Lords Sitting of 8 July 1991

Preamble
The House met at half-past two of the clock: The CHAT RMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Portsmouth.

EC: Money Laundering Directive
Lord Campbell of Croy Lord Campbell of Croy asked Her Majesty's Government:
What progress is being made in the Council of Ministers to prevent money laundering within the EC.
The Minister of State, Department of Transport (Lord Brabazon of Tara): My Lords, the Council of Ministers adopted the money laundering directive on 10th June. The directive has to be implemented by member states before 1st January 1993.
Lord Campbell of Croy: My Lords, I am grateful to my noble friend for that reassuring Answer, because these measures are aimed chiefly at the evil of drugs. Are the British Government completely confident that by the beginning of 1993 it will be possible to enforce the agreement under which all deposits in banks and similar institutions of more than 15,000 ecus (approximately £10,000) must have a full explanation?
Lord Brabazon of Tara: My Lords, we shall seek to ensure that we comply with all our obligations under the directive by that date. The requirement to which my noble friend refers is that concerning the identification of customers. Institutions are required to obtain evidence of the identity of their customers when they enter into business relations with them; for instance, the opening of an account. Identification requirements also apply to one-off transactions between institutions and customers; for example, the purchase of travellers cheques involving sums in excess of 15,000 ecus. There is no requirement in the directive for the compulsory explanation of deposits.
Lord Cledwyn of Penrhos: My Lords, the United Nations has estimated that up to 500 million dollars are laundered in the industrialised world every year. Can ere Minister give the figures, first, for the European Community and, secondly, for this country?
Lord Brabazon of Tara: My Lords, I do not have the estimated figures for either this country or the European Community.
Lord Cledwyn of Penrhos: My Lords, the Minister will recall the recommendation in the report of the Select Committee of this House which was submitted to us last year. It also made certain estimates. Can he assure the House that the report's recommendations are being implemented by the Government?
Lord Brabazon of Tara: My Lords, I apologise for not having the details of the report in front of me. I shall look into the matter and ensure that the recommendations are being acted upon.
Lord Bruce of Donington: My Lords, is the Minister aware that the provisions of the original directive were amended in June this year and that they do not appear to present any difficulty in the exercise of the directive? Is there any reason why its implementation should be deferred until 1st January 1993? If the Minister's answer is that there appears to be a necessity for primary legislation, will he explain exactly where in the amended directive appear the clauses which give rise to that? If there is to be primary legislation, why has it not been presented previously?
Lord Brabazon of Tara: My Lords, major changes will not be required of this country because to a large extent existing United Kingdom law and practice are already compatible with the provisions of the directive. However, there must be some legislative changes to ensure that we comply with our obligations and we shall bring forward appropriate measures. As regards other countries I understand that more substantial legislation is required. That is why the directive cannot come into force before 1st January 1993.

Mr. John Witney: Release from Prison
2.41 p.m.
Lord Boyd-Carpenter Lord Boyd-Carpenter asked Her Majesty's Government:
Why and on what authority Mr. John Witney, who had been sentenced to life imprisonment for participation in the murder of a policeman with a minimum of 30 years' detention prescribed by the trial judge, was released from prison after a substantially shorter period.
The Minister of State, Home Office (Earl Ferrers): My Lords, Mr. Witney was released on life licence after almost 25 years in prison on the authority of my right honourable friend the Home Secretary. This was in exercise of his powers under the Criminal Justice Act 1967 following a recommendation which was made by the Parole Board in 1988 and after consultation with the Lord Chief Justice.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that when sentencing the trial judge said:
"I think it is likely that no Home Secretary regarding the enormity of your crime will ever think fit to show mercy by releasing you on licence. This is one of the cases in which the sentence of imprisonment for life may well be treated as meaning exactly that"?
Is my noble friend also aware that the trial judge felt bound to state a figure for a minimum sentence of 30 years? Will he explain why in those circumstances, and in view of the clear views of the trial judge, the man was released five years before the expiry of those 30 years?
Earl Ferrers: My Lords, I understand my noble friend's anxiety. I remind him that the judge's recommendation is not binding. The detention of life

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sentence prisoners is determined by the length of time considered necessary to mark the seriousness of the offence and by the risk which release would present to the public. After consultation with the Lord Chief Justice in 1985 the then Home Secretary decided that a distinction could be drawn between Witney, who did not fire any shots, and the other two co-defendants who did. In November 1988 the Parole Board advised that he no longer presented a risk to the public. That is why in February 1989 my right honourable friend decided that Witney could be released after a further two years.
Baroness Phillips: My Lords, is the Minister aware that many members of the general public are genuinely disturbed about, first, the light sentences which are being passed; secondly, the fact that some people are not sentenced at all; and thirdly, that people, as this Question shows, are released before the end of their sentence? Is that fair to the police who worked on the case? And is it fair to the rest of us?
Earl Ferrers: My Lords, he was not released before the end of his sentence. He was given a life sentence, and the life sentence continues. The question for the Home Secretary's judgment is how much of that time should be spent in prison. There is anxiety about people who commit these terrible atrocities. I share that anxiety. However, the fact is that my right honourable friend must take advice from the Parole Board. In this case it was considered that Witney was no longer a risk to the public. That is why he was released.
Earl Nelson: My Lords, I should declare an interest in this Question. I was serving in the Metropolitan Police at the time of the murder of three police officers at Shepherd's Bush. One of the officers, Detective Sergeant Christopher Head, was a personal friend of mine.
I am sure that the Minister will be aware of the disappointment which I feel at his Answer. In saying that, I am sure that I speak for every serving police officer in this country. Will the Minister give an assurance that no others who have been sentenced in this way are likely to be granted early release, particularly the third defendant in the case—Harry Roberts—who was also recommended to serve 30 years?
Does the noble Earl agree that there is a certain element of farce, not in the sentencing procedure but in the way in which matters are interpreted in later years? Last week we discussed the Criminal Justice Bill: we heard arguments on both sides. Some people argue that life imprisonment should mean that; others hold different views. However, if sentences are to be overturned, such as in this case, does the Minister not agree that there is a certain element of farce?
Earl Ferrers: My Lords, I appreciate the anxiety of my noble friend Lord Nelson, considering his personal involvement. Understandably, any person who has had such an involvement is more concerned than those of us who have not had such an experience. I regret that my replies have been disappointing to my noble
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friend. I believe that he means that he is disappointed by the early release of Witney. We must bear in mind that the principle of a life sentence, as it is now determined, is that there should be the possibility of release when a person is considered to be safe for release. It was considered in Witney's case that his participation was different from that of the other two. That is why my right honourable friend was advised that release was acceptable. I should point out that he was so advised by the Parole Board in 1985 but that the advice was not accepted at that time.
With regard to the other people to whom my noble friend referred, every case is considered on its own merits. Roberts remains in closed conditions. The next review of his case will be 1992 but there are no grounds to set aside the trial judge's recommendation. With regard to Witney, his sentence is the equivalent of a determinate sentence of around 36 years.
Lord Monson: My Lords, does the noble Earl agree that if the Criminal Justice Bill had already become law and if the other place had not thrown out your Lordships' amendment which abolished the necessity of imposing a mandatory life sentence for murder, the trial judge could have achieved his objective by sentencing Mr. Witney to 60 years' imprisonment with the possibility of release after 30 years? If that had happened, there is no way in which he could have been released so soon, except for an urgent medical condition. Therefore, does the Minister agree that those Members of another place who rejected your Lordships' amendment because they wanted to give the impression of being hard on the more heinous forms of murder have shot themselves in the foot?
Earl Ferrers: My Lords, the noble Lord, Lord Monson, carries his imagination rather too far. As regards the Criminal Justice Bill, the changes which may take place—and the Bill is still going through Parliament, so we cannot yet tell what will be changed—will not affect mandatory life sentences as proposed at present.
Lord Boyd-Carpenter: My Lords, can my noble friend confirm that this is the first case in which a man involved in the murder of a policeman has been released on licence? Does that change in policy mean that the Parole Board and the Home Office have altered their policy? Will he be frank about that?
Earl Ferrers: My Lords, I do not believe that the Home Office has altered its policy in the slightest. There have been various occasions when people were released early. Other police killers have been released. Witney is the first adult male convicted of the murder of a policeman since 1965, when the death penalty was abolished, to be released.
Lord Donaldson of Kingsbridge: My Lords, one or two people from this side tend to take a different view from that of the noble Lord, Lord Boyd-Carpenter, and those supporting him. Most of us would like to express our view.
Noble Lords: Question!
Lord Donaldson of Kingsbridge: My Lords, perhaps I may be allowed to express a view on the matter.
Noble Lords: Order!
Lord Donaldson of Kingsbridge: My Lords, I have been doing this for 22 years; I am sorry to have got it wrong. Is the noble Earl aware that some of us believe that 25 years' imprisonment is a long sentence, though in this case not too long? That somebody is released after 25 years on grounds of no longer being a danger to the public is a good reason for releasing him. I do not believe that the noble Earl has exercised any special privileges in that regard.
Earl Ferrers: My Lords, what the noble Lord, Lord Donaldson, says indicates a variety of views on the subject I can only repeat that it is the Home Secretary's duty—and it is an onerous duty—to decide when such a person should be released. He does not release such people lightly. He has taken advice. The person concerned has been in prison longer than the minimum recommendations laid down by his former right honourable friend Sir Leon Brittan, when he was Home Secretary. I can only repeat that distressing though this case is—and it is—there is a difference between Witney, who did not fire the shots, and the other two who did.
Viscount Mountgarret: My Lords, does my noble friend agree that while there is considerable sympathy and understanding for those serving long sentences in prison that their cases should be reviewed sympathetically, nonetheless there exists unease in the country as a whole that sometimes too much attention is paid to the miscreant and not enough consideration given to either the victim or possible intended victim? Perhaps the Government will bear that it mind.
Earl Ferrers: My Lords, of course we shall bear that in mind. There is no question that when anyone is murdered, release of the prisoner is a matter of prime concern. When it is the murder of a policeman, that concern is even greater. Only this morning I attended the memorial service of one such policeman who was murdered and it was a distressing occasion.

Hong Kong and Vietnamese Boat People
2.53 p.m.
Lord Aylestone Lord Aylestone asked Her Majesty's Government:
What help is being given to Hong Kong to assist in alleviating the problem of the thousands of Vietnamese boat people, not classified as refugees, who have to live in detention centres.
The Minister of State, Foreign and Commonwealth Office (The Earl of Caithness): My Lords, since 1989 Her Majesty's Government have spent almost £35 million either directly or via UNHCR on the care and screening of Vietnamese asylum seekers. We recently pledged a further £6 million to UNHCR for activities under the Comprehensive Plan of Action for 1991. We have also taken the lead in international efforts to find a durable solution. For example, we are pursuing with Vietnam, UNHCR and the International
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Organisation for Migration, the possible creation of an internationally managed centre in Vietnam to which those non-refugees who do not opt for voluntary return can be transferred.
Lord Aylestone: My Lords, I thank the Minister for his reply and for writing to me bringing me up to date with the position in Hong Kong regarding the Vietnamese people. Perhaps I can ask two questions. First, has the attitude of the United States changed with regard to the return to Vietnam of the Vietnamese boat people who have not volunteered but who are being persuaded to return? Secondly, has the Republic of Vietnam given an international assurance that if people are returned they will be treated decently and will be allowed to return to their villages and that in every way they need have no fear about going back?
The Earl of Caithness: My Lords, following a successful visit to Washington by officials of the Foreign and Commonwealth Office, there has been a movement in the American attitude. The Americans want the Comprehensive Plan of Action, which is the only sensible basis on which to solve this problem, to work. It means that those who are not granted refugee status must be returned to the country of origin. As regards the second question raised by the noble Lord, over 8,000 people have now returned to Vietnam. Over 7,000 of that number came from Hong Kong. We have no evidence that persecution took place in any of those cases.
Lord Cledwyn of Penrhos: My Lords, we welcome the information from the noble Earl that some progress is being made and action being taken by Her Majesty's Government in what is an extremely difficult situation in Hong Kong. Will the Minister confirm that the number of refugees has now increased to 61,000 people? Can he say what progress has been made on the Comprehensive Plan of Action agreed in 1989, and what is its main thrust?
The Earl of Caithness: My Lords, the latest figures as of 3.30 this morning are that 61,485 people are in the camps, 381 of whom arrived during the past 72 hours. That indicates that the pressure on Hong Kong continues unabated. The Comprehensive Plan of Action was designed to solve the problem. Its primary function is designed to obtain agreement between all the countries in the area that those who leave Vietnam for whatever reason and, having gone through the screening process in Hong Kong, should they go there, fail the test of becoming recognised as a refugee are returned to Vietnam. That has not worked as satisfactorily as it was hoped, and that is why we are making efforts to set up an internationally managed centre in Vietnam so that the Comprehensive Plan of Action can work better.

Hospital Waiting Lists
2.57 p.m.
Lord Molloy Lord Molloy asked Her Majesty's Government:
What proportion of people on hospital waiting lists die before receiving treatment.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Hooper): My Lords, the vast majority of people on waiting lists are waiting for the treatment of conditions which are not life-threatening. Emergency cases do not go on a waiting list; they are treated immediately. Therefore, the information in the form requested would have no purpose and is not collected.
Lord Molloy: My Lords, is the noble Baroness aware that many people feel that those figures should be collected to enable us to understand them? Many people who are on the waiting list for one or two years die from something other than that for which they require the operation. Very often they are so long waiting that the operation cannot be performed. Can the Minister say whether it would be possible for GPs to contact hospital authorities to inform them of the conditions of the patients they have sent there?
Baroness Hooper: My Lords, we are aiming to make the National Health Service and the Department of Health more efficient. We feel that that aim would not be furthered by requiring unnecessary statistics to be collected. Sadly, with the passage of time people die. That applies to people who happen to be on waiting lists as well as people who are not. Tackling the length of time that people wait is what counts. We have achieved considerable success in that regard and numbers are plummeting.
Lord Skelmersdale: My Lords, my noble friend mentioned people on waiting lists who sadly die for reasons other than those for which they are on that waiting list. Does my noble friend recognise that waiting lists are considerably inflated by such deaths and that it can take many months to remove those names from the waiting list?
Baroness Hooper: My Lords, yes. We are issuing guidelines on the collection of data and the way that waiting lists are formulated for that purpose in particular.
Lord Northfield: My Lords, despite what the noble Baroness said, does she recall the exchanges that took place in this Chamber around a year ago? We gave figures for a district health authority in Surrey where the consultant cardiologist was absolutely convinced that people on his waiting list were dying because they were not able to be attended to. Is the Minister further aware that that consultant cardiologist wrote to me again saying that he estimates that, in his area of 125,000 people, in 12 years 25 deaths have occurred of people on the waiting list—three in the past 12 months—while waiting for heart treatment? At that rate he reckons the figure may be around 500 per annum for the whole nation. Is that not a reasonable estimate, coming from a man on the ground doing this work?
Baroness Hooper: My Lords, I believe I am right in understanding the noble Lord to be referring to the South West Thames Regional Health Authority in the example he gave. All cardiac emergency cases are treated immediately. For some heart conditions patients in that region are currently waiting between one and two years. The region has agreed a target of
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nobody waiting more than one year for cardiac surgery, and that target is to be reached by March 1992. It plans to double the number of open heart operations performed in 1990–92 during the coming year. That represents progress.
Lord Hailsham of Saint Marylebone: My Lords, does my noble friend agree with me that I would much rather have my treatment if I were going to live rather than if I were to die of something else?
Baroness Hooper: My Lords, I must agree with my noble and learned friend.
Lord Ennals: My Lords, does the Minister recall that on 4th July I asked whether she would refute press statements that the Government proposed to stop publishing waiting lists? Will she accept that if that were to be the case it would be very difficult for GPs who wish to provide for patients the opportunity of choosing between consultants with long or short waiting lists? Will the Minister also accept from me that on that date I had no intention of suggesting that she herself was personally unconcerned about the great length of waiting lists? Will she set the mind of the House at rest by answering the question that I asked on that occasion?
Baroness Hooper: My Lords, the article to which the noble Lord refers was simply wrong in its factual basis. We have never collected centrally, from hospitals, waiting time information. The important matter to focus on, as I have said on previous occasions, is the length of waiting time. The numbers are coming down. In the 12 months to September 1990 the number of patients waiting over one year was reduced by 7 per cent. In the seven months to April 1991, the provisional fast track figures show a further fall of 18 per cent. in patients waiting over one year.
Lord Kinnaird: My Lords, does my noble friend agree that in these days when no one is allowed to die a natural death it might be merciful for some to be allowed to do so?
Baroness Hooper: Yes, my Lords. I can think of a few myself.
Lord Molloy: My Lords, it is fairly well known that people who do not have a relative waiting for an operation in hospital who may die will find this discussion humorous. However, does the Minister agree that there are very many British people who do not find the position humorous? Is she also aware that the Inter-authority Comparisons Consultancy believes that if the old-fashioned card system were removed and replaced by modern computers, information would be obtainable much more speedily and perhaps reduce the numbers of those living a life of quiet desperation in our hospitals?
Baroness Hooper: My Lords, I believe that most people will welcome the fact that more people than ever before are being treated by our national health system. While there have been problems over long waiting times, we are tackling these with waiting list

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funds, special studies of the country's longest lists, new sharp management executive targets, and the appointment of 100 extra consultants.
Lord Mellish: My Lords, is the Minister aware that some of us on this side of the House consider this to be a daft Question? Furthermore, one might just as well ask the Minister for the figures for 10 years ago of those who died on the waiting lists. That information would be just as relevant.
Baroness Hooper: My Lords, I can tell the noble Lord that the in-patient waiting lists increased by 48 per cent. under the previous government. Under this Government they have fallen by 6 per cent.
Lord Ennals: My Lords, will the Minister accept that the current length of waiting lists is now nearly 40 per cent. higher than it was 12 years ago?
Baroness Hooper: No, my Lords.
Lord McColl of Dulwich: My Lords, does my noble friend agree that the method of calculating waiting lists in the time in office of the Secretary of State, David Ennals, was quite different from the method used today? In his day, when a patient was given a date for the operation the patient was removed from the waiting list; therefore, comparisons are meaningless.
Baroness Hooper: My Lords, yes. If we use a common basis for comparison the in-patient waiting list is the 6 per cent. decrease which I quoted earlier.

Business
3.5 p.m.
Lord Hesketh: My Lords, perhaps I may apologise for the slightly extended nature of today's business statement. At a convenient moment after 3.30 p.m. my noble friend the Leader of the House will, with the leave of the House, repeat a Statement that is to be made in another place on the Brixton prison escape. That will be followed by my noble friend Lord Brabazon of Tara who will, again with the leave of the House, repeat a Statement on the Bank of Credit and Commerce International.
It may be for the convenience of the House if I announce that the Committee stage of the Local Government Finance and Valuation Bill will be adjourned at about 7 p.m. for about one hour and that during this adjournment the Human Fertilisation and Embryology (Special Exemptions) Regulations 1991, the Access to Personal Files (Social Services) (Amendment) Regulations 1991 and the Motor Vehicles (International Circulation) (Amendment) Order 1991 will be taken.

Local Government Finance and Valuation Bill
3.6 p.m.
The Minister of State, Department of the Environment (Baroness Blatch): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Baroness Blatch.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Clause 1 [Repeal of section 101 of Local Government Finance Act 1988.]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 1:
Page 1, line 6, at beginning insert:
("(B1) This section shall have effect for the period between Royal Assent and a date specified by an Order made by the Secretary of State, such date to be not later than the date of implementation of a new scheme of local taxation to be known as Fair Rates which shall be based on the occupation of property.").
The noble Lord said: With the customary pause, I move this amendment and I also speak to Amendments Nos. 6, 9 and 11. I apologise to the Committee for the error in the setting down of Amendment No. 11, which should read:
"Page 1, line 17, after ("subsections") insert ("(B1),").
This is a very tightly drawn Bill. The Long Title makes it difficult for us, within the rules of procedure, to give expression as we would wish to the consternation which is felt not only on these Benches but also in many parts of the country at the mismanagement of local government finance by the Government. It is a Bill which seeks to turn away from the major errors made in Scotland in 1987, and in England and Wales in 1988, with the introduction of the poll tax.
It seeks to do three things, one of which will be the proper concern of my noble friend Lord Carmichael of Kelvingrove, because it concerns Scotland. Two of the matters will be dealt with mainly by my noble friend Lady Hollis and myself. The first of the issues with which the Bill is concerned is to admit, in effect, the total failure of the Government's efforts to achieve accountability in local government finance by not only continuing with capping but extending it so that a very large number of small local authorities will be included under the capping rules. The second matter must also cause very great concern and relates to the preparations which are to be made for what is to be called the "council tax", for which legislation is to be introduced later this year if the Government survive that long.
Amendment No. 1 and the three related amendments give the Government an opportunity to get out of the trap which they have dug for themselves. The amendments give the Government the opportunity to take immediate action to deal with the problems of the introduction of the so-called council tax by using the taxation system which is already available to

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us in the form of the rating system and going back certainly a year earlier—if the Government are really slow in introducing the council tax, then two years earlier—to a fair system in which tax can and will be collected because the system can and will receive the support of the people of this country.
We must not underestimate the significance of the delay which can be caused by this Government's procedures and their incompetence in recognising their errors. We must not underestimate the cost of this delay. In its report earlier this year the Audit Commission estimated that the cost of a year's delay in the implementation of a new tax system is of the order of £800 million. We on these Benches are frequently accused of being spendthrift. We are frequently accused in advertising campaigns—which appear to emanate from government and not from the the Conservative Party that has paid for them—of being spendthrift. The true fact of the matter is that it is the Government, by their insane introduction of the poll tax in the first place and their undignified and ignominious retreat from the poll tax now, who are being spendthrift and who are being extravagant. It is noticeable that the consultation paper published by the Government earlier this year makes no reference to how to achieve a better level of service in local government or a more cost-effective level of service; all that it refers to is restraining local expenditure and taxation.
That is not the view which we on these Benches take about local government. We take the view that what the people want from local government is good value for money and that if they feel they are getting good value for money they are entitled to say they are willing to pay more for a good service. It is precisely that which is being taken away from them by the capping procedures.
Our view is, and always has been, that if we have a taxation system for local government which is widely respected and widely accepted, then of itself accountability will be achieved—an accountability which cannot be achieved by a tax which is almost universally seen to be unfair, as the Government admit. We shall be moving amendments to achieve that greater degree of accountability, not least by a move to annual election.
We have an opportunity now if the Government are willing to take it. It is a very brief opportunity and if we allow the matter to go beyond the end of this month we probably will not be able to make the enormous savings which are now possible. However, it is possible for the Government once again to admit that they have been wrong. It is possible for them now to accept the necessity for a return to a property-based system which takes account of income and takes account more directly of ability to pay—something which can properly be called a fair rate system. I beg to move.
Lord Rippon of Hexham: I do not wish to repeat views that I have expressed in the past about rate capping. When we were debating the community charge I shared the view expressed then by the present Home Secretary that rate capping would be
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intellectually dishonest. We really cannot have rate capping and talk about local democracy and accountability. At the same time, we must all recognise the anxieties of the Secretary of State and the Government that the generous transfer of funds from the Exchequer to the local authorities should go to those who are expected to benefit. That I understand is the reason why it is felt that there should be an extension of rate capping.
I must declare an interest in this matter; not a financial interest, but an interest as president of the Association of District Councils. When I speak on these matters I would normally say that my views are not those of the association although I accept them generally. I am speaking for myself. Equally, I try not to get involved when there is a great difference of opinion within the association. However, perhaps I may tell the Committee that at a recent conference of the Association of District Councils the question of extending rate capping to local authorities with budgets of under £15 million was discussed. There was a motion—which I am bound to say I put twice to an audience of about 1,500—as to whether there was a voice who would like to speak in favour of the Government's proposals, or whether there was a hand which anyone would like to raise against the Government's proposals. Nobody spoke.
Baroness Hollis of Heigham: In favour of the proposals.
Lord Rippon of Hexham: I beg the Committee's pardon. Nobody wished to speak in favour of the Government's proposals and nobody wished to vote in favour. Faced with that kind of opposition, which goes from Right to Left and includes everybody in the centre, the Government might think again about the wisdom of doing this, particularly as rate capping takes place on the basis of standard spending assessments, the reliability of which are very doubtful, to put it mildly.
Therefore, I hope that the Government will at least say that whatever may be done in the immediate future—perhaps various modifications might be considered—there is no intention in the new legislation of carrying forward the principle of rate capping, which the Committee and the Government must accept is totally irreconcilable with the concept of local democracy and accountability. At the very least, the Government ought to give the assurance which they used to give that capping was only for reckless or irrational local authorities. As president of the Association of District Councils I do not find any such authorities among those with budgets under £15 million.
3.15 p.m.
Lord McIntosh of Haringey: I wonder whether the noble Lord, Lord Rippon, would like to add a few words to the very welcome things he said about the ADC conference. I too was present, taking the chair the day after him. The point that ought to be emphasised to the Committee is that the conference at which the noble Lord took the chair was taking place while the ADC was under Conservative control. That

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may not last beyond the end of this month, but that conference was a conference of an association under Conservative control.
Lord Rippon of Hexham: That is perfectly true.
Baroness Hamwee: It is interesting to hear someone with such authority and speaking for so many authorities—local authorities in this case, which are struggling to deal with the current system—speak so forcefully on the need for the views of those local authorities to be taken into account. I am much struck by some of the later amendments—I am not speaking to them now—and the fact that a need has been seen by some Members of this Committee to attempt to write into a Bill an exercise in consultation is very telling. It cannot be usual for primary legislation to require that. The limit on capping, which is to be removed, seems to me to be merely the Government taking to its very extremes the dogma that has so much characterised what has been happening recently with local government finance. And for what? What will be achieved by this exercise? The smaller the authority the less money there is at stake. Very small amour is will be saved and very substantial services will be prejudiced by this exercise.
I should like to speak to Amendment No. 1, which refers to "Fair Rates". Although the noble Lord, Lord McIntosh, knows that I share his views on much of this Bill and on many of his amendments, I have to say for the record that I cannot support that system. It says a good deal that the amendment includes a reference to "Fair Rates" without our being told precisely what that scheme is. However, I shall not get into that little squabble at the moment. My colleagues and I on these Benches have decided that we shall not detain the Committee with our proposals which, as Members of the Committee will know, would be for a local income tax. However, I shall not spend time on that at this stage.
Baroness Blatch: These amendments would have the effect of limiting the repeal of Section 101 of the 1988 Act which prevents an authority whose budget is less then £15 million from being capped in the period between Royal Assent of this Bill and the introduction of a scheme of local taxation based on the occupation of property. There is no logic to the proposition behind this amendment. Why is the extension of capping to authorities whose budgets are currently below the statutory minimum to be dependent on the introduction of a local tax based on the occupation of property? Experience has shown that strong capping powers are an essential aspect of any local government finance system.
Sharpened accountability has not in itself provided sufficient incentive for local authorities to budget wisely, particularly during times of transition. We intend to ensure that there are strong and effective capping powers appropriate to the new council tax. I know that my noble friend Lord Rippon will find that a rather disappointing comment. That is why we have confidence in our illustrative exemplifications of the council tax and that is why we should have no confidence at all in the figures put forward by the
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Opposition to illustrate their fair rates scheme. They say that they will not have capping of any kind. In a system without restraint I am afraid that spending would go through the roof.
The Opposition claim that their policy is to abolish the community charge and then to replace it in the short-term by returning to domestic rates based on the 1973 valuation lists. That would be followed by the introduction of a new rating system under which properties would be valued by reference to a complicated mixture of four different factors. There can be no worse prospect for either local authorities or their residents. First, there would be the immediate reintroduction of the old rates system which was universally regarded as unfair, as Mr. Kinnock himself has acknowledged, and then a second upheaval to bring in a system under which it would be almost impossible for householders to understand the basis on which they were being taxed. In contrast, under the Government's proposals, property will be banded according to its value, a concept which is clear and comprehensible. We do not need to label our proposals fair in order to try to sell them. The council tax is self-evidently much fairer than either the old style rates or the revamped version which is favoured by Members of the Committee opposite.
In short, the measures we are now seeking will strengthen capping powers in the run up to the new system of the council tax. Under the new system we intend to have strong and effective capping powers. The Opposition's proposals mean that spending would rise out of control. Our proposals are responsible and very clear. I call upon the Committee to reject the amendment.
Lord McIntosh of Haringey: I confess myself satisfied with that answer. The Minister has made clear the battle ground on which we are joined. She has made it clear that she has no confidence in the ability of the Government to produce a local government finance system which will avoid the continued use of capping. She has made it clear that the arguments and hopes expressed by the noble Lord, Lord Rippon of Hexham, are not to be treated sympathetically or even with any serious degree of understanding by the Government. She has made it clear that this Government will continue, whatever system of local government finance they choose to adopt, to determine from Marsham Street what local authorities shall spend rather than allow local people to do that. She has made it clear that the Government turn their back, as we always said they would, on the principle of accountability in local government. This is a centralist government. They treat local government with spite and treat it so because they have no confidence in the ability of people in their local areas to make proper judgments about the services they want and how much money they should spend on them.
These are very modest amendments. They simply state that the extension of the capping procedures proposed in the Bill will go ahead but only until such a time, or indeed not later than such a time, when the Government produce a fairer system of local government finance. By opposing the amendment the

1219
Government are making it quite clear that they have no intention of producing a fairer system of local government finance. I shall test the opinion of the Committee.
3.23 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 52; Not-Contents, 128.

