.] Leicestershire Bill [H.L.] Worcester City Council Bill [H.L.]
The Chairman of Committees (Lord Aberdare): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That those provisions in the Bills against which no petition has been presented, or if presented has been withdrawn in whole or in part, or which become unopposed by reason of any of the provisions of Standing Order 113 be committed to a Select Committee and that the quorum of the Select Committee be two.—(Lord Aberdare.)
On Question, Motion agreed to.

Rates Bill
2.59 p.m.
The Minister of State, Department of the Environ-ment (Lord Bellwin): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Bellwin.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clause 9 [Power to introduce general control]:
Lord Sandford Lord Sandford moved Amendment No. 72:
Page 8, line 5, at end insert—
("( ) The date to be specified under subsection (1) above shall not be less than three years from the date of operation of an order laid by the Secretary1 of State pursuant to section 2(1) of this Act.").
The noble Lord said: In considering this amendment we now move to Part II of this Bill, which is the one which confers so-called general powers on the Secretary of State to deal generally with local government rather than with selected members of it. I should like to say two things by way of preliminary remarks. The first is that I move this amendment as a probing amendment, and when we come to Amendment No. 77 I shall move that and speak to it on the same basis. In regard to the grouping which my noble friend has suggested, I would agree that Amendments Nos. 72 and 76, which are virtually the same, should be taken together, but I would prefer to speak separately to No. 77 when we get to it and not to say very much about that now.
Amendment No. 76: Page 8, line 9, at end insert—
(" ( ) No order shall be made under this section

(a) until the expiration of three years from the date upon which the Secretary of State has first laid an order before the House of Commons pursuant to section 2(1) of this Act, and

(b) unless, during each of the three financial years preceding such making, the relevant expenditure (as defined in section 54 of the Local Government, Planning and Land Act 1980) of all local authorities in England and Wales or in both countries (as the case may be) has exceeded by five per cent. the sum of relevant expenditure determined in accordance with the provisions of section 54 of the said Act of 1980 and employed by the Secretary of State for the purpose of determining the aggregate amount of rate support grants.").

The Committee will recall that the Government sought to justify this legislation as being necessary in order to control the excessive expenditure of a small number, variously described as being 12 and 20, of extravagant, defiant and largely Left-wing local authorities. If that is the reason for the legislation, then certainly Part I is needed. The Government were successful in making that point on Second Reading and ended up at the conclusion of the Second Reading debate with a substantial majority of about 80. However, if the number of Peers who are normally present in the House had voted—the number who, for example, will be taking part in the Divisions today (if we have any)—then the majority would have been down to single figures. Be that as it may, they have justified the use of this legislation to the satisfaction of the House in respect of the small number of local authorities which have spent excessively and which by doing so have collectively damaged, injured and impaired the Government's macro-economic strategy.
I think that the Committee will agree that the justification that is now required for Part II of the Bill (which we begin to consider now) is of a wholly different order. This is a probing amendment because in my view the Committee want to start this part of the Bill with the Government putting forward a clear and quite different justification for asking Parliament for these general powers. If I may say so, my noble friend's arguments for the powers under Part I lacked conviction when we came to examine them in detail during the Committee stage. Although he said at some point that there was a small number—it might be 12 or 20—of these extravagant and defiant authorities, and that they stood out clearly from all the rest of the 400 or so, when we pressed him for the criteria by which he made that judgment, he remained as elusive as his colleague in another place who did no more than present the Committee on that occasion (and we have the same sheets of paper now) with a choice of 15 criteria, each of which produced a different grouping of local authorities. So it has not been established yet that there is a clear group of 12, 15, 18 or 20 authorities who stand out clearly from all the rest. A different group of authorities stand out according to which criteria one applies.
In this Part of the Bill we really require justifications which are much sharper, more precise and more substantial than the justification with which the Committee has shown it is content (in view of the way in which it has voted so far) as regards the selective powers. General powers are quite a different matter. They will give central government power to exercise over the whole of local government the control which Part I only gives in respect of a limited number of authorities, although we do not have the figure in the Bill. The criteria are still no more satisfactorily spelled out in this Part of the Bill than they were in the first Part.
But the justification which this amendment seeks to test is the one which the Government have used on several occasions both in this House and in another place; namely, that they need this power because, after a certain lapse of time, it may prove that the powers in Part I have not been adequate to bring excessive expenditure by local government under control. By that they could mean that Part I has not worked; it has
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not been effective; or it has not been possible to implement it as they would like. There are certainly quite a number of people who are more familiar with local government finance than I am and who have been able to point out the limited extent to which Part I will do what the Government say that it will do. Therefore, that is one matter about which we will want to hear.
Another matter is that the Government have said that it may prove, after a certain lapse of time, that, although they have been effective in bringing a limited number of authorities under control, the situation is such that such a large number of authorities are spending somewhat above target or above GREA that it is necessary to apply the powers much more generally; even to whole sections—to all the counties or to all the metropolitan authorities. If the Government are to be given powers of that type, then I put it to the Committee that the justification for it has to be spelled out very clearly. It is for those and similar reasons that I move this amendment now to probe the Government's intentions and to invite them to give us the justification which this particular Part of the Bill requires over and above any justification that was put before us as regards Part I. I beg to move.
Baroness Stedman: I should like to speak in support of Amendment No. 72 and at the same time speak to Amendment No. 76 which stands in my name and the name of the noble Lord, Lord Evans of Claughton. I note that the noble Lord prefers to take Amendment No. 77 separately.
Many of us, including all the local authority associations, do not like the general powers; indeed, we are very suspicious of them. As I understand it, Amendment No. 72 is an attempt to try and delay the use of the general scheme to limit all local authority rates. This can be brought into operation after both Houses of Parliament have approved an order made by the Secretary of State. What we are really saying in this amendment is, "Stop and think before you invoke the general powers". In effect we are providing a cooling off period between the introduction of the selective powers in Part I and the general powers of Part II.
The Government have said on many occasions that the general scheme would only be used if local authority spending continues to be out of line with Government plans. But we are not accepting the Government's right to set the total of local spending. We are trying to build into the legislation in Amendments Nos. 76 and 77 the Government's undertaking only to invoke a general scheme if local spending is in some sense out of control. We take as the measure of control deviation the figure for relevant expenditure which is imposed by the Government in the rate support grant.
These amendments would ensure that the provisions of Clause 9 cannot come into force unless total relevant expenditure has been exceeded by 5 per cent. for each of the three years preceding, bringing in the powers of Part II. They would enable the Government to decide whether the selective scheme to which they are so heavily committed has worked. We have argued that the high spending authorities cannot be expected to make all their savings in one financial

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year and that it is unrealistic to expect to secure all the reductions in one year.
We have opposed Part I of the Bill unsuccessfully, but if we are to have it, then please give the selective powers a reasonable time to operate, because once this legislation is on the statute book power will be taken away from local authorities and given to central government. Once an order has been agreed, the Government then have unlimited power for an unlimited period of time. We are trying to ensure by these amendments that the general scheme does have a chance to work for three years and that the Government can show a really significant and continuing difference between Government plans for local authority spending measured by the total set for determining the aggregate grant, and local authority spending.
We are not happy about either Part I or Part II. We think that we need to know a lot more from the Government about their criteria. We need to know how the Government would define expenditure which has become out of control. We need to know if the Government will accept 5 per cent. or will say that is too high a margin for total expenditure. What figure would they be likely to accept? What would be the macro-economic effect of a 5 per cent. variation or of the Government's alternative criteria? In effect, under exactly what circumstances would they invoke the general scheme? Do they propose to invoke the general scheme?
Baroness Birk: I rise to support Amendments Nos. 72 and 76, which have just been spoken to, and I should like also to speak to Amendment No. 77.
Amendment No. 77: Page 8, line 9, at end insert—
("( ) No order shall be made under this section unless during each of the three years preceding such making, the relevant expenditure of all local authorities in England or in Wales or in both countries (as the case may be) has exceeded by five per cent. the sum of relevant expenditure determined in accordance with the provision of section 54 of the Local Government, Planning and Land Act 1980.").
As the noble Lord, Lord Sandford, has intimated that he would prefer Amendments Nos. 72 and 76 to be taken separately from Amendment No. 77, I shall extricate some of the detail which makes Amendment No. 77 rather different from the other two amendments.
As has already been said, this group of amendments seeks to define the circumstances under which the Government may invoke the general scheme of rate limitation. The Government have said that they will introduce the general scheme only if total local authority spending continues to be in excess of the Government's spending plans. It is very significant that the remarks which have been made by the noble Lord who moved Amendment No. 72 and by the noble Baroness who has just supported it have, like ours, been along the same lines: that there will be a great deal of both anxiety and distrust about what will happen and much understandable curiosity as to what the Government have in mind. Our remarks have aimed at trying to get from the Government a great deal more than they have at present been willing to volunteer.
The Government have said that they will introduce a general scheme only if total local authority spending continues to be in excess of the Government's plans. But we find it intolerable to be told that the general scheme is to be used only if in some sense the situation goes out of control and that the Government will not need to tell Parliament or, more importantly, do not agree to include on the face of the Bill just what they mean by "out of control". The noble Baroness, Lady Stedman, also made that point.
The idea behind Amendments Nos. 72 and 76—and I am trying hard to separate them from Amendment No. 77—is certainly superficially very attractive. The reasoning is that a selective scheme should have a chance so to work, before admitting failure of such a selective scheme to meet the Government's objective of reducing overall local expenditure. The truth is, of course, that a real selective scheme alone cannot deliver the reductions being sought in the public expenditure White Paper. I make no apology for repeating some of the remarks that have already been made in this debate and earlier, because there may be a forlorn hope that, if the Government really appreciate both the strong feeling and a certain amount of common sense and practical sense which motivates those of us on these Benches, who are very concerned and who are moving these amendments, they might be a little more forthcoming and rather more willing to concede something on this Bill. Except for a very minor amendment moved by a noble Lord opposite, not one amendment has been conceded, not even one of a small matter of substance has been taken back by the Government to be looked at again. In fact, there has always been a remarkable lack of support for the Minister from Government Benches. He, poor man, has nearly always been on his own having to deliver the Government's diktat. It is sad for him, but presumably it is his choice.
If Amendments Nos. 72 and 76 were successful, in effect, we should be giving the Government a licence to use the selective scheme very widely. I am tempted to say that we should let them see how irrelevant is the capping of a handful of authorities (which is constantly referred to by the Government) to reducing levels of expenditure by the 13 per cent. margin which the Government seek. Therefore, though we support these two amendments—and, again, they are on exactly the right lines and are pushing at the right door, which is never opened from the other side—out of the three amendments, I would suggest that Amendment No. 77 is both more effective and the better way to deal with the particular problem that we are now discussing.
Lord Bellwin: I am very grateful to the noble Baroness, Lady Birk, for her concern at my being on my own. First, it is not for the first time; secondly, I have tremendous support in spirit but, even more important, in the Division Lobbies, where it matters most when the chips are down. What better can one ask than to have support there? I should have thought that that is where it really counts. Nevertheless, I am still grateful to the noble Baroness for the spirit in which she made her remarks—at least, as I intend to interpret them.
My noble friend Lord Sandford said that, certainly in the earlier stages of Committee when we dealt with

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Part I of the Bill, my arguments had lacked conviction and that I was elusive. As to being elusive, I might well accept that. Worse things than that have been said. As to lacking conviction, again, I can only point to where it matters most—the Division Lobbies, which is where we have had great support. I had rather hoped that we might also have spoken to Amendment No. 77, but by all means let us take it separately. I know that my noble friend prefers it that way.
These amendments require a minimum period of three years to elapse between the first new selective scheme and an order to introduce the general limitation scheme. As I have repeatedly said, we do not expect ever to have to use the general rate limitation scheme. Some noble Lords have suggested that if that is the case, perhaps I should have no objection to a minimum period before it could be used. But I have always argued that the very existence of the general rate limitation scheme would be one of the reasons why it should never be necessary to use it. It is basically an argument about deterrence.
My hope and belief is that the combination of the continuing efforts of responsible authorities, the pressure through the grant system and the direct benefits of selective rate limitation, backed up by the existence of such a scheme and the knowledge that, if necessary, it would be possible to move to the general scheme, will be sufficient to ensure that local government spending conforms more nearly to our plans. That is why I believe that it will be unnecessary to introduce the general scheme.
The amendment would remove for a period of three years the benefit of the deterrent effect; and certainly for that reason alone I cannot support it. The selective and general schemes are complementary and it would be very counter-productive, even dangerous, to remove one of them from the arena for a fixed period.
Furthermore, although I regard it as highly unlikely, I could not accept the situation in which these two amendments would leave us, where we should be unable to respond to a significant breakdown in the pattern of largely responsible behaviour by local government before the financial year 1988–89. That would be the effect of this amendment. If this amendment were agreed, we would not be able to act at all before 1988–89. Clearly no one could possibly accept a situation such as that.
Perhaps this is the moment to say something in overall terms about the general scheme, and I shall certainly be glad to dilate upon it further when we come to later amendments, where it may be more appropriate. I should like to quote what my right honourable friend the Secretary of State said in another place on the Second Reading of this Bill. On 17th January 1984, at col. 174, he said:
"I know that many of my honourable and right honourable friends are concerned about the circumstances in which it might be necessary for the Government to put to Parliament a proposal to introduce the general rate limitation scheme".
He then said:
"Under Part I, the selective scheme will catch the highest spending authorities. There is, however, a second tier of overspenders, less serious perhaps, whose spending and rating is certainly contributing to the overall problem, but who will, I believe, respond not only to the pressures of the grant system but also to a very real desire to avoid rate limitation under either the selective or the general scheme. There are as well, of course, the 80 per cent. of
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responsible authorities which are at present budgeting at or close to their targets.
"What I would say to the House, therefore, is this. Any decision about whether there should be a move to general limitation must depend on the future spending decisions of not just a few authorities but of a significant number of authorities. If it becomes apparent that, for whatever reason, a substantial block of authorities are spending irresponsibly and so are pursuing a course calculated to overturn the Government's expenditure plans, then we should have to consider asking the House to implement the general scheme. But I repeat that we do not want to have to do that. Only if the spending decisions of a substantial number of authorities cause us to act would we contemplate asking the House to activate the power".
That is what my right honourable friend said.
Although there is much more that I should like to say about this, and on which to expand, as this is the first of many amendments with which we have to deal today perhaps your Lordships will allow me to let it go at that and stick to the amendment alone. Certainly I expect that we shall come back to the underlying theology of what we are proposing.
3.22 p.m.
Lord Broxbourne: I had not intended to say anything in this debate at all until I heard the provocative remarks of the noble Baroness to the effect that my noble friend the Minister had no support, or at any rate no vocal support, from the Benches behind him. Perhaps the noble Baroness will take warning from this occurrence as to the unwisdom of throwing out such challenges, in that it only takes up more time of the Committee by making noble Lords make speeches which they had not intended to make and as to which there are those who may think they would have been better left unmade—and the noble Baroness may be one of them. On the other hand, my noble friend the Minister may be glad to have some testimony, however small, to the fact that he is not that shrinking, isolated figure that the noble Baroness seeks to portray.
On the substance of the matter, these amendments seek to put time limits upon the jurisdiction of Parliament. That is nearly always an unwise thing to do, for various reasons. At Second Reading I ventured to make a few observations about the principles and exercise of the sovereignty of Parliament. Provisions such as these shackle, and in my submission shackle unnecessarily, that jurisdiction and the exercise of those powers. Laying down these arbitrary time limits is doubly difficult, because however reasonable they may seem to be to some at the time they are instituted, in a moving world, by the time the time limits take effect they may well be outdated and counter-productive. I would submit to your Lordships that my noble friend has given a helpful, constructive and conciliatory reply, and that he should be supported in this and the amendments rejected.
Viscount Ridley: As I have put my name to this amendment I should like to support it, but I hope that it will not go too far at this time. My noble friend said that this specific scheme must be seen to have failed before he will consider introducing, or asking Parliament to introduce, the general scheme. Can my noble friend give us any indication of what criteria he would use to say that the specific scheme had failed? How long would he consider to be a respectable period in which he could consider that he had evidence that it was necessary to invoke this draconian, ultimate deterrent of the general powers?
Lord Bellwin: When responding earlier to cover the points raised by the noble Baroness, Lady Stedman, perhaps I should have covered this. The reason I did not do so was because she was touching upon Amendment No. 77, and I hoped she would forgive me if I did not touch on this point. My noble friend Lord Ridley picks up one of the points that the noble Baroness covered; namely, how long would one have to go before one knew that the selective scheme was not working. I said repeatedly in previous discussions on earlier amendments regarding some of the spending of the highest overspenders—and, remember, I quoted it as being as high as 50, 60, 70 or 80 per cent. and more above GRE—that it would not be practicable to expect that that could be reduced in one year. It just could not be done, because then you would have to face a situation in which an authority was being asked to do something which it was impossible for it to do in one period.
That is why I have said all along that the levels that my right honourable friend the Secretary of State decides upon must be levels that are achievable and reasonable, and that will take some time. How long that time will be it is clearly not possible to state at this moment, or until such time as we announce the designations and their bases. But if it does nothing else, it shows that these particular amendments which talk of three years from the introduction of the selective scheme are not applicable. Therefore, I hope that my noble friend and those supporting this amendment will accept from me that whatever else one may think about any of the other amendments, in terms of practicalities this particular one is not a starter at all.
Lord Sandford: I am most grateful to Members of the Committee who have taken part in this debate, and particularly to my noble friend on the Front Bench for the information he has given us. So far as I am concerned, there is no question of rejecting this amendment because I am not going to press it. I said that it was a probing amendment to elicit some more information from the Government about the circumstances in which this Part of the Bill is likely to be used, the reasons for it and the justification for it. To some extent it has succeeded in that.
I welcomed, and I hope the Committee did, the general remarks that my noble friend made to us on Part II of the Bill. If he has more to say about Part II generally, the sooner he says it in the course of today's debates the better it will be for the Committee. That, of course, is up to him, and I shall seek to give him that further opportunity before I withdraw this amendment should he wish to respond to it.
We are left with a number of reasons and justifications for Part II of a rather different kind, which we shall have to study carefully between this stage and the next in order to see whether they are compatible. One justification that has been used before—and my noble friend used it again—is that this general scheme will be used only if the selective one fails in some respect. It can fail in a number of different respects, and presumably this is available for any sort of failure: a failure to work as intended; a failure to work quickly enough; a failure to deliver the expectations aroused by Part I; or a failure to work as
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the Government hoped it would work. We are still not clear which of those failures is in mind.
My noble friend's remarks have identified clearly what he describes as a second tier of overspenders. It may be that these can be got at only through the general scheme, in which case that is a new justification for the general powers. A third one—and this is where we have to ask ourselves how compatible it is with the first—is that the existence of this legislation on the statute book, though inoperative and not brought into force, will act as some sort of deterrent. Maybe it will; maybe it will not.
Certainly in the present unreformed state of local government finance the constraints on irresponsible and excessive expenditure do not seem to be operating. The admirable council which has been in control of Birmingham City, for instance, and has been success-ful in reducing the rates there, has just been thrown out by the local electorate. That seems to me to be an indication that we are trying to operate a system in which large amounts of expenditure of other people's money by local councillors is not the least bit unpopular—it is very popular. Nothing at all in this legislation is putting that right. It is trying to operate on a system which is clearly not working correctly. Whether Parliament would be right in giving the Government more powers to introduce a system of control which is trying to deal with the impossible situation, because the controls are being shown as incapable of proper application by the local electorate who are responsible for them, is another matter which we must consider.
I sit down for a moment to see whether my noble friend wants to respond and to say more about the general justification for Part II, before I withdraw this amendment.
Lord Bellwin: I said—and I should like to stick to it—that as there are many amendments to follow, even on Clause 9—and even on the question whether the clause shall stand part of the Bill we may have debate. I should prefer to leave my reply until that moment, especially as my noble friend very fairly said in opening that he was moving a probing amendment. He has probed successfully, I would have thought, so far. Perhaps we might leave the matter now and come to it a little later on.
Lord Sandford: We will go on pressing, but I beg leave to withdraw this amendment.
Amendment, by leave, withdrawn.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 73:
Page 8, line 6, at beginning insert ("At least three months").
The noble Lord said: If, in the amendment with which we have just dealt, three years was a long time, we now move to a more reasonable time—three months. I very much hope that the Minister will be receptive to the case which I intend to deploy. Clause 9(1) deals with the power to make an order. In Clause 9(2) we are talking in terms of consultation both with the associations representing local government and with each local authority which, in the mind of the Government, is to be designated.
What the amendment seeks—and in my view it is simple and reasonable—is to begin Clause 9(2) with the words:
"At least 3 months"
before making an order under the clause. We are back to a point that was dealt with at length but not too great a length. The point, I think, was taken by the Minister regarding the people who find themselves designated—I will not say suddenly because I take the Minister's point. Designation is not likely to come out of the blue. What they are doing, with their eyes wide open, is known not only to themselves but also to the Minister and his advisers. We are talking about a reasonable time, both for the people affected to assemble their case and for the people who will sit in judgment upon them—that is not merely the men in Marsham Street but the men and women in both Houses of Parliament. The importance of this order-making process is underlined in Clause 9(3) because it needs to be approved by a resolution of each House of Parliament and therefore also has constitutional connotations. We are talking in terms of who will decide whether sufficient time has been given to individual authorities and to the associations in order to prepare their case.
The Minister very kindly wrote to me following the debate we had on Amendment No. 46.I simply say in passing that I am grateful for what he has done there in spelling out what he has in mind as a reasonable time. I do not think the Minister would think it amiss if, when we were asking then for three months, what transpires is about two months. There may be no difference. The Minister may very well feel that when these matters are put to the test sufficient time will be given. What worries people outside of course is that the Minister will know his own timetable while the people outside who are affected will not know his timetable, and they will want time not only to assemble their case but to try to influence the people who are going to act in these matters.
The Minister I think would want to have one or two illustrations of the reason for the time. Hackney was mentioned last week, and I do not intend to refer to it in this illustration. Liverpool and Birmingham have been mentioned. I think the Minister will say less about the Birmingham experience in the light of the mandate which the victorious Labour group have received from Birmingham. We know how the Minister and his colleagues are great ones for believing in what the mandate and the manifesto stand for. I simply want to mention the London Borough of Lewisham.
Lord Bellwin: Lewisham?
Lord Graham of Edmonton: I repeat "Lewisham", in case the Minister did not hear it. He will hear more of it as the debates go on. It is clearly an authority that has enormous problems, and if it is to be affected at all it is more likely to be affected in the first Part of the Bill rather than in the second. Lewisham tells me—and others, no doubt—that one of its problems is that, since 1980, it has been deprived of £100 million in rate support grant. If the rate support grant had continued in 1981, 1982, 1983 and 1984 at the same level, I think the Minister would accept the fairness of their
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case that the problems that will have put them into penalty box, where the Minister may very well be designating them, need to be considered. There are a range of other measuring rods against which the enormity of the task which faces the councillors in the London Borough of Lewisham has to be faced.
I think the Minister, not unreasonably, will say, "We in the Ministry know all about their problems", and they will point to GREA and say that the problems have already been taken into account, and that there is nothing that the councillors of Lewisham can tell them that they do not already know. We have all had sufficient experience in many an argument of believing that there is nothing new to be learnt; and yet, by a representation of sincere and earnest people, men and women who understand better than anyone in this House or in another House the nature of their problems, it may be that an additional veneer of concern may be conveyed to the Minister and his colleagues.
We are asking in the amendment for a resonable time to be provided to the authorities and the individ-uals in order that they can deploy their case. We know what the saction of the law is. At the end of the period, the Government will have their way in this as in other legislation; but we hope that the Minister will give the same kind of satisfaction as he gave on Amendment No. 46, that the time scale that he has in mind, while he may not be able to write it into the Bill, will certainly be able to give some confidence to people outside that they will have sufficient time in order to make their case. I beg to move.
Lord Bellwin: It is interesting that the noble Lord, Lord Graham of Edmonton, has moved away from Enfield. It has been Enfield, and Hackney up until now—and now it is Lewisham. I have no complaint about that. I am just glad to see the versatility of the noble Lord, Lord Graham of Edmonton.
I of course accept that a move to general rate limitation would be a big step to take, and it would be reasonable for local authority associations to be given a reasonable time in which to make their case for or against such a move. It would certainly be our intention that there would be a full and adequate consultation, and that is precisely why we have written this requirement into the Bill from the outset. Indeed, there would be a general legal duty on the Secretary of State to allow reasonable time for consultation. It is clear that the courts are always prepared to look at the nature of the matter being consulted upon in deciding whether an adequate period has been allowed. Having accepted that, it would be both our intention and our legal responsibility, as I say, to allow for an adequate period of consultation; but I cannot accept this amendment since it seeks to impose a fixed period for consultation and, furthermore, a period which I think is excessive.
If it were to become apparent that it was necessary to move to rate limitation, then for the limitation procedures, with which we are familiar from Part I, to operate we should need to be in a position to set expenditure levels for authorities and complete the consultation on those by the end of July. That would mean that the order introducing the general scheme

811
would have to be approved by both Houses—I repeat by both Houses—by the latest early in July.
Three months before that would put the time for the start of consultations in early April. By that time in the year, however, we would have only incomplete knowledge of the firm budget decisions of local authorities. That would be no basis on which to reach a conclusion with colleagues that it was appropriate to move to rate limitation.
The conclusion is that the effect of the amendment would be to impose a year's delay in the introduction of the general scheme of rate limitation. I am sure that was not the intention of the noble Lord, otherwise he would have said so, but that is the effect of it in practical terms. We have made it clear that we would only move into Part II with reluctance and only if it ever became absolutely essential to do so. However unlikely we think their use would be, we could not accept amendments which might make it impossible for us to respond quickly should the circumstances arise.
We could talk about the problems of the individual authorities. I suspect we did most of that in dealing with Part I of the Bill. Here we are talking about something quite different. All else apart, in terms of practically handling the timing of it, unless one were to accept a year's delay, it would not be practically possible to do this.
Lord Graham of Edmonton: I am interested in the timescale that the Minister outlines. I hesitate to accept his argument that in April there would be incomplete information as to the budgets of local authorities. My understanding and experience is that well before April each rate precepting authority is fairly clear and precise and has gone through all the arguments publicly to provide statistics. What the Minister might be saying, though not precisely, is that there may be difficulty in the Ministry in analysing, commenting on and coming to conclusions upon the budgets. I would understand that, but the problems are not those of the Ministry having the information; the problems in that case are those of the Ministry responding to information in the light of the imperatives which it has laid upon it.
The Minister also said that he does not wish to accept the amendment because he does not wish to be precise as to what is "reasonable". If three months is wrong, perhaps the Minister would not mind four months or even longer; but the Minister then said that he thought that three months was, if anything, too long. When these matters are resolved it will be the Minister and his colleagues who will tell local government what the Minister decides is reasonable, and not after consultation with them.
My evidence is not complete, but all the evidence I have from local authorities shows that they are not, in regard to this amendment or related amendments, looking for delay or putting matters back for 12 months, et cetera. They are genuinely worried about their ability to deploy their case, but hope, if the Minister says that consultation has any meaning, that the consultation might produce some change or some shift. That is the purpose of our amendment. I accept that the Minister has a timetable, which may not be his
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own but is the Ministry timetable. I shall be withdrawing the amendment at this stage, but I intend to come back with something comparable at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 74 to 76 not moved.]
3.45 p.m.
Baroness Birk Baroness Birk moved Amendment No. 77:
[Printed earlier: col. 803.]
The noble Baroness said: We now come back to the group of amendments we have already half dealt with. The Government have said that they will introduce a general scheme only if total local authority spending continues to be in excess of the Government's spending plans. Amendment No. 77 attempts to give some substance to the Government's promise. In replying to Amendments Nos. 72 and 76, the Minister said that the selective and general schemes were complementary; therefore he could not accept Amendments Nos. 72 and 76. The fact that they are complementary, the fact that the selective scheme through the Government's own choosing and decision has been left so wide, means that what is now the general scheme could be used by the selective part of the Bill and vice versa. When we were discussing this in the earlier days of the Committee, the Government refused to accept an amendment on limiting the selective scheme and also refused to give any number which they thought was acceptable to them. By doing that, therefore, they have made the general scheme much more redundant and unnecessary than it would otherwise have been when the Bill was first published.
I take the point made by the noble Lord, Lord Broxbourne, and would hate him to feel that I had not listened with great care and considered every comment he made in support of his friends, but one or even two very noble swallows do not necessarily make a legislative summer. Therefore, I feel that the Minister has been slightly bereft of friends since very few noble Peers have come to his support. I say this very hastily because I would not like others to keep getting up to show that they do support him when he is up against it.
Amendment No. 77 defines over-spending in terms of 5 per cent. above the level of spending set each year for the purposes of determining rate support grant. In that way it is in line with part of Amendment No 76. But that sum (relevant expenditure in the jargon of the rate support grant) is fixed by the Government, so the Minister can hardly baulk at that part of the amendment. The figure of 5 per cent. can be subject to the criticism that it is too high. I submit that 5 per cent. is a tolerable margin, if one takes into account that we are dealing with the budgetary decisions of over 400 individual local authorities. It is also reasonable bearing in mind the statement of a senior Treasury civil servant that in 1975 the margin of £1 billion had a negligible effect in macro-economic terms—that awful phrase which keeps on coming up and which we seem to be landed with. Five per cent. of relevant expenditure is currently a little over £ 1 billion. I find it quite intolerable that we should be told that the general scheme is to be used only if local spending is in some sense out of control, without the Government

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telling Parliament, or, more importantly, agreeing to include on the face of the Bill just what they mean by the expression "out of control".
The other amendments we have discussed in this group require the selective scheme to be in operation for three years before the Government introduce the general scheme. If the other amendments were successful we would, in effect, be giving the Government a licence to use the selective scheme very widely. On the other hand, there are very real advantages to be gained for most authorities if the general scheme could not be invoked, as this amendment sets out, until we see the scope of the selective scheme. Up to now the Government have refused to give any indication of this. In answer to what the noble Lord, Lord Broxbourne, rightly said about this all emanating from Parliament, when he says it is unwise to put a time limit on this, that I agree with in regard to legislation which is dealing with something quite specific and which is current at this time. What we are being asked to agree to in this legislation is something that may occur in the future—we do not know how or where the Government have taken very careful precautions to see that they can deal with this problem if they wish under Part I of the Bill, anyway; and to deal with something that has not yet arisen. This is why many of us from all parts of the House are very unhappy about this legislation and it is for this reason that we on these Benches feel very strongly about Amendment No. 77.
If the Minister does not find this acceptable, I wonder whether in his reply he would comment upon how he defines "out of control", whether he considers that the 5 per cent. is too high a margin and what figure he would accept. Also may I ask what are the economic effects of a 5 per cent. variation and what would be the Government's alternative criterion? Most important of all, under exactly what circumstances would the Government invoke the general scheme, taking into consideration that they have in no way defined the extent and limitations of the selective scheme? I beg to move.
Lord Sandford: I have put my name to this amendment, and I speak to it now because I want to invite my noble friend to say a little bit more about the circumstances in which this Part of the Bill will come into force. One of the reasons given hitherto has been that the Government envisage circumstances in which local government expenditure as a whole will become out of control and will begin to distort their general economic policy. If that were so, then there is a justification for the general powers; but I very much agree with the noble Baroness who has just spoken that it is not proper for the Government to expect Parliament to give the Government a blank cheque, carte blanche, to introduce this Part of the Bill under any measure of excessive expenditure without specifying what it is.
It is certainly true—and the last lot of local elections has borne this out—that the whole basis under which local government is financed has broken down, or is in danger of breaking down, to the extent that the local electorate (the people who elect the councils and particularly the people who pay the rates) do not have sufficient control to curb local expenditure to the
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extent that they should. That does not mean to say that Parliament should give the Government power to do it in this manner. It means that local government finance should be reformed, and quickly, so that the control, the strict curbs, on local expenditure may be applied in the proper way. That is the reason why, to the extent that Parliament does give the Government power in this field it should be precisely defined and limited.
In this amendment, we are seeking to get in front of the Committee the Government's views on the circumstances in which this will be done. If 5 per cent. is not the right figure, what other figure is right? If figures are not the right way to approach it, in what other ways can we approach the problem? It really is not right for the Government to be given powers to introduce a form of control over local government as sweeping and as wide as those provided for in Part II without any indication of the circumstances in which that can be done.
It is one thing for the Government to be coy and illusive—if that is the word I used before—about the criteria which are going to be applied to individual authorities. We still do not know. Nothing has appeared on the face of the Bill and nothing precise has even been vouchsafed in the words that Ministers have used. We do not know what the criteria are that will be applied to individual authorities. Now, in this Part of the Bill, where we are talking about the general circumstances in which it will be possible to control the whole of local government, all the 450 units of it, it really is important to Parliament to see on the face of the Bill—and we have not even got it in so many words—at what point, measured in figures of one sort or another, local government expenditure is going to be regarded as being out of control.
Lord Bellwin: Before touching on the amendment, I am seeking to avoid the debate which I still think we are going to have on Clause 9. If I can first of all pick up one or two of the points that my noble friend has made, he said that local government finance should be reformed, and quickly. He knows that the one thing you cannot do, if it is to be done properly, is to do it quickly. It has been attempts to do things quickly which has led us into the situation that we are in today. We had a very lengthy debate on this and I am going to try not to get into it again now. But the one thing you cannot have is the kind of reform which I know my noble friend and others want, quickly. That is part of the problem.
Also I must take him to task for saying that a general scheme would affect the whole of local government. In another place it was mentioned at recent stages of the Bill—and I shall be bringing along amendments later today or tonight to make the point—that there are to be exclusions even from the general scheme; and that will affect many authorities. But, again, that is something for later on.
May I say to the noble Baroness, Lady Birk—and I do take her point—that we have to be careful here otherwise all my noble friends will come to my support. In fact, there were 15, I think, of my noble friends who supported us at Second Reading. I have never had such support in any Second Reading of any of the 25 Bills I have taken through your Lordships' House. I find that very comforting. May I say about

