I beg to move amendment No. 1, in page 1, leave out lines 17 to 20.

With this it will be convenient to take amendment No. 5, in page 2, line 6, leave out from 'paid' to the end of line 10 and insert

'annually in the financial year to which it applies'.

This is an opportunity to explore why a change has been introduced to what would seem to be a most sensible way of allocating grants. The system suggested in the Bill would set aside the standard formula for allocating money for different authorities. Why is that different approach being taken? It is hard to understand why a standard formula cannot be worked out to take account of different sizes of authority and authorities' different demands. Once fixed and in place, the point of such formulas is to take account of differences that emerge. It is not clear why the Government want to change the system and allow the Minister to take differing views and change the formula. It is unclear why such decisions will be taken, what criteria the Government would use to make different allocations, when that would happen, whether the Minister wants to be able to do that annually or at short notice, who would be informed and how transparent the process will be. That raises some concerns—I do not for a moment suggest that the Minister would be involved in this—that Ministers might come under pressure as a result of special pleading from particular authorities, or, perhaps, favoured authorities that have done particularly well, or a chat in a corridor. I do not believe that that is a transparent way in which to set a grant system.

The Minister might respond by saying that it is necessary to be able to react to events and that it is difficult to plan some of these things a year in advance, as circumstances might change. The events of 11 September illustrate that. Perhaps that is why the Government want flexibility: they want to be able to make adjustments if special circumstances arise in, for example, Birmingham, Manchester or Oldham that suddenly require something to be done that does not conform to the formula.

However, I understand that that flexibility already exists: additional payments can be made for certain projects or emergencies. Therefore, a standard formula could be established, and if special circumstances arose, additional resources could be invested.

As a consequence, I am unclear about why this is needed. I hope that the Minister will give a little more information about it. Why is it necessary? How would the change be allocated? Would Parliament have an opportunity to scrutinise the matter? It would be wrong if the Minister could decide, without anyone else having the right to express an opinion or make a judgment, that, for instance, the formula needed to be changed in the middle of the financial year, so that more resources could be allocated to Birmingham or Manchester.

As you, Mr. Griffiths, will have noticed, my name appears on the amendment together with that of the hon. Member for Winchester (Mr. Oaten). Perhaps the Government Whip is a little sensitive about yesterday's developments—[Interruption.] He has indicated, by a sedentary intervention, that he is not totally content.

As the hon. Member for Winchester has said, one of the amendment's purposes is to establish what the Government think about the subject under discussion. Although the Minister is likely to refer us to standard procedures relating to the allocation of grants to local authorities under other legislation, several points require clarification.

The lines that the amendment would delete contain a reference to the designated Minister. Although such a reference is standard practice in legislation, will the Minister clarify which of his colleagues at the Cabinet Office he would expect to be the designated Minister for those purposes—would it be him or someone else? The situation has changed: responsibilities were transferred earlier in 2001 from the Home Office to the Cabinet Office, and local authorities would like to know which Minister they should be lobbying with regard to those purposes and whether a particular portfolio within the Cabinet Office would normally be expected to have responsibility for the allocation of grants.

Will the Minister also share his thoughts about the general view that he would expect the Government to take across the board—or, specifically, Cabinet Office Ministers to take with regard to this particular instance? What criteria would they use to assess whether it they should use different formulae or criteria when making determinations for different authorities? Is it simply the case, as the hon. Member for Winchester said, that the Minister wishes to have the flexibility to take account of unexpected circumstances, or does he wish, in general, to have the power to distinguish between, for example, urban and rural authorities—or to make special provisions for authorities with major concentrations of population that might be subject to particular forms of civil contingency planning, or for authorities with a coastline or a large amount of territory that is affected by flood plains or rivers? What criteria might the Government wish to use to draw distinctions between local authorities?

The Minister will be aware that there is always enormous tension—some might go so far as to say resentment—among local authorities when distinctions are made. It will always be the case that no two local authorities will be treated in a way that leaves both of them happy. However, it is important to have clarification on the reasons why local authorities that regard themselves as similar are treated differently by the Government for these purposes.

