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House of Lords

Tuesday, 5 July 2011.

2.30 pm

Prayers-read by the Lord Bishop of Derby.

Diplomatic Missions: Unpaid Congestion Charges and Parking Fines


2.36 pm

Asked by Lord Faulkner of Worcester

Earl Attlee: My Lords, two-thirds of all foreign missions pay the London congestion charge, but as diplomatic missions are immune from prosecution in UK courts, there is no legal course of action which Her Majesty's Government or local authorities can take to enforce payment of the congestion charge or parking fines. The Foreign and Commonwealth Office, Transport for London and other local authorities continue to press non-paying diplomatic missions to pay the clearly outstanding congestion charges and parking fines.

Lord Faulkner of Worcester: I thank the Minister very much for that Answer-disappointing though it is, I am afraid. Does he agree that this is an absurd situation which cannot go on indefinitely? The total in unpaid congestion charge penalties rose from £36 million at the start of last year to £52 million by the end of April. Is not the answer perhaps for the Prime Minister or the Foreign Secretary to sit down quietly with the American ambassador-who owes £5 million of those fines to the people of London-and explain to him that this is not a tax: it is a legitimate charge for services rendered under Article 34 of the Vienna Convention on Diplomatic Relations? If the American ambassador were to do it, I am sure that the others would follow.

Earl Attlee: My Lords, the noble Lord suggests that this situation could go on indefinitely. My noble friend Lord King, who briefed me, told me that he had to deal with this issue during his time in office, so it is a long-running problem. On the noble Lord's second question, I understand that the mayor has had a chat with the President of the United States, but he still did not get very far.

Lord Trefgarne: My Lords, will my noble friend forgive me if I rain on his parade? Is he aware that the collection of congestion charges by Transport for London is a pretty haphazard affair? Some of us have had the misfortune, and on at least two occasions, of an allegation that we had not paid when we had.

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Earl Attlee: My Lords, I have had a brush with Transport for London over the congestion charge and, unfortunately, I found it to be deadly efficient.

Lord Berkeley: My Lords, can the noble Earl tell the House whether the President of the United States and his very long and low-slung car-which went aground in Dublin, we are told-and his retinue of 40 other cars paid the congestion charge when they came to London last month?

Earl Attlee: My Lords, I expect that they probably claimed diplomatic immunity.

Baroness Doocey: My Lords, I declare an interest as a Member of the London Assembly. Does the Minister agree that the abolition of the western extension zone gives the Government a new opportunity to renegotiate this long-running saga?

Earl Attlee: My Lords, the situation is simple: we believe that the Government of the United States should pay these congestion charges and parking fines as they occur. It does not really matter how far out the congestion charge zone goes, these fines and charges are due.

Lord Davies of Oldham: My Lords, the Minister is right: sagas last a long time, and so has this particular abuse-for it is an abuse of our hospitality when charges are not paid by foreign embassies. Why does the Minister not talk to his Foreign Office colleagues and suggest that Foreign Office staff from this country working overseas will not pay any charges until we reach the sum that is owed to us by those delegations that refuse to pay legitimate charges?

Earl Attlee: The noble Lord will recognise that diplomacy is a very delicate matter and that such a course of action would be extremely ill advised.

Lord Glentoran: Will the Minister say what success the previous Government had with this problem, which has been going on for many years?

Earl Attlee: My Lords, I would like to keep this non-partisan. All Governments put pressure on the Government of the United States and other countries. I am pleased to say that we have had some success with Kazakhstan, which has managed to regularise its overdue parking fines.

Lord Pearson of Rannoch: My Lords, have the Government made a study of how the United Kingdom pays similar fines in other jurisdictions? Do we obey their rules: is it only they who do not obey ours? How do we stand elsewhere?

Earl Attlee: My Lords, the noble Lord makes an extremely important point. Our diplomats are very careful to pay all outstanding charges when they are

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overseas. We discourage any parking offences and in the United States our diplomats pay toll charges, which are equivalent to our congestion charge.

Lord Tebbit: My Lords-

Lord Avebury: My Lords-

Lord Strathclyde: My Lords, my sense is that the House would like to hear from my noble friend Lord Tebbit and then from my noble friend Lord Avebury.

Lord Tebbit: My Lords, could we not experiment with wheel clamping the CD-plated cars of particular embassies? That might have a good effect-and while we are about it, we could try wheel clamping one or two Lib Dem Members of this House.

Earl Attlee: My Lords, I am sure that my noble friend knows the details of the Vienna Convention on Diplomatic Relations, under which diplomatic cars are inviolable. Therefore, we cannot clamp them.

Lord Avebury: My Lords, perhaps I may make a helpful suggestion. The Government should seek statutory power to tow away any vehicle that has been the subject of several previous parking fines that remain unpaid.

Earl Attlee: My Lords, I repeat the point that I just made. Diplomatic cars are inviolable. The other problem is that we could get into a tit-for-tat situation with our diplomats overseas. I suggest that that would not be a sensible course of action. It would be much better to continue to apply the pressure that we do.

Lord Pearson of Rannoch: My Lords, how does the noble Lord equate his last answer with his answer to me in which he said that we obey the rules overseas? How could there be any tit for tat?

Earl Attlee: My Lords, my replies are not inconsistent.

Manufacturing: Investment Growth Forecast


2.43 pm

Asked by Lord Sheldon

The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox): My Lords, the Government do not make forecasts of growth in manufacturing investment specifically. However, the Office for Budget Responsibility has forecast total annual business investment growth of 6.7 per cent in 2011. This forecast is underpinned by an extended period of low interest rates, reductions

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in the rate of corporation tax and strong growth in profitability. The findings of independent surveys by the CBI and the manufacturers' organisation, the EEF, also suggest that manufacturing investment will increase in 2011.

Lord Sheldon: My Lords, I thank the noble Baroness for that reply. On 28 April the Prime Minister said that there had been an increase in manufacturing output and exports in the previous 12 months, but on 25 May the EEF, the manufacturers' organisation, commented that although there was export growth, manufacturing investment was down. This was confirmed in June by the Project Management Institute. How does the noble Baroness consider these matters?

Baroness Wilcox: There is no doubt that we have gone through a soft period in the last three months. However, the latest surveys from the CBI and the EEF suggest that output will grow overall in the second quarter of 2011, with manufacturers expecting growth to continue well into the third quarter.

Lord Razzall: My Lords, in the light of her Answer and indeed the Question put by the noble Lord, Lord Sheldon, might this not be a moment for the Minister to endorse the Statement last week by her colleague the Business Secretary that Britain's economy must undergo a cultural revolution to prevent manufacturing losing so many school leavers and high-flying graduates to the City? What steps are she and her department prepared to take to promote the See Inside Manufacturing programme, in which young people visit schools to encourage others to train as career engineers, thereby helping our exports and manufacturing?

Baroness Wilcox: The Government are well aware-certainly my boss, the Secretary of State, is well aware-that advanced manufacturing is what will take our country forward in the future. Investment in technology, investment in skills and investment in the very thing that my noble friend has just mentioned are what will take us forward.

Lord Peston: I do not know where the Minister gets her figures from, but the Office for National Statistics, in its latest published figures on business investment, tells us that business investment fell in the first quarter of this year; so I would like to know who she is quoting as superior to the Office for National Statistics. However, is not the main question about the level of manufacturing output? Is the Minister aware that virtually everybody who is looking at the forecasts, for both the British and the global economy, now expects us to start going through a period of a fall in the expansion of manufacturing output locally and globally? Is that not a matter that the Government ought to be taking rather seriously?

Baroness Wilcox: We are predicting growth-not very exciting, but we are. We must always remember that over the past 30 years manufacturing has declined as a share of the economy; as a sector it has grown and continues to grow.

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The Lord Bishop of Derby: My Lords, I hope you will allow the Bishop of Derby to ask the Minister about Bombardier in the context of the very important commitment to manufacturing investment. Could the Minister indicate to us where the design and making of trains fit into a strategy within which we have to invest in manufacturing; and what investment in manufacturing in that strategy would have to say to a highly skilled workforce in a place like Derby that it is facing collapse through lack of investment and lack of opportunity?

Baroness Wilcox: There are a lot of questions from the right reverend Prelate. I will answer as many as I can, or as many as my Leader will allow me to. We all know about the announcement that Bombardier made this morning that 1,200 jobs would be lost at the plant in Derby. The company had already told us that this was going to happen regardless of whether it had won the Thameslink contract. As we know, this particular industry is very volatile. The company has had enormous contracts, it is coming to the end of them and it did predict that it would lose jobs. As a volatile industry, it has to hire and fire at will, but we hope that it is a temporary situation. We are doing everything that we can to try and help it grow. We are introducing 21 new enterprise zones across the local enterprise partnership areas, which will benefit from superfast broadband, lower taxes and lower levels of regulation and planning controls. At the end of the day, it is very important for us to support our industry wherever we can.

Lord Hughes of Woodside: My Lords, did the Minister not hear on the one o'clock news today the chairman of the Derby company, I believe, who gave no indication that it was going to have troubles anyway, and who claimed that the reason for Siemens getting the contract was that the Germans actually support Siemens through subsidies? If we have to have competition in the European Community, why can we not have it on a level playing field?

Baroness Wilcox: There is no doubt that it is always a shock when we do not get a contract like this. Today, the Transport Secretary and the Business Secretary have written to the Prime Minister underlining the need to examine the wider issue of whether the UK is making best use of the application of the EU procurement rules. I think this House will be very glad to hear that.

Lord Vinson: Does the Minister agree that for the first time for many years the pound is close to parity level, which helps make our industry, at last, much more competitive internationally? Would she like to suggest to the Treasury that, in future instead of having just an interest rate policy or an inflation policy, we should also have a rate of exchange policy that might help us to support our industry over many more decades in the future?

Baroness Wilcox: My noble friend makes a very important and interesting point, and I shall take it back.

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Lord Young of Norwood Green: My Lords, it was more than a shock for Bombardier employees who have lost their jobs. Even more worrying, perhaps, is its ability to bid for future contracts, such as Crossrail. The point I want to emphasise is that British manufacturers are failing to capitalise fully on the weak value of the pound as factory growth lags behind continental nations led by Germany. The purchasing managers' index of UK factory output fell to 51.3 per cent last month, just above the 50 per cent-

A noble Lord: Reading!

Lord Young of Norwood Green: I will be-that marks the divide between expansion and contraction. That is the lowest reading since September 2009. What steps are the Government going to take to ensure that British manufacturing is able to respond to an environment where the value of sterling should enable it to have a competitive advantage?

Baroness Wilcox: We are having a competitive advantage in countries such as China and India, where we are growing. That is very important to us. Competing with our European colleagues is one thing, but taking new business abroad from the BRICs is even more important to our country at this time.

Audiovisual Media Services Directive


2.52 pm

Asked by Lord Clement-Jones

Baroness Rawlings: The AVMS-audiovisual media services-directive has been implemented by way of co-regulation under which Ofcom has given the day-to-day responsibility to the Authority for Television on Demand, which to simplify I will refer to as ATVOD in future. It is for those two bodies to make certain that the system works. Ofcom plans to review this after March 2012. Ministers are aware of the range of concerns that have been discussed with Ofcom, ATVOD and the industry.

Lord Clement-Jones: My Lords, I thank my noble friend for that reply, which is reassuring because surely ATVOD is everything an industry-based co-regulatory scheme should not be: expensive, too wide in scope, far from light touch and, indeed, already giving rise to litigation. I am delighted to hear that the DCMS will be making sure that ATVOD is fit for purpose.

Baroness Rawlings: My noble friend Lord Clement-Jones makes a very good point. Our regulations specifically require that the fees be justifiable and proportionate in

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respect of each provider. We are aware that the regulations will inevitably have a cost, but we look to the regulators to make certain that that cost is minimised.

Baroness Gardner of Parkes: ATVOD is a very difficult name that we are all trying to come to terms with, but is it a fact that a number of companies have refused to pay the first full-year contribution?

Baroness Rawlings: My noble friend Lady Gardner is absolutely right. Some have not paid, but this is being looked at and is why Ofcom is going to be the backstop to follow these points through.

