HL Deb 14 June 1988 vol 498 cc155-88

3.9 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.]

Clause 104 [Power to designate authorities]:

[Amendment No. 165 had been withdrawn from the Marshalled List]

Lord McIntosh of Haringey moved Amendment No. 166: Page 56, line 30, after second ("the") insert ("preceding financial").

The noble Lord said: I shall speak slowly to enable the Committee to empty! With this amendment we move to a new and extremely important issue. Throughout their advocacy and promotion of the Bill, the Government have argued that the principle justification for it is to improve the accountability of local government to its electors; but when we reach this clause and this part of the Bill, we discover that the Government have no faith whatsoever in the ability of the measures proposed to achieve accountability.

What the Government are saying, as they have said in a number of Acts of Parliament in recent years, is that they, the Government, will be the ultimate arbiters of how much local authorities will spend and that the decisions of the local electors and the local community charge payers can, if the Secretary of State so wishes, be set at nought. That is the Government's clear intention in not only continuing but intensifying and making more fierce the provisions which have existed for a number of years for the capping of rates and which are now to be applied to the capping of the community charge.

I say that the provisions in the Bill are worse than the existing situation for two reasons. First, the definition of what community charge is liable for capping is merely that the Secretary of State shall determine that in his opinion either that the community charge is excessive or that the increase in the community charge is excessive. That differs from existing legislation because at present those authorities whose expenditure is below the grant related expenditure or needs assessment are exempt from rate capping.

Thus, for example, if the political control of a local authority changes at an election and the defeated party had set a rate below the grant related expenditure or needs assessment determined by the Government, and the incoming party in pursuance of the policies that it had put before the electorate and upon which it was elected determines to increase the community charge, then, regardless of whether the resulting community charge is below the grant related expenditure or needs assessment, the Government can cap that community charge on the basis that the increase is excessive. In that sense, this proposal is significantly more draconian and more restrictive of local authority independence than the existing situation.

The second way in which the new capping procedures are worse is in the matter of timing. At the moment, rate capping is on a previous year assessment, and the rate capping decision is made—I shall not go into the details of how it is arrived at or what consultation there is—in, let us say, July 1987 for the financial year 1988–89. In other words, the local authority is warned of the amount of rate capping which is to be imposed. It is enabled to make adjustments for that in the preparation of its departmental budgets and finally in the setting of a rate in the ordinary way. The rate support grant is announced in the course of that period so that a rate can be fixed to come into effect on 1st April in the example of 1988 that I have given.

In the Government's proposals, which are matters with which we deal in the amendments, the timing is not that the capping of the rate for the succeeding year shall be determined in the previous July, but that the final decision about the capping of the community charge shall be taken in May or June of the year in which the local authority finds itself, which can be anything between two and three months into the financial year. By the time the local authority has gone through all the procedures set out in the Bill for rate capping—I am sure the Minister will set them out much more clearly than I can—we are already into the financial year concerned.

Those community charge payers who have already paid will have to receive refunds; those community charge payers who have decided to pay by standing order will have to have their standing orders varied, and many aspects of local authority expenditure will have to be curtailed, increased or revised in accordance with the Secretary of State's final decision. I am talking about the procedures whereby under the Bill precepting authorities and charging authorities must give to the Secretary of State their calculations on which he can base his determination by 11th March.

I am talking about the fact that he lets them know what will be required within seven days. He then issues a notice to the authority which could be, let us say, by the end of March, and the authority has 28 days in which to appeal against it. After that, the Secretary of State considers the appeal and makes a final order setting out the maximum figure. The order is a statutory instrument which must be approved by the other place. That is the procedure which takes place between March amd May of a given year.

The procedure for in-year community charge capping will sow inevitable confusion, not so much for the local authority, although that is of course important, but for the community charge payers (the electors), the people who may well, in the course of that process, on the first Thursday in May be going to elect part or all of the local authority concerned. They may be turning out, or confirming in office, the authority whose calculations have been rejected by the Secretary of State and which is in dispute with him about what the final community charge will be.

That type of confusion, particularly at such a time, is the worst possible way to achieve the accountability which is most important at the time of the election and which the Government, in theory, are seeking to achieve. If we were behaving irresponsibly in this matter, and not seeking to be a revising Chamber, we would wish to wipe the Bill entirely clear of this whole business of the capping of the community charge. We believe that it is profoundly undemocratic and in contradiction to the Government's expressed statement which they have made over and over again. When they are reminded of the administrative complexity and social injustice of the community charge, they always return to the same argument about accountability, and yet in this part of the Bill they deny the ultimate accountability that matters—that of the local authority to its electors—and replace it by the accountability of the local authority to the Secretary of State. That is what we find unacceptable. That is why we find it necessary to bring the amendments before the Committee.

Perhaps I may briefly tell the Committee what the amendments are. I am speaking to my Amendments Nos. 166, 167, 168, 169, 170 and 172. I think it will be for the convenience of the Committee if it is taken that I have spoken also to Amendments Nos. 167A, 170A and 170B in the name of the noble Lord, Lord Ross of Newport. Amendments Nos. 166, 167, 169 and 170 seek to achieve very broadly that the principle of in-year community charge capping should no longer take place, that the timing is changed so that the decision is taken before the financial year starts and so that local authorities are enabled to make sensible calculations and represent a sensible case to their electors for the community charge which they propose to levy.

Amendment No. 168 says that the Secretary of State must first issue a report to show how accountability has been affected by Part I of the Bill. Amendment No. 172 makes a point which I should have thought ought not to be necessary: that different principles for the capping of the community charge should not apply for different classes of boroughs. That is far too open for a Secretary of State to distinguish between local authorities which are politically friendly and those which have been singled out, as too often has been the case in the past, for victimisation by the Government.

These are not wrecking amendments. They are constructive amendments intended to make the capping procedure, which we entirely condemn, as workable as possible. I hope that even if the Government find them objectionable—I hope that they will not—they will find favour with the Committee. I beg to move Amendment No. 166.

Lord Ross of Newport

Perhaps I may speak to Amendments Nos. 167A and 170A. I totally support everything that has been said from the Opposition Front Bench by the noble Lord, Lord McIntosh of Haringey. Quite frankly, these are totally undesirable powers which we are being asked to grant to the Secretary of State in quite substantial quantity. There are 11 clauses which are very complicated. They are a total bureaucratic nightmare and I do not know how local authorities are supposed to survive with such restrictions being placed upon them.

From my own experience in local government I know that when a crisis hits a community it is to the local leaders among the community that the citizens turn. We had a major crisis in my part of the world when our heavy engineering complex was suddenly closed down by the American owners. Nearly 1,000 jobs suddenly went. This happened almost overnight. We have obviously a crisis coming up now in Plymouth. Although I received friendly responses from the Prime Minister and her Ministers, the fact was that there was nothing one could do and no encouragement that one could get someone to take over a heavy engineering complex on an offshore island.

However, it was to the county council that the employees in that firm and most of the people living in Cowes on the Isle of Wight turned, and they expected us to take action. We held a number of meetings. There were people standing up, offering to put up money so that we could set up a development board and encourage new industry to come in. They very much supported me as leader of the council at that time, when I made it known that we as a local authority would go in with two entrepreneurs to acquire that site and try to get it back into production. That is what we did and we still own part of it.

That was a crisis which arose and for which extra money had to be spent, to meet the needs of that purchase. That might not happen or it might be rate capped under this legislation which we are debating today. The only Conservative-controlled council that was rate capped was Portsmouth. I have already paid tribute in the Second Reading speech to what Portsmouth has done to get itself off the ground. Anyone who was in the navy will know that Portsmouth was at a pretty low ebb at the end of the war. It took 20 to 30 years to start getting itself back to being a place to which people wanted to go. Because Portsmouth spent the money, it was able to support the "Mary Rose" museum, and to encourage other ships to come in and also to bring in the cross-Channel services. That was largely through public initiative. Portsmouth was rate capped in the process but most people now think that the town did a damned good job.

I also suggest that Glasgow, which I think has never been rate capped, is using public money sensibly. It has revived itself in to being a city to which many people want to go. It has put money into the arts. Of course it is always the arts that get clobbered whenever there are restrictions on local government expenditure, and that is happening to me right now.

I wanted to say that because I think that rate capping is yet another measure preventing initiative. If we want people to join local government and to use their initiative we are certainly not going the right way about it through these clauses in the Bill. Amendments Nos. 167A and 170A make provision for local ballots on the Secretary of State's decision to cap an authority. He can only go ahead if he has the blessing of a simple majority of local residents.

The Government have gone ballot-mad lately. Let us take it into the local authority scene. We shall have local ballots in housing. People in council housing will be able to ballot on whether they want to change their landlords, whether they want to go to a local housing association or another private landlord. Under the education Bill people can ballot if they want to come out of the local authority control in education. So why do we not do this on the whole question of the poll tax capping? It seems to me to be a perfectly legitimate way to go about it.

Amendment No. 170B has two parts, First, it mandates the Secretary of State to draw up regulations governing the procedure for such ballots and to bring them back before the House. I think that this is entirely reasonable. It is the Government's job to govern; I accept that. With all the combined resources of the Department of the Environment, it is not beyond its wit to perform such a task. Drafting the detail of legislation is not the job of the Opposition.

Secondly, it declares that the Secretary of State should pay for the ballots. That seems again to be entirely reasonable, given that there will only be a need for the ballot if the Secretary of State decides to take action to cap the community charge. He will effectively trigger the ballot and he should surely pay.

I shall finish by giving a quotation from the Local Government Chronicle in an article written by Mr. Robert Hedley. It says: why government even contemplates phasing the charge in alongside the rates, which would so confuse the public as to destroy this argument in the short term heaven knows. But to cap community charge smacks of dishonesty and selective vengeance". We are trying to show the Government a way round. If they honestly believe that an authority is behaving in a totally irresponsible way, they could go to the electorate and say, "OK, we'll have a ballot on this issue". They should let the local people respond and say what they think about it. I beg to move.

Lord Boyd-Carpenter

There seem to be two points that arise on this series of amendments: first, as to the actual timing of a capping decision of the Government; and, secondly, as was put with his customary force by the noble Lord, Lord McIntosh of Haringey, as to whether under the new system a capping power should survive.

