—Peter Bryan, Lord Bishop of Bath and Wells, was (in the usual manner) introduced between the Lord Bishop of Southwark and the Lord Bishop of St Albans.

asked Her Majesty’s Government:

How they intend to work with other Governments to ensure that offshore financial centres respect the principles of openness and disclosure with a view to restoring financial stability in international markets.

My Lords, we are witnessing unprecedented turmoil in global financial markets that needs international solutions. Co-operation with international partners is crucial to an effective global response, and to this end we will continue to work with those partners, including the Financial Stability Forum and the G20. Given their role in hosting offshore financial centres, the Crown dependencies and Overseas Territories have an important role to play in this international response.

My Lords, I thank the Minister for that Answer. In his Statement yesterday, the Prime Minister promised that he would bring greater transparency to tax havens by including them in the scope of the financial system. Will the Minister confirm that “tax haven” and “offshore financial centre” are interchangeable concepts? I know that some Crown dependencies object very strongly to being called tax havens, but actually an offshore financial centre is a place where people put their money in order, among other things, to minimise their tax obligations, and therefore it is a tax haven.

Will he also confirm that half of the OECD-listed financial centres are under Crown sovereignty and that Britain therefore has a particular role to play not only with the Crown dependences but also the Overseas Territories in making sure that transparency and disclosure as promised by the FSB and the FATB are fulfilled?

My Lords, 10 of the 35 low-tax jurisdictions identified by the OECD are either Crown dependencies or Overseas Territories. We fully support the efforts being made by the OECD, in particular as a consequence of its meetings in Paris in October and the forthcoming meeting in Berlin, to improve transparency and the supervision of these centres in respect of both regulation and tax matters. We are encouraging offshore financial centres to enter into tax and information exchange agreements. I am pleased that there has been some progress, and we would like to see a lot more.

My Lords—

My Lords—

My Lords, let us hear from my noble friend Lord Barnett first. I am sure that there will be time for both noble Lords to speak.

My Lords, will my noble friend give a definition of an offshore financial centre? Under certain definitions, could the United Kingdom be considered to be one of those centres? Some billionaires, and even modest millionaires, come here from time to time and are evading or avoiding tax. Apparently, we are counting how many days a lot of these people spend here. How many people are being counted, and if are they considered to be avoiding or evading tax, do we disclose that fact?

My Lords, the UK is a world-leading financial centre, but it has not achieved that status for tax effectiveness reasons, and as such is clearly not included by the OECD in its list of territories. In recent years, we have taken steps to tighten up the process to reduce tax evasion, including through the tax and information exchange agreements to which I referred earlier. As a result of information exchanges with major banks, we recently secured more than £400 million of tax repayments, and we believe that there is considerable potential to extend the programme further. We also announced last year further changes to non-domicile status, in particular to ensure that those who stay here for longer than seven years make a fair contribution to British society and the British economy. I cannot quantify tax evasion because by its very nature it is not a figure that is easy to place. However, we are vigilant in our pursuit of tax evasion.

My Lords, I noticed that the Minister, in referring to international agencies, did not mention the European Union. May I suggest that he looks closely at the suggestions for added regulation coming from the EU that, if not checked, could have the result of driving all the banks offshore?

My Lords, we are looking carefully at the recent proposals for tightening the savings directive. Inasmuch as they reduce the risk of money-laundering, reduce the risk of money flowing into counterterrorism and lead to greater tax transparency, we will encourage them, but only on the basis that they do not impose disproportionate, excessive or unnecessary cost on UK financial institutions.

My Lords, I am not sure if I should declare this interest, but I will do so for the sake of protection: I am chairman of the All-Party Parliamentary Group for the Cayman Islands, a British Overseas Territory.

Oh!

My Lords, is the Minister aware that the Cayman Islands financial services industry is fully committed to meeting international standards and criteria, that it has put in place the most rigorous regulatory and monitoring regimes and that it has enacted the relevant local legislation and demonstrated its commitment, as well as observing the European directive on bank accounts?

My Lords, I am so aware.

My Lords, does the Minister agree with President-elect Obama in wanting to crack down on tax havens, including Jersey, Guernsey and the Isle of Man? If so, and if the Government are committed to greater transparency in this area, why has the UK been blocking moves at the UN to upgrade its tax committee to intergovernmental status?

My Lords, we are committed to ensuring that people meet their tax obligations. Many offshore financial centres play a vital role in international economics that is not solely dependent on the tax status, but we are working with our colleagues in the United Nations, the Financial Action Task Force, the OECD and the EU to increase scrutiny and supervision of offshore financial centres.

My Lords, the original Question was about restoring financial stability in the international markets, but most of the supplementary questions have been about tax havens. Will the Minister explain what tax havens have to do with international financial stability?

My Lords, I am answering the questions that I am asked.

asked Her Majesty’s Government:

What consideration they have given to removing the need for citizens of the Republic of Macedonia to have a visa when visiting the United Kingdom.

My Lords, the United Kingdom Border Agency undertook a comprehensive review of the United Kingdom’s visa regimes in 2007. The results of this review regarding Macedonia were such that the Government have no plans at present to lift the visa requirements for Macedonian citizens.

My Lords, my noble friend will be aware that, when they were citizens of Yugoslavia, Macedonians could come here without visas and, once they join the European Union, they will be able to come here without visas. In the interim, however, there is an anomaly, causing an adverse effect on both trade and tourism. I plead with the Minister to ignore the bureaucrat’s brief in front of him, exercise the leadership for which he has become famous and go back to the Home Office and sort this matter out.

My Lords, I thank my noble friend for the accolade, which, given that we are talking about Macedonia, makes me feel somewhat like Alexander. I would never follow a bureaucrat’s brief word for word. I have looked at this issue. Whereas when Yugoslavia was a complete nation the rules were different, we have now undertaken this comprehensive review and I am afraid that we do not feel that most of the western Balkan countries meet the requirements for us to allow their citizens to enter this country without visas.

My Lords, when the comprehensive review of the visa regime that the Minister mentioned was undertaken by UKBA, we were looking at imposing visas on citizens of three countries—Brazil, Malaysia and Venezuela—who are currently not subject to our visa regime or, I believe, to visa regimes in the European Union. What was the result of that review? Are we taking part in the European Union review of visa regimes in relation to not only Macedonia but also Ukraine? What steps are being taken to harmonise our visa regime with those of the European Union as a whole?

My Lords, the visa waiver test identified 11 countries on which we propose to introduce new visa regimes, but these were subject to a six-month review, which is ongoing; we will not know the result until 2 January. We have talked to these countries and outlined the issues that we are concerned about: how passports are issued, co-operation on documentation and a whole series of things. We are negotiating with these countries and, if we come to an agreement, we could possibly waive the visa requirement. Of course, we require visas for 110 other countries because we do not believe that they have gone anywhere near meeting those steps and we demand the visa regime to ensure the safety and security of our country.

My Lords, how do Her Majesty’s Government justify the present position whereby not only Macedonians but also citizens of the United States, Australia, Canada and New Zealand need a visa to come to this country, whereas Bulgarian and Romanian gangsters are free to come and go as they wish?

My Lords, I like to think that SOCA and various other organisations would bowl out various gangsters. As the noble Lord well knows, Bulgaria and Romania are part of the European Union and we have agreements there. People from member states do not need visas to travel throughout the European Union, which is part of being part of the EU.

My Lords, there is evidence from the last elections in Serbia that the younger elements, who cannot travel on Yugoslav passports as their parents did, are the most nationalistic parts of the population. Does my noble friend agree that, if we are serious about integrating the western Balkans as a whole into the European Union, we must ensure that younger people and people generally are able to travel to prepare themselves for entry, which is in our interests and theirs?

My Lords, the fact that there are visa requirements does not stop youngsters travelling. I agree completely with my noble friend that movement, travel and the ability to visit by youngsters is a very good thing, particularly for those visiting our rather splendid country. It is wonderful for them to be able to see how this nation operates and what happens here. If they take those things back to their country, it is good for us all.

My Lords, does the Minister understand that the difficulty with people coming to this country is that, by and large, they need to be sponsored? Can he say whether the number of employers who are happy to sponsor people to come to work or visit here is sufficient to enable them to do so?

My Lords, I have spotted that the noble Baroness specialises in asking questions to which I do not know the exact answer. As far as I am aware there are, but I hope that I may get back to her in writing. I was told in the briefing that this would not have an impact on visits and things, but I would like to clarify that to be absolutely certain.

asked Her Majesty’s Government:

What is the proportion of wealth currently held by the richest 10 per cent of the population.

My Lords, in 2003—the latest year for which figures are available—it was estimated that the richest 10 per cent of the population owned 53 per cent of the wealth in the United Kingdom.

My Lords, I thank my noble friend for that reply. For a number of years now, many of those with the highest level of income derived from their wealth have, by various means, avoided paying the rates of tax paid by those with much lower incomes. This should not continue indefinitely. But more immediately, why have the Government not made a fairer relationship between normal taxpayers and those with large incomes by introducing tax on a new level of income greater than 40 per cent?

My Lords, if the noble Baroness, Lady Noakes, will allow me to answer a question relating to tax, the Gini coefficient of wealth distribution shows that a significant widening of inequalities of wealth during the 1980s and early 1990s has reversed somewhat in the current decade. In part, that is a consequence of tax policies, the national minimum wage and benefits. The proportion of tax paid by the wealthy continues to increase. The top 10 per cent of income tax payers pay more than 50 per cent of all income tax proceeds.

My Lords, does the Minister accept that if you are talking about wealth as opposed to income, the relevant taxes are those on capital? Does he see the merit in having a capital gains tax rate that applied at the same level as income so that the wealthy did not have an incentive to go down a capital gains tax route, which means that they are paying tax at a lower rate than ordinary rate taxpayers?

My Lords, earlier this year steps were taken to increase the rate of capital gains tax to match it with income tax in respect of the general partners in private equity firms. The Chancellor of the Exchequer gives very careful consideration to tax rates. If he wished to change those rates, he would no doubt do so as part of his Budget Statement.

My Lords, what effect does the Minister consider the recent turmoil in the financial markets will have had on the figures he gave in his initial response to the noble Lord, Lord Sheldon?

My Lords, that is a difficult question to answer with any precision, but it is likely that the decline in the value of marketable securities, land and property will have had a disproportionate effect on wealthier people.

My Lords, would the Minister care to cast any light on the proportion of national wealth enjoyed by the richest 10 per cent in socialist countries? For instance, in the former Soviet Union, was it not rather nearer 90 than 53 per cent?

My Lords, I am not in a position to give the noble Lord a precise answer to that question. However, according to the OECD, we have seen the most significant move towards wealth and income equality recorded this decade within the OECD countries.

My Lords, perhaps the Minister could make clearer for simple people like myself what he meant by “disproportionate”. Did he mean that the wealthy had suffered more or less than other people under the present financial circumstances?

My Lords, I apologise to the noble Baroness if I was not clear. I mean that they will have suffered more in proportion to their wealth.

My Lords, does not the fact that a severe stock market crash has reduced wealth inequality show that we have a somewhat false way of calculating true wealth? Perhaps we ought to revise our consideration and include houses not at current prices but at the long-run supply price: that would give us a more realistic account of what wealth is. We cannot have wealth being high one day and low the next: that cannot be true economics.

My Lords, there are limitations to the methods used by the ONS and HMRC for calculating wealth and wealth distribution. They use the Gini coefficient, which is derived from the Lorenz curve. They use probate material that they supplement by modelling adjustments. At the heart of the question of the noble Lord, Lord Desai, is a very acute and correct observation. More importantly, a new wealth and assets survey has been introduced, covering a cohort base of more than 32,000 people, which will measure the progress of their wealth, including assets such as pensions claims. As times goes by, we will get much more reliable data from this new series, on which we will make our first report next year.

My Lords, around 13 million people in this country are estimated to be living in poverty. If the Government are going to use any proportion of tax revenue, however raised, to spend their way out of recession, what financial help will be given to those who support those at the poverty end of the wealth-inequality spectrum, such as credit unions and workers’ co-operatives? What will be done to provide more help for hard-pressed agencies such as the CAB and debt centres, which are so vital at the poverty end of the spectrum, particularly in this economic downturn?

My Lords, the right reverend Prelate may be seeking to draw me on what might be contained in the Pre-Budget Statement next week. In that, he will fail, because I am not aware of what will be said on issues to do with taxation.

This Government have done much to help those who are in poverty, as defined by national statistics, through benefits, credits, the national minimum wage, housing assistance, winter fuel allowances, child trust fund arrangements, savings gateways and open-market home-buying. There is a series of initiatives to help those people and the agencies on which they rely for support.

My Lords, the Minister said that the Government have been doing rather well on poverty. However, the plain fact is that there are rather more people in relative poverty than there were in 1997, and child poverty has been increasing for the past two years. What do the Government say about that?

My Lords, 2 million people have come out of poverty since 1997.

My Lords, with the suggestion that the CAB, for instance, needs to be supported at this time, local government will be hard pressed to continue with grants to local citizens advice bureaux. Can the Government give an assurance that they will keep an eye on this and make sure that the CAB is there to meet the needs of this crisis?

My Lords, the Government have placed great emphasis, in their programme of addressing the consequences of the global crisis that has affected our financial institutions, on promoting responsible lending, by engaging with banks to ensure that they behave responsibly with customers and borrowers who are experiencing difficulties. One core condition attached to the bank recapitalisation arrangements that we introduced was that the banks have committed to expend more funds to support the relationship with customers experiencing difficulties. We recognise that, in particular, citizens advice bureaux play a very important role in helping people who are experiencing difficulties. We commend their work and hope to be able to continue to support them.

asked Her Majesty’s Government:

Whether they intend to reduce the size of the Defence Intelligence Staff; and, if so, why.

My Lords, I am sure that the whole House will wish to join me in offering sincere condolences to the families and friends of Marines Robert McKibben and Neil Dunstan and Colour Sergeant Krishnabahadur Dura, who were killed on operations in Afghanistan this week.

As part of the Ministry of Defence’s streamlining exercise, Defence Intelligence Staff elements based in central London will be reduced in size by around 20 per cent. DIS establishments outside central London, which constitute nearly 90 per cent of its overall manpower, are not affected by streamlining. Streamlining will improve the way in which the MoD head office works, creating a smaller, more agile and efficient organisation.

My Lords, I thank the Minister for that Answer. She will recall the Butler inquiry four years ago, of which she was a member. It said:

“DIS is a vital component of and contributor to the national intelligence machinery … DIS is crucial to MoD in everything from strategic planning through equipment acquisition to the conduct of military operations”.

Is not any reduction in intelligence provision to our Armed Forces akin to committing them to combat with inadequate or inferior equipment? With ongoing operations, surely that is both operationally and morally indefensible.

My Lords, the noble and gallant Lord knows very well the work done by defence intelligence, as do I. He mentioned that I served on the Butler review. The review said that if increased funding to the single intelligence account was required to commission DIS expert resources, that funding should be found. Most of the extra funding that has gone to the single intelligence budget has been for counterterrorism work. We are satisfied that the changes that we are making will not have an adverse effect. As I said, 90 per cent of the staff of DIS work outside London, and they are not at all affected.

My Lords, we on these Benches also send our condolences to the families of the two soldiers killed, both serving with 2 Battalion the Royal Gurkha Rifles. The noble and gallant Lord raises a very important Question. What assessments have the Government made of the impact of the proposed cuts on intelligence sharing with friendly nations?

My Lords, there has been significant consultation about the proposals. We work very closely with our allies in this field. It is not just the MoD that is involved; work very closely with other government departments, and all the potential customers for DIS have been consulted. Many of the reductions will be made because we are significantly reducing the business support staff, and that can be achieved as a result of the planned co-location in London, where we are going from three sites to one site, which in itself will have significant benefits in London. As I said earlier, 90 per cent of those working for DIS do not work in London and are not affected at all by streamlining.

My Lords, first, let me associate these Benches with the condolences given. Will the Minister assure us that the Government have a bottom line as to how many cuts can be made, and that the bottom line will reflect the fact that we have to occasionally act independently and thus will not be able to tap into the resources of our allies’ intelligence?

My Lords, I can give an assurance. The chief of defence intelligence said recently:

“The area is funded for what it is being asked to do from the central defence budget and will continue to support the Armed Forces and contribute strongly to the intelligence community’s work across government”.

As I said earlier, we discussed this with our allies and with other customers, and we are confident that DIS can be a stronger organisation.

My Lords, is the Minister aware that her Answer fills me with considerable concern? I am not clear what the prime motivation is and whether it is to save money. If there is one thing that this Government should have learnt, it is that with serious shortages of resources in many areas, intelligence has never been more important when prioritising whatever resources you have and in facing new ventures. As new ventures come—for example, now there is the threat of hijacking and piracy—there are new challenges that intelligence will have to face.

