HL Deb 07 June 1988 vol 497 cc1320-95

House again in Committee on Schedule 4.

Lord Glenarthur moved Amendment No. 86E: Page 93, line 15, leave out ("and earnings") and insert ("if any) or income (whether or not from employment)").

The noble Lord said: I spoke to this amendment with Amendment No. 86B. I beg to move.

On Question, amendment agreed to.

Lord McIntosh of Haringey moved Amendment No. 87: Page 93, line 30, leave out ("and").

The noble Lord said: This amendment is prompted by a Statement made in another place on 20th April by the Minister of State for Local Government. He said, at col. 239, that there would be a maximum beyond which attachment would not operate as a proportion of benefit or income support.

Perhaps I may remind the Committee that in Schedule 4, paragraph 5, which deals with attachment of earnings, there is no specific reference to the maximum beyond which attachment would not operate. The purpose for which we have put down this amendment is to find out whether the Government have come to a conclusion about the maximum figure. If they have not reached a decision, we urge them to do so, but if they are not willing to be so urged, we shall suggest a figure to them.

We are specifying a maximum of whichever is greater, £5 or 2 per cent. of an individual's earnings. What we are suggesting is that the Government, if they disagree with the amounts that we have specified, should, in accordance with the Statement of the Minister in another place, say what the amount should be.

It is of some importance that there should be a figure, because this is a matter of considerable worry to employers. They have to be involved in the attachment of earnings for non-payment of the community charge and they will be particularly concerned if they fear that the attachment of earnings will decrease significantly the earning power of their employees. In turn this will put pressure on the employers.

In this country we are not familiar with attachment of earnings as a way of collecting local taxes. It is a new departure for us and in general it is an undesirable departure. However, it must neither cause hardship to the individual so that there will be further arrears or further difficulties arising, nor make life difficult or embarrassing for an employer who has to impose such an attachment of earnings. I hope very much that the Government find it possible to enable us to withdraw Amendments Nos. 87 and 89 by saying what is their intention and how they propose to give effect to the Statement in another place of the Minister for Local Government. I beg to move.

Lord Glenarthur

I hope it is clear from paragraph 5 of Schedule 4 that the Government recognise the need for close control over the operation of the rules for attachment of earnings in community charge cases. We shall exercise that control in the regulations envisaged in paragraph 5(2). One of the regulations will deal with the maximum amount of earnings that can be deducted for any level of income. Our regulations will be very much more sophisticated than the £5 or 2 per cent. maximum approach of the noble Lord, Lord McIntosh, which incidentally takes little account of ability to pay. We have not yet settled the figures that will be proposed in our regulations. If the noble Lord would like an indication of the amounts we have in mind I would refer him to Schedule 2 to the Debtors (Scotland) Act 1987. I have those schedules with me but they are fairly lengthy.

Lord McIntosh of Haringey

Needless to say, I do not.

Lord Glenarthur

I can almost immediately give the noble Lord those schedules. Among other things they will apply to deductions for attachment of earnings in the case of non-payment of community charges in Scotland. We envisage that no deductions should be permitted for earnings up to a threshold level. That is the right approach. There are amounts of earnings so small that only deductions less than those implied by the noble Lord's amendment should be allowed. Conversely, where people have large disposable incomes, they should be expected to pay off much more quickly the debt they have incurred. Two per cent. of net earnings is in those cases far too low. For earnings over £300 a week, for example, the Debtors (Scotland) Act envisages deductions of £83 a week in respect of the first £300, plus 50 per cent. of the remainder. I am sorry that the noble Lord does not have the schedules with him, but on the basis that that is the amount we have in mind I hope he will feel able to withdraw the amendment.

Lord Morton of Shuna

Having tried to follow the Debtors (Scotland) Act when it was passing through this Chamber, I am slightly amazed that suddenly, by a back door, it is to be added as an afterthought to the Local Government Finance Bill for England. I appreciate that it is not being added, but how is anybody to know that the standard one applies in Scotland to any debt will suddenly be applied to England? There is not an Act or anything else to tell us. It is a laudable approach to take the Scottish approach and apply it to England—on the whole I would be in favour of it—but surely it would be better just to say so openly instead of doing it through the back door.

Lord Glenarthur

The answer to that is that we do not necessarily propose to use precisely the same figures. What I hoped to indicate was the kind of figures that we would be talking about. It is perhaps a ball-park figure but it will follow broadly those lines. That is the nearest parallel that I can give the noble Lord.

Lord McIntosh of Haringey

I am far from convinced that the analogy is exact. An Act such as the Debtors (Scotland) Act which applies to all debts and not simply to this particular form of default is not necessarily applicable to the non-payment of the community charge. It may well be that the criteria which apply are not appropriate. I am conscious of two points in this respect. The first is the difficulty for the individual concerned whose earnings are being attached. To that extent I appreciate the flexibility of the provisions which the noble Lord has set out and which come from the Debtors (Scotland) Act. However, I am also conscious of the problems for employers. As somebody who meets a payroll himself, I am conscious that any deductions are not necessarily conducive to good industrial relations and to good management of human resources.

Without having read the schedules in detail I am not satisfied that the Government have come to the right conclusion. However, I recognise that with inflation proceeding as it does, the figure of £5 is not suitable to be put into legislation. I shall study the schedules and consider the alternatives while insisting on the need for an effective control of the proportion of earnings. In the circumstances, I think it is best if I withdraw the amendment.

Amendment, by leave, withdrawn.

8.45 p.m.

Lord Banks moved Amendment No. 88: Page 93, line 32, at end insert ("; and (e) no attachment order may be placed on income from any social security entitlement.").

The noble Lord said: As we know, Schedule 4 to the Bill provides that an authority may recover arrears of community charge by means of an attachment of earnings order. I understand that such an order would apply to social security benefits as to other forms of income, although social security is not normally thought of as earnings but as a replacement for or a supplement to earnings. During the Report stage in another place the Minister for Local Government said: Attachment of earnings will be available for defaulters in employment, and it is right that there should be parallel arrangements for income support recipients". He went on to say: It would be quite wrong if people whose benefit had been increased to help them pay the community charge were able to avoid payment without being subject to the same sanctions as those in employment".—[Official Report, Commons, 20/4/88; col. 837.]

It is true that income support has an element in it in respect of the 20 per cent. poll tax. However, I should like to make two comments about that. First, we do not believe that the income support figures were uprated sufficiently to take fully into account the rise in the cost of living between the announcement of the original illustrative figures and the adoption of the final figures. Personal allowances were raised by between 4.5 per cent. and 5 per cent. on the November 1985 rates, yet inflation between May 1985 and September 1987 rose by 6.5 per cent. for RPI less the element of housing, or 7 per cent. for RPI including housing costs. We do not believe that the figures were sufficiently uprated.

The second point is that the increase added on top of that to take account of the 20 per cent. poll tax which those on benefit would have to pay is a national average figure. Those who are in arrears where the poll tax is above average will find their subsistence benefit—it is a subsistence benefit—substantially eroded. On 1987–88 figures the national average poll tax would have been £224. Twenty per cent. of that is £45. That is the sum which would have been added to income support. However, in Camden, for example, the poll tax would have been £782, of which 20 per cent. is not £45 but £156, or £111 more than provided for. Surely it is carrying a principle too far to say that someone on benefit must pay £111 out of a subsistence benefit to encourage him to bring pressure to bear on his local authority in order to compel it to reduce its spending.

In the case of Hackney the average figure to be paid is £93, in the case of Lewisham it is £90 and in the case of Tower Hamlets it is £83. We must remember that such figures make no allowance for failure to uprate the basic benefit sufficiently. The amendment would prevent an attachment of earnings applying to social security benefits. Therefore I hope that the Minister will be prepared to reconsider the Government's attitude on the matter and feel able to withdraw his opposition to the amendment.

Baroness Jeger

I rise to express my support for the amendment on behalf of my noble friends. It seems to me to be absolutely unacceptable that there should be this 20 per cent. figure across the board. The noble Lord, Lord Banks, has already mentioned that in Camden, according to official figures, there should be an individual price of £782. According to government figures the national average is £224. I cannot understand why the Government say that the 80 per cent. reduction should be in accordance with the national average, because people cannot help where they live. They probably live in a certain place because their job is there and because there is work in the area. Looking through all the figures, which I have studied most carefully, I find that the national average is £224. I take the example of Camden not for any reason other than that I happen to live there and I know the area well. I pay rates in Camden and my charge will be £782. I should perhaps mention that the noble and learned Lord, Lord Elwyn-Jones, is also a Camden ratepayer.

In Birmingham, which is also a Labour-controlled council, I understand that the rate will be £186. Therefore if I was a wicked old lady living in Birmingham I would receive a pay-back, because my rates would be less than the average. However, if I am the same silly old lady living in Camden, I would then have to pay infinitely more. I feel that the concept contained in the Bill in regard to the average rate, which is worked out on a social security basis, is totally wrong. If there is to be a rebate scheme, why is it not mentioned in the Bill? In my view we are hearing far too much from Ministers about regulations; however, we are not hearing enough about amendments to the Bill. For example, will the rebate scheme be temporary?

It has been said that in some boroughs only one person in four pays rates. Of course that assumption is nonsense because it is based on the figure which the ratepayer who receives the piece of paper pays. It does not take account of the fact that his wife and family are part of the household and they all contribute in one way or another. Therefore it is totally bogus to take on board the fact that the family involved in the household costs are not contributing.

I have tried to assess some of the figures which affect the amendment. In the other place on 16th December (at col. 1124 of Hansard) an honourable Member pointed out that in the Orkney Islands it is not a question of 20 per cent. that would be taken from social security payers but 41 per cent., because of taking the basis of the average throughout the whole country. If a person happens to live somewhere which is not considered to be average, they will suffer accordingly. I concede that the figure created in the other place in respect of the Orkney Islands of 41 per cent. included water rates. However, I do not think that that figure should be dismissed because we shall all have to pay water rates.

Therefore, I must ask the Minister when he talks about the help which is given to people on social security, how they are getting up to 80 per cent. assistance and thereby only having to pay 20 per cent.—and further, when the Minister in the other place said that there would be extra help for people on low incomes who were receiving income support to help them through this trouble—how much assistance such people will receive. When I read carefully through the debates which took place in another place I could not find how much such people would be helped. Could they perhaps be helped up to 100 per cent.? Is it not a ridiculous waste of the circulation of money that we are supposed to be giving to people who are too poor to pay the poll tax—I insist on calling it that—when we then take it back from them? Surely this is a wasteful circulation of money.

I know that the Government think that by being so mean and nasty to people on social security it will help them come to certain conclusions about accountability. However, that is not the real world.

What happens when you have a single mother living on social security who now has to pay the poll tax? She is told that she should pay more attention to the local council elections. She may not have been living for long in that area. In a volatile situation in central London, the area which I know best, it is totally unfair and stupid to say to someone, "You should have voted at the last election to clear those people out and then you would be all right". She might have been under 18 at the time of the last local elections. She might have been living elsewhere.

We need mobility of labour in central London. People are constantly coming in who are much welcomed, for example, to drive trains and buses. They might have been nowhere near Camden at the time of the last local elections but they are being clobbered according to the present situation. I am sorry to keep mentioning Camden, but it is my area.

On the other hand, no one seems to mention accountability in regard to the rich who find themselves living in such areas. Therefore I think it is wrong. I wish I could say that in a non-party political way because I know that there are many Members in other parts of this place who feel that we are doing something totally unjust. We are saying to people on social security, "It does not matter how poor you are or how many children you have, you must pay this amount". It might sound easy to say that, but who is going to do it? Who will visit an unmarried mother with three children living in a top back-room or in grotty bed and breakfast accommodation—which seems to be the ideal of the Conservative Party for most homeless families in this country—and do this? Such people must pay their 20 per cent. not of what their borough is claiming from them but according to the whole average. Such people may also be having to pay back loans from the social fund. We are talking about the poorest people in this country.

The amendment tries to ensure that we do not take that action against those people. We are taking on board a situation in which, through no fault of their own, people have not always chosen to live where they do. It is bogus nonsense to say that people must vote where they are to make it better for themselves, when they were not there to vote the last time and may not be there to vote the next time.

It is cruel for the Government to say that such people should undergo a deduction from what no one thinks is a generous social security payment. I hope that the Government will at last agree that such people should not suffer from the Bill.

9 p.m.

Baroness Faithfull

Perhaps I may just make a comment and not ask a question. I am fearful that if the amendment is not accepted an enormous number of children will have to be taken into care. It costs roughly £3,000 a year when a child goes into care. A different department of the local authority will pay out £3,000 a year because a woman has not paid her supplementary benefit attachment of earnings order. We are fearful that that will happen. It will mean the break-up of family life and will lead to children not having a home. That in turn will have tremendous repercussions right the way through children's lives, and it will not be cost-effective for society as a whole.

Lord McIntosh of Haringey

I had not intended to intervene, because my noble friend Lady Jeger has put my party's position strongly and effectively. I am reminded by what the noble Baroness, Lady Faithfull, has just said of an experience that the borough of Haringey had some 20 years ago when my wife was chairman of the children's committee. The council then took the view that no children should come into care as a result of homelessness; and that the activities of the housing department, the social services department, the children's department, as it then was, and the planning department should be exerted to ensure that that never happened.

I am appalled to think that 20 years later we are moving backwards and that children will come into care as a result of homelessness caused in many cases by the failure of our social security system to provide a minimum standard of earnings and accommodation to secure a decent life. It is on that basis only that I intervene to beg the Government to take the amendment seriously and to find some way to implement it.

Lord Glenarthur

The noble Lord described the purpose of the amendment. I will start by repeating the basis of the quotation that he gave when he began his remarks. We believe that there should be equality of treatment, wherever possible, between those who are in employment and those who are receiving benefit. Attachment of earnings will be available for defaulters who are employed, and there is therefore a strong argument that similar arrangements should apply to those people receiving income support who do not pay their community charge.

If that approach appears harsh, I should explain—it has been mentioned many times—that people receiving income support will be automatically entitled to a reduction, or rebate—whatever one likes to call it—of 80 per cent. I should say to the noble Baroness that the rebates that we have introduced are dealt with later in the Bill in Schedule 13, so we are little premature. However, I accept that the matter has a bearing on the amendment. Regulations will in due course be made under Schedule 13 to introduce the details of the rebate system. I say that to set the matter in context.

Those people who have the rebate of 80 per cent. will have to find only 20 per cent. of the charge. An amount will be included in their income support to reflect the fact that they have to pay that amount. The noble Baroness and others have quoted the example of Camden. Camden is a borough which, as has been said, produced an illustrative figure of £782 for the community charge; 20 per cent. of that will be just over £156 a year, which is £3 a week. I do not want to embark on a discussion about the merits or otherwise of particular local authorities, but that seems to me to be a good example of a high-spending authority which must bear some of the responsibility for the community charge being as high as it may be, in the context of the remarks of the noble Baroness, Lady Jeger. There are others where the charge will be such lower. We are talking about an average charge of 86p a week.

Baroness Jeger

When the Minister talks about high spending in boroughs such as Camden, does he not recognise the enormous expenditure of that and neighbouring boroughs caused by homelessness? With three railway stations, we attract a number of people, and there are enormous responsibilities which have to be paid for. It is not a question of high spending for nonsense, it is high spending in trying to meet the terrifying needs facing some of the central city authorities.

Lord Glenarthur

That may be the case. I am not an expert on where Camden spends its money. I am sure that the noble Baroness is quite right that a lot of what is spent is valuable, I doubt whether it is all necessary. But I do not think we ought to be getting into the semantics of arguing about a particular local authority area. It may not be semantics, but it is politics. The noble Lord said it himself, and it is politics as regards that borough. The fact is that there is a system under which the additional amount will form part of people's benefits. It will be included in their income support to reflect that they will have to pay that amount.

Let me return to the theme of the amendments. The noble Lord, Lord Banks, suggested that the amount of uprating in income support for rates was insufficient. The Government believe that an appropriate amount was included. Moreover the amount to be included in respect of the community charge has not yet been decided, so I am not quite sure how the noble Lord can suggest that an amount which has not yet been set is inadequate. The amount of uprating for the community charge will be decided this autumn and included in income support, starting in 1989–90, when the community charge will first come into effect in Scotland.

It is perfectly true, as the noble Lord, Lord Banks, has indicated, that the 20 per cent. uprating will be the national average figure. It is because the community charge will vary from authority to authority that accountability—and I return to a word which I know is not always music to the ears of Members opposite—will be preserved for those on low incomes. They too will have an interest in the cost as well as the benefits of extra local spending, whether it be in Camden or anywhere else.

The figure of £782 for Camden, with which a certain amount of play has been made, is simply a forecast based on current spending. We have made clear that there will be transitional arrangements over four years. In year I, with dual running of rates and the change for Camden, the charge will be only £100. The transitional period will give Camden time to get spending to acceptable levels. That is, it would amount to £178 if they were in line with their needs assessment.

If there were no provision for direct deductions from benefit to pay off arrears, people receiving income support would be at a disadvantage in comparison with people in work. The only sanctions available would be distress or, ultimately, commitment to prison. It is surely better for arrears to be paid off through deduction from benefit, which is what I am suggesting, than for either of those remedies to be applied.

The Government therefore intend, as the noble Lord, Lord Banks, forecast, that direct deductions from income support should be available. The present provisions in the Bill will not enable this to be done, since they relate only to the attachment of earnings. This, incidentally, renders the amendment which the noble Lord has proposed inappropriate on technical grounds, since it seeks to prevent a power being used for something for which it could not be used in any event. The Government, however, intend in due course to bring before your Lordships an amendment to enable deductions in respect of arrears to be made from income support and paid directly to the local authority. As with the attachment to earnings and distress, the remedy will be available only where the magistrates' court has made a liability finding, and the amendment will include a power to prescribe a maximum for the amount of benefit which may be reduced.

My noble friend Lady Faithfull, with her knowledge and expertise on the subject, raised the matter of children in care. I realise and understand the spirit in which she made that point, but I hope that my noble friend will recognise that at present there are single parent families who face difficulties with rates. I hope that my noble friend will accept also that more than 80 per cent. of single parent families will be better off under the community charge than they are under rates. So I do not see that the risk of more children being brought into care, with all the disadvantages that that entails in my noble friend's eyes, need be a concern for her. There are advantages—substantial ones at that—and I hope that my noble friend will not lose sight of them. The theme of rebates takes us again on to Schedule 13 and no doubt when we deal with it we shall be able to consider the matter more fully.

Baroness Jeger

Perhaps I may ask the noble Lord, when we reach Schedule 13, why the provisions for rebate cannot be put into the Bill itself. I feel that we are getting too much legislation in this House where the powers are delegated to regulations and statutory instruments and all sorts of things. We do not get enough of the important provisions in the Bill itself. I assure the Minister that I have read Schedule 13. I read too much. I should like to know whether, when this rebate comes in, it will be temporary. What will happen if these provisions are not incorporated in the Bill itself?

Lord Banks

I must confess that I am very disappointed with the answer the Minister has given on this point. I can see that there is no understanding at all on the Government's side of the Committee, at least on the Front Bench on the Government's side, of the case which we are endeavouring to put forward.

The noble Lord, Lord Glenarthur, asked me what I meant when I said that in our view the income support was not uprated sufficiently. It is income support I am talking about. Our view is that income support was not sufficiently increased between the first time the figures were spoken of and the date when the current figures were established. I say that because that is the basis of any income out of which these people will be called on to meet their arrears.

I made the point that the figure of 20 per cent. which was put on to that figure—which was added to that figure of income support in order to account for the 20 per cent. which the people on benefit would have to find—was a national average. Therefore there were many cases—we quoted some of the most extreme cases to illustrate the worst effects of this—where the individuals would find that they were called upon to pay a great deal more than the amount allowed for in the amount added to income support because the amount of the poll tax in the area where they lived was so much higher.

We think it wrong to fine people on income support because their council is spending at a high rate. There may be all kinds of arguments for that and there may be all kinds of people in the community who should be immediately concerned with that, but those people who are struggling on benefits at a subsistence level should not be the people who are forced into the front of this battle about how much the council should or should not be spending. They have precious little time to think about anything except what they are spending on themselves. Therefore I feel that I have no alternative but to divide the Committee.

9.17 p.m.

On Question, Whether the said amendment (No. 88) shall be agreed to?

Their Lordships divided: Contents, 36; Not-Contents, 69.

