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30 Jun 2011 : Column 1948

128G: Clause 48, page 41, line 3, at end insert-

"(3A) Subsection (3B) applies if-

(a) the determination is that it is appropriate to hold the referendum, and

(b) the petition is a special-case petition.

(3B) The proper officer of the authority must-

(a) if the authority is not the Greater London Authority, arrange for a meeting of the authority to decide on a resolution that the referendum should be held, or

(b) if the authority is the Greater London Authority, arrange for the authority to decide on a resolution that the referendum should be held.

(3C) The arrangements under subsection (3B)(a) or (b) must be such as to enable the decision concerned to be made as soon as is reasonably practicable after-

(a) the determination is made, or

(b) if later, the officer concerned came to be of the opinion as a result of which the petition is a special-case petition.

(3D) If the authority-

(a) is not the Greater London Authority and resolves at the meeting mentioned in subsection (3B)(a) that the referendum should be held, or

(b) is the Greater London Authority and resolves that the referendum should be held,

it must make arrangements for the referendum to take place in accordance with sections 51 to 54."

Amendments 128F and 128G agreed.

Amendment 128H

Moved by Lord Greaves

128H: Clause 48, page 41, line 8, leave out subsection (5)

Lord Greaves: My Lords, in moving the amendment I will say how nice it is to see the noble Lord, Lord Brooke of Alverthorpe, in his place. The noble Lord could have his referendum on parking charges and the council would meet the cost of the referendum by increasing the charges even more. Who knows what unintended consequences may occur? I will now speak to the amendment before the Whips start glowering at me.

Amendment 128H is about the publicity that a principal local authority has to give to a determination that it is not appropriate to hold a referendum. Clause 48(4) states:

"If the determination is that it is not appropriate to hold the referendum ... the notification must give the reasons for the determination, and ... subject to subsection (5), the authority must publish those reasons when it publishes the determination".

That all seems fine. But then subsection (5) says a quite extraordinary thing:

"A principal local authority is not obliged to publish those reasons if it thinks that in all the circumstances it would be inappropriate to do so".

I cannot think of any circumstances in which it would not be appropriate to publish the reasons why the local authority has decided not to hold the referendum when it gets a petition which otherwise matches all the necessary conditions.

The grounds for determination are set out in Clause 47 which we have been discussing at some length and they are fairly clear-they would be even clearer if some of

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my amendments were passed. Even so, the Bill is going to include a clear statement of the reasons why a council can decide not to have a referendum even though it gets a petition.

Amendment 128Q is exactly the same wording in relation to a request for a referendum from a member. Whether it has to tell the member the reasons why it is not going to have the referendum the member is asking for, I am not quite sure, but it seems quite extraordinary that this is the case. It takes me back to my very early days in local government, which are far too long ago, when the council I was on-and no doubt many others-used to publish a minute for a decision that said something like, "That the action now mentioned be carried out by the officer now named".

That sort of thing does not happen any more. My understanding is that local authorities are now under a general obligation to state the reasons for all the decisions they make and publish. That is certainly what the local authorities I know all do and I think that is now required. If a decision can be made not to hold a referendum without having to say why, then if the people asking for the referendum are rich enough it is a recipe for lining the pockets of a lot of lawyers. If they are not rich enough they will just get very angry and the whole process will be undermined.

I am challenging similar provisions in Amendments 129D and 129CAA which cover what a local authority does after a referendum and the action it decides to take. Again, it is suggested that if no action is taken then the authority has to publish the decision. In this case what the Bill says is right: the authority has to publish the decision and the reasons why if it decides not to do anything about a referendum that has been carried by a majority of people voting and calls for action. However, it does not have to say anything at all if it decides to carry out what the referendum wants or it decides partly to carry out what the referendum wants or to do something slightly different which might achieve some of the same objectives.

It seems to me that whatever the decision is on the basis of the referendum that has taken place, the local authority ought to make a clear statement of what it is going to do in response to the referendum, the decision of the referendum and give the reasons why. In this case, I suspect it is that the people drafting this have not thought through it 100 per cent. I would have thought the Government could have redrafted this part without any real problems. The first two, where it clearly says that you do not have to say why you are rejecting it, are clearly wrong and must be challenged.

Amendment 128J is the other amendment in this group and takes us back to some discussions we had on the Local Democracy, Economic Development and Construction Act when it was going through this House on the question of identification of the organiser of a petition. It was all very unsatisfactory when that Bill came to this House. We got it right. This is less unsatisfactory but it is still not quite right. Clause 48(6) states:

"In this Chapter 'petition organiser', in relation to a petition, means-

(a) the person designated in the petition as the person with whom the authority may deal in relation to the petition".

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It is possible that a petition will come in and the person is not actually designated in the petition but the person identifies themselves as the organiser, they turn up and hand it in, they have a covering letter that they have signed or something like that. Amendment 128J suggests a slightly better wording. Instead of,

it suggests,

All the authority needs to do is to ask who the person in charge of the petition is. It might be the first name on the list; it might be the person who has simply signed the covering letter; it might simply be the person who turns up at the council offices or hands it to the mayor, or whatever they do, and identifies themselves as the organiser. The subsection just needs to be clarified a little. I beg to move.

Baroness Whitaker: My Lords, some noble Lords may think that my one question for the Minister might have sat more easily with amendments in previous groups, but I hope they will indulge me because then I had to be in the Education Bill Committee, to which I shall shortly have to return. My question can loosely be attached to this group of amendments.

The problem that has been brought to my attention is that when local authorities are bound to publicise and take the outcomes of referendums into account in decision-making, it could result in them being pressured by local communities into disregarding welfare issues and the rights of Gypsies, Travellers and others. We know that there is form on this. Local communities have had that kind of attitude. My question for the Minister is: is there any safeguard to deter that?

Lord Taylor of Holbeach: Perhaps I may help the noble Baroness, Lady Whitaker. She may not be aware that one of the government amendments makes it clear that planning applications-it is often under planning applications that these matters arise-are excluded from the provisions for referendums. The noble Baroness will remember that we had a brief exchange about this earlier. The whole business of provision for Traveller populations is subject to direction and regulations as far as local authorities are concerned, so it is an area in which local authorities are obliged to act properly. It is also an offence for people to campaign on these issues in a way that breaks the law. I hope that the noble Baroness is content on that matter.

The amendments tabled by the noble Lord, Lord Greaves, require the council at all times to publish its reasons for such a determination. We believe that the vast majority of local authorities-in fact, almost without exception-will publish their reasons for such a determination. They want local people to know why their petition or the request from their councillor was not considered appropriate. However, removing the discretion not to publish those reasons could mean that the council is required to publish details that may be confidential or otherwise inappropriate. For example, the petition could relate to an individual for whom it would cause further embarrassment to publish details of the petition or breach their human rights. In such a case, the authority would be able to report that the petition had been rejected but without any further detail.