Baroness Jones of Whitchurch: Will the Minister explain exactly what backstop powers Ofcom has retained in order to intervene if it feels that ATVOD is not carrying out its functions properly? Does she agree with the original point made by the noble Lord, Lord Clement-Jones, that it has exceeded and expanded its role way beyond that which was designated in the original directive and that it needs to focus much more carefully just on raising standards in the video-on-demand industry?

Baroness Rawlings: My Lords, this has been gone through because of public consultation, and the actual responsibilities delegated to ATVOD include setting and collecting the fees from the VOD service providers to meet the estimated costs of carrying out ATVOD functions. ATVOD's power to set and collect fees is subject to Ofcom's prior written approval.

Baroness Benjamin: My Lords, in a recent survey, 20 per cent of eight year-olds said that they had seen nudity online. Is my noble friend the Minister aware that on the most popular websites, children are exposed to advertising of an adult nature and are invited to explore links to very explicit websites? If so, will the Government consider encouraging Ofcom to take further measures to protect children and young people from being targeted in this way by putting in place simple practical steps so that online media owners can take action to prevent clear-cut examples of inappropriate content appearing in places where children are likely to see them?

Baroness Rawlings: My noble friend Lady Benjamin makes a very valid point, and it is necessary for the Government to encourage simple steps to be taken. The Government believe that protecting children from harmful content in our media is of the greatest importance. That is why, following the implementation of the audiovisual media services directive, providers of certain video on-demand services will now be required to comply with minimum standards set under the directive. In 2010 these requirements were incorporated into UK law. They include the use of effective access controls.

Lord Inglewood: Does my noble friend agree that the whole system for the regulation of video on demand and other digital television-type and actual television

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services is hugely complicated? As the recent report of the Communications Committee pointed out and recommended, it would be to everyone's advantage, not least of all the public's, if it became a bit simpler.

Baroness Rawlings: I totally agree with my noble friend that it is hugely complicated, and it has taken me a great deal of time to get to grips with it, but we recognise that there may have been some initial problems with the regulation in the area, which is why we have looked to ATVOD and Ofcom to resolve these issues.

Sudan: Framework Agreement


2.57 pm

Asked by Lord Alton of Liverpool

The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford): My Lords, we fully support the ongoing discussions in Addis Ababa led by President Mbeki. We assess that for it to secure peace and security in the region, the framework agreement must be used by both sides as a basis for the immediate cessation of hostilities.

We continue to urge north and south to negotiate to resolve all outstanding comprehensive peace agreement issues.

Lord Alton of Liverpool: My Lords, I thank the Minister for his reply. Does he accept that for any of us who travelled in Southern Sudan during the war there, when some 2 million people died and 4 million others were displaced, any celebration of Southern Sudan's landmark independence this coming weekend is tempered by these terrible atrocities which have been committed in recent days on the basis of ethnicity and political affiliation, and by the dire failure of the ceasefire to stop the violence or displacements?

As the comprehensive peace agreement expires this weekend, and given the United Kingdom's role as guarantor and as one of the brokers of that agreement, will the Minister say whether we have raised, in the UN Security Council, the importance of sustaining, rather than withdrawing, a continuing UN peacekeeping presence in the area, and the importance of a robust Chapter 6 mandate? Will the Minister also comment on the bleak warning given by the most reverend Primate the Archbishop of Canterbury last weekend that he could see another Darfur beginning to unfold in southern Kordofan, Abyei, and the areas to which I have alluded?

Lord Howell of Guildford: Naturally, on the last point, we hope that this warning, which no doubt is justified by the long history of atrocities, is not fulfilled.

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As to the noble Lord's question on the comprehensive peace agreement, in theory it ends on 9 July with the independence of Southern Sudan, but it has been recognised that key issues are yet to be resolved and must be talked about.

As for our role with the United Nations, the UN Security Council, as the noble Lord knows, has extended the remit of UNMIS until 9 July and has signalled that it wants the remit to continue beyond then despite the continued strong opposition of Khartoum, which says that UNMIS must remove itself. As well as that, United Nations Security Council Resolution 1990 empowers the Ethiopians to move into Abyei. They are on their way, although they have not yet arrived. Those are the activities of the United Nations and we continue to play a full and central part in them.

Lord Chidgey: Is my noble friend aware that the chair of the Sudan Disarmament Immobilisation and Reintegration Committee has estimated that with the current level of resources, when the conflict ends it will take at least six years to assimilate 150,000 surplus soldiers back into civilian life? What assistance do the Government plan to provide to speed up this DDR process and reduce the risk of what is a major security threat to the region?

Lord Howell of Guildford: Clearly, this is one more problem on top of the problems of refugees, resettlement, basic development and provision of infrastructure in the two countries; notably, in Southern Sudan, which is a very poor country, and in the north. I can give my noble friend only the general answer that my right honourable friend the DfID Secretary of State has indicated that our substantial and detailed programmes to meet these and future problems will continue and will be administered in a very detailed and hands-on way.

Baroness Kinnock of Holyhead: My Lords, the Minister will be well aware of the enormous needs of the new country soon to become a reality on Saturday. Those needs include health, education, infrastructure and huge gender disparities-92 per cent of women in Southern Sudan are illiterate. Will the Minister comment on the heavy criticism now regularly made of the slow disbursement of aid through the pooled donor fund which is being used? Will he further comment on the need for long-term, predictable funding, rather than the unpredictable, short-term financing that is currently happening?

Other post-conflict countries, such as Mozambique, Rwanda and Sierra Leone received long-term funding after the conflict ended, and Afghanistan still receives long-term predictable funding. Will the UK push for a five or 10-year commitment to funding for essential services, such as health and education, in the new Southern Sudan?

Lord Howell of Guildford: All that the noble Baroness says is correct. The model followed elsewhere is that which should be followed in the division of Sudan. It is very difficult. A lot of the activities are unco-ordinated

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and need better co-ordination. However, it is very hard to see beyond the present pattern of continuing an ugly conflict. As soon as we can see beyond it, these post-conflict arrangements should be put in place. For the moment, I can only say that these are the right ideas. We are moving towards them but there are some ugly, immediate problems that have got to be overcome in order for peace to break out and for these very poor countries to begin to move on the long-term pattern to development with suitably arranged financial funding behind them.

The Lord Bishop of Wakefield: My Lords, does the Minister agree that the efforts made by the former South African President, Thabo Mbeki, in brokering the framework agreement demonstrate the viability and stability of both states of the Sudan, will to a large extent remain dependent on the continued support and assistance of the international community in helping both sides to resolve the outstanding issues? In the light of the report of the European Union Committee of this House, what steps are Her Majesty's Government taking with their European partners to hold the Khartoum Government to the agreement?

Lord Howell of Guildford: For a start, as the right reverent Prelate surely knows, we are backing and funding to a substantial degree the African Union implementation panel, over which President Mbeki presides and into which he is putting enormous efforts. That is our expression of support for the continuing work of the panel and of the products of the panel, including the framework agreement signed on 28 June, to which the noble Lord, Lord Alton, has already referred. We hope that will stay in place and will secure the beginnings of some order, particularly in South Kordofan where a whole confused range of Arab and non-Arab forces-some allegedly belonging to the south but in the north, and some in the north but belonging to the south-are fighting each other. We are backing the Mbeki implementation panel and, through that, many African Union people think that the best solutions will come.

There is an argument, which I only put before your Lordships, that while we must support the humanitarian efforts and do everything we can to support peace, the African Union itself is anxious that it and not outside powers should solve its problems.

Lord Luce: My Lords, since Southern Sudan is proceeding this week towards independence-in what we all agree is a very dangerous and very precarious situation which could lead to further disasters-may I reinforce the point made by my noble friend Lord Alton that, as a sponsor of the comprehensive peace agreement and with all our responsibilities over 60 years with the Sudan, we should pull out all the stops to persuade the international community, particularly the African community, to help hold the ring in that part of the world?

Lord Howell of Guildford: The noble Lord will recognise, I am sure, that we are doing so. Enormous efforts are being made on the diplomatic front, both in

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the UN and with the African Union and with all other parties involved. On top of that, the UK is one of the chief funders and backers of development-medium, short and long-term-in both Khartoum Sudan and Southern Sudan. We are not merely talking and making pleas for the ceasefire, of course we have to do that, but we are putting our money where our mouth is and making very substantial and solid commitments to a better future for these countries, which we hope will begin after 9 July.

Baroness Tonge: My Lords, the Minister will know that, sadly, oil reserves play a very great part in the troubles of Southern Sudan and indeed in the government of Sudan generally. The Chinese are very involved with oil extraction in Sudan. Will the Minister tell us whether our Government had any conversations about the Sudan with the Chinese when they visited?

Lord Howell of Guildford: I am very glad that my noble friend raised that issue. We tend to overlook the fact that the Chinese nowadays not only have a commercial involvement in many regions-particularly this region-but need to match their commercial involvement with some diplomatic responsibility. I am happy to say in the Sudan situation that is beginning to be evident. Our own envoy has had contact with the Chinese envoy and the Chinese have made some extremely helpful statements in support of calming the situation and overcoming the difficulties in the disputed areas of Abyei and South Kordofan. We are finding that Beijing's old stance of not wanting anything to do with anybody else's foreign policy is in this area beginning to give way to a more realistic and responsible attitude. That can only be helpful and we intend to work with it.

Phone Hacking

Private Notice Question

3.08 pm

Asked by Lord Fowler

Lord Fowler: My Lords, I beg leave to ask a Question of which I have given private notice.

The Minister of State, Home Office (Baroness Browning): My Lords, once again our thoughts are with the Dowler family. As the Prime Minister said, these allegations are truly dreadful and the police should pursue their investigations wherever they lead them.

A police investigation into allegations of phone hacking is currently under way. It is important that the investigation is allowed to proceed and that the conclusions

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be made public. A number of parliamentary inquiries and other reviews are also under way, and a number of individual cases are currently before the courts. This represents a broad span of activity across several aspects of this issue and the Government believe it most appropriate to consider the outcome of the police investigations and these various inquiries before deciding whether any further steps are necessary.

Lord Fowler: My Lords, I thank my noble friend for the reply, but I urge her to go further. I declare an interest in that I was once a journalist, but my view of the press is that newspapers are there to expose injustice and abuse of power, not to illegally intrude into the private lives of the public.

Is my noble friend aware that since January of this year I have asked four Questions on the Floor of this House on phone hacking? Steadily, month by month, the revelations have become more and more serious, with today's revelation about Milly Dowler almost beyond belief and certainly beyond contempt. Are we not now confronted with one of the biggest scandals affecting the press in living memory and with clear evidence that a deliberate conspiracy has taken place against the public? Will she therefore recognise that this is not a matter of party politics but of protecting the public, and that the only way that that can be done successfully is by an eventual independent inquiry looking at all the evidence? Why cannot the Government commit themselves to that today?

Baroness Browning: My Lords, I can understand my noble friend's concern, and the concern of the House as a whole, at what is a truly shocking matter. This morning the Home Secretary, appearing before the Home Affairs Select Committee in another place, described what has happened, with the new information that has been received, as shocking and disgusting. She reiterated today that we must await the outcome of the police investigation, but she stated that, if these allegations are found to be true, there will need to be new avenues to explore.

Lord Rosser: My Lords, we support the call of the noble Lord, Lord Fowler, for an independent inquiry. The latest disturbing allegations about phone hacking will only have strengthened the feeling that parts of our national newspaper industry regard themselves as being above the law and having no need to fear any action from the Press Complaints Commission. The Minister's reply to the noble Lord, Lord Fowler, will just not do. How many more potential phone- hacking scandals have to be unearthed, and how many more denials that they knew what was going on by editors and News International top executives do there have to be, before this Government recognise the failings of previous investigations-by the police, by News International and by the Press Complaints Commission-and act? Will the Government set up an independent inquiry into phone hacking and the culture and practices of at least part of the national newspaper industry that have allowed these things to happen?

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Baroness Browning: My Lords, as noble Lords will know, this matter is subject now to a robust investigation by the Metropolitan Police. The MPS has provided a public update and made it clear that it can say no more at this stage. Surrey Police, which is responsible for the Milly Dowler investigation, is also making no comment. Accordingly, this remains an ongoing operational matter for the police on which Ministers can neither interfere nor comment in any substantive way. The proper course is for the investigation and the independent review of previous evidence to be allowed to proceed without interference.