Division No. 1

CONTENTS

Ardwick, L.

Jay, L.

Birk, B.

Jenkins of Putney, L.

Blackstone, B.

John-Mackie, L.

Blease, L.

Leatherland, L.

Briginshaw, L.

Lockwood, B.

Brooks of Tremorfa, L.

Longford, E.

Bruce of Donington, L.

McIntosh of Haringey, L.

Callaghan of Cardiff, L.

Mason of Barnsley, L.

Carmichael of Kelvingrove, L.

Milner of Leeds, L.

Cledwyn of Penrhos, L.

Mishcon, L.

Clinton-Davis, L.

Morris of Castle Morris, L.

Cocks of Hartcliffe, L,

Murray of Epping Forest, L.

David, B.

Nicol, B.

Dean of Beswick, L.

Northfield, L.

Desai, L.

Peston, L.

Dormand of Easington, L.

Phillips, B.

Ennals, L.

Pitt of Hampstead, L.

Fisher of Rednal, B.

Portsmouth, Bp.

Fitt, L.

Serota, B.

Gallacher, L. [Teller.]

Stallard, L.

Galpern, L.

Stoddart of Swindon, L.

Graham of Edmonton, L. [Teller.]

Strabolgi, L.

Underhill, L.

Hilton of Eggardon, B.

Wallace of Coslany, L.

Hollis of Heigham, B.

White, B.

Houghton of Sowerby, L.

Williams of Elvel, L.

Irvine of Lairg, L.

NOT-CONTENTS

Alexander of Tunis, E.

Denton of Wakefield, B.

Ampthill, L.

Dudley, B.

Astor, V.

Effingham, E.

Belhaven and Stenton, L.

Elles, B.

Beloff, L.

Elliot of Harwood, B.

Belstead, L.

Erne, E.

Bessborough, E.

Erroll of Hale, L.

Birdwood, L.

Ferrers, E.

Blatch, B.

Flather, B.

Blyth, L.

Fraser of Carmyllie, L.

Borthwick, L.

Fraser of Kilmorack, L.

Boyd-Carpenter, L.

Gainford, L.

Brabazon of Tara, L.

Gisborough, L.

Brougham and Vaux, L.

Glenarthur, L.

Butterworth, L.

Grantchester, L.

Caithness, E.

Gridley, L.

Campbell of Alloway, L.

Hailsham of Saint Marylebone, L.

Campbell of Croy, L.

Carnegy of Lour, B.

Harmsworth, L.

Carnock, L.

Hastings, L.

Cavendish of Furness, L.

Havers, L.

Cawley, L.

Hayter, L.

Cayzer, L.

Henley, L.

Clanwilliam, E.

Hesketh, L. [Teller.]

Cockfield, L.

Hives, L.

Constantine of Stanmore, L.

Hood, V.

Cottesloe, L.

Hooper, B.

Cox, B.

Howe, E.

Cullen of Ashbourne, L.

Hylton-Foster, B.

Cumberlege, B.

Ironside, L.

Dacre of Glanton, L.

Johnston of Rockport, L.

Daventry, V.

Joseph, L.

Davidson, V. [Teller.]

Killearn, L.

De Freyne, L.

Kinloss, Ly.

Denman, L.

Kinnaird, L.

1220

Knollys, V.

Rankeillour, L.

Lauderdale, E.

Reay, L.

Long, V.

Renwick, L.

Lucas of Chilworth, L.

Rodney, L.

Lyell, L.

Romney, E.

McColl of Dulwich, L.

Russell of Liverpool, L.

Macleod of Borve, B.

St. John of Fawsley, L.

Mancroft, L.

Saltoun of Abernethy, Ly.

Margadale, L.

Selkirk, E.

Merrivale, L.

Shrewsbury, E.

Milverton, L.

Skelmersdale, L.

Monk Bretton, L.

Strange, B.

Monson, L.

Strathcarron, L.

Monteagle of Brandon, L.

Strathmore and Kinghorne, E.

Mountevans, L.

Strathspey, L.

Mountgarret, V.

Sudeley, L.

Mowbray and Stourton, L.

Terrington, L.

Munster, E.

Teviot, L.

Murton of Lindisfarne, L.

Thomas of Gwydir, L.

Norrie, L.

Ullswater, V.

Nugent of Guildford, L.

Vaux of Harrowden, L.

Onslow, E.

Waddington, L.

Oppenheim-Barnes, B.

Wade of Chorlton, L.

Oxfuird, V.

Wedgwood, L.

Park of Monmouth, B.

Wharton, B.

Pender, L.

Whitelaw, V.

Peyton of Yeovil, L.

Wise, L.

Platt of Writtle, B.

Wynford, L.

Porritt, L.

Young, B.

Quinton, L.

Resolved in the negative, and amendment disagreed to accordingly.
3.32 p.m.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 2:
Page 1, line 6, at beginning insert:
("(A1) Subsection (1) below shall have effect for the purpose of removing restrictions on the powers of the Secretary of State to designate English or Welsh authorities in respect of which no order providing for retirement by thirds has been made under section 7 or 26 of the Local Government Act 1972, as appropriate.").
The noble Baroness said: In moving this amendment I shall, with the leave of the Committee, speak also to Amendment No. 4. Both amendments call for annual elections. On Second Reading—and I apologise to the Committee for the fact that I was unable to attend on that occasion—the Minister said at col. 268 of Hansard that she wanted,
"unfettered local accountability".
But that,
"excessive spending … damaged the overall management of the economy and the control of inflation",
and that it allowed authorities,
"to impose unnecessary burdens on their charge payers". [Official Report, 20/6/91; col. 269]
She also said that she had hoped that the "increased transparency" of the community charge—I believe that the Minister must be one of the remaining three people in the country who still call it a community charge—would work to that effect, but that it had failed to do so.
I hope and believe—and I hope that Members of the Committee agree with me—that the amendment before us would, if it were adopted, give the Minister what she wants; namely, the "unfettered local accountability" to which she referred.
However, I should like first to comment on the remarks made by the Minister on Second Reading about excessive spending and the implications that that might have for annual elections. In her speech,

1221
she made much of the 25 per cent. rise in local authority spending during the two years in question, which I take to be 1989–90 and 1990–91. However, I ask Members of the Committee to consider whether that spending of 25 per cent. was excessive. Inflation for the first of those years—that is 1989–90—was around 8 per cent. The following year it was 9.6 per cent. That was 17.5 per cent. in all and less than the 25 per cent. mentioned by the Minister; that is, if she is right. But is she right?
However, perhaps one should also consider the additional responsibilities incurring expenditure imposed by central government on local government during those two years. Some of them were welcome—for example, the Environmental Protection Act; but some were decidedly unwelcome, such as the cost of collecting the poll tax or the transfer from central government of additional housing benefit costs. In my local authority of Norwich that additional expenditure amounted to about £2 million on a budget of £17 million, or 12 per cent. If one adds to that the cost of inflation for those two years at 17.5 per cent. and the additional government-imposed responsibilities at 12 per cent., one sees that a standstill budget for local government over those two years would have produced an increase of about 30 per cent. in real terms. In fact, as the Minister said, local expenditure was held at 25 per cent. Members of the Committee may think that that was not excessive under the circumstances.
As regards the burden on the charge payers, I should remind the Committee that, had government grant remained at the same level in real terms as in 1979, the local authority levies would have increased by less than the rate of inflation. I am talking in average figures. However, it is quite clear not only that local authority spending over the past two years has not been excessive but also that, had the Government not withdrawn their grant, the burden for charge payers would have been less than the rate of inflation. Indeed, the average poll tax would have been just £100 per head. Moreover we should have been spared all those shenanigans—which made the poll tax opaque, rather than transparent as the Minister suggested—such as the safety nets, transitional arrangements, area relief, household relief and flat rate subsidy on flat rate levy.
Secondly, even if the expenditure of some individual authorities was "excessive" in the judgment of the Government, that judgment is a political one and indeed a party political one; it is not an economic one. As my noble friend Lord McIntosh of Haringey said on Second Reading, that assumes only one answer. The difference between local government and local administration, as I am sure Members of the Committee are aware, is precisely that local administration assumes uniform problems, uniform expenditure, uniform solutions; in other words, it assumes that all places are the same. But local government does not. Not only does it assume that different communities have different needs; it also has different perceptions as to how best to meet them. The approach is essentially pluralist—a concept which we hope Members of the Committee will endorse today.
Local spending is a decision for local people to make. Of course, government have the right to determine their grant formula, but local people have the right to decide through the ballot box how the locally raised revenue shall be spent. Hence the amendment. It proposes that, where there are annual elections, authorities spending below the £15 million suggested shall be exempt from rate capping. At present, less than half district councils have annual elections. The same applies to London boroughs and the county councils.
What then would the timetable look like? How effective would such a discipline be? The average local authority budget is passed in March, the bills are sent out in April and, following the terms of this amendment, the elections would take place in May; that is, should the local authorities decide to adopt the procedure. That would serve as an entirely proper discipline on local government. It clearly works.
I am sure that Members of the Committee are familiar with the figures. However, the year that the London boroughs had all-out elections—namely, May 1990—their budgets increased by barely 6 per cent. That was the effect of submitting those budgets to the electorate. The budget increase of the Metropolitan districts (one third out)—in other words, those with, effectively, annual elections—was only 8 per cent. But the county councils, which did not face an electorate, raised their budget by 13 per cent. The shire districts, over 60 per cent. of which do not currently hold annual elections but have "all outs" every four years, increased their budget by 14 per cent.
Annual elections clearly establish the link that we all want to see between taxation and representation and thus strengthen both accountability and transparency. If during the year following an annual election that budget is seen not to represent value for money in the eyes of the voters, they can, do and should throw out a portion of their elected members. Broadland District Council in Norfolk may chose to offer its electors a low rate, low service budget. On the other hand, Norwich City Council, which is adjacent to it, might propose higher taxes for higher levels of service. What matters is not cheapness: what matters is, on the one hand, value for money as audited by the Audit Commission; and, on the other hand, the informed and active consent which local people have given to the authority. I suggest that that is offered by the amendment before us which proposes annual elections.
I hope it is clear from what I have said that we agree with capping. But the question is: who does the capping? The amendment proposes annual elections to ensure that local people cap their authority through the ballot box, and not central government who, having lost the democratic vote and been rejected at the ballot box in 900 seats at last May's local elections, seek to enter by the back door and make themselves the majority voter in every town hall. Local people may want a service; they may vote for that service; and they may be willing to finance that service out of their own money—we are not talking about central government matching grants here—and the Government say, "No". They relegate citizens to the

1223
status of children who cannot be trusted to make up their own minds, make their own decisions or take responsibility for their judgments.
The amendment requires local authorities to be accountable —transparent, as the Minister would wish—through the ballot box, as I am sure she would also wish. In that way, as Widdicombe says, local government becomes government by local communities rather than of local communities. I hope that the Committee will support the amendment. I beg to move.
Baroness Blatch: The amendments seek to establish a link between the electoral arrangements pertaining in an authority with the requirement for the Government to have the power to cap that authority. As I shall demonstrate, there is no logic in such a link. Reference was made to Second Reading. The noble Baroness considered the point about unfettered spending by local authorities. She approves of local authorities having unfettered freedom to spend at whatever level they choose. She also advocates that the Government should have no interest in local authorities' aggregate spending. I shall remind her of what else I said on Second Reading. I also said that the contrast between our experience this year, when the Government announced their intention of capping in advance, and the previous year was marked. In 1991, local authority expenditure rose by 13.5 per cent. and was almost £3 billion above the amount we considered appropriate. In 1991–92, local authority budgeted expenditure is only 0.5 per cent. above the amount provided for in the settlement. The results speak for themselves.
I admit that at first sight the logic of the proposition might be regarded by some as seductive. Even allowing for the apparent attraction of annual elections, I do not believe that the proposition stands closer examination. First, the facts do not support the view that where councils are elected in thirds there is sharpened accountability which would lead to spending restraint. Harlow, for example, has election by thirds and yet the council is overspending to the tune of £83 per charge payer; Elmbridge, likewise elected by thirds, this year is adding £73 to the charge; and Watford, elected by thirds, is adding £56 to the charge. I could continue. The noble Baroness also ignores the amount of local government finance that comes from the national taxpayer, and therefore it is appropriate that the Government should be interested in aggregate spending.
There is no basis for the suggestion that councils, having elections in thirds, should in some way be privileged and not be subject to the capping regime if they choose to budget below £15 million.
Secondly, the proposition underlying the amendments is flawed in principle. Councils which elect their members in thirds have one year without an election. Under the scheme suggested in the amendments, what would happen? What is more important, so far as the principle of elections to approve overspending is concerned, is that single issue elections are alien to the British tradition. To view an election as the means of validating overspending is not part of our tradition.
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We have made clear our commitment to enhanced accountability. That is why we propose to retain increased transparency of spending decisions of local authorities which have to foot the bill under the council tax.
The Opposition say that they rest their entire case for expenditure restraint upon accountability. An exposition of that view was provided in another place by the honourable Member for Dagenham when he said that they opposed wholeheartedly and thoroughly the principle of capping and that as they advocated the independence and value of local government, they believed that the right controls on local government spending were those exercised through the ballot box. That is easy to say in the absence of responsibility.
It gives us no satisfaction to say that we have found that enhanced accountability, while an integral part of the system of local government finance, has not been able to deliver the high hopes which we had previously expressed. The experience of the past few years has shown conclusively that increased accountability has not in all cases led to sensible and prudent budgeting.
We shall not allow charge payers to be left unprotected from the vagaries of their authority's spending plans, not even until the next local election. We shall take action, if it is required, to ensure that they do not have to pay the bills for excessive budgets in the first place. We have a duty to protect charge payers. The necessity for that has been borne out by events. The amendments seek to restrict the exercise of that duty and hence the protection that we are able to offer; I call upon the Committee to reject them.
3.45 p.m.
Lord Cockfield: There is an important fallacy in the arguments put forward by the noble Baroness, Lady Hollis. She was trying to equate a high level of expenditure with a high level of services. It is nothing of the sort. A high level of expenditure often represents no more than inefficiency, bad management, incompetence, padded payrolls and poor services. What on earth does she think has been going on in Liverpool these past three years?
Baroness Hollis of Heigham: I was disappointed, although not entirely surprised, by the Minister's reply. She made a number of points and I shall try to respond to some of them. First, she said that results speak for themselves. Knowing the stringency of capping, local authorities reduce their expenditure to avoid it. That is obviously right; but turkeys too are not especially keen on offering themselves up for Christmas. That says nothing, however, about the appropriate and preferred method of disciplining local authority expenditure. The Opposition's argument is that that discipline should be exercised by local electors who foot the local additional bill. That should be met by annual elections, as we propose, rather than by Ministers.
I agree that by definition capping reduces local authority expenditure; so would annual elections. The question is: who reduces it and for what reason? Under the amendment, it would be the decision of local people, through their councils, for containing,

1225
disciplining and controlling their expenditure. It would not be central government. In other words, it is town hall and not Whitehall.
The noble Lord, Lord Cockfield, said that a high level of expenditure did not necessarily represent value for money. He is correct. It may represent inefficiency and incompetence. The Opposition do not seek to justify high expenditure as such, but justify it in so far as it represents value for money. Time and time again the Audit Commission has said of those very budgets that central government have sought to rate cap—including that of my authority—that we offer value for money at just the point at which central government have chosen to exercise their rate capping powers.
The Minister made much of the point about central government's aggregate expenditure. That is due to the fact that at the moment poll tax raises only 14 per cent. of total spend after the flat rate subsidy. But that reflects the fact that the business rate is now regarded as a central government tax. The unified business rate currently raises some 32.5 per cent. of local authority expenditure. That is a local tax, centrally hijacked. If that tax were now to be brigaded, as it should be for accountancy purposes, with the poll tax, the Committee would see that local people raise some 46 per cent. of their local spend. That is a far from insignificant sum and the area from which discretionary spending would be financed.
The Minister said that it was not a British tradition to have single issue elections. I am sure that as a member of a county council she will agree with me that the budget is not a single issue election; it represents the financial translation of the policies, principles, services and political judgments that motivate that local authority and for which that authority seeks endorsement from the local electorate. In other words, to use annual elections as a vote of confidence in the budget is saying that those local elections review the capacity and functioning of local government. That is why we are against capping.
Finally—this, as my noble friend Lord McIntosh said, marks the divide between us—the Minister repeated again this afternoon that she sees the job of government as protecting people—local voters—from their local councils. I repeat that that is to relegate local voters to the status of children who cannot be trusted to vote properly and do not know what they are doing when they vote. So far as local people are concerned, when they exercise their vote they exercise their judgment. I suggest that the Government would do well to take that judgment as seriously at local elections as they will shortly have to at the general election. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Viscount Astor: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Brixton Prison: Escape
3.50 p.m.
The Lord Privy Seal (Lord Waddington): My Lords, with the leave of the House, I shall now repeat a Statement on the escape of two Category A high risk prisoners from Brixton Prison which is now being made in another place by my right honourable friend the Home Secretary. The Statement is as follows:
"I wish to make a Statement about the escape of two Category A high risk prisoners from Brixton Prison using a firearm on the morning of 7th July. They were awaiting trial at the Central Criminal Court for serious offences including conspiracy to murder and conspiracy to cause explosions.
"Yesterday morning the two prisoners named Pearse Gerrard McAuley and Nessan Quinlivan attended the first Roman Catholic mass of the day in the prison. The service began at 9.15 a.m. and finished at about 10.05 a.m. Since both were high risk prisoners, they were subject to the usual security precautions. Accordingly, they underwent a rub-down search before leaving their secure unit for the chapel. They were escorted there by three officers.
"After the service, and again in accordance with the usual procedures, the prisoners were escorted by three prison officers to return to their unit. A dog patrol supervised them between the chapel and the main prison building. Once inside and in a narrow passageway, one of the prisoners produced a firearm and took one of the escorting officers hostage, holding the gun to his head. He fired a shot above the officer's head, and the other prisoner took the keys of the hostage officer and used them to gain access to the prison centre. In the centre a further shot was fired which passed through the clothing of another officer. The prisoners and their hostage went through two other gates, entering a building yard.
"In the yard another shot was fired to keep pursuing staff at bay, and the prisoners reached the prison wall at a point where they were able to scale it despite the razor wire at the top. They then escaped into the married quarters area outside the prison and threatened a prison officer who was cleaning his car. They took possession of it but abandoned it when they found their route was blocked.
"They were at that point within a few yards of Brixton Hill, where they stopped a private car. The driver was ordered out and shot in the upper right leg and the woman passenger got out unharmed. I am pleased to say that the driver is recovering in hospital. The car was driven into Brixton and abandoned in a side street. With money they had taken from the car driver, they used a taxi to take them to Baker Street Underground Station.
"I am deeply disturbed by this grave lapse of security and by the associated risk to members of the public. I have decided that we must have a swift

1227
and independent inquiry into the circumstances of this deplorable incident so that any necessary lessons can be learned promptly.
"I have therefore asked Her Majesty's Chief Inspector of Prisons, His Honour Judge Tumim, to carry out a full inquiry with the following terms of reference:
'To inquire into the circumstances of the escape of prisoners McAuley and Quinlivan from Her. Majesty's Prison Brixton on Sunday, 7th July, and in particular to review the security arrangements for handling high risk prisoners in this prison; to assess how those arrangements were operated on the day concerned; and to make recommendations'.
"I spoke to Judge Tumim this morning and he told me that he would be starting the task immediately. He will be assisted by the police. I have asked him to submit an interim report by the end of this month. Subject to the need to protect sensitive security material and to the possibility of criminal charges being laid, I intend that the chief inspector's findings should be published.
"When Judge Tumim inspected Brixton last year, his report referred to certain comments on security matters which he had put directly to the Director-General of the Prison Service. These dealt with matters of physical security, including the position and coverage of closed circuit television. I shall be asking the inquiry to pay particular attention to the progress made in these areas.
"Judge Tumim also recommended that we should reconsider holding Category A high risk prisoners in Brixton when new accommodation became available at the new Belmarsh Prison in Woolwich. The Director-General accepted this recommendation. The new unit at Belmarsh for all Category A prisoners in London who are designated as a high risk has been recently completed. It had been planned to use this as from November, but I have decided to bring this forward to next month.
"In the meantime I have taken the following action. All governors of prisons which hold Category A prisoners, other than dispersal prisons, have been asked to review urgently their procedures for handling Category A high risk prisoners whenever it is necessary for them to leave their secure units. In particular they must consider immediately whether religious services can be provided for them in their living areas as opposed to allowing them to move to chapels. I have asked the Director-General of the Prison Service to report to me on this as a matter of urgency.
"I have also given instructions that other prisoners awaiting trial on terrorist charges should be moved immediately from Brixton to high security dispersal prisons.
"This was a very serious incident and no time must be lost in finding out exactly what happened and taking all possible measures to prevent such an event recurring."
My Lords, that concludes the Statement.
3.57 p.m.
Lord Mishcon: My Lords, I thank the noble Lord the Leader of the House for repeating the Statement to us. It is a very serious and grim Statement to which we have had to listen.
The House and the country will be deeply disturbed that two suspected terrorists held in supposedly high security conditions can procure firearms and break out of prison in this manner. While considering this dreadful incident, I am sure that the whole House will have learned with some relief that the motorist concerned appears to be recovering in hospital. We offer him from all sides of the House our sympathy in his injuries and our good wishes for his speedy recovery. The House will also, I am sure, wish to express our admiration for the brave prison officers who faced these two men, armed and fierce as they were.
Quite obviously we welcome the Government's announcement that an inquiry is to be launched into what occurred. From these Benches, we are grateful that that inquiry will include an examination of all the security arrangements at Brixton Prison and not just the circumstances of this particular escape.
We were pleased too to know that an interim report is to be issued and published by the end of the month. I trust—if I am allowed to say this—that the usual channels will procure that any such interim report is speedily debated in your Lordships' House. It is important and urgent for obvious reasons, not least because such incidents have a most damaging effect on the morale of prison officers in our prisons and on this occasion on the morale of our security forces, who show great courage in apprehending suspects of this kind and spend an enormous amount of time in doing so.
Will the Minister confirm or deny that at the time of the break-out, Brixton prison was holding 1,060 prisoners, 230 more than the official limit, with only 140 staff on duty? Does the Minister not agree that the break-out occurred after chapel on Sunday? One can hear in this House, and no doubt in another place too, grim echoes of Strangeways. Almost precisely the same timing and almost precisely the same methods were employed in the incident at Strangeways. In his report on the prison disturbances at Strangeways, Lord Justice Woolf considered the problem of weekend staffing levels. He suggested that disturbances are more likely to occur at that time. He went to the trouble of recommending, at paragraph 13.106 on page 351 of his report, ways of increasing weekend staffing, not least because of the risks that exist at this time. What have the Government done about that recommendation? If they have done nothing until now, why is that?
These escapes are even more alarming, not just because of the report of Lord Justice Woolf but also because of a report referred to in the Statement, namely, that of Judge Tumim, the very man who is being asked to conduct the inquiry into these events. However, what the Statement did not contain was the date upon which Judge Tumim made his report on Brixton Prison. That occurred in August last year—11 months ago. The Statement does not contain

1229
direct quotations from that report. However, because of the seriousness of the contents of this Statement, I must ask for your Lordships' indulgence while I quote from that report. At paragraph 3.08 on page 46 of his report Judge Tumim deals with the question of security at Brixton Prison. He stated in August 1990:
"This process would be helped if Brixton did not hold high or exceptional risk Category A inmates; the need for it to do so should be re-examined in view of the prison's existing level of security and the forthcoming opening of … Woolwich with extensive, purpose-built Category A accommodation and security. In the meantime, the time taken to approve proposed visitors to Category A inmates should be reduced".
At paragraph 2.12 of the report Judge Tumim further states:
"At the time of our inspection Brixton held nearly 60 inmate, in the highest security category (Category Al), many of whom also had the ability and resources to mount escape bids".
What firmer warning could the same judge who is now being asked to conduct the inquiry give? Why has the warning been ignored—as one anticipated—and why has the judge been asked to report again on precisely the matters on which he reported in August 1990? This House has received many excellent reports on conditions in our prisons. Many of those reports have drawn attention to most unsatisfactory conditions of overcrowding and insecurity. From these Benches I welcome the fact that there will be another report. But could we have done with reports and see action instead?
Lord Harris of Greenwich: My Lords, I, too, wish to thank the noble Lord, Lord Waddington, for having repeated the Statement. Few Home Secretaries can have had to read such a sombre Statement in the House of Commons than has been the lot of the current Home Secretary. It is a matter of the gravest importance that two dangerous, armed men have been allowed to escape from Brixton prison. The men represent a danger to the general public and that fact is causing the most serious concern in the police service. I am sure the noble Lord, Lord Waddington, recognises that fact.
What is the purpose of major police operations that are launched to bring suspected terrorists before the courts if the suspected terrorists are allowed to escape in the circumstances of the break-out at Brixton Prison yesterday? It is all the more worrying that this incident has taken place when there is an ever-present prospect of still further Provisional IRA activities in Great Britain. Like the noble Lord, Lord Mishcon, I, too, welcome the fact that Judge Tumim is to be asked to conduct an independent inquiry. All of us have substantial confidence in Judge Tumim who has produced some admirable reports on conditions in prisons. Our welcome of his appointment is unrestrained but it raises the question—the noble Lord, Lord Mishcon, has just touched on the point —of how wise it has been to hold Category A prisoners in prisons which are so grossly overcrowded. That situation represents a major threat to the security of a prison. This is not a case of being wise after the event.
I welcome the fact that changes will be made as regards high security prisoners attending chapel services. Again I am not trying to be wise after the
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event. But, given what happened at Strangeways last year, one has to wonder why, when the disturbances at Strangeways arose within the chapel, greater steps were not taken to ensure that serious problems did not arise from Category A prisoners attending chapel services in Brixton.
The question of staffing levels is a difficult one. I believe most of us recognise that there has been a major improvement in the staff-inmate ratio in prisons over the past 20 years. We welcome that improvement but we may need to look at staffing levels on Sundays. It is no accident that both these episodes took place on a Sunday. I hope very much that the noble Lord, Lord Waddington, will be able to confirm that that matter is receiving substantial attention.
In conclusion I must say that there can be absolutely no excuse whatever for what occurred at Brixton yesterday. I hope very much that we shall have an opportunity to discuss this matter on the basis of Judge Tumim's report at the earliest opportunity.
Lord Waddington: My Lords, I believe we can all agree that the noble Lord, Lord Mishcon, was entirely right when he referred to this Statement as a grim Statement. The noble Lord also voiced the opinions of everyone in this House when he expressed his sympathy for the motorist who was shot. The sympathy of all of us goes out to the motorist. The noble Lord expressed his admiration for the people who, faced with those armed, desperate men, behaved so well. He said that he would like a debate on this very serious matter and obviously that request will be considered.
The noble Lord asked about the number of prison officers on duty yesterday in the prison. The answer is that 145 prison officers were on duty and there were about 1,000 prisoners in the prison. As was pointed out by the noble Lord, Lord Harris of Greenwich, one of the matters which Judge Tumim will undoubtedly look into is the question of staffing ratios on Sundays. The noble Lord was at pains to point out that staffing ratios overall have improved dramatically over the past decades. In the 1960s there were six prisoners to one prison officer; 10 years ago there were three prisoners to one prison officer; and now there are two prisoners to one prison officer. Therefore, in fairness one should not forget the great improvements which have taken place, just as one should not forget the great improvements in the prison estate, with 12 new prisons since 1979 and 12 other prisons to be completed during the next three years.
The noble Lord, Lord Mishcon, referred to Judge Tumim's report on Brixton published in August 1990. I can assure him that Judge Tumim's warnings have not been ignored. The Home Secretary has been advised by the director-general that all his recommendations are being considered and action has been taken. It is for the inquiry to consider whether further action should have been taken.
Noble Lords should be hesitant to criticise the Government regarding the recommendation that high risk Category A prisoners should be moved to Belmarsh. Belmarsh has only recently opened. The original intention was that high risk Category A prisoners should be moved to Belmarsh in November

