HL Deb 14 October 1999 vol 605 cc631-40

(".—(1) A local Bill promoted in Parliament by a London local authority may include provisions which affect the exercise of functions by the Authority or any of the functional bodies.

(2) Subsection (1) above applies only if the Authority—

  1. (a) gives its written consent; and
  2. (b) confirms that consent in writing as soon as practicable after the expiration of 14 days after the Bill has been deposited in Parliament.

(3) If the Authority does not confirm the consent as required by subsection (2)(b) above, the Authority shall give notice of that fact to the London local authority promoting the Bill.

(4) Where notice under subsection (3) above is given to a London local authority, that authority shall take all necessary steps for the omission from the Bill of the provisions in question or, if those provisions were requested by other London local authorities under section 87 of the Local Government Act 1985, of those provisions so far as relating to the Authority or the functional body concerned.

(5) The functions conferred or imposed on the Authority by subsections (2) and (3) above shall be functions of the Authority which are exercisable by the Mayor acting on behalf of the Authority.

(6) Before exercising the functions conferred on the Authority by subsection (2)(a) or (b) above, the Mayor shall consult the Assembly.

(7) Nothing in this section applies in relation to provisions requested under section (Power to request provisions in Bills promoted by London local authorities) above.

(8) In this section "London local authority" means—

  1. (a) a London borough council; or
  2. (b) the Common Council.").

On Question, amendments agreed to.

Clause 67 [Amounts for different categories of dwellings]:

Lord Dixon-Smith moved Amendment No. 270:

Page 36, line 31, leave out ("76") and insert ("74").

The noble Lord said: My Lords, in moving this amendment I shall speak also to Amendments Nos. 271 to 273, 275 to 279 and 305 to 307. As I understand matters, the expenses for magistrates' courts and the probation service within London are currently covered as "special expenses" of the office of Receiver for the Metropolitan Police. Such expenses are financed under a special arrangement laid clown by Clause 45 of the Local Government Finance A ct 1992.

The Greater London Authority Bill will abolish the office of Receiver with the commencement of the Greater London magistrates courts agency, but that does not happen until the year 2001. In the meantime, the office of Receiver will remain and the special expenses will have to be paid for. When this Bill was drafted, the Government expected there to be a range of transitional financial arrangements required. In the light of this, Clauses 75 and 76 were inserted setting out a temporary mechanism for payments of Metropolitan Police matters remaining unresolved after the setting up of the GLA. So that provisions would take precedent, Clauses 75 and 76 caused the Local Government Finance Act 1992 to cease to have effect in such cases.

As I understand it, it is now clear from the work done by the Department of the Environment, Transport and the Regions that these clauses will only apply to financing of the special expenses of the office of Receiver. Given the fact that this situation will exist only for one year, changing the current system would cause exceptional administrative difficulties. The calculations set out in Clauses 75 and 76 would also, paradoxically, result in a huge additional financial burden on inner London authorities when applied only to the special expenses of the office of Receiver. For Westminster Council, I understand that it would mean a loss of revenue support grant in excess of £1,100,000.

Clauses 75 and 76 now constitute an administrative anomaly which, if left in the Bill, will result in an iniquitously unfair approach to the financing of the office of Receiver for an additional period of 12 months. However, were those clauses to be deleted, the current perfectly acceptable arrangements under Section 45 of the Local Government Finance Act 1992 would remain in effect in place—the status quo ante, which, as I understand it, is satisfactory to everybody.

This is a large group of amendments dealing with this matter, but it is important. I can well understand that it is the sort of situation that one would only discover after one begins to work through in intimate detail the consequences of a Bill of such detail and complexity as this one. I ask the Government to consider most seriously either accepting our amendments or, probably more realistically, taking them away and studying them and the consequences of what is to happen under the Bill, with a view to producing an acceptable solution on Third Reading. It is our view that the effect of the Bill as presently drafted would produce an anomalous situation with very unfortunate financial consequences for certain parts of London. We do not think that that is right, still less do we think that that was the Government's intention. I beg to move.

10.15 p.m.

Lord Whitty

My Lords, the noble Lord raises a number of complex issues relating to the funding of the probation service and magistrates' courts in a transitional period. The expenditure on those areas will be a general expense, not a special expense. The concerns which the noble Lord expresses in terms of the impact on borough funding and general funding will be a transitional problem. It is not a long-term problem, whereas these amendments would have a serious long-term implication. The funding by the receiver for the interim transitional period will be dealt with through transitional arrangements which we may come to at the back of the Bill and some of which will need to be dealt with administratively. The effect of the amendments, if adopted as tabled, would be that the GLA would have to raise several hundred thousand pounds more from its council tax payers than it actually needs.

