Localism Bill

Lord McKenzie of Luton Excerpts

Tuesday 5th July 2011 Lords Chamber

[Lord Greaves]

My Lords, I have added my name to amendments in this group and I agree with everything that the noble Lord, Lord Jenkin, has said.

I am sure that most Members of this Committee, never mind the whole House, will not spend a lot of time reading the details of Schedule 5 to the Bill and all the ways in which the Secretary of State will be able to lay down very detailed powers and instructions for local authorities on how to carry out council tax referendums. However, these measures are extraordinary, and typical of a huge amount in the Bill. If the Bill constitutes localism, it is extremely detailed top-down localism.

I have seven amendments in this group, six of which are effectively the same. They seek to remove the description of high council tax increases as “excessive”. The Bill says that if a council wants to impose a council tax increase which is higher than the Secretary of State thinks is appropriate, as agreed by the House of Commons, it will be described as excessive. This is bad legislation. The word is prejudicial rather than neutral and is almost a slogan. One of the things that the Secretary of State will be able to do is to determine the question in any referendum that takes place. I can imagine a question such as, “Do you agree with your council that they should impose an excessive rise in the council tax this year?”. That is the effect of “excessive”. Legislation should be neutral and should not use such words. My amendments seek to delete “excessive” and replace it with,

“higher than the level recommended by the Secretary of State under the provisions of this Chapter”.

That is what the legislation should say. It should be value neutral and simply set out what the position is. Of course, if the noble Lord’s amendments were all passed, mine would be pre-empted and would fall. I would be delighted if that were the case as I would rather not have these detailed prescriptions there in the first place. However, if we are going to have them, we should use proper language and not political slogans.

My Amendment 129LABA concerns the date of the referendum. It probes the Secretary of State’s ability to lay down detailed instructions on this and seeks to ascertain why councils cannot be left to deal with this themselves. However, this is in effect already covered by the rather more sweeping amendments of the noble Lord, Lord Jenkin, and therefore I do not need to speak to it further.

[Lord McKenzie of Luton]

My Lords, first, I wish to speak to the amendments spoken to by the noble Lord, Lord Greaves, with which we sympathise. It is not just a case of semantics and of substituting one form of words for another. For the reason that he has outlined, we agree with him that if “excessive” is used in the legislation it will inevitably end up in the question that is put to the voters in a referendum, as it would be the technical term. We are denying local authorities the right to campaign for the council tax increase that they want. If we want to approach this matter in a neutral way, the very least we can do is to remove prejudicial legislation, as the noble Lord termed it.

The Minister may well say that “excessive” is not a new term and that it is embodied in the current capping legislation. However, there is a difference between that position and what may happen in the future because the current arrangements for capping will not be put to a popular vote. Therefore, that term is effectively an internal term rather than one that would inevitably feature in the referendum question on some basis or other. For that reason, I believe that we need to recast the term that is in the legislation.

I agree with the noble Lord, Lord Jenkin. It is a central point of our concern with this legislation that it is stuffed with detailed powers and that the Secretary of State has to draw back from the nominal rights that it is seeking to give to local authorities. I doubt whether the gap between finishing Committee in July—if we do—and Report in September is long enough to unpick some of the stuff that has come from our discussions today, but at least there is perhaps a longer gap than usual. Our attitude to the amendments of the noble Lord, Lord Jenkin, depends on precisely where the Government are on this. When last Thursday we had our first canter around the issue of capping powers, it was said that all Governments of all persuasions had held to themselves a reserve power. If in fact it is the Government’s position that they are eschewing that power, we do not feel obligated to hold to the position that I think I outlined—that it is difficult for us to deny the current Government those powers if we took them in past years. If that is not one of the criteria of the Government, that point falls away. When he responds, perhaps the Minister can tell us whether the Government see the arrangements currently included in the Bill as capping powers, whether they believe that they should have the right to hold those powers, or whether they are, by one formulation or other, happy to let local electors decide on what the appropriate level of council tax should be. If his response is, “Well, we think there should be reserve capping powers and this is what the Bill is about”, that is one thing, but if the argument is that the Bill is about making sure that electors are the final arbiters in this, that helps us in our position on the matter.

