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Baroness Hollis of Heigham: Perhaps the Minister had a bad supper. His reference to considerable margins of error which are never pointed out can be dealt with at some length. If the noble Lord checks his statistics against mine and the document, he will find that in most cases I took the median point of the Government's average range of variations. Where the range runs from 90 per cent. to 95 per cent., I have given a figure of 92 per cent., so I have tried to handle the figures at least as scrupulously as the statisticians.

The Minister has not even faintly begun to address the report. Because he had a speech on the subject prepared for him last Tuesday he is not willing to engage with this issue, which is concerned with encouraging local authorities to maximise entitlement and in the process to report to Parliament. I am so disappointed at the irritable and bad-tempered way in which the Minister, unusually for him, has replied. I wish to test the opinion of the Committee.

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8.29 p.m.

On Question, Whether the said amendment (No. 58) shall be agreed to?

Their Lordships divided: Contents, 18; Not-Contents, 61.

Division No. 3


Addington, L.
Alderdice, L.
Carlisle, E.
Carter, L.
Clancarty, E.
Dubs, L.
Ezra, L.
Falkland, V.
Farrington of Ribbleton, B.
Gould of Potternewton, B. [Teller.]
Grey, E.
Hollis of Heigham, B.
Kilbracken, L.
Morris of Castle Morris, L.
Redesdale, L.
Russell, E. [Teller.]
Turner of Camden, B.
Whitty, L.


Ailesbury, M.
Allenby of Megiddo, V.
Anelay of St. Johns, B.
Astor of Hever, L.
Attlee, E.
Balfour, E.
Belstead, L.
Berners, B.
Biddulph, L.
Blatch, B.
Brabazon of Tara, L.
Brigstocke, B.
Brookes, L.
Brougham and Vaux, L.
Cadman, L.
Chesham, L. [Teller.]
Clitheroe, L.
Coleridge, L.
Courtown, E.
Craigavon, V.
Cumberlege, B.
Denbigh, E.
Denton of Wakefield, B.
Dixon-Smith, L.
Downshire, M.
Feldman, L.
Ferrers, E.
Goschen, V.
Haddington, E.
Hardwicke, E.
Harris of Peckham, L.
Henley, L.
Hindlip, L.
HolmPatrick, L.
Keyes, L.
Kingsland, L.
Lindsay, E.
Long, V.
Lucas, L.
Lucas of Chilworth, L.
Luke, L.
Lyell, L.
Mackay of Ardbrecknish, L.
Mackay of Clashfern, L. [Lord Chancellor.] Mackay of Drumadoon, L.
Miller of Hendon, B.
Mountevans, L.
Munster, E.
Onslow, E.
Oppenheim-Barnes, B.
Park of Monmouth, B.
Pearson of Rannoch, L.
Renton, L.
Shaw of Northstead, L.
Skelmersdale, L.
Strathclyde, L. [Teller.]
Trumpington, B.
Ullswater, V.
Vivian, L.
Wilcox, B.
Wynford, L.

Resolved in the negative, and amendment disagreed to accordingly.

13 Mar 1997 : Column 510

8.37 p.m.

[Amendment No. 59 not moved.]

Clause 6 [Role of Audit Commission]:

[Amendment No. 60 not moved.]

Clause 6 agreed to.

Clause 7 agreed to.

Clause 8 [Directions by Secretary of State]:

[Amendment No. 61 not moved.]

Clause 8 agreed to.

13 Mar 1997 : Column 511

Clause 9 [Enforcement of directions]:

Earl Russell moved Amendment No. 62:

Page 15, line 34, at end insert--
("( ) Before serving any such notice, the Secretary of State shall consult the Audit Commission on the question whether the local authority was capable of achieving the specified standards of service without exceeding its capping limits.").

The noble Earl said: This amendment asks the Secretary of State to consult the Audit Commission on whether an authority is capable of achieving the specified standards of service without exceeding its capping limits. We have heard about the demonising of claimants. I think that we should also think about the demonising of local authorities--and there has been a good deal of it in the past 18 years. There has been a good deal of blame heaped on authorities for not doing things which many people believe that the amount of money given to them would not have enabled them to do. The Minister is perfectly entitled to say that many people are mistaken--that has happened before and it will happen again--but the point of the amendment is not to say who is right; it is to get a competent and impartial judge of who is right, which might enable us to make a certain amount of progress on the subject.

Again, if it does not happen in this way, it might happen in another way which the Minister would find less congenial. The question whether the amount of money given to a local authority is capable of being sufficient, if competently managed, to do the task set before it, is something which is liable to judicial review. Recently that was confirmed for me in a Written Answer from the noble Viscount, Lord Ullswater. It was a judgment of the court in a case involving Claycross Council. It did not uphold the claim on that occasion but ruled that the case was one of which it could perfectly properly take cognisance. If it is not to be done by the Audit Commission, it may be done through judicial review which in this case I believe is the less competent way of doing it.

