Information for Purposes of Block Grant

Orders of the Day — New Clause E – in the House of Commons at 5:45 pm on 30th June 1982.

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Lords amendment: No. 13, insert the following new clause—

"E. — (1) The Secretary of State shall have power to require any information submitted to him by a local authority under section 65(1) of the Local Government, Planning and Land Act 1980 (information for purposes of block grant) to be certified under arrangements made by the Audit Commission established under Part III of this Act.

(2) The said section 65(1) shall have effect with the substitution for the words "the total expenditure to be incurred" of the words "the expenditure incurred or to be incurred" and as if section 4 above were included in the provisions there mentioned.

(3) Subsection (2) above has effect in relation to any year beginning on or after 1st April 1981."

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

I beg to move, That this House doth agree with the Lords in the said amendment.

Photo of Mr Ernest Armstrong Mr Ernest Armstrong , North West Durham

With this we may take Lords amendment No. 32.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

Subsection (1) of the new clause is designed to allow the present arrangements for the certification of block grant claims to continue under the audit commission. In the past, as the House will know, administrative arrangements have been made for the district auditor to certify rate support grant claims. This has provided the necessary independent check on the figures and has ensured consistency between authorities in the calculation of grants. I think that we are all agreed that consistency is of great value in this context.

The same can be achieved in future by providing for the audit commission to make arrangements for the certification of claims. We actually envisaged the certification being done by whoever the commission has appointed to audit the local authority's main accounts. That seems sensible, and the House would certainly agree that the Secretary of State should require a formal certificate for a claim for such significant amounts of central Government grant.

That takes care of subsection (1) of the new clause. Subsections (2) and (3) correct a deficiency in drafting of section 65(1) of the Local Government, Planning and Land Act 1980 which was taken directly from regulations made under the 1974 Act, and which was not wholly appropriate to block grant.

The opportunity has also been taken to extend the scope of section 65(1) to include the information required for the purposes of clause 4, which, if the Bill is passed, will be as much a part of the grant calculation as the sections of the 1980 Act referred to in section 65(1). In short, the amendment dots the "i's" and crosses the "t's" of a procedure that has already been accepted in substance. Therefore, I ask the House to agree to it.

Amendment No. 32 is consequential on amendments Nos. 13 and 14, which I hope that we shall discuss in a few moments.

Photo of Mr Gordon Oakes Mr Gordon Oakes , Widnes

I am grateful to the Under-Secretary of State for Wales for his short explanation, but we ought to consider the importance of the amendment first in relation to amendment No. 32. The Under-Secretary of State said that the amendment is consequential. It may be consequential, but it severely alters the long title of the Bill in an important way. I stress that, as did my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) earlier, when he was talking about the money resolution, because of the power of the House, and hon. Members who make up a Committee examining a Bill.

Were an amendment of this nature to be submitted by a member of the Committee, the Chairman, who would come under your authority, Mr. Deputy Speaker, and the Clerks advising him, would advise that that amendment was out of order. The amendment would not be selected, so it could not be considered.

In certain circumstances, and with difficulty, the Government can introduce an amendment to alter the long title of the Bill, but it is done with great forethought. If one is alerted by an amendment to the long title of the Bill a row takes place about why it should be done and why the Government had not had the foresight to present the Bill properly in the first place with the proper title.

However, in the other place, the Government seem to have complete immunity to introduce almost anything into a Bill and, in a cavalier fashion, amend the long title of a Bill subsequently. The amendment is drastic. According to the original long title, the intention of the Bill is to amend the provisions relating to adjustments of the distribution of block grant". That is one thing, but as amended that will read to amend the provisions relating to block grant. That is wide and sweeping. It is necessary for the Government to amend the long title to achieve their objective. The amendment goes futher than the Under-Secretary described.

Amendment No. 13 states that the provision shall have effect in relation to any year beginning on or after 1st April 1981. That gives powers to the audit commission, which is not yet in existence, to make arrangements for the presentation of information to the Government in respect of last year's block grant. Why is that necessary? An error or lack of foresight cannot be the answer because of the words in new clause E(2). The Bill uses the words the total expenditure to be incurred". That is understandable because the information relates to that year and the block grant can be determined for that year. The amendment substitutes the words the expenditure incurred or to be incurred". That takes into account what happened in 1981 before the audit commission operated.

The Under-Secretary said that the information was supplied by the district auditor. That may be true, but the suspicion is that local authorities do not submit the correct information to the Minister. I hope that the Minister will deny that vociferously, but there is scintilla of a suspicion.

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The audit commission is a contentious body. Even though it has been watered down from its original concept, local authorities are suspicious that the commission could turn out to be "Her Majesty's Inspectors' Department for the Scourging of Local Authorities". Both Labour and Conservative authorities fear that. Why does the audit commission have to interfere with information supplied to the Department of the Environment in relation to last year's block grant? Why does the whole of section 65 of the old Act have to be amended to take care of that? Why is it necessary for the long title of the Bill to be amended in an underhand fashion in another place?

Photo of Mr John McWilliam Mr John McWilliam , Blaydon

My right hon. Friend the Member for Widnes (Mr. Oakes) caught me out when he triggered my mind to an aspect that the Under-Secretary of State for Wales did not mention. We shall not vote against Lords amendment No. 13, but if the Government were serious in their intention to reduce public expenditure they would not press the amendment. I do not believe that Ministers have understood the financial consequences of the amendment. We are talking not about the local government audit service, but expensive private auditors, whose time costs a great deal.