Lord Prescott: My Lords, the hacking of Milly Dowler's mobile is, so far, the latest and most obscene action of this company of the Murdoch press. Will the Minister confirm that it is still the Government's view that these criminal acts are irrelevant to Murdoch's purchase of BSkyB? Is the Minister also aware that the regulator Ofcom has a duty and a statutory responsibility to investigate matters of privacy? Have the Government asked Ofcom for its advice on that matter before they come to a decision on BSkyB?

Baroness Browning: My Lords, I have every sympathy for the noble Lord, Lord Prescott, who I believe is himself a victim of this phone-tapping scandal. Phone tapping or hacking is illegal and is not a matter that the Government regard lightly. It is an offence for a person intentionally to intercept without lawful authority any communication in the course of its transmission. That applies equally to the media. The noble Lord asked me about the decision that my right honourable friend the Secretary of State for Culture, Olympics, Media and Sport has to make about BSkyB. The House will be aware that the Secretary of State in that department has to follow guidelines as already set out in law. He will follow those guidelines in making his decision.

Baroness Williams of Crosby: My noble friend the Minister is obviously doing everything that she can to try and help the House, but might she consider the very serious situation in which there has been a considerable loss of trust both in police inquiries and in the work of the Press Complaints Commission? In that situation, would the Minister agree that we need a more fundamental look at the whole situation that now confronts us-one in which the media feel that, to some extent, they do not have to abide by the normal rules of civic behaviour in our society? Therefore, should we not very seriously consider the proposal of my noble friend Lord Fowler, given that such an independent complaints committee might recover trust from the public in making recommendations about what should be done?

Baroness Browning: I fully understand why my noble friend raises the issue of trust, because from the beginning these matters have been conducted in ways which have given the public great concern. If I may, let me quote to my noble friend the words of Sir Paul Stephenson, given that the Met is now conducting a very robust and vigorous investigation, whose conclusions, once

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made, will be ones on which I believe we can rely. Sir Paul Stephenson has said that questions should be asked once the criminal inquiry and any judicial process have been concluded. As I mentioned, the police investigation is ongoing and it is a matter for that inquiry and that investigation to conclude. At that point, Sir Paul Stephenson said, questions should be asked. I can assure the House that we will consider the outcome of police investigations as well as other inquiries that are under way. I am not saying to the House today that we will not have an inquiry, but while police investigations are under way I cannot be pressed on that.

Lord Fellowes: My Lords, does the Minister agree that, at the end of this episode, it would be a good thing for the Press Complaints Commission either to be given statutory powers or to be wound up?

Baroness Browning: My Lords, I am aware that the chairman of the Press Complaints Commission has expressed her grave concerns today that the News of the World lied in giving evidence. She was extremely angry that the Press Complaints Commission had been misled. That is a very serious matter, and I am sure that my right honourable friend the Secretary of State for Culture, Media and Sport will want to take account of her views on that matter and what has happened with the Press Complaints Commission.

The Lord Bishop of Manchester: My Lords, it seems to me that two issues are germane to this debate. One is the tragic matter of Milly Dowler and, clearly, the judicial inquiry has to be pursued in that direction and the police allowed to do what they are meant to do. The second issue seems to me to be a much deeper one and also a matter of some urgency for this House to address once the particular inquiries relating to Milly Dowler are over. The noble Baroness, Lady Williams, referred to what I believe are some serious underlying ethical issues about this whole matter that this House must address and as soon as possible. I hope that the Minister, while clearly having to make the point about the present inquiries, will give a more robust response to what has been said in all quarters of this House this afternoon about the need for the deeper issues to be addressed.

Baroness Browning: I thank the right reverend Prelate for the way he couched his question. He clearly understands from my replies that I cannot engage the House today in a full debate on this, because we are waiting for these investigations and legal outcomes to be made public, but I have no doubt that once they are in the public domain, we shall return to this subject with much vigour.

Lord Borrie: My Lords-

Baroness Anelay of St Johns: My Lords, I regret that we have reached the limit of 10 minutes on the Private Notice Question.

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Arrangement of Business


3.19 pm

Baroness Anelay of St Johns: My Lords, my right honourable friend the Leader of the House of Commons made a business Statement yesterday to set out how the other place would be invited to take the Police (Detention and Bail) Bill thorough its Commons stages on Thursday 7 July. The two-clause Bill was published in draft last night and will be introduced into the Commons later today.

The Explanatory Note sets out why the Government consider that the Bill merits expedited consideration by both Houses. In short, the Bill will restore the law on the calculation of time spent in police detention to what it was commonly understood to be prior to the High Court judgment of 17 June in the case of Hookway. That decision held that police detention runs uninterrupted for a maximum of 96 hours from the point at which detention is authorised, whether or not the person is on bail. The decision has significant operational implications for the ability of the police to investigate offences and protect the public. It is for those reasons that the Government propose to expedite the passage of the Bill rather than wait for the outcome of the appeal to the Supreme Court, the result of which is in any case uncertain.

It may be convenient for noble Lords to know that the usual channels have agreed to invite the House to take the Bill through all its Lords stages in the course of Tuesday 12 July, next week. We propose to start that day with the Second Reading of the Police (Detention and Bail) Bill. We will then pause, while continuing in that pause with the Committee stage of the Localism Bill. That will give Members of the House the opportunity to table amendments to the Police (Detention and Bail) Bill and the clerks the opportunity to prepare a Marshalled List. Later that day we will take the Committee stage in the usual way, after proceedings on the Localism Bill. If the Police (Detention and Bail) Bill is not amended in Committee, the Report stage and Third Reading will then be taken formally. We will finish the day, I hope, with the notification of Royal Assent. The next edition of the forthcoming business will set out this programme when it is published tomorrow morning.

A speakers list for the Second Reading is now open, and the clerks have agreed to accept amendments to the Bill immediately after its First Reading-that is, from the end of Thursday 7 July. This order of business is of course subject to the will of the House, and on Monday my noble friend the Leader will move the Motion proposing to take the stages in one day.

Marine Navigation Bill [HL]

First Reading

3.22 pm

A Bill to make provision about marine navigation.

The Bill was introduced by Lord Berkeley, read a first time and ordered to be printed.

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Nationality, Immigration and Asylum Act 2002 (Juxtaposed Controls) (Amendment) Order 2011

Immigration (Provision of Physical Data) (Amendment) Regulations 2011

Weights and Measures (Specified Quantities) (Unwrapped Bread and Intoxicating Liquor) Order 2011

Criminal Procedure (Legal Assistance, Detention and Appeals) (Scotland) Act 2010 (Consequential Provisions) Order 2011

Adoption and Children (Scotland) Act 2007 (Consequential Modifications) Order 2011

Environmental Permitting (England and Wales) (Amendment) Regulations 2011

National Minimum Wage (Amendment) Regulations 2011

National Minimum Wage (Amendment) (No. 2) Regulations 2011

Renewable Heat Incentive (Amendment to the Energy Act 2008) Regulations 2011

Renewable Heat Incentive Regulations 2011

Storage of Carbon Dioxide (Access to Infrastructure) Regulations 2011

Criminal Justice and Licensing (Scotland) Act 2010 (Consequential Provisions and Modifications) Order 2011

Disclosure of State Pension Credit Information (Warm Home Discount) Regulations 2011

Legislative Reform (Epping Forest) Order 2011

Motions to Refer to Grand Committee

3.22 pm

Moved By Lord Strathclyde

Motions agreed.

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Localism Bill

Bill Main Page
Copy of the Bill
Explanatory Notes
15th Report from the DP Committee
16th Report from the DP Committee

Committee (5th Day)

3.23 pm

Schedule 5 : New Chapter 4ZA of Part 1 of the Local Government Finance Act 1992

Amendment 129LZZZA

Moved by Lord Jenkin of Roding

129LZZZA: Schedule 5, page 263, leave out lines 9 to 29

Lord Jenkin of Roding: My Lords, I hope that I will be able to deal with these amendments quite shortly. Last Thursday my noble friend Lord Shipley made an admirable speech on the clause stand part debate before the amendments came up, and advanced all the arguments that I would have made in support of this group. The main difference between my noble friend and me was that he expounded his objectives-eloquently and adequately, I thought-and I have tabled the amendments that would give effect to them.

I do not intend to take the House through each of these several amendments. However, I can say that the amendments have four main purposes in relation to the possibility of a referendum on the council tax in an area where it is thought that the council tax increase has been-to use the word in the Bill-excessive. It should not be for the Government to lay down what is excessive. There has been a lot of talk about this being a new form of rate-capping. I know something about that, having dealt with that in an earlier part of my political life. This is intended to be a protection for council tax payers against an increase in council tax which goes beyond what they feel to be fair.

The first point that I would like to make is that it should be for local people to determine whether they find a suggested council tax increase excessive. Therefore, my amendments in a sense come under four groups. First, there are amendments which would delete the Secretary of State's powers to determine what constitutes an excessive rate of council tax-this is likely to be very different in different circumstances in different areas around the country. Secondly, it should therefore also be for the local authority to decide when a referendum should be held. That should not be determined by central government. If localism means anything, this is exactly what it is supposed to mean. Thirdly, it should be the councils, rather than the Secretary of State, which should decide how the referendum is going to be conducted. Finally, there are amendments which would delete powers for the Secretary of State to make a whole raft of regulations, on, among other things, setting out the question to be asked in a referendum, the allowable publicity accompanying a referendum, and how votes ought to be counted.

I have dwelt on this issue before. The rhetoric of Ministers in this Government has been that this is a brand new start, a real decentralisation of power from Whitehall to town hall and county hall, and that it is

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going to be a rejuvenation of local authorities. Yet one only needs to look at the size of the Bill to realise that, while that may be the objective, it is certainly not being produced in this Bill. The Bill is full of detailed directions, and powers to make regulations to give further detailed directions, as to how local authorities are to use what is supposed to be their new freedom.

I am not going to say more than that, or go through all the details. I hope that Ministers-who are going to have an unusually long gap between this Committee stage and the Report stage, which will come after the Recess-will have a good, hard look at this Bill, to see whether some of this centralisation and central direction, and this business of telling local authorities how to have their freedom and how to behave themselves, can be removed from the Bill. I can assure my noble friends on the Front Bench that it will be extremely popular among the local authorities, which have had their hopes raised that they are at last going to have freedom from central direction, and then find that this Bill does nothing of the sort. I beg to move.

The Lord Speaker (Baroness Hayman): I have to inform the Committee that if this amendment is agreed to I cannot call Amendments 129LZZA to 129LZZF by reason of pre-emption.

3.30 pm

Lord Greaves: My Lords, I have added my name to amendments in this group and I agree with everything that the noble Lord, Lord Jenkin, has said.

I am sure that most Members of this Committee, never mind the whole House, will not spend a lot of time reading the details of Schedule 5 to the Bill and all the ways in which the Secretary of State will be able to lay down very detailed powers and instructions for local authorities on how to carry out council tax referendums. However, these measures are extraordinary, and typical of a huge amount in the Bill. If the Bill constitutes localism, it is extremely detailed top-down localism.

I have seven amendments in this group, six of which are effectively the same. They seek to remove the description of high council tax increases as "excessive". The Bill says that if a council wants to impose a council tax increase which is higher than the Secretary of State thinks is appropriate, as agreed by the House of Commons, it will be described as excessive. This is bad legislation. The word is prejudicial rather than neutral and is almost a slogan. One of the things that the Secretary of State will be able to do is to determine the question in any referendum that takes place. I can imagine a question such as, "Do you agree with your council that they should impose an excessive rise in the council tax this year?". That is the effect of "excessive". Legislation should be neutral and should not use such words. My amendments seek to delete "excessive" and replace it with,

That is what the legislation should say. It should be value neutral and simply set out what the position is. Of course, if the noble Lord's amendments were all passed, mine would be pre-empted and would fall. I

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would be delighted if that were the case as I would rather not have these detailed prescriptions there in the first place. However, if we are going to have them, we should use proper language and not political slogans.

