HL Deb 23 February 1987 vol 485 cc65-82

House again in Committee.

Clause 6 [Validation of past acts]

[Amendment No. 12 not moved.]

Baroness David moved Amendment No. 13: Page 5, line 46, at end insert ("provided that any such total shall have been reasonably estimated")

The noble Baroness said: In speaking to Amendment No. 13, I should also like to speak to Amendments Nos. 15, 17 and 22. These amendments require the Secretary of State to have acted reasonably in relation to rate-capping—the word "reasonably" appears in all these amendments—and will require decisions retrospectively validated to have been made reasonably as a condition of immunity.

These amendments concentrate on the provisions of Clause 6(2), which validate retrospectively anything done by the Secretary of State before the passing of the Act in connection with his powers under Part I of the Rates Act 1984 for the financial years 1985–86 and 1986–87: that is rate-capping. As will have been clear from the previous group, the clause effectively means that no legal challenge will now be possible against the Secretary of State's actions in relation to rate-capping since its introduction in 1985–86 up to the present time.

The amendments propose an alternative mechanism, although within the context of the Bill's proposals. Only those past decisions of the Secretary of State which were arrived at reasonably, having regard to the exercise of his discretion, would be validated retrospectively. Likewise, the retrospective deeming of calculations of total expenditure by the DoE to have been lawful under Clause 6(1) would also need to have been made reasonably. Thus the amendments would preserve the criterion of reasonableness in judging the lawfulness of these acts and as a consequence—this is the important point—leave some opportunity for testing issues in the courts.

The last amendment in the group, Amendment No. 22, deals with unreasonable acts. Under the new subsection, Clause 6(5)(a), they would continue to be validated retrospectively, provided that the procedures in the new Clause 6(5)(b) were complied with. Under that subsection, the Secretary of State would be required, if he were to earn the legal protection of the clause, to specify what he ought to have done in the particular case to have made his action lawful in the first place. This explanation will be required within 14 days of the Royal Assent or of the final decision in respect of any court case brought against his actions: for example, the case of Greenwich.

If this amendment were put into operation it would expose any doubts which may exist in the DoE about other areas of the exercise of discretion as well as the legal problems with relevant and total expenditure. The wide scope of the retrospective provisions must give rise to suspicions that such official doubts exist. Although under this amendment the Secretary of State could ultimately have his retrospective immunity, in order to achieve it he would have to announce publicly the steps taken in the unreasonable exercise of this discretion. If he failed to admit to such areas of doubt within 14 days, further legal challenges would be possible at a later stage on those points, against which he would have no retrospective protection under the Act.

The aim of these amendments is to put a few controls on the Secretary of State. There is still great uncertainty within the local authorities about how extensively the Secretary of State will use his new powers. The local authorities would feel that there were some safeguards if this group of amendments were accepted. I beg to move.

Baroness Hooper

There has already been considerable discussion about the scope of the validation of the Secretary of State's past decisions on rate limitation, and it is now being suggested by means of these amendments that we should in some way aim to validate the decisions so that they cannot be challenged on the grounds of the problems relating to relevant and total expenditure but would be open to challenge on the grounds of unreasonableness.

I have to say to your Lordships that even if it were possible to achieve this while making it clear how the past decisions are affected by the Bill, it would be an utterly unnecessary complication. When taking rate limitation decisions, my right honourable friends have always been bound by the general administrative law requirement not to act unreasonably, and they firmly believe that they have fulfilled this requirement. Even the recent court challenge to certain of my right honourable friend's decisions—in the cases of Greenwich and South Yorkshire—have not been brought on the grounds of unreasonableness and nobody has suggested that my right honourable friends have acted unreasonably.

Indeed, the rules of the Supreme Court and the Supreme Court Act 1981 require that challenges be brought promptly and at any rate within three months, except in exceptional circumstances. So local authorities know that challenges to all these decisions should have been brought by now. One may therefore presume that no local authority considers that any decision in issue here was unreasonable, in the sense of the Wednesbury case—which is of course the leading authority on the subject. I would also remind your Lordships that we have conceded the Greenwich and Islington cases solely on the ground of the total expenditure problem. My right honourable friends do not accept that their decisions were flawed on the grounds suggested by the authorities.

The purpose of Clause 6 as it stands is this. The Secretary of State's past decisions on rate limitation are affected to a greater or lesser extent by the practice adopted in defining total and relevant expenditure. We have clear advice that that practice is incorrect in law. It is a practice which local government asked us to adopt in the first place, and in those circumstances it would be quite wrong, we believe, to leave any uncertainty about whether those past decisions are valid. Clause 76 gives that certainty and we feel that these amendments put forward by the Opposition would undermine it. I therefore recommend that the Committee should reject these amendments.