The noble Lord, Lord West, who is sitting beside the Minister, knows perfectly well, as a former chief of defence intelligence, the importance of this. This Government could have saved the nation a huge amount of money if, before the weapons of mass destruction issue arose, they had listened rather more carefully to the Defence Intelligence Staff.

My Lords, I must rebut very strongly the last comment. As a member of two of those inquiries, I do not think there was any problem in terms of people listening to defence intelligence at that time. The Government definitely recognise the significant importance of intelligence, both to us and to our allies. The degree of co-operation we have, both across government and with our allies, is very good. We have a highly respected and capable Defence Intelligence Staff, of which we are proud and intend to remain proud.

My Lords, would my noble friend remind the House, particularly the noble Lord, Lord King, by how much the single intelligence account has risen in the past few years?

My Lords, the defence budget is £34.1 billion. We have just seen the longest sustained growth in that budget for over 20 years. In 2010-11 it will be 11 per cent higher than it was in 1997. That does not include all the money for operations and urgent operational requirements which comes directly from the Treasury.

My Lords, was the Minister correct in putting that statement about rises in the defence budget in the past, thus implying that those increases are now over?

My Lords, I was anticipating what the situation would be by 2010-11.

My Lords, perhaps the Minister would like to say what percentage of GDP the defence budget will be in two years’ time, compared to 10 years ago?

My Lords, I do not have the figures in front of me, but I recall that we are the second largest spender on defence in the world, second only to the United States. That shows this Government’s commitment.

My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Planning Bill, have consented to place their Prerogative and Interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

Before we move on to the Third Reading of the Planning Bill, it may be helpful for me to say a few words about Third Reading amendments in line with the guidance recommended by the Procedure Committee and agreed by the House. The Public Bill Office has advised the usual channels that two amendments on the Marshalled List for Third Reading today fall outside the guidance given in the Companion and set out by the Procedure Committee. These are Amendments Nos. 1 and 28 in the names of the noble Lord, Lord Reay, and the noble Earl, Lord Caithness. On the basis of the Public Bill Office’s advice, the usual channels have agreed to recommend to the House that neither amendment should be moved. As ever, ultimately, this is a matter for the House as a whole to decide.

Bill read a third time.

Clause 10 [Sustainable development]:

[Amendment No. 1 not moved.]

Clause 12 [Pre-commencement statements of policy, consultation etc.]:

moved Amendment No. 2:

moved Amendments Nos. 3 to 6:

moved Amendment No. 7:

My Lords, I declare my interest and refer in particular to the fact that I am a solicitor in private practice advising on planning issues. I am also a member of the Commission on Scottish Devolution.

The noble Duke, the Duke of Montrose, has moved an interesting amendment in relation to cross-border railways. He is right to say that the responsibility for cross-border railways lies with the United Kingdom Government but I believe that the consenting process would be a matter for the Scottish Parliament. The noble Duke may be interested to know that the commission has received submissions in relation to nuclear power, which is a reserved matter but where the consenting and planning process would be a matter for Scottish Ministers. The commission is considering these representations. If the noble Duke wishes to make representations to the commission in relation to cross-border railways, we will be pleased to look at them.

My Lords, I am grateful to the noble Duke for moving the amendment, which gives us a further opportunity to explore the issue of cross-border rail infrastructure. We need to make a distinction between two separate issues here. The first is the issue of services. As my noble and learned friend has just said, where those services are cross-border, my department through the franchising arrangement takes the lead role. The issue at stake in the Planning Bill is not services but infrastructure. The Infrastructure Planning Commission will not have vires in respect of the Scottish part of rail infrastructure proposals which cross the border. That does not mean, however, that the United Kingdom Parliament could not play a role in consenting to such schemes. It would be open to the promoters to seek authorisation by means of a private or possibly hybrid Bill presented to the Westminster Parliament, which would be likely to require a Sewel motion. In seeking consent for such a rail infrastructure scheme across the border, that would be one of two possible ways forward. The other would be for the IPC to consider the English part and for Scottish Ministers to consider the Scottish part.

Discussion on which of those options would be best would take place at the appropriate time, taking full account of the circumstances of the case. I am certainly not closing the door to the possibility of the United Kingdom Parliament deciding the planning issues relating to those infrastructure projects, but that would be by means of a private or hybrid Bill, requiring a Sewel motion; it would not be done through the IPC which, under the Bill, would not have powers in respect of the rail infrastructure required for cross-border projects. The issue of services is distinctly different. It relates to the contracting process with train operating companies for services which, as the noble Duke said, run from Glasgow, Edinburgh and other Scottish cities to south of the border.

My Lords, I am interested to hear the response of the Minister, but I am still puzzled. One knows perfectly well that planning is a devolved matter and, as I understand it, would require consideration of specific areas, items, routes or anything else within Scotland. Is it the Minister’s contention that national infrastructure is not a reserved matter and that, therefore, it is a proper matter for the Scottish Administration to consider? If so, does that relate only to national infrastructure as regards Scotland? The clauses at the beginning of the Bill apply to Scotland, so I would have thought that the Scots should be able to consider cross-border railways.

My Lords, it is our contention that the Scottish dimension of any rail infrastructure projects that cross the border are subject to the devolution settlement and, therefore, should either be decided by Scottish Ministers or, as I said, be subject to a private or hybrid Bill procedure, which, in turn, would require a Sewel motion.

My Lords, I find it difficult to plough my way through all this, but in the mean time I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 60 [Local impact reports]:

moved Amendment No. 8:

My Lords, before the Minister moves her amendment, will she advise on how the Government will help local authorities with the preparation of this report? Will there be guidelines so that the reports will be consistent? What steps will be taken to ensure that all major items are included throughout the country on an equal basis, in particular agriculture?

My Lords, I am glad that the noble Baroness welcomes the amendment. I will put on record some of the reasoning behind it and then address the amendment itself. I hope that I can reassure her. It may be useful if I set out why the Bill provides for the commission to invite the relevant local authority, or authorities, to produce a local impact report.

We are absolutely clear that local authorities, as the democratically elected representatives of the local community, have a vital role to play in the consent regime for major infrastructure, particularly in ensuring that national decision-makers, including the proposed IPC, take proper account of relevant local factors and considerations. Therefore, the Bill provides local authorities with a vital role in representing their communities in the new process and in ensuring that their local communities are adequately consulted. I say to the noble Earl, Lord Caithness, that we will certainly put out guidance and take early action with local authorities to ensure that they understand the process. This is an important question, because so much will rest on their understanding of what this offers their planning procedures.

Relevant local authorities will be consulted by the promoter of a project before they submit an application under the provisions of Part 5 of the Bill. The IPC must have regard to any report on the adequacy of the promoter’s consultation received from a local authority when deciding whether to accept an application. Relevant local authorities will be interested parties to the examination of an application. In addition, Clause 60 requires the IPC, on accepting an application for development consent, to invite the relevant local authority, or authorities, to produce a report on the likely impact on their area of the proposed development being applied for. Clause 104 then requires the commission to have regard to the local impact report when making its decision. Clause 105 requires the Secretary of State to do the same in a case in which she decides, for example, to exercise her power of intervention. This all adds up to the local impact reports being central to the IPC decision. As such, we have sought to give local authorities the longest time to prepare the reports, which will, I envisage, be quite detailed documents. They will reflect the impact of a development on the local development plans; they will reflect what the community feels and thinks.

However, the importance that the new process gives to local impact reports needs to be balanced against the need to ensure that the applicant and other interested parties are also given a reasonable opportunity to comment on the report to the IPC. We are looking for a balance of fairness and access. On Report, the noble Lord, Lord Berkeley, raised the concern that the Bill does not appear to provide for a local authority’s local impact report to be seen and commented on by the applicant and any other interested party before the end of the examination of the application by the IPC. My noble friend’s concerns arose from the provision in Clause 60(6), which provides that the deadline for submission of the local impact report is the same as the deadline for the completion of the examination of the application by the IPC. My noble friend made a compelling case and I gave an assurance that I would consider this further ahead of Third Reading, which I have done.

I accept that provisions in Clause 60(6) may inadvertently suggest that the applicant and other interested parties might not have an opportunity to comment on a local impact report. This was not our intention. Our Amendment No. 9 therefore removes subsection (6) of Clause 60 so that instead it will be for the commission to specify in each case the date by which the local impact report must be received. That will be subject to procedural rules made by the Lord Chancellor under Clause 97, which we expect will clarify that the deadline must give sufficient time for the parties to comment on the local impact report.

What we have are rules that will strike the right balance between giving local authorities the longest time possible to complete these detailed and important reports and ensuring that the applicant and interested parties are given a reasonable opportunity to see and comment on the report to the IPC before the completion of the examination of the application. I commend the amendment to the House.

Amendment No. 8, which was tabled by the noble Baroness, Lady Hamwee, would provide that the deadline in Clause 60 should allow reasonable time for the preparation of the local impact report. That is not necessary in the light of what I have said. I set out in some detail that it would be for the commission to specify in each case the date by which the local impact report must be received. That will be subject to procedural rules made by the Lord Chancellor under Clause 97, which, as I said, we expect will clarify that the deadline must give sufficient time for the parties to comment on the local impact report.

The noble Baroness asked me for reassurance that local authorities will also get reasonable time to comment and complete the local impact reports. I am happy to give her that reassurance because, above all, we will make sure that the procedural rules make it clear that the IPC should give local authorities the longest time possible to complete these reports and ensure that the applicant and the interested parties can see and comment on the report to the IPC. That will be achieved by procedural rules, which is the best way, because it allows for discussion. I hope that the noble Baroness will be satisfied with that.

My Lords, I asked for an impossible assurance. I do not know that any Minister could give an assurance that people will behave like civilised adults on every occasion. Experience suggests that that ideal is not always achieved. However, I am reassured by what she said, which put the importance of the local impact report well to the fore. What has been arrived at with that assurance and with reference to procedural rules gives the right balance and I am happy to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 9:

moved Amendment No. 10:

My Lords, I welcome the Government’s amendments. Throughout the passage of this Bill, the Minister has devoted time and a considerable degree of care to listening to noble Lords and responding to their concerns wherever possible. As ever, the wording which the Government have produced is considerably better than mine and I thank the Minister for the two amendments. In introducing them, she said quite rightly that there have been occasions when the term “site” has been used. In fact the Bill deals only with “locations”. We have all been guilty of referring to “sites”. There was even an occasion at the last stage when the Minister talked about “potentially suitable sites”. I am glad that that has been corrected and we have slightly broadened the issue.

Amendment No. 12 reflected my concern that the Secretary of State should be in the same position as the commission in cases where the Secretary of State takes a decision on matters to which he or she must have regard. I appreciate that it will be rare for there to be a national policy statement in place when there is a Secretary-of-State decision, but it is possible and the Bill allows for that. The Government’s drafting clearly includes confirmation—and I use that word rather loosely—of the status of the NPS vis-à-vis other considerations. Having had it explained to me that it is in a different part of Clause 104 from those to which the panel and council must have regard, and that those parts of Clause 104 are not repeated in Clause 105, I can see that my concern is misplaced; that concern being that a court looking at the two clauses might say that Parliament had a different view as to how Clause 105 would operate and national policy statements would have a different status in that clause. Third Readings are useful occasions. I can see now that that should not apply. I am grateful for the time of the House and for the opportunity to explain my concern, as well as to thank the Minister and make sure that it is understood how the two clauses operate.

My Lords, for reasons that the whole House understands and accepts, the noble Lord, Lord Reay, chose not to move his Amendment No. 1 about respecting high quality landscape. Is the Minister willing to elaborate a little on what she considers the clause as amended to mean for the duties of the panel and council and the Secretary of State as they arrive at their decisions in relation to respect for the landscape?

I am happy to see my noble friend Lord Hunt in his place and most grateful to him for his willingness to meet the noble Lord, Lord Reay, and me and for the letter that he has written to us. He said on Report that national policy statements will take account of all relevant government policy, including PPS7, and I appreciate that PPS7 confirms that great weight should be given to the designations of national parks and areas of outstanding natural beauty in planning policies and development control decisions. Can the Minister confirm that PPS7 will be among matters prescribed in subsection (2)(c) of Clause 104 or other matters which the panel and the council may consider important or relevant, as in subsection (2)(d)?

The major development test set out in paragraph 22 of PPS7 says that major developments should not take place in national parks and areas of outstanding natural beauty except in exceptional circumstances. Will my noble friend tell us a little more about how strong that protection is, and how strong the protection in PPS22 and its companion guide is? Some of us fear that it will be argued, for example, that the need to provide more renewable energy in coming years constitutes an exceptional circumstance, and that adverse effects on the quality of the landscape will be considered to be outweighed by other environmental, social and economic benefits, thus justifying the festooning of our most beautiful and treasured landscapes with wind-power apparatus. Can my noble friend reassure us to any extent on that point, and can she assure us that the forthcoming national policy statement on renewable energy will robustly protect important landscapes?

I appreciate that local authorities are instructed in PPS7 to take account of landscape quality in preparing local development documents, and that local authorities will be statutory consultees where national policy statements are location-specific, as well as for pre-application and examination processes in the development consent regime, and that they will have the opportunity to provide local impact reports to the IPC. Clause 104 refers to all this. My noble friend said in the debate on a previous amendment that local impact statements will be key.

Clause 104(4) applies,

“if the Panel or Council is satisfied that deciding the application in accordance with any relevant national policy statement would lead to the United Kingdom being in breach of any of its international obligations”.

Will my noble friend tell us whether the Government will regard the European Landscape Convention as being among those international obligations, and will she confirm that PPS1 reflects that convention and will be interpreted in that sense? Will she also confirm that the Government will pay very careful heed to the advice of Natural England, as a statutory consultee for all national policy statements? Such reassurances would be helpful, but they would remain somewhat flimsy.

So, finally, I ask my noble friend for two specific assurances. Will she assure the House—in terms that can be noted by the courts, which will interpret this law in due course—that, as an important environmental consideration, the conservation of the landscape falls within the scope of the Secretary of State’s duty to contribute to sustainable development in Clause 10? When, before designating a national policy statement, Ministers carry out an appraisal of its impact on sustainability, will they assess and take account of its impact on the landscape? The noble Lord, Lord Hunt of Kings Heath, gave the noble Lord, Lord Reay, and me such assurances in his letter, but it would be hugely helpful if my noble friend could place those assurances on the record in Hansard.

My Lords, I thank the noble Baroness, Lady Hamwee, for interpreting and speaking to my amendment, which I shall say nothing more about.

I will answer quite a lot of the questions asked by my noble friend Lord Howarth by referring to the letter which my noble friend Lord Hunt of Kings Heath sent to the noble Lord, Lord Reay, but I will have to write him about others because they were even more detailed than some of the answers that he received. I will do my best not to weary the House by referring to the letter, which answers most of these questions.

National parks and areas of outstanding natural beauty have the highest status of protection for their landscape and scenic beauty, and great weight indeed should be given to them in planning policies and development control decisions. Of most relevance to this in the context of the Bill is the major development test. This is set out in paragraph 22 of PPS7, which says:

“Major developments should not take place in these designated areas, except in exceptional circumstances”.

As my noble friend Lord Hunt said on Report, national policy statements will take account of all relevant government policy, which will include PPS7 where it is relevant to that NPS.

PPS7 recognises non-designated areas of landscape outside nationally designated areas that are particularly highly valued locally. It sets out that local authorities should draft criteria-based policies in local development documents, utilising tools such as landscape character assessment. The noble Lord asked how strong those planning provisions are: they are very strong indeed.

Specific policies on planning for renewable energy, including on landscape protection, are set out in PPS22, which is supported by a companion guide to provide practice guidance on assessing the visual and landscape effects of planning applications for wind turbines. PPS22 recognises that the landscape and visual effects of particular renewable energy developments will vary on a case-by-case basis according to the type of development, its location and the landscape setting of the proposed development.

PPS22 advises that in sites with nationally recognised designations, such as sites of special scientific interest, national parks and AONBs, planning permission for renewable energy projects should be granted only where it can be demonstrated that the objectives of designation of the area will not be compromised by the development and any significant adverse effects on the qualities for which the area has been designated are clearly outweighed by the environmental, social and economic benefits. Small-scale developments should be permitted within these areas provided that there is no significant environmental detriment to the area concerned. We intend that there will be an NPS for renewable energy, which will be drawn up and consulted on in due course.

