Validation of Past Acts

Orders of the Day — Local Government Finance Bill – in the House of Commons at 7:15 pm on 26th January 1987.

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Question proposed, That the clause stand part of the Bill.

Photo of Jack Straw Jack Straw Shadow Spokesperson (Environment, Food and Rural Affairs)

I should first explain that we decided not to move the group of amendments beginning with amendment No. 93 and also that beginning with amendment No. 96 solely because of the shortage of time now available to the Committee to deal with some extremely important issues before the guillotine comes down at 12 o'clock.

I wish to make some brief points about clause 6 before we move on to a major debate on the rate-capping procedures in the Bill which come up in two groups of amendments, that beginning with amendment No. 106 and that beginning with amendment No. 107. I hope that it will be for the convenience of the Committee if I take them together to expedite the debate.

We do not intend to press clause 6 to a vote. Again, that is solely because of the time constraints. The fact that we shall not push the matter to a Division should not in any sense be taken as evidence that we accept part of the purpose and force of clause 6.

We have previously had extensive debates on the operation of clause 4(6), which has become known as the judge-proofing subsection in so far as decisions taken before the passing of the Act relate to part VI of the Local Government, Planning and Land Act 1980. We have a similar objection to the operation of clause 6(4) that relates to the rate-capping powers of the Secretary of State. Under clause 6, any orders made under section 2(3) of the Rates Act 1984 are deemed to have been estimated in compliance with part VI of the 1980 Act. That is understandable within the scheme of the Bill. The clause then goes on to state: Anything done by the Secretary of State before the passing of this Act for the purposes of Part I of the 1984 Act"— which relates to selective rate capping in the years beginning 1985 or 1986 shall also— be deemed to have been done in compliance with the provisions of that Part". Again, we comprehend why that is being included in the Bill, even if we disagree with it. However, subsection (3) states: For the purpose of section 7 below and Schedule 2 to this Act which are the clauses and the schedule which substitute formula rate capping for the procedure under the 1984 Act, any designation of an authority in relation to this forthcoming financial year and any determination and notification of an authority's total expenditure, shall, if made before the passing of this Act, be deemed to have been made in compliance with the provisions of Part I". Subsection (4) of the Bill states: This section shall have effect notwithstanding any decision of a court (whether before or after the passing of this Act) purporting to have a contrary effect. Therefore, I should like to ask the Minister why it is necessary to have such a judge-proofing provision within the clause. Already, decisions that the Secretary of State has made, or could make, up to the passing of the Act are deemed to have been made in compliance with either the 1980 Act or the 1984 Act. If that matter went to court and some issue were made about the Secretary of State's powers to make decisions once the Act had been passed, the court could read subsections (1), (2) and (3)— the courts would be perfectly capable of understanding what they mean—and apply them. Assuming that they had been applied properly, the deeming provisions would protect the Secretary of State.

7.45 pm

Therefore, why is it necessary, given the way in which subsections (1) to (3) will operate, for there to be the omnibus subsection (4), which prevents the court from making any decisions in circumstances in which they would otherwise be able to make them?

I should like to give the Minister an example. Later we may hear from my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) about the fact that, in Islington's view, the borough fell just below the trigger point for rate capping, which, as I recall, was 12·5 per cent. over grant-related expenditure assessment. In a sense, that is a matter of fact, and an application of the rules. As the law stood before the Bill, Islington would have been able to go to court, if the Secretary of State had disagreed with it, and argued that point. That is right because it is exactly what the courts exist for—to determine and arbitrate on an issue such as that. However, under the Bill, Islington is denied that opportunity.

What purpose is served by preventing a borough—I know that there are political objections to Islington, but I do not think the Minister will take up that point—from going to court and arguing a point like that?

We believe that judge-proofing provisions like those in clause 4(6) go way beyond anything that is necessary simply to put the law in good order, as was the ostensible purpose of the Bill. For that reason, we thoroughly oppose clause 6 and especially subsection (4).

Photo of Dr Rhodes Boyson Dr Rhodes Boyson , Brent North

I am grateful to the hon. Member for Blackburn (Mr. Straw) for letting the Committee know that he will not seek to divide it on clause 6, but will be raising queries about cerain points about it. The clause is vitally important to the Bill. As the hon. Member for Blackburn said, it is about the validation of past acts in relation to rates limitation.

There are three matters that need validating and which the clause covers. First, the clause validates any orders made under section 2(3) of the Rates Act 1984 before the passing of the Bill. These orders have the effect of exempting local authorities from being selected for rate limitation if their total expenditure is less than the specified figure. That level is now £11·1 million for English authorities and has been increased by two successive orders from the figure of £10 million, originally specified in the Rates Act.

Secondly, the clause validates anything done by my right hon. Friends before the passage of the Bill for the purpose of part I of the 1984 Act in relation to the years 1985–86 and 1986–87. It validates rates limitations for those years.

My third point is that made by the hon. Member for Blackburn. The clause validates any designation of an authority for rate limitation for 1987–88 and any determination and notification of an expenditure level for 1987–88, before the passing of the Bill.

As the hon. Member for Blackburn said, the clause provides that validation will have effect notwithstanding any decision of a court whether before or after the passing of the Bill purporting to have contrary effect. The clause thus provides the validation necessary if there is to be certainty as to how the law stands in relation to these decisions. The clause plays a key role in enabling us to maintain the status quo. That is why we consider that that is an essential part of the Bill.

The reason for clause 6 is exactly the same as that for clause 4(6), mentioned by the hon. Member for Blackburn —to make it absolutely clear that the past decisions described in clause 6(1) to (3) are valid even if a court, having heard a case before enactment of the Bill, declares the decision to be invalid on the basis of existing law. At the late stage at which we are now, when authorities have to make their decisions and determine the rate on 1 April, it is absolutely essential that we pass the Bill with full validation and without being at risk of returning to the present position, with the problem over definition.

Photo of Jack Straw Jack Straw Shadow Spokesperson (Environment, Food and Rural Affairs)

The Minister says that the clause has been drafted to provide certainty and that that has to be balanced against the need for justice. Clause 6(1), for example, relates to orders laid before the passing of the Act. The minute the Act comes into force, that deeming provision will come into force. If that was the only point of issue in a court, it would find in favour of the Secretary of State. Why is it then necessary to exclude any possibility of court action, including circumstances in which, procedurally the Secretary of State may have erred?

Photo of Dr Rhodes Boyson Dr Rhodes Boyson , Brent North

As I have already said to the hon. Gentleman, I understand and appreciate why he is putting that point. We must be certain that the validation stands up without threat so that rate-capped authorities know what the situation is.[Interruption.] The hon. Member for Newham, North-West (Mr. Banks) may intervene if he wants to. I know the strength of his feelings on almost every issue that comes up in Committee.

Rate capping this year is a one-year matter. For the authorities that were rate-capped last year and those that will be rate-capped for the first time this year, we have made special arrangements for this year only. The following year we shall revert to the normal procedure of individual decisions on individual boroughs. But this year we must act so that the authorities know where they are and so that there can be no more doubt on the level of rates that will be allowed or on the level of expenditure.

Photo of Jack Straw Jack Straw Shadow Spokesperson (Environment, Food and Rural Affairs)

I regard the Minister's explanation about the need for subsection (4) as tautologous and wholly unsatisfactory. As I explained, we oppose the clause, and hope to come back to it when the other place has considered the matter.

Question put and agreed to.

Clause 6 ordered to stand part of the Bill.