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Lord Mackay of Ardbrecknish: Of course I shall look into the matter and, if I believe there is anything to be said, I shall certainly write to the noble Baroness. However, our experience is that authorities which undertake the most thorough checks and verification on claims are often those which achieve the best savings from their anti-fraud work.

Baroness Hollis of Heigham: There is no disagreement between the Minister and myself on that point. It is clear that those authorities which have been rewarded for detecting fraud are those which have detected fraud most successfully. Indeed, that is true by definition; it is a truism. However, I am concerned about the other end of the equation; namely, where authorities have been successful at preventing fraud occurring in the first place and where, therefore, there is no fraud to detect. In such cases, authorities may be penalised for not reaching their targets.

Having said that, I believe that we have made our point. I hope that the Minister will look into the matter because all of us are extremely worried about it; indeed, that applies both to local authorities and to taxpayers. The Government really must review their method of supporting local authorities in seeking to prevent as well as to detect fraud. At present the Government are sending out perverse and contradictory signals, which cannot be in anyone's interest. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Mackay of Ardbrecknish moved Amendment No. 255CD:

Page 161, line 10, at end insert--
("( ) For subsections (4) and (5) (agreements with other authorities for carrying out of functions) substitute--
"(4) Nothing in this section shall be read as excluding the general provisions of the Local Government Act 1972 or the Local Government (Scotland) Act 1973 from applying in relation to the council tax benefit functions of a local authority.".").

On Question, amendment agreed to.

Earl Russell moved Amendment No. 255CDA:

Page 162, leave out lines 28 to 31.

The noble Earl said: In moving the above amendment I shall, with the leave of the Committee, speak also to Amendment No. 255CDB. The amendments refer to two related points about drafting but, nevertheless, they are important. I shall read some of the words in the legislation that I propose to delete so that Members of

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the Committee will be able to understand what is worrying me. New Section 140C(1) to the Social Security Administration Act 1992 says:

    "Subsidy shall be paid by the Secretary of State in such instalments, at such times, in such manner and subject to such conditions as to claims, records, certificates, audit or otherwise as may be provided by order of the Secretary of State".
If those words do not say that the Secretary of State may do whatever he likes, then I do not know what they mean.

So far I have made a perfectly conventional point, but what has begun to interest me is the effects on the relationship as regards the legislature, the executive and the judiciary of drafting legislation in that manner. I say that because a Secretary of State to whom those words are applied is, I believe, effectively entirely freed from statutory restraint in relation to the power there described. In fact, he is put back in the position that the executive was in before Parliament first evolved of not being controlled by parliamentary statute because it was used to freedom from control.

However, nature does abhor a vacuum. People do attempt to control power, so the natural result of leaving power thus unfettered by statute is that the only way it can be controlled is through judicial review. In speaking in a debate on 5th June my noble friend Lord Rodgers of Quarry Bank offered statistics for applications for judicial review. He said that in 1976 there were 500 applications, but that there were 3,000 in 1993.

I have many times heard the blame for that rise in applications being placed on the judiciary, and I have many times heard it being placed on the executive. The question I want to raise is: if we draft legislation which leaves Secretaries of State that free from statutory restraint, ought we not to desist from blaming either the judiciary or the executive? Indeed, should we not really be blaming ourselves? I beg to move.

Lord Mackay of Ardbrecknish: When I looked at the content of the noble Earl's amendments I suspected that the argument we have just heard would indeed be the one put forward. Perhaps I may tell the noble Earl that I am not entirely sure that the Secretary of State is given such unfettered powers by virtue of the two new subsections. In fact, they are fairly well defined: they refer to the subsidy, the instalments and the times that he should pay them in, and so on. They also refer to the,

    "claims, records, certificates [and] audit",
that he might require in order to satisfy himself that public money is being properly spent.

