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Wakeham, Rt Hon John

Waller, Gary

Wardle, Charles (Bexhill)

Warren, Kenneth

Watts, John

Wells, Bowen

Wheeler, John

Widdecombe, Ann

Wilkinson, John

Winterton, Nicholas

Wood, Timothy

Young, Sir George (Acton)

Tellers for the Noes :

Mr. Kenneth Carlisle and

Mr. Stephen Dorrell.

Question accordingly negatived.

Clause 28

Guidance and consultation about promotion of economic development

Mr. Andrew Welsh : I beg to move amendment No. 316, in page 35, line 24, leave out subsection (1).

At 11.53 pm, I will be as brief as possible. The amendment--

Mr. Tony Banks : Take your time, kid.

Mr. Welsh : The amendment seeks to delete subsection 28(1), which will impose a duty on local authorities to seek guidance from the Secretary of State about any expenditure on the promotion of local economic development. The Bill places yet another statutory obligation on local authorities to put themselves into the clutches of the Secretary of State when they simply set about exercising the powers of economic promotion allocated to them.

Local government can, and should be, a significant and knowledgable contributor to local economic regeneration and a prime motivator in encouraging local economic activity.

My fundamental objection is to yet another example of unnecessary central Government interference with duly given local government powers. Clause 28(1) sets out to shackle local government in its attempts to determine the exact nature and requirements of local industrial promotion. As ever, with the anti-local government mob which now runs the United Kingdom's central Government, central Government will determine what will and what can be done by local authorities in such matters. That is yet another clawing back of power from local government to central Government, and is another unnecessary demand on local authorities.

My objection is that I do not believe that central Government is always right in such matters. Local authorities have few enough industrial powers devolved to them and little enough cash to meet their industrial problems. Therefore, it is somewhat unnecessarily heavy-handed of central Government to take these further restrictive powers over duly elected local councils.

Local authorities know the local situation and the industrial development and promotional needs of their local areas in a way that is quite impossible for central Government. That is why they should be allowed full control in getting on with such matters to ensure that there is industrial regeneration and innovation in their areas. However, the Bill seeks further to stop the scope for such initiatives in the industrial promotion that is at the heart of any new initiatives and developments locally. I know from first hand the expertise and ability of local authority staff--men and women who understand and who know personally the economic profile of their areas

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Mrs. Virginia Bottomley : I am not entirely clear whether the hon. Gentleman is aware that these measures do not apply to Scotland.

Mr. Welsh : The hon. Lady will have noticed that I have not specifically mentioned Scotland, which I normally do. I am sure that the expertise that I have found at first hand exists also in English local authorities.

Local government should be given the powers and the authority to get on with those activities because local authorities know the local situation.

Mr. Nicholas Bennett : Will the hon. Gentleman give way?

Mr. Welsh : Oh dear.

Mr. Bennett : I am most grateful to the hon. Gentleman for giving way. I simply want to place on the record the fact that we welcome his part in English legislation and hope that we can take part in Scottish legislation.

Mr. Welsh : Well, it is a return match for the interference that the hon. Gentleman has made in my country's legislation. Perhaps I am getting one back, but I hope that I am doing so in a positive and useful way.

Local authorities know best how to promote local industry in their areas because they know the economic needs in a way that central Government cannot. Why should local government officials, under policy guidance from democratically elected local councillors, not be allowed to get on with their work of dealing with the local economic problems without always being hedged in by legislation and by Big Brother in central Government? Legislation has already severely limited the powers and initiative allowed to local people. My fundamental objection is that the Bill worsens rather than improves the situation. Economic development, promoted and encouraged with sensitivity by people with local knowledge and, more importantly, the power to get on with the job, would be a far better objective than that of this part of the Bill.

I do not in any way object to local authorities having a duty to report on their plans in each financial year to ensure that local plans fitted in with the Government's broader strategic economic planning function. That is why my amendment seeks to remove the first subsection only of clause 28. Local authorities have been given little enough freedom of action and few enough resources to create employment and to encourage local enterprise. My amendment would at least free them from one more unnecessary restriction on their powers of action.

Mrs. Virginia Bottomley : Apart from the explanation to the hon. Member for Angus, East (Mr. Welsh) that this provision is not available in Scotland at the moment, I should like to inform him that the Convention of Scottish Local Authorities has welcomed the fact that more time will be allowed for the development of the separate proposals for Scotland. However, judging from the hon. Gentleman's remarks, perhaps he would not like the power to be extended there.