The noble Lord asked me about the European Landscape Convention, which has been mentioned several times during the passage of this Bill. As my noble friend said on Report, the Government believe that the UK is already fulfilling the requirements of the convention; therefore, it does not have any immediate implications for the planning system in England. National planning policies, including PPS1: Delivering Sustainable Development, recognise the need to provide appropriate protection and enhancement of rural and urban landscapes in England, in line with the principal aims of the convention.

The noble Lord mentioned Natural England. Defra has asked Natural England to take the lead on the implementation of the ELC in England, working closely with English Heritage and others. I should like to underline that Natural England will be a statutory consultee for all NPSs and will be able to raise those issues that it feels are appropriate, including any arising from the ELC.

The Bill also requires that, before designating a national policy statement, Ministers must carry out an appraisal of their sustainability. That will assess the impact of the NPS on the landscape and other environmental issues, and ensure that they are taken into account. As with Clause 10, it will capture not just environmental but also economic and social impacts, which will ensure that we understand the impact of NPSs holistically as we seek to deliver our sustainable development objectives.

The Government agree that high quality landscape is important and should be protected. They have put policies in place to that effect, and NPSs will take account of all relevant government policy. Local authorities will be able to report to the IPC on the impact of specific proposals. The noble Lord asked about regulations under Clause 104(2)(c) in relation to PPS7. I will write to him on that, but I can tell him that a number of provisions on protecting landscape will be incorporated into NPSs. With that reply and with the promise of reading Hansard tomorrow and picking up on any detailed questions that I did not address, I hope that the noble Lord will be content.

My Lords, before the noble Baroness sits down, is she aware that what she has just said is enormously important to a whole range of organisations covering different aspects of landscape protection? Many people out there in the countryside will be very grateful.

On Question, amendment agreed to.

moved Amendment No. 11:

moved Amendment No. 13:

My Lords, I thank the Minister for the amendments. She said that she hopes that I will be reassured by them. I am far more than reassured. I first raised this issue in Committee and moved amendments on Report in the hope that a satisfactory compromise could be reached. I have to say that a satisfactory compromise has not been reached because as far as I can see, the amendments now being proposed by the Minister do everything I had hoped and intended my amendments to do. It is a very good show and I thank the Minister for listening, for understanding the issue and for responding to it. If the Minister enjoys agreeing with me, I enjoy it far more when she brings forward amendments that do exactly what I have been asking for.

On Question, amendment agreed to.

moved Amendment No. 14:

My Lords, I congratulate my noble friend on this amendment. I thank her for the exemplary way in which she has kept the House informed of developments in the Bill, and for her kind words. My noble friend Lord Howarth of Newport said on Report that she could take her place in history and that she could open the way to a new and better era of architecture and design in Britain.

The amendment completes a legal framework that will enable our talented architects and designers to give of their best for ordinary affordable social housing as well as for big infrastructure projects. We shall have a better society because of it if we make sure that all concerned take full advantage of the new duty to achieve sustainability by good design. The first crucial step would be taken by these amendments, and I applaud my noble friend’s achievement in getting them through.

My Lords, I add a word of congratulation to the noble Baroness, Lady Whitaker, and the noble Lord, Lord Howarth, on how they have pursued this. Of course, our main congratulations go to the Minister.

I hope that I will not be thought to be a little niggardly in saying that, in contrast to the response on the issue of the commons law last week, when the Minister was very positive and said that she would look at it quickly and come back with proposals, as indeed she has—I and commons campaigners in other parts of the country respect and are delighted by that—she was a bit negative on this issue last week. Looking at Hansard, I thought that, on Report, she was uncharacteristically truculent on design, even suggesting that it was quite impossible to put something in the Bill because there was no time to consult.

I pay tribute to the Minister for the speed with which she and her team in the department have managed to come up with something in the Bill that meets many of our concerns. As a relative newcomer to your Lordships’ House—I have been here only three and half years; until you have been here 33 years you are not regarded as a native—I have seen how the Minister and her team have responded with meticulous efficiency to issues in the House, and by correspondence with many of us involved in the passage of the Bill. That is in sharp contrast to my experience on the Front Bench in the other place over 14 years, when Ministers did not think it necessary to explain and persuade. That is to the credit of this House, and to the Minister and her team.

The elegant U-turn that the Minister has undertaken over the past few days is to her personal credit and that of her team in the department. The result is a great step forward. I say to her and to other Members of your Lordships’ House who have made this such an important part of our discussions on planning that it is a pity that we did not have this requirement clearly in previous legislation—notably the Planning and Compulsory Purchase Act 2004, to which it has now been added. It is a great step forward, and I am sure that it will be recognised as such outwith this House.

My Lords, my noble friend has indeed allowed the hand of history to touch her shoulder. When it was suggested on Report last week that that might be so, she blushed modestly and demurred. Since then, however, she has embraced her historical destiny to become the reformer responsible for the institution of legal requirements that will raise standards of design across the entire planning system, and in regeneration and building.

The new clause and this legislation will be timely. The Government are extremely anxious to accelerate construction activity, and housebuilding in particular, for good reason. We understand that there are 1.7 million households on the waiting list for social housing. It is widely agreed that a stimulus is needed for the economy under the present conditions. However, there is a danger that, in our haste to accelerate construction, quality is sacrificed. We must not repeat the disastrous mistakes that were made decade after decade in the second half of the 20th century. With a great deal of public sector activism and expenditure, and a depressed private sector and—I hope not, but perhaps—a depressed social housing sector operating in circumstances of great difficulty, there is a danger that we will revert to the policy of creating estates, with all that word’s bad connotations, instead of continuing to create integrated communities. That is an aspect of design.

There is a continuum between economic policy, social policy, planning policy, functionality, sustainability, building regulations, green spaces, design and aesthetics. All are interdependent. My noble friend has been right to reject the view that it would have been inappropriate to state the requirement for design alongside the requirement for sustainable development in this legislation. Good planning, plus good design, plus good building tend to make for good communities.

My Lords, I always enjoy listening to the noble Lord but I remind him that this is Third Reading.

My Lords, of all the noble Lords who might upbraid me I am perhaps happiest being upbraided by the noble Lord, Lord Dixon-Smith. I will simply confine myself to noting that we have an anomalous situation in which conservation area advisory committees were set up in statute but are not statutory consultees. That is a wasted opportunity. We should better use these advisory bodies, design review and other advisory bodies of this kind. However, this amendment to the town and country planning regime, together with the amendments which my noble friend previously brought forward, strengthens our drive for good design and strengthens the duty to have regard to design on the HCA and in the development consent regime. I am deeply grateful to my noble friend and I ask her whether she will now turn her creative mind to how this new and good law can be made to work well.

My Lords, I hope that the noble Baroness will forgive me if I do not spend time focusing on her place in history because I could not do so better than the noble Lord has done. Instead, I wish to make one observation about the proposed new clause, which we support. It is important to recognise that the sustainable development duty is not diluted but that good design is a mechanism for achieving sustainable development. I would hate it to be thought—I do not believe that any noble Lords think this—that somehow we have created a new hierarchy within sustainable development. I do not read that as being inherent in the new clause. We support the notion of sustainable development but not that of spreading it more thinly or changing it.

On Question, amendment agreed to.

Clause 208 [Liability: interpretation of key terms]:

moved Amendment No. 15:

My Lords, this is the only amendment on CIL, and I support my noble friend in what he said. It gives me the only opportunity to ask the Minister a couple of questions about CIL. I am certainly not happy with the way that the Bill is at the moment, or with the way CIL is. We have no regulations, which we were promised in another place, we have no information on which we would have been able to discuss the matter and at each stage there have been a substantial number of government amendments. This is an ill-conceived policy.

The Minister said on Report that CIL is very much a general charge. If a local authority is looking at funding infrastructure, it has to work out what percentage can come from other areas and what percentage can come from CIL. Given what the Minister said on Report, how is she going to prevent a local authority transferring CIL into other pockets of money? If a local authority is looking at CIL as a general charge rather than as a specific charge for a development, it will be wide open for it to transfer CIL money into other areas of the local authority. Can she explain how that will be prevented and how local authorities will stop that?

I have one other question. As the Government have refused to remove the Planning-gain Supplement (Preparations) Act from the statute book, confidence in the Government among the construction community and surveyors is at rock bottom. They do not trust the Government on this. If the Government spend any money under the PGS Act, can the noble Baroness give a categoric assurance that a Minister will make a Statement in both Houses that money is going to be so spent? There is great fear, despite what she said on Report, that her department sees CIL as a short-term measure and really it wants to go back to the planning gain supplement. Will the noble Baroness confirm that a Statement will be made in both Houses before any money is spent?

My Lords, I declare an interest as a partner in a business that works in the development area. The noble Lord, Lord Dixon-Smith, raises a reasonable point. It would be helpful if the Minister could remind the House where in the impact assessment documents there is an estimate of the amount to be raised from CIL in the first five years and whether that takes account of the inevitable effect that it will replace Section 106 money. In almost all cases, I find it difficult to conceive of a situation where a developer will continue to pay Section 106 money as well as CIL.

In the impact assessment for the Planning Bill, there are no figures in relation to CIL. It might well be that I have been negligent in not reading every document that one could have read in preparation for this Bill, but I cannot remember them. However, it would be a great pity if, for all this effort, the result was a bit of a damp squib and that, on balance, the amount raised from CIL was modest. Certainly the outlook for the next few years in the development business is that it will be a tough time.

My Lords, grouped with this amendment is Amendment No. 26 in the name of my noble friend Lord Bradshaw, who has just entered the Chamber. The timing is immaculate. However, to allow him to get to his place, perhaps I may say that the noble Lord, Lord Berkeley, took up the question of what is meant by the phrase “roads and other” in the line,

“roads and other transport facilities”,

in the definition of “infrastructure”—not so much what is meant by it but why it is necessary. I felt at the time that the noble Lord had a good point, but it was late at night and we were all finding it a bit difficult to articulate things. I believe it was suggested that it would be answered in writing. I do not think that I have seen a response to that. I may have missed it, in which case I apologise, but I have no doubt that the Minister has an answer now and it would be a shame if she did not have an opportunity to give it.

My Lords, I declare an interest as a vice-president of the Local Government Association and the Association of Police Authorities. I intervene at this late stage in this Bill with some trepidation, partly because I spent 26 years as an elected member of local and regional government trying to avoid ever having anything to do with planning decisions, but more particularly because I have not previously successfully intervened in these debates. Having twice put down amendments at Committee and on Report, I thought it was inappropriate, having not been available to move them on those occasions, to put them down at Third Reading.

However, Amendment No. 26, which we are considering in this group, gives me the opportunity to make a point. I am grateful to the Minister for arranging for me to meet officials on the question of why there is actually quite a long list of items of infrastructure in Clause 215, yet policing and emergency services are missed out. If I understand the argument that was put to me, I was told that the list was not intended to be exhaustive, but merely to set the boundaries of the sorts of things that might be included in the term “infrastructure”. If things such as emergency services, policing and fire services and so on were included that might turn it into an exhaustive list, which it is not.

I am concerned that we will end up with a dog’s breakfast in Clause 215. We will have a list of items which will include some things and not others. It will include so many things that it might no longer be said to be just giving a few vague examples of things that might be deemed to be infrastructure for these purposes. It will end up providing a list. There is already evidence that local authorities are looking at it and saying that its implication is that those items included specifically in Clause 215 are what is really meant by infrastructure and those should be the priority in any community infrastructure levy.

I hope that, in responding to Amendment No. 26 and the group, my noble friend will therefore make it clear that the list is not exhaustive and that she will give us a few more examples of what might be included, for the benefit of local authorities. Obviously, railways and airports—they have been discussed at previous stages of the Bill—could be included, but it should also be clear that the list includes policing and emergency services. I hope that she will be able to say that, because it is without question that many large developments require additional investments in policing and emergency services. The evidence is that large developments often bring with them increases in crime, and that there are issues about police response times and how you make sure that the development combats crime and disorder.

Interestingly, the recent PPS12 advised that the core strategy within a local planning authority area should be prescriptive in terms of certain infrastructure requirements. It then listed a number of areas that should be identified as part of that process, including everything listed in Clause 215(2) and—it was the only “and”—the police. For some reason, when the list turns up in Clause 215(2), policing and emergency services are missed out. I hope that my noble friend will understand why there is concern about that strange list and that, in her response, she will clarify once and for all not only that the list is not exhaustive but that policing and emergency services—and, of course, railways—should be included.

My Lords, I apologise for my sudden arrival. The points were made perfectly adequately both by my noble friend and from the Minister’s side of the House. Simply, the list should not be focused on one thing; it should include all the infrastructure requirements of a local authority.

My Lords, I am sure that the noble Lord, Lord Dixon-Smith, feels perfectly justified in bringing the amendment back at Third Reading, as we have had a wider debate—a collective debate on several separate issues. I applaud his tenacity in bringing forward his concerns. He and I disagree about the issue—as he described it, the chicken and egg. I will address the amendment before I come on to questions raised by other noble Lords.

It should be noted that the amendment presents two clear and perverse opportunities to avoid paying CIL, which I am sure is not something that the noble Lord wants. First, there are no specified limits on the minimal amount of infrastructure that a building must house if it is not to become liable for CIL. That is because “infrastructure” in the amendment is not tied to the CIL definition of “infrastructure” in Clause 215. In the context of the amendment, “infrastructure” could have its ordinary meaning and cover things such as pipes. Therefore, it could exclude large numbers of new buildings on the grounds that they contain pipes, ducts or electric cables. Secondly, by providing that only new buildings housing infrastructure will be exempt from paying CIL, rather than allowing for changes to existing buildings housing infrastructure, the amendment risks distorting the behaviour of developers, who might seek to disguise changes to existing buildings as entirely new buildings housing infrastructure and thus not liable to pay.

We cannot support the amendment. However, I am aware that, in our conversations about the nature of infrastructure and its impact, the noble Lord made it clear that the amendment on Report was probing and directed at finding what was and was not included in the definition of development liable to pay CIL. On the basis of the question that he raised about the text of the Bill, I think that that is still his intent. To answer the question, I will have to expand the argument a little.

Noble Lords are aware that the purpose of CIL is to raise funds to provide infrastructure to support the development of an area. CIL is intended to spread costs of providing such infrastructure more fairly. I remind noble Lords that only 14 per cent of developments contribute to Section 106. As noble Lords will recall, there is a principle of fairness behind the logic. Infrastructure generates impact and costs. I take the point about chicken and egg but I do believe there is an ethical argument that it should contribute to the costs of local and sub-regional infrastructure given these impacts. I give two examples: schools generate huge amounts of road traffic and hospitals generate huge amounts of clinical and other waste. These are demands that those infrastructures can place on other infrastructures. That is why we believe that infrastructure should contribute to those needs because otherwise other development will have to pay higher rates of CIL in the generalised assessment to cover those costs.

We have limited the notion of infrastructure. We principally sought to delineate liability in relation to buildings, because buildings by their nature are places where people congregate or travel to and from and they represent the sort of developments that local authorities plan for when considering their infrastructure needs. I know that this is not an entirely straightforward concept—there are powers in Clause 208(2)(a) to deal with difficult cases—but the word “buildings” should be interpreted in its ordinary sense. If you look at the Concise Oxford English Dictionary, you see that “building” is,

“a permanent fixed structure forming an enclosure and providing protection from the elements etc (e.g. a house, school, factory, or stable)”.

Given the impact that such buildings have on local infrastructure, we are right to explore in regulations whether they might contribute to these infrastructure costs through paying CIL.

We have always said that exemption from CIL is a matter for regulations. We have not ruled out that there could be an exemption from CIL for infrastructure in addition to what is not covered because it is not a building—we have had some interesting exchanges on wind turbines, for example. However, we do not want to rule things out now on the face of the Bill before we have consulted on them. Any exemptions from CIL need to meet the criteria that we set out in paragraph 4.10 of the August document. I hope that the noble Lord will take some comfort from that.

We have to think about things such as warehouses. These have a major impact on transport infrastructure, although in these cases the charging authority might decide to charge different rates of CIL for such developments because they have a different level of impact. On that basis, railway stations and harbour buildings would also be CIL-liable whereas structures such as railway lines and power lines would not. I appreciate that there is a power in Clause 208(2)(b) to cover other structures, but our intention in making regulations would be to cover those structures that are similar to buildings because they might place demands on infrastructure or benefit from it.

As we indicated in our August document on CIL, we also intend that some development that might otherwise fall under Clause 208(1) will not be liable to pay CIL. Household developments by home owners are one such example. We also intend to exclude many developments for which planning permission is granted under the GPDO because such development is likely to have minimal impact on local infrastructure.

These are complex issues. We have struggled with them at each stage of the Bill. We are pledged to continue to work closely with stakeholders on which development should be liable to pay CIL and which should not. We will certainly consult on the detail.