Lord Dean of Beswick

It is with some regret that we hear, through the Minister, that the Government are almost totally unsympathetic to what these amendments are trying to achieve. We fully accept that the Government understand the purpose; but we fail to understand the total non-acceptance of what we are trying to do. The rejection of these amendments, as we see it, means that once the Act becomes law the Secretary of State will have almost carte blanche authority to do what he wants. In her reply, the Minister indicated that Greenwich and another local authority were being accepted as being outside the particular scheme and were being allowed to go ahead at present. Can she confirm whether that was in fact correct?

Baroness Hooper

I said that the concession on the Greenwich and Islington cases was made on the basis of the total expenditure problem.

Lord Dean of Beswick

Is one to assume from that that the Government think that only Greenwich and the other local authority in question have that financial problem? I suspect that there are others in a somewhat similar position. I do not know that one can pick out one-offs in terms of local authorities when dealing with rate support grant, rate capping and the conglomerate of conditions that are imposed on local authorities in arriving at the final support grant figures.

What I think is odd is that only two authorities have been singled out. The Minister said that it was because of the peculiarity of the financial situation there, but I should have thought that when you start dealing with two local authorities in a different way from the rest you are to a great extent varying the principle that is being put through in this Bill. The Minister is nodding his head—

Lord Skelmersdale

I am shaking it.

Lord Dean of Beswick

Is the Minister saying that there are circumstances in which some of the other local authorities will be allowed the same freedom to act as Greenwich and the other authority that has been mentioned? Is he saying that now?

Baroness Hooper

No. As I understand it, it is up to the local authorities to challenge the decisions of the Secretary of State, and so far the local authorities that have done so are the ones to which I have referred. As I mentioned earlier, the normal period for making these challenges is within three months unless the circumstances are exceptional. In the case of all the decisions and orders referred to in the various subsections to which amendments have been proposed, I believe that the last order was laid last July, which has allowed the local authorities plenty of time.

Lord Dean of Beswick

So what the Minister is now saying is that the other authorities are out of time? Is the Minister saying that they have missed the bus?

Baroness Hooper

I could say that it would be unreasonable to allow them to do otherwise.

Lord Dean of Beswick

It seems odd that the Government are saying that it would be unreasonable to allow them to do otherwise, when a number of other local authorities could say, "Our financial position and our latest appraisal are the same as Greenwich and we are in an identical position". If we are now making law, I do not see why the Government cannot say that if an authority is in the same position as Greenwich and that other local authority, it can have the same consideration. This Bill is trying to rewrite the law on the rate support grant and I see no reason why this amendment cannot be accepted on that basis.

As my noble friend and colleague said in moving this amendment, and as will be seen from the previous group, the clause effectively means that no legal challenge will now be possible against the Secretary of State's action in relation to rate-capping from its introduction in 1985–86 up to the present. Bearing in mind that this Bill will become a new Act of Parliament, I take it—though I am not legally qualified like my noble and learned colleague Lord Silkin—that it puts in limbo most of the things that we believed to be the law until it becomes a new law retrospectively.

Therefore, it is not unreasonable to ask that all local authorities should be treated in the same manner. If this were a completely new Bill, making history with no history to fall back on, the Government could well be accused of hybridity by treating some local authorities differently from others. On that basis, this is a reasonable series of amendments and I hope that the Government will give some serious and more sympathetic consideration to it.

8.15 p.m.

Lord Silkin of Dulwich

I must confess that I was surprised to hear the noble Baroness resting the department's case on the Wednesbury decision. It is one with which, from time to time, I had something to do in an earlier period, as may be imagined, and I came to know it fairly thoroughly. My understanding of Wednesbury was that what was decided was that one cannot challenge the decision of a Minister or a public authority on the grounds that it is an unreason-able decision unless no reasonable person in the position of the Minister or a public authority could possibly have made such a decision. In other words, it must be a decision which is beyond all possible reason in the circumstances. Unless you can reach that very high standard, according to the decision in Wednesbury, judicial review would not lie.

To equate that with the meaning of "reasonable" in these amendments seems to be quite wrong. Indeed, the noble Baroness assumed that that equation existed without stopping to discuss whether it should exist. But the word "reasonable" does not always mean reasonable in the very limited Wednesbury sense. In fact, if one looks at subsection (5) of Clause 7, one finds the phrase "As soon as is reasonably practicable". Quite clearly, the word "reasonably" in that context does not mean reasonably in the Wednesbury context. It would be a very limited meaning if that were so. It means what the word ordinarily means. It must be not merely practical, but reasonably practical.