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Lord Beecham: Why could the local authority not say that it is not elaborating because of confidentiality or the Human Rights Act? Why should it not make that clear in those circumstances?

Lord Tope: My Lords, that is exactly my point. I thought that the Minister had just given the reason which the local authority would give in those circumstances for not accepting it. If I remember rightly, the question asked by my noble friend Lord Greaves was, "What are these exceptional circumstances?". The example that has just been given is not one of them because the local authority would give the reason which the Minister has just given us.

Lord Taylor of Holbeach: Perhaps in continuing to respond to this set of amendments the answer might become clearer. The noble Lord went on to suggest that with the words "designated in the petition" and in seeking to get a particular person named as the petition organiser, it would be reasonable to expect that a petition will usually make clear who an organiser is and that in most cases the organiser will welcome being the contact point for the petition. However, it is possible that a petition could fail to specify the organiser and we expect authorities to act reasonably in seeking to identify who might take on that responsibility. Little is added to this clause by imposing a requirement on anyone to provide a notification. Where the petition is clear, the person identified will be the organiser; where it is unclear, the discretion in Clause 48(6)(b) enables an authority to decide who appears to be carrying out the role of organiser. My reaction in considering this amendment is rather overshadowed by my political campaigning background. I have explained the difference between electoral processes and the petition process, but I see what my noble friend is driving at. If there is ambiguity in this matter, I am prepared to look at this again.

I am not convinced that Amendments 129CAA and 129D are necessary. It is reasonable to expect that if a council or partner authority decides to give effect to a referendum they will tell people about how they have listened and acted on their views or that local people will notice it anyway. However, the provision in Clause 55 is important in that it ensures that where partner bodies decide not to give effect to a referendum result, local people are made aware of the reasons why. I hope that that explains that. Sometimes giving the reason for the rejection can give the game away; for example, it could identify that an individual had a criminal conviction. This is another reason why it might be essential to have discretion in the Bill. However, given the contributions made by noble Lords, we will look at this and see if the wordings do reflect exactly what it is the Committee would wish to see in the Bill.

Lord Tope: My Lords, I am grateful to the noble Lord. I suspect that as he was speaking he was remembering many of the things that I am only too well aware of in the reality of petitioning. On the question of the exceptional circumstances, if they were reasons of a confidential nature I imagine that the local authority would use the words that they use now when they are going into confidential session as

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the reason for not pursuing the Bill. These are not major points that will hold up the Bill but we should look at them to see whether there can be better wording. If there really are exceptional circumstances that the local authority is unable to state-and I am bound to say that I cannot think what that might be, because if something is of a confidential nature then that would be the reason-then we should say what they would be. I cannot think that there are any that cannot be covered by the appropriate form of words.

Amendment 128H, which is in the name of my noble friend Lord Greaves and refers to "designated in the petition", once again reminds me of the happy hours we spent on the local democracy Bill and all that that legislation prescribed on petitions. I recall that my noble friend brought in some petitions to his council, which did not look like petitions to Parliament in any sense. We all know that they are not usually neat and tidy, with the petition organiser's name at the top. Again, this is not a major point. My noble friend has suggested an alternative wording which I think would meet it very well. However, the term "designated in the petition" does not meet it. Most of the petitions to my council that I have seen-and I suspect that the Minister has had similar experience-do not designate anyone in the petition itself. It just does not work that way. Therefore, a rather simpler, looser way would serve the point much better and save people getting into an unnecessary tangle.

5.30 pm

Lord Greaves: I am grateful for the support from my noble friend and others, and for the fairly emollient response from my noble friend the Minister. The first point that I was going to make has just been made by my noble friend. Councils deal with decisions all the time-for example, not giving licences to people because they have criminal convictions. Sufficient reasons are given for those decisions without going over the top and hauling them out into the open and putting them in the local stocks, which we have in my town. I cannot think of any decisions minuted by my council in the past two decades for which the reasons have not been set out. People are perfectly capable of writing decisions that are appropriate in the circumstances.

However, I cannot quite understand how criminal convictions will come into this. I suppose that the petition organiser might turn out to be a complete rogue, but why should that invalidate a petition that was otherwise perfectly valid, especially as the Minister said earlier that people in prison should be able-it is slightly extraordinary-to sign these petitions even though they cannot vote? I cannot see why a person should not be able to organise a petition in his community simply because he has criminal convictions. The petition itself is hardly likely to reveal people's criminal convictions. Is it? I do not know.

I am grateful for what the Minister said. I think that we will have a few more chats about this. I beg leave to withdraw the amendment.

Amendment 128H withdrawn.

Amendment 128J not moved.

Clause 48 agreed.

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Clause 49 : Action following determination in response to request

Amendment 128K

Moved by Lord Taylor of Holbeach

128K: Clause 49, page 41, line 20, leave out "arrange for a meeting" and insert "-

(a) if the authority is not the Greater London Authority, arrange for a meeting of the authority to decide on a resolution that the referendum should be held, or

(b) if the authority is the Greater London Authority, arrange for the authority"

Lord Taylor of Holbeach: My Lords, government Amendment 129G makes a change to Clause 57. The purpose is to make it clear that the,

in this chapter is, in the case of the Greater London Authority, a joint function of the mayor and the Assembly, and that the function is to be discharged in the same way as the Greater London Authority discharges any other functions that are specified as the joint responsibility of the mayor and the Assembly.

Government Amendment 128K removes the requirement for the Greater London Authority to hold a meeting to decide on a resolution to hold a referendum. It reflects the constitutional arrangements of the authority, which does not hold joint meetings of the mayor and the Assembly and will instead enable appropriate arrangements to be made for the mayor and the Assembly to come to a decision about whether to hold a referendum.

Government Amendments 128N and 128P make consequential changes to Clause 49(3), again removing the requirement for the Greater London Authority to hold a meeting. I hope that noble Lords will agree that this clarification is helpful and I urge them to accept these amendments.

In this group we have some amendments from my noble friends Lord Greaves and Lord Rennard. Amendment 128L seeks to make it clear that a resolution to hold a referendum may be taken at the next ordinary meeting of the authority following determination that it is appropriate to hold a referendum. Amendment 128M in consequence removes Clause 49(3), which requires a meeting to discuss a resolution to be held as soon as practicable. These amendments assume that the wording of Clause 49(2) currently requires a meeting to be specifically convened for the purpose of resolving whether to hold a referendum. I can assure noble Lords that that is not our intention. We believe that the inclusion of the word "for" in Clause 49(2) makes it clear that a meeting must not be specifically convened but that the issue may be added to the agenda of any meeting of the full council. I will listen to the debate of my noble friend and then perhaps I can respond to his proposal.