My Lords, I asked two specific questions. Where in the documents before the House is there an estimate of revenues to be raised—that is, before the figures are revised—and do those estimates take account of the certain reduction in Section 106 contributions that are made to local authorities? I appreciate that those contributions are made by a small proportion of developers, but they relate to the major developments and the figures will be substantial. It would be helpful to me, if not to the House as a whole, to have a feel for the amounts expected to be raised and the amount of offset from Section 106. Those are important matters, which I am sure were carefully considered before the proposal was brought forward.

My Lords, probably the best that I can offer my noble friend at the moment is a quotation from the August document, although I can send him the detail. Paragraph 4 of that document states:

“The Government is already investing substantial additional funds to support housing growth and economic development. CIL will also provide further new resources. Estimates as to how much CIL will raise are heavily dependent on the number of local authorities that elect to charge CIL, and the rates that they charge. However, CIL is expected initially to raise hundreds of millions of pounds of extra funding per year towards the infrastructure that local communities need. While CIL will make a significant contribution to infrastructure provision, core public funding will continue to bear the main burden, and local authorities will need to utilise CIL alongside other funding streams to deliver infrastructure plans locally”.

I cannot answer the specific question on the RIA as I do not have a copy and so cannot give the noble Lord a paragraph number. I will write to him and build on that. I hope that I have addressed all the questions that were raised. I shall make sure that I write if I have not.

My Lords, the Minister has, as always, been generous with her time and done her best to answer the questions. The people who will have to interpret everything that has been said, both in this Chamber and in another place, are those who, ultimately, will sit down to draft the regulations. Although I am in no hurry to see them, I look forward to them with considerable interest, to see how those people manage to interpret everything that has been said on this subject. I am grateful to the Minister.

My Lords, before the noble Lord sits down, may I put a correction on the record? In answering my noble friend, I should have said “police stations”, meaning the buildings, rather than “police”. I wanted to make that absolutely clear and I apologise to the noble Lord for interrupting.

My Lords, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 209 [Charities]:

moved Amendment No. 16:

My Lords, I should point out that if this amendment is agreed to, I shall not be able to call Amendment No. 17.

My Lords, I shall speak to my three amendments in this group. I have no wish to repeat the arguments that I set out in previous stages of the Bill. It has been proven again and again that charities deliver public benefit, including benefit that comes within the definition of community infrastructure, at far better value than any public administration can, usually because of the voluntary input of labour and the localised nature of many charities. The idea of raising money in any form from charities to be spent by the public sector is a negative benefit for society. For the Treasury to be shy about giving a total exemption for charities is short-sighted.

My second general point is that the charitable sector is already very heavily regulated, with no room for manoeuvre for charities outside their charitable purposes and with every aspect of their business having to be explained to and audited by the Charity Commission. I cannot believe that there is any room for underhand dealings—certainly nothing that any extra regulation or control can do to make a ha’p’orth of difference in this field, apart from causing all charities, especially the very small ones, unnecessary extra costs in the form of lawyers and accountants to comply with an extra layer of unnecessary regulation.

My Lords, I add my thanks to the Minister for the trouble she has taken, the letters she has written and the way she has tried to reach a solution on this rather tricky issue. In her letter she refers to the question of “purpose” or “purposes” which we discussed last time. She wrote to us to explain that “purpose” or “purposes” in her letter was the same under the Interpretation Act. It might be helpful if she could say that on the Floor of the House this evening. While many people will undoubtedly read her letter, more people will read the proceedings of this House in Hansard, so if she could say it again, that would be extraordinarily helpful.

I have a great deal of sympathy with Amendment No. 16 tabled by the noble Lord, Lord Shutt. As he graphically pointed out, it is discriminatory against charities which happen to have ended up with their assets in land as opposed to in investments on the stock market. The Government have concerns about a windfall from development. It seems strange that you could get a windfall from a takeover on the stock market and be liable to no tax but on the other hand, as the noble Lord, Lord Shutt, pointed out, you could be CIL-able in terms of a land holding. Charities tend to be quite rich in land because schools and care homes will have land. Therefore, there will tend to be discrimination against them and against people who seek to leave property to charity in the future.

I take slight issue with the Minister’s officials about one aspect of the letter. In our previous debate, I referred to the fact that Section 36 of the Charities Act 1993 contained an anti-avoidance provision. I felt that it underlined the reasons why Amendment No. 16, in the name of the noble Lord, Lord Shutt, was worth pursuing. Her officials describe this as a reasonably undemanding requirement on the charity and what it can do. It is worth pointing out that the Act requires that, if there is a connected party, the disposition must go to the Charity Commission, whatever happens. In any case, the trustees have to,

“obtain and consider a written report on the proposed disposition from a qualified surveyor instructed by the trustees and acting exclusively for the charity”—

and—

“advertise the proposed disposition for such period and in such manner as the surveyor has advised”.

Having considered the surveyor’s report, they must consider,

“that the terms on which the disposition is proposed to be made are the best that can reasonably be obtained for the charity”.

There follows a definition of who the qualified surveyor must be.

It is not fair for the Minister and her officials to say that these are reasonably undemanding requirements, as they force the charity to consider very carefully what it is doing and to take appropriate advice. If the charity fails to do that, the charitable resources requirement requires the Charity Commission to ensure that charitable resources are being used properly. One therefore wonders whether the Government have the appropriate confidence in the Charity Commission to carry out this task. I understand why they wish to leave this to the regulations. Indeed, the Minister says that draft regulations will be published in the spring and that they will listen carefully to the views of the sector, but this is the heart of the difficulty; we will have passed the Bill before the regulations come out. Moreover, the regulations are not amendable and will not come to this House, so it really is good night from us tonight on the detail of this part of the Bill.

The issue of changing “may” to “must” has been detailed by the noble Lord, Lord Cameron. It simply does not make sense for officials to write letters saying that this would be otiose and would lead to unworkable results, with duties that were impossible to fulfil. It would be helpful when the Minister winds up if she could give us some real-life examples of why this would be so.

On our Amendment No. 21, the noble Lord, Lord Shutt, has a rather more draconian, scorched earth approach in that he wants to blast the whole thing out of the way, but I think that we need to make the change that the noble Lord, Lord Cameron, has outlined: no ifs, no buts, no maybes. There are very clear controls on the way in which the clause will operate: you have to be a relevant charity, so there is no question of you being able to sneak into this; and, unless the Minister accepts Amendment No. 16, in the name of the noble Lord, Lord Shutt, there will be regulations, which can be drawn up in such a way that they are anti-avoidance measures. We therefore do not need to think of a further, final failsafe in an anti-avoidance provision. I very much hope that the Minister will see that Amendment No. 21—and Amendment No. 25, which would ensure that the clause applies only to subsection (2)—is absolutely critical to maintain the confidence that the charitable sector should have in the way in which the Government propose to apply CIL to charities.

My Lords, I, like other noble Lords, am most grateful to the Minister for the enormous energy that she has put into striving for the best possible legislation; she is probably conscious that she is nearing sainthood in this House. My name is attached to Amendments Nos. 19, 21 and 25, and I support what the noble Lords, Lord Shutt, Lord Cameron and Lord Hodgson, have said. I do not want to detain the House by repeating arguments or by trying to embellish them in any way. I simply appeal to the Minister and the House to strive to produce crisp, clear-cut and unambiguous legislation, which is unencumbered with unnecessary compliance or regulatory complexity, so that the whole of the charitable sector can get on with its valuable work for the public good and for the public benefit, and so that scarce resources do not have to be diverted into overcoming a plethora of new, complex hurdles. Like other noble Lords, I, too, wait expectantly for the Minister’s reply.

My Lords, I have two short speeches to make in quick succession on these amendments. The charities most affected by the possibility of paying the community infrastructure levy are the housing associations, which are building tens of thousands of homes on which this new levy would be charged over and over again. We have reached a point where it is clear that those housing associations that are charities will be excluded and will not have to pay CIL. In all normal circumstances, Clause 209 will cut them out, which is extremely good news and very positive.

The housing associations divide between the 70 per cent that are charities and the remainder that are not charities because, usually for slightly obscure historical reasons, they decided not to register as charities. I had responsibility for helping such organisations to register between 1968 and 1988, which gave me 20 years of looking at the constitutions of those different organisations. About 30 per cent of them are housing co-operatives or organisations that are industrial and provident societies without charitable status. Even though they make up only 30 per cent of housing associations, they make up about 50 per cent of the total housing association output. If they are not also excluded we will run into all kinds of anomalies. When one looks at the two types of organisation side by side, it is hard to be sure which is and which is not a charity.

I hope that the Minister will place on record some of the very helpful comments that she made to us in a letter. She expressed the view that she hopes it will be possible, after consultation with the National Housing Federation and others, to find the regulations to ensure that those organisations that do not happen to be charities but are also providing this much needed affordable housing are included in the same exemption from CIL.

I am hoping to hear—again, it is a matter of saying this on the Floor of the House, which is important to those in the world outside—that it is the Government’s intention that all housing associations that are making the same provision of social housing for the same kind of people will be placed in the same position for CIL, which I hope is a fairly straightforward statement. Otherwise, we will have half the production line of affordable housing by these organisations disadvantaged and confused. All kinds of anomalies will creep in as to which kind of organisation a builder or a local authority wants to work with. It would be immensely helpful if we could have clarity regarding the Government’s intention to place all housing associations on the same footing if they are doing exactly the same job with the same subsidies and the same governmental support.

My second speech relates to the amendment specifically about charities. I have followed the ebb and flow of this debate very closely and with a good deal of interest. Obviously, we must recognise that the Minister has already—perhaps she has not been given a sainthood for this part of the Bill—moved a long way towards putting in the Bill the fact that there will be a 100 per cent non-negotiable exemption for charities in all normal circumstances. That is the effect of the way in which the Bill is phrased. However, she has reserved unto government the fact that in regulations there will be the opportunity in exceptional circumstances to say no to that overarching 100 per cent general exemption. It would not be like rate relief which, for example, is 80 per cent relief or VAT which is 0 per cent relief. As someone who runs charities, I know that we have to pay some taxes, such as VAT.

I turn to those that have invested in land. I ran the Joseph Rowntree Housing Trust for many years and we had a portfolio that included land that will go for future development. Indeed, the trust still owns such land. I was musing on the point that an investment by charities in land should be treated in the same way as an investment in stocks and shares; that is, if they are sold, no capital gains tax is payable. But if land is held for investment, when it is sold, the charity would not pay CIL at that point; it would be payable further down the line by the housebuilder who purchases the land. However, it would not be payable if the purchaser was a charitable housing association. Therefore, this would affect only indirectly the investment of the Rowntree foundation and others holding land for investment purposes. I absolutely take the point.

The question for us, having put into the Bill a 100 per cent exemption in normal circumstances, is whether we can be given sufficient reassurance about the exceptions to those normal circumstances in which the Government reserve the right to say no. I chair the Giving Forum which looks at ways in which giving and donations can be increased. We are promoting, for example, the idea of lifetime legacies, ways of giving during someone’s lifetime but still getting some benefit. I have come up against the staunch resistance of the Treasury to measures that might be abused by clever lawyers using obscure charity law to benefit individuals or companies. Tedious as it is, I have come to recognise that it is possible for avoidance measures to creep in to such schemes.

On state aid and the European dimension, I am afraid that I have no understanding of why that is an inhibition at all, but I appreciate that the Treasury has its own lawyers who will put up a very hard fight to ensure that there is in regulations a safety net for the Government that provides that although in normal circumstances there will be a 100 per cent exemption, the Government can reserve the right in some perhaps obscure situations nevertheless to call in the CIL exemption. We are not going to get past that because the government lawyers are going to be fairly adamant. That seems to be a pretty solid brick wall. We can take a rush at it, although possibly the rush would go a bit too far with the amendments tabled by the noble Lord, Lord Shutt. However, those tabled by my noble friend Lord Cameron of Dillington, the noble Lord, Lord Hodgson of Astley Abbotts, and the right reverend Prelate the Bishop of Southwell and Nottingham, do not. I hope that we can be given sufficient reassurance not to have to push this too hard. I have a great deal more sympathy with those amendments rather than seeking to go at this head on. I hope, too, that the Minister can give us a few more words of comfort before we take the next steps on this.

My Lords, I want to intervene to say a few words about the state aid legislation. I have enjoyed our thoughtful debates on this at each stage of the Bill and I pay tribute to my friend for the journey she has made and the willingness she has shown in trying to encompass all the genuine points made on the charities aspect.

I want to say in particular to the noble Lord, Lord Cameron, that I do not think that we can simply disregard state aid. I do not accept that what the Government are trying to do here is somehow to “gold plate”—I believe that was the expression he used—this part of the regulations. Over 25 years, I have found that the most vexatious and time-consuming work is creating structures for real estate and for regeneration which avoid charitable and non-profit-making organisations falling into the trap of state aid. I have to say to the House that of all the areas I have been involved in, this is one in which the European Union has tremendous expertise and incredibly long tentacles in its reach into such projects. The Union is very proficient at understanding how to realise value from these and when state aid is in fact being granted. It took me two and a half years to secure claims for the English Cities Fund in a way that did not contravene state aid rules. It is immensely sophisticated in its application of state aid, and at our peril would we take lightly the advice coming from the Minister on this point.

My Lords, I apologise to the House for intervening on this important Bill only at this late stage of Third Reading, but I have continued reservations on this charitable question. I strongly support Amendments Nos. 19, 21 and 25.

I shall speak briefly on those in a moment, but I have a problem with government Amendment No. 22. I much prefer Amendment No. 20 in the name of the noble Lord, Lord Shutt. If Amendment No. 22 is carried, I do not, in my ignorance, see how it makes sense. Unless I have completely misinterpreted it, Clause 209(3) would then read:

“Regulations under subsection (1) or (2) may provide that an exemption or reduction does not apply if specified conditions are satisfied”.

That appears to be a contradiction in terms, although I may be quite wrong on this. I do not like the clause, but it would make more sense if it read, “reduction does not apply unless specified”, and so on. Perhaps the officials could scribble a memo or two to the Minister to clarify that.

I return to the other amendments. In Amendment No. 19—the “must/may” argument—I found it incongruous that subsection (1) has “must” while subsection (2) has only “may”. On Amendment No. 21 I can do no better than support what my noble friend Lord Hodgson has said, while Amendment No. 25 is to an extent consequential on Amendment No. 21. I urge the Minister to look again at the whole question of charitable status, particularly for those who are building and renovating buildings that are themselves in the charitable sector.

My Lords, I shall comment on Amendment No.16 and others tabled by my noble friend Lord Shutt. I am involved in 15 charities and voluntary bodies, which are declared in the Register of Lords’ Interests. There is no question that the ability of these charities to survive is very tenuous in some cases, while others are doing exceptionally well. The ones I am associated with that I have great concerns about are environmental charities, which often own property and land and which provide a superb service, not only for country dwellers but also for those in metropolitan areas. They would be captured in the net as the Bill is currently phrased. The amendments would provide a lifeline to many charities by ensuring that they were not unfairly penalised.

My Lords, I was puzzled by many of these amendments. I am involved in a number of charities, as is evident from the Register of Lords’ Interests. The noble Lord’s amendment to Clause 209 does not seem reasonable. It would be unreasonable to fetter the Executive as tightly as some of these amendments would oblige. It may be that noble Lords opposite do not contemplate being in government and that were they to be so they might take a different view.

I was much persuaded by the remarks of the noble Lord, Lord Best. He was talking, of course, about exemptions for charities. Speaking generally, the term “charity” covers a wide range of undertakings, and the activities of charitable institutions are also very varied—the charity owned by Northern Rock had some curious aspects.

Some charitable trusts put up buildings that have significant infrastructure implications; for example, a big art gallery in a city centre. Such trusts are economic undertakings when they charge to make a return on investments and to create additional funds. We are party to treaty obligations not to create unfair competition through state aid, with penalties, including for the charities, if we do. I live not far from the piers of the south-east coast, which could be a case in point. There is a real difference between what non-government Members may suggest and what Governments can actually do. I hope we do not accept constraints that would be quite unsuitable.

My Lords, I have had the hand of history as well as comparisons to a vision of sainthood offered to me this afternoon. I am extremely grateful for all the kind things that have been said across the House. I pay tribute to my officials for an extraordinary job of work. The issues raised by the amendment have taxed us all.

On the other hand, of course, I have been accused of prevarication and obscuration. I wish that I had gone through the Charities Act 2006 with noble Lords. I suspect that, having been here for the passage of that Act, which was pretty heavy going, I would have understood many things that I have had to learn quickly in the past few days. I understand why the noble Lord, Lord Shutt, and the right reverend Prelate call for clarity. We are trying to make things as unambiguous as possible in legislation, so that we can have certainty about outcome and impact. That is absolutely the right thing to do.

