Local Audit and Accountability Bill [HL]

Lord Tope Excerpts

Wednesday 26th June 2013 Grand Committee

[The Earl of Lytton]

My Lords, this amendment returns to an issue that was flagged up by more than one noble Lord at Second Reading—the question of mission creep.

One of the problems of local democracy is the perception that there is very little for the elector to influence beyond which party happens to rule the roost. The process of localism—and indeed the fruits of the Government’s initiatives on this—must surely be to redress this balance. That means having current, live and important issues, including matters of expenditure, at stake in local elections. I will return to this subject in respect of Clause 39, so I will leave it for the moment.

If the role of the National Audit Office is allowed to expand, as would be possible under this Bill, the question that the Local Government Association has asked—indeed, this amendment comes with its imprimatur—is: what is left for the voter to determine? Democracy and democratic accountability are clearly in point here.

The Local Government Association’s second question is: what is there to prevent the National Audit Office effectively replicating the investigative adventurism— my words, not those of the Local Government Association—of the Audit Commission? On our first day in Committee, the Minister said that a recreation of the Audit Commission by the back door is to be avoided and I entirely understand that. Just so, the recreation of its functions by an expansion of the National Audit Office is equally to be guarded against.

Amendment 18ZA would restrict the role of the National Audit Office to prevent this mission creep and the potential erosion of the proper function and role of local democracy. Its scrutiny would therefore apply to expenditure, principally that from central government. I will speak also to Amendment 18ZB, but on the detail of Amendment 18ZA I can see that the Minister may feel that this is too wide a get-out clause. However, if he could indicate whether the principle might be acceptable, I dare say that we could talk about the detail of the wording and how we can deal with that as the Bill proceeds.

Amendment 18ZB has been tabled, of course, to prevent mission creep, to which I have referred. It seems that the Bill effectively risks reintroducing some of the intrusive and costly activities that the abolition of the Audit Commission was supposed to have removed. Looking at the overall geometry, as the LGA would put it, the role of the National Audit Office would be restricted to evaluating expenditure that has a majority of its funding from the central government grant. It goes on to say that the NAO should be precluded from replicating the activities of the Audit Commission under its previous assessment and inspection regime.

I will leave it there. I dare say that the noble Lord, Lord Tope, may have some comments to make, as will other noble Lords. I beg to move.

[Lord Tope]

My Lords, I am grateful to the noble Earl, Lord Lytton, for moving his amendment, to which I have added my name. I endorse all that he said and, in deference to the Grand Committee, I will not repeat it; I will simply add a number of points.

The amendments of course come at the instigation of the Local Government Association, but reflect fairly widespread concern, based upon experience with the Audit Commission, about what is termed “mission creep”. Most, or perhaps all, of us would agree that the Audit Commission started very well. It did some very good work and continued to do so, but its mission and role expanded to such an extent that the Government, without too much objection elsewhere, have determined that it has now reached the end of its useful life. There is concern, whether well founded or not only time will tell, that the same experience could come to the National Audit Office—that having now got the limited role that was intended, over time, just as with the Audit Commission, the mission will expand.

I have had a useful briefing from the National Audit Office. It was mostly factual and very reassuring. Paragraph 2 states:

“The NAO considers that any future responsibilities it takes on within the Government’s new framework for local public audit should … align with the NAO’s core role of providing assurance to Parliament and holding Government to account over its use of resources”.

That is the intention behind Amendment 18ZA: to try to give effect to that. It may not be the best way of doing so; I do not know. However, the intention is there to say that if the NAO’s role is to Parliament in respect of the use of government resources, then those resources which are raised locally—which in some authorities are considerable; it varies—are outside the core role of the NAO as defined by Parliament and repeated by the NAO itself.

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Moved by

[Lord Tope]

19B: After Clause 37, insert the following new Clause—
“Local authority publicity requirements
(1) The enactments set out in Schedule (Local authority publicity requirements) shall have effect as follows.
(2) Any requirement for a local authority (in whatever capacity) to publish a notice, an advertisement or any other matter in a newspaper shall cease to have effect.
(3) Instead, the local authority shall publish the notice, advertisement or other matter in question in such a manner as the local authority thinks is likely to bring it to the attention of persons who live in its area.
(4) The Secretary of State may be regulations amend Schedule (Local authority publicity requirements) by adding or removing enactments.
(5) In this section, “local authority” means—
(a) a county council in England or Wales,(b) a district council,(c) a London borough council,(d) the Common Council of the City of London in its capacity as a local authority,(e) a county borough council in Wales,(f) the Council of the Isles of Scilly,(g) a parish council, or(h) a community council.”

