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Division No. 1


Aberdare, L.
Allenby of Megiddo, V.
Alton of Liverpool, L.
Anelay of St Johns, B.
Arran, E.
Astor of Hever, L.
Attlee, E.
Bell, L.
Biffen, L.
Blackwell, L.
Blaker, L.
Blatch, B.
Bowness, L.
Boyce, L.
Brougham and Vaux, L.
Byford, B.
Campbell of Alloway, L.
Carlisle of Bucklow, L.
Carnegy of Lour, B.
Chalker of Wallasey, B.
Cope of Berkeley, L. [Teller]
Craigavon, V.
Crathorne, L.
Cumberlege, B.
Dixon-Smith, L.
Eden of Winton, L.
Elliott of Morpeth, L.
Elton, L.
Feldman, L.
Ferrers, E.
Forsyth of Drumlean, L.
Fraser of Carmyllie, L.
Freeman, L.
Gardner of Parkes, B.
Garel-Jones, L.
Geddes, L.
Gilmour of Craigmillar, L.
Glentoran, L.
Gray of Contin, L.
Greenway, L.
Hanham, B.
Hanningfield, L.
Harris of High Cross, L.
Henley, L.
Higgins, L.
Hodgson of Astley Abbotts, L.
Hooper, B.
Howe of Aberavon, L.
Howe of Idlicote, B.
Howell of Guildford, L.
Hylton, L.
Kilclooney, L.
Kimball, L.
King of Bridgwater, L.
Knight of Collingtree, B.
Laird, L.
Liverpool, E.
Lucas, L.
Luke, L.
Lyell, L.
McColl of Dulwich, L.
MacGregor of Pulham Market, L.
MacLaurin of Knebworth, L.
Mar, C.
Mayhew of Twysden, L.
Miller of Hendon, B.
Montagu of Beaulieu, L.
Montrose, D.
Mowbray and Stourton, L.
Moynihan, L.
Murton of Lindisfarne, L.
Naseby, L.
Newton of Braintree, L.
Northbrook, L.
Northesk, E.
Norton of Louth, L.
O'Cathain, B.
Patten, L.
Perry of Southwark, B.
Peyton of Yeovil, L.
Phillips of Sudbury, L.
Plumb, L.
Plummer of St. Marylebone, L.
Rawlings, B.
Rees, L.
Renton, L.
Roberts of Conwy, L.
Saltoun of Abernethy, Ly.
Sanderson of Bowden, L.
Sandwich, E.
Seccombe, B. [Teller]
Selsdon, L.
Sharples, B.
Shaw of Northstead, L.
Shrewsbury, E.
Simon of Glaisdale, L.
Skelmersdale, L.
Soulsby of Swaffham Prior, L.
Stewartby, L.
Strathclyde, L.
Swinfen, L.
Thomas of Gwydir, L.
Trefgarne, L.
Trumpington, B.
Ullswater, V.
Vivian, L.
Waddington, L.
Wade of Chorlton, L.
Wakeham, L.
Weatherill, L.
Wilcox, B.


Acton, L.
Addington, L.
Ahmed, L.
Alderdice, L.
Alli, L.
Andrews, B.
Ashton of Upholland, B.
Bach, L.
Barker, B.
Barnett, L.
Bassam of Brighton, L.
Beaumont of Whitley, L.
Berkeley, L.
Bernstein of Craigweil, L.
Bhatia, L.
Blackstone, B.
Borrie, L.
Bradshaw, L.
Brett, L.
Bridges, L.
Brightman, L.
Brooke of Alverthorpe, L.
Brookman, L.
Brooks of Tremorfa, L.
Bruce of Donington, L.
Burlison, L.
Campbell-Savours, L.
Carter, L.
Chester, Bp.
Christopher, L.
Clark of Windermere, L.
Clement-Jones, L.
Clinton-Davis, L.
Cohen of Pimlico, B.
Corbett of Castle Vale, L.
Crawley, B.
Darcy de Knayth, B.
David, B.
Davies of Coity, L.
Davies of Oldham, L. [Teller]
Dean of Thornton-le-Fylde, B.
Desai, L.
Dixon, L.
Donoughue, L.
Dormand of Easington, L.
Dubs, L.
Eatwell, L.
Elder, L.
Evans of Parkside, L.
Evans of Temple Guiting, L.
Falconer of Thoroton, L. (Lord Chancellor)
Falkender, B.
Falkland, V.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Filkin, L.
Flather, B.
Fyfe of Fairfield, L.
Gale, B.
Golding, B.
Goldsmith, L.
Goodhart, L.
Gordon of Strathblane, L.
Goudie, B.
Gould of Potternewton, B.
Graham of Edmonton, L.
Grocott, L. [Teller]
Hamwee, B.
Hardy of Wath, L.
Harris of Richmond, B.
Harrison, L.
Haskel, L.
Hayman, B.
Hilton of Eggardon, B.
Hogg of Cumbernauld, L.
Hollis of Heigham, B.
Hughes of Woodside, L.
Hunt of Chesterton, L.
Hunt of Kings Heath, L.
Irvine of Lairg, L.
Janner of Braunstone, L.
Jay of Paddington, B.
Jones, L.
King of West Bromwich, L.
Kirkhill, L.
Laming, L.
Layard, L.
Lea of Crondall, L.
Lester of Herne Hill, L.
Lipsey, L.
Livsey of Talgarth, L.
Lofthouse of Pontefract, L.
Macdonald of Tradeston, L.
McIntosh of Haringey, L.
McIntosh of Hudnall, B.
MacKenzie of Culkein, L.
Mackenzie of Framwellgate, L.
Mackie of Benshie, L.
McNally, L.
Mar and Kellie, E.
Marsh, L.
Massey of Darwen, B.
Merlyn-Rees, L.
Methuen, L.
Miller of Chilthorne Domer, B.
Mishcon, L.
Mitchell, L.
Morgan, L.
Morris of Manchester, L.
Newby, L.
Nicol, B.
Oakeshott of Seagrove Bay, L.
Palmer, L.
Parekh, L.
Paul, L.
Pendry, L.
Peston, L.
Pitkeathley, B.
Plant of Highfield, L.
Prys-Davies, L.
Radice, L.
Ramsay of Cartvale, B.
Redesdale, L.
Rendell of Babergh, B.
Richard, L.
Rodgers of Quarry Bank, L.
Roll of Ipsden, L.
Rooker, L.
Roper, L.
Russell, E.
Sainsbury of Turville, L.
Sandberg, L.
Scotland of Asthal, B.
Sharp of Guildford, B.
Sheldon, L.
Simon, V.
Smith of Clifton, L.
Stone of Blackheath, L.
Strabolgi, L.
Strange, B.
Symons of Vernham Dean, B.
Taverne, L.
Temple-Morris, L.
Thomas of Walliswood, B.
Thomson of Monifieth, L.
Thornton, B.
Tope, L.
Tordoff, L.
Turnberg, L.
Turner of Camden, B.
Wallace of Saltaire, L.
Walmsley, B.
Warner, L.
Warnock, B.
Warwick of Undercliffe, B.
Watson of Invergowrie, L.
Wedderburn of Charlton, L.
Whitaker, B.
Whitty, L.
Wigoder, L.
Williams of Crosby, B.
Williams of Elvel, L.
Williams of Mostyn, L. (Lord President of the Council)
Williamson of Horton, L.
Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.