Airedale, L. McNair, L.
Banks. L. [Teller] Masham of Ilton, B.
Blease, L. Mason of Barnsley, L.
Brooks of Tremorfa, L. Milverton, L.
Cocks of Hartcliffe, L. Morton of Shuna, L.
Darcy (de Knayth), B. Mountevans, L.
David, B. Parry, L.
Elwyn-Jones, L. Prys-Davies, L.
Ezra, L. Ritchie of Dundee, L.
Faithfull, B. Robson of Kiddington, B.
Fisher of Rednal, B. Seear, B.
Gallacher, L. Stedman, B.
Graham of Edmonton, L. [Teller.] Taylor of Blackburn, L.
Taylor of Gryfe, L.
Gregson, L. Tordoff, L.
Houghton of Sowerby, L. Turner of Camden, B.
Hylton, L. Underhill, L.
Jeger, B. Winstanley, L.
McIntosh of Haringey, L.
Arran, E. Johnston of Rockport, L.
Astor, V. Killearn, L.
Balfour, E. Lauderdale, E.
Beaverbrook, L. Lindsay, E.
Beloff, L. Long, V. [Teller.]
Belstead, L. Lucas of Chilworth, L.
Blatch, B. Lytton, E.
Borthwick, L. McFadzean, L.
Brabazon of Tara, L. Mackay of Clashfern, L.
Caithness, E. Margadale, L.
Cameron of Lochbroom, L. Montgomery of Alamein, V.
Carlisle of Bucklow, L. Murton of Lindisfarne, L.
Carnegy of Lour, B. Oxfuird, V.
Carnock, L. Pender, L.
Carr of Hadley, L. Portsmouth, E.
Clinton, L. Pym, L.
Coleraine, L. Renton, L.
Colnbrook, L. Rochdale, V.
Craigmyle, L. Saltoun of Abernethy, Ly.
Cranbrook, E. Sandford, L.
Davidson, V. [Teller.] Skelmersdale, L.
Dundee, E. Southborough, L.
Ferrers, E. Swinfen, L.
Gainford, L. Teviot, L.
Gisborough, L. Trafford, L.
Glenarthur, L. Trefgarne, L.
Grantchester, L. Trumpington, B.
Grimston of Westbury, L. Ullswater, V.
Halsbury, E. Vinson, L.
Harvington, L. Waldegrave, E.
Henley, L. Windlesham, L.
Hesketh, L. Wise, L.
Hives, L. Wynford, L.
Hooper, B. Zouche of Haryngworth, L.
Jenkin of Roding, L.

Resolved in the negative, and amendment disagreed to accordingly.

9.25 p.m.

[Amendment No. 89 not moved.]

Lord Morton of Shuna moved Amendment No. 89A: Page 94, line 33, at end insert — ("and the said regulations shall include provision for interpleader proceedings for the determination of ownership of such goods.").

The noble Lord said: The amendment adds a provision that the regulations shall include provision for interpleader proceedings for the determination of ownership of goods. Under the present system of rates, where an occupier does not pay the rates it is normal that he has property in the premises. Where a person is in a house and is liable for the poll tax, he may have no property in the house. That would apply in particular to young people who are staying in their parents' home or some other person's house. There is a grave danger in those situations that a bailiff may say that some property belongs to the person from whom he is trying to recover a charge where it in fact belongs to someone who is staying in the house. There must be a procedure by which challenges as to who owns what may be dealt with.

My brief from the Law Society informs me that the magistrates' courts will be dealing with those situations and that they are not well equipped to do so. Be that as it may, it seems that there should be some procedure for dealing with the matter of who owns what before it can be attached and sold. No doubt the drafting of the amendment is wrong—it always is—but the principle may be acceptable to the Government. I beg to move.

Lord Glenarthur

In the view of the Government, it is entirely right that there should be proper procedures for resolving disputes of that nature. I hope that I shall be able to persuade the noble Lord that the amendment is unnecessary because further provision will be made elsewhere in the Bill. Paragraph 6(3)(c) makes provision for cases where there is an irregularity in the execution of a distress. Such a irregularity might occur where the wrong person's goods are seized. The provision will enable the aggrieved person to take proceedings in the county court and to recover compensation.

However, we do not feel that that provision alone is sufficient to cover all eventualities. We therefore intend to bring forward an amendment at Report stage to provide for an appeal to the magistrates' court for any person aggrieved by a distress. Where there is a dispute over the ownership of goods seized during distress, the magistrates' court will be able to resolve it and if necessary order the return of the goods or, if they have already been sold, to require the authority to pay compensation.

In our view, that is the most appropriate procedure where the court issuing the original liability order resolves any disputes arising from the recovery action taken under the order. I hope that the noble Lord agrees that the provisions already in the Bill, together with the appeal procedure which I have outlined, will provide adequate recourse in the event of a dispute arising over the execution of a distress. I hope that he will agree that his amendment is unnecessary.

Lord Morton of Shuna

I should have thought that paragraph 6(3)(c) will not be of much help in a normal situation. If the magistrates' court is trying to act, it will not help to say that a person can go to the county court. That simply adds confusion. However, as the Government appear to accept that there should be some procedure—whether or not it is called an appeal does not matter—by which the magistrates' court which granted and operates the procedure also deals with a person who comes along and says, "You took this saying that it was Johnny's and it is mine", that seems to me to be correct. Therefore, I shall withdraw the amendment at this stage and we shall see whether the Government meet the difficulty at the next stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

9.30 p.m.

Baroness Stedman moved Amendment No. 90: Page 94, line 48, at end insert— ("(d) any person making a distress anywhere in England and Wales must hold a certificate as prescribed.").

The noble Baroness said: This is quite a modest amendment and yet an important one. It has been suggested to me by the Rating and Valuation Association whose members in local authorities will be the ones responsible for the collection of the community charge. Under this Bill the provisions for levying for distress are broadly the same as those in the present domestic rating system. A magistrates court makes a liability order against the debtor and the authority concerned then proceeds to levy the amount owed by distress and sale of the debtor's goods.

But unlike the procedure under the distress for rentals legislation of 1983 there is no requirement for the bailiffs to hold a prescribed certificate, and consequently there have been cases, which Members of the Committee will have seen highlighted in television series like "That's Life" and "Out of Court", where uncertified bailiffs have been used and the distress procedure, which at all times is a rather harrowing experience, has not been as well handled as it might have been.

In 1986 the Law Commission reported on distress for rent and recommended that all the bailiffs operating on distress should be certificated. I understand that the practice under the distress for rentals legislation of 1983 is for the county court to issue certificates to bailiffs either for general distress purposes or for a particular distraint. That is, I believe, a form of protection that we should now bring into the local government revenue collection in order to keep the cowboys and unauthorised people out. I hope that this will find satisfaction with the Government. I beg to move.

Lord Glenarthur

I recognise the good intention which lies behind the noble Baroness's amendment but I hope I can persuade her that it is unnecessary—indeed inappropriate. Rent is of course charged by a variety of landlords, the vast majority of whom are responsible and who as creditors could be expected to be careful in whom they employ as bailiffs. Nonetheless there is rightly concern over a few unscrupulous landlords who might hire disreputable bailiffs to execute distress warrants. It is only proper therefore that some additional provision should be made to help prevent that happening.

I do not think the same can be said for distress for community charge or rates. Only charging authorities are able to levy community charges and rates, and only they will be employing bailiffs on the few occasions when distress may prove necessary. Local authorities are elected bodies which are responsible to the people living in the area and I am sure that they can be trusted to employ only bailiffs who have a good track record. Indeed if one looks back over the number of grievances against the execution of distress under the present system, local authorities themselves have an excellent track record in this respect.

I accept, nevertheless, that through no fault of the creditor it is conceivable that there may be some irregularity in the execution of a distress warrant and that in those circumstances the person aggrieved should have proper recourse. This, however, is already provided for in paragraph 6(3)(c) of Schedule 4 to the Bill, which enables a person aggrieved by the way in which a distress is carried out to recover full compensation through the county court. This has proved adequate protection in the past and I do not believe there is serious concern that it should not continue to do so under the new system.

So I hope the noble Baroness will agree with me that the local authorities can be trusted where necessary to choose responsible and reputable bailiffs, and that where there is any irregularity in executing the distress there is already adequate provision in the Bill as it stands.

Baroness Stedman

I am grateful to the noble Lord and I accept that for the most part we would not have any problems with the local authorities. I think there is still a possible danger that there might be the odd cowboy getting in. But I should like to read what he has said, consult my advisers again and, if necessary, come back to it. But for the time being I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees (Lord Renton)

Before calling Amendment No. 91, I have to point out that if the amendment is agreed to I cannot call Amendments Nos. 92 or 93.

Lord Wilberforce moved Amendment No. 91: Page 95, line 1, leave out paragraph 7.

The noble and learned Lord said: The purpose of this amendment is to question the insertion in the Bill of the power to commit to prison people who fail to pay the community charge. I use the word "question" deliberately because it seems to me that this is a matter that requires some examination by this Chamber.

In the Bill as it was originally introduced into another place there was no provision for commitment to prison. There was simply a short paragraph of perhaps four lines providing for distress and for attachment of earnings. There was nothing more. That was the case when the Bill received a Second Reading in the other place and it was the position, I believe, when it went into Committee there. It was at the Report stage that the Government brought forward this enormous Schedule 4, which consists of eight pages and includes one whole page dealing with commitment to prison.

So far there has been very little discussion in this Chamber about the matter, although in the course of the previous stages of the Bill some rather pertinent remarks were made by, among others, the noble Baroness, Lady Faithfull, (whom I am very happy to see in her place) and the noble Lord, Lord Houghton of Sowerby, whom I am sorry not to see in his.

The final reason why this Committee should give more than a moment of consideration to this matter is that in the Scottish Bill there is not any provision for imprisonment for the corresponding liability for community charge. There is nothing in the Scottish Bill and we ought to think about this matter for a few moments.

Even at this late stage my submission is that in these days imprisonment for any form of civil debt is simply totally unacceptable. I shall develop the argument in two phases: first generally and then in relation to the Bill. However, I shall not make a long speech—certainly not on the general point because the Committee is familiar with the situation as regards imprisonment for debt. There is no doubt that this country has a very poor, indeed a lamentable, record on this matter. We hung on to imprisonment for debt for decades after every other Western European country and Canada—I have not been able to find any exception—had abolished it. We retained it perhaps for some kind of nostalgic love of the Marshalsea and sponging houses and in remembrance of Dickens and his story of Little Dorrit and so on, in the way in which the British hang on to obsolete and disreputable institutions. It was not until the Payne Committee in 1969 that the legislature faced up to the situation. That committee made a unanimous recommendation that imprisonment for debt should be abolished. As regards maintenance, it recommended it only by a majority. However, as regards all other civil debts, without exception it recommended that imprisonment for debt should be abolished.

The Government took action in 1970 and passed the Administration of Justice Act in that year, in which—in Section 11 I believe—imprisonment for civil debts was abolished; but contrary to the recommendation of the Payne Committee and without consulting anybody they retained the possibility of imprisonment for non-payment of income tax, rates and certain statutory contributions. Of that decision it was said by Sir Jack Jacob, one of our leading authorities on civil procedures, that to have taken that course: was a serious error of judgment". He said that it was hardly credible that in this day and age the English legal system should still be embroiled with this problem.

We kept imprisonment for non-payment of taxes and rates and that has been applied as regards rates. It is difficult to obtain any exact figures. The only one that I have been able to obtain—and perhaps the noble Lord can do better—shows that in 1986 about 370 people were received into government penal establishments. I suppose that that leaves open the possibility, and the probability, that there are quite a few more in police cells. The number is therefore not insignificant. It is a significant figure at a time when every day appeals are being made by judges and Ministers not to send people to prison for anything except crimes of violence. I need not give the overcrowding figures: 49,000 in places for 42,000, and many more in police cells. The case is a very strong one in general terms.

We now come to this Bill. In Schedule 4 we have a vast panoply of remedies for recovery of community charges. We have the classic distress in paragraph 6 when they come and take away the television set or the video. Admittedly that will not do for every case because there will be instances where it will not be possible to say to whom the object belongs; or the person liable cannot be fixed with ownership of a distrainable object. We then have attachment of earnings in paragraph 5. In another place the Minister said that attachment of earnings will make it much more difficult to refuse to pay the community charge. It is therefore a very effective remedy and is provided for in great detail in paragraph 5 and the rest of the schedule.

That is not the end of it. We have the possibility of a charging order being made on property. That is paragraph 8. That is quite an effective remedy. One has a charge on the property and one realises the charge in the same way that one realises a mortgage. In order to show that the Bill has not forgotten anything, one cannot turn oneself into a company because the Government have a later amendment which states that in the case of a company one can apply for a winding-up order.

We heard a little more about another remedy this evening. That concerns attachment of benefits. We do not know exactly what form it will take but the Minister in another place said that the Government were going to bring forward a provision about attachment of benefits. I understand from what the Minister said a few moments ago that it will be part of the Bill.

We therefore have this remarkable progress. It is a "softly, softly" approach. We start with distress and attachment, and we now move forward to this immense eight-page schedule with distress, attachment, charging orders, winding-up orders, and with attachment of benefit to come. One has to ask this question. Do we need commitment to prison? One knows what the Government will say. They will say that it is necessary to have this as an ultimate sanction. They will say, "Do not be too frightened about it because magistrates will not be sending great numbers of people to prison. They will only use it as a weapon of last resort. They will only use it in bad cases. One has to have a case of wilful refusal or culpable neglect". That is what the schedule states; it takes over from the old Rent Act. They will say that it is a necessary weapon to have as an ultimate reports.

There are a number of answers to that. In the first place, if it is wrong to imprison people for not paying a civil debt, it must be wrong to threaten people with imprisonment for a civil debt. That is a simple moral point that I should have thought would strike anybody. Secondly, it is wrong to say that this is just a weapon of reserve. As I have pointed out, it has been used, although not to a considerable extent. The numbers were 370-plus in 1986. One will have three times as many people liable for the community charge. That raises the figure to about 1,200, assuming that one extrapolates in the same way. That does not make allowance for rebelliousness, refusal or recalcitrance to pay what I believe as an ignorant person to be a not very popular tax.

One has to show culpable neglect but that is a very variable concept. Magistrates throughout the country, as we know from the rent administration, applied quite different standards. For goodness sake, who among us in this Chamber has not been guilty of culpable neglect at some time in not paying bills? We have all been guilty of culpable neglect but we are not sent to prison. One does not imprison a man because of his negligence, even if he is culpably negligent, in not paying his debt. I do not think one can get much comfort from that.

Then one might consider the cost and trouble of administering the imprisonment procedure. The cost of holding someone in prison I believe to be about £250 a week at present. The average annual amount of the community charge will be about £230. So that is not a terribly economic proposition.

Finally—and this surely is a striking point—there is the absence of this provision in Scotland. One has to ask, if it is not needed in Scotland, do we really need it in England and Wales? Are the English and Welsh more easily frightened into paying up than the Scots? Are the prisons in this country more empty places than they are in Scotland? The noble Lord, Lord Morton of Shuna, lamented yesterday that when there is any disparity between two parts of the kingdom it is always to the disadvantage of Scotland. He must be very satisfied that the boot is now on the other foot and the disparity the other way round.

Surely, in all common sense, both parts of the kingdom ought to be in line. There is no question of introducing imprisonment for debt in Scotland. There would be a revolution if we tried it on; so the only honourable and sensible course is to bring England into line with Scotland and get rid of it here. This is not an occasion for general law reform; I am not suggesting that for a moment. Law reform was undertaken in 1970 when imprisonment for debt in principle was abolished. But there were some unfortunate excrescences by way of exception, including imprisonment for non-payment of rates. It is up to us to deal with that.

I implore the Government, in the interests of English justice and of the decency of the Bill, which the Government have a chance to establish by abandoning the provision, to drop imprisonment for non-payment of community charge. I beg to move.

9.45 p.m.

Lady Saltoun of Abernethy

Perhaps I am wrong, but I understood that the Scottish Bill would be brought into line with the English Bill where the English Bill had been amended. I believe I understood the noble and learned Lord to say that Schedule 4 was brought into the Bill by amendment in another place. Therefore, would I not be correct in thinking that these provisions for imprisonment would apply to Scotland? If I am right in thinking that, I implore the Government to consider this again. The whole Bill is already so unpopular in Scotland that to bring in imprisonment would be a great mistake. Imprisonment is about the most inefficient method of debt collecting that I can think of.

Lord Elwyn-Jones

It is a very great pleasure to support the amendment so superbly moved by my noble and learned friend Lord Wilberforce. There is only one criticism I would make of his admirable speech. That was when he referred to English justice. I believe he meant to embrace Welsh justice as well.

Lords Wilberforce

That is very much an emphatic assertion.

Lord Elwyn-Jones

As the Welsh were here first—I keep reminding noble Lords—it is very important not to forget them on these occasions.

The proposal of the noble and learned Lord, Lord Wilberforce, is to leave out paragraph 7 of the schedule which is starkly headed "Commitment to prison". It does not disguise the matter. That is the heart of the issue. It is proposed at a time when the prison situation is critically bad. Prisons are overcrowded. And here is a measure to add a considerable number—we know not how many—to the existing list of prisoners.

My noble friend has referred to the fact that there are over 50,000 men and women in prisons in England and Wales. We have more prisoners in our prisons per head of the population than any country in Europe. We tend to be referred to as "that criminal country, England and Wales". For some reason Scotland escapes the net of that legitimate conclusion drawn from this monstrous situation. To add to that this proposal, which is against all the decent tide of opinion, is quite outrageous.

The difficulty is that it is counterproductive in every sense. As my noble friend has said, it costs £250 per week to keep a prisoner behind bars. By the time the sentence proposed under the schedule has been served by the offender that amount would far outweigh the loss to the public purse of writing off the debt altogether. It is a nonsense both economically and socially.

The tragedy is that it would fall upon the poorest section of our community. It is very often the young who are badly hit. It is the young people with no stable income who are liable to be hit very hard by the community charge. The Bill and this proposal are against the whole trend of penal policy away from custodial sentences. The noble Lord, Lord Elton, said: Nothing makes it more likely that a man will go to prison than the fact that he has been there before. That is a most profound and wise statement.

The noble Lord has not yet spoken in reply and perhaps there may be hope of some redemption before the debate is over. I know that he is a kindly man personally and if some of his wisdom could be reflected more frequently in government policy we might get along better.

Noble Lords

Hear, hear!

Lord Elwyn-Jones

However, to coin a famous phrase, we shall wait and see what the outcome will be.

There is little doubt that if the sanction is applied it will run the risk of criminalising—that is a horrid word, but it is a horrid condition—a particularly vulnerable part of our population; that is, young people with no stable income. It will be directed against those least able to sustain the additional pressures that the community charge will impose. It is against the whole trend of policy with regard to the abolition of imprisonment for civil debts and so forth. Therefore I hope that, in the light of what has already been said, we shall hear from the Government a commitment to take away altogether the whole miserable provision or at least to make major amendments to it.

Lord Glenarthur

The noble and learned Lord, Lord Wilberforce, has set out clearly why he believes that imprisonment on civil debts under any circumstances is, as I understood him to say, unacceptable. I must say that the noble and learned Lord will be aware that I am particularly conscious, as a result of my earlier days at the Home Office, of the problems of overcrowding in prisons. I am well aware of many of the facts which he brought before us this evening, and he was supported by the noble and learned Lord, Lord Elwyn-Jones, in doing so.

I shall answer some of the points relating to Scotland in a moment. I hope that I shall be able to persuade Members of the Committee that, while I understand the course of the argument against them being included, the provisions, though little used, are an important part of the recovery mechanism and to remove them would undermine the whole enforcement process.

I believe that it is important to appreciate that the current position as regards a person being sent to prison for not paying his rates is that the court has to be satisfied that there is wilful refusal, which is again encompassed in this Bill, or culpable neglect to which the noble and learned Lord, Lord Wilberforce, referred; in effect, that the person had the money and could have paid but did not or would not do so.

The noble and learned Lords, Lord Wilberforce and Lord Elwyn-Jones, have said that it is wrong under any circumstances to imprison anybody for this failure. However, what they have not said is how the community charge should be paid if somebody wilfully refuses to pay and has the assets in some form or other available to him. As I said, existing arrangements for rates have carried over to the community charge.

The noble and learned Lord, Lord Wilberforce, implied that it would be quite easy to show culpable neglect. Referring to an important point brought out by the noble and learned Lord, Lord Elwyn-Jones, I believe it would be very difficult, even for younger people, to neglect paying the charge despite a bill, a statutory reminder, an appearance before the magistrates' court for an order, an attachment of earnings or distress and finally a further appearance before the magistrates for an order for commitment. That is a fairly sorry experience for anyone to have to go through if they are wilfully refusing to pay the community charge. A person who simply forgot to pay his community charge—and I dare say there will be those who forget—would not go through all those proceedings and end up in prison by mistake. I find it very difficult to believe that that could happen.

