House of Commons Hansard Debates for 15 Jun 1994

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section of the council can effectively opt out. That will have the extremely deleterious effect of preventing local authorities--the new unitary authorities--from carrying out their functions and exercising democracy. Opting out and fragmentation will result in decisions that will negate the possibility of a strategic approach to policy and the ordering of priorities in the best interest of the public at large rather than that of particular sections of the community. Subject to possible disciplinary action by my highers and betters on Labour's Front Bench, I must admit that I am inclined to accept amendments Nos. 54 and 55 on the basis that they appear to me to be wrecking amendments. It is unusual for the Government to table wrecking amendments to their own legislation, but to increase the number of councillors from 10 to 15 could severely injure the principle of the area committees, a point made by the hon. Members for Meirionnydd Nant Conwy (Mr. Llwyd) and for Brecon and Radnor (Mr. Evans). I am therefore attracted to the amendments, and I hope that they are accepted. [Interruption.] It appears that my hon. Friend the Member for Caerphilly (Mr. Davies) will let me off if I vote for them.

The Bill is illogical, especially in terms of the so-called decentralisation proposals. A better description would be "opting-out" proposals. Let us consider the contrast between education and social services policies and housing policies. In education, there will be one syllabus and one approach decided by the whole of a unitary authority, but it appears that the area committee can determine its own housing allocation priorities. That is illogical because, in principle, there is no difference between delivering housing and delivering education services.

Let us take the issue of planning. It seems extraordinary that an area committee could override or at least contradict the decision of a unitary authority in respect of planning. Consider a thorny local issue in Neath, for example--the question of secure accommodation for young offenders. In this case, West Glamorgan county council took the decision to site some young offenders' secure accommodation in the Neath area--a decision which I happen to support as the local Member of Parliament but which was met with fierce resistance from local people who felt that it was the wrong spot and who had many legitimate arguments. Is the Minister saying--this is my reading of the new clause--that the area committee could override a strategic decision to supply secure accommodation by refusing planning permission in that particular spot in the unitary authority ? That is a classic example of the point that I am trying to illustrate. An overall policy with strategic implications not only for that area but, in this case, for the whole of south Wales, could be overridden by part of the authority, objecting to it simply on a parochial basis. There are many other illogicalities and policy conflicts to which I could draw attention. However, in respect of Neath, Port Talbot and Lliw, without revisiting the arguments in principle about the boundaries of the new authority and whether they are appropriate--I believe that they are not--there will be severe tensions in the new unitary authority between upper Lliw, Neath and Port Talbot. A faction of dissident councillors--either in those areas on a united basis or in parts of those areas--who set

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up an area authority and opted out, could severely disable the operation of the new authority. Given that the reorganisation is proceeding against local wishes--it is proceeding because the Government are forcing it through--the new unitary authority will have to establish a new basis on which to work together, new trust and a whole new approach towards getting together people who have previously been suspicious of and hostile to each other. Suddenly, the option of an area committee opting out will open up and that will be very dangerous.

The real aim of the new clause is to continue the process that the Government have embarked on and on which they have set their heart--the process of smashing local democracy. That is their task and their aim. They have an obsession with opting out which makes me believe that the real objective and the hidden agenda is to paralyse local government and the new unitary authorities. The Government already have powers to cap them. In some cases--such as that of the metropolitan authorities in England--the Government have abolished local councils because they were doing things to which they objected. They have further disabled local authorities through the processes of opting out, contracting out and the sale of council housing and by preventing them from building new homes. On top of that, they are seeking to fragment and hive off sections of the local authorities. It all adds up to a quite clear prescription for paralysing and disabling the operations of local democracy, especially where it is Labour local democracy and where local people are attempting to implement policies in accord with their wishes rather than the wishes of an extremely elitist, centralising central Government.