Sometimes, however, clarity comes at the expense of risk. Things are complex. The problem with the third sector, as the noble Baroness, Lady Whitaker, pointed out, is that it is hugely diverse and complex in terms of what it does, charities’ objectives, how they work, their relationships, their economic arrangements with trading funds and so on. We are incredibly privileged to have this sector, but it is by no means simple. In all my dealings with noble Lords over the past few weeks, discussing these amendments with the Charity Tax Group, listening to debates and so on, I am reminded time and again how complex these areas are and how vital it is to be careful about what we are doing. Underlying everything I say this evening is a deep desire to do what is right and safe for the third sector, and to make absolutely sure that what we have will be as fully protective and enabling as possible.

I know that noble Lords originally had a number of concerns about Clause 209 and how we will use the powers it gives us to help charities in the important work that they do. I shall address those first. I think that noble Lords have now received the letter that was sent by email at 11 pm last night. I am sorry that it was not sent earlier, but it was complex to draft. It might be helpful if I quickly run through the purposes behind the various components of Clause 209 again.

The heart of the clause is subsection (1) and the guarantee which it represents; that is, that CIL regulations must include a 100 per cent exemption from CIL where the liable party is a,

“relevant charity in England and Wales”,

and the development is to be used wholly or mainly for its charitable purposes. The noble Lord, Lord Best, spelt that out in his contribution. A relevant charity in this context is defined in subsection (4) as any charity registered with the Charity Commission or which is excepted or exempt from the duty to register with the Charity Commission. It is not just about registered charities. The subsection covers many scenarios: a lifeboat station developed for use by the RNLI, for example, or a hostel which would be used by a homelessness charity. It would also apply to a building only to be used as a head office for a charity.

The noble Lord, Lord Shutt, was talking about land on this point. However, CIL becomes liable only if there is development on it. It is extremely important to recognise that when charities buy and sell land alone, CIL is not directly engaged. Charities are in fact asked for Section 106 contributions, reflecting that their developments have impacts. We are looking at whether Section 106 could be scaled back so that charities might benefit from that. That is the reality.

I shall plough on. Not all types of charitable body will fall within the scope of subsection (1) and, in addition, some charities and charitable bodies may perform development, perhaps for investment purposes, which may not constitute using a building for charitable purposes, to which the 100 per cent exemption in subsection (1) is tied. We certainly want to explore providing as wide a range of relief as is legally and practically possible in regulations.

One noble Lord—I am sorry that I do not know who—talked about “regulations by chance”. There will be nothing chancy about these regulations. The Charity Tax Group is committed to working with us assiduously on this, as it has done so far. I have no doubt that it will be as tough and comprehensive as it needs to be.

Because we want as wide a range of relief as is legally and practically possible, subsection (2) provides a power for regulations to go further than the duty imposed in subsection (1). It does this in two ways. First, subsection (2)(a) provides a power in CIL regulations to provide an exemption to institutions established for charitable purposes which fall outside the coverage of subsection (1). We have expanded the scope of the clause precisely to enable us to help more charities. For example, this would allow us to cover those in Scotland and Northern Ireland, and, if appropriate, other EU charities where they wished to develop in England and Wales.

Secondly, subsection (2)(b) empowers CIL regulations to require charging authorities to make arrangements for an exemption or reduction to CIL to institutions established for charitable purposes. This will allow us to comply with EU law when giving relief, and, expanding the clause, allows us to explore providing exemptions or reductions for charities which are engaging in fundraising activities which fall outside the scope of subsection (1)—for example, where land is developed for investment purposes. I will come to investment activity, as the noble Lord, Lord Shutt, invited me to do, because there are some complex issues. They require serious discussion and further exploration with interested parties such as the Charity Tax Group.

I reassure noble Lords who are concerned that subsection (5) may be used to cut back the range of charities that may enjoy the 100 per cent exemption in subsection (1) that this is not legally possible. We cannot do that. This subsection applies only to the powers in subsection (2) and cannot be applied to the duty in subsection (1).

We introduced subsection (3) in an amendment on Report. The original subsection stipulated that regulations may provide that an exemption or reduction under subsections (1) and (2),

“applies only if specified conditions are satisfied”.

That caused noble Lords concern, which I understand. I gave assurances on Report that we could not lawfully use the powers to render the duty in subsection (1) meaningless or hollow. There was a feeling, which I regret, that somehow that qualification would render subsection (1) null and void. It does not, and would not have. I therefore undertook to take away the amendment tabled by the noble Lord, Lord Cameron, seeking to delete the subsection.

It has been put to us that this subsection does not provide sufficient comfort to the charities that regulations implementing this subsection will reflect our broad policy aims. It seems to presume non-exemption with unspecified conditions. That was the problem with the original drafting. We came back with Amendment No. 22, which amends subsection (3) so that regulations can provide that an exemption does not apply if certain conditions are satisfied.

I understand that this is not elegant, but we have had to be deliberate in our drafting. As we have amended this clause, it will convey the message to charities that being exempt where a development is used for the charitable purposes of the charity will be the usual situation, as the noble Lord, Lord Best, said. Where very specific conditions are satisfied, however, an exemption may not apply. I shall come to those conditions in a moment.

It is symbolic that we are approaching the giving of exemptions to charities as being our presumption. There is now a presumption as regards exemptions. I should also make it plain that we are not intending to use this power to find some general way out—I should feel deeply insulted if anyone thought that we were—of providing an exemption of the sort required under subsection (1). It is for exceptional circumstances. Far from intending to be harmful, subsection (3) is intended to help because it will allow us to work with the sector to decide what sort of conditions should feature in regulations. I have spoken to many of your Lordships over the past few weeks and they will know that the two conditions we particularly will apply to subsections (1) and (2) concern anti-avoidance and compliance with state aid law. We are talking about risk. That is why the relevant amendment was tabled.

As regards the anti-avoidance measure, it is important that regulations have powers to outline anti-avoidance measures. It is not without parallel. For example, Schedule 8 to the Finance Act 2003 stipulates the condition to the relief for charities from stamp duty land tax. It states that,

“the transaction must not have not been entered into for the purpose of avoiding tax under this Part (whether by the purchaser or any other person)”.

I am aware of the argument about bureaucracy and imposing another layer of regulation. I know that noble Lords are unwilling to countenance what they see as further regulation in a heavily regulated sector, but the charitable sector is heavily regulated because there is a lot of public interest and public money at stake. Private money is also involved. It is a hugely complicated financial sector which has to be regulated in the way that it is. However, subsection (3) does not automatically impose further regulation. It is a starting point for discussions with the sector and other stakeholders on what conditions relating to anti-avoidance might look like. I assure noble Lords, not least with the Better Regulation Task Force in mind, that avoiding unnecessary duplication of existing regulation will be uppermost in our minds during this process.

As regards Europe, I was very grateful for the contribution of the noble Baroness, Lady Ford, because few people know about what she referred to as the long tentacles of Europe, and the sharp eyes. I believe that we are absolutely right not to take any risks, however remote people feel they may be. It is vital that regulations can protect the charity sector from a breach of state aid rules, the penalties for which are serious and could involve charities having to repay relief, with interest. I understand that some noble Lords are sceptical about this issue but we cannot afford to ignore the risk of this happening. Again, this is an issue which has been brought up in other regimes giving charitable exemptions. For business rates, the guidance on rate reliefs for charities and other non-profit making organisations published by a former incarnation of my department in 2002 brings this issue to the attention of local authorities and sets out how they should respond where a state aid is given under this regime. This is not a distraction, as a noble Lord said. The European Commission rules on state aid state:

“Aid must have a potential effect on competition and trade between Member States. It is sufficient if it can be shown that the beneficiary is involved in an economic activity and that he operates in a market in which there is trade between Member States. The nature of the beneficiary is not relevant in this context (even a non-profit organisation can engage in economic activities)”.

The European Commission takes a very wide, purposive approach to EU law in practice. Therefore, we are trying to be careful, to anticipate, to use foresight and to use evidence as the basis of our judgment.

Our view is that state aid law can be engaged even where a development is to be used for a charitable purpose since charities can be engaged in an economic activity, be in competition with other undertakings and are engaged in an activity where there is trade between member states. Building houses in England and Wales and selling them on is an economic activity which many companies from across Europe engage in.

Government Amendment No. 23 is a purely technical change. Currently, Clause 209(4)(b) applies only to institutions registered in the register of charities kept by the Charity Commission under Section 3 of the Charities Act 1993. However, as a consequence of the commencement of Section 9 of the Charities Act 2006, the register will be kept under Section 3A of the 1993 Act. This amendment therefore amends Clause 209(4)(b) to cater for this change when it comes into force.

My Lords, I thank noble Lords who have taken part in this lengthy debate of more than an hour. I will make one comment on the specific point of the noble Lord, Lord Best. My Amendment No. 24 exactly covers the example that he gave of the housing association that is not a charity.

I started out by saying that I wanted “clarity with charity” and I return to that theme. I do not know whether I am being portrayed as an extremist: I prefer “purist”. The interesting thing is that there is no difference between what I am proposing for what happens to land that is built upon by a charity, either for itself or for a charitable purpose, and what happens now. What is now being proposed will make things more difficult and complex. I have sympathy for the Minister, because she has a poor brief and a poor hand. It took her 26 minutes to try to explain this to us: it is very difficult. The noble Lord, Lord Hodgson, used the word “CIL-able”. I would alter that to “CIL-ability”. I do not think, after 26 minutes, that anybody can say what the CIL-ability is of any specific development. That is the problem with the Bill. It is all going to be, “Let’s hope we get something in the spring in regulations”. The aim today is to get clarity for charity. Therefore, I wish to test the opinion of the House.

moved Amendment No. 21:

moved Amendments Nos. 22 and 23:

moved Amendment No. 27:

My Lords, the Government have been constructive, through the Minister, in response to many amendments proposed by other Members. However, the response to the issue of the involvement of your Lordships' House in the making of the regulations that will be needed under the Bill has been negative, to say the least. I must make it clear that I do not speak today on behalf of the Delegated Powers Committee, because it has not had an opportunity as a committee to consider the amendment. However, one necessary function of the committee is to see that the rights of your Lordships’ House are not overlooked or diminished by legislation that the Government propose to introduce. That, I am afraid, is what is happening now.

We should surely start from the presumption that the roles of your Lordships’ House and of the House of Commons in respect of delegated legislation are equal, subject to the exception of supply Bills and other financial Bills and to the exercise of financial privilege of the House of Commons. I therefore greatly regret the vote last week that resulted in your Lordships’ House rejecting its own right to claim involvement in the making of statutory instruments. That weakened your Lordships’ House. It would have been a good thing if new regulations had required resolutions of both Houses—certainly in many cases. That is especially so because the secondary legislation gets far less attention in the House of Commons than it does here. The House of Commons has nothing equivalent to the Delegated Powers Committee or the Merits of Statutory Instruments Committee. Debates in the House of Commons on statutory instruments are notoriously brief.

My Lords, I am extremely glad that the noble Lord, Lord Jenkin, has found a way to bring this important issue back to the House at Third Reading. We owe him a debt of gratitude for identifying the issue and pursuing it so resolutely. The arguments that he and the noble Lord, Lord Goodhart, presented to the House in our debate on Amendment No. 130 on Report and the arguments that they have presented today are irrefutable. I have never seen my noble friend the Minister so miserable in dutifully defending the indefensible.

In our vote on the amendment moved by the noble Lord, Lord Jenkin, on Report, this House deprived itself of the power and the responsibility—long-established without peradventure and amply demonstrated in the many precedents cited by the noble Lord, Lord Jenkin—to approve or disapprove regulations governing charges or levies as opposed to taxes raised for the Exchequer on the principle that the noble Lord, Lord Goodhart, just explained. That was a gratuitous act of self-immolation.

If significant constitutional change is to be introduced, it should not be introduced as an incidental aspect of legislation. Although I make no personal criticism of my noble friend the Minister, I believe that in introducing this change the Government should have been candid with the House. Equally, the House should have been vigilant. The House should not abandon its rights and its responsibilities without the most careful consideration, in a fit of absence of mind. That is what happened last week when we had a vote on a poor turnout and, by 96 votes to 90, as I recollect, the noble Lord’s amendment was lost. This amendment gives us the chance to retrieve at least a good part of what we threw away last week. I hope that the House will acquit itself better today than it did last week.

My Lords, I did not support the Government in the Lobbies on the vote last week. Although I was in the building, I absented myself from the vote. That was because I am a member of the Delegated Powers and Regulatory Reform Committee, which had reached a clear view on what the proper procedure should be. For those reasons, I felt that I could not support the Government. I would certainly have no difficulty, however, in supporting the Government in the Lobbies tonight if this matter is pushed to a vote. There are three reasons for that. First, although the noble Lord, Lord Jenkin, says that he respects the vote last week, it seems clear that this is an attempt to revisit that vote.

My Lords, if I did not make it clear, I now make it absolutely clear that I am not seeking in any way to give this House a joint right to approve the regulations. The House decided last week that it did not want that and I made it clear in my opening speech that I am not challenging that. All I want is that we should have a say.

My Lords, I take that point; I was referring more to the point made by the noble Lord, Lord Goodhart. Nevertheless, this House took a decision last week, albeit by a small majority, on the way ahead.

The second reason why I oppose this is that it seems to bring a new procedure into the legislature. I have been a member of this House for only two years, but I have never seen any procedure like this before. We have never discussed this or anything like it in the Delegated Powers and Regulatory Reform Committee.

My Lords, I understand the noble Lord’s position, but I refer him to the super-affirmative provision that was included in the Legislative and Regulatory Reform Act 2006. That provision is not unlike, although it is somewhat broader than, those contained in this amendment.

My Lords, the super-affirmative provision within the legislative reform procedure is there because we are dealing with primary legislation. This is not primary legislation; it is subordinate legislation.

My Lords, was not a procedure—closely akin to the procedure that the amendment tabled by the noble Lord, Lord Jenkin, envisages—adopted by the House last Monday in a Motion moved by the noble Lady, Baroness Thomas of Winchester, in which social security regulations were considered by the House?

My Lords, I am not aware of that provision; the noble Lord has the advantage of me in that respect. It does seem, however, that this is a new procedure within primary legislation to deal with subordinate legislation.

The third reason why I cannot support the amendment is that it seems to have flaws. The new procedure would provide that no subordinate legislation would be made by the House of Commons unless a period of 60 days had elapsed. During that period of 60 days, either House of Parliament would have the opportunity to debate the regulations or to refer them to any committee for a report. What would happen if, on the 59th day of that period of 60 days, one of the Houses—particularly this House, as it might be seen as obstructive of the House of Commons—referred the regulations to a committee? Would that suspend the operation of the 60 days?

My Lords, I should have thought it pretty clear that it would not. There is a 60-day period within which a committee would have to produce a report and, if it had not produced a report by the 59th day, there would be nothing left for it to do.

My Lords, I say with the greatest respect to the noble Lord that new subsection (3) says:

“During the period of 60 days—

(a) either House of Parliament may—

(i) debate, or pass a resolution relating to, the regulations, or

(ii) refer the regulations to any committee for a report”.

It seems to me that if, on the 59th day, the regulations are referred to any committee for a report, it is obvious that no report can be obtained from that committee before the 60th day.

My Lords, the noble and learned Lord is misreading the amendment. The words,

“During the period of 60 days”,

in subsection (3) cover both paragraphs (a) and (b). Subsection (b) states that,

“the Secretary of State must respond”.

The circumstances postulated by the noble and learned Lord, frankly, lack credibility. Sixty days should be enough for either House to make a point and for the Government to respond. We are simply asking for this House to have a say.

My Lords, perhaps the noble and learned Lord, Lord Boyd, would look—

My Lords, I hesitate to intervene, but this is Third Reading and we are rapidly turning it into Committee proceedings. This should be the last intervention in my noble and learned friend’s speech.

My Lords, I should like to make this point. Paragraph (c), which refers to the affirmative resolution procedure, states that the regulations,

“shall not be made unless, before approval by the House of Commons, a period of 60 days has elapsed, beginning with the day on which the regulations were laid”.

Surely that makes it perfectly obvious that the House of Commons can proceed with its resolution at the end of the 60-day period without waiting any longer for any report to emerge.

My Lords, in one sense, that makes my point. If, towards the end of the 60 days within which it can refer the matter to a committee, the House refers it to a committee, that makes the whole thing pretty pointless. In my submission, this House has taken a decision on the correct way forward and has said that it is content that the House of Commons should exercise its privilege in financial matters. We should now accept that.