Lord Greaves: My Lords, I have two amendments in the group, Amendments 128L and 128M. Amendment 128L says "arrange a meeting", and Amendment 128M says,

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Clearly, if it is two and a half months until the next full council meeting of that authority,

could be taken to mean that the meeting has to be called more quickly than that. I am perfectly happy to accept the assurances that the Minister has already given. I was just concerned about the cost of these referendums to local authorities. The cost of organising an extra meeting of the full council is not cheap for any authority, especially for a small one where the cost is a larger proportion of its budget. It is not a trivial expense. If the Minister is putting that assurance on the record, then my amendments have achieved their purpose.

Lord Taylor of Holbeach: I thank my noble friend for that observation. It is a matter of the precision of the language, and the key phrase is,

to be held. Had the phrase been that the proper officer "must arrange a meeting", it would have been clear that a meeting must be specifically arranged. We believe that the wording in the Bill is clear. If it proves not to be the case, we are prepared to reconsider it. However, we believe that the meaning is clear. I would be grateful if my noble friend would withdraw his amendment.

Amendment 128K agreed.

Amendments 128L and 128M not moved.

Amendments 128N and 128P

Moved by Lord Taylor of Holbeach

128N: Clause 49, page 41, line 22, leave out "meeting must be held" and insert "arrangements under subsection (2)(a) or (b) must be such as to enable the decision concerned to be made"

128P: Clause 49, page 41, line 24, leave out "resolves at the meeting" and insert "-

(a) is not the Greater London Authority and resolves at the meeting mentioned in subsection (2)(a) that the referendum should be held, or

(b) is the Greater London Authority and resolves"

Amendments 128N and 128P agreed.

Amendment 128Q not moved.

Clause 49 agreed.

Clause 50 agreed.

Clause 51 : Question to be asked in local referendum

Amendments 128QA and 128R not moved.

Amendment 128S

Moved by Lord Greaves

128S: Clause 51, page 42, line 10, leave out subsections (3) to (5)

Lord Greaves: My Lords, the amendments in this group need not detain us for long. They have been tabled to probe the appropriateness of the word "misleading" as the criterion a local authority can use to change the wording of a referendum question. It must consult the people who have put forward the petition before doing so, but I am not sure that the

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word "misleading" covers everything. For example, an authority might want to improve the grammar of a question. As my noble friend Lord Tope said, petitions to councils even for something as important as a referendum are not necessarily written in the most appropriate phrases. If more felicitous wording can be introduced, it may be an improvement, but I am not sure whether that would make the question any more or less misleading. There may be inappropriate words in the question, which the council thinks are slang or rude, but once they are removed the petition remains perfectly valid.

More substantively, a question might be asking for action from the wrong people. It might ask the council to do something which it cannot do, but the council might be able to do other things. I am trying to think of an example. There is a gap in the railway line between Colne and Skipton on the Lancashire-Yorkshire border, and a campaign called SELRAP is working to have it reinstated. Noble Lords might have had communications from the group because it is vigorous in pursuing its case with everybody. I am not sure whether I should declare an interest as a patron of SELRAP since I am talking about it, but I was bullied into it. A petition might ask Pendle or Craven council, or even Lancashire or North Yorkshire county council, to reinstate the railway line. Regrettably, that is not within the power of any of those local authorities. On the other hand, it is within their power to provide funds to SELRAP and to push the process of assessing proposals for the reinstatement of the line further along the road. The GRIP process is a series of steps that all cost money, and the authority could contribute towards it.

A petition might come in asking any of the councils to put in a new railway line, but it would be rejected on the grounds that it had nothing to do with them. On the other hand, the councils could ask for a differently worded petition so that SELRAP could be funded to undertake the next batch of work necessary to get Network Rail, the Government and everyone else to pay attention. Alternatively, it might be a county council matter but the petition is sent to the district council, or vice versa. Those are helpful changes, and I do not think the word "misleading" describes them.

Amendments 128T and 128V were meant to probe the question of holding the referendum on the same day as elections, and whether that is a good or a bad thing. We have discussed this in some detail so it is not necessary to pursue it any further. Amendment 128U looks at how quickly a referendum has to take place once a council determines that it should be held. If it is generally thought that in order to save money and for general convenience, a referendum should be held on the same day as an election, and that election is due within 12 months, the amendment would make it possible, at the discretion of the council, to delay the referendum for up to 12 months rather than only up to the six months provided for in the Bill. In most cases referendums brought forward during the summer and autumn would have to be freestanding and would therefore cost perhaps three times as much. I beg to move.

Lord True: My Lords-

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The Deputy Chairman of Committees (Baroness Gould of Potternewton): My Lords, the amendment proposed is:

"Page 42, line 10, leave out subsections (3) to (5)".

Lord True: I apologise for that, my Lords. I was dazzled by the sun and by my noble friend's arguments. I do not want to speak to all the amendments in the group, although I have quite a bit of sympathy for them. However, Clause 52(3) is far too restrictive, so again I want to be more permissive than my noble friend. I really do not see what business it is of the Government to come in and say that a local referendum is to be delayed until the date of an election or another referendum. If it is an urgent question relating to a matter of concern that might involve a small number of people in a borough, it need not be that expensive. Why cannot the local authority just get on with it and use its own discretion? Clause 52(1), (2) and (5) seems perfectly reasonable, but could my noble friend just leave the rest to the local authority to determine?

5.45 pm

Lord Beecham: The noble Lord might look at Clause 52(4), which seems to give the relevant discretion.

Lord True: I noticed that but thought it an extraordinarily strange piece of drafting. It says that you must wait-but need not wait if you do not want to. I do not recognise that sort of drafting. Why not just leave both subsections out?

Lord Beecham: The noble Lord will become very familiar with that sort of drafting in the course of discussions on this Bill and others.

Lord Taylor of Holbeach: First, I heard what my noble friend said about the word "misleading" in the Bill and will reflect on whether that might be improved in some way. I hope that he welcomes the general principle that the authority should be able to make sure that the question being put is relevant and accurately reflects the situation, in relationship with the petition organiser. The last thing that one wants is a matter of semantics, where the petition organiser has to go back and get all the names and addresses again. This gives a necessary flexibility. I hope that my noble friend will be able to withdraw that amendment.

My noble friend indicated that he will withdraw Amendments 128T and 128V. Amendment 128U would require the local authority to hold a referendum on the same day as an election or other referendum within the next 12 months. Our provision currently requires that the referendum will be held on the same day as a referendum or election in the next six months. As I have already said, we believe that the provision in Clause 52(3) as drafted is sensible and practical. Councils may not know 12 months in advance whether a poll will be triggered. Generally, local people will want a referendum to be held as soon as practicable. The amendment proposed by my noble friend would tend towards delaying it. We are sympathetic to my noble friend Lord True's general approach of leaving this to the local authorities to manage at their discretion. We

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do not consider this amendment necessary. If there are good reasons to delay a referendum for more than six months then the council can do so.

