Payment of Revenue Grants

Orders of the Day — Transport Bill – in the House of Commons at 4:18 pm on 1st February 1983.

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'Without prejudice to any other powers under which an authority may make grants to an Executive, the power to make revenue grants in pursuance of this Act shall, if exercised for the purpose of implementing proposals approved under the preceding section above, be regarded for all purposes as being properly exercised.'.—[Mr. Booth.]

Brought up, and read the First Time.

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

With this, it will be convenient to take amendment No. 25, in clause 5, page 5, line 14 leave out subsection (1) and insert (1) An Authority may in any year increase the amount of any revenue grant determined under section 4(1) above at such time or times as they think fit having regard to their duties under this Act and the Act of 1968 or the Act of 1969'.

Photo of Mr Albert Booth Mr Albert Booth , Barrow-in-Furness

The purpose of the new clause is to create a clear legal right of passenger transport authorities to pay revenue grants to their passenger transport executives. This right will apply to any revenue grants made for the purpose of implementing proposals to carry out the transport plans which the passenger transport authorities have to approve under the provisions of clause 4.

The Bill was introduced in an atmosphere of considerable concern about the legal position of local authorities in the metropolitan areas and the GLC in respect of their payments under transport policy. The situation had developed largely from a decision in the other place which held, in Bromley v the GLC, that the GLC did not have the legal right to pursue a transport policy on which it had campaigned, on which it had been returned to office and which, at the time of the campaign, although it had been a matter of considerable controversy with regard to its political merit, had given rise to no suspicion that it was illegal. It was considered to be a proper matter for democratic decision-making.

In introducing the Bill, which is now at its Report stage the Secretary of State claimed that one of the merits of the measure was that it clarified the legal position. In Committee we showed beyond reasonable doubt that, far from clarifying the position, it created an area of grave doubt even where hitherto there had been some certainty. For example, by repealing section 15(3) of the Transport Act 1968 we shall remove a clear statement defining an area in which public transport authorities can issue instructions to their passenger transport executives on the policies to be carried out in the expenditure of money provided by the authority. The Bill is therefore bringing into question the democratic role of metropolitan authorities and of the GLC in the determination of transport policy. It is undermining the judgment of Mr. Justice Woolf, who clearly set out the basis on which metropolitan authorities work in relation to their legal powers.

4.30 pm

Clause 5 provides legal protection only up to a level of expenditure that is to be specified by the Secretary of State in guidance that he will issue to the passenger transport authority. He also issues advice and guidance to passenger transport executives. If the Bill intends to deal with the legality of expenditure by transport passenger authorities in pursuit of their policies, it must be clear about the area in which those authorities can properly make expenditure decisions.

Clause 5 thoroughly muddies the water and leaves the gravest possible area of doubt by saying that expenditure up to a particular level, which will be specified in guidance from the Secretary of State, represents a proper use of power and by failing to say that expenditure above that level is illegal. On the contrary, it leaves the whole issue to be determined by the courts. It makes nonsense of the English language if "guidance" is intended to mean an absolute determination of what constitutes legal expenditure. That is tantamount to saying that the Secretary of State will issue an edict on what public transport authorities can spend.

If all the areas of revenue grant expenditure that might fall outwith the figure specified in the Secretary of State's guidance are left to the decision of the court and in doubt, the Bill cannot, by any stretch of the imagination, be said to be clarifying the law. On the contrary, it is creating the gravest doubt.

Clause 5 evades the important issue of what metropolitan or GLC public transport expenditure is legal. It leaves it to the courts to determine whether revenue grants in excess of the public expenditure limit in the guidance are legal. As a result, a passenger transport authority can discharge an electoral mandate that involves revenue grant expenditure above the limit set subsequently by the Secretary of State only at the risk of subjecting its members to surcharge and bankruptcy. That is wrong, and that is why new clause 1 is needed.

If the Bill is placed on the statute book in its present form, it will add to the need for further legislation to clarify which transport policy decisions are to be made by local government and which by national Government. The Bill is unclear about what will be decided nationally and what will be decided locally, and it is also unclear about what the courts will decide when the first cases are brought on the meaning of clause 5(2). If the Bill is enacted, legislation will have to be introduced to clarify which areas are the responsibility of the metropolitan authorities or the GLC, when they should decide revenue expenditure and when the level should be determined by the Secretary of State for Transport.

Photo of Mr Peter Griffiths Mr Peter Griffiths , Portsmouth North

Notwithstanding the right hon. Gentleman's comments about an element of doubt remaining over spending above the protected expenditure level, does he agree that those transport authorities that choose not to exceed that level no longer face the uncertainty of the past?

Photo of Mr Albert Booth Mr Albert Booth , Barrow-in-Furness

Unfortunately, I cannot even agree to that proposition. Even in the area that deals with revenue grants that total less than the public expenditure level that is defined in the Secretary of State's guidance, rate payments could be involved that breach the legislative requirement of the Secretary of State for the Environment under the Local Government (Miscellaneous Provisions) Act 1982. The local authority might still be involved in a loss of revenue support grant and, given the logic of the decision by some of the Law Lords in Bromley v the GLC, it will be subject to actions for a breach of fiduciary duty. Unfortunately, there is not even any certainty that if expenditure is kept within the limits, local authorities will stay out of the courts.

In some ways, that intervention has underlined my contention that the law should be clear about which decisions can be taken by local government without legal challenge and which decisions are for the Government to take. Once we have that legislation on the statute book we can legislate to remove any possibility of surcharge on and disqualification of those who take decisions in local government properly, with the exception of acts of wilful financial negligence or corruption. The Bill does not give those in local authorities any scope to proceed on that clear understanding. If new clause 1 and amendment No. 25 were accepted, local authority transport policy could be significantly clarified.

I draw the attention of hon. Members to amendment No. 25. The Bill provides for public transport authorities to make only one determination each year, in accordance with the planning procedure in the Bill. That planning procedure is such that the determination will have to be made at the beginning of each financial year. Therefore, it can be made only in the light of the circumstances obtaining at the time, together with any reasonably foreseeable circumstances.

The pattern of our national economy is such that within any one financial year there could be various changes which would mean that the provision made by way of revenue grant was insufficient to carry out the policy. In recent years there have been increases in the price of fuel, instances of major industrial action and other events which could easily disrupt the most carefully thought out passenger transport authority's three-year plan. Therefore, the authority might well find it necessary in the course of the financial year to inject a further subsidy into the passenger transport executive undertaking to stabilise and protect the level of service planned.

Unless the Bill permits the passenger transport authority to increase its determination, the executive will be at the mercy of unforeseen events and, as a result, will be unable to carry out its services with the revenue grants provided. The Government and Conservative Members pride themselves on understanding, and being sympathetic towards, the problems of business men. Surely none of them would claim that any business would so restrict its own financial scope as to prevent its taking money from reserves or making some other provision to deal with an unforeseen call upon the financial provision that it has made for that year of operation.

Photo of Mr Reg Race Mr Reg Race , Haringey Wood Green

I do not know whether my right hon. Friend had the opportunity to see Sir Freddie Laker on television last night, when he was chastised by the Nationwide team for his activities during his previous incarnation with Laker Airways. Sir Freddie said that avoidance of amounts due to creditors was simply part of free enterprise. My right hon. Friend's comments about the role of business men are apposite because, if they run into difficulties with creditors and overdraw their facilities, they do not pay their creditors, whereas public transport undertakings are now being told that they must eliminate all deficits within a specified period.

Photo of Mr Albert Booth Mr Albert Booth , Barrow-in-Furness

I do not have the advantage of having seen the programme to which my hon. Friend refers, but the case is of a man who, in his business arrangement with Laker Airways, guarded himself against many creditors' claims. I hope that no hon. Member will advocate that such arrangements should apply to public life. They should certainly not apply to financial agreements between passenger transport authorities and passenger transport executives.

If an executive were protected in such a way that creditors were unable to secure repayment, Conservative Members would consider that improper. All that we are asking for in the amendment is that if circumstances arise which, in the best judgment of the PTA—on having been called upon even by a PTE—requires it to make an adjustment to the grant for the year, that the PTA should be able to do so.

It is not only unreasonable, but uneconomic, to argue in the way that the Secretary of State did in Committee and say that if the problem arose all that would be necessary would be for borrowing to take place. If the PTE—or, for that matter, the PTA—found itself in that circumstance and said that it wished to borrow to cover itself against unforeseen circumstances, it would be doing so at a time of national economic difficulty, when interest rates were rising. In any case, the borrowing would only add to the financial burden of the authority in having to clear the debt.

The amendment accepts that a PTA or the GLC must operate within the conditions imposed by the Transport Act 1968 and the Transport (London) Act 1969 and that if in the course of the year it runs up against an unforeseen call for finances to carry out its transport policies it can develop a further grant arrangement.

