HL Deb 08 May 1984 vol 451 cc800-71

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 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

  1. (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
  2. (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 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 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 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 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 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 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


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 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 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 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 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 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 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 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 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.

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.
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.
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 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 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 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 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 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 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 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 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 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 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 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.

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.

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 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.

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 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 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 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 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

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 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 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 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 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.

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 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 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.

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.

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.
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.
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.
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 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—

  1. (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
  2. (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 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 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 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.

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

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 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 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 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 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 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—

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

The noble Lord said: 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 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 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 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 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 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 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 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—

  1. (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—
    1. (i) the services provided by any local authority referred to, or proposed to be referred to, in such report, statutory instrument or other document,
    2. (ii) the inhabitants of such local authority's area,
    3. (iii) social and economic conditions in such local authority's area: and
  2. (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 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 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


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 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 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, 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 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 moved Amendment No. 92:

After Clause 12, insert the following new Clause

(". Where the Secretary of State has—

  1. (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,
  2. (b) issued guidance to an authority pursuant to section 59(6)(cc) of the 1980 Act, and
  3. (c) determined a maximum expenditure level for an authority pursuant to this Act,

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 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 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.