Lords Sitting of 13 June 1988

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Hereford.

Gibraltar Airport: Proposals
Lord Boyd-Carpenter Lord Boyd-Carpenter asked Her Majesty's Government:
What is the present position in respect of the proposal of the Spanish Government as to the joint use of Gibraltar airport.
The Minister of State, Foreign and Commonwealth Office (Lord Glenarthur): My Lords, it is for the Gibraltar House of Assembly to decide whether it wishes to amend Gibraltar's legislation to permit the implementation of last December's joint declaration on Gibraltar airport. We firmly believe it is in its interests to do so.
Lord Boyd-Carpenter: My Lords, can my noble friend confirm that the Gibraltar Government have asked Her Majesty's Government for details of the operation of the agreement and of the proposed system? Can he say whether it has been possible to provide those details?
Lord Glenarthur: My Lords, yes. We have already provided a commentary on the Anglo-Spanish declaration on Gibraltar airport which deals with the matter fully.
Lord Cledwyn of Penrhos: My Lords, we understand that the new Chief Minister, Mr. Bossano, visited London recently and had talks with the Foreign and Commonwealth Secretary. Can the noble Lord say whether the agreement was discussed at those talks, and is he able to say what the results were? Secondly, the Minister referred to the Gibraltar House of Assembly. Can he say when the matter is to be debated there?
Lord Glenarthur: My Lords, I understand that this was one of several matters discussed during Mr. Bossano's visit. I am afraid that I am not in a position to give details because essentially the matter is for the people of Gibraltar to decide. Can the noble Lord repeat his second supplementary question?
Lord Cledwyn of Penrhos: My Lords, it was whether the Minister can say when the Gibraltar House of Assembly is likely to debate the matter.
Lord Glenarthur: My Lords, I apologise. I am afraid that I am unable to say because it is a matter for the House of Assembly to consider. I understand that no deadline has been set on the procedure. The first step is for the House of Assembly to adopt the amendments to the Gibraltar customs and immigration legislation. That would be the legislative vehicle to achieve this, but no time has been set. been set.
Lord Cledwyn of Penrhos: My Lords, can the Minister help your Lordships' House by indicating the attitude of the new Gibraltar Administration towards the agreement? Is he able to say whether they are supportive of it?
Lord Glenarthur: My Lords, I believe there to be anxieties in Gibraltar. It may be useful if I say to the noble Lord that any concerns about the agreement making concessions on sovereignty are totally invalid. The airport would remain under British control and there are significant economic and commercial advantages for Gibraltar if the declaration comes into force. However, it is a matter for final decision by the Gibraltarians.
Lord Molloy: My Lords, will the Minister confirm that the British Government have submitted proposals to which there has been no response and that this must mean that the ball is now firmly in the court of the other side? Is it likely that we shall be told about any response so that the whole position can then be re-examined?
Lord Glenarthur: My Lords, the noble Lord is right. The ball is firmly in the court of the people of Gibraltar at the moment. If they reject it the airport agreement will not go ahead and Gibraltar will be unable to benefit from EC aviation liberalisation measures which would otherwise remain unaffected.
Lord Boyd-Carpenter: My Lords, can my noble friend say whether the information given by Her Majesty's Government to the Gibraltar Government covers the question of the size of the gate leading from the Gibraltar-owned airport into Spanish territory? Is it to be the kind of gate through which an aeroplane can go or only passengers?
Lord Glenarthur: My Lords, as far as I am aware it is not a gate through which an aircraft can pass; it would be for passengers only. And the arrangements for the new terminal relate to that. I shall provide my noble friend with a copy of the commentary which will explain the matter more fully.

Oxford University: Appointments to Chairs
2.41 p.m.
Lord St. John of Fawsley Lord St. John of Fawsley asked Her Majesty's Government:
Whether they expect to be in a position to make recommendations within the foreseeable future for the Regius Chairs of Modern History and Greek in the University of Oxford.
The Parliamentary Under-Secretary of State, Department of Education and Science (Baroness Hooper): My Lords, these Chairs are expected to fall vacant within the next two years. It is for the university to decide when to make appointments. The Government will become involved in making recommendations only when that decision is made by the university.
Lord St. John of Fawsley: My Lords, I am grateful to my noble friend for that Answer. Is she aware that there is widespread anxiety in the university world about the reduction in public funding? Is she further aware that in Oxford 112 posts have been abolished and 72 academic posts have been suspended? Can she hold out any hope of an improvement in the future?
Baroness Hooper: My Lords, I understand that the university has decided to fill the Regius Chair of Greek in 1990. In the case of the Chair of Modern History, the university has given a higher priority to filling two other prestigious Chairs in history. I understand that at Oxford there are a total of 10 Chairs in history, of which three are vacant. Of these, one is being filled, one has been advertised and the third has been left vacant for the time being. We believe that universities need to bring their income and expenditure into line in ways which are academically sound.
Lord Jenkins of Hillhead: My Lords, is the Minister aware that in intervening I find it more difficult to strike the correct balance between interlocutor and respondent than on any Question I have asked or answered in either House over 40 years? May I interrogatively assure her that the—
Noble Lords: No.
Lord Jenkins of Hillhead: My Lords, may I ask the noble Baroness whether she is aware—if that is the more acceptable form—that the University of Oxford looks forward to being able, by its own efforts, to overcome the austerity imposed upon it by the Government in time for the Prime Minister, if she is so minded (I hope, after consultation with the university) to appoint even the noble Lord, Lord St. John of Fawsley, to one of those high posts?
Baroness Hooper: My Lords, I think I must reply by saying that it is right that decisions concerning priorities within a university are for the university itself to take.

Teachers: Professional Competence
2.44 p.m.
Baroness David Baroness David asked Her Majesty's Government:
On what grounds they are proposing that unqualified people should be employed as teachers.
Baroness Hooper: My Lords, my right honourable friend the Secretary of State wants to encourage many more talented people with relevant qualifications and experience to become teachers. He proposes, therefore, to change the regulations on the granting of qualified teacher status for those who have not trained in England or Wales. These regulations have long been in need of reform. Under my right honourable friend's proposals, no one will be granted qualified teacher status until he or she has received any necessary training and their professional competence has been fully tested. The existing arrangements do not provide such a safeguard.
Baroness David: My Lords, is it right that the training is to be given by the various LEAs round the country, or organised by the governors of grant-maintained schools or city technology colleges? What monitoring will there be of the training? What monitoring will there be when qualified teacher status is finally given?
Baroness Hooper: My Lords, the training arrangements will vary according to the needs of the teacher concerned. Some overseas-trained teachers may require very little additional training, whereas an untrained person with no previous teaching experience would clearly need more extensive training. On the whole, that will be the responsibility of local education authorities. In due course the department will make available guidance on appropriate training for licensed teachers.
Baroness David: My Lords, may I follow up that by asking whether the Government will help LEAs with the expense of this extra in-service training?
Baroness Hooper: My Lords, in the sense that the regulations provide nothing new, the arrangements will follow current practice. The regulations will enable the Government to clarify the situation. Already we have about 10 per cent. of teachers who enter under the routes which are described in the consultation document. The consultation document clarifies the entry arrangements. It will not make an enormous difference to the follow-up training that is required.
Baroness Blackstone: My Lords, can the Minister say how this extra training is to be paid for in a context where local authorities have been substantially cut back and are finding difficulty in maintaining a number of services in the field of education? Can the Minister also say how professional competence is to be tested?
Baroness Hooper: My Lords, the costs of training will be eligible for support under the local education authority training grant scheme and the grant-maintained schools grant. As I said, guidance on monitoring will be issued after the responses to the consultation document in which monitoring is referred to.
Lord Ritchie of Dundee: My Lords, I understand from the Government's consultation paper that if a governing body or a local education authority wants a teacher for a specific school, it can apply for that teacher to be given a licence. How long is it likely to be before a licence is granted? If a period of, say, two years' training intervenes, the need for that teacher may have disappeared before he is on the staff. How long will the school have to wait?
Baroness Hooper: My Lords, the proposal in the consultation document is that qualified teacher status will be granted on the recommendation of the local authority or school governing body after the licensed teacher has taught satisfactorily during a period of no fewer than two years and no more than three years. During that period a licensed teacher with no or insufficient pre-entry training would have had to undertake a training programme tailored to his or her needs.
Lord Dormand of Easington: My Lords, is the Minister aware that the replies she has given are completely unsatisfactory and will be rejected by almost everyone in the teaching profession and those associated with it? I ask the noble Baroness to refer to exactly the same experience which we had in the 1960s. Although there were some natural born teachers at that time, they were very few and far between. It took a great deal of effort, time and I may say (because I was engaged in it), a great deal of human suffering in trying to remove the other people from the profession. Finally, does not the noble Baroness agree that if training means anything, it must be the training which we have now? We do not have untrained lawyers, doctors, and so on.
Baroness Hooper: My Lords, I cannot agree with the noble Lord. A number of people have already warmly welcomed the proposals, and more will do so when they have considered the consultation document. We hope and expect that the new arrangements will attract more people to teaching. Indeed, the work of the Teaching as a Career unit has shown that many older people are attracted to teaching but are put off by the pre-service training requirement and the lack of clarity in the present arrangements for granting qualified teacher status on the basis of experience. We hope that the proposed arrangements will also help to attract more candidates from the ethnic minorities who perhaps possess overseas teaching qualifications. That must be to the benefit of the schools.
Baroness Blatch: My Lords, does the Minister agree that the proposals which are outlined and which are being challenged at the moment by the noble Baroness will go an enormous way to help in the shortage subjects by getting people with science and technology backgrounds into the classroom with the appropriate training? The proposals will also meet some of the requirements of the new curriculum.
Baroness Hooper: My Lords, as my noble friend said, and as I said previously, we expect this scheme to attract many new entrants.
Lord Peston: My Lords, the document itself refers to the licensed teacher undertaking such training as the employer deems appropriate, but my noble friend asked how we shall know that each employer deems the same kind of qualities appropriate as each other employer. Perhaps I may also ask whether a teacher who achieves this status in one LEA will be eligible for employment with any other LEA.
Baroness Hooper: My Lords, I can probably say "Yes" to the second part of the supplementary question asked by the noble Lord. The arrangements for the training of licensed teachers will he subject to the same kind of central supervision as all other teacher training.
Baroness Fisher of Rednal: My Lords, can the Minister give the House information as to the level of the salary scale at which the licensed teachers will be joining the profession before the two years' training, and afterwards? At what level of the salary scale will they be placed?
Baroness Hooper: My Lords, no change will be necessary to the regulations which govern teachers' salaries. During the period of licensed teaching, special arrangements will apply. Obviously, after qualified teacher status has been acquired the normal provisions of the teachers' pay and conditions document will apply.
Lord St. John of Fawsley: My Lords, does my noble friend agree that one needs only one attribute to be a good teacher, and that is to have a teaching nature?
Baroness Hooper: My Lords, I agree with my noble friend. That is one of the most important aspects of teaching. By presenting these regulations as proposals at this stage, the Government hope very much to attract to the profession people with that particular indefinable quality.
Baroness David: My Lords, do I understand from the Minister that when teachers first enter the profession under licence they will have less salary than a qualified teacher?
Baroness Hooper: My Lords, yes.

Teacher Training Materials
2.53 p.m.
Baroness Blatch Baroness Blatch asked Her Majesty's Government:
What further action is planned following the launch on 17th May of the new educational materials designed to equip trainee teachers with an understanding of industry and commerce.
Baroness Hooper: My Lords, the Government are funding a major programme for the dissemination of these materials to teacher training institutions. In particular, each institution will receive a free set of materials.
The project directors will also he undertaking a government-funded survey to review current industrial and commercial awareness work in initial teacher training courses. The survey results should provide helpful guidance as to the most effective use of industrial and commercial perspective materials within teacher training.
Baroness Blatch: My Lords, I thank my noble friend the Minister for her reply, and I congratulate the Government on a particularly exciting programme. With effect from 17th May and the launch of this scheme we are dealing with teachers who are in training but who are not yet in the classroom. I ask the Minister whether the scheme can be extended to those teachers who are willing to participate in the scheme and who are already in the classroom.
Baroness Hooper: My Lords, initially, all industrial and commercial perspective materials arc to be distributed in the widest possible way to initial teacher training institutions. The means of dissemination will include conferences, workshops for tutors, consultancy services and the publication of project materials and their free distribution to teacher training institutions. We hope to widen the spread of distribution as much as possible.

Business
Lord Denham: My Lords, it may be for the convenience of the House if I announce that the Committee stage of the Local Government Finance Bill will he adjourned at approximately 7 p.m. for approximately one hour and that during this adjournment the Report stage of the Access to
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Medical Reports Bill and the Committee stage of the Motor Vehicles (Wearing of Rear Seat Belts by Children) Bill will be taken.

Barlow Clowes
2.55 p.m.
The Secretary of State for Trade and Industry (Lord Young of Graffham): My Lords, with the leave of the House I shall now make a Statement on Barlow Clowes.
Your Lordships will be aware of extensive recent publicity surrounding the affairs of Mr. Peter Clowes and the companies in the Barlow Clowes group. In view of the public concern on this matter it is right that I should inform the House of the situation and of the action that the Government are taking.
There are many companies involved here. Those most in the public eye have been Barlow Clowes Gilt Managers Limited, a UK investment management company, and Barlow Clowes International Limited, a similar company but registered in Gibraltar. The holding company of the group is James Ferguson Holdings plc. Investigators were appointed in November last year, under Section 106 of the Financial Services Act 1986, to examine the affairs of Barlow Clowes Gilt Managers Limited. The interim report of the investigators has been received and formed the basis for the winding up petition of that company. The Official Receiver has been appointed provisional liquidator, and special managers of its assets have been appointed at the instance of the Securities and Investments Board. My department is in close touch with the special managers, who have been at the company's premises over the weekend. Mr. Clowes has been co-operating during this period with the special managers. At present it cannot be said with any certainty what the return to creditors will be. Papers have been passed to the serious fraud office, and investigations are being carried out by the police.
On Friday of last week the Section 106 inspectors, Mr. David Ziman, a solicitor, and Mr. Walter Hoffman, an accountant, were appointed under Section 432 of the Companies Act 1985 to look into the affairs of James Ferguson Holdings plc. This will in turn enable the affairs of all that company's subsidiaries to be looked at.
The Gibraltar company, Barlow Clowes International Limited, is being wound up at the instance of the holding company under the supervision of the Gibraltar courts. The joint liquidators are two British firms, Cork Gully (who are the special managers of Barlow Clowes Gilt Managers Limited in UK) and Ernst and Whinney.
Public concern has been expressed about the role of my department in relation to these companies. I have decided that this should be examined objectively and independently, and I shall appoint an independent person of standing to investigate and report to me as soon as possible on the facts of my department's handling of the matter. Subject to there being no legal impediment, either as to content or as to timing, I propose to publish that report.

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Meanwhile it will be of interest to the House to know of the earlier decisions taken in relation to these companies. In 1984 the department approached the Barlow Clowes partnership to establish whether they should be licensed under the Prevention of Fraud (Investments) Act 1958. Rumours about the partnership were subsequently reported by the National Association of Securities Dealers and Investment Managers. After pressure from the department the partnership applied for a licence and in October 1985, after prolonged negotiation and the receipt of assurances, a licence was granted. In October 1986 it was renewed. In October 1987, in the light of dissatisfaction by the department and with the monitoring of returns from Barlow Clowes, and of other information, it was decided to appoint investigators. The company's licence was renewed while this investigation was in progress.
The main priority at present must be to safeguard as far as possible the interests of investors. I cannot at present comment on the amounts which may be at stake or on the position of individual investors. I am sure, however, that the liquidators in London and Gibraltar will seek to resolve the situation as quickly as possible in the interests of investors. I shall make a further statement when I am in a position to do so.
My Lords, that concludes the Statement.
Lord Williams of Elvel: My Lords, the House will be grateful to the noble Lord, the Secretary of State, for making that Statement on this very serious situation. In particular, we on this side welcome the frankness with which the Secretary of State has announced an objective and independent inquiry into his own department. It must be an extremely difficult action for a Secretary of State to take, but he has grasped the nettle and we are grateful for this.
Who does the noble Lord have in mind as the independent inquirer, if that is the expression, because the identity of the gentleman or lady in question is a matter of serious concern to the Opposition? Will the inquirer have all possible access to papers and be able to take evidence on this matter under oath? Those seem to be the fundamental principles under which the Secretary of State might wish the inquiry to he conducted.
The affairs of Barlow Clowes International are now to a certain extent sub judice. We welcome the reference to the serious fraud office. We hope that the police will be successful in unravelling the extremely difficult series of transactions that obviously lie behind the position the noble Lord has described. For the moment we shall suspend judgment on the question of the role of the Department of Trade and Industry until we hear further from the noble Lord as he has promised.
Will he, however, let the House know, first, what responsibility lies with the parent company, James Ferguson Holdings plc, in respect of the obligations of its subsidiaries? As I understand it, the parent company asked for a liquidation of Barlow Clowes International. Is it possible for a parent company simply to ask for a liquidation and walk away from the results, or is there any residual liability? Secondly, are there any inherent criticisms of the accountants
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Spicer and Pegler who were mentioned in the report of the Securities and Investments Board, and who in 1986 apparently failed to draw attention to the transfer and possible mingling of United Kingdom and Gibraltar funds through a Geneva account? Is the noble Lord satisfied that those criticisms are well founded?
Thirdly, have the Government in mind any arrangements for compensating those investors who have perhaps—we do not know—lost their money as a result of fradulent practice by Barlow Clowes? I return here to my first question as to the responsibility of the parent company to start organising something, perhaps with the co-operation of the Government. Under the Financial Services Act, as I understand its provisions, if this were to happen now there would be some compensation for those who lost their money.
We are dealing with approximately 11,000 private investors who invested approximately £140 million. Those sums were invested not necessarily directly but were placed by intermediaries who were relying on the licence granted under the Prevention of Fraud (Investments) Act by the Department of Trade and Industry. It is an important matter. We welcome the Government's stated intention to try to stamp out once and for all this kind of business. We regard this as another sleazy operation, licensed by the DTI, operating through various tax havens and perhaps even failing to distinguish between client and own funds. We look forward with great interest to further statements from the Government.
Lord Ezra: My Lords, I should like to join the noble Lord, Lord Williams, in thanking the noble Lord, Lord Young, for making this Statement, and in expressing appreciation for the prompt action of the DTI in setting up this inquiry to deal with the public comment so far made on the issue. I should like to address two questions to the noble Lord; one affects licensing procedures and the other compensation.
As to licensing, the noble Lord, Lord Young. made it clear that there was some delay in these securities dealers obtaining a licence in the first place. It was due to approaches from the DTI that finally they came into line but at the same time the National Association of Securities Dealers and Investment Managers was expressing some doubts about their operations. This ultimately led to an inquiry in October last year although a licence was at that time granted. Investors continued to invest. In fact, according to newspaper reports, they were investing right up to 27th May this year. The question that I should like to ask—I believe it is independent of the inquiry to be conducted—is whether in cases of this kind, where the DTI is perturbed about the operations of the dealers and where inquiries are ultimately being mounted, some warning should be given publicly that this is being done. While all this was occurring people were in a bona fide manner investing their savings right up to 27th May this year. That is a general point to the noble Lord.
My second point is compensation. I am not at all clear where those who are likely to lose as a result of this will stand in relation to the compensation fund

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set up under the Financial Services Act. Perhaps the noble Lord can elucidate their position.
I should like to add a general comment. Having been involved fully in the debates on the Financial Services Act I am concerned that although the intention was to protect investors small investors are beginning to lose out. Not only are they being advised, as in this case, by apparently reputable organisations to invest in bodies to some degree suspect, but the charges being made to smaller investors are also much higher than they were previously. Can we not use this as a reason for having a look at the position of the small investor in the new financial circumstances in which we find ourselves?
Lord Young of Graffham: My Lords, I am grateful to the noble Lord, Lord Williams of Elvel. I hope very soon to be in a position to announce the name of the person who will head the inquiry. I wish to assure the House that when I announce the name it will be perfectly satisfied with the individual who is chosen. The terms of inquiry must first be agreed with the person who will head the inquiry. Under this procedure there will not be any power to examine under oath. Both I and my permanent secretary will instruct the officials of my department, who are so required under their terms of employment, to cooperate fully. This is an inquiry to determine the facts of what actually happened within the department and to determine whether or not the department is to blame in any way or whether procedures could be improved in the future.
To go back to the origins of the affair, there were lessons to be learnt. The Prevention of Fraud (Investments) Act 1958 was deficient in some ways and the Financial Services Act went out of its way to remedy those deficiencies. It is far too early to talk about compensation. We have first to ascertain what the losses are, if there are losses. I can assure the noble Lord, Lord Williams, that at present I am neither satisfied nor dissatisfied in that respect. What I want to do is to see what the inquiry turns up and to have a good, dispassionate look at the facts.
In one area I fear I must depart from the noble Lord, Lord Williams. I should like to think that whatever we do now will stamp out this business once and for all. However, I have a less sanguine view of human nature and I suspect that these things happen from time to time. We must ensure that it happens as infrequently as possible.
It is early at this stage to make these judgments. The Financial Services Act will show that this kind of incident should not happen in the future. It is serious and I should like to assure the House that I view with the greatest possible seriousness what may have happened to some individuals who attempted to invest life savings into this kind of enterprise. It is a matter to which I have no doubt we shall return.
Lord Williams of Elvel: My Lords, I have a small question on the actual words of the Statement, and I wonder whether the noble Lord can assist me. The text of the Statement as released through the
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Government Whips' Office, in referring to the inquiry, states that it will
"report to me"—
that is, the Secretary of State—
"as soon as possible on the department's handling of the matter".
However, the Secretary of State added the words,
"on the 'facts of my' department's handling of the matter".
Is it the words of the noble Lord or the words of the Statement which are authoritative?
Lord Young of Graffham: My Lords, notwithstanding the advances of modern technology, words are occasionally left out. Indeed, it should be:
"The facts of the department's handling of the matter"
We want to establish the facts and see what actually happened, so that judgments can be made.
Lord Stoddart of Swindon: My Lords, is the noble Lord aware that a cold chill of apprehension will have run down the spines of many small investors as a result of this particular affair? Many people, especially non-taxpayers, have invested their money in overseas or offshore funds because the Chancellor of the Exchequer has monopolised all savings upon which interest is paid without deduction of tax. Therefore, a huge number of people, non-taxpayers and others, have invested their money in offshore gilt funds. Indeed, there are many well-known names, but it would be invidious to mention them. However, on hearing about this particular affair many people will be most concerned that their money may not be safe after all.
I understand that the Financial Services Act does not give protection to people who invest in offshore funds; and, indeed, there are many millions of such people at present. Therefore, will the noble Lord take the opportunity to give to those people who have so invested their money some assurance that their savings are not in danger? Further, will he undertake that the Government will try to take some steps to ensure these people do become covered by the Financial Services Act?
Lord Young of Graffham: My Lords, much as I should like to do so, there is nothing I can say about offshore funds or about activities outside the jurisdiction of the courts, or of the Government. There has long been a saying that you cannot separate risk and reward, and that if people look for above-level rewards then they might be taking above-level risks. However, that is not a matter which we are here to discuss today. I shall look again at the Financial Services Act, but I must say in all conscience that it would be impossible for this country to supervise funds throughout the world. All we can do is to ensure that the funds over which we have supervision and control are run properly.
Lord Peston: My Lords, will the noble Lord make some comment on the speed of the matter? Speaking for myself, I am appalled by the slowness of the affair. I understand that in October 1987, despite expressions of dissatisfaction, and so on, investors nonetheless went on investing. I am certain that the

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noble Lord would not justify all that in the words of the great "economist", W. C. Fields; namely,
"Never give a sucker an even break".
This is an extremely serious matter of investor protection, and yet matters continued from October 1987 until the present day before virtually anything happened. I wish to know how vigorously and rapidly the current investigations will proceed; that is, in regard to the affairs of the company itself, in regard to the operations of the serious fraud office and the police, and also in regard to the noble Lord's own department. Can we be assured (without any of this being done superficially, but so that it is all done fundamentally) that it will happen rapidly and that we shall know something about serious action being taken within the foreseeable future?
Lord Young of Graffham: My Lords, one of the reasons why I came to your Lordships' House to suggest an independent inquiry was to satisfy the type of doubts that have just been expressed. It may seem that it has taken a long time but there are many interests which must he taken into account, not least of which are those of the existing investors in the funds and the steps which must be taken in that regard. We have to be sure beyond doubt that such matters are taken into account. I have little doubt that the inquiry will establish how well, or otherwise, my department has acted. Further, I am more than content for the facts to speak for themselves.
Lord Bruce of Donington: My Lords, in the Statement the noble Lord referred to the investigations that were decided upon in October 1987 in the light of dissatisfaction by his department with the monitoring returns from Barlow Clowes, and other information. Is it the case that in October 1986, when the permit was renewed—notwithstanding the long negotiations in 1985—the department had no information in its possession indicating that there was some doubt about the matter and that the monitoring returns submitted by Barlow Clowes up to October 1986 were perfectly in order?
Lord Young of Graffham: My Lords, I see little point in appointing an investigator to carry out an inquiry without actually being bound by the terms of its findings. I think it would be best if we were to wait until such time as the results of the inquiry are available. They will be published, so all Members of your Lordships' House will be able to form their own views.

University of Wales College of Cardiff Bill [H.L.] formerly University of Wales, Cardiff Bill [H.L.]
3.15 p.m.
Read a third time, and passed, and sent to the Commons.

Imperial College Bill [H.L.]
Read a third time, and passed, and sent to the Commons.

Road Traffic Bill [H.L.]
3.16 p.m.
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, I beg to move that this Bill be now read a second time.
This is the first of three Bills on the Order Paper in my name. If I may, I shall speak to all three together, and then move the other two formally, together with the consequential Motion in connection with the third. I should like to offer my compliments and thanks—and I trust also those of the House—to the Law Commission, the Scottish Law Commission and the draftsman who have made such an excellent job of this enormous task of consolidation.
The last major consolidation of the Road Traffic Acts was in the Road Traffic Act 1972, which has been considerably amended by primary and especially by subordinate legislation. Part III of the Transport Act 1982 set up a new procedure for punishing certain road traffic offences by fixed penalty. Provisions relating to prosecution and punishment of offences were consolidated in the Road Traffic Regulation Act 1984.
The structure of the Road Traffic Bill corresponds to that of the 1972 Act, each part covering similar subject matter to that of its predecessor, but the consolidation has provided an opportunity to shorten the length of sections, and to simply the language and make it consistent.
The consolidation differs in structure from the previous consolidations in its treatment of the provisions about the prosecution and punishment of offences. These have been consolidated, with the provisions about fixed penalties, in the second Bill under my name, the Road Traffic Offenders Bill.
Thirdly, there is the Road Traffic (Consequential Provisions) Bill, which is ancillary to the two main Bills. It deals with a number of technical and transitional matters, including repeals and consequential amendments, and it re-enacts or amends some provisions which have not been brought into force.
The consolidation gives effect to two Bills of the present Session, the Criminal Justice Bill, and the Motor Vehicles (Wearing of Rear Seat Belts by Children) Bill, neither of which has been enacted. 'Any changes which may be made in those Bills will have to be reflected by amendment to the draft consolidation Bills.
The Law Commissions have, in accordance with usual practice, issued a report on the consolidation in which they make a number of recommendations for minor technical amendments to remove anomalies and inconsistencies which came to light during the consolidation exercise so that the law can be stated in a clear and straightforward fashion.
There is a special Motion on the Order Paper relating to this consolidation. The Road Traffic (Consequential Provisions) Bill is an essential part of the consolidation, but is not, in the strict sense, a Consolidation Bill. It is most conveniently dealt with, along with the other two Bills, by the Joint Committee, but the rules of the House require that

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the House must refer it to the Joint Committee specifically. The other Bills will go through to the Joint Committee in the ordinary course.
I beg to move that the first of the three Bills be now read a second time.
Moved, That the Bill be now read a second time.—(The Lord Chancellor.)
On Question, Bill read a second time, and referred to the Joint Committee on Consolidation Bills.

Road Traffic Offenders Bill [H.L.]
3.20 p.m.
The Lord Chancellor: My Lords, I beg to move that the Bill be now read a second time.
Moved, That the Bill be now read a second time.—(The Lord Chancellor.)
On Question, Bill read a second time, and referred to the Joint Committee on Consolidation Bills.

Road Traffic (Consequential Provisions) Bill [H.L.]
The Lord Chancellor: My Lords, I beg to move that the Bill be now read a second time.
Moved, That the Bill be now read a second time.—(The Lord Chancellor.)
On Question, Bill read a second time.
The Lord Chancellor: My Lords, for the reason that I sought to explain in my opening submission, I beg to move that the Bill be referred to the Joint Committee on Consolidation Bills.
Moved, That the Bill be referred to the Joint Committee on Consolidation Bills.—(The Lord Chancellor.)
On Question, Motion agreed to, and it was ordered that a Message be sent to the Commons to desire their agreement.

Local Government Finance Bill
3.22 p.m.
The Minister of State, Department of the Environment (The Earl of Caithness): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(The Earl of Caithness.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Schedule 8 [Non-domestic rating]:
The Chairman of Committees (Lord Aberdare):Perhaps I may remind the Committee that if
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Amendment No. 119A is agreed to, I cannot call Amendment No. 120.
The Earl of Caithness: I moved Amendment No. 119A last Thursday night. I commend the amendment to the Committee.
Following is the amendment:
Page 114, line 21, leave out sub-paragraph (6) and insert—
("(6) The relevant population in relation to an authority shall be calculated by—

(a) taking the number of those members of the population of the authority's area who fall within such description as is specified in regulations made by the Secretary of State, and

(b) making such adjustments (if any) by way of addition or subtraction (or both) as are specified in, or calculated in a manner specified in, the regulations.").

Baroness Gardner of Parkes: As I understand it, the way in which this matter has been dealt with means that I am entitled now to speak to Amendment No. 120 although if Amendment No. 119A is accepted I shall not be able to divide the Committee on my amendment. I had not intended to divide it on the amendment, but I want to hear the Government's answer on the matter.
When I heard the noble Earl move Amendment No. 119A, it was clear to me that it could answer all our problems; but, on the other hand, it might not answer any of them because, although it enables him to do everything that we want to help the City of Westminster and other parts of inner cities throughout the country, it does not insist that he does it. I am looking to him to spell out in more detail something that would help us all.
On Thursday night I declared an interest in the City of Westminster because I have just finished as Lady Mayoress and I am a resident of Westminster. My husband is a councillor. The amendment would cover more than just Westminster; it would cover all inner cities and all areas which have a considerable commuting population coming in each day. I shall speak mainly about the City of Westminster because I know it best. The situation in Westminster is different from anywhere in London except the City of London.
Westminster has an adult resident population of 150,000. It has a daily commuting population—this is based on the 1981 statistics from the Office of Population Censuses and Surveys—of an additional 400,000 a day. Even the City of London, according to those figures, has fewer than 300,000 a day.
Clearly, it would be unjust for 150,000 residents to have to produce sufficient money through their community charge to bear all the necessary expenses incurred for that much larger commuting population. The City of Westminster receives no rate support grant. Indeed, it pays an equalisation levy of £77 million, which helps other boroughs; but it is assessed for grant-related expenditure because that is used for other calculations. Under the new system the borough will receive a grant. My question is: will it be a more realistic assessment that the present one?
At present, the assessment is that those services provided for commuters are worth£18 million a year. An independent study carried out by Peat Marwick

17
indicates that it is closer to £35 million, so that the grant-related expenditure assessments for London are unrealistic. I believe that it is acknowledged that historically they never have been realistic.
At present, the City of Westminster raises a rate of £550 million. It has its own direct spending of £100 million, and the rest goes in various forms of precepts. Under the new arrangement, the business rate, which is at present £460 million, will go into a central pool. I noticed that the Minister made a comment last Thursday on that point (at col. 1600 of Hansard). It will all flow into one big purse. That is what the amendment is about. What will come back out of that purse? At present the city controls its own expenditure wisely and well.
I have seen notes from the Minister which have been somewhat critical of the fact that Westminster has underspent by 5 per cent. I have often heard criticisms in this place of boroughs that overspend. If one balances one's budget carefully, it often means that one ends up with a little in the kitty. That is something of which Westminster should be proud rather than upset. Instead, when the new system comes in. it will be desperately short of money.
Westminster will have a shortfall every year on the present rate of return that has been promised, based on the resident population, of £38 million a year. How will that deficiency be made up? We cannot ask 150,000 people to make up a deficiency of£38 million a year when it is to be spent on other people who are nothing to do with the City of Westminster. There will be a great disincentive to clean the streets, provide public conveniences, libraries, and licensing, of which we do a great deal, including the sex shops in Soho, and something which should be dear to the hearts of everyone here at the moment: the inspection of food premises. That is one of our major expenses. We all know that that has been close to home recently. Policing in Westminster is another major expenditure. There are marches, demonstrations, and international conferences that are not special to Westminster. They just happen to occur geographically in Westminster. Westminster has to pick up the tab for them.
Let us say that under my amendment it was assessed that one would add 20 per cent. of the number of commuters daily onto one's resident population when calculating one's relevant population. If we did that, there would be gains of course. The biggest gain would be for Westminster because it suffers most under the new scheme.
However, there would also be gains for many other cities throughout the country. There would be some gainers and some losers but the calculation shows that even the greatest loss under this amendment would be £13 per annum for anyone who is a community charge payer anywhere. That is 25p a week. So the benefits for the inner cities would be very great. The disbenefit is that the maximum for anyone would be 25p a week. Westminster is different; the thought is very worrying that it has £460 million now but that in 1990, when what we think will be £581 million produced from the business rate goes into the central pool the amount that comes back will be £17
18
million which is 2 per cent. of what is collected. That will make an enormous difference.
In Westminster 800,000 tonnes of rubbish, 65 per cent. of it from commercial users, is collected every day. That is three times as much as anywhere else in the country except the City of London; it is two-and-a-half times as much as any other London borough. If the rubbish were not collected but instead dumped in Trafalgar Square, in six months Nelson would be just visible, peering over the top of the heap. To clear and dispose of business refuse at the moment costs us £7 million a year. Westminster spends three times as much on street cleaning as anywhere in the whole country including the City. I think that might not be accurate; it might be three times more than anywhere in London, including the City.
Another factor is that the business rates are paid promptly. We have been very fortunate over the years in that interest on this money has enabled Westminster to provide services for businesses. The interest alone is producing £14 million at the moment. Under the new system, as I have said and as the Minister commented, all would go into one big purse. When it comes out again, so far as I know it will not come out with any interest on it. Of course, a much smaller amount will be coming out.
The cost of collection of the community charge and the uniform business rate will be double the present cost. There is a significant point here for the whole of London. I should like to quote my experience on the London Electricity Board. In the best and most stable part of our distribution area we have a turnover of 18 per cent. of households per year. In areas with the greatest turnover it is as high as 30 per cent. a year. The electricity board is looking for only one person in each home to meet the electricity bill. It will he quite difficult trying to locate each person in a home. Nothing has been said about the water rate, yet residents keep asking me what will happen. I should be grateful for a comment from the Minister.
Perhaps we may look further into matters which go wider than London. Westminster council spends £4 million a year on the arts: the Open Air Theatre, the Institute of Contemporary Arts, the Photographers Gallery, the Mall Galleries, the Wigmore Hall, the Serpentine Gallery and the Unicorn Theatre for Children. These are just a few. But £1¼ million each goes to the English National Opera and the London Festival Ballet. How can community charge payers, who are so hard pressed already trying to cope with the number of commuters, possibly think of these things?
The Lord Lieutenant of Greater London, Lord Bramall, a Member of this House, is not able to be here today. However, he has asked me to express his concern and to say that had he been here he would certainly have supported the view that London and particularly the inner city need some help. Of course, Westminster has taken over providing accommodation for him but the services he renders are available throughout the whole of London. He has seen the need that exists.
There is another significant point on which I was very concerned to read the Minister's comments. I have been in local government long enough to see the

