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Baroness Hamwee: I am not much clearer about this point, but I am not sure that we would be able to pursue this matter productively this afternoon. The Minister has said that the Assembly has "sufficient powers". Certainly it has powers to call the Mayor and officers before it to answer questions—of that there is no doubt—but if the Assembly does not know that an issue has been identified then it will not be prompted to call for those questions to be answered.

This is not a matter of internal politics. It is always difficult to convince others that sometimes one simply wants the Authority, as a new piece of government, to work well and to be seen to be proper and transparent. I want to make it clear that this is not a Liberal Democrat attack on the current Mayor. There are other things over which we could attack the Mayor, but this is not a part of that, nor indeed is it an attack on the professionalism of the current officers.

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I am still a little lost, but perhaps the precise powers that would achieve what I am seeking is something that we could discuss outside the Committee. For the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 29 agreed to.

Clause 30 agreed to.

Clause 31 [Power to pay grant]:

Baroness Hanham moved Amendment No. 80:

    Page 14, line 25, leave out subsection (1).

The noble Baroness said: We move on from the Greater London Authority, although I can hardly forbear to comment that the Mayor has just sacked his Deputy Mayor, so goodness knows what he gets up to as regards the Chair of the Assembly.

Baroness Hamwee: I beg your pardon?

Baroness Hanham: I am not telling noble Lords what is going on because I am not seeking any political purpose here.

Baroness Hamwee: The temptation is too great. Three years ago the Mayor of London offered the post of Deputy Mayor to a member of each of the political parties in turn. One party had the offer withdrawn almost immediately and I am sure that the noble Baroness will work out which one that was. Another party, my party, refused the offer before the Mayor could withdraw it. So I can say to the noble Baroness, Lady Hanham, that he does not get up to anything with me.

Baroness Hanham: Today's news is that he has sacked his Deputy Mayor. I mentioned it only because I thought that the noble Baroness would like to know.

I shall move on to Amendment No. 80. The purpose of this amendment is to put questions about the grant and grant powers under Chapter 1 of the expenditure grant. It seeks to probe exactly what are the circumstances under which these powers would be used.

The Explanatory Notes suggest that the expenditure grant is a power that is very wide-ranging, one that would enable any Minister to make a grant to any local authority of either capital or revenue. The notes also suggest that it is a power which, in the future, would largely eliminate the use of specific grants. I am aware that specific grants have been widely criticised by local authorities as their use has increased over the years. Today they make up a significant percentage of a local authority's total grant.

Currently such grants amount to around 15 per cent of the total local government finance settlement. However, in general they have been given to all local authorities for specific purposes and only in the most limited circumstances have they been made available to only a small number of authorities.

It is true that local authorities have long resented specific grants, believing that hypothecation is a contradiction in terms to a block grant. Therefore I

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cannot understand why, when this matter was discussed in another place, the Minister said that these powers would be welcomed by local government.

I could just about have understood if the power had been limited to enabling the Minister to pay out grant to, for example, an area hit by a natural disaster—replacing, say, the troubled and complicated Bellwin formula. But the Explanatory Notes make it very clear that that is not the case. Grants under public service agreements are, apparently, in the frame, as are those to a particular class of authority. We are presumably back to our "excellent" and "good" categories under the comprehensive performance assessment—or, more worryingly, would the grants be made to support the poor and the weak?

However, current legislation enables Ministers in the Office of the Deputy Prime Minister to make such limited grants in any event. So what is to be included under the clause? Why is it needed? Why is it so widely framed? Any opposition party must be highly suspicious of any legislation that may allow Ministers to do anything they want, when they want. Does the Minister want me to give way?

Lord Rooker: When you have finished your sentence.

Baroness Hanham: I have another paragraph.

4.15 p.m.

Lord Rooker: The noble Baroness referred to existing powers. If she could tell me to which section of which Act she is referring, I can check whether that is the one to which I shall refer or some other provision. That is important in discussing the issue raised by the amendment.

Baroness Hanham: Any Minister already has power to provide specific grants under normal legislation. That is my point: there are already powers in legislation for specific grants, however they are identified.

I was about to make one of the party political points on which the Minister is so keen, and on which I seldom get a chance to shoot back. To repeat: any opposition party must be highly suspicious of any legislation that may allow Ministers to do anything they want, when they want, and which leaves open the possibility of grants being given to favoured councils for undefined purposes. Of course, it is not just ODPM Ministers who will be able to dish out those grants, but any Minister—a matter to be dealt with under further amendments.

Further enlightening words in the Explanatory Notes point out that Treasury approval will be needed for any grant under that heading. In what areas under whose responsibility are applications expected to be made to that august and all-encompassing department? It would help our understanding of the situation if the Minister would explain in detail what is expected under the clause—what it is anticipated to cover—and why those grants currently made as specific grants in the local government finance

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settlement cannot just be paid as part of the block grant, which is precisely what local government would like, rather than ring-fenced, as they are at present.

My surmise is that the Local Government Association thought that it was welcoming a limited power to pay grants to local authorities for a small number of tightly defined purposes requiring urgent investment, not a sweeping power encompassing about 15 per cent of its total finance. I look forward to hearing the Minister's explanation. I beg to move.

Baroness Hamwee: I have tabled a later probing amendment. I was going to ask then, but perhaps it is appropriate to ask now, whether the Minister can confirm that Sections 88A and 88B of the Local Government Act 1988—

Lord Rooker: No, I am sorry; I thank the noble Baroness for giving way, but she can help me. All these amendments were originally grouped as one block. They have all been degrouped. I did not degroup them. I intend to answer each amendment in order. I shall not make a repeated compendium speech, because I could end up making the same speech on each amendment. I am more than happy to answer the questions, but, with respect, it is not on for the noble Baroness to regroup the amendments while she is on her feet.

