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Lord Tope: I listened to the noble Lord, Lord Dixon-Smith, with considerable interest and some sympathy because I felt that his heart was not really in this amendment. Therefore I was not surprised to hear him say that the amendment was exploratory. However, I was astonished to hear him say that if the amendment were accepted it would do away with the need for capping. I thought that the noble Lord did not--

Lord Dixon-Smith: I said that it would do away with the need to cap the Greater London Authority.

Lord Tope: I stand corrected. As I say, I thought that the noble Lord moved the amendment with something less than enthusiasm because earlier today he told us that he opposed capping. I know from his days in local government that he opposed capping when it was first introduced by the previous government. He has always been clear and honest about that. Therefore I felt some

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sympathy for him in having to move this amendment which is similar to an even sillier one that was moved by his colleagues in another place.

This amendment seeks to impose on the Greater London Authority a limit which is tied to the retail prices index. Later the noble Lord can explain to me how that is not capping. It seems to me to be the crudest--and most universal in terms of the Greater London Authority--form of capping yet devised. The noble Lord--or probably his friends in another place--has chosen the retail prices index as a most inappropriate method of imposing a crude cap on an authority. I believe that that is entirely inappropriate. From all his years in local government the noble Lord knows as well as I--probably better than I do--that cost increases within local government do not relate that closely to the retail prices index. I am surprised that the noble Lord proposes the imposition of an arbitrary cap tied to the retail prices index by law for ever. At times the noble Lord appeared to confuse the increase in precept with, for example, fare increases under Transport for London. That is a different issue. Here we are discussing precepts.

The noble Lord also said that the amendment sought to place the blame where it lies--presumably with the Greater London Authority. However, it does nothing of the sort. It removes any possibility of blame from the Greater London authority because it has no power to decide that it wishes to impose a much higher, or for that matter a much lower, precept increase. We cannot support this amendment. I think that it is particularly silly. I return to the point I made earlier this afternoon; namely, the proper means of accountability for the mayor and the assembly of the Greater London Authority as regards whatever increase or decrease they want in a precept is to be properly accountable to the electors of London. Such a provision should not be imposed on them by law by means of some rather artificial index that does not relate to local government at all.

4.15 p.m.

Lord Whitty: I am glad that this amendment is both exploratory and philosophical. I think that we have swung from the total freedom of the Liberal Democrats to total constraint on the part of the Conservative Front Bench. The amendment seeks to restrict annual increases in the GLA's precept to annual increases in the RPI. The amendment refers to the GLA precept in the singular, although the GLA will, of course, issue a number of precepts, one to each billing authority. But leaving that aside, the noble Lord, Lord Tope, has made the case absolutely clear; namely, that local authorities have to take into account their responsibilities to their electorate, the resources available, changing circumstances and the priorities that they establish. We do not restrict any other local authorities to fixed increases or to increases which are related to a single RPI figure. We recognise that some flexibility is needed to decide how much local authorities need to raise from the council tax. We consider that there is a limit to that and therefore we have retained the reserve powers.

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However, as the noble Lord, Lord Tope, has reminded us, in a different context the noble Lord, Lord Dixon-Smith, is opposed to those reserve powers. But his proposal would place a far greater constraint on the GLA. The GLA is covered by our "third way"; that is, a course between the total freedom of the Liberal Democrats and the total constraints of the Conservatives. Broadly speaking that brings the GLA within the local government regime. Not only will it be subject to that legislative provision; it will also have a common law fiduciary duty. Under the new legislation that we shall introduce, it will also be subject to best value. It is subject to auditors and the intervention of the Audit Commission. There are all kinds of pressures on the GLA to spend its money wisely within the freedoms that we shall give it under the local authority finance system. If an utterly outrageous increase is proposed, the reserve powers would come into play, but not until that point.

The noble Lord referred to changes in the allocation of revenue support grant and so forth. There are certain changes both within and between authorities, but the intention is to have a fairer distribution, not to take money away from London, as the noble Lord suggested. Some degree of stability is needed. We are looking at changes in the methodology of allocating grants. In the meantime the three-year stability that we have announced has been welcomed by local authorities generally, although it will be subject to some changes such as demographic changes which would need to be reflected in the distribution.