Finally, should the amendment fall and subsection (3) remain unaltered, does the Minister expect Government decisions under this heading to be subject to the normal processes of judicial review? If a local authority felt that a ministerial decision was unreasonable, even allowing for the flexibility granted under the Bill, could it still ask the court for a view on whether the Government had acted unreasonably or on the basis of demonstrably faulty information? It would reassure me if the Minister were to say that the normal procedures would remain in place. In certain circumstances, local authorities may wish to avail themselves of that important backstop.

I hope that the Minister will be able, perhaps with advice, to answer some of those questions. If he cannot answer them now, perhaps he will do so in correspondence.

I am grateful for the chance to speak in this debate. The Minister will recall that I expressed particular concern on Second Reading about the issues covered by amendment No. 1, because Worcestershire county council and I regard subsection (3) as probably the most offensive part of the Bill. My hon. Friend the Member for Westmorland and Lonsdale (Mr. Collins), who speaks for the official Opposition, was mild-mannered and courteous in making his objections. I am tempted to be rather more robust in order to reflect the concerns of my county council.

The Minister will recall that I paraphrased the explanatory notes on Second Reading. That paraphrase goes to the heart of the amendment, which I strongly support, because it would leave out those quite extraordinary powers. Will the Minister reassure Worcestershire county council and me that the arbitrary powers granted by Bill have a well-founded precedence? I was interested to note that, on winding up on Second Reading, the Minister said that the provisions replicated provisions elsewhere in local government formulae and funding arrangements. If that is so, my objection is more difficult to sustain. However, my county council feels that those provisions will clearly and arbitrarily allow different criteria to be used for different parts of the country.

Of particular concern to the county council is proposed subsection (3)(b), which states:

''may vary a determination by a further determination.''

In other words, a grant can be held back and not paid for an indefinite number of years. The Minister could arbitrarily decide to reduce a previously announced grant to zero, leaving the county with no money at all. That may be an extreme case, but it seems remarkable that we should grant the Minister such arbitrary powers. I urge him to consider whether he needs them and whether, on reflection, he could accept amendment No. 1.

My hon. Friend will have noticed that the concerns that he has expressed, which are addressed in the amendment, are reinforced by proposed new section 3B(4), which states:

''An authority shall repay to the designated Minister any sum which . . . (b) exceeds the amount to which the authority is entitled under that section for that year (whether or not by virtue of a varying determination''—

a determination of the sort that my hon. Friend refers to. It is precisely for that reason that it would help if the Minister gave us an assurance that he will seek to use the power that the amendment would delete—the power to vary the determination by a further determination—only in exceptional circumstances. It would also help to have some idea of what those circumstances might be.

That is exactly the point. If the Minister can give a clear indication of how he expects the powers to be used, my county council and I might be reassured. The nature and scope of the powers is considerable. I know that the total sums of money are small in the context of a county council's budget, but we all agreed on Second Reading that civil defence is important. If the moneys available to county councils for such purposes are to be controlled in such an arbitrary way, we need to know what criteria the Minister will use when exercising those powers.

The hon. Gentleman would agree that one of the problems with county council expenditure is the rigidity of the standard spending assessment formula. Does not clause 1 have the opposite effect by creating flexibility to allow the Minister to respond to positive representations from bodies such as the hon. Gentleman's county council in the event of unforeseen circumstances arising from acts of God or acts by a foreign power?

A reassurance to that effect from the Minister would be very welcome. However, it is the emphasis on repayment of overpayments to county councils, to which my hon. Friend the Member for Westmorland and Lonsdale referred earlier, that makes one suspicious—it moves in the other direction. My county council tells me that, as a final degree of uncertainty, the grant payable to any authority could arbitrarily be reduced to zero from the original determination. That could be announced at any time, even after the grant period has started, leaving local authorities without any resource to carry out this important function. That goes to the heart of our concerns about the Bill. I hope that the Minister will be very specific in his response and tell us exactly how the powers will be used.

Both amendments essentially relate to the flexibility issues in the Bill. It is useful to have the opportunity to address both of the points raised. First, on amendment No. 1, although I understood the points made by the hon. Member for Winchester, the Government believe that Ministers need the ability to treat different authorities in different ways, because without that power, all authorities would have to be treated identically, regardless of type. For example, the characteristics of fire and civil defence authorities are different from those of metropolitan authorities. Taking my own constituency as an example, Bradford metropolitan district council receives a civil defence grant, but so does the West Yorkshire fire and civil defence authority.

