HL Deb 20 February 1992 vol 535 cc1368-434

3.27 p.m.

Baroness Blatch

My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be now further considered on Report.—(Baroness Blatch.)

On Question, Motion agreed to.

Clause 24 [Alteration of lists]:

Earl Howe moved Amendment No. 80: Page 15, line 19, after ("to") insert ("the whole or any part of").

The noble Earl said: My Lords, in speaking to this amendment I shall speak also to Amendments Nos. 81 to 84, 88, 89, 98, 99 and 102.

Amendment No. 80 clarifies the position in relation to a relevant transaction in the rare circumstances where there is more than one freehold on a dwelling. In such cases it means that rebanding is possible where there has been a material increase and any one freehold on the property is sold.

Amendment No. 89 for England and Wales and Amendment No. 102 for Scotland are clarifying amendments which also relate to revaluation following sale. They make it totally clear that in the definition of "material increase", the building, engineering and other operations mentioned should be carried out in relation only to the dwelling concerned. This ensures that the valuation band of a dwelling cannot be increased because of such operations on a neighbouring dwelling or property.

Amendments Nos. 81, 82, 83 and 88 for England and Wales, and part of Amendment No. 99 for Scotland, relate to properties which have a mixed domestic and non-domestic use. They will permit regulations to allow a change in the valuation band of a dwelling which is a composite hereditament when there is a change in the property's use. Amendments Nos. 82 and 99 contain the substance of the provision and Amendments Nos. 81, 83 and 88 are consequential.

Composite properties will quite properly be subject to both non-domestic rates and the council tax. Valuation for each will take account only of non-domestic and domestic uses as appropriate and will achieve a fair balance between the two taxes. If the balance of use of a composite changes, or more significantly it becomes or ceases to be a composite hereditament, then its valuation for non-domestic rating may change. These amendments give the potential for a corresponding change in valuation for the council tax.

Amendment No. 84 for England and Wales and the first part of Amendment No. 99 for Scotland clarify the circumstances in which a listing officer or assessor may alter the initial band shown in a list. I am grateful to my noble friend Lord Balfour for bringing the need for clarification to our attention. After these amendments, the Bill will contain identical provisions in this respect for England, Wales and Scotland.

Once valuation lists are in place, anybody who believes his home has been allocated to the wrong band will be able to make a proposal to the listing officer or assessor that his home should be in a different band. If the listing officer agrees that the band should be altered, then our intention is that he should be able to alter the valuation list accordingly. That alteration may be upwards or downwards. It may be to correct clerical errors as well as to make the more substantive changes I have described. After amendment Clauses 24(4) and 87(4) will make that clear. I beg to move.

Lord McIntosh of Haringey

My Lords, it is somewhat disturbing that amendments of this kind in what is supposed to be a simple Bill should be introduced at this late stage of the proceedings. I accept that most of the amendments seem relatively straightforward and I am sure the tribute to the noble Earl, Lord Balfour, is well justified.

I am particularly interested in Amendment No. 89 which seems to remove the possibility of a change in banding as a result of building, engineering or other operations carried out in relation to other dwellings. The noble Earl explained that that provision referred to changes in an adjoining property. However, is it not the case that this amendment would rule out any changes in the banding as a result of a general improvement in the neighbourhood—for example, gentrification of the neighbourhood?

The Earl of Balfour

My Lords, I wish to record, first, that I am grateful to my noble friend Lord Skelmersdale for passing on to me some valuable information which enabled me to table amendments at this stage. I am a slow reader and I did not notice in Committee the defects in the Bill before it was too late to table amendments at that stage. However I tabled amendments as quickly as possible to provide my noble friends on the Front Bench with as much information as possible. I am satisfied that the government amendments allow a valuation officer, or an assessor in Scotland, to correct errors that may have been made. Therefore Amendments Nos. 85 and 100 standing in my name would appear to be unnecessary. Amendment No. 100 would fall anyway because it is pre-empted.

I now turn to Amendment No. 86 to Clause 24 and Amendment No. 101 to Clause 87. I am a little concerned about Clause 24(5) which states: The regulations may include provision— (a) as to who (other than a listing officer) may make a proposal for the alteration of the list with a view to its being accurately maintained". In the case of Scotland a local assessor would be involved in this matter. I wonder why a listing officer, or in Scotland a local assessor, have been excluded. I feel it is very much the duty of such a person to make an accurate list. That is my reason for asking this rather technical question. The position at present could leave an assessor or other authorities in some doubt.

Lord Skelmersdale

My Lords, my noble friend Lord Balfour does me more credit than I deserve. I am grateful for his remarks. However, I am prompted to speak not so much as a result of what my noble friend has said but rather as a result of the remarks of the noble Lord, Lord McIntosh. He, like all noble Lords, is exemplary in his praise for this House as a revising Chamber. He can hardly complain that this Bill is being revised properly on Report in your Lordships' House when he and I have both been involved in local government Bills where revisions have been made as late as Third Reading after the Bills have passed through another place.

Earl Howe

My Lords, I am grateful for the final remarks of my noble friend Lord Skelmersdale. His remarks were correct. I should say in reply to the noble Lord, Lord McIntosh, that the matter of gentrification is not relevant to Amendment No. 89 and would have absolutely no effect on the amendment. The material increase that I mentioned must be carried out prior to sale and it becomes effective at the time of the sale. As I have said, it can occur only if building and other operations are in relation to the dwelling concerned and not to any other property, such as the property or land next door.

My noble friend Lord Balfour posed a question to the House. I am sure the House will be quite content for us to consider my noble friend's amendments in conjunction with the group of amendments we are discussing. I believe my noble friend has slightly misunderstood how the arrangements for changing the list will work because in practice the listing officer, or the assessor, will make or decline to make changes to the list in response to proposals from others. It would not be appropriate for him to make proposals to himself. The government amendments to the clause give the listing officer or assessor the appropriate powers to make changes to the list, including powers to correct typographical and other such errors. I hope that I have clarified the matter sufficiently.

The Earl of Balfour

My Lords, I am satisfied with that clarification and I thank my noble friend.

On Question, amendment agreed to.

Earl Howe moved Amendment No. 81: Page 15, line 19, leave out ("or").

On Question, amendment agreed to.

Earl Howe moved Amendments Nos. 82, 83 and 84:

Page 15, line 21, at end insert: ("(iii) the dwelling has become or ceased to be a composite hereditament for the purposes of Part III of the 1988 Act; or (iv) in the case of a dwelling which continues to be such a hereditament, there has been an increase or reduction in its domestic use,").

Page 15, line 22, leave out ("either") and insert ("any").

Page 15, line 23, leave out paragraph (b) and insert: ("(b) the listing officer is satisfied that—

  1. (i) a different valuation band should have been determined by him as applicable to the dwelling; or
  2. (ii) the valuation band shown in the list is not that determined by him as so applicable; or").

On Question, amendments agreed to.

[Amendments Nos. 85, 86 and 87 not moved.]

Earl Howe moved Amendments Nos. 88 and 89:

Page 16, line 23, at end insert: (""domestic use", in relation to a dwelling, means use in such a manner as to constitute it domestic property for the purposes of Part III of the 1988 Act;").

Page 16, line 26, after ("operation") insert ("carried out in relation to the dwelling").

On Question, amendments agreed to.

Baroness Hollis of Heigham moved Amendment No. 90: Page 16, line 32, leave out ("physically disabled").

The noble Baroness said: My Lords, the Bill as currently drafted ensures that only physically disabled people will benefit from the reduction scheme devised by the Government. However, this amendment seeks to widen the definition of disability so that those with severe learning handicaps are also included. In other words, people with learning disabilities who make adaptions or changes to the properties in which they live as a result of that disability should also benefit from the reduction scheme available under the Bill.

It is clear that this was the position following the Rating (Disabled Persons) Act 1978 where people who suffered from mental impairment were also included in that list of people defined as disabled who were eligible for reductions in their rates by virtue of the property they occupied. Section 8 of the 1978 Act says that: In this Act—'disabled person' means any person who is blind, deaf or dumb or who suffers from mental disorder of any description or who is substantially and permanently handicapped by illness, injury or congenital deformity or any other disability for the time being prescribed for the purposes … of the National Assistance Act 1948".

That is a much wider list than is included in the Bill. In other words, it was originally intended that anyone with a substantial disability or suffering from long term illness should qualify under the rating Act. I am seeking to find out from the Minister whether the omission from the Bill is accidental or deliberate.

I hope that it is not deliberate because it is clear that mentally disabled people may often need substantial alterations to their property which even though less visible than those for the physically handicapped, are nonetheless necessary. MENCAP, which supports the amendment strongly, has given some examples. To give just one, many mentally disabled people—for example, young men—are not aware of their own strength. They may retain the playfulness of a child but can pull down mantelpieces, knock down doors, break windows or go through a glass door. There may well need to be structural alterations to cope with someone who is prone to self-inflicted violence such as beating his head against a wall—which would therefore need extra padding or insulation—pushing out a window, or butting into a standard door. MENCAP says, in an evocative phrase, that some parents have had to turn a room into a fortress.

I also know that some mentally handicapped people can be very noisy. Their property may require extra soundproofing. They may be vulnerable and careless with open sockets, appliances and anything made of glass, bath taps which can scald and they may leave on gas cookers with the gas unlit.

When a housing committee which I chaired built a sheltered housing scheme for the severely mentally handicapped we had to spend a great deal of additional capital to make that property suitable for families with handicapped members. We had to spend money on strengthening the fabric, additional heating, soundproofing and the alteration of fixtures and fittings and also on physical security so that people, especially the elderly, did not wander.

Therefore, I hope that the Minister will be able to tell us that it is intended that the Bill should include the severely mentally impaired where their disability gives rise to such alterations as I have outlined. If that is the case I shall be delighted to withdraw the amendment. I beg to move.

Lord Boyd-Carpenter

My Lords, I fully understand the point which the noble Baroness opposite was trying to make about the mentally disabled, but she did not appear to appreciate that the terms of her amendment would be more restrictive in certain cases than the Bill. The Bill provides that where someone is physically disabled the concession arises. However, in order to qualify under the amendment moved by the noble Baroness, they would have to be permanently and substantially disabled.

There are many serious disabilities from which people suffer but no one is prepared to say whether they will suffer from those disabilities permanently. That is a much stricter test of disability. I hope that the noble Baroness will appreciate that in her well-intentioned desire to help the disabled she seems to be tightening up the Bill in a much more restrictive form in respect of many forms of ordinary physical disability.

Baroness Hamwee

My Lords, I support the amendment. I take the point which the noble Lord, Lord Boyd-Carpenter, made. I hope that we may hear from other noble Lords with some positive support for the thrust of the amendment. If it is necessary to revise the amendment in order to provide for the people whom we seek to protect through this amendment, in addition to those already referred to in the Bill, we may have to return to that point. However, we on these Benches support the amendment which, as the noble Baroness, Lady Hollis, said is supported by MENCAP.

The Earl of Balfour

My Lords, I sympathise with what has been said by the noble Baronesses on the other side of your Lordships' House, but I feel that my noble friend Lord Boyd-Carpenter made a very good point. Perhaps I may say in that respect that I know two wonderful people who many years ago were discharged from the Glasgow infirmary as being incurable. They went to a bonesetter who lived in Broughton in Peeblesshire for many years. They were practically carried into his home to be treated but after two years' treatment they recovered and now walk about with the aid of nothing more than a stick. Therefore, I feel that the amendment would be unfortunately restrictive. I sincerely hope that the amendment is not pressed because I do not believe that it will achieve what the noble Baroness wishes.

3.45 p.m.

Lord McIntosh of Haringey

My Lords, it is worth saying that the wording of the amendment has been discussed very closely with and by the groups representing people with disabilities. The impression I gained from those discussions is that they do not want to return to the wording of the rating Act; they want to avoid words such as "handicap", "impairment" or "disorder". I understand that the disability groups feel that the phrases "permanent disability" and "chronic illness" are adequate to cover most situations and most people concerned. After all, it is the terminology of the National Health Service and Community Care Act 1990.

Lord Stoddart of Swindon

My Lords, I support what my noble friend said. I took note of what the noble Lord, Lord Boyd-Carpenter, said and it worries me. It would be most unfortunate if we restricted the position by the amendment. Perhaps the Minister could indicate whether he would be happy to remove the word "physically" from the phrase "physically disabled" at a later stage so that we were left with the word "disabled".

The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley)

My Lords, the noble Baroness—and I quite understand this—seeks to widen the definition to include those with learning difficulties rather than the definition as it stands at the moment. Following on from the point made so ably by my noble friend Lord Boyd-Carpenter, I hope that I can persuade her that not only is the amendment unnecessary but, worse, it is more restrictive than the current provisions as set out the Bill. As my noble friend said in discussing the wording, going further than the words at present in the Bill would limit the alteration of lists to cases where adaptions had been made to make a dwelling suitable for someone with a substantial and permanent disability. The present wording makes no such restriction.

For that very simple reason I hope that the noble Baroness is prepared to withdraw her amendments. I shall go on, I hope, to show that they are simply unnecessary. In passing perhaps I may say that the noble Lord, Lord McIntosh, mentioned MENCAP and said that the words were agreed with MENCAP.

Lord McIntosh of Haringey

My Lords, if the Minister will check he will realise that I did not mention MENCAP but referred to disability groups or groups representing disabled persons.

Lord Henley

My Lords, I apologise for misunderstanding the noble Lord. I just wanted to go on and say that none of the disability groups, or MENCAP or for that matter anyone, brought such ideas to our attention within the department. The noble Baroness waved a MENCAP briefing but that briefing was not brought to our attention. I merely make that point in passing without wishing to make any criticism of those groups.

I wanted to show that the amendments which the noble Baroness put forward are unnecessary. We are dealing with substantial alterations to Clause 24 which could have the effect of placing a property in a lower band. For example, if a lift is installed which takes up a significant proportion of the living space in the home of a disabled person and that makes a large hole in his living room ceiling and is unsightly, then obviously the capital value of the dwelling may well be reduced to such an extent that it would be appropriate to allocate the dwelling to a lower band. Any dwelling which has been adapted to make it suitable for someone with a physical disability will be covered by regulations under Clause 24 as it stands at the moment.

It is not our intention to exclude any group of people who might benefit from these regulations. The people with learning disabilities, who do not have a physical disability—I stress that if they have a physical disability they are covered and there is no problem —are unlikely to require adaptations which reduce the value enough to be significant in terms of the banding of their home. They may well require the removal or adaptation of certain fixtures and fittings which could cause injury, or the provision of special features such as window guards, but I do not consider those significant terms of banding.

I take note of the examples given by the noble Baroness. One was what one might call the person who is not aware of his own strength and the other was the necessity for what one might call padded cell arrangements. I appreciate that the noble Baroness did not say "a padded cell" but to the layman those are the terms in which she was thinking. I do not believe that those examples would necessarily fall into the category of reducing the value. Double glazing, which might be necessary in some cases, particularly in the case of noise, may simply be cost neutral or may increase the cost. That might be the case, for example, with what I refer to as the padded cell syndrome. I am prepared to look at those particular cases to see whether they could be significant or what one might call band significant. Certainly, when we considered these amendments at the time they were tabled, our view was that it would be unlikely that there could be any people not having a physical disability who might need alterations that reduced the value of the property. I should certainly be prepared to consider whether that may be the case.

I believe that it is more likely that adaptations which cater for such disabilities, for example, a ground floor extension or the addition of a second bathroom, would be more likely to add to the value of the dwelling rather than reduce the value. Regulations under Clause 24 will provide that material increases in value resulting from building, engineering or other work, will be taken into account only when the dwelling is sold. So improvements which add to the value—for example, an extension—cannot affect the banding until the dwelling is sold and therefore will not have any effect on the individual. That applies equally to any improvements made on account of any person with a disability.

There is therefore no question of a higher tax bill because of alterations which increase value. The Bill provides that there could be a lower bill in cases where adaptations reduce the value to such an extent that the banding is inappropriate. I hope therefore that the noble Baroness will accept that the amendments are not necessary. As I said, I give the assurance that I shall look carefully at the examples she gave. But I honestly believe that it is very unlikely that there could be cases where adaptations could lead to a reduction in value. I hope she will accept that her amendment is unnecessarily restrictive and possibly would have a deleterious effect. I hope therefore that she will withdraw it.

Baroness Hollis of Heigham

My Lords, I am happy to respond to the Minister's helpful and conciliatory tone. I am delighted that he is willing to take away the issue and consider whether the worries of this side of the House and those expressed by the noble Baroness, Lady Hamwee, can be met.

On the point made by my noble friend Lord McIntosh, the disability groups obviously would be happy if the definition were widened. I take on board the substance of the point made by the noble Lord, Lord Boyd-Carpenter, and endorsed by my noble friend Lord Stoddart. However, I understand that they agreed on the wording of the amendment because they did not want to get into a debate on where disability begins and ends. Somebody with a broken leg, following a skiing accident, like myself when I smashed an Achilles tendon and was in a wheelchair for six months, may not have a permanent disability but merely a temporary one. In my view, that should not necessarily give rise to a rating reduction. It was to avoid that kind of situation that the wording of the amendment was so drawn.

I accept the Minister's point about substantial alterations—for example, a lift. Obviously where that is necessary —though he doubted whether it would often be necessary—for somebody who is severely mentally impaired, they will drop a band.

But perhaps I may again press the Minister about an issue to which we referred in the earlier debate when we spoke about band A properties and a possible band ZA. Under the Bill, unless they are in band A, disabled people will drop a band if alterations are made to their property which reduce its value. So do we all. They will not be penalised if their property increases in value—neither would any of us. But the Minister also accepted that somebody living in a flat could become severely disabled while in that flat and make perhaps different use of its space. Although he did not change a door, a window or the heating and did not make any structural change, nonetheless he would enjoy the benefit of the discount and drop a band. The Minister conceded that point. No physical alteration need be made but a physically disabled person could drop down a band.

Perhaps the Minister, with the leave of the House, could respond to that point. We seek from him the assurance that someone who is mentally disabled to the same degree might also enjoy the same concession of dropping a band by virtue of the use made of the property. Report stage may not be the right time to ask for such an assurance. I therefore ask the Minister to come back to this point at Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 91 not moved.]

Clause 26 [Powers of entry]:

The Earl of Balfour moved Amendment No. 92: Page 17, line 17, after ("given") insert ("to the owner or occupier").

The noble Earl said: My Lords, in moving this amendment I shall speak also to Amendment No. 104. Clause 26 is a peculiar clause. It introduces a new type of officer—a valuation officer—who is mentioned in that clause and in Clause 27 but nowhere else in the whole Bill.

Clause 26 specifies that he must give three clear working days' notice in writing of his intention to go into somebody's home to carry out his survey. In England and Wales he may also authorise a servant of the Crown to do that for him, provided that, that person must if required produce his authority".