On the first point, I have some sympathy with what has been said. It is obviously in everybody's interests that if a capping decision has to be made it should be made and announced as early as possible. Obviously if it is made late in the day it can cause considerable confusion and difficulty. I imagine that my noble friend the Minister shares the view that if these decisions have to be made, the earlier they can be made the better. They are, however, complex and matters which sometimes involve fairly prolonged inquiry. I think it would be very foolish to introduce any limit in time beyond which a capping decision could not be made. The words, "in the interests of an early decision" are such that one has to be careful not to inhibit the exercise of the power altogether.

I firmly believe that the capping power must remain. I believe that under the new system, with the introduction of what has so often been referred to as accountability, it is likely to be needed less often than it has been in the past. I very much hope that that will be so. It could be said to be one of the objects of the Bill to try to secure that this should be done. The necessity for doing it arises less than it has unhappily done in recent years.

However, I think it would be very irresponsible for any government to abandon the power of capping. After all, it is the central government and the central government alone who are responsible for the management of the national economy. It is the central government who are called to account—and rightly called to account—if the national economy gets into trouble or—and this is particularly relevant to the issue—if excessive expenditure produces a balance of payments crisis or further inflation. Therefore in my view the Government must plainly retain the power to impose capping. I should be very much against any amendment which deprived them of that power. However I agree—and I go along with Members of the Committee opposite to this extent—that if this has to be done, the earlier it is done the better.

3.30 p.m.

Lord Bellwin

I too listened with much interest to the timing point made by the noble Lord, Lord McIntosh of Haringey. I am just not sure the extent to which that would have all the adverse repercussions that he mentioned. I agree with my noble friend Lord Boyd-Carpenter that that is something which must be looked at very closely. I do not at all accept the point about the confusion to the electorate, to which the noble Lord, Lord McIntosh, referred. In actual fact I cannot imagine a better situation than the electorate being called upon to give their verdict on a community charge level which had been fixed by an authority and which could only be reduced if the authority were capped. I can imagine what their reaction to that might be.

However, this whole business of capping certainly brings back very vividly to me previous debates on rate capping. What has happened since has not led to the horror forecasts that were made at the time. In fact I suggest that there are millions of people in the country who are very happy that those powers exist. One must bear in mind that it is only those authorities which are spending beyond the levels that are considered to be reasonable—as compared with those who spend within those levels—which are affected. I can think of situations, as I am sure can many other Members of the Committee, in the past year or two when people living in at least one London borough had their rates increased by 67 per cent. We can imagine the feelings of the people who lived in that borough when the rate was capped the following year. It is no secret that that borough was Ealing and that the rate there had to be reduced dramatically. 1 mention that only as an example.

I submit that rate capping has been a very effective measure which has brought only good. It has concentrated the minds of authorities so concerned to the point where many of them are becoming far more efficient in their working terms than they ever were before because they have no alternative. As for the like proposals on the community charge, I suspect that there will be the same effect in the end.

I have already mentioned my slight reservation about the timing. I shall look forward to hearing what the Minister says when he replies. We really get the flavour of the Opposition's feeling about everything pertaining to this particular amendment when we recall that the noble Lord, Lord McIntosh, mentioned the: social injustice of the community charge". There are many of us who feel that it is not in any way a social injustice. We believe that for a majority of the people it is a social justice. It is not as the noble Lord, Lord McIntosh, said, victimisation by government, but it is the unfairness of the present system that has led to this Bill and all the changes contained therein.

Lord McIntosh of Haringey

I hope that the noble Lord, Lord Bellwin, will accept my assurance that my amendments on the timing matter simply bring the situation back to what it was, and is now, under the Rates Act 1984, which he himself piloted with such distinction through this Chamber. If that is a tribute to the noble Lord's skill in advocacy and drafting, then so be it. But we feel that what was good and what was recommended to the Chamber by the noble Lord, Lord Bellwin, in 1984 has some validity. However, it is interesting that both the noble Lord, Lord Bellwin, and the noble Lord, Lord Boyd-Carpenter, have made nothing of the point that it is the Government's claim that the community charge in itself will achieve accountability and should therefore make capping unnecessary. He has given no credit whatever to any difference between the community charge and the rating system in that respect.

Lord Boyd-Carpenter

Before the noble Lord sits down, will he kindly withdraw that last reference to me? If he had been good enough to pay attention to what I said, he would recall—as Hansard will record—that I made it clear that it seemed to me likely that rate capping would be needed much less with the community charge, because of the introduction of accountability, than it has unfortunately been in the past, but that it was nonetheless sensible to keep it in reserve. He will appreciate now that what he was trying to say a moment ago about my comments simply twisted them.

Lord McIntosh of Haringey

I should apologise to the noble Lord. He is quite right of course in what he said. I still do not think that it follows from that that the reserve power is necessary, but that is a disagreement between us on a matter of policy and not a conflict on the record.

Lord Rippon of Hexham

As my noble friend Lord Boyd-Carpenter pointed out, this discussion has raised two points. The first was the rather limited one about the matter of the timing. As regards that point, I am sure that my noble friend the Minister will have regard to what has been said. On the second point, 1 should not like the impression to be given that everyone on this side of the Committee is enthusiastic about the concept of rate capping, or wholly convinced of its necessity, particularly as my noble friend has pointed out that one of the arguments in favour of this Bill is that it would make rate capping less necessary in the future than in the past.

Accountability is one of the current weasel words. It can mean different things to different people. I am all in favour of financial accountability. I think that a great deal has been achieved by the Government in recent years and by the Audit Commission in order to achieve financial accountability. But there is also accountability to the electorate. I think that one of the arguments in favour of this Bill is that it is going to create a new financial system under which a greater degree of independence can be returned to local authorities. That is what many of us wished to see.

I think that some of the arguments about the effect of local expenditure on the national economy or on the balance of payments are carried too far. There has always been control over public expenditure and there are many ways in which the Government can exercise control. I have always taken the view that, where a local authority spends money on services which the local electorate want and for which the local electorate are prepared to pay, that should be encouraged.

The Earl of Caithness

Before turning to the detail of the amendments it may assist the Committee if I briefly describe the rationale behind the inclusion of the charge capping provisions in the Bill and the way in which we envisage them operating.

The new system of local finance, in particular the community charge, which the Bill is establishing is a powerful force for local accountability. Community charge capping in no way detracts from it, for in the long term all councils will have pay attention to the wishes and interests of their electors. Nor does the inclusion of the capping provisions cast doubt on the efficacy of the accountability mechanisms we are setting up. But it is clearly the duty of the Government to safeguard charge payers from the most severe effects of excessive community charges where an authority, without regard to the financial or electoral consequences, embarks on irrational spending policies which are detrimental to the interests of residents. Should this situation ever arise—and I hope it will in fact never occur—the powers we are seeking will enable my right honourable friend to bring rapid relief to the hard pressed charge payers.

During the Clause 58 stand part debate that we had yesterday, the noble Lord, Lord Graham of Edmonton, stressed to the Committee that there was a new realism in local government. We welcome this and I trust that this continues to be the case. But we must, as we were just reminded by my noble friend Lord Bellwin, always be aware of past examples of reckless behaviour by local authorities. The Committee will recall the massive rate increases which some authorities have imposed—such as Ealing's 72 per cent. in 1987–88. In addition some authorities may be tempted to abuse the transitional period by hiding excessive spending under the cloak of the temporary financial support which the transitional arrangements will give. Against such a background it would clearly be unwise not to provide powers of the charge capping type. The way in which Part VIII will operate is simple. The scheme will operate by reference to an authority's spending financed by its demand on the collection fund. If that demand is greater than £15 million and is excessive in absolute terms or represents an excessive increase over the previous year, as measured against general criteria of excessiveness determined by my right honourable friend, he will designate the authority for charge capping. He will propose a lower figure for the authority's demand on the collection fund and give it 28 days to accept the reduction. If it accepts, my right honourable friend confirms the reduction and the authority has 21 days to put it into effect.

Alternatively, if the authority applies to him for a different figure, my right honourable friend will consider the application and may confirm the figure which he proposed, or fix a higher or lower figure. If a higher figure is fixed, he may impose requirements on the authority concerning its expenditure or financial management. The figure is to be specified in an order requiring affirmative procedure in another place only. Once the order is approved and the authority has been notified, it must within 21 days comply with the limit; otherwise it will not be able to draw further revenue from the collection fund until it does comply.

The Government are satisfied that these provisions allow for the rapid relief of charge payers. The whole process should be completed by the summer. That answers the concerns about a timetable which were raised by my noble friend Lord Boyd-Carpenter, among others. We do not think that these amendments would enhance the provisions in any way; indeed, they would make the process more complicated or would render them ineffectual.

Amendment No. 168 aims to provide that an authority should only be selected for charge limitation after my right honourable friend has made a report on the impact of the introduction of the community charge on its accountability. When we considered a similar set of amendments in another place, my honourable friend explained that they were based on a misunderstanding of why we are seeking charge-capping powers. It is not in any way because we fear that the community charge will fail to deliver improved accountability. On the contrary, we are convinced of the efficacy of the accountability mechanisms we are establishing with the Bill. But, as I have explained, charge capping is there to provide rapid relief to those suffering from the excesses of a council which is either simply not susceptible to any reason or logic, or which is taking advantage of the arrangements in the transitional period partly to camouflage irresponsible spending policies.

The amendment would introduce bureaucratic and time-consuming requirements to produce and consider reports about accountability and the community charge which would run counter to the very essence of charge capping. In particular it would make the application of the charge-capping powers difficult in 1990–91. In this first year of the new system there would be no past experience on which to base such reports, yet this transitional period would be the time when charge payers would perhaps be in most need of the back-up protection which this part of the Bill provides.

Amendments Nos. 167A, 170A and 170B in the name of the noble Lord, Lord Ross of Newport, would also be time-consuming and costly in their consequences. They would require not so much a ballot but rather a referendum to be held in any authority where my right honourable friend intends to cap the charge or precept. This requirement would seriously damage one of the main principles underlying Part VIII of the Bill; namely, that there should be a means by which the overburdened charge payer can gain rapid relief. The whole process would be extended by about a month. However, the effect of these amendments would be seen not only in the delay but also in the unnecessary cost which would fall—because the Secretary of State is required to provide sufficient resources—on taxpayers as a whole. It has not been the custom in this country to decide matters by referendum, except for important constitutional issues. The Government do not believe that these costly and time-consuming proposals would be a suitable reason for abandoning that custom.