Mr. Maxton : I am also sure that the party of the hon. Member for Angus, East (Mr. Welsh) has little or no influence in COSLA, which is almost entirely dominated by the Labour party.

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12 midnight

Mrs. Bottomley : The amendment is unnecessary. The Secretary of State may give guidance under subsection (1). While obviously it will probably be necessary for guidance to be given in the form of circulars at the time of the regulations being enacted, it is not necessarily our intention to issue further specific guidance to local authorities.

If specific guidance were to be made available, it is most likely that it would be aimed at promoting value for money or consistency between central Government and local authority initiatives. In short, it would be only practical assistance which would be helpful and sensible for local authorities to see. They would be required only to take it into account, and, having taken it into account, it would be for them to make up their minds on the matter.

These economic development powers will be helpful and of great benefit to local government, and I therefore hope that the hon. Gentleman will withdraw his amendment.

Mr. Andrew Welsh : As my attempt to be helpful seems to have been somewhat rebuffed by English hon. Members, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 29

Amendments of existing power to incur discretionary expenditure

Lord James Douglas-Hamilton : I beg to move amendment No. 244, in page 36, line 11, leave out this section' and insert

subsections (2) to (9) below'.

Mr. Deputy Speaker : It will be convenient to discuss at the same time Government amendments Nos. 123, 245, 124 and 246.

Lord James Douglas-Hamilton : The purpose of this series of amendments will be welcome. It is designed to remove an anomaly which came to light as a result of the tragic events at Lockerbie last December. Obviously, tribute has been paid to the magnificent efforts of local authorities, especially but not exclusively the authorities most directly involved.

As part of the wider response, local authorities in England and Wales wish to contribute to the disaster fund that was set up by Dumfries and Galloway regional council, but it was found that the power which local authorities in England and Wales would normally use to make such a contribution-- section 137(3) of the Local Government Act 1972--did not extend to cover appeals set up by Scottish local authorities unless the civic head of an English or Welsh authority was associated with the appeal.

The series of amendments rectifies that situation on both sides of the border reciprocally. The effect is that where the civic head of a local authority launches an appeal, any local authority will be able to contribute.

Mr. Maxton : My hon. Friends and I welcome this series of amendments, which will prove extremely useful. I am sure that Scottish local authorities will now wish to

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contribute towards the Hillsborough fund in the same way that English local authorities wish to contribute to the Lockerbie appeal.

Amendment agreed to.

Amendment made : No. 123, in line 44, at end insert


(c) at the end of paragraph (c) there shall be added "or by such a person or body as is referred to in section 83(3)(c) of the Local Government (Scotland) Act 1973".'.--[ Lord James Douglas-Hamilton.]

f divn list Sir George Young (Ealing, Acton) : I beg to move amendment No. 9 in page 37, leave out lines 28 to 43.

Mr. Deputy Speaker : It will be convenient to discuss at the same time the following amendments : No. 8 in page 37, leave out lines 44 to 48.

No. 282, in Schedule 2, page 139, leave out lines 1 to 21.

Sir George Young : These three amendments which stand in my name enable the House to consider a matter on which the Committee was unable to reach a decision without the casting vote of the Chairman. They deal with the important matter of how voluntary organisations of the metropolitan counties are funded. In a nutshell, the Government wish to remove the section 48 funding power introduced in the Local Government Act 1985.

There are two arguments against what the Government plan to do, one of principle and one of practice. The argument of principle is that it is seen to be in conflict with undertakings given in good faith at the time of abolition which set up a secure funding framework for voluntary organisations in metropolitan counties which covered more than one local authority area.

The argument of practice against what the Government plan to do is that at a time when we are trying to reduce manning in local authorities, the arrangements proposed by the Government would increase manpower in those local authorities that have to scrutinise the voluntary sector and would involve the complex relationships that exist between local authorities as they try to justify their spending under section 137.

The Government argued that abolition of domestic rates gave an opportunity to abolish section 48 and bring the mets into line. They undertook to discuss with the local authorities the practical difficulties that we came across in Committee. In fairness to the Government, they have held discussions with representatives of the voluntary sector to try to find a way through the problem. Having seen the minutes of those meetings, I remain convinced that it would be right for the Government to abandon the strategy on which they are embarked and to leave section 48 alone as a separate funding power in its own right for the voluntary sector and the metropolitan counties. It would reassure the voluntary sector, which has now established a funding arrangement under the new regime, if the Government said that, on reflection, their strategy is not, perhaps, the best one and that it would be better to leave section 48 as it stands.