My Amendment 129LABA concerns the date of the referendum. It probes the Secretary of State's ability to lay down detailed instructions on this and seeks to ascertain why councils cannot be left to deal with this themselves. However, this is in effect already covered by the rather more sweeping amendments of the noble Lord, Lord Jenkin, and therefore I do not need to speak to it further.

Lord McKenzie of Luton: My Lords, first, I wish to speak to the amendments spoken to by the noble Lord, Lord Greaves, with which we sympathise. It is not just a case of semantics and of substituting one form of words for another. For the reason that he has outlined, we agree with him that if "excessive" is used in the legislation it will inevitably end up in the question that is put to the voters in a referendum, as it would be the technical term. We are denying local authorities the right to campaign for the council tax increase that they want. If we want to approach this matter in a neutral way, the very least we can do is to remove prejudicial legislation, as the noble Lord termed it.

The Minister may well say that "excessive" is not a new term and that it is embodied in the current capping legislation. However, there is a difference between that position and what may happen in the future because the current arrangements for capping will not be put to a popular vote. Therefore, that term is effectively an internal term rather than one that would inevitably feature in the referendum question on some basis or other. For that reason, I believe that we need to recast the term that is in the legislation.

I agree with the noble Lord, Lord Jenkin. It is a central point of our concern with this legislation that it is stuffed with detailed powers and that the Secretary of State has to draw back from the nominal rights that it is seeking to give to local authorities. I doubt whether the gap between finishing Committee in July-if we do-and Report in September is long enough to unpick some of the stuff that has come from our discussions today, but at least there is perhaps a longer gap than usual. Our attitude to the amendments of the noble Lord, Lord Jenkin, depends on precisely where the Government are on this. When last Thursday we had our first canter around the issue of capping powers, it was said that all Governments of all persuasions had held to themselves a reserve power. If in fact it is the Government's position that they are eschewing that power, we do not feel obligated to hold to the position that I think I outlined-that it is difficult for us to deny the current Government those powers if we took them in past years. If that is not one of the criteria of the Government, that point falls away. When he responds, perhaps the Minister can tell us whether the Government see the arrangements currently included in the Bill as capping powers, whether they believe that they should have the right to hold those powers, or whether they are, by one formulation or other, happy to let local electors decide on what the appropriate level of council tax should be. If his response is, "Well, we think there

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should be reserve capping powers and this is what the Bill is about", that is one thing, but if the argument is that the Bill is about making sure that electors are the final arbiters in this, that helps us in our position on the matter.

I say to the noble Lord, Lord Jenkin, that there is a question about his formulation. Under the Government's proposition, a level of council tax, if deemed excessive, requires the authority to produce a substitute calculation. As I understand it, a substitute calculation is one that is not excessive. I suppose that most authorities in this position would compute a substitute council tax that was just a smidgen short of what the excessive level would be. I am not quite sure, on the noble Lord's formulation, what that substitute calculation would be and what would happen in circumstances where there was a referendum, 5 per cent of the electors called for it, and they did not support the level of council tax that was proposed. What are the consequences of that? If the noble Lord could help us with that point, it would be appreciated. It is clear under the Government's propositions what the consequences would be, but I am not quite sure what the consequences would be under the noble Lord's formulation.

I think that this has been a very helpful debate. It is incumbent on the Minister to say whether the Government see the powers as capping powers and believe that they need them, or whether that is not their position and this is basically about letting electors decide what the appropriate or inappropriate level of council tax would be.

Lord Tope: My Lords, I suppose I can rise to speak on behalf of the only party in this House that is unencumbered by a history of support for capping, but I will try to resist too much temptation there. My name is obviously with my noble friend Lord Greaves on his amendments. I think he is right and I hope that the Government will consider very carefully that fairly simple change to wording which, as others have said, is actually very important. If these provisions are to be in Bill-like my noble friend Lord Greaves, I would rather that they were not-it is important that we have a neutral wording and not a prejudicial wording, which "excessive" must be, especially if that wording is likely to be used either as part of a referendum question or at least in support of any such referendum.

My particular reason for wanting to say a few words now is to support the noble Lord, Lord Jenkin, both in his general and particular plea. The general plea relates to much less regulation and dictation from the Government, a message repeated throughout the Bill. It is salutary to remember that when Ministers first announced the Bill, it was greeted with a pretty widespread welcome right across local government. The aim and intention as enunciated by Ministers was, broadly speaking, welcomed. We knew that there would be some things in here that we would be less happy about, but we thought that most things we would be fairly happy about. Then we came to see the detail of the Bill and the extent to which, as others have said, if it is localism at all, it is localism top-down. It is also prescribed by ministerial regulation and it is potentially constrained by Secretary of State powers. I join the noble Lord, Lord Jenkin, in urging Ministers, during

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what will be a longer than usual gap between Committee and Report, to take courage and look seriously at whether we need to be so risk averse that we hedge everything with regulations, Secretary of State powers, and so on. I said at Second Reading that if we mean localism, we have to trust local government. Some may occasionally get it wrong, but is that a reason to legislate for the vast majority that are to be trusted and should be trusted?

I turn now to the particular of this, which is about council tax capping. I do not have to be quite as measured as the noble Lord, Lord McKenzie. I do not have to carry that history and I understand that. It is council tax capping, as others have said. In reality, it is probably the most effective capping that a Government have ever had, because I suspect that very few, if any, local authorities will take the risk of setting what is prescribed as an excessive tax. It will be a huge risk: not just the risk of whether they can or cannot win a referendum but the cost and administrative upheaval of having to rebill later.

That seems to me to fly in the face of a fairly basic principle of localism. I have always believed that it was a fundamental democratic principle that local councillors are elected-personally, I wish that they were elected under a fairer system, but, nevertheless, they are elected -to determine the needs of their local community and to balance those needs with the level of tax that has to be raised to meet them. That is a tricky balance. Then they are accountable for their decisions to the people who elect them, the local people. We come back to the fact that if there is to be a referendum on council tax levels, it should be the local people who determine the need for a referendum, not the Secretary of State. To me, that is what localism is about, and that is why I support both the general statements of the noble Lord, Lord Jenkin, and his particular in the amendment.

Earl Attlee: My Lords, this is a large group. I shall speak first to Amendments 129LZZZA, 129LZZG, 129LZZH, 129LZZJ, 129LZAA, 129LZAB, 129LZC, 129LZE, 129LZF, 129LABZA, 129LABZB and 129LBA.

These amendments from my noble friend Lord Jenkin would require a referendum to be held only in response to a local petition signed by local electors. I understand what my noble friend seeks to achieve. That may indeed be purer localism than the Government's approach, but there would be grave practical difficulties in going down that road. My noble friend seeks to allow the timing to be determined locally, but time will be very short for such a petition to be organised, as council tax must be set in early March. If democratic control is to be effective, and not just cause financial confusion, the electorate's endorsement or otherwise of the authority's decision should follow very soon after. Given the binding nature of the referendum, it would be necessary to establish that each signatory of the petition was a local government elector in the area. That would be a difficult, time-consuming, contentious and potentially expensive precursor to the main event, the referendum itself.

The amendments leave in place the notion of substitute calculations, but do not resolve with any certainty the basis on which those calculations should be made. In effect, the authority will be saying, "If you do not like

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this level of council tax, we will adopt that one". Who is to say that the electorate will not feel the substitute to be excessive as well?

3.45 pm

The amendments leave in place the Secretary of State's power to direct that the process should not apply. This is sensible in principle but will leave the authority in difficulty. As the Bill stands, the test he will use is: will this authority be unable to discharge its functions or meet its financial obligations if it is not allowed to set an excessive council tax? The approach proposed in the amendments is much less clear cut. They would leave unclear the arrangements that would lead to a referendum challenging a major precepting authority's council tax. Apparently the process is to be triggered by a petition to a billing authority. What happens if a precepting authority covers several billing authority areas but only in one of them is a qualifying petition raised? Is there to be a referendum across the precepting authority's area, or not? A further concern is that several petitions could be launched without central organisation.

Our approach, while preserving a principal role for central government in these local matters, is more practical, much more coherent and less likely to cause undue delay and confusion. We think it is right that authorities themselves should determine whether they have set an excessive council tax-one that has breached the principles set down for the financial year by the Secretary of State and approved by the House of Commons. We also think it is right that if an authority has set an excessive council tax it should arrange a referendum to give its electorate the final say on whether the decision should stand.

Baroness Farrington of Ribbleton: Will the Minister indicate a preparedness to discuss between Committee and Report the implications of the amendment moved by the noble Lord, Lord Jenkin of Roding? Having had discussions with the noble Lord when he was Secretary of State and I represented local authorities, I think the Government would find helpful such discussions on the practicalities of the issues, which appear to be the issues that the noble Earl, Lord Attlee, is relying on. The noble Lord, Lord Jenkin of Roding, is very knowledgeable about the history and the implications and he would be extremely helpful if the Government were minded to move to quell the fears of the noble Earl, Lord Attlee.

Earl Attlee: My Lords, I am extremely grateful to the noble Baroness because I passed by my handwritten notes and did not read them out. My noble friend Lord Jenkin set some homework for Ministers during the Recess. We will carefully consider the Committee's deliberations, and we are grateful for all noble Lords' counsel, even if we do not agree with all of it.

The amendments in the name of my noble friend Lord Greaves would change the wording of new Section 52ZB so that an authority is no longer required to determine whether it has set an "excessive" increase in council tax. Instead it is required to determine whether the increase is,

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We consider that it would not be appropriate to change the wording of the new section in that way. The question of whether an authority's relevant basic amount of council tax for a financial year is excessive will be decided in accordance with a set of principles determined by the Secretary of State and approved by the House of Commons. If an increase in council tax is then set locally that exceeds the level anticipated by those principles, it is perfectly reasonable to call it excessive. The increase might be justified, but the authority will have to persuade the electorate of that. It would be excessive because it exceeded the norm adopted by most authorities. The Government's policy on this must be set against the background that average council tax increases have been high over the years, and in many years higher than inflation. This Government have taken steps of their own to help move away from this position, notably by funding a council tax freeze for this year. Ultimately, however, the best way to control excessive local expenditure is to make sure the local electorate can put a stop to it.

Lord Greaves: The Minister said that it will be up to the local authority to persuade the local electorate of the case that it is putting forward. Is it not the case that local authorities will not be allowed to spend money on campaigning in such referendums?

Earl Attlee: My Lords, I am not certain of the details, and I hope we will come to a suitable amendment to debate that.

Lord Jenkin of Roding: The noble Lord, Lord McKenzie, asked that specific question last Thursday, and my noble friend gave this very specific answer:

"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".-[Official Report, 30/06/11; col. 1971.]

Is he saying that that stands, or is that not right now?

Earl Attlee: I am extremely grateful to my noble friend for refreshing my memory. He is absolutely right; that is the current situation.

Lord McKenzie of Luton: The Minister seems disinclined to accept the amendment, which would remove the word "excessive" from the legislation. Will he give an undertaking that the word "excessive", as applied to the proposed council tax of any local authority, will not have to feature in any referendum question?

Earl Attlee: My Lords, I hope to give the noble Lord some comfort on that. Within the context of that policy, the Government think they are right to refer excessive increases and to require that such increases be approved via a referendum. There is enough flexibility in these provisions to enable sensible principles to be defined. The Secretary of State has the power to set different principles for different categories of authority; and, in exceptional circumstances, if an authority is unable to discharge its functions in an effective manner or unable to meet its financial obligations, he can disapply the referendum provisions altogether.

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Lord Beecham: What sort of categories might the Secretary of State have in mind? Is the noble Earl referring to types of authority, or are there some other criteria that the Secretary of State is likely to adopt?

Earl Attlee: My Lords, my understanding is that they are the different types of precepting authorities, but I will clarify that in writing to the noble Lord. No doubt there will be other matters that we will need to write on in due course.

Many noble Lords have asked me questions. The noble Lords, Lord Greaves, Lord Tope and Lord McKenzie, suggested that the word "excessive" in a referendum question might prejudice the result. Noble Lords made me think hard about this point but inspiration arrived. It might be possible to ensure that referendum questions do not prejudice the matter, and we will consider this point over the Summer Recess.