815
this amendment that it is identical in many ways to the second half of Amendment No. 76. It assumes a three-year delay and further requires those years as part of a run of three years in which local government spending overall exceeds relevant expenditure by 5 per cent. or more. I have to observe that the total relevant expenditure in 1984–85 is £22.9 billion so that 5 per cent. of that figure would be £1.14 billion. In other words, it is being proposed in the amendment that it should be necessary to endure a significantly worse level of overspend than we have at present, and for three consecutive years, before it will be possible to take any action. That surely cannot be right.
Here we are embarked upon all this legislation to deal with a situation which, so far, in any one year has not been that, although the total has been £2·5 billion for the last three years. I am sure that this is not something that those who support the amendment have appreciated. I have made it clear that in deciding whether to move towards implementing the general scheme the Government would take into account the pattern of overspending as much as the aggregate; and I will dilate on this later on.
I do not have a firm view about an aggregate overspend figure which might be sufficient to trigger off a general rate limitation, or on the way in which a view on that should be combined with a view on the general pattern of overspending. I ask your Lordships to consider whether, at a time when the excesses of the worst overspenders are being controlled by the selective limitation scheme, it would be reasonable to impose a requirement that the ratepayers of the country should endure three successive years of overspending at this even greater level than at present before having access to further relief.
The truth is, as I keep saying, that we are in a hypothetical area. I think I should mention again and again, as I will do, that there are to be immense safeguards in this—not least, the requirement to come back to both Houses. And I shall say a little more about this later on, but I hope we shall never have need for a general scheme. I hope that local government in its turn will recognise the responsibilities that it has as a significant part of the national economy and of the public sector. But if these conditions are not fulfilled, I cannot predict how events will move. That is why I respectfully suggest that it is inappropriate to set down conditions on the introduction of the general scheme, or statutory delay, as is proposed in these amendments.
Baroness Birk: The Minister's reply makes me even more worried than I was when I moved the amendment. The amendment says:
"each of the three [financial] years preceding such making, the relevant expenditure of all local authorities … has exceeded by five per cent".
All we are asking for is something which is not a tremendous or major objective. We are now talking about the general powers and not a selective scheme. We do not want the local authorities to be under this horrendous, very dreadful threat, as I see it. The Government are not prepared to look at each of the "three years preceding such making" in order to see whether the authorities themselves can in different
816
ways recoup. The Government want to come in right away with these general powers, which several times we have been told they are so anxious not to invoke. If this is the Minister's main reason for turning down the amendment, it makes the whole concept of the general powers even more worrying. We have gone over this question to such an extent on these different amendments that I have no alternative but to press it to a Division.
Lord Bellwin: Before the noble Baroness sits down—
Baroness Birk: I have sat down.
Lord Bellwin: We are still in Committee, so far as I know, and it is still permissible for me to say something even after the noble Baroness has sat down. I think that I must just make it quite clear, as I said before, that we are talking here about a hypothetical situation. That is what we are saying. I really do not at all follow the noble Baroness's recently expressed new concern, bearing in mind what I have said. When we spoke earlier about Amendments Nos. 72 and 76 I made it quite clear that the whole matter of the selected criteria was one thing; but here we are talking about the totality, which is something quite different. I certainly did not imply that this was a triggering-off figure—far from it. What I was saying was that to carry out what Amendment No. 77 seeks to do would mean that we would have to talk about a limit above what is at the present time the totality of spending. In the current year, for instance, we are talking about a figure of between £850 million and £900 million; that is the approximate figure. Here 5 per cent. of the total relevant spending would be £1·4 billion. That is a new ceiling which the noble Baroness has suggested. It is not a figure that I have put down at all. In any case, we still come back to the fact that, even under a selective scheme, it is going to take time before we can see how effectively it is working; and at that time we shall have to see what it will be. It will depend on how quickly we can get a response. So I am sorry that there seems to be some confusion about this question; but there is no confusion about the fact that I cannot accept this amendment.
Baroness Birk: I really must answer that intervention by the Minister, and of course I was quite happy for him to make it. I asked whether, if he objected to the 5 per cent. and felt that that was too high, he would be prepared to come back with another figure. Hearing the murmurings around me, it seemed both to me and my noble friends that the way he was arguing was very much on the selective scheme rather than on the general powers, and it is the general powers I am talking about. Since I find the reason given totally unsatisfactory and very worrying, I intend to press this amendment to a Division.
4.5 p.m.
On Question, Whether the said Amendment (No. 77) shall be agreed to?
Their Lordships divided: Contents, 108; Not-Contents. 119.

DIVISION NO. 1

CONTENTS

Ailesbury, M.

Irving of Dartford, L.

Airedale, L.

Jacobson, L.

Allen of Fallowfield, L.

Jacques, L.

Amherst, E.

Jeger, B.

Annan, L.

Jenkins of Putney, L.

Ardwick, L.

John-Mackie, L.

Attlee, E.

Kagan, L.

Ayleslone, L.

Kaldor, L.

Banks, L.

Kennet, L.

Bernstein, L.

Kilmarnock, L.

Beswick, L.

Leatherland, L.

Birk B.

Listowel, E.

Blyton, L.

Lloyd of Kilgerran, L.

Boston of Faversham, L.

Lockwood, B.

Bottomley, L.

Mais, L.

Bruce of Donington, L.

Mar, C.

Burton of Coventry, B.

Mayhew, L.

Campbell of Eskan, L.

Mishcon, L.

Carmichael of Kelvingrove, L.

Molloy, L.

Cledwyn of Penrhos, L.

Mulley, L.

Collison, L.

Nicol, B. [Teller.]

Cooper of Stockton Heath, L.

Oram, L.

Cudlipp, L.

Paget of Northampton, L.

Darling of Hillsborough, L.

Pitt of Hampstead, L.

David, B.

Plant, L.

Davies of Leek, L.

Ponsonby of Shulbrede, L.

Delacourt-Smith of Alteryn, B.

[Teller.]

Porritt, L.

Denington, B.

Prys-Davies, L.

Diamond, L.

Raglan, L.

Donaldson of Kingsbridge, L.

Rathcreedan, L.

Donnet of Balgay, L.

Roberthall, L.

Elwyn-Jones, L.

Ross of Marnock, L.

Ennals, L.

Sainsbury, L.

Evans of Claughton, L.

Seear, B.

Ezra, L.

Serota, B.

Falkender, B.

Shaughnessy, L.

Fisher of Rednal, B.

Simon, V.

Fulton, L.

Stallard, L.

Gaitskell, B.

Stedman, B.

Gallacher, L.

Stewart of Alvechurch, B.

Gladwyn, L.

Stewart of Fulham, L.

Glenamara, L.

Stone, L.

Graham of Edmonton, L.

Strabolgi, L.

Greenway, L.

Taylor of Mansfield, L.

Gregson, L.

Tordoff, L.

Grey, E.

Underhill, L.

Grimond, L.

Wedderburn of Charlton, L.

Hampton, L.

Wells-Pestell, L.

Harris of Greenwich, L.

Whaddon, L.

Hatch of Lusby, L.

White, B.

Hayter, L.

Winchilsea and Nottingham, E.

Hooson, L.

Houghton of Sowerby, L.

Wootton of Abinger, B.

Ilchester, E.

Young of Dartington, L.

NOT-CONTENTS

Alexander of Tunis, E.

Daventry, V.

Allerton, L.

Davidson, V.

Ampthill, L.

Denham, L. [Teller.]

Avon, E.

Dilhorne, V.

Bellwin, L.

Dormer, L.

Beloff, L.

Drumalbyn, L.

Belstead, L.

Eccles, V.

Bessborough, E.

Effingham, E.

Blake, L.

Elliot of Harwood, B.

Brookeborough, V.

Elton, L.

Broxbourne, L.

Erne, E.

Buckinghamshire, E.

Fanshawe of Richmond, L.

Caithness, E.

Fisher, L.

Campbell of Croy, L.

Forbes, L.

Carnegy of Lour, B.

Fortescue, E.

Cockfield, L.

Fraser of Kilmorack, L.

Coleraine, L.

Gardner of Parkes, B.

Cottesloe, L.

Gisborough, L.

Cullen of Ashbourne, L.

Glenarthur, L.

818

Gowrie, E.

Orr-Ewing, L.

Gray of Contin, L.

Pender, L.

Gridley, L.

Pennock, L.

Hailsham of Saint

Perth, E.

Marylebone, L.

Peyton of Yeovil, L.

Henley, L.

Polwarth, L.

Hill of Luton, L.

Portland, D.

Hives, L.

Radnor, E.

Hood, V.

Rankeillour, L.

Hornsby-Smith, B.

Renton, L.

Hylton-Foster, B.

Rochdale, V.

Ingrow, L.

Romney, E.

Kaberry of Adel, L.

St. Aldwyn, E.

Kilmany, L.

St. Davids, V.

Kinloss, Ly.

Saint Oswald, L.

Kinnaird, L.

Saltoun, Ly.

Lane-Fox, B.

Sandys, L.

Lauderdale, E.

Sempill, Ly.

Long, V.

Sharples, B.

Loudoun, C.

Skelmersdale, L.

Lucas of Chilworth, L.

Spens, L.

Luke, L.

Stamp, L.

Lyell, L.

Stodart of Leaston, L.

McAlpine of Moffat, L.

Strathcarron, L.

McAlpine of West Green, L.

Strathclyde, L.

McFadzean. L.

Strathspey, L.

Mackay of Clashfern, L.

Sudeley, L.

Macleod of Borve, B.

Suffield, L.

Mancroft, L.

Swansea, L.

Marley, L.

Swinton, E. [Teller.]

Maude of Stratford-upon-Avon, L.

Terrington, L.

Thorneycroft, L.

Merrivale, L.

Tranmire, L.

Mersey, V.

Trefgarne, L.

Middleton, L.

Trumpington, B.

Monckton of Brenchley, V.

Tryon, L.

Montgomery of Alamein, V.

Vaux of Harrowden, L.

Mottistone, L.

Vickers, B.

Mowbray and Stourton, L.

Waldegrave, E.

Norfolk, D.

Westbury, L.

Northchurch, B.

Whitelaw, V.

Nugent of Guildford, L.

Resolved in the negative, and amendment disagreed to accordingly.
4.13 p.m.
Baroness Stedman Baroness Stedman moved Amendment No. 78:
Page 8, line 12, at end insert ("following consideration thereof by a Select Committee of each House of Parliament")
The noble Baroness said: This is carrying on the theme of more parliamentary scrutiny before this Part comes into operation—if it comes into operation. What we are asking is: if the general powers are necessary, why should they not be subject to full parliamentary scrutiny? We all know how easy it can be to get orders through either House, and what we need is to write a fuller constitutional safeguard into the process by referring it for consideration to a Select Committee. This would enable Parliament to gauge opinion by taking evidence on a general rate limitation scheme. Parliament would then be able to take a properly balanced and considered view as to whether the general order was desirable. I beg to move.
Lord Bellwin: There is an existing procedure of the other place for referring a Bill to a Select Committee for it to receive evidence and representations on the policy of the Bill. But there is no such procedure for referring orders to Select Committees for consideration in the way proposed. There are existing procedures for orders to be considered in some circumstances by a Select Committee. For example, the Joint Committee on Statutory Instruments sees all orders in draft to decide whether they have been

819
properly made in line with the parent legislation; and we have a Select Committee procedure for hybrid orders which does not exist in the other place. Of course, it would be possible for the environment Select Committee to decide that it wished to consider an order under Clause 9, but that would be a matter for the committee.
At present, we have no procedures for a Select Committee to be appointed in the circumstances envisaged by this amendment. I am not one to argue that something must not be done for the first time, but I do believe that, so far as parliamentary procedures are concerned, it is not appropriate for a single Bill to extend them in this way. As I said, there are existing arrangements for considering changes to procedures through the usual channels.
But I have another argument of principle against the amendment. It is our practice to consider the policy of a Bill during our procedures prior to enactment. Where legislation gives a power to make subordinate legislation, we do not then reopen the question of policy behind the Act. The issue to be considered by the House at that time is whether the power is being used appropriately. Of course, some subordinate legislation is of greater importance. For that we have the procedure of affirmative orders so that the proper scrutiny necessary can be given to legislation at the appropriate time.
Need I say again that an order under Clause 9 must be approved separately by both Houses of Parliament, and that I feel that that is a great safeguard? I remember hearing your Lordships argue this again and again to me on earlier legislation, when I was trying to put the case for the negative resolution procedure, and so on. It was explained to me then, when I did not understand it—perhaps I understand it better now—what a powerful method that was. I hope that with that explanation the noble Baroness will feel able not to press the amendment.
Lord Graham of Edmonton: May I rise in support of the amendment? The Minister is quite right in pointing to present practice, but he will be aware that in another place on 6th March his right honourable friend the Secretary of State said:
"However, of course, we recognise that if we ever have to implement Part II … it will be a major constitutional matter". [Official Report, Commons Standing Committee G.]
It is quite reasonable for Members of this Committee, in the light of the possibility that any part of it will be triggered off, and also in the light of what the Secretary of State has said about it being a major constitutional matter, to bring forward what may very well be unusual, if not unique, remedies for that situation.
What we are really saying is that, in the light of what is felt outside, particularly among the associations, the Government are not being reasonable about examining all the evidence which is available before taking action. We are saying that it is not merely the other House that should have full opportunities for consultation—and I am well aware, as the Minister appreciates, that there are devices and opportunities that can be used. We are asking Members of this Committee: are we not prepared to say to the Government that they should write into legislation
820
that your Lordships' House should be given the maximum possible opportunity for consultation, and that there should be a Select Committee of both Houses of which your Lordships will be members along with others? They will then take evidence along with others, will send for witnesses along with others and will bring back to your Lordships' House the fruits of their labours along with others.
Noble Lords are being invited to stand up for their own rights. It is a unique situation, and we are asking Members of this Committee whether they are prepared to say to the Government that we want equity of consultation and of opportunity with Members of another place. I certainly believe that this is a very reasonable amendment to move at this time.
Lord Pitt of Hampstead: I am a little disappointed that the Government are still stonewalling on this amendment. Before a rate is levied by a local authority, the finance committee meets. The committee is advised by officers and it cross-examines the officers. It is the finance committee which recommends to the council what rate should be levied. The Government are proposing that Parliament should take over that responsibility and say what the rate levy should be. Therefore. Parliament should have a comparable procedure. The only comparable procedure is a Select Committee to carry out the same responsibilities as those carried out by the finance committee. In this case, it would make recommen-dations to the Minister.
The Government should think through this matter again. The proposals contained in the Bill are likely to create a great deal of conflict between central and local government. Central government should make sure that Parliament is in a position to defend what central government have done. This is what the Government are being offered by means of this amendment. I hope that they will think again about it. They are taking the wrong decision.
Lord Diamond: May I detain your Lordships' Committee for a moment by pursuing not the essential merits of the amendment which have already been displayed so well, but the point on which the noble Lord, Lord Bellwin, is relying to resist the amendment. He is saying that this might be a good idea but that we have no such procedure at present, and that to propose it by means of an amendment to a Bill is an ususual way to introduce such a procedure. That is of course right, but I invite the noble Lord and the Committee to consider that we are in the difficulty that we have a Bill in which, according to the merits of the argument, this facility should exist. If we do not provide for such an examination in the Bill by means of the procedure of going to the Procedure Committee, having a full debate, bringing it back to the House and approving it, we shall have lost the opportunity of providing for that examination under the Rates Act as it will then be. If the noble Lord says that if this procedure is initiated he will undertake to bring back the Bill so that we can reinsert it, that will dispose of my argument. However, I do not suppose that the noble Lord will do so.
Parliament frequently is in the difficulty that it has to anticipate a particular matter because a particular Bill is before the House. The opportunity is either taken then or it is lost. As that would be the situation

821
with regard to this Bill, I am inviting the noble Lord to reconsider whether it is proper to rely, as a defence against the amendment, upon the fact that there is no such procedure at present, although, as the noble Lord has said, there is nothing to prevent your Lordships' Committee from deciding, in the normal way, to have such a procedure.
Lord Bellwin: The point is that it would not be a procedure for your Lordships' House; it would have to be a joint procedure. The amendment so states. However, even if it were to be a procedure only for your Lordships' House, I would still use the same argument: that the proposed procedure is unprece-dented. That does not mean that nothing should ever be done because it is unprecedented, but it is a fair point for me to make.
I do not think I can add to what I have already said. I understand exactly the point which has been made. I believe that the safeguards we have spoken about, which I suspect we shall speak about again very shortly, will more than cover the real concern which has been expressed without having the Select Committee procedure, the investigating committee which the amendment proposes. I am sorry that I cannot be more helpful to the noble Baroness. However, I believe that she understands the point I am making, even if she does not necessarily agree with it.
Baroness Stedman: I am grateful to the noble Lord for what he has said. Together with my noble friend Lord Diamond, I cannot understand why procedure cannot be altered. We on these Benches, who are trying to break the mould, are all in favour of having new procedure. I should like to look again at what the noble Lord has said. I had hoped that he might take back the point in order to see whether there is a way of achieving greater parliamentary scrutiny. However, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.25 p.m.
Lord Underhill Lord Underhill moved Amendment No. 79:
Page 8, line 12, at end insert—
("( ) An order under this section shall expire at the expiration of 12 months from the making thereof but without prejudice to the Secretary of State's power to make a further order to which the provisions of subsection (3) above shall apply.").
The noble Lord said: I beg to move Amendment No. 79 on behalf of my noble friend Lady Birk. When all the provisions contained in the three subsections of Clause 9 are put into effect and we have the order, I would ask noble Lords to consider what the position will be. According to the wording of the Bill, the terms of an order for a general scheme will be there for ever until there is legislation to repeal it. The Secretary of State will have this power without further Parliamentary debate, unless this should be pressed upon him.
We must not slide into the position of having permanent parliamentary control of local government in the way provided for in the Bill. If any Government wish to retain the powers which are set out in Clause 9 for a general scheme under Part II of the Bill, from time to time they should have to seek the renewal of parliamentary approval. The amendment provides that an order made under this clause will expire at the
822
end of a period of 12 months. We are not suggesting new primary legislation. The amendment provides that the Secretary of State shall make a further order which will come before both Houses for approval, as is provided for the original order under subsection (3) of the clause.
My noble friend Lord Graham of Edmonton reminded the Committee that when the Secretary of State discussed the general scheme, Part II of the Bill, during the Committee stage in another place, he said that this is a major constitutional matter. We all accept that that is the position. Therefore, there should be parliamentary accountability and the opportunity for review before continuing an order beyond a period of one year.
We are not taking away any powers from the Secretary of State. If annual renewal is considered by the noble Lord the Minister to be too frequent, I hope that he will accept the principle behind the amendment and tell the Committee what period should be stated in the Bill for the expiry of such an order and for a new order to be made. I beg to move.
Lord Bellwin: We had a similar discussion in Committee about the powers in relation to Part I. On that occasion the Committee accepted our view that the provision for annual renewal of powers was more appropriate to emergency legislation which might be expected to lapse quickly or to be replaced by more permanent provisions. That has been the pattern with legislation like the Prevention of Terrorism Act or the legislation in the wake of UDI in Southern Rhodesia. I do not accept that the general rate limitation powers will be similar in any sense to those provisions. They have arisen—I say it again slowly, and I repeat it—after a number of years during which the Government have sought to achieve their public expenditure objectives in more conventional ways. The powers have been specifically endorsed in an election manifesto and the legislation subjected to proper scrutiny by both Houses of Parliament. Moreover, a decision to seek to activate Part II will arise only in circumstances where substantial numbers of authorities are ignoring the spending guidelines of the Government. Should we ever reach that position, it would surely be unreasonable then to expect that matters could be put back to rights in so short a period as one year.
I accept that after a period of time it may be felt—I hope it will be—that circumstances have changed, so that the form of the general limitation powers or, let it be said, even the need for them may be brought into question. In that respect, I see no difference between this legislation and most of the other legislation that is considered by this House. If circumstances change sufficiently, it would be appropriate to legislate again to bring the law into line with what is then required. I see no basis on which to accept the annual renewal of these powers.
There is one other matter that I should like to draw to the attention of the Committee. As we have just heard, the intention of this amendment is to require the annual renewal of the powers in Part II; but I am advised that the amendment as drafted would not achieve that effect since the only purpose of the order under Clause 9 is to bring Clauses 10 and 11 into

823
effect. Once that has been done, it cannot be undone without a specific provision limiting the effect of those clauses. This amendment would only limit the life of the Clause 9 order and would not affect the continued application of the effective clauses of the Bill. That is another reason why we cannot accept this amendment.
Lord Underhill: The noble Lord the Minister has given me good reason for seeking leave to withdraw this amendment—not that it is defective in principle but so that we may consider what he has said about the actual wording. In general, there is a great principle involved here. The Minister says that this legislation is no different from any other that we pass. That is the whole point about our criticism of the Rates Bill; that it puts local government at the behest of central government in a way that we have never seen before in this country. As the Minister has said, and as the Secretary of State has said, that is a major constitutional point.
It is for that reason that we believe Parliament should consider this matter and not just leave it on the statute book merely to be subject either to amendment by primary legislation or to repeal. It ought to be dealt with from time to time by Parliament looking at the whole provision. In the light of what the Minister has said, we shall look carefully at the principle and wording of this amendment and will then consider returning with it at Report stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 9 shall stand part of the Bill?
Baroness Stedman: This is the beginning of an attempt to persuade the Government to think again about the general powers or to have these powers removed from the Bill. In another place, responsible and long-serving Conservatives argued that too much power was being placed in the hands of the Secretary of State and that the general powers could be used to control the spending of every local authority.
Any controls that go right across the board are bound to be arbitrary; and many of us have grave doubts as to whether officials at the Department of the Environment really will get a chance to study each case individually. If only some 12 to 20 local authorities are supposed to be the high spenders, why is it that the selective scheme in Part I is not enough? The Government keep arguing that they will use their powers against only a small number of local authorities—but the Government are unwilling to have a restriction to meet that need written into this Bill.
If there really is no intention to use these powers, it is difficult to understand why they are in the Bill. Reserve powers can be turned into substantive powers by a single vote in each House—and either by an extension of the selective powers or by the introduction of general powers, the provisions of this Bill can be extended to far more than the 12 to 20 authorities who are supposedly concerned.
There is real and deep concern about the scale of the cuts demanded of local authorities, and a worried fear
824
that this must affect all authorities about the use of general powers. There is concern not only on this side of the Committee and on the Cross-Benches but also on the Benches opposite—as Conservatives in rural areas especially know that cuts made on paper at the centre are likely to be translated into stark reality in the towns and villages.
It was Edward Heath who remarked in another place on 17th January (at col. 184 of Hansard):
"I entered the House in 1950 having fought an election on Mr. Churchill's theme that we were to set the people free. The theme was not to set the people free to do what we tell them but to set the people free".
This part of the Bill creates a dangerous precedent, not only for the present Secretary of State but also for future Secretaries of State, who might decide to have a go at shire counties to help the Labour-controlled authorities. They might even get rid of the shire counties altogether, if we continue along the dangerous path taken by the Government in this Bill and in other Bills now before another place.
The introduction of the power to introduce general control has been made subject to an affirmative resolution by both Houses of Parliament. No doubt the Minister will argue yet again that that is sufficient safeguard. But is it really? If the introduction is dependent on the agreement of both Houses, why include the power in this Bill? Why do the Government not wait until they need a general limitation and then introduce a new Bill to cover that situation? Could it be that an affirmative resolution is usually obtained quite easily, whereas a Bill has to go through all stages in both Houses and be subject to scrutiny and discussion both inside and outside Parliament?
If the Government do not now consider that there is a case for these powers, then they should not be seeking them even as reserve powers or as a deterrent. If and when the Government feel that there is a real case, they should come to Parliament and make that case. This Bill and the reserve powers take no count of parliamentary supremacy. They only build up the supremacy of the Secretary of State. Many of us feel that this Bill is an affront not only to local government but also to Parliament itself.
In the general scheme (unlike the selective scheme) the selection process does not take place. All councils will be covered and the exclusion conditions for spending below £10 million or GREA do not apply. The associations feel that moving from the present system of targets—which are in many cases unrealistic—to expenditure limits which must be realistic will lead to a further breach of the Government's expenditure plans for local government.
The Association of District Councils has said:
"This failure will be used to justify bringing into effect the general scheme".
The association went on to say:
"In terms of Government public expenditure policy, the Bill will be a failure and that failure will be expensive for the cost in local democracy. The rate limits are an administrative folly and a constitutional outrage and must be opposed".
I feel sure that these sentiments are shared by the other associations and by all those who are closely associated with local government. Even at this late stage, I urge

825
the Government to withdraw Part II of this Bill. Failing that, I implore the Committee to vote against Clauses 9 to 12 in this part of the Bill.
4.40 p.m.
Lord Chelwood: My noble friend Lord Ridley originally had his name to this amendment and to the other three amendments that the clause shall not stand part of the Bill. I believe that noble Lords will understand that my noble friend is in a slightly difficult position. I believe that he will wish to contribute to our debate at a later stage and explain what his difficulty has been. I am a poor substitute for him because although I have been knocking around in Parliament for almost 40 years, I have never ever been a member of even a parish council, and I am really rather ashamed of that. I will be as brief as I can, and I know that noble Lords will not mind if I am very outspoken.
I am not in any way a spokesman for the Association of County Councils. The views I express are my own; but I fully share the association's views, and I shall be reflecting them in large part. I want to make very clear indeed that I am not a critic of Part I of this Bill. It is important that I have that on the record. I regard Part I as an unfortunate necessity. I feel that no Government worth their salt can allow their economic strategy and their broad control over national spending—now, with this Government, showing clear signs of mounting success—to be put at risk by politically motivated local authorities. I am glad, therefore, that Part I is well on its way and that my Government are asserting their authority in this manner, and by no means too soon.
However, I very much regret that there is no ceiling on Part I. I confess that, although I listened with the utmost care to what my noble friend had to say about those reasons. I still do not know what really are the Government's reasons. However, there is no ceiling, and it is an ill wind that blows nobody any good. I think that Part I, with no ceiling, when considered in conjunction with the working of the 1981 block grant powers, must make Part II completely superfluous.
The arguments, as I see them, for dropping Part II altogether are unanswerable. I hope that I can sum them up fairly. Part I. with no limit, surely gives the Government ample powers to require the good behaviour of local authorities in any conceivable scenario—one of the Secretary of State's favourite words that he used many times in Committee in another place. I share the ACC's view that Part II is only marginally less objectionable as a result of the Government's Amendment No. 80A (I think it is now Amendment No. SOB) which I should guess all noble Lords welcome. All it does is to make statutory the exemption of an undefined number of authorities which the Secretary of State would in any case have the power to exempt under Clause 10(2). So the ACC, which I must remind the Committee represents 45 authorities with a total population which is more than half the population of the country—30 million people—objects in principle to Part II.
The county in which I have lived since I was a tiny tot—East Sussex—is in the van in raising these objections. When a vote was taken in the ACC on whether or not it would object to Part II, the result was 97 votes to two. That was in the executive council. I
826
unreservedly share the view of the ACC that, if and when the need ever arises for a general scheme, a Bill subject to normal parliamentary scrutiny in both Houses should be introduced. Incidentally, there was no formal consultation on Part I or Part II between the Government and the ACC or, so far as I know, with other associations with which I am not in touch. Nor has there been a Government response even to the very carefully drafted and rather full document of October last which the ACC produced, commenting on the White Paper. I confess that I find that very odd indeed.
The undefined powers being sought are, in my view, no less objectionable because they are only so-called reserve powers—to use the Secretary of State's words in another place on 17th January. He said, in many different ways, that he hoped they would never have to be invoked. It was my noble friend Lord Bellwin who today said, two or even three times, that they would be used only with reluctance. Nor are they any the less objectionable because the Secretary of State says that they could not be activated without the explicit permission of both Houses: I repeat, the explicit permission of both Houses. That is what he said in other ways as well, but those words are taken from his article in the Observer the Sunday before last. I emphasise "explicit permission", and I shall come back to that phrase in a moment.
Nor do I think the fact that there is a mandate for these general powers makes them any more acceptable. Surely such sweeping powers at the centre would undermine local democracy and reduce local accountability, thus tilting the balance much too far in favour of Whitehall. In what I thought was a remarkable speech, my noble friend Lord Thorneycroft, who has been in the Chamber for most of this afternoon but who is not now here, damned Part II with such faint praise and the damn was so damning that one could heardly hear the praise. I find myself in agreement with all except perhaps his conclusion.
Certainly there is a mandate for a general scheme to limit rate increases. It rated (no pun intended) just half a sentence in the Conservative Party's manifesto. Certainly this "mandate" was theoretically endorsed by the electorate—we all know that that was the case—and endorsed by a very large majority indeed. But this major constitutional question was not an electoral issue, so far as I know. It was barely noticed by the political parties and. for some extraordinary' reason, barely noticed by the media. Broadly speaking, the same is true of a repetition in the Queen's Speech of the words which were in the manifesto.
The ACC has not suddenly come to the view that it objects to the powers in Part II. Within hours of the publication of the White Paper the chairman rejected the proposal for general powers out of hand as,
"a threat to our well trusted local government system".
In October the association amplified and heavily underscored its objections to the placing of so much power in the hands of the Executive and the consequent weakening of local democratic control.
I thought that it was regrettable that in another place a spokesman for the Government—a junior Minister—spoke about the ACC as trying to look after

827
its own vested interests. I suggest that that was an unworthy charge, and, incidentally, it is one which can be easily made to cut both ways. So I say again that there is overwhelming opposition from the ACC, which is, incidentally, very largely a Conservative body, to the enabling power in Part II, for which no case seems to have been made in the White Paper and for which no case has since been made.
The Secretary of State has rightly described the powers sought under Part II as being,
"a significant change in the relations between central and local government"—[Official Report, Commons, 29/3/84; col. 325.]
The Secretary of State has been quoted today more than once as describing the enabling proposals in Part II as a major constitutional matter. I freely admit that there has been no attempt to play this down, but how could there be? The more far-reaching a measure, the more important it surely becomes that there should be proper scrutiny by both Houses of Parliament. So what do the Government do? The Government promise Parliament a "special" order—I put the word "special" in quotes in my notes—requiring a "special" vote. But it is not a "special" order that we are offered. It is not a "special" vote. It is just a plain, common or garden statutory instrument, of an affirmative character. So far as I know, there is nothing "special" about it at all. If there is, I hope that in replying my noble friend will tell us why it is "special" in some way. As I see it at present, I do not think that the Secretary of State was well advised to use that word in this context.
In fact, Parliament is being asked to rubber stamp a Bill that it has not seen in a hypothetical situation, as the noble Lord, Lord Bellwin, has twice said today, which it cannot envisage, and which he, on his own admission, cannot envisage. We all know that neither House can amend an affirmative order. That is again stating the obvious but it needs restating in this context. We know that only a major revolt in the present circumstances in another place would lead to a defeat of such an affirmative order. We are bound—and I am quoting here from our Hansard of 6th August, 1989, col, 1562—by the unwritten convention that:
"subordinate legislation, since it is not subject to the Parliament Act, should not be rejected by this House".
Those were the words used by my noble friend Lord Soames on that occasion. Does my noble friend Lord Bellwin accept that that is still the position? I think he is bound to do so. My noble friend wishes to interrupt?
Lord Bruce-Gardyne: I am most grateful. Is it not a fact, though, that at that time this House rejected an order on one occasion but passed it on the second one?
Lord Chelwood: No. With respect to my noble friend, he is half right and half wrong—or a quarter right and three quarters wrong, I should say, and I will explain why. But before I do so, I should like to say that in the circumstances it is an unwritten convention that we do not vote down an affirmative order. I think it would be safer not to vote at all because you never can be quite sure, if it is that controversial, who is going to win.
828
So far as my noble friend's interruption is concerned, I should remind him that the only occasion on which the Upper House has departed from that convention which I have mentioned was in 1968. It was this of which I think my noble friend was thinking. It was when the Southern Rhodesian United Nations sanctions order was being debated. I think it is widely held that that was aberration and certainly not a precedent to be followed lightly, if at all. So we would be driven to using some parliamentary device—and there are devices in another place, as my noble friend Lord Bellwin has reminded us—such as adjourning a debate, as was done in 1978. That occasion was an order that would have required the compulsory wearing of seatbelts in Northern Ireland. The debate was successfully adjourned and the order was dropped. Another device was used successfully in 1937 on a Scottish matter. I am not quite sure exactly what it was. It was used again in the 1960s to short circuit an affirmative order which would have given the green light for a third London airport. That was also a success. On that occasion a resolution was carried, the order was dropped and the airport still is not there.
Of course, such a device, or even perhaps a different device, could be used again. But why should we be driven to this hole-in-the-corner procedure? Why can we not have something much more straightforward? I feel that to put the Upper House in such an embarrass-ing position amounts to treating us with some definite disrespect and I pray that this will not happen.
If one day there is a new scenario—to use the same word again—it may be that there would be a case for legislation that goes well beyond Part I of this Bill. I accept that. I do not know whether noble Lords who have their names on this same amendment do so as well. But this smokescreen of vague phrases, behind which the Government have tried to hide Part II, has now been blown away in both Houses. Part II should be seen for what it is. I see it like this anyhow. I think it is an ugly hybrid, spawned by the failure of successive Governments over many years to tackle the reform of the rating system and the reform of the local government electoral system, both of which I think play into the hands of extremists. I think the fruits of such a hybrid would be sour, perhaps even quite poisonous. The Part I conventional weapons are more than enough so there is no need for the Part II nuclear deterrent.
I beg the Government to take full account of the arguments ranged against them today—and we have not by any means heard all of them yet—from all sides of the Committee and expunge Part II from the Bill. As I see it, the choice for the Government is between a hollow victory and a sensible compromise.
Baroness Birk: I rise to support the amendment to which I have my name and on which the noble Baroness, Lady Stedman. and the noble Lord, Lord Chelwood, have both made such powerful speeches. We have spent two long days discussing the details of the so-called selective rate limitation scheme. During that time we have failed to persuade noble Lords opposite to assist in ameliorating the provisions of that part of the Bill. Therefore we are left with a selective scheme of rate limitation which can become as wide as the Secretary of State wishes.