I do not think that this is a sensible amendment. It places far greater constraints on the GLA than are sensible. Our own approach, which has been attacked in the House as having reserved powers, has a far lighter touch than that proposed by the noble Lord. I hope that, on reflection, he will not press the amendment.

Lord Tope: Before the noble Lord, Lord Dixon-Smith, responds, the Minister referred a couple of times to "the total freedom proposed by the Liberal Democrats". I hope he will accept that winning a two-thirds majority from the assembly and then winning a simple majority at a referendum of 5 million London electors does not quite equate to "total freedom".

Lord Whitty: I was speaking in financial terms. Clearly there are political constraints--as always--and the noble Baroness's previous amendment would have put in place a severe political constraint. I accept that. The philosophy is that one should somehow maximise the financial freedom subject to those political constraints, whereas the noble Lord's amendment would minimise the financial freedom and not allow any political judgments to take place.

Baroness Hamwee: That is exactly right. We stand by that. We would add that the political constraints in the various proposals we have made should be with the authority concerned--in this case the Greater London Authority, but it is a point we make for local government generally. Each individual authority with any modicum of instinct for its own self-preservation

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will understand the needs of the political constraints, quite apart from the propriety of applying them. So, yes, political constraints--but at the right level and in the right sphere.

Lord Dixon-Smith: When one has dug oneself into a hole it is always good advice to stop digging. However, we should be quite clear that the reserve powers mentioned by the Minister would be irrelevant if the amendment were to be included in the Bill.

We should recognise that part of the purpose of debate at this stage of a Bill in this House is to test the intellectual strength of the Government's proposals. Although not everyone may agree, it seems to me that sometimes one has to reverse the argument that one would normally produce in order to do just that. At the end of the day, the proof is in what passes through the House. I do not apologise to the Committee for moving the amendment, with which, I admit, I have some philosophical difficulty.

However, the point behind it is serious. There will be problems with the Greater London Authority precept. I accept that political constraints ought to operate effectively on it. The lesson learnt over the years by those of us who have been involved in local government is that the assignment of responsibility for financial actions is extremely difficult to pin on the people who took the decisions that had an effect on the precept. It was with that in mind that the amendment was moved.

We have had a useful discussion. However, I do not think that I am a lot clearer about the Government's attitude to public financing generally as a result. That is probably my fault because I did not argue sufficiently clearly the point that I wished to make. For that I am sorry. If I have taken the time of the Committee ineffectively, I apologise, but that was the purpose behind the amendment. I shall study the Minister's reply to deduce what I can from it. If I can deduce sufficiently useful material, we shall not bring forward the amendment again. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 70 agreed to.

Clause 71 [Provisions supplemental to section 70]:

Baroness Hamwee moved Amendment No. 213A:

Page 38, line 44, at beginning insert ("With the agreement of the majority of the members of the Assembly voting").

The noble Baroness said: In moving Amendment No. 213A I shall speak also to Amendment No. 220E.

Clause 71(5) provides for the Secretary of State to alter the constituent parts of the calculation under Clause 70(4) and (5); Clause 73 provides for the Secretary of State to alter the constituents of the calculation under Clause 73(2), which deals with the calculation of council tax. We propose that the agreement of the assembly should be required to such alterations. If the Secretary of State is making sensible proposals, the assembly will no doubt agree. I have faith in the likely common sense of the assembly, particularly when one has to look to the majority of its members. These amendments are protections in case the Secretary

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of State is not sensible or goes against the will of the authority in a manner which the assembly calculates would not find favour with Londoners.

The amendments are consistent with the role of the assembly. The assembly will have an overview of various budgetary matters and, in particular, the detailed matters to which Clause 70, which deals with the component and consolidated budgets, will apply. We have spent some time this afternoon talking about the need for an overview. Even were I to accept--which I do not--the Government's view of how the budget will be put together, nevertheless the assembly's view, gathered from experience of working in the authority and the background of the individual assembly members, will be relevant. It should have a role in these decisions. I beg to move.

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