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Local Government, Planning And Land (No 2) Bill

Volume 413: debated on Thursday 9 October 1980

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3.37 p.m.

(Lord Bellwin)

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 Bellwin.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD ABERDARE in the Chair.]

Clause 41 [ General power to reduce rate support grant]:

I understand that the noble Lord, Lord Evans of Claughton, intended his Amendments Nos. 82A to 82J to come after Clause 45, and not after Clause 41, as printed in the Marshalled List. The first amendment before the Committee this afternoon, therefore, is Amendment No. 83.

moved Amendment No. 83:

Page 38, line 10, after ("may") insert ("after consultations with that authority")?

The noble Baroness said: After discussion with the office of the noble Lord, Lord Bellwin, I think it may be for the convenience of the Committee, in view of the number of amendments we have to consider, if we perhaps have a general debate at this stage on Clauses 41, 42 and 43, so that we do not keep repeating the same arguments, and then go through the amendments in a rather more formal way at the end of our general debate. I hope that meets with the approval of your Lordships.

This part of the Bill is really at the very heart of it, because the 1972 Act did a lot to demoralise local government and to make it more remote, less efficient and in many cases more costly. But the consequences of the Bill before the Committee now are far more insidious, and it is extremely important that effective and meaningful consultation should go on at all stages and at all levels.

One of the difficulties on this part of the Bill, and the interim arrangements, is that the local authorities do not know where they are, and that this legislation, whatever was said after my protest on Monday, is akin to being retrospective, because this Bill will not be an Act until November and yet everything that applies to the interim arrangements dates back to April, when the councillors lawfully fixed their rates for the services they thought necessary for their areas. On this side of the Committee, we neither like nor approve of this kind of legislation, and the local authorities do not know what is in store for them because they have not yet been properly consulted. They find themselves in an atmosphere of quite considerable uncertainty.

The main problem lies with the penalties to be imposed, supposedly initially only on a transitional basis. The Secretary of State may reduce the amount of rate support grant payable for any year if the uniform rate for that authority's area in that year exceeds the notional uniform rate. This can be done without any statutory obligation for consultation with local authorities; and I must refer back to the questions that I posed at Second Reading. Who will advise the Secretary of State? What powers will these advisers have? On what basis or judgment will the Secretary of State determine the needs of any or all local authorities? In law the Secretary of State may listen to advice but the ultimate responsibility is his and his alone. Without statutory consultation being written into this Bill, his advice may come only from his departmental advisers and not from the local government leaders who have the responsibility to their electors.

How will this section operate? How did it operate as far as the 14 named authorities are concerned? Did the Secretary of State get his advice from his civil servants; and, if so, where did they get their information and how did they examine whether a local authority was profligate or whether it was a very poor authority with low rateable values and inevitably higher rates?

The proposals in this part of the Bill can only be exercised by applying arbitrary criteria to local authorities' budget decisions for 1980 and 1981; and a selection of different but equally valid criteria could produce different results. The criteria selected by the Secretary of State in the case of the 14 authorities appear to be designed to penalise some of the most deprived areas in the country—notably, partnership authorities such as Hackney, Lewisham, Lambeth, Tower Hamlets and areas of exceptionally high unemployment such as Newcastle-on-Tyne. The main criteria in determining which authority should be penalised appears to have been the rate poundage levied in 1980 and 1981, with the exercise of a waiver if an authority is judged by the Secretary of State to have made exceptional efforts to reduce its planned spending for 1980–81 below its original planned level. One of the 13 metropolitan authorities singled out by the Secretary of State had an adjusted uniform rate in excess of 155 pence in 1979–80; seven of the 13 had adjusted uniform rates of between 121 pence and 152 pence in 1979–80 and, given the prevailing rates of interest and inflation, it would have been difficult for these authorities to have levied a rate lower than 155 pence in 1980 and 1981. It seems to us that they are being penalised for the cumulative effect of the previous years' decisions rather than for decisions that they have taken in 1980.

In general, we should like to know how contact will be made with the local authorities. Will the officers of the department consult the officers of the local authority; or does the Secretary of State anticipate meeting personally the elected members of the local authorities involved? What right of appeal will these local authorities have if they feel that they have been unfairly treated and, more important, to whom may they appeal if that right of appeal is granted? How will this Bill act in a shire county? If a county council offends the Secretary of State by supposedly overspending (because it is the county council that has the bulk of the expenditure powers in a shire county) does the Secretary of State penalise the shire county and the districts within it even though the districts themselves may not have overspent? If the opposite happens and the district is the guilty party, then these powers are only trivial because the county precept is usually higher than the amount a district spends on its local amenities. How will it operate? How can it operate? Or was the noble Lord's right honourable friend the Member for Hexham right? Is it really quite unworkable?

If we look further ahead, what is going to happen to the money that is being saved by the Secretary of State's penal sanctions? Does it go towards reducing the money paid out in rate support grant? Does it mean the Treasury does not have to find so much money; or does it go into a general pool to be snared among the "good boys"? As I said at Second Reading, no Secretary of State of whatever party ought to be given these wide powers and these penal sanctions. No Secretary of State should have this arbitrary power to decide who are the offenders in a game where there are no consistent rules and it all depends upon the whim and fancy of the Secretary of State; where local authorities will not know what crime they are charged with; they will not know in what circumstances they are committing the crime and will not know what will be their punishment.

In another place, the Minister frequently talked about penal sanctions applying to some 10 or 12, certainly not more than 20, local authorities. In fact, the Secretary

of State at this point in time seems to have decided that it has caught the 14 authorities that he had already named— 13 Labour councils and one Tory-Liberal council—who have been told to forfeit £19 million between them. In the Financial Times today, there is an article which points out that, as a result, all the London boroughs will suffer; because the reduction in the resources element of the so-called 14 over-spenders will mean that they cannot pay their full precept to the Greater London Council, to ILEA and to the police. Therefore, all London will suffer for what these 13 or 14 authorities are supposed to have done.

The Secretary of State has had to admit that earlier forecasts of £739 million over-spending by the local authorities for this financial year have already been proved wrong. The common belief is that the estimate was over-stated by almost £400 million and the over-spending is expected to drop considerably without further real cuts. The 14 authorities penalised have all levied rates of 30 per cent, or more above the 119 pence and they have been unable to cut back on their services. Eight other authorities levying rates of 30 per cent, or more above 119 pence have not been penalised. How did they escape the axe and why? Why just work on 119 pence notional rate? Why not look at how authorities have responded to appeals to cut and have decided they can cut no more? If this latter method had been used, my own county council of Cambridgeshire might well have been high on the list, having only cut £1·7 million from the £7 million they were asked to cut—and their decision was right. I defend and applaud it. Further cuts would have eaten into the fabric of our services.

The Secretary of State has also announced that he is holding back another £200 million from the £1,400 million earmarked to top up for inflation the £13,300 million rate support grant target. The system used by the Secretary of State on the "hit list" cannot be right when it catches Newcastle and takes away £1·3 million. Yet Newcastle in a separate set of calculations for next year's system of block grants is one of the local authorities which comes nearest to matching its expenditure to the department's estimate of its needs. Even the Secretary of State has already conceded that this is so.

The Secretary of State cannot possibly know or think about what is happening on the ground as a result of this continous bashing of local councils—more battered babies, less home help, fewer meals on wheels, worse educational opportunities, larger classes, fewer teachers, less ancillary help, worse fire cover and, in some areas, less resources for the police and for law and order. Many councils, squeezed between high interest rates and soaring prices, will have to make rate increases in the autumn. When the rates go up in November and December, let it be understood that the blame does not lie with the councils and the councillors but with the Conservative Government who are to blame for damaging and destroying local services. And in the same way, when ratepayers all over the country have to pay more and get less the fault again lies with the Government and not with local councils and councillors.

The question no one has yet answered, here or in another place, is whether it would be possible for any Government to use the penal provisions of Clause 41 once the block grant system has been introduced. That is a question to which we need to know the answer before we reach Clause 49 and the block grant, because that clause, for the first time ever, will give a Secretary of State the power to say what he thinks should be the expenditure for each local authority in England and Wales. Once he can do that, if the provisions of Clause 41 are also available to him, he will not only be able to lay down the standard expenditure for each local authority but by using the provisions of this clause will be able to ensure that every single local authority absolutely adheres to the standard expenditure level which he has laid down; and the consequence of the block grant proposals, plus Clause 41, would mean the end of local government as we know it.

If Government intend to allow the existing provisions relating to the rate support grant to lapse when the full block grant comes into operation, why use the phrase, "for any year", or, as now proposed to be amended, "to the year 1980–81 or any subsequent year before the commencing year"? If really necessary, local government might just be persuaded to accept a fair transitional period for one year but they are not willing to accept such a nebulous and open-ended commitment as this Bill provides. These 14 authorities on the proposed "hit list" were selected by one formula. If a different formula had been used, say, as I instanced, how much local authorities had failed to meet the Secretary of State's order to cut, then other authorities would have been caught and perhaps other Conservative-controlled authorities as well as Cambridgeshire County Council would be facing the reckoning.

We are being asked to give these arbitrary powers to a Secretary of State without any guarantee that the resolution to be put before Parliament will enable both Houses to judge whether the Secretary of State has adopted a proper and a fair attitude towards local authorities or whether he has indulged in bullying tactics. However spendthrift the Secretary of State asserts that local authorities have been, the fact remains that for over 40 years the amount paid in rates has consistently been around 2·5 per cent, of real disposable interest. They have spent a consistent £14 billion in recent years and there has been a drastic decline in capital expenditure.

Before the Recess I asked to what extent local authorities had overspent in the last 10 years, and the reply from the noble Lord, Lord Mowbray and Stourton, was to the effect that in 1970–71, at the out-turn prices, they were down by £31 million, which was 0·9 per cent. In 1971–72 they were up £51 million, or 1·2 per cent.; in 1972–73 they were £77 million—up 1·6 per cent.; in 1973–74 they were down £29 million, or below 0·5 per cent.; in 1974–75, the year of reorganisation, they were up by £394 million, which amounted to an increase of 5·4 per cent.; in 1975–76 it was £69 million, which was an increase of only 0·7 per cent.; in 1976–77 it was down by £203 million; in 1977–78 it was down by £236 million, and the provisional figures for 1978–79 are down by £130 million. Those figures do not prove that local authority as a whole have really earned the name which is trying to be pinned on them of being tremendous over-spenders.

In Clause 42 we come to the use of multipliers. That formula is dependent on information sent in by the local authorities rather than being totally independent of that information. This is dangerous because it opens up a possibility of adjusting the formula to fit the information which is coming in. This could happen under subsection (3) of Clause 42. Because the rate poundage can vary enormously the formula must in some way take into account the rateable resources of the area, the actual amount of rates paid by the average household. Under subsection (3) different multipliers may be determined for different authorities. Where will the multiplier come from? Who will be determining what it is? Why will there be a differentiation between authorities? What is the real role of the multiplier and what is the motivation behind it? Where does the application of multipliers of less than unity, a differential multiplier, get us along the way? Could it lead us back again to the 10 or 20 or even 14 authorities that the Government really want to clobber? What about waivers? They come into it now. Are they also to be exercised on a complicated formula or just on the Secretary of State's whim or discretion?

One of the main problems facing local government is its out of date tax return. I do not want to return to our debates on the earlier clauses of the Bill as to why regular revaluations are not only desirable but really necessary, but the tax base is the basis of all the revenue estimates and if the valuation is not updated then local authorities are denied the extra finance to meet their obligations. Today's rateable values do not give a fair indication of the relative wealth or health of local authorities. These clauses show a complete and utter disregard for local democracy and they are a deliberate move to replace local control by central dictatorship. Local government in this country has an honourable record. Many noble Lords, on all sides of the Committee, have served with distinction on very many councils, and I ask them, "Would you want to continue in local government as a puppet of a Secretary of State of any party, and if your answer is, No, then help us to try and get these clauses removed".

I close on a rather lighter note by telling noble Lords what I was told the other evening about the umpire who went to umpire a cricket match. He called the two teams together before the match and said, "There is a proposal abroad to penalise for bumpers. It hasn't yet been accepted by the MCC but I'm going to enforce it today and I'll tell you after the match how it's worked". The team which thought it had won by 15 runs found itself penalised for bumpers by 30 runs and thus lost the match. That is what is happening in local government today, and it is not cricket. I beg to move.

I must congratulate the noble Baroness on that very excellent introduction to this debate. It might actually help some of us who will be speaking on this side to cut down the length of our own speeches because it was so compendious and said so much that is absolutely right. I do not think any of us would want to leave this debate thinking that all is absolutely well in the field of local government and the level of spending. There is overspending; there is waste. I think we all know and can think of examples, even in our own authorities, where there is overspending and waste. Some authorities have a more responsible attitude to the ratepayers than others. But I suspect that the method which the Secretary of State has adopted to try to deal with what are a very small minority is really quite outrageous and contrary to the whole basis of democratic local government.

I gather that the Secretary of State said in his speech at Brighton this week that central Government are no more efficient than local government. I wonder what steps he is taking to put things right there. He seems to have chosen the pick of local government as the stalking horse to cover up what in my admittedly limited experience I can agree with the noble Baroness is an area where, on the whole, local government has kept within very considerable restraint—much better restraint than some public departments which are not supervised by elected people. Another quotation from the Secretary of State in the same speech which I find very difficult to understand is where he said that a massive shift of power from local government to central Government would be wholly incompatible with our wish to entrust people personally and directly with the maximum responsibility for their own lives. He could have kidded me!

Though the transitional legislation is not actually retrospective, it has a smell of retrospectiveness about it, in that local authorities which made a perfectly legal budgetary decision in April 1980 are now being penalised for passing above a totally unspecified amount, above a notional uniform rate of 119p about which they could not have known. Though not actually retrospective, that makes it almost impossible for local government to look ahead, plan ahead or to have any serious form of budgeting in the future.

This is particularly so when one considers that this Government and previous Governments have actually encouraged many of the authorities that they are now penalising to increase their spending on main programmes of education, housing and social services. Having taken that encouragement at face value and increased their expenditure, the authorities are now being clobbered for doing precisely what the Government asked and requested them to do. Those of us who are engaged in local government can hardly be blamed if we are more than a little confused and punch-drunk as a result of the way the present Government are behaving in this particular area.

It also is very difficult to understand how the Government have defined this and by what criteria or criterion they have decided to penalise the particular authorities to which the noble Baroness referred. There is a very good article in the Municipal Journal of 26th September in which the authors challenge the Secretary of State over the penalty assessment method. It appears to them—and they are experts—as it appears to many of us, that it is almost impossible to understand why the Secretary of State has picked on a particular 14 rather than another 30 local authorities. This uncertainty is no basis upon which one can organise sensible and progressive local government. All sides of the Committee should take this opportunity of challenging the enshrining in legislation of actions which are uncertain, arbitrary and grossly unfair.

4.3 p.m.

I should like to accept the suggestion of the noble Baroness that we should have a fairly wide-ranging debate on her amendment, covering Part VI of the Bill as a whole. I was going to speak fairly extensively on my Amendment No. 100A, but it would be much better to do it now. I should like to start from the point that the noble Baroness mentioned as an aside—namely, that the 400 or 500 units of local government are responsible for an annual expenditure of no less than £14,000 million. That being so, I should have thought there was absolutely no question that in times of acute national economic difficulty somebody in the Cabinet must have the powers to control that expenditure in some way, if need be. It would therefore not be surprising if the Secretary of State was either using powers that he had or, if he was not satisfied that he had the necessary powers, seeking them from Parliament, as he is doing.

So there are two matters to be examined: the first is whether he really needs the powers. The second is whether he is seeking the appropriate powers. There were earlier this year three possibilities open to him: he could have accepted as a basis for further work the proposals offered to him by all three associations of local government together for doing what they all agreed needed to be done by him. Unfortunately, that agreed set of proposals was pushed to one side in terms which I have to say discouraged any of the associations from doing any further work on them.

Even if they had not been discouraged, it rapidly became impracticable for any more work to be done on them because all the manpower resources available in the associations were soon absorbed in working on the proposals of central Government which neither then nor since have been accepted by any of the associations. These consisted of the transitional scheme incorporated in Clauses 41 to 45 and the block grant scheme incorporated in Clauses 46 to 59. That is where we stand at the moment, with the best of the three possibilities regrettably abandoned.

The first question to ask before going any further is whether local government expenditure as a whole is so badly out of control that the Secretary of State needs to have and to exercise powers to bring it under control. The noble Baroness is perfectly right when she quotes figures—and I will quote a few more—to indicate that so far from being out of control, local government expenditure—all £14,000 million of it—is under control and has been for several years. In 1976–77 local government spent —0.3 per cent, of what was budgeted; in the next year it was —2.7 per cent, and the year after that —0.8 per cent. The year 1979–80 was exactly on target.

That seems a pretty precise piece of expenditure control. It is the result of the aggregate efforts of each unit of local government. If there were serious signs that things were going awry this year, it would be a different case. But the indications are such that all the Secretary of State has had to do, apart from dealing with these 14 local authorities—and I will come on to that in a moment—is to hold back and not cut out £200 million of the £14,000 million. There is a measure of caution and control there, but nobody can say that there is a massive overrunning by local government as a whole.

One could say: "Well, the national expenditure is, generally speaking, out of control and something has to be done about it. When local governments are spending £14,000 million they ought to be asked to contribute". However, if one looks at expenditure by central Government and local government since 1974, at a time when central Government expenditure has increased by 8 per cent., local government expenditure has fallen by 14 per cent. That shows fairly clearly where the trouble is occurring. If one takes another comparison and compares the state of affairs in local government with the state of affairs in some of the nationalised and publicly-owned organisations, looking back over six years when the cumulative effect of inflation has been to raise expenditure by 110 per cent., the district rates have gone up by only 85 per cent., electricity by 214 per cent, and railway fares by 183 per cent. It simply is not true to say that local government expenditure is out of control or that it is the main factor in getting us into the economic condition that we are in now. However, of course, local government has to play its part in getting things right. That is undoubtedly the case. Where there has been waste, that must be corrected; where there have been cases of extravagance, that has to be rebuked and possibly penalised. But the main trouble which local government is left grappling with arises from the constant addition of duties, obligations and powers which are loaded upon it.

Here I am afraid we have to say that Parliament must share the blame with central Government. It is we who pass the legislation and we are not strict and vigilant enough in seeing what the effect will be on local government which is left having to enact it. Let me quote a few examples, The Housing and Homeless Persons Act 1977 which we passed and which was strongly urged by bodies like CHAR and SHELTER and so on, has had the effect of presenting the borough of Hillingdon with an absolute open-ended commitment to house anybody who arrives at Heathrow and cannot find anywhere to lay his head for the night. It has induced an enormous amount of queue jumping all over the place. A good case could be made for it, but we ought not to have allowed it through without being certain that the resources would be available to implement it.

To take a much smaller case, the Homes Insulation Act, there is a good case for insulating houses under present circumstances, but nearly all the local authorities whose job it is to do that have run out of the cash to implement it. With the Chronically Sick and Disabled Persons Act, to go back a bit further, we had tremendous debates, if your Lordships will remember, about whether or not there should be an open-ended survey by the local authorities concerned of where disabled people were in their areas and what ought to be done for them. A very strong case was argued by the "mobile Bench" that this should be done and we were all greatly moved by it and let it through. However, the cost, the burden and expectations that were raised by that have been quite impossible for local government to implement thoroughly and properly, because we did not properly foresee what would be involved, or not all of us did.

There is another item for which there is great public support and that is public participation. This involves enormous amounts of staff time, mostly overtime, long evening meetings all over the place. It all has to be paid for, it all makes the rest of the work of the authority take a longer not a shorter time and it just adds to the burdens of local government. In spite of all that, the cost of local government in relation to the totality of national expenditure has fallen. The annual expenditure by local government has been held steady, and all of this at a time when inflation is rising and the price of fares and electricity has increased two or three times.

So the noble Baroness is absolutely right: the record of local government bears very good comparison with that of central Government and with all other public authorities. We really cannot accept that the blame for the troubles now besetting the national economy can be pinned on local government alone. What we must do is to play the best part we can in trying to put things right. In order to do that, there may be a need to curb a few individual authorities, or the Secretary of State seems to think there is a need to be able to curb local government expenditure as a whole.

I hope I have shown that there is no evidence of the need to do the second thing for the moment. There are very grave objections to the transitional arrangements included in Clauses 41 to 45. They fall very unfairly and arbitrarily, and the noble Baroness has mentioned a number of these. However, in the circumstances that I have just described, it seems to me that if the Secretary of State does not think that he has adequate powers, it would be much better to use the transitional scheme in Clauses 41 to 45 this year, and if necessary next year, while we are looking at the block grant system as a whole in much more detail than is possible.

So I must ask my noble friend if he will explain why this transitional scheme in Clauses 41 to 45 cannot continue to be used, If he satisfies us on that, why is it necessary to introduce the block grant Clauses 46 to 59, with all their complexities, most of which have yet to be discerned, and to introduce it all with such tremendous haste? A good deal of the antagonism and opposition to the block grant is caused by almost total ignorance among the treasurers and so on up and down the country as to what will be involved in operating it and what the effects will be on individual local authorities.

I should like to support my noble friend from an entirely non-expert but political point of view. I agree wholly with the speeches of my noble friend Lady Stedman and the noble Lord, Lord Evans. I have three points to make, as usual. First of all, the Bill seems to me a completely outrageous attack, not only an attack but an assault on our democratic Government. That is one point I should like to make. I am afraid that only a very ingénue Secretary of State could have brought forward or thought up these clauses. I go further. I think it is not only an ingénue Secretary of State but a political Peter Pan who could have produced this Bill and tried to get it through and get it across in the country generally.

4.16 p.m.

We heard from the noble Lord, Lord Sandford, a most impressive and disturbing speech which fitted in extremely well with the excellent speech of my noble friend Lady Stedman and that of the noble Lord, Lord Evans of Claughton, I take very much the same view as the noble Lord, Lord Sandford, and I am trying to look at this on a non-party basis. First of all, remembering that the bulk of the metropolitan districts are Labour, may I join the noble Lord, Lord Sandford, in denying completely the suggestion that local authorities as a whole are over-spending. The noble Lord gave most interesting figures, I thought: national expenditure up by 8 per cent.; local government expenditure down by 15 per cent. He mentioned that local government spending has been below the Government target for the last three years and in the current year should be on target. In those circumstances, I think it is preposterous for the Secretary of State to introduce changes of this kind which apparently are not needed on the financial facts of the situation.

What the Secretary of State is doing in these clauses is repairing some of the damage or preparing for the introduction of the block grant, something which throughout local government has been anathema for a very long time. I do not think that there is a case for rushing into this legislation at the moment. I think it is a very great pity that a Bill which has other attractive features should be so severely marred by the provisions in respect of the transitional arrangements and also the block grant.

We must not forget that this is the first time that a Secretary of State has taken or tried to take powers to intervene directly in the financial policies of individual councils.

It may be—and I would not argue with this—that the Secretary of State's motives are wholly good. I do not want to get into the realm of bashing at him. But we must remember the precedent that is being created in this Bill, and it does not follow that we shall always have a Secretary of State who is dedicated to the strengthening of democracy. If a future Secretary of State wants a precedent for interfering in local government, the present Secretary of State has given him the fullest scope.

It may be that these provisions are technically not retrospective, but I feel very much as the noble Lord, Lord Evans, does about this. The Secretary of State is taking powers which can be, and are being, used to punish individual councils for what were perfectly legitimate decisions at the time that they made them. We do not know the criteria on which the Secretary of State is acting. We do not know the basis on which he is reaching a figure. But it must be emphasised that he is not taking account of the problems of the historically high spenders, for the reasons that other speakers have given.

I live in the borough of Camden. We pay very high rates in the borough of Camden. We are being punished at the moment as a big spender. I should be most unhappy if we were not big spenders in the borough of Camden. We have the most serious problems in almost every field of local government and social activity, and unless we were spending a great deal of money we should be failing to discharge our responsibility as a metropolitan district.

I have just two other brief points. First, the Secretary of State fixes the notional uniform rate for the purpose of resources element. He fixes that himself. Secondly, he can fix the expenditure threshold to catch individual councils as he wishes to do it. This is no basis upon which to legislate. There is uncertainty throughout the whole field of local government at the moment. That uncertainty is intensified by the lack of clarity and, what seems to some, the lack of real preparedness behind this legislation. I believe that the Government and the Secretary of State would earn nothing but respect if, at this stage, they would say: We will postpone discussion of the financial provisions of the Bill and go ahead with the other most important provisions which the Bill contains.

4.23 p.m.

It is undoubtedly the case, as was said by the noble Lord, Lord Greenwood of Rossen-dale, who speaks in this House with the great experience of a former Minister in charge of the department, that the powers under the whole of this Part of the Bill are drastic. But I am bound to say—and I hope that I shall cause no offence to any other noble Lord or noble Lady—that for that reason I welcome them.

I say that because it seems to me, with very great respect to all of those on both sides who have taken part in this debate, that their speeches, though full of knowledge of the problems and difficulties and successes of local government, have not given sufficient weight to the overriding circumstances of the state of our national economy today.

It is difficult for all of us, whether in this direction or in any other, to adjust our minds, after years in which the national product rose and it was possible to finance ever-increased provision in all directions, central and local, to the fact that the failure of the British economy even to maintain, never mind increase, its product and to produce wealth means that drastic action has to be taken right across the board, if the national economy is again to recover and we are to get the growth which can sustain the improvements that all of us on both sides of the Committee would wish to see.