There is no suggestion in amendment No. 25 that, in considering any further grant made during the year, all of those considerations that were proper at the time of the original determination should be set aside. Far from doing that, the amendment makes it clear that any further grant is subject to those broad conditions. However, given that qualification, if we are to try to draw some sensible transport planning out of the Bill's provisions, it is necessary that it should allow for such a contingency. Those are the aims of the new clause and the amendment.

Photo of Mr Harry Cowans Mr Harry Cowans , Newcastle upon Tyne Central

The Government claim to have business acumen. Is it not nonsense to force a local authority to borrow regardless of the market and regardless of whether it has funds which it would be more beneficial to transfer? All that the Secretary of State has said is that the authorities should borrow. The financial flexibility under the Bill, without the new clause, is restrictive. It is nonsense for the Government to claim that they are looking after the ratepayers when they force a local authority to borrow, even if such borrowing is not necessary because the local authority already has the funds available.

Photo of Mr Albert Booth Mr Albert Booth , Barrow-in-Furness

I agree wih my hon. Friend. It makes nonsense to force the authorities to borrow in those circumstances and it creates a great inconsistency in the way in which deficits must be dealt with under the financial duties of the PTE under clause 2. The borrowing will cause a deficit to arise, which presumably will fall to be considered under the deficit procedures at the end of the financial year, without any of the normal financial safeguards or financial alternatives for dealing with the problem being available to the authority at the time when the problem first arose.

I hope that both the new clause and the amendment will commend themselves to the House. We look forward with interest to hearing what Conservative Members consider to be the merits of leaving the Bill in its present form. If they cannot put up any arguments to suggest that the Bill would be better without the new clause, we look forward to their support in the Lobby.

Photo of Mr David Howell Mr David Howell , Guildford 4:45 pm, 1st February 1983

It may be of help to the House if I respond to the opening remarks of the right hon. Member for Barrow-in-Furness (Mr. Booth). He touched upon some of the fundamental purposes and aspects of the legislation. I agreed with some of his preliminary remarks. He began by saying that the Bill was introduced in an atmosphere of considerable anxiety about the legal rights to subsidise the metropolitan counties and the GLC. That is correct. There has been much anxiety about the legal ambiguities and the legislative position governing the payment of subsidy for public transport operations.

I take it from what the right hon. Gentleman said that we are agreed that, although it has been challenged by others, there was and is a need for legislation to secure a stable and clear basis for the payment of subsidy for public transport operations. That is recognised, and that is why this Government have introduced the Bill.

The right hon. Gentleman spoke about the judgment by Mr. Justice Woolf in the Merseyside case. The right hon. Gentleman is right in saying that judgment was given, although the case did not go to appeal. However, in the West Midlands authority case last year, when the metropolitan authority was legally challenged, it felt constrained to increase its fares. There has been other talk of legal ambiguity. There are still doubts about the legal position despite the recent case involving the GLC. The judgment was one of a long series of legal happenings on this issue.

More than that, the bids for support for local public transport operations that the metropolitan authorities and the GLC are contemplating for next year, are such a quantum leap in expenditure that it is highly likely, even on the most prudent assessment, that new legal challenges and difficulties will arise. We are talking about a possible increase of between 75 and 100 per cent. between 1982–83 and 1983–84.

Against that background, and even if we put aside the right hon. Gentleman's point about the considerable anxiety about the legal position, it would be folly not to bring forward legislation now to create the stability and clarity that is needed.

There is an argument whether the proposed legislation establishes what the Opposition believe is needed.

Photo of Mr Kenneth Marks Mr Kenneth Marks , Manchester, Gorton

The Minister agreed with my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) that there was cause for concern about Greater London. The metropolitan counties have always agreed with that. He tried to extend that concern to apply to the metropolitan counties, but it does not apply to them. I am not sure that it applies even to Greater London since last week's judgment. The Minister did not give the real reason for the Bill—it is not the uncertainty about the legal position, but that he thought that the metropolitan counties would go too far in subsidising transport.

Photo of Mr David Howell Mr David Howell , Guildford

The right hon. Member for Barrow-in-Furness said "and the metropolitan counties". The hon. Gentleman can check Hansard tomorrow. The reason belongs in the past, the present and the future. It would be imprudent to ignore the probable developments that are already written in the figures before us. If there is a liklihood of further legal challenge, that is as serious a consideration as the fact that there have been legal ambiguities in the past.

Photo of Mr Albert Booth Mr Albert Booth , Barrow-in-Furness

The Minister has quoted me correctly by saying that the Bill was introduced at a time of concern about the legal rights of the metropolitan authorities, as well as those of the GLC. However, he is not entitled to deduce from that that I think that that concern can be met by the Bill. On Second Reading—I said that the Bill would not make a sensible contribution towards dealing with the concern of metropolitan authorities.

Photo of Mr David Howell Mr David Howell , Guildford

That is so. The right hon. Gentleman's amendment challenges the main purposes of the Bill. The Opposition and the Government disagree about the legislation that is needed. It has been the contention of Opposition Members, repeated by the right hon. Gentleman, and embodied in the new clause, that the Bill—which we believe to be necessary and desirable to create the clarity and stability that have been, still are and will be lacking—somehow undermines democracy and fails to provide the stability and clarity that is required.

The facts are quite different. The legislation will protect expenditure by metropolitan transport authorities up to a specified level. Within that level, there is extensive legal protection and legal certainty. The right hon. Gentleman cast doubt on the degree of legal certainty, even within the protected expenditure levels. Whatever the circumstances under rate support grant, clause 5(2) makes expenditure within the specified level a proper exercise of an authority's powers. It is, therefore, legally protected within the protected expenditure level. There is no doubt that that is a proper exercise of local authority power.

The Opposition's quarrel with the Government is that the Bill does not give unfettered power, as the new clause would. The clause would give unfettered power to local authorities so that expenditure at any level, rather than expenditure up to a specified level, for which provisional figures have been put forward would be legally protected. Obviously, they remain provisional until the Bill becomes law.

The quarrel is that above that protected expenditure level, expenditure by a local authority might still be exposed to ratepayer challenge, which the Opposition believe to be a terrible thing. Does the right hon. Gentleman want cash limits to be imposed by central Government? I have heard it suggested that that would be desirable. The Government do not believe that cash limits would be the right way to handle the matter. It would be a far greater intrusion into the control of local transport undertakings and activities than the Government or anyone else desire. The Government have not adopted cash limits as a course, and I do not think that the right hon. Gentleman really wants that course. What does he want? The answer is explained in the new clause. He wants unfettered rights for authorities to spend. He wants them to be free to decide how much ratepayers' money should be spent on transport subsidies. If he wants that, he must also believe—this is the heart of the matter, and I must throw doubt on his belief—that if there were unfettered spending all ratepayers providing the money for that spending would be protected by local democracy, which he claims is under attack.

Photo of Mr Robert Hughes Mr Robert Hughes , Aberdeen North

Does not the Minister think that it would be better for the elected members of local authorities to decide how much money should be spent, rather than unelected judges who, under the Bill, would decide how much should be spent? Is not the Minister guilty of using the courts as a political agent for his policy?

Photo of Mr David Howell Mr David Howell , Guildford

I must ask the hon. Gentleman to think about the matter again. He obviously believes that all ratepayers vote, but that is not the case. Less than half the rates are raised by those who vote in the local democratic processes. More than half of them, are raised from commerce and business, where there is no vote. The right hon. Member for Barrow-in-Furness is suggesting that not only should we abolish the rights of all ratepayers to challenge expenditure above the protected level, which the Government have provided for the sake of stability and clarity in transport matters, but that we should remove all rights for ratepayers—the majority of whom do not have a vote and are, therefore, not directly protected by the local democratic elections—to have recourse to the courts at any level of expenditure, which should be unfettered. The Government believe that it is wholly wrong to remove that protection. A far better balance will be secured by the protected expenditure level within which an authority can proceed, comforted by the fact that, under clause 5(2) it is regarded as a proper exercise of their powers.

Of course local authorities are free to go beyond the protected level of expenditure, but in doing so there is the possibility of a ratepayers' challenge. Opposition Members want that right to be removed, regardless of whether the ratepayers have the right to vote.

Photo of Mr Harry Cowans Mr Harry Cowans , Newcastle upon Tyne Central

The Minister has misread the new clause. It seeks only the power to implement the proposals that have already been agreed. He cited clause 5 as a protective clause, but it does not protect the present position. Under subsection (2), the exercise of power relates only to spending within the guidelines.

New clause 1 takes account of that, but allows for flexibility—if something happens to cause a deficit—for local authorities to make an additional revenue grant within the guidelines of the previous proposals, without having to resort to borrowing. That is exactly what the Opposition are seeking.