My Lords, my name is added to this amendment, so I believe that I am entitled to say something, although I have little to add to what my noble friend has said. I find the remarks of the noble and learned Lord, Lord Boyd of Duncansby, very depressing. In earlier stages of the Bill, it was quite clear, in discussions on other matters, that there was a view on the government Benches that it would be completely alien for Members of this House or of Parliament to behave efficiently and in a businesslike way, that that would never happen and that progress could not be made. I am sorry, but I do not believe or accept that. It is very depressing that anyone could even make those kinds of remarks. We have spent a great deal of time already in this House considering CIL. If we have no place in the decision-making on this, what have we been doing? As the result of consideration here, the Bill has been greatly improved. That justifies my noble friend’s amendment.

My Lords, as the noble and learned Lord, Lord Boyd of Duncansby, started to give his critique, my heart sank, but when I realised that paragraph (c) in the amendment would be part of Clause 221(2), that subsection (3) would be a separate subsection and that paragraph (c) is not subject to subsection (3), my spirits rose again. I had not thought it likely that the noble Lord, Lord Jenkin of Roding, and my noble friend, who worked together closely on this amendment, would have made a basic drafting error, although, for about 30 seconds, I thought that the noble and learned Lord had spotted one.

It has been put to me that, even without this amendment, this House could do what is suggested by having a debate, passing a resolution and setting up a committee. That is so, but paragraph (b)—the provision that the Secretary of State must respond—is at the heart of good scrutiny; it requires a response and feedback. The attention to detail shown by your Lordships’ House to Part 11 over the past few days demonstrates the value of such scrutiny. The arrangements proposed in the amendment would perfectly capture the skills of this House, although they do not go as far as those that some of us supported when dealing with the amendment last week.

We are told that this is not a tax—although that raises issues. However, the development and regeneration that might come about as a result of this levy will certainly be affected by the detail as well as by the principle. Again, this House would have a valuable role to play. Finally, the comment was made—possibly by the noble Lord, Lord Jenkin—that the House of Commons and the House of Lords have equal roles in a bicameral Parliament. I would say that they are complementary—perhaps they are equal and complementary—and the complementary element is captured by this amendment, which we on these Benches support.

My Lords, at Second Reading, I criticised the Minister for excluding this House from looking at the regulations. I put my name to the amendment tabled by the noble Lord, Lord Jenkin, in Committee, as I believe that it is important that this House should be consulted at least in this small way. Without the work that we have done in Committee, on Report and, today, at Third Reading, this Bill would be in considerably worse shape. To exclude this House is purely a political decision; it has nothing to do with the policy in the Bill. The Minister should think carefully about the route that she is taking.

My Lords, I am well aware of the strong feeling about the role of the House as we have worked through this part of the Bill. I absolutely understand the genuine passions expressed so consistently, particularly by the noble Lord, Lord Jenkin. However, I need to remind the House that last week we resolved, on Report, not to accept the amendment moved by the noble Lord, Lord Jenkin, which would have provided for all CIL regulations to be made subject to the affirmative resolution of both Houses. This is a question not of what the Minister wants, but of what the House wants, and the House decided last week that it did not want affirmative regulations. This is not a political issue.

While I understand the disappointment that has been caused, I think that the amendment would create more problems than it would solve. It would provide, alongside the affirmative procedure in the other place, for a 60-day period during which either House could debate or pass a resolution on the draft regulations, or refer the draft regulations to any committee for report. The Secretary of State would then have to respond to any debate, resolution or report before the other place could give its approval to the regulations. The amendment would control the circumstances in which the other place might approve any CIL regulations. Sixty days would have to pass and the other place could not approve regulations until the Secretary of State had responded to any debate, resolution or report.

I will come to the procedural issues in a moment. On the practical details, I ask noble Lords to think about what would be involved. Part of the problem is that we do not know. The amendment risks turning the process for making CIL regulations into a long and complex one. It would permit this House to refer a draft of the CIL regulations to a committee to consider and issue a report. My noble and learned friend Lord Boyd asked some pertinent questions and some clarification was forthcoming. All I can see is that there would be considerable delay in making CIL regulations. The process would also apply to amendments to CIL regulations to close a loophole or to correct a minor error. We are looking at a long procedure every time that we try to amend CIL regulations.

Throughout this process we have tried to balance fairness and transparency with greater speed so that we can put arrangements in place to raise the funding that we now so urgently need for local infrastructure. On timing, I indicated that the Government would not make the CIL regulations before autumn 2009. However, once it is right to do so, surely those regulations should be made promptly to enable charging authorities to generate additional revenue for infrastructure.

The substantive response to the amendment rests on two arguments. The first is that—with the exceptions of delaying the other place’s affirmative resolution debate by 60 days and compelling the Secretary of State to respond to the debate or resolution—what the noble Lord seeks to achieve is already achievable. My noble friend Lord Howarth referred to last week’s debate and the Motion tabled by the noble Baroness, Lady Thomas. There is nothing to prevent this House from debating anything that it wants on a Motion, if it should so choose. There are two issues there. The amendment would also require the Secretary of State to respond to any debate, resolution or report made by either House. It is unclear what form this response would take. How useful would it be? Exactly what duty would be placed on the Secretary of State? What would it do to the relationship between the two Houses in terms of secondary legislation?

I argue that, as noble Lords have emphasised in practically every speech, the role of our House is one of scrutiny and revision. My fear is that we would not have scrutiny and that this procedure would diminish the value of the scrutiny that we offer; it would dilute the notion of scrutiny. This would be a debate without powers to annul, at a time when we are absolutely insistent on the value of this House. What I said to the noble Lord in my letter was perfectly compatible with what I have just said and with my respect for this House. There is a genuine problem there with the role of this House.

Secondly, my noble friend Lord Howarth talked about a constitutional change suddenly being imposed. This is my real anxiety. We are inventing a new form of parliamentary procedure for secondary legislation. This is a new convention, which raises fundamental issues about the relationship between the two Houses in considering secondary legislation.

My Lords, will my noble friend explain why the Government felt it appropriate to set aside an existing constitutional convention?

My Lords, I really do not think that is comparable. As I said, it raises profound questions, not only about the relationship between the two Houses in considering secondary legislation but about the role of the Secretary of State in this. When this House chooses to change and improve, it does so on the basis of serious consideration that crosses all parties. I have sympathy with what the noble Lord has tried to do, but I am seriously concerned that it would have dire consequences for the business of the House, the making of regulations and, perhaps, even the nature of regulations. It is not the way to reform the conventions of this House at the final stages of a complex, much improved Bill, in response to the failure of an earlier vote. I know the noble Lord is not revisiting that, and that what he wants is to give this House a voice at all costs. I am afraid that I cannot accept the amendment.

My Lords, that is a deeply disappointing speech. Perhaps I must remind the Minister of the words that I used in moving this amendment: of course that vote must be respected, and I accept that it will be for another place only formally to approve the many regulations. The noble Baroness began by saying that we were trying to reverse last week’s vote. That is absolutely not true. We are now asking for a say in what happens here, that is recognised in the legislation. If the Minister does not like the procedure which I have set up, it is open to the Government to come forward with some other way in which this House could have a say. They can only do that if we send this amendment back to the other place. I wish to test the opinion of the House.

moved Amendment No. 30:

moved Amendment No. 31:

My Lords, before I move that the Bill do now pass, I shall say a warm thank you to everybody who has improved it. I want to single out the noble Lord, Lord Jenkin, who has been remarkably assiduous and has kept us on our toes. It has been the greatest pleasure to work with the Opposition on improving a Bill that we can be proud of. I thank my noble friends who have been incredibly supportive and successful. We have some ping-pong, but it will be quite restricted. Above all, I thank my officials. I have worked with many Bill teams, but this team has worked very late and very long, has risen to the challenge of an extremely technical Bill and has done a brilliant job. I also thank my private office. With that, I beg to move that the Bill do now pass.

Moved accordingly, and, on Question, Bill passed, and returned to the Commons with amendments.

My Lords, I beg to move that the Commons amendments be now considered.

Moved accordingly, and, on Question, Motion agreed to.

commons amendments

[The page and line references are to Bill 67 as first printed for the Commons.]

Amendments Nos. 1 to 8

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 1 to 8. I shall speak also to Amendments Nos. 9 to 17, 149 to 151, 154, 155, 175 and 176. These amendments are relatively minor and technical. Amendments Nos. 1, 10, 149 to 151, 154 and 155 amend existing powers in the Bill that empower the Secretary of State to make secondary legislation containing provisions that are directly related to matters covered in the Bill.

I shall take Clause 6 as an example. It includes a power to make provision consequential on, or supplementary to, Clauses 2 to 5. Clause 6 goes on to state that this includes the power to amend,

“any enactment (whenever passed or made)”.

The purpose of Amendment No. 10 is to clarify that the power would enable future secondary legislation to amend provisions contained in the Local Transport Act itself, or provisions as amended by that Act, as well as other enactments.

Amendments Nos. 2 to 8 amend the consultation requirements that are imposed on the senior traffic commissioner. The main change is that, before issuing directions or guidance to the other commissioners, the senior commissioner would be required to consult such organisations representing the interests of public transport users as he thinks appropriate. Amendment No. 9 confirms that the Secretary of State may issue guidance to the senior traffic commissioner about any of his functions.

At this point, I refer to the amendment tabled by my noble friend Lord Rosser, Amendment No. 9A, which is intended to ensure that the senior traffic commissioner has regard to any recommendations made by the Public Transport Users Committee for England or the Rail Passengers’ Council, now popularly known as Passenger Focus, so that enforcement action could be considered against poorly performing operators. I believe that I can meet the concerns that my noble friend has in this regard. Back in April, the Secretary of State announced that, subject to further consultation on the details, additional functions would be conferred on the Rail Passengers’ Council to enable it to represent the interests of bus passengers. That reflects the fact that many respondents to our consultation on strengthening bus passenger representation had a clear preference for Passenger Focus taking on this role. Passenger Focus already does a good job representing rail passengers, and there are economies of scale in giving the role to an existing statutory body; therefore, we do not intend to establish a public transport users’ committee at the current time.

However, I assure my noble friend that, were we to establish such a committee, the powers in the Bill would be wide enough to place certain requirements on the senior traffic commissioner to take account of recommendations made by the committee if that was thought desirable. Similarly, the current clause enabling the Secretary of State to confer bus and coach functions on the Rail Passengers’ Council through secondary legislation would be wide enough to make similar requirements of the senior traffic commissioner, if thought desirable. Due consideration would, nevertheless, need to be given to ensure that it was done in such a way as not to prejudice or diminish the authority or independence of the senior traffic commissioner. The secondary legislation will be subject to the affirmative resolution procedure, so there will be a proper opportunity for your Lordships' House and the House of Commons to debate the detailed proposals.

Amendments Nos. 11 to 16 relate to local transport plans. Amendment No. 11 makes explicit that local authorities must have regard to government policies and guidance relating to climate change mitigation and adaptation, as well as other environmental issues. This responds to points raised in the House in earlier debates on the Bill, as well as to debates in the other place.

I shall say a few words about the amendment to the Motion proposed by the noble Lord, Lord Bradshaw. We entirely share his view that the planning and delivery of transport, whether by central government or local authorities, should play its full part in mitigating the threat posed by climate change. I reassure him that we will be emphasising the importance of taking that goal into account both in the guidance that we give to regions on planning regional transport priorities and in the draft guidance to local authorities on local transport plans, which we will publish before Christmas.

We are also developing the tools that regions and local authorities urgently need to help them assess the impact of their proposals and policies on the emission of greenhouse gases. Measuring such impact is, I fear, far from simple. It is well known, for example, that a well intentioned but badly planned measure to reduce congestion, and the emissions that result from that congestion, may have the unintended effect of encouraging more people to use their cars. We need to ensure that local authorities are encouraged not only to reduce emissions but to do so effectively.

Given our current state of knowledge, it is simply impossible for local authorities to estimate with any great accuracy the total impact of their transport policies on climate change. We do not believe that making such matters a potential issue for the courts to determine, as might happen under the noble Lord’s amendment, is the right way forward at this stage. In addition, it is important that local authorities consider the threat of climate change against the totality of their policy, taking into account the need to integrate transport policies with, for example, housing and land use planning.

Measuring the impact of transport policies alone carries a significant risk of perverse results. Impacts need to be measured across local authority policies, so that the best measures overall may be planned and implemented. I stress again to the noble Lord that we will be emphasising the importance of taking the threat posed by climate change into full account in the guidance that we give to both regions and local authorities on local transport plans.

Amendment No. 16 makes explicit that local authorities must consult transport providers and transport users when developing their local transport plans. Clause 12 would transfer responsibility for local transport policies and plans in our major cities outside London to the Integrated Transport Authority for the area concerned, but the ITA would be required to consult the councils falling within its area.

However, there are some statutory references to local transport policies developed by metropolitan district councils. Those councils will no longer be developing such policies, so those statutory references will no longer work. Amendment No. 17 and consequential Amendments Nos. 175 and 176 clarify how those references are to be interpreted once Clause 12 comes into force. I beg to move.

Moved, That the House do agree with the Commons in their Amendments Nos. 1 to 8.—(Lord Adonis.)

My Lords, some of us are surprised and a little concerned that so many amendments and clauses were brought to this House at such a late stage, but I accept the Minister's statement that a lot of them are tidying-up amendments and improve the Bill. I do not intend to say too much, except to welcome one or two things, but we have one or two concerns that we should discuss about provisions that might reduce the democratic aspect of the Bill. We are also obviously concerned about the imposition on local authorities. That will come up during the evening.

I especially welcome the amendment that means that we should consult passengers. We all think that we should do that; we discussed it at an earlier stage. I also welcome the Minister's comments on climate change; however, I hope that the Government practise what they preach. When you cross the QE2 Bridge as you go round the M25, a cloud continuously hangs over the toll booths. The Government may solve such things. Charges for the Dartford Crossing should be considered.

The Government should practise what they preach, but I tend to agree with the majority of the amendments, so I have no further comments.

My Lords, I note what the Minister had to say about the amendment in my name but I am not entirely sure how far he is committing the Government in relation to the role of Passenger Focus. To be effective Passenger Focus is going to need to have some teeth, particularly given the problems that some passengers face with bus services outside London. I recognise that secondary legislation will deal with the powers of that watchdog in more detail but I would like to see secondary legislation ensure—and I would be grateful if my noble friend could confirm if this is his intention—that the watchdog Passenger Focus has a role on appeals on complaints because that would bring it into line with its equivalent for London, which applies to bus services in London as well as rail services. I would also like to see Passenger Focus given the powers to access performance information from operators which at present is not readily available and without which it is difficult to see how Passenger Focus could do its job.

Obviously the purpose of the amendment was to enhance the authority of the watchdog by ensuring that the traffic commissioners have regard to the views of the watchdog. If passengers are unhappy with what is happening to their services, they will surely expect the passenger watchdog to be able to do something about it. I ask the Minister to repeat the commitment that he appears to have given to ensure that I have understood it. At present the watchdog has no powers to make operators do anything about the service problems that passengers might be complaining about. However, the traffic commissioners have the powers to act on poor services because they can investigate and penalise poor performance. The amendment would mean that the body designated as the passengers’ champion can ensure that the bodies with the powers to act on poor bus services, namely the traffic commissioners, have to take into account passenger concerns. I urge the Minister to look very hard—and I am asking for a very clear response to make sure that I have understood the commitment he appears to have given—at how secondary legislation can ensure that the passenger watchdog has the full range of powers it needs to represent passengers, including a role on complaints and appeals arising from complaints, the ability to access performance information, and the ability to ensure that traffic commissioners have regard to its representations on behalf of passengers. Can the Minister say whether the issues I want to see Passenger Focus be able to deal with are covered by the assurances he gave?

My Lords, the noble Lord, Lord Rosser, said that Passenger Focus needs more teeth, to sum it up in a few words. He spoke entirely about complaints by users to Passenger Focus and yet in a presentation last night which the noble Lord, Lord Rosser, and I were at, the problems that people are bringing to Passenger Focus relate to such things as the overcrowding of trains, which is entirely in the hands of government. It is not much good having a passenger watchdog that can bite in one direction but cannot bite in the other. It needs to be a two-way-facing organisation, not a one-way-facing one.

On my Amendments Nos. 11A and 11B relating to climate change, I accept what the Minister has said. My worry is that the guidance issued might be issued in such a way that local authorities which choose to do so may ignore it. I remember the debate we had on the Traffic Management Act 2004. That was supposed to bring some discipline to the use of the highway by utility companies and it has not worked at all well because certain local authorities either ignore it or are too weak to enforce it. As congestion is the major reason for the unreliability of bus services and the escalating cost of the bus industry, it is important for central government to address issues such as traffic management and climate change in a way that will bring about some advance.