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this year. Only two of the four wings at Belmarsh are yet in operation. It is a newly-commissioned prison coming into operation by stages, as one would expect. In view of the obvious anxiety that is bound to have been caused throughout the country as a result of the incident, my right honourable friend the Home Secretary has decided to bring forward the transfer of Category A high risk prisoners to Belmarsh. As I said in the Statement, they will go there next month.
Both the noble Lord, Lord Mishcon, and the noble Lord, Lord Harris of Greenwich, welcomed the decision to ask Judge Tumim to carry out the inquiry. I certainly do so.
So far as concerns the lessons from Strangeways, it is worth bearing in mind that there were 309 people in the chapel at Strangeways and there were 71 in the chapel at Brixton on this occasion. One of the things that was said after the Strangeways incident, which I remember so vividly, was that with such a large number of people in the chapel it was difficult to exercise proper supervision over them, particularly with staffing levels as they were on a Sunday. Having 309 people in the chapel confronted the staff with a considerable task. One could say that that lesson was learnt because yesterday there were 71 people in the chapel —a very great difference. As the Statement makes clear, the Home Secretary is not content with that. One of the matters which will have to be considered by the inquiry is whether such chapel gatherings should be terminated for high risk prisoners and whether those prisoners should have the opportunity for religious observance in the wings within which they are kept secure.
4.15 p.m.
Lord Mason of Barnsley: My Lords, is the noble Lord aware that the escape of these two most dangerous terrorists is sickening for the anti-terrorist squad? So far as they are concerned a year's work of surveillance and detection has been squandered. Secondly, does he agree that this is a major morale booster for the Provisional IRA? It is an international propaganda coup from which its cause will benefit and it has made our prison system look pathetic.
Will the noble Lord say whether those two prisoners were in the maximum security wing? Were routine searches of visitors evident or have they been abandoned? Was the metal detector screen operative in recent times? Finally, what of inside help? Who aided and abetted the escape? Are there IRA terrorist supporters within Brixton gaol? Rooting out him or them is as important as capturing those who have escaped. I hope, therefore, that the inquiry to which the noble Lord referred will take into consideration such an investigation of the inside operation.
Lord Waddington: My Lords, the noble Lord is entirely right. This must be absolutely sickening for all those who take such risks and work so hard to fight the terrorists. It is indeed a propaganda coup for the terrorists.
The answer to the noble Lord's questions are as follows. As I understand it, the two prisoners were in
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the maximum security wing. There is a metal detecting screen which is used when visitors come to see maximum security prisoners. I have no reason to think that on the last occasion when the two men received visitors their visitors did not on that occasion, as on previous occasions, go through the metal detecting screen. There is careful supervision of visits. I am told that two prison officers observe a visit when it takes place. The prisoner is there, there is his visitor and there are two prison officers watching. However, the other questions which the noble Lord asked are matters for the inquiry.
The Earl of Onslow: My Lords, can my noble friend answer this one question? Why do we have two IRA prisoners together at one time? Surely it would be much better if they were separated. If one was in Manchester and the other in Cornwall they would not have been able to combine. If both are in the same place at the same time it is much easier for them to take advantage of what is obviously a thoroughly incompetently run prison.
Lord Waddington: My Lords, they should be where one is confident that there is maximum security. The question which my noble friend has asked is fundamentally a question for Judge Tumim.
Lord Jay: My Lords, has the noble Lord the Leader of the House seen reports in the press that individuals who visited Brixton prison last week were in no way effectively searched or screened as they entered the prison?
Lord Waddington: My Lords, I can only tell your Lordships what I have learnt from the Home Office. High risk Category A prisoners have individual supervision when they receive a visit. They are strip searched before such a visit and they are strip searched after the visit. The inquiry will want to ensure that that took place on every occasion, but that is what ought to have happened.
Lord Chalfont: My Lords, in the light of the admirably concise terms of reference for Judge Tumim, is it not possible for the submission of the interim report to be given even more urgency, especially as, if the report is not received until the end of this month, it is unlikely that there will be a debate on it in this House or in the other place until the autumn?
Lord Waddington: My Lords, your Lordships will agree that one has to strike a reasonable balance. To insist that Judge Tumim should report to us in less than a month might mean a less thorough report than your Lordships would wish to see.
Baroness Phillips: My Lords, why was the priest not brought into the prison? Surely that is elementary. It is touching to know that there were 71 people present. It would be interesting to know how often they went to church when they were outside. They all appear to undergo rapid conversions when they go into prison. Is the suggestion that the gun was found in the confessional box correct? If so, are visitors to the prison domain allowed to wander around the

1233
grounds? Listening on the radio this morning to the noble Lord, Lord Harris, I understood the head of prisons to say that all visitors were not searched. That was the phrase that he used. How are the visitors who are to be searched selected? When visitors come to this place, they have to go through a screen. We have to walk about with identity cards on, presumably even if we go to church. Why are some people searched and not others? It appears that there are some curious rules. We do not need an inquiry to look into them; we just need two sensible people—preferably women—to put the prison governor right.
Lord Waddington: My Lords, as I said earlier, the purpose of having an inquiry of this nature is to ensure that that which was supposed to happen in fact happened, but there is no doubt as to what should have happened. If people come out of the high-security area in which they are incarcerated in order to go to church, that is one period when they are more able to take mischievous action than at any other time during the week. That is why my right honourable friend said that one of the matters that Judge Tumim will have to take into consideration is whether those high-risk, category A prisoners should continue to be taken to church. One would have thought that it might be possible to provide facilities for them to worship in their own high-security quarters, if that is what they really want to do.
Lord Monson: My Lords, will the Leader of the House tell us whether the prison officers who were escorting those two extremely dangerous prisoners were armed? If the answer is that it is not part of our British tradition to arm prison officers, may one suggest that British traditions, which may have been appropriate in the relatively gentle 1930s or 1950s, are no longer appropriate in the much more dangerous 1990s".
Lord Waddington: My Lords, I have no doubt that that matter, among others, will be considered by Judge Tumim when he reports.
I hive just been corrected on one small matter which I should mention. I said that an inmate is strip-searched both before and after a visit. That is not right. He has a rub-down search before and is strip-searched after the visit.
Lord Mishcon: My Lords, perhaps I may refer to the important point that was made by the noble Lord, Lord Chalfont. This is an international matter of some importance. The appropriateness of appointing Judge Tumim has already been mentioned. As we all know, he made a detailed report on the prison and its security arrangements in August 1990. It would be a speedy matter to see what improvements or alterations, if any, have been made since then. In addition, he would have to find out what, it would appear, occurred on the evidence that he can obtain regarding the incident. With an judge of the experience of Judge Tumim, that would mean possibly seven days' intensive work. Noble Lords may agree with me that it is important that Parliament should have an opportunity to debate the matter and any interim recommendations that are made. Will the Leader of the House assure us that an
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effort will be made to obtain the report within a week or so with a view to the House considering it before the summer recess?
Lord Waddington: My Lords, obviously I shall pass on to my right honourable friend what the noble Lord, Lord Mishcon, has said. There are a number of matters to be considered: first, what work has been done since Judge Tumim compiled his report; secondly, what further work might now be indicated; and, thirdly, what happened on this occasion. Perhaps my right honourable friend should tell Judge Tumim that the House would prefer the report to be completed in time for a debate before the House rises, but if Judge Tumim says that that would not be consistent with the thoroughness that he wishes to put into the exercise, we must accept that.
Lord Havers: My Lords, I know Judge Tumim very well. As we all know, he is a very responsible man. He will read today's debate. We should not put him under any pressure of time because I am certain that he will produce that report just as soon as he properly and responsibly can.
Lord Waddington; My Lords, I am grateful to my noble and learned friend. I shall tell my right honourable friend exactly what has happened in the House this afternoon and explain to him that we should like the report as soon as possible. I am sure that he will convey those views to Judge Tumim and that the latter will do his best to produce a report quickly but thoroughly.
Lord Howie of Troon: My Lords, perhaps I may press the Minister a little further on the matter of a debate. Clearly, it will be difficult for the report to be debated before the summer recess. Will the Minister consider recalling the House as soon as the report is available?
Lord Waddington: My Lords, I shall consider that suggestion, but I shall consider it at great length and it might take me the whole of the recess to carry out that consideration.

Bank of Credit and Commerce International
4.26 p.m.
The Minister of State, Department of Transport (Lord Brabazon of Tara): My Lords, with the leave of the House I shall now repeat a Statement on the Bank of Credit and Commerce International which is being made in another place by my right honourable friend the Economic Secretary to the Treasury. The Statement is as follows:
"The Bank of England, along with the authorities in a number of other jurisdictions, took action on Friday to secure control of the assets of the Bank of Credit and Commerce Group.
"The BCC group operated in this country through a Luxembourg incorporated company, BCCI SA, which had a number of branches in the United Kingdom, mostly in the London area. On

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Friday, the Directorate of the Luxembourg Monetary Institute took action under Luxembourg law to secure control of the assets of the company. This was done in consultation with other regulatory authorities concerned which have taken appropriate action against other subsidiaries and operations of the BCC Group. The effect of these actions was to place the assets and liabilities of the entities concerned under the protective control of the supervisory authorities, or of the courts as appropriate, of each country. In the United Kingdom, following a petition made by the Bank of England, the UK courts have appointed Touche Ross as provisional liquidator. The effect of this action is that deposits with the United Kingdom branches of BCCI SA are frozen.
"The action taken by the regulatory authorities resulted from prima facie evidence, contained in a report commissioned by the Bank of England and recently received, of widespread fraud in a number of jurisdictions stretching back over a number of years. The action was taken in order to safeguard the interests of depositors, other bona fide creditors and the shareholders of the BCC group. A copy of a press notice issued by the Bank explaining its action has been placed in the House Library.
"The principal supervisory authorities are seeking the co-operation of other authorities in other countries where BCCI has been in business, with a view to securing a run-down of the group. They are seeking co-operation in order to identify and take appropriate action against those responsible for any wrongdoing. Relevant papers have been passed to the Serious Fraud Office.
"Within the UK the immediate effect of the supervisors' action is that UK depositors cannot withdraw their funds. Sterling deposits in the UK branches are covered by the Deposit Protection Fund to the extent of 75 per cent. of deposits up to £20,000 (that is, up to £15,000 per depositor). The Bank of England has issued a notice explaining the position of UK depositors and the operation of the funds. A copy has been placed in the House Library.
"The Deposit Protection Fund will be activated as soon as a winding up order is made in the UK courts. Claims will be processed as quickly as possible.
"The Bank held a meeting with the main high street banks and the liquidator this morning. As a result arrangements are being set in place for the liquidators to aid the banks in their assessment of applications from small businesses for alternative facilities. While that assessment is a commercial matter for the banks, I hope they will respond as sympathetically as possible.
"The banks are also urgently discussing with the liquidators whether comparable arrangements can be made for small depositors who find themselves in immediate difficulties.
"In addition Touche Ross is willing for six weeks to give free advice to small businesses affected by the BCCI winding up.
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"Under the Banking Act 1987 the Bank of England has sole responsibility for authorising and supervising banks and the Government have no locus in their decisions. The Government were, however, kept fully informed of the proposed action, and it has our full support."
My Lords, that concludes the Statement.
4.30 p.m.
Lord Peston: My Lords, I thank the noble Lord for reading the Statement. That is the only "Thank you" I can offer. The Statement seems to me—I am sure other noble Lords will agree—to be less than satisfactory. One has to ask the Government: what has been going on here? This is not a matter that has suddenly emerged. The Statement reads as if it has, but this is something that has been going on for some time. Noble Lords will confirm in due course that it has been raised previously in this House.
I have a number of questions and a number of points that I must draw to the Government's attention. The key issue to bear in mind is that this bank is part of the commercial banking system, and to have allowed this to happen is damaging to that system. One must ask whether due account has been given to the general damage that occurs within the City of London when this sort of thing happens. I must repeat my question: what has been going on? Will we actually be told what has been going on? In particular, at the level of ordinary questions, how much money is missing? Can we be told that?
As I understand the matter, there are three aspects of the problem to which we need to address ourselves, not one of which seems to me to have been dealt with in any detail in the Statement. First of all, as I understand it, there has been straightforward fraud. Can we be told about that aspect of the matter? Secondly—I have heard noble Lords raise the subject previously—there has been a great question of money laundering, not unconnected with drug smuggling and things of that sort. Not a word is said about that aspect of the matter in the Statement. Thirdly, there is the question of bankruptcy. That word does not appear at all in the Statement. Can we not therefore have a Statement that actually covers the questions in which one is interested?
There is a most serious question concerning the auditors. Can the noble Lord tell me whether I am right and that in 1989 the auditors actually certified the accounts of this bank as true and fair? If that is the case, again can we be told how it turned out that they were not only not true and fair but not remotely so? Again, I repeat the question: what has been going on?
I have to make the comment—and from reading the Statement it appears even more strongly—that it seems that the Bank of England has taken an unconscionable time to act. Other people seem to have been aware of the dangers for much longer than the Bank of England, but that is the regulatory authority. Can we be told why it took so long for the Bank of England to act? Is one being unduly cynical in assuming that the Bank of England was rather more concerned about the bank than about the bank's depositors? Are we asked to believe, in the case of the

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depositors in this bank, that caveat emptor is the only criterion or principle that the Government would apply, that the depositors ought to have known better and that they should not have left their funds in the bank up to the present time?
I have to admit to a degree of ignorance about the Deposit Protection Fund. I have to tell noble Lords that I was quite unaware of the details of the fund. I was under the impression that those of us who deposited our funds in commercial banks were taking no risk at all and that there was 100 per cent. protection. I should be interested to know why 75 per cent. protection is what is available. I admit my ignorance, but I am taken aback to discover that one is protected up to only 75 per cent. More to the point, I did lot know that that protection was available up to only £20,000. Can the Government comment on that aspect of the matter?
More generally, can the Government say something about their attitude to the small depositors involved? The Statement says,
"The Deposit Protection Fund will be activated as soon as a winding up order is made in the UK courts. Claims will be processed as quickly as possible."
As a small depositor, one would not be looking for a bland statement of that nature. One would want to know exactly when that is going to happen. Are we talking' about these funds being available tomorrow, next Monday, or at any time in the future? Do not the Government feel that they have some responsibility in this matter?
Equally, I must ask about the effect on small businesses. As I understand it, the main small businesses affected are Asian owned. They are businesses owned by the Asian community who tend to be extremely hard working and energetic. I see that there is some suggestion that the commercial banks—the other joint stock banks—might take an interest in the matter. The Government say they hope that they will "respond as sympathetically as possible". Can the Government make a more positive statement than that they hope that they will "respond as sympathetically as possible?" Facilities ought to be made available, without any doubt whatever. The integrity of the commercial banking system is involved here. Cannot the Government at least say in terms that a rescue operation ought to be mounted, and mounted right away, and that in their view no enterprising small business should be made bankrupt in the next few days simply because of a liquidity or cash restraint?
This is a serious matter. It is so serious that we cannot simply discuss it on the basis of a Statement before your Lordships. The banking system of this country is of enormous importance. My own judgment is that we ought to ask more generally about the state of the banking system and about the regulation of the banking system. I know of general remarks about the usual channels and all that. I would ask the noble Lord whether, using the usual channels formula, we should not, as Members of your Lordships' House, examine regulation of the banking system much more seriously. In sum, I and many noble Lords are deeply concerned about what has
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been happening here. I hope for a rather more encouraging and reassuring statement from the Government.
Lord Harris of Greenwich: My Lords, I too thank the noble Lord, Lord Brabazon of Tara, for having repeated the Statement. What his right honourable friend has said in the House of Commons indicates that we are in the presence of a major banking scandal. I believe that the Statement raises far more questions than it answers.
May I first deal with the point about the powers of the Treasury and the Bank of England. The Government say that this is a matter entirely for the Bank of England and nothing to do with them. That is because of the provisions of the Banking Act. But Section 80 of that Act provides:
"The Treasury may, after consultation with the Bank [of England], by regulations impose on overseas institutions … such requirements as the Treasury consider appropriate".
The power could hardly be wider. So there is no question in my view of Ministers shuffling this off on to the Bank of England. However, let us assume for the moment that the Government are absolutely right in what they say and that it is a matter exclusively for the Bank of England. That means of course that the Bank is in fact almost wholly unaccountable. Apparently it is not responsible to Ministers. It does not appear to be responsible to anybody else either. I shall come back in a moment to that question.
The first thing on which I should like to congratulate the Minister's right honourable friend is that he managed to make this Statement with no reference to the Florida prosecution of BCCI, an issue that was debated in this House on a Question that I initiated on 23rd April last year. Here was a bank, the BCCI, with more than 40 branches in the United Kingdom, convicted of money laundering in the United States on a massive scale, involving Noriega but also a number of other people involved in the cocaine business in America. The fine imposed on BCCI was around 15 million dollars, the largest fine ever imposed on a bank in the United States. In the course of that debate I asked what the Bank of England was going to do about it. I regret to say I received no positive answer to that question.
We turn next to the Senate investigation now taking place, of which the noble Lord, Lord Brabazon, will be aware. A committee under Senator Kerry has been looking at the affairs of BCCI and its massive misconduct in the United States. That committee heard a statement by Mr. Morgenthau, the district attorney for Manhattan and one of the most respected prosecutors in the United States, to the effect that he was most deeply disappointed by the lack of co-operation he had received from the Bank of England. That seems to me extremely serious. What does the noble Lord, Lord Brabazon, have to say about it?
Why did not the Bank of England act much earlier? It has known for a great deal longer than three years, as confirmed by the Statement, of very serious allegations concerning BCCI which was allowed to continue trading as usual. That decision was made by the Bank of England and it is now accountable. Why

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did the Bank of England not look at its powers under the "fit and proper person" formula in the Banking Act? It seems to me that it had considerable powers to take action but chose not to do so. Why was there not an immediate audit by independent auditors once the allegations came to the attention of the Bank of England?
The noble Lord, Lord Peston, rightly pointed out the rather strange situation involving Price Waterhouse. Given the allegations of which the Bank was aware, why did it not commission an independent audit to satisfy itself that the matter was being handled satisfactorily by the directors of BCCI? In the light of all that, why will there be no independent inquiry as to what the Bank of England has been up to? It may be that the Bank has an answer to these points, but it may also be that it does not. Not only are our banking institutions having serious questions raised about them; so is the Bank of England. I hope very much that we will have some specific answers from the noble Lord, Lord Brabazon.
The blunt question is: has the Bank of England been negligent? What did it know, and when? I hope we will receive answers to those central questions.
Thousands of small businessmen are now at risk of being driven out of business because of the misconduct of the fraudsters involved in the BCCI affair. There is no point in passing on the responsibility to the banks: the banks are themselves experiencing great difficulties at the moment. It would be wholly unrealistic to imagine that the banks are in a position to bail out thousands of small businesses in London and elsewhere. What are the Government proposing to do? The Government have rightly said that they have a high regard for the small business community. Now is an opportunity for them to demonstrate what action they are going to take.
Lord Brabazon of Tara: My Lords, I shall attempt to deal with the many questions raised by the noble Lords, Lord Peston and Lord Harris of Greenwich. The primary question asked was why the Bank of England had not acted sooner and whether or not it was fully responsible for that. The Banking Act 1987 deliberately places total responsibility for authorising and supervising banks on the Bank of England. Its decisions are subject to appeal to a tribunal but are not subject to public direction. The Bank took action as soon as it was satisfied that it had evidence which would support the use of its statutory powers. The Bank cannot act on suspicion alone. Its actions under the Act are subject to appeal. It must be sure before acting that it has evidence it can use in legal proceedings. The Bank has kept the Treasury informed from time to time about developments and in recent days has kept the Government fully informed of the actions it proposed.
Both noble Lords referred to the question of what had been going on in the BCCI with particular reference to money laundering. The information which the supervisors have suggests widespread fraud going back over a number of years but not directly connected with the money laundering offences in America. I cannot go beyond saying that the evidence
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suggests that serious crimes have been committed. I do not wish to say anything which may prejudice any convictions.
The noble Lord, Lord Peston, asked why the auditors had not spotted this before and said they should have noticed the fraud sooner. I understand that the information available to the supervisors suggests that the fraud was an extremely sophisticated one which was very hard to detect. As far as money laundering in the United States is concerned, the prosecutions related to the activities of particular individuals and were not of themselves sufficient grounds for action under the Banking Act.
The noble Lord, Lord Peston, asked about the Deposit Protection Scheme. That was a matter discussed at some length during the passage of the Banking Act 1987. The scheme protects 75 per cent. of deposits up to £20,000; in other words, a maximum payment of £15,000. It certainly does not cover 100 per cent. of people's deposits. I share with both noble Lords who have spoken the concern for small businesses which may be affected by this debacle. As I said in the Statement, the Bank held a meeting this morning with the main high street banks and the liquidators as a result of which arrangements are being set in place for the liquidators to aid the banks in their assessment of applications by small businesses for alternative facilities. That assessment is a commercial matter for the banks and I hope they will respond as sympathetically as possible. I cannot be more positive than that, but I believe that it is a hopeful sign.
BCCI was an international bank operating in 69 different countries. Less than one-third of its assets were in the United Kingdom; therefore, there can be no question of the United Kingdom Government rescuing such a bank.
The noble Lord, Lord Harris of Greenwich, referred to Section 80 of the Banking Act. That reflects, I believe, a misunderstanding of the provisions. The section refers to representative offices of overseas banks, not branches taking deposits in the United Kingdom. The section does not permit the Government to change the regulations of deposit-taking branches.
The noble Lord, Lord Harris, also said that there should be a proper inquiry. Of course, the first priority must be for the Bank, other regulators and the liquidators to bring about an orderly winding-up of BCCI so as to minimise losses to depositors and others who did business with that bank. But the Government and the Bank of England will certainly be reflecting on any lessons which may be learnt from this case for the framework of regulation, both at home and internationally. We shall certainly tell the House our conclusions, although there will be a limit to what can be published about a particular case because of Banking Act restrictions and the need not to prejudice any legal proceedings.
The noble Lord, Lord Peston, suggested that we should debate banking regulation. As the noble Lord himself said, that is a matter for the usual channels. I merely note that this is the second debate which has been called for in the last half-hour.
4.50 p.m.
Lord Boyd-Carpenter: My Lords, my noble friend will be aware of press reports that an approach is being, made to the Arab ruler who, it is suggested, is the ultimate authority in the case of this bank. Can he confirm whether this is so, and, if it is, whether that approach is being made by Her Majesty's Government, the Bank of England or some third party? I am sure that he is aware of the enormous anxiety that this affair is causing to a number of people who have small businesses. If relief and support is sought in that direction, the more that is known about the matter the more they will be reassured. Can he clear up this matter?
Lord Brabazon of Tara: My Lords, I referred to small businesses just now. The Bank of England is in touch with the shareholders to seek their co-operation in achieving an orderly run-down with the minimum of loss to depositors. The shareholders have a very good record of supporting the bank and have already injected substantial sums. The Government are also in close touch with the authorities in Abu Dhabi.
Lord Bruce of Donington: My Lords, my noble friend Lord Peston asked the Minister about the positi DTI of the auditors in relation to this affair. Will the Minister confirm that on a number of occasions since 1988 the auditors found cause for considerable disquiet? I understand that, beyond their function as auditors and in accordance with their public duty, they informed the Bank of England on several occasions of their disquiet. If that is the case, why did the Bank of England not institute further and more detailed inquiries? The Minister said that they were suspicious but not satisfied. How can one be satisfied when one is suspicious? Is it not quite clear that the confidence that was generally felt after the investigation of the Johnson Matthey affair has now very largely gone?
Further, is it not the case that although the Banking Act 1987 transferred specific responsibility for supervision to the Bank of England, nevertheless the Government own the Bank of England and are still responsible for giving general directions under the unrepealed section of the original Act of 1946? Were the Government informed by the Bank of England that it had been even partially alerted by the auditors? If they were informed, what did they do about it? If they were not informed, why not?
Lord Brabazon of Tara: My Lords, I cannot comment on whether the auditors expressed disquiet at the activities of the BCCI. For some time the Government have been aware of concern about BCCI's operations. As I said before, the Bank has kept the Treasury informed about developments from time to time and in recent days has kept us fully informed of the action that it proposed to take.
The noble Lord asked whether the Government were content with the Bank of England's performance The Government have no doubt that the Bank took action, as I said before, as soon as it was satisfied that it had evidence which would support the use of its statutory powers and that it took the only possible
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action in the circumstances. Its action was part of a co-ordinated operation by banking supervisors in a number of countries. I repeat that point; namely, that this is a worldwide operation.
Lord Havers: My Lords, I understand that the protection afforded to depositors is to the depositor, even though, as a small business, he may have several accounts. If those accounts amount to quite a large sum of money, he will still only receive £15,000. I find that very worrying. Can the Minister confirm whether or not my understanding is right?
Lord Brabazon of Tara: My Lords, if an individual has multiple deposits with the United Kingdom branches, they are aggregated and treated as one for deposit protection purposes. So my noble and learned friend is right in that matter.
Lord Desai: My Lords, I must bring three issues to the attention of the House. Three years ago I took part in a television documentary on Channel 4 which pointed to serious doubts about the operations of BCCI. That was before the Florida injunctions. There has been drug laundering and recently there have been two different charges either of fraud or of bankruptcy. We need to know which of these various issues —or perhaps all of them—is true.
It may be, as the Minister said, that the Bank of England did not have sufficient legally tight evidence to close down the bank but did it not have powers to warn or rap the knuckles of those people and say, "We do not like what is going on. You are an international bank. Your misdemeanours may not fall in our territory but we still do not like what you are doing as an international bank. You must change if you are to continue operations at a retail level within the United Kingdom"? That is a very important point which must be addressed.
It may be the case that under the provisions of the depositor protection fund only 75 per cent. of up to £20,000 is guaranteed, but I wonder how many depositors in the United Kingdom in general know that fact. I do not know whether or not my bank has informed me of it—certainly the last questioner did not know. It is not a well known fact. That compares with the Federal Deposit Insurance Corporation, which publicly says that up to 100,000 dollars are guaranteed.
I urge the Minister to consider immediate relief pending the settlement of any legal actions of up to 75 per cent. of those people's deposits. It is not a matter of commercial assessment. It is a matter of simple documentary proof that they held the deposits. Commercial assessment and legal proceedings take a long time and these people, especially given the tightness of M0 up to M4, currently going on in the banking system, will be extremely short of money and could go bankrupt. One may go bankrupt by one's own fault but to go bankrupt because of other people's faults, as a result not simply of incompetence but of fraudulent behaviour, is unforgivable. I urge the Minister to consider immediate—that is, tomorrow—repayment of some money to the depositors.
Lord Brabazon of Tara: My Lords, I am afraid that there is nothing more that I can say to the noble Lord about the deposit scheme and the possibility of money being paid back quickly. I hope that it will be possible to pay it back quickly. I do not have the information here, but I believe that 15 days is required for a formal winding up to take place and then the deposit scheme can be brought into action. As I said in the original Statement, there will be lessons to be learnt from the collapse. The peculiar structure of BCCI made supervision difficult. Therefore the Bank of England took the lead in organising an international college of regulators, in securing a single auditor for the group and, in recent days, in co-ordinating international action to wind up the matter. Clearly this case has underlined the need for close co-operation of supervisors internationally. The Government and the Bank will certainly reflect on any lessons that the affair may have for the framework of regulation at home or internationally.
Lord Morris: My Lords, is my noble friend aware that, unlike the noble Lord opposite whose understandable and righteous indignation has been aired, I believe that the Bank of England and Her Majesty's Government are to be congratulated? Reading between the lines it is clear that absolutely at the forefront of their thinking was the need to protect the depositors as much as possible. I cannot understand how noble Lords opposite do not live enough in the real world to realise that if the Bank of England had gone off at half cock without getting such an astonishing—indeed I believe unprecedented—degree of international co-operation in timing the moment at which they struck, in this day and age with modern telecommunications, BCCI would have removed all the funds outwith the jurisdiction of the United Kingdom so fast that it would not have been funny. Then where would the depositors have been? I am absolutely convinced that the Bank acted in a highly responsible manner despite the fact that it was almost certainly highly suspicious. On the contrary I believe that the future will show that the Bank of England and Her Majesty's Government have acted highly responsibly.
Lord Brabazon of Tara: My Lords, I am grateful to my noble friend for his remarks. He is right to say that it would not have been possible to warn the ordinary depositors of this matter. Any such warning would have prompted an immediate run on the bank. There would also have been a risk that assets might have been moved out of the United Kingdom and records destroyed. Therefore speed and total secrecy were essential.
Baroness Blackstone: My Lords, I disagree with the comments of the noble Lord, Lord Morris. They show a disdainful lack of concern for the small businessmen and small depositors who have funds in the bank.
First, I wish to repeat a question asked by my noble friend Lord Peston which the Minister has not answered. It concerns the timetable for helping small depositors who are in immediate difficulties. The
1244
House needs to know how long such people must wait for assistance. Many are suffering considerable difficulties as a result of the freezing of their assets.
Secondly, I return to a question which was asked by a number of noble Lords but was not answered satisfactorily. Can the Minister give the precise date on which the Bank of England first became suspicious about the activities of this bank? It would be helpful if the House could know that. My third question relates to a point raised by the noble Lord, Lord Harris, and my noble friend Lord Peston. Precisely what is the fraud that is involved in this business?
Lord Brabazon of Tara: My Lords, the noble Baroness has asked three questions, but I cannot add a great deal to what I have already said. As regards the timetable for the depositors' scheme, I must point out that under the Banking Act the fund cannot make payments until a formal winding-up order has been made against the institution. The Bank has applied for a winding-up order but there is a statutory minimum of 15 days before there can be a hearing. The Government and the Bank are pressing for an expedited hearing in less than 15 days. Once the order has been made the deposit protection fund will make payments as soon as possible. Secondly, the noble Baroness asked when the Bank became aware of the matter. I understand that the report was received by the Bank last week, but I must check the date and let the noble Baroness know. Thirdly, I cannot give a figure relating to the scale of the fraud.
Lord Harris of Greenwich: My Lords, the question which the noble Baroness asked was rather different, if I may say so on her behalf. She did not ask when the report was received by the Bank of England: she asked when the Bank of England had substantial suspicions of what was going on. All noble Lords would be immensely grateful if the Minister could answer that question.
Perhaps the noble Lord will also be good enough to answer two questions which no doubt inadvertently he has not answered as yet. First, will he comment on the statement made by the district attorney for Manhattan to the Senate Committee on Banking that the Bank of England had not co-operated with him in his investigation of BCCI? That is an extremely serious matter as I am sure the Minister will agree.
Secondly, I asked why the Bank of England did not commission independent auditors to review the circumstances of what was happening in BCCI. Apparently the Bank has had its suspicions for years, so why was that not done? It appears to be self-evident that it was desirable so to do.
Thirdly, I understand the position of the Minister and the Bank of England. He says that the Bank had suspicions, but no more, and that in those circumstances it could take no action. What does the Minister believe that the police do when they have suspicions? They investigate, so why was this matter not investigated? I fully understand that the Bank of England does not want any form of independent inquiry and if I were the Bank perhaps I should take the same view. However, in my view Parliament is right to demand just such an inquiry.
Lord Brabazon of Tara: My Lords, I am afraid that by repeating his questions the noble Lord will receive no better answers than I have already given. I have given all the answers that I can safely give in the hope that they are accurate. Of course I shall read in the Official Report what has been said. I understand that the Manhattan district attorney is now happy with the co-operation that he is receiving from the Bank of England, and therefore I believe that the noble Lord is wrong about that.
Lord Harris of Greenwich: My Lords, with great respect, the noble Lord is not wrong. The Manhattan district attorney complained about the lack of co-operation from the Bank of England. That is a serious matter. However, I welcome the fact that the Bank of England has now begun to co-operate.