19
effect of electoral pressures. When there is an election in the counties—and all governments have done this—it seems that more of the rate grant goes to the counties. When the election is back in the cities, the grant moves back. This produces a very unstable effect. At col. 1598 of Hansard on 9th June the Minister commented that the present system is unstable. I am worried that the amendment may not meet our problems. The Minister says that we cannot do away with grant shifts. In other words, under the new system we shall still have the old effect of the money bouncing backwards and forwards according to where the electoral pressures are.
The other point to be appreciated is that there will be electoral pressures on the councillors being elected in every borough where there is a commuter area. These people will say, "Why should you spend money on businesses at our expense?" There will be a great disincentive for business to come into the inner cities. Acording to statistics, Westminster council is most affected. However, to give Members of the Committee a few examples, others affected are Manchester, Newcastle, Portsmouth, York, Liverpool, Birmingham, Bristol and Exeter. They would all gain from my amendment, to say nothing of other inner London boroughs.
I believe I have stated the case very clearly; my amendment would cover all London. I believe however that Westminster is a special case with a huge gulf between the City of London and all other areas. The Government have recognised that situation; they are making special provision for the City. But there is another huge gulf between Westminster and everyone the next step down. The Government should look again at the whole issue. They could consider treating Westminster as a special case. I have not done so in the amendment because I thought it would be fairer to help many areas, not just Westminster. I look for a definite statement from the Government.
The Minister said at col. 1599 of Hansard on 9th June:
"We would have to make radical changes and make the grant system simpler. The key simplification is that grant will depend only on assessed need and not spending".
There are many statements the Minister has made, including those at cols. 1598, 1599 and 1600 of 9th June. All the way through the Minister implies that these things are a matter of choice as to what we spend and what people are paying for through their community charge.
I hope from the arguments I have put foward today that Members of the Committee will see that the choice will not be there. The obligations are there, and if the choice is made on the basis of what the voters of Westminster want it will be a disastrous situation. I hope the Minister will make some specific comment on, and commitment to, assessments being based on the actual daytime population and commuter changes in these areas.
The Earl of Caithness: Perhaps it might be appropriate for me to take the unusual step of replying to my noble friend at this stage because I
20
know that a number of Members wish to speak on this important point. I do so for one reason. I believe that my noble friend has a point in what she is saying but that she is also labouring under a misapprehension about our proposals. It might be for the convenience of the Committee if I clear that up now.
The amendment would alter the population basis on which the proceeds of the NNDR pool are to be distributed. As I explained on Thursday, the distribution of NNDR proceeds is to be pro rata to population. The question is: which population? The Bill provides at present that "relevant population" means:
"Those members of the population of the authority's area who fall within such description as is specified in regulations made by the Secretary of State".
The amendments I have already introduced would enable us to take account of students and exemptions. Amendment No. 120 would add to the population as defined in regulations a proportion of the daytime net in-flow of people.
I do not think that this is the right basis for distribution and I shall explain my reasons soon. But even if we were to conclude that it is, I can assure my noble friend that the Bill as drafted will already allow us to specify the proposed definition. I think it is important to retain the flexibility offered by the current position, which allows us to define a population basis in regulations rather than to write into the Bill a definition which could then be amended only by primary legislation. From that point of view alone the amendment is not an improvement on the current position. But, as my noble friend so clearly said, the purpose of the amendment is to give more NNDR to areas with more commuters and tourists, and, as I understand it, the idea is to use NN DR to compensate for need to spend on daytime visitors and commuters.
I see, however, that my noble friend has said nothing about the situation of those areas with a net outflow of commuters and tourists, for of course more NN DR or grant for Westminster as a tourist and business centre must mean less for the dormitory towns of the South-East. We have made some quick calculations of what would happen if the whole of the NNDR were distributed on the basis of daytime adult population—this is something that could happen under the amendment of my noble friend—and the results will be of interest to the Committee.
As one would expect, business and commercial centres receive more NNDR and their community charge goes down. Camden, for example, would receive an extra £208 of NNDR per person, thus bringing its community charge down by that amount. Manchester would receive an extra £91, and Islington an extra £86; but the great majority of districts would lose. Epsom and Ewell would lose £41 per head, Mid-Sussex £42, Gillingham £56, and so on. The biggest gainer, of course, would be Westminster, which would receive an extra £675 approximately of NNDR per resident adult, enabling it to do away with the community charge altogether and to make a refund of over £300 to each of its residents. As a resident of Westminster that might be

21
beneficial to me, but I do not think that it is something that I can recommend to the Committee. If we took just a small proportion of the daytime inflow, the effect on almost all authorities would he negligible, but in Westminster the charge might still he zero. That is because such an arrangement overcompensates Westminster by giving it more income than it requires to meet its spending needs.
This leads me to my main objection to this amendment, which is that it goes against the whole purpose of the new grant system. My noble friend might very well want that as her ultimate aim, but as the Committee knows our reform consists of three parts: the community charge, NNDR and the grant system. I have to say to my noble friend that to undermine one part of the equation cannot but affect the other two parts which we are changing.
But, as I said earlier, my noble friend has a genuine concern behind her amendment, and one with which I agree. Of course different areas have different needs, and it is right that these should be allowed for. As we have explained on a number of occasions, it is the grant system which will compensate in full for differences in need as measured by needs assessments. The NNDR is not a means of compensating for differences in need, but is designed to provide a general support to authorities' requirements for revenue.
As my noble friend knows, the present GRE system makes allowance for net daytime inflows and we are considering what allowance it would be appropriate to make in the needs assessments in the new system. I am sure, however, that it is through the grant system and not through the basis for distributing NNDR that we should continue to seek to equalise different levels of need to spend.
My noble friend commented on the cost to a local authority of commuters. She suggested that insufficient allowance may be made for costs of services for the daily inflow of tourists and commuters, especially to such areas as the City of Westminster and other popular tourist haunts. I think we need to consider carefully what these extra costs really are. Tourists and commuters will not, of course, have any effect on the major services such as education, which accounts for around half of local authority expenditure, or personal social services, which account for another large slice. But it is argued that authorities do have to provide certain extra services, such as carparking, public conveniences, parks and so on. I can see that this would make an area more attractive to tourists, and I know that some authorities will argue that tourists will come to their area whether or not they are encouraged by the local authority, and that they still have to be catered for. All this may be true, but I think we should also consider whether these services have to be provided at the expense of the local charge payer. I am not convinced that all authorities have fully explored ways in which their services for visitors can be made more self-financing taken as a whole.
But looking at the position of Westminster, I see that last year it spent in total less than its assessed spending needs. That suggests that the grant system did make sufficient allowance for daytime visitors,
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and also that Westminster is operating efficiently. I believe that the grant system will continue to make adequate allowance for Westminster's situation.
To sum up, my answer to my noble friend is that in so far as commuters impose additional costs, these can be taken into account in the needs assessment for grant purposes. Therefore, I can reassure my noble friend that grant will compensate for them in full. We believe it would be double counting for NNDR also to compensate for these costs. But should we change our views entirely and decide that compensation should be provided by adjusting the basis for distribution of grant and NNDR, we can do that within the terms of the Bill as it now stands.
Lord Leatherland: Before the noble Earl sits down, may I remind him that he has made several references to "MNBR". What is "MNBR"?
The Earl of Caithness: It is NNDR, which means national non-domestic rate.
3.45 p.m.
Lord Carr of Hadley: I am sometimes tempted myself to use the old geometric proof of a reductio ad absurdum. But even as a resident of Westminster I should not wish to carry the purpose of the amendment of my noble friend Lady Gardner of Parkes to the point of obtaining a handout of £300 to all the residents of Westminster, or even of £1. For reasons that I have made clear in this Chamber on other occasions, I feel that the whole concept of this charge is unfair as I shall benefit very greatly, whatever the conceivable level of the community charge in Westminster may be, compared with what I am at present paying in rates. But that is not the point that I rise to make.
I notice that my noble friend the Minister says that the Government already have the power to alleviate the problems which must be alleviated. Of course I must accept that, but I have to say to my noble friend the Minister that so far he has not really convinced me, at least, that the Government do understand the scale of the problems, or are showing a sufficient determination to deal with them.
I have never been able to accept the Government's contention that there was a standard level of community charge of about £180 a year which, together with the two grants to be made by central government as at present defined in the Bill, would enable all councils which were reasonably efficient to provide adequate services for the residents in their areas. An average of £180 throughout the country is perhaps possible, but a standard community charge of£180, or something like it, for every council is absolutely impossible. When one examines it one sees that it is a nonsensical proposition, simply because there are very fundamental and very large differences in the circumstances and the needs that have to be met in different areas. There is a great variation around the average in the needs that have to be met and, therefore, the costs of meeting them.
The most obvious cause of these variations in the average, but not the only one, occurs in relation to those councils whose areas cover the centres of big

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cities, but not the surrounding suburbs and travel-to-work areas from which commuters pour in and out to work daily, to which shoppers and other tourists from this country and abroad come to enjoy themselves. The most extreme case of this is, of course, the City of London. That is already specially provided for. The next most extreme case is the City of Westminster; but there are other city centre councils in other parts of the country which suffer from the same problem, even if not to anything like the same extent or the same degree as does Westminster.
I want to put in broad brush terms once again, in a slightly different way, the position of Westminster, not as a special case but as an example—the most extreme example, perhaps—of the inequities for which I believe the Government really must take responsibility; and I seek assurances from the Government that the powers they are taking, or which they already have, will be used adequately to redress these gross inequities which I believe are in danger of arising at the moment.
I emphasise that I cannot speak with the detailed knowledge of local government and other local services possessed by my noble friend Lady Gardner of Parkes. I shall therefore make a rather broad and general statement of the situation. As I understand it, Westminster City Council expenditure as projected under the new arrangements and for which it falls to be responsible will he of the order of £200 million per year calculated at current levels of expenditure. I emphasise that that is a broad figure. Of that amount, approximately half—that is to say, about £100 million—will be accounted for by the services for which Westminster council is directly responsible already. The other half—that is, another £100 million or thereabouts—is precepted by authorities over which the Westminster City Council has no control presently. In due course, once ILEA has been abolished, it will take over responsibility for education. Therefore, by far the largest single element of the £100 million precepted expenditure will, in the foreseeable future, fall under its control; but not yet.
On the expenditure side we must see how the new sources of income for Westminster and other councils will meet that expenditure. Under the Bill, they will receive funds in three ways as the Minister has said. They will receive funds from the revenue support grant from government. I stress that I am not an expert in those matters. However, I understand from the papers which I have seen that the estimated grant from government is of the order of £103 million.
The second source of income arises from the distribution of their share of the uniform business rate. I understand that this is estimated by the Government at £35 million. There is also the community charge, which is the third leg of income. If Westminster City Council were to levy on its 150,000 adult residents a community charge at the so-called standard rate of £180 or thereabouts, it would raise approximately £27 million. The total figure—a result of adding £103 million, plus £35 million, plus £27 million—gives a projected income of £165 million against a projected expenditure of
24
£200 million. As I understand it, that leaves a gap in broad terms of some £35 million.
How is that to be met? So far as I can see, there are only four ways. The first method is for the Westminster City Council to raise the community charge from the so-called standard level rate to a level of nearly £400 per person. That is more than double the so-called standard charge. Another way to close the gap would be for the Westminster City Council to reduce its level of expenditure by something approaching 20 per cent. The reduction would not be quite as much as that, but it would not be far short of it.
The third way of closing the gap would be an increase in the prospective yield of the main grant from the Government. I hope I am correct in calling it the revenue support grant. The gap could be closed by raising the present estimated level from £103 million up to a maximum of £138 million. That would be £35 million higher than is presently estimated. The fourth method would be to increase Westminster's share of the uniform business rate by £35 million. That is the direction in which the amendment of my noble friend is moving.
I ask the Government which of the four methods or what mixture of them they foresee a responsible council using to balance its income and expenditure account. I do not think that it is sufficient for the Government to speak theoretically. They must come down into the market place and deal with concrete problems. I have oversimplified them. However, I believe that I am substantially correct. I have oversimplified them to make the basic realities as understandable as possible.
The first two of the four projected methods which I have mentioned for closing the gap are within the control of Westminster council. The second two are under the control of the Government. If the Government refuse to act or are unable to act, either by increasing the main grant or by increasing Westminster's projected share of UBR distribution, then the council will have to increase its community charge to a level which is more than twice the so-called standard level or cut its expenditure by a figure approaching 20 per cent.
Surely it would be grossly unfair to expect Westminster residents to pay a community charge so far above the so-called standard level. In accordance with the Government's constantly-repeated principle of electoral accountability—a part of the Bill with which I strongly agree—I am sure that the majority of the electors of Westminster City Council would not stand for it. Presumably the council would be compelled by accountability questions to go down the expenditure-cutting road in order to close the gap. What would that mean? As I have already said, about half of the £200 million expenditure to which I have referred arises from policies within the council's control. However, the Government's assessment of what is reasonable for that half of the council's expenditure is slightly higher than what the council spends on those matters. Clearly the Government do not think that the Westminster City Council is extravagant or wasteful, or that it can or

25
should make major cuts in those areas. Indeed, the Minister made that clear in his recent remarks.
Therefore, we come to the other half of the expenditure which is presently precepted. Out of that, some £80 million, which is accounted for by the precept from ILEA, will, in the foreseeable but not the immediate future, come under the council's direct control. I am sure that the Government are right to believe that under Westminster City Council some significant economies will be made in that expenditure. However, do they really believe that £80 million can be reduced by something approaching £35 million? That is not far short of a 50 per cent. reduction. If they believe that, I do not believe that they have their feet on the ground.
How do we square those figures with reasonable fairness, both to the residents who have to pay the community charge and to the nearly half a million daily commuters and the nearly half a million tourists who come into Westminster and require services? How will that circle be squared? The huge disproportion between resident and non-resident population in Westminster makes it impossible to think in terms of anything like a standard community charge unless Westminster is given far more than the amounts presently estimated by the Government from the two forms of grant which the Bill proposes.
Why should 150,000 adult residents of the City of Westminster bear the burden of costs created principally but not entirely by providing for the needs of not far short of half a million daily commuters and nearly half a million tourists from other parts of this country and from abroad? Does the Minister understand the practical scale of the problem? I believe that I have painted a fairly accurate broad picture, although I may not have the precise details.
My second question is: if the Government really understand, can they assure the Committee in rather more concrete and less generalised terms than they have used so far that they are taking adequate action—under their Amendment No. 119A and existing powers raised earlier—to meet the problem which I have outlined?
should like to put down a marker in relation to a supplementary but very important point which we shall discuss fully when we come to Amendment No. 140 which stands in my name. In addition to the expenditure caused by the huge disproportion of daily residents in London as opposed to residents living in London, the Westminster City Council also makes grants to important arts bodies, particularly to English National Opera and the London Festival Ballet. They make those grants by arrangement with the Government following the Government's abolition of the GLC. That charge really cannot just be passed on, because it represents about £15 on the community charge. That is not a proper expenditure to pass on to the local community charge payers. We shall come to that subject later on but I wished to put down a marker at this stage.
Finally, although I have exampled my case by reference to Westminster, I want to emphasise that all the same arguments, both about floating daily population and about contributions to other bodies, apply (although to a considerably lesser degree) to
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other city centre councils throughout the country. Therefore, although Westminster is a special case in scale, it is by no means a special case in the country as a whole in principle. Other councils such as perhaps Newcastle, Liverpool, Birmingham and Manchester all have this kind of problem to some degree or another. It will he inequity on a grand scale if the Government cannot adapt their proposals or convince the Committee that their proposals are sufficiently flexible to meet those needs with equity and not with inequity as appears likely at the moment.
4 p.m.
Lord McIntosh of Haringey: All of us who work in the City of Westminster, whether paid or unpaid, must have an instinctive sympathy for the noble Baroness, Lady Gardner of Parkes, and her amendment. We must be grateful to her not only for introducing this important subject but for her own contribution. We must be particularly grateful for the very remarkable speech which we have just heard from the noble Lord, Lord Carr of Hadley. If I may say so—and I do not mean this in any sense as a criticism—it is a speech which would have graced the Second Reading as much as it has graced the Committee this afternoon. It was notably thoughtful and raised very clearly some of the major issues which are still slipping through at a level of abstraction which does not do the Chamber or the Committee any credit. There is still a level of imprecision in the Government's thinking—and often also of had thinking—which needs to be exposed more clearly.
The noble Baroness, Lady Gardner of Parkes, made a very effective speech against the practicalities of the Bill, not just in relation to the City of Westminster (although that is the area on which she concentrated) but against the whole theory by which local government finance is to be raised from three different sources. In particular, she talked about the national non-domestic rate—which I prefer to call the national business tax. It is quite clear not only from what she said but also from the way in which the tax is proposed that it is a peculiarly bad tax. It is to be raised from businesses not on the basis of their ability to pay, which would be assessed as is corporation tax by their profits, not even as in the bad old days of the selective employment tax which Was on the basis of the pay roll and therefore reflecting some indication of their size. It is to be based on the size of their premises. That has a very poor relationship with their ability to pay.
Having committed a very serious crime in the taxation world of creating a national business tax, the Government then propose another crime, which is to hypothecate it to local authority services. With that we are moving back to the bad old days of the road fund. That never worked and this will never work. Taxes all go into a common pool, not only for local authority purposes but also for the purposes of the Exchequer. Since the tax will go through the Consolidated Fund it clearly contravenes another fundamental principle of taxation.
Thirdly, still on the subject of the national business tax, we have the purely arbitrary decision of the

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Government to allocate it to local authorities on the basis of resident population. I cannot say that the principle of a day-time floating population is right or wrong; but nor can I say that the principle which the Government have adopted of a flat rate on resident population is right or wrong. It is purely arbitrary. It had to be put there because something had to be put there, but it does not stand up to rational justification.
Once one starts to expose the inadequacies of the national business tax, one then comes to the inadequacies of the other parts of local government finance, as the noble Lord, Lord Carr, made very clear in his speech. The theory behind the Bill is that accountability can be adequately expressed by all residents paying an amount which will be a flat rate regardless of ability to pay. That flat rate will be determined by all of the obligations of the local authority whether or not they are related to the services which the residents receive. In other words, as has been made clear in this debate, the individual personal community charge will be affected by the need of the local authority to raise money in order to provide for extra refuse collection services, and so on, for tourists and businesses.
Once one starts to knock away those two legs of the three-legged stool one then starts to worry about the third leg of the stool, which is the community charge itself. I think that we have come very close to a better appreciation of what is wrong with the personal community charge, not just in social terms. Obviously the noble Lord, Lord Carr, is right to oppose a Bill which makes him, me and other people who are better off still better off and makes poor people worse off. That must be correct and that was recognised by the amendment which was moved by the noble Lord, Lord Chelwood, three weeks ago.
The three elements of the Government's new system of local authority finance are crumbling as we look at them. Today is not the day and perhaps we shall have to do a lot of thinking—certainly the Government will have to do a lot of thinking before Report stage—but we must have an opportunity to look at the irrationalities, the illogicalities and the injustices which have been exposed by the debates in Committee and in particular by this amendment.
I have to say that as concerns Amendment No. 119A I agree with the noble Lord, Lord Carr, and indeed with the Government, that it is better to deal with such matters through the revenue support grant. I am confirmed in that belief by a letter from the leader of Birmingham City Council—which incidentally would benefit from the noble Baroness's proposal—in which he says that he thinks that it would be better for it to be dealt with through the resources of the rate support grant. I am sure that that is the answer.
Although I am opposed to the noble Baroness's amendment, I think that the solution which the Government are putting to the Committee—that it is up to the Secretary of State to do what he likes, just as we shall see when we come to discuss grants that it is up to the Secretary of State to adopt any principle
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he likes for the allocation of grants—is not good enough and it will be seen not to be good enough.
Lord Boyd-Carpenter: The last two speakers made very clear their opposition to the main principles of the Bill. I am in a different position since I am a supporter of the main principles of the Bill. I speak briefly this afternoon on that basis although my comments will be directed toward the specific amendments under discussion. Perhaps I may add that I do not have to declare an interest in respect of Westminster. My London home is half the width of a street outside the City of Westminster. That half-width of the street costs me an additional several hundreds of pounds a year in rates because the borough in which my home is located charges a higher rate than does the City of Westminster. I should be only too happy if that halfwidth of the street could be eliminated.
The point about the City of Westminster was extremely well put by the noble Baroness. Perhaps I may be permitted to say that, following a year in which she gave considerable service to the City of Westminster as its lady mayoress, she has rendered it perhaps even greater service this afternoon by bringing out so clearly, effectively and authoritatively the difficulties that could face Westminster if rectifying measures are not taken under this Bill.
My noble friend the Minister indicated that in his view the remedy for Westminster would be by way of the grant. He did not like the idea of adjusting the NNDR and preferred the means offered by the grant. Certainly there is an argument to be made out either way. I do not wish to take a particularly dogmatic line about it.
My reason for intervening in this debate is to ask my noble friend the Minister whether he would be a good deal more specific than he has been as to what the Government intend to do if they are going to use the grant method to deal with the situation. Obviously I shall not ask him to go into detail since it would be a waste of his time and that of the Committee to go into precise figures; but I should like some assurance about the principles on which the Government intend to operate in respect of grant in places such as Westminster. As has been mentioned several times this afternoon, Westminster is the second most dramatic example in the country of a city which has a very large daytime population and quite a small night-time population. What exactly do the Government propose to do when using the grant method?
As the Committee has heard, the City of London, which offers the extreme example, lies outside the discussion, and as has been rightly pointed out, there are other cities elsewhere where the problem arises; however, as I understand it, in none of those places is the situation anything like as acute as in the City of Westminster. It will help many of us—especially those who, like myself, favour the general approach of the Bill—if my noble friend can be a good deal more precise in indicating the principles that the Government propose to apply, using the powers offered by their own amendment and using their other powers under the Bill, in order to prevent the

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grave injustice to the residents of Westminster to which the noble Baroness, Lady Gardner of Parkes, so eloquently and fully referred. When he comes to reply, I hope that my noble friend the Minister will be able to help us a little on this matter.
4.15 p.m.
Lord Sandford: I rise as yet another Westminster ratepayer with a considerable direct interest in the way this matter is settled. First, I support the Bill and agree with my noble friend Lady Gardner that there is indeed a case to be answered. I was glad to hear my noble friend in his intervention say that he recognised that point. I should like to follow up the comments made just now by my noble friend Lord Boyd-Carpenter. There are a number of specific points which the Minister has not yet made and which I think the Committee hopes to hear either this afternoon or at the next stage.
I part company with my noble friends Lady Gardner and Lord Carr in thinking that it would in any circumstances be right to deal with this case by adjusting the national non-domestic rate. That would be to say that the kind of costs generated by the commuters who come to work in Westminster are of the same order as those generated by the residents who live in the city; and that cannot he the case. The residents generate costs by virtue of the children who have to be educated, the demands on the social services, and so on. Those costs are far ahead even of the costs of filling up Trafalgar Square in the dramatic way indicated by my noble friend Lady Gardner. No, the right answer is the one given by my noble friend: to use the rate support grant.
However, I am sure he will agree that the rate support grant and the GRE factor that controls it have fallen into a considerable state of disrepute—perhaps it has always been so. When I was president of the ADC, I recall this measure being introduced to us by our right honourable colleague Mr. Heseltine. He claimed that it was a factor that the Government had thought out which would be useful to vigilant ratepayers in assessing the competence of their own authority. Of course one could not argue against such a lofty concept. However, it has never been used in that way. It has always been used—as clearly it was intended by civil servants to be used—as a way of controlling local government. When Militant Tendency made it absolutely essential for central government to pick up the tools available to hand, the Government did not hesitate. It has to be rescued from its present status and made more respectable. My noble friend Lady Gardner indicated another way in which rate support grant and GRE in particular have been abused, and that also must stop.
In responding to my noble friend Lord Boyd-Carpenter, I hope that my noble friend on the Front Bench will indicate that some of the shortcomings and all the abuses to which the rate support grant and GRE have been subject in the past have now been recognised, and that Ministers will attend to a serious reform of the whole business and keep it in good order. If' that is done, I am quite satisfied that rate support grant can be the answer to Westminster's problems.
Lord Birkett: I rise to speak to this amendment, I confess, mostly out of a worry about what may happen to the arts in Westminster as a result of this Bill. As the noble Baroness, Lady Gardner, pointed out, the arts do very well in Westminster. Westminster has a very large raft of companies and galleries which it supports. As has already been mentioned, it includes the English National Opera and the London Festival Ballet. The Committee will not need reminding that those are large companies of national status and international renown.
When the GLC was about to be abolished, I prophesied gloomily that almost no London borough would be either willing or able to take up the challenge of funding the arts in the way that the GLC had done. I know of no more cheeful spectacle than a prophet of doom who has been proved wrong, so I was very happy indeed swiftly and powerfully to be proved wrong by Westminster. I believe that it has done exceedingly well for the arts as a result. It would he tragic and ironic if this Bill were to damage all that. I cannot believe that such was the Government's intention.
I am not an expert on the finances of local government; and certainly the complicated formulae referred to by the noble Baroness and by the noble Lord. Lord Carr, are rather beyond me. I wish to say only that if this amendment (or the Government's acceptance of at least the major principle of it) ceases to endanger the arts—as we know the arts in Westminster are endangered—I shall thoroughly support it. I must not speak any more about the arts this afternoon because the noble Lord, Lord Carr, has said that he has tabled an amendment, Amendment No. 140A, on the matter which is broader than this one. Not all the danger to the arts will come from boroughs whose daytime population is out of balance with their night-time population, so to speak. There must be dangers other than that one. I am sure that the amendment of the noble Baroness cannot cope with the entire problem of the arts, and I am sure that she never meant to do so. It would however deal with the situation in Westminster. Since I know perfectly well that there will probably not be an opportunity to support the Motion of the noble Baroness, I think it best for me to say that if the arts are to be endangered by this Bill, and if this amendment is not the way to cope with the problem, then something else must be found to deal with the situation.
Baroness Fisher of Rednal: I shall not be speaking at great length. However, I wish to reiterate the point that the noble Lord, Lord Carr, and the noble Baroness, Lady Gardner of Parkes, raised, that the situation does not affect only Westminster. One has heard a lot about Westminster, and Birmingham has been mentioned. Birmingham has not only a large day-time population, but also a large night-time population who come to listen to the City of Birmingham orchestra, to see the ballet from London, and to hear the opera that comes from London twice a year. The provisions will not affect only a few thousand people. There are over 1 million people living in the city of Birmingham. Therefore a much greater number of persons is involved in this discussion.

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The chief executive officer at Westminster wrote to the chief executive officer of Birmingham. As my noble friend says, Birmingham comes down on this side of the argument. The needs grant must be much more seriously considered in order to help the cities. As the noble Lord said, if we accept the provisions of the amendment there would be some winners and some losers. Perhaps I may give an example from the Birmingham area. While the Birmingham citizens would benefit, Solihull—and I feel sure Solihull is on a level with Westminster—would lose because it is a net exporter of people. One has to listen therefore to what the Minister said: there are losers and gainers under the amendment of the noble Baroness, Lady Gardner.
However, we have listened to what the Minister has said. I was not very happy at what I thought I heard. We are assuming that the national non-domestic rate will be distributed separately from the needs grant. That is the impression that I have gained from the Minister. I understand that the Department of the Environment is now proposing to pay those two amounts together in a lump sum. Therefore any increase in what one might receive from the national non-domestic rate will correspond with a decrease of one's needs grant. In other words, we are back to where we were under the old rates system. It is the Government giving with one hand and taking away with the other—and with grand multiplication tables that no one understands. It is therefore important that the Minister tells us this afternoon whether the national non-domestic rate will be separate from the needs grant so that those cities, such as Birmingham, Manchester and Sheffield, which are involved in this problem, will be able to see that they are also getting their fair share of the needs grant.
Lord Plummer of St. Marylebone: I do not wish to attack the main principles of the Bill. However, as a Westminster ratepayer I feel that the Minister must be more explicit on how it will affect the city council. In the absence of further details on how the needs grant will be allocated, there is no doubt in my mind that the Westminster City Council will be worse off.
I fully support all that the noble Baroness, Lady Gardner, and the noble Lord, Lord Carr, have said. I do not wish to go over those figures again. But listening to those speeches I thought that I might try to re-write the amendment in the name of the Minister, which could quite easily read, "I sentence you to hanging and will make such adjustments, if any, by way of addition or subtraction to the rope as are specified or calculated in a manner specified in the regulation, when I get round to it". Westminster City Council is entitled to know exactly what it will end up with.
As someone who has wrestled with problems of ratepayers for some time perhaps I may deal with further practicalities. One can take an extreme example. The Government say that one of the main principles of this Bill is to make the ratepayers examine the finances of the council more closely. The citizens of Queen's Park, and even of St. John's Wood, who are somewhat remote from the very
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centre of Westminster, could say, "Why am I paying all this money to clear up the roads around the Palace of Westminster? Why am I clearing up all the mess that the tourists make in Oxford Street? It should perhaps be left to someone else. When I come to vote in the next city election I shall demand that this is extracted from the sum which I find on my bill." One has to deal in local government with practicalities. While the Government are seizing yet another lever of power over the finances of local government, they must come forward now with greater information.
Lord Beloff: The case that has been made by the noble Baroness and the noble Lord, Lord Carr, is unanswerable. I think that the Government have accepted this. I urge upon them that the solution they produce—when they come back with one—is capable of being generalised and is not too particular and specific.
The course of our debates on this Bill, both at Second Reading and at Committee stage, have shown that we are in grave danger of having to do this job again. Those of us who have to sit through these debates are reluctant to contemplate this. Perhaps I may say that this is my only personal interest since I live many miles from the City of Westminster.
It is clear that the structure of local taxation in this country, which goes back a long way historically, has been permanently affected by the increasing divorce between residents on the one hand and work and the pursuit of pleasure on another. People do not very often work where they live. When they seek forms of recreation it is not only across local government boundaries, but, as has been pointed out in relation in particular to the City of Westminster, it is across national boundaries. We live in an age of increasing mobility. A system of taxation that does not take this into account is bound to produce the kind of anomalies to which the noble Baroness referred.
On the other hand, one must never extrapolate too rapidly. It may be that in some respects this will change. As Members of the Committee know, I understand nothing of technology. I understand that it will be possible for much of the work in the offices in the City of Westminster to be done by people at home tapping on some machine or looking at some screen. We might therefore have a reduction in the comparative day-time population of Westminster, London, Birmingham and Manchester, or wherever it may be. Therefore if a system is to be durable one needs to take into account that the patterns of social life—and consequently the services required, and where they are required—are likely to change at a much greater rate than was thought possible when the foundations of our system were laid; or that might have been considered possible by the Government when they suggested the current amendments.
That makes it difficult, because it is also the case that if you looked at this dispassionately and from a distance you could come up with the idea that local taxation itself is an anomaly; that service is required to be provided on the spot, but that the money raised is something which can never be allotted for any long period of time to a particular geographically defined group. But that I know is something which upsets

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people on both sides of the Committee about equally. and I will not pursue it.
I will simply go back to my point that I hope the Government will not come forward and say, "We are going to give Westminster this", or, "We are going to do that for Birmingham", but will come forward with a formula which will take account, at any rate for a number of years to come, of the fact to which attention was called by the noble Baroness and by the noble Lord, Lord Carr of Hadley—the fact that we are dealing with a situation in which where one receives services may have nothing to do with where one beds down for the night.
4.30 p.m.
Lord Rippon of Hexham: I intervene only very briefly because, like other noble Lords, I have been concerned with these matters over a good many years. I will not repeat the arguments of my noble friends, with which I fully agree. I should like also to emphasise that this does not concern just either Westminster or Birmingham. For example, it is a matter of concern to Newcastle and it is a matter of concern to all cities which are at the present time giving support to the arts. That is a matter to which we shall come again later on.
I listened very carefully to my noble friend the Minister. He said that all these matters can be dealt with within the context of the Bill as its stands. The trouble is. as I said when we were discussing the national business rate, that this is skeletal legislation with even more than usual provision for everything to be done by regulation. I therefore believe that it is very important that the Government should make clear here and now—indeed, my noble friend said it on the business rate—that they will have further consultation with all the bodies concerned.
I do not at this stage attach importance to any particular set of figures. I cannot do so. But I believe, with my noble friend Lord Boyd-Carpenter, that the Government must be willing to get down to the detail and to give a much clearer indication than they have been able to do so far of how the principles and the practices that they have in mind will be implemented in a workable and equitable way.
Lord McIntosh of Haringey: Before the noble Lord sits down, may I ask him whether he would not agree that since what is being proposed is, in effect, a zero sum gain—in other words, no additional money, or less money, is to be extracted from the national business tax—everybody in the country will he concerned; Westminster, Newcastle and Birmingham on the one side and the authorities which will lose on the other side?
Lord Rippon of Hexham: I agree that I do not know what combination of amendments would be appropriate. The value of this debate is that it has raised the anxieties, and I am sure it will help my noble friend the Minister in his discussions with the Secretary of State and others if he is able to show, which I do not think he will have much difficulty in doing, the mood of this Committee.
Lord Peyton of Yeovil: I, too, should like very shortly and briefly to support this amendment which was so eloquently spoken to by my noble friend on behalf of the Cities of London and Westminster. I heard with sonic concern the words of my noble friend the Minister. Ministers change and good intentions fade. That is my chief concern at the moment. If I were to credit my noble friend with some kind of immortal existence on that Bench, then I should have no worries. But when he is replaced. may be, in due course by someone else it could be that his good intentions will disappear and will not be as well fulfilled as I am sure they would be by him.
I have another reason for supporting this amendment and for the sympathy which I feel with the Cities of London and Westminster. There are a number of bodies which look to them for support and encouragement. Not least among those is the London Zoo, the Zoological Society of London. It is with some confidence that we look to the council for considerable support and assistance in the future. It would be distressing to charities of that kind if the means available to the city council were unduly constrained by a measure such as is now contained in the Bill. I must say again to the Minister that I do not feel at all happy with the rather unfurnished statement that the powers to do what is asked are already in the Bill. I look for something more.
Baroness Gardner of Parkes: As your Lordships know, I cannot press or even move my amendment although as it happens, in a strange way, Amendments Nos. 119A and 120 have come together. But I should like to thank those Members who have spoken on the amendment, because they have made the point very clearly to the Minister and I hope and believe that he will now go away and think more on this matter.
I thought the point made by my noble friend Lord Beloff, that it should be something of a general nature, was an excellent one, and my noble friend Lord Boyd-Carpenter made a very good contribution when he said that we want something explicit. I think everyone wants to know whether or not the commuting will be a particular thing and what will be the factors taken into account in setting this rate support grant.
The Minister said in his speech—and I will check later in Hansard to see that this is correct—that the grant will compensate for them in full. If that is true. and if he really will do that, I think we can all he reassured. But the point just made, that good intentions fade, is a most relevant one, and that is why we all hope there will be something more specific coming out either in the form of regulations to be seen by your Lordships' House or in a statement or an amendment brought forward by the Government at a later stage.
I thank those who have participated, and particularly the noble Baroness, Lady Fisher, from Birmingham. She is quite right in saying that what you give with one hand you lose with the other, and the effect of my amendment would, financially, have been absolutely nil. The only point on which I must take issue is the Minister's statement that

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Westminster are putting forward something which will give them a net profit per person. That was not the intention, because the wording stated that the Government would be able to set a percentage, and I made clear in my speech that we were only considering 25 per cent. of the people coming in. Also, my noble friend Lord Sandford made the point that people coming in are not using the same quantity of services. That is why we thought that 20 per cent. was the kind of figure to use as a base, when our greatest net loser would have lost £13 a year. Therefore the Minister has been working on quite a different calculation, and that makes the point again very clearly that we want to know in future what calculations we are to work on so that we have the same answers.
The Earl of Caithness: Perhaps I may respond to some of the points raised, because that would be fair to the Committee. In particular, I should like to deal with some of the points raised by my noble friend Lord Carr. I can assure him that grant will be distributed so that if all authorities spent at the level of their spending needs assessment they could all levy the same charge. Everyone would pay the same charge for the same level of service. So let me make it clear that the needs assessment for Westminster, as for all other authorities, will take account of all that the present system does.
I referred my noble friend Lord Peyton to one of the establishments supported by Westminster. It is very dear to his heart and in recent weeks it has become very dear to mine. It is the London Zoo, where the Government have also been able to help. That is why at the moment Westminster's GRE is approximately £1,200 per head. That compares with Reading, for example, where some commuters travel from, where the GRE is £613 per head. It is clear from that that needs are taken into account at present and I confirm that they will continue to be taken into account in the future. If councils spend at that level they will be charged at the standard level of £810 for 1987-88, to which my noble friend referred. There is no doubt that the needs assessments are capable of reflecting the varying needs of the authorities. The corollary is that all spending above the needs assessment level will fall on the charge payer. That is what accountability means.
My noble friend referred in particular to the overspending which arises from the spending of ILEA. That has nothing to do with commuters or tourists and therefore the amendment which we arc discussing would appear to be a quite inappropriate way of dealing with the matter. The Government believe that ILEA could provide a good education service for far less than it spends. We expect the London boroughs to be able to Lind considerable savings. They will not be able to do that overnight. To anticipate our discussions on Part VI of the Bill, dealing with grants, I assure the House that the transitional safety net grant arrangements will mean that changes in the amount to be raised from local taxpayers will be phased in over four years. Therefore London will not be paying any more than is now being paid for the services as a whole.
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My noble friend Lord Carr of Hadley also raised the question of the ENO and LFB, as did the noble Lord, Lord Birkett. It might be appropriate if in that connection I respond more fully to Amendment No. 140A. Of course the needs assessment will take into account our galleries, museums and so forth, as they do at the moment.
Perhaps I have not spelt out specifically how the amendment would undermine the accountability of the new system and why we favour operating through the grant system rather than national non-domestic rates. It is central to the accountability of the new system that there should be a common level of community charge for a standard level of expenditure. Under our proposals that will be possible but under the amendment the cost of a standard level of service will vary depending on the size of the daily shift in population. That will not help in getting across the clear message that we seek to promote local accountability. I fully accept that for that to work the cost of a standard level of service must be properly assessed. We believe that we have that about right now. We assess the cost of services in Westminster to be almost twice the cost of those in Reading, where some commuters travel from. We are reviewing the needs assessments and I assure the Committee that the cost of the extra services in city centres—Westminster, Birmingham or wherever—will be fully taken into account.
My noble friend Lord Boyd-Carpenter asked me to he more specific and I hope to be so in dealing with Clauses 82 to 94, the grant section. When speaking to Amendment No. 136 I should like to say more about the grants and how we propose that they should work. That may be the right time to take the opportunity of making a general statement. However, my noble friend was right to recognise the fact that it is too early to be totally specific.
I assure my noble friend that the general approach will be to reflect the cost of providing services, taking account of the number of people likely to use each service. For example, the assessment for education will depend on the number of pupils. There will also be special allowance for the extra costs in London. It will be open to the Secretary of State to reflect the net daytime inflow as one of the indicators in assessing the needs. I believe it likely that he will wish to include a factor in order to reflect the point we have been discussing; the point made by my noble friend Lady Gardner of Parkes. I confirm that we shall be having discussions with the local authority associations later this year. That fulfils the hope expressed by my noble friend Lord Rippon of Hexham.
My noble friend Lord Beloff was right to raise the point about flexibility in the formula. The Committee will be aware that more than 60 items are taken into account in the rate support grant. Fewer items will be taken into account in respect of the revenue support grant. However, they will cover much the same ground as the rate support grant and therefore the needs of individual authorities can be assessed.
The noble Baroness, Lady Fisher, expressed concern about national non-domestic rates and the revenue support grant and the way it will be assessed and distributed. Each receiving authority will have a

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grant entitlement and an NNDR entitlement. My department has indicated that we propose to make the payments—that is to say, hand over the cash—in one go, taking account of the grant and any NNDR that we owe the authority and the NNDR which it is due to pay into the central pool. Those payment arrangements will not affect the authority's entitlements, so we shall not be slipping back into the difficult system that we have at the moment.
I was rather surprised by the total dislike of the NNDR expressed by the noble Lord, Lord McIntosh of Haringey, because it is in effect the rating system which we now have. I had not realised the extent to which the noble Lord disliked the current rating system for businesses—
Lord McIntosh of Haringey: There is a slight difference between a non-domestic rate set by local authorities and a national business tax, the level of which is set entirely by central government.
The Earl of Caithness: I apologise for misinterpreting some of what the noble Lord said. I thought he was criticising the fact that businesses paid rates. That was the message that I received from the noble Lord.
I should like to take up a point made by my noble friend Lady Gardner of Parkes at the beginning of her speech. She made reference to a remark that I made at an earlier stage. It was that:
"We cannot do away with grant shifts between tiers".
When I made that statement I was referring to the existing RSG system. Under our new system we shall be paying grant to the collection fund for the whole area and not to separate tiers. Therefore we shall not have the instability that we have at present.
After raising such an important point my noble friend reassured me that she had taken on board the point I made in an earlier intervention. It was that it is through the grant system that we shall take account of exactly those points she raised—such as commuters—and not through the NNDR. We believe that that is the right way to do so because it maintains the principle of what we are trying to achieve in altering the whole balance of local government finance under the three headings of community charge. NNDR and the grant system.
Lord Jay: I do not believe that the Minister has answered the question raised by the noble Lord, Lord Carr of Hadley, at the beginning of the debate. He said that in order for Westminster City Council, which is unusual but not unique, to carry on a spending level at a point agreed by the Government it must either double the domestic rate or make reductions in expenditure below the level of approximately 20 per cent., if not more.
The only suggestion made in the debate as to how the gap may be covered is that the Government must sufficiently increase the rate support grant to cover the gap. If the Government have given no assurance that that will be done, the Committee is, in effect, left not knowing what will happen. The impression made on me by the speech of the noble Lord, Lord Carr, is that the Bill as it stands in that case is virtually
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unworkable. After all, in Westminster that is not a unique case.
The Minister might have said that what will happen, in effect, is that this gap will be covered by the rate support grant. However, he did not say that. If I understood him right, he said that the Government will continue to take account of the various needs, such as the arts, London Zoo, and so on. He did not say that, in taking account of that, he would cover the financial gap. Until he does that, it seems to me that he leaves the Committee at a loss. He has not answered the obvious implication that the Bill as it stands, quite apart from its injustice, which we are not discussing this afternoon, is virtually unworkable.
The Earl of Caithness: The Bill is not unworkable. It has been thought out extremely carefully. I did not comment on my noble friend's figures because I found it extremely difficult to do so without studying them in detail and knowing the basis on which they have been arrived at. My intention, which I should have made clear, is to look at what my noble friend said and reply to him in writing, putting a copy in the Library.
Lord Carr of Hadley: Perhaps I may say to my noble friend before he sits down that I will attempt, perhaps also in writing, to clarify my figures, which arc difficult to put over in the course of a speech.
Lord Graham of Edmonton: We understood them.
On Question, amendment agreed to.
[Amendment No. 120 not moved.]
The Deputy Chairman of Committees (The Earl of Listowel): Before calling Amendment No. 121, I should point out to the Committee that, if this amendment is agreed to, I cannot call Amendment Nos. 122 or 122A.
[Amendments Nos. 121 and 122 not moved.]
The Earl of Caithness The Earl of Caithness moved Amendment 122A:
Page 115, line 15, leave out sub-paragraph (5) and insert—
("(5) The relevant population in relation to a council shall he calculated by—

(a) taking the number of those members of the population of the council's area who fall within such description as is specified in regulations made by the Secretary of State, and

(b) making such adjustments (if any) by way of addition or subtraction (or both) as are specified in, or calculated in a manner specified in. the regulations.")

