Local Government Bill [H.L.]

HL Deb 13 January 1992 vol 534 cc13-78

3.14 p.m.

Lord Hesketh

My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Local Government Bill, has consented to place her prerogatives and interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

Bill read a third time.

Clause 4 [Application to parish and community councils and charter trustees]:

Lord Simon of Claisdale moved Amendment No. 1:

Page 4, line 41, leave out from ("expedient") to end of line 44.

The noble and learned Lord said: My Lords, this amendment deletes paragraph (b) from Clause 4(3). The ground for doing so is that the provision is unnecessary. Being unnecessary it is one of the many intrusions which go to swell the statute book. In 1975 the Renton Committee on the preparation of legislation remarked on the prolixity of legislation. In that year the statute book ran to three volumes. Notwithstanding the recommendations of the Renton Committee, 10 years later with fewer statutes it ran to five volumes. The format was then enlarged but within two years it still comprised five large volumes. These volumes are very expensive. They must now cost about £300. When I last inquired a few years ago, they were well over £200. Therefore, if only in the interests of the consumer, Parliament is under an obligation to scrutinise legislation carefully and to eliminate any provision which is unnecessary.

In Committee, paragraph (b) attracted a baleful glare from the noble Lord, Lord McIntosh, and the noble Lord, Lord Howie of Troon, also looked askance at it. But the noble Baroness hastened to point out that it was quite innocuous, that it did no more than it said and that local authorities vary very greatly in extent of jurisdiction. She mentioned the county council, which is obviously quite different from a parish council in jurisdiction and resources. She said that all that was done in the paragraph was to take account of those differences and to allow the Secretary of State to make different regulations to suit the different circumstances.

It seemed so reasonable that the amendment was not pressed. I ventured to try to assist the noble Baroness by pointing out that not only was the provision completely reasonable but quite innocuous because it was unnecessary. The powers that are given in this paragraph are well contained in the earlier part of the section.

The noble Baroness kindly said that she would consider the matter and if she were advised that it was unnecessary, the paragraph would be removed. I rather discouraged her from hoping that she would receive such advice. It is a formula which has got into the computer in the parliamentary draftsman's office and anything that gets into a Whitehall computer is akin to being engraved on tablets of stone brought down from the holy mountain, in this case the holy mountain of the Medes and the Persians. I did not encourage the noble Baroness to hope that she would receive any positive advice on the matter.

The noble Baroness kindly invited me to discuss with her later amendments to which we shall come in due course. Being anxious to compromise and indeed to settle for half, I identified four separate areas in which there had been disagreement in Committee. I offered to concede two and a half if she would meet me on one and a half. However, when I visited that noble building in Marsham Street the noble Baroness kindly raised two other matters. One was this immediate discussion; the other was the Henry VIII clause that your Lordships condignly and rightly removed from the Bill. I do not believe that the noble Baroness raised those two extra matters for the pure pleasure of saying "no" six times rather than four, but that is how it worked out.

Although the architecture of that building was impugned that day, I could not help remarking on the spirit that animated the Minister rather than the architecture that surrounded us. It seemed to be the spirit that Goethe ascribed to Mephistopheles: the spirit that always says "no". At any rate that was the answer that I received to each of my points.

The noble Baroness is right. One requires different regulations for different circumstances, different localities and different local authorities. I must concede that the law is an ass, because Mr. Bumble said so. However, the law is not so ignorant that it does not know that local authorities vary greatly in size and responsibility, that a county council is not the same as a parish council, and that different regulations will be needed for each. It is quite unnecessary to go out of one's way to obviate a far-fetched argument that if this provision were not included any such exercise of regulation-making power would be ultra vires the main provision of the section.

The trouble is that there is absolutely no limit to the silly arguments that can be advanced in a court of law. If we try to obviate and forestall every argument the statute book will continue to fill in the way that I described. The provision is entirely unnecessary. I put it down again on Third Reading—I did not raise it at Report—because the Bill will go to another place and two committees are now looking into the structure and content of the statute book. I beg to move.>

Lord McIntosh of Haringey

My Lords, I am sad to find myself to some extent at variance with the views of the noble and learned Lord on this matter. In an immensely valuable and entertaining speech he described the legal consequences of the provision in the Bill. However, he did not refer to the subject matter: the exclusion of parish and community councils from the Citizen's Charter provisions. It is well known that we on these Benches support the Citizen's Charter provisions; indeed, they were our idea in the first place. We believe that it is proper for them to apply to the larger parish and community councils; some are large and have substantial budgets. However, it would be quite improper to include the very small villages whose only concern may be street lighting or a parish hall.

Although I do not dare to disagree with the noble and learned Lord's legal interpretation, I hope that a degree of flexibility for the Secretary of State in this matter will be acceptable.

Lord Peyton of Yeovil

My Lords, before my noble friend replies, I should like to say that I support the noble and learned Lord who proposed the amendment. I should be grateful if my noble friend on the Front Bench would explain to me—it may be that I am short on understanding—exactly what will be provided by subsection (3) (b) which is not already provided by subsection (3) (a).

Perhaps I may comment on the characteristic generosity of the noble and learned Lord, Lord Simon of Glaisdale, in referring to a holy mountain as the source of our legislative supplies. I believe that he was carrying his generosity a little too far. Before the reconstruction of Richmond Terrace and the mews behind it, there used to be an archway leading off to the main thoroughfare of Whitehall. For the guidance of those who passed underneath the archway there was a terse and laconic instruction, "Commit no nuisance". I am now beginning to understand the nuisance to which that notice was directed. Unhappily, with the reconstruction the notice disappeared and its efficacy with it.

The noble and learned Lord generously referred to the "noble building" in Marsham Street which is the current home of my noble friend. I am sure that her recent experiences of that building will cause her to decline the compliment offered to it by my noble and learned friend. I hope that my noble friend will pause to consider whether this tedious, tiresome and unnecessary sentence is essential to her purposes.

The Minister of State, Department of the Environment (Baroness Blatch)

My Lords, in the context of a different clause, the noble and learned Lord, Lord Simon, argued during Committee that the provisions that he seeks to remove by the amendment were unnecessary. As I explained at Report, I took advice on that and came to the conclusion that they were necessary. Nothing would have pleased me more than to have acceded to his wishes. Like him, I believe that we have an opportunity to take something out of the Bill if it is superfluous.

The order-making power in Clause 4 enables the Secretary of State to bring parish and community councils and charter trustees within the scope of the provisions in Clauses 1 to 3 on the publication of information as to standards of performance. Clause 4 achieves that by providing that Clauses 1 to 3 shall have effect as if the bodies defined in the order were relevant bodies for the purposes of Clauses 1 to 3. What that does in practice is to give the Secretary of State discretion to limit the sheer numbers of bodies to which those clauses would apply.

I am advised—and in matters of legal importance I have to be advised—that the effect of the amendment would be that either all or no parish and community councils and charter trustees could be brought within the scope of the performance reporting provisions. As the noble Lord, Lord McIntosh, said, there are distinctions between some parish authorities and others. For example, there are some large ones to which specific instructions may well apply. The ability to be selective by, say, one of those types of authority, by expenditure, range of function, or other feature would be lost. Therefore something material would be lost by the removal of this part of the Bill.

Your Lordships will know that some parish and community councils spend only a few hundred pounds a year whereas others spend more than some full district councils. It would be a waste of public money to bring the smaller bodies into the net. Yet it may well be desirable in the longer term that the larger bodies should be brought within the discipline of providing information as to their performance. Again, the range of functions undertaken by the bodies affected by Clause 4 varies widely: some take responsibility for street lighting and others for district council services. Once it had been decided in principle to extend the application of Clauses 1 to 3 to parish and community councils and charter trustees, the effect of the Secretary of State exercising his discretion would be to reduce the number of bodies affected. Given the diversity of circumstances, I hope the noble and learned Lord will agree that it is necessary that the Secretary of State should have the discretion not to bring some of these bodies into the scope of Clauses 1 to 3 and that this discretion should be beyond doubt.

If the removal of the provision from the Bill had no effect whatever, I should have been the person to have acceded to the wishes of the noble and learned Lord. However, with that explanation—and the explanation that I gave to my noble friend Lord Peyton, with whose remarks I concur in relation to my home at Marsham Street—I invite the noble and learned Lord to withdraw the amendment.

Lord Simon of Glaisdale

My Lords, I cannot pretend that the Minister's reply was not what I had expected. Therefore, it would be quite ridiculous for me to wax indignant about it. The Minister received me most courteously in what the noble Lord, Lord Peyton, insisted I should call an ignoble building. She has replied courteously and carefully today and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

3.30 p.m.

Clause 8 [Procedure for competitive tendering]:

Lord McIntosh of Haringey moved Amendment No. 2:

Page 8, line 12, after ("may") insert ("after the report of an inquiry established in accordance with subsection (1A) below").

The noble Lord said: My Lords, in moving the amendment I shall speak also to Amendment No. 3. It will not have escaped your Lordships' notice that the Opposition Front Bench has confined the amendments which it has tabled on Third Reading to Clauses 8 to 10. That is not only because we are in agreement with a great deal of the rest of the Bill but because we wish to concentrate as much as possible on the increasingly unsatisfactory story of the preparation and presentation of that part of the legislation.

Noble Lords will recall that we attempted to have Clauses 8 to 11 taken out of the normal consideration of the Bill in order that the result of the consultation on compulsory competitive tendering and the Government's response to it could be available to Parliament before decisions were taken on CCT. The House, and indeed the Whips, did not see fit to accede to that reasonable request. We then pointed out that the consultation document had a number of self-evident defects, as could be seen from published documents.

Having had access to the report of the PA Consulting Group, which formed the basis of the Government's deliberations on compulsory competitive tendering, we found that the group did not support the concept of CCT to anything like the extent suggested by Ministers nor to the extent suggested in the consultation document. Therefore, not only is there the impropriety that the House is being asked to consider this legislation without having seen the results of the consultation or the Government's response to it, but the fact that the consultation document itself is defective because it does not adequately take account of the views of the consultants.