Local Government Finance and Valuation Bill
5.5 p.m.
House again in Committee on Clause 1.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 3
Page 1, line 9, after ("Act)") insert ("subject to subsection (2A) below").
The noble Lord said: I do not know whether Members of the Committee are capable of casting their minds back to what was being said before we were so rudely interrupted. I recall because I made notes of some of the Minister's comments about overspending, poll tax capping and the Government's ideas about their own infallibility. It is proper that we should return to that matter in Amendment No. 3. I shall speak also to the substantive amendment, Amendment No. 10.
The Minister responded to comments made by my noble friend Lady Hollis in respect of an earlier amendment. She was rightly being criticised for complacency about the level of local authority spending in 1991–92 as compared with the previous year. She said that in the previous year councils were spending "above the amount we considered appropriate". She referred to a number of councils, notably Conservative-controlled Elmbridge and Labour-controlled Watford, which were spending significantly above the Government's guidelines and adding to the charges. I hold no particular brief for Elmbridge or Watford. I believe that the people of Elmbridge have good reason to be dissatisfied with the property developments indulged in by their Conservative council. Nevertheless, the point is that the Minister said that it is what "we"—that is, the Government —consider to be appropriate which is their dominating concern. On that basis they are proposing to continue capping under any foreseeable system of local government finance.
Capping is not a matter of opposing the virtuous central government against the wicked local government. In theory capping is supposed to be setting a price for a standard level of service, setting the price of that standard level of service against the resources
1246
available to the local authority, providing the local authority with a fair proportion of government grant to enable it to provide that standard level of service and then pursuing it if it does not achieve a proper level of service at a reasonable price. That is the only way in which anyone can conceivably justify poll tax capping.
It does not happen in that way at all. In fact there is a predetermined cake of government grant which is divided up among local authorities. It is not provided on the basis of a standard level of service because there is no definition of such a service, nor is there a calculation of the cost. The formulae are set out in an extremely vague and often unfair way. Local authorities are expected to adhere to those formulae even when they are not allowed to understand them.
Perhaps I may give a few examples of the ways in which standard spending assessments are set, and are set wrongly, and the way in which we have the absurd differences between one local authority and another. I am sorry that the noble Baroness, Lady Flather, is not able to be with us this afternoon because on Second Reading she gave a very convincing argument showing how Windsor and Maidenhead are hard done by in terms of the standard spending assessment and government grant compared with neighbouring Slough. There are many more examples of the ways in which standard spending assessments are defective.
The calculations on education are based on student numbers but are adjusted by a factor called AEN. That has three components, two of which come from the 1981 census which is already, as is obvious to Members of the Committee, 10 years old. The effect is that, for example, Wigan is told to spend £1,588 per primary pupil but Surrey—and Surrey is hardly a poorer authority than Wigan—is allowed to spend £1,703 per pupil. At secondary level, Wigan is meant to spend £2,302 per pupil while Berkshire is allowed to spend £2,518 per pupil. Is it seriously suggested that Surrey and Berkshire have more problems of deprivation which need extra funding than Wigan? Even if that were suggested—and the absurdity of that will be obvious to the Committee—why is Manchester supposed to spend £500 per pupil more than neighbouring Bolton?
The data on which the standard spending assessments for education are based are out of date and wrong. Even if the AEN factor, by which the allowance per pupil is calculated, were correct, why suddenly in 1991–92 was that factor reduced from its previous total of 70 per cent. of total funding to 50 per cent? No reason was given for that. There is no reason and there can be no reason because the system is deliberately designed to be a mystery.
Let us look at personal social services—the second most important spending area of local government after education. There is no element in the calculation of the social services standard spending assessment for the number of people receiving the services or the cost of provision. Instead there are 19 indicators of need for personal social services, of which 14 use 1981 census data. There is no reflection in those figures of

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the increasing need of local authorities to prepare for the Care in the Community and the Children Act changes.
One of the most aggravating matters for local authorities is the way in which so many items of expenditure are covered by what is called "other services". That covers everything from births to cemeteries and allotments to port health. The most absurd example of all of those is the example of visitor nights; that is, the extra grant and standard spending assessment which is given to those local authorities which are deemed to have a greater burden because of the number of visitors which they have. It is no matter that only a few years ago the Government said that that is quite inappropriate and that local authorities should raise money from the visitors to pay for the services which must be provided for them. When it became convenient to support Westminster City Council by giving it an extra allowance under the standard spending assessment, Westminster received the money. That is how Westminster was able to reduce its poll tax and give that factitious semblance of electoral success to the Government last year. Why is the visitor nights calculation worth £37 per adult to Westminster when it is worth only £10 to Blackpool and nothing at all to Stratford on Avon?
One could go on because there are many more examples. Brent has a higher snow allowance than Cumbria and Camden has a higher snow allowance than Lancashire. There are many other examples that I could quote. The point which must be made is that there is no rational basis for the standard spending assessment and for the capping which is the purpose of this part of the Bill and which is the permanent purpose of government in their relations with local government.
At the very least Amendment No. 10 suggests that an order giving effect to this part of the Bill should not be made before the Secretary of State has published a review of the calculations and operation of the standard spending assessment in local authorities. There is no reason on earth why the Government should not agree to that except that they know that they cannot defend standard spending assessments. I beg to move.
5.15 p.m.
Baroness Carnegy of Lour: The noble Lord, who knows a great deal about this subject, has moved his amendment extremely ably. He has exposed the problems of calculating standard spending assessments, the amount on which local government grant is based.
However, the amendment would add insult to injury. Many people who were in local government, at a time when it was very much more effective and gave a lot more local satisfaction than it does now, believe that one of the problems which has beset it is the turning of what should be local government spending issues into matters concerning central government politicians and central, national party politics.
Along with the noble Lord, I am one of those who wish to see a clearer, simpler and less opaque
1248
calculation of the basis for grant to local government. However, if local government electors are to be treated year after year to an even greater public wrangle than there is now, based on published criteria and figures in the kind of annual review which the noble Lord suggests the Secretary of State should publish, they will believe even more than they do now that what they vote about is what central government have allocated to their councils and not about the competence of their councillors to make the best of the money which they have.
If that happens—the noble Lord may consider that that is in any case inevitable—it seems to me that there is no justification whatever for the noble Lord's argument for local government raised tax. It would be much better if the system were based on VAT and income tax and the whole palaver of setting and raising tax were thus not necessary. If that were so, the debate would justifiably be a debate only about the amount of money which local authorities are given by central government and what they make of it.
It seems to me that the noble Lord is underlining his own argument for a locally raised tax by moving the amendment. If one feels that local taxation is essential in order to achieve "answerability", then it is a great pity to enhance the argument about central government. It would be much better if local authorities would talk with central government privately to try to achieve a better formula and do the best that they can for their local electors with that money. I am sorry that the noble Lord has tabled this amendment. On the whole I believe it is damaging to his cause.
Baroness Blatch: I am grateful to my noble friend for reinforcing those points. It is interesting to hear the noble Lord, Lord McIntosh, say that a Labour Government would be unconcerned about the aggregate spending of local government and that his party would approve of no limit whatever on spending.
When I worked in local government I remember that the Labour Government had no monopoly on fairness when it came to disputing grant. I remember the painful experience of having to cut £10 million from the budget overnight without notice. At that time we did not believe that the selection of Cambridgeshire for a cut of £10 million was fair compared to many other local authorities.
The noble Lord is selective in his quotations. He refers to AEN—additional educational needs. The greater beneficiaries of AEN are inner London Boroughs and big cities in recognition of their specific problems. With regard to educational SSAs, for Wigan it is £475 per adult; for Surrey it is less, and reasonably so, at £399 per adult; Berkshire is £482 per adult; Lambeth is £725 per adult; Tower Hamlets, whose needs are even greater, is £934 per adult; Manchester £672 per adult, and Westminster, lowest of all, is £368. Those figures should be seen in perspective against what was said by the noble Lord, Lord McIntosh.
The amendment tables a formidable catalogue of requirements but it is unnecessary. The Government are satisfied that the standard spending assessments

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are fair and reasonable. They are based on extensive analysis and research which has been fully discussed with local authority associations. They are determined according to general principles approved by another place; they take account of an authority's social, democratic and geographic characteristics as well as the functions for which it is responsible.
SSAs are subject to continuous review and refinement. They are calculated each year on the basis of up-to-date information available on a consistent basis for all authorities. We are holding regular meetings with the local authority associations to consider next year's settlement. Individual authorities will have an opportunity to make representations in regard to their SSAs for 1992–93 during the consultation period in the autumn. We have also made clear that we are willing to look at any fresh information which an authority may consider to be relevant.
How do noble Lords opposite suggest that the review would work? How long do they envisage it will take? Are they prepared to countenance delays in the announcement of next year's SSAs? Any delay would be to the disadvantage of all authorities who wish to plan their spending for next year in the light of those assessments. Not only is a wholesale review of the calculations and operation of SSAs completely unnecessary, but the delay that it would cause in the timing of next year's grant settlement would wreak havoc with local authorities' planning timetables.
I say again that we are willing to look at any new evidence which an authority wishes to bring to our attention. We are keeping SSAs under constant review and the proposed amendments are unnecessary and unhelpful. I call upon the Committee to reject them.
Baroness Hamwee: I wish to speak in support of the amendment, oddly enough for many of the reasons mentioned by the noble Baroness, Lady Carnegy. She said that she thought voters would take their decisions on the basis of what central government were allocating to local government. Since that is now the largest component of any local authority budget I do not believe that she is far wrong in suggesting that that should be the basis for their assessment.
The noble Baroness said also that local authorities and local authority associations should be talking to the Government. As the Minister indicated, that happens. For those on the receiving end of it—I do not know whether that applies to the Minister—I suspect that it happens with depressing and repetitive regularity, with members of local authorities of all political persuasions joining together in delegations both on behalf of their authorities and as members of the local authority associations to visit Marsham Street, often with a list of questions not asking that different decisions be made but to establish precisely why the assessment for their authority has been put forward.
It is an indictment of the Government that such an amendment needs to be tabled. The SSAs are so complex—perhaps not as complex as the grant related assessments—that they are part of the reason that local government finance is held in such disrepute
1250
both by the man in the street and, perhaps even more than councillors, by local authority officers who are trying to operate the regulations.
The noble Lord, Lord McIntosh, said that the formulae are vague. I disagree a little. They are so complex that, to use the term of the noble Baroness, Lady Carnegy, they are almost completely opaque to those trying to apply them. There is a widely held view among councillors that the computers at Marsham Street are run until the right answer comes out at the other end. That may not be the case, but it is indicative of the state that the system is in. We should all be talking from all sides that are concerned with the matter. It is a great shame that a request for consultation has to be put forward in a Bill such as this. It should not need to be requested in that way.
Baroness Blatch: Perhaps I may respond to the noble Baroness. The record of my department concerning discussions both with the local authority associations and, indeed, individual authorities, and very often with individual councillors, is a very good one and long may it remain so. We operate an open door policy and I hope that that, too, will continue.
I pose a question to the noble Baroness. If the Government are not to recognise the special needs of an authority—whether deprivation, one-parent families, ethnic minorities or any specific factor that makes their needs special as one authority compared with another—how does the noble Baroness suggest grant should be distributed between authorities? The alternative is a very rough justice indeed.
Baroness Hamwee: It is not for a moment suggested that the needs for different areas are not taken fully into account. I have not discussed the amendment with the noble Lord, Lord McIntosh, but I read the large gaps between the lines. The amendment was tabled because local authorities are not satisfied with the way that the system works. It is not a question of not recognising need. Need and the provision of services is what the local authorities are all about.
Baroness Blatch: The reason I posed the question is that the noble Baroness criticised the system and said that there were too many exemplifications. I am saying that if the exemplifications are reduced then the justice becomes rougher. I ask how the noble Baroness, by simplifying the system, can ensure that all authorities are being dealt with fairly.
Lord McIntosh of Haringey: I do not believe that the Minister is doing justice to the argument. She must know that that is the case. Nobody is complaining about the number of exemplifications. The noble Baroness, Lady Hamwee, is not making that complaint. She is saying that the system is too complex. She is not saying that the examples given to explain it are too common.
That is not the issue before the Committee. The issue before the Committee is that it has been demonstrably shown that the standard spending assessment does not live up to its own standards. That is the real point. If there were a real standard spending assessment it would be based on an assessment of the standard cost of running an acceptable service. The

1251
needs element would be taken into account and there would be an allowance for specific difficulties to affect the standard spending assessment in certain parts of the country. That is not what happens. An arbitrary amount of money is allocated. Various calculations, many of them based on out-of-date information and partial or inadequate information, are used to make the final calculations.
I thought that the noble Baroness, Lady Carnegy, started very well. She contrasted the days when, as she described it, local government was more effective. That was confirmed by the Minister when she spoke about the difficulty in Cambridgeshire when the local authority had to cut £10 million from its budget. Both noble Baronesses and I were active in local government at a time when one was allowed to know what one could spend and what one's grant was to be before the year started. As a final twist in the tale of central government control of local authorities the Government introduced a system whereby one is not told until after the year has started, after the poll tax level has been set, that one cannot spend that kind of money. That has been an additional burden on local authorities and has increased the difficulties of local authorities both in setting realistic budgets and in collecting the money due to them. The evidence for that is only too plain in the collection levels for the poll tax.
After a very good start the noble Baroness, Lady Carnegy, came to a rather perverse conclusion. She believes that we should be taking away from local authorities altogether the power to decide what their budgets should be. I did not notice the Minister agreeing to that. However, progressively over the years the Government have gone as far as they dare in that direction. They have gone progressively in the direction of reducing local authority accountability and increasing central government control.
This is a modest amendment which says that the Government' should look at their own calculations and make them public before extending capping. That does not seem to be an unreasonable or damaging suggestion to make in the limited context of the Bill. I believe that the Committee should take a decision.
5.31 p.m.
On Question, Whether the said amendment (No. 3) shall be agreed to?
Their Lordships divided: Contents, 65; Not-Contents, 124.

Division No. 2

CONTENTS

Addington, L.

Dean of Beswick, L.

Ardwick, L.

Desai, L.

Aylestone, L.

Donaldson of Kingsbridge, L.

Beaumont of Whitley, L. [Teller.]

Dormand of Easington, L.

Ennals, L.

Blackstone, B.

Ewart-Biggs, B.

Blease, L.

Falkland, V.

Boston of Faversham, L.

Gallacher, L.

Bruce of Donington, L.

Galpern, L.

Carmichael of Kelvingrove, L.

Graham of Edmonton, L. [Teller.]

Cledwyn of Penrhos, L.

Clinton-Davis, L.

Grey, E.

Cocks of Hartcliffe, L.

Hampton, L.

David, B.

Hamwee, B.

1252

Hanworth, V.

Northfield, L.

Harris of Greenwich, L.

Peston, L.

Hilton of Eggardon, B.

Phillips, B.

Hollis of Heigham, B.

Pitt of Hampstead, L.

Houghton of Sowerby, L.

Prys-Davies, L.

Howie of Troon, L.

Redesdale, L.

Jay, L.

Richard, L.

Jeger, B.

Ritchie of Dundee, L.

Jenkins of Putney, L.

Rochester, L.

John-Mackie, L.

Seear, B.

Kilbracken, L.

Sefton of Garston, L.

Kilmarnock, L.

Stedman, B.

Listowel, E.

Stoddart of Swindon, L.

Lockwood, B.

Tonypandy, V.

Longford, E.

Tordoff, L.

McIntosh of Haringey, L.

Underhill, L.

Mason of Barnsley, L.

White, B.

Milner of Leeds, L.

Williams of Elvel, L.

Morris of Castle Morris, L.

Winchilsea and Nottingham, E.

Nicol, B.

NOT-CONTENTS

Ailesbury, M.

Huntly, M.

Aldington, L.

Hylton-Foster, B.

Ampthill, L.

Ingrow, L.

Arran, E.

Johnston of Rockport, L.

Astor, V.

Joseph, L.

Auckland, L.

Kimball, L.

Belhaven and Stenton, L.

Kinnoull, E.

Blatch, B.

Knollys, V.

Blyth, L.

Lauderdale, E.

Boardman, L.

Long, V.

Borthwick, L.

Lyell, L.

Boyd-Carpenter, L.

McAlpine of West Green, L.

Brabazon of Tara, L.

Macleod of Borve, B.

Brougham and Vaux, L.

Mancroft, L.

Butterworth, L.

Margadale, L.

Byron, L.

Marlesford, L.

Caithness, E.

Masham of Ilton, B.

Campbell of Croy, L.

Merrivale, L.

Carnegy of Lour, B.

Milverton, L.

Carnock, L.

Monk Bretton, L.

Cavendish of Furness, L.

Mottistone, L.

Cawley, L.

Mountevans, L.

Cochrane of Cults, L.

Munster, E.

Coleraine, L.

Murton of Lindisfarne, L.

Colnbrook, L.

Nelson, E.

Constantine of Stanmore, L.

Norfolk, D.

Cox, B.

Norrie, L.

Craigavon, V.

Nugent of Guildford, L.

Craigmyle, L.

Onslow, E.

Cumberlege, B.

Orkney, E.

Daventry, V.

Orr-Ewing, L.

Davidson, V. [Teller.]

Park of Monmouth, B.

Denton of Wakefield, B.

Pender, L.

Dundonald, E.

Pennock, L.

Eccles, V.

Platt of Writtle, B.

Elles, B.

Plummer of St. Marylebone, L.

Elliot of Harwood, B.

Pym, L.

Elton, L.

Quinton, L.

Erne, E.

Rankeillour, L.

Faithfull, B.

Reay, L.

Ferrers, E.

Rodney, L.

Flather, B.

Romney, E.

Fraser of Carmyllie, L.

Roxburghe, D.

Gardner of Parkes, B.

St. Albans, Bp.

Gisborough, L.

Saltoun of Abernethy, Ly.

Grantchester, L.

Seccombe, B.

Greenway, L.

Selkirk, E.

Gridley, L.

Shannon, E.

Halsbury, E.

Skelmersdale, L.

Harmsworth, L.

Strathcona and Mount Royal, L.

Hastings, L.

Havers, L.

Strathmore and Kinghorne, E.

Henley, L.

Sudeley, L.

Hesketh, L. [Teller.]

Swansea, L.

Hives, L.

Swinton, E.

Holderness, L.

Teviot, L.

Hooper, B.

Thomas of Gwydir, L.

Howe, E.

Trefgarne, L.

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Trenchard, V.

Whitelaw, V.

Ullswater, V.

Wise, L.

Vaux of Harrowden, L.

Wynford, L.

Waddington, L.

Young, B.

Wade of Chorlton, L.

Resolved in the negative, and amendment disagreed to accordingly.
[Amendment No. 4 not moved].
5.39 p.m.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 5:
Page 1, line 9, leave out from ("shall") to end of line and insert:
("have no effect in respect of any authority to which it would otherwise be applicable where the amount calculated by it in relation to the year concerned under section 95(4) of that Act or the aggregate amount of precepts issued by it for the year (as the case may be) is greater than the total amount in respect of that authority calculable from its Standard Spending Assessment.").
The noble Baroness said: This amendment continues and develops issues raised by Amendment No. 1 as regards capping and Amendment No. 3 in relation to standard spending assessments, which my noble friend Lord McIntosh dealt with. Amendment No. 5 will ensure that local authorities which spend up to or at their SSAs, and which are also below the figure of £15 million, will not be capped. The issue arises because in another place the Minister, Mr. Portillo, said that they would not be, but subsequently another junior Minister said only that such capping was "unlikely". Therefore this amendment seeks clarification from the Minister on that point.
The amendment raises the issue of capping. It may be helpful if I quote the chairman of the Association of District Councils which, as my noble friend Lord McIntosh and the noble Lord, Lord Rippon, reminded us, is currently Conservative controlled. At the local government conference in Brighton just a few days ago, Mr. Thomason said:
"The ADC is particularly concerned about capping proposals as a principle but also as to their proposed extension to smaller authorities. It is not that we want to justify high spending, but because capping based on faulty standard spending assessments does not adequately reflect spending needs and presents particular distortions for small councils".
One recalls the string of commitments we have heard. In the early 1980s we were told by the Government that capping would not be introduced. In 1985 we were told that it would only be a power of last resort. In 1988 we were told that it would be only a reserve power. The then Minister, Mr. Howard, said:
"The people of an area will be able to vote for a relatively high speeding authority if they so choose".
However, by 1990 that right to be able to vote for a relatively high spending authority has become a matter of selective action capping, but not as a matter of course. What is now being proposed is universal capping: every authority, any circumstance, every budget, all to be scrutinised by Whitehall. That is what it means. No longer are government seeking to restrain only the high spenders, only the large authorities, or—spare the thought—only the Labour authorities. As was said in another place, what this means is a comprehensive vote of no confidence—no, not a vote, the Government did not win that at the
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local elections—a comprehensive statement of no confidence by central government in local government.
In this amendment we are not talking about saving vast sums of money for the nation, the economy and the taxpayer. If all 87 district councils with budgets under £15 million which were eligible for capping were to be capped, that would save us £102 million; or less than one-quarter of the budget of an average county council such as Norfolk. If the de minimis rule applies, whereby the first £26 per head is exempt, then the total saved represents barely 10 per cent. of Norfolk County Council's budget. All this, for that.
The Minister made a sturdy defence earlier of standard spending assessments when she told my noble friend that they were fair and reasonable. I recall that not so very long ago a previous Minister, occupying the present Minister's position, defended grant related expenditure assessments in much the same way—that they too were "fair and reasonable". Not, as my noble friend Lord McIntosh said, that we have any great faith in SSAs, but the switch from the 63 variables of GREA to the 13 variables of SSA has produced wild swings of losers and gainers. Some district councils have gained 25 per cent. in the standard spending assessment; my own district council has lost 6 per cent. Both assessments were thought to indicate what an average local authority needed to spend to produce an average level of services. However, GREAs and SSAs could not both have been right. Both were defended in exactly the same terms that the Minister has employed this evening.
Standard spending assessments are notoriously crude—a point made by the noble Baroness, Lady Hamwee, and my noble friend Lord McIntosh. Of its 13 variables—applicable, for example, to education and social services—only one, the "other services" variable, applies to district councils. On that one variable—in turn, distributed basically on a population base—grant and its fulcrum point of capping applies. Moreover, those population figures are, for the most part, 10 years out of date. The figures ignore factors like the regional role of an authority, its historic buildings and the like. Yet, however crude, arbitrary and opaque those standard spending assessments are, as Members of the Committee have previously said, they represent at the moment the only benchmark we have of what the Government say is appropriate for a local authority to spend. Therefore, the amendment seeks to ensure that what government say local authorities should spend to provide an average level of services is what they can spend to provide such services. If local authorities do spend to the limit of their SSAs then whatever the previous level of percentage growth on their previous budget, those local authorities should not be vulnerable to capping while under the £15 million figure. That is important precisely because small district councils, with budgets of perhaps £4 million, £5 million or £6 million, are especially vulnerable to the financial impact of quite modest one-off items of expenditure: car parking,