I hope that with the assurances I have given, and in particular the agreement to look again at the word "misleading", that my noble friend will feel free to withdraw his amendment.

Lord Greaves: I am grateful for that and will certainly do so on that assurance. I clearly put these down as probing amendments. On the timing, having listened to the discussion I agree with the noble Lord, Lord True, that it ought to be down to the local authority. If they want to call a referendum immediately, they ought to be able to do so. It may well be an issue that will be dead in 12 months anyway. On the other hand, the wording ought not to preclude having the referendum on the same day as the next round of elections, as far as fixed elections are concerned-general elections now appear to be fixed but we will see-so long as they are not more than 12 months away. It may well be that some authorities that do not elect their council every year will not have an election within 12 months. Those that do ought to be able to have it on that day if that is what they think best on the principles set out by the noble Lord, Lord True. I beg leave to withdraw the amendment.

Amendment 128S withdrawn.

Clause 51 agreed.

Clause 52 : Date of referendum

Amendments 128T to 128W not moved.

Clause 52 agreed.

Clause 53 : Publicity for and in relation to local referendum

Amendment 128X

Moved by Lord Greaves

128X: Clause 53, page 43, line 9, leave out subsections (4) and (5)

Lord Greaves: My Lords, this amendment probes the material about the referendum and the question published by the local authority holding the referendum. Clause 53(4) says:

"Subject to subsection (5), the principal local authority may publish, or arrange for the publication of, material that is designed to encourage support for or opposition to the question to be asked in the referendum",

while Clause 53(5) says this applies only to referendums which are,

from the public, "or a request" from a member or members of the authority and that the authority can,

whatever that may mean.

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I am moving this amendment to take out those two subsections as a means of probing how they will work and what they mean. I have also put down Amendments 128Y and 128Z, which say that if the local authority produces material in support and/or opposition to the question, it has to do so in a fair and balanced way. It has to give,

on each side. That mirrors what happens in national referendums, where the Government, or the Electoral Commission on behalf of the Government, publish statements which say, "On the one hand, vote yes; on the other hand, vote no". They put a fair and balanced argument. In this new world of local referendums, it is not clear to me whether local authorities are going to be able to churn out publicity on one side only, or to be strongly in favour of one side and against the other, and whether that is intended or desirable. This is a very important question that needs careful bottoming.

My understanding is that the Electoral Commission has expressed some concern about this and believes that there should be balance, although I was looking for the stuff that I think I have had from it before this debate and I could not find it. I cannot quote exactly what it is saying but it would be interesting to have a definitive view from the Electoral Commission on this matter, certainly before we get to Report. It is fairly obvious that this is an important matter and that there may be different views on it, but our view is that a council ought to be putting out fair and balanced publicity, if it wishes to put out publicity at all. It ought to have the option not to spend any more money than it is already and to keep out of the argument altogether. The Bill suggests that it can because it says:

with the clear implication there that it does not have to if it does not want to.

Particularly where a referendum is tied in heavily with the local political argument and where referendums and local elections get intertwined, as I think will be inevitable, it will be dangerous for local authorities to get involved on one side of an argument. The political party running a local authority may strongly be on one side with the party in opposition, which might be ready to take over if it wins enough seats, on the other. For the local authority to weigh in with public money in those circumstances seems to me to be wrong in principle. I am not saying that people should not campaign; people should campaign, but they should go out and organise their own campaigns.

Amendment 128AA seeks to put some controls on expenditure on this kind of publicity in a referendum on which the local authority spends its own money. It seeks to harden up the word "reasonable" by saying that it has to be approved by a meeting of the council. The meeting of the council that determines that a referendum should take place should also decide whether the local authority spends any money on it and how much; it should set a budget for it, because, in any case, this will be all be money outside the council's agreed budget. I assume that councils will not put contingency sums in their budget in case they have

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referendums. They will all be hoping that they do not have any, from that point of view. They will not want to put the council tax up or cut other services at budget time in order to put money aside for referendums, so I assume they will not do that and therefore it may well need a supplementary vote by the full council anyway, if it is a full-scale referendum and is costing tens or even hundreds of thousands of pounds. Where is it going to come from? The council will have to decide, so it would be part of that.

I would put forward Amendment 128AA only on the basis that the council was going to be even-handed. The council being able to vote sums of money to one side in a highly politically contentious question is a very dangerous way forward. This is put forward as genuinely probing, to find out what the Government's views are, but it is also a considerable concern that might need a bit more thought before Report.

Lord True: I know that the noble Lord, Lord Beecham, wishes to speak briefly: I, too, will speak briefly. I do not think that this is a matter that we can resolve in this Committee. It is important and perhaps in the period up to Report we may see some guidance and thoughts as to how the Government, the Electoral Commission and others see it developing. There is a difference between a national referendum about an unresolved policy question and certain circumstances of local referendums. The noble Lord, Lord Brooke of Alverthorpe, is no longer in his place; he has rushed out to organise a referendum against the parking-charge policy of his own council. In those circumstances it is surely reasonable for the council to defend its policy against the proposition that is put on the other side, so I do not think that we can be absolutist on this matter. I do not favour the extensive spending of public money, but I hope that my noble friend, as we discuss these things over the next few weeks, will not rule out and disarm councils-elected representatives-from putting their case in referendums.

Lord Beecham: My Lords, I echo the concerns of the noble Lord, Lord True. This is difficult territory. The Bill as it stands contains a provision that,

The noble Lord, Lord Greaves, has already indicated that it is not at all clear what "reasonable" might be, but I put it another way: if expenditure is unreasonable, then, of course, it can be challenged by the usual audit processes. I think that that is sufficient safeguard in that respect. What is more complicated is the question of equal prominence. Amendment 128AA states that the decision is only to,

This raises some difficult issues. On the equal-prominence argument, who is to provide the case for the petitioners-for those who are seeking the referendum? It can hardly be suggested that the local authority should provide their case for them. There will be cases in which there is a well resourced, articulate group of people who can produce a substantial case. If, on the other hand, it is a community group, or some organisation which produces a three-line question for a referendum, it may not be able to do that. Is the council then

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constrained to reply to the three-line referendum with a three-line response? That would not be reasonable. The equal-prominence test is very difficult to operate in practice.

6 pm

I am also somewhat doubtful about the notion of a council specifying a maximum amount to be spent at the beginning of a process. One does not know what form the campaign will take. To go back to my example-although it is not on all fours with this issue because it related to a binding referendum rather than to these, which are not binding-Peel Developments was a well resourced company putting substantial amounts of money into a campaign locally. There may well be a situation where a well resourced commercial interest-for instance, a private residents' group-put a lot of money together to campaign legitimately on an issue. I suggest that the council could not tie its hands in advance by indicating a maximum amount. Flexibility is called for here.

