Lords Sitting of 28 June 1999

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

Press Complaints Commission
Lord Harris of Greenwich Lord Harris of Greenwich asked Her Majesty's Government:
Whether Ministers have had any discussions with the chairman of the Press Complaints Commission following recent intrusions into personal privacy by tabloid newspapers.
Lord McIntosh of Haringey: My Lords, Ministers meet the noble Lord, Lord Wakeham, from time to time to discuss press regulation matters. My noble friend Lord Williams of Mostyn, for example, met the noble Lord, Lord Wakeham, on 27th April to discuss the Government's criminal memoirs review. There have, however, been no formal discussions in direct response to the events to which I believe the noble Lord, Lord Harris of Greenwich, is referring.
Lord Harris of Greenwich: My Lords, is the noble Lord aware of repeated intrusions into privacy by one or two tabloid newspapers, including the particularly obnoxious example that occurred only a few weeks ago? Does he agree that one of the most unattractive features of that particular example was the newspaper benefiting commercially, followed by an entirely hypocritical apology to those who were involved in that very unhappy episode? Finally, is the noble Lord further aware that one of the most disagreeable aspects of the whole matter is that a number of people who suffer from
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the activities of tabloid newspapers decide not to pursue their complaints for fear that, if they do, there will be still further intrusions into their privacy?
Lord McIntosh of Haringey: My Lords, we do not normally comment on individual cases. I imagine that the noble Lord is referring to the Countess of Wessex and the Sun. We were pleased that the matter was resolved without recourse to adjudication. On the noble Lord's final point, yes, I agree with him entirely.
Lord Wakeham: My Lords, I have a great deal of sympathy with some of the remarks made by the noble Lord who asked the Question. Yet, when one examines the alternative of a statutorily based system, one finds that it would cost an enormous amount of money for people to pursue such matters; it would take a great deal of time; and it is very unlikely that the courts would award anything like the kind of damages that would make it worth while. The fact is that people would not use a legally based system—and that is without taking into account even the effect of the Internet. Self-regulation is by no means perfect, but I suggest to the Minister that it is a great deal better than the alternatives.
Lord McIntosh of Haringey: My Lords, the Government's view has consistently been that strong and effective self-regulation is better than a statutory regime. But, for that to work, it requires either that people are much more willing to come forward with complaints, which was the point made by the noble Lord, Lord Harris of Greenwich, or that the commission extends the use of the power that it already has to investigate complaints of its own volition.
Baroness Sharples: My Lords, does the noble Lord agree that this practice is even more unacceptable than cheque-book journalism?
Lord McIntosh of Haringey: My Lords, these are both problems that the press and the media generally have to face. I do not know that I would put a value on

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either of them. Cheque-book journalism, if it results in distortion and invasion of privacy, is very bad; intrusion on privacy in itself, even if there is no money involved, is very bad. That is true, whether or not those involved are in the public eye.
Lord Chalfont: My Lords, although self-regulation may be preferable to a statutory regime, as the noble Lord, Lord Wakeham, has said and as I gather the Minister agrees, would it not be a good thing to warn the press in the strongest possible terms that, unless self-regulation is made to work, a statutory regime may have to be considered?
Lord McIntosh of Haringey: My Lords, I said that strong self-regulation is preferable to a statutory regime. Despite some recent very bad examples, I believe that matters have very mildly improved, because the Press Complaints Commission has had greater self-confidence in recent years than perhaps it had in the past. I am not sure that making threats from the Government Dispatch Box is the right way to proceed.
Lord Luke: My Lords, does the Minister agree that the most important person in any instance like this is the victim? If that is the case, does he further agree that proactive moves by the PCC, which have been mooted in certain quarters, would inevitably cause distress to victims who, in most cases, would far rather not have any publicity at all?
Lord McIntosh of Haringey: My Lords, discussion about the investigation of complaints on the volition of the PCC must always take that point into account. Clearly, if the victim positively does not want an investigation to be carried out, any inquiry will have to be abandoned very rapidly. That is the difficult kind of balance with which the Press Complaints Commission must deal.
Lord Annan: My Lords, does the Minister agree that the public would have greater confidence in the Press Complaints Commission if it had power to fine summarily newspapers that abused the privacy of members of the public?
Lord McIntosh of Haringey: My Lords, if that happened the PCC would become, almost by osmosis, a public body and begin to have the powers and sanctions that would arise under a statutory regime. One does not create a statutory regime necessarily by legislation; one creates it if one has the powers to fine of the kind that the noble Lord advocates.
Lord Monkswell: My Lords, bearing in mind that the proprietor of many of the tabloids is Mr Rupert
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Murdoch, who has recently married, do the Government have any indication whether his new wife will have a positive influence upon him?
Lord McIntosh of Haringey: My Lords, I have no idea—and I do not think I care.
Lord Molyneaux of Killead: My Lords, can the noble Lord explain the difference in terms of impact between a complaint upheld and a complaint dismissed?
Lord McIntosh of Haringey: My Lords, if a complaint is upheld by the PCC, the newspaper concerned has a duty to apologise in a form prescribed by the commission.
Lord McNally: My Lords, I rise to assist the Minister. What is the result of increasing circulation by a quarter of a million and defying the Press Complaints Commission? The answer is a slap on the wrist from the noble Lord, Lord Wakeham. Unless the PCC has real teeth, it will continue to be ignored, and everybody knows it.
Lord McIntosh of Haringey: My Lords, I suspect that the noble Lord is edging towards the view of the noble Lord, Lord Annan, that there should be a fine to reflect the advantage that the newspaper gains through an invasion of privacy. We do not agree. If we did that, we would de facto have a statutory complaints procedure.

Eastern Europe: UK Enterprise Policy
2.45 p.m.
The Earl of Carlisle The Earl of Carlisle asked Her Majesty's Government
Why they are terminating the joint industrial and commercial attachments programme for British businesses in Russia and central and eastern Europe, and what they intend to put in its place.
Baroness AmosMy Lords, the programme is no longer appropriate to the department's priorities for helping the transition process in the region. We are supporting bilateral programmes tailored to country needs. Details are set out in published country strategy papers.
The Earl of Carlisle: My Lords, I thank the noble Baroness for her reply, which I find rather disappointing. Does the Minister agree that for a mere £5 million a year since 1990 over 900 United Kingdom companies have been active in 25 nations of the former Soviet empire and that their principal objective has been to provide managers with knowledge of British free market systems and business ethics, no doubt with a view to winning contracts in the short, medium and long term? Does the Minister also agree that the Department for International Development is taking an unusually short-sighted view of this matter? Will the noble

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Baroness arrange for JICAP to be transferred to the Foreign and Commonwealth Office so that it can continue under the aegis of the British Council?
Baroness Amos: My Lords, I cannot agree with the noble Earl that the Government are taking a short-sighted view. Before the decision to stop the programme way taken there was an extremely wide-ranging ark comprehensive evaluation of it. That evaluation looked at the core objectives and also the contribution of the programme to the wider transition process in the region and its relationship with our priorities under the White Paper on international development. The result of the evaluation showed that the programme was not contributing much to the goal of enterprise restructuring. There was only patchy evidence of an improvement in enterprise performance, including the building of commercial links with UK companies. The estimate of the trade generated as a result of the programme was modest. Therefore, the decision was taken to look at bilateral programmes that would improve the performance and the relationship. It is not a short-sighted decision. Aid and support will continue but in a different form.
Baroness Rawlings: My Lords, I do not know when the programme to examine JICAP was carried out. However, does the Minister agree that this is definitely not the moment to stop the funding of JICAP which has been so successful, especially to countries like Bulgaria which have suffered so much since the Kosovo war? Does she also agree that this is exactly the kind of organisation that can be of tremendous help in the reconstruction of the Balkans after the war?
Baroness Amos: My Lords, as I said in my reply to the supplementary Question of the noble Earl, we are looking at alternative ways to support and build the enterprise culture in those countries. The evaluation showed clearly that the core objectives that had been set and their relationship with the priorities of the department were not being met through this particular kind of funding mechanism. We shall continue with management training and look at such matters as mentoring, networking and building relationships between companies and partnerships across countries. That work will continue, but this particular programme is not meeting the objectives we set.
Lord Campbell of Alloway: My Lords, has the British Council been consulted on this matter? If not, might it be?
Baroness Amos: My Lords, as part of the evaluation of the programme, British Councils in the United Kingdom and overseas were consulted. A number of participants on the programme and their employer organisations were also consulted. A number of questionnaires were sent to companies within the United Kingdom which acted as hosts to those participants. So the evaluation was wide ranging. We spoke to a range of stakeholders, including the CBI and the DTI.
The Earl of Carlisle: My Lords, the Minister informed us that her department was looking at
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alternative ways to proceed. Would it not be wiser to avoid cutting this admirable scheme at the end of the month until alternative ways have been put in place? Otherwise it will send the wrong signals to the Russian Federation and the other 24 countries that we have been supporting.
Baroness Amos: My Lords, I say again that I cannot agree with the noble Earl. We have developed country strategy papers with individual countries such as Bulgaria where we set out clearly the kind of support we expect to give. We have developed a Russian president's management initiative which will involve over 500 management trainees and a budget of £5 million over three years as an example of what can be done. It is a more complex programme involving business school training. It has company attachments and a teacher capacity building element as well as coaching and mentoring. So we are finding alternative ways of ensuring that management training takes place and that the relationship between British business and those countries continues but in a different way.
The Earl of Lauderdale: My Lords, can the Minister tell us when those countries which are members of NATO will start to prepare a plan to repair the wicked damage which has been done in the bombing?
Baroness Amos: My Lords, the noble Earl may be referring to the next Question. However, there is a great deal of ongoing discussion among the international financial institutions as well as the other countries about the long-term reconstruction of the region.

Kosovo: NATO Costs
2.52 p.m.
Lord Peyton of Yeovil Lord Peyton of Yeovil asked Her Majesty's Government:
When they expect to be in a position to estimate the total cost of the NATO operation against Serbia, how it will be shared out between the member states, and by whom the matter will be decided.
The Minister of State, Ministry of Defence (Lord Gilbert): My Lords, individual nations are expected to bear the costs associated with their own military activity in support of Kosovo-related operations apart from those relating to running costs of NATO headquarters in-theatre and common-user infrastructure projects in support of operations, both of which will be eligible for NATO common funding. The Government are not therefore in a position to estimate what the total costs of NATO operations in response to the Kosovo crisis might be. It is also likely to be some time before the level of the United Kingdom's reimbursement from NATO common funding is known.
Lord Peyton of Yeovil: My Lords, I understand the Minister's difficulties. But, first, perhaps he will agree with me that that kind of venture cannot possibly be too frequently repeated. Secondly, this one all but came to

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grief with a flood of advice from people who had much to say but were willing to do nothing. Lastly, perhaps I may take the Minister to an issue which he might find a little more difficult. What was his reaction to the unfortunate statement attributed to President Clinton that America having taken part in the destruction side it had little to offer when it came to reconstruction? If true, that would be a shameful affair and an indication of just how difficult it will be to achieve a fair settlement.
Lord Gilbert: My Lords, I can certainly agree with the noble Lord that we do not want to see any more Kosovo crises in Europe or anywhere else on the face of this planet. It would be extremely difficult to reconstitute such an operation, and we hope that it will never come to pass. As to the views of people who did not involve themselves too greatly in the operation but had things to say about it, I think that a very great price was paid for keeping unanimity within the North Atlantic Council. The price, unfortunately, was paid by the citizens of Kosovo and also those of Serbia who suffered damage through NATO operations. It is certainly my view that had NATO been allowed to attack in the first few weeks the targets it was allowed to attack in the last few weeks the operation would have been over in a fraction of the time that it took.
I have not seen President Clinton's remarks in detail. However, I point out to your Lordships that the United States bore the overwhelming proportion of the cost of the military operations involved in Kosovo. In my view it is only right that Europe should pay more than its share of the reconstruction costs.
Lord Bruce of Donington: My Lords, in view of the fact that the costs to the United Kingdom of its significant part in the operation are likely to run into billions of pounds, will the noble Lord ask his right honourable friend the Chancellor of the Exchequer whether it would be possible to incorporate in the next Budget Statement, by a separate appendix, some indication, including the method of resource accounting or otherwise, of estimated cost?
Lord Gilbert: My Lords, I am not sure that I recognise the figures when my friend talks about the cost of the operation to the United Kingdom being of the order of billions of pounds. We have published a figure to the end of May. Expenditure on our military contribution was of the order of £43 million, but that did not include the cost of replenishing stocks of ordnance expended during the operations.
Lord Waddington: My Lords, did the Minister see the extraordinary report that the Secretary of State for Trade and Industry said in China that the bombing of the Chinese Embassy in Belgrade was nothing whatever to do with Britain and entirely a matter for the United States? Was that not a most extraordinary statement, not least because No. 10 was throughout the action putting it about that Mr Blair was in the lead, putting some guts into the President of the United States?
Lord Gilbert: My Lords, as I have been out of the country for the past week, I am not familiar with the
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report the noble Lord adduces in support of his remarks. It seems to me that he is involved in a most complex non sequitur. Whatever the attitude of the Prime Minister in encouraging operations, it had nothing whatever to do with events at the Chinese Embassy.
Lord Burnham: My Lords, the House will have heard with pleasure the statement of the Secretary of State that the costs of up to £43 million will be carried from central reserve. Can the Government give any view on their future policy on the sharing of future and continuing costs among participants to NATO's partnership for peace, bearing in mind that that includes Russia and many neutral countries?
Lord Gilbert: My Lords, I listened carefully to what the noble Lord said. Nothing in his question leads me to depart from the formula of the Answer I gave to the noble Lord, Lord Peyton. I shall check Hansard to see whether I have overlooked anything the noble Lord said. I should be precise. The agreement at the moment—discussions are taking place between the Ministry of Defence and the Treasury—is that the net additional costs of MoD operations will be subject to discussion and access to the reserves where the MoD is unable to accommodate those costs without prejudice to other commitments.
Lord Stoddart of Swindon: My Lords, reverting to the question of the involvement of the United States in the reconstruction of the area, I heard the American President state that America had played its part in the solving of the crisis and that it felt that the Europeans should bear the reconstruction costs. Is my noble friend aware that some estimates put those costs at over £100 billion? Is the United States serious in believing that it should not bear some of the costs of repairing the destruction which, in the main, it brought about?
Lord Gilbert: My Lords, I am not familiar with the estimate that my noble friend uses, but I put it to him that the United States bore 80 to 85 per cent of the costs of military operations on its own shoulders. As the whole of Europe has a gross domestic product not far short of that of the United States, it has, by subtraction, accepted only 15 per cent of the total costs. I do not know that the United States has ever said that it will walk away from all reconstruction costs and knowing the generosity of the American people it is unthinkable that it would. Equally, it is clear that this is a European problem and Europe has to make its full contribution.
Lord Cledwyn of Penrhos: My Lords, can my noble friend confirm that the 19 members of NATO are making a contribution?
Lord Gilbert: My Lords, the 19 members of NATO will have been making a contribution to the operational costs according to the formula I gave in my original Answer. Questions of contributions to the reconstruction costs will be for every country to determine for itself in the fullness of time.

Manufacturing Industry: Energy Taxation
3 p.m.
Lord Campbell of Croy Lord Campbell of Croy asked Her Majesty's Government:
Whether they intend to temper the impact on manufacturing industry of increases in taxation of energy, or to offer compensation.
Lord McIntosh of Haringey: My Lords, the climate change levy will entail no increase in the overall burden of tax on business since the revenues will be fully recycled via a 0.5 percentage point cut in the main rate of employer national insurance contributions and additional support for schemes aimed at promoting energy efficiency. The Government recognise the need for special consideration to be given to the position of energy-intensive industries under the climate change levy proposals, given their high energy usage and exposure to international competition. The Government intend to set significantly lower rates of the levy for those energy-intensive sectors which agree targets for improving their energy efficiency.
Lord Campbell of Croy: My Lords, I thank the noble Lord for that Answer. As he would expect, I recognise the need to make the reductions in gas emissions which were agreed at Kyoto. However, will the Government carefully consider adjustments to their proposal for a climate change levy, because it would discriminate against firms already hard-pressed by other factors? The starting date is nearly two years ahead. Furthermore, is the noble Lord aware that the proposal to offset the levy by a general reduction in national insurance would penalise firms having small workforces but large energy requirements?
Lord McIntosh of Haringey: My Lords, I am pleased that the noble Lord recognises the urgency and size of the problem which we face if we are to adhere to the Kyoto targets. For exactly the reasons he mentions, we are giving special consideration to the position of energy-intensive industries. We are negotiating with the steel, chemical and aluminium industries, among others, to ascertain what we can achieve in the period available, which is deliberately long, by means of energy reduction targets rather than the full force of a climate change levy.
Lord Brookman: My Lords, I welcome the Minister's remarks, but is he fully aware of the position of some of the major energy users; for example, the steel industry? I am told that it is currently making substantial losses and that if the carbon tax is not satisfactorily modified, it will have additional costs in excess of £300 million. Does he agree that against the backdrop of its current difficulties, that is unacceptable?
Lord McIntosh of Haringey: My Lords, my noble friend knows far more about the steel industry than I will ever know This is not a carbon tax. If it were, we should have considerable difficulties in calculating the
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figures. The figure that my noble friend quotes assumes a rate of levy which has not yet been decided and will not be announced until next year's Budget. It does not assume any results from the negotiations we are now carrying out with the steel industry on emission reduction, which I believe will be successful.
Lord Saatchi: My Lords, why are the Government opposed on these proposals by distinguished environmentalists such as my noble friend Lord Campbell and by representatives of manufacturing industry? Is it not because this is a textbook case of a government mixing their social objective of more "greenness" with their tax objective of more revenue, and ending up satisfying neither?
Lord McIntosh of Haringey: My Lords, I welcome the noble Lord, Lord Saatchi, to his position at the Dispatch Box. I believe that he is wrong. He should recognise that our proposals are precisely those put forward by the noble Lord, Lord Marshall of Knightsbridge, the former president of the CBI, who specifically said that we must have a combination of taxation and traded permits in order to achieve the objectives. This series of proposals has been worked out closely with industry, particularly manufacturing industry.
Lord Dormand of Easington: My Lords, can my noble friend say what effect the increase in energy taxation is having on the British coal industry? I have recently received two letters from the chairman of the country's biggest coal company expressing concern about the issue. Is my noble friend aware—I am sure that he is—that the British coal industry has greatly reduced in size and that some of us believe that it ought to continue?
Lord McIntosh of Haringey: My Lords, again, my noble friend knows far more about the coal industry than I do or ever shall. However, he is making assumptions about the rate of the levy and about our success or otherwise in achieving reductions by agreement. It would be unwise to anticipate either of those points. That is exactly why we set a two-year period for negotiations.
Viscount Eccles: My Lords, I have been employed in the foundry industry—another energy-intensive industry—for many years and I do not recognise the balance to which the Minister referred. Crudely, his proposals appear to raise energy costs by 15 per cent. The national insurance rebate represents 1 to 2 per cent of that. Does the noble Lord agree that a rebate system will provide little comfort to managements which daily seek greater energy efficiency and often achieve it? Does he also agree that a scheme of this kind is bound to lead to job losses and a worsening of the balance of trade?
Lord McIntosh of Haringey: My Lords, the targets which we were set at Kyoto, and which we have set for ourselves, are most demanding. We must reduce carbon

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emissions by 1.5 million tonnes a year by 2010. It has been calculated that that involves expenditure of £1.75 billion a year. It is true that the reduction in national insurance contributions will not cover all of that extra expenditure for most energy-intensive industries, but that reduction is intended to cover industry as a whole. It is exactly the point of employment which is the basis of the negotiations we are carrying out in particular with the steel, chemicals and aluminium industries.

Business
3.8 p.m.
Lord Carter: My Lords, at a convenient moment after 4.30 p.m., my noble friend Lord Williams of Mostyn will, with the leave of the House, repeat a Statement being made in another place on Wormwood Scrubs.

Academic and Academic-Related Staff Pay and Conditions Bill [H.L.]
Lord McCarthy: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Lord McCarthy.)
On Question, Motion agreed to.

Road Traffic (Vehicle Testing) Bill
Lord Lucas of Chilworth: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Lord Lucas of Chilworth.)
On Question, Motion agreed to.

Greater London Authority Bill
3.10 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Whitty.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTLES in the Chair.]
Lord Whitty Lord Whitty moved Amendment No. 212A:
Before Clause 67, insert the following new clause—
AMOUNTS FOR DIFFERENT CATEGORIES OF DWELLINGS
(" .In section 30 of the Local Government Finance Act 1992 (amounts for different categories of dwellings) there shall be added at the end—
"(10) Where the major precepting authority in question is the Greater London Authority, subsections (2)(b) and (4) above shall have effect as if the references to sections 43 to 47 below were references to the appropriate Greater London provisions.
(11) In this section, "the appropriate Greater London provisions" means—

(a) sections 70 to 75 of the Greater London Authority Act 1999 and section 47 below; or

(b) in the case of calculations by way of substitute, sections 70, 71 and 73 to 75 of, and Schedule 6 to, that Act and section 47 below."").

The noble Lord said: I hope that I can set a good example by speaking to the amendment with some dispatch. The new clause simply corrects an oversight; it makes no substantive change or change of principle. Section 30 of the Local Government Finance Act 1992 sets out how a billing authority should calculate the council tax for different categories of dwellings. It has to calculate the aggregate of its own tax and that of its major preceptors. The new clause amends Section 30 of the 1992 Act to ensure that where the Greater London Authority is one of the preceptors it refers to the budget requirements and tax setting provisions in the Greater London Authority Act. It will therefore ensure that the amount of tax calculated by the GLA under the provisions of the Bill will be added to council tax bills in London. I beg to move.
On Question, amendment agreed to.
Baroness Hamwee Baroness Hamwee moved Amendment No. 212B:
Before Clause 67, insert the following new clause—
TAX-VARYING PROPOSALS: REFERENDUM
(" .—(1) The Greater London Authority shall be empowered to adopt proposals for tax-varying powers by a two-thirds majority vote of the members of the Assembly voting.
(2) Before implementing proposals for tax-varying powers, a referendum of those entitled to vote in ordinary elections shall be held in which a simple majority of those voting shall be required to allow the tax-varying proposals to be implemented.").
The noble Baroness said: The new clause is to provide for the authority to be able to exercise tax-varying powers, but subject both to the agreement of two-thirds of the members of the assembly and, importantly, a referendum by Londoners.
Although the amendment is in the part of the Bill dealing with financial matters, we regard it as a question of general principle relating to the different spheres of government. In our view, the devolution of power should include financial matters. I have spoken previously in the Committee about the need for trust between central government and the new authority, not just as some sort of isolated principle, but with a view to the authority's working effectively because we believe that a relationship based on trust will produce

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the best results. The amendment is also about maximising the authority's financial freedom and about clear accountability in financial matters.
The amendment does not require immediate tax varying powers on the part of the authority. What it seeks to do is to allow for that possibility, subject, as I said, to the agreement of two-thirds of the members of the assembly, which is a substantial target to meet, and also to a majority vote in a referendum. Both are important.
I believe that the assembly will have very clear views, particularly as time goes on, as to how the authority will best operate. It will, after all, be in a prime position to assess the effectiveness of the authority in its role of scrutinising the mayor's actions, as a matter of common sense, because of where the assembly members come from, not just geographically, but with their background of representing constituencies and the whole of London.
The majority vote in a referendum is important as well. We believe that Londoners should have the opportunity to contribute to the style, powers and range of their authority. If they agree with a proposition seeking to permit the authority to vary taxes, that is a matter on which their views should be heard very clearly. But, as I said, it is not a matter for immediate implementation. The detail will have to be worked up. We accept that. We appreciate that the amendment is a matter of principle and does not set out the detail. It is the principle to which I ask the Committee to have regard.
There could nit be a debate within the authority, or with the people of London, about how tax-varying powers would operate without attention being paid to the tax base which is used. We on these Benches would prefer the authority to collect revenue through devolved income tax powers in the same way as is to happen in Scotland.
In financial matters, as in others, the authority should not be totally controlled by central government. The Bill provides for the sort of constraints which are applied to local government by way of constraints on capital spending, borrowing, the capping of revenue and so on. We believe that the authority should be able to set its overall budget and establish priorities—strategic priorities—within the budget. That, after all, is what the authority is being established for, not to act as a kind of counting house to pull together the aggregate of the functional bodies.
We believe that there will be a problem of accountability, or at any rate of transparency. It is difficult enough now with council tax bills where people tend to look at the amount charged and have a debate about the complexities of the impact of central government revenue grant, gearing and so on. It is not something that lends itself to easy conversation on the doorstep, in a queue at the supermarket or wherever. The need for transparency for the authority's success is important. The clearer the link between spending, tax and the input of Londoners themselves, the better.
There is a cynical argument that without considerable autonomy on the part of the authority it will not achieve very much. We prefer, at this stage certainly, not to be
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cynical but to put down a marker that the matter is important, a marker for the Treasury and for Londoners. I beg to move.
3.15 p.m.
Lord Dixon-Smith: My noble friend Lady Carnegy of Lour must have read the amendment with a feeling of considerable astonishment in view of the long time that was spent discussing financial matters in relation to Scotland. There was then a serious question as to whether the Scottish Parliament should have tax-varying powers, but the tax-varying power under discussion was certainly not on the basis of the general wording we see in the amendment. It was simply the power to amend the basic rate of income tax by 3p up or down.
The noble Baroness, Lady Hamwee, has many beliefs with which I can sympathise. If I am out of order in what I am about to say, or if it is unparliamentary, I hope the Committee will accept my apology in advance. The problem with all matters fiscal is that the devil is in the detail. It is the detail we need to be concerned about. The great problem with the amendment is that there is no detail. I accept that the noble Baroness said that the detail was to come. But if we put the clause in the Bill without the detail we shall be technically putting on the face of the Bill the power for the Greater London Authority to amend any tax that it chose. In my view, that would be quite extraordinary. On these Benches we could not support such an open-ended commitment.
It may well be that there is a case for reviewing the whole question of local government finance and the general tax basis on which local government is presently funded. But that is an entirely separate issue. The Bill is sufficiently large and complex already. If such a matter were introduced, I believe that the Bill would be talked out and would not be passed in this Session. I cannot support the amendment.
Baroness Carnegy of Lour: My noble friend is right. I was surprised by the amendment. The tax-raising powers in Scotland are defined in statute. They may not be adequately defined but they are defined and as time goes on we shall see how they work.
The noble Baroness, Lady Hamwee, made an interesting speech on Second Reading. She knows a great deal about London and has much experience of administration in London. I imagine that in tabling the amendment she is merely enunciating a dream which she and her colleagues on the Liberal Democrat Benches have; namely, that this authority in London will be able to do all sorts of amazing things and use public money to do them. The point about the Scottish Parliament is that it is a legislative Parliament and is to legislate on a wide scale in Scotland. It is possible that legislation may diverge considerably from that brought about in Westminster and that a little more money will be needed, or a little less money. That will be made possible by its tax-varying power.
This is a different sort of assembly. It is to be a strategic authority. Before the noble Baroness decides what she is to do with the amendment, she owes it to us to say what kind of taxation she has in mind for the

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assembly. For example, does she believe it would be acceptable for the London assembly to double income tax for people in London in order that its dreams could be fulfilled? London people already have to pay large sums to the councils. Does she envisage that they will have to pay more to the assembly? What is the scale of what she suggests?
It is a strange amendment. I do not suppose that the noble Baroness wants us to spend too long on it. I hope that in her reply she will tell us about the sort of thing she has in mind for those of us in London who would have to pay the tax.
Lord Whitty: I am not surprised by the amendment. I know where the Liberal Democrats are coming from. Far be it for me to stop people enunciating dreams in any event. However, the amendment covers old ground which we discussed during the referendum legislation. The result of that referendum was for a Greater London Authority which did not have the kind of tax-raising powers which the amendment suggests. Certainly as the noble Lord and the noble Baroness, Lady Carnegy, said, these are sweeping powers which are not appropriate in this context.
The referendum provided the mandate for the authority. We do not intend to depart from the result of that referendum by introducing tax-raising powers for the GLA. Council tax payers contribute to the costs of London-wide services now and will continue to do so when responsibility for those services transfers to the GLA. There will be a contribution towards the costs of the mayor and assembly. But it is not intended that the GLA should become a tax-raising authority, even to the extent of the Scottish Parliament.
The Bill sets out a responsible financial framework for the GLA, creating a single finance system which will give the mayor substantial scope to decide on the allocation of priorities between the GLA and the functional bodies. The mayor will set the GLA's consolidated budget, subject to the assembly's role in approving it, and will be able to allocate resources.
That framework will provide Londoners with the responsible, accountable authority for which they voted. The amendment would move it into an entirely different sphere. I am sure that the noble Baroness will recognise that she is attempting to create a body which is very different from that which we put to the people of London. Indeed, she will realise, even within her own philosophy towards tax-raising powers, that the amendment is extremely wide and would raise substantial anxieties were it to be pursued. I ask her to withdraw the amendment.
Lord Tope: My noble friend Lady Hamwee did not actually use the words, "I have a dream", as the noble Baroness, Lady Carnegy, suggested, but she might well have done. I too have a dream. I have a dream that one day we shall have a central government who trust local government. That goes to the heart of the matter.
My noble friend made clear that she was moving the amendment to raise the twin principles of financial freedom and accountability. Quite deliberately, we have
16
not tabled amendments which tie that up in great detail. My noble friend referred to our preferred method of devolved income tax and so on. Those are important details which should be debated but those debates should take place once we have agreed the principle. Today, we wish to raise the principle of the matter.
The first principle is that of financial freedom. We are talking about electing a mayor and assembly for our capital city and an electorate of a little over 5 million. It is to be an authority which the Government keep telling us is not the same as local government but is not regional government either. Whatever it is, it is a substantial body which should be trusted by central government to have the financial freedom it needs to be able to implement the wishes of the people of London.
That takes me to the next principle; namely, accountability. We do not suggest for one moment, nor should we, that the authority and mayor should have an unfettered freedom either to raise or reduce taxation on a whim. We are talking about tax-varying, not tax-raising, powers. The accountability is considerable. First, the mayor is accountable to the electorate of London. It will be a foolish mayor indeed who seeks dramatic changes in taxation. Even should that happen, it must be authorised by an elected assembly which is also accountable to the people of London. We say that that should require the assent of a two-thirds majority of that assembly, which is no mean task, as my noble friend said. Therefore, there is a considerable degree of accountability.
Most important is the question of to whom, ultimately, the authority is accountable. The Government say that it is accountable to the Secretary of State. We say that the authority should be accountable to the electors of London, the people who put them there. That is why we say that any tax-varying powers should be subject to a referendum and only if a majority is obtained in that referendum may a proposal ahead. The Government say that the Secretary of State knows better than the people of London. We disagree with that very strongly.
The noble Lord, Lord Dixon-Smith, is right to say that the devil is in the detail. Certainly, were that principle to be agreed now we should be the first to accept that there needs to be much more detail and we should be delighted to have an opportunity to come back and propose some of that detail. But we raise this matter on the principle that the major authority in the country, in our capital city with its first elected mayor, should be given the financial freedom to do what the people of London wish to be done. The people of London should be asked, and be able, to give that authority through a referendum. If we can agree that important principle today, which is at the heart of these proposals, or at least indicate a willingness to agree it, we can then go into the detail which the noble Lord, Lord Dixon-Smith, is so keen to address.
3.30 p.m.
Baroness Hamwee: When we were discussing the scope that we might suggest is available to the authority my noble friend Lord Phillips of Sudbury whispered to

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me that the mayor could propose free ice-creams for the people of London. I suppose that if the people of London feel it correct to spend their tax on that, they can have the opportunity to say so. I am sad to say to my noble friend that I do not believe it is within the powers of the mayor to provide ice-creams or other types of physical sustenance of that sort.
My noble friend is absolutely right. We tabled this amendment in order to raise the principles inherent in it. I am disappointed that the responses have not addressed the principles. We agree with the noble Lord, Lord Dixon-Smith, that the Bill is already too complex. We made it perfectly clear why we think it is unnecessarily complex. I refer to the very detailed prescriptions of how the authority is to exercise its powers.
As my noble friend said, we believe in the twin principles of financial freedom and proper accountability. The type of tax, the scale, and so on, would be matters to be dealt with at the time, were such a proposal to be on the table. Indeed, the detail of any proposal might well lead to its being rejected by a careful assembly or the London electorate. As to whether or not it is appropriate for a body such as the GLA, the authority would and should have very clear views. The GLA will not be a legislative assembly in the same way as the Scottish Parliament; nevertheless, through its strategic and functional responsibilities, it may well have views either that more money needs to be raised or that less money should be spent.
The Minister said that this is not within the terms of the referendum which agreed that the Government should proceed with their proposals. I very much doubt whether anybody voting in the referendum anticipated a Bill of such length, complexity and detail. The points cannot be dismissed simply by saying that Londoners have already voted on the issue. If they have, what is to prevent them having the opportunity, once the authority is up and running, to reconsider the points we raise? That is all we raise.
These are important principles and I am sorry that they, at any rate, have not attracted a greater faith in Londoners; I put it no wider than that. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 67 agreed to.
Lord Tope Lord Tope moved Amendment No. 212C:
After Clause 67, insert the following new clause—
ADMINISTRATION
(" .—(1) Section 14 of the Local Government Finance Act 1992 (administration, penalties and enforcement) shall be amended as follows.
(2) After subsection (1) there shall be inserted—

"(1A) A billing authority in Greater London shall, in respect of council tax for each financial year, indicate on any notice served on a liable person, the amount chargeable as a result of any precept set by the Greater London Authority.

(1B) Any reference, in this section to a liable person is a reference to a person who is solely liable to pay to the Authority, in respect of a particular dwelling, an amount in respect of council tax for a financial year, and includes a reference to a person who in the opinion of the Authority will be so liable.".").

The noble Lord said: I beg to move Amendment No. 212C standing in my name and that of my noble friends. I believe this may be a less contentious amendment. If the Minister is to reply shortly that it is unnecessary. I hope that he or she will explain why.
The amendment proposes that a billing authority—in most cases, the London borough councils—when sending out council tax bills each year, will state clearly on such bills the amount of the precept from the Greater London Authority. That is currently the case with the fire authority and the police. Their precepts are shown separately, as are the other precepts. Clearly, that should be the case with the Greater London Authority, but we cannot see provision for that in this long and complex Bill.
The reason for the amendment is simply to be sure and clear that that will happen. Were it not to happen, that would be nothing much short of deceit. It is already the case that whatever we say in the detail of council tax bills, the public (who sometimes feel that the increase or even the amount is too great) understandably blame the billing authority which sent them the hill. In this case, we need to be clear that the responsibility lies where it belongs, with the Greater London Authority which set the precept. That should be clear on council tax hills when they are sent out.
Lord Whitty: The noble Lord anticipates me correctly. This amendment is unnecessary. Under existing legislation right across local government all council tax payers are sent a demand which is required, among other matters, to show details of any precept that forms part of the total amount. As a major precepting authority, therefore, the GLA precept will be identified separately on demand notices.
To ensure that that is done in an intelligible way, we intend to amend the Council Tax and Non-Domestic Rating (Demand Notices) (England) Regulations 1993, with which the noble Lord will be familiar, to accompany any demand notice. That w ill mean a need to show the total expenditure for the GLA and its functional bodies; total expenditure by class of service; total amount of specific earmarked grant, and the GLA's consolidated budget requirement, the budget requirement for the GLA and each functional body compared to the previous year.
I believe, therefore, that there will be plenty of information under existing regulations, clarified by that amendment to the regulations, to ensure that council tax payers throughout Greater London will know the amount of the precept and on what it is being spent.
Lord Tope: I am grateful to the Minister for that explanation. I suspected that that might be the case. I am relieved, as I am sure we all are, to know that the 1993 regulations are to be amended. This has been a useful, if brief, debate to clarify the position. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hamwee Baroness Hamwee moved Amendment No. 212D:
After Clause 67, insert the following new clause—
GLA: EXEMPTION FROM COUNCIL TAX LIMITATION
(" .Chapter IVA of the Local Government Finance Act 1992 (limitation of council tax and precepts), as inserted by Schedule I to the Local Government Act 1999, shall not apply to the Greater London Authority.").
The noble Baroness said: I beg to move Amendment No. 212D standing in my name. This amendment inserts a new clause to provide that the chapter on capping, which will be brought into effect by the Local Government Bill, as it now is—it will no doubt become an Act—shall not apply to Greater London or to the Greater London Authority.
We have been told that the authority will not be regional government, nor local government; it is sui generis. The Secretary of State has considerable powers under the Bill. Much of the income depends on both the general grant and the transport grant under Clauses 85 and 86. There are provisions for credit approval and for redistributing the receipts of functional bodies.
During the passage of the current Local Government Bill, to which I referred, and on other occasions, for the reasons which we gave in the debate on the amendment concerning tax-varying powers and a referendum, we made it clear that we believe that in order to operate well, local government or, indeed, any sphere of government, should not be subject to the rigid, heavy control of the Secretary of State. For this purpose, I accept that the GLA is not local government, although local government financial provisions are, by and large, being applied to it.
I am well aware that the provisions in the Local Government Bill are intended to be reserve provisions. I am also only too well aware that there is no legislative assurance as to the circumstances in which those provisions will be applied.
We believe that if capping powers are to apply to the new authority, the Government must justify why they should do so. That is why we tabled the amendment.
Lord Dixon-Smith: It is interesting to discuss an amendment which seeks to remove the impact on the Greater London Authority of another Bill which is still proceeding through the House. But removing the impact of the Local Government Bill—it has been accepted for other purposes that the Greater London Authority should be included in that Bill as a best value authority—does nothing about Clause 26(8). That clause gives the Secretary of State power to,
"impose limits on the expenditure which may be incurred by the Authority by virtue of section 25(1)",
and establishes the authority's powers. Nor does it do anything about Clause 71(5) which gives the Secretary of State power to alter the constituents of a budget.
I entirely agree with the principle that capping is obnoxious and I support the noble Baroness, Lady Hamwee, in her comments on this so-called "reserve" power. All those involved in local government have always been concerned about the potential for abuse in reserve powers. In my experience, for governments they are a bit like drug addiction; they are
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habit-forming. I therefore share the noble Baroness's concern about this general matter. But unless we are able to take fairly dramatic action on the content of this Bill, which so far we have failed to do though there are further stages when we may yet do so, simply accepting Amendment No. 212D would not alter the state of affairs very much. Therefore, at this stage I do not support the amendment.
Lord Whitty: The noble Lord, Lord Dixon-Smith, is right that we are still in discussion on the general issue on the Local Government Bill, and Amendment No. 212D is either an indirect way of getting back to those arguments to which we will no doubt return in any case, or it is a means of exempting the GLA from a financial regime which applies to the rest of local government.
We made it clear throughout our discussions on the GLA that it will be subject to the same arrangements for limiting council tax increases as local authorities generally. As we explained in the other context, the Government have a duty to protect local taxpayers and therefore must have those reserve powers. At the same time, we made it clear that we hope never to have to use those powers for the GLA or for any other local authority. But the GLA in this context is a local authority. A financial regime applies to it and this move to exempt it would not be appropriate. It would be contrary to what we put to the electorate in the referendum. I hope, therefore, that the noble Baroness will feel able to withdraw her amendment.
Baroness Hamwee: I am interested that the noble Lord, Lord Dixon-Smith, seems to feel that the clause is not wide enough. We can certainly attempt to extend it.
We were addressing the provisions which will almost certainly be included in the current Local Government Bill because we are realistic. Whatever this Chamber decides to do with those capping powers, we have seen well enough that such provisions would go back to the other place and no doubt be ping-ponged back here. It seems inappropriate not to make the argument which must be made; that is, that we believe—and I accept because I have a dream on this as well—that the Greater London Authority should not be controlled in the same way that often proved inappropriately restrictive in relation to local government. It is the nature of the powers, and the fact that they are described as reserve powers but parliamentary counsel appears not to have been instructed to articulate the reserved nature of the powers, that we find particularly distasteful. We will return to the matter, certainly on the Local Government Bill and quite possibly also on this Bill at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
3.45 p.m.
Clause 68 [Issue of precepts]:
Lord Whitty Lord Whitty moved Amendment No. 212E:
Page 36, line 23, leave out from ("for") to end of line 25 and insert ("the reference to sections 43 to 47 below there shall be substituted a reference to the appropriate Greater London provisions:").
The noble Lord said: In moving Amendment No. 212E, I shall speak also to Amendments Nos. 212F and 212G. They are all technical amendments correcting aspects of the Bill.
At various points in the Bill the respective roles of the mayor and the assembly are set out so that their responsibilities are clear. Schedules 5 and 6 are two examples of that. Schedule 5 sets out the timetable and roles of the mayor and assembly for deciding the original component and consolidated budget requirements, and is given effect by Clause 72. Schedule 6 sets out the timetable and roles for substitute calculations of the budget and has effect whenever substitute calculations are to take place; for example, under Clause 80 if the Secretary of State sets a minimum budget requirement for the Metropolitan Police Authority.
Wherever there is a reference to "budget requirement calculations", Clause 72 should only be cited in the case of the original calculations. In the case of substitute calculations, there should be no reference to Clause 72; instead Schedule 6 should be cited.
These amendments will ensure that Section 40 of the Local Government Finance Act 1992, which concerns the issue of precepts, contains references to the correct provisions. I beg to move.
On Question, amendment agreed to.
Lord Whitty Lord Whitty moved Amendments Nos. 212F and 212G:
Page 36, line 26, leave out from ("for") to end of line 28 and insert ("the reference to sections 43 to 47 below there shall be substituted a reference to the appropriate Greater London provisions:").
Page 36, line 34, a. end insert—.
("(10) In this section, "the appropriate Greater London provisions" means—

(a) sections 70 to 75 of the Greater London Authority Act 1999 and section 47 below; or

(b) in the case of calculations by way of substitute. sections 70, 71 and 73 to 75 of, and Schedule 6 to, that Act and section 47 below."").