The clause does not indicate to whom the notice in writing must be sent. As the clause is drafted, the notice could be sent to the next door neighbour, which I consider would be most undesirable. I am grateful to the noble Lord, Lord Henderson of Brompton, who assisted me in drafting the amendment to the effect that the written notice must be sent: to the owner or occupier".

I should like to have inserted: to the owner and/or occupier",

but those words are not usually put into legislation. The valuation officer could have some difficulty finding out who was the owner or occupier. I feel very strongly that this amendment is required. The clause will be defective without it.

In the Scottish mirror clause, Clause 89, notice must be given to the occupier only. My noble friend Lord Strathclyde advised me that that is all that is required. I do not agree. Perhaps I may give the House some examples. I shall choose Scottish examples because in Scotland the local assessor has no powers to delegate his functions except to his depute.

Let us suppose that on a Monday morning he sent an office boy round to deliver letters to the farmers' houses of the five farms that are on my estate, stating that he wished to inspect them on the following Friday. He would be complying with the law as proposed in Clause 89. However, his office boy did not bother to drop a similar letter into my estate office. A week later I discovered that a local assessor had carried out his inspection without letting me know. I would be furious.

In my second example, let us suppose that I or my noble friend Lord Strathclyde were the area manager of a housing association and the assessor sent his office boy round on a Monday morning pushing letters through the letter-boxes of houses which he thought were four-apartment houses on the housing estate with the purpose of determining that they were four-apartment houses and not, let us say, three or five-apartment houses. If no notification were sent to the area manager I am sure that my noble friend would be furious. If I were the area manager I know that I would be furious.

Thirdly, I have a few very elderly but wonderful old occupiers who tend to become upset if strangers call on them. However, if I, as the owner, am informed that the assessor is seeking entry to any house of mine, I can easily arrange for him to obtain access.

Amendment No. 104 does not ask for much, but if the provision were inserted I am sure that it would lead to friendlier feelings between the local assessor and owners of property in general. I beg to move.

4 p.m.

Lord Skelmersdale

My Lords, I support the amendment. Clause 89 relating to Scotland refers to "the occupier". Under Clause 26 relating to England and Wales the letter can be sent to anyone. Indeed, there is no specification as to whom it should be sent. That seems an absolute nonsense. Either the Bill should say "occupier" in both places or it should say "owner and occupier." For the reasons that my noble friend has given, I believe that the words "owner and occupier" are right.

Baroness Phillips

My Lords, we are becoming far too lax about the delivery of important notices. When I sat as a magistrate a summons had to be personally served. Apparently it can now be pushed in anyone's door. It is no good an individual saying that he has not received it; there is no way for him to deny it. It is all part and parcel of what the noble Earl's amendment seeks to cover.

I support the amendment. If it is an important notice it must be delivered to all the persons concerned with the application. We are becoming far too lax. Perhaps our Acts of Parliament do not carry matters to a final conclusion. However, as the noble Earl said, those who have finally to operate the law are the people to be informed.

Lady Saltoun of Abernethy

My Lords, I do not have a Whip to check the facts for me. But I seem to recollect that the Natural Heritage (Scotland) Act 1991 provided that notices had to be sent to both owners and occupiers.

The Earl of Selkirk

My Lords, I support the amendment. We had a Bill dealing with local government finance which was highly unpopular throughout the country. We now seek to produce a Bill which is a little more acceptable. My noble friend makes a sensible suggestion. It does not affect the Bill but it makes the legislation slightly more acceptable. I believe that the House would be wise to accept the amendment.

The Parliamentary Under-Secretary of State, Scottish Office (Lord Strathclyde)

My Lords, I know that the amendments relate to an area about which my noble friend Lord Balfour is particularly concerned. I have listened carefully not only to him but to all noble Lords who have spoken.

It may be helpful if I first place in context the use which may be made of the powers provided in Clauses 26 and 89. It is in practice unlikely that valuation officers or assessors will wish or indeed will need to enter the overwhelming majority of dwellings in order to value them. That is not the way in which such valuations are generally carried out. The need to enter a dwelling may arise in particular circumstances; for example, where the information already available to the valuation officer or assessor about a particular dwelling—such as information from the valuation roll —is not sufficient to enable him to make a banding decision.

Another and perhaps more likely circumstance might be that the valuation officer or assessor wishes to double check the valuation of a property which he intends to use as a beacon property in the valuation process—in other words, a measure against which to compare other dwellings.

In the vast majority of cases, dwellings will be valued without the owner or occupier ever seeing the person undertaking the valuation. In cases where the valuer decides that entry is required the purpose of that visit will be to supplement existing information with an on-site inspection. It will not be an on-site valuation per se. For clear, practical reasons, however, the valuer will want to arrange entry with the person best placed to let him into the dwelling. That is the purpose of the notification procedure. In most cases that person will be the person residing in the dwelling.

If, however, no one is resident in the house I am advised that the provisions as they stand in both Clauses 26 and 89 would require the valuation officer's or assessor's notice to be sent to the owner. That is precisely our policy intention.

Turning to the noble Earl's amendments, they specifically require notification to be given to the owner or occupier. As I hope I have explained, that is what the clause as drafted provides. If we adopted my noble friend's amendments, it could allow an unfortunate situation to arise. The amendments could possibly permit an assessor or valuation officer to fulfil his statutory requirement of serving notice by sending a notice to a non-resident owner of a dwelling which was in fact occupied by someone else. I am certain that that is not my noble friend's intention.

I appreciate the concerns of the noble Earl. However, in the context of the circumstances in which those powers will be exercised, I believe that the notice powers are fully adequate. We all acknowledge the anxieties, for instance, of old people at having strangers call. However, the provisions of Clauses 26 and 89 will ensure that in the event of entry being required, full written notice will be given. With regard to the adequacy of the wording of the Scottish clause, I should perhaps advise my noble friend that the clause repeats the wording of Section 9(14) of the Rating and Valuation (Apportionment) Act 1928.

There is an important point to add. A notice under Clause 26 will not be regarded as duly given if it has been given to anyone other than a person affected by it. For example, a notice given to a next door neighbour will not suffice. In most cases the notice will he given to the occupier since it is his occupation that will be disturbed by the exercise of the power. Clause 89 has exactly the same effect in Scotland.

My noble friend Lord Skelmersdale raised an important point. Clause 89(2) specifies that the notice shall be given to the occupier. However, Clause 26(2) does not specify to whom the notice shall be given. My noble friend will appreciate that the law relating to the tenure of property is different in Scotland. That is why, for example, the lists which determine liability in England and Scotland as set out in Clauses 6 and 75 are different. Against that background it was considered that a specific reference to the occupier was required in the Scottish clause in order to achieve the same policy effect in Scotland as in England and Wales.

I recognise that this is an important issue and for that reason I have responded to it at length. It was right of my noble friend Lord Balfour to raise it. However, I hope that in the light of my explanation he will feel able to withdraw his amendment.

Lord Skelmersdale

My Lords, before my noble friend sits down I wish to raise one matter. He gave a full answer to an apparently simple amendment and said that under Clause 26 the valuation officer has to notify the owner. Where in Clause 26 is that stated?

Lord Strathclyde

My Lords, no, I did not say that. I said that notice had to be given to the occupier since his occupation will be disturbed by the exercise of that power.

The Earl of Balfour

My Lords, I am not familiar with the technicalities of English law and am rather defeated by the answer. The provision does not appear to be on the face of the Bill. I cannot take the matter further but perhaps my noble friend will look at the matter again between now and Report. That is all that I can ask. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.15 p.m.

Clause 39 (Precepting and precepted authorities):

Lord Teviot moved Amendment No. 93:

Page 28, line 6, at end insert: ("(5) The Secretary of State may by order amend subsection (1) above so that a Passenger Transport Authority becomes a major precepting authority for the purposes of this Part as from such date as he may determine and, without prejudice to his powers under section 113(1) below, such an order may contain such modifications of the provisions of this Act as appear to him to be necessary or expedient for giving full effect to the amendment.").

The noble Lord said: My Lords, in moving the amendment I return to a subject originally raised in 1988 when your Lordships last discussed local government finance. It is the question of the precepting status of passenger transport authorities. The passenger transport authorities and their passenger transport executives play a vital role in providing public transport in the metropolitan counties. Their responsibilities include funding all local British Rail services, providing socially necessary bus services, securing transport provision for the mobility impaired and providing passenger information, bus stations and bus stops and shelters. Since then, these bodies have developed new light rail schemes, adding to the Tyne & Wear Metro which opened in 1980. They are: Manchester Metrolink, which is about to open; Sheffield Supertram, which is being built; Midlands Metro, which is awaiting approval; and the Leeds Supertram, which has just deposited a Parliamentary Bill.

Before 1990 the PTAs were funded by precepting on the constituent district councils and received grant directly from central government. They therefore needed only to precept on the rates of their district councils for the balance between their total expenditure and their rates support grant. The Local Government Finance Act 1988 changed that and made the PTAs levying bodies. Now they have no direct source of funding. They have to ask the district councils to find the whole of their expenditure from the districts' own resources. Grant goes to the districts but it is impossible to identify how much of the grant is for public transport. Consequently, the districts do not see a direct connection between the bill for the PTA levy and part of the grant which they receive from central government.

The purpose of this amendment is to give the Secretary of State the power to restore the PTAs to precepting status by making an order. It does not, therefore, seek to change the existing situation immediately. I am fully aware from the answer given to the noble Lord, Lord Underhill, in Committee that the Minister for Transport is reviewing this very issue at the moment. I should not wish to prejudice that. However, should he decide to restore the PTAs to precepting status it would give the Secretary of State the means of making PTAs precepting authorities without need for further primary legislation.

Your Lordships have twice debated this issue in the past; from memory at 12.30 in the morning. Happily, we debate it now at a reasonable time in the afternoon. I do not wish to detain the House with the same arguments, but I do wish to advise the House of the consequences of what has happened under levying. As several noble Lords predicted, there have been great difficulties in financing public transport in the PTA areas. Between 1989–90 and 1991–92 the district councils increased their contributions to the PTAs by 8 per cent. and their other expenditure by 22 per cent. according to careful analysis by the PTE group. The remainder of PTA expenditure had to be funded from reserves, which in most cases have now been totally exhausted.

Both the Manchester Metrolink and Sheffield Supertram schemes have meant that their PTAs have had to borrow money to help to finance them. The debt charges have to be paid by the PTA. Even though the Government increase the district councils' revenue support grant to cover these higher costs the districts do not necessarily pass the whole of this extra income on to the PTAs. The result is that other programmes are being squeezed. For example, in Greater Manchester the concessionary fare for the elderly has increased by 67 per cent. in the past two years and is likely to increase by at least another 15 per cent. soon. Expenditure on transport for the mobility impaired has had to be cut and provision of accessible transport in many areas shelved. These effects are not confined only to Greater Manchester. Taking concessionary travel as an example, there has been the introduction of charges in Tyne and Wear; the quadrupling of the fare in South Yorkshire; the ending of the free off-peak scheme in West Yorkshire; and charging for travel in the evening peak in the West Midlands. In Merseyside there has been a major increase in rail fares.

The amendment merely gives the Government room to manoeuvre on this important issue. I am well aware that if it were decided to make the PTAs precepting authorities it would be necessary to devise a standard spending assessment for them which might take time. Therefore, by giving the Secretary of State flexibility the amendment allows a workable solution to this and any other problems to be devised. I beg to move.

Lord Jenkin of Roding

My Lords, I have a sense of déjà vu. As my noble friend said, we debated the matter when dealing with the 1988 Bill. My noble friend on the Front Bench will remember that then I argued that the Government's proposed reversion to the system of levying district councils rather than precepting on them was an unfortunate change. When we originally introduced the regime after abolishing the metropolitan county councils and had the police, fire and transport services under joint boards we provided that all should be precepting authorities. In other words, the amount which they would require to be paid by the charge payers should appear as a separate precept and not be lumped in with the rest of the district councils' spending, as happens under the levy system.

The arguments which my noble friends deployed with sufficient force to convince the Committee on that occasion was that by lumping the amount together with the district expenditure one increases the accountability of the district councillors to their local electors. That is certainly an argument. I submit that it must be balanced by having regard to the difficulties which that system creates both for the district councils and for the passenger transport authorities. Of course, the police and fire authorities were left as precepting authorities.

I need not repeat the difficulties to which my noble friend referred in relation to a number of detailed schemes. However, one difficulty which noble Lords may wish to bear in mind concerns what happens if a local authority is at or near the level at which it qualifies for charge capping. The effect is that it will make every conceivable effort to keep its expenditure below the level at which it would qualify to be capped. Under the levying system, that expenditure, which the authority is trying to keep down, would have to include the levy which the passenger transport authority levies on it.

A neighbouring district council which is keen to see improvements in passenger transport in order to reduce congestion on the roads may be perfectly happy to accept a higher charge because it is nowhere near the level of capping. Yet the combined effect of the levying coupled with the system of capping, which in general I support, means that it must move at the pace of the slowest. The local authority which is least able to bear the size of the levy which the passenger transport authority will wish to impose on it dictates what can be levied from all the rest.

I put to my noble friends that the result may be a level of investment in public transport which is lower than that which the Government would wish to see and for which they had made provision under the SSAs. Under a system of precepting, the passenger transport authority determines its own expenditure and levies its own precept which, of course, is on the bill sent to the charge payer. That is like a county council precept. We are all familiar with the system whereby counties precept on districts. That system would be the same. That was a provision originally contained in the local government legislation which abolished the metropolitan county councils.

There are other difficulties of an extremely complex nature in relation to the problem of capital spending. However, I do not wish to weary the House by going through those difficulties. In practice the result is that district councils are becoming increasingly reluctant to support their passenger transport authorities in developing and promoting the type of major public transport scheme which everyone wishes to see, including my noble friends and the Government, which are needed to tackle the growing problems of urban congestion.

As my noble friend said, we are not banging at a closed door. On the contrary, Ministers in another place have made it clear that they are examining the case which has been put by the local authority associations and passenger transport authorities as to whether it may be right to revert to precepting. I believe that Ministers have quite rightly recognised the nature of the problems to which my noble friend and I have been drawing attention. My honourable friend Mr. Freeman, the Minister for Public Transport, had a meeting with the Association of Metropolitan Authorities in July last year at which he acknowledged the problem.

In a letter to the Tyne and Wear PTA in November my honourable friend Mr. McLoughlin, the transport Minister, said that the Government were looking at the possibility of a change in the present arrangements. Indeed during the Committee stage of the Bill my honourable friend the Minister for Local Government, Mr. Portillo, acknowledged that his honourable friend Mr. Freeman was considering representations on the subject. The same point was made in your Lordships' House.

What will happen if Ministers decide that they wish to revert to precepting rather than levying? If the power is not contained in the Bill, we shall have to wait for primary legislation. This amendment commits the Government to nothing. It merely allows them the freedom to revert to the precepting system by order.

I suggest to my noble friends on the Front Bench that given that the Government are looking at the problem and have acknowledged the problem to the local authorities, they should accept the amendment. That would give them a much needed power if they decide that a change is necessary. Without that we may have to wait one year, two years or however long it takes for the Government to find time for another local government Bill. This power enables the Government to make that change by order and I strongly support my noble friend's amendment.

Lord Boyd-Carpenter

My Lords, I do not share the enthusiasm of my noble friend Lord Jenkin of Roding for the system of precepting. It is a system whereby charges are imposed by organisations which are not directly responsible to the electorate for the raising and spending of money. For that reason I have very little enthusiasm for the general practice of precepting. However, I do not wish to weary your Lordships by continuing the debate on that issue. I merely wish to make a short point on the form of the amendment.

As your Lordships will see—and I am sorry that no noble and learned Lords who speak frequently about Henry VIII clauses are present—the amendment proposes to give to the Secretary of State extremely wide powers to alter the law as laid down by Parliament. It states: The Secretary of State may by order amend subsection (1) above", and it concludes: such an order may contain such modifications of the provisions of this Act as appear to him to be necessary or expedient for giving full effect to the amendment". As far as I can see, there is no provision that the exercise of that power by the Secretary of State should be controlled or regulated in any way by compelling him to use statutory instruments or to obtain orders. It simply proposes to give the Secretary of State, for the perfectly understandable reasons to which my noble friends referred, a power off his own bat, if he feels so disposed, to amend drastically the provisions of the statute. For that reason, I do not like the amendment.

Lord Underhill

My Lords, I rise to support the amendment moved so comprehensively by the noble Lord, Lord Teviot. In his speech he outlined in great detail the duties and responsibilities of the passenger transport authorities and the effect that the change from precepting has had on those authorities.

I was extremely pleased to hear the powerful speech by the noble Lord, Lord Jenkin of Roding, who knows full well what happened as regards the 1988 Act. It may be recalled that in Committee I moved an amendment to add to the list of precepting bodies in Clause 39(1) passenger transport authorities for the metropolitan areas. I appreciate the point made by the noble Lord, Lord Boyd-Carpenter. However, if one looks at Clause 39(1), one sees that the list of precepting bodies includes county councils. Therefore, if one accepts the argument of the noble Lord, Lord Boyd-Carpenter, county councils would not be precepting authorities.

In Committee I endeavoured to add to the list of precepting bodies the passenger transport authorities in just the same way as the police authorities, the fire services and civil defence authorities in the metropolitan areas are listed in that subsection. It is not my intention to repeat all the arguments put forward in Committee. I shall mention one important point. The main reason for the passenger transport authorities being originally included by the Government in the list of responsible authorities in the metropolitan areas was so that decisions of transport importance would be taken on a county-wide basis in those areas. That is an important point which should be considered.

An argument arose in Committee regarding the difficulties of SSAs. Mr. Portillo, the Minister concerned, said that it would be difficult to determine how to base an SSA for a passenger transport authority. As recently as January of this year the Association of Metropolitan Authorities—I know because I happen to be president of that body—gave serious consideration to the matter. The passenger transport executives and the passenger transport authorities working closely together arrived at a scheme whereby SSA for PTAs could be accepted by the Government. It may be that since that meeting in January the Government have had discussions with those bodies and arrived at a conclusion.

Before I had concluded my arguments on the amendment in Committee, the noble Lord, Lord Teviot, intervened and said that all options should be left open. He hoped that I would consider the matter and determine what action I intended to take. The noble Earl, Lord Howe, who I believe is to reply to the debate today, said, I should have said that I was grateful to my noble friend for his suggestions [to leave all options open]. The Government do not have a closed mind on the return to the precepting status. We are alive to the views expressed. However, at this stage and for the purposes of this Bill we are not convinced that it is the road we wish to go down".— [Official Report, 28/1/92; col. 1275.] I was so impressed by that statement that I decided to await the consideration being given to the representations made to the Minister for Public Transport who, we were assured, and as the noble Lord, Lord Jenkin, said, was giving them serious consideration. I decided that the most sensible action was to await that consideration and withdraw the amendment.