I must make a plea, however briefly, to the Committee not to let the background of the state of our economy be overlooked in our concern for the well-being of local government. With great respect, my noble friend Lord Sandford, with his great experience of, and close experience in, local government, seemed not to give sufficient weight to this aspect of the problem. With respect to him, it is really not sufficient to say, as he said and demonstrated with great skill, that local government expenditure is under control. The question is not whether it is under control. The question is whether given the whole picture of the national economy, it is higher than we can sustain and therefore requires to be restrained.

With great respect to him, too, it is no answer to the attempt of the Secretary of State to restrain expenditure in this direction—and here I take issue with the noble Baroness, Lady Gaitskell, because I think that we have a most able Secretary of State who is doing an extremely effective job in his great department—to point out, as my noble friend perfectly legitimately did, that there are other areas in which expenditure also requires restraint. Indeed, I would join him in urging upon my noble friend on the Front Bench that in the area of nationalised industries much greater restraint is required. I would join him in urging, for example, that the handing out of large sums of money to the Steel Corporation at this juncture, in the absence of any real effort by that Corporation to restore its viability, is very questionable. I would join him in urging far greater reductions in the staff of central Government than Her Majesty's Government so far appear to have been able to achieve. I am with him on all those things.

But where I differ from him is in this respect. The fact that there is expenditure which could, and should, be curtailed in other directions is no answer to the request now made in this Bill for powers to achieve authority to restrain expenditure in this enormous area of local government. We are talking of very nearly one-third of the totality of public expenditure. This is a very large area and, with respect to the state of our economy—and I hope that your Lordships will bear with me if I appear to be repetitious on this point—it is impossible for any major area of expenditure not to be subject to restraint.

We can debate, and we shall no doubt debate, the precise impact of these proposals. A later amendment of, I think, my noble friend raises the question of the date. Here I must say that I am completely on the side of my noble friend on the Front Bench, because if I have a criticism of Her Majesty's Government it is that, so far, they have not taken steps early enough to restrain public expenditure, both in this area and in other areas, and time is not on their side in this respect.

I realise that what I say is disagreeable to many of those who have far greater knowledge of local government than I have, but it seems to me that when the Government of the day come forward—I think a little belatedly—with an intention to take drastic action, not only to control but to curtail expenditure, it would be wrong of us to criticise that too far. We shall certainly wish to see that it is done in a civilised and an effective manner; Parliament will have adequate powers under this measure so to do. But on the basic issue raised not only in this Part of the Bill, I must say to my noble friend on the Front Bench that I am sure Her Majesty's Government are right to proceed. I would say to my noble friend who has spoken from the Back-Benches—and I also say this to noble Lords and noble Baronesses opposite—that although we all have a great concern for the well-being and success of local government, there is one more important cause and that is the salvation of this nation's economy.

4.30 p.m.

The noble Lord who has just spoken described the powers that have been undertaken by the Secretary of State in these clauses as "drastic". We would call them arbitrary. What is complained about by those who have spoken on both sides of the Committee is the arbitrary nature of the selection process and the fact that it would appear to hit the most deprived areas of our community. I had the honour of representing a dockland constituency for 29 years and I have recent close familiarity with one of the constituencies which is to be directly penalised; namely, Tower Hamlets. If one thinks of the social harm that what is proposed will do to that harassed community it really becomes quite intolerable.

Let me take that little community as an example. It is certainly one of the most deprived areas in the country. It has a large number of one-parent families. There are more children in care there per thousand of the juvenile population than in any other local authority in the country. There is a very high proportion of old people. The average wage is lower than that of almost any surrounding community. With the decline of dockland, it has lost a large proportion of its middle-aged group. They have moved away and left behind the old and the needy. In the last 15 years, the population has dropped from 200,000 to under 150,000.

There are special difficulties like the situation in the Spitalfields area where we have seen the collapse of the clothing industry—we would venture to say because of the policy of the Government. The Bengali community, dependent upon that industry, is in desperate straits. This is the community which is to be penalised. There was a sudden demand after the budgetary arrangements had been prepared that they should toe the line or suffer the penalty. So far as deserts are concerned, my understanding is that the local authority has behaved responsibily and that in the last five years the rate increases there have been far lower than in many surrounding boroughs. They have engaged on a policy of increasing the rate base by encouraging industry and commerce to come into the borough. So here is a classic example not only of the exercise of arbitrary power by the Secretary of State but of achieving a very unjust purpose in a very unfair way.

I do nope that the noble Lord the Minister who listens very carefully to the debate will understand the feelings that we on this side of the Committee have about the matter. He is not an unsympathetic man; I know that well. But here he is hitting the poorest and the most needy by what is proposed. I hope that the Government will think again.

There has been much mention in the argument about the Bill, both within this House and beyond, of extravagance, overspending, danger to the national economy. I think that we all accept that what is extravagant and what is overspending is a matter for legitimate difference of opinion among sensible people. Expenditure which some citizens will regard as extravagant others will regard as necessary, or generous, or worthy of the dignity of their borough.

How have we tried to deal with that situation up to now? We have done so by dividing the expenditure of local government into that which is borne by the ratepayers and that which is borne by central Government, with the approval of Parliament. If we feel, as the noble Lord, Lord Boyd-Carpenter, argued, that these are grave times and that we must economise in all directions, not to mention having to pay not only for real needs but for quite unnecessary tax concessions to very rich people at the beginning of this Government's tenure of power—if it is felt that we have got to do that for local government, one could accept, even if one did not agree, that the Government were entitled to say, "The amount of help which we shall give to local government, whether it is called rate support grant, block grant, or whatever, shall be reduced and shall be made in ways which discourage what we fear may be extravagance". That is one thing which is within central Government's and Parliament's power. But what is inherent in Clause 41 is that the Secretary of State is saying, "I am going to say what I think the rate poundage in different local authorities ought to be, and I am going to penalise those who do not agree with me".

This is a very serious invasion of what we regarded as an essential part of the way our democracy worked. It is important, if democracy is to work, that the decision should be made not merely by a central parliament, speaking for the nation as a whole, but by every locality and village. People should feel that they have some control over the decisions that affect them. It is that which this is invading. It is not safe to say, "Oh, it is merely a temporary transitional arrangement". It is not safe for two reasons, one of which my noble friend Lady Stedman has pointed out: that this transitional arrangement goes on until the commencing year.

We now understand that the commencing year is to be what the Secretary of State says it is. We have all assumed that it was going to be next year and that assumption may still be true, but in fact the commencing year is to be what the Secretary of State says it is. That is true, by the way, of nearly everything in the Bill. If you look at the definition of anything, what it comes down to in the end is that it is what the Secretary of State thinks it is, or ought to be. An overspending borough is one which is spending more than a notional rate, and a notional rate is what the Secretary of State thinks that rate ought to be. All this is wrapped up in the verbiage of the clauses, but this is what comes down to in the end.

I invite noble Lords to consider Clause 51, which makes provision, even when the transitional period is over and the block grant is in operation, for the Secretary of State in certain circumstances, which again he will have power within certain limits to define, to reduce the amount of grant if he thinks that it is unreasonable compared with what it was in the previous year. So we are not discussing merely a temporary and transitional threat.

I have listened to the argument as to whether this is a retrospective clause and I agree that one can argue it this way or that, but it reminds me in some respects of a medieval Act of Attainder. Although the penalties are not so severe as those prescribed in an Act of Attainder, the principle is the same. In time past, if the Government wanted to "clobber" somebody and there was some danger that if he was put on trial he might be acquitted, they required Parliament to pass an Act saying that he was guilty and was to suffer certain penalties. That is in effect what is being done in this Act.

This idea of "notional rate", what your rate ought to be, has not been apparent before to local authorities. They are now told, "You are the guilty ones and you will suffer a penalty". But an ancient Act of Attainder had at least this limit on its injustice. The person whom it affected was actually named in the Act, but here we have the principle of attainder added to the principle of ministerial regulation. The persons to whom Clause 41 are applied are to be persons defined in ministerial regulations and are not to be precisely defined in the Act itself.

We have heard from the pronouncements of the Ministry and reports in the press who are to be the first 14. There is nothing in the Act as it stands to say that they will be the only ones. The Minister at one stage said that the sufferers would be those who were substantially above the notional rate. Well, the notional rate, in the first place, will be what he says it is, and "substantially" will mean what he thinks is substantial. So they are to be determined to be criminal and to be worthy of penalty on criteria which the Minister can lay down and which might hit much wider than they hit already.

I wish, without delaying your Lordships too long, to draw attention to one particular authority among the 14. It is the borough in which I live and which I used to represent in another place—the Borough of Hammersmith and Fulham—which is unique in that it is the only one of the victims which has not got a Labour majority on its council. It is governed by a Tory/Liberal coalition. The type of coalition may be exemplified by referring to that restaurant keeper who put on his menu a delicacy called "horse and rabbit pie" and when he was asked in what proportion he mixed the viands he replied "50/50—one horse, one rabbit". The last general election produced the result 24 Conservatives, 24 Labour, and 2 Liberals and in effect the Tories have been governing with the assent of the two Liberals ever since.

Now, why are they among the list? Everybody in our borough is asking this question and one suggestion which has been made to me is that it was to give the Secretary of State an appearance of impartiality. There was one period, before sex equality reached its present stage, where statutes required that on various public bodies there must be at any rate one woman, who was known as the statutory woman. That was to show how impartial and equal we were. It may be that Hammersmith and Fulham are statutory Tory, in order to demonstrate that there is no element of political animosity in selecting the 14. If that is true, it is not much comfort to the citizens of the Borough of Hammersmith and Fulham.

There was another suggestion—that Mr. Heseltine was actually under the impression at the time when he made the decision that the council was still governed by a Labour majority. That would be a pardonable error, because we have had a Labour majority on the council since the year 1944 except for two brief periods which the citizens did not take long to repent. But it is very odd that it is not until after so many years, when they have a Tory-Liberal majority on their council, that they are publicly pilloried as being extravagant over-spenders. What can they have done? What have they failed to do?

Let us look at some of the things that they have done. They have closed one of the public baths in the most thickly populated part of the borough; they have cut down such services as home helps, meals on wheels and old people's clubs, and where it has been possible for them to increase the charge for anything, they have done so. They have restricted the opening hours of the public libraries; they have raised the rental charge for the hiring of rooms in the Town Hall, to the great distress of certain local charitable bodies. They have raised the rents of council dwellings once and were about to do it again until at last the two Liberals called a halt and said that really to raise the council rents twice in one calendar year was a bit too much. It may be that that occurred to them after they had been pilloried by the Minister for extravagance. Consequently, it may be that the citizens of Hammersmith and Fulham are being penalised because they were not diligent enough to elect an all-Tory authority and there appeared to be two spendthrift Liberals among them.

Then, despite the existence of a very considerable housing waiting list, which is a grim and serious problem, they have in effect abolished the programme of the building of council dwellings altogether. That was a very large act of sabotage but, in order to demonstrate that just as no act of sabotage would be too large for them or no act of meanness too little, they have proceeded to reduce the number of public lavatories. In particular in one very pleasant open space they closed down the public lavatory. When representations were made to them on behalf of elderly people about the difficulties this caused, a spokesman for the council pointed out that after all there was another some 20 minutes walk away. I mention this because they have been most diligent in behaving as good Tories should behave and one would have thought that Mr. Heseltine would have presented them with a medal. What on earth are they doing in this galère?

It looks as though there has been a bit of a muddle somewhere, quite apart from far more serious general objections to the clause. My chief objection to this clause is that it is arbitrary, it is extremely harsh, and it makes absolute nonsense of the first words in the title of this Bill, "An Act to relax controls on Local Government".

I should like to associate myself with a large part of the remarks made by my noble friend Lord Sandford in his very spirited defence of local government. I quarrel with him only because he has stolen all the statistics that I intended to use myself; statistics which are in themselves of course the direct answer to the noble Lord, Lord Boyd-Carpenter's good speech. Local government expenditure is falling and central Government expenditure is rising and the wrong target is being aimed at. The only statistic I would add is that I think it is true to say that the cost of local government is going up a great deal less quickly than the cost of the newspapers which are habitually criticising local government at every possible opportunity.

I spoke at length on Second Reading about the block grant and I have no intention of saying anything further now although when we reach Clause 46 I should like to join in the debate on that. The complications of that block grant seem to me to be getting worse and more frightening each time and indeed some of my own later amendments may make them more complicated still, but with the best possible intent, like all amendments. What I should like the Minister to say, in quite clear terms is whether or not it is possible that the introduction of the block grant can be postponed (as has been suggested, I think, by all the associations) until we really understand it and have some opportunity of getting rid of the serious difficulties which attend it. Perhaps he can also say whether the transitional arrangements can or cannot be made to last for one year, and if not, why not, and if so, why so.

We in local government are fundamentally opposed to providing the Secretary of State with penalty clauses in the shape of transitional clauses which would enable him to withhold supplementary grant from those local authorities judged to have marginally exceeded the rate which he believes is appropriate.

I should like to refer to the amendments which are on the Marshalled List, because we are taking a general debate on this. It is clear that we dislike transitional arrangements; however, the noble Lord the Minister has tabled an amendment which, in practice, would allow the transitional period to be lengthened. At the moment it is confined to a year. At the ninth sitting in the Committee stage in another place the Minister of State gave what we thought was an undertaking that it would last only a year. This was repeated by the Parliamentary Secretary at the eleventh sitting and it seemed fairly clear but it is also the case that the assurance that a year would be the length of the transitional arrangements was the one fact which prevented a revolt on the Tory Benches in another place on the Second Reading. The Minister is now providing for it to continue and we believe that this is a retreat from the assurances and ought to be resisted.

I should like to refer to Amendment No. 86, which very much concerns the transitional arrangements. This was an amendment which was asked for by at least one local authority association at the Committee stage in another place. It requires the Secretary of State to compare one year with another when contemplating the use of the penalty clauses. This is to ensure that allowance is made for what are traditionally high-spending authorities. This term has nothing to do with profligacy, otherwise the local authority association concerned would have had nothing to do with it. Often the traditionally high-spending authorities have perfectly sound reasons for doing so and in the main it has nothing to do with the political complexion of the council concerned. It has to do with two things: the problems that those authorities have to face and the encouragement that has been given by successive Ministers over a period of almost 10 years to do specific things in their own areas. Newcastle is a case in point; the London boroughs are also similarly situated. I am talking about partnership schemes, I am talking about the desperately difficult inner city problems of decay with which the London boroughs particularly are faced.

Some noble Lords on this side of the Committee, as indeed the Secretary of State, had the privilege of touring the dockland areas from Tower Bridge to Greenwich only a fortnight ago. We saw there a great deal of first-class redevelopment of a very high order. It was a most stimulating experience. One of these boroughs, Tower Hamlets, is going to be penalised to the extent of something like £1,055,000 or—such are the vagaries of the whole system—it could be as high as £4½ million. The local authority itself has no idea whether it will be one or the other. They are told by the Department that if they make an exceptional effort they might escape the penalty clause. I believe that that authority and many others have made an extraordinary effort. If noble Lords have not seen what has been done in dockland it is time they went down and had a look. In my view they should not be penalised, they should be further assisted to deal with the intractable problems that face them and other authorities of the same kind.

What we question is the right and the wisdom of allowing the Secretary of State to impose his will on local authorities. This has nothing to do with the question of whether they are spending too much, because, as the noble Lord, Lord Sandford, and others will recall, the local authority associations at the invitation of the Secretary of State offered to produce a scheme based entirely on the criteria and aims of the Minister, a scheme that would achieve his objectives, and indeed it was refused. So there is no question of intransigence or obstruction in this at all; it is for us a matter of principle. We believe that Whitehall does not know best, and I should have thought that slogan ought to be engraved on the hearts of many Members on the other side of the Chamber.

I think this threat to local government is particularly unacceptable when it appears to be retrospective. I am sure the Minister will object to the term "retor-spective", but I am in good company; even the Spectator, The Times, the Financial Times, agreed that this was a retrospective act and as such was highly undesirable. What the Secretary of State is doing is penalising local authorities for doing what, as Lord Evans said, was perfectly legal when they did it. It is clear that the Secretary of State decided some time ago that he was going to penalise—hammer, if you like—a number of local authorities and he has spent the last few months trying to find a way to do it. That accounts for the whole vagaries of the system and why some authorities expecting to be penalised under the criteria are not going to be penalised and others with enormous problems facing them are going to have to suffer. They will be penalised in 1980–81, presumably by the rate support grant order which is to be published on 21st November.

Not only is this action, as we believe, retrospective; it is entirely arbitrary. I believe it is necessary when the Minister takes action of this kind that we in Parliament should know a great deal more about it than we are being told in this legislation. I hope noble Lords will accept that three principles are involved—one against retrospection, one against arbitrary action, and the third, being properly accountable and putting to Parliament clearer indication of the Minister's intentions. They are not just matters relating to these 14 authorities; they are principles of constitutional propriety which ought to be taken account of.

As chairman of the finance committee of a local authority, I am very strongly aware of the stresses and strains being put on local government. They are so severe that it will be intolerably difficult for many councils—and I am talking about councils which are seeking to support the Minister in what he is doing—to meet his requirements. The truth of the matter is (I say this to the noble Lord, Lord Boyd-Carpenter) that it is not just a question of local government. Local government is being sacrificed deliberately more than many other elements in the community on the altar of monetary economics, because, as I think the noble Lord, Lord Sandford, pointed out, as did Lord Ridley, local government has a very good record. Its expenditure is going down while that of central Government is going up; it has been fairly consistent proportion of the gross disposable income of the country for 40 years. I think that is hardly true of any Government of whichever party.

Indeed, in the last five years the LDS allocation—that is, the locally determined schemes from which authorities get their capital permission—has dropped to one-sixth of what it was, and it really is one of the most crippling restrictions that we have faced for a very long time. That is already part of the financial discipline that local authorities have been existing under over the last few years. We say this is not a reason for taking the massive Draconian measures to reduce the expenditure of local government or to penalise local authorities whose expenditure can be justified on the facts. As I said, local government has a consistently good record of matching closely the capital and revenue targets laid down nationally; and who can ask for better than that?

I think one of the difficulties is that often the Secretary of State and some of his staff do not understand very clearly what happens in local government. Every now and then halfway through the year the Secretary of State gets up and says local government are overspending. Each Secretary of State for the last five years has done this. What they do not realise is that it is in the nature of local government to over-estimate. It is very difficult to predict, and therefore the expenditure rate in the mid-term is often proportionately much higher than it should be at the end of the year, but in almost every year by the end of the year, either from balances or underspending, or for other reasons, the actual financial balance has been achieved and the record maintained.

The guidelines which have been laid down by the Government have been adhered to by most authorities. Those like my own authority which followed the Minister's advice for 1980–81 and allowed 13 per cent, inflation find that that is wholly inadequate. Are we to be penalised because we accepted the Government's advice and included a 13 per cent, rate, because the rest of that cost will have to be paid for. A short-term money market rate of 20 per cent, was not of local government making. Yet we shall have to meet the very considerable additional cost involved in financing that money. Then there is the implication of comparability payments, again nothing that local government was directly responsible for. The burden to be placed on local government is intolerable. The Government are imposing cuts of nearly 5 per cent. already in the pronouncements made by the Secretary of State. At no time in the history of local government at the most crucial time of economy has it ever been possible to provide more than a 2 per cent, reduction in the actual expenditure.

The basic criterion for determining which authorities should be penalised appears to be rate poundage levied in 1980–81 but the criterion is most unclear. As the noble Baroness, Lady Stedman, has said, one of the 13 metropolitan authorities singled out by the Secretary of State had an adjusted rate of 155 pence in 1978–79, and therefore by no stretch of imagination could it have come to the level required of it, having already been in the year before at the adjusted notional rate. A number of other anomalies are here; seven of the 13 authorities had a uniform rate of between 121 and 152 pence in 1979–80, and equally there are authorities high up in the list who have had the waiver produced for them who on all reasonable reckoning ought to have been in the class of those authorities penalised. I am talking not about recalcitrant authorities, but about authorities—both Conservative and Labour—which may be trying desperately to do what the Minister wants. The present rate poundage is often historical fact with little to do with the present councillors, but they will be required to conform or be penalised without any real consideration, despite the circumstances that have brought them to that level.

It is clear that not only is this unjust but, if the costs continue as they are at present, the Secretary of State will have to penalise a much larger number of authorities if they are going to get the money to meet the bills that I have been talking about, whether of inflation, comparability or something else. As I have said, it is not only unjust; it destroys the relationship between central and local government and it is weakening a system that we believe is the envy of the world.

What many people, particularly those being penalised, will find so unfair is that pressure has been put on local authorities over several years—not just this year but in earlier years—while certain other authorities, and I refer particularly to the regional water authorities, have been able to make massive increases without restriction. I do not think that, as long as these authorities are allowed to continue to make such massive increases, the penalties placed on local government can really be fair or acceptable.

I said that the system of penalising local authorities is unfair and unacceptable. However, the base under which it is established is highly suspect. I should like to demonstrate that briefly before I close my remarks. Newcastle-upon-Tyne is one of the towns to be penalised. The block grant is designed to make recalcitrant authorities toe the line. But, in fact, when the block grant proposals operate Newcastle will not be an over-spender—it will come off very favourably indeed. Surely that is a nonsensical situation which makes the Government's system both highly suspect and arbitrary. We urge the Minister to abandon the transitional arrangements.

5.3 p.m.

We have been hearing from all sorts of people who seem to hate the new proposals for rate support grant. I come from the Isle of Wight, a part of the world where, in point of fact, the present system is so dreadful that anything that replaces it is bound to be better. In 1979–80 we had two-thirds of the grant per head of population of the average for England and Wales, and we are reasonably confident that the new plans will be an improvement.

We think it sensible that there should be a form of rate support grant which looks at needs and looks, as it were, into the future instead of into the past. We think it very reasonable to have a new system on the lines that the Government propose. It would perhaps be more helpful, while we are having this debate, to know rather more of the detail and I would agree with anyone who criticised what is proposed on those grounds. But basically nothing can be worse than what we have at present; and so I would welcome, on behalf of my county, not only the new system, but also its implementation at the earliest possible occasion.

Having said that, I should like to make another point. Having listened to this debate, it seems to me that people are saying that the system which is being adopted or the Government's attitude in bringing it into force, somehow is breaking down the good relationship which has existed in the past between central Government and local government. I have not noticed that that relationship has always been of the highest order. We have been grumbling with central Government in my part of the world for certainly the last 10 years about unfair treatment, and in a way our grumbles have been very much those that one might have as an individual with one's bank manager.

I have noticed that if I have an overdraft my relationship with my bank manager is quite different from when my account is in surplus. It would seem to me that if one is going to have to be supplied with money, and one is not self-sufficient, it is reasonable that the supplier of money should have some sort of a say as to how that money is being used. After all, the British Government had rather distasteful experiences with the International Monetary Fund some five years ago when the party opposite were in power, and they grumbled like mad and felt that the International Monetary Fund comprised a dreadful lot of people. It seems to me that whenever there is a superior body, whether one is an individual, a local government authority or a great nation, and whenever one is in debt to somebody else, one rather resents the interference that is inevitably applied to one. It would seem to me that a great deal of what has been said, particularly by noble Lords opposite, has been a resentment of that sort which, after all, will happen in any case. So I should like to say to the Government that I am sure that their system is better than the one we have at present and I hope that they will introduce it as soon as possible.

The noble Lord, Lord Mottistone, is far too optimistic: nothing is ever so bad that the ingenuity of man cannot make it worse! The question that I should like to ask—and it really is a question, and I have given the noble Lord the Minister the opportunity to see a letter that I have received—arises from a council that is concerned that there is a retrospective element that is punitive, and it is also concerned that arrangements might have been arrived at that are now to its detriment. It asked me to ask whether it is true that four concessions have been granted by the Government to the Association of County Councils in return for not, as it quotes:

"fighting the main penalty provisions and plans to introduce a new block grant system to control spending".
It says that if that is so, then it would wish to make it clear for its part that such an agreement does not carry the approval of that authority and that the association has been so advised. Is the Minister able to comment?

5.7 p.m.

I wonder whether I might reply to the debate. We have been speaking at great length and I feel that now is the time to respond. I should like first to deal with the point about the future of the transitional arrangements. I think I can clear this up by saying that there is absolutely no question of the transitional arrangements and block grant running simultaneously, as was suggested.

The transitional arrangements modify the existing system of rate support grant pending the introduction of the new block grant system and will lapse automatically with the introduction of block grant. It was suggested by my noble friend Lord Ridley that the implementation of block grant should be deferred until 1982–83 to enable further development work to take place and to allow for further consultation with the local authority associations on the mechanics of the new system. I fully acknowledge that we have had to develop the system at a fast pace, but I could not accept any suggestion, as has been made, about inadequate consultation.

The fact is that we believe—and this is a matter which we shall debate, soon I hope—that a workable system has been developed, one which will allow an equitable grant system to be made for the next financial year and, of course, development work will continue. But, as with any new system, there will be some rough edges which will need improvement once the system is in operation. But, to defer the introduction of block grant would, in my view, be running away from the problem. The present rate support grant system suffers from serious defects; it is unfair, and by the encouragement it gives to ever higher levels of expenditure it conflicts fundamentally with our commitment to sustain reductions in public expenditure. It must, therefore, be replaced at the earliest practical moment and I submit that that moment has now arrived.

