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Lord Acton: My Lords, further to the point that my noble friend has just made, if this issue is handled by ZANU-PF as poorly as the matter of the commercial farms, is it not likely that this move will lead to still

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greater unemployment and a still greater number of refugees entering South Africa? In the light of this and of what my noble friend has just said—and pace the noble Lord, Lord Tebbit—what is President Mbeki’s attitude to yet more refugees coming as a result of this legislation?

Lord Malloch-Brown: My Lords, my noble friend is correct to draw attention to the fact that there are already millions of refugees in South Africa, swamping its social services and increasing its unemployment. There is no doubt that the action of the kind now contemplated in Zimbabwe would target the only functioning parts left of that country’s economy—the natural resources and banking sectors. So we very much hope that President Mbeki will bring his influence to bear to prevent this absurd action.

Taxation: Inheritance Tax and Capital Taxation

3.29 pm

Lord Forsyth of Drumlean asked Her Majesty’s Government:

Lord Davies of Oldham: My Lords, in yesterday’s Pre-Budget Report, the Chancellor of the Exchequer announced a change to the inheritance tax rules that will ensure that married couples and civil partners benefit from both partners’ tax-free allowances. The Chancellor also announced a new single rate of capital gains tax of 18 per cent from 2008-09 that will ensure a more sustainable system that is straightforward for taxpayers.

Lord Forsyth of Drumlean: My Lords, I welcome the Chancellor’s announcements yesterday on capital taxes, but would it not have been fairer to raise the inheritance tax threshold to £600,000 for everyone, rather than discriminating against people such as the two sisters who have gone to the European Court, single parents, and couples who have been co-habiting for many years and perhaps brought up a family? Why are the Government imposing on them an additional tax liability of £120,000 rather than treating everyone the same, as my right honourable friend the shadow Chancellor had proposed?

Lord Davies of Oldham: My Lords, the House will recognise, as the noble Lord suggested, that such individuals will be penalised only if they fall within the framework of this level of taxation. Let us be clear that we are talking about substantial resources. The noble Lord is shaking his head. The Government, being responsible and in power, have to balance tax cuts, which they can propose and will become effective and reduce revenue, with the expenditure that we need to provide for the goods which the nation demands of us. The noble Lord will therefore appreciate that we cannot be cavalier in quite the way that the Opposition have been.

Noble Lords: Oh!

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Lord Davies of Oldham: My Lords, when I say “cavalier”, consider the obvious fact that £1 billion of revenue would be lost to people whose assets are over £900,000. That looks to me like a poor trade-off, as that money could be used beneficially for the wider community.

Lord Wedderburn of Charlton: My Lords, will the Government consider publishing an official guide for those who do not have the resources to consult very highly paid—properly paid—lawyers for their advice? It would be an official document headed: “How to avoid paying inheritance tax”.

Lord Davies of Oldham: My Lords, although my noble friend would be intellectually equipped to deal with such a document, the problem is that ordinary citizens, like the rest of us, have the greatest difficulty in wrestling with these concepts. He will also be well aware that when attempts are made to offer householders ways of avoiding this tax, those attempts often do not withstand the test of subsequent legal judgment. That is why we have to be absolutely rock secure that any advice given is accurate and effective for the citizen.

Baroness O'Cathain: My Lords, does the Minister realise that, under the measure discussed yesterday, the Government will create yet more discrimination against elderly sisters looking after elderly parents and against people with family homes? It is disgraceful that nothing was done for those people in yesterday’s Statement.

Lord Davies of Oldham: My Lords, I hear what the noble Baroness says. Whenever a tax judgment is formed there are bound to be those on the other side who are not beneficiaries of the reform although they have a very similar case to that of those who are. We recognise the case which the noble Baroness puts forward and shall continue to look at that problem. However, she will appreciate that it is much more important to look at the issue that confronts a wider section of the population and which the Chancellor dealt with admirably yesterday.

Lord Newby: My Lords—

Viscount Bledisloe: My Lords—

The Lord President of the Council (Baroness Ashton of Upholland): My Lords, if the noble Lords are quick, there is time for both.

Lord Newby: My Lords, I congratulate the Government on adopting the Liberal Democrat policy of abolishing capital gains tax taper relief. At the same time, may I offer them a suggestion that might help to achieve one of the Chancellor’s other declared aims yesterday, of simplifying business taxation? It is to abolish the capital allowances system and to replace it with a system based on company accounts.