I agree with Mr. Portillo's response to our publication of the document: that Ministers take the decisions and not consultants. That is entirely correct. However, when Ministers commission research it behoves them to pay at least some attention to the expert opinions that they are commissioning and for which they are paying. They should allow that to be reflected to a greater extent than has proved to be the case in the consultation work.

During the past few days we have pointed out to the press that there are many ways in which the consultants' report is not adequately reflected in the consultation document. Although a number of local authority services are ruled out by the consultants for consideration for CCT they still appear in the White Paper, Competing for Quality. There is little evidence in the consultants' report of the type of savings which Ministers claim for CCT. The report points out that as regards many services—notably legal services, public relations, secretarial and accountancy services—experience has shown that private sector provision is substantially more expensive than public sector provision.

The consultants are lukewarm even about the services which they identify as being good candidates. They state that they are based on merely preliminary judgments, which are in turn based on case studies rather than on a comprehensive analysis. The consultants give the lie completely to Ministers' claims that quality is inherent in the Government's proposals and has been so since and including the 1988 Act. The consultants state specifically that quality is not an acceptable criterion under existing legislation except under the circumstances of double envelope tendering.

Although the consultants recommend that construction and related services are good candidates for CCT, they fail to point out that the savings from that are on capital account rather than on revenue account and therefore will take a number of years to be realised. Moreover, the consultants point out correctly that there will be a high cost of processing small contracts which could outweigh the savings to be made. They suggest that there should be a de minims rule about the size of the services to be contracted out. That suggestion is not taken up by the Government.

The most important single point is that in paragraph 4.1 the consultants describe the requirement for a true market as a "key" requirement. The Government have completely ignored that consideration. They have substituted to a lesser extent the idea of an internal market as opposed to the idea of a true market. They have failed to take on board the consultants' recommendation that, in order to achieve a true market, there should be the possibility of cross-boundary tendering by local authorities themselves.

The consultants point out that under certain circumstances CCT could constrain administrative reform and innovative ways of delivering local authority services. They believe that that should be avoided. Again, there is no reflection of that view in the Government's consultation document, nor in anything that Ministers have said. The consultants point out a number of potential conflicts between CCT and the programme of local government reform which will be established by Part II of the Bill. There is no reference to that in the consultation document. They point out the potential conflict between CCT and the process of local management of schools and colleges. Again, there is no reference to that in the consultation document.

The consultants point out the possibility of conflict between CCT and the Citizen's Charter, which refers boldly to total quality. However, as is made clear in amendments that we have tabled, there could easily be a conflict between total quality and the requirement to accept the lowest tender, which is the essence of the Government's legislation. They point out the potential for conflict between compulsory competitive tendering and the performance of statutory duties. Again, the Government do not recognise that, but it is referred to in later amendments.

I could go on about this matter but I shall not do so. It is clear that the intellectual and factual basis of the Government's arguments for CCT are inadequate. The way in which the House is being asked to consider the matter is also quite inadequate. That is not to say—and I make this clear—that the consultants do not recognise candidates for compulsory competitive tendering and recommend that there should be compulsory competitive tendering in some areas and that savings will be achieved. That is hardly surprising because that was the remit given to the consultants.

However, I believe that the way in which this House is being treated not only as regards timetable but also as regards the arguments is entirely unsatisfactory. I urge the House to accept these amendments. They would secure that that most important aspect of the relationship between central and local government should not be altered without a proper inquiry into all the costs and benefits involved. That seems to me the minimum requirement of good behaviour by central government if they are to retain their credibility with local government and with the people of this country. I beg to move.

Baroness Hamwee

My Lords, I support the amendment. It is understood that every political party and grouping has its own principles and philosophy, but the question of compulsory competitive tendering seems to have become a dogma which threatens to overwhelm common sense.

Moreover, it shows a lack of trust in local government which lies ill with the words of praise which were spoken about local government in so many of our debates on the Bill. I shall not say a great deal about this matter and I shall not go into the detail of the report to which the noble Lord, Lord McIntosh, referred, save to say that so much of what we now discover in the report echoes so many of the things said and anxieties expressed in the course of our debates by noble Lords on all sides of the House.

Were it not for the refusal to extend the consultation, we might not feel so strongly about this amendment. Clause 8(2) is now as it started. It merely states that: the Secretary of State shall consult such representatives of local government as appear to him to be appropriate". Obviously that immediately gives him such a discretion that the terms of the clause proposed by the noble Lord, Lord McIntosh, are desirable to rectify the faults and lacunas in that later clause. The amendment gives not only Members of this House and Parliament the opportunity to react to what may be about to happen, but it also it extends the debate and allows the input of all those who will be concerned. I support the amendment.

3.45 p.m.

Baroness Blatch

My Lords, it is interesting that the noble Lord, Lord McIntosh, chose to speak mostly about what he perceived to be the differences between the Government's consultation paper and the report and not so much about the proposed amendment.

From all that the noble Lord and the noble Baroness have said, it is clear that whatever report they have read, they have not read very closely the Government's consultation paper because many of the anxieties which they have expressed and to which the noble Lord referred in his press release have been addressed in the Government's consultation paper.

These amendments would set up a new level of bureaucracy as a hurdle to the use of the powers in Clause 8. However, they do not affect the Secretary of State's power under Section 2(3) of the Local Government Act 1988 to extend CCT to new activities.

I assure noble Lords that the Government would not propose to extend CCT to any new service or to make use of the powers under Clause 8 if we thought that in doing so we should harm the efficiency and effectiveness of those services. I would not expect Parliament to approve the extension of CCT to any new service, or any use of the powers under Clause 8, if it considered that such harm would result. If Parliament disagreed with the Government on the use of those powers, it would have the opportunity to reject the orders concerned. Given that safeguard and the safeguard in this Bill and the 1988 Act that orders could not be laid before consultation on the detail had taken place with representatives of local government, a requirement to set up an inquiry is wholly unnecessary, extremely cumbersome and expensive.

Wide-scale market testing of those services has not yet occurred. Therefore, any comments can only be subjective at this stage. It takes time for markets to adapt to the knowledge that new opportunities exist and for potential suppliers of those services to gear themselves up to the challenge of competing with local authority workforces. We should wish the timetable for the introduction of CCT for new activities to allow for that. We look forward to receiving comments on the timetable which we have suggested in the consultation paper.

As I have repeatedly made clear, CCT has advantages other than cost savings. It gives councils the freedom to concentrate on their strategic responsibilities rather than the mechanics of service delivery. The opportunity for provision of services by dedicated providers—whether in house or external—assists in the search for quality. The need for clear specifications means more careful consideration of standards leading to an increased responsiveness to the needs of clients. Increased efficiency leads to lower costs, higher quality or both.

It is no secret that neither the noble Baroness nor the noble Lord, Lord McIntosh, approve of CCT. Almost any mechanism will be resorted to in order to ensure delay or that it should not happen at all. These two amendments are about delay and I hope that they will be withdrawn.

Baroness Hamwee

My Lords, before the Minister sits down, will she tell the House whether the description that she gave of compulsory competitive tendering was in fact a very good and entirely welcome and appropriate description of competitive tendering? When it is in the discretion of local authorities, we on these Benches and every good local authority would support competitive tendering. However, the element of compulsion seemed not to be part of the Minister's argument.

Baroness Blatch

My Lords, the noble Baroness almost makes my point for me. Before the element of compulsion there was little competitive tendering. As the noble Baroness pointed out, the better and more enlightened local authorities used competitive tendering, but all too many local authorities would never have market-tested their services. Moreover, many good and well-run local authorities perceived themselves to be doing a good job and perceived their services to be cost effective. It was only after market testing that they found that that was not necessarily so.

Lord McIntosh of Haringey

My Lords, if the Minister thinks that she has responded effectively to the question of the noble Baroness, Lady Hamwee, then she cannot have read her own consultants' report. On page 42, when addressing the issue of feasibility of compulsory competitive tendering, the report talks about the more subjective aspects of quality, and it points out that whilst these more subjective factors (quality, demonstrated understanding, credentials) are perfectly valid in normal competition, they cause real problems in any compulsory environment". It is the compulsory environment which is the clue to our opposition to the proposals.

We are not and have never been opposed to competitive tendering. I have no doubt that Labour and Liberal Democrat councils have taken part frequently in competitive tendering. We are opposed to the thoughtless, badly planned and badly argued extension of compulsory competitive tendering to a range of services which have already been subject to it under the 1988 Act but which have largely stayed in the hands of local authorities' own departments. The best that can be said is that the compulsory competitive tendering procedures under the 1988 Act are not proven. It certainly cannot be claimed that they are a success, nor that the results of the 1988 Act are an argument for the extension of compulsory competitive tendering in this way.

The Minister sought to give us her own personal assurances that the compulsory competitive tendering legislation, when finally implemented—in other words, when it is more than merely a series of regulation-making powers—will be applied sensitively, and that it will not be applied in cases where it will not work well. I am grateful for those assurances and, knowing her, I am inclined to accept their sincerity. But that is not what we are about. We are about legislation. We are dealing with provisions which may be implemented by any Secretary of State. Indeed, in one way or another they will need to be implemented by a Labour Secretary of State within a few months.

By those criteria the Bill as drafted does not stand up to the kind of scrutiny that we are attempting to give it. It does not stand up to scrutiny because all the attempts that we made to persuade the Government to come clean regarding their intentions, rather than simply issuing a consultation document, failed. It does not stand up to scrutiny because it gives the Secretary of State the power by order to extend compulsory competitive tendering to such services and in such a way as he thinks fit.

It is not good enough for the Minister to repeat that Parliament has the power to reject any orders made as a result of the proposed legislation. Even if there were no self-denying ordinance on orders in this House, in that we do not seek to overturn them when they are approved by another place, we all know the weakness of Parliament, which can approve or reject orders but cannot in any way amend them.