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It is very important in this context, while we are discussing Part II. We are left with a selective scheme which contains the bare minimum of parliamentary control. The same will occur if the Committee accepts Part II: the bare minimum of parliamentary control. One could say this is a practically nude piece of legislation in terms of parliamentary protection. We are left with a selective scheme which fundamentally breaches the principle of locally elected authorities determining their own expenditure and rating levels.
I realise that many noble Lords in this Committee—and the noble Lord, Lord Chelwood, is one of them and has expressed his view—draw a distinction between Parts I and II of this Bill. The selective scheme, we are told by Ministers in both Houses, is only about limiting the excesses of from 12 to 20 authorities. But that is not what the Bill actually says. Nor has it been possible—and I am afraid I have to repeat it again—to get any further information from the Government on what they mean by the selective scheme. We have heard and seen no parameters whatsoever. But in my view such a distinction between the Parts is false. The Bill, as drafted, gives us a selective scheme which can be very general indeed, as the noble Lord, Lord Chelwood, pointed out, and a general scheme which also contains the potential to be selective. Moreover, the Government's amendments, which we shall be considering shortly, appear at first sight to make it even more selective. It seems to me that in practice there is very little difference between the two Parts of the Bill, as the right honourable Geoffrey Rippon, former Conservative Secretary of State for the Environment, and others, said in another place. Both Parts of the Bill require the Secretary of State to overturn the wishes of the local electorate in spending and taxing policies. In reality, in a general scheme of rate limitation it will be civil servants making the decision, not Parliament and not locally elected councillors.
We all know perfectly well, whether we have had experience in local government or not, that although every piece of legislation in this area states that the Secretary of State shall make the decision, the Secretary of State has to be advised and has to have the work done by members of his department. He cannot possibly carry out all this work single-handed. Therefore it will be the executive which is making these decisions and in fact it is Whitehall which is making the decisions, not Parliament and not locally elected councillors.
The Government will say that the local mandate is defective and the local authorities are not accountable to their electorates. But rate limitation does not improve this—far from it. If the Government feel that—and I think this is on the same lines as the remarks of the noble Lord, Lord Chelwood—why do they not pursue far simpler and more democratic methods to increase accountability? For example, at annual elections one third of the members could retire each year.
Why did they not take seriously the widespread dissatisfaction with local government finance, and accept the amendment I moved from these Benches on the first Committee day? This Bill in both its Parts is unfortunately a classic example of the man from Whitehall knowing best. Although this quotation has
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already been uttered many, many times, I do not apologise for again pointing out that the Secretary of State in another place recognised that if we had to implement Part II. it would be a major constitutional matter. It is this major constitutional matter for which we, in this House, have a very grave responsibility. Whatever changes we can make to this Bill in this House, which will restrict the damage caused to local government, we shall be carrying out an essential task and one that is something which is part of the modus vivendi of this place. That sums up our attitude in an attempt to reject Part II of the Bill.
I suspect that many noble Lords opposite still think, I believe mistakenly, that Part I is only about stopping grants to such schemes as "Babies against the bomb" and so on. But even if all the bizarre expenditure were cut, it would still not deliver the cuts in public expenditure figures that the Government are seeking. Maybe it is not what the Department of the Environ-ment seeks, but it is certainly what the Treasury seeks, and therefore the Government. The figure is in the region of £2 billion. It is for this reason that the Government need the general scheme. The Secretary of State has said that he hopes never to have to use it. I am sure that he believes that, and that he is being quite sincere. To have the scheme on the statute book is sufficient for the Government. Once the Government have that deterrent—and it will be one-sided, to draw an analogy with defence policy—they can then bully and cajole local government.
As has already been stated, the Government should bring in legislation when it is needed. They should not bring it in when it is not immediately necessary. We are being asked to give the Government a very big stick indeed. That big stick can be waved around with no parliamentary control and only minimal control if ever the Government decide to use it. The precedent of this goes very much wider than even the issues between central government and local government. It is using our legislative procedure and, in fact, our democratic parliamentary procedure in a way that I think many of us, right across the Chamber, find extremely abhorrent. We find it very distasteful to have to contemplate the idea that this is something that may be passed by this Parliament, of which we are rightly proud.
Many of us, of course, find the whole Bill objectionable. Today, however, we are discussing Part II. If we can delete any part of it, then we shall be protecting not only local government, but also our parliamentary democracy. I also urge noble Lords to reject this clause.
5.2 p.m.
Viscount Ridley: As my name was on the original Marshalled List and then withdrawn to make way for that of my noble friend Lord Chelwood, may I say how delighted I am that I took such action because my noble friend made a powerful and important speech, which shows that my decision must have been right. I wish to make clear, however, beyond any doubt whatever, that, as I have said before, and as your Lordships are well aware, the ACC, of which I am president, remains united in total opposition to Part II of the Bill. In no way must the withdrawal of my name be seen to imply any change in its attitude.

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Now that the Committee has agreed to Part I totally unamended, so that the Government can use their selective powers, unamended by anything that we have put into the Bill in this Chamber, on any authority in England and Wales, it seems to the ACC that the powers sought under this clause really are unnecessary and that there should be clear evidence of the need for the general scheme before it is brought forward. Should it be necessary to do so, I believe that it should be done in a separate Bill.
Quite apart from the GREAs, of which we have heard much, it has not been said often enough that the 1982 Act, with its stringent targets and savage penalties, will still be in operation, whatever may happen to this Bill. There is no intention to repeal that part of the 1982 Act. Whether this means that we now have a belt and two braces approach to local government finance, or whether it is a matter of handcuffs and leg-irons at the same time, I am not sure. Whatever it is, I am afraid that Part II will change local government, and I fear that it will not change it for the better.
Lord Bruce-Gardyne: It is with some trepidation that I rise to support this clause. I do so with trepidation not least because, like my noble friend Lord Chelwood, I can claim no experience of participating in local government, except in the sense that I suspect he. too. shares of having from time to time participated in the process of seeking the election of candidates for local government. That is rather a different proposition. I rise with considerable trepidation also because I appreciate, as I am sure do all your Lordships, the strength of feeling that Part II of the Bill in particular has aroused. I wish briefly, however, to put two propositions which I submit that it might be desirable for your Lordships' Committee to consider before we come to a vote on the clause.
The first proposition concerns the electoral mandate, to which my noble friend Lord Chelwood referred. I have no more particular brief than has anyone else for the concept of the electoral mandate. My noble friend says that this was not a subject which was widely discussed during the recent election and not a subject on which the attention of the electorate was concentrated. That is very true. I should go further and say that it would be a rare individual who had studied the manifestos of any of the political parties before he actually came to cast his vote. I should certainly not seek to suggest this afternoon that there is any overwhelming sanctity for the doctrine of the mandate.
On the other hand, as a very new arrival in this Chamber, I wonder whether it is the appropriate role of the non-elected House to overturn a policy commitment for which, however much it may or may not have been discussed, this Government, or any Government, have a clear, recent and perfectly specific electoral mandate. It seems to me that if there is to be an overturning of electoral mandates, it is more appropriate that is should occur in the other place.
Of course, my noble friend Lord Chelwood argued that, with the Government's massive majority in the other place, the proposed procedure for activating Part II of the Bill was a bit of a charade, or even an insult
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to both Houses of Parliament, since the one House was certain, in effect, to rubber-stamp the Government's decision in a matter of this kind on a single vote, given the size of the Government's majority. As my noble friend reminded your Lordships' Committee, it has at any rate not been the usual custom, to put it no higher, for your Lordships to overturn an order.
To my mind that is an argument that could perhaps be advanced against any alternative provisions for activation of this legislation under the existing balance in Parliament. I do not myself see it—I may be wrong—as a good and sufficient reason, in an instance of this kind, for the non-elected Chamber to assume the responsibility of voting down a proposition for which the elected Government have a clear and specific electoral mandate. I wonder whether your Lordships' Committee would be altogether wise to embark in this way on what it seems to me would be a fairly unusual precedent.
Lord Chelwood: Does my noble friend see some constitutional objection to the Upper House asking the elected House—another place—to think again about the way in which reserve powers might be brought in, so as to give both Houses of Parliament an opportunity to amend them whenever it is necessary to bring them in? That is all that one is asking in suggesting that Part II should be taken out of the Bill here, whereupon another place might then have the opportunity to consider whether there is any force in our arguments that the way" that it is proposed to introduce these powers would deprive the Upper House of any say whatever in those powers.
Lord Bruce-Gardyne: I am bound to say to my noble friend that I do not see that your Lordships are denied any say whatever. As my noble friend has reminded your Lordships' Committee, under the affirmative resolution procedure this matter would come before this House and the other House for consideration.
Apart from that, I have two reservations about the course suggested. The first is that it is by no means clear to me that an alternative procedure such as my noble friend and others have suggested would be any more likely to achieve a more definitive option for Parliament if a proposal was advanced to activate Part II of this Bill than the procedures which are laid down in the Bill. Secondly, I am bound to say that I do not see that we can get away from the fact that if we vote this clause down this afternoon we shall be specifically overturning, for whatever motive and under whatever conditions, an electoral mandate to which the Government are entitled to have recourse.
My second argument, which I want to put very briefly before your Lordships, is admittedly not a new one at all. It is one which has been cited frequently, but I am bound to say that it seems to me to have considerable power. My noble friend Lord Chelwood and the noble Baroness, Lady Stedman, referred to Part II in particular, and the noble Baroness, Lady Birk, referred to the whole Bill, as being an assault upon the principles of local democracy and local accountability. The noble Baroness suggested that if we were concerned to achieve greater accountability and democracy, then why not turn to more frequent elections of local councils. Unfortunately, one does

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not improve local democracy or local accountability if one has a more frequent performance of a form of election which is subject to what I suggest are the defects in the electoral procedures relating to local government today. As has been pointed out frequently, those defects are essentially the mismatch between the right to vote and the duty to pay rates—the right of representation and the duty of taxation. One does not change that mismatch by holding more frequent elections. Indeed, for my part—
Baroness Birk: Will the noble Lord give way? On the question of local accountability, it must make a difference if the council has to come before the electorate more often and if it has been acting in some way that is considered extravagant. This is something that has been advocated by a great many people, including academics and other people in this field, as well as politicians. On the noble Lord's second point, the whole question of rates and local government finance is something at which the Government have been urged to look. I will not delay the proceedings further by commenting on the implications of what the noble Lord was saying otherwise, because we may get to the stage where he will be arguing that if people are not paying taxes perhaps they ought not to have the right to vote anyhow.
Lord Bruce-Gardyne: I share the noble Baroness's wish not to delay your Lordships, but I should like to comment very briefly on her last point. The fact is that all the voters pay taxes; they may not pay direct taxes, but they pay indirect taxes which account for a very substantial proportion of Government revenues. In the case of local government, a substantial section of those who have the power to vote contribute in no way to the rating income. On the other hand, equally one has approaching 50 per cent. of the rating income collected from a section of ratepayers—the business ratepayers—who have no vote at all in the proceedings. Therefore, I have to say again to the noble Baroness that I do not see that she will improve in any way on that mismatch by having more frequent elections.
The problem of local accountability and democracy goes even wider than that. That is why, at the beginning of my remarks, I said that over the years I often participated, as I imagine did my noble friend Lord Chelwood, in the business of campaigning for local candidates. I am sure that many noble Lords, even those who may not have participated directly in local government, will have had the same experience. I remember very well participating in the summer of 1982 in a campaign for the election of candidates for district councils in Cheshire. What was the overriding subject on the doorstep? Was it the efficiency of the refuse collection? Was it the way in which the library services were performed? No, it was not. It was one subject and one subject alone—the Falklands campaign.
Of course, that had nothing whatever to do with local government, but as I went round from doorstep to doorstep and found that this was the subject uppermost in the minds of people who were contemplating voting in those elections, it struck me that it was very hard to argue that under present
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conditions the concept of local democracy and local accountability had enormous meaning. We may regret it, but I believe we have to recognise the reality of local democracy and local accountability as it is.
I have to confess that from my experience in the other House of dealing with the local authorities which covered my own constituents I was by no means convinced that the problems of overspending and somewhat irresponsible housekeeping were necessarily confined to the small minority of councils who might feature for treatment under Part I of this Bill. I remember hearing, in true-blue Cheshire, a long speech by the chief executive in which he explained in great detail how it was not necessary for local authorities to succumb to the pressures upon them from central government to curb their current spending programmes. Instead, they could take the other alternative of increasing their local rating burden and they could afford to remember that over a period—I think he quoted 15 years—the proportion of household incomes reflected by the rates was lower than it had been at the beginning of that period.
What struck me was that at no point throughout a fairly lengthy speech did he make a single reference to those who provided half his rating income, the commercial sector. Yet these were the people who were in fact being driven out of business, not only in the vast, overspending inner city authorities but also in some of the shire counties as well, by a propensity to believe that the commercial ratepayer had no vote and therefore the impact upon him of the rate was not something with which those in power in local authorities need necessarily concern themselves.
It is for those reasons, on top of the others, that, much though I dislike this—and here I go along with many of my noble friends—as a means of bringing some control and restraint into local government finance, I am convinced that until we can find a better and more representative system of local democracy and local accountability the Government are entirely justified in seeking the powers represented in Part II of this Bill.
5.20 p.m.
Lord Evans of Claughton: I must say that I found the speech of the noble Lord, Lord Bruce-Gardyne, very interesting and very stimulating. I obviously do not agree with all that he says. He mentioned the suggestion by the noble Baroness, Lady Birk, that there should be more frequent elections. The noble Lord overlooked, or perhaps chose to ignore, the remarks of the noble Lord, Lord Chelwood, that a different kind of election which was more sensitive to the wishes at one time or another of the electorate, such as a form of proportional representation, might go a long way to resolving the problems of the sensitivity of local authorities to the views of the electorate.
I know that reference to any form of proportional representation always causes smirks and smiles from unreconstituted Conservatives and Labour Party members. But the fact of the matter is that it is one experiment that we have not tried. I will not bore your Lordships by repeating the successful experiment which took place a century ago in a city in the county of Sligo. But the fact remains that where it has been

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tried it does create a more responsible form and a more responsive kind of local councillor and local council.
I must say that I heartily agreed with the noble Lord when he said that in 1982 all one heard about was the Falklands. Indeed, one wondered how the local councillors could in any way affect whether the "General Belgrano" was sunk or left to go on sailing. However, that was the only occasion in over 30 years of canvassing in local government elections that I have seen a national issue take precedence over one very important local issue, and that is dogs fouling the pavements. That is the issue that in my part of the world is raised with monotonous frequency year in and year out. and apparently the local authorities are as likely to be able to cure that as they were able to affect the outcome of the Falklands campaign.
I turn for a moment to the mandate which has been mentioned so much today. I concede, as the noble Lord said, that there is practically no one in any political party—even a party activist—who reads the manifesto of his party from beginning to end. If he did so it would probably cure him from voting for all time. I would concede that what people were saying—in so far as they were thinking about local government at all—was that "They", meaning the Government or the Opposition, "should be doing something about the rates". That, in my view, is what they were saying. My quarrel with the Government is that their means of curing the rates problem is to take this draconian step which is an affront to the kind of local government in which I have been involved for very many years.
I know the arguments—they are well rehearsed—as to why reform of the means of raising funds for local government is difficult. But it is not impossible. Local authorities on the continent have produced systems which are far less regressive than the rating system. Many proposals have been made in this country for introducing reforms and I believe that it is only the entrenched opposition of many people in the Civil Service that prevents a serious attempt being made, not to replace the rates, but to augment the rates with a form of local income tax. That is the real protest that many of us make. It is not just that we reject Part II as being contrary to the future of local government as we know it and contrary to a long-standing balance between local and central government. The point is that there does not seem to have been any serious attempt by the Government to answer the frequently repeated criticisms from these Benches, from Labour Benches, from Tory Benches, from Cross-Benches and from academics outside either House, that a reform of local government giving local government more sources of income has not been tried. That is why I feel so strongly about this matter.
I believe that what we are debating now is that Part II of the Bill stand pan; that is really what we are discussing, and not just Clause 9. Indeed, this is the most important Part of the Bill. It is the most fundamental constitutional issue that we are likely to discuss in the whole of the progress of the Bill through this House. The concept of the affirmative resolution has been well dealt with by several noble Lords who have spoken previously. But what I object to so strongly is that if we adopt Part II—and admittedly
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there have to be consultations with local authorities before Part II is introduced and admittedly there has to be an affirmative resolution of both Houses—then the point of Part II, as a matter of principle, will have ceased once Part II is enshrined in the legislation. Once it is part of this legislation then the question of Part II and the reserve powers ceases to be a matter of principle, but becomes purely part of a fairly simple and straightforward legislative process.
I should like briefly to return to the question of the mandate and what the Conservative Party Manifesto said. It said:
"to provide a general scheme for limitation of rate increases for all local authorities to be used if necessary".
Surely, without damaging the concept of the mandate—about which I take a fairly robust view as did the noble Lord, Lord Bruce-Gardyne, and others—without offending the right of the elected House to make these decisions as against an unelected Chamber, surely within that manifesto commitment there is no need to legislate for Part II until we have had time to see how Part I is going and how it is controlling and dealing with the problems of overspending authorities. Therefore, I do not think that there is any need here to complain that in any sense this House is riding roughshod over the elected Chambers mandate. So before we decide to take this very draconian step, we should think again, we should think very carefully and try and ensure that Part II of the Bill is excluded from the Bill. It would still, in my opinion, be a bad Bill but not nearly as wicked and outrageous a piece of legislation as if Part II were included.
Lord Sandford: Every noble Lord on the Committee would agree with me when I say that there is not anyone here or in another place who has not viewed the prospect of Part II of this Bill, and Clause 9 in particular, with the very greatest reluctance and caution. That is why it is sad that the probing amendments today have so far failed to elicit any willingness from my noble friend and from the Government to amend Clause 9 in any way so as to provide Parliament with, or to put on the statute book, any indications at all or measurements of the circumstances in which the general powers—these very wide general powers—of Part II will be activated. That ought to give us all cause for concern.
The Government's last minute amendments to Clause 10 are, of course, welcome, so far as they go. But I would put it to the Committee that they are no substitute whatever for satisfaction on Clause 9. Alas, so far Her Majesty's Government have not indicated in any way or in any precise words—let alone put anything about it into the Bill, or indicate any willingness to put something into the Bill—the actual circumstances in which Part II might be used. Nor, I am sorry to say. have they acknowledged at all that Part II would only be needed until such time as some start had been made on practical and progressive improvements in the rating system, although they recognise—and they recognised in the White Paper— that many of those were possible. Nor is it linked in any way to embarking upon a study of more radical reforms in local government finance which are so long overdue and which could—even if such a study had

837
just begun, or if some commitment was made to it—begin to lead to an improvement in local account-ability which, as so many noble Lords have said, is so lacking at present.
In these circumstances, now that we have some indication of the Government's justifications for this Part of the Bill my preference still is for an attempt at a later stage to amend Clause 9, and to attempt to do that for the reasons that have been given so cogently by my noble friend Lord Bruce-Gardyne. However, if this question is pressed now, I should feel bound to support it in the Division Lobby—not, as my noble friend Lord Bruce-Gardyne said just now, so as to overturn a decision which has been taken by an elected Chamber on a matter for which they have a mandate, but in order to do what we are properly empowered to do in this House and which we have frequently done over and over again: to give the other place an opportunity to think again. Heaven knows, it was clear enough from their debates that they expressed as much concern, doubt and anxiety about this Part of the Bill as any of us here. That is all we would be doing if we were to press this matter further.
Lord Bruce-Gardyne: I am most grateful to my noble friend for giving way. I am afraid that I do not follow the argument that there is some distinction between voting down in this place a proposition for which the Government have a clear and specific electoral mandate, and giving the other place an opportunity for second thoughts about that proposi-tion, because, after all, under any circumstances, that is what voting down in this House is surely bound to mean.
Lord Sandford: I think not. I believe that the Committee would agree with me that if, for instance, we had taken a vote at Second Reading and rejected the Bill, that would indeed have been voting down a decision by another place, and very few of us would have dreamt of doing such a thing. But to take a decision at the Committee stage, or at any stage, on a particular clause in a Bill which has the effect of making the other place debate it and think about it again, is an entirely proper function for this House and one to which we quite frequently have recourse.
My personal preference would be for a further attempt at amending Clause 9 by way of some of the amendments which we have used to probe the Government's intention this afternoon. But if the matter is pressed to a Division, I should certainly support it, and I would recommend your Lordships to take the view that, in doing so, all we shall be doing will be giving another place a chance to have another think.
Baroness Fisher of Rednal: It has been said by many noble Lords that the general scheme of rate-capping will not be used unless the circumstances are very serious. But one cannot believe the Government when they say that, because the 1984–85 settlement illustrates why the Government cannot restrict rate-capping only to the 12 to 20 authorities. We have not heard from the noble Lord the Minister whether they will be the same 12 to 20 authorities year after year, because he does not intend to give us as much information as we desire. But I feel convinced that rate
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capping will affect all the authorities through the deterrent effect, through a much greater use of selective powers than we currently envisage or through the use of the general scheme.
This conclusion must be reached when one considers the penalties that the Government are introducing in 1984–85. The penalties will have to become stiffer and stiffer each year for them to bite. During an earlier Committee day on the Bill I quoted the White Paper on Public Expenditure. (Cmnd. 9143), which was published not many months ago. It clearly shows that the Government are planning a reduction of 13 per cent. in local government expenditure over the next three years. The Minister shakes his head, but I advanced this argument on a previous Committee day and he did not reply to it; he said that we shall be discussing matters of this kind at a later stage. Perhaps this is the later stage when he will tell me that the figures in the White Paper are misprints—perhaps they are printers' errors. I hope that the Minister says that they are, because he did not answer the argument that I advanced before.
If one looks at those cuts, one can see in the magnitude of this reduction the reason that the Government are having to seek general powers of rate capping. They cannot possibly bring about the cuts in public expenditure that are referred to in the White Paper without taking general powers. During the Committee stage of another place the Secretary of State was asked to give the reasons why he would use the reserve powers. He declined to do so, in the same way as this afternoon the Minister has declined. It is not this side of the Committee, or either side, that does not know what is happening. I feel sure that if he was honest the Minister would not be able to give us specific instances as to how the cuts will take place. In Standing Committee the Secretary of State said:
"Should we ever find ourselves having to deal with this, a much larger number of authorities would be included".
When he was asked what he meant by a larger number he said, "Perhaps 60, 80 or 100 authorities". So we can see why the district councils are worried and why the ACC is worried, because they immediately fall into that large net. They are not the naughty boys of the metropolitans; these good boys are now very worried because of those figures.
I should like to compliment the noble Lord. Lord Chelwood, on what he said about the constitutional issues. I shall not repeat much of what he said because I listened with the greatest respect, and I agree with many of the points he made about the constitutional issues. But if the Government are saying to us that they want to do something for the ratepayers—and I feel sure that the ratepayers would be very grateful if they would do something for them—and if that is truly their motive, rates could be reduced quite considerably throughout the country simply by reverting to the level of rate support grants that applied hitherto: there would have been a fall from 66.5 per cent. to 51.9 per cent., over the last seven years. The Minister smiles. I have not attended this place since Monday and Tuesday of last week because I participated in the Birmingham council elections.
Noble Lords: Hear, hear!
Baroness Fisher of Rednal: It is quite obvious that that "jewel in the Crown" did not have such a long run as the television play. People did not stay up to listen to Labour winning, as they did to view the television series, but that is what happened. Why did it happen? It happened because the local Tories overplayed their role. I say to the Minister tonight: make quite sure that the Government do not overplay their role. One must recognise that there are local issues in local elections.
About six weeks ago in this House I asked a Question about dinner ladies. I can remember the Answer quite clearly: this is not a very important issue; it must be dealt with locally. It was dealt with locally in Birmingham last week. The dinner ladies' campaign won a considerable number of votes. The matter was pooh-poohed in this House by the Minister when he replied, although I point out that it was not the noble Lord who is sitting in that place at the moment. However, that is what local elections are all about and that is why we say that there is this great need for constitutional matters to be upheld.
I cannot see the noble Lord, Lord Bruce-Gardyne; I think he has left the Chamber. I was wondering whether he would want to intervene after I had spoken. I failed to see the point he was raising regarding those who pay full rates, and they being the only ones who should be allowed to vote in local elections. That worries me. One wonders whether he is trailing his coat. Are we going to see, in the future, the Government considering bringing in a new version of citizens' rights? If they cannot win on the rate capping, will they start trying to change the constitution, and who can vote? These are constitutional issues, they are worrying issues, and we cannot let the Minister off the hook by his not giving us answers tonight.
5.41 p.m.
Baroness Gardner of Parkes: I rise to support Clause 9 of the Bill. If I did not support this Bill so strongly I should not be here today. After the tedious times I have sat through Greater London Council meetings, this afternoon was going to be one of those joyous occasions when Her Majesty was opening the Thames Barrier, which of course has been paid for to the extent of over three-quarters by the Government. It would have been a joy to be there. It is only because I so strongly support the Government in this Bill that I have given up my seat there today to be here and to vote in favour of Clause 9.
The general powers are a necessary part of this rate-limitation procedure, and the rate-limitation procedure is necessary to protect the ratepayers. These are back-up powers, as has been explained, and I am a great believer in the principle of a deterrent. We have had a long debate, and many points have been raised, some of which I should like to take up. The noble Baroness, Lady Stedman, said that the idea was to set the people free. But the only freedom at the moment is for local authorities to spend without limit at the expense of the unprotected ratepayer.
Baroness Stedman: Would the noble Baroness give way? I was quoting Mr. Edward Heath on that occasion, not myself.
Baroness Gardner of Parkes: I thank the noble Baroness. I was well aware of that because she said so; but I thought she was supporting the view herself. The ratepayer has no protection through the ballot box, and I was surprised that the noble Baroness, Lady Fisher, did not understand this point when it was clearly made by my noble friend Lord Bruce-Gardyne. Only 35 per cent. of those voting in local authority elections pay full rates. That was the point he was making. He was not in any way discussing who would or would not have a right to vote: he was saying that, of those voting, only 35 per cent. had an interest in the financial expenditure situation. The remaining 65 per cent. were very happily voting to spend someone else's money, which is rather different. Then, 46 per cent. of the total rate bill is paid by the business sector, which of course has no votes. We therefore reach the situation—and this is the point that has been made so many times throughout the debates on this Bill—that there is no direct connection between those who have the right to vote and those who pay the bills.
The noble Lord, Lord Chelwood, said he viewed Part I as an economic necessity. But when we came to the speech of the noble Baroness, Lady Birk, she made clear the point that she considers Part I and Part II are indivisible—and indeed this is the view that I believe the Minister takes. These two Parts must go together. I also accept that view. For that reason, Part I is essential and Part II is equally essential for the back-up power.
The ratepayer can be appalled by a sudden shift of rates. When we take the authority of which I have spoken so often here, from 1977 to 1981 the rate precept was 17p, 17p, 19p and 21 p. Within one year of a change of control in that authority, it went from 21 p to 39p—an almost 100 per cent. increase. Perhaps it is 80-something per cent.; my mathematics are not able to assess it. But it was a big jump, after what had been a steady and regular small increase, suddenly to go from 21 p to 39p in the pound.
The noble Lord, Lord Chelwood, told us that the Association of County Councils objects to this. Of course, I believe that and understand their point of view. But how many ratepayers have written to any of us here saying, "Please let me pay more rates; don't control what I am going to pay"? Yet when there was the rate increase about which I have just told your Lordships, the jump from 21p to 39p, I still have the letters from both domestic and business ratepayers. The domestic ones said that they would like to leave London but they could not even sell their little properties because of this jump in rates, and the others said that they were having to fire staff and were being forced out of business. We are losing sight of the person at whom this Bill is aimed, and that is the ratepayer. That is the aim: to make this Bill a protection for the ratepayer. I support Clause 9.
Lord Stallard: May I delay the Committee for a few seconds longer? I had not intended to speak until the noble Baroness, Lady Gardner, said her piece. It is true that I have not had any letters from any ratepayers saying, "Please put my rates up". But I have had many scores of letters—and I dare say that most people active in local government as well as in national government have—asking us to save them from the

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effects of this rate-capping Bill as they understand them.
If time permitted I should love to answer some of the criticisms that have been made about my own local authority. I should love to go into the details—I have them here, and I shall use them later—because Camden has been quoted at length. Everybody of any note in this Committee to whom I have listened has become an expert on Camden. One or two have digressed a bit and mentioned another local authority, but Camden seems to have borne the brunt. I have therefore taken the trouble to get a list of facts about Camden. I shall not use them in this particular debate because perhaps they are too precious and I shall save them for later.
I would say to the noble Baroness who has just spoken that she has made the same criticisms about the Greater London Council, and has repeated from time to time the criticisms made about their spending on grants to voluntary organisations, and so on. This has been blown up out of all proportion by many of her friends, and by the Aims of Industry, and so on. I have not the time to read the letter that many of us have received, including a copy of a letter from the Director General of the Greater London Council—not necessarily a supporter of ours—Mr. Maurice Stonefrost, which was written to all London Members of Parliament and the Prime Minister on 10th April setting out the position regarding the £47 million spent by the GLC on grants to voluntary organisations. It is an interesting letter in direct reply to the charges made by the noble Baroness, Lady Gardner, in previous speeches.
Baroness Gardner of Parkes: Would the noble Lord give way? I, too, have received a copy of that letter. I consider it a most interesting and scurrilous way of taking two entirely separate paragraphs of my speech, putting them together in a way that happened to suit, and trying to distort the image completely. This Committee is too well aware of the situation, and noble Lords who have read Hansard for themselves will have seen how this has been done.
Lord Stallard: It is not my intention to get involved in an argument between the noble Baroness and the Director General of the GLC. I am sure that he will be able to reply and stand up for himself, as he has done in the case of this letter. I thought he was perfectly reasonable in taking two paragraphs that were relevant to his arguments directly from Hansard and replying to them. I think that more Members ought to read the reply. Again, it may well be useful later in the debate.
I simply rose to support those people who through-out the debates on Clause 9 have been concerned about the increase in the powers of the Secretary of State as opposed to the powers of Parliament. That is really the nub of the argument that we have before us on this particular clause.
I am still not really convinced that Parliament has sufficient powers in Clause 1 or in Clause 2. I want to reopen the arguments on Clause 1 although other noble Lords have tried to do that. Certainly I do not think that the safeguards that have been presented or allegedly presented by the Minister, or by his colleagues in the other House, are safeguards at all
842
because, as has been said, if the introduction of this general power is necessary and is going to be dependent on the agreement of both Houses, and, as has been said, it is a major constitutional affair, why not have a separate Bill? I think the reason has been stated as well. We all know that it is far easier to get a resolution through both Houses of Parliament on the procedure outlined in the Bill than it would be to introduce the separate Bill that most of us would like to see instead of these affirmative orders. Such a Bill would have go go through the scrutiny of the whole country and discussion inside and outside Parliament whereas a resolution can be quickly disposed of. I think that that is about the most crucial of the arguments on Clause 9.
What we are not getting from the Government or from the Bill is any strengthening of the supremacy of Parliament. What we are getting is a strengthening of the supremacy of the Secretary of State. That is an entirely different thing and I think that we all ought to be very wary about this whole procedure. If I may again quote from the Association of Municipal Treasurers in their response to the original White Paper, they said:
"The society is not convinced that these reserve powers are necessary as for the scheme to be implemented there would have to be an admission by the Government of the day that there was a complete breakdown in financial relationships between central and local government of which the rate support grant system forms a major part".
They then went on to put a few more arguments, ending up by saying:
"This reserve power is seen as a scapegoat for failures in central government as against local government and should be withdrawn from the proposed legislation".
That argument has been put very eloquently by other noble Lords and noble Baronesses this afternoon. I want to support those people who say that this is not an enhancement of Parliament's powers but an extension of the Secretary of State's powers in a very dangerous way on a constitutional issue and based on a false premise on arguments that have been blown out of all context and do not stand justification. As I have said, the arguments on Clause 1 did not stand any justification, either. So far as I am concerned, the whole clause should be deleted from the Bill.
5.54 p.m.
Lord Bellwin: It is obviously important and I welcome the opportunity to spell out in more detail than I was able to do on Second Reading the Government's approach to the general scheme for rate limitation and to explain why it is in the Bill. Let me make one thing clear straight away. Although it has been said again and again, I think it is important to say once more that the firm wish of the Government is that the general powers in Part II will never be needed and that they are there as reserve powers. They will be used only if it becomes absolutely necessary to do so. The Government hope and believe that the combina-tion of the various pressures on local authorities— selective rate limitation, the pressures of the block grant system, the system of targets and hold-back— will ensure that expenditure and rates are kept at reasonable levels and that the Government's overall economic policies are not jeopardised.