Perhaps I may answer the point made by the noble Lord, Lord Irving. The reason for Amendment No. 84 to Clause 41 is simple, but it is important. It is normal practice that legislation runs until such time as other legislation is brought in to repeal it. This Bill has been so constructed that block grant commences by order rather than at a specified date, because naturally the Government are firmly wedded to the democratic process for them to take parliamentary assent to the Bill for granted. It is, therefore, logical for there to be no terminal date for the transitional arrangements, but I repeat that they will automatically lapse on the introduction of block grant by order. There is no intention on the part of the Government for this to go on beyond that point in time.

We shall be debating the provisions on block grant shortly, but, in considering what are generally described as the transitional arrangements for 1980–81, I ask the Committee to note that they are designed to apply so far as possible the principles of block grant through adjustment of grants' entitlements under existing legislation at the first increase order under the 1980–81 RSG settlement. The notional uniform rate is the pivot of the transitional arrangements, the figure around which they revolve.

I hope that I can put this in a few words, but I think that it is necessary to say exactly what it is because from what I heard from noble Lords opposite, it seems that they really do not know. The notional uniform rate is the rate in the pound which all authorities could levy if they spent at the level of their assessed expenditure needs after payment of needs element and taking account of resources element. It is calculated by subtracting from total relevant expenditure, first, specific and supplementary grants, secondly, total needs element, and, thirdly, what is known as "London clawback". I am sorry, but it is necessary to explain this in detail to make the point to which I shall come in a moment.

The result is then divided by the total population of England and Wales, multiplied by the national standard rateable value. The subtraction of London claw-back is a technical adjustment to take account of the above-standard rateable resources of London. I want to stress that the notional uniform rate, which is 119p for 1980–81, is not, as has been suggested, an arbitrary figure. It is not, as the noble Lords, Lord Stewart of Fulham, and Lord Greenwood of Rossen-dale, said, what the Secretary of State thinks it should be. It is implicit in every annual rate support grant system, and it is the product of arithmetic, not of judgment.

I turn to the uniform rate of local authorities. The uniform rate is that part of a local authority's total expenditure which is to be met by rates, divided by the total rateable value of its area as enhanced by the operation of the resources element. It is thus a true measure of an authority's intentions on expenditure and balances. A comparison of an authority's uniform rate with the notional uniform rate is a fair comparison of what an authority intends to spend with what it needs to spend in terms of the RSG needs assessment.

Before the noble Lord leaves that point, as he is so emphatic about this, how does he understand the words in Clause 41(2) which state that:

"'The notional uniform rate' means the rate which … the Secretary of State considers that each rating authority … would need to levy in order to finance [its] spending needs"?
I follow all about calculating the needs, but in the last resort it is what the Secretary of State considers that they would need.

I wonder whether I may be allowed to complete what I have to say, because I shall come to other such figures and I think that they may give the noble Lord the answer he wants. If they do not, of course I shall be glad to return to his point later on. After all, this is a Committee stage.

A comparison of notional and uniform rates thus enables a judgment to be formed about relative levels of spending. As the Committee knows, the Secretary of State for the Environment announced on 18th September that in the face of a potential overspend by local government in 1980–81, the Government had decided that it was only right to take action against those authorities which had blatantly disregarded the Government's exhortations to reduce expenditure and, subject—and I stress this—to parliamentary approval, to reduce grant to those authorities with uniform rates above a threshold level of 155p.

Perhaps I can now deal with the specific argument about retrospection and unconstitutionality, unfairness and arbitrariness. I confess that I find it difficult to understand the charge that these provisions are retrospective or unconstitutional. Certainly they can hardly have come as a surprise to anyone. Perhaps we could look at the chronology of events. As long ago as November 1979 the Secretary of State for the Environment announced in the context of the rate support grant settlement for 1980–81 that the Government would introduce legislation to provide for the transitional arrangements. A circular letter was issued to all local authorities last December describing the basic framework of the proposed scheme. The scheme was outlined in the Rate Support Grant Order 1980–81, which was debated in another place last January. Provisions were then included in the Bill presented to Parliament.

It has always been made clear that there can be no abatement of grant unless Parliament approves the provisions of the Bill. In another place the Government agreed that there should be an order setting out the general principles of the scheme, subject to no less than an Affirmative Resolution. Some argue that retrospection lies in announcing the intention to apply transitional arrangements before legislative approval. But it is surely not uncommon—it is absolutely normal practice—for the Government of the day to spell out their detailed intentions on specific legislation well before enactment. Indeed, the Opposition have been pressing the Government to explain exactly how the transitional arrangements would work and, if necessary—and I have them with me—I can give many quotations to prove that that is so.

The noble Lord, Lord Evans of Claugh-ton, said that it was difficult to understand. He asked "Why the 14? What is the criterion?" Let me try to enlighten him. As I have explained, the list of overspending is a comparison of notional and uniform rates. The Government chose a figure of 155p—and this may be the point to which the noble Lord, Lord Stewart, refers—which is well above the notional uniform arithmetically-calculated rate of 119p—30 per cent, above. We did that because such an enormous extra percentage makes ample allowance for what everyone knows is the unsatisfactory character of existing needs assessment.

The noble Baroness, Lady Stedman, asked why some over 155p were excused. From the outset it was made clear that a waiver would be applied if authorities with historically high levels of expenditure—and this is also the point upon which the noble Lord, Lord Irving, touched—too high to be reduced below any threshold in one year, had nevertheless made exceptional reductions in expenditure. The Government, therefore, constructed two tests: either that an authority should have contained its expenditure in the current year by providing for a cash increase in rate and RSG-borne budgeted expenditure between 1979–80 and 1980–81 of at least three percentage points below the average for the class; or that an authority should have achieved the target under the recent revision of 1980–81 budgets requested by the Government of at least a 2 per cent, reduction in current expenditure volumes in real terms between 1980–81 and 1978–79.

If the noble Lord will give way (I am sorry to interrupt him), he said that the Government looked at the ones which were over the 155p, and introduced the waiver where they felt that the traditional high-spending authorities had done something about it—they could not, perhaps, reduce it in the one year. Did the Government also make any direct contact with the local authority representatives of the 14 authorities that are on the list to be penalised to find out what they had done, and, if they had not done it, the reasons behind why they had not felt that they could reduce it?

If I may be allowed to finish, I cover that point as well in what I am about to say. I did try to be very patient and I listened to everything that everyone else said, so perhaps I could put in my plea now. Nine out of the 23 authorities with uniform rates above 155p qualify for one or the other of the two waivers which I have just mentioned. The Government have made it clear—and this is the point—that it is still open to any of the remaining 14 authorities to qualify under one or other waiver by making further relevant changes in their finances before the order is presented to Parliament later this year. So much for the accusation of unfairness. The test of overspending and the basis of the waivers have been logically constructed and will be consistently applied. There is nothing arbitrary about it. I repeat that nothing can be done unless Parliament approves the provisions of the Bill and endorses the principles on which the scheme is based in an order subsequently presented to Parliament.

One last point. The Government in no sense gain from the transitional arrangements. The money withheld from the profligate authorities is redistributed to all other authorities. The transitional arrangements, like block grant, are concerned not with controlling the total of local authority grant but with its fair distribution between authorities. Today we have heard much overheated rhetoric about taking over local government, about central Government wanting to fix local rates and central Government deciding local spending. Well, really! With how it has turned out, we are talking of only 14 out of some 450 authorities.

The nub of the whole argument is that the Government are simply refusing to give national support to excessive levels of local expenditure. Let me say again that the local authorities affected can still decide even now for themselves whether and how to reduce their expenditure. That is their decision. Noble Lords may be interested to know that I have good reason to believe that some of them are already trying to do just that.

We have talked these transitional arrangements through and it is time to consider what we are trying to achieve. Surely it is right for the Government to spotlight those authorities who are not willing to conform to national policy objectives. I am sure that the country I at large thinks it right and proper that those authorities who refuse to co-operate should bear the cost. The Government are entitled to expect the co-operation of local authorities whose individual local objectives must be subordinate to the national interest.

I have here in front of me a whole string of comments and notes I have made on points raised by your Lordships through the debate. I feel that you would not want me to try to cover them one by one at this stage. We shall be having, I assume, a lengthy debate on block grants soon. I fear that many of the points will be made again. I would only say that I do respect—even though I disagree strongly with the points made by noble Lords opposite—the sincerity of their belief in the points they have made. Likewise, I am deeply grateful to my noble friends Lord Boyd-Carpenter and Lord Mottistone for their support on this. But if they and all your Lordships will excuse me I will not at this time in this debate go into the details of what has been said. I can cover them all, I assure you, and would like to do, but I think we have to take some cognisance of the time.

To summarise, the proposal to withhold money from authorities which by objective criteria—and that is the point—are spending at excessive levels is an integral part of Government strategy for the public sector. The grant to be withdrawn will not go back to the Exchequer but will be redistributed to other authorities. The policy is to be carried out in a way that is neither retrospective nor arbitrary. On the contrary, it is both just and reasonable, and I commend this clause to your Lordships.

Before the noble Lord sits down, I accept that he was asked a lot of questions, and I am quite sure that with him the Committee does not want wearying at this stage with all the detailed answers. There was one question that I asked which I think is of some importance. What right of appeal have authorities got, and to whom will they have a right of appeal, if the Secretary of State decides that they are on the penalised list? They ought to have some right of appeal. They ought to be able to make their case as to why their rates are high, why they cannot reduce their spending. To whom will they make it, and when they will be able to make it.

I thought I had touched on that too when I said that already some of the local authorities concerned have been along, if you like, to say, "Here is our case. This is what we think. This is what we can do. This is why we feel"—et cetera. The door is wide open. The door is open all the time, and I hope they will come along, as some have already done, and talk to us about it and we shall gladly look at that.

5.25 p.m.

In inviting your Lordships to reject the transitional arrangements and particularly Clause 51, I want to challenge the Government's objective criteria. I will start with the claw-back in so far as London is concerned. Your Lordships heard me comment before on the harm and unfairness to London through this claw-back in the rate support grant. It is not without some interest that 11 of the 14 authorities to be penalised are London authorities. They are London authorities because what happens all the time is that the social needs of London are ignored.

The fact that some authorities in London have a high rateable value is given undue prominence. The consequence of that claw-back is that inevitably London authorities have to levy higher rates than authorities outside London. That is one of the basic points, and that is again why we cannot accept this objective criteria. They are based on this claw-back which affects London quite seriously and is a major factor in what has now happened.

In inviting the Committee to reject this, I want to say that the objective criteria needs to be looked at again. I also want to illustrate, supporting some of the remarks that other Members have made, the consequences of the power that the Secretary of State has taken and the way he intends to use it. Three of the boroughs to be penalised are boroughs with which I have a relationship. I practise in the Family Practitioners Committee of Camden and Islington. I represented a part of Hackney for 16 years in County Hall and the whole of it for nine of those 16 years. I have patients in Islington as well as Camden.

Hackney is one of the most deprived areas in London. It has been accepted by the Government that it is one of the most deprived areas in the country, because as a consequence the Government have entered into a partnership with Hackney and Islington. By all the criteria on which deprivation is judged Hackney is regarded as deprived. The funny thing about it is that in terms of per capita expenditure of each London borough Hackney is below the average. It is the fifth lowest of the 12 inner London boroughs in spite of the problems that it has.

What is more, Hackney is now threatened not only with a withdrawal of some of its rate support grant but a withdrawal of some of the grants that it was supposed to get under the partnership arrangement. The whole point about these partnership arrangements is that central Government are encouraging certain local authorities to spend on certain projects because central Government feel that there is great social need in the area. Yet the same central Government turns round and includes these expenditures as part of the expenditure of this borough to which it objects. How absurd can you be?

It is either that you want these boroughs to do these things, in which case it is not appropriate that expenditure under these partnership schemes should be included in their overall expenditure, or you do not want them to do it in which case do not pretend that you want them to. It is quite wrong for central Government in one breath to encourage a local authority to enter into partnership with it for certain expenditure and then to penalise that authority for that additional expenditure.

I am a Camden ratepayer and if the rate support grant is reduced my rates will have to go up, and I face that squarely. It may be that there is an appearance of wellbeing about Camden which fools Government as it fools so many others. The truth of the matter is that there is a high proportion of both the very rich and the very poor in the borough of Camden, and numerically the latter are much more extensive, and therefore central and local government social support is much more necessary. We also have the problem of unemployment; but as everybody else has that I will not stress it. Camden has high environment costs, with three railway termini and heavy road usage; it is also one of those areas which for one reason or another attracts tourists, and because of its business grouping and high multiple occupation the question of refuse collection and street cleaning is of the highest importance. What is more, Camden is one of those boroughs the daytime population of which is double its normal number of residents.

All these things have a bearing on the way in which the borough is affected in terms of the amenities it needs to provide and the consequences of meeting those needs. Moreover, as most noble Lords will be aware, Camden has a considerable architectural heritage which imposes costs of upkeep and makes more costly the need to maintain those hereditaments; but the rateable values of those properties are not very high. And because Camden is a central London borough with a great deal of business, land costs are very high, and therefore to deal with its housing problems Camden must spend a lot more than many other boroughs because, despite what I have said, Camden today, in the light of figures that have been produced, has the highest degree of homelessness in London with the highest number of people having been accepted as priority cases for rehousing.

I confess from my own knowledge that Camden has a high degree of vagrants in terms of drug addicts and alcoholics, and it ranks with Hackney and Westminster as having the third highest number of one-parent families. It also has the second highest number of single elderly people in London. In addition, as the Committee will be aware, there are several major hospitals in the borough of Camden. That has consequences in that Camden must provide social services and workers, social workers who work for many people who do not live in the borough, but the cost has to be met locally. I have mentioned the number of people who come into Camden, and that has an effect in terms of library amenities and things of that sort, and I spoke about the architectural heritage. The problem is that we have 4,000 listed buildings and 15 conservation areas to protect; so when all those matters are borne in mind one can understand why Camden is a high-spending borough.

It strikes me that the Government, in their attempt at objectivity—I am not suggesting they are doing otherwise—are missing many of those points, and therefore I return to where I started: that basic to all the trouble is the fact that London never gets its fair share of rate support grant. That happens every time, and it will happen again because I have been reading of a proposal that a larger proportion of the rate support grant should be shifted from inner London, with all the problems the area has, to the outer areas. I have therefore used this occasion to illustrate why the Secretary of State should not be given the powers for which he is asking, because there is ample evidence that the power is being abused.

I feel I share some responsibility with the noble Baroness, Lady Stedman, for having suggested to my noble friend Lord Bellwin that we


Amulree, L.Glenamara, L.Parry, L.
Ardwick, L.Gordon-Walker, L.Peart, L.
Avebury, L.Gosford, E.Phillips, B.
Aylestone, L.Greenwood of Rossendale, L.Pitt of Hampstead, L.
Balogh, L.Gregson, L.Ponsonby of Shulbrede, L. [Teller.]
Bernstein, L.Hale, L.
Beswick, L.Hall, V.Ritchie-Calder, L.
Birk, B.Hampton, L.Rochester, L.
Blease, L.Hatch of Lusby, L.Ross of Marnock, L.
Blyton, L.Hayter, L.Rugby, L.
Boston of Faversham, L.Henderson, L.Sainsbury, L.
Bowden, L.Heycock, L.Seear, B.
Briginshaw, L.Houghton of Sowerby, L.Seebohm, L.
Brockway, L.Ilchester, E.Sefton of Garston, L.
Brooks of Tremorfa, L.Irving of Dartford, L.Segal, L.
Bruce of Donington, L.Jacques, L.Shackleton, L.
Byers, L.Janner, L.Simon, V.
Chitnis, L.Kaldor, L.Stamp, L.
Cledwyn of Penrhos, L.Kilmarnock, L.Stedman, B.
Collison, L.Kirkhill, L.Stewart of Alvechurch, B.
Cooper of Stockton Heath, L.Leatherland, L.Stewart of Fulham, L.
Darling of Hillsborough, L.Listowel, E.Stone, L.
David, B.Llewelyn-Davis of Hastoe, B.Strabolgi, L.
Davies of Leek, L.Lloyd of Hampstead, L.Strauss, L.
Davies of Penrhys, L.Lockwood, B.Taylor of Mansfield, L.
Delacourt-Smith of Alteryn, B.Lovell-Davies, L.Underhill, L.
Denington, B.McCarthy, L.Wallace of Coslany, L. [Teller.]
Donaldson of Kingsbridge, L.Mackie of Benshie, L.Wells-Pestell, L.
Elwyn-Jones, L.Milverton, L.Whaddon, L.
Evans of Claughton, L.Mishcon, L.Wigoder, L.
Fisher of Rednal, B.Morris of Grasmere, L.Willis, L.
Gaitskell, B.Morris of Kenwood, L.Wynne-Jones, L.
Galpern, L.Noel-Baker, L.Young of Dartington, L.
Gladwyn, L.Northfield, L.

should start this afternoon with a fairly broad debate over the whole of Part VI, and I think that has served a useful purpose; it has enabled a lot of steam to be let off. But I would also suggest that now that that has happened and the Minister has given his reply, we should not trespass much further on the flexibility of our procedure but, rather, invite the noble Baroness to tell us what she proposes to do about the amendment.

I share the view of the noble Lord and think it might be appropriate to put the amendment formally and test the opinion of the Committee.

5.37 p.m.

On Question, Whether the said amendment (No. 83) shall be agreed to?

Their Lordships divided: Contents, 100; Not-Contents, 144.


Alexander of Tunis, E.Gage, V.Mowbray and Stourton, L.
Alport, L.Gainford, L.Murton of Lindisfarne, L.
Amory, V.Gowrie, E.Netherthorpe, L.
Ampthill, L.Grafton, D.Newall, L.
Avon, E.Gray, L.Northchurch, B.
Balerno, L.Grimston of Westbury, L.Nugent of Guildford, L.
Bellwin, L.Hailsham of Saint Marylebone, L. (L. Chancellor.)O'Brien of Lothbury, L.
Belstead, L.Onslow, E.
Berkeley, B.Hankey, L.Orkney, E.
Bessborough, E.Hanworth, V.Orr-Ewing, L.
Boothby, L.Harvington, L.Pender, L.
Boyd of Merton, V.Hatherton, L.Penrhyn, L.
Boyd-Carpenter, L.Henley, L.Perth, E.
Brookes, L.Hertford, M.Porritt, L.
Brownlow, L.Hill of Luton, L.Rawlinson of Ewell, L.
Caithness, E.Hornsby-Smith, B.Ridley, V.
Cathcart, E.Hunt of Fawley, L.Robbins, L.
Chelwood, L.Hylton-Foster, B.Rochdale, V.
Cockfield, L.James of Rusholme, L.Romney, E.
Colville of Culross, V.Jeffreys, L.Rosslyn, E.
Congleton, L.Kemsley, V.Sackville, L.
Cork and Orrery, E.Kimberley, E.St. Aldwyn, E.
Cornwall is, L.Kinloss, Ly.St. Davids, V.
Cottesloe, L.Kinnaird, L.Sandford, L.
Craigavon, V.Lindsey and Abingdon, E.Sandys, L. [Teller.]
Crathorne, L.Linlithgow, M.Savile, L.
Croft, L.Liverpool, E.Selkirk, E.
Cromartie, E.Long, V.Sempill, Ly.
Cullen of Ashbourne, L.Lonsdale, E.Sharpies, B.
Daventry, V.Loudoun, C.Soames, L. (L. President.)
Do La Warr, E.Lucas of Chilworth, L.Spens, L.
De L'Isle, V.Luke, L.Stanley of Alderley, L.
Denham, L. [Teller.]Lyell, L.Strathclyde, L.
Devonshire, D.McAlpine of Moffat, L.Strathcona and Mount Royal, L.
Digby, L.MacAndrew, L.Strathspey, L.
Drumalbyn, L.McFadzean, L.Suffield, L.
Dundee, E.Mackay of Clashfern, L.Swansea, L.
Dundonald, E.Macleod of Borve, B.Swinfen, L.
Eccles, V.Mancroft, L.Teviot, L.
Elibank, L.Mansfield, E.Trefgarne, L.
Ellenborough, L.Margadale, L.Trenchard, V.
Elliot of Harwood, B.Marley, L.Trumpington, B.
Elton, L.Marshall of Leeds, L.Vaux of Harrowden, L.
Evans of Hungershall, L.Massereene and Ferrard, V.Vickers, B.
Falkland, V.Minto, E.Vivian, L.
Ferrers, E.Monk Bretton, L.Wellington, D.
Ferrier, L.Morris, L.Willoughby de Broke, L.
Fortescue, E.Mottistone, L.
Fraser of Kilmorack, L.

Resolved in the negative, and amendment disagreed to accordingly.

In calling Amendment No. 84, I should advise the Committee that if this amendment is agreed to, I cannot call Amendment No. 85.

5.48 p.m.

moved amendment No. 84:

Page 38, line 11, leave out ("any year") and insert ("the year 1980–81 and any subsequent year before the commencing year").

The noble Lord said: I spoke to this amendment previously. I beg to move.

On Question amendment agreed to.

[ Amendment No. 85 not moved.]

moved Amendment No. 86:

Page 38, line 13, at end insert ("and if the percentage increase in that authority's uniform rate compared with its uniform rate for previous years exceeds the percentage increase in the National uniform rate between the same two years by more than such percentage as may be determined by the Secretary of State and be applicable to all local authorities.").

The noble Baroness said: On behalf of my noble friend Lord Irving of Dartford, I beg to move this amendment.

This amendment is identical to one that was put down by the Opposition in another place. It might be helpful if I were to say that I have taken "national uniform rate" as it appears in the amendment to mean "notional uniform rate"; I am sure that that is right. The notional uniform rate for 1979–80 cannot be denned in a report under Section 3(3) of the Local Government Act 1974, as required by subsection (3) of this clause, because that report was made in December 1978. The amendment is therefore expressed in terms that are impossible to fulfil.

I am grateful to the noble Lord for putting this point right. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Page 38, line 34, at end insert—

("(3A) The notional uniform rate for the


Alexander of Tunis, E.Elliot of Harwood, B.McFadzean, L.
Alport, L.Elton, L.Mackay of Clashfern, L.
Amory, V.Evans of Hungershall, L.Macleod of Borve, B.
Ampthill, L.Falkland, V.Mancroft, L.
Auckland, L.Ferrers, E.Mansfield, E.
Audley, L.Fortescue, E.Margadale, L.
Avon, E.Freyberg, L.Marley, L.
Balerno, L.Gage, V.Marshall of Leeds, L.
Bellwin, L.Gainford, L.Masham of Ilton, B.
Belstead, L.Gisborough, L.Massereene and Ferrard, V.
Berkeley, B.Gowrie, E.Middleton, L.
Bessborough, E.Grafton, D.Milverton, L.
Boyd-Carpenter, L.Gray, L.Minto, E.
Brabazon of Tara, L.Grimston of Westbury, L.Monk Bretton, L.
Brookes, L.Hailsham of Saint Marylebone, L. (L. Chancellor.)Morris, L.
Brougham and Vaux, L.Mottistone, L.
Brownlow, L.Hanworth, V.Mowbray and Stourton, L.
Caithness, E.Harvington, L.Murton of Lindisfarne, L.
Cathcart, E.Hatherton, L.Netherthorpe, L.
Chelwood, L.Henley, L.Northchurch, B.
Cockfield, L.Hertford, M.Nugent of Guildford, L.
Colville of Culross, V.Hill of Luton, L.O'Brien of Lothbury, L.
Congleton, L.Hornsby-Smith, B.Onslow, E.
Cork and Orrery, E.Hunt of Fawley, L.Orkney, E.
Cottesloe, L.James of Rusholme, L.Orr-Ewing, L.
Craigavon, V.Jeffreys, L.Pender, L.
Crathorne, L.Kemsley, V.Penrhyn, L.
Croft, L.Kimberley, E.Perth, E.
Cromartie, E.Kinloss, Ly.Porritt, L.
Cullen of Ashbourne, L. [Teller]Kinnaird, L.Rawlinson of Ewell, L.
Knutsford, V.Ridley, V.
Daventry, V.Lindsey and Abingdon, E.Robbins, L.
De La Warr, E.Linlithgow, M.Rochdale, V.
De L'Isle, V.Liverpool, E.Romney, E.
Denham, L.Long, V.Rosslyn, E.
Devonshire, D.Lonsdale, E.Sackville, L.
Digby, L.Loudoun, C.St. Aldwyn, E.
Drumalbyn, L.Lucas of Chilworth, L.St. Davids, V.
Dundee, E.Luke, L.Sandford, L.
Eccles, V.Lyell, L.Sandys, L. [Teller.]
Elibank, L.McAlpine of Moffat, L.Savile, L.
Ellenborough, L.MacAndrew, L.Selkirk, E.

year 1980–81 shall be of such an amount as is specified in the report for that year under section 3(3) of the Local Government Act 1974.").

The noble Lord said: I think that I have already covered this point fairly adequately. Looking at my notes, I see that when I spoke earlier I said everything that I would say now, and so perhaps I may move the amendment formally. I beg to move.

On Question, amendment agreed to.

5.50 p.m.

I beg formally to move that Clause 41 be left out of the Bill.