Here in Clause 6, what these amendments are seeking to do is this. It is being said: "Here is a clause which quite unusually, quite exceptionally, is purporting to give to the Secretary of State very wide powers to validate what he may have done in the past, which it is conceded may have been unlawful, and within the terms of the clause, though unlawful, those actions shall be deemed to have been lawful and to have been done in compliance with the provisions of the Bill." It does not seem to me to be unreasonable, using the word in its widest sense, that that special privilege which is being given to him, exceptionally, by this legislation should be defined by reference to actions which were reasonable in the broad sense of the term and not in the very narrow Wednesbury sense.

I do not know the reasons why local authorities have not challenged decisions of the Secretary of State previously and have allowed the time to elapse to which the noble Baroness referred. But, inasmuch as they could not have challenged them except within the terms of the Wednesbury decision, they would have had to put forward the contention that no reasonable Secretary of State could possibly have made those decisions, which they may well have felt was far too strong a burden to undertake. It is very understandable, and on many occasions it is an argument which in another capacity I have been able to use when attacks have been made upon decisions of Secretaries of State.

Where one is dealing, as now, with a much wider meaning of the ordinary word "reasonable" and is not tied down to the Wednesbury definition of it, one cannot say whether if that had been available to those local authorities they would have had grounds for bringing proceedings within the period that the noble Baroness has mentioned. Therefore, the whole opposition founded on the Wednesbury decison falls and a better ground needs to be found before opposition to the amendments is justified.

The case for the amendments is as I have already stated. It is obvious that the constitutional importance of the exemptions and the forgiveness which Parliament is now being asked to give to the Secretary of State is so great that it should be given only if he has acted reasonably in the widest possible sense of that term. It is that argument which the Minister needs to meet rather than an argument founded on the narrow definition of "reasonable" in the Wednesbury case.

Baroness Hooper

I start by saying that I believe there is no hybridity risk in this clause since all authorities are treated in exactly the same way. Nor does the clause in any way give the Secretary of State carte blanche authority to do whatever he wants to do. This clause covers only past decisions.

I pointed out that we felt the amendments were not necessary and I also said in answer to the point raised by the noble Lord, Lord Dean, that individual cases were not finalised on the grounds of unreasonableness. I therefore feel that his analogy does not apply.

In referring to the general provisions of administrative law and the Wednesbury decision, I should not disagree with the interpretation of the noble and learned Lord, Lord Silkin. It is my understanding that the general administrative law principles which require the Secretary of State to act reasonably in the Wednesbury sense refer to decisions which are outrageous, which are reached without taking account of relevant factors or indeed which are reached after taking into account irrelevant factors. I agree that that is perhaps a narrower definition than that which noble Lords seek to achieve by their amendment. Nevertheless, we feel that there is always some difficulty in interpreting what is reasonable and what is unreasonable. For example, perhaps the noble and learned Lord could explain what he means in Amendment No. 13 by "reasonably estimated".

Having said that, I return to the original premise, which is that what we want to achieve with the clause is certainy for local authorities. We do not believe that that would be achieved if the amendments were allowed.

Lord Silkin of Dulwich

Since I am invited to construe Amendment No. 13, I should have thought that it is reasonably simple. I might possibly have altered the wording slightly in that instead of reading, provided that any such total shall have been reasonably estimated". it would have read, provided any such total shall be a reasonable estimate".

Lord Dean of Beswick

I am grateful to the Minister for the way in which she replied to the point that I made. However, perhaps she misunderstood what I meant by carte blanche I was not referring to the Bill as a whole; I was referring to the fact that in the case of retrospection the Bill gives the Secretary of State total control without any recourse, because the right to go to a court is taken away. If it is possible to have recourse to a court, I should be pleased to hear it.

Baroness Hooper

I think that the noble Lord is in error in his understanding of this point. The effect of the clause is to cover only past decisions made by the Secretary of State, which, as I have said, have already been laid as orders or in some other way, so that there is no future effect as a result of the clause.

Lord Dean of Beswick

That means that the Secretary of State can deal with such matters as he wishes. The decision is unchallengeable; that is the point I am making. It is a retrospective carte blanche. It must be.

Baroness Hooper

It is not as the Secretary of State wishes; it is as he has done already, and I think that should leave no one in any doubt.

Lord Underhill

If I may raise a small point, I believe that the noble Baroness referred to something which had already been done. However, I believe she also said that a local authority could not take advantage of the position because it would be out of time. If that is so, why is there anything at all in subsection (2) relating to the year beginning 1985 and the year beginning 1986, when according to the Minister no action can now be taken by local authorities irrespective of the Act?