[Lord Tope]

My Lords, in moving Amendment 19B I shall also speak to Amendment 19E, which must be the longest amendment I have ever tabled in 19 years in your Lordships’ House.

Amendment 19B would remove the statutory requirement to publish certain notices in the local press, and Amendment 19E, which runs to nine pages, lists the 163 enactments that require publication of statutory notices in the local press. I am grateful, I assume, to the Local Government Association for that list of 163—it certainly was not my homework. Subsection (2) of the proposed new clause would remove the statutory requirement to publish in a newspaper. Subsection (3) still requires a local authority to,

“publish the notice, advertisement or other matter in question in such a manner as the local authority thinks is likely to bring it to the attention of persons who live in its area”.

The requirement to publish statutory notices in the local newspaper was introduced in 1972. We lived in a completely different world 40 years ago where we would not have envisaged the enormous changes in communication and media opportunities that have taken place over that time. In 1972 a statutory notice in a well-read local newspaper quite probably was the most effective way of communicating with residents. In 2013, I would suggest that a frankly rather boring, hard-to-read notice published somewhere in the middle and back pages of, perhaps sadly, a much less well-read local newspaper, is the least effective way of all the opportunities now available to communicate any information to anybody, whether they be local residents or people with professional or organisational interests.

It is high time for us to remove that statutory requirement, something which has long been championed by local government. Indeed, a survey by the Local Government Association indicated that 84% of councils believe that there are less expensive and/or more effective ways to disseminate information contained in public notices. The only surprise to me is that 16% of authorities apparently do not share that view, although I suspect that they might be in the “did not respond “or “do not know” categories.

I have yet to meet members of the public who regularly look for and read statutory notices in the local newspaper. I will leave for another day the question of how widely read and circulated local newspapers now are, certainly in London, and how wide their reach is. Again, the Local Government Association’s survey suggests that in 54% of council areas—not London in particular, but council areas generally—local newspapers reach less than 40% of the population. Of that 40%, very few will be reading statutory notices. If this amendment were enacted, it would still of course be possible for a local authority to place a public notice in a local newspaper if it wished to. It may on occasion think that that is a desirable thing to do, but it would no longer be a statutory requirement.

We all know the considerable financial pressure facing local authorities, which is no doubt increased with today’s announcements. However, local authorities have spent a little over £26 million in the past year paying local newspapers for the cost not of general advertising but of statutory notices. They pay another £17 million, voluntarily and entirely properly, for general advertising. That is something that they can do of their own volition, but the £26 million is something that they are required to do by the 163 statutory enactments listed in Amendment 19E. I can think of little greater waste of money. I have said earlier that statutory notices are possibly the least effective means of communication. They must certainly be the least cost-effective means of communication.

Some of this is born of the understandable concern over the demise of many local papers. The demise of the regional press is an important issue which we have debated previously; it is not really a debate for this context. However, I do not think, and I do not think that anyone else thinks, that requiring the publication of statutory notices—in effect requiring local authorities to provide a £26 million-a-year subsidy to local newspapers—is in any sense the answer to the demise of and difficulties facing local media due to the changing world of communications. That is a much bigger force than that with which we are here to deal. Continuing this requirement seems rather Canute-like, facing the incoming tide of the change in how people receive their communications, which is no longer through statutory notices.

Rather more concerning to me—and something of which I was less well aware—is the fact that the LGA survey to which I referred found that 42% of local councils are charged by their local newspapers a higher rate for public notices, which they have no choice but to publish in the local newspaper, than exists for general advertising. That is perhaps a matter between the local authority and the local media, but nearly half of local authorities in the country have found that to be the situation. There is, again, something seriously wrong there.

We raised this issue at Second Reading and the Minister kindly wrote to the noble Lord, Lord McKenzie, and sent a copy to all of us who took part in the debate. There was an interesting section headed “Statutory notice”, in which she responded to some of the points that I had made. She said that it was a contentious issue, but I am not sure that it is. It is in the sense that local authorities have long said that this is a waste of money and they do not want to do it, but whether that is contentious or agreed by 84%—but not, perhaps, by the newspaper industry for understandable reasons—may be another matter. She concluded that section of her letter with the following comments. I want to quote from it because I would like to expand her remarks. She wrote:

“This is an issue that the Government continues to take seriously and look at. The Government will continue to work with those who have an interest in the future of statutory notices to better understand the key issues and evidence. We are currently exploring the scale of current requirements placed on public bodies”—

I hope that my Amendment 19E gives some indication of the scale of the requirement—

“and other sectors to put notices in newspapers. However, the Government has no plans, at this stage, to include anything on statutory notices in the Bill. It is more important that we take time to properly consider this complex subject rather than reach rushed conclusions”.