843
The first point I must make is that Part II is aimed at circumstances substantially different from those which we have now. The Government have often quoted the figure of £2·5 billion as the amount by which local authority current spending is running thead of the plans published in the 1981 Public Expenditure White Paper. It has been argued that this is such a severe departure from the Government's spending plans that the situation could not be put right simply by curbing the spending of the few high spenders and that therefore the general scheme would have to be introduced, and introduced quickly. The noble Baroness, Lady Fisher, was talking in general on these lines and I shall come to one or two of the other points she mentioned in a few moments.
This is not the Government's approach. We do not intend to use Part II to try to claw back that £2.5 billion. The general pattern of spending against target over the past three years has shown, taking local authorities as a whole—I am glad to say this—a closer and closer convergence of actual spending with the Government's targets. The pattern seems likely to be repeated in 1984–85. It represents a degree of success which the pressures of the rate support grant system have already achieved. That success was also demonstrated in the rate increases agreed for 1984–85—around 5.5 per cent., the lowest for 10 years, and one of the best justifications I can quote for our policy.
But the outstanding feature of the present situation is the small minority of irresponsible high spending authorities which are clearly standing out against the general trend. They take no notice of Government spending guidelines, of the protests of their ratepayers, or anything else. The selective scheme in Part I is designed as the answer to the problem presented now by those authorities. For Part I is designed specifically to deal with the problems of excessive spenders. Taken together, the existing pressures plus Part I of the Bill should combine, on present trends, to secure our objectives.
I must stress "on present trends" because, as I said on Second Reading, the situation could change. The kind of policies that we now see in a small number of authorities might prove contagious and spread to a much larger number. I say it again readily—the noble Baroness quoted me—that if we were to find ourselves with 60, 80 or 100 authorities spending and rating in a way that the minority does today, then of course we would have to take action—action to defend the ratepayers and to protect the Government's overall economic strategy.
Part I of the Bill is designed to deal with the problem as it exists today of a small number of high spending authorities which account for the largest part of the budgeted overspend. Authorities cannot be selected under Part I unless they are excessive spenders. So Part I would not adequately protect ratepayers in the different scenario in which a very much larger number of authorities were moving away from their present more moderate behaviour. Individually they might not be spending at the excessive levels that we are seeing today from the minority, but the collective effect could be more damaging. Then these
844
circumstances could call for a different approach. That is why we have Part II in the Bill.
I understand the concern that is expressed about Part II, but look at the trouble we have had with just a small number of irresponsible authorities. Can we really afford to leave ourselves defenceless against the possibility of the same sort of behaviour on a wider scale? I know that noble Lords opposite dislike my saying so and I know that they know that it is not my way to be provocative, but it is a reality that a number of Labour councils are being taken over today by Marxist extremists. It is growing all the time and the Labour party nationally cannot or is not willing to contain or control it. Now we must have powers to deal with the damage that they could do. Having said this, I must immediately go on to stress the many safeguards in the Bill which have not been properly recognised.
It is provided that the Secretary of State must lay before both Houses the affirmative resolution order. It is also provided that before making such an order the Secretary of State should consult relevant representa-tives of local government. This is certainly not constitutional legislation. My noble friend Lord Broxbourne in his admirable Second Reading speech laid that ghost once and for all. But the Government have never sought to hide that Part II contains far-reaching powers, and that the use of the general system of rate limitation would represent not a major constitutional change but a significant change in the balance between central and local government. Therefore, it is right that both Houses of Parliament should be fully involved in any such proposed change and that Parliament should be aware of the views of local government in considering the issues. Both Houses would need to be fully satisfied that circumstances justified so major a change in the relationship with local authorities before they were prepared to assent to the orders.
That is not all. We are also now providing—not once has it been mentioned today—in Clause 10(2), to which we are coming soon, for the possibility of the exclusion by parliamentary order from the general scheme of authorities spending below a prescribed amount. I will be asked to put a number on how many authorities to which that might apply. I will try to say that it will be about half the total number of authorities; slightly more or slightly less, but that is roughly the figure. When we were told about all the resolutions passed by the ACC. the ADC and the others there was no mention of the matter then because this had not come about. This is new and I think I am entitled to pray it in aid. It is a major change. It was welcomed and recognised as such in another place.
Even that is not all, because at Report stage in another place we said that we would take action to make exclusions and also to continue the exemption which at present applies to smaller spending authorities. This is often played down, but the fact is that authorities spending below £10 million a year are exempt from Part I of the Bill. I do not have a figure now because who knows how many years hence, if ever, the general scheme will come into play? How would it be possible to put a figure on it? The same underlying philosophy will still apply to the smaller

845
spending authorities vis-à-vis the general scheme. How many people that will involve remains to be seen. My goodness me, when I hear the ADC, of all associations, complaining how many of their members are, as I said before, even in the ball park!
This Bill is about curbing the high, irresponsible spenders, those with bad records. It is not meant for those who are genuinely trying to run their affairs responsibly. We have therefore tabled an amendment to meet the spirit of what is sought. That amendment provides that an authority would be excluded from the operation of a general scheme if it were ever to be introduced, if it remains below either—I repeat either—its target or its GRE in the previous three years and if it were budgeting to be below its target or below its GRE in the year under consideration. We shall come to that in more detail when we come to Clause 10.
I have not been speaking for too long and I think it is important to pick up one or two of the points that were mentioned. My noble friend Lord Chelwood—I cannot answer all his points, dearly though I should like to try—said that there had been no consultation between the Government and the ACC. I have to tell him that consultation was offered and it was turned down. My noble friend talked about the mandate as did the noble Lord, Lord Evans of Claughton, and indeed others. I am grateful to my noble friend Lord Bruce-Gardyne for his support on that, because one cannot turn away from it. I have the election manifesto here and I will read just a small part of it:
"We shall legislate to curb excessive and irresponsible rate increases by high-spending councils, and to provide a general scheme for limitation of rate increases for all local authorities to be used if necessary".
The Committee can say whatever it likes. It cannot pretend that the manifesto was not there. It is not good enough to say, "Who reads the wording in a manifesto?" If that was to be an argument no one would ever write manifestoes. Thank God! all the people in the country very clearly read the Labour Party manifesto at the last election—I made it the one thing I did on every public platform I spoke on—and that is why we won the election as we did.
We have heard talk about parliamentary democracy. I do not know! A majority of 100 at Second Reading which became a majority of 125 at Third Reading—I reckon that is a pretty substantial majority by any kind of criterion one wants to apply. The Government are entitled to ask whether that kind of majority, 125, is of no significance at all. Come on! The Committee knows exactly what that means. If it is to mean nothing, then nothing is to mean anything in the future.
The noble Baroness, Lady Fisher of Rednal, said that rate capping will affect all authorities. Really, where do I begin? Everything we are saying or doing and repeating says that the very last thing we want to happen is for this to apply to more authorities than it does now. I have already given an example. In fairness to the noble Baroness, she was perhaps not to know that, unless she saw the next amendment that is to come. The fact is that we shall make specific exemptions and exclusions. Even she would not say that in any circumstances it applied to all authorities.
846
The noble Baroness, Lady Stedman, who was the first speaker in this debate, said that the Government might try to get rid of the shire counties altogether. I remind her that the only people who said that they would get rid of the shire counties altogether—and they made it a promise—was the Labour Party. They made it a promise and it is perhaps as well to say that again now. The noble Baroness said also that the Bill takes no part in parliamentary supremacy. Others are complaining that it is all about government, and therefore parliamentary supremacy, so we cannot have it all ways.
My noble friend Lord Sandford said that he would vote against the clause—to make, he said, another place think about it again. Let no one have any illusions. Voting against the clause is to defeat the clause and to defeat the Government on it. There should be no fudging of that issue. That is exactly what a vote against the Government is about. Let no one pretend that it is anything else. That is what it is and I hope that all my noble friends, and also at least those on the Cross Benches, have no doubts about it. I know that noble Lords opposite have no doubts about it.
I shall not speak longer. I believe very much that this provision is necessary. The fact is that Parts I and II of the Bill are complementary. To talk about bringing in another Bill if it should ever be needed, is not good enough. Everyone knows how long it takes to bring in legislation. We shall already have a period of years before we can see what will be the effect of Part I of the scheme. I keep repeating that and that should be said. We promised to bring this in; it is needed as a reserve power. I say again that it is complementary to Part I. There are now to be exemptions which were not there before. They are safeguards, and that is why we are now asking for these powers which we believe to be necessary to have the pressure on local government which at this time is needed very much indeed, so that authorities will produce sensible spending and rating policies. I therefore hope that the Committee will support this clause.
6.7 p.m.
On Question, Whether Clause 9 shall stand part of the Bill?
Their Lordships divided: Contents, 140; Not-Contents, 130.

DIVISION NO. 2

CONTENTS

Airey of Abingdon, B.

Carnegy of Lour, B.

Alexander of Tunis, E.

Cathcart, E.

Allerton, L.

Cockfield, L.

Ashbourne, L.

Coleraine, L.

Avon, E.

Colville of Culross, V.

Barber, L.

Colwyn, L.

Belhaven and Stenton, L.

Cottesloe, L.

Bellwin, L.

Cranbrook, E.

Beloff, L.

Cullen of Ashbourne, L.

Belstead, L.

Daventry, V.

Bessborough, E.

Davidson, V.

Blake, L.

De Freyne, L.

Brabazon of Tara, L.

Denham, L. [Teller.]

Brougham and Vaux, L.

Digby, L.

Broxbourne, L.

Dilhorne, V.

Bruce-Gardyne, L.

Dormer, L.

Buckinghamshire, E.

Drumalbyn, L.

Caithness, E.

Ebbisham, L.

847

Eccles, V.

Mersey, V.

Effingham, E.

Middleton, L.

Elles, B.

Milverton, L.

Elliot of Harwood, B.

Monckton of Brenchley, V.

Elton, L.

Monson, L.

Fanshawe of Richmond, L.

Montgomery of Alamein, V.

Forte, L.

Mottistone, L.

Fortescue, E.

Mowbray and Stourton, L.

Fraser of Kilmorack, L.

Munster, E.

Gainford, L.

Norfolk, D.

Gardner of Parkes, B.

Northchurch, B.

Glenarthur, L.

Nugent of Guildford, L.

Gowrie, E.

Onslow, E.

Grantchester, L.

Orkney, E.

Gray of Contin, L.

Pender, L.

Greenway, L.

Pennock, L.

Gridley, L.

Polwarth, L.

Hailsham of Saint

Portland, D.

Marylebone, L.

Radnor, E.

Halsbury, E.

Rankeillour, L.

Henley, L.

Redesdale, L.

Hill of Luton, L.

Renton, L.

Hives, L.

Rochdale, V.

Hood, V.

Romney, E.

Hornsby-Smith, B.

St. Aldwyn, E.

Hylton-Foster, B.

St. Davids, V.

Inchcape, E.

Saltoun, Ly.

Inglewood, L.

Shannon, E.

Ingrow, L.

Sharples, B.

Kaberry of Adel, L.

Skelmersdale, L.

Killearn, L.

Somers, L.

Kilmany, L.

Spens, L.

King of Wartnaby, L.

Stodart of Leaston, L.

Kinnaird, L.

Strathcarron, L.

Kitchener, E.

Strathspey, L.

Lane-Fox, B.

Sudeley, L.

Lauderdale, E.

Suffield, L.

Lindsey and Abingdon, E.

Swansea, L.

Long, V.

Swinfen, L.

Loudoun, C.

Swinton, E. [Teller.]

Lucas of Chilworth, L.

Terrington, L.

Lyell, L.

Teviot, L.

McAlpine of Moffat, L.

Thomas of Swynnerton, L.

McAlpine of West Green, L.

Tranmire, L.

McFadzean, L.

Trefgarne, L.

Mackay of Clashfern, L.

Trumpington, B.

MacLehose of Beoch, L.

Tryon, L.

Macleod of Borve, B.

Ullswater, V.

Mancroft, L.

Vaux of Harrowden, L.

Marley, L.

Waldegrave, E.

Maude of Stratford-upon-Avon, L.

Westbury, L.

Whitelaw, V.

Merrivale, L.

Windlesham, L.

NOT-CONTENTS

Airedale, L.

Cudlipp, L.

Allen of Fallowfield, L.

Darling of Hillsborough, L.

Alport, L.

David, B. [Teller.]

Amherst, E.

Davies of Leek, L.

Ardwick, L.

Dean of Beswick, L.

Attlee, E.

Delacourt-Smith of Alteryn, B.

Aylestone, L.

Bancroft, L.

Denington, B.

Banks, L.

Diamond, L.

Barnett, L.

Donaldson of Kingsbridge, L.

Beaumont of Whitley, L.

Donnet of Balgay, L.

Bernstein, L.

Ellenborough, L.

Beswick, L.

Elwyn-Jones, L.

Birk, B.

Ennals, L.

Blyton, L.

Evans of Claughton, L.

Boston of Faversham, L.

Ezra, L.

Bottomley, L.

Falkender, B.

Brooks of Tremorfa, L.

Fisher of Rednal, B.

Bruce of Donington, L.

Fitt, L.

Burton of Coventry, B.

Foot, L.

Campbell of Eskan, L.

Fulton, L.

Carmichael of Kelvingrove, L.

Gainsborough, E.

Chelwood, L.

Gaitskell, B.

Cledwyn of Penrhos, L.

Gallacher, L.

Collison, L.

Gladwyn, L.

Cooper of Stockton Heath, L.

Glenamara, L.

848

Graham of Edmonton, L.

Phillips, B.

Gregson, L.

Pitt of Hampstead, L.

Grey, E.

Plant, L.

Grimond, L.

Ponsonby of Shulbrede, L.

Hampton, L.

Prys-Davies, L.

Hanworth, V.

Raglan, L.

Harris of Greenwich, L.

Rathcreedan, L.

Hatch of Lusby, L.

Roberthall, L.

Henderson of Brompton, L.

Ross of Marnock, L.

Houghton of Sowerby, L.

Sainsbury, L.

Irving of Dartford, L.

Sandford, L.

Jacobson, L.

Seear, B.

Jacques, L.

Sefton of Garston, L.

Jeger, B.

Segal, L.

Jenkins of Putney, L.

Serota, B.

John-Mackie, L.

Shaughnessy, L.

Kagan, L.

Simon, V.

Kaldor, L.

Stallard, L.

Kilmarnock, L.

Stamp, L.

Kissin, L.

Stedman, B. [Teller.]

Lawrence, L.

Stewart of Alvechurch, B.

Listowel, E.

Stewart of Fulham, L.

Lloyd of Kilgerran, L.

Stoddart of Swindon, L.

Lockwood, B.

Stone, L.

Lovell-Davis, L.

Strabolgi, L.

Mackie of Benshie, L.

Taylor of Blackburn, L.

MacLeod of Fuinary, L.

Taylor of Mansfield, L.

Mar, C.

Tordoff, L.

Mayhew, L.

Underhill, L.

Milner of Leeds, L.

Vickers, B.

Mishcon, L.

Walston, L.

Molloy, L.

Wedderburn of Charlton, L.

Molson, L.

Wells-Pestell, L.

Monk Bretton, L.

Whaddon, L.

Mulley, L.

Winchilsea and Nottingham, E.

Nicol, B.

Northfield, L.

Winstanley, L.

Ogmore, L.

Winterbottom, L.

Oram, L.

Wootton of Abinger, B.

Paget of Northampton, L.

Young of Dartington, L.

Resolved in the affirmative, and Clause 9 agreed to accordingly.
6.17 p.m.
Clause 10 [Authorities subject to general control]:
Lord Bellwin Lord Bellwin moved Amendment No. 79A:
Page 8, line 14, leave out ("subsection (2)") and insert ("subsections (1A) and (2)")
The noble Lord said: With this amendment I speak also to Amendments Nos. 80B and 81 A.
Amendment No. 80B: Page 8, line 18, at end insert—
("(1 A) If in any financial year it appears to the Secretary of State from the best information available to him that an authority—

(a) has in each of the three preceding financial years complied with subsection (1B) below and is likely to comply with that subsection in that financial year; or

(b) has in each of the three preceding financial years complied with subsection (1C) below and is likely to comply with that subsection in that financial year,

he shall by a notice in writing served on that authority exempt it from the operation of subsection (1) above in relation to the next financial year.
(1B) An authority complies with this subsection in a financial year if it has not been designated in relation to that year under section 2 above and its total expenditure in that year does not exceed its grant-related expenditure for that year.
(1C) An authority complies with this subsection in a financial year if it has not been designated in relation to that year under section 2 above and complies in that year with guidance issued to it for the purposes of section 59(6)(cc) of the Local Government, Planning and Land Act 1980.")
Amendment No. 81 A; Page 8.line 19, after ("If) insert ("in a case to which subsection (1A) above does not apply")
This group of three amendments results from an undertaking given by my right honourable friend the Secretary of State in another place. Their purpose is to

849
provide for the exclusion from the operation of the general rate limitation scheme of authorities with an established record of responsible self-restraint in their spending. It may seem paradoxical to be proposing exclusions from the operation of a general limitation scheme, but I do not believe that there is a problem when the purposes of the Bill are remembered.
The Bill has two purposes: to protect ratepayers and to safeguard the Government's expenditure plans. In addition, we have said that we would only envisage general rate limitation being brought into effect where there was evidence of a large number of authorities starting to increase their spending in an unacceptable way. But authorities which have an established record of low spending will not be imposing excessive burdens on their ratepayers, nor will they have contributed to a problem of general overspending which might have led to the introduction of general limitation.
There was a feeling in another place that it would be wrong—indeed, pointless—to seek to impose rate limits on authorities which could demonstrate that they had by their own efforts maintained responsible spending levels. We have accepted those sentiments. This group of amendments provides therefore for authorities to be excluded from the operation of the general limitation scheme—in the event of its introduction—if they have not exceeded their grant-related expenditure in each of the previous three years and are budgeting to do so again in the year in which the question of exemption falls to be determined, or they have managed their affairs similarly in relation to their expenditure targets.
I should perhaps add a word here about the earlier version of amendment which appeared on last week's Marshalled List as Amendment No. 80A. On further consideration that amendment was considered to permit the exclusion of authorities spending less than either GRE or target in each of the past three years. In other words, an authority could swap each year between meeting GRE or meeting target, according to which was easier, and still achieve an exemption. That did not seem to us to indicate a consistent approach to limiting expenditure, or to conform to the sentiments expressed in another place. We have therefore replaced that amendment with this one which does meet our intentions. I apologise for any inconvenience, but the amendment involves a complicated set of "either/or" criteria. I am sorry that we did not get them all in the right place at the first attempt.
The Committee is entitled to ask what effect we anticipate such an exemption might have in terms of the number of benefiting authorities. Presently, we have only the evidence of past performance to go on, and there is no way in which we can know what might be the situation if, and when, we come to introduce a general limitation arrangement. However, I can say that, on the evidence about expenditure in the years from 1981–82 to 1983–84 and from the provisional figures from 1984–85 budgets, it would seem that a total of 208 authorities in England and 21 in Wales might have benefited from this exclusion if we had had to decide on that today.
No doubt there will be concern expressed by those authorities which believe themselves to be low
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spenders, but which do not exactly meet the criteria proposed. I have to say that that is inevitable where criteria have to be spelled out in a precise way. And the point is this: general rate limitation, if it were ever introduced at all, would not be with us for a long time yet. Authorities will now know what will be the grounds for exemption. It is up to them in the future to ensure that their spending is brought into line, if they want that kind of automatic exemption.
I have said that this amendment will exempt from the operation of the general rate limitation scheme authorities which have an established record of spending below their GRE or their expenditure target. In the course of discussion in another place it was made quite clear that there were a number of authorities who were worried that unless there was a clear exclusion based on a long history of spending below GRE, they might be brought within a system which would impose absolute controls on their expenditure decisions simply because they were forced to go over target in one year. To meet that fear we have drafted this amendment in terms of an "either/or" exclusion. It excludes authorities if they have either met their targets for the relevant period, or if they have spent below GRE for the relevant period. This, of course, implies that it is possible for an authority to be excluded solely because its expenditure is below its GRE. even if it has exceeded its target.
We have accepted this in recognition of the concern expressed in the other place that the severe constraint of having an absolute limit placed upon the rate should not apply to authorities which have a record of spending below GRE simply because they may have exceeded their target in any one of the previous years. We do not condone spending over targets, but authorities have the freedom to exceed the target level—at some cost in lost grant—and we do not believe it right to bring those authorities within rate limitation if they otherwise have a record of low spending in relation to GRE.
But I should leave the Committee in no doubt that this does not imply that the Government regard an excess over target, even in one year, as acceptable. The achievement of the Government's overall expenditure plans is dependent upon all authorities meeting their targets. In certain targets we have tried to recognise the effect of low-spending authorities. Their targets are less demanding than are those for high spenders. We believe that the targets are reasonable and should be met.
In subsections 1(b) and 1(c) we provide for the benefit of the exemption to be withheld from authorities which have been designated for rate limitation during the previous three years. It would not seem to us to be reasonable to exclude an authority from general rate limitation on the strength of a compliance with its expenditure target springing from an earlier rate limit.
Finally, I want to draw attention to the fact that we are retaining the previous provision for the exclusion of authorities spending less than an amount to be determined by the Secretary of State where they would not otherwise be excluded by these amendments.
This power gives some additional flexibility to the operation of the general limitation scheme. It would be

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possible, for example, under this provision to repeat the exemption of small authorities provided for in the selective scheme. We also accepted in the other place that the provision could be used to exempt authorities spending less than amounts which might have been related to GRE or to targets. We said then that it might be possible to envisage circumstances in which it could be appropriate to have an exemption in those terms. It will remain possible to use the power in that way, but it is much more difficult now that we are putting into the Bill specific exemptions to envisage the circumstances in which it might be appropriate so to do.
With these amendments the Government are responding to concern expressed in another place and making a significant, but reasonable, adjustment to their original proposals. We have considered carefully whether in moving this amendment we are undermining the fundamental objective of this Bill or exposing ratepayers in some areas to unreasonable burdens. We have concluded that we are not, for the reasons I have given. I am glad therefore in moving these amendments to be able to demonstrate that the Government have been prepared to be flexible where it is possible to be so and to assure those ratepayers who may be concerned that these exclusions will not deprive them of protection from high spending and rates, where they are in need of it. I beg to move.
Baroness Birk: The Minister, I think, appreciates, as he mentioned, that this proposal came in very late in the day, and it has been extremely difficult to take in all the complexities of this amendment. Frankly, it really makes me feel that had the Government decided more wisely than the votes indicated here not to go ahead with the general powers at all. we would at least have been spared all this stuff with which we are now faced in order to make the situation more flexible. It really is a kind of Alice in Wonderland situation to have to deal with all this incomprehensible stuff in order to reassure people who need not have had to be reassured if the Government had not done what they did in the first place.
In returning to this very tiresome amendment, making the test the higher of GRE or target, I wish to ask whether the Government are in danger of jeopardising their public spending objectives? It is not because I have a tremendous concern for the Government that I ask the question; I think it is something we ought to know. If they tilt over in their efforts to show flexibility and helpfulness, as the Minister said they are very anxious to do, will they not be in some kind of jeopardy?
Are the GREs going to become targets? If this is so, it is of course going to be very bad for the metropolitan authorities, or those which the Government does not abolish in its next round of "flexibility". I think the most important matter of all is that the Government set both the GREs and the targets. I think that the Minister will agree with me over that; I do not think that I can make a mistake about it. This amendment therefore is no safeguard at all because the Government can move their own goalposts—and no doubt will do so.
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On the question of the figures I would say that they are really complicated if one tries to extricate them because there are different sets of figures. As I understand it, those which came out from the Department of the Environment last week have not allowed for disregards. These are absolutely essential because for the purposes of determination (which the Minister discussed when he was explaining the amendment) the compliance for a year will have to take into account disregards; otherwise it will make the whole matter extremely uneven and unfair.
I am afraid that this is really a first shot. Perhaps in the meantime the Minister can elaborate on it and write to everybody else who is taking part in the debate on this very tricky amendment, so that we have a chance to be more fully informed when we come back to it on Report.
6.30 p.m.
Viscount Ridley: I am delighted to welcome this amendment. I am sure that the Government have made a very important concession and I do not agree with Lady Birk's, "tiresome". But I do not think it is quite fair for my noble friend to say, as he did just now, that this was warmly welcomed in another place because this never saw the light of day in another place. That may have been the intention of the Members themselves but the amendment has only just appeared before us.
However, I want to ask one question. If I understand this correctly, you have to have been a good boy for three years and as you are already in another financial year that in fact means four years; so it is not quite so great and immediate a concession as might be thought. Would it not be possible to say that in each of the two preceding financial years the authority had done one or other of these things—the effect being three years from the date when the threat was issued? I think that might make it an even more important concession and I would ask my noble friend to look at it.
Lord Evans of Claughton: When the proposal was made by the noble Lord's right honourable friend to put an amendment before this Committee, I think there were stifled sighs of relief from some of the honourable Members on the Government side. Whether they would still be relieved, having seen this amendment or whether they would be scratching their heads in some bewilderment, I do not know. As I understand it, within local government and even within the department itself, there is quite a vigorous debate going on about the methodology by which you come to settle what shall be the guidelines, the targets and the methodology to use when deciding about the GREs, and whether you use the GRE only to settle the rate support grant or whether it is used also as a kind of limitation on expenditure and what is the relationship of the guidelines, or the targets, to the limitations in the Bill.
Once one has looked at these things one wonders what comparisons have been used by the civil servants in the noble Lord's department to reach their conclusions and why there have to be two different ways to decide whether a local authority had been a good boy or a bad boy. Also, why is there not just one criterion to settle this? These are all mysteries that I

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hope the noble Lord will be able to explain to us so that, as the noble Baroness said, we can go away and think deeply about this and then come back at Report stage possibly slightly less bemused. I suppose one must say, as the noble Viscount, Lord Ridley, has said, that this concession is perhaps slightly better than nothing at all; and so one might come back, having looked at this, with a more positive reception. The noble Baroness may be right: it might not be tiresome but it is certainly confusing, and I hope that the noble Lord may be able to clarify the matter for us.
Lord Sandford: May I make a brief point before my noble friend replies to the debate. He was rebuking me mildly during the previous debate in respect of the Association of District Councils, whose views I sometimes venture to impart to your Lordships. He said that they appear to be so grudging and do not show their gratitude for these concessions when they are offered. I hope that is not the case.
In speaking just before my noble friend, I said that this amendment was welcome so far as it went. Whether one is talking about this amendment or the £10 million exemption in Part I, which certainly excludes a very large number of members of the association from the operation of that Part, it does not alter the fact that it is primarily on the principle that the entire association are united in their criticisms, because every piece of the legislation, including this piece, involves the scrutiny and monitoring of their affairs by civil servants of the Department of the Environment. It is because the whole concept of local government envisages the supervision and control of local government by locally-elected councillors and their electorates that no amendment of this kind will water down that criticism. So we welcome it so far as it goes but we do not think it does anything to ameliorate our objection to the clause.
Lord Dean of Beswick: I have no desire to lengthen this debate but I should like to put a brief question to the Minister. With his long experience in local government, he will be aware that in the past where financial allocations have been made to various authorities, if there has been a low take-up in some areas another authority which can prove the need for resources has been able to apply for them and use them. Obviously they kept the Government within the global sum which the Government considered unexpended. I do not think anybody would argue that the needs of all the constituent authorities in the United Kingdom are the same. It is not even arguable that the inner-city areas of London and other big cities need much greater funding than other areas. Could I ask the Minister to consider the possibility—I do not ask him necessarily to answer just now—where there has been a proven need, as time goes by, of the bar on the penalties of certain authorities being lifted? Because we are talking about a three or four-year period, perhaps he might consider the need to lift that bar on the basis that it may be money which would have been allocated to somebody else anyway.
Lord Bellwin: If I may take the last point first, which is too often the most convenient thing to do, the noble Lord is quite right when he says that we are talking about a situation which may never arise anyway, and

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it is to be hoped that it never will. Secondly, if it does arise it will be some time ahead. In a way his question runs into the point which was touched on by the noble Baroness, Lady Birk, when she talked about targets. Everyone has tried to touch on the same point. The question is: would there be targets? I just do not know. We are talking about a situation which will be some long time hence, if ever it does arise. Would there then be targets? I do not know. I think it would depend very much on how successful Part I had been and also on whether the whole Bill had achieved its objective. If the Bill has achieved its objective and the spending is within the general Government guidelines, the Government will certainly have to think again about the whole position. That would be a happy situation. Obviously I cannot make forecasts now, but I know it would be a happy concluson if we could get to that situation; we will just have to see.
May I say this to the noble Baroness, Lady Birk, in reply to her question as to whether the GREs would be targets. As she knows, they are essentially the formulae used for deciding the amount of grant. They have never been targets and the only reason why they are now in this situation is because one is trying to have an "either/or". I should like to stress that. It is either targets or GREs. I asked this question of the civil servants: is it like being on the line in tennis? If you are on the line, are you in or are you out? They said that if you are exactly on the GRE. if you are on the line, then you are in and you are all right. But if you are over the line, you are out. It is the same as with tennis. I am sorry if I have digressed, but that was the way I put it.
The noble Viscount, Lord Ridley, asked: what about two years? I understand his reason for asking the question but I fear that the decision is that it should be three years. No doubt now that this is coming forward in this way there will be other representations made about that. He said that the intention was made clear in another place and what was not spelt out was the detail. In that sense, he is right about that.
May I say just a word to my noble friend Lord Sandford, who said that the entire association was united. With great respect to him, that may be so as regards the executive—I do not know about that—but it is certainly not so of the entire membership of the association. I go round the country probably more than most, and I visit place after place after place where there are members of the ADC in particular who do not agree with the executive's decision. Therefore, it is not right to say that the entire association is united. If he likes, I will give my noble friend a long list of those who have expressed that opinion to me.
He said that it would be scrutiny by civil servants. First, we are talking again about a hypothetical situation which may never come about; and, secondly, scrutiny by civil servants would arise only in some unforeseen situation which my noble friend may envisage, but which I do not. I gather that there are two tiers, at least, for the amendments being proposed. I think that they are a very considerable step forward. It has not been easy to make moves of any major nature in this whole matter and here is one which will probably take out more than half, even from a general

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scheme. So, all in all, this is a step forward and I assume that it is being accepted as such.
On Question, amendment agreed to.
[Amendment No. 80 not moved.]
Lord Bellwin Lord Bellwin moved Amendment No. 80B:
[Printed earlier.]
The noble Lord said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
[Amendment No. 81 not moved.]
Lord Bellwin Lord Bellwin moved Amendment No. 81 A:
[Printed earlier.]
The noble Lord said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Lord Evans of Claughton Lord Evans of Claughton moved Amendment No. 82:
Page 8, line 28, at end insert—
("( ) The Secretary of State shall by notice in writing served on an authority exempt it from the operation of subsection (1) above in relation to the next financial year if he is satisfied that, in relation to that authority, one or more of the following conditions apply, namely—

(a) that the authority has exercised its best endeavours with a view to ensuring

(i) that its expenditure in the previous financial year has not exceeded the grant related expenditure (as defined in section 56(8) of the Local Government. Planning and Land Act 1980) of that authority, and

(ii) that its expenditure in the previous financial year has complied with any guidance issued by the Secretary of State under section 59(6)(cc) of the said Act of 1980;

(b) that the authority is a designated authority for the purposes of the Inner Urban Areas Act 1978;

(c) that the authority has entered into arrangements with the Secretary of State or Ministers pursuant to section 7 of the said Act of 1978;

(d) that all or any part of the authority's area has been designated a special area pursuant to section 8 of the said Act of 1978;

(e) that any increase in the total expenditure of that authority or in any rate levied or precept issued by it, as between the last but one financial year and the financial year immediately following that financial year has been less than the increase in the Index of Retail Prices in the same period.")