On Question, amendments agreed to.
Clause 68, as amended, agreed to.
Clause 69 agreed to.
Clause 70 [Calculation of component and consolidated budget requirements]:
The Chairman of Committees (Lord Boston of Faversham): In calling Amendment No. 212H I must tell the Committee that if this amendment is agreed to, I cannot call Amendment No. 212J.
Baroness Hamwee Baroness Hamwee moved Amendment No. 212H:
Page 38, line 3, leave out subsection (7).
The noble Baroness said: We have just heard from the Chairman of Committees about the pre-emption point. I should be delighted if Amendment No. 212H were agreed to, but I shall speak also to Amendment No. 212J.
Clause 70 deals with the calculation of component and consolidated budget requirements. For each of the functional bodies, and for the authority itself, the amount is calculated taking account of estimated expenditure, reserves and so forth. Those amounts are totted up. Account is taken of income and if the aggregate expenditure will be less than the aggregate income then for the purposes of these provisions the budget for that body will be nil. Our amendments seek to ask why.
Is it intended as an efficiency incentive? That does not seem to be the case because the savings would go to accumulated reserves and so be counted the following year. Under subsections (4) and (5) of Clause 70, efficiency gains can be anticipated. Is it a matter of control on the functional bodies planning ahead? I hope not. I do not think so. Is it a control mechanism, the ring-fencing of budgets for each functional body? That is probably the case.
We on these Benches would prefer the authority to see the budget as a whole and not simply as a set of constituent parts. Amendment No. 212J provides that the excess will be repayable from the functional body to the authority. In our perhaps ambitious eyes, the GLA should be a body which looks at a number of strategic matters affecting London. It cannot provide certain services direct; its powers are limited and the matters to which it is to have regard are set out in detail. That does not mean the body should not be ambitious for the success of London and consider issues affecting London—I hope your Lordships will forgive the jargon in a holistic fashion. I prefer the word "holistic" to the term "joined up". I certainly prefer it to a joined-up London for the next millennium, which we are told to hope for in a number of policy areas.
For the authority to look at London's needs and Londoners' aspirations, it will wish to consider its budget as a whole, not as a set of component parts—and our amendments would allow it to do that. In another place, the Government objected to the proposed arrangements because they do not apply to local government finance. Although the authority is to be treated for some purposes as though it were a local authority, this is not local government. Still less are the individual functional bodies local government.
The Minister in another place said that local authorities whose income exceeds expenditure should not have to give away income to other bodies. Instead, they should consider how best it should be used to improve the services. Precisely. We see that as a matter for the authority, rather than having individual bodies squirreling away cash and protecting their budgets in a way that suggests they may be competitive with one another. We hope the various bodies that will undertake the plans for London of the mayor and the authority will be co-operative, not competitive.
The Minister in another place also pointed to clauses that allow each functional body, with the mayor's consent, to make payments to another body. That is the wrong way around: that would be a number of tails wagging the dog. We ought to be looking at the powers

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and effectiveness of the authority as a whole, not forgetting the whole and looking only at the functional bodies.
Lord Dixon-Smith: We have some sympathy with the principles enunciated in the amendments, even though we might not support them today. If one of the functional bodies happened to come up with a surplus—I presume that it is likely to be a small one—the fact would be well known and suitable adjustments would follow subsequently.
In the light of what happened when budgets were devolved to schools, I have some hesitation about manoeuvring. The noble Baroness, Lady Farrington of Ribbleton, will be all too familiar with the consequences of schools holding balances on their budgets, which could theoretically leave large sums of money prudently squirreled away by school governing bodies in the interests of some flexibility in future in the management of their schools. If local authorities had those locked-up funds available to them, perhaps they would be able to put them to better use than having them sit in a bank.
This is not a straightforward matter and I agree that we need to consider London's funding as a whole in the way that the amendment suggests. I am not sure, however, that the personnel structures that are established under the Bill would make that practicable and achievable. As the noble Baroness said, we need to consider the matter in the round and it is certainly a subject to which we will all be returning. At this stage, I note what has been said and look forward to hearing the Minister.
Baroness Farrington of Ribbleton: The amendments seek to allow for bodies to have negative budget requirements. Secondly, they would require functional bodies to pay any amounts calculated as negative budget requirements to the GLA.
Our main difficulty is that the amendments seek to change some key aspects of the local government finance regime for the GLA. While we have always been clear that there would need to be modifications to the standard system, we have been clear also that those would need to reflect its unique role.
The local government finance system does not provide for negative budget requirements for local authorities generally. It is not the intention to change that for the budget requirements of the functional bodies—as Amendments Nos. 212H and 212J seek to do. Local authorities whose income exceeds their expenditure do not have to give away their income to other bodies. Instead, they consider how best it can be used to improve the services they provide. The exception is legislation that has money being delegated to other bodies—as with schools, as the noble Lord, Lord Dixon-Smith, said. The same principle applies to the GLA and the functional bodies.
The noble Baroness and the noble Lord raised the point of why the budget requirement of a local authority would in theory take account of a negative budget generated by one or more of its service departments but
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the consolidated GLA budget would not. They are not comparing like with like. I have explained that the constituent bodies of the GLA are separate bodies with separate budget requirements. The GLA, following consultation with the functional bodies, would calculate a budget requirement for each functional body as the difference between that body's expenditure and income. The GLA then calculates the consolidated budget by adding together the budget requirements of each of the constituent bodies.
A London borough council, for example, has only one budget requirement. The education department and social services department do not calculate separate budget requirements under the applicable statutory provisions. A London borough council's budget is like a constituent body's component budget under the Bill.
I cannot envisage the circumstances in which the mayor would set a negative budget requirement for any of the functional bodies. That could theoretically happen only if the income of those bodies exceeded their expenditure. Ruling out negative budgets does not mean ruling out flexibility. The Bill provides a mechanism for any spare resources to be redistributed from one body to another. Clause 106 allows any of the bodies, with the mayor's consent, to pay revenue grant to another functional body. The mayor is firmly in the driving seat in setting the GLA budget. The budgetary practices that he or she establishes will be expressed in five component budgets. He or she will certainly take an overall view.
Clause 105 makes similar provision for grants for capital spending. That mechanism for ensuring that resources are used efficiently across the GLA and the functional bodies is much more appropriate than a rigid system of negative budget requirements.
For those reasons, the amendments are not acceptable. I ask the noble Baroness to withdraw them.
4 p.m.
Baroness Hamwee: The Minister referred to certain clauses, but the problem with them is that they require the mayor's consent which suggests that the mayor is not in a position to take control. However, before I respond any further, perhaps the noble Baroness can clarify one point for me. She explained that the financial provisions are to reflect the financial arrangements which apply to local authorities. The Minister's reply seemed to indicate—and perhaps she will confirm whether or not I am correct—that each of the functional bodies is the equivalent of a local authority. Looking at it as a whole, the model which the Bill sets out seems to me to read as if each functional body is an "arm" of the mayor, if I may stretch the physical analogy a little. In other words, it is the authority, comprising the mayor and the assembly, which is the equivalent of a local authority. However, the Minister seemed to be telling us that each functional body is a separate local authority for this purpose.
Perhaps I may expand on my argument—that is, if it needs expansion. The Minister talked about borough budgets. In a London borough, I accept that it is the council as a whole which would take a view as to

25
the comparative priorities, to use her examples, of education and social services. That is precisely the sort of model we would like to see here, with the authority in the position of the council. The Minister said that boroughs have to act under their statutory provisions. We are at present discussing what statutory provisions will apply to the authority, so I think that that may be begging the question.
Baroness Farrington of Ribbleton: The noble Baroness has identified the difference. The difference between us is the fact that she would prefer a different model from that proposed in the Bill.
Baroness Hamwee: Yes, I would; I have made no secret of that fact. But that was not my question. I do not think we shall progress a great deal further on the matter today. Nevertheless, it is a matter of some importance. Perhaps the Minister has something further to say before I withdraw my amendment.
Baroness Farrington of Ribbleton: It may help the noble Baroness to know that, as I said earlier, the mayor decides the budget requirements but each functional body has its own budget. They are added together to form a consolidated budget requirement. I do not know whether that assists the noble Baroness.
Baroness Hamwee: I am grateful to the Minister but, sadly, I do not think it does. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 212J not moved.]
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 213:
Page 38, line 11. at end insert—
("(10) Notwithstanding any other provisions of this Act, the precept issued by the Authority for any financial year ("the relevant financial year") subsequent to the first financial year for which the Authority issued a precept shall not exceed the precept issued in the financial year preceding the relevant financial year by a percentage greater than the percentage by which the Retail Price Index increased in the year to the 31st December preceding the relevant financial year, except where this can be shown to be the consequence of a reduction in funding from central government.").
The noble Lord said: The Government have said that the GLA should not represent an oppressive financial burden on Londoners. Paragraph 6.7 of the White Paper on London promised that the finances of the GLA would,
"meet the Government's objectives of efficiency and value for money in public spending".
However, on the face of the Bill, the fulfilment of those pledges appears to be left to chance.
Experience elsewhere of powerful precepting authorities shows that, all too easily, they can escape the electoral consequences of their decisions because council tax payers fail to understand that their increased tax bill very often results from a decision by a precepting authority rather than a decision by a billing authority. This happens despite all the information that is sent out with tax bills. Indeed, experience in London
26
during the time of the GLC also bore out that fact. I cannot believe that people in London would wish to return to such a situation.
There is another factor involved, which is mentioned in the amendment; namely, government finance. All too often, for a local authority setting its budget the greatest variable that it faces in its financial resources is the variation in the funding it receives from central government. At present, we are in a period of relative stability because the Government have said—I am grateful to them—they will not amend the relevant distribution formula for a period of three years. But that period of peace, quiet and correctness is, I suspect, likely to be followed by a more violent period of change as the formula is altered to catch up with the demographic shift that has taken place over a longer period of time. The blame for local tax increases must rest where the responsibility for it lies. Among other things this amendment seeks to help to bring that situation into being.
As far as I can see, there is no financial discipline in terms of Part III of the Bill as it stands, except the Secretary of State's powers of direction. This is a new type of authority and the dangers of irresponsible financial planning should be diminished, if not eliminated, in the drafting of the Bill. The Government's stated intention is that the authority should be financially responsible. If that is to be more than a pious hope, limiting the increase in its precept for each financial year to the percentage increase in the RPI to the previous December is not only desirable but perhaps also an indispensable protection for the people of London.
The proposal is a moderate one; but it also has to be said that it is not novel. We are suggesting that the precept should not outstrip inflation; that is to say, it should not rise more quickly than the RPI. We see many examples of this in practice. The Government expect the privatised utilities to abide by much more stringent price cuts. They operate in the private sector but because they provide a public service and are all too often in a monopoly situation it is deemed that these requirements are reasonable. They are often required to operate on RPI minus—in other words, their prices can increase at below the rate of inflation—and they are expected to maintain their profitability through increases in efficiency, and so on.
When we had a Conservative government and the idea of RPI minus as a formula was produced for the regulation of these utilities, the Labour Party said that it was not a sufficiently stringent discipline. I find myself asking this question: how, in reality, is the GL. A different from the privatised utilities? Of course, the same could be said of all government services indeed, we are to some degree involved in a philosophical debate at this point. However, the GLA is certainly a monopoly provider for many of its services. It is certainly in a monopoly situation.
The Government claim that the RPI minus formula is needed to encourage privatised utilities. So why should not the same argument be applied to the GLA.? Limiting its price rises to the retail prices index would

27
encourage efficiency in London's public spending, which is exactly what the White Paper set out to do. Some people may say that local government is different; it provides services. But the privatised utilities are services. There is a parallel, if not a complete congruence, between the two.
The situation in London is exacerbated by a trend which is apparent at the moment of the Government tending to move resources from London and the south-east of the country into the west, the Midlands, the north-east and the north-west. We see that through the changes in the revenue support grant and the temptation for even wider changes than we have had so far. It must be borne in mind that London is already a huge net contributor to the nation's finances. If we are in the business of removing resources from the south-east, and from London in particular, we need to bear in mind that many parts of London are as disadvantaged as disadvantaged areas anywhere else in the country. Simply to use this resource shift to justify a different political need is not appropriate.
In a sense this amendment is exploratory. It explores the Government's attitude and philosophy on matters financial. I look forward to the Minister explaining how he sees the future of government services and government costs. Are they to be related to the normal cost increases which we have seen? If we had a period of deflation, would they still maintain that kind of relationship; or are we to expect that they might rise and expand—perhaps gently—in a way which absorbs an ever-increasing part of the community's total finances and resources? If that were to happen, I believe that it would be damaging.
This amendment seeks to impose a proper discipline on the Greater London Authority. It would, of course, render totally redundant the possibility of capping under the Local Government Bill because, were the Greater London Authority to be subject to this kind of a discipline, it seems to me that it would not fall foul of the Secretary of State at any time. I beg to move.
Lord Tope: I listened to the noble Lord, Lord Dixon-Smith, with considerable interest and some sympathy because I felt that his heart was not really in this amendment. Therefore I was not surprised to hear him say that the amendment was exploratory. However. I was astonished to hear him say that if the amendment were accepted it would do away with the need for capping. I thought that the noble Lord did not—
Lord Dixon-Smith: I said that it would do away with the need to cap the Greater London Authority.
Lord Tope: I stand corrected. As I say, I thought that the noble Lord moved the amendment with something less than enthusiasm because earlier today he told us that he opposed capping. I know from his days in local government that he opposed capping when it was first introduced by the previous government. He has always been clear and honest about that. Therefore I felt some
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sympathy for him in having to move this amendment which is similar to an even sillier one that was moved by his colleagues in another place.
This amendment seeks to impose on the Greater London Authority a limit which is tied to the retail prices index. Later the noble Lord can explain to me how that is not capping. It seems to me to be the crudest—and most universal in terms of the Greater London Authority—form of capping yet devised. The noble Lord—or probably his friends in another place—has chosen the retail prices index as a most inappropriate method of imposing a crude cap on an authority. I believe that that is entirely inappropriate. From all his years in local government the noble Lord knows as well as I—probably better than I do—that cost increases within local government do not relate that closely to the retail prices index. I am surprised that the noble Lord proposes the imposition of an arbitrary cap tied to the retail prices index by law for ever. At times the noble Lord appeared to confuse the increase in precept with, for example, fare increases under Transport for London. That is a different issue. Here we are discussing precepts.
The noble Lord also said that the amendment sought to place the blame where it lies—presumably with the Greater London Authority. However, it does nothing of the sort. It removes any possibility of blame from the Greater London authority because it has no power to decide that it wishes to impose a much higher. or for that matter a much lower, precept increase. We cannot support this amendment. I think that it is particularly silly. I return to the point I made earlier this afternoon; namely, the proper means of accountability for the mayor and the assembly of the Greater London Authority as regards whatever increase or decrease they want in a precept is to be properly accountable to the electors of London. Such a provision should not be imposed on them by law by means of some rather artificial index that does not relate to local government at all.
4.15 p.m.
Lord Whitty: I am glad that this amendment is both exploratory and philosophical. I think that we have swung from the total freedom of the Liberal Democrats to total constraint on the part of the Conservative Front Bench. The amendment seeks to restrict annual increases in the GLA's precept to annual increases in the RPI. The amendment refers to the GLA precept in the singular, although the GLA will, of course, issue a number of precepts, one to each billing authority. But leaving that aside, the noble Lord. Lord Tope, has made the case absolutely clear; namely, that local authorities have to take into account their responsibilities to their electorate, the resources available, changing circumstances and the priorities that they establish. We do not restrict any other local authorities to fixed increases or to increases which are related to a single RPI figure. We recognise that some flexibility is needed to decide how much local authorities need to raise from the council tax. We consider that there is a limit to that and therefore we have retained the reserve powers.

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However, as the noble Lord, Lord Tope, has reminded us, in a different context the noble Lord, Lord Dixon-Smith, is opposed to those reserve powers. But his proposal would place a far greater constraint on the GLA. The GLA is covered by our "third way"; that is, a course between the total freedom of the Liberal Democrats and the total constraints of the Conservatives. Broadly speaking that brings the GLA within the local government regime. Not only will it be subject to that legislative provision; it will also have a common law fiduciary duty. Under the new legislation that we shall introduce, it will also be subject to best value. It is subject to auditors and the intervention of the Audit Commission. There are all kinds of pressures on the GLA to spend its money wisely within the freedoms that we shall give it under the local authority finance system. If an utterly outrageous increase is proposed, the reserve powers would come into play, but not until that point.
The noble Lord referred to changes in the allocation of revenue support grant and so forth. There are certain changes both within and between authorities, but the intention is to have a fairer distribution, not to take money away from London, as the noble Lord suggested. Some degree of stability is needed. We are looking at changes in the methodology of allocating grants. In the meantime the three-year stability that we have announced has been welcomed by local authorities generally, although it will be subject to some changes such as demographic changes which would need to be reflected in the distribution.
I do not think that this is a sensible amendment. It places far greater constraints on the GLA than are sensible. Our own approach, which has been attacked in the House as having reserved powers, has a far lighter touch than that proposed by the noble Lord. I hope that, on reflection. he will not press the amendment.
Lord Tope: Before the noble Lord, Lord Dixon-Smith. responds, the Minister referred a couple of times to "the total freedom proposed by the Liberal Democrats". I hope he will accept that winning a two-thirds majority from the assembly and then winning a simple majority at a referendum of 5 million London electors does not quite equate to "total freedom".
Lord Whitty: I was speaking in financial terms. Clearly there are political constraints—as always—and the noble Baroness's previous amendment would have put in place a severe political constraint. I accept that. The philosophy is that one should somehow maximise the financial freedom subject to those political constraints, whereas the noble Lord's amendment would minimise the financial freedom and not allow any political judgments to take place.
Baroness Hamwee: That is exactly right. We stand by that. We would add that the political constraints in the various proposals we have made should be with the authority concerned—in this case the Greater London Authority, but it is a point we make for local government generally. Each individual authority with any modicum of instinct for its own self-preservation
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will understand the needs of the political constraints, quite apart from the propriety of applying them. So, yes, political constraints—but at the right level and in the right sphere.
Lord Dixon-Smith: When one has dug oneself into a hole it is always good advice to stop digging. However, we should be quite clear that the reserve powers mentioned by the Minister would be irrelevant if the amendment were to be included in the Bill.
We should recognise that part of the purpose of debate at this stage of a Bill in this House is to test the intellectual strength of the Government's proposals. Although not everyone may agree, it seems to me that sometimes one has to reverse the argument that one would normally produce in order to do just that. At the end of the day, the proof is in what passes through the House. I do not apologise to the Committee for moving the amendment, with which, I admit, I have some philosophical difficulty.
However, the point behind it is serious. There will be problems with the Greater London Authority precept. I accept that political constraints ought to operate effectively on it. The lesson learnt over the years by those of us who have been involved in local government is that the assignment of responsibility for financial actions is extremely difficult to pin on the people who took the decisions that had an effect on the precept. It was with that in mind that the amendment was moved.
We have had a useful discussion. However, I do not think that I am a lot clearer about the Government's attitude to public financing generally as a result. That is probably my fault because I did not argue sufficiently clearly the point that I wished to make. For that I am sorry. If I have taken the time of the Committee ineffectively, I apologise, but that was the purpose behind the amendment. I shall study the Minister's reply to deduce what I can from it. If I can deduce sufficiently useful material, we shall not bring forward the amendment again. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 70 agreed to.
Clause 71 [Provisions supplemental to section 70]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 213A:
Page 38, line 44, at beginning insert ("With the agreement of the majority of the members of the Assembly voting").
The noble Baroness said: In moving Amendment No. 213A I shall speak also to Amendment No. 220E.
Clause 71(5) provides for the Secretary of Stale to alter the constituent parts of the calculation under Clause 70(4) and (5); Clause 73 provides for the Secretary of State to alter the constituents of the calculation under Clause 73(2), which deals with the calculation of council tax. We propose that the agreement of the assembly should be required to such alterations. If the Secretary of State is making sensible proposals, the assembly will no doubt agree. I have faith in the likely common sense of the assembly, particularly when one has to look to the majority of its members. These amendments are protections in case the Secretary

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of State is not sensible or goes against the will of the authority in a manner which the assembly calculates would not find favour with Londoners.
The amendments are consistent with the role of the assembly. The assembly will have an overview of various budgetary matters and, in particular, the detailed matters to which Clause 70, which deals with the component and consolidated budgets, will apply. We have spent some time this afternoon talking about the need for an overview. Even were I to accept—which I do not—the Government's view of how the budget will be put together, nevertheless the assembly's view, gathered from experience of working in the authority and the background of the individual assembly members, will be relevant. It should have a role in these decisions. I beg to move.
Baroness Farrington of Ribbleton: Amendment No. 213A is intended to ensure that the Secretary of State could exercise his powers under Clause 71 to make regulations to amend the rules governing the calculation of the GLA's component and consolidated budget requirements only with the consent of a majority of assembly members voting. Similarly, Amendment No. 220E would mean that the Secretary of State could exercise his powers under Clause 73 to make regulations to alter the rules for calculating the GLA's basic amount of tax only with the consent of a majority of assembly members voting.
The noble Baroness is clearly continuing the Liberal Democrat campaign to curtail and prune the powers of the Secretary of State and to confer what are usually executive powers on the assembly. Perhaps it would help the Committee if I explain why the Secretary of State's powers in Clauses 71 and 73 are needed. The Clause 71 power is needed so that the Secretary of State can include or exclude certain items from the budget requirement. The budget requirement is used in the tax-setting equation to determine the amount of revenue the GLA will need to raise from council tax after deducting revenue support grant, non-domestic rates, and so on. The Clause 73 power is needed so that the Secretary of State can alter the rules governing the calculations for the basic amount of council tax to accommodate the introduction of new grants or changes to the powers under which grants specified in Clause 73 may be paid.
Both of these powers are similar to the Secretary of State's powers in respect of local authorities generally in the Local Government Finance Act 1992. Any changes to the rules governing calculations would probably need to apply to local authorities generally and to the GLA. Those changes are made only following consultation with local government, and although we would certainly expect to consult the mayor and the assembly about changes, surely the noble Baroness does not seriously expect us to agree that the assembly, uniquely, should have the power to veto them. It is Parliament and not assembly members which rightly has
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this role in relation to regulations made by the Secretary of State. For these reasons, we invite the noble Baroness to withdraw her amendments.
Baroness Hamwee: All our amendments are serious, and I am sure that the noble Baroness understands that. Indeed, our campaign to prune the powers of the Secretary of State will continue. The fact that the powers are similar to those which the Secretary of State has in relation to local government does not seem an argument for applying the powers to the GLA, but rather to reducing the powers in connection with local authorities. I am sure the noble Baroness is not surprised by that reaction. We shall consider this matter further, but for the moment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 71 agreed to.
Clause 72 agreed to.
Baroness Farrington of Ribbleton: I beg to move that the House do now resume.
Moved accordingly, and, on Question. Motion agreed to.
House resumed.

Wormwood Scrubs
4.31 p.m
The Minister of State, Home Office (Lord Williams of Mostyn): My Lords, with your Lordships' leave, I should like to repeat a Statement made in another place by my right honourable friend the Home Secretary earlier this afternoon. The Statement is as follows:
"With permission, Madam Speaker. I should like to make a Statement on the report of an inspection of HMP Wormwood Scrubs which the Chief Inspector of Prisons, Sir David Ramsbotham, is publishing today. Copies have been made available in the Library and the Vote Office. Given the nature of the report, I thought that I should report to the House the failings exposed at the prison and the urgent remedial action I expect to see taken.
"Prosecutions: before coming on to the report, let me, however, first deal with the question of the prosecution of certain prison officers. On 15th June, after a detailed police investigation, the Crown Prosecution Service announced that 25 prison officers from Wormwood Scrubs were to be charged with offences of assault on prisoners. The House will understand that I am therefore unable to comment on them today. But there can be no place in the Prison Service for abuse of prisoners of any kind. This is a fundamental principle. The Government and the new director general, Martin Narey, will take whatever steps are required to maintain it.
"Findings: let me now come on to the report itself. The Chief Inspector of Prisons undertook an unannounced full inspection of Wormwood Scrubs from 8th to 12th March 1999. This report published

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today makes deeply disturbing reading. In his preface, Sir David recalls that he had already been highly critical of what he had found when he last visited the prison in 1996. In that earlier report he made a large number of recommendations and called for a determined Prison Service response to reform the prison. However, on his return Sir David found that this reform had not occurred. While individual staff were carrying out excellent work, in what he said were extremely difficult circumstances, he considered that overall the treatment of prisoners remained `profoundly unsatisfactory'.
"Sir David sets out a number of specific failings: the needs of prisoners appeared inadequately understood; there were examples of the statutory rights of prisoners being denied; induction procedures were poor; prisoners spent too long in their cells; regimes were inconsistent and impoverished; healthcare had been cut back; there were allegations of abuse, including racial abuse; and arrangements for discharge of prisoners were not systematic.
"Sir David also found a destructive, unco-operative and self-seeking attitude among a minority of staff which was very difficult for managers to combat.
"Response: these are serious criticisms and Sir David makes a large number of recommendations for improvement. I have asked the new director general, Martin Narey, to put in place a robust action plan to respond to them. He is to report to me within 30 days. I expect the overwhelming majority of the recommendations to be accepted and implemented.
"There is one significant exception. Sir David recommends that Wormwood Scrubs should be market tested. I am keeping this option open but there are new managers in place at almost every level of the Prison Service responsible for Wormwood Scrubs and in my view they should be allowed an opportunity to put the prison back on an even keel. Should, however, rapid progress not be made in reforming Wormwood Scrubs all options—including market testing or closure—are open.
"Change already under way: let me now tell the House of the changes already under way. These include: a thorough overhaul of the procedures of the segregation unit; improved prisoner complaint procedures; more efficient deployment of staff; expansion of the regime, including additional offending behaviour programmes, increased constructive activities and a new education contract; a restructuring of healthcare management; and finalising and implementing an effective drugs strategy.
"The report points out that at the time of the inspection, 46 her cent of prisoners at Wormwood Scrubs came from the ethnic minorities compared to 11 per cent of staff. The chief inspector makes six recommendations relating to race relations and I expect them all to be accepted. As the House knows, the Government are setting the Prison Service challenging targets for the retention and promotion of ethnic minority staff. This reflects our commitment to eradicating racial discrimination in the criminal justice system.
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"POA: these remain small beginnings and much remains at a planning stage. What I require is a radical overhaul of Wormwood Scrubs, its culture and its working practices. I firmly believe that the overwhelming majority of prison officers will welcome the improvements which the Prison Service needs to implement at the prison. I expect the Prison Officers Association, both nationally and locally, to work constructively with the service to secure reform.
"The senior POA official who a few days ago publicly described prisoners at Wormwood Scrubs as `the scum of the earth' has now expressed bitter regret for his gratuitously offensive remarks. Last week the national chairman of the POA gave the director general a categorical assurance that his members would work with the governor and senior Prison Service managers to transform Wormwood Scrubs. I welcome that assurance.
"I have made it absolutely clear to the director general that change must be delivered at Wormwood Scrubs. I hope this will done with the full support and co-operation of the staff at Wormwood Scrubs and of all Prison Service trade unions, including the POA. But there will be change either with or without that co-operation. Wormwood Scrubs has the staff and the resources to meet the challenges laid down by the chief inspector. To ensure progress I have asked Sir David and his team to conduct a further investigation of the prison in six months' time, the results of which, will of course, be reported to the House.
"I am determined to ensure that the Prison Service protects the public and provides a decent secure environment for prisoners".
My Lords, that concludes the Statement.
4.38 p.m.
Lord Cope of Berkeley: My Lords, the House will be grateful, as usual, to the noble Lord the Minister for repeating what the Secretary of State said in his Statement to another place. I am personally grateful for a sight of the report itself, although obviously I have not had time to study it in great detail. I expect the noble Lord the Minister will want to share with your Lordships his own reaction to the report, as the current prisons Minister within the Home Office.
The report made very clear that it believes that responsibility for the failure to make improvements since the last inspection lies with the Prison Board and the area managers and so on, and not solely with the local management. However, some questions can relevantly be asked, particularly as regards what happened during that period. Why was there apparently no governor at the prison for a period of six months or thereabouts? When the prison was in a serious situation, with bad reports both from the inspector and the board of visitors, that seems a very long time for it to be left without proper leadership.
Why was there a 40 per cent cut in health provision when attention had been drawn to the fact that that area required more attention rather than less? The error presumably lay above local management level with the

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higher management of the Prisons Board and Ministers. What was done about the action plan that we believe was put in place following the previous inspection? Generally speaking, when inspections of this kind take place an action plan is drawn up to address the failings that are revealed. In this case the action plan had evidently not been implemented. The inspector describes his previous recommendations as having been virtually ignored.
I support the decision of Ministers not to close the prison at this time or to market test it—although both options remain open and it is correct that they should. Does the Minister agree with the statement of the chief inspector that no private contractor in a private sector prison could get away with what has happened in Wormwood Scrubs?
4.41 p.m.
Lord McNally: My Lords, the Minister must now be considering whether his department is not the "Ministry of One Darned Thing After Another". He should also be aware that over the years the Home Office has proved more often a trap-door than a springboard for ministerial ambition. But, as the noble Lord, Lord Cope, indicated, this Statement is different from the others that the Minister has recently had to make. It covers his direct area of ministerial responsibility and events that have taken place during his watch. I noted a report in one newspaper that the Minister might even consider this a resigning matter. I do not believe that our public life is so rich in talent that that would be a way forward. It would be interesting to know whether the Minister, during his time as prisons Minister, or other Ministers visited Wormwood Scrubs during the period covered by the report.
More broadly, does the Minister agree that this is one of the most damning and disgraceful reports of recent times about any part of our public service? As the report rightly states, Wormwood Scrubs has both the staff and the resources to carry out its responsibility. At any other time, the response to a report of this seriousness and severity would have been to set up a full public judicial inquiry. Was that ever considered?
I understand what the Minister says about market testing. However, the report seems to indicate that market testing in the private sector has proved a success. Are there lessons to be learnt about how those findings might be applied to the public sector?
Almost every prison report over the past 30 years has highlighted the appalling state of industrial relations in our prisons. There is no question that prison officers have a difficult job and that the vast majority of prison officers are decent human beings. But there is overwhelming evidence of rogue branches in the POA and of a canteen culture as bad if not worse than that identified in the police service. The POA has for too long had the reputation of being a cowboy outfit. It should realise just how low is its esteem as an organisation. The POA is as much on test now as Ministers are as regards how to deal with this situation
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Paragraph P6 of the report highlights the fact that Sir David Ramsbotham asked to see an investigation report. He states:
"I was denied access by the then Director General, after he had taken legal advice".
Does the Minister defend that decision? Would other inquiries find similar refusals to co-operate with investigations?
Are there any proposals for improving prison officer training—for example, in restraint techniques, racial awareness and cultural differences, and in the management of drug regimes? In short, are our prison officers sufficiently trained for the conditions they have to face? Will there be any dismissals other than those that are presently under prosecution?
Finally, I ask the usual channels to note that the House will expect a full debate on the Prison Service before we rise for the Summer Recess. I said that ministerial resignations were not in question. But Ministers must realise that, if the matters highlighted in the report are not put right at once, the resignation required will not be of the prisons Minister but of the Home Secretary himself.
4.48 p.m.
Lord Williams of Mostyn: My Lords, in response to the noble Lord's last question about the usual channels, as the noble Lord tactfully and subtly indicates, that is not a matter for him or me. I have always responded on the basis that if there is to be time available for important public matters, I personally welcome the opportunity to explain and, where justification is available, to justify.
I am grateful to both noble Lords for their responses. As to my own reaction, it was anger and fury, and shame. I can get some benefit from the statement of Sir David Ramsbotham in paragraph P29:
"I have therefore discussed the way forward with the Minister of Prisons and the Director General, and know how committed they, personally, are to eliminating the evil that we found at Wormwood Scrubs, and that we have reported on in a number of other prisons".
Every manager of any significant seniority who was present during the relevant time, whether within the prison or at area management level, now no longer works in the mainstream Prison Service. Most have left the service altogether. There were serious problems here and serious deficiencies. There was not a governor for six months. The noble Lord, Lord Cope, is right to say that that was too long a gap. The earlier governor resigned at fairly short notice. The question then was whether to continue with an experienced deputy governor in situ or whether immediately to change over. We have learnt a lesson. The Prison Service is focusing much more closely now on succession issues for prison governors. There needs to be a sensible balance between a governor who stays too long—I do not necessarily say that that was the situation in this case—and a governor who is extremely enthusiastic and stays too short a time. But these succession issues, in management and human terms, are extremely important.
The 40 per cent cut in the healthcare budget was, in my view, a mistake. The 1996 action plan was, as I understand it. provided to Sir David Ramsbotham with

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a progress report which was able to confirm implementation on a number of action points. So the action plan was not "virtually ignored". Some work was done.
The question of market testing has been raised.' Jack Straw has said quite plainly that market testing at this time is not feasible and we must make the prison work. To close the prison is not feasible for the same reason. But the Home Secretary has also said unambiguously that he does not rule out any option including market testing or closure. Some lessons are to be learnt about the quality of service provided by private prisons. Equally, not every private prison I have visited or read inspection reports upon is supreme in every way. It is notoriously well known that a number of private prisons at some stage have had quite significant worrying failures.
I turn to the comments of the noble Lord, Lord McNally. Fortunately, I do not have his previous convictions and therefore do not have to have any political ambitions. I have said many times, and I am happy to repeat, that the job of the prisons and probation Minister is one that should be the honourable ambition of anyone who waits to do something useful. One does not regard it as either a prospective platform or diving board, depending cal whether one goes up or down. It is not a springboard to ambition in my case. We have a genuine duty to the wider public and to those who are incarcerated as a result of state coercion.
The noble Lord fairly asked about prison visits. My immediate predecessor Joyce Quin visited shortly before the hand-over of responsibilities to me in July of last year. In respect of both Feltham and Wormwood Scrubs, I had intended to make unannounced visits but for the same general reason in both cases I was asked not to do so. I knew that there were to be visits to both by Sir David and his team. One can muddy the waters and take away the virtue of an unannounced inspection. According to the figures given by Jack Straw—therefore, they must be right—I have visited 46 prisons. I believe your Lordships are aware that I visit every Friday. It is possible to visit every prison for a quarter of an hour, but I regard that as deeply insulting to both the prisons and those who work there. One must have a sensible period in a day in order to visit a prison.
We considered a public inquiry. I do not believe that that is appropriate for Wormwood Scrubs at this time. Twenty-five officers have already been arrested, charged and suspended. It may well be that the police inquiries are not concluded. Inevitably, with criminal prosecutions under way, to hold a public inquiry is impossible; in any event, it would interfere with our determination to get things right. Your Lordships will note that we want Sir David to return in six months. Much more importantly, we want a positive action plan within 30 days.
The question is: has the private sector proved a success? Undoubtedly, yes. We are applying market testing to Doncaster and Buckley Hall, both privately run institutions that are open to competition by the Prison Service and the private contractor in the immediate future. Have industrial relations been poor at
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the Scrubs? Undoubtedly, yes; no one who reads this report can dispute it. To me, one of the very important aspects was that when the wholly inappropriate comment was made by a senior POA official at national level, virtually immediately he withdrew it in writing. Just as significantly, the chairman and general secretary of the POA, Mark Healey and David Evans respectively, have made it quite plain that their personal support for reform will be guaranteed.
The POA sometimes does wrong—I do not know of any human institution that does not—but a very significant number of its members do extremely well. I give one small illustrative example. I visited Blundeston prison on Friday last and learnt of a very imaginative scheme called Encounter that brings young juveniles into the prison to see what may happen to them if they do not pull themselves together. Those who are about to fall into the abyss of the prison system from their point of view are brought into the prison, spoken to firmly and locked up in the cells. That scheme, which is more extensive than the shorthand summary I have given, is run by David Banks, chairman of the POA at Blundeston. Although certain matters have arisen at Wormwood Scrubs, if the POA wants to work with Jack Straw and myself we have made quite plain that we welcome that co-operation.
My first action on taking over the job was to ask both Mark Healey and David Evans to come and see me. We agreed to meet on a regular "diarised" basis so that we could chart the way ahead. But, as Jack Straw said quite unambiguously—no one should be under any illusion or in any doubt—if matters do not improve, no option is excluded. Therefore, he requires certain amelioration from the director general and the full-hearted co-operation of the POA, which we have been guaranteed.
I defend the decision on the internal report. That was taken entirely on legal advice. It is not always possible to hand over documents at that stage. In many ways I believe that it is an advantage to Sir David to come to his own independent conclusion and not necessarily be governed by internal disciplinary inquiries which are not complete. Is there sufficient training in control and restraint? That is a matter very much in the minds of Martin Narey and Phil Wheatley, the new deputy director. Will there be dismissals? I do not know; nor should I know. There are disciplinary charges and it is for the proper disciplinary mechanism to deal with those matter. It is quite wrong for me to speculate one way or another. As to the debate which was the last matter to which the noble Lord, Lord McNally, referred, I responded to that immediately.
4.55 p.m.
Lord Biffen: My Lords, I am sure that the Minister accepts that only the perverse would seek to take any political advantage out of this unhappy situation. Taking account of his reluctance to hold a public inquiry and having regard to the general interest in this topic, would the Minister welcome a departmental Select Committee investigation?
Lord Williams of Mostyn: My Lords, I am not convinced of the validity of that. We have had the most

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trenchant possible inquiry and vigorously expressed report on Wormwood Scrubs. We must turn that place round on the basis of a tight timetable: 30 days for an action plan and a specific series of recommendations for the Home Secretary, followed by a return in six months. It is not for me to reject the noble Lord's suggestion, particularly bearing in mind my regard for his very long public service and experience. We can certainly bear it in mind. Our immediately priority must be to get this right.
The Earl of Longford: My Lords, I agree with others that this a damaging report. In my 50 or more years' experience of prison visiting this is the most damaging report on any prison that I can remember. In those circumstances, the Government can never absolve themselves of all responsibility. On the other hand, talk of resignations should be set aside as ridiculous. My noble friend, whom I have criticised before and shall criticise again quite often, is one of the ablest Ministers I can remember. I rule out that idea. I also disagree with the comment from the Liberal Democrat Benches about the POA. It is easy to blame the POA for everything. I believe that all governments, including the one to which I belong, have failed to establish the proper relationship with the POA. None of us would want to be a prison officer; it is the most appalling job in the world. One must make special efforts to come to terms with the POA, which all previous governments have failed to do.
I disagree very strongly with the Minister on one particular matter. He said that privatisation had succeeded. I disagree totally with the idea of privatising prisons. It is a step entirely in the wrong direction. Having said that, I disagree entirely with those who want to get rid of one of the best Ministers we are likely to find.
Lord Williams of Mostyn: My Lords, I have never found myself in absolute, total agreement with the noble Earl. I know that he is enormously supportive of what we seek to do. There is no question of resignation. There is a shame that we have found these things. No one has made a party political point. Sir David Ramsbotham's first report related to matters in September 1996. Matters which should have been put into effect following that time were not effectively followed through.
I have said already that I extended the hand to the POA immediately on taking up this work. I hope that its representatives, chairman and general secretary will want to take that hand and give the co-operation which they have said unambiguously that they will. The noble Earl said that no one wants to be a prison officer and that it is the most appalling job in the world. I entirely disagree. One sees the commitment, dedication and quality of young staff coming into the Prison Service. It is not the most appalling job in the world; and it is done by many with great distinction.
Baroness Uddin: My Lords, I thank the Minister for repeating this important Statement. I wish to comment
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on the welfare of Moslem prisoners. I had the privilege of seeing the report but have not had time to study it. Paragraph 5.39 refers to blatantly racist comments made by prison officers. How does the Minister intend to deal with that? If he has already done something, what action has he taken?
The report also acknowledges differential treatment as regards the statutory right of Moslem prisoners to be involved in religious activities. Will the Minister tell the House what is being done to ensure that all prisoners, including vulnerable prisoners, have equal access to religious provisions?
Paragraph 5.99 refers to the special needs of foreign national prisoners. Does my noble friend agree that we are not talking about special needs or special treatment but about equal rights and equal treatment of all prisoners?
Finally, 46 per cent of prisoners are from ethnic minorities. What action will my noble friend consider in six months' time when the review is undertaken, or perhaps in 30 days when the action plan comes before the Home Secretary? Will my noble friend consider taking on board some of the Macpherson recommendations for all institutions as set out in the report on the Stephen Lawrence inquiry?
Lord Williams of Mostyn: My Lords. my noble friend is right. Forty-six per cent of inmates are from ethnic minorities; and 11 per cent of staff. That cannot be acceptable. Earlier this year, the previous director general set up a scheme entirely for the recruitment, training, retention and promotion of those from ethnic minorities in the Prison Service. I have also set in hand a scheme where members of the Prison Service from ethnic minorities will come to my private office on a regular basis for two weeks at a time so that we get a decent interchange of views. That has been enormously well received by those who are from ethnic minorities in prisons. We were overwhelmed by the volume of applications. That is about to start.
I stress that the scheme by Sir Richard Tilt was set up before the report. There is a long way to go. I shall have nothing useful to report in 30 days; and nothing beyond tentative steps within six months because there is a long backlog of wrong behaviour, of blind wilfulness, to get over.
The noble Baroness is right about statutory rights. If they are statutory rights, they should be enforced by law if staff or management fail.
On religious observance, it has been plain to me that the Moslem community was not properly dealt with in the prison context. Therefore I recently authorised a full funding of a Moslem adviser to the chaplaincy. I know that the noble Lord, Lord Dholakia, was interested in that. Those matters are in hand, with the advertisement placed recently.

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It will be a long haul. We are ready, quite rightly, on these occasions to criticise wrongdoings of other organisations. But—I do not say this in mitigation—it is not the only organisation in this country which has similar defects in the racial context.
Lord Dholakia: My Lords, perhaps I may put three questions to the Minister and thank him for the tone of the Home Secretary's Statement which seems positive about what needs to be done.
First, the Chief Inspector of Prisons has never before called for the closure of the prison. This is the first time he has done so. That drastic recommendation shows the depth to which the prison has sunk. What concerns me most is that complaints surfaced as early as 1991 through reports of the chief inspector, the board of visitors and by individual inmates. Yet it has taken all this time for any action to be taken. The noble Lord, Lord Biffen, who mentioned the Select Committee inquiry, is right. How long does it take for a complaint of this nature to be dealt with? It was through the sheer force of the solicitors that the complaints were examined in detail.
Secondly, I refer to the machinery of complaints against prison officers. Those of us who have been members of boards of visitors know clearly how inadequate the machinery is. In many cases the governors are powerless against the might of the prison officers. Rather than simply relying on ombudsmen, is it not time to consider whether similar machinery to the Police Complaints Authority is appropriate so that there is an independent element in examination of complaints?
Thirdly, I wish to echo the point raised by the noble Baroness, Lady Uddin. Forty-six per cent of the inmates in Wormwood Scrubs are from ethnic minorities. Many people—some have rung me—are concerned about what has gone on. If we were to analyse the complaints made against prison officers, a substantial number are from black and Asian prisoners. Will the Minister ensure that the Home Secretary's Statement, which is fairly positive in the action that needs to be taken, is reported widely in the ethnic minority press so that sympathy is given to those families who are worried about their relations in prison?
Lord Williams of Mostyn: My Lords, yes, we have the benefit of the immediate and, I hope, long-term consequences of the Macpherson recommendations in the context of the Stephen Lawrence inquiry. As the noble Baroness said, there are many lessons to be learned from that inquiry which are not limited to one police service; namely, the Metropolitan Police.
I agree that machinery is important. The prison ombudsman, to wham I pay tribute, is just retiring. As his retirement request—not simply the last meal of the condemned man—he asked the Home Secretary and myself whether his terms of reference might be extended. We agreed.
The noble Lord. Lord Dholakia, said that this is a very damning report. It is. It is fair to say that the chief inspector said that there are a number of alternatives
42
The first is immediate closure. I do not think that anyone suggests that realistically at this time, but I stress what the Home Secretary said. He is not closing off any options; and he means it. The second was to change managers. But, as Sir David says at P14 of his preface, almost all the governor grades are new, having been brought in recently by the governor. The governor has been there only since March 1998; and we have a new area manager as well. So all those in effective management positions are new. He spoke about market testing, which I have dealt with. He spoke about partial closure and staff retraining. Two wings have been decanted so that the population has gone down from 1,100 or so to 700 or so. He raises the question of changing the role of the prison. That is a more long-term question; I think that he wants immediate issues focused on first. But we must take seriously those five options which he puts forward.
As regards reporting, Sir David and Mr Martin Narey, as the new director general, are having joint press conferences. Had it not been for the fact that I was required to repeat the Statement here, we had agreed that the three of us should be present as an indication of the way in which we all three mean business. I repeat what Sir David has said not in any sense of self-exculpation. During every conversation I and Martin Narey have had with him we have said that we shall support him when he finds wrong-doing and we shall do our utmost to put things right. If we set a 30-day target, we requested him to produce another report in six months which Jack Straw says will be published.
That was not the position in the past. As regards the period going back to 1991, I shall not make any partisan observation. I do not know the full details and I am sure that, as always, there is strength in what the noble Lord says. We have been responsible for what has gone wrong and I repeat what Jack Straw says; he takes responsibility. There is no hiding behind the difference between operations and policy.
Lord Merlyn-Rees: My Lords, I declare an interest in that I am vice-president of the Butler Trust, named in honour of a distinguished predecessor as Home Secretary. The trust gives honours and awards on a considerable scale. They are presented every year at Buckingham Palace to people in the Prison Service who do a good job. A great deal of good work is being done within the service and we must not allow this terrible report to lead people to believe that it is typical of the service. It is not.
There is no such thing as a Prisons Minister; there is only the Home Secretary. Whatever is done in the prisons department of the Home Office to divide up the work, the responsibility lies with the Home Secretary and there is no question of him or my noble friend resigning. It jars with me sometimes when in Northern Ireland reference is made to the "Prisons Minister" and the "Police Minister". There is only one person in charge—and that is the Home Secretary.
The question which I hope is being asked is: why has nothing been done since the last report? We can have all the reports on earth, but is there to be a repeat of the situation? Why was nothing done? It is not a political

43
question; this is a different government. Why was nothing done about the last report and what can we expect from another report?
Lord Williams of Mostyn: My Lords, the noble Lord, Lord Merlyn-Rees, is right about the Butler Trust. I attended the presentation of the awards this year when the Princess Royal gave the awards commending people. It was humbling to see the excellent work that was done. I took my hat off to those people—and not for the first time. That is why I slightly chided the noble Earl, Lord Longford, for saying that it is the most appalling job in the world. People of the kind identified by the noble Lord, Lord Merlyn-Rees, make me certain in my belief that it is not the most appalling job in the world. It is difficult and challenging, but good people do it well.
The noble Lord is right about the shorthand that is used. When I watched the Home Secretary's response to questions in another place, he made that very point. He said, "I am Secretary of State at the Home Office. The responsibility is mine." That has not always been the position.
The noble Lord asked why nothing was done about the report. It related to an inspection in the autumn of 1996. I do not know what happened, but it was not published until 21st March 1997. I shall not tease, but I shall allow myself this: it was the last day of the Sitting of the previous Parliament.
Lord Geddes: My Lords, I may have misheard the Minister's reply to my noble friend Lord Cope, but I thought that when rejecting the suggestion of a public inquiry, the Minister, who is normally very careful with his words, said that it may well be that police inquiries are not concluded. I did not understand whether ongoing inquiries have not been concluded or will not be concluded. The answer could be interpreted either way.
Lord Williams of Mostyn: My Lords, I am probably trying to be too careful, conscious of the fact that 25 officers at Wormwood Scrubs have been charged with offences involving assaults on prisoners. More than 25 allegations are being made and others continue to be made by solicitors representing other prisoners. That was all I wanted to say. I must be extremely careful because it would be ashes and dust in the mouth if any trial were prejudiced, or could be prejudiced, by anything incautious I said. I think that I was being too Delphic, but that is the explanation for it.
Lord Mishcon: My Lords, as one who had the privilege of being professionally associated with the Prison Officers Association for many years, perhaps I may comment briefly on what the Minister has said. During that time, I came across a number of real idealists and I was proud to know that they were part of the Prison Service, and they were proud to be members of it. Perhaps I may do something which is sometimes objectionable, but not in this case. I should like to pay a special tribute to a great idealist whose name has been mentioned, Mr David Evans, general secretary of the POA.
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It has been asked why a previous report has not been implemented. From the contents of the report, it seems that major items of complaint—and they are terrible—would have been as obvious as a running sore to anyone who carried out any inspection. I understand why a report may not have been implemented, although it is regrettable, but what about inspections in the mean time after the realisation that a report had stated that many things were very wrong at Wormwood Scrubs? How frequently do ordinary inspections take place? If they have been too meagre in the past, is it part of the Government's plan to put things right and to introduce regular inspections which are not announced beforehand, and not only by the Chief Inspector of Prisons once every so often?
Lord Williams of Mostyn: My Lords, my noble friend Lord Mishcon has had this interest for many years. He was the founding drafter of the charter of the POA a very long time ago. I pay tribute to David Evans, the general secretary. I have been interested in prisons since long before the election and frequently discussed these matters with him. The work done by the race relations committee of the POA is first rate and we have a great deal to learn from it.
There was a running sore in 1996. The noble Lord, Lord Mishcon, is right to ask whether inspections are sufficiently frequent. I suspect, although I shall correct it if I am wrong, that one would be looking for an inspection every two years or so. But that is not the end of the matter because one is speaking of the chief inspector's inspections. It seems to me that inspections by area managers and ultimately by the deputy director general are also of extreme importance. We are focusing on that aspect because the area manager can visit on a more regular basis. Self-evidently, it is part of his job to manage those governors and prisons within his area. That is an issue which we have very much in mind.
Similarly, we have divided up the organisation of prison matters. The new deputy director general, Phil Wheatley, who is certainly extremely vigorous, well informed and active, is to have operational responsibility, which means of course the oversight of area managers' inspections.
My noble friend also raised the question of unannounced inspections. The last one, by Sir David and his team, to whom I pay full credit, was unannounced. I have myself been on unannounced visits. After the first half-hour it is quite plain that somebody's telephone has been ringing. In my case, all it led to was a request to the Private Office for a photograph so that I might be easily recognised at the gate and there would be even more warning of an unannounced inspection. Unannounced inspections have their virtues, but I am not sure that they would solve all our problems.
We must recognise management's duty to manage. One cannot simply rely on the great inspections. In the same way, in the schools context, one cannot simply rely on Her Majesty's Inspectors of Schools to turn up, because all the pupils tend to be on good behaviour, with the teachers quaking. What one needs is something much more focused and involved, which we must get in the Prison Service and which Martin Narey and

45
Phil Wheatley are determined to have. They have absolutely the full support of Jack Straw and myself in everything they want to do, not only to put Wormwood Scrubs right but to remedy any other deficiencies that are found in the Prison Service.