Mrs. Virginia Bottomley : The Government have given careful consideration to the points raised in Committee, especially those made by my hon. Friend the Member for Ealing, Acton (Sir G. Young). As he said, section 48 was introduced to help voluntary organisations after the abolition of the GLC. Many voluntary organisations were performing an excellent function and it was thought right

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that they should receive assistance, especially as they were losing the product of the 2p rate from one tier of local authority. We have now carried out a complete review of the limit on expenditure under section 137. We intend to ensure that spending for which there is no other statutory basis should be achieved on a different assumption--that it should be £5 per head of the adult population. There was great debate in Committee about how the section 137 proposals would work in with the section 48 scheme. There was an anomaly at the time of the abolition of the GLC and in the context of the new regime it was difficult to justify extending the arrangement.

We shall accept my hon. Friend's amendments. We have reconsidered our proposals and agreed upon a better basis. Clause 29(9) is directed at redressing the anomaly. It is a precise provision that states clearly that any expenditure under a section 48 scheme that cannot be attributed to a specific power is to be counted against the section 137 limits of the constituent councils.

As my hon. Friend said, it would impose an unnecessary burden on the schemes if it had to be assessed whether each grant could be justified under powers other than under section 137. It was argued that it would make the construction of the budget--especially in London, with 33 authorities involved--extremely difficult if each had to consider not only the cash required but the impact of individual grants on their own programmes.

As a result of meetings with the staff of the London section 48 scheme and the lead authorities of other schemes, we decided to reconsider the matter. We propose to build on the fact that the section 48 schemes have now settled into fairly regular patterns of spending. My hon. Friend's amendment will remove the special treatment of section 48 expenditure that cannot be referred to any specific power of the authorities. Instead, we shall reduce the limit on expenditure under section 137 for the constituent authorities of the section 48 schemes by an amount approximately equal to their expenditure under section 48, and which, elsewhere in the country, would have to score against the section 137 limit.

We want to discuss further with the authorities concerned the precise amounts involved. We believe that section 48

expenditure--which has made an important contribution to voluntary organisations in the London and other metropolitan areas--as well as the possibility of section 137 expenditure will be safeguarded.

Mr. Soley : We are always grateful for small mercies. It took a near defeat for the Government in Committee to make them reconsider the matter. Indeed, it was only the Chair's casting vote that saved them.

It should be put on the record that not only the former GLC area is affected, but metropolitan areas generally. Indeed, in Committee on the abolition Bill we warned the Government that the voluntary sector would be in some difficulty. The voluntary bodies have been worried and the hon. Member for Ealing, Acton (Sir G. Young) has done them a service. However, I do not think that the amendment goes far enough and if the Government are serious about helping the voluntary sector they will have to go further.

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Sir George Young : I was delighted to hear what my hon. Friend said. I know that her words will be welcomed by the voluntary organisations in London and in the other metropolitan counties. Nine minutes past 12 is not the time to engage in a detailed discussion about how the reduction in section 137 will take place. However, I note that she has undertaken to negotiate with the people concerned. It is right to pay tribute to the work of Ministers, whose commitment to the voluntary sector has never been in doubt. I welcome the fact that they have shown flexibility--which I always knew was there--in coming to the decision to leave section 48 as a funding power in its own right.

Amendment agreed to.

Amendments made : No. 8, in page 37, leave out lines 44 to 48. No. 245, in page 37, line 48, at end insert--

(10) In section 83(3) of the Local Government (Scotland) Act 1973 (contributions permitted to charitable and public service funds etc.), at the end of paragraph (c) there shall be added "or by such person or body as is referred to in section 137(3)(c) of the Local Government Act 1972".'.-- [Mr. Gummer.]

Schedule 2

Local Government Act 1972, section 137, as amended

Amendments made : No. 124, in page 137, line 45, at end insert or by such a person or body as is referred to in section 83(3)(c) of the Local Government (Scotland) Act 1973'.

No. 282, in page 139, leave out lines 1 to 21.-- [Mr. Gummer.]

Clause 31

Application of Part IV

Amendment made : No. 87, in page 40, leave out line 21.

Clause 33

Expenditure to be charged to revenue account

Amendments made : No. 88, in page 42, line 5, at end insert and the reference in subsection (5) below to expenditure incurred by a local authority shall be construed in accordance with this subsection'.