On Question, amendment agreed to.
Schedule 8, as amended, agreed to.
Clauses 52 and 53 agreed to.
Schedule 9 [Non-domestic rating: administration):
Lord Glenarthur Lord Glenarthur moved Amendment No. 122B.
Page 117. line 49, at end insert—
("(d) allowing winding up").
On Question, amendment agreed to.
Lord Ross of Newport Lord Ross of Newport moved Amendment No. 123.
Page 118, line 20, after ("is") insert ("reasonably").
The noble Lord said: This paragraph deals with the

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information which a person may be required to pass to a valuation officer. At the moment a valuation officer issues forms to people which they are required by law to return. Most of them are returned but he follows up requiring further information. The Bill specifies:
"A valuation officer may serve a notice onߪan owner or occupier of a heraditament requiring him to supply to the officer such information as is required by him for the purpose of carrying out functions conferredߪon him by,"
that part of the Bill.
The power to serve such a notice is obviously essential, but the exercise of that power was previously always tempered by the word "reasonably" so that a person was under an obligation to supply only that information which was reasonably required by the valuation officer. Frankly, I see no reason why that safeguard should be removed and I believe that most people in the profession agree. Why should we give a valuation officer the unfettered right to demand information?
The people most concerned about the absence of the word "reasonably" are in those professions dealing with licensed premises. The established basis of valuation for public houses has been determined over many years by decisions of the Lands Tribunal. For the revaluation which is now taking place the valuation office of the Inland Revenue is canvassing other means by which licensed premises may be valued. To this end, it is embarking on what is believed to he a fishing expedition. raising issues which have previously been beyond its powers of inquiry.
Leading counsel's opinion has already been sought on what the valuation office might properly require. It could be that the argument on the construction of the word "reasonably" may, if the Government decide not to listen to our pleas, proceed from an action at the local valuation court to the Lands Tribunal itself. Counsel is firmly of the opinion that the extended enquiries currently pursued by the valuation office range too far, and go well beyond what might be reasonably required for the purposes of making a valuation list.
People are therefore concerned that Schedule 9, paragraph 5(1) has been drafted so that a valuation officer may serve a notice on a person who is an owner or occupier of a heraditament requiring him to supply that officer such information "as is required". The word "reasonably" does not appear. I fairly assume that this is because of the problems experienced at the moment by the valuation office in canvassing these alternative methods of valuation. Since then, enquiries have given cause for dispute, and the valuation officers are seeking to make life easier for themselves on any future valuation by asking for that word to be removed, thereby providing themselves with more far-reaching powers of enquiry than exist now and beyond what the Lands Tribunal might possibly grant on any appeal over the present contentious matters.
I feel that we should not move away from the existing situation and that the word "reasonably" should appear in the Bill. I beg to move.
The Earl of Lytton: Perhaps I may be permitted to speak to this amendment. to which my name also appears, and to support the noble Lord. Lord Ross of Newport.
There are commercial undertakings where the type of information that could be required or obtained falls into the category of what can be described as commercially sensitive. While some of these matters might be pertinent to the enquiry of a valuation officer, others certainly might not be pertinent in strict terms to the discharge of his functions in the preparation and valuation of properties to be included in the list. Therefore, I support this amendment, which sets out to return the situation to what it was previously.
In all probability the Minister will—at least I hope he will—take this point on board because he was at pains to point out to me on another occasion that all government officers are subject to a test of reasonableness. I am sure that all the officers I worked with in the valuation office were reasonable beyond any doubt whatever. Nevertheless, governments and the aspirations of those in public service alter and if it is the case that all public servants are subject to a test of reasonableness I see no reason why. for the benefit of the peace of mind of ratepayers, the word "reasonably" should not he incorporated in the Bill.
The Earl of Caithness: During Monday's sitting we considered a similar amendment to Amendment No. 123 in relation to Clause 6 and the power of the community charges registration officer to seek information. Today the noble Lord, Lord Ross of Newport. has raised the issue in connection with information sought by the valuation officer. The point I made earlier applies equally in this case.
The concept that a valuation officer may only seek such information as he reasonably requires for the exercise of his function is already implicit in Schedule 9, paragraph 5(1). As the noble Earl, Lord Lytton, reminded the Committee. I explained during our discussions on the equivalent amendment to Clause 6 that I had obtained unambiguous legal advice on this point.
All public officials, including the valuation officer, are under a general duty to act reasonably and they can have their actions reviewed by the courts if they fail to do so. There is extensive case law on this subject and many Members of the Committee will be familiar with the term "Wednesbury unreasonableness" after the small Black Country town distinguished by its former council having given its name to a leading case.
Thus, if the valuation officer were to demand information that was not reasonably required for the purposes of his statutory functions and were to begin proceedings to enforce his demand, he would not get very far. In practice, there is very little history of valuation officers seeking to act unreasonably. There is a good understanding between them and outside professional advisers as to the information they can reasonably require.
Thus, as I explained as regards an earlier amendment, adding the word "reasonably" would be

41
otiose to the Bill. It could do harm since it might suggest that some other test of reasonableness was intended. The noble Lord, Lord Ross of Newport, reminded the Committee that the equivalent provision in the General Rate Act 1967 uses the word, but I remind the Committee that that derives from legislation drafted long before the modern doctrine of unreasonableness was developed.
I hope to convince the Committee that there is no intention on the part of the Government to slip through unnoticed an extension to the power of the valuation officer in this case.
5 p.m.
Lord Ross of Newport: I thank the Minister for his reply and for reminding us of his earlier reply as regards another instance which has already been debated in this Bill. I hope very much that what he said is taken on board by valuation officers and that people, particularly in the licensed trade, if they believe that information is being sought from them that they regard as unreasonable, arc not obliged to pursue the case through the valuation court to the Lands Tribunal. I think that would be unfortunate and I am sure the Minister would agree that they should not be put to that expense.
I hope very much that the department will draw the attention of valuation officers to the reply that the Minister has given to the Committee this afternoon. The Minister is nodding. I am very grateful for that response and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 9, as amended, agreed to.
Clause 54 [Hereditaments]:
Lord Ross of Newport Lord Ross of Newport moved Amendment No. 123ZA:
Page 29, line 12, leave out ("lands'') and insert ("all lands, whether or not beneficially occupied. including those which would not otherwise he subject to rates but for this provision except for the exceptions made in this Act;").
The noble Lord said: In moving Amendment No. 123ZA. perhaps I may reassure the Minister at the start that I do not intend to give a long treatise on land value taxation or site value rating or to quote from the works of Henry George or the efforts of Mr. Mark Wilks. However, I believe it is right that as this Bill is going through we should at least put down a marker for land value taxation. In fact, the amendment would extend the definition of land to be rated to cover all land, including undeveloped land.
I hasten to add that would not include agricultural land and there would be some exemptions. Personally. I believe that we should have rated agricultural land long ago, but probably we should not do so now because agriculture at the moment is going through a had time and this would not be the right time to introduce such a measure.
We believe that the owners of land should be taxed because the land itself is part of the community and in that sense it belongs to the community. Added value is created by the community through building of roads and the use of public transport, and if all land were taxed there would he less incentive to hold
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land, speculatively. There would be an incentive to either develop or sell, hoping to remove the large areas of wasteland in our inner cities. I draw that point particularly to the attention of the Minister.
We are talking about the rating of empty property; namely, empty houses after six months, leaving some to the discretion of the local authorities. Why are we not including land which has already been zoned for development and upon which outline planning consent has been given? People are deliberately holding back on such land and they are blocking from development whole areas in our inner cities and main towns. If they were obliged to pay rates, perhaps an increasing amount. they would put that land on the market. I believe that will appeal in particular to the present Secretary of State.
However, perhaps I may point out that a tax on vacant, undeveloped land is actually supported in a booklet recently produced by the Institute of' Economic Affairs. Therefore, we are not on our own after all in what was formerly the Liberal Party, which has always given some support to the idea of land value taxation.
As I have said. I am not pressing this amendment to a vote because I do not believe I should get very far at the moment. I recognise that such a measure would take about 10 years to introduce and there would have to be an enormous job of revaluation. I believe it to be an alternative that should have been looked at before this Bill was brought before the Committee.
I put to the Minister the point that land scheduled for development in inner urban areas should he taxed in one way or another to bring it onto the market. I beg to move.
The Earl of Caithness: Since this is a somewhat technical issue, it may be for the benefit of the Committee if I set out some of the background. At present, to he rated, a property has to be beneficially occupied. This means that, in addition to the various categories of property which are specifically exempt, a number of other types are effectively exempt because no one derives a benefit from occupying them. They include land awaiting or undergoing development, public highways, and open moorland. The Bill, by preserving the present case-law definition of occupier in Clause 55(2), preserves this position.
The amendment would bring these properties into the definition of relevant non-domestic hereditament in Clause 54(4), and would thereby require them to be entered on rating lists under Clause 38. However, it would take more than that to make anyone pay rates on them. If the valuation officer had to value a derelict site, he would give it a nil or negligible value, because no one would pay rent for it in its present state. It may have development potential, but that would be worth nothing to a tenant.
What the amendment is seeking to do is to introduce so-called site value rating. As the noble Lord, Lord Ross of Newport, said, that is an old chestnut of the Liberal Party. It means rating people not on what their property is worth in its present use, but on what it might he worth if it had been developed for a more valuable use, provided that permission for that use would be given. I ask the

43
Committee to consider whether that is really fair. We often hear complaints from small shopkeepers that their rents are driven up by competition from banks and building societies. To some extent, although we may sympathise, we have to say that that is the law of the market. I wonder whether they know that the noble Lord's amendment would mean that they would be paying rates as if their shops had already been taken over.
Of course, it is desirable to bring land back into use, especially in the inner cities. This was a point raised by the noble Lord, Lord Ross of Newport. Rather than rating that land on its potential value, we believe that the action the Government have taken to bring it back into use is perhaps the more appropriate way of doing it. As Members of the Committee know, we have achieved much in that area. I do not believe that it is sensible to proceed by asking people to pay rates on property out of which they can obtain no current benefit.
Lord Monson: Is the Minister aware that one of the briefs on this Bill put out by his department implicitly supports the concept of site value taxation, doubtless without meaning to? I have not got the brief with me, but, as I remember, it was explaining why the Government propose to exempt caravans from the provisions of the Bill but not second, holiday homes. The reason was that whereas caravans depreciate in value, houses appreciate. Houses as such depreciate in value, albeit perhaps not as fast as caravans: this situation is masked by the housing boom which we have now. What appreciates is the site on which the houses stand. Without realising it, the Government have an excellent argument for site value taxation in their own briefing.
The Earl of Caithness: The noble Lord does not have the brief and neither do I.
Lord Ross of Newport: Perhaps the noble Lord saw the brief from the Institute of Economic Affairs. I shall try to find it and send it to the Minister.
I thank him for the reply, which is on the lines that I expected. As I have indicated, I am not pushing this amendment to a vote. However, I take the view that though the Minister is claiming that by government action and pressure on local authorities land is coming into development, local authorities are not the only owners of land. I have just taken over in my home town of Newport a site that has remained derelict for 10 years. I persuaded the Co-op to allow us to turn it into a private car park. I had no help from the local authority and this project has already cost £20,000. At the moment everyone is parking on the site for free and we have not yet erected the electric barriers. When I put around a notice saying that the charge would be £5 a week it was not liked very much. That is putting some of this land into general use because the Co-op has not felt that it is yet time to build a new store. It is looking at what is going on in other parts of the town.
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There is no incentive for it to do so. I believe that the Co-op should be rated and I have told it so. There is further disincentive in that we now have planning charges. I strongly oppose the introduction of planning charges in this country. They are a very heavy cost these days and people will not spend several hundred pounds, in some cases over £1,000, to put in planning applications. They would rather wait or not do it at all.
There is no incentive to bring some of the land on to the market. One can put pressure on local authorities to sell, and one can oblige them to sell now, but one cannot do it in respect of private owners. An opportunity is being missed. In 1973 the noble Lord, Lord Barber, introduced this idea in a Budget but the Finance Bill fell. I suggest that the Minister and his department should look at the proposal and I believe that there would be general support for it throughout the country. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Hesketh Lord Hesketh moved Amendment No. 123ZB:
Page 29, line 22, leave out subsection (5) and insert—
("(5) Subsection (5A) below applies in the case of a hereditament provided and maintained by an authority mentioned in subsection (6) below for purposes connected with the administration of justice, police purposes or other Crown purposes.
(5A) Any rules as to Crown exemption which would have applied apart from this subsection shall not—

(a) detract from any duty to show the hereditament in a local or central non-domestic rating list,

(b) prevent a person being subject to a non-domestic rate as regards the hereditament under section 39, 41 or 46 above, or

(c) prevent the person being liable to pay in respect of the rate.").

The noble Lord said: I should like to speak also to Amendments Nos. 129A and 129B. This is a further group of drafting amendments designed to clarify the provisions relating to buildings occupied by local authorities in connection with the administration of justice. police or other Crown purposes.
Amendment No. 123ZB makes clear that those hereditaments are not subject to the rules regarding Crown exemption and must be shown in a local or central rating list, and that the occupier is liable to pay non-domestic rates. Amendments Nos. 129A and 129B add liability to pay in respect of the rate to the similar provisions in Clause 73 relating to residual rating. I beg to move.
On Question. amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 123ZC:
Page 29, line 42, at end insert—
("(9A) A hereditament shall be treated as wholly or mainly used for charitable purposes at any time if at the time it is wholly or mainly used for the sale of goods donated to a charity and the proceeds of sale of the goods (after any deduction of expenses) are applied for the purposes of a charity.").
The noble Earl said: I spoke to this amendment with Amendment No. 103. I beg to move.
On Question, amendment agreed to.
Clause 54, as amended, agreed to.
Clause 55 agreed to.
Clause 56 [Domestic property]:
5.15 p.m.
Lord Glenarthur Lord Glenarthur moved Amendment No. 123ZD:
Page 31, line 3, leave out from ("But") to ("wholly") in line 4 and insert ("property is not domestic property if it is").
The noble Lord said: With this amendment, it may be convenient to the Committee if I speak to Amendments Nos. 123ZE, 123A, 123AB, 123B and 123C. The grouping may seem rather strange because the amendments deal with three subjects—caravans, self-catering accommodation and residential care homes. I understand that, if they were considered separately and the government amendments were accepted, the later amendments in the names of the noble Lords, Lord Stanley and Lord Ross of Newport, would be pre-empted. I have no wish to prevent debate on the points that they intend to raise.
The government amendments, Amendments Nos. 123ZD, 123ZE. 123B and 123C, are concerned with the classification of caravans and houseboats. They mesh with amendments already agreed in Clause 3 on the standard charge. Together with the earlier amendments they honour a commitment made by the Government during Committee stage in another place to take holiday caravans and houseboats out of the standard community charge and hack into domestic rating. They would provide that caravan pitches and houseboat moorings should be classified as non-domestic property and therefore be liable to non-domestic rating except where they form someone's sole or main residence or where a caravan is situated on a protected site—a protected site is one where caravans are stationed not for holiday use but for year-round residential occupation. In such a situation the caravan owner would be liable to the standard community charge. This approach is in line with the Scottish Act and has been accepted by representatives of the caravan industry.
I have no doubt that my noble friend Lord Stanley of Alderley will wish to speak on his amendment and that the noble Lord, Lord Ross of Newport, will wish to speak on his, and so I shall not cover their points until they have had a chance to speak. I beg to move.
Lord Stanley of Alderley: One of the ways in which farmers and others who live in the countryside can create employment and wealth is by letting accommodation as holiday flats or homes. This amendment, which is supported by the Tourist Association and the National Farmers' Union, suggests that the best way to rate these holiday lets is by having them rated under the national non-domestic rate rather than under a multiplier of the community charge. There are two reasons for preferring this method of charging. First, the charge will be predictable, which is important for a business. Secondly, the charge will be geared to the size of the business. If, as I hope, the Government concede that this is how they believe holiday lets should be dealt with, I have a query or two to put to my noble friend. My queries would apply even if he does not accept the principle.
Can my noble friend help me on the position of the owner who moves out of his house in the summer and
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lets it as a holiday home and then lives in a shack or cattle yard? That happens a good deal in Wales. Secondly, what is the position of a person who uses the holiday home himself for the summer and then lets it in the winter? Even if my noble friend would like to ponder these two questions I hope he will accept the principle of the amendment that these should be rated under the non-domestic rate.
The Earl of Radnor: I should like briefly to support the amendment to which I have put my name. It seems logical and sensible that self-catering accommodation should not be domestically rated. Most people believe that it is used for business and there it should lie. It should benefit from that regime which would be more suitable not only to the farmer running his self-catering business to protect himself against ever-increasing hard times but also to anybody who has self-catering accommodation, in the town or at the seaside or wherever it may be.
I should like to anticipate a problem which was referred to by my noble friend Lord Stanley. There may be a dual use for this form of accommodation. A degree of cheating might come in and the owner might use accommodation to live in for long periods. I scanned through the Bill and I thought that in that case my noble friend might put the matter right by borrowing phraseology from another part of the Bill and adding at the end of this amendment:
"In determining whether a house which is used for or in connection with self-catering accommodation is solely so used no account shall he taken at any time during which it is used in any other way if that time does not amount to a substantial part of the time during which the building is used".
My noble friend on the Front Bench will know that that provision applies to an alternative use of fish ponds but it seems to apply equally well to self-catering accommodation.
Having said that I am thinking of all types of self-catering accommodation, I should like to re-emphasise my noble friend's point about the farming industry and remind the Committee that the more beautiful parts of our land are often the worst for farming. This is where farmers will want to turn to this source of income. If it is beneficial to them to put self-catering accommodation under a business regime I hope that will be taken into consideration and that farmers will be helped as much as possible. I support the amendment, and I hope that something sensible will be sorted out along the lines described by my noble friend.
Baroness Stedman: I should like also to express my support for the amendment moved by the noble Lord, Lord Stanley. Having made the exceptions on caravans, it is perfectly proper that we should also make exceptions on the grounds proposed. The Government are asking the farming industry to take some land out of farming and to use their buildings to good effect and thus help to create more leisure industry on the farms and in the farming areas. Therefore this might well be one incentive which would help them to do so.
I should like to go further than the subject of self-contained accommodation. Is the Minister able to say what the effect of the community charge is on those

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people in the more popular areas of our country who offer casual bed-and-breakfast facilities? Will they have any particular difficulties dealing with the section of their property which is used casually for bed-and-breakfast?
Lord Ross of Newport: I am grateful for the Minister's courtesy in allowing me at least to air the principles behind Amendment No. 123AB. This was prompted to some extent by the exchange which took place the other evening between the Minister and his colleague the noble Lord, Lord Jenkin of Roding. It concerned the question of the rating of residential homes and nursing homes which are now eligible to qualify for a 100 per cent. rate rebate under the provisions of Section 2(2)(a) and (c) of the Rating (Disabled Persons) Act 1978. I am told that such provisions were first thought to apply only to such premises as homes for the mentally ill or physically disabled. However, it has become apparent that most establishments caring for and accommodating the elderly can he shown to qualify for the rebate.
Paragraph 15(1) of Schedule 5 to the Local Government Finance Bill provides for the exemption from rates of certain premises providing facilities for the ill and disabled. The four categories in question have been directly extracted from the rebate provisions of Section 2(2)(b), (d), (e) and (f) of the 1978 Act. However, the two references there to "residential accommodation- do not appear in the Bill. Paragraph 9 of Schedule 1 to the Bill—the one we are debating at present—provides for exemption from the community charge of residents of nursing and residential care homes. Clause 56 as it stands would leave the home itself. even though it may be a business—of course it is a business—to be regarded as a domestic property and therefore outside the scope of the non-domestic rate.
There has been a proliferation of nursing homes and especially of private care establishments, in recent years. In my constituency alone we had over 90. Perhaps it is just as well that I am no longer the Member of Parliament for that area. If I were, no doubt I should lose all their votes by moving the amendment. We have had to put a stop on the situation. Indeed, both planning authorities have had to say that they are not prepared to grant any more conversions, especially of hotels and guest-houses, into homes for the elderly because they are beginning to represent too big a proportion of our population. Obviously it is seen as a good way to make sizeable income. If you run a good home—I accept that most of them are very well run indeed—there is no questioning the fact that there is much money to be made, especially in regard to nursing-homes.
Therefore, the view has emerged from local authorities and especially from rating practitioner members of the Rating and Revaluation Association—who prompted the amendment—that the opportunity should now be taken to seek to ensure that such businesses start to pay the non-domestic rate from 1990. Although I cannot move the amendment, I am most grateful to have had the opportunity to air my concerns.
Lord Glenarthur: My noble friends Lord Stanley of Alderley and Lord Radnor have put their fingers on a most difficult issue. It is one which arises at the boundary between domestic and non-domestic sectors. However, I am sure they appreciate that fact. We are concerned with property which, on the one hand, is used for the purposes of living accommodation and would normally be domestic but which, on the other hand, is run as a business and, arguably, like other business premises, should pay the national non-domestic rate. The position is further complicated by the fact that many buildings are not used for self-catering accommodation throughout the year. My understanding is that while in summer the accommodation is generally let to holidaymakers for short periods, in winter it may be let for longer periods to people who use it as their main residence. Further, there may even be several changes of use during the year.
Holiday self-catering accommodation falls somewhere between hotels, which are clearly businesses and can be rated as such, and second homes which are domestic and subject to the standard charge. We are anxious to ensure that self-catering accommodation is treated fairly and in accordance with the principles of the Bill. To that end, perhaps I can tell my noble friends that officials from the Department of the Environment have had discussions with representatives of the self-catering industry in the light of which we are now considering precisely how self-catering accommodation should be treated. I can assure both my noble friends that I will look closely at the arguments they have put forward in favour of treating self-catering accommodation as non-domestic. Nevertheless, I hope that they will appreciate that the issue is far from being clear-cut and that it is most important that we arrive at a fair and workable arrangement which would suit both my noble friends.
I should like to deal with the two specific points raised by my noble friend Lord Stanley. A person will be liable to pay the personal community charge at his sole or main residence whether that is a house or caravan. The person's liability to pay the personal community charge will therefore remain unchanged, assuming he stays within the same charging area. However, if he moves to another charging area he will then become subject to its community charge.
The position of the house which he vacates will depend on many factors. First and foremost, it will depend on whether the person changes his sole or main residence when he moves out of his house. Assuming that his sole or main residence changes, he will be liable to pay either the standard community charge or non-domestic rates for the period when he is not resident in the house. Which of the two he pays will depend, as I said earlier, on the boundary between domestic and non-domestic sectors. That is where it is difficult to draw the line at present.
The second example, given by my noble friend, was the person who uses a holiday home for himself in summer and then lets it during the winter. The answer is the converse of the one I have just given. The person will pay the personal community charge while he is mainly resident in the house in summer and, assuming he is no longer resident there in winter, will

49
be liable to pay either the standard community charge or rates for the winter period.
My noble friend Lord Radnor raised the matter of treatment of empty property. Again, the question is much the same; that is, whether the property is subject to the standard community charge or to rating. In the case of the former, property which is empty and unfurnished will not be liable to the standard community charge for the first three months. Thereafter, local authorities will have discretion to set a standard of between zero and two-times the personal community charge. If holiday let accommodation is placed in non-domestic rating it will also have a three-month period of grace where it was unoccupied; thereafter, if it remained unoccupied, it would attract 50 per cent. rates relief.
The noble Baroness, Lady Stedman, asked about casual bed-and-breakfast accommodation arrangements. Accommodation which is offered for bed-and-breakfast accommodation is analogous to the hotel situation and would therefore, I am advised, be rated accordingly. The owners of bed-and-breakfast accommodation will of course pay the personal community charge in the normal way and the accommodation they personally occupy would not be rated.
I turn now to the amendment tabled in the name of the noble Lord, Lord Ross of Newport. I must say that it is not an exceptional proposal. To set the scene perhaps I may take Members of the Committee back a year or so to the passage of the Scottish legislation. As introduced, that Bill made no specific provision for residential care homes or nursing homes.
During the Committee stage many Members of the Committee put forward persuasive arguments in favour of according residents of such institutions special treatment. Indeed, one of the reasons given for exempting residents of homes was, so far as I can remember, that it would bring public and private hospitals into line. We had of course already proposed to exempt long-term patients in National Health Service hospitals. I accepted that those in residential homes would have relatively little contact with the local democratic process, and that accountability could not be expected to operate properly. It was not proposed, nor would we have accepted, that we should discriminate against those who happen to be in privately run nursing homes. Merely because a nursing home is run as a business does not mean that the residents are less entitled to benefit from the exemption. I hope that the noble Lord sees the force of that point.
It would not be the owners of such homes who would suffer as a result of the noble Lord's amendment: it would probably be the old people themselves. If the owner were required to pay an additional £1,000 a year in rates he would be likely to increase charges to cover the increased expenses. We should be in the position, therefore, of giving with one hand, through the exemption, and taking it away with the other, by rating the property.
I did not detect from the noble Lord's remarks that he was attempting to tax the profits of those homes; but, as I have said, the purpose behind the amendment is unhealthy. I should perhaps point out
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to him that most residential homes do not pay rates at present. The large majority of them are exempt from rating under the provisions of the Rating (Disabled Persons) Act 1978. If we were to put such homes back into rating they would almost certainly be exempt by virtue of that Act, so in practice the amendment would have a limited effect. I hope I have answered most of the points which my noble friends and the noble Lord, Lord Ross, have raised.
5.30 p.m.
Lord McIntosh of Haringey: I had not intended to intervene in what are to some extent, as the Minister said, marginal matters; but I was appalled by something the noble Lord said about bed and breakfast accommodation. Do the Government intend that those who offer one or two rooms as bed and breakfast accommodation in the summer should not only be subject to the personal community charge for the house in which they live but should he solemnly assessed for non-domestic rating on the basis of one room which may be occupied for a total of a month or two through the summer and then revert to being family accommodation for the rest of the year? I cannot believe that the Government can seriously mean that. It would be a total nonsense. It would be administratively wildly extravagant. It would act as a deterrent to people offering bed and breakfast accommodation. I cannot believe that if that is the Government's intention they have consulted the tourist boards or the tourist industry.
Lord Glenarthur: I am not sure that the situation does not already exist in much the same way for accommodation which is used only occasionally. As things stand, if it is used occasionally it may not come to the attention of the valuation office and so could escape rating. It is not a new problem; it exists now. It is not one which arises from the changes brought about by the Bill.
Lord McIntosh of Haringey: That is not the case. Property is being rated anyway because we have a domestic rating system. The domestic rating system is being abolished and replaced by the community charge, which does not involve any rating assessment. In order to catch the people who provide a service to this country, the tourist industry and probably the balance of payments, these places will have to be solemnly visited, rated and assessed in a way they would not otherwise be. I cannot think that that is what the Minister intends. I should be grateful if he would write to me about the matter before we reach another stage of the Bill.
Lord Jenkin of Roding: Perhaps I may have a copy of the letter because the same point had occurred to me. It is highly unlikely that in the case of a farmhouse or country cottage, which is occupied and where there is a room available for letting for bed and breakfast, anyone has for one moment thought of denying to part of that house the 18.5p domestic rate which would of course be applicable if the house were wholly rated as a domestic hereditament. If it were not, it is difficult to see why it should now come in for rating under this part of the Bill.

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The noble Lord, Lord McIntosh, had a point when he said that the tourist boards might well have something to say about the proposal, because a great deal of summer accommodation in holiday areas is offered by people who have a spare room or couple of rooms and want to turn an honest penny. I cannot believe that it would be right that the whole machinery of the non-domestic rating system should be brought to bear on a couple of bedrooms or a bedroom and a sitting room. It does not seem to me to make sense. I hope that when my noble friend looks at this matter again he will feel able to come to the same conclusion.
Lord Tordoff: I wonder whether the Minister is aware of the casual basis upon which many of these bed and breakfast accommodation places work. Some of them may be used only half a dozen or a dozen times in a whole year. Presumably, from what the Minister said, those people would be swept up into this great net at the same time. Please may we also have a copy of the letter?
Baroness Stedman: I had not thought that the amendment would produce this hare and run as long as this. Having raised the matter, may I also have a copy of the letter?
Lord Glenarthur: I have not yet committed myself to writing at all. but I certainly shall in view of the enthusiasm with which the letter will be greeted. I should like to look at what has been said. Obviously some important points have been raised. I cannot leave the matter at that. As I understand it, such bed and breakfast properties would only be rated in relation to those rooms for the period during which they are offered as bed and breakfast accommodation.
Perhaps I may finish before the noble Lord, Lord McIntosh bursts into fits of laughter. There is another side to the matter. which is that if it were not to be done in that way it seems that the system would discriminate against the larger-scale bed and breakfast operators. My goodness! I realise as one who has had responsibility for tourism in at least part of the country for some time just how valuable a job is done by those people. The suggestion would discriminate against larger-scale bed and breakfast operators. Having said that, I shall take up the offer of a letter made by the noble Lord, Lord McIntosh, and write to him to explain the point in detail.
Lord McIntosh of Haringey: I am most grateful to the Minister. Will he accede to my other request, which is that the letter should come before Report stage? Secondly, will he consult the tourist hoards? Even if he consults only the major tourist boards it would be a step in the right direction.
Lord Glenarthur: I guarantee to write speedily to the noble Lord in the course of the next day or two when I have reflected upon what has been said. I shall also establish precisely what consultation has taken place on this issue with the tourist boards and make that part of the letter.
Lord Stanley of Alderley: Before my noble friend withdraws the amendment, I must say that I was somewhat staggered by the point brought up by the noble Lord, Lord McIntosh. I had assumed that the position would continue as it is now and that ordinary bed and breakfast would not attract any charge. Perhaps I may ask my noble friend two questions. First, will he accept the principle of my amendment, which is for what I call fair long-term holiday letting to be rated under the non-domestic rate? Because, as I understand it, when the rating officer comes round to rate he will have a fair idea whether that flat or holiday accommodation will be let for a month, two months or three months, and will set the charge as such. I hope that my noble friend will feed that in. My next question is one which my noble friend probably will not like, but I should like to have an answer to the question whether such properties will be rated under the national non-domestic rate by Report stage, if possible; otherwise, I shall feel obliged to table a similar amendment again.
Baroness Faithfull: Perhaps I may ask a question. We have talked about bed and breakfast in terms of the tourist trade, but what about bed and breakfast for homeless families?
Lord Glenarthur: My noble friend has introduced a further complication. but an important one, to what I thought was a fairly self-contained clement to do with self-catering accommodation. which is what the amendment of my noble friend Lord Stanley is all about. Perhaps I may also look at that point. It is possible that some homeless people use that type of accommodation in that way, but I cannot give my noble friend a categorical answer on that immediately. I undertake to look at what she has said.
As regards responding on the detail of the point of my noble friend Lord Stanley about the self-catering accommodation. I have told the noble Lord that we are looking at this now in the light of discussions which the department has had with the representatives of the self-catering industry. I have no doubt whatsoever that my right honourable friend and indeed my noble friend Lord Caithness will note carefully the urgency with which my noble friend seeks an answer. Beyond that I cannot go.
On Question. amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 123ZE:
Page 31, line 8, leave out paragraphs (b) and (c).
On Question, amendment agreed to.
[Amendments Nos. 123A and 123AB not moved.]
Lord Glenarthur Lord Glenarthur moved Amendment No. 123B:
Page 31, line 10, at end insert—
("(2A) A pitch for a caravan is domestic property if one or both of the following conditions is fulfilled—

(a) it is part of a site which is a protected site;

(b) it is occupied by a caravan which is the sole or main residence of an individual (construing sole or main residence in accordance with section 2 above).