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street paving, several extra staff for implementing the Environmental Protection Act imposed on us, with our approval, by government.
We had similar problems a few years ago when the Government ran simultaneously both GREAs and targets. As the Minister will no doubt recall, this produced chaos and confusion all round. This amendment seeks to ensure that we do not march backwards into the same morass. What the amendment seeks from the Minister is clarification and commitment: clarification of the somewhat different statements made in another place and commitment that local authorities spending up to and at their SSAs—not over, but under £15 million —will not be capped. I hope the Minister will be able, unambiguously, to give us that commitment. I beg to move.
5.45 p.m.
Baroness Blatch: The noble Baroness ranged far and wide from the amendment in her presentation of it. This amendment seeks to maintain, as the noble Baroness said, exemption from capping of authorities in England and Wales, setting budgets below £15 million, for those authorities which set their budgets below standard spending assessment. The proposition is unnecessary. We have made clear the position of an authority which sets a budget at or below its standard spending assessment. During the passage of this Bill in another place my honourable friend the Minister for Local Government and Inner Cities stated:
"I have no intention of capping authorities below the SSA". —[Official Report, Commons, 11/6/91; col. 801.]
One cannot be clearer than that. Authorities which budget sensibly have nothing to fear from the extension of our capping powers. Authorities which budget at or below SSA are acting in a prudent and sensible manner. They are giving their charge payers a fair deal. We have no need to take action against such authorities. It is against the other kind of authority —those which spend above SSA—from which the hapless charge payer requires protection. We are determined, through the provisions of this Bill, to provide that protection in all cases. I call upon the Committee to reject the amendment.
Baroness Hollis of Heigham: I am happy to accept that statement by the Minister, which gives us the assurance we seek. Mr. Portillo's statement, which the Minister quoted, was subsequently qualified by Mr. Key, another junior Minister in the DoE, and therefore it is not unreasonable for us to assume that he was modifying Mr. Portillo's statement that,
"it is unlikely that a sensible and prudent local authority which is not spending above its SSA will be caught by the Bill".—[Official Report, Commons, 11/6/91; col. 820.]
Can we therefore assume that that should now read that a sensible and prudent authority not spending above its SSA will never be caught by the Bill and that Mr. Key's statement has been modified, in turn, by what the Minister said tonight?
Baroness Blatch: I stand entirely by what I said in my reply to the noble Baroness.
Baroness Hollis of Heigham: Then I am happy to withdraw my amendment.
Amendment, by leave, withdrawn.
[Amendment No. 6 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 7:
Page 1, line 9, at end insert ("after the making of an order under subsection (3A) below.").
The noble Lord said: In moving this amendment I shall speak also to Amendments Nos. 8 and 12, Amendment No. 12 being the substantive amendment. This, again, is a request for clarification because in another place Mr. Portillo responded to the Opposition by giving what he claimed to be helpful assurances about the inclusion or otherwise of European Community money in acceptable expenditure. That is what these three amendments are about. What we are trying to do in this amendment is to make sure that when expenditure for capping purposes is determined expenditure associated with a European Commission funded project will not be taken into account. Mr. Portillo said:
"Where a local authority spends some money and subsequently gets a grant from the EC, in the year that it spends the money it must find it from the collection fund. In the year after it will get the money from the EC. However, if, in year one, when the local authority spends that money, it already knows that it is going to get a grant from the EC, it can take that into account in the year that it spends the money because the budget is assessed on an accrual basis".—[Official Report, Commons, 11/6/91; cols. 840–1.
That is helpful for revenue projects, but we should like the Government to go a little further and make clear the position on capital.
As I understand it, when we are talking about capital budgets, there cannot be any supplementary credit approvals until the year after the budget has been expended. We have to ask whether it is possible for a local authority which has capital funding from the European Community to use the basic credit approvals as a basis for borrowing. I suspect that the Minister's answer will be, as Mr. Portillo intended to be, helpful, but it would be desirable to have the position set out entirely clearly. I beg to move.
Baroness Blatch: These amendments are designed to delay the operation of the provisions of Clause 1 of the Bill. Their effect would be to delay abolition of the exemption of authorities setting budgets of less than £15 million from the capping regime—and hence the protection that this provision would offer charge payers—until an order bringing the provisions into effect has been made by the Secretary of State. In turn this order itself could not be made until the Secretary of State had laid before Parliament a statement that the calculation made under Section 95(4) of the Local Government Finance Act 1988 for authorities setting budgets of less than £15 million did not include any expenditure which had been undertaken in the expectation that that sum would in future be covered by a grant from the European Community.
This is an unnecessary series of amendments. They seek to top slice the budgets of some authorities so that additional expenditure over and above the limits implied by our capping criteria would be permissible. This goes quite against the general policy that capping

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bites on the aggregate demand made by an authority on the collection fund. No distinction is drawn between the component parts of that budget. However, apart from that fundamental point, there are other reasons why the amendments are misguided.
Where expenditure is funded by EC grants, this expenditure, as is the case with any expenditure financed by specific grants, does not lead to an increase in an authority's budget on which the capping criteria bite. The noble Lord made that point himself. The amendment refers specifically to the situation where expenditure is incurred in the expectation that there will be EC funding. The arrangements to apply in such a case were described by my honourable friend the Minister for Local Government and Inner Cities during consideration of the Bill in another place. He made clear that where a local authority spends money in one financial year in the knowledge that it will be reimbursed for that expenditure in the subsequent year—in this case through an EC grant—it can take this expected income into account in the year in which it incurs the expenditure. That is standard accruals accounting practice. The authority therefore has no need to increase its budget on which capping bites to take account of such expenditure. Accordingly there is no reason why authorities in receipt of EC funding have any need for the kind of concession which the noble Lord opposite is seeking to give them, even if such a concession were right in principle, which I believe not to be the case.
These amendments seek to delay the operation of the provision of Clause I of the Bill for wholly spurious reasons. The noble Lord, Lord McIntosh, was concerned that basic credit approvals could be used to cover any capital borrowing. My understanding is that capital has no direct implications for capping, which bites on revenue. We are talking about revenue servicing borrowing, including where the authority chooses revenue contribution to capital. In other words, it is the revenue contribution to capital spending that would be caught, if necessary, by capping; but where it can be covered by expected income from the EC the effects on the local authority's budget would be neutral.
Lord McIntosh of Haringey: I am grateful for that reply. These are arcane matters. The Minister said that there will be no direct effect in terms of capping. I wonder why she used the word "direct". We need to know without ambiguity what powers local authorities have to borrow to finance expenditure which is going to be funded as a capital project by a European Community grant. Do authorities have the power to borrow for that purpose even when it is a capital grant rather than a revenue grant?
Baroness Blatch: We are talking about capping biting on the revenue costs of a local authority. Where that revenue is met by EC grant, clearly the effect on a local authority's budget is neutral. Where a local authority contribution matches an EC grant—in other words, where the local authority itself is providing money as well as the European Community—the
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extent to which the local authority is providing revenue would form part of its normal budget and would be subject to capping if over the limit.
Lord McIntosh of Haringey: I am sorry but I must press the Minister. Can we have a firm assurance that a local authority in that position will have approval for the borrowing that will be necessary? It is well understood that the European Community announces grants well in advance of making the payment. We want to know whether the local authority will need to get borrowing approval in advance of the grant. The capping procedure is very rigid indeed. There are no disregards from the capping procedure. For example, Sheffield is faced with enormous extra expenditure arising from the Hillsborough football stadium disaster, but no allowance is made as to whether the necessary expenditure for emergencies will be taken into account in deciding whether the council should be capped.
Baroness Blatch: European Community funding for projects in the United Kingdom is matched by government through extra credit approvals. Those are allocated to local authorities. What I cannot do is give a guarantee that in every single case the precise credit approval will match the local authority spending. I say that for two reasons. One concerns the way in which it will impact on each local authority. I cannot be precise about whether the actual project is fully funded by the EC, is partially funded by the EC or whether the local authority is matching EC funds. With regard to where the revenue costs of borrowing are met by extra credit approvals and by EC funding, the effect on the local authority budget will be neutral. But where a local authority is spending more than what is covered by the EC it will form part of its normal budgeting process and therefore will be aggregated and would be subject to capping.
Lord McIntosh of Haringey: I feared that that would be the answer. That means that local authorities which succeed in gaining European Community funding on a basis which involves their contributing to it themselves may find themselves penalised for doing something which is approved of by the European Commission and is approved of to the extent of getting funding from Europe. However, because of the capping provisions, they may be unable to take it up because they may be unable to get authority from Marsham Street in order to expend their part of it. That seems paradoxical. It seems to me that central government in Britain are putting themselves quite unnecessarily above the judgment of the European Commission and indeed are running a severe risk that local authorities may lose the opportunity to bid for European Community grants.
This is an extremely complex matter. We shall have to read the reply given by the Minister and then consider whether we need to return to it at Report stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 8 to 12 not moved.]
Clause 1 agreed to.
6 p.m.
Clause 2 [Amendment of grounds for charge capping in Scotland.]
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 13:
Page 2, line 4, at end insert ("and the Secretary of State shall not treat the total estimated expenses of an authority as excessive when the budget set by the authority results in an increase in expenditure lower than the rate of inflation prevailing at the date on which the budget is set".).
The noble Lord said: This amendment and the three which follow it on the Marshalled List, although they have not been grouped together, are really concerned with the results of what is believed by many, in particular the Law Society of Scotland, to be a change in the attitude of the Government to Scottish rates and poll tax. The main concern is the dropping of the test of "excessive and unreasonable" expenditure. The test is to be replaced by a situation where the Secretary of State will consider whether an authority's planned expenditure is "excessive" or whether there is an excessive increase in planned expenditure compared with the previous year.
If the Secretary of State for Scotland is following the English rule and other assessments, as he apparently is in this part of the Bill—and I am glad that the noble and learned Lord the Lord Advocate is here to explain the situation to me—then, in addition to measuring proposed increases in budget percentages from year to year, he will also look at the Government's expenditure target, which for Scotland is called "the grant-aided expenditure assessment". In England, the near equivalent is the standard spending assessment.
The grant-aided expenditure assessments in Scotland were primarily developed for the purpose of distributing grant on a more fair and equitable basis. It has never been recognised by authorities in Scotland, nor by organisations like CoSLA, as being a suitable mechanism for identifying the absolute need for an authority to spend. Further, that point has repeatedly been acknowledged in circulars from the Scottish Office. By just applying the English rules to the budgets set by local authorities this year and using grant-aided expenditure assessment as part of the Government's control mechanism, 31 local authorities in Scotland would have been capped.
Perhaps I may give the Committee an example to show just how ludicrous that arrangement would have been. Stirling District Council would have been capped, although it had no increase in the poll tax it charged this year compared to last year. Moreover, Shetland Islands Council would have been capped despite the fact that it presently has a poll tax of only 93 pence per annum. I am sure that the Minister is aware of how ludicrous is the argument. I hope that he will be able to reassure us by way of the Government's response. I beg to move.
The Lord Advocate (Lord Fraser of Carmyllie): In moving the amendment, the noble Lord, Lord Carmichael, has briefly traversed the ground in relation to those authorities in Scotland which have had budgets in excess of their grant-aided expenditure. With respect, I should tell the noble Lord that I am
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not sure that there is a great deal to be gained by going over decisions which the Secretary of State took in Scotland on the basis of a test which relates not only to excessive but also to unreasonable expenditure. The noble Lord is obviously aware of the change which is proposed for Scotland.
Perhaps I may address my remarks specifically to the effect of the amendment before the Committee. Its effect would be to require the Secretary of State to use the rate of inflation at the time the local authority's budget was set as the yardstick by which to measure "excessive" expenditure. Quite apart from the fact that this would take no account of any authority which was already budgeting well in excess of its grant-aided expenditure figure, this amendment does not provide for the fact that—as in the current year—inflation could fall sharply between the time budgets were set and the start of the year in question. I believe that the noble Lord will appreciate that it is not unknown in Scotland for the local authority to fix its budget for the coming year before one calendar year has expired; indeed, sometimes it is done in December or certainly before the end of January.
The Secretary of State and all taxpayers have the right to expect authorities to take into account when they set their budgets forecasts of a fall in inflation for the year ahead. On that basis, I must tell the noble Lord that his amendment seems to be unacceptable. With that brief explanation of what the amendment before us entails, I invite the Committee to reject it.
Lord Carmichael of Kelvingrove: Before the Minister sits down, can he say whether he would reconsider the matter if the amendment were to be reworded in order to provide that "attention" would be paid to the rate of inflation, or that "allowance" would be made for it, so that if it was negative inflation the Secretary of State would legitimately, as per the present wording, be entitled to take a lower figure but if it was above such a figure he would also be entitled to make allowances for that fact?
Lord Fraser of Carmyllie: I know that the noble Lord will appreciate that one of the changes which is allowed for and set out in this clause for Scotland, which I understand applies this side of the Border as matters stand, is that the Secretary of State will have regard to principles as he may determine in respect of that year. It may be that he will set out his capping criterion in advance. The noble Lord puts forward the example of 31 councils which would have been caught by the English criteria. But if, in the future, criteria are to he established for Scotland, the authorities concerned would know in advance what was the situation. Therefore, in those circumstances, they would be in a position to budget sensibly.
Lord Carmichael of Kelvingrove: I am grateful to the Minister for his explanation. It is one that will need to be studied closely and one upon which we shall take advice. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 14:
Page 2, line 27, at end insert:
("(d) in Schedule 3 to the 1987 Act in paragraph 2 for the words "without having afforded the local authority to which the report relates an opportunity of making representations" there shall be substituted the words "without a meeting between himself and representatives of the local authority to which the report relates being held to discuss";
(e) in Schedule 2 to the 1987 Act at the end of paragraph 2 there shall be inserted the words "Such a report shall not be laid before Parliament until the Secretary of State and the local authority to whom the report relates have been questioned in public by the Select Committee for Scottish Affairs on the contents of the report." ").
The noble Lord said: This amendment also refers to the 31 local authorities. I am sure the Minister knows the ones to which I am referring, as they have been well publicised. It deals with the unlimited powers being given to the Secretary of State by means of the Bill. It really points to a situation where local government in its entirety is being subjected to capping, and not just those authorities whose expenditure was considered in the past to be both unreasonable and excessive.
That point really leads on to the other amendments. It would have been better had all these amendments been grouped together, but I only realised today that this had not been done. At present, it seems that the Secretary of State has almost total power. In addition to the scrutiny of Scottish capping and the proposal for representations to be made, we are suggesting that there should also be a meeting between representatives and the Secretary of State. In other words, in addition to representations being made, we believe that there should be a sort of statutory meeting. Further—I accept the fact that this is perhaps too openly democratic for the Secretary of State—prior to a report being laid before Parliament, we suggest that there should be a second requirement that the report itself should be questioned in public by the Select Committee for Scottish Affairs.
Both this amendment and Amendment No. 13 were tabled in an attempt to heighten awareness of the very wide-ranging powers which the Secretary of State will have if the Bill is passed in its present form. The Bill would give him quite unprecedented powers. I beg to move.
Lord Fraser of Carmyllie: As the noble Lord clearly spelt out, the amendment would have the effect of altering and prolonging the procedures followed where the Secretary of State undertakes capping action. It would, first, place a requirement upon him to hold a meeting with representatives of any local authority against which capping action had been taken before he could make and lay a report before this place proposing a reduction in the personal community charge.
Such a requirement is superfluous. The present legislation, through paragraph 2 of Schedule 3 to the Abolition of Domestic Rates (Scotland) Etc. Act 1987, ensures that authorities have the right to make representations, as the noble Lord is aware. In practice, they are invited to make written representations, and if they request a meeting further to discuss those representations, the Secretary of State would
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almost certainly agree to that. Indeed on every occasion where a local authority in Scotland has requested a meeting, that request has been agreed to.
The terms of the amendment are also impractical. No provision is made for a local authority to send in written representations, merely that a meeting should be held. That would deprive an authority of the opportunity to set out its arguments in greater detail than is possible at a meeting. Furthermore, the amendment would require a local authority to have a meeting with the Secretary of State even if it did not think that that was essential.
The second part of the amendment would require the Secretary of State, and any authority against which capping action was being taken, to appear before the Select Committee on Scottish Affairs. I suspect a note of mischief in the amendment. The noble Lord is very much aware that there has been no Select Committee on Scottish Affairs since 1987, for reasons which are also well known. I hope that there will be a change which will allow for the re-establishment of the Select Committee at some time in the future, but one cannot envisage that happening immediately.
The effect of the amendment would therefore be to wreck the clause, since under its terms no report proposing a reduction in an authority's community charge could ever be laid. I am sure that that was not the noble Lord's intention, but I have to advise him that that is the practical effect of the proposal contained in the second part of the amendment. Existing procedures allow local authorities adequate opportunity to make representations, and with that explanation of the two parts of the amendment, I urge the Committee to reject it.
Lord Carmichael of Kelvingrove: I again thank the Minister for his reply. When we consider a Bill in this place, everyone tells us that we are planning for the future. I believe that we are only 21 points ahead in Scotland at the moment. We shall probably have a Select Committee after the next election, because something will need to be done about it.
However accommodating the Secretary of State is, and there have been some accommodating ones, there is always the feeling that the local authority and the public, in a wider sense, are never brought into the discussion. That is one of the reasons why we felt a Select Committee should examine the matter. I said that the proposal was perhaps over-democratic, but we should be able to find a mechanism that does not delay the procedure too much. I hope that we shall see the day when such matters are discussed and the more interesting parts televised so that the population of Scotland will realise what local authority expenditure is all about. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
6.15 p.m.
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 15:
Page 2, line 32, at end insert:

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("(4) The Secretary of State shall within twelve months of the coming into effect of this section make an order giving effect to the provisions of section (Application of Scottish criteria) below.").
The noble Lord said: The feeling is that the Scottish criteria are being undermined by the Bill. The Minister may already have been given some information by the Law Society of Scotland which, among others, is worried about the proposal. We are anxious that within 12 months of the section coming into effect the Secretary of State should make an order giving effect to the provisions of a section dealing with the application of the Scottish criteria.
We are worried that none of the powers in the Bill is effected by affirmative resolution. All are subject to negative resolution which affords little opportunity for discussion in either place. The basis of the objection is that the word "unreasonable" has been omitted. That affects the way we have been working in Scotland. In dealing with the other amendments, there was a feeling that where expenditure was obviously necessary the local authority could take the Government to court. To include only "unnecessary" and not to allow reasonableness to be discussed falls short of what we consider obvious justice in the Scottish sense. I beg to move.
Baroness Blatch: It is interesting to note that the amendment would apply solely to charging authorities. Does the noble Lord have a particular reason for exempting precepting authorities from the concession? Will not preceptors feel hard done by if they do not receive a similar relaxation in the rigour of the capping regime which will be enjoyed by their charging authority counterparts?
The amendment runs totally counter to the measures to extend our capping powers which we are convinced are necessary if we are to be able to protect all charge payers from the consequences of excessive expenditure. The success of the capping regime in 1991–92 in limiting local authority budgeted spending to only about 0.5 per cent. above the amount provided for in the settlement is a well-established fact. The power for my right honourable friend the Secretary of State to cap authorities indulging in excessive increases in expenditure was an integral part of that regime and will remain so. Indeed, it is precisely because the powers previously available to my right honourable friend the Secretary of State for Scotland are too limited that we seek the powers contained in Clause 2.
The Opposition are happy to see a much weaker form of capping introduced in England and Wales, the effect of which would be to prevent my right honourable friend taking the kind of robust action which has saved many charge payers from facing excessive bills this year. The amendment would remove one limb of the capping criteria under which we currently operate—the power to cap excessive year-on-year increases in budget—and would seriously damage the effectiveness of the second, the power to cap budgets which are, in my right honourable friend's view, excessive in absolute terms. The combined effect would be significantly to reduce
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the protection that we are able to offer to charge payers. I call upon the Committee to reject the amendment.
Lord Carmichael of Kelvingrove: I accept the flaw in the amendment that the precepting authority would be the only authority that could appeal to the Secretary of State. The authorities precepted upon would be unable to do so. If I include them in an amendment on Report, perhaps the Minister will consider the proposal.
The word "unreasonable" has been used in Scottish legislation. It is well-established. The courts are well able to decide what is reasonable and what is unreasonable. The spirit of the amendment is not as bad as the Minister made out. It is one with which we have worked for some time. However, I realise that the amendment is flawed, and I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Clause 2 agreed to.
[Amendment No. 16 not moved.]
Clause 3 [Valuation of domestic properties]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 17:
Page 2, line 35, after ("required") insert ("(a)".
The noble Baroness said: I wish to move Amendment No. 17 and speak to Amendments Nos. 21 and 39. These amendments seek a clear statement by the Government that local authorities are competent to start preparations for the new tax so that it may be introduced as smoothly as possible. We fear that without such an acceptance on the face of the Bill, spending for these purposes could be ultra vires. It seems clear that providing information for valuation seems to be covered by law but more general preparation for the bill may not be. The reason for this is that, if Members of the Committee will cast their minds back to the preparations for the poll tax, local authorities had two years in which to gear up. However, when the tax was introduced we found that canvass forms were inaccurate; computers broke down or refused to talk to each other; software did not arrive in time or did not work; laser printers could not read the forms; packaging machinery did not operate. Some lucky residents ended up receiving six poll tax demands, not all with an identical sum on them, and others received none at all. As everyone queried everything, the phone system and advice surgeries broke down as well. That is before we get on to rebates, benefits and the need for high security windows to protect the staff.
In the name of sanity, we want time to avoid all that. I appreciate that the DoE is involved in consultation, but if there is to be any hope of local government meeting the April 1993 deadline—which I have to say I somewhat doubt —we must start preparations now. We must not delay them until after the passing of the major Act, perhaps in the autumn. I beg to move.
Baroness Blatch: As far as valuation is concerned Clause 4 of the Bill places a duty on authorities to supply any information requested in a notice served on them by the Commissioners of Inland Revenue. If

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the Bill now before this Committee is enacted, authorities will be placed under a duty to provide that information. There will, therefore, be no doubt about their powers in that respect.
I now turn to the more general preparations for the introduction of the council tax. As prudent managers, local authorities will of course look ahead. There is nothing unusual in the process of looking at statutory functions and assessing possible developments in the future. If I were still in local government today I too should be looking at how my authority should prepare for the introduction of the council tax. I add that it is clear from the many detailed responses we have received on our council tax proposals that many authorities are doing just that.
We have announced our intention to legislate next Session to introduce the council tax in April 1993. It is that legislation which will give local authorities the necessary powers generally to prepare for and to implement the council tax. If it is enacted according to our plans local authorities will have all the necessary powers early in the 1992–93 financial year. It is our view I hat in such circumstances it is open to authorities to make a contingency allowance when prepaying their 1992–93 budgets to cover the expenditure they estimate they will incur in 1992–93 in exercising those powers.
We have asked local authorities to let us know of any specific difficulties they foresee with such arrangements. We have not yet received anything from them, but if we do we shall of course consider carefully what they have to say. But whatever the authorities might tell us about preparing generally for the council tax, these are not matters for this Bill. This Bill is about the valuation of domestic property. General preparations for a new form of local taxation is an entirely different matter. It is a matter for future legislation. I believe it would be wrong in principle for us to do more than to deal with valuation. I call on the Committee to reject the amendments. Finally, I must advise the Committee that if these amendments are accepted, they would be a matter of privilege in another place.
Baroness Hollis of Heigham: I thank the Minister for her reply, which we shall study carefully. I am happy to have her reassurance that the issue of valuation seems to be well covered by law.
I turn to the point about general preparation. As I understand it, subsections (2) and (5) of Section 114 of the Local Government Finance Act 1988 both seem to suggest that a local authority may be vulnerable under the provisions on maladministration ultra vires on any expenditure in advance of the major Act being passed.
The Minister made it clear that the local authority would have powers to include appropriate expenditure in its budget for the coming year once the Bill had passed (should it do so, given other contingencies). In practice that means that staff cannot be appointed and expenditure cannot be incurred for software, except for ordering and the like, until the financial year of April 1992, to take effect for the next year, 1993.
I understand that the noble Baroness is involved in consultations, and I hope that there is good will on the
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issue. Nevertheless, I repeat to her that, as concerns the ability to incur expenditure in April 1992, 12 months will not be adequate if the Minister seeks to meet the timetable that the Government themselves have laid down for the introduction of the provisions of the Bill in 1993. All our experience on the poll tax suggests that it took us two years and after that a further 18 months for the legislation to begin to run even faintly smoothly.
If the Minister seeks to tell us of the preparation time, she will find that the council tax may, I fear, have an even bumpier initial ride, should it come to pass, than the poll tax. I believe that between now and Report stage the Minister will have received the responses to the consultation document. I very much hope that we may then pursue the matter further with good will. I am sure that there is no real dispute between us, but as the provisions stand I fear that the Minister may be acting in a rather shortsighted way and that would be regrettable. However, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 18:
Page 2, line 35, leave out ("a") and insert ("an individual").
The noble Lord said: In moving this amendment, I wish also to speak to Amendment No. 28. I hope that the Minister will not say about all amendments to Clause 3(1) that they will be subject to privilege if they are accepted. It seems to us that there is a conflict between subsections (1) and (3) of Clause 3 about the basis of the valuation which is prepared for in the Bill and which is planned for the new council tax.
Clause 3(1) states:
"There shall be paid out of money provided by Parliament such sums … to enable a valuation to be carried out, in accordance with the following provisions of this Act, of all domestic properties in Great Britain".
Then we turn to subjection (3), which states:
"The valuation shall be carried out … differentiated according to prescribed bands of values".
Those words seem to us to be deliberately opaque. They have been explained by Ministers in another place on a number of different occasions but the explanations do not entirely add up. It is still not clear whether the intention is, as in Clause 3(1), that the valuation should be of all domestic properties or whether, as in Clause 3(3), there should only be valuation,
"differentiated according to prescribed bands of values".
Our position must be made clear. We do not believe that justice will either be done or be seen to be done if the valuation is only to be on a grouped basis for bands of value. It will not be just if there is to be no individual valuation of individual properties and if the owners or occupiers of those properties are not to know what the valuation is but will simply have to be content with knowing into what band they fall.
Ministers made great play in another place of the valuer standing at the end of a street looking down it and saying, "Ah, these houses are all the same. We shall put them all in the same band". I do not believe that people in any given street ever feel that all their properties are of the same value; nor do purchasers believe that they are the same.
All kinds of different considerations apply—for example, the convenience that the position of the house in the street offers. Considerations such as the availability of car parking come into play, or physical factors such as extensions which have been added to a house. The values of houses differ according to what people have done with their houses. Therefore people are right to want individual valuations. They are right to expect that a valuation for the purpose of taxation which will remain in force for a long time will be based on a proper valuation of an individual property. They are right to be worried at the thought of a valuer standing at the end of a road and valuing properties in that road by casting an eye down it. If that is the case, I do not think people will consider they have been dealt with fairly.
Similarly if people do not know what the valuation of their property will be, how will they know whether or not to appeal against the assessment? That is the real problem. Some Ministers in another place seem to think that if people only know which band they are in, there will be fewer appeals. I suggest that the opposite will be the case. I suggest that because there are so few bands and because the difference between bands is so significant, people who do not know what their individual valuation is and how far away they are from the edge of a band will appeal to gain a significant advantage from being put into a lower band. I suspect that if this scheme goes forward, there will be many more appeals and litigation, and much more trouble for the valuation profession than would be the case if we had a system that was from the outset self-evidently fair and just.
We appeal to the Government to save themselves from what seem to us to be the inevitable consequences of a badly thought out attempt which seeks in effect to protect the interests of Tory voters who live in more expensive properties. That is why the system has been set up in this form but it will rebound on the Government in a similar way to the poll tax although perhaps not with the same ferocity. I beg to move.
6.30 p.m.
Baroness Blatch: These amendments seek to reintroduce an individual valuation of each domestic property. The result would, I believe, be a step backwards. It would be expensive and unfair and would delay the introduction of the council tax. It would be expensive because it would require the precise valuation of each house, each flat and each dwelling in Great Britain. On the basis of the proposals suggested by the Opposition, that valuation would be based on four factors: market values, rental values, building costs and repair and maintenance costs. The cost of a professional assessment of each of these factors would be astronomical, and there would be a need for frequent revaluations if individual values were to be kept accurate. This would mean yet more astronomical costs.
We must contrast that with our proposals, which avoid the need for precise valuation. These proposals have been widely welcomed. We provisionally
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estimate that the costs of allocating properties to bands will be about £250 million or about £11 for each property. This is not a small sum of money, but it is only a small fraction of the sum that would be required if there were to be an individual valuation carried out in the manner underlying these amendments.
The noble Lord's amendments concern the complex system preferred by the Opposition. In speaking to this amendment it was clear that the noble Lord had overlooked the fact that the bands are sufficiently wide to allow for general banding and that the tax rate between bands is not that great. I believe the noble Lord said the opposite. We believe these amendments seek a reintroduction of an expensive and unfair system. I call on the Committee to reject them.
Lord McIntosh of Haringey: This is not the only amendment that we have tabled to this clause. Later amendments, which have to be discussed separately for the sake of clarity, make it clear that we believe it is possible to return to the 1973 rates in the short term for all existing properties. The valuation which is required on an individual basis will only be required for new properties. Our Amendment No. 20 concerns that point. Therefore the argument that our provision is not feasible on financial grounds does not stand up.
It is true that the gap between different bands is not as great as it should be. It is also true that the tax is a flatter tax than a property tax should be. It does not reflect real differences in property values, just as property values themselves do not reflect ability to pay. That is why—as we shall indicate in later amendments—it is necessary to temper a purely property tax with ability to pay as indicated by income. For all those reasons the proposed council tax, which we shall debate in full in the autumn, is far less just than the system of local government finance which we wish to put in its place.
Lord Renton: Has the noble Lord calculated what it would cost to go back to the 1973 valuation? I am sure he would find it was a very considerable amount to start afresh on that. Bearing in mind that in all such matters of public expenditure we have to compare cost with benefit, does the noble Lord really consider that the large cost of his proposal would produce a benefit that is worthwhile?
Lord McIntosh of Haringey: To go back to the 1973 valuation for those properties which have not been altered would not cost anything at all because the valuations already exist. However, I believe the point the noble Lord, Lord Renton, wishes to make is that our proposals require a new and, I accept, complex valuation, over a longer term. The Minister mentioned the figure of £250 million as the cost of even this curtailed government valuation system. I ask Members of the Committee opposite to consider that figure in the light of the figure of £800 million given by the Audit Commission as the cost of a single year's delay in the introduction of a new and effective system of local government finance.
Lord Renton: I have listened carefully to the noble Lord a s he is always so well informed on these matters. But is he really saying that we could base this new valuation—I believe we have had five quotations—on 1973 values without any regard to the change in the value money or to the work that may have been done on a particular street of council houses? There are bound to be changes that should be taken into consideration and the cost of the detailed estimation of those changes would be very considerable.
Lord McIntosh of Haringey: The noble Lord made two points. One concerned the change in the value of money. I am sure that with his knowledge of local government affairs the noble Lord will agree that that matter will be dealt with automatically by the difference between rateable value and rate poundage. In other words, where values are out-of-date and have not reflected changes in the value of money, the change in the value of money is reflected in the rate poundage which is levied. That has been a feature of the rating system for many years under all governments.
The noble Lord made a second point about those properties which have undergone significant alterations s. nee 1973. That is a valid point. We accept that there will have to be some interim valuations for new properties or for properties which have undergone significant alterations in order to establish as fair a system as possible even in the short term. But all those factors pale into insignificance beside the £800 million a year which has been identified by the Audit Commission as the cost that would result from delaying the introduction of an acceptable and accepted system of local government finance. Members of the Committee opposite who were responsible for the introduction of the poll tax and the chaos that it has caused, and for the huge losses to the public purse that have resulted from that tax—quite apart from the social unrest that it has stirred up—should be more aware than they appear to be of the figures that I have mentioned.
We say that it is possible to make an immediate move away from the poll tax and that it is not necessary to keep the poll tax for two years, as the Government propose. It is possible to undo the most damaging effects of the poll tax fairly rapidly and at the same time give adequate attention to producing a scheme of local government finance which will work and which will be acceptable.
Baroness Carnegy of Lour: The noble Lord has spoken about the cost of delay. Is he really saying that it would be just to resurrect valuations which were so different from one another and from the previous valuations? The most important point which my noble friend mentioned was the enormous rise in the value of some houses in comparison with others whose value has stayed still or hardly risen at all. That is where the injustice lies and that was the injustice which was revealed in Scotland. The noble Lord must not mislead us into thinking that a return to the old valuations, even for a very short time, could conceivably be just or acceptable. Is he saying that the Labour Party in government would do that?
Lord McIntosh of Haringey: I am sorry that the noble Baroness should wish to return to the panic which struck the Conservative Party in Scotland when it saw the effect of the revaluation there. Conservatives failed to see the point that changes in rateable values which took place over large areas of Scotland would be corrected by changes in the rate poundage demanded. They were in a complete panic because they did not understand and would not explain to the Scottish people the difference between a change in rateable value and a change in rate poundage. They did not explain that an increase in the rateable value of an area does not demand a single penny extra in local authority expenditure in that area.
Baroness Carnegy of Lour: The noble Lord cannot get away with that. He knows perfectly well that within a given area of local government there was an enormous increase in the rateable value of some houses while others had stood still or reduced in value. That was the problem and it would be enormously magnified in England now.
Of course I understand how rate poundage worked. I operated it for years, just as the noble Lord did. He has heard me say before that in the area where I live the value of some houses multiplied three times while others within the same area did not. That is what he is suggesting might happen in this country. It would be extraordinarily unfair, whatever he says.
Lord McIntosh of Haringey: In so far— and it is not very far—as the noble Baroness has a point, it is in her claim that the valuation is not being done well enough and does not reflect property values as it should. Later this evening we shall consider amendments which seek to deal with the laxity of the procedures being proposed in this Bill. The Government intend to privatise the valuation system. I wonder whether that is well understood. There is no provision anywhere for those who will do the valuation to he properly qualified. There is no provision that it should be done on a consistent basis as it would have to be if it were undertaken by the proper public authorities. If the noble Baroness is claiming that the inadequacy of valuation is the damaging factor, then that factor applies with extra force to the proposals which are made by this Government. However, the issue is much more profound.
I blame all Conservatives for the poll tax but I blame Scottish Conservatives particularly. Conservatives in the rest of the country will also blame Scottish Conservatives for the poll tax. Scottish Conservatives, faced with a revaluation of the rates, panicked. Their panic has driven us all to the desperate plight in which we now find ourselves. I shall gladly give way to the noble Baroness.
6.45 p.m.
Baroness Blatch: I am not intervening. I am replying to the amendment.
My noble friends Lord Renton and Lady Carnegy of Lour raised an important point. Defence being better than attack, the noble Lord, Lord McIntosh, chose simply to answer every question with an attack on yesterday. My noble friend Lord Renton posed a

