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Lord Hanningfield: Perhaps I may add to my noble friend's point. I accept what the Minister has said; namely, that this provision will do away with the problem of ring-fencing and enable money to be given to local authorities in a wider way. But that does not apply to expenditure that has already been incurred. Therefore, this seems to be a different point from the one that the Minister has explained as regards why the Government want this power.

Lord Rooker: That is the reason that I shall give the answer that I am going to give.

I do not want to be ungallant, but it is a long time since I heard anyone mention the National Enterprise Board, so the noble Baroness is showing her age!

Baroness Hanham: I do it all the time!

Lord Rooker: Amendment No. 82 would mean that the new grant-making power in Clause 31 could be used only to make grants to a local authority towards expenditure,

not towards expenditure "already incurred". This would therefore preclude reimbursement grants, where a local authority incurs some cost and the Government subsequently pay to the authority some or all of the expenditure incurred. An example would

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be where the Government want to compensate authorities, say, for the extra costs of looking after asylum seekers, where, because of their peripatetic nature, it is not possible accurately to predict future expenditure need. Amendment No. 82 would mean that we should need to continue to pay reimbursement grants through Section 88B of the Local Government Finance Act 1988 or some other specific power, where available, which tends to cause delays in the payment of the grant to the affected authority and limits the flexibility with which the grant might be used.

That is the simple explanation. I repeat that the grants will not be paid without Treasury approval, and, as we shall see in relation to Clause 32, authorities are required to provide information to Ministers before such grants are made. So this is not a matter of doling out money on pet projects. I am not going to be wound up by this constant sniping of a crude political fashion. Labour Ministers do not fund "pet projects". I hope that Tory Ministers did not do so. That would be outwith the conduct of public life in this country. We did not do it previously, and we are not going to do it now.

Baroness Hanham: I thank the Minister. I am rather enjoying these amendments. They provide me with the first opportunity in a long time to have a dig at the Minister and for him to have a dig at me!

The more the Minister talks and the more the explanations come, the less I understand why Section 88B of the Local Government Finance Act is not being amended under this legislation. What is happening now is that there will be almost contradictory legislative powers running in parallel.

The Minister's comments on grants in relation to asylum seekers relate to what I had understood the subsection to be; namely, a permissive power for the Minister to help in a specific situation. No one could have initially foreseen what would happen in relation to asylum seekers. Local authorities were faced with a very serious situation and great financial outlay. In such a situation the provision would be perfectly proper and I would not have sought such an amendment. This is not just about that. We are talking about specific grants in totality. Therefore, it is such a wide power that it should fall under Section 88B of the Local Government Act 1988; and within the ordinary finance settlement. There would be exceptions, such as asylum seekers or natural disasters—I almost put those in the same category and in the same breath. I would then understand the power. But we are beyond that. The reimbursement powers, as described by the Minister, in this very wide power to get rid of specific grants, seem too wide for the Bill. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.45 p.m.

Baroness Hanham moved Amendment No. 83:

    Page 14, line 26, at end insert "provided that the grant is available to all other local authorities of the same category on the same terms and those terms have been publicly certified as equitable by the accounting officer of the Department and that all

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    documents and correspondence relating to decisions on such grant are made available annually to the Comptroller and Auditor General"

The noble Baroness said: The purpose of the amendment is to ensure that any grants are made on objectively published criteria; that they are certified by the department's permanent secretary; and that they are subject to the fullest possible scrutiny. That would become an onerous burden in the light of the wide-ranging powers that the Minister described. However, where there is scope for selective grants to individual authorities, it must be right to ensure that there is no question of the powers being used selectively.

The amendment would prevent the Government writing special rules for an individual authority. I hear what the Minister says about governments not abusing these powers. But under them there will be times when an individual authority can be given money. So the amendment would prevent the Government writing the special rules which the Explanatory Notes that say they may want to do. They might want to give some special grants.