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(2B) A mooring is domestic property if it is occupied by a boat which is the sole or main residence of an individual (construing sole or main residence in accordance with section 2 above).").
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 123C:
Page 31, line 12, at end insert—
("(3A) In applying subsection (3) above no assumption may be made that a site which is not a protected site will become one.
(3B) Whether anything is a caravan shall be construed in accordance with Part I of the Caravan Sites and Control of Development Act 1960.
(3C) Whether a site is a protected site shall be construed in accordance with Part I of the Caravan Sites Act 1968.").
On Question, amendment agreed to.
Clause 56, as amended, agreed to.
Clause 57 [Interpretation: other provisions]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 123CA:
Page 31, line 35, leave out subsection (7) and insert—
("(7) A relevant provision applies on a particular day if (and only if) it applies immediately before the day ends: and for this purpose relevant provisions are sections 39(6) and (Discretionary relief) (2) above.").
On Question, amendment agreed to,
The Earl of Caithness The Earl of Caithness moved Amendment No. I23D:
Page 31, line 41, at end insert—
("(8A) A hereditament shall be treated as shown in a central non-domestic rating list for a day if on the day it falls within a class of hereditament shown for the day in the list; and for this purpose a hereditament falls within a class on a particular day if (and only if) it falls within the class immediately before the day ends.").
The noble Earl said: I beg to move Amendment No. 123D. This is a purely drafting amendment to put right an oversight in the drafting of Clause 45(2). I beg to move.
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 123E:
Page 31, line 41, at end insert—
("(8A) A charity is an institution or other organisation established for charitable purposes only or any persons administering a trust established for charitable purposes only.").
On Question, amendment agreed to.
[Amendment No. 123F not moved.]
Clause 57 agreed to.
Clause 58 [Charging authorities affected]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 123:
Page 32, line 7, leave out ("£130") and insert ("£200").
The noble Lord said: This amendment seeks to reduce the number of authorities to be included in the provisions of dual rating.
Throughout the process of developing this legislation the Government have been aware of the need to provide for a swift but smooth transfer from domestic rates to the community charge. Equally, there is a need to ensure that the transition does not impose too sudden or excessive burdens particularly
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on those people who have not themselves previously been responsible for paying rates. In November last year, after considerable public debate and careful consideration of the issues, the Government announced that they would be introducing the community charge at one go for most areas of England and all of Wales, so that the full benefits of the new system would be realised as soon as possible. There will, however, be a safety net which is contained in Part VI of the Bill; this is designed to moderate changes in the burden of paying for local government between one area and another.
The size of the community charge, when the new system is fully in force, will relate directly to the level of spending in each area in relation to the Government's assessment of what needs to be spent to provide a standard level of service. In some parts of London—either as a result of the spending behaviour of the boroughs concerned, or ILEA, or both—the full community charge would be very high.
Introducing the community charge in one go in these areas would place a substantial additional burden on some adults within the first few years after 1990. We therefore decided that it would be right to phase out domestic rates over a number of years in areas where spending is highest. This will mean that the burden will transfer gradually from ratepayers to community charge payers. It will also mean that boroughs in inner London will have time to reduce expenditure to a more sensible level before the community charge is fully in place in 1994–95. The proposed abolition of ILEA in 1990 will provide a major opportunity for them to take charge of their own spending levels. This will ensure that charge payers never need to face bills as large as those implied by 1987-88 spending levels.
Since the Bill was first published we have given further consideration to the level of overspending that would attract the provisions of Part IV, both in the light of representations made by authorities affected and in the light of preliminary returns of expenditure plans for 1988-89. As my right honourable friend announced in another place, we have concluded that it would be right to move the threshold for inclusion in these transitional arrangements from an overspend of £130 per head to one of £200. This would remove the authorities of Kensington and Chelsea, Waltham Forest, Wandsworth and Westminster from dual running.
We are clear that the spending plans of these authorities are such that the levels of the community charge to be raised in these areas during the early years will be sustainable. The authorities concerned have given us sufficient assurance that they will be able to reduce their spending to bring the charges down to levels not dissimilar to those found elsewhere. For other authorities still in dual running, we are proposing, by an amendment to Clause 94, to make a grant available to support the costs of administration. I beg to move.
5.45 p.m.
Lord Graham of Edmonton: I rise simply to say that what the Minister has proposed goes some way towards ameliorating the impact of the nexus of the

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residual rating idea. However, I am bound to say that the arguments that he has used for excluding the four authorities that he has mentioned do not square with the facts. The basis upon which the Minister has asked the Committee to believe that this special treatment for those four should be given—and I wrote this down—is where spending is the highest. These are not the ones where the spending is the highest.
I support the amendment, but there is an amendment down immediately following this that Clause 58 shall not stand part of the Bill. It is in the name of my noble friend Lord McIntosh. I intend to speak more fully and very strongly at that stage about the clause.
Lord Tordoff: Perhaps I may ask for clarification for the Committee. Was it the case that the noble Lord was also speaking to Amendment No. 144B?
Lord Glenarthur: I apologise to the Committee. I should have said that I was speaking to Amendment No. 144B, which is the amendment that relates to the clause after Clause 94, a new clause.
On Question, amendment agreed to.
On Question, Whether Clause 58 shall stand part of the Bill?>
Lord Hayter: There are four names down, one of which is mine, to oppose the Motion that this clause shall stand part of the Bill. We wish to delete the whole of this residual rating, but it is better to discuss it in connection with this clause.
The idea behind residual rating is that the community charge be phased in while rates are phased out. That is the term that is used; it is residual rating. The background to residual rating is rather strange. First, in the Scottish Bill, apparently it was going to apply throughout the whole of Scotland. Then by a miracle it was removed so that Scotland has no residual rating at all.
The next thing that happened was that the Government proposed, in the Green Paper called Paying for Local Government, to phase in the community charge by having a general scheme of residual rating throughout the whole of England and Wales. This scheme was intended to act as a cushion to reduce the effects on households where the charge would have a substantial financial impact as compared with the rates they had been paying.
The most obvious example of this would be in households with adult children whose presence at home had not altered the rates Bill but who will have an effect in connection with the community charge. So phasing in this charge over a number of years, with a progressively reducing residual rating element, meant that for many households the impact of the change to the community charge would be spread over a number of annual instalments. Then at that point the Government had second thoughts. I am not quite sure why, and perhaps the Minister will be able to explain that to us. With the publication of the Bill the Government abandoned the idea of residual rating altogether for England and Wales except for
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13 London boroughs and the City of London. Now, as we heard in the discussion on the previous amendment, they have had third thoughts, and those 13 London boroughs and the City of London have now been reduced to nine boroughs and the city. That reminded me somewhat of Agatha Christie's play,The 10 Little Nigger Boys. Perhaps we might be able to bring this number down to the point where, in our opinion, residual rating is of no great concern.
The London Boroughs Association and the Association of London Authorities together represent all the remaining authorities now subject to residual rating. We have checked with them, and neither association believes that a real case can be made out for retaining residual rating at all, in view of its abandonment for England and Wales generally. They therefore feel it should go. That view is shared by CIPFA.
Members of the Committee might well ask why, if the Government are trying to be kind, these remaining boroughs and the City of London do not want this concession. There are four reasons for that. First, as the basis for retaining the residual rating has been that without it some households would experience steep increases if the charge were introduced in one go, that should mean that the authorities to which the residual rating will apply are the authorities with the highest projected community charge. But this is not the case. For example, the projected charge for Greenwich in 1990, using the Government's own figures, is £265.
Again using the Government's figures, there are no fewer than 26 authorities not subject to residual rating which have higher projected charges. If a resident in Greenwich needs to be cushioned against paying £265 for the first time in 1990, surely the residents in those 26 other authorities who will be paying greater amounts need the cushion even more? The inconsistency is even greater in the case of Hammersmith and Fulham, which will have to operate the residual rating scheme. That authority has a projected community charge in 1990 of £299. The Committee will hardly believe this, but there are 103 authorities in this country not subject to residual rating with higher projected charges than Hammersmith and Fulham. It is very difficult to resist the temptation to think that this is illogical. I was almost inclined to say that it is damned silly.
If one considers the effect of the Government amendment to Clause 58, which has the effect of reducing the number of authorities subject to this residual rating from 14 to 10—the ones we have just heard about—one sees that the anomalies multiply. Taking again the basic premise on residual rating—that it should act as a cushion for people paying for the first time in 1990—logic would indicate that the four authorities that we have just been hearing about which have been taken out should be those with lower community charges than the 10 which remain. But that is not the case. I shall not give the Committee the figures; it can take my word for it.
The second reason why these authorities and the City of London do not want residual rating is extremely important. Residual rating, as one will discover if one takes the trouble to read the nine

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pages in this Bill on residual rating and the 16 different clauses, will generate a very considerable administrative burden. Of course it will be costly to implement because every authority will have to recruit, to train and to pay additional staff to administer two different sets of bills and two different sets of this complex rebate system. They will need that staff only for a matter of four years. It will not be all that easy to get individuals to come for four years when they know that they will be kicked out at the end of that period.
As regards the computer side, it is again obvious that the software used in the computers for the residual rating will apply only to those 10 authorities we have just been talking about. The people who manufacture the software will not be in all that much of a hurry to satisfy that particular need. All of this will come at a time when the community charge is being introduced for the first time and when education, competitive tendering and housing legislation also have to be tackled. The scale of the additional work involved in implementing residual rating can be judged by the fact that a whole Part of this Bill is devoted exclusively to this subject.
Now I come to the third reason to support the view that residual rating should go. The basis of selection for residual rating in Clause 58 hinges on a local authority's spending per head above set standard criteria, using 1987 to 1988 figures. Even if the formula used in Clause 58 identified the authorities with the highest community charges in 1990, which I have demonstrated it does not, the use of these figures would still not necessarily give a proper indication of the authorities which should be selected. There are so many things that can change before 1990 and which could reduce the community charges of those authorities now subject to residual rating. From April 1989, for example, polytechnics will be funded directly by the Government and not through local authorities. Then there are the consequences of the abolition of ILEA and other matters. Those are all facts which confuse the issue.
The fourth reason against residual rating is associated with that word which has been used already this afternoon—accountability. For four years after the introduction of the community charge electors in the authorities subject to residual rating will not be able to make straight comparisons between the financial performance of their own authority and that of other authorities where the normal community charge is operating. Given that one of the main reasons for introducing the community charge is to increase accountability, that is surely undesirable and contradictory.
So, if there were cogent reasons to require (by the way, this is compulsory) these 10 authorities to operate a complex dual system of rates and the community charge when it has been dropped for all other authorities, Part IV of the Bill could be justified. But in my opinion such reasons simply do not exist. Residual rating is a complication which these remaining local authorities should do without. They want to do without it, because they think that it is in the long-term interests of the ratepayers concerned.
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I said last week in connection with another amendment that there was a great element of guesswork in this Bill. I have just provided a few of the facts, but perhaps in the Government's eyes there is still some guesswork. So why should the Government be so obdurate? Why not put the onus on the other side—the London Boroughs Association, the Association of London Authorities and the City of London? If they are right, the Government will have graciously given them their head. If they are wrong, the Government will have nothing with which to reproach themselves. The Government had offered residual rating and those organisations had refused it; therefore, it would be their fault. For all the reasons I have put forward, I feel convinced that residual rating is wrong and that we should oppose this particular clause as a gesture of our opinion on the subject.
6 p.m.
Baroness Faithfull: I rise to support the noble Lord, Lord Hayter. As he has said, residual rating was originally to apply to all authorities in England and Wales. Then, as he went on to say, it was to apply to 14 London authorities. Now it is just 10, and of those 10 four have been removed today.
As residual rating was designed to mitigate the effect of the redistribution of the tax burden in local authority areas where this would have the most pronounced effect, one might expect that these authorities now selected for residual rating would be those facing particularly acute redistributive effects from the community charge. It appears, however, that the Government had no general data about redistributive effects and relied on a simpler approach.
The most acute case in the Government's view would be that of a non-dependant currently making no specific contribution to the household rate bill and facing a full community charge bill for the first time in 1990. On that basis, the new system would he most in need of the cushioning effect provided by residual rating in those areas with the highest community charge. However, as the noble Lord, Lord Hayter, has said, the authorities selected are not those which face the highest community charges in 1990. That is because government grants will have the effect of phasing in the full community charge during 1990 to 1994. Clearly the Government have adopted the wrong approach in selecting those authorities to which residual rating is, in its own terms, appropriate. The fault lies in the approach.
The fault in the approach is the use in Clause 58 of the simple spending-per-head formula as the criterion for applying residual rating. That may act as a pointer towards high community charges ultimately. However, it wholly ignores the effect of government grants between 1990 and 1994—the very period for which residual rating is intended. Those grants will affect the amount of community charge which people in an authority will have to pay. That is exactly what we are concerned about with residual rating.
The government amendment to Clause 58 will, as the noble Lord, Lord Hayter, has said, have the effect of taking four boroughs out of the residual rating

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scheme. As the Committtee has heard, they are Kensington and Chelsea, Waltham Forest, Wandsworth and Westminster. Without residual rating, the community charge for Westminster in 1990 to 1991, using the Government's figures, will be £471. By 1994, when residual rating ends, it will be £396. By comparison, in Islington, for example, the community charge will be £294 in 1990 to 1991, rising to £483 in 1994 to 1995. The 1994 to 1995 figures will be the same whether or not residual rating applies because the residual rating scheme only operates up to 1994.
We therefore need to concentrate on what happens to the community charge in the intervening years. We find that an adult son or daughter living in the family home in Westminster will be paying in each of those years up to 1993 to 1994 substantially more than his or her counterpart living in Islington. Using the Government's own figures, the Westminster resident will be paying £312 more in community charges over the transitional years when residual rating applies. Yet according to the government amendment, the person in Westminster does not need to be cushioned while the person living in Islington who is paying less does. My noble friend Lady Gardner of Parkes would no doubt support me, if she were present in the Chamber, in saying that that is quite illogical.
I have not picked that example because it is isolated. Hammersmith and Fulham has a projected community charge in 1990 of £220, rising to £465 in 1994. Wandsworth figures for the same period are £217 and £435. Hammersmith and Fulham will be subject to residual rating. Wandsworth will not. That seems difficult if not impossible to understand and to justify.
From what the noble Lord, Lord Hayter, and I have said, since the Government have decided that people in the four London boroughs taken out by the amendment to Clause 58 would not be protected by residual rating it must logically follow that residual rating should go in the other authorities as well. Therefore, I conclude by saying that, first, if one considers people paying rates and people who will be paying a community charge, they will not be greatly helped. Secondly, the situation is quite illogical and, as the noble Lord has said, it will be very expensive. Therefore, I believe that the clause should not stand part of the Bill.
Baroness Stedman: I also believe that the clause should not stand part. We must look at the clause in terms of the 1986 Green Paper. It was then envisaged that there would be a 10-year period of phasing in for the community charge. In July 1986 the Government announced that the 10-year period would be reduced to four years. In November 1987, that proposal was abolished in favour of introducing the community charge in one instalment except for 14 London boroughs and the City of London.
As the noble Lord, Lord Hayter, has said, as a result of the previous amendment the Government have reduced that number by four. That seems to raise the question of whether we should have residual rating at all. The London Boroughs Association, together with the City of London and CIPFA,
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oppose the idea of residual rating. The noble Baroness, Lady Faithfull, asked whether the Government had taken note of the effects of their proposal. What data have the Government used concerning the redistributive effects of the proposal? Have they used data only from per capita high spending authorities? Why has the City of London been included? There are only 5,000 residents within the City of London. There are some 300,000 day workers for whom the City must provide a variety of services. In addition, facilities such as the Barbican are of interest and use to the whole of London.
The noble Earl, Lord Jenkin, when he was Secretary of State, said on 25th January 1984 that the GRE was based predominantly on the size of an area's resident population. That is a largely irrelevant statistic in the City of London. How did the City come to be included in the system of residual rating? The community charge will not be easy to administer. It will be expensive for those authorities who must operate it and, at the same time, implement residual rating. Where will the extra staff come from? They will he expected to serve inner London boroughs, some of which are already rate capped. Who will pay for the extra staff? Surely those people will realise that there will be no jobs for them after five years when residual rating is phased out. Will that encourage them to stay with the authorities or will they look for jobs with a long-term future elsewhere? Are the Government satisfied that with such a small number of local authorities involved the computer software for billing and housing benefit will be ready in time? Indeed, it is likely that many of the people who will depend on housing benefits will not even know what their entitlement is when bills arrive.
The Government have said that a specific grant will be available towards the costs of collection. Will that specific grant cover all the costs? Not only will the extra staff have to be recruited, trained and paid: they will also have to be housed somewhere to carry out the job. What are the extra costs for the office accommodation that will be provided? Residual rating will not make authorities more accountable and the relationship between spending levels and the community charge will be very obscure. Have the Government thought, as the noble Lord, Lord Hayter, asked, of the extra burdens they are placing on London boroughs as a result of other legislation which is going through, or has gone through, this Chamber? What about the financial, staffing and accommodation problems involved in the abolition of ILEA and in the setting up of new education departments within the boroughs? What about new capital controls, new housing legislation and the compulsory competitive tendering which now has to be undertaken? We are overloading local authorities at a time when there will be a major problem in implementing satisfactorily those responsibilities which we have already placed upon them.
Finally, since the Government changed their minds about Scotland and there is no residual rating in Scotland why do we have to have it here?
6.15 p.m.
Lord Graham of Edmonton: Although he probably has a brief which says "resist", I very much hope that

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the Minister is prepared to listen not only to views expressed from the Conservative Benches, the Cross Benches and the Alliance Benches but also from the Labour Benches. I honestly believe that—outwith the main raison d'étre of the Bill, which is not in dispute in relation to this clause—he ought to take on board what people outside this Chamber tell us will be the impact of the Bill.
Those speaking on this issue, including myself, are not only repeating to the Committee what we have been told but we are also using our intelligence and experience in assessing that information. The more I look at the burdens which the Government are piling not only upon themselves but also upon good hardworking local council officers and councillors the more I despair. The whole basis of this clause may very well have started off with the Government feeling that there was a need for an additional cushion, but there are safety nets and other measuring rods. This may very well have been seen by the Government and those who advise them as something that would be right. But as all other speakers have pointed out, once down to the nitty gritty it was quite clear that this was not welcomed. It was argued against and the arguments were accepted by the Government save in respect of 14 authorities.
In the amendment just agreed which I support the Government have recognised that there is no need for the four named authorities to be included. The Association of London Authorities—of which I have the honour to be president—and the London Boroughs Association, which together represent all the London authorities, and CIPFA, say that they do not want anything to do with residual rating and Clause 58.
The fact that those who have to try to operate it do not want it will not of itself be sufficient argument to move this Government. Powerful arguments have been presented. I cannot understand why, if the Government decide to resist the objections to Clause 58 standing part of the Bill, they are not prepared to take on board the concern about the burdens which those outside the Chamber tell us will be placed upon them.
Initially, when the Government introduced the concept they rested on the premise:
"The move from rates to a community charge will inevitably affect the personal finance of households since single-adult households gain at the expense of multiple multi-adult households. The Government considers that the change should be made gradually by introducing the community charge initially at a low level".
The noble Lord, Lord Hayter, and the noble Baronesses, Lady Faithfull and Lady Stedman, have pointed out that things have moved on since then. Great changes have taken place which will affect the whole basis and raison d'étre of residual rating. Perhaps I may give the Minister just one example which I believe has a bearing on what we are arguing about. When the Government produced their estimates of the 1987–88 community charge they said that, for example, in Camden the charge would be £782. Yet the local authority associations say that in 1988–89 the community charge estimate for Camden is £639, which is £143 lower. That reduction is due to changes which the Government have brought about.
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The Government estimate of the community charge for Hackney for 1987-88 was £691; the local authority associations estimate a reduction to £577. For Lewisham the reduction is from £677 to £577 and for Tower Hamlets from £639 to £636. The Government are sticking to the principle when not only the ball game has been changed and the goal posts moved but the whole premise upon which the need for residual rating was based has gone.
The point I want to labour, but not at great length, is the impact upon authorities which over the period from 1990 to 1994 are faced with horrendous problems and burdens. Those of us with some experience in local government will already feel sympathy for the authorities. As has been pointed out to the Government, the picture has changed. The situation with regard to rate limitation is one change, the abolition of ILEA, the funding of polytechnics and the needs assessment are others. Who will tell us what the needs assessments will be? No one can give a firm answer on that particular point.
I hope that the Government consider sympathetically what authorities have to undertake. Those 10 authorities will be the only ones which have the job of dual running. Three systems will be required: a system of dual running for rent rebates, rate rebates and the community charge benefit. I am told by the community charge implementation subgroup that decisions have not yet been taken on the details of a rebate scheme for those authorities which are affected. It is quite clear that the DHSS will have to be involved because of the interlocking nature of the impact upon local authority administration of those matters.
How can the Government plan to introduce residual rating without having a clear view as to how important aspects of it will work? An hour ago the Government accepted the sense of what the Committee said in respect of the amendment moved by the noble Baroness, Lady Gardner of Parkes; namely, that when the authorities examine the impact of the Bill as it affects them they come up with what appear to us to be quite unacceptable consequences. In supporting the proposal that this clause should not stand part of the Bill, like all of those who have spoken we do so as a device. It is a device to register publicly and plainly that we are unhappy with the clause and that we do not want it. I speak only for myself, but if the Minister were able to say anything when he replies that would satisfy those outside the Chamber who have to implement the provision I am prepared not to press the issue to a vote. Unless he does so I am prepared to press it to a vote.
Lord Glenarthur: When I moved Amendment No. 123G I explained the Government's basic thinking on the need for phasing in the community charge over a four-year period in certain high-spending authorities. I understand the point made by the noble Lord, Lord Graham, and other noble Lords, about the need to protect local authorities and I accept the force of their argument, but I must point out that the overriding need is to protect the charge payer, particularly the first-time charge payer, from the very high levels of charge that they would otherwise experience in the early years of the new system. The spending levels of

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the authorities concerned are very high indeed, whichever way one looks at it, and whatever the excuses for that expenditure may be.
This clause provides the basis for the selection of authorities in the provisions of Part IV. The authorities concerned will need to know the basis on which they are to raise revenue at an early stage following the enactment of this legislation, so that they can plan to establish or maintain the necessary procedures for collection. The clause allows for this. It does so by selecting authorities on the basis of current levels of overspending relative to the authorities' grant related expenditure assessments for 1987–88. These figures are already established, as therefore is the selection of authorities. As I mentioned earlier, the figures that are now becoming available for 1988–89 change the picture in detail, and have given us the confidence to raise the threshold of overspending to £200. I am glad that the noble Lord, Lord Graham, at least welcomes that advance. For the remaining authorities, although there are some reductions in expenditure, it is continuing to run at excessive levels and we do not see signs of it coming down to acceptable levels before 1990.
Lord Graham of Edmonton: I am grateful to the Minister, but if he rests his case on the basis that the purpose of residual rating is to reduce the final community charge bill to the charge payer, that does not square with the facts. I am told, for instance, that in Camden with no residual rating there will be an increase of £80. With residual rating it will be £171, because once the safety nets have gone and one arrives at the year 1994 there is no assistance whatsoever. In Lewisham, with no residual rating it is £76 and with residual rating it is £144. I do not know from where the Minister gets his figures. My figures come from the local authorities—the LBA, the city of London and the ALA—who will have to make the system work.
Lord Glenarthur: So far as I can give an answer in relation to other figures which I have not seen validated, I must say that I have not yet completed deploying my arguments and I shall endeavour to do so in due course. What the noble Lord says bears on the present spending levels and the course of them, but I do not think it is necessarily profitable to run over old ground again.
Before picking up some of the specific arguments that have been raised, perhaps I may answer one general point; namely, the concern expressed by authorities about the burden of operating both residual domestic rates and the community charge. We recognise that extra work will be involved, which is why we proposed Amendment No. 144B, so as to make available a specific grant to support the extra costs. With that provision we believe that authorities will be able to deploy the necessary resources to do both jobs. It is true that the community charge is new ground for them, as it is for all authorities, and officials are taking considerable pains to guide authorities in its implementation. But the management of residual domestic rating will involve
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little more than a continuation of the existing system, albeit in a simplified form. Some changes in procedure will be required and officials will be discussing with the authorities how best to implement them so as to ensure the smooth operation of residual domestic rating.
As I have said, the clause seeks to protect the charge payer. I am therefore surprised that the authorities which object to these provisions include those which profess the greatest concern for protecting the interests of their residents. I think that they should welcome dual running rather than treat it as an imposition.
The noble Lord, Lord Hayter, suggested that we should abolish altogether dual running, and cited Scotland as an example. I know that the London authorities have expressed an interest in being allowed to move to the community charge in one go, but their levels of initial community charge would be very high and would increase substantially over the first few years of the system. The authorities exempted by the amendment that I moved earlier have signified their determination to reduce spending and thereby hold down the level of the charge. The fact is that others have not given that signal. As I have already said about three times, our concern is to protect the charge payer in those circumstances.
I am aware of the fact that a request has been made by local authority associations for the abolition of dual running. It was only fairly recently, I understand, at a rather late stage in the development of this legislation, that the associations made such representations. I can assure the Committee that my right honourable friend is giving careful consideration to the arguments put to him and he will be responding to the associations as soon as possible.
Part of the argument put by the noble Lord, Lord Graham, which he used particularly in relation to the earlier amendment that I moved, seemed to be that the first year community charge would be higher in some authorities not covered by Part IV of the Bill than it would have been in some who were covered had there not been dual running, and he cited examples of authorities outside London. It may seem anomalous that in a few areas outside London the first year community charge is likely to be higher than that which would have been found in some inner London boroughs had they moved to the community charge in one go, but that is an effect of the safety net provisions which ensure that the impact of the changes in grant and non-domestic rates income are phased in over that four-year period.
The initial community charge of the authorities outside London will include a net per capita contribution of £75 in the first year which will reduce progressively, thereby lowering the level of the community charge in that area. Conversely, the computed community charge payable in inner London is moderated by a very substantial contribution from the safety net in the first year. As that disappears their community charges will rise to levels very much above those found elsewhere. To protect the inner London charge payer from the prospect of those excessive charges we need the provisions for residual rating to give the charging

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authorities time to bring their expenditure under control. As for the suggestion made by the noble Lord, Lord Hayter, when he queried the ranking of first year charge levels, I believe that that point has already been covered by the answer that I have just given.
Perhaps I may return to a point that was made by the noble Baroness, Lady Stedman, when she referred to the City of London. She asked why the city is included in dual running. I must tell her that it is partly because it bears the burden of ILEA overspending, a fact which the noble Baroness certainly did not mention in her arguments. I hope the Committee will agree that its first year charge of £477 is a very high community charge. The fact that it bears an element of burden on behalf of ILEA is an important factor which must be taken into account.
My noble friend Lady Faithfull asked about Westminster. She is quite right. Although Westminster has a high initial charge level, it is a major contributor to the safety net. Its charge will go down during the transition. Other authorities in dual running benefit from the safety net and their charges will go up. So there is movement in each direction across the board. I hope that that is at least in part an answer to my noble friend.
On the question of administration, and the need to administer two systems, a point clearly made by the noble Lord, Lord Hayter, I accept that dual running will involve more work, although the extra work is in the nature of maintaining the existing domestic rating system rather than running a new one.
With regard to staff, we are talking about fairly small numbers. It is interesting to note that many of the authorities about which we are talking have over the past few years increased their staff quite substantially. It is therefore my belief that they should be able to cope.
In the same way I believe that they should be able to manage on the matter of computing. With residual rating we are only talking about the adaptation of existing computer systems to run for a further four years. Although my knowledge of computer systems is not so great as that of the noble Lord, Lord McIntosh of Haringey, I believe that it is easy to overstate the problems to which local authorities are drawing attention on this point.
I have to say to the noble Lord, Lord Hayter, yes, there will be a number of challenges for local authorities to face with regard to burdens of implementing other legislation. I have no doubt that they will manage. But I am sceptical that the establishment of a new system of educational administration will have much impact on how residual domestic rates are collected because that, after all, is a continuing task.
The noble Lord, Lord Hayter, also suggested that the selection criteria were wrong. If I understood him correctly, he hinted that the wrong year was being used. Authorities will need to know how they are to raise revenue in 1990–91 as soon as possible and we therefore need firm criteria for their selection in the Bill. Although the 1988–89 budget data are likely to be published shortly, we do not expect them to show any significant change in the ranking of authorities to
66
be included in dual running. There are likely to be some substantial reductions in the full community charge levels when computed on the 1988–89 data. However, these will still leave authorities' charge levels very much higher than those of authorities outside dual running. We hope that the downward trend will continue in future years. Rates limitation may need to continue to play its part although this can only restrict the worst overspending. However, without a clear determination to reduce spending on the part of the authorities concerned, it is difficult to see how spending could be brought down to reasonable levels by 1990.
I am not sure whether I heard the noble Lord, Lord Graham of Edmonton, correctly. If I understand correctly what he said about the increase in charges, he was comparing the year on year increase with and without residual rating. The former—with residual rating—starts from the base of a low first year charge—about£100—and rises year by year as residual rates disappear. They are of course greater than the rises which would occur if only the disappearance of the safety net were being considered. But surely it is better to give the charge payer as much protection as possible in the early years for the reasons that I gave in answer to the earlier amendment. That is the time that they will face the initial impact of the community charge.
I conclude by saying I believe that it is extremely important that this clause—with all that it does to protect the charge payer, for whom a great deal has been said during the passage of this Bill—stands part of the Bill. We have, I believe, selected the authorities most in need of these provisions. We are providing the resources to allow them to manage the provisions effectively. We have heard that expenditure may go down. That is to be welcomed, even though it is mostly by encouragement and perhaps by the Government's efforts to persuade them, rather than the authorities' own. I believe that the charge payers will welcome the cushioning which is provided here, while still recognising where the responsibility for sensible spending rests.
I urge the Committee to consider carefully the point about the charge payer. His interest must he protected. I understand the arguments about local authorities. I believe that I have met most of the arguments that have been put forward. I beg to move that this clause stand part of the Bill.
6.30 p.m.
Lord Graham of Edmonton: Before the Minister sits down, perhaps I may say that I am staggered at what he has said on the problems that we have put to him. He sums it up in the phrase, "I have no doubt that they will manage". This is typical of what the Minister and his colleagues have said throughout this Bill. They have recognised the burdens. They have recognised the changes. They have recognised the punishment. But they have then said to local government, "We have no doubt that you will manage".
The people whom the Minister has no doubt will manage are telling us that they cannot manage because of the burdens that are being placed upon

67
them. When the Minister seeks in a different context to put the burden of the residual rating system on London authorities, what he has failed to perceive, and to take advantage of as a politician, is that there is a new realism about. The Minister can say what he likes on how that has come about. However, there is a new realism in London local government. It recognises the realities. It recognises not only that this Bill will become an Act but that local government has major responsibilities, as it always has had. It recognises that it has to come to terms with these responsibilities.
I do not speak on behalf of Conservative authorities, but Labour authorities are arguing this point also. All authorities are saying, "We do not want residual rating". The Minister is saying, "Whether you want it or not, we want to add this additional veneer of control, or tightness". On the figures that are produced, I say to the Minister, as he may say to me on the figures that are produced for him, this is what I am told. The burden of the Government's actions will make it more punitive upon the community charge payer in those London authorities than otherwise. I wait to listen very carefully to what the noble Lord, Lord Hayter, will say, because his name is first on the list; but I know what I shall do.
Lord Hayter: It strikes me how completely illlogical it is, when one thinks of the hundreds of authorities in England, Wales and Scotland, that one has this enormous part of the Bill dealing with 14 local authorities, now reduced to 10. Logic and common sense are on my side. I shall vote against the proposal that this clause stand part of the Bill.
Baroness Faithfull: Before we take a decision, perhaps I may ask for some help from the Minister. We all want the payers to be cushioned so far as possible. However, we differ on our figures. Is the Minister convinced by the figures that he has used? A number of us have used figures that we have received from local authorities. Ought we not to look into this more carefully before we make a final decision? Is he convinced that the figures he has given are absolutely correct'? Does he not think that we ought to consider them again?
Lord Glenarthur: I do not think that I gave one single figure. Figures have been bandied about throughout the passage of the Bill. The noble Lord, Lord Graham of Edmonton, produced figures, which I do not dispute, about the full community charge values in 1994–95 for Camden and Lewisham. I believe that he quoted one other. I am not sure upon what basis the noble Lord gave the figures in relation to the change that would be effected as a result of moving from the safety-netted provision to a community charge without dual running in 1990. If I had more data on those figures I would certainly look at them, but I do not believe that my figures are in any way incorrect.
Baroness Faithfull: Without quoting figures, what I was saying was that the reason for this residual rating
68
is to cushion those authorities which are having to pay the highest. From the figures we have, it seems to me illogical that residual rating authorities are not necessarily those whose payers are paying the highest. I think that was my only point.
Lord Glenarthur: I will look at those figures, but I do not really think it changes the purpose of Clause 58. The whole object of the exercise is to provide the protection which, as I understand it, my noble friend wants them to have. The figures that we have been using in other discussions on this Bill did not seem to be wildly out of line. The fact is that this is, if you like, a means of safety for those who are paying, for the charge payers, and it is their interests which these provisions seek to protect.
Baroness Stedman: If the noble Lord is to look at figures again, will he also look at some of the briefing which many of us have received, which puts a very different complexion on the matter? We are told that the projected community charge in Greenwich, to which residual rating will apply, is£265. We are also told that there are 16 other authorities around London with projected community charges higher than£265 and yet they are not to be subject to residual rating. We are furthermore told that Hammersmith and Fulham has a projected charge of£229, and yet there are 77 other authorities with a higher figure which are not to be subject to residual rating. Perhaps if those are the figures, and they are substantiated, the Minister will understand more easily why some of us are so concerned about these nine or 10.
Lord Glenarthur: I appreciate that concern and I think that this material has been widely seen. These are complex figures that appear on various charts. I too have one in front of me which goes into the details of which local authorities have budgeted to spend £80 or more at the area level above GREAs in 1987 and 1988. There are whole lists of figures, and the figure of£265 which the noble Baroness quoted for Greenwich is the safety-netted community charge without dual running in 1990. I do not think that that at all removes the importance of what I have said as regards protecting the community charge payer in these expensive local authority areas.
6.43 p.m.
On Question, Whether Clause 58, as amended, shall stand part of the Bill?
Their Lordships divided: Contents, 118; Not Contents, 84.

DIVISION NO. 1

CONTENTS

Ampthill, L.

Caccia, L.

Arran, E.

Caithness, E.

Beaverbrook, L.

Cameron of Lochbroom, L.

Beloff, L.

Campbell of Alloway, L.

Belstead, L.

Campbell of Croy, L.

Bessborough, E.

Carnegy of Lour, B.

Boyd-Carpenter, L.

Carnock, L.

Brabazon of Tara, L.

Carr of Hadley, L.

Brougham and Vaux, L.

Colwyn, L.

69

Constantine of Stanmore, L.

Marshall of Leeds,, L.

Cottesloe, L.

Merrivale, L.

Craigavon, V.

Mersey, V.

Craigmyle, L.

Milverton, L.

Davidson, V. [Teller.]

Mottistone, L.

Deedes, L.

Munster, E.

Denham, L. [Teller.]

Murton of Lindisfarne, L.

Dilhorne, V.

Napier and Ettrick, L.

Dundee, E.

Nelson, E.

Eden of Winton, L.

Northesk, E.

Elliot of Harwood, B.

Nugent of Guildford, L.

Elliott of Morpeth, L.

Onslow, E.

Erroll, E.

Orkney, E.

Fanshawe of Richmond, L.

Orr-Ewing, L.

Ferrers, E.

Oxfuird, V.

Foley, L.

Pender, L.

Fortescue, E.

Penrhyn, L.

Fraser of Kilmorack, L.

Peyton of Yeovil, L.

Gainford, L.

Pym, L.

Gardner of Parkes, B.

Rankeillour, L.

Glenarthur, L.

Reigate, L.

Gray of Contin, L.

Renwick, L.

Greenway, L.

Richardson, L.

Gridley, L.

Rodney, L.

Halsbury, E.

St. Aldwyn, E.

Hardinge of Penshurst, L.

St. Davids, V.

Harmar-Nicholls, L.

Saltoun of Abernethy, Ly.

Harvington, L.

Sanderson of Bowden, L.

Hemphill, L.

Sandford, L.

Henley, L.

Selborne, E.

Hesketh, L.

Sharples, B.

Hives, L.

Skelmersdale, L.

Home of the Hirsel, L.

Stanley of Alderley, L.

Hood, V.

Strange, B.

Hooper, B.

Strathcarron, L.

Hylton-Foster, B.

Strathcona and Mount Royal, L.

Jenkin of Roding, L.

Johnston of Rockport, L.

Swansea, L.

Kaberry of Adel, L.

Swinfen, L.

Killearn, L.

Swinton, E.

Kinnoull, E.

Terrington, L.

Knutsford, V.

Teviot, L.

Lauderdale, E.

Thomas of Gwydir, L.

Layton, L.

Trafford, L.

Lindsey and Abingdon, E.

Trefgarne, L.

Long, V.

Trumpington, B.

McAlpine of West Green, L.

Vaux of Harrowden, L.

Mackay of Clashfern, L.

Vinson, L.

Macleod of Borve, B.

Windlesham, L.

Malmesbury, E.

Wyatt of Weeford, L.

Marley, L.

NOT-CONTENTS

Addington, L.

Foot, L.

Airedale, L.

Gallacher, L.

Amherst, E.

Galpern, L.

Ardwick, L.

Graham of Edmonton, L. [Teller.]

Atholl, D.

Aylestone, L.

Grimond, L.

Barnett, L.

Hampton, L.

Blease, L.

Harris of Greenwich, L.

Bonham-Carter, L.

Hatch of Lusby, L.

Boston of Faversham, L.

Hayter, L. [Teller.]

Bottomley, L.

Houghton of Sowerby, L.

Brooks of Tremorfa, L.

Hughes, L.

Bruce of Donington, L.

Jacques, L.

Carmichael of Kelvingrove, L.

Jay, L.

Carter, L.

Jeger, B.

Cledwyn of Penrhos, L.

John-Mackie, L.

Cobbold, L.

Kilbracken, L.

Cocks of Hartcliffe, L.

Kilmarnock, L.

Davies of Penrhys, L.

Listowel, E.

Dean of Beswick, L.

Llewelyn-Davies of Hastoe, B.

Dormand of Easington, L.

Lockwood, B.

Ennals, L.

Longford, E.

Ewart-Biggs, B.

Lovell-Davis, L.

Faithfull, B.

Lytton, E.

Falkender, B.

McIntosh of Haringey, L.

Feversham, L.

McNair, L.

Fisher of Rednal, B.

Masham of Ilton, B.

70

Mason of Barnsley, L.

Stedman, B.

Mayhew, L.

Stewart of Fulham, L.

Milner of Leeds, L.

Stoddart of Swindon, L.

Monson, L.

Taylor of Blackburn, L.

Morton of Shuna, L.

Taylor of Gryfe, L.

Mountevans, L.

Taylor of Mansfield, L.

Nicol, B.

Tordoff, L.

Northfield, L.

Turner of Camden, B.

Oram, L.

Underhill, L.

Pitt of Hampstead, L.

Wallace of Coslany, L.

Ritchie of Dundee, L.

Whaddon, L.

Ross of Newport, L.

White, B.

Seear, B.

Williams of Elvel, L.

Serota, B.

Wise, L.

Shepherd, L.

Young of Darlington, L.

Stallard, L.