The noble Lord said: Clause 10(2) seeks to make the general scheme selective and, as I suppose your Lordships will have realised, we should have liked to delete subsection (2). But if it is not the wish of the Committee that that should be done then we should like to mitigate it so that a local authority is exempt if it has, first, tried to keep below the GRE targets in previous years or, secondly, is a designated district. As the noble Lord is well aware, partnership and programme authorities, usually inner urban authorities, are recognised by the Government as having special, distinctive and expensive urban problems. The Government having recognised that, that seems to be a good basis for including that as one of the three reasons. A third reason for exemption is

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that the rates and expenditure of a local authority are below the level of inflation during the same period.
It seems to me that these three criteria are more sensible grounds for giving exemption from Clause 10(2) than is the size of a local authority's budget. Briefly, that is the basis upon which I move the amendment, which I think would be an improvement to the Bill. I genuinely do not see that this is in any sense getting at the root of the principles behind the Government's proposal. It is just that the amendment seeks to introduce a more sensible basis for settling exemption than the basis which the Government are using of the size of a local authority's budget. I beg to move.
Lord Bellwin: The Government recognise the case of the responsible authorities and have provided for that in the amendment we passed a few moments ago. The first part of this amendment seeks a similar end, but, in my view, it is not operable. I cannot see how a Secretary of State could ever establish whether an authority had used its best endeavours to reduce its spending to the target GRE level. Moreover, the amendment as drafted seeks no evidence of a record of responsible behaviour. The Government's approach is, therefore, preferable and I would not wish to support the first part of this amendment.
Three other proposed exemptions in this amendment dealing with partnership and programme authorities overlap substantially, since all partnership and programme authorities must also be designated authorities, as the noble Lord clearly knows, for the purposes of the Inner Urban Areas Act 1978 and a "special area" under Section 8 cannot be defined, except for a partnership or programme authority. We have heard how inner city authorities ought to be exempt from rate limitation, because of their special problems. The noble Lord made his point well. He knows that I am personally very involved in those areas, so I, too, know the situation very well. We most certainly accept that inner city areas have special problems. But that. I have to say again, is reflected in the GRE assessments which, as I have shown earlier, are significantly weighted to the inner city areas.
I think I remember saying that the personal and social services GRE in, for example. Hackney—if I may be allowed to quote this again—is four times larger than the average for. I think, the whole country, but it may also be for the other inner London areas; I am not too clear about that. But it is an enormously higher factor than for anyone else, which is fair, because it is there to indicate the need. That is exactly what GREs are supposed to do.
Also, in our willingness to support programmes of action through the partnership and programme authority machinery we are well directed towards the problems of those areas. But that recognition does not give a blank cheque for spending or absolve those authorities from the search for economies. Indeed, it is very often in those areas which have so many disadvantages for employers, because of outworn infrastructure or shortages of skilled manpower, that the need for responsible spending and rating is particu-larly crucial. I shall not go into a lot of other opportunities which these very authorities, more than any others, ought to be undertaking at the present time

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to obtain better value for their money, because that would mean entering into a long debate and I feel very deeply about the subject.
There is also a proposal in this amendment that authorities which increase their total expenditure or their rates between one year and another by less than the rate of inflation should be excluded. I have two reasons for not being able to accept this option. First, annual changes in both total expenditure and rates are open to considerable manipulation between one year and another, as the noble Lord knows. Total expenditure through decisions on the financing of capital expenditure and on the use of special funds is another area of opportunity, if I may call it that; and then the rates are often affected by the use of revenue balances. Over a period as short as a year it is relatively easy for a local treasurer to make these two indicators appear to be increasing less slowly than the rate of inflation. We have argued before that rate increase figures, particularly in the short run, do not tell the full story by any means. But my other objection is that we are seeking real term reductions in spending, particu-larly from the higher spenders, and this amendment would require us to exclude any authority which was standing still in volume terms. That is not the purpose of the Bill.
Lord Evans of Claughton: I put down this amendment, as your Lordships will realise, before Amendment No. 80B was put down by the Government. I have listened carefully to what the Minister has said, and I am aware of his concern about the programme and partnership areas. I was very glad. as were others, to see him at the International Gardening Exhibition which was opened by Her Majesty the Queen last week and which has already surpassed all expected records. So things are looking very rosy there—
Lord Underhill: They are blooming.
Lord Evans of Claughton: They are blooming. I only hope that the noble Lord has got the dust off his shoes and his suit after that. But it is a very hopeful occasion and I trust that it will do a lot more for Merseyside than many critics have been suggesting. I should like to read me Minister's speech, to compare it with the amendment which he so recently moved, and to consider how the matter stands. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 10, as amended, agreed to.
Clause 11 [Expenditure levels and variation of maximum]:
[Amendment No. 83 not moved.]
6.50 p.m.
Baroness Nicol Baroness Nicol moved Amendment No. 84:
Page 8, line 40, leave out paragraph (b).
The noble Baroness said: On behalf of my noble friend I beg to move Amendment No. 84. At the same time, I wish to speak to Amendments Nos. 86 and 87.
Amendment No. 86: Page 9, line 13, leave out subsection (4).
Amendment No. 87: Page 9, line 17, leave out subsection (5).
If the general scheme is activated, the Secretary of State can, under Clause 11, vary the maximum limit set for a local authority. Varying upwards is unlikely to cause problems for the authority, but varying downwards is another matter. An authority affected by the general powers will have already completed a long and painful exercise to meet the figures set by the Secretary of State. If the Secretary of State has the power further to reduce that figure, it will create uncertainty about the levels of service available to the authority during the inevitably lengthy period of examination of its budget. As the Minister has already allowed, most local authorities have conscientiously tried to meet Government targets in the past, and no doubt will continue to do so in the future. It is unfair to add to an already heavy task by leaving a cloud of uncertainty over whether or not their efforts will need to be repeated.
The most disagreeable aspect of the general power is that the Secretary of State is not required to give reasons for anything he does. What is to prevent a future and less scrupulous Secretary of State from using these powers for purely political or, indeed, personal objectives? We seem to assume, as we go through the Bill that we shall for ever be governed by people of integrity and good character. This is not necessarily so. Even within the same political complexion characters can change. And not only that: as has been said on so many occasions today, it is the civil servants who will decide, and they decide for many different reasons. The effect of this group of amendments, if we accept them, would at least minimise some of the bad effects. I beg to move.
Lord Bellwin: I wish noble Lords opposite would not keep saying that it is the civil servants who decide. The civil servants could decide. I was told before I arrived in your Lordships' House and in Government that this is exactly what would happen. All I can say is that this is not my experience. "Yes. Minister" does have certain connotations, but not serious ones.
This group of amendments deals with the power to change authorities' rate limits under the general scheme. These procedures are the equivalent of, but rather different from, the interim rate limit procedure provided for in Clause 5 in respect of the selective scheme, and that procedure is explicitly disapplied by Clause 11 for the general scheme. Amendment No. 84 seeks to remove from Clause 11(2) the power for the Secretary of State to reduce a rate or precept limit already set by him under the general rate limitation scheme. That power would have to be exercised by making a statutory order subject to an affirmative resolution.
It will be remembered that we argued in the context of Clause 5 that the interim rate limit would be a very exceptional procedure, quickly leading to a final limit, but provided so that an authority was enabled to make a rate or issue a precept. It will also be noted that under the selective scheme Parliament has been made aware of the designation of a particular authority for rate limitation through the report required under Clause 2(1).
The Government's view is that the situation would be rather different under general rate limitation, if it were ever introduced. Many more authorities would

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be involved, and there must therefore be a greater risk that for a number of them discussions of individual rate limits would not have been completed in time for the finalising of rate demands. Furthermore, there would no longer be the parliamentary involvement at designation stage. We believe it would be wrong for the Secretary of State to be able to set rate or precept limits, albeit on a temporary basis, for all local authorities without parliamentary sanction. Under the general scheme, therefore, the Secretary of State must set rate or precept limits by affirmative resolution order under Clause 4(4) in all those cases where no agreement has been obtained and the interim rate limit procedure is not available to him.
However, some of those limits may have been set on the basis of incomplete discussion in order to enable the process of making a rate or setting a precept for the coming year to go ahead. Provision is needed for varying the limit in order to meet any changes in circumstance that might arise, and because we are dealing with a situation of some uncertainty the variation could be either upwards or downwards in the light of later information received, although an upward variation is probably more likely than a downward one. Relaxation of the rate limit does not raise major problems of principle for the authority, and the Government therefore think it justifiable for such a relaxation to be achieved by written direction of the Secretary of State. This is provided for in Clause 11 (2) (a). and in that case Clause 11(3) provides for the making of substitute rates or precepts so that any revised rate or precept in respect of the relaxed limit can be collected.
I have dealt in some detail with this amendment, and will gladly give more details if the noble Baroness feels this to be necessary. May I, however, say a word about Amendment No. 87, which would prevent the Secretary of State from including more than one authority in an order reducing the rate limit under the general scheme? My own view is that such orders would be extremely rare. We would want the House to have the opportunity to scrutinise a reduction in the rate limit previously approved by it for an authority, but I believe this can be done adequately by means of the composite order procedure. I assured the Committee when we considered earlier amendments of this kind that we shall ensure that appropriate time and facilities will be provided for debate. How long that will need to be will depend upon the number of authorities covered by such an order.
We have provided a contingent parliamentary safeguard for the rare case in which we have to reduce a rate limit under the general scheme. It will require the rigours of the affirmative resolution procedure in the other place. That is quite proper, and is also quite adequate. With those assurances, I hope that the noble Baroness will feel able to withdraw the amendment.
Baroness Nicol: I still do not like the clause as it stands. I should very much have preferred a better provision to be written into the Bill to make sure that the Secretary of State has to give better reasons for what he does and better guidance at the beginning. However. I can see that this amendment will not make any progress. Therefore, I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Baroness Stedman Baroness Stedman moved Amendment No. 85:
Page 8, line 40, at end insert—
("( ) No direction under subsection (2)(a) above and no order under subsection (2)(b) above shall be served or made unless a draft thereof has been laid before and approved by a resolution of each House of Parliament.").
The noble Baroness said: This is another amendment in which we are trying to press for greater parliamentary scrutiny. We have not got very far with anything else, and I suspect we shall not get very far with this amendment, but I beg formally to move it.
Lord Bellwin: The noble Baroness is very far-seeing. In those circumstances, without going into detail—unless the noble Baroness wants me to do so, in which case I gladly shall—may I say that we feel that we are unable to accept the amendment. In the other place, an amendment in these terms was rejected. I believe that it would be unwise to challenge the traditional division of responsibilities between the two Houses by passing this amendment. I am pleased that the noble Baroness said what she did.
Lord Graham of Edmonton: If we are referring to Clause 11, subsection (2) relates to the
"maximum prescribed in the case of such an authority".
As I read paragraphs (a) and (b), the Secretary of State reserves to himself the right to increase or reduce the maximum prescribed. If that is the case, surely the discretion and flexibility which the Secretary of State alone enjoys ought to be the subject of consideration and approval by resolution of both Houses of Parliament. I know that we have gone over the argument concerning the severe limitation which is being placed upon this House by the legislation. But as the Government have seen fit to tramp new ground in respect of constitutional propriety, we are entitled to raise this point from the Floor of the Committee, bearing in mind that the Secretary of State has if not complete sovereignty then complete certainty that he will get his way.
This amendment seeks to ensure that where the Secretary of State has a change of mind or has been persuaded by consultation, the House will be given an opportunity to hear the reasons why. I know that we are talking about general powers. I know that the Minister and his colleagues have said that this power would very rarely, if ever, be used. I know that we are talking about only 12 to 20 of the major transgressors. In that case, we are talking about only a very limited number of opportunities where these powers may be involved. I suggest to the Minister that the case we made before is still a reasonable one. I should like to hear more detail as to why the Minister cannot accept this amendment.
Lord Bellwin: When we discussed Amendment No. 84 I reminded the Committee that we argued in the context of Clause 5 that the interim rate limit would be a very exceptional procedure quickly leading to a final limit but provided so that an authority was enabled to make a rate or issue a precept while discussions with the Secretary of State were being concluded. It will also be noted that under the selective scheme Parliament has been made aware of the designation of a particular

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authority for rate limitation through the report required under Clause 2(1).
The Government's view is that the situation would be rather different under general rate limitation, if it were ever introduced. We believe it would be wrong for the Secretary of State to be able in principle to set rate or precept limits—albeit on a temporary basis—for all local authorities without Parliamentary sanction. Under the general scheme therefore the Secretary of State must set rate or precept limits by affirmative resolution order under Clause 4(4) in all those cases where no agreement has been obtained, and the interim rate limit procedure is not available to him.
However, some of those limits may have been set while discussions were continuing. Provision is needed for varying the limit in order to meet any changes in circumstances that might arise. Relaxation of the rate limit does not raise major problems of principle for the authority, and the Government therefore think it justifiable for such a relaxation to be achieved by written direction of the Secretary of State. This is provided for in Clause 1 l(2)(a); and in that case, Clause 11 (3) provides for the making of substitute rates or precepts so that any revised rate or precept in respect of the relaxed limit can be collected.
But where the Secretary of State wishes to reduce the limit agreed by Parliament and the authority does not agree. I accept that it is quite proper that he should have to obtain Parliamentary approval for a further order, which will effectively be overriding the earlier one and to the authority's disadvantage. That is presently provided for. Amendment No. 84 accepts that the Secretary of State should be able to change rate limits under the general scheme, but it imposes restrictions on the operation of that power. Whether a rate limit were increased or decreased under this amendment, the orders would have to be approved by both Houses of Parliament.
I am not sure that this particular issue is an appropriate one for the involvement of this House. Certainly we recognise that we have a proper interest in the initial decision to move to the general scheme, and that is why Clause 9 requires the approval of both Houses to an order introducing it. But normally the supervision of detailed local taxation matters is a matter for the other place alone. Few know that better than the noble Lord, Lord Graham. For example, even so major an instrument as the rate support grant report is subject only to approval by a resolution of the House of Commons. The selective rate limitation orders presently provided for in Scottish legislation also are subject only to House of Commons affirmative resolution procedure.
I hope that that extra explanation has been helpful; cerainly it should set the matter out for any further consideration which the noble Baroness and the noble Lord may wish to give to it.
Baroness Stedman: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 86 and 87 not moved.]
Clause 11 agreed to.
7.5 p.m.
Baroness Stedman Baroness Stedman moved Amendment No. 88:
After Clause 11, insert the following new clause:
(" Community impact statement.
. Where pursuant to the provisions of this Act, the Secretary of State is required to lay before Parliament any report, statutory instrument (whether in draft or otherwise) or other document then—

(a) not later than six weeks before such laying before Parliament he shall publish a statement (in this section referred to as a "community impact statement") as to the likely consequences of the action or proposed action which occasions such laying before Parliament for—

(i) the services provided by any local authority referred to, or proposed to be referred to, in such report, statutory instrument or other document,

(ii) the inhabitants of such local authority's area,

(iii) social and economic conditions in such local authority's area: and

(b) not later than two weeks before such laying before Parliament he shall publish any comments upon the said community impact statement submitted to him by such local authority or by any body or group of persons representing the inhabitants of that authority's area or any part thereof.").

The noble Baroness said: I should like to move this amendment on behalf of my noble friend. It would ensure that the Secretary of State must consider the impact of his decisions on the locality that is to be rate capped. To make sure that he does, this amendment would make him examine his figures and his arguments so that he may prepare a clear statement of how the rate he is proposing, and the expenditure ceiling he is imposing, will affect the services in any given area to be rate capped, and examine the economic and social conditions of those local authority areas.
The second part of the amendment would simply enable local authorities being capped to issue their statement and have that statement published by the Secretary of State. We believe that this amendment will help Parliament, the Secretary of State and his officials to ascertain all the relevant facts. Short cuts and arbitrary random decisions would be that much less likely, since the Secretary of State and the department would have to consider the effects of any action they propose. This would be a great step forward for freedom of information and for open government. It would enable everyone involved in the provision of public services—the voluntary organisations, housing and social services departments, the arts bodies, education, public transport, the fire and police services, and many others—to know how they will be affected. The Government would not be able to duck the issue of the effects of rate capping.
If the Government feel that they must press on and interfere, then let them have the courage to be open and constructive and publicly admit the consequences of their action. There has always been a balance to be struck between taxation and the provision of services. This amendment tries to define the Government's view of that balance. It would put the onus on he who pulls the strings—the Secretary of State—to show how local authorities are to provide adequate services under the conditions imposed upon them by him. I beg to move.
Lord Bellwin: This is a very fundamental point which the noble Baroness mentions; it is one we have

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touched upon before in the earlier days of the Committee's work. To the extent that the arguments are familiar, so, too, is our response to them. Authorities do have the choice of making economies through cutting services to the needy or by making improvements in efficiency, cutting costs, and avoiding waste. This is a very deep subject. I have referred to it very often as the "third option". The first option is that one puts up the rates. The second option is that one cuts the services. The third option is that one seeks better ways of getting the services one wants at a lesser cost. The fact is that there are many authorities who are doing exactly that with great success. If anyone doubts that that is so, they have only to compare the statistics, to see how the cost of providing services by one authority as against another varies.
While I have always been the first to say that different authorities" circumstances are never exactly the same—and they are not—there are classes of authority which are so similar that such a similarity cannot be denied. Yet the variation between them in cost of providing some services is not just a little more or a little less but is dramatic—it is astonishing. It is so much so that there can be no explanation. When one asks the question, "why does it cost so much more?" and begins to examine the matter, one discovers all kinds of factors; such as the fact that one local authority contracts out a service; one authority does it another way; one authority is willing to adopt certain styles of management, and another is not. Indeed, there are clear opportunities to assess one authority with another in terms of its delivery and the cost of delivery of its services. To pretend that that does not exist—I am certain that the noble Baroness does not pretend that, but there are many who do—is to deny what I believe is one of the underlying problems that we face today.
If only we did not have that problem, local government would be very much better. Often it is those very authorities who have the greatest needs—and I know that they do—who are the most opposed to any attempt at all to try to provide services at lower cost. I know why they are. They say that to do so means that they provide the services by employing fewer people; it has to be said. The fact is, however, that others say that their first priority is to have the extra money and be able to provide better services. It can be done.
This is a very wide subject and a big debate, but I cannot accept the amendment. Your Lordships will note that I have not referred to any notes because I believe that this is such an important fundamental point. We do not consider that the only options are an increase in rates or the cutting of services. The area is full of opportunities, if only all authorities would take up those opportunities in the way that very many do.
Baroness Stedman: I am grateful to the noble Lord and I am glad that he thinks that this is an important amendment; we do, too. I should like to read carefully what he said and perhaps come back on Report, when we shall have a little more information about it, and how it would work. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 12 [Supplementary provisions]:
7.12 p.m.
Baroness Stedman Baroness Stedman moved Amendment No. 89:
Page 9, line 27, at end insert—
("( ) On the coming into force (in relation to either England or Wales or to both countries) of sections 10 and 11 of this Act as provided for in sections 9 and 12 above, subsection 6(cc) of section 59 (Adjustment of Distribution of block grant) of the Local Government Planning and Land Act 1980 should cease to have effect in relation to either England or Wales or both as the case may be.").
The noble Baroness said: I move this amendment on behalf of my noble friend Lord Evans. Its purpose is to ensure that the local authorities to which the general provisions of the Bill apply are not faced with both targets and grant penalties and also rate capping. We are seeking an answer on the relationship and interaction between targets and rate capping. As things stand, the local authorities may be rate capped by reference to one expenditure level, and if targets or guidance are lower than the rate capped levels, they may also have to pay a grant penalty. This is, perhaps, the use of two rather coercive measures which may become unnecessarily confusing.
The GREAs which we work on at the moment were intended not only for determining the block grant, but also for setting the spending limits. We think that it is wrong that GREAs should be used for that purpose. The 1980 Act replaced the needs and resources elements in determining the grant with the block grant and with GREAs. The 1982 Act introduced guidance. The difficulties and controversies that rage in local government circles are over the method of settling expenditure guidance, which is different from the setting of the GREAs. Authorities whose guidance is below GREA have been in trouble. They have been told that GREAs are only nominative assessments of their needs. On the other hand, they will suffer if they are below their GREAs and above their expenditure guidelines. Now there is a third target in the Bill on the expenditure limit. The amendment is to seek further clarification on how it will work. I beg to move.
Lord Bellwin: I assume the noble Baroness is also covering Amendments Nos. 97 and 100.
Baroness Stedman: Yes.
Lord Bellwin: Amendment No. 89 would end targets if general rate limitation were ever brought into effect. In fact, I touched on this a short while ago. Amendment No. 97 would end targets as soon as the whole Bill came into effect. Amendment No. 100 is consequential and would change the Long Title of the Bill.
As regards selective rate limitation, I am clear that it will be necessary to continue to apply pressure through the grant system on the majority of the authorities who are not selected. I have assured the Committee—I keep saying it again and again—that we are talking of selecting between 12 and 20 local authorities. Under the selective scheme without targets the main discouragement from high spending which the remaining authorities would face would be the fear

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of designation in a future year. There is no doubt that for the majority targets do work. They have been successful in constraining the spending of at least 80 per cent. of authorities. That is not to say that we shall need to have targets for all time. My right honourable friend has indicated that over a reasonable period of time we might move to a position where it was possible to rely solely on the pressures available through the grant system. But that must depend on the progress of events.
The position is slightly different in respect of general rate limitation. I accept that it might not be appro-priate to have targets and hold back if all authorities were contained within a general rate limitation scheme. I have already mentioned the amendments, which were put down after the amendments of the noble Baroness, giving the exemptions and also the power to exclude authorities with small spending. What we do not yet know, of course, is just how many authorities would be exempted because we cannot foresee the pattern of overspending which might require a general scheme to be introduced. I am not arguing that we will need targets if general rate limitation should ever be needed, but if there were significant numbers of authorities excluded from the limitation scheme, it might be wrong to remove all pressure from the excluded authorities to continue to budget and to rate economically. There is no require-ment to set targets each year. If authorities have shown restraint, targets can be set at a level which reflects that moderation. Therefore, in so far as it is now possible to foresee these detailed circumstances, it is reasonable to allow for the continued operation of targets alongside general rate limitation. But it is not realistic to speculate in more detail about the future of targets more generally until we know the circumstances that we might be facing.
The need for targets is reconsidered by the Government each year. I do not think a strong case has been made for their abolition forthwith. I believe that the case for doing so in the future can be made only with the facts at that time before us. I hope I have said enough to encourage the noble Baroness to know that in this area, at least, we have to watch and wait and see: nothing is forever.
Baroness Stedman: I am delighted with the Minister's closing words—that nothing is forever. When I went back to Cambridgeshire after the second day of our Committee stage and reported on the statement from the Minister that Cambridgeshire is not for rate capping, I thought that the councillors would be jubilant. They were not half as jubilant as I thought they would be because they said, "Ah, yes, we may not be rate capped, but remember we are still £1,250,000 above our target and they will get it back in penalties". It seems to me that one cannot win. We get satisfaction on one score, but not on another. Perhaps when the Minister is looking at this and trying to work out ways—and bearing in mind that nothing is for always—he will remember counties such as Cambridgeshire who are very low spenders. I put in a special plea for them. Meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Sandford Lord Sandford moved Amendment No. 90:
Page 9, line 27, at end insert—
("( ) This Part of this Act shall continue in force for the period of three years beginning with the date of the passing of this Act and shall then expire.").
The noble Lord said: In moving this amendment, I wish at the same time to speak to Amendments Nos. 95 and 96 but only to propose to the Committee how I suggest we should now deal with these three amendments.
Amendment No. 95: Clause 17, page 11, line 14, at end insert—
("( ) Part I of this Act shall not come into force unless and until the principles referred to in subsection (4) of section 2 have been approved by each House of Parliament.").
Amendment No. 96: Clause 17, page 11, line 14, at end insert—
("( ) Parts I and II of this Act shall continue in force for the period of three years beginning with the date of the passing of this Act and shall then expire.").
The three amendments are concerned with the different circumstances in which various parts of this Bill—Part II in the case of Amendment No. 90, Part I in the case of Amendment No. 95, and both Parts in the case of Amendment No. 96—should be either brought into force or lapsed. My feeling is that in the course of debates today, and in the previous two debates in Committee, we have got almost as much as we are going to get for the time being from the Government as to their views on these matters. Therefore, unless my noble friend on the Front Bench indicates that he has saved up some sweeties for me on one of these three amendments, I shall, subject to the views of other noble Lords who have their names to Amendments Nos. 90, 95 and 96, suggest that we should save time and not say any more on any of them. Perhaps my noble friend can first indicate whether he has anything to say that he has not already said. I beg to move.
Lord Bellwin: I am grateful to my noble friend for putting that the way he did. Certainly his last sentence was very apt. As we move on I am finding it harder and harder to say something that has not already been said. I fear that I cannot help my noble friend. We could certainly debate this question at length, but I am unable to help him in this matter.
Lord Northfield: Before the noble Lord withdraws the amendment, perhaps I may say that since Second Reading I have listened to many of these debates and to the various currents of opinion. I remain exactly of the opinion that I had at Second Reading; namely, that I cannot find gross constitutional impropriety in this Bill, as was alleged on so many sides. I cannot agree with most of the more extravagant criticisms of it. But I feel very strongly that the right limitation to put on this Bill is a limitation of time. I should like at some time to be able to deploy that case, even if we do not do it now. So if the noble Lord is going to withdraw the amendment, I think that we should reserve the position and say that there will come a time when we want to say the point at which we draw the line in this Bill. I can go along with a lot of the Government's thinking on this Bill but not so far as to writing this Bill permanently into law. I hope we can express that at some time, even if it is not tonight.
Lord Bellwin: I thought I actually touched on that a few moments ago because I accept, without question,

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that after a period of time it may be felt—and it is to be hoped that it will be—that circumstances have changed so that the form of the general limitation powers, or even the need for them, may be brought into question. But in that respect I see no difference between this and other legislation. To put a time limit on, without going into the details and arguments as to why is not at the moment helpful. If the Bill succeeds, then we could very well get to the situation that I think everyone would like to see. If we did not think it would succeed, we would not be introducing it. If the Bill did not succeed—that is in Part I—then we have to look into the general scheme in the way that we are doing at the present time. Then we are talking of some years hence because it would be some years before Part II was activated. So in a way there almost is a time factor built in. But, as I say, to debate more in detail we would have to go into detail.
Lord Northfield: The noble Lord is tempting and I do not want to deploy the general case; but the honest answer to him is that we have different objectives. My objective in putting a limitation on the Bill is not the same as that of the noble Lord. My objective is to force the Government to seek more radical solutions to the whole area of conflict which underlines this Bill.
Secondly, as I have said many times in this Chamber before, it is time the confrontation between Parliament and local government came to an end and we went into a period of peace. I happen to believe that putting a limit on this Bill would be a first stage in smoking out a better policy from the Government about these areas of conflict; and, secondly, to restoring some peace. That is why I should like the right opportunity to say these things. In a sense it may not be helpful to the noble Lord, Lord Bellwin; but it is a part of the objective that a number of us have, which may differ from his objective.
Lord Sandford: I take the silence of the other noble Lords who are associated with these three amendments to indicate that they agree with what I was proposing. Before withdrawing this amendment, I would hasten to say, in response to what has been said by the other two noble Lords, that certainly there is now a case for a very considerable amount of thought and reflection on the various proposals for time limits which have been mooted at various times and the various objections which the Government have raised to them. My noble friend on the Front Bench has confirmed that he has not anything further to say on any of these three amendments that he has not previously said, so do not let us waste time dealing with each of them.
I reserve the right—and this is what I think the noble Lord, Lord Northfield, was wanting to hear from me—to return to this matter at the next stage and look very carefully at what time limits, controls and conditions we ought to seek in the light of what has been said on that particular topic, both in this and the previous Part of the Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 12 agreed to.
Baroness Stedman Baroness Stedman moved Amendment No. 91:
After Clause 12, insert the following new Clause—
(" . Where, under any provision of Part 1 of this Act having effect by virtue of subsection (1) of section 10 above the Secretary of State is required to lay a report before Parliament, or, under subsection (2)(b) of section 11 above the Secretary of State is empowered to make an order, no single report or order (as the case may be) shall relate to authorities in more than one of the classes of authorities set out in subsection (5) of section 2 of this Act.").
The noble Baroness said: This is only a probing amendment. It is an attempt to try and make sure that an order cannot at the same time relate to authorities which fall within different categories. An extreme example would be the GLC or one of the metropolitan authorities and something like the Broadlands district council. It is unfair to cap one big authority and to bring in many others on its coat-tails in the same order. It also makes parliamentary scrutiny of that order that much more difficult. If any future debate on rate capping is to be properly structured, then the authorities in the different categories, as recognised in this Bill, must be debated separately. Their problems are different because their powers are different. They should not be just lumped together in one order and rushed through both Houses. At least some attempt at scrutiny ought to be possible. I beg to move.
Lord Bellwin: I recognise the problem that large composite orders could raise under a general scheme. To those who are doubtful about whether composite orders can be adequately discussed from the individual authority's point of view, I would cite the example of the rate support grant report. That covers all 414 English local authorities, and its subject matter is of fundamental importance. Yet, I can assure the Committee—and I know the noble Baroness needs no assurance on this because she has worked within the system—that the views of individual parts of the country come through loud and clear. Certainly Cambridge's never ceases to come through. No voices are strangled or gagged. The Government have to take note of individual views as well as the collective feeling of the House.
As I have already said, the Bill as drafted would permit separate orders for separate classes since the composite provision is discretionary. There may well be a case particularly under a general scheme for more than one order, for example if different authorities had taken different lengths of time to reach decisions about their rate limit proposals. If different classes raised different issues, that might also be an argument for separate orders. But even though there are a substan-tial number of different classes—six in fact—listed in Clause 2(5), together with single member classes such as the GLC, ILEA, the City of London, and the Council of the Isles of Scilly, the requirement for separate orders—which could be inflexible to operate—could still give rise to one or more orders covering a large number of authorities.
I believe that the Bill is actually sufficiently flexible to enable sensible and efficient coverage of the parliamentary procedures under a general scheme. The noble Baroness, perhaps on reflection or on reading what has been said—if she would care to pursue it further with me I should be only too pleased to do so—perhaps would find that the amendment does not offer any advantage.
Baroness Stedman: I am grateful to the noble Lord. As I said, it was only a probing amendment to try and find out the Government's view. We are still not happy about the fact that more than one authority can be debated and perhaps not have time for proper debate or for proper representations to be made. But at this point of time I will read again what the noble Lord has said and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Stedman Baroness Stedman moved Amendment No. 92:
After Clause 12, insert the following new Clause
(". Where the Secretary of State has—

(a) determined the grant related expenditure (as defined in section 56(8) of the Local Government Planning and Land Act 1980 (in this section referred to as the "1980 Act")) for an authority pursuant to section 57(1) of the 1980 Act,

(b) issued guidance to an authority pursuant to section 59(6)(cc) of the 1980 Act, and

(c) determined a maximum expenditure level for an authority pursuant to this Act,

then, notwithstanding the provisions of the 1980 Act, for the purposes of the determination of an authority's grant related expenditure, the issuing of guidance to an authority and the determination of an authority's maximum expenditure as aforesaid, the higher or highest of those figures shall be used for all three purposes.").