Amendments Nos. 166 and 169 seek to base selection on spending in the previous rather than the current financial year. In the context of this part as a whole, this is obviously inappropriate and contrary to the whole principle of charge capping. The shape of the scheme set up in Part VIII is an "in-year" system, in which excessive charges are reduced in the same year in which they are levied. It would not make sense to require a reduction of a charge which itself may not be excessive on the grounds that the charge in the previous year was excessive. Perhaps I may expand on that matter, which concerned the noble Lord, Lord McIntosh. The Committee will be aware that a system of rate capping which operates in-year has been tried and shown to work in Scotland. That is adequate proof that it can be done.

It is true that in practical terms it is less easy to achieve savings if one starts early in the financial year than it is if one starts addressing the problem eight months before the beginning of the financial year as the present system of rate capping in England allows. However, my right honourable friend has to exercise his powers in a reasonable manner and he would of course take into account the practicability of any reduction he seeks from a charge-capped authority under the new system. We should also bear in mind that any authority selected under the new charge-capping arrangements will, by definition, be an authority spending excessively. It will therefore have much more scope than any normal authority to make significant savings. That also will be a factor to be taken into account in the level of any reductions sought by my right honourable friend.

Amendments Nos. 167 and 170 would mean that an authority could only be capped if its charge or precept was not only at an excessive level but also represented an excessive increase on the year before. However, a charge would clearly not have to fulfil both these criteria before the charge payer would find it burdensome. I can see that the argument behind Amendment No. 172 might make some authorities more careful about their budget-making decisions. But I remind the Committee that if this is enforced we will be dealing with a very few recalcitrant local authorities. Thus the danger in announcing selection criteria in advance is that they might come to be seen as a going rate—a Government norm. This then might influence some authorities' behaviour adversely by encouraging them unnecessarily to spend up to that norm. But, as I have already explained, charge capping is not intended as a general mechanism to influence authorities' behaviour. Authorities should be influenced by the accountability pressures of the community charge system. We do not want to distort this. Charge capping is a reserve power to be brought into use, if at all, where an authority irrationally ignores the pressures of the system.

To sum up, the result of the amendments would be that my right honourable friend could not exercise his powers of charge capping in a flexible manner at the very times when they might be most needed, nor in a way that fulfilled the purpose of charge capping; namely, to give rapid relief to charge payers suffering under the excesses of an irrational and irresponsible council.

3.45 p.m.

Lord Harris of Greenwich

Perhaps the Minister will be good enough to reply to the specific points put to him by his noble friend Lord Rippon.

The Earl of Caithness

I believe that I have covered most of the points which my noble friend put to me. If I have not done so, perhaps he will remind me what points I did not cover.

Lord Harris of Greenwich

With great respect, I do not believe that the Minister dealt very satisfactorily with the significant questions put to him by the noble Lord. However, perhaps I may ask a second question with which I hope the Minister will deal. He mentioned the matter of referenda. Why is it right to have a referendum with regard to housing and wholly wrong to have a referendum with regard to this Bill?

The Earl of Caithness

The noble Lord, Lord Harris, tempts me to discuss another Bill which will shortly be coming before the House. I look forward to discussing that Bill with him in the future.

Lord Harris of Greenwich

With respect, that is no reply. The Bill comes from the noble Earl's department. How does he defend his approach to this amendment when the Government are introducing a referendum as regards housing?

The Earl of Caithness

At the moment, that Bill is being discussed in another place. It is right to wait until the Bill comes before the House to consider that point.

Noble Lords

Hear, hear!

Lord Ross of Newport

Perhaps the Minister can comment on this matter. Two years ago, due to some quirk in the rate support grant formula, Gillingham, Bath and one or two other towns had an absolute bonanza and Gillingham decided that there would be no rate increase for that year. It was cited as a very sensible authority. This year Gillingham presumably because the rate support grant formula has somehow been put right, has had a rate increase of 40 per cent. Does the Minister consider that to be excessive and would it be rate-cappable?

The Earl of Caithness

I think that one would have to look at all the circumstances surrounding the charge that an authority might levy in the future in view of the criteria which I spelt out in answer to the amendment.

Lord Jay

It did not appear to me either that the Minister answered the points put to him by his noble friend Lord Rippon. If I understood him correctly, the noble Lord, Lord Rippon, argued that rate capping in this case would limit the independence of local authorities and therefore would reduce the force of the argument about the accountability which is supposed to be included in this system. As he said, accountability means many things to different people. What it is presumably intended to mean in the argument in support of the Bill is the influence of the elector in electing a local authority and controlling or at least influencing the level of expenditure by that authority.

We all know that that influence is already severely limited by the fact that 75 per cent. of local government expenditure will be financed by revenue which is outside the control of the local authority and therefore of the local elector. As I understand it, 50 per cent. will come from rate support grant and another 25 per cent. from the uniform business rate. Therefore we are talking about influence over only a quarter of local government expenditure. If one realises that, it is surely apparent that the independence left to local authorities and therefore to their electors is pretty small.

There will be strict limits to the extent to which they can reduce the domestic rate, because if they reduce it more than modestly they will be unable to finance even the Government's agreed level of expenditure. If they are also to be prevented from increasing it beyond some unspecified level I should have thought that their independence, and therefore the genuine accountability to electors, would be reduced to a more or less negligible level. That seriously impinges upon what is supposed to be one of the main arguments for the whole Bill.

It did not seem to me that the Minister had answered that argument, whether or not it is the argument that the noble Lord, Lord Rippon, had in mind. I think part of it was, but, whether or not it was, I do not believe that the Minister replied to it.

Lord Rippon

Perhaps I may just explain. I made a series of assertions, by which I stand. I gather that they do not at the moment find favour with Her Majesty's Government. That is disappointing but I have no doubt that they will change their minds in due course.

Lord Bellwin

Perhaps I may remind the noble Lord, Lord Jay, that I served in local government at a time when the rate support grant was not 50 per cent. but 66 per cent.—two-thirds. One may therefore wonder what effect that had on both the independence and the accountability of the local authorities under such a regime.

Lord Jay

That may be so, but it does not alter the fact that in future 50 per cent. plus 25 per cent. will amount to 75 per cent.

Baroness Carnegy of Lour

It seems to me that the people of this country have become accustomed to the concept that they elect councillors to decide on their behalf on the level of local services and that, if those councillors prove to be totally wild, central government will come to the rescue. They elect Members of Parliament for that purpose. There are two legs to the whole understanding of local government.

I agree with my noble friend Lord Boyd-Carpenter that it is highly likely that the capping of the community charge will be necessary very much less often than hitherto. Indeed, the system will be working perfectly if it is never necessary. However, one can envisage, particularly at the outset, a council being elected and reckoning at the beginning of its term of office to be really wild and, for whatever reason—and there are many reasons why it might happen—putting the community charge up in a way that will be totally intolerable to its electorate. It may well be that by the time the next election comes the council will have got out of that way of thinking.

We hope that the answerability will enormously improve the way people think, but it may not operate instantly and properly. It would be completely irresponsible, in my view, for central government not to have a fallback position. We have seen that fallback position operate in a very limited way in Scotland, but it has been very important for those people who have been rescued by it.

I think that this is an essential power. I can quite understand why those who want the community charge to fail do not want this provision. However, if one wants it to succeed, I believe that power must be available.

Lord Bellwin

Just to put the record straight, I should like to say to the noble Lord, Lord Jay, that the figure of 66 per cent. to which I referred was without the business rate which was charged to business people. Heaven knows what the percentage was then, but it would have been much larger.

Lord McIntosh of Haringey

When I first spoke on this amendment, I predicted that the Minister would set out the provisions of this part of the Bill with much greater clarity than I could. He did so with great lucidity, and the Committee will be grateful to him. However, his speech was strong on exposition and very low on advocacy. He did not really answer the case that was made, either about the justice of the capping of the community charge and still less about the timing.

What we are recommending goes back to the existing system which the Government introduced only four years ago. First, it has not been claimed by the Government that rate capping is any more necessary now than it was four years ago. Nor is there any suggestion that local authorities are becoming any more irresponsible rather than less irresponsible and therefore that further measures are needed other than those provided by the Rates Act 1984.

Secondly, it is being proposed for a situation in which, according to the whole basis of the Bill, accountability is to be achieved by the very imposition of a community charge rather than by the imposition of rates. I am afraid that the argument does not stand up in either case to the kind of examination which the Committee has given to it this afternoon.

What we have here is nothing more than a "switch sell". We are being sold what is in effect accountability of local authorities to the Secretary of State as if it were accountability of local authorities to their electorate. The country has been sold a false bill of goods and the Committee this afternoon is being sold the same false bill of goods. It would be irresponsible if we did not object to that by seeking to approve the amendments in my name and the name of the noble Lord, Lord Ross of Newport.

3.58 p.m.

On Question, Whether the said amendment (No. 166) shall be agreed to?

Their Lordships divided: Contents, 100; Not-Contents, 135.