On Question, Whether Clause 41, as amended, shall stand part of the Bill?

Their Lordships divided: Contents, 142; Not-Contents, 87.

Sempill, Ly.Strathclyde, L.Trenchard, V.
Sharples, B.Strathcona and Mount Royal, L.Trumpington, B.
Soames, L. (L. President.)Strathspey, L.Vaux of Harrowden, L.
Spens, L.Swansea, L.Vickers, B.
Stamp, L.Swinfen, L.Vivian, L.
Stanley of Alderley, L.Trefgarne, L.Wellington, D.


Amulree, L.Gosford, E.Phillips, B.
Ardwick, L.Greenwood of Rossendale, L.Pitt of Hampstead, L.
Avebury, L.Gregson, L.Ponsonby of Shulbrede, L. [Teller.]
Balogh, L.Hale, L.
Beswick, L.Hall, V.Ritchie-Calder, L.
Birk, B.Hampton, L.Rochester, L.
Blease, L.Hatch of Lusby, L.Ross of Marnock, L.
Blyton, L.Hayter, L.Rugby, L.
Boston of Faversham, L.Heycock, L.Sainsbury, L.
Bowden, L.Houghton of Sowerby, L.Seear, B.
Briginshaw, L.Ilchester, E.Seebohm, L.
Brockway, L.Irving of Dartford, L.Sefton of Garston, L.
Brooks of Tremorfa, L.Jacques, L.Shackleton, L.
Bruce of Donington, L.Janner, L.Simon, V.
Byers, L.Kaldor, L.Stedman, B.
Chitnis, L.Kirkhill, L.Stewart of Alvechurch, B.
Cledwyn of Penrhos, L.Leatherland, L,Stewart of Fulham, L.
Collison, L.Llewelyn-Davies of Hastoe, B.Stone, L.
Cooper of Stockton Heath, L.Lloyd of Hampstead, L.Strabolgi, L.
Darling of Hillsborough, L.Lockwood, B.Strauss, L.
David, B.Lovell-Davis, L.Taylor of Mansfield, L.
Davies of Leek, L.McCarthy, L.Underhill, L.
Davies of Penrhys, L.Mackie of Benshie, L.Wallace of Coslany, L. [Teller.]
Delacourt-Smith of Alteryn, B.Mishcon, L.Wells-Pestell, L.
Denington, B.Morris of Grasmere, L.Whaddon, L.
Elwyn-Jones, L.Morris of Kenwood, L.Wigoder, L.
Evans of Claughton, L.Noel-Baker, L.Willis, L.
Fisher of Rednal, B.Parry, L.Wynne-Jones, L.
Gaitskell, B.Peart, L.Young of Dartington, L.
Galpern, L.

Resolved in the affirmative, and Clause 41, as amended, agreed to.

Clause 42 [ Reduction of resources element]:

6 p.m.

moved Amendment No. 88:

Page 39, line 16, at end insert—
("( ) In making a determination under this section the Secretary of State must demonstrate that those authorities whose grant is to be reduced have acted unreasonably.").

The noble Baroness said: I am going to speak very briefly to this amendment, and, if I may, to Amendment No. 89 at the same time. The proposals in these clauses can be exercised only by applying arbitrary criteria to local authorities' budget decisions, as has been said in the general debate. It is only right and proper that the Secretary of State should have to spell out the reasons why he has chosen particular authorities to punish, so that they can have an opportunity to explain their position, why they took certain steps, and also, and most particularly, so that the Secretary of State can be seen to have acted logically and with some degree of fairness and justice, which would certainly not seem to be the case with the 14 authorities which he has chosen this year. In speaking of reasonable or unreasonable action, I should like to ask the Minister to give a proper answer to the question my noble friend asked earlier, as to whether there is any right of appeal, to whom that appeal should be made and, indeed, who would decide it. I beg to move.

I do not know what the noble Baroness means by "proper answer". To explain the position, I gave an answer which was factually correct and really there is nothing that I wish to add to it.

I will take that point. Unsatisfactory it may be to the noble Baroness, and for that I apologise, but I fear that the only answer that I can give is the correct one even if that be unsatisfactory. Again, whatever I say on this amendment will be something that I have said already. The fact is that there is a concern that the Secretary of State might act arbitrarily, but the wording of the amendment is ill-defined.

The particular areas in which a Secretary of State would have to demonstrate that an authority had acted unreasonably would presumably be in overall levels of spending. This is determined by a comparison of the notional uniform rate and the individual authority's uniform rate. For me to go over again what I have said before on that would not be helpful. I am therefore satisfied, not least when bearing in mind that the order is subject to an Affirmative Resolution in the other place, that there is no question of the arbitrary use of these provisions. I fear that we cannot accept the amendment.

I am sorry that the noble Lord feels that he cannot go further. Perhaps he could take it back and have a look at it. I think that it would clear the air considerably for local authorities who get themselves on the "hit list" by one means or another if within the notice to them that they are above the rate and will lose some money they could be told more than just the fact that they are over the rate limit. I think they would want to know about it in more detail and have it demonstrated that they were acting unreasonably. Perhaps they would take it more kindly if they were told that they were acting unreasonably because they were doing this or that or spending too much, say, on their social services and so on. That would open the door for them to come to see the Minister. I do not think that a right of appeal is quite met by the fact that the authority might say to the Minister, "May we come and talk to you?" That is not quite what is normally meant by a right of appeal.

6.4 p.m.

I think that what the noble Baroness is suggesting is really not a starter. You cannot say, "Let me look through your accounts" and then, having done so, say, "You are spending too much on this or that". That would be bitterly resented. I do not think that it is practicable or desirable that the Government should do that. The criteria are set down. That is the first thing. The waivers are there. I myself have seen local authorities since this announcement, and there is provision which allows them to come and talk. It is not for me to predict what will happen, but there may be those within the "hit list" (although I personally prefer the term "penalty area") who will be able to show that they ought perhaps to come off the list. Nothing would please the Government more. We do not keep the money. It is not money that we want. All we want is a level of spending. I should like to be helpful. It is easy to say that I will look at it again but it would not be fair or frank of me to do so, and I fear that I cannot do so.

Would the Minister indicate to what extent, in arriving at these objective criteria, the Government have consulted the local authorities and their associations and to what extent there has been an agreement?

It is an arithmetical calculation. I read out the chronology of events leading up to this. We took a figure, we specified 119p but said at the same time that we were not seeking to do merely that, and we asked that people should do what they could. In the event we made it 30 per cent, above 119p. Again this is an arithmetical figure. There is nothing I can add to that. By all means let the local authorities feel that they may come to see us.

My concern was with the claw-back. Has there been an agreement with, say, the London Boroughs' Association about that?

I refrained from responding to the great temptation to discuss the London claw-back. I have spent years discussing it. It is technical and it is complicated. There are those who think that it should be greater and those who think it should be less. There can be no better case to justify the block grant than by saying that this will not be the kind of lever that will exist in the future. There will be a single grant and the whole thing will come into the centre. If I were in a London authority, I should welcome the fact that anything different might be better for them.

The Minister keeps repeating the phrase "arithmetical figure". Is it that or is it a fanciful figure? What kind of figure is it? "Arithmetical" tells us nothing.

I went to a lot of trouble to spell out how the arithmetic was done. I did it slowly and carefully I am sure that when the noble Baroness reads Hansard she will see it all there. If the noble Baroness would like more information, I shall gladly write to her.

We are not happy with the Minister's answer, nor with the situation, but, as he has criticised the wording of the amendment we shall now withdraw it and consider putting down something slightly different in wording but in the same sense as this amendment at Report stage.

Amendment, by leave, withdrawn.

Clause 42 agreed to.

Clause 43 [Reduction of needs element for authorities in Greater London]:

had given notice of her intention to move Amendment No.: 89

Page 39, line 40, at end insert—
("( ) In making a determination under this section the Secretary of State must demonstrate that those authorities whose grant is to be reduced have acted unreasonably.").

The noble Baroness said: I have already spoken to this amendment and I would propose that it be not moved, but with the same proviso that I attached to the withdrawing of Amendment No. 88.

Clause 43 agreed to.

Clause 44 [ Supplementary grants for transport purposes]:

moved Amendment No. 90:

Page 40, line 5, after ("exercised") insert ("separately and").

The noble Lord said: This amendment does not reflect any change in policy since it has always been the intention that transport supplementary grant may be operated quite independently in England and in Wales within the framework of the new separate rate support grant system. It is a technical drafting amendment to make it clear that there can be two separate systems of administration in the two countries. I shall be proposing further technical amendments in respect of the other Part VI grants similarly to clarify their independent operation in the two countries. I beg to move.

In dealing with this amendment, I should like to speak also to Amendment No. 91, because if Amendment No. 90 is carried there is no point in considering Amendment No. 91. Subsection (1) to which this amendment refers was not in the original Bill. It was inserted during the Committee stage in another place. In my innocence I thought it was just a mistake in the use of the word "differently". When that amendment was introduced in the other place the Under-Secretary said it was a mistake in view of the different responsibilities of the Ministry of Transport in England and, in Wales, the Secretary of State for Wales. The Minister added:

"These amendments are all purely technical and are intended to correct the drafting".
As I have said, I thought the use of the word "differently" was a mistake, and therefore in my Amendment No. 91 I sought to change this to "separately". Now we see it was not actually a mistake, because the Government, in their Amendment No. 90, which the Minister has just moved, wish to insert the word "separately" but to leave in "differently". Thus it is not just a matter of a technicality. Naturally subsection (1) is necessary because of the different respective powers of the two Ministers in England and in Wales. But the wording of the subsection goes beyond that. Surely the transport supplementary grant cannot be administered differently in the two countries? Does it mean that there could be different levels and different criteria? How could that be, seeing that the provisions of Section 6 of the Local Government Act 1974 are applicable to both Wales and England? Also, from the subsequent wording of this clause it would seem that the transport supplementary grant could be abolished, say, in Wales but continue in England. I would suggest that that is what the clause actually says.

I have looked through the report of the Standing Committee in another place and I cannot see anywhere that the Minister concerned dealt with this matter adequately. What he did say, as reported at column 628 of the Standing Committee of 19th March this year, was:
"If the right honourable gentleman is correct in saying the words of the amendments that I am now speaking to are wrong, I give him the assurance that we shall certainly alter them if they go further than my original description of purely technical amendments".
The point had been made in the Standing Committee that these were not technical amendments, and the points that I am making now have been made in the Standing Committee. So far as the other place was concerned, despite that statement by the Under-Secretary, that was the last we heard of the matter. Now we have the Government's Amendment No. 90, which seems to reinforce the fact that this is not just technical but could introduce different formulae and different criteria in Wales and in England. Therefore, I oppose the amendment proposed by the Minister.

The fact is that transport supplementary grant and national parks supplementary grant are an integral part of the overall rate support grant system. At present that system is administered on a combined England and Wales basis by the Secretary of State for the Environment and the Minister of Transport. This arrangement is inconsistent with the Secretary of State for Wales's general responsibility for local government in Wales. It is right, therefore, that he should be able to administer the rate support grant system for Welsh local authorities and take account of the particular circumstances in Wales. This Bill will enable him to do so. Amendment No. 91 would require separate TSG arrangements in England and in Wales to be identical in every respect. Such a requirement really would make no sense of the separate ministerial responsibilities for England and Wales and takes no account of the differing circumstances in the two countries. It is only by allowing for different treatment that the different needs, circumstances and priorities of the two countries can be taken fully into account. I wonder whether, with that, the noble Lord may feel able, perhaps with some reluctance, to withdraw the amendment.

I am still not satisfied with the explanation because the two Ministers must adhere to the provisions of the Local Government Act. Naturally they will take into account the terms of that Act. But I can see that the Minister is adamant about this and I shall not move Amendment No. 91.

On Question, amendment agreed to.

[ Amendment No. 91 not moved.]

6.15 p.m.

The noble Lord said: In moving this amendment, may I speak also to Amendment No. 95? The subsection as drafted would enable the Secretary of State to discontinue entirely payments of transport supplementary grant or to amend their scope. I am sorry that I have to bring this in and stop the debate on the rate support grant, but that is the way the Bill has been worded and it is not my mistake. Section 6 of the Local Government Act 1974 provides for the annual payment of TSG to county councils and to the GLC in respect of estimated expenditure on transportation needs. This expenditure covers highways, public transport, the regulation of transport and the provision of parking places. It could really be said that the introduction of TSG was, in effect, a transportation block grant because it replaced previous grants for roads, public transport infrastructure, rural buses, ferries and grants to PTEs in respect of rail passenger services. All those were dropped and were included in the transport supplementary grant.

The Secretary of State already has considerable control over TSG, and authorities' estimated expediture has to be accepted by the Secretary of State and is paid on the amount which exceeds a threshold which he prescribes. The Secretary of State also determines the proportion of transport capital expenditure of an authority to be financed by borrowing. Therefore, the Secretary of State has considerable authority, as he should do, over the present allocation of TSG. That part of the estimated transportation expenditure which is not met by TSG or borrowing is included at a lower rate in needs and resources elements of the present rate support grant. After the amount of TSG is determined, the local authority is left entirely free to decide how to spend the grant within those approved items. It can use it in various ways which I will not weary your Lordships by describing. They all come under the four headings to which I have referred.

Under this subsection, this could now be changed. The Secretary of State could change the items of estimated expenditure on which the transport supplementary grant is based. He could define the actual individual items to be covered by TSG. At present a council may use the grant within the four headings laid down in the Act, in accordance with its transportation policy. I think it is generally agreed that the transport supplementary grant has been of great benefit in bringing together both capital and revenue aspects of transportation. It has enabled transport policies and finance to be closely integrated. The subsection as drafted would empower the Secretary of State to discontinue altogether any payments of transport supplementary grant. I suggest to the Committee that that would be most unfortunate and a regressive policy for transport.

In another place, the Minister responsible stated that TSG would not be abolished unless needs of transportation could be brought into a new block grant system. But the impression was given that it had been found extremely difficult to bring transportation within the block grant system, and I would suggest to your Lordships that it is going to be very difficult to see how the purpose of the introduction of TSG to meet the needs of transportation could be properly covered within any new block grant system. I would stress that TSG is linked to actual transportation needs and the transportation policies and programmes of the county councils and the GLC. Surely this must continue. The integration of those things is really important and essential. Is it not generally agreed that the transport supplementary grant system has been successful in the development of county transportation policies, leaving the authority free to determine the priorities?

May I say this, with respect? During all the debates on the Transport Bill, in which the noble Lord the Minister and many other noble Lords took part, there was no hint whatever of any possibility of the TSG being halted, being cancelled. Yet we made considerable reference to the TSG and its benefits in that debate. Therefore, I ask noble Lords to support Amendment No. 92 so that we can make quite sure that there can be no great interference with the present system of TSG and certainly no power to abolish it. I beg to move.

Any decision to abolish or amend the scope of TSG will depend on the ability of block grant to reflect the need for transport expenditure. No such decision has yet been taken. TSG will, in any event, continue unchanged in England for the 1981–82 grant settlement. In Wales the Secretary of State is currently considering the matter following consultations with Welsh local authorities. For the future, however, subsection (2) provides a power to discontinue TSG by order, should this prove justified. Without such a power in this Bill, further primary legislation would be necessary to do so. However, the Committee will have noticed that, under subsection (7), any order made would be subject to Affirmative Resolution procedure. This will provide the opportunity for discussion of any order which is put forward.

I say again that nothing will be done to abolish TSG until and unless we are sure it can be absorbed into the RSG. If a power to abolish or amend the scope of TSG is to be included in this Bill, it is obviously sensible that it should also include the power to make all the necessary changes. These might include, for example, transitional provisions or amendments to other legislation covering Government grants to local authorities. This part of Clause 44 provides those powers and it should therefore remain in the Bill.

The Minister has in effect said that he wants this as a reserve power. It must be clearly appreciated that the incorporation of TSG in a block grant system could have an adverse effect on our transportation policies, it could have an adverse effect on the co-ordination or integration of county transport policies with finances and other measures. I therefore consider


Ardwick, L.Fisher of Rednal, B.Pitt of Hampstead, L.
Avebury, L.Gaitskell, B.Ponsonby of Shulbrede, L. [Teller.]
Balogh, L.Galpern, L.
Bernstein, L.Gosford, E.Ritchie-Calder, L.
Beswick, L.Greenwood of Rossendale, L.Rochester, L.
Birk, B.Hale, L.Ross of Marnock, L.
Blease, L.Hall, V.Seear, B.
Blyton, L.Hampton, L.Sefton of Garston, L.
Boston of Faversham, L.Hatch of Lusby, L.Segal, L.
Bowden, L.Heycock, L.Simon, V.
Briginshaw, L.Houghton of Sowerby, L.Stedman, B.
Brockway, L.Irving of Dartford, L.Stewart of Alvechurch, B.
Brooks of Tremorfa, L.Jacques, L.Stewart of Fulham, L.
Bruce of Donington, L.Janner, L.Stone, L.
Cledwyn of Penrhos, L.Kaldor, L.Strabolgi, L.
Collison, L.Kirkhill, L.Strauss, L.
Cooper of Stockton Heath, L.Leatherland, L.Taylor of Mansfield, L.
Darling of Hillsborough, L.Llewelyn-Davies of Hastoe, B.Underhill, L.
David, B.Lockwood, B.Wallace of Coslany, L. [Teller.]
Davies of Leek, L.Lovell-Davis, L.Whaddon, L.
Davies of Penrhys, L.Mishcon, L.Wigoder, L.
Delacourt-Smith of Alteryn, B.Morris of Kenwood, L.Willis, L.
Denington, B.Parry, L.Wynne-Jones, L.
Elwyn-Jones, L.Peart, L.Young of Dartington, L.
Evans of Claughton, L.


Alexander of Tunis, E.Elibank, L.Liverpool, E.
Alport, L.Ellenborough, L.Long, V.
Amory, V.Elliot of Harwood, B.Lonsdale, E.
Ampthill, L.Elton, L.Loudoun, C.
Audley, L.Falkland, V.Lucas of Chilworth, L.
Avon, E.Ferrers, E.Lyell, L.
Balerno, L.Fortescue, E.McAlpine of Moffat, L.
Bellwin, L.Freyberg, L.MacAndrew, L.
Belstead, L.Gage, V.McFadzean, L.
Bessborough, E.Geddes, L.Mackay of Clashfern, L.
Boyd-Carpenter, L.Gisborough, L.Macleod of Borve, B.
Brabazon of Tara, L.Gowrie, E.Mancroft, L.
Brookes, L.Grafton, D.Mansfield, E.
Brownlow, L.Gray, L.Margadale, L.
Caithness, E.Greenway, L.Marley, L.
Cathcart, E.Grimston of Westbury, L.Marshall of Leeds, L.
Chelwood, L.Hailsham of Saint Marylebone, L. (L. Chancellor.)Massereene and Ferrard, V.
Cockfield, L.Melville, V.
Colville of Culross, V.Hanworth, V.Middleton, L.
Colwyn, L.Harvington, L.Milverton, L.
Congleton, L.Hatherton, L.Monk Bretton, L.
Cork and Orrery, E.Henley, L.Monson, L.
Cottesloe, L.Hertford, M.Morris, L.
Croft, L.Hill of Luton, L.Mottistone, L.
Cromartie, E.Hornsby-Smith, B.Mountevans, L.
Cullen of Ashbourne, L.Hunt of Fawley, L.Mowbray and Stourton, L.
Daventry, V.Ilchester, E.Murton of Lindisfarne, L.
De La Warr, E.Jeffreys, L.Northchurch, B.
Denham, L. [Teller.]Kemsley, V.Nugent of Guildford, L.
Devenshire, D.Kimberley, E.O'Brien of Lothbury, L.
Digby, L.Kinloss, Ly.Onslow, E.
Drumalbyn, L.Knutsford, V.Orkney, E.
Dundee, E.Lindsey and Abingdon, E.Orr-Ewing, L.
Eccles, V.Linlithgow, M.Pender, L.

this so important to our transport system that I must press the amendment.

6.23 p.m.

On Question, Whether the said amendment (No. 92) shall be agreed to?

Their Lordships divided: Contents, 72: Not-Contents, 135.

Penrhyn, L.St. Davids, V.Strathclyde, L.
Perth, E.Sandford, L.Strathcona and Mount Royal, L.
Porritt, L.Sandys, L. [Teller.]Suffield, L.
Rawlinson of Ewell, L,Savile, L.Swansea, L.
Ridley, V.Selkirk, E.Swinfen, L.
Robbins, L.Sempill, Ly.Trefgarne, L.
Rochdale, V.Sharples, B.Trumpington, B.
Romney, E.Soames, L. (L. President.)Vaux of Harrowden, L.
Rosslyn, E.Spens, L.Vickers, B.
Rugby, L.Stamp, L.Vivian, L.
Sackville, L.Stanley of Alderley, L.Wellington, D.
St. Aldwyn, E.

Resolved in the negative and amendment disagreed to accordingly.

6.32 p.m.

moved Amendment No. 93:

Page 40, line 10, leave out ("shall be paid or that no such grants").

The noble Lord said: In moving this amendment I also wish to speak to Amendments Nos. 94 and 96. These amendments also deal with the transport supplementary grant which has already been covered by the last amendment. I just wish to speak briefly on how vital this grant is to London for three reasons: first, the grant properly brings together both capital and revenue aspects of transport which cannot happen with the rate support grant or block grant. Secondly, it takes account of London's very capital intensive transport infrastructure which could never be adequately reflected in any formula approach to a rate support grant or a block grant. Thirdly, it links the planning and programming process with the financing of policies and programmes. We have already heard that there should be amendments so that the Secretary of State can return the transport supplementary grants for London and the county areas where it is appropriate. There is simply no way in which the block grant proposals in the Bill can properly reflect and support the revenue and capital transport requirements for London.

I am moving a few amendments which are of interest to the Greater London Council. I am not quite sure whether there is any interest that I have to declare, but to set the record absolutely straight, I was an employee of both the London County Council and then the Greater London Council for 20 years up till 1978. After that I was pensioned off. I beg to move.

Perhaps I may very briefly support what the noble Lord, Lord Gainford, has said. He has very properly drawn attention to the importance of the transport supplementary grant to London, particularly with its unique transport problems in this country. I do not think there is all that much I need add to what the noble Lord has said other than to support him.

I hope I can persuade my noble friend Lord Gainford that this amendment is not necessary. An identical amendment was suggested at Committee stage in another place, but was not agreed to. The Minister of Transport and the Secretary of State for Wales have made clear that it is still too early to say whether or not TSG will continue in the longer term after block grant is introduced. As part of the development work for block grant those parts of local transport expenditure which are presently grant-aided by TSG are being examined to see if it is possible to take account of them through block grant alone. However, it has been concluded that TSG will continue in England at least for 1981–82, the proposed first year of operation of block grant.

The order-making powers included in Clause 44 will only be used in due course if the Government are sure that block grant can adequately take account of the variations in transport spending between authorities which caused TSG to be established originally. Any order which is made will be subject to Affirmative Resolution procedure in both Houses of Parliament. Moreover, the clause as drafted already provides for the possibility of TSG continuing, but in an amended form. This might, for example, be for a more limited range of expenditure which it was still felt could not be dealt with through block grant.

Coming to Amendment No. 94, in responding to this I would have once again to remind the Committee of the assurances given by the Minister of Transport and the Secretary of State for Wales about the continuation. I know that the GLC and some other authorities are concerned about the effect which the demise of TSG might have on the financing of their transport expenditure. I must point out that the existing powers already allow TSG to be paid to fewer than the total number of counties. So one option which remains open, even with Clause 44 as drafted, is to retain Section 6 of the 1974 Act but so to arrange matters that only those counties with very high transport spending receive TSG.

I hope that this fact, together with the general reassurances which have been given might assuage the fears of the GLC and others. However, when we come to Amendment No. 96 I have perhaps better news for my noble friend. I am grateful to him for this helpful amendment which will ensure that consequential matters may be dealt with in an order which amends the scope of TSG and not one which brings about the termination of the grant. I am very glad to accept that amendment.

Before the noble Lord, Lord Gainford, replies to the Minister, I wonder whether I could refer to the question of assurances. In the Standing Committee in another place, the amendment of the Standing Committee was withdrawn because the Minister suggested that discussions were taking place with the associations and he would give assurances to the Committee. At the Report stage in another place the same Member of Parliament for Ilford, South was still not satisfied and wanted assurances that there would be no disparity for London in the event of TSG continuing. The Minister then said that he would have to draw the attention of his honourable friend the Minister of Transport to the observations that had been made. I wonder if the Minister could indicate whether there is a definite assurance that, whatever happens, if TSG is to continue there will be no disparity whatever concerning the position in Greater London.

I may be wrong—let me put it politely—and I should like to be put right, but may I quote the supplementary note which the Minister was kind enough to arrange that we could pick up in the Printed Paper Office:

"Section 6 as at present constituted obliges the Minister of Transport to make annual payments of TSG to county councils [including the GLC]. But as its name implies, TSG is a supplementary grant. It is paid towards expenditure above a threshold, and expenditure that is not met by TSG is supported through RSG in the usual way. Whether it is necessary to retain this supplementary grant"—
here is the 64,000-dollar point—
"will depend on the ability of the block grant to reflect need for transport expenditure. … The method of needs assessment to be used for block grant is still being determined in consultation …".
The situation does not seem clear to me, with all due respect. Can it be clarified any more, or am I dense?