I am not sure that we are rushing this as the matter has been under consideration for many years. However, what we have before us now is the fairly rare legislative opportunity to repeal a very outdated statutory requirement and replace it with one which better reflects the 21st century complexities of communication in a multimedia society.

I hope that before the Bill concludes its passage in the other place and perhaps returns to this place—which may well occur towards the end of this year—the Government will reach conclusions on something which is hardly a new or surprising issue and take the legislative opportunity provided by the Bill to repeal that out-of-date 1972 requirement. I beg to move.

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[Baroness Hanham]

My Lords, happily, noble Lords have not quite agreed on this again, which is always very useful as far as I am concerned, but they have raised issues that are important and I want to acknowledge that.

The purpose of statutory notices is to inform the public about decisions that will affect their lives, their property and their amenity. There are 162 aspects they will need to be informed about but they are all relevant to local people, either individually or in groups. The amendment does not consider the effect on the public or on business and other groups, and would potentially put local people in the dark. We must acknowledge that there are still people who do not access information other than through newspapers. The local paper, where it exists, still fulfils a very public duty in that regard.

Removing statutory notices from the requirement to publish for local authorities would also stifle local transparency and the rights of local people to challenge decisions that impact upon their lives, because they would not know about them. This is a complex and contentious issue, as my letter to the noble Lord, Lord Tope, acknowledged. I do not believe there is any consensus about taking them out of local newspapers even if they cost a small amount to put in.

The burden of statutory advertising is one that we acknowledge, and the Communities and Local Government Select Committee’s recommendation a couple of years ago for a review of publication requirements for statutory notices cannot be ignored in the long term. Against this background, local newspapers remain an important part of local democracy, ensuring that local people are informed about the decisions that affect their daily lives. It is essential that local people have free and open access to information that can affect them or impinge upon them rather than having to rely on other means. I acknowledge that the requirement to publish some notices in newspapers comes from an age which has long since gone—1972 was a very different time from now—and they could perhaps be removed. However, other requirements remain as valid today as they always have been.

Looking at planning applications, there is a limited amount of time for local residents to make representations, yet applications can and do affect their and their neighbours’ quality of life and property. The previous Administration consulted in 2009 on removing the statutory requirements to publish planning notices in newspapers. It was not well received. The noble Lord, Lord McKenzie, may remember that.

The then Government concluded that it was clear from responses that some members of the public and community groups relied on the statutory notices in newspapers to learn about planning applications in their area. There was no conviction that good alternative arrangements could readily be rolled out. The effect of this amendment would therefore be to reduce public scrutiny regarding, for example, planning decisions, the provision of sex shops, bus-lane fines, casinos, betting shops and councillor allowances, among myriad others. I acknowledge that all 162 are laid out in Amendment 19E, but I have understandably mentioned a few which are important. Although some may be willing to see all these go, we would ask whether the blanket removal of a huge swathe of statutory notices is really in the public interest or ideal. That does not stop us looking at the statutory notices under initiatives such as the Red Tape Challenge, but they are currently as listed.

It is vital that we understand how local people receive and use information in the 21st century. Some make use of innovative technology, and everyone here sits with their little iPads making sure they know exactly what is going on at home when they are sitting here taking important decisions about legislation. However, not everyone is as privileged and not everybody has, or wants, easy access to technology. They like reading what they want in papers and we cannot disregard that.

It is also true that the money that pays for these statutory notices helps to keep local newspapers in existence. That is important to ensure that those who are not going to be tied up to the internet have ready access to information not only about statutory notices but about what is going on their local area. The newspaper industry is clear that competition with local authority newspapers for advertising revenue is damaging their primary source of revenue and preventing newspapers reporting on what local authorities are doing on behalf of local people.

It would be unfair to remove statutory notices in such a blanket way as proposed, particularly while independent newspapers are—as the noble Lord, Lord Tope, acknowledged—under threat and need to be kept in business. A small contribution to that is through the statutory notices, which seems a good use of public money. We would not wish to accept the amendment. With the comments I have made, and with the understanding that the coalition agreement was that we would try to protect local newspapers, I would ask the noble Lord to withdraw his amendment.