The key difference is that the new powers to attach earnings and make direct deductions from benefit will mean that it is much more difficult to refuse to pay the community charge than it is to pay rates. To begin committal proceedings against someone the charging authority will be required to satisfy the court that distress was attempted against that person and that there were insufficient goods on which to levy the amount. I should add that where a court does not issue a warrant for committal because it is not satisfied that there was wilful refusal or culpable neglect, it can remit the amount owing on the grounds of inability to pay which was discussed in relation to an earlier amendment. I hope that I was then able to reassure Members of the Committee that provisions relating to committal are aimed at those who have the means to pay but refuse to do so and not at those who for whatever reason are unable to pay.

The noble and learned Lord, Lord Wilberforce, referred to the fact that imprisonment was not included in the Bill on introduction in another place. That is quite true although the Government had already made clear their intention to provide such a power. After the Bill had been introduced, concern was expressed at the absence of a power of imprisonment by, among others, local authority practitioners. In Committee in another place an amendment on this point which was sponsored by the Rating and Valuation Association was proposed and the Government acknowledged that it was the intention to add such a power. A government amendment was brought forward on Report in another place. Therefore, I think that I can fairly emphasise the wish of the local authority practitioners to have a power of this sort and their undoubted concern were it to be deleted.

The power of committal is not widely used. Indeed, fewer than 400 people were committed for non-payment of rates in 1986. I am confident that considerably fewer will be imprisoned after 1990 because instalments, direct payment methods and obligatory reminders will reduce the need to pursue arrears through the courts and also because attachment of earnings and direct deductions from benefit will make it much more difficult to refuse to pay. Nevertheless, we recognise the importance of ensuring that the charging authorities have an effective sanction to back up the enforcement provision. I have to tell the noble and learned Lord that committal, however distasteful it may be, has proved an effective final sanction over the years under the present system. The small number of people actually imprisoned—

10 p.m.

Lord Elwyn-Jones

I intervene merely to ask the noble Lord, and he will bring his great knowledge and experience to bear in answering me, whether there are not excellent alternatives to imprisonment in our penal system by way of community service orders and so on. It does not mean that offenders will go scot-free. Our penal system has admirable alternatives to prison which can be called in aid. Prison is the last and most odious remedy.

Lord Glenarthur

I understand that point of view, but the fact is that taking, for example, the 400 people who were committed for non-payment of rates in 1986, I understand—and I know this from my personal experience in the Home Office in dealing with prisons—that those people spent only short periods, usually a matter of days, before they agreed to pay the outstanding debts. We are referring to people who have the money and procedures have been carried out to establish that they are wilfully refusing to pay.

The fact is that during the existence of rates those who have been committed to prison have, on the whole, spent only a short period of time in prison for non-payment; but I accept that there may be some occasions when people have spent longer in prison. Of course there are other forms of sanction but experience shows that prison is the most effective, however distasteful it may be, for those minority of cases.

Lord Morton of Shuna

My understanding and recollection of the Scottish discussion on this subject was that we were going through a procedure—and I am waiting to hear what changes are to be made in the Scottish procedure—whereby recovery was basically through civil remedy. Therefore, in Scotland one can easily recover by civil remedy money from someone who has it but who refuses to pay. One can do that in Scotland by arrestment and other methods. Imprisonment is therefore unnecessary. Surely that is the answer.

If we are dealing with people who have the money but who refuse to pay, as I understand it from the Minister, is not the answer to achieve in England the same method of obtaining the money as in Scotland rather than putting people in prison?

Lord Glenarthur

With respect, I can deal with the position in Scotland in a moment, as I was coming to that, and answer that point together with the point put by the noble Lady, Lady Saltoun.

I conclude this part of my answer, before turning to Scotland, by saying that without the power that this Bill provides local authorities will face a far harder task in collecting the community charge and rate income from those few people who persistently refuse to meet their financial obligations. I am sure that those who actually operate the system recognise the value of committal as a last resort. I stress that it is a last resort.

Turning to Scotland, the noble and learned Lord, Lord Wilberforce, asked why we cannot have a similar approach in this Bill to that which exists in Scotland. The noble Lady, Lady Saltoun, asked whether the Scottish Bill will be brought into line with the English Bill—I think that was the way round that she suggested. As the Committee will be aware, though there are many similarities between England and Wales and Scotland there are also a great many differences. In particular, there are different legal systems, traditions and systems of local government. It is inevitable that when the same policies are applied separately and tailored to different needs and circumstances differences occur in detail.

There are two specific reasons why committal to prison is felt necessary as a last resort in England and Wales and unnecessary in Scotland. The tradition in Scotland has not been to commit people to prison for non-payment of civil debt, as the noble Lord, Lord Morton of Shuna, suggested. This was largely abolished under the Debtors (Scotland) Act 1880. One of the few exceptions was rates. Committal for non-payment of rates has not been used in Scotland for a number of years and it was finally abolished, as the noble Lord will recollect, under the Debtors (Scotland) Act 1987. This contrasts with England and Wales, where, though the provision is not frequently used, as I said, about 400 people a year are committed for non-payment of rates.

However, it is not tradition alone which separates England and Wales from Scotland on this subject. The Debtors (Scotland) Act 1987 provides a wide range of debt recovery powers, including the ability to attach money held in bank accounts and more effective distress procedures. I believe this is the point which the noble Lord, Lord Morton of Shuna, was suggesting.

This Act followed a report by the Scottish Law Commission in 1985 on diligence and debtor protection. Therefore Scotland has the benefit of very recent revised legislation on debt recovery procedures. It was felt that the commitment, which in practice had not been used for some time, could be dispensed with. Therefore, we have decided that in view of the narrower recovery procedures generally available in England and Wales, and because committal is still used and clearly valued as a deterrent by local authorities in England and Wales, it would be appropriate to retain it as a final sanction in the limited circumstances provided for in Schedule 4.

I accept the thrust of the noble and learned Lord's amendment as it relates to the prison population and the general undesirability of putting more people in prison than is absolutely necessary. I fully take that point. However, where I differ from both the noble and learned Lord—

Baroness Seear

The noble Lord has told us what is the Scottish system, but he has not explained why it cannot be adapted for use in England. That is what the Committee wishes to know. If the system works in Scotland why should it not be applied to England? The Minister has told us the history of Scotland, but he has not told us why they do things so much better there.

Lord Glenarthur

The noble Baroness raises a point which is entirely valid. In due course, as part of a general review of debt recovery arrangements in England and Wales—for that is what it would need to be—if it was felt appropriate to match the powers available in the Debtors (Scotland) Act then the presumption would be that those wider recovery powers would mean that imprisonment was no longer needed in England and Wales.

As I said a moment ago, the Debtors (Scotland) Act 1987 was preceded by a Scottish Law Commission report published in 1985. As I remember from sitting at least on the edges of the Bill as it went through this Chamber, it was in itself a fairly complex report. It went much wider than this Bill.

Lord Morton of Shuna

The noble Lord is giving the impression that the Act of 1987 was a completely new piece of legislation. All it was doing was bringing up to date the Scottish procedures for the recovery of money. The basic procedures have existed for centuries.

Lord Glenarthur

I am not quite sure what point the noble Lord is making.

Lord Morton of Shuna

The point I am making is that it is not new legislation that was suddenly introduced in 1987 as a result of a report in 1985. There have been facilities in Scotland for as long as there have been banks to recover money held by third parties owed to the creditor. The whole procedure has existed for some time though England has decided not to go that way. However, England could occasionally look north and see that there are benefits there.

Lord Glenarthur

Perhaps it will. That is the purpose lying behind my reply to the question from the noble Baroness, Lady Seear. The fact is that the procedures probably have existed in Scotland for years, but not in England, and that is why we find ourselves in the present position. If the situation were reviewed in due course, account would need to be taken of civil debt collection much more widely than the ambit of this Bill now before the Committee.

I come back to the point that I made. The operators feel that imprisonment is an ultimate sanction. We are talking about England and not about Scotland. While understanding the desirability of not putting people into prison if one can possibly avoid it, I believe fervently that a sanction of this kind is necessary. I am afraid that I cannot accept the amendment.

Lord Hylton

Perhaps I may say how deeply disappointing and regressive I found the Government's reply. The Minister mentioned people who wilfully refuse to pay what they should pay. Surely the answer is to pursue their money and their goods and not to imprison their persons. Secondly, could we not have in England day or weekend attendance instead of 24-hour imprisonment for perhaps quite long periods? There again I follow the noble and learned Lord, Lord Elwyn-Jones.

The Government's reply was even more disappointing, although there were some emollient remarks about total prison numbers from the noble Lord, Lord Glenarthur, who has had personal experience in the Home Office of the prison department. I do not know whether I ought to draw to his attention the article in this morning's Independent which listed those prisons most at risk and pointed to those which have 110 per cent. overcrowding. If that was not enough, we have just experienced a major prison riot in Cumbria where 26 prisoners escaped and there was serious damage to the structure of the prison. That is what we have to take account of.

Perhaps I may come back to a previous amendment, Amendment No. 82. I tried, too early in the day I admit, to raise a technical point regarding paragraph 7(3)(c). I was trying to ask whether provision allowing remission of payment where no warrant is issued or term of imprisonment fixed limits the discretion of the magistrates. I hope it does not, but that is a minor consideration. What many of us on all sides of the Committee would like is to delete the whole page and to get rid of even the threat of imprisonment.

Lord Parry

I wonder whether the noble Lord has considered that this part of the Bill might lead to grave embarrassment for the Government or future governments. It is not unknown within our system for people so to object to the payment of certain charges that they face the difficulties even of imprisonment in order to drive home their aims. If the Bill is passed in this form a great many politically motivated people might deliberately choose to refuse to pay in order to achieve political embarrassment of the government of the day simply by clogging the prison system.

Lady Saltoun of Abernethy

The noble Lord, Lord Parry, is quite correct, because the Scottish National Party is threatening to do exactly that in Scotland. If I understood the noble Lord, Lord Glenarthur, correctly, there is no intention on the part of the Government to amend the Scottish Act and to introduce Schedule 4(7) into it.

10.15 p.m.

Lord Glenarthur

Yes, in answer to the noble Lady's point, there is no intention to amend. The amendment would be the other way round, if we had a general review of debt recovery arrangements in England and Wales. It is by virtue of that process that we would get to a stage ultimately similar to that which exists in Scotland.

The noble Lord, Lord Hylton, asked about paragraph 7(3)(c). The answer is that that sub-paragraph enables remittance on grounds of poverty. It does not in any way limit the magistrates' discretion, which I think is the assurance for which the noble Lord was looking.

The noble Lord, Lord Parry, suggested that perhaps the Government are digging a political pit for themselves in so far as the possibility might be said to exist of politically-motivated people acting in that way and wishing to clog up the prison system. I cannot believe that it would be in their interests so to do. The difficully which arises with this amendment is that it removes the possibility of dealing with someone who, for political or other reasons, might go to extraordinary lengths to tie up his property and finances in such a way that he never has to pay the community charge.

Should people behave in that way, not only do they put upon themselves the burden of the whole trappings—as the noble and learned Lord, Lord Wilberforce, has outlined—of having to go through the enforcement procedure detailed in Schedule 4, but such people must realise that they are imposing upon others the possibility of having their community charge uprated to take account of the fact that they are not there. That consideration also applies to other sections of the Bill. Therefore it is grossly unfair. We are merely trying to ensure that in the final analysis, if there is no other way of obtaining the money from a person, he can be committed to prison.

Baroness Seear

The noble Lord cannot have it both ways. He has told us that hardly any people will go to prison. If the numbers are as he says, the amount by which other people's charges will be increased will be a fraction of 1 per cent., at the very most. He has also told us that the work was carried out in great detail for recovery of debt for the Scots. Therefore, given that the spadework has been done for the Scots, how long would it take—if the Government wanted to do it—to bring forward a similar Bill which would apply to England?

Lord Glenarthur

The answer is that it is a matter which requires much consideration in just the same way as it did for Scotland. The Scottish Law Commission published its report in 1985. Indeed, the noble Lord, Lord Morton of Shuna, has answered the noble Baroness' question by saying that some of it was there. However, if it had all been there, the Law Commission would not have had to report on the situation in the first place.

Lord Carr of Hadley

Would it not be possible for the noble Lord to undertake on behalf of the Government, between now and Report stage, to consider the possibility of setting up an inquiry—which I understand is necessary—for the law to be changed in England and Wales to match approximately that which already exists in Scotland? If the Committee were to receive such an assurance I think some of us would be eased in our consciences about the amendment.

Lord Glenarthur

My noble friend has asked me whether I can agree to consider the matter between now and Report stage. While I understand the concerns of the noble Lord, I must say to him that it would be impossible for me to give such an assurance.

Lord Carr of Hadley

I am not seeking an assurance of deliberate action but an assurance that the matter will be inquired into with reasonable dispatch over the next year or two. I do not ask that any decision should be taken within the next few weeks.

Lord Glenarthur

I am afraid that I cannot give even that assurance. I said that in due course, as part of a general review of debt recovery arrangements—which would take longer than I can possibly say at the moment—it might be felt appropriate to match the powers available in the Debtors (Scotland) Act. I can go no further than that.

Baroness Faithfull

I should like to take up the point made by the noble and learned Lord, Lord Elwyn-Jones, about alternatives. As regards juvenile justice, in the last Criminal Justice Bill we asked that no one should be committed to custodial care until every other line available had been tried. I realise that there has to be an ultimate sanction. I understand my noble friend's point in that connection. However, I think that every effort ought to be made—as was made for juveniles in the Criminal Justice Bill—to ensure that the courts try everything else available.

I also take up the point made by the noble Lord, Lord Hylton. People do not like attending attendance centres; it is almost an ultimate sanction for some people. I should like to ask my noble friend the Minister whether he thinks that we ought to consider widely just what the alternatives are. Prison is the ultimate sanction only in the most extreme cases.

Lord Glenarthur

I take my noble friend's point. But experience shows that commitment to prison is the ultimate deterrent—the deterrent that will bring about the results that we wish to see.

Lord Tordoff

Except in Scotland, the Minister is saying, presumably?

Lord Glenarthur

Except in Scotland, for the simple reason that the provision does not exist up there, as I described just now.

Lord Ross of Newport


Lord Glenarthur

The noble Lord, Lord Ross, wishes to intervene?

Lord Ross of Newport

Surely by next year the Government will face the situation where people in Scotland will not pay their taxes and rates. Is the Minister saying that they will not be committed to gaol whereas people in England and Wales will be? I represented a constituency that has three prisons. It is daft to say that people who do not pay their poll tax should be committed to prison. That does not make any sense. For God's sake, take the money from their wages or whatever income they have.

Lord Glenarthur

The noble Lord, Lord Ross, quotes from his former constituency. The situation in Scotland exists now for rates. There is a difference between the two. There are many other examples of differences in the way that this matter operates in Scotland. If we are to take the Bill forward in the way proposed, there will be one or two differences. The reason for the difference in this case was set out clearly by the noble Lord, Lord Morton of Shuna. He described how historically some things had not been tackled in Scotland. They did not require a great deal of work by the Scottish Law Commission whereas other aspects of debt recovery did. They are incorporated in the 1987 Act, which followed the 1880 Act as I understand it.

We need an ultimate deterrent. My noble friend Lady Faithfull said precisely that. There is an ultimate need.

Noble Lords


Lord Glenarthur

My noble friend Lady Faithfull understood the force of the argument that an ultimate deterrent was necessary. She may have shaken her head, but she will read what she said in Hansard tomorrow.

Baroness Faithfull

I admitted that there had to be an ultimate deterrent, but I said that everything else should be tried first. And that requirement is not written into the Bill. We decided in this place on an earlier Bill that the courts should look at everything else before they looked at prison. If that requirement were to be written into the Bill many of us would be much happier.

Lord Glenarthur

I accept that, but the suggestions that my noble friend makes are not ultimate enough, if I may put it that way. That is why we need this clement of the Bill. I appreciate that it is distasteful to many Members of the Committee; nevertheless, it is a necessity.

Lord Wilberforce

I do not intend to make another speech. I should like to make just two short points. Needless to say, one relates to Scotland. It is right to say that there are historical differences in many respects between Scotland and England, but the point here is that we are dealing with the same tax. We are dealing with a poll tax, a community tax. It must be intolerable to have different sanctions in one part of the kingdom—in England and Wales: imprisonment in one part and not in the other. I fail to see how that difference can be defended.

The other point relates to recovery. The noble Lord says that we must have this provision as a means of recovery. As has been pointed out by several speakers, the way to recover the community charge is to get at a man's assets, as happens in Scotland. All the noble Lord could say was that if there were a general review of debt recovery in England and Wales it might be possible to introduce a provision similar to the attachment of bank accounts in Scotland.

We do not need a general review of debt recovery in England and Wales. We had that in 1970. We have abolished imprisonment for civil debt in England and Wales. We are faced with this case and the parallel case of income tax, which comes under the same principle. All that is necessary is to provide a sanction by which we can get at a man's assets. If he has the means to pay, he must have distrainable goods, earnings or a bank account.

If what is lacking is the ability to get at his bank account, then the amendment puts into the Bill something which provides for his bank account to be got at. It is quite simple: all we have to do is make a mechanism similar to that which obtains in Scotland. The Government can have their way, though I feel that they will probably regret it if they do and if they insist on this. But, as a matter of conscience, I could not abandon the amendment and, as a matter of English law, I could not be a party to the admission into this Bill of a continuation of imprisonment for this sort of liability. I am afraid I must press the amendment.

10.25 p.m.

On Question, Whether the said Amendment (No. 91) shall be agreed to?

Their Lordships divided; Contents, 33; Not-Contents, 49.

Carr of Hadley, L. McIntosh of Haringey, L.
Cocks of Hartcliffe, L. McNair, L.
Coleraine, L. Monson, L.
David, B. Morton of Shuna, L.
Elwyn-Jones, L. Mountevans, L.
Faithfull, B. Parry, L.
Fisher of Rednal, B. Ponsonby of Shulbrede, L.
Gallacher, L. Ross of Newport, L.
Graham of Edmonton, L. [Teller.] Saltoun of Abernethy, Ly.
Gregson, L. Seear, B.
Hacking, L. Stedman, B.
Halsbury, E. Taylor of Blackburn, L.
Hooson, L. Tordoff, L.
Hylton, L. Underhill, L.
Killearn, L. Wilberforce, L. [Teller.]
Lucas of Chilworth, L. Winstanley, L.
Lytton, E.
Arran, E. Harvington, L.
Astor, V. Henley, L.
Balfour, L. Hesketh, L.
Beaverbrook, L. Hooper, B.
Beloff, L. Jenkin of Roding, L.
Belstead, L. Johnston of Rockport, L.
Blatch, B. Kimball, L.
Borthwick, L. Lindsay, E.
Brabazon of Tara, L. Long, V. [Teller]
Brougham and Vaux, L. Margadale, L.
Butterworth, L. Monk Bretton, L.
Caithness, E. Montgomery of Alamein, V.
Cameron of Lochbroom, L. Oxfuird, V.
Carnegy of Lour, B. Pender, L.
Carnock, L. Sandford, L.
Clinton, L. Skelmersdale, L.
Craigmyle, L. Swansea, L.
Davidson, V. [Teller] Swinton, E.
Denham, L. Teviot, L.
Dundee, E. Trafford, L.
Effingham, E. Trumpington, B.
Ferrers, E. Ullswater, V.
Gisborough, L. Wynford, L.
Glenarthur, L. Zouche of Haryngworth, L.
Grimston of Westbury, L.

Resolved in the negative, and amendment disagreed to accordingly.

10.33 p.m.

Lord McIntosh of Haringey moved Amendment No. 92: Page 95, line 26, after ("concerned") insert ("to the constables of the police area in which the warrant is issued").

The noble Lord said: The necessity for Amendment No. 92 arises from the conflict between this Bill and the wording of the General Rate Act 1967. I am speaking, if I may, to Amendment No. 93 also. Amendment No. 92 refers to the direction of a warrant of commitment. Amendment No. 93 refers to the execution of a warrant of commitment.

In both of these cases the General Rate Act 1967 provides for a warrant of commitment to be directed to the rating authority, to the constables of the police area in which the warrant is issued and to such other persons, if any, as the magistrates' court issuing the warrant may think fit. In the case of execution, the 1967 Act states that a warrant may be executed anywhere in England and Wales by any person to whom it is directed or by any constable acting within his police area.