Not for one moment would I dare to suggest that. I think that the puzzlement is very fairly based, because, as I said earlier, there are yet to be decisions taken. For that reason, this is to some extent an open situation and I tried to put it in that way. I cannot reply to the noble Lord, Lord Underhill, because I do not have the answer. But it goes without saying that I will certainly get it for him.

I thank my noble friend very much indeed for his acceptance of Amendment No. 96. As regards Nos. 93 and 94, I am very grateful for his continued assurances concerning the transport supplementary grant. As this is so vital—although I am willing to withdraw these amendments—I must stress that, in the event of this Bill becoming law without a definite assurance of the continuation or the preservation of the transport supplementary grant, there will probably have to be further consultations to see what can possibly be done. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[ Amendments Nos. 94 and 95 not moved.]

6.42 p.m.

moved Amendment No. 96:

Page 40, line 19, leave out ("termination of the grants") and insert ("provisions of the order").

The noble Lord said: I have already spoken to this amendment. I beg to move.

On Question, amendment agreed to.

Clause 44, as amended, agreed to.

Clause 45 [ Separate provision for Wales]:

moved Amendment No. 97:

Page 40, line 39, after ("separately") insert ("and differently").

The noble Lord said: If I may refer your Lordships to my earlier amendment to Clause 44, this is one of the other technical amendments to remove any doubts as to the independence of the separate operation of the national parks supplementary grant in England and Wales. I beg to move.

On Question, amendment agreed to.

Clause 45, as amended, agreed to.

Clause 46 [ Introduction of new system of rate support grants]:

I am instructed that I should now call Amendments Nos. 82A to 82J.

(" Introduction of new system of rate support grants

.—(1) Subject to the provisions of this Part of this Act, the Secretary of State shall, for the commencing year and each subsequent year, make out moneys provided by Parliament to local authorities in England and Wales in accordance with the provisions of this Part of this Act a grant to be known as the rate support grant.

(2) Rate support grants may be treated separately for England and for Wales, and any provision of this Part of this Act conferring a power on the Secretary of State or imposing a duty on him may accordingly be applied separately to each of those countries.

(3) The following bodies are local authorities for the purposes of this Part of this Act, namely—

  • (a) the council of a county;
  • (b) the council of a district;
  • (c) the council of a London borough;
  • (d) the Common Council of the City of London; and
  • (e) the Council of the Isles of Scilly.
  • (4) Subject to the following provisions of this Part of this Act, payments in respect of rate support grants shall be made to a local authority at such times as the Secretary of State may with the consent of the Treasury determine, and shall be made in aid of the revenues of the authority generally.

    (5) In this section "the commencing year" means such year as the Secretary of State shall appoint in the order made under section 8(3) below, being not later than 3 years after the date of the Royal Assent to this Act.").

    The noble Lord said: I must apologise first, for any inconvenience that has been caused to your Lordships by moving Amendment No. 82A when we are well into the nineties. There was confusion in the printing office between page 41 and Clause 41. But I must say, in view of the enormous amount of work which the printers have had to do, with these continual Marshalled Lists and supplementary additional Marshalled Lists, that they are doing a marvellous job. But that is why these amendments are not in the order that they should be. With No. 82A, I should like to speak to Nos. 82B, 82C, 82D, 82E, 82F, 82G, 82H and 82J, as well as No. 104A.

    This series of amendments seeks to substitute a completely new per capita population based rate support grant for both the existing, much criticised, rate support grant and the Government's notorious, centralist and dirigiste block grant system, which is referred to in the following clause. I see a look of pain coming over the face of the Minister, but I genuinely believe that these block grant proposals have been lying about in Whitehall for years waiting for someone who was wanting to make his name, or who was stupid enough, as my noble friend said, to bring them forward. They do not seem to have a friend anywhere.

    What I am trying to do is to introduce a new, little stranger into the family and to give your Lordships a third choice in considering an alternative to the present rate support system. Since no one has come up with an effective method of financing local government entirely, or largely, locally, we shall no doubt have to rely for the foreseeable future—I am sure much to the regret of everyone on all sides—on central Government resources for the majority of local government finance. It amounts at present to approximately 60 per cent.

    If I may quote again from the Secretary of State's speech at Brighton, he explained

    why the Government have not proceeded with their intention to abolish rates—strangely enough, blaming the previous Labour Government—and pointed out that what he wants is to get rid of a system of revenue raising of this kind. Removing only domestic rates would face the country with the prospect of another 4p on income tax or 4 per cent. on VAT. If we got rid of domestic rates, industrial and commercial rates which are no more popular, would be next. There would be a demand that they should be removed. If central Government took the responsibility of removing industrial rates that would add another 6p to income tax or another 6 per cent, on VAT. He went on to say:

    "If we are to preserve the independence of local government, it has to be realised that much of the taxation will have to be raised locally".

    I think we all agree with that and I should hope to receive an assurance, or at least a favourable nod from the Minister, that other schemes of raising money locally are being looked at, such as the concept of local income tax and the possibility of the taxation of capital or of site values.

    There are a large number of different schemes for raising money locally, which I hope are being examined with care by the Government, because hope for local government lies in greater independence, if possible, from Government grants. In the meantime, we must find a system of central financing which is simple, comprehensible, not centralist and practicable. I would remind noble Lords that a statesman, whose name I do not often quote—Disraeli—said that centralism is the death of democracy and, possibly, noble Lords on the other side might like to think what their illustrious predecessor thought about these matters. So I believe that neither the present RSG nor the block grant system is simple and neither is likely to be comprehensible. The block grant is centralist and I doubt whether it will be practicable.

    The proposals for the per capita grant have three virtues. First, there is simplicity. The grant would be distributed purely on a population basis, thereby avoiding the Byzantine complexity of the present rate support grant calculations and the calculation of the needs element, with its volatility and it attachment to

    expenditure. I can understand why the Government object to that. The block grant system is similarly complex, and I understand it is now recognised in the department that methods of calculation based on unit costs, client groups and so on are unsatisfactory and complicated, and that regression analysis will have to remain.

    Secondly, the system that I propose is not centralised, and it therefore avoids the fundamental, constitutional criticism of the block grant, which would leave the Secretary of State, in my opinion, to determine both local authorities' needs and their grant-related poundage. Under the block grant system, independent local government would wither away and local government would become a mere agency of central Government. I do not think I am exaggerating that point. It is a very serious point and is the kernel of this whole discussion and of the differences that are appearing between us, because this is the basic and constitutional point. The decisions will be made not on local need, local experience and local involvement, but upon central Government decisions and bureaucratic formulae. My system requires no decisions of that kind, except a decision by the Government about what the global amount of the grant will be. It requires no decision of that kind to be made centrally about local authorities.

    Thirdly, let me deal with its practicability. Individual local authorities will be able to regain the capacity for rational budgeting which has been gradually whittled away over the years and which would be totally destroyed under the block grant system. This population based grant, which could have weightings to take into account a large number of old people, high unemployment, or a large number of school-leavers, could be introduced over three years without causing any greater changes in grant to local authorities than has been occasioned over past years. No doubt we shall hear arguments against this proposal, the principle of which must be that it does not compensate local authorities either for low rateable resources for for high need.

    Local government reorganisation, for which I personally did not have much time, had one virtue. It created larger and more varied authorities and therefore has reduced the force of that argument. Because of their increased size, authorities are now more varied and larger and therefore have a wider spread of resources. But in so far as it still has force, the coincidence of high social need and high rateable values generally means that equalisation is, on the whole, self-cancelling.

    As the noble Lord the Minister knows, rate support grant is distributed very largely on a population basis. The differences in rate burdens nationwide are far greater than the differences in average household incomes, and a population-based distribution would moderate those differences. Perhaps it is naive of me to think this, but if this kind of system were introduced it would have the great virtue of taking the grant distribution system out of the political cockpit. It would be there, based on clear criteria about which there could not be complex arguments.

    I put forward this proposal as a reasoned alternative to the block grant and in substitution for the rate support grant. It would have the additional virtue from the present Government's point of view that it would enable the Government, at central Civil Service level, to reduce the workload and the number of civil servants engaged in the extremely complex calculations involved in the rate support grant and the block grant. I shall not at this point go through each of the clauses. I have notes here dealing with each of them but it might be better if I were to stop at that point and to move the amendment standing in my name.

    6.52 p.m.

    First, I am sure that the noble Lord, Lord Evans of Claughton, will not be surprised when I say that I do not take his point about the block grant not having a single friend anywhere. All I would say is, how wrong can you be? I am certainly not going to be drawn into a general debate on rates, but it is no secret, as the noble Lord said, that we are indeed looking into alternatives.

    As to this amendment, what can I say except how tempting it all sounds! The fact is that the overall objective of the existing rate support grant arrangements is, as the noble Lord, Lord Evans, said, to enable all authorities to provide a comparable level of services for a similar rate in the pound. This will remain the objective under the block grant. To achieve this objective, the grant has to be distributed to authorities in such a way as to compensate them for differences in their assessed expenditure needs and in their rateable resources. Under the present system, this is done through separate needs and resource elements. Under the block grant it would be done with a single grant.

    The amendments would mean the complete abandonment of this objective. The implication would be that there are no significant differences in the needs and resources of authorities requiring compensation, yet we know that this is just not the case. Rateable values per head of population vary considerably across the country. The expenditure needs of authorities also differ substantially not just between the extreme examples of rundown inner city areas and affluent home counties but between, say, sparsely populated rural counties and counties with new and expanding towns.

    If we were to abandon the equalisation of needs and resources, as the amendments would do, the pattern of the grant distribution would change completely. Large amounts of grant would be removed from authorities with high assessed expenditure needs and low rateable values, and thus currently significantly dependent upon equalising grants. Major grant increases would accrue to authorities with low needs and high resources. The general effect would be considerable rate increases in needy areas and big rate reductions in more affluent areas.

    Apart from this, I have to say that the amendments are defective in many ways. It has been argued that by specifying a simple per capita distribution the amendments would prevent the Secretary of State from exercising discrimination between authorities in the grant distribution. If that is the objective, it seems to me that the amendment would fail signally to achieve it. As they stand, the amendments appear to allow the Secretary of State to determine separate per capita allocations for non-metropolitan and metropolitan councils. As I see it, this would allow the Secretary of State to pay £5 per head to one type of authority and £500 per head to another. There are also numerous other problems with the amendments. For example, in the definition of "relevant expenditure" and in the definition of authorities "specified to receive grant", the GLC and ILEA are omitted.

    The sentiment has been expressed that the rate support grant system is far too complex and open to manipulation. Arguments have been advanced in favour of simple systems like the per capita proposition contained in the amendments. I understand this point of view. Of course we would all like a simple system. But the fact is that we have a grant system based upon an equalising principle, which is a well established principle accepted by successive governments and by this one. The pursuit of equity inevitably means some complexity, but it is an objective to which I feel we must adhere. In those circumstances, I feel that we could not accept these amendments.

    While not agreeing with all the proposals which the noble Lord, Lord Evans of Claughton, has made, I am grateful to him for having brought to your Lordships' Committee some new thinking on the finance of local government. I do not think that the rate support grant is as bad as it is often said to be; on the whole, it has worked pretty well but with a number of imperfections. Equally, I can see that the block grant has a number of attractions, although it does not succeed in winning my support.

    One of the really good things that has come out of this controversy has been some new thinking about local government finance. I am not going to try today once again to get the noble Lord the Minister to withdraw this part of the Bill so that we can have more time to think about it, but I should like him to tell us that the department are thinking seriously about, for example, the proposals of the Outer Circle Group—Mr. Tyrell Burgess, Mr. Anthony Travers and Mr. John Cornford—and the document which was sent to me yesterday by the East Anglian Management Centre, written by Mr. Philip Tunley. These are just two examples of a lot of extremely interesting and stimulating new thinking. With his vast experience, I should greatly appreciate the noble Lord's views on these at some time, but if he were able to say today that they were having consideration in the department I should be more than grateful.

    I do not know the second of the publications to which the noble Lord, Lord Greenwood of Rossendale, has referred, although I do know the first. However, may I assure him that of course there must be more debate. No one is going to pretend that in block grant we have the answer to this complex area. Least of all am I going to pretend so. Yes, of course, we will have a look at it. Anything which puts something into the pool of thinking is more than welcome. We should look not only in this country; we should look everywhere and do everything to get something which will be agreed and which will give us a better result. For that reason, I take the point which the noble Lord very properly made.

    I think that the noble Lord, Lord Evans of Claughton, has gone to quite some trouble to put this forward. One has to be involved in this work, as I have been during the last year, to have some indication of what that means and to appreciate just how much work he must have put into it. I respect that. The fact that I do not feel that the amendments are acceptable in no way detracts from the fact that I am glad that he, with his experience, put something into this. Let us all keep on trying to do that.

    I welcome the tone of the noble Lord opposite. I am glad that the Government are thinking about it and that the noble Lord is concerned about the various documents which have been circulating. I, too, am grateful to the noble Lord, Lord Evans of Claughton, for having introduced some new thinking into the Bill. We accept that the argument is fairly widespread that the rate support grant is becoming increasingly complex and less and less comprehensible to both members and officers. The proposals before us today suggest a much simpler method by distributing the grant on a per capita basis.

    We accept that our job in Committee is to try to send the Bill away in a rather better state than it came to us and on that basis, if for no other, I think perhaps the amendments before us from the noble Lord, Lord Evans, have some merit. I think they may perhaps prove on examination to be better than those we have before us. I think more work will have to be done on the proposals because possibly they are too simplistic or perhaps it is because we are all so wrapped up in RSG as it is at the moment that we think they are too simplistic. I hope some consideration will be given to them. If the noble Lord is looking to us for support we are happy to support him and if the noble Lord opposite is saying that they will be seriously considered I think we shall all be very grateful.

    I think it must be said that the basic supposition is not new and I am sure the noble Lord, Lord Evans, would not claim that it is. It is already in the pool of thinking; what is interesting is the detailed way in which he puts it forward. One can then see whether, if the overall principle is not acceptable there may be an aspect of it which is helpful, and that is why I welcome the fact that these amendments have been put forward.

    I apologise to the noble Lord, Lord Evans, because I did not hear the beginning of his speech but I was interested in the suggestions which he has put forward, which as other noble Lords have said, are constructive. What is suggested is somewhat similar to the Scottish system and I wondered whether he had taken some of it from our friends North of the Border? Noble Lords may remember that I raised this on Second Reading, but I still have not had an answer from the Minister about the Scottish system. If it is not wasting any time I wonder whether the noble Lord can say whether it applies to Scotland and whether the Scottish system is what he is trying to suggest for England and Wales.

    If I may make a quick comment on the block grant as opposed to the Scottish system, the situations are not exactly alike. The Scottish system is much smaller and much simpler and I do not think one can draw comparisons in any way between the two. A system like that in Scotland can only work as it does where it is that much smaller. We know that the existing RSG system in England and Wales is over-complex, defective and not susceptible to piecemeal improvement and that is one of the reasons why we come to block grant.

    I am grateful for the generally sympathetic way in which the proposals have been received. I would not try to pretent to your Lordships—otherwise I might get a reputation that I could not keep up with—that this is entirely the work of my brain. It is the work of the Outer Circle policy group, who have been very helpful and constructive. They have been trying to find ways of improving the means of raising the finance for local government and of course their researches do owe something to the system which exists in Scotland.

    I think some of the criticisms made by the noble Lord the Minister are a little unfair. We would argue that under the system in London a formula is not necessary. Outer London boroughs provide education, it is true, whereas in inner London it is the responsibility of ILEA. It is also true that there are overall functions carried out by the GLC. However, it seems to us that it is better to distribute rate support grant among the boroughs on a simple population basis, leaving the GLC and the ILEA to precept on the boroughs as at present, as both inner and outer London boroughs would have to find the money for education, although its provision is secured differently in each case.

    It is interesting that if this position were adopted it would bring the rate burdens far more nearly into line with spending on a country-wide basis because at the moment the ratepayers of Warwickshire, for instance, pay an average of £240 a year on their property for £342-worth of services per head. On the other hand the domestic ratepayers of Tyne and Wear pay an average of £187 a year per house for £462-worth of services per head. There are those huge variations. So that it shall not be thought that I am leaving out my own area, Merseyside offers another example of high spending and low rates. By comparison with other areas, those of us who live in the Merseyside think that we pay high rates. I can remember in the old days that we would argue for hours and hours about putting half an old penny on the rates. People used to rant and rave about that appalling extravagence of the controlling group. We all think that our rates are too high but in Merseyside for an average of £208 we get £451-worth of services. So it would not help to spread over the country as a whole the services that one gets in return for the price one pays.

    I was pleased at the sympathetic response that I received and I am glad that the Minister has given the assurance that he is always open to consideration and to discussion of these matters. With your Lordships' consent, I should like to withdraw this whole series of amendments, thereby reducing the third Marshalled List to about half its size, and to reconsider the matter and, if necessary, to return to it on Report. Possibly we can have conversations with the Minister and his honourable friends on some parts of these proposals. I beg leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    I understand that it is not the noble Lord's intention to move Amendments Nos. 82B to 82J.

    At this point I think it might be for the convenience of the Committee if we were to take the dinner adjournment and return to our deliberations at eight o'clock.

    [The Sitting was suspended from 7.8 to 8p.m.].

    Clause 46 [Introduction of new system of rate support grants]:

    Page 41, line 14, at end insert—

    (" ( ) The commencing year for the purposes of this part of this Act shall not begin earlier than 1st April 1982.").

    The noble Baroness said: This amendment has the support of Lord Bruce and Lord Sandford, and in fact Lord Sandford spoke to it when we were having the general debate at the beginning of the afternoon. I think everybody is agreed that block grant is a very difficult and complex affair and that comparatively few people really understand it. This is true even within the local authorities. Local authorities are really under pressure at the moment. Their manpower is having to be cut and they are in real difficulties. I think it would be considerate and sensible if these new arrangements could be postponed for another year. I beg to move.

    I spoke to this when we were dealing with Amendment No. 84. There is nothing that I can add that would be new. The fact is that we believe that a workable system has been developed which will allow an equitable grant distribution to be made for the next financial year. Of course, development work will continue. As with any new system there will be some rough edges which will need improvement once the system is in operation. But to defer it would be running away from the problem. We feel it really must be placed at the earliest practicable moment, and we feel that moment has arrived and that is why we cannot accept the amendment.

    In reply to an amendment by my noble friend Lord Evans of Claughton the noble Lord said that the department were actively considering alternative methods. Would it not be better to defer this change until those discussions have gone further? They might produce a system which could come in permanently rather than a system which will in any case have to be changed within a year or two.

    I hope I did not give the wrong impression. I said that we were looking at the whole rating system. I said that I recognised that block grants would probably not be the final solution—I dislike using the term—to grant distribution, but certainly we would expect that it would last for some time until we come up with something better. It is not just the department; everyone is looking at this question and it is part of a great debate. But this is as it is at the moment and we would not want to defer this.

    We are disappointed at the noble Lord's reply. We have three amendments saying the same thing in different ways and we thought he might have an opportunity to change his mind or say that he preferred one to another. All the local authority associations have asked for deferment and further consultation on this, and I think even at this late stage I might encourage my noble friends to see whether the Committee cannot help to change the noble Lord's mind.

    Dinner was very good, but I feel I cannot do that. When the noble Baroness refers to consultations, I can only repeat that I hope they will go on at all times; but we have to stand on a


    Ardwick, L.Hale, L.Simon, V.
    Avebury, L.Heycock, L.Stamp, L.
    Balogh, L.Houghton of Sowerby, L.Stedman, B.
    Birk, B.Irving of Dartford, L.Stewart of Alvechurch, B.
    Blease, L.Jacques, L.Stewart of Fulham, L.
    Blyton, L.Kaldor, L.Stone, L.
    Bowden, L.Kilmarnock, L.Strabolgi, L. [Teller.]
    Brockway, L.Kirkhill, L.Strauss, L.
    Cledwyn of Penrhos, L.Llewelyn-Davies of Hastoe, B.Taylor of Mansfield, L.
    Collison, L.Mishcon, L.Underhill, L.
    David, B.Parry, L.Wallace of Coslany, L.
    Davies of Penrhys, L.Peart, L.Whaddon, L.
    Elwyn-Jones, L.Ponsonby of Shulbrede, L. [Teller.]Wigoder, L.
    Evans of Claughton, L.Wynne-Jones, L.
    Gaitskeil, B.Ridley, V.Young of Dartington, L.
    Galpern, L.Ross of Marnock, L.
    Greenwood of Rossendale, L.Segal, L.


    Abinger, L.Ferrers, E.Massereene and Ferrard, V.
    Alport, L.Fortescue, E.Middleton, L.
    Ampthill, L.Freyberg, L.Minto, E.
    Auckland, L.Gage, V.Monson, L.
    Avon, E.Gainford, L.Morris, L.
    Bellwin, L.Geddes, L.Mottistone, L.
    Belstead, L.Gisborough, L.Mountevans, L.
    Bledisloe, V.Gowrie, E.Murton of Lindisfarne, L.
    Boyd-Carpenter, L.Gray, L.Orkney, E.
    Bridgeman, V.Greenway, L.Pender, L.
    Brookes, L.Grimston of Westbury, L.Penrhyn, L.
    Brougham and Vaux, L.Hacking, L.Rawlinson of Ewell, L.
    Caithness, E.Hanworth, V.Rochdale, V.
    Cathcart, E.Harvington, L.Romney, E.
    Chelwood, L.Hatherton, L.Sandys, L. [Teller.]
    Cockfield, L.Hill of Luton, L.Savile, L.
    Cork and Orrery, E.Hornsby-Smith, B.Selkirk, E.
    Cornwallis, L.Hylton-Foster, B.Sempill, Ly.
    Craigavon, V.Kimberley, E.Sharples, B.
    Croft, L.Knutsford, V.Soames, L. (L. President.)
    Cromartie, E.Lindsey and Abingdon, E.Stanley of Alderley, L.
    Cullen of Ashbourne, L.Liverpool, E.Strathclyde, L.
    De La Warr, E.Long, V.Strathcona and Mount Royal, L.
    Denham, L. [Teller.]Lucas of Chilworth, L.Suffield, L.
    Devonshire, D.Lyell, L.Swansea, L.
    Digby, L.McFadzean, L.Swinfen, L.
    Drumalbyn, L.Mackay of Clashfern, L.Trefgarne, L.
    Dundee, E.Macleod of Borve, B.Trenchard, V.
    Eccles, V.Mancroft, L.Trumpington, B.
    Elibank, L.Mansfield, E.Vaizey, L.
    Ellenborough, L.Margadale, L.Vaux of Harrowden, L.
    Elles, B.Marshall of Leeds, L.Vickers, B.
    Elliot of Harwood, B.Masham of Ilton, B.Vivian, L.
    Elton, L.

    Resolved in the negative, and amendment disagreed to accordingly.

    moment in time and we think that this is the moment in time.

    We do feel very strongly about this issue and we are going to ask the Committee to divide on this amendment.

    8.7 p.m.

    On Question, Whether the said amendment (No. 98) shall be agreed to?

    Their Lordships divided: Contents, 48; Not-Contents, 100.

    8.14 p.m.

    Page 41, leave out lines 15 to 19 and insert—

    (" ( ) For the commencing year and any subsequent year rate support grants for local authorities in England and local authorities in Wales may be administered separately and differently; and this Part of this Act shall be construed accordingly in relation to rate support grants for any year for which such grants are so administered.").

    The noble Lord said: I beg to move Amendment No. 99. Again, I should like to refer the Committee to my earlier amendment to Clause 44. This is the last of the technical amendments to remove any doubt as to the independence of the operation of RSG in England and Wales. I beg to move.

    On Question, amendment agreed to.

    [ Amendments Nos. 100 and 100A not moved.]

    moved Amendment No. 101:

    Page 42, line 9, leave out (" of the Local Government Act 1974 ").

    The noble Lord said: I beg to move Amendment No. 101. The purpose of this amendment is to add those parts of Section 2 of the Local Government Act 1974 which are not already included to the list of enactments which the Secretary of State may repeal. Those parts suitably modified are now to be incorporated in the Bill. The only subsections remaining in Section 2 are (7), (8) and the words "Schedule 2 to this Act shall have effect" in subsection (2). Subsections (7) and (8) together allow the Secretary of State to make payments from the total needs element to specified bodies like LAMSAC and LACSAB. These subsections suitably modified have been incorporated into Clause 49 of this Bill and it is therefore no longer necessary to retain them in the Local Government Act 1974. I beg to move.

    On Question, amendment agreed to.

    On Question, Whether Clause 46, as amended, shall stand part of the Bill?

    We are beginning to discuss now the introduction of an entirely new RSG system which again has united all the local authority associations in criticism of the Government. Why have the Government felt it necessary to introduce this type of block grant on a revised rate support grant? Is it so that they can better turn the screw on local authority expenditure in a way that the present system does not permit?

    It seems to us that the Government have not given enough time and thought to what is to take the place of the existing system, that they have not really heeded the views of the local authority associations. We can see no justification for these hurried changes. This is where we begin to meet up with tapers as well as multipliers. The Government will pay a certain sum of money up to a point somewhat beyond the threshold where standard rate poundages and expenditure ratios are equal, and then we get the effect of the taper. I believe that the Government do not know how they will work out the assessment. They do not know how the tapering effect will clobber the marginal grant rates and they do not know what will be the implication of the multipliers.