Photo of Mr David Howell Mr David Howell , Guildford

The hon. Gentleman is referring to matters that are more specifically addressed by amendment No. 25. The effect of the new clause would be to remove all fetters on the level of subsidy that a local authority could pay. The Government have made it absolutely clear—they are not alone in their view—that there should not be an unfettered power because there are large numbers of contributors through the rates who do not have the vote. The Select Committee also thought it wrong, saying in its fourth report: within the expenditure constraints which local authorities now face, we believe that the Government is right to seek some reduction from the levels of public transport revenue support which occurred last year". I believe that the hon. Gentleman is a member of the Select Committee, so he must believe that, as do the Government. That is reflected in our approach to the legislation.

I turn to the more specific point whether during the year there should be powers to increase the grant in the face of unforeseen circumstances. The essence of our approach and the strong belief of the Government is that sensible financial disciplines require a single determination of grant to be made. We believe that it is poor financial practice for there then to be loopholes and escape valves through which further grant can be paid in certain circumstances. It is much better that that matter should be corrected, if unforeseen circumstances arise, by borrowing in the current year and the deficit or borrowing taken account of in setting the level of grant and, of course, the protected expenditure level for the following year. We believe that if a proper plan is made for calling upon reserves, reserves are available, but that if no proper plans are made there should not be a haphazard calling on reserves. Sensible financial practice demands that a determination be made each year. If special circumstances arise they should be met by borrowing in that year with the problem put right in the following year. That is an orderly and businesslike way of proceeding.

Amendment No. 25 would, in our view, undermine that businesslike way of proceeding. I ask the right hon. Gentleman to withdraw that amendment as well.

5 pm

Photo of Mr Reg Race Mr Reg Race , Haringey Wood Green

I wish to refer the Secretary of State to several important considerations in new clause 1. The clause strikes at the heart of the Government's proposals. The Opposition are saying that the determination of transport policy should be in the hands of elected people and not in the hands of unelected and unaccountable people in the courts—the judges who are responsible to no one but themselves and perhaps, at times, to their own rather strange views.

Photo of Mr Reg Race Mr Reg Race , Haringey Wood Green

I shall gladly give way to my hon. Friend in a moment if he will allow me to develop my point. I think that he might agree with me once I have developed it.

Our proposition in new clause 1 is that we do not want local transport undertakings to face the threat of serious legal challenge if they spend money beyond the so-called protected expenditure levels. It is crucial that local transport undertakings should have that power. One of our major criticisms of the Secretary of State's position is that, by his actions in the Bill, he is encouraging ratepayers to take legal action against duly elected local transport authorities. Therefore we say that new clause 1 is crucial if local transport undertakings, elected by the people and accountable to them through the process of election, are to be able to carry through in a reasonable way the policies on which they were elected.

I should like to refer to the way in which the balance between Parliament and the courts should be struck. Obviously, there will be occasions on which judges and the courts will have to intervene to determine precisely where Parliament's intentions lay in particular legislation. Sometimes the merit of an Act of Parliament or its meaning in changed circumstances is not clear. The courts cannot make political decisions because they are not empowered to do so. We have a system not of divided political responsibility, as in the United States, but of interlocking responsibility, and the court's responsibility is to determine Parliament's intention. The court's duty is not to determine what the transport policy for a particular area should be—at least that is my view, although I am not sure that it is the Secretary of State's view.

Photo of Mr Robert Hughes Mr Robert Hughes , Aberdeen North

I am sorry to interrupt my hon. Friend. I think that, inadvertently, he is putting the point in the wrong way. It is not the court's responsibility to carry out the intentions of Parliament. If it were, we would not be grumbling. My complaint is that the judges look at the face of the Act no matter how ridiculous and contrary to Parliament's intentions their conclusion may be, which is why we had the ridiculous decision on the GLC.

Photo of Mr Reg Race Mr Reg Race , Haringey Wood Green

I hate to disagree with my hon. Friend, but I shall in a moment quote Lord Justice Kerr in the case of the London Transport Executive v. the GLC, the proceedings of which we have just received. It is an important point because it appears to me that the courts are interpreting their function in a way quite different from that in which most right hon. and hon. Members view their role. It is important to consider what the courts are up to.

Photo of Mr Reg Race Mr Reg Race , Haringey Wood Green

I shall allow my hon. Friend to intervene in a moment.

The courts are not qualified to make judgments about the type of transport policy that a local authority should introduce. They have no information, and they do not want information, about public transport and how it affects the unemployed, women or people who do not have access to private transport. Therefore, they cannot possibly make judgments about whether a particular transport policy is reasonable or justified.

After the Bill is enacted, the courts will be faced wth a ratepayer saying, "I do not think that the balance between the ratepayer and the user of public transport has been properly set by the elected local authority." The courts will then be roped into making a judgment about that balance. That is precisely what Lord Justice Kerr said on 27 January in his comments in the judgment of London Transport Executive v GLC. On page 10 of his remarks, referring to the proper exercise of powers contained in legislation, he said: the local authority may not strike an unfair balance between passengers and ratepayers. Subject to the true construction of the 1969 Act, as interpreted in the Bromley case and discussed hereafter, the place where this balance is to be struck is a matter for the discretion of the Council as the authority charged with the implementation of the Act. But if the balance is arbitrary or clearly unfair, then it will be invalid under the Wednesbury principle, and indeed ultra vires and it will then be the duty of the courts so to hold. So, even if the local transport undertaking is elected on a policy and even if it considers carefully the implementation of that policy, if someone says, "I am terribly sorry but I do not think that the balance between the ratepayer and the user of public transport is right," the courts can rule that that local authority's decision, whatever it is, is ultra vires—outside the powers of legislation passed by Parliament.

Photo of Mr Peter Griffiths Mr Peter Griffiths , Portsmouth North

Does the hon. Gentleman agree that the courts, in addition to deciding matters of legislation, are also concerned with natural justice? Is that not a long-term principle of our law?

Photo of Mr Reg Race Mr Reg Race , Haringey Wood Green

The hon. Gentleman may well be right, but that question has not been raised in any of the judgments that I have seen in relation to public transport undertakings. It does not seem to be one that has exercised the courts. The courts have been saying that, no matter what the policy on which a local authority was elected, no matter what consideration was given to that policy by the elected councillors, and no matter how careful they had been, should someone allege that they cannot make that judgment because it strikes an unfair balance between the ratepayer and the user of public transport, and should that allegation be believed by the court, the court will say that the decision was ultra vires.

I submit that the courts will therefore be making a political judgment about what is the proper balance between ratepayers and users of public transport. They are not qualified to make that judgment. No information is given to the courts about the way in which public transport is used by the unemployed, by women, by school leavers or by people without access to private transport. The argument that unelected and unaccountable judges can make this kind of decision seems absurd.

Photo of Mr David Howell Mr David Howell , Guildford

Does the hon. Gentleman's view extend to the point that courts should not judge upon whether an authority has transgressed or exceeded its statutory powers?

Photo of Mr Reg Race Mr Reg Race , Haringey Wood Green

I am saying that the courts have decided, on the principles set by the House of Lords in the Wednesbury case, that there is a balance to be struck between ratepayers and users of public transport. That seems to be a principle that will inform all their actions over the next few months. It is important that people who elect local councillors on a particular policy should know that this is what will happen unless the Bill is changed. We are saying in the new clause that we do not want the courts making this kind of judgment. They are not qualified to make such judgments.

We must protect the rights not only of local authority councillors but of the electorate. One has only to recollect how the whole concept of fiduciary duty and the duty to ratepayers was erected in the first place to understand what the issue is all about. The concept sprang out of the dispute in Poplar in the 1920s when the Labour-controlled borough council decided to pay its work force equal pay. This was challenged by ratepayers as being an unfair use of public funds. The courts invented the concept of fiduciary duty to ensure that this principle could not be established by a Labour-controlled local authority.

Under the Bill the courts will determine, in the political and economic climate of the time, the extent to which a local authority can carry out its manifesto. I suspect that there will be a great difference in the view of the courts about what is appropriate and right as between a time of economic growth when central Government are willing to pump money into local authorities, and during a period of more restrictive and monetarist approach by central Government. It will not be an objective view of reality. It will be not only the individual views of judges but a reflection of the prevailing political climate in national political life. I believe that new clause is crucial and that the House should pass it.

The Secretary of State, in resisting the new clause, is trying to invent further powers for unelected people and is trying to increase his powers to restrict the rights of local authority councillors. I hope that those Conservative Members who have expressed some interest in the rights of elected local authority councillors will vote for it.