We return to how to ensure that there is fair play on the special grants and that the sweeping power would be double-locked, so that it could be seen to be fair. I do not see why the Government should object to that, which would safeguard Ministers against any accusation of unfairness. I beg to move.

Lord Rooker: As the noble Baroness said, Amendment No. 83 aims to ensure that grants made under the new power in Clause 31 are available on the same terms to all authorities of the same category. The department's accounting officer has publicly certified those terms. However, the amendment would limit the use of the powers in Clause 31. It would be odd indeed were the Government, having determined the eligibility conditions for a grant, then not to use those conditions in distributing the grant. If there is a set of conditions for a grant to be distributed to authorities, we would be daft not to use them.

There may be circumstances in which a grant would appropriately be made to one particular authority. I understand—I do not know the background to this; I am just asking about it—that Section 88B of the Local Government Finance Act 1998, about which the noble Baroness obvioulsy knows a great deal more than I do, so if I am not careful I shall get my legs chopped off, has been used in that way in the past.

Parliament agreed that an additional grant should be provided to the London Borough of Hackney to aid the authority's revenues. That was an exceptional case, which met the Government's criteria for giving additional financial support as set out in the local government White Paper. Without the 25 million Hackney could not have agreed a balanced budget for 2002–03 and would have been unable to start building future financial stability. Although it would be appropriate for a grant to be made in such extreme circumstances through the existing special grant power in Section 88B of the 1988 Act, there may be less extreme cases in which it would be appropriate to use Clause 31 to make a grant to one authority only. The amendment would preclude that.

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So I must say that I stand here naked in knowing nothing about Hackney—the past, the present or what is expected in the future, or how the money was paid. I presume that it was ring-fenced, in the sense that the authority had obviously got itself into a mess and the money was to get itself out of it. I presume that it was not given without strings. Furthermore, it is quite clear that the process used was one that Parliament approved as a one-off payment. That is the example that I cite, although I do not have the background. But that was a wholly exceptional case.

We want to retain the flexibility of the clause, in case there is a need to use it, instead of using the Section 88B powers, in which of course Parliament would be involved. That is the point. The point is not to circumvent Parliament, but there could be occasions when one authority, because of whatever special circumstances have arisen, would receive a one-off grant in circumstances that would be known to everyone. The grants would not be paid in secret. Information, as I have said, would have to be provided to Ministers before the grants were paid.

Baroness Hanham: I thank the Minister for his reply. I think what he said was that in the event of something being quite specific and quite unusual, the process involve what I have actually asked him to provide: it would ensure that there was proper support and agreement for it. We shall not go further into Hackney. It involved a specific situation—none of its services were working well. I think that anyone would agree that that was quite a different case. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hanham moved Amendment No. 84:

    Page 14, line 27, leave out subsection (2).

The noble Baroness said: We reach the point about whether Parliament is or is not included in the new grant regime. The purpose of the amendments is to test the reasons why the Secretary of State want such wide-ranging discretionary powers, and, if he does, to subject the use of those powers to control by affirmative resolution of Parliament.

It cannot be right that selective, discretionary powers of that kind should be exercised by Ministers alone. If included in primary legislation, grants to specific authorities but not others would be hybrid, requiring the very highest level of parliamentary scrutiny. Such potentially discriminatory powers should not be exercisable at the Secretary of State's pleasure. All rules surrounding them should be open to parliamentary control and that control should be achieved by affirmative resolution.

We return to where we started when we suggested that there are two forms of grants. There are specific grants, which any department may give and which would be included as a specific grant in the Local Government Finance Act 1988; and there are grants which may be given on a discretionary basis for a particular reason. If the grant is given as part of the

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Local Government Finance Act, it will be under Section 88B. That would be understandable because it would probably be well described within that block grant power. Where the powers are discretionary and open to selectivity, it would be proper for them to be implemented by affirmative resolution. I beg to move.

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