It may be said that "any person" includes a constable, but I can assure the Committee and the Government that there is a considerable fear on the part of local authorities that police forces, unless they are not only empowered to do so but encouraged to do so by statute, will be unwilling to continue to execute the warrants issued by magistrates' courts. Indeed I understand, although I have no direct evidence of this, that Home Office circulars encourage the police in this direction.

It seems to me that when we come to the direction and execution of warrants the police must share the responsibility for the enforcement of the law in their area with the local authorities and that it would be wrong to give them any excuse to exercise any unwillingness to enforce the law. Therefore I put it to the Committee that the 1967 General Rate Act provision of saying "any person including a constable" is the right way to deal with these two related problems and that these two amendments are worthy of the attention and approval of the Committee. I beg to move.

Lord Glenarthur

I recognise what the noble Lord is trying to achieve by these amendments but I hope I can reassure him that they are unnecessary. The General Rate Act 1967 at present enables a warrant of commitment issued by a magistrates' court to be directed to a rating authority, to the police constables of the area concerned or to any other such persons as the court thinks fit. When it came to considering the enforcement provisions for the community charge, which are based largely on those in the General Rate Act, we were advised by the Home Office that it was unnecessary to mention police constables specifically.

The provision in paragraph 7(1)(h) of Schedule 4, as currently drafted, allows the warrant to be directed to any persons the court thinks fit; and I have been assured that this enables the warrant to be directed, if necessary, to a police constable. So I hope, with that assurance which seems to meet the noble Lord's concern, he will feel able to withdraw the amendment.

Lord McIntosh of Haringey

That answer does not explain why the Home Office should have changed its mind since 1967. At that time, as I have reminded the Committee and as the Minister has confirmed, it was considered necessary not only to say that the warrant may be directed to any other person as the magistrates' court issuing the warrant may think fit—similar words apply in regard to the execution of the warrant—but to specify that it may be issued to constables. The issue here is whether there may be a quite unnecessary and undesirable conflict between the police force and the local authority of the area. It seems illogical and inconsequential of the Home Office to be giving the advice now that what was proper at that time, and does not appear to have caused any difficulties, should be unnecessary now. There must have been a good reason for putting the constables into the 1967 Act. We have had no explanation as to why there should have been a change of mind.

I do not feel happy that we have done everything that we can to ensure harmonious relations between the police and the local authorities; but if that is the position the Government have come to as between the departments, I do not suppose at this time of night that we are going to make any major difference to it. I should like to think about whether there is any alternative form of words I could find which would help to persuade the Government of the justice of this case, but in the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 93 not moved.]

Lord Glenarthur moved Amendment No. 93A: Page 96, line 5, at end insert—

("Winding up

7A.—(1) Regulations under this Schedule may provide that where a magistrates' court has made a liability order against a person (the debtor) and the debtor is a company, the amount due shall be deemed to be a debt for the purposes of section 122(1)(f) of the Insolvency Act 1986 (winding up of companies by the court).

(2) The amount due is an amount equal to any outstanding sum which is or forms part of the amount in respect of which the liability order was made.").

The noble Lord said: I spoke to this amendment with No. 86B. I beg to move.

On Question, amendment agreed to.

Lord Glenarthur moved Amendment No. 93B: Page 96, line 39, after ("commitment") insert (", winding up").

The noble Lord said. I have spoken to the amendment. I beg to move.

On Question, amendment agreed to.

Lord Glenarthur moved Amendment No. 93C: Page 98, line 7, at end insert—



14A. This Part of this Schedule applies as regards the recovery of any sum falling within paragraph 1(1)(cc) above.

14B. Regulations under the Schedule may make, as regards the recovery of such a sum, provision equivalent to that included under Part II of this Schedule subject to any modifications the Secretary of State thinks fit.").

The noble Lord said: I beg to move.

Lord McIntosh of Haringey

I do not recall that the amendment has been spoken to. I do not wish to delay the Committee. However, it would be helpful, since the amendment is not inconsequential, to have an explanation.

Lord Glenarthur

Unless I have my papers in a muddle, the amendment was included in the grouping with Amendments Nos. 86B, 86C, 86E, 93A to 93C, 122B and 128A. I believe that I referred to it. However, if the noble Lord wishes me to, I shall go back to it.

Lord McIntosh of Haringey

That is not the grouping which I have and which I agreed to. However, I do not wish to delay the Committee and I suggest that the matter can be easily remedied at Report stage.

On Question, amendment agreed to.

Schedule 4, as amended, agreed to.

Clause 22 [Appeals]:

Lord Glenarthur moved amendment No. 93D: Page 14, line 19, at end insert— ("(3A) Where a penalty is imposed on a person under Schedule 3 below, and he alleges that there is no power in the case concerned to impose a penalty of the amount imposed, he may appeal under subsections (1) and (2)(f) above against the imposition.").

The noble Lord said: Perhaps it will be for the convenience of the Committee if I also speak to Amendments Nos. 192B, 192C, 192D and 192 E. I hope that the Committee will welcome the amendments, which clarify the position on appeals against civil penalties imposed by the community charges registration officer or the charging authority.

The intention is that penalties imposed in accordance with Schedule 3 should be a fixed amount—£50 for the first offence and £200 for a subsequent offence. The Committee will, I am sure, agree that there is clear advantage in that. At present the drafting of paragraphs 7 and 9 of Schedule 14 might be taken to mean that a Valuation and Community Charge Tribunal, in dealing with an appeal against a civil penalty, has power to reduce that penalty, say, from £50 to £30. That is not what we intend. The four amendments to Schedule 14 therefore take out the words "or reduce" to make that clear.

However, we need to make provision for a situation whereby a person accepts that a penalty should be imposed but contends that it should have been £50 and not £200 because he believes that the breach of duty was a first rather than a second offence. The amendment to Clause 22 will give the person the right to appeal on the basis that the registration officer or charging authority has imposed a penalty which he or it is not empowered to impose. If on appeal the Valuation and Community Charges Tribunal were to agree with the appellant, it would then quash the incorrect penalty of £200 and the authority or officer could then impose the correct penalty of £50. I beg to move.

On Question, amendment agreed to.

Clause 22, as amended, agreed to.

Clauses 23 to 27 agreed to.

10.45 p.m.

Clause 28 [Interpretation]:

Lord Hesketh moved Amendment No. 93E: Page 16, line 32, at end insert— ("(2A) References to anything shown in a register on a day are references to what is shown for the day (including what is shown by virtue of a retrospective entry).").

The noble Lord said: This is simply a clarifying amendment which puts beyond doubt the effect of an entry in a community charge register. As the Committee knows, it is the entry of a person in a register on a day as subject to a community charge which triggers his liability to pay an amount in respect of the charge. However, it is not quite as straightforward as it might seem to determine whether a person is registeed "on a day", because of the possibility of retrospective entries.

I think an example may help to illustrate the point. A person might be subject to the personal community charge on 1st April by virtue of having his sole or main residence in an area but he might avoid the notice of the registration officer until, say, 1st June, two months later. The registration officer would then register him as subject to the charge, not beginning on 1st June, but beginning on 1st April.

The question then arises: was the person registered as subject to the charge on 1st April? This amendment makes it clear that he was by providing that what is shown in a register on a day means what is shown for the day in question, including what is shown by virtue of a retrospective entry. I am sure your Lordships will agree that this is a sensible and desirable clarifying amendment. I beg to move.

On Question, amendment agreed to.

Lord Glenarthur moved Amendment No. 94: Page 17, line 10, leave out (", caravan or houseboat") and insert ("or caravan").

The noble Lord said: This amendment was spoken to on the first day in Committee. I beg to move.

On Question, amendment agreed to.

Clause 28, as amended, agreed to.

Clause 29 [Amount for personal community charges]:

Lord McIntosh of Haringey moved Amendment No. 95: Page 17, line 34, leave out ("and").

The noble Lord said: In moving Amendment No. 95, I should like to speak also to Amendment No. 96. The occasion for this amendment arises from the statement of the Minister for Local Government at Committee stage in another place on 25th February, at col. 987 of the Official Report, when he said: It is not our intention to prevent authorities from making realistic estimates of shortfalls and losses and from using these for the purposes of setting their community charges". This does not find its reflection in the provisions of Clause 29. We are proposing here that it should be so reflected.

This is not simply a matter of form. We are not looking only for the fulfilment of a commitment for its own sake. The ability of a local authority to raise the revenue from the community charge necessary to meet expenditure is extremely important for two special reasons. The first is that expenditure which is not recognised as being legitimate expenditure for the purpose of the community charge is quite capable, as we shall see from later discussions on this Bill, of being capped. I have no doubt that the Committee will take some time on that matter. Therefore, despite the statement of the Minister for Local Government, a local authority may find itself with expenses for which it will not be allowed to raise money and it may get into difficulties under that provision.

The second consideration which must be taken into account is that, even if the community charge level is not capped, there will be penalties imposed on the local authority because it has not been adequately taken into account in the setting of revenue grant. Again, we have not yet come to the detailed discussion of the revenue grant, and I have no doubt that the Committee will want to spend some time on that matter as well. However, in either case the local authority will be at a substantial disadvantage if it has expenditure for which it has no authority to raise money under the community charge procedure.

There is no difficulty about the Government providing for it. After all, the Government have already said that they will reimburse local authorities for any of the losses incurred as a result of the exemptions which arc set out in the Bill. Since there is no question of reimbursement from central government, there should therefore be no difficulty in the Government recognising the quite substantial levels of loss that might be possible—as indeed was recognised by the Minister for Local Government—as a result of evasion or other shortfalls in the collection of the community charge.

Over the past hour or so we have been discussing the whole issue of penalties on the basis that it is universally agreed that there will be difficulty in collection—difficulties about evasion and about the expenditure involved in collection. We have come to a conclusion different from the one which I should have wished to reach. Nevertheless the issue is alive. It has been discussed in the Committee and it deserves serious consideration as a proper item on which the local authority will have to raise revenue and for which it will have to provide in its accounts. I beg to move.

Lord Monson

Possibly for reasons slightly different from those given by the noble Lord, Lord McIntosh, I warmly support this pair of amendments. If the Government have the strength of their convictions, they will accept them without hesitation. On the other hand, if they resist them, we shall know that the Government are seriously worried that they may have grossly underestimated the heavy costs of the collection of the poll tax, which they have already conceded will be vastly more expensive to collect than are domestic rates.

Baroness Carnegy of Lour

Should this amendment be adopted it would surely be an extraordinary innovation in local government. At the moment one of the major items of consideration when striking a rate is the amount to be allowed for in respect of what will not be collected because of evasion. It is the responsibility of local government to make an assessment of that.

As I understand it, one of the concerns of the Scottish local authorities at the moment lies in trying to estimate the amount that they will fail to collect in the first year of the community charge. They reckon that they will fail to collect more in the first year than in the second year and that collection will improve as the years go by and people become accustomed to the system. Surely, however, local authorities will have to allow for that situation and people will have to realise that if some people do not pay others will pay more.

It is quite different from the additional cost of running the system, the correct proportion of which will be paid by central government grant and by means of the business rate. I should have thought that the amendment proposed an innovation that simply will not work.

Lord Glenarthur

So far, we have been discussing Part I of the Bill, which establishes the system of community charges. We have now come to examine those provisions which set up the systems that the authorities will use each year to obtain the revenues that they need to finance their expenditure. Before turning to the detail of the amendments, it may assist the Committee if I say a few words about the collection fund which is very much central to these systems that we are establishing.

We shall be considering the collection fund in detail when we come to Part VII of the Bill. The essential point for the moment is that all the community charges collected by a charging authority from its area, and in England revenue support grant and contributions from the national non-domestic rate pool, will he paid into its collection fund. Out of that fund the charging authority will pay revenues both to itself and to the other local authorities providing services in the area. These payments will be in response to what we might see as demands which authorities have made on that collection fund.

All authorities providing services in a charging authority's area, including the charging authority itself, are to be required for each financial year to make before 11th March of the preceding financial year their demands on the collection fund of that area. In the terminology of the Bill the demand of the charging authority itself is the "sum it calculates" under Clause 99 and the demands of the other authorities are their precepts. Once these demands have been made, the charging authority administering the collection fund is to set on or before 1st April of the financial year such amounts for its personal community charges that the yield it expects from those charges will be sufficient for the collection fund to meet the demands made on it.

That is very much the point made by my noble friend Lady Carnegy. If I have understood the argument of the noble Lord, Lord McIntosh, correctly, he is seeking to ensure that the duty on a charging authority to set sufficient community charges for its collection fund to be able to meet the demands made on it is so framed that the charging authority must take account of losses and shortfalls in relation to community charges arising from non-registration, evasion and difficulties of enforcing payment.

Clause 29 sets out the duty to set sufficient community charges. Clause 29(3) means that a charging authority must indeed take losses and shortfalls into account when setting the amounts of its personal community charges. There is no question of authorities not being able to take into account realistic estimates of shortfalls and losses when setting their community charges. Indeed the provisions of Clause 29 will require charging authorities to do just this; namely, to set their community charges at such a level that on the basis of the best and most realistic estimates they can make they expect the resulting yield will be sufficient for their collection funds to meet the demands being made on them. That is the first point.

The noble Lord, Lord Monson, spoke about the alleged difficulties of collection of community charge and about the costs involved. On the question of evasion there are two reasons why this will not be a serious problem. First, adults will be under a duty to notify the local authority if they believe that they are subject to a community charge. They will also be under a duty to notify the authority of a change of address and to respond to requests for information from local authorities. The great majority of people will do just this. I do not accept that a large number of adults are dishonest or seek to go to some of the extraordinary lengths which have been canvassed in some areas to evade their responsibilities.

Secondly, local authorities will have every incentive to secure comprehensive community charge registers. Authorities will be dependent on people paying their community charges for a significant part of their revenue, just as they are dependent on the payment of rates at the moment. I have every confidence that local authorities will take their responsibilities seriously. There are already signs that many authorities are now buckling down and setting up their arrangements for collecting community charges.

I would also remind the Committee that local authorities will have many sources they can use to check and supplement their registration returns. They will be able to canvass residents. Initially they will probably canvass everyone, and thereafter on a rolling basis. But this will be for local authorities to decide. Authorities will be able to crosscheck information against various records.

Finally, there are the sanctions that we are providing in the Bill that will provide a back-up for the authorities concerned. Those are the penalties in Schedule 3. As regards costs of collection in 1990 and subsequent years, we have always maintained that the costs per charge payer will be broadly the same as the costs per ratepayer and the costs of collecting the community charge will be taken account of in revenue grant settlements from 1990–91 onwards.

The amendment that the noble Lord has proposed will add nothing to what is already in the Bill. Indeed I fear that it would unnecessarily complicate the provisions.

11 p.m.

Lord McIntosh of Haringey

I do not think it is very tactful for the Minister to remind us in his reply of two matters on which some of us felt very strongly when we debated them yesterday. The first matter concerns the sources of information which the registration officer will have in order to complete the register. Many of us felt very strongly—indeed, to the extent of dividing the Committee—that far too much power was being given to the registration officer and that there was far too much invasion of civil liberties involved in the process of compiling and maintaining the register. So that particular argument does not go down terribly well with this side of the Committee and, I suspect, with some other noble Lords as well.

It was also not particularly tactful to remind us of the various sanctions that can be applied to enforce the completion of the register. We have had debates on this matter. The Government have their view and we have ours. I do not think the Minister can expect us to be convinced by those arguments. What is worrying about the Government's response to the amendments is that they appear still to be determined to play down the difficulties that there will be in collecting the community charge. They seem to think that the matter can be kept under control, that it will not cause great difficulty and that therefore it is something which does not need to be referred to particularly in the Bill.

I accept as a matter of form, as I must, that Clause 29(3) provides that the authority must secure that the total amount yielded is sufficient to provide for the items mentioned below, that it could be said that the cost of the losses and shortfalls is included in that, and that, strictly speaking, my amendment could therefore be said to be superfluous. On that basis alone, I shall ask leave of the Committee to withdraw it. However, this discussion has been useful in drawing attention to the continuing lack of realism on the part of the Government about the difficulties of collection, about the possibilities of shortfall, about the problems of non-registration and evasion and about the difficulty of enforcing payment.

I do not apologise for that. I believe that it has been worth while, but I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 96 not moved.]

Clause 29 agreed to.

Clause 30 [Setting of different amounts]:

Lord Glenarthur moved Amendment No. 96A: Page 17, line 44, leave out ("premises situated in").

The noble Lord said: With the leave of the Committee perhaps I can speak also to Amendment No. 96C. These are technical drafting amendments relating to how we describe those community charges which can be said to be in respect of a certain part of a charging authority's area. These amendments represent no change of policy. They are merely for clarification. I beg to move.

On Question, amendment agreed to.

Lord Glenarthur moved Amendment No. 96C: Page 18, line 32, at end insert— ("(5) A community charge relates to a part of an area if it is—

  1. (a) a personal community charge arising in respect of a residence contained in the part.
  2. 1357
  3. (b) a standard community charge arising in respect of a building, self-contained part of a building or caravan contained in the part.
  4. (c) a collective community charge arising in respect of a dwelling constituting or contained in a building which is contained in the part.
(6) Rules contained in regulations under sections 10(6), 12(6) and 14(7) above shall apply for the purpose of construing subsection (5) above.").

The noble Lord said: I have just spoken to this amendment. I beg to move.

Lord McIntosh of Haringey

Should we not take Amendment No. 96B first?

The Deputy Chairman of Committees (Lord Grantchester)

No. They have been marshalled the other way round in my list, which is the fourth Marshalled List.

Lord Glenarthur

In order to clarify the situation I should like to point out that I have already spoken to Amendment No. 96C in relation to an earlier amendment. I think that we can take it as read, and I beg to move.

On Question, amendment agreed to.

Lord Glenarthur moved Amendment No. 96B: Page 18, line 32, at end insert— ("(7) As regards any charging authority the Secretary of State may make directions that, for the purposes of subsection (2) above, the extent (if any) to which an item is to be provided for by other means shall be determined by the authority in accordance with the directions. (8) Directions under subsection (7) above—

  1. (a) must be made in writing;
  2. (b) may contain rules in accordance with which, or specify factors by reference to which, a determination is to be made:
  3. (c) may specify (as the extent concerned) an amount in relation to a particular item;
  4. (d) may relate to one item or to a number of items;
  5. (e) may contain different provision as to different items;
  6. (f) may be amended or revoked by other directions under subsection (7) above.
(9) The power to give directions under subsection (7) above may be exercised differently for different authorities. (10) No directions under subsection (7) above shall have effect in relation to a determination unless they are served on the authority concerned before it makes the determination.").

The noble Lord said: When considering the previous amendments I described how Clause 30 provided that in certain circumstances a charging authority must set different amounts for its community charges for different parts of its area. For example, where a precept relates to part of its area, the authority will set its community charge so that the charge payers of that part provide the revenues necessary to meet that precept after allowing for the other sources of revenue support grant, or whatever, which are available for meeting the precept.

Amendment No. 96B will enable my right honourable friend to make directions about how a charging authority is to attribute other sources of revenue it receives to meeting items such as the precepts I have mentioned which are to be met from part of its area. I hope the Committee will accept that the amendment will enable us to provide that where a charging authority sets different community charges for different parts of its area the revenues received by its collection fund, other than community charges, can be treated in a sensible way. I beg to move.

Lord McIntosh of Haringey

I am less happy about this amendment for the same reason that I was worried about an earlier amendment. It gives the Government powers to determine what the other means will be without ever setting out their idea of the other means and the circumstances in which they will determine how they will be provided for. I can readily understand that in a district which is parished, for example, there will be a different precept for a different parish and that that will cause a variation in the community charge. However, that has already been accepted under Clause 30(2), and as I understand the matter it is not part of the other means provision.

What do the Government mean by this? What is the content rather than the form of the amendments? What are the Government asking us to empower the Secretary of State to do? It is far from clear from the amendment as drafted.

Lord Glenarthur

The matter is of particular significance for those district councils on the outskirts of London which receive for part of their area a precept from the receiver for the Metropolitan Police district, the other parts of their area being policed by the appropriate county council. In such circumstances the Metropolitan Police precept which the district receives will fall on that part of the council's area which is policed by the Metropolitan Police. The council will also receive revenue support grant and contributions from the national non-domestic rates pool.

We envisage that when setting its community charge for part of its area covered by the Metropolitan Police precept the amount of revenue support grant which the district council attributes to that part will reflect the spending needs of the Metropolitan Police area. In other words, the revenue support grant which the district will receive because of the needs of the Metropolitan Police will be targeted on that part of its area which is required to contribute to the Metropolitan Police. It is our intention to make directions under the power we are now seeking in this amendment to ensure that grant is treated in this way.