Photo of Mr Peter Griffiths Mr Peter Griffiths , Portsmouth North 5:15 pm, 1st February 1983

I trust that my right hon. Friend the Secretary of State will not weaken in his determination to resist the new clause and amendment No. 25. Throughout the discussions in Committee, and again this afternoon, attention has been drawn to the importance of maintaining a balance between the rights and duties of the transport authority, elected by the people locally, which enjoys the franchise but which produces less than half of the total funds that may be available to be spent within the local area and also less than half of the funds that are raised within the local authority area.

There is also the need for some other authority to represent the interests of those who do not have the local franchise but who are nevertheless called upon to pay a large proportion of the funds that are expended by the authority in any of its duties—in this case as a transport authority in a metropolitan county. Under our constitutional arrangements, that duty must fall to the Government. It is not a matter of the political complexion of the Government. It is the role of the Government to represent the interests of the people at large. Overall, there is the concept that if a transport authority is acting in any way that appears to a certain group of ratepayers, local business men or those who are contributing to the funds locally to be exceeding the powers granted by Parliament, such action is open to challenge in the courts.

I take strong exception to some of the comments about the role of the courts in reaching decisions in areas that are not to be properly appropriated either by the Secretary of State or by the local transport authority. The courts do not make, and never have made, decisions on the merits of political policy. It would be wrong and intolerable if they were to do so. What they have to decide is whether a policy, no matter what its merits, is sanctioned by the law as it stands at a particular time. If it does not, they will have to declare that it is outside the powers of the authority until such time as the law is changed. It is that balance involving the courts, the Secretary of State and the local authority that is the nub of the argument.

I see amendment No. 25 as a more extreme form of the same concept embodied in the new clause. One can therefore deal with them together.

Photo of Miss Joan Maynard Miss Joan Maynard , Sheffield, Brightside

The hon. Gentleman reiterates the point about the unfettered right of the local authority to levy subsidy from the rates to transport. That is not correct. The local councillors are subject to election. The hon. Gentleman argues that some of the people who have to pay these rates are not represented. He refers, in some cases, to the owners of industries. I should point out to the hon. Gentleman that the managers and workers, in general, in those industries, live within the ratepaying area. They are just as concerned about the validity of the industry and its ability to continue in business as are the owners. Their jobs are at stake. Despite the fact that they continue to vote for the transport policies of local authorities such as South Yorkshire, the Government, through the Secretary of State, are saying that if the electors of South Yorkshire persist in a policy which the Government do not like, they will lay down guidelines to bring in the courts.

The hon. Gentleman says that the courts are not being asked to make political judgments, but, as my hon. Friend the Member for Wood Green (Mr. Race) has just said, that is exactly what they are doing. They say that they are taking into consideration the balance between the ratepayer and the transport user, which must be correct. It must be a political judgment.

Photo of Mr Peter Griffiths Mr Peter Griffiths , Portsmouth North

I am grateful to the hon. Lady for the reiteration of her views on this matter. I agree that the transport authority—the metropolitan county council—has a perfect right to put forward a policy on behalf of those who elected it. I suggest that there is a need to protect the rights and interests of those who will provide the majority of the cash but who do not have the right to make that decision. It is something that needs to be placed, on occasions, outside the local authority's control.

The word "unfettered" has been used. I am opposed to the unfettered use by local authorities of what they believe to be a political mandate if that mandate works against the principle of natural justice, as I pointed out during my intervention in the speech of the hon. Member for Wood Green (Mr. Race). Strong political views can be held and translated into political policies that are against the principles of natural justice. That needs safeguarding.

I do not want to be diverted from the new clause and the amendment, because I should like to draw attention to the dangerous possibilities included in amendment No. 25. It does not suggest that there might be special circumstances in which it will be necessary to increase the amount of revenue grant in a year. The amendment provides: an Authority may in any year increase the amount of any revenue grant determined under section 4(1) above at such time or times as they think fit having regard to their duties". If that amendment were passed, the authority would have the right to determine the amount of grant payable.

It would be possible for local authorities virtually to disregard the level established by the protected expenditure level at the beginning of the year, because they would be able to say, "We have run out of money. There have been particular problems, so we need to increase the amount of grant." They would be able to say that, not once because there was a bad winter or something similar, but because there were political reasons for increasing the amount of grant made available.

That is what the Bill seeks to avoid, and that is why the new clause and the amendment are directly opposed to the principle of the Bill, which is that there should be a balance and protection for local authorities. If the clause and the amendment are passed we shall lose the balance and the real purpose and thrust of the Bill, and I fear that that is the true purpose of the Opposition's proposals.

Photo of Mr Kenneth Marks Mr Kenneth Marks , Manchester, Gorton

To suggest that authorities will be unfettered if the new clause is passed is absolute nonsense, and I am sure that the hon. Member for Portsmouth, North (Mr. Griffiths) knows it. Why does a party which has been saying for the past nine years that it will abolish rates dislike ratepayers so much that it opposes our views?

On Friday I received the first 10,000 signatures on a petition from the Greater Manchester area where people are anxious that the Bill could result in poorer public transport for Greater Manchester through higher fares, cuts in services and the threat to children's cheaper fares. They ask Parliament to reject the Bill so that decisions on fare levels can continue to be made locally without directions or guidance from Whitehall. In a letter commenting upon what had happened in Greater Manchester the Minister said that he deplored the spending of ratepayers' money on paid advertising. I look forward to seeing his signature on some of the letters that will go to the Secretary of State for Defence.

We were told on Second Reading and in Committee that the purpose of the Bill was clarification. We have had 100 hours or more of debate in Committee and the water has been muddied considerably by the Bill. It virtually gives the Secretary of State the right to dictate to metropolitan county councils and the Greater London council how they should run their passenger transport systems and by how much they should help those systems from their own finances. It is the Secretary of State's intention to place more fetters on local authorities.

In Committee the Under-Secretary of State said that the powers of local authorities have not been reduced. Of course they have, and the Secretary of State confirmed today that that is the purpose of the legislation. Whit will happen? The Secretary of State will give advice to passenger transport executives. They will prepare a plan. The Secretary of State will then give some more advice to them and to the county council. The county council will then make a determination and that will go to the Secretary of State. He will advise them to think again, and at the same time he will make a grant. It is his business to make a grant, as he has in the past.

There will be a threat to local councillors that there will be legal action, and the Conservative party will inspire that legal action, as it has in the past. It inspired legal action against Labour Governments and education authorities when the Prime Minister was the spokesman on education.

Photo of Mr Stan Cohen Mr Stan Cohen , Leeds South East

The Secretary of State referred to restraint on local authorities. Does my hon. Friend agree that we should insist on some clarification of that point? Who imposes the restraint and why?

Photo of Mr Kenneth Marks Mr Kenneth Marks , Manchester, Gorton

I hope that we shall receive that clarification. There is a great deal of restraint placed on local authorities. There is restraint by the electors and domestic ratepayers who do not like paying rates any more than business ratepayers. Local authorities have been restrained by the courts already and a number of other restraints exist.

Whatever the views of the hon. Member for Portsmouth, North, our proposal gives local authorities the last word. That was the expression used by the Under-Secretary of State in Committee. Having listened to what the Secretary of State has said, I hope that the new clause and the amendment will be supported by both sides of the House.

Photo of Mr Peter Fry Mr Peter Fry , Wellingborough

Judging by the speech of the hon. Member for Wood Green (Mr. Race) and the intervention of the hon. Member for Aberdeen, North (Mr. Hughes), the Opposition seem to feel that once elected a local council can do what it likes. That is not the kind of democracy that I understand or the way in which Government in this country should work. Surely there must be some constraints. A Government came to power 50 years ago in another country through its proper electoral system. There were not enough checks and balances in that country's constitution, Nazi Germany followed and Hitler came to power with all that happened. As my hon. Friend the Member for Portsmouth, North (Mr. Griffiths) has pointed out, a proper constitutional system should contain checks and balances.

Some local authorities have a degree of unbridled arrogance once they are elected. It applies to both sides of the political divide. The longer they stay in power, the longer they think that they always know best, although they are generally elected by a minority of the electorate.

5.30 pm

The basic point is whether this new clause is intended to destroy the purpose of the Bill. Presumably, if a local authority calmly consideres the advice that my right hon. Friend may tender and says, "We do not care what you say because we are going to do what we wanted to do in the first place," the whole exercise is pointless. I appreciate the honest desire of many Opposition Members to preserve for local government much discretion and decision-making in public transport matters. I accept that local people must and should have a great say in the public transport policy in their area. I take that for granted.

However, the trouble is that if one always leaves it to the local passengers, they would never want fare increases. They would always want the fares to remain at rock bottom. In major cities, where for many years there has been tremendous resistance to fare increases, there is usually a great shortage of capital investment. That has been true of Greater London for many years, and it is even more true of New York where there is such great resistance to fare increases that, to our eyes, its public transport system is antiquated. The hon. Member for Newcastle upon Tyne, Central (Mr. Cowans) knows that perfectly well. One cannot leave the decisions to those who wish to pay low fares and who are not worried about the overall considerations of public transport and the enormous amounts of money that are required today to keep it going.

