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Lord Dixon-Smith: The noble Lord, Lord Whitty, will be happy to hear that I am glad to be persuaded. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 agreed to.

Clause 3 [Non-target years: default rules]:

Lord Dixon-Smith moved Amendment No. 7:

The noble Lord said: I hope that this group of amendments will prove to be rather less controversial than our discussion so far. The Bill provides a date of 16th July 2004 as the end of the first target year. My question concerns 16th July, not 2004. We have a complete system of government and local government dedicated to accounting for everything on an annual base with 5th April as the end of the year. That has become inalienable, although I am bound to say that I can find no more logic in 5th April than I can in 16th July, except that except that 5th April happens to be there. It seems a little funny peculiar, to put it that way, that on this specific issue—and there may well be others—we will have to deal with a different year and a different accounting base. It may be that something is written in the European directive which means that it has to be 16th July, but surely if it were 5th April in that year, since that is before 16th July, that would not be a problem. I cannot help wondering if we are not in the business of arguing about square tomatoes—sorry, cubic tomatoes—and straight bananas.

It would be interesting to know what the irredeemable logic is of this rather odd date. I beg to move.

Lord Hanningfield: I support my noble friend Lord Dixon Smith on the amendment. As I said earlier, I am leader of a large local authority and we have at least a dozen waste contracts of one kind or another, all of which are April to April, as are all our financial proposals and reckonings. If we are to introduce new jobs, they should really be done April to April. When I talk to my local government colleagues and the Local Government Association, none of us can understand why it should be 16th July. I very much hope the Government will reconsider and have it April to April,

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otherwise the situation of existing contracts will be extremely difficult and will have to be rethought in the future.

I fully support this amendment and hope, as my noble friend Lord Dixon-Smith said, that the Government will think seriously about this.

Lord Greaves: I shall briefly support the noble Lord, Lord Dixon-Smith, in this amendment for all the reasons that he and the noble Lord, Lord Hanningfield, have put forward.

The noble Lord, Lord Dixon-Smith, referred to cubic tomatoes and straight bananas. Since I obviously read the wrong newspapers, I do not know what he is talking about. However, if either of them goes off, they become biodegradable municipal waste, so perhaps they are relevant to this discussion.

Those of us who have been in local government for over half our adult lives have been ruled by the normal annual local government cycle, which runs from April to April. We are probably all agog to hear what the Minister has to tell us about the excitement and significance of 16th July. I shall sit down and wait.

Lord Whitty: I hope the noble Lord is not too agog, because the explanation is fairly straightforward, as the noble Lord, Lord Dixon Smith, implied. There is provision within the timetable which does not relate to what I might call standardised horticultural waste or any other European inflexibility but it does relate to 16th July, which was the date from which the directive applies. Therefore, the target dates throughout the scheme relate to 16th July. This may not be particularly helpful from a UK local government financing point of view and I have some understanding and sympathy with the points made here.

To make the allowance scheme more workable for the waste disposal authorities, it may be necessary to run the trading year for allowances in a way that corresponds more closely to the financial year of local authorities. We need to give further consideration to this. For example, it may be possible to run a trading scheme from July in a given year through to April—the end of the financial year. All the reconciliation could take place so that the final result on the target would be known for July, but all contractual aspects would relate to a year ending in April, as is the case for the rest of local authority activity.

There is therefore some possibility of our reconciling what I understand clearly to be the treadmill of the local authority year with the requirement of the directive. The figure is in there at the moment because of the requirement of the directive. We can probably look at this a little further, either subsequent to the Bill or during its consideration. We clearly need to make it compatible with the way in which the local authorities are doing their planning and making their contractual arrangements. In that spirit, I hope that the noble Lord will not pursue the amendment now, but we will see what we can do on this front.

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4.15 p.m.

Lord Glentoran: Perhaps I may make two points while the Minister is contemplating working towards 5th April. One of my criticisms of the Government over this is that they have left themselves no leeway within the directive. This scheme, this strategy and this Bill gear everything up to happening and happening and, crunch, on the day the directive comes into play either we have met it or we have not. There is no leeway as I understand it. Perhaps moving from July to April would at least give them a few months' leeway.

The second point, wearing a commercial hat as opposed to any other, is that in the commercial sector we have contracts for up to 25 years and more already in place or being put in place, with dates written in. Unravelling that and putting it back together would involve quite serious cost.

Lord Stoddart of Swindon: I was encouraged by the Minister's comment that he will consider the problems that have been raised. However, I am worried about how this directive was negotiated. Presumably there were British bureaucrats negotiating together with other bureaucrats. I find it disturbing that they did not pick this problem up. They did not seem to realise that our national and local government financial system runs from April to April. I do not know why they did not pick that up and at least ask for a derogation.

I return to the fact that it is fortunate that we are dealing with the Bill as primary legislation. Members of the Committee who are experienced, particularly in local government and in business, have seen straight away how difficult this 16th July date will be. We should all be grateful to the Minister that he at least is listening.

Lord Jenkin of Roding: I share the general welcome that the Committee has given to the Minister's readiness to look at this again. When I went to the Treasury as Financial Secretary 32 years ago, I remember asking my officials why the tax year ran from 6th April to 5th April, but the answer was that the reason was lost in the mists of history. It may have had something to do with quarter days for the payment of agricultural rent and so on.

However, company accounts follow the company's accounting year and do not run necessarily from 6th April to 5th April. The Act then deems that that is to be the year on which the profits will be assessed for the tax year, the following 6th April to 5th April. If that were announced, so that in fact you did not have a single broken year, but you actually went on with years to 5th April and it was then always deemed to run from 16th July, would that amount to a breach of the directive? Are we once again guilty of gold plating a directive?

If we chose to interpret the directive so that one could have 12-month periods ending on 5th April and simply say that they will be regarded as the basis year for the subsequent 12 months beginning on 16th July, I cannot believe that anyone would regard that as in any way sufficient to warrant an intervention on the part of the Commission. This is another example of the

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tendency, to which one has frequently drawn attention, of the Civil Service in this country to gold plate and do the thing in a way that could not conceivably be open to attack. I do not believe that it could be. I wonder whether the Minister will undertake to look at that as an alternative way of proceeding. Instead of having a broken year, which I understood was his suggestion for the first year, the period would always run from 6th April to 5th April. It could then be translated so as to apply for what one may call the commission year beginning on 16th July.

Lord Whitty: This requires further consideration. In regard to England, the Government will be setting the allowances throughout the whole scheme. There will be plenty of notice for one to see the point that one is supposed to reach by the designated year, even if part of the matter is determined separately from what is in the directive. That means that by that year one will have had to reach a certain level.

The date at which the Commission will judge ourselves and other European countries to have met or otherwise those targets will be 16th July. As the noble Lord will know, different EU countries have different financial years. Most operate on the calendar year, but not all. Therefore, in European legislation we need a specific date against which we are all judged. The way in which we attain that may well be compatible with the accounting year for the local authorities. In other words, by April there will need to be in place sufficient reductions of trading or whatever to meet the target when it is measured in July. That is why I said that the year could run from July through to April.

Then the reconciliation took place so we made the figures ready for the Commission in July. That did not cut across contractual arrangements and annual accounting for the local authorities. However, there will be time to plan that because the allowances will be made in advance. It is not as crucial a problem as perhaps the Committee suggests but, nevertheless, it is one that needs some thought and clarification. We cannot remove 16th July as it is a legal requirement under European legislation, but in relation to how we arrive at that, we must be practical about the way in which local authorities carry out their business.

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