Resolved in the affirmative, and Clause 58, as amended, agreed to accordingly.
6.51 p.m.
Clause 59 [Valuation lists]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 124:
Page 33, line 15, at end insert—
("(2A) Any valuation list maintained by the sub-treasurer of the Inner Temple or the under-treasurer of the Middle Temple under the 1967 Act on 31st March 1990 shall be maintained by the Common Council in accordance with this Part in respect of the transitional period; and for the purposes of this Part the list shall be treated as the Common Council's in respect of the transitional period.
(2B) Before 1st April 1990 the sub-treasurer, the under-treasurer and the Common Council shall take such steps as are reasonably practicable to ensure that the Common Council assumes responsibility for any such list, and that it is accurately maintained, on that date.").
The noble Lord said: In moving this amendment I should like also to speak to Amendments Nos. 126, 127, 128 and 130. These are a series of technical amendments which each have the same purpose. At the present time the Inner and Middle Temples are separate rating authorities for the limited amount of property within their areas. In the future, although they will continue to discharge their functions as local authorities, they will fund this by precepting for their expenses on the Common Council of the City of London. They will not, themselves, be collecting authorities for the community charge or for residual or non-domestic rates.
The residual rating system with which this part of the Bill is concerned relies in part on 1973 valuation lists prepared under the General Rate Act 1967. To provide for the continued collection of residual domestic rates, it will be necessary to transfer the valuation lists currently maintained by the Temples to the City of London, which will then be able to collect the amounts due from Temple residents.
Liability for residual domestic rates is defined (in Clauses 63 and 67) in terms of the liability that a ratepayer would have had under the General Rate Act. For Temple residents this liability relates to the valuation lists formerly held by the Temples. Since these bodies will no longer be collecting rates, it is necessary to transfer the arrangements for the liability of their ratepayers to the lists held by the City; this is what the two new clauses do.
These amendments close a small but important gap in the provisions for residual rating in the City of London. I beg to move.
On Question, amendment agreed to.
Clause 59, as amended, agreed to,
Clause 60 [Hereditaments identified in lists]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 125:
Page 33, line 19, leave out ("entries in its valuation list") and insert (", in a valuation list maintained by it under section 59 above, entries").
On Question, amendment agreed to.
Lord Hesketh Lord Hesketh moved Amendments Nos. 125A and 125B:
Page 33, line 28, leave out ("on") and insert ("for").
Page 33, line 35, leave out ("on") and insert ("for").
On Question, amendments agreed to.
Clause 60, as amended, agreed to.
Clause 61 [Deletion from lists]:
Lord Hesketh Lord Hesketh moved Amendment No. 125C:
Page 34, line 19, after ("in insert ("for any day").
On Question, amendment agreed to.
Clause 61, as amended, agreed to.
Clause 62 [Values to be shown in lists]:
Lord Hesketh Lord Hesketh moved Amendments Nos. 125D and 125E:
Page 34, line 23, leave out ("on") and insert ("for").
Page 34, line 36, leave out ("on") and insert ("for").
On Question, amendments agreed to.
Clause 62, as amended, agreed to.
Clause 63 [Liability]:
Lord Hesketh Lord Hesketh moved Amendments Nos. 125F and 125H:
Page 35, line 2, leave out ("on") and insert ("for").
Page 35, line 44, leave out ("on") and insert ("for").
On Question, amendments agreed to.
[Amendment No. 125G had been withdrawn from the Marshalled List.]
Clause 63, as amended, agreed to.
Clause 64 agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 126:
After Clause 64, insert the following new clause:
("Section 63: the Temples.
.—(1) In the case of a hereditament situated in the Inner Temple or the Middle Temple, section 63 above shall have effect subject to the following modifications.
(2) For subsection (1)(b) there shall be substituted—
"(b) the ratepayer would have been liable to pay anything in respect of a rate in the nature of a general rate as regards the hereditament if this Act had not been passed, the sub-treasurer of the Inner Temple or the under-treasurer of the Middle Temple (as the case may be) had made a rate for the
72
year, and the hereditament had been included in a valuation list in force for the year for the purposes of the 1967 Act."
(3) For subsection (3) there shall be substituted—
"(3) In construing subsection (1)(b) above—

(a) an order of the sub-treasurer of the Inner Temple or the under-treasurer of the Middle Temple under section 55(1) of the 1967 Act (rating of owners) shall be treated as having effect throughout the transitional period if it would have had effect on 1 st April 1990 had this Act not been passed, but

(b) for the purposes of rescission the order shall be treated as having been made by the Common Council, and if in that period the Common Council makes an order rescinding the order it shall be treated as rescinded at the end of the transitional year in which the rescinding order is made."

(4) For subsection (4) there shall be substituted—
"(4) In construing subsection (l)(b) above—

(a) an agreement entered into by the sub-treasurer of the Inner Temple or the under-treasurer of the Middle Temple under section 56 of the 1967 Act (payment or collection by owners) shall be treated as having effect throughout the transitional period if it would have had effect on 1st April 1990 had this Act not been passed, but

(b) for the purposes of determination the agreement shall be treated as having been entered into by the Common Council, and if in that period notice to determine the agreement is given by the Common Council to the owner or by the owner to the Common Council the agreement shall be treated as determined at the end of the transitional year in which the notice is given."

(5) In subsections (5) and (8) for "authority" there shall be substituted "Common Council".").
On Question, amendment agreed to.
Clause 65 agreed to.
Clause 66 agreed to.
Clause 67 [Liability]:
Lord Hesketh Lord Hesketh moved amendments Nos. 126A and 126C:
Page 37, line 15, leave out ("on") and insert ("for").
Page 38, line I, leave out ("on") and insert ("for").
On Question, amendments agreed to.
[Amendment No. 126B had been withdrawn from the Marshalled List.]
Clause 67, as amended, agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 127:
After Clause 67, insert the following new clause:
("Section 67: the Temples
.—(1) In the case of a hereditament situated in the Inner Temple or the Middle Temple. section 67 above shall have effect subject to the following modifications.
(2) For subsection (1)(b) there shall be substituted—
"(b) the ratepayer would have been liable to pay anything in respect of a rate in the nature of a general rate as regards the hereditament if this Act had not been passed, the sub-treasurer of the Inner Temple or the under-treasurer of the Middle Temple (as the case may be) had made a rate for the year, and the hereditament had been included in a valuation list in force for the year for the purposes of the 1967 Act".
(3) In subsection (2)(c) for "resolution" there shall be substituted "order".
(4) For subsection (3) there shall be substituted—
"(3) In construing subsection (1)(b) above—

(a)an agreement entered into by the sub-treasurer of the Inner Temple or the under-treasurer of the Middle Temple under section 56 of the 1967 Act (payment or collection by owners) shall be treated as having effect throughout the transitional period if it would have had effect on 1 April 1990 had this Act not been passed, but

73

(b) for the purposes of determination the agreement shall be treated as having been entered into by the Common Council, and if in that period notice to determine the agreement is given by the Common Council to the owner or by the owner to the Common Council the agreement shall be treated as determined at the end of the transitional year in which the notice is given".

(5) In subsections (4) and (8) for "authority" there shall be substituted "Common Council".").
On Question, amendment agreed to.
Clause 68 [Alteration of lists]:
Lord Hesketh Lord Hesketh moved Amendment No. 127A:
Page 38, line 27, at end insert—
("(bb) as to the period within which a proposal must be made,".
On Question, amendment agreed to.
Clause 68, as amended, agreed to.
Clause 69 agreed to.
Schedule 10 agreed to.
Schedule 11 agreed to.
Clause 70 [Cases where owners are liable]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 128:
Page 39, line 23, after ("resolutions") insert ("or orders").
On Question, amendment agreed to.
Clause 70, as amended, agreed to.
Clause 71 agreed to.
Clause 72 agreed to.
Schedule 12 [Residual rating: administration]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 128A:
Page 122, line 38, at end insert—
("(ee) allowing winding up;").
On Question, amendment agreed to.
[Amendment No. 129 not moved.]
Schedule 12, as amended, agreed to.
Clause 73 [Hereditaments and domestic property]:
Lord Hesketh Lord Hesketh moved Amendments Nos. 129A and 129B:
Page 40, line 4, leave out ("or").
Page 40, line 6, at end insert (", or
(c) prevent the person being liable to pay in respect of the rate.").
On Question, amendments agreed to.
Clause 73, as amended, agreed to.
Clause 74, [Interpretation.: other provisions]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 130:
Page 40, line 17, leave out from ("is") to end of line 18 and insert—
("(a) the valuation list so maintained by the authority concerned, or
(b) where the authority is the Common Council, a valuation list so maintained by the Common Council.").
On Question, amendment agreed to.
Clause 74, as amended, agreed to.
Clause 75 [Precepts to be issued]:
[Amendments Nos. 130ZA to 130ZD not moved.]
Clause 75 agreed to.
Clause 76 [Precepted authorities]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 130A:
Page 41, line 36, leave out subsection (7) and insert—
("(7) The relevant population in relation to an area or part shall be calculated by—

(a) taking the number of those members of the population of the area or part who fall within such description as is specified in regulations made by the Secretary of State, and

(b) making such adjustments (if any) by way of addition or subtraction (or both) as are specified in, or calculated in a manner specified in, the regulations.").

On Question, amendment agreed to.
Clause 76, as amended, agreed to.
Lord Hesketh: I suggest this might be a suitable moment to break for dinner. I propose that we return at eight o'clock. I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Access to Medical Reports Bill
7 p.m.
Considered on Report.

Motor Vehicles (Wearing of Rear Seat Belts by Children) Bill
Lord Nugent of Guildford: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Nugent of Guildford.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD MURTON OF LINDISFARNE in the Chair.]
Clause 1 [Compulsory wearing of rear seat belts by children]:
Baroness Macleod of Borve Baroness Macleod of Borve moved Amendment No. 1:
Page 1, line 9, after ("vehicle") insert ("with more than three doors").
The noble Baroness said: I congratulate my noble friend Lord Nugent of Guildford on bringing this Bill to the House. I also apologise for my absence at Second Reading; it was not possible for me to be here.
I have tabled this amendment as almost a probing amendment because my noble friend Lord Brabazon of Tara, in winding up on Second Reading, said that the Minister for Roads and Traffic would give an undertaking during "consideration" of the Bill in another place that the Government would consult

75
widely about the drafting of the regulations. There is one aspect that I am particularly worried about which is the reason why I have tabled this amendment. I refer to the carrying of children in cars with only two doors.
I have driven a car with only two doors for a long time. I am well aware that people—children or adults—who are in the rear of the car when an accident takes place cannot possibly get out. It is not possible for anyone, whether the fire service or people on the spot, to release children and get them out of the car, perhaps over the heads of the adults in charge of the car.
I hope the Minister will bring this amendment to the notice of his right honourable friend because although, in my view, the principle of the Bill is right, in that it could save lives, I believe it is important to take this point on board. I have tried to get one of my grandsons out of the back seat of a car with myself and another adult in the front unable to move following a feigned accident. It was not possible. In that spirit, I beg to move.
Lord Nugent of Guildford: I thank my noble friend Lady Macleod for her congratulations to me on bringing forward this Bill. I thank her also for expressing her support for the principle of the Bill, which I would certainly expect because clearly it is going to save lives and reduce the number of injuries to children.
The problem concerning the amendment is that if included in the Bill it would exclude over one-third of all motor cars on the road—that is, some 7 million—which have two doors, usually with a hatchback of some kind. Therefore, the effect of the amendment would be to remove from one-third of all motor cars the additional safety we are hoping for with the progressive use of rear seat belts for children. An overwhelming case would have to be made out before accepting the amendment.
In fact, there is no experience—other than what my noble friend said concerning her own experiment in trying to release a child from the back of a car with two doors—in accident records of children being trapped in the backs of cars in accidents. This of course, is in accidents generally and especially in the most anxious conditions where motor cars are on fire or have plunged into water, with the consequent danger of drowning.
In fact, the Department of Transport set up an inquiry after compulsory front-seat belts were agreed to by Parliament. That inquiry, headed by two independent assessors (two professors from the London School of Economics), reported on those particular aspects. The assessors found that there was no increase in deaths by fire or drowning and no evidence of entrapment by seat belts.
Therefore, while I sympathise with my noble friend's amendment, I have to tell her that it would knock a large hole in the intention of the Bill by excluding one-third of all motor cars. Without convincing evidence that it was justified, we could not accept the amendment. I hope that my noble friend, while by all means asking my noble friend the
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Minister to hear evidence from anyone who puts forward in the course of consultation points about two-door cars, nevertheless will agree that there is not a sufficiently strong case to write the amendment into the Bill. I hope therefore that she will be willing to withdraw the amendment.
Lord Monson: I warmly support the amendment so ably moved by the noble Baroness. However, I have to say that whatever the theoretical objections—and I appreciate what the noble Lord, Lord Nugent, said—I suspect that those who are inclined to resist it cannot understand the practicalities of life as it is lived by families today.
Assuming they have a choice and that they have not been landed with a two-door company car or that they can only afford the cheapest model in a range—and that is normally a two-door car—most families will opt for a four-door car, especially now those cars are fitted with childproof locks. The difficulty of getting carrycots and, even more so, recalcitrant children out of the back of two-door cars needs no emphasising. Nevertheless, inevitably some parents are obliged to convey their offspring in two-door or three-door cars from time to time, whether on a permanent or temporary basis.
What happens if the car crashes and the parents notice that petrol is spilling from a fractured petrol tank, or if the car is driven into a drainage ditch or reservoir and the parents find that either the door or the seat tilting mechanism has jammed? Most modern cars are fitted with padded head rests or head restraints which are hard but hollowed out for purposes of visibility. I have found that it is difficult, even where relatively neat, padded headrests are fitted, to transfer either a raincoat or small parcel or carrier bag from the back seat without having to get out of the car. It is even more difficult when much larger head restraints are fitted where there is a much smaller gap between the top of the restraint and the roof lining of the car. In the experience of most people, both head rests and head restraints are extremely awkward to remove from the back of the front seat even at the best of times, let alone in the panic circumstances of a crash.
I say to the noble Lord, Lord Nugent, when he virtually denies that people are killed when cars catch fire, or drown, as I said at Second Reading, more people are drowned in their cars than in boating accidents each year. The motoring correspondent of the Observer, who is almost fanatically in favour of this Bill, admits that 120 cars catch fire every day, so I do not believe that it can be maintained—
Lord Brougham and Vaux: I thank the noble Lord for giving way. Does he realise that anyone can drown in three inches of water, even in a bath?
Lord Monson: Why add to the number drowning? Just imagine trying to rescue a child or children trapped by a jammed seat belt buckle in the circumstances of a potential fire or drowning. It need not be the car itself which catches fire; it could be the car or lorry it has crashed into. Theoretically, matters ought to be easier in a three-door car involved in a crash because one should be able to get in through the

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tailgate and rescue the child from there. However, if the car in question has been rammed in the rear by another car or goods vehicle, as often happens, that avenue of escape is barred as well. It is for that reason and not because of any desire to be pernickety that I warmly support this amendment.
Lord Underhill: I appreciate the spirit in which the noble Baroness has put forward this amendment, but listening to the noble Lord, Lord Monson, it seems that the noble Lord, Lord Nugent, need hardly have spoken. The noble Lord ignored almost every fact that the noble Lord, Lord Nugent, put before the Committee, including the evidence gathered over the past five years.
I rest the whole matter on the provision in the Bill that there will be regulations which will include vehicles of a prescribed class. If the wide consultations prove the case put forward by the noble Baroness, it can be looked at. However, that would mean disproving all the evidence of the past five years. There is provision in the Bill if we really want to check the position.
Lord Bruce-Gardyne: I apologise for interrupting, but my noble friend Lord Nugent took the line that to accept my noble friend Lady Macleod's amendment would in effect remove practically all the value from the entire measure. The noble Lord seems to be suggesting that evidence given to the Department of Transport might in due course lead it to accept the exclusion of two-door cars. He has accused the noble Lord, Lord Monson, of ignoring what my noble friend Lord Nugent said against this clause. Would the noble Lord himself accept that an amendment along these lines, if it were substantiated by evidence given to the Department of Transport before it introduced regulations, could be perfectly compatible with the purposes of the Bill?
Lord Underhill: I believe that if evidence were found on the lines proposed in this amendment, then to a great extent the Bill would not become completely valueless but its value would be considerably diminished. That would depend on any new evidence. By passing the Second Reading, we have agreed that there shall be the widest consultations. I believe most of the amendments before the Committee are ones that can be covered by consultation. I believe that the facts that we have at present mean that we should not support this amendment. The wider consultations may bring further evidence beyond that which the noble Lord, Lord Nugent, mentioned, but I doubt it.
The Earl of Halsbury: I supported the noble Lord, Lord Nugent, in 1981, and I again give him unconditional support in 1988. I believe that the best contribution I can make to the proceedings of this Committee is to say that I support him through thick and thin and that I shall make no further intervention.
The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara): I accept my noble friend Lady Macleod's concern
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about the possibility of entrapment in a vehicle in the case of an accident. Such a possibility exists, but as my noble friend Lord Nugent pointed out, the fear is more imagined than real.
The chance of being injured in a crash or collision is very real and much greater. A TRRL study about the effects of seat belt wearing published in 1985 found that, in 1983, 13 occupants of cars and light vans drowned in their vehicles and 26 died in fires. In that year the total number of car-occupants deaths was 2,109. The total car-occupant casualties exceeded 130,000. The risk of death and serious injury can be dramatically reduced by wearing seat belts. The TRRL study and the parallel study by Professors Durbin and Harvey indentified at least 200 fewer deaths and 7,000 fewer injuries per year as a result of compulsory front seat belt wearing. The advantages far outweigh the disadvantages. Anyone who has seen—
Lord Bruce-Gardyne: I apologise to my noble friend for interrupting, but perhaps he will allow me to make one point. He is quoting the evidence relating to front seat belt wearing, but we are talking here about the wearing of rear seat belts. What evidence do we have to demonstrate that what is relevant to the one is relevant to the other?
7.15 p.m.
Lord Brabazon of Tara: I am using the evidence of front seat belt wearing as an example of the kinds of savings in life that can take place. I have every reason to believe, as I said before and shall say again, that the impact of making children wear rear seat belts will make a significant improvement in the accident rate. Anyone who has seen the short film which has been produced showing how children are thrown about in cars involved in accidents will have no doubt at all about the value of this Bill in encouraging the use of restraints. I remind the Committee that over 60 children are killed and over 7,000 injured each year while travelling unrestrained in the backs of cars. I believe it is irresponsible of us as drivers to expose them to unnecessary levels of risk.
This Bill does not introduce any limitations or constraints as to the number of rear seat passengers that can be carried. It does not require that all children in the rear of cars should be restrained, but only that restraints which are fitted and are suitable should be used. Therefore, as I said at Second Reading, the Government are happy to support this Bill. As has been said, there are many issues that need to be resolved when drawing up the enabling regulations. We shall consult widely with all interested and expert bodies; namely, the police, who support the Bill; family organisations, motoring organisations and taxi drivers' associations.
I can also give an undertaking that we shall include in the consultation process those noble Lords who have expressed an interest in and some misgivings about how the law will operate. We shall not rush the regulations; we shall proceed step by step. There is now a growing body of public opinion that recognises the vulnerability of children as car passengers and considers that they should be restrained. Restraint

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reduces by two-thirds the chances of a child passenger being killed or injured in a crash. I submit that this Bill is in step with that shift of opinion. Wearing rear restraints is estimated to reduce child fatalities by 75 per cent. and to reduce injuries by two-thirds. Therefore, the Government cannot support this amendment or any of the amendments before the Committee. I know that my noble friend Lord Nugent will be able to deal with them most effectively and I shall not intervene again unless it is absolutely necessary.
Perhaps I may be allowed a personal view from the Dispatch Box. Having children aged five and two-and-half years, my wife and I will be affected by this Bill when it becomes law for quite a long time to come. We always try to strap in our children, and I fully agreed with the noble Lord, Lord Tordoff, when he said at Second Reading that it is much easier to persuade children to put on their belts when the law says that they must. I must confess that I rather jumped the gun and I am already using that argument.
My wife takes part in the school run and we sometimes carry the children of friends. I have every confidence that the regulations will cover these kinds of situations. Apropos a future amendment, the children sleep quite happily when strapped into their seats. I hope that the Committee will allow this Bill to go forward unamended.
Baroness Macleod of Borve: I thank the noble Lord, Lord Monson, for his assistance. I feel very strongly about the two doors. I cannot agree with what the Minister said. I do not think it has been proved because so few children have had the ability, as he would say, to wear seat belts. They are not provided in most cars. However, as I said at the beginning, I brought forward the amendment in order to ask the Minister to take another look at the matter and to see whether he could incorporate it into the regulations. I do not wish it to be part of the Bill but it should he looked at as part of the regulations. I beg leave to withdraw the amendment.
Amendment, by leave withdrawn.
Lord Bruce-Gardyne Lord Bruce-Gardyne moved Amendment No. 2:
Page 1, line 9, alter ("vehicle") insert ("in excess of 30 miles per hour").
The noble Lord said: I should like to—
Lord Nugent of Guildford: Will my noble friend be kind enough to give way for a moment? With the informality of a Private Member's Bill there are no formal arrangements about grouping amendments. However, it appears that Amendments Nos. 2 and 3 are almost identical. I wonder whether my noble friend and the noble Lord, Lord Monson, will agree to these amendments being debated together.
Lord Bruce-Gardyne: It is in the hands of the noble Lord, Lord Monson, but, so far as I am concerned, that would seem to be a sensible way of proceeding. I was about to make that suggestion myself because it is a matter of argument as to where the precise words should appear in the Bill.
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I was a little concerned to hear my noble friend the Minister state that he did not intend to intervene unless it was absolutely necessary. I should have thought that, at least on some of the amendments, it would be reasonable and desirable that we should have an expression of the Government's opinion. Therefore, I hope that my noble friend will not regard that as a total vow of silence.
This amendment is a relatively modest proposition. It is designed to suggest that regulations introduced under the provisions of Clause I would not apply where the car was being driven at less than 30 miles an hour. I was much impressed by the arguments advanced at Second Reading by the noble Lord, Lord Cobbold. I hope it is not too late to compliment the noble Lord on an admirable maiden speech. I only wish that I had been present to hear it although I have subsequently read it.
The point here is a simple one. It concerns a family that is on what I believe is known as the milk round, taking the children to school and in all probability travelling, as a family does for this purpose, a relatively short distance and at a modest speed. Children are collected at various points along the journey. I did not often do this myself but my wife did it over a period of years. Children are collected at regular intervals on the way to school by a car travelling at a modest speed. Of course an accident can happen but equally there is the certainty that children are getting into the car at regular intervals along the route. The problem of making sure that each and every one of them—so long as there are not more than two on the back seat—is at any given time strapped in for the remainder of the journey to school is rather greater than the promoters of the Bill would have us believe. I would not relish being in the position of the upholders of law and order who had to make sure that this legislation was enforced on the highway when children are being picked up at regular intervals and the vehicle is travelling at a modest speed. In those circumstances the danger of a collision is diminished.
I do not suggest that the amendment would transform the purpose of the Bill but, as the noble Lord, Lord Cobbold, suggested in his maiden speech, it might relate the legislation slightly more to the realities of a day-to-day life for the average family. I beg to move.
Lord Cobbold: In supporting the amendment I take up a point raised by the Minister. It is important to be clear that what is at issue is not the wearing of seat belts as such. All of us agree with the Minister that seat belts are an effective safety device and that they have saved many lives and reduced injury on almost all occasions when they have been put to the test. The amendments are not concerned with the libertarian issue. Whatever may be the view of the Committee on the extent to which the state would be empowered to interfere with the freedom of individuals—it is one of the fundamental duties of the Chamber to give the individual the benefit of the doubt—we are concerned this evening that the Bill contains many anomalies which will make it extremely difficult to enforce in practice. It will be difficult for parents to decide how to operate it and it runs the risk of bringing the law into disrepute.

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While I am happy to support the alternative amendment, Amendment No. 3, in the name of the noble Lord, Lord Monson, Amendment No. 2 seeks to enable the continued operation of the all-important school run. I should like to ask the Minister how, when he takes other people's children to school, he makes the decision whether to strap in those children or his own. That is a difficult decision with which parents would be faced in those circumstances.
Lord Brabazon of Tara: It is simple. The first in is strapped in.
Lord Cobbold: I am grateful for that reply. The amendment does not materially alter the Bill but would enable this perfectly natural and very much used operation of taking schoolchildren to their place of education to proceed as normally. It is sensible and will be welcomed by parents. It will reduce the risk of children being made to walk or cycle to school and therefore being put at even greater risk.
7.30 p.m.
Lord Monson: In speaking to Amendment No. 2, perhaps, as suggested, I may speak also to Amendment No. 3, which is tabled in my name. Amendment No. 3 is a possible alternative to Amendment No. 2. The slightly different wording of Amendment No. 3 has no special significance, but I contend that it would slot in at a much more natural point in what is a long and potentially rather confusing sentence. The purpose of the alternative amendments is to protect and ensure the survival of the well-known school run.
It is true that the Minister in another place on 13th May (at col. 645 of Hansard) appeared to favour the retention of the school run. However, as the noble Lord, Lord Peyton of Yeovil, pointed out in this Chamber only some three hours ago, when speaking in Committee on the Local Government Finance Bill, the trouble is that Ministers change. The present Minister, whom we all know to be an extremely sensible man, may well be replaced in due course by someone far less reasonable and far less liberal, in the true sense of that word. Indeed, he may even be replaced by someone from another party altogether, which could lead to even more drastic changes.
It is not without significance that the noble Lord, Lord Nugent, in his Second Reading speech indicated considerable disapproval, not of the school run itself but of the fact that it normally entailed many children being carried in the back of the car. He said that notwithstanding the fact that so many Members of the Committee and their wives (as the noble Lord, Lord Bruce-Gardyne, pointed out) have practised the arrangement for many years without the slightest mishap. Therefore, unless some safeguard is written into primary legislation the situation could change for the worse in relation to parents.
Admittedly these amendments are a somewhat rough and ready method of achieving the desired aim. After all, not all school runs are confined to built-up areas. Nevertheless, they normally do not involve great mileage; for example, even in the
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country a four-to-five-mile run would be the most one would expect.
It is most important to remember what the noble Lord, Lord Cobbold, pointed out. If children are forced to walk or cycle they are actually at far more risk than if they are in the back of a car, even in an unbelted state. As I said, it is not too much of a hardship to limit one's speed to 30 mph—or, in practice, to 35 mph—for a distance of only four to five miles. After all, there is no way that the police can tell at a glance whether a parent has been given an exemption for a school run.
I should also point out that although it is true that accidents can happen at speeds below 30 mph, films which use dummies do not recreate genuine situations. It is most rare for cars to be driven smack into brick walls; most accidents in urban areas are sideways accidents or involve glancing crashes of some type. Further, I have been advised that the heads of the plastic dummies used in the simulated film versions of accidents fracture at an impact speed of 17 mph, whereas a human head can hit a toughened screen, as opposed to a laminated one, at a higher speed than that and frequently incur only minor injury.
If the Government can bring forward a workable and enforceable solution to the problem I shall he glad to hear about it. However, failing that, I think the amendment proposes the best workable solution available.
Lord Tordoff: From these Benches I oppose the amendment on many grounds. First, if ever I saw a wrecking amendment, this is it. It removes the effects of the Bill from most urban areas. Basically I think that the people who move the amendment are really unaware of the dangers involved in impacts of cars against other bodies, whether they are glancing, head-on or going straight into a wall. The fact of the matter is that the amount of energy created by a moving body—which a child is when it leaves the back seat and hits something in front of it—is half MV2. I am sure that the noble Earl, Lord Halsbury, will confirm that fact. When one starts squaring up "V" one begins to have an awful lot of energy released. That is why three bodies moving through a car and hitting a windscreen, the back seat or the person in front can do a great deal of damage, whether it is at 15, 20 or 30 mph. The restriction to 30 mph does not make sense in practical terms. Apart from anything else it completely rules out the operation of the Bill in any urban area. Therefore I hope that Members of the Committee will oppose it.
Lord Brougham and Vaux: I should like to say one word in response to the remarks made by the noble Lord, Lord Monson. Like the noble Lord, Lord Tordoff, I too oppose the amendment and, indeed, all the others. I think the noble Lord, Lord Monson, used the word "adult". We are not dealing with adults; we are dealing with children whose heads have not yet formed properly and which are therefore still very soft.
Lord Nugent of Guildford: I thank my noble friend Lord Brougham and Vaux for his kind support, and

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also the noble Lord, Lord Tordoff. I am indeed glad that I have found one point on which I can agree with the noble Lord, Lord Monson, because it is not often that I agree with him. Amendment No. 3 is drafted better than Amendment No. 2. Even so, I am afraid that I do not advise Members of the Committee to accept it.
First, may I reassure the noble Lord, Lord Monson, and indeed my noble friend Lord Bruce-Gardyne, that the school run will continue. In another place my honourable friend the Minister, Mr. Bottomley, explained what will happen in regard to seat belts in the backs of motor cars. He said that children would be required to wear them. For example, if there are two children then they would both be required to wear a seat belt; if there are three children then they would all be required to wear a seat belt. Further, if there are more children in the car than that, then the other children will not be able to wear seat belts merely because there will not be any available to them.
Just how my noble friend the Minister will draft the regulations I cannot say, obviously it will be difficult. However, this is the principle of the Bill. In so far as seat belts are fitted, we want them to be worn because they will protect children—
Lord Bruce-Gardyne: I apologise to the noble Lord for interrupting him, but perhaps I may ask him whether he has ever been involved in a school run where children are picked up and possibly deposited at different points because they do not always go to the same school. Has the noble Lord really contemplated the practicality of having the adult in the car legally responsible—regardless of the circumstances—subject to legal pains and penalties if a child picked up at one point has not immediately attached the seat belt; and if another child, picked up at another point (replacing a child which has perhaps been deposited at a different school on the way around) has not done so? I say again, has he really contemplated the practicalities in terms of the school run?
Lord Tordoff: I should like to ask the noble Lord, Lord Bruce-Gardyne, whether he agrees that adults should be legally responsible for children under the age of 14, or does he seek some wider change in the law of this country?
Lord Bruce-Gardyne: If the noble Lord will forgive me, I am not sure that is a suitable subject for discussion this evening. Of course the parent or guardian is legally responsible for the safety and performance of under-age children; there is no argument about that. The issue of practicalities does not always receive the attention it deserves.
Lord Nugent of Guildford: I think that perhaps I should continue my speech because we seem to be getting somewhat out of order. Of course we are pretty flexible in this place but there are limits to how far we can stretch that flexibility. I accept that it is inconvenient to introduce this law. I also accept that it will be most difficult to draft amendments in order
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to accommodate the school run, which will obviously continue. However, that is what my noble friend and his honourable and right honourable colleagues are willing to do, and therefore we should ask them to do it.
It is a difficult and practical point. However, the practical point that I return to is that those of us who want children to have the protection of wearing seat belts in the backs of cars are conscious of the fact that more than half of the accidents and injuries that occur on the road occur in built-up areas. Therefore, if we accept the amendment we will have knocked out more than half of the motor-car miles that we wish to cover. In those circumstances it is not acceptable, and we are left with the practical problem (outlined most cogently by the noble Lord, Lord Bruce-Gardyne) of just how the school run is to be accommodated.
It must be said that the police are willing to accept the Bill—and, indeed, they support it. They believe that enforcement will not present them with a problem. Obviously, the school run will be a delicate affair. There must be a bit of give and take over it. All I am interested in trying to achieve is that, insofar as there are seat belts in the back of a car, children should wear them. In that context the amendment is not acceptable because it will knock out half the mileage that we wish to protect. I hope that my noble friend Lord Bruce-Gardyne and the noble Lord, Lord Monson, will not press an amendment that knocks out half the Bill.
Lord Monson: Before the noble Lord, Lord Nugent, sits down, I am grateful to him for his kind compliments. Despite his assurances that the school run will definitely be maintained, how can he be sure that in future less reasonable Ministers of Transport will not reverse the decision unless we write the safeguard into primary legislation?
Lord Brabazon of Tara: I have already made it clear that in drafting the regulations we shall consult widely. I have made it clear that we shall accommodate the school run. The amendment limits the speed to 30 miles an hour, and I see no connection between that and the school run. Many school runs take place in rural areas and drivers will do more than 30 miles an hour.
Secondly, as my noble friend Lord Nugent has said, about 70 per cent. of accidents occur in built-up areas. It would be unfortunate to eliminate that protection from the Bill's coverage. As I said, we shall consult widely. The regulations will be in the form of an affirmative resolution in this place. Any change that might be brought forward by some future Secretary of State will also be in that form, and there will be an opportunity then for debate.
Lord Monson: I appreciate that point. However, does the Minister agree that neither he nor his honourable friend in another place can possibly bind their successors?
Lord Brabazon of Tara: I have just said that we cannot bind our successors; but the regulations will have to be made by affirmative resolution and therefore they will have to be debated.
Baroness Macleod of Borve: Perhaps I may ask my noble friend whether he is also taking into consideration the fact that a number of minibuses do the school run nowadays. Minibuses, not just motor cars, also have to be taken into consideration.
Lord Brabazon of Tara: I shall take that point into consideration when we come to draft the regulations. As I have said, we shall take into consideration all the points made by noble Lords. I am not sure whether minibuses would have to have seat belts fitted.
Lord Bruce-Gardyne: I listened carefully to the response by my noble friend Lord Nugent. It reminded me slightly of a story I heard many years ago from the brother of my noble friend Lord Home, Mr. William Douglas-Home, who wrote a play called The Chiltern Hundreds which was essentially about his father. The actor who was playing the role of the father was called upon in the play's directions to cross the stage, answer the telephone and carry on a conversation with someone off stage. The actor, a distinguished old gentleman called A. E. Matthews, was 83. One evening he apparently "dried", as the theatrical profession says, and was unable to recall the lines that he was supposed to speak. He turned to the leading lady on stage and said, "It's for you, my dear".
I am bound to say that that seems to be the attitude of my noble friend in his response to the amendment. He does not know how the school run will be maintained within the legislation. He turns to the Government and says that it is for them to come up with a good solution. But, after all, this is not government legislation; it is my noble friend's legislation. I do not believe that his reply was satisfactory. However, I accept with reluctance his unwillingness to have the amendment written into the Bill and I therefore beg leave to withdraw it.
Amendment, by leave, withdrawn.
[Amendment No. 3 not moved.]
7.45 p.m.
The Principal Deputy Chairman of Committees (Baroness Serota): In calling Amendment No. 4 I should point out to the Committee that if the amendment is agreed to I cannot call Amendment No. 5.
Lord Monson Lord Monson moved Amendment No. 4:
Page 1, line 10, leave out from ("there") to ("in") in line 12 and insert ("are in the rear of the vehicle not more than three persons some or all of whom are children under the age of fourteen years who are not wearing seat belts").
The noble Lord said: I shall speak at the same time to Amendment No. 5 to which I added my name but about which I must confess that I have subsequently had second thoughts. Amendment No. 5 is a somewhat stronger and simpler alternative, but I am not sure that it will be wholly acceptable to the noble Lord, Lord Nugent, and his friends.
Once again, some of us feel strongly that safeguards should be written into primary legislation. What reinforces that belief is the evidence of some confusion and cross-purposes within the
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Government and among the Bill's supporters. Some of them have suggested that all existing seat belts in the rear of a car will have to be used by children if the Bill becomes law. A moment's thought would demonstrate the difficulty of working that out. If there are four or five children and two of them have to wear belts, the others will be squeezed into a tight space in the centre and their arms and legs will be entangled and so forth.
The Minister in another place pointed out in Standing Committee on 27th April 1988 at cols. 14 and 15 that if three adults and two children were packed in the back of a car, in practice none would be able to wear seat belts. There would be two seat belts that could not be used. Some confusion is already becoming apparent. On 6th June the Minister said, at col. 1180 of Hansard, that it would equally not be practicable to use rear seat restraints if there were four or five children squeezed up in the rear seat.
What the Minister said this afternoon rather contradicts that. He said that if four or five children were squeezed on the back seat two or three of them would have to wear belts. One can see that there is confusion among the Bill's supporters and in government circles. For that reason, I beg to move.
Lord Bruce-Gardyne: I support the amendment moved by the noble Lord, Lord Monson. I dare say that it is drafted with a good deal more skill than my Amendment No. 5 and so I am happy to subsume my amendment in the terms of Amendment No. 4.
Here, it seems to me that we are touching upon what is potentially one of the more intractable and unenforceable aspects of the legislation. As the noble Lord, Lord Cobbold, in his maiden speech pointed out, and as the noble Lord, Lord Monson, reminded us, one will frequently have substantially more than two children on the back seat of a car, especially on the school run, and yet apparently the police arc expected to adjudicate as to which children should wear seat belts and which children are properly not equipped in that way. The reality is that when one has three or four children on the back seat of a car, as one may well have especially on a school run, there will be no prospect of sorting out which children are wearing scat belts and which are not. I seriously suggest to my noble friend that this is one of the aspects of the Bill which will create quite intractable problems of adjudication and grave difficulties of enforcement from the point of view of the police and the courts, if it comes to the courts having to adjudicate in cases of this kind.
It is not good enough, I submit, for my noble friend, our colleague in another place or the Minister in another place to say, "That is quite all right. If we have more than two children on the back seat then two will wear seat belts and the remainder will not". This will create impossible problems of enforcement. I should have thought that it was calculated to bring the law into contempt. We must have a better explanation from the promoters of this Bill on how precisely they expect this aspect of the legislation to operate than we have been given hitherto. I am happy to support the amendment.
The Earl of Erroll: I very nearly stood up before on several of the other amendments, for the simple reason that I cannot understand why we pass legislation which does not say on the face of the Bill what we all agree is intended to be done eventually through regulations.
It seems to me extremely dangerous that we should pass a Bill which says that if there are any seat belts fitted in the back of the car then everyone in the back seat must wear seat belts. In other words, if there is one seat belt, then one person must wear a seat belt and there cannot be any others in the car. That is what it says, "except as provided by regulations". The regulations have not been made, they are not there and we do not know what they will say. If we intend that school runs should go on and should be permitted, then I think that should be on the face of the Bill. That is what we are here to determine, not to pass the buck to civil servants.
Having said that, it seems to me that one of these two amendments, Amendment No. 4 or No. 5, is the solution to the school run problem and taking the children to the village fete, to parties and all the other social things that may happen in life. I do not think we wish to destroy social family life and therefore one of these two amendments is essential.
The other reason which I feel has been expressed very well by other speakers whom I support, is that if you have five bodies across the back seat you cannot fit two of them into seat belts and then have three crammed into the tiny space left in the middle. It does not work. You either have everyone sitting in the hack seat wearing seat belts because there are only three or less, or you probably have none of them. If someone can fit in, so be it but it should not be made compulsory by law. I think we must put something in the Bill which says what we mean and not have lots of vague promises. That is what we are here for.
Lord Underhill: I had not intended to speak on this amendment but, in view of the remarks of the noble Earl, I hope that noble Lords will bear in mind what I said on Second Reading. I believe that this is a most useful Bill, one which ought to get Royal Assent as soon as possible and we could then permit the regulations to be fully discussed. Frankly, I am one of those who believes that we should write on to the face of the Bill as many details as possible. But in this case I believe that the regulations will require the utmost consultation. That has been promised to us by the Minister.
The Bill provides for consultation and most of the points which are the subject of these amendments are detailed, in Clause 1, to be the subject of consultation. I should like this Bill to go through. One or two of the points which have just been raised will require most serious consultation, but what I want to see is the Bill approved by this House with consultations taking place. Then the regulations can be drafted accordingly on the affirmative procedure.
The Earl of Erroll: Before the noble Lord sits down, perhaps I may say that I think it is very wrong in principle to hurry legislation through just because it seems to be a good thing in principle and then pray that we can sort it out later. We do not debate the
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regulations: this is our chance to put on the face of the Bill what we mean. We are not going to debate the regulations, and to hurry this through is bad legislation.
Lord Nugent of Guildford: Noble Lords have merely gone over the same ground again about the problem of the school run. It is a problem; we have all agreed on that. While I listened with interest to the intervention by the noble Earl, he has done no more than repeat the arguments which have already been put forward by my noble friend Lord Bruce-Gardyne and the noble Lord, Lord Monson, on the last amendment.
Yes, of course there is a problem about the school run, we all agree with that and it was very fully debated in the other place. I thought that the general principle was fairly well adhered to by the Minister there, that in so far as there were seat belts he would expect them to be worn. I also have to agree that, if the congestion became sufficiently great, perhaps the regulations would have to provide that they should not be worn.
I think that the noble Earl's experience of legislation is rather limited if he thinks that it is possible to put all these detailed provisions in the Bill. What regulations are for is to cover details after minute consultations. Certainly the noble Earl will be able to come along and be eloquent when the order becomes before us. It will be in the affirmative form. If he feels strongly enough about it he could invite the House to divide against it. Whether he would carry a majority remains to be seen. Certainly he will have every opportunity to debate the matter.
However, we really are going over the same problem again. What those of us who wish this Bill to go through want to see is a beginning of the wearing of seat belts by children who are sitting in the back of motor cars. That will preserve life and limb which are now being lost. We know that there are problems with the regulations; we know that they will have to be flexible. After a great deal of consultation I hope that my noble friend and his honourable and right honourable friends in another place will get the best answer they can. In due course we shall see the affirmative order, which will come along for us to approve or not, as we wish.
Thus I hope that noble Lords will not continue to press this amendment but will accept that this is exactly the same problem as we have already discussed, and that they will be good enough to withdraw their amendments and trust to the fact that regulations must be produced which will, so far as is physically possible, provide for the school run to continue and that as far as possible seat belts, where they exist, will be worn.
Lord Bruce-Gardyne: I hope that my noble friend will forgive me for suggesting that his response to the noble Earl, Lord Erroll, was to some extent somewhat dismissive. As he knows very well, it is all very fine that these regulations will come before us under the affirmative resolution procedure. But suppose we are dissatisfied with them? We can vote them down and they can be reintroduced the next day. So while we certainly need to look at the procedure under which

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such regulations shall he carried through under the Bill, nevertheless there is no substitute for having these details written into the Bill itself, I suggest, before it passes through this House.
Lord Monson: I think that the noble Lord, Lord Bruce-Gardyne, has made a very telling point. Theoretically we can vote down an order when it is brought in but in practice we hardly ever do. I cannot remember the last time it happened: it must be once every 10 years or thereabouts.
My amendment is simply designed to embody the Minister's admission, made in the Standing Committee by Mr. Bottomley, that if three adults and two children were placed in the back of the car, in practice none of them would be able to wear seat belts. There would be two seat belts which could not be used. This was confirmed by the noble Lord, Lord Brabazon, when he said that it would not be practical to use seat restraints if there were four or five children squeezed onto the rear seat. That was in column 1180 of Hansard of 6th June.
I. suppose that my amendment goes fractionally further, in that I specified three persons. If I had said four. I think I should have felt entitled to press this amendment to a Division, I should be doing no more than two government ministers have already admitted is feasible. But, in view of the fact that my amendment goes fractionally further than what they had indicated would be acceptable, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Nugent of Guildford: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
Viscount Davidson: My Lords, I beg to move that the House do adjourn during pleasure for one minute.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8 p.m. to 8.1 p.m.]