Baroness Hooper

I was referring to general principles of administrative law, which under normal circumstances require that challenges should be brought promptly or at any rate within three months, except in exceptional circumstances. The general point is covered by that principle and I believe that the reference made in subsection (2) is again a reference to past decisions. Once again, it is not a matter which is liable to arise in the future.

Lord Underhill

I bow to legal opinion on this. However, if such a matter is not likely to arise or connot arise in the future, why do we have subsection (2) at all?

Baroness Hooper

The noble Lord has me slightly on this. However, it is my understanding that although the decisions all relate to occurences in past years, in the complicated methods of referring to some of those decisions and their effects, the reference to "intermediate year" is necessary in the subsection in order to make it clear that it relates to past decisions. I think elsewhere in the Bill will be found—although I am not absolutely sure where at the moment—a definition of "intermediate year". Courts do give leave in exceptional circumstances. Therefore, it is intended to cover exceptional cases and possibly cases in the pipeline.

Lord Underhill

Therefore, does the noble Baroness agree that if a court allowed a case to be heard in exceptional circumstances, that part of the amendment specifying that the Secretary of State should have acted reasonably could take effect and therefore the amendments would be in order?

Baroness Hooper

The point which I tried to make earlier is that the amendment is not necessary. The circumstances in which the general rules of administrative law apply on the grounds of unreasonableness will apply in any event.

Baroness David

We have had quite an interesting discussion on the amendment. We shall have to read the debate with great care. It seems to me that we were wise to bring these amendments forward. They may well be necessary. However, in fairness to the noble Baroness, we must read Hansard carefully and decide what to do at the next stage. She has not yet convinced me that the amendments are unnecessary. We shall look with great care at Hansard and I should not be at all surprised if we returned with the same amendments at Report stage. However, at this moment I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees (Earl Cathcart)

In calling Amendment No. 14, I should advise the Committee that, if it is agreed, I cannot call Amendment No. 15.

[Amendments Nos. 14 to 20 not moved.]

8.30 p.m.

Baroness David moved Amendment No. 21: Page 6, line 15, at end insert ("except where such a decision is given in respect of litigation before the courts on or before 18th December 1986.").

The noble Baroness said: This amendment has to do with Greenwich. Its purpose is to remove immunity against the case brought by Greenwich. It is to allow the Greenwich case against the Secretary of State to proceed further. Greenwich had taken the Secretary of State to court over two issues and had appeared in court at first instance before 18th December, which was the date of the publication of this Bill. The Government conceded on the first limb of the Greenwich case but not on the grounds that the borough was correct on the point taken. They conceded because they argued that, knowing as they did that all their calculations of total and relevant expenditure were illegal, they could not defend the case.

I think it is important from the point of view of this amendment to give a little history of the Greenwich case and to say what was really happening in the courts. The Greenwich challenge sought, first, to quash the Rate Limitation (Prescribed Maximum) (Rates) Order 1986 as it related to Greenwich. This is the 1986–87 rate-capping order. This limb of the challenge has succeeded. The Secretary of State consented to judgment in favour of Greenwich, and a consent order was made by the High Court on 17th December, 1986, which, as noble Lords will be well aware, was the day before this Bill was read a first time in another place. Clause 6 of the Bill seeks to reratecap Greenwich in 1986–87 and to reverse the High Court decision; and of course it goes much wider than that.

Secondly, Greenwich sought to prohibit the Secretary of State from redetermining multipliers determined for the London boroughs in the Rate Support Grant Report (England) 1986–87 as proposed by the DoE consultation paper Local Government Finance (Grants) 1986 No. 50. This limb of the challenge was heard on 29th and 30th January 1987 and 2nd February 1987. The proposals have now been embodied in the 1986–87 First Supplementary Report announced to another place on 13th January 1987. The Secretary of State is anticipating the outcome of the proceedings, and this I shall explain.

The "redetermination of multipliers" sounds complicated and it is. In simple terms, the Secretary of State received a complaint from Bromley that it did not get an adequate allowance in RSG terms for taking over additional highways on the abolition of the GLC. The Secretary of State agreed and proposed to give Bromley more grant. He also adjusted the grant of authorities charged with running Hainault Forest. He decided to find this money by penalising other authorities, and inner London boroughs in particular. Greenwich is the largest potential loser, with an envisaged loss of £3.822 million of grant in 1986–87 entitlement. Tower Hamlets and Lewisham will also lose more than £1 million.

