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Baroness Hamwee moved Amendment No. 212D:

After Clause 67, insert the following new clause--


(" . Chapter IVA of the Local Government Finance Act 1992 (limitation of council tax and precepts), as inserted by Schedule 1 to the Local Government Act 1999, shall not apply to the Greater London Authority.").

The noble Baroness said: I beg to move Amendment No. 212D standing in my name. This amendment inserts a new clause to provide that the chapter on capping, which will be brought into effect by the Local Government Bill, as it now is--it will no doubt become an Act--shall not apply to Greater London or to the Greater London Authority.

We have been told that the authority will not be regional government, nor local government; it is sui generis. The Secretary of State has considerable powers under the Bill. Much of the income depends on both the general grant and the transport grant under Clauses 85 and 86. There are provisions for credit approval and for redistributing the receipts of functional bodies.

During the passage of the current Local Government Bill, to which I referred, and on other occasions, for the reasons which we gave in the debate on the amendment concerning tax-varying powers and a referendum, we made it clear that we believe that in order to operate well, local government or, indeed, any sphere of government, should not be subject to the rigid, heavy control of the Secretary of State. For this purpose, I accept that the GLA is not local government, although local government financial provisions are, by and large, being applied to it.

I am well aware that the provisions in the Local Government Bill are intended to be reserve provisions. I am also only too well aware that there is no legislative assurance as to the circumstances in which those provisions will be applied.

We believe that if capping powers are to apply to the new authority, the Government must justify why they should do so. That is why we tabled the amendment.

Lord Dixon-Smith: It is interesting to discuss an amendment which seeks to remove the impact on the Greater London Authority of another Bill which is still proceeding through the House. But removing the impact of the Local Government Bill--it has been accepted for other purposes that the Greater London Authority should be included in that Bill as a best value authority--does nothing about Clause 26(8). That clause gives the Secretary of State power to,

    "impose limits on the expenditure which may be incurred by the Authority by virtue of section 25(1)", and establishes the authority's powers. Nor does it do anything about Clause 71(5) which gives the Secretary of State power to alter the constituents of a budget.

I entirely agree with the principle that capping is obnoxious and I support the noble Baroness, Lady Hamwee, in her comments on this so-called "reserve" power. All those involved in local government have always been concerned about the potential for abuse in reserve powers. In my experience, for governments they are a bit like drug addiction; they are

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habit-forming. I therefore share the noble Baroness's concern about this general matter. But unless we are able to take fairly dramatic action on the content of this Bill, which so far we have failed to do though there are further stages when we may yet do so, simply accepting Amendment No. 212D would not alter the state of affairs very much. Therefore, at this stage I do not support the amendment.

Lord Whitty: The noble Lord, Lord Dixon-Smith, is right that we are still in discussion on the general issue on the Local Government Bill, and Amendment No. 212D is either an indirect way of getting back to those arguments to which we will no doubt return in any case, or it is a means of exempting the GLA from a financial regime which applies to the rest of local government.

We made it clear throughout our discussions on the GLA that it will be subject to the same arrangements for limiting council tax increases as local authorities generally. As we explained in the other context, the Government have a duty to protect local taxpayers and therefore must have those reserve powers. At the same time, we made it clear that we hope never to have to use those powers for the GLA or for any other local authority. But the GLA in this context is a local authority. A financial regime applies to it and this move to exempt it would not be appropriate. It would be contrary to what we put to the electorate in the referendum. I hope, therefore, that the noble Baroness will feel able to withdraw her amendment.

Baroness Hamwee: I am interested that the noble Lord, Lord Dixon-Smith, seems to feel that the clause is not wide enough. We can certainly attempt to extend it.

We were addressing the provisions which will almost certainly be included in the current Local Government Bill because we are realistic. Whatever this Chamber decides to do with those capping powers, we have seen well enough that such provisions would go back to the other place and no doubt be ping-ponged back here. It seems inappropriate not to make the argument which must be made; that is, that we believe--and I accept because I have a dream on this as well--that the Greater London Authority should not be controlled in the same way that often proved inappropriately restrictive in relation to local government. It is the nature of the powers, and the fact that they are described as reserve powers but parliamentary counsel appears not to have been instructed to articulate the reserved nature of the powers, that we find particularly distasteful. We will return to the matter, certainly on the Local Government Bill and quite possibly also on this Bill at a later stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

3.45 p.m.

Clause 68 [Issue of precepts]:

Lord Whitty moved Amendment No. 212E:

Page 36, line 23, leave out from ("for") to end of line 25 and insert ("the reference to sections 43 to 47 below there shall be substituted a reference to the appropriate Greater London provisions;").