Local Government Finance Bill
House again in Committee.
Clause 77 [General and special expenses]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 130B:
Page 42, line 6, leave out ("and").
The noble Lord said: With the leave of the Committee I shall also speak to Amendments Nos. 130C, 130D and 131A. These technical amendments are needed to Clause 77 to ensure that certain Welsh community charge payers do not have to contribute twice to the cost of the public library service. As Members of the Committee will know, county councils usually provide library services but four districts in Wales are library authorities for their
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areas, and one more district library authority is proposed. I hope the Committee will agree that these are highly desirable technical amendments. I beg to move.
Lord Graham of Edmonton: This, on the face of it, looks like a technical amendment. Will the Minister tell us what consultations have taken place with the local authority associations and perhaps, in addition, with the library association? As the Minister will be aware, the library movement feels that it has been badly treated from time to time by the impact of certain aspects of the Government's legislation.
Not only the Welsh ratepayer but any ratepayer would jib if he had to pay twice for a single service. As the Minister is aware, amendments have been moved to make sure that the services which are paid for are actually received. That was the burden of the earlier amendments. I hope that the Minister can tell us that the bodies concerned, who have the right to speak on behalf of the ratepayers, are satisfied with the proposal. If he can tell us that, we shall be satisfied with it also.
Lord Glenarthur: I can give my assurance to the noble Lord that the local authorities have been consulted in the role which the noble Lord described, and they are happy. The noble Lord might wonder why it is just Wales that is affected. The Local Government Act 1972 recognised the special factors in Wales which make it desirable for some district councils to be library authorities. These factors consist of such things as sharp transitions in population distribution, industrial concentration and language usage. District councils are able to apply to the Secretary of State at 10-year intervals to be constituted library authorities for their area in place of the county council. I am advised that there is no parallel in England.
Lord Graham of Edmonton: I am grateful to the Minister for those remarks, which were very helpful. I listened carefully to what I call the "excluding criteria". I can see that all of them could apply almost anywhere, except the final factor that the Minister mentioned, which was language. I believe that the Minister said that one of the qualifying bases upon which this provision would apply in Wales was the language factor.
I should be grateful if the Minister could repeat the other criteria, because they seemed to me to apply to rural, small, specially affected parts of almost any other community. We understand, as must the Minister, that there are special circumstances in Scotland in general. I also acknowledge that there are special circumstances in Wales in general, but other than the one that the Minister mentioned about language I do not understand why the other factors were referred to. I should be grateful if the Minister would explain them to me.
Lord Glenarthur: What we are talking about here is the Local Government Act 1972, which provided those particular factors—the population factor, the industrial concentration factor and the language factor. I shall come back later, if I may, to the details

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of the language factor. But I hope that the noble Lord will realise that there are four districts providing library services in Wales at the moment. They are Rhondda, Merthyr Tydfil, Cynon Valley in Mid-Glamorgan and Llanelli in Dyfed. From 1st April next year it is intended that Newport in Gwent shall also be a library authority.
In order to ensure that the residents of these five districts do not contribute to the expenses of the library service provided by their county council outside their districts—in other words, to prevent them from effectively having to pay twice so to speak—it is necessary to ensure that these expenses are reflected only in those precepts issued by the county council to district councils which are not library authorities. This can only be achieved if the expenses of a county council are, in such circumstances, special expenses under this clause of the Bill. County councils would then adjust their precepts accordingly under the provisions contained in Clause 76. That is what these amendments will achieve.
I think the other amendments are largely self-explanatory. The noble Lord asked me if I could go into further details about how the factors were reached. I cannot give him an answer as to why the point about language usage was reached in 1972. I shall very happily look at that for the noble Lord and come back to him on it.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 130C:
Page 42, line 11, at end insert ("and
(c) if it is a Welsh county council whose library area consists of part of its administrative area, its expenses in exercising its functions as library authority in its library area are its special expenses.").
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 130D:
Page 42, line 17, at end insert—
("(4A) Expenses which are special by virtue of subsection (2)(c) above relate to the part of the council's administrative area which consists of its library area.").
On Question, amendment agreed to.
[Amendment No. 131 not moved.]
Lord Glenarthur Lord Glenarthur moved Amendment No. 131A:
Page 42, line 34, at end insert—
("(10) "Library area" shall he construed in accordance with the Public Libraries and Museums Act 1964.").
On Question, amendment agreed to.
Clause 77, as amended, agreed to.
Clauses 78 and 79 agreed to.
Clause 80 [Information]:
Lord Glenarthur Lord Glenarthur moved Amendment 131B:
Page 43, line 28, after ("2") insert (", 9 or 12").
The noble Lord said: This is a simple drafting amendment. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 132 and 133 had been withdrawn from the Marshalled List.]
Clause 80, as amended, agreed to.
Clause 81 [Levies]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 133A:
Page 43, line 41, leave out (", district council or London borough council") and insert ("or charging authority").
The noble Lord said: With the leave of the Committee, I shall speak also to Amendments Nos. 133B, 164K, 175A, 181B, 181C and 196A. The amendments are technical. They seek to provide that the existing arrangements for combined police authorities and so on will continue as at present without the need for further regulations under the Bill; that the Common Council and the Isles of Scilly will be treated like other charging authorities with respect to levying bodies; and that reference to certain authorities is in the correct part of the Bill. I commend the amendments to the Committee. I beg to move.
Lord Graham of Edmonton: The amendment speaks of leaving out,
"district council or London borough council".
The Minister, in pleading his case, brought in the Scilly Isles. Perhaps he can explain the purport of that inclusion. As I understood it, he said that it appeared in the wrong part of the Bill. Will the Minister take on board our previous discussions concerning London boroughs? I am interested in why a London borough council should he struck out of this part of the Bill.
Lord Glenarthur: There are many bodies which at present obtain some or all of their revenues by making demands, under a variety of statutory provisions, on certain local authorities. Many of these provisions are framed in terms of the rating system and hence can no longer apply in the new system of local government finance. The Bill—the provisions of Clause 121—would repeal all these provisions and in their place set up under Clause 81 a wide regulation-making power which would enable us to replicate existing arrangements for these bodies to obtain their revenue but in a form consistent with the new local government finance system.
For combined police authorities such as the Thames Valley Police Authority, combined fire authorities, magistrates' courts committees and probation committees this whole process of seeking to replicate existing arrangement through regulations is unnecessary as in these cases the existing statutory provisions, unlike many other cases, are not framed in terms of the rating system and hence would be entirely satisfactory after 1st April 1990. Amendments 133B and 181C would provide that combined police authorities, combined fire authorities, magistrates' courts committees and probation committees would not be levying bodies and hence would continue to raise their revenue under existing powers.
Turning to Amendments Nos. 133A, 181B, and 164K, as the Bill stands the Common Council and

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Isles of Scilly would not be able to take account of any levy issued to them after 1st April 1990 and any levying bodies in their area would no longer be able to issue a precept, make a levy or have their expenses paid by either of these two authorities. This would exclude, for example, bodies such as the London Residuary Body and the Lee Valley regional park from making a levy on the Common Council. This is clearly not right and these amendments seek to redress the situation by bringing all charging authorities within the scope of Clause 81(1)(b).
Before turning to one final point, perhaps I may dwell briefly on Amendments Nos. I 75A and 196A. The noble Lord will have observed that the effect of those amendments is merely to delete from Clause 115 the three subsections that define what is meant in subsection (2) by a waste disposal authority, a combined police authority and a combined fire authority, and reinstate them in their proper place in Clause 142. That clause, together with Clauses 143 and 144. provides for the interpretation of the terms used in the Bill as a whole. It is therefore a small piece of tidying up.
The amendments delete references to specific charging authorities. I believe that that is the point about which the noble Lord expressed concern. The clause refers to charging authorities which include London boroughs, district councils, the Isles of Scilly and the Common Council. I believe that that covers the point made by the noble Lord; I assure him that the amendments are purely technical.
Lord Graham of Edmonton: I appreciate what the Minister has said and I am grateful. However, it puzzles me that clearly nothing has happened in the course of the passage of this Bill which has caused his advisers to come to that conclusion. In other words, the first premises on which the Bill was drafted were clearly incorrect, since nothing has happened since. Either second thoughts, wiser counsel or retrospection has prevailed. I only wish that that would happen more often.
On Question, amendment agreed to.
8.15 p.m.
Lord Glenarthur Lord Glenarthur moved Amendment No. 133B:
Page 43, line 43, at end insert (", combined police authority, combined fire authority, magistrates' courts committee or probation committee.").
On Question, amendment agreed to.
Lord Teviot Lord Teviot moved Amendment No. 133C:
Page 44, line 6, leave out paragraph (b).
The noble Lord said: I am afraid that we shall move into much lower gear with this amendment. It is a technical amendment. I shall speak also to Amendment No. 174A. They are probing amendments. I have already expressed my concern to the Committee about the Government's proposal to give passenger transport authorities levying rather than precepting powers. The Committee has decided that issue. The present amendments concern the Government's powers to further control a PTA's finances.
As the Bill is drafted, the Government have two powers to control PTA finances. First, there is the power on Clause 81(3)(b) which enables the Secretary of State to impose a maximum limit on levies. Secondly, Clause 104 allows the Secretary of State to community charge cap a district council whose expenditure includes the proportionate amount of the levy from the Passenger Transport Authority.
Effectively those powers mean that the Secretary of State can subject the spending of a PTA to attack on two fronts. That seems to me to be wrong in principle and it does not appear to apply to any other form of local government expenditure. It is particularly serious in respect of the power in Clause 81 to impose a maximum limit on the levy against which the PTA is not given any right of appeal. Surely it has been established that where the Secretary of State exercises a discretion on the level of expenditure of an authority, that authority has a right of appeal. Is it an oversight on the part of the Government that that right is not included in the Bill or is it their intention to cover the matter by regulations?
The amendment to Clause 81 seeks to remove the power of the Secretary of State to impose a limit on the levy and simply rely on the power to charge cap a district. That would surely be adequate as the threat of charge capping a district would be an effective deterrent to PTA overspending.
I now turn to the related amendment, Amendment No. I74A, which seeks to provide that in deciding whether or not to charge cap a district the Secretary of State shall disregard the amount of levy on that district from the PTA. I hope that I have firmly establised that PTAs have very good relationships with their district councils. They have expressed concern that the PTA levy could be the factor that causes them to be community charge capped. One can understand that concern, particularly in the circumstances where the levy involves substantial expenditure which may not directly benefit that district. For example, a light rapid transport system in a regional centre such as Manchester, Birmingham or Leeds may not be felt by adjoining districts to be to their immediate benefit.
As the Bill is currently drafted, the Secretary of State could impose a limit on a PTA levy and then community charge cap a district whose proposed expenditure has gone over the limit because of the size of the PTA levy. Surely that is unreasonable because it does not apply to other elements of local government expenditure.
I should be content if the Government would confirm, first, that a right of appeal would be given to the PTA against the Secretary of State's decision to impose a maximum limit on the levy, and, secondly, that the levy will be disregarded in deciding whether a district is to be community charge capped. I could then accept the Secretary of State's retaining the power to set a maximum limit on the levy.
I realise that this is a very complicated technical amendment, and perhaps I have not done justice to it. I have been through it about six times. I understand it but perhaps I have not made it clear. However, I am sure that the noble Lord, Lord Underhill, who will follow me, will make it as clear as daylight. I beg to move.
Lord Underhill: I am sure that noble Lords have followed what the noble Lord, Lord Teviot, said. I thought that he put his case very cogently. He reminded the Committee that last Tuesday we debated the question of the precepting of passenger transport authorities being changed to levying. I remind the Committee that on that occasion nine noble Lords spoke and not one of them supported the government attitude on this matter. I was the only speaker from the Labour Opposition. That indicates the all-round support. We may still have to determine certain aspects of the matter in the light of the proposition put forward by the noble Lord, Lord Jenkin of Roding, who said that he was considering the possibility of a suitable amendment at Report stage.
I must echo the question as to why the Government are seeking to take power in Clause 81 to impose by regulation a maximum limit on any levy that may be charged. Perhaps I may remind noble Lords what has happened in recent years. I think my dates are correct. In 1983 we had the Act which made it necessary for a passenger transport executive to seek government approval for its financial plans. We had what we commonly term the PEL—the protected expenditure limit. We then had in the 1985 Transport Act control of the precept for the first three years of the new joint transport authorities in the metropolitan areas; namely, the passenger transport authorities. The Committee will recall that the noble Lord. Lord Jenkin of Roding, reminded the Committee that we are still in the third year of that transitional arrangement.
Now the Government seek under Clause 81 to control the maximum amount of levy. Yet the main argument put forward for the change from passenger transport authority precepting to levying was one of accountability. The proposal to set a maximum limit on levies suggests very little faith in accountability. Either the Government have no faith in accountability—although that was their argument for changing precepting of PTAs to levying—or alternatively it is a further step seeking yet further reduction in expenditure on public transport in the metropolitan areas.
In Standing Committee in another place a similar Amendment—to delete paragraph (b) of Clause 81—was put forward. On that occasion, on 8th
March (at col. 1326 of Hansard), Mr. Christopher Chope, Under-Secretary of State, said:
"The clause does not contain a capping power. It has a levy limiting power. The purpose is to set limits on levies where none currently exists".
At that time there was no levying power for passenger transport executives. That came afterwards, in the Report stage after all the work of the Standing Committee in another place had been completed. How does that statement by the Under-Secretary of State in the Standing Committee in another place fit in with the decision taken on Report to introduce levying for PTAs in place of precepting? As the noble Lord, Lord Teviot, has said, the amendment must be considered with the provision in Clause 104 for the designation of a charging authority; that is, community charge capping on the same basis as there is presently rate capping.
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I want to emphasise, as the noble Lord, Lord Teviot, mentioned in his opening remarks, that we could find a passenger transport authority having its expenditure controlled in two ways: directly by the limit placed on the levy of a PTA under Clause 81, and indirectly by a district council being charge capped under the provision in the Bill for community charge capping. There is the possibility that the district council may consider that the levy from the PTA must be curtailed to help to bring the district council's expenditure to a level which the Secretary of State may consider necessary. The district council may need to decide what curtailment of expenditure is necessary and it could decide to curtail the expenditure of the passenger transport authority.
Such a procedure, under which excessive expenditure could be dealt with twice, seems both unnecessary and unreasonable in the light of the power under Clause 81 to set a maximum limit on a levy. Any such pressure by a district council would lead inevitably to all the dangers which noble Lords stressed in the debate last Tuesday. I remind the Committee that not one noble Lord spoke in support of the government proposal. Noble Lord after noble Lord stressed the importance of a passenger transport authority being responsible for carrying out county-wide services. Should there by any necessity for a district authority to seek to curtail the expenditure of a PTA it would undoubtedly hit the provision of county-wide services. Yet noble Lords from the government side stressed that it was the provision of county-wide services which was the very reason for PTAs being set up in the first place.
Amendment No. 133C seeks to delete paragraph (b) from Clause 81, removing the power of the Secretary of State to set a maximum limit on levies, thereby adhering to the Government's own faith in the accountability of elected members. In addition, Amendment No. 174A, to Clause 104, proposes that where the Secretary of State designates a district council to proceed with charge capping, the amount of any levy from the PTA shall be disregarded in calculating the district council's expenditure. I think I am correct in saying that under the precepting procedure the precept of a PTA would not be taken into consideration for the local council's expenditure because it is the precepting authority's expenditure and not the local authority's expenditure.
Under the present rate capping provisions there is the right of appeal to the Secretary of State and the right of challenge under Clause 108 for the proposed community charge capping. I shall repeat the question which I believe was asked by the noble Lord, Lord Teviot; namely, why is there to be no provision for any right of appeal by a levy-charging body against any maximum levy which might be set by the Secretary of State.
If there is to be a maximum levy set by the Secretary of State, I cannot understand why there should not be a right of appeal against it. At the moment we have an appeal against determination for rate capping and there is also provision for any challenge against the precept level. We ought at least to have a right of appeal on the matter of any maximum levying. I hope that the Minister will see the common sense in these two amendments, bearing

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in mind what I have said about the statement made by the Under-Secretary of State. I shall not read out to the Committee what Mr. Christopher Chope said as it is reported in Hansard at col. 1326, but I hope that the Minister will read his remarks very carefully. In addition to the point from his speech that I mentioned, he spoke of the types of authority covered which the Government thought to deal with by this levy provision. He referred to the Wimbledon and Putney Commons Act 1971, said that it had not been passed by a Labour Government—and indeed I do not think it was—and went on to speak of other minor authorities. When the clause was discussed and passed in the Standing Committee there was no intention to bring forward the maximum position to deal with public transport authorities. That came forward only at the Report stage in the other place.
For those reasons I hope that the Government will at least take these two matters back and carefully look at these two important amendments.
8.30 p.m.
Lord Brabazon of Tara: As my noble friend explained very clearly, these amendments concern the future control to be exercised over passenger transport authority expenditure. The noble Lord, Lord Underhill, reminded us that the Government have been exercising precept control over PTA expenditure for the past three years. Our aim now is to create an environment in which that is no longer necessary. I trust therefore that I can demonstrate that the concerns expressed by my noble friend Lord Teviot and by the noble Lord, Lord Underhill, are unfounded.
I turn first to the power to set a maximum on the levy. This power applies to all levying bodies and is not designed simply as a means of limiting PTA expenditure. Rather the power is needed to preserve existing statutory limits over those levying bodies which are at present bound by them. These bodies will generally be small boards which have in their legislation a maximum levy expressed in terms of existing rating legislation.
I can give another example to add to the one referred to by the noble Lord, Lord Underhill: the Tunbridge Wells conservators with an existing maximum of one-third of a penny in the pound. Without the power which my noble friend's amendment seeks to remove, it would not be possible to set a new maximum expressed in terms of community charge legislation. The conservators and many other boards like them would thus be left without a statutory limit on their levy. While it may well be doubted whether the Tunbridge Wells conservators will rush to take up this new found freedom, I am sure that the Committee can appreciate the difficulties the loss of this power would present overall.
I do not believe these are difficulties that we need face, because I can assure my noble friend and the Committee that we have no present intention of using this power to set limits on PTA expenditure. Indeed, we would not wish to do so except in very exceptional circumstances—both because of the very absence of a statutory mechanism for consultation and appeal,
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to which my noble friend Lord Teviot and the noble Lord, Lord Underhill, referred, and because the whole thrust of the change to direct billing is that it is the districts who should take a greater responsibility for PTA spending decisions and not central government. There is no intention of running a dual control system of levy and charge limitation as my noble friend suggested.
I turn now to my noble friend's amendment, Amendment No. 174A, on charge limitation. If districts are to take full responsibility for PTA spending decisions, then the PTA bill must be treated as part of their expenditure for all purposes, and that includes charge limitation. If this amendment were carried districts would be able to support excessive PTA expenditure without fear of being charge capped. Concern has been expressed that the charge to billing will lead directly to some districts being charge limited. If that is indeed the case then those districts must already be overspending significantly.
A district's share of PTA expenditure will be just 6 per cent. of its total expenditure and the transfer of PTA expenditure to the districts will he adjusted for in selecting districts for precept limitation. Districts have control over PTA budgets. A district on the edge of charge limitation can instruct its representatives to press for a lower level of expenditure. If that fails, it will have to make cuts in other areas of its budget just as it would to accommodate any other fixed expenditure items. Furthermore, I can assure the Committee that should the district still be precept limited the fixed nature of the PTA bill would be taken into account in determining the appropriate limit. With the increased accountability which will result from the change to the community charge we naturally hope that no districts will give cause for charge limitation.
My noble friend has asked me to give two assurances: that a right of appeal should be given to the PTA against the imposition of a maximum limit on the levy; and that the levy should be disregarded in deciding whether a district is to be charge capped. I cannot give him precisely those assurances, but I can give him two which I believe will meet his concerns. Firstly, I can assure him that in the remote event—and I emphasise that it is remote—of our proposing to use the power to impose a maximum on the levy, we should discuss the matter fully with the PTA concerned before final decisions were taken. Secondly I can assure him that in the process of charge capping the fact that the PTA bill was fixed would have a bearing—not at the point of deciding whether to charge cap a district but at the stage of determining the limit. The fixed nature of the PTA bill would, like other items of relevant information, be taken into account at that stage by the Secretary of State. I hope that my noble friend can accept what I have said on those two points and that on reflection he will feel able to withdraw the amendment.
Lord Underhill: Before the noble Lord, Lord Teviot, tells us his intentions on this amendment, perhaps I may ask the Minister to clarify two statements that he made which I may have misheard. I believe in the first part of his remarks he said that the Government had no intention of fixing a

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maximum limit on the levy for a a PTA. Later, toward the close of his speech, he said that if any maximum levy were to be set they would have discussions with the PTA concerned. Which is the Government's intention? If it is the former I hope that the Government will introduce an amendment to Clause 81 excluding that maximum from PTAs.
Lord Brabazon of Tara: Let me repeat what I said at the beginning of my remarks. I said that we had no present intention of using this power to set limits on PTA expenditure and that we would not wish to do so except in very exceptional circumstances. However, I cannot give an undertaking that it might never be done.
Lord Teviot: I feel much happier about his matter. One result of being attacked on two fronts has been that my noble friend has absolutely allayed any fears. He was kind about my speech. I had felt that a smelly old schoolmaster in his pipe-smoked tweed coat and grey flannel trousers would give Teviot four out of 10 and Underhill eight out of 10 for their contributions. I do not think he would have had to say anything about my noble friend.
I feel much happier about the matter and I shall read every word of the discussion. I am very pleased that the noble Lord, Lord Underhill, spoke when he did. I think that everything is now fairly clear. However, I have a duty to take advice and I may have to come back at a later stage. At this time I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 81, as amended, agreed to.
Clause 82 [Interpretation]:
[Amendments Nos. 134 and 135 not moved.]
Clause 82 agreed to.
Clause 83 agreed to.
Clause 84 [Revenue support grant]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 136:
Page 45, line 45, at end insert ("and
(cc) what amount of grant he proposes to pay to receiving authorities in reimbursement of the costs incurred by charging authorities in respect of the duties imposed by sections 21 and 23 (4) of this Act".).
The noble Lord said: With this amendment we move to Part VI of the Bill, which concerns grants. Reference has already been made to the grants position in debates earlier this afternoon. Indeed, I was gratified to find the Minister making favourable references to this amendment when he spoke on Amendment No. 119A earlier this afternoon. I believe that I am right in saying that he referred to the text of Amendment No. 136.
With this amendment we are not making dramatic changes to the grants system. However, before moving to Amendment No. 136—and I wish also to speak to Amendment No. 140—I ought to say something about our general attitude towards the grants system. In view of the huge uncertainty about
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the level and product of the community charge, and indeed of the national business tax, it is clear that the grants system will be the only way in which the Government can reinstate any measure of sense into the system of local authority finance.
It is quite clear that we shall have to have some needs and resources calculation. What is regrettable, indeed indefensible, in the Government's proposals in Part VI of the Bill is that the Government are giving no indication whatsoever of the way in which the revenue support grants will be calculated, on what principle they will be calculated, or on how justice will be done between one individual authority and another or between one class of authority and another. In that sense the noble Lord, Lord Rippon of Hexham, used the word "skeletal" on a number of occasions about the Bill. This is a skeleton of a Bill. It has no flesh on its bones. It does not tell us anything other than the classic formulation which we have in Bills of this kind which provides that the Secretary of State shall do as he thinks fit and that we shall have to trust not only this Secretary of State but no doubt successor Secretaries of State if we doubt that there is going to be any justice in local authority financing. At the moment I am not inclined to trust any Secretary of State—present, past or future—to exercise such wide powers as are conferred upon him by this Bill, and in particular by this part.
In view of the moderation of my remarks I hope that the Government will feel that these amendments are capable of sympathetic treatment. The first aim is to provide that when the Secretary of State determines the amount of revenue support grant he must inform the local authorities and the public how much of the grant is being paid for the administration of the community charge and how much is being paid for the cost, in particular, of the registration of the community charge. At the moment there is no requirement of this kind. It is not clear, either to the public or to the local authorities, how much is being granted for expenditure—this is what the public, the electors, the community charge payers, believe that they are receiving for their money—and how much is being raised in order to pay for the administrative costs.
The noble Earl will agree that if we are to have accountability, and if the community charge payers are to know accurately how much goes towards paying for the services they are receiving from their local authorities, and from where it comes, they should know also how much is being paid by the Government towards those local authorities, not for specific services but for the administration of the community charge. In view of the admittedly high cost—I think we can all be at one on that—it is important to know how much the Secretary of State is allowing.
Amendment No. 140 is a similar amendment. There is the procedure in the Bill for a distribution report. The requirement under this amendment is to disclose in the distribution report how the grant to cover community charge administration and registration will be distributed between authorities. This is a by-product of the procedures to which the Committee has agreed as between different local authorities. It is clearly important to know how the

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sums involved are being distributed between those authorities. However much the Government may feel strongly in favour of the principle of the grants section of the Bill, I hope that they will feel that these amendments are modest, not at all threatening, and deserve the support of the Committee. I beg to move.
8.45 p.m.
The Earl of Caithness: With the leave of the Committee I should like to spend a little time introducing Part VI, which is Clauses 82 to 94 inclusive, because it is essential that I set it out for the Committee. It is relevant to future amendments. It is also extremely relevant to what my noble friend Lady Gardner of Parkes said earlier this afternoon. It is extremely sad that she is not in her place to hear what I have to say because it would go a long way to soothing her fears about the grants system.
As the noble Lord, Lord McIntosh of Haringey, said, this Part of the Bill deals with the payment of revenue support grant to local authorities. As we turn to consider the amendments to this part we shall no doubt be discussing some of the details of the grant system, but before we do it might be helpful if I briefly sketch out how the revenue support grant system will operate.
In developing the new arrangements for grant support to local government we have aimed to produce a system which is more stable, more intelligible, more accountable and above all simpler than the present one. There will be a single revenue support grant which will compensate in full for variations between areas in the need to provide local services and will also provide additional support for services in proportion to each area's population.
Grant will be distributed so that if every authority spends at the level of its needs assessment all authorities will be able to set the same community charge. The needs assessment will be our assessment of what each authority needs to spend to provide a standard level of service efficiently. The money to pay for this spending will come, as now, from three separate sources: community charges, business rates and grant. Neither grant nor business rates will change according to what the authority actually spends. Authorities will, I hope, welcome this as a major simplification of the present arrangements with their constantly varying grant. That means that any changes in spending will fall on the community charge payer. The authority will therefore be totally accountable to the charge payer for its spending decisions.
Needs assessment will play a key role in the new system. As I have explained, it will be the basis for the distribution of grant. We believe that the needs assessment methodology can and should be much simpler than at present. The complexity of the assessments discredits the grant system by making it incomprehensible to local taxpayers and even to some local authorities. The new system will have fewer indicators of need, which will greatly simplify the system while continuing to reflect needs no less fairly than at present. Our key aim is to strike a balance between simplicity and fairness.
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The needs assessment methodology will be set out in the distribution report, the first of which will be in place well in time for the first settlement under the new system. The distribution report can be amended from time to time if necessary, but the Bill does not require, and we do not envisage, an annual report. Each distribution report will apply until it is either amended or replaced by a new one. While we do not intend there to be a new basis of distribution every year— that would re-introduce a great deal of uncertainty—data from authorities will be updated each year. For instance, the number of school children may increase.
The distribution report will describe and define the indicators to be used in assessing need and contain some of the weightings to be given to certain indicator data. The actual needs assessments, and hence the grant entitlements for each authority, can be calculated from this, but only after the total revenue support grant for the year has been fixed.
The total of revenue support grant for a year will be set out in an annual revenue support grant report which will be laid before another place for consideration and approval. The report will determine the amount to be paid to certain specified bodies which provide services to local authorities and the total amount available for distribution to authorities. This amount of grant will be distributed on the basis of the methodology set out in the distribution report applying at the time. This will produce a separate figure for the needs assessment for every authority and a grant entitlement for each charging authority to be paid into its collection fund. There will be a separate and different distribution report and separate and different revenue support grant reports for Wales, where slightly different arrangements will apply.
Once the revenue support grant report for the year has been approved in another place, the Secretary of State will formally calculate the amount of grant to which each authority is entitled and will inform them of that amount. This amount is then fixed for the year. We envisage that, in fact, provisional grant figures will be provided when the report is debated, as is done now.
There will be one opportunity to make another grant calculation, perhaps to put right data errors or to update some information, but any change in grant as a consequence of this calculation will be made after the end of the financial year. Having grant certainty for the year will do away with one of the difficulties of the present system which makes sensible financial planning so hard for local authorities. At present there can be considerable variations in grant entitlements during or after the financial year. This has been due largely to variation in spending by individual authorities, but the new revenue support grant will be independent of expenditure and therefore there will he no change in grant in the year.
The Committee will see that the system is really very straightforward and simple. We set out in one report, the distribution report, how needs are to be assessed and grant distributed, and then in a further report each year we set out how much grant is to be paid. Grant entitlements will then be calculated and payment made accordingly.

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Having set out in some detail how the grant system will work, I turn to the amendment moved by the noble Lord, Lord McIntosh of Haringey. This amendment would require the Secretary of State to set out what amount he would pay to receiving authorities in respect of the costs incurred by charging authorities in collecting charges and penalties and in providing a registration officer with staff, accommodation and other resources. These will, of course, be important functions of receiving authorities and we want them to take very seriously their responsibilities in this regard. But I do not think that this requires us to single out these functions for special treatment.
The need to provide for collecting, enforcing and administering the charge will be taken into account by the Secretary of State when he determines the overall level of revenue support grant and sets out the basis for distribution of grant. The needs assessment of charging authorities will take into account their need to spend on these as on other functions, and their grant entitlement will reflect this. This mirrors what happens under the present system. The GRE for rating authorities covers the cost of rate collection, so their grant entitlement supports those costs as it does any other.
The noble Lord may be concerned about whether there will be a separate indicator relating to community charge administration and collection. We have, of course, said that we want to reduce the number of indicators from its present level—there are more than 60, I believe—and there have been all sorts of rumours that there will be only six or fewer. No decisions have yet been taken. We are still looking at the options. But I think it is safe for me to say that there will be more than six indicators overall. The treatment of community charge costs has yet to be decided but we should bear in mind the overall aim of simplification. It may be, for example, that population would be the best basis for distribution, as the number of properties is now for rate collection costs. And there may be other services which could usefully be taken with this and distributed on the same basis. But whether it is dealt with separately or not, it will be fully taken into account.
The requirements introduced in Amendments Nos. 136 and 140 would mean making available a specific amount of revenue support grant for this service and describing how this amount is to be distributed. This would, of course, run directly counter to the unhypothecated, block grant nature of revenue support grant. Such an arrangement would move towards being, in effect, a specific grant. But the Government take the view that when the extent of central government support for local services has been decided, it is for local authorities to decide for themselves how best to supply them. A specific grant would be an inappropriate means of supporting a mainstream statutory function of all authorities.
Those are the general grounds on which I would argue against any separate treatment for a particular service. But there are other practical arguments against it, too. First, grants for specific functions are generally designed to influence local authorities to do something or more of something than they otherwise
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would. But surely authorities' own best interests will ensure that they need little encouragement to administer their own finances efficiently? If they do not, they will be affecting their own coffers, and in due course the costs of any mismanagement would fall on their charge payers. I am sure they do not want any more of that than we do. So that argument fails as a reason for needing a separate grant element.
But, secondly, I have to tell the Committee that these amendments would not in any way oblige the Government to meet a greater share or a higher level of costs than they thought appropriate. Even with these amendments, we would first set the total of revenue support grant. Then the amount to be paid to specified bodies would be deducted. The amendment as drafted seems somewhat confused on this point, but I think the intention would be that the amount to be payable in respect of these costs would be identified and deducted, to he distributed on a separately specified basis. What remained would be the general block grant to be distributed on the basis set out in the distribution report. In other words, the more grant was set aside to support these costs, the less would be available for the main distribution. This arrangement would not affect the total amount of grant to be paid.
It could affect the overall distribution of grant, if the separate element were distributed on a basis very different from that used for the main distribution. But in any case grant distribution would be related to an assessment of need to spend. So having a separately identified element of grant would not mean that there would be any relationship with actual spending. Some overspending authorities would still doubtless overspend. They would get no more grant. High costs would still fall to be met by the charge payer, who would, on the other hand, benefit from low costs. So I can see no advantages from the arrangements set up by these amendments and, indeed, some disadvantage in giving the impression that we are treating these costs differently.
Lord McIntosh of Haringey: We must be grateful to the Minister for his clear exposition of the Government's thinking in this part of the Bill. It certainly is helpful to have it set out in this way, and it is a good deal clearer when he says it than when we try to read it in the notes on clauses. Certainly it is a good deal clearer than when we read it in the Bill. Nevertheless I still find myself in considerable difficulty about many of the points he is making.
The first claim he makes is that the new system will he "above all, simpler". I have to remind him that in a series of Acts relating to local government over the past nine years, in the lifetime of this Government, what we have had is not a simpler method of administering or financing local government, but increasing complexity on a grand scale. Every Bill that has been brought forward has increased the complexity of the system, and every administrative act by Ministers has increased the complexity of the calculations to which the legislation gives effect.
Indeed, it has got to the stage where, when the rate support grant is announced, it becomes virtually impossible for real consultation to take place with local authorities and it is, I think, notorious that the

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effectiveness of the Central Consultative Committee, which used genuinely to discuss local authority expenditure and where the resources were going to come from, has declined dramatically under this Government. So, although I do not deny that the principle of the distribution report system and the grant based on the current distribution report is a better way of doing it than we have at the moment, I certainly deny that it is doing anything more than getting rid of some of the complexities introduced by the Government.
I also return to the charge which I made in introducing these amendments, which is that there is no indication whatsoever of the principles of which the Secretary of State will take account in calculating the grant, or of the way in which it will be allocated among different local authorities. It is all very well to say that the framework is the framework of a distribution report. That does not go anywhere to saying what the Secretary of State will put into the distribution report. In other words, we are still being required to sign a blank cheque. We are being asked to accept that the Secretary of State, having accepted the procedures so lucidly explained by the Minister, has a clear idea, about which we are unworthy to be told, of what will be in the grant calculations.
Turning to the specific amendment, I do not believe that the Minister can have understood the proposals fully. We are not saying that we are looking for a greater share or a higher level of grant for the purposes of explaining how much the administration costs will be. We are not looking for an increase in the total amount. In so far as the Minister's reply covered those points, it may be our fault in the drafting of the amendment. However, that was not what we intended.
In the amendments we are trying to ensure that the extent to which the government grant is being swallowed up in the extra administrative costs required by this Bill, these procedures, this way of financing local government—and only by this way of financing local government—should be made explicit to the community charge payers. I cannot imagine any more modest demand for accountability as between costs incurred by local authorities in providing services and costs incurred purely as a result of government action. I cannot imagine on what grounds the Government can, with a straight face, deny that the community charge payers have a right to know what money is going to the services and what money is going to the extra administration required by the complexities of the collection system.
Although we have grave reservations about many other aspects of the grant system, to that extent I am inclined to say that we shall either ask for the decision of the Committee now or that we shall come back with other amendments on the point at the Report stage. I do not know whether the noble Baroness, Lady Seear, wishes to add anything to that.
9 p.m.
Baroness Seear: I speak as an ignoramus on matters of local government finance but I do not suppose that I am alone in that. I wondered whether the Minister would answer one or two questions. It helps to have the statement that he made but it seems
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to me that all the important decisions will be taken by the Secretary of State. They are important in terms of the amount of money local authorities will receive.
Can the Minister say how clear the way in which decisions are arrived at will be made? We are told that the Secretary of State will decide, but how transparent will the whole performance be and how much consultation will there be with individual local authorities as regards what the expenses will he? It sounded a highly centralised and somewhat dictatorial way of dealing with the provision for local finance. It is very important because, as the Minister said, any failure to meet the costs of running local government must fall directly on the community charge payers. Therefore they have a direct interest in wanting to know how the support grant has been calculated and whether it has been calculated correctly.
I should like to ask the Minister one further question. I am glad that the noble Lord, Lord Belstead, has come into the Committee at this moment. During the debate on the Education Reform Bill the noble Lord told me that I would have my answer to this question when the local government Bill was before the Committee. It has now come before the Committee. Given that the redistribution carried out by ILEA is being moved with the abolition of that body, many Members are concerned about how the level of spending for schools in the poorer boroughs will be sustained. Unless the support grant is able to compensate for the loss of the elements which, through ILEA, redistributed amounts from the wealthier boroughs to the poorer boroughs, the schools in the poorer areas will quickly become sink schools. Can the Minister tell the Committee that that will not happen and that the support grant will be adequate to replace what would have been given through the redistribution carried out by ILEA?
Baroness Fisher of Rednal: The noble Baroness, Lady Seear, has asked the Minister two questions. I was interested to hear the Minister say that there would be fewer indicators of need. That phrase worried me more than any other. I followed what the Minister said but I had thought that the "need" element for local authorities meant just that; need for the needy authorities. I believe all Members will agree that some authorities have more severe problems than others. One does not wish to enumerate them because those Members present know the difficulties faced by some local authorities. Will the fewer indicators of need operate against those local authorities which need the money, particularly the inner city areas throughout the country?
The Earl of Caithness: I should first like to answer the question asked by the noble Baroness, Lady Fisher of Rednal. No, it will not affect those authorities which have special needs. The whole purpose of our system is to simplify it. We believe that some of the duplication can be removed. Other services can usefully be taken on a population basis and distributed on that basis. The core point of the concern expressed by the noble Baroness will continue to be met by the needs assessment.