Greater London Authority Bill
5.21 p.m.
House again in Committee.
Schedule 5 [Procedure for determining the Authority's consolidated budget requirement]:
5.20 p.m.
Lord Whitty Lord Whitty moved Amendment No. 213B:
Page 197, line 5, leave out from ("of") to end of line 6 and insert ("the Mayor and the Assembly, in accordance with the following provisions of this Schedule, to prepare and approve for each financial year—").
The noble Lord said: This is a straightforward, minor amendment which is consequential to an amendment made to Clause 29 at the Commons Report stage. Clause 29 now provides that any function of the authority is exercised by the mayor unless specified otherwise. The amendment clarifies that the duty of preparing the GLA's budget is shared between the mayor and the assembly, in accordance with the schedule. I beg to move.
On Question, amendment agreed to.
Lord Tope Lord Tope moved Amendment No. 213C:
Page 197, line 48, leave out ("February") and insert ("November").
The noble Lord said: In moving this amendment, I shall speak also to Amendment No. 217A.
We have now moved to Schedule 5, dealing with the process for the preparation of the budget. The purpose of the amendments is to bring the budget cycle forward. It is our view that budget preparation is not just a financial and administrative exercise in a public body such as the GLA or, indeed, any local authority; budget preparation is very much a political exercise as well. I deliberately say "political" with a small "p", because it is about determining policy priorities and should be part of a much wider public debate.
Recently we suggested that the so-called "state of London debate" should be used as part of the public debate on the budget process to help the mayor to determine her or his priority policies so that they can be properly reflected in the budget. This process needs time. If we are to have proper and effective consultation with the various component parts of London—by which I mean not only London borough councils and the City of London, but also the many voluntary and business organisations which have an interest—that needs time to achieve, and it certainly needs time if it is to have any real influence on the budget preparation, reflecting the priorities.
To do all of that in February, when one has a shotgun against one's head, is much too late, so we suggest in Amendment No. 213C that the mayor should be
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presenting the draft on or before 1st November. Incidentally, it ties in with the time when we think there should have been the state of London debate. Whether or not the debate has that title, I am sure that the assembly will have a similar public debate. In that way, there can be an open and meaningful process with Londoners, both in their representative bodies and more widely, determining priorities so that a budget can be drawn up—that is, as far as it is ever possible to reflect that process.
Amendment No. 217A suggests that the final budget should be approved by the last day of November. On reflection, I think that is probably rather too early, especially if the Government persist in having the RSG settlement as late as they currently do. The announcement is usually at the very beginning of December. I have to say in parenthesis that having that statement as late as it is now is causing enormous difficulties for those of us running authorities that want to undertake full and effective public consultation and are forced to do so over the Christmas period. The purpose of all of this is to bring forward the process to enable a much more open and public debate.
This process affects the London borough councils and their own budget preparations. It may well be argued rightly, that the GLA budget and the GLA precept are not part of the London boroughs' budgets; and they are not. Earlier this afternoon we were discussing the question of pinning the blame—perhaps that is the expression to use, given the nature of some of our debate—or at least clarifying what is a GLA budget and what is a London borough council budget. But the fact remains that London borough councils determining their budgets for the forthcoming year, in particular determining the likely council tax increase for the coming year, will want to have, and certainly should have, account of the overall tax burden which will be put upon their taxpayers.
Therefore, it would be important for the London borough councils also to know the likely—or, preferably, definite—level of the GLA precept at an early enough date to be able to influence their own budget decisions, should they so decide. February is much too late.
So the purpose of the amendment is to test whether the Government seriously share our views about budget-making being an open and transparent process, an involving process, both with the London borough councils and, at least as importantly, with London's communities, and whether they are serious about giving the mayor an opportunity to respond to the views that he or she hears at that time and having time to take them into account before presenting the budget finally to the assembly. I beg to move.
Lord Dixon-Smith: The noble Lord, Lord Tope, makes a plausible case for moving the budgetary process of the Greater London Authority forward to an earlier date, but, as we found earlier this afternoon, the problem lies in the detail. A move from 1st February, the date in the Bill, to 1st November would move the Greater London Authority's budget decisions back to before the end of a normal parliamentary Session, and certainly, as

47
the noble Lord himself pointed out, to before the Government have made their support grant announcements. That is not likely to lead to a practical budgetary process for the Greater London Authority, unless the Government are prepared to commit themselves to change their ways.
I think I am right in saying that the noble Lord has experience only of budgets within London. If he had had county experience, as I have had, he would know that one becomes used to the pressures that arise on a precepting authority, as the county council is and as the Greater London Authority will be, and then the precept effect on the boroughs and their equivalent, the district councils, in county areas. That is the reality of this particular amendment.
Nevertheless, we all wish to see the budgetary process going ahead at an earlier stage, if achievable. So while I cannot support the detail of the amendment, I look forward to hearing the Minister's reply. The principle is correct, even though the detail may be in error.
5.30 p.m.
Baroness Farrington of Ribbleton: As the noble Lord said, Amendment No. 213C would require the mayor to present the draft consolidated budget to the assembly by 1st November rather than by 1st February as provided in the Bill. But, as he acknowledged, the amendment would also bring forward the deadline for approving the budget, so the timetable for the budget process would not be extended.
Although I can see that November may have been chosen to coincide with the provisional local government finance settlement, it is difficult to believe that the noble Lord is arguing that the GLA's budget should be fixed before its grant allocation is finalised. That would make no sense at all. As he recognised, the provisional settlement is announced in December rather than November, leaving the mayor and assembly to work without even provisional grant figures.
In response to his comment about the timing and December being too late, I should say that this year we announced overall provisions for local authorities for the next three years, which should help local authorities to plan their expenditure.
Although the mayor and assembly would be required to complete their respective roles in setting the budget before the end of November, the deadline for setting the budget requirement and issuing a precept to billing authorities would remain unchanged—the last day of February.
I cannot agree that the deadline for either the draft or the actual budget should be brought forward. The GLA, like local authorities, must be able to take account of the local government finance settlement in setting its budget. The mayor is required to consult the assembly before finalising his draft budget and we expect that much of the work will take place long in advance of the steps required in Schedule 5. In fact, I should be surprised were the mayor and assembly not to reach a
48
fairly firm view of their budgetary priorities in December, when the provisional settlement is announced.
For those reasons, I hope that the noble Lord will feel able to withdraw his amendment.
Baroness Hamwee: I was glad that the noble Lord, Lord Dixon-Smith, ended his series of "buts" with an acknowledgement that the various elements of the cycle may deserve some examination. Whether our proposed dates are right or wrong, I am sorry that the noble Baroness did not acknowledge that it is worth pausing to consider whether what is proposed here is a practical or, one may argue, the best proposal.
I say that in the light of what the noble Lord, Lord Dixon-Smith, said about the pressures under which the counties are accustomed to work. Of course, a few years ago, the London boroughs were accustomed to having to reflect the GLC's demands and there are still precepts with regard to the police and so on. Just because that awkward situation exists in the counties and districts outside London, should those difficulties necessarily be replicated in London? We believe not.
Throughout the passage of the Bill, the Conservatives have argued forcefully that the position of the boroughs—and I paraphrase—should be paramount. This amendment does not seek to suggest that one set of bodies should take precedence over another. But we acknowledge that one of those sets of bodies—that is, the boroughs—is in a position which needs to be recognised, both with regard to the work which must be undertaken at borough level during the heat and hard work of setting the budgets towards the end of the calendar year when the settlement is announced and in what is a fairly frantic period over Christmas and the early part of each new calendar year.
We are very much aware that any borough which wishes to do that job properly cannot do so, sitting in its own town hall, without having a dialogue with the residents. The establishment of the GLA will create the need for an extra element of that dialogue. We are keen to make sure that it is an effective dialogue.
Baroness Farrington of Ribbleton: I am sorry that the noble Baroness feels that I did not respond to the point that was raised. I referred to the fact that we should fully expect a great deal of work to take place in advance of those steps being taken. We are talking about the framework of the Bill as opposed to the establishment of good practice, which will quite clearly allow for earlier discussions.
However, I return to the point regarding the announcement of the RSG settlement. To require the GLA to establish its programme within the law at a much earlier stage may put it at a disadvantage and, I argue, may quite inadvertently create those problems for the boroughs which the noble Baroness fears and which we all seek to avoid. Quite dramatic changes may need to be made in the circumstances. Therefore, the boroughs may be working on a false assumption.
Baroness Carnegy of Lour: Will the noble Baroness remind me whether the Government can announce the

49
local government settlement when Parliament is in Recess? This amendment would mean that the Government would have to alter their habits and bring forward the announcement to November. Parliament is often in Recess well into November. Does Parliament have to be sitting when the announcement is made? Is it approved by the House of Commons?
Baroness Farrington of Ribbleton: I speak from recollection, and I shall write to the noble Baroness and correct it if I am wrong, but I believe that the final approval of the settlement takes place in February. The figures announced at the end of November or in December are for consultation. To be fair to the noble Lord, Lord Tope, his amendment does not propose to change the date of the RSG, although I recognise that we are trampling on yet one more of the dreams of the noble Baroness, Lady Hamwee.
Baroness Carnegy of Lour: The noble Baroness need not write to me. I just wanted to be sure that the settlement could be announced when Parliament was in Recess, if that became necessary. It sounds as though that is possible, if is only for consultation. I am sorry if I am confusing matters. I just want to be sure that there is no impossible implication for government in this amendment. It sounds as though there is not. I do wish the noble Baroness to write to me about that.
Baroness Farrington of Ribbleton: I am sorry if I did not make myself clear. The final settlement, which is subject to the affirmative resolution procedure, is not until February. The noble Baroness asked me about November.
Lord Tope: I can only say that the Minister has been too long out of local government. She is right to say that the RSG announcement made at the end of November or early December these days is an announcement for consultation purposes, at least in theory. I imagine, therefore, that it could be made when Parliament is not in Session, although I would not propose that it should be.
The consultation period then lasts through December until either late December or early January. At that point Ministers presumably make up their minds and most authorities find that their final settlement has changed from the original suggestion by £2,000 or £3,000 on a budget of several hundred million pounds. That is the process.
The noble Baroness is also correct in that I do not propose in these amendments to change the date of the announcement of the RSG settlement. It is probably outside the scope of the Bill to do so. Were it within the scope of the Bill, I would certainly propose that we should change the date of the settlement; that is, to have the announcement n late November/early December to be able to carry out proper and effective consultation with voluntary groups, local residents, local businesses, and so on, over the Christmas period. That is something we have attempted every year for the past seven or eight years. Even giving due warning of such meetings, there
50
is still insufficient time available and an impossible deadline to meet. None of that is the purpose of the amendment.
Of course, I accept that the mayor cannot propose, and the GLA cannot decide, the budget for the year without knowing what the RSG settlement will be. However, the date of the RSG settlement announcement is not laid down by some immutable law of nature; it is laid down by the Treasury. If an amendment in the Bill was to have the effect of moving in the direction in which I wish, I would propose it even more fervently than I do now.
The dates suggested here—November rather than February—are negotiable. I would not go to the wall if the Minister said, "We cannot accept November but we might accept December or an earlier date than February". I expect that we would be both pleased and surprised. The purpose of the amendment and the theme I was trying to explore is the need to give more time for effective public consultation in the budget preparation. I accept the comments of the noble Baroness that there will be many private and public discussions long before February in the course of budget preparation. Once a deadline is put in an Act of Parliament, that tends to be the deadline, and most of us inevitably work to deadlines. I fear that we shall be stuck with a deadline which, in my view, even with the RSG settlement remaining as it is in terms of timetable, gives a period of time which is much too short and tight for effective work on a budget.
The noble Lord, Lord Dixon-Smith, referred to the fact that I have only London experience and have not enjoyed the delights of county and district government. That is correct, but perhaps I may remind the noble Lord that I served for 12 years on a London borough council when we had the Greater London Council, which also levied a precept upon us. That was at times both exciting and interesting. I believe that process is similar. Therefore, I do have some experience of this and I can assure him that not having a precept levied upon one by a county council, or in this case the Greater London Authority, does not make it any less stressful at budget time. It makes it hard, perhaps, to find someone else to blame, but usually the Government serve for that.
I believe that I have raised the issue. I suspect that we shall return to it, perhaps with a little more of the detail for which the noble Lord, Lord Dixon-Smith, is looking. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5.45 p.m.
Lord Tope Lord Tope moved Amendment No. 213D:
Page 198, line 17, at end insert—
("(1A) The Assembly shall take such measures as it consider, necessary to consult the bodies and persons referred to in subsections (2) and (3) of section 27 on the draft consolidated budget prior to its consideration by the Assembly.
(1B) The consultation arrangements referred to in sub-paragraph (1A) above may include surveys, opinion polls, public hearings, citizens' juries and referendums.").
The noble Lord said: I rise to move Amendment No. 213D which stands in my name and that of my noble friends. This amendment returns to the same issue of trying to encourage and, indeed, to require a more open budget consultation process. In practice, I suspect that much of this will happen. I certainly hope that it will if we have the assembly we should have, and that the mayor, at any rate, would wish to do it.
As I stated when moving the previous amendment, it is enormously important that the political priorities of the mayor are fully and properly debated, discussed and determined so that the mayor, in proposing his or her budget, knows the expectations not only of the London borough councils but also of the other groups listed in Clause 27 of the Bill and, indeed, of Londoners generally.
The purpose of the amendment—perhaps more directed than the previous one—is to draw out from the Government whether or not they share our views about the budget process and the need for that very open and full consultation process and, if they do, what steps they will take to encourage or require the assembly and the mayor to carry out such steps. I beg to move.
Baroness Farrington of Ribbleton: This amendment would place an express duty on the assembly to consult the same list of bodies (as the mayor is required to consider consulting before exercising the general power) about the mayor's draft budget before considering it at a public meeting. This amendment raises the important issue of consultation on the GLA's budget. We have, of course, already considered consultation at great length when debating the consultation provisions in Clauses 27 and 34.
We cannot imagine that the mayor, if he or she thought it appropriate, would not want to test public opinion about the proposals for forthcoming expenditure by the GLA and the functional bodies. The amendment would place an express duty on the assembly rather than the mayor to carry out this consultation. I think it much more likely that the assembly would want to take its own soundings on public feelings on budgetary priorities long before it reaches the mayor's draft budget. As we have discussed, the timetable for the budget process is inevitably tight. Waiting until the mayor's draft budget to carry out consultation is, as the noble Lord acknowledged, unlikely to be feasible.
An express duty to consult a specified list of bodies on the GLA's proposed budget, regardless of whether it is placed on the mayor or the assembly, would appear to be unduly prescriptive. The mayor will, of course, already be under two very important incentives to test Londoners' support for his budget proposals. The first is the ballot box. Secondly, under the provisions of the Local Government Bill, the Government will be able to take account of local people's support for the GLA's budget in deciding whether or not to use its reserve powers to regulate excessive council tax increases. We suspect that those two factors will certainly be in the assembly's mind as it considers the mayor's draft budget and approves the final version
52
I am sure that the assembly, too, will want to take account of public views when considering the draft budget. I would expect it to do that in the usual ways: for example, by holding public meetings, or by constituency members consulting electors in their area. Again, we feel that a specific duty is unnecessarily prescriptive. I am aware that one woman's prescription is another person's necessary discipline. We appear, occasionally, to use the same terms in a slightly different context. On this occasion, I hope that the noble Lord will feel able to withdraw the amendment.
Baroness Hamwee: Before my noble friend responds, perhaps I may say that, yes, indeed, in tabling paragraph 1B we were looking forward to hearing our arguments about prescription played back to us. They may come back across the Chamber at another point in the debate.
Paragraph 1A inserts a duty; paragraph 1B sets out the possible methods of consultation. Sadly, we can imagine that the mayor may not want to test public opinion on the draft budget. Can the Minister confirm that the assembly will be entitled to do so?
Baroness Farrington of Ribbleton: Yes.
Lord Tope: I am grateful for that. It is a strange irony that the Minister is now suggesting that I and my friends are being over-prescriptive, given the comments that we have been making and will continue to make throughout this Bill. But that irony was not lost on the Minister in making those comments.
I question whether we are being over-prescriptive. The amendment relates to Clause 27 and asks that,
"The Assembly shall take such measures as it considers necessary to consult",
as stated by that clause, with,
"any London borough council; the Common Council; and …

(a) voluntary bodies some or all of whose activities benefit the whole or part of Greater London;

(b) bodies which represent the interests of different racial, ethnic or national groups in Greater London;

(c) bodies which represent the interests of different religious groups in Greater London;

(d) bodies which represent the interests of persons carrying on business in Greater London".

That is who we require the assembly to consult. To borrow the Minister's words, it is inconceivable to me that an assembly doing its job properly in considering the mayor's budget would not do that. It puzzles me why the Government are not prepared to require the assembly to do just that and, instead, suggest that it is over-prescriptive. That comes from a government who told us the other evening that they require the mayor to have two political advisers and 10 members of staff, whether they happen to be full or part-time. That is not over-prescriptive. But to require the assembly to consult the people as the Government laid down in Clause 27 is over-prescriptive.
The Minister said that what is or is not prescriptive is in the eye of the beholder. We have an excellent example of that now. This is not the time to press this further. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 214:
Page 199, line 31, leave out sub-paragraph (3) and insert—
("(3) The final drat t budget, with or without amendment, shall be the Authority's consolidated budget for the year if approved by a majority of the Assembly members voting.").
The noble Lord said: With the leave of the Committee, in moving Amendment No. 214, I shall speak also to Amendments Nos. 215 to 219.
As drafted the Bill creates a situation which makes it possible for the mayor to pass a budget with the support of only one-third of the members of the assembly. That is the implication of the requirement for two-thirds of the assembly to vote for an amendment in the final draft.
Amendment No. 214 seeks to allow the elected assembly to provide proper checks and balances upon the mayor's budgetary powers, restoring accountability and helping to prevent possible financial irresponsibility. The Bill gives virtual dictatorial powers to the mayor and the assembly is almost powerless to intervene in the budget-making process. No assembly of which I am aware has ever had less power in a democratic country.
The Government's White Paper on London said that the assembly,
"must be much more than a talking shop"—
paragraph 1.14. Again, in paragraph 3.6 of that White Paper the Government said that,
"the assembly will provide an essential check and balance to the power of the mayor".
The budgetary procedures in the Bill as currently drafted make a mockery of those promises. The assembly could not be a check or a balance on the executive power of the mayor in this instance; it could only be a puppet.
If the Government do not accept Amendment No. 14—it is fairly moderate, requiring only that the mayor obtain a simple majority to pass a budget—it will prove what many of us fear—that while New Labour may preach democracy, in reality its policies are those of control. These amendments put the GLA's budgetary provision on a normal democratic footing in line with the position in any other authority. The propositions on the face of the Bill are the equivalent of allowing the Chancellor of the Exchequer to bring to the House of Commons a budget which could be passed with a two-to-one vote against it. I cannot imagine the furore that would be created if a legislative proposal was introduced to make that possible. But that is what we are being invited to consider in this Bill as drafted.
Without these amendments, the Government's promises of democratic accountability in the budget-making process of the Greater London Authority will not be fulfilled. I await the Minister's reply with interest, but this may be a matter which will cause some difficulty. I beg to move.
Baroness Hamwee: We have a lot of sympathy with this set of amendments. We, too, find it quite wrong to put the mayor in a position where it will be difficult for the assembly to overturn or alter the budget. We tabled an amendment in the next groups which contains a similar thrust. We, too, would like to see the assembly voting on the basis of a simple majority with regard to the draft budget.
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Perhaps I can ask one or two questions for clarification. The noble Lord, Lord Dixon-Smith, moved Amendment No. 214, which seeks a simple majority in respect of paragraph 8(3), the approval of the final draft budget. I do not believe that his set of amendments proposes a change to paragraph 8(4) which deals with amendments. I am not sure therefore whether or not he is proposing that amendments require a two-thirds majority and the final draft budget a simple majority.
In connection with Amendment No. 217, which proposes the duty contained in paragraph 8(7) to approve the final draft budget, is that to be a duty of the authority rather than the assembly? The authority embraces the assembly and the mayor. I am not entirely clear about the comparative roles of the two entities—if I can call the mayor, masculine or feminine, an entity. But the principle point of the amendments, which is that the Bill should not create a situation which is close to unworkable, should be retained.
Baroness Farrington of Ribbleton: This group of amendments seeks to alter the assembly's role in approving the GLA's budget. The intention appears to be to ensure that there is no prospect of the assembly failing to vote on and approve the GLA's consolidated budget. As drafted, Schedule 5 allows for the possibility that the assembly may fail to approve the mayor's final draft.
The next group of amendments—the noble Baroness, Lady Hamwee, referred to these—give me an opportunity to explain how the procedures in Schedule 5 have been carefully designed to give the lead to the mayor, to provide a proper role for the assembly, to avoid deadlock and to ensure that a budget is set. It would not be acceptable for the assembly to decide the GLA's budget by a simple majority. That would be entirely out of kilter with the respective roles of the mayor and assembly. The details of paragraphs 8 and 9 of Schedule 5, which this group of amendments seeks to alter, are the end of a carefully designed process which needs to be considered as a whole.
While these amendments purport to give the assembly greater power, they could in fact lead to deadlock, with the GLA having no budget at all if the assembly failed to vote or agree on the mayor's final draft by the end of February. The noble Lord, Lord Dixon-Smith, said that was not a normal process and made a direct comparison with local authority structures generally. He wanted to stop the assembly being a puppet. The noble Lord fails to recognise that the entire procedure is based on a different model—one that gives the assembly a strong role in scrutiny, and executive powers to the mayor. Those powers are not dictatorial but are part of a new structure in a new system.
The noble Baroness, Lady Hamwee, referred to one reason that the amendments are defective, when she referred to paragraphs 8(3) and 8(4). For that reason also, the amendment is not acceptable and I urge the noble Lord to withdraw it.
6 p.m.
Lord Phillips of Sudbury: Before the Minister sits down, may I ask—I hope not unfairly—whether she is aware of any precedent for such a majority?
Baroness Farrington of Ribbleton: It would be difficult to draw on a precedent when the proposal before the Committee is a totally new structure.
Lord Phillips of Sudbury: I was thinking in terms of other democracies, where the division of powers that is prevalent in the Bill is common enough—but I know of none where a two-thirds majority is required.
Baroness Farrington of Ribbleton: At this stage, I bow to the noble Lord's greater knowledge. If I can find a way of demonstrating greater knowledge than his, I shall do so in writing.
Baroness Young: Listening to the Minister, I was slightly surprised at the arguments that she adduced against my noble friend's amendment. She started with the proposition that the assembly was quite unlike anything else in local government. That statement is one with which we can all agree—although a great number of alarm bells will ring in my head if the assembly is taken as a model for other towns that might have directly elected mayors, because the precedent is most undesirable. I was glad to hear what was said by the noble Baroness, Lady Hamwee.
The Minister said in defence of the assembly that it is not similar to anything else. She then explained that the whole London procedure is different and that that the powers given to the mayor are a new structure in a new system. That may be a statement of fact, but it is not an argument in support of giving the mayor what are effectively dictatorial powers over the budget. We all agree that the budget will be the most important thing for the mayor. The budget is the most important thing for any organisation. If the mayor can ultimately overrule the assembly, that cannot possibly be regarded as democratic. That may be different and new, but it is certainly not democratic in relation to anything in local government that I have come across—and not democratic in relation to other constitutions. It sets a dangerous precedent.
It may be that the amendments are not correctly drafted, but they raise an important principle. I hope that the Government will look at all this again.
Lord Brooke of Alverthorpe: There are a variety of reasons for introducing change to London—not least the fundamental issues of democracy and efficiency. One problem we have in local government is that democracy is in an ever-downward spiral with regard to the accountability to the electorate of those elected. The proposed change relates to efficiency, but also to democracy for London, with the aim of getting a greater number of people involved in a new type of democracy compared with the traditional model used in local authorities and county councils. That change requires the Government to introduce through Parliament new structures to create a balance between the elected assembly, mayor and electorate.
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The budgetary approach will, of course, be important. It is impossible to envisage a situation in which, in year one, there could be a complete stalemate between the mayor and the assembly, with the matter sent back to the public, who we hope will vote in significant numbers.
I hope that people are prepared to be bold and will try to understand the new structure, with its attempts to introduce greater democracy on a larger scale as well as producing a more efficient operation than in the past. I hope that the Opposition will withdraw their amendment.
Lord Birdwood: I appreciate the Government's motivation in trying to create a structure having a high degree of lubrication, which majority voting would achieve. I cannot think of the social dynamics of a body that would find it in its heart to oppose nearly every budget put before it.
I have some intellectual curiosity about whether the proposal was a pure creation from the Pandora's Box of the government draftsman; or was a model from anywhere else in the developed world used as a template?
Baroness Carnegy of Lour: It was refreshing to hear the noble Lord, Lord Brooke of Alverthorpe, describe some of the thinking behind the Bill because it assists those of us on these Benches to hear other than members of the Government Front Bench explain something so new and different.
Is it the idea that the mayor's budget will get a fair wind and be amended only if it has something badly wrong with it in the view of the electorate? My experience of a two-thirds majority is that which I had to operate on an education committee if we had to dismiss a teacher. It is difficult to achieve a two-thirds majority on a council when one is not dealing with a matter of party politics.
The assembly will be elected by proportional representation, and that, in addition to the two-thirds majority, will make it difficult to amend the budget. Is it the idea that the mayor should get away with it unless there is something so pressingly wrong with the budget that it is possible to assemble a two-thirds majority against it? That is the only reason that I can think of for the Bill being constructed in the way that it is. As my noble friend Lady Young said, that is not the normal way to approach a democratic decision in local government.
Baroness Farrington of Ribbleton: The word "democratic" is used by different people in different ways. The framework of the structure put to Londoners in the referendum embodied an executive mayor and an assembly with the primary task of acting as a body of scrutiny, but also of serving in various capacities on bodies working within the overall strategy established by the mayor.
Within that concept, it is important that there should be a separation of powers between an executive mayor and an assembly. It is entirely right that an executive mayor should be in the lead in deciding the GLA's budget. We are very concerned to ensure that there is no deadlock, which would leave the GLA with no budget. There needs to be a means of setting the budget in the extremely

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unlikely event of the mayor failing to set one. Schedule 5 accommodates such factors. As the noble Baroness, Lady Carnegy of Lour, said, it is difficult, but not impossible, to get a two-thirds majority. It involves people thinking very seriously and coming together. That is an important feature of the proposals before the Committee.
The noble Baroness, Lady Young, raised the issue of how we had developed this particular model. It is not a model based on a rigid blueprint which has been transposed from one place to another. Indeed, it comes from looking at a variety of different models and different relationships that exist between directly elected mayors and assemblies or councils of one sort or another, both within Europe and the United States of America. We believe it is important for the assembly to be able to participate in, but not dominate, the budget process.
The procedures set out in Schedule 5 will allow the assembly to have a real influence on the level of overall spending, on the level of spending by each of the functional bodies, and on spending on different services. We believe that the proposals before the Committee get that balance right.
Baroness Young: I am sorry to intervene once again, but I must say that I was very surprised to hear the Minister call the referendum in aid of her argument. After all, only 34 per cent of Londoners voted for this. The idea that everyone who voted actually voted for a mayor and an assembly with these particular powers is beyond belief.
Baroness Farrington of Ribbleton: The party of the noble Baroness and that of the noble Baroness, Lady Hamwee, and the noble Lord, Lord Tope, certainly did all they could to raise the models that they wished were before Londoners. In every election—be it a European parliamentary election or a referendum election—the parties claim victory with a majority of those voting in support of their arguments, whether the percentage is 15 per cent, 12 per cent or 35 per cent.
6.15 p.m.
Lord Dixon-Smith: I pick up on the last point. We are saying that it should be the majority of those voting who give the final approval of what is to happen. Surely that applies equally to the budget and to everything else. Perhaps I may return to where the debate began. However, before I do, I should like to say that I am most grateful for the support I have received from Members of the Committee on this side of the Chamber.
I should point out to the noble Baroness, Lady Hamwee, that the amendments we propose would make it possible for a simple majority to vote both for amendments to the budget and, indeed, for the budget. But at the end of the day it is the duty of the authority—and the authority in this instance is the mayor and assembly acting together—to approve the budget.
The extraordinary feature about Schedule 5 is that it appears to sanction a budgetary procedure which admits that there can be failure and allows a budget to be approved which does not have the approval of the authority—only the approval of the mayor. I think that that is quite unprecedented—new authority, or no; new
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system, or no; new democracy, or no. The Minister admitted that the whole process could lead to deadlock. This is a new model and a different model. To me, it is a very strange model of democracy. I find it absolutely unbelievable that the mayor cannot get agreement, or that the mayor and the assembly working together cannot get agreement.
The mayor's powers of patronage over the assembly are perhaps worthy of mention at this point. Out of an assembly of 25 members, the mayor can appoint 12 members to the police authority, nine members to the fire and emergency planning authority and four members to the London Development Agency. Eleven of the 25 members of the assembly are elected from party lists, which, I suppose, might just be an embarrassment to the mayor. However, it seems quite unlikely that the assembly will not have a majority of members from the party of the mayor, unless he stands as an independent. Of course, politics is always an interesting process.
I do not see how we can accept that one can have a new form of democracy where a minority rules. To me, that is a contradiction in terms; new system, or no. The comparison that I made was not with the normal situation that exists in any local authority's budgetary process, but the process which goes on in the other place over the nation's budget. It seems to me that London is being asked to accept, not that a majority view may prevail, but that the mayor, in this new form of democracy, shall have the right to dictate. That may be acceptable to the Government but I have to say that it is not acceptable to me. We have had a most interesting debate. I shall study with care in Hansard everything that has been said. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hamwee Baroness Hamwee moved Amendment No. 214A:
Page 199, line 34, leave out ("two-thirds") and insert ("a majority").
The noble Baroness said: In moving the amendment I shall speak also to Amendment No. 224D. With this amendment we turn to the paragraph in Schedule 5 which deals with any amendments to the mayor's budget. It is for this that we propose a simple majority. We are concerned here with amendments to the budget that we regard as crucial. As we read the Bill, the final draft is a matter for a simple majority. However, there is always the sword hanging over the assembly's head that, if it cannot agree, it is the mayor's budget anyway.
Amendment No. 224D deals with the provision requiring two-thirds of the assembly to agree any amendments to the mayor's draft calculations. In considering the Government's proposal, I wondered whether they were concerned about the mayor's autonomy and flexibility. If so, I think it is rather touching when one considers the very considerable powers on the part of the Secretary of State in the Bill, though admittedly not in this paragraph. I have in mind the powers as regards the overall control, which will work its way through into the budget. I also assume that the Government are concerned to ensure that there will be no frivolous amendments to the budget. However, as was said in the previous debate, if the assembly is to be a real check and balance on the mayor, it must have a realistic opportunity to exercise that duty.
We do not seek overwhelming powers in this amendment. We do not propose that the mayor shall not be in the lead in this matter. I have to confess a degree of admiration for the Government and whoever drafted the proposal in the Bill because, superficially, to achieve acceptance for a measure by two-thirds of the assembly would appear to require the mayor to be persuasive and to take the assembly with him or her on the relevant measure. However, as other Members of the Committee have made clear, to obtain the agreement of two-thirds of the assembly to an amendment will be a difficult exercise, unless, of course, the mayor has gone right off the rails. However, let us assume that we shall not have a mayor who goes completely off the rails. The simple majority which we seek is not, in our view, out of kilter—to use the Minister's words—with the respective roles of the mayor and the assembly. It is out of kilter only if one accepts that there will be a strong mayor and a rather weak assembly.
We also wish to consider what constitutes scrutiny. That, after all, is the assembly's primary role. We do not believe that it is adequate to allow the assembly to articulate its concerns but not to demonstrate them in a vote which will have a real effect. The Government fall back on the argument that the referendum in May of last year provided the detailed framework for the new body. I regard that rather as a fall-back position because, as I believe the noble Baroness, Lady Young, said, one did not expect Londoners who voted at that time to know all the detail of the proposal. In any event, the measure was not a manifesto commitment in the sense of a general election manifesto. We are seriously concerned about the good workings of the new authority. I beg to move.
Lord Dixon-Smith: After the bombardment to which we subjected the Committee in the previous group of amendments, I am delighted to support the noble Baroness on this issue. The measure constitutes a different form of expressing what I have been saying. I am delighted to support the noble Baroness.
Baroness Farrington of Ribbleton: These amendments would completely overturn a fundamental feature of the legislation; namely, that there will be a separation of powers between an executive mayor and an assembly to provide scrutiny.
If I recollect correctly, the position adopted by the party of the noble Lord, Lord Dixon-Smith, was that the only person who should be elected, and therefore have the democratic right to set budgets for London, was the mayor. The noble Lord's party was in favour of an elected mayor but not an elected assembly. Presumably if that had occurred, we would not have had the elected scrutiny body elected by all Londoners.
It is entirely right that an executive mayor should be in the lead in deciding the GLA's budget. However, after the comments made by the noble Lord, Lord Dixon-Smith, it is extremely important to repeat that our proposals seek to avoid deadlock; not, as he said, to create it. There needs to be a means of setting the budget in the extremely unlikely event that the mayor fails to set one.
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Amendment No. 214A would, in effect, give the role of deciding the GLA's budget to the assembly. The mayor's role would be limited to submitting draft and final budgets to the assembly. A simple majority of assembly members could throw his plans out and substitute their own. The mayor would not even have a vote in deciding the budget in those circumstances. The assembly has the ability to influence the mayor. The mayor must consult the assembly before preparing a draft. The assembly may amend a draft by a simple majority. If the mayor's final draft does not include the assembly's amendments to the first draft, the mayor must give reasons why that is the case.
Amendment No. 224D would similarly leave the mayor with no real say in making substitute calculations. An executive mayor who is responsible for deciding strategies must be in the lead in that matter. The procedures set out in Schedule 5 will allow the assembly to have a real influence on the level of overall spending, the level of spending by each of the functional bodies, and on spending on different services.
A power to amend the mayor's budget by a two-thirds majority ensures that there is wide consensus among assembly members that the mayor's budget is significantly flawed in some respects, and, crucially, wide consensus about the changes needed to put things right. Then the assembly will be able to act.
Reference has been made to the political party of a mayor and which party would constitute the majority in the assembly. That is a rather old-fashioned way of looking at the procedure that is to be put in place. A two-thirds majority would comprise people from all parties or none. It has been said that the referendum did not constitute a manifesto commitment. The Government have kept faith with the people. The manifesto stated that the Government would put forward proposals and would give the people of London a referendum on this matter. It is a bit much to say that the Government cannot claim support in the referendum for the proposals that are before us. These amendments are not in line with the proposals that were put to the people of London. I urge the noble Baroness to withdraw Amendment No. 214A.
Lord Dixon-Smith: Before the noble Baroness sits down, I should like to make the following point. Whatever proposals we or my colleagues may have put forward as regards the possible membership of the assembly, the assembly, once in place, will vote on the basis of a simple majority. At that level, at any rate, the process would be democratic. I wish we could stop referring back to the referendum. If the referendum had made clear that the budgetary proposals of the Greater London Authority could emerge without the approval of the authority, or could be passed on the back of a minority vote, I doubt very much whether the people of London would have accepted such a proposal, referendum or not. There is a fundamental disagreement of principle here. As I say, I support the amendments of the noble Baroness. I have heard nothing to persuade me to change my mind.
Baroness Young: Having supported my noble friend Lord Dixon-Smith, I should like to support the noble Baroness, Lady Hamwee. She makes a serious point in the amendment which deserves to be looked at. The proposal

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in the Bill for the separation of powers is based presumably on the separation of powers in the American constitution, on which it is perfectly possible to have deadlock. The separation of powers allows for that in a way that our constitution does not. In order to overcome what is clearly a possible constitutional deadlock, the Government have decided that they will remove the democratic element and say that the mayor will have overriding power.
The noble Baroness said that the assembly will have influence. Yes, it will have influence—but it will not have power. That is the difference. There has always been a fundamental prerequisite of democracy in this country—which has stood the test for a good many years—of no taxation without representation. In London, quite clearly, as my noble friend and the noble Baroness, Lady Hamwee, have made clear, there will be taxation—not through representation through the assembly, but through the one mayor that people may have voted for several years before. To a very large extent he will be able to run unchecked except for this extraordinary two-thirds majority. I think this is an extremely dangerous principle. I have heard nothing this afternoon which leads me to think that the Government have understood the path down which they are going.
6.30 p.m.
Baroness Hamwee: I do not wish to suggest that the Minister is not capable of responding to those points; however, I regard them as unanswerable. The Minister's argument almost seemed to suggest that the assembly may as well have no role at all when it comes to the budget. I am sure we will return to this issue at the next stage. In order that it is again on the record, I shall merely make the point now that we are not proposing that the Minister should not be in the lead; that role still remains.
Lord Tope: The mayor.
Baroness Hamwee: The mayor should be in the lead. It might as well be the Minister. I have written down "M in lead" with not enough gap between the words.
We look forward with interest to all parties and none playing their part and to the whipless culture that that suggests. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment Nos. 215 to 219 not moved.]
Lord Tope Lord Tope moved Amendment No. 219A:
Page 200, line 5, leave out ("other") and insert ("earlier").
The noble Lord said: I beg to move Amendment No. 219A, which stands in my name and the names of my noble friends.
The amendment refers to paragraph 10 of Schedule 5 which gives the Secretary of State power to change the February dates for the budget, which we were debating earlier, to,
"such other day as may be specified".
The purpose of the amendment is to restrict that power to enable the Secretary of State to amend it to "such earlier day". We debated earlier our view that the
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February dates are already too late; certainly later than desirable. If the Secretary of State has power to make those dates even later, then that becomes even more undesirable.
Paragraph 151 of the Explanatory Notes to the Bill states:
"The purpose of this power is to accommodate any delay to the Local Government Finance Settlement".
In other words, what the Government mean by any "such other day" is any "such later day".
The effect of the GLA setting its budget and its precept any later than the last day of February—without presumably a similar permission for the London borough councils to delay their budget making—and all the consequences that will flow from that, make the whole process a mockery. It would be wrong. We must stick to this deadline at the very latest. We would wish to see the Secretary of State with the power to set an earlier deadline—indeed, we would wish him to exercise that power for the reasons we debated earlier. The Government's purpose in this provision of allowing the date to be later would make any meaningful consultation—even with London borough councils, let alone with the wider London interest groups£impossible. It would make the budget process for London borough councils even more difficult, if not impossible.
We propose that the Secretary of State should have the power to set an earlier date, but certainly not a later date.
Baroness Farrington of Ribbleton: Schedule 5 provides that the Secretary of State may, by order, change the 1st February date, by when the mayor must present his draft budget to the assembly, and the last day of February date, by when the GLA's budget must be finalised, for any other date he may specify. The amendment would remove the Secretary of State's power to specify dates later than the statutory dates in the GLA's budget process, as the noble Lord said in moving his amendment.
The power is needed because the GLA, like other major precepting authorities, will not be able to finalise its budget until it has the final figures for RSG and NNDR (national non-domestic rates) that are set out in the local government finance settlement. The power to amend the GLA's timetable would be used if for some very good reason the settlement were delayed, making it difficult for the mayor to prepare a draft budget and impossible for the budget to be finalised by the specified dates.
The effect of the amendment would be to remove the Secretary of State's ability to specify any revised date. It would be absurd to prevent him from using his discretion in deciding whether to take account of a delay. Surely it makes sense to allow him to decide whether such a delay is serious enough to require him to specify later dates for preparing a draft budget. We are not talking about normal practice but about serious circumstances where it would be necessary for the

