|
Clause 20
Directions
Mr. Clifton-Brown: I beg to move amendment No. 45, in
clause 20, page 8, line 19, leave out 'in writing' and insert 'made by regulation.'.
We have had this argument more than once in the short time I have been on the Bill. Primary legislation is one thing; regulations by secondary legislation are a lesser thing; and directions, at a Secretary of State's whim, lack any form or scrutiny or control by this democratically elected Parliament. While I can understand the need for directions in dire circumstances, on the whole they should be avoided. Hence, we suggest in our amendment that the directions should be made by regulation. Will the Minister tell us what he expects the directions to contain, and provide some examples. That is important, and people reading the Hansard report of our proceedings would expect that.
Mr. Leslie: Amendment No. 45 deals with the three powers to issue directions. Clause 2(2) allows the Secretary of State by direction to waive any national borrowing limit for an individual authority. Under clause 4(2), the Secretary of State could impose a local borrowing limit on an authority by direction. Finally, under clause 16(2)(b), a direction could be used to allow revenue expenditure to be used as capital expenditure. The powers are essential to the Bill and the operation of the chapter. Directions are issued by writing a letter to an authority. They enable action to be taken quickly, but also sensitively, in individual cases. However, the amendment would remove them and require regulations to be made instead. That process could lead to unacceptable delays and reduce flexibility.
I asked officials in my Department to look for other examples in previous local government legislation to see whether there were precedents for powers to direct. Lo and behold, they discovered at least 16 direction powers, not least in those provisions enacted between
Column Number: 230
1980 and 1997 under legislation passed by the previous Administration. Section 40(6) of the Local Government and Housing Act 1989 issues directions that particular expenditure may be treated as capital expenditure. Taking the example set by the previous Administration, we believe that in certain circumstances direction powers are important. The clause defines how the directions would operate.
Mr. Andrew Turner: It does not take a great deal of prescience to ask officials to look back and answer the Minister's question, if that person is the Minister. What takes a little more prescience is to ask officials to look back and anticipate the questions that may come from the Opposition. The Minister has not answered the question that was asked by my hon. Friend the Member for Cotswold, which was on what occasions directions of that sort have been used Why was it necessary for them to act so rapidly that the regulatory procedure was inappropriate?
Mr. Leslie: In the debate on a previous clause, when we were looking at one of the direction powers, I gave specific examples of capitalisation of spending by Plymouth and Thurrock councils in the financial year 1996–97. The previous Administration issued directions, not least at the request of the local authorities, to assist them in some of their reorganisation costs. I answered the hon. Member for Cotswold by giving examples of the sort of circumstances in which the three powers in the chapter might be used for specific local authority cases. I have covered some of the issues that may arise in the clause. It is not an unusual clause, and it is not unusual to have directions in a Bill. I hope that the Committee will accept that.
Mr. Clifton-Brown: There is one unintended consequence of what the Minister is saying. By referring to the Housing Act 1989 and its six powers of direction, he demonstrated to the Committee that Governments with large majorities tend to pass sweeping and all-encompassing legislation. That is not necessarily the best action to take. It may be that too large a majority is not the best thing for democracy. Having said that, the clause is straightforward, as is the amendment. However, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 20 ordered to stand part of the Bill.
Clause 21
Accounting practices
Question proposed, That the clause stand part of the Bill.
Mr. Clifton-Brown: We have had a debate about accounting practices, regulations and the code. I have a simple question to put to the Minister. Clause 21(2) refers to accounting practices
''(a) which the authority is required to follow by virtue of any enactment, or
(b) which are contained in a code of practice . . . made by the Secretary of State.''
Under subsection (3), when there is a conflict between the two practices, those that are subject to Acts of
Column Number: 231
Parliament will take precedence. Why would the Secretary of State make regulations to make a code of practice that conflicted with a code of practice enacted by statute? Will the Minister tell us what on earth the Government have in mind and explain in what circumstances a conflict could arise?
3.30 pm
The Minister for Local Government and the Regions (Mr. Nick Raynsford): I am happy to assure the hon. Member for Cotswold that the purpose of clause 21 is to carry over into the new system the definition of proper practices for accounting purposes, which is part of the current capital control legislation. The definition has been amended to allow the codes of practice covered by the definition to be clarified in regulations. The present definition leaves the coverage somewhat vague and, given the importance of the definition, that is undesirable. The clause also provides a power to define accounting practices by regulation. That is necessary to allow important aspects of local authority accounting practice to be maintained, such as the treatment of capital receipts, which differs from normal accounting practices adopted in the wider world.
The hon. Gentleman asked why there might be a conflict. If specific provisions applicable to local government are carried forward for a period, general accounting policy and practice may change over time and call into question specific local government practices enshrined in statute. Clearly, if they are enshrined in statute, they should take precedence. I have explained the logic behind the measure; it is a matter not of the Secretary of State making regulations that do not accord with statute, but of accepting the fact that we are bringing together usual accounting processes with specific statutory provision relating to local government.
Mr. Clifton-Brown: The Minister is making the best case for the two subsections to be reversed, in that the statute would be modified by a subsequent code issued by the Secretary of State. Is he saying that practices may change? If so, surely he would want a power to modify the practice under statute by a subsequent code. Can the Minister give me a further explanation?
Mr. Raynsford: The hon. Gentleman will understand that complex territory can change over time. If there were any doubt about proper interpretation, the principle of the primacy of statute should be preserved. That is the sole purpose of the clause. Such a provision is sensible because, over the years, accounting practices can change. There can be variations in them and, while it is appropriate that usual accounting practices should apply whenever possible to local government, differences can occur because of specific issues that apply uniquely to local government. A conflict may arise in the future in respect of changes in accounting rules and practices that have not necessarily been informed by long-standing local authority statutory provision. The provision is in the Bill to avoid ambiguity or doubt, not because we envisage the Secretary of State approving, by regulations, practices that are in conflict with the statute.
Column Number: 232
Mr. Clifton-Brown: The Minister's explanation was reasonable as is subsection (2)(a). It is reasonable to say that that enactment could be changed by regulations. Why on earth one would want a code of conduct that would conflict with that I do not know. Therefore, subsection (3) does not make much sense. However, unless my hon. Friends are minded to do otherwise, I will not suggest that they vote against clause stand part.
Mr. Davey: I apologise for being absent at the start of the debate. The Committee has made better progress than I expected.
Mr. Raynsford: That is not accidental.
Mr. Davey: That is unfair of the Minister, as the record will show.
How are Government discussions with CIPFA on the proposed regulations progressing? CIPFA is concerned about how depreciation costs will be accounted for, and the organisation's briefing papers make some good points. It is concerned that local authorities should properly comply with generally accepted UK accounting practices and that good management information should be available to them to ensure that capital investment is properly sustained. Therefore, when they produce the regulations, the Government must allow for depreciation to be put into the accounts in the usual way under resource accounting, which now guides Whitehall, and they must resource it through grants. The Government reply, on page 8 of the Select Committee report, which CIPFA supports, states that ''discussions are underway''. It would be appropriate to hear how those discussions are going.
Mr. Raynsford: They are proceeding very well. We have a constructive relationship with CIPFA, which does an enormous amount of work in this field. I am happy with the relationship and with our progress, but I can give no specific report on that progress at this stage. I will keep the Committee informed of any developments during the passage of the Bill and will try to ensure that a final agreement is publicised in the normal way, at the appropriate time.
| 