[Lord Tope]

My Lords, I am searching for the words in the coalition agreement which certainly comply with the amendment. I am, of course, grateful to all noble Lords who have spoken in the debate. Perhaps it was the way in which I introduced it; there seems to be some misunderstanding. There is nothing in what I am seeking, nothing in this amendment, which removes the requirement to publish statutory notices. What I am seeking to remove is the requirement to publish them in local newspapers; that is an important difference. I entirely agree, and wholly sympathise, with the view expressed by several speakers that by no means everybody accesses the web or electronic means of communications. The noble Earl, Lord Lytton, may well receive his parish notices by e-mail, but I suspect that not all in the parish study the parish e-mails. Maybe one day that will be the case, but it is not yet and I do not suggest that it should be.

This amendment would still require local authorities to publish their statutory notices, but it would require them to do so in a way that they thought likely to bring them to the attention of persons who live in the area. That could be in the local newspaper—perhaps in a better form than most statutory notices—by e-mail or on their website. Possibly the most effective way is still on a piece of paper put through the letterbox, which is still, I suspect, where many people get their information on planning applications and other matters of direct interest to their immediate vicinity. It is for the local authority to decide, depending on the circumstances of its own area, which is the most effective and cost-effective way of meeting a statutory requirement to publish public notices. Among the least effective ways is this statutory notice—with which we are all familiar but which is seldom read—published in the back pages of a newspaper.

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Debate on whether Clause 38 should stand part of the Bill.

[Lord Tope]

My Lords, I gave notice of my intention to oppose Clause 38 standing part of the Bill, and I did so to enable us to have a debate on what for many in local government is arguably the most contentious part of the Bill, or certainly one of the most contentious. I did not wish to try to amend the clause; I simply wanted to facilitate a debate to enable the Minister to give us the evidence that the abuse of the voluntary publicity code is sufficiently serious and widespread, and indeed is a prime cause of the threat to local newspapers, as to justify giving very considerable powers to the Secretary of State over the local publicity that councils can undertake.

I have been supplied with the wording of the coalition agreement which relates to this issue rather more than to the statutory notice one. The agreement states:

“We will impose tougher rules to stop unfair competition by local authority newspapers”.

For added value, the Liberal Democrat manifesto stated that we:

“Support a diverse regional and local media. We will help to maintain independent local sources of news and information by enabling partnerships between TV, radio and newspaper companies to reduce costs, and by limiting publicly-subsidised competition for paid advertising from local council free-sheets”.

I will leave it to the Minister to tell us what the Conservative Party’s 2010 manifesto stated, as I am sure she knows it off by heart.

As I said, I am asking the Minister for the evidence on which the Government are basing what I consider to be fairly draconian measures. I ought to say that I entirely agree with that section of the coalition agreement and, indeed, with that part of my own party’s manifesto. I believe that I am sitting next to the author of that, so I have little choice but to agree. However, I do agree. I offer no personal or political support for that tiny number of local authorities—I believe that it is a tiny number—which have gone too far in a party-political sense when publishing newspapers, magazines or other material. That criticism applies whichever party is involved or even, in one case, no party. I think that we all hold that view. However, is that abuse so widespread and general as to justify legislating to give the Secretary of State this power? I am not sure which words to use as I do not want to say, “power to control the publicity output of local authorities”, but that is where this is leading.

The measure gives the Secretary of State power to intervene even if a local authority has complied with the currently voluntary publicity code. I find that worrying. I have never believed that a small number of abuses, however wrong or undesirable or however much we all oppose them, is ever sufficient justification to legislate for everybody. However, that is what I think we are doing. I believe that the vast majority of publications, of whatever nature—magazines, newspapers, newssheets, letters from the leader—comply with the voluntary code. Of course, people may or may not agree with some of the comments but they give no cause for general concern and certainly no requirement for legislation.

Clearly, my Government take a different view so, by enabling this debate today, I am asking the Minister to give us more widespread evidence—rather than two or three perhaps misguided local authorities—that this is a problem that needs to be tackled in this way. I also wonder whether the continuing budget cuts are actually proving a far more effective restraint on local authority publications, whatever their content, than anything that we may legislate for; that may be something that we need to examine further.

I will pause now and give the Minister the opportunity to provide the evidence that many of us are seeking.