I say to the noble Lord, Lord Jenkin, that there is a question about his formulation. Under the Government’s proposition, a level of council tax, if deemed excessive, requires the authority to produce a substitute calculation. As I understand it, a substitute calculation is one that is not excessive. I suppose that most authorities in this position would compute a substitute council tax that was just a smidgen short of what the excessive level would be. I am not quite sure, on the noble Lord’s formulation, what that substitute calculation would be and what would happen in circumstances where there was a referendum, 5 per cent of the electors called for it, and they did not support the level of council tax that was proposed. What are the consequences of that? If the noble Lord could help us with that point, it would be appreciated. It is clear under the Government’s propositions what the consequences would be, but I am not quite sure what the consequences would be under the noble Lord’s formulation.

I think that this has been a very helpful debate. It is incumbent on the Minister to say whether the Government see the powers as capping powers and believe that they need them, or whether that is not their position and this is basically about letting electors decide what the appropriate or inappropriate level of council tax would be.

[Lord Tope]

My Lords, I suppose I can rise to speak on behalf of the only party in this House that is unencumbered by a history of support for capping, but I will try to resist too much temptation there. My name is obviously with my noble friend Lord Greaves on his amendments. I think he is right and I hope that the Government will consider very carefully that fairly simple change to wording which, as others have said, is actually very important. If these provisions are to be in Bill—like my noble friend Lord Greaves, I would rather that they were not—it is important that we have a neutral wording and not a prejudicial wording, which “excessive” must be, especially if that wording is likely to be used either as part of a referendum question or at least in support of any such referendum.

My particular reason for wanting to say a few words now is to support the noble Lord, Lord Jenkin, both in his general and particular plea. The general plea relates to much less regulation and dictation from the Government, a message repeated throughout the Bill. It is salutary to remember that when Ministers first announced the Bill, it was greeted with a pretty widespread welcome right across local government. The aim and intention as enunciated by Ministers was, broadly speaking, welcomed. We knew that there would be some things in here that we would be less happy about, but we thought that most things we would be fairly happy about. Then we came to see the detail of the Bill and the extent to which, as others have said, if it is localism at all, it is localism top-down. It is also prescribed by ministerial regulation and it is potentially constrained by Secretary of State powers. I join the noble Lord, Lord Jenkin, in urging Ministers, during what will be a longer than usual gap between Committee and Report, to take courage and look seriously at whether we need to be so risk averse that we hedge everything with regulations, Secretary of State powers, and so on. I said at Second Reading that if we mean localism, we have to trust local government. Some may occasionally get it wrong, but is that a reason to legislate for the vast majority that are to be trusted and should be trusted?

I turn now to the particular of this, which is about council tax capping. I do not have to be quite as measured as the noble Lord, Lord McKenzie. I do not have to carry that history and I understand that. It is council tax capping, as others have said. In reality, it is probably the most effective capping that a Government have ever had, because I suspect that very few, if any, local authorities will take the risk of setting what is prescribed as an excessive tax. It will be a huge risk: not just the risk of whether they can or cannot win a referendum but the cost and administrative upheaval of having to rebill later.

That seems to me to fly in the face of a fairly basic principle of localism. I have always believed that it was a fundamental democratic principle that local councillors are elected—personally, I wish that they were elected under a fairer system, but, nevertheless, they are elected —to determine the needs of their local community and to balance those needs with the level of tax that has to be raised to meet them. That is a tricky balance. Then they are accountable for their decisions to the people who elect them, the local people. We come back to the fact that if there is to be a referendum on council tax levels, it should be the local people who determine the need for a referendum, not the Secretary of State. To me, that is what localism is about, and that is why I support both the general statements of the noble Lord, Lord Jenkin, and his particular in the amendment.

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[Earl Attlee]

I am extremely grateful to my noble friend for refreshing my memory. He is absolutely right; that is the current situation.