That is because when calculating its precept under Clause 74, the GLA would have to ignore the income it receives through the police grant. That would be fairly nonsensical and in making the additional calculations, the GLA would again have to ignore the grant income from central government in respect of police services. Consequently, the precept would be so large that council tax payers would be required to be paid that part of the cost of police services which will actually be met by police grant from central government.

Therefore, I ask the noble Lord to withdraw his amendments. Since they deal with the transitional arrangements, of which the implications have been raised with at least one London borough, it may be sensible for us to communicate in writing with the noble Lord before Third Reading about how we shall deal with the transitional arrangements. I assure the noble Lord that, if the amendments were adopted as such, the anomaly would be far greater than the one to which he alludes.

Lord Dixon-Smith

My Lords, I am always prepared to accept that when an amateur gets going in this sort of situation, he is quite likely, if allowed an entirely free rein without check, to produce something not wholly reasonable. However, the purpose of tabling these amendments was to have this issue, which has unfortunate consequences, discussed. In that, I have had some success.

The Minister has very nearly satisfied me. He has not quite given me an assurance that administrative arrangements will be made to deal with the interim period which will ensure that those sort of large financial swings will not occur, although he has said that administrative arrangements will be made to take care of the interim period. I am grateful for his offer of further discussions to try to sort out that issue. In the meantime I am quite happy to withdraw this group of amendments.

Amendment, by leave, withdrawn.

[Amendments Nos. 271 to 273 not moved.]

[Amendment No. 274 not moved.]

Clause 69 [Issue of precepts]:

[Amendments Nos. 275 to 279 not moved.]

Clause 71 [Calculation of component and consolidated budget requirements]:

[Amendment No. 280 had been withdrawn from the Marshalled List.]

Baroness Hamwee moved Amendment No. 281:

Page 38, line 37, leave out ("requirement") and insert ("bid").

The noble Baroness said: My Lords, in moving the amendment I shall speak also to Amendments Nos. 282, 283, 288, 289, 290 and 291.

These amendments concern the budget total for the authority. All but one of them is an amendment to phraseology to be consistent with our approach, which is to leave out references to the functional bodies' requirements and to talk about their bids as being hid requests. Amendment No. 291 is the substantive amendment to Schedule 5, to provide that in preparing the draft consolidated budget the mayor shall have regard to the component budget requirement or bid of each of the constituent bodies but shall not be bound to accede to it.

In Committee we made the point that we feel that the new London authority should be regarded as one body, headed by the mayor and making coherent policy, rather than a set of component bodies which make their requirements known and give the mayor their own totals, which the mayor would tot up and refer to as the budget. I appreciate that I deal with this simplistically. We remain concerned that the procedure does not allow political priority setting. After all, we all know that politics involves a great deal of setting of priorities. That is rarely seen so starkly as when budgets are set.

The Minister wrote to me following Committee stage, explaining the procedures and saying that, once the budgets had been set, each of the functional bodies would operate independently and be responsible for managing its own financial affairs, administration, and so on. I understand that. However, I do not understand why the Bill should allow not just juggling, so that each of the functional bodies is allocated what it claims, but for a view to be taken by the mayor proposing the budget in its various stages that one of the functional bodies needs to be given priority as against another. I should be grateful if the Minister would explain to me how the mayor can determine the priorities and not be the creature of the four bodies, all of whose claims, I have no doubt, will be extremely persuasive. I beg to move.

Lord Whitty

My Lords, I am not quite clear what the noble Baroness seeks to do. Certainly the words which she uses give entirely the wrong impression of how the budget process would work. To refer to "complicity bids" by the various functional authorities seems to misunderstand the central role of the mayor in setting the budget, which is to provide a consolidated budget. Clearly, the mayor has to trade off priorities both within the functional authorities' budget, which mostly they will have done themselves and, in certain circumstances, between them in order to produce an acceptable consolidated budget. However, to refer to it as a bidding process does not seem to me to bring the mayor any closer—indeed, it would take him or her further away—from the requirement to have a consolidated strategic approach to budget setting, taking into account, but not accepting and simply totting up—as the noble Baroness suggested—the bids which are already there from the functional bodies.

We require the functional bodies to act together responsibly and also, at the end of the day, for the mayor to be able to make an assessment between priorities and producing a consolidated budget. The totality should not be seen as a bidding competitive process but as one which helps to formulate those priorities and therefore that budget. I hope that the noble Baroness will recognise that the terminology which she suggests is moving in the opposite direction and is therefore not one that we could. accept.