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very simple question: are noble Lords opposite really saying that a return to the rating system would cost nothing? In reply the noble Lord, Lord McIntosh, said that it would cost nothing. I suggest that it would cost the ratepayers dearly, and not only Scottish ratepayers, who will not enjoy the prospect of returning to the rating system. The rating system has been declared by all, including the leader of the noble Lord's party, as unfair, out of date and discredited. Returning to a rating system is not a happy prospect. I believe that it would be costly. The people for whom it would be costly would be those who have to meet those very high bills.
The noble Lord criticised the present Government for the time it will take to bring in the new council tax. He said that we shall be lucky to bring it in by 1993. We intend to do so. The noble Lord said that it would take until 1994 at least. I suggest that the system which the noble Lord proposes is far more complex. The valuation will take much longer and will be much more expensive, and people will be faced with returning to the discredited rating system not for one year or two years but possibly for much longer than that.
The nature of the grant system for the council tax is a matter for the main council tax Bill and not for this Bill. Until we come forward with that Bill, which this Chamber will be able to consider in good time, it would be wrong to preclude using any information for purposes connected with grant distribution.
However, we have made clear that the present grant system should be amended as little as possible in order to accommodate the new system of local taxation. At present grant is distributed so that local authorities can finance spending at the standard level by levying a common community charge. For the council tax which we propose authorities in each area can finance spending at the standard level by levying standard taxable amounts fixed by the Secretary of State. There would be one amount across the country for a band A property, one for a band B property and one for a band C property, and so on. In that way authorities will be compensated for differences in their expenditure needs and for any variations in their taxable capacity.
In simple terms, couples living in properties in the same band anywhere in each country—England, Scotland or Wales —will face the same council tax bill before any rebate or discount which may apply if their authorities spend at the same standard level. Information about the banding of properties would be a vital tool to achieve that. To preclude its use would deprive us of the main basis for determining the level of taxable resources in each area.
The proposal that relative aggregate personal income in each area should be used in the formula would make no sense in our proposals. It would mean that properties in the same band but in different local authorities would pay different amounts of council tax even if those authorities spent at the same standard level. There can be no sensible justification for that and I therefore call on the Committee to reject the amendment.
Lord McIntosh of Haringey: It is a pity that in her response the Minister did not choose to give a reply which bears any relation to the amendments. That is not what the amendments say. The Minister, and her supporters on the Government Benches, seek to make much of the injustice of the earlier rating system even though it is absolutely clear that our intention is to return to the rating system only as a short-term measure in order to avoid the very much greater injustice of continuing with the poll tax for a year longer than is absolutely necessary.
We have to consider what is to be put in place of the poll tax in the longer term. I put it to the Committee that what the Government propose is more unjust than anything which could ever have arisen from the rates. They propose a property tax based on capital values. The Minister has made it quite clear that the same amount will be raised from a property in Hackney worth £165,000 as from a property in Virginia Water worth £1 million. That does not represent ability to pay, which is what we argued about when we first debated the poll tax when Lord Chelwood moved his amendment relating to ability to pay. I am sure that he would not have been satisfied to be told that a millionaire in Virginia Water is to pay no more than a council tenant in Hackney whose property is rated highly because of its location but who cannot afford to buy it under the right-to-buy procedures. The value of property in different parts of the country depends on factors very different from the ability of the tenant or owner to pay taxation.
Baroness Blatch: Does the noble Lord agree that the rating bill for the majority of people in this country would be higher than the present community charge if we were to return to the old rating system?
Lord McIntosh of Haringey: I certainly do not agree that under a proper system of local government finance, which includes local determination of the unified business rate—a matter we are not allowed to discuss in the context of this Bill—the rates raised from and determined by local people would be higher than they would be under the poll tax. Under the poll tax, because we try to take money from people who do not have the ability to pay, we spend hundreds of millions of pounds on extra collection costs. The Government admit that. It costs hundreds of millions of pounds extra for those who have to make up the deficit caused by those who cannot pay. Clearly, it is not because they will not pay; it is because they cannot pay. Any system which gets away from the shambles in which we have found ourselves since 1987–88 will be better and fairer than the present system.
Baroness Blatch: The noble Lord suggests returning to the rates immediately, pending changes. Does he agree that the majority of people returning to the rates, pending changes, would be worse off than they are at present when paying the community charge?
Lord McIntosh of Haringey: One cannot estimate what kind of rebate scheme one will have. The Government have insisted on a rebate scheme under which millions of people are required to pay 20 per cent., which they cannot afford, of 100 per cent., which

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it is recognised that they could never afford. It costs more to collect that 20 per cent. than it represents in revenue. We should like to table amendments to put the matter right. We should like an opportunity to put the matter right because the Government know that it must be put right. But the Bill is so drafted that we cannot put it right now. Neither the present system, which is patently not working, as the Government recognise, nor the proposed alternative, will be fairer than our proposals or the proposals of the Liberal Democrats. A local income tax would be much fairer than the Government's proposal. This is a panic compromise. It is designed to get away from the collapse of local government finance, brought about by the Government, without offending rich Tory voters. It will not work.
Perhaps I may now return to the amendment to which the Minister was studiously determined not to refer. The only just way of achieving a valuation—the only means of achieving what will be seen as a just valuation—is to have an individual valuation of each property. We have suggested how that can be done and how delay and injustice can be avoided. It is a matter of deep regret that the Government do not understand the significance of the proposal.
Lord Swinfen: Is not the noble Lord mixing up the capital value of property—in other words, what it would fetch on the open market—with the rateable value which is a theoretical letting value? The two values do not mix. In addition, am I not right in saying that, since the last rating revaluation, there are a number of appeals still outstanding, not only in Scotland but in England and Wales, which complicate the whole business? There will be appeals on new properties that have been built since the rating system was abolished, coupled with the appeals still left over from the old rating system which have not been settled because the process takes a long time.
Lord McIntosh of Haringey: The noble Lord, Lord Swinfen, should address his comments to the Government Front Bench because it is precisely the system proposed by the Government that will cause the difficulties he describes. It is precisely because the Government's system is based purely on capital sale values and not on notional rental values that the injustice that has been described will come about. If it is to work, a rating system must take more into account and must be tempered by consideration of people's ability to pay. If the noble Lord reads carefully what I have said and, perhaps more importantly, what the Government have said in reply, he will see that all his criticisms fairly and squarely come home to roost on the Government's proposals. They do not apply to our proposals. We shall certainly return to the matter on Report. I shall not be seeking the Committee's opinion. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 19:
Page 2, line 35, after ("valuation") insert ("with the purpose specified in subsection (4A) below").
The noble Lord said: In moving Amendment No. 19, I should like to speak also to Amendment No. 35 which is the substantive amendment. The proposal is designed to get away from the difficulty of the government scheme. I suspect that this is partly what the noble Lord, Lord Swinfen, was talking about. The danger is that property values will be used not just to set individual taxes but to distribute revenue support between authorities.
Baroness Blatch: I hope the noble Lord will forgive me for intervening. As I understand it, we have just dealt with Amendments Nos. 19 and 35.
Lord McIntosh of Haringey: I feared that that was the case. I was speaking to Amendments Nos. 18 and 28. That was why I did not understand the Minister's reply.
Baroness Blatch: I spoke to Amendments Nos. 18 and 28 which introduce individual valuation of domestic properties.
Lord McIntosh of Haringey: When the Minister rose to reply, I thought that she had jumped ahead of herself, and that is the case. I was still speaking to Amendments Nos. 18 and 28. I had not moved on to speak to Amendments Nos. 19 and 35. That may be the cause of the misunderstanding. There is no misunderstanding between myself and the noble Baroness, Lady Carnegy. We understand one another very well, although we disagree. However, I had spoken only to Amendment No. 18, as the Chair will confirm, and I did not seek leave to withdraw it until a moment ago.
Baroness Blatch: I understood that the noble Lord spoke to the amendment which is concerned with individual valuation of each property. I therefore responded to Amendments Nos. 18 and 28. He then spoke to another amendment which was concerned with valuation. That is the amendment which starts:
"A valuation carried out under this section shall be for the purposes".
I responded to that amendment, which was Amendment No. 35, in conjunction with Amendment No. 19.
Lord McIntosh of Haringey: The record will show that I did not move on from Amendment No. 18 to Amendment No. 28. If that had been the case, I would have had to seek leave to withdraw Amendment No. 18, and I did not do so until a moment ago. I fear that the Minister has got ahead of herself on her brief.
I should now like to speak to Amendment No. 19 which I have not moved previously. It is concerned with a different matter; namely, the use of property values as the resource base for local authorities. Under the Government's proposals, the only resource base which will be acceptable is that of property values. The trouble is that the Government now propose to return to the worst features of the rating system. I was drawn into the argument because of the way in which the Minister responded to my earlier amendments, not because of anything that I said when introducing the amendments. It brings back the issues of high capital values which are not related to the ability to pay and

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which were raised, quite properly, by the noble Lord, Lord Swinfen, and by the noble Baroness, Lady Carnegy, when they took part in the earlier debate.
The fundamental fallacy behind the Government's proposals lies in the fact that it is people, not houses, who pay taxes. For that reason it is necessary to have Amendment No. 35, which would provide:
"A valuation carried out under this section shall be for the purposes (and only for the purposes) of compiling lists differentiated according to prescribed bands of values … No use shall be made … in assessing the amount or distribution of revenue support grant between local authorities, except as part of a formula also reflecting the relative aggregate personal income of each local authority area".
This is precisely the argument that we anticipated in the previous debate. It is because the Government's methods are so crude, and because they incorporate a fundamental unfairness in capital values without any mitigation reflecting ability to pay, that we believe that these amendments are necessary, and indeed will protect the Government from itself. I beg to move.
7 p.m.
Baroness Blatch: Perhaps I may start by apologising to the noble Lord. I now understand what has happened. I in fact responded to Amendments 18 and 28. The debate then rambled on—if my noble friends will forgive me—and I came back. One query was about valuation and the other was about the use of valuation information, and I came back with my response to this amendment speaking to Amendments Nos. 18 and 21. Therefore, I would ask the noble Lord to accept my response on the use of information, and I repeat only the last part of that answer. To achieve this information about the banding of properties would, we believe, be a vital tool, and therefore the amendment should be rejected.
Lord McIntosh of Haringey: I accept and understand the difficulties that the Minister has had. These are related groups of amendments and I suppose that it would have been possible to have had a single cover—all debate for all of them. That was not suggested either by us or by the department because we wanted to try to keep the separate issues as clear as possible and to deal with one matter at a time.
The fundamental point that needs to be made about all the amendments in this series whenever it is suggested to us that it is going to be more expensive to have an interim rescue operation—which is what the return to the rating system in the short term would be—followed by the fairer system compared with the proposals of the Government, is that nothing, but nothing, can be as expensive to the public purse as the poll tax or its proposed successors. Nothing that results in a cost of collection more than twice as high as the previous system can be called just nor can justify calling the previous system unjust. Nothing which results in such a high level of non-payment not because of unwillingness to pay but because of inability to pay can be called preferable to going back, even on a short-term basis, to the rating system.
The system that we have now, which was introduced by this Government after hours of debate
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in this House, is patently, and is now admitted to be, the most unjust system of local government finance that has ever been entered into. These amendments may not go as far as we would wish because they are amendments to a narrowly-drawn Bill. However, they represent an attempt to go back in a considered way, without unnecessary delay, to a fairer system than the existing system, and to move as rapidly as possible to a system that is fairer than any of the existing systems or the system that is proposed.
It is a matter of deep regret that the Government do not understand the significance of what we are trying to do. This may be a matter that we shall wish to return to at Report stage, but in the meantime I beg leave to withdraw Amendment No. 19.
Amendment, by leave, withdrawn.
Viscount Astor: I beg to move that the House be resumed. In moving this Motion, perhaps I may suggest that the Committee stage begins again at five minutes past eight.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Rights of Access to Neighbouring Land Bill
Brought from the Commons; read a first time, and to be printed.

Human Fertilisation and Embryology (Special Exemptions) Regulations 1991
7.5 p.m.
Baroness Hooper Baroness Hooper rose to move, That the draft regulations laid before the House on 17th June be approved [23rd Report from the Joint Committee].
The noble Baroness said: My Lords, I beg to move that the draft order laid before the House on 17th June be approved.
The draft regulations now before the House will provide for two exceptions to the general rule that any person keeping or using embryos, or storing gametes (that is, sperm and eggs) may do so only in accordance with a licence from the Human Fertilisation and Embryology Authority.
During the passage of the Bill—now the Human Fertilisation and Embryology Act 1990—in the other place it came to the Government's attention that there were situations were embryos and gametes were kept or stored for purposes other than those involving infertility treatments and embryo research. For example, there would be a need to keep and examine embryos and gametes in the course of criminal investigations connected with enforcement of the legislation itself. Also, in some organisations, sperm may be stored for research or teaching purposes only. Unless exceptions were made for these situations the licensing provisions of the Act, which were designed to regulate the use of gametes and embryos in treatment

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services and embryo research, would have to apply. The new authority would be obliged to inspect and license all these places.
It is important to appreciate that the regulations would only permit exceptions in very limited circumstances, and will not allow people to evade the stringent controls laid down in the parent Act. Furthermore, because of the importance and sensitivity of these issues, they are subject to the affirmative resolution procedure, which allows Parliament the opportunity to consider them fully.
The first exception, which is set out in Regulation 2, relates to the keeping or examination of embryos and the storage of gametes in connection with offences under the Act itself. Section 39 of the Act gives members and employees of the Human Fertilisation and Embryology Authority power to take possession of any thing which they have reasonable grounds to believe may be required to be used in evidence in any proceedings for an offence. If this ever became necessary, the authority would ensure that among the people taking possession of the gametes and embryos there would be an expert, with knowledge about how such material should be handled.
Both the Government and the Human Fertilisation and Embryology Authority are very conscious of the implications of taking possession of embryos and gametes. In the case of embryos the authority will be dealing with a potential human life, and possibly an infertile couple's hope of a child. It is therefore vital to ensure that where embryos and gametes are kept in connection with an offence they are kept in proper conditions and examined only by experts in this field. For practical reasons we are therefore proposing—and these regulations provide—that these embryos and gametes should remain under the supervision of the authority. It will have knowledge of the experts working in the field, and will be able to identify where appropriate facilities exist.
The regulations then go on to specify several additional safeguards, of which your Lordships will no doubt be aware from reading the regulations. Once the investigation or proceedings for an offence are completed it will be for the HFEA, under whose supervision these gametes and embryos are kept and examined, to ensure that if possible they are returned to the incensed premises from which they came. For example, if the case is not proved, the gametes or embryos in question could be returned to the treatment centre and, if appropriate, used for treatment services.
I hope your Lordships will appreciate that the exemption is necessary in order to allow criminal activities to be properly investigated. The vast majority of doctors and scientists working in this field are responsible and dedicated people who welcome the new controls. We expect these provisions to be invoked only very rarely, if at all. Nevertheless, it is right that these carefully considered mechanisms and safeguards should be in place in case they are ever needed.
The Second exception relates only to gametes—that is, sperm and eggs—stored for purposes other than infertility treatment and embryo research. It does not
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apply to embryos. Embryos can be stored only under licence or in circumstances where an offence may have been committed. Therefore, it may be helpful if I describe the kind of circumstances in which Regulation 3 dealing with this exception would apply. For example, the exception would apply to a university laboratory carrying out research projects concerned with the locomotion of sperm; the development of pharmaceutical products aimed at enhancing the quality of sperm which has been thawed after cryopreservation; or a medical school using sperm to study cell structure. The regulations also contain important terms and conditions which apply to gametes stored under the exemptions. If it is brought to the attention of the police or the new authority that a centre which is exempted is not complying with the conditions set out in the regulations it will be liable to prosecution. On conviction, the individuals concerned could face up to two years' imprisonment or a fine or both.
The draft regulations have been drawn up after a period of full consultation during which interested organisations have been given an opportunity to express their views. Some of your Lordships may recall that copies of the consultation document were made available in the Printed Paper Office. In drawing up the draft regulations now before your Lordships we have considered very carefully the comments received. I hope the House will agree that they are both reasonable and comprehensive.
Moved, That the draft regulations laid before the House on 17th June be approved [23rd Report from the Joint Committee].—(Baroness Hooper).
7.13 p.m.
Lord Ennals: My Lords, I thank the noble Baroness for her very clear presentation of the case for these regulations and say that I totally support everything she has said. I believe these are the first regulations to be brought forward under the Human Fertilisation and Embryology Act 1990, and perhaps it would be appropriate to do two things. First, I thank the interim authority for the work it has done and, I believe, will continue to do until the end of this month. Perhaps the Minister can clarify whether or not that is the case. I know that the new Act comes into operation as from 1st August.
I should like to express the thanks of the House to the interim authority for the very fine job it has done under the leadership of Dame Mary Donaldson, who has been a tower of strength. At the same time, I should like to congratulate Professor Colin Campbell on his appointment as chairman of the new authority. The task that the authority has to perform is an important and sensitive one, first in understanding and preventing inherited disability and secondly in alleviating the misery of infertility, which appears to affect about one in eight couples. Infertility causes great stress and misery to an enormous number of people. Research into infertility goes side by side with treatment, and that is the pattern of development in the present work. Indeed, one reason for the Act was

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that treatment could not be improved without research and there would be no research without treatment.
As I understand it, when the main provisions of the legislation come into force on 1st August 1991 treatment, research and storage centres will have to comply with stringent licensing conditions and follow the guidelines set out in the code of practice published by the HFEA. It will provide for two exceptions as defined in the regulations to the general rule that any person keeping or using embryos or storing gametes—sperm or eggs—may do so only in accordance with the terms of a licence obtained from the HFEA.
On the occasion of this introduction of the first regulations perhaps I may put one or two questions to the Minister. If she is not able to answer them straight away I will of course be happy to receive a letter. First, on the research side, would she say whether the NHS reforms make any difference to the provision of infertility services? Will the trusts offer services to infertile couples as freely as other hospitals? Second, perhaps the Minister could outline how many organisations will be covered by the exemption in the regulations on the ground of research unrelated to the HFEA Act. Third, would the Minister comment on the need to include in the authority's reports details of the success rates of clinics? The Minister in the Commons referred to the authority's draft code of practice being presented to the Secretary of State and laid before the House. I wonder whether the Minister can give us any idea when that will happen. It will be of great interest to all those Members of the Committee who took part over many weeks in the debates on the Bill.
I conclude by warmly thanking the Minister for her presentation. I support the orders presented by the Minister to the House on this occasion.
Baroness Hooper: My Lords, I should like to thank the noble Lord for his comments and his welcome of the regulations. I thank him particularly for his remarks about the interim authority. I can confirm that that authority will be replaced by the new body on 1st August but that it is still in being at the moment. I can reassure the noble Lord by telling him that not only will the reforms make no difference to the way progress is made in this area but also that, because of the increased efficiency of the system the efforts made will be more effective. So far as the draft code is concerned, it is under consideration at the moment and I hope will be laid before Parliament very shortly. If I can add to those remarks in any way I shall write to the noble Lord. I would merely say once again that the regulations before your Lordships deal in a sensible, practical way with two particular circumstances and are wholly within the spirit of this important Act.
On Question, Motion agreed to.

Access to Personal Files (Social Services) (Amendment) Regulations 1991
7.20 p.m.
Baroness Hooper Baroness Hooper rose to move, That the draft regulations laid before the House on 17th June be approved [23rd Report from the Joint Committee].
The noble Baroness said: These amendments are minor and technical. They are required to take account of the establishment of National Health Service trusts. I hope, therefore, that your Lordships will readily agree to them. It may help if I explain a little of the background to the regulations. The Access to Personal Files (Social Services) Regulations 1989 are made under the Access to Personal Files Act 1987. They deal with an individual's right of access to personal information held on local authority social services department files. Incidentally, they do not deal with computerised information, because that falls under the Data Protection Act.
At the moment the regulations refer only to health authorities as the employing bodies of the health professionals providing the information, but with the establishment of NHS trusts—which also employ health professionals—the legislation needs to be amended to extend the same provisions to circumstances in which an NHS trust provided or now holds the medical records concerned. It is a technical amendment. It will not add to the workload of the local authority. It merely means that local authority requests for guidance on disclosure in some cases will be differently addressed.
Before laying the regulations we consulted bodies representing local authorities as required by the Access to Personal Files Act. I ask the House to agree to these minor technical amendments. I beg to move.
Moved, That the draft regulations laid before the House on 17th June be approved [23rd Report from the Joint Committee].—(Baroness Hooper.)
Lord Ennals: My Lords, again I thank the Minister for her explanation. From my standpoint there is no need to delay the House on what, as she said, are quite technical amendments. She will know that I have shown no great enthusiasm for NHS trusts and nothing that I have seen lately is likely to change my mind, although I am ever open to new inspiration.
This regulation is a formality made necessary by the creation of NHS trusts. If there are NHS trusts, we have to make certain that this is taken into consideration. This regulation was approved in another place without debate. I do not intend to detain the House any longer.
On Question, Motion agreed to.