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Lord Davies of Oldham: My Lords, the second point raises issues that deserve more intensive consideration. On this occasion, however, I am prepared to recognise that the noble Lord has advocated the issue of capital gains tax for some time. He will therefore take delight, as all Labour supporters do, in the constructive action that the Government have taken.

Viscount Bledisloe: My Lords, surely the problem that was concerning people was their ability to pass their family home on to their children. Why does it matter, if one wants to pass one’s family home on to one’s children, whether one is still married or—and I declare an interest—divorced?

Lord Davies of Oldham: The answer, my Lords, is that we are concerned. As the noble Lord will recognise, we have made special arrangements so that those who have been widowed should fall within the framework and are beneficiaries. However, he will also recognise that taxation cut-off points must be made on a clear judgment about the percentage of the population whom we can afford to assist in these terms. He will also appreciate that the Chancellor has addressed the issue, benefiting 97 per cent of households.

Lord Howarth of Newport: My Lords—

Lord Burnett: My Lords—

Baroness Noakes: My Lords—

Noble Lords: This side!

Baroness Ashton of Upholland: My Lords, it is time.

Local Government and Public Involvement in Health Bill

3.36 pm

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Andrews): My Lords, I beg to move that the Bill be now further considered on Report.

Moved accordingly, and, on Question, Motion agreed to.

Clause 53 [Power of council to alter years of ordinary elections of parish councillors]:

[Amendments Nos. 66 and 67 not moved.]

Clause 54 [Amendment of existing provisions about schemes for ordinary elections]:

[Amendment No. 68 not moved.]

Baroness Andrews moved Amendment No. 69:

On Question, amendment agreed to.

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Clause 56 [Electoral Commission and Boundary Committee: reviews and recommendations]:

[Amendment No. 70 not moved.]

Clause 59 [Change of name of electoral area]:

Baroness Andrews moved Amendments Nos. 71 to 76:

(a) ”(b) by a majority of at least two thirds of the members voting on it.”(a) in a case where the council are operating a mayor and cabinet executive, the elected mayor of the council;(b) in a case where the council are operating an elected executive, the members of the elected executive of the council.”

On Question, amendments agreed to.

Clause 62 [Executive arrangements for England]:

Baroness Scott of Needham Market moved Amendment No. 77:

The noble Baroness said: My Lords, I am grateful for the support of colleagues in the House, who are showing such an interest in the future of local government by staying for approximately two minutes while we begin Report stage again.

This is a dauntingly long group of amendments, which seeks to achieve just one thing: to give local authorities full flexibility in their governance models. The Bill narrows the range of options to local authorities down to three. One of these, as we will see in later groups of amendments, is to all practical intents and purposes totally unworkable. The other two options are based on the so-called “strong leadership” model, with the council at large taking on a largely scrutiny role.

I start by again asking the Minister why the Government feel it necessary to change the arrangements for local authorities from those currently in place. She talked in Committee about how councils are now agents of change and said that they need to adapt to new challenges. Well, there have always been new challenges for local authorities.

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When councils were in their heyday in the 19th century, they dealt with the major problems of the time—public health and so forth—because they were free of Whitehall interference and were able to choose governance structures largely of their own making. If councils are to meet the new challenges of climate change, law and order problems and so forth, they can do so if left free from government interference.

There is no evidence of any public appetite for elected mayors. Referendums have been held throughout the country and the electorate have rejected them as an option. Even in those areas where we have an elected mayor, the turnout has been low; there are mayors who operate with no popular mandate. I fully accept that there are areas where the mayoral model is the right one and that people want it—that is fine. However, in other areas, mayors are enjoying pretty much untrammelled power with no popular mandate.

I ask the noble Baroness to consider again that in areas that have no strong geographic identity the mayoral model is wholly inappropriate. To the south of where I live is a local authority called Babergh. Even people who live in Babergh do not know that they live in Babergh. It has no identity as a council. If someone were to stand as mayor of Babergh, that would be pretty meaningless, as you cannot have an identity for an area like that, which was simply a construct of the last round of restructuring.