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power to be used as a logical move to assist the GLA. For that reason we believe the amendment is unreasonable and ask the noble Lord to withdraw it.
Lord Tope: Before I consider what to do with the amendment, can the noble Baroness say whether the Secretary of State currently has the power to permit London borough councils to set their council tax by a later date than that provided in statute at the moment?
Baroness Farrington of Ribbleton: I am not aware whether the legislation the noble Lord refers to applies in London in the same way as elsewhere in the country. My understanding is that it does not apply. In this case we are talking about the equivalent of county councils as opposed to the GLA. I will write to the noble Lord about whether that power exists in that regard.
Baroness Hamwee: Could the Secretary of State postpone the GLA's announcement, as it were, the finalisation of its budget, beyond the date when the London boroughs have to set their budgets and start sending out bills? I am not suggesting that would be a sensible thing to do, but will it be allowed?
Baroness Farrington of Ribbleton: Even if it were possible in theory it would be ludicrous were it to be applied. It could only be a hypothetical situation.
Lord Bowness: Does it not verge upon the ludicrous to allow the Secretary of State to defer the date from 1st February to an even later date, as is specified on the face of the Bill? There will be enormous difficulties. Rather than a regulation to this effect, it would be more appropriate to place a duty on the Secretary of State to announce the rate support grant at an earlier date in time for people to set their budgets.
Lord Dixon-Smith: I find the debate quite fascinating. Of course the Government will say that they envisage having to use this power only in a particular emergency situation and all the rest of it. I should prefer not see this power on the face of the Bill in order that the Greater London Authority has to approve its budget itself. That would make more sense.
Lord Tope: It would be clearer and, if I may say so, more honest if this paragraph were to say what the Government mean—that is, not "other day" but "later day"—and we were clear that it meant a later day. I am subject to correction, but I think I am right in saying that the deadline by which the London borough councils—and presumably district councils as well although in this context we are talking only about London borough councils—have to set their council tax is determined by the amount of notice that they have to give before the start of the financial year. If memory serves me correctly, it is either 10th or 11th March. Am I about to be corrected?
Baroness Farrington of Ribbleton: Perhaps I may help the noble Lord. The Secretary of State cannot
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change the date by which a precept must be set for the GLA or any other authority, but a precept is not invalid if it is set late.
Lord Bowness: Can the Minister help us? Is there not a statutory date by which the borough councils have to set the council tax rate?
Baroness Farrington of Ribbleton: Yes, we are talking about the precepting authority here and the difference between the GLA and the borough councils. The borough councils do have to set a date.
Lord Bowness: I am grateful to the Minister for that, but bearing in mind that the date is, as I recall, in March, this date of 1st February could be deferred to such a point that it is virtually impossible to call a meeting of the borough council and set the appropriate level for council tax. As I understand it, that is what the noble Lord, Lord Tope, is attempting to point out. He is also trying to point out how impossible life would be if the date of 1st February could be deferred to any great extent.
Baroness Farrington of Ribbleton: We are not talking about deferring it to the point where it would not be possible to set a rate within the legal time; we are talking about circumstances which would be quite exceptional, where it was necessary for this power to be used. We are aware that the period of time necessary for the boroughs to set their rate by 11th March must be reasonable and the Secretary of State must automatically be required to act in a reasonable way. All we are seeking to do is to ensure that there is no problem should very exceptional circumstances arise.
6.45 p.m.
Baroness Hamwee: One of the concerns in my mind, which has grown during the course of this debate, would be what the Secretary of State might do if we find ourselves in the situation where the Secretary of State and the Government are of one party and the mayor is of another. Arguing over precisely what is "reasonable" is not going to help practical decisions. One can imagine the rows that there might be between central Government and the authorities, the two parties to the argument. This provision, which allows the possibility of later date, if not being completely unreasonable, could nevertheless be used in a very mischievous fashion.
Lord Tope: I have concerns about both February dates. As I said earlier, the beginning of February date, is too late to allow for proper meaningful consultations, but that may be forced upon us by what I accept will be exceptional circumstances. However, we are legislating for exceptional circumstances and these provisions are put forward to provide for exceptional circumstances.
I have an even greater concern about the last day of February being the last date by which the mayor is required to produce his or her final budget. I may not have completely understood what the Minister said just now, but I thought she was saying that the mayor would

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still have to levy the precept by the last day of February even if the budget can be delayed by order of the Secretary of State. I am not entirely clear how a precept is going to be levied before we have a final budget. Also, I do not think that I have had an answer to my question about whether the Secretary of State has power elsewhere in statute to amend the last date by which London borough councils have to set their council tax. I believe this to be 10th or 11th March.
Baroness Farrington of Ribbleton: I am sorry the noble Lord did not hear me. I said it is 11th March, and the Secretary of State does not have that power.
Lord Dixon-Smith: I think we are going to pursue this point for some considerable time, but it seems to me that the easy option here for the Government would be to fall back on Clause 26(8) which states:
"The Secretary of State may by order impose limits on the expenditure which may be incurred by the Authority by virtue of section 25(1) above".
Also, the Secretary of State may by regulation do one or both of the following: alter the constituents of any calculation made under subsections (4) or (5) of Clause 70, whether by adding, deleting or amending any items. Subsection (4) in aggregate, if I have understood it correctly, describes the expenditure of the authority. Subsection (5), if I have understood it correctly, describes the income of the authority.
The truth is that the Secretary of State, if he chooses to exercise it, has power to dictate the budget of the Greater London Authority. I would suggest that if the circumstances should become as exceptional as this debate would appear to suggest, he might feel inclined to exercise those powers rather than continue with what might be a difficult problem. I certainly accept that that would cause all the boroughs immense difficulty if in fact the budget of the Greater London Authority were not determined at a sufficiently early date to make it practical for all the London boroughs which are party to collecting the revenue for the GLA to set their precepts, because their precepts have to follow on as a consequence of the GLA's precept, and they cannot be made without it.
I think that perhaps we are slipping in our capacity for joined-up thinking here and we are not looking at the totality of the Bill but only at part of it. I am not sure that is a helpful thing to do, and still less am I certain that the Government would wish to be reminded that they have those powers.
Lord Tope: We are envisaging here exceptional circumstances in which the local government finance settlement is so delayed that the Secretary of State feels it necessary to exercise the powers that this schedule would confer on him to allow the mayor to delay the setting of the final budget beyond the end of February. However, the Secretary of State has no such power to extend the deadline for the London borough councils, which will be affected in exactly the same way by exactly the same local government finance settlement. So I cannot understand why we should be asked here to give greater power in respect of the GLA than exists for
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the London borough councils—power which, if ever it is used, would put those councils in an absolutely impossible situation.
We shall not press this amendment today but we shall certainly return to it. I hope that here we have unearthed a difficulty which I am quite sure the Minister, with her long experience, will very well understand is a difficulty which perhaps the Government, in the drafting of the Bill, had not foreseen. We shall certainly return to this and I shall certainly want the Government to explain to me, as currently a London borough council leader, how we would deal with a situation where the GLA's budget was set only days before we had to set our rate for council tax, or even theoretically after we had set the council tax rate—a situation in which the Secretary of State was actually powerless to help. For the time being, unless the Minister has something urgent to say to me—
Baroness Farrington of Ribbleton: I think there is some misunderstanding. I respect the years of experience that the noble Lord had at the time of the GLC, but he is speaking rather as though the setting of the London boroughs' budgets is dependent on knowing well in advance the amount being set by the GLA. There are two different issues: one is the date by which the Secretary of State would be bound as well, which is the date for legally setting the rate, and the Secretary of State would have to have regard to putting that into effect. But noble Lords from those areas which do not have two tiers of authority are tending to contribute to the debate as though it were essential for all the details to be known before the borough authority could take its decisions. Its decisions are independent. Those decisions and the sum total both have to be included in the levying of the rate at the council meeting. Those are two different issues. I see the noble Lord, Lord Dixon-Smith, nodding his head. I assure the noble Lord, Lord Tope, that it will not be possible for the Secretary of State to use the powers proposed in the Bill in order to prevent the borough council from acting in a legal way.
Lord Bowness: I do not want to delay the proceedings, but, as I understand it, the noble Baroness seems to be saying that not knowing what the precept will be does not prevent the borough council settling its own budget. However, the political reality is that the borough council, since it levies the council tax and actually collects the money, will want to know what the total bill is before it makes its final budget and levies its council tax. I understand what the noble Baroness is saying in theory. However, I do not believe that from her experience of local government, albeit in a precepting authority, she would expect the collector to make final decisions without knowing what the bill would be.
Baroness Hamwee: What action should the boroughs take if they consider that the Secretary of State is behaving unreasonably? We are told that this provision does not allow the Secretary of State to behave unreasonably. I accept that, at any rate for the purposes of this argument. But if there is a query as to whether or not the Secretary of State is being unreasonable, what

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can the boroughs do? One cannot realistically envisage the boroughs going to the court to require the Secretary of State to come out with a decision. I am unclear as to how the provision will operate if there is a real problem.
Baroness Farrington of Ribbleton: The London boroughs will set their budgets and council tax by 11th March. They should also calculate the total council tax by that time, and there is no difficulty. The problem to which the noble Baroness continues to refer does not arise. If the GLA precept is delayed, the London borough will want to set the final tax within the due date, and the information will be available for it to do so. We are not talking about the Secretary of State delaying between 1st February and 1st April. We are talking about only a marginal delay as a result of circumstances beyond anyone's control.
Baroness Miller of Hendon: I hesitate to enter the debate at this late stage, but if we are talking about only a very small matter, I do not know why the Government are unable to accept the amendment. The reference in the Bill is,
"such other day as may be specified in the regulations".
It can mean anything.
Lord Tope: I shall read the debate with considerable interest. The Minister appears to be saying that the GLA can set its precept without having finalised its budget. I suppose that that is theoretically possible, but it would be rather difficult.
Baroness Farrington of Ribbleton: I did not say that.
Lord Tope: The Minister indicates that that is not what she said. Clearly, I need to read the Hansard report of this debate carefully. It seems to me that we are giving the Secretary of State power in relation to the GLA that he does not have in relation to the London borough councils, which will suffer exactly the same difficulties from a delayed finance settlement as will the GLA. We are creating an extremely difficult situation. We tabled this amendment in order to set the dates earlier; but the argument has been about the Government's intentions of enabling the dates to be set later. We have exposed some very real difficulties that will arise in the exceptional circumstances for which we are legislating. I shall read the debate carefully. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Whitty Lord Whitty moved Amendment No. 219B:
Page 200, line 5, at end insert—
("Publication
.—(1) The Mayor shall as soon as practicable publish each of the following documents

(a) the Authority's consolidated budget for the year; and

(b) the component budget of each constituent body for the year;

(2) In this paragraph "relevant document" means any document required to be published under sub-paragraph (1) above.
(3) A copy of each relevant document shall be kept available for the appropriate period by the Mayor for inspection by any person on request free of charge at the principal offices of the Authority at reasonable hours.
(4) A copy of any relevant document, or any part of a relevant document, shall be supplied to any person on request during the appropriate period for such reasonable fee as the Mayor may determine.
(5) In this paragraph "the appropriate period" in the case of any document is the period of six years beginning with the date of publication of the document pursuant to this paragraph.").
On Question, amendment agreed to.
Schedule 5, as amended, agreed to.
Clause 72 agreed to.
Clause 73 [Calculation of basic amount of tax]:
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 220:
Page 39, line 26, leave out paragraph (a).
The noble Lord said: After all the fireworks, the noble Lord opposite will be relieved to hear that this simple little amendment is purely exploratory. At present, all national non-domestic rates are distributed through all existing authorities. That includes a subscription which goes to the Metropolitan Police and the London Fire and Civil Defence Authority. It goes to the boroughs and all the local authorities across the land. That is a 100 per cent take-up of the national non-domestic rate. Now we are creating a new authority—and thus more than 100 per cent. But the pool is still the same.
I acknowledge that some of the parts of the Greater London Authority are already receiving national non-domestic rate as a contribution towards their expenditure. To that extent one feels no concern. But we shall now be distributing those funds to, let us say, a further 0.1 per cent of authorities. I am concerned that the 0.1 per cent might cause some difficulty, albeit marginal, to existing authorities. I thought it worthwhile tabling this amendment in order to enable the Minister to do two things: first, to explain what the new arrangements will be for the distribution of national non-domestic rate; and secondly, to demonstrate how the change will not affect any existing local authority in an adverse way. I look forward with a keen appetite to the Minister's response. I beg to move.
Lord Whitty: I was glad to hear the noble Lord describe this as an exploratory amendment. I was slightly unclear about the intention were he to pursue it in a legislative way. It might have been to ensure that the GLA did not receive a share of the non-domestic rate. It is our intention that the GLA should receive a share. In terms of its knock-on effects, the position would be that, if the GLA received a share, that would not have an effect on authorities outside London. In effect, there would be a corresponding decrease in the amount of redistributed national non-domestic rates going to other London authorities. But there would be compensating changes in the RSG entitlement for those authorities. In other words, one would have to look at the total system. We are talking about relatively small amounts.
If the amendment were pursued, the effect would be to increase council taxes throughout London, and potentially to leave the GLA, theoretically at least, with

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an excess of income over expenditure. Clearly, we should not wish that to be the outcome. However, as the noble Lord is not pursuing the amendment, I leave it to him to decide whether my explanation of what would happen is sufficient for him or whether he requires further details, either now or at a later stage, or in writing, to explain exactly how the process would work. I hope that he will withdraw his amendment, subject to seeking further clarification in that respect.
Lord Dixon-Smith: If I have correctly understood the Minister, his intention is that the changes resulting from the introduction of the GLA should not affect the situation outside London, and if there is any variation within London it will be taken care of by adjustment of the general revenue support grant which the Government make to the London boroughs. I shall study what the Minister said and satisfy myself that that is the situation. I am grateful for his explanation. It should be a simple matter, and I hope it is. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7 p.m.
Lord Whitty Lord Whitty moved Amendment No. 220A:
Page 39, line 43, after ("report") insert ("or determination").
The noble Lord said: In moving Amendment No. 220A I should like to speak also to Amendments Nos. 220B to 220D and 220G to 220K. This group of minor technical amendments is necessary because the general GLA grant will be the subject of a determination, not a report. All of the other items of income referred to in Clauses 73(2) and 74(4) are the subject of a report. These amendments merely ensure that the Secretary of State will be able to set out the amounts of general GLA grant that he considers relate to police and non-police services in a more appropriate place; namely, the determination in which the total amount of general GLA grant will be set out. Therefore, the amendments relate to terminology. Although there are a lot of amendments, they are designed simply to deal with that point. I hope that the Committee can accept the amendments. I beg to move.
On Question, amendment agreed to.
Lord Whitty Lord Whitty moved Amendments Nos. 220B to 220D:
Page 40, line 4, after ("report") insert ("or determination").
Page 40, line 5, leave out ("(b) or (c)") and insert ("or (b)").
Page 40, line 7, at err insert—
("() in the case of the item specified in paragraph (c) of that definition, the determination under section 85 below for the financial year in question;").
On Question, amendments agreed to.
[Amendment No. 220E not moved.]
Baroness Hamwee Baroness Hamwee moved Amendment No. 220F:
Page 40, line 40, lease out subsection (9).
The noble Baroness said: Amendment No. 220F seeks to omit from the Bill Clause 73(9). That subsection provides that if the precept is negative, council tax bills
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will not be reduced. I am in the slightly curious position of moving an amendment moved in another place by the honourable Member for Bromley and Chislehurst. I do not always have a great deal in common with him but here I believe that he has a point. The amendment would enable the GLA to notify the billing authorities, the boroughs, to levy a negative precept on its behalf; in other words, to reduce the burden on London taxpayers. No extra billing would be required for refunds because the amount billed by the borough would be reduced by this mechanism.
We have been urged to anticipate a lean and mean authority, according to the popular meaning of that term. I hope that it will not be an excessively mean authority The Government's response in another place was that the Minister could not conceive of a case for treating the GLA differently from local authorities in general, but the GLA is a different authority with quite separate functions. This amendment is entirely in line with the arguments that we have put forward today about transparency and the importance of the authority's relationship not just with the boroughs but all Londoners. I beg to move.
Lord Whitty: We dealt with the issue of the effect of a negative council tax at an earlier stage, and I believe that the same issues apply in relation to this amendment and non-police services. The noble Baroness has in a sense anticipated my comments. There is no obvious reason why the GLA should be treated differently from other local authorities in this respect. If there is a grant it should not be offset by a reduction in council tax for a different service area. It would be odd for us to alter that principle in relation to these provisions. I did not hear any specific argument advanced by the noble Baroness to indicate why we should change it in this respect when we did not accept the argument in the earlier debate and we do not accept it generally across local authorities.
Baroness Hamwee: I hoped that we might have had a slightly more imaginative reply, accepting that reasonable flexibility was something to be encouraged. We have not argued for a change with regard to other authorities because they are not the subject-matter of this Bill. But if something does not work as well as it might so that in effect money goes back into the pockets of taxpayers, it does not seem to us that the fact it cannot be undertaken in other authorities means that it should not be undertaken in London. We regard this as an important point, but clearly we are not making headway, at any rate at the moment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 73, as amended, agreed to.
Clause 74 [Additional calculations: special item for part of Greater London]
Lord Whitty Lord Whitty moved Amendments Nos. 220G to 220K:
Page 41, line 41, after ("report") insert ("or determination").
Page 42, line 1, after ("report") insert ("or determination.'").
Page 42, line 5, leave out ("any of paragraph (b), (c) or (d)") and insert ("paragraph (b) or (c)").
Page 42, line 7, at end insert—
("() in the case of the item specified in paragraph (d) of that definition, the determination under section 85 below for the financial year in question;").
On Question, amendments agreed to.
Clause 74, as amended, agreed to.
Clauses 75 and 76 agreed to.
Clause 77 [Calculation of tax for different valuation bands]:
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 221:
Page 43, line 26, at end insert—
("(4) Where the precepting authority is the Greater London Authority, within one week of the Greater London Authority having calculated the amount to be stated under section 40(2)(a) in respect of any billing authority in Greater London in relation to each category of dwellings in that billing authority's area, the Greater London Authority shall cause to be published such amount in relation to each category of dwellings in that billing authority's area, these amounts to be expressed both as annual and weekly figures, publication to be by way of a prominent printed announcement in at least one local newspaper circulating in that billing authority's area and nominated by that billing authority.").
The noble Lord said: This amendment would oblige the GLA to publicise the consequences of its decisions about precept in the form of an estimate of its effect on council tax payers as soon as it has established its budget. This would enhance the accountability of the mayor and the assembly to London's taxpayers and so improve the democratic and open, I hope, nature of London's new authority. If we can ensure that the GLA publishes in local newspapers details of the amount for each category of houses in the area expressed as both annual and weekly figures, Londoners will be able to see exactly how much of their personal council tax bills arise from immediate decisions of the GLA. Thereafter, the Greater London Authority will not be able to hide the consequences of its spending decisions within an overall council tax bill. The boroughs must also determine their precept and, despite all of the potential difficulties in the process as a result of the Bill, an aggregate precept then goes to the council tax payer.
It is important for the council tax payer to know how the Greater London Authority taxes have been determined; and, more importantly, how the mayor and the assembly as the Greater London Authority are ordering London's affairs in the interests of London's residents; a mayor and an assembly whose decisions on taxation and spending are visible to the public immediately are more likely always to behave in a responsible manner. It seems to me that the Government cannot oppose the amendment.
In their White Paper, the Government promised that Londoners will be able to choose the person in charge of their city to ensure that he or she—I have included "she" for once; I must be slipping—is publicly accountable for his or her action. Our amendment ensures just that.
The White Paper also promised that under the new regime local people will better understand, and have a greater say in, expenditure and council tax decisions. In view of our previous debates, I admit that there is some
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doubt about whether local people will have any understanding of the process under which the Greater London Authority achieves its final budget decisions. Be that as it may, we have to go on.
The White Paper also stated that the Government are in favour of keeping spending in check. Our amendment, which will let people know immediately a decision has been taken, will help that.
The Government claim to be in favour of open government. I dare say that they will tell me that the amendment is unnecessary since it is similar to some which have been moved earlier today; and of course all this information goes out to the rate payer. If the Government chose to tell me that the amendment is unnecessary because of the assiduity of local newspapers which will be likely to take this calculation and interpret it immediately for its impact on a specific borough of London, that might be a reasonable explanation. But I do not regard the advent of a fairly closely printed, albeit detailed and clear, sheet of paper which sets out the Greater London Authority's decisions and their consequences, which arrives in the home of the council tax payer two and a half months later, as answering the point that the amendment seeks to bring home. I pay tribute to the press for the work that they do. But I suspect that the Government will tell me that the amendment is unnecessary for different but, to me, inadequate reasons. I beg to move.
7.15 p.m.
Baroness Farrington of Ribbleton: The noble Lord is not slipping; he or she is growing!
Under demand notice regulations brought in by the previous government in 1993, all council tax payers are sent a demand notice which is required to show the amount of council tax payable to a major precepting authority for their property. As a major precepting authority, the GLA is required to provide details to billing authorities so that they can be included.
The noble Lord obviously lives in a different household from many of us. In the past I have faced someone across the breakfast table, who looked at me sternly and said, "Are you responsible for this?" One of my sons also refused to be dropped off by me at a new girlfriend's front door to collect her because, as he explained, "Her father doesn't know you're the 'Rates Farrington' yet". So the noble Lord's world in which people do not peruse their bills in detail is one that I do not recognise.
All those people liable will therefore know the full details of the amount of GLA precept that they are required to pay. Publishing the information in local newspapers would involve local authorities in additional administration and costs which would have to be found from their budgets. For those reasons, I ask the noble Lord to withdraw the amendment.
Lord Dixon-Smith: I am grateful to the noble Baroness for her response to the amendment. It was entirely along the lines I expected. However, I am disappointed and shall study it. But I am grateful for the

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fact that the press will be more likely to do the job so that the amendment may be unnecessary. Although the Government's answer is factual, it is not adequate. It would have been better if they had been prepared to accept the amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 77 agreed to.
Clause 78 agreed to.
Clause 79 [Substitute calculations under section 49 of the 1992 Act]:
Lord Whitty Lord Whitty moved Amendment No. 221A:
Page 44, line 6, leave out subsection (2) and insert—
("() For subsection (1) (power to make substitute calculations) there shall be substituted—
"(1) A major precepting authority which has made calculations in relation to a financial year in accordance with—

(a) sections 43 to 48 above (originally or by way of substitute),

(b) sections 70 to 75 of the Greater London Authority Act 1999 and sections 47 and 48 above, or

(c) sections 70, 71 and 73 to 75 of, and Schedule 6 to, that Act and sections 47 and 48 above (by way of substitute),

may make calculations in substitution in relation to the year in accordance with the relevant provisions.
(1A) For the purposes of subsection (1) above, the relevant provisions are—

(a) in a case falling within paragraph (a), the provisions specified in that paragraph; and

(b) in a case falling within paragraph (b) or (c), the provisions specified in paragraph (c).").

The noble Lord said: In moving the amendment, I speak to the other grouped amendments which are technical in nature.
Amendments Nos. 221A, 221D, 222A, 223A, 223B, 223D, 224A, 225B and 225C ensure that, whenever the GLA carries out substitute calculations, either because it decides to or because it is required to, it does so under the relevant provisions, primarily Schedule 6.
If these amendments were not made, the Bill would appear to require substitute calculations to be made in accordance with Schedule 5. That would not be practical as Schedule 5 requires calculations to be made by the end of February, and the need for substitute calculations may well arise after that date.
Schedule 6 instead provides the appropriate procedure, and sets out the roles of the mayor and assembly in making the substitute calculations. The amendments make that clear.
Amendment No. 221B eliminates an unintended effect of the GLA's power to make substitute calculations. It makes clear that the mayor and assembly cannot reallocate money from one constituent body—that is, the GLA and the four functional bodies—to another part of the way through the financial year except in circumstances where they have to do so in accordance
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with Clause 81, so as to ensure that the Metropolitan Police Authority budget is adequate following a direction from the Secretary of State; or in accordance with Clause 82, in the event of an emergency or disaster. Apart from those two areas, the mayor and the assembly will have the power to make substitute calculations only to cut both the consolidated and component budgets. A newly elected mayor may wish to do that.
However, this does not mean that the mayor and the assembly have no powers to transfer money from one body to another. In a situation where there is an underspend, Clause 106 empowers the GLA, and, with the mayor's consent, the functional bodies, to pay revenue grants to one another. This will ensure that any "spare" money need not go to waste.
Amendments Nos. 221C and 223C remove unnecessary regulation-making powers from the Bill, and make clear under which powers the regulations referred to in Clauses 79 and 80 are to be made. These are technical and clarifying amendments. I beg to move.
Baroness Hamwee: Perhaps I may ask the Minister a question on Clause 106 to which he referred. It provides that the authority can pay grants. When I read subsection (1) I had understood that that provided the necessary conduit from central grant through to the functional bodies. Subsection (2) deals with moving money between the functional bodies. Is it correct that money can be moved only from the budget of one functional body to another if that is instigated by the functional body which has the excess? That is how Clause 106(2) is worded and it was one of the reasons for the concern I expressed on an earlier amendment.
Lord Whitty: The provision refers to Clause 106(2); namely, the ability to transfer from one functional body to another in the case of an underspend in the central grant and between bodies. However, in all such situations, the functional body and the mayor must agree on the transfer. I was distinguishing that situation from substitute calculations.
Baroness Hamwee: Can the mayor require that to be undertaken? In referring to the agreement, the Minister said that the mayor would not be in control and the functional body which had the excess could hang on to it if it wished. Is that correct?
Lord Whitty: Any transfer requires agreement; therefore the noble Baroness is right.
Lord Bowness: I hope that I am not alone in suggesting that Clauses 74 and 79, which the Minister now seeks to amend, are incredibly complicated. They were complicated in their original form and they are scarcely less complicated in their amended form. I and perhaps other Members of the Committee would find it most helpful if the Minister were able to place in the Library a layman's guide in plain English on the effects of these changes.
Lord Whitty: I shall inquire whether that can be done. I was afraid that the noble Lord was going to

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challenge me on my algebra in relation to parts of Clause 74. They are complex clauses and I had hoped that the relatively minor and technical amendments I have made would clarify them. I shall consult to see whether I can meet his point.
Lord Bowness: The trouble with minor and technical amendments is that they normally have unforeseen consequences about three years after the Bill has been passed.
On Question, amendment agreed to.
Lord Whitty Lord Whitty moved Amendments Nos. 221B to 221D:
Page 44, line 20, leave out from ("Authority,") to ("any") in line 22 and insert—

("(i) the amount of any component budget requirement calculated under subsections (4) to (7) of section 70 of the Greater London Authority Act 1999,

(ii) the amount calculated under subsection (8) of that section. or

(iii)")

Page 45, line 22, at end insert ("under section 73(3)(b) of the Greater London Authority Act 1999 (in relation to item P1) or under section 74(5)(b) of that Act (in relation to item P2)").
Page 45, leave out lines 29 and 30 and insert ("the appropriate Greater London provisions in making the calculations.
(6A) For the purposes of subsection (6) above, "the appropriate Greater London provisions" means—

(a) in the case of calculations required to be made in accordance with sections 70 to 75 of the Greater London Authority Act 1999 and sections 47 and 48 above, those provisions; and

(b) in the case of calculations required to be made in accordance with sections 70, 71 and 73 to 75 of, and Schedule 6 to, that Act and sections 47 and 48 above, those provisions.").

On Question, amendments agreed to.
Clause 79, as amended, agreed to.
Clause 80 [Minimum budget for Metropolitan Police Authority]:
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 222:
Page 45, line 35, leave out ("This section applies") and insert ("Subsections (1B) to (1D) apply, in relation to a financial year, to the making by the Authority of calculations required by section 70 in the case of the Metropolitan Police Authority.
(1A) Subsections (2) to (12) apply").
The noble Lord said: In moving Amendment No. 222 I shall speak also to Amendment No. 223. In our view, the Metropolitan Police force is particularly ill served by the financial provisions of the Bill. The two most objectionable provisions are addressed by our amendments to Clauses 80 and 81.
In preparing the Bill, the Government clearly recognised the risk that a mayor might not sufficiently fund the Metropolitan Police and the dangers that such a risk poses for the safety of Londoners. For that reason, Clauses 80 and 81 provide a mechanism for the Secretary of State to remedy the situation if he finds that a particular mayor has set the police budget at a level which he considers is insufficient to provide an efficient and effective police force for the Metropolitan Police area.
If the Government were not concerned about the possibility of mayoral underfunding of the police, they would not have felt the need to introduce measures such as Clauses 80 and 81. We share their concern. There is one particular mayoral candidate whose record might give grounds for concern. Nonetheless, we believe that the Government are right to worry about the possibility that mayors, separately from that one individual, might consider underfunding London's police.
The trouble is that the Government's solution fails to deal properly with the problem. It is inadequate for two major reasons. First, it begins to deal with the problem only after it has occurred. Clause 80 is a mechanism for remedying underfunding after the event, which would have to be the case. However, it carries a clear risk that once an irresponsible mayor has overspent in other areas the police shortfall will have to be met by an increased GLA precept, the cost of which will be borne by London's council tax payers.
We believe that prevention is better than cure and that Londoners should be protected in advance from underfunding. Their safety should not be put at risk because curative action can be taken only slowly and in retrospect. Even where a remedy is necessary, the time period of 35 days, in Clause 81, appears far too long. We believe that Londoners deserve better than to be uncertain about the future of the police force for such a period.
Both these aspects involve the safety and security of London as a whole, which we believe could be unnecessarily exposed. Our two amendments address the problem. First, the amendment to Clause 80, Amendment No. 222, proposes that subsections (1B) to (1D) offer a preventive rather than a remedial solution. We want to avoid the problem before it becomes a difficulty. Currently, the Bill enables the mayor to present a budget which might incorporate inadequate financial provisions for the police. Under the current Clause 80, the Secretary of State may then require that police funding be increased with an enjoinder to the mayor to seek offsetting savings elsewhere in the budget. If no such savings are identified by the mayor, the Secretary of State may substitute a higher total budget for the police in order to ensure that what he considers to be the necessary resources are provided.
The result is an increase in the GLA precept because of the timescale. Not only is there a period of uncertainty about the future of London's policing; the delay could also cause difficulties for the boroughs in establishing what their actual precept should be.
We believe that the solution is straightforward. Our amendment requires the mayor to gain the approval of the Secretary of State for the level of Metropolitan Police funding which he is proposing before he includes it in his budget. That proposal implies no change in the Secretary of State's powers over police funding. The safeguard on funding built into the Bill would become part of the budget process, not a possible late shock to London's council tax payers. Surely, it must be better that the mayor should go into discussions with the Secretary of State over his proposals for the police before he arrives at his budget rather than afterwards

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I should have thought that that would provide a much more satisfactory way of arriving at both the Metropolitan Police budget and the Greater London Authority budget, with satisfactory consequences for the people of London who have to pay their council tax bills. I beg to move.
7.30 p.m.
Lord Patten: I warmly support the amendment of my noble friend Lord Dixon-Smith. I think we are moving into uncharted waters. The Committee may care to reflect on the fact that for a very long time there has been a carefully modulated set of checks and balances between the Secretary of State for the Home Department and the Metropolitan Police, which has ensured that reasonable and adequate funding has come to the Metropolitan Police.
We shall find from time to time that, like all public services, the Met will say that it is being underfunded, that there are crises, and there will be panic on the "Today" programme. People will be demanding more money from the mayor and, through the mayor, from the government of the day.
Setting that aside, I think that by and large the funding mechanisms with which many Members of the Committee will be familiar, and which have underpinned the policing of London, have worked well in the past. I cannot imagine who the nameless mayoral candidate was to whom my noble friend referred. My noble friend Lord Archer of Weston-Super-Mare and I were speculating as to who might be this person who might gratuitously underfund the Metropolitan Police, given half a chance, in some future year.
But I believe that the suggestion of my noble friend Lord Dixon-Smith is extremely practical. This is not a partisan matter, and I urge the noble Lord, Lord Whitty, who takes such care to reflect on matters raised in the Committee, to think that nothing would undermine the status of the mayoralty and the intentions of the Bill more than problems with the Metropolitan Police. If people feel that, because of political changes, the introduction of a mayor and the resulting funding changes, they are not being looked after by the Met in the way to which they have grown accustomed, we could find that both the standing and status of the Metropolitan Police, who do so much to help, is undermined. We could also find that the office of the mayor is undermined.
I urge the Minister to reflect very carefully on the words in the amendments put forward so forcefully by my noble friend and to consider whether something pragmatic can be done to build on the provisions already in the Bill, which I support, to make sure that these possibilities do not come to pass under whoever is mayor of London.
Lord Whitty: I understand the concern that we ensure that the Metropolitan Police are properly funded. In my view, the Bill has the balance right.
We are changing the current system, whereby the Home Secretary effectively decides directly the funding of the Metropolitan. Police, to one where there is some
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democratic decision-making, through the mayor, and oversight of the police, through the Metropolitan Police Authority.
However, I accept what the noble Lord, Lord Patten, said about the need to preserve confidence in the police and the delivery of police services. In my estimation, that will in part be assured through the operation of the new Metropolitan Police Authority. We therefore need some reserve powers, which is what we have provided in these clauses to deal with the, in my view inconceivable, political circumstance, that the mayor did not provide adequate resources for the police. I cannot envisage any mayor setting a budget which would threaten service standards or the public's confidence in the police.
Moreover, I would assume that before the budget was set there would be a fair degree of informal contact between the Home Office and the authorities within London, and that if the mayor were inclined to set a budget which the Home Secretary was likely to regard as inadequate, that information would be conveyed and the mayor would heed that information, in order to avoid just such a direction as is provided in this reserve power.
It is important that the first responsibility should rest on the mayor to set the budget. I do not think it is sensible to do what the amendment would do, which is to bring the Home Secretary back into prominence in setting the budget and having authority over the police force directly. The single financial structure created by the Bill is designed to give the mayor and assembly responsibility for setting the aggregate budget for the authority and the four functional authorities. If we were to involve on a routine basis the Secretary of State in effectively determining the size of that budget before the total budget process was complete, that would be incompatible with that structure and with the objective of making clear to the electorate of London that it was the mayor's responsibility.
That having been said, clearly we require those reserve powers. They are there to be used in unlikely—indeed, extremely rare—circumstances. I therefore hope that the noble Lord will recognise that to push the amendments so that the Home Secretary effectively predetermines this element of the budget would be counterproductive. However, I repeat that we need the reserve powers as specified in the Bill.
Lord Dixon-Smith: I was not sure for a moment whether the noble Lord the Minister was saying that the procedure in the Bill was unnecessary or that my amendments were unnecessary. However, it is clear from the tenor of what he said that he feels that the procedure will be called into use only on very rare occasions. I think he actually said that it was unnecessary.
However, I return to the question of the primacy of decision-making with regard to the Greater London Authority's budget. Under my amendments, the mayor-would in fact determine, before he went to the Secretary of State, what the police budget should be. The difference is that under what I propose the mayor would take than proposal to the Secretary of State and gain his agreement to it before he took it to the assembly and the assembly discussed the matter and it became part of the authority's budget.

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The difference between us is marginal. However, there should be sufficient flexibility in the Government's approach to these matters for them to be able to consider making a change along the lines that I have suggested, if I do not have the wording of the amendments sufficiently precise to achieve the purpose which I have enunciated.
I shall study carefully what the Minister has said. I am sorry that he has a tickle in his throat which caused him problems, but that did not alter the quality of the content. I do not think that I entirely accept his conclusions, and I would certainly prefer to see the Government move on this, but, at this stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Whitty Lord Whitty moved Amendment No. 222A:
Page 45, line 36, leave out paragraph (a) and insert ("the Authority—

(a) has made calculations in relation to a financial year in accordance with sections 70 to 75 above and sections 47 and 48 of the Local Government Finance Act 1992, or

(b) has made substitute calculations in relation to a financial year in accordance with sections 70, 7) and 73 to 75 above and Schedule 6 to this Act and sections 47 and 48 of that Act,
but").

On Question, amendment agreed to.
Baroness Farrington of Ribbleton: I beg to move that the House do now resume. In moving this Motion, perhaps I may suggest that the Committee stage begin again not before 8.40 p.m.
Moved accordingly, and, on Question, Motion agreed to.

Tax Credits Bill
7.40 p.m.
The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham): My Lords, I beg to move that the Commons reasons be now considered.
Moved, That the Commons reasons be now considered.—(Baroness Hollis of Heigham.)
On Question, Motion agreed to.
COMMONS REASONS
[The page and line refer to HL Bill 39 as first printed for the Lords.]
LORDS AMENDMENT
1 Clause 6, page 3, line 31, at beginning insert ("Subject to subsection (1A).").
The Commons disagreed to this amendment for the following reason:
1A Because it is not appropriate for smaller employers to be exempted from paying tax credit to their employees.
Baroness Hollis of Heigham: My Lords, I beg to move that the House do not insist on their Amendment
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No. 1 to which the Commons have disagreed for the reason numbered 1A. I shall speak also to reason numbered 3A.
Amendments Nos. 1 and 3 were introduced by the noble Lord, Lord Goodhart, and were passed by this House, during our Committee stage debate of the Tax Credits Bill. They would allow employers with fewer than 10 employees to elect that any tax credit payable to their employees should be paid by the board. They would also enable regulations to be made governing the making and revoking of such elections.
The House of Commons has now considered the amendments and has disagreed to them. The reason given is that it is not appropriate for smaller employers to be exempted from paying tax credit to their employees.
Your Lordships will not be surprised to learn of this decision in another place. As I said when we debated these amendments in Committee, payment of tax credits by employers is central to the Government's policy of making work pay, and be seen to pay. The tax credits will be inextricably linked to the rewards of work because they will be shown on the employee's payslip as an addition to net take home pay. This will help to break the perceived link with benefits and will reduce the stigma which is often attached to claiming in-work support.
So these amendments really strike at the heart of the Government's tax credit policy by potentially exempting up to 825,000 employers—70 per cent of the total—from paying tax credits. The amendments would also be extremely complicated to operate because of the difficulty of identifying quickly those employers who would be eligible for the opt-out and wished to elect it. As I pointed out in Committee, in all cases of doubt the Inland Revenue would have to contact employers to check, first, how many people worked for that employer, and, secondly, whether or not the employer was prepared to pay tax credits through the payroll. That would mean delays in finalising tax credit awards and confusion for employees who would not know where they were from one award period to the next if employers moved in and out of the "fewer than 10 employees" category.
Your Lordships made much of the fact that employer payment of tax credits imposes some additional burdens on business. As I have said before, the Government have from the outset recognised that there will be some extra costs to employers in paying tax credits through the payroll and we are doing everything possible to keep those extra costs to a minimum. Since May 1998 we have been consulting representatives of employers and payroll software suppliers on the details of the scheme and significant changes have been made to meet the representatives' concerns.
We have also, as your Lordships are aware, decided that small employers who do not operate a PAYE scheme should not be asked to pay tax credits through the payroll. This is a practical measure to ensure that employers who currently have no dealings with the Revenue in their role as employers—for example, if they employ simply a nanny or a gardener—are not

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brought into the Revenue's employer database simply through once having a tax credit recipient on their payroll.
The new Small Business Service, announced in the Budget, will provide better and more targeted support and assistance to small businesses with: a new business guide, business tax starter pack and guidance for new employers; and, as was raised by the noble Lord and the noble Earl, Lord Russell, a new helpline service for new employers offering fast-track support.
As part of the Small Business Service all new small businesses will be provided with assistance with their payroll operations from April 2000. The DTI is currently consulting on the method of delivery of that service. The intention is that the service should be delivered by means of a voucher scheme whereby all eligible businesses would be able to redeem a voucher with any commercial provider on a list held by the Small Business Service. That scheme should do much to ease the burden on small firms which are running a payroll.
Specifically, in the tax credits context, all employers will be given ample guidance in the coming months and after April 2000 enabling them to pay tax credits smoothly and with the least possible extra work. There will be a targeted publicity campaign which will involve all the media. There will be seminars across the country which will be of particular interest to small businesses.
I hope that all I have said will convince your Lordships that Amendments Nos. 1 and 3 are unnecessary and inappropriate. They have been considered at length in the other place and have been firmly rejected there. The House of Commons did what this House asked it to do; namely, to think again. The Commons thought again and overwhelmingly reaffirmed the position which existed at the end of the Bill's passage through the other place. Therefore, I urge your Lordships to accept the Commons reasons for disagreeing to Amendments Nos. 1 and 3 so that the passage of this Bill will not be further delayed.
Moved, That the House do not insist on their Amendment No. 1 to which the Commons have disagreed for their reason numbered 1A.
Lord Goodhart: My Lords, I am not surprised that the noble Baroness has asked us to reconsider Amendments Nos 1 and 3, and I doubt that she will be surprised by the fact that, although we have reconsidered them, we think that they were right and proper amendments.
These amendments provide for payment of working families' tax credit by the Inland Revenue direct rather than through the wage packet in the case of small employees. The amendments were moved by me and supported by the Conservatives on Report.
The purpose is to give employers with fewer than 10 employees the right to ask the Inland Revenue to make payments direct. It is an opt-out, not an exclusion, and for that reason it would, to a large extent, get round the difficulties of those employers whose number of employees fluctuates above and below 10. Those employers in that situation would obviously be unlikely
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to wish to opt out because of the inconvenience to them of alternating between having to be in the scheme and out of it.
There are already some circumstances in which payments of WFTC will be made direct by the Inland Revenue; for example, where a couple agrees that payment should be made to the caring parent. So there does not appear to be any great point of principle involved in enlarging the list of cases in which payment is made direct.
The Government insist that payment through the wage packet is necessary to increase the incentive effect of the tax credit. I do not believe that. It is true that the tax credit will give people greater incentive to take a job but that is because of the considerable increase in the total family income which will result from the increase in the tax credit. The fact that the income may come in two dollops, not one, cannot make a ha'p'orth of difference. I believe that workers are sufficiently intelligent to know that the extra money which they receive does not come from their employer's own pocket even though it comes through the wage packet. Therefore, if there is any stigma effect in having an income which comes partly from the Inland Revenue, that stigma will not be eliminated by this scheme.
Against that, payment through the wage packet will impose significant burdens on many small employers. As the noble Baroness said, there are some 825,000 employers with fewer than 10 employees. The draft regulatory impact assessment suggests that about 100,000 of those will employ someone entitled to the tax credit. Therefore, the great majority will not. But payment through the wage packet for that 100.000 who are so entitled will involve significant extra time and cost. The impact assessment statement suggests that the recurrent costs to small employers who must pay the tax credit will be £370 per year. That figure looks to be somewhat on the high side and it may be that it is not entirely accurate. However, the impact would be quite substantial.
I do not believe that the Inland Revenue would find great difficulty in finding the employers with fewer than 10 employees in order to find out whether or not they were entitled to opt out.
Since Third Reading in your Lordships' House, as the noble Baroness mentioned, the Government have devised a scheme to enable some initial payments to be made by way of vouchers. That will deliver a limited degree of help to new small employers but the scheme is minimal and, as I understand it, is not intended to cover the recurring costs which are the main burden. It is simply intended to cover the start-up costs. The CBI certainly believes that the scheme is inadequate and would prefer smaller firms to be exempt, as we proposed.
Furthermore, 38 per cent of employers with fewer than 10 employees still use manual payroll systems. The working families' tax credit will be a particular problem for them. They will not be helped by any software that the Government are able to provide for those who have automated processing systems for wages.

