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Baroness Hanham: I am sorry to be tiresome about this, but, as far as I understand it, a best value authority is an authority that has achieved best value status. The clause states:

That suggests to me that the grant is payable only to an authority that has achieved best value status, not, as the Minister just said, any authority that applies for that status. That matters because, as the Minister just said, not to be able to give grant to any authorities applying would discourage them from doing so. But I

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do not think that that is what the clause states. There is a bit of nodding going on in the back row; I think that I am right to say that it would be payable only for expenditure incurred by an authority that had achieved best value status.

Lord Rooker: That is the shorthand of local democracy, if you like. The noble Baroness is quite right: if we read the first line of the clause—line 35—it states:

    "The appropriate person may pay any of the following to a best value authority".

But it applies to those who are applying for beacon status. If a best value authority applies for beacon status but fails to achieve it, it may receive grant under paragraph (a) for the expenditure incurred in making that application. But it must be a best value authority in the first place. Any confusion is my fault, because of the way in which I gave my previous answer, but that concerns best value authorities applying for beacon status.

Baroness Hamwee: I am grateful to the Minister for putting some flesh on the bones of the provision. As I understand it, the definition of a best value authority in Clause 123 applies in the clause, as it does throughout the Bill.

As I said, I understand the desirability of grants to assist the dissemination of best practice, and that the third purpose in Clause 38(1)(b)(ii) is necessary to trigger Clause 38(1)(b)(i)—the reward. It is questionable whether there should be a payment to reward the designation of beacon status, which carries with it various other rewards that one would have thought were perfectly adequate.

I do not accept the policy of financial incentives to apply to beacon status, but I am glad that we at least understand what are the proposals. We have been told that there is currently not only a grant-making power but a practice under our old friend, Section 88B, for the dissemination of best practice, so I am not persuaded of the value or desirability of the clause. However, I shall read carefully what the Minister said and, for the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 101B not moved.]

Lord Hanningfield moved Amendment No. 102:

    Page 18, line 5, 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) within not more than five months of such grant being made."

The noble Lord said: We thank the Minister for his explanation of how he envisages the clause working—how best value and beacon status may be supported and that authorities will be able to apply for expenses in trying to achieve that status.

We have debated whether the clause is good, but we are here trying to add to the clause by stating that, although we agree with the Government's recognition that the application process can add to expenses, we

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are concerned to maintain the transparency of any grant paid to best value authorities for service excellence by ensuring that it is scrutinised by Parliament. That is the only way to ensure the transparency and credibility of such transactions. Importantly, that is also the best way to provide a clear incentive to those councils striving to improve. Can the Minister assure us that the grant system will operate in a clear and accountable manner? I beg to move.

6.45 p.m.

Lord Rooker: The answer has to be "yes". The noble Lord deserves a better explanation. The amendment would require any grants made under Clause 38 to be reported in a special grant report under the now—I should not say "infamous"—Section 88B of the Local Government Finance Act 1988 within five months.

This would not be workable because Section 88B does not apply to English parish and town councils or to Welsh community councils. It would not therefore be possible for a determination made under these clauses in relation to those bodies to be reported. It would also represent a significant increase in the scope of Section 88B.

In so far as principal local authorities are concerned, Amendment No. 102 would raise the possibility that a grant made under the new power could be struck down after it had been paid, by a later decision made by Parliament—I referred to this in relation to a previous amendment. Apparently the amendment would also apply to Wales and the requirement for parliamentary approval would be inconsistent with the devolution settlement.

The absence of a special grant report under Section 88B would not mean that Parliament would no longer be able to consider grants under Clause 38, as indeed is the case under the other clauses that we debated. Parliamentary approval will still be needed to the ambit of the relevant department's request for resources and, in England, Treasury consent will also be needed. In Wales, appropriate safeguards will be put in place.