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[Lord Tope]

My Lords, I, too, have some concerns about this clause although I am a little unsure about whether to raise these concerns on these amendments or perhaps in a few minutes in the debate on whether the clause should stand part of the Bill. However, I will deal specifically with Amendment 19BB, which deals with the issue of retrospection. The case has been well made with particular instances. I have concerns about the retrospective nature of subsection (15) on rather practical grounds. By the time this Bill is enacted, all attention will be focused on the next financial year and not the current one. For the Secretary of State, whoever that may be at that time, to be penalising authorities at that stage for acting lawfully at the time when they took the action in respect of this current financial year seems to be both wrong and impractical. Should the Secretary of State take that view, what will be the practical implications by the time we are very nearly through the current financial year? I hope that when the Minister responds in a moment she will at least be able to give us some reassurance on the particular issue of retrospection, which is causing quite proper practical concern as well as political and philosophical concern.

[Baroness Hanham]

My Lords, as I understand it, the noble Lord has grouped together Amendments 19BB and 19BC. Amendment 19BB challenges the Secretary of State’s power to determine categories of authority and to set excessiveness principles which apply to them accordingly. Subsection (15) makes it explicit that, in doing so, he may differentiate between authorities on the basis of past council tax decisions. The amendment would remove subsection (15) because of concerns, as raised in our discussion, about retrospection and about it providing much wider powers to the Secretary of State when setting excessiveness principles.

I am happy to confirm that subsection (15) does not apply referendum principles retrospectively. It does not make any changes to the setting of council tax in previous years or change the referendum limits that applied. The Government were clear before council tax and levies were set for 2013-14 that they would take into account the decisions taken by local authorities on council tax in setting future principles. As already stated, no changes will be made to those principles that applied in 2013-14 or, indeed, to any other year. Both authorities and levying bodies can continue to plan accordingly.

In light of the fact that local authorities have had a pretty clear indication that their decisions for 2013-14 would be taken into account—what they did, where and why—in setting future principles, there is no argument that authorities were not aware of the Government’s intentions or justification for accusations of unfairness, given the Written Ministerial Statement of 30 January 2013, followed by an information note sent to all to local authorities on 8 February. Decisions taken on council tax increases for 2013-14 were taken in full knowledge of those warnings. Subsection (15) does not radically extend the Secretary of State’s existing powers. It clarifies those powers and removes any doubt as to whether they allow him to continue to take into account past council tax decisions when making decisions on the following year.

Amendment 19BC would provide that during a transitional period specified expenditure could be exempt from inclusion within the calculation on whether a council tax increase was excessive. The noble Lord will be aware that the excessiveness principles, which are set annually, already allow for different principles to be set for different categories of authority. For this reason, I assume this amendment is intended to press the case for the additional flexibility that we have been talking about.

It is intended that the detailed excessiveness principles for 2014-15 will be made later in the year. However, the principle will remain that local taxpayers should be protected from unwanted excessive council tax increases. It is local residents who should have the final say on whether to accept an excessive increase. We recognise that there may be specific reasons as to why a particular local authority may wish to set an increase above that level; the noble Lord, Lord Beecham, referred to the city deal in Leeds, and the noble Lord, Lord Smith, referred to Manchester. The city deal with Leeds on private sector investment has been predicated on increases in levies from the West Yorkshire Integrated Transport Authority. It is right that the levy set by the 22 elected councillors from the five district councils that manage the authority should be treated in exactly the same way as the costs of every other local authority investing in local transport projects. The Government accept that neither this nor any other city deal is dependent on setting an excessive council tax increase, nor that excessive increases in levies were agreed as part of the deal. The chair of the West Yorkshire Integrated Transport Authority put it well himself. He said that,

“transport will be managed locally rather than from Whitehall, with decision making to suit local needs, accountability to Council Tax-payers and creating a transport network fit for purpose”.

Local decision-making and local accountability to council taxpayers are what the current clause would provide by extending the transparency of decisions taken by bodies funded from council tax receipts and ensuring that local residents have their say when those decisions would require larger increases. In summary, the Secretary Of State already has flexibility to set referendum principles that address particular situations and the right to take into account the 2013-14 council tax level. With those explanations, I hope that the noble Lord will be willing to withdraw his amendments.

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[Lord Tope]

I begin by reassuring the noble Earl, Lord Lytton, that he may be in a minority of two. I share his concerns and would ask the Minister a question for clarification. Is it the case that, if a referendum on what is deemed to be an excessive levy is lost, that so-called excessive levy will still apply but the local council will have to cut its own budget in order to levy an appropriate council tax to meet the levy demand? Noble Lords opposite are saying yes; that is clearly the answer I am going to get and I want it to be clear and specific on the record. If so, we need to understand the implications of what we are doing. I can pick many examples, but flood defences might be appropriate. One can well understand where a drainage board wishes to put in a so-called excessive levy for particular work in a particular area and the public at large, who pay the council tax, may well feel that they do not want to contribute to that. As others have said, it can lead to unforeseen and undesirable consequences.

