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Baroness Hamwee moved Amendment No. 212B:

Before Clause 67, insert the following new clause--


(" .--(1) The Greater London Authority shall be empowered to adopt proposals for tax-varying powers by a two-thirds majority vote of the members of the Assembly voting.
(2) Before implementing proposals for tax-varying powers, a referendum of those entitled to vote in ordinary elections shall be held in which a simple majority of those voting shall be required to allow the tax-varying proposals to be implemented.").

The noble Baroness said: The new clause is to provide for the authority to be able to exercise tax-varying powers, but subject both to the agreement of two-thirds of the members of the assembly and, importantly, a referendum by Londoners.

Although the amendment is in the part of the Bill dealing with financial matters, we regard it as a question of general principle relating to the different spheres of government. In our view, the devolution of power should include financial matters. I have spoken previously in the Committee about the need for trust between central government and the new authority, not just as some sort of isolated principle, but with a view to the authority's working effectively because we believe that a relationship based on trust will produce

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the best results. The amendment is also about maximising the authority's financial freedom and about clear accountability in financial matters.

The amendment does not require immediate tax varying powers on the part of the authority. What it seeks to do is to allow for that possibility, subject, as I said, to the agreement of two-thirds of the members of the assembly, which is a substantial target to meet, and also to a majority vote in a referendum. Both are important.

I believe that the assembly will have very clear views, particularly as time goes on, as to how the authority will best operate. It will, after all, be in a prime position to assess the effectiveness of the authority in its role of scrutinising the mayor's actions, as a matter of common sense, because of where the assembly members come from, not just geographically, but with their background of representing constituencies and the whole of London.

The majority vote in a referendum is important as well. We believe that Londoners should have the opportunity to contribute to the style, powers and range of their authority. If they agree with a proposition seeking to permit the authority to vary taxes, that is a matter on which their views should be heard very clearly. But, as I said, it is not a matter for immediate implementation. The detail will have to be worked up. We accept that. We appreciate that the amendment is a matter of principle and does not set out the detail. It is the principle to which I ask the Committee to have regard.

There could not be a debate within the authority, or with the people of London, about how tax-varying powers would operate without attention being paid to the tax base which is used. We on these Benches would prefer the authority to collect revenue through devolved income tax powers in the same way as is to happen in Scotland.

In financial matters, as in others, the authority should not be totally controlled by central government. The Bill provides for the sort of constraints which are applied to local government by way of constraints on capital spending, borrowing, the capping of revenue and so on. We believe that the authority should be able to set its overall budget and establish priorities--strategic priorities--within the budget. That, after all, is what the authority is being established for, not to act as a kind of counting house to pull together the aggregate of the functional bodies.

We believe that there will be a problem of accountability, or at any rate of transparency. It is difficult enough now with council tax bills where people tend to look at the amount charged and have a debate about the complexities of the impact of central government revenue grant, gearing and so on. It is not something that lends itself to easy conversation on the doorstep, in a queue at the supermarket or wherever. The need for transparency for the authority's success is important. The clearer the link between spending, tax and the input of Londoners themselves, the better.

There is a cynical argument that without considerable autonomy on the part of the authority it will not achieve very much. We prefer, at this stage certainly, not to be

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cynical but to put down a marker that the matter is important, a marker for the Treasury and for Londoners. I beg to move.

3.15 p.m.

Lord Dixon-Smith: My noble friend Lady Carnegy of Lour must have read the amendment with a feeling of considerable astonishment in view of the long time that was spent discussing financial matters in relation to Scotland. There was then a serious question as to whether the Scottish Parliament should have tax-varying powers, but the tax-varying power under discussion was certainly not on the basis of the general wording we see in the amendment. It was simply the power to amend the basic rate of income tax by 3p up or down.

The noble Baroness, Lady Hamwee, has many beliefs with which I can sympathise. If I am out of order in what I am about to say, or if it is unparliamentary, I hope the Committee will accept my apology in advance. The problem with all matters fiscal is that the devil is in the detail. It is the detail we need to be concerned about. The great problem with the amendment is that there is no detail. I accept that the noble Baroness said that the detail was to come. But if we put the clause in the Bill without the detail we shall be technically putting on the face of the Bill the power for the Greater London Authority to amend any tax that it chose. In my view, that would be quite extraordinary. On these Benches we could not support such an open-ended commitment.

It may well be that there is a case for reviewing the whole question of local government finance and the general tax basis on which local government is presently funded. But that is an entirely separate issue. The Bill is sufficiently large and complex already. If such a matter were introduced, I believe that the Bill would be talked out and would not be passed in this Session. I cannot support the amendment.

Baroness Carnegy of Lour: My noble friend is right. I was surprised by the amendment. The tax-raising powers in Scotland are defined in statute. They may not be adequately defined but they are defined and as time goes on we shall see how they work.

The noble Baroness, Lady Hamwee, made an interesting speech on Second Reading. She knows a great deal about London and has much experience of administration in London. I imagine that in tabling the amendment she is merely enunciating a dream which she and her colleagues on the Liberal Democrat Benches have; namely, that this authority in London will be able to do all sorts of amazing things and use public money to do them. The point about the Scottish Parliament is that it is a legislative Parliament and is to legislate on a wide scale in Scotland. It is possible that legislation may diverge considerably from that brought about in Westminster and that a little more money will be needed, or a little less money. That will be made possible by its tax-varying power.

This is a different sort of assembly. It is to be a strategic authority. Before the noble Baroness decides what she is to do with the amendment, she owes it to us to say what kind of taxation she has in mind for the

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assembly. For example, does she believe it would be acceptable for the London assembly to double income tax for people in London in order that its dreams could be fulfilled? London people already have to pay large sums to the councils. Does she envisage that they will have to pay more to the assembly? What is the scale of what she suggests?

It is a strange amendment. I do not suppose that the noble Baroness wants us to spend too long on it. I hope that in her reply she will tell us about the sort of thing she has in mind for those of us in London who would have to pay the tax.

Lord Whitty: I am not surprised by the amendment. I know where the Liberal Democrats are coming from. Far be it for me to stop people enunciating dreams in any event. However, the amendment covers old ground which we discussed during the referendum legislation. The result of that referendum was for a Greater London Authority which did not have the kind of tax-raising powers which the amendment suggests. Certainly as the noble Lord and the noble Baroness, Lady Carnegy, said, these are sweeping powers which are not appropriate in this context.

The referendum provided the mandate for the authority. We do not intend to depart from the result of that referendum by introducing tax-raising powers for the GLA. Council tax payers contribute to the costs of London-wide services now and will continue to do so when responsibility for those services transfers to the GLA. There will be a contribution towards the costs of the mayor and assembly. But it is not intended that the GLA should become a tax-raising authority, even to the extent of the Scottish Parliament.

The Bill sets out a responsible financial framework for the GLA, creating a single finance system which will give the mayor substantial scope to decide on the allocation of priorities between the GLA and the functional bodies. The mayor will set the GLA's consolidated budget, subject to the assembly's role in approving it, and will be able to allocate resources.

That framework will provide Londoners with the responsible, accountable authority for which they voted. The amendment would move it into an entirely different sphere. I am sure that the noble Baroness will recognise that she is attempting to create a body which is very different from that which we put to the people of London. Indeed, she will realise, even within her own philosophy towards tax-raising powers, that the amendment is extremely wide and would raise substantial anxieties were it to be pursued. I ask her to withdraw the amendment.

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