Mr. Ron Davies : The debate demonstrates the complete weakness of the Government's position on the Bill. It was absolutely clear in Committee --certainly all hon. Members who represent the Powys and mid-Wales area, including Meirionnydd, and all Opposition Members have made it clear--that the answer to the problem of mid-Wales is separate, unitary authorities for Montgomery, Brecon and Radnor and Meirionnydd. We have made that absolutely clear and we have voted for it consistently.

It is a pity that the hon. Member for Brecon and Radnor (Mr. Evans) did not vote with us and did not mobilise those Conservative Members, who we are told are malcontents and who are opposed to what the Government are doing and who, we are told--or at least as the hon. Member for Brecon and Radnor tells the press--are prepared to assist him in his project of destroying Powys. We had an opportunity to do that earlier. The hon. Member for Brecon and Radnor would have had that opportunity if he had mobilised his people and voted with us. We faced a majority of 31 against us. If the hon. Gentleman had managed to get 16 people to vote with him, he could have had what he wanted, and what we all wanted, which was the opportunity for democratic decisions to be taken by our local authorities. However, that did not happen.

As a consequence, the hon. Member for Brecon and Radnor has missed out. He has missed the opportunity to have unitary authorities in mid-Wales and he also has a very poor compromise. The Government are insisting on the Powys model. In an attempt to offset the deficiencies in that model which the Government know exist, they have

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now introduced the system of area committees to pacify, among other people, the hon. Member for Brecon and Radnor.

The hon. Member for Brecon and Radnor is now the biggest critic of the area committees. He has pointed out the deficiencies in the financial arrangements and in accountability between the principal council and the area committees. As the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) and the hon. and learned Member for Montgomery (Mr. Carlile) pointed out, with regard to planning, finance and decision making, the whole area is fraught with difficulties. 9.30 pm

I do not say this unkindly because I know that the Under-Secretary of State for Wales was caught out a few times in Committee, but he was absolutely clueless. We asked him about accountability, the district auditor, the ombudsman and surcharge, but he did not have a clue. He promised to consider those points and to come back to us. He has come back in the form of the Minister of State, but the Minister of State has shed no light on those deliberations.

The Minister of State is at least as confused and unsure as the Under- Secretary was in Committee a couple of weeks ago. The Minister of State has been asked detailed, specific questions about what will happen and about the line of responsibility between the supposed area committees and the principal councils, but he has shed no light on that.

Our view is absolutely clear. The answer to the problem is to restore separate unitary authorities and to strike out all the provisions relating to area committees. That is what we voted for in Committee and that remains our position tonight.

The area committees do not resolve the Powys problem. Instead, they undermine what we are told is the central provision of the Bill--the creation of unitary authorities. The Government are undermining Powys. In their botched attempt to achieve a compromise, they are including a mischief in the Bill which could be used throughout the length and breadth of Wales to undermine and to destroy the principle of unitary authorities.

Mr. Rowlands : Is my hon. Friend clear whether the area committees would have to produce service delivery plans ? If not, how will unitary authorities provide a service delivery plan when they will not have responsibility for the money or for delivering services in the area ?

Mr. Davies : No doubt the Minister of State will shed his usual incisive light on that question. Although I may be paraphrasing in a pre- emptive way what the Minister of State is about to say, no doubt he will say that it is a matter for the principal councils. If an application is made and a scheme is put to him in which the question of service delivery plans is devolved to the area committees and he approves it, that must be a matter for the area committees. That would be the Minister of State's answer and that is the Government's position.

As my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) would rightly point out, we are now being asked to buy a pig in a poke. We do not know what conditions, principles, values or attitudes will determine the Government's approval of the schemes which have yet to be prepared. That is the reality of the situation that we are facing.

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My hon. Friend the Member for Neath (Mr. Hain) suggested that we would take issue with him in respect of amendment No. 54. He said that he was tempted to support that amendment. Amendment No. 54 increases from 10 to 15 the number of councillors required to make an application for the establishment of an area committee. It is clear that the establishment of area committees is an arbitrary invention. The issue was completely mauled in Committee. However, I understand why my hon. Friend the Member for Neath is tempted by amendment No. 54. It will make the establishment of area committees more difficult. However, if my hon. Friend votes for that amendment, he will endorse the principle of area committees. He will be saying that in some circumstances, albeit these circumstances as opposed to those circumstances, he is prepared to endorse the idea of area committees.