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We therefore took the view that our amendment imposed no detriment on employees, unlike, for example, the exclusion of small employers from an obligation to designate stakeholder pensions for the benefit of their employees under the Welfare Reform and Pensions Bill which we believe would be detrimental to employees. Our amendment relieves small employers from a significant burden without any corresponding detriment to employees. We regret, therefore, that the Government have not seen fit to accept a useful amendment which, in our belief, does no damage to the principle of the Bill.
However, we now reach the point of considering whether to insist on the amendments. Insisting on amendments is a powerful weapon. It is not quite, perhaps, a nuclear weapon, but it is certainly a highly explosive one. That weapon needs to be reserved for occasions of outstanding importance: in football terms, "Premier League amendments". These amendments are important, certainly Division 1, but at the end of the day I feel that they do not quite make it into the Premier League. We do not believe, therefore, that this is an appropriate issue on which to force a battle between your Lordships' House and the other place and we do not propose to insist on the amendments.
Lord Astor of Hever: My Lords, it is not every day that I find myself in agreement with spokesmen from the party of the noble Lord, Lord Goodhart. However, as far as concerns this amendment, I am in complete agreement with what the noble Lord so eloquently said. We, on this side, feel that the Government are wrong. I agree with the noble Lord, Lord Goodhart, that the amendments are right and proper.
The Government are sending a message to the business community that they can expect a return to the sort of highly destructive, business-unfriendly regime last seen under the Labour government in the 1970s. The Minister recognised that there would be some extra cost to employers. However, the Government have under-estimated the administrative and financial burden that WFTC will create, particularly as there is no reimbursement of costs to firms on the lines of that operated for maternity pay.
No less a person than one of "Tony's cronies", the noble Lord, Lord Haskins, chairman of the Better Regulation Task Force, has said publicly that the Government have under-estimated the impact on small businesses. The Better Regulation Task Force was set up by the Prime Minister specifically to cut red tape on business. The Government therefore appear to have two contradictory objectives. On the one hand, they tell the business and small business lobby groups that they want to reduce the burdens on business. If that is really the case, why not accept the amendment? On the other hand, their real objective seems to be to increase massively time wasting and cumbersome burdens. Any noble Lord tempted to doubt that should read The Price of Fairness from the Centre for Policy Studies. The authors say that Labour's social legislation will add £4.6 billion to business costs and eradicate 880,000 jobs.
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The Minister mentioned the voucher scheme. Do the Government feel that this scheme is sufficient to alleviate the administrative burden which the WFTC will create? This is an area of special concern to the CBI which, as the noble Lord, Lord Goodhart said, is concerned that the vouchers will not reflect the cost of administering the tax credits.
In Committee, the Minister stated that virtually no work will be carried out by employers. She reinforced that by saying that work for employers will be minimal. If that really is the case, why is it necessary for employers to attend seminars, as she mentioned? Do the Government now accept that administering the tax credits is more complicated than the Minister first said and now needs explaining in detail at seminars?
How can the Government possibly hope to persuade hard-pressed businessmen and women to attend these seminars? Do not the Government feel that the time of such people would be better spent running their businesses, providing jobs and creating wealth? Certainly, that is the message which the Trade Secretary has been trying to send out.
Finally, will the Government review the situation a year after the legislation comes into force? It will surely be necessary to check that there are not the excessive administrative burdens and costs on businesses, particularly small businesses, which they themselves fear will happen?
Baroness Carnegy of Lour: My Lords, I rise briefly, in view of all that has been said by my noble friend and the noble Lord, Lord Goodhart. It seems extraordinary that the Government continue to maintain that it is not appropriate for small employers to be exempted from this provision. Small employers feel very strongly about the matter. Surely, the Government know that. I understand that they have established in their minds the need for employees to see the tax credit arrive with their wage packet. I do not believe that employees are as dumb as the Government think. They will understand very well that they are receiving an income supplement because they are in a job, however they receive it. It is unfortunate that the Government, who are flying a very strange flag, disregard the anxiety of employers who have under 10 employees and feel strongly about this. I am sorry about the Government's decision.
Baroness Hollis of Heigham: My Lords, I thank noble Lords for their contributions. I regret that so far the Government have not been able to persuade them of the propriety of our position. However, in response to the first point, we firmly believe that the entry wage of people going into work should be seen to be a qualitative leap from the benefits they would otherwise receive. This applies particularly to lone parents who will make up perhaps over 50 per cent of those on WFTC. The best way of doing that is to break the link of that tax credit with its former benefit wraparound, which is family credit. We believe that, and the research we commissioned indicates that our views are correct.
People want jobs where the entry wage, which they will receive through the wage packet, is a qualitative leap from what they would otherwise enjoy from benefit

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books, giros and so on. To some extent the proof of the pudding will be seen as this develops. However, the research from the Institute for Fiscal Studies already suggests that if we bring this alongside other improvements by government changes to national insurance and the like, in the longer term we can expect to see 250,000 extra people coming into work. That is from an independent organisation. We obviously hope that those figures could well be surpassed. However, we believe, as all our research shows, that it is the entry wage, and the perception of what comes in the pay packet, that determines the willingness of people to return to work.
Lord Goodhart: My Lords, I am grateful to the Minister for giving way. Am I right in assuming that the figure of 250,000 is the total of those likely to be persuaded into work by the working families' tax credit and not the difference between the figures of those who would be in and those who would be out merely because small employers were not part of the scheme?
8 p.m.
Baroness Hollis of Heigham: My Lords, that is true. We are talking about the total figure and not the specific tranche. As I said, it included WFTC, NICs and the temporary starting rate. It did not include the national minimum wage. But we expect the result to be an increase of something like 47,000 people in employment over a one-year period; up to 290,000 (I said 250,000) in the long run. This is the work of the Institute for Fiscal Studies.
The noble Lord is absolutely right. But the point remains—the institute established it—that the entry wage is what determines people's perception of whether or not it is worth while returning to work, particularly for lone parents. They come into work from a position of being in benefit whereas many of the couple families will already be in work and will need to acquire this benefit because, perhaps, temporarily their income has dropped, whether through shorter hours or because the partner has dropped out of work or whatever. So for lone parents in particular, the entry wage is important. This is a qualitative improvement and that is the philosophy behind the tax credits system; that is, that work pays and is seen to pay.
Lord Swinfen: My Lords, before the noble Baroness leaves that point, perhaps I may ask a question. The person seeking work will know what the employer is prepared to pay as a straightforward wage. But it is the Inland Revenue which will decide what the tax credit is to be. Before the individual takes a job, how will he know what tax credit he will receive? That is what will determine whether or not he takes a job. Will there be somewhere he can go for advice?
Baroness Hollis of Heigham: My Lords, there is a short answer and a long answer. The short answer is that he can certainly obtain advice as to what the implications will be. The noble Lord will also remember that lone parents on income support will be enjoying a four-week rollover for their first month of work. At the
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end of that time, they will receive their pay packet. At that point, they will have an option to continue to stay in work. If their entry wage is not high enough—they will have been buffered for the first four weeks by a rollover of income support—they will be able to go back on to benefit. That is why we want to see the world of work being a qualitative improvement from the world of income support, together with all the related benefits that they hitherto received. I repeat, most lone parents going on to WFTC will have come off income support. Income support will carry them for the first month. If the entry wage that they receive in their pay packet is insufficient, they will retreat back into the world of economic inactivity, and I am sure that the House does not want that.
We firmly believe that this is not an unreasonable responsibility for employers. I have to repeat this because we said this both in debate and in letters, but it is worth reaffirming. The average cost to the small employer will be £37, six minutes a week or 70p per week per employer. We believe that this is not an unreasonable burden.
Where it becomes difficult is for the small employers who have manual payroll systems. There the burden is not so much WFTC, but the existing burden of PAYE and NICs. Therefore the Business Advice Centre—I was asked what its role was—and the vouchers are part of an effort to help small businesses to move out of manual systems and into the software packages which will allow them not only to deal straightforwardly with WFTC, but also with the other more onerous burdens (no one suggests that they should not pay them) of NICs and PAYE. That is the point.
I go further than that. We believe that WFTC is not a burden on employers; and we believe that it will not only attract lone parents particularly into the labour market, but also that it will be to the benefit of employers because it will widen the labour pool from which they can draw their staff. As a result, we believe it to be in the best interests of business, of staff and of lone parents. I hope therefore that your Lordships will not press the amendment.
Lord Astor of Hever: My Lords, before the Minister sits down, I specifically asked about the vouchers. Does she feel that the amounts offered are sufficient to alleviate the costs of administering the tax credits?
Baroness Hollis of Heigham: My Lords, I should say first that the income support rollover is two weeks rather than four. Housing benefit is the longer one.
The documents that were sent out for consultation suggest that we are thinking of vouchers in the region of £50 to £200 which can be redeemed against a registered list of suppliers. From my modest knowledge of IT systems, that would make a substantial contribution to a modest software package. But it is a consultation document, and if it needs to be tweaked, the Government will listen very seriously. This is part of a wider effort to ensure that small businesses come

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into the 21st century in terms of their support systems, not just for WFTC, but also for the far more difficult responsibilities of NICs and PAYE.
Lord Astor of Hever: My Lords, does the Minister expect the Government to review the tax credits after a year?
Baroness Hollis of Heigham: My Lords, after six months we shall be moving from the current system of paying family credit into payment through the employer. At that stage we shall be reviewing how we are doing and shall continue to monitor the situation. If the Government's policies are not delivering the responses we want to see, obviously it would be foolish of the Government not to take that into account. But all the research, all the evidence and all the public responses—the reviews have been very good indeed—indicate that this is the way forward for the future of the tax and benefit system. As a result, we shall be able to help more people into work and to stop the poverty of unemployment being transferred to the children.
On Question, Motion agreed to.
LORDS AMENDMENT
2 Clause 6, page 3, line 35, at end insert—
("() The Board shall ensure that any single parent can decide to receive payment of any tax credit direct from the Board rather than from the employer.")
The Commons disagreed to this amendment for the following reason:
2A Because it is appropriate for tax credit paid to employees to be paid by their employers.
Baroness Hollis of Heigham: My Lords, I beg to move that the House do not insist on their Amendment No. 2 to which the Commons have disagreed for the reason numbered 2A.
The amendment, which would have given lone parents a choice not available to other applicants, is not about putting lone parents in the same position as couples; it would allow lone parents to choose whether to receive tax credits in their pay packet or direct from the Revenue. That is not a choice open to couples.
Insisting on this amendment would mean a major policy change, not just a minor shift at the margins. The matter was fully discussed here, where it was decided that it would be better to give this choice, and in another place where it was decided that it would not. We should not insist on the amendment.
Before putting the point formally, it may be helpful if I recap the arguments. I have already alluded to one; that is, that it gives lone parents the same choice as is open to couples, where it clearly does not. The other two major arguments were that it would allow lone parents to preserve anonymity; and, thirdly, that it secures lone parents against being pressurised, discriminated against or victimised by their employer. I shall take each of those three arguments in turn.
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The argument in relation to choice and the analogy with couples is that in practice couples have a choice because they can choose which one of them is to receive WFTC. In the main, they will be families where the man works and the woman stays at home to care for the children. But I dispute that it concerns choice as to how the tax credit can be paid and that it can be paid at home.
If both partners in a couple are in work, they can choose for the tax credit to be paid to her; but in that case, it can be paid to her only through the wage packet. If he is in work and she is at home, they can choose for it to be paid to her, in which case it will be paid to her at home because she does not have a wage packet through which it is paid. If she is in work and he is at home and they choose for the tax credit to go to her, again it can be paid only through her wage packet because she is in work and not at home. Therefore, the analogy with lone parents is simply not valid. Lone parents are not being denied something that couples are being given. Lone parents are in work and therefore they will be paid through the wage packet in exactly the same way as though the choice in a couple was to pay to the mother and she was in work, in that she too could only be paid through the pay packet. That is the analogy.
The second argument concerns fears that tax credit payments will breach confidentiality. Lone parents will be treated no differently from anyone else. Employers will simply be told, as with other recipients, of the amount to pay. They will not be involved in any way in gathering personal information or determining the award themselves. Debates here and in the other place revealed concerns that employees' circumstances could perhaps be inferred from the amount they receive from the employer. We sought to allay those fears whenever they surfaced, either during debates or in writing to noble Lords. Perhaps I may assure the House yet again that because of the number of separate elements—the effect of the taper and the childcare tax credit—it will not be possible to work out what someone is being paid. No doubt payment through the wage packet will mean that the employee is eligible to one of the two tax credits, either WFTC or DPTC, but that will be the extent of the employer's certain knowledge.
Your Lordships' third concern was that employers would be able to discriminate against, or apply pressure to, groups of employees who might cause them administrative hassle by claiming tax credits. Employers are unlikely to know enough about a person when they take them on to make an accurate judgment about whether or not they are likely to qualify for tax credits. The evidence of research done for the DSS into family credit says that employers did not have enough information about potential recruits to adopt such tactics. There will be no more opportunity at that stage of recruitment than there would have been under family credit. Research carried out for the Joseph Rowntree Foundation has also shown that employers are increasingly seeking the least possible information at the time of recruitment to avoid possible charges of discrimination.
Once the credit has been claimed and awarded, it will become clear to any employers administering payment through the wage packet that the employee is getting a

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credit. It was because of the possibility of discrimination at that point that the anti-discrimination provisions at Clause 7 were included.
There is a danger in what was proposed in the amendment. Giving single parents alone a choice of payment method could say to employers—albeit the small number of bad ones who might wish to avoid their responsibilities—that searching out lone parents in their workforce might be a productive strategy. It would give them information about which employees they could approach to persuade or pressure them into asking to receive the tax credit directly. That is an uncomfortable thought and one that weighs against the amendment.
Given those explanations, and in the knowledge that Amendment No. 2 was rejected by an overwhelming majority after careful appraisal in the other place. I ask your Lordships not to insist upon it.
Moved, That the House do not insist on their Amendment No. 2 to which the Commons have disagreed for the reason numbered 2A.—(Baroness Hollis of Heigham.)
Lord Higgins: My Lords, the House will be grateful to the Minister for spelling out many of the arguments made previously. The purpose of our original amendment was to ask the other place to think again. I thought it appropriate to listen to the debates in the other place.
I confess that whenever I go to another place and sit in the Gallery, particularly during Prime Minister's Questions, I get the impression that there has been a serious mistake. Everyone appears to be sitting on the wrong side. On the occasion in question, that was not so. While there were a number of Members on the Opposition Benches, the only ones on the Government Benches were the Minister and the Whip, albeit that they were joined by the PPS half way through the debate. It is extremely arguable that the other place paid appropriate attention to what is undoubtedly an important matter.
It may be that Members in the other place were watching the debate on television. One of the problems is that MPs tend to watch the proceedings on TV in their rooms rather than be present in the Chamber. I always thought that an unfortunate development and certainly not one to which that House agreed. The amount of attention that seemed to be given to the debate on the Floor of the House on 22nd June was not as great as one might have expected, given the importance of the issue.
As I pointed out in Committee, not only did the National Committee for Single Parent Families support our amendment, as one might expect, but the Low Pay Unit, the Trades Union Congress, the Confederation of British Industry, the Institute of Directors and the Federation of Small Businesses all came down in favour. In Committee, I asked whether anyone had come out in favour of the Government's position but the noble Baroness did not respond. Perhaps she would like to do so now.
In the debate on the previous amendment, the Minister referred to the research by the Institute for Fiscal Studies, which is equally applicable to Amendment No. 2. The noble Baroness suggested that
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250,000 people, who, presumably, would not otherwise be in work, were likely to go into work. The general employment situation is such that more people are becoming employed, but presumably those are an additional 250,000 people.
It was not at all clear to me whether the IFS analysis referred to the incentive for people to get into work, involving massive expenditure of £1.5 billion, rather than the method of payment. If the Minister is to make a case for either the previous amendment or this one, it would have to hinge on the method of payment that would result in an increase of 250,000 jobs. Perhaps the noble Baroness can say whether it is the method of payment rather than the extent of the wage subsidy—as it has been described by a number of outside groups—that is likely to do that.
The reason given by the other place for rejecting an amendment that your Lordships felt appropriate is that,
"it is appropriate for tax credit paid to employees to be paid by their employers".
Following the debate and Division in another place, a select group would have gone to a little room behind the Chair to think up reasons for rejecting your Lordships' amendments. It does not seem that they did a good job of drafting. One would have expected the reason to be that it is appropriate for tax credit only to be paid to employees by their employers rather than the form of words on the Marshalled List. There is no supporting argument. The reason does not say why it is appropriate for tax credit paid to employees to be paid by their employers.
I refer also to whether the choice that we say should be given to lone parents is reflected in the choice that the Government have already given to couples but not, as the noble Baroness rightly spelt out—and I always admire how she manages to make her arguments so clearly from the Dispatch Box without reference to her notes—so far as married couples or partners are concerned who are both in work. We accept that that is something on which the Government have stood firm. However, the Government have said that where one person is working and the other is not, they will have a choice as to which of them receives the tax credit and by which method—whether through the pay packet to one person or the other.
Baroness Hollis of Heigham: My Lords, I must correct the noble Lord. We have said that there will be a choice as to which person the credit is paid—not that they may choose how it is paid. If she is at home, it can only be paid to her at home. If she is in work, it can only be paid to her in work. There is no choice as to how it is paid, only to whom it is paid. That question does not arise with lone parents because there is only one person to whom the credit can be paid—the lone parent.
Lord Higgins: My Lords, I fully accept that there is only one person to whom the credit can be paid where that is a lone parent. It is also the case—because if it is paid to one partner it is paid in one way and if to another

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partner, it is paid another way—that, to the extent that they are given a choice one way or another, they can determine which way the credit is paid.
Baroness Hollis of Heigham: Yes, my Lords, that happens if one of them is at home—not at work. Equally, they can still give that same choice to her and they would both be in work. Or they could give that same choice to her and she would be in work, not he. In other words, they are determining to whom it is paid. They are not determining the mechanism by which it is paid. The mechanism follows the choice of who it is.
Lord Higgins: Yes, my Lords—and to that extent, they have the ability to decide that it will be paid one way or the other, by deciding to which partner it will be paid. In any case, we believe that it is appropriate that lone parents should have the choice. That is the point we seek to make and it arose in the debate in another place. Referring to my honourable friend Mr. David Willetts, Dawn Primarolo said that,
"we are reaching the end of our consideration of the Bill. Does he accept that the purpose of the tax credit is to provide a work incentive and to reinforce the rewards of work, and that, throughout our consideration of the Bill, that has been our central argument in support of the Bill?"
My honourable friend replied:
"The argument that we have to boost in-work incentives does not mean that we have to compel people to receive the payment in a specific way".—[Official Report, Commons; 22/6/99; col. 959.]
Effectively, what we were arguing for with this amendment—and it is still a sound argument—is that the lone parent should have the choice as to whether or not this is paid through the pay packet.
There is an inherent view—I said a "paternalistic approach" in Committee—that lone parents are unable to comprehend the fact that if they are in work they get more, in the sense that they get what they are paid by way of a wage and they get what they are paid by way of a benefit. The idea that a lone parent, or indeed anyone, is incapable of understanding that rather simple point seems to us to be quite extraordinary.
In addition, as regards lone parents taking a job, it is only when they are actually in the job and see their pay packet that they realise they get more when they are in work. It is not something that they are able to see in advance. In any event, once they are in the job, they then find that there is a distinction as far as concerns their pay packet; but they also get a tax credit. For other reasons which have been elaborated in considerable detail both in Committee in this House and also in the other place—for example, the arguments about whether or not there is a stigma (we already know the extent to which family credit is taken up is very high), and the question of confidentiality, about which we still have some doubts—we think it is perfectly reasonable, and will not significantly influence the extent to which people will go into work, that lone parents should be given this choice.
I have one further point to make in relation to the attitude of the Government. I have in mind the use of an expression by Ms Primarolo in another place, which
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I do not think is one that the noble Baroness has used. She said that we must have the arrangements for paying the amounts to lone parents because it will drive home that work pays. Again, it seems to be to be a rather harsh attitude towards lone parents that you have to drive home to them the fact that they will be paid. As many outside groups have suggested, it is largely in the form of a wage subsidy. As I understand it, it is still the case that, once they get their pay packet, they will be able to see that this is something which is separate from the basic wage.
In debating the previous amendment, my noble friend pointed out that there is a burden on businesses. There is a real danger here, not for the vast mass of small businesses or large businesses but for some businesses which are less reputable than the others. For example, if a small business of the kind I have just described finds that it has to go through the necessary procedure to pay someone through WFTC as against paying someone who is not in that category, it may choose to avoid the administrative hassle and problems involved if it takes on someone who is getting working families' tax credit by taking on someone who is not receiving the benefit. To that extent there may indeed be some degree of discrimination. The Government have sought to meet that point by way of clauses in the legislation relating to non-discrimination. On the one hand, that demonstrates that they believe there is such a risk; but, on the other hand, we cannot be sure that this will not happen in practice.
For all those reasons, it seems to me that the amendments we put forward were appropriate. I regret the fact that those in another place did not appreciate our arguments and that the Government have continued to maintain their dirigiste attitude towards the policy, which we believe is not justifiable.
Lord Goodhart: My Lords, on our amendment the noble Lord, Lord Astor of Hever, began his remarks by saying that, somewhat unusually, he agreed with everything that I had said. Perhaps I may now return the compliment by saying that, on this occasion, I agree with every word that the noble Lord, Lord Higgins, has said.
The Government's arguments for rejecting this amendment are, frankly, inconsistent with their grounds for rejecting our amendment. Our amendment was rejected because of the view that there was no serious burden on employers, or certainly no burden serious enough to require steps to be taken to deal with it. On this amendment, the Government are saying that small employers will object to the payment of tax credit through the wage packet to an extent which will deter them from employing people who claim tax credit. Indeed, the Government have thought it necessary to include provisions in Schedule 3 to deal with employers who do discriminate. Therefore, unless one assumes that small employers are likely to behave in a wholly irrational manner, those two arguments cannot both be correct.
I believe that there is a burden here and a serious risk of discrimination. There is, in practice, as the noble Lord, Lord Higgins explained, a choice for couples—at

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least where there is one non-working partner. In that case, the working partner can agree that the payment is made to the non-working partner. If that is not choice, I do not know what is.
As far as concerns single parent employees, there may be cases—they will not be frequent but, when they happen, they could be considerably distressing—where an employee actually does not want the employer to know, for reasons of privacy, that he or she (usually it will be "she") has family responsibilities. Further, even if discrimination is not a problem and even if the employee does not mind the fact that the employer will know that she is a single parent, she may well be deeply concerned about the possibility of discrimination as regards taking her on as an employee. Discrimination is a possibility, notwithstanding Schedule 3 to the Bill. There may be a genuine fear of discrimination, which leads an employee to want to get the tax credit direct rather than through the wage packet. Certainly a job is better than a right to claim compensation for discrimination under Schedule 3.
Ultimately, the argument is a very short one. If a single parent employee wants WFTC to be paid by the Revenue direct, payment through the wage packet cannot possibly be an incentive; indeed, it could be a disincentive. For those reasons, it seems to me that this amendment is also a thoroughly reasonable one and one which I very much regret the Government did not see fit to accept.
Baroness Hollis of Heigham: My Lords, the noble Lord, Lord Higgins, opened his remarks by suggesting that, as there were only a few people on the government Benches in the other place, the Government should not have won, even though there was a vote. If that is an argument that the noble Lord wants to press, will he now say that no one on his Benches tonight should vote if he were minded to press the matter because they have not heard the argument? If the noble Lord cares to take a vote just from those present who have heard the debate, I would encourage him to do so. Indeed, if we confine it to those present in the Chamber, I am reasonably confident of the outcome. If not, someone will have my guts for garters tomorrow. I do not believe that the noble Lord was serious about his point. He knows perfectly well about the judgment of the House of Commons. They were asked to think again. They have done so; and they gave an overwhelming verdict.
I turn to the more substantive points made by both the noble Lord, Lord Higgins, and the noble Lord, Lord Goodhart. Both noble Lords persist in believing that couples have a choice in this matter but lone parents do not. I am running out of syntax in which to explain this matter. I again remind the House that 51 per cent of the current family credit population are lone parents and 49 per cent are couples. About a quarter of those couples have the Female as the main earner. In that situation, if a decision is taken to pay the money to her, the couple have no choice but to have it paid through her pay packet. In that case, the female is in exactly the same position as if she were a lone parent as opposed to having a dependent spouse who happens to be male and living at home If she is in work and the money is
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going to her, it must be paid through her pay packet. If she is at home and the money is going to her, it will be paid to her at home. The choice concerns to whom it is paid, not how it is paid. If she is in work, she cannot say, "I want it paid to me, but I want it paid at home". She has no choice but to have it paid through her pay packet, just as is the case with a lone parent.
I have used trisyllabic words, bisyllabic words and words of one syllable. I cannot believe that the noble Lords, Lord Higgins and Lord Goodhart, do not understand that point. I regard it as a piece of sophistry when they say that because two people are involved and they can decide to whom it is paid, they therefore have a choice. They have a choice as to whom it is paid but not how it is paid. Therefore, the claim that couples have choices which lone parents do not is not valid.
The noble Lord, Lord Higgins, suggested that no stigma attaches to family credit and therefore it is perfectly reasonable to continue to pay family credit and that it has a high take-up. However, that is not true. Only 79 per cent of those entitled to family credit take it up. It has the lowest take-up of the main income-related benefits. However, some 95 per cent of those on IS claim that benefit, and 97 to 100 per cent of those eligible for housing benefit claim that. Some 90 to 95 per cent of those eligible for CTB claim that benefit. Therefore, in terms of take-up, family credit has always been one of the lowest income-related benefits to be claimed. Although the position has improved somewhat in recent years—the take-up has increased from 69 to 79 per cent—the take-up is well below that of other income-related benefits. The noble Lord picked up the point—
8.30 p.m.
Lord Goodhart: My Lords, I am most grateful to the noble Baroness for giving way. The take-up in terms of the amount of money that could be claimed is, I believe, substantially higher than 79 per cent. I believe that the figure is around 85 per cent.
Baroness Hollis of Heigham: My Lords, expenditure is always higher than the case load. However, about 21 per cent of those who could claim a useful addition to their in-work pay fail to do so. We do not believe that that same failure to claim will arise in connection with WFTC by virtue of the fact that it will be paid automatically through the wage packet.
The noble Lord said that my honourable friend had said that work pays and that we would drive home that message. It is easy for us to be complacent about the details of the social security system. I should like to share with the noble Lord a statistic that shocked me when I read it the other day. I read that 60 per cent of those out of work who claim housing benefit believe that if they enter work they will lose their housing benefit. That is not true. Everyone who has listened to this debate today in this Chamber knows that that is not true. However, the majority of people outside the Chamber believe that it is true. They believe that if they enter work, they will lose their housing benefit. If there is that level of ignorance about the social security system, it is not surprising that lone parents do not claim

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family credit when they are entitled to do so. It is not surprising that they do not realise how much better off they will be in work as compared with being on benefit. If they do not have that information, they will not make an informed choice.
One of the aims of WFTC is to empower lone parents to make an informed choice so that they will know what they can expect to obtain when they enter work as opposed to being on benefit. The noble Lord, Lord Higgins, insisted that family credit was a wage subsidy. That is a little rich as the previous government introduced family credit without the underpinning of a minimum wage. That meant that family credit was a subsidy not to the employee, but to the low-paying employer who knew that he could pitch wages where he liked, knowing that the taxpayer would take the strain. It is precisely because the working families' tax credit is being introduced following the introduction of the minimum wage that we know that no longer will support for low wages be a subsidy and a sweatshop charter, as it was under the previous government.
The noble Lord, Lord Goodhart, said that an employee may not want an employer to know about his or her family responsibilities. I thought that we had discussed this at considerable length in Committee and on Report. Employers will not be able to infer details of an employee's circumstances from the amount of tax credit that is paid. They will simply not be able to "deconstruct" that back to its component parts.
Lord Goodhart: My Lords, I am most grateful once more to the noble Baroness for giving way. I apologise for intervening again. I have made this point several times before. I accept entirely the fact that the employer will not be able to know details of an employee's family situation. However, the employer will be able to know the one absolutely essential feature; namely, that the claimant—the employee—has family responsibilities.
Baroness Hollis of Heigham: Yes, my Lords. In other words, the employer will know that an employee forms part of the perhaps two-thirds of his workforce who could be married, widowed, co-habiting or have children, as opposed to those who are single. The employer will know that a certain employee is simply not single; that is all he can know. He will not even know whether a person is disabled. That person may be entitled to a disability tax credit and be single. The employer will not even know that. I think that the noble Lord's example pushes at the very edges of reasoned information.
The noble Lord also argues that there is inconsistency between the Government's position on lone parents and the earlier amendments on employers. That is not the case. We have argued that the burden on employers is not disproportionate. That is why we are against an exemption. However, that does not mean that some employers may not take the opportunity to avoid any extra work that is involved
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if they can. There will always be some who will seek to duck and weave. We do not want to expose employees—particularly vulnerable employees—to that kind of pressure.
I hope that for all those reasons the House will affirm the decision of the Commons. I do not refer necessarily to the argument about the sparsity of attendance in the Chamber tonight compared with the sparsity of attendance in the Commons. I refer to the false argument that lone parents are not analogous to couples in this respect. They are in the same position as couples with regard to making a choice as to whom the money is paid. I refer to the argument that family credit has a relatively low take-up compared with other income-related benefits, as opposed to what we expect will be the relatively automatic payment of the working families' tax credit. I again make clear the point that work pays. We shall ensure that work pays without the taxpayer subsidising the low paying, unfair, exploitative employer. As I say, I hope that the House will affirm the decision of the Commons.
Lord Higgins: My Lords, before the noble Baroness sits down, I hope that she will answer the two points that I raised. First, does the suggestion of the Institute for Fiscal Studies that 250,000 extra people will be employed refer to the method of payment or to the extent that the working families' tax credit is a wage subsidy? Secondly, have any outside bodies supported the view that the noble Baroness has expressed with regard to the method of payment?
Baroness Hollis of Heigham: My Lords, on the first point, the noble Lord disappoints me. If he had read the report which he is happy to argue about, he would know the answer to his question. The report does not even seek to go into that level of detail. I am surprised that I have to tell the noble Lord this because I would have expected him to have read the report and to have shared his views on that report with the House tonight before engaging in this kind of debate.
Lord Higgins: My Lords, I am aware of that, but the answer is not in line with the argument which the noble Baroness expounded earlier in reply to the noble Lord, Lord Goodhart.
Baroness Hollis of Heigham: My Lords, the argument surely is that we know that only 79 per cent of those who are entitled to family credit take it up. We know that loan parents constitute the majority of claimants—about 51 per cent of those on family credit. We know that as a result there is money not going to homes, even to those in work. We also know that many lone parents in particular who want to enter work feel that they cannot afford to do so because they fear that they risk losing benefit. They feel that they are better off not being in work. We believe that the working families' tax credit will take care of all of those problems and will benefit lone parents. Therefore, I hope that your Lordships will acquiesce in the Commons overturning the amendments tonight.
On Question, Motion agreed to.
LORDS AMENDMENT
3 Clause 6, page 3, line 35, at end insert—
("(1A) Any employer employing fewer than ten employees may elect that any tax credit to which an employee is entitled shall be paid by the Board instead of being paid by him.
(1B) For the purposes of subsection (1A), the Board may make regulations providing for—

(a) the method for making or revoking an election;

(b) the method for cancelling an election if the employer subsequently employs ten or more employees; and

(c) two or more connected employers to be treated in specified circumstances as if each of them employed the employees employed by the other connected employers as well as the employees employed by himself.")

The Commons disagreed to this amendment for the following reason:
3A Because it is tot appropriate for smaller employers to be exempted from paying tax credit to their employees.
Baroness Hollis of Heigham: My Lords, I have already spoken to the amendment. I beg to move.
Moved, That the House do not insist on their Amendment No. 3 to which the Commons have disagreed for the reason numbered 3A.—(Baroness Hollis of Heigham)
On Question, Motion agreed to.

Greater London Authority Bill
8.41 p.m.
House again in Committee on Clause 80.
[Amendment No. 223 not moved.]
Lord Whitty Lord Whitty moved Amendments Nos. 223A to 223D:
Page 46. line 15, leave out from ("sections") to ("calculations") in line 17 and insert (" 70, 71 and 73 to 75 above and Schedule 6 to this Act and sections 47 and 48 of the Local Government Finance Act 1992 would be different from the last relevant").
Page 46, line 20, leave out ("sections") and insert ("provisions.
() In subsection (5) above, "the last relevant calculations" means the last calculations made by the Authority in relation to the year in accordance with—

(a) sections 70 to 75 above and sections 47 and 48 of the Local Government Finance Act 1992, or

(b) sections 70, 71 and 73 to 75 above and Schedule 6 to this Act and sections 47 and 48 of that Act.").

Page 47, line 11, at end insert ("under section 73(3)(b) of the Greater London Authority Act 1999 (in relation to item P1) or under section 74(5)(b) of that Act (in relation to item P2)").
Page 47, line 15, leave out from ("with") to end of line 17 and insert ("the appropriate Greater London provisions in making the calculations.
() For the purposes of subsection (11) above, 'the appropriate Greater London provisions" means—

(a) in the case of calculations required to be made in accordance with sections 70 to 75 above and sections 47
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and 48 of the Local Government Finance Act 1992, those provisions; and

(b) in the case of calculations required to be made in accordance with sections 70, 71 and 73 to 75 above and Schedule 6 to this Act and sections 47 and 48 of that Act, those provisions.").

On Question, amendments agreed to.
Clause 80, as amended, agreed to.
Clause 81 [Provisions supplemental to section 80]:
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 224:
Page 47, line 25, leave out ("35") and insert ("15").
The noble Lord said: The amendment is very short, very brief and very simple. It seeks to change the number "35" to "15". Before dinner we had a considerable debate around the question of the funding of the Metropolitan Police and the procedure to be followed in the event that the Secretary of State advised that the mayor's proposals were not adequate and that the mayor should do something about it. He is given a considerable period of time to do something about it. We do not think that that period of time is necessary. We think he should perfectly well be able to do it in much lesser time. After all, if he is a competent mayor he will have all the details of the Greater London Authority Bill at his fingertips, so to speak, and he will know what is and what is not possible and that if adjustments can be made he will be able to make them. For the peace of mind of the people of London, that prolonged period of time should be diminished. The amendment seeks to do just that. I beg to move.
Baroness Farrington of Ribbleton: This amendment would require the GLA to make substitute calculations in 15 days rather than 35 days. We believe that this is too short. The GLA will have to follow the procedure set out in Schedule 6, which involves both the mayor and the assembly. It is essential that any changes to the budget are considered carefully, especially where cuts are being made, as might be the case here.
In general, when a local authority is designated and has to set a new budget requirement it is expected to do so in 21 days. To insist that the GLA, which has to involve both the mayor and the assembly in the process, completes its substitute calculations in a shorter time is unrealistic.
There is no prospect of any gap in funding for the MPA unless the GLA failed to make substitute calculations within the 35-day period. After receiving a direction, the mayor will continue to receive grant income from central government and council tax income from billing authorities as usual. Once the substitute calculations have been made, income from billing authorities will be on the basis of the substitute rather than the original calculations. It is only if the GLA does not meet the deadline that it will cease to receive income from billing authorities. So reducing the deadline to 15 days would not reduce the risk of a shortfall in funding for the police. It would have the opposite effect.

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The GLA will, in any case, wish to complete these substitute calculations as quickly as possible as it may need to adjust its spending plans or rebill the local taxpayers. Therefore I ask the noble Lord to withdraw the amendment.
Lord Dixon-Smith: I listened to the remarks of the noble Baroness in response to the amendment with some fascination. She seems to be following the view that all things are possible in the best of all possible worlds.
We are facing a situation in which there is already a problem. Unless one actually imposes some need for expedition on the system of amendment, if it is required as a result of a difference of opinion between the mayor and the Secretary of State over the police budget, then, despite what the noble Baroness said, there could be difficulties. I accept that it is perfectly true that there could be difficulties after 15 days if an agreement was not reached. That would apply whatever the time limit suggested on the face of the Bill might be. The point about the 15 days is that it would bring the decision right back so that it was well within the current financial year and well within the current funding arrangements of the police. The proposals on the face of the Bill begin to take the decision day further and further away from the original budgetary proposals. More significantly, it brings it closer and closer towards the end of the financial year when the problems could really begin to rise.
I have heard what the noble Baroness said—I shall study Hansard with care—but I do not think that her explanation has gone to the core of the problem. We shall come back to the issue at a later stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Whitty Lord Whitty moved Amendment No. 224A:
Page 47, line 44, leave out ("to 75 above") and insert (", 71 and 73 to 75 above and Schedule 6 to this Act").
On Question, amendment agreed to.
Clause 81, as amended, agreed to.
Clause 82 [Emergencies and disasters]:
Lord Whitty Lord Whitty moved Amendment No. 224B:
Page 48, line 23, leave out from ("year") to end of line 26.
The noble Lord said: In moving Amendment No. 224B I shall speak also to Amendment No. 224C. These are minor amendments. The first amendment deletes Clause 82(2)(c), which is not necessary and is a relic from an earlier draft of the clause. Amendment No. 224C corrects a minor error in Schedule 6. It replaces a reference to the existing capping legislation with a reference to the relevant provision in the new reserved powers under the Local Government Bill. I beg to move.
On Question, amendment agreed to.
Clause 82, as amended, agreed to.
Schedule 6 [Procedure for making of substitute calculations by the Authority]
Lord Whitty Lord Whitty moved Amendment No. 224C:
Page 201, line 39, leave out from ("section") to end of line 40 and insert (" 81 of this Act or section 52K or 52V of the Local Government Finance Act 1992.").p
The noble Lord said: I beg to move Amendment No. 224C formally.
On Question, amendment agreed to.
[Amendment No. 224D not moved.]
Lord Whitty Lord Whitty moved Amendment No. 224E
Page 202, line 18, at end insert—
("Publication
.—(1) This paragraph applies where any substitute calculations are made in accordance with this Schedule.
(2) Where this paragraph applies, the Mayor shall as soon as practicable publish a document containing the substitute calculations.
(3) In this paragraph "relevant document" means any document required to be published under sub-paragraph (2) above.
(4) A copy of each relevant document shall be kept available for the appropriate period by the Mayor for inspection by any person on request free of charge at the principal offices of the Authority at reasonable hours.
(5) A copy of any relevant document, or any part of a relevant document, shall be supplied to any person on request during the appropriate period for such reasonable fee as the Mayor may determine.
(6) In this paragraph "the appropriate period" in the case of any document is the period of six years beginning with the date of publication of the document pursuant to this paragraph:").
The noble Lord said: I beg to move Amendment No. 224E formally.
On Question, amendment agreed to.
Schedule 6, as amended, agreed to.
Clause 83 agreed to. Clause 84 agreed to.
Baroness Hamwee Baroness Hamwee moved Amendment No. 224F:
Before Clause 85, insert the following new clause—
("CHAPTER IA BORROWING POWERS GLA BORROWING POWERS
.—(l) The Greater London Authority shall by virtue of this section have the power to borrow money.
(2) The Secretary of State shall not intervene in decisions taken under subsection (1) above.
(3) The Secretary of State shall issue guidance on prudent levels of borrowings for the Authority.
(4) The guidance may include an indicative limit on borrowings which shall take account of—

(a) the need for prudent on-going debt management;

(b) specific capital projects proposed by the Authority; and

(c) the total stock of the debt of the Authority.

(5) The guidance issued by the Secretary of State shall be published after discussions with the Mayor, the Chartered Institute of Public Finance Accountants and the Authority's auditor.
(6) If the budget proposed by the Mayor, and agreed by the Assembly, requires higher borrowings than the indicative limit in the Secretary of State's guidance, an Assembly vote shall take place with a two thirds majority of members voting required for the higher level of debt to be approved.").
The noble Baroness said: I beg to move Amendment No. 224F and at the same time I shall speak also to Amendment No. 225D, standing in the name of the noble Lord, Lord Sheppard of Didgemere, to which have also put my name. These amendments deal with borrowing powers on the part of the authority. The Bill allows borrowing only with very considerable constraints, using the system of basic and supplementary credit approvals. These are very closely linked with the budgets of individual functional bodies.
I do not believe there can be any dispute that some of the functions of the GLA will be very capital intensive. For this reason, we think it is important to ensure that the GLA has adequate powers to invest. We prefer an approach which looks at the authority's overall budget, including, and because of, the revenue effects on the taxpayers. 'We believe that the GLA should have a general power to borrow.
We are prepared to accept that the Secretary of State should have a role, though not the only role, in this, and our proposed clause provides that the GLA shall have the power to barrow without the intervention in decisions by the Secretary of State. However, the Secretary of State might issue guidance as to the levels of borrowing, including an indicative limit on borrowing to take account of the various matters set out in the draft clause.
We provide for publication of the guidance after discussions with the mayor and with other bodies, and we also suggest that, if the budget proposed by the mayor requires a higher borrowing than the indicative limit to which I have referred, then an assembly vote on the basis of a two-thirds majority will be required for the higher level of debt to be approved. This is all part of the GLA being able to determine its own strategic priorities. It is a matter a general principle for us that, as we have said several times in the course of this Bill, authorities should be able to take their own decisions about financial matters. That would include managing their budgets in both revenue and capital aspects.
If the GLA is to succeed with its important and onerous duties, many of which will require investment, then it should be able to take the decisions which are so closely related with carrying out its functions—that is, how to carry them out and how to ensure that the funding for the investment is there. That is why we have proposed this widely-worded amendment.
Amendment No. 225D, to which I have already referred, is. I admit from these Benches, a fall-back position. But it is one to which I am very happy to speak to tonight. I know that the noble Lord, Lord Sheppard, is sad not to be here this evening but he is abroad. This amendment has come from the "stable" of London First, representing London's businesses. I believe it is very telling that it is London's employers who are so very vocally concerned with investment in public transport. The clause provides that the GLA can issue a loan instrument secured only on the revenue stream from new charges and levies: that is, from prospective revenue.
We believe that this amendment is something of a test of the Government's credibility in what they say about hypothecation in the context of this Bill. It is vital that
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Londoners see the spending effects of their payments and see what they will be paying by way of congestion and parking charges, assuming that the provisions proposed are implemented. They will also see how their money can be put to good use for investment in public transport without a long wait.
The ability to invest future income streams would, to our mind, be helpful—indeed probably vital—to ensure the success of what are undoubtedly going to be difficult policies to bring into effect. However, if the public are to be taken along with proposed new policies which will be the subject of very considerable debate and are likely in some quarters to meet considerable resistance, then the carrot of better public transport must be there at least at the same time as the stick of the charges.
Many of the most immediate improvements which the GLA will wish to put into effect through its functional bodies are likely to involve relatively small-scale expenditure—expenditure which may be able to be financed directly from revenues such as bus priority measures, measures for cyclists and so on. We will come to the details of these schemes later but, as the Committee will be aware, there is a need for capacity improvements on the London Underground. These, as we have already discussed, are likely to be beyond the scope of public/private partnership agreements. That is quite apart from how one deals with the need for investment before PPP bites: contributions to investment in better commuter rail services, improved interchanges, more radical bus and intermediate transport schemes, and so on.
This amendment anticipates future revenues, not with a profligate approach but with a sensible one. Without the ability to borrow outside the Treasury controlled total, either the investment will not be additional investment—and the views of the public on additionality will be very important to the success of this scheme—or the revenue will be able to be spent only on a pay-as-you-go basis, and that will very considerably limit what can be achieved. Having spoken enthusiastically about Amendment No. 225D, I commend Amendment No. 224F to the Committee.
Lord Berkeley: Perhaps I may intervene briefly to speak to Amendment No. 225D in the names of the noble Lord, Lord, Lord Sheppard of Didgemere, and the noble Baroness, Lady Hamwee. I have listened carefully to the noble Baroness's remarks. The principles behind the amendment are certainly worth considering. It seems that the main revenue of Transport for London will be parking and road user charges. It will probably take a number of years before those can be implemented. If the proposed improvements to public transport cannot begin until the revenue starts to flow in, the carrot and stick approach that the Government have been so keen to put forward—in other words, giving people an alternative to cars—will become very difficult. There will be no improvements, in terms of bus lanes and so on, for a very long time. If we take the example of the Jubilee Line or the World Squares' proposal for Trafalgar Square and the area outside this House, we see that these projects take a great deal of time.