Greenwich objected that the Secretary of State had no power to do this, and this he now acknowledges. But he has taken powers in the Rate Support Grants Act 1986 which he considers give him that power. The Act received Royal Assent on 31st October. Although Mr. Ridley says himself that he is the only person who is certain what the law is, Greenwich still maintains that he does not and that he still has no power to redetermine multipliers and to penalise Greenwich as proposed. What I shall say will describe the position in a little more detail.

The stated intention of the 1986–87 RSG report was to avoid losses or gains to ratepayers as a result of the abolition of the GLC. That was in paragraphs 20 and 21 and Annex G. This was to be achieved by determining multipliers to adjust the RSG entitlement of successor authorities. As a preliminary it was necessary to make an expenditure assumption to reflect the transfer of functions from the GLC to successor authorities. In other words, the Secretary of State had to divide the GLC budget between successor authorities. If noble Lords want to look that up, they will find it in paragraphs 6, 7 and 8 of Annex G to the report.

This division/allocation of the GLC budget was notified to Greenwich and to other successors by a DoE letter of 20th December 1985 which purported to give the final allocations of the GLC budget. Multipliers were determined in the RSG report using this allocation. That is in paragraphs 15 to 17 of Annex G. The allocation to Greenwich was £22.779 million. Greenwich is having to spend £24 million on ex-GLC services and estimates that expenditure of not less than £26 million is required. But it does not have the resources to spend at this level. The Secretary of State is now proposing to change his final allocation and to reduce this to £20.513 million, or thereabouts—it is very difficult to get accurate information from the DoE. Thus the original inadequate allocation of £22.779 million will be reduced.

As the original allocation was inadequate it meant that as a result of GLC abolition there were losses for Greenwich ratepayers, contrary to the stated intention of the Secretary of State. The Secretary of State now proposes to increase those losses. The effect of his proposals is to withdraw £3.822 million of Greenwich's 1986–87 block grant entitlement. Greenwich ratepayers would have to find a further £3.822 million over and above the losses which they have already suffered as a result of GLC abolition.

Grant taken away from Greenwich and other inner London boroughs is being given to Bromley, Barnet, Sutton and outer London boroughs. The outcome is even more serious, as it relates to the base position following GLC abolition and will affect grant entitlement in 1986–87 and future years as well. There is a lot to play for. Following the protest by Bromley, the Parliamentary Under-Secretary of State, Mrs. Angela Rumbold, announced on 31st January 1986 at col. 1256 of the Official Report that a mistake had been made in the allocation of the GLC budget for highway maintenance to successor authorities. It is to be noted that this is but one element of the GLC budget. The Secretary of State is not proposing to correct errors which disadvantaged Greenwich such as his misallocation of land drainage expenditure. Greenwich was allocated only £138,000, yet actual expenditure, which is in the form of a levy to the Thames Water Authority, over which Greenwich had no control, is £769,000.

On 6th March 1986 the Minister of State for the Environment, Countryside and Local Government, Mr. William Waldegrave, announced how the Secretary of State would deal with his error. The intention was to redetermine the multipliers determined for London boroughs in accordance with Annex G to the draft supplementary report. There is to be a temporary safety net to limit grant losses to the equivalent of a 2p rate, but only as a temporary arrangement to be removed in a subsequent supplementary report.

Greenwich objected that the Secretary of State was proposing to act in an unlawful manner. This he now acknowledges, but he claims to have taken powers—paragraph 10 to Schedule 1 of the Rate Support Grants Act 1986—to act as he proposes by amending Part VI of the 1980 Act, the Act at issue in Clause 4 of this Bill. Thus the Secretary of State was forced not to proceed with his March proposals but introduced new proposals to the same effect in the DoE paper referred to earlier. He proposes to implement the proposals using the new powers which we believe are available to him after the Rate Support Grants Act received Royal Assent at the end of the last Session.

However, Greenwich strenuously maintains that the Secretary of State still has no powers to implement the proposals now incorporated into the proposed First Supplementary Grant Report for 1986–87 announced on 13th January 1987. Judgment in the case is expected this Thursday. I shall return at the end of my speech to a number of questions that I should like to put to the Minister arising from a possible decision in Greenwich's favour.

I now refer to the rate cap challenge. This was successfully concluded on 17th December and it is not necessary to give full details. But included in the grounds of challenge were, first, that the Secretary of State took into account his unlawful proposal to reduce Greenwich's block grant entitlement; and, secondly, that it was bad enough taking into account the proposal at all as the Secretary of State failed to disclose this to Greenwich prior to proposing a maximum rate to Parliament. But this conduct was all the more serious as the proposal was unlawful, as the Secretary of State now acknowledges. Thus on 30th January 1986 Greenwich had a meeting with Mr. Waldegrave and asked for a higher rate limit, enabling it to incur expenditure above the redetermined expenditure level of £95.228 million.

