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Lord Dixon-Smith moved Amendment No. 270:

Page 36, line 31, leave out (“76") and insert (“74").

The noble Lord said: My Lords, in moving this amendment I shall speak also to Amendments Nos. 271 to 273, 275 to 279 and 305 to 307. As I understand matters, the expenses for magistrates' courts and the probation service within London are currently covered as “special expenses" of the office of Receiver for the Metropolitan Police. Such expenses are financed under a special arrangement laid down by Clause 45 of the Local Government Finance Act 1992.

The Greater London Authority Bill will abolish the office of Receiver with the commencement of the Greater London magistrates courts agency, but that does not happen until the year 2001. In the meantime, the office of Receiver will remain and the special expenses will have to be paid for. When this Bill was drafted, the Government expected there to be a range of transitional financial arrangements required. In the light of this, Clauses 75 and 76 were inserted setting out a temporary mechanism for payments of Metropolitan Police matters remaining unresolved after the setting up of the GLA. So that provisions would take precedent, Clauses 75 and 76 caused the Local Government Finance Act 1992 to cease to have effect in such cases.

As I understand it, it is now clear from the work done by the Department of the Environment, Transport and the Regions that these clauses will only apply to financing of the special expenses of the office of Receiver. Given the fact that this situation will exist only for one year, changing the current system would cause exceptional administrative difficulties. The calculations set out in Clauses 75 and 76 would also, paradoxically, result in a huge additional financial burden on inner London authorities when applied only to the special expenses of the office of Receiver. For Westminster Council, I understand that it would mean a loss of revenue support grant in excess of £1,100,000.

Clauses 75 and 76 now constitute an administrative anomaly which, if left in the Bill, will result in an iniquitously unfair approach to the financing of the office of Receiver for an additional period of 12 months. However, were those clauses to be deleted, the current perfectly acceptable arrangements under

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Section 45 of the Local Government Finance Act 1992 would remain in effect in place--the status quo ante, which, as I understand it, is satisfactory to everybody.

This is a large group of amendments dealing with this matter, but it is important. I can well understand that it is the sort of situation that one would only discover after one begins to work through in intimate detail the consequences of a Bill of such detail and complexity as this one. I ask the Government to consider most seriously either accepting our amendments or, probably more realistically, taking them away and studying them and the consequences of what is to happen under the Bill, with a view to producing an acceptable solution on Third Reading. It is our view that the effect of the Bill as presently drafted would produce an anomalous situation with very unfortunate financial consequences for certain parts of London. We do not think that that is right, still less do we think that that was the Government's intention. I beg to move.

10.15 p.m.

Lord Whitty: My Lords, the noble Lord raises a number of complex issues relating to the funding of the probation service and magistrates' courts in a transitional period. The expenditure on those areas will be a general expense, not a special expense. The concerns which the noble Lord expresses in terms of the impact on borough funding and general funding will be a transitional problem. It is not a long-term problem, whereas these amendments would have a serious long-term implication. The funding by the receiver for the interim transitional period will be dealt with through transitional arrangements which we may come to at the back of the Bill and some of which will need to be dealt with administratively. The effect of the amendments, if adopted as tabled, would be that the GLA would have to raise several hundred thousand pounds more from its council tax payers than it actually needs.

That is because when calculating its precept under Clause 74, the GLA would have to ignore the income it receives through the police grant. That would be fairly nonsensical and in making the additional calculations, the GLA would again have to ignore the grant income from central government in respect of police services. Consequently, the precept would be so large that council tax payers would be required to be paid that part of the cost of police services which will actually be met by police grant from central government.

Therefore, I ask the noble Lord to withdraw his amendments. Since they deal with the transitional arrangements, of which the implications have been raised with at least one London borough, it may be sensible for us to communicate in writing with the noble Lord before Third Reading about how we shall deal with the transitional arrangements. I assure the

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noble Lord that, if the amendments were adopted as such, the anomaly would be far greater than the one to which he alludes.