    This Bill proposes major changes in the control of local government expenditure and the block grant will give the Government a direct influence over the level of revenue expenditure of every local authority. I do not believe that these complete changes are justified or can be justified. I would hope even at this late stage that the noble Lord might be pursuaded to withdraw the whole of Part VI and begin to enter into meaningful consultations with the local authority associations.

    Of course, there have been problems in the past, but I foresee even greater problems in the future following this tremendous upheaval. As I said previously, from my own experience I believe that the Local Government Act 1974 was a disaster, but if this Bill goes through then I believe that the historians of the future will say that this Bill had a greater effect on local government democracy than even did the 1974 Act.

    If the local authorities remain within their cash limits, then they should have the right to initiate the schemes and to make what innovations they think are right for their area. That is their constitutional right. If their electors think that they have done wrong, then that is ' what democracy is all about because those electors will have the right, through the ballot box, not to re-elect those councillors.

    I believe in local democracy and I do not want to extend the power of the civil servants. The proposals outlined in the Bill will not solve any defects in the present grant system: they are so complicated that only a very few experts will understand the system—and I do not profess to be one of them. Their very complexity means that it will be even more difficult to forecast at the time of the RSG settlements either the effects of those settlements in total on local authority spending and rates or the effects on individual authorities. Therefore, every local authority will face great financial uncertainty and that is bound to affect the efficient planning and management of the highly important services maintained and provided by local government. The whole system is ill-defined in the Bill and too many powers are sought through secondary legislation without any adequate safeguards against possible misuse.

    One point among very many that we shall be debating later is the nonsensical way in which RSG works. It would seem so obvious and only common sense that when an authority's population increases, its share of the RSG should increase. But it does not. The facts are that the two fastest growing regions in the country—East Anglia and the South-West—have suffered larger grant losses since 1974 than other regions. Indeed, in my own county of Cambridgeshire our population has increased by 10 per cent, since 1974 and our grant has been reduced by 20 per cent. This cannot possibly be a satisfactory state of affairs.

    The block grant as proposed will reduce the autonomy of local authorities and will lead to much greater uncertainty and instability. I believe that no Government should attempt to use the block grant to specify what they think individual authorities ought to be spending. As proposed, it does not solve the problem of the needs assessment. We are against the wide use of multipliers which would make it possible for the distribution of the grant to be manipulated in what are quite unacceptable ways, and the whole apparatus is far too complicated. The public are involved and, indeed, they are on the receiving end of local government. There must be local accountability. I believe that local authority bureaucracies are much more efficient than the bureaucracy of central Government.

    The block grant proposals are not feasible without a proper method of assessing local needs. By that, I mean a method which cannot be distorted by past spending. The block grant ought to be supporting the major services and not seeking to equalise rate levies. This would be a disincentive to local efficiency. The central assessment of local needs can never avoid inequity, as regression analysis has proved over the years. Only local elected councils can judge what ought to be spent to meet their local needs within the framework of the national economic policy.

    I fear that the system proposed will try to substitute arbitrary central assumptions for local judgment. Part VI as a whole is a total devaluation of local discretion, and, far from being rational and ordered, it will be reliant on the whims, the prejudices, the preconceptions and the misconceptions of a Secretary of State. Mutual trust is completely lacking, and that above all is what is needed between central and local government today. I hope that the Committee will support me in trying to get this clause removed.

    When I spoke on the Second Reading of this Bill I said that I much disliked the block grant, and so did the Association of County Councils and all its members. Nothing that has happened in the last two months has made me change my mind one detail I wish that the alternatives that were put forward—to which reference has been made, so I shall not waste time—had been considered further, for in my view it is perfectly possible to find a system that would meet the Government's objectives without the block grant.

    At this point I wish to speak for myself and not for the ACC. At this eleventh hour we must realise that the reality of the situation is that there is no practical alternative to acceptance of the Government's proposals. If I thought that there was the slightest chance of the Government changing their mind, I should be delighted to urge them to do so, but I think that we have gone so far down this road that it is impossible to take the matter any further.

    The country has been persuaded, rightly or wrongly, that local government is largely extravagant and responsible for a great many of the ills which the country now faces. As we have already debated, this is unfair. But never mind that, the country will not stand for extravagance in local government, and it will stand for the essence of the block grant, and it is right—we have never denied that it is right—that the high spenders should be penalised and should not be able to obtain resources at the expense of the lower spenders, and that the thrifty should subsequently be rewarded.

    One way of doing this was the arbitrary removal of £200 million from the increase order which, as we all know, is very unfair because it catches every coloured sheep, from black to pure white, at one blow, and this is unacceptable except as a very temporary measure. We have heard, and I think that we have decided, that the transitional arrangements under Clause 41 cannot be extended for more than the one year for which they were originally proposed. Therefore, I repeat that in my view in practice the block grant is the only alternative now available to ensure that the high-spending authorities do not take too much of the cake in the future.

    As has been said so many times, the block grant will be completely and totally complicated—much more complicated than multi-variational regression analysis. We may well feel when we have finished with this process that the devil we know is better than the devil we do not know. I hope that I am wrong, but I have grave fears that the new system will prove just as difficult to operate as the old one, and there are, indeed, many reports from the technical committees which are taking place—the grants working group and so on—that very important papers have to be handed round at the beginning of a meeting for decisions later that day. That shows the muddle that we have got into.

    As a result of this, I should like to ask very sincerely—and it seems to me that we must be realistic that the Government will win this vote, for I very much doubt that there is any chance of changing their mind or of their losing a vote—that we be given an assurance that the Government will continue to talk with local authority associations on the details. I know they will, but it would be nice to have it stated. Furthermore, should the undoubted and grave fears of all authorities that this system is a damaging one to the relationship between local and central Government be proved to be correct, I hope that the Government will have the courage to say so and return to Parliament with their suggestions for improvements in one way or another. As I have already said, I shall be proposing some technical amendments which will make the matter even more complicated than it is in the Bill. In fact, they are intended to sugar the pill very slightly. I hope to bore your Lordships with the detail of that in a few minutes and I shall keep it as brief as I can.

    It is a bitter pill that local authorities are being asked to swallow. It is medicine which will be swallowed with reluctance, but like all unpleasant medicine it is perhaps best swallowed quickly so that we can get on with the next matter; in other words, if rape is inevitable, relax and enjoy it. I cannot vote for the Government on this issue; I doubt whether I can vote for the Opposition. Therefore, I shall apologise for wasting your Lordships' time and shall sit firmly in my seat.

    My note says that we have had a thorough debate on this. In fact, we did have a thorough debate on the earlier amendment, when many noble Lords expressed their views and their concern, and I understand that. What surprises me most about the whole issue is that it is talked about as if what we have at the moment really is a tremendous system that does everything that we would like it to do, when anyone who has been in local government at all in recent years knows what a dreadful thing it really is at present. It is so complicated that I am not ashamed to say that despite having been involved for many years in local government finance and being leader of a key and major authority, I do not know exactly how it works. I know the principles of it and if I do not, I suspect that there are others of your Lordships who also do not. For that reason I am always surprised that in this whole debate we talk about what we have at the moment. It is implied that what we have at the moment is better. It is said that the block grant will do all these dreadful things, but it is not true.

    I shall not—for I think that there is no need to do so—run through exactly how the present system works and point out how very secretive it really is, because it is. However, I should perhaps mention just three fundamental defects of the present system. First, it relies so heavily on actual past expenditure. The formulae that it produces are a self-fulfilling prophecy. I say that the more an authority spends, the higher its assessed needs and the more grants it gets. The less an authority spends, the lower its assessment and the less grant it gets.

    The second point is that the formulae change from year to year in an apparently random and unpredictable way, sometimes with devastating effects for individual authorities. Factors are in one year and out the next, with the result that authorities have had grant bonanzas one year followed by a massive cut the next. Apart from the chaos this causes for authorities trying to plan their budgets, it just is not plausible that an authority's needs can change wildly from one year to the next.

    The third major defect is that the analysis consists—and this is a very important point—of thousands of complex statistical calculations carried out within the privacy of a computer, with almost no human control over what is going on. Each year the various pieces of data have been fed into the machine, the handle has been cranked and the formulae have come out on a take-it-or-leave-it basis. The results have often been implausible and enormous amounts of grant have been distributed on the basis of factors such as single-parent families whose relevance to the mainstream of local authority services is difficult to see. And yet the black box technique has prevented councillors or even Members of Parliament from having any useful debate about the crucial question of how the needs of local authorities and, say, grants are calculated. I, along with many others, find it difficult to follow the apparent love that there seems to be for the present system. It only became such when we came up with block grant as the alternative.

    I am not going to go over all the other aspects about it. I think you know from the arguments that took place earlier the philosophy behind what we are seeking to do with block grant. But I would want to say one thing about the effect on central and local government relationships. That is an important point and I should comment upon it.

    What we are doing first is to make available in a form which people really will be able to see, certainly a complex system, no one seeks to deny that, but at least the black box is open, the things are on the table; you will be able to debate it and discuss it in a way that has not been done before. I am not saying for a moment that it will be easy because it will not, but at least it will be there and it will be seen, and that must be to the advantage of everybody who is interested in this whole subject.

    I am not making a long speech, but I think that block grant is far from being the sinister threat to local government that some make it out to be. No one can quarrel that the present system of distributing RSG is fair, but if you have taken careful note of the objections to block grant you will see that they are almost entirely on the issue of local interference, which in turn is mainly about the basis of assessing need. Grant related expenditure we now call it. There is a total, finite sum of money to share out, and block grant is solely about the most equitable way of doing it. That is all it is. It is nothing else. It is not an over-simplification to put it that way because all the other arguments are peripheral to that main issue. I hope that that puts the whole debate into perspective.

    If ever there was a need to end the grant distribution system which gave to those who spend most, taking away from those who practice prudence, it must surely be now. This is a fundamental facet of the Government's philosophy and it is an essential aspect in restoring the country's economic health. I will not go through all the points I have here before me unless there is another big debate, which I suspect there will not be. I entirely understand that noble Lord's opposite are committed to opposing on this, and so be it. I respect the sincerely held expressions of concern about the possibility of an impact, an interference, with local authorities. I would only say this before I sit down: If I, with my background in local government and with my wishes for the welfare of the future of local government, did not sincerely believe that what we shall get in block grant is far better than anything we have now, if I really felt that it would lead to a kind of central domination and interference of central Government, I could not put it in the way that I put it now. I just could not do that. I might say the words, but I could never put it in that way. I really believe that this will make a grant distribution system that is far better than anything we have had up to now. If it is not the ultimate answer—I am sure it is not—at least it is going to be a tremendous improvement. Having said that, I hope that your Lordships will feel able to support us on this point on the clause stand part.

    8.34 p.m.

    I accept all that the noble Lord says. But heavens, do not let me get down as being a supporter of block grants, and a believer that it is all that is wonderful. I have been moaning about it for years, and hoping that we can get something better in its place. I would also say to the noble Viscount, Lord Ridley, do not be quite so despondent that we cannot possibly win a Division if we have one. If I had waited until I was in a majority on a local authority I would not have been on a county council for 28 years, because I have never been in a majority, but I have managed to survive and love local government. I think this is perhaps our last place in this Bill where those who are concerned about local government, who have been fighting for delay in the implementation of this, who have been fighting for more and more consultations with the local authority associations, can work together. It is time for them to stand up and be counted, and I am not prepared to give way.

    I was concerned this morning reading the Financial Times. This is an appropriate moment to get a bit of information in this democracy. I should like the House of Lords to stand up as a defender. Now this magnificient paper, the Financial Times, which is never wrong, says:

    "Row over secret land deal".
    It deals with it this way:
    "A furious row has broken out over the discovery that the Government has allegedly "—
    listen to this ugly word— "
    "hoodwinked county councils"—
    and, by God! there was proof of it, I should think—
    "into making a secret deal over the Local Government, Planning and Land (No. 2) Bill, but without giving them any real concessions ".
    I shall not read it all, because the Minister knows about it. It is all about the multiplier, and of course the big boys, the metropolitan boys, are in dudgeon and are calling a special meeting on Wednesday. May this House be informed about the relevance of this, and what has been going on behind our backs?

    I should like to try to put a damper on the vibrant enthusiasm of the Minister for the scheme. The local authority associations and the representatives who have been involved in this in the great detail have this to say:

    "The working papers demonstrate the complexity, incomprehensibility, and uncertainty of the proposed new system of block grant. The technical papers are so detailed, so complex and unintelligible that wholly insufficient time has been given for them to form a rational view of the proposals."
    They go on:
    "Because of this it is a virtual impossibility for them to take any considered view on the detailed proposals and to assess the likely effect of the various options on particular authorities."
    So much for the clarity, so much for the certainty, and so much for the future, and so much for consultation. If a businessman engaged in this kind of consultation the Government would be on their head and, indeed, very soon out of business.

    On the question of complexity, we have a system of which it was said that there are only six people who know about it. There is no one who owns up to knowing anything about this block grant scheme at all with the certainty of even the expert. It requires a battery of terms, formulae, criteria, multipliers, dampers, waivers, and arithmetical exercises and even has its own special set of formulae or equations. A equals f times (big UR minus big NUR) equals the abatement of grant. It has been described as a mad bureaucrats paradise.

    No wonder we need so many civil servants, and we shall need more. If the Government are not prepared either to withdraw the block grant proposals and make them simpler, the least they can do is to give a little longer time for the local authority representatives to begin to understand what the whole thing is about. When they understand it, maybe there is some hope for the rest of us.

    We have all been proud of our democratic system of local government. But if the central Government begins to exert control over local government to the extent of making a uniform rate and a judgment about each local authority's expenditure, this will weaken the independence of our local government and make it less accountable to the people who elect the representatives to the council chambers.

    If a local authority is over-spending, and it may be true that some do, those best suited to call the councillors to account are the people in the locality who understand the circumstances and who were originally responsible for electing them to their positions. To take away the discretion which the local authorities exercise is to play into the hands of the civil servants. This is going to be the problem. Local government is going to be at the mercy of civil servants who are in charge of the day-to-day management of this complex formulae, and all the problems that arise from them. The Economist said that the block grant was the back door to local government reform. However that may be I do not know, but the erosion of the right to decide will provide little incentive to bringing intelligent men and women whether Conservative, Labour or Liberal, into local government, and that will be a great pity. It has been summed up very well by the Outer Circle Policy Group:
    "Instead of being centres of Government, local authorities will be outposts of a central administration in London. Decisions about local services will be taken not on the basis of local judgments of the demand for services and the willingness of ratepayers to pay, but on a formula which may bear no relation to the circumstances of any individual authority."

    As for the remarks of the noble Lord, Lord Davies of Leek, I must say, "Come on now !". I read the papers as well. When the time comes that the noble Lord believes them any more than in the past, that will be quite a landmark in his career. As for the remarks of the noble Lord, Lord Irving of Dartford, I am tempted to get into the nuts and bolts of the subject, but I shall resist the temptation. I must, however, comment on his remark about the erosion of the right to decide. The right to decide what? Is it the right to decide what you spend or what you rate? In no way does the block grant, any more than the present RSG system, affect that one iota; the whole debate is about how one distributes the grant, a finite sum of money which goes to all the local authorities. The concern is to ensure that one authority does not get an advantage over another. That is the whole point of the debate, to try to do it equitably and fairly.

    I agree with the noble Lord that it is complicated, but nobody who has really been involved could say there has been no consultation. It may be said they need more time, but nobody can say there has not been consultation, because the consultation is on-going and continuous. Sometimes one needs more time, certainly, but there must always come a moment when one must say, "Here it is and it will work". The fact that it looks more complicated even than before is simply due to the point I made earlier. The black box is open, the numbers are on the table, the formulae are on the table and the whole basis is there to be seen.

    If I began to talk about the terms of it, one is bound to say it is complicated. I see the noble Lord, Lord Sefton, smiling. So he should because he has heard all the terms; the claw-back to the multipliers, the levers, the multi-variant regression analyses, the London claw-back and all the rest that one could mention. The mind starts to boggle because one begins then to discuss such things as needs assessment, standard expenditure, grant related expenditure, national uniform rate, notional uniform rate, uniform rate. One could go on and on, so complex it is.

    I have not tried to pretend—I have said this more than once today—that we have here the ultimate; it is certainly not that, because this must be something that is on-going, and here I take the point made by my noble friend Lord Ridley. It would be most unfortunate if there were not an on-going dialogue between central and local government and, for that matter (this was mentioned by one noble Lord) with anybody else who has something to contribute to this debate for the future. That is a must. Meanwhile, however, the Government must take a decision and say, "Here it is. We have had plenty of 'aggro' "—if that is the right word to use—" but here it is ". It does not come easy when differing with friends, in particular. These decisions are not lightly taken but are agonised over, but then there comes the moment when one must say, "Here it is. Come on, chaps. There must be something better and this is better", and that is why I support it.


    Abinger, L.Freyberg, L.Mottistone, L.
    Avon, E.Gage, V.Mountevans, L.
    Bellwin, L.Gainford, L.Murton of Lindisfarne, L.
    Belstead, L.Geddes, L.Northchurch, B.
    Bessborough, E.Gisborough, L.Orkney, E.
    Bledisloe, V.Gowrie, E.Pender, L.
    Boyd-Carpenter, L.Gray, L.Penrhyn, L.
    Brabazon of Tara, L.Greenway, L.Rawlinson of Ewell, L.
    Bridgeman, V.Grimston of West bury, L.Renton, L.
    Brookeborough, V.Hanworth, V.Rochdale, V.
    Brookes, L.Harvington, L.Romney, E.
    Brougham and Vaux, L.Hatherton, L.Saint Oswald, L.
    Caithness, E.Henley, L.Sandys, L. [Teller.]
    Cathcart, E.Hill of Luton, L.Savile, L.
    Chelwood, L.Hornsby-Smith, B.Selkirk, E.
    Cockfield, L.Hylton-Foster, B.Sempill, Ly.
    Cork and Orrery, E.Kimberley, E.Sharples, B.
    Craigavon, V.Knutsford, V.Soames, L. (L. President.)
    Croft, L.Lindsey and Abingdon, E.Stamp, L.
    Cromartie, E.Liverpool, E.Stanley of Alderley, L.
    Cullen of Ashbourne, L.Long, V.Strathclyde, L.
    De La Warr, E.Lucas of Chilworth, L.Strathcona and Mount Royal, L.
    Denham, L. [Teller.]Lyell, L.Strathmore and Kinghorne, E.
    Devonshire, D.McFadzean, L.Suffield, L.
    Digby, L.Mackay of Clashfern, L.Swansea, L.
    Drumalbyn, L.Macleod of Borve, B.Swinfen, L.
    Duncan-Sandys, L.Mancroft, L.Trefgarne, L.
    Dundee, E.Mansfield, E.Trenchard, V.
    Eccles, V.Margadale, L.Trumpington, B.
    Elibank, L.Marshall of Leeds, L.Vaizey, L.
    Elles, B.Massereene and Ferrard, V.Vaux of Harrowden, L.
    Elliot of Harwood, B.Middleton, L.Vickers, B.
    Elton, L.Monk Bretton, L.Vivian, L.
    Ferrers, E.Morris, L.Westbury, L.
    Fortescue, E.


    Ardwick, L.David, B.Hatch of Lusby, L.
    Avebury, L.Davies of Leek, L.Heycock, L.
    Balogh, L.Davies of Penrhys, L.Houghton of Sowerby, L.
    Birk, B.Denington, B.Irving of Dartford, L.
    Blease, L.Elwyn-Jones, L.Jeger, B.
    Blyton, L.Evans of Claughton, L.Kaldor, L.
    Bowden, L.Gaitskeil, B.Kilmarnock, L.
    Brockway, L.Galpern, L.Kirkhill, L.
    Cledwyn of Penrhos, L.Greenwood of Rossendale, L.Llewelyn-Davies of Hastoe, B [Teller.]
    Collison, L.Hale, L.

    I cannot resist saying that I admire the Minister's talent for spilling out words, words, words and more words, but failing totally to answer the question.

    They may fail to do so for the noble Baroness, but lam most concerned that they should not fail so far as my noble friends are concerned.

    8.43 p.m.

    On Question, Whether Clause 46, amended, shall stand part of the Bill?

    Their Lordships divided: Contents, 103; Not-Contents, 51.

    Mishcon, L.Segal, L.Taylor of Mansfield, L.
    Parry, L.Simon, V.Underhill, L.
    Peart, L.Stedman, B.Wallace of Coslany, L.
    Pitt of Hampstead, L.Stewart of Alvechurch, B.Whaddon, L.
    Ponsonby of Shulbrede, L. [Teller.]Stewart of Fulham, L.Wigoder, L.
    Stone, L.Wynne-Jones, L.
    Ross of Marnock, L.Strabolgi, L.Young of Dartington, L.
    Sefton of Garston, L.Strauss, L.

    Resolved in the affirmative, and Clause 46, as amended, agreed to accordingly.

    Schedule 7 [ Enactments mentioned in section 46(1l)( c)]:

    8.52 p.m.

    moved Amendment No. 102:

    Page 146, line 5, column 3, leave out from beginning to (" to ") in line 12 and insert— (" Sections 2.").

    The noble Lord said: This is a technical amendment. It relates to subsections remaining in other parts of the clause. I beg to move.

    On Question, amendment agreed to.

    moved Amendment No. 103:

    Page 146, leave out lines 22 and 23 and insert— ("Scheduled").

    The noble Lord said: I could almost say likewise in this case. This is another consequential amendment. I beg to move.

    On Question, amendment agreed to.

    Page 146, line 23, at end insert—

    ("1976 c. 52.Lotteries and Amusements Act 1976.In Schedule 4, paragraph 9
    1980 c. 20.Education Act 1980.Section 32. Schedule 6.").

    The noble Lord said: This is another amendment of the same type relating to Schedule 7. I beg to move.

    Since we spent so much time on the Education Act 1980, can the noble Lord tell us which particular section we are taking the power to delete?

    Yes. Paragraph 9 of Schedule 4 of the Lotteries and Amusements Act 1976 is an amendment to Section 1(4) of the Local Government Act 1974, which defines relevant expenditure for the purpose of rate support grant. Since this subsection of the Local Government Act 1974 is itself repealed by Schedule 7 to the Bill, it is no longer necessary to retain paragraph 9 of Schedule 4 to the Lotteries and Amusements Act 1976. Section 32 and Schedule 6 to the Education Act 1980 both refer to paragraph 3 of Schedule 2 to the Local Government Act 1974, which provides for the adjustment of needs element to take account of the pooling arrangements for the cost of education under the Bill.

    On Question, amendment agreed to. Schedule 7, as amended, agreed to.

    [ Amendment No. 104A not moved.]

    Clause 47 [ The aggregate amount of rate support grants]:

    Page 43, line 24, at end insert—

    (" (e) the level of expenditure of local authorities on capital account in the (five) years preceding the grant year, and the consequences of that expenditure for authoritities' expenditure on revenue account (including debt charges resulting therefrom and the likely costs of staffing and maintenance).
    ( ) In taking into account future variations in the level of prices, costs and remuneration under subsection (4)(d) above, the Secretary of State shall have regard to the latest forecasts for movements in indices of prices and of earnings within the national economy produced by the Treasury under the Industry Act 1971, and by the National Institute of Economic and Social Research.
    ( ) A Rate Support Grant Report shall specify:
  • (i) the level of relevant expenditure upon which the Secretary of State is basing his determination of the amount available for grants and the date by reference to which the level of prices, remuneration and other costs is applied for this purpose;
  • (ii) the estimate of future variations in the level of prices, costs and remuneration taken into account under subsection (4)(d) above;
  • (iii) the differences (if any) between the estimate referred to in (ii) above and those indicated by the forecasts referred to in subsection (4A) above, and the general considerations which have influenced the Secretary of State in arriving at the estimate under (ii) above if such differences exist.").
  • The noble Baroness said: This is put forward as a probing amendment. The first part of the amendment, paragraph ( e), covers a point that is always of concern to local authorities in general and in particular. On capital expenditure central Government have often appeared generous in allowing that expenditure to take place, but the pay cheque has to be picked up for the following years by the authority concerned from its rate fund. We want to see the Secretary of State having regard not only to the economic conditions generally, but more specifically to the capital that has been laid out in the preceding five years and the revenue consequences of that. The revenue consequences are often not stable but may rise each year, so that as time goes on they will increase for the authority concerned, and we believe that this is a factor worthy of further consideration by the Secretary of State.

    The next part of our amendment acknowledges the need to be aware of, and to take account of, the inflation rate, and we suggest that the basis should be a forecast not by a Government department, but by a responsible body, such as the National Institute of Economic and Social Research. We go on to say that the RSG report should specify not only the level of relevant expenditure, but also the date by which the Secretary of State expects that level to be reached from information supplied by responsible forecasters outside of central Government.

    With the second and third parts of the amendment we are trying to limit the very wide-ranging power that the Secretary of State has under the wording of the clause. As I said before in this debate and on Second Reading, we think that no Secretary of State, of whatever party, should have these far-reaching powers.

    I believe that if the Government were to look at this and were to adopt our suggestions, a much fairer settlement would be made on the block grant, because it would be based not on the whim of the Chancellor, but on specific considerations that everyone would be aware of. It would not only be fairer to local authorities, but would also be seen to be fairer. If the Government want to use the words "economic conditions", then they should be looked at from a specific point of view, with definite markers to guide the Secretary of State and which would be understood not only by the Secretary of State and his officials, but also by local authorities.