The provision is not a substitute for proper legislation; it is not proper legislation. We believe that the House should accept the amendment and provide this necessary additional safeguard to the proper control and management of local authorities. I shall therefore seek the opinion of the House.

3.53 p.m.

On Question, Whether the said amendment (No. 2) shall be agreed to?

Their Lordships divided: Contents, 73; Not-Contents, 124.

Division No. 1
CONTENTS
Addington, L.	Jenkins of Putney, L.
Aylestone, L.	John-Mackie, L.
Birk, B.	Judd, L.
Blackstone, B.	Kennet, L.
Bonham-Carter, L.	Kilmarnock, L.
Boston of Faversham, L.	Listowel, E.
Bruce of Donington, L.	Lockwood, B.
Callaghan of Cardiff, L.	McIntosh of Haringey, L.
Carmichael of Kelvingrove, L.	Mackie of Benshie, L.
Cledwyn of Penrhos, L.	Mason of Barnsley, L.
Cocks of Hartcliffe, L.	Mayhew, L.
David, B.	Milner of Leeds, L.
Dean of Beswick, L.	Molloy, L.
Desai, L.	Monkswell, L.
Donaldson of Kingsbridge, L.	Morris of Castle Morris, L.
Donoughue, L.	Morris of Kenwood, L.
Dormand of Easington, L.	Nicol, B.
Ennals, L.	Ogmore, L.
Falkland, V.	Peston, L.
Fitt, L.	Phillips, B.
Gallacher, L. [Teller.]	Pitt of Hampstead, L.
Galpern, L.	Ritchie of Dundee, L.
Gladwyn, L.	Sainsbury, L.
Gregson, L.	Seear, B.
Grey, E.	Sefton of Garston, L.
Hampton, L.	Serota, B.
Hamwee, B.	Shackleton, L.
Hanworth, V.	Shepherd, L.
Harris of Greenwich, L.	Stedman, B.
Hilton of Eggardon, B.	Strabolgi, L.
Hirshfield, L.	Taylor of Gryfe, L.
Hollis of Heigham, B.	Tordoff, L. [Teller.]
Holme of Cheltenham, L.	Underhill, L.
Hooson, L.	Wallace of Campsie, L.
Houghton of Sowerby, L.	White, B.
Howie of Troon, L.	Williams of Elvel, L.
Hutchinson of Lullington, L.

NOT-CONTENTS
Aldington, L.	Constantine of Stanmore, L.
Alexander of Tunis, E.	Cottesloe, L.
Allenby of Megiddo, v.	Crathorne, L.
Ampthill, L.	Cullen of Ashbourne, L.
Arran, E.	De Freyne, L.
Astor, V.	Denham, L.
Balfour, E.	Denton of Wakefield, B.
Bauer, L.	Eccles of Moulton, B.
Belhaven and Stenton, L.	Effingham, E.
Beloff, L.	Elles,B.
Belstead, L.	Elliot of Harwood, B.
Bessborough, E.	Elliott of Morpeth, L.
Blatch, B.	Elton, L.
Blyth, L.	Erroll of Hale, L.
Brabazon of Tara, L.	Faithfull, B.
Brigstocke, B.	Ferrers, E.
Brougham and Vaux, L.	Flather, B.
Campbell of Alloway, L.	Forbes, L.
Carnarvon, E.	Fraser of Carmyllie, L.
Carnegy of Lour, B.	Gainford, L.
Carnock, L.	Gainsborough, E.
Cavendish of Furness, L.	Gardner of Parkes, B.
Clanwilliam, E.	Geddes, L.
Coleraine, L.	Gibson-Watt, L.

Gridley, L.	Norrie, L.
Halsbury, E.	Orkney, L.
Hayter, L.	Orr-Ewing, L.
Henley, L.	Oxfuird, V.
Hesketh, L. [Teller.]	Pender, L.
Hooper, B.	Perry of Southwark, B.
Howe, E.	Peyton of Yeovil, L.
Hylton-Foster, B.	Platt of Writtle, B.
Jeffreys, L.	Plummer of St. Marylebone, L.
Johnston of Rockport, L.	Reay, L.
Joseph, L.	Renton, L.
Kimball, L.	Romney, E.
Kinloss, Ly.	St. Davids, V.
Kitchener, E.	Saltoun of Abernethy, Ly.
Knollys, V.	Shannon, E.
Lane of Horsell, L.	Simon of Glaisdale, L.
Lauderdale, E.	Skelmersdale, L.
Lindsey and Abingdon, E.	Slim, V.
Lloyd of Hampstead, L.	Soulsby of Swaffham Prior, L.
Lloyd-George of Dwyfor, E.	Strange, B.
Lyell, L.	Strathclyde, L.
Mackay of Ardbrecknish, L.	Strathmore and Kinghorne, E.
Mackay of Clashfern, L.	[Teller]
Macleod of Borve, B.	Strathspey, L.
Malmesbury, E.	Sudeley, L.
Manton, L.	Terrington, L.
Marlesford, L.	Teviot, L.
Merrivale, L.	Thomas of Gwydir, L.
Mersey, V.	Thurlow, L.
Mills, V.	Trefgarne, L.
Milverton, L.	Trumpington, B.
Monk Bretton, L.	Ullswater, V.
Montgomery of Alamein, V.	Vaux of Harrowden, L.
Morris, L.	Vivian, L.
Mountgarret, V.	Waddington, L.
Mowbray and Stourton, L.	Wade of Chorlton, L.
Munster, E.	Westbury, L.
Nelson, E.	Wise, L.
Norfolk, D.

Resolved in the negative, and amendment disagreed to accordingly.

[Amendment No. 3 not moved.]

4.1 p.m.

Baroness Hollis of Heigham moved Amendment No. 4:

Page 8, line 19, at end insert:

("( ) No order made in accordance with subsection (I) above shall be applicable to the following services—

1. (a) the development of corporate strategy;
2. (b) committee administration;
3. (c) services to elected members;
4. (d) electoral registration;
5. (e) financial planning and advice; or
6. (f) personnel recruitment other than for senior posts.").

The noble Baroness said: My Lords, the function of this amendment is to exclude from compulsory competitive tendering those services which the PA report deemed unsuitable and inappropriate. Crudely, as my noble friend Lord McIntosh said, the PA report recommends certain direct services, such as construction, as candidates for CCT, but says that most regulatory services such as planning or environmental health, are poor candidates for CCT; and that corporate services and those associated with the democratic process, should be excluded altogether. That is what this amendment seeks to secure.

The PA consultants' report looked first at the feasibility, benefits and risks attached to exposing the range of local authority professional services to CCT. When it came to feasibility the question was asked whether a core service exists that can be specified. The point raised by the noble Baroness, Lady Hamwee, and my noble friend Lord McIntosh was also mentioned. The report made a critical distinction between the suitability of a function for competitive tendering and its suitability for such tendering within a compulsory framework. The test of distinction between the two was whether it was auditable. The word used is "auditability". The report says that within a compulsory framework it is critical to be able to define such activity. The PA report goes on to say that much of the professional work put out by authorities cannot be dealt with because it involves perfectly proper subjective factors which may come into play where competitive tendering is voluntary, but not where it is compulsory.

The second criterion brought into play by the PA report as to whether CCT is feasible is whether clear, client responsibilities can be established. The report says: Whilst some of the professional services under consideration provide a direct service to the public

—that is to say, the ones considered appropriate for CCT—

"others are enforcing statutory requirements, and yet others provide an entirely internal service to their council's operations. In all cases it is necessary, if contracts are to be issued, to be able to identify one or more 'clients' who will have responsibility for the definition, contracting and control of the service or activities and are, or can be, organisationally distinct from potential in-house contractors".

The report goes on to argue that many of the activities currently carried out by professional departments within local government are a mixture of client and contractor. The report says that while such separation may be conceptually straightforward, it can present real practical problems when the activities come to be disentangled in practice, particularly in ensuring value for money in small authorities.

The third test as to whether CCT is feasible is whether there would be any compromise of statutory responsibilities; for example, in quasi-judicial or policing capacities. Development control work is also one such example. Fourthly, the report goes on to ask whether performance indicators can be used. It states that in many areas a professional body exists which assists in defining and underwriting professional standards, and goes on to say that the qualitative element is especially important in the managerial/ professional area: poor design and poor legal services are more dangerous and difficult to spot than poor street-sweeping.

The Report says that it would be unduly constraining to assume that only functional activities need to be monitored. Quality needs to be planned and controlled. Throughout all of these areas and these tests, the PA believes that many professional services are not appropriate candidates for CCT.

The report then looks at the benefits associated with CCT and asks whether market potential exists. It says that maximum benefit will only be obtained if there is real external competition for the tendered work. No doubt that may exist in certain areas, such as architectural design and printing; in other areas, such as committee administration, no obvious external market exists and therefore such services are poor candidates for CCT.

The report looks at the risks associated with CCT and states that many of the professional service areas under consideration are close to what has always been regarded as the corporate centre of local government, where there is often a complex web of interrelationships between the service areas and other direct service departments. The report states that many authorities would find the transition to competitive ways of operating in such professional services areas very difficult to manage, and that they would be likely to incur significant transitional costs. The risks and costs need to be assessed against the possible benefits, but it is doubted whether in these areas of service, professional benefits and other possible benefits would accrue.

In that context, using the criteria of feasibility, benefits and risk set out in the PA consultants' report, the services in that report—that is, corporate strategy, committee administration, services to elected members, electoral registration, financial planning and advice and personal recruitment other than for senior posts—are services which should be excluded from CCT.

The PA report then looks at those particular services in some detail. Under corporate strategy it states that it does not consider that the elements of corporate strategy are suitable because: many elements of the process are central to the corporate and democratic core of decision making; defining the areas for competition in relation to the corporate core could not be achieved satisfactorily on a rational basis; the introduction of clear performance indicators and standards would be very difficult and the competitive selection process accordingly difficult to audit".