The noble Lord, Lord McKenzie, asked whether these measures are capping powers and whether the Government would be happy to see voters support a higher and excessive level. If voters make an informed decision to support higher council tax, the Government will be perfectly happy. That is the principle behind the legislation. In view of what I have said, I hope noble Lords will feel able to withdraw their amendments.

Baroness Scott of Needham Market: Before the noble Lord decides what to do with his amendment, will the Minister undertake during this gap to look at some dictionaries for definitions of "excessive"? I have taken advantage of the new rules of the House and googled the word. The definitions all say that it describes a quantity or amount exceeding that which is justifiable, tolerable or desirable-for example, excessive drinking. So will the noble Lord accept that "excessive" is a term that has connotations, whatever its original and absolute meaning might be? I agree with my noble friend Lord Greaves that it does not have a place in legislation.

Earl Attlee: My Lords, I cannot agree with my noble friend's point that it does not have a place in legislation, but I undertake to consider whether the word "excessive" is appropriate in the referendum question.

Lord Greaves: I am grateful for that; it is a step forward. If the Government are to do that over the Recess, will they consult the Electoral Commission about that matter, as it is a referendum question?

Earl Attlee: My Lords, I think it would be extremely unlikely that we did not take advice from the Electoral Commission.

Lord Jenkin of Roding: My Lords, we have spent more than half an hour on this amendment, following the speech of the noble Lord, Lord Shipley, on Thursday. I think the Government have got the message. I am extremely grateful to my noble friend Lord Attlee for undertaking to cogitate on these matters between now and Report. I understand some of the difficulties that his officials have put before him, but I was very encouraged to hear him say that he read from his own

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handwritten notes in response to the noble Baroness opposite when he said he would look at all these matters again. In the light of that assurance, I hope the noble Lord, Lord McKenzie, will forgive me if I do not go into detail about what the results of this might be. I do not regard these amendments as an infallible way of achieving the overall purpose of less top-down government control and more control by devolved local authorities. They are accountable to their electors and I suspect that my noble friend Lord Attlee really will look at this, as he said he would. I shall be happy to help him, and I shall perhaps bring along some of those who have been advising me on these matters. I beg leave to withdraw the amendment.

Amendment 129LZZZA withdrawn.

Amendments 129LZZA to 129LZZJ not moved.

Amendment 129LZA

Moved by Lord McKenzie of Luton

129LZA: Schedule 5, page 264, line 27, at end insert ", and must be accompanied by the reasons for determining why there should be different categories of authority for the year under consideration"

Lord McKenzie of Luton: My Lords, this is a straightforward matter and I hope it will not detain us for long. In determining the principles by which a level of council tax is considered to be excessive-or whatever replacement word we may have-the Secretary of State can adopt different principles for different categories of authority, a point just raised by my noble friend, but such principles must apply to all authorities in the same category. There is nothing new in that and similar arrangements operate under existing capping rules. In determining categories of authority, the Secretary of State must take into account any information which he thinks is relevant. In the interests of transparency, this amendment simply requires those reasons to be set out in the report on the principles, which must be laid before the House of Commons.

This is especially important because, in government terms, these matters are to be determined by the public. I do not know whether the Minister can expand a little on what type of principles are likely to be identified in the circumstances which would help members of the public, if they were to vote, and how and what information would be conveyed to them.

Earl Attlee: My Lords, this amendment appears to assume that the Secretary of State will inevitably determine different categories of authority in a set of principles. That is not necessarily the case. The proposed new Section 52ZC allows the Secretary of State to determine different categories of authority, but he may also decide to apply the principles equally to all authorities. Without pre-judging the Secretary of State's decisions, he may, for example, determine as a category districts, councils, counties, metropolitan boroughs, police or fire authorities, which I think fully answers the question that arose in the previous group of amendments. That would be a matter for the Secretary

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of State to decide on a yearly basis. The Secretary of State is already required to set out his principles in a report to the other place. It is inevitable that the reasons for the principles will be debated there before the other place gives its final approval. Therefore, the proposed new clause is unnecessary and I urge the noble Lord to withdraw the amendment.

4 pm

Lord McKenzie of Luton: My Lords, I thank the Minister for his reply. The amendment would have operated not only in circumstances where there was differentiation between different sorts of authorities but where there was no differentiation, because presumably, in making the judgment, the Secretary of State would have had to take into account a certain amount and range of information. I was simply seeking a situation where, when it came to the information to be taken into account in making the determination, either everyone will be in the same category or there will be different categories, but either way this should be transparent and included in the report that goes to the House of Commons. If the Minister says that that would inevitably be the case and it would be covered in the report, I am happy that that is on the record and I beg leave to withdraw the amendment.

Amendment 129LZA withdrawn.

Amendments 129LZAA and 129LZAB not moved.

Amendment 129LZB

Moved by Lord McKenzie of Luton

129LZB: Schedule 5, page 265, line 43, after "rates," insert "non-domestic rates,"

Lord McKenzie of Luton: My Lords, I shall speak also to the other amendments in the group. I hope that noble Lords will forgive me if my speech is not so brief. Amendments 129LZB and 129LAB seek an identical wording. The first relates to the substitute calculations of a billing authority, the second to substitute calculations of a precepting authority. Each calls for the inclusion in accruals of non-domestic rates in addition to the redistribution of non-domestic rates. This does no more than make provision for the localisation of the business rate in due course. In the absence of such an adjustment, by what mechanism will these calculations take account of localised business rates, should that be where we end up? Prior to this happening, perhaps the Minister will confirm the position of redistributive non-domestic rates. Will he confirm that currently, taking one year with another, amounts collected are fully redistributed? Will he also confirm that there are no plans or discussions concerning the possibility of charging amounts against the national pool before redistribution?

Amendment 129LAC concerns the recovery of the costs of a referendum. New Section 52ZN(7) allows a billing authority to recover from a precepting authority the cost of holding a referendum. However, new Section 52ZN(8) gives the Secretary of State powers to deny or modify the right of a billing authority

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to recover such costs. The impact assessment estimates that the cost of a referendum, depending on the size of the local authority and whether other elections are held at the same time, could be between £85,000 and £300,000. Therefore, not inconsiderable sums are at stake. In what circumstances is it envisaged that recovery of referendum expenses would be denied to a billing authority? Does the Minister consider that the term,

will cover the costs of rebilling in the event of a referendum not supporting the level of council tax calculations-in other words, the costs associated not only with the referendum but with its consequences? If the term is not meant to cover that, how is this otherwise catered for?

Amendment 129LE deletes a range of regulation-making powers that the Secretary of State has in connection with a referendum. In this respect, it is more focused and less ambitious than that of the noble Lord, Lord Greaves. The powers extend to the question to be asked; publicity; the limits on expenditure; the conduct of the authority, its members and its officers; when, where and how voting is to take place; how the votes are to be counted; and the disregarding of alterations in a register of electors. Frankly, it is outrageous that these matters cannot be left to an individual local authority. Amendments 129LF and 129LG deal with another matter.

As the legislation currently stands, the Secretary of State has power to determine that the referendum provisions are not to apply, notwithstanding that a council's tax calculations are, in his view, "excessive". The Secretary of State can do this if he considers that, without that level of increase, the authority would be,

Our amendment is an opportunity to probe the meaning of this, but also to argue for an opportunity for a local authority to request an independent assessment of whether the criteria are met. There was limited debate in Committee in the other place on this issue. The line that the Minister was taking was that this safeguard was really only about a crisis or a catastrophe; for example, the collapse of BCCI, where the Western Isles had invested heavily. Clearly there are extreme examples, but where principles are applied to a local authority as part of a category of authorities, they do not sufficiently take account of its specific circumstances.

The Minister discussed the application of this safeguard where it was an issue about the level of services and how they were provided. In the House of Commons Bill Committee of 8 February, col. 440, he argued that local authorities had to set a budget that was lawful and would enable them to fulfil their statutory functions. However, if such a lawful budget was deemed excessive, it would only stand if supported in a referendum; if not, it could logically be the position that the authority would therefore be unable to fulfil its functions. The fact that the Ministers may be satisfied in aggregate that local authorities have been provided with sufficient resources-and we might argue about that-does not mean that each and every one in the same category will be. It may be that a particular authority has

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encountered issues of provider failure, litigation and redundancy costs, possibly because it is in transition to a delivery model that the Secretary of State might find more acceptable. It may be that some of the issues, for example, relating to contract litigation, where it might be genuinely difficult to provide sufficient information for a realistic assessment in a referendum at a particular point in time, could be in point; indeed, it could be prejudicial to a local authority's case for it to do so. Sometimes it would difficult to condense quite sophisticated legal issues into information that would accompany a referendum question. So we have two fundamental points that these particular amendments are seeking to probe.

What does the Minister see as the boundaries of the use of these provisions? Discussion at the other end suggested that they were only to be applied in extreme, catastrophic circumstances. We postulated other circumstances-but not routine-where a local authority should not be forced through a referendum with all the costs and uncertainties that this entails. Our amendment, as well as being a probe, also sets out an alternative route for a local authority to benefit from this provision, whatever its boundaries. There should surely be a right to some independent assessment of whether these provisions apply. I would not commit it to the precise mechanism that we have set down; I simply raise the issue of the principle. I beg to move.

Lord Greaves: My Lords, I have a later amendment, Amendment 129LEA, which is on its own. I would have included it in this group if I had quite understood what the latter part of the amendment tabled by the noble Lord, Lord McKenzie, was about. The new Section 52ZR, which the Bill would insert into the Local Government Finance Act 1992, provides for the Secretary of State to give a direction,


When speaking in the stand part debate introduced by my noble friend Lord Shipley last week, the Minister referred to this briefly when he said that these provisions would be used only in very extreme circumstances, such as,

I do not know how often that happens, but I do not think it has happened, certainly in England, in my lifetime. It seems very rare, so I tabled Amendment 129LEA for the purpose that the noble Lord, Lord McKenzie, tabled his amendment: to probe the Government on exactly what kind of circumstances this provision might be used in. In view of that, I will listen carefully to the answer in this grouping, and I will not move my amendment when we get to it.

Earl Attlee: My Lords, Amendments 129ZB and 129LAB would add the words "non-domestic rates" to new Section 52ZF(3)(a) and new Section 52ZJ(4)(a). There is no need to do this. The wording "redistributed

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non-domestic rates" covers the sums that would have to be taken into account in respect of non-domestic rates when an authority carried out its original council tax calculations.

The noble Lord, Lord McKenzie, asked whether amounts of non-domestic rates are fully redistributed. The answer is yes, by virtue of Schedule 8 to the Local Government Finance Act 1988. When making substitute calculations to determine an amount of council tax that is not excessive by reference to the principles under the new Sections 52ZF and 52ZJ, an authority must use the amount determined in its previous calculations for redistributed non-domestic rates. This is because an authority should not be able to change its estimate of the amount it will accrue in the year in respect of redistributed non-domestic rates to calculate an amount of council tax which complies with the excessiveness principles.

Lord McKenzie of Luton: Perhaps I can help the Minister. The purpose of these amendments is much more straightforward than that. It is simply to try to cater for the situation where we no longer have redistributed non-domestic rates but have directly billed non-domestic rates. That is the sole purpose.

Earl Attlee: My Lords, these are complex matters, and I am advised that I should read it all out.

Subsection (8) of new Section 52ZN provides the Secretary of State with the power to modify or disapply a billing authority's entitlement to recover costs in connection with a council tax referendum from a precepting authority. Amendment 129LAC would remove this provision. This power is needed so that the Secretary of State may make different provision for the recovery of costs in a situation in which a number of billing authorities are required to hold a referendum on a major precepting authority's increase in council tax but one billing authority fails to do so. In this situation, it would not be appropriate for those billing authorities to recover their costs from the major precepting authority. Provision may instead be made for the billing authorities to recover their costs from the defaulting billing authority. We are aware that the Delegated Powers and Regulatory Reform Committee's report on this part of the Bill recommended that this power should be subject to the affirmative procedure. We will consider that recommendation carefully and will return to the matter in due course, if required.