Motor Vehicles (International Circulation) (Amendment) (No.2) Order 1991
7.23 p.m.
Earl Howe Earl Howe rose to move, That the draft order laid before the House on 20th June be approved [23rd Report from the Joint Committee].
The noble Earl said: My Lords, I beg to move that the draft Motor Vehicles (International Circulation) (Amendment) (No. 2) Order 1991 be approved.
The amendment is necessary because the Motor Vehicles (International Circulation Order) 1975, as amended, at present conflicts with a Community regulation which has direct effect. Council Regulation 4059/89/EEC, agreed at the EC Transport Council in December 1989, provides for a transitional scheme allowing cabotage to take place within member states under a limited quota of cabotage authorisations. Cabotage may be defined as the carrying out of domestic transport operations by non-resident hauliers. The scheme, which represented a significant breakthrough for the United Kingdom, came into force on 1st July 1990 and will last until December 1992, when it is to be replaced by a definitive cabotage regime. Freedom to carry out cabotage is an important element in the liberalised single market that the UK wants to see in place by 1st January 1993.
The regulation lays down five specific areas where the performance of cabotage operations is subject to the laws and regulations of the host member state. These are as follows: rates and conditions governing the sport contract; weights and dimensions of vehicles; requirements relating to the carriage of certain categories of goods; driving and rest time; and VAT on transport services. In all other areas the laws of the member state where the vehicle is registered apply.
Thus with the exception of VAT on transport services, an operator carrying out cabotage is free of vehicle tax, vehicle excise duty or any other tax upon the use of a goods vehicle as long as he is operating under a cabotage authorisation in pursuance of the regulation.
Under the Motor Vehicles (International Circulation Order) 1975, however, visiting foreign hauliers in the United Kingdom are exempt from paying vehicle excise duty for a maximum of three months. If they stay any longer than three months, even if they are operating under one of the new cabotage authorisations, the order provides that they become liable to pay duty.
The provisions of the 1975 order are overridden to the extent that they are inconsistent with the directly applicable EC cabotage regulation, which, as from 1st July last year, has been part of UK law. However, it is a treaty obligation to ensure that there are no discrepancies between Community law and domestic legislation. An amendment therefore needs to be made to the order so that explicit mention is made of transport operations which are excluded from paying vehicle excise duty by virtue of being covered by a valid cabotage authorisation.
I trust your Lordships will agree to this minor amendment. It is needed to remove the inconsistency from the present legislation and to make it clear to the reader that foreign hauliers, temporarily operating under a cabotage authorisation in this country, are not liable to pay vehicle excise duty. I commend the order to the House.
Moved, That the draft order laid before the House on 20th June be approved [23rd Report from the Joint Committee].—(Earl Howe.)
Lord Underhill: My Lords, I thank the noble Earl for his explanation of this order, without which it would have seemed a little confusing to the layman. He said that the regulations took direct effect from 1st July last year. Will he confirm that they have been fully implemented in the United Kingdom from that date? The order was dated 21st December 1989. Perhaps he can explain why it has taken 18 months to introduce an amendment to the 1975 order into this Parliament.
Lord Shepherd: My Lords, perhaps I may ask a very short question. Following my noble friend's point that the order was dated 1989 and we are only now implementing it, can the noble Earl tell us whether other countries within the Community are yet to fulfil the obligations of the agreement of 1989 or whether we are the last to bring about ratification?
Earl Howe: My Lords, I thank both noble Lords who have spoken. The provisions of the new order were implemented in full by the United Kingdom and other countries in the EC with effect from 1st July last year. It is quite true that it would have been tidier and strictly more correct to have brought this order before Parliament somewhat sooner than this. Part of the delay is attributable to the need to obtain precise clarification from Customs and Excise about the force of the temporary importation regulations 1961, on which the regulations contained in the 1975 order partially depend.
Whatever degree of promptness may be desirable in a perfect world, the central point here is that the law as it applies to EC hauliers is not in the least affected by the order that we are considering. The law has been firmly in place since 1st July 1990. The need for the order arises solely because a piece of current UK legislation makes no allowance for an EC Council regulation which partially overrides it. If discrepancies of this kind arise, it is necessary to eliminate them and make our rule book completely clear. In that sense what we are discussing is a technical amendment.
On Question, Motion agreed to.
Baroness Hooper: My Lords, I beg to move that the House do now adjourn during pleasure until five minutes past eight.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.29 to 8.5 p.m.]

Local Government Finance and Valuation Bill
House again in Committee on Clause 3.
[Amendments Nos. 20 and 21 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 22:
Page 2, line 39, after ("Wales") insert ("solely").
The noble Baroness said: I shall speak also to Amendment No. 33. Although they are not in the same group Amendments Nos. 23 and 34 represent a fall-back position.
Amendments Nos. 22 and 33 seek to ensure that valuation remains in the hands of the Inland Revenue staff, who are skilled and experienced. If they have been able to work and enjoy public confidence for so long as regards the concept of notional rents they will have less difficult and laborious work as regards the concept of capital value.
On Second Reading the Secretary of State indicated that he expected to involve private sector valuers. We on this side of the Committee have fears about what that might mean. The important point is that the poll tax has destroyed confidence in the integrity of local government finance. There is no doubt about that and it is a point to which we may well return. Therefore, it is extremely important that that integrity is restored. That will be done only if people have every confidence in the professionalism, objectivity and training of the valuation staff. The people who have the skills are the staff of the Inland Revenue.
We should like the Minister to comment on what is meant in this context by "professionals". If it is the Government's determination not to keep valuation within the hands of the Inland Revenue but to go outside, does the Minister mean by that term local estate agents, the office boy or more trained people? Following the enactment of the Bill will measures be taken to prevent the private sector valuers handling both the initial valuations and appeals in respect of the same property? If one employs private sector valuers possibly drawn from estate agencies what assurances will there be that they will not have a vested interest in pushing up property prices knowing that at the point of sale their commission will increase accordingly?
In Amendments Nos. 22 and 33 we seek to restore confidence in the process of valuation. Without that confidence we can see appeals proliferating. We believe that the best way to do that is to keep valuation in the hands of the staff of the Inland Revenue, who have expertise, objectivity, professional training and an ability to make comparisons across the country through their professional bodies. I beg to move.
Viscount Astor: Would it be convenient to speak also to Amendments Nos. 23 and 34 as the subjects are related?
Baroness Hollis of Heigham: Although I indicated that there was an argument for grouping them together I still have a faint hope that the Government will accept Amendments Nos. 22 and 33. In that case Amendments Nos. 23 and 34 will not be necessary. They represent a fall-back position and for that reason they have been grouped separately.
Viscount Astor: These amendments seek to prevent the Commissioners of Inland Revenue appointing persons who are not in the service of the Crown to assist them in the valuation. We intend to use the best professional expertise to undertake the work involved in allocating properties to bands. We shall use the
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private sector where it can use its skills to do a speedy, cost-effective job. By the same token we shall use the public sector when it can do a speedy, cost-effective job. The reason for that is simply to get the best deal for taxpayers. It would be wrong to rule out the opportunity of using the private sector where to do so would provide better value for money.
I can, however, reassure the Committee that we shall ensure that persons who do not have the appropriate expertise and qualities to undertake a sound and cost-effective job are not involved. There are a variety of jobs to be done. All offers of assistance will be considered and decisions will be taken on the most cost-effective use of all the resources available.
These amendments seek to stifle our quest for using the best expertise in a cost-effective way and therefore I urge the Committee to reject them.
Baroness Hollis of Heigham: I thank the Minister for that reply. I am slightly alarmed that his emphasis was not on professionalism, objective skills and established standing. His emphasis was on words and phrases like "speedy", a "cost effective job" and the "best deal for taxpayers".
Viscount Astor: I said "appropriate expertise" and I must stress that. That must be grouped with cost effectiveness. However, the first criterion must be "appropriate expertise".
Baroness Hollis of Heigham: In the light of that, I am happy to withdraw the amendment. I shall press the Minister further as regards the next amendment.
Amendment, by leave, withdrawn.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 23:
Page 2, line 40, after ("Revenue") insert ("or persons appointed to assist them who are members of the bodies specified in subsection (4) below").
The noble Baroness said: We are aware that as regards the valuation of houses, there will be the same anxieties which have been raised by my noble friend Lord McIntosh about the precise value of one property compared with other properties in the same street. That will lead to two questions in the eyes of most taxpayers. First, they will wish to know who is carrying out the valuations; and secondly, they will wish to know whether they have a right of appeal. My noble friend Lord McIntosh has already argued that without individual valuations, both questions will have an additional edge.
We believe also that if the valuations are not carried out by those with the appropriate professional expertise—those belonging to a professional body whose performance can be monitored—their integrity and reputation may be called into question by members of the public. If the Minister will give an assurance that the Government expect that only those who are members of the Royal Institution of Chartered Surveyors or members of the Institute of Revenues, Rating and Valuation will be employed, then I shall withdraw the amendment. If he cannot give such an assurance, then I shall wish to develop my case further.
Viscount Astor: The Bill provides that the valuations shall be carried out by the commissioners of the Inland Revenue in England and Wales and local assessors in Scotland. They will ensure confidence in the valuations and consistency across the country. These amendments seek to require that the only people who can help with the valuations are members of the Royal Institution of Chartered Surveyors or members of the Institute of Revenues, Rating and Valuation. We are determined to use the best professional expertise available to carry out the allocation of properties to bands in the most cost effective way and in a manner which will deliver the introduction of the council tax in April 1993. We are naturally considering the role of members of both the RICS And the IRRV.
It cannot be right for us to rule out asking people who are not members of those bodies to assist in the task. However, I assure the noble Baroness and the Committee that we shall rule out persons who do not have the appropriate expertise and qualities to undertake a sound and cost effective job. That is an important point.
Baroness Hollis of Heigham: Will the Minister be kind enough to tell the Committee what he means by "appropriate expertise"?
Viscount Astor: We are talking about expertise in valuation. That expertise must be looked at very carefully. At present I cannot give the exact criteria which may be used but I repeat that all the people used must have the expertise and qualities to undertake a sound job. All offers of assistance will be considered and decisions will be taken on the most cost effective use of the resources available. I repeat that the valuations will be carried out by the commissioners of the Inland Revenue in England and Wales and by local assessors in Scotland. They will ensure confidence in the valuations.
Baroness Hamwee: The words, and more particularly the tone, of the Minister indicate that the Government cannot tell us what will be the necessary expertise and qualifications, either professional or otherwise, of the people who will be involved in the exercise. I believe this is a panic measure to pull in anyone who may be able to meet the criteria.
I am in two minds as regards these amendments. I realise the need to get on with the exercise and I am not accusing anyone of making the wrong decisions for the wrong reasons. However, I fear that the wrong people may be used in order to speed up the exercise. I do not believe that the Minister is able to give us any more assurances at present. However, I hope that he will realise that Members on the Benches opposite feel seriously about this matter. It is not only a matter of expertise; it also concerns professional confidence. One may have as a neighbour an estate agent who may have the appropriate expertise. However, one may be very worried about his vested interest in arriving at the right valuation for properties in his area.
Viscount Astor: This is not a panic measure, but we must not rule out drawing on all available resources
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and people. It would be a great mistake to rule out many people who could assist in this exercise. I urge the Committee to reject the amendment.
Baroness Hollis of Heigham: Like the noble Baroness, Lady Hamwee, I am very unhappy about the Minister's words and the tone of his reply. He gave the impression that the Government will be grateful for any help they can get and hope that it will be qualified. That sounds to me to be far too vulnerable.
8.15 p.m.
Viscount Astor: I did not say that I hope that they will be qualified. I said that we shall be looking only for qualified help. That is totally different.
Baroness Hollis of Heigham: I accept the noble Viscount's refinement but when I asked him to explain what he meant by "qualifications" he was unable to give a definition. Clearly, they are not qualifications objectively perceived or he would have given me a definition. Therefore, it will be a subjective assessment as to whether or not the people used are qualified. Given my unease and the unease registered by the noble Baroness, Lady Hamwee, as regards vested interests and lack of confidence in estate agents' judgments—we have all had experience of gazumping and so on—I am fairly sure that we shall return to this matter on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 24:
Page 2, line 45, at end insert:
("(2A) In carrying out the valuation, the Commissioners or local assessors (as the case may be) shall furnish to any occupant of domestic property which is subject to valuation information relating to—

(a) the process of valuation;

(b) rights of appeal in respect of an individual valuation;

(c) rebates and discounts, including rebates up to the full amount that would otherwise he payable in respect of certain persons following amendment of the Social Security Act 1986").

The noble Baroness said: This is a highly virtuous amendment which will ensure that householders receive information about the process of valuation, the right of appeal and rebates. Essentially it is a right-to-know amendment. It aims to ensure that people know of the judgments entering into their local taxation.
Following the Widdicombe Report, the Government rightly required local authorities to send out the fullest information about their budgets. The Government laid down in considerable detail what information should be contained, in what form it should be laid out and even the size of paper on which the information should be contained.
Similarly, local authorities and government have worked together fairly successfully to ensure the widest possible knowledge of housing benefit. People should know how budgets are arrived at by means of the information going out with poll tax budgets. It is important that they should know how the relative share of their payments is arrived at; in other words, the valuation and what considerations enter into it.

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Therefore we are asking, as the first part of this amendment indicates, that all members of the public who are paying bills should be eligible for information regarding the process of valuation. The share that they pay and how that figure is arrived at is an important piece of information, as is the budget of the local authority.
Secondly, the amendment asks for a right of appeal. Given that valuation is to be street by street and, as we heard in previous discussions, not necessarily by people whose integrity is beyond dispute—whether it is the Inland Revenue or members of a professional chartered body—it will be important as a way of restoring confidence in local government that people know what the appeal machinery will be. Preliminary research from the Paisley college suggests that 25 per cent. of all valuations will be in the top or bottom 5 per cent. of bands; in other words, at the edges of the bands. There will therefore be considerable interest in seeing on which side of those bands properties fall.
Thirdly, the amendment seeks to circulate information about rebates and the right to 100 per cent. rebates. Obviously the amendment will date from April 1993. We hope—and it may be possible to return to this at Report stage—that the Government will consider the abolition of the 20 per cent. contribution from April 1992.
We all know that the poll tax has been brought into disrepute for many reasons, but primarily for two. First, it was perceived to be unfair and, secondly, it was seen to be difficult to collect. The 20 per cent. rule was responsible for both of those states. By requiring students, single parent families, elderly pensioners and the infirm to contribute 20 per cent., irrespective of their means, was seen as being profoundly unfair and income support levels did not for the most part protect people from that change. The 20 per cent. contribution also brought the poll tax into disrepute over and above the fact that it was unfair and it contributed to the administrative chaos of poll tax. The 20 per cent. has become uncollectable.
In an authority like my own—Norwich—25 per cent. of the population are on the 20 per cent. payment scheme—students, the unemployed, women carers, and the like. Half of those people move within a year and many students move perhaps twice a year. Every time a payer moves it takes six letters, all of them required by government and each costing £2 or £3 a time, to register a single change of address. If the payer moves twice it doubles the amounts. If arrears have to be chased on a couple of payments, let alone take people to court for liability orders, the costs soar.
As the Audit Commission reported, and as my noble friend Lord McIntosh said, the 20 per cent. payer pays on average £6, yet it costs £15 to collect that sum. The more dutiful the local authority is in chasing arrears and taking people to court, the more losses it incurs. That is before taking into account the legal burden of 4.5 million summonses and 3.2 million liability orders, of which barely 200 have so far reached the stage of a means assessment by the courts which themselves are breaking down under the strain.
In an authority like Norwich one-third of our soaring poll tax collection charges go in chasing the 25 per cent. of the population who are supposed to pay 20 per cent. but who contribute barely 5 per cent. to total revenue. We do not want to be told by the Minister, as on previous occasions, that everyone must contribute, however modest their means. The Secretary of State made clear that he does not share that belief and that, given household arrangements, all contribute as of now. I am confident that the Minister now shares the view of the present Secretary of State and we welcome that embodiment in the new tax from 1993. We are asking that that scrapping of the 20 per cent. rule should be introduced as quickly as possible and preferably from April 1992. Every local authority treasurer wants it and every local authority association wants it. The Secretary of State entirely accepts the principle and we know that we could introduce it very speedily indeed.
I wonder whether Ministers fully appreciate the damage done to the integrity of local government finance by the 20 per cent. rule in particular and the poll tax in general. If we are to establish a widespread perception that local authority taxes are reasonably fair and collection reasonably efficient, we shall have the Minister's support for the amendment. I beg to move.
Baroness Hamwee: Perhaps I may briefly speak to the amendment. The objectives identified by the noble Baroness, Lady Hollis, are those of which I am sure the Government approve; namely, an endeavour to provide the best value for money and not to waste money, quite apart from the fairness and unfairness arguments that have been quite rightly put forward. Many local authorities are frustrated at the amount of time, energy and manpower wasted on this exercise.
Baroness Blatch: I hope that I may be forgiven for being confused about the way that the noble Baroness responded to the amendment. The amendment requires information relating to the process of valuation, rights of appeal, rebates and discounts. It says nothing about scrapping the 20 per cent. rule or the way in which the community charge has worked. It relates to the supply of information to people. I believe that the amendment is premature and perhaps I may explain the position.
The amendment seeks to require the Commissioners of Inland Revenue and local assessors to supply information to any occupant of domestic property relating to the process of valuation, rights of appeal and rebates and discounts. I must tell the Committee that we are committed to ensuring that the council tax is properly understood by the public and that they are aware of the process of valuation, their rights of appeal and their eligibility for rebates and discounts. But I must also tell the Committee that such matters as right of appeal, rebates and discounts are for the main Bill which we propose to introduce in another place in the autumn.
I am sure, however, that the Committee wish me to place on record that there will be a full procedure for appeals. We are now considering all the points put to us during the consultation period about this and many

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other matters connected with the council tax. When we come to consider the machinery of appeals in this Chamber we will no doubt be in a much better position to discuss the sort of information occupiers of property will need in order to exercise their rights of appeal.
I am sure also that Members of the Committee wish me to place on record our intentions for how the rebate system will work. We propose that for individuals or couples on income support, or with equivalent levels of income, rebates will meet 100 per cent. of their liability to the council tax. There will be no minimum contribution. As with other benefits, we envisage that people on incomes above the income support level will contribute on a sliding scale. Claimants will have access to the full range of information that is available to them for other benefits. But again we can consider the details when the main council tax Bill comes before this House.
There is also the question of discounts. We have proposed a system of personal discounts. Households with two or more adults would pay the basic council tax for their property. Single adult households would pay less through a personal discount and some households would receive two discounts. Where the first or second adult in a household is in one of the categories that are now exempt from the personal community charge that person will give rise to a discount. We also propose that where the first or second adult in a property is a student, student nurse, apprentice or youth training trainee, each will receive a full personal discount. The details will be in the main Bill. I call on the Committee to reject the amendment.
Baroness Hollis of Heigham: I am happy to have the assurance of the Minister, as I am sure we all are, that the Government are at one with us in seeking to ensure that the information is widely spread.
It is important that the amendment should be tabled at this stage—I go back to a point raised by other Members of your Lordships' Committee tonight —because the integrity of local government finance has been extremely damaged by the passing of the poll tax legislation. Just five years ago only 2 per cent. of rates went uncollected. People automatically expected to pay. There was no question about that and any arguments concerned the precise nature of the budget not its mechanism. As a result of the poll tax, particularly the 20 per cent. rule and arguments regarding who is eligible to pay, that integrity has been destroyed. Something that took 50 years to build up has gone in two years. The figures that I had just a couple of months ago indicate that 40 per cent. of all adults were in debt to their local authority, sometimes for only one or two payments but sometimes for very much more. That damage to the automatic assumption of integrity in the local government financial system has been severely imperilled. We must restore that integrity if local government is ever to run smoothly and properly again.
The amendment is tabled to ensure that people are provided with adequate and proper information about valuations, appeals and rebates, including full rebates. We hope for some kind of undertaking from the Minister that we can perhaps introduce full rebates
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earlier rather than later to make amends for the chaos that we continue to face, or go some way towards meeting it. We may wish to come back to the matter at Report stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
8.30 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 25:
Page 3, line 1, at beginning insert ("Subject to subsection (1A) below").
The noble Lord said: In moving this amendment I shall speak to my Amendment No. 32. I also understand that it is for the convenience of the Committee if I speak also to Amendment No. 30 standing in the name of the noble Lord, Lord Gisborough. The issue is summarily called "regional banding" and it attracted a great deal of attention at Second Reading, particularly through the speeches of the noble Lord, Lord Gisborough, and the noble Baroness, Lady Flather, from the Government Benches.
I confess that in a purist way I was not very enthusiastic or supportive of those amendments. I took a view rather similar to that which Mr. Nigel Lawson expressed in an article in the Daily Telegraph on 4th March this year. He said:
"Nor, of course, as some have subsequently alleged, would it"—
that is, a local property tax based on capital values—
"penalise those who live in localities where property values are particularly high. For the greater the tax base in any locality the lower would be the percentage tax required to raise the revenue that is needed".
That is the purist's position and, on the whole, that was the view I took at Second Reading. However, I have become convinced, from looking at the details of what the Government are saying about their proposed council tax, that that will not be the case. There will be a great deal of injustice caused by the lack of any positive effort such as we propose in Amendment No. 32, to,
"ensure that there is broadly equitable distribution between regions of the burden of local taxation".
There are three reasons for that in increasing order of importance. First, there is the crudeness of the seven-band system itself and the fact that so many people with very different types of property will find themselves in the same band. Therefore that escape route, if one can so describe it, between rateable value and rate poundage will no longer be available.
Secondly, there is the problem of gearing. The fact that business rates have been taken away from local authority control means that now 86 per cent. of local authority expenditure is in effect determined by local government. In turn that means that for every pound that a local authority wants to spend above its fixed standard spending assessment, it will have to raise £7. Thirdly, and most important of all, there is the indication that the Government are going to use house prices as the basis for setting the standard spending assessment.
I listened as carefully as I could to the Minister's explanations earlier this evening about that matter

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and I am still unconvinced that the Government are going to avoid that trap. If they fall into the trap of using house prices —in other words, the basis of the council tax—as in turn the basis for determining the resources element of a local authority's budget, in effect it will be pulling itself up by its own bootstraps. Then we fall into the trap that we talked about in relation to Hackney, where there are relatively high prices for houses because of the location, but people are living in those houses who will never have a hope in hell of buying their own houses under the "right to buy" system if, for example, they are council houses. Under any criterion of ability to pay, they would certainly fall way below what would otherwise be possible or reasonable.
That is the strength of the argument used by the noble Lord, Lord Gisborough, and the noble Baroness, Lady Flather, when she spoke about the differences between Windsor and Maidenhead on the one hand and Slough on the other. That is the extent to which it has become clear that the version of the council tax proposed by the Government will not achieve justice. Something will have to be done to ensure, again in the words of Amendment No. 32,
"a broadly equitable distribution between regions of the burden of local taxation".
I am sorry that my amendments are more wordy than the admirably brief amendment of the noble Lord, Lord Gisborough, but I believe that we are a little more explicit in what we are seeking to achieve, although I accept that we are seeking to achieve the same thing. I hope that one or other of the amendments will find favour with the Committee. I beg to move.
Lord Gisborough: As has already been stated, the widely recognised disadvantage of any tax based on capital values is that it hits disproportionately people who live in areas of high house prices. Just because someone lives in an area of high property values does not mean that he has a high disposable income. On the contrary, it means that he is likely to have higher mortgage repayments to meet along with higher living expenses as well as the example which was given a moment or two ago.
Thus, wherever one lives in England the bands will be the same. In areas with high property values people will be paying more whatever type of property they live in. In areas of high house values, such as the South East, the great majority of people will be in the top band, whether they have a small detached house or a duke's castle. It will invite the accusation of unfairness — the very cry that did so much to destroy the credibility of the community charge. By having national banding the Government are creating their own ambush into which they are determined to walk.
However, although residents in London and the South East will pay more, they will not get a higher standard of service. That is because the more a council can raise through the council tax, the less government grant it will get. Residents in London and the South East will be paying more for a standard level of
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service, and the extra they pay will in effect go towards subsidising the level of services enjoyed by residents in other parts of the country, which will include me.
That does not seem fair, and regional banding of the valuation will avoid such an anomaly. That is because the bands will be based on average regional house prices and people living in similar properties will fall into similar bands wherever they live. A household in London in a one-bedroom flat will pay roughly the same as a similar household in, say, Manchester, if its local council provides a standard level of service.
In addition to being demonstrably fairer, regional banding will also increase accountability, which is a key objective in the Government's reform of the local government finance system. If taxpayers can expect to pay the same for a standard level of service wherever they live, it will be easy for them to see whether their local authority is being efficient in delivering services. Under national banding, however, even the most efficient London boroughs will have to charge their residents more because house prices are higher than the national average. That blurs accountability.
Regional banding has one other significant advantage over national banding, in that it will avoid the necessity for periodic revaluation. The need for revaluation under the rating system was a key element in its unpopularity and the necessity for a national revaluation was the main impetus behind the decision to reform the local government finance system which led to the introduction of the community charge.
There are huge regional fluctuations in the housing market year on year. For example, between 1987 and 1991, house prices in London increased by just 6 per cent. compared to 34 per cent. in the UK as a whole and 84 per cent. in the North West region. Regional fluctuations of this magnitude mean that, with one single banding range for England, houses will have to be revalued regularly as they move into higher bands.
With regional banding that problem will be avoided. As regional property markets fluctuate in relation to one another, the regional bands will move correspondingly. The only time that there will need to be revaluations will be when the prices of certain houses within a region increase or decrease relative to houses within the same region. That is likely to be a much less common phenomenon, and, anyway, the effects of the revaluation will be localised and will be much more readily understood.
Finally, regional banding preserves all the fundamental principles of the council tax, but mitigates the disadvantages inherent in any tax system based on the capital value of properties. Getting the basis of valuation for the council tax right is the key element in guaranteeing its successful introduction and ensuring that the new system stands the test of time.
Baroness Hamwee: Like other Members of the Committee I support the amendment, but not with a huge degree of enthusiasm. It is promoted by the London Boroughs Association, which is Conservative-controlled. By any standards I do not believe that it can be described as a hotbed of radicalism. Therefore, I hope that the amendment will

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be considered seriously, with the anxieties of the association being taken to heart. The noble Lords, Lord Gisborough and Lord McIntosh of Haringey, have said much of what I wanted to say and I shall not repeat it, given the hour. Perhaps I may mention my own borough of Richmond, not because it is the best and nicest borough, but it is one where it is considered that everyone is rich and everyone lives in a big house and can afford the tax. That is not so.
Among the most salutary experiences that I have had in local government was attending local meetings at the time of the introduction of the poll tax. A resident said, "I'm going to have to break the law. I've never broken the law in my life, but I'm not going to be able to cope with the poll tax". I fear that that experience will be repeated with the new council tax. I am told that in my own borough only I per cent. of homes are likely to fall into the lowest band, with 34 per cent. in the highest band. That is not because people can afford to pay the tax but because of the prices of houses in our borough in London and the South East, as the noble Lord, Lord Gisborough mentioned. The LBA's figures show that under the national banding scheme about 31 per cent. of houses in greater London would fall into the top band, whereas under the scheme that the LBA is promoting only some 15 per cent. would fall into the top band. I think that those figures are worth taking to heart.
Baroness Blatch: These amendments give me another opportunity to explain why the Government have proposed that there should be national rather than regional banding for the new council tax.
First, I should like to say a few words about the community charge. We have proposed that the community charge should be replaced by the council tax because many people were not persuaded that the community charge was fair. Many people considered that there should be a reflection of people's circumstances in the bills they paid.
The principle underlying the community charge was that unless one was entitled to a rebate or reduction one should pay the same bill whatever one's circumstances and wherever one lived in a district or wherever one lived in the country. Differences in circumstances would be catered for in national taxation and especially in income tax. However, the community charge was, as I said, not perceived to be fair arid people thought that property was a good basis for local taxation.
Even though property does give a good basis for local taxation people did not want a return to the rates with all the unfairness of that system which we got rid of in 1989 for Scotland and 1990 for England and Wales. We had no desire to return to a system which penalised those who sought to improve their property and which, even more importantly, led to demands for disproportionate sums, often from those who could ill afford to pay. Such people were often pensioners with modest means living in the family home they had built up over many years. We did not want a return to the distress that the rates caused such people.
We thought long and hard before coming up with our council tax proposals. We believe that they meet all the concerns which led to the perception that the
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community charge was not fair and which discredited the rates. Our proposals are for a banded tax based on property values. Properties with a similar value would be in the same band. The tax would be based on the readily comprehensible principle that if a council spent at the standard level then a couple living in a property with the same value would face the same council tax.
Of course, that means that those in properties where values are high pay more. I do not duck that issue. Indeed it is in that way that we reflect the individual circumstances which were not taken into account in the community charge. I believe that is the right approach.
However, there is a vital further ingredient to our proposals, and that is the maximum difference of two-and-a-half times between the bills faced by properties in the first band and those in the seventh band. This will mean that sums will not be demanded out of proportion to the circumstances of the individuals concerned. That will be true both within regions and between regions.
It has been suggested that our proposals require Londoners in particular to pay more than their fair share. Let me tackle that accusation head on. Our proposals are designed to ensure that everyone pays their fair share, no more and no less. Before we came forward with our proposals we considered the position of London in great detail and are satisfied that we have achieved a fair deal for residents in the capital. What our proposals mean is that in any street a detached house with a high value is likely to pay more than a flat with a low value. We believe that is fair.
It is perhaps at this very local level that one can most clearly see the foundation for our proposals but I should like, if I may, to consider how the logic carries through to individual districts, regions and the whole country.
In any borough those in a three bedroom house in an attractive location next to the common or on the heath for example, are likely to pay more than those in a three bedroom semi-detached house in a much less attractive location; perhaps, for example, backing on to the bus garage, the gas works, or a railway line.
The same logic applies across London. In boroughs like Kensington and Chelsea, or Barnet, where prices are generally high, the average property is likely to face a higher tax than in boroughs where prices are generally lower, like Haringey or Tower Hamlets.
Within the South East the average tax in the Medway towns or in East Kent will be less than in Surrey; and across the country in high priced areas the bill for an average property will be more than in low priced areas for a standard level of service. On the basis of our estimates the bill for an average property in Rochester, in Medway in the South East, will be low; about the same as Middlesbrough in the North. The bill for an average property in Enfield in London will be at about the level of the national average, and about the same as Blackpool in the North. The bill for an average property in Tunbridge Wells in the South East will be above average, and about the same as Harrogate in the North.

