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Baroness Hamwee: I do not think there is any difference at all between any of us about the desirability of this. However, can the Minister answer my question about the sanction for failing to comply with the duty? I ask that because I am trying to envisage how this would operate in practice.

Lord Rooker: As I have said, the clause puts a duty on members, so we are talking about an authority. As far as a sanction for non-compliance is concerned, the district auditor will determine whether the laws are being obeyed. This would be a legal requirement, but the detail of its implementation is for the authority. Ultimately, if there is a wilful refusal to operate the law and an authority says, "We will not carry out a review from time to time", the district auditor can take action and, if need be, go to the courts to seek enforcement. Indeed, the matter could be dealt with by judicial review if there is a problem.

I am sure the noble Baroness is not on the side of giving sustenance to councillors who wilfully refuse to review their general budget from time to time. They choose the time and they choose the action as well. They choose how and when the budget is reviewed and they choose the course of action to take. They will obviously seek professional advice if there is a deterioration. I cannot conceive of sanctions being required against the sort of councillors elected these days, but ultimately, the district auditor is always there as a longstop on behalf of the public.

Baroness Hamwee: Of course I do not wish to support the incompetent or the wilful refusal. However, I do not want to see any more words in the statute than are absolutely necessary. After all, there are quite a lot, year on year. Does it come down to this—that the clause gives the district auditor a trigger to do something, but nothing that the district auditor would not do without the clause? It will deal with the wilful refusers, and all that is added in technical terms is that a judicial review might require an authority to take action. Anything else would be triggered, in any event, by the mechanisms of which we have all seen examples over the years.

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4 p.m.

Lord Rooker: It would be, but, to return to what I said at the start, we have had very few examples, but there could have been a failure on the part of officers to report to members about a deterioration in the budget. Because the authority has a duty to review from time to time, it catches that situation. Where for various reasons it may have been defensible at the time, the officers did not report to the councillors that there had been a deterioration in the budget, that then brought on a crisis, one exacerbated by further problems. So because normal and reasonable councillors serving on normal and reasonable councils—the vast, overwhelming majority—would operate the clause and review from time to time, in effect that impels officers to report to the members, and the duty is then on those members to take action.

Lord Hanningfield: There is one matter we have touched on, but I do not think that the Minister has referred to it at all because so often he refers to "the council". At present, under the new legislation that has introduced cabinets, the council has only one particular purpose, which is to set a budget. Only once during the year does the council itself become involved in the detail of financial management. That is the case for every council for over 85,000 residents, which embraces most councils in the country. Those 85,000-plus people have cabinets with a member responsible for finance, working closely with the financial officer. As I have said, I know how many councils operate. Most councils would produce a financial report of some kind every month, presented either by the financial officer or by the responsible cabinet member.

The council itself would not be involved to any degree because it has no powers in these matters other than to set a budget each year. I wonder whether, even in discussing this proposal, that is recognised because over the year the council has no powers itself to change the budget. Therefore, even in the way that the Minister has presented this, that fact has not been recognised; namely, how modern local government has been operating over the past two years. I am afraid that the noble Lord, Lord Bassam, is totally out of date on how councils operate today because this system was not in place in the past.

Having been involved in the way we operate over the past two years, I have noticed a tremendous change. I hope that the Minister is fully aware that local government is very different since the introduction of the cabinet. Indeed, I have just come from a cabinet meeting in Essex held this morning.

Lord Rooker: If I did not know the noble Lord better, I would say that he is starting to filibuster. We are well aware of the changes. When local government structures are changed, surely the powers of the council are delegated either to committees, to officers or to the cabinet. There are scrutiny committees and questions at council meetings. So there are plenty of opportunities. It is absolutely true to say that at one point the full council may meet to endorse the budget to set the council tax, but monitoring carries on throughout the year, whatever the structure.

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Not all councils have opted for this system. Some have elected mayors with executive authority. So all those structures still take account of the fact that if there is a deterioration in the budget but the financial reporting system is in place—the clause refers to the "authority"—the authority is in fact the area to which scrutiny has been delegated, such as the finance committee, the scrutiny committee, the cabinet member or the executive mayor, as well as reporting back to the council.

The clause as drafted takes account of the changes as well as the flexibility in local government structures that we have today, but which certainly was not there either in my noble friend's day or indeed in my day, because I was never there.

Lord Hanningfield: We have addressed this whole series of clauses because we feel strongly about them. I hope that the Minister will think again before we reach the Report stage about how we might achieve some of the objectives desired by the Government without passing all these clauses covering levels of reserve as well as more complicated matters. With that, I withdraw the Motion that the clause should not stand part of the Bill.

Clause 28 agreed to.

Clause 29 [Budget monitoring: Greater London Authority]:

Baroness Hamwee moved Amendment No. 79A:

    Page 13, line 21, after "situation" insert "and the Mayor of London shall report the deterioration to the Chair of the London Assembly"

The noble Baroness said: I have already declared my interests to the Committee, including my role as chair of the London Assembly. This is a probing amendment which seeks to understand whether, under Clause 29(3), there is a difference of approach as between the four functional bodies—that is, Transport for London, the Metropolitan Police Authority, the London Fire and Emergency Planning Authority and the London Development Agency—on the one hand and the Greater London Authority, which we have become accustomed to referring to as the "core GLA", on the other. I assume that, in referring to a body, Clause 29(3) includes the core GLA, because otherwise nothing would be left to be the subject of subsection (3)(a).

In the case of a deterioration of a functional body, Clause 29(3)(b) requires that to be reported to the Mayor and, unusually, to the Chair of the Assembly. I am not sure whether any similar provision is included elsewhere in legislation covering the Chair himself or herself.

The Chair would not know automatically about a deterioration in the position as regards the core GLA. As it happens, through a budget committee, the Assembly monitors the spending of the GLA, although inevitably that is by nature somewhat retrospective. But it is the Mayor's budget and it is his operation of it, as are the budgets of the functional bodies.

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I have moved the amendment largely to determine whether there is a difference in approach and, as a sub-text, to suggest that if one seeks transparency and reporting in the public domain, then a provision such as reporting to the Chair of the Assembly would be helpful to ensure that it actually takes place and the Mayor does put matters into the public domain. I beg to move.

Lord Rooker: I confess that I had some difficulty understanding the amendment, given how the clause has been drafted. Then again, I do not fully understand the workings of the Greater London Authority or, indeed, the internal politics of the authority. I suspect that the amendment might have more to do with that than with the drafting of the legislation, for reasons that I shall explain.

Clause 29 places a duty on the Greater London Authority and its functional bodies to monitor their budgets and to consider what action to take if a deterioration is identified. Amendment No. 79A introduces a new duty into Clause 29 requiring the Mayor of London to report to the Chair of the London Assembly if the deterioration is identified in the budget of one of the Greater London bodies.

The amendment is completely unnecessary. If one of the functional bodies identifies a deterioration, the clause already places a duty on the body to report to the Mayor and to the Chair of the Assembly. If it were a deterioration in the Greater London Authority's own budget, current practice would ensure that it was made known to the Assembly, and the Assembly has sufficient powers to obtain information if there were any resistance.

Clause 29 was drafted in its present form taking into account a joint response received on the draft Bill agreed by both the Mayor and the Assembly, of which I understand the noble Baroness is a member. The reporting duty proposed in Amendment No. 79A was not requested in that response. I hope, therefore, in the light of this clarification, that the noble Baroness will not pursue her amendment.

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