Having examined the matter at length, having considered it in Committee and having heard the debate this evening--the Government have had the opportunity to come up with the answers, but they have not come up with one --I am even more convinced that the appropriate thing for us now to do is to strike out the provisions.

I understand the difficulty that the hon. and learned Member for Montgomery is in. He regards area committees as perhaps an unacceptable palliative, but nevertheless, if that is all that is on offer, I presume that he wants it. Therefore, I can understand why he wants to oppose a measure which will make that more difficult. If he is minded to call a Division, I will not recommend that my hon. Friends support him.

Much as I sympathise with the hon. and learned Gentleman's position, I hope that he will understand that our position is quite clear : if we were to vote on amendment No. 54, either supporting it or opposing it, that would imply a degree of acceptance of the principle of area committees. We do not endorse the principle ; we think that the whole thing is wrong. The appropriate course of action was to have agreed our amendment in Committee and entirely deleted clauses 27 and 28.

Sir Wyn Roberts : Very briefly, I am genuinely surprised at Opposition Members' view of area committees. After all, area committees are not dissimilar to committees of main authorities. We are very familiar with them ; they include the education committees, planning committees and so on of main councils. Opposition Members know the answers to many of the difficulties that they anticipate, as the hon. Member for Caerphilly (Mr. Davies) showed.

This is an attempt to try to meet the community loyalty and local identity that we know exist in many parts of Wales that cannot qualify for unitary authorities of their own. We would be very hesitant about that and about their strength to maintain those authorities. We have gone as far as we possibly can to ensure the delegation of powers. We have enabled such delegation to a far greater extent than is available under the present system, but, of course, much depends on the schemes that are worked out for the delegation of powers to area authorities.

I believe that the schemes and the proposition of area committees will be attractive not only in mid-Wales but in Camarthenshire, Caernarfonshire and Meirionnyddshire because they have the unique feature that they cannot be changed without their consent.

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Mr. Alex Carlile : If it is the right hon. Gentleman's aim to ensure that there is as much local involvement as possible and that area committees should provide that, why is he not prepared to say, "Well, perhaps for certain areas, 15 members are too many," and that, therefore, on reflection, as long as 50 per cent. of the members representing that area request an area committee, a scheme will have to be prepared ?

I do not think that the hon. Member for Brecon and Radnor (Mr. Evans)--I think that he agrees on this point--and I are asking very much when we request such a concession. Surely it is worth a final re-think on that basis if the right hon. Gentleman really wants areas such as Radnorshire to have an area committee.

Sir Wyn Roberts : The hon. and learned Member for Montgomery (Mr. Carlile) and others are anticipating a difficulty that will not occur. If there are 17 councillors in Radnorshire--Radnorshire is the smallest area that I can think of where there might be an area committee--I cannot see that the proposition will not be attractive to all 17 councillors, bearing in mind that they are members of the unitary authority as well.

Mr. Rowlands : I do not want to make a speech ; I simply want to elicit some information from the Minister. Earlier, I asked a simple question, to which I still have not received an answer. In clause 26 of the Bill, the unitary authorities are given a specific duty to prepare service delivery plans. How will they be able to prepare such plans when they will have neither the power nor the responsibility for delivering the services if area committees are established ? Can the Minister explain how that will happen ?

Sir Wyn Roberts : Obviously, in so far as the unitary authorities have delegated to an area committee, the area committee will take responsibility for meeting that part of the service delivery plan. There is nothing unusual in that. Currently, we have county committees which are part of the county authority, and there is collaboration between committees and the main authority. We anticipate that that will also occur where we have area committees of unitary authorities.