Both noble Lords who have spoken emphasised that to accept Amendment No. 93 would not be committing the Government to any action other than a consideration of their intentions. The amendment I moved in Committee would have inserted into the Bill the requirement that the passenger transport authorities be included in the list of precepting authorities.

I hope that the noble Earl will be able to tell us today the results of the serious consideration given to the matter. I recognise that since 28th January there has been little time and he may not be in a position to do that. I hope therefore that he will accept Amendment No. 93 on behalf of the Government. It does not commit them to making the PTAs precepting authorities. However, as was emphasised by the noble Lord, Lord Jenkin, if we do not introduce the provision today we shall have to wait some time before any further consideration can be determined by legislation.

I hope that the Minister is in a position to state either the results of the representations—I hope that they are favourable—or, alternatively, that he will accept the amendment so that should the Government later decide on the principle of the PTA becoming a precepting authority for the purposes of the Bill, it can be carried out by order. If the order is not fully in line with the terms of the legislation, there will be an opportunity at Third Reading for the Government to table an amendment. I hope that the Government will accept the amendment of the noble Lord, Lord Teviot.

4.30 p.m.

Earl Howe

My Lords, I am grateful to my noble friend Lord Teviot for his clear presentation of the amendment and to all noble Lords who have spoken to it. The amendment would have the effect of allowing the Secretary of State to make an order establishing metropolitan passenger transport authorities as major precepting authorities. It would, in effect, return them to their position under the rating system, before they were established as levying bodies under Section 74 of the Local Government Finance Act 1988. As I argued in Committee, the Government felt that there were sound reasons for making the change and I am not convinced by the arguments adduced by my noble friend and other noble Lords in favour of restoring their previous position.

My noble friend Lord Boyd-Carpenter pointed out that the amendment was in effect a Henry VIII power. I agree that the order-making power in the amendment would, were the amendment accepted, be subject only to the negative resolution procedure by virtue of Clause 112. I would be a little surprised if that were acceptable to noble Lords opposite.

Noble Lords will recall that the reasons for the previous change, which came into effect in 1990–91, were that we believed PTAs, as precepting authorities, to be insufficiently accountable to the metropolitan boroughs for their spending decisions. Also, there were technical problems in devising a grant-related expenditure assessment that reflected their spending needs.

The establishment of PTAs as bodies levying upon the metropolitan districts dealt with those problems. Their expenditure is included in the districts' budgets, and district councillors are now much more directly responsible for those spending decisions as part of their wider responsibilities to the electorate. However, I did say that my honourable friend the Minister for Public Transport has been looking at the matter. Since Committee stage we have looked at the position carefully and have reached the firm conclusion that PTAs should not become precepting authorities. The reasons for establishing them as levying bodies are as valid now as in 1988. I cannot therefore advise the House to accept even the permissive amendment moved by my noble friend. We are aware that authorities have perceived difficulties in relation to some major capital projects—my noble friend Lord Jenkin highlighted the situation where a local authority was at, or near, its capping level—but we remain as willing as ever to approach those difficulties in a constructive fashion.

My noble friend Lord Teviot mentioned the South Yorkshire Supertram. It may be helpful for me to use the financing arrangements for the Supertram as an illustration. The costs of the project, around £240 million, are met in part by Section 56 grant and in part by borrowing. The loan charges on that borrowing are split into two categories. Charges on that element, which it is not foreseen could be recouped through the sale and trading profits of Supertram, are fully covered by increases in the SSAs of the district councils and therefore supported by RSG. For the second category—the trading element, which will eventually be recouped from the sale or operation of the system—we have offered the South Yorkshire authorities the opportunity to capitalise their interest payments so that the short-term burden on charge payers or council tax payers is reduced.

The overall effect is that in the long term the authorities will gain a major asset worth £240 million at no cost to local taxpayers. In the short term, if the limited expenditure that they are asked to meet occurs when they are spending above their SSAs more generally, they must make choices about their spending priorities. The main point is that we are already prepared to give local authorities the flexibility that they need in situations of this kind without going back to the old regime with its concomitant disadvantages. Therefore, in the light of what I have said at some length, and I apologise for that, I hope that my noble friend will feel more comfortable about the matter and that he will withdraw the amendment.

Lord Teviot

My Lords, I would like to say that I am happy, but I am not at all happy. I inform your Lordships here and now that I am not going to go careering off to the Division Lobbies. That would be totally unwise. However, there are one or two items I wish to discuss briefly before I finally withdraw the amendment. I do not accept the concomitant disadvantages of the old system. I feel that the new system since 1988 has been totally unsatisfactory for all the reasons that I explained. The situation was explained rather better by my noble friend Lord Jenkin of Roding, with his experience. My noble friend went into great detail. That gives me encouragement to pursue the matter.

I am also grateful to the noble Lord, Lord Underhill, for his support and particularly for saying that my approach and the amendment were more satisfactory than the direct approach of having to put the matter back. My noble friend Lord Boyd-Carpenter picked up the legal argument. He did not like the situation. From that point on I felt it unwise to proceed. However, this is a situation which has been forced on us and it has not worked. The amendment appeared to be the right formula to overcome the problem.

I shall read with particular care what my noble friend Lord Howe said. As regards his reference to the Sheffield Supertram and other things, I shall consider with care how the Government looked into all these issues. I reserve the right to come back to the matter at Third Reading. There may be an amendment at that stage. Perhaps I shall not be in the same frame of mind as I am now in withdrawing the amendment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 54 [Power to designate authorities]:

Lord McIntosh of Haringey moved Amendment No. 93A: Page 38, leave out lines 23 to 28.

The noble Lord said: My Lords, with this amendment we return to the most important issue of capping or what is called in the Bill "designation." We return to a particular aspect of it which, even if one accepts that it is the Government's intention to impose widespread or even universal capping, still seems to stick out like a sore thumb. It still seems to be the case that there is a particular injustice involved in Clause 54. The clause itself provides that the, Secretary of State may designate an authority".

In other words, he may put the finger on it for capping purposes if the amount calculated by its budget is excessive or if there is an excessive increase in the budget. Subsection (4) provides that the calculation of the budget for that purpose shall be less the aggregate amount of any precepts issued to it by local precepting authorities or anticipated by it in pursuance of regulations. In other words, the budget of a district council, if one takes the clause up to and including subsection (4), is the net budget after taking off the precept from the county council, and at the other end, after taking off the precept from a parish council.

Subsection (6) is deleted by this amendment. It provides that the Secretary of State may say that subsection (4) shall not apply. In other words, the precepted amount shall be included in the budget in relation to any financial year specified or any other financial year. Therefore, we are back in the extraordinary position that a district council may have its capping limits set, not on any decisions of expenditure which it takes itself, but on the total of its budget including the precepted amount. It is clearly the intention that that relates principally to parish councils. It is not intended that the provision should apply to the county council precept.

In some cases that does not matter very much. In some of the cases we are talking about, we are dealing with relatively small amounts of money. However, there are district councils for whom parish council precepts are of considerable importance. For the Mid-Bedfordshire District Council, parish spending is 19.5 per cent. of that of the district. In Huntingdonshire, the figure is over 31 per cent. Even accepting for the purposes of this amendment the basic thinking behind the Government's capping proposals—we do not of course, but we are not querying them here—there is an anomaly which has been left. There seems no good reason why a district council should leave itself open to capping because of the decisions of a parish council whose spending is totally outwith the control of the district council.

None of this is said in any spirit of antagonism toward parish councils. I believe that noble Lords who know my record on that issue will accept that that must be the case. There is something wrong here, and the Government have the chance to put it right. I beg to move.

4.45 p.m.

Baroness Blatch

My Lords, as I made clear when we discussed a similar amendment in Committee, unless an order is made under Clause 54(6), the Bill's provisions continue the current practice whereby parish precepts are ignored in considering whether the budget set by an authority is excessive or represents an excessive increase over the previous year. I must emphasise once again that we are not seeking direct controls over revenue spending by parishes. As I have said previously, we hope that we will be able to rely on the general pressure of accountability to control parish spending. We would not however wish to see the wholesale transfer of functions and spending from district to parish councils, with the result of higher parish precepts, without any accompanying reduction in district spending, as a device—this point was not covered by the noble Lord—to enable districts to avoid the disciplines imposed by capping. In such circumstances it might not be appropriate to continue to exclude parish expenditure from districts' budget requirements for the purposes of capping.

Although we hope never to use this power, it would be imprudent to fetter the Secretary of State's discretion in this respect and I therefore call upon the House to reject the amendment.

Perhaps I may make reference to the Henry VIII power. The power confers no unfettered power on the Secretary of State to vary or amend primary legislation; it simply allows him to decide, in the light of the prevailing circumstances, whether it would be appropriate to bring parish precepts within district councils' budgets for the purposes of exercising his powers under Chapter V of Part I of the Bill. That is not, selectively, a parish or, selectively, a district council. It is parish precepts being within the district council's budget. I hope that the amendment will not be pressed.

Lord McIntosh of Haringey

My Lords, I did not make any reference to Henry VIII provisions in subsection (6) on this occasion. If I had, I might have been tempted to refer to the Henry VIII accusation that was made in relation to the previous amendment. Ministers will be aware that the noble Lord, Lord Teviot, in moving the previous amendment, adapted it and made it more moderate in order to give Ministers an opportunity to be more flexible themselves because they said at the time that the matter was still under consideration.

I was directly challenged on that point because it is known that I look on Henry VIII provisions with disfavour. If I were the noble Lord, Lord Teviot, intending to bring back the matter at Third Reading, I would return without the Henry VIII provisions. In other words, I would bring it back on the face of the Bill and without giving the Secretary of State any option that one ought to go back to precepting powers. That is the only possibility now left to those who are concerned about the problems of passenger transport authorities. However, that is for him and not for me. On this occasion I am not accusing the Government of making any Henry VIII provision. What I accuse the Government of is a case of advanced paranoia. They seem to think that any single option which is available to any local authority to seek to avoid the advancing tentacles of government control of local authority expenditure has to be closed down in advance of any evidence that that is even likely to happen.

I notice that the Minister in her reply did not say that district councils were handing over functions to parish councils in order to avoid capping. She just said that they fear that they might do so in the future and therefore we have to close that potential loophole. If one spends time going around closing potential loopholes then one is destroying any mutual respect, mutual trust and mutual confidence that might exist between central and local government.

The evidence for the Government's claim that they are looking for accountable and responsible local government is not very strong in the light of their reaction to this very simple and straightforward amendment. I am sorry that Ministers feel as they do. I am not satisfied with the reply and I shall have to consider what our response will be on the matter. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey moved Amendment No. 94: Page 38, line 31, at end insert: ("(8) No authority shall be designated under this section before the Audit Commission has reported on the operation of the arrangements for the distribution of revenue support grant on the economy, efficiency and effectiveness of the provision of local authority services.").

The noble Lord said: My Lords, Amendment No. 94 returns in a different form to one of the four most important elements in the Bill; that is, the issue of the justice of universal council tax capping and its relationship to the standard spending assessment.

The simple aim of this amendment is to suggest that capping should not be carried out until, the Audit Commission has reported on the operation of the arrangements for the distribution of revenue support grant on the economy, efficiency and effectiveness of the provision of local authority services".

We did not invent those words. They come from Section 27 of the Local Government Finance Act 1982 where the Audit Commission is charged, or may be charged, by the Secretary of State with investigating, the impact … of the operation of any particular statutory provision or provisions; or … any directions or guidance given by any Minister of the Crown … on economy, efficiency and effectiveness in the provision of local authority services".

If ever there were a case for an inquiry under the Section 27 powers in the 1982 Act, it is this case. If ever there were a case where the claims made by government and the proposals of government could have incalculable consequences for the effectiveness of the operations of local authorities, this is it. That is true both from the point of view of the nature of the capping powers themselves and from the point of view of the standard spending assessments which are to be taken into account. But, of course, the words "excessive" and "excessive increase" in Clause 54 define themselves in terms of what the Secretary of State, in his opinion, considers excessive. It has been made clear that the definition for the Secretary of State of what is excessive is in excess of standard spending assessments. If the Secretary of State's powers are to be exercised at all, it has been made clear to us that they will be exercised with respect to expenditure proposed above standard spending assessments.

It is not just that. It is proposed that there should be, as there used to be, some flexibility about the way in which this is operated. In the years 1985 and 1986, when standard spending assessments and, the capping powers were first introduced, capping came into effect at a level of 20 per cent. above standard spending assessments. In other words, it was recognised that standard spending assessments were a crude measure—to give them more credit than I think they deserve—of local authority expenditure.

By 1990 the excess allowed over SSAs was reduced to 12.5 per cent. and by 1991–92 and 1992–93 it has been made clear that any level of local authority expenditure above the standard spending assessment may leave the local authority liable to capping if there is an increase which is considered to be excessive in expenditure from one year to another. Therefore, the standard spending assessment having been broadly a guideline, and a fair amount of leeway being allowed on either side of the standard spending assessment, the noose is now tightening on local authorities and the standard spending assessment is being treated as an absolute figure.

At the same time, as a result of the 1991 Act, the exclusion of smaller councils—those with budgets of less than £15 million—has been removed so that now capping potentially applies to all councils, including the smallest councils. That is not acceptable. Clearly it is a confession of failure on the part of the Government. If after having several stabs at it they have produced, in their view, the best possible system of local authority finance then they ought now to be able to return to their original notions of accountability; to the statements made on innumerable occasions by Ministers, by Secretaries of State, by local Conservative politicians, that accountability ought to be in the ballot box rather than Marsham Street. By admitting that they are continuing and increasing the level of capping they are admitting that they have not really solved in their own minds the issue of local government finance and how to make it accountable. Certainly the existence of universal capping casts doubt on solutions proposed by this Government in the Bill for the future of local government finance.

However, it is worse than that because the proposals depend on the validity or otherwise of the standard spending assessment. I spent a considerable time in Committee—some of your Lordships may well have thought too much time —talking about some of the anomalies of the standard spending assessments. I referred to the fact that in many cases they are based on out of date information; that they exclude some major elements in expenditure; that they give quite extraordinary prominence to other elements of local authority expenditure—for example, visitor nights—as opposed to other possible expenditure on people who come into an area from a travel-to-work area or from a shopping area; and to the fact that they do not take account of a number of matters in the other services sector which are of considerable importance and may involve considerable expenditure. No account is taken, for example, of whether a local authority has a museum, an art gallery, any form of public park, a crematorium, or anything of that sort. An authority may have those amenities. One might say that some of them should make money, like crematoria, but nobody suggests that public parks should pay for themselves; yet they are not taken into account in the standard spending assessment.

The standard spending assessment is fundamentally flawed because it pretends to be the cost of a standard level of service, whereas in practice it is a way of dividing a fixed amount of money predetermined by government. Therefore, it is impossible to relate the standard spending assessment to any identifiable fixed level of service. Indeed, if one could, there would not be anything like the differences between one local authority and another. There might be differences in grants, because grants would take account of resources, but how do the Government explain the fact that, on the basis of a standard level of service, the standard spending assessment per head in Stoke on Trent is £128, in Bristol it is £139 but in Leicester it is £236? It simply does not make sense. The figures are badly done and they are badly done because they are arrived at through a false premise.

To depend for the basis of capping on these deeply flawed standard spending assessments is to turn accountability on its head. It is to put Marsham Street in the position of making the decisions—all the important aggregate decisions—on local expenditure in each individual spending authority. That cannot be right. The amendment would not put that right but by requiring the Audit Commission to produce a report before capping procedures were introduced it would at the very least expose the effect of what is proposed on the day-to-day workings and the efficiency, economy and effectiveness of local government. I beg to move.

5 p.m.

Lord Boyd-Carpenter

My Lords, with this amendment issues are raised for the first time this afternoon which probably, on broad political grounds, divide the two sides of the House. The Labour Party has always been opposed to capping. It has sometimes found itself in the position therefore of defending outrageously extravagant local authorities which have imposed a heavy burden on their ratepayers, taxpayers and inhabitants. The amendment would have the effect of deferring any exercise of the capping power for a considerable time. That is the intention; there is no concealment about it. It would mean that any local authority would feel itself free to indulge in very high spending indeed without fear of interference from the Government.

I do not see how any responsible government can accept that. One accepts that the great majority of local authorities in this country conduct their affairs responsibly. However, experience over the past few years has shown that there are exceptions and that there are local authorities which have been prepared to squander their citizens' money on wild degrees of extravagance. I find it difficult to see how a responsible government of any political colour could simply stand by and let that happen. The effect of the amendment must be—I speak subject to the correction of my noble friend on the Front Bench—to put the capping power on ice for a certain length of time. I am not very clear about how long, but for a certain amount of time there would be no capping. There would therefore be every encouragement to the minority of squandermaniac local authorities that like going in for excessive spending. That is a conclusive argument against the amendment and I hope that your Lordships will throw it out.

Lord Renfrew of Kaimsthorn

My Lords, I very much agree with the observations of my noble friend Lord Boyd-Carpenter. We are being offered during the course of the Report stage—I include the elements yet to come—a full range of what I should like to call temporising devices. A temporising device may be defined as a provision which would delay implementation of the provisions of an Act and indeed delay the routine functioning of the Act until various consultations, reports, reflections, cogitations, ruminations and ratiocinations have been completed.

First, there is the device of the affirmative resolution to which we shall come in Amendment No. 116A. I mention here that this amendment immediately follows on a provision for negative resolution, which is, after all, already written into the Bill. Then we have the device of the Secretary of State first having to make a report on something or other. I do not remember what it was now but we certainly had one of those on the first day of the Committee stage. I remember opposing it. Then we have the notion of consultation by the Secretary of State. We shall come to that with Amendments Nos. 97, 107A and 116A. Now we have the interesting device of a report by another body, in this case the Audit Commission.

Some of these devices are interesting. Indeed I think there could be much merit in the report of the Audit Commission which the noble Lord opposite would wish us to have. What is obnoxious, however, is that the whole operation of the Act will have to sit by—be put on ice, as my noble friend puts it—until this interesting report has come forward. There is nothing improper in such suggestions. The noble Lord, Lord McIntosh of Haringey, rebuked me the other day for using the term "wrecking" in relation to one of his amendments and reminded the House, with complete propriety, that it is indeed appropriate for the Opposition to put down what might be termed wrecking amendments when they seek to oppose the provisions of the Bill. That is an entirely reasonable point. Nonetheless it is important to recognise these temporising devices for what they are.

It is not clear to me whether the report of the Audit Commission will be expected to make reference to the local authority which is to be designated. If it has no specific relevance to the local authority in question, it will be a general report of considerable general interest but perhaps with little pertinence to the specific act of the Secretary of State in designating the local authority in question. If, on the other hand, the Audit Commission is to be expected to investigate the efficiency and working of local authority services in every specific regional district where a designation process is proposed, it will be an extremely time-consuming business. My noble friend is completely right to say that it will result in long delays.