[Lord McKenzie of Luton]

The Minister seems disinclined to accept the amendment, which would remove the word “excessive” from the legislation. Will he give an undertaking that the word “excessive”, as applied to the proposed council tax of any local authority, will not have to feature in any referendum question?

[Earl Attlee]

My Lords, I hope to give the noble Lord some comfort on that. Within the context of that policy, the Government think they are right to refer excessive increases and to require that such increases be approved via a referendum. There is enough flexibility in these provisions to enable sensible principles to be defined. The Secretary of State has the power to set different principles for different categories of authority; and, in exceptional circumstances, if an authority is unable to discharge its functions in an effective manner or unable to meet its financial obligations, he can disapply the referendum provisions altogether.

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Moved by

[Lord McKenzie of Luton]

129LZA: Schedule 5, page 264, line 27, at end insert “, and must be accompanied by the reasons for determining why there should be different categories of authority for the year under consideration”

[Lord McKenzie of Luton]

My Lords, this is a straightforward matter and I hope it will not detain us for long. In determining the principles by which a level of council tax is considered to be excessive—or whatever replacement word we may have—the Secretary of State can adopt different principles for different categories of authority, a point just raised by my noble friend, but such principles must apply to all authorities in the same category. There is nothing new in that and similar arrangements operate under existing capping rules. In determining categories of authority, the Secretary of State must take into account any information which he thinks is relevant. In the interests of transparency, this amendment simply requires those reasons to be set out in the report on the principles, which must be laid before the House of Commons.

This is especially important because, in government terms, these matters are to be determined by the public. I do not know whether the Minister can expand a little on what type of principles are likely to be identified in the circumstances which would help members of the public, if they were to vote, and how and what information would be conveyed to them.

[Earl Attlee]

My Lords, this amendment appears to assume that the Secretary of State will inevitably determine different categories of authority in a set of principles. That is not necessarily the case. The proposed new Section 52ZC allows the Secretary of State to determine different categories of authority, but he may also decide to apply the principles equally to all authorities. Without pre-judging the Secretary of State's decisions, he may, for example, determine as a category districts, councils, counties, metropolitan boroughs, police or fire authorities, which I think fully answers the question that arose in the previous group of amendments. That would be a matter for the Secretary of State to decide on a yearly basis. The Secretary of State is already required to set out his principles in a report to the other place. It is inevitable that the reasons for the principles will be debated there before the other place gives its final approval. Therefore, the proposed new clause is unnecessary and I urge the noble Lord to withdraw the amendment.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for his reply. The amendment would have operated not only in circumstances where there was differentiation between different sorts of authorities but where there was no differentiation, because presumably, in making the judgment, the Secretary of State would have had to take into account a certain amount and range of information. I was simply seeking a situation where, when it came to the information to be taken into account in making the determination, either everyone will be in the same category or there will be different categories, but either way this should be transparent and included in the report that goes to the House of Commons. If the Minister says that that would inevitably be the case and it would be covered in the report, I am happy that that is on the record and I beg leave to withdraw the amendment.

Amendment 129LZA withdrawn.

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Moved by

[Lord McKenzie of Luton]

129LZB: Schedule 5, page 265, line 43, after “rates,” insert “non-domestic rates,”

[Lord McKenzie of Luton]

My Lords, I shall speak also to the other amendments in the group. I hope that noble Lords will forgive me if my speech is not so brief. Amendments 129LZB and 129LAB seek an identical wording. The first relates to the substitute calculations of a billing authority, the second to substitute calculations of a precepting authority. Each calls for the inclusion in accruals of non-domestic rates in addition to the redistribution of non-domestic rates. This does no more than make provision for the localisation of the business rate in due course. In the absence of such an adjustment, by what mechanism will these calculations take account of localised business rates, should that be where we end up? Prior to this happening, perhaps the Minister will confirm the position of redistributive non-domestic rates. Will he confirm that currently, taking one year with another, amounts collected are fully redistributed? Will he also confirm that there are no plans or discussions concerning the possibility of charging amounts against the national pool before redistribution?