The DoE know at that meeting that it was proposing to reduce Greenwich's block grant entitlement, and hence the level of £95.228 million at which it could incur expenditure without recourse to reserves, but concealed that from Greenwich. On the following day, 31st January, an announcement was made to Parliament but no details as to how this affected individual authorities were given.

In the course of February the DoE produced proposals which did contain details of the effect on individual authorities but it did not disclose these to Parliament or to Greenwich prior to inviting Parliament to approve the draft Rate Limitation Order. The draft order was laid before the House of Commons on 13th February and approved on 25th February 1986. On 26th February the Secretary of State made the order.

It was not until 6th March that Parliament and affected authorities were told of the proposals which undermined the basis on which the order had been approved by Parliament and made by the Secretary of State. Thus Greenwich was denied the opportunity to make representations as to this crucial element of the rate-capping calculation. It follows that the Secretary of State conducted consultations and statutory negotiations under the Rates Act 1984 on one basis, whereas the Secretary of State reached a final decision on a different basis, taking into account an uncommunicated decision—to reduce Greenwich's RSG entitlement. Greenwich accordingly contended that the Secretary of State acted in an unlawful and procedurally improper manner and to its prejudice.

In the event, the Secretary of State avoided a detailed examination of his conduct by submitting to judgment on the tangential point of the definitions of relevant and total expenditure. As it was only necessary to win on one point, the other issues were not ventilated in the High court. The Greenwich case is now poised at a very interesting stage. As I said, judgment will be given this Thursday on the RSG aspects of the case.

The Government's QC stated that the Bill would not affect the outcome in respect of the RSG aspect on the basis that the Bill validates past decisions and that the decision on multipliers is still to be taken. The proposal to recalculate multipliers, however, first appeared in March. It was withdrawn but then reappeared in the consultation paper. It is incorporated in the Rate Support Grants Act 1986, which amends the 1980 Act to give the Secretary of State the necessary powers—at least in the Government's view—and it now appears in the supplementary report which is awaiting the passage of the Bill before it proceeds. It is difficult to see how all these steps are divorced from a final decision.

The Minister should state tonight the position on the following points. First, will the Government confirm that, although they conceded the case on rate-capping because of the definitions, this Bill will validate the 1986–87 rate cap anyway and without an opportunity for Greenwich to re-mount a challenge on the main issue? Secondly, if Greenwich wins the RSG limb of the case on Thursday, the Bill will affect none of the past proposals, Acts and so on on this issue?

Thirdly, will the 1986–87 supplementary report be withdrawn as a consequence, and what will be the time-scale for all authorities' RSG adjustments for that year? Fourthly, in relation to the second question, if it affects none of the past Acts on this issue, how does this square with the words "Anything done" in Clauses 4(1) and 6(2)?

Finally, in a letter to Margaret Hodge dated 20th March 1986 the Secretary of State gave an assurance that in later years—that is, 1987–88 onwards—he would consider the implications of changes in grant entitlement resulting from the removal of the temporary safety net when calculating rate limits for those years. It is worth noting that in this Bill the Secretary of State has prevented himself from honouring this assurance by the terms of this clause and Clause 7, which prevents consideration of the position of individual authorities prior to setting a rate limit.

I am sorry to have gone on for so long but it seems to me that Greenwich has had a hard time. It is important that the situation should be thoroughly understood. I hope that the Minister will be able to respond to this long explanation of Greenwich's situation. I beg to move.

8.45 p.m.

Lord Skelmersdale

I shall try, but whether I succeed only the noble Baroness and perhaps her colleagues on the Front Bench opposite will be able to tell. I think it would be best for me to go back to the Bill before referring to the terms of this amendment and to look at Clause 6. This may or may not save time on the Clause 6 stand part debate which I anticipate we shall have fairly shortly.

The important part is subsection (3), which states: For the purposes of section 7 below and Schedule 2 to this Act—

  1. (a) any designation of an authority under section 2 of the 1984 Act in relation to the financial year beginning in 1987, and
  2. (b) any determination and notification under section 3(1) and (3) for that Act of a level for an authority's total expenditure in that year,
shall, if made before the passing of this Act, be deemed to have been made in compliance with the provisions of Part I of the 1984 Act"— that is, the Rates Act. What is germane to this particular subsection is that when the axe fell, as it were, my right honourable friend had taken only two decisions for next year; namely, he had selected who should be rate-capped and he had made a decision on their limits. He had not yet decided on anything else and so, by definition, must fall outwith the scope of this Bill.