Baroness Hamwee

My Lords, yes. I accept that answer to the first set of amendments. However, I believe that if the noble Lord considers the term "bid" as against "requirement", he may see that I make the very point that he makes. As I said, the most important amendment in this group is the one to the schedule. The paragraph before the one where we propose an insertion—that is, paragraph 3(i) of Schedule 5 on page 222—reads: After the Mayor has prepared the draft component budgets … he shall prepare a draft of his proposed consolidated budget". That is because the consolidated budget comprises the totality of the draft component budgets. I am relieved that the Minister described the process in precisely the way we would like to see it carried out. However, I am not convinced that the wording in the Bill provides for that. I shall reconsider the matter, in the context of the Minister having had a go at my drafting. However, that is all right. His assurances have been helpful and he has put the matter in terms he may have used at the previous stage, but which at the time I did not entirely take in. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 282 and 283 not moved.]

Clause 72 [Provisions supplemental to section 71]:

[Amendment No. 284 not moved.]

Clause 73 [Procedure for determining the budget requirements]:

Lord Tope moved Amendment No. 285:

Page 39, line 44, leave out ("procedural").

The noble Lord said: My Lords, in speaking to Amendment No. 285, I shall speak also to Amendment No. 299, which is the nub of the matter. I make no apology for returning to the issue of amendments to the mayor's budget. Schedule 5 to the Bill provides that such amendments shall not be made unless they have the agreement of a two-thirds majority of the assembly. We are proposing here that, in accordance with the normal democratic process, an amendment should be agreed if it has a simple majority.

One of the very few powers of the assembly is that it may scrutinise and approve the budget of the mayor. It is hoped that that will be done by discussion and agreement. However, if the assembly is to do its job properly, it must have, to use the phrase loosely, a reserve power enabling it to amend that budget if it so chooses. To achieve a two-thirds majority for an amendment—not for approval of the budget as a whole, but only an amendment to the budget —will be extremely difficult, given the likely composition of the assembly. It seems to me that in drafting the Bill in this way, the Government have made it clear that, while they are happy for the assembly to look at and comment upon the mayor's budget, they would be unhappy if the assembly had any real power to affect that budget.

To accord with the democratic process, if a simple majority supports an amendment, that amendment should be made. For the Government to give so much power in relation to the budget, and in effect no power, or power only in the most extreme circumstances to the assembly—namely, when a two-thirds majority can be commanded—is to take too far even the Government's desire for a strong mayor and a weak assembly. The point of this group of amendments is to return to the democratic principle and to give the assembly at least some power in terms of the duties it has to scrutinise and to approve the mayor's budget. The assembly should be able to agree amendments by a simple majority. That is the case in any other democratic institution in this country. I beg to move.

Lord Whitty

My Lords, I understand completely the noble Lord's point of view on this matter. However, the noble Lord must recognise that here we are dealing with a new and unique structure. It is clear that the executive power rests with the mayor and a power of scrutiny rests with the authority. For the executive power to be effective the mayor needs to be able to allocate resources to carry out the priorities that he or she has set in the relevant strategies. That means that the mayor must set the budget and that in general that budget should be delivered.

It is therefore quite right, as the noble Lord says, that we are dealing with the slightly extreme circumstances in which the assembly would have the right to amend the budget. The circumstances are not that extreme. Providing for a two-thirds majority is fairly well known in various circumstances in terms of constitutional change. However, the provisions would mean that, if a simple 51 per cent of the assembly took a different view, perhaps being of a different party from the mayor, or if that simple majority of the assembly temporarily took a different view from the mayor, they would not be able to amend his budget. If there were a reasonable degree of consensus within the assembly to achieve that two-thirds opposition, an amendment would be carried.

In a sense, we are moving slightly towards the noble Lord in giving greater power to the assembly than perhaps obtains in other circumstances, because setting the budget is clearly the mayor's key executive power. All the other strategies of the assembly will be as paper if there are not the resources to carry them out. Therefore, being able to set his or her own budget is a powerful part of the mayor's executive function. Nevertheless, we recognise that there should be some restriction in extreme circumstances and we have therefore provided for the two-thirds majority in this case.

I think that it is a reasonable balance. I know that the noble Lord has a slightly different view and, as we have seen at various points in this debate, he and his party consider that the assembly should have powers wider than those of the mayor. We take a different view, as does the structure. To be consistent but still to provide a safety net, we think that it is reasonable to require a two-thirds majority before an amendment to the budget can be made. We believe that that fits in with the other provisions in respect of the structure of the authority. I therefore hope that the noble Lord will not pursue his amendment tonight.

10.30 p.m.

Lord Dixon-Smith

My Lords, my Amendment No. 300 is part of this group. It too deals with the budgetary purpose and addresses particularly the points raised by the Minister in his last remarks.