In addition to supporting the noble Earl, I also rise because my noble friend Lady Eaton is unable to be here today; she is at the Council of Europe. She has asked me to raise an issue in respect of the West Yorkshire transport fund. I will read into the record the contents of an e-mail she has received from the director of finance of the City of Bradford:

“You asked about the implications of the proposal that rises in levies, as well as Council Tax levels, could trigger a referendum.

The most significant implication for Bradford relates to current plans across the Leeds City Region to create a West Yorkshire Transport Fund. This fund is planned to grow to a total of £1bn by 2025/26 to pay for investment in the transport infrastructure. It will comprise, roughly, £150m from Dept for Transport, £100m from Local Transport Plan, £750m from the participating Councils, each of whom will contribute an increasing amount each year, by way of a levy. The current plan means that Bradford Council would put in £1.2m in Year 1, £2.4m in Year 2, £3.6m in Year 3 etc. The total investment over the period to 2025/26 from Bradford would be £161m.

It’s worth pointing out that the Transport Fund is a central plan in the Leeds City Deal, a key part of the Government's regional policy. While the Transport Fund is not the only element, it provides the underpinning infrastructure investment on which other investment activity builds.

Now, before the proposal to treat the levy by the same referendum rules as Council Tax, this plan held good. For citizens, the plan did of course mean that, while the Council Tax element of their bill would be restrained at below 2%, they would pay an increasing amount for transport investment. (And leaving aside the referendum issue, the decision to create and sustain the Fund ranks among the most significant decisions in the next budgeting rounds for participating Councils.)

The Bill’s proposal means that the Transport Fund can only be afforded in its current form if offsetting reductions are made across other services in the Council. So, by Year 3, for example, savings in other services would need to be roughly £2.4m higher than otherwise, for Bradford to afford its currently planned contribution of £3.6m in that year.

From a financial perspective, the proposal means … If investment in transport remains a priority, and the planned regional-level investment makes sense, there is now much sharper trade-off between transport and other choices. … If investment in transport has to be significantly reined in to satisfy the ‘below 2% rise’ rule, the investment returns will be significantly curtailed, with the reduced economic impact (which in turn would expect to feed through to a weaker taxation base of citizens in work and firms in business paying rates) ... For individual citizens/households, a lower aggregate taxation burden than they otherwise would face”.

That ends the quote from the director of finance at the City of Bradford, which I undertook to raise today. I hope the Minister is able to respond, if not today then later, particularly to the noble Baroness, Lady Eaton, on whose behalf I have raised this.

[Lord Smith of Leigh]

My Lords, I agree with the noble Earl about the problems of the electoral cycle. It was a bit disappointing that this is the fallow year for metropolitan authorities so we did not have elections. Noble Lords may recall that Wigan won the FA Cup and the feel-good factor was particularly good; obviously there have been fantastic comments on social media, but unfortunately we did not have any local elections to take advantage of that.

It was really interesting that the noble Lord, Lord Tope, read out the views of the director of finance from Bradford. The answer that the Minister gave to the earlier amendment was that, under Clause 39, the current provisions of the Localism Act, which define the relevant basic amount of council tax increase, will change from being what the council itself sets to include levies and other charges. Therefore, decisions that were entirely within the law as it stood earlier this year in March will be affected.

We had a debate earlier on the council tax referendum principle. The Government say they are not capping but actually they are. In my long experience of local government, I cannot believe that once the Secretary of State sets out the guidelines to which a referendum will apply, any local authority would want to set an amount of council tax increase above that guideline. If it does, it is on to an absolute loser. There is no way it will win a referendum on that. Which council tax payer is going to vote for higher council tax? They are not asking, “What services are being cut?”. It is a simple referendum on the increase in council tax and nobody wants it. The Secretary of State may want and need that part of it but effectively it is capping local authorities.

Capping does not always have the longer-term political impact that Governments may think. When capping was first introduced, my authority was one of the 22 Labour authorities that were all capped at once; no Conservative authorities were. We set a budget, but the Government said we could not and that we had to reset it and make significant cuts. When we came to the elections that May, we had a really big increase in our majority, so it did not have any negative political impact. I have great sympathy with the noble Earl’s position. Do we need this clause? I do not think so.