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Although we are reducing the number of items taken into account, we do not believe that the local authorities will suffer.
I am glad to say that the noble Lord, Lord McIntosh of Haringey, and the Government are at one in their reflections of the present system of grant calculations and distribution. As the noble Lord has said, it is incomprehensible. We believe that our proposed system will be much simpler because it will be assessed on a needs basis rather than on a spending basis. I believe that that will be much clearer to local authorities. It can be carried out in advance of the financial year rather than the authorities constantly having to return and rather than the grant being affected by the actual spending of the authority.
To answer the noble Baroness, Lady Seear, the distribution basis and the revenue support grant will have to be set out in reports which, as I said, will have to be clear in themselves. I reiterate that they have to be approved in another place; so the concern of the noble Baroness about how clear the process will be is to be debated in another place. Of course, I can reassure the noble Baroness that there will be consultation with the local authority associations about the amount of grant each year.
On the second point raised by the noble Baroness regarding ILEA, the needs assessment of all the inner London boroughs will take account of their new responsibilities for education and the grant collection will ensure that additional needs which cannot be met from local resources will be met from grant. At the moment I am unable to give further details, but I shall see whether I can ascertain more information for the noble Baroness.
Lord McIntosh of Haringey: I suppose we have made some small progress in that the Minister indicated that he will support my Amendment No. 144, which provides for the consultation with,
"such representatives of local government as appear to him to be appropriate".
Noble Lords: Oh!
Lord McIntosh of Haringey: That is exactly what the Minister said would happen. I cannot see any reason why he should not give effect to it in law if he is volunteering his agreement with our intention in that amendment. However, we are not debating that amendment now, and the Minister can find out ways in which to backtrack on the commitment he has just given.
The answers given are not satisfactory and these are not matters we can let go. It is not appropriate for me to seek the opinion of the Committee at this time of night but I give warning that, if we cannot even reach agreement on such a simple matter as setting out for the benefit of those paying the community charge how much is coming from grant for services and how much is going on the administration of the community charge, then we are making very little progress in the face of what must be deliberate lack of clarity on the Government's part in saying how these grants are to be calculated and how they can be
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justified to the users of local authority services. In other words, we are a long way from accountability.
We have other amendments on the Marshalled List which attempt to deal with the matter in more detail but we are disappointed with the reception we have received so far. In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 137:
Page 46, line 4, at end insert ("and
(c) shall take into account—

(i) the latest information available to him as to the aggregate of all authorities' expenditure.

(ii) any probable fluctuation in the demand for services giving rise to additional expenditure, so far as the fluctuation is attributable to circumstances which are not under the control of local authorities;

(iii) the need for developing those services and the extent to which, having regard to general economic conditions, it is reasonable to develop them; and

(iv) the current level of prices, costs and remuneration and any future variation in that level which in the opinion of the Secretary of State will result from decisions which appear to him to be final and which will have the effect of increasing or decreasing any particular prices, costs or remuneration.").

The noble Lord said: This amendment is the next stage of our attempt to introduce a little glasnost into the Government's procedures. Clearly, the Secretary of State will have before him, when preparing his reports and determining expenditure, information on local authorities' expenditure. No doubt he will have available to him information on fluctuations in demand for the services and in the charges to be made by local authorities for services so that the net cost can be calculated. I am sure that as a responsible Minister of the Crown he will be concerned with the need for developing the services and the extent to which it is reasonable to develop the services, or, indeed, to reduce them if that is the right thing to do. After all, the Secretary of State is taking a very close interest in local authority expenditure. He will not deny that. He must be properly informed about all these matters in order to reach a just decision.
The Secretary of State will have to be concerned with the level of prices, costs and remunerations which apply to local authorities. I do not want to repeat the argument that we had last week about the relevance of the retail prices index, but there was a great deal of recognition that there are considerations and other local authority costs which vary from the retail prices index. It is not possible to operate on too simple a formula.
I am not arguing for complexity for its own sake: I am saying that the Secretary of State, if he is behaving responsibly in preparing these calculations, will have to take matters of that sort into account. There is no obligation on him to do so in the Bill as drafted and it seems reasonable that he should be required to do so if we are to have any confidence that the decision he arrives at is justified.
It is not just a matter of the nature of the Secretary of State's considerations: it is a question of whether the judgment which another place takes when these orders are placed before it is based on information

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which is reliable. Unless these calculations are made available to Members in another place they cannot make a sensible judgment whether the Secretary of State himself is sensibly determining the level of support grant or whether his distribution reports are realistic. In that sense, though it is not proposed that these regulations should come before this Committee, it is not inappropriate for us at this time to suggest the kind of background information and the basis of calculation which the Secretary of State will have to use and which he should be taking into account, and which, I suggest, he should be making available to another place in order that they may approve the order with the due concern and responsibility which they must have for these matters. On this basis I beg to move.
9.15 p.m.
The Earl of Caithness: As we have heard, the purpose of Amendment No. 137 is to re-introduce into the Bill those factors which the Secretary of State is required to take into account before determining rate support grant in the present system under the Local Government, Planning and Land Act 1980. Therefore, it seeks to retain a link between the amount of grant and the level of expenditure. I say to the noble Lord, Lord McIntosh of Haringey, therein lies my difficulty.
The new system that we are proposing is designed to encourage local accountability by establishing a clear link between the need of an authority to spend and its community charge. The revenue support grant system will continue to compensate local authorities for variations in their needs, but the grant of an authority will no longer be dependent upon its expenditure, only its need to spend. Our purpose is to break the present link between grant and local authority spending.
If a Secretary of State were required to take into account the actual spending of a local authority when he determined the amount of grant, this would run directly counter to our intention that the grant should he fixed in relation to the need to spend rather than on the level of expenditure which local authorities choose to incur. Under the new system, if a local authority chooses to spend above the level it needs to spend this will readily be apparent in the community charge and the community charge payer will doubtless take account of that at the next opportunity he has to cast a vote. On the new basis, it is not something that the Secretary of State should he required to take into account when determining the amount of grant.
Lord McIntosh of Haringey: I find that answer almost entirely misconceived. In these amendments it is not proposed that the Secretary of State should base the revenue support grant on the expenditure of local authorities, but merely that information on the expenditure of local authorities should and must be available to him in making his calculations.
I suggest that the whole distinction between having revenue support grants based upon needs and resources rather than expenditure is misconceived. It is not the case that revenue support grants are based on expenditure: they are based upon what are
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supposed to be objective calculations of needs and resources. That is the basis upon which successive Secretaries of State have justified their rate support grant awards and their rate support grant figures over the years. It was Mr. Michael Heseltine, the Secretary of State, who added complexity to an already complex calculation by the introduction of multiple regression techniques into the calculations of the grant from the estimates of needs and resources. It was not at all on the basis of expenditure.
That is not to say that the Government do not concern themselves with the expenditure of local authorities now or in the future because both under existing legislation and under Part VIII of this Bill the Government are taking a keen interest in the expenditure of local authorities and propose to use it in order to limit the level of community charge which is raised. The idea that we are moving from an unjustifiable grants system based upon expenditure to an justifiable grants system based on needs and resources is almost entirely phoney. First, that was not the case before and, secondly, we are not moving away from it.
In both cases I reject the charges that the Government make and the analysis which the Government make about these amendments. To say that information on changes in demand, the need for service development, the need for information to be available on local authority expenditure as a whole and the need for information on costs, should be taken into account by the Secretary of State, is quite a different matter from saying, as the Minister appears to be saying, that what we are advocating is a change to a calculation of grant on the basis of expenditure.
I hope that I have not done any injustice to the Minister in what he said, but I hope that if I now withdraw the amendment, as I propose to do, he will look at the arguments that have been put forward this evening. I hope that he will recognise that his allegations about our amendment and the implications of it are almost entirely misconceived. However, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 138:
Page 46, line 7, at end insert—
("(6A) The report shall also include—

(a) details of the factors taken into account in the estimate of the distributable amount for the year referred to in paragraph 8 of Schedule 8;

(b) an estimate of the total amount for the year of community charges to be raised by charging authorities and a reconciliation of the factors taken into account in this estimate within the related factors in (a) above and elsewhere under this section.").

The noble Lord said: We try again, without much hope of success and without much hope of the arguments penetrating. With this amendment we ask that when the revenue support grant report is laid before another place, as it will be once a year, the Secretary of State should do the other place the courtesy of explaining what he estimates the income of authorities to be, and indeed each authority to be, from the national business tax, and give an estimate of the total amount of the community charges raised

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by local authorities and how he has arrived at that estimate.
There will be disputes about these matters. There will be difficulties in arriving at the best estimates. The complexity of the system is such that it is not obvious what resources will be available to local authorities. On the other hand, it is essential that in reaching a decision the House of Commons should know not only what are the other resources against which the revenue support grant will be calculated but also how that estimate has been arrived at. There is nothing more frustrating than the position we had earlier when discussing the residual rate, when totally different sets of figures appeared to be circulating in different parts of the Committee on the effect of the residual rate on the individual community charge payer and ratepayer in certain inner London boroughs. That difference of evidence cannot be resolved on the floor of the Committee tonight, but when the House of Commons comes to consider a revenue support grant order it must have some confidence that it has the correct figures. In order to do so it must have the basis of calculation used by the Secretary of State in preparing the order.
I suggest that this is not a threatening amendment. It does not force the Secretary of State to make a judgment any different from that which he would otherwise make of the recommendations he will put to another place, but requires that he should do so with the utmost openness and make his calculations available so that they can he sensibly discussed there. I beg to move.
The Earl of Caithness: There are some technical flaws in this amendment, the chief of which is that there is no "estimate" of the distributable amount, but rather a calculation, albeit one based on estimates of certain amounts, and for that reason the amendment as it stands does not achieve its purpose.
However, I would not of course argue against it on that ground, since there are more important reasons for disagreeing with the noble Lord. I imagine that the concern underlying it is that somehow in making his estimates and doing his calculation the Secretary of State will not act reasonably, and that authorities will not benefit as much as they could from the proceeds of business rates. I understand the concern authorities have that the changes we are making to the rating system should not inadvertently disadvantage local people. Indeed, we share that concern, but I believe, for good reason, that this will not, and cannot, happen.
First, the Secretary of State must, as always, in using his discretion to make the estimates which then form the basis of his calculation, act reasonably. An authority which believes he has not may he able to challenge his action. Furthermore, Members of another place will have the opportunity in the debate on the revenue support grant report to question the Secretary of State, and I have no doubt that they will represent the interests of their constituents most vigorously. But, secondly and more specifically, the non-domestic rating account for each year will show the amounts of business rates paid in by local
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authorities and the amounts paid out to them. It will be quite apparent on the face of the account whether it is in balance, in surplus or in deficit. If it is in deficit, that will reduce the amount which can be distributed the following year. If it is in surplus, that will increase the amount which can be distributed the following year. What this means is that any money coming into the pool can only be used for redistribution and will be used for that purpose. It cannot be siphoned off for any other purpose. Conversely, only the sum coming into the pool can be paid out; there is no source of additional money.
The Secretary of State's calculation will be based on estimates which may prove not to be entirely accurate predictions of future trends. However, if this is so, and the distributable amount calculated turns out to be greater or smaller than the amount actually available, the necessary adjustments will be made the following year. In short, I believe that the non-domestic rating pool is being set up in such a way that authorities need have no fear that the proceeds of non-domestic rates will go astray.
I had thought that the noble Lord, Lord McIntosh of Haringey, was on the point of giving up, but I am delighted that he moved the amendment. As he knows, the Government are always open to argument and I recognise the strength of his concern. I shall certainly undertake to consider whether we can amend the clause to provide that the estimates upon which the calculation is based should be set out in the report as well as the distributable amount itself. Indeed, perhaps the noble Lord and I might have a word about that between now and the next stage of the Bill's proceedings.
I now turn to the second item. The report is to include an estimate of the total amount for the year of community charges to be raised by charging authorities and a reconciliation of the factors taken into account in this estimate with the related factors in the calculation of the distributable amount and elsewhere. The first is clear and straightforward. However, I cannot accept it because it would prejudge local authorities' budgeting decisions.
The report will, on present plans, be made about the same time as the rate support grant is made, in November. It will set out the amount of revenue support grant to be paid to authorities. It will set out the distributable amount of non-domestic rates. We will provide figures showing individual authorities' needs assessments and the grant entitlement of each receiving authority. We will be able to say what the national norm is for the community charge for spending at need. However, since the actual community charges will depend on authorities' spending decisions, which will not yet have been taken, we will not be able to make an estimate of the amount to be raised by charging authorities.
Since the report will give the grant total and the NNDR, we will know the total of authorities' needs assessments. It is a simple matter of arithmetic to calculate the amount which will have to be raised from the community charge if authorities spend at need. By definition this will be consistent with the grant and NNDR totals, but is is unlikely to be the same as the actual amount raised, which will of course depend on local authorities.

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For the same reasons there would be difficulties with the final part of the amendment, the reconciliation of the community charge total, RSG total and the NNDR distributable amount. As I have just explained, a reconciliation of these figures, on the assumption that all authorities spend at need, is simple arithmetic. However, a reconciliation taking into account actual spending and actual charges cannot be done in the revenue support grant report.
I am afraid that this has been a rather long and technical explanation of the problems arising from the amendment. I hope, however, that the Committee will accept that in certain respects it fails to achieve its objective and in others is based on ill-founded worries. Given this, and my undertaking to consider, whether we could include more information about the basis on which the distributable amount is calculated, I hope that the noble Lord will feel able to withdraw the amendment.
Lord McIntosh of Haringey: As the Minister rightly says, the amendment is in two parts. The first refers to national business tax and the second refers to the receipts from community charges. I must say straight away that I am most grateful for the undertaking given by the Minister about the national business tax and I look forward to hearing his conclusions once he has taken it away and thought about it. Further, I shall certainly be pleased to talk to him about the matter at any time before the next stage of the Bill's proceedings.
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As regards the second stage, it may well he that the Minister has a point. When drafting the amendment it was not our intention to prejudge the local authorities' community charge calculations. Further, if the timing of the report is such that it would have this effect, then clearly that situation would be undesirable.
I still believe that the purpose behind the amendment is sound. It is important that when the settlement is made the public should know what the Government think will be the result of the settlement in terms of the community charge, because after all that is what hits the headlines when the grant settlement is made. If well-informed calculations are not made of how much the community charge will cost the individual in each local authority, then ill-informed calculations will be made. We should prefer to see well-informed calculations rather than ill-informed calculations.
I hope that we shall he able to explore the possibility of our coming together on this matter and achieving our objective of knowing what the Government expect to come out of the grant settlement in terms of the community charge. without prejudging local authority decisions. Perhaps when we meet we can talk about that matter also. On this occasion, not giving up has perhaps yielded some minor movement. for which we must be grateful. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 84, agreed to.
Clause 85 agreed to.
9.30 p.m.
Clause 86 [Distribution reports]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 139:
Page 46, line 32, leave out subsections (1) to (3) and insert—
("(1) The Secretary of State shall—

(a) determine in relation to each charging and precepting authority notional expenditure assessments having regard to their functions and needs in accordance with principles to be applied to all authorities, and

(b) make a report containing the basis on which he proposes to distribute among receiving authorities those amounts of revenue support grant which fall to be paid to such authorities under this Part, being a basis which has regard to the notional expenditure assessment determined under subsection (1) (a) above.

(2) Before determining the notional expenditure assessment or making the report under subsection (1) above, the Secretary of State shall consult such representatives of local government as appear to him to be appropriate.
(3) This report shall be laid before the House of Commons and shall specify the principles on which the notional expenditure assessments and basis of distribution are determined.").
The noble Lord said: In moving Amendment No. 139 I should like to speak also to Amendments Nos. 141 and 144. I misjudged the Minister when he agreed to the principle behind Amendment No. 144, because I think that he was also agreeing to the principle behind No. 141. I take it that he will be able to accept those amendments and that I can concentrate upon Amendment No. 139. It is of more importance than may appear from the wording of the amendment. The point behind it, which must never be lost sight of, is what I think economists call the gearing.
If there is any error in the Government's assessments of the needs of a local authority and those needs have to be met by raising expenditure, the very fact that so much of local authority expenditure is financed from central sources—that is, the grants element and the national business tax element—the effect of any miscalculation of needs on the final community charge levied will be much greater than one for one. One cannot put a figure on it. But if, for example. there were a 10 per cent. error in the assessment of needs, or there were to be a 10 per cent. change in needs through no error on the Government's part—one of the points made in the earlier amendment we debated—the effect on the community charge, because of the gearing, could be 20 per cent., 30 per cent. or 40 per cent. That is the nature of the beast which has been recommended to the country by the Government. It is a dangerous and inflexible beast. The dragon flicks its tail and all sorts of unintended effects, about which the dragon with its small brain does not know, can result.
The Secretary of State must do everything he can to establish what the needs of local authorities are, in accordance with the acceptable, understood and agreed principles, and make that information available to the public. The object of the exercise—accountability—cannot be achieved unless the Secretary of State acts with the utmost openness and consistency in making his calculations and explaining how they are arrived at.
Those matters are too important to be raised and withdrawn in a few minutes after a bland government
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reply. I hope that I can expect the kind of sympathetic treatment from the Minister that we had on the last amendment. I hope that he will confirm his commitment to consultation with local authorities which is being debated in this group of amendments also. I hope that I shall be able to withdraw these amendments or have them accepted with a light heart. But if that is not the case, if we are not making progress towards openness on the part of the Secretary of State in arriving at his grant settlement, then I am bound to say that we are moving even further from the principle of accountability which is the Government's main justification for all these amazing administrative procedures and the amazing social injustice which is involved with the community charge.
Unless we have an indication of understanding and assent from the Government, then this matter will have to be taken further, either now or at a later stage. I beg to move.
The Earl of Caithness: The noble Lord has given us a full explanation of the purpose of these amendments. He sees Amendment No. 139 no doubt as a safeguard for local authorities, setting constraints on the Secretary of State's powers and ensuring that certain steps are taken. I understand his argument but I hope to show the Committee that the noble Lord's concerns are misplaced.
First. we have already produced—as long ago as last September—one of our series of yellow-covered booklets about the new grant system. It contains a lot of information about how we intend the new system to work. At this stage I am delighted to see my noble friend Lady Gardner of Parkes in her place. I hope that she will read Hansard and what I said when I spoke to Amendment No. 136, which was related to grant. Of course it is very relevant to what my noble friend said earlier, but doubtless she too has read the yellow-covered booklet and knows that in the booklet we proposed a system of "needs assessments"—that is, assessments of need to spend. These, it says,
"will continue to reflect the real disparities in the circumstances of different areas which affect authorities' need to spend in order to provide a standard level of service efficiently".
It goes on to say,
"There will be a separate assessment of needs made for each authority and it is likely that these will be built up from assessments for each of the major services, with a single assessment for all other services".
So we are going to produce a "notional expenditure assessment" for each authority; it will have regard to authorities' functions and it will measure their need to spend. The assessments will be based on principles applicable to all authorities, or all authorities in a class.
What more will the distribution report contain? It will describe how grant is to be distributed on the basis of these needs assessments. As the yellow booklet says, grant will compensate in full for differences in needs assessment. If Authority A has a needs assessment£5 million higher than Authority B, it will get £5 million more grant than Authority B.

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There will also be an additional slice of grant distributed as an equal amount per adult and that will make up each authority's full grant entitlement. The effect of this is that, if every authority spends at the level of its needs assessments, all authorities will need to raise the same level of community charge.
The system is simple and it is not a secret. Local authorities need no safeguard against it. This brings us to the second reason why I do not think authorities need be concerned at the present form of Clause 86. It is not open ended and we do not make the mistake of thinking that it is. The Secretary of State must always exercise his discretion reasonably. He cannot settle on an arbitrary basis for the distribution of grant and it is difficult to see why he should want to. The expenditure of all local authorities is our concern and in considering what level of support to provide, again, we take account of the position of all authorities. We are only too well aware that if we were to act capriciously or unreasonably, some authority would no doubt seek judicial review of our action.
But there is a further safeguard, before things reach that stage. It is that each distribution report, the initial one, any replacement and any amendment report, will have to be approved in another place before it can have effect. I have to say that it is up to those in another place to determine how effective that scrutiny is. The Secretary of State can be held to account for anything in such reports if concerns about authorities are raised in another place.
In saying that our intentions are reasonable and do not need to be constrained, I am not of course implying that all authorities will agree with every aspect of what we propose. Indeed, as some of them hold diametrically opposed views this would be quite impossible. But this points up another flaw in the assumptions which appear to underlie this amendment. Procedural constraints, such as those this amendment would establish, act as legal hurdles but cannot bring about any particular outcome (in this case, any particular grant distribution) as they do not, and cannot, remove the Secretary of State's discretion. This is why I do not believe it would be an improvement to make this amendment to the Bill. It would add to its procedural complexity and to the possibility that we might make a technical slip—and I remind the Committee that it is authorities which suffer in the end if we cannot operate the system simply and flexibly—without materially affecting the system we propose to set up.
Turning now to Amendments Nos. 141 and 144, which introduce a formal consultation requirement in Clauses 88 and 90, which concern respectively distribution reports and the transitional safety net, the Committee will know that the present grant distribution arrangements, and in particular the GRE needs assessments, are extremely complicated. We intend that the future arrangements will be much simpler, and much more comprehensible. It is, however, inevitable that there will be a degree of complexity and a certain amount of mathematics involved if we are to achieve a fair reflection of local authorities' needs.
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We shall certainly want to talk to local authority associations as we prepare each distribution report. But formal consultation would not be appropriate because that would impose a more formal straitjacket on the way in which the exercise is carried out. We have proposed instead that the Secretary of State should notify local government interests of what he has in mind. He will of course receive any representations they may make, and will consider them before final decisions are made. There is nothing new or unusual in this. We are constantly receiving suggestions and representations which are all taken into consideration.
The noble Lord, Lord McIntosh of Haringey, was also concerned that there was no consultation provision in the clause dealing with the transitional safety net, Clause 90. The report setting out the transitional arrangements will be a one-off report. Again, I do not think it is necessary for there to be formal consultation to ensure that the authorities' views are heard. I am sure that they will make them known and we shall listen.
I should say to the noble Lord, Lord McIntosh of Haringey, that I am not backtracking on the commitment I made on Amendment No. 136. I told the Committee that there would be consultation with local government representatives about the amount of RSG each year. The Bill requires that in Clauses 84 and 85. But in view of the noble Lord's remarks, perhaps I should read what he said in the Official Report. I must admit that I did not take in all of the noble Lord's points fully. However, if I could read them between now and another stage of the Bill, I believe that would he beneficial.
Lord Bonham-Carter: Before the noble Earl sits down, may I ask him whether I am right in saying that I heard him say, as a categorical statement, that the Secretary of State will always act reasonably? Is that a law which the noble Earl proposes that the Chamber should accept as the truth?
The Earl of Caithness: I fear that the noble Lord may not have been in his usual place when I spoke about reasonableness earlier on. Of course the Secretary of State is duty bound to act reasonably, for if he does not he might be taken to a judicial review.
Baroness Seear: The noble Earl really must understand that there are a great many of us who find this an extremely unsatisfactory reply. There is plenty of evidence in this Bill, which presumably was drafted with the approval of the Secretary of State, that he does not always act reasonably. It is apparent on the written page. There is the fact, for example, that we were told that the Secretary of State was proposing to collect poll tax from old men in cardboard boxes under the arches. That is not much of a measure of the reasonableness of the author of this document.
Who makes the estimates of the needs? It is the civil servants, presumably, who advise the Minister. Having been involved in the past in some studies of this kind, I should like to know how they arrive at

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their knowledge of what the needs are. It is an extremely intricate and difficult matter. What is the process by which needs are determined? The bland description given by the Minister of how it is to be done and his ultimate trust in reasonableness leave me totally unconvinced.
9.45 p.m.
The Earl of Caithness: The experience gained by the department over many years of dealing with local authorities stands it in good stead in terms of knowing what local authorities need. Local authorities have never been slow in coming to the department with their concerns or to point out matters on which they believe that the department has not taken their representations on board. That knowledge, accumulated over many years, has enabled the present system—incomprehensible as it is!—to continue. The proposed system will be much simpler. As I have said on more than one occasion, we shall continue to be in touch and to consult with local authority associations over a number of issues in the Bill. I am sure that local authorities will not be slow in coming forward with their views if they have not been reflected in what the department has said.
Lord McIntosh of Haringey: As evidenced by the Minister's reply, there are two basic misconceptions about the amendments. First, he stated that we are looking for safeguards for local authorities. We are looking for safeguards for voters and community charge payers. They are the ones who will ultimately suffer if there are errors or injustices in the way in which the revenue support grant is calculated and, a fortiori, because of the gearing to which I referred in moving the amendment, in the community charge that they have to pay. I reject the claim that the purpose of the amendments is to safeguard local authorities.
The second misconception is that the amendments are intended to affect the discretion exercised by the Secretary of State in any way. After all, this is a revising Chamber. We are not seeking to move controversial or wrecking amendments. This series of amendments concerns the information which the Secretary of State has in arriving at his decision and the way in which he communicates that information to the public at large and to the House of Commons when it is considering the order. There is nothing which in any way restricts the discretion of the Secretary of State. It contributes a procedure which is more realistic than the simple fall-hack position of saying that the Secretary of State must always act reasonably or that he is subject to judicial review.
If neither the House of Commons nor the public at large has the information on which to determine whether or not the Secretary of State is acting reasonably, the criterion of reasonableness cannot be said to be effective. That is a fundamental point. It should not be left to questioning. It should be a matter of established procedure that the Secretary of State is open in the way in which he arrives at his calculations, the explanation he gives of the calculations and the results of them.
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The matter is one of great seriousness, not merely for local authorities but also for those who are using services and paying for them. If mistakes are made they will result either in a breakdown of services, an excessive community charge or a combination of the two. I cannot see why the Government find it necessary to go on stonewalling on important matters of public accountability. I find that to be in total contrast to the claims which were made by the Government at Second Reading and when we started our consideration of the Bill in Committee that the rest of the procedures are justified because of an increase in accountability. When we ask for more accountability and for accountability from the Secretary of State as well as from local authorities, we meet a blank wall of resistance.
When it comes to the matter of consultation, I am not convinced by the answer which the Minister gave. He said that the Secretary of State is obliged to notify local authorities of the contents of the distribution report. However, I remind him that he is only required to notify them of the general nature of the contents of the distribution report. That is even further away from proper consultation than the Minister claimed.
This is not a matter which has been adequately dealt with by the Government. We shall have to return to the subject at a later stage and we shall have to find some way of bringing to the Government some sense—which they appear not to have at the moment—of their responsibilities to the public and users of local authority services. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 140 not moved.]
Lord Carr of Hadley Lord Carr of Hadley moved Amendment No. 140A:
Page 46, line 35, at end insert—
("( ) In making a report under subsection (1) above the Secretary of State shall have regard to the extent to which each receiving authority gives financial support to bodies representative of the arts.").
The noble Lord said: I should like to say a word on behalf of my co-sponsors of this amendment, my noble friend Lady Young, the noble Lord, Lord Donaldson of Kingsbridge, and the noble Baroness, Lady Birk. Unfortunately, all three find it impossible to be present tonight. When we were trying to plan ahead we all hoped—as perhaps the Government also hoped—that this amendment would have been taken at the end of last week rather than at the beginning of this. All three asked me to apologise to the Committee for their unavoidable absence and to stress their strong support for the amendment to which they have put their names.
The Government confirmed strongly in our first debate today—that on their Amendment No. 119A—that the rate support grant was the proper instrument for meeting the special needs of particular local authorities. I do not dissent from that view provided the Government will make absolutely clear both their ability and their determination to use the rate support grant fully and fairly for that purpose. As a number of noble Lords made clear in that earlier debate this afternoon, including particularly

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Members on this side of the Chamber who are noted for their strong support for the Bill as a whole, it is necessary now for the Government to make clear their interest and intent in more definite and specific terms and less general terms than has been the case hitherto.
The amendment deals in specific terms with the special needs of local authorities which have important arts bodies in their areas and asks that they should be specifically taken into account by the Secretary of State. It has become an accepted and important part of our system of public support for the arts in this country that local authorities should give support to important arts organisations in their respective areas and that that responsibility should not be left solely to the Arts Council. I submit that it is of great importance that that practice should continue. It is therefore of great importance that the Government should recognise the strong fear that exists that the new system of local government finance which this Bill proposes to introduce may make the continuance of that established practice impossible or at the very least extremely difficult.
The Government may say that that fear is unfounded but I think that they must recognise that the fear exists very strongly. Nothing they have said so far has been sufficient to remove that fear. That is why we come back to the need which was mentioned earlier this afternoon for more specific and concrete assurances from the Government as to how they intend to use what they say is flexibility that they possess and to fulfil the responsibility which they say that they accept.
Hence, the amendment seeks from the Government an assurance that, in determining authorities' revenue support grant, the Secretary of State will have regard to the extent to which each receiving authority gives financial support to bodies representative of the arts in each of their areas. That principle is of general, nationwide application. I want, however, to argue the case above all in connection with one particular national arts organization—namely, English National Opera. It is not because this is the only case that matters. Far from it. It is because I believe that factual arguments about a specific case make clear the problems of the needs far better than do general arguments over a much wider field.
First I must declare my interest as one of the vice-chairman of' English National Opera, which ensures that I know what I am talking about when I go into a little detail. English National Opera currently derives its income from two main sources. The first source is public grants. To a major extent they come from the Arts Council and to a lesser but vital extent, they come from Westminster City Council. In round figures, in the current financial year£7 million is coming from the Arts Council and£1·25 million from Westminster City Council. This year the Arts Council grant is 5·2 per cent. greater than it was two years ago, which the Committee may note is an increase significantly below the rate of increase of inflation. This year the Westminster City Council grant is 11·2 per cent. greater than it was two years ago, which is a higher rate of increase than the rate of inflation.
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Taken together the two public grants in total have increased by 6·1 per cent. over those two years.
The second source of ENO's income is that generated by the company itself. Self-generated income falls under three headings. First of all there is the box office, which this year is budgeted to produce £4·5 million. That is an increase of no less than 30·6 per cent. over what it was two years ago. Another source of self-generated income lies in retailing, catering and other trading activities. This year that source is budgeted to produce £1·6 million, which is an increase of no less than 23·5 per cent. compared with two years ago. The third source of self-generated income consists of private sponsorship and donations, and that is budgeted to produce this year a figure closely approaching £l million, which is an increase of no less than 29·4 per cent. compared with two years ago.
Taken together the total of privately generated income has increased over the past two years by 27·9 per cent. Thus, during the period when total public grants to ENO have been increasing by 6·1 per cent., the company's self-generated income has increased in total by 27·9 per cent. Putting those figures another way, as a percentage, the income from public grants is now 54 per cent. of the company's total income compared with 56 per cent. of the company's total income in 1986–87 and 65 per cent. in 1983–84.
I have gone into those figures in some detail in order to show to the Committee and to the Government in particular that English National Opera, far from begging indolently for public charity, has been vigorously and successfully pursuing a policy of decreasing its degree of dependence upon public grants. I assure the Committee that that policy will be continued with great intensity, and I believe that further progress will continue to be made in that direction. Yet while I am sure that it will succeed in making further progress, I think the Committee may accept it as reasonable that ENO cannot expect to maintain the quite exceptional annual percentage rate of increase that has been achieved over the past few years. The more one does in this field, the more difficult it becomes to take the next step forward. But we shall certainly pursue it most vigorously.
However, I hope that I have also shown how vital is the grant from the Westminster City Council as a component of our financial resources. This is even more true in view of the fact that as a deliberate act of policy Arts Council grants annually are being increased at significantly less than the annual rate of inflation. We therefore have to go on increasing our private sources of income as a percentage of the whole to make up for the less-than-inflation-rate increases of the Arts Council grant. If we were to lose the Westminster City grant as well the position would become impossible. I do not think that the board of directors could fulfil the responsibilities placed upon them. I must stress to the Committee, and to the Government—who presumably know it well—that our responsibilities were not of our own definition. They were placed upon the board of ENO when it was set up.
I have gone in some depth into the position of ENO because I know about this aspect. I believe that factual detail about a particular case can be more

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illuminating, and. I hope convincing, than greater generalities over the whole field. What I have said about ENO I imagine could also be said if I knew as much about London Festival Ballet. I know the general principles are the same and I hope that other Members of the Committee will be able to go into that in more detail.
However, I must remind the Minister that the giving of these grants by Westminster City Council to both the English National Opera and the London Festival Ballet was the direct result of an arrangement made by the Government with Westminster City Council following the abolition of the Greater London Council which had previously been grant-aiding both these bodies. The present position of these grants is a direct result of that arrangement. I submit to the Government that they cannot simply walk away from that position which they created and arranged.
Perhaps I may end as I began by stressing that the amendment that I am moving is a general one and of nationwide application. Once again, I have been stressing what has happened to two particular bodies within the area of the Westminster City Council. However, in other cities throughout the country—Birmingham, Liverpool, Newcastle, Manchester and others one could mention—similar situations, although of a more limited scale, are occurring. I therefore wish to stress that it is not just special pleading on behalf of one or two particular companies in one particular local council area. It is pleading for the continuance of what has become—and with direct government encouragement—an essential and integral part of our method of public support for arts bodies throughout this country.
I beg the Government to take this matter extremely seriously, to see whether they cannot give assurances that we need within this Bill. If for any reason they cannot, they must find answers outside this Bill, as they did in the Education Reform Bill in relation to similar bodies such as the Horniman Museum. Where there is a will there is a way. The Government willed the present position of these grants and they must find the way for them to be continued. I beg to move.
Lord Bonham-Carter: I hesitate to intervene at this point, because I would not like to spoil the very strong case which the noble Lord, Lord Carr of Hadley, has made for the amendment he has moved; nor do I want to enter into a philosophical debate about the way in which we support the arts in this country. I would only say that what he said made it abundantly clear that sponsorship, which has a role to play, has only a marginal role—and I am glad that it is only a marginal role—in supporting the arts in this country, because sponsorship carries with it very grave policy implications for the administration of the arts, about which I have reservations which I have already expressed on another occasion.
The main point which I want to make is simply this. I cannot comprehend why the Government do not take more seriously the economic benefits which the arts bring to this country. The fact of the matter
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is that London is the greatest tourist centre of any capital city in the world. One of the two reasons it is the greatest centre for tourism in the world is the English language. The other is the vitality of the theatre, the opera, the ballet and the musical world in general. That is why people find it agreeable and interesting to come to London, not merely on their way elsewhere but for conferences of all kinds.
I have urged the Arts Council—I must declare an interest here as I was on the board of the Royal Opera House for many years and am still connected with the Royal Ballet—to try to make an estimate of how much we earned in straight foreign currency through the existence of the incredibly vital theatre, musical and operatic and balletic world in this country. I cannot believe that if the Government, whom we now know always act reasonably, were to look at this they would not recognise that this is a huge economic asset which should be supported and which has transformed the role of London in the world of the arts.
Before the war people would not have dreamed of coming to London to listen to music. Today London is the capital city in the world in which more music of every kind is played than in any other capital city that there is. That is not merely important and agreeable for those of us who live in London. It is important and agreeable for all of those who come to London and it makes it an extremely attractive place to visit.
As the noble Lord, Lord Carr of Hadley, said, this has to be supported by other centres outside London to which, in one degree or another, the same applies. The Edinburgh Festival is a huge earner of foreign currency. The Edinburgh Festival reflects what is going on not merely in this country but throughout the rest of the world. It has made for itself a special position. This special position cannot possibly be financed without long-term assurances of government finance, public finance; and the same applies to Birmingham, to Manchester, to Liverpool, to Welsh opera and to Scottish opera. This is a public interest in which we have a public concern, and I very much hope that the noble Earl in dealing with this very important amendment will show sympathy and understanding for the public concerns which are expressed in it.
Lord Jenkin of Roding: I wish to add only a word or two to the speeches which have already been made, and perhaps rather more specifically than the noble Lord, Lord Bonham-Carter, who has ventured into the whole realm of arts financing. Perhaps I may just remind him and the Committee of the substantial provision that was made by the Government at the time of the Local Government Act when the GLC and the six metropolitan county councils were abolished. There was a substantial increase in the Arts Council funding, in order to make sure that some of the arts ventures and companies that those councils were supporting would continue with public support.
The particular point that I should like to make is limited to the ENO and the London Festival Ballet. It is within my recollection, which is just as fallacious as anyone else's but I believe it is right, that, when we