Addington, L. Carmichael of Kelvingrove, L.
Amherst, E. Carter, L.
Ardwick, L. Cledwyn of Penrhos, L.
Aylestone, L. David, B.
Basnett, L. Davies of Penrhys, L.
Birk, B. Dean of Beswick, L.
Bonham-Carter, L. Dormand of Easington, L.
Boston of Faversham, L. Elwyn-Jones, L.
Bottomley, L. Ennals, L.
Briginshaw, L. Ewart-Biggs, B.
Bruce of Donington, L. Falkland, V.
Callaghan of Cardiff, L. Feversham, L.
Campbell of Eskan, L. Fisher of Rednal, B.
Gallacher, L. Northfield, L.
Galpern, L. Oram, L.
Gladwyn, L. Peston, L.
Glenamara, L. Pitt of Hampstead, L.
Graham of Edmonton, L. Ponsonby of Shulbrede, L. [Teller.]
Grey, E
Grimond, L. Reilly, L.
Hampton, L. [Teller.] Ritchie of Dundee, L.
Hanworth, V. Rochester, L.
Harris of Greenwich, L. Ross of Newport, L.
Hatch of Lusby, L. Russell, E.
Hayter, L. Sainsbury, L.
Houghton of Sowerby, L. Scanlon, L.
Hughes, L. Seear, B.
Hunt, L. Sefton of Garston, L.
Hutchinson of Lullington, L. Serota, B.
Irving of Dartford, L. Shepherd, L.
Jacques, L. Soper, L.
Jay, L. Stallard, L.
Jenkins of Putney, L. Stedman, B.
John-Mackie, L. Stewart of Fulham, L.
Kennet, L. Stoddart of Swindon, L.
Kilmarnock, L. Strabolgi, L.
Kings Norton, L. Taylor of Blackburn, L.
Lawrence, L. Taylor of Gryfe, L.
Llewelyn-Davies of Hastoe, B. Taylor of Mansfield, L.
Lloyd of Kilgerran, L. Tordoff, L.
Lockwood, B. Turner of Camden, B.
McIntosh of Haringey, L. Underhill, L.
McNair, L. Vernon, L.
Mason of Barnsley, L. Wallace of Coslany, L.
Mayhew, L. Walston, L.
Mishcon, L. Wedderburn of Charlton, L.
Molloy, L. Wells-Pestell, L.
Morton of Shuna, L. White, B.
Mulley, L. Winchilsea and Nottingham, E.
Murray of Epping Forest, L.
Nicol, B. Winstanley, L.
Airey of Abingdon, B. Ellenborough, L.
Aldington, L. Elliot of Harwood, B.
Alexander of Tunis, E. Erne, E.
Allerton, L. Fanshawe of Richmond, L.
Arran, E. Ferrier, L.
Auckland, L. Fortescue, E.
Bauer, L. Fraser of Kilmorack, L.
Beaverbrook, L. Gainford, L.
Belhaven and Stenton, L. Gisborough, L.
Bellwin, L. Glenarthur, L.
Beloff, L. Gridley, L.
Belstead, L. Haddington, E.
Bessborough, E. Hailsham of Saint Marylebone, L.
Biddulph, L.
Blake, L. Halsbury, E.
Borthwick, L. Hardinge of Penshurst, L.
Boyd-Carpenter, L. Harmar-Nicholls, L.
Brabazon of Tara, L. Harvington, L.
Broxbourne, L. Henley, L.
Bruce-Gardyne, L. Hesketh, L.
Burton, L. Hives, L.
Butterworth, L. Home of the Hirsel, L.
Caithness, E. Hood, V.
Cameron of Lochbroom, L. Hooper, B.
Campbell of Alloway, L. Hunter of Newington, L.
Campbell of Croy, L. Hylton-Foster, B.
Carnegy of Lour, B. Ilchester, E.
Carnock, L. Jessel, L.
Coleraine, L. Kaberry of Adel, L.
Cork and Orrery, E. Killearn, L.
Cornwallis, L. Kimball, L.
Cottesloe, L. Lauderdale, E.
Cox, B. Layton, L.
Cullen of Ashbourne, L. Lloyd of Hampstead, L.
Davidson, V. [Teller.] Long, V.
De Freyne, L. Lothian, M.
Denham, L. [Teller.] Luke, L.
Dilhorne, V. Lyell, L.
Dundee, E. Mackay of Clashfern, L.
Eden of Winton, L. Malmesbury, E.
Effingham, E. Marley, L.
Masham of Ilton, B. Saltoun of Abernethy, Ly.
Merrivale, L. Sanderson of Bowden, L.
Mersey, V. Seebohm, L.
Montagu of Beaulieu, L. Selkirk, E
Montgomery of Alamein, V. Shannon, E.
Morris, L. Sharples, B.
Mottistone, L. Skelmersdale, L.
Moyne, L. Somers, L.
Munster, E. Stodart of Leaston, L.
Nelson, E. Strange, B.
Nelson of Stafford, L. Swansea, L.
Norfolk, D. Swinton, E.
Northesk, E. Terrington, L.
Nugent of Guildford, L. Teviot, L.
O'Brien of Lothbury, L. Thomas of Gwydir, L.
Onslow, E. Thurlow, L.
Orkney, E. Todd, L.
Portland, D. Trafford, L.
Pym, L. Tranmire, L.
Radnor, E. Trefgarne, L.
Rankeillour, L. Trumpington, B.
Richardson, L. Vaux of Harrowden, L.
Rochdale, V. Whitelaw, V.
Rodney, L. Windlesham, L.
St. Aldwyn, E. Wise, L.
St. Davids, V. Wynford, L.
Saint Oswald, L. Young of Graffham, L.

Resolved in the negative, and amendment disagreed to accordingly.

4.6 p.m.

[Amendments Nos. 167, 167A and 168 not moved.]

Lord McIntosh of Haringey moved Amendment No. 168A: Page 56, line 34, at end insert— ("( ) For the purposes of this section, the Secretary of State shall ignore any expenditure undertaken under section 137 of the Local Government Act 1972 as calculated in accordance with section 122 below.").

The noble Lord said: In moving Amendment No. 168A I suggest to the Committee that it should be taken with Amendments Nos. 182, 183 and 184ZA. We now turn to another and I think equally important section of the Bill, which is conspicuous neither by its presence nor its absence, but rather by the vagueness of its provisions. I am speaking of what has been known for many years as the sixpenny rate, covered by Section 137 of the Local Government Act. Over the years that Act ensured that in almost all their expenditure local authorities would be severely constrained to those items expressly authorised by central government. However, it provided a safety valve in the form of a sixpenny rate—which with decimalisation became a 2p rate—and allowed them to spend up to that amount of money on matters which were not expressly forbidden by statute in contradiction to those which were expressly authorised.

Over the years that safety valve proved to be a very valuable provision for local government. The limit has never been exceeded and very often it has never even been reached. It has provided for a very large number of what are important although, in expenditure terms, perhaps secondary services by local authorities which have increased their powers and flexibility to provide services as well as to respond to the wishes of their local electorate.

The most important example is the expenditure by local authorities on the work of voluntary organisations. I am by no means an expert on the work of voluntary organisations; I yield in these matters to the expertise of many other Members of the Committee. I believe and hope that there are others who will be able to say much more about it than I can. However, it will be evident that many voluntary organisations which deal with housing or social needs and have other charitable objects do not fit neatly into the categories of permitted expenditure that central government imposes on local authorities. Therefore if those voluntary organisations are to be given support by local authorities, it frequently has to be done under the provisions of Section 137 as I have described it. That applies in particular to the cause of the arts, which has received a good deal of support in this Chamber over the past few days. Expenditure on the arts may not be appropriate for the local authority under other powers, but could well be appropriate under the Section 137 powers.

The second major use of Section 137 expenditure has been for local economic development and employment generation. In case anybody should think that this is a politically controversial subject, let me remind the Committee that the last bulk of this expenditure was carried out in close collaboration with government. The urban programme, supported by the Department of the Environment, relies very heavily on the ability of the local authorities to raise funds under Section 137 and to co-operate with government initiatives, and for government to cooperate with local authority initiatives in economic development, in job creation, in renewal of rural areas and in getting rid of inner city deprivation and dereliction. This is not a party political matter. This is an issue on which I believe all parties share the same objectives and have agreed over the years to use the Section 137 powers to achieve these objectives.

The third major use of these powers is in two-tier authorities where the local council, which does not have responsibility directly for education or social services, wishes to give expression to the needs of its local area in the social services or the education field. Because education and social services would be the responsibility of the county council it would be ultra vires for that district council to do so under existing legislation. It has to use Section 137 powers in order to do that. It is important that district councils should be able to do so even though they are not education or social services authorities. The district councils have the local knowledge which is so important in deciding whether a particular service is necessary and whether it is properly adapted to the needs of the local community.

In all those respects, I hope that I have said nothing politically controversial. I have stated facts which have been accepted by all parties. This is the way that we have run our local government system throughout the century, and before.

Section 137 powers have already been under very severe attack in recent years. These are not positive attacks, or deliberate attempts to restrict the powers, but more in the nature of neglect of them. First, the value of 2p in 1974 was clearly very different from now. It is worth considerably less in a period in which there has been no general revaluation in England and Wales. To that extent the ability of local authorities to spend in real terms has been severely restricted. Secondly, our metropolitan areas—comprising a very large part of the population of this country—had the advantage of two sets of 2p rates, two sets of Section 137 money. With the abolition of the metropolitan councils and the Greater London Council, this has been abolished. Such a position applies only in the shire counties and the district councils. To that extent the force of the Section 137 provisions has been gravely weakened.

The Government have set up the Widdicombe Inquiry which has given a good deal of attention to this matter. The Widdicombe Inquiry supports what I have said about the value of the Section 137 powers and the provision for local flexibility in expenditure. The Widdicombe Inquiry made the recommendation that as a result of the changes that I have described in the effectiveness of the Section 137 powers, the 2p should be raised to 4p. What are the Government doing in this Bill? They are not responding directly to the Widdicombe recommendations. They are providing the Secretary of State with a wide-ranging power to make alternative arrangements regarding Section 137 of the Local Government Act 1972 and the other relevant legislation.

The intentions of the Government may be entirely honourable. They may have no intention of restricting the powers of local authorities under Section 137. Indeed the Minister may be able to announce this afternoon that the Government agree with Widdicombe that there should be an increase in the amount of flexibility available in order to restore the previous situation. If that is the case, I shall be the first to beg leave to withdraw the amendment with great satisfaction.

I humbly suggest to the noble Earl that this is a classic example where, if the Government's intentions in this matter are honourable, they could do themselves no harm by putting these honourable intentions on the face of the Bill. There is no new precedent here. It has been done in local government Acts throughout this century. There is nothing remarkable or exceptional about it. We are not inviting the Government to do anything for the first time. We are asking that the safeguards that have existed and have been accepted as an essential part of local government finance over the years should be continued in this legislation.

I hope that the Committee and the Government will agree with that case. I beg to move.

4.15 p.m.

Baroness Stedman

I should like to support all that the noble Lord, Lord McIntosh, has said in moving his amendment, and to speak specifically to the amendment in my name, Amendment No. 183.

