§ Mr. Kenneth Baker
I beg to move amendment No. 32, in page 53, line 5, at end insert—'(3) Notwithstanding subsection (2) of section 3 of the Rates Act 1984 the principles in accordance with which the Secretary of State exercises his power under that section to determine a level for the total expenditure of a relevant authority in the year beginning with the abolition date may differ from those applied by him in the case of any other relevant authority.'.
We have always recognised that in allocating the abolished authorities' spending among successor bodies for rate support grant purposes generally, we cannot rely on any simple indicator such as the successor authorities' present expenditure or population. For example, in the case of the costs of the GLC's transferred housing stock we clearly must take into account that some boroughs took very much larger transfers than others. That is why clause 78(2) confers power, for one year only, to make adjustments to successor authorities' targets without regard to general principles. I believe that that is supported by both sides of the House.
The same arguments apply to the expenditure levels which have to be set for successor authorities selected for rate limitation. Without this amendment, we could face the situation where it was obvious that one selected authority needed to spend more than another on transferred functions, but we could not allow for this because there would be no general principle to describe it. I should stress that we shall still have to apply principles to each authority, which will have to be reasonable. We shall have to justify the reasonableness; we cannot pluck figures out of the air.
I commend the amendment to the House as a sensible precaution to ensure that we can set reasonable expenditure levels that take proper account of the costs of transferred functions.
§ Mr. Straw
The Minister said that the Secretary of State would have to apply principles in relation to each authority and to act reasonably. Will those principles be published, because in this case the Government will be acting on an authority-by-authority basis? The Minister knows that problems arose because some of the yardsticks that the Government were following were not published until late in the day and it was recognised that that was a mistake, as they were published in the end, and simply added to the mutual suspicion that had built up.
Applying principles across the board is one thing. We can object to principles, and often do so, but there is rough justice as between one authority and another. However, where different principles apply to different authorities, it is of crucial importance that they should be published, so that those authorities and others can judge whether the Secretary of State has acted fairly. I should be glad if the Minister would reply on that point.
§ Mr. Tony Banks
This may be the only opportunity to put in a few other questions that the Minister may be able to answer. The first concerns rate limitation for certain successor bodies. It is a pity that neither the Minister nor the Secretary of State suggested that there should he rate limitation on London Regional Transport. I note that that successor body, in anticipation of abolition, is about to put up its fares and make its precept at whatever level it wishes. Can the Minister guarantee that the level of contribution of each of the London boroughs will be matched by a similar amount of GREA in respect of whatever they are required to pay to the London residuary body?
Can the Minister assure us that the London boroughs will not attract block grant penalties as a result of 727 overspending by the residuary body? Will he remove any doubts that Labour Members and boroughs may have by making the residuary body responsible for its block grant and for any penalties that might be attributable to it?
Will the levy of the residuary body, or of any of the successor bodies, appear as a separate item on the rate demand? No doubt would exist on that point if it were a precept instead of a levy.
§ Mr. Kenneth Baker
The answer to the last question asked by the hon. Member for Newham, North-West (Mr. Banks) is that the levy from the residuary body will have to be determined by December of this year for the following year. That is one reason why the residuary body will have to be appointed in shadow form relatively soon. It will have to take up its preparatory planning responsibilities from 1 September this year and determine the levy.
We do not envisage the residuary body's levy appearing, as it were, as a separate item in the make-up of the rate demand. That will be a matter for the individual local authority to determine, though it will probably want to itemise it separately so as to show its ratepayers the element that comes from the residuary body.
To the extent that I followed the hon. Gentleman's question about penalties and targets, I have explained that the clause allows us to vary targets. Under clause 78, the Secretary of State can vary targets to take into account a variety of matters. That is on the assumption that targets will still operate in 1986–87. I explained in Committee that I am still actively pursuing the matter at various meetings. I emphasise that the change to which I am referring will be transitional and for one year only. Ministers are not absolved from exercising their powers reasonably.
§ Mr. Baker
We have always acted reasonably, as the various court cases show. When the GLC and ILEA take us to court, we win time and again because the court vindicates us in view of the reasonable way in which the Secretary of State for the Environment exercises his judgment.
We have had a remarkable victory this week in cases which the GLC and the ILEA brought. I do not know how much they have cost their ratepayers and whether they have been awarded our costs as well. The GLC does not seem to think that any week passes well without taking action against my Department.
§ Mr. Baker
That statement comes from the chairman-elect. I cannot wait until he is in his frock coat, tails and pinstripes, presiding over the GLC, to see what he proposes to pass through.
The hon. Member for Blackburn (Mr. Straw) asked if I would publish the principles as they apply to different authorities. I shall examine that point, but I cannot give an undertaking on it now because it pertains to the whole regime of rate capping and the powers and responsibilities we have under the Rates Act.
§ Mr. Baker
I do not necessarily accept that, because this year, as the hon. Gentleman knows, we have not made the considerations available publicly. Under the Rates Act, an obligation was placed on rate-limited authorities to argue about expenditure levels, but none of them did so. In addition, they had the right to discuss actual rate levels. That is the way in which the legislation is drafted. I have noted the hon. Gentleman's request, but I do not intend to make a definitive statement about it tonight.
§ Amendment agreed to.