Amendment 129LAC concerns the recovery of the costs of a referendum. New Section 52ZN(7) allows a billing authority to recover from a precepting authority the cost of holding a referendum. However, new Section 52ZN(8) gives the Secretary of State powers to deny or modify the right of a billing authority to recover such costs. The impact assessment estimates that the cost of a referendum, depending on the size of the local authority and whether other elections are held at the same time, could be between £85,000 and £300,000. Therefore, not inconsiderable sums are at stake. In what circumstances is it envisaged that recovery of referendum expenses would be denied to a billing authority? Does the Minister consider that the term,

“incurred by the billing authority in connection with the referendum”,

will cover the costs of rebilling in the event of a referendum not supporting the level of council tax calculations—in other words, the costs associated not only with the referendum but with its consequences? If the term is not meant to cover that, how is this otherwise catered for?

Amendment 129LE deletes a range of regulation-making powers that the Secretary of State has in connection with a referendum. In this respect, it is more focused and less ambitious than that of the noble Lord, Lord Greaves. The powers extend to the question to be asked; publicity; the limits on expenditure; the conduct of the authority, its members and its officers; when, where and how voting is to take place; how the votes are to be counted; and the disregarding of alterations in a register of electors. Frankly, it is outrageous that these matters cannot be left to an individual local authority. Amendments 129LF and 129LG deal with another matter.

As the legislation currently stands, the Secretary of State has power to determine that the referendum provisions are not to apply, notwithstanding that a council’s tax calculations are, in his view, “excessive”. The Secretary of State can do this if he considers that, without that level of increase, the authority would be,

“unable to discharge its functions … or … to meet its financial obligations”.

Our amendment is an opportunity to probe the meaning of this, but also to argue for an opportunity for a local authority to request an independent assessment of whether the criteria are met. There was limited debate in Committee in the other place on this issue. The line that the Minister was taking was that this safeguard was really only about a crisis or a catastrophe; for example, the collapse of BCCI, where the Western Isles had invested heavily. Clearly there are extreme examples, but where principles are applied to a local authority as part of a category of authorities, they do not sufficiently take account of its specific circumstances.

The Minister discussed the application of this safeguard where it was an issue about the level of services and how they were provided. In the House of Commons Bill Committee of 8 February, col. 440, he argued that local authorities had to set a budget that was lawful and would enable them to fulfil their statutory functions. However, if such a lawful budget was deemed excessive, it would only stand if supported in a referendum; if not, it could logically be the position that the authority would therefore be unable to fulfil its functions. The fact that the Ministers may be satisfied in aggregate that local authorities have been provided with sufficient resources—and we might argue about that—does not mean that each and every one in the same category will be. It may be that a particular authority has encountered issues of provider failure, litigation and redundancy costs, possibly because it is in transition to a delivery model that the Secretary of State might find more acceptable. It may be that some of the issues, for example, relating to contract litigation, where it might be genuinely difficult to provide sufficient information for a realistic assessment in a referendum at a particular point in time, could be in point; indeed, it could be prejudicial to a local authority’s case for it to do so. Sometimes it would difficult to condense quite sophisticated legal issues into information that would accompany a referendum question. So we have two fundamental points that these particular amendments are seeking to probe.

What does the Minister see as the boundaries of the use of these provisions? Discussion at the other end suggested that they were only to be applied in extreme, catastrophic circumstances. We postulated other circumstances—but not routine—where a local authority should not be forced through a referendum with all the costs and uncertainties that this entails. Our amendment, as well as being a probe, also sets out an alternative route for a local authority to benefit from this provision, whatever its boundaries. There should surely be a right to some independent assessment of whether these provisions apply. I would not commit it to the precise mechanism that we have set down; I simply raise the issue of the principle. I beg to move.

[Lord Greaves]

My Lords, I have a later amendment, Amendment 129LEA, which is on its own. I would have included it in this group if I had quite understood what the latter part of the amendment tabled by the noble Lord, Lord McKenzie, was about. The new Section 52ZR, which the Bill would insert into the Local Government Finance Act 1992, provides for the Secretary of State to give a direction,

“that the referendum provisions do not apply”,

because,

“the authority will be unable to discharge its functions in an effective manner or … the authority will be unable to meet its financial obligations”.