Mr. Rowlands : In clause 26, the draft proposals for service delivery plans must be prepared by November 1995--unitary authorities will be putting out service delivery plans before the area committees have been established. They will offer to deliver services and subsequently find that they will not have the power or responsibility for delivering the service plans. They will not even have control over the money. How will that conundrum be solved ?

Sir Wyn Roberts : I think that the hon. Gentleman well understands how it will be solved. In so far as the unitary authority delegates responsibility for the service delivery plan, the committee will be responsible for meeting the requirements.

Question put and agreed to.

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

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New clause 15 --

Area committees : membership etc.

.--(1) This section applies where an area committee has been established by a council in accordance with an approved decentralisation scheme.

(2) The provisions of the 1972 Act with respect to arrangements for the discharge of functions by committees of local authorities and sub- committees, and the appointment of such committees and sub-committees, shall be subject to this section and section (Sub-committees of area committees) .

(3) Every person who is a member of the council for an electoral division which falls within the area for which the committee is established shall be entitled to be appointed to the committee at his request.

(4) The committee may appoint additional persons, including members of the council who are not entitled to membership of the committee under subsection (3), as members of the committee.

(5) No other persons shall be eligible for appointment to the committee.

(6) In this section, in relation to an area committee, "co-opted member" means any member appointed by the committee under subsection (4).

(7) Where the Secretary of State has given a direction under section 297 of the Education Act 1993 (power to direct appointment of members of certain committees) which applies to the committee and can only be complied with by the appointment of one or more additional members to the committee, it shall be the duty of the committee to exercise its powers of appointment to secure compliance with the direction.

(8) A co-opted member of an area committee shall not be entitled to vote at any meeting of the committee on any question which falls to be decided at that meeting.

(9) Nothing in subsection (8) shall prevent the appointment of a person, in compliance with a direction under section 297 of the Act of 1993, as a voting member of an area committee.

(10) In the application of section 101 of the 1972 Act (arrangement for discharge of functions by local authorities) in relation to the committee

(a) subsection (1) shall have effect as if it gave power to the committee, if authorised to do so by the decentralisation scheme, to arrange for the discharge of any of its functions by a local authority other than the authority who made the scheme ;

(b) subsection (2) shall have effect with the omission of the words "unless the local authority otherwise direct" and (in the second place where they occur) the words "the local authority or". (11) Sections 102(3) of the 1972 Act (power to include persons who are not members of the local authority concerned) and 15 of the Local Government and Housing Act 1989 (political balance on committees) shall not apply in relation to membership of the committee. (12) The term of office of each of the co-opted members of an area committee shall be fixed by the committee.

(13) Section 102(2) of the 1972 Act (number of members of committee and terms of office) shall not apply in relation to the committee. (14) In the case of an appointment made in order to comply with a direction under section 297 of the Act of 1993, the committee shall exercise its powers under subsection (12) subject to any provision of the direction relating to terms of office.'.-- [Sir Wyn Roberts.] Brought up, read the First and Second time, and added to the Bill.

New clause 18 --

Sub-committees of area committees

.--(1) In this section "sub-committee" means a sub-committee of an area committee.

(2) The members of a sub-committee shall be appointed by the area committee from among persons who are

(a) members of the area committee appointed under subsection (3) of section ( Area committees : membership etc. ) ; or

(b) entitled to be members of the area committee by virtue of that subsection.

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(3) Subject to subsection (10), a sub- committee may appoint additional persons, including persons who are not members of the area committee concerned, as members of the sub-committee.

(4) No other persons shall be eligible for appointment to a sub-committee.

(5) In this section, in relation to a sub-committee, "co-opted member" means any member of the sub-committee appointed under subsection (3).

(6) Where the Secretary of State has given a direction under section 297 of the Education Act 1993 (power to direct appointment of members of certain committees) which applies to a sub-committee, it shall be the duty of the area committee concerned and the sub-committee to secure compliance with the direction.

(7) A co-opted member of a sub-committee shall not be entitled to vote at any meeting of the sub-committee on any question which falls to be decided at that meeting.