Without the ability to use different formulas for different types of authority, we could end up with overlapping authority activities receiving twice the amount of grant, and other areas that do not have fire and civil defence authorities, for example, not receiving that funding. The provision is necessary to help overcome some of the problems of overlapping and to ensure that the formulas can be different to reflect the difference between London boroughs and county authorities, for example.

I am grateful to the Minister, but his explanation does not help me. I thought that that was what a formula did in the first place—that it was set in order to take account of those different types of authorities.

I am advised that a series of different formulas are necessary to apply to different sorts of authority. That is why the provision is necessary. Otherwise, there would be a single formula, which could be challenged in so far as it would differ from authority to authority, regardless of the type.

Are there precedents elsewhere in local government for different formulas being applied to different authorities performing the same basic function?

Yes. As I said on Second Reading, sections 46 and 47 of the Police Act 1996 contained similar provisions, although they have not been precisely replicated in the Bill because the circumstances are different. This is standard practice for most cash-limited grant arrangements in local government finance and other associated areas.

It is also important to understand that unforeseen or exceptional circumstances might arise, and the amendment would make increases or reductions in grants much more difficult. The provision could possibly be needed to address the problem of the different characteristics of authorities, such as coastal proximity, if, in the future, we need to address particular eventualities.

The provision seeks to make legal only the activities under the formula that previously operated. The amendment would make a return to that system impossible. We should regard flexibility as a virtue, rather than an evil aspect of legislation. Discretionary powers are necessary because we cannot always predict what will happen, particularly in this area.

The Minister has begun to deal with the point that I wanted to put to him, and has said something reassuring, but I should like further clarification. He said that the wording that the amendment would remove from the Bill is intended to ensure a return to the way the system operated before the famous legal case that created the need for the Bill. Does he envisage that, under the Bill, the Government would behave, with respect to the relationship between local authorities and the distinctions that are made between them, broadly as they did before the legal case of 18 months or two years ago? Do they want to make distinctions between local authorities in addition to, or different from, those made in the recent past?

The Bill is intended to make legal a practice that previously occurred. The Government have yet to decide whether precisely the same formula that existed before the challenge would be applied. I understand that those matters were tackled in the emergency planning review that we discussed on Second Reading. Certainly, given the fact that the new financial year is relatively close, I anticipate no significant changes to the formula that was used, although we reserve our right to examine it, particularly in the light of recent events.

Is the idea to apply different formulae appropriately to different authorities, so that there is both budgetary certainty for those spending the money and ministerial discretion in the light of the inherent uncertainty surrounding planning for emergencies? That would mean that Worcester or other local authorities could have an idea of the money coming in, rather than not knowing whether they are coming or going.

That is broadly correct. The Government need sufficient discretion to be able to respond to unforeseen situations. We may also need to be able to consider enabling some authorities to take on a civil defence role on behalf of others, in a joint agreement, as already happens in some cases. With reference to points that were made about amendment No. 5, questions arise about how the Government might make payments in advance of a financial year. Special projects could also be considered.

I appreciate the Minister's helpful remarks. He has told the Committee two things. First, he has clearly implied that, in the coming financial year, the review of grant payable is likely to be upwards only; there are unlikely to be significant cuts in grants to individual authorities. Secondly, he has suggested that the variation of determination by a further determination would, again, be upwards only, in an attempt to help an authority with a civil emergency. Worcestershire county council was concerned that the powers might be used for cuts. I think that the Minister has told us that that is unlikely.

I suspect that I must disabuse the hon. Gentleman as to the precise wording of my comments. I was referring to the ability to institute a formula allocation. The amounts for the next financial year are yet to be determined and we are in negotiations in the usual way with the Treasury. The Government need sufficient flexibility in our allocation of civil defence grant to ensure that we continue the good practice and solid financial planning that existed previously.