Lord McIntosh of Haringey

What the Minister says makes good sense but why does the amendment not say that? Why are we being asked to give the Secretary of State the authority to make regulations about something whose meaning the Minister, except under questioning, rather than voluntarily when the amendment was moved, was not able to explain? This is a most unsatisfactory way to draft a Bill and to treat the Committee. However, as I agree that the provision is, under cross-examination, shown to be acceptable, I do not think we shall oppose the amendment.

On Question, amendment agreed to.

Clause 30, as amended, agreed to.

Clause 31 agreed to.

Clause 32 [Deputy to set substituted amounts]:

Lord Teviot moved Amendment No. 97: Page 19, line 10, at end insert— ("( ) a metropolitan county passenger transport authority,").

The noble Lord said: For the convenience of the Committee, I shall speak also to Amendments Nos. 129, 131, 135, 171, 173 and 196, which are all related. I am not speaking to Amendment No. 174A, as that relates to a different issue. My noble friend is aware of that and I have dealt with the matter through the usual channels.

The amendment seeks to reinstate into the Bill the powers of a metropolitan county passenger transport authority to finance its expenditure by precept. PTAs have this power at present and when this Bill was first introduced in another place it did not propose any change. However, on Report the Government amended the Bill to its present form under which the PTAs are merely levying authorities.

In order to appreciate the significance of that, we must understand the difference between a precept and a levy. The precepting system means that the PTA decides its expenditure level and, after taking into account government grant, raises the money from individual ratepayers. Therefore, the PTA has a direct relationship with its ratepayers. Instead of issuing its own rate demands and administering its own collection system, it authorises the constituent district council to collect the money on its behalf. However, it is the PTA's money, directly reflecting the PTA's decisions. That is sensible and logical. It is sensible because it saves money compared with collecting the rate itself. It is logical as the PTA, with its county-wide role, is, as many have said on several occasions in this Chamber, the right body to make decisions on public transport policy.

Nothing in the remainder of the Bill prevents the precept system from continuing. Indeed, it will continue in the other joint authorities—the police and fire authorities. However, the Government's proposal is to make the PTAs levying authorities. Under this system the PTA merely sends the bill to the district councils in its area which will cover its expenditure. The district council and not the community charge payers will pay. Thus, direct financial links with those for whom the service is being provided will be severed.

When they proposed the change in the other place the argument put forward by the Government was that this would make PTAs and their members more accountable. Members of the Committee will know of my interest in public transport and, in pursuing this matter, I have been to PTA meetings and have met PTA members and officers. I have seen the way in which the PTAs consult widely on their policies and expenditures. They produce excellent policy documents which are commented on by district councils, chambers of commerce, bus operators and interested members of the public. They are accountable to ratepayers and to industry and commerce with whom thy consult in accordance with the Rating Act. Ratepayers receive detailed information on their activities, policies and expenditures with their rate demands.

Individual PTA members are accountable now to their district councils as they are appointed by the districts. They can be removed from the PTA if the district requires. They have no tenure of office, which they had before 1974. As elected members they are of course accountable to their electorates. Thus as a body and as individuals the PTAs are already accountable. The Bill as drafted does nothing to increase their accountability. Instead, by removing their rights to precept and to have access to their own income the Bill will cause an essential degree of accountability to be lost both to individual charge payers and through the statutory consultation procedures. People paying for the service will, as of right, get less information about it and about the policies pursued to provide it.

As if that were not enough, there are many other disadvantages to the proposals. First, they will introduce further uncertainty to the PTAs' budgets. A levy cannot be as secure a source of income as a precept. At present, following deregulation, they face uncertainty over their incomes. PTAs will of course continue to consult districts and others when deciding what levy to set, but once the levy has been set the district councils will be able to challenge the amount of the levy. Will they be able to withhold payment? If so, can up to 10 districts agree a levy in a reasonable time? These are new uncertainties under government proposals and I shall be interested to hear my noble friend's response.

In public transport terms the proposals are frankly a downgrading of status. There will no longer be a direct grant from central government. The districts will get an allowance for public transport in their grants but this can be spent on anything. Many of the positive provisions that this House helped to build into the 1985 Transport Act, especially on concessionary fares and special transport facilities for the disabled, could well be at risk as a result. Incidentally, I have received a brief on the disabled from the National Council for Voluntary Organisations, which is concerned on this point.

There will be increased risk of districts seceding from the PTAs, thus putting the whole range of county-wide services at risk. At present, districts can apply to secede on public transport grounds. Under the terms of the Bill they will also be able to apply, it appears, on financial grounds. The result will be many strategic initiatives. The benefit of the county as a whole will be at risk from the ever-present threat of secession. We have seen a number of these initiatives developed by PTAs since local government re-organisation. The furthest advance is the Manchester light rapid transit scheme, which is now to be a joint public and private sector development. The PTA system has shown that it can grasp such opportunities, not least because the PTAs have their own financial resources.

Many bus operators are concerned about these proposals and the implications for them. If districts do secede, the overall pattern of secured services and concessionary travel for a large number of people whose travel needs are not artificially constrained by district boundaries may disappear. In any event, the administration involved in attendant services and concessionary fares will be increased enormously. Large operators may be able to cope, at a price, but small operators will be placed at a serious disadvantage in coping with the extra bureaucracy. Competition, which the Government have been careful to foster, could well be stifled.

British Rail is also concerned because it would be impossible to organise railway services on a district by district basis. Rail services in the conurbations and even some services into neighbouring shire counties will be at risk if districts secede. Most significant of all, I know that most, if not all, district councils are opposed to the Government's proposals. This amendment seeks to remove all the uncertainty by simply preserving the current arrangements, a solution favoured by almost all bodies who were so hastily consulted by the Government earlier this year. I beg to move.

Lord Underhill

As my name is attached to all seven of these amendments, it might be useful if I said a few words at this stage before, I hope, other Members speak in support of the amendments. Perhaps I may remind the Committee that on 22nd January the Department of Transport issued a consultation paper entitled Proposed Changes in the Financing of Passenger Transport Authorities. In a Written Answer on 30th March Mr. David Mitchell, the Minister responsible for public transport, admitted that most of the respondents to the consultation paper disliked the proposals but that he was nevertheless going to introduce amendments to this Bill at the Report stage in the other place. That seems to query first of all the object of the consultation if the Minister agreed that most of the people consulted disliked the proposals. The matter was raised in this House in our recent debate on transport and also at Second Reading of this Bill but no explanation has been given as to why this particular amendment had to await the Report stage in the other place following its Second Reading and Committee stage there.

In a wide-ranging speech covering most of the important points, the noble Lord, Lord Teviot, has emphasised the question of accountability. The Government have to explain the fact that the representatives on the PTA are not self-appointed. They are all elected members of their district councils, elected by them to attend PTA meetings. Therefore, they are accountable as elected members of district councils to those councils. I cannot see how the argument of accountability can be justified.

As regards the value of the PTAs, Mr. Nicholas Ridley, the Secretary of State responsible for this Bill, said on 7th November 1984, when he was Secretary of State for Transport: That is why we shall provide the joint passenger authorities with members appointed by the constituent districts. That reverts to the previous arrangements which worked perfectly satisfactorily". We now have this proposal coming forward from the Secretary of State who, in November 1984, made that particular statement concerning the working of the PTAs.

In the Standing Committee of the other place considering the Transport Bill, on 12th February 1985, Mr. Giles Shaw, Minister of State at the Home Office, said at column 1337: We are faced with an authority being set up to provide a service which inevitably is wider than any individual district council. That of course is the logic and the rationale behind joint hoards for police, fire and transport so that there can be co-ordination of policy and an agreement to run what is in essence a public service.". If one bears in mind what the noble Lord, Lord Teviot, has said, I ask the Minister, "Why change all that by this proposal in the present Bill?"

All these references—and I could quote others—ignore the whole tenor of the consultation paper. Ministers may endeavour to justify the consultation paper but throughout it there is encouragement for district councils to secede from their PTAs. I should like to quote paragraph 4: Individual district councils may consider that they could better achieve their policy objectives if they were to pay for and administer public transport support in their area directly". There is a reminder in the consultation paper of Section 42 of Transport Act 1985 which provides for district councils to secede. I cannot believe that the Department of Transport issued a consultation paper of that kind without the Ministers concerned approving this encouragement to secede from the PTAs.

What would happen if there was a secession from the PTAs is almost too dreadful to consider. Admittedly this covers only the important conurbations of the old metropolitan counties and would also have some effect in Strathclyde. It would ignore the considerable number of bus services which cross at least one district boundary. At the Second Reading of the Bill we heard from the right reverend Prelate the Bishop of Manchester that in Greater Manchester as many as 65 per cent. of the services cross district boundaries. What a hopeless mess it would be if there had to be separate arrangements with each district council for bus subsidy, bearing in mind what has been said about the cross-district transport services.

Picture the mess there would be if each district council had to arrange its own transport concessionary fares scheme. The individual districts would also have to agree procedures to meet changes in commercial services, bearing in mind that only 42 days' notice is required of any changes in commercial services. I was pleased that the noble Lord, Lord Teviot, referred to the position of British Rail. It is terribly concerned about the possibility of the break up of the present PTA system of representatives from district councils. British Rail says that it would be absolutely impracticable for it to have to negotiate separate arrangements with each district council. There is also the question of the level of service to be provided and the fares to be charged. To have to do this with every district council instead of, as at the moment, through the PTA would be nonsense.

I have also received a communication from the Community Transport Association, to which the noble Lord referred. It is worried about the possible secession and points out that the six existing passenger transport authorities and the Strathclyde region spend some £6 million on special needs transport services. With the change in the Bill we could find each district council trying to weigh up transport needs alongside social needs, whereas at the moment the question of transport needs is considered on a countywide basis with the PTAs.

We have asked why the joint passenger authorities have been singled out for this change from precepting to levying. The explanation was given by the noble Lord, Lord Brabazon, when replying to a transport debate. He said: The purpose of the change is to increase accountability. It is not so necessary for the fire and police services which are subject to police supervision". In another place the Minister concerned added that another difference is that the Home Office pays 50 per cent. of the grants.

The change to levying would remove the right of appeal against any spending restriction imposed by central government. Undoubtedly we shall find that there will be such restrictions on expenditure. The other important point is that transport expenditure would not be itemised in the community charge, whereas if it were a precept charge the precept for transport for the PTA services would be itemised separately. Those who received the community charge notice would know that so much had been paid towards the precept of the PTA. By the levying system, which would not be mentioned at all, it would come under the general district council's costs.

I hope that Members of the Committee will appreciate what has been said on the issue. It may only affect these parts of the country but it is a most important question. I hope therefore that not only will all seven amendments receive the Committee's support but also that the Government will realise the common sense of changing the position they have introduced into the Bill.

11.30 p.m.

Lord Jenkin of Roding

It gives me no great pleasure to say from these Benches that I think the amendment which has been moved by my noble friend Lord Teviot is right. I should like to explain the reasons behind my agreement. When we published the White Paper Streamlining the Cities, which was the precursor to the Local Government Act that many Members of this Chamber took a close interest in during the various stages of its passage through this place, we always recognised, as the noble Lord, Lord Underhill, said, that when the metropolitan county councils were abolished there were three services which had to continue to be operated on an area-wide basis. Transport was one of those services. Therefore joint boards were to be set up and the members of them were to be supplied by the districts to ensure that such services were looked at on an area basis.

We had considerable discussions, within the Government at that time, as to whether the joint boards should be precepting or charging bodies. I notice that the word "levying" is now used, but at that time we used the word "charging". The arguments centred on many factors, one of which was the issue of accountability and the transparency of the amount which would be precepted by the joint board and which would pass straight through to be paid by the ratepayer—now known as the community charge payer. In the end we decided that precepting was a better way of achieving this than charging, because it provided the benefit of transparency and accountability. Further, it left the joint board—in this case the passenger transport authority—with the clear responsibility for its own expenditure and with the collective responsibility, so to speak, of the districts for administering the services area-wide.

The policy found expression in the White Paper which streamlined the cities in Chapter 3, paragraph 3.1: The joint boards will be directly responsible for their own expenditure decisions, will have a power of pre cept, and will therefore stand in a clear fiduciary relationship to the ratepayers of the area". That was why the solution was chosen, applying to the police and fire services as well as to transport.

I take up a point made by the noble Lord, Lord Undeŕhill. I understand why the Government do not propose to change the position as regards the police and fire services. This is because there is a much greater degree of central government involvement in the expenditure and in the establishment and maintenance of standards in those services. However, their argument, as I understand it—I have had the advantage of discussing the matter with two Ministers in the Department of Transport—is that actual experience in the case of transport has shown that accountability is not as strong as had been envisaged when we passed the Local Government Act.

It is said that district councillors tend to distance themselves from the activities of the PTAs and therefore they do not feel themselves accountable to their electors for the actions of the PTAs. We are entitled to ask for some evidence of that. My noble friend Lord Teviot has described the measures that are currently being taken by PTAs to ensure that their district councils are involved in the decisions that they make; that there is co-ordination between services—

Lord Teviot

I apologise for interrupting my noble friend, who has come to a valid point. It is one that he mentioned to me and that I have researched. In the past hour only I have been in touch with four out of the six PTEs. It is a fairly late hour to get in touch with people at their homes. I think that I have received reasonable information. I should like to mention West Yorkshire, which does better than the others. It has a good, positive relationship with district councils, which co-operate with PTAs over the development of public transport systems and the most efficient use of resources. That PTE has regular committees on education, social services, highways, planning and taxis. It meets quarterly.

Greater Manchester and its 10 councils have regular discussions on policy plans, budgets, three-year plans and light rapid transport. Tyne and Wear consults districts on shared services and has a full-time district liaison officer. South Yorkshire PTA members are on four district transport advisory committees with separate sub-committees. I am afraid that I have been unable to contact the West Midlands or Merseyside, but I believe that there is a difference in those areas.

Lord Jenkin of Roding

I am extremely grateful to my noble friend. He absolves me from any further responsibility to seek to justify putting a question to my noble friend the Minister as to what evidence there is that district councils tend to distance themselves from the activities of PTAs.

If there were some evidence of that, surely there is a perfectly valid explanation for it. We are still in the transitional period. The Committee will recollect that when the Local Government Bill was introduced, and as it was enacted, it contained a requirement that the precepts of the joint boards should have central government approval for the first three years: 1986–87, 1987–88 and 1988–89. We are still in the middle of that period.

I could well understand that district councillors might say, "Well, so long as that ceiling is imposed by central government there is not much point in our engaging in substantial discussions with the PTA as to the level of its precept. Of course, when the three years are up, and the government ceiling is removed, we may well be in a different state, but we cannot tell".

I have to ask my noble friend the Minister whether the Government's proposal, which the amendment moved by my noble friend seeks to reverse, is not premature. How can one argue that the system is not working well when, after all, we are only in the second year of a transitional period? I seriously question whether the Government are wise to seek to reverse a decision taken comparatively recently by Parliament, as I must make clear to the Committee, after a great deal of careful thought and analysis as a result of which we came to the conclusion that precepting was the right answer.

Following one of the other points made by my noble friend, what are likely to be the consequences of switching to a levy system in place of a precept? My noble friend on the Front Bench may have a point when he says that it will bring home to the district councillor, when he seeks the support of his electors, that he or his council has to include in the community charge the appropriate share of the charge which is being made, the levy which is being made by the PTA, and that this will enhance accountability. I readily concede that point.

However, I then have to go on to ask, accountability for what? Will it not be, in those circumstances, the accountability that that elector and that district councillor will feel for the very specific services which may apply in that district's area? It seems to me that it will be very difficult to argue that it will be an accountability for the services that cover the area as a whole, the whole of the PTA area. That is not what that elector or that district councillor will be concerned about. Therefore, I argue that, yes, there may at first sight be an enhanced accountability from the councillor to the elector. But it is not the accountability which Parliament sought to establish when it retained area-wide passenger transport authorities.

Therefore one looks for another reason. The noble Lord, Lord Underhill, mentioned secession. Here again I find my noble friend's argument puzzling and confusing. When one came to read it, the consultation paper of January seemed to suggest that one of the advantages of a levy was that it would bring home to the individual district council that there might well be advantages in secession. In a passage a little lower down from the one read to the Committee by the noble Lord, Lord Underhill, paragraph 5 states this: The changeover to direct billing will put districts into a better position to make an assessment of whether secession would better meet their interests. Districts may in particular regard secession as desirable because decisions on bus services needed for its population would be made by a body more closely in touch with the needs of its residents. I am bound to say that I agree with those who read into those words a fairly clear government encouragement to secede. But, when that was put to the Minister of State, Mr David Mitchell, in the debate in another place, he had this to say on 20th April: I have no reason to believe that the measure will lead to secession by districts. I do not anticipate such a development, and I can give any honourable Members who are genuinely worried on that score an assurance that if any authority asks for secession, my right honourable friend the Secretary of State will look very carefully at the proposals, and set conditions that will have to be met. On that ground, honourable Members can be considered reassured that secession will not result." [Offcial Report, Commons, 20/4/88; col. 922.] If it is going to result in a flawed accountability, because it will not be an accountability for the whole of the PTA area, and if it is not intended to lead to secession, then one is bound to ask, what is the purpose of making this change?

I can say to my noble friend, who would concede it, that if there were evidence after a reasonable period of proper operation of the system—that is to say, after the end of the transitional period—that it was not working, that there was a gulf between the districts and the PTA and that therefore one had once again to reopen the question, then I should certainly be prepared to look at that with a very open mind. I would not consider myself in any way wedded to the proposal in the White Paper and in the Bill which we passed at the time.

But surely that is premature. I wonder whether my noble friend might consider a possible alternative way of approaching this. Clearly he would not want to come back to the House in two or three years' time with primary legislation to reopen this whole question. In retrospect, the right answer is perhaps that I might have tabled an amendment in this sense, but we have further stages of the Bill when it may be possible to do so. But one could take a power to convert the precept into a charge, a power to be approved by both Houses on affirmative resolution. Both Houses would need then to be satisfied that the system had so far broken down that it had to be changed. But one cannot say that now. We are in the transitional period with the ceiling put on to the precept by the Government. Five out of the six passenger transport authorities actually spend up to their ceiling. So I would very earnestly beg my noble friend to look at this again. I think that the Government have jumped the gun for reasons which are not wholly clear to me. I believe this is premature and I think that it would be better if they took it back and thought again.

11.45 p.m.

Lord Mountevans

One of the joys of speaking fourth in a little debate like this is that most points have been made before. So one puts away one's first page, or almost. But I would agree with those Members of the Committee who have said that direct billing in lieu of precept is harmful to public transport in the metropolitan areas at this time rather than being a progressive move. As has been said, it will have a negative effect on the provision of service in general apart from the concessionary schemes. It will prevent forward planning, without which no sensible public transport organisation—indeed, no private enterprise—can operate. If a private enterprise or a public one does not know whence its funds are coming, it cannot plan ahead.

It has also been mentioned that British Rail is rightly concerned about the effects which could arise if the Bill went through in its present state. British Rail is obliged by directive to provide a network and a density of service which is broadly comparable to that prevailing over the past decade. To do so it depends on three sources of income: the fare box income, the PSO grant and the Section 20 payment—the latter being from the PTAs.

But, as has been argued already, the PTAs run across district lines, as does British Rail. When British Rail provides its service and looks for its funding, it has to take account not only of its economic objectives but also of the very simple fact that people live in one district but work in another. They live in one district but they travel to another for the purposes of friendship or kinship; for the purposes of treatment; for the purposes of health or for the purposes of leisure.

Under the billing procedure it seems to me highly unlikely that there will be any investment in infrastructure in what one might call the middle district if one had three districts A, B and C. The benefit might be to a considerable extent operationally economic for British Rail and to a considerable extent appealing to district A and district C—let us say, in Manchester, Stockport and Bolton. British Rail has just opened the Windsor link, which I believe lies in the Salford district. There is no great benefit to the Salford district from the Windsor link, but on the other hand it is of the utmost benefit to other people in the conurbation.

The noble Lord, Lord Underhill, argued that direct billing could lead to secession and so, I think, did almost everybody else who has spoken so far. I wonder if one cannot take this a little further and say that secession is almost something that the Government encourage, because if major districts secede from unitary authorities those unitary authorities become weaker. They lose their ability to fulfil the county-wide function that was mentioned by the noble Lord, Lord Teviot, in his very earliest remarks.