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I am not convinced that this amendment is necessarily the right one. However, I should like an assurance that cash will be forthcoming from some source—which must be the Government—in the interim period. The record of the past 10 years is not particularly good, especially under the previous government.
Many surveys have indicated that people who pay charges or taxes for motoring related activities would be happier to pay more if they knew that the money would be allocated to transport expenditure—it is to be hoped public transport. I hope that my noble friend the Minister will be able to say that, if the amendment is not acceptable, the Government will find some extra money to fill the gap between the revenue coming in and the need for the expenditure to begin. I look forward to my noble friend's reply.
Lord Dixon-Smith: My Lords, it is a pleasure to support Amendment No. 225D, tabled in the name of my noble friend Lord Sheppard of Didgemere and the noble Baroness, Lady Hamwee, and supported by the noble Lord, Lord Berkeley, on the Benches opposite.
We would encourage the Government to listen to the principle of Amendment No. 225D with great care, and to act upon it if at all possible. This may not be the precise amendment that is required to meet the needs of the situation. In any event, there is a particular problem in this area. We have not yet reached the point in the Bill where we might approve possible charges. However, the hypothecation period for the application of those charges is only 10 years. It might be extremely difficult to have the Greater London Authority issuing a loan instrument secured only on those revenues if there were not an assurance that that hypothecation would continue and that, let us say, the revenues raised in London and for London might be filched by a different government department for other purposes.
I have no doubt that in that situation the Government might argue that that was for the greater good. But Londoners would have some difficulty in following that argument. The Government would have even greater difficulty in persuading Londoners that it was appropriate. That obstacle exists. The time may come when we shall be able to do something about it. But from the point of view of using that revenue stream as a capital resource, the 10-year limit is a positive embarrassment.
That said, we support the principle of using that revenue stream as the base on which a capital sum might be raised for the future which would permit major improvements to London's transport system, without wishing in any way to specify what those improvements might be. My guess is that we could all think of 10 different improvements that we should like to see and believe are worth funding. Around this Committee there would probably be not 10 projects but 60—and that is being moderately unambitious.
The amendment tabled by the noble Lord, Lord Sheppard of Didgemere, of London First, has wide support from London business and commerce. That is not to say that that automatically makes it right. But it
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does mean that there is a wide degree of public assent to the principle behind the amendment. I urge it upon the Government.
With Amendment No. 224F, the noble Baroness, Lady Hamwee, is in the business of once again enunciating one of her dreams. The dream is unexceptionable; we should all love to see that ideal state. But the problem is—and the Minister will undoubtedly check me if I am wrong—that at the end of the day the Treasury stands in and is the guarantor of any debts, particularly in a capital field, on the part of a public authority—which include all local authorities and the Greater London Authority. If the Treasury stands in as guarantor, much as I regret it, the Treasury will inevitably have its finger in the pie and its say in what happens. That has to be accepted as unavoidable.
I should prefer a situation in which local authorities and the Greater London Authority stood on their own feet without the Treasury as guarantor. That would make for a much more exciting ride for local authorities. If that were the situation, local authorities would have to behave in a totally responsible way. If they did so, this country, and the world, would be much better for it. But, unfortunately, for better or worse—in this case, it is for worse—that is not the situation. I share the dream of the noble Baroness and wish that we could remove the Treasury from these matters. I would do anything to support the noble Baroness if that was the proposal. However, I do not think that such an amendment would be appropriate for this Bill. Therefore, I cannot support Amendment No. 224F, but it gives me great pleasure to support Amendment No. 225D.
Lord Ponsonby of Shulbrede: I hope that my noble friend the Minister can answer the following simple point. My understanding is that if the GLA has a good case for capital borrowing, it can apply to the Secretary of State for credit clearance. That is exactly the way in which all other local authorities operate. The noble Baroness, Lady Hamwee, did not advance a case as to why the GLA should be treated differently from any other local authority. That is the crux of the matter. The noble Lord, Lord Dixon-Smith. fantasised about greater independence being given to local authorities. We all share that fantasy. I remember that it was his party which, when in government, took away a good deal of that independence. Nevertheless, the noble Baroness must explain to the Committee why the GLA is different from other local authorities in this respect.
Baroness Miller of Chilthorne Domer: Perhaps I may draw a lesson from the recent past where the Government have gone through hoops and loops to get out of a particular bind. I refer to the housing stock of many authorities. They were unable to borrow the money needed to make substantial repairs. It is not appropriate to go into the details this evening. The Minister will be aware that to get round it the Government suggested to local authorities that, rather than borrow more money, they should form local housing companies. There may be something to be said for such bodies because in that way tenants have a greater say. Primarily, however, local authorities were

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forced down that road because they were not allowed to borrow money for the repairs which everyone agreed were necessary to make capital improvements to housing stock. If we look at that lesson, we see that my noble friend's amendment should be more than a dream. Drawing on history, if we do not allow this kind of borrowing, eventually we run into problems that must be resolved in a less than appropriate manner.
Lord Whitty: I recognise the need to engage in early capital projects, particularly in the area of transport, and therefore some of the matters that lie behind the concerns of London First. I am aware that the noble Lord, Lord Sheppard of Didgemere, intends to pursue this matter at a later stage as he cannot be here tonight. Therefore, I need to place on record for any future debate—although I hope that it will not be pursued tonight—the position of the Government.
I do not regard this matter as being wholly dreamland. It is fascinating to note that in this matter the noble Baroness and the noble Lord are in the same territory. We consider it important that the GLA is not treated differently from other local authorities. I should like to distinguish between the two amendments. I take first the amendment in the name of the noble Baroness. That would give the GLA power to borrow money which would be restrained only through the guidance of the Secretary of State. The other would be specifically a loan instrument secured against revenues under the road-user charging scheme. Both cut across the Government's clear commitment that the GLA should be subject to the local government finance regime. I believe that the Members of the Committee who have spoken in support of these amendments should provide an answer to my noble friend Lord Ponsonby as to why that should be so. All local authorities use the current system of credit approval to borrow. Their expenditure through borrowing increases public expenditure and, ultimately, exposes the Treasury. Our aim is to ensure that borrowing by the GLA is subject to the same system of control as applies in other areas.
In response to my noble friend Lord Ponsonby, the GLA and any other authority can approach the Government for borrowing to be authorised by credit approvals. Further approvals can be sought from the Secretary of State or the mayor, in so far as he has power to make allocations. There is, therefore, provision for capital expenditure to be undertaken. We have also provided for the unique nature of the GLA in two important ways: first, by creating a special system of credit approval, which recognises explicitly the particular role of the mayor to produce a capital spending plan through which he approaches the whole of capital spending priorities across all the four functional bodies; and, secondly, in the production of the plan. Clearly there is an important need for the mayor to be able to tackle many of the problems of London's crumbling infrastructure, not least in transport. It will be important that the Secretary of State is able to view positively any proposals by the mayor for investment but within the total system of local government finance as we understand it.
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It is also true, to complicate matters slightly further, that we announced in July a review of the local government capital finance system. We are looking at alternative arrangements for regulating borrowing as compared with existing arrangements which may be unnecessarily restrictive in some cases. One of the options being looked at is to allow authorities to borrow subject only to limits relating to the level of debt and to the guidance on prudent levels which underlies the noble Baroness's amendment. However, we are looking at that and a number of other options in this review. In the interim it is not appropriate that we authorise an entirely new and different regime for the GLA.
It is true that in addition to the ordinary credit approvals the GLA and the functional bodies will have a number of options to raise money to meet their capital spending needs, including transport. They could work with the private sector in relation to PFIs. Any deals which meet the PFI rules would not count against borrowing, and such deals could be established on the basis of expected revenues. We have also made clear that those authorities with innovative local transport plans will in effect get a larger share of existing resources in the Comprehensive Spending Review settlement.
It is also open to the GLA and functional bodies, where they are clear as to the future income, to issue bonds. A bond issued by one of those bodies would count on the public sector borrowing requirement and it would need to be secured against all the revenues of the authority and not a particular identified revenue scheme. A bond issue would, frankly, be more expensive than if the Government borrowed the money. In practice, in recent years local authorities have rarely used the bond route as it is cheaper to borrow from the public works loan. Nevertheless, that option is also open to them given adequate returns for the investment.
Therefore, a number of instruments are available to the GLA even within the current regime to finance early transport and other capital projects. But the general system of local government finance must be, subject to minor modifications, the same as applies to other local authorities.
I hope that that rather lengthy explanation both indicates the principle that we are adopting in relation to the GLA and other local authorities, and that the regime is not a straitjacket but will provide and allow for a number of ways in which the GLA could raise the capital finance itself even within the current regime; and that we are looking at changes within that capital spending regime which would apply to the GLA as it would to other authorities.
9.15 p.m.
Lord Brabazon of Tara: Perhaps I may make a few comments on Amendment No. 225D which relates to the revenue stream from the parking charges and the congestion charges. In my opinion the amendment would be better if it allowed the borrowing by Transport for London rather than the authority itself. That would then ring-fence it for transport purposes

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Are there not two precedents? I refer, first, to the changes the Government have made to local authority airport borrowing, where I gather that they freed local authority airports from the public sector borrowing requirement constraints. Is that not a precedent for Transport for London?
Secondly, a private company is being allowed to borrow large quantities of money from the market for the building of the Channel Tunnel rail link, but it is guaranteed by the Government and the company is therefore getting the money at government rates in the market which are considerably finer than they would be for a private company on its own.
Those are, I believe, precedents which would apply to Transport for London borrowing against revenue from both the items specified in the amendment: parking charges and congestion charges. Can the Minister comment on that?
Lord Whitty: I do not think that the second of those options is analogous. Clearly there is an underlying assumption concerning government support for the scheme, but it is not a direct public authority that is being allowed to borrow. It is an entirely private company.
In relation to municipal airports, we have agreed that there should be a relaxation in relation to local authority airport companies where they have constituted a separate incorporated company. That is possibly the analogy of housing stock drawn by the noble Baroness, Lady Miller of Chilthorne Domer. But in relation to fully commercial operations such as municipal airports, we are in a different situation from that of an authority which is dependent ultimately on the Treasury for various forms of taxation for its finances. So there is not a direct comparison. Nevertheless, as I said, the Government are considering whether some change in regime should apply to local authorities as a whole. The point of principle I make tonight is that the GLA should not be treated differently from the rest of the local authority sector in this respect.
Lord Dixon-Smith: Perhaps I may comment briefly on the Minister's statement that in recent times the local authorities have not greatly resorted to the bond market. My experience has been that the decision of local authorities in the management of their capital debt depended very much on their reading of the long-term prospects for interest rates. If they were of the view that interest rates were likely to rise, the tactic was always to borrow long with the Public Works Loan Board (PWLB). However, if their view was that the interest rates were likely to be low, so far as they could they would borrow short and in the bond market. They did so for the good reason that they could borrow from the bond market for shorter periods than they could borrow from the PWLB.
That is the reading that tends to lie behind decisions on loans and I do not believe that we should assume that because local authorities have tended to use one type of loan debt as opposed to another at any particular time,
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the situation should or will continue for a while. In any major authority, the decision is tactical and can result in an authority which gets it right saving considerable sums of money on behalf of its council tax payers. Therefore, good financial management in responsible authorities does produce real and tangible benefits.
Baroness Thomas of Walliswood: Perhaps I may add a couple of points before the Minister responds. I am disappointed to hear the old canard that borrowing by local authorities adds to public expenditure. It does so only because the Treasury decides it does so. Many economists will not accept that that is sensible, but there we go! The argument is not easy to justify, because the borrowing would be done in the private market and would not have the effect of creating a new money supply.
The Minister said that the new authority could not be different from any other authority. The new authority is different. It is taking a direct charge from the people who live in its area in the form of congestion charging and levies on workplace parking. That is unique. Those powers combined are different. The new authority will have a new revenue stream, which is hypothecated within the Bill, and that will make it different from any other authority. I was chairman of my highways committee for three years and I know about borrowing, and the difficulties of it, for capital projects in highways and transport. But this authority will be different. We are talking about a stream of revenue which can be created by the local authority. In fact, the Bill provides for that. The GLA will not be the same as any other local authority.
The Minister referred to PFI for raising additional funds. Yes, that is possible. The various ways in which local authorities can combine with the private sector to achieve agreed objectives are most useful, but almost always the local authority has to make capital input to show commitment to the scheme. It is seldom that all the money is found in some magic way by the private sector. One of the uses which could be made of borrowing in this way against revenue streams is precisely to provide that top-up in the more expensive kind of schemes to which various members of the Committee have referred.
On the two last points, I should like the Minister to reconsider the theory that in this respect the GLA is exactly like every other local authority. In my submission, it is simply not like every other local authority. Therefore, it is at least worth considering whether its financial powers should not reflect that very different character.
We have taken note of the comment of the noble Lord, Lord Brabazon of Tara, and will consider whether the suggestion that borrowing against revenue streams might more properly be allocated to Transport for London is a sensible way of moving forward.
Lord Whitty: The view of the noble Baroness as to whether this should or should not be counted against public borrowing is a matter that we shall not resolve on the basis of this Bill. I understand that there are fairly firm views, and effectively we are now also bound by

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some European aspects which make our position more similar to that in other countries. Part of the argument against was that we were disadvantaging ourselves, but that is no longer the case.
As for whether the GLA is a different kind of local authority in terms of financial regimes, it is in certain respects, but there is no reason why the rest of the country should regard it as being subject to preferential treatment.
As for saying that the GLA is different because it will have a revenue stream arising from road-user charging, it is our intention, which has been signalled fairly clearly, to legislate more generally, and all local authorities should be able to raise such charges and levies. Therefore, the GLA would rapidly become the same as local authorities a year or so after the passage of this legislation, so that is not a particularly good argument for special treatment.
The noble Lord, Lord Dixon-Smith, has considerably greater knowledge of local authorities in earlier periods raising more money through bonds. It is true that at times they have resorted to bonds, based on the expectation of relative movements of interest rates. However, in general it has been for relatively short periods of time compared with the long-term capital that we would be looking to raise under the objectives behind this clause—perhaps long-term capital investment in transport.
In any case, any judgment at any particular point in the cycle must be fairly subjective. We could not rely on a relative improvement in the bond rate of interest, as compared with that of the Public Works Loan Board, lasting long enough to alter the fact that bonds are a very particular way of financing capital expenditure. Nevertheless, it is an option that is available to the GLA, depending on its long-term assessment of the capital projects under consideration.
I hope I have responded to those additional points. We shall no doubt return to this debate later in the Bill, and I hope that for the moment, with those comments for the record, we can move on.
Baroness Hamwee: In a moment.
One of the things that I have gleaned from the debate is that in the eyes of the Committee I have dreams and the noble Lord, Lord Dixon-Smith, has fantasies. I shall stick with some of my dreams.
My noble friend Lady Thomas of Walliswood referred to an issue that the Minister said we shall not resolve tonight: the definitions applied by the Treasury in the case of the PSBR. In our eyes, as was said in the report of the Select Committee on relations between local and central government, that is the Humpty-Dumpty argument—"Things mean what I say they mean."
As regards why the GLA should be treated differently from other authorities, we believe that these freedoms should be available to all authorities. Sadly, the Bill provides only for the GLA. Therefore, in our dreams, we wish the GLA to achieve that which we wish to see all authorities achieve. It is a question of taking advantage of the opportunities 'which are available.
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I note what the Minister said about future legislation. But time will have been lost. I am sad but not surprised that there has been no answer to the points that I made about the need for public support for the schemes which may be brought forward by the mayor. Congestion and parking charging will be new to this country and it is extremely important that those measures should have public support and that the public should see the additionality of the funds used. They should be confident that they are not, yet again, being ripped off by some bureaucratic and rather grasping government, whichever level of government we are talking about.
In our eyes, those political points underlie and underpin the need for those financial freedoms. As the Minister said, we shall clearly want to return to this topic. We shall be talking to the noble Lord, Lord Sheppard of Didgemere, about the right approach. We may return with more than one approach to the issue. For the moment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
9.30 p.m.
Clause 85 [General GLA grant]:
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 225:
Page 49, line 10, at end insert ("and the cost assumptions on which the amount of the grant has been determined, which shall be published in such manner as the Secretary of State deems appropriate").
The noble Lord said: Clause 98 is of fundamental importance to the future of London because capital expenditure predicates future revenue expenditure. One is not talking just about interest and loan repayments when one says that; one is discussing also running costs. That could be the cost of running the Underground, if one puts in a new line, new signalling equipment, new rolling stock, highway improvements or it could be, because we are discussing capital expenditure in general, the cost of a building, staffing it and all the associated costs which would run with that. Therefore, consideration of the capital budget is fundamental to the future of this great conurbation. Capital investment can be regarded as good, by definition; but, in the way of the world, it is like everything else because an excess may have an adverse effect.
I apologise to the Committee. I am dealing with the wrong amendment. Amendment No. 225 is a simple amendment which requires that the Government should publish the cost assumptions on which they calculate the amount of grant which they are to give to the GLA. It is a simple matter which the Government could reasonably accept.
The cost assumptions on which the budget are made for the GLA grant and the GLA transport grant are fundamental. If they are not well and widely known, it makes it much more difficult for the people of London to understand what is going on. It also makes it more difficult for the people of London to understand the budgetary process of the authority.
I use the word "authority" because we are talking about the authority's budget. We are not talking about the mayor's budget. In the end, it must be the authority's budget.
This is really another of those issues of open government. The case should be unarguable. I look forward to the Minister accepting the absolute validity of this simple little matter. I beg to move.
Baroness Farrington of Ribbleton: The Secretary of State will be obliged to consult the mayor before determining the amounts of grant to pay to the GLA. It would be very surprising if the mayor did not make public the content of those consultations. It would also be surprising if noble Lords and Members of another place with an interest did not table parliamentary Questions asking about the basis for the determinations.
We do not agree that the Secretary of State should be under a duty to publish the cost assumptions on which the amount of grant has been determined. Noble Lords will be aware of the clear principle that policy advice to Ministers should not be published. This amendment would not add anything to the information that will already be in the public domain. Therefore, I feel sure that I can ask the noble Lord to withdraw his amendment.
Lord Dixon-Smith: I always wonder at the wording of parliamentary etiquette. When the Minister feels sure she can ask me; for sure she always can. The question has to be whether I shall accede to the request. In this instance—
Baroness Hamwee: I thank the noble Lord for giving way. I sense that the noble Lord may be about to withdraw his amendment. Perhaps I may interrupt him to ask the Minister whether a cost assumption is a matter of policy. It seems to me to be based on economic assessments, and so on, and not something which is confined to the policy area.
Baroness Farrington of Ribbleton: Surely there is an element of judgment in putting together the amount in the end in terms of policy and priorities. In answer to the noble Lord, Lord Dixon-Smith, if he calls me Pangloss, I am bound to assume that he is prepared to withdraw an amendment.
Lord Dixon-Smith: We are back in the business of discussing open government. I believe that it would not be disagreed anywhere on this side of the Committee that the way the Bill is drafted and the way the Government are answering these questions leaves something to be desired on the question of openness. In the light of that comment, I shall study with care what the Minister said in response to the amendment. In the meantime, I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Clause 85 agreed to.
Clause 86 [GLA transport grant]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 225A:
Page 49, line 27, at end insert ("but the amount of the grant shall increase by at least the annual rate of the Retail Price Index in each year beginning from the Authority's second financial year.").
The noble Baroness said: Clause 86 provides that the Secretary of State will provide what is to be called the "GLA transport grant" to the authority for the purposes of transport for London. Our amendment provides that the amount of the grant shall increase by at least the annual rate of RPI in each year from the second year of operation of the authority.
As I mentioned in the debate on borrowing, it is important that Londoners have confidence that public transport is regarded by central government, as well as by the authority, as a very high priority. Indeed, from everything that has been said by the Government about the functions of the GLA and about getting London moving, I believe that they regard transport as a high priority.
The public must not be allowed to think that congestion and parking charges will go into a general pot rather than into improving public transport. We did not agree with the amendment proposed earlier today which linked in that case the precept to the rate of RPI. Amendment No. 225A, which is extremely modest, appropriately links the grant to RPI. There is a closer connection, although if any Member of the Committee has any other basis for ensuring that the GLA grant is kept up in a manner which the public would regard as keeping up with inflation, we are open to suggestion.
The general point is a question of public confidence and support for what the authority is doing. The travelling public must believe that the GLA is keeping up the proper level of investment in London's transport system. I beg to move.
Lord Whitty: I understand that the noble Baroness is after a degree of stability in the funding of transport, but that will arise when the mayor produces the plan, when the plan is agreed by central government and when we have some means of delivering that plan. To link the level of government grant to the RPI is potentially counterproductive and unhelpful to the mayor. The mayor may want, for example, to see some substantial increases over a short period of time in order to meet the costs of a major project which needs to fit in with the general timetable planned. Were central government to look at that request and know that that exceptionally high level of grant would thereafter be linked to RPI, they might well hesitate to accede, whatever their political complexion at that point.
Although I understand what lies behind the amendment, it may be counterproductive and I hope therefore that the noble Baroness will not press it. In relation to the congestion charge situation, I can reassure Members of the Committee again that the money arising from the road-user charging scheme will be available for transport projects. It will be hypothecated entirely to transport projects for the first 10 years of each scheme. There is therefore a built-in stability in that respect. This amendment does not add to that and it could deter a future Secretary of State from allocating specific resources to a specific need.
Baroness Thomas of Walliswood: Perhaps I may ask the Minister a specific question. He may already have made this point and I missed it.

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Behind Amendment No. 225A lies the question of additionality. There is real concern that the new revenue stream will be a substitute for existing income or existing permissions to spend (however one phrases it) in London on transport or other objectives. If the Minister could reassure the Committee today and, through us, a wider world that the principle of additionality is built into the way in which the Government regard this Bill and the revenue streams we are discussing—that is, the current transport grant and the new revenue streams—that would go some way to making these amendments unnecessary.
Lord Whitty: That is probably the wrong question. Additionality and non-additionality are not the issue; the issue is whether the mayor proposed a plan which needed to be financed, whether the Government agreed that plan, and whether adequate revenues were available for it. The source of those revenues will certainly include hypothecated road-user charges. For many years to come—I suspect, well beyond the 10 years that we are talking about now London will require substantial additional transport grant from the centre. The question of additionality therefore does not arise in that context. The key is need and whether that need can be financed by the various revenue sources.
9.45 p.m.
Baroness Hamwee: I believe that my noble friend's question was exactly the right question, even if it was an awkward question. The concerns expressed about the hypothecation of the two income streams are understood by the Minister when he says that he anticipates that they will be hypothecated for many more than the 10 years of which we have heard. That will certainly be necessary because it will take a large chunk of those 10 years to get such schemes off the ground.
Lord Whitty: I will clarify the position for the sake of the Chancellor of the Exchequer. I did not say that the hypothecation would necessarily last more than 10 years for each scheme that is started within the next 10 years. I said that I suspected that grants could be necessary for well beyond that period. I clarify that point just in case.
Baroness Hamwee: The Minister is absolutely right. I did not mean to put words into his mouth. Perhaps I was hoping to understand something of what was in his mind, but I would not like the noble Lord to find disfavour with the Chancellor.
The Minister challenged our amendment on the basis that it might be counter-productive but it is specifically worded as a minimum. We used the words,
"the amount of the grant shall increase by at least the annual rate of the Retail Price Index".
so I do not think that could be regarded as prejudicing the cause.
The main point is the question of additionality and stability, as identified by the Minister. If I were confident that central government were committed to funding the transport strategy and its implementation—
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including local implementation plans—I would have felt less need to table the amendment. However, for the moment I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 86 agreed to.
Clauses 87 to 91 agreed to.
Clause 92 [Judicial review]
Lord Whitty Lord Whitty moved Amendment 225B:
Page 52, line 4, leave out from ("1999") to end of line 5 and insert—
("(cd) a substitute calculation made in accordance with an) of sections 70, 71 and 73 to 75 of, and Schedule 6 to, that Act;" ").
On Question, amendment agreed to.
Clause 92, as amended, agreed to.
Clause 93 [Functions to be discharged only by certain authorities]:
Lord Whitty Lord Whitty moved Amendment 225C:
Page 52, line 14, leave out from ("1999") to end of line 15 and insert—
("(bc) making a substitute calculation in accordance with any of sections 70, 71 and 73 to 75 of, and Schedule 6 to, that Act;".").
On Question, amendment agreed to.
Clause 93, as amended, agreed to.
Clauses 94 to 96 agreed to.
[Amendment No. 225D not moved.]
Clause 97 agreed to.
Clause 98 [Aggregate credit approval for Authority and functional bodies]:
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 226:
Page 54, line 30, leave out paragraph (c).
The noble Lord said: It seems to me that it would be superfluous to repeat the words that I spoke in error when we were discussing the previous amendment. Therefore, with the leave of the Committee, perhaps we could take those words as having been spoken and relevant to this amendment. That would spare me the bother of repetition, which would, of course, greatly add to everyone's feeling that we were not making the progress that we ought to be making.
Clause 98 sets out pretty much a system which is largely consistent with existing local government practice. We have category A schemes which are specifically approved by the Secretary of State; we have category B schemes which relate to a nominated sum by the Secretary of State and which can be allocated by the authority; and we have category C schemes which, if I read the paragraph correctly, relate to designated amounts for allocation by the mayor to such authorities and for such purposes as he sees fit. I have no problem with any of those designations.
I have a little difficulty with category D schemes because this area appears to me to go back to giving the Secretary of State control, once again, over matters with

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which the mayor is dealing. I therefore find myself wondering more than somewhat whether that category really is necessary in view of the previous three.
Amendment No. 227 has been tabled because I must confess that Clause 99(3) is beyond my powers of comprehension, unless particular circumstances arise. As drafted, the subsection states:
"Where an additional credit approval is issued not more than six months after the end of a financial year"—
in other words, it seems to me that it is a post-dated approval—
"the period specified under subsection (2) above may be one which begins, or begins and ends, at any time during that financial year".
For that clause to have any place in the Bill, the GLA will, perforce, have carried out items of capital expenditure which are, presumably, outwith its capital budget and, more significantly, outwith any capital approvals which it has previously received.
It is possible that circumstances could arise where such post-dated approval is in fact required. But if that is the case, it does not give me a great deal of confidence in the financial management either of the authority or indeed of the system of approvals which could allow such a situation to arise. It is with that in mind that I have tabled the amendment to remove subsection (3). I await the Minister's response with considerable interest. I beg to move.
Lord Whitty: I could attempt to go into considerable detail on this clause, but it seems to me that I should indicate to the noble Lord the fact that I do not think his objectives would be achieved by these amendments. Amendment No. 226 would remove Category C from the aggregate credit approval that the Secretary of State will issue to the mayor before the start of the financial year. That would restrict the mayor. Amendment No. 227 would remove Clause 99(3), which provides that as long as,
"an additional credit approval is issued not more than six months after the end of a financial year"
the period for which it has effect may begin at any time during that year. It is important that the Government should have the option of supplementing the allocation of capital resources by means of the aggregate credit approval. The provision gives additional flexibility to the Minister in that regard if an authority approaches him.
In my view the amendments would add unnecessary restrictions to the GLA's capital finance system. Amendment No. 226 would severely restrict the role of the mayor in allocating credit approvals to the GLA. Amendment No. 227 would also be restrictive and would be inconsistent with the flexibility which applies in the issue of supplementary credit approval to other local authorities. Therefore it would place the GLA at a disadvantage.
I am happy to write to the noble Lord with further detail. I have some rather lengthy notes here which I could read out but I am not sure that that would greatly enlighten any of us. I believe that the noble Lord's amendments would have the contrary effect to that
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which he seeks. Therefore I hope that he will not pursue them. However, as I said, I am happy to provide further detail request it.
Lord Dixon-Smith: I am grateful to the Minister for his reply. He has filled in some of the background which was what I hoped to prise out of him in tabling these amendments. I shall study with care what he has said. I should be grateful if he would write to me with the pages of detail that he says he has. Other interested persons might find that useful too. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 98 agreed to.
Clause 99 [Additional credit approval]:
[Amendment No. 227 not moved.]
Clause 99 agreed to.
Clauses 100 to 103 agreed to.
Clause 104 [Power to redistribute capital receipts of functional bodies]
The Deputy Chairman of Committees (Lord Cocks of Hartcliffe): Amendment No. 228. Lord Dixon.
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 228:
Page 57, line 46, at end insert ("provided that no such payment may be directed to be made by a body until that body's debts have been fully repaid").
The noble Lord said: I hope that the Deputy Chairman of Committees will forgive me if I point out that I need to be referred to as the noble Lord, Lord Dixon-Smith, as the noble Lord, Lord Dixon, sits on the Government Benches. He may be upset if when he reads Hansard in the morning he discovers that he has proposed opposition amendments.
The Deputy Chairman of Committees: The noble Lord, Lord Dixon, was one of my Whips. With his physique I would not like to offend him. I call Amendment No. 228 in the name of the noble Lord, Lord Dixon-Smith.
Lord Dixon-Smith: I am most grateful for those comments. Clause 104 gives the Secretary of State power to make regulations to enable the mayor to direct the allocation of a functional body's usable capital receipts to some other part of the Greater London Authority. Amendment No. 228 requires that before the Secretary of State can make regulations to permit the mayor to designate those usable capital receipts for other purposes the functional body should have paid off any of its capital debt that is outstanding. Once that has taken place, reallocation becomes permissible.
The issue of capital funding and the tactics of capital management is inevitably complex. There is not the slightest doubt but that, even with interest rates where they are today, the cheapest way of funding capital expenditure is to fund it directly on revenue. One is then not subject to interest charges and interest payments over a long period of time, which of course inevitably raise the cost of projects. If that happens, the consequence is that the present generation finds itself

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paying for benefits which are enjoyed and will continue to be enjoyed by future generations, benefits to which they make no contribution. Of course, they may undertake their own capital expenditure. Loans spread the cost across the generations but, in doing so, they also increase the costs.
We are discussing the good management of resources. It is an issue which requires careful consideration. There is a separate issue within it; that is, that the functional bodies within the Greater London Authority will need financial incentives of some kind if they are to manage their assets efficiently and effectively in the interests of the people of London. If the financial consequences remain with the functional body, good asset management will bring about either lower cost systems or lower costs. Alternatively, possibly more beneficially, it might permit an increase in the overall volume of service.
However, if we follow the Secretary of State's powers of designation and the mayor reallocates the usable capital receipts elsewhere, the functional body may well find that it is not receiving the direct benefits of its good financial management; and, if it finds that it is not getting the direct benefits of its good management or its good management of its property assets, it may feel less inclined to manage those assets well in the best interests of the wider public.
It is with that in mind that we have tabled the amendment. Perhaps it would only partially bring about the effect that I desire, but partially is better than not at all. I beg to move.
10 p.m.
Baroness Hamwee: The noble Lord will not be surprised that we have difficulty in supporting the amendment. We have taken the line throughout that the authority's budget should be regarded as one budget, not as a group of individual budgets from the functional authorities. Although we do not much like the need in Clause 104 for the regulations to come from the Secretary of State to allow the redistribution of the receipts, we do at least recognise that the mayor will be the beneficiary of any regulations and be given the power to make directions. We think it is appropriate that the budget is one single budget, not a group of individual budgets. Questions of the control and care to be taken by the functional bodies are ones to which the mayor should have regard in running the authority rather than being matters for legislation.
Baroness Farrington of Ribbleton: Amendment No. 228 would mean that a functional body could be required to give up part of its useable packet of receipts for the benefit of the GLA or another functional body only if it has become free from debt. In fact the power to make such regulations as those in Clause 104 is an important reserve power. We have no immediate plans to make such regulations and it may be that they would never be needed.
Clauses 105 and 106 enable the bodies to redistribute resources voluntarily, subject to the mayor's consent. If these arrangements are used in a co-operative way it
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may never be necessary to invoke the powers. The mayor's power to redistribute capital receipts is subject to a number of safeguards. First, amounts that the mayor directs a functional body to pay to him can only be used to meet the capital expenditure of the GLA or of another functional body. Secondly, the mayor cannot take away from a functional body capital receipts derived from particular disposals of assets. Thirdly, any regulation made by the Secretary of State will contain a number of safeguards to make sure that the power was exercised reasonably.
I must say that I find this amendment unhelpful, and its effect is unclear. It appears to mean that a body could be required to give receipts for redistribution by the mayor only if it was free from debt. This may be intended to require the prior discharge of long-term borrowing rather than all debts. That would need to be made clear. Assuming that that is the intention behind the amendment, it would prevent the mayor from securing the most efficient use of capital receipts across the GLA family, but at the same time it would do nothing to require or encourage the functional bodies to take any steps to discharge their debts.
This amendment could strain the use of any power conferred on the mayor to redistribute the capital receipts of functional bodies, and would certainly make it more difficult to use the power sensibly and effectively. It would probably render it unworkable. I therefore ask the noble Lord to withdraw this amendment.
Lord Dixon-Smith: I am grateful to the Minister for her explanation of the reasons why the Government feel they cannot support these amendments. I shall need to study the answer with great care before deciding whether to take the matter further. There is always a potential for conflict between the interests of the constituent bodies and the authority as a whole, and that is something which we have to face in this Bill and which must be faced by the authority in due course. Our function here is to try to make sure that the process will work as smoothly as possible within the authority. It was with that in mind that the amendment was moved, and I now beg leave to withdraw it.
Amendment, by leave, withdrawn.
Lord Dixon-Smith moved Lord Dixon-Smith moved Amendment No. 229:
Page 58, line 26, at end insert—
("() The anticipated percentage of the available capital receipts of each functional body that are to be paid to the Authority as specified in subsection (I) above shall be published by the Mayor in the capital spending plan prepared for that body under section 106 below.
() The amount paid out of available capital receipts to the Authority by that body during the year shall not exceed or be less than the amount stated in the capital spending plan by more than ten per cent of available capital receipts.").
The noble Lord said: I beg to move Amendment No. 229. This amendment, with Amendments Nos. 230 to 235, appears on the Marshalled List in my name. With the leave of the Committee, I will speak to them all. The Government's proposals give a great deal of discretion: to shift capital receipts from the functional bodies to

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fund capital spending of other bodies within the authority in Clause 104; to make grants for capital spending in Clause 105; and even to make grants for current spending in Clause 106.
While some degree of flexibility is desirable, it seems to me that the amount of flexibility which is permissible under the Bill as drafted is perhaps rather more than is reasonable. In the wrong hands, it could lead to possible abuse by, for example, raiding the capital receipts of one body in favour or projects elsewhere, when the body that was, so to speak, raided was itself in desperate need of capital expenditure. I accept that there is always a judgment to be drawn. To borrow the words of the noble Baroness, Lady Hamwee, we are dealing with one authority and the mayor has to be able to set his priorities. But the authority should be bigger than the mayor. It will in the end be bigger than the mayor and the assembly too. A judgment will always have to be made as to what is responsible financial management. These amendments are directed towards that.
Turning to Amendment No. 233, the Bill as drafted seems to specify a minimum capital grant. The provision relates to grants under Clause 105. The Government's proposal is that the mayor's capital spending plans should set out the minimum amount of grant that the authority is to pay to each functional body for its capital spending in the coming year. To set out a minimum at this stage seems inappropriate. It would be better to set out the estimated amount of the grant rather than the minimum. That would be a tighter definition; it would be less capable of subsequently being, let us say, adjusted unfortunately if a mayor were so inclined.
Amendments Nos. 234 and 235 reinforce the disclosure requirements of the earlier amendments. The first amendment ensures that all the capital spending plans of each functional body should make clear all the funding resources for that functional body's capital spending: not just the capital grants from the authority but also any proposed transfer of capital receipts from other functional bodies. That would increase the transparency of the assembly and, through public access to public spending plans, the understanding of the wider public as to how capital spending was being funded.
The existing government proposal suggests that there should be some disclosure of funding from capital grants, but does not indicate what will come from the transfer of the capital receipts. The amendments are directed towards improving the transparency under which the authority is working.
Baroness Farrington of Ribbleton: This group of amendments would require the mayor to include in the capital spending plan a wide range of additional information about capital grants and the redistribution of capital receipts. That is information that could be given only if at the time when he came to prepare the capital spending plans for the forthcoming financial year the mayor had made, and was in a position to make, firm decisions about the distribution of such resources. Taken together, the amendments would greatly reduce the
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mayor's discretion in allocating capital resources to the functional bodies and they are not acceptable to the Government.
Four of the amendments relate to information in the capital spending plan about redistributed capital receipts. Members of the Committee will be aware from previous debates that Clause 104 gives the Secretary of State power to make regulations under which the mayor would be allowed to redistribute the capital receipts of functional bodies. If such regulations were made, Amendment No. 232 would require the mayor to include in section A of the capital spending plan the amount of capital receipts functional bodies would be expected to pay him or her.
Amendment No. 234 would require the mayor to estimate in section B of the plan the amount of capital receipts he would take away from one functional body and give to another.
The mayor would also be required under Amendment No. 235 to include in the figure for the expenditure that he expects each functional body to meet out of capital grants in Section D the amount he expects them to meet out of redistributed capital receipts and grants paid by the GLA.
Amendment No. 229 would constrain the availability of capital receipts to the mayor under Clause 104 to an amount which does not vary by more than 10 per cent from the amount that he states in the capital spending plan. These amendments would constrain the use of any power conferred on the mayor to redistribute the capital receipts of functional bodies and make it more difficult to use that power in a sensible and effective way.
Under Amendments Nos. 230 and 231 the powers of the GLA and functional bodies to pay capital and revenue grants to each other are similarly intended to be exercisable at any time during the financial year. The need for an exchange of resources between bodies in the GLA family could arise at any time during the financial year. The amendments would prevent and undermine this. I go back to the point made in several contributions by the noble Baroness, Lady Hamwee. These amendments could completely undermine one of the methods by which the Bill promotes the most efficient use of the resources of the GLA and the bodies as a whole. I do not wish to misquote the noble Baroness, who believes that we do not go far enough in this respect.
Finally, Amendment No. 233 would require the mayor to include in Section B a statement of how much capital grant he estimates the GLA will pay to each functional body. The Bill as currently drafted requires the mayor to state the minimum amount. The Government's Amendment No. 232A allows him to specify nothing if he has not reached a decision on that amount. In requiring all such payments to be estimated before the start of the financial year, the amendment cuts down the discretion and financial flexibility that the power is intended to confer. Thus, to reduce the mayor's discretion will disadvantage the functional bodies because the amendments will remove financial flexibility in making available capital resources.
The mayor is to be in a position to help meet the expenditure needs of the functional bodies, which can change during the course of a financial year. He can help by making available grants and helping with the

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redistribution of resources. We believe that it is not cost effective or sensible to have these matters tied down in a plan before the year begins. The amendments would seriously undermine the mayor's discretion and, therefore, cannot be acceptable. I ask the noble Lord to withdraw the amendment.
10.15 p.m.
Lord Dixon-Smith: I am grateful to the noble Baroness for her response, which takes me some way forward. She may well be right in saying that the amendments make it more difficult for the mayor to operate in a sensible and effective way with regard to management of the capital resources of the authority, but I also suggest that they would make it considerably more difficult—this is the intention—for the mayor to act in a rash and less effective way. Every coin has an obverse and reverse. One must always consider that aspect. Nonetheless, I shall consider with care the response of the noble Baroness. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 104 agreed to.
Clause 105 [Capital grants between Authority and functional bodies]:
[Amendment No. 230 not moved.]
Clause 105 agreed to.
Clause 106 [Revenue grants between Authority and functional bodies]:
[Amendment No. 231 not moved.]
Clause 106 agreed to.
Clause 107 [Form and contents of capital spending plan]:
[Amendment No. 232 not moved.]
Lord Whitty Lord Whitty moved Amendment No. 232A:
Page 59, line 31, leave out paragraph (a) and insert—
("(a) if the Mayor has decided a minimum amount of grant which the Authority is to pay to the body for the year under section 105(1) above, that minimum amount;").
The noble Lord said: This is a minor amendment. It is intended to remove a possible misunderstanding of the existing draft; namely, that the mayor is required to state for each functional body a minimum amount of capital grant he will pay to that body (and therefore is required to decide four minimum amounts). That was not the intended effect of Clause 107(4)(a). It was intended to leave the mayor free to decide what capital grants to make to the functional bodies and to require him to specify an amount only where he makes a decision to pay a body no less than a certain amount.
The amendment ensures that the requirements for preparation of the capital spending plan are brought completely into line with other arrangements in the Bill. I beg to move.
On Question, amendment agreed to.
The Deputy Chairman of Committees (Lord Dean of Harptree): In view of Amendment No. 232A being carried, I cannot call Amendment No. 233.
[Amendments Nos. 233 to 245 not moved.]
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 236:
Page 60, line 16, at end insert
("(7) Section E of a capital spending plan made for any financial year ("the relevant financial year") other than the first two financial years following the commencement of the Authority shall consist of—

(a) a statement of—

(i) the amount of the body's total capital spending in the preceding financial year, and

(ii) the total amount of expenditure which the Mayor had expected the body to incur in the capital spending plan for the previous year;

(b) where the amount in paragraph (a)(i) exceeds the amount in paragraph (a)(ii), a statement of the reasons for this and a proposal for reducing the capital spending plan for the relevant financial year by the amount of the excess.").