This amendment seems to be a further attempt to modify the validation provisions we are seeking for past actions on rate limitation, so that in the case of at least some of these matters there still remains scope for effective judicial review, and the things done which are the subject of the amendment relate to matters which were the subject of litigation which was before the courts on or before 18th December 1986—the day on which the Bill was introduced into another place.

I accept that what we are proposing will cut across the normal judicial review process in a few cases. However, we are talking not of a plethora of cases but of only a few. There are only three cases which fall within the category of the amendment: two brought by the London Borough of Greenwich and the South Yorkshire Passenger Transport Authority related to rate limitation for 1986–87 and one brought by the London Borough of Islington was a challenge to their designation for 1987–88. Because total expenditure runs throughout the rate limitation system, we have conceded on total expenditure grounds alone.

As I understand the law—and I am sure the noble and learned Lord, Lord Silken, will correct me if I am wrong—that means that even though that was the limb of the case on which the Government conceded, the whole case is conceded with it. As my noble friend Lady Hooper has just said in answer to the last amendment, two of the cases—Greenwich and Islington—have already been conceded and we are conceding the third. The court has therefore already made a decision in two of these three cases, and the effect of the amendment is that Islington's designation for 1987–88, Greenwich's rate limit for 1986–87 and South Yorkshire Passenger Transport Authority's precept limit for 1986–87 would not be validated. It is quite clear that the Bill therefore needs to validate these decisions.

The noble Baroness spoke at great length about the Greenwich multiplier case which I can tell her is about a future decision which the Bill does not validate at all. The case is wholly outside the validation provisions of the Bill and will be decided in the usual way. I, like her, understand that judgment is likely to be given on Thursday of this week. The future decision will be taken in the first supplementary report for 1986–87. This has not been taken, which is why it cannot be validated by this particular Bill. It will be taken, however, after Royal Assent.

I do not see therefore how arguing the merits of the Greenwich case relates either to the Bill or indeed to the amendment. Even if it did on the Greenwich multiplier case, my right honourable friend cannot take any further decisions until after the Bill is enacted. They will still be for review in the courts, if Greenwich still wants them, in exactly the same way as has happened up to now.

In answer to the quick-fire questions of the noble Baroness, Lady David, at the end of her speech, while my introduction covered two of the points, I can tell her that the Bill validates the 1986–87 rate cap and all past rate support grant decisions. So far as concerns the other questions, if I have not answered them, I shall clearly have to write to the noble Baroness because otherwise we shall get this matter referred to time and again in our future discussions on the Bill which I for one should like to avoid. That is all I can say in answer to this particular amendment and I trust it has been helpful enough to the noble Baroness to allow her to withdraw this particular amendment.

Lord Silkin of Dulwich

Would the Minister be good enough to repeat (perhaps a little more slowly than he did when making his speech) the part of his remarks in which he apparently was seeking my agreement? Why that should help him, I am not sure; but evidently he thought a great deal of that fortification of his argument. Before I fortify it I should like to know what it is I am fortifying.

Lord Skelmersdale

I shall try and repeat what noble Lords will find in Hansard tomorrow because it is not something that I had written down before I said it. What I said was that as I understood the legal position, when a government concedes a case in administrative law, the whole case falls. The bit which was not conceded has no direct judgment on it. Obviously, the case is given away in that respect as it is in the concession respect. That is what I was seeking confirmation for. The noble and learned Lord may or may not tell me I am right, but that is what I sought to say.

Lord Silkin of Dulwich

I am grateful to the Minister. Whether he is right or wrong really depends on what exactly he means. I am still not very clear about that. Perhaps I can put it in my language. If proceedings are brought seeking, as in this case they would be, the annulment of a decision and the plaintiff—in this case a local authority—relies on four grounds, it is sufficient for him to succeed on one. The fact that he has succeeded on one does not mean that he has either succeeded or failed on the other three.

Lord Skelmersdale

Without taking it in particularly rapidly at this time of night, I understood that what the noble and learned Lord has just said is confirmation of what I said earlier. However, we shall no doubt both look at Hansard in due course and decide whether I am being erroneous or not, since that seems to be the going word of the afternoon!

I am not convinced that whatever happens we should simply accept the decisions of the court. We could not possibly agree to this. This is the decision on the cases which started as a result of the procedure before the Bill. It is essential that, notwithstanding the total expenditure problem, we maintain the discipline of rate limitation. The need for this discipline is all too clear as is illustrated by the Audit Commission's Report on certain London authorities. It would be irresponsible of us if we allowed the technical problems on total expenditure to leave ratepayers unprotected, even for one year, from the burdens which high spending councils might otherwise impose on them.