Late last night the Minister adopted a generous attitude towards the parish and community councils. I think that we probably achieved a minor success. Today I wish to quote the Government's intentions in respect of the parish and community councils and the future of this 2p rate power in Section 137 of the Local Government Act 1972. The expenditure under that power is limited to a maximum for each local authority of twice its 1p rate product. This limit will have to be converted in some way. As I understand it, Clause 122 empowers the Secretary of State to substitute some other limiting factor. However, unless some care is taken on what the new factor with regard to the safety net will be, some of the councils may find that their effective limit is lower after 1990 than before.

This issue is perhaps even more important for the smaller parish councils for which the limit is currently less than £1,000 a year. In many cases it is only a few hundred pounds. But it matters to all those parish and community councils that they should not lose their ability to exercise this power merely because of the need to convert the method of fixing the limit. Whatever factor the Government use to replace the 1p rate product as a measure of the limit of expenditure, the result ought to be no diminution of the power which enables parish and community councils to undertake small-scale expenditures on many matters of great benefit to their smaller areas.

As the noble Lord, Lord McIntosh, has said, the value of that power has substantially diminished since it came into effect in 1974 because no alteration in the limit has ever been made to take account of the alteration in the value of money. That has affected the powers of these smaller local councils even more than the district and county councils which have a much higher 1p rate product.

The Government have not as yet given any clear indication of their intentions, although it is understood that the scope of this power is under review. But the importance of the power to all authorities, and in particular to the parish councils, has always been great because their other powers in parish councils are not very wide. However, many beneficial applications of this power have been made up and down the country to enable these smaller councils to provide facilities for their parish, at the expense of their parish, which would otherwise not have been provided.

I am hoping that today the Minister will be able to give us an assurance that these authorities will be no worse off in future than they are at present.

Lord Somers

When the noble Earl replies, will he say what effect this amendment will have on those local governments which spend a great deal of money on the arts? I do not believe that their position should be prejudiced in any way.

Lord Ross of Newport

Perhaps I can also speak in support of the amendments moved so ably by the noble Lord, Lord McIntosh of Haringey, to one of which I have put my name. As he so rightly said, the amendments give the Committee an opportunity to give effect to the thrust of the Widdicombe proposals and at the same time to give much needed reassurance to many beleaguered voluntary organisations. We wish to see their valued contribution to society and to the community continue. Amendment No. 184ZA is very sensible because it offers a lasting solution to the Section 137 issue by introducing the idea of a multiplier related to the retail prices index. That would negate the need constantly to update the Section 137 powers. I look forward to the Minister's reply on that particular point.

There is widespread concern within the voluntary sector about the current 2p limit on Section 137 spending. As the Widdicombe Report pointed out, some authorities are very close to reaching the limit. As a result, in recent years some voluntary organisations have been told that they cannot be funded by the local authority. In my part of the world that has happened in connection with the Citizens' Advice Bureaux. One local authority has refused to make any contribution to their budget in the current year.

The position has been particularly aggravated by other factors. There was the Leicester ruling that staffing and administrative costs associated with Section 137 work must also be charged to the Section 137 account. There was the abolition of the GLC and metropolitan county councils which reduced the limit that could be spent in those areas from 4p to 2p. There was the tapering of transitional funding grants whereby in 1987–88 and 1988–89 successor authorities in the abolition areas have to cover 50 per cent. of the costs of schemes previously funded by the GLC or the metropolitan county councils instead of 25 per cent. as was the case in 1986–87. Many of those schemes can only be funded under the current Section 137 provisions.

An increasing number of time-expired schemes in the urban programme are not being renewed by the Department of the Environment—and I am sure the Minister will agree with that. That means that local authorities must absorb the whole cost of the scheme, often having to use Section 137 powers. There is increasing emphasis by the DoE on economic projects in the urban programme and most of those have to be funded under Section 137.

The decision neither to revalue rateable property nor to raise the 2p limit since 1974 has meant that the real product of the 2p rate is substantially less than it was in 1974; that is obvious. All these concerns were acknowledged by the Widdicombe Committee which recommended that the Secretary of State should increase the limit to 4p for the London boroughs and metropolitan district councils. Unfortunately that recommendation has not been acted upon. However, this is an opportunity to give effect to the Widdicombe recommendations and also to reassure the voluntary bodies that local authorities will still be able to maintain their discretionary powers and assistance.

Lord Harmar-Nicholls

The soothing and cooing speeches made in support of Amendment No. 168A are in very great contrast to the wording of the amendment itself. If we vote on this amendment, we shall be voting not for the speeches but for the words in the amendment which are very definite. I believe that it is expecting too much to write these words into the statute when one gives the power to the Secretary of State to do his duty. The amendment says: For the purposes of this section, the Secretary of State shall ignore any expenditure undertaken". To say that one will make it as definite as that when one does not know what may be involved, and to expect the Secretary of State to have an overriding guiding hand in the way that local authorities keep within their limits, is asking too much.

The noble Lord, Lord McIntosh, is looking very surprised and rather hurt. However, if he can table an amendment which is as attractive, as soothing and as cooing as his speech in support of the amendment, it may well be that it could be looked at again. However, at this stage— and I believe that nobody knows this better than the noble Lord himself—to pass an amendment which states: The Secretary of State shall ignore"— not "may", any expenditure undertaken", I do not believe is in keeping with the spirit of the speech or the Bill. I do not believe that it is being fair to the common sense of the Secretary of State in the future, whoever he may be, who has to come in as a judge on some of these matters. I do not believe that we should accept the amendment in its present wording.

Lord McIntosh of Haringey

I am grateful for the noble Lord's indication of possible future support if we have to table another amendment on Report. However, that is not what our amendments say. The amendments that we are proposing do not add to the existing law under Section 137 of the Local Government Act 1972. The amendments do not propose any decrease in the powers of the Secretary of State—powers which are already the law and which I have not heard as being the subject of political controversy in the intervening years.

Lord Feversham

In support of those last comments and in opposition to the speech made before it, surely this is an important and, by now, quite traditional freedom of local authorities. It is enshrined in Section 137 of the Local Government Act. It seems a great pity that this new Bill on local government finance should not deal adequately with this important freedom. Although as president of the National Association of Local Councils I very much support the probing amendment of the noble Baroness, Lady Stedman, I am somewhat moved by the discussions which have taken place this afternoon to go further in support of the noble Lord, Lord McIntosh. It would be very good if at some point in this Bill we could have this important freedom noticed and enshrined in some form of words; whether or not they are the words of the noble Lord, Lord McIntosh, I do not believe is so important. However, I feel that this important freedom should again be enshrined in the Bill and I hope that the Government will try to work towards that.

4.30 p.m.

The Earl of Caithness

These four amendments deal with issues relating to a local authority's spending under Section 137 of the Local Government Act 1972; that is their residual power to incur expenditure in the interests of the area or its inhabitants where no statutory powers exist.

Perhaps I may deal first with Amendment No. 168A. It proposes that, for the purposes of calculating the community charge or precept maximum for an authority designated for charge limitation, Section 137 spending should be left out of account. The noble Lord, Lord McIntosh, has, in his customary manner, argued persuasively in favour of this amendment. There seems, at first sight, to be some attraction in leaving out of the calculation of a charge limit, expenditure under a power which is itself subject to a financial limit.

On further consideration, however, it becomes clear that such an omission would have severe disadvantages. It would mean that all expenditure by a local authority incurred in the discharge of the functions, or in the carrying out of the duties, placed on local authorities by Parliament, would be subject to capping; while spending under Section 137, which is, by definition, spending not approved by Parliament, would not.

We are not talking about small sums. Under the present system, some councils are permitted to spend several millions of pounds under Section 137. Although many councils have used the power well and wisely for the benefit of their area, some have made very questionable decisions. In the Government's view, therefore, it is particularly important in the case of discretionary spending that charge payers should be able to be protected from the potential excesses of their local authorities.

Perhaps I may now turn to the amendments on the future basis of Section 137 itself. These amendments raise three issues. Amendments Nos 182 and 184ZA together propose removing Section 137 from the scope of the regulation-making power in Clause 122, and making provision in this Bill for the future basis of calculating the Section 137 limit. In addition, Amendment No. 184ZA proposes that the Section 137 limit should, from 1990–91 onwards, be inflation-proofed, by reference to the retail prices index. In part, the amendments seek to implement the recommendations of the Widdicombe Report for a new Section 137 limit based on population, in place of the present rateable value-based limit.

Amendment No. 183, to which the noble Baroness, Lady Stedman, spoke, proposes safety-netting any losses resulting from a change in the method of calculating Section 137 limits. The Widdicombe Committee's review of Section 137 was wide ranging. The committee not only looked at the matter of the financial limit and the need to identify a new method of calculation that is more equitable, less prone to annual fluctuations and more consistent with the community charge than the present limit, but it made other recommendations about the future scope of the power and its detailed application. These are among the 88 recommendations on all aspects of the conduct of local authority affairs to which the Government will shortly be responding.

It is relevant to our consideration of the precise level of the limit that the committee also recommended a review of local authorities' powers to carry out economic development. If it were decided to grant local authorities specific powers to carry out economic development projects currently funded under Section 137, that would have an important impact on the need to use the power in future. Economic developments, according to the Widdicombe Committee's research, accounts for some two-thirds of spending under Section 137 and its Scottish equivalent, Section 83 of the Local Government (Scotland) Act 1973.

As has been pointed out, in another place my honourable friend indicated that it would not be too long before the Government announced their response to Widdicombe. That remains the position. I have to say to the Committee that I regret that I am not in a position to give any firm indication of when an announcement will be made, nor to undertake that a response will be published before this Bill leaves your Lordships' House.

The Government have, however, made provision for the necessary changes to Section 137 to be made by regulation. What the Committee is being asked to do in Clause 122 is to endorse the means of effecting those changes. However, I should like to take the opportunity to respond to some points, and in particular to a point raised by the noble Lord, Lord McIntosh of Haringey, and the noble Lord, Lord Ross of Newport, both of whom stressed the importance of Section 137 for grants to voluntary bodies and economic development activity.