In addition, the grants made under Clause 38 are likely to be quite small or to be repeated and therefore the need to continue to rely on the grant-making powers under Section 88B would be cumbersome. Furthermore, Amendment No. 102 would apply to Wales, and the requirement for parliamentary approval would be wholly inconsistent with the devolution settlement.

I hope that I have provided the noble Lord with an answer. The points that I have made about Section 88B being cumbersome and about the fact that Parliament knows what is going on, as I indicated in relation to Clause 36, should be taken in the round. No secret grants will be paid. No grants will be paid either without Treasury approval or without proper procedures in the Welsh Assembly, and they will be publicly listed in due course.

Lord Hanningfield: I thank the Minister for his comments. I do not intend to return to the discussion

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about devolution of powers to Wales, but this point also relates to a further amendment. This is a new policy and a new initiative. The point relates to wider publicity, if that is the right word—if there has to be Treasury approval and so on. The accountability that we should like to see is not provided.

Lord Rooker: No, it is even worse than that. I am informed that Treasury approval is not required under Clause 38, merely under Clause 36.

Lord Hanningfield: So it is worse. As I said, we support the policy. It is merely a question of the process of making it public, visible and accountable. Even if it does not apply to parish and town councils, because powers are not included in the previous Act, surely something could be done to make the process more transparent and visible.

Lord Rooker: I may be wrong—I have no experience of local government save for the period when I was a co-opted member of an education committee 30 years ago—but my experience is that local government is not slow in coming forward when grants are available. In fact, sometimes—I shall not go down the road of a current issue—local authorities over-egg the pudding. When changes are made to grant systems, it is suddenly discovered that all kinds of things fall out of the cupboard. The treasurer will say to members: "Let's get in with this little lot before they make changes". So I honestly do not think that local government will be unaware of the changes being made in this legislation.

I accept the point in relation to the 8,000 parish and town councils—although we have means of communicating with them, and many members of parish and town councils are members of district councils as well. The intention is not to keep quiet about this. I am sure that the LGA will make sure that its members are fully up to speed on the grants that are available.

Lord Hanningfield: Of course, it would not be the LGA looking after the town and parish councils.

There is a theme that we might want to reflect on before we go further in our debates on the Bill; namely, how we deal with parish and town councils. For the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 38 agreed to.

Clause 39 agreed to.

Clause 40 [Loans by Public Works Loan Commissioners]:

Baroness Hanham moved Amendment No. 103:

    Page 18, line 15, after "appropriate," insert "by order"

The noble Baroness said: This amendment would limit the Minister's ability to make payments to the Public Works Loan Commission without an order of approval being laid before Parliament.

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Clause 40 brings us to the subject of overhanging debt—the amount of money owed to the Public Works Loan Commission as a result of borrowing by a local council to provide housing. It relates also to the amount of debt and to paying it off.

In another place, it was suggested that the provision of such debt for 2003–04 was currently more than 600 million. That is a substantial figure. It is substantial, too, in the sense that the Secretary of State or the Minister will be making payments to the Public Works Loan Board for individual authorities, as I understand it, as they transfer their housing stock to registered social landlords and consequently ensure that the debt is written off.

Part of the problem as regards the transfer of housing to registered social landlords is that, sometimes, not all of it is transferred and some remains with the council. The amount of money that the Secretary of State is proposing to pay off will be different in proportion depending on which authority is involved.

It seems to us that, where this will happen and where the Secretary of State will have the powers to pay this money to the Public Works Loan Board, it is right that he should do it only with the approval of Parliament.

A further point arises in relation to Clause 41; namely, the right of the Minister and of authorities to use money from one good authority to pay off the debts of an authority that is not quite so well run. Some authorities do not have debts; they are prudent and debt free. We discussed these in relation to the pooling arrangements earlier in the Bill.

I hope that the Minister can accept an amendment along these lines. This amendment may not be brilliant, but it would ensure that Parliament would see what was being paid to the Public Works Loan Board, on what basis, and on behalf of which authority. I beg to move.

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