Photo of Mr Chris Price Mr Chris Price , Lewisham West

They are probably members of the Tory Party.

Photo of Mr John McWilliam Mr John McWilliam , Blaydon

They probably are members of the Tory Party, and perhaps not too worried about expenditure. A total audit and valuation has to be made for an effective certification of claims for block grant. Some auditors work on a £50 per day basis, at least, so it will cost a great deal of money.

I invite the Minister to explain where the money will come from. Will it be reckonable for rate support grant purposes so that only half comes from the ratepayers, or will it all come from the ratepayers? Let us be clear. We are talking of unnecessary expenditure, which the Government intend to ram down the throats of hard-pressed ratepayers. I hope that the Minister will reconsider the amendment.

I accept that the wording in the 1980 Act is deficient, but I do not accept that the Minister has any right to introduce the provision before 1 April 1983. We are now well into the financial year beginning 1 April 1982. I dislike retrospective legislation, whether it is to clear up yet another blunder by the Government or whether it has more sinister purposes. I believe that the amendment is intended to clear up another blunder.

I urge the Minister to reconsider Lords amendment No. 13. It will cost a lot of money. It will lead to claims taking longer. Perhaps that is why he agrees with the amendment. Perhaps he does not want block grant claims to be submitted on a timeless basis. Perhaps he wants another half-year system. If claims do not reach his Department in time, local authorities will not receive the money. How can the Government ensure that the proposal will not interfere with claims being submitted timelessly?

I have read Lords amendment No. 32 carefully and I approve of it. I give it my unqualified support. It states: leave out 'adjustments of the distribution of". That relates to block grant. Clause 4 says: In subsection (6) of section 59 of the Local Government, Planning and Land Act 1980 (purposes for which the amount of block grant payable to a local authority may be adjusted under that section) after paragraph (c) there shall be inserted" the guidance and so on. Neither on Second Reading nor in Committee have we made any secret of our abhorrence of everything that is in clause 4, which includes powers to adjust the distribution of block grant. I welcome amendment No. 32 wholeheartedly because if it is carried I shall raise a point of order asking that clause 4 be ruled out of order since its import will not be contained within the long title of the Bill. The amendment is entirely different from amendments No. 13 and 32 on which the Government had to resort to the subterfuge of introducing a second money resolution. The amendment changes the long title of the Bill in such a way as to eliminate the disgusting effects of clause 4 and the attempts to impose holdback.

Therefore, I hope that the Minister will accept that amendment No. 13 is unnecessary and will cost a lot of money and that amendment No. 32 is the best thing that could have happened. I hope that he rejects everything that he said about clause 4 and withdraws it before the Chair has to rule it out of order.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

These fairly simple amendments have aroused unexpected and surprising debate. I shall deal with the points as they were made. The right hon. Member for Widnes (Mr. Oakes) made a great deal of amendment No. 32—the amendment to the long title—which is designed to cover amendments Nos. 13 and 14.

The hon. Member for Blaydon (Mr. McWilliam put his finger on the reason why subsection (3) of the new clause goes back to 1 April 1981. The reason has nothing to do with the audit commission. There is a drafting error in the 1980 Act in section 65(1), which is about the provision of information and it is because of the drafting error that we must have this change.

Amendment No. 13 affects subsections (2) and (3) of the new clause, and the change that we are envisaging will enable not just total spending, but current expenditure or any other item of expenditure to be considered. It was suggested that we might be casting aspersions on the reliability of the information provided by the local authorities. I assure the right hon. Member for Widnes that there is no suggestion that authorities might deliberately mislead the Department. Audit certification is necessary to ensure that all claims are consistent. I have already emphasised the need for consistency and I stress too the need for continuity.

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The hon. Member for Blaydon referred to the cost of audits. My noble Friend Lord Bellwin said in another place that the total cost is less than £100,000. Considering the number of authorities involved, that is not too large a sum.

I do not agree that the amendment will place further significant demands on local authorities. There are wide powers in section 65(1) of the 1980 Act to enable my right hon. Friend the Secretary of State to obtain information for block grant purposes. The Lords amendment would oblige local authorities to furnish expenditure statistics so that holdback can be calculated accurately. It was always envisaged that the conclusive calculation of block grant would be based on outturn figures and these will also be used for holdback.

Since the clause will be as much a part of the grant calculation as are the sections of the 1980 Act referred to in section 65(1), it is only right that subsection (1) should be tidied up as the amendment proposes.

I am happy to reassure the hon. Member for Blaydon that the cost of certifying grant claims will be relevant expenditure for rate support grant purposes.

Photo of Mr John McWilliam Mr John McWilliam , Blaydon

I am grateful for that assurance, but will the Under-Secretary tell us a little more about Lord Bellwin's estimate of £100,000? There are more than 400 local authorities and £100,000 would not pay for much auditors' time. I estimate that it works out at about half a day's work by a partly qualified assistant for each local authority, which would be less than adequate in the light of the duty that the House is about to place on the audit commission.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

My noble Friend Lord Bellwin said that at present the audit of rate support grant claims costs less than £100,000 for the whole country and that he did not expect that the cost would be significantly, if at all, greater in future. I cannot add to that or provide details of the auditors' time involved.

Block grant certification payments will be made by local authorities. Clause 22 makes it clear that the audit commission must undertake grant certification work if required by a local authority and that it is to charge the authority concerned. That seems reasonable since certification is a service to the body that receives the grant.

Question put and agreed to.

Lords amendment No. 32 agreed to.