I have some sympathy with the new clause because I believe that the Bill has introduced another element of uncertainty, although it tries to remove uncertainty. The reason for that is shown clearly in clause 4, which precedes clause 5 where the new clause is to be inserted. Clause 4 provides: The matters by reference to which the guidance of the Secretary of State … may be given shall include—(a) what appears to him to be the appropriate national level of expenditure by Authorities on revenue grants. That may sound fine, but what does it mean? Does it mean, for example, that there should be a notional national level? Is it the same as for British Rail, where 40 per cent. of fares are subsidised by the public service obligation? We do not know. Will there be differences between one metropolitan county and another, for example, between the GLC and south Yorkshire?

I shall, of course, support my right hon. Friend in the Lobby, but he must spell out much more clearly his public transport policy. He must tell not only the metropolitan counties but the shire counties what support he believes is reasonable from public funds to run public transport.

My right hon. Friend knows full well that on Second Reading I took some time to put forward the view, which I share with several others who have an interest in public transport, that there is a need for a fixed percentage from the fare box. If my right hon. Friend believes—I presume that he does because it is included in the Bill—that there is an appropriate national level of expenditure by authorities on revenue grants, will he consider being more explicit or at least give a broad guideline to every local authority and public transport undertaking in Britain?

There is gross unfairness between one county and another. We are all familiar with the tremendous problems of cheap television licences, and many of us believe that the cheap licence for those who live in warden-controlled accommodation should not have been granted because other old age pensioners rightly object and ask why they should not have it as well. The same is true of retirement pensioner concessionary fares. Every hon. Member must at some time receive letters from constituents asking why they cannot have a scheme similar to that operated by the district council or the metropolitan county next door. The position is most unsatisfactory.

That is not a public transport issue, but it relates to public expenditure and to how far one considers public transport as a necessary social service. As there has been a lack of an overall national transport policy and the means to support it, we have reached the position today where some local authorities, rightly or wrongly, have decided to invest far more heavily in subsidising fares than others. That is not the fault of those local authorities, because hitherto they have felt fully justified in subsidising public transport. The difference has tended to be political, but not entirely. Lancashire county council has a good record of supporting public transport and it invests much money in helping public transport.

Photo of Mr Kenneth Marks Mr Kenneth Marks , Manchester, Gorton

Does the hon. Gentleman realise that all the shire counties receive grant under the transport supplementary grant on the understanding that they give concessionary fares? Some of them do not do that but use it to keep down the rates.

Photo of Mr Peter Fry Mr Peter Fry , Wellingborough

This is not the place to discuss the intricacies of the transport supplementary grant. The hon. Gentleman knows my view about the TSG—that it should be much more specific. The way that it has been drawn up hitherto is most unsatisfactory, but that is a subject for another debate.

My right hon. Friend must put some flesh on the bones of the phrase that I quoted from clause 4. If a national figure must be considered, he should make it clear and, if the Bill is to be successful, he must do it fairly rapidly.

We are only at the start of even greater Government involvement in the entire public transport and local government scene. One cannot tackle the metropolitan counties and leave all district council undertakings completely on one side. Sooner or later one is bound to be brought into the argument whether a district council should be allowed to subsidise its ratepayers to the extent that a metropolitan county can do so. If we are bringing in legislation to control the worst spenders, my right hon. Friend must investigate how many district councils support public transport. He will find that district councils support public transport in many ways, some of them most mysterious. The danger is that the Government are being led into a quagmire, so the sooner that my right hon. Friend sets down clear national guidelines, the easier it will be to take on the difficult task of imposing a national policy on the many different policies undertaken by local authorities.

I shall support my right hon. Friend tonight, as I supported him on Second Reading, but I hope that he has taken note of some of the warning notes that I have sounded this evening.

Photo of Mrs Jill Knight Mrs Jill Knight , Birmingham, Edgbaston

The new clause speaks of the power to make revenue grants being properly exercised. It is extremely important to bring to the attention of the House one local authority which is certainly not exercising its rights in a proper and correct way. That, I am sorry to say, is the West Midlands county council, which has spent about £70,000 on a campaign against the Bill. [HON. MEMBERS: "Hear, hear."] Opposition Members say, "Hear, hear." I wonder how many people who are paying the £70,000 agree with that expenditure.

Photo of Mr William Wilson Mr William Wilson , Coventry South East

As one of the ratepayers of the West Midlands county council, I can say that one hon. Member in the House supports it.

Photo of Mrs Jill Knight Mrs Jill Knight , Birmingham, Edgbaston

It is a poor show indeed if only one of the Members who is a ratepayer of the West Midlands county council supports it. Fortunately it can be said of the hon. Gentleman that he can afford to support a grant of this nature, but it is wrong to use ratepayers' money in this way.

The campaign leaflet is misleading in every way. Many ratepayers have undoubtedly been conned into believing what the West Midlands county council says in its leaflet. I should like just a few minutes to put the record straight. I hope to show that it is way out of line with the way in which the new clause suggests that revenue should be spent.

The first thing that the leaflet attempts to tell the ratepayers in my area is that the Bill threatens local bus and train services. It says: if the Bill becomes law Westminster could decide just how much West Midlands County Council could spend on them.That is absolute rubbish.

Photo of Mrs Jill Knight Mrs Jill Knight , Birmingham, Edgbaston

The hon. Gentleman really must try to understand what I agree is a complicated matter. It may be beyond him, but he must try to understand it. The Bill will give the Secretary of State the power to tell each of the metropolitan authorities and the GLC—not just my authority—the maximum level of revenue support which the Government are prepared to protect from legal challenge each year. It is not said that they will decide how much the West Midlands county council, or any other council, can spend. The council will have its rights, duties and responsibilities left intact. If, in that framework, councils decide to spend more money, that is for the council to decide. At least it clears up a great deal of confusion under the present law. It does not remove the right of local councils to do what they wish with their money.

Photo of Mrs Jill Knight Mrs Jill Knight , Birmingham, Edgbaston

It is true. I am sorry if Labour Members do not understand. They must read the Bill.

The second paragraph of the leaflet says: The County Council has told the Government it needs to spend £42 million on buses and trains in the year that begins next April. What is really important, surely, is to know how much the council is currently spending. It is no good saying that it has told the Government that it needs to spend £42 million without saying what its current spending is, because that is an important part of the argument.

The truth is that the planned expenditure on revenue support of £42 million has to be compared with expenditure currently estimated at £28·2 million. To say that one wishes to spend £42 million while the current expenditure is only £28 million is rather a big jump, and the ratepayers have every right to know how much of an increase the West Midlands county council is demanding. It is right and proper that that figure should have been set out in the leaflet, but it is not.

5.45 pm

Furthermore, we go on to hear that without that enormous jump Hundreds of jobs of people now working in the bus-building and bus components industry would be lost. People must understand that there are claims on public money for services in addition to transport. The Government recognise—and I hope that all hon. Members do—that we must subsidise public transport. It is not the principle of subsidy that is in question, but the amount that the country can afford to subsidise. That is what we are talking about. If we do not understand that we must balance other interests and claims on public money, there will be other problems with regard to local employment. Many businesses will close if they have to pay much more in rates.

Those hon. Members who represent constituencies in the west midlands know perfectly well that we have a frighteningly large number of factories the roofs of which have been taken off so that the rates do not need to be paid. If one is to demand more and more rates, more and more factories will go out of business.

Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton

The hon. Lady has obviously not sat on the Standing Committee since last November, unlike many hon. Members. As a Member who represents a Birmingham constituency, the hon. Lady must have seen the election addresses that went out at the time of the West Midlands metropolitan county council elections in May 1981. It was specifically stated that the Labour-controlled metropolitan county council would put up rates to bring fares down. That was what the hon. Lady's constituents voted for. That is what they are continuing to tell the hon. Lady they want to see in practice, by sending her hundreds of protests.

Photo of Mrs Jill Knight Mrs Jill Knight , Birmingham, Edgbaston

The hon. Gentleman must not presume to tell me what my constituents mean, because I can tell him that many of my constituents have great problems in meeting their rate demands.

Another facet of the deceit in this leaflet is that it does not give a clear picture. It says nothing about the rate increase which, per se, is being demanded. The fact that the leaflet threatens further unemployment must be put clearly next to the undoubted truth that if rates continue to rise there will be further unemployment for reasons other than that given.

Photo of Mrs Jill Knight Mrs Jill Knight , Birmingham, Edgbaston

No, I shall not give way to the hon. Gentleman.

