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Right Of Councillor To Opt For Financial Loss Allowance

Volume 987: debated on Thursday 3 July 1980

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'(1) In section 173 of the Local Government Act 1972 (attendance allowance and financial loss allowance) at the end of subsection (1) (right of member of local authority who is a councillor to receive attendance allowance) there shall be added the words "unless a notice under section 173A below is effective in relation to him".

(2) The following section shall be inserted after that section:—

"Right to opt for financial loss allowance

173A.—(1) If a councillor gives notice in writing to the local authority of which he is a member that he wishes to receive financcial loss allowance, he shall be entitled, subject to and in accordance with the following provisions of this section, to receive that allowance instead of any payment by way of attendance allowance to which he would otherwise be entitled.

(2) A notice under this section is referred to in this section as a 'financial loss allowance'.

(3) If a councillor gives a financial loss allowance notice to the local authority not later than the end of the period of four weeks from his election as a member of the authority, he shall be entitled to receive financial loss allowance for the performance of any approved duty since his election, whether performed before or after the giving of the notice.

(4) If a councillor who has not given the local authority a financial loss allowance notice in accordance with subsection (3) above gives them such a notice not less than three months before the beginning of a financial year, he shall be entitled to receive financial loss allowance for the performance of any approved duty performed not earlier than the beginning of that financial year.

(5) A financial loss allowance notice shall continue to have effect until the councillor ceases to be a member of the local authority or until a notice under subsection.(6) below takes effect, whichever occurs first.

(6) If not less than three months before the beginning of a financial year a councillor who has given the local authority of which he is a member a financial loss allowance notice gives them notice in writing that he withdraws that notice, he shall be entitled to receive payments by way of attendance allowance, instead of financial loss allowance, for the performance of any approved duty after the beginning of the financial year following the giving of the notice.

This section does not extend to Scotland".'.—[ Mr. King.]

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

The clause is in response to an amendment that was tabled in Committee. It has the support of all the local authority associations. Its effect is that it will now be possible for the option of financial loss allowance to be possible as well as attendance allowance. It will apply to England and Wales but not to Scotland, because the Confederation of Scottish Local Authorities decided that it did not wish to have that option. For that reason, it was not imposed on those authorities.

I want to make it clear that if a councillor receives one of the new special responsibility allowances under clause 20 of the Bill it will not affect his right to claim financial loss allowance under the new clause. Councillors in positions of special responsibility will have duties over and above the approved duties normally recognised by their councils for allowance purposes. Special responsibility allowances will relate to those additional duties; they will therefore be separate from any financial loss or attendance allowance that a councillor is entitled to claim.

Financial loss allowance is not taxable, unlike attendance allowance. For that reason, the change may involve a certain amount of cost to the Exchequer. The Government will therefore in due course be observing the effect of giving the option. The Committee felt that it was a sensible option to allow. I know that the right hon. Gentleman on the Opposition Front Bench are in favour of it. I am therefore pleased to be able to introduce it.

My right hon. Friend knows that I am interested and concerned about this matter because of my previous service on the Greater London Council. There, I experienced the very heavy work load of a board chairman. The work load there is not too dissimilar to the work load of a Back-Bench Member here. I am concerned that authorities such as the GLC should be taken into account, and I hope that the Minister can assure me that some element of general expenses, above the financial loss allowance, will be available to councillors in this case. I hope that when the new attendance allowances are introduced the increase will be substantial, because they seem to have fallen well behind what is at present required.

I shall detain the House for only a moment to welcome the Government's proposal. The Government have met the wishes of the Committee, and I express my gratitude to them. Almost everyone who has served on a local authority makes a financial sacrifice by doing so. They will continue to make sacrifices, but, thanks to this clause, in many cases the sacrifices will not be as great. We should welcome the clause on behalf of the many thousands of men and women who serve in local authorities.

Everyone who has served on local authorities recognises that there is a financial loss. I was not clear on the point of tax-free allowances. How can they be balanced against the losses of earnings of councillors? Many considerations have to be taken into account, such as the councillor being in a different tax bracket, and so on. Will my right hon. Friend clarify that point?

The new clause does not extend to Scot- land. The Minister said that that was because COSLA did not wish it to be extended to Scotland. I accept that. Nevertheless, it is unsatisfactory, and I am surprised that COSLA took that view. For a considerable time, COSLA has been dissatisfied with the present system of attendance allowances. I had discussions with COSLA when I was Secretary of State and I had sympathy with many of its points.

Under this clause there is a straight option for individual councillors. Therefore, no councillor could possibly be worse off, but certain councillors could be better off. If the Government would agree to a revision of the present situation and come up with a solution that would be acceptable to COSLA. I understand that it would be sensible to leave the clause as it stands. But it is unlikely that the Government will make a wholesale revision of the system in Scotland, and make Scottish councillors better off than English councillors. But if that does not happen, Scottish councillors will be worse off than English councillors if the clause is not extended to Scotland.

I am not critcising the Government, because if they have had advice from COSLA they obviously feel disposed to accept it. I hope that COSLA will reconsider the matter. It would be a considerable mistake for councillors in Scotland not to have this option. I repeat that no one could be worse off, but many people could be better off.

I listened with interest to the remarks of the right hon. Member for Glasgow, Craigton (Mr. Millan), but I am sure that he does not expect me to comment. In some ways I have shared his surprise, but the Government have accepted the information and advice of COSLA, and it is now a matter for my right hon. Friend the Secretary of State. As the right hon. Gentleman said, this clause merely extends an option to individual members.

My hon. Friend the Member for Windsor and Maidenhead (Dr. Glyn) raised the issue of financial loss allowance. It is an option. The individual member then has to persuade the Inland Revenue that he has suffered a loss. There is a ceiling on the loss that he can claim. At present it is £14, as opposed to the attendance allowance of £13, so it is not open-ended in that respect I hope that I have clarified my hon.

I understand the point raised by my hon. Friend the Member for Ilford, South (Mr. Thorne). We are reviewing the question of the attendance allowance, and the circumstances that he raised will be covered in our consideration of the matter.

Question put and agreed to.

Clause read a Second time, and added to the Bill.