(8) Nothing in subsection (7) shall prevent the appointment of a person in compliance with a direction under section 297 of the Act of 1993 as a voting member of a sub-committee.

(9) Sections 102(3) of the 1972 Act (power to include persons who are not members of the local authority concerned) and 15 of the Local Government and Housing Act 1989 (political balance on committees) shall not apply in relation to membership of a sub-committee. (10) The number of members of a sub-committee and their terms of office shall be fixed by the area committee concerned.

(11) Section 102(2) of the 1972 Act (number of members of committee and terms of office) shall not apply in relation to the sub-committee.

(12) In the case of an appointment made in order to comply with a direction under section 297 of the Act of 1993, the area committee shall exercise its powers under subsection (10) subject to any provision of the direction relating to terms of office.'.-- [Sir Wyn Roberts.]

Brought up, read the First and Second time, and added to the Bill.

New clause 6 --

Financing of local government in Wales

-- .--The Secretary of State, after consulting the Treasury, shall within six months of this Act coming into force present a report to Parliament on methods to restructure the financing of local government in Wales ; such report shall include consideration of (a) the feasibility of local government raising a local income tax, or receiving a proportion of the VAT and corporation tax arising from businesses within their area ;

(b) a tax placed upon second homes in Wales, the proceeds of which shall accrue to local government ; and

Brought up, and read the First time.

Mr. Wigley : I beg to move, That the clause be read a Second time. New clause 6 deals with an essential aspect of local government : finance. I tabled the new clause very much as a probing new clause because in our discussions so far on the Bill we feel that the question of financing local government in Wales has not been adequately dealt with.

As hon. Members will see, under new clause 6 the Secretary of State would, within six months of the Act coming into force, report to Parliament on methods of restructuring the financing of local government in Wales. The new clause looks specifically at three aspects : first, the possibility of raising a local income tax and taking a proportion of value added tax or corporation tax within Wales ; secondly, a levy on second homes ; thirdly, the abolition of council tax and the uniform business rate.

I do not apologise for pressing this matter at this stage, because I had thought that we might be moving towards coherent consideration of local government financing as well as structures when on 5 December 1990 the then

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Secretary of State for the Environment made a statement to the House and mentioned doing away with the hated poll tax. He made it clear when discussing that tax that he believed that there was an argument for considering the structures of local government along with its financing, which appealed to us very much.

Back in the 1970s, we gave some substantive evidence to the Layfield committee when it considered the financing of local government. In paragraph 3 of our evidence, we stated that finance should not be

"considered in isolation from local government boundary structures or functions . . . we believe all these aspects of local government to be interdependent."

We warmly welcomed the Government's comment in 1990 that they were considering finance and intended to consider structures and functions at the same time.

9.45 pm

Thinking back to Layfield in the mid-1970s, it is worth noting that the committee came out in favour of a local income tax. On page 281 of its report, it stated that local income tax

"is a feasible source of local revenue for non-metropolitan counties, metropolitan districts, Scottish regions and islands authorities, and possible London boroughs."

If that was possible in the 1970s, how much more practical and possible is that source of finance for local government now, with the move to the computerisation of so much information ? If the argument was valid then, it is even more valid now.

Let us consider the pattern in other countries. Many of them source a good proportion of local government revenue from taxation on income and profits. In Sweden, Finland, Denmark, Norway, Switzerland, Luxembourg, Germany and Belgium, more than 80 per cent. of local authority income comes from taxation on income and profits. My figures are from the late 1980s and may have changed a little during the past few years. That is a far more acceptable means of raising income for local government as it is more progressive.

We all know about the anomalies of the council tax system. It may not be so bad as the poll tax system, but it contains serious anomalies and causes serious hardship. To make the system in any way acceptable, the Government have had to move more and more to financing local government in Wales from the central Exchequer so that only a small proportion of Welsh local government income comes from its variable, independent source of finance-- the council tax. I shall give the figures in a moment.