The report adds that many trends in local government, such as the local management of schools, increasing customer expectations and budget restrictions, will have the same effect of heightening cost consciousness within local government without forcing it to go out to CCT, which will cause maximum disruption. As my noble friend Lord McIntosh said, the report also shows concern that applying CCT to the areas of corporate strategy would result in a real danger of constraining innovation and reversing highly desirable trends in devolution and decentralisation. It would also undermine the corporate networking that these services require.

In other words, by implication the report says—as we ourselves argued at the Report and Committee stages—that CCT is rigid, centralist, anti-corporate and undermines the democratic process within local government. The report emphasises that in these services there are no real external markets and that they generate real problems of probity.

When the PA report moves from corporate strategy to committee administration, it again makes the point that we tried to argue at Report stage; namely, that the democratic control of local authorities is currently exercised primarily through the committee system. Because the core service is problematic the committee service is seen as supporting members rather than chief officers. That is a key obstacle to the matter going out to CCT. Even if that problem were overcome, the PA report states that the benefits to be obtained are unclear since there is no current market or knowledge of the nature of the client. The response and the role of the authority would be severely constrained.

Similarly, when the PA report considers the third of the services which should be exempt from CCT—member services—the same point is made. That service too is very close to the democratic core of local government and presents problems for the clarity of democratic accountability if undertaken by an external contractor. Accordingly, the PA report considers that member services are not a good candidate for compulsory competition. Likewise, when the report considers electoral registration, its feasibility is questioned because electoral registration is at the core of the democratic process and its potential privatisation could be extremely sensitive. It argues that this, too, is not a good candidate for CCT.

Similarly, when we come to financial planning and advice, with the setting of targets for the establishment of appropriate performance indicators, in the judgment of the PA report this, too, is not a good candidate for CCT.

A more fundamental anxiety was the possible compromise of statutory responsibilities as is also the case in legal services. The requirements under Sections 151, 113 and 114 of the 1988 Act, responsibilities of the city treasurers and chief executive officers, causes this uneasiness. The report goes on to suggest that even where it has been tried, the costs have increased by an order of magnitude, as in South Oxfordshire. Though it is clear that the P.A. report doubts it, we very much hope that the benefits will outweigh the risks and the problems. It is without doubt that the PA Consulting Group report suggests that this is inappropriate.

Therefore, all the services that we have identified in the amendment are precisely those which the PA report has argued line by line are not good candidates, and are unsuitable and inappropriate for compulsory competitive tendering as measured by the tests of feasibility of benefits and of risks. The report's argument is heightened in that it draws attention to the fact that these services, which are at the democratic core of local government operations, are precisely those services most vulnerable when local government moves into a period of major change associated with the Bill introducing the council tax.

It would clearly be absurd to ask for financial services to go out to CCT at a time when we are trying to hand over from the poll tax to the council tax; at a time when we are talking about the management of schools and about the introduction of community care and internal markets and social services; at a time when there are substantial changes in housing management; at a time when such services are increasingly being affected by changes in EC directives; and at a time, above all, when local government faces major upheaval in its management and structure. For all these reasons, the PA report—on which the Government were alleged to have drawn for their consultative document—recommended that these services in this amendment should not be put out to CCT.

We on these Benches attempted to argue this fully at Report stage. We little thought then that the PA report which the Government had commissioned should so fully endorse so many of our arguments. Now that we know what those arguments are in the PA report, and now that we see how fully they support the arguments we made at Report stage, we wish to move this amendment. I beg to move.

Lord Wade of Chorlton

My Lords, I understand that what the noble Baroness, Lady Hollis, enumerates can be considered to be different aspects from the more traditional services. My belief is that this is the one area that can have the greatest impact on the changes that are necessary within local government. They are the very services that will make people think afresh about how things should be done; the very ones that will bring in new ideas and innovations and enthusiasm into what is necessary to make changes. I resist very much the idea that this amendment should be agreed to because I believe that if we can move forward in the way that the Bill now suggests, we can make one of the greatest changes for the benefit of the customer that the Bill presents to us. I hope that the Government will not give way on this issue.

4.15 p.m.

Baroness Blatch

My Lords, the noble Lords opposite, and indeed the noble Baroness, Lady Hollis, in particular, regard the activities listed in the amendment as being particularly sensitive and not well suited to a direct requirement for CCT. They clearly also misunderstand Clause 8 as it now stands, despite having been very strong supporters of the amendment, for it is applicable only on a common basis to any defined activity. This amendment, which picks out particular activities, therefore is gobbledegook.

Furthermore, if the noble Baroness, Lady Hollis, and her colleagues had spent as much time and energy reading our proposals as they spent reading other documents, they would see that we broadly agree on the sensitivity of those areas. All the areas named by the noble Baroness, Lady Hollis, are properly addressed in our consultative document; and indeed the sensitivity of those areas has been very readily addressed.

Perhaps I may single out particularly the administrative and corporate services. The noble Baroness will notice the figure mentioned in our document is 15 per cent. On the preparation of—

Baroness Hollis of Heigham

My Lords, I thank the Minster for giving way. In that case, does it mean that the Minister is happy to accept our amendment?

Baroness Blatch

No, my Lords. I am saying that the amendment is entirely defective. As the Bill now stands, it is not possible to take out and to single out particular activities for different treatment. The noble Baroness was a main supporter of the amendment that brought that about.

On the preparation of corporate strategies, committee administration and electoral registration, the consultation paper says: The closeness of these areas … to the democratic process and to the corporate core of an authority could … raise problems if they were substantially contracted out. That can be found on page 27 at paragraph 2.5.5. On financial planning and advice, the paper notes that although it would be possible to draw up specifications for aspects of the work, at the same time it is recognised that: The location of this work at or near the corporate core of authorities … could make it necessary to limit the extent of this work offered for competition, and that such a limitation would in turn reduce the benefits likely to be derived. That is from page 29, paragraph 2.5.14.

It is precisely because we are aware of the sensitivities surrounding these services that we have put forward in the consultation paper a flexible approach to CCT for corporate services. It is described by the consultation paper at page 31, paragraphs 2.5.27 to 2.5.36. In essence, we propose that following further legislation to require local authorities to set up internal trading accounts, either local authorities would be required to expose a limited number of appropriate specified elements of corporate services to competition or—and this is our preferred approach—we would require local authorities to tender at least a given proportion of each broad service category. Local authorities would be given a large measure of flexibility to choose which of their services they wished to put out to tender, and for which it would be more appropriate. We would expect authorities to be able to fulfil the proportion specified without prejudicing their statutory or democratic duties. In the light of what I have said, I hope the noble Baroness will feel that it is appropriate to withdraw the amendment.

Baroness Hollis of Heigham

My Lords, perhaps I may first comment on the contribution of the noble Lord, Lord Wade. I am sorry that we are so far apart on the significance of corporate activities and why they are so vulnerable should CCT be applied to them. That would turn the clock back more than 20 years. It would turn the clock back before Bains, when Bains taught local government not to think departmentally but corporately. It would turn it back over the past 10 years during which local government has been trying to devolve, decentralise and flatten the management pattern and tiers by out-posting professional services into service departments. If the remarks of the noble Lord, Lord Wade, were valid, then all the very healthy developments of local government which emulate best practice in business would now be reversed.

However, I was happy to see that the Minister did not agree with the remarks made by the noble Lord, Lord Wade, because the Minister's argument—

Baroness Blatch

My Lords, I take some objection to the way in which the noble Baroness, Lady Hollis, is interpreting my views of what my noble friend said. I did not specifically refer to my noble friend. But I have to say to him that I agree with him. We have said two things in our consultation document: one is that we have agreed with the noble Baroness and her colleagues opposite that there is a sensitivity about these services. But where that sensitivity does not exist, and where local authorities deem it appropriate, we believe that there will be opportunities to contract out, and we believe that that would be the right and proper thing to do.

Baroness Hollis of Heigham

My Lords, I was going to make a further two points, and I shall go back to the contribution made by the Minister. The Minister said that she shared the views of the noble Lord, Lord Wade; but her arguments in responding to this amendment suggested that the amendment on our side was largely unnecessary because the consultative document Competing for Quality embodied the very reservations made by the PA report.

Baroness Blatch

My Lords, with the leave of the House, I am not sure that I should say this at Third Reading, and think we are probably both breaking the rules. I have said to the noble Baroness that contracting-out will be a percentage. It will be for local authorities to determine that percentage and to decide how and which parts of those services it would be appropriate to contract out. The noble Baroness constantly puts words into my mouth. I hope that she will read what I have said. The amendment makes no sense in regard to the position she supported on Clause 8. The amendment is gobbledegook.

Baroness Hollis of Heigham

My Lords, the Minister established two points. She said that defined activities under the 1988 Act do not incorporate such activities and that therefore, in her phrase, the amendment is gobbledegook. Is the Minister saying that the situation will stay that way? In other words, as the Bill winds its way through Parliament, can we expect that the amendment will not be necessary by virtue of the defined activities under the 1988 Act?

The Minister also made much of the fact that the consultative document Competing for Quality embodies the reservations of the PA report. She said that the report states that these services are sensitive and so on. In that case, I repeat the question. Will the Minister give an assurance that the services which the PA report states are poor candidates for compulsory competitive tendering will be exempt from compulsion? Where a local authority believes that a particular aspect of a service should go out to tender, that is surely reasonable. However, the PA report unambiguously states that such services as I have cited are not suitable candidates for CCT. If the Minister is correct in saying that those reservations are picked up in Competing for Quality she should have no difficulty in accepting the spirit, if not the words, of the amendment.