Although I have, I hope, answered some of the noble Lords' concerns I must make it clear that there is no question at all of the Government calling into question the principle of Section 137. What Section 137 does is to give a general power to undertake expenditure subject to a financial limit which is at present expressed as the product of a 2p rate. The only question in issue here is how that limit should be formulated for the future. The Committee should not think that the amendment is in any way necessary for the continuance of the powers under Section 137.

The noble Lord, Lord Ross of Newport, then went on to say that many authorities are approaching their limit and cannot fund some voluntary bodies. I have to say to the noble Lord that there is no evidence that the present spending limits on Section 137 are a general constraint on spending. The 1986–87 returns to the Department of the Environment have indicated that only 26 local authorities out of a total of 405 spent in excess of 80 per cent. of their limit. To me that does not demonstrate a problem on the scale that the noble Lord has suggested, but if the noble Lord has particular examples where he feels that the shoe is pinching perhaps he will let me know.

The noble Baroness, Lady Stedman, referred to the important position of parish councils. The position of parish councils is also being considered in the context of the Widdicombe proposals. We are aware that for parish councils Section 137 is particularly valuable because they have relatively few specific powers. I have certainly noted the noble Baroness's concerns and they will be taken into account, but I can give no assurances that the quantum of spending will be increased, which I believe was the implication of what she was proposing.

The noble Lord, Lord Somers, raised the important question of the arts. I have to say to the noble Lord that Section 137 is not relevant to support for the arts. This was a matter we discussed in some detail yesterday, as I am sure the noble Lord will recall, and I confirmed that provision for the arts would be taken into account in the needs assessment of local authorities.

The amendments we are debating have been useful in informing the Government of noble Lords' views on particular issues concerning the future of Section 137. I shall want to consider these. However, the substantive changes we are discussing do not need to be finalised in the context of this Bill, and therefore I hope that the amendments will be withdrawn.

Lord McIntosh of Haringey

I listened carefully to the Minister in the hope that he would say enough to enable me to withdraw the amendments. Even up to the last minute, his last few words, I had hoped that that would be the case. I have not found those words. As I understand it, the position is that the Government are going to ensure the continuity of Section 137 powers, and for that we must be grateful. Indeed, we recognised from the outset that this was the intention of the Government. However, they have not recognised the force of the arguments about the way in which Section 137 powers have been diminished over the years since 1972 by inflation, and the way in which they have been diminished by the abolition of two-tier authorities in the metropolitan counties. To that extent there has not been any serious recognition of the problems which face local authorities who wish to make use of what has been universally agreed—and agreed by the Minister in his speech just now—to be a valuable function of local government.

I must say to the noble Earl that I take exception to his introducing into his speech this curious attack on some local authorities. He said that some of their decisions on expenditure under Section 137 were questionable. Most, or some, of our decisions are questionable at one time or another. That is the stuff of politics. We do not expect all to be in agreement, or to be free from question on all the decisions that we make either in our public or our private lives. If the expenditure of local authorities under Section 137 was not at times questionable then it is doubtful whether any of it would be worth while.

The Minister also gave a quite inadequate response to the questions put in another place some months ago about the Government's response to the Widdicombe Report. His honourable friend said then that it would not be too long before the Government responded, and the Minister says now that the position is still the same. The position is not still the same because we are several months on from that time and it is no longer acceptable for the Government to delay the response and to delay the safeguarding of Section 137 powers, which the Widdicombe Committee, appointed by this Government, opposed.

In brief, what these amendments do is to give effect to the Government's own committee's recommendations, the Widdicombe Committee recommendations. I think it is proper that this Committee should have an opportunity to vote on those recommendations and on this amendment.

4.38 p.m.

On Question, Whether the said amendment (No. 168A) shall be agreed to?

Their Lordships divided: Contents, 101; Not-Contents, 136.

Addington, L. Lawrence, L.
Airedale, L. Llewelyn-Davies of Hastoe, B.
Amherst, E. Lockwood, B.
Ardwick, L. Longford, E.
Attlee, E. McGregor of Durris, L.
Aylestone, L. McIntosh of Haringey, L.
Basnett, L. McNair, L.
Birk, B. Marsh, L.
Blease, L. Mason of Barnsley, L.
Bonham-Carter, L. Mayhew, L.
Boston of Faversham, L. Molloy, L.
Bottomley, L. Morton of Shuna, L.
Brooks of Tremorfa, L. Mulley, L.
Bruce of Donington, L. Murray of Epping Forest, L.
Campbell of Eskan, L. Nicol, B. [Teller.]
Carmichael of Kelvingrove, L. Northfield, L.
Carter, L. Oram, L.
Chitnis, L. Peston, L.
Cledwyn of Penrhos, L. Pitt of Hampstead, L.
David, B. Ponsonby of Shulbrede, L. [Teller.]
Davies of Penrhys, L.
Dormand of Easington, L. Rea, L.
Elwyn-Jones, L. Ritchie of Dundee, L.
Ennals, L. Rochester, L.
Evans of Claughton, L. Ross of Newport, L.
Ewart-Biggs, B. Russell, E.
Falkland, V. Sainsbury, L.
Feversham, L. Scanlon, L.
Fisher of Rednal, B. Seear, B.
Foot, L. Sefton of Garston, L.
Gallacher, L. Serota, B.
Galpern, L. Soper, L.
Glenamara, L. Stallard, L.
Graham of Edmonton, L. Stedman, B.
Gregson, L. Stewart of Fulham, L.
Grey, E. Stoddart of Swindon, L.
Grimond, L. Strabolgi, L.
Hampton, L. Taylor of Blackburn, L.
Hanworth, V. Taylor of Gryfe, L.
Harris of Greenwich, L. Taylor of Mansfield, L.
Hatch of Lusby, L. Tordoff, L.
Hayter, L. Turner of Camden, B.
Houghton of Sowerby, L. Underhill, L.
Hughes, L. Vernon, L.
Hunt, L. Wallace of Coslany, L.
Irving of Dartford, L. Walston, L.
Jacques, L. Wells-Pestell, L.
Jay, L. White, B.
Jeger, B. Winchilsea and Nottingham, E.
Jenkins of Putney, L.
John-Mackie, L. Winstanley, L.
Kennet, L.
Airey of Abingdon, B. Biddulph, L.
Aldington, L. Blake, L.
Alexander of Tunis, E. Blyth, L.
Allenby of Megiddo, V. Borthwick, L.
Allerton, L. Boyd-Carpenter, L.
Ampthill, L. Brabazon of Tara, L.
Arran, E. Brougham and Vaux, L.
Auckland, L. Broxbourne, L.
Bauer, L. Bruce-Gardyne, L.
Beaverbrook, L. Burton, L.
Belhaven and Stenton, Butterworth, L.
Beloff, L. Caithness, E.
Belstead, L. Cameron of Lochbroom, L.
Bessborough, E. Carnegy of Lour, B.
Carnock, L. Mersey, V.
Clitheroe, L. Milverton, L.
Coleraine, L. Montagu of Beaulieu, L.
Colnbrook, L. Mottistone, L.
Colville of Culross, V. Moyne, L.
Cork and Orrery, E. Munster, E.
Cottesloe, L. Nelson, E.
Cox, B. Norfolk, D.
Croft, L. Northesk, E.
Cullen of Ashbourne, L. Nugent of Guildford, L.
Davidson, V. [Teller.] Onslow, E.
De Freyne, L. Orkney, E.
Denham, L. [Teller.] Oxfuird, V.
Dilhorne, V. Porritt, L.
Dundee, E. Portland, D.
Eden of Winton, L. Portsmouth, E.
Elibank, L. Pym, L.
Elliot of Harwood, B. Radnor, E.
Erne, E. Rankeillour, L.
Fanshawe of Richmond, L. Richardson, L.
Ferrier, L. Rochdale, V.
Fortescue, E. Rodney, L.
Fraser of Kilmorack, L. St. Aldwyn, E.
Gainford, L. St. Davids, V.
Gisborough, L. Saltoun of Abernethy, Ly.
Glenarthur, L. Sanderson of Bowden, L.
Gray of Contin, L. Sandford, L.
Gridley, L. Selborne, E.
Haddington, E. Selkirk, E
Hailsham of Saint Marylebone, L. Shannon, E.
Sharples, B.
Hardinge of Penshurst, L. Skelmersdale, L.
Harmar-Nicholls, L. Somers, L.
Harvington, L. Stockton, E.
Henley, L. Stodart of Leaston, L.
Hesketh, L. Strange, B.
Hives, L. Swansea, L.
Home of the Hirsel, L. Swinfen, L.
Hood, V. Swinton, E.
Hooper, B. Terrington, L.
Hunter of Newington, L. Thomas of Gwydir, L.
Hylton-Foster, B. Thurlow, L.
Ilchester, E. Todd, L.
Jessel, L. Trafford, L.
Kimball, L. Tranmire, L.
Lauderdale, E. Trefgarne, L.
Layton, L. Trumpington, B.
Long, V. Vaux of Harrowden, L.
Lothian, M. Whitelaw, V.
Luke, L. Windlesham, L.
Lyell, L. Wise, L.
Mackay of Clashfern, L. Wynford, L.
Malmesbury, E. Young, B.
Marley, L. Young of Graftham, L.
Merrivale, L.

Resolved in the negative, and amendment disagreed to accordingly.

4.45 p.m.

[Amendments Nos. 169 to 173 not moved.]

Lord Graham of Edmonton moved Amendment No. 174: Page 57, line 18, at end insert— ("(6) The power to designate an authority under Section 104 above shall have effect for the chargeable financial years beginning in 1990, 1991, 1992, 1993 and 1994 only.").

The noble Lord said: I beg to move the amendment standing in the name of my noble friend. For the last hour and a half the Minister and those who support him have sought successfully to persuade the Committee that, in the unlikely event of some local authorities continuing to act in the future as they have in the past—that is, irresponsibly, in the eyes of the Minister and those who support him—in regard to incurring expenditure, some power needs to be available, in reserve or up one's sleeve, to ensure that the rate can be capped.

The Minister made very heavy weather of this and failed completely to answer the charge that the raison d'être of the whole of this Bill is accountability. Yet he refuses to allow the elected councillors to be accountable to their electorates from time to time. What my noble friend Lord McIntosh has been able to demonstrate very effectively is that when the Minister talks about accountability he is really talking about the accountability of councillors to him and not about the accountability of councillors to their electorates. So be it.