The reason why I wonder whether secession is not a matter of government policy is because in April I was watching "Newsnight". On it the Secretary of State for Education was being tackled by my noble friend Lord Callaghan of Cardiff on his education Bill. In effect the Secretary of State said, "Yes, of course, if one gets three or four of the major districts to secede from a local education authority that is the end of the unitary authority." So perhaps I may ask the Minister to look across the lines a little and tell me whether the unitary authority is under threat from the Government. Shall we find that the police and the fire services will shortly be under threat in spite of any logic that says that they are best run on a county-wide or broader basis?

Finally, one comes to accountability, which seems to have been defined as directly elected. I have only one point to make about this. As far as I am aware the Pope is not directly elected. I am not certain if the Leader of the Opposition was directly elected; I know the Prime Minister was not directly elected. Could we perhaps have a new definition of "accountability"?

Lord Beloff

I have only two brief reasons for supporting the amendment. The first is that many of us were asked to support the Government in passing the legislation now in force on the basis of what an excellent thing PTAs would be and how they would enable the more rational planning of transport to go on. I do not like having to turn a somersault, unless the evidence can be produced that we made a terrible mistake and that in fact transport is in disarray. No such evidence has been produced.

My second reason is that, looking ahead, it is clear that the present pattern of urban transport all over the world is going to be revised. We are going to have another era of other forms of transport: light railways, tramways in a new form, or whatever it may be. We have seen this in other countries. And it is coming here, for instance, in the North-East. It seems to me that the last thing one wants to do is reduce the area over which a transport authority operates. Clearly, if you had secession and the operation was broken up even to a limited extent, there would be no capital forthcoming for such ventures. These will, I believe, solve many of our traffic and transport problems; it seems absurd to cut away the foundations of the future.

Lord Tordoff

I intervene briefly, as someone who added his name to the amendment. There really is very little more to say. It seems to me that the debate revolves around the decision as to whether we have a sensible transport system— the noble Lord, Lord Beloff, put his finger right on the button—capable of development, integrated and envisaged in the Bill, which many of us criticised. We would have approached the problem in different ways. Nevertheless the Transport Bill and the Local Government Bill took us down this road.

We have heard today from the noble Lord, Lord Jenkin, who has now made two remarkable speeches on the Bill. One was made on Second Reading, the other on this amendment. It seems to me that the Government really must listen to what is being said: the contra-distinction between an efficient transport system and what I believe is a spurious attempt to increase accountability.

What does accountability mean in these circumstances? At the end of the day, people have one vote in one election. They are going to cast that vote not on the basis simply of whether the passenger transport system is adequate in their district but over a whole range of issues relating to local government. To suggest that there will be greater control of passenger transport authorities because transport is brought into the hands of the districts and taken away from the overall body seems to me a spurious argument. To set that against the dangers of further disintegration of our transport system, with the dangers of the lack of investment suggested by the noble Lord, Lord Beloff, seems to me to be foolish in the extreme. I hope that the Government will take great notice of what has been said in this debate.

The Earl of Halsbury

The noble Lord, Lord Teviot, asked me to come and listen to this debate and form an opinion as to what I had listened to. I am not an expert on the technicalities involved in local government administration, but I should like to remind the Government that I have supported this Bill from the start because of the extremely lucid and persuasive Second Reading speech of the noble Lord. Lord Jenkin of Roding.

Once more he seeks to persuade the Chamber not to go ahead with the Bill but to think again. I can only add my persuasion to his. I like to think of these Committee stages, for the most part, as a fencing match with buttoned foils. The object is not to draw blood. That can be done at Report stage. If the Government can be persuaded to think again and if Members of the Committee whose names appear on the amendment can withdraw it and reserve their position until the next stage, it may be possible to reopen talks and consultations and produce an agreed text for the Bill. Having listened to the debate, I urge the Government to think again.

Lord Flarmar-Nicholls

Perhaps I may echo the point made by the noble Earl. I have no personal knowledge of the subject. Like others, I was asked to come and listen to the debate. Although we have not heard the answer of my noble friend the case made for the amendment is very strong. In the very authoritative speech of my noble friend Lord Jenkin, he did not ask for the amendment to be made permanent. He suggested that time could be given to see how things turn out. If the worst happens, we can revert to the provision presently in the Bill. I understood my noble friend to say that he would like to have the opportunity to put the intention into an amendment to be examined at Report stage.

Unless my noble friend has a very strong brief on the matter, in the light of the strength of the arguments made in support of the amendment, I think it would be sensible to leave the matter open in order to see whether the suggestion can be implemented.

Lord Brabazon of Tara

I have listened carefully to the arguments advanced by my noble friend Lord Teviot and other Members of the Committees in support of the amendment. I was grateful to my noble friend for enunciating so clearly some of the concerns which are felt about our measure. I hope in a moment to deal in some detail with the points that he has raised, and I very much hope that what I have to say will reassure him. Equally I hope that others who say that they will support the amendment will decide on reflection that they should not do so

Perhaps it would be helpful to the Committee if I now set out briefly the background to our decision to make the PTAs bill their constitutent districts for their expenditure. In doing this I have in mind the comments made by the noble Lord, Lord Mountevans, at the Second Reading of this Bill on 9th May when he suggested that the Government had failed to be sufficiently forthright in setting out the reasons for the change.

In setting up the PTAs as joint boards under the Local Government Act 1985, the Government considered that accountability would be ensured if the PTAs were made up of representatives of the constituent district councils. Thus when voting for district councillors the electors would be aware of the policies the councillors would mandate their representatives to support on the PTA.

Experience has shown, however, that the link between the districts and the PTA's expenditure is not as close as we had hoped in 1985. Districts have instead distanced themselves from PTA expenditure when it has suited them, despite the fact that it is their representatives who have approved the PTA's budget. That applies not only to districts who find themselves in a minority on a PTA but also those who support the majority view.

My noble friend Lord Jenkin asked for examples of that distancing. I shall point to one very recent example. At a meeting shortly before the change to direct billing was introduced to the Bill, representatives of the Association of Metropolitan Authorities stated that they would prefer the continuation of precept control over the PTAs—and I remind the Committee that this will no longer apply to the PTA's upon the change to direct billing—to greater involvement of the districts in the PTAs. The reason is that it made life easier for them. That is evidence. The noble Lord, Lord Underhill, referred to the late introduction of the change to direct billing—

12 midnight

Lord Jenkin of Roding

I was asking for something rather different. I was asking for examples of where individual districts in a particular area were in some way absolving themselves from responsibility for what went on in the PTA in their area. That is what I understand to mean by distancing themselves from the decisions. My noble friend will obviously be coming onto the question of the transitional period in a moment, but can we have examples of where this has happened on the ground?

Lord Brabazon of Tara

I think I have just given an example of how the PTAs would rather find themselves not having to—

Lord Mountevans

I am sorry to interrupt, but did the noble Lord not just quote the Association of Metropolitan Authorities, whereas the question is being asked about the PTAs and the districts? Although they are all in one chain, I do not think one can say that if one puts the umbrella up the left foot necessarily agrees.

Lord Brabazon of Tara

Perhaps I could continue. But I think there is definite evidence that the districts have distanced themselves, or attempted to distance themselves, from decisions made on their behalf by the PTA and I think the example I have just given is a good one—

Lord Underhill

May I interrupt?

Lord Brabazon of Tara

I think I should go on at the moment. We have had a long debate and I have quite a lot of questions to attempt to answer. I shall try to deal with any other points that are raised. The noble Lord, Lord Underhill, referred to the late introduction of the charge to direct billing. Ideally we would have wished to produce all our proposals upon the first publication of the Bill, but this was a change which required time for reflection. We also delayed a decision on the change to give more time for comment after originally offering what we realised was a very brief period. Therefore, I trust that the debates in both this House and in another place have now allowed the questions to be fully aired.

The noble Lord, Lord Underhill, said that most consultees disliked the proposals, but most did so believing that mass secession would result. I do not believe that this will happen. Moreover, respondents' hostility reflected the desire of the districts to remain distanced from their PTA's spending.

My noble friend Lord Teviot and other Members of the Committee focused on accountability and I should like to say a little about this as it is at the heart of the matter. I think we agree that accountability is of paramount importance, but of course we differ on the means of achieving it. My noble friend has said that the PTAs have a direct relationship with the ratepayers and that, the link with those for whom the service is provided will he broken", by our proposal; that our proposal will diminish accountability, by removing PTAs' access to their own income"; and that PTA members are accountable both to their districts and to their own electorates.

The point is that the PTAs' relationship with the electorate appears direct, in the sense that they precept directly, but it is not a fully accountable relationship. The PTAs do not answer directly to the electorate for their decisions. So the link is not a direct one. This has, as I have said, enabled districts to distance themselves from PTA spending decisions.

I agree that the PTA members are representatives of their districts, but they do not stand before the electorate for election on that basis. They are not directly accountable for PTA decisions. Where there is a direct link is precisely in the fully accountable relationship between the districts and their electors, and that is where responsibility for spending should properly lie. It is not true that our proposals will remove PTAs' access to their own income; their access to funds is undisturbed by our proposal.

My noble friend also pointed to the extent to which PTAs currently consult on their policies and expenditures. This is an admirable adjunct to accountability, and is something which I fully expect to continue under our proposal both at district and at PTA level.

Members of the Committee, particularly the noble Lord, Lord Underhill, referred to the Home Office joint boards and asked why these changes do not apply to the Police or Fire and Civil Defence Joint Boards. These are in a very different position from the PTAs: the police authorities have magistrates as well as district councillors and receive 51 per cent. of their funding direct from the Home Office, which also exercises control over staffing levels; and both the police and fire authorities have inspectorates overseeing national standards. PTAs, by contrast, should simply be implementing the collective policies of their constituent district councils.

The Committee was concerned that our measure would, introduce uncertainty into PTAs' budgets because a levy "cannot be a secure source of income". My noble friend was also concerned that PTAs would no longer get direct grant from central government. I can reassure him on both those points. When the districts receive a bill for their share of PTA expenditure they will be obliged to pay it. The PTA can therefore plan securely and there will be no real uncertainty. On grant, I should point out that revenue support grant is to be paid into collection funds, not in support of particular authorities.

Lord Tordoff

Perhaps the Minister will allow me to correct him. Is it not true that this will only apply on a much more limited timescale? What he has just said about districts not being able to refuse to pay the bill is true on a one-year basis, but it is certainly not true over a longer period.

Lord Brabazon of Tara

That is no different from the present situation. The PTAs have to set their budgets on an annual basis and the budget has to be agreed as it is now. That will not change in the future.

Lord Tordoff

With respect to the Minister, the PTAs are able to operate on a much longer timescale than that. Their precepting powers enable them in fact to look forward for two or three years. The new system will certainly not enable them to do that.

Lord Brabazon of Tara

They will still have to have their budgets accepted by their members as they do at present, so that will continue. I think it may be helpful if I say a few words on the mechanics of the change.

The change means that PTA expenditure will form part of each district's expenditure and will be recorded as such on the community charge demands. There will be no separate PTA precept. There will, however, continue to be a statutory requirement of the PTAs to produce plans and we will continue to collect figures on spending, so comparison with other areas and awareness of the size of budgets will hardly be lost through the change even if districts do not seek to draw attention to the scale of PTA expenditure. The districts' representatives on the PTA will need to reach agreement just as at present on the PTA budget. Such agreement may prove a little harder to reach when the districts are taking a closer interest in PTA spending, but this is a necessary concomitant of greater accountability.

I turn now to the question of secession, which has been raised by many Members of the Committee. Of course there will be minority districts on the PTAs that find themselves paying directly for PTA policies which they do not support. If they cannot win their argument at the PTA then the ultimate step is for them to seek to secede. The option of secession is thus essential to proper accountability. Where a PTA is spending excessively we should clearly have some sympathy for it. I can assure the Committee, however, that my right honourable friend the Secretary of State will not grant secession unless he is satisfied that proper provision has been made for conurbation-wide services and responsibilities and that the change will be cost-effective; and that would include of course the British Rail services to which the noble Lord, Lord Mountevans, referred.

Lord Dean of Beswick

I am grateful to the Minister for giving way on this matter of secession. Does he not understand that in the metropolitan county areas the hard core of the population is served by the biggest authority? For instance, West Yorkshire has a population of 1.7 million people, 750,000 of whom live in the city of Leeds. The West Midlands has a population of about 2.7 million, of whom 1.2 million live in the city of Birmingham. In Greater Manchester nearly half a million of its 2.5 million population live in the centre of Manchester. Those are the spokes and the heartbeat of the transport authorities. If they opt for secession, what is left for the small authorities outside those areas? Quite sincerely I predict that there will be a terrible disintegration of the whole of the service.

Lord Brabazon of Tara

Perhaps I may remind the noble Lord that secession is an option that is available under the present system and it has been since the 1985 Act. In any case, I have said that my right honourable friend will have to satisfy himself that proper provision has been made if he intends to allow secession to take place. I should be surprised if districts were not aware of what represented the best value for money for their electors.

Finally, I come to a concern which I know is felt on all sides of the Committee. It was raised in particular by my noble friend Lord Jenkin of Roding. The 1985 Act set up a system of joint hoards, including the PTAs on the basis that there remained a need for the co-ordination of transport on a county—wide basis. Our measure is believed—wrongly, I think—to undermine the structure that the 1985 Act set up. The Government acknowledge now, just as they did in 1985, the need for conurbation—wide co-ordination of passenger transport. We do not seek to disturb the structure which we established then. What we seek is to improve the accountability of that structure. Surely this an objective to which my noble friends at least ought readily to subscribe.

It may be thought that the 1985 structure was likely to be undermined not by our measure but by the secession of districts. I remind noble Lords, as I have just said to the noble Lord, Lord Dean of Beswick, that that possibility has existed since the 1985 Act. Section 42 of that Act specifically provides for the possibility of secession. We are not changing that in any way. If greater accountability causes a district to consider secession on the grounds of better value for money for its charge payers that too is surely a move which we should welcome. The Secretary of State will be able to take a wide view in considering whether he will agree to the district seceding.

This is a change which will clearly bring welcome accountability to the metropolitan PTAs. No more will districts be able to shirk their responsibilities for PTA expenditure levels. Some noble Lords may regret that public transport in the metropolitan areas will be subjected to the scrutiny of district councils, but this comes from making PTAs accountable. I would sooner see this than PTAs pursuing policies supported by but a few. Are noble Lords supporting this change really in favour of accountability, I wonder?

My noble friend Lord Jenkin has reminded us that this year has been the last year of automatic precept control. This appears to me to be the very time to introduce accountability rather than waiting to see whether the charge payers of the metropolitan areas are suddenly faced with excessive bills. If I interpreted his suggestion correctly, my noble friend has, however, suggested that he may introduce an amendment at Report stage to defer these proposals by introducing a power to introduce billing. Obviously we shall have to look at that amendment on its merits. We would of course give it very careful consideration.

That is an undertaking that I can give. I cannot, I am afraid, despite the arguments that I have heard this evening, accept the amendment as it stands in the name of my noble friend Lord Teviot. However, I hope that, with that very lengthy explanation, my noble friend and other Members of the Committee will perhaps feel able to withdraw the amendment. I have given the offer to consider an amendment from my noble friend Lord Jenkin.

Lord Jenkin of Roding

Before my noble friend sits down, I am obviously grateful for his undertaking that he will consider very carefully an amendment which will convert this into a power rather than into immediate change. Before he concludes, can he address himself to the argument which I sought to put before the Committee? It is that perhaps one of the reasons why district councils have not addressed themselves with great force to the size of the precepts is that those precepts have been government controlled? That is the essence of the transition. In fact when he seeks to use the end of the transition period as a reason for wanting to change the system of accountability, he is standing the argument on its head. The fact is that we have not had a period when there has been accountability, because it has been centrally controlled. Let us wait to see whether when there is not central control the same complaints can possibly be addressed, perhaps with some more evidence produced.

12.15 a.m.

Lord Brabazon of Tara

I look forward to my noble friend's amendment at Report stage, but it seemed to us that this was a good time to introduce this change with the removal of precept control. I do not believe that all authorities have reached their maximum precept, so it may not be that relevant a question.

Lord Underhill

I do not want to prolong the debate, but I echo what the noble Lord, Lord Jenkin of Roding, has said. Much as I believe that the PTAs and passenger transport executives are doing excellent work, I should be prepared to support an amendment which said that if in two or three years' time we found they were not doing the task for which they were appointed, we should change the system. Therefore why cannot the Minister say the same? Let us go back to precepting with an enabling regulation to change to levying, if we find that the PTAs and PTEs are not functioning properly within a certain time. I should be prepared to support that, and I have not consulted my colleagues. Will the Minister do the same?

Lord Brabazon of Tara

I said that if my noble friend proposed that kind of amendment at Report stage the Government would clearly have to consider it very carefully. That, I am afraid, is as far as I can go at the moment, but it is an undertaking which I hope the Committee will be prepared to accept in good faith.

Lord Teviot

This has been a most interesting debate. I really did not believe that this subject would command such interest with so many noble Lords here and that the debate would continue for 65 minutes. I shall not take much longer, but there are still one or two points I should like to mention.

My noble friend made a very valiant effort and has given us one or two crumbs, a few currants or even a little cream at the end for us to consider. But one cannot lose sight of one or two of the issues that he did rather less well on earlier. He spoke about districts. He was challenged to name one or two districts that were distancing themselves and were dissatisfied. I asked my noble friend to give an example, but I do not think there is one. He still has an opportunity to tell me what districts they are, but my information has been totally different.

The Committee has been very fortunate to listen to the great wisdom of the noble Lord, Lord Jenkin. I agreed with the noble Earl, Lord Halsbury, whose wisdom we have followed throughout. I shall await my noble friend's amendment with interest.

On accountability, I do not think that my noble friend the Minister was all that convincing. After all, the Local Government Act provides joint boards, people are appointed and the system is thought to be perfectly democratic and efficient. The people appointed are accountable and can be removed.

My noble friend hoped that I would be satisfied that the amounts of money involved would go into transport and not into other things. The noble Lord, Lord Tordoff, also mentioned this. The noble Lord, Lord Underhill, says he is prepared to wait to see my noble friend's amendment and how the Government respond to it. I believe we must do that. However, earlier I thought I would divide the Committee because I felt the subject should be considered as a whole. Otherwise, through Report stage and Third Reading and when the Bill becomes law one reaches a dog's breakfast situation. One would like to see the status quo maintained.

I shall see what the Committee decides on this amendment. At the moment I shall not withdraw it, but I shall see what happens.

Lord Underhill

Perhaps I have not made myself clearly understood. I said that I hoped that the Minister would agree that the position of precepting should be returned. I would readily consider the matter being looked at again in two or three years' time if we found that the system was not functioning as it ought. However, in the meantime we must have a return of the precepting procedure.

Lord Teviot

I think that in that case I must test the opinion of the Committee.

12.20 a.m.

On Question, Whether the said amendment (No. 97) shall be agreed to?

Their Lordships divided: Contents, 23; Not-Contents, 37.

Beloff, L. NcNair, L.
Dean of Beswick, L. Monson, L.
Fortescue, E. Morton of Shuna, L.
Graham of Edmonton, L. Mountevans, L.
Hacking, L. Ponsonby of Shulbrede, L. [Teller.]
Halsbury, E.
Hylton, L. Ross of Newport, L.
Killearn, L. Saltoun of Abernethy, Ly.
Lindsey and Abingdon, E. Seear, B.
Lucas of Chilworth, L. Teviot, L. [Teller.]
Lytton, E. Tordoff, L.
McIntosh of Haringey, L. Underhill, L.
Arran, E. Harmar-Nicholls, L.
Balfour, E. Henley, L.
Beaverbrook, L. Hesketh, L.
Belstead, L. Hooper, B.
Blatch, B. Johnston of Rockport, L.
Borthwick, L. Kimball, L.
Brabazon of Tara, L. Lindsay, E.
Butterworth, L. Long, V.
Caithness, E. Mackay of Clashfern, L.
Cameron of Lochbroom, L. Margadale, L.
Carr of Hadley, L. Monk Bretton, L.
Coleraine, L. Montgomery of Alamein, V.
Craigmyle, L. Skelmersdale, L.
Davidson, V. [Teller.] Southborough, L.
Denham, L. [Teller.] Trafford, L.
Dundee, E. Trumpington, B.
Ferrers, E. Ullswater, V.
Gisborough, L. Wynford, L.
Glenarthur, L.

Resolved in the negative, and amendment disagreed to accordingly.

12.27 a.m.

Clause 32 agreed to.

Clause 33 agreed to.