The noble Baroness said: This amendment is seeking, within the general scheme, to provide that the three possible targets, the GREA, the guidance, and the expenditure limits, whichever is the highest, should be the one that will have force. I think the Committee would like some explanation about the interaction that will apply between GREAs and guidance and the new expenditure limits. Until 1980, there was no centrally determined norm for expenditure for a local authority. I suppose one could argue that the needs assessment which was built into the old RSG was perhaps a norm for a level of services. But that needs element was only one part of a very complicated formula and was never published as a form of guidance or of norms. In 1980 the needs of the resources element were replaced by the block grant. For the first time in local government finance a clear norm was introduced in the form of GREA.
The 1982 Act introduced guidance that has been used every year since. Those involved in local government argue with me that the methodology for setting expenditure guidance has not only been different from the methodology for the GREA but that the authorities have been put in a very difficult position. On the one hand, authorities are told that GREA is the normal assessment of what they need, and yet they are told that they will suffer penalties if they spend below GREA but above their expenditure guidance.
Under these schemes, there is now going to be the third target of the expenditure limits. What we must ask the Minister is how will those expenditure limits be determined? To what will the Secretary of State have to have regard in setting those limits? Initially, we have been told that GREA is only one of several indications that will be used. Yet on 21st February, in the Standing Committee in another place, the Minister's right honourable friend said that GREA would be the central criteria and that it enabled a comparison to be made of the relative spending of authorities with different mixes of functions. Therefore, it would seem that GREA is to be used to set norms and firm

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spending limits and not just to determine the allocation of block grant.
This amendment is a probing one to find out a little more about what the methodology of the Government is or what they will use to set their expenditure limits. What will be the inter-relationships between the three separate and sometimes quite contradictory targets given to the local authorities? Under the general scheme, is the total of public expenditure limits to be higher than the total of GREA or higher than the total of targets. Indeed, will the total of spending limits for local authorities be cited in the Government's public expenditure plans? If the local authority's spending limit is too high, will the other local authorities be given even lower targets in order to meet the needs of those that have the higher spending targets? I beg to move.
Baroness Birk: The noble Baroness who moved this amendment, explained it so clearly that there is not really much to add. We from these Benches support the amendment for the reasons that the noble Baroness set out. A rate cap, according to what was said in another place by Sir George Young, would have a GREA, a target and an expenditure limit determined in accordance with this Bill. We feel also that there will be a great deal of confusion and inequity in this situation.
Lord Bellwin: Each of the separate figures has a different purpose. There could be good reasons for determining them in different ways. It would not be surprising, therefore, if all the numbers differed in the end. GRE is a yardstick for use in the distribution of block grant. It is an assessment of the cost to an authority of providing in its area services to a typical standard in the light of its statutory functions and its objectively recorded circumstances. It is these attributes of the GRE that we have argued also make it suitable as a yardstick of higher levels of spending in relation to local need. It is not the only one but it is a yardstick.
However, we have always accepted that GREs are not expenditure targets. When it became necessary to introduce individual targets, we did so on a totally different basis and confirmed the new arrangements in a new statute. As the 1982 Act makes clear, the purpose of targets is to achieve the reduction in the level of local authority expenditure which the Secretary of State thinks necessary having regard to general economic conditions. Since that is their purpose, it follows that targets must be based more on authorities' present spending levels. In that sense they are wholly different from GREs which are based on a notional assessment and are not affected by authorities' present level of spending.
The targets have been set by formula. The formulae have changed over the years, and have included a variety of constraints on authorities' year-on-year expenditure increases. Bigger increases have been implied by targets for low-spending authorities than for authorities which have exceeded GRE and target in previous years. Targets are the Secretary of State's judgement of the amounts he could reasonably ask each authority to aim at in order that the Government's overall expenditure plans should be met. But authorities have the ability to overspend the

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target figure albeit at the cost of grant holdback and therefore presumably higher rate bills.
Targets and GRE are two different sorts of figures therefore. GREs are determined for the purpose of a fair distribution of block grant. Targets are determined in an attempt to ensure that overall spending plans are achieved. Your Lordships may care to note that substituting the higher of target or GRE for GRE would have significant effects on the distribution of block grant. In particular it would significantly reduce the rates of authorities with targets most above their GREs by increasing their grant at the expense of other authorities. GREs and targets therefore perform quite different functions. So, too, do targets and the expenditure levels set under this Bill for rate limitation purposes.
I should perhaps go on to say that this is a probing amendment, and to give information which I believe the noble Baroness wants to have. First, unlike targets, expenditure levels feed straight into the rate limit, which means that, effectively, authorities cannot exceed them. So whereas targets can be exceeded, albeit at the cost of higher rates, expenditure levels cannot. Second, precisely because these levels cannot be exceeded, we have provided in the Bill for a redetermination procedure which allows the Secretary of State to take account of particular local circumstan0063es of individual authorities. In setting targets, by contrast, he cannot do that: he is statutorily obliged to calculate targets on principles applicable to all authorities. So an authority's target must be based on a general principle and can anyway be exceeded. Its expenditure level under the Bill can take account of its particular circumstances and cannot be exceeded. Those important differences may well result in different target and expenditure level figures for an authority, and with good reason.
The new clause does not take into account the essential differences between GREs, targets and expenditure levels. I hope that, with that explanation, the noble Baroness, when she has had time to consider it carefully, will follow it more easily.
Baroness Stedman: I was hoping to get a little more information about how the Government were proposing to define overspending; whether they were going to take it as above GREA, above target or over the selective or the general limit. It seems to me that we are still as confused—at least I am—and I would like to read what the noble Lord has said. At this moment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Skelmersdale: This might be an appropriate moment to resume the House and to tell your Lordships that we do not propose to return to the Committee stage of this Bill before 8.40 p.m. I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Gas (Amendment) (Northern Ireland) Order 1984
7.38 p.m.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Lyell): My Lords, I beg to move that the draft Gas (Northern Ireland) Order 1984 which was laid before your Lordships on 9th April be approved.
On 10th October last year, my right honourable friend the Northern Ireland Minister for Industry was able to announce an agreement with the Republic of Ireland for the supply of natural gas. The successful conclusion of these negotiations will help to ensure that a gas industry will continue in the Province for the foreseeable future. This decision has been welcomed by the Northern Ireland gas industry's existing domestic, commercial and industrial consumers. The availability of a natural gas supply will ensure that the Province can offer the same range of fuels as the rest of the United Kingdom while benefiting from the advantages in terms of price and service which competition brings. Similarly, it helps to ensure that Northern Ireland remains on equal terms with most of Western Europe as regards the range of energy supplies available to potential industrial investors.
It is against this background that the draft order has been brought before your Lordships. The proposed order is intended to enable gas undertakers compulsorily to acquire new rights over land. The order would also provide statutory authority for Government to assist financially in the reorganisation and development of the existing Northern Ireland gas industry. Your Lordships will see that Article 3 of the draft order seeks to strengthen the provisions of the Gas (Northern Ireland) Order 1977. Under Article 13 of that order gas undertakers have the right to lay underground pipes across land; and under Article 16 of the same order—that, of course, is the 1977 order—the undertakers may where necessary use powers of compulsory acquisition.
Article 3 of the legislation before your Lordships amends Article 16 of the 1977 order to include the powers to vest new rights over land. It is intended that this will make clear the scope of the earlier legislation in terms of the vesting of easements, such as rights of way. This article is primarily intended to provide the Northern Ireland Gas Company, which has been charged by the Government with the task of construc-ting the main pipeline, with essential statutory authority for the project.
Article 4 of the draft order is intended to place on a statutory basis financial assistance by Government to the Northern Ireland gas industry. At present, financial support to the industry is provided by the Department of Economic Development on a non-statutory basis. The proposed legislation would empower the department, subject to the approval of the Northern Ireland Department of Finance and Personnel, to provide financial help for the radical reorganisation and development required to allow the existing industry to take full advantage of the opportunities offered by the availability of natural gas. Neither article is likely to have additional financial or manpower implications.

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Finally, I should tell your Lordships that the order was circulated in draft to all interested parties before it was laid, and all the comments that were made were of a minor nature. With that, I beg to move.
Moved, That the draft order laid before the House on 9th April be approved.—(Lord Lyell.)
Lord Underhill: My Lords, in replying to the remarks of the noble Lord, Lord Lyell, I should like to welcome him to his new post. I am certain he will understand that my colleagues and I deeply regret the circumstances which have necessitated this change, and we wish his noble friend all the best for the future.
We welcome this order. In general, it enables the supply of natural gas from the Republic to be developed satisfactorily. We welcome that because at the moment Northern Ireland is the only part of the United Kingdom without a natural gas supply. Also, the fact that it is a co-operative effort with the Republic, with supplies coming from Kinsale, is a very encouraging development. Perhaps I should comment that in the discussion document on energy supplies which the Northern Ireland Office sent out we find that at the moment only 3 per cent. of the energy supplies in Northern Ireland are by gas; but I gather the department confidently expects that this can be raised to 11 per cent. once the natural gas pipeline and supplies are under way.
We are faced, are we not, with a situation in which the gas industry in Northern Ireland has a very bad image. Prices are high, and we have very small energy-supply undertakings. There are 13 of them, and they will require some co-ordination. Can the Minister say anything about prices? Looking at the Northern Ireland Economic Council's response to the Government discussion paper issued in October, I find:
"However, at the price levels which are anticipated, we believe that a strenuous marketing effort will be required to achieve the market penetration levels necessary to ensure the financial viability of the project".
Later on—this is all on page 4—the response says:
"To minimise uncertainty in existing gas undertakings it is desirable that the Government should urgently set out the complete natural gas distribution network".
I do not know whether the Minister is able to make any comments on that.
Can he explain further what Article 4 means? It says:
"The Department … may expend money for the purpose of maintaining and developing the gas industry in Northern Ireland and for promoting the reconstruction and reorganisation of that industry".
Unless I heard the Minister wrongly, he said that this has no financial implications. If it has no financial implications, how are grants to be made?
The only other comment I would make is that we are providing a statutory base for financial assistance which the Minister said has not previously been given on a statutory basis; the department has given it on a non-statutory basis. Again, this shows the problems that we face in all legislation and matters concerning Northern Ireland. If this is the first time that mandatory powers have been given for the purpose of assisting the gas industry financially—and I am not saying that we should not give that assistance—it

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seems wrong that this should be done by Article 4 of an order which we have just got to accept and that there are no conditions or other details laid down about it. Can the Minister say that all these matters will be dealt with satisfactorily and co-ordinated by the newly-formed Northern Ireland Gas Company, to which he referred? Can he give some indication how that is progressing? Otherwise, we welcome the order.
Lord Hampton: My Lords, I, too, welcome the noble Lord, Lord Lyell, in his new appointment and wish him success at a challenging time in Irish affairs. I also send good wishes to his noble friend Lord Mansfield.
There seems no reason whatever for not welcoming this order, which should help the supply of natural gas to Northern Ireland in a demonstration of co-operation with the Republic. The construction of the pipeline will give much-needed work in both the north and the south. It seems that landowners have largely been co-operative about compulsory routing over their land. Can the Minister say whether compensation has been disputed in many cases, and what procedure is available for resolving disagree-ment?
7.47 p.m.
Lord Lyell: My Lords, first of all I should like to thank both noble Lords who have spoken for their very kind words, not just to myself but, above all, to my noble friend whose place I have taken this evening and, indeed, in the Northern Ireland Office. Certainly I shall see that my noble friend receives a full report of tonight's proceedings. I am sure that he will be very grateful for the kind words that have been spoken by the two noble Lords. Indeed, I should like to say how grateful we all are.
The noble Lord, Lord Underhill, gave the order a very kind welcome. The first point he raised was that of pricing. If I try to give the noble Lord a brief explanation of how the Government see the pricing of natural gas for consumers in Northern Ireland, he may perhaps be satisfied with my explanation. I am able to tell him that we hope and understand that natural gas tariffs are likely to be up to 25 per cent. below current average town gas prices in Northern Ireland.
The noble Lord was also curious to know about the market for gas. We understand that a six-fold increase in gas sales is being sought. As the noble Lord has pointed out, the percentage of gas which is used for energy purposes in Northern Ireland at the moment is quite small. We hope that the energy share of gas in Northern Ireland will increase from the figure of 3 per cent., which the noble Lord mentioned, to 11 per cent. by the turn of the century, which is only 16 years ahead—a mere drop in the lifetime of many of your Lordships. But this figure of 11 per cent. should be seen in comparison with the current level of 41 per cent. in the United Kingdom as a whole. We expect that the energy market in Northern Ireland will increase by approximately l½ per cent. per annum during the period of the contract, which is 22 years; so it is quite a long while. As a result of this, we do not foresee competing fuels suffering a fall in demand, let alone an absolute fall in demand. But we can see that potential growth in each market competing with gas may be reduced.

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The noble Lord, Lord Underhill, asked about the financial implications of the order in Article 4. I am able to tell the noble Lord and your Lordships that the order provides simply that existing deficit support be given statutory authority. Indeed, I stressed—and I would stress it again to the noble Lord and to your Lordships—that no additional financial support is provided by Article 4. It is the existing deficit finance that has been given statutory authority. I hope that those remarks answer the queries which were raised by the noble Lord, Lord Underhill.
I am very grateful for the welcome which was given to the order and for the very kind words which were spoken by the noble Lord, Lord Hampton. Indeed I shall ensure that his kind words are passed on to my noble friend Lord Mansfield. The noble Lord asked about compensation. I am able to tell him that where land is compulsorily acquired, which it can be under Article 16 of what I would call the master order, and, also, if the noble Lord were to consult Article 13 of the 1977 order, he would see that there is existing statutory provision for payment of compensation to any persons from whom interests in lands are compulsorily acquired.
Of course, in statutory terms the rights of persons whose property is affected by vesting orders are translated into financial claims on the compensation fund. But arrangements are made to provide what we call "accommodation works" either in lieu or in part settlement of claims. In the case of the natural gas project, I am able to tell your Lordships that arrange-ments are being made for the restoration of farmland, in conjunction with the Commissioner of Valuation. I hope I have given your Lordships a brief outline of what we have in mind in relation to this order, and that I have been able to satisfy your Lordships.
On Question, Motion agreed to.

Straw and Stubble Burning (Control and Licensing) Bill [H.L.]
(formerly Straw and Stubble Burning Prohibition Bill [H.L.])
7.53 p.m.
Read a third time.
Lord Alport: My Lords, I beg to move that this Bill do now pass. In doing so, I am reminded that on Second Reading I said that I was sure that your Lordships would knock the Bill into shape. Your Lordships have knocked it into a rather different shape from the one in which it started. Although it is more limited, I think that it is a useful Bill and that it is right for it to go now to the other place and be submitted to the tender mercies there. I merely want to take the occasion of proposing that the Bill do now pass, to thank those of your Lordships who took part in the early stages of the Bill and who helped very much to improve it. I beg to move.
Moved, That the Bill do now pass.—(Lord Alport.)
On Question, Bill passed, and sent to the Commons.
Lord Denham: My Lords, I beg to move that the House do now adjourn during pleasure until 8.40 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.54 until 8.40 p.m.]

Rates Bill
House again in Committee.
Clause 13 [Duty to consult industrial and commercial ratepayers]:
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 93:
Page 9 line 32, at end insert (", or any other organisation or person or I ody of persons with whom consultation appears to it to be desirable,").
The noble Lord said: We come to what is considered by many, certainly by me, to be a very important clause and one to which I hope we shall do justice, certainly in the eyes of those outside the Committee who, like me, consider that this amendment is very constructive, as indeed is Clause 13.
Although later we shall deal precisely with the obligations and sanctions of an authority, Clause 13 lays a duty on authorities to:
"consult persons or bodies appearing to it to be representative of industrial and commercial ratepayers".
Certainly we on this side of the Committee believe that this is a very useful additional device in terms of consultation. However, we are still puzzled as to why industrial and commercial ratepayers are especially singled out for this treatment.
Throughout these debates and others reference has been made to those who pay rates. I believe that earlier in today's debates reference was made to those who vote and who do not pay rates. There is a popular myth that rates which are paid by businesses are paid by the businessmen or the businesswomen. Of course, that is not strictly the case. Almost invariably the rates borne by a business are paid by the goods and services of the business. If a factory's rates or a shop's rates increase, because a business needs to be competitive the cost of its goods and services increases. We shall come to another argument as to the detrimental effect upon the ability of a business to remain competitive if it has to pass on rates. However, I certainly hold the view that the need to consult with businessmen, and industrial and commercial users is a very satisfactory way of going about things.
Many years ago I was leader of the Enfield Council. Today I received a letter from the town clerk of Enfield (which I note is also in the hands of other members of this Committee, including the noble Baroness, Lady Gardner of Parkes; and I shall certainly ensure that the noble Lord, Lord Bellwin, receives a copy because he is always assiduous in sending me copies of letters that he receives from Enfield), who points out that for many years it has been good practice in an authority such as Enfield to consult with the local business community. It is, of course, interesting that the body with which Enfield Council consults is the Enfield District Manufacturers' Association, which is representative of the industrialists in the borough. That is absolutely true, but it is a very narrow interpretation.
The biggest ratepayer in most communities is the local co-operative society. From the size of its business and its spread of operations in Enfield, the co-operative society is one of the biggest ratepayers in Enfield. Globally the co-operative movement pays about £50 million, and the CWS, the banks and insurance companies pay about £20 million. This leads us into an interesting argument, which will arise from the guidance which the Minister will give us on this, as to how precisely one goes about consulting. We shall then find ourselves in some kind of hornets' nest.
Enfield Council also tells me, quite rightly, that the leader of the council and other senior members have periodic meetings with the Federation of Enfield Residents' and Ratepayers' Associations. In my view, that is absolutely the correct procedure.
The amendment which I seek to move says:
"or any other organisation or person or body of persons with whom consultation appears to it to be desirable".
We all have our separate lists of those to include and perhaps those to exclude. I am quite certain that what the Government have said is that in this rate situation there is a body of people—the businessmen or the industrialists—who feel especially hard done by. So we say to councils, "You must consult with these people". In a moment we shall come to the question of meaningful consultation and whether or not local councils take as much notice of their consultation process as do the Government. It is a moot point as to how much notice the Government take and how much notice a local council takes. Certainly every local council reaches a predetermination; it takes advice and guidance and forms a view. The local business community will include not only those who are members of the district manufacturers' association or the chamber of commerce, but other business interests as well. There is a very good reason why some people may not be members of a corporate body. But you invite them in and you must have something to tell them. You must say, "We are thinking of moving towards this or that situation". Then you open up the discussion and ask them what they think.
Most ratepayers will start with the premise that they would like to pay less. Then there will be an argument. Many of them will say that they do not think the council should spend its money on this or that service; there will be members present who will have their own views. The council will have to listen to them very carefully and decide an order of priority. At the end of the day the Government will decide, but the council will come to a view on what the rate shall be. It is quite certain that the local business community—that is my global phrase which includes industrialists, commercial ratepayers and those who are members of and those who are not members of a body—will be disappointed in one way or another. They may be satisfied that the council has done all it wants.
You then have the situation, as applies in Enfield, where meaningful discussions take place with the Federation of Residents' and Ratepayers' Associations. I live in that London borough; I attend my local ratepayers' association meetings and its annual social evening, which is a very well-attended event. The noble Baroness, Lady Gardner, and I were there last year, and they are genuine and sincere people. At the end of the day the council has the

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problem of trying to reconcile the differences of opinion. We on this side of the Committee believe that Clause 13(1) is a good clause. It is right and proper that a duty be laid upon a council to consult with industrial and commercial ratepayers. We are simply saying that other people have as great an interest in the outcome of the rate-making process as the industrial and commercial ratepayers; certainly the domestic ratepayers have as much interest in the rates to be paid.
Therefore, one looks for a body which will represent them. Certainly the employees in an authority have a great interest. Therefore, I assume that the Government will look sympathetically at amendments which lay a duty upon the council, before it strikes a rate, to have had meaningful discussions with the employees of an authority, otherwise what is the point of a so-called partnership? It is on that basis that we on this side of the Committee consider that this is a sensible clause. It extends the process of consultation. We should like to see the Government look sympathetically at how this can be extended.
The Minister should also spend some time— and the night is young—in going through the procedure of whether he considers that consultation may be a charade or a facade; or perhaps after the consultation process the Government are prepared to listen to the pleas of the council that it has been badly done by in terms of rate support grant and other Government action. The Minister needs to spell out the position, since it appears as though people who will be badly affected but who are articulate will get something whereas at the end of the day it will turn out to be very little. Many a council will say to the Government, "it is all very well listening to the views of people who are affected, but that will mean everybody".
I repeat the basis on which I earlier made the point, which is that most business rate payments in one way or another are paid by the consumer of the goods and services, or the shareholders, or the employees. In other words, there is not a person who is called the businessman, out of whose pocket is paid the increase in the rates. There are lots of other bodies comparably affected. Therefore I hope that the Minister will be able to say something helpful and accept this amendment in the spirit in which it has been moved. I beg to move.
8.52 p.m.
Baroness Gardner of Parkes: My noble friend Lady Macleod has asked me to speak for her on this amendment, on which I also speak for myself. As the noble Lord, Lord Graham, said, we have received a copy of the letter from Enfield. It is strange how this authority keeps coming back into our debates. There are a few points in the letter that the noble Lord has overlooked. First, it makes clear that consultation is already wider than will be demanded by this Bill. He will find that that is so in any well-managed local authority. There is already wide consultation.
However, in some local authorities business interests have been overlooked because in particular the elected councillors are more anxious about being re-elected and are therefore more concerned with the person who has the actual vote. That is where the industrial and commercial ratepayers have not been

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receiving adequate consideration in terms of the rate. But I think that the noble Lord's view that a business is not a ratepayer is simplistic. I have had letters from various businesses in Enfield. They have made clear that although an individual person might not be represented as paying the business rate, the whole business and the jobs of those people employed in it are at stake if the rate goes up to such an extent that the business is unable to continue. It is an important factor; only so much can be passed on to the consumer. There comes a point when the consumer stops buying, as, indeed, the noble Lord said. The point is reached where the goods are no longer competitive. From that point on the business is in that unhappy spiral which can take it down and into bankruptcy.
Although there were a great many valid points with which I agreed in the noble Lord's speech, I think that this amendment is unnecessary. Every local authority can now consult anyone it thinks desirable to consult. I support the wording in the clause which gives this particular commitment.
Lord Mottistone: What disappointed me about the speech of the noble Lord, Lord Graham, was that at both the beginning and the end he sought to create the impression that the phrase in the Bill which refers to "industrial and commercial ratepayers" was referring to individual people.
Lord Graham of Edmonton: No.
Lord Mottistone: That is how it came over. It seemed to me that that was the gloss the noble Lord was putting on it, because he then talked about it not affecting businessmen and business women. The fact is that it is not talking about people; it is talking about businesses, which have to struggle to remain in existence. The noble Lord took his argument on to the fact that they will pass their extra costs on to the customer. They will pass on their costs to the customer only if they are inefficient and they cannot make a success of their business.
The rates are a greater burden than taxes on companies as a whole throughout the country, and this is a problem. It is right that this Bill should identify industrial and commercial ratepayers as a special entity, because they are a special entity for rating purposes. It is not right to diffuse the whole of the subsection in the way that this amendment seeks to do, because as my noble friend Lady Gardner has said, there is ample opportunity for discussing with other people. In any case, by their vote the domestic ratepayers can have a hand in who is in power on their particular council, whereas business companies cannot. They deserve special identification. I believe that this is a dangerous amendment which would diffuse what is a special purpose to deal with a special case.
In his persuasive way the noble Lord—and I noticed that the chaps did not switch on the timing device, and so he did not know how long he was going on, which was a long time—tried to cast on this situation a different view from the simple picture that this Bill creates. I hope that my noble friend will have a strong

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argument and help to persuade the noble Lord, Lord Graham, that his amendment would be better withdrawn.
The Earl of Avon: I am not sure that my arguments are all that strong, but I hope, anyway, that I can put the noble Lord's mind at rest, which is what I shall seek to do. In including this provision in the Bill the Government were conscious of the widespread concern felt by business about the lack of opportunity to influence high levels of rates, even though non-domestic ratepayers account for nearly 60 per cent. of local authorities' rate income. We looked at the possibility of reintroducing the business vote, but that
Instead, the provisions in Clause 13 of the Bill will give business ratepayers the opportunity to be heard and to make their views known. We intend to provide in the code of guidance and regulations the necessary framework to ensure that this duly operates both flexibly and effectively. I assure the noble Lord, Lord Graham, that it is intended not to be a charade, but a two-way process. I hope that, businesses will increase their understanding of local authorities at the same time as they make their views known.
I come to the specific amendment. It would not, as I see it, in practice extend to anyone the duty to consult, since it leaves local authorities with full discretion to decide which, if any, other organisations they think it will be desirable to consult. The local authorities are already free to consult whoever they want about whatever they want. We are not in any way restricting this fundamental freedom.
The purpose of the clause is to give industrial and commercial ratepayers, who provide nearly half of local authorities' rate income, an opportunity to influence the level of those rates. Domestic ratepayers are already able to influence their council's policies and programmes through the ballot box, and for this reason we have not extended the duty to consult to them or their representative. However, I accept that there may be some non-domestic ratepayers who could not be defined as industrial or commercial (and I give such examples as universities or hospitals) who may wish to make known their views.
Lord Graham of Edmonton: Nationalised industries.
The Earl of Avon: I notice that the noble Lord says, nationalised industries. I know that he has an amendment later about electricity boards.
We intend to suggest in the code of guidance that local authorities may wish to consider whether they should also consult representatives of other non-domestic ratepayers who are not industrial or commercial. The amendment before us would carry no more statutory weight than that since it is, I expect deliberately, very vague. I hope that the noble Lord will agree on reflection that there is no need for his amendment. I assure the Committee that there is nothing in Clause 13 that will restrict local authorities from consulting as widely as they wish.
Lord Lloyd of Kilgerran: The Minister said very candidly when he opened his speech that his argument, after all, would not be very strong. As I listened to him as carefully as I could I began to get

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further assurances from his speech that his argument certainly was weaker and weaker as it went on. I understand that the noble Baroness, Lady Gardner of Parkes, in her objections to the amendment, which I feel could be useful, relied on the fact that so many local authorities consult very widely. But in my limited experience, I have come across many local authorities who do not bother to consult widely. They see it as a matter of principle not to do so. Therefore I counter her argument by saying that there are a large number of authorities who will consult widely but there are also a lot of authorities which do not consult widely enough.
The noble Lord the Minister referred to the fact that there might be universities, colleges or polytechnics —so important these days—in a particular local authority which should be consulted. There is no harm therefore in putting an amendment like this into the Bill suggesting that in their discretion local authorities should consult as widely as possible. I appreciate that there may be some little administrative difficulties, but it is in the discretion of the local authority to consult widely. It does not limit the present powers that local authorities have, but it puts into a Bill the desirability of wide discretion, as is the main theme of the amendment.
Lord Graham of Edmonton: I consider that this has been a useful short debate. May I repeat that we on this side of the House fully support the intention of Clause 13(1) that the industrial and commercial ratepayers be consulted, I remind the Committee that the noble Baroness, Lady Gardner of Parkes, has said that our amendment is unnecessary. In her experience, Clause 13(1) is unnecessary because there is consultation taking place in Enfield, as I told the House and the noble Baroness confirms, with the local industrial and commercial community, with the exception of the local co-operative society. In the Enfield area and, I believe, in many others, the local co-operative society is the biggest single ratepayer. I repeat the figure—more than £50 million is paid by co-operative societies and £20 million by the national federations.
I noted that the Minister who replied said that it would be his intention to point out in the guidance that it was open to the local authority whether to consult others and widen the consultation. It would be a scandal if some credence is given to consultation in the future and then it is left to the discretion of local authorities so that they can pick and choose, particularly if large ratepayers are excluded.
Baroness Gardner of Parkes: I should like to ask the noble Lord, Lord Graham of Edmonton, whether he considers that the Co-op would be covered as a commercial ratepayer. I would have thought that it would be covered by the present wording in Clause 13. It seems that that is his major concern about the Co-op. I would also ask him to comment on the point made previously in the Minister's reply about the phrase:
"consultation with whom it appears to be desirable".
Surely those who are not consulting now could consider anyone they are not consulting is not desirable to consult with.
Lord Graham of Edmonton: I mentioned that I had the feeling that councils would be looking for shortcuts in consultation. For instance, if there is a local chamber of trade, ipso facto, they will consult with the local chamber of trade. In Enfield, they will consult, as they do now, with the manufacturers' association. If there is a large business which is neither a member of the chamber of trade or of the manufacturers' association, I would certainly rest happily on the understanding which was written into guidance and circulars that, in effect, if there are bodies which for their own good reasons are not members of those central consulting bodies, they would be in the process of consultation.
If the interpretation which is given by the noble Baroness, Lady Gardner of Parkes, that one of the largest industrial and commercial ratepayers in the London Borough of Enfield would be involved is correct, then I rest happily. But we are trying to get understandings from the Minister, and the Minister has said it would be left open to any council to decide whom it should consult. Then he gave a little credence to my point, which is that this will lay no obligation other than urging authorities to consult with industrial and commercial ratepayers, if they decide on the manner in which they do it—if it is narrow, if there is any malice involved—it is entirely up to them. So far as I am concerned, the points that have been made have certainly been interesting.
The Minister said that non-domestic ratepayers paid 60 per cent. of the rates. He was very careful not to say that non-domestic equalled business and industrial; because, as the Minister knows, when one looks at 100 per cent. of the rate income other than by central government, there are more than the two categories of domestic and business—there are others too. So we are in the interesting area that a very articulate group of people—businessmen, whom we all support throughout the House—have been able to make the case and have it written into the Bill that they, of all groups, are entitled to special treatment. All I am saying is that the Federation of Ratepayers in many areas would also consider that it has an equally valid claim to at least appear to be consulted by the local council.
I repeat the point that the council which goes into consultation is going to get some very interesting arguments, because some groups will be in favour of continuing expenditure on one head in the budget, and others will be interested in others. The council will have to make those difficult decisions.
I meant to indicate at the commencement of my speech that I have always had a connection with the co-operative movement outside the House, in the other House and which I continue to have here. The co-operative movement—the Co-operative Union—welcomes this clause of the Bill. All I am seeking to do is to say that what the House believes is right for businessmen ought also to be extended to others. But I am satisfied that we have had a reasonable debate. I beg leave to withdraw the amendment, but reserve the right to come back at some later stage.
Amendment, by leave, withdrawn.
9.8 p.m.
Lord Underhill Lord Underhill moved Amendment No. 94:
Page 10, line 2 after ("State") insert (", in consultation with, and after taking into account any representations received from such associations of local authorities as appeear to him to be concerned and any local authority with which consultation appears to him to be desirable,")
The noble Lord said: The previous debate has been extremely helpful and noble Lords will note that the Minister referred to the guidance to be given. Noble Lords should note the wording of subsection (3) which says:
"an authority shall have regard to any guidance issued by the Secretary of State concerning … persons or bodies to be regarded … as representative of"—
industry and commerce—
"and … the timing and manner of consultation under this section".
The fact that the Secretary of State considers it necessary that guidance shall be given would suggest that there is envisaged that, unless proper guidance is given, there could be some difficulties in carrying out this provision, of which we accept the principle, as my noble friend Lord Graham of Edmonton said.
The Minister said in reply that the guidance must be such as to allow flexibility. I would suggest that it must also be guidance that makes a proposal both realistic and practical. If the Minister is to give this guidance to authorities, who shall be regarded as representative of industry and commerce? If he is to give guidance as to the manner and timing of these consultations to local authorities, surely he ought to have the best possible advice. What better advice could there be than that of the associations representing local authorities? The three associations will surely be consulted by the Minister and will give him advice so that he can give guidance on this important matter. No one is taking any power away from the Minister. In the amendment we are endeavouring to give the Minister some additional assistance.
There are places in the Bill where it is written in that there shall be consultation with the associations of local authorities. There are other places in the Bill where we have tried to put this in and the Minister has resisted it. This is one of those occasions where we are not arguing about the principle of this clause. This is one of those occasions where it is highly desirable that the Minister should consult the associations of local authorities so that he can give the best possible guidance; guidance which will be of a practical nature, for unless it is practical it will be useless to local authorities.
There is a further amendment to follow, Amendment No. 94ZA. All I would say is that the proposal I am making would produce more precise guidance whereas in the amendment it would be rather imprecise. We think the guidance ought to be such that local authorities will find it extremely helpful in carrying it out. The clause makes it quite clear that they must have regard to the guidance. Therefore it is vital that that guidance should be fit and proper.
The Earl of Avon: As the noble Lord, Lord Underhill, carefully explained, this amendment relates to the code of practice and regulations that we propose to issue on the new duty to consult representatives of
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business ratepayers before fixing rates and precepts. First, I should like to assure the Committee that the Government intend to hold full consultations with the local authority associations, as well as business and other interested organisations, about the contents of both the code of guidance and the regulations. Indeed that process has already begun. We have asked a wide range of more than 100 organisations—including the local authority associations—for their preliminary views, and my colleagues and officials have held useful and productive meetings with the local authority associations and business organisations on many of the detailed aspects of this provision. So we already have a good idea of what both sides would like to see in the code of guidance and regulations, and we shall give them opportunity to comment on drafts of each which we expect to be able to issue for consideration very shortly, perhaps even by Report stage.
The amendment would place a duty on my right honourable friend to do something when he already intends to do very much more. The amendment singles out the local authority associations. But the clause which we are debating involves two parties—local authorities and business representatives. It would seem somewhat odd, in those circumstances, that the Secretary of State should have a duty to consult the local authority associations but not representatives of business organisations.
The amendment also requires my right honourable friend to take into account "any representations received". My right honourable friend would certainly want to consider any representations made by local authority associations, but the wording of the amendment gives the implication that he might be bound to give effect to any representations he receives from the associations. We have debated this before, and I am sure that the Committee will agree with me that this is going a little too far. As I have said, we have already consulted widely, and shall consult again when drafts have been prepared. I do not believe that any statutory consultation would improve on that.
There is a small technical point, which is that if we had a statutory process we could not begin that until the Bill is law and earlier consultations will not, in fact, count. So this amendment could actually mean a delay in producing the guidance for consultations this autumn on the 1985–86 rates and precepts. We hope to have this ready very soon after enactment, and I do not think the delay while we carry out statutory consultations will benefit the local authorities. They need this guidance well before the autumn so that they may start setting up the necessary consultation arrangements. I hope that I have said enough to allay any fears that the noble Lord, Lord Underhill, may have, and to make him feel that it is not really necessary for him to press the amendment.
Lord Mottistone: May I underline the point that my noble friend has made about the fact that it seems rather unfair, in view of the nature of Clause 13(1), that business organisations should not be consulted, too? If there are to be preliminary consultations, they are rather one-sided. All the other points made by my noble friend put my mind at rest, and I hope they have done the same for the noble Lord, too.
Lord Underhill: I am grateful to the Minister for his response. It will be understood that in these matters I am advised by one of the associations, the Association of Metropolitan Authorities. I am certain that the information that the noble Earl has given will be appreciated. The reason why the amendment refers only to the associations is not for them to be consulted as vested interests, as bodies of ratepayers, but as representatives of the authorities who have got to carry out these consultations. Therefore, it is vital that they should help the Minister in drawing up the guidance to be given. That is the important point.
Although I am going to ask leave to withdraw this amendment, the Minister implied that the wording of the amendment was such that the Secretary of State would be bound to put into effect any views made to him—and that is not my interpretation—after taking them into account. It merely means that he will have to treat the representations very seriously. I hope that the consultations which, as he has said, are already starting, or which are to be carried out, will be real consultations; because we have evidence on such other matters as the streamlining of the cities that, frankly, all the consultations under the sun do not seem to be making one iota of difference to the determination of the Government to carry out what they intend to do. These consultations must be such as to help to ensure that the consultations with industry and commerce are suitably carried out. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Pennock Lord Pennock moved Amendment No. 94ZA:
Page 10, line 6, at end insert—
("( ) Notwithstanding subsection (3)(a) above, where any person or body has been nominated by industrial and commercial ratepayers as their representative for the purposes of this section and where such a person or body represents a substantial proportion of such ratepayers in terms of rates payable, an authority shall not be regarded as having performed its duty under subsection (1) above unless its consultations include consultations with such person or body.").
The noble Lord said: As a comparative newcomer to your Lordships' House I have listened with rapt attention over the last four hours or so, and with an interest which, if I am honest, has waxed and waned, but which, I am happy to say has waxed rather than waned, to the constitutionally weighty matters that have been discussed and often the fine intellectual distortions and interpretations which have occurred between them. We have heard much of the infringement of democratic responsibility between central and local government; we have heard much of the accountability of the respective powers; we have heard much of the need for the protection of the powers and responsibilities of them; and, having listened for four hours, I come to the regretful conclusion that, whatever the outcome, industry, business and commerce is always caught in the crossfire.
The crossfire is that, whatever conclusions you come to, it is business and commerce which largely have to pay for them. Sometimes I have thought that not only are we caught in the crossfire but we are gagged and bound in such a way that the only way in which we can express our views is to roll our eyes somewhat before
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the demolition begins. Speaking, therefore, with some seriousness, I recognise that the Government are aware of this problem, that business and commerce have not been able to express themselves on these weighty matters, and in this Bill, I think, they have come a long way to recognise that business and commerce need to be consulted.
I would agree with the noble Lord, Lord Graham, that businessmen do not pay for these things out of their own pockets; but he and I know full well that if we have to pay, and have to pay in such an exorbitant way that we are not able to pass on the costs to our customers, we go out of business. And if we go out of business it is not just the businessmen but the employees, the shareholders and everyone concerned who are affected. To us, this is a matter of considerable importance. It is my contention that, although the Bill comes a long way, farther than ever before, in seeking to respond to, and be aware of, the business and industrial interests, it still, nevertheless, states that the local authority should consult with those who appear to it, the local authority, to be suitable representatives of business and commerce.
This seems to me quite inimical to our democratic concepts, and perhaps, speaking more pragmatically, much worse in that you will not get the better people; you will not get a continuity of debate which leads to a sense of accountability; you will not get an effective dialogue between the representatives of business, commerce and local government if the decision as to who is to be consulted is taken by local government. Bear in mind what the noble Lord, Lord Lloyd of Kilgerran, said, that many local authorities do not bother to discuss with business anyway. So, the purpose of my amendment is that surely business and commerce should have its own responsibility to decide for itself who is going to represent it in its discussions with local government.
The noble Lord the Minister has said that there will be a code of guidance, a code of practice, which will probably deal with these matters. I have met in my industrial career many codes of guidance, and I regret that often they are rather like the Beatitudes, the Sermon on the Mount—everyone agrees with them but few people put them into practice. The purpose of my amendment is to seek to stiffen this and to give industry, commerce and business a little more responsibility in deciding for itself who shall represent it when it comes to discussions with local government.
I am by education a stunted historian, and I recall that the clarion cry of no taxation without representation has rung through our nation throughout the centuries. I seem to recall that in another place John Hampden said it in such a way that the House was shut down for 11 years. I recall that at the time of the American colonies also pleading against taxation without representation Edmund Burke, the then representative for Bristol, said:
"Great empires and little minds go ill together".
I do not represent great empires; I do not believe that Government today has a little mind, but I would plead that business and commerce on this issue should be able to decide for themselves who shall represent their case, who shall defend their interests in a matter which is, to them, of supreme importance.
9.23 p.m.
The Earl of Avon: That was a very moving speech from my noble friend Lord Pennock. I only wish that, instead of 11 days at Easter, we could occasionally have 11 years. I share the desire of my noble friend Lord Pennock and of the noble Lord, Lord Graham of Edmonton, to ensure that this clause operates effectively. That is certainly the wish of the Government and we thought hard about it. Perhaps I could just tell your Lordships something behind our thoughts. We concluded that the structure set out in Clause 13 was the most effective means of achieving our aim. First, it imposes a general duty on local authorities to consult; second, it requires them to have regard to guidance issued by the Secretary of State as to who should be consulted and how that consultation shall be effective; third, it confers powers on the Secretary of State to prescribe in regulations information to be supplied to consultees. We decided on this three-tier structure precisely because we believe that the provisions must be flexible enough to take account of local circumstances and to enable local authorities and businessmen to build on existing best practice.
We did not feel it would be possible in primary legislation to specify the pattern of consultation that would be appropriate in all circumstances. Instead we will be covering this in a code of practice to which local authorities must have regard. We shall be recommending that where organisations such as the CBI and Chambers of Commerce represent business ratepayers in an area they should be brought into the consultation process. Certainly we would expect to ask authorities to consult any person or body which represents either a substantial number of business ratepayers or which is contributing a substantial proportion of their rate income. So the code of guidance which my right honourable friend will be issuing will deal with the question of who should be consulted, and it will be able to do so more fully and more flexibly than any specific provision in the legislation such as that which has been proposed.
I understand my noble friend's concern that a local authority might try to evade its duty by consulting only representatives of a particular group of business ratepayers or by ignoring another important group. We have, sadly, become aware that we can no longer expect all local authorities to act, as we would believe, sensibly; but they are all required to act reasonably. A local authority that ignored both the code of practice to which it must have regard and the claims to be consulted of a body representing a substantial proportion of industrial and commercial ratepayers in terms of rates payable would surely not be acting reasonably and they would lay themselves open to challenge in the courts. So I hope my noble friend will feel that it is not necessary to press his amendment. Indeed, if I may say so, his wording is such that I would find it hard to see how it would be more easily enforceable under his amendment than under the existing proposals.
But I must also suggest that it raises a difficulty. This is because it ties a local authority to consulting one group of business ratepayers, measured by the size of rates paid, where these exist as a nominated body. This we would certainly want the local authorities to do; but we should then mention others that would be
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equally worthy of consultation. It is because of the diversity of such bodies across the country that we felt it right to cover this aspect of the process in a code of practice and not in the primary legislation. I hope that I have to some extent persuaded my noble friend by these arguments. I know he has poured cold water upon the code of practice, but I hope he will understand the difficulties.
Baroness Seear: Before the noble Lord sits down, may I ask him what meaning he attaches to the phrase "must have regard"? Is it not perfectly clear that this in fact has no force? What is the meaning of the word "must"?
The Earl of Avon: I think I must rely on what it says, that it would have force, because it leaves them open to a challenge in the courts.
Viscount Ridley: Before my noble friend Lord Pennock replies to the unanswerable arguments of my noble friend Lord Avon, would he not agree that half the trouble is that not enough people from business enter local government? I have said this before and I have personal experience of people saying that they are far too busy to stand for election. They leave the way open for the sort of extremists which have caused this Bill to be brought before us.
Lord Gisborough: I have some sympathy with the amendment. I am not myself convinced of this recourse to the courts because if business and commerce do not feel, even if consulted, that they are being adequately taken into account by the authority, I cannot see that there is any way. through the courts, they could ever prove that the authority had or had not adequately consulted them.
Baroness Fisher of Rednal: I would not disagree violently with what the noble Lord. Lord Pennock. has said, but I hope it would be two-way traffic and that the consultation would be from industry and commerce if they were thinking seriously of moving out of an area. I speak of the West Midlands, where very many large organisations have moved out because they are multinational and so on, and this makes a tremendous difference to the amount of rates which come into any particular authority. So if they want consultation on the actual rate fixing it is important that they play their part. If they are going to say. "We are going to pull out of your area", that could affect the rate demand that they are thinking of levying. There needs to be that balance, I think.
Lord Mottistone: If I may speak before my noble friend replies, I should like to make a special point. What the noble Baroness. Lady Fisher, has just said is very important and needs to be taken note of. but it is not really part of the Bill as it stands. What disappoints me is that Clause 13 is entitled. "Duty to consult industrial and commercial ratepayers". In replying to Amendment No. 93. my noble friend said, in effect, that the guidelines would require a local authority to consult pretty well anybody and not to make a speciality of the commercial and business ratepayers, which is the point of the Government's clause. I hope that this broad brush arrangement, to try to get the noble

