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Lords Chamber

Volume 413: debated on Thursday 9 October 1980

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House Of Lords

Thursday, 9th October, 1980.

The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.

PrayersRead by the Lord Bishop of Newcastle.

Postage Rates For Christmas Cards

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether they will make a statement concerning the introduction of cheaper stamps for Christmas cards provided the cards are posted by an agreed date.

My Lords, in so far as deliveries by the Post Office are concerned this falls within the day-to-day managerial responsibility of that organisation. Your Lordships will be aware that the Government will be seeking from Parliament powers to enable charities to deliver Christmas cards, for which there would be no fixed rate. At this stage I think the House would agree with me that we should wish to the noble and learned Lord who sits upon the Woolsack all the good wishes of your Lordships' House on his birthday today.

My Lords, while certainly joining in the last part of what the Minister has to say, may I ask him whether an exception such as special Christmas stamps is hardly to be construed as the day-to-day work of the Post Office? I should have thought it was an annual one. May I move on from that and ask him whether the objection to cheaper stamps if letters are posted early obviously does not come from the users?—any such objection comes either from the Government or the unions.

My Lords, in answer to the noble Baroness's first question I think the Post Office does distinguish between a day and a year—at least, I hope they do in the delivery of personal and business mail! So far as the second part of the noble Baroness's question is concerned, I regret to say that I understand that the problem over the concessionary rates, which were mentioned by the noble Baroness, is that they were vetoed by the unions.

My Lords, is the Minister aware that I was afraid that that was the case? It happened last year. Is he aware that it happened as long ago as in 1951 over Olympic stamps? May I ask him whether, in all seriousness, this matter could be looked at again, because quite obviously it could mean the selling of many more stamps?

My Lords, this matter will be looked at again, but so far as the precise arrangements are concerned the Charities Commission is indeed in touch with the Government so far as the delivery of mail of this type is concerned in the future. I can assure the noble Baroness that this is being looked at, but it is part of the normal management matters for the Post Office.

My Lords, would not any competently and commercially-minded business seek to spread the load in the way suggested by the noble Baroness, and also maximise earnings in this way? As it is the taxpayer who has to make up the deficits on the postal side of the Post Office, has not Parliament some right to urge this rather strongly on the management of that corporation?

My Lords, Parliament may urge, but I would once again stress that the final decision has to be taken by the Post Office. So far as my noble friend was concerned about the generation of traffic, the concessionary rate would need to generate sufficient additional traffic to offset the lower revenue from each item.

My Lords, could the Minister say on what grounds the unions vetoed this proposal?

My Lords, does my noble friend know whether the Post Office are planning again this Christmas to spend many thousands of pounds on expensive television advertising exhorting people to send their friends Christmas cards?

My Lords, I was not aware of that, but if my noble friend would care to put down a Question perhaps he might find me or somebody attempting to give him an Answer.

My Lords, may I ask the Minister whether he could draw to the attention of the Post Office that members of unions are not necessarily anti-charities? I am quite certain they are not. Would he bring it to the attention of the unions of the Post Office that it is charities who suffer very seriously indeed, because most of them now have Christmas cards which are in aid of their charity and they will suffer considerably? May I ask the noble Lord whether he will bring this to their attention?

My Lords, I do not think that this House, or indeed the Government, can bring various points to the attention of the unions, but I am sure that the noble Baroness's comments will be read by the Post Office, and I have no doubt that the Post Office management, in discussions with the unions, could and will take note of my noble friend's comments.

My Lords, does the noble Lord regard the question of what the union's objection is as something for which he requires prior notice because of the fact that the reasons are not obvious to him?

I would require prior notice, my Lords. The reasons are extremely complicated, but if the noble Lord would put down a Question we could go into them on another occasion.

Radar Defence: Modernisation Programme

3.13 p.m.

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government when they expect to let tenders for the work services connected with the modernisation of the United Kingdom's radar defence network.

My Lords, the first tenders for this important programme have already been let. Further tenders will be let progressively over the next few years.

My Lords, while British air defence is dependent on some 80 fighters, may I ask my noble friend whether he agrees that it is vitally important that we should make the maximum progress in the modernisation of the radar and control network? In accord with that view, may I ask him to consider whether we could speed up the bureaucracy of the Property Services Agency to the maximum degree and put as much work as possible to civil contractors, who may be able to build speedily and therefore more cheaply and bring about the operational requirements which are so urgently needed?

My Lords, the PSA is something of a soft target in parliamentary debates, particularly defence debates. However, while a number of people feel that the PSA is unnecessarily bureaucratic, it is extremely difficult to get any evidence that that is in fact the case. I think I can reassure my noble friend that on the whole the practice would be to use local contractors as being the most cost-effective way of doing the job. As far as recognition of the urgency of the matter is concerned, I would make two further points. First, it has not been possible to get on as fast as one would wish until the tenders were let for the equipment that will go into these establishments, and my noble friend will be aware that, happily, a British consortium won the large contract for this equipment just before the Farnborough Show. Secondly, in recognition of the fact that this is an urgent programme, the work services and other contracts have been exempted from the moritorium which regrettably the Ministry of Defence have placed on new contracts.