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The noble Lord said: In moving Amendment No. 212E, I shall speak also to Amendments Nos. 212F and 212G. They are all technical amendments correcting aspects of the Bill.

At various points in the Bill the respective roles of the mayor and the assembly are set out so that their responsibilities are clear. Schedules 5 and 6 are two examples of that. Schedule 5 sets out the timetable and roles of the mayor and assembly for deciding the original component and consolidated budget requirements, and is given effect by Clause 72. Schedule 6 sets out the timetable and roles for substitute calculations of the budget and has effect whenever substitute calculations are to take place; for example, under Clause 80 if the Secretary of State sets a minimum budget requirement for the Metropolitan Police Authority.

Wherever there is a reference to "budget requirement calculations", Clause 72 should only be cited in the case of the original calculations. In the case of substitute calculations, there should be no reference to Clause 72; instead Schedule 6 should be cited.

These amendments will ensure that Section 40 of the Local Government Finance Act 1992, which concerns the issue of precepts, contains references to the correct provisions. I beg to move.

On Question, amendment agreed to.

Lord Whitty moved Amendments Nos. 212F and 212G:

Page 36, line 26, leave out from ("for") to end of line 28 and insert ("the reference to sections 43 to 47 below there shall be substituted a reference to the appropriate Greater London provisions;").
Page 36, line 34, at end insert--
("(10) In this section, "the appropriate Greater London provisions" means--
(a) sections 70 to 75 of the Greater London Authority Act 1999 and section 47 below; or
(b) in the case of calculations by way of substitute, sections 70, 71 and 73 to 75 of, and Schedule 6 to, that Act and section 47 below."").

On Question, amendments agreed to.

Clause 68, as amended, agreed to.

Clause 69 agreed to.

Clause 70 [Calculation of component and consolidated budget requirements]:

The Chairman of Committees (Lord Boston of Faversham): In calling Amendment No. 212H I must tell the Committee that if this amendment is agreed to, I cannot call Amendment No. 212J.

Baroness Hamwee moved Amendment No. 212H:

Page 38, line 3, leave out subsection (7).

The noble Baroness said: We have just heard from the Chairman of Committees about the pre-emption point. I should be delighted if Amendment No. 212H were agreed to, but I shall speak also to Amendment No. 212J.

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Clause 70 deals with the calculation of component and consolidated budget requirements. For each of the functional bodies, and for the authority itself, the amount is calculated taking account of estimated expenditure, reserves and so forth. Those amounts are totted up. Account is taken of income and if the aggregate expenditure will be less than the aggregate income then for the purposes of these provisions the budget for that body will be nil. Our amendments seek to ask why.

Is it intended as an efficiency incentive? That does not seem to be the case because the savings would go to accumulated reserves and so be counted the following year. Under subsections (4) and (5) of Clause 70, efficiency gains can be anticipated. Is it a matter of control on the functional bodies planning ahead? I hope not. I do not think so. Is it a control mechanism, the ring-fencing of budgets for each functional body? That is probably the case.

We on these Benches would prefer the authority to see the budget as a whole and not simply as a set of constituent parts. Amendment No. 212J provides that the excess will be repayable from the functional body to the authority. In our perhaps ambitious eyes, the GLA should be a body which looks at a number of strategic matters affecting London. It cannot provide certain services direct; its powers are limited and the matters to which it is to have regard are set out in detail. That does not mean the body should not be ambitious for the success of London and consider issues affecting London--I hope your Lordships will forgive the jargon--in a holistic fashion. I prefer the word "holistic" to the term "joined up". I certainly prefer it to a joined-up London for the next millennium, which we are told to hope for in a number of policy areas.

For the authority to look at London's needs and Londoners' aspirations, it will wish to consider its budget as a whole, not as a set of component parts--and our amendments would allow it to do that. In another place, the Government objected to the proposed arrangements because they do not apply to local government finance. Although the authority is to be treated for some purposes as though it were a local authority, this is not local government. Still less are the individual functional bodies local government.

The Minister in another place said that local authorities whose income exceeds expenditure should not have to give away income to other bodies. Instead, they should consider how best it should be used to improve the services. Precisely. We see that as a matter for the authority, rather than having individual bodies squirreling away cash and protecting their budgets in a way that suggests they may be competitive with one another. We hope the various bodies that will undertake the plans for London of the mayor and the authority will be co-operative, not competitive.

The Minister in another place also pointed to clauses that allow each functional body, with the mayor's consent, to make payments to another body. That is the wrong way around: that would be a number of tails wagging the dog. We ought to be looking at the powers

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and effectiveness of the authority as a whole, not forgetting the whole and looking only at the functional bodies.

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