Baroness Blatch

My Lords, perhaps I may respond to those two points. The document that I wish to be discussed here and now is the one that is in the public domain. I refer to the Government's consultative document. That is the document I stand by. It is the Government's view, having taken much advice into account, that there is some scope for percentages of those services to be contracted out. That is up for consultation, and only when that consultation period is at an end will the Government determine a way forward.

The noble Baroness asked whether the amendment to Clause 8 will be addressed. I can promise her that it will be addressed in another place. Only when it is addressed will these amendments make sense in the way in which the noble Baroness has put them forward.

Baroness Hollis of Heigham

My Lords, I thank the Minister for that response. She said that she stands by the consultative document because it embodies advice over and beyond what is in the PA report.

Perhaps I may refer to the comments made originally by my noble friend Lord McIntosh and the noble Baroness, Lady Hamwee. The Government failed to publish the PA report. When they produced the consultative document it did not fully embody the reservations of the PA report. Now that they have published that document we are being asked to consider legislation before the comments on that consultative document can be taken into account. We have not had time to receive them. I include the housing management report. On that basis we continue to press the Minister to see whether, following the guidance that is available—the only guidance we have—she will follow the recommendations of her own consultants. It is clear that this matter will have to be pursued in another place at another time and possibly when amendments made there come back to your Lordships' House. In that context, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey moved Amendment No. 5:

Page 8, line 19, at end insert: ("( ) No order shall be made in respect of any individual service in accordance with subsection (1) above unless the Secretary of State is satisfied that the quality of provision in respect of that service made by local authorities will not deteriorate as a result of the effects of the order.").

The noble Lord said: My Lords, I was interested to hear the Minister say in response to the previous amendments that we should not be moving amendments to strengthen the position of rational control of competitive tendering because of the amendment that was passed in Committee. I have paid attention to the several ministerial press conferences that have taken place since that time. It was made clear, as the Minister has again made clear today, that the Government intend to overturn the amendment which we carried in Committee on 2nd December. We have always understood that to be the case and we have accepted that the Government have the right to attempt to do that. Under those circumstances we take the view that a series of probing amendments about the Government's intentions, which is what Amendments Nos. 4 to 9 are, is entirely appropriate. We are seeking to get the Government to be more precise than they have been so far about the way in which they see competitive tendering. I make no apology for continuing to put down amendments on the basis that the Government are not satisfied with their own legislation as amended and will be seeking to change it. There are particularly good reasons why Amendment No. 5 should be adopted even with subsection (1) of Clause 8 as drafted. After all, all we did was to take out some superfluous wording from subsection (1). We did not add very much new wording.

The point which concerns us is the quality threshold. The PA Consulting Group asserts on page 32 of its report that the clear thrust of current CCT legislation is to obtain competitive bids and be able to judge clearly competence to undertake work at the price specified. The competition of those clearly able to undertake the work specified is then primarily on the basis of cost. The report goes on to state that quality is not one of the criteria which could, within the professional services area, form an explicit part of the evaluation of tenders under current statutory requirements. That is exactly what we have sought to change by the amendment that was agreed in Committee and that is exactly what the Government now propose to take out. It is not a question of flexibility at all. It is a question of whether the Government understand the concept of quality in local authority services and whether they are determined to uphold the principles of quality.

As the matter stands there is a strong suspicion that the Government want to take minimum tests of basic competence—with no reference to real quality—and, having established those, go on to demand that local authorities should accept the lowest tender. All kinds of people can establish basic competence. On page 115 of the report the consultants spell out what the quality threshold of basic competence might be. They refer to specified levels of professional qualifications and the qualification mix of staff, a track record of relevant experience either by the firm or by the people concerned, a requirement to respond to requests for service within a defined timescale and evidence of quality assurance systems under BS5750 or IS09000 registration or equivalent.

All tendering bodies, whether public or private, will have a long list of procedures covering matters of that kind. No one will be allowed even to submit a tender unless he meets those measures of basic competence. But the issue of quality is on top of that. It is quality valued against price which is the true criterion—what the French call rapport qualité/prix. That is what is ruled out by the Government's legislative proposals. Indeed, the PA Consulting Group confirms that in its report. It is therefore especially important that we should insist, as we do in the amendment, that quality should be a prime consideration in the evaluation of tenders. I beg to move.

Lord Howie of Troon

My Lords, I shall be brief. The House knows that I am concerned about this part of the Bill. I am heartened by the fact that my noble friend Lord McIntosh has put down this amendment. I was greatly interested in what he had to say, especially about quality assurance. I mentioned quality assurance at Report stage. I did so only in passing, in reply to an intervention by the noble Baroness, Lady Carnegy of Lour. I mentioned it only briefly and it possibly passed unnoticed. However, quality assurance is important in this part of the Bill.

I have been looking at a report entitled Inspection and Other Strategies for Assuring Quality in Government Construction—and we could extend "Government" here to cover local government, and so on. It is published by the Building Research Board of the National Research Council in the United States, and has just been published. It is important to ensure that we recognise and obtain quality in two respects. I believe that my noble friend underlined both of them.

The first area of quality assurance—and the most important in the long-term—is quality in the construction itself so that the whole life cost of the construction, whether it is a building or a structure of some kind, is economical, effective and efficient. I am sure that those are all aims of which the Government would approve. But that is only one element. As I tried to show during the earlier stages of the Bill, there are occasions where fee competition has led to bad construction and to fee bids which would not ensure good design and construction. The Government have not replied to any of my specific points but I daresay that they will do so in due course.

The second area of quality assurance is where the bidders have passed through some sieve where they have received, so to speak, a "consultancy kite mark"; in other words, they have achieved a mark of competence which indicates that they will and can be expected to provide good design and hence lasting work. If fee competition goes ahead—and it looks as though the Government are determined that it should—it is absolutely essential that those who are invited to tender should themselves be quality assured. I believe that my noble friend made that point. I strongly support him.

In my view, the Government have not approached the matter in the right way. I certainly hope that the consultations that the Government are having with the professional bodies of the construction industry will make some sense of the Government's aim. I support the amendment. I hope that the House will do likewise.

4.30 p.m.

Baroness Blatch

My Lords, we have heard the noble Lord, Lord McIntosh, and indeed his noble friend, speaking as though the Labour Party was the sole defender of the concept of quality and provision of local services.

Lord Howie of Troon

My Lords, I must interrupt the noble Baroness to point out that I am not speaking now as a member of the Labour Party; I am speaking for myself.

Baroness Blatch

My Lords, I apologise most profusely to the noble Lord. However, my comments are very relevant to the noble Lord, Lord McIntosh.

Your Lordships will recall that the Labour Party has described its proposals for local government as "Quality Street". But, tell that to Camden, to Lambeth, to Southwark, to Liverpool, and indeed to the once Labour-controlled Brent council whose legacy to the newly Conservative-controlled Brent is a history of administrative chaos.

With compulsory competitive tendering, we in Government are looking not for something fanciful, but at practical experience gained as a result of implementation of the requirements of the Local Government, Planning and Land Act 1980 and the Local Government Act 1988. Before CCT was introduced, many local authorities were doing a good job in carrying out building work, refuse collection or grounds maintenance. But let us be under no illusions. Some local authorities believed that they were producing effective and efficient local services at an economic cost, only to find when they were market tested that that was not always the case. There were also too many authorities which were not doing such a good job and for which the need to ensure that local communities enjoyed the right standard of service provision was the last consideration, not the first.

CCT has certainly led to cost savings in carrying out this work. At the same time, however, it has significantly improved the management of the services concerned through the discipline of the detailed specification which all local authorities have to prepare as the basis for their tendering exercises. That specification provides local authorities with the opportunity to set the standard of provision at the level which seems right to them, in the interests of their communities, and to insist that they obtain the quality of service which the specification requires. Competition, properly carried out, means that they will get that quality of service at the best price that the market can offer. Good management and effective competition have come together so that the services subject to CCT are now being performed more efficiently than before and generally to the same standards or higher. CCT has given local authorities the opportunity to do something positive about quality in service provision. They have generally made the best of that opportunity.

We believe that the benefits that competition has brought to the services currently subject to CCT should also be applied to other activities, notably professional services. Of course we intend and expect to safeguard and improve quality in these new services. But we recognise that the assessment of quality for professional services is more complicated than the assessment for manual services, and may need to be handled differently. In our consultation paper we expressed our willingness to consider the need to modify existing CCT procedures to meet quality concerns for professional services. We see a need for the Secretary of State to have flexibility in the application of the CCT requirements of Part I of the Local Government Act 1988 to such services.

Clause 8 as amended in Committee has removed the flexibility that was provided in the clause as introduced. I have already made it clear that we intend to address this lack of flexibility before the Bill completes its passage through Parliament. I must re-emphasise, however, that the Government see CCT, in its existing application to manual services and in its proposed application to professional activities, as supportive of quality and that we intend to take the Bill forward, and to use the powers under it that Parliament may approve, in a way which will mean that the quality of service provision is properly safeguarded. I know that that is a point which the noble Lord, Lord Howie of Troon, has made on a number of occasions. I believe, just as strongly as he does, that quality has to be a material consideration at all times for competitive tendering. Therefore, I believe that the amendment is unnecessary. I hope that it will be withdrawn.

Lord Howie of Troon

My Lords, before the noble Baroness sits down, perhaps she would care to comment on the specific matters which I have raised from time to time during the passage of the Bill; namely, that a building might collapse and, on another occasion, I pointed out that certain fees were clearly not high enough to provide quality work. I do not necessarily ask her to do so now, but perhaps she would care to write to me on the matter.

Baroness Blatch

My Lords, there is nothing like the present time for answering such a question. I cited my own "home" building of Marsham Street as being an example of a building which could be built or designed in-house. However, it is not the best example. The important point which the noble Lord, Lord Howie of Troon, is making each time he speaks—and which I support—is that quality, whether it concerns an in-house workforce or a private company, must be a material consideration. The other point that I have always made when speaking from the Dispatch Box is that quality as regards some services is a more straightforward matter and can be dealt with in specification. Quality as regards professional services, as indeed the noble Lord has often said, is not that straightforward. We believe that it requires a different method of determination.