That is a sentiment that I shall express in rather longer and wider terms tomorrow when we actually get down to the nitty gritty of the various formulae that are proposed in the Bill. In the meantime, I hope that the noble Baroness, and indeed the noble and learned Lord, will feel that even if I have not been helpful I have at least tried to be helpful in respect of this amendment.

Baroness David

The Minister has made a good effort because I made a long speech and I asked a lot of questions. He has answered some but not all of them. I hope that he will do what he said he would, which is to read Hansard in the morning, and if possible to get fairly quick answers. It would be helpful if some communication could come before we get down to what he calls the nitty gritty tomorrow afternoon, even though I cannot bring this particular amendment up again until Report stage. If he can give any sort of communication to us before we start on the second Committee day tomorrow, that will be extremely helpful. With that said, I am prepared for the moment to withdraw the amendment, but I think the Minister wants to say something else.

Lord Skelmersdale

Time being what it is, it may not be possible to send to the noble Baroness a written missive; it might have to be an oral one. However, I shall certainly do my best so that she is well armed to attack me tomorrow.

Amendment, by leave, withdrawn.

[Amendment No. 22 not moved.]

On Question, Whether Clause 6 shall stand part of the Bill?

Lord Silkin of Dulwich

I do not intend at this hour to take up much of the time of the Committee on clause stand part. I rise to draw attention to the fact that, although a number of amendments have not been moved on Clause 6 because of the narrow defeat on the major amendment of Clause 4, that is not to say that those amendments are considered to be wrong.

No doubt in due course we shall want to come back to those matters, so far as we are able to do so, in order to make quite sure that the whole basis of validation, which is the fundamentally important part of this Bill, is in the most appropriate language, as the noble and learned Lord, Lord Denning, said in the course of his earlier speech. That applies of course to both Clause 4 and Clause 6.

9 p.m.

Lord Skelmersdale

Perhaps I may quickly say that, as the noble and learned Lord, Lord Silkin, has just said, Clause 6 validates past Acts in relation to rate limitation. When considering the amendments that we have debated at length this afternoon, the nature of the validation provisions that we are seeking in this clause was fully and extensively discussed, and indeed, as the noble and learned Lord has just said, voted upon. As I explained then, and have continued to explain throughout the afternoon, our principal concern is to provide absolute certainty about precisely what is validated so that there can be no argument that something done in the past is not valid.

Of course I understand the concern of a number of noble Lords about the scope of the validation provisions that we are seeking and about the fact that these provisions put past decisions—and I must emphasise past decisions again as I did on the last amendment—effectively outside the scope of judicial review. However, noble Lords opposite have not suggested any satisfactory alternative. As I have explained, the amendments that have been put forward simply will not work. They either will result in nothing being validated or will lead to great uncertainty about what is validated.

We have not embarked lightly on the course that we have chosen, as I have said. We have carefully considered the nature of the validation provisions that are necessary to deal with the problem on relevant and total expenditure and I have listened carefully to the arguments that have been put forward today. I remain convinced that there is no alternative to the provisions that we are seeking in Clause 6. I believe that they are both right and necessary. However, I have said, and I say again to the noble Baroness, that I shall study Hansard with the greatest care and—to use an expression on which I think the noble and learned Lord, Lord Silkin, pulled me up a little time ago—I shall crawl over it personally and I shall answer in the light of that crawling. I hope that this clause may stand part of the Bill.

Baroness David

I am grateful for the noble Lord's remarks. From what he has said I believe that he has been impressed by the very powerful opposition that there has been to certain parts of Clauses 4 and 6 of this Bill. There was very distinguished opposition when my noble and learned friend Lord Silkin moved his Amendment No. 3, and I am very glad that the noble Lord is taking that into account. There are a great many people who are very unhappy about many parts of this Bill. Having had so many mistakes about legislation in the past, it will be another very big mistake if this measure gets on to the statute book with so much uncertainty as to the meaning and the breadth of so many of the clauses in the Bill. I am very glad that he is taking that sensible attitude to it.

Lord Skelmersdale

If there is any uncertainty under the Bill there will certainly be even more uncertainty as to what is and is not validated so far as concerns the amendments that have been put down on the Marshalled List today. I have said that I and the Government want certainty, and the noble Baroness has agreed with me about that. Perhaps with a bit of luck we shall actually achieve it.

Clause 6 agreed to.

Baroness Hooper

It may be for the convenience of the Committee if we break our deliberations now. I therefore beg to move that the House do now resume.

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

House resumed.

House adjourned at five minutes past nine o'clock.