It is significant that the organisers of the campaign urge people to cut off the part of the leaflet on which the information is set out. It is no wonder they ask them to do that, because anyone who knows anything about the subject at all will know that the information is misleading. All that they wish Members of Parliament to have are the boxes on the other side ticked. They do not want us to know that people have been conned into ticking boxes on the basis of wrong information.

Against one of the boxes on the other side are the words: I am against further rises in local bus and rail fares. Who is not? "I am against service cuts." "I do not want to pay any more money." "I want fares to be kept down." Those are the comments that one hears. Those who make them must believe in Father Christmas. Where else they think the money is coming from, I do not know.

I was fascinated to see that one of my constituents had added another box and crossed out the others. Against that box it said: I support the abolition of the West Midlands county council. He ticked that box.

I should like to add two other questions to the form: Do you agree that the West Midlands county council should have spent £70,000 of your money on this campaign? We should then have seen how many people agreed with that. I should also have liked to ask: Are you, as taxpayers and ratepayers, ready to contribute a further £18 million per annum on top of the money that you are already contributing to subsidies for the buses in the West Midlands? We should have the truth if we are to have a campaign of this kind. We do not have an iota of it in this leaflet.

I finish by saying that I strongly support all subsidised transport, but subsidies cannot be limitless. I recognise that transport must be regarded as a service and that all services must be paid for. What I am trying to do is to make a plea for realism. In doing so we should, without hesitation, vote down the new clause.

Photo of Mr Albert Booth Mr Albert Booth , Barrow-in-Furness

I wish to respond to one point made by the Secretary of State. He misrepresented the new clause as a call for unlimited—he used the word unfettered—expenditure by public transport authorities. Our case has been clear. It is that there are hard, important decisions to be taken on issues of transport expenditure and transport policy. They are political decisions, and if there is to be any valuable role for local democracy the extent to which those decisions can be taken in the local political arena must be clearly defined. We should have the courage to say in the House, when we deal with transport legislation, that this is the part of policy that Government will determine, and this is the part that will be determined by local authorities.

We recognise the right of the Secretary of State under our law to prescribe the amount that we pay by way of transport supplementary grant, but also recognise the right of local authorities to campaign among their electorate for a mandate as to the type of services that should be run in their area, and the amount of ratepayers' money that they should add to the transport supplementary grant provided by the Secretary of State for the purpose of providing those services.

We disagree specifically with the Government about the idea that there should be a part of policy that is outwith the control of Parliament, outwith the control of local government and left to court decisions on the basis of appeals on precepts that are outwith what we believe should be properly defined in legislation as the role of local government.

Until that is accepted by the Government, we shall continue to have the difficulty of having matters determined in court in a way that makes nonsense of local democracy, of the voting process, and of allowing local people, through a proper democratic framework, to determine the type of service that they should have and that is provided with their public money.

Photo of Mr David Howell Mr David Howell , Guildford

The right hon. Member for Barrow-in-Furness (Mr. Booth), in pressing the new clause, has been candid in explaining his reasons for doing so, and about what he and his right hon. Friends wish. The new clause would certainly allow the authorities concerned to spend up to any level of revenue grant that they chose. He said that he wanted them to campaign for that right to do so, and appeared to endorse the curious view of the hon. Member for Wood Green (Mr. Race) about the rule of law and the role of courts in this country. I wish to say a word or two about that before we end the debate, because it is important to realise the views that are being canvassed about the rule of law, to which we are all subject, however high and mighty, however elected and by whatever mandate we are empowered.

The right hon. Member for Barrow-in-Furness said that we should let local authorities campaign, or pay under the new clause, any level of revenue grant that they think is right and sensible. The legislation does not stop them doing so. On the other hand, it does not extend the protection against ratepayer challenge to any level of grant, but only to a limit specified by the protected expenditure level.

With regard to the campaigning, I draw attention to the robust speech of my hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight). She spoke about the campaigning that she had come across against the Bill and about what it is alleged to do. She was right to point to some of the inaccurate and misleading advertisements. Whatever may be said about advertisements for certain policies, it must be wrong for inaccurate and misleading statements that are calculated to arouse anxiety but that have no basis in fact to be put out at ratepayers' expense. In particular, I refer to the advertisements that claim that the concessionary fares for the elderly, the blind and the disabled are to be threatened by the Bill. Those claims were put out as assertions, paid for by ratepayers, in a number of leaflets in metropolitan authorities. The claims are wholly untrue, as I have said many times, and as I repeat again, and I cannot refute them too often. The Bill does not affect the power of the local authorities to grant concessionary fares.

It is wrong to claim that the Bill affects that power and it is wrong for local authorities to put out leaflets claiming that there will be large rail and bus fare increases arising from the Bill. It is wrong to say that there are bound to be massive cuts in services, and, above all, it is wrong to say that the Bill is a threat to cheap concessionary fares for the elderly and children. I have been distressed to receive letters, as have other hon. Members, from people who have been led by this propaganda to believe that the concessionary fares were to be taken away. That has no basis in fact.

Photo of Mr Harry Cowans Mr Harry Cowans , Newcastle upon Tyne Central

In balancing the books of a public transport executive, if it becomes necessary to cut services, can the Minister still say that the concessionary fares will not be threatened? A person may be standing at the bus stop with his nice new concessionary fare in his coat pocket, but the bus that he uses may not run any more.

Photo of Mr David Howell Mr David Howell , Guildford

It does not necessarily follow that the services that the elderly, blind and disabled use may be altered under the Bill by the more efficient running of the transport services. Whatever the hon. Member may say, leaflets have been sent out—I do not know whether with his approval or not—claiming that the concessionary fares for the elderly will be threatened, but that is not true and is inaccurate and misleading. However, the leaflets have been sent out by a public authority with ratepayers' money. I hope that hon. Members on both sides of the House will dissociate themselves from this practice. That is the type of campaigning that I hope we would all be against.

My hon. Friend the Member for Wellingborough (Mr. Fry) urged me to look beyond the proposal that there should be a protected level of expenditure for metropolitan transport authorities, and sought a more national scheme in which he felt that there should be fewer variations, and more laying down of a reasonable level of support throughout the nation. That is his view, but he knows that I shall not go along with that.

Local transport decisions about how much support to give in the shire counties or the metropolitan counties are bound to vary. There is bound to be a wide variety of local circumstances which must be properly taken into account. There is, as the Bill describes, a basis upon which the holder of my office seeks to put forward a national view, or a view of the amount of national resources that should be available for total support for local transport. Within that there should be, are bound to be, and properly will be, considerable variations. I would not seek to put too rigid a mould upon those.

The hon. Member for Wood Green was worried about the role of the courts and the law. I found his remarks curious and slightly chilling, because he clearly has the view that if there be an elected body, whether or not it is a statute-making one—and local authorities are not—once elected it should have the right, and should be allowed, to proceed unimpeded by any challenge in the courts by any person of any locus or standing. That is alien to our democratic tradition.

6 pm

I quote the words of Lord Justice Kerr in a recent judgment relating to the GLC and London Transport when he referred to the Wednesbury principle as follows: If an authority misdirects itself in law, or acts arbitrarily on the basis of considerations which lie outside its statutory powers, or so unreasonably that its decisions cannot be justified by any objective standard of reasonableness, then it is the duty and function of the courts to pronounce that such decisions are invalid when these are challenged by anyone aggrieved by them and who has the necessary locus standi to do so". That is a fundamental statement of view. It upholds the rights of the individual against authorities, however they may have derived their authority.

I am amazed that the hon. Member for Wood Green should challenge that proposition or that he should go against the proposition put by Lord Justice Watkins in the earlier Bromley judgment in relation to the "Fares Fair" policy which was condemned by many people and which Labour Members supported and said should be restored. It was described as a hasty, ill-considered, unlawful and arbitrary use of power. Those who see a proper place for the rule of law in this country object to it.

Photo of Mr Reg Race Mr Reg Race , Haringey Wood Green

I am sure that the Secretary of State would not wish to misrepresent my views. My objection is not to the role of the courts in interpreting the intention of Parliament and the precise form in which the law stands, but to the courts making judgments about what is a fair balance between the ratepayers and the people who use public transport because the courts are not qualified to make such judgments.

Photo of Mr David Howell Mr David Howell , Guildford

I do not wish to misrepresent the hon. Gentleman. I see that point. The judgments, from one of which I quoted an extract, direct themselves to the view that the courts are not able to make a judgment as to the precise and right balance between the ratepayer and farepayer. That remains open to challenge by the ratepayer if it is believed that the local authority has not observed its fiduciary duty.

I thought that the hon. Gentleman said—if it is a misrepresentation, I withdraw it—that the courts should have no part in this matter. The courts and the rule of law have a part in our affairs and in our democracy at every level. I hope that every hon. Member supports that view.