The noble Lord, Lord Greaves, is on a probing expedition. I would like to join him on that expedition, although I am not sure that we will end up in the same place. There needs to be some serious consideration here. While the Electoral Commission's views may be valuable, we again have to bear in mind that these are not binding decisions. It is therefore less important, though not unimportant, to be as precise as on the major constitutional issues on which the commission adjudicates or indeed regarding the electoral process itself, where there are limits to be employed.

Given that referendums can be authority-wide or merely confined to a ward or a smaller area-or, given the right percentages, across the whole of London-it is very difficult to be at all precise about how matters should be couched in financial terms or even about how they should be expressed. Within that area, the case for a referendum on a simplistic notion to reduce council expenditure or abandon a particular project might be advanced in a few short paragraphs, while the arguments against might be complicated. On perhaps an environmental issue or any one of a number of issues, the case against the referendum might be complicated, but the case for it could be presented simplistically. It cannot be right that the council is constrained from putting the full picture to its population.

I do not know quite where we end up with this, but I am not particularly happy with the thrust of some of the noble Lord's amendments. I would not like to see much in the way of constraint on how councils can respond to petitions.

Lord Taylor of Holbeach: My Lords, the debate has shown that this is a complex and sensitive area. We would certainly not want councils to be innocent bystanders when important local issues were being debated. I am grateful to my noble friend for tabling these amendments because at least they give us an opportunity to check whether the words in the Bill reflect what we want out of this process. I suspect that not just the Electoral Commission but the LGA itself will want to reflect on this area. Currently, any publicity published by an authority will have to be in accordance with the code of recommended practice on local authority

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publicity, which means that it has to be even-handed and responsible. It is necessary for the recommended practice to allow local authorities to put their case in a proper fashion. Generally, authorities are restrained from publishing any publicity material relating to a referendum question on issues such as whether to adopt executive arrangements. The scope of local referendums, however, is such that there is the possibility of questions being put which could have significant impact on communities. We believe that it is right that councils should be able to play a part in the process when the referendum has been triggered by a petition or request. Referendums such as have been proposed by my noble friend unnecessarily restrict the position of local councils.

The arrangements for authorities to control expenditure are already set out in Clause 53, coupled with an authority's wider duty to have regard to the code of recommended practice on local authority publicity. They are adequate to ensure that excessive amounts of public money are not spent on publicity material for referendums. I hope that these explanations and assurances persuade my noble friend that he can withdraw his amendment. This is an area where local authorities are likely to want to satisfy themselves that the arrangements as set out in the Bill meet their need to protect community interests as they see them. With that, I hope that my noble friend will withdraw his amendment.

Lord Greaves: I am grateful to noble Lords for the discussion. It is an indication of the complexity of the issue that I have agreed with most of the things that most noble Lords have said on all sides; it is in no circumstances straightforward. As I hope I said, I moved the amendment to probe and, in order to probe, I proposed something quite different from what was in the Bill. There are good arguments on both sides. I firmly believe that local authorities, faced with what they might think of as a hostile referendum question, should be able to put their point of view forward and, if it is a complex question, should be able to explain it.

It is quite possible, of course, that the local authority will be in favour of the referendum question, in which case it is not clear why they should spend any money at all. Perhaps they think that the people organising it are incompetent and will not do it very well. Who knows? One can imagine lots of different circumstances.

I am firmly of the countervailing view that local authorities ought not to be able to get involved in promoting referendum campaigns which are effectively being put forward by parties or party-political candidates-or any candidate in local elections-for political purposes. That would be quite wrong and quite contrary to the present code of publicity. It is difficult to see how to draw up regulations which cater for both the extreme circumstances of a hostile referendum which the authority thinks would seriously wreck its strategy and policies in key areas and, on the other hand-

Lord McKenzie of Luton: Does the noble Lord have a view on whether local authorities should be able to campaign on council tax referendums, which are in a

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sense political because the policy is effectively decided by elected councillors? Would he support the right of councils to be able to campaign in those?

Lord Greaves: Yes, I would. Although it is important that local authorities should not get involved in party-political campaigning, the present code of conduct on local authority publicity is too restrictive. Local authorities ought to be able to campaign in a general way more easily and widely than they can at the moment if they believe that what they are campaigning for is in the interests of the people that they serve and represent. However, that is a wider issue. We have the code as it is and I do not think that there is any prospect of it being changed much in the near future. However, it will be very difficult to find satisfactory wording that stops local authorities intervening in elections and political matters, but allows them to defend their well thought-out and agreed policies and strategies against hostile attack. This matter has to be further discussed and considered and the various organisations involved, including the LGA and the Electoral Commission, have to be involved in that. I beg leave to withdraw the amendment.

Amendment 128X withdrawn.

Amendments 128Y to 128AA not moved.

Clause 53 agreed.

Amendment 129 not moved.

Clause 54 : Voting in and conduct of local referendums

Amendments 129A to 129CZA not moved.

Clause 54 agreed.

Clause 55 : Consequences of local referendum

Amendments 129CA to 129E not moved.

Clause 55 agreed.

Clause 56 : Application to parish councils

Debate on whether Clause 56 should stand part of the Bill.

Earl Cathcart: My Lords, on Tuesday, when we discussed whether 5 per cent was the appropriate figure to call referendums, I went through all the levels of local government right down to the parish level. I was rather crestfallen when my noble friend Lord Taylor dismissed my arguments by saying,

"I should emphasise that the Bill's provisions in this area do not provide for referendums relating to parish councils, which are not part of the Bill. We will have an opportunity later to discuss parish councils".-[Official Report, 28/6/11; col. 1744.]

With hindsight, I may have got rather ahead of myself on Tuesday. Therefore, I welcome the opportunity to discuss parish councils now. I will not repeat the remarks that I made on Tuesday, but will the Minister take into account what I said then when the Government consider this clause? Five per cent of electors in my noble friend's parish in Holbeach might seem all right, but that is not appropriate in a parish with only 200 electors, which means that only 10 people would

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be required to call a referendum-that is far too low. In my parish in Norfolk, with only 50-odd electors, the 5 per cent figure would mean that three people could call a referendum. Perhaps different percentages could be applied according to size. If 5 per cent is appropriate for Holbeach, perhaps 20 per cent for a parish with only 200 electors-that is, 40 people-might be the right figure.

I presume that when this clause refers to parish councils, that includes parish meetings. Will the Minister please confirm this?

Lord Greaves: My Lords, the purpose of this stand part debate and of Amendment 129F is to have an exploratory discussion to probe the Government about their intentions with regard to parishes. Is what is in the Bill to be taken at face value in that the Government realise that they have to think about how referendums will interact with parish and town councils, and inevitably therefore consider the relationship between the existing legislation for parish polls and the new provisions for referendums, which are altogether more complex and involved?