The amendment says—and I note very carefully and fortuitously what the Minister and his friends have been saying for the last hour and a half—that in the early days of the new financial arrangements there could very well be circumstances in which that handful of local authorities out of many hundreds which in the eyes of the Minister and his friends have acted irresponsibly would be tempted to spend excessively.

The Minister has his own degree of faith in those few councils, but there is also the contempt with which he views not only their ability to hold down the rate but the ability of the rest of the councillors. By having the legislation to cap the rate, he is not merely saying that this is designed to deal with a handful of recalcitrant councillors; he is saying to every single council, "This power is also there to deal with you if you decide in the special circumstances that you want to exceed your spending levels." That is available. It is a stick, a threat, a fear. The noble Baroness, Lady Carnegy of Lour, who regrettably is not present, made a point of saying that in the early years of the new arrangements—and I do not know the source of her evidence—there is likely to be an excess of zeal by some authorities who will be tempted to overspend.

If the Government are serious about trying to redress the deterioration in the relationship between central and local government that the Minister and his colleagues have presided over—indeed, engineered—in the last seven years, this is the opportunity to do it. Although one can have suspicions about one or two local councils we ask the Minister to trust local government. If the Minister insists that he needs the power to cap the charge, how long does he believe that he needs it? The Minister says—and this is if the amendment fails—that he may need it forever. That breeds a climate of suspicion, fear and anger and, in some instances, despair.

We ask the Minister to trust local government to act responsibly, with the Government retaining the powers to make it do so according to the Minister's light for the limit of the transitional period. We have not chosen the number of years. The Government have said, I think not unfairly, that there is likely to be a period in which special arrangements of all kinds will need to be made. We accept that. However, it is a question of giving local councils and councillors the feeling that, if the Government wish to control, tighten and make bodies accountable, there will be a limit. If in that period some councils act irresponsibly, to change the law to suit the Government's whim in the light of local government's behaviour will be nothing new: the Minister has done it time and again in the last eight years. There has been original legislation, primary legislation and secondary legislation when the Government have had to come back largely to deal with isolated instances of what they would claim are recalcitrant councils.

This is an opportunity for the Minister to show that he has faith in his ability to influence local councils in their behaviour. Does the Minister believe that he needs one year, two years, three years or four years? If councils—I do not believe that this will happen—act irresponsibly, has the Minister no faith in his ability to persuade them? He parades before the Committee the dreadful things that have happened in some Labour local authorities, particularly in London. As the Minister knows, he brought forward his nightmarish tales in 1982, 1983, 1984 and 1985. In the local elections held in 1968, there was an increase in the number of Labour councils returned. Some councils that had not been Labour controlled became Labour controlled after the elections. I have faith in local people. They are not easily hoodwinked and they know the worth and measure of those who represent them. If at the end of a four-year period the Government seek to shackle the councils and force them to comply with a dreadful panoply of restrictions, people will know how to react.

The Government have many measures whereby councils can be required to conform. The Minister should know that local government is sick of the way in which he and his colleagues have been hounding it at every turn. The Government now have an opportunity to ease off. I cannot speak for every local council but the local authority associations who speak for them say first that they do not need rate capping and, secondly that they do not need it beyond four years.

The Minister now has an opportunity to respond to my earlier statement, which he quoted. There is a new mood of realism in local government not only in London but throughout the country. The Minister can act in a statesmanlike fashion by accepting the amendment.

Baroness Stedman

I should like to speak to Amendment No. 175, which is grouped with Amendment No. 174. We have been arguing in Committee for more than six days about the question of accountability in one form or another. Many of us have argued that it is under threat from three different specific provisions in the Bill. In earlier amendments to Schedule 7, we tried to deal with the fact that the inflation rate for increases in non-domestic rates does not reflect the actual cost met by local government. We argued a couple of days later that the arrangements for billing and accounting for the community charge do not clearly state the true position for county councils as set out in Clause 96.

We come now to what I see as the third threat to accountability—that community charge capping is not even limited to the transitional period. The Green Paper implied that capping would be used in the transitional period only. On Second Reading, I was among those Members who said that they would accept the powers for the transitional period. I went on to say that I might even accept the powers in the case of a national emergency, but that they should not be permanent.

Capping is now a permanent fixture in the Bill. There is no provision to restrict the length of time of the capping powers. I hope that the Minister will be able to accept the amendment as fair and just to all concerned. It allows capping to continue subject to review every five years, providing that the necessary orders are laid before the Houses of Parliament for approval.

If the Minister is unable to accept the amendment, we may have to return to the matter on Report. If the Minister in unable to accept the amendment so ably moved by the noble Lord, Lord Graham of Edmonton, which I support in preference to my own amendment, perhaps he would consider accepting Amendment No. 175 as a fall-back position. I should be equally happy about that.

The Earl of Caithness

I congratulate the noble Lord, Lord Graham of Edmonton, and the noble Baroness, Lady Stedman, for the skill with which they have deployed their arguments.

We have heard on occasions in consideration of the Bill about the Labour Party's lack of alternative policies to those contained in the Bill. With respect, Amendment No. 174 is perhaps a good example of an amendment moved by the Opposition in another place. That amendment would have delayed the application of charge capping for five years. The party of the noble Lord presumably saw the need to retain capping powers five years hence.

It has been said that powers are needed to cover only those transitional years when the community charge has not been fully introduced. Although the Government agree that those are the years in which it is perhaps most important to give charge payers the back-up protection that they have a right to expect, what I did not say was that they should be left unprotected after 1994–95. As I have explained, an authority might still be irrationally tempted to make excessive demands after 1994. Indeed, the amendment tabled by the noble Lord, Lord Graham of Edmonton, could increase the risk of that happening. When we discussed Amendment No. 165 I dealt with that extensively as, indeed, I dealt with the point of accountability.

The arguments I have just deployed could equally apply to Amendment No. 175, to which the noble Baroness, Lady Stedman, has put her name. Charge capping is included in the Bill as a safeguard against an irrational authority setting excessive charges. Such a possibility, however remote, is with us now, and will be with us in five or 10 years.

The noble Lord, Lord Graham of Edmonton, made a special plea that we should trust local authorities. I have already agreed that there is much more realism than in the recent past concerning local authorities. The inclusion of this power does not mean that we distrust local authorities. It is included in the Bill as a protection to the charge payer who might on occasion be subjected to an excessive charge by a local authority which is behaving irrationally and in such a way that even the noble Lord, Lord Graham of Edmonton, would not approve of it.

I repeat, charge capping is a longstop power which we hope it will not be necessary to use. Therefore, I hope the Committee will agree that we would be acting unreasonably towards charge payers if the powers were not included in the Bill.

5 p.m.

Lord Graham of Edmonton

I am grateful to the Minister not only for his brief, but also because it is clear that he has listened carefully to the arguments deployed by the noble Baroness, Lady Stedman, and myself.

The noble Earl makes noises about recognising greater responsibility, but in my view he treats the electorate with scant appreciation. We are looking at an electorate which, in 1986, say, elected a council which could very well have caused the programme of the Minister and his colleagues. Nevertheless, the council is elected. In spite of all that the Government have said, and all their powers, the people in that community continue to re-elect that Labour authority.

The Minister is saying that there could be the possibility—the rare possibility—that one or two councils out of more than 100 will act, in his view, irresponsibly. The mind boggles at the extent to which the Minister and his colleagues are determined to go in order to make sure that local government conforms completely to the way in which the Government feel it should.

The Minister should not wonder why men and women who are involved in local government despair about the philosophy which the Minister and his colleagues are enunciating; that is, that local government will merely become a group of people who are place men and place women who will have to perform in the light and manner which central government stipulate.

I will work for a change in government. If, as I hope, there is a change in government and that government has the range of powers which this Minister has taken unto him, then all hell will be let loose; not only by the Minister and his friends in opposition, but from all sectors of the media. One of the sick-making aspects is that there are good men and women who want to serve their communities and who are saying that that is not the road down which they are prepared to go. I invite the Committee to express an opinion.

5.4 p.m.

On Question, Whether the said amendment (No. 174) shall be agreed to?

Their Lordships divided: Contents, 98; Not-Contents, 131.