The freedom of local government is eroded if it does not have the financial freedoms and responsibilities which go hand in hand. One of the problems is that if one moves to a system where up to 90 per cent. of local authority income comes from a central Exchequer by way of rate support grant, revenue support grant, or whatever the terminology may be at the time, it enables central Government to put stringent conditions on the money which goes to local government and necessarily takes away its freedom.

Our new clause, which ensures that the Secretary of State will report on other possibilities, suggests that a certain proportion of the value added tax raised in Wales should go, as of right, to Welsh local authorities. After all, the tax is highly geographically definable because it arises at a certain point which, in computer terms, can be cross-coded to postcodes and easily identified with local authority areas. Of the 17.5 per cent. raised in VAT, a certain proportion--perhaps 3 percentage points--should

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go automatically to local authorities. Likewise, a proportion of corporation tax--10 per cent., or whatever-- should go to local authorities.

By ensuring that those proportions of central taxation go to authorities as of right, and by ensuring flexibility in local income tax, we could do away with the council tax and the uniform business rate. There is no doubt that the uniform business rate is a severe burden. It is an overhead which in times of recession can pull down businesses which would otherwise be viable. It is a fixed cost, whereas a proportion of corporation tax--or, if it is a

non-incorporated business, a local income tax--is variable with income, so if income goes down it is not a fixed cost which pulls down the whole viability of the business. I believe that those questions deserve attention and that attention should be in the context of the structures, boundaries and functions of local government. I mentioned the dependence in Wales on grants from the central Exchequer. I shall look next at the council tax as a proportion of the total income of local authorities in 1993-94. We must bear in mind the fact that the council tax is the only independent income that we have of any significance. There may be sundry and miscellaneous incomes, but those are usually very small.

In Mid Glamorgan, the council tax represents only 9.5 per cent. of the total income of the authority. In other words, 90.5 per cent. comes from sources outside that authority, and the freedom of that authority has been severely eroded. The figure in Powys is 12 per cent, in Gwynedd 14 per cent., in Dyfed 14.4 per cent. and in Clwyd 15.2 per cent. The average for all Welsh counties is 12.5 per cent. With districts, the position is even more grotesque. In the Rhondda, the value of the council tax as a proportion of total income is 5.3 per cent., which means that some 94.7 per cent. comes from other sources. We cannot have genuine local freedom in local government when the variable proportion of the income is greatly limited. As for the overall position in Wales, the total 1993-94 figures of all incomes for district and counties in Wales combined is £2,452 million, of which the council tax provides £297 million. That emphasises the point.

If 3p of the 17.5p in the pound of VAT came as a right to local government, it would generate about £300 million in Wales. If 10 per cent. of corporation tax came through to local government, it would generate £100 million. A local income tax of something like 4p in the pound-- that would be the variable element, because the other two are parts of central Government taxation, although we feel that they should accrue to local government--would generate £400 million. That would give something like £800 million as of right, compared with the figure of just under £300 million which we are talking about now. That £800 million would be unfettered income and would not be subject to the stringent controls which inevitably must come from a Government who have the opportunity to put conditions on the grants that they pass out. Such considerations should be taken on board at this stage. I believe that it is irresponsible for us to be setting up structures and functions of local government without looking at the finances.

If local government is to provide genuine local democracy, it must have the responsibility and the freedom to undertake policies in line with the needs of any area. Clearly, there are poor areas in Wales and there must be an equalisation function coming through from the central

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Exchequer, via the Welsh Office. I accept that any variable independent sources of that kind would probably never be more than 30 to 40 per cent. because of the importance of maintaining standards in areas of deprivation.

In allocating grants to areas, there needs also to be a close scrutiny of what criteria are used and what considerations come into play for the allocation to meet the local circumstances. For example, there clearly has to be consideration of deprivation, sparsity and demographic factors in any area and these possibly need to be fine tuned. We are always playing with them, and they are complex in the model that we have at present, but something needs to be done to make sure that money is going by way of equalisation to the areas that really need it, and that areas generally have much greater freedom with regard to their finance.