Although on this side of the House we must respect the fact that noble Lords opposite are not in sympathy with these procedures in general, it cannot be right, if we are trying to pass a Bill that will work, to have, every time there is an issue of disagreement, a report, a consultation, an affirmative resolution and a cogibundancy of cogitation, to use the term from Nightmare Abbey.

Lord Stoddart of Swindon

My Lords, the noble Lord, Lord Renfrew, ran through the list of amendments in the Marshalled List and sought to show that they were unnecessary and that we were trying to upset the passage of the Bill. However, the amendments would not be necessary if the clauses were not in the Bill. The noble Lord must know that we do not agree with the clauses and we do not agree that the Government should be circumscribing the actions of local government in the way that they are. We believe that the Government are embarking on a process of undemocratic centralism.

We do not believe in undemocratic centralism any more than we believe in the so-called democratic centralism of the former Soviet Union. We on this side of the House believe in free local authorities—at least I do; I cannot speak for my Front Bench. I believe in local authorities which are themselves allowed to raise the bulk of their income and to decide for themselves the bulk of their expenditure. They should be answerable to the local electorate. In my book, that is democracy. Anything other than that—and certainly the imposition from Whitehall of controls on that expenditure—is frankly anathema to me because it is not local government.

I served in local government at a time when there was a real partnership between the Government and local government and when Whitehall took account of the need for local authorities to decide things for themselves. Local government certainly had to bear in mind government policy, but its actions were not completely circumscribed by it. We have embarked down a road, which the Government seem to want, where democratically controlled local government no longer exists. The Bill—and especially this clause—is a recipe for town managers. Under the Bill, we would not need elected local authorities because they can do nothing for themselves. The Government might just as well say, "Let's abolish local government and set up a system of town managers".

The noble Lord, Lord Boyd-Carpenter, referred to extravagant local authorities, but in almost the next breath he said that most local authorities were highly responsible. Therefore, according to the noble Lord, we are talking about a system that will deal not with the vast majority of local authorities, but with a few rogue local authorities.

Lord Strathclyde

My Lords, Lambeth!

Lord Stoddart of Swindon

My Lords, if I may say so, the Bill is taking a huge sledgehammer to crack a very small nut. It is the sort of thing that Hitler used to do. If a small minority of people was against him and did things to undermine him, he used to take innocent people out and shoot them. I am not suggesting that the Government want to take out local authority members and shoot them, but why on earth should we make things difficult for the vast majority of local authorities simply and solely because a few rogue local authorities, which, after all, should be responsible to their own electorates, are kicking over the traces and not doing what the Government tell them?

Lord Boyd-Carpenter

My Lords, I do not know why the noble Lord, Lord Stoddart, is suggesting that the Bill will make things difficult for the vast majority of local authorities because the vast majority will not have to be capped and their operations will not therefore be interfered with. He is arguing that, however wildly extravagant and oppressive a local authority may be to its own people because of its high spending and heavy demands upon them, Her Majesty's Government should simply fold their hands and let it happen. That is what the noble Lord is suggesting.

Lord Stoddart of Swindon

My Lords, I do not think that the noble Lord, Lord Boyd-Carpenter, understands the system or what is happening. The fact is that local authorities have to conform to the Government's standard spending assessment or be capped. What used to be Tory Berkshire is not quite that any more because it has become a hung council since the Tories lost a seat there. But the previously Tory-controlled Berkshire County Council had to conform or be capped—and it did not like that one bit. Is the noble Lord, Lord Boyd-Carpenter, suggesting that Berkshire County Council is a rogue, irresponsible local authority? I can assure him that it is not. Its expenditure on many services is well below the average, but it is having difficulty and has had difficulty for two or three years in meeting the Government's standard spending assessment. We are talking about perhaps a handful of local authorities that could be described as "rogue" authorities which are making the running for the whole of local government.

The amendment is relevant for another reason: because people simply do not understand the system. I know that I have been over this ground before, but people in this country find it hard to understand why one local authority has to levy what is presently a community charge of perhaps £400 whereas another local authority levies nothing at all or, in the case of Westminster this year, a charge of only £36. People know perfectly well that that cannot be due simply to the efficient operation of that local authority. They know that there is something else to it. That is why it is right that the amendment provides for an examination of the circumstances of a local authority that is to be capped, as Reading as been capped both this year and last year. There should be an opportunity to examine why a local authority, such as Reading, which has been praised for its efficiency by the Audit Commission, should have to charge about £360 per year whereas people in Wandsworth pay nothing. People do not understand that. The local councillors in Reading certainly do not understand it and, as a charge payer, I still do not understand it, but I very much resent it. The amendment would provide for an examination of what is happening in a local authority that the Government propose to cap.

That is why I support the amendment. Indeed, I should have thought that if the Government wanted to be open, they would be happy to accept it or something similar because it would provide for a proper examination of the circumstances. The Government could not then be accused of being party political in their grant allocations and there would be an independent inspection of what they proposed to do to a local authority. I support the amendment.

5.15 p.m.

Baroness Hamwee

My Lords, I, too, support the amendment, which will be no great surprise to your Lordships given that we, in the Liberal Democrats, have always supported the accountability of local authorities to their local communities. The noble Lord, Lord Boyd-Carpenter, put his finger on it when he said that if the provisions in the Bill for capping were suspended, certain authorities would indulge in high spending without fear of interference from the Government. Others of us may say that some local authorities might indulge in high spending, but that they should fear those who put votes in the ballot box.

The noble Lord, Lord Renfrew, said the operation of the legislation as a whole would be prejudiced if the amendment were accepted. That is perhaps stretching things a little because the provisions relate only to the suspension of one power until there has been a report by the organisation that we have all been taught to respect as saying sound and wise things about local authority finance.

When I was a fairly new councillor in the early 1980s, I attended a meeting at which someone commented that the number of people who understood local authority finance was probably about the same as the number of people who understood the situation in Lebanon. I do not think that things have got a great deal better—in Lebanon either—since that time.

The amendment would enable those of us in local government to answer the people who quite understandably approach us saying, "Please can you explain why I am so prejudiced against and why things are so different in different authorities?". The Audit Commission's report, pinning the work of local authorities into the categories of "economy", "efficiency" and "effectiveness" would be a very good thing.

In the outer London boroughs—I do not have the figures for inner London and, in any event, it is probably unfair to compare them—the spending limits for next year per head of population range from the lowest of £619 to more than double that amount. The proportion of expenditure that is funded by the poll tax in the current year is multiplied by a factor of two, from the lowest of just under 14 per cent. to the highest of over 27 per cent.

Speaking as a councillor from Richmond, I should be glad to have the position examined. The borough is second to lowest in block grant per head of population for next year. I can only assume—I know this to be the case—that we are highly economic, efficient and effective. I should be glad to have the stamp of the Audit Commission to tell people that. People deserve to know why there is such a range of charges and why the system is so complex. If there is nothing for them to be anxious about, they should be told that.

Lord Jenkin of Roding

My Lord, I too oppose the amendment. I agree with everything that my two noble friends have said about the amendment and what underlies it. I speak as the Minister who carried the first rates Bill through another place. That Bill was eventually passed by this House. It introduced capping for the first time. No one pretends that one introduced it with pleasure or enthusiasm. It became a most regrettable necessity. It was introduced in response to rising pressure and the rising vocal anger of ratepayers, as they were then, against the intolerable burdens being imposed upon them by a number of local authorities. The House will remember that we started with relatively few authorities. There was a general power which, in my estimation and that of a number of my honourable friends, would never need to be used. No one pretends that capping is desirable, but it regrettably proved to be necessary to prevent the extravagant demands that were being made.

When the community charge was introduced it was hoped that, with the combination of measures embodied in the legislation, one would have sufficiently strengthened the accountability of local authorities to their local charge payers (through the multiplier and so on) that capping would be unnecessary. The power was taken as a transitional measure to ensure that too great an advantage was not taken, because, even then, I believe my noble friends will agree, the Government underestimated the determination of local authorities to increase their spending and to choose the opportunity of a change in the system to blame the Government. That became the normal thing.

Yesterday I attended the launch of a new Rowntree publication entitled A New Accord: Promoting Constructive Relations Between Central and Local Government. All of us interested in local government should read what is an interesting publication. I happen to think that it is unrealistic in many respects. It is idealistic. It is in no way rooted in the political realities of the situation, as I am sure the noble Lord, Lord McIntosh, and his noble friends and my noble friends will recognise. It is the dream of a number of able, well-meaning people. They believe that if only the great, the good and the beautiful could all agree, everything in the garden would be lovely. It contains some interesting proposals.

The report was torn to shreds by one member of the commission, the current chairman of the Association of Metropolitan Authorities, the very able Labour councillor from Newcastle, Councillor Jeremy Beecham. A number of us had criticisms of it. It is interesting in one respect which is relevant to the amendment. Properly the authors say, as I have said, that on the whole capping is not conducive to the concept of local democracy, and would that it were not necessary! It is interesting to note what the authors say about capping. In general, they are against it, but where there is a transition to a new tax it might be necessary. For such a body to argue that the one case which would justify retaining the capping power is a transition to a new tax is significant. Here we have a transition to a new tax. My noble friends are right in those circumstances to include the capping provision. I equally agree that it would be unnecessary to preface the use of that power by an Audit Commission report.

There is nothing to prevent the Audit Commission from deciding to have the kind of study that the amendment proposes. It might be a revealing exercise if it were to be done; but to make it a condition precedent to the use of the capping power is inappropriate. When a body such as the Rowntree Trust recognises that such a power is justified during a transition, it shows that it is a realistic power which might be used. I oppose the amendment.

Baroness Blatch

My Lords, again, we have ranged far and wide in a fundamental disagreement between noble Lords opposite and my noble friends. Noble Lords opposite believe fundamentally that there should be no limit on local authority spending, and that the Government should take no view about the impact of that aggregate of local authority spending on the national economy. If noble Lords opposite were ever to come to power I do not believe that they could deliver that proposition in practice. At some stage, they would find themselves having to take a view that unfettered local authority spending would have an adverse impact on the national economy. It would be only a matter of time before they would have to resort to some means of control.

I was disappointed, because the noble Lord, Lord McIntosh, did not return to accusations of political bias in determining SSAs; but sadly his colleague and noble friend Lord Stoddart of Swindon, did. I shall put the record straight, because it is important that that should be done. First, the factors used to determine SSAs for authorities are applied universally across the country. They are also arrived at in consultation with the local authority associations. It is true to say that the local authority associations have never made the accusation that there is political bias in determining those factors. Even if, at worst, there were, they are applied uniformly across the country. I want to refute, as my noble friend Lord Jenkin did in Committee, that that is the case.

I shall give some facts. Labour-controlled local authorities receive the greatest external support for spending. The higher SSA-pounds-per-adult go to Labour-controlled authorities. They spend at a much higher level than Conservative-controlled authorities. All local authorities with a community charge of £300 or more are Labour-controlled or have no party in overall control. They have greater support from government. It is recognised that they have more generous SSAs, but still they choose to spend at a higher level and to charge ratepayers more.

The noble Baroness, Lady Hamwee, talked about putting the capping powers into suspension, and that we should not worry if local authorities are self-indulgent; that it should not be our concern; and that our concern should be about votes in ballot boxes. That is very much the concern of this side of the Chamber. We believe that the people who have to pay the bill for that self-indulgence and extravagance are the people who put the votes into the ballot boxes. It is the responsibility of any government to have a conscience about the people who must pay the bills for excessive spending. Simply to say that we do not care about excessive spending is something with which we on this side of the Chamber cannot agree.

Once again the noble Lord, Lord Stoddart of Swindon, indulged in Westminster bashing: he said that there must be more to it. There is indeed more to it; Westminster is a very efficient local authority. If one compares external support for Westminster in pounds per adult with that for many Labour-controlled authorities in a similar class in London, there is no comparison. Thus, one cannot use that as an argument.

The noble Baroness, Lady Hamwee, was concerned that the figure for many of the outer London boroughs varied from approximately £600 to over £1,000. I hope the noble Baroness will accept the differing needs of the authorities in supplying services to their populations. It must be cheaper to provide services for people in Surrey than for those in Tower Hamlets. The needs of the people of Newham differ from and are greater than those of Richmond. That is precisely the rationale for saying that there must be different sums for different authorities.

Baroness Hamwee

My Lords, I thank the Minister for giving way. I accept that there are different needs and that the external grant must reflect them. I said that people paying the poll tax, or what will be the council tax, find it difficult to understand the differences. I was not suggesting that those of us who have had the privilege of a little exposure to the arcane, complex workings of the system do not accept that there are differences in need.

5.30 p.m.

Baroness Blatch

My Lords, I accept what the noble Baroness said but she missed the point that the amendments which she has been supporting during the passage of the Bill, those proposed by the Labour Benches and supported by the Liberal Benches, as well as the Liberal amendments supported by the Labour Benches, add up to greater complexity. All the information which the noble Baroness is worried about is in the public arena; it is public information. I do not pretend that the information is easily assimilated, but it would not be possible to have a simple system on how one arrives at needs. However, it is public information and local authority associations as well as local authorities have it.

Under the council tax system, we propose that RSG should be distributed to authorities to allow each to set a council tax at broadly the same level for each band. RSG will continue—as under the present system —to make up the shortfall between the amount which authorities expect to receive through income from local residents and from non-domestic rates and their SSAs. We are not proposing any major changes to SSA methodology although we shall, of course, seek to make improvements wherever these are justified on the basis of the available evidence. This year is a case in point. Through consultations with the local authority associations, the issue of capital receipts was addressed and some change was made to the factor that caused a slightly different redistribution.

The fundamental point for the purposes of this amendment is that SSAs—the basis on which RSG is to be distributed—are in no sense whatever a commentary on the efficiency or otherwise of an authority. SSAs represent the Government's view of the appropriate level of expenditure for each authority to incur to provide a standard level of service consistent with our view of the level of expenditure for authorities as a whole. This is measured through the uniform application of the methodology to the particular circumstances—geographical, demographic and social—of each authority's area. The methodology is designed to reflect variations in these characteristics which have a demonstrable effect on variations in the cost of providing services. I challenge both the noble Baroness and the noble Lord if they suggest that that should not be done. We may argue about the factors, but that there should be some recognition of the differing needs of different authorities as a principle is, I hope, not in doubt.

SSAs do not—and nor should they—represent any judgment about the relative efficiency of an authority, its policies, its previous spending plans or its current and future priorities. These are matters for each authority. We are satisfied that SSAs represent a fair and reasonable assessment of the expenditure required to provide a standard level of service. It is for authorities to seek to improve upon that if they can. If they do so, the result will be lower council taxes for their residents. If they do not, it will be higher council taxes. This is fundamental to the enhancement of local accountability.

Capping is concerned with the Secretary of State's judgment about whether an authority's budget is excessive or represents an excessive increase over the previous year. We are not concerned, in designating authorities for capping, with the priorities which an authority has set for itself or the efficiency of its use of resources.

Thus, to delay decisions on capping to take account of a study of the effects of SSA methodology on value for money in the provision of local authority services would be, as I hope is clear to all noble Lords, wholly spurious.

I end where I started. We know that noble Lords opposite believe that local authorities should spend with no limits other than those they put on themselves and that there should be no concern about the aggregate of local authority spending as it impacts on the national economy. On behalf of the Government, I could not accept that as a principle and I call upon the House to reject the amendment.

Lord McIntosh of Haringey

My Lords, the Minister is right in saying that this has been a wide-ranging debate. It has covered the widest range of misconceptions from the Government Benches about local authority finance that we have heard for some time, and the widest range of misunderstandings about the thrust and impact of the amendment that one could have expected.

I sympathise with noble Lords opposite. They have to face the situation that the Conservative Party has held three different views about capping over the past 10 years. Ten years ago Ministers, even some of those who are Ministers now, said that capping was totally undesirable and that it should be left to the local ballot box. Five or seven years ago, with the active participation of the noble Lord, Lord Jenkin of Roding, Ministers were saying what the noble Lord, Lord Boyd-Carpenter, said on one occasion: that capping was an exception which should be used only on rare occasions. As he said, the vast majority of local authorities conduct their affairs responsibly.

Now they have a quite different view. The Government now take the view that capping is a permanent and universal element in local authority finance and that it should be applied to all kinds of councils every year and written into the Bill accordingly. It must be difficult for noble Lords opposite to decide which of the three views to take.

The view they cannot take is that of the noble Lord, Lord Boyd-Carpenter, that we on this side are defending extravagant local authorities. We are, of course, doing no such thing. We are saying that extravagance must be controlled, but—as has been the view of the Conservative Party, apart from this recent aberration—it should be controlled by the ballot box rather than by the whim of the Secretary of State. That is a very different situation.

In an interesting intervention, the noble Lord, Lord Renfrew, sought to change the English language to some extent, partly by the use of the neologisms of Thomas Love Peacock, which I appreciate. He also seems to think that we are using what he called "temporising" amendments. My dictionary says that to temporise is to adopt indecisive or time-serving policies. That is by no means either the intention or the impact of Amendment No. 94. I should have thought that what we seek to do in the amendment is quite different. We seek to bring into the open the workings of local authority finance and to give people an opportunity to consider them, particularly the Secretary of State, before proceeding with a somewhat rash venture.

The noble Lord also seems to think that what would be required of the Audit Commission is an investigation of each designated authority. No such thing. Clause 54 provides, quite rightly, only for the designation of classes of authority, not of individual authorities.

In a helpful intervention, the noble Baroness, Lady Hamwee, talked about the complexities of local government finance as we find them. She thought that few people understood them now, as was the case when she first went into local government. I am reminded of Browning who in his old age was asked about his early poem Sordello. He said that when he first wrote the poem only God and Robert Browning knew what it meant, but now God alone knew what it meant.

The noble Lord, Lord Jenkin, has the advantage of me as I have not seen the Rowntree publication to which he refers. It was interesting to hear him acknowledge that when he was responsible for introducing capping it was done so as a transitional measure. The noble Lord said that the power was taken as a transitional measure. I wrote those words down as he said them. If I misunderstood what he said, I apologise; but those were the words he used.

The noble Lord seeks to justify capping in the words of the Rowntree researchers by saying it is all right if one is moving to a new taxation system. I must remind the House that it is the Conservative Party not only in this Government but also in this Parliament that has forced on an unwilling public not one but two new taxation systems. Perhaps the way to avoid capping is to get rid of a Conservative Government and institute a local financial system which works.

The Minister was disappointed that I did not return to an accusation of political bias. I did not return to that accusation because I had not made it in the first place. It is interesting that the Minister should adopt such a confrontational attitude that she is disappointed when I do not act as she wishes. The Minister also seems to think that the word "refute" means the same as to deny. I remind her that refute means to prove the falsity or error of a statement. All the Minister is doing is asserting that our statements are wrong. She is certainly not in any sense refuting them.