16 Jul 2003 : Column 892

On Question, Motion agreed to.

Local Government Bill

5.1 p.m.

The Minister of State, Office of the Deputy Prime Minister (Lord Rooker): My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.—(Lord Rooker.)

On Question, Motion agreed to.

16 Jul 2003 : Column 893

Clause 16 ["Capital expenditure"]:

Baroness Hamwee moved Amendment No. 32A:

    Page 7, line 18, leave out ", or as not being,"

The noble Baroness said: The amendment takes us to the subject of capital expenditure. Clause 16 defines that term and provides that the Secretary of State can, by regulations or direction, provide that expenditure is or is not capital expenditure.

When we debated the clause in Grand Committee, the Minister helpfully explained why it was good for local authorities to treat revenue expenditure—or be directed to treat it—as capital. That will be familiar to local authorities, provided that they have the revenue to treat as capital. Clause 16(2) is interesting—it allows the Secretary of State, in effect, to designate expenditure as capital expenditure or not—when read with subsection (1), which refers to expenditure,

    "which falls to be capitalised in accordance with proper practices".

That is how the subsection approaches the matter.

In Grand Committee, the Minister was silent on the subject of providing for expenditure not being capital expenditure. The draft regulations seem to be silent on the point as well. I hope that the Minister can respond to the amendment, the purpose of which is to probe the Government. Why is it proper for the Secretary of State to be able to direct or, by regulations, provide that any expenditure that, in normal terms—particularly when proper accounting practices are applied—would be treated as capital expenditure should not be? The Secretary of State will need to justify that view, and it is important for local authorities dealing with budgets to be able to assess in advance what is capital expenditure. They should not have the ground taken from under their feet, when the Secretary of State says, "Sorry, chaps. This time round, it's not". I realise that the Secretary of State must be reasonable, but the view should be justified, and it was not justified in Grand Committee.

Before the Minister tells me so, I realise that, for consistency, I should have deleted the same words from the following paragraph. No doubt, the arguments would be the same. I beg to move.

Lord Rooker: My Lords, Amendment No. 32A, as the noble Baroness said, relates to Clause 16, which defines the term "capital expenditure". The clause begins by saying that the term is normally to be interpreted in accordance with proper practices, as defined in Clause 21. Clause 16(2)(a), however, enables that definition to be varied by regulations. The Bill will allow regulations to be used to widen or narrow the accounting definition of capital expenditure. The amendment would remove the power to exclude from the definition any expenditure that is currently treated as capital expenditure.

The power is a continuation of one that has existed under the present system since 1990. It has not been exercised often. The main occasion was when it was used to solve a problem relating to local authorities' investments. Numerous authorities lost money when

16 Jul 2003 : Column 894

some commercial banks holding their investments went into liquidation. In due course, they received reimbursement from the liquidators. For highly technical legal reasons, that reimbursement would have counted as capital expenditure for the authorities and would have had an adverse impact on their resources. The regulation-making power was used to ensure that the reimbursement did not score as capital expenditure, thus protecting the authorities concerned. That problem is, fortunately, now in the past, but it illustrates the desirability of preserving the regulation-making power.

Clause 16(2)(b) will enable the same result to be obtained by issuing directions to individual local authorities, but that is not a satisfactory way of dealing with an issue affecting a large number of authorities. I hope that, with those reassurances and the example that I gave of why we need the powers, the noble Baroness will withdraw the amendment.

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