The provisions for parish polls are really very simple. A very small number of people can turn up to a parish meeting-what used to be called the ratepayers' meeting when people paid rates-and requisition a parish poll. The parish poll is a referendum of all the local government electors in the parish, but it is often on a fairly small scale. Sometimes it is not. Sometimes it is run as a normal election, with all the polling stations open, except that the polling hours are from 4 pm to, I think, 9 pm-the noble Earl, Lord Lytton, will correct me if that is wrong-so there are restricted polling hours.

The Earl of Lytton: I do not know.

Lord Greaves: It is something like that. I do not think that it was extended to 10 pm; it might be only until 8 pm; I am not sure.

In my experience of parish polls, there is sometimes agreement between the council concerned and the district council or borough council, which has to organise the polls from its normal election process, not to have all the polling stations open. I am aware of a smallish town which has six or seven polling stations. They have a parish poll and they opened only one of the polling stations in the town centre on the grounds that it did not cost them as much. That flexibility is available, and it is an altogether simpler process. Of course, it is open to abuse because of the small number of people who can requisition a parish poll. Even if the Government are keeping provision for parish polls, I would think that, as part of the review, they will consider how the referendum provisions will impact on parishes.

There are now a lot more much bigger parishes than there ever used to be. A lot of places which, before 1974, were urban districts or small boroughs, have now become town councils. If you have an electorate of 18,000 or 22,000, or even more, having 10 people able to turn up at a parish meeting and only a small number of those being able to requisition a poll is nonsense. The parish poll provision is there for small, rural parishes, and the world is, in many places, not like that any more.

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Have the Government any firm plans for what they will do or is it all provision in case they want to do something in the future? If they have firm plans, can they tell us what they will be before Report? The Bill's provision about possible central government funding for referendums in parishes, organised by parish councils, is interesting, but I cannot believe that it is serious. It would leave it open for referendums to be organised in parishes on a large scale without any financial implication locally. The more that we discuss this in Committee, the more I come to the view that the number of referendums which will take place is probably a great deal less than some of us feared when we started looking at this, simply because of the financial problems.

We saw in the AV referendum that the no campaign campaigned heavily on the cost of the referendum itself-as though that was a logical reason to vote no, although the spending was already taking place. That was a very effective way of campaigning, and I am coming to the view that local referendums will meet a huge amount of opposition simply on the basis of cost. When people go around trying to organise them, once the cost and the implications for the council budget are revealed, a lot of them will not go ahead.

That is just musing about the future. The more that the Government can tell us about their proposals for parishes now, the better. I make it absolutely clear that I am in no circumstances trying to abolish parish polls. I am probing the Government's intentions.

The Earl of Lytton: My Lords, I welcome the amendment in so far as it opens up an opportunity to make a contribution on this point. I fundamentally support the Bill's provisions to provide for the Secretary of State to make specific provision for parish council referendums. There are many reasons for that, of which I am sure the noble Lord, Lord Greaves, will be aware. I am sorry that I cannot elaborate on the question of the times of day and the hours when certain things relating to parish polls might take place. I am afraid that I am only the humble president of the National Association of Local Councils and not a fully paid-up clerk of one of the more go-getting parish councils. Noble Lords will have to suffer second best on this occasion.

As I said on Second Reading, parish councils are not a homogenous institution. They are so highly variable in size and many other ways that it is difficult to think of a standardised approach. I suspect that this is very much work in progress in terms of discussions going on with the department on how to deal with this rather difficult issue because of the problem of trying to make one size fit all. Not only are there differences in size of electorate but their budgets, capacity, degree of training and even their expertise differ widely, even within a particular size category.

My purpose was to flag up some of the things that the Secretary of State might need to consider. As I say, I am aware of ongoing discussions and I certainly do not want to be in any way prescriptive. In the parish council, being the smallest unit of local government, there must be a proper balance between engagement with representative democracy and the referendum facility. That is likely to be exacerbated in future because, as localism brings the involvement of parish

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councils with a larger range of things that may have been dealt with traditionally by principal authorities, the opportunities for things to be called into question will inevitably increase. We must have robust systems to guard against that. It is also the case that that can add to the risk of people wanting to reach for the referendum solution. It is beginning to look like a question of how many bites of this not very large cherry in some places is to be provided for the public.

I will not labour the point about the engagement with the democratic and representative function of parish councils. The burdens of referendums on parish councils are by and large disproportionately high. I mentioned that in a previous Committee sitting and gave an example. Currently, the trigger for a parish poll under paragraph 18 of Schedule 12 to the Local Government Act 1972 is by common consent too low. But that is no argument for removing it altogether. I was very pleased to hear the noble Lord, Lord Greaves, say that that was not his intention. I look forward to something better than that provision in the Local Government Act coming forward at a later stage, but I do not know whether discussions will have proceeded that far ahead. There is a need to prevent the parish being hijacked by the referendum provision. To that end triggers must be in some way relevant to the issue and possibly to the parish size. I cannot go further than that because we are dealing with tiny parish councils on the one hand and some very large town councils on the other, some of which have budgets that would exceed principal authority sizes.

There has to be a genuine local interest. I was very pleased when, some time ago, one of the smaller political movements tried to hijack the process for national political aims. I seem to recall it was something to do with the European Union and it was ruled out of order. Quite right too, because what should a small parish be doing with something concerning the European Union? Small parishes in particular are vulnerable, if we are not careful, to these sorts of pressures.

In addition, there needs to be protection for referendums cutting across other issues that have to be dealt with-the other powers and functions. I mentioned this earlier in connection with principal authorities. The same thing needs to be built in; not necessarily on exactly the same model, but in essence something similar. There needs to be a cost benefit out of all this, not for it to be completely disproportionate in the manner that I explained when I addressed this issue at our last Committee sitting.

Lord Taylor of Holbeach: My Lords, this is an important area. The Bill that addresses localism must indeed address the issue of parish councils, the most local form of government. In providing for referendums in this Bill, the Government have said that they will be consulting about the way they take place. I am grateful for the contribution of the noble Earl, Lord Lytton; and perhaps I can make amends to my noble friend Lord Cathcart for my dismissive ways with his previous contributions on this subject.

I value the contributions made by both noble Earls because I consider parish councils to be important. My noble friend Lord Greaves has an amendment in

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this group, Amendment 129F, which we can consider at the same time. It relates to parishes where electors have long enjoyed the power to demand a local referendum or parish poll under the Local Government Act 1972. It removes the power of local government electors to demand a parish poll. However, as my noble friend says, he has no intention of anticipating that this amendment might achieve that objective until replacement facilities are in place.

We know that a poll must be organised if the chairman consents, or if it is demanded by 10 or one-third of the electors present at the meeting, whichever is the lesser figure. So the triggers for parish polls can be quite small. None the less, I understand the concerns expressed about the varying size of parishes and this is a matter that will be considered by the review that the Secretary of State has put in train. This, along with whether parish provisions apply to parish meetings as well as parish councils, are all part and parcel of the mix. We will see if there is pressure to bring this in and if it is possible within the review that the Bill provides.

