Recovery by Local Authorities of Establishment Charges

Local Government Bill – in the House of Commons at 12:00 am on 22nd January 1974.

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' (1) In any case where a local authority—

  1. (a) are empowered under any enactment to carry out any works or do any other thing on or in relation to any land or building, and
  2. (b) by virtue of that or any other enactment are entitled to recover from any person expenses incurred by them in exercising that power,
the local authority shall be entitled to recover, together with and in like manner as the expenses which are recoverable as mentioned in paragraph (b) above, such sum as appears to them to be reasonable in respect of their establishment charges.

No. 43, in Schedule 8, page 68, line 14, at end insert:

'26 Geo. 5 & 1 Edw. 8. c. 49.(The Public Health Act 1936.Section 292'.

No. 44, in page 68, line 23, at end insert:

'12,13 & 14 Geo. 6. c. 55.The Prevention of Damage by Pests Act 1949.In section 7(2) the words "two hundred and ninety-two" and the words "for the inclusion of sums in respect of establishment charges in expenses recoverable under that Act" '.

No. 45, in page 69, line 8, column 3, at end insert:

'In section 174(2)(6) the words from "which may include" to "and notices" '.

No. 47, in page 71, line 46, at end insert:

' 1969 c. 10.The Mines and Quarries (Tips) Act 1969.In section 23(1), paragraph (c) excep the final word "and" '.

No. 48, in page 72, line 42, column 3, at end insert:

'In section 91(4), paragraph (c) except the final word "and" '.

Photo of Mr Hugh Rossi Mr Hugh Rossi , Hornsey

The amendments are consequential to Schedule 8. They are necessary repeals or amendments to other statutes if new Clause 1 is to take effect. Local authorities already have the power under certain statutes—in particular the Public Health Act 1936, the House Purchase and Housing Act 1959, the Mines and Quarries (Tips) Act 1969 and the Prevention of Damage by Pests Act 1949—to include 5 per cent. on top of their charges for doing works under those Acts as establishment expenses.

The local authorities have long since felt that 5 per cent. was an unrealistic figure. They have been urging upon the Government that they be given wider discretion. (2) The provisions of subsection (1) above shall have effect in substitution for any provision contained in any enactment, including an enactment in a local Act, under which a local authority who have exercised any such power as is referred to in subsection (1)(a) above have power to recover any sum in respect of their establishment charges or any clement or elements of those charges.(3) In this section "local authority" has the same meaning as in section 34 of this Act '.—[Mr. Rossi.]

Brought up, and read the First time.

7.46 p.m.

Photo of Mr Hugh Rossi Mr Hugh Rossi , Hornsey

I beg to move, That the clause be read a Second time.

Photo of Mr Oscar Murton Mr Oscar Murton , Poole

With new Clause 1, it will be convenient to discuss the following Government amendments:

The purpose of the clause is to broaden the power enjoyed by local authorities to add establishment expenses to the costs incurred by them in carrying out works to property on behalf of or in default of the owner, and to recover such costs and expenses from the owner. This is another instance of the Government's wish to give local authorities all reasonable powers that they need without unnecessary fetters being placed upon them. Therefore, new Clause 1 refers to "reasonable" charges instead of a fixed percentage charge.

Photo of Mr Gordon Oakes Mr Gordon Oakes , Widnes

We welcome the clause and agree with its principle. What it is saying is that where a local authority has to expend local money mainly on default powers, because it has had to go in to do something which someone else ought to have done, it is obviously wrong that the ratepayers of that authority should have to pay the establishment charges. Perhaps the Minister can expound a little on some of the difficulties that may be created.

The great advantage of having a percentage system is that it is fixed and definite and the person receiving the bill knows whether he has been properly charged by the 5 per cent. rule. The difficulty here, when the clause refers merely to establishment charges, is to know how a local authority arrives at its establishment charges in respect of the many departments which may be involved in dealing with a particular default power.

This may well surprise the individual who has to pay the bill, because he will be amazed at the cost to the local authority of carrying on those default powers. It may be that he deserves to pay ; it is certainly wrong that the ratepayer should pay. I wonder what sort of system the Government have in mind, having rightly rejected the percentage system, for showing how the local authority will, to use a phrase that the Under-Secretary will understand, tax its costs in the event of a dispute involving many departments. I ask this question purely for information and am in no way seeking to criticise the intent of the clause.

Photo of Mr Hugh Rossi Mr Hugh Rossi , Hornsey

I understand that the term "establishment charges" or "overheads" is well understood in the building and construction industry, and we would expect local authorities to follow professional practice in these matters. Should difficulties arise, there will no doubt be consultations between my Department and the local authority associations to give guidance as necessary.

Question put and agreed to.

Clause read a Second time, and added to the Bill.