Lord McIntosh of Haringey

My Lords, that was a tired old brief. The Minister believes that if she quotes Camden and I reply Elmbridge, if she quotes Lambeth and I reply West Wiltshire, if she quotes Brent under Labour control and I quote Brent under Conservative control or even Westminster and its cemeteries, we shall have advanced the argument in some way. I do not think that we have made any advance.

In my view, neither the Minister nor the Government really want to address the issue of quality in an objective way. We shall see the proof of that when they seek to overturn our amendments in another place. We have been making the point, and we have not been doing so in an especially sanctimonious way, that quality is a consideration which has been given inadequate attention in the consultants' report, in the consultation document where really the main emphasis on quality is in the title rather than in the text, and particularly in the legislation. Until we amended it, the legislation had no adequate safeguards for quality other than for architectural and engineering services. We have made the point, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey moved Amendment No.6:

Page 8, line 19, at end insert: ("( ) No order shall be made in accordance with subsection (1) above unless the Secretary of State is satisfied that the unit cost of any service to which the order will apply is not greater among providers of the service other than local authorities, than the unit cost measured in respect of equivalent provision by those authorities.").

The noble Lord said: My Lords, in moving this amendment, I wish also to speak to Amendment No. 7. We return here to a matter which causes the consultants considerable anguish of mind, as I read between the lines of the PA report. They point out on a number of occasions the difficulty of going for the lowest tender almost at all costs. They point out first that there are a number of occasions on which the total costs of carrying out the service under compulsory competitive tendering would be higher if it were privatised, even though the tender from the privatised contractors would in theory be lower than an internal tender.

The consultants also point out that there should be a de minimis rule which ensures that any financial benefits from compulsory competitive tendering should not be outweighed by the process costs, the costs of organising and controlling the outside tender.

These are consistent points made many times in the consultants' report and yet they find no reflection in the legislation and no adequate reflection in the Government's thinking. But the Government's thinking merely applies to local authorities. They do not apply it to the work of individual government departments. I have before me a tender letter from another government department, not this one—I shall not name it because we got the job—but after we had already been accepted on to a long list of contractors whose basic competence and suitability had been vetted and found adequate, we then received a letter from this department saying: The Department does not undertake to accept the lower or any tender and reserves the right to accept the whole or any part of any tender".

If local authorities were allowed to say what government departments are allowed to say, we might not be in the position in which we find ourselves.

To protect the interests of the poll tax payers and local authorities by ensuring that all the costs are taken into consideration, including the costs of controlling the tender, seems to us the minimum common sense. I beg to move.

Baroness Blatch

My Lords, clearly my right honourable friend would not bring forward proposals to extend CCT to new services unless he believed that greater efficiency would result. But it is self-evidently impossible for the Secretary of State to point to cost savings or quality improvements from CCT for a given service until CCT has applied to that service and widescale market testing has occurred. The only way to find out whether his view that efficiency savings will be made is correct is through giving the market a chance.

No doubt the likelihood of efficiency improvements will be one of the issues addressed in responses to the consultation paper Competing for Quality, and we shall consider those responses carefully. But to fall back on the Opposition's view that because something has not yet happened, it cannot happen even if the right framework is put in place is a counsel of despair.

It takes time for markets to adapt to the knowledge that new opportunities exist, and for potential suppliers to gear themselves up. We should certainly wish the timetable for new activities to allow for that and we look forward to receiving comments on the timetable proposed in the consultation paper. It is quite clear that CCT has produced important savings in the cost of work exposed to competition so far. Research carried out by the Institute of Government Studies has demonstrated that on average the annual cost of contracts subject to CCT has been reduced by 6 per cent. after competition, a saving which is enjoyed year on year as the contracts progress.

As for administrative costs, the same research has shown that there have been costs incurred by authorities in preparing for CCT and that these have on average amounted to 11 per cent., but on a once-and-for-all basis at the start of the contracts.

CCT has meant that local authorities are getting work done to the same standard or even higher than before and at a lower cost. It is also clear, however, that the considerable financial benefits that have resulted have not been the only positive results of CCT. Local authorities have had to get a grip on the management of services both in order to prepare the specification for the CCT exercises and to monitor the subsequent performance of the work by the successful contractor, whether that is the direct service organisation or a private contractor. On both counts, cost and quality, local communities are generally getting a better deal as a result of CCT. We believe that the same will be true when we extend the discipline of CCT to other services, including those in the professional sphere.

It is ridiculous to suggest that local authorities can reasonably consider whether or not work being done in-house is giving them the best value for money. Those who assert that external provision is more expensive, without testing the market, are like medieval monks who never set foot outside their monasteries and yet were convinced that the world was flat.

Your Lordships will recall that our proposals to introduce and extend the CCT which were embodied in the 1980 and the 1988 Acts were initially greeted with similar claims. Experience has shown how ill-founded they were. I repeat that the benefits of CCT are not only those of financial savings. The pressure to review how a service is being provided and to check on whether the standard of provision is right is no less conducive to securing a good deal for local communities.

Of course, many local authorities do their best to manage their professional services properly, but CCT brings the pressure for good management to bear universally. Our proposals for corporate professional services acknowledge that not all elements of those services can or should be exposed to competition and allow flexibility of approach which will underpin the discipline of competition with that of rigorous accounting. We did precisely that in response to advice that was received. I hope that the noble Lord will feel that these amendments are unnecessary and will withdraw them.

4.45 p.m.

Lord McIntosh of Haringey

My Lords, I like that brief much better, particularly the reference to the flat earth. I did not think it was those in monasteries who were particularly insistent that the earth was flat. I thought that any of us outside could see that the earth was flat. There is no doubt about it, is there? I am amazed that the Minister should question it.

That was a much more interesting brief. The only trouble is that it bore no relation either to the experience of compulsory competitive tendering under the 1988 Act or to the amendment. With the 1988 Act, the Minister gives figures—and there are plenty of figures around—for the savings which it is claimed came from compulsory competitive tendering. She does not say that the vast majority of compulsory competitive tendering processes resulted in the tender going to the internal contractor. Therefore, the savings—if they really exist—would have occurred anyway as local authorities have been under financial pressure and are gradually re-examining the cost and value of their services.

That does not relate to the amendment which refers to two specific requirements which we think should apply to compulsory competitive tendering. One is that the unit cost of services should not be greater than the unit cost of equivalent provision by the authorities. That seems to me to be the minimum common sense. Secondly, the cost of the savings should not be outweighed by the cost of undertaking tendering in respect of those services. Again, that seems to be minimum common sense.

Now we have assurances from the Minister that such considerations will be taken into account by the Secretary of State. We have received many of these assurances on many occasions. We had them when we were dealing with the 1988 Act. Unfortunately assurances do not make legislation. Until those assurances are put into statute, or at least required to be made in regulations by statute, they are not adequate and the Bill is still inadequate in that respect. I have made my point and there is no reason to delay the House any further. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 7 not moved.]

Lord McIntosh of Haringey

moved Amendment No. 8:

Page 8, line 19, at end insert: ("( ) No order shall be made in accordance with subsection (1) above in respect of the corporate services of local authorities before the Secretary of State has laid before Parliament a statement that he is satisfied that the introduction of compulsory competitive tendering in respect of any such service will not constrain—

1. (a) voluntary decentralisation of such services by local authorities;
2. (b) innovations undertaken voluntarily by local authorities in the organisation of such services.").

The noble Lord said: My Lords, I believe that on this amendment the Minister may be able to answer in a friendlier fashion even if she argues again that the amendment is not necessary because of the amendments that have already been made to Clause 8(1). As someone who is experienced in local government, I am sure the Minister is even more aware than I that substantial changes have been made in local government as regards the voluntary decentralisation of services, innovations in service delivery and changes in management structures, in trying to emerge from the rigidity which has all too often been a feature of local authority administration and service management.

The PA Consulting Group points out in its report that there is a risk that the compulsory competitive tendering process may obstruct those reforms which a local authority may wish to make, partly because of the sheer amount of time taken for senior officers of local authorities to prepare tender documents and partly because to prepare a tender document one almost inevitably freezes at that time the way in which a service will be delivered. Even if the Minister will not accept the amendment, I hope she will accept that I am discussing a real concern which her right honourable friend should take seriously when he is considering the regulations. I beg to move.

Baroness Blatch

My Lords, the noble Lord claims to have read the PA report and I make no comment on that. However, it is disappointing that he has paid so little attention to the consultative document. Paragraph 2.5.32 of that document states: the Government recognises that local authorities vary widely in their organisation of professional services, and that, unless the competition requirement was very limited, the specification of individual elements of these services for competition could cut across innovative organisation, such as dispersing financial or personnel work from the centre. It will be important to bear in mind the development of local management of schools (LMS) and the need for arrangements for compulsory competitive tendering for corporate services which complement the incentives to achieve service efficiency provided by the operation of LMS. An alternative approach [to requiring CCT for specified elements of corporate services] would be to require that a percentage of the total annual value of work carried out by a discrete professional service should be exposed to competition. This would allow local authorities considerable flexibility in deciding how to implement a requirement to go out to competition". In the consultation paper we have made it quite clear that we favour this approach in order to give local authorities the flexibility spoken of. Respondents to our consultation document may press for a different approach and offer good reasons for doing so. I have no intention of pre-empting the consultation process and our consideration of responses by committing the Government firmly to one approach.

It seems to me, however, that the presentation of our proposals in the consultation paper shows that we are fully aware of the interesting and valuable organisational developments that have been introduced by a number of local authorities. These are matters that will be in the forefront of our minds as we take our proposals forward. I would hope, therefore, that the noble Lord, Lord McIntosh, will not feel it necessary to press the amendment.