My Lords, while welcoming the fact that many of these contracts may be put out to private contractors, may I ask the Minister to do what he can to ensure that all other minor works at RAF stations are put out to private contract as well as to the PSA?

That is a different question, my Lords, although it is a question, as I said, that crops up on a number of occasions. There should be no misunderstanding about this. I think it is likely that all these contracts will be put out to private contractors. I am not aware of a suitable Government contractor who would undertake the work, anyway, certainly so far as this work is concerned.

My Lords, can the Minister assure us that the British consortium to which he referred will arrange for the manufcature of this equipment to be in the United Kingdom?

I do not think I could give an assurance of that nature, my Lords; that would be a matter for the consortium and the manufacturers. But it is predominantly a British consortium and I would imagine that the basis on which they went into the tender was therefore a British manufacturing base.

My Lords, is my noble friend aware of the estimate that at least 70 per cent, of the equipment in connection with that tender will be made in Great Britain? Is he further aware that wherever these networks have been built in the free world, it has always been the work services and local post office which have held up progress, and therefore he might have been wise to have let the works contract even before letting the contract for the electronics that go inside? Will he therefore try to make up for lost time in view of the delay of 18 months while these tenders have been considered?

My Lords, what I tried to explain to my noble friend is that there is a difficulty about letting the works services until one knows the exact dimensions of the equipment one intends to put inside, and clearly one does not know the exact dimensions of the equipment until one has had the contract. I can confirm that, so far as the data processing equipment is concerned, it is my understanding that 70 per cent, of the equipment is British; but I have to remind my noble friend that regrettably some of the primary radar equipment will not be made in this country and that outside contractors have been successful.

Middle East: Eec Peace Initiative

3.18 p.m.

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether it is the intention of the European Community to make clear their views on the prospects for peace in the Middle East in advance of any new American initiative or declaration of policy, now that the EEC mission has reported.

My Lords, work is continuing in the Nine on the basis of M. Thorn's report and the principles set out in the Venice Declaration, which remain valid. Contacts with all interested parties will be maintained. The Nine remain determined to make a constructive contribution towards a settlement.

My Lords, may I press my noble friend to add to that somewhat negative reply by asking him, first, whether he can confirm that M. Gaston Thorn, on his return from his fact-finding mission in the Middle East, said that the second stage of the European initiative should be to explain how it is envisaged that the Palestine Liberation Organisation could join the negotiations for a peace settlement? And in more general terms, may I ask my noble friend whether he does not share the view that there is a real risk that unless there is a follow-up, and a positive one, fairly soon to the very welcome Venice Summit Statement made by the Community, if need be independently of the United States, the words used on that occasion are bound to have an increasingly hollow ring in the ears of moderate Jewish and Arab opinion which exists in far larger numbers than many people realise, and at the same time is bound to encourage extreme views on both sides?

My Lords, M. Thorn's mission has only just been completed. The results of his discussions are still being assessed, and it is too early to say what the next step will be. As for the position of the PLO, to which my noble friend referred, it is a significant element of Palestinian opinion, and it is not I think realistic to suggest that a settlement can be achieved without some participation from it.

My Lords, will the noble Lord not accept that it would be extremely unfortunate if this European initiative were in any way to confuse or undermine the Camp David arrangements that are already under way?

My Lords, I entirely agree with the noble Lord. The European initiative is designed to run in parallel with the Camp David process.

My Lords, following on from what the noble Lord, Lord Byers, has said, I should like to press the noble Lord to answer the question of whether it would not be better to give every support to the Camp David process and the Camp David signatories, since the United States, Israel, and Egypt have made it quite clear that they do not want a European intervention. Would it not be more productive to allow this process to continue without any further interference, especially at a time when the situation in the Gulf is as alarming as it is?

My Lords, the purpose of M. Thorn's recent mission was of course to determine the views of the various participants to the conflict in that part of the world, and I would not at all agree that this precludes progress on the Camp David process.

My Lords, are we deluding ourselves if we think that the European Community has a magic formula for success or progress in resolving the Middle East conflict? Surely we should still stick to the American views in this area.

My Lords, of course I agree that the European Community has no magic formula in this matter, but the Community is now a powerful political force in the world, and I believe that it can make an effective contribution on this problem.

