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The Deputy Chairman of Committees (Lord Elton): I must tell the Committee that if this amendment were to be agreed to, I should be unable to call Amendments Nos. 85 to 87 by reason of pre-emption.

Lord Bassam of Brighton: I apologise in advance that I shall take some time to work through the amendments, but I will try to give the noble Baroness a full response.

The new grant-making power in Clause 31 is intended to allow Ministers or the National Assembly to pay grants without imposing undue restrictions, in line with our freedoms and flexibilities approach, to authorities as they achieve desired outcomes, and so help to ensure that we keep ring-fencing to a minimum. For that reason, the LGA is very supportive.

The amendments would defeat one of the main aims of the provision, which is to offer an alternative, so that departments are able to make non-ring-fenced grants available to local government. Amendments Nos. 86, 89 and 91 would require a procedure that is even more cumbersome than the present special grant procedure, which requires the grant to be approved only by the House of Commons. That would be needed for every grant, including small or uncontroversial grants, or those being repeated from previous years.

Amendment No. 86 would mean that the amount and manner of payment of a grant made under Clause 31 would have to be considered and approved by both Houses of Parliament. Therefore, it would defeat one of the main aims of the new power, which is to make it easier to make grants without conditions.

Amendment No. 89 would mean that any conditions on a grant made under Clause 31 would need to be set out in an order and approved by both Houses of Parliament. I have sympathy with the evident aim of the amendment, which is to make it more difficult to place controls on a grant which would make it ring-fenced. But the Government have put in place separate machinery—a gateway process—to ensure that there will be no new ring-fenced grants that do not meet a set of criteria set out in the local government White Paper, Strong Local Leadership—Quality Public Services. Where a conditional grant is made, that will be as a result of clear policy decisions.

Amendment No. 91 would mean that both Houses of Parliament would need to approve the terms of any grants made using the powers in Clause 31. Amendments Nos. 91, 89 and 86 will make it more likely that departments will continue to use their own specific grant-making provisions, which may include more restrictions than are necessary.

In a previous discussion on Clause 31 in another place, some Members were concerned that that power will mean that Parliament would no longer be able to consider grants to local authorities. In England,

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parliamentary approval will still be needed in the ambit of each department's request for resources. Parliamentary approval will still be sought for the local government finance settlement each year, which provides the majority of funding to local government. In addition, the special grant power will remain available for any cases where it is appropriate to seek Parliament's approval for the award of a grant.

In England, where the new power is used to make grants, the Treasury's consent will be needed, which is an important safeguard against the imposition of spending conditions unless they are genuinely necessary and beneficial.

Amendment No. 88 relates to Clause 31(3). It states that a grant made,

    "under this section may be paid on such conditions as the Minister . . . may determine".

The amendment, which deletes the word "such", would seem to make no change to the meaning of the clause but simply make it ungrammatical.

Amendment No. 84 would remove Clause 31(2), which gives a Minister of the Crown the power to determine the amount of a grant made under Clause 31(1) and the manner of its payment. The amendment would make the power unusable because a Minister could make a grant but could not determine its amount or how it is paid. The amendment would therefore negate the purpose of Clause 31. We would have to continue using the cumbersome special grant power under Section 88B of the Local Government Finance Act 1988 to make non-ring-fenced grants. As with the other amendments, that would encourage the use by some departments of their own powers to make such grants. That tends to lead to grant regimes which impose restrictive conditions on local authorities' expenditure plans and decisions. So Amendment No. 84 would make it more difficult to reduce ring-fencing and would counter our efforts to free up local authorities from the overly restrictive conditions that exist with some grants.

I apologise for taking the Committee's time, but it was necessary to go through the impact of the amendments in some detail. I hope that, on reflection, the noble Baroness will feel able to withdraw her amendment.

Baroness Hanham: I am extremely grateful to the Minister for also replying to Amendment No. 85, which I have not moved. But he has done so, which saves me having to go through the words. I think that he is just trying to hurry me up, rather than anything else.

The Minister's reply just makes larger the question of why specific grants are being left in Section 88B of the Local Government Act 1988. If the power will mean that one does not require the restrictions on the grant for the specific reasons for which it has been given, then why on earth not just remove Section 88B and get rid of the power to make specific grants, which is what the complaint is all about? Local government is not happy with specific grants and never has been. To have those powers removed so that Ministers can

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only give money under the powers under the clause will make far more sense. I think that having the two provisions will just cause enormous confusion.

I am now even less clear on why we should have this provision, in addition to Section 88B, if we are trying to reduce the power of restriction and provide more flexibility. Either specific grants under Section 88B will become totally irrelevant and that power will never be used, or this power will be used, or there will be a hotchpotch of the two.

I think that the amendments have achieved some enlightenment, as they were intended to do. However, I do not know why the Local Government Association is not leaping up and down about the issue. Specific grants will still exist, and this provision will probably be used in limited circumstances. I do not think that the situation which the Minister described is the one that he intends to achieve. Nevertheless, I beg leave to withdraw the amendment.

[Amendments Nos. 85 to 87 not moved.]

5 p.m.

Baroness Hamwee moved Amendment No. 87A:

    Page 14, line 29, leave out subsections (3) and (4).

The noble Baroness said: The amendment proposes leaving out subsections (3) and (4) which allow conditions to be applied to the making of grants. I think that both Ministers have said that the new provision will allow grants to be made without undue restrictions—which is wholly consistent with what was said in the Commons. We applaud the reduction of restrictions and the reduction of ring-fencing. However, like the noble Baroness, Lady Hanham, I am still puzzled about which of the Bill's provisions will ensure that. We know that Section 88B of the 1988 Act is not to be repealed. I would feel much more comfortable about the proposals if it were repealed. We have heard about other Secretaries of State having the right to make grant. As I understand it, no other similar provision is to be repealed.

Under Clause 31(3), the grant,

    "may be paid on such conditions as the Minister . . . may determine".

I wonder whether the Minister can explain how that differs from Section 88B(7) of the 1988 Act, which says that a special grant "may" specify conditions that the Secretary of State intends to impose. Does the "may" in the 1988 Act mean "must"? Do both "mays" mean "may", or do both mean "must"? I hope that that is a clear question.

By way of a small but not unimportant illustration I should like to cite an example which came to my attention today, regarding the cost incurred by fire authorities in implementing the Bain recommendations as part of the settlement that we hope will soon be achieved in the fire dispute. Implementing the recommendations will cost quite a lot; I understand that the cost to the London Fire and Emergency Planning Authority will be not far short of 500,000 in the current year. It is hoped, of course, that a grant will be made to enable the fire authority to meet that cost. The Minister need not look worried; I am not

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going to ask him to respond to any of the details. My point is that the fire authority and other brigades will need to take their own decisions on how best to spend the sums required to move into the new regime anticipated by Bain of prevention and of making appliances available to meet new criteria. If you like, it is about local autonomy.

Although that is perhaps not a good example, it is a concern which illustrates why we want as little restriction as possible. As we have heard, we do not want undue restrictions. I beg to move.

The Deputy Chairman of Committees (Lord Hogg of Cumbernauld): I must advise the Committee that if Amendment No. 87A is agreed to I shall be unable to call Amendments Nos. 88 to 90 inclusive by reasons of pre-emption.

Baroness Hanham: I think that the noble Baroness, Lady Hamwee, has made a good point. If the grant is going to be paid on conditions, where goes this business of getting rid of the ring-fencing and the specific grants? The whole purpose of specific grants is to say for what they shall be used. As the noble Baroness said, subsection (3) would re-establish those conditions. I am therefore not sure that we are freeing up anything.

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