My Lords, I do not have any problem with the amendment moved by my noble friend Lord Rosser. Indeed, the strengthening of the powers of Passenger Focus is not something, I would have thought, that any of us in your Lordships’ House would object to. However, whether inadvertently or not, I felt that he glossed over many of the problems that give rise to complaints where bus services are concerned. I am not surprised about that because the brief that he delivered was prepared by the Passenger Transport Executive Group which believes that the only problem with buses is the question of ownership. Yet a countrywide survey made of passengers earlier this year—and I do not propose to read out the figures again because I did so at an earlier stage—revealed that in passenger transport executive areas in particular the main complaints of passengers were not the matters raised by my noble friend Lord Rosser but those of overcrowding on some services, congestion and the lack of information about where buses go to and how to pay fares, because many towns and cities have a different system of fare collection. These are all matters not for wicked bus company owners but for the passenger transport executives, although there is no mention of them in the brief that they habitually provide.

While supporting the aim behind the amendment tabled by my noble friend Lord Rosser, I hope the Minister will agree that other matters ought to be addressed, such as the recalcitrance of some local authorities to provide proper paths for their buses, proper areas restricted for bus users—bus lanes in other words—and the habit in some cities, including Birmingham which is run by a Conservative-Liberal coalition, of removing bus lanes because the leaders of those councils are in thrall to the private car. I hope these matters will be addressed by the Minister and he will bear in mind that the main complaints of many of our passengers in our major towns and cities lie at the feet of the passenger transport executives rather than those who own and operate the buses.

My Lords, I am grateful to noble Lords for the broadly positive welcome they have given to this first group of amendments. The noble Lord, Lord Bradshaw, is right that it is not sufficient simply to produce guidance. The guidance needs to be taken seriously by local authorities. However, it appears to the Government that local authorities are taking the need to give much greater priority to the tackling of climate change very seriously indeed. The number of local authorities which have chosen to include an emissions target among their priorities in local area agreements is very encouraging. One hundred out of 150 local authorities have selected National Indicator 186 measuring the per capita reduction in CO₂ emissions in the relevant area as a priority in their local area agreement with the Government. All 150 will monitor progress against this indicator and this will feed into the Audit Commission’s comprehensive area assessment starting next year. So the trend is encouraging but as I stressed in my opening remarks, it is very important that the Government provide local authorities with much better tools with which to assess the impact of their proposals and policies on the emission of greenhouse gases because this is not an area in which many authorities have had much experience.

This is a collaborative process between us and local government. We are working together to identify best practice. Local authorities are willing to take action, and we now need to capitalise on this spirit of good will to see that it leads to real change on the ground.

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 9.

Moved, That the House do agree with the Commons in their Amendment No. 9.—(Lord Adonis.)

[Amendment No. 9A, as an amendment to Amendment No. 9, not moved.]

On Question, Motion agreed to.

Amendment No. 10

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 10.

Moved accordingly, and, on Question, Motion agreed to.

Amendment No. 11

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 11.

Moved, That the House do agree with the Commons in their Amendment No. 11.—(Lord Adonis.)

[Amendment No. 11A, as an amendment to Amendment No. 11, not moved.]

On Question, Motion agreed to.

Amendments Nos. 12 to 17

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 12 to 17.

Moved accordingly, and, on Question, Motion agreed to.

Amendment No. 18

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 18. Again, these are relatively minor and technical amendments. Amendment No. 18 relates to quality partnership schemes and specifically the power for the Secretary of State and the Welsh Ministers to make regulations about admissible objections. As noble Lords may recall from earlier debates, the idea of admissible objections is that bus operators should have the opportunity to object to requirements relating to fares, frequencies or timings in a quality partnership scheme which they believe are unachievable or commercially unviable, but they should not have the opportunity to veto local authority proposals on spurious grounds.

It is therefore envisaged that the traffic commissioners will play a role in determining whether operators’ objections are admissible, in cases where the operator and the local authority cannot reach agreement. The Government have in mind that a traffic commissioner may need to call on an independent expert to assist him, in which case it may be necessary for that expert to be paid for his or her assistance. Amendment No. 18 simply enables future regulations to provide for such payments.

Amendments Nos. 147 and 148 are about the powers of the traffic commissioners where a bus operator is failing to run his services properly. The Bill already includes a new power for the traffic commissioners to order a failing operator to expend money to improve his services. The amendments make it clear that the traffic commissioner can be more specific about the precise improvements on which the operator is to spend money delivering, and that he can also require money to be spent on improving facilities such as information at bus stops.

Amendments Nos. 152, 153 and 156 to 158 relate to bus passenger representation. Clause 69 already empowers the Secretary of State through secondary legislation to confer new functions on the Rail Passengers Council—commonly known as Passenger Focus—to allow them to represent the interests of bus as well as rail passengers. We considered this issue a moment ago in our debate on the previous group of amendments. The amendments now under discussion provide flexibility to allow the remit of Passenger Focus to be broadened to cover matters relating not only to bus and coach services but to tram services and passenger transport facilities. The department will consult on whether Passenger Focus should represent tram passengers in due course.

On Question, Motion agreed to.

Amendments Nos. 19 to 43

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 19 to 43.

Part 3 is aimed at enhancing the powers available at a local level to secure improvements in the standard of local bus services. Buses are a crucial part of our local transport system and over the past few years we have seen the first sustained increases in bus patronage across Great Britain for half a century. A number of places around the country where local authorities and bus operators work in partnership have delivered real improvements to services. As a result, more people are getting on buses.

However, there are still too many places where passengers are not enjoying improvements and where patronage continues to fall. Where voluntary partnerships are working well, the Government applaud them. But it is also important that other options are available, particularly for those areas where partnerships are not delivering improvements. This Bill seeks to devolve decisions to those who understand the needs and requirements of their local areas and to ensure that the right tools—voluntary partnerships, quality partnership schemes and quality contracts schemes—are available at a local level.

The Bill includes various provisions to make quality contracts schemes a more realistic option for local authorities, while also preserving appropriate safeguards for bus operators. This group of amendments covers four aspects of these provisions. The first effect of this group is to ensure that in England the elected local authority takes the final decision about whether a quality contracts scheme should be made in its area. The amendments replace the proposed approvals boards with QCS boards. Rather than making the final decision as to whether a scheme should go ahead, the role of a QCS board would be to provide an opinion and, where appropriate, to make recommendations to the local authority. It would be for the local authority to take the final decision, having considered the board’s opinion and any recommendations.

The amendments also spell out more clearly the precise role of these boards. The boards will be expected to consider two things; namely, first, whether the local authority has fulfilled the statutory requirements to give notice of their proposed scheme and to consult on it and, secondly, whether the proposed scheme meets the “public interest” criteria set out in the Bill.

The amendments retain a role for the Transport Tribunal in hearing appeals against a local authority’s decision to make a scheme. The scope of this appeal right would depend on whether the proposed scheme had received a clean bill of health from the QCS board. If it had received a clean bill of health in terms of meeting the five statutory public interest criteria and in terms of consultation, the appeal is restricted to points of law. The intention of this right of appeal to the Transport Tribunal is to provide a quicker, more accessible and less costly alternative to judicial review. Consistent with the preferences of the devolved Administration, the existing arrangements as regards schemes in Wales are left unchanged.

The second issue dealt with in this group of amendments relates to employment protection. At earlier stages of the Bill’s passage through your Lordships’ House, amendments were made to strengthen the protections available to bus workers in an area where a quality contracts scheme is being introduced. The principal effect of those amendments was to provide certainty that the Transfer of Undertakings (Protection of Employment) Regulations 2006 would apply where an operator is forced to stop running bus services because a quality contracts scheme is coming into force.

Amendments Nos. 132 to 136 strengthen further the protections available. They define an additional situation where TUPE would apply. They also make provision about pension protection, placing a duty on the Secretary of State to make regulations to ensure that workers involved in the provision of bus services in the scheme area before the scheme was made do not lose out in pension terms as a result of the scheme.

The third issue, covered by Amendments Nos. 20, 70 and 122 relates to local authority powers to operate bus services in certain circumstances. This responds to questions raised during the Bill’s passage through your Lordships’ House and the House of Commons. These amendments would provide a power for a local transport authority to operate local bus services in a very specific set of circumstances; namely, where an operator of services under a quality contract had ceased to provide those services before the contract was due to terminate—for example, if the contractor goes into liquidation. In such a situation, it may be in the interests of passengers for the local transport authority to be able to step in for a limited period while it takes action to make appropriate arrangements for the longer term.

Because this is intended to be no more than a temporary emergency power, the amendments include a clear time limit of nine months, after which the authority can no longer operate the services. The Government have listened to the concerns of local authorities that they could face a very difficult position if they had not quite concluded their negotiations with a “replacement” operator at the end of that nine-month period. The amendments therefore also include a provision whereby the nine-month period may be extended by up to a further three months by the local traffic commissioner. The Government consider that this allows more than ample time for a competent local authority to make the necessary arrangements for a new contractor to be appointed and builds in an appropriate degree of flexibility through the three-month extension. I beg to move.

Moved, That the House do agree with the Commons in their Amendments Nos. 19 to 43.—(Lord Adonis.)

My Lords, first, I apologise to your Lordships for not declaring an interest in my earlier intervention today, although I have done so on previous occasions during the passage of the Bill. I am employed as a consultant to FirstGroup plc. I am also a declarable shareholder in the National Express Group, although given the state of the Stock Exchange I perhaps will not have to make that declaration for too many more years. It is only fair to say at the outset that, while I do not believe that the amendments in this group would significantly improve the Bill from when it last left your Lordships’ House, I hope that the Minister can assure me and reassure the bus industry that the Government have stayed true to their word. Can he confirm that this legislation, as amended, will still protect the legitimate interests of bus operators and passengers?

I am aware that we have had a long summer of lobbying. Indeed, we have had eight long years of lobbying on quality contracts. I am also aware that there has been some glee and jubilation from certain members of the passenger transport executives up and down the country over the recent amendments to the quality contracts scheme process. Those of us who have taken a long interest in these matters are aware that a great deal of face-saving is involved and that the amendments under discussion in this group fall some way short of what the more let us say control-oriented, brethrens of the local authorities sought. Ministers have been at pains over the past few months to allay any fears that the industry might have and to point out to bus operators that any quality contract proposal will still be subject to independent and sequential scrutiny. I know that many members of the bus industry are still comfortable that quality contracts are some way from the easy option portrayed by some in the Passenger Transport Executive Group. Will the Minister assure us that quality contracts will be used only as a last resort by sensible authorities that have exhausted all faster, more economic and passenger-friendly options?

Some people in the bus industry think that pressing for these amendments is something of an own goal by the would-be regulators as it could open the door to longer and more expensive legal action. “Bring it on” was the response, as I understood it, from certain more active members of the Passenger Transport Executive Group, but it is not their money. If you are paying for court cases with local ratepayers’ money, it is less of a problem than it would be perhaps to a commercial operator.

I believe that passengers will be best served if the legitimate interests of the bus operators are, as Ministers have continuously promised, properly protected. Bus operators got a bad and inaccurate press from those rather few honourable Members of the other place who participated in the debate throughout the most recent stages of the Bill. But it is important that Ministers concentrate on fact rather than rhetoric. It is a fact that £2.2 billion has been invested in buses outside London over the past 10 years. In seven of those 10 years, that investment exceeded net profit in the bus industry.

FirstGroup, the company I work for, has built up over the past decade from a small municipal undertaking based in Scotland to a multinational company employing many thousands of people in the United Kingdom. In replying to the debate, the Minister should tread very carefully indeed so as not to cause any further anxiety in the bus industry, particularly during this somewhat delicate economic period. It is important, and I think both legitimate and right, that passengers as well as operators should have their legitimate interests protected under this legislation. Many people in the bus industry believe that if the quality contract route is to be followed without some of the safeguards that Ministers have indicated will be provided, much of their business— will be confiscated whether lawfully or not will be for the courts to say. I understand that Ministers have assured the bus industry privately that even though this is far from an easy option, if the proposals were to be taken forward, not only would operators have every opportunity to put their own case, they would also have a proper right of appeal against any decision. It would help to allay many fears in the bus industry if the Minister could confirm that it is indeed the case that the amendments I would have proposed had he spoken at the time I expected him to speak—that is, on this particular group—would therefore be superfluous. I trust that he can do so because I have already indicated that I do not propose to move Amendment No. 44A.

I want to ask my noble friend why the appropriate approvals authority for a quality contracts scheme in Wales may approve the scheme if it is satisfied not only that the new public interest test in Clause 19 is met but also if it is satisfied that the scheme is in the public interest. I expect to be told that it is because Wales has a devolved Administration, but I do not think that the public interest is any less important in the rest of the United Kingdom. Indeed, I would point out that Ministers and the Government generally have been consistent in saying that the legitimate interests of bus operators have to be taken into account when the merits of a quality contract are being assessed. In order to do that and to ensure that the benefits of a quality contract are proportionate to the disbenefits, surely it is essential that the QCS board is able to assess fully the financial losses that any operator might incur as the result of a quality contract being introduced, not just the collective position of all operators. Can the Minister confirm that the government amendment which creates new Section 124(1A) of the Transport Act 2000 will oblige QCS boards to assess each operator’s financial interest, not just an overall assessment of them all?

I want also to press the Minister on government Amendment No. 69. As currently drafted, the Bill restricts the scope of an operator’s appeal to the Transport Tribunal. Where a QCS board has approved a quality contract or recommendations to change the quality contract have been taken on board by the relevant authority, an operator’s appeal can be made only on a point of law, not on a point of fact. As far as I can see, this prevents operators appealing to the Transport Tribunal against the assumptions that might have been made by the authority and the QCS board in justifying a quality contract. It also prevents operators making representations to the tribunal on matters taken into account or not taken into account by the authority or QCS board. An operator’s only right of appeal to an independent tribunal against an approved quality contract would be his submission to the QCS board on the authority’s consultation. I ask my noble friend whether such a procedure actually makes sense and indeed whether it would be defensible in law. Surely there can be no justification for restricting the scope of an operator’s appeal to the tribunal, and this amendment therefore removes the restriction currently applied by the amended Bill. It will enable an operator to appeal to the tribunal on a point of law and fact, regardless of the view of the QCS board. This is a further amendment designed to ensure that the legitimate interests of operators are taken into account.

I apologise for the length of this speech, but it is the only one I intend to make during the passage of this Bill, and these matters are of enormous concern to the bus industry. I turn finally to the question of the invitation to tender to be issued while appeals are outstanding. It is possible, under the terms of the amended legislation, for an authority to proceed to issue an invitation to tender to operators who may wish to bid for a contract to run a quality contract even if an appeal against a quality contract is outstanding. Again, we are in the realms of certain members of the Passenger Transport Executive Group saying, “If there is legislation, so what?”. I would point out that legislation of this kind is likely to be protracted and expensive, and that there ought to be a proper justification from PTEG to justify this course of action. Surely it cannot be right for public authorities to proceed with an ITT and all the costs that involves while an appeal is outstanding. If the appeal is successful, all the time and expense of proceeding with the tendering process would be wasted. The position is even more serious if a tender is awarded before an appeal against the particular contract has been won. It is, to say the least, a bizarre arrangement and there appears to be a fundamental lack of common sense and of justice in the procedures as they are presently laid down. It may well be that common sense would prevail and an authority would not proceed to prepare and issue an ITT while an appeal is outstanding, but there is nothing to stop it doing so under the terms of the Bill before us today. By stating expressly that an ITT can be issued even when an appeal is outstanding, the Bill almost encourages local authorities to proceed in that way. The straight question for my noble friend is this: how do the Government propose to ensure that authorities use their powers wisely?

In conclusion, having taken a deep interest in the Bill and having some years’ experience in the bus industry, I cannot say personally that the prospects for companies and bus passengers have been enhanced by the Government’s amendments. I hope that the Minister will take it upon himself to give an assurance to bus operators that the last stage of any change in the quality contract will not be made as easy as some, in my view overly optimistic, members of the Passenger Transport Executive Group apparently believe.

My Lords, I should like to add a few words to the speech of the noble Lord, Lord Snape. I have no financial interest in the bus industry, but I have a lot of experience of it. I want first to reiterate the point I made earlier: traffic congestion is by far the biggest enemy of bus services. Unless there are effective ways of dealing with congestion, bus services will continue to deteriorate.