My Lords, may I ask the noble Lord again to consider the position very seriously? Is he aware that the action that is being taken at present with regard to recognition, directly or indirectly, of the PLO cannot possibly be accepted, particularly in view of the fact that the PLO is continuing to state that it is out for the destruction of Israel? —and any help, in the nature of recognition of the PLO, is obviously a stab at Israel itself. May I ask the noble Lord to realise that while from time to time many arguments have been used to the effect that the main and important subject in so far as peace in the Middle East is concerned is Israel, present circumstances will, I think, show to the world as a whole, and to us in particular, that that is not the case and that Israel has nothing at all to do, for example, with what is happening at present. In those circumstances, will the noble Lord please revise his attitude towards the situation?

My Lords, the noble Lord has on many occasions in your Lordships' House complained about what we propose in this matter, but I would say again to him that a unilateral solution to this problem is not possible. We believe that it is necessary to take account of the views of all the interested parties.

My Lords, are not the Government aware that there is a strong section of opinion that feels that the Camp David process has slightly run into the sands (if your Lordships will excuse a metaphor) because the Palestinians have to all intents and purposes been excluded from this? Is the noble Lord not aware that for Israel to survive in the long term and in peace a solution must be found with the Palestinians, who at present seem to be represented by the Palestine Liberation Organisation, whether we like it or not?

My Lords, it is true that the Camp David process has not of late made as much progress as we would have hoped, but it is far from dead. Certainly what my noble friend said in the remainder of his supplementary question is true.

My Lords, is it not undeniable that the European Community has at least as great a moral obligation, and at least as many vested interests, in seeking a workable and peaceful solution to the problems of the Middle East as has the United States? Why should we hang back in trying to further this initiative, bearing in mind in particular that President Sadat has said that he would welcome a European initiative in parallel with the Camp David one?

My Lords, I think that the noble Lord is reinforcing what I have said; namely, that the European initiative should run in parallel with the Camp David process.

Gas Prices To Industrial Consumers

3.26 p.m.

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government what steps are being taken to monitor industrial gas prices.

(The Earl ]]]]HS_COL-552]]]] of Gowrie)

My Lords, in order to ascertain average fuel prices paid by industry, the Department of Energy conducts a quarterly survey of some 900 large industrial consumers. The results of this survey are published in the department's statistical bulletin Energy Trends. The department obtains from the British Gas Corporation the average unit price realised in new and renewed contracts, and, on a quarterly basis, the volume of gas sales to industry. These also are published in Energy Trends, together with a gas price index.

My Lords, I am grateful to the noble Earl for his Answer. Will he recall that he gave an undertaking to me that there would be a proper monitoring process? May I ask him whether it is being undertaken, and whether it has not been handed over to the CBI?—because that would perhaps be unwise, and even unfair, since it would still leave him in a position to question the facts, as he has been doing in the past. Is the noble Earl aware that not just the paper industry, but 10 or 12 major manufacturing industries are now convinced that the high prices charged in this country for gas, as against those charged in other countries, are a serious impediment to the competitive position and in many cases represent the difference between profitability and non-profitability? In view of the urgency of this matter, can the noble Earl tell me when this exercise will be complete?

My Lords, with regard to the first part of the noble Lord's supplementary question, it is because the CBI has been anxious along the grounds expressed in the second part of the noble Lord's supplementary question, that at the NEDC meeting on 6th August it volu-teered to collect more reliable price data in its view, so that the discussion could begin from common assumptions. My right honourable friend the Secretary of State welcomed that. Nevertheless, as I said in my initial Answer, the department has of course its own monitoring service, and we shall now be able to compare the two.

My Lords, is it not a fact that the gas industry is making an enormous surplus every year?

My Lords, the Government have been criticised for adding to inflation by putting up energy prices—

but despite the chorus of "Hear, hear", I am afraid I must say that that is an entirely false assumption, for the following reasons. Unless energy prices are related to world market clearing levels, effectively a subsidy is being provided for them. If a subsidy is being provided for them, it will have to be paid for by the taxpayer in one form or another, and that will add to inflation.

My Lords, will the noble Earl please answer my question? It was as follows: Is it not a fact that the gas industry is making an enormous surplus year by year?

My Lords, the gas industry is certainly not making an enormous surplus on gas. Nevertheless, gas is an expensive form of energy, and naturally the nation as a whole benefits from that price.

My Lords, is it not a fact that the gas industry is making a profit of about £450 million a year?

My Lords, I would hope that the gas industry would soon make more profits than that.

My Lords, is it not true that today the cost of gas is not based on any economic standards at all, but is based entirely upon the decision of the Government to raise the price of gas? Would not the noble Earl also agree that there are in the country many industries that suffer very gravely from this rise in the cost of gas? These are the energy-intensive industries. Would the noble Earl not agree that this has nothing to do with the question of equating the cost of energy throughout the whole sector?—because it is impossible to equate the cost of energy.