Under the schedule, the budgetary process provides that the mayor will produce a draft budget which will then be considered by the assembly. At that stage, the assembly has the right, by a simple majority, to approve the budget with or without amendment. Therefore, the assembly has the right to amend the budget by a simple majority at the first stage. Continuing through the schedule, one sees that the mayor then takes away the budget, produces a final draft and takes it back to the assembly. This is where we come to the question of a two-thirds majority in the assembly if the budget is to be amended further.

My problem with this, as a practical man—I think that the noble Lord, Lord Tope, will have had similar experiences, as will anyone who has been deeply involved in the preparation of a local authority budget—is that it is not a process with a series of separate, identifiable steps. It is a long and continuous negotiation. Sometimes it is a ghastly haggle and an agreement is achieved usually only with extreme difficulty. Everybody has to make adjustments.

I can imagine that before the mayor produces his first draft budget he will have had considerable discussions with interested parties in the assembly. He is bound to have discussions with all those whose functions relate to the Greater London Authority. At that point he goes to the assembly with his draft budget. As I say, it can approve it with or without amendment, by a simple majority. Let us suppose that the assembly has amended the budget, which is highly likely. The mayor reconsiders the budget and what has been said. It may be that in the process of that negotiation—I shall not diminish it by describing it as a "haggle"—he does not agree with the assembly. He then sends the final draft budget back to the assembly.

My amendment is to put into the Bill that, where at the first stage of its consideration the assembly has produced an amendment, it has the right to insist on it at the second stage by a simple majority. That would not permit the assembly to introduce new considerations.

I call in aid the Government's own document. I admit that it is a slightly questionable one. It is entitled The Shape of Things to Come? The reason why I say it is slightly questionable is that the Government are so confident about it that a question mark is put at the end. Perhaps it is not the shape of things to come. But in Box 3 of that document one finds the assembly's functions. They are to approve or amend the budget. One can have a debate about whether amending it at the first draft stage is amending the budget or not. I suggest that amending it at that stage is not amending the budget.

If the assembly choose to amend it at the second draft stage that is amending the budget. I disagree with the Government over their approach to this matter. The assembly should have some authority here. As I have said, my amendment is to give it some authority to insist on an amendment on which it has had negotiations with the mayor. I do not believe that that is particularly unreasonable given that what we are discussing is likely to be continuous negotiation, with disagreements ultimately refined to fairly small items which are too often almost matters of taste. This amendment has considerable merits from a practical point of view. I commend it to the House.

Lord Whitty

My Lords, I am not entirely sure whether I am allowed to speak again at Report stage. However, since the noble Lord has spoken to his amendment after I have spoken, perhaps I may point out that he is clearly right that in practice there will be a continuous process of discussion, consultation and negotiation.

The provision of the two-thirds majority is because that at the end of the day we believe that the mayor must have authority to see his budget through, except in the most exceptional circumstances. Therefore, whatever has happened previously and where a two-thirds majority might emerge, clearly it would not be a relatively minor part of the budget. There would be a major disagreement. In those circumstances we have to have a mechanism for resolving it. In normal circumstances the resolution would be that the mayor prevails, but there would be a safety-net in the quite unusual circumstances where the assembly could overturn a decision by a two-thirds majority. We are looking at that provision.

I agree entirely with the noble Lord that in practice it is a much more interesting process before one reaches that stage. There will be a. great deal of consultation not only with the assembly but with many other people. There has to be a final resolution. We consider that we have the right balance for the final solution.

Lord Tope

My Lords, I return to my group of amendments. The Minister said that it is quite usual in this country for there to be a requirement of a two-thirds majority for constitutional amendments, or those that can be termed as such. That is true. However, we are not talking about constitutions, but budgets, and they are very different matters. The Minister is right; there is a substantial difference here.

At the beginning of Report stage we stated that we would not repeat all our arguments for having a stronger assembly and a weaker mayor. We have accepted that that is a different view and the Government's view prevails. However, we come to the nub of the matter in terms of budgets. The Government are not just proposing a strong mayor and a weak assembly. It seems that by requiring a two-thirds majority for amendments to the budget, they are proposing a mayor with absolute power and an assembly with absolutely no power. That is except in the most exceptional circumstances when the mayor has "gone off his head", which I believe was the phrase used at an earlier stage—

Baroness Hamwee

Gone off the rails.

Lord Tope

My Lords, that is an eventuality which might bring us into a greater crisis than just the budget. I shall not press the amendment at present. However, it has brought into stark relief the differences between us and the Government and just what they propose for the Greater London Authority. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 286 not moved.]

Lord Whitty moved Amendment No. 287: Before Schedule 5, insert the following new schedule—