The Minister may refer to the money that is given to local authorities to fight fraud; but that money is top-sliced off an ordinary grant, so it does not increase the amount of money available but only earmarks a certain part of it. But that process of earmarking steadily diminishes the amount left over to everything else. Before everyone blames the local authorities for everything that they do, perhaps we should have some independent investigation. I beg to move.

Lord Whitty: I rise briefly to support the noble Earl's amendment. I do so in defence of hard-pressed local authorities who in this area as in others find it difficult to reconcile the escalating demands of Parliament through statutory requirements and orders such as those envisaged in this clause with the increasingly rigorous financial restrictions placed upon them by Parliament. It is in the interests of central government and all of us that local authorities improve their standards, and it is the responsibility of local authorities to do so. However, as in other areas where Parliament imposes obligations on local authorities, there is real difficulty in complying with such an order if it leads to expenditure that so distorts local authority

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budgets that capping limits are threatened. That is the contingency with which I believe the noble Earl is concerned. Local authorities then face the unenviable task of breaking one law or the other in the potential conflict between this clause and their responsibilities under local authority finance Acts.

This is dangerous territory. My noble friend Baroness Gould and I in our former capacities used to tell Labour-controlled local authorities that whatever they did in their budgetary strategies, they should stay within the law. Occasionally their riposte to us was, "That is all very well; but which law should we break?" It is very dangerous territory because it creates a situation in local authority management in which the reputation of the law is called into question. We do not want to get into that kind of conflict. The amendment does not of itself resolve that conflict; it ensures that the DSS and the Secretary of State seek advice from the Audit Commission and other sources and takes into account the financial and legal implications of an order under this clause so that the Secretary of State can make a judgment accordingly. In certain circumstances there may be better ways of ensuring that performance is improved which do not involve the possibility of a local authority refusing or failing to comply with this instruction. For those rather more general reasons, I support the amendment.

8.45 p.m.

Lord Mackay of Ardbrecknish: Before I come to the details of the amendment, I should like to remind your Lordships of the current funding arrangements. Subsidy is provided by central government to meet the cost of administering housing benefit and council tax benefit, including measures to ensure the prevention and detection of fraud. In addition, local authorities may earn additional funds through the weekly benefit savings scheme. This can provide extra resources to be used against fraud, and many local authorities have achieved very good performance by targeting their resources and activities intelligently. Fraud overpayments identified by the local authority attract full subsidy, and in most cases the authority will be able to recover all or some of the amount overpaid. Elsewhere in the Bill we are making changes which will further improve authorities' ability to recover these overpayments. On top of this, there is provision for authorities to bid for moneys from the challenge fund where they are able to offer innovative schemes to tackle fraud. Thus, in addition to the direct saving to the authority from stopping fraudulent claims, further effort on fraud work can produce extra income. On the more general question of capping, it is for local authorities to ensure that the budget that they set enables them to meet their statutory duties. But in setting a cap which is reasonable, appropriate and achievable, account is taken of all the circumstances that an authority may face.

I now turn to the changes to the procedures introduced by the Bill which the proposed amendment would make. The amendment appears to envisage that the issue of a notice that a determination is being considered and indeed that a direction on standards will be taken in isolation. This is not the case. There are

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several stages during which account should be taken of the particular circumstances of a local authority and at which the authority will be able to put forward views.

The report to the Secretary of State on the administration of housing and council tax benefit will cover the arrangements currently in place within the authority, including the measures taken to prevent and detect fraud. Recommendations in the report will reflect these and include practical steps that the authority can take to improve performance. The local authority will be given full opportunity to comment on the report. In putting forward proposals, it may include reference to any financial constraints. If the authority wishes to make representations on the resource implications of any recommendations and its impact on the timetable for improvement, it will be able to do so.

Where a direction has been issued and the local authority has failed to attain the standards required notice that a determination is being considered will be issued. This will be a further opportunity for the authority to comment, in particular, on why a determination on standards on contracting out should not be issued. Any representations made about financial constraints would need to be borne in mind by the Secretary of State before making his decision. I add that to have to refer to the Audit Commission at that stage before any response has been received from the authority or the Secretary of State has decided on a determination seems to be a pointless administrative expense.

I do not believe that this amendment is necessary to ensure that proper account is taken of the resources available to the local authority. It creates an unnecessary additional step in those cases where resources are not at issue. I hope with that explanation of how we envisage the system will work and that we believe the amendment would not help, the noble Earl will feel able to withdraw it.

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