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Lord Smith of Leigh: I have some sympathy with what has been said by the noble Baroness, Lady Hamwee, and the noble Lord, Lord Dixon-Smith. The noble Baroness referred to the tight grip on local government. I should remind the Committee that the tight grip is loosening a little, but it is perhaps not quite loose enough yet. It is not the purpose of the Bill to review the arrangements for local government finance. I am confident that my noble friend the Minister and his colleagues in the Department of the Environment, Transport and the Regions are considering that matter and will report at the end of the three-year period.

In seeking what are proper restrictions on the use of the powers of local authorities, we should ensure that we are not too prescriptive. I share the concern of the noble Lord, Lord Dixon-Smith, when he says that local authorities are acting democratically and in public. I am particularly concerned by the words "or otherwise". If the Government seek to restrain the raising of money by precepts or borrowing, I think it is proper to do so. There may be other areas which the Government seek to restrict, but rather than adding the words "or otherwise", they should come clean now and list what those restrictions will be.

In recent years, when the party opposite was in government, local authorities were forced to get used to a certain amount of creativity as regards funding. But there are concerns, particularly given the function of well-being, that additional services that we begin to provide should be charged on a proper basis. We already charge for certain services that we provide, and we need to understand to what extent the restriction will apply. If there is joint activity with another partner, to what extent will partners be able to fund into that? Is that raising money? What about European funding, and so on? The phrase is rather too much of a catch-all. I should welcome the Minister's assurance that there could be greater precision in the limitation.

Lord Hanningfield: I support my noble friend Lord Dixon-Smith. In a recent debate, the noble Lord, Lord Harris of Haringey, talked about developing a small industrial site, which could be an important issue in this area of development and promoting the economic well-being of an area. The inclusion of "otherwise" could mean that rents could not even be charged for the building of the properties. The whole area is of great concern.

Earlier today, we debated the extra powers being given to local government. I feel, as most speakers have said, that the provision constrains our powers so

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much that perhaps the power might not be worth having. I support my noble friend Lord Dixon-Smith in his call for the removal of the subsection.

Baroness Farrington of Ribbleton: There is no limit on what local authorities can spend under the well-being power, but the point of the power is to give them discretion. In answer to the noble Baroness, Lady Hamwee, the proposals are neutral; all we are saying is that authorities may not use the power itself to raise money.

The noble Lord, Lord Dixon-Smith, raised the question of whether this was a kind of "anti-power". It certainly is not. Local authorities have plenty of specific powers which allow them to raise money, and there is nothing to stop them using those powers in tandem with the well-being power.

The noble Lord is very effective in putting across the case of someone who was not a gamekeeper and has not become a poacher. All I can say is that he walked, talked, lived, supported and encouraged others to support the gamekeepers during his time. I pay tribute to the fact that the noble Lord challenged his own government on parts of their policy relating to expenditure and local authorities. However, he cannot deny that there is at least a little of the gamekeeper in his history, as I believe the noble Lord, Lord Hanningfield, too, would readily accept.

The limitation in subsection (2) merely stops local authorities using the well-being power to raise money, whether by precepts, borrowing or otherwise. There are good reasons for that, which mean that the Government cannot accept Amendment No. 22 or Amendments Nos. 23, 24 and 25. We do not believe that authorities should be able to use the well-being power to impose new taxes on individuals or business. The power to tax should be subject to the specific approval of Parliament. Arguably, Amendment No. 22 would place that decision in the hands of local authorities.

Nor do we see merit in allowing authorities to use the well-being power in itself as a means of borrowing. There are specific terms and conditions around local government's power to borrow. There are two clear reasons for such controls, as my noble friend Lord Smith generously indicated. First, they ensure that authorities act prudently, so that local communities are not faced with an excessive burden of debt charges in future years; secondly, they help to ensure that the Chancellor's objectives for the national economy are achieved--both the "golden rule" that borrowing should only be for investment, not for day-to-day spending, and the rule that public sector debt should be kept at a prudent and stable level over the years.

However, we are keen to look for alternatives to the present system of controls on local government capital finance, which would continue to meet the same broad prudential and macro-economic objectives but in a simpler and less restrictive way. We are exploring that with the LGA as part of our wider review of local government and it will be included in this summer's Green Paper.