    As I see it the danger as the Bill stands is that the subsection can be used by the Secretary of State as an excuse to level down expenditure in a particular sector because he decides that the nation can no longer afford that expense, and that is where the Secretary of State would be taking over from local government and councillors who have been elected locally. As I have said, this is a probing amendment at this stage, and we should like to hear the Government's views. I beg to move.

    I should like to support the noble Baroness, at least to the extent of asking my noble friend carefully to consider this amendment.

    It is an interesting point that is raised, but in fact it is a very big amendment that we have in front of us. The new paragraph (e) in subsection (4) I suggest is not necessary. The Secretary of State already takes notice of the revenue consequences of all past and immediately planned capital spending in fixing relevant expenditure. Spending on loan charges is allowed for in full, and if interest rates increase during the grant year, extra grant is payable outside the cash limit.

    Let me now turn to the proposed new subsections (4A) and (4B). Subsection (4A) refers to two particular forecasts of future pay and price movements by the Treasury and the National Institute of Economic and Social Research. I wondered why these were the two chosen to be selected. There are others who might equally well have been chosen; I do not know. Perhaps the noble Baroness opted for these two because they may have heard criticisms of others; I do not know. The fact is that the Secretary of State already has to have regard to the current levels of pay and prices and likely future movements as they will affect local authorities in the grant year.

    In so doing he has to consult the local authorities, whose representatives are quick to draw attention to all factors which they think will affect authorities. To select two national forecasts as a reference point is, I suggest, not a starter, especially as the proposed subsection (4B) recognises that the Secretary of State may legitimately come to a different conclusion.

    Subsection (4B) largely recognises present practice in preparing RSG settlements and reports. The level of relevant accepted expenditure and the price base are specified. So is the general allowance to be made for pay and price movements in the grant year. But it is not reasonable to explain why the considerations accepted by the Secretary of State when examining the whole range of local government services in consultation with the authorities should differ from the latest national forecasts of pay and price movements by two bodies singled out from a number of others engaged in this work. The contexts are really quite different.

    The present requirements of subsection 4(d) and the established practice of RSG reports and settlements already allow a responsible Government to make fair and realistic allowances for inflation during the grant year. We did this for 1980–81, and will be doing the same for 1981–2. In fact, so did the previous Government for the grant year 1979–80. Yes, I take the basic point. I know exactly what is the concern on this, and having been on the other end, the receiving end, I felt very deeply about it when the figures proved to be wrong. But, although I was sceptical at the time when I was on the receiving end, I always assumed that they were given in good faith and were based upon parameters, calculations, which were genuinely anticipated. We were sceptical, as I say, that we were always right. But there it is. I think that successive Secretaries of State will try to get the thing right. It would be very foolish to do otherwise, and, although, as I say, I understand and sympathise with the motivations behind the amendment, I think we should leave it as it is.

    I am grateful to the noble Lord, and I will read very carefully in Hansard tomorrow what he said. As I said, it is a probing amendment. I will look at it again, and if I can come back with something a little more specific, perhaps, at the next stage I will do so. I assure the noble Lord that I have no interest in the two organisations named; it is just that I do not trust Government forecasting. I beg leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    [ Amendment No. 105B not moved.]

    9.3 p.m.

    Page 44, line 10, at end insert—

    ("( ) Where "relevant expenditure" includes sums payable under precept to the councils of parishes or communities the Secretary of State may by regulations made under section 113 of the General Rate Act 1967, provide for the transfer of the amount of block grant attributable to any such precept from the local authority to the council of the parish or community as the case may be.")

    The noble Baroness said: At last, I hope, I am going to get some support from the noble Lord opposite, and perhaps some help. I am speaking on quite a different tack now, on behalf of what we used to know as parish councils, and before I start I should like to pay tribute to the members of the South Kirby and Moor-thorpe town council, who, I will not say worried me but who certainly lobbied me almost incessantly in the latter part of the Recess and, I believe, have been to see the noble Lord as well, and are even here tonight to hear what happens to their amendment. I hope that might be an incentive to the noble Lord opposite to say, Yes, for a change, and not, Maybe, or, No.

    The position is that the Local Government Act 1972 introduced what was a new conception in concurrent powers under which the parish or the district could operate services within a parish, and the new districts, unlike the old rural district councils that we had before, had some areas that were parished and some that were not. The grant attracted by parish expenditure was the RSG resources element, and in the past it was paid to the larger authority. The new district councils have discretionary powers, and that is where the trouble seems to start—when they had discretionary powers for paying for the concurrent services. If in the past a district council refused to exercise its discretion, then where the parish were carrying out functions and, in many cases, had been for years previously, the parish has been double-rated on the cost of these functions; that is, the parish ratepayers bore not only their own parish rates but the district rate for the one service. The RSG which was attracted by parish council expenditure was used to alleviate the district council expenditure generally, and parished areas which operated services were quite effectively compulsorily subsidising the unparished areas.

    There are two amendments, Nos. 105C and 105D. In 105C, what we are trying to do is to enable the Secretary of State to correct what we think is an injustice which has affected many parish councils for many years and has affected many parish and community councils since 1974. The provision we are asking for is to empower the Secretary of State to make regulations. Although I hate him poking his nose into local government, I still think he is the one to do it this time. Although the necessary transmission of monies can be made in a very simple and easy manner, the legislative expression of the power involves possibly more complex wording than we have and is more appropriate to a statutory instrument than to sections in an Act of Parliament.

    As I have said, the injustice arises from the fact that the district councils act for the parish and the community councils in levying that part of general rates which those councils need to finance their activities. They pay over the amounts on precepts issued by those councils, and the amount of the precept is taken into account for calculating the rate support grant and the new block grant system payable to the district council. But the district council are not required to pay over that part of the grant to the parish or the community council whose precept has earned it. A few districts do pay this over voluntarily, without any administrative problems at all; others seem to keep that part of the grant for their general district purposes.

    Then the unfairness of it begins to be compounded, because all the parish councils in the district do not necessarily spend at the same level and do not therefore require the same amount from the rates as measured in pennies in the pound on rates. But if the relevant part of the grant is not paid over to the parish council, then the ones who are more active in any one year earn perhaps the grant of benefit that is gained equally by their inactive neighbours. Since parish councils are not under a duty to provide the service, but exercise their powers in their town and village, then the services that their town or village needs may well mean substantial differences of expenditure in any one year between two adjoining parish councils. This situation is a deterrent to the exercise by the parishes and the communities of their statutory powers since they are on a very small scale, they work very economically and they can harness local community effort; and it is not good for public administration that they should be inhibited by these financial considerations which may not be very much to us but mean a very great deal to a parish.

    The total amount at stake is not large. In the 1979–80 financial year I believe the total parish and community expenditure was of the order of £30 million—about one-third of 1 per cent, of local government expenditure; so we are not talking about the vast sums we were talking about on earlier amendments today. But it is an important issue to the parishes because it can represent a very significant amount of their expenditure, depending on the percentage of grant receivable by their district council. The change which we suggest would not increase the total of grant payable by the Secretary of State but would merely ensure that a very small part of that went to a different set of authorities.

    On the second amendment, the new clause is intended to provide the means for ending this injustice which is described as double rating. It has mainly arisen since 1974 and in some districts with large urban areas substantial parts of the districts are outside any parish and community; and, to meet the difficulty, the statutory functions of the parish and community councils have to be exercisable by somebody in the district. The councils were given all the functions which are also held by parish and community councils. The districts may exercise these functions, known in local government language as concurrent functions, for any part of their districts and since the districts normally levy a standard rate in the pound over the whole of their area while the parish or community council activities are financed by rate levies on the parish or community alone, it is possible for parish ratepayers to pay the whole cost of, say, bus shelters provided by the parish council and yet contribute to district council costs of providing similar shelters in an area not within a parish. On the other hand, the ratepayers in these areas would not automatically be contributing towards some of the benefits within the parishes. This double rating injustice can easily be remedied by making sure that the district councils exercise their discretionary power in Section 147(3) of the Local Government Act 1972. At the moment it is discretionary; and all we want is that it should be mandatory.

    This parish council and others are concerned about this and have been so for some time. I understand that they have also been to see the noble Lord, who lent them his usual courteous and sympathetic ear. I understand that before they went, they also acquired a copy of Magna Carta and when they opened the meeting with the noble Lord, Lord Bellwin, they quoted from it to him something that I shall quote now in the hope that he will give me a favourable answer:

    "To no-one will we sell, to no-one will we deny or delay, right or justice".

    I hope that for once the parish councils are going to get right and justice.

    I am disappointed in the noble Baroness. Here we have been adopting a united stand in our efforts to keep central Government and their sticky fingers out of local government. Now she gets up and invites the Minister to get into the relationship between the district council and the parish council. I am surprised at her. There has been a problem here; I acknowledge that. It is largely overcome. I protest at her efforts to introduce central Government to try to resolve a small, residual element of trouble.

    As a Yorkshireman who is also president of the Essex Association of Local Councils, I should like to congratulate my noble friend on having moved this amendment and to give her the strongest support I am able to give. I do not know to what extent noble Lords become involved in local councils; but if they have them in their districts, as does the noble Viscount, I can assure them that they are well worth attending, that they are wonderful organisations and that they are really democracy at the grass roots. It is no good the noble Lord, Lord Sandford, coming here with his steamroller and trying to roll over the rights of these small people in the villages.

    I think the noble Lord put it in a very good way. He is no doubt well aware that, although the local district councils can do this, very few of them take the trouble to do so. What we want to try to do is to make it easier for them to get their desserts. It is really galling for one parish council to benefit in this way because the local district council uses its discretion and for a neighbouring parish council in another district not to benefit. That is something which causes a great deal of ill will and, I think, frustrates and disappoints a lot of people in local councils who feel that there is an important job to be done.

    I am glad that my noble friend stressed the fact that the amount involved is not very great but that, nevertheless, in spite of the fact that it is reasonably economic, it is a most important proposal. I do not think, with respect, that it is enough for the Minister to say that this is something that must be left to the discretion of the district. It does not work properly at the moment and I hope that, at any rate on this one issue in the course of the Bill, the noble Lord will allow his really very kind heart to be seen and that he will be able to give way to my noble friend and make this concession.

    9.14 p.m.

    I should like to say how much I support this amendment. I have had conversations with the bodies to which the noble Baroness referred, and I should have thought that if we really do believe in democracy, right down to the grass roots, we should be encouraging parish councils. We should also, of course, be encouraging urban parish councils. That is slightly outside this brief, but we should be encouraging them. If central Government have a role in local government—I have said some very nasty things about the centralism of this legislation and the dirigiste nature of it—they should be protecting potential Davids from potential Goliaths. I know what happened to Goliath, but David did not have the protection of the Local Government Act; he had to rely on his own strength.

    Here, of course, the parish council has absolutely no strength against the district council because it is purely and simply a permissive power. The parish council has absolutely nothing, no force, no backing to enable it to enforce what is real justice in its relationship with the district council. While I abhor too much central Government interference in local government, this is an area where I should have thought there should be an absolute, unqualified statutory right and obligation for the parish council to receive not just the rate poundage but the grant which is attributable to that rate poundage. I should have thought it was really an unanswerable case because the parish council has nowhere else to turn if the district council does not play the game with it. I think the Government should have supported this amendment and encouraged the parish councils.

    I should like to put right something the noble Lord, Lord Evans, said when he stated that the parish councils had nowhere to turn. They do have a right to levy a local rate themselves. It is very limited, but it does give them some scope. It is always a joy to listen to the noble Lord, Lord Greenwood. I hope that he can square away what he said with his AMA colleagues when he sees them. I am sure they will be asking him a lot of questions tomorrow about that.

    They have an awful lot to forgive from a number of directions.

    I would say "touche" to that. As the noble Baroness said, my Yorkshire compatriots did come to see me. It is very nice when people feel so fervently about an issue that they take the trouble to come not once but twice, attending and listening. That really makes one want to do something to be helpful. I know the problem very well. In my own former authority we found ourselves, I after reorganisation, after having no parishes, all of a sudden having 27 parishes, all doing their own thing. Good luck to them, and why not? We were one of the authorities—I am sure your Lordships will say "Shame!"— which did not give them an additional proportion.

    One of the problems here is this matter of concurrent functions. It does not make a lot of sense. I do not like it at all in the general setting of local government. I have always felt, since reorganisation, that it led to waste and duplication, because one could rightfully say, "If they are doing this work why does anybody else need to do it?" The noble Baroness argued about the great virtue of local people on the spot. Who is more interested in seeing that a street is cleaned properly than the people who actually live there, in a village away out from somewhere else? So of course one has to be sympathetic. One of the problems has been the great concern about the mass of detailed work. There are so many thousands of parish councils that the problem of actually doing it must give rise to some concern, although I am aware that the district councils themselves, through their existing organisations, can make the money available.

    Without having too much ado about it, what I want to say is this. I think the equity is unanswerable. I consider they have a very powerful case in equity and, indeed, in what is good for local government. But I really fear for all the practical problems in bringing it about. I doubt very much if, within the scope of this Bill, we could do what is required, but I feel I owe it to noble Lords who have spoken and the great keenness they have shown to say, "All right. We will take it away and have a look at it". But I am bound to say that, although I think there is a case for this, somehow, some way, I doubt if we could get it within this Bill. I promise that we will have a close look at it. I think we ought to talk seriously to the associations about it; and certainly we will do that.

    However, so far as the amendments are concerned, I will take them away and consider them. But I hope that neither the noble Baroness nor may I say the lads from Yorkshire will feel too badly if we cannot get it within this Bill. We have a lot of sympathy with what they are trying to do. There is a lot of goodwill everywhere about it. I doubt if we can get it in this Bill; but there ought to be something set up that will seriously look into what it involves. We must talk to the associations about it.

    When my noble friend takes this away I wonder whether he will consider one point which occurred to me while listening to this most interesting debate. I believe that we are talking about the traditional supporters of the Conservative Party in the main. I may be wrong about that. Any time that the Conservative Party have deserted that lot they have always paid for it in the end.

    The South Kirkby lads are certainly not supporters of the Conservative Party. With respect, I do not think that is the issue. What matters is whether this is the right thing to do. We will only decide it at the end of the day on that basis. Also, is it a practical and possible thing to do? I stress this again to cover myself: what do the associations feel about it? Is their attitude a fair one?

    The noble Lord has lifted my heart at last! At last he is beginning to give. I wish he had given something a little earlier. I am delighted and I accept that this may not be the right place to put this amendment. We had a lot of heart-searching before we were helped to find a place where the amendments could go in. Perhaps I could use South Kirkby and Moorthorpe as an example, so that the Committee realise what the problem means in these days, because they are the ones who have done most of the work about it. Their parish has a lot of unemployment. They have infrastructure problems which they have had for decades. They have an active parish council—and this is instanced by the fact that they are here tonight, apart from dunning both the noble Lord and myself through the Recess.

    They have been trying to run their services and they have been tackling the problems in their area. Currently, they tell me, their parish rate is 8·1p. Approximately half of that is really double rating. In an area of high unemployment, that is something to take account of. The resources element in this type of badly hit area was around 43 per cent. Initially their district council did their duty and they gave them a grant for most of the resources element that was attracted by the parish expenditure. But now they have had their grant reduced and in turn are reducing the parish council grant to only 1p.

    This is a specific case of an authority under stress which becomes even further disadvantaged when things get bad economically. I am most grateful to the noble Lord for saying he will take it back. I accept that we will probably not get this in the this Bill and we will do more behind the scenes with the local authority associations and circulars and orders. If I can help in any way from this side of the Committee, I will do so and I am sure that my noble friend Lord Greenwood will also join us. I beg leave to withdraw this amendment.

    Amendment, by leave, withdrawn.

    Clause 47 agreed to.

    had given notice of her intention to move Amendment No. 105D:

    After Clause 47, insert the following new clause:

    " Special charging orders

    (. In section 147 of the Local Government Act 1972 (expenses of principal councils) the following subsections shall be inserted after subsection (3):—

    "(3A) If in any part of a district the district council is exercising as principal one or more of the statutory functions held by the parish or community councils (as the case may be) in its district, and such function or functions is elsewhere in that district being exercised by one or more parish or community councils (as the case may be) the district council shall make such charging resolution as is described in subsection (3) above as is appropriate in all the circumstances of the situation.
    (3B) The Secretary of State may by order made by statutory instrument prescribe (a) the factors to be taken into account by the district council in making any charging order under subsection (3A) above and(b) the procedure by which any parish or community councils desirous that any such charging order be made may secure the making of an appropriate order.
    (3C) Subsection (3A) of this section shall not come into force until the first day of April in the year next after the year in which the Secretary of State shall have made the first order under subsection (3B) above."").

    The noble Baroness said: I beg leave to withdraw this amendment in the light of what the noble Lord has promised.

    Amendment, by leave, withdrawn.

    Clause 48 agreed to.

    Schedule 8 [ Domestic rate relief grant]:

    9.25 p.m.

    moved Amendment No. 106:

    Page 146, line 29, leave out ("each") and insert ("the").

    The noble Lord said: Paragraph 1 of Schedule 8 deals with the reduction of rates by reference to domestic rate relief grant, and provides that in the rate support grant report for each year an amount in the pound of domestic rate relief shall be specified for the purposes of Section 48 of the General Rate Act 1967. This amendment is necessary because the word "each" was included to take account of a proposed mandatory separation of rate support grant for England and Wales, rather than the permissive separation now provided. The substitution of the more general word, "the", allows for the possibility of there being a joint report for the two countries. It is in any case superfluous and possibly misleading to refer to each rate support grant report when Clause 46(4) of the Bill provides for separate systems for England and Wales. I beg to move.

    It is with very great hesitation that I dare to challenge a Government drafting amendment, but this one does not seem to be very felicitous. Indeed, this paragraph will read, "In the year an amount in the pound shall be specified in each rate support grant report." I think this needs further elucidation, I do not think we can just leave it as starting off "in the year"; it is too vague, too imprecise. I think I must ask my noble friend whether he would be so kind as to consider it further.

    On Question, amendment agreed to.

    moved Amendment No. 107:

    Page 146, line 37, leave out ("for England or, as the case may be, for Wales").

    The noble Lord said: The purpose of this part of Schedule 8 is to provide for the setting of the amounts in the pound of domestic rate relief, and for the setting of these amounts so as to correspond to the aggregate amount of domestic rate relief grant available.

    Clause 46(4) of the Bill provides that grants may be paid separately to local authorities in England and Wales, and are administered accordingly. Consequently, the reference to the individual countries in Schedule 8 is no longer necessary. I beg to move.

    On Question, amendment agreed to.

    moved Amendment No. 108:

    Page 147, line 5, leave out ("in England and Wales").

    The noble Lord said: This part of Schedule 8 deals with the distribution of domestic rate relief grant. This amendment to the definition of "A", the aggregate of the amounts calculated, in sub-paragraph 2(1) is necessary because separate arrangements will pertain to England and Wales and the proportionate allocation of domestic rate relief grant must be carried out in each country separately. Leaving the words as they stand would result in a single proportioning factor for the two countries instead of separate factors for each. I beg to move.

    On Question, amendment agreed to.

    Schedule 8, as amended, agreed to.

    moved Amendment No. 109:

    After Schedule 8, insert the following new Schedule—


    PART I



    1.—(1) The English block grant for a year and the Welsh block grant for the year shall be subject to adjustment in accordance with this paragraph.

    (2) The Secretary of State shall consider whether in his opinion the burden of the education expenditure for each year falls unevenly between local authorities in England on the one hand and those in Wales on the other.

    (3) In doing so he shall ascertain the difference between—

  • (a) the amount of the education expenditure for the year of local authorities in England which appears to him (after taking account of recoupment) to enure for the benefit of people belonging to the areas of local authorities in Wales; and
  • (b) the amount of the education expenditure for the year of local authorities in Wales which appears to him (after taking account of recoupment) to enure for the benefit of people belonging to the areas of local authorities in England.
  • (4) If, after he has ascertained that difference, it appears to the Secretary of State that the burden of the education expenditure for the year falls unevenly between local authorities in England on the one hand and those in Wales on the other, he may fix an amount by which the English block grant for any year should be increased and the Welsh block grant for the year should be decreased (or vice versa) in order to take account of the uneven way in which the burden falls.

    Apportionment of increased or decreased amount

    2.—(1) Regulations shall provide for—

  • (a) the apportionment among local authorities in England of the amount (if any) by which the English block grant is increased or decreased in accordance with paragraph 1 above;
  • (b) the apportionment among local authorities in Wales of the amount (if any) by which the Welsh block grant is increased or decreased in accordance with that paragraph,
  • and for ascertaining the amount by which the block grant payable to each local authority should be increased or decreased accordingly.

    (2) In paying the block grant for any year, the Secretary of State shall adjust the amount of the grant accordingly.

    (3) Regulations under this paragraph may make different provision in relation to authorities in England and authorities in Wales.


    3.—(1) This paragraph has effect for the interpretation of paragraphs 1 and 2 above.

    (2) References to the English and Welsh block grants for a year are references respectively to the aggregate amount of block grant payable in the year to local authorities in England and the aggregate amount of block grant payable in the year to local authorities in Wales.

    (3) References to the education expenditure for a year are to the expenditure which the Secretary of State estimates has been or will be incurred for the year by all local authorities in England and Wales in the exercise of their functions as education authorities, and references to the education expenditure for a year of local authorities in England and of those in Wales are to be construed accordingly.

    (4) References to recoupment are to recoupment between authorities under section 31 of the Education Act 1980.




    4.—(1) The block grant payable to a local authority in England, and that payable to a local authority in Wales, shall be subject to adjustment in accordance with paragraphs 5 and 6 below.

    (2) Those paragraphs shall be administered separately and may be administered differently, in England and in Wales, and references in them to regulations, to a local authority or local authorities and to a local education authority or local education authorities shall be construed accordingly, except where the wording of paragraph 5(5)( a) otherwise requires.

    Expenditure other than on advanced further education

    5.—(1) Regulations may provide for ascertaining the aggregate of the expenditure to which this paragraph applies of all local authorities for apportioning the aggregate amount the authorities and for ascertaining the amount by which the block grant payable to each authority ought to be increased or decreased.

    (2) The Secretary of State shall, in accordance with regulations under this paragraph, ascertain at such time as may be specified by the regulations—

  • (a) the estimated amount of the increases and decreases of the block grant which ought to be made for any year, and
  • (b) the actual amount of those increases and decreases,
  • and he shall in paying the block grant for any year adjust the amount of that grant in accordance with the estimated amounts so ascertained and shall in paying that grant for the earliest practicable subsequent year make any adjustment necessary to offset differences between the estimated and actual amounts so ascertained.

    (3) Subject to sub-paragraphs (4) and (5) below, this paragraph applies to such expenditure as may be specified by regulations, being—

  • (a) expenditure, other than that to which paragraph 6 below applies, incurred by local authorities in the exercise of their functions as local education authorities;
  • (b) expenditure incurred by local authorities on research into any of their functions, in the training of persons in matters connected with the functions of local authorities or in respect of persons to whom the training is given.
  • (4) Regulations specifying expenditure of any description under sub-paragraph (3) above may provide that only a specified proportion of that expenditure shall be expenditure to which this paragraph applies.

    (5) Regulations under sub-paragraph (3)( a) above shall apply this paragraph to—

  • (a) expenditure incurred by local education authorities in the making of provision for primary and secondary education in respect of pupils not belonging to the area of any local education authority in England or Wales ot to the area of any education authority in Scotland; and
  • (b) expenditure, other than that to which paragraph 6 below applies, incurred by local education in the making of the provision for further education in respect of such pupils.
  • Expenditure on advanced further education

    6.—(1) Regulations may provide—

  • (a) for the specification by the Secretary of State, in advance for each year, of the amount of expenditure to which this paragraph applies which is to be taken into account for the purposes of the regulations in relation to that year;
  • (b) for enabling him to specify additional amounts of such expenditure which are to be so taken into account;
  • (c) for apportioning among local authorities, under or in accordance with the regulations, either the whole or a part specified by or in accordance with the regulations of—
  • (i) the amount specified for any year as mentioned in paragraph (a) above;
  • (ii) any additional amounts specified for that year as mentioned in paragraph (b) above;
  • and for informing local authorities of the shares apportioned to them respectively;
  • (d) for the specification, under or in accordance with the regulations, of the appropriate contribution of each local authority to the expenditure apportioned as mentioned in paragraph (c) above;
  • (e) for ascertaining the amount by which the block grant payable to each authority ought to be increased or decreased by reference to the share apportioned to it as compared with its appropriate contribution.
  • (2) The Secretary of State shall in paying the block grant for any year adjust the amount of that grant in accordance with the amount ascertained as mentioned in sub-paragraph (1)( e) above.

    (3) This paragraph applies to such expenditure incurred by local authorities in connection with further education of an advanced character, including the training of teachers, as may be specified for the purposes of this paragraph by or under regulations.




    7.—(1) Regulations may make provision requiring local authorities to furnish the Secretary of State, at such times and in such manner and form as may be specified in the regulations, with such estimates of their expenditure and with such other information required by him for the purposes of this Schedule as may be so specified.

    (2) Regulations under this paragraph may make different provision in relation to authorities in England and authorities in Wales.