The noble Lord said: The purpose of the amendment is to guard against systematic overspending on capital items by publishing an outturn at the end of the year so that it can be compared with the planned amounts of capital spending for each functional body in each of the previous two financial years so that the level of financial management, or the competency of that management, can be perceived easily.
The amendment maintains a principle for which we have been pressing throughout the Bill of imposing greater visibility in the authority's spending. It reinforces the disclosure requirements of earlier proposed amendments. Were this disclosure to reveal an overspend in relation to the plan, it would require reasons to be given together with proposals to claw back or deal with the problem of an overspend. This would be a protection for the people of London and would help to prevent poor management of capital resources which might lead to an unacceptable risk for the people of London in the future, which would be permissible as the Bill is currently framed. I beg to move.
Lord Whitty: The amendment is somewhat overprescriptive. It would require the mayor to produce every year an extra part of his plan which reported precisely on the deviations from the plan the previous year and explained the reasons for the excess. It would also require proposals to be made for clawing back that excess.
The mayor will draw up every capital spending plan in consultation with the functional bodies and others, and with the GLA as a whole. It is clearly important that we have serious monitoring. But this is a vigorous straitjacket. Under Clause 109, the mayor may take account of any factors which appear to him to be appropriate. That would include the extent to which functional body spending departed in either direction from expected levels, bearing in mind that the expected level specified is not intended to fix the amount of capital spending for the functional body. There may well be good reasons why more or less spending is incurred by a functional body and its departure from the mayor's

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expectation may be for the general benefit not only of the functional body but of the GLA and London as a whole. Therefore, the requirement that not only should be publish it in this form, but that it should be subject to a commitment to claw it back in the following year would be excessive. The mayor needs freedom to exercise discretion responsibly. It would be wrong to prescribe his specific course of action in legislation. Having said that, I accept the mayor's responsibility to report on the monitoring, but not in this form.
Lord Dixon-Smith: I am grateful to the Minister for his explanation, which I shall study with some care. When I was involved in local government, we were used to the idea of producing a precise capital expenditure plan for every year which was entirely expenditure based. It was always the case that if there was an underspend, the reasons were established, explained and published. If there was an overspend, which one must admit could occur, the reasons had to be established, explained and the consequences dealt with in the subsequent year's financial plan. As night follows day, an overspend in one year was followed by a diminution of the planned spend in the subsequent year.
Nevertheless, I hear what the Minister said. I shall study it and, in the mean time, beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 107, as amended, agreed to.
Clause 108 [Preparation of the plan: consultation and completion]
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 237:
Page 60, line 22, after ("Assembly") insert (", to each of the London borough councils, to the Common Council").
The noble Lord said: In moving this amendment, I shall speak also to Amendments Nos. 238 and 239. We are still in the business of achieving greater approval and openness for the mayor's capital spending plans. The first two amendments propose that the boroughs and the Common Council, together with the assembly and the functional bodies, should be circulated with the draft and final version of the capital spending plan. The plans are almost bound to have a direct impact on the boroughs and at the least they should be aware of them as soon as they are available. The amendment would achieve that.
The third amendment deals with openness with regard to the capital spending plan and brings it more into line with local government standards of openness; for example, the right to make copies is clear in Section 14 of the Audit Commission Act 1998, which provides for the right to make copies of documents in relation to the period in which the authority's finances are under audit. That is a good principle to follow.
The Government's proposals refer to the right of inspection, but they do not refer to the right to make copies. We believe that the right to make copies should exist, particularly in this complex area of capital spending. Careful examination and careful consideration are needed if any lay member is to have some understanding of what has happened. Members of the
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public should be able to examine the plans properly and this right could well be essential for that to be possible. I do not believe that the Government should have any difficulty in accepting the amendments, although I am bound to admit that their ability to receive good amendments has not been much revealed in our proceedings up to this point. I beg to move.
Baroness Hamwee: We would not take issue with the first two amendments in this group, but the points made by the noble Lord. Lord Dixon-Smith, illustrate the importance of good consultation, not just on the financial matters but on the strategies underlying them. We have made comments already today about the importance of the authority's financial cycle and the provision of information and so on being sensible as regards the boroughs' own financial cycles. We perhaps stumbled on an issue about whether the Secretary of State can take decisions and give directions in such a way as would be a nonsense in view of the dates by which the boroughs have to agree their budgets.
The timing for the capital spending plan, its availability to the public and discussion of it seem to us necessarily to involve the other players on the London scene, and not just the assembly. But the January date is rather late; it highlights some of the points made earlier today.
On Amendment No. 239, I hope that the Government will tell us that somewhere in their amendments about making material available the point about copies is already covered. The amendment and subsection (5) illustrate the comment that has run as a thread through the points made from these Benches about how detailed the Bill has become, and also the amendments being put forward, because it seems not to be possible to deal with such matters in a general and common-sense fashion. We would not, of course, wish that copies of the capital spending plan should not be available for copying, however.
10.30 p.m.
Baroness Farrington of Ribbleton: Amendment No. 237 would require the mayor to send a copy of his draft capital spending plan to the London borough councils and the Common Council and invite them to submit their written comments within 21 days.
Amendment No. 238 would require the mayor to send the final version of the capital spending plan to those councils.
The capital spending plan is the means by which the mayor will control and influence the capital spending amounts and priorities of the GLA and the four functional bodies. It is clear that the assembly should be consulted on the draft plan, given its relationship with the mayor and the fact that its members are elected representatives of Londoners in relation to GLA functions. Similarly, it is clear that the functional bodies, which will be directly affected by the plan, should also have this right.
It is vital that the mayor should send the assembly and the functional bodies the final capital spending plan because the assembly will want to monitor the capital

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spending of the GLA and the functional bodies by reference to the plan, and the functional bodies will need to be guided by it. The plan also serves in part as statutory notification of credit approvals they have been allocated for the year.
The mayor could, of course, send the draft and final capital spending plan to the London borough councils and the Common Council if he thought that this would serve a particular purpose and—which I stress—if time allowed him to take account of any observations that they made to him. But their interest in the plan is not of the same kind as that of either the assembly or the functional bodies, and there is no case for requiring the mayor to do so in primary legislation.
With regard to Amendment No. 239, on making copies, government Amendment No. 238B fulfils our commitment to ensure that members of the public should be able to obtain copies of the capital spending plan for a reasonable fee. This right will, of course, also apply to the London boroughs and the Common Council.
In the light of what I have said, I invite the noble Lord to withdraw the amendments.
Lord Dixon-Smith: I am grateful to the Minister for her explanation, which I shall study with care. We move these amendments with no other purpose than to help London and its future. It is with that thought in mind that the amendment was moved and, for now, I beg leave to withdraw it.
Amendment, by leave, withdrawn.
[Amendment No. 238 not moved.]
Baroness Hamwee Baroness Hamwee moved Amendment No. 238A:
Page 60, line 33, at end insert—
("(4A) The Assembly shall debate and vote on the capital spending plan.
(4B) If the Assembly votes by a majority of those voting to reject the Mayor's capital spending plan, not later than 56 days thereafter an election shall be held for the office of Mayor and all Assembly members as if such election were an ordinary election and the Mayor and Assembly members so elected shall hold office until the first Thursday in May in the fourth calendar year following that in which the ordinary election preceding such election was held.").
The noble Baroness said: Under the clause, the assembly is to be consulted. On a previous occasion in this Committee, I moved that the words "have regard to" the results of consultation should be included in conjunction with a requirement to consult. I was told, and was glad to receive the assurance, that the words were not necessary. I, wonder whether, in including the provision in Clause 108(3), that the mayor is to consider the comments, that negates that point elsewhere. I hope that the Minister can assure me that simply because consultation is specifically to be followed by consideration and that the consideration is on the face of the Bill, that does not undo the requirement on the part of the mayor to have regard to the results of other consultations and to act reasonably.
However, the major point in the amendment is to give the assembly a greater role and voice in relation to the capital spending plan. One may regard that provision as something of a nuclear option. We have had a number
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of nuclear options already in the course of the Bill. Earlier this evening, I said that it seemed that Members of the Committee regard me as having dreams and the noble Lord, Lord Dixon-Smith, as having fantasies. I accept that that may be something of a nightmare.
The incentive for the assembly not to take a frivolous view of the capital spending plan is contained in the second part of the amendment, which provides that, if it votes to reject the plan, then not only the mayor but also the members of the assembly must submit themselves to the London electors for election.
As we have discussed already, the success of the GLA will be quite closely related to a number of major projects and new approaches to London's problems which will require considerable investment. In our view, the capital spending plan is extremely important to the success of the new authority. That is why this amendment proposes that the assembly should be able to vote on the capital spending plan but, as I say, we are providing an incentive to ensure that it does so in a sensible and constructive manner. I beg to move.
Baroness Miller of Chilthorne Domer: It seems to me that, without the inclusion of this amendment, the assembly is rather emasculated. It will be good that everyone will be able to discuss the state of London annually and to have public question time. However, nothing arouses the interest of people so much as discussions in relation to where the money is to be spent. If the assembly is not able to debate and vote on future spending plans, it will feel undermined from the beginning.
The assembly is to debate strategies; it is able to debate how owls are doing in the biodiversity plan: how ancient monuments are coming along in the culture plan. But, as the Bill is drafted at present, it will not have any say in how the money will be spent. That is regrettable and begs the question: why should it not have a say? What is the point in having an assembly? One of the biggest issues with which it will deal is how to spend the money and where it will be going. If that is controversial, that is a good thing. Hopefully the mayor will have done his consultation well, there will be a lively debate and the spending plan will go through. However, not to allow for that debate and vote will considerably weaken the position of the assembly. I look forward to hearing the Minister's views on why the assembly should not debate this. It seems to me a fundamental part of what their duty should be.
Lord Whitty: There may be some misunderstanding as well as total disagreement with our approach here. In relation to the misunderstanding, I assure the noble Baroness that, where we speak of specific requirements for the mayor to consider comments from the assembly and wider consultation, that applies in this area also. In view of her remarks, we will consider whether this reference is out of step with other provisions on consultation in the Bill. To ensure that it is clear, I will take her point away.
It is obviously important that the assembly has a chance to have its say about the capital spending plan. That is why the mayor will be under a duty to send it in

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draft to the assembly, consider the latter's amendments and have regard to them in making any changes to the draft. But if, at the end of that process, the assembly disagrees with the mayor, the idea of a two-thirds majority being able to precipitate an election on one aspect of the mayor's total stewardship seems to me a little out of kilter. After all, the mayor is responsible for the whole provision of transport for London; the whole of the police authority; the development of the various strategies; the fire agency, and so forth. This is a power for the assembly effectively to sack him and sack itself. That is probably more of a kamikaze tactic than a nuclear deterrent on this one important, but nevertheless single, dimension of the mayor's responsibilities.
I think that this would have an unfortunate effect on the relationship between the assembly and the mayor, even if it was never used. Were it to be used, it would be pretty disastrous for the stability and forward plan for London which the mayor is supposed to deliver. If, for example, the mayor was of a different political complexion or there was within the assembly a fluctuating majority which could reach two-thirds, there would always be the danger of the capital spending plan in any one year being subject to this trigger of an election mid-term or, indeed, in the first year of a mayor's mandate.
That seems to be entirely contrary to what everyone in London wants; that is, a degree of stability, of long-term strategic planning and of clear strategy from the mayor and the executive powers. If it was constantly under threat from such a clause as this, I do not think that would be appropriate. We have had this discussion before on earlier parts of the Bill. I am probably only repeating myself, but I hope that the noble Baroness will not pursue her amendment.
Baroness Hamwee: I am grateful to the Minister for his response to the first part of my comments on the amendment. As to this being out of kilter, we have proposed amendments elsewhere in the Bill with regard to the role of the assembly. The self-destruct option is certainly extreme, but that is because the issue of the capital spending plan is a matter of particular moment.
The Minister says that London wants long-term planning and stability. It will be Londoners who elect members of the assembly, as well as electing the mayor. I believe that above all Londoners will want the right decisions to be taken. The smack of government does not necessarily mean that that government are absolutely right and correct. However, I note the view of the Government, which is not unexpected. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
10.45 p.m.
Lord Whitty Lord Whitty moved Amendment No. 238B:
Page 60, line 34, leave out subsection (5) and insert—
("() A copy of the capital spending plan shall be kept available for the appropriate period by the Mayor for inspection by any person on request free of charge at the principal offices of the Authority at reasonable hours.
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() A copy of the capital spending plan, or any part of it, shall be supplied to any person on request during the appropriate period for such reasonable fee as the Mayor may determine.
() In this section "the appropriate period" in the case of a capital spending plan is the period of six years beginning with the date of publication of that plan pursuant to this section").
The noble Lord said: This amendment was spoken to earlier. I beg to move.
On Question, amendment agreed to.
[Amendment No. 239 not moved.]
Clause 108, as amended, agreed to.
Clauses 109 to 111 agreed to.
Clause 112 [Proper financial administration and chief finance officer]
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 239A:
Leave out Clause 112 and insert the following new Clause—
PROPER FINANCIAL ADMINISTRATION AND CHIEF FINANCE OFFICERS
(" .—(1) The Authority shall—

(a) make arrangements for the proper administration of its financial affairs; and

(b) secure that one of its officers (its "chief finance officer") has responsibility for the administration of those affairs and for the oversight of the financial administration of the functional bodies.

(2) Every functional body shall—

(a) make arrangements for the proper administration of its financial affairs; and

(b) secure that one of its officers (its "chief finance officer") has responsibility for the administration of those affairs.

(3) In subsection (1)(b) and (2)(b) above, the reference to officers includes a reference to employees or members of staff and, in the case of Transport for London and the London Development Agency, includes a reference to members of the relevant Authority.").
The noble Lord said: I rise to move this amendment because it is our opinion that Clause 112 as drafted does not make sufficiently clear the relevant lines of responsibility between the authority and the functional bodies, and the absolute need for the authority's chief finance officer to be a chief finance officer for the whole authority and in control and with oversight of all the finances of the authority, which must include those of the functional bodies.
Our amended Clause 112, in our view, reshuffles parts of existing Clause 112 to make those lines of responsibility and control absolutely clear and not susceptible to any misunderstanding. It is with that in mind that we tabled the new Clause 112 and we hope that the Government feel at the very least that it is worthy of consideration. I beg to move.
Baroness Farrington of Ribbleton: As the noble Lord, Lord Dixon-Smith, said, this amendment is intended to alter the arrangements for proper financial administration for the GLA and the four functional bodies. It would provide for the GLA's chief finance officer to be responsible for overseeing the financial administration of the four functional bodies. Put simply, the functional bodies' chief finance officers would be in the position of reporting to the GLA's chief finance officer. In the event of a disagreement, her or his advice would take precedence over theirs. Such an arrangement

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would be a recipe for confusion and blurred accountability and we cannot agree to it. Perhaps it would help if I were to explain the arrangements for financial administration for which the Bill provides.
The mayor, subject to the assembly's role, will be responsible for setting the budgets of each of the four functional bodies, but will not be accountable for the management of their financial affairs. That responsibility will rest with the bodies and authorities. For that reason, it is essential that the functional bodies, and the GLA itself, each have their own chief finance officer.
In financial management terms, once their budgets have been set, each of the functional bodies will operate independently. Each will be required to make arrangements for the proper administration of its financial affairs, and to appoint a suitably qualified person to oversee those affairs: namely, the chief finance officer. Each of those officers will stand in their own right within the body concerned, carrying out the full functions of their post—in accordance with the provisions of the Local Government Finance Act 1988—and reporting as necessary to the relevant board or authority. The GLA's chief finance officer will report to the mayor.
Each hoard and authority will be responsible for ensuring probity and regularity in the financial management of its own functional body. Each will be expected to have regard to any reports and recommendations made by its chief finance officer and to ensure action is taken where necessary. Those arrangements will provide a clear line of responsibility from each of those chief finance officers to their relevant boards. As each functional body is responsible for its own financial affairs, it would not be appropriate for the GLA's chief finance officer to have a role in the functional bodies' finances. That would blur accountability by depriving each board and authority of a single source of specialist financial advice and appropriate financial oversight.
To reflect the mayor's interest, we have provided that where a chief finance officer makes a report concerning a functional body, he is required to provide a copy for each member of the relevant body, the mayor and the Chair of the assembly. Responsibility for dealing with the report will rest with the board or authority concerned and it cannot transfer that responsibility to the mayor.
The Bill provides for clear arrangements for financial administration. Unfortunately, the noble Lord's amendment would lead to confusion and blurred accountability. I urge him to withdraw it.
Lord Dixon-Smith: Once again the noble Baroness has eloquently produced arguments to sustain the Government's proposals. She said that the mayor would not be responsible for the activities of the functional bodies in detail. The problem is that the mayor will be responsible for the policies that those bodies are obliged to follow and for the budget that they will have to follow. If the mayor has those responsibilities, I hope that he never disagrees with something that a functional body might do. If he does, under the arrangements in the Bill he will have no authority to do anything because the functional bodies will be free to act independently when the financial year has started.
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The noble Baroness may think that my amendment would lead to a certain amount of confusion hut, in practice, the procedures that the Minister enunciated would be equally likely, if there is any divergence of view, to lead to confusion. I will consider carefully the Minister's response but we may return to this matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 112 agreed to.
Clauses 113 and 114 agreed to.
Clauses 115 (Functions of chief finance officer as regards reports)
Lord Dixon-Smith Lord Dixon-Smith moved Amendment 240:
Page 63, line 29, leave out from first ("the") to end of line 33 and insert ("Chairman of Transport for London or, in his absence, the Deputy Chairman of Transport for London"")
The noble Lord said: The purpose of this small amendment is to ensure that where reports are being considered, the finance officer is obliged to consult the chairman or, in his absence, the deputy chairman of the functional body, rather than
"the person who is to be consulted under subsection (3A) above"—
which means that consultation could be dealt with by somebody with rather less authority.
The purpose of the amendment is simply to ensure that where reports under this clause are brought forward they are dealt with at the highest possible level in the functional body. I believe that that would be a proper way of handling the situation. I should add that it seems to me that the amendment has some relevance to the London Development Agency, which was referred to in the previous amendment, but we seem to have missed that one in our trawling through the Bill. No doubt the noble Baroness will be relieved that that is the case. I beg to move.
Baroness Farrington of Ribbleton: The chief finance officer of a relevant authority has a duty to ensure that where the authority has incurred, or might be about to incur, unlawful expenditure, he or she should complete a report and present it to the full authority. Before completing the report, the chief finance officer is, so far as it is practicable to do so, required to consult with the head of paid service and the monitoring officer. This requirement on the chief finance officer to consult with other officers of the authority seeks to ensure that there is agreement among the officers of the authority about the legality of the course of action being taken and that all the relevant facts are clear.
Once a report has been completed and passed to an authority, it must be considered at a meeting of the authority within 21 days of the receipt of such a report. The authority must then consider whether it agrees or disagrees with the report. The auditor must be notified of the meeting and, as soon as possible afterwards, informed of the outcome.
The Board of Transport for London will include executive members. The structure of the body may not follow that adopted generally by local government, and it may not choose to appoint a chief executive. However, it

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is important that it has members or officers specifically designated to fill those posts which have a responsibility for ensuring probity in the running of the body. Provision has been made for the appointment of a member or officer as the chief finance officer, and that officer must be a member of a recognised professional accountancy body. The chief finance officer will carry the full responsibilities attaching to this post in accordance with the provisions of the Local Government Finance Act 1988, including the completion of reports to the body.
While it may not be appropriate for Transport for London to appoint a chief executive or monitoring officer in the same way as a local authority, we nevertheless believe that it should appoint a person, either a member of the board or an officer, to fulfil the role of head of paid service and monitoring officer and with whom the chief finance officer can consult before finalising a report. Accordingly, we have provided that TfL should designate someone to fulfil this role.
Where the chief finance officer does complete a report about the actions of Transport for London, the body must consider it at a full meeting of the board. To require the chairman, and only the chairman (or his deputy), to be consulted before the report is finalised would limit the discretion of TfL to appoint whom it thinks fit to fulfil the consultation role and appointments may change from time to time or from case to case.
I agree that the chairman, or, in his absence, the deputy chairman, will need to be fully informed and be required to consider any report presented by whoever fills the role of the chief finance officer. This need not necessarily be during the preparation of the report. The chairman will accordingly be fully informed in the consideration of the report.
The arrangements that we are proposing will ensure that matters are considered properly and promptly by those with the necessary responsibility for taking action. I do not think that we should seek to limit the discretion of Transport for London to appoint whom it considers is most suitable to undertake these consultation roles. I have answered this amendment in some detail because I am confident that, on reflection, the noble Lord will feel that he may not need to return to the issue.
11 p.m.
Lord Dixon-Smith: I am confident that at this hour of the night I cannot match the eloquence of the noble Baroness's reply and I do not intend to do so. However, I shall study what she has said with great care and then consider what I wish to do about the matter. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 241:
Page 63, line 43, at end insert—
("(4B) In those cases referred to in subsection (4A)(a) and (b) above, the Mayor of London shall publish the report within 7 days of receiving it."").
The noble Lord said: This amendment requires that where someone has made an adverse report that report should be published. There may be some technical difficulties if a report names a particular individual. However, I believe that the facts of such a case could be reported without names. Again this is a matter of probity and openness. I believe that if an adverse report is made to the authority it is in everyone's interest that the main substance of the report is placed in the public arena as soon as it is practical to do so. At present reports are to be considered at a meeting of the assembly within 21 days. The mayor has to respond to any recommendation of that meeting within 14 days of that meeting. That in itself is a considerable delay. The opportunity for spin doctoring to spin out of control—as has been observed on occasions—would be much reduced if the report was placed in the public arena at the earliest possible opportunity. This amendment seeks to give effect to that. I beg to move.
Baroness Farrington of Ribbleton: We fully support the motive behind this amendment. We believe it is important that the GLA and functional bodies are publicly accountable for their actions and that all relevant reports are made publicly available.
Where a chief finance officer completes a report under the provisions of Section 114 of the Local Government Finance Act 1988, the authority or functional body must consider it at a meeting within a period of 21 days, as the noble Lord said. This meeting must be convened in accordance with Part VA of the Local Government Act 1972, which requires that details of the agenda and the reports themselves must be made available three days before the meeting.
Specific provision has been made for Transport for London to be subject to the provisions of Part VA of the Local Government Act 1972. It will therefore have to hold a public meeting within 21 days and make the chief finance officer's report available beforehand.
The responsibility for publication rests, as I think it rightly should, with the authority and each functional body. Therefore we believe the amendment to be unnecessary and hope that the noble Lord will feel able to withdraw it.
Lord Dixon-Smith: I shall study the words of the noble Baroness with considerable pleasure and consider the matter in the light of what she has said. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 115 agreed to.
Clause 116 [Duties of Authority or functional body as regards reports]
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 242:
Page 65, line 27, at end insert—
("(7A) Where any recommendation carries the support of a simple majority of members of the Assembly present and voting on that recommendation at a meeting under subsection (3) above, the Mayor shall comply with that recommendation when making any decision under subsection (6) above.").
The noble Lord said: I am amazed that I am finding my way through these amendments without getting into a greater muddle than I have on past occasions! Amendment No. 242 is designed to ensure that when a financial report on improper activity is submitted any action that is taken is not exclusively within the mayor's discretion. The Bill as currently drafted makes the Greater London Authority unique, in that it is the only local authority in the United Kingdom in which the mayor and not the entire authority decides what action should be taken when financial irregularities are discovered. This is a departure from the spirit and wording of the Local Government Finance Act 1988. I wonder whether it is a justifiable departure.
The assembly will have no powers to oblige the mayor to do anything in such circumstances, whereas an existing local authority can compel council leaders to take a particular course of action. The Bill merely states that the mayor has to take account of the assembly's views when coming to his decision. Once again, this is reducing the assembly to the position of a powerless talking shop.
We have heard evidence that that is what the Government think it should be. Despite that, we think it should be rather mote. We do not want the assembly to be incapable of bringing real scrutiny and supervision to bear on either the mayor's or the functional bodies' financial activities.
The mayor might decide to do nothing about one of those reports. That is a technical term for wasting the public's money. It could be through incompetence; it could be through something worse; but whatever the cause, it is not in the interests of the people of London. If the mayor takes a decision to do nothing, that is the end of the matter—and that cannot be right.
The amendment restores to the assembly the accountability which the Government have effectively left out of the legislation and puts the GLA on to the same basis as every other local authority in the country. That is essential given the size and scope of its budget. If this amendment is accepted, it will demonstrate that the assembly is a truly representative body and enable it to have some check on a small aspect of the mayor's activities.
I can anticipate what the noble Baroness may say in response to the amendment. I almost feel like inviting her to say that she will give me the expected reply, cut short the proceedings by saving her the necessity of giving it, and saying that I shall consider it in absentia. I am confident that I know what her answer will be. I beg to move.
Baroness Miller of Chilthorne Domer: For the same reasons that I mentioned when we were discussing my noble friend's amendment about accountability to the assembly for the capital spending plan, I support the amendment of the noble Lord, Lord Dixon-Smith. The assembly is the right body to hold the mayor to account.
Baroness Farrington of Ribbleton: The amendment would require the mayor to comply with any recommendations supported by a majority of the
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assembly in respect of any report published by the chief finance officer of the GLA and in deciding what action to take in consequence of the report. The amendment would, in effect, give the assembly the role of deciding what action to take following a report by the GLA's chief finance officer. We have rightly returned to the respective roles of the mayor and the assembly many times. It is plain that noble Lords opposite simply want a different sort of city-wide governance from the one proposed and the one endorsed by Londoners in the referendum.
Earlier in the debate the noble Baroness, Lady Young—who is not in her place—appeared surprised that we should produce a proposal for a separation of powers. It is common in the United States, in Canada, for example, in Toronto, and in Europe, for example, in Rome and in Barcelona, to have systems which involve this sort of separation of powers. I do not want to go over all those arguments again. I would, however, emphasise that under the model for London set out in the Bill the mayor is responsible for the strategic direction of the GLA and the functional bodies. The mayor must consider the report. If nothing is done, this could lead to the CFO producing another report at a later date. Therefore the mayor must consider the report and decide what action, if any, to take in respect of it.
Under our proposals, provision has been made specifically to require the mayor to attend the meeting at which the assembly considers the report. Furthermore, the mayor must have regard to any views or any recommendations of the assembly at that meeting. The assembly will therefore have influence in the matter but ultimately the mayor must retain the final responsibility for deciding how to respond to the report. In the light of this reply, I feel I should ask the noble Lord, Lord Dixon-Smith, to withdraw the amendment and to read what I have said at leisure.
Lord Dixon-Smith: I am fascinated that the noble Baroness did not accept my invitation to curtail her eloquence and say, "Yes, the reply is what you expected it to be." Instead she has tempted me, just marginally, by giving a longer reply. Without wishing to detain the Committee for more than a few moments, I would remind your Lordships that in a Question to the noble and learned Lord the Lord Chancellor last Thursday the subject of the separation of powers was under discussion. He had some views on that and on the way we do things in this country that were slightly at variance with what is in this Bill. While there are some aspects of the American system that are good, not the least of the problems we face with establishing an authority such as the GLA is that we are borrowing some parts of the American system, but only some. We are not borrowing all of them. The difficulty arises when you pick and choose between parts of a system to which the community is accustomed and try to translate them to somewhere else, to a community that is not accustomed to them.

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I shall study the noble Baroness's remarks with care. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 116 agreed to.
Clauses 117 and 118 agreed to.
Schedule 7 [Amendments of the Audit Commission Act 1998]
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No. 243:
Page 205, line 22, at end insert ("; and
() the Assembly, the London borough councils, the Common Council and such other bodies as appear to him to be appropriate").
The noble Lord said: This amendment deals with a situation in Schedule 7 where the mayor is requesting the Audit Commission to undertake a study of one of the functional bodies. It is interesting that, before making a request under subsection (1) to make such a study,
"the Mayor of London shall consult … the functional body concerned"—
that is a sine qua non; it has to happen—
"and … such associations of employees as appear to him to be appropriate".
I have some difficulty in understanding why associations of employees should be the only people who are consulted before the mayor invites the Audit Commission to make a particular study. It seems to me that there may well be many groups, possibly user groups, people who are affected directly by the particular service, who would have a view. They may also have a perspective on the study which should be taken into account by the mayor before making a request for a particular study.
It would be possible—I put it no higher than that—to argue that that wording was included as a sop to the trade unions. I do not think that that is what should be intended in a Bill of this nature. We should play these matters absolutely straight. We have widened out the list of consultees in this situation. That is reasonable. Although the proposal may not be totally effective to undertake the purposes that I have enunciated, I beg to move.
11.15 p.m.
Lord Whitty: Without wishing to engage in a degree of controversy at this stage, I am always slightly resentful when a sensible requirement to consult the trade unions is regarded as a sop. In regard to Audit Commission reports, it is sensible to engage employees in this matter. The noble Lord suggests that certain other people should, by statute, be consulted as well. I do not see a need to place a statutory duty on the mayor to consult bodies that are already included in the general list of bodies which the mayor has to consider whether it is appropriate to consult in this and other contexts. It is not necessarily right that the mayor should be required to consult the London boroughs and the Common Council in this particular context.
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However, I accept that it would be sensible to consult the assembly before requesting a study. It may therefore be that some greater clarification and a possible extension of the areas of required consultation are required. Having started on an antagonistic note, I shall give the noble Lord some comfort that we shall consider his amendment and consider whether in this context any amendments are required at a later stage.
Lord Dixon-Smith: I am grateful to the Minister for the conciliation at the end of his remarks. I accept, almost with equal pleasure since this is the last of my amendments that we shall debate for some time, the smack over the head that he has duly administered. I shall study the Minister's remarks with care and I look forward to his response. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 7 agreed to.
Clauses 119 to 121 agreed to.
Lord Whitty Lord Whitty moved Amendment No. 243A:
After Clause 121, insert the following new clause—
NO DISCRETIONARY RATE RELIEF FOR FUNCTIONAL BODIES
(" .—(1) Section 47 of the Local Government Finance Act 1988 (discretionary relief) shall be amended as follows.
(2) In subsection (9) (which provides that a hereditament is an excepted hereditament, and accordingly not eligible for relief, if all or part of it is occupied by any body there mentioned) at the end of paragraph (b) (which relates to precepting authorities) there shall be added "; or
(c) a functional body, within the meaning of the Greater London Authority Act 1999".
The noble Lord said: This new clause amends Section 47 of the Local Government Act to ensure that properties occupied by the functional bodies cannot be granted discretionary rate relief by billing authorities.
The situation at present is that Clause 47 will allow billing authorities to grant rate relief to organisations such as charities and so on. That provision will explicitly exclude the precepting authorities. But it needs also to exclude the functional bodies. The GLA itself therefore already falls within the scope of the exception, but the functional authorities do not. That needs clarification. I hope the Committee will accept the amendment. I beg to move.
On Question, amendment agreed to.
Lord Whitty Lord Whitty moved Amendment No. 243B:
After Clause 121, insert the following new clause—
LOCAL LOANS
(" .—(1) In Schedule 4 to the National Loans Act 1968 (which specifies the bodies to which local loans may be made) in paragraph 1, in paragraph (a) of the definition of "local authority", the word "and" immediately preceding sub-paragraph (iii) shall be omitted and after that sub-paragraph there shall be added "; and
(iv) a functional body, within the meaning of the Greater London Authority Act 1999".
(2) In section 2 of the Public Works Loans Act 1965 (new form of local loan and automatic charge for securing it) in sub-paragraph (1) (which includes a definition of "relevant authority") in paragraph (a), the word "and" immediately preceding sub-paragraph (iii) shall be omitted and after that sub-paragraph there shall be added ";and
(iv) a functional body, within the meaning of the Greater London Authority Act 1999".").
The noble Lord said: In moving Amendment No. 243B. I should like to speak also to Amendments Nos. 455F to 455H. A range of bodies, including local authorities, whose capital finances are regulated by the Local Government Acts, borrow from the Public Works Loans Commissioners. The GLA and the functional bodies will be among those local authorities. These amendments are necessary to give the commissioners a complementary power to lend money to the functional authorities. This means that amendments need to be made to the National Loans Act 1968 and the Public Works Loans Act 1965, which refer back to the Public Works Loans Act 1875. Such loans are secured by a charge on the revenues of the authority concerned. The GLA is already a local authority for this purpose, but the amendment is needed to make a functional body a local authority for these purposes. The other amendments are consequential repeals in parallel with the words omitted by these amendments. I beg to move.
On Question, amendment agreed to.
Clause 122 agreed to.
Clause 123 [General transport duty]
Baroness Thomas of Walliswood Baroness Thomas of Walliswood moved Amendment No. 243C:
Page 67, line 18, after ("within") insert ("and across").
The noble Baroness said: The Committee now moves into the exciting world of transport, where it may remain for some time in logjams of various kinds. This is a very simple amendment. In addition to the mayor having to consider travel to, from and within London, he or she should also consider travel across London. I am aware that in another place the Minister argued that journeys in and out of and within London subsumed journeys across London so that the amendment was unnecessary. However, there are some very important routes involved in northern, southern, eastern and western journeys, which is what is meant by "across London" as opposed to the in and out radial routes with which we are all very familiar. That is the pattern of travel in and out of London. Those routes are particularly important, for example for access to and from the airports. They are also controversial because they will require additional space on existing lines or those that are about to be built or improved. We believe that the transport duty should cover a range of new transport possibilities as well as existing ones. I beg to move.
Baroness Hamwee: I support my noble friend in moving this amendment. I should like to ask another question relating to Clause 123(1), which requires the mayor to
"develop and implement policies for the promotion and encouragement of safe, integrated, efficient and economic transport facilities and services".
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Members of the Committee will be familiar with the terminology "efficient and economic" in the context of requirements on local authorities as to the provision of services. They are repeated in the Local Government Bill which is currently going through the House. Those terms are normally coupled—although I am not sure that it is correct to use that word when there are three of them—with "effective". It seems to me it is a requirement that the transport facilities and services to, from, within and across London should be effective—for example, trains should not stop in tube tunnels for half an hour at a time and so on. I use that as one example. I hope that the Minister can explain the adjectives in answering my noble friend's amendment.
As this is the first amendment on this part of the Bill, perhaps I may say how sorry I am—it is understandable that the Government want to get on with this long and complicated Bill—that they choose to start the debate on such a major part so late at night. Major issues are raised in the first chapter on transport. I am sure that the Government will realise that there are some gaps on the Benches, and that voices they had expected to contribute to this part of the Bill will not be heard. Points which might appropriately have been made at this point in the Bill will be made later. That may not be very convenient. Alternatively, they will be made on Report. It is the Government's decision. But I think that these issues deserve rather more prime time.
Lord Brabazon of Tara: I had not intended to speak to this amendment, but I endorse entirely what the noble Baroness says. We start this section on transport at a late hour. I think that it is regrettable that we start so late. Nevertheless, the agreement has been reached that we should go a little way into it.
The Government have tabled an enormous number of amendments to this part of the Bill. They gave notice that they were going to do so, and have been helpful in writing to us explaining the purpose of the amendments. Nevertheless, large sections of the Bill are being almost completely rewritten in Committee. That will not help our considerations. It will mean that we have to do more work at the next stage. I give the Government warning that it will require more time at Report stage as a consequence.
Baroness Gardner of Parkes: I, too, am concerned that we are starting this section at this time of the evening, although I am quite bright and raring to go as I said nothing earlier. However, the Minister must be getting tired.
As regards the amendment, it is possible that "within" includes "across". If so, that is satisfactory. But one requires a comprehensive responsibility for the whole of London. Passengers have been inconvenienced with the chopped up, short bus routes which now exist. Many women, in particular if they have small children or heavy shopping, would rather wait longer for a bus that takes them their entire journey than wait in the rain and

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cold for a connection. Consideration should be given to improving the connection of transport throughout London.
Lord Berkeley: I had not intended to speak to this amendment. However, following the comments of the noble Lord, Lord Brabazon, and the noble Baroness, Lady Hamwee, when I first read the Bill it struck me also that there were few government amendments. Now that we have them, I welcome them as contributing to improving the Bill. I believe that the amendments have been tabled after listening to comments made by Members of all parties, and I welcome them. I do not necessarily agree with them all, but they contribute to the Bill's improvement. I look forward to some interesting, short and sweet debates on them.
11.30 p.m.
Lord Whitty: I thank my noble friend for those remarks. We consider that the amendments we tabled to this part of the Bill are appropriate and to a large extent address technical deficiencies or concerns expressed in another place and here informally. This is not a case of rewriting the Bill, as the noble Lord, Lord Brabazon, suggested. It is a case of turning the Bill into an effective document which meets a number of concerns.
As regards starting the subject at this hour of the night, as we proceed with the Bill it may be regarded as somewhat early. We must complete our consideration of the remaining nine parts; we have hitherto covered three parts.
As regards the amendment, I agree with the noble Baroness, Lady Gardner, that "to", "from" and "within" cover "across". I also agree with her about the problems of connection which must be addressed by the mayor of London. Most of those are "within" in the normal sense. As regards adding "across", I do not want to be too pedantic, but if one is travelling from Manchester to Brighton one will travel "to", "within" and "from" in the course of the journey. To add "across" merely adds an additional word. If one travels across London, entering and emerging in the same journey, that is covered by "to", "from" and "within".
Again, I do not want to be too pedantic, but I believe that the noble Baroness, Lady Hamwee, referred to the adjective when she meant the adverb. I believe that the adverbs meet the point and additional adverbs will not necessarily improve matters. I hope that, with that understanding, the noble Baroness will withdraw the amendment.
Baroness Thomas of Walliswood: I believe that my noble friend was referring to the adjectives "safe" and "efficient". Those are adjectives. I am sure that her grammar is impeccable. She is, after all, a lawyer and she must know how her language operates. She cannot afford to make mistakes of that kind.
I hear what the Minister says in reply. I am sorry that he will not add "across", which seems to me to give a slightly different dimension. However, at this point I shall not press the amendment. I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Baroness Thomas of Walliswood Baroness Thomas of Walliswood moved Amendment No. 243D:
Page 67, line 18, at end insert ("with the minimum adverse environmental impact").
The noble Baroness said: This is a simple amendment which provides that whatever is done in the transport strategy by the council authority should have,
"minimum adverse environmental impact".
That requires an ability, a wish and an intention to balance "goods" and "bads" against each other. For example, one can reduce traffic speed by rumble strips, but they will not have a minimum adverse environmental impact. On the contrary, in built-up areas they have a bad environmental impact.
We propose an additional encouragement to the mayor to ensure that she always bears in mind the balance which must be struck between benefits in this area. I beg to move.
Lord Whitty: I understand the concern which lies behind the amendment. I appreciate that not only the noble Baroness but others are concerned that it should be explicit. However, we argue that the Bill already provides for a regard to environmental duties within the transport strategy. The reason it is not explicit at every point is that in the interests of keeping this extremely large Bill within reasonable bounds and ensuring integration between environmental and transport issues we have covered that only in Clause 33.
That clause requires the mayor to do a number of things in drawing up or revising the transport strategy. First, he or she must have regard to the principal purposes of the authority, which include promoting the improvement of the environment in Greater London. Secondly, he or she must pay regard to the effects on health and the achievement of sustainable development. Thirdly, the mayor must ensure that all his or her strategies are consistent. This means making sure that the transport strategy and the various environmental strategies—on air quality, municipal waste management, bio-diversity and noise—all pull in the same direction. Fourthly, the mayor must ensure that the strategy is consistent with national policies and with any international obligations of which he or she has been notified. This means, therefore, that the mayor must take account of the national integrated transport strategy and national air quality and waste strategies in preparing his or her transport strategy for London.
The mayoral strategies will, of course, be the key vehicle through which the mayor will work. That is why Clause 33 expressly made clear the need for integration between transport and the environment. Therefore, we do not regard a repetition in this clause, which the amendment would provide, as necessary.
I hope that the noble Baronesses and those outside the Chamber who are concerned with this issue will accept those assurances and accept that Clause 33 meets the point.
Baroness Hamwee: As the Minister said, there are many outside this Chamber who have expressed concern about this issue. While I accept the intellectual argument

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that reading the Bill as a whole takes one back to the earlier clauses and the various matters raised there, it is a pity that the Government, who have not been short on words in the Bill, do not put down the important marker at the beginning of Part IV that those who are concerned with transport should look back and remind themselves of the environmental issues and duties.
I accept that the earlier provisions of the Bill will apply, but it would have been welcomed by those who wish to see improved transport if it had specifically been provided that regard should be had to environmental considerations, and a marker had been put down at the start of the biggest part of the Bill.
Baroness Thomas of Walliswood: My noble friend has made the point well that we, and others, are trying to put important considerations up front so that they do not have to be constantly repeated in this part of the Bill. That is the object of some of the amendments. I do not know what people outside the Chamber will say about this, but for now I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Thomas of Walliswood Baroness Thomas of Walliswood moved Amendment No. 243E:
Page 67, line 18, at end insert—
("() These policies shall achieve road traffic reduction targets set by the Mayor pursuant to this Part.
() The Mayor shall set road traffic targets for Greater London provided that any such targets shall not be less than those set by the London Planning Advisory Committee.").
The noble Baroness said: Here we come to a very different set of amendments. With Amendment No. 243E we are taking Amendment No. 245, in the name of the noble Lord, Lord Graham of Edmonton. He is not in his place, but, with the leave of the Committee, I propose to make some comments about that amendment.
In our amendment we suggest that the mayor should include in his transport policies traffic reduction targets. The targets should be at least as ambitious as the current targets under the LPAC. The amendment in the name of the noble Lord, Lord Graham of Edmonton, would add a requirement for the transport strategy to contain progressive targets to reduce traffic volume. The two obviously go hand in hand.
When this was debated in another place, the response was that the mayor's policies had to be consistent with national policies and that because of government policy on road traffic reduction, it was not necessary. The Government's policy on road traffic reduction is that local authorities shall have road traffic reduction targets. The Government have not set a target for road traffic reduction. Therefore, it is not satisfactory to say that the matter is completely dealt with by national policy.
The question of the necessity for targets has been applied. The advantage is that, first, it gives the policy a direction. Secondly, it aids in the selection of the best tools to implement the policy. If there is a target which says that X must be achieved by Y, it is possible to assess the methods to be adopted as to their relative
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effectiveness in achieving that objective. Thirdly, it provides a method by which to test and measure progress.
Elsewhere in the early part of the transport section, there is a great deal about what is to happen if the local borough implementation plans are not successful. But unless targets are set to measure the success, it is difficult to know the level of success. That is why those targets are set.
I have had some experience of that. We set targets in the Surrey transport plan which is now many years old. It was one of the first in the country. I shall not say that the plan was brilliantly successful because we were experimenting in a world in which it was difficult to carry out such experiments. But certainly, the targets assisted us in measuring what we had achieved. I beg to move.
Lord Whitty: The requirement to have targets for reductions is not really the issue here. The issue is whether the amendments are appropriate to that when we have a national policy, with which the mayor's strategy must be consistent, which will lead us to road traffic targets.
We indicated in the White Paper that we are considering how national targets can help in dealing with congestion and pollution. We are seeking advice from the new Commission for Integrated Transport on this matter. As the noble Baroness said, it is already our policy that local traffic authorities are required to consider traffic reduction in accordance with local circumstances and therefore to set local targets. We have tabled Amendment No. 297G which relates to the traffic chapter of the transport part of the Bill. Our proposed new clause, which will amend the Road Traffic Reduction Act 1997, will explicitly link the work of the boroughs formally to the mayor's transport strategy. Taken with the Bill's existing provisions, that gives a clear message on road traffic reduction.
In view of the requirement on the mayor with regard to the policy of the GLA and TfL in this area and the amendment which we have tabled, it is not appropriate that, on the face of the Bill, we should agree to targets which relate to those set by the London Planning Advisory Committee, which will cease to exist when the GLA is established. Nor is it necessarily appropriate to agree to "progressive targets", as specified in the amendment in the name of my noble friend Lord Graham of Edmonton, because they may apply differently in different parts of London, as the mayor comes to develop his strategy with the London boroughs.
It is therefore important that the mayor and the London boroughs, in the light of developing national policy, are allowed to develop their own targets, rather than have them pre-set, as these amendments would provide. I would therefore ask the noble Baroness to withdraw her amendment.
Baroness Thomas of Walliswood: I thank the Minister for that answer. I shall read it with care and I

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shall also refer to Amendment No. 297G, which I must confess I have not yet mastered. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Brabazon of Tara Lord Brabazon of Tara moved Amendment No. 244:
Page 67, line 23, after ("pedestrians") insert ("and cyclists").
The noble Lord said: Amendment No. 244 stands in my name and that of my noble friends Lady Miller and Lord Dixon-Smith. It is a simple amendment. Clause 123(3) makes specific provision for transport facilities and services to include pedestrians but it does not include cyclists, and this amendment does. The expression "transport facilities and services" would not normally be held to include cyclists who, like pedestrians, are self-transporting. Although specific provision is rightly made that such facilities and services include facilities and services for pedestrians, no mention is made of facilities and services for cyclists.
Cycling is a means of transport that is environmentally friendly and healthy—certainly to the cyclists if not always to pedestrians—and in inner London it is reasonably fast. However, despite encouragement which successive governments have tried to give to cycling, it has declined in recent years and deserves to be further encouraged. Provision of facilities and services for cyclists can play a part in doing so. It should be made clear in the context of the general transport duty to which this clause refers that such facilities and services must be included.
The noble Lord may be surprised to see that I am moving the amendment. I have not always been a friend of the cyclist, certainly in London. I was delighted to read in the newspaper only yesterday that the Government intend to increase penalties for cyclists who ride on the pavement. That is an extremely good move. I hope that the Minister will be able to confirm it.
Any facilities and services that are made to improve the lot of cyclists would, I hope, encourage them at the same time not to ride on pavements and ignore pedestrian crossings, traffic lights, one-way streets and various other rules which motorists have to obey.
Amendment No. 245A, in the name of the noble Baronesses on the Liberal Benches, is grouped with this amendment. It is right that that should be so. I cannot quite see the logic of including Amendment No. 246A in the group. That seems to relate to consultation, which is a slightly different issue. I beg to move.
Baroness Thomas of Walliswood: I must confess to a certain envy that the noble Lord, Lord Brabazon of Tara, who, as he says, has not been noted in your Lordships' House as a promoter and defender of cycling should have nevertheless got in the word "cyclists" before I did. They certainly appear in the list of amendments we wish to discuss. However, the noble Lord has made an excellent introduction to the amendment.
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What is striking about cycling in central London is how incredibly dangerous it is for everyone. It is dangerous for pedestrians, as we have often discussed in your Lordships' House. It is dangerous for cyclists; it is even dangerous for motorists. The reason is that cyclists are mixed up with motorists in a way which makes it virtually impossible for the two types of transport to avoid coming literally into collision with each other.
I do not know how many Members of the Committee have driven in any form of transport around Trafalgar Square at, let us say, half past eight in the morning. I am absolutely astounded that cyclists are not killed every day in that very dense stream of traffic. Certainly my taxi driver was furious the other day because the previous day he had had the whole of one side of his taxi scraped by part of a cycle. That was extremely expensive for him and, as he said, he could not chase the cyclist.
Everybody is angry with everybody else because there is no provision for cyclists. I remind the Committee that we are talking of "cyclists", not "bicycling" or "cycling"; it is the cyclist or vulnerable road user we ought to be considering. We can see how different the situation has been for pedestrians. For over 100 years, they have had footways to walk on; in more recent years, crossings and lights have been provided. Those facilities are simply not available for cyclists. That is one of the reasons why everybody on the roads in London is at loggerheads and why cyclists turn to pavements as being a freer and safer place to travel, and therefore come up against pedestrians.
This is an important element to include in the Bill at an early stage. Two amendments are grouped with Amendment No. 244. As the noble Lord, Lord Brabazon of Tara, said, they require the mayor to obey the national cycling strategy and to consult cycling groups. The two elements are not the same, but if we are interested in producing good policies for cyclists, it is natural to consult cycling groups. I am happy to leave the amendments grouped as they are. I support Amendment No. 244.
Viscount Craigavon: I support all three amendments in my own way. At Second Reading, I said that I hoped that we could persuade the Government that it was not unreasonable to declare on the face of the Bill slightly more sympathy for cycling and cyclists. I also said that the cycling fraternity of this House might assist me in doing that. But, as was explained earlier, I hope the Committee understands that at this time of night it is not unreasonable to let people lead a more peaceful life. We hope to have more cyclists here at a later stage; quite a few are Members of your Lordships' House.
For those reasons I did not table amendments of my own, but I support the amendments grouped before us. Because of the lateness of the hour, I shall not launch off on a general encomium on the benefits of cycling. I support what was said by the noble Baroness, Lady Thomas, and was pleasantly surprised to have the noble Lord, Lord Brabazon, praising the merits and benefits of cycling. I hope that he continues to do so. I assume