I agree that the current parish poll rules need reform, but accepting the amendment moved by the noble Lord, Lord Greaves, would remove the provisions without replacing them with anything. We want a modernised and proportionate referendum regime for the parish sector and we propose to create this with regulations under Clause 56, which empowers the Secretary of State to apply the scheme to parish councils with such modifications as may be necessary. The effect of the clause would be to allow the replacement of the existing archaic parish poll regime with a modernised local referendum regime tailored to the particular circumstances of parish councils. While we seek to retain this important element of direct democracy that has been enjoyed for years by voters in parish areas, we want to modernise the existing regime and make it fit for purpose in the modern world.

Before making any regulations, we will consult widely on the reforms that people want. We will consult on whether all or some of the referendum provisions in the Bill should apply and on whether the ability of electors to demand a poll at a parish meeting should be retained; and, if it is, on what the threshold should be. Decisions on the appropriate modernised regime for parishes will be taken following the consultation, and subsequent regulations will be subject to affirmative resolution, giving noble Lords the opportunity to ensure that the replacement regime is better than the existing provisions. I hope that the assurances I have given will allow noble Lords to accept that Clause 56 should form part of the Bill.

Clause 56 agreed.

Amendment 129F not moved.

6.30 pm

Clause 57 : Discharge of functions

Amendment 129G

Moved by Lord Taylor of Holbeach

129G: Clause 57, page 45, line 1, leave out from "Authority," to "by" in line 2 and insert "a function of passing a resolution under this Chapter is to be exercisable (in accordance with this Chapter)"

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Amendment 129G agreed.

Clause 57, as amended, agreed.

Clause 58 : Interpretation

Amendment 129H not moved.

Amendment 129J

Moved by Lord Taylor of Holbeach

129J: Clause 58, page 45, line 40, at end insert-

""special-case petition" has the meaning given by section (Petitions: special cases in which holding of referendum is discretionary)."

Amendment 129J agreed.

Amendments 129K and 129L not moved.

Clause 58, as amended, agreed.

Clause 59 : Referendums relating to council tax increases

Debate on whether Clause 59 should stand part of the Bill.

Lord Shipley: My Lords, I will speak to this clause on behalf of the noble Lord, Lord Tope, and will address some of the principles that stand behind it. In practice, the clause continues a capping regime. Councils will not want to risk losing a referendum because there will be a significant rebilling cost. Clause 59, and Schedules 5 and 6, create a duty for a billing authority to determine, in line with principles set out by the Secretary of State, whether a proposed council tax increase is excessive. Authorities will be required to hold a local referendum on the proposed rise if it is deemed to be excessive.

The difficulty is that it should be for local people to determine whether they find a proposed council tax increase excessive rather than for the Secretary of State to decide what constitutes excessive. Local people should trigger the referendum, not the Secretary of State. Therefore, there is a strong case for saying that amendments to the Bill should be introduced that would limit the Secretary of State's power to determine what constitutes an excessive rate of council tax and would give that power instead to local people under proposals elsewhere in the Bill for holding local referendums so that they can decide what constitutes an excessive rate of council tax.

Secondly, councils, rather than the Secretary of State, ought to be able to decide when a referendum will be held and to decide the arrangements for it. We should also delete powers for the Secretary of State to make non-specific regulations on matters such as the question to be asked in the referendum, the allowable publicity accompanying that referendum and how votes are to be counted. We have already discussed the percentage levels required to trigger a referendum and it seems to me that this is an example of where we do not need to have the Secretary of State interfering with what local people could perfectly well handle for themselves.

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There are two issues that I feel concerned about and I have raised them at previous stages of the Bill. When a billing authority is determining whether a council tax proposal is excessive it might be appropriate for a referendum to be held on whether the council tax level and increase proposed is deemed by some to be too small. True localism should mean that local people have the right to hold a referendum on whether the council tax might be raised higher than the level that the Secretary of State deems to be excessive. I do not propose that one should have a higher rate-simply that if you really want to implement localism it should lie within the power of local people to make that decision.

There is a further complication to this. Under the Bill, referendums can be held within electoral areas within a council area. It is inevitable that referendums will be held on issues that might require additional expenditure to be made within that area. It might be unreasonable to expect the whole of the council area to fund the additional increase. The increase could be for a specific local facility that might otherwise close down, such as a swimming pool that people would like to preserve that requires additional cash. At the moment parish councils have certain powers to raise additional money. We could see referendums being held to save local facilities such as the swimming pool where local people might be willing to pay for the facility and would wish a referendum to be held on generating the necessary resource.

This seems to strike at the very heart of localism. Ultimately, if we permit referendums to be held within one or more electoral areas of a council, logically those people should be allowed, as those who have a parish council are allowed, to vote to spend additional money. I speak from my perspective as a member of Newcastle City Council. Half of my ward has a parish council, which has the power to raise additional money, and the other half does not and is not able to raise additional money. That is a complication that will become very important.

The broader issue in terms of Clause 59 is whether it is for the Secretary of State to decide to hold a referendum or whether it is for local people to use the facilities that exist to generate that referendum.

Lord McKenzie of Luton: My Lords, we should thank the noble Lord, Lord Shipley, for introducing this clause stand part debate and for his very clear exposition of localism and what it means in terms of council tax. I agree with him that the provisions in the Bill amount to a capping regime. I am sure the Government will argue that local people do determine what is excessive if they support a referendum. That is a very narrow interpretation of the Bill. This is capping by another name.

We also have to acknowledge that successive Governments have reserved the right to limit increases in domestic taxation when they have been judged to be excessive. We certainly did as a Government, and I believe that the Conservative Government did. I am not sure whether the noble Lord, Lord Jenkin, is culpable as well. There are arguments about whether that is important for the overall management of the economy.

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When the noble Lord, Lord Greaves, introduced his first amendment in our proceedings, he talked about localism being decisions being taken at the lowest possible level, but he acknowledged that there is a wider dimension that has to be taken into account in some instances. The impact assessment for the Bill-

Lord Greaves: I think I said "underpinning a minimum level of service". I certainly would not apply it to council tax.

Lord McKenzie of Luton: Indeed. I was not suggesting that the noble Lord would have judged council tax to be one of those things, but I think there is an argument that it is. The impact assessment reminds us that some 36 authorities have been capped under legislation that this Bill will replace-I think that is since the power was first used in 2004-05-and 16 of those were subject to in-year designation and had to redo their calculations. Indeed, the architecture of the Secretary of State setting principles with the opportunity to look at different categories of authorities has been imported from the existing capping regime.