Lord McIntosh of Haringey

My Lords, I have read the consultative document and I recognise the wisdom of some of its suggestions. I am neither saying that the consultation document is all defective nor that the consultants' report is all defective. Unfortunately we are considering neither the consultants' report nor the consultation document. We are considering the Bill. The Bill gives the Secretary of State powers to do what he likes in introducing compulsory competitive tendering. If we are to be persuaded on this matter—I do not think we shall ever be persuaded to allow this enabling legislation through—we seek some better indication of the Government's thinking than a consultative document which the Minister does not feel able to state represents the Government's view. I understand her reluctance to do so as consultative documents are designed to take the views of other people and then the Minister makes up his or her mind.

Unfortunately in this case the consultative document is issued at the same time as the legislation and Parliament is asked to make a decision on it before the consultation procedure is complete. Under those circumstances I must make it clear that it is the Bill we are unhappy with and not, in this respect, the consultative document. However, I see no point in prolonging this discussion. Our point has been adequately made. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 9 not moved.]

Clause 9 [Power to define conduct as competitive or anti-competitive]:

Lord McIntosh of Haringey moved Amendment No. 10:

Page 9, line 41, leave out paragraph (f).

The noble Lord said: My Lords, I understand that Amendment No. 10 is grouped with Amendment No. 11 standing in the name of the noble Lord, Lord Airedale. I am glad to see that the noble Lord is present in the Chamber. I am sorry if I caused him some alarm by not moving Amendment No. 9.

On this amendment we return to the question of the meaning of words. The noble Lord, Lord Airedale, and I consider we have received a thoroughly unsatisfactory answer from the Government on that matter. Despite a number of well meaning attempts at clarification, we still did not receive any reply to our fundamental proposition. That proposition was that guidance is issued and those to whom it is issued have a duty to have regard to guidance, whereas orders or instructions are issued and those orders have to be adhered to or obeyed. If that is not done, they would be contravened.

The Bill refers to a contravention of guidance. We suggest that is a misuse of the English language and a debasement of it because it makes guidance appear to be more authoritarian—if not more authoritative—than it is intended to be. It would be dangerous if the idea got around that guidance—guidance is a valuable procedure in the relations between central and local government—had to be adhered to and the alternative to adhering to it was to contravene it. There has to be something between an order or an instruction and something which is intended to be helpful. The idea of guidance that one must have regard to is a useful halfway house. It would be a shame to see it destroyed by this misuse of language as it exists in paragraph (f) of Clause 9(3). I have taken the wholehearted approach of seeking to remove the entire paragraph. The noble Lord, Lord Airedale, has sought to amend the detailed wording. However, I believe we are both trying to do the same thing. I beg to move.

Lord Airedale

My Lords, I am pleased to support this amendment with which my Amendment No. 11 is linked. On Report, I accused the Government of acting furtively in this matter. The Minister quite rightly took me up on that. I wish to withdraw the word "furtive". However, the effect of Amendment No. 10 cannot be more clearly stated than by the words used by the noble and learned Lord, Lord Simon of Glaisdale, in Committee. I hope I may be forgiven for repeating once more the words of the noble and learned Lord.

The noble and learned Lord said: Parliamentary democracy, like any human institution, is not perfect. But it is well tried. There is no reason why we should give up all the safeguards and all the value that it has shown over the centuries and submit to government by future letters of guidance. At this stage we do not know what the guidance will be; it is insufficiently defined. I therefore suggest to the noble Baroness, who has thus far conducted the Bill to general admiration, that she consider how far we are travelling down the road of bureaucratic rather than democratic government".—[Official Report, 3/12/91; col. 136.] I turn to the words "contravention of guidance", which my amendment seeks to delete. If English is fast becoming the language of the world we owe a duty to see that our language is used properly. One of the bastions of correct use of the English language must be the statute book. The parliamentary draftsman is the guardian of the statute book. It does not behove governments to bully the draftsman into straining the English language in order that the Executive may seize further power at the expense of Parliament. The words "contravention of guidance" simply will not do. Failure to observe guidance is one thing; "contravention of guidance" is virtually meaningless.

5 p.m.

The Deputy Speaker (The Earl of Listowel)

My Lords, if Amendment No. 10 is agreed to I cannot call Amendment No. 11.

Lord Monson

My Lords, I should like to support Amendment No. 11 in the name of the noble Lord, Lord Airedale. As always, the noble Lord is zealous in his concern for the protection of the English language. Rather sadly the Government, once again, are less zealous in their concern for the language. Your Lordships may recall the rather curious phrase which arose some months ago relating to a voluntary ban on the promotion of tourism to South Africa. A ban is by definition compulsory or it is nothing. One cannot have a voluntary ban; there can be a voluntary boycott or there can be discouragement. The wording in question falls within that category. Of the two amendments I prefer that of the noble Lord, Lord Airedale.

Lord Howie of Troon

My Lords, I have little to say on the subject except to recall that a number of years ago I visited an emerging country in Africa where I was introduced to a man who was the minister of education and guidance. He was the chief of police. I do not suggest that the Minister is anything like a chief of police, but that example indicates that the word "guidance" has a number of meanings. I should like to guide the Minister towards the comments made by my noble friend and by the noble Lord, Lord Airedale, and attempt to protect the English language, which is sorely in need of protection.

Baroness Blatch

My Lords, I trust that your Lordships are content that we should consider the amendment moved by the noble Lord, Lord McIntosh. He moved an amendment at Committee stage which sought to delete Clause 9(3) (f), as does Amendment No. 10, and Clause 9(3) (e). We debated that amendment and the noble Lord, Lord McIntosh, pressed matters to a Division in which the amendment was clearly rejected. Nonetheless, with the indulgence of the House I am happy to respond to the arguments which have been put to your Lordships for a second time today.

Lord McIntosh of Haringey

My Lords, will the Minister allow me to intervene? She has quite rightly corrected me regarding a breach of the rules of order in having put forward an amendment which is virtually identical to one which had been defeated. That was a mistake on our part for which I apologise. I shall be happy to withdraw my amendment in favour of that of the noble Lord, Lord Airedale. I hope that that helps the Minister when she replies.

Baroness Blatch

My Lords, I am grateful to the noble Lord for that intervention. Perhaps I may turn to the amendment in the name of the noble Lord, Lord Airedale. While the noble Lord did not formally move the amendment which he tabled at Report stage he nevertheless expressed his anxieties during the course of our debate. I listened carefully to his points and offered a response.

As I did on that occasion, I should like to draw your Lordships' attention to the provisions of subsections (3) (e) and (3) (f) of Clause 9. They make it clear that the regulations which the Secretary of State would be empowered to make under Clause 9 would provide for guidance to be issued and would require any contravention of that guidance to be taken into account in determining whether an authority had acted anti-competitively. That would mean that the guidance in question would be clearly underpinned in regulations and would be as objective as possible.

It would be reasonable and appropriate to expect local authorities generally to act in accordance with that guidance and for the Secretary of State to consider the extent to which they had acted in accordance with or had contravened that guidance if and when he had to take a view on whether or not they had acted anti-competitively, as he must when considering the possibility of the use of his sanction powers under the Local Government, Planning and Land Act 1980 and the Local Government Act 1988. It would also mean that there would be a test for the courts to apply if they were required to decide whether or not an authority had acted anti-competitively.

There has been considerable debate about the status of guidance. It is important that there should be clarification for all concerned, not just as to how local authorities should behave when implementing the measures but also as to how the Secretary of State should exercise his powers under the Act. Guidance, particularly in this specific sense, prescribes specifically the grounds for the Secretary of State to make a judgment as to whether or not a local authority has complied with the guidance. It improves certainty. It is for that reason that the word appears on the face of the Bill.

I hope that noble Lords will recognise that I have made those points previously, but they are the nub of the case for the provisions which have been brought forward in order to give a clear and objective basis for that guidance. I hope therefore that the noble Lord, Lord McIntosh—who I believe supports the noble Lord, Lord Airedale, in this matter—and other noble Lords who have spoken will see fit to withdraw the amendment.

Lord McIntosh of Haringey

My Lords, I must repeat my apologies for an inadvertent breach of the rules governing amendments which can be put down at Third Reading. As the Minister said, I support the amendment of the noble Lord, Lord Airedale, which was not put to a Division at an earlier stage.

With respect, I do not believe that the Minister has answered the point that was made. The noble Lord, Lord Airedale, would be fully justified in moving his amendment and pursuing it to a vote if he wanted to do so. I am sure that he will feel that attention will be paid to the case that he has made and that Ministers will see that this use of the word "contravention" in relation to guidance is entirely inappropriate. I beg leave to withdraw Amendment No. 10.

Amendment, by leave, withdrawn.

Lord Airedale moved Amendment No. 11:

Page 9, line 41, leave out ("contravention of") and insert ("failure to have regard to").

The noble Lord said: My Lords, in moving Amendment No. 11 I am replying to what the Minister said just now in relation to that amendment. I should feel more comfortable about the matter if the noble Baroness had found a precedent for it. I expect that great searches of the statute book have been made to see whether there is any precedent for the extraordinary expression, "contravention of guidance". I do not think that the noble Baroness has found a precedent. She may say that she is not setting a precedent, but how does she know? In a few years' time, if it suits the government of the day to use those words as a precedent, you can bet your boots that they will do so. I listened very carefully to the speech of the noble Baroness. Every time she came to the word "contravention" it would have made just as good sense if she had used the word "disregard".

I do not think that it is right that the use of the English language should be strained in that way, the effect of which is, as I said earlier, to give power to the Executive at the expense of Parliament and to take control away from Parliament. We should test the opinion of the House on this matter. I beg to move.

Baroness Blatch

My Lords, before the noble Lord presses the amendment—

Lord McIntosh of Haringey

My Lords, the Minister is entitled to reply to the amendment which has been freshly moved.

Baroness Blatch

My Lords, I am grateful to the noble Lord. I do not wish to dissuade the noble Lord, Lord Airedale, from his intention, but perhaps I may make two points.