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These differences reflect differences in circumstances between those areas which are reflected in house prices. In short, anywhere in the country someone with a home valued at, say, £50,000 will face a lower bill for a standard level of service than someone with a home valued at, say, £150,000.
Regional banding would mean that economic circumstances, as reflected in house prices, would not be reflected in the bills people pay. Regional banding would mean that those in the North with a property which was valued at a similar level to one in the South would pay more. At worst, this amendment is about special pleading for London. A resident of Middlesbrough would pay more than one in Rochester; a resident of Blackpool would pay more than one in Enfield; and a resident of Harrogate would pay more than one in Tunbridge Wells.
We do not believe that the public would perceive it to be fair that a resident of Harrogate living in an average house for that town valued in Band E and a resident of Tunbridge Wells living in an average house, similarly in Band E, should pay more simply because he lived in the North rather than the South East.
The anomalies of regional banding would be particularly stark at the boundaries between regions. For example, on the boundary between the South East and the South West an identical house, valued at the same level, in a Hampshire village would face a substantially lower bill than its neighbour in a Wiltshire or Dorset village.
To sum up, the effect of regional banding is to force areas where properties are generally lower priced to pay more. At the margin, it means that identical properties with identical values can pay different amounts. Of course, the Bill in its current form does not preclude regional banding and we shall consider very carefully all the points put to us on this issue before finally deciding the pattern of bands. However, I have to say that we are not convinced that regional banding would be fair.
Before I conclude I should like to refer to something that the noble Lord, Lord McIntosh, has said twice during our proceedings on this Bill. He said that £1 extra from spending means £7 extra from council tax. If a local authority wants to spend £1 extra it has to raise £1 extra; if it wants to spend £1 million it simply raises an additional £1 million. That is the underlying principle of our proposals. I ask the Committee to reject the amendment.
8.45 p.m.
Lord McIntosh of Haringey: I am frankly astonished that the Minister should seek even now to take this historical view of the history of local government finance under this Government. I am astonished that she should seek to repeat the arguments for the poll tax which she, as my noble friend Lady Hollis rightly says, is one of the last people to call the community charge. I am astonished that she should still seek to persuade the Committee that the poll tax failed only because people misunderstood it rather than because it was inherently
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unsound. I am astonished that she should fail to recognise the strength of the arguments which have been put notably, if I may say so, by the noble Lord, Lord Gisborough, against the capital value system which is now being proposed.
With one breath the Minister is seeking to assure the Committee that the differences between the bands are not very great and that therefore there will not be too many appeals and that there will not be anything like the degree of differentiation which she sees as being damaging. With another breath she is seeking to persuade the Committee that differences are great and that these are properly reflected in house prices and house values in different parts of the country. She cannot have it both ways.
What is clear is that the noble Baroness has no answer to the charge that the standard spending assessment in particular will be related, in some way as yet unspecified, to house prices. That is what will produce the injustice of an unalloyed and unmitigated reliance on house values. The noble Lord, Lord Gisborough, saw that very clearly. Nothing the Minister said has detracted from the strength of that argument. It is necessary to seek the opinion of the Committee on the amendment.
8.50 p.m.
On Question, Whether the said amendment (No. 25) shall be agreed to?
Their Lordships divided Contents, 31; Not-Contents, 40.

Division No. 3

CONTENTS

Addington, L.

Hughes, L.

Airedale, L.

Lockwood, B.

Beaumont of Whitley, L.

McIntosh of Haringey, L.

Blease, L.

Mason of Barnsley, L.

Campbell of Eskan, L.

Mayhew, L.

Clanwilliam, E.

Monk Bretton, L.

David, B.

Prys-Davies, L.

Dean of Beswick, L.

Rea, L.

Dormand of Easington, L.

Redesdale, L.

Gallacher, L. [Teller.]

Rochester, L.

Gisborough, L.

Sefton of Garston, L.

Graham of Edmonton, L.

Shackleton, L.

Grey, E. [Teller.]

Tordoff, L.

Hamwee, B.

Whaddon, L.

Harris of Greenwich, L.

Winstanley, L.

Hollis of Heigham, B.

NOT-CONTENTS

Aldington, L.

Hesketh, L. [Teller.]

Arran, E.

Hives, L.

Astor, V.

Howe, E.

Belstead, L.

Long, V.

Blatch, B.

Lyell, L.

Blyth, L.

Mackay of Clashfern, L.

Borthwick, L.

Marlesford, L.

Boyd-Carpenter, L.

Milverton, L.

Brabazon of Tara, L.

Mottistone, L.

Caithness, E.

Mountgarret, V.

Carnegy of Lour, B.

Pym, L.

Carnock, L.

Reay, L.

Cavendish of Furness, L.

Seccombe, B.

Davidson, V. [Teller.]

Skelmersdale, L.

Dundee, E.

Strange, B.

Ferrers, E.

Strathmore and Kinghorne, E.

Fraser of Carmyllie, L.

Ullswater, V.

Grantchester, L.

Waddington, L.

Harmar-Nicholls, L.

Wynford, L.

Henley, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
8.58 p.m.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 26:
Page 3, line 2, after ("may") insert ("by a date not later than 1st August 1991").
The noble Baroness said: I shall be brief. The amendment seeks to require the Secretary of State to prescribe by 1st August 1991 those assumptions, principles and dates which will apply for the purpose of compiling and maintaining the valuation list. It is meant to be a probing amendment designed, if we can, to extract information from the Minister on the valuation process. It is important that the assumptions, principles and so on are determined soon, as the DoE says that the valuation process will be completed by autumn 1992, a little over a year away.
I hope that the Minister will feel able to address some of the following questions. For example, how will the value of property be defined? At what date will values be determined? Will the principle applying to non-domestic rates apply whereby values were those existing the year before the valuation list came into force, and, if so, will this freeze regional variations in house prices at that date? Further, can the Minister give an indication as to what other assumptions and principles will be prescribed? I beg to move.
Viscount Astor: As the noble Baroness said, this amendment seeks regulations relating to the assumptions, principles and reference date for the valuation to be made by not later than 1st August 1991. Subject to the enactment of the Bill, we are of course keen to make rapid progress with the task of allocating properties to bands. We have been asked many times when we intend to make the necessary regulations. Our responses have made clear that we intend to do so as soon as possible.
I have to say that the precise timing will depend first and foremost on the passage of this Bill through this House another place. Until and unless the Bill is passed and receives Royal Assent there can be no regulations to make. Our intention is to make the necessary regulations as soon as possible after enactment. It may be that it is possible to do so before 1st August 1991. It may be that it is not. We are keen to make progress; but we are also keen to ensure that the job is done properly. If it takes longer to get the regulations right, we will take longer. It cannot be right for our hands to be tied to making regulations before; 1st August—only three weeks from now—when the Bill is still before this Chamber for consideration in Committee. I must stress to the noble Baroness that the making of the regulations depends upon the passing of the Bill. That is the important point.
Baroness Hollis of Heigham: I thank the Minister for his reply. However, I must confess that I am somewhat puzzled by his remarks. First, I should have thought that the broad sweep of principles and assumptions would already have been banked within the DoE, especially in view of the assurance given by
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the noble Baroness, Lady Blatch, when we discussed Amendment No. 17; namely, that although there may be some hesitation about empowering local authorities to begin general preparations for the Bill, they were nonetheless authorised to start immediately in terms of procuring the information required for valuation purposes. The noble Baroness was careful to separate those two aspects. It seems now that that cannot be done. Therefore, the consent is meaningless if we do not have the bounds, or the circumscriptions, so to speak, of central government's assumptions behind the valuation principle.
I must accept what the Minister said. Obviously, there is no point in pressing the matter today. Nonetheless, I must say that I do not think that it bodes well for the speediness, the smoothness, and so on, involved in introducing this new Bill if the basic assumptions upon which valuations are to be based cannot yet—and certainly cannot now—be prescribed by law, as the amendment suggests.
It seems to me that the noble Viscount's response is quite contrary in spirit to the comments made by the Minister in regard to Amendment No. 17. However, if he says it cannot be done, then it cannot be done. I can only say that we on this side of the Committee are extremely surprised by his reply. In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 27 to 29 not moved.]
Lord Gisborough Lord Gisborough had given notice of his intention to move Amendment No. 30:
Page 3, line 5, after ("prescribed") insert ("regional").
The noble Lord said: This amendment has been discussed. However, I should like to make just one point. I believe that my noble friend the Minister missed the point where the object is to have banding so that the bands run right through to cover different sorts of houses within an area. The complaint, which was not dealt with, is that in high-banded areas almost all the houses will be in the high band, so there will not be many bands. There will just be a single band of high value for the whole area. I cite as an example Ditchling, or a similar high-value village. As I said, I do not wish to move the amendment. However, I should like to reserve the right to return to the matter at a later stage.
[Amendment No. 30 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 31:
Page 3, line 5, at end insert ("as specified in Schedule (Banding of Property) to this Act.").
The noble Lord said: Before I begin, I feel that I should apologise to the noble Lord, Lord Gisborough, for inadvertently trying to deal with the non-movement of his amendment. Once one acquires the habit of not moving amendments, it is very difficult to lose it.
In moving this amendment I shall, with the leave of the Committee, speak also to Amendment No. 40 which is the substantive amendment. Because of the narrow scope of the Bill and the very few opportunities which exist for us to express what are—worse than concerns—our fears about the direction

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in which the Government are moving, based on their statements which are not contained in the legislation, we are forced to propose a number of alternatives which may seem sometimes to conflict with the Government's proposals.
The Committee has just decided that it does not want to pursue a policy of regional banding. I am not sure whether this is a better amendment. However, I believe that, under any circumstances, what we propose here—a banding system with 14 bands—is enormously fairer and more equitable than what the Government propose. I commend the amendment to the Committee on that basis.
Members of the Committee have already indicated how, in some parts of the country, there will be very heavy proportions of the electorate who will fall into a very small range of bands. Perhaps I may put forward some further examples, one of which I have already mentioned. In Hackney which is, after all, a very poor area, 70 per cent. of households with two or more people will fall into the top three bands —that is bands E, F and G—of the seven bands proposed by the Government. In Rotherham, also a relatively poor area, 84 per cent. of households will fall into bands A to C; that is, the bottom three bands.
If one has that sort of disparity between one part of the country and another where average incomes will not be that great and where, as we have heard, there will not be any regional system and people in bands A and G will be paying the same in Rotherham as in Hackney, we are then approaching again, to some extent, the poll tax.
In responding to an earlier series of amendments, the Minister made great play about the differences between one area and another. However, I put it to her that a system that leaves 1.3 million properties in the top government band can only be described as a system designed to defuse the inevitable rage of Conservative voters if they found that, once more, after several years of being let off the hook, they were forced to pay for local government services in accordance with their ability to pay and their use of local authority services, because it is a well-established fact that richer people use local authority services more than poorer people.
With the amendment we oppose the degree to which the Government, although purporting to return to ability to pay as a criterion for local government finance, are not doing so. They are not tempering the wind to the shorn lamb; they are tempering the wind to the shorn wolf. That is the position in which we find ourselves. We object to that, which is why I am moving the amendment. I beg to move.
Baroness Hamwee: I support the amendment for the reasons given by the noble Lord, Lord Gisborough, when discussing Amendment No. 30. He identified the problem of large numbers of households being in relatively few bands, and that is the problem addressed in the amendment. On Amendment No. 30 the Minister gave assurances, but they will work only if there are sufficient bands with a sufficient spread. If, for instance, a relatively small home rented from a housing association is in the same band as a
1300
six-bedroomed, three reception room house in half an acre of garden, that will cause a major problem and, as has been said so many times today, will bring the council tax into disrepute.
Baroness Blatch: I shall start by giving one or two facts. First, there is no area where more than half the properties will be in the top band. My noble friend Lord Gisborough referred to areas of the country where all dwellings would be in the top band. As I said, there is no area where more than half the properties will be in the top band. Secondly, it is worth noting what the percentages are: 19 per cent. in the lowest band; 16 per cent. in the next band; 20 per cent. in the next band; 17 per cent. in the following band; 13 per cent. in the next band; 8 per cent. in band F; and only 7 per cent. in band G.
The Government have proposed seven bands. The idea behind banding is to avoid the problems of detailed valuation which plagued the rates. For banding to be effective, there can be a few broad bands only. That is the logic of our position. As the number of bands increases, so the detail and the disparities increase. The more bands there are, the greater is the administrative task involved and the greater the likelihood of disputes and appeals. We have proposed seven bands as a balance between the benefits of a few broad bands and our desire to ensure that the council tax is related to the value of property.
Noble Lords have suggested that we have 14 bands. They would do well to remember that the greater the number of bands the closer the system becomes to the rates. It has been suggested a number of times since the debate started—not necessarily today—that the Government considered 14 bands. We did not. Our proposals are designed specifically to avoid disproportionate bills in London, the South East and elsewhere in the country. A couple living in a dwelling in the seventh band would pay two-thirds more than a couple living in a property in the middle band. A couple living in a property in the first band would pay two-thirds of the bill for a middle band property. Overall, bills for couples in the seventh band would be two and a half times as much as those for couples in the first band in the same local authority area. That will, unlike the rates, avoid disproportionate bills for high price areas.
People living in Barnet, where there are a large number of homes priced above £160,000, will know that despite the high value of their property the amount they are being called upon to contribute is limited to two-thirds more than the national average for spending at a standard level. Contrast that with the position under rates where they would have been called upon to pay at least twice as much—in many cases three, four and five times as much. I understand that noble Lords opposite propose that there should be no ceiling, and so that sum could be multiplied even further.
It is a myth that all those living in expensive property can afford to make a limitless extra contribution to local government. Many of course have high levels of income, but they pay their fair share in income tax—much of which is used to pay revenue support grant to local authorities. For those

1301
who do not have high levels of income, penal rates are unfair and a considerable hardship to many, particularly elderly, people.
Under the amendments there would be no fewer than six bands for properties which are in the highest of our seven bands, and for those at the top, properties would be assessed, and I quote, "with no upper limit". It has been argued that such a system would remove an unfairness from our proposals.
First, let me say that there are only 7 per cent. of properties across the country in our top band. This is of course highly variable between areas, but a further five bands might have only a very small number of properties nationally. However such bands are constructed, the benefit to the rest would be tiny. If there were six top bands instead of one, the effect might at best be to reduce the bills for the rest by less than 1 per cent. The fact is that skewing the system in this way to make those at the top pay more does very little for the rest.
The number of bands is not laid down on the face of the Bill. We are still considering the many responses to our consultation that we have had on the issue of more bands, especially at the top. When we have fully considered the responses we shall come forward with our decision. But it would be premature for the number of bands to be prescribed in the Bill. Both for that reason and for the reasons of principle I have outlined above, I call on the Committee to reject these amendments.
9.15 p.m.
Lord McIntosh of Haringey: The number of bands may not be prescribed on the face of the Bill, but Ministers in another place have made themselves absolutely clear. They said, "Yes, we intend to go on consulting but we will have seven bands because it is our firm intention to have seven bands".
The Minister seems to think, or has been encouraged to say, that because we are looking for a valuation system which reflects more accurately the differences in property values in the country, somehow we are looking for a one-for-one relationship between property values and the level of the rates—the level of what I the Minister would call the council tax. That is definitely not the case. We have made it clear from the beginning that considerations other than property value will be taken into account. We have made it clear from the outset that fair rates include an element of consideration of income levels. That has been written into the amendments to the Bill this afternoon and evening.
Thus, to try the scare tactic of assuming that someone who has a house worth £500,000 will necessarily pay 10 times as much as someone with a house worth £50,000 is wide of the mark. That is not the case at all. It may well be that if someone's income is more than 10 times as much as that of another person with a house worth £50,000 they will pay more than 10 times as much. But on the whole it is more likely that the system we shall propose will be a tax much more closely related to ability to pay and in which property values are only the starting point.
Baroness Blatch: I do not believe that I misinterpreted the noble Lord. He now suggests that if people earn very high incomes they may well be required to pay more. Does that mean that we shall all have to declare our incomes to the local authority and have a separate register in addition to the valuation in order for the local authority to know that someone is earning five or 10 times as much as someone else at the bottom of the scale? The noble Lord commented that if somebody earns 10 times as much, they may be required to pay 10 times as much. That can be done only if one's income is known.
Lord McIntosh of Haringey: The Minister has had the opportunity to read the policy statement with the same attention as I gave it. She knows perfectly well that there are well-established ways in which it is possible, for example, to allow people to apply for rebates on the basis of low income. That in turn could be assessed by the Inland Revenue without the local authority knowing what the income is.
There is no reason why there should be disclosure of information about income beyond the Inland Revenue. This matter has been discussed in policy statements over a period longer than the past 12 months. I am sure that the Liberals, who support the policy of local income tax, will support me in saying that there is no element in a local income tax of disclosure to any third party of what an individual or household income is, any more than with income tax itself. That is a complete red herring and it is a pity that the Minister thought fit to raise the point.
We cannot get away from the fact that the whole of the council tax is designed to be as flat a tax—in other words, as close to the poll tax as possible—as the Government can get away with. That is what they intend. They are doing this to protect the 7 per cent. of households which have properties in the top band and the much larger proportion which have properties in the other high bands. The Government are doing it in order to save Conservative votes and they are doing it in about as unscrupulous a way as I have ever seen in politics. I am sorry that Ministers whom I personally respect should find themselves in this position. At this time of night I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 32 to 35 not moved.]
Clause 3 agreed to.
Clause 4 [Information about properties in England and Wales]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 36:
Page 4, line 9 at beginning insert ("Subject to subsection (2A) below,").
The noble Baroness said: In moving Amendment No. 36 I wish to speak also to Amendment No. 37. This amendment follows up a theme that has already been raised in the previous speech of my noble friend Lord McIntosh about the disclosure of information. It seeks to prohibit electoral registration material being used for valuation purposes. After all, for valuation purposes the only information that the valuer needs at the beginning of the process is a list of addresses. That

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is in the public domain. The fear that is held—I think it is a well-founded fear—concerns the cross-use of such information. People fear that it may be used, for example, to police one-person discounts for council tax thereby encouraging the second adult to fall off the register. In other words, people may disenfranchise themselves. That has certainly been so far the experience with the poll tax.
I believe that the Home Office found in some 37 constituencies in 1989–90 that the number of people on the electoral register fell by around 1,000 in each of those constituencies. If one grosses up those figures, one discovers that something like half a million people came off the electoral register in England and Wales alone. The Home Office also noted a further fall in the poll tax register in 1990–91 of some 110,000 people in England alone. I am sure that none of us wishes that evidence to be repeated in the case of the council tax. However if it were to be repeated, people would lose not only their local vote but their general election vote. This is clearly a democratic issue but, as I am sure the Minister will appreciate, it is also a civil liberties issue. We are concerned about the fact that data gathered for one purpose may be used for another and about the right to protection against that possibility.
I am sure we would all agree that privacy should not be limited only to those who can afford to pay for it. Although this amendment refers specifically to the electoral register, I hope that we can extend the principle to other forms of data if the Minister finds the amendment acceptable. I beg to move.
Viscount Astor: This Bill is about the allocation of properties to bands. It concerns the characteristics of property. It is not concerned with who lives in the property. It is certainly not concerned with whether people are on the electoral register. But it would be wrong to limit in this way the information which the commissioners can use for the purpose of the valuation. It would not be sensible, for example, to bar the use of information about property addresses, whatever the source of that information.
Of course we have proposed that there should be a personal element to the council tax. We believe that there should be a system of personal discounts to reflect the number of adults in each household as well as the value of the property. We have suggested that households with two or more adults should pay the basic council tax bill for their property. Single adult households should pay less through a personal discount and some households would receive two discounts.
We consider that a significant advantage of the discount approach is that it does not require a register of council tax payers. Households simply pay a reduced amount through a discount where there is only one liable adult or two discounts where there are none or where the property is unoccupied.
We are considering the responses to consultation on all these issues and it is premature to consider what information could or should be considered for the main legislation to introduce the council tax. What is
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clear, however, is that these amendments are superfluous to the purpose of this Bill and I urge the Committee to reject them.
Baroness Hollis of Heigham: I must confess that I was again somewhat disappointed with the Minister's reply. Let us be clear that for the purposes of this Bill valuers do not need individual names and therefore they do not need to refer to the electoral register for valuation purposes. The Minister has said that for the purposes of the Bill all the valuers need is a list of addresses and not a list of individual names. To seek individual names, therefore, which is what the electoral register provides, is necessary only for purposes over and beyond that of valuation—in other words, for cross-checking eligibility for rebates, payments and other such matters. That is why Members of the Committee on this side of the Chamber regard this as a civil liberties issue.
I hope that on reflection the Minister will want to think further about the matter and perhaps move in some way at a later stage, because I believe that he would meet a number of civil liberties concerns if he were to concede that point.
Finally, the Minister said tonight that this proposal was premature. He also said that it was premature to ask about the qualifications of surveyors; it was premature to ask about the principles of valuation; it was premature to discuss in greater detail a number of issues tonight. Yet somehow, although we are not allowed to discuss these matters, to have the information required or make preparations until after this Bill becomes law—by the winter or spring of next year—this complex new tax, which will require elaborate work, is due to be in place within 12 months. The responsibility and burden for that will fall upon local authorities.
I believe that Ministers and their advisers are inviting all sorts of trouble by not being able to offer to the Committee tonight perfectly proper information which should already have been considered if we are to accept and support the timetable which Ministers expect us to abide by. Nonetheless, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 37 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 38:
Page 4, line 25, after ("days) insert ("or such other longer period that may be specified in the notice").
The noble Baroness said: This is a very minor amendment and I shall not delay the Committee for long. As the Bill stands local authorities and housing associations are required to submit information within 21 days. We feel that that is a rather tight timetable and would like it specified that the information should be supplied following consultation,
"or such other longer period that may be specified in the notice".
Much of the data will be computerised. However, we all know the problems that have been experienced with the poll tax. As a leader of a council and chair of a finance committee who has lived through the introduction and implementation of the poll tax, I do

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not take those concerns lightly. I hope that the Minister does not either. This modest amendment would go some way to giving local authorities in particular and housing associations and other similar bodies which hold a large stock of housing a little more flexibility in returning the information that is required. In turn that will ultimately reduce the number of appeals and the pressure on the system. I hope that the Minister will feel able to accept the amendment. I beg to move.
Baroness Blatch: The amendment seeks to give the option of extending the length of time allowed for a notice of information to be completed by an owner or occupier. The Bill already allows owners and occupiers 21 days to comply with a notice of information and makes clear that no one who has a reasonable excuse for failing to observe the time limit will be penalised. We intend to keep bureaucracy and form filling to a minimum. The process of allocating properties to bands should generally be fairly straightforward. In many cases whole streets with broadly similar characteristics will be in the same band.
Valuation officers will not need to send out forms to every property. The forms which are sent out can easily be completed within 21 days. To allow more time would be unnecessary. I call on the Committee to reject the amendment.
Baroness Hollis of Heigham: The Minister may have misunderstood the point of the amendment. We are not dealing with forms being sent out to individual properties which are tenanted. The presumption is that those forms will go to the landlord rather than to the occupier. Local authorities may hold a stock of 40,000 or 60,000 houses. A housing association may hold a stock of 20,000 properties. In those cases the limit of 21 days is very tight.
Obviously records are computerised, but I repeat that experience of the poll tax has shown that the problems of computer software, forms, printing systems and the like make it extremely difficult to produce the information which will obviate much of the need for appeals. We are not asking that local authorities specify the time. We are asking that the Government should be able to extend the time allowed, particularly in the case of larger bodies which hold a large housing stock in order for the system to run more smoothly. I hope that the Minister may be able to respond to that point.
Baroness Blatch: The Bill states:
"A person on whom a notice is served under subsection (3) above shall supply the information requested if it is in his possession or control, and shall do so in such form and manner as is specified in the notice and within the period of 21 days beginning with the day on which the notice is served".
The amendment simply seeks to extend the period. We are talking here about an individual.
Lord McIntosh of Haringey: Is the Minister saying that a local authority or housing association is not a person within the meaning of the Bill? We have always understood that a person included an organisation. I have never heard the interpretation that a person means an individual.
Baroness Blatch: I am told that a person could be a local authority, but a local authority could certainly answer within 21 days.
Baroness Hollis of Heigham: My authority has perhaps 20,000 houses. Other authorities, such as Sheffield or Newcastle, have perhaps 100,000 properties and have elaborate information which a valuer will quite rightly need to know in terms of, for example, improvements, access to drainage, size of gardens and access to garages. Between us, we could come up with a long list of information. It must be accurate for valuation purposes. We have not been told the principles, we are not allowed to make the preparations and nor can we be confident that the valuers are professionally qualified in ways that we would accept. Given all the points that we have established tonight, it is absurd to ask a local authority to produce that kind of information, possibly affecting 100,000 properties, in 21 days. We simply ask that, where a local authority can put up a good case to government that it needs more than 21 days, the Government will accept that. The primary reason for that will be the amount of stock held. Perhaps the Minister will comment further.
Baroness Blatch: The information will predominantly be requested from house owners and occupiers. It will occasionally be necessary to go to a local authority or perhaps to a housing association, but those occasions will be much less frequent because most of the information will be sought from owners and occupiers.
Baroness Hollis of Heigham: I accept that, but local authorities hold about 4.5 million or 5 million properties in stock.
Baroness Blatch: Most of the house owners and occupiers will respond in the normal way. We are talking about the residual number of people who for one reason or another do not respond.
Lord McIntosh of Haringey: The Minister must distinguish between owners and occupiers. It makes a huge difference. If the occupiers are to answer, they will answer only for one property and will do so without difficulty within 21 days, but she cannot simply lump owners and occupiers together. As my noble friend said, local authorities have a stock of about 5 million homes. Housing associations have a stock of about 500,000 homes. If they are in large estates and represent large portfolios, the difficulty of producing information of that kind will he that much greater. This is the only place in the Bill—everything else is tentative—where a period such as 21 days is specified. I do not want to encourage my noble friend to divide the Committee, but I urge the Minister to say that she will look at the matter again between now and Report stage.
Baroness Blatch: I believe that I have a reputation for always saying that I shall continue to consider matters between stages of a Bill. I understand that there is no greater owner of municipal housing than Norwich City Council with which the noble Baroness is associated.
Baroness Hollis of Heigham: It has the highest percentage of municipal housing.
Baroness Blatch: As the noble Baroness says, it has the highest percentage of municipal housing. Predominantly, the occupiers of those houses will respond to the request for information within 21 days. It will only be in cases of difficulty that the local authorities will be required to provide the information.
Baroness Hollis of Heigham: We cannot push this matter any further tonight because there is a gap between us as regards our understanding of the Bill. I am sure that the Minister will query the matter further with her advisers, as we shall do. Perhaps we can discuss the matter, because that is not our
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understanding. If our understanding is correct, I hope that the Minister will reconsider her views before Report stage. There is no point in trying to press the matter further tonight because we are too far apart on our understanding of the Bill.
I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 4 agreed to.
Clauses 5 and 6 agreed to.
[Amendment No. 39 not moved.]
Clause 7 agreed to.
Schedule agreed to.
[Amendment No. 40 not moved.]
House resumed: Bill reported without amendment.
House adjourned at twenty-four minutes before ten o'clock.