Photo of Mr Stanley Crowther Mr Stanley Crowther , Rotherham

No one is suggesting that an authority should be immune from legal action if it acts irresponsibly, foolishly and unreasonably. We object to the fact that under the Bill an authority which has acted completely reasonably and responsibly, and which under the present law is protected against action, in accordance with Mr. Justice Woolf's famous judgment in the Merseyside case, will in future be exposed to action because it has exceeded a figure arbitrarily fixed not by Parliament or the courts but by the Secretary of St ate who is taking the law into his own hands.

Photo of Mr David Howell Mr David Howell , Guildford

I am grateful to the hon. Member for that reassurance about his views of authorities that act unreasonably in an ill-considered, unlawful and arbitrary way. That is precisely what was happening in the "Fares Fair" case. If hon. Members had recognised that more openly and readily at the time, it would have improved the general debate.

As for reasonableness and balance in the future, the purpose of the Bill, which would be undermined by the new clause, is to provide a protected level of expenditure within which authorities that act reasonably and seek a balance between the ratepayer and the farepayer will have nothing to fear from a ratepayer's challenge, as in the past they had.

To some extent, the ratepayer's rights are being reduced but the capacity and ability of a local authority to proceed without fear of legal challenge and in the proper exercise of its powers under clause 5(2) are being strengthened.

Those are the reasons why I believe that the Bill is right and necessary at this time and will create the greater stability that has been lacking. The right hon. Member for Barrow-in-Furness began by referring to those reasons when he talked about the atmosphere of concern in which the Bill was introduced. I believe that the House would be wrong to accept the new clause or the amendment and right to reject both of them.

Question put, That the clause be read a Second time:—

The House divided: Ayes 234, Noes 294.

