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Lord Bassam of Brighton: I think that we all understand the impact of the amendment. The clauses as drafted allow Ministers to put conditions on a grant. The amendment would in particular remove provision as to the use of the grant and the circumstances in which it must be repaid. The amendment would ensure that only unfenced grants with no conditions could be made under the new power. I find it difficult to believe that the noble Baroness, Lady Hamwee, wants to achieve that end or thinks that it would be a sensible instrument of policy. However, perhaps she thinks that we should establish such a regime of extreme liberality in local government finance.

The effect would be that ring-fenced grants approved on policy grounds would continue to be made under departments' own specific grant-making powers, which may be more restrictive than necessary, or under the less flexible general Section 88B power in the Local Government Finance Act 1988. I think that that is the point of our proposals. That particular provision is less flexible. I think that that was one of the noble Baroness's concerns.

The noble Baroness, Lady Hamwee, asked a couple of specific questions which I shall try to deal with in turn. Both Section 88B and the new power can make grants with no conditions—unfenced—or with conditions, ring-fenced. We have separate machinery in place to ensure that departments do not make conditions when those are not justified. That machinery is called the gateway process. My understanding is that the Local Government Association is very much in favour of Clause 31, which it regards as an important statement and method of working. Specific grants need not be ring-fenced. They can have conditions in relation to which

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authorities receive them but still no conditions as to how they are spent. Reward grants, for example, fall into that category. Other examples are the planning grant, which has already mentioned, and the LPSA performance reward grant.

The noble Baroness, Lady Hamwee, picked us up on the use of the word "may". The usage of "may" in Section 88B(7) is the same as that in Clause 31(3) and means "may" and not "must"—conditions "may" be imposed. So there is a similarity. I know that there is always a fog over matters of local government finance, but I hope that that has cleared up at least some of it.

Baroness Hamwee: I am afraid that it has not. At least we have learned that "may" means "may". I assume that the gateway process could apply to grants made under either provision. It does not surprise me that the LGA is in favour of anything involving grant money going to local authorities. It is not so much that I am not persuaded of the value of a grant-making power; it is that I do not understand the basis on which the achievements are claimed.

I am persuaded that omitting the reporting provisions in Section 88B is a good thing. As I said before, however, I would be more convinced if Section 88B were to go entirely. I am not suggesting that Ministers should not have any rights at all to impose conditions, if only because I recognise reality. It is not even necessary to say that they may impose conditions because that is implicit. If conditions were not agreed to by a local authority the money would not go to them; so QED.

My perplexity is not fully addressed. I shall go away and find some hot towels after the debate. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 88 to 91 not moved.]

Baroness Hanham moved Amendment No. 92:

    Page 14, line 36, at end insert—

"( ) Any grant paid under this section shall be reported to Parliament as a special grant report pursuant to section 88B of the Local Government Finance Act 1988 (c. 41) (special grants) within not more than five months of such grant being made."

The noble Baroness said: This amendment is in response to what I am beginning to regard as the arbitrary nature of the grant regime proposed by Clause 31. It is about scrutiny and safeguards. Clause 31(1), which we have debated at length, is quite clear. The Explanatory Notes state that,

    "Treasury consent will be needed in all cases to the making of the grants".

We can see nothing in the clause to that effect. So from where will the money come?

As we have discussed repeatedly, Clause 88B of the Local Government Finance Act 1988 provides that the Secretary of State should state to which authority a grant has been paid,

    "the purpose for which it is to be paid, and . . . the amount of the grant".

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It continues that, in addition to the consent of the Treasury,

    "a special grant report shall be laid before the House of Commons",

and that such a report must receive affirmative resolution before the grant proceeds. That is what we are asking for in this amendment. We are also asking that it should pertain to Clause 31. I beg to move.

5.15 p.m.

Lord Rooker: The new grant-making power in Clause 31 is, as I have said previously, intended to allow Ministers or the National Assembly to pay grants without imposing undue restrictions on authorities in the way that they achieve desired outcomes and so help to ensure that we keep ring fencing to a minimum. That is why the LGA supports the new power.

Amendment No. 92 would require the grant to be reported as a special grant report under Section 88B of the Local Government Finance Act 1988 within five months. It would mean using the cumbersome Section 88B power in every case. I have previously explained that process. That would involve using it for very small or uncontroversial grants, or those being repeated from previous years. With the amendment, a grant made under the new power could be struck down after it had been paid by some later decision by Parliament not to approve the special grant. That would mean uncertainty and delay for local government.