No. 89, in page 42, line 11, at end insert--

(5) Nothing in this section or the following provisions of this Part shall permit an authority to charge to a revenue account which they are required to keep by virtue of Part VI or any other enactment any expenditure incurred by a local authority which could not otherwise be so charged.'. [Mr. Gummer.]

Clause 34

Expenditure excluded from section 33(1)

Amendment made : No. 38, in page 43, line 8, at endadd-- (5) Where, by virtue of subsection (1) above, expenditure of any description is excluded from the obligation in section 33(1) above, it shall also be excluded from any requirement arising under any enactment (including an enactment in Part VI of this Act) under which the expenditure is required to be charged to a revenue account or any particular revenue account ; but if--

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(a) an authority decide that expenditure of that description should be charged to a revenue account as mentioned in subsection (1) above, and

(b) under any such requirement that expenditure (apart from this subsection) would have to be charged to a particular revenue account,

that expenditure may be charged only to that revenue account.'.-- [Mr. Gummer.]

Clause 40

Credit arrangements

Amendment made : No. 90, in page 48, line 20, leave out from made' to the' in line 22 and insert-- (a

(on the assumption that the option will be exercised or, if the option could be exercised in different ways, on the assumption that it will be exercised in each of those ways, and)


(on the assumption that the option will not be exercised, and if, on any of those assumptions'.-- [Mr. Gummer.] )

Clause 41

Initial and subsequent cost of credit arrangements

Amendment made : No. 91, in page 49, line 22, at end add-- (5) In the application of this section to a credit arrangement which consists, in whole or in part, of a contract, the consideration under which falls within subsection (7) of section 40 above,-- (

(a) if the credit arrangement exists only on the basis of one of the assumptions in that subsection, the local authority shall make that assumption for the purposes of this section ; and

(b) if the credit arrangement would exist on the basis of any two or more of those assumptions, the authority shall for the purposes of this section make whichever of those assumptions seems to them most likely.'.-- [Mr. Gummer.]

Clause 42

Limits on powers to enter into credit arrangements

Amendments made : No. 92, in page 49, line 42, leave out charged to' and insert set aside from'.

No. 93, in page 49, line 45, leave out charge' and insert set aside'-- [Mr. Gummer.]

Clause 43

Variation of credit arrangements

Amendment made : No. 94, in page 50, line 13, at end insert-- (1A) If, in the case of a credit arrangement falling within subsection (5) of section 41 above,--

(a) the option in question is exercised in a way different from that which was assumed for the purposes of that section, or (

(b) it was assumed for the purposes of that section that the option in question would not be exercised but it is in fact exercised, the exercise of the option shall be regarded for the purposes of this section as a variation of the terms of the credit arrangement ; and if, in such a case, it was assumed for the purposes of section 41 above that the option would be exercised (or would be exercised in a particular way) and it subsequently appears to the local authority that it will not in fact be exercised, the option shall be assumed to have been abandoned and that abandonment shall be regarded for the purposes of this section as a variation of the terms of the credit arrangement.'.-- [Mr. Gummer.]

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Clause 45

Basic credit approvals

Mr. Tony Banks : I beg to move amendment No. 169, in page 52, line 27, after shall', insert

after consultation with the local authority associations'.

Mr. Deputy Speaker : With this it will be convenient to take amendment No. 170, in clause 47, page 53, line 25, leave out from Minister' to end of line 27 and insert

shall consult the local authority associations on factors to be taken into account'.

Mr. Banks : Amendments Nos. 169 and 170 relate to clauses 45 and 47, which set out the method of controlling local government capital expenditure. Clause 45 states that the Secretary of State shall, before the beginning of each financial year, issue each local authority with a notice setting out a credit approval ; that is how much it can borrow by various methods. It states that not only the total amount should be specified, but subsection (4) describes the period over which the various loans must be made.

I am seeking try to infuse into the proposals a little consultation, which the Secretary of State should have with the local authorities, which are so dramatically affected by the proposals. We find it extraordinary that the Secretary of State should consider setting out all the financial expenditure of a local authority without consulting the local authority associations.

Those matters were raised in Committee and we were hoping--indeed, we were expecting--an amendment very much like our own from the Government. In Committee we were led to believe that the Secretary of State would welcome an amendment along those lines, and the Minister for Local Government said so in the course of debate on 6 April 1989 which is reported in columns 696 to 698 of the Official Report. If the Minister is not prepared to accept the form of words enshrined in the amendments, will he tell us what form of consultation his proposals will take?

12.15 am

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