My Lords, there is a sharp difference of view between the Government and the noble Lord, Lord Wynne-Jones, and indeed between his view and that of the Governments of most of our competitor countries. In the view of nearly all Western Governments you cannot dissociate the clearing prices of gas from the clearing prices of oil. Both are highly valuable national assets, and to sell either asset at below its market clearing level is denying the country, which in the long run owns these assets, the benefit of them.

But, my Lords, would not the noble Earl concede that current energy pricing policies account, at least partly, for so many of our best exporting companies finding it increasingly difficult to compete against countries in which energy is much less costly?

My Lords, the evidence available to my right honourable friend's department is that the averages of cost between this country and competitor countries are about the same. I concede to the noble Lord, Lord Rochester, that some of our competitor countries had negotiated contracts before the recent high increases in the price of oil, but the moment those contracts come to an end, as the Dutch are now finding, for example, the prices of gas have been rising fairly considerably. So I do not think that this country will find itself, overall, in an adverse competitive position.

My Lords, in case the noble Earl did not hear me before, may I ask him whether it is a fact that the gas industry is making a profit of about £450 million a year?

My Lords, if I am to give a precise figure as to the profits of the gas industry, the noble Lord, Lord Leatherland, will have to put down another Question; but I can say to him that the distinction between the profits of the gas industry and the national assets of this country really is a false distinction.

My Lords, may I ask the noble Earl whether he and the Secretary of State for Energy are familiar with the law of comparative advantage in international trade, according to which, if a country is fortunate enough to be able to produce gas much more cheaply than other countries, then it should be able to take advantage of that fact, either directly or indirectly, by selling more cheaply those things for which gas is an important element of production?

My Lords, I think the noble Lord, Lord Kaldor, has put the matter, as I would expect, very clearly. What he is saying, effectively, is that it would be good and desirable for British industry to have a subsidy on energy costs.

My Lords, if I may make it clear, in economics the common term "subsidy"—and I am sure the noble Lord, Lord Robbins, will confirm this—means selling things below their cost of production. It is not a subsidy if you sell gas at a price which is very much greater than the cost, as has just been shown, and involves the gas industry having quite an inordinate profit.

My Lords, I would have thought that, to most people, if you sell an article in your possession at below what it will fetch an element of subsidy is involved.

My Lords, how can that be when there is a profit of £425 million a year? This cannot be logically correct.

My Lords, there is, of course, a profit, but the profit devolves to the nation.

My Lords, would not the noble Earl agree that the profit might be more usefully employed by manufacturing industry than by the nation?

My Lords, I think that would be true if my right honourable friend were convinced that British industry is in an adverse competitive position, but in fact that is not the view of my right honourable friend. I have to relay that: that is not his view. But I do have to say, as I have said in this House in the past—and I am well aware of the strong feelings in British industry as well as in Parliament about this issue—that industry all over the Western world is having to adjust most painfully to high energy costs, and it will not in any way help the competitive position of this country if we, too, do not make that adjustment.

My Lords, will the noble Earl bear in mind that while this argument is going on a number of our industries are being very severely damaged, and will he make sure that he comes to a policy decision very early in this matter?

My Lords, the Government have come to a policy decision, as the noble Lord knows; but, as I said, I am aware of the strong feelings about this issue, and I understand that the noble Lord, Lord Irving, has an Unstarred Question down for debate. To my great sorrow, I cannot be here myself, but my noble friend Lord Strathcona may be able to give the House rather more satisfaction on that occasion than I have been able to do on this.

My Lords, is the Government's proposition that a monopolist who fails to extract the maximum price from his monopoly position is subsidising the public?

No, my Lords. The Government are maintaining two propositions, which I can put very simply—and I have put them before, so I will try not to detain the House on them. Fundamentally, the national gas assets, as the noble Lord, Lord Balogh, sitting beside the noble Lord, is well aware, accrue to this nation. If they are sold at below their market clearing levels, whatever other advantages there may be, or the rights or wrongs of that policy, an element of subsidy will be given ultimately by the nation towards those assets.


My Lords, I think it may be helpful in more ways than one if I choose this moment to tell your Lordships that dinner will be available tonight. At approximately—and I repeat "approxinately"—seven o'clock, the Committee stage of the Local Government, Planning and Land (No. 2) Bill will be adjourned approximately for an hour.

Tenants' Rights, Etc (Scotland) Amendment Bill H L

My Lords, on behalf of my noble friend Lord Mansfield, I beg to introduce a Bill to provide for authorisation by the Secretary of State for Scotland of refusal to sell certain dwelling-houses, provided for elderly persons, under the Tenants' Rights, Etc. (Scotland) Act 1980; and to make minor amendments to that Act. I beg to move that this Bill be now read a first time.

Moved, That the Bill be now read 1a .— ( Lord Lyell.)

On Question, Bill read 1a , and to be printed.

Local Government, Planning And Land (No 2) Bill

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 inhibite