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asked Westminster City Council whether it would take over from the GLC the grant aiding from local government sources of those two companies, it was on terms that the rate equalisation arrangements that existed within London would be modified so as to reflect the burden which Westminster was taking on. I am glad to see that my noble friend on the Front Bench is nodding assent, so perhaps my recollection has not played me false on this occasion.
It follows from that—does it not?—that if the basis of funding Westminster City Council, which was established at that time on the footing that it took over these liabilities, is now to be changed—and the debate initiated earlier this evening by my noble friend Lady Gardner of Parkes underlines that—it is incumbent upon the Government to make some alternative arrangement that does not leave the community charge payers of Westminster having to face the substantial burden as a part of their normal contribution or, as was feared by my noble friend Lord Carr, allow the grant to fall by the wayside. I suspect that either outcome would be unnacceptable to the Committee.
I believe that my noble friend Lord Carr was right when he ended his speech by saying that the Government—it was I who in 1985 made the decision in the name of the Government—having decided that this should be done for those two world-famous arts companies, it is now for them to follow on from that by making a provision which does not lead either to the ending of the grant or its substantial reduction, or to an unacceptable burden falling on the community charge payers of Westminster.
As regards the areas outside London, the only one with which I am the least familiar is Liverpool and the arrangements which were made there. The Merseyside Museums and Galleries Trust was established and Sir Lesley Young is now the distinguished chairman of that trust. I understand that the trust is faring well. I do not expect the arrangements in the Bill materially to affect what will happen to that trust. However, as regards the two companies in London a specific arrangement was made. The basis of that arrangement is now to be changed in the Bill. I believe that, within the Bill or outside it, there is an obligation on the Government to try to put matters right.
Lord Feversham: I do not wish to prolong the issue, but I must rise to support the noble Lord, Lord Carr. I do so if only as a voice from the Cross-Benches and to reinforce his distinguished supporters from other parts of the Committee. I believe that all Members wish to make sure that the Government understand that they are almost completely surrounded in respect of this issue.
Lord Howie of Troon: I should like to add briefly to the comments made by the noble Lord, Lord Bonham-Carter, from the Liberal Front Bench. He spoke reverently of the attraction of London as an international centre of culture and so forth. I should like to add one example to the generalised examples which he gave. This week at the Institute of Civil
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Engineers just across Parliament Square a meeting of the World Federation of Engineering Organisations is taking place. Why is the federation meeting here in London? There are two reasons. First, London is a great centre of engineering. Secondly, London is a great cultural centre to which delegates from all over the world are attracted. It is a feature of that particular conference this week that delegates from no less than 50 countries throughout the entire world are here. The paramount reason is, of course, for engineering, but in addition it is because they can set up a conference devoted to engineering matters in a centre which gives a wide range of cultural activities which can be ancillary to the conference. The attitude of the noble Lord, Lord Carr, is right, as he so often is and has been in his long career in Parliament. I hope he is supported.
10.15 p.m.
Baroness Carnegy of Lour: Although my noble friend says that this is a general amendment covering the whole of the country, it is tailor-made to affect that which Westminster council does for the English National Opera.
The amendment is not really the right way round for other local authorities—at least, for those with which I am familiar—in that, if specific additional support for local authorities is not to be based on their current spending but on needs, the Government should be looking at the arts enterprises within the local authority areas for which the authorities have responsibility but which they will not necessarily fund to the same extent year by year. For example, there are museums. The Edinburgh Festival is an ongoing event which Edinburgh District Council and Lothian Regional Council must support. They do not do so very strongly but they must and should support it, and it is always there.
Local authorities vary the support they give to the local museums, theatres and operas for which they have a responsibility to contribute. They are matters for annual consideration. It would be wrong to say that the Secretary of State should have regard to the extent to which each receiving authority gives financial support to bodies representing the arts. It should not be based on that but on the responsibility that they have and they should then decide how much to contribute.
At the same time, the London bodies need separate consideration. I am not sure why the community charge payers in Westminster should have this enormous responsibility for the English National Opera when community charge payers from all over the country enjoy it and many other parts of London receive the economic benefit from its existence. To confuse the two issues is a pity. The Government should be looking at how to ensure that the English National Opera and other similar national bodies are to be assured of support, with the change that is now taking place, and at how to ensure that across the country support for the arts is considered in terms of the arts enterprises which exist in the area and which the local authorities might fund rather than in terms of what authorities did in the previous year. That is more in tune with the theme of the Bill.
Lord Beloff: I believe that my noble friend Lady Carnegy of Lour made a very important point. I do not believe it removes the argument for this particular amendment to the limited extent to which it has been proposed in favour of two major national companies, for the very cogent reason advanced by the noble Lord, Lord Jenkin of Roding, that this was an undertaking given. All that is being suggested is that it is carried into a new situation in regard to the way in which local finance is raised.
I believe there can be no argument, and I make no apology because everyone here is declaring an interest. I declare a much more humble interest than other Members of the Committee. I am not on the board of anything but I actually go to ENO, and I should worry a little at the thought of someone paying a community charge in Westminster and subsidising to some extent the tickets that I buy. This is a matter that should be taken into account.
As the noble Lord, Lord Bonham-Carter, said, there is a major case for the nation as a whole to regard the support of the arts among the major objectives of government. I am not sure that it is true of activities as regards local government which do not directly and to a major extent affect the lives of their own constituents. Therefore, while I hope very much that the Minister will be able to accept this amendment, I believe that this little debate—I am sorry it has been so late at night but, as in the case of other Gangs of Four, only one is left—is an important debate and I hope that at some future date we shall be able to return to this very important subject.
The Earl of Caithness: As we have heard, the purpose of Amendment No. 140A is to introduce a requirement for the Secretary of State to,
"have regard to the extent to which each receiving authority gives financial support to bodies representative of the arts"
when he makes the distribution report. As we have already discussed the distribution report will describe and define the indicators to be used in assessing need for each authority and will contain some of the weightings to be given to certain indicator data. Once the revenue support grant for the year has been fixed, the actual needs assessments, and hence the grant entitlements for each authority, can be calculated from the information in the distribution report.
The needs assessment will play a key role in the new system. It will be our assessment of what each authority needs to spend in order to provide a standard level of service efficiently. The needs assessment will be built up from a number of separate indicators of need to produce an objectively determined basis for the distribution of grant. In constructing needs assessments I confirm to the Committee that we shall take into account the general responsibilities of local authorities for funding arts as part of the services to local people just as we do at the moment. This will not change. I cannot go so far as to say that we shall take into account the actual contributions now made by authorities to arts bodies or, in particular, by Westminster City Council, on London's behalf, to the English National Opera and the London Festival
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Ballet. In the first place one of the major changes we are making is to pay grant only in relation to need to spend, not in relation to actual spending. I can see no reason to make an exception for the arts, however much we as individual patrons of the arts might wish to ensure the future of particular bodies which have given us enjoyment.
I also say to the Committee that even if we were to take account of past spending on the arts in our grant distribution we could not ensure that any extra grant went to increased arts spending, nor could we direct spending to particular institutions or bodies. It is true that any arts support by an authority in excess of its needs assessment, like any other spending above its needs assessment, which will already have taken account of arts funding, falls wholly on the community charge payer.
The Committee will recall that this lies at the heart of our policies for local accountability. If an authority wishes to provide additional services the charge payers in that area must be willing to pay for them. If there is as much support outside this Committee for bodies such as ENO and LFB—and I very much hope there is—then there should be continued support for subsidy to them from charge payers through local authorities.
As regards the support of Westminster to the English National Opera and the London Festival Ballet, we need to remember that although Westminster make the payments, the cost is not borne by their ratepayers alone. It is not solely a Westminster problem. It is in fact shared by all London boroughs, because Westminster pay less into the London rate equalisation scheme for distribution to other boroughs than they otherwise would. Therefore, all London ratepayers contribute to the support of the ENO and LFB. Of course, like so many other matters, this is concealed from the ratepayer under the present system. It follows therefore that it is for the London boroughs as a whole to consider whether they want to continue the present level of support under the new system. Again, if the feelings of the Committee reflect the feelings of those outside, there will be considerable support for such funding and there are methods by which local authorities can continue their support.
I must emphasise that one of the main purposes of these reforms is to give back to the charge payer the right and the power to decide how his or her money should be spent. It must be for them and not for the Government to decide at the end of the day what priority they wish to give to arts funding. That said, perhaps I may make this point clear to my noble friend. The Government recognise the standing of bodies such as those currently supported by the London boroughs through Westminster and we shall he keeping an eye on them. We shall be prepared to consider whether there is some help or encouragement we can give to secure their future which does not conflict with the essential principles of our new local government finance regime.
The amendment proposed here would give rise to such a conflict and that is why I cannot support it, albeit that the Committee, like the Government, wish to see these bodies continue to flourish. However, I

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take note of the strength of the Committee's feeling on the matter. I can confirm to my noble friend that I shall be discussing this debate with my right honourable friend the Secretary of State.
Lord Carr of Hadley: I draw some encouragement from my noble friend's last remarks and I shall certainly do all I can to co-operate with him, as I am sure will others, in the future consideration of this matter. Frankly, following on from what the noble Lord, Lord Jenkin, said, I am not so much concerned about from where the help comes but that it should come from somewhere and that the Government should not run away from the responsibility which they undertook in the setting up of the present grant system. I indicated to my noble friend ahead of this amendment that it was at this stage a probing one.
Perhaps I may say to the noble Baroness, Lady Carnegy, that I accept any criticism of lack of perfection and of multi-directionism in the drafting of the amendment. Its purpose was to air the problem and to seek the Government's reactions. I shall not go back on my undertaking to ask leave to withdraw the amendment. However, I must say to my noble friend that, with respect, the answer he gave in the first part of his remarks does not begin to address the problem. The English National Opera was not set up by the government of the day to serve the local needs of citizens even of the whole of London. They are of course included, but it is the English National Opera Company. Its main role—accomplished, I believe it is agreed, with considerable excellence and distinction—is to serve the needs of all the people of this country and the many visitors from home and overseas who come to London.
Surely the Government—whatever government it may be—cannot expect the ratepayers or the community charge payers of the City of Westminster to bear a substantial part of that burden on their shoulders. It does not add up. If the Minister is saying that this is beyond the scope of local government finance as it is now to be organised and that it will be organised in some other way, that is all well and good. With that assurance, and with the hope that we may have the opportunity to discuss this again in private at least prior to the next stage of the Bill, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 141 not moved.]
Clause 86 agreed to.
Clause 87 agreed to.
10.30 p.m.
Clause 88 [Calculation of sums payable]:
[Amendment No. 142 not moved.]
The Earl of Caithness The Earl of Caithness moved Amendment No. 142A:
Page 48, line 5, leave out ("(i)") and insert ("(h)").
The noble Earl said: This is a minor technical amendment. I beg to move.
On Question, amendment agreed to.
[Amendment No. 143 not moved.]
Clause 88, as amended, agreed to.
Clause 89 agreed to.
Clause 90 [Special provision for transitional years]:
[Amendment No. 144 not moved.]
The Earl of Caithness The Earl of Caithness moved Amendment No. 144A:
Page 49, line 18, leave out ("financial matters") and insert ("matters (financial or otherwise)").
The noble Earl said: This is also a technical amendment. I beg to move.
On Question, amendment agreed to.
Clause 90, as amended, agreed to.
Clauses 91 to 94 agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 144B:
After Clause 94, insert the following new clause:
("Transitional grants.
.—(1) The Secretary of State may, if the Treasury consents, pay a grant in respect of a transitional year to an English charging authority to which Part IV applies.
(2) The amount of the grant shall he such as the Secretary of State determines with the Treasury's approval.
(3) In deciding whether to pay a grant to an authority in respect of a year and in determining the amount of any such grant, the Secretary of State shall have regard to his estimate of the expenditure the authority might reasonably he expected to incur in the year in carrying out its functions under Part IV.
(4) A grant under this section shall he paid at such time, or in instalments of such amounts and at such times, as the Secretary of State determines with the Treasury's consent; and any such time may fall within or after the financial year concerned.").
The noble Lord said: I spoke to this amendment when I moved Amendment No. 123G. I beg to move.
On Question, amendment agreed to.
Clause 95 [Collection funds]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 144C:
Page 51, line 33, leave out ("before") and insert ("on").
The noble Earl said: I beg to move Amendment No. 144C, and with the leave of the Committee I shall speak also to Amendments Nos. 164A, 164B, 164C, 164D, 164E, 164F, 164G, 164H and 164J.
District councils and London boroughs are currently required to keep a general rate fund. All the receipts of these councils are carried to this fund and all their liabilities are discharged from it. It is intended that this arrangement would be replicated under the new local government finance system, but modified to reflect that in addition to the keeping of the general fund there would also be a free-standing collection fund. My noble friend Lord Glenarthur outlined the principles of the collection fund when we debated the amendments on Part 11 and today we have considered at some length the arrangements for operating collection funds in England and Wales. We

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also intend, through the provisions of Clause 98, to set up a similar arrangement for the City. However, while in the case of other charging authorities their general fund will be used to cover receipts and expenditure relating to all their functions, the City fund will only be used to cover those matters which currently fall within the ambit of the City's general rate, poor rate and St. Botolph tithe rate.
Within the general rate fund there can be a number of funds, such as the authority's loans fund which it uses to manage its borrowings for capital purposes, or special funds which are in effect its financial reserves. The funds are not free-standing but are merely sub-divisions of the general rate fund. We wish to continue those arrangements so that on 1st April 1990 the funds will become sub-divisions of the charging authority's general fund or, in the case of the City of London, its city fund. The powers we are seeking will enable my right honourable friend to make regulations which will secure this.
In short, the amendments will enable us to maintain the existing arrangements for an authority to manage its moneys. but in a form consistent with the new financial system. I therefore commend them to the Committee and beg to move.
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 144D:
Page 51, line 42, leave out from ("held") to end of line 43 and insert (", invested or otherwise used in such manner as may be prescribed by regulations made by the Secretary of State.").
The noble Earl said: I beg to move Amendment No. 144D and at the same time to speak to Amendment No. 164L. These amendments will ensure that the traditional and effective cash management practices of local authorities continue. I can commend them to the Committee. I beg to move.
Lord Jenkin of Roding: I welcome the amendment. The London Borough of Redbridge had expressed some dismay that on the drafting of the Bill it was apparent that its investment powers were to be much more heavily circumscribed. It is now clear that that is not to be so. In the past it had been in the habit of lending to bodies such as water authorities and it could not understand why it should not be free to continue to lend the balances standing to the credit of the collection fund in the same direction, so I welcome the amendment and thank the Government for having moved it.
On Question, amendment agreed to.
Clause 95, as amended, agreed to.
Clause 96 [Payments to and from collection funds]:
[Amendment No. 145 had been withdrawn from the Marshalled List.]
[Amendments Nos. 145A and 146 not moved.]
[Amendment No. 147 had been withdrawn from the Marshalled List.]
Baroness Stedman Baroness Stedman moved Amendment No. 148:
Page 52, line 12, leave out paragraph (f).
The noble Baroness said: I understand that it will be for the convenience of the Committee if we talk also to Amendments Nos. 153, 154 and 156 in this group of amendments. I should like to speak specifically to Amendment No. 148, which is in my name.
If the paragraph were removed it would give to district councils the benefit of the interest on the money collected. Surely it is better to allow the collecting authorities to retain all the interest in the collection funds. It is the charge payers in a charging area who will receive the benefit if they pay early. I believe that if within a county area payers from one district pay promptly, they, as distinct from the other payers in the other areas of the county, should be the chief beneficiaries of their prompt returns and payments. There are sticks for local authorities in the Bill. I hope that the Government will accept the amendment as a possible carrot for a rather better than average performance.
The collection fund is defined in Clause 88. The items to be charged to the fund are listed there. They are borne by the authorities precepting on the fund so the cost is spread over the whole county area. The items not charged to the fund are borne by the community charge payers in each district separately.
The districts will bear all the costs of collection—the billing, the reminders, the cash collection and the recovery. The districts will not be able to keep all the benefit of interest receipts from a favourable cash flow due to an efficient method of collection. Districts now keep 100 per cent. of the interest generated by the cash flow from the rate collection. That is a real incentive to operate fast and efficiently in issuing demand notes, collecting cash and tracing defaulters. The proposed community charge will be much more difficult to collect than the rates, which is another reason why the interest should he retained by the collecting authority. I beg to move.
Lord McIntosh of Haringey: The noble Baroness in moving Amendment No. 148 referred also to Amendments Nos. 153, 154 and 156, all of which are in my name and are on a closely related point. I am fairly open minded about the best way to achieve the purpose. Certainly the amendment of the noble Baroness has the advantage of simplicity. The point, as she has so clearly said, is that the cost of interest payments should be charged to the collection fund. At the moment, the charging authority has to pay interest to a precepting authority if the charging authority fails to pay the precept in accordance with the prearranged timetable. This could happen if there were considerable difficulty in charge payers withholding or being slow in making payments.
We have not yet considered whether we are going to adopt in England the proposal which will be debated tomorrow for Scotland, of having a lottery to reward people for paying early. I do not know whether the lottery will achieve the consent of the Committee. I can imagine that there could be different views about that. But it is certainly right, as the noble Baroness. Lady Stedman, said, that there

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should be rewards for efficient collection of the community charge. That is the intention of Amendment No. 153.
I do not think I need weary the Committee with the detail of Amendment No. 156, which makes a similar point in relation to the costs of collecting the community charge and the national business tax. The costs of collection and the interest receipts are treated together because otherwise charging authorities will have little incentive to speed the flow of payment from the charge payers into the collection fund if it will cost them any money to do so. In that way, the benefits of the additional interest receipts are shared among all the authorities precepting on the fund and the additional costs would fall upon the charging authority alone.
Also together the costs of collection and any losses on collection are aggregated. If there are difficulties—and there are bound to be difficulties in collecting the community charge—there will be a shortfall fund. The authority which takes extra effort to collect the charge will have to bear the costs of that extra effort. Instead, the costs of collection, according to this amendment, would be set against the income collected, because the costs as well as the income would be set against the collection fund.
I think these are realistic amendments which make a very similar point to that made by the noble Baroness. I hope that they will receive the sympathetic consideration of the Government and the Committee.
The Earl of Caithness: I have listened carefully to the points made by the noble Baroness, Lady Stedman and the noble Lord, Lord McIntosh of Haringey. To decide what is the appropriate treatment of interest earned by the temporary investment cash surpluses in the collection fund, and of the costs of administering the fund it is necessary to look at the nature of the collection fund.
The Bill provides that interest on the temporary investment of sums in a collection fund is credited to the fund. As my honourable friend explained in another place, this is consistent with the philosophy of the collection fund, which regards money in the fund as being held temporarily by the charging authority on behalf of its charge payers. Such money is not the charging authority's "own" money, and hence interest earned on it should go to the fund and should not be for the authority's own direct use. Furthermore, the amounts passing through the collection fund can be very significant in relation to the charging authority's own expenditure, especially in shire areas. Thus, interest on these sums, if credited to the charging authority itself, would significantly distort the charging authority's own demand for revenues on the collection fund and hence weaken accountablility. Such an approach of crediting the charging authority with interest could also be a disincentive to charging authorities to pass more money quickly through the collection fund.
There is however the important issue of giving charging authorities an appropriate level of incentives to collect charges promptly, and my
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honourable friend, the Parliamentary Under Secretary of State gave an assurance in another place that we were aware of the need for incentives and would try to keep them as they operate now, and that we would be talking to the local authority associations about this. We are doing just that. We have proposed to the associations that the arrangements we shall be setting up for distributing money in the collection fund will mean that any interest received by a fund will benefit solely the charge payers in the fund's areas. Thus, for example, in a shire county, if one district is particularly efficient in collecting charges, the interest it earns for its collection fund will benefit only its charge payers—by way of lower community charges—rather than being shared between all charge payers across the whole county.
The noble Baroness and the noble Lord will be pleased that we have now also decided that it would be right for the efficient district council itself to enjoy some benefit from the fruits of its efficiency. Accordingly, we intend to make directions under Clause 102(3) which will have the effect that each charging authority will receive an allowance from its collection fund which represents the interest earned on the temporary investment of community charge moneys in the fund. We believe that this arrangement would provide incentives for efficiency while remaining consistent with the principles of the collection fund.
The amendments run counter to the principles underlying the collection fund. Interest on collection fund moneys belongs to the fund, as I have explained. On the other hand, costs of administering the fund, together with other costs of collecting the community charges, are simply costs of one of the charging authority's functions, and along with the costs of all its other functions are properly part of its expenditure to be met from its general fund. I would add that costs of administering the fund will not include any interest payable by the authority, as the arrangements we intend to set up—by regulation under Clause 103—for distributing money from the fund will ensure a collection fund is never overdrawn.
The Government accept that charging authorities need an appropriate level of incentives, and I believe the arrangements we are now proposing will achieve this. I hope the Committee can agree them.
10.45 p.m.
Baroness Stedman: I am grateful to the noble Earl. It is rather late at night to take in all that complicated reply. I have a feeling I am supposed to be saying "Thank you" because the noble Earl has gone some way towards meeting us, as promised by his colleague in another place. I should like to read the reply again, and I shall convey my thanks personally, if I have the right idea. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 149 not moved.]
[Amendment No. 150 had been withdrawn from the Marshalled List.]
[Amendments Nos. 150A and 151 not moved.]
Baroness Stedman Baroness Stedman moved Amendment No. 152:
Page 52, line 19, after ("precept") insert ("other than that part of a precept in respect of which subsections (6), (7) and (8) below apply").
The noble Baroness said: I seem to remember way back in 1981, when we were discussing the Local Government and Planning (Amendment) Act, being in the Royal Gallery at about this time of night and trying to fight the corner for parish councils. It looks as if we have gone right round the course and I am back again trying to fight for parish councils. The attempt here is to deal with both the English parishes in Amendments Nos. 152 and 163 and the Welsh parishes in Amendments Nos. 162 and 164, so that in future the non-domestic rating position which the parishes currently enjoy in relation to guaranteed access to part of the money that is raised from the rates levied on non-domestic property, continues. The changes proposed to the position which could result from the Bill, will not affect the amount of rates paid by occupiers of non-domestic property anywhere in the country, nor will there be any increase in the grants paid by government to assist local councils. None is paid now nor will be paid to the parish councils.
The purpose and effect of the amendments is to ensure that the expenditure of parish and town councils will be met in the future, as at present, in part by rates levied on non-domestic property, and in part by payments from the personal finances of individuals—currently by the domestic rates and in future by the community charge. There will be quite serious dislocation of the finances of many parish and town councils, especially those with an above average amount of non-domestic property in their parish, if their finances have to depend wholly upon the community charges paid by the inhabitants; and we try to prevent the financial pressures on the most local and most economic level of provision in the areas and transfer the responsibilities to the more distant and, because of their need to maintain administration, perhaps the less economical district councils. We want to protect the councils who have undertaken borrowing commitments on the basis of a low level of rate income and who will have to continue repayments when a third, a half or more of the rate income base ceases to be available.
The mechanism for the amendment is that the district council, which is the charging, collecting and paying authority, will be required to calculate the expenditure of the district council, that part of the expenditure of the county council to he met by precept on the district council and the expenditure of all the parish councils of the same proportion of the non-domestic rate proceeds held by the district council in its collection fund. The district council will then distribute that amount to the parish councils in proportion to their expenditures and meet the balance of their requirements from the collection fund which is made up for this purpose of the community charges paid by the parish inhabitants.
The parishes still need money with which to carry out their duties. They need to be assured that that money will come to them. We hope that the amendments meet the case in respect both of English
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parishes and of Welsh community councils. I beg to move.
Lord Feversham: Perhaps I may put in a brief word of support for the amendments, which are concerned specifically with the loss of business rate or non-domestic rate to parish councils under the proposals in the Bill. I believe that the noble Baroness has dealt sufficiently with the technicalities. I shall not reiterate them or detain the Committee. However, I should like to add some general observations in support of the amendments and with regard to local councils.
I have the honour to serve as president of the National Association of Local Councils as well as being a local councillor myself. Therefore, I have a particular interest in their problems. I believe that the local or parish council tier of government is of immense value to our national life, operating, as it does, close to the ground in the community and enabling local people to make decisions for themselves on largely non-political lines and without the need for bureaucratic complexity.
It ought to be the aim of all central governments to work to maximise the advantages of this kind of local government. Unfortunately, large-scale legislation designed to alter radically the way in which local authorities operate—we seem to be getting a lot of that sort of legislation at the moment—tends to erode bit by bit the position of parish councils. This Bill is no exception. It is the loss of a specific share of the non-domestic rate to the parish council which presents the greatest threat of erosion in the Bill.
The purpose of the amendment is to attempt to find a way in which the difficulty can be solved to the advantage of the parishes without seeking to undermine what the Government are seeking to achieve over a wider field.
Lord McIntosh of Haringey: I rise to support the amendments, although my name is not on them. I do so as a former chairman of the Association for Neighbourhood Councils and as the present joint president of that association, which has always been very closely associated with the National Association of Local Councils and has always been concerned to extend the principle of parish councils into the urban areas of England which are at present denied the right to have them. That does not mean that we are not also concerned with Wales and with the suburban and rural areas of England, which are able to have parish councils.
We have talked of the gearing on some of the charges in which a very small difference in needs assessment or in the money available from the national non-domestic rate makes a huge difference to the community charge paid. If there were any meaning in the previous discussion about gearings, then the argument for the case of parish councils is very much stronger.
At the moment the principle of the national non-domestic rate must be that it should subsidise the charge payers rather than the councils. That clearly is the right principle and one that I know the Government adopt in dealing with these matters. The problem is that as the Bill is drafted at the moment

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the subsidy goes only to the district councils and not at all to the parish councils. I do not think I can put it more simply than that. That means that parish councils' expenditure appears to be entirely without any subsidy from the national non-domestic rate or from the grant system. Therefore, any increased expenditure by parish councils is very heavily geared and makes a huge change to the parish council rate. It is not that they are deprived of the ability to raise money, but they do not have any of the support they have had in the past from other sources of local government finance. I cannot believe that that was the Government's original intention because I know that the Government have always given a degree of support to local councils and would not wish voluntarily to see them suffer from changes in legislation.
It could well be that the drafting of these amendments leaves something to be desired and that they could be improved. I am not qualified to judge them. Clearly, putting in whole new subsections of this kind is a complicated and highly skilled matter. However, I hope that at the very least the Government will recognise the need for parish councils to be treated on an equal footing with district councils as far as concerns grant and subsidy. I hope also that they will be able to give an indication either that the amendments are acceptable or that something comparable can be put into the Bill.
Lord Tordoff: I should like to offer support in principle from these Benches for the amendments. There is no more democratic form of local government than parish councils, in our view. Therefore, the question of accountability is peripheral to the argument. Both the noble Baroness, Lady Stedman, and the noble Lord, Lord Feversham, have made the point very cogently. However, looking at the Official Report for another place I understand that Mr. Michael Howard complained that it was unsatisfactory that parish councils should be able to offload their spending to businesses which happened to be in their parish area. That approach, he said, does not contribute to accountability. In my view that is a fairly monstrous statement.
As the noble Lord, Lord McIntosh of Haringey, has said, there is a problem of gearing. To take that finance away from parish councils which have been used to being able to call upon business rates is monstrous. There is no question that if the rate is being transferred to the national level there should be some proportional distribution of that rate between the district and the parish council. It is in that spirit that the amendments are moved. They have our full support.
11 p.m.
The Earl of Caithness: These amendments seek to change the arrangements for handling the contributions received from the national non-domestic rates pool. As I understand them they are designed to give parish and community councils direct access to a share—in proportion to their precepts—of the national non-domestic rate, now
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commonly abbreviated to "NNDR". I have listened carefully to the points made by those who have spoken on this matter and I understand the concerns raised, but these amendments do not remove a disadvantage which the NNDR arrangements impose on the parish charge payer but rather seek through the NNDR to give such charge payers an advantage.
It may be argued that such an advantage is needed to compensate charge payers for the higher charges that they may face if they are in a parished area, but I do not believe that this is the right use of NNDR, which is to provide a flat rate support to charge payers, and in any event parish charge payers need not necessarily face higher standards.
It is of course open to a district council in either England or Wales to reduce its own charges in those areas where a parish or community council provides services which elsewhere the district itself provides. Thus, if both the parish and the district provide the service in question to the same level and with equal efficiency and the district makes a reduction, the charge payer in the parish and the charge payers in the other parts of the district's area would have the same charge. However, I accept the argument of the noble Baroness that should a district decide not to reduce its charges in this way, then those in parished areas may pay higher charges than those in non-parished areas. Thus, in order to protect those in parished areas from being unfairly treated I can inform the Committee that the Government are taking this matter up with the Association of District Councils with a view to seeking to agree with the association guidelines for councils to give some specific recognition to parish services when setting the community charges.
Returning to these amendments, I believe that they manipulate the NNDR in a way that would run counter to the underlying principles of the new financial system, but in view of the Government's acknowledgment of the difficulties that may be faced by parish councils and the action that we are taking to counteract them I hope that the noble Baroness will feel able to withdraw her amendment.
Lord Tordoff: Before the noble Baroness speaks, perhaps I may ask the Minister whether, in the negotiations which take place, consideration of the existence of large businesses in a parish area—large factories, for instance—will be one of the things that will be taken into account. We must recognise that some of the costs that will be borne by the parish may be directly attributable to the presence of industries within their areas, and therefore the situation cannot be the same in each area. There may be certain pollution costs, for instance, that ought to be taken into account.
The Earl of Caithness: Indeed there are a number of things that of course are being taken into account. One has to take into account the fact that some district councils do not have parishes at all. As the noble Lord will be aware, there is nothing that the parish council is doing at the moment that the district could not be doing. However, I can assure him that full consultations are taking place.
Baroness Stedman: It seems to be my night for saying "Thank you" to the Minister. I have done it twice in succession on amendments. I am delighted that he is taking the amendment back and having discussions. I hope that they are successful and look forward to hearing from him in the future about the kind of arrangements that he has made and how the parishes will benefit from them. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment no. 152A had been withdrawn from the Marshalled List.]
The Earl of Caithness The Earl of Caithness moved Amendment No. 152B:
Page 52, line 24, leave out ("(7)") and insert ("(5)").
The noble Earl said: In moving Amendment No. 152B I shall also speak to Amendments Nos. 152C and 152D. These are technical and drafting amendments. I beg to move.
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 152C and 152D:
Page 52, line 28, after ("repaying") insert (", under regulations under this Act,").
Page 52, line 29, leave out ("under this Act").
On Question, amendments agreed to.
[Amendments Nos. 153 to 157 not moved.]
[Amendment No. 158 had been withdrawn from the Marshalled List.]
[Amendment No. 158A not moved.]
[Amendment No. 159 had been withdrawn from the Marshalled List.]
[Amendment No. 159A not moved.]
[Amendment No. 160 had been withdrawn from the Marshalled List.]
[Amendment No. 160A not moved.]
[Amendment No. 161 had been withdralt7zfrom the Marshalled List.]
[Amendments Nos. 161A to I62ZA not moved.]
The Earl of Caithness The Earl of Caithness moved Amendment No. 162A:
Page 53, line 4, leave out from ("this") to end of line 5 and insert ("section—

(a) includes power to revoke or amend a specification made under the power;

(b) may be exercised differently in relation to different authorities.").

The noble Earl said: Clause 96 would provide for my right honourable friend to specify what payments can be made from and what sums can be paid into English and Welsh charging authorities' collection funds. This is a minor technical amendment to enable different specifications to be made for different groups of charging authority. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 163 and 164 not moved.]
Clause 96, as amended, agreed to.
Clause 97 [General funds]:
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 164A to 164D:
Page 53, line 13, leave out ("before") and insert ("on").
Page 53, line 22, leave out from ("assets") to end of line 23 and insert ("held in the general rate fund of such an authority").
Page 53, line 24, after ("1990") insert ("(other than assets forming part of a trust fund)").
Page 53, line 25, at end insert—
("(7) After 31 March 1990 the Council of the Isles of Scilly shall not be required to keep any fund known as its general fund and required (apart from this subsection) to be kept under any order made under section 265 of the Local Government Act 1972; and the assets held in that fund immediately before 1 April 1990 (other than assets forming part of a trust fund) shall be transferred on that date to the Council's general fund established under this section.").
On Question, amendments agreed to.
Clause 97, as amended, agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 164E:
After Clause 97 insert the following new clause:
("General funds: supplementary.
.—(1) In this section "relevant authority" has the same meaning as in section 97 above.
(2) The Secretary of State may make regulations—

(a) about the relationship of a relevant authority's general fund to its other funds;

(b) providing for assets falling within a relevant authority's general fund to be held in separate funds within the general fund").

(3) The regulations may provide that any fund established by a relevant authority on or after I April 1990, other than its collection fund or a trust fund, is to be maintained as a separate fund falling within its general fund".
On Question, amendment agreed to.
Clause 98 [The City fund]:
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 164F to 164H:
Page 53, line 28, leave out ("before") and insert ("on").
Page 53, line 42, at end insert—
("(4A) No sum shall be paid into, and no payment shall be met from, the City fund except in accordance with subsections (3) and (4) above.").
Page 53, line 43, leave out subsection (5) and insert—
("(5) The assets of the Common Council subsisting immediately before I April 1990 shall be transferred to the City fund on that date if they are assets—

(a ) subsisting in respect of the general rate, the poor rate or the St. Botolph tithe rate, or

(b) representing sums credited in aid of any of those rates.").

On Question, amendments agreed to.
Clause 98, as amended, agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No.164J:
After Clause 98, insert the following new clause:
("The City: further provisions.
—(1) The Secretary of State may make regulations—

(a) about the relationship of the City fund to other funds of the Common Council;

(b) providing for assets falling within the City fund to be held in separate funds within the City fund;

(c) prohibiting the Common Council from establishing funds.

(2) The regulations may provide that any fund established by the Common Council on or after 1 April 1990, and falling within a

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prescribed description, is to be maintained as a separate fund falling within the City fund.
(3) The regulations may provide that such assets as are transferred to the City fund under section 98(5) above and fall within a prescribed description shall he held in separate funds falling within the City fund; and the number and composition of the separate funds shall be such as are prescribed.
(4) The regulations may provide that the Common Council shall not establish or maintain on or after I April 1990 a fund into which both the following must or may be paid—

(a) sums which must be paid into the City fund under section 98(3) above, and

(b) other sums.

(5) The regulations may provide that the Common Council shall not establish or maintain on or after 1 April 1990 a fund from which both the following must or may be met—

(a) payments which must be met from the City fund under section 98(4) above, and

(b) other payments.").

On Question, amendment agreed to.
Clause 99 [Calculations to be made by authorities]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 164K:
Page 54, line 27, leave out from ("above") to ("shall") in line 28 and insert ("the authority").
The noble Lord said: I spoke to this amendment with Amendment No. 133A. I beg to move.
On Question, amendment agreed to.
Clause 99, as amended, agreed to.
Clauses 100 and 101 agreed to.
Clause 102 [Other transfers between funds]:
The Earl of Caithness The Earl of Caithness moved Amendment No.164L:
Page 55, line 14, at end insert—
("(2A) Regulations under section 95(5) above may include provision that—

(a) any sum to which they relate shall be transferred from an authority's collection fund to its general fund or to the City fund (as the case may be);

(b) the sum so transferred shall be held, invested or otherwise used in such manner as may be prescribed;

(c) a sum equal to the sum transferred shall be transferred to the authority's collection fund from its general fund or from the City fund (as the case may be);

(d) together with the sum so transferred an additional sum representing interest and calculated in a prescribed manner shall be transferred.").

On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No.164M:
Page 55, line 19, at end insert—
("(3A) If the Secretary of State directs it to do so, a charging authority shall transfer to its collection fund from its general fund
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or from the City fund (as the case may be) such an amount as is specified in, or calculated in a manner specified in, the direction; and the transfer shall be made at such time as is specified in the direction.").
The noble Earl said: I beg to move Amendment No. 164M and to speak to Amendment No. 164N at the same time. These amendments will enable my right honourable friends to make directions requiring English and Welsh charging authorities to transfer the sums specified in the directions from their general fund to their collection fund. This power which we are seeking is the converse of the power in Clause 102(3), which enables my right honourable friends to direct the transfer of funds from the collection fund to the general fund. I beg to move.
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No.164N:
Page 55, line 21, leave out ("or (3)") and insert (", (3) or (3A)").
On Question, amendment agreed to.
Clause 102, as amended, agreed to.
Clause 103 agreed to.
Lord Hesketh: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
House adjourned at thirteen minutes past eleven o'clock.