When speaking in the stand part debate introduced by my noble friend Lord Shipley last week, the Minister referred to this briefly when he said that these provisions would be used only in very extreme circumstances, such as,

“where the High Court has exercised its powers to appoint a receiver where an authority has failed to service its debt”.—[Official Report, 30/6/11; col. 1971.]

I do not know how often that happens, but I do not think it has happened, certainly in England, in my lifetime. It seems very rare, so I tabled Amendment 129LEA for the purpose that the noble Lord, Lord McKenzie, tabled his amendment: to probe the Government on exactly what kind of circumstances this provision might be used in. In view of that, I will listen carefully to the answer in this grouping, and I will not move my amendment when we get to it.

[Earl Attlee]

My Lords, Amendments 129ZB and 129LAB would add the words “non-domestic rates” to new Section 52ZF(3)(a) and new Section 52ZJ(4)(a). There is no need to do this. The wording “redistributed non-domestic rates” covers the sums that would have to be taken into account in respect of non-domestic rates when an authority carried out its original council tax calculations.

The noble Lord, Lord McKenzie, asked whether amounts of non-domestic rates are fully redistributed. The answer is yes, by virtue of Schedule 8 to the Local Government Finance Act 1988. When making substitute calculations to determine an amount of council tax that is not excessive by reference to the principles under the new Sections 52ZF and 52ZJ, an authority must use the amount determined in its previous calculations for redistributed non-domestic rates. This is because an authority should not be able to change its estimate of the amount it will accrue in the year in respect of redistributed non-domestic rates to calculate an amount of council tax which complies with the excessiveness principles.

[Lord McKenzie of Luton]

Perhaps I can help the Minister. The purpose of these amendments is much more straightforward than that. It is simply to try to cater for the situation where we no longer have redistributed non-domestic rates but have directly billed non-domestic rates. That is the sole purpose.

[Earl Attlee]

My Lords, these are complex matters, and I am advised that I should read it all out.

Subsection (8) of new Section 52ZN provides the Secretary of State with the power to modify or disapply a billing authority’s entitlement to recover costs in connection with a council tax referendum from a precepting authority. Amendment 129LAC would remove this provision. This power is needed so that the Secretary of State may make different provision for the recovery of costs in a situation in which a number of billing authorities are required to hold a referendum on a major precepting authority’s increase in council tax but one billing authority fails to do so. In this situation, it would not be appropriate for those billing authorities to recover their costs from the major precepting authority. Provision may instead be made for the billing authorities to recover their costs from the defaulting billing authority. We are aware that the Delegated Powers and Regulatory Reform Committee’s report on this part of the Bill recommended that this power should be subject to the affirmative procedure. We will consider that recommendation carefully and will return to the matter in due course, if required.

Amendment 129LE seeks to limit the matters the Secretary of State may make provision for in regulations regarding the conduct of council tax referendums. The regulations would include setting out what is acceptable in terms of publicity, expenditure, the conduct of authorities, their members and officials, and the counting of votes, so these are significant issues. We consider that it is important that these matters be prescribed in regulations, as an authority will be bound by the result of the council tax referendum, in contrast to a local referendum. It is intended that the regulations made under these powers will be modelled on the Local Authorities (Conduct of Referendums) (England) Regulations 2007, which make provision in relation to the conduct of referendums on local government executive arrangements. I can assure the noble Lord that the regulations will be subject to consultation with the Electoral Commission.

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[Earl Attlee]

My Lords, I can assure my noble friend that my words are very carefully chosen.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for his very full response to these amendments. We will need to read the record to see what we wish to take forward from this, but I just want to follow up the point about the reserve powers that the Secretary of State is to have.