I am well aware that the noble Earl is always suspicious--I nearly said rightly suspicious--of the executive asking Parliament to give itself lots of power. If the noble Earl is worried about these two minor pieces of legislation I invite him to look at a clause passed in the other place only yesterday which is winging its way to this Chamber and which, I believe, gives a Henry VIII power to at least one of my clan of considerable breadth and scope. However, that is another matter.

Perhaps I may tell the noble Earl what those two subsections are about. I hope he will then be persuaded that it is not unreasonable--and, indeed, that it is in the

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interests of good government, both from our point of view and that of local authorities--that we should have such powers.

Local authorities are currently required to submit estimates before and during the course of the year on the basis of which payments on account of subsidy are made pending the receipt of a final audited claim after the end of the financial year. The provision at Schedule 10 for subsidy to be paid by instalment is intended to put the payments on account of subsidy on a statutory basis so that they are local authorities' by right rather than an exercise of discretion. If such payments were not made, an unacceptable burden would be placed on local authorities' budgets and cash flows.

Apart from denying authorities the right to receive subsidy in advance of incurring benefit expenditure, the amendment would also remove the power to require authorities to submit a claim for subsidy, to have it audited, to keep records and otherwise satisfy the Secretary of State as to the propriety of their claim for subsidy and the awards of benefit on which it is based. I suggest that the latter is obviously unacceptable as there would be no check on the accuracy of the claim or the propriety of the expenditure incurred. In the interests of both local authorities and the public purse I hope that the noble Earl can see the merits of new Section 140C(1).

Turning to new Section 140C(2), there are often cases where local authorities submit inaccurate or incomplete claims for subsidy which are qualified by auditors. After inquiry as to the reason for the inaccuracy, or after these claims have been qualified by the auditors, it may transpire that it is not possible for the matter to be properly quantified. Generally there is no real doubt that the local authority has incurred proper expenditure, even if its precise extent is open to question. The accepted, although infrequent, practice in these cases is for the Secretary of State to employ his powers of estimation in order to resolve the matter. The amendment, by removing the power to estimate subsidy, would leave no alternative but to withhold or claw back any subsidy for expenditure which cannot be properly quantified by auditors, or where a claim is incomplete.

I believe that it is in the interests of local authorities and local council taxpayers who would ultimately fund and subsidise benefit expenditure that the Secretary of State should retain powers to estimate subsidy. Therefore I do not believe that the Secretary of State is being given fairly unfettered power here, entirely free of any restraint. New Section 140C only fills out duties which are set out in new Sections 140A and 140B. I believe that is the way we have to proceed in order that we can set up a reasonable administrative system for paying these subsidies in a sensible way without--dare I say?--cluttering primary legislation, and without the problem of having to come back for primary powers when we need to make changes of a fairly minor nature for administrative reasons. I hope with those remarks and assurances the noble Earl will feel able to withdraw his amendment.

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7 p.m.

Earl Russell: I am grateful to the Minister for that reply. He has perhaps inevitably taken the amendment in a somewhat literal manner. He has taken it as an attack on the existence of a power of any sort, whereas in fact my concern was rather with the drafting. I put it down in this form to probe the drafting because I had no intention of putting it to a Division. The Minister must by now have read the report of his noble friend Lord Renton on the preparation of legislation. I am fully in accord with the general arguments of that report. One could perhaps have said that subsidy should be paid in a reasonable manner and subject to audit, which would have been a general statement of principles by which the power was governed, and which would then be subject to interpretation by the courts. The courts would have had something to bite on. But in this drafting I really do not see what the courts can bite on, especially with the addition of the words "or otherwise".

In all the Minister said, I heard no justification at all for including the words "or otherwise". It is this full and fussy drafting which at the same time does not actually create any restriction which may be judicially investigated, which is giving me considerable cause for concern. Even if we were going to have a power, it could have been drafted a great deal better than it is here. This type of drafting invites judicial review. However, I shall not solve that problem at this time of night. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 255CDB not moved.]

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