    8.—(1) Before doing any of the things mentioned in sub-paragraph (2) below, the Secretary of State shall consult such associations of local authorities as appear to him to be concerned and any local authority with whom consultation appears to him to be desirable.

    (2) The things are:—

  • (a) making regulations under this Schedule;
  • (b) ascertaining an amount under paragraph 1(3) above;
  • (c) fixing an amount under paragraph 1(4) above;
  • (d) specifying an amount under paragraph 6(1)(a) or (b) above.
  • Regulations

    9. References in this Schedule to regulations are to regulations made by the Secretary of State by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.


    10. Section 38 (5) of the Education Act 1980 (individuals treated as belonging to areas of local education authorities) applies for the purposes of this Schedule as for those of that Act.").

    The noble Lord said: This new schedule is less daunting than it appears at first glance. For the most part it is a consolidation of the education pooling provisions of paragraphs 3 and 3A of Schedule 2 to the Local Government Act 1974 as amended by Schedule 6 to the Education Act 1980, and the relevant regulation-making provisions of Section 10 of the Local Government Act and Section 32 of the Education Act.

    There are only two substantive changes. The first is the straightforward change in nomenclature from needs element to block grant. This will enable new education pooling regulations to be made for 1981–82 and subsequently to operate in the context of block grant in the same way as the current regulations operate in the context of needs element. The second change concerns the treatment of Wales, the drafting implications of which are such as to require this in any case useful consolidation to enable it to be dealt with comprehensibly. I beg to move.

    I have just one or two questions which I should like to ask the Minister, because there are a few points which make me rather anxious when I read this new schedule. Sub-paragraph (2) states:

    "The Secretary of State shall consider whether in his opinion the burden of the education expenditure for each year falls unevenly".
    On what basis will he reach his opinion? Is this another case of the Secretary of State making up his mind for himself? There is something very similar in subparagraph (4), which reads:
    "If, after he has ascertained that difference, it appears to the Secretary of State that the burden of the education expenditure for the year falls unevenly",
    On what basis will he decide that? Will it be on a per capita basis, or how will it be done? Then on page 16 of the Marshalled List there are two mentions of regulations, on page 17 there are three mentions of regulations, and on page 18 there is one. Will anybody see those at any point and approve them, or will they be issued from on high and shall we all have to put up with them?

    May I put one very small question? I realise that England may be dealt with differently and separately from Wales, but is there any hidden implication in the wording at the beginning where the provision says:

    "The English block grant for a year and the Welsh block grant for the year shall be subject to adjustment"?
    Is there some hidden difference between them? Why is there the word "a" and then the word "the"?

    May I carry this one stage further? It is quite right that justice should be done between education authorities in England on the one hand, and Wales on the other. But England is a fairly big place with very diverse circumstances and one would have hoped that there would be an attempt to do justice as between one local authority and another within England, or even one type of local authority and another within England. Although I do not wish to anticipate Amendment No. 111, those counties which have a rapid increase of population in England may require special treatment so far as education is concerned. So my noble friend should be asked to consider not only the points already made, but this further point as well.

    First, as to the point about the Secretary of State making a judgment, there is nothing sinister or new in this. It has always been the procedure. The basic criteria and the statistical information used will be the same as he has always had. To the best of my knowledge, that is the basis upon which these matters are computed. Paragraph 8 of the Schedule requires the local authority associations to be consulted before any amounts are fixed by the Secretary of State under paragraphs 1, 2 and 4, and I say again that this is absolutely the normal procedure.

    As to the other points that were raised, if I may refer your Lordships to subparagraph (4) that reads:
    "If after he has ascertained that difference, it appears to the Secretary of State that the burden of the education expenditure for the year falls unevenly between local authorities in England on the one hand and those in Wales on the other, he may fix an amount by which the English block grant for any year should be increased and the Welsh block grant for the year should be decreased … in order to take account of the uneven way in which the burden falls".
    As I understand it, that means that any year is the starting point and it flows from that on a yearly basis. That is my interpretation. If I am wrong, then I shall report back accordingly, but I think that is correct. As my noble and learned friend rightly advises me, the regulation-making power is subject to annulment.

    On Question, amendment agreed to.

    Clause 49 [ The block grant]:

    9.34 p.m.

    moved Amendment No. 109A:

    Page 46, line 1, leave out ("The") and insert ("Subject to subsection (6A) below, the").

    The noble Viscount said: This is a highly technical amendment, and I beg any of your Lordships who have other things to do, who perhaps have not taken supper, to take this opportunity to do them. I hope that it will be convenient to the Committee if with Amendment No. 109A, which I am moving, I take Amendments Nos. 109C, 109D, 110A and 112A. They are all related to the same matter. They are known now as the Squire's amendments. They were moved by a Mr. Squire in another place at the Report stage of the Bill. I understand that the Government made sympathetic noises about them but did not allow full time for them to be accepted. Therefore I hope very much that they will meet with the approval of the Committee. I shall do my best to explain them but I cannot promise to avoid the technical language which, as I have already said, is inherent in the process of block grant.

    At present, the Bill provides no principles for the setting by the Secretary of State in each year's grant settlement of schedules of grant-related poundages. This series of amendments which I am moving introduces a basic framework which governs the basis upon which the grant-related poundages must be set for authorities spending below or not more than the specified amount above their grant-related expenditure figures. It requires the relationship between grant-related poundages and an authority's spending in these circumstances to be a linear or straight line one. The effect is that it will not be possible to provide differential incentives in the shape of high marginal rates of grant for marginal increases in spending which might be intended to encourage low-spending authorities to raise the level of their spending.

    If accepted, these amendments protect authorities which for one reason or another spend below their grant-related expenditure. They protect them from unfair pressure to raise their spending levels. This pressure could be applied by the removal of grant from such a group of low spenders and instead offering it back to them if they would raise their spending up to grant-related expenditure. Conversely, there could be much less incentive for any authority to seek economies, if it were so minded, if the block grant were structured so that such economies would only result in very small reductions in the rate levies which they felt necessary to levy.

    What it means, try to to get it back into English, is that whatever cut may be made at whatever level, the same percentage of such a cut should be given to the ratepayers and not taken back by the Government by messing about with the block grant. I hope I have made it clear, though I doubt it. I believe that the amendment will protect the block grant from being unfair. It is, as I said earlier, the sugar on the pill and the lily being painted. I beg to move this group of amendments, starting with Amendment No. 109A.

    As my noble friend rightly says, this follows an aspect of block grant which was debated at some length in another place when my right honourable friend said that we were sympathetic to the principle in question. Therefore I welcome the amendment and, indeed, the others to which my noble friend has just spoken. Yes, we accept them.

    On Question, amendment agreed to.

    moved Amendment No. 109B:

    Page 46, line 2, leave out ("to be incurred by them during the year") and insert ("estimated to be incurred by them during the year for the purpose of making the rate of precept").

    The noble Lord said: The noble Viscount's presentation of his amendments was so gripping that I hesitate to bring the Committee down to more mundane considerations. I do it with a certain amount of hesitation because what I am trying to do is to clear my own mind upon the point that I am going to make. I beg to move this amendment. As I understand it—and I am asking for guidance from the Minister—without an amendment of this kind it will not be possible to get conclusive grant calculations until after a local authority's accounts have been closed for the grant year.

    The amendment seeks to distinguish between, first, the uncertainty about grant entitlements that is bound to exist until all rates and precepts have been made, with the implications of these for the total demand on grant, and, secondly, the added uncertainty introduced by the proposed block grant system, which would, I understand, if unchanged prevent conclusive grant calculations from being made until well after the end of the grant year. I may be wrong about that, but I am really genuinely seeking guidance from the noble Lord, who has a great deal more experience of this at council level than I myself have. I beg to move.

    This amendment hangs together with the earlier amendment moved by the noble Lord to Clause 47(5). As I explained in the debate on that amendment, the proposal would change the basis of calculating authorities' entitlements to block grant from their actual expenditure on the provision of services to the revenue they plan to raise. I am interested in the point mentioned by the noble Lord as to the point at which a local authority would actually have this grant. Would it be conclusive until after the grant year? I should have thought that that was not so but because I am not certain I should like to take it away and look at it, to be sure that in fact it would not present any problems.

    I am much obliged to the noble Lord and I beg leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    9.41 p.m.

    moved Amendment No. 109C:

    Page 46, line 5, at end insert—
    ("(6A) The amount of block grant payable to a local authority may not exceed the total expenditure to be incurred by them during the year.").

    On Question, amendment agreed to.

    Clause 49, as amended, agreed to.

    Clause 50 [ Determination of grant-related poundage and grant-related expenditure]:

    moved Amendment No. 109D:

    Page 47, line 24, at beginning insert ("Subject to subsection (3) below,").

    On Question, amendment agreed to.

    Page 47, line 26, at end insert—

    ("(3) The principles on which the grant-related poundage shall be determined shall be such that—
  • (a) if an authority's total expenditure exceeds their grant related expenditure that authority shall not receive less grant than they would have done had the difference between their total expenditure and their grant related expenditure been smaller;
  • (b) if an authority's total expenditure is less than their grant related expenditure, that authority shall not receive less grant than they would have done had the difference between their total expenditure and their actual expenditure been greater;
  • (c) for all authorities with the same ratio between total expenditure (per head of population) in their area and their grant related expenditure or the same difference between their said total expenditure and their grant related expenditure, the ratio of the block grant they receive to the block grant they would have received if their said total expenditure had equalled their grant related expenditure shall be the same.").
  • The noble Baroness said: In view of the fact that the noble Lord has just accepted the amendments proposed by the noble Viscount, Lord Ridley, and also the long debate that we had on Clause 46, which I should rather like to read again, with the leave of the Committee at this late stage, and as my mind is going round in circles, I do not propose to move this amendment.

    Page 47, line 26, at end insert—

    ("(3) The principles set out in section (Principles for determinatipn of grant-related poundage) need not be specified in the Rate Support Grant Report.").

    On Question, amendment agreed to.

    moved Amendment No. 111:

    Page 47, line 26, at end insert—
    ("(3) The principles on which the grant related poundage and the grant related expenditure are determined shall be such that when an Authority's population increases its grant shall not in consequence decrease.").

    The noble Baroness said: When we were talking earlier today I referred to one of the things which seemed to be somewhat anomalous in the present system: that when a county's population goes up its rate support grant does not go up to help it. This is what we have experienced in the county in which I live, Cambridge-shire, which is one of the two fastest growing counties in the country. To the outsider, it obviously seems to be common sense that when the population goes up and more services have to be provided the local authority needs a little more help to do it. But it has not worked that way. At this stage it is not clear just how the new block grant system will work, but I understand from my county treasurer friends that there is every indication from the accounts of the proceedings of the grant working group that there will be as much complexity in the various formulae as we have now; and it is this complexity in the formula that we have had up to now which has led to the anomaly which we hope by this amendment to try to prevent recurring.

    It is difficult because the two fastest growing regions in the country—East Anglia and the South-West—have both suffered larger grant losses since 1974–75 than any other region. The two fastest growing counties are Buckinghamshire and Cambridgeshire and they are in the top 10 losers of grants since 1974–75. The grant per head has fallen by about 30 per cent, in both cases. In 1980–81 the population of Milton Keynes increased by over 6 per cent, but it lost 4 per cent, in grant; and in the neighbouring Chiltern the population decreased and yet it managed to gain 1 per cent, in grant from the other districts. These were directly attributable to the population grants.

    My county treasurer tells me that there are published statistics which show that in more than 20 counties the needs grant paid to the district councils has in reality become a negative dependence on the population, and it has been calculated by him that if the population of Cambridge-shire was to be doubled by the addition of an exact copy of its existing population—that is the doubling of the number of elderly, school people, handicapped, and so on—then by applying the existing rate support grant formula we would have a drop of 40 per cent, in our grant. That cannot be sensible. It cannot really be feasible for counties to be expected to accept that. The Cambridge-shire population has increased by 10 per cent, since 1974–75 and its grant has been reduced by 20 per cent.

    We are asking the noble Lord to have a look at it having some regard to the increase in population. They tell me in Cambridgeshire that the addition of one person who is not elderly nor unemployed nor a pupil, or one of those who now attract grant, will lead to a fall in grant of £142 at November 1979 prices for every-one of those people we get. Mine is a good county. We need money to carry on our services. If the noble Lord will have a look at this and see whether in the new formula he could work in the fact that increase in population does not lead I to decrease in grant, I would be very happy.

    We have exactly the same experience in the Isle of Wight with a rising population and a falling grant. Is not that a great argument for moving to a new form of rate support grant?

    I desire to support this amendment. During my nearly 34 years as Member for Huntingdonshire the population more than trebled and that did give rise to the most acute problems, especially with regard to education. One has to remember that the causes of these population increases are threefold. In Huntingdonshire, and indeed the greater part of Cambridgeshire of which Huntingdonshire is now part, the three kinds of increase with which we had to contend were those due to town development schemes, of which we had four or five, the new town extension of Peterborough, and the natural increase.

    The natural increase followed from a steady influx under town development schemes over the past quarter of a century. When you have these people coming under these schemes they tend to be wage-earners in their prime of life with young and growing families, and so the educational burden does increase very rapidly. Then in course of time, not very long after, you get the natural increase following as the children grow up and themselves marry. We have got to that stage. I do not need to give the facts again because they have been so ably given by the noble Baroness. I would ask my noble friend to give very sympathetic consideration to this. I understand it has caused concern in Government circles. Therefore, I hope we shall hear from my noble friend that he will consider this amendment very sympathetically.

    The noble Baroness has argued that it would be an absurdity if authorities that have increasing populations were to experience a decline in the grant, and the amendment is designed to prevent this from happening. It would be an absurdity if block grant was paid out on the basis of so much per head of population, but it is not. As I have explained to the Committee on a number of occasions, block grant is an equalising grant designed to enable authorities to provide a comparable level of services for a similar rate in the pound; in other words, to even out differences in needs and resources.

    Of course, population factors must be one of the criteria, but it is one of a number that must be taken into account in the grant calculations. I am not surprised at some of the weird results to which the noble Baroness and indeed my noble friend Lord Renton referred. I would suggest that they crank the handle again and see what comes out next time, because no one really knew quite what was going to happen.

    But the fact is that a growth in population will increase an authority's needs, but it will also increase its resources. It does not follow automatically under the terms of the equalisation objective that authorities' grant entitlements in absolute terms should necessarily change in line with population. Authorities will get the grant they need to enable them to levy the same rate poundage as authorities providing services at comparable levels. This may mean more or less grant for expanding authorities, depending upon how the increase in population affects the overall balance between their needs and their resources.

    By seeking to establish a direct relationship between population and grant the amendment would in fact undermine the equalisation objective of block grant. I cannot do anything as regards this amendment. Nevertheless I think that it would be necessary to talk the point through again—and that I undertake to do—to see if in fact sufficient importance is given to the population factor in the calculation. And as we shall henceforth have things without and not within the black box, maybe we shall be able to see the matter more clearly.

    So, although I cannot accept the amendment for the reasons I have given based on the equalisation point, I certainly undertake to ask that it be looked at very carefully to see if enough weight is given to it as a factor in the calculation of the grant.

    Before the Minister sits down I wish to point out that there is total solidarity in Cambridge-shire. I wonder whether the Minister would agree that a rise in population does not necessarily mean a rise in resources; it also means a rise in needs for instance, for hospitalisation, and it also means that the original inhabitants are getting jolly old and they must also be looked after. In fact I cannot quite equate rise in numbers with rise in resources.

    I would only say to my noble friend that I had no doubt that there would be solidarity in Cambridge—I would expect nothing less. As regards the point that she makes, Yes, I think that it is quite true. On the other hand there is a resource effect of an increase in population as well. But, at the end of the day, what we are really saying is that if equalisation is the name of the game—and it is—are population numbers given as much weight in the calculations as they should be, and that I have said I shall look at, but not within the amendment.

    I should be most grateful to the noble Lord if he will take the matter back and look at it. I shall also make him a present of a document which I received from my county treasurer which goes into much greater detail than I wanted to bore the Committee with tonight. If he will look at it, then perhaps we can get in touch with each other before the next stage of the Bill and see whether anything needs to be done. Meanwhile, I beg leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    9.54 p.m.

    Page 47, line 26, at end insert—

    ("(3) In determining the standard expenditure for a local authority the Secretary of State shall have regard to the actual expenditure of that authority. After taking account of changes in price levels, the standard expenditure determined for any authority shall not vary from the budgeted expenditure of that authority for the year preceding the grant year by an amount exceeding ±10 per cent.")

    The noble Baroness said: I beg to move Amendment No. 112. We are putting forward this amendment, because we think that local authorities must be the best judge of the expenditure need of their areas. This amendment would introduce a safeguard to ensure that centrally produced expenditure assessments do not vary to an unbelievably wide extent from the actual expenditure levels of individual local authorities. It would mean that there would not have to be very violent changes from year to year with which they would find it very difflfficult to cope. I beg to move.

    This amendment seeks to ensure that an authority's assessed standard expenditure shall not differ from its actual expenditure by more than 10 per cent. In short, it seeks to establish a link between actual expenditure and standard expenditure even more consistent than that which obtains between expenditure and assessed needs under the present system. That is precisely the link which we have said we want to break.

    In addition, this amendment would seriously undermine the incentive which the block grant provides for authorities to keep their expenditure within reasonable limits. It would also weaken the Government's position in determining relevant expenditure, because the sum of standard expenditure must always equal the total of relevant expenditure. In short, it would enable individual authorities to set the pace for their own standard expenditure assessments and would undermine the Government's legitimate concern with the overall volume of local authority expenditure, which the local authority associations themselves acknowledge.

    However, in so far as the amendment seeks to ensure some stability for authorities, we have made it clear that one of the objectives in developing a new method of standard expenditure assessment must be reasonable stability in the pattern of assessments from year to year. This is a legitimate concern and one that we recognise. But, of course, I could not accept the amendment.

    I should like to tell the Minister that, in fact, the amendment says "±10 per cent", not just "plus". However, I shall read what he has said in Hansard tomorrow and consider whether I shall bring the amendment back at Report stage. I beg leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    On Question, Whether Clause 50, as amended, shall stand part of the Bill?

    I think that this is the right time for me to ask the Minister to explain—and I do not expect him to take very long—exactly the criteria that we use for determining "relevant expenditure". I want the criteria that are used.

    "Relevant expenditure" is that expenditure which an authority undertakes which excludes the specific grants which it receives or the charges which it makes. That is its relevant expenditure. If that does not help the noble Lord very much, I fully understand, but I suspect that, from the experience that he has had in local government, it will in fact tell him what he wants to know. As with all these definitions, they are very complicated. In fact, one needs to understand the language even to know quite what they mean; one must know the jargon. I entirely sympathise; unless one has had to work with it for years, one does not know it. However, that is what "relevant expenditure" is, as opposed to "general expenditure".

    I really want to know the criteria that the noble Lord used for determining it. He has not told me that.

    The best thing that I can do to help the noble Lord is to send him, if he will promise to read it, a long treatise on the whole subject of all the different types of expenditure and exactly what they mean.

    I want to know exactly what the noble Lord will accept as relevant expenditure for purposes of the rate poundage and expenditure. Perhaps I could illustrate this. Will the Secretary of State say that it is only expenditure which, in fact, they have agreed to be related to certain specific activities that would be regarded as "relevant expenditure"? If so, what are those activities? That is what I am after.

    No, that is not so. There is a definition within the Bill itself of "relevant expenditure", but it is in general terms. The noble Lord is asking for the exact criteria that go within it. That, of course, is something which has to be discussed as it is calculated in each year's calculation.

    But before determining it, it will be discussed with the relevant associations, will it not? If the noble Lord tells me that, I shall be satisfied. I have raised the subject because I should not like it to be thought—and I know that it is thought in some quarters—that, in fact, central Government will merely dictate what shall be relevant expenditure for purposes of the rate support grant.

    I do not think in practice that this will be a problem. Even if he does not read it I shall still feel obliged to send to the noble Lord some details on this point, and I think he will find them interesting.

    Clause 50, as amended, agreed to.

    10 p.m.

    moved Amendment No. 112A:

    After Clause 50, insert the following new clause:

    " Principles for determination of grant-related poundage

    (.—(1) The principles set out in subsections (2) and (3) below shall apply to all authorities belonging to the appropriate class.

    (2) Where an authority's total expenditure is at a level equal to or less than their grant-related expenditure, a given decrease in their total expenditure must produce the same decrease in their grant-related poundage as would be produced by the same decrease in their total expenditure if it were at any other level which is less than their grant-related expenditure.

    (3) Where an authority's total expenditure is at a level equal to or more than their grant-related expenditure, a given increase in their total expenditure must produce an increase in their grant-related poundage not less than the increase that would be produced by the same increase in their total expenditure if it were at any lower level.

    (4) References in this section to an increase or decrease in grant-related poundage are references to an increase or decrease in absolute terms.

    (5) References in this section to an increase or decrease in an authority's total expenditure may be construed either as references to an increase or decrease in absolute terms in their expenditure per head of the population of their area or as references to an increase or decrease in the ratio between their total expenditure and their grant-related expenditure; but such references shall be construed in the same way in relation to all authorities.").

    The noble Viscount said: I formally move Amendment No. 112A. This is part of the package already accepted by the Government some time ago.

    On Question, amendment agreed to.

    Clause 51 [ Adjustments of distribution of block grant]:

    moved Amendment No. 113:

    Page 48, line 5, leave out from ("authorities") to end of line 20 and insert—
    ("(b) for the purpose of limiting grant changes from one year to the next;
    (c) to take account of less than the actual gross rateable value of an authority or group of authorities in calculating entitlement to block grant; or
    (d) to give effect to the equalisation of resources with London.").

    The noble Baroness said: Clause 51 is the clause which deals with the use of multipliers to adjust a local authority's block grant entitlements. The use of multipliers is one of the factors which will make the block grant system difficult to understand and explain. If Part VI of the Bill is not withdrawn—and obviously it is not going to be—then the block grant system is dependent on the use of multipliers. The legislation ought to make clear the purposes for which multipliers may be used. This amendment would meet the objective and allow the sort of adjustments which would be found necessary to allow the rate support grant system to continue.

    It would allow the damping of grant I distributions for year to year and for the operation of a safety net, if that were necessary, to protect an individual local authority against the effect of excessive shifts in needs or in standard expenditure assessments. It would enable London resources clawback, or indeed that of a high rateable value authority, to continue to be set at less than 100 per cent. to offset the extent to which London's resources are over-valued by the present valuation system. We think it would enable the system of the within-London equalisation arrangements to continue. I hope that this does not add any unnecessary complications to the Bill and that the noble Lord will think it is worth giving it his support.

    I have to tell your Lordships that if this amendment is agreed to, I shall not be able to call Amendment No. 113A.

    Would it be for the convenience of the Committee and the Minister if I spoke to 113A because it is on the same subject as the noble Baroness's amendment with certain differences to which I shall come? There has not been collusion between herself and myself, as the Committee might suspect. We should congratulate her wording as being somewhat shorter than mine. But I think the effect of paragraphs (i) (ii) and (iii) and, as she says, (a) (c) and (d) is virtually the same. I shall not go through what she has said. The safety net is important so that authorities should not receive a sudden drop or otherwise jump significantly from one year to the next. Secondly, the London clawback is covered by this.

    One has to accept that to make this system work the multiplier is needed. The multiplier can work in one of two directions; either to multiply by a factor of more than one or by a factor of less than one. So the multiplier could be used to reduce the grant that an authority might get if it was so decided. Where we come to the differences between Amendments 113 and 113A is in the fact that I wish to see inserted at the bottom of my amendment the phrase,
    "or for such other purposes as the Secretary of State may determine".
    That might be thought to give the Secretary of State a total freedom to do anything he likes in the most dastardly way with the multiplier, and to use it for political purposes, which is what no doubt he would like to do from time to time. Indeed, that may be what some people suspect previous Secretaries of State or the current Secretary of State to be guilty of doing in the past, and so arranging it that their friends got more grant than their enemies.

    No one really suspects that the Secretary of State wants to do that in the future, but we feel because of the complexity of the block grant that the need to specify the use of it, which I think is moved by the noble Baroness, Lady Stedman, and I hope agreed by everybody, should include a provision which says that in the future, because it is so difficult to see what might happen, there should be power for the Secretary of State to use it for something else.

    Let me say at once that this power would be subject to parliamentary approval—it could not be used behind the scenes—because Parliament would need to see in the rate support grant report what he is proposing to do with the multiplier. It would mean, for instance, that he could without breaking the law and in compliance with this provision cover the amendment in the name of my noble friend Lord Mottistone which follows mine, and we need only one guess to know which island my noble friend intends to speak about when he gets to it—and that is likely to be the Isle of Wight. The special needs of the Isle of Wight could be covered or the special needs of any other part of the United Kingdom or any other unforeseen circumstances. I apologise for speaking at this length at this hour, but I hope that with the addition of the phrase in my amendment which begins "or for such other purposes" the Committee will accept the amendment. I repeat that it is subject to parliamentary approval and it means that political interference with the mutiplier could not be done without Parliament's knowledge. I hope I shall be able to move it in due course when we have dealt with Amendment No. 113.

    Lest it should be thought that the Association of District Councils is disinterested in the matter of clawbacks, smoothing year-by-year changes, safety nets or multipliers, I wish to join in the debate and say briefly that of the two proposed amendments spoken to, I would prefer that in the name of my noble friend Lord Ridley.