We feel constrained in denying the Government powers which effectively amount to capping powers and their right to influence levels of taxation in the broader interests of the management of the economy, anti-poverty strategies, et cetera because the reality is that each year the Secretary of State will set the benchmark for council tax increases and it is probably right that few councils will run the gauntlet of a referendum, given the costs and consequences of an adverse outcome. The impact assessment estimates the cost of a council tax referendum to be between £85,000 and £300,000. Should a referendum not be successful, the administrative consequences could be convoluted, with year-end refunds or credits against future liabilities and the possibility for people to ask for an in-year refund, so the systems and costs involved in those choices could be significant.

We are coming on to discuss the powers that the Secretary of State has taken for himself in framing how the referendum question is to be put and the constraints around expenditure. According to the impact assessment, the authority will not be able to campaign for its proposed council tax level. Given the debate we have just had about the authority's role in referendums, perhaps the Minister will confirm that an authority cannot campaign for the council tax increase that it thinks is appropriate. Of course, we might expect the cards to be stacked against those proposing the increase. Councils are facing unprecedented dilemmas at present with budgets severely constrained and with front-end loading because the coalition Government's approach to the deficit is to cut too far and too fast. The system will have to cope with the challenges of the localisation of non-domestic rates. If this is to happen, will not local councils be forced to look to that as a source of extra income before running the risks of referendums that would increase council tax? I am not sure that that would be good news for the business community, but perhaps the Minister will tell us-I know these things are embryonic at the moment-whether there will be equivalent capping-type regimes for a localised,

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non-domestic rate and, if not, what the likely impact of having these effective capping powers on council tax increases might be for the NNDR.

One of the other issues that arise from this in making an assessment about whether council tax levels are fair is how council tax rebate is going to work in the future. The Government are localising council tax rebate. Not only are they cutting 10 per cent off it in aggregate, but it seems as if it is going to be left to local authorities to make individual judgments about the scheme that they want to introduce and maintain. That runs contrary to giving powers to government to manage these things centrally, and is an added complication.

For the present, we will focus our efforts on trying to improve the provisions in the Bill rather than to do away with them, but we are mindful of the strong localist argument for not having these powers at all.

6.45 pm

Earl Attlee: My Lords, I am grateful to my noble friend Lord Shipley for giving me the opportunity to promote the principle of council tax referendums. We have several interesting amendments to debate later on, including some government ones.

Clause 59 gives effect to Schedule 5, which inserts a new Chapter 4ZA into the Local Government Finance Act 1992. This enables local electors to approve or veto excessive council tax increases in a referendum. It also gives effect to Schedule 6, which removes the Secretary of State's powers to cap council tax in England and makes consequential amendments to various Acts as a result of the provisions for council tax referendums. The clause will ensure that excessive council tax increases occur only where they have a clear mandate from local people. This is in contrast to capping, where Ministers take the decisions and local people have no say at all. It will strengthen local democracy and ensure councils are more accountable to their electorates, but it will allow the electorate to vote for increased expenditure if they want it.

A set of principles defined by the Secretary of State will be used by authorities to determine whether their council tax increases are excessive. These principles must be submitted in a report to the House of Commons for its approval. A comparison of basic amounts of council tax could be the only principle, but the Secretary of State can include other principles as he sees fit. It is necessary for the excessiveness principles to be determined by the Secretary of State with the approval of the House of Commons.

The noble Lord, Lord McKenzie, touched upon the wider economic issues of council tax expenditure. It would be impractical and excessive to require a referendum for every single council tax increase. The flexibility allows for different sets of principles for different categories of local authorities. For example, principles relating specifically to town and parish councils could ensure that the great majority of councils-indeed, all but large, high-spending parish councils-would not be required to hold referendums. The report for the House of Commons must be laid before the date on which the local government finance report for the year is approved. Authorities will therefore know, when

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setting their council tax, whether or not they have exceeded the principles, so they will go into this process with their eyes open.

Where an authority determines that its council tax is excessive, it will normally hold a referendum no later than the first Thursday in May-the usual date of local elections. However, the Secretary of State can specify a different date by order, such as to allow the referendum to be held on the same day as local government elections if this date is not the first Thursday in May. Entitlement to vote in the referendum is based on the register of local government electors and entitlement to vote in local government elections for a particular area.

Where an authority sets an excessive council tax increase, it must also make substitute calculations to determine a basic amount of council tax which does not exceed the excessiveness principles. The substitute calculations would take effect in the event that the authority's increase is rejected in a referendum or the authority fails to hold a referendum by the required date. The Secretary of State may make regulations concerning the conduct of referendums, which would include such matters as the wording of the question to be asked in the referendum, the publicity to be given and expenditure limits. There are obvious reasons why this may be necessary.

The noble Lord, Lord McKenzie, asked whether authorities can campaign for the proposed increase in council tax. No, it is intended that they cannot. They must put the facts to the electorate and leave them to decide but individual councillors will be free to campaign.

The Secretary of State will have the power to direct that the council tax referendum provisions should not apply. The power could be exercised only where it appears to the Secretary of State that unless the authority is allowed to increase its tax excessively, the authority will be unable to discharge its functions in an effective manner or be unable to meet its financial obligations. This is a reserve power and the expectation is that this would be used only in exceptional circumstances, such as where the High Court has exercised its powers to appoint a receiver where an authority has failed to service its debt within a set time period.

This clause is long and detailed but it is not as complicated as capping legislation, which has such concepts as budget requirement, designation, nomination,

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designation after nomination and vice versa, notional budget capping as well as actual capping and so on. And I have not got the foggiest clue what that is about. It replaces all that with a simple concept; namely, that local people and not Ministers should take the decision to approve or veto excessive council tax increases.

Sadly, council tax has more than doubled since 1997. If councils want to set excessive council tax increases-that is, those that exceed the norm-in future they will have to prove their case to the electorate. I urge that Clause 59 should stand part of the Bill.

Lord McKenzie of Luton: I touched on non-domestic rates and localisation, and how that regime would sit alongside the regime proposed in the Bill. In particular, I should like to know whether there would be equivalent capping powers on the business rate because that has ramifications for council tax levels as well.

Earl Attlee: My Lords, that is a weensy bit technical for me. Some amendments deal with non-domestic rates. If the noble Lord's point does not get covered, I will of course write to him.

Lord Greaves: The Minister mentioned parish and town councils. I think he said that only a small number would be caught by the referendum provisions and that there would be those which are very large and would have large levels of spending. He is nodding so I remember correctly. What sort of scale does he expect this to be? Would it be three or four, half a dozen, or 30 or 40? The Government must have some idea.

Earl Attlee: My Lords, the noble Lord has asked an important question. There will be provisions to ensure that small parish councils do not get caught by these provisions. They will be for only the larger authorities. I am sure that we will either get to a suitable amendment or I can write to the noble Lord and other members of the Committee with full details of how that important issue is addressed.

Clause 59 agreed.

House resumed.

House adjourned at 6.55 pm.

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