Amendment 129LE seeks to limit the matters the Secretary of State may make provision for in regulations regarding the conduct of council tax referendums. The regulations would include setting out what is acceptable in terms of publicity, expenditure, the conduct of authorities, their members and officials, and the counting of votes, so these are significant issues. We consider that it is important that these matters be prescribed in regulations, as an authority will be bound by the result of the council tax referendum, in contrast to a local referendum. It is intended that the regulations made under these powers will be modelled on the Local Authorities (Conduct of Referendums) (England) Regulations 2007, which make provision in relation to the conduct of referendums on local government executive

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arrangements. I can assure the noble Lord that the regulations will be subject to consultation with the Electoral Commission.

4.15 pm

Amendment 129LABA removes the requirement for a billing authority to hold a referendum on a precepting authority's excessive council tax increase. We consider that billing authorities are the appropriate bodies to arrange council tax referendums, as they are responsible for administering the council tax system. They also have experience of organising local elections, whereas there are some precepting authorities, such as police and fire and rescue authorities, that do not have any experience of this. Billing authorities will also be best placed to co-ordinate referendums where more than one authority covering the same area sets an excessive increase in council tax. Where a major precepting authority sets an excessive increase in council tax, it follows that all billing authorities to which it issues a precept, will need to organise a referendum. In these circumstances, to ensure the referendum is held on the same day by billing authorities across the major precepting authority's area, billing authorities are required to hold the referendum on the ordinary day of local elections. Provision is made so that billing authorities may recover the expenses they incur in connection with the referendum.

Amendments 129LF and 129LG relate to new Section 52ZR, which is a reserve power for the Secretary of State to disapply the council tax referendum provisions and would only be used in exceptional circumstances. It may, for instance, be used in a situation where the High Court has exercised its powers to appoint a receiver because an authority has failed to service its debt. The amendment would mean that an authority which sets an excessive council tax can seek an independent assessment, and the Secretary of State would be compelled to give a direction to disapply a council tax referendum if that assessment comes to a particular conclusion. It is inappropriate for an unelected and unaccountable person to make the decision, since it will involve factors beyond a simple financial assessment of the authority's position. It will, for example, involve a judgment about whether local taxpayers should be entirely unprotected from excessive increases for a financial year. Depending upon the precise timing, one outcome could be for the Secretary of State to refuse to issue a direction but to treat the authority as a separate category when setting excessiveness principles. For these reasons, the Secretary of State expects the power of direction will genuinely be used only in exceptional circumstances.

These are very complex but important matters, and if I may I will write if there are any points which I have not covered. In the mean time, I hope noble Lords will feel able to withdraw the amendments at the appropriate point.

Lord Greaves: The Minister said that the billing authority-I am thinking in terms of a two-tier area with counties and districts-may be able to recover its costs. Should that not be automatic if the referendum is in relation to the level of council tax set by the county council, for example?

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Earl Attlee: My Lords, I can assure my noble friend that my words are very carefully chosen.

Lord McKenzie of Luton: My Lords, I thank the Minister for his very full response to these amendments. We will need to read the record to see what we wish to take forward from this, but I just want to follow up the point about the reserve powers that the Secretary of State is to have.

I can see that such powers would be necessary in a range of circumstances-including in catastrophic circumstances, at one end of the spectrum-and we are not arguing that, at the other end of the spectrum, there should be an automatic right to go to an unelected body to try to get off the consequences of this legislation. However, there could well be circumstances in-between. It may be that the solution would be-and perhaps this is what the Minister was suggesting-that you would separately designate a particular authority as a special category, but in general these regulations will be applied to groups of authorities, if not all of them together. Although the Government may well take the view that in aggregate they have enough to fulfil their functions, there could be circumstances of individual authorities where that is simply not the case. To be able to convince an electorate in a referendum that that is the case may not always be easy. There could be circumstances around litigation or sensitive commercial discussions where simply to spell out the upside and downside of that information provided in a referendum could be detrimental and prejudicial to the local authority. Therefore, has there not got to be some other safety valve in those sorts of circumstances, which are not the authority defaulting on its debt but the authority potentially getting into quite severe difficulty because of the potential downside of a court case, for example? It would be left not able to raise the level of tax that it thought that it should be able to deal with.

That is the point we are probing, which we have coupled with a right for an independent assessment in those circumstances. I ask the Minister to consider that point seriously. Whatever the supposed evils of capping at the moment, one of the benefits was that at least it was looked at on an authority-by-authority basis. If you had an authority which was in a sense in a particular circumstance, that could be taken account of within the principles that had been set. That seems to be not available under this formulation, which is a real issue.

Earl Attlee: My Lords, while not agreeing to take the matter away, I will unpack the issue with my officials and, if necessary, write to the noble Lord.

Lord McKenzie of Luton: I am very grateful for that. I beg leave to withdraw the amendment.

Amendment 129LZB withdrawn.

Amendments 129LZC to 129LZF not moved.

Amendment 129LA

Moved by Earl Attlee

129LA: Schedule 5, page 266, line 45, leave out from "Acts" to end of line 2 on page 267

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Earl Attlee: My Lords, government Amendments 129LA and 129LB ensure that only residents and not business voters are entitled to vote in any council tax referendum in the City of London. This addresses an anomaly which has become apparent since the clauses were originally drafted. Without the amendment, business voters in the City would be able to vote in a council tax referendum even though they are not resident in the area. The amendments therefore provide that it is only the residents of the City of London who can vote, which will bring the City in line with the position in the rest of England regarding council tax referendums. I beg to move.

Lord McKenzie of Luton: My Lords, we are happy to support these amendments.

Amendment 129LA agreed.

Amendment 129LAA

Moved by Lord McKenzie of Luton

129LAA: Schedule 5, page 267, line 17, at end insert-

"( ) On application by a relevant authority, the Secretary of State may direct that the substitute calculations referred to in subsection (5) may be increased by an amount determined by the Secretary of State."

Lord McKenzie of Luton: My Lords, Amendment 129LAA seeks another safety valve for limited, possibly exceptional, circumstances. Where an authority's council tax is deemed to be excessive, it will be required to hold a referendum. If the referendum does not approve the basic amount of council tax, the council tax is set by reference to a substitute calculation. A substitute calculation is an amount predetermined by the authority, which would not be excessive under the rules. One might suppose that in most cases the substitute calculation would be just below what the Secretary of State would deem to be excessive. Our amendment would offer a route to an authority to seek to have the substitute calculation increased by an amount to be determined by the Secretary of State. So we are not suggesting that this should be a reference to independent assessment.

We do not advance this proposition as a general route to overturn the results of the referendum-it would be necessary to develop specific criteria. However, there may be circumstances where a local authority should not be bound by the substitute calculation-for example, picking up a theme in relation to the previous amendment, events may arise between the commencement of a referendum and its conclusion which, if reflected in the information provided, might influence the result. It could be a contractual matter with adverse consequences; it could be announced closures of major commercial undertakings, particularly if they were localised NNDR, which could have a significant impact on the council's revenue base.

What would happen if there was a genuine challenge to the result of a referendum? If this challenge were sustained, what is the position? Would the local authority have to apply the substitute calculation, notwithstanding that an adverse result in the referendum was found to be unsound? How would that all work?

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Earl Attlee: My Lords, this amendment seeks to allow an authority another bite at the cherry if it loses a council tax referendum. It also is surprising to note, given the previous debate, that the amendment would give the Secretary of State a new power of direction. A council tax referendum will present a clear option to voters: to vote for either the authority's preferred increase or for an increase that does not breach the excessiveness principles. This amendment would allow the authority to apply to the Secretary of State to set an excessive increase in council tax when the local electorate have voted against this, thus allowing him to override the referendum result.

The noble Lord suggested that an extraordinary situation could arise locally. However, the electorate would be aware of that when they chose whether to vote for an excessive increase or not. The principle of this provision is that the local electorate should take the decision and not the Secretary of State. The Secretary of State has a power to direct that the referendum provisions are not to apply. However, he may use this power only where the authority is unable to discharge its functions in an effective manner or is unable to meet its financial obligations. The expectation is that this power would only be used in exceptional circumstances, such as where the High Court has appointed a receiver where an authority has failed to service its debt. It would not be appropriate for the Secretary of State to be able to direct that an authority may set an excessive increase in council tax and take the power of veto away from local electors as a matter of routine. I therefore urge the noble Lord to withdraw his amendment.

Baroness Scott of Needham Market: Will the noble Lord consider a scenario in which a local authority is required to increase substantially its council tax because it has to pay one of the EU fines being introduced by the Government in an earlier part of the Bill?

Earl Attlee: My Lords, I hope that the need to pay an EU fine will be an exceedingly unlikely event.

Lord McKenzie of Luton: My Lords, I am grateful to the noble Lord for his response but I do not think he really dealt with the question about an EU fine. It is provided for in this Bill and if the provision is removed we would all be delighted. A fine could be visited on a local authority at the last minute potentially after it has set its budget and its referendum detail is public.

I want to return to what happens if there is a challenge to the referendum-the Bill allows for that-and that challenge is sustained. If a local authority is deemed to have an excessive council tax increase-we must stop using that term otherwise it is going to be inculcated in our own speech as well as the text of the Bill-it has to hold a referendum. If that referendum does not support the council tax increase but is subsequently determined to be flawed, what are the consequences? It seems to me there are no provisions for the Secretary of State or anyone else to bring redress to the local authority which has been on the receiving end of malpractice in respect of the referendum.

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Earl Attlee: My Lords, I imagine that the local authority will have to adhere to its reduced budget but, if I have anything to add on that point, I will write to the noble Lord.

Lord McKenzie of Luton: I beg leave to withdraw.

Amendment 129LAA withdrawn.

Amendments 129LAB to 129LAC not moved.

Amendment 129LB

Moved by Earl Attlee

129LB: Schedule 5, page 271, line 33, leave out from "Acts" to end of line 37

Amendment 129LB agreed.

Amendment 129LBA not moved.

Amendments 129LC and 129LD had been withdrawn from the Marshalled List.

Amendments 129LE to 129LG not moved.

4.30 pm

Amendment 129M

Moved by Earl Attlee

129M: Schedule 5, page 280, line 29, at end insert-

"(ba) the amount of any levies and special levies-

(i) issued to it for the year, or

(ii) anticipated by it in pursuance of regulations under section 74 or 75 of the 1988 Act, or

(c) the amount of any expenditure it estimates it will incur in the year that will be qualifying expenditure in taking steps to give effect to the result of any qualifying local referendum held in an area consisting of, or including, the whole of its area."

Earl Attlee: My Lords, I shall speak also to government Amendments 129N to 129U. This group of amendments addresses two specific issues concerning the calculation of whether an authority's council tax is excessive. First, the amendments ensure that a referendum on a council tax rise is not triggered solely because of planned expenditure which has already been explicitly supported in a local referendum. The amendments apply where a qualifying local referendum is held across the whole of the billing authority area, the county council or the GLA. In such circumstances, an authority may be able to disregard qualifying expenditure that it estimates it will incur in taking steps to give effect to the result of that referendum when calculating whether an increase in council tax is excessive. This means an authority will not have to take this expenditure into account when determining whether it must hold a council tax referendum.

The conditions for qualifying expenditure and qualifying local referendums will be prescribed by the Secretary of State in regulations. The regulations will include matters such as the information that must be

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available in advance of the local referendum, the time period within which the local referendum must have been held and restrictions on the expenditure that may be disregarded. For the avoidance of doubt, we are making changes only to the calculation which determines whether a council tax is excessive. We are not changing the calculation of council tax itself.

Secondly, the amendments ensure that increasing levies, which have to be treated as part of the billing authorities and certain major precepting authorities' expenditure for council tax purposes but are outside their control, do not tip the balance in requiring an authority to hold a council tax referendum. These amounts will therefore also not be taken into account when an authority calculates whether its council tax is excessive. I beg to move.

Lord McKenzie of Luton: My Lords, I think that I am grateful to the noble Earl for his explanation but I would like to read the record. These seem not unreasonable amendments.

Amendment 129M agreed.