Amendment No. 5 would make certain existing practices very difficult, particularly if the grant were only to be paid annually in the relevant financial year. For example, the current practice is that 90 per cent. of the grant is paid in each financial year—in September, I think. The remaining 10 per cent. is normally paid in the subsequent financial year, following receipt of audited accounts that specify that the money has been spent for the purposes intended. That is standard National Audit Office practice, and is best practice in terms of financial arrangements. The amendment would make that difficult to fit in.

I am grateful to the Minister for giving way again. He is genuinely helping the Committee, which we all appreciate.

I want to remind the Minister of some of his remarks on Second Reading. He said that the Bill would benefit local authorities because they

''need to know how much the Government are going to make available in support of emergency planning activities for each financial year, and need a clear indication of what will be available provisionally for future years. They need to know how the total is going to be allocated among them so that they can make their own calculation of their share of the cake.''—[Official Report, 28 November 2001; Vol. 375, c. 1013.]

Thus the Minister was making a powerful case in favour of local authorities knowing what their grant was likely to be as far in advance and in as much detail as possible.

I want to press the Minister, therefore, on the time scale. He referred on several occasions to the fact that the grant allocation under the Bill for the next financial year could not be determined. It is nearly Christmas, and the next financial year begins only three or four months into the new year. There is some uncertainty, so will he be clearer on when local authorities will know how much they will receive for the next financial year, and whether they will receive rather more notice of the likely sums in future?

As a prerequisite to the hon. Gentleman's request, we need to enact the Bill. If we do not have the power to institute a formula, it will be difficult to discuss how much will be paid and how that will be done, especially if we stay with a demand-led system in which, under a distorted and haphazard arrangement, authorities are able to bid individually. The comprehensive spending review process aims to give greater surety about sums over three years. As I mentioned on Second Reading, we have already pencilled in sums for the next financial year, although we need to renegotiate those sums in the light of recent events. The formula powers are necessary in order to move on to discussions about how we would institute a national strategic budget available to all civil defence authorities.

Will the Minister clarify a question on timing? Proposed new section 3B of the Civil Defence Act 1948 states that

''a grant for a financial year need not be paid in that year''.

What does that mean? Is it possible that some local authorities would receive no money in some financial years for civil defence?

My understanding is that the wording is standard practice in statutory drafting on payments for cash-limited grants to local authorities. We are again touching on the flexibility issue raised by the hon. Member for Mid-Worcestershire (Mr. Luff), who talked about why the Bill had clawback provisions. Governments can occasionally make mistakes.

Not since 1997.

No, certainly not since 1997 to my knowledge. In the rare event that errors take place, a statutory power is required to correct them. That is normal drafting procedure.

I also want to refer to what the hon. Member for Mid-Worcestershire said about responsible use of powers, a point that leaps out of the statute on a raw reading. For example, it is true that a judicial review would apply to Ministers' decisions, which need to be reasonable. A responsible use of powers is needed, and we have been examining the fact that decision makers have to act in accordance with the law fairly and reasonably. It would be unlawful to exercise a discretion for improper purpose or without taking into account all relevant considerations.

The hon. Member for Westmorland and Lonsdale asked about the designated Minister. The Home Secretary is currently the designated Minister, but in the process of the transfer of function order, my understanding is that it will shortly become the Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster.

The Minister has assured us in general terms and said that his understanding is that there are precedents in the formulae for other local services. He gave a specific example of one police formula. Will he undertake to write to Committee members before Third Reading to list other precedents that exist elsewhere in local government funding arrangements?

I shall endeavour to do that. I shall be interested to ascertain whether we can trawl through the statutory provisions of previous Local Government Acts, although we would not want to spend an inordinate amount of time digging through the annals of history.

I do not seek a comprehensive response, just a few further examples.

I shall do my best.

I am more reassured, but how many different formulae will there be? Are we talking about two or three? I would be concerned if there were many more than three or four, and it is important to get an idea of the number. If there are three or four, we will be able to understand that there different ones for counties or local authorities. If there are any more, the system will become confusing.

I assure the hon. Gentleman that this is a discrete and limited grant operation. My understanding is that there are only a limited number of different types of local authorities—counties, unitaries, metropolitans, and fire and civil defence authorities, for example. We will need different formulae to reflect their different characteristics. It is not an endless and complex labyrinth of formulae, but if I can provide the hon. Gentleman with a more detailed answer at a later date, I will do so.