Lord Renfrew of Kaimsthorn

My Lords, I thank the noble Lord for giving way. I understood him to say a moment ago that Clause 54 makes provision for the Secretary of State to designate a class of authority rather than to designate a specific authority. I am sure I do not understand the Bill as well as the noble Lord; but that is not what Clause 54 appears to say. I understand that Clause 54 empowers the Secretary of State to designate an authority. I hope the noble Lord will correct me if I have misunderstood the matter.

Lord McIntosh of Haringey

My Lords, the noble Lord has misunderstood the matter. Clause 54(2) further states: those principles shall be the same either—

  1. (a) for all authorities falling within that class; or
  2. (b) for all of them which respectively have and have not been designated under this Chapter".
Class is defined in subsection (3).

Baroness Blatch

My Lords, with the leave of the House, I hope it will be helpful to state that Clause 54 deals with the designation of classes. However, capping deals with individual authorities.

Lord McIntosh of Haringey

My Lords, capping has to be implemented on designation rules which apply to classes. Of course it has a different effect on individual authorities, but the rules for designation are set across classes. That is what the Audit Commission would be concerned with. The Audit Commission would not be concerned with individual authorities.

As regards the Minister's defence of standard spending assessments, it was couched in such vague terms that it is difficult to reply to it. All I would say about it is that I do not deny—I have never claimed otherwise—that standard spending assessments will be different in different kinds of authorities because they will reflect different local conditions. What we are saying, and what the Minister totally fails to refute, is that standard spending assessments are seriously flawed in the way in which they are calculated. They are based on much out-of-date information. They exaggerate some elements and undervalue others. My fundamental point is that SSAs are simply not good enough to be used as a basis for capping. Ministers and noble Lords opposite are quite right to say this point is a fundamental difference between us. On this occasion it is also right that I should seek the opinion of the House.

5.44 p.m.

On Question, Whether the said amendment (No. 94) shall be agreed to?

* Their Lordships divided: Contents, 57; Not-Contents, 138.

Division No. 1
Addington, L. Hamwee, B.
Airedale, L. Hanworth, V.
Ardwick, L. Hatch of Lusby, L.
Aylestone, L. Hollis of Heigham, B.
Beaumont of Whitley, L. [Teller.] Holme of Cheltenham, L.
Houghton of Sowerby, L.
Bonham-Carter, L. Howie of Troon, L.
Bruce of Donington, L. Hughes, L.
Carmichael of Kelvingrove, L. Irvine of Lairg, L.
Carter, L. Jeger, B.
Cledwyn of Penrhos, L. Jenkins of Hillhead, L.
Cocks of Hartcliffe, L. Kissin, L.
Dean of Beswick, L. Lovell-Davis, L.
Desai, L. [Teller.] McIntosh of Haringey, L.
Diamond, L. McNair, L.
Donoughue, L. Mallalieu, B.
Dormand of Easington, L. Milner of Leeds, L.
Falkender, B. Morris of Castle Morris, L.
Falkland, V. Ogmore, L.
Fitt, L. Peston, L.
Gallacher, L. Phillips, B.
Gladwyn, L. Prys-Davies, L.
Graham of Edmonton, L. Rea, L.
Greene of Harrow Weald, L. Richard, L.
Grey, E. Seear, B.
Hampton, L. Serota, B.
Stoddart of Swindon, L. White, B.
Turner of Camden, B. Williams of Elvel, L.
Underhill, L. Willis, L.
Abinger, L. Jenkin of Roding, L.
Acton, L. Killearn, L.
Alexander of Tunis, E. Kimball, L.
Alexander of Weedon, L. Kitchener, E.
Allenby of Megiddo, V. Knollys, V.
Ampthill, L. Lane of Horsell, L.
Arran, E. Lauderdale, E.
Ashbourne, L. Lindsey and Abingdon, E.
Astor, V. Lloyd of Hampstead, L.
Auckland, L. Long, V.
Balfour, E. Lucas of Chilworth, L.
Barber, L. Lyell, L.
Bauer, L. McColl of Dulwich, L.
Belhaven and Stenton, L. Mancroft, L.
Beloff, L, Manton, L.
Belstead, L. Marlesford, L.
Biddulph, L. Merrivale, L.
Blatch, B. Mersey, V.
Blyth, L. Milverton, L.
Boardman, L. Montgomery of Alamein, V.
Borthwick, L. Morris, L.
Boyd-Carpenter, L. Mottistone, L.
Brabazon of Tara, L. Mountevans, L.
Brigstocke, B. Mowbray and Stourton, L.
Brougham and Vaux, L. Munster, E.
Butterworth, L. Murton of Lindisfarne, L.
Caithness, E. Nelson, E.
Campbell of Alloway, L. Newall, L.
Carlisle of Bucklow, L. O'Cathain, B.
Carnock, L. Orkney, E.
Cavendish of Furness, L. Oxfuird, V.
Clanwilliam, E. Pender, L.
Cochrane of Cults, L. Pennock, L.
Cockfield, L. Peyton of Yeovil, L.
Colwyn, L. Plummer of St. Marylebone, L
Cork and Orrery, E. Prentice, L.
Craigavon, V, Pym, L.
Craigmyle, L. Quinton, L.
Cumberlege, B. Rankeillour, L.
Dacre of Glanton, L. Reay, L.
De L'Isle, V. Rees, L.
Denham, L. Renfrew of Kaimsthorn, L.
Denton of Wakefield, B. Rennell, L.
Eden of Winton, L. Renton, L.
Elles, B. St. Davids, V.
Elliot of Harwood, B. Saltoun of Abernethy, Ly.
Elliott of Morpeth, L. Sandford, L.
Elton, L. Selborne, E.
Ferrers, E. Selkirk, E.
Flather, B. Shannon, E.
Fraser of Carmyllie, L. Shrewsbury, E.
Gainford, L. Skelmersdale, L.
Gisborough, L. Soulsby of Swaffham Prior, L.
Glenarthur, L. Strathcarron, L.
Gorell, L. Strathclyde, L.
Grantchester, L. Strathcona and Mount Royal, L.
Gray of Contin, L.
Greenway, L. Strathmore and Kinghorne, E. [Teller.]
Haddington, E.
Hailsham of Saint Marylebone, L. Terrington, L.
Teviot, L.
Hanson, L. Thomas of Gwydir, L.
Henley, L. Trumpington, B.
Hesketh, L. [Teller.] Ullswater, V.
Hives, L. Vinson, L.
HolmPatrick, L. Waddington, L.
Hooper, B. Westbury, L.
Howe, E. Wilberforce, L.
Huntly, M. Wise, L.
Hylton-Foster, B. Wolfson, L.
Jeffreys, L. Young, B.

[*The Tellers for the Not-Contents reported 138 names. The Clerks recorded 139 names.]

Resolved in the negative, and amendment disagreed to accordingly.

5.53 p.m.

Clause 65 [Duty to consult ratepayers]:

Earl Howe moved Amendment No. 95: Page 43, line 44, leave out from ("prescribed") to ("and") in line 45.

The noble Earl said: My Lords, in moving Amendment No. 95, I should like to speak also to Amendment No. 96. The amendments are technical in nature. Clause 115 provides that prescription under the Bill will be by regulations made by the Secretary of State. That renders unnecessary the references in Clause 65(6) to prescription by the Secretary of State. Amendments Nos. 95 and 96 therefore remove those references. I beg to move.

On Question, amendment agreed to.

Earl Howe moved Amendment No. 96: Page 43, leave out line 47 and insert ("may be prescribed").

On Question, amendment agreed to.

Lord Beaumont of Whitley moved Amendment No. 97:

After Clause 65, insert the following new clause:

("Protection of rural areas

—(1) It shall be the duty of the Secretary of State in carrying out his duties under this Act, to have regard to the needs of people in rural areas.

(2) In carrying out his duty under subsection (1) above the Secretary of State shall consult local authorities serving rural areas on the impact of the tax in their locality, in particular—

  1. (a) how the national bands relate to local property prices and average local incomes; and
  2. (b) the impact of second homes on property prices and therefore levels of the council tax in their area.").

The noble Lord said: My Lords, on behalf of my noble friend Lady Hamwee, I should like to move Amendment No. 97 standing in her name. During the course of the Bill, the Liberal Democrats have sought to ameliorate the effects of the council tax on those in rural areas. People living in the countryside will lose under the council tax in several different ways. As we have shown, in some sparsely populated areas the bands will not reflect the true distribution of property and many property owners will find themselves in bands which do not fairly reflect the value of the property. The appeal system will not operate in those circumstances.

On the other hand, in our rural areas second home owners will push up the price of property in many communities beyond the reach of many in those communities. Not only is affordable accommodation not available to the young, which may have a very debilitating effect on the life of the whole community, but the average valuation used for the council tax will be increased. The result will be bills out of all proportion to the wages and other income received by the indigenous population who earn their living in the countryside. There will also be a higher proportion of people living in tied accommodation in rural areas, farm workers being a prime example. We have already pointed out the difficulties under the banding system in relation to tied accommodation.

We failed to convince the Government of the validity of a number of those points, but the amendment will ensure that the needs of rural areas are not forgotten and that the relevant Secretary of State will report back on the impact of the tax on rural areas. It may turn out that the tax will prove nothing but a blessing for rural areas, although that seems extremely unlikely. In that case, the Secretary of State will report back triumphantly. However, it is much more likely that the report will highlight the difficulties being experienced in rural areas. In that case, as noble Lords on all sides of the House would want, steps could then be taken to correct some of the difficulties along the lines which we have already suggested. I beg to move.

Lord Renfrew of Kaimsthorn

My Lords, this seems to me to be an amendment of doubtful utility. In proposing it, the noble Lord said that the Secretary of State will report back. However, the amendment places no requirement on the Secretary of State to report back. That is in itself a very good thing because such a requirement would make this even more of a temporising amendment than it already is with its duty of prior consultation. When I use the word "temporising"—and I am now addressing myself to the noble Lord, Lord McIntosh—that is a polite way of saying "delaying"; that is what I take the term to imply. there is an element of that in this case in that there would be a duty for the Secretary of State to consult local authorities.

The first part of the proposed new clause is surely of paramount superfluity. It reads: It shall he the duty of the Secretary of State in carrying out his duties … to have regard to the needs of people in rural areas". One would indeed wish that to be the case. However, one would not wish thereby to exclude the needs of people in urban areas or any other areas, such as suburban, which are intermediate between the two. In referring to a class of persons which in terms of area includes more than half the country, although in terms of individuals rather less, the amendment is superfluous.

The second part of the amendment requires the Secretary of State to: consult local authorities serving rural areas on the impact of the tax in their locality, in particular … how the national hands relate to local property prices". It is very difficult to envisage what the Secretary of State will do with that information, even if he learns something in the process of consultation which he did not already know. One hopes that the Secretary of State will keep such matters under constant review. The Bill sets out provisions for the bandings, although it is open to the Secretary of State to modify those under the provisions of Clause 5(4). The noble Lord did not refer to that in particular. The only use that I can see for that proposal would be in relation to second homes in Wales, to which the noble Lord did not specifically refer.

Under Clause 12(2) and (3) there is a possibility for the Secretary of State for Wales to modify the discount provisions for second homes in Wales. One hopes that it is a matter which will be kept under review. It will need to be, because under the Bill the Secretary of State for Wales, or someone, has the duty to decide whether subsection (2) or subsection (3) should be applied.

One sympathises with the intentions behind this new clause, but it seems to me to be a clause which would not in itself achieve anything at all.

6 p.m.

Lord McIntosh of Haringey

My Lords, I intervene only because of the use by the noble Lord, Lord Renfrew, of the word "temporise". To temporise is to adopt an incisive or time-serving policy. Temporising may result in delay but it need not be the only reason for delay. Therefore, the noble Lord should not use it as an alternative word for "delay". Perhaps I may give an example. At the moment the Government are failing to produce a policy for the privatisation of British Rail. That is not temporising. They are failing to do it because there is no effective way of privatising British Rail. The words are different in meaning.

Lord Jenkin of Roding

My Lords, I am tempted to follow the noble Lord into the problems of the privatisation of British Rail, but being a man of immense strength of character I shall resist that temptation.

In the matter of temporising, the word "dilatory" comes to mind. In this House and another place we use the word "dilatory" in a very special sense. A dilatory Motion is a Motion which delays the proceedings. Normally, in common parlance, "dilatory" means one is failing to get on with that which one ought to get on with—as I am failing to get on with this debate. Perhaps I am being dilatory.

The only point that I wish to put to the noble Lord on the Liberal Democrat Benches is that it is not my experience that local authorities are slow to come and make their views known to the Secretary of State if they feel that something is operating to their disadvantage. Indeed, on the contrary, if I were given £100 for every hour that I have spent listening to the complaints of local authorities about the way in which the local taxation system and the grants system were impinging upon them I should be a very rich man indeed.

Lord McIntosh of Haringey

My Lords, the noble Lord was given £100 for every hour. He was paid.

Lord Jenkin of Roding

I do not think, my Lords, that it was as much as that. I was paid for a whole lot of other things. I am against cluttering up the statutes with unnecessary clauses. With the greatest respect to the noble Lord who moved the amendment, I believe that it is unnecessary.

Lord Cockfield

My Lords, I should point out to the noble Lord, Lord McIntosh, in view of his constant reference to his dictionary, that the bigger the dictionary the more meanings will be found in it for any particular word or phrase.

Baroness Phillips

My Lords, I did not realise that the amendment was about a word. I thought that it concerned something much wider. I sympathise with the noble Lord who moved the amendment. My only sorrow is that he confined the provision to rural areas. Where I live, unfortunately, the position of second homes is reversed. People have their main dwelling in the country and a second home in London. Also rented houses are affecting the situation. Certainly the prices of the houses are affected. The noble Lord has an extremely good point. I am only sorry that he confined it to rural areas.

Baroness Blatch

My Lords, these amendments would require my right honourable friends the Secretary of State for the Environment for Wales and the Secretary of State for Scotland to have regard to the needs of people in rural areas in carrying out their duties under the Bill. So far so good. We are all in favour of virtue. But we do not need to write our preferences into legislation, and that is what this amendment does. It is merely a preference on behalf of the Liberal Democrats. Go hang, if you are urban; go hang, if you are suburban; but if you are rural the Liberal Democrats would have it written on the face of the Bill that you should be singled out as people for whom we should have regard when carrying out and implementing the powers and duties under the Bill.

The system that is in place, and indeed the provisions of the Bill, take into account the needs of all people, wherever they live. Perhaps I may give the noble Lord just one example of how the needs of rural people are met. In determining needs there is a factor called sparsity. It is a known fact that more people have to use buses to take children to school in rural areas and that it is more expensive to provide some services there. However, it is equally true that there is higher expenditure incurred in meeting the needs of people in, for example, the inner cities. It would be quite wrong to put on the face of the Bill a preference for having regard to the needs of people in rural areas when indeed we have a duty to have regard to people in all areas, whether those areas are inner city, suburban or rural areas.

The rest of the amendment is equally unnecessary. We would expect local authorities in rural areas, as in other areas, to take account of the impact of the tax on their areas in setting the tax. There is no reason whatever for the Government to consult authorities about a matter which they are to decide for themselves, subject to the usual constraints of expenditure limitation. We have ensured that nobody will have to pay a disproportionate amount of his income in local council tax by limiting the range between bands and providing rebates of up to 100 per cent. for people on low incomes. People applying for rebates who have homes in the higher bands will be entitled to rebates up to a higher level than those whose homes are in lower bands.

It is also worth saying to the noble Lord that there is no loss of revenue to local authorities for second homes. The amount is made up by the grant that the Government give to local authorities, recognising both discounted people and the loss of revenue as a result of second homes.

Finally, noble Lords opposite should not forget that only some 15 per cent. of local authority spending has to be met by local people. The remainder is funded by central government taxation and the proceeds of the non-domestic rate.

I believe that the proposals in the Bill ensure that no one will be asked to pay more than his fair share toward local authority spending. I hope that I have persuaded the House that the amendments are quite unnecessary. I wish to convince noble Lords that it would be quite wrong—not just unnecessary or undesirable, but quite wrong—to single out one class of people on the face of the Bill and have nothing to say about all other people in all other areas with differing needs, to whom we have a responsibility.

Lord Beaumont of Whitley

My Lords, I should have said, as the noble Baroness delicately reminded me, that in moving this amendment I also spoke to Amendment No. 106. The noble Lord, Lord Renfrew, accused me of either temporising or being dilatory. I shall not embark on the argument as to which word it should be because neither of them is correct. The noble Lord rightly pointed out that we did not lay a special duty on the Secretary of State to report back. But the whole purpose of the amendment is to ensure that the Secretary of State keeps these matters in mind and, under the open government which we are always assured the party opposite espouses, will let us know the problems that are met and produce reforms for the occasion. None of the things mentioned would have delayed anything that this Bill attempts to achieve. They could all happen simultaneously or afterwards. Therefore, that particular accusation falls to the ground.

Rural areas have particular problems, especially those with a very sparse population. They need particular attention to be paid to them. I thought that it was a little unfair of the noble Baroness to say that we want to talk about rural areas and do not talk about people anywhere else. My noble friend Baroness Hamwee spent several days talking about all the other people.

Baroness Blatch

My Lords, I am grateful to the noble Lord for giving way. With the leave of the House, perhaps I may clarify one point. The noble Lord talks about sparsity. I said that sparsity—in other words, the need of rural areas to provide services to their people—is a constituent factor in determining SSAs. Does he disagree? If he does, can he please say what it is about sparsity that is not recognised in determining SSAs for rural areas?

The noble Lord suggests that concern only for rural people is put on the face of the Bill. He does not suggest that the needs of inner city people and suburban people should also be put on the face of the Bill, does he?

Lord Beaumont of Whitley

My Lords, I do not suggest that the same problems face people in rural areas as those in suburban and inner city areas. No one is more aware than me of the problems of the inner cities.

Lord Hailsham of Saint Marylebone

Than I.

Lord Beaumont of Whitley

My Lords, I thank the noble and learned Lord for contributing his learning at this moment. I can see that I shall not get far with the amendment. I therefore beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 87 [Alteration of lists]:

Earl Howe moved Amendment No. 98: Page 58, line 35, after ("it") insert (", or any part of it,").

My Lords, I spoke to Amendment No. 98 in moving Amendment No. 80. I beg to move.

On Question, amendment agreed to.

The Principal Deputy Chairman of Committees

My Lords, in calling Amendment No. 99 I must point out that if the amendment is agreed to I cannot call Amendment No. 100.

Earl Howe moved Amendment No. 99:

Page 58, leave out lines 39 to 43 and insert: ("(b) the local assessor is satisfied that—

  1. (i) a different valuation band should have been determined by him as applicable to the dwelling; or
  2. (ii) the valuation band shown in the list is not that determined by him as so applicable; or
(c) the assessor has, under Schedule 5 to this Act, added, amended or deleted an apportionment note relating to any lands and heritages included in the valuation roll; or").