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Lord, Lord Graham, to stop fighting a battle for the Co-op in Enfield, will not reflect itself throughout the country quite as it came across to me.
Lord Graham of Edmonton: May I ask the Minister to take on board—and, by the way, there are double stamps on Tuesday in Enfield—that I should like him to pay particular attention to the point made by the Leader on the Liberal Benches; that is, the action that is open to a dissatisfied commercial ratepayer who feels that his representations have not been fully taken into account. At the end of the day, as I said more than once on Amendment No. 93, a council must be left to determine its own priorities, having regard to the representations that have been made. If what the Minister is saying is that anyone who is consulted and feels that the outcome is not to his liking, is then entitled, on the basis of that and that alone, to take the council to court, I can imagine that many councils will run away from consultation if they can possibly do so. We may have misunderstood the position, or the Minister may have explained it in a way that was difficult to understand, but I should be glad if he could speak more to that point.
The Earl of Avon: If I try to clarify the position, I shall probably get people more mixed up than I did before. To start with, I gather that the Co-op is included, anyway. Clause 13 is concerned with a duty to consult industrial and commercial ratepayers, and I said that the purpose of the clause is to give industrial and commercial ratepayers an opportunity to influence the level of those rates. I also mentioned that we might define more fully "industrial or commercial", such as universities or hospitals. That is what led my noble friend to have a doubt. The noble Baroness, Lady Seear, was asking about the word "must". The duty is to consult; so that is a "must". What they do after the consultation will be up to the local authorities, but the duty rests on them to consult. That is where the duty lies, and that is where they would lay themselves open to a challenge in court.
Lord Pennock: Having listened to the debate, may I beg leave to withdraw my amendment, in the light of my noble friend's assertion that the points which we have raised will be covered in the code of guidance which is to be introduced? But bearing in mind my earlier somewhat unworthy suspicions of such documents, would it be possible for us to see at Report stage some outline of this code of guidance, so that we can be reassured on the points which we have sought to represent this evening?
The Earl of Avon: I hesitate to give an undertaking. It is our hope to get it by then, but the fulfilment of my hopes is usually a little delayed. However, we shall certainly see what we can do.
Amendment, by leave, withdrawn.
Clause 13 agreed to.
9.34 p.m.
Lord Mottistone Lord Mottistone moved Amendment No. 94A:
After Clause 13, insert the following new clause:—
("Reduced rating for industrial and commercial purposes.
. After section 19 of the General Rate Act 1967 there shall be inserted:
"19A. The rateable value of industrial and commercial hereditaments shall, for the purposes of valuation lists in force at the appointed day as from that day, and for the purposes of subsequent valuation lists, be ascertained as follows:

(a) in the case of an industrial or commercial hereditament shown in the valuation list as being occupied and used wholly for industrial or commercial purposes, the rateable value of the hereditament shall, subject as hereinafter provided, be taken to be ninety per cent. of the net annual value thereof;

(b) in the case of an industrial or commercial hereditament shown in a valuation list as being occupied and used partly for industrial or commercial purposes, the rateable value of the hereditament shall, subject as hereinafter provided, be taken to be an amount equal to ninety per cent. of the net annual value shown in the list as apportioned to the occupation and user of the hereditament for industrial or commercial purposes, together with the whole of the net annual value so shown as apportioned to the occupation and user of the hereditament for other purposes.".").

The noble Lord said: This amendment is a repetition and we have gone around the buoy before. I have a record of the Committee stage of the Local Government Finance Act in May 1982. It is fair to say that on this amendment, and on the others which we have put down, I have received advice from the CBI. As part of a general approach to improve United Kingdom competitiveness, it is established industrial policy to seek to restrain the cost increases imposed on business. In the recent recession, rates posed an increasing problem for business. They are now the heaviest tax that trade and industry have to bear. Total rates paid by United Kingdom business in 1983–84 will be close to £6 billion, compared with about £4 billion in mainstream corporation tax and, hitherto, £1·7 billion in employers' national insurance surcharge.
Furthermore, since 1979 rates paid by industry have risen about one and a half to two times more than other costs and prices. From 1929 to 1963 industry benefited from partial derating. I believe that once again industrial concerns have a particularly strong case for relief, but it should be granted to the whole business sector to improve competitiveness. Where companies are seeing some signs of recovery, lower rate bills would give business more funds to invest in the future, and those companies whose existence is threatened would be helped to survive.
I argue also for the introduction of partial business derating on grounds of fairness. This amendment would remove the inequity of the present rating system which results in domestic ratepayers in England and Wales being subsidised by the domestic rate relief of 18·5p per pound of rateable value. Business is also dealt with harshly compared with agriculture, which is derated, yet the arguments for business being treated similarly are certainly as strong.
The problem is that if my amendment were accepted, which asks for a 10 per cent. reduction, where would the Government find their £600 million? We should have thought that in the first year it could be paid for by the Government through an increase in the rate support grant, but in due course—this depends on the reaction and the efficiency of the local authorities—it is worth noting that the Audit Commission believes that between £1 billion and £2 billion per annum can be saved by local authorities in England and Wales alone through increased efficiency and effectiveness in their spending. If that were to

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come about, and if local authorities were interested in making themselves effective rather than in doing other things, which we shall not refer to while speaking about this amendment, the question of finding £600 million would be dead easy.
So, coming up for the second time (or is it the third?) I ask the Government to consider that business interests should be given fairness and encouragement for their own development so that they may achieve the efficiency on which the well-being of all of us, including the local authorities, depends. I hope that the Government will give very favourable consideration to this amendment. If they do not like its wording, that is another matter; but the underlying principle is one which I hope they will accept. I beg to move.
Lord Bellwin: I hope that my noble friend is not coming up for the third time. I should hate to lose him, as he is one of my most avid and regular supporters. My noble friend and the CBI know well that the Government agree when they say that industry and commerce need some respite from the mounting rate burden. This is a major reason why we have introduced the Bill. However, we must be sure that any help we provide for industry and commerce is well directed in order to have maximum effect.
The substantial loss in rate income which would result from the amendment would have to be made up by either the taxpayers or the ratepayers, so that some of the relief would feed straight back into higher rate poundages. That cannot make sense. We are providing real help to industry and commerce in the highest spending authorities by our proposals in Part I and Part II of this Bill.
We have taken note of the serious problems which rates may pose for declining industries or those having to leave property empty because of the recession. We have introduced new regulations relieving empty industrial property of rates altogether. In Part III of the Bill, we have introduced a right for all non-domestic ratepayers to pay their rates in 10 monthly instalments. We have provided a new duty on local authorities, as was debated a few moments ago, to consult representatives of business ratepayers about their expenditure plans. These actions will give help where it is most needed.
My noble friend's amendment would simply shift the burden of rates without doing anything to reduce it overall. I most heartily concur with the last sentiments he expressed, about opportunities for local authorities to provide services at lesser cost. Earlier today I was talking about just that. But the relief given to industry and commerce by this amendment would be offset by a substantial additional burden on ratepayers generally or on taxpayers—perhaps adding around 8p to rate poundages in the absence of additional government grant. This would be a major additional burden for domestic ratepayers. It would also partly offset the gains businesses would make from the proposed derating.
Passing the burden on to taxpayers would have an equally undesirable consequence. We are committed to reducing the burden of tax on incomes—not increasing it. Moreover, my right honourable friend
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the Chancellor of the Exchequer announced in his Budget a number of measures to help businesses and encourage economic activity. These include radical changes to make the tax system more even-handed as between capital and labour and as between different types of investment, to encourage greater efficiency. Taxes paid by businesses will be substantially reduced over 1984–85 and 1985–86, taking the two years together, and profits after tax increased for all sectors.
There will be a continuing benefit to businesses from the lower rates of corporation tax and the abolition of the National Insurance surcharge. We hope to encourage greater investment, yielding a higher average pre-tax return than under the previous discriminatory system, through measures which must contribute to better employment prospects. The measures we are taking on the wider tax front and in this Bill will reduce the burden of rates on all ratepayers—and they are, I believe, the best way to help businesses.
I do not in any way underestimate the problems faced by businesses in meeting their rates bills. Indeed, we may discuss this point further in relation to other amendments to be debated tonight. I do not believe that across-the-board relief would help to provide assistance where it is most needed. I am sure from the discussions which have taken place in the past few years that my noble friend understands very clearly that I have a great deal of sympathy and understanding, but I fear that this amendment is not the way to help at this particular moment in time.
Lord Broxbourne: I wish to intervene for only a brief moment. It may be that my noble friend Lord Mottistone—in spite of his enviably equable, cheerful and optimistic disposition—may be a little disappointed by the reply of his noble friend the Minister in this regard. This amendment makes a relatively modest suggestion for improving the position of industrial hereditaments. I believe it has been common ground in the discussions on this Bill to date that industrial hereditaments and industrial ratepayers are in a disadvantaged and somewhat unenviable position at the present time.
The proposed measure would take effect as an addendum to Section 19 of the General Rate Act 1967 under which, as your Lordships know, there is a dichotomy between the methods of assessing the rateable value of residential herediatments under subsection (2) and any other hereditaments under subsection (3)—which, of course, includes industrial hereditaments.
Under subsection (2), for the residential hereditaments, one calculates the gross value and then it is flexible to the extent that deducted therefrom are sums specified by ministerial order. In the case of industrial hereditaments it is a more stark liability because the net annual value of such hereditaments is based on the calculation of the net annual value of the property without any deductions whatever. What is proposed here, if I understand the proposition correctly, is a relatively modest 10 per cent. deduction from that net annual value.
When one reflects on the history of the matter, it is I think an appropriate epithet to say that it is relatively modest. My noble friend has reminded your Lordships

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that in 1929 industry was wholly derated as a parallel action to the derating of agriculture. From that time their paths, of course, have diverged. Agriculture today continues to be wholly derated. On the other hand, industry is wholly rated. It is therefore in the balance of things as they are today in the economic sphere, not an unreasonable proposition.
My noble friend the Minister said that he cannot accept the amendment at present and I have no doubt that my noble friends will accept that decision. However, I think that it is reasonable to ask the Minister, with his right honourable friend the Secretary of State and other ministerial colleagues, to give further thought between now and Report to ways in which they can ease the position of industrial hereditaments and thereby promote and sustain the wellbeing of the economy of the nation.
Lord Bellwin: May I just say a brief few words to thank my noble friend for his intervention. On this amendment I fear that I cannot go any further than I have said. In a few moments we shall be coming to one or two other amendments where possibly I might be able to be somewhat more forthcoming, but on this amendment we have to stay where we are.
Lord Pennock: I underline the Minister's predicament, which is, as my noble friend has said, that a 10 per cent. reduction is not very much especially compared with the 100 per cent. reduction for agriculture and the 10 per cent. reduction for the domestic ratepayer. But 10 per cent. reduction is, nevertheless, £600 million for the simple reason that industry is at the moment paying out £6 billion and that is such a high figure in the first place. I can therefore understand the predicament; but perhaps the Government can also understand that the nature of the predicament is such because industry for too long and too largely has been paying this enormous imposition.
Lord Mottistone: I am grateful to my noble friend the Minister; but I am even more grateful to my noble friend Lord Broxbourne because I think that he has pointed a way through. I feel that perhaps governments—and I do not mean party government because this rates problem has gone on for a long time—have all the time studied and considered the problem primarily from the end of the domestic ratepayer. The situation that has developed is that the basic arrangement by which business and industry pay for services rendered by the local authority—which is the basic principle of the matter—has diverged so much and there are so many special rules and exceptions that there is little relation between the two. The question of taxing business could well deserve an across-the-board look in order to produce a rate
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system which paid for services rendered and a taxation system—I am talking about a neutral total income for the Government which would have to be adjusted—so that the resultant picture looked fairer to business ratepayers; that is, the companies.
I welcome the thought of my noble friend Lord Broxbourne that what I am suggesting could take place between now and Report. I do not believe it can because I do not think Ministers talk that frequently and fast enough, but of course it would be super if my noble friend the Minister had come back with an amendment which dealt with all these problems that fast. Even if he cannot, it would be very nice if he could say now that what I have just suggested, about looking at the whole problem of business and industrial taxation in order to reduce an obviously fairer balance, is something at which he and his colleagues might look.
Baroness Birk: After hearing what he said, I wonder whether it occurred to the noble Lord, Lord Mottistone, and the noble Lord, Lord Broxbourne, and the noble Lord, Lord Pennock, in view of the other amendments that are going to come before us, that they might suggest to their noble friend the Minister that he sets up an inquiry into the rating system, both industrial and domestic.
Lord Mottistone: No, because I am proposing that we set up, not an inquiry into the rating system but an inquiry into the industrial taxation system, which is rather different. I do not know if my noble friend is going to respond.
Lord Bellwin: I always respond. I think this is really where I came in at the very first debate on the very first issue of this whole matter. I would only repeat what I said then, that of course nothing is forever. It was my noble friend Lord Sandford, I think, who moved the original amendment—with my noble friend Lady Birk as I recall, as to where do we all go in the future. I say again, as I said then, that the legislation here has to be in place to tackle the immediate problems with which we are faced, plus other legislation which will shortly be coming here. When all that is in place and working, then it may very well be that there will be a moment when a wider look is called for. But I do feel that I would have to agree here with the noble Baroness, Lady Birk, that to do something on its own is not; it would only exacerbate problems. If anything is to be done, it has to be something else way beyond that. But right now we have got immediate problems to deal with, and that is what we are doing now.
Lord Mottistone: I beg leave to withdraw this amendment.
Amendment, by leave, withdrawn.
9.53 p.m.
Lord Bellwin Lord Bellwin moved Amendment No. 94AA:
After Clause 13, insert the following new clause:
("Provision of information to ratepayers. 1967 c. 9.
.—(1) Rules under section 113 of the General Rate Act 1967 may require a rating authority to serve with any demand note for a rate a notice containing information—
(a) as to the past or proposed expenditure of—

(i) the rating authority; or

(ii) any authority by which a precept has been issued to the rating authority,

and as to the financing of that expenditure; and
(b) as to any increase or reduction in the rates made by the rating authority or in the precepts issued to it.
(2) Rules under that section may require an authority having power to issue precepts to serve notices on ratepayers in its area containing information—

(a) as to its past or proposed expenditure and as to the financing of that expenditure; and

(b) as to any increase or reduction in the precepts issued by the authority.

(3) Rules made by virtue of this section may make different provision for different cases; and any notice required to be served by rules made by virtue of this section shall be in such form (if any) as the rules may prescribe.
(4) An authority having power to issue precepts to a rating authority shall supply that authority with such information as is reasonably necessary for enabling it to comply with any requirements imposed by rules made by virtue of subsection (1) above; and a rating authority shall supply an authority having power to issue precepts to it with such information as is reasonably necessary for enabling the precepting authority to serve any notices required by rules made by virtue of subsection (2) above.")
The noble Lord said: The Government have made very clear their concern that local authorities should be more accountable to their ratepayers. We have yet to discuss Clause 14, which introduces a new right for occupiers who pay rates through their local authority landlord to receive the same information in relation to the rate and the background to their local authority's spending as those of us who pay rates direct. We also announced in our White Paper Rates that we would seek to ensure that ratepayers are provided with clear information as to how their rate bill is apportioned between the rating and precepting authorities. We propose to introduce new rate demand rules to require that this information be shown on the face of the rate demand note.
However, I am sure local authorities would agree with me when I say that information on how much each rating and precepting authority is spending and how that expenditure is being financed is clearly useful to ratepayers. Of course, many authorities already recognise this and produce exceptionally clear explanations for all ratepayers. We introduced a code of practice with recommendations on the content of such notices in 1980 called Explaining the Local Authority Rate Bill. Many authorities have certainly taken its message to heart and used it well.
This amendment extends the Secretary of State's powers under Section 113 of the General Rates Act 1967 to make rules governing the content of the rate demand note itself to cover information relating to expenditure, financing and changes in rate or precept levels. We feel that we need these powers to ensure that all ratepayers have access to the sort of background information produced by the best authorities. This will
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be particularly useful in ensuring the accountability of the new joint boards and the new directly elected education authority for inner London because ratepayers will be less well acquainted with the role of these upper tier authorities.
We shall be discussing the content of new rules with the local authority associations and other interested parties and we expect to use the extended powers next year in order to bring new rules into effect for the 1986–87 rate demands. We shall incorporate in the new rules the changes already proposed to ensure that ratepayers are aware of the amount of their individual rate bills attributable to the levy made by each major authority in their area. I believe that local authorities will welcome this breathing space to revise their rate demand forms as appropriate. I also believe that this extension of existing powers to make rules in relation to rate demands will enable us to improve the account-ability of authorities to their ratepayers. I therefore commend the amendment and the associated amendment to the Long Title. I beg to move.
Baroness Birk: I wonder whether I may ask the Minister a couple of questions. Obviously, account-ability is blurred by precepting. I understand the point about bringing information from precepting authorities to ratepayers directly. Will this be done at the expense of the precepting authority, or will the Government make money available? There will be an additional amount of expenditure involved. At first glance, although I have not had much chance to look at it. it seems that this could be quite an expensive operation. Will it also be the case that the Home Secretary and the Secretary of State for Transport provide the information for the Metropolitan Police and the London Regional Transport precepts? Will parishes be covered by the amendment? They are formally precepting authorities, are they not?
Lord Bellwin: I do not see why there should be any additional cost. The rate demand note goes out now; it will merely be a matter of what goes on to it. What we seek is that there should be a clear exposition of each of the rating or precepting authorities' charge set forth in such a manner as I am sure will be mutually agreed with the associations. I do not think that there is any real difference here at all. There are many areas where there is a difference, but I do not think that this is one of them. The actual form and layout will be decided jointly by consultation. In terms of the cost, I do not see why there need be any addition at all.
The only other point that I have not yet covered relates to parish councils. I would not have expected that their precept would be included, but I hear what the noble Baroness says and I shall certainly want to consult about that. Again, it would be a matter for the associations. It is quite a sticky point that is raised by the question of parishes. It can have far more significance than some may think. As I speak now I do not think that it is the intention that they should be included, any more than they are now. Nevertheless, the noble Baroness makes a good point. I shall want to check it out carefully, and I shall be in touch with her about it.
Baroness Fisher of Rednal: I have listened to what the noble Lord has said. I am in receipt of about half a dozen rate demand notes. Some are excellently done, and include diagrams. If the Minister is issuing information asking for this to be done, I hope he will state that it should be done in simple English. The language of rates is very difficult. If ratepayers are to gain benefit, it must be done in words that they understand.
On Question, amendment agreed to.
Clause 14 agreed to.
Lord Pennock Lord Pennock moved Amendment No. 94B:
After Clause 14, insert the following new clause:
("Removal of right to levy rates on unoccupied industrial and commercial purposes.
.—(1) The Secretary of State may by order direct that in respect of—

(a) hereditaments which have been and remain constructed or adapted for use as factories, mills or other premises of a similar character for use wholly or mainly for industrial purposes; or

(b) hereditaments (not comprising one or more dwelling-houses or having a floor space not exceeding 240 square feet and used as a lock-up garage) whose net annual value falls to be determined under section 19(2) of the 1967 Act,

rates shall be payable under paragraph 1 of Schedule 1 to the 1967 Act but unless and until he so directs with effect from 1st April 1982 no such rates shall be payable in respect of the said hereditaments mentioned in paragraphs (a) and (b) above under the said paragraph 1.
(2) The power to make an order under this section shall be exercisable by statutory instrument.
(3) A statutory instrument containing such an order shall be subject to annulment in pursuance of a resolution of either House of Parliament.")
The noble Lord said: In speaking to Amendment No. 94B, which is really to do with the non-payment of rates for empty premises, I should like also to associate Amendment No. 94C, which relates to the non-payment of rates for empty warehouses.
Amendment No. 94C: After Clause 14, insert the following new clause:
("Removal of right to levy rates on empty warehouses.
. After paragraph 2(f) of Schedule 1 to the General Rate Act 1967 there shall be inserted—
"(g) the hereditament is held for the purpose of being available for the storage in the course of any trade—

(i) of goods or materials which are to be used in the manufacture of other goods or materials;

(ii) of goods or materials which are to be subjected, in the course of a trade, to any process;

(iii) of goods or materials which, having been manufactured or produced or subjected, in the course of a trade, to any process, have not yet been delivered to any purchaser; or

(iv) of goods or materials on their arrival by sea or air into any part of the United Kingdom;".")