In summary, the Government need to have the flexibility to have a strategic grant-giving powers approach, and I urge the Committee to reject the amendments.

We have had a useful exchange, and I am reassured. I still do not understand why much of the flexibility, which the Minister wants in order to make the special additional payments, cannot be found within the existing system. There must be a way for the Government to respond to and the system to cope with a bid that comes in with odd circumstances. We have been reassured also that the system is not completely unusual and that the practices take place elsewhere. I am almost convinced that the proposal to make granting payments in instalments and to make a consideration that a grant payment may not be made in a financial year is a technical provision and not about trying to withdraw grants.

Mr. Leslie indicated assent.

The final point on which I wanted reassurance was that we would not establish six or seven different systems. Again, the Minister has reassured me that we are probably talking about only three or four formulae, depending on different authorities. Having had those reassurances, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

I beg to move amendment No. 4, in page 2, line 17, at end insert—

'(2) In section 2(3) of the Civil Protection in Peacetime Act 1986 (c. 22) (emergency) for the words ''regulations made under section 3 of that Act'' there shall be substituted the words ''under section 3 or 3A of that Act''.'.

This is a short technical and consequential drafting amendment to ensure that the references in the Civil Protection in Peacetime Act 1986 are consistent with the Bill. The amendment will remove references in the 1986 Act to grant-making regulations—currently the Civil Defence (Grant) Regulations 1953—and replace them with reference to sections (3) and (3A) of the Civil Defence Act 1948 as amended by the Bill. The amendment will allow local authorities to continue to use civil defence grant for emergency funding and not simply for responding to hostile attack from a foreign power, which was the original intention of the 1948 Act.

I apologise to the Committee for the oversight in the drafting of the Bill and the need for the amendment. Without the amendment, we would risk returning to the old system that could prevent us planning for non-hostile attacks, such as adverse weather conditions, foot and mouth and chemical hazards.

I have no reason to doubt the Minister's explanation for what is largely a technical amendment. It is unlikely that we will oppose it after further clarification from the Minister.

The Minister may have an encyclopaedic memory of all the provisions of the Civil Protection in Peacetime Act 1986, but I do not. Why do the words that the amendment would delete start with

''regulations made under section 3''?

The words that will be inserted instead begin with

''under section 3 or 3A''.

The word ''regulations'' will disappear. Will the Minister or his colleagues assure me that if the amendment is made, the 1986 Act will still make sense?

My second point flows from what the Minister said about the importance of stressing that since the 1948 Act the scope for civil defence and the civil defence grant has broadened. I am sure that there is a wish that we should not be restricted to defending the civil population from purely armed attack. However, given present circumstances in which the risk of such armed attack is greater than it has been over the past decade, will the Minister assure us that the provisions that the amendment will change will not result in a reduction of the activity that is directly related to protection against an armed attack? He will understand that there is appropriate public concern about this matter, and that assurance would be helpful.

The 1986 Act was the result of a private Member's Bill—I was not in Parliament in 1986; I am not sure where I was, I was 14 years old—that broadened the limited powers specified in the 1948 Act. I understand that the provisions in the Bill and the amendment would not reverse the situation.

The 1986 Act broadened the range and remit of the powers under which local authority emergency planning units were able to spend the grant. That applies to planning for peace-time activities and, if the need arises, to planning for potential hostile attack. I have seen some local authorities' detailed emergency plans, and they cover an enormous range of eventualities. Therefore, I can assure the hon. Gentleman that the wide-ranging scope will continue.

The hon. Gentleman asked a technical question about why the amendment would substitute the existing phrase that contains the word ''regulations'' for a phrase that does not include that word. I am assured that there are no regulations under the new system. We will have a published formula and criteria. I have asked about the provisions of the amendment and I was reassured on several points. Asking questions of a parliamentary counsel was an enlightening experience. I can assure the hon. Gentleman that it seems to us that the Government have been entirely in order.

Question put and agreed to.

Clause 1 ordered to stand part of the Bill.