On Question, amendment agreed to.

[Amendments Nos. 100 and 101 not moved.]

Earl Howe moved Amendment No. 102: Page 59, line 45, after ("operation") insert ("carried out in relation to the dwelling").

The noble Earl said: My Lords, I spoke to this amendment with Amendment No. 80. I beg to move.

On Question, amendment agreed to.

[Amendments Nos. 103 and 103A not moved.]

Clause 89 [Powers of entry]:

[Amendment No. 104 not moved.]

[Amendment No. 105 had been withdrawn from the Marshalled List.]

[Amendment No. 106 not moved.]

Baroness Blatch moved Amendment No. 107:

After Clause 101, insert the following new clause:

Transitory enforcement provisions for England and Wales

(".—(1) Schedule 4 to the 1988 Act (community charges: enforcement) shall he amended as follows.

(2) In paragraph 7 (distress), after sub-paragraph (3) there shall be inserted the following sub-paragraph— (3A) The regulations may include provision that—

  1. (a) no person shall make a distress unless he is an officer of the authority concerned, or he is a person of a prescribed description and any prescribed conditions are fulfilled;
  2. (b) no person making a distress shall seize goods of a prescribed description."

(3) In paragraph 8 (commitment to prison), in sub-paragraph (1) (a), for the words "it appears to the authority that no (or insufficient) goods of the debtor can be found" there shall be substituted the words "the person making the distress reports to the authority that he was unable (for whatever reason) to find any or sufficient goods of the debtor".

(4) After paragraph 13 there shall be inserted the following paragraph—

"Admissibility of evidence

13A.—(1) Regulations under this Schedule may include provision that, in any proceedings before a magistrates' court under any provision included by virtue of the preceding provisions of this Part of this Schedule—

  1. (a) a statement contained in a document of record shall be admissible as evidence of any fact stated in it of which direct oral evidence would be admissible; and
  2. (b) a certificate which is made with respect to a document of record produced by a computer and purports to be signed by a responsible person shall be admissible as evidence of anything which is stated in it to the best of his information and belief.

(2) In this paragraph— 'document of record' means a document constituting or forming part of a record compiled by the authority concerned; 'responsible person' means a person occupying a responsible position in relation to the operation of the computer; 'statement' includes any representation of fact, whether made in words or otherwise.

(5) In paragraph 15 (joint and several liability), in sub-paragraph (3), for the words "it appears to the authority concerned that no (or insufficient) goods of that person can be found" there shall be substituted the words "the person making the distress reports to the authority that he was unable (for whatever reason) to find any or sufficient goods of the chargeable person.").

The noble Baroness said: My Lords, I spoke to this amendment in part with Amendment No. 70 and in part with Amendment No. 75. I beg to move.

On Question, amendment agreed to.

6.15 p.m.

Clause 102 [Council tax benefit]:

Baroness Hollis of Heigham moved Amendment No. 107A:

Page 69, line 27, at end insert: ("( ) It shall be the duty of the Secretary of State to consult local authorities about how the arrangements for the alternative maximum council tax benefit are working in practice and within nine months of the coming into force of Schedule 9, the Secretary of State shall lay before parliament a report setting out progress by billing and levying authorities in implementing these new arrangements and, in particular—

  1. (a) the costs of administering the alternative maximum council tax benefit including calculation on whether the maximum or alternative maximum is appropriate;
  2. (b) the numbers of applications for alternative maximum council tax benefit;
  3. (c) the number of claimants in receipt of the 7.5 per cent., 15.5 per cent. or 25 per cent. rebate respectively and the number of students in each category.").

The noble Baroness said: My Lords, the amendment proposes that after consultation with local authorities the Secretary of State report to Parliament on the operation of the second low income reduction scheme within nine months of Schedule 9 coming into force. The report would address issues of the scheme's cost and identify the number of applications.

Why, my Lords? We on this side of the House have argued frequently that the Bill is more internally complex than the poll tax and that its complexity is structural because the provisions seek to graft a poll tax head element on to a basic property tax. Because of that poll tax element, the Bill quite properly tries to weigh the ability of each of two members of a household to contribute to a bill for which only one may be liable and only one—the liable person—is eligible to claim rebates.

The complexity is compounded—as we see in subsequent amendments which we may discuss at Third Reading—because such issues operate at the interface of the DSS and DoE benefit systems. We are dealing with benefits framed by the DSS, administered by local authorities and reimbursed by the DoE. As drafted the Bill provides that anyone who is a single householder obtains a 25 per cent. discount irrespective of his income. From that flows the concept that other second people such as students or nurses by status—it is a status discount—may be invisible. There is too the rather odd notion—I understand what it seeks to achieve—of second low income adult reductions. That seems to assume that although a second visible adult is present in the household they might as well be regarded as invisible if their income is low enough provided that the second adult is not the spouse. If the second adult has a low enough income the liable person, regardless of his income, can claim a discount of up to 25 per cent.

In other words, a millionaire who is a single householder will receive a discount of 25 per cent. A millionaire who has living with him some other person of low income can also claim a 25 per cent. discount. That person may be his son, a lodger, an au pair, or whoever. But as long as that person is not a cohabitee, that millionaire can claim a discount of 25 per cent. on the second person low income. However, two women friends, each earning about £80 a week on average, can claim nothing either on the liable person or on the second person.

Since the liable person cannot receive rebate on both his income and the second person's income, he has to do a "better buy" calculation as to whether he prefers to claim a rebate on his own income or the second adult low income. I accept that it is a simple calculation if the second person in the household is on income support. It is a straightforward deduction of 25 per cent. But if not, I suggest that it will be very complex indeed. Both the liable person and/or the local authority will have to track all the members of that household through all their work and benefit situations on a daily basis in order to determine the "better buy" solution.

Government are essentially running a discount on the second adult which is not based on status invisibility but on low income. In other words, a discount is being run through the rebate system. That is why the issue is problematic. Local authorities and householders will have to calculate on a daily liability all such changes. They might have to switch several times in as many months between whether they calculate on the liable person or the income of the second person in the household.

Let me give an example. Mrs. Smith is liable for the council tax. She receives a retirement pension and a small occupational pension. She is entitled to a rebate in her own right of about 10 per cent. of the bill. She lives with her son who is in low paid work. Some weeks he works overtime; other weeks he does not. When he works overtime he earns approximately £105 a week; when he does not, he earns approximately £90 a week. When he works overtime Mrs. Smith is better off calculating a rebate on her income. When he does not work overtime she is better off claiming a second adult low income rebate on him of 15 per cent.

Does the Minister seriously believe that operators of the benefit system, householders and local authorities can regularly track that position and award the right benefit? It is no defence to respond, as the Minister may be minded to do, that only a small number of people will be involved. About 10,000 calculations of "better buy" may be involved. We should not be setting up systems which we know in advance will be problematic. Even when the better off calculation is not involved the difficulties in tracking third party income fluctuations are formidable.

The local authority associations have grave reservations about the second adult low income reduction. I accept—I wish to emphasise it—that it is an honourable attempt by Government to face the problem of the second person in the household being poor but it is a problem created because the Government have insisted on retaining a poll tax element in the Bill and at the same time of making sharper the rebate scheme.

If either of those two basic structural flaws were amended, then the problem of the second persons's low income would not arise and the absurd complexities of trying to track alterations in income and switching between rebate on the first person and reduction on the second person's income would not arise.

As the Bill is drafted, despite the efficacy of modern computers, and having myself been through the hassle of trying to make the poll tax rebate scheme work, I suggest in all modesty that the scheme is unworkable. I ask the Minister to take the matter back and consider it again. I beg to move.

Lord Henley

My Lords, the noble Baroness's amendment would require the Secretary of State to report to Parliament about the operation of the arrangements for the alternative maximum benefit or second adult rebates which a liable person will be able to receive in respect of a second adult on low income who shares his or her home on a non-commercial basis. Although I shall not make a meal of it, I must say that the amendment as drafted is defective. Schedule 9 will be commenced on Royal Assent and therefore the amendment would require the Secretary of State to report on the operation of the alternative benefit in December of this year before the benefit system comes into effect in April 1993.

The Government made it clear as long ago as last April that under the council tax non-dependants on low incomes living as second adults can give rise to a rebate which will be awarded to the liable person. The present amendment would place on my right honourable friend in another place a duty to monitor the implementation of the benefit scheme. I should explain that these rebates will be awarded to help people who would otherwise be affected by the fact that they share their homes with a person who is on a low income and could not therefore be expected to make a contribution towards the liable person's council tax.

The noble Baroness gave the example of a millionaire who had a person in receipt of a low income living with him. The millionaire's income is not relevant; it is that the second adult living with him has a low income and therefore cannot be expected to make a contribution towards the bill for that house. Second adult rebates are intended to assist such non-commercial situations where a person shares his home with a person on a low income who does not pay rent.

The Government have been anxious to keep the administration of second adult rebates as straightforward and simple as possible. I do not accept the point made by the noble Baroness about excessive complexity. The system we have devised has been simplified to take account of the concerns expressed by the local authority associations. I do not accept that they will not be able to make these arrangements work on a similar basis to the arrangements for non-dependant deductions which local authorities have operated for many years in the housing benefit and rate rebate schemes.

That brings me to the example which the noble Baroness gave about Mrs. Smith in receipt of a small occupational pension. She has a son living with her whose income varies. Exactly the same concerns relate to other benefits, in particular to housing benefit. There will always be people whose income fluctuates from one week to another. It is up to the claimant —in the example it will be Mrs. Smith—to furnish information about gross income of the second adult. Further information about his personal circumstances —for example, whether he is a pensioner—will not usually be needed. The same information is currently collected by local authorities in assessing housing benefit and was collected under the rate rebate scheme before April 1990 or before April 1989 in Scotland. The guidance issued to local authorities for housing benefit states that the onus is on the claimant to provide the relevant information about the incomes of non-dependants. We do not believe that the provision will cause local authorities insuperable difficulties. They have managed with housing benefit and I do not see why they should not manage with council tax benefit, in particular in these days of modern computer systems.

Perhaps I may put these matters into context. Based on the published assumptions for council tax levels we estimate that in total some 190,000 tax payers in Great Britain will receive a second adult rebate; nearly half of them will be pensioners. We estimate that expenditure on second adult rebates will be around £10 million. That will be reimbursed by the DSS and not the DoE, as the noble Baroness said.

Baroness Hollis of Heigham

My Lords, I intervene to ask the Minister to elucidate on that statement. I understood that it would fall within the rebate framework of which local authorities currently receive 95 per cent. reimbursement from the DoE. Is the Minister proposing some other scheme or is he simply talking about the DSS funding the local authorities via the DoE?

Lord Henley

My Lords, yes, exactly that system will apply with funding going from one hat to another and then to local authorities.

The amendment also refers to the costs of calculating what she referred to as the "better-buy". I should explain that under the council tax benefit proposals, a person cannot receive at the same time both a rebate in respect of a second adult sharing his property and a rebate based on his own income and personal circumstances. Section 131(9) of the Social Security Contributions and Benefits Act 1992, as amendment by Schedule 9, will provide that the claimant will be entitled to whichever is the greater of these two amounts of benefit. That is obviously advantageous to the individual claimant.

We estimate that a relatively small number of cases —around 10,000 tax payers in Great Britain—will be affected by the "better-buy" procedures out of an estimated benefit caseload of 5 million. The administrative implications of this aspect of the benefit system must be viewed in this light. I should also explain that information about both the income and personal circumstances of the liable person, and the income of the person sharing his home, will be available from the claim form. The "better-buy" calculations will therefore be a relatively straightforward matter for the computer systems, which local authorities will be putting in place, to cope with such matters.

I conclude by telling the noble Baroness that we will monitor carefully the introduction of the council tax benefit scheme. The benefit regulations will be subject to formal consultation with local authority associations. The amendment is therefore unnecessary and I hope that the noble Baroness will feel able to withdraw it.

Baroness Hollis of Heigham

My Lords, I thank the Minister for his reply. The second person low income discount is an honourable effort to resolve a problem that should not have been built into the Bill. Clearly we should not start from here.

Perhaps I may pick up two points. First, as regards targeting, the Minister defended the propriety of the millionaire with a second low income person in his household receiving a 25 per cent. discount. Perhaps we may think about the matter. Discounts will cost local authorities collectively some £780 million. However, in so far as they were for single person occupancy they were justified on the grounds that the single millionaire would use fewer services than a two-person household. It was justified on the use of services. Clearly if there is a millionaire and a low income son that situation will not apply because the low income son makes it a two-person household. They will be using the services as heavily as a pensioner couple, a husband and wife or the two women friends receiving £80 per week.

Is the discount therefore targeted to poverty and need? The Government's efforts to introduce it are meant to identify hardship and need and in that we support them in spirit although not in their operational detail. No, it is not, because we are dealing with a millionaire household in which there is no poverty. It is simply that a second person has a low income and the first person has a high income. That cannot be defended as constructed by government. It is not based on the use of services—it is a two-person household —and it is not based on the poverty of a household because one of those people is a millionaire. How then can the Minister defend such a system?

Lord Henley

My Lords, I justified it earlier and I continue to give that justification. It is a question of the perceived unfairness that a single person living on his own should pay the same as a household of two or any number of people. The noble Baroness now takes the matter further saying that as regards a single millionaire who has a son or someone else living with him the second adult is the important factor. Again, where two people are in the household one would expect the second adult to make a contribution. If he is receiving a low income he is not able to do so. Therefore, even though the first person is a millionaire it is right and fair that there should be a second adult rebate.

6.30 p.m.

Baroness Hollis of Heigham

My Lords, that is the most implausible defence of the millionaire's need for a contribution towards his household bills that I have ever heard.

I turn to the second issue; namely, complexity. The Minister emphasises that modern computer systems will overcome the problems created by small numbers. The local authority associations' position on that remains as I have suggested. The ADC and CoSLA expressed reservations as to its administrative practicability and the AMA, the ALA and the London Boroughs Association all took a stronger line and said that they regarded the scheme as unworkable. They said that, although something should be paid, that would frequently be wrong. For example, the income of a second adult in a household may change because of receipt of a bonus, commission or payment for overtime. That person may then fail to tell the liable person and the liable person will continue to claim on the basis of the second person's income. The liable person would then be held responsible for paying back any overpayment.

That is unbelievably complex. I make the point because the poll tax fell ultimately not only because it was conceived to be unfair but also because it was practically unworkable. The poll tax was simpler to administer than the council tax scheme. The Minister and his advisers should take seriously the advice of the local authority associations, the majority of which say that the scheme is unworkable and the other two local authority associations have grave misgivings. They do not say that lightly because they recognise the need to identify and aid low income households. However, if they say it is unworkable, as they do, and the Minister and his advisers walk away from that warning, they have only themselves to blame when in three or six months' time after the operation of the tax the Audit Commission makes the same sort of detailed and heavy criticism of the unworkability of the scheme as it is currently doing as regards the poll tax.

We have warned the Minister and if the Minister and his advisers choose not to listen, so be it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 108 not moved.]

Schedule 9 [Social Security: Council Tax Benefit]:

Baroness Hollis of Heigham moved Amendment No. 109: Page 112, line 18, after ("resident") insert ("including residents who are undertaking a full time course of education or are student nurses.").

The noble Baroness said: My Lords, this amendment seeks to include students in the rebate system. Under the current government proposals students living in all-student households—for example, halls of residence—will be exempt from the council tax. Other students may be liable for the tax but invisible and excluded from rebates. Therefore, although such students are liable, they are excluded from the rebate scheme because as students they are outside the social security network. We seek to identify that problem. Students who live in all-student households would be exempt. However, a student who is liable for the bill and who is sharing with other students is not eligible to claim a rebate because he is outside the social security system.

We welcome the clarification that where a student is personally invisible but liable for council tax and not eligible for a discount, he is eligible to claim the second adult's rebate. That will help a few students. However, we believe that this will be the least workable part of the whole structure of the Bill and therefore few students will wade their way through it.

At present liable students, unlike any other group, will still be left with at least 50 per cent. of the bill to pay without any help from the benefit system, however low their income. They may have a personal status discount of 25 per cent.—in other words, they are invisible—and may also enjoy a 25 per cent. discount because of the low income of the second adult, but they are still eligible or required to pay 50 per cent. of the bill without access to the rebate system, unlike the millionaire who has lots of income but receives a 25 per cent. discount.

As student numbers grow, an increasing number of students will be in that situation. They will be in non-university accommodation sharing with other students. I give the example of all-student house in which one student is a year ahead. He finishes at university in the summer but stays on in the house. He is no longer a student. He receives a low income. However, he will immediately attract a 75 per cent. or, at best, 50 per cent. bill. It is obvious that many problems will result.

I could give many examples from my experience of the university world, but I shall give your Lordships just one such example. A CAB in Surrey reports a mature student who obtained a place on a two-year Ph.D course after being unemployed for more than a year. During that time he had been living on income support with his partner and two children, including a four month-old baby. He had been awarded a research grant of £103 per week but the university would only allow him to undertake six hours paid work per week. Under the council tax scheme he would have to give up his university place because he and his wife would not qualify for benefits and could not survive on the grant.

There are other cases where hardship would be even more acute. For example, a liable student and a wife, who may receive income support or very low earnings, will not be eligible for rebates under the scheme, particularly if the student is sharing with other than a spouse or partner.

Students are outside the social security system but remain liable for a bill and they may have no income with which to pay it. Therefore, it seems only reasonable in that situation that they should be eligible in their own right for rebate. I beg to move.

Lord Henley

My Lords, the House will not need reminding that the Government do not believe that full-time students should generally receive social security benefits. They should look instead to the educational maintenance system for support. Later on I shall explain what exemptions there are to that generality. The removal of benefit entitlement from students—and this is a matter about which we argued in Committee as regards an identical amendment—did not take place in isolation. At the same time additional resources were made available through student loans and access funds.

Certain vulnerable students with special financial needs, including students who are lone parents or who are disabled, and student couples with dependent children, can claim income support and housing benefit, and they will be able to claim council tax benefit if they are liable to pay the tax. Also all part-time students will be able to claim benefit.

In the case of couples, where one partner is not a student, the non-student partner will be able to claim council tax benefit as a couple. This follows the arrangements which already apply in housing benefit. However, the income of both partners will be taken into account and benefit will be assessed from the applicable amounts appropriate for a couple in their circumstances.

Finally, the Government also intend to ensure that no non-dependent deduction will be made where, for example, a full-time student is living in the household of a liable person entitled to council tax benefit. The income of that student will be totally ignored in terms of the liable person looking to council tax benefit. In other words, the liable person who is not a student will be liable for 75 per cent. of the bill but there will be no non-dependent deduction on account of the income of the student, whatever that may be.