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My noble friend Lord Smith, the noble Lord, Lord Hanningfield, and the noble Baroness, Lady Hanham, rightly emphasised the difficult issues and complexities that surround the issue of charging. We accept that the current basis on which authorities can or cannot charge for the services that they provide is confused and unduly restrictive. The problems were clearly highlighted in the recent report of the Audit Commission, The Price is Right: charges for council services.

In response to the noble Lord, Lord Dixon-Smith, and the noble Baroness, Lady Hamwee, the Government are determined to place charging on a more rational footing. To that end we are looking at the issues as part of the wider review of local government finance that is under way. As I said, local government is fully involved in the process. I believe that representatives of the LGA are meeting tomorrow with the department as part of a joint task group examining the issues around local authority charging. In response to my noble friend Lord Smith, we are determined to make rapid progress on this issue and to bring forward proposals in the local government finance review Green Paper this summer.

In response to the noble Baroness, Lady Hamwee, let me make it absolutely clear that the well-being power does not prevent local authorities from charging for services. They simply cannot use the power itself as a means for doing so. Under Section 150 of the Local Government and Housing Act 1989 the Government can make regulations to allow authorities to charge for services that they provide, although that power cannot be used in respect of some specified functions, including education in schools and fire-fighting. Local authorities can continue to use their powers under the Local Authorities (Goods and Services) Act 1970 to charge for services that they provide to other public sector bodies.

I apologise for responding at length. I hope that it has been helpful to set out the way in which the Government intend to tackle as a matter of urgency some of the issues raised in the debate. I hope that, with the assurances that I have given, the noble Baroness will be persuaded to withdraw Amendment No. 22 and that Amendments Nos. 23, 24 and 25 will not be moved.

6.15 p.m.

Lord Dixon-Smith: Before the noble Baroness sits down, perhaps she will accept that we are stepping on thin ice when we get into the business of metaphors. "Poacher turned gamekeeper" is all very well, but I prefer "pots" and "kettles". If I have a touch of the gamekeeper in my history, the noble Baroness has a considerable amount of the poacher in hers. I have tried very hard to see whether I can add a fourth metaphor so as to have real mixture, but I cannot.

Baroness Farrington of Ribbleton: I feared for a moment that the noble Lord was going to look at me and in all innocence say, "Set a thief to catch a thief".

Lord Hanningfield: I am grateful to the noble Baroness for her response. As vice-chairman of the

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Local Government Association I am involved in some of the discussions that are taking place. My understanding is that some of these matters will take some years to deal with, and that there will even be legislation before there is any new kind of local government finance Act. Is the noble Baroness saying that it may take that long to sort out the charging policy? If so, the wording in the clause as presently drafted needs to be examined. We want this Local Government Bill to be actionable before very long. Can the noble Baroness give a possible timetable on the local government finance review?

Baroness Farrington of Ribbleton: I informed the Committee earlier that the Government hoped to bring forward proposals in the summer.

Baroness Hamwee: I cannot think of any suitable metaphors. I am sure that comments can be made about choosing friends but not relations, but I cannot work out what they are. As to charging, I am very familiar with R v. LB Richmond-upon-Thames ex parte McCarthy and Stone. I believe that the charge was only £25 per hour. I always understood the former Department of the Environment, now the DETR, to be very sympathetic to the problems that faced local authorities as a result of the restrictions on charging. Like the noble Lord, Lord Hanningfield, I believe that it would be sad if the opportunity was not taken to correct the position. There appears to be little opposition to the underlying proposal.

The Minister has confirmed that Clause 3(2) does not make any difference either way, and that is the assurance that I seek. However, having listened to the debate, doubt has been cast on it--I am sure the Minister understands that I do not attack her integrity--by the words in parenthesis. If the position is neutral and Clause 2 does not of itself allow a local authority to raise money or restrict it so doing, why is it necessary to say,

    "whether by precepts, borrowing or otherwise"?

Clearly, those words trouble Members of the Committee who have sought to understand the thrust of the provision. I do not ask the noble Baroness to comment further on that matter, but at a later stage I shall seek to table an amendment to remove the words in parenthesis. If the provision is neutral, those words appear to be unnecessary. At this stage, I beg leave to withdraw the amendment.

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