In a previous discussion of Clause 31 in another place, some were concerned that that power will mean that Parliament would no longer be able to consider grants to local authorities. That is simply not the case. In England, parliamentary approval will still be needed to 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 to the award of a grant. In England, where the new power is used to make grants, the Treasury's consent will be needed—that is an important safeguard against the imposition of spending conditions unless they are genuinely necessary and beneficial.

I am really tempted to go to my notes on the next group of amendments, but I shall resist that. That would fall in line with the purpose of the amendment. I have a perfectly satisfactory answer but I had better stick to the approach that I began with—I did so in a somewhat heated moment. I said that I should stick to each amendment as listed, and I shall not deviate from that, tempted though I am.

Baroness Hanham: I will withdraw the amendment and move on to Amendments Nos. 93 and 94. That would help the Minister and me. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Baroness Hanham moved Amendment No. 93:

    Page 14, line 36, at end insert—

    "( ) For each financial year the Secretary of State shall publish a table setting out—
    (a) the grants made to each local authority under this section;
    (b) the size and purpose of the grant; and
    (c) the political control of the authority at the time the grant was made."

The noble Baroness said: I hope that the Minister will remember at a later stage how helpful I am being before he sends a nasty political barb in my direction.

Amendment No. 93 is simple. It is about open government; that is, setting out information for the public on what the grants are all about. Throughout our debate on the clause he has agreed to the need for that. Amendment No. 93 asks for a list of the grants being made under Clause 31; under what head they would be made and whether they were unusual or significant; and what their purpose was. That is a routine task. As the Minister said, the Local Government Act comes before Parliament but the amendments would require that those grants that have been given under the power to be listed. I am sure that the Minister will not object to that.

Amendment No. 94 complements and reinforces Amendment No. 93; it takes up the same point. At least the general rules of the general settlement should apply to everyone equally if the grant is equal—if it is a specific grant across the board. If it has been given not across the board but to a particular authority, the explanation under the list would be different. I beg to move.

Lord Rooker: Amendment No. 93 would require the Secretary of State to publish on an annual basis a table giving details on all grants paid under the new power in Clause 31. We do not believe that there is any need for such a requirement in legislation for reasons that I will explain. We already make information available, as noble Lords would expect us to want to do. For local authorities overall, one of the key tables provided at the time at which Parliament considers the annual local government finance revenue settlement sets out all known relevant special and specific revenue grants to be paid to councils each year. Each grant is listed separately together with the size of the grant. We will add those grants made under Clause 31 to that list. We also provided a list of grants as part of our announcement on freedoms and flexibilities. For individual authorities, we will look to consider setting out the allocations for individual authorities at the time that grants are made.

For example, a circular by the Department of Health that was issued at the time of the provisional local government finance settlement set out the allocations to councils for those grants that were announced at that time. The purpose of the grant will be made available at the time at which the grants are announced. We also draw together information on grants in a variety of forms in response to Parliamentary Questions of both Houses. Those reflect Members' interests at the time.

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We do not publish the political control of the authority at the time at which the grant was made and do not believe that it would be appropriate or practical to do so for reasons that I will explain. Grants are given on the basis of need and not on the basis of political control, which, in any case, changes over time. Information on the political control of authorities is publicly available but grants are not until we make them and publish them. Prescribing some particular set of information to be published each year would add no benefit.

Amendment No. 94 would make it unlawful for the Secretary of State even to consider the political control of an authority in reaching decisions on the use of the power. It would require certification to Parliament by Ministers and officials that the political control of a local authority had not been taken into account, and so on. This is an unnecessary amendment because Treasury approval is already required to the use of the power. The Treasury will be exercising control over the grants made under Clause 31 and will need to be satisfied that there is proper justification for the amount of the grant, the manner of its payment and any conditions imposed on its payment. The payment of grant under that power will depend entirely on the eligibility criteria for the grant and not on the political control of the authority, which may, in any event, be subject to change.

Local authorities could, if so advised, seek judicial review of any distribution of grant moneys under Clause 31 if it appeared that the basis of distribution was tied to the political control of the local authorities concerned. The change proposed by the amendment is not found in the legislation governing the revenue support grant, which provides the majority of local government funding—several billion pounds a year—to local authorities. It is also not present in the grant-making power under Section 88B of the Local Government Finance Act 1988. We believe for those reasons and for practical reasons that that would be inappropriate. It would introduce an unnecessary bureaucratic requirement of a certificate to Parliament.

On the thrust of Amendment No. 93, we will add the grants under Clause 31 to the list that is already published so that everyone can see them at the appropriate time.

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