I should also make clear that students who are liable to pay council tax will be able to claim council tax benefit in the form of a second adult rebate, as the noble Baroness recognised. In other words, if a student is living with just one other person who is not a student, he will be liable for 50 per cent. of the bill because he will be able to claim status discounts both as a single person and in the form of a second adult rebate.

I should also make clear that students who are liable to pay council tax will be able to claim council tax benefit in the form of a second adult rebate. I should explain that Section 131(7) of the Contributions and Benefits Act 1992 as substituted by this Bill refers to the second resident not to the claimant for benefit. If the second resident is a person who falls to be disregarded for purposes of discount then no second adult rebate is payable in respect of him. This provision, however, does not prevent a liable person who gives rise to a discount from being entitled to benefit for a second adult.

We have responded very positively to anxieties about the position of students under the council tax. Where liability does exist there will be special arrangements for helping vulnerable groups through the benefit system; for example, disabled students, lone parents, student couples with dependent children, pensioner students, students under 19 in further education, students undergoing employment training and the spouses of students. We have not overlooked the fact that students are able to look to the educational maintenance system to provide for their specific needs and expenditure patterns. It is a system which has been considerably enhanced over recent years. The Government cannot accept the amendment and I trust therefore that the noble Baroness will withdraw it.

Baroness Hollis of Heigham

My Lords, I thank the Minister for his reply. With the leave of the House perhaps I can clarify a point. Where a student lives with a partner they are jointly and severally liable. If she applies for rebate—the case of the spouse, as the noble Lord indicated—will she obtain a rebate on 100 per cent. of the bill? That would effectively be 75 per cent. Or will she only obtain a rebate on 50 per cent. of the bill? That would be 50 per cent. of the 75 per cent. In that case who would be expected to pay the balance?

Lord Henley

My Lords, my understanding is that her rebate would be assessed as being what her portion of the bill would be; that is, 50 per cent. of the bill. In the case of a student living with a non-student that would be 75 per cent. and therefore the rebate would be 37½ per cent. The student would be liable for the rest.

Baroness Hollis of Heigham

My Lords, that clarifies the issue. On that basis the student with no income other than a maintenance grant, which has been recognised in legislation by making students invisible—

Lord Henley

My Lords, perhaps the noble Baroness will give way. I wish to correct something I have just said. My understanding is that the full bill could be rebated in those circumstances.

Baroness Hollis of Heigham

My Lords, logic has been sacrificed for compassion, but let me not object to that. There still remains the case of the liable student and the friend on income support—a non-cohabitee. Under the Bill they will still each face a 50 per cent. bill. How does the noble Lord suggest the student should pay that 50 per cent. of the bill? The second person is on income support and obtaining all the discount entitlement related to that because the second person has no income. The liable student is on a basic grant which has been recognised in all other contexts as being so modest that, because students are outside the benefit system, when it is an all-student household they pay nothing. If a student is living with someone on income support and the person on income support is obtaining the maximum rebate eligible of 25 per cent., where will the student find the 50 per cent. of the bill for which he or she is liable when the logic that an all-student household should pay nothing has been accepted?

Lord Henley

My Lords, I rise again with the leave of the House, and this will be the last time I intervene. We considered that it was to the educational system that the student must look for support. But certain vulnerable groups of students, as I mentioned, may be protected. The student in that case will be liable for the bill if he is not one of the vulnerable groups.

Baroness Hollis of Heigham

My Lords, I thank the Minister. I realise that we are at the Report stage. The Minister has made clear that if students live together, under the educational maintenance scheme they are judged to be too poor to pay anything towards the council tax bill and are therefore exempt. But when they live with someone on income support, that same person goes from having a nil liability to a 50 per cent. liability while still on the same educational support system.

I hope that the argument suggests that the logic of the Government's position is indefensible. Students are outside the rebate system but retain a liability when their only income is that of an educational maintenance grant which in other circumstances—for instance when they live in an all-student dwelling—renders them exempt from paying anything. So be it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6.45 p.m.

Baroness Hollis of Heigham moved Amendment No. 109A: Page 112, line 35, after ("percentage") insert ("which shall not be greater than 15 per cent.").

The noble Baroness said: My Lords, Amendment No. 109A relates to the issues of taper. I make no apologies for returning to this for two reasons. First, increasing the generosity of the taper targets help to those who most need it. The more generous the taper the more it enables those just above income support levels to gain help. A 15 per cent. rather than 20 per cent. taper softens the cliffs of the poverty trap. Some 50,000 families, as was mentioned at Committee stage, will face marginal tax rates of over 90p in the pound when one interlocks family credit, housing benefit and council tax benefit. For many it will represent 97p in the pound.

That must be a perverse disincentive. If someone is working three days a week or 24 hours and has the opportunity to work four or five days a week and thus has less claim on family credit and so forth, why should they bother when the taper for each additional hour they work is 97p in the pound? It is thought to be punitive if those on £40,000 a year have a marginal tax levy of 40p in the pound; yet someone in the position I outlined has a marginal tax rate of 97p in the pound. That cannot be other than a perverse incentive to avoid taking up work opportunities, especially when the travel costs and so forth are likely to produce a marginal tax rate of over 100 per cent.

The more gradual the taper, the better. It is not a significant addition in cost when one thinks of the totality of the benefit bill. We are speaking of around £60 million which would reduce the taper from 20p to 15p in the pound, as it was under the old rates scheme. It is little more than the additional grant that the Government will be throwing at district councils in which their grant will exceed their spend, and only a fraction of the £780 million bill being spent on discounts.

The second reason for advancing the argument for a taper of 15 per cent. is that it would float people and local authorities off the administrative complexity of the cases we have been exploring, whether on joint and several liability or second adult low income households. A more generous rebate scheme for the liable householder—remembering that the rebate scheme ends at £75 a week for someone on an average headline bill—would help low income people by going a little higher up the income scale for eligibility. It would withdraw the taper more gradually, reducing the severity of poverty trap cliffs, and would also render it unnecessary for local authorities and the people involved to do the better-off calculation between their rebate and that of the second person low income. As a result we would have simplicity of administration.

The amendment comes with the support of RADAR. Many disabled people, three-quarters of whom are in benefit and the rest on low wages, will be disproportionately affected by the steep taper of 20p in the pound. Secondly, it comes with the support of CAB. The problems of indebtedness often occur at precisely the point where people shade off income support levels and where any modest help that we can target on people in poverty will help them avoid facing the poverty trap. Thirdly, it comes with the support of the local authority associations. It will avoid increasing the claims on second adult low income discounts and instead confine the rebate scheme to the liable adult with much reduced complexity of administration.

Finally, the amendment comes with the support of all the Opposition Benches and many on the Cross-Benches. It is a scheme costing relatively little that would, unlike the single person discount, help those in greatest need. I beg to move.

Lord Monson

My Lords, I was open minded about the amendment when I first read it on the Marshalled List. To tell the truth I could not entirely understand it. However, the noble Baroness explained it well and made an excellent case for it. I gladly support it.

Lord Henley

My Lords, I was interested to note that the noble Baroness thinks £60 million is not much money. We obviously have different perspectives.

Baroness Hollis of Heigham

My Lords, knowing the Minister would say that, I was careful to say, "within the context of the benefit system."

Lord Henley

My Lords, within the total context of the benefit system it may appear to be small. However, I can assure the noble Baroness that even within the context of the benefit system £60 million is a large sum.

I am sure that noble Lords will recognise that the proposed rebate system has to be judged as a whole. Claimants for rebates will be entitled to rebates of up to 100 per cent. which will also help tax payers with incomes above income support levels. All beneficiaries, including those non-householders who will not be liable to pay any council tax, will gain from the Government's decision not to claw back from 1993 any of the amounts included in income-related benefits to help pay the 20 per cent. contribution towards the community charge. This decision will mean that, from April 1993, income-related benefits will, at 1992–93 prices, be some £680 million more than would have been required to compensate for inflation since 1989.

Also, the council tax system will help people who are living alone—for example, widowed mothers with children—by means of the discounts to be awarded under Clause 11 of the Bill. Non-householders will no longer be directly liable for local taxation. The council tax benefit taper needs to be considered in this context. Taking all these decisions together, the higher taper means that under the council tax benefit entitlement will extend to people with broadly the same levels of income as were helped by community charge benefit. Retaining the same taper as in community charge benefit, that is the 15 per cent. as proposed by the noble Baroness, Lady Hollis, would have entailed expenditure of some £60 million more than the 20 per cent. taper that we have proposed.

That would have led to a marginal deduction rate which could get as high as 96 per cent. as opposed to 97 per cent. that it can reach under the 20 per cent. taper. In other words, the noble Baroness is suggesting £60 million expenditure for a reduction in the marginal—I stress "marginal"—deduction rates from 97 per cent. to 96 per cent. I have to tell the noble Baroness that we do not consider that priority can be given to expenditure in this area.

We considered the structure of the new rebate system very carefully. Like other income-related benefits, council tax benefit will have to be reduced as income rises above income support levels. I am sure that even the noble Baroness, Lady Hollis, accepts that when income rises above income support levels, benefit has to be reduced gradually. To stop benefit precipitately at a given level, as we would all accept, regardless of the claimant's circumstances, would be fundamentally flawed, and would have an adverse effect on work incentives. The benefit taper ensures that an increase in income above income support level does not lead to an equal cut in council tax benefit. On the government's proposals, if a claimant's weekly income is £10 in excess of his or her applicable amount, the level of council tax benefit will be reduced by only £2 a week, the same as prevailed under the rates. Under this amendment £10 a week of excess income would reduce benefit by £1.50 a week, all at a cost of £60 million.

It is important to look at the whole thrust of our proposals for the council tax and not see one aspect, like the higher benefit taper, in isolation. Unlike the community charge with its universal liability, many people will not be liable to pay the council tax. They will not have to claim council tax benefit, and they will therefore not be affected by the higher taper; indeed for them the 20 per cent. taper will be irrelevant. In view of this, and in view of the cost of an amendment of this kind, I trust that the noble Baroness will withdraw her amendment. The Government cannot accept it.

Baroness Hollis of Heigham

My Lords, I accept that £60 million is not a small sum, but it is a sum which will be targeted to the most needy, the disabled, the low-wage earner, the person in part-time work and the like. That is unlike the system of discounts which we have talked about and the sum of £780 million. Those discounts are going to people without any relevance to their ability to pay. In some cases it is going, as we said just now, to two-person households of high income who will still be enjoying such discounts.

The Minister has made it clear that he cannot accept the amendment and I do not propose to press it tonight. At the end of the day, this amendment targets a modest sum to groups such as the disabled, those on low pay and in part-time work who are facing severe taper problems. They would enjoy not only a higher level of benefit because on something like £62.50 a week the difference between a 15 per cent. and a 20 per cent. taper is about £1 a week which is a significant difference. We may need to return to this matter. I am very disappointed that the Minister does not accept the moral disparity between discounts irrespective of the ability to pay and a taper which is now harsher than under the poll tax for those who are the most necessitous in our society. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 110 not moved.]

Lord McIntosh of Haringey moved Amendment No. 111:

After Clause 103, insert the following new clause:

("Rate appeal refunds

—(1) In this section— (a) "relevant rates" means the aggregate of

  1. (i) any rates which a rating authority within the meaning of the General Rate Act 1967 has repaid under section 79(2) (a) if that Act in 1423 respect of any period of rate prior to 1st April 1990 in consequence of any relevant alteration; and
  2. (ii) any rates which a rating authority has refunded under section 9(1)(a) of the General Rate Act 1967 in consequence of a relevant alteration.
(b) "a relevant alteration" means any alteration made in a valuation list by virtue of sections 71 to 78 of that Act after 1st April 1990.

(2) In the chargeable financial year commencing 1st April 1992 a charging authority shall be entitled to deduct and retain from the amount (the provisional amount) which it is liable to pay to the Secretary of State for that year under paragraph 5(4) of Schedule 8 to the 1988 Act an amount equal to relevant rates repaid by it prior to 1st April 1993 in consequence of any relevant alteration.

(3) In any subsequent chargeable financial year a charging authority shall be entitled to deduct and retain from the amount (the provisional amount) which it is liable to pay to the Secretary of State for that year under paragraph 5(4) of Schedule 8 to the 1988 Act an amount equal to the relevant rates repaid by it during that financial year in consequence of any relevant alteration.

(4) For each chargeable financial year from 1st April 1992, the Secretary of State shall credit to the account kept by him under Part 1 of Schedule 8 to the 1988 Act a sum received from the Treasury equal to the aggregate of the amounts deducted and retained by charging authorities during such year pursuant to subsections (2) and (3) of this section.").

The noble Lord said: My Lords, I return to this amendment that is on a subject which we considered at Committee. I return to it for two reasons. First, I did not do justice to the argument when I introduced the amendment; and, secondly, the Minister in his reply did not do justice even to my inadequately expressed argument. In moving the amendment, I failed to make clear the peculiar anomaly as regards rate appeals relating to the period before the introduction of the poll tax on 1st April 1990 which are to be charged to the local authorities concerned. That is only for a very short period. Until 1989–90, rate appeals of this kind—there were rate appeals which resulted in more revenue as well as those which resulted in a decrease in revenue—were fed into the block grant for the following year. The refunds or increases were borne by all ratepayers, but the most important factor was that they were treated as affecting the local tax base and they were not counted as expenditure. They were not counted against spending targets for local authorities.

That is a very fundamental point. Until 1989–90 we did not have the anomaly of the effect of appeals which were counted against spending targets. That was at a time when capping was much less widespread than it is now or is going to be in the future under this Bill.

The second element that I did not make clear concerned rate appeals after 1990. Under the national non-domestic rate, refunds, as a result of rate appeals, affect the national pool and not the individual authority. We have a situation where before the period we are talking about and after it, there is no effect on individual authority's spending targets, but in the period we are talking about there is. It appears to be a complete anomaly in that respect. It would not be out of keeping to correct that situation.

The reason why I said that the Minister's response was inadequate on that point was particularly related to what the noble Lord, Lord Strathclyde, said about the ILEA. He attributed blame to that body for the circumstances leading to the fact that the London Residuary Body has to increase its levy in 1992–93 to cover the refunds. I pointed out to him that even the London Residuary Body did not realise that the refunds would occur. It was difficult to suppose that the ILEA expected that. I failed to point out that even if it had, it could not possibly have included the provision for the refunds in its accounts because the ILEA was not a rating authority. Therefore, the idea that full provision could have been made in the final accounts is irrelevant. Rate refunds would have been included in the authorities' calculations of rateable values notified to the ILEA for the penny rate purposes. The ILEA itself would have had no knowledge of refunds being taken into account, much less the level of future liabilities. It will be helpful if the Minister sets that matter straight.

I understand from a circular which was sent out on Tuesday from the Department of the Environment to local authorities, that there is to be a scheme of supplementary credit approvals to cover the cost of late rating adjustments. Clearly, that is a very poor second best as far as we are concerned. We would much rather it were attributed to the national non-domestic rate pool. But even allowing for the fact that this is an improvement on what Ministers were able to say when we last debated the matter, I must question the fact that paragraph 4 of the letter states: The arrangements which the Secretary of State is minded to adopt would involve issuing to an authority an SCA"—that is, a supplementary credit approval— equal to a specified percentage of the amount by which a sum, calculated as described in the enclosed schedule, exceeds a threshold".

The value of that concession, if it is a concession, depends entirely, first, on the specified percentage, and secondly, on the threshold. It would be helpful if the Minister could give us some idea of what is in the mind of the Government, particularly in view of the fact that responses to the circular are required by 6 p.m. on Tuesday. If the Minister does not intend to give Parliament any idea of what is to happen, it will be very difficult for us to consider the matter at the last stage of the Bill next Thursday. I beg to move.

7 p.m.

Lord Strathclyde

My Lords, it was the noble Lord himself at Committee stage who made the comment that this was a pending reply. I said to him then that I was not certain that we would be able to come back with an answer before Report stage. I hope that what I say will satisfy him and that he will be able to withdraw his amendment.

The noble Lord has explained that in essence the new clause would provide that when calculating what they must pay to the national non-domestic rate pool, districts and London boroughs would be entitled to deduct amounts in respect of late rating adjustments. The clause also provides that the Treasury should make up any shortfall in the NDR pool to which such deductions would inevitably lead.

As I have explained, late rating adjustments result from rating appeals for 1989–90 and earlier years which have been decided since the introduction of the current system. The costs of these adjustments are shared between tiers, reflecting the fact that all tiers shared the rate income in the first place. In inner London that means that part of the costs are passed onto the London Residuary Body since the LRB is the successor to the Inner London Education Authority and that authority received a share of the original rate income.

The purpose of this amendment is to provide that the costs of late rating adjustments are not borne locally but by the national taxpayer. That would mean, among other things, that in inner London the LRB had no costs which it had to meet. We do not believe that would be justified, since, as I have made clear, the ILEA originally received part of the rate income which has, in effect, been found to have been overstated. What is more, in part at least, the amounts to be refunded to ratepayers will depend on local circumstances, and on local authorities' past decisions on the level of their rates, which points, we believe, to these adjustments being a local matter.

Noble Lords will recall that when we discussed this issue in Committee we made clear that authorities have traditionally dealt with these adjustments themselves, by making provision for them when budgeting. The sad fact is that, in the case of the ILEA, full provision for such costs was not made in its accounts. That is why the LRB is now having to increase its levy for 1992–93 to enable it to meet its share of the costs. But we do not see that as a reason for the national taxpayer having to pick up the bill. Other consequences of the welcome demise of ILEA have been dealt with within London, and we believe it is right that that should continue.

However, we have recognised that in certain cases the circumstances of these late rating adjustments are such that special assistance is justified. In the case of inner London boroughs we have said that we would be prepared to grant directions enabling an authority to capitalise that part of the LRB levy which is attributable to those costs. We believe that capitalisation will help the boroughs to accommodate the levy within their budgets for 1992–93. In other cases, where authorities are facing serious budget difficulties as a result of their own costs of meeting these adjustments, we are also prepared to consider granting such directions.

As to supplementary credit approvals to cover these costs, we are considering a number of requests from inner London boroughs with regard to the LRB levy for 1992–93. We shall consider each case on its merits, but the House should know that we have already made clear that we do not have additional spare resources for 1992–93. I can, however, tell the House that my right honourable friend the Secretary of State yesterday announced that he is minded, out of resources which are available as a result of certain SCAs not being taken up to the anticipated extent in 1991–92, to issue SCAs to provide some assistance to those authorities most affected in 1991–92 by those late rating adjustments of which they could not have been aware with certainty when setting their budgets for that year. He has invited authorities, including of course, all London boroughs, to provide him with information about their late rating adjustments in 1991–92, after receipt of which he intends to decide the level of assistance which would be appropriate in the circumstances. There is nothing that I can add to that statement in answer to the request of the noble Lord. I hope that what I have said has given him some peace of mind and that he will therefore be able to withdraw his amendment.