Clause 34 [Power to anticipate precept]:

Lord Glenarthur moved Amendment No. 97A: Page 20, line 4, leave out ("and the Common Council") and insert (", the Common Council and the Council of the Isles of Scilly").

The noble Lord said: With the leave of the Committee, I shall speak also to Amendments Nos. 97B, 97C and 97D. The effect of these amendments is very simple. They add to those charging authorities which are empowered to anticipate certain precepts to be issued to them the Council of the Isles of Scilly. Clause 34 empowers a district council and the Common Council when setting their community charges to anticipate precepts yet to be issued by parish councils and similar bodies. The purpose of the clause is to provide a safety valve for parishes which fail to set their precepts before the statutory deadline of 11th March of the preceding financial year.

The Isles of Scilly, which is a charging authority under the Bill in the same way as a district council, likewise may have within its area parish councils. Accordingly it is only right that the same arrangements should apply for the anticipation of precepts in the Isles of Scilly as will apply generally throughout England and Wales. These amendments secure this, and at the same time improve the drafting of the existing Clause 34. I beg to move.

On Question, amendment agreed to.

Lord Glenarthur moved Amendments Nos. 97B to 97D: Page 20, line 6, leave out ("relevant precepting authorities are") and insert ("a relevant precepting authority is"). Page 20, line 10, leave out from ("Council.") to third ("the") in line II and insert ("a relevant precepting authority is the sub-treasurer of the Inner Temple or"). Page 20, line 12, at end insert— ("(c) in relation to the Council of the Isles of Scilly, a relevant precepting authority is any parish council or chairman of a parish meeting with power to issue a precept to the Council.").

On Question, amendments agreed to.

Clause 34, as amended, agreed to.

Clause 35 agreed to.

Clause 36 [Standard community charge multipliers]:

Lord Monson moved Amendment No. 98: Page 21, line 21, leave out ("it") and insert ("the authority").

The noble Lord said: I am glad to be able to say that this amendment is a great deal less complicated and contentious than Amendment No. 97. I stress at once that it is not a paving amendment for a subsequent amendment. It stands on its own. I say that because the fact that it is bracketed with others may have misled the Committee.

I trust that the amendment will be recognised as entirely constructive and non-political. We are constantly being reminded—rightly so—that the wording of Acts of Parliament should be clear, unambiguous, and easily comprehensible not only to lawyers but to members of the public. As the Bill stands subsection (2) is both imprecise and ambiguous. To what does the word "it" in line 21 refer? Presumably it is to the word "authority" in line 19 rather than the word "multiplier" in line 20. But that is not immediately obvious, nor indeed is it certain.

The subject of each of the other nine subsections in Clause 36 is a noun rather than a pronoun. I suggest that it would be both logical and helpful if subsection (2)—the odd subsection out—were to be modestly amended in the way suggested to bring it in line with all the other nine subsections, thereby clarifying the clause for lawyers and laymen alike. I beg to move.

Lord Ross of Newport

May I speak to Amendment No. 98A as it is listed in the same group of amendments, or do I wait until the Minister has replied?

Lord Glenarthur

The noble Lord, Lord Monson, pointed out that his amendment was discrete in its own way and perhaps I can respond first to it.

I noted the noble Lord's remarks. There is an awful lot in what he says. The amendment puts the subsection beyond doubt and I am therefore happy to accept it.

Lord Monson

I am grateful to the Minister.

On Question, amendment agreed to.

The Chairman of Committees (Lord Aberdare)

In calling Amendment No. 98A I must inform the Committee that if it is agreed to I cannot call Amendment No. 99.

Lord Ross of Newport moved Amendment No. 98A: Page 21, line 25, leave out subsection (4).

The noble Lord said: I hope that I may speak also to Amendment No. 100A. Amendment No. 98A deals with the contentious issue of second homes and it is a golden opportunity for the Committee to take some action because the amendment aims to give a higher profile to local decision-making on standard community charge matters by removing the Secretary of State's power to make regulations specifying which multiplier should be used for each specified class of property.

The fear is that such classes will be unable to cope with the wide variety of second home types and that some second home owners will make windfall gains. Will the classes distinguish between houses used as second homes which are small and ones which are large? Do the Government intend that a tiny cottage will be charged in the same class as a much bigger house?

Local authorities can actually see the houses and can make objective assessments as to which multiplier should be used, perhaps according to the size of the property and the services used. The Secretary of State cannot. Members of Parliament in another place know when they go canvassing—particularly in a constituency of the kind I represented—where there are vast numbers of second homes. The people live in them only half the year.

The Government have said that regulations need to be laid down because local authorities would otherwise push for the highest charges. I do not believe that. Only a government determined to cast every local authority as a Liverpool or a Lambeth could believe such a proposition. I have said, and will say again as a person who totally believes in local government in this country, that out of the 450 local authorities 435 to 440 have behaved impeccably. It is about time that that was recognised by the Government Front Bench. Local authorities are elected by local people and they are best placed to protect local interests.

Authorities will not set high multipliers for chalets and huts because they realise that their presence does not affect the housing market for local people but rather can benefit the local economy. They will not set the multiplier for large houses too low because they believe that such houses may accommodate many people who use many services.

Perhaps I may now deal with Amendment No. 100A, which seeks to raise the multipliers to a maximum of 4. This increase is a logical extension of the arguments for the earlier amendment which I have spoken to. The amendment actually fits in with the logic of the Government even though they do not want to accept it. The Government pretend that the standard poll tax is a service charge. In the case of second homes the charge is presumably for property-based services, for example, refuse collection as opposed to education or social charges. It is in fact a property tax.

Surely service charges should relate to the amount of the service received. For example, in a restaurant we may pay a service charge calculated as a percentage of the bill and related to the service received. Why not so with the standard community charge? Large holiday homes perhaps housing many people, will require more services. Raising the multipliers will give more scope to build in a fairer service charge and stop second home owners from making windfall gains.

As I have said, we maintain—and it is absolutely daft to deny it—that the standard community charge is a property tax and not a service charge. Increased multipliers would facilitate a more flexible property tax. I beg to move.

Lord Monson

This may be an opportune moment for me to speak to my Amendments Nos. 99 and 100, which are consequential upon Amendment No. 98. It is not an ideal time of the morning to enter into complicated discussions upon the standard community charge, but that is the way it goes.

These are basically probing amendments, at any rate at this stage of the Bill. I suspect that to most of us the standard community charge is shrouded in some mystery. Doubtless because of the constraints of time, the noble Earl, Lord Caithness, hardly touched upon it in his Second Reading speech. The Explanatory Memorandum prefacing the Bill is sketchy in the extreme and the Notes on Clauses are, frankly, of very little use. However, the office of the noble Earl did very kindly send me a short but helpful memorandum and there was some clarification from the noble Lord, Lord Glenarthur, on May 24th, when we discussed Clause 3 in Committee, though I was not in the Chamber at that particular time.

It seems to me that greater flexibility should be provided than under Clause 36 as it stands. Perhaps in retrospect my amendment could and should have provided for extra permitted multiples of 1¼ and 1¾ respectively, but that is something that can be rectified at a later stage if the principle is accepted. For example, is it fair that empty homes and second homes should be subject to a multiple as high as 2? Certainly, 1½ and 1¾ but why 2? Though second homes and vacant homes awaiting sale may well need the services of the fire brigade and the police just as often as constantly occupied primary homes, they need refuse collection and services of that kind a good deal less and the education services not at all.

There is also the question of houses for sale. With gazumping and the problems associated with obtaining mortgages—not at the moment because the building societies are full of cash, but at other times—and the notorious chain, sales often cannot be completed inside three months. Within that time-span the Government propose to protect the owner, although it is not actually written into the Bill, so far as I can see. Therefore, might not a multiple of one-quarter rather than one-half or more be appropriate for someone whose house is still unsold after, say, four months?

Finally, I should like to hear from the Minister why the Government believe that councils left to their own devices will ever voluntarily impose a multiplier of less than 2, given the perennial need to maximise revenue whatever the political orientation of the council concerned.

Lord Glenarthur

I have listened to the arguments put forward by both the noble Lords, Lord Ross of Newport and Lord Monson. Perhaps I may deal first with Amendment No. 98A moved by the noble Lord, Lord Ross of Newport. That would have the effect of removing the power of the Secretary of State to set a maximum multiplier in certain circumstances. I cannot accept that he should be denied that right. It is a power which is both useful and desirable. For example, we have made it clear that the power will be used to set a multiplier of zero for property which is empty for up to three months.

Without subsection (4) of Clause 36 the Secretary of State would be unable to provide this important benefit for people who become subject to the standard charge when moving house. I am sure the Committee will agree that that would be a quite undesirable result. Indeed I am a little surprised that this amendment should have been moved at all given the clear support shown when we last discussed this issue generally in Committee for a limit on the multiplier in certain circumstances. I hope that the noble Lord will not press that amendment.

I turn finally to Amendments Nos. 99, 100 and 100A, which would extend the range of multipliers that may be set. Amendments Nos. 99 and 100 would open up the possibility of having multipliers of one quarter and three-quarters, while extending the range to two and a half, three, three and a half or four. I do not believe these extensions are necessary or justified. I am particularly opposed to Amendment No. 100A because there are no circumstances in which the Government believe a multiplier of more than two can be justified.

Two units of community charge is the correct upper limit, because it corresponds in the average authority to the average rate bill at present, a theme to which we have returned on more than one occasion. I must, however, remind the Committee that the standard community charge is not a variable property tax on the lines of domestic rates; and we cannot allow it to be turned into a variable property tax by adding greatly to the range of multipliers. Nor can I see much merit in allowing multipliers of one quarter or three-quarters. We do not intend to specify a large number of different classes of property, so there is really no need for a range of multipliers graded as finely as the amendment proposes. It is certainly not our intention, for example, to specify a range of classes for houses of different size or value as that would be a retrograde step towards a kind of rating system.

The standard charge is not in any sense a tax on the value of property; it is a charge for local services levied on people who have two or more homes. As we have pointed out on innumerable occasions, the use which a person makes of local services bears little or no relation to the size or value of his first or second or third home. That is why we envisage the standard community charge being set at a fixed level for most second homes within an area. It is only in special cases, such as empty property, where we propose to specify a separate class. There is no need, therefore, for a finely graded series of multipliers to be available to the charging authority.

Perhaps I could just say in passing that I find it rather odd that the noble Lord, Lord Ross of Newport, should seek to extend the range of mulitpliers for the standard charge. It appears to me that what he is trying to do is to convert the standard charge into a form of variable property tax. He shakes his head but that is the effect of what he proposes. That seems odd if what he proposes is to replace a variable property tax—domestic rates—with some form of local income tax.

With those explanations, I hope that both noble Lords will see fit to withdraw their amendments.

Lord Hylton

Listening to the Government's reply one would not gather that there is a problem anywhere about second, third or possibly even fourth homes. I should have thought that, with his close connection with the Isle of Wight, the noble Lord, Lord Ross of Newport, is extremely well qualified to assess the extent of the problem. If the Minister cares to consult his right honourable friend the Secretary of State for Wales he will discover that there is a considerable problem of second homes in the Principality.

I was also surprised by the Government's doctrinaire opposition to any kind of property tax, and all the more surprised when one takes into consideration the unified business rate applying to commercial properties. The problem of second and third homes affects the local economy and bears very harshly on the hopes for adequate and decent housing of local people and the descendants of local people, as we have tried to explain on numerous housing Bills before now. I therefore urge the Government to think again about this Bill.

12.45 a.m.

Lord Ross of Newport

The Government are missing a golden opportunity to take a step in the right direction and require people who have acquired second homes in many parts of the country—in Cornwall, in Wales, in the Isle of Wight, in Devon, and in the Lake District—to contribute. Under the provisions of the Bill such people will in fact pay far less. At present such homes are rated so these people are at least contributing towards the rateable income of the local authority. I imagine that even two-times multipliers will mean quite a big cut for people with second homes.

At present, as I am practising in the business, I can tell the Committee that the housing situation is diabolical. The whole market has taken off with enormous prices and gazumping going on all over the country. A whole generation of people aged between 20 and 30 years of age are being priced right out of the property market. Do the Government not understand that there is a great deal of ill-feeling in villages in my part of the world—and in many other parts of the country—against those who are buying second and even third homes? Such ill-feeling takes off when people see themselves priced right out of the market. The Housing Bill will not do anything to improve the situation because that will only put up rents. If you happen to be lucky enough to be in a council house, or perhaps a housing association home, you may actually be able to buy that home at a considerable discount. However, if you are not, you are in real trouble.

I think that in the years to come, much ill-feeling will be taken out on those people who have second homes and who only live in them for perhaps two, or possibly three, weeks a year. The time is as short as that in some cases. Anyone who has canvassed in my part of the world will know that we have complete villages that are virtually empty during the winter months.

I thought that this was a sensible proposition which the Government could take on board and leave to the local authority to deal with. Where it is known that someone is flouting it and hardly using the house, they could put the multiplier up a bit. However, I gather that we shall not be doing that.

We used to put propositions forward in the other place. Indeed, my late friend David Penhaligon used to make great speeches about this saying, "For God's sake, bring second homes under some sort of planning control." Well, that was not accepted because of the freedom of the individual aspect. Here we have the chance to do something, but the Government have turned it down. I do not intend to press the amendment at this stage. However, it is a great shame.

Lord Monson

Before the noble Lord sits down perhaps I may use the opportunity to put two questions to the Minister. Can he say what the Government's attitude is towards empty homes which are on the market but which remain unsold after three months? Is there not a case for imposing some limitation on the multiple that can be imposed upon houses which are still unsold between three and six months?

Further, I revert to a question I asked when speaking to Amendments Nos. 99 and 100. Can the Government envisage any circumstances in which authorities left to their own devices will voluntarily impose a multiple lower than the maximum permitted?

Lord McIntosh of Haringey

I do not know whether the Government will respond to those questions but before the noble Lord, Lord Ross of Newport, concludes, I must stress that the reason we have been uncharacteristically silent on the issue is that we do not think the amendments affect second homes as some Members of the Committee seem to think they do. We think that the category of properties subject to the standard community charge is much wider than second homes in the sense of country cottages of the rich. The case of the constituent of my right honourable friend the Leader of the Opposition in his constitutency of Islywn is a good example. Here was someone who was suffering because she was in hospital and not able to sell her only home; yet of course it would be subject to the standard community charge.

I should like to ask the Minister—if he is going to reply to these questions—whether I am right in thinking that there are far more homes like those of people who are in hospital, those of people in long-term care and those of people whose jobs take them away from their homes than the classical second home falling under the scope of the community charge. As I see it, the requirement for penalties on genuine second homes, desirable as they may be in some parts of the country—I do not deny the experience and expertise of the noble Lord, Lord Ross—is quite a small part of the problem which needs to be tackled by the standard community charge.

Lord Glenarthur

I shall answer the points made by the noble Lord, Lord Monson. First, on the matter of property left empty after three months, the local authority can set whatever multiplier it wishes. It could set zero if it wanted, or something more than zero.

Lord Monson

I appreciate that point, but is it not rather unfair if the property owner, who has tried to sell the property but has not succeeded, is suddenly faced with a large bill? The Government are protecting the person whose property is unsold after three months. Should they not give some, albeit lesser, protection to the owner whose property is unsold for up to six months?

Lord Glenarthur

I can understand the noble Lord's point of view up to a point; but that property will still exist. Let us suppose that it were to catch fire in the middle of the night. That fire would still have to be extinguished by the local fire brigade. That would be making use of local authority services. It is a valid point. It may not be an especially great one. It goes to show that under certain circumstances there may be a need for the local authority to set a multiplier which is higher than zero.

On the other point, authorities may well impose a multiplier of less than two for the simple reason that here we are talking about local authority discretion. Discretion is a feature of the Bill in more than one place. There will be occasions when it is right that an authority should have that option available to it. It is a matter better dealt with locally than centrally.

In answer to the noble Lord, Lord McIntosh, perhaps I may say that I think it is a point that was dealt with when we discussed an amendment to do with people in hospital and a separate class of property, so again of local discretion. There are probably far more genuine second homes than those the noble Lord, lord McIntosh, mentioned. I take the point that he was making, but as I understand it, there will be a large number of people who fit the case he made in his answer to the noble Lord, Lord Ross of Newport. I may not have explained myself very well at this time of night, but I hope that he gets my drift.

Lord Ross of Newport

We are promised that the Secretary of State will by regulation set out the multipliers for specified classes of property. I just think, heaven help us all! The regulation that will come from central government is unbelievable. Cannot we occasionally trust local authorities to do what is right? I am saddened by the Government's whole attitude to local authorities these days. There is little point in people standing for councils any more because they have no discretion over anything.

I was serious when I said that there was an opportunity to write this matter into the Bill and at least provide a way to dissuade some people from paying exhorbitant sums to buy cottages in villages which should be occupied by local inhabitants. However, we are not going to, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 99 to 101A not moved.]

Lord Glenarthur moved Amendment No. 101: Page 22, line 2, leave out (", caravans and houseboats") and insert ("and caravans").

The noble Lord said: I spoke to the amendment earlier. I beg to move.

On Question, amendment agreed to.

Lord Ross of Newport moved Amendment No. 102: Page 22, line 3, at end insert— ("(11) The multiplier relating to properties owned by members of the diplomatic service required to serve overseas shall be 1.").

The noble Lord said: I am trying to help those in the diplomatic service. Those serving overseas will have their homes in this country treated as though they were second homes and as a result almost certainly have to pay a standard community charge, which is twice the local community charge. The diplomats' trade union argues that this is unfair. Their homes are not second homes. Yet single diplomats overseas who receive no local services will have to pay twice as much poll tax as if they were resident locally and using all local services.

Mr. Michael Growcott, in a letter which other Members may have received, says: Most of our members would consider it not unreasonable to pay a single community charge on their vacant homes, but they would consider it unfair to have to pay more than that as a result of following up an instruction to take up a Diplomatic Service posting overseas. Those officers who normally live alone may find themselves having to pay twice as much when they are serving abroad as when they are at home". That is a very fair point. I hope that when the Minister replies he will at least say that he is prepared to give some consideration to the amendment. I beg to move.

Lord McIntosh of Haringey

I too have been in correspondence with the trade union side at the Foreign and Commonwealth Office. I fully support the amendment. I hope that the trade union side of the Department of the Environment has been putting suitable pressure on Ministers to support their colleagues.

Lord Monson

I fear I take a dissenting view. Is not one of the problems with the amendment that in many cases the adult children of the diplomats concerned live in their properties in the United Kingdom? It would be quite unfair if they were to be able to live, at a very low effective rate of poll tax, in what could be quite a large and valuable property.

Lord McIntosh of Haringey

Since it is our amendment and we should reply, I understand that in such a case it will he subject to the personal community charge anyway, because somebody is living there.

Lord Glenarthur

Perhaps I may assure the noble Lord, Lord Ross of Newport, that we have given this proposal very careful consideration. It is only following that consideration that we have concluded that the amendment cannot be justified. The first point I would ask Members of the Committee to consider is that a standard community charge equal to two units of personal charge will be broadly equivalent to the average rate bill at present. People who go abroad continue to pay rates on the home they leave behind, as it is not at all unfair that they should pay the standard charge; nor will they, on average, he any worse off with the standard charge than with the rates.

The second point I would make is that a standard charge multiplier of I could not possibly be justified for diplomats unless a similar concession were granted to anyone who becomes subject to the standard charge as a result of being mainly resident abroad. Thirdly, the standard community charge will not necessarily be set at two units of charge. Local authorities as we discussed in relation to an earlier amendment, will have discretion to set a lower multiplier if they wish.

The last point I must make is that it is important to appreciate that members of the Foreign and Commonwealth Office who are serving abroad will not necessarily be subject to the standard community charge at all. The charge will only arise if their home in this country ceases to be their main residence and if it is not used, in their absence, as the sole or main residence of any other individual. That is perhaps the individual whom the noble Lord, Lord Monson, suggested, in which case it will fall to the personal community charge. If the property is left empty and unfurnished, no standard charge will arise for three months and thereafter the charging authority will have the discretion to continue to levy no charge on empty property. So, going back to the point that I made earlier, we have looked at this very carefully. I have to say that the amendment would be full of difficulties and that it is not acceptable.

Lord Ross of Newport

Before the noble Lord sits down, I appreciate the comments he has made. Can we take it that under Clause 36 we shall get regulations at some time specifying classes of property which may be liable to the standard charge of rating between 0 and 2? Is this one area where the diplomatic service might look for some assistance?

1 a.m.