Amendments 129N to 129U

Moved by Earl Attlee

129N: Schedule 5, page 280, line 30, after "than" insert "a county council or"

129P: Schedule 5, page 280, line 34, at end insert-

"(2A) In the case of a major precepting authority that is a county council, any reference in this Chapter to the authority's relevant basic amount of council tax for a financial year is a reference to the amount that would be calculated by it in relation to the year under section 42B(1) above if section 42A above did not require or permit it to take into account-

(a) the amount of any levies-

(i) issued to it for the year, or

(ii) anticipated by it in pursuance of regulations under section 74 of the 1988 Act, or

(b) the amount of any expenditure it estimates it will incur in the year that will be qualifying expenditure in taking steps to give effect to the result of any qualifying local referendum held in an area consisting of the whole of its area."

129Q: Schedule 5, page 280, line 38, leave out from "amount" to "(referred" in line 39

129R: Schedule 5, page 280, line 41, after "year)" insert "that would be calculated by it under section 88(2) of the Greater London Authority Act 1999 if sections 85 and 86 of that Act did not require or permit it-

(i) to take into account the amount of any levies issued to a constituent body for the year,

(ii) to anticipate, in pursuance of regulations under section 74 of the 1988 Act, the issue of levies to a constituent body, or

(iii) to take into account the amount of any expenditure it estimates a constituent body will incur in the year that will be qualifying expenditure in taking steps to give effect to the result of any qualifying local referendum held in an area consisting of the whole of Greater London"

129S: Schedule 5, page 280, line 42, leave out from "amount" to "(referred" in line 43

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129T: Schedule 5, page 280, line 45, at end insert "that would be calculated by it under section 89(3) of the Greater London Authority Act 1999 if sections 85 and 86 of that Act did not require or permit it-

(i) to take into account the amount of any levies issued to a constituent body for the year,

(ii) to anticipate, in pursuance of regulations under section 74 of the 1988 Act, the issue of levies to a constituent body, or

(iii) to take into account the amount of any expenditure it estimates a constituent body will incur in the year that will be qualifying expenditure in taking steps to give effect to the result of any qualifying local referendum held in an area consisting of the whole of Greater London"

129U: Schedule 5, page 281, line 29, at end insert-

"(9) In this section-

"local referendum" has the meaning given by section 42(1) of the Localism Act 2011;

"qualifying expenditure" means expenditure in relation to which the prescribed conditions are met;

"qualifying local referendum" means a local referendum in relation to which the prescribed conditions are met."

Amendments 129N to 129U agreed.

Schedule 5, as amended, agreed.

Schedule 6 agreed.

Clauses 60 to 66 agreed.

Schedule 7 agreed.

Clause 67 agreed.

Clause 68 : Duty to consider expression of interest

Amendment 129V

Moved by Lord Greaves

129V: Clause 68, page 57, line 26, leave out from "with" to end of line 28 and insert "this Chapter"

Lord Greaves: My Lords, we now move on to Chapter 3 of Part 4 of the Bill, excitingly titled "Community Right To Challenge". I have seven more amendments in this group, along with my noble friend Lord Tope, and there are a couple from the Labour Party. These are the first of a series of amendments on this community right to challenge part of the Bill which I am moving on behalf of the Liberal Democrats on the basis of the criterion which the noble Baroness, Lady Andrews, put forward at Second Reading-workability. This is a completely new idea and a completely new set of provisions. It is extremely important that, when they leave this House, they leave in a workable condition. They may already be in a workable condition, or they may not. Our job is to make sure they are, whether or not they require changes.

The basic principle-in rather obscure language, I have to say-is that,

if submitted by a relevant body that is interested in,

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I have to say that back in Colne this is not the language people use and, no doubt, when the community right to challenge gets down to the grass roots, people will have a plainer English explanation of what it is all about. The relevant authority is, as set out, a principal local authority in England, or a body set out in Clause 68(2)(d), which reads,

Here we have more mysterious regulations specifying mysterious people. Before the Bill leaves this House we need to know who these people are, at the very least.

A "relevant body" is defined as,

in other words, two or more employees of the council whose services are being challenged-

It is not a surprise to find that there, since it is what we find everywhere in the Bill, but, again, we need to know what it means.

A "relevant service" which is being challenged on the relevant authority by the relevant body is,

and "other than" is, effectively, a service that the Secretary of State makes regulations saying shall not be subject to the challenge. Yet again, we have a power to the Secretary of State that we need to understand.

This, in many ways, is the nub of the problem. This is framework legislation, skeletal legislation, and there is a huge amount down to regulations. It might seem boring to keep saying this, but in every part of the Bill this seems to be the fundamental problem. What we have here is a new idea-what I would describe as a spiffing wheeze-that has been dreamt up by the Government. It has actually been dreamt up by the Conservative part of the Government and I do not complain about that; a coalition is a coalition of two parties and each party has a right to bring its own spiffing wheezes to the table. We have to find out how this is to be done as I do not think that we are being told that at the moment. I would like all these specific powers for the Secretary of State to be removed, or at least a lot of them.

Is there any hope that we are going to see draft copies of the regulations before the Bill leaves this House? We do not have them for Committee stage. Will we have them by Report? If we do not have them by then, I can see that there might be a certain amount of bother in the House.

That is all I that I really want to say about this. I have some more notes but they just repeat what I have said, so I will not say it again. The noble Baroness, Lady Farrington, is going to express shock and surprise that I have not said it three times.

Baroness Farrington of Ribbleton: Most certainly not. The noble Lord, Lord Greaves, ceased to surprise me about 20 years ago. My point is that it is very helpful for other parts of your Lordships' House to know when we are dealing with a government view or

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whether it is a jolly wheeze thought up by one party-on this occasion, according to the noble Lord, by the Conservative Party. I hope that members of the Conservative Party in your Lordships' House will tell us when a jolly wheeze has their support but not that of the Liberal Democrats. It is a new form of coalition Government, and I am enjoying it.

Lord Greaves: The noble Baroness is, unusually, wrong. It is not a new form of coalition Government; it is how most coalitions work. Different parties bring different proposals to the table, compromises and trade-offs are reached and, one hopes, the best ideas from each of the parties come through. All I am saying is that it is no secret that the community right to challenge, as it is now called, and indeed the community assets that we will move on to discuss after this, came from the Conservative Party. I am not criticising that party for that or saying that I do not support it.

When I opened my remarks I said clearly that what we have to do with a new, untried, untested idea is ensure that it is going to work. If it does not, one of two things will happen. A lot of difficulties will be caused on the ground because the idea has not been thought through properly or, alternatively, it will be realised that it has not been thought through properly before these myriad regulations are produced and it will never happen, the regulations will never happen and perhaps the chapter will never be commenced. What I and the Liberal Democrats are trying to do is to be satisfied that the proposals are workable before they leave us so that they are actually a great success when they go out there.

Lord Beecham: My Lords, the amendments in my name start with Amendment 130ZBA. In estate agents' parlance, the key to property is always described as "location, location, location". When it comes to this legislation and the work of the Civil Service in advising Ministers, the phrase seems to be "regulation, regulation, regulation", and it is to that that this amendment is addressed. The purpose of Amendment 130ZBA is to require the Secretary of State, before making regulations prescribing which services may be tendered and which not after an expression of interest, to consult with the Local Government Association or any public bodies to which the relevant section would apply. That echoes pleas that fell on unsurprisingly deaf ears last night in this Chamber on the police reform Bill where similar requirements were sought that the Home Secretary would require that police commissioners consulted with local authorities in respect of various matters. That did not appeal to Ministers but I rather hope that on this occasion Ministers will acknowledge that it would be sensible and right for the Secretary of State, before making regulations around this issue and indeed others in the Bill, to consult with a representative body for local government.

The second amendment would simply take out Clause 68(9). It is similarly designed to reduce the regulatory function to which other noble Lords-the noble Lords, Lord Jenkin and Lord Greaves-have referred. I hope the Government will acknowledge that no harm will be done to them, and indeed the general tenor of the legislation will be improved, if they were to accept these amendments.

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Baroness Hamwee: My Lords, I am sure that they use plain English in Colne. I imagine that it is very direct language, and I very much doubt that they use the term "spiffing wheeze" or "jolly wheeze". My noble friend may have forgotten that the department has actually issued a plain English guide to the Bill.

Lord Greaves: A lot of people in Colne used to read the Beano.

Baroness Hamwee: But do they read the plain English guide to the Localism Bill? That says, on the community right to challenge, that many local authorities,

I hope that my noble friend Lord Shutt of Greetland, who I think will respond to the debate, will be able to say a word about whether in the Government's mind social enterprises are something different from community groups. Many social enterprises are in fact businesses. That is not a criticism, but they are very different from community groups. The application of these provisions to social enterprises is interesting. The guide refers to them providing,

and delivering services "with"-that is, with local authorities-"and through them". I was interested in the "with", which, in the legislation, finds its manifestation in,

I do not know whether my noble friend is able at this stage-we may need to wait for the regulations, which I, like the noble Lord, Lord Greaves, hope to see before too long-to explain what that assistance might look like.

Lord Shutt of Greetland: My Lords, I thank those who have contributed to this series of amendments. We have a fresh start here, in that the community right to challenge will hand the initiative to voluntary and community bodies with good ideas about how services can be run better, and more cost-effectively, ensuring these ideas get a fair hearing, and will give them the time to organise themselves to bid to run these services.

In making my preparations for the day, I spotted the word "regulation" more than once. I thought the best thing to do is to take this head on. Much of the detail of how the community right to challenge will work is to be included in regulations. In response to amendments from noble Lords which touch on this detail, I will often have to explain that we are currently carefully considering issues that have been raised in our recent consultation. It is important that we get the details right. I would like to reassure noble Lords that, on various issues on which we have consulted, we propose to set out the way forward prior to the Report stage of the Bill. I am not promising, but if we can, we will see if we can get some draft regulations. That may not be possible in all cases but we will endeavour to do so.

I understand what my noble friend Lord Greaves said. I had not thought of "jolly wheeze" as featuring in his vocabulary. However, community organisations

5 July 2011 : Column 156

are part of the Liberal Democrats' vocabulary. Therefore, this measure may have been suggested by one part of the coalition but I readily embrace it as a means of giving communities an opportunity to come forward with better ways of delivering local services. However, we need to see what is in the regulations, on which consultation is still taking place.

Lord Beecham: Will the noble Lord confirm that the Government accept the recommendations of the Delegated Powers Committee regarding regulations under this part of the Bill being subject to the affirmative procedure?

Lord Shutt of Greetland: My Lords, the Government are considering those recommendations. I will not make any promises on that but I believe that they are very likely to take serious account of the committee's views. It would be very unusual if they did not.

Amendment 129V would remove the Secretary of State's powers to specify requirements for expressions of interest in regulations. We have taken this power to ensure that power really is pushed down into the hands of communities. The majority of relevant authorities will act within the spirit of the right but this power would prevent a recalcitrant authority requiring an unnecessarily burdensome amount of information that would stymie a relevant body wishing to use the right.

Amendment 130ZB would remove the Secretary of State's power to exempt services from challenge. Taken with Amendment 133ZK, which would remove the power for the Secretary of State to specify the grounds for rejecting an expression of interest, which we will consider later, this amendment would give relevant authorities discretion to reject a challenge to any of their services. As I have already explained, we have taken these powers to ensure that power really is pushed down into the hands of communities. The majority of relevant authorities will act within the spirit of the right, but this power would prevent a recalcitrant authority rejecting expressions of interest out of hand.

Amendments 130ZA, 131ZA, 131G, 131H, 131E, 131F and 131DA would remove the Secretary of State's powers to make changes to the right in regulations. Amendments 130ZA and 131ZA would remove the power to add relevant authorities and bodies. Amendments 131E and 131F concern the power to amend the definition of a relevant body and voluntary and community bodies. Amendments 131G and 131H concern the power to make any amendments to this chapter of the Bill that are necessary as a consequence of adding relevant bodies and authorities, including making changes to regulation-making powers. Amendment 131DA would remove Clause 68(9), which contains many of these powers.

We have taken these powers to enable us to keep pace with change and appetite for extension of the right. For example, the powers to add, amend and repeal relevant bodies and amend the definitions of voluntary and community bodies enable us to ensure that these definitions continue to reflect the types of organisation representing communities.