I can see that such powers would be necessary in a range of circumstances—including in catastrophic circumstances, at one end of the spectrum—and we are not arguing that, at the other end of the spectrum, there should be an automatic right to go to an unelected body to try to get off the consequences of this legislation. However, there could well be circumstances in-between. It may be that the solution would be—and perhaps this is what the Minister was suggesting—that you would separately designate a particular authority as a special category, but in general these regulations will be applied to groups of authorities, if not all of them together. Although the Government may well take the view that in aggregate they have enough to fulfil their functions, there could be circumstances of individual authorities where that is simply not the case. To be able to convince an electorate in a referendum that that is the case may not always be easy. There could be circumstances around litigation or sensitive commercial discussions where simply to spell out the upside and downside of that information provided in a referendum could be detrimental and prejudicial to the local authority. Therefore, has there not got to be some other safety valve in those sorts of circumstances, which are not the authority defaulting on its debt but the authority potentially getting into quite severe difficulty because of the potential downside of a court case, for example? It would be left not able to raise the level of tax that it thought that it should be able to deal with.

That is the point we are probing, which we have coupled with a right for an independent assessment in those circumstances. I ask the Minister to consider that point seriously. Whatever the supposed evils of capping at the moment, one of the benefits was that at least it was looked at on an authority-by-authority basis. If you had an authority which was in a sense in a particular circumstance, that could be taken account of within the principles that had been set. That seems to be not available under this formulation, which is a real issue.

[Earl Attlee]

My Lords, while not agreeing to take the matter away, I will unpack the issue with my officials and, if necessary, write to the noble Lord.

[Lord McKenzie of Luton]

I am very grateful for that. I beg leave to withdraw the amendment.

Amendment 129LZB withdrawn.

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[Earl Attlee]

My Lords, government Amendments 129LA and 129LB ensure that only residents and not business voters are entitled to vote in any council tax referendum in the City of London. This addresses an anomaly which has become apparent since the clauses were originally drafted. Without the amendment, business voters in the City would be able to vote in a council tax referendum even though they are not resident in the area. The amendments therefore provide that it is only the residents of the City of London who can vote, which will bring the City in line with the position in the rest of England regarding council tax referendums. I beg to move.

[Lord McKenzie of Luton]

My Lords, we are happy to support these amendments.

Amendment 129LA agreed.

Moved by

[Lord McKenzie of Luton]

129LAA: Schedule 5, page 267, line 17, at end insert—
“( ) On application by a relevant authority, the Secretary of State may direct that the substitute calculations referred to in subsection (5) may be increased by an amount determined by the Secretary of State.”

[Lord McKenzie of Luton]

My Lords, Amendment 129LAA seeks another safety valve for limited, possibly exceptional, circumstances. Where an authority’s council tax is deemed to be excessive, it will be required to hold a referendum. If the referendum does not approve the basic amount of council tax, the council tax is set by reference to a substitute calculation. A substitute calculation is an amount predetermined by the authority, which would not be excessive under the rules. One might suppose that in most cases the substitute calculation would be just below what the Secretary of State would deem to be excessive. Our amendment would offer a route to an authority to seek to have the substitute calculation increased by an amount to be determined by the Secretary of State. So we are not suggesting that this should be a reference to independent assessment.

We do not advance this proposition as a general route to overturn the results of the referendum—it would be necessary to develop specific criteria. However, there may be circumstances where a local authority should not be bound by the substitute calculation—for example, picking up a theme in relation to the previous amendment, events may arise between the commencement of a referendum and its conclusion which, if reflected in the information provided, might influence the result. It could be a contractual matter with adverse consequences; it could be announced closures of major commercial undertakings, particularly if they were localised NNDR, which could have a significant impact on the council’s revenue base.

What would happen if there was a genuine challenge to the result of a referendum? If this challenge were sustained, what is the position? Would the local authority have to apply the substitute calculation, notwithstanding that an adverse result in the referendum was found to be unsound? How would that all work?

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[Earl Attlee]

My Lords, I hope that the need to pay an EU fine will be an exceedingly unlikely event.

[Lord McKenzie of Luton]

My Lords, I am grateful to the noble Lord for his response but I do not think he really dealt with the question about an EU fine. It is provided for in this Bill and if the provision is removed we would all be delighted. A fine could be visited on a local authority at the last minute potentially after it has set its budget and its referendum detail is public.