In Committee, the noble Baroness talked about the importance of strong leadership. We all agree with that, but there is no evidence that mayors are stronger per se. Those in the current round of mayors were often high-profile leaders who came through the old system. The evidence is that, rather than mayors themselves being strong and high visibility, it is the personalities that bring that to the fore. We have seen that with the most high-profile mayor of all, Mr Livingstone. There is no guarantee that moving to a mayoral model will ensure that a person of such a profile and personality will come through.

I also take issue with the Minister about whether the new models will allow for the development of new people coming through. As I argued in Committee, the abolition of the old committee structure does not allow for people to learn their trade in the way that they used to. In Committee, the noble Baroness said that this learning process would come through chairing overview and scrutiny committees. However, that involves an entirely different skills set. Chairing an overview and scrutiny committee is not high profile; it is essentially a technical job, and it will not lead to people coming forward who are then suited for executive power. I suggest that most people think that Gwyneth Dunwoody does a great job chairing a Select Committee, but she is not your Prime Minister. A different set of skills is required.

The Government also quoted studies that show that mayors are more effective at articulating a vision for their local area. Again, that probably has as much to do with personality as position. I challenge the Government to pause. It is not simply the ability to articulate a vision that makes someone a good leader. That is important—of course it is—but so is service

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delivery, and the Government have, as yet, given us no evidence that those areas that have moved to these models of governance have improved service outcomes, which have to be the most important outcome of all.

I am a member of your Lordships’ Select Committee on Communications. We took some interesting evidence this morning from a company that runs local newspapers throughout the country. It said:

In other words, it is all spin. It is no wonder that people feel that a vision is being articulated. It is a vision that is wrapped in spin; it is developed by the press officers and has no real substance in many cases.

Overview and scrutiny still has a long way to go in many areas before it becomes effective. In any event, it can be quite a damaging model. Essentially it involves councillors looking back at decisions that have already been made and, quite probably, picking holes in them. From the public point of view, it portrays the council as inward-looking. What is worse, when the scrutiny process takes place and nothing happens, which is the case a lot of the time, the council comes across as looking toothless and people ask, “Why have we bothered to elect them at all?”.

We often hear criticisms of the London Assembly, which, notwithstanding the work done by my noble friend, is often accused of being toothless. But that is exactly how the Government set the models up. This long raft of amendments seeks to bring back the ability of local authorities to choose a model of governance that suits them so that they can, if they wish, revert to the old committee system. I suggest to the Government that there is nothing wrong with councils making decisions by committee if that is what they think suits them.

There is enormous variety in the make-up of our local councils, whether because of size, geography, culture or politics. To straitjacket them as the Bill does—to reduce them to three models of governance—will be to risk the very stability and service improvements that the Government seek to achieve. I beg to move.

3.45 pm

Baroness Hanham: My Lords, we had a long debate on this in Committee and I just want to reiterate that our views accord very much with what the noble Baroness, Lady Scott, said. The trouble with the Bill is that it is far too prescriptive. The Minister suggests that it gives lots of flexibility; it does not at all, especially in structures, with which we will deal under later amendments. There were a number of reasons for having an election, but one was to have seen the back of this Bill, which would have dropped very nicely under those circumstances. But there we are; we are left facing it. We have discussed this and the Minister knows our views. On these aspects, we are very far from where we want to be in local government.

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Baroness Andrews: My Lords, we indeed debated much of this in Committee at great length and with some passion, and we return to it today. Amendments Nos. 77, 84, 86, 88, 91 to 93, 114 and 133 to 135 are intended to allow any council to operate alternative arrangements. That is the burden of them. That is to say, they would allow unitary councils and district councils with a population of 85,000 or more, based on the Registrar-General’s estimate on 30 June 1999, to operate alternative arrangements. That would be to move back from an executive model to local government by committee—arrangements that for very good reasons we have allowed for smaller councils under the 2000 Act, because of their very different circumstances and limitations.

At root, the amendments would completely overturn the purpose of the Bill as it relates to council governance. Councils in future would be able to give up having executive arrangements and adopt a committee-type structure—the alternative arrangements, in short. The important point is that not only would that return local government to the position that it was in before the Local Government Act 2000; the amendments also reject the changes that are being made, on the basis of evidence and consultation, to strengthen and focus leadership of local government and to ensure that the best practice under the 2000 Act will in future be replicated everywhere.

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