Addington, L. Attlee, E.
Airedale, L. Aylestone, L.
Amherst, E. Basnett, L.
Ardwick, L. Birk, B.
Blackstone, B. Llewelyn-Davies of Hastoe, B.
Blease, L. Lockwood, B.
Bonham-Carter, L. Longford, E.
Boston of Faversham, L. McGregor of Durris, L.
Brooks of Tremorfa, L. McIntosh of Haringey, L.
Bruce of Donington, L. Mackie of Benshie, L.
Campbell of Eskan, L. McNair, L.
Carmichael of Kelvingrove, L. Mason of Barnsley, L.
Cledwyn of Penrhos, L. Mayhew, L.
Cromartie, E. Molloy, L.
David, B. Morton of Shuna, L.
Davies of Penrhys, L. Nicol, B. [Teller.]
Dean of Beswick, L. Northfield, L.
Dormand of Easington, L. Oram, L.
Elwyn-Jones, L. Peston, L.
Ennals, L. Pitt of Hampstead, L.
Evans of Claughton, L. Ponsonby of Shulbrede, L.
Ewart-Biggs, B. Rea, L.
Falkland, V. Ritchie of Dundee, L.
Feversham, L. Rochester, L.
Fisher of Rednal, B. Ross of Newport, L.
Foot, L. Russell, E.
Gallacher, L. Scanlon, L.
Glenamara, L. Seear, B.
Graham of Edmonton, L. [Teller.] Seebohm, L.
Sefton of Garston, L.
Grey, E. Serota, B.
Grimond, L. Somers, L.
Hampton, L. Stallard, L.
Harris of Greenwich, L. Stedman, B.
Hart of South Lanark, B. Stewart of Fulham, L.
Hatch of Lusby, L. Stoddart of Swindon, L.
Hayter, L. Strabolgi, L.
Houghton of Sowerby, L. Taylor of Blackburn, L.
Hughes, L. Taylor of Gryfe, L.
Hunt, L. Taylor of Mansfield, L.
Irving of Dartford, L. Thurlow, L.
Jacques, L. Tordoff, L.
Jay, L. Turner of Camden, B.
Jeger, B. Underhill, L.
Jenkins of Putney, L. Wallace of Coslany, L.
John-Mackie, L. Walston, L.
Kennet, L. Wells-Pestell, L.
Kilbracken, L. Winchilsea and Nottingham, E.
Kilmarnock, L.
Kings Norton, L. Winstanley, L.
Airey of Abingdon, B. Croft, L.
Aldington, L. Cullen of Ashbourne, L.
Allenby of Megiddo, V Davidson, V. [Teller.]
Allerton, L De Freyne, L.
Arran, E. Denham, L.
Auckland, L Dilhorne, V.
Bauer, L. Dundee, E.
Beaverbrook, L. Eden of Winton, L.
Belhaven and Stenton, L. Elibank, L.
Beloff, L. Elliot of Harwood, B.
Belstead, L. Erne, E.
Bessborough, E. Erroll, E.
Biddulph, L. Fanshawe of Richmond, L.
Blake, L. Ferrier, L.
Blyth, L. Fortescue, E.
Borthwick, L. Fraser of Kilmorack, L.
Boyd-Carpenter, L. Gainford, L.
Brabazon of Tara, L. Gardner of Parkes, B.
Brougham and Vaux, L. Gisborough, L.
Broxbourne, L. Glenarthur, L.
Burton, L. Gray of Contin, L.
Butterworth, L. Gridley, L.
Caithness, E. Haddington, E.
Cameron of Lochbroom, L. Hailsham of Saint Marylebone, L.
Carnegy of Lour, B.
Carnock, L. Hardinge of Penshurst, L.
Clitheroe, L. Harmar-Nicholls, L.
Coleraine, L. Harvington, L.
Colnbrook, L. Henley, L.
Colville of Culross, V. Hesketh, L.
Cork and Orrery, E. Hives, L.
Cottesloe, L. Home of the Hirsel, L.
Cox, B. Hooper, B.
Hylton-Foster, B. Rochdale, V.
Kaberry of Adel, L. St. Aldwyn, E.
Kimball, L. St. Davids, V.
Lauderdale, E. Saint Oswald, L.
Layton, L. Saltoun of Abernethy, Ly.
Lloyd of Hampstead, L. Sanderson of Bowden, L.
Long, V. [Teller.] Sandford, L.
Lyell, L. Selborne, E.
Mackay of Clashfern, L. Selkirk, E
Macleod of Borve, B. Shannon, E.
Malmesbury, E. Sherfield, L.
Marley, L. Skelmersdale, L.
Marsh, L. Stockton, E.
Merrivale, L. Stodart of Leaston, L.
Mersey, V. Strange, B.
Mottistone, L. Strathcona and Mount Royal, L.
Moyne, L.
Munster, E. Swansea, L.
Nelson, E. Swinton, E.
Nelson of Stafford, L. Terrington, L.
Norfolk, D. Thomas of Gwydir, L.
Northesk, E. Trafford, L.
Nugent of Guildford, L. Tranmire, L.
Onslow, E. Trefgarne, L.
Orkney, E. Trumpington, B.
Oxfuird, V. Vaux of Harrowden, L.
Peel, E. Vinson, L.
Perth, E. Whitelaw, V.
Portland, D. Windlesham, L.
Portsmouth, E. Wise, L.
Pym, L. Wynford, L.
Radnor, E. Young, B.
Rankeillour, L. Young of Graffham, L.
Richardson, L.

Resolved in the negative, and amendment disagreed to accordingly.

5.12 p.m.

Clause 104 agreed to.

[Amendment No. 174A not moved.]

Clause 105 agreed to.

The Deputy Chairman of Committees (Lord Nugent of Guildford)

As regards Clauses 106 to 114, if no Member of the Committee has any intervention to make I shall put them en bloc.

Clauses 106 to 114 agreed to.

Baroness Stedman moved Amendment No. 175: After Clause 114, insert the following new clause:

("Expiry and renewal of Part VIII.

. This Part shall continue in force until the end of the period of five years beginning with the passing of this Act and shall then expire, but at any time before the expiry of this Part Her Majesty may by Order in Council direct that it shall continue in force for a further period of five years from the date on which it would otherwise expire:

Provided that Her Majesty shall not be recommended to make an Order under this section unless a draft of it has been laid before and approved by resolution of both Houses of Parliament.").

The noble Baroness said: As regards Amendment No. 174 I was not happy with the reply that the Minister gave when he was dealing with my amendment in conjunction with that of the noble Lord, Lord Graham. He said that we were both trying to take powers out of the Bill. If the Minister reads my amendment carefully he will see that 1 ask for a review within five years and for an order to be laid before both Houses of Parliament. The noble Lord, Lord Graham, said that the Minister does not trust local authorities. It seems that the Government do not trust either the Members of this Committee or of another place to deal competently with orders laid before them. Therefore, I beg to move.

5.13 p.m.

On Question, Whether the said amendment (No. 175) shall be agreed to?

Their Lordships divided: Contents, 82; Not-Contents, 122.

Addington, L. Jenkins of Putney, L.
Airedale, L. John-Mackie, L.
Amherst, E. Kilmarnock, L.
Ardwick, L. Kings Norton, L.
Attlee, E. Llewelyn-Davies of Hastoe, B.
Aylestone, L. Lockwood, B.
Basnett, L. Longford, E.
Birk, B. McIntosh of Haringey, L.
Blackstone, B. Mackie of Benshie, L.
Blease, L. Mason of Barnsley, L.
Bonham-Carter, L. Mayhew, L.
Boston of Faversham, L. Molloy, L.
Brooks of Tremorfa, L. Morton of Shuna, L.
Bruce of Donington, L. Nicol, B.
Carmichael of Kelvingrove, L. Northfield, L.
Cledwyn of Penrhos, L. Oram, L.
David, B. Peston, L.
Davies of Penrhys, L. Pitt of Hampstead, L.
Dormand of Easington, L. Rea, L.
Elwyn-Jones, L. Rochester, L.
Ennals, L. Ross of Newport, L.
Evans of Claughton, L. Russell, E.
Ewart-Biggs, B. Scanlon, L.
Feversham, L. Seear, B.
Fitt, L. Seebohm, L.
Foot, L. Sefton of Garston, L.
Gallacher, L. Stedman, B.
Glenamara, L. Stewart of Fulham, L.
Graham of Edmonton, L. [Teller.] Stoddart of Swindon, L.
Strabolgi, L.
Grey, E. Taylor of Blackburn, L.
Grimond, L. Taylor of Gryfe, L. [Teller.]
Hanworth, V. Taylor of Mansfield, L.
Harris of Greenwich, L. Thurlow, L.
Hatch of Lusby, L. Turner of Camden, B.
Hayter, L. Underhill, L.
Hughes, L. Vernon, L.
Hunt, L. Wallace of Coslany, L.
Irving of Dartford, L. Walston, L.
Jacques, L. Wells-Pestell, L.
Jay, L. Winchilsea and Nottingham, E.
Jeger, B.
Airey of Abingdon, B. Butterworth, L.
Aldington, L. Caithness, E.
Allenby of Megiddo, V. Cameron of Lochbroom, L.
Allerton, L. Campbell of Croy, L.
Arran, E. Carnegy of Lour, B.
Auckland, L. Carnock, L.
Bauer, L. Clitheroe, L.
Beaverbrook, L. Coleraine, L.
Belhaven and Stenton, L. Colnbrook, L.
Beloff, L. Cork and Orrery, E.
Belstead, L. Cottesloe, L.
Bessborough, E. Craigavon, V.
Biddulph, L. Croft, L.
Blake, L. Cullen of Ashbourne, L.
Blyth, L. Davidson, V. [Teller.]
Borthwick, L. De Freyne, L.
Broadbridge, L. Dilhorne, V.
Brougham and Vaux, L. Dundee, E.
Broxbourne, L. Eden of Winton, L.
Burton, L. Elibank, L.
Elliot of Harwood, B. Onslow, E.
Erne, E. Oxfuird, V.
Erroll, E. Peel, E.
Ferrier, L. Porritt, L.
Fortescue, E. Portsmouth, E.
Fraser of Kilmorack, L. Pym, L.
Gainford, L. Radnor, E.
Gisborough, L. Rankeillour, L.
Glenarthur, L. Richardson, L.
Gray of Contin, L. Rochdale, V.
Gridley, L. St. Davids, V.
Haddington, E. Saint Oswald, L.
Hailsham of Saint Marylebone, L. Saltoun of Abernethy, Ly.
Sanderson of Bowden, L.
Hardinge of Penshurst, L. Sandford, L.
Harmar-Nicholls, L. Selborne, E.
Harvington, L. Selkirk, E
Henley, L. Shannon, E.
Hesketh, L. Sherfield, L.
Hives, L. Skelmersdale, L.
Home of the Hirsel, L. Somers, L.
Hooper, B. Stockton, E.
Kaberry of Adel, L. Stodart of Leaston, L.
Kimball, L. Strange, B.
Lauderdale, E. Strathcona and Mount Royal, L.
Layton, L.
Long, V. [Teller.] Swansea, L.
Lyell, L. Swinfen, L.
McAlpine of West Green, L. Swinton, E.
Mackay of Clashfern, L. Terrington, L.
Malmesbury, E. Thomas of Gwydir, L.
Marley, L. Trafford, L.
Marsh, L. Tranmire, L.
Merrivale, L. Trumpington, B.
Mersey, V. Vaux of Harrowden, L.
Mottistone, L. Vinson, L.
Moyne, L. Whitelaw, V.
Munster, E. Windlesham, L.
Nelson, E. Wise, L.
Nelson of Stafford, L. Wynford, L.
Northesk, E. Young, B.
Nugent of Guildford, L. Young of Graffham, L.

Resolved in the negative, and amendment disagreed to accordingly.

5.22 p.m.

Clause 115 [Interpretation]:

The Earl of Caithness moved Amendment No. 175A:

Page 63, line 28, leave out subsections (3) to (5)

On Question amendment agreed to.

Clause 115, as amended, agreed to.

Clauses 116 and 117 agreed to.

Lord Hesketh

I beg to move that the House do now resume.

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

House resumed.