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also that the Minister, the noble Lord, Lord Whitty, is basically sympathetic to cycling. I hope that we can take that as read in regard to cycling amendments.
Amendment No. 244 was spoken to by the noble Lord, Lord Brabazon. It is an important amendment. I had the benefit of reading the mini-debate on cycling in the other place and this issue was not resolved. It is a serious issue; it is almost a legal or technical issue. Whether or not to include it in the Bill is almost not a matter of choice. Reading the speech of the Minister in the other place, Miss Glenda Jackson, I noted that she twice used the phrase, "I am advised"; first, that the amendment was unnecessary; and, secondly, that the phrase "transport facilities and services" legally includes cyclists. But when she was questioned by various Members of the Committee, she concluded by saying that she would go away and investigate and in some way report back the result of her inquiries.
I have a copy of the letter that the Minister wrote to the person advising the Cyclists Public Affairs Group—and I have the benefit, as do some others, of its invaluable advice on the Bill. The Minister, in that letter, used the same phrase—which did not take the matter any further. When a Minister precedes his or her remarks with the words, "I am advised that", one wonders whether the Minister fully believes what he or she is saying. I hope that the noble Lord, Lord Whitty, will omit that preamble when he responds to the amendment. I hope that he will give a substantive answer. If not, we should try to get to the bottom of the legal position.
I also support the noble Baroness, Lady Thomas, on Amendment No. 245A. It would be desirable to include the national cycling strategy within London separately in this part of the Bill. I wish to ask the Minister a question on a related matter—the London cycle network, which I mentioned on Second Reading. Is the Minister satisfied that the London cycle network is likely to be completed by the target date of 2005 without further encouragement in the Bill?
The London cycle network is a mammoth project and we do not want any slippage. A lot of money has already been spent, and more spending is expected. I would like the Minister's opinion on the subject.
Baroness Hanwee: I am not at all surprised to see amendments referring to cycling and cyclists, given that there is reference to pedestrians in Clause 123(3). Can the Minister explain why it is necessary to refer specifically to pedestrians'? I understand that those who consider the transport needs of Londoners and academics regard walking as a mode of transport.
Most journeys in London are made on foot. Those journeys may be short but, numerically, walking is the most frequent choice. I do not for one moment suggest that facilities and services for pedestrians should be ignored, but I would be glad of clarification as to why it is necessary to make specific reference to pedestrians. We have debated not adding unnecessarily to the Bill
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If one starts on what might be regarded as a list, it is almost inevitable that noble Lords will add to it their genuine concerns.
Lord Whitty: I warmly welcome the slightly unusual support for cyclists. When this Chamber is somewhat fuller, one gets a different impression of the general view. I particularly welcome the conversion of the noble Lord, Lord Brabazon—although he could not finish his remarks without taking a slight sideswipe at cyclists. I accept in part that there is a problem.
The Government have indicated a significant degree of support for cycling as a mode of transport. We have put substantial additional resources into the London cycling network, increasing the figure from £3.5 million to £5.5 million. We presume that the mayor will take on the major responsibility for developing that network and providing facilities for cyclists. 'The balance of allocations by the mayor will be for him or her but the mayor is required to have regard to the national policy on cycling. The purpose of the national cycling strategy is to increase the level of cycling in this country. In passing, I should add that 2 per cent of people cycle to work in this country. The usual comparison cited is that 30 per cent do so in Holland. I believe that the noble Lord, Lord Brabazon, just said that it is a lot flatter in Holland, but it also true to say that in Switzerland 10 per cent of the people travel to work on cycles. In comparison, despite the relative flatness of London, only a very small proportion of people travel to work on cycles.
I cannot understate the Government's commitment to supporting an increase in cycling as a mode of transport, for all sorts of reasons. My honourable friend Glenda Jackson has made her commitment clear in many contexts. Our concern about this amendment is legalistic and linguistic. There is a problem here. We have sought further clarification on the matter and we have been strongly advised that the term "transport facilities and such services" subsumes a reference to cycling. The word "transport" means that you are carried. Pedestrians are not carried. "Transport facilities" does not include pedestrians. Therefore, an explicit reference to pedestrians must be added.
Cycling is already included under the term "transport facilities and services" both here and elsewhere in the Bill and in other legislation. If we were to include a reference to cycling as an additional matter, as distinct from all other modes of transport, it would cast doubt on whether the term "transport facilities- elsewhere in the Bill included cycling. It clearly does include cycling and must do so. Whether or not there are other ways of doing so apart from the commitment that I have reiterated today and which my honourable friend Glenda Jackson has made quite clear in another place—namely, that cycling is expected to be a major part of the mayor's approach to integrated transport in London—it is not appropriate to do that in the form proposed by the amendment. Indeed, if we were to include it here, it could be counter-productive.
That is the advice I have received. I can only inform Members of the Committee of that advice. There may be a natural reaction, which is certainly mine and that

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of my colleagues, to that advice, but it has to be taken into account when drafting Bills. The noble Baroness said earlier that lawyers such as the noble Baroness, Lady Hamwee, have to use such words continuously, but that is our clear legal advice and we are sticking to it. Therefore, I ask the noble Baroness not to pursue this amendment and to accept our reassurance to all concerned with cycling that it is a major priority for the mayor. We would expect the mayor to pursue it in line with the national commitments.
Midnight
Baroness Hamwee: Whatever the legal position, I hope that the Minister will understand that it is quite hard for Members of the Committee to consider that advice. The noble Lord has told us that he has been advised as to what words should or should not be included in the Bill, but he has not explained why he is so advised. It would be helpful to my noble friend and to me—and, indeed, to the rest of the Committee—to know the precise basis of that advice. I do not impugn what the Minister is saying as to the legal requirements, but I hope that he will understand that noble Lords would appreciate some knowledge as to the underlying argument which is the basis for the Minister's response.
Of course, the noble Lord may not be able to put that information into Hansard now. However, I am sure from the comments that have been made from all sides of the Committee that this is an issue which will attract attention at a later stage. Indeed, that may provide the opportunity for placing such points on the record. If that is not practicable, I hope that the Minister will be prepared to write to Members of the Committee setting out the basis of the argument.
Lord Whitty: I am certainly prepared to write to the noble Baroness but the advice is simple; namely, that we have to include pedestrians in the measure because they do not constitute transport, whereas cycling does. To differentiate cycling from other modes of transport would be detrimental to assuming that transport elsewhere in the Bill includes cycling. The letter will be short but I am happy to write to the noble Baroness and to other interested noble Lords.
Baroness Hamwee: I may not have made myself clear. Given the way that we build up law in this country using legislation and case law, I would have expected references to comparable decisions or legislative provisions which would have illustrated the issue. I am sorry to continue to be "picky" at this time of night but this is an important point.
Lord Brabazon of Tara: I remind the Minister that we are discussing my amendment. As the Minister and the noble Baroness, Lady Hamwee, have said, this matter hinges on a legal interpretation. The noble Baroness, Lady Hamwee, made a good suggestion; namely, that we should get some clarification from the Minister between now and the next stage of the Bill which will allow us to decide how to proceed with this issue. As I understand the position, this legal process
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can be taken into account in court. I believe that is what the Minister meant when he discussed this part of the Bill. Perhaps he would like to add that point to his letter.
I would not want the Committee to believe that I had been completely converted, as the Minister appeared to suggest. My point is straightforward; namely, I am in favour in cycling but I am not in favour of a great many cyclists, for the reasons which I gave. However, if this amendment helps make provision for cyclists then it is a good thing. For the moment I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Thomas of Walliswood Baroness Thomas of Walliswood had given notice of her intention to move Amendment No. 244A:
Page 67, line 26, at end insert ("and waste").
The noble Baroness said: We have discussed this amendment at length on a previous occasion. I shall not move the amendment.
[Amendment No. 244A not moved.]
Lord Berkeley Lord Berkeley moved Amendment No. 244B:
Page 67, line 26, at end insert (", and
(c) the needs of all road users, assessed in relation to the efficient movement of people and, in particular, the needs and safety of pedestrians and cyclists").
The noble Lord said: This amendment seeks to amend Clause 123(3)(b). We have discussed this subsection at some length. I am pleased and surprised to hear that the noble Lord, Lord Brabazon, is a convert to cycling. I did not see him on the parliamentary cycle race a couple of weeks ago. Several other colleagues were present, including my noble friend the Minister. However, the noble Lord, Lord Brabazon, must have made a late conversion.
With regard to Clause 123(3)(a) and (b), I get the impression that the transport facilities and services for public transport are covered by paragraph (a), whereas paragraph (b) covers freight, which I of course welcome. However, I felt that something was missing. My amendment seeks to address the question of space allocation on the road. We have heard much—in the White Paper and elsewhere—about encouraging local authorities to consider the needs of all road users. In the discussion on the previous amendment, several Members of the Committee said how important it was to give cyclists road space. One could argue that pedestrians also need such space. However, it appears that many local authority road engineers still measure their success in terms of numbers of road vehicles rather than in terms of numbers of people. I suggest the following wording,
"protecting from congestion the priority categories of traffic including emergency and other essential services, public transport, pedestrians, cyclists, disabled travellers and deliveries".
I wonder whether such a wording might not be more appropriate.
Many things can be done by these engineers. A pedestrian can press the button on traffic lights and the lights go green immediately rather than 30 seconds elapsing, as happens in many locations—certainly in Westminster. We have talked about priority bus and

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cycle lanes—to some extent ad nausea. We have heard of pedestrianisation. The underlying logic is that if there is not enough road space for unrestricted use by everyone, then certain classes of traffic must have priority in order to protect essential commercial, social and strategic interests.
Many techniques are now available for achieving this aim quite cheaply. One can see the logic of according greater priority to a bus carrying 50 or 60 people rather than a car with two or three people in it. The natural reaction of many people—including, I suspect, the noble Lord, Lord Brabaton—will be that if you give one group of people, say those in buses, greater priority, that causes more congestion for other people. Professor Phil Goodwin, of University College London, chairman of the advisory group used in preparing the transport White Paper, carried out research and collected international evidence which showed that although there is more congestion it is not as serious as has been suggested. The reason is that a certain proportion of the displaced traffic disappears from the system. It is not a very large proportion—the estimate is between 10 to 20 per cent in most cases—but it creates quite significant results. It needs courage to restrict certain types of traffic and promote others.
There are many examples one could give. At this time of night, I shall not do so. I give the example of a new idea by the Highways Agency to create a bus lane between Witney and Oxford on the A40. That road was built for three lanes; it was subsequently reduced by white paint to two. The agency wants to build another lane for buses only, which is commendable. But why not turn the road back into three lanes and make one of them a bus lane? That would save probably £10 million of capital costs.
A signal needs to go out to local authority engineers that people must be counted in the allocation of road space rather than traffic. My amendment is a short, not very good, attempt to draft something which I hope can be developed into instructions, guidance and all the other codes of practice which may follow on from it. I beg to move.
Lord Brabazon of Tara: The noble Lord, Lord Berkeley, mentioned my name twice in moving the amendment. I do not propose to respond. He appears to me to have made a speech which bears absolutely no relation whatever to the amendment. It was more applicable to a general transport debate, which we could have at a more suitable hour.
Baroness Gardner of Parkes: I shall not speak at any length because of the time. The noble Lord has included in his amendment the words "in particular"; I could suggest to him places such as Hyde Park, where a cycle track across the bridge has restricted all other traffic to one lane. 'The park is now full of stationary, polluting traffic. There are all sorts of arguments, but I cannot support his amendment.
Baroness Thomas of Walliswood: My name is joined with that of the noble Lord, Lord Berkeley, in the amendment. I regard it as an extremely interesting
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amendment. From the way the noble Lord introduced it, it is clear that he considers it a probing amendment to see whether this important matter can be incorporated into the Bill.
We are not in a situation in London—and never will be—where we can create more road space. We have all the road space we are ever going to have, with very minor amendments to that statement. As a result, if we are to have efficient movement of people through the streets of London we have to have regard to the allocation of road space in the most efficient way as between different uses. That is what the amendment is about. I commend the noble Lord, Lord Berkeley, on having brought it to the attention of this Committee. I very much hope that the Minister in responding will deal with it in the serious way in which it was proposed, because these are ideas which could be extremely fruitful in terms of the mayor's transport strategy.
12.15 p.m.
Baroness Miller of Chilthorne Domer: I agree with my noble friend, but I could not disagree more with the noble Lord, Lord Brabazon of Tara, about the amendment not being relevant. If we were a little younger, we would know that there is yet another group of potential road users who are neither pedestrians nor cyclists. I wonder where roller-bladers fit into the definition. Roller-blading is a growing method of transport and it is not as strange as people may think. You get from A to B more quickly than if you walk, and blades are more transportable than a bicycle. That is the sort of group that I think is addressed by this amendment, which is useful in widening our minds with regard to the groups of people who may be able to use the roads safely if they were not quite so much taken up with motor vehicles.
Lord Whitty: This has been an unexpectedly wide-ranging debate. I do not come suitably briefed on a national strategy for roller-blading, but I recognise that it is a particular form of transport which we have failed completely to register in our integrated transport policy so far. Nevertheless, I take the point
My noble friend Lord Berkeley raised a lot of issues, many of which I have some sympathy with; but the terms of his amendment run up against the same objections as I raised earlier in relation to specifying cyclists as if they were not subsumed by "transport". It also runs up against some of the problems raised by the noble Baroness, Lady Gardner. Whether or not one agrees with her, it is clear that not in all circumstances will one wish to give preference to a particular modality. It must be part of the mayor's broader decisions on a strategic transport policy not to have the word "particularly" written into the Bill in one context when clearly in other contexts it may give some priority to particular modes and not to others. We have therefore couched the clause in a non-modal form so as to give the mayor responsibility for considering an integrated approach. I appreciate some of the points raised in our

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discussion but I do not think that the drafting of this amendment is helpful. I therefore hope that my noble friend may feel able to withdraw it.
Baroness Thomas of Walliswood: I am more and more regretting this negative and legalistic attitude to the suggestions that have been made. This whole series of amendments seeks an inclusive approach to a transport policy up-front, so that we do not have to keep coming back over and over again to a series of arguments about whether a certain set of road-users should be mentioned in this or another context. There may be deficiencies in the drafting of the amendment, but it is an important one and, in my view, deserving of a more serious answer.
Lord Berkeley: I am very grateful to my noble friend for his comments. This was a probing amendment, as has been pointed out. I shall read very carefully what he said and perhaps revisit the amendment in a different form at the next stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 123 agreed to.
Clause 124 [The Mayor's transport strategy]:
[Amendments Nos. 245 and 245A not moved.]
Lord Berkeley Lord Berkeley moved Amendment No. 245B:
Page 67, line 36, at end insert—
("() In preparing the transport strategy, the Mayor shall take into consideration—

(a) the government's policy for integrated transport;

(b) the needs of those who do not have access to a motor vehicle;

(c) the availability of strategic routes, water, rail and road; and

(d) the needs of commerce and environmental protection.

() In preparing the transport strategy, the mayor shall consult—

(a) the Strategic Rail Authority;

(b) London borough councils;

(c) local authorities covering areas within the responsibility of Transport for London;

(d) representatives of users of transport, including train, bus. underground, cyclists, pedestrians, as well as road, rail and air freight;

(e) any other person or body whom the Mayor considers it appropriate to consult.").

The noble Lord said: I shall be brief. This is entirely a probing amendment. It seeks to ensure a nice, long list of those who should be consulted in preparing the transport strategy. I felt initially that there was a great deal of consultation at the next level down, but not much in regard to a particular transport strategy.
The whole business of consultation was discussed on an earlier Committee day. It is important that the mayor consults with those listed. However, I expect that I shall be told that it is not necessary to put this list on the face of the Bill. I beg to move.
Baroness Thomas of Walliswood: It is very late. I shall do no more than register my support for the amendment.
Baroness Gardner of Parkes: We had amendments very similar to this in regard to the national health Bill,
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where everyone set out pretty well everything. No matter what is set out, someone will be left out. Therefore, it is far better not to have such a list.
Baroness Farrington of Ribbleton: I hope that I can convince my noble friend Lord Berkeley and the noble Baroness, Lady Thomas of Walliswood, that the amendment is unnecessary.
Looking first at the matters which it is suggested the mayor should take into consideration, the transport strategy will be subject to Clauses 33 to 36 of the Bill. Those clauses lay down the process by which the mayor's strategies will have to be prepared. He or she will have to ensure that all strategies are consistent. That means that the mayor will need to integrate transport policies with environmental, economic development and planning policies.
The mayor will also need to ensure that the transport strategy is consistent with transport policy; in other words, with the Government's policy for integrated transport. He or she will need to have regard to how the strategy furthers the principal purposes of the authority, one of which is promoting social development in Greater London. Under Clause 124, the strategy must also include proposals for accessible transport for people with mobility problems.
I hope that the noble Lord and the noble Baroness can therefore agree that the Bill as drafted will require the mayor in drawing up the strategy to take into account the matters listed in this amendment.
The matter of consultation occupied us for some time in our earlier consideration of the Bill. Under Clause 34, in preparing a strategy, the mayor must consult each London borough council and any other body that he or she considers appropriate. In deciding which other bodies are appropriate, the mayor must consider the list of bodies in Clause 27. That list includes voluntary bodies, and bodies which represent businesses.
The noble Baroness, Lady Gardner of Parkes, indicated the difficulty in drawing up lists. This list is not intended to be exclusive. It is simply impractical to list every single body which the mayor should consider consulting. The fact that the noble Lord has included on his list a body which does not yet exist—the strategic rail authority—shows the difficulty of the task facing anyone seeking to do so.
The provisions in the Bill as it stands mean that, where the mayor fails to give proper consideration as to whom he or she should consult, or fails to consult bodies representing groups with legitimate interests which would be affected, he or she could be challenged by the interested parties, the assembly or, ultimately, the courts. I hope that, with that comprehensive reassurance, my noble friend will feel able to withdraw the amendment.
Baroness Hamwee: Before the noble Lord responds, he is entirely right in hoping that we shall see a strategic rail authority before too long. The Government have, after all, tabled amendments, and indeed have included provisions in the Bill, which anticipate legislation that is not yet in effect. So the noble Lord is not entirely out

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of kilter—a term that seems to have come into favour this evening—in proposing a body that does not yet exist.
Baroness Farrington of Ribbleton: I did not imply in any way that that body was not important or that it would not come into being. The thought that crossed my mind was how many other bodies might come into being in future which noble Lords would consider appropriate to add to the list.
Lord Berkeley: I am grateful to my noble friend and the noble Baroness, Lady Hamwee, for her contribution. This is a probing amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 124 agreed to.
Clause 125 [Directions by the Secretary of State]:
Baroness Ham wee Baroness Ham wee moved Amendment No. 245C:
Page 68, line 5, leave out ("direct") and insert ("request").
The noble Bareness said: In moving Amendment No. 245C, I should like to speak also to Amendments Nos. 245D to 245F. Grouped with these amendments is Amendment No. 246 in the name of the noble Lord, Lord Brabazon of Tara, and his noble friends. Clause 125 provides for further significant powers of direction on the part of the Secretary of State. They provide another pie out of which the Secretary of State is clearly not prepared to keep his finger.
The clause provides that if the Secretary of State considers that the transport strategy is inconsistent with national policies, and that the inconsistency is detrimental to an area outside London, he can direct the mayor to revise it. Why are these provisions necessary? With regard to national policies, Clause 33 provides that regard must be had to them. Conversely, why is that reference necessary in Clause 33 if we come upon it in the present context? Is it really appropriate to provide for directions on the part of the Secretary of State? The mayor may well have regard to national policies but have very good reasons for doing something slightly different in London.
As to detriment to an area outside London, I believe that it is up to the mayor to negotiate with such an area. I do not believe that counties are so directly restricted from doing things that are detrimental to their neighbours, including London. Perhaps the Minister can confirm that. I do not suggest that they should set out to do things that are detrimental to their neighbours; I simply inquire whether they are subject to a legislative prohibition in that context.
In our view, the structure that the Government create under this Bill will increase the risk of conflict. The authority will always be in the shadow of nanny who is ready to sort things out. The Secretary of State is apparently not prepared to nurture self-reliance on the part of the mayor and assembly and leave them to grow up a bit and understand how to foster good relations.
We agree with the Conservatives. By indicating their opposition to the Question that the clause shall stand part of the Bill, they indicate that the Bill would be
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improved without the clause. But if it is to remain in the Bill, we propose that the direction should be a request so that there is the implicit requirement that there should be discussion and debate, and that the direction or request should be to the mayor and the assembly. The assembly will have views, embracing no doubt the effects outside London since by definition many members of the assembly will represent areas on the boundaries of London. Assembly members are likely to have the expertise to act as some moderating force on the mayor. Judging by the amendment in the name of the Conservatives, I believe that they may have a similar notion of the role of the assembly.
Finally, Amendment No. 245F proposes to leave out subsection (2). We find the "jump to it" spirit of the provision rather distasteful and inappropriate. I beg to move.
Lord Brabazon of Tara: I agree with what the noble Baroness, Lady Hamwee, said in moving the amendment. I speak to Amendment No. 246, and to the Question whether Clause 125 shall stand part of the Bill, because the two issues go together. My opposition to the clause standing part of the Bill is at the extreme end of the equation. I am glad that the noble Baroness indicates support. We believe that if one sets up this body with the mayor and the assembly, they should be allowed to get on with their job in this instance and the Secretary of State should leave them alone for all the reasons that the noble Baroness gave.
Amendment No. 246 is a compromise. It states:
"No direction by the Secretary of State shall come into force if it is rejected by a resolution of the Assembly".
In other words, if the mayor and the assembly agree with one another, as we hope they will, and the assembly votes on it, that will overrule the Secretary of State. Otherwise I agree with the amendment of the noble Baroness.
Lord Whitty: I am slightly astonished at the intervention of the noble Lord, Lord Brabazon, given the history of his government in Parliament, that we should set up the GLA and let them get on with it without the power of intervention by the Secretary of State.
I believe that in some circumstances the Secretary of State has to have the power of intervention. As the noble Baroness, Lady Hamwee, indicated, the powers of intervention in Clause 125 are limited. They relate to a situation where a strategy is inconsistent with the national transport policy and at the same time has demonstrably adverse effects outside Greater London. In those circumstances, there is a responsibility on central government to act on behalf of the nation as a whole and the neighbouring or other part of the United Kingdom affected adversely by the policy.
Amendments Nos. 245C and 245D remove the reserve power insurance policy for the rest of the country by downgrading it to a request. Amendment No. 245F would remove the duty on the mayor to respond by changing the strategy in accordance with the direction. The circumstances in which that would arise

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would be rare; and the circumstances in which the power of a direction would be used probably rarer still. A deliberately high hurdle must be crossed before the Secretary of State can act. However, there may be circumstances where it is necessary to act to avoid detriment to the national policy. Amendment No. 245D in effect makes the Secretary of State's direction subject to the assembly. That seems to me an odd constitutional position which I cannot accept.
Amendment No. 246 would mean that if the assembly voted to reject it, any direction by the Secretary of State would not come into force. That raises a constitutional objection. It would not be an appropriate role for the London assembly which is there to scrutinise the actions of the mayor. The responsibility of the Secretary of State is, as always, to Parliament. There would be a serious confusion of roles. I do not believe that it is an overweening power. It would be used to protect the rest of the country as a reserve power and we would wish to see it retained on the face of the Bill. I therefore hope that the noble Baroness will not pursue the amendment.
Baroness Hamwee: I accept that on this occasion, in contradistinction to intervention powers in another Bill which the House is considering, the basis for the exercise of the reserve powers is spelt out in the Bill. That much I welcome. Other than that, we disagree. However, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 245D to 246 not moved.]
Clause 125 agreed to.
Clause 126 agreed to.
Clause 127 [Preparation of the plan]:
[Amendments Nos. 246A and 247 not moved.]
Clause 127 agreed to.
Clause 128 [Approval of plans by the Mayor]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 247A:
Page 69, line 22, at end insert—
("() The Mayor shall approve a local implementation plan if he considers that it meets the criteria set out in subsection (3).").
The noble Baroness said: Clause 128 puts constraints on the approval of a local implementation plan. Under subsection (3) the mayor is not to approve an implementation plan unless in his view it meets certain criteria which are set out in paragraphs (a), (b) and (c). I do not believe that the clause provides that the plan should be approved if it does meet those criteria. That is not implicit, especially as in subsection (2) the wording is that the mayor "may" approve a local implementation plan. Can the Minister clarify the position? I beg to move.
Lord Whitty: The amendment would reduce the mayor's discretion over whether or not to approve the local implementation plan. The amendment would mean that, provided the three conditions were met, the mayor would have no option but to approve the plan. That would mean that he or she would be unable to consider any other factors. While it may be true that the criteria are fairly wide and it is therefore unlikely that the mayor
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would wish to reject the plan on other factors, there are issues of whether, for example, the plan is unsatisfactory compared with the other plans submitted by other councils or would have a detrimental effect on their achievement.
Local implementation plans will be key to the successful implementation of the mayor's overall transport strategy and the mayor must have power to ensure that the plans contain all that is necessary. The boroughs must be consulted about the transport strategy, so they will already have had their chance to express their views about its nature and how it might affect their responsibilities. When they come forward with their own plans, there must be some flexibility with the mayor on whether he or she accepts them and whether he or she engages in a process of discussion with the local authorities to approve the plans and make them more compatible with the overall strategy. That is the intention of the clause.
I hope that, with that explanation, the noble Baroness may see fit to withdraw her amendment.
Baroness Miller of Chilthorne Domer: Before my noble friend comes back, I should like to say that I find the reply of the noble Lord the Minister somewhat disappointing, given the difficulties that will inevitably arise from working in this two-tier way. I found the clause very negative in the first place. We are given a list of reasons why the mayor will not approve the strategy "unless". It would have been more positive if the clause had been drafted to say that he will approve it "if". The spirit of our amendment would be likely to provide a much better dialogue between the mayor and those boroughs drawing up the local implementation plan. Therefore, I think that we shall return to this subject, especially when we see the length of the Government's Amendment No. 248D, for example, which anticipates that there will be many problems and that life will not be easy.
Our amendment would make much clearer for those boroughs that are working on their plans exactly the spirit in which the mayor shall approach such matters. It would make it clear that the criteria are very important and that he is definite about them, so that both parties approach things in a positive spirit. The clause as it stands without our amendment is negative in spirit and will inhibit that.
Baroness Hamwee: My noble friend is absolutely right. If we are to have the negatives, would not it have been better simply to provide that, as subsection (1) says,
"Each London borough council shall submit its local implementation plan to the Mayor for his approval"?
That says all that is required. But I have made that point a number of times, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 128 agreed to.
Clause 129 [Power of the Mayor to prepare a plan]:
[Amendment No. 248 not moved.]
Lord Whitty Lord Whitty moved Amendment No. 248A:
Page 69, line 36, leave out from ("refuses") to ("unless") in line 39, and insert ("under subsection (2) of section 128 above to approve a local implementation plan, the London borough council which submitted the plan shall prepare a new local implementation plan and submit it to the Mayor under subsection (1) of that section")
The noble Lord said: I shall also speak to the rest of the amendments in this group: Amendments Nos. 248B to 248P and 249A to 249F. These amendments, which relate to the local implementation plans, are here because when we discussed those plans in another place we were pressed on why we had not included any provisions for review of the plans. There were other questions, including why the mayor could claim only reasonable administrative expenses, rather than all reasonable expenses, from the boroughs if he or she had to intervene to implement a plan. Other issues were also raised.
We agreed to go away and reflect on these matters, and the amendments in this group are largely the fruits of those reflections. Rather a large number of amendments are required, but it is necessary to ensure that the same process is followed for a revised plan as for the original.
The amendments have three main purposes. First, they make it clear that the boroughs have a duty to revise their local implementation plans when the transport strategy is revised, unless they notify the mayor that this is unnecessary. Secondly, they enable the boroughs to propose revisions of their own to local implementation plans if they see fit, even in the absence of a revised mayoral strategy. Thirdly, they enable the mayor to recover any "reasonable expenses" from the boroughs when he or she has had to prepare or implement a local implementation plan on their behalf, rather than, as under the previous provisions, being limited to "reasonable administrative expenses".
The rest of the amendments are consequential on those three main purposes. They apply the procedure for preparing and submitting local implementation plans under the existing clauses to revised implementation plans under these clauses.
Amendment No. 248E, a new clause, allows revisions to be made to a local implementation plan either when a borough wants to propose changes to its own implementation plan, or when the transport strategy has been revised. In the latter case, a borough may notify the mayor that it doe; not think any revisions to its LIP are necessary.
Amendment No. 248E specifies what a revised LIP should contain and whom the borough should consult in preparing it. Subsection (3) applies Clause 128 to a revised LIP. Those procedures replicate those for the initial LIP.
Amendment No. 248F allows the mayor to intervene if a borough's revised LIP does not fully implement the strategy as it applies to its area or if a borough has not prepared revisions when those are necessary. This clause
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therefore replicates the mayor's powers in Clauses 128 and 129 which were in relation to the initial plan. It extends them to apply to a revised implementation plan.
Although this seems to be a complicated set of amendments, it squares the process of revision of LIPS, as we were requested to do in another place. I hope that Members of the Committee will understand the need for the amendments. I beg to move.
On Question, amendment agreed to.
12.45 a.m.
Lord Whitty Lord Whitty moved Amendment No. 248B:
Page 69, line 40, leave out ("in writing").
On Question, amendment agreed to.
[Amendment No. 248BA not moved.]
Lord Whitty Lord Whitty moved Amendment No. 248C:
Page 70, line 19, leave out ("administrative").
On Question, amendment agreed to.
Clause 129, as amended, agreed to.
Lord Whitty Lord Whitty moved Amendments Nos. 248D to 248F:
After Clause 129, insert the following new clause—
REVISION
(" .—(1) A London borough council may at any time prepare such revisions as it considers appropriate to the council's local implementation plan.
(2) Where the Mayor revises the transport strategy under section 33(2) above, each London borough council shall as soon as reasonably practicable after the Mayor has published the transport strategy as revised prepare such revisions to the council's local implementation plan as it considers are necessary in order to implement that strategy in its area.
(3) Where a London borough council considers that no revisions are required to be prepared under subsection (2) above the council shall notify the Mayor.
(4) For the purposes of this section, the "local implementation plan", in relation to any London borough council, means whichever of the following has been most recently approved, or as the case may be, prepared, by the Mayor, namely—

(a) a local implementation plan prepared by the council and approved by the Mayor under section 128 above;

(b) a local implementation plan, as proposed by the council to be revised, approved by the Mayor under that section; and

(c) a local implementation plan or revised local implementation plan prepared by the Mayor on behalf of the council.").

After Clause 129, insert the following new clause—
PROCEDURE FOR REVISION
(" .—(1) In preparing any revisions under section (Revision) above a London borough council shall consult the bodies and persons required to be consulted under subsection (2) of section 127 above, taking the references in paragraph (d) of that subsection and in subsection (5) of that section to the local implementation plan as references to revisions under section (Revision) above.
(2) Each local implementation plan as proposed to be revised shall include the matters specified in section 127(1) and (3) above.
(3) The provisions of section 128 above shall apply to a London borough council's local implementation plan as proposed to be revised as they apply to the council's local implementation plan.").
After Clause 129, insert the following new clause—
POWER OF THE MAYOR TO PREPARE A REVISED PLAN
(" .—(1) Where the Mayor has published the transport strategy as revised but it appears to the Mayor that a London borough council has failed—

(a) to prepare such revisions to the council's local implementation plan, or

(b) to submit to him for approval such a local implementation plan as proposed to be revised,

as the Mayor considers necessary in order to implement in the council's area the transport strategy as revised, the Mayor may issue to the council a direction under section 132 below requiring the council to do so within such period as the Mayor shall specify in the direction.
(2) Where the Mayor has issued a direction of the kind mentioned in subsection (1) above but the council has not complied with the direction within a reasonable time, the Mayor may prepare a revised local implementation plan on behalf of the council.
(3) Where the Mayor refuses to approve under subsection (2) of section 128 above a local implementation plan as proposed to be revised, the London borough council which submitted the plan shall prepare new revisions and submit to the Mayor under subsection (1) of that section a new local implementation plan as proposed to be revised, unless the Mayor notifies the council that he intends to exercise his powers under subsection (4) below.
(4) Where the Mayor—

(a) refuses to approve under subsection (2) of section 128 above a local implementation plan as proposed to be revised, and

(b) has served on the London borough council who submitted the plan a notice under subsection (3) above,

the Mayor may prepare a revised local implementation plan on behalf of the council.
(5) In preparing a revised local implementation plan the Mayor shall consult the bodies and persons required to be consulted under subsection (5) of section 129 above, taking the references in paragraphs (a) and (e) of that subsection and in subsection (8) of that section to a local implementation plan prepared on behalf of a London borough council as references to a revised local implementation plan prepared on behalf of such a council.
(6) A revised local implementation plan prepared by the Mayor under this section shall include the matters specified in section 127(1) and (3) above.
(7) Where the Mayor prepares a revised local implementation plan on behalf of a London borough council, he may recover from the council as a civil debt any reasonable expenses incurred by him in preparing the plan.").
On Question, amendments agreed to.
Clause 130 [Implementation by a London borough council]
Lord Whitty Lord Whitty moved Amendments Nos. 248G to 248N:
Page 70, line 27, at end insert (", or a local implementation plan as proposed to be revised,").
Page 70, line 29, leave out ("prepared") and insert ("submitted").
Page 70, line 31, after ("above") insert ("or, as the case may be, section (Procedure for revision) (2) above").
Page 70, line 33, at end insert ("or, as the case may be, section (Procedure for revision) (2) above").
Page 70, line 34, after ("plan") insert ("or a revised local implementation plan").
Page 70, line 35, after first ("above") insert ("or, as the case may be, section (Power of the Mayor to prepare a revised plan) above").
Page 70, leave out line 38 and insert ("approved by the Mayor under section 128 above or, as the case may be, a local implementation plan as proposed to be revised, approved by the Mayor under that section.").
On Question, amendments agreed to.
Clause 130, as amended, agreed to.
Clause 131 [Implementation by the Mayor]:
Lord Whitty Lord Whitty moved Amendment No. 248P:
Page 71, line 2, at end insert—
("() Subsection (1) above applies in relation to a local implementation plan, as proposed to be revised, approved by the Mayor under section 128 above as it applies to a local implementation plan approved by the Mayor under that section.").
On Question, amendment agreed to.
[Amendment No. 249 not moved.]
Lord Whitty Lord Whitty moved Amendment No. 249A:
Page 71, line 15, leave out ("administrative").
On Question, amendment agreed to.
Clause 131, as amended, agreed to.
Clause 132 [Directions by the Mayor]:
Baroness Hamwee Baroness Hamwee moved Amendment No. 249AA:
Page 71, line 21, leave out paragraph (b).
The noble Baroness said: In moving this amendment, I shall speak also to Amendments Nos. 249BA, 249EA, 249EB, 249G and 249H. Under Clause 132 the mayor has considerable powers of direction over the boroughs with regard to the manner in which they are to exercise their functions regarding local implementation plans.
I can understand the mayor's interest in the outcome, but should the mayor be concerned with the process, say, for the time by which the local implementation plans will have been created and put into effect, Clause 132(2) includes the timetable as one of a list of six matters, and they are not, in themselves, exclusive.
Amendment No. 249AA deletes from Clause 132(1)(b) the mayor's power of specific direction as to the manner in which a London borough council is to exercise the functions. Amendment No. 249BA deletes Clause 132(2)(b), which contains directions as to the bodies or persons who must be consulted about a local implementation plan. Consultation by a borough is a matter for the borough; it is a local matter.
Amendment No. 249EA deletes Clause 132(2)(e), which sets out directions as to how the borough is to implement the proposals contained in the local implementation plan. The action to be taken by the borough seems again to be a matter for the borough since the mayor is concerned with overall strategic matters which will include important local details but should not, in our view, allow the mayor to become involved unduly in detail at local level.
Amendment No. 249EB deletes Clause 132(2)(f) which provides for directions as to the steps required to be taken to remove the effects of action which is incompatible with local implementation plan proposals. That seems to us to be very wide. Whose action is the mayor able to direct the London borough council to agree with? One hopes that borough action will have

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been determined with consultation with residents and neighbouring boroughs. This seems to be a particularly wide provision.
Amendment No 249G provides that direction should be given only with the agreement of the assembly. As I have said, these are wide powers. Even if we are told, as we may be, that these are again reserved powers, we believe that the scrutiny role of the assembly would appropriately give it a role in this exercise.
Amendment No. 249H requires prior consultation with the borough in question before these powers of direction may be exercised. The Committee may gather from this that we do not much like Clause 132. I beg to move.
Lord Brabazon of Tara: I have tabled a Motion that Clause 132 does not stand part of the Bill. I may as well speak to that now. I shall be brief because the noble Baroness has pretty well deleted the clause with the amendments she has just moved.
This amendment is a boost for subsidiarity. The mayor should not have untrammelled rights to dictate to councils how they perform their transport functions. Councils are close to the local people affected and more knowledgeable about local circumstances. Councils are responsible and better able to ensure that the local implementation plan interfaces with the other policies and functions of the council. Councils should be accountable to their electorate and not to the mayor for the implementation of policy. Therefore, I agree with the amendments moved by the noble Baroness.
Lord Whitty: This clause provides the mayor with the ability to give legally binding instructions to councils on the manner in which they perform any of their duties under this clause or the previous four clauses. It is vital that the mayor has sufficient powers to ensure that the strategy is properly implemented. Our intention is that the mayor's strategy should cover high-level areas with the detail left to the boroughs, as the noble Lord implied in his general approach to this clause.
Nevertheless, there will be specific areas where, in order for the overall strategy to work and for the co-operation to exist between the boroughs, the GLA and the London boroughs, there will need to be specific powers; for example, if local boroughs' policies cause problems on a GLA road, then the mayor needs to have powers to intervene. If, as was alluded to at an earlier stage in the consideration of this Bill, there are problems where one borough has given parking priority to residents on one side of the road and the other borough has given parking priority to residents on the other side of the road to the detriment of cyclists and through traffic, then the mayor has to have powers to intervene specifically.
I hope that these general powers will be used on only limited occasions. The wide range of traffic and transport responsibilities which the mayor has will only he implemented if a positive and constructive relationship is built between the boroughs and the GLA. It is important, therefore, that we do not rely on reserve
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powers to deliver the strategy. The kind of instances to which I have referred will arise from time to time and there will be difficulties in resolving them unless the mayor is given reserve powers.
It is important to recognise that the boroughs will already have been fully involved in the development of the mayor's strategy in the first place; that the requirements of that strategy are well communicated to the boroughs prior to them drawing up their own local implementation plans; and that in the same way that local transport plans in the rest of the country will be scrutinised and accepted or otherwise amended by the Secretary of State, within London those powers are there for the mayor. The mayor will have powers of direction should the overall policy or co-operation across London be jeopardised by the failure of the local implementation plan to operate in a way which delivers that strategy.
It is not the intention that the mayor should have the responsibility for dealing with every individual item within the boroughs' strategy; that must be for the boroughs. But there will be exceptions where the mayor will need to intervene. To remove these powers entirely, as would happen with the removal of Clause 132 and as suggested by the combination of measures put forward by the noble Baroness, would leave the mayor in a very much weakened position.
The specific requirement that the mayor should seek the agreement of the assembly, which is covered by Amendment No. 249G, is again a confusion of the powers of the assembly and the executive powers of the mayor. A direction is a matter for the mayor. It may be sensible to discuss this with the assembly, but at the end of the day, the decision should be the mayor's to issue a directive.
These are reserve powers. They would not be used very frequently but, in order to make a reality of the strategy, they have to exist and, unfortunately, on occasion situations will arise where they will need to be invoked. I hope therefore that noble Lords will not press these amendments which drastically reduce that power.
Baroness Thomas of Walliswood: Can the noble Lord tell the Committee, in relation to this and some of the previous amendments relating to the relationship between the mayor and the London boroughs, what importance he lays upon a system which will encourage good relations between the boroughs and the mayor as compared with a series of provisions which are almost bound to put the mayor in conflict with the boroughs? That is at the root of the objections to the clauses by members of both the Conservative and Liberal Democrat Front Benches.
Having lived in a two-tier authority area and worked as part of a two-tier system, I know that one has to work hard to secure agreement between the two levels. Simply putting in the hands of the chairman of Surrey county council a requirement that the local borough or district council should do such and such would have contributed nothing to the creation of good relations between the two tiers in that county.
1 a.m.
Baroness Miller of Chilthorne Domer: My noble friend is right. I return to something that the Minister said earlier—that the mayor is elected to do a job and how would the electorate feel if he does not do that job? The converse applies in this case. London borough councils have been elected to do a job and some of the new powers will take away the jobs that they were elected to do. The Minister's contention is that in some cases, the councils will be performing the job poorly. Surely that is for the electorate.
If the Government intend that, as soon as a council does not perform well, someone else should take over and run matters, that is yet another disincentive to the public to turn out and vote through the ballot box for a more efficiently run council. I accept that there is a fine balance in letting inefficiency continue but it is not the mayor's job to interfere in what is clearly a local issue.
Clause 132(2)(b) refers to the people who should be consulted. The borough council may have consulted a number of bodies and persons and produced a set of issues and a way forward that is acceptable locally. The mayor may not find that way easy to work with. He may not like it. But it is not reasonable for him then to ask a different group of people to come up with a different question. It is a matter of subsidiarity. I do not think that writing into the Bill something that takes that away will add to the wish of local people to contribute to the implementation plans—which is important if they are to work—or strengthen the role of the mayor.
There is confusion in the drafting of the clause between what is truly strategic and what is operational. If the mayor were involved in such detail in several London boroughs, he would not have time to pursue much of his strategic role.
Lord Whitty: Most of what the noble Baroness said indicates that we are not absolutely agreed that a strategic authority is needed. There is a clear commitment in the Bill to produce a transport strategy. I thought we were all agreed that the mayor should be the major instrument for drawing up that strategy, entering into consultation and ensuring that involvement takes place at all levels—with the boroughs as one of the key elements in delivering the strategy.
If we all accept that London has been lacking an overall approach to planning different modes of transport—as I believe we do—we cannot also say that the mayor shall have no powers over the boroughs and the other elements, in terms of the functional bodies and so on, in delivering the strategy. Clearly we want that to be done with an ethos of partnership, understanding and give-and-take between the various planning levels. At the end of the day, the person and institution responsible for the strategy must have the tools to carry it out.
Sometimes it will come down to a particular issue. For example, there may be a conflict about a road that is a strategic road. If there is a conflict where a borough takes a decision which distorts the modalities of the rest of the strategy, then that may appear to be a very
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particular decision to the borough but it will have wider strategic implications. Therefore, the mayor requires these reserve powers.
I am sure that the noble Baroness and all concerned will accept on one level that that is the case, but the working through of the strategy means that where there is a problem which cannot be overcome by negotiation or by a joint approach, then one party or the other has to have the decision-making process. In our view, it must be the mayor because, at the end of the day, he or she will be responsible for the delivery of that strategy. I therefore hope that noble Lords' opposition to this clause will be reduced by what I have said and that they will not pursue their amendments.
Baroness Hamwee: As I said when I moved the amendment and spoke to the rest of the group, our concerns relate to the mayor's prospective involvement in the process and not just in the outcome as regards ensuring that his strategy is implemented. Of the examples given of possible difficulties, I have to say that, arguably, one of them is not strategic, while the other suggests that the mayor's views must override those of the borough. That is exactly the self-fulfilling recipe for conflict to which my noble friends so correctly alluded.
We believe that there should be a strategic authority: indeed, we have been quite clear about that. However, we have also been quite clear that the boroughs need to be allowed to work in partnership. Although the Minister used that terminology, we do no see that the clause assists that partnership. With regard to the role of the assembly, we are not confused about it. We acknowledge that we take a different view from the Government. However, that will not deter us from continuing to make points which we believe are apposite.
I am not sure how much longer we shall continue tonight, but I shall leave room for further debate in this respect. In the meantime, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Lord Whitty Lord Whitty moved Amendment No. 249B:
Page 71, line 26, after ("plan") insert ("or revisions to such a plan").
On Question, amendment agreed to.
[Amendment No. 249BA not moved.]
Lord Whitty Lord Whitty moved Amendments Nos. 249C to 249E:
Page 71, line 28, at end insert ("or revisions to such a plan").
Page 71, line 29, after (" 127(3)(a)") insert (", (Procedure for revision) (2) or (Power of the Mayor to prepare a revised plan) (6)").
Page 71, line 30, after (" 127(3)(b)") insert (", (Procedure for revision) (2) or (Power of the Mayor to prepare a revised plan) (6)").
On Question, amendments agreed to.
[Amendments Nos. 249EA and 249EB not moved.]
Lord Whitty Lord Whitty moved Amendment No. 249F:
Page 71, line 35, at end insert—
("() The reference in subsection (2)(e) above to the local implementation plan includes a reference to—

(a) a local implementation plan, as proposed by a London borough council to be revised, approved by the Mayor under section 128 above; and

(b) a local implementation plan or revised local implementation plan prepared by the Mayor on behalf of a London borough council.").

On Question, amendment agreed to.
[Amendments Nos. 249G and 249H not turned.]
Clause 132, as amended, agreed to.
Baroness Farrington of Ribbleton: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House adjourned at eight minutes past one o'clock.