The principle involved is exactly the same in both cases, and it is a simple one. Rates are a tax paid by business in return for the beneficial occupation of a property. Where that property is not occupied beneficially it seems somewhat inequitable to pay rates simply because the property exists. Speaking perhaps more practically, rates have to be paid for out of profits. If the premises are empty, no profits can be earned; so the rates have to be paid out of profits from
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the business or from other parts of the business which might exist. Support is required which possibly and probably renders the other parts of the business uncompetitive and so it is threatened. It seems that if one has a factory which is empty, not only is it inequitable to pay rates on it but one is also threatening in the medium term, and perhaps even in the short term, the very existence of the business and the number of jobs that are involved.
In the case of the domestic ratepayer, if an individual has no income or insufficient income steps are taken to take this into account and some relief is accorded. It seems to us that the same principle should be applied where it is palpable that due to the premises being empty no profits are being earned. If one moves to the question of a warehouse which is empty, the payment of rates becomes even more penal. Rates usually amount to something like 2 per cent. to 5 per cent. of the total cost of running a factory.
In view of the fireworks noise from outside I feel there is opposition in the upper regions. However, in the case of a warehouse which is unoccupied, frequently the rates are approximately from 15 per cent. to 20 per cent. of the total cost of keeping that warehouse in being. It is our contention that the inequity of paying rates on a warehouse is even stronger than in the case of a factory. I am bound to say that the Government have recognised this; first, with rates for empty premises in allowing local government to restrict the total rate to 50 per cent. of the original rate which was required; and also by proposing recently to end the payment of rates for empty industrial premises.
Through this amendment we are seeking also to include warehouses, shops, offices and other business establishments that are empty and are still paying rates, for the same reasons that the Government have sought to introduce the amendments so far. In this case, unlike the previous amendment, which although modest in its percentage was somewhat penal in its effect on Government costs, we calculate that the cost to the Government would be somewhere between £10 million and £15 million. In recognising the justice and the equity of the cause and the effect of continued payment for empty premises—eventually unemployment—the Government have come a long way. The purpose of these two amendments is to ask them to come just a little further and adopt the logical conclusion of their efforts so far.
Lord Evans of Claughton: I have to declare an interest. I am president of the National Association of Warehouse Keepers; sometimes I wonder why I am, but nevertheless I am. In supporting the amendments which the noble Lord, Lord Pennock, has moved I should like to direct attention particularly to Amendment No. 94C, which deals with warehouses. The noble Lord has dealt very well with the problem of warehouse keepers. My association points out that while other industries may be worker intensive, warehouses tend to be very highly rates intensive. They are particularly affected by the failure of the Government to include them in the exclusion from payment of rates for empty premises, because

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industrial premises, for some reason, which no doubt is shrouded in some mist in the Department of the Environment, have been excluded—and bearing in mind the fireworks noises from outside, I think that the national association is taking things a bit far when they introduce gunfire to support their case here!
However, it seems to me that if industrial premises that are vacant should be allowed to claim total exemption from rates, why should warehouses not be able to do so? They are particularly exposed, for the reasons that the noble Lord gave earlier. Also there is very fierce competition in the areas where they are most vulnerable in the north of England from freeports and from enterpise zones. Freeports and enterprise zones are not subject to rates at all. Anyone who has warehousing facilities there—whether occupied or unoccupied—is released from any responsibility for rates. The warehouse keeper in an area just outside an enterprise zone or a freeport is in a very difficult position in competing with those who are within that area.
In addition to that, industrial de-stocking during the recent—
Lord Graham of Edmonton: Recession—
Lord Evans of Claughton:—recession that the country has suffered. I do wish that the noble Lord, Lord Graham, would not make my speeches for me, although they are very much better than mine. But as the noble Lord says, "during the recent recession", induced no doubt by a Conservative Government as the noble Lord, Lord Graham, would also say. The rates account, as the noble Lord, Lord Pennock, has said, for up to 30 per cent. of the outgoings of warehousing companies. The rate is a much higher percentage than for the rest of industry.
If we could persuade the Government to agree to this amendment, I gather that the loss of income to local authorities would amount to as little as 0.05 per cent. of income received at present from warehouses. So in view of the fact that the warehousing industry is hard pressed both because of competition from freeports and from enterprise zones and because of the de-stocking brought about by the Government's policies, the Government should consider this amendment and Amendment No. 94C very seriously, I think that they should also take seriously the other amendment moved by the noble Lord, Lord Pennock.
My particular concern is to try to ensure that something can be done for the warehousing industry which is suffering very heavily at the moment. If this support is not given to them, I suspect that they will go on doing what they are doing at present—that is, closing warehouses, taking the roofs off them and very often vandalising them in order to avoid paying rates. Of course, more important than that, they are introducing a very considerable element of unemployment. This is a very serious point so far as the warehousing industry is concerned, and I hope that it will be treated sympathetically by the Minister in his reply.
Lord Bellwin: The Government are very conscious of the problems that empty property rates can cause and which my noble friend has elucidated. I can say from my own experience that in Leeds we never ever rated any empty properties and nor do they do so today, so far as I am aware.
I will not again go over all the measures that we have taken and are taking to reduce rates and to help businessmen generally. They will of course help ratepayers owning empty properties as much as others. But specific assistance on empty property has been given through the Rating Exemption of Unoccupied Industrial Hereditaments Regulations 1984 which my right honourable friend laid on 8th March. These stop local authorities from levying any rates on empty industrial hereditaments from 1st April 1984. This relief could be extended more widely—and I wonder whether my noble friend appreciates this point—without primary legislation, and to that extent the complicated structure created by Amendments Nos. 94B and 94C, which will exempt warehouses from empty property rates, is actually not necessary.
However, we have had to set priorities. The cost of extending relief to all empty non-domestic property, or even just to warehouses, would result in a further substantial loss of potential income for local authorities. In our view it is right to relieve empty industrial property of a burden that in the current climate cannot be effective in providing an incentive to make full use of empty properties because the market demand for such property does not exist. But in many parts of the country there is a demand for empty warehousing and commercial properties, and we consider it right that local authorities should retain the discretion to levy an empty property rate of up to 50 per cent. on these properties. But I am pleased to say that many choose not to do so, though there may still be circumstances where it is appropriate.
I shall not make a great meal of this. I should like to conclude by saying that, despite what I have just said, I appreciate that the boundary between industrial property and warehousing may actually be blurred in places, and this must be at least as true of the boundary between warehousing and certain retail operations; but there is still an area of blurring here. To give 100 per cent. relief to empty warehousing could add perhaps half as much again to the potential cost of the relief which we have already introduced for empty industrial property. If my noble friend thinks it would help, I shall look at this again. I am sure he knows that I am anything but optimistic about it, and I very much doubt whether we can help. But I believe that there is a blurring, and for that reason, before we have to reach a conclusion on it, I should be willing to have another look at it.
Lord Pennock: With that assurance from my noble friend the Minister, we are very happy to withdraw this amendment.
Amendment, by leave, withdrawn.
10.12 p.m.
Lord Mottistone Lord Mottistone moved Amendment No. 94BA:
After Clause 14, insert the following new clause:
("Rate relief fur partially used business premises.
. After section 25 of the General Rate Act 1967 there shall be inserted the following new section—
"25A.—(1) This section applies where—

(a) part of any hereditament, which has been and remains constructed or adapted for use as a factory, mill or other premises of a similar character for use wholly or mainly for industrial purposes, is not so used (the unused part); or

(b) part of any hereditament comprising a commercial building is not used for the purpose for which it has been used remains constructed or adapted for use (the unused part):

Provided that in either case no other use is made of the unused hereditament, but notwithstanding that the building or plant or machinery therein, or appurtenant land is or continues to be maintained in a workable condition.
(2) In this section, references to a hereditament comprising a commercial building are references to a hereditament (not being a dwelling house or a hereditament having a floor space not exceeding 240 square feet and used as a lock-up garage) whose net annual value falls to be ascertained under section 19(2) of this Act.
(3) If the rating authority is satisfied upon application in the prescribed form being made to it that—

(a) either paragraph (a) or (b) of subsection (1) above applies in respect of a hereditament; and

(b) the unused part under the said subsection (1) is sufficiently identified in the prescribed form,

then it shall request the valuation officer to apportion the rateable value of the hereditament between the unused part and the remaining part of the hereditament; and if the apportionment made by the valuation officer is agreed by the authority and the occupier, then as from—

(i) the date upon which such agreement is reached; or

(ii) the commencement of the rate period in which the request was made,

whichever is the later, until the event in subsection (4) below occurs the value apportioned to the remaining part shall be treated for rating purposes as if it were the value ascribed for the hereditament in the valuation list.
(4) The event referred to in subsection (3) above is whichever is the first to occur of the following:

(a) any of the unused part becomes used;

(b) a further apportionment of the value of the hereditament is made;

(c) the person in occupation of the hereditament at the time that the apportionment under this section is made ceases to be in occupation.

(5)(a) In determining whether the unused part is sufficiently identified for the purpose of paragraph (b) of subsection (3) above the rating authority shall have regard to the requirements of the valuation officer in determining whether he could reasonably carry out the apportionment mentioned in subsection (3) above if requested so to do and if either the applicant or the valuation officer is dissatisfied with the decision of the rating authority he may apply to the local valuation court who on hearing the applicant, the rating authority and the valuation officer or such of them as choose to appear before it may confirm or reverse the decision of the local authority;
(b) no appeal shall lie from the decision of the local valuation court.
(6) Without prejudice to any other statutory rights vested in any person where an application has been received by a rating authority the valuation officer may at any time enter upon the relevant hereditament to satisfy himself that the unused part is or has been or is likely to remain unused and such right of entry shall continue until any of the events mentioned in subsection (4) above occurs.
(7)(a) Where at any time in any period during which it has been represented to the rating authority that part of a hereditament is, was or will be an unused part as defined above that part or any of it was not in the opinion of the rating authority
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unused as so represented the authority may require rates to be paid in respect of the whole hereditament as if none of it is, was or had been during the relevant period an unused part and may require interest to be paid on the said amount of rates at such reasonable rate as may from time to time be prescribed by the Secretary of State as if the whole of the said amount of rates had been due on the first day upon which any part of the rates in respect of the unused part would normally have fallen due if no application under section (1) above had been made;
(b) where a rating authority requires an amount to be paid by way of rates under paragraph (a) above the said sum shall be paid, without any option to pay by instalments under section 50 of this Act, on such date following the notification by the rating authority to the person liable for the rates on the hereditament upon which the next normal payment of rates on that hereditament falls due or if there is no such date on the thirty-first day after the said notification and allowance shall be made for any rates already paid on the part of the hereditament which was not represented to be unused;
(c) where an amount falls to be paid under this subsection all rights and remedies shall be available to all parties concerned as if the said amount was a normal amount of rates and all time limits shall apply having due regard to the date for payment specified in paragraph (b) above.
(8) In this section—

(a) the prescribed form shall be such form as the Secretary of State shall from time to time prescribe as being necessary for the proper application of this section;

(b) the Secretary of State shall issue regulations governing procedures for appeals under subsection (5) above;

(c) the Secretary of State shall exercise his powers under this section by Statutory Instrument which shall be of no effect until laid before and approved by a resolution of the House of Commons.".")

The noble Lord said: Again, this amendment is one that I have been around the buoy on before. During consideration of the Local Government, Planning and Land (No. 2) Bill in October 1980 I jolly nearly won a Division against the Government, the voting being 59 to 61, which was better than the Opposition did this afternoon, but sadly I did not win. We returned to the charge again in the Local Government Finance Bill in May 1982. It is called "mothballing". The problem is to deal with the case where part of business premises is taken out of use but maintained for eventual re-use when economic conditions improve. We would ask that a local authority be required to apportion the rateable value of the premises between the unused part and the remaining part of the hereditament.
A number of examples exist in large and complex premises, parts of which cannot normally be vacated and separately let off, where a major item of plant—for example, a blast furnace, with associated plant and control rooms—is held on a care and maintenance basis but is not in productive use. If the plant was rendered incapable of beneficial occupation—for example, by partial demolition—it would cease to form part of the hereditament and its value would be deleted, but if left intact, the item has to be included in the overall value of the property. This places an unfair burden on industry, and we ask that a provision should be made for giving "mothballing" rate relief without undue difficulty. This would constitute a positive step towards preserving the industrial base.
The important point is that, of the amendments which have been brought before your Lordships on the earlier occasions, about which I have spoken, in 1980, at any rate, this type of amendment received support from all sides of the Chamber—from these Benches and the Benches opposite. I believe that it is an amendment which perhaps the Government might

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now move towards meeting. I shall be most interested to hear what my noble friend has to say. I beg to move.
Lofd Bellwin: There are many problems associated with Amendment No. 94BA. Of course, as my noble friend says, one has to be sympathetic with the underlying proposals, but there are considerable practical problems of definition. There would be the placing of an onus on valuation officers to identify unused parts of hereditaments. It would be hard to make the law clearcut. It must be a recipe for uncertainty. There would also be enforcement problems, not to mention the cost of the proposed relief.
I fear, without going into more detail, willing though I am to do so, that Amendment No. 94BA would not be workable or, frankly, I am bound to say, justifiable in terms of directing relief to where it is most needed. However, I have much sympathy with the arguments that my noble friend has put forward in this context. There are two measures which we could usefully introduce to help businesses suffering from the recession without the serious problems of the proposal that has been tabled, and which we might table at Report.
The first would be to amend section 25 of the General Rate Act 1967. At present local authorities are discouraged from using this discretionary power to provide temporary rate relief for buildings which are temporarily unoccupied because no provision is made for ending the relief unless the unoccupied part is re-occupied. That is one area where we could take steps to encourage greater use of the power by local authorities. Therefore, I propose—and I hope that my noble friend will be pleased to hear me say so—to table an appropriate amendment on that at Report.
The second amendment which I hope my noble friend would consider a valuable addition to this Bill relates to premises unused save for the storage of plant and machinery previously used there, or intended for use there. Again we believe that priority for relief should be given to businesses which have to close premises but do not wish to strip out all their plant or machinery, or feel that thus equipped the building may be more easily let.
We propose therefore to consider introducing at Report stage an amendment to provide that such premises should be treated as though they were empty. I hope that my noble friend will accept my assurances that the Government are well aware of business ratepayers. I think he understands why we have to consider, however, all the other problems, and not least the practicality of proposals, the cost, the effect on other ratepayers and taxpayers, in short that we have to set priorities. But with what I hope will be valuable improvements I hope that my noble friend will feel able to withdraw his amendment for the reasons I have given.
Lord Mottistone: I am indeed grateful to my noble friend. Do I understand that he has two amendments in contemplation to deal with my one amendment?
Lord Bellwin: Whether we do it in the form of two separate amendments, which is what I believe at the
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moment we intend to do, or in some other form, perhaps my noble friend would leave for me to discuss with the draftsman. Certainly we will cover the points I have mentioned.
Lord Mottistone: I am grateful to my noble friend, and I look forward with great interest and hope to the next stage of the Bill. I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
[Amendment No. 94C not moved.]
Clause 15 [Miscellaneous amendments and repeals]:
On Question, Whether Clause 15 shall stand part of the Bill?
Lord Sandford: With Clause 15 we come to the end of Part III, headed Other Provisions Relating to Rates and Precepts. I want to make three brief points. First we welcome the modest progress which has been made in this Part towards improving and reforming the rates system. Secondly, to thank my noble friend on the Front Bench for the meeting he arranged last Thursday with a number of us to examine with him the scope for making more improvements and speeding up the rate at which those improvements are made. Finally, to express the hope that before the Bill leaves us, and to a large extent between now and the next stage, we may be able to identify together further steps that can be taken to speed up progress on the matters listed in Chapter 5 of the annexe to the White Paper, on a good number of which there is not too much progress to be seen at the moment.
Clause 15 agreed to.
Clause 16 agreed to.
Clause 17 [Commencement]:
[Amendments Nos. 95 and 96 not moved.]
Clause 17 agreed to.
[Amendment No. 97 not moved.]
Clause 18 [Short Title, Interpretation and extent]:
[Amendment No. 98 had been withdrawn from the Marshalled List.]
[Amendment No. 98ZA not moved.]
Clause 18 agreed to.
Schedule 1 [Miscellaneous amendments and repeals]:
Lord Bellwin Lord Bellwin moved Amendment No. 98ZB:
Page 17, line 14, at end insert—
("Domestic rate relief
7A.—(1) In section 48(5) of the principal Act for the word "movable" there shall be substituted the words "two or more moveable" and in paragraph 3 of Schedule 13 to that Act before the word "moveable" there shall be inserted the words "two or more".
(2) This paragraph shall be deemed always to have had effect.").
The noble Lord said: This amendment inserts a new paragraph into Schedule 1 to clarify the legislation relating to provision of domestic rate relief for caravans and houseboats by the definition of private dwelling as used in Schedule 13 of the General Rate

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Act. Since it is intended as a clarification of existing legislation I hope that the Committee will accept this amendment.
On Question, amendment agreed to.
The Earl of Avon The Earl of Avon moved Amendment No. 98ZC:
Page 17, line 16, after ("8") insert—
("(1) In section 50(1) of the principal Act for the words from "(not being a tenant" to "through the owner" there shall be substituted the words "is liable to pay any rates in respect of a hereditament"; and for the words "any rates", in both places where they occur, there shall be substituted the words "the rates".")
The noble Earl said: I will speak to this amendment together with Amendment No. 98ZD.
Amendment No. 98ZD: Page 17, line 16, leave out ("the principal") and insert ("that").
These amendments fulfil our intention to extend to all ratepayers the right to pay rates by instalments. Section 50 of the General Rate Act 1967 provided the right to pay rates in monthly instalments to all domestic occupiers and we extended this in the Local Government Planning and Land Act 1980 to the occupiers of non-domestic property between certain rateable value limits. We have recently increased the upper limit to £10,000 in London and £5,000 elsewhere.
Following consultations on our proposals for rate reform contained in our White Paper, Rates, we decided to remove those limits altogether from the beginning of the next rating year, this extending the right to pay rates by instalment to all occupiers both domestic and non-domestic. However, some owners who are not occupiers also pay rates. These are the owners of unoccupied properties and owners who are rated on behalf of the occupier under provision of Section 55 or 56 of the General Rate Act. The Bill as drafted does not extend the right to pay by instalments to such ratepaying owners because the original provisions contained in section 50 of the 1967 Act relate only to occupiers. I hope that with this explanation the Committee will accept the two amendments.
On Question, amendment agreed to.
The Earl of Avon The Earl of Avon moved Amendment No. 98ZD:
[Printed above.]
On Question, amendment agreed to.
Lord Mottistone Lord Mottistone moved Amendment No. 98A:
Page 17, line 22, leave out paragraphs 9 to 16 and insert—
("9.—(1) For section 70(1) of the principal Act there shall be substituted—
(1) The valuation officer shall, within twenty-eight days after the date on which a proposal under section 69 of this Act is served on him, or within seven days after the date on which such a proposal is made by him, as the case may be, transmit a copy thereof, together with a statement in writing of the right of objection conferred by subsection (2) of this section, to the occupier of the hereditament to which the proposal relates, not being the maker of the proposal."
(2) For section 70(2) of the principal Act there shall be substituted—
"(2) The owner or occupier of the whole or any part of a hereditament to which the proposal relates may, within twenty-eight days from the date on which notice is served under
906
subsection (1) of this section on the occupier, serve on the valuation officer notice in writing of objection to the proposal; and, where the proposal was made otherwise than by the valuation officer, the valuation officer shall, within twenty-eight days of the date on which a notice of objection is served on him, transmit a copy thereof to the make of the proposal."
(3) Paragraph (e) of section 72(2) of the principal Act is repealed.
(4) In section 73(2)(a) of the principal Act, the words "and to the rating authority" are repealed.
(5) Paragraph (d) of section 76(4) of the principal Act is repealed.")
The noble Lord said: The purpose of this amendment is to remove the existing right of rating authorities to receive details of, or intervene in, the procedure for challenging proposals for the alteration of the current valuation list except where the rating authority is itself the proposer or ratepayer. It has only relatively recently become the case that local authorities have done this—I say recently, I mean within the past ten or fifteen years. It can be extremely costly to businesses when they do it.
I therefore believe that rating authorities should no longer have a statutory right to receive details of, or intervene in, any challenge initiated by another party nor to make a challenge to a direction. This arrange-ment would achieve both simplicity and a fair balance between the rights of individual ratepayers and those of local ratepayers as a whole. The changes introduced by the Local Government Act 1947, whereby the reponsibility for rating assessments was transferred to valuation offices, have now been in effect for more than 30 years. During that time the valuation officers have shown clearly that they are able to fulfil their functions in a fair and impartial manner, and the intervention of a third party in the form of a rating authority is totally unnecessary. The revised procedures resulting from the proposed amendment would also have the effect—this comes back to what I said in the first place—of reducing administrative costs for all parties currently involved in the assessment process.
As to the changes that the Government are introducing in the Bill under paragraphs 9 to 16 (those I am seeking to replace in Schedule 1), I want to raise a technical point of detail relating to the new procedures for rating appeals. Under the planned procedure for valuation office proposals, where the rating authority makes an objection, the valuation officer is required to send a copy to the occupier. There is no such arrangement in the case of valuation office proposals and I think there should be. Perhaps this is a matter which my noble friend might agree to look at before the Report stage and possibly either accept my amendment, which would deal with the problem, or introduce a technical amendment to his own part of the Bill at the next stage. I beg to move.
The Earl of Avon: My noble friend has taken us into some detailed technicalities of rating practice. I hope that I need not deal with every consequence of the proposed amendment but, as my noble friend suggests, we shall study it and write to him on any further points we have.
Basically, the amendment would remove the right of rating authorities to become involved in proposals for changes to the valuation list which are initiated by

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another party, except where their own property is involved. In order to effect this change my noble friend wishes to remove from the Bill paragraphs 9 to 16, which, as well as making a more limited change in the direction he seeks, provide some minor, but nevertheless worthwhile, changes to the procedures surrounding the process of altering the valuation list. These changes will, we expect, result in an annual saving of some 65 staff in the valuation office.
My noble friend mentioned appeals. The failure to send ratepayers separate notifications when an appeal is referred to a local authority valuation court will lead to uncertainty, but I do not believe that it will really be a problem. Interested parties will be told at the beginning of an appeal of the alternative course that the proceedings can take and the local valuation officer will be on hand to offer advice as needed.
I should be sorry to see lost the improvements that we have put down. They will eliminate a great deal of the paperwork involved in making changes to the valuation list in a way which I believe will be helpful to all concerned. At this stage in the evening I do not propose to go into more detail, but we shall consider my noble friend's remarks and perhaps write to him in more detail about our own story.
Lord Mottistone: I am most grateful to my noble friend. It is a complicated subject and unsuitable for this time of night. As usual, schedules always seem to come at the end. I am delighted that my noble friend is to write to me; I hope that he will, even if he does not really want to. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Avon The Earl of Avon moved Amendment No. 98AA:
Page 21, tine 5, leave out from ("list") to end of line 11 and insert—
("(c) minutes of the proceedings of any local valuation court with respect to the valuation list currently in force in a rating area or, subject to subsection (3) of this section, the immediately preceding valuation list; and
(d) minutes of the proceedings of any rating authority during the preceding ten years or, where the valuation list currently in force in the rating area of an authority was transmitted to it under section 68(2) of this Act before the commencement of that period, during the period since the list was transmitted to the authority.").
The noble Earl said: If I may, I shall take with the leave of the Committee, Amendments Nos. 98AA and 98AB together.
Amendment No. 98AB: Page 21, leave out line 23 and insert— ("list.
(4) for the purposes of this section the expression "ratepayer" includes an occupier who pays a rent inclusive of rates, and also includes any person authorised by a ratepayer to act on his behalf under this section.").
These are technical amendments to correct two minor deficiencies in paragraph 17 of Schedule 1, which time-limits rights of access to certain old rating records. We have included these provisions in the Bill in order to relieve the valuation office, rating authorities, and local valuation courts, of the burden and expense of keeping available for inspection old records which could have no possible relevance to present day valuation and rating matters. It is not our intention either to restrict the rights of ratepayers or of
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valuation officers in relation to the kind of records to which they might reasonably need to have access or to restrict in any way the persons entitled to such access. These two amendments will ensure that provisions in paragraph 17 fulfil these intentions. I recommend them to the Committee. I beg to move Amendment No. 98AA.
On Question, amendment agreed to.
The Earl of Avon The Earl of Avon moved Amendment No. 98AB:
[Printed above.]
On Question, amendment agreed to.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 98B:
Page 21, line 28, at end insert—
(". For paragraph 5(1) of Schedule 7 to the principal Act there shall be substituted—
"(l)(a) Subject to sub-paragraph (2) of this paragraph, the basic electricity rateable value shall be taken to be £175 million and the share thereof of the Generating Board shall be one half of that sum and the share thereof of each Area Board shall be a percentage of one half of that sum calculated as follows:—

(i) such percentage of 50 per cent. thereof as the gross value of the fixed assets of that Board bears to the aggregate gross value of the fixed assets of all Area Boards;

(ii) such percentage of 25 per cent. there of as the gross income from the sales of electricity (excluding inter-Board sales) of that Board bears to the aggregate gross income from sales of electricity of all Area Boards;

(iii) such percentage of 25 per cent. thereof as the number of sales of electricity units (excluding inter-Board sales) by that Board bears to the aggregate number of sales of electricity units by all Area Boards.

(b) For the purposes of this sub-paragraph in relation in any year the gross value of the fixed assets of an Area Board shall be taken to be the gross value thereof as shown in the annual accounts of that Board at the 31st March falling next but one before the beginning of that year and the gross income and number of sales of electrical units of an Area Board shall be taken to be those respective figures as shown in the annual accounts for the purposes of 12 months ending 31st March falling next but one before the beginning of that year." ")
The noble Lord said: I apologise for the lateness of the hour. This amendment, which is a fairly full one, requires a background note. Before 1948 certain complexities had arisen in regard to the rating of electricity undertakings. The problem centred on the fact that cables, et cetera, in each rating area were treated as a separate hereditament, which entailed valuing separately parts of undertakings which were of little value when taken by themselves, although they might form a vital link in the undertaking as a whole.
The Local Government Act 1948 remedied the situation by derating electricity hereditaments and providing for the making of bulk payments, in lieu of rates, by the electricity industry for the benefit of local authorities. Under that Act, the then British Electricity Authority were required to make such payments, of the sums specified in the Act, year by year subject to certain adjustments; and that Act further required the area electricity boards to contribute towards the payments so made.
The apportionment of these payments among the authority and the area boards was made in accordance with the joint recommendations of Sir Harold Howitt and Sir George Erskine, who were appointed, after consultation with the then Minister of Fuel and Power and in agreement with the area boards, to advise the

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authority on the matter. They recommended that the payment should be allocated between the authority and the area boards on the basis of a primary apportionment between the authority, on the one hand, and the area boards (taken together) on the other, related to the amounts of their respective fixed assets, and then the amount allocated to the area boards to be apportioned between them as follows: 40 per cent. on the basis of the relative amounts of fixed assets; 20 per cent. on the basis of the relative gross income from sales of electricity (excluding inter-board sales); 20 per cent. on the basis of sales of units (excluding inter-board sales); and 20 per cent. on the basis of the net surplus.
The Electricity Act 1957 established, and transferred the functions of the former British Electricity Authority to, the Electricity Council and the Central Electricity Generating Board; and the Local Government Act 1958 provided that, in place of the payment to local authorities in lieu of rates, any property of the Electricity Council would be rated by inclusion in the valuation lists but the CEGB and area electricity boards would be rated on a notional hereditament for which a total basic rateable value would be assessed in accordance with the provisions of that Act. Each of the said board's share of the basic rateable value was set out in a table in that Act as a percentage of the total sum, and these percentages arose from the apportionments which had been made under the Howitt/Erskine formula. That table was re-enacted in section 5(1) of Schedule 7 to the General Rate Act 1967.
In the early 1950s the London Electricity Board had the largest operational undertaking of any of the area electricity boards, which, under the Howitt/Erskine formula, resulted in that board having a correspondingly larger percentage share of the total sum payable in lieu of rates than any other area board. However, the operating position has changed considerably since then, and if the Howitt/Erskine formula was applied using the figures from the accounts of all the area boards for the last four years an entirely different set of percentages would arise. The percentage share for the London Electricity Board would drop from the present 7.05 per cent. to 5.32 per cent. which would result in a saving of some £6 million. From this it can be seen that by continuing to use the percentages calculated on the operating position in the 1950s the London Electricity Board and their consumers are now bearing an unfairly large share of the rate burden.
It will be noted that the Howitt/Erskine formula included as one of the factors in the equation the net surpluses of the respective boards. At the time, these were profits resulting from normal trading considerations. Now, however, the net surplus of each board results from the application of government directives and its relationship to those of other area boards is entirely arbitrary.
In present-day circumstances, therefore, it does not seem appropriate to include in the apportionment the net surplus of the boards. A more true reflection of the relative position of the boards would be given if the Howitt/Erskine formula were adjusted as follows: 50 per cent. on the basis of the relative amounts of fixed assets; 25 per cent. on the basis of the relative
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gross income from sales of electricity; 25 per cent. on the basis of sales of units excluding inter-board sales.
The effect of the first amendment proposed to the Bill would be to substitute for sub-section 5(1) of Schedule 7 to the General Rate Act 1967 a new sub-section which incorporates the revised Howitt/Erskine formula as set out above. This is thought better than substituting the percentages which the formula gives rise to, since it will ensure that any future changes in the operational undertakings of respective boards would be reflected in the yearly apportionments.
The Committee may, however, feel that a change of this nature needs more time for discussion and consultation than the timetable for the present Bill would allow. Accordingly, an alternative approach is proposed by the second amendment. Sub-paragraph (2) of paragraph 5 of Schedule 7 to the General Rate Act 1967, and the re-enactment of powers in the Local Government Acts of 1948 and 1958, give the Minister power where by reason of any substantial change in circumstances it is expedient so to do, and after consultation with the electricity council and local authorities, where appropriate, to vary the sum which is to be taken to be the basic electricity rateable value, any order so made being subject to approval by a resolution of each House of Parliament.
The second amendment proposed would extend this power to enable the Minister—now the Secretary of State—in the same circumstances, and subject to the same safeguards, to vary by order the percentage share of the total sum of each of the electricity boards. The present power has been exercised on a number of occasions since 1948 raising the total sum in line with the general increase in rateable values. Thus the figure which appeared as £47,212,610 in the Act of 1967 now stands at £175 million. It would seem also to be an appropriate way of dealing with changes in the relative sizes of the operational undertakings of the various boards. Although such changes would not be likely to be reflected annually as would happen if the revised Howitt/Erskine formula were incorporated in Schedule 7, they would in due course (when the resulting imbalance became significant) give rise to appropriate adjustments through the exercise of the departmental power. I think the situation is reasonably clear.
Noble Lords: Oh!
Lord Graham of Edmonton: As I have said before, the night is young. This is a genuine case which should appeal to all, including the single Member on the other side behind the Front Bench who has constantly spoken of equity, fair play and reasonableness. Here we have a situation where I am told that the electricity consumers who are covered by the local electricity board are now paying £6 million more in 1984 than they would if there had been some adjustments to the situation.
I appreciate that, as on every other aspect of rates, where in fact we have a situation where someone is going to benefit, someone else is going to be adversely affected. We have a situation where, if the London Electicity Board consumers are advantaged by £6 million, of course some other consumers or some other area board are going to find that in effect they

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will have to pay a little more. I acknowledge that; but I would think that many Members of this Committee who pay bills to the London Electricity Board would welcome the reply of the Minister and at least an indication that at the Ministry they have some thoughts on whether in 1984 a formula that was appropriate in 1950 ought not to be revised or adjusted. I believe this would be not only to the benefit of the London Electricity Board consumers but also would be well received by those who believe in equity and fair play. I beg to move, and I look forward to the debate.
Baroness Gardner of Parkes: I have a certain sympathy with this, as I likewise have been contacted by the London Electricity Board and they have put their case very thoroughly to me. But I think that this amendment is not so good as the second amendment which the noble Lord has down, because No. 98C seems to be a much more simple formula. I hope that the Minister will take this away and look at it, since it is a fairly complex matter. If there is an injustice it should be looked at.
The Earl of Avon: I think that the whole Committee—such as exists at the moment—will be very grateful to the noble Lord, Lord Graham of Edmonton, for his exposition of this amendment. When I reached my office in the Department of Energy this morning, I read in the newspapers that this amendment was down. Little did I realise that this evening I should actually be responding to it. Such is the way of life! But I hope the noble Lord will appreciate that I have a double edge to my response in that I do act for electricity as well.
The electricity industry, like most public utilities, is not valued for rating purposes in the normal manner, but by a formula set down in Schedule 7 to the General Rate Act 1967. This formula was updated by the Electricity Boards (Rateable Values) Order 1976. The formula prescribes a cumulo value for the whole operational undertaking of the electricity industry, which is then apportioned between the CEGB and the twelve area boards on a fixed percentage basis. This amount apportioned to each board is then varied each year to take account of changes in the output of that board compared with the output in the 1974 base year.
This Amendment No. 98A, as the noble Lord has explained, changes the basis of apportionment between boards. Amendment No. 98B would give my right honourable friend the Secretary of State power under paragraph 5(2) of Schedule 7 to the General Rate Act 1967 to vary, after consultation, the apportionment of the cumulo value between boards in future by order. I have no objection to this proposal in principle; but I must tell the noble Lord that, while I have no objection in principle to this amendment, it is an unnecessary duplication of existing powers. Section 19(4) of the Local Government Act 1974 already gives my right honourable friend the power to repeal or amend by order any provision contained in Schedule 7 to the General Rate Act 1967. Such an order would require the approval of both Houses and could only be made following consultation with interested parties.
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Consultation with all those affected by the formula is of course a vital prerequisite to any change, and this is why I am afraid that the amendment is not immediately acceptable.
This scheme would help some area boards, particularly the London Electricity Board, at the expense of the rest. Setting aside for the moment the merits of change—and in particular this change—I do not see how we could make such an amendment to the apportionment of the cumulo without consulting all the affected parties. And of course this would include the local authority associations.
I readily concede that over the years since the apportionment was set in the 1950s, the relative positions of the boards have changed and the apportionment should be reviewed. I am concious that the London Electricity Board, in particular, consider the apportionment now to be anomalous and unfair. It is, however, just one of a number of anomalies that have developed over the years in the formulae used for rating assessments. The Government certainly intend to carry out a series of full reviews of those formulae in the context of the revaluation of non-domestic properties we will be carrying out. We shall certainly wish to use this opportunity to iron out anomalies as well as to reassess the rate liability of the various formula-rated industries. These reviews will be undertaken by working parties of officials from all interested parties, including the Electricity Council. We intend to begin preparatory work on these reviews later this year. I hope that with that explanation and also with that assurance—I realise that the noble Lord would like us to proceed even more quickly—he will be able to withdraw his present amendment.
Lord Graham of Edmonton: I intend to withdraw it, but may I first say that I am grateful for the support by the noble Baroness, Lady Gardner, of the principle, and for her sympathy with what is behind the amendments. I am also very grateful indeed for what I consider to be the constructive and sympathetic response of the Minister to the problems of the LEB. He quite rightly pointed out that when one is making a change of this kind it cannot possibly be arbitrary. It is no good this Committee taking a decision and finding that there are people who will be disadvan-taged, saying, "We do not get an adequate share". I acknowledge, as the Minister pointed out, the various consulting fora which exist, not least the Electricity Council. I think I understood the Minister to say that in a review which is taking place covering the year 1984, not simply on this but on other issues, he is likely to come forward and at least to indicate that the consultations have taken place.
People outside who have felt aggrieved about this, not least the LEB's consumers and those who look after their interests, have had to wait for an opportunity to raise the matter, and that opportunity presented itself with this Bill in this form. That is why I have taken advantage of this opportunity to raise the matter here tonight. I would certainly have preferred to raise it earlier in the day, because I genuinely believe that there could have been a much wider debate from the point of view of equity and other matters.
But in view of the response of the Minister I shall consult with those outside who have advised me on

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these matters and I very much hope that it will not be necessary to come back again. In the light of those observations, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 98C and 99 not moved.]
The Earl of Avon The Earl of Avon moved Amendment No. 99A:
Page 22, line 46, at end insert—
("Adjustment of grant for disparities in rate revenue
.—(1) For section 59(11)(c) of the Local Government, Planning and Land Act 1980 there shall be substituted—
"(c) as if paragraph (e)—

(i) were omitted except in relation to any exercise of the power conferred by subsection (1) above for a purpose mentioned in subsection (6)(b) or (c) above; and

(ii) in relation to any such exercise of that power, referred to two classes, namely, councils of Inner London boroughs and councils of outer London boroughs."

(2) This paragraph has effect in relation to any financial year beginning on or after 1st April 1983.")
The noble Earl said: This is a technical amendment of the legislation which governs the block grant system. It is very simple, and unless the Committee wish it I do not intend to speak further. I beg to move.
On Question, amendment agreed to.
Schedule 1, as amended, agreed to.
Remaining schedule agreed to.
In the Title:
Lord Bellwin Lord Bellwin moved Amendment No. 99B:
Line 5, after ("it;") insert ("to make provision for requiring additional information to be given to ratepayers;").
On Question, amendment agreed to.
[Amendments Nos. 100 and 101 not moved.]
Title, as amended, agreed to.
House resumed: Bill reported with the amendments.
House adjourned at eleven minutes before eleven o'clock.