I want to return to what happens if there is a challenge to the referendum—the Bill allows for that—and that challenge is sustained. If a local authority is deemed to have an excessive council tax increase—we must stop using that term otherwise it is going to be inculcated in our own speech as well as the text of the Bill—it has to hold a referendum. If that referendum does not support the council tax increase but is subsequently determined to be flawed, what are the consequences? It seems to me there are no provisions for the Secretary of State or anyone else to bring redress to the local authority which has been on the receiving end of malpractice in respect of the referendum.

[Earl Attlee]

My Lords, I imagine that the local authority will have to adhere to its reduced budget but, if I have anything to add on that point, I will write to the noble Lord.

[Lord McKenzie of Luton]

I beg leave to withdraw.

Amendment 129LAA withdrawn.

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[Earl Attlee]

My Lords, I shall speak also to government Amendments 129N to 129U. This group of amendments addresses two specific issues concerning the calculation of whether an authority’s council tax is excessive. First, the amendments ensure that a referendum on a council tax rise is not triggered solely because of planned expenditure which has already been explicitly supported in a local referendum. The amendments apply where a qualifying local referendum is held across the whole of the billing authority area, the county council or the GLA. In such circumstances, an authority may be able to disregard qualifying expenditure that it estimates it will incur in taking steps to give effect to the result of that referendum when calculating whether an increase in council tax is excessive. This means an authority will not have to take this expenditure into account when determining whether it must hold a council tax referendum.

The conditions for qualifying expenditure and qualifying local referendums will be prescribed by the Secretary of State in regulations. The regulations will include matters such as the information that must be available in advance of the local referendum, the time period within which the local referendum must have been held and restrictions on the expenditure that may be disregarded. For the avoidance of doubt, we are making changes only to the calculation which determines whether a council tax is excessive. We are not changing the calculation of council tax itself.

Secondly, the amendments ensure that increasing levies, which have to be treated as part of the billing authorities and certain major precepting authorities’ expenditure for council tax purposes but are outside their control, do not tip the balance in requiring an authority to hold a council tax referendum. These amounts will therefore also not be taken into account when an authority calculates whether its council tax is excessive. I beg to move.

[Lord McKenzie of Luton]

My Lords, I think that I am grateful to the noble Earl for his explanation but I would like to read the record. These seem not unreasonable amendments.

Amendment 129M agreed.

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[Lord McKenzie of Luton]

I wonder whether the noble Lord can help me on a point which is prompted by this proposition. If you are switching expenditure from one authority to another and precepting increasing on the one hand and reducing on the other, how does that play as far as the calculations for council tax referenda are concerned?

[Lord Shutt of Greetland]

My Lords, I need real notice of that last point as it is a bit technical. I have not heard of parish council tax capping. I have never heard of it and have a feeling that it is not there. That is the simple response to that.

It may be that having a little amendment putting parish or town in the Bill could be helpful so that nobody is in any doubt that parish means parish and town. I understand and accept that. Of course, there is no symmetry in the sense of the sizes of parishes or towns. For example, I was in the former Elland urban district council area, which never got parish council status, yet Todmorden, which is a borough council, did. There is no symmetry, but nevertheless this House has a wealth of experience of people involved in parish and town councils, so it is not surprising that such an amendment creates interest.

Through the legislation as a whole, we are enhancing the role of parish councils. They will be able to exercise the general power of competence when they meet certain conditions. They will be able to nominate assets of community value and we propose that they can express their intention to bid for an asset, triggering the full moratorium or window of opportunity. They will be able to initiate the preparation of neighbourhood plans and we will also be carefully considering the arrangements for parish polls as part of our proposals for local referendums.

However, we believe that Amendment 133 is a step too far and, in addition, is unnecessary and risks cutting across the intentions of the community right to challenge. We already expect local authorities to engage with their communities on services, including with parish councils, as part of the commissioning and engagement process. Where there are representations, we would expect these to be considered and taken seriously. If representations are made and concern over service delivery remains, parish councils are already named as relevant bodies under the community right to challenge. They would be able to issue a challenge to deliver the service if they believed they could do so differently or better. Relevant authorities will have carefully to consider these challenges.