Lord Glenarthur

If the noble Lord looks at Clause 36(3) he will see that a specified class is: such class as may be specified in regulations made by the Secretary of State". That is then further explained in Clause 36(4), which states: If the Secretary of State so requires by regulations, a multiplier and so on. So the short answer is, yes, there will no doubt be some regulations made by my right honourable friend.

Lord Monson

What is the position if the diplomat in question owns two homes in this country, as many quite possibly do—a main residence and a country cottage?

Lord Glenarthur

Will the noble Lord please repeat that?

Lord Monson

What is the position if the diplomat in question owns two homes in the United Kingdom—a main residence and a country house or cottage? Would he pay the standard community charge in each case?

Lord Glenarthur

Yes; that is right. There are a number of diplomats who have properties in the country and have to have a flat in London as well, certainly perhaps the more senior ones; so that would apply.

Lord Ross of Newport

I think we have aired the subject. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 36, as amended, agreed to.

Clause 37 [Local rating lists]:

Lord McIntosh of Haringey moved Amendment No. 102A: Page 22, line 9. leave out ("local") and insert (national").

The noble Lord said: I had intended to use this amendment as the basis for a general statement of our position about non-domestic rating in the Bill, but I think that at this time of the morning it would be entirely inappropriate to do that. This amendment is simply a mild protest against a piece of Orwellian newspeak which dominates Part III of the Bill. This clause and subsequent clauses continually refer to local rating, to local rating lists and to local non-domestic rating lists. The truth of the matter is that this is a national non-domestic rating system. It is one which is uniform throughout the country. It is applied on a uniform basis and it is applied entirely according to the decisions and judgment of the Secretary of State.

Local authorities have no say whatsoever in the matter, either in the formulation of the rating valuation—indeed, they never have had nor should they have—or in the setting of appropriate non-domestic rates in their own locality. In those circumstances the word "local" is totally inappropriate and I suggest that it would be much better if the Bill were honest and used the word "national" throughout where "local" now appears. I beg to move.

Lord Ross of Newport

As a strong supporter of local government I speak fervently in favour of this amendment.

The Earl of Caithness

The noble Lord, Lord McIntosh of Haringey, said that he would wish to give an exposition of his party's views on the NNDR. Of course we should have liked to hear that. I was ready to respond and indeed had shortened what I was going to say to the noble Lord. But I shall keep it for a more appropriate moment.

Reading the noble Lord's amendment in the narrow way that he has now put it to the Committee, it raises a point of pure terminology about the description of the rating lists which are to be maintained for the property in each local authority's area. The noble Lord prefers to call them national because they will be used for collecting the national non-domestic rate. We prefer to call them local because there will be one list for each local authority area, and to distinguish them from the centralist property occupied by statutory undertakers with national networks.

Lord McIntosh of Haringey

George Orwell must be turning in his grave. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 102B not moved.]

The Earl of Lytton moved Amendment No. 102C: Page 22, line 28, at end insert— ("(9) in relation to any relevant hereditament each entry in the List and all subsequent entries shall be notified to the ratepayer.").

The noble Earl said: In speaking to Amendment No. 102C I wish also to speak to Amendments Nos. 108E, 108F, 108H, 108J and 108K, 123F and 127A. These are tabled in my name and that of the noble Lord, Lord Ross of Newport. Amendments Nos. 108G and 127A are in fact in the name of the Minister and I have no special comment to make on those. The grouping has served to combine what I can only describe as rather a motley collection of technical amendments. They are loosely related but in fact they fall principally into three main categories. The purpose of each amendment is really to remedy a defect in the Bill, as I see it, and is not intended to alter the general import of the Bill as a whole. More importantly, they should be taken as being probing amendments and not regarded as anything more than that, because I am seeking clarification of the Government's intentions.

I turn first to the related Amendments Nos. 102C and 108E. Both seek to ensure that the information concerning alteration in the list is automatically relayed to the ratepayer. In Amendment No. 102C the intention is to bring this Bill into line with what I understand to be the position in Scotland and Northern Ireland. The amendment would simply provide that the ratepayer is notified of his entry in the list and of any alteration to it. The importance of this is as much to enable the ratepayer to check the entry in the list as for any other matter. With computer technology, a simple print-out should be possible at quite minimal cost.

Because the description of the property as well as the level of assessment may be of great relevance to the ratepayer, particularly if he occupies a composite hereditament, I commend this particular amendment to the Committee. Also, in landlord and tenant law, the level of rateable value may materially affect the level of compensation due to a tenant, and to know what the rateable value is at any given time may therefore be of particular importance. Under the General Rate Act of 1967, an occupier is entitled to receive a notification of any proposed change in the valuation list entry affecting the property he occupies, and I consider that this is a very important safeguard.

If I may go on to Amendment No. 108E, this is a fallback provision to No. 102C. It seeks to impose in Clause 47 a duty on the Secretary of State or the authority to advise the ratepayer of any changes in his entry in the list occurring between the date of deposit of a new list and the time when it actually comes into force. I think the purpose may well be self-evident. In my view, it would be inequitable not to have such a procedure, as it could seriously mislead a ratepayer into thinking that an entry was correct upon inspection, only to find at a later date that a different entry was in fact used once the list came into force. Obviously this could have serious accounting implications. Clearly, No. 108E only stands if No. 102C does not receive any response.

I turn now to Amendments Nos. 108F, 108J, 108K and 123F. Amendments Nos. 108F and 123F seek to insert the words "material change" as a qualification to the word "circumstances". The clear intention of the Government is to reduce the currently unfettered right of ratepayers to make proposals to alter their assessments. That general approach is in line with what I understand to be the current Scottish practice. I make no complaint about that, but I think the Bill goes a great deal further. In future there will be only non-domestic rate-payers in any event, and it follows that, administratively, the number of appeals should be far less of a problem.

The particular point here is that, as I understand it, the Government are proposing to limit the right of appeal to a six-months' period after the list comes into force. That being the case, obviously appeals after that date will be allowed only in a certain limited set of circumstances such as a change of occupation or other material change.

I do not think there is any particular objection to the time limit, because this is closely allied with the Scottish legislation. On the other hand, if there is going to be that limitation, it is only right and equitable that there should be a fairly generous definition of what constitutes a material change of circumstances.

The words "material change of circumstances" are defined in Amendment No. 123F and in short the definition seeks to preserve something of the grounds of appeal which are in common use today under the terms of the General Rate Act 1967. On the basis of what I have just said, I make no apology for the fact that the definition is drawn rather widely. I also accept that, as drafted, it goes well beyond the sheer physical changes that in the view of the Government should alone remain as grounds for an appeal between rating evaluations. However, I believe it gets very close to the position in Scotland.

There are more things than simple physical factors which affect property and its valuation and which may affect rents after a very short period. The economic prosperity of an area can be enhanced or diminished by matters quite unrelated to physical change alone. Matters such as town centre schemes, road improvement proposals and even grants for planning consent can materially affect businesses. In particular, such provisions as car-parking facilities can dramatically alter the profitability and the rental value of shops over quite a short period of time.

If it is the intention of the Government to treat as immutable the levels of values from each revaluation, then great inequity will arise in the period of five years between revaluations. I postulate that one ratepayer might by sheer good fortune be able to make an appeal that will take into account several different things—perhaps including pure valuation factors rolled in on the back of other changes—while a ratepayer next-door could not do so through having been debarred by the operation of the Bill. That is not conducive to a proper pattern for the maintenance and operation of the Bill.

I am glad to note that the Minister has tabled Amendment No. 184B. It is not in the present grouping. However, it is relevant. In particular, the concept of physical enjoyment in relation to a property is one which is wholly new to me and I look forward to clarification. Amendment No. 108K is merely cross-reference to the definition in Amendment No. 123F. I refer to it only for the sake of completeness as regards to Schedule 6.

In dealing with Amendment No. 108J, I shall outline with extreme brevity some of the provisions of the General Rate Act 1967. As matters stand, all properties are valued in the year before a revaluation takes place. That pattern of values becomes known as the tone of the list. When a subsequent appeal is made, the valuation basis is normally that tone but with the physical factors and the extent of the property being those as of the appeal date. The operation of Sections 19 and 20 of the General Rate Act provides that where there is an actual fall in values that lower value shall apply.

My amendment seeks to reinstate that fallback position. If it is absent, the result could be that an absolute fall in values affecting the property in, say, the second year after a revaluation could not be corrected for three years. Potentially the period is longer than that in the initial period where we have a current revaluation that will have to last until 1995. Three years is a long time to have to subsidise other ratepayers and wait for justice to be done.

I am sure that the Government will say that few properties will be affected. In that case, why not include the amendment as a safety net? Perhaps at this point I may refer to some comments made by the RICS. What it said was that the amendment had the backing of the Rating and Valuation Association and in particular was put forward in the other place. The institution's concern is that the Government are proposing to take away from a ratepayer the right to be taxed on the lower amount where the actual value of his property has fallen below the assessed value. It went on to say that very few properties are likely to be affected. It said, moreover, that the instances where the rental value of the property in 1990 had fallen below its 1988 level are likely to be concentrated in declining industries—and it quotes shipbuilding— industries which experience cyclical booms and which may decline by 1990, such as theatres, and peripheral locations where small businesses will be invariably the worst affected. I do not think it can be the Government's intention to penalise that category of occupier.

The point was covered in debates on a similar amendment in another place in Standing Committee Eon 3rd March 1988 and is reported at cols. 1150 to 1154 of Hansard. I shall briefly paraphrase what the Minister for Local Government said at col. 1154. He indicated that such matters as the construction of a new superstore in direct competition would very likely provide grounds for an appeal by other retailers. He did not actually use the word "retailers".

However, while pointing to the anomaly which he believed the proposed amendment would create, I do not believe he actually addressed himself to the fact that falls in value can and do occur, nor to the obvious inequity that would arise in those circumstances. I would therefore particularly like to hear the Minister's assurance that the circumstances I have mentioned will in fact give rise to a right of appeal.

Amendment No. 108H is very straightforward in that it is a counterpart to the liability for ratepayers to pay interest on underpayments of rates. It makes the Secretary of State responsible for including a provision that interest shall be paid to ratepayers who have overpaid. This is in line with my understanding of the general principles enshrined in the law on taxation and I think should be followed for that reason.

On the wider aspects of this Bill, I have to say that I particularly wish to see that the Bill operates smoothly and efficiently. I think that as it stands it produces some very considerable inequity. I feel particularly strongly that this safety net of the fall in actual values should be retained. I shall obviously look forward to the reply of the Minister on that basis. I beg to move.

Lord Ross of Newport

I shall speak very briefly as the noble Earl, Lord Lytton, has dealt fairly fully with these amendments. It is rather a shame that we are dealing with this matter at 1.15 a.m. because these are rather important amendments and I am sure the Minister himself will agree that they come from a very responsible institution of which he, I and the noble Earl, Lord Lytton, are members.

I agree with the attempt to bring us into line with Scotland and Northern Ireland on some points. I also think that the point made in Amendment No. 108E, which deals with the deposit of the valuation list as at December 1989 and the fact that if the valuation officer makes a change within those three months up to April 1990 he does not have to notify the ratepayer, must be put right. The ratepayer is surely entitled to notification if the valuation officer decides to make a change in the list in that three-month period.

There is also the question of interest on overpayments. We get from the Inland Revenue some interest on money these days if we have overpaid tax. Why can it not apply to the ratepayers? Then there is the material change of circumstances in ownership. If there is an amendment to the valuation list and the occupation changes, the incoming occupier can, as I understand it, pick that up and put in a notice to amend the valuation, whereas if you happen to be the owner of a tenanted property you are denied that. If the property changes hands after the owner or occupier has put in a notification within the six-month period to change the rating assessment, then the new owner—not the occupier—may not be allowed to amend the valuation list or to put in a proposal to amend it. That also seemed to me to be inequitable. I have dealt with the amendments very briefly and the time is late, but I hope very much that the Minister will feel that they are worthy ones.

Lord McIntosh of Haringey

I did not move my Amendment No. 102B because of the time of night. The purport of that amendment was to make it possible to have revaluations more frequently than every five years. In other words, I was pursuing the goal of greater flexibility in this matter of non-domestic rating. I am by no means qualified to understand the detailed arguments of the noble Earl, Lord Lytton, or the noble Lord, Lord Ross. In so far as they appear to be tending to the same objective, I think that I should give them general support.

The Earl of Caithness

The noble Earl, Lord Lytton, has indeed been very patient. It is not often that someone who moves amendments in Committee for the first time has to wait until almost ten past one o'clock to do so. The Committee should commend the noble Earl for his patience. Therefore I think it is right that I should deal at some length with the points he has raised. In fact, tonight he has spoken to separate amendments, which are grouped together because they all relate to the alteration of the rating lists.

Amendments Nos. 102C and 108E, which apply respectively to local and central rating lists, would require the ratepayer to be notified of his entry in the list and of any subsequent amendments to that entry. "I his is essentially the present position and indeed the position that the Government intend to maintain. Under it, the ratepayer is informed of his property's valuation when he receives his rate demand. He is also informed of any alteration to his entry in the list after it has been deposited. In addition, the list is on display to the public at the town hall. The Government intend to continue the present position and to provide for it by regulation. Amendments Nos. 102C and 108E are therefore unnecessary.

Amendments Nos. 108F, 108K and 123F and the Government's amendments, Amendments Nos. 108G and 127A, all relate to rights to make a proposal for alteration of an entry in the list. Amendments Nos. 108F, 108K and 123F are all concerned to ensure that there is a right of appeal where there is a material change in the circumstances affecting a property. The Government's Amendment No. 108G is necessary to eliminate uncertainty over the Secretary of State's power under regulations governing alterations of local and central rating lists to impose a time-limit on the right to make an appeal. Government Amendment No. 127A does exactly the same in respect of residual rating lists.

The circumstances in which proposals for alteration of the list can be made will be governed by regulations made under Clause 47(2). The Government's proposals were set out last summer in the consultation paper, often known as the yellow paper. As the noble Earl, Lord Lytton, knows, we considered the responses to that consultation paper very carefully and have modified some of our proposals in the light of the views expressed, particularly those of the RICS. A main proposal in the paper was that the right to propose an alteration in the rateable value entered in the new valuation list at a general revaluation should be exercised within six months of the new list coming into force. That was intended to reduce the number of misconceived appeals. Such appeals, even if they occasionally secure a small reduction in rateable value, place a disproportionate burden on valuation officers and the local valuation courts.

At this point I have to declare an interest because I remember myself submitting one or two of those appeals when I was in practice, and I know what a long period of the valuation officer's time they consumed. However, it has been put to us strongly by the professional bodies and professional organisations that some occupiers simply do not bother to appeal and a new occupier can find that his rateable value is substantially out of line. Therefore we have modified our earlier proposals and also intend to provide for a right of appeal by a new occupier on any grounds, provided that an appeal has not already been made against the valuation in question. Any value, however, must relate to a particular set of circumstances.

There will also be a right of appeal therefore throughout the life of the list where there has been a material change of circumstances. This is what the amendment of the noble Earl, Lord Lytton, seeks to achieve. "Material change" will be defined to include not only physical changes in the building or the locality but also decided court cases with a bearing on the method by which the rateable value was arrived at.

Lord Ross of Newport

Does material change of circumstances include change of ownership?

The Earl of Caithness

I thought I had just covered that point about the right of appeal.

Finally, there will be a right of appeal against any decision by the valuation officer to alter an entry on the list when, for example, the property is extended or improved. I should add that we intend to consult very closely with the rating profession on the framing of these regulations. I hope that what I have said has explained why the Amendments Nos. 108F, 108K and 123E, in the name of the noble Earl, Lord Lytton, are unnecessary, because we are committed to providing through regulations the right of appeal that they seek.

Amendments Nos. 108G and 127A, which are in my name, are necessary to eliminate a slight uncertainty in the Bill as it stands as regards the Secretary of State's power to provide for a time limit. I shall therefore in due course be commending them to the Committee.

The purpose of Amendment 108H, in the name of the noble Earl, Lord Lytton, is to provide for payment of interest where a valuation is reduced as a result of an appeal and a repayment is made to the ratepayer. We entirely agree with the policy underlying the amendment of the noble Earl. He is quite right to argue that people who appeal successfully against their rating valuation, and have thus effectively paid too much in rates, should be reimbused for the use of their money by the payment of interest. I have to say that I cannot accept his amendment as it stands because of technical drafting considerations, but I undertake that we shall bring forward our own amendment at Report stage to achieve exactly the same result.

Amendment No. 108J relates to the tone of the list rule evaluation. Paragraph 2(4) of the schedule seeks to overcome an anomaly in the present system. It requires all valuations, whether for new properties or as a result of proposals or appeals, to be based either on the general level of rents prevailing on the day that the rating list came into force, or on a specified preceding day. The purpose of this sub-paragraph is to promote a common and fair basis for all valuations. The tone of the list rule is designed to ensure that ratepayers whose properties are valued between general revaluations—for example, because they are new—are protected from the effects of general inflation and other economic factors which give rise to increased rents between general revaluations. It means that when a property is valued between general revaluations, the valuation officer takes account of the physical circumstances of the property as they are at the time, but relates this back to the general level of rents at the time of the last general revaluation.

Amendment 108H seeks to reintroduce a provision presently contained in the General Rate Act. It would allow a value lower than one of the tone of the list to be entered on the rating list if the rental value of the property at the time of the valuation is lower in cash terms than the level when the list was compiled. What this means is that it is only when the reduction in the rent is more than enough to offset increases resulting from general inflation that this provision would take effect. It is anomalous. It means that an appeal on the grounds of falling actual rental values in an area has progressively less chance of success in each subsequent year after a general revaluation. In the immediate aftermath of a revaluation, however, and with the lower rates of inflation that this Government have achieved, the provision could lead to great instability. It could swamp the appeal system when the load on the valuation officer and the valuation and community charge tribunals will be at its greatest.

This change was the subject of widespread consultation. I have to say to the Committee that opinion was divided even among those august bodies representing the rating professions. Many of them recognise that it is worth trading off this small opportunity for appeals between revaluations for an assurance that we shall indeed get back to quinquennial revaluations, and that the resulting appeals can be processed in a reasonable time. Surely justice delayed is justice denied. The ratepayers must be shielded from the effects of any sharp downturn in their industries, but the proper protection lies in holding frequent revaluations rather than the haphazard protection they receive at present.

I have explained why the government amendments are necessary and why we can meet many of the points of the noble Earl, Lord Lytton. Perhaps I may take up one point of the noble Lord, Lord Ross of Newport, about the period between the deposition of the rating list on 31st December 1989 and the list coming into force on 1st April 1990. I should like to take up the point that he made and to consider whether one should require the valuation officer to notify the ratepayer of any change made during that three-month period. It is right that I should read in the Official Report, what the noble Lord said.

Lord Ross of Newport

I made a point in an intervention which I believe is very important. It concerns whether material change of circumstances includes change of ownership. Rates are generally paid by the occupier. It is true, and has been stated tonight, that when there is a change of occupation there will be a chance for the occupier to appeal against that assessment whether the previous occupier has or has not appealed. But if there is a change of ownership, it is in the interests of the owner of that property that there should be an appeal against the rating assessment. Does that come under material change of circumstances? I believe that that is a relevant question.

The Earl of Caithness

Perhaps the noble Lord will allow me to consider that point.

The Earl of Lytton

I am sorry, I am not sure that I understood the point that I am supposed to speak to. Will the Minister repeat what he said, please?

The Earl of Caithness

My last point concerned an issue raised by the noble Lord, Lord Ross of Newport. I said that I should like between now and another stage to look at the point that he raised.

The Earl of Lytton

I thank the Minister for his very full reply, especially at this hour of night. I do not wish to delay the Committee for any longer than is absolutely necessary. I felt that the amendments I put forward were very much in the form of a safety net. I am sorry that the Minister has not felt it possible to take on all of them. I shall be looking very closely at the proposals he brings forward and discussing in further detail with others the Official Report of the proceedings today.

I do not feel that the anomaly that the noble Earl refers to in Amendment No. 108J is quite as bad as he makes out and certainly not so bad as to offset the inequity that results. Also I do not feel that it will swamp the appeal systems. My feeling is that the type of safety net provisions that I have proposed would be adequate and necessary for protecting the commercial ratepayer. Without them commercial ratepayers must regard themselves as being somewhat at risk in this situation, bearing in mind that we do not at the moment know the result of the revaluation which is going on and therefore we cannot know for sometime to come what impact it will have or how it will operate.

On the basis of the comments made by the Minister, I beg leave to withdraw the amendment.

Amendment, be leave, withdrawn.

Clause 37 agreed to.

Clause 38 agreed to.

Lord Hesketh

I beg to move that the House do now resume.

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

House resumed.