In moving the new clause and in calling for a report, we are in no way undermining the Bill. The suggested time scale to assemble thinking on the restructuring of local government finance is not unreasonable. If we do not provide for such a rethink in the Bill, the Government will have no other chance to reconsider in depth local government finance in Wales. Given the nature of the Bill, and at this stage in its proceedings, I realise that we cannot do any more than I have suggested, but my suggestion is well worth consideration. The relevance of such a report goes beyond Wales, but it should certainly be considered in the context of Wales.

Given the spirit in which I have introduced the new clause, I hope that the Government will be prepared to take on board my suggestions and will find some positive way to respond.

Mr. Murphy : The hon. Member for Caernarfon (Mr. Wigley) has rightly raised the issue of local government finance, which was dealt with rather perfunctorily on Second Reading, in Committee, and now on Report.

The new clause presents the Government with an opportunity to reconsider some of the anomalies of the local government finance system. They should consider returning the business rate to local authorities, and in the short term they should certainly examine the number of bands in the council tax. They should, unquestionably, reform the system of standard spending assessments to make them more intelligible. They should also abolish the capping of local government.

I hope that the Minister will be able to answer one specific question about local government finance. It arises from a written answer from the Parliamentary Under-Secretary of State for the Environment published in Hansard today. It refers to the remuneration of members of local authorities. We should consider capping in conjunction with the remuneration of councillors. I understand that a letter has been sent to all the local authority associations asking for their views on the Government's proposal to change the way in which members of local authorities are remunerated--and about time, too.

The Labour party entirely agrees with making a change for the better because many people are discouraged from being local authority members because of the appalling remuneration that they receive. If the proposed change means, however, that a local authority has to pay every single penny of the remuneration, that could mean that it is penalised under the capping regime.

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Does the consultation process on remuneration apply to Wales, bearing in mind that we are in the middle of a reorganisation ? What are the Minister's views about the possibility of capping as a result of the remuneration of councillors under the new proposed regime ?

Mr. Gwilym Jones : Other than under a deeply philosophic guise, I cannot agree with the hon. Member for Caernarfon (Mr. Wigley) that this is the right time to introduce a report on the restructuring of local government finance, even if it is designed only to initiate the first stage of such a review. As the hon. Member knows, we are not proposing any changes to local government finance in the Bill. The arrangements will continue unchanged from the current councils to the new ones. I therefore do not think that it is appropriate to pursue this probing new clause and I suggest that the House should not accept it.

I should like to take the opportunity to say that I believe that the council tax has been well accepted by the council tax payers of Wales. It combines fairness with simplicity of administration and it overcomes those aspects of the rates and the community charge that were most criticised. It achieves accountability through a clear link between what councils spend and what local residents pay. In turn, under the uniform business rate, businesses benefit from certainty and stability. Increases in the poundage cannot exceed the increase in the retail prices index and businesses pay rates on a common basis. That has been a great step forward and underlines the desirability of making no change to local government finance. The hon. Member for Torfaen (Mr. Murphy) asked about consultation and capping. I believe that the consultation exercise would give him the opportunity to pursue his questions. We look forward to studying the hon. Gentleman's detailed views on all those points, which will be taken fully into account when we consider the matter.

Mr. Murphy : With the permission of the House, Mr. Deputy Speaker. Local government in Wales needs an answer on what the Under-Secretary of State for the Environment said today. Does that consultation process now apply in Wales ? Given that local government is in the process of reform, will our Welsh associations be asked specifically for their comments, and will whatever occurs in England in terms of remuneration of councillors apply also to Wales ?

Mr. Jones : Yes, it certainly will. I look forward to hearing the views of the hon. Gentleman and his colleagues on those important matters.

It being Ten o'clock, the debate stood adjourned.

Ordered,

That the debate be resumed tomorrow--[ Mr. Arbuthnot .]

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