Division No. 54][6.4 pm
Abse, LeoFitt, Gerard
Adams, AllenFlannery, Martin
Allaun, FrankForrester, John
Alton, DavidFoster, Derek
Ashley, Rt Hon JackFraser, J. (Lamb'th, N'w'd)
Ashton, JoeFreeson, Rt Hon Reginald
Atkinson, H. (H'gey,)Freud, Clement
Bagier, Gordon A. T.Garrett, John (Norwich S)
Barnett, Guy (Greenwich)Garrett, W. E. (Wallsend)
Barnett, Rt Hon Joel (H'wd)George, Bruce
Beith, A. J.Ginsburg, David
Bennett, Andrew (St'kp't N)Golding, John
Bidwell, SydneyGourlay, Harry
Booth, Rt Hon AlbertGraham, Ted
Boothroyd, Miss BettyGrant, John (Islington C)
Bottomley, Rt Hon A. (M'b'ro)Grimond, Rt Hon J.
Bradley, TomHardy, Peter
Bray, Dr JeremyHarman, Harriet (Peckham)
Brocklebank-Fowler, C.Harrison, Rt Hon Walter
Brown, Hugh D. (Proven)Hart, Rt Hon Dame Judith
Brown, R. C. (N'castle W)Hattersley, Rt Hon Roy
Brown, Ronald W. (H'ckn'y S)Haynes, Frank
Brown, Ron (E'burgh, Leith)Healey, Rt Hon Denis
Buchan, NormanHeffer, Eric S.
Callaghan, Rt Hon J.Holland, S. (L'b'th, Vauxh'll)
Callaghan, Jim (Midd't'n & P)Home Robertson, John
Campbell, IanHomewood, William
Campbell-Savours, DaleHoram, John
Cant, R. B.Hoyle, Douglas
Carmichael, NeilHuckfield, Les
Cartwright, JohnHughes, Mark (Durham)
Clark, Dr David (S Shields)Hughes, Robert (Aberdeen N)
Clarke, Thomas (C'b'dge, A'rie)Hughes, Roy (Newport)
Cohen, StanleyJay, Rt Hon Douglas
Coleman, DonaldJenkins, Rt Hon Roy (Hillh'd)
Conlan, BernardJohn, Brynmor
Cowans, HarryJohnson, James (Hull West)
Cox, T. (W'dsw'th, Toot'g)Johnson, Walter (Derby S)
Crawshaw, RichardJones, Rt Hon Alec (Rh'dda)
Crowther, StanJones, Dan (Burnley)
Cryer, BobKerr, Russell
Cunliffe, LawrenceKilroy-Silk, Robert
Cunningham, G. (Islington S)Lambie, David
Cunningham, Dr J. (W'h'n)Lamond, James
Dalyell, TamLeighton, Ronald
Davidson, ArthurLestor, Miss Joan
Davis, Clinton (Hackney C)Lewis, Arthur (N'ham NW)
Davis, Terry (B'ham, Stechf'd)Lewis, Ron (Carlisle)
Deakins, EricLitherland, Robert
Dean, Joseph (Leeds West)Lofthouse, Geoffrey
Dewar, DonaldLyon, Alexander (York)
Dixon, DonaldLyons, Edward (Bradf'd W)
Dobson, FrankMcCartney, Hugh
Dormand, JackMcDonald, Dr Oonagh
Dubs, AlfredMcElhone, Mrs Helen
Duffy, A. E. P.McGuire, Michael (Ince)
Dunnett, JackMcKay, Allen (Penistone)
Dunwoody, Hon Mrs G.McKelvey, William
Eadie, AlexMacKenzie, Rt Hon Gregor
Eastham, KenMaclennan, Robert
Edwards, R. (W'hampt'n S E)McMahon, Andrew
Ellis, R. (NE D'bysh're)McNally, Thomas
Ellis, Tom (Wrexham)McTaggart, Robert
English, MichaelMcWilliam, John
Ennals, Rt Hon DavidMagee, Bryan
Evans, John (Newton)Marks, Kenneth
Ewing, HarryMarshall, D (G'gow S'ton)
Faulds, AndrewMarshall, Dr Edmund (Goole)
Field, FrankMarshall, Jim (Leicester S)
Mason, Rt Hon RoySkinner, Dennis
Maxton, JohnSmith, Cyril (Rochdale)
Maynard, Miss JoanSmith, Rt Hon J. (N Lanark)
Meacher, MichaelSnape, Peter
Mikardo, IanSpellar, John Francis (B'ham)
Millan, Rt Hon BruceSpriggs, Leslie
Miller, Dr M. S. (E Kilbride)Stallard, A. W.
Morris, Rt Hon A. (W'shawe)Steel, Rt Hon David
Morris, Rt Hon C. (O'shaw)Stewart, Rt Hon D. (W Isles)
Morris, Rt Hon J. (Aberavon)Stoddart, David
Morton, GeorgeStott, Roger
Moyle, Rt Hon RolandStrang, Gavin
Mulley, Rt Hon FrederickStraw, Jack
Newens, StanleySummerskill, Hon Dr Shirley
Oakes, Rt Hon GordonTaylor, Mrs Ann (Bolton W)
Ogden, EricThomas, Dafydd (Merioneth)
O'Halloran, MichaelThomas, Jeffrey (Abertillery)
O'Neill, MartinThomas, Mike (Newcastle E)
Orme, Rt Hon StanleyThorne, Stan (Preston South)
Park, GeorgeTilley, John
Parker, JohnTinn, James
Pavitt, LaurieTorney, Tom
Pendry, TomVarley, Rt Hon Eric G.
Penhaligon, DavidWainwright, E. (Dearne V)
Pitt, William HenryWainwright, R. (Colne V)
Powell, Raymond (Ogmore)Walker, Rt Hon H. (D'caster)
Race, RegWardell, Gareth
Radice, GilesWeetch, Ken
Rees, Rt Hon M (Leeds S)Wellbeloved, James
Richardson, JoWelsh, Michael
Roberts, Albert (Normanton)White, J. (G'gow Pollok)
Roberts, Allan (Bootle)Whitehead, Phillip
Roberts, Ernest (Hackney N)Whitlock, William
Roberts, Gwilym (Cannock)Wigley, Dafydd
Robertson, GeorgeWilley, Rt Hon Frederick
Robinson, G. (Coventry NW)Williams, Rt Hon A. (S'sea W)
Rodgers, Rt Hon WilliamWilliams, Rt Hon Mrs (Crosby)
Rooker, J. W.Wilson, Gordon (Dundee E)
Roper, JohnWilson, Rt Hon Sir H. (H'ton)
Ross, Ernest (Dundee West)Wilson, William (C'try SE)
Ross, Stephen (Isle of Wight)Winnick, David
Rowlands, TedWoodall, Alec
Sever, JohnWoolmer, Kenneth
Sheerman, BarryWrigglesworth, Ian
Sheldon, Rt Hon R.Wright, Sheila
Shore, Rt Hon PeterYoung, David (Bolton E)
Short, Mrs Renée
Silkin, Rt Hon J. (Deptford)Tellers for the Ayes:
Silkin, Rt Hon S. C. (Dulwich)Mr. James Hamilton and
Silverman, JuliusMr. Norman Hogg.
Adley, RobertBright, Graham
Aitken, JonathanBrinton, Tim
Alexander, RichardBrittan, Rt. Hon. Leon
Alison, Rt Hon MichaelBrooke, Hon Peter
Amery, Rt Hon JulianBrotherton, Michael
Ancram, MichaelBrowne, John (Winchester)
Arnold, TomBruce-Gardyne, John
Aspinwall, JackBryan, Sir Paul
Atkinson, David (B'm'th,E)Buchanan-Smith, Rt. Hon. A.
Baker, Kenneth (St.M'bone)Buck, Antony
Baker, Nicholas (N Dorset)Budgen, Nick
Beaumont-Dark, AnthonyBulmer, Esmond
Bendall, VivianButcher, John
Benyon, Thomas (A'don)Carlisle, John (Luton West)
Benyon, W. (Buckingham)Carlisle, Kenneth (Lincoln)
Berry, Hon AnthonyCarlisle, Rt Hon M. (R'c'n)
Best, KeithChalker, Mrs. Lynda
Bevan, David GilroyChannon, Rt. Hon. Paul
Biffen, Rt Hon JohnChapman, Sydney
Biggs-Davison, Sir JohnChurchill, W. S.
Blackburn, JohnClark, Hon A. (Plym'th, S'n)
Blaker, PeterClark, Sir W. (Croydon S)
Body, RichardClegg, Sir Walter
Bonsor, Sir NicholasCockeram, Eric
Bottomley, Peter (W'wich W)Colvin, Michael
Bowden, AndrewCope, John
Boyson, Dr RhodesCorrie, John
Braine, Sir BernardCostain, Sir Albert
Cranborne, ViscountKellett-Bowman, Mrs Elaine
Critchley, JulianKimball, Sir Marcus
Crouch, DavidKing, Rt Hon Tom
Dickens, GeoffreyKitson, Sir Timothy
Dorrell, StephenKnight, Mrs Jill
Douglas-Hamilton, Lord J.Knox, David
Dover, DenshoreLamont, Norman
du Cann, Rt Hon EdwardLang, Ian
Dunn, Robert (Dartford)Langford-Holt, Sir John
Durant, TonyLatham, Michael
Eden, Rt Hon Sir JohnLawrence, Ivan
Edwards, Rt Hon N. (P'broke)Lawson, Rt Hon Nigel
Eggar, TimLee, John
Elliott, Sir WilliamLe Marchant, Spencer
Emery, Sir PeterLennox-Boyd, Hon Mark
Eyre, ReginaldLewis, Sir Kenneth (Rutland)
Fairbairn, NicholasLloyd, Ian (Havant & W'loo)
Fairgrieve, Sir RussellLloyd, Peter (Fareham)
Faith, Mrs SheilaLoveridge, John
Farr, JohnLyell, Nicholas
Fell, Sir AnthonyMcCrindle, Robert
Fenner, Mrs PeggyMacfarlane, Neil
Finsberg, GeoffreyMacGregor, John
Fisher, Sir NigelMacKay, John (Argyll)
Fletcher, A. (Ed'nb'gh N)Macmillan, Rt Hon M.
Forman, NigelMcNair-Wilson, M. (N'bury)
Fowler, Rt Hon NormanMcNair-Wilson, P. (New F'st)
Fox, MarcusMcQuarrie, Albert
Fraser, Peter (South Angus)Madel, David
Fry, PeterMajor, John
Gardiner, George (Reigate)Marland, Paul
Gardner, Sir EdwardMarlow, Antony
Garel-Jones, TristanMarshall, Michael (Arundel)
Gilmour, Rt Hon Sir IanMarten, Rt Hon Neil
Goodhart, Sir PhilipMates, Michael
Goodhew, Sir VictorMaude, Rt Hon Sir Angus
Goodlad, AiastairMawby, Ray
Gorst, JohnMawhinney, Dr Brian
Gow, IanMaxwell-Hyslop, Robin
Gower, Sir RaymondMayhew, Patrick
Grant, Sir AnthonyMellor, David
Greenway, HarryMeyer, Sir Anthony
Grieve, PercyMiller, Hal (B'grove)
Griffiths, Peter (Portsm'th N)Mills, Iain (Meriden)
Grist, IanMills, Sir Peter (West Devon)
Grylls, MichaelMiscampbell, Norman
Gummer, John SelwynMoate, Roger
Hamilton, Hon A.Monro, Sir Hector
Hamilton, Michael (Salisbury)Montgomery, Fergus
Hampson, Dr KeithMoore, John
Hannam, JohnMorgan, Geraint
Haselhurst, AlanMorris, M. (N'hampton S)
Havers, Rt Hon Sir MichaelMorrison, Hon C. (Devizes)
Hawkins, Sir PaulMurphy, Christopher
Hawksley, WarrenMyles, David
Hayhoe, BarneyNeale, Gerrard
Heath, Rt Hon EdwardNeedham, Richard
Heddle, JohnNeubert, Michael
Henderson, BarryNewton, Tony
Heseltine, Rt Hon MichaelNormanton, Tom
Hicks, RobertNott, Rt Hon Sir John
Higgins, Rt Hon Terence L.Onslow, Cranley
Hill, JamesOppenheim, Rt Hon Mrs S.
Hogg, Hon Douglas (Gr'th'm)Osborn, John
Holland, Philip (Carlton)Page, John (Harrow, West)
Hooson, TomPage, Richard (SW Herts)
Hordern, PeterParkinson, Rt Hon Cecil
Howe, Rt Hon Sir GeoffreyParris, Matthew
Howell, Rt Hon D. (G'ldf'd)Patten, Christopher (Bath)
Howell, Ralph (N Norfolk)Pattie, Geoffrey
Hunt, David (Wirral)Pawsey, James
Hunt, John (Ravensbourne)Percival, Sir Ian
Hurd, Rt Hon DouglasPeyton, Rt Hon John
Irvine, Rt Hon Bryant GodmanPollock, Alexander
Irving, Charles (Cheltenham)Porter, Barry
Jessel, TobyPrentice, Rt Hon Reg
Johnson Smith, Sir GeoffreyPrice, Sir David (Eastleigh)
Jopling, Rt Hon MichaelPrior, Rt Hon James
Joseph, Rt Hon Sir KeithProctor, K. Harvey
Kaberry, Sir DonaldPym, Rt Hon Francis
Rathbone, TimTapsell, Peter
Rees-Davies, W. R.Tebbit, Rt Hon Norman
Renton, TimTemple-Morris, Peter
Rhodes James, RobertThatcher, Rt Hon Mrs M.
Rhys Williams, Sir BrandonThomas, Rt Hon Peter
Ridley, Hon NicholasThompson, Donald
Rifkind, MalcolmThornton, Malcolm
Rippon, Rt Hon GeoffreyTownend, John (Bridlington)
Roberts, M. (Cardiff NW)Trippier, David
Roberts, Wyn (Conway)Trotter, Neville
Rossi, Hughvan Straubenzee, Sir W.
Rost, PeterVaughan, Dr Gerard
Rumbold, Mrs A. C. R.Viggers, Peter
Sainsbury, Hon TimothyWaddington, David
St. John-Stevas, Rt Hon N.Wakeham, John
Shaw, Giles (Pudsey)Waldegrave, Hon William
Shaw, Sir Michael (Scarb')Walker, Rt Hon P. (W'cester)
Shelton, William (Streatham)Walker, B. (Perth)
Shepherd, Colin (Hereford)Walker-Smith, Rt Hon Sir D.
Shepherd, RichardWall, Sir Patrick
Shersby, MichaelWaller, Gary
Silvester, FredWalters, Dennis
Skeet, T. H. H.Warren, Kenneth
Smith, DudleyWatson, John
Smith, Tim (Beaconsfield)Wells, John (Maidstone)
Speed, KeithWheeler, John
Speller, TonyWhitelaw, Rt Hon William
Spence, JohnWhitney, Raymond
Spicer, Jim (West Dorset)Wickenden, Keith
Spicer, Michael (S Worcs)Wiggin, Jerry
Sproat, IainWilkinson, John
Squire, RobinWilliams, D. (Montgomery)
Stainton, KeithWinterton, Nicholas
Stanbrook, IvorWolfson, Mark
Stanley, JohnYoung, Sir George (Acton)
Steen, AnthonyYounger, Rt Hon George
Stevens, Martin
Stewart, A. (E Renfrewshire)Tellers for the Noes:
Stewart, Ian (Hitchin)Mr. Carol Mather and
Stokes, JohnMr. Robert Boscawen.
Stradling Thomas, J.

Question accordingly negatived.