Lord McIntosh of Haringey

My Lords, I do not think that my peace of mind matters very much at all. It is the local authorities and their rate payers and taxpayers who matter. I am afraid that the Minister has gone no further than did the Under-Secretary of State in response to my questions when I introduced the amendment. What we have is not even a second best, but very much a third or fourth best. We have a form of supplementary credit approval which still means that local authorities have to pay for it: it is just that they have to pay for it out of capital spread over a longer period rather than it being accepted that this is a national responsibility. The specified percentage has not yet been made clear and neither has the threshold; therefore, the amount is very indeterminate. That is a particular problem for local authorities, because although their bids have to be in by next Tuesday at 6 p.m. they will not have an answer in time for the budgets they have to produce—if they have not done so already—in the next week or so.

It is not as if the Government did not know the extent of the problem. Councillor Jeremy Beecham, the chairman of the AMA, wrote to the Secretary of State as long ago as September of last year pointing out the problem in detail. The replies have been unsatisfactory and in the strict sense, temporising, until now—and I am sorry that the noble Lord, Lord Renfrew, is not here to hear the word used properly. It is a fact, and I am sorry that the Minister did not admit it, that the ILEA could not have made provision. Even if it had, the effect on the London boroughs would have been entirely different according to how the ILEA precept affected them.

This is a real example of the way in which the Government have failed to take account of legitimate pleas and protests expressed in moderate terms that have been made to them. To leave it until now, towards the end of February, when they have been aware of the problem for a very long time and then to make this unsatisfactory answer is doubly unsatisfactory. I am worse than disappointed in the Minister's reply. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 117 [Savings and transitional provisions]:

Baroness Blatch moved Amendment No. 112: Page 79, line 8, leave out ("section 101") and insert ("sections 101 and (Transitory enforcement provisions for England and Wales)").

The noble Baroness said: My Lords, Amendment No. 112 was spoken to with Amendment No. 70. I beg to move.

On Question, amendment agreed to.

Baroness Blatch moved Amendment No. 113: Page 79, line 11, after ("4") insert ("and 6(11)").

The noble Baroness said: My Lords, in moving Amendment No. 113 I should like to include Amendments Nos. 117 to 119 and Amendments Nos. 121 to 125. This is a group of amendments to paragraph 6 of Schedule 10 and paragraphs 11 and 12 of Schedule 12 to the Bill, and are intended to improve the operation of the national non-domestic rate pooling arrangements. I am able to give explanations of what each of these amendments is about if the House so wishes. If not, I beg to move.

On Question, amendment agreed to.

Clause 118 [Short title, commencement and extent]:

Baroness Blatch moved Amendment No. 114: Page 80, line 12, after ("44(c)") insert ("44A").

The noble Baroness said: My Lords, Amendment No. 114 should have been included in the groupings with Amendment No. 43. Noble Lords may not have noticed that I omitted to include it. It is entirely consequential upon Amendment No. 126. I beg to move.

On Question, amendment agreed to.

Baroness Blatch moved Amendment No. 115: Page 80, line 20, after ("sections") insert ("(Transitory enforcement provisions for England and Wales) and").

The noble Baroness said: My Lords, this amendment was discussed with Amendment No. 70. I beg to move.

On Question, amendment agreed to.

Schedule 10 [Local Government Finance: England and Wales]:

Lord Beaumont of Whitley moved Amendment No. 116:

Page 118, line 5, at end insert— ("1. In section 43 of the 1988 Act (Occupied hereditaments: liability) in subsection (5) for the formula—"AxB/Cx5 there shall be substituted the formula—"AxB/Cx10"").

The noble Lord said: My Lords, I move this amendment on behalf of my noble friend Lady Hamwee. It brings the mandatory rate of exemption from non-domestic rates of buildings occupied by charities into line with the rate of mandatory exemption for those owned by charities but at the time unoccupied. Charities are currently entitled to 80 per cent. rate relief on buildings that they occupy and 90 per cent. on unoccupied buildings. Local authorities have discretion to award further relief. This affects voluntary organisations that own or rent offices, charity shops, community centres, advice centres and training workshops. Rate relief has always been an important element of support for those bodies. According to Charity Trends in 1991, voluntary groups received £145 million in reliefs in 1989–90; and £23 million of that was discretionary relief.

Under the existing system of rate relief a charity which uses a building to provide a charitable service must pay a higher rate than if it were to leave the building idle. This is a financial disincentive for the charity to make the best possible use of all premises. The amendment would harmonise the rates at little cost. Charities have reported difficulties in obtaining discretionary relief from local authorities.

Additionally, some charities are having problems in gaining access to even the mandatory relief to which they are currently entitled. Local authorities give revenue capping, community charge collection difficulties and the gap between central government grants and resources needed for statutory duty provision as reasons for refusing relief to charities.

The National Council for Voluntary Organisations estimates that the extension of 90 per cent. mandatory rate relief to all charities and charitable organisations, whether or not their premises are currently being used, will cost the Exchequer between £3 million and £4 million per annum. This deferred amount would be met by the non-domestic rate pool and would not be a burden on local authorities. It is a very small sum by most standards. When we are arguing about £60 million being a small sum or £187 million being a small sum, and when, these days, we are positing millionaires to exist in many houses, £3 million to £4 million does not seem a great deal.

It is a small sum especially when one considers the 2.5 per cent. VAT surcharge imposed on voluntary organisations to help pay for the poll tax. The increase in VAT has cost voluntary organisations approximately £33 million to £35 million in 1990–91. Furthermore, at a time of recession when the demands made on voluntary organisations are increasing, no financial penalty should be imposed on voluntary organisations attempting to make the best possible use of their premises. The existing legislation on rate relief imposes an extra 10 per cent. burden on those organisations which are using their premises. The amendment will rectify that situation. I beg to move.

7.15 p.m.

Earl Howe

My Lords, at the Committee stage, the House considered an amendment which would have completely removed the rates liability on many charities. We explained then how charities had already benefited from the move to the new business rate and why we felt that any further concessions would not be appropriate.

As I said then, all charities benefit from services provided by local authorities. Many have high street outlets which profit from the particular services provided there; and there is a range of tax incentives which are designed to increase the funds available to them. Under general rates, the level of mandatory relief to charities was 50 per cent. but during the passage in 1988 of the Local Government Finance Bill we were persuaded to increase this to 80 per cent. because we saw that many charities were likely to face substantially increased bills. On top of that, those facing increases have benefited from the transitional arrangements which we introduced to protect ratepayers from the impact of the revaluation and the introduction of the uniform business rate in the first years of the new system. I should like to hear what evidence the noble Lord has that charities have not obtained the mandatory relief to which they are entitled. The reason could possibly be that they are mainly commercial enterprises as opposed to being mainly charitable enterprises. For the purposes of the relevant legislation that is a critical distinction.

The noble Lord referred to the cost of extending relief. The 80 per cent. mandatory relief cost £280 million in 1990–91. The cost of extending relief by 10 per cent. would be about £35 million.

Charities' mandatory relief is borne by the national non-domestic rates pool, as is 25 per cent. of the cost of any additional top-up relief. The remaining cost of the top-up relief is met by local charge payers. It is not clear from the amendment how the proposed increase in the level of mandatory relief for charities would be financed. Someone would have to pay for the concession: would the cost fall on the community charge or council tax payers, other non-domestic ratepayers, or taxpayers in general?

For these reasons we did not think that we should remove the burden of rates from charities entirely, and nor do we now think that the extent of relief should be increased. It is worth repeating that the discretion which authorities have to top-up relief means that the relief can be extended if the authorities think that this would be appropriate having regard to the interests of their community charge or council tax payers. For those reasons, I hope that the noble Lord will withdraw the amendment.

Lord Beaumont of Whitley

My Lords, it did not appear a great deal to ask, but as the Government do not seem to be in a giving mood tonight, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 116A not moved.]

Lord Strathclyde moved Amendment No. 116B:

Page 118, line 14, leave out ("in the same ownership which") and insert ("which— ( ) are owned by the same person,").

The noble Lord said: My Lords, in moving this amendment perhaps I may speak also to Amendments Nos. 116C to 116E. These amendments are a series of related changes to the existing amendment to Section 64 of the Local Government Finance Act 1988 concerning the ownership of multiple moorings and a recasting of the wording of the amendment inserted by paragraph 2 of Schedule 10 to the Bill. I beg to move.

Lord McIntosh of Haringey

Multiple moorings, my Lords? What does that mean?

Lord Strathclyde

My Lords, moorings are things that boats tie up to.

Lord McIntosh of Haringey

My Lords, how does that come into the amendment?

Lord Strathclyde

My Lords, perhaps I may give a slightly fuller explanation. I am dealing with Amendments Nos. 116B to 116E. The amendments simply make technical changes to the provisions in paragraph 2 of Schedule 10 to the Bill dealing with the rating of multiple moorings. Paragraph 2 enables regulations to be made concerning marinas and other places where there are several moorings in one ownership but which are occupied by, for instance, different pleasure boat and yacht owners. The provisions honour a commitment we made during the passage of the Local Government and Housing Bill 1989 to re-enact similar rules to those under the old rating system which were in the Rates Act 1984. I hope that I have satisfied the noble Lord with that fuller explanation.

On Question, amendment agreed to.

Lord Strathclyde moved Amendments Nos. 116C to 116E:

Page 118, line 18, leave out ("the owner") and insert ("that person").

Page 118, line 21, leave out ("occupied by the same owner") and insert ("owned and occupied by that person").

Page 118, leave out lines 23 to 33 and insert: ("(3B) Regulations under subsection (3A) above may provide that—

  1. (a) where a valuation officer makes a determination as mentioned in that subsection, he shall, if prescribed conditions are fulfilled, supply prescribed persons with prescribed information;
  2. (b) while such a determination is in force—
    1. (i) the person who on any day is the owner of the moorings (or the moorings and land) which constitute the hereditament shall be treated for the purposes of sections 43, 44A and 45 above as being in occupation of all of the hereditament on that day; and
    2. (ii) no other person shall be treated for those purposes as being in occupation of all or any part of the hereditament on that day."

(2) After subsection (11) of that section there shall be inserted the following subsection— (12) In subsections (3A) and (3B) above 'owner', in relation to a mooring, means the person who (if the mooring is let) is entitled to receive rent, whether on his own account or as agent or trustee for any other person, or (if the mooring is not let) would be so entitled if the mooring were let, and 'owned' shall be construed accordingly."").

On Question, amendment agreed to.

Baroness Blatch moved Amendment No. 117:

Page 120, line 24, leave out ("In each of sub-paragraphs (8), (9) and (10)") and insert ("In sub-paragraphs (8) and (9)").

On Question, amendment agreed to.

Baroness Blatch moved Amendments Nos. 118 and 119:

Page 120, leave out lines 27 and 28 and insert: ("(10) For sub-paragraph (10) of that paragraph there shall be substituted the following sub-paragraphs— (10) If the amount notified under sub-paragraph (6) (b) above is less than the provisional amount, the Secretary of State shall—

  1. (a) if he believes that the amount so notified is not likely to have been calculated in accordance with the regulations under paragraph 4 above, inform the authority of his reasons for that belief;
  2. (b) if he is not of that belief, pay to the authority, at such time as he decides with the Treasury's approval, an amount equal to the difference between the amount so notified and the provisional amount.").

Page 121, line 17, at end insert: ("(11) For sub-paragraph (2) of paragraph 6 there shall be substituted the following sub-paragraph— (2) Such a calculation shall be made on the basis of the information before the person making the calculation at the time he makes it; but the Secretary of State may make regulations—

  1. (a) requiring a calculation under paragraph 5(2) or (3) above to be made on the basis of that information read subject to prescribed assumptions;
  2. 1431
  3. (b) enabling a calculation under paragraph 5(6) above to be made without taking into account any information as regards which the following conditions are satisfied—
    1. (i) it is not reasonably practicable for the person making the calculation to take it into account; and
    2. (ii) it was received by the authority after a prescribed date (which may be before or after the end of the year in question)."").

On Question, amendments agreed to.

Lord McIntosh of Haringey moved Amendment No. 120: Page 125, line 21, at end insert: ("( ) The calculation made under subsection (1) above shall not cause the aggregate of the amounts payable in respect of revenue support grant and redistributed non-domestic rates to exceed the authority's budget requirement.").

The noble Lord said: My Lords, I would return to an amendment worded in the same way as one that was moved in Committee only if I was dissatisfied either with the way in which we had presented it or with the answer. As the argument was presented by my noble friend Lady Hollis, I shall not say that I was dissatisfied with that. I was, however, dissatisfied with the Government's answers.

We are dealing with what is called "negative tax" —in other words, the provision whereby an authority's revenue support grant and its redistributed non-domestic rate income can exceed its budget requirement. On the face of it, that does not seem to make sense—and I still think that that is the case. I do not think that the argument was adequately answered in Committee.

I wish to refer particularly to the claim of the noble Lord, Lord Henley, at col. 217 on 4th February, that the amount of grant saved would remain with the Exchequer because an authority's entitlement to RSG and non-domestic rate are set before their budgets are known. The noble Lord failed to take into account the fact that under paragraph 15 of Schedule 10 there is power for the Secretary of State to issue amending reports at any time before the end of the financial year following the financial year concerned. In other words, it is perfectly possible for the Secretary of State to recycle to all other authorities grant which has been saved instead of taking it back into the maw of Great George Street. I beg to move.

Earl Howe

My Lords, I take the last remarks of the noble Lord, Lord McIntosh, to mean that he is arguing that there is some inequity in allowing a district council—the authorities that would in practice be affected by this amendment—to hold on to more revenue support grant and redistributed non-domestic rates than it needs to meet its budget requirement. The surplus in such cases would have to be paid into the collection fund to offset the county precept for the area.

We had a very full discussion of this amendment in Committee. My noble friend Lord Henley explained that we were simply seeking to preserve the ability of councils in this position to pass on the benefits of their good housekeeping to the people who elected them.

We are having to make special provision because of wider changes in the system of local government finance.

Revenue support grant and redistributed non-domestic rates are at present paid into the collection fund administered by charging authorities in respect of all local authority services in an area. The charging authority sets its community charge to meet the balance of its own and precepting authorities' demands on the collection fund. However, under the council tax RSG and NDR will be paid directly to billing authorities and major precepting authorities. Each authority will set its own council tax to cover the gap between its RSG and NDR entitlements and its budget requirement. These amounts will be distinguished in the demand notice.

A district council with more RSG and NDR than it needs to meet its budget requirement will not need to set a council tax on its own account. We are proposing that it would pay the surplus into its collection fund to offset the county precept for its area. In the rare event that the surplus exceeded the amount needed to offset the precept, the balance would remain in the collection fund. Any estimated collection fund surplus at the end of the year would be shared between the billing authority and major precepting authorities in the following year.

Already, under the present system, the community charge in some areas is needed only to finance spending by the county council. This effect is not apparent to charge payers because RSG and NDR are paid into the collection fund and the community charge is set to cover all local authority spending in an area. The wider changes in the local government finance system that I have just described mean that special provision is needed to enable district councils to pass on the benefits of low budgets to council tax payers by transferring surplus RSG and NDR to their colleciton funds. We are making this special provision in response to representations from district councils.

Noble Lords opposite suggest that districts will only have surplus RSG and NDR because of defects in RSG and NDR distribution, or because they are spending well below their standard spending assessment. They propose that surpluses of RSG and NDR should be spread among other authorities.

The reason why some districts will have surpluses is not necessarily because they are low spenders— though some may be—or because their SSA is high, but simply because their income from other sources such as investments and asset sales covers such a high proportion of their expenditure. It does, indeed, reflect the good housekeeping that is apparently scorned by noble Lords opposite. Now they seem to be suggesting that we should change the rules to deny the fruits of good housekeeping to the people who elected those authorities.

Some 30 districts would have lost RSG and NDR as a result of this amendment if the council tax had been in place in 1991–92 and if those districts had set the same budgets. Not all are in prosperous parts of the country. Some cover important industrial towns; others cover agricultural areas. They represent a broad cross-section of authorities, albeit in the southern half of the country.

I have spoken at length because the matter is complex. I hope that I have reassured the House that there is no inequity in what we are proposing. We are merely seeking to safeguard the position of local people from the consequences of wider changes in the system of local government finance. I hope that the noble Lord, Lord McIntosh, will withdraw his amendment.

Lord McIntosh of Haringey

My Lords, the noble Earl, Lord Howe, seeks to claim that in moving the amendment we are opposing good housekeeping. No such thing! We are pointing out that there is another side to the coin of the inadequacy of the standard spending assessment as a basis for capping. That is the basis on which the Secretary of State forms his opinion about what is excessive expenditure. It is because the standard spending assessments are inadequate as a basis on which to set grants that they are inadequate in both directions. If they are set too high for some people, they are set too low for others. One needs to look only at the list of the 30 district councils that would benefit from the Government's proposals—those which would suffer if negative taxes were outlawed, as proposed by our amendment—to see that those authorities comprise largely the shire counties in the Midlands and the South of England. In other words, with almost no exceptions, they are authorities that are strong Conservative supporters. The only exceptions that I can see in the list are Slough and Plymouth. I point that out as a matter of fact without making any allegations of deliberate bias.

It is the defects of the standard spending assessment that have led to this ludicrous situation. It is clear that authorities need money to provide services. It is only because the grant system has been so distorted that we have this absurd and paradoxical result. It is one of the many things about the Bill that will have to be reversed by a new government. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 12 [Payments to Local Authorities by Secretary of State: Scotland]:

Baroness Blatch moved Amendment No. 121: Page 144, line 46, after ("calculate") insert (", in such manner as may be prescribed,").

On Question, amendment agreed to.

Baroness Blatch moved Amendments Nos. 122 to 126:

Page 145, line 21, leave out ("timeously")

Page 145, line 29, at end insert: ("(12) Where the Secretary of State has suspended payments under sub-paragraph (9) above by reason of the authority's failure to make the calculation required under sub-paragraph (5)(a) above in the manner prescribed, for the purposes of sub-paragraph (10) above sub-paragraphs (8) and (9) above shall apply to differences between the provisional amount and the certified amount as they apply to differences between the provisional amount and the notified amount.").

Page 145, line 33, at end insert ("—(a)").

Page 145, line 35, at end insert: ("(b) enabling a calculation under paragraph 11(5) (a) above to be made without taking into account any information as regards which the following conditions are satisfied—

  1. (i) it is not reasonably practicable for the person making the calculation to take it into account; and
  2. (ii) it was received by the authority after a prescribed date (which may be before or after the end of the year in question).").

Page 153, line 7, at end insert:

"Local Government (Miscellaneous Provisions) Act 1976 (c.57)

44A. The power conferred by section 16 of the Local Government (Miscellaneous Provisions) Act 1976 (power of local authorities to obtain particulars of persons interested in land) shall not be exercisable with a view to performing any functions under Part I of this Act.").

On Question, amendments agreed to.