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Amendment 130ZBA would require the Secretary of State to consult representatives of relevant authorities and other public bodies affected by an extension of the right. We have recently concluded a consultation on our proposals to use the various powers with all those with an interest in the right and we will consider the need for consultation on future changes. Before extending the right, we would need to have detailed discussions with key interested parties, in particular to understand whether additional services might need to be excluded from the challenge.

I should respond to the noble Baroness, Lady Hamwee, who mentioned one type of social enterprise. I have certainly seen in my life numerous names representing organisations that are not a sole trader or public limited company but which have some social, community, environmental or other involvement. It seems that it does not stop. I think that the important thing is that other forms of enterprise might appear but that we are yet to hear from. The way that the script is written covers anything that might happen in the future. In those circumstances, I trust that the amendments will not be pressed.

Baroness Hamwee: Before my noble friend responds, I wonder if I may just say a word about that last point on social enterprises. A community body is defined in Clause 68(8) as a body carrying on activities,

No one would quarrel with that, but the distinction between a community and a voluntary body as defined, is a reference-or, in the case of a community body, lack of reference-to profit, to it not being carried on for profit, or to what happens to the profit. Reading the words,

I wondered whether that was to be read as including how profit is dealt with, whether it is to be ploughed back for the benefit of the community. Perhaps this is another matter for regulations. However, the distinction might be relevant in giving us a flavour of how the Government expect this new arrangement to work. Maybe it is a question of letting 1,000 flowers bloom, and so on.

Lord Shutt of Greetland: Letting many flowers bloom is the position. Clause 68(5) refers to a "voluntary or community body", and the noble Baroness has mentioned the differences there; to a body "established for charitable purposes"; to the parish council; and then to "two or more employees", and "more" could be considerably more. How that "more" then establishes itself is another way forward. There are clearly two features here: the elements of "voluntary", "community" or "charitable"; and the way in which employees choose to organise themselves. They are lumped together, but in many minds-in my mind at any rate-they are two distinct ways forward.

Lord Beecham: The noble Lord may recall that I have an amendment dealing with precisely that matter, which we will discuss later.

Lord Greaves: My noble friends Lady Hamwee and the Minister are straying on to matters covered by future amendments. I remind my noble friend that she

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might have suggested some of those amendments. As for the idea that this is all about letting 1,000 flowers bloom, I invite my noble friend the Minister to come on over the tops and have a look at Colne at the moment. It is in an absolutely beautiful condition thanks to Colne in Bloom. There is a massive display of flowers; far more than 1,000. On the other hand, letting 1,000 flowers bloom did not do much good for Mao Tse-Tung. It has different connotations.

The Minister referred to recent consultations. Can he give us an assurance that the Government will publish a pretty full account of the results of those consultations and the evidence that they got? Will it be possible to access them?

Lord Shutt of Greetland: I do not have it to hand, but I am pretty certain that they are to be published on 2 August. I think that that is the statutory date when the results of the consultation must be published so that people know what people have had to say, so that will be done.

Baroness Byford: Have those consultations finished, or are they ongoing?

Lord Shutt of Greetland: That formal consultation has now finished, but I am pretty certain that, bearing in mind that this is still going through your Lordships' House, other views will still be taken into account-but not in the formal consultation.

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Lord Greaves: Will what is published be a pretty good summary of what people said in the consultation, as well as of the Government's views? I think that the Minister is saying yes to that. That is good news, as was the fact that the Minister said that the department will endeavour to prepare draft regulations. People may have to work hard over the summer; some of us will be watching from the south of France.

The Minister referred to unnecessary, burdensome information required by a recalcitrant authority. That is the same way of thinking: that councils cannot be trusted to do things right, that some of them will be recalcitrant and that therefore everybody, even the great majority who will do it right anyway, must be lumbered with the alternative unnecessary, burdensome information, which is all the rules and regulations which come from central government to councils.

We are aware that the Department for Communities and Local Government is losing a lot of its staff. Who and where are the staff who will be employed to produce all that vast range of new rules and regulations-which, in our view, are unnecessary? We are not saying under any circumstances that there is no need for regulations, Secretary of State orders or secondary legislation. We are saying that the scale and amount of it is out of hand and will be more so as a result of the Bill.

The Minister rightly said that we are in favour of pushing power down into communities, and that expressions of interest should not be rejected out of hand. We all agree with that, but many later amendments

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in this part are about safeguards to ensure that the process will not be dangerous or cause difficulties and problems. We will come to those.

The Minister said that councils need to keep up to date and, for example, reflect the types of organisation representative of their communities. I am sure that that can be done without taking all those extra powers. The problem is that if the power for regulations is there, regulations will be produced, in some cases at great length. Far from keeping councils in order, in many cases they will simply prevent councils doing things in the best way for their local circumstances.

My final point, to which, again, we will come, is that the Minister said that some powers are to make it possible for the Secretary of State to exclude additional services from the challenge. The problem is that we do not know which services will be included and which will not. Again, we will come to amendments that will probe that.

It has been a useful introduction. I say thank you to noble Lords who have taken part and to the Minister for his attempt to be helpful. I beg leave to withdraw the amendment.

Amendment 129V withdrawn.

Amendment 129W

Moved by Lord Patel of Bradford

129W: Clause 68, page 57, line 28, at end insert-

"( ) the expression of interest includes evidence that a substantial number of the service users affected by the service support the expression of interest."

Lord Patel of Bradford: My Lords, as has already been explained, Clause 68 concerns the duty placed on relevant authorities to consider an expression of interest. It is a very important clause, as it provides the foundation for the community right to challenge process. The duty sets out the definitions of relevant authorities and bodies, definitions that we have already discussed and that we shall debate further in two or three later amendments. It also sets out the terms by which an authority must consider an expression of interest. That is the part that the amendment would strengthen.

Think for a moment about the meaning of this chapter, and indeed the thrust of the Bill: it is about the central role and importance of local communities in determining the ways in which services are provided. When we talk about communities, whether we use the terms, "community organisation", "body" or "group", we must be very careful about what we mean. There is always a risk that we assume that a particular community group, voluntary body or even a local authority understands all the communities that use services or represents them. Clearly, we cannot have a situation in which any individual or group can challenge the provision of a particular service and have a right for their expression of interest to be considered. We must also guard against the interest being too narrow. When considering services it is only right that the views of those who use the services should also be considered in any challenge. It is, after all, the service users who will be most affected by changes made as a result of the challenge.

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I have worked for many years with a great number of service users from the full range of health and social care environments, including those with mental health problems, alcohol and drug addictions, those involved in the criminal justice system, and with people of all ages, including the very young and older people. My experience consistently is that service users are not only very willing and keen but very capable of saying what they think about services and how they would like to see them improved. I would like to think that among the reasons a local authority would accept a community right to challenge and go through a procurement process for the service is because they want to see improvements. I cannot think of a better way of doing this than by ensuring that service users are involved in the process.

Of course, we have then to consider how many service users should be involved. What is the optimum number? What might the minimum number be? I have no easy answers, but I am sure that other noble Lords will want to express a view on this. It seems to me that the number should be substantial, given the profound impact that any change in provider could have on those using the service. This approach gives credence to service users as a body of people whose views must be considered. It also places a duty on those wishing to lay an expression of interest to make sure that they have adequately consulted the service users, or are at least in a position to do so. I would argue that there is also protection in taking that approach. By ensuring that the views of those most affected by any proposed change are taken into account, we can avoid the situation in which potential bodies seeking to challenge the current provision are not doing so solely in their own interests.

I hope that the Minister will be willing to consider this amendment and that he can give me some strong reassurance on what steps will be taken to ensure that the views of those using services are taken fully into account. I beg to move.

Lord True: My Lords, I have some sympathy, of course, for the direction that the noble Lord is coming from, but he himself touched on important questions of practicality. There are a lot of questions of practicality in these clauses. Many local authorities are in the process of seeking to set up charitable trusts, social enterprises, and other organisations such as those that were referred to in Clause 5. I am not quite sure how the views of the service users would be established by those wishing to make a challenge or put forward an expression of interest. If there were a small social enterprise to be formed from among a group of local authority workers out of their interest in sustaining high-quality services, it would be proposed that they have focus groups, referendums or other means to establish the reaction of service users. Although well intentioned, the amendment might actually put obstacles in the way of local authority workers establishing social enterprises or bodies.

I am a little nervous about the direction in which the amendment would take us. Clause 70 contains rules for local authorities and how they should consider expressions of interest; there are duties laid upon local authorities to take into account how any expression of

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interest would promote the well-being of people in the local authority area. So although I understand where the noble Lord is coming from, this may add an extra complication to an already complicated piece of legislation, and I could not support the amendment.

Lord Shutt of Greetland: My Lords, this is the other side of the coin in terms of whether one is being too prescriptive. This amendment would require a relevant body to demonstrate that a substantial number of service users support its proposal when submitting an expression of interest. This puts an unnecessary burden on relevant bodies, and the relevant authority if it must verify the information. Where more than one relevant body submits an expression of interest, service users could be approached several times, which may be frustrating and confusing. This will be magnified by the fact that local people will use many different services. We agree that expressions of interest should reflect the needs of service users. Relevant bodies will often have excellent insight into these needs. The Bill enables relevant authorities to specify periods for the submission of expressions of interest in particular services. They could, for example, set periods that would enable relevant bodies to take into account the results of any consultation with service users, undertaken as part of the commissioning cycle. We are considering how service-user needs might be reflected in the requirements for an expression of interest. I hope, under these circumstances, that the Minister will feel it appropriate not to press the amendment.

Lord Greaves: The Minister said that more than one relevant body might submit an expression of interest in a particular service at any given time. I am trying to think of an example. Two community groups might be interested in taking over a particular park. They might be at daggers drawn and they will not want to put in a joint bid. How does the authority decide between those two community groups? I am trying to avoid using words like "relevant bodies". Anybody out there listening to this discussion will not have the slightest clue what we mean by "relevant authorities", "relevant bodies" and "relevant services". But if two community groups want to run the same park-for example, because it is on the border of two quite different areas-how does the council decide which one to deal with?

Lord Shutt of Greetland: My Lords, the council concerned will have its own procedures for dealing with these things, but the chances are that one submission will be better than the other. If they are bang on equal, it might come down to price, but councils have their own decision-making ways. If the submissions are almost identical, councils will just have to look at them with great care. But it would be strange if they were identical. One could look at what lies behind the application, the strength of the body, whether it looks sustainable and whether the committee of the organisation looks as if it is there for the long haul. I am quite certain that these are all things the authority will be looking at.

Lord Beecham: Can the Minister indicate that on this topic, at least, there will not be regulations from the Government?

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Lord Shutt of Greetland: The noble Lord is asking, in effect, to put a regulation into the Bill. The government line is that we do not need it in the Bill and therefore this is regulation-free.

Lord Greaves: To go back to the question I asked, the answer my noble friend gave is probably OK if the two applications come in at the same time or within the same council cycle so that they can be discussed by whatever procedures a particular council has to deal with these matters. But does the Bill not say that once an application has been accepted and is being considered, no more applications for the same thing can be made and accepted? Therefore, if one came in today and the other came in a couple of months later, perhaps in response to the knowledge that the first one had gone in, it could not be accepted. How would that be dealt with?

5.15 pm

Lord Shutt of Greetland: I shall have to come back to the noble Lord on that. There two ways in which these expressions can be made: one is that once we have an Act of Parliament, people can, as it were, just pitch; and the other is by authorities saying, "We are looking at various things and this is the starting date and this is the finishing date, when we look forward to people making expressions of interest". If it were the latter, it would be quite clear when expressions of interest could be made. If people were just making a pitch, an authority might look at that and be surprised that something else turned up later.

Lord Patel of Bradford: The Minister said that the best that he could offer was to put this into regulations. That is obviously welcome. However, I am disappointed. The noble Lord clarified the problem of practicality for me. I have worked in health and social care for about 20 years and every service that is delivered will never say that it will never engage with service users. Everyone is very happy to say, "Yes, we will engage with service users", but they do not do it, simply because they think that practically they cannot manage it, that they will not get any benefit from it, and that they will talk to too many service users and confuse them. Using the words of the noble Lord, Lord Greaves, this is utter nonsense.

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