Baroness Hamwee: I am not regrouping; I am asking a question pertinent to the point made by the noble Baroness, Lady Hanham. Can the Minister confirm that Sections 88A and 88B of the Local Government Finance Act 1988 will not be repealed? I ask that because that is pertinent to the question of the Baroness about the clause's purpose. As I understand it, those sections, which contain the grant-making provisions, introduced in 1992, will remain on the statute book. That was the sole purpose of my asking the question; I am not trying to speak to my later amendment.

Lord Rooker: Perhaps I may speak first to the lead amendment, Amendment No. 80—except that there is no group because Amendment No. 80 now stands on its own. I fully understand why the noble Baroness, Lady Hanham, asked her questions, because under the clause as drafted, subsection (1) could give rise to her thinking that we are up to naughty deeds. We are not.

The new grant-making power in Clause 31 is intended to allow Ministers or the National Assembly to pay grants without imposing undue restrictions on authorities on how they achieve desired outcomes, and so help to ensure that we keep ring-fencing to the absolute minimum necessary. In other words, it is part of the package of trying to reduce ring-fencing. I shall explain why.

Amendment No. 80 would remove Clause 31(1), which gives a Minister of the Crown power to pay a grant to a local authority towards expenditure incurred or to be incurred by it. The amendment would therefore negate the intention of the whole of Clause 31 and its dependent Clauses 32 to 35. We would have

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to continue using the cumbersome special grant power under Section 88B of the Local Government Finance Act 1988 to make unfenced grants.

That in itself encourages the use by some departments of their power to make ring-fenced grants and tends to lead to grant regimes that impose restrictive conditions on local authorities' expenditure decisions. The new power in Clause 31 will make it much easier to give grants that are not ring-fenced. Amendment No. 80 would therefore make it difficult to reduce ring-fencing and to free local authorities from restrictive conditions on grants. The clause provides an important element of the Government's desire to free councils to manage their own business, in line with our principles of public sector reform. We want councils to be responsible for their decisions.

In other words, freeing up the position as set out in Clause 31(1) avoids us having to fall back on Section 88B of the Local Government Finance Act 1988 to make unfenced grants. However, because that procedure is cumbersome, and because the centralist tendency is always there, some government departments tend to use their powers to stick in ring-fenced grants, with all their rules laid down about what local authorities can and cannot do.

The purpose of the Bill is to give freedom and flexibility to local authorities, so we do not want departments to fall back on their powers to introduce ring-fenced grants under the carpet or through the back door, simply because they do not want to use the Local Government Finance Act 1988—which, without Clause 31(1), would be the only other route. So the provision is not a means for Ministers to spend on a whim—obviously, Treasury approval will be required and Ministers cannot spend on a whim in any event, as the noble Baroness well knows. It is designed to pass the grant money over with the minimum possible conditions—indeed, on some occasions, with no conditions—but for a general purpose. It will be up to the local authority what to do with the money.

Given that we have a host of amendments with which I propose to deal in turn as they are moved, I shall briefly set out the general purpose of Clause 31 before we start to discuss the amendments. That may be useful.

Clause 31 provides a new wide-ranging power for Ministers to make expenditure grants to local authorities. It will create greater flexibility in delivering capital or revenue support to authorities and allow government departments to pay grants without imposing undue restrictions on authorities—as I mentioned.

At present, the only general grant-making power is the "special grant" power under Section 88B of the Local Government Finance Act 1988, which was, I remind the Committee, the poll tax Act. That was substituted by Section 104 of and Paragraph 18 of Schedule 10 to the Local Government Finance Act 1992. Exercise of that power requires not only Treasury consent but the laying of a report before Parliament for debate in Standing Committee. Once

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approved, a report cannot be amended and any changes required later can be achieved only by laying a new report before Parliament.

The procedure tends to lead to grant regimes that impose restrictive conditions on local authorities' expenditure decisions. It encourages the use by some departments of their own powers to make ring-fenced grants. We want to avoid that. The new power will make it much easier to give grants that are not ring-fenced.

However, we do not propose to repeal the special grant power, which will remain available for any cases in which it is appropriate to seek Parliament's approval for the award of a grant. We shall also continue to pay revenue support grant under existing powers, thereby preserving Parliament's right to oversee the awards.

As Clauses 31(3) and (4) make clear, conditions may be attached to the grant, which could include expenditure conditions, but there is no need to attach any conditions at all—subject to the circumstances. The structure of the provision is designed to ensure that conditions are attached only as a result of clear policy decisions, rather than arising through default, as is typically the case when departments use their own powers to make ring-fenced grants.

Clause 31(5) requires that, in England, the Treasury's consent will be needed to the exercise of the power. That will be an important safeguard against the imposition of spending conditions unless they are genuinely necessary and beneficial. That will stop Ministers taking that route to ring-fencing. In the short time for which I have been in the ODPM, I have felt a bit of frustration about grants paid.

A good example is the planning delivery grant, which we announced in December. It is not ring-fenced over the three years. It will be paid on the basis of better performance of the planning regimes, but, when the money goes to the authority, the authority can do what it wants with it—planning or anything else. The test of paying the money is an improvement in planning performance, but the money is not ring-fenced. So when the money arrives at the local authority treasurer, the local authority can do what it wants with it. We have tried to step back: to encourage improved performance in that function and to pay the money; but not be prescriptive about how it is spent.

Of course, the presumption is that the authority will already have spent more money to improve its performance to achieve the extra planning delivery grant, but when it receives the grant, it is not ring-fenced. So that is one example of a different kind of flexible regime under which money is paid to local authorities.

I hope that that helps to set the scene for the clause. I shall be happy to respond in detail to the amendments as they have now been grouped.

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