Lord Dixon-Smith: My Lords, I am always prepared to accept that when an amateur gets going in this sort of situation, he is quite likely, if allowed an entirely free rein without check, to produce something not wholly reasonable. However, the purpose of tabling these amendments was to have this issue, which has unfortunate consequences, discussed. In that, I have had some success.

The Minister has very nearly satisfied me. He has not quite given me an assurance that administrative arrangements will be made to deal with the interim period which will ensure that those sort of large financial swings will not occur, although he has said that administrative arrangements will be made to take care of the interim period. I am grateful for his offer of further discussions to try to sort out that issue. In the meantime I am quite happy to withdraw this group of amendments.

Amendment, by leave, withdrawn.

[Amendments Nos. 271 to 273 not moved.]

[Amendment No. 274 not moved.]

Clause 69 [Issue of precepts]:

[Amendments Nos. 275 to 279 not moved.]

Clause 71 [Calculation of component and consolidated budget requirements]:

[Amendment No. 280 had been withdrawn from the Marshalled List.]

Baroness Hamwee moved Amendment No. 281:

Page 38, line 37, leave out (“requirement") and insert (“bid").

The noble Baroness said: My Lords, in moving the amendment I shall speak also to Amendments Nos. 282, 283, 288, 289, 290 and 291.

These amendments concern the budget total for the authority. All but one of them is an amendment to phraseology to be consistent with our approach, which is to leave out references to the functional bodies' requirements and to talk about their bids as being bid requests. Amendment No. 291 is the substantive amendment to Schedule 5, to provide that in preparing the draft consolidated budget the mayor shall have regard to the component budget requirement or bid of each of the constituent bodies but shall not be bound to accede to it.

In Committee we made the point that we feel that the new London authority should be regarded as one body, headed by the mayor and making coherent policy, rather than a set of component bodies which make their requirements known and give the mayor their own totals, which the mayor would tot up and refer to as the budget. I appreciate that I deal with this simplistically. We remain concerned that the procedure does not allow political priority setting. After all, we all know that politics involves a great deal of setting of priorities. That is rarely seen so starkly as when budgets are set.

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The Minister wrote to me following Committee stage, explaining the procedures and saying that, once the budgets had been set, each of the functional bodies would operate independently and be responsible for managing its own financial affairs, administration, and so on. I understand that. However, I do not understand why the Bill should allow not just juggling, so that each of the functional bodies is allocated what it claims, but for a view to be taken by the mayor proposing the budget in its various stages that one of the functional bodies needs to be given priority as against another. I should be grateful if the Minister would explain to me how the mayor can determine the priorities and not be the creature of the four bodies, all of whose claims, I have no doubt, will be extremely persuasive. I beg to move.

Lord Whitty: My Lords, I am not quite clear what the noble Baroness seeks to do. Certainly the words which she uses give entirely the wrong impression of how the budget process would work. To refer to “complicity bids" by the various functional authorities seems to misunderstand the central role of the mayor in setting the budget, which is to provide a consolidated budget. Clearly, the mayor has to trade off priorities both within the functional authorities' budget, which mostly they will have done themselves and, in certain circumstances, between them in order to produce an acceptable consolidated budget. However, to refer to it as a bidding process does not seem to me to bring the mayor any closer--indeed, it would take him or her further away--from the requirement to have a consolidated strategic approach to budget setting, taking into account, but not accepting and simply totting up--as the noble Baroness suggested--the bids which are already there from the functional bodies.

We require the functional bodies to act together responsibly and also, at the end of the day, for the mayor to be able to make an assessment between priorities and producing a consolidated budget. The totality should not be seen as a bidding competitive process but as one which helps to formulate those priorities and therefore that budget. I hope that the noble Baroness will recognise that the terminology which she suggests is moving in the opposite direction and is therefore not one that we could accept.

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