Secondly, quality partnerships, where they are working and where they bring bus companies into partnership with the local council and the police, have a lot of virtue in them. In fact, many local authorities have not yet taken up their powers to clear their highways, monitor bus lanes and fine those who invade them. In my opinion, attention to these areas would result in much better bus services than are likely to be brought about by quality contracts. A further point to make on quality contracts is that many people look jealously at London and say, “If we had that system in our city, we would be all right”. I ask the Minister to pause and reflect on how much subsidy is put into public transport in London. It is vast compared with that provided outside, and any move along the road to quality contracts outside London will presumably come with a price that I think those who are proposing it intend to present to the Government. That has to be considered.

London has a huge number of people who arrive in the city by public transport without their cars and therefore use the bus services. Again, that is not the case in every city. Some cities still offer cheap and plentiful parking, and they wonder why the bus services they operate are not efficient—there is obviously a cheap alternative and the cars being driven into those car parks are in fact blocking the roads along which the buses are to operate.

I am not convinced that anyone has shown that vast profits are being made in the bus industry that could be redistributed through a quality contract to subsidise less well served or less used areas. Where you can make even a modest profit running a bus service, that will be done commercially. It is only in areas where traffic is very thin that a bus service does not work, and you will not make a sensible adjustment by cutting services in busy corridors where there are lots of people travelling—often quite poor people—and saying to them, “You can have a less good bus service so we can take some of the profits from there to run bus services in the more remote areas”.

My Lords, I shall comment on a couple of points made by the noble Lord, Lord Bradshaw. No doubt he will strongly disagree with this, but I get the impression that the enthusiasm for the Bill from the Liberal Democrats in this House was considerably less than from the Liberal Democrats in the other place. From reading the debates it seems to me that their support was pretty wholehearted, which cannot be said of the Liberal Democrats in your Lordships’ House.

My Lords, I am sure the noble Lord, Lord Bradshaw, can defend himself, but could the noble Lord, Lord Rosser, not say that the same thing is true of the Labour Party?

My Lords, I have made my point about the Liberal Democrats in the two Houses. I suspect that the Bill will be supported by my party in this House as well. Furthermore, I do not accept the argument of the noble Lord, Lord Bradshaw, that quality contracts go with high levels of subsidy. The two are separate issues and one does not necessarily go with the other.

I am pleased that the Government have accepted the principle behind the amendment. The issue is that, in the event of a quality contract operator defaulting for any reason, a local transport authority must be able to use any means at its disposal to keep bus services running, including operating services itself. Although I listened carefully to what my noble friend said, I remain concerned that the time limits being placed on the operator of last resort are too stringently set out in primary legislation, which is emphatic that while 12 months may be needed, 12 months and one day will not.

In the Bill, those powers of last resort are restricted to nine months, with an additional three months at the discretion of the traffic commissioner. In the other place, concern was expressed that that was too restrictive, given the wide range of scenarios that could result from an operator defaulting on a franchise. What would happen if a deal with a replacement operator for the franchise fell through at the last minute? What would happen to bus services then? Another scenario could be a franchise deal involving significant investment in new vehicles, to which reference has already been made, but where that programme of investment had not been completed when the initial quality contract operator, or contractor, defaulted. It might be a difficult task for a local transport authority to secure a replacement operator for the quality contract and ensure that the new vehicles were supplied at a competitive price when potential bidders knew that the local transport authority had a fixed period in place whereby it could keep services running as the operator of last resort. That does not seem to place the local transport authority in a strong position in any negotiations.

There are other possible scenarios, although one accepts that they would be exceptional. The independent or local transport authority might no longer require the use of a particular operator because of poor performance and could be subject to legal challenge. Surely in that situation the challenge might go on for a considerable time. Would any other operator be prepared to touch the provision of services with uncertainty remaining over the status and position of the original quality contract operator?

What happens if an operator goes out of business 13 months before the end of their contract? What would the position be, then, if the local transport authority could operate services, if necessary, only for 12 months, when the contract itself was going to end after 13? What happens if there is an argument between competing operators and an independent transport authority over the ITA’s decision on who should get a contract following the existing operator’s defaulting? That, too, might be subject to legal challenge. As I said a moment ago, if a deadline to negotiate on contracts is approaching, considerable power is handed to the bidders when they know that the local transport authority is in the position that it can no longer operate those services after a maximum period of 12 months.

It is also worth noting that when the Government used their power of last resort in the operating role to take over the operation of south-east trains, following the failure of the Connex South Eastern franchise, those powers were exercised for almost two and a half years. How would passengers and the taxpayer have fared on south-east trains if the Government had been subject to a fixed time limit set out in primary legislation on their own powers of last resort on rail franchises?

I realise that the Government are concerned that a local authority might seek to abuse these powers to, in effect, municipalise local bus services, taking them back into public ownership. Even if that were a likely threat, though, under the terms of the amendment the traffic commissioners would provide a safeguard against that, as they would decide whether or not the last-resort powers were to be granted. The Government’s guidance to the traffic commissioners could be used to ensure that these last-resort powers could be extended only to protect passengers in exceptional circumstances following the default of an operator and the restarting of the franchise under a new operator.

I hope that my noble friend will be prepared to consider this amendment. The deadline seems unnecessarily restrictive; it allows no room for manoeuvre if, in exceptional circumstances—and one accepts that they would be exceptional—the specific date could not be adhered to. The amendment would allow the traffic commissioner, if he or she so desired, to agree to an extension. I have no doubt that they would want some compelling reasons for granting an extension rather than seek to use the power that I propose they should have in a way that did not reflect the need for exceptional circumstances to be proved.

My Lords, the Government in this House support the Bill with exactly the same degree of enthusiasm as they supported it in the other House—there is no difference between our positions here and there. As was the case in the House of Commons, so here. We pay tribute to the entrepreneurial zeal and public service commitment of so many of our bus operators, in precisely the way that my noble friend Lord Snape would wish us to do. They make a great contribution to public transport in this country and we need them to make a greater contribution in the coming years. We recognise, as my noble friend said, that in a good many areas buses are doing well—London, mentioned by the noble Lord, Lord Bradshaw, being a case in point, where we have seen a welcome transformation for the better in the pattern of bus service usage in recent years. As I said earlier, in some areas buses are not doing as well as we would wish. There are many reasons for that. I recognise the importance of addressing congestion, which the noble Lord mentioned. It is because of these issues that we need to address that we brought forward the provisions in the Bill.

My noble friend Lord Snape’s overriding concern is that the Government should stand by their commitment to protect the legitimate commercial interests of bus operators. We absolutely stand by that commitment. The amendments I am speaking to in this group are designed precisely to ensure that appropriate safeguards are preserved in the interests of bus operators. First, the amendments retain a clear role for independent scrutiny of a local authority’s proposals. That scrutiny will take place after the authority has concluded its public consultation process. This is important because it ensures that the quality contract scheme boards can take full account of any concerns raised by operators during the consultation process.

Secondly, the amendments retain the five public interest criteria already set out in the Bill. These include a requirement that any adverse effects on operators must be proportionate to the benefits of the scheme, which is a crucial safeguard for operators. Thirdly, the amendments retain a right of appeal to the Transport Tribunal.

To deal with my noble friend Lord Snape’s Amendments Nos. 44A and 69A in more detail, the first, on a public interest test, would require QCS boards to consider proposed schemes not only against the five statutory criteria already in the Bill, but also against a more general test of the public interest. The five criteria in the Bill already provide appropriate benchmarks against which any scheme should be judged, and are designed to provide clarity about how the public interest is to be assessed. They require an authority to show that the proposed scheme will, first, increase bus patronage; secondly, benefit passengers; thirdly, contribute to the implementation of the authority’s local transport policies; and, fourthly, do so in a way that is economic, efficient and effective. In essence, this means that the scheme must deliver value for money which, in turn, means that the authority needs to take account of all of the costs and benefits likely to arise from the scheme.

The crucial safeguard for bus operators is the fifth criterion: that any adverse effects on bus operators, both inside and outside the scheme area, must be proportionate to the benefits arising from the scheme. These five criteria make plain, in somewhat more detail than a general public interest criterion, what requirements a scheme needs to fulfil and what questions a QCS board needs to consider. They meet my noble friend’s concerns and the legitimate interests of bus operators.

My Lords, before my noble friend leaves that point, why is the public interest test to be applied in Wales? Why does it not apply in England?

My Lords, ours is a better test. Under the devolution settlement, it is of course up to Wales to frame the precise test that it wishes to apply. There would not be much point in devolution if we had to replicate the provisions that the Welsh put in place in every respect. The effect of our tests is to protect the public interest precisely as we would wish to ensure effective bus services, and to protect the legitimate commercial interests of bus operators.

On my noble friend’s Amendment No. 69A, on appeals to the Transport Tribunal, under the amendments made in the House of Commons the grounds for appeal against a local authority’s decision to make a quality contracts scheme would depend on whether or not the QCS board had in effect given the final version of the scheme a clean bill of health. Where the QCS board, which will be independent of both central government and the local authorities, has given such a clean bill of health, having examined all the facts of the case and considered all the opinions expressed in the consultation, the Government consider that it is entirely appropriate for the onward right of appeal to the tribunal to be limited to points of law.

That would enable an appeal to be brought, for example, on the grounds that the authority had acted unreasonably in deciding to make the scheme, had acted with bias, or had fettered its discretion. There would therefore be a clear safeguard in the most unlikely event of a QCS board failing to identify a major flaw in the authority’s proposal. It is not correct to say that an operator would, as a general rule, have no right of appeal against an authority whose case for a quality contract scheme was based on unreasonable assumptions. However, where the final version of the scheme had not received a clean bill of health from the QCS board, an appeal could be brought on either points of law or on questions of fact, enabling a full-case review. The Government consider that these proposals provide an entirely appropriate level of protection, while avoiding unnecessary stages in the process, which, after all, could delay the implementation of schemes that are manifestly in the public interest.

My Lords, more than one of the possible scenarios that I suggested—I accepted that they would be exceptional—related to legal proceedings being taken over a decision to dispense with the services of a quality contract operator, or as regards an argument between quality contract operators in the independent transport authority over who should take over an existing quality contract after the original operator had ceased to operate the services. Does my noble friend accept that that is a possible scenario, or does he dismiss that possibility? If he accepts that it is a possible scenario involving legal proceedings, does he not accept that those legal proceedings could go on for a considerable period, and that it is therefore not unrealistic to build in a provision which would enable us to go beyond the 12 months where it was proved that there were exceptional circumstances? If we find ourselves in that scenario, what happens the day after the 12 months are up?

My Lords, I would rather not paint precise scenarios. It is hard to predict the circumstances in which services might come to a halt. However, if there were to be a scenario of the kind painted by my noble friend of a service coming to an end in circumstances where legal proceedings followed, even by the rather lengthy proceeding standards of our learned friends, one would realistically expect them to have been concluded well within a 12-month period. Therefore, we would not expect such a scenario to justify an extension of the 12-month period. However, I come back to the central point that this is intended to give local authorities the power to act as operator of last resort, not to put in place their own bus services on an ongoing basis. Recognising that we have to make a judgment about a cut-off point at some defined period, our view is that 12 months is the longest period in which one could justify a local authority acting as operator of last resort, and that any local authority which is fulfilling its duties responsibly would be able to put in place a replacement service over that period.

If a local authority was incapable of putting in place a replacement service in 12 months, it is very difficult to see what circumstance will change in the 13th month that is suddenly going to make it possible to act in a way it was incapable of acting in the previous 12 months. Therefore, even in the scenario that my noble friend paints of there being complicating factors surrounding the ending of a bus operation, we believe that the 12-month period is sufficient to put in place successor arrangements, and that we should not need to extend the 12-month period further.

On Question, Motion agreed to.

AMENDMENT NO. 44

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 44.

Moved, That the House do agree with the Commons in their Amendment No. 44.—(Lord Adonis.)

[Amendments Nos. 44A and 44B, as amendments to Commons Amendment No. 44, not moved.]

On Question, Motion agreed to.

amendments NOS. 45 to 68

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 45 to 68.

Moved accordingly, and, on Question, Motion agreed to.

AMENDMENT NO. 69

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 69.

Moved, That the House do agree with the Commons in their Amendment No. 69.—(Lord Adonis.)

[Amendment No. 69A, as an amendment to Amendment No. 69, not moved.]

On Question, Motion agreed to.

amendments Nos. 70 to 121

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 70 to 121.

Moved accordingly, and, on Question, Motion agreed to.

AMENDMENT NO. 122

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 122.

Moved, That the House do agree with the Commons in their Amendment No. 122.—(Lord Adonis.)

[Amendments Nos. 122A to 122C, as amendments to Amendment No. 122, not moved.]

On Question, Motion agreed to.

amendments Nos. 123 to 158

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 123 to 158.

Moved accordingly, and, on Question, Motion agreed to.

amendments Nos. 159 to 162

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 159 to 162. These amendments relate to integrated transport authorities and local road charging schemes. Before dealing with them, I wish to set out again the issues which we are trying to address in Part 5. As I said earlier, in the main urban areas outside London, current transport leadership and delivery arrangements do not always work as well as they might and need updating to reflect changing travel patterns. Current arrangements date from the Transport Act 1968, which allowed establishment of passenger transport authorities with responsibility for public transport across each city. There are now six PTAs covering areas such as the West Midlands.

In 1985 the power to create further PTAs was repealed, and the broad arrangements for local transport decision-making have remained the same since. However, over the past 20 years there have been many changes in the transport needs and patterns of different areas. Despite this, existing legislation offers little flexibility to update local arrangements, or for one PTA area to do things differently where local needs differ.

We believe that reviewing existing arrangements is a priority, and that local areas are best placed to identify the changes needed. The Bill changes the generic names of the six passenger transport authorities to integrated transport authorities. This change reflects the wider responsibilities that all ITAs will have in relation to local transport policies and plans, and their powers to act for the economic, social and environmental well-being of their area. The Bill also allows local authorities, both in areas with ITAs and in those without, to review existing arrangements in their area and come forward with proposals for improvements.

It will be up to the authority in each area to decide how wide a review it wishes to carry out. A review could cover, among other things, how well public transport services operate, the management of roads and the current distribution of powers over transport between local authorities and ITAs. The Bill would then allow the Secretary of State to respond to the proposals put forward by authorities by making individual orders for each area; for instance to establish a new ITA or to make changes to the constitution of an ITA that already exists. These orders would be subject to affirmative resolution in each House.

Amendments Nos. 159 to 163 are about the membership of integrated transport authorities. These amendments have two principal effects. The first is to guarantee that each of the “representative councils”, as defined in the amendments, will appoint at least one representative to the ITA. This supports democratic accountability by ensuring that every part of the area of an ITA must have at least one representative on the ITA, and no part of the ITA’s area can be unrepresented. The Local Government and Housing Act 1989 will continue to apply to such appointments as it does now. This provides a further safeguard: that the appointment of elected members of a local authority to an ITA reflects the political balance of those councils.

The second effect of the amendments relates to a potential role for non-elected members of an ITA. The Bill allows the flexibility for non-elected members to be appointed to an ITA—for example, representatives of transport users, businesses and other groups—so long as they will be a minority of the members of the ITA. These amendments provide that such non-elected members may be granted voting rights on the ITA only by the existing voting members of the authority. This will ensure the democratic accountability of the ITA.

Amendment No. 166 restricts the power to make secondary legislation under Part 5 and makes clear that supplementary provision made under the powers in Clause 86 cannot amend or disapply the political balance requirements contained in the 1989 Act.

Amendment No. 164 provides that Clause 80 includes the power to delegate functions relating to local road-charging schemes. It also incorporates the safeguard that such functions may be delegated only with the consent of the majority of those authorities whose functions are to be delegated.

Amendment No. 168 relates to local road-charging schemes. It puts beyond doubt that English local authorities outside London, before making a local road charging scheme, will be required to consult such local persons, and representatives of local persons, as they consider appropriate. The key point is that there must be local consultation. That was a concern of the party of the noble Lord, Lord Hanningfield.

Amendment No 167 provides that orders made under Part 5 of the Bill, establishing new ITAs or reforming existing ones, will not be subject to “hybrid instrument” procedures in this House. I apologise to the House that this provision was not included in the Bill at its introduction. It is regrettable that the question of hybridity was not raised until after the Bill had passed through the House of Commons. It is all the more important, therefore, that I set out to the House today the compelling reasons that have led us to seek this new provision, given the concerns set out by the noble Lord, Lord Bradshaw, in Amendment No. 167A.

There are four reasons for the course of action that we propose. First, the Bill, together with the new duties introduced on 1 April this year by the Local Government and Public Involvement in Health Act, provides that orders under Part 5 will receive detailed scrutiny inside and outside Parliament. The order to set up or amend an ITA would be made only after a local area had had the opportunity to review its existing governance arrangements and to develop proposals for reform, in consultation with interested parties.