First, the effect of the clause as now drafted is not to oblige local authorities always to comply with guidance issued by the Secretary of State. Subsection 3(f) provides that the extent to which guidance has been contravened should be taken into account in any determination of anti-competitive behaviour. In other words, a contravention of guidance will not automatically lead to a determination that an authority has acted anti-competitively.

I understand the point being made by the noble Lords. The guidance will not be regulation by the back door. We intend a half-way house between regulation which must be complied with and circulars to which authorities must simply have regard, as the noble Lord, Lord McIntosh, said. The guidance envisaged under Clause 9 lies between the two. The extent to which an authority complies will be a matter which the Secretary of State must take into account, but that is not the same as regulation, as I have just explained. The degree to which it is taken into account must be the ground that he uses for determining whether he believes a local authority has acted anti-competitively.

Secondly, perhaps I may comment on the English language point. If the English language is the main concern, the Government might consider whether there was a better word for this purpose than guidance. I should be more than happy to send that as a message to my colleagues in another place.

Lord Airedale

My Lords, I am much encouraged by the final words that the Minister spoke. I was not expecting them after the earlier part of her speech. Of course, I shall be pleased if the Government will reconsider the matter and do everything in their power to persuade the draftsman not to strain the English language. I beg leave to withdrawn the amendment.

Amendment, by leave, withdrawn.

5.15 p.m.

Baroness Hollis of Heigham moved Amendment No. 12:

After Clause 10, insert the following new clause: ("Public service contracts and E.C. legislation

. The exercise of the powers conferred on the Secretary of State by and under sections 8 and 9 above shall be without prejudice to the exercise by local authorities of discretion in the selection of contract award criteria within the framework of the rules laid down in European Community legislation relating to the coordination of procedures for the award of public service contracts.").

The noble Baroness said: My Lords, I make no apologies for coming back a third time to the issue of EC directives and within that the clauses of the Bill, especially in the light of the rather differing responses of the Government in Committee on the one hand and on Report on the other.

Perhaps I may refer to the Local Government International Bureau's occasional papers for local authorities on responding to the challenge of EC law. The bureau says that no one should be in any doubt about the importance of EC-derived law for local authorities. Nearly all our food law, animal feeding stuffs and fertilisers law and most of our weights and measures law is now effectively European law. It estimates that, within a few years, 80 per cent. of United Kingdom law will be EC-inspired. I need only remind your Lordships of previous debates within the framework of EC directives about bathing waters, drinking water and environmental protection for that point to be well established. Your Lordships may also be aware that there is at present a wide-ranging proposal for a Council directive on the liability of the suppliers of services which would render the supplier of a range of services liable for damage and financial loss directly resulting and would place the burden of proving an absence of fault on the supplier, a point to which I may wish to return.

In Committee and on Report, in the light of the Minister's response we established, first, that EC law takes precedence over British law and, secondly, that EC law provides that, where a public service contract passed through the equivalent of a quality threshold, EC law would permit a local authority a choice between the economically most advantageous tender on the one hand and the cheapest tender on the other. Thirdly, we established both in Committee and on Report that the intention of the EC directive was to enlarge local authority freedom, not to enable Ministers to limit it or to direct which of those two paths local authorities must follow; in other words, the cheaper one.

By definition, if national law was to have supremacy over that EC directive, there would be no point in having the EC directive at all. However, if, as the Minister said, the EC directive should reign supreme, Ministers surely cannot determine for local authorities that choice which the EC says belongs to local authorities. At the very least, in the light of the proposal for a Council directive making the supplier of services liable for financial loss directly resulting, it puts a question-mark over the right of a council taxpayer to pursue through the European Court of Justice his claim for any financial loss that may fall on the local authority, should it be required by the Minister to take the cheapest and not the economically most advantageous tender. I hope that the Minister will comment on that point.

The Minister's comments in Committee and on Report raise at least three questions. First, if she insists that local authorities should not have that choice, she is in effect saying that local authorities should not be able to choose the best value for money, but only the cheapest. What is the difference between the economically most advantageous tender and the cheapest? It is value for money. Value for money judges inputs and outputs. It sees the situation in the round. The cheapest does not. It measures only inputs cost without consideration necessarily of outputs.

By going for the cheapest when it is not the economically most advantageous, local authorities will pay less to get even less. For example, instead of paying £5 for £5 worth of service, or £7 for £7 worth of service, or £10 for £10 worth of service under the economically most advantageous, the cheapest would mean paying £4 for £3 worth of service. If the Minister meant what she said in the earlier debate on the Audit Commission, as I am sure that she did—namely, that local authorities should set standards and the Audit Commission should judge the performance in meeting those standards—that is the freedom to choose, which local authorities should have expressly empowered by the European directive.

In real life, no one would choose the cheapest when it did not represent the economically most advantageous. I am sure that the Minister would not do that in private life. The Government do not do that when it comes to public procurement, nor do they do it in the tender document to which my noble friend Lord McIntosh referred earlier. Why should local authorities be expected to use the cheapest when it is not the economically most advantageous in ways that would be regarded as profoundly stupid if carried out in private life or under Government policy? Yet local authorities will be required to apply that standard.

The second question that is raised is that of quality. The Minister said earlier today that quality should be a material consideration. However, with regard to architecture, for example, the two-envelope system proposed in the consultative document simply will not work. On the assumption that all architects are RIBA-qualified, going through that quality threshold means that thereby the local authority must accept the cheapest of all architects' tenders, irrespective of their quality of design as known to the local authority or the judgment that the local authority may wish to make about the sensitivity and appropriateness of an architect's track record for a particular site. As my noble friend Lord McIntosh said, given that architectural services are capitalised, when such savings would be minimal it is clear that going for the cheapest would be a foolish path to follow.

Thirdly, by Ministers insisting that local authorities must follow the path of the cheapest as opposed to the economically most advantageous, they are—I do not use these words lightly—showing yet again their contempt for the capacity of local authorities to make judgments in the interests of local taxpayers. We have seen that with regard to the poll tax Bill when two or three voices in central government knew better than thousands of officers and experienced councillors what was sensible. We have seen it with regard to capping and capital control rules where local authorities that bought land 400 years ago are not allowed to recycle it and use the proceeds in ways that would inhibit even the running of a whelk stall. We have seen it in the refusal of central government to sign the EC charter on local self-government at the same time as Members of this House and another place go to eastern European countries and persuade them to do precisely that. The irony is that the same central government that so vigorously defend parliamentary sovereignty from European interference have no respect at all for democratic local decision-making and seek to deny to local authorities what almost all EC member countries regard as appropriate.

Can it be sensible to require local authorities to take the cheapest when it is not the economically most advantageous course or path for their local taxpayers? Surely it is profoundly stupid to deny to local government that area of judgment. I beg to move.

Earl Howe

My Lords, we have discussed at some length in Committee and at Report stage whether our proposals for a double envelope tendering system are or are not consistent with the draft EC directive on public services contracts. I hope it is now accepted that they are consistent and that our proposals do nothing to damage the principle that inter-state competition for the provision of services should not be distorted, which is the principle that underlies the directive.

Moving to the context of the Bill, I hope that I can reassure the noble Baroness on all her areas of concern. The point now at issue goes to the root of many of our discussions on this part of the Bill. In our view it is necessary to introduce restrictions of various kinds on local authorities' discretion to conduct tender evaluations as they see fit. The regulations which we propose to issue under Clause 9 on the matters to be taken into account in tender evaluation are some examples of those restrictions. They are necessary to clarify the framework of CCT and to ensure fair competition. In some cases they require the Government to form a judgment about the right balance to be struck when evaluating short-term costs against long-term benefits. I know that noble Lords opposite disagree with us, but we are convinced that it is necessary to restrict authorities' freedom in this way, so as to ensure that they are not unduly biased in favour of their in-house teams.

Our proposal for a double envelope tendering procedure raises questions of the same kind. It amounts to a method of structuring decisions about which tender to accept. First, there will be a quality sift and then a choice based solely on price. As the noble Baroness pointed out, that is entirely consistent with what the draft directive refers to as the economically most advantageous tender. I am sorry if my remarks at Report stage may have led her to believe otherwise. I can see that they may have done.

Baroness Hollis of Heigham

My Lords, I am grateful to the noble Earl for giving way. Can he explain what he understands to be the difference between the economically most advantageous and the cheapest?

Earl Howe

My Lords, the difference is as I have just stated. It incorporates the idea of value for money, just as the noble Baroness made clear. It incorporates the idea of a quality sift, so to speak, in the context of the double envelope procedure.

We do not, as the noble Baroness suggested, insist that local authorities must adopt the second criterion, which is known as the "lowest price only", allowed by the draft directive. We have taken very much on board the spirit and substance of the EC directive and should like to apply them to these situations also.

We believe that the double envelope system will ensure quality, technical competence, technical assistance, service levels and other matters with which the noble Baroness is right to be concerned. It is not, therefore, simply the cheapest at the expense of quality, as she suggested. In addition, the procedure should ensure that these qualitative matters are dealt with separately, explicitly, in as objective a fashion as possible and in a way that can be seen to be fair by tenderers and clients alike.

In conclusion, it may assist the noble Baroness and the House if I summarise our position. First, we are satisfied that our proposals are consistent with the draft directive. We are also satisfied that it is justified to restrict local authorities' discretion in the choice of tendering regimes when their own in-house team is involved. We do not accept that adopting the double envelope procedure amounts to accepting the cheapest without regard to an authority's fiduciary duty—quite the contrary.

In the light of those remarks, I hope that the noble Baroness will feel able to withdraw her amendment.

Baroness Hollis of Heigham

My Lords, I thank the noble Earl for his reply but I am baffled by it. I do not fully understand it. Clearly, I shall have to read it.

I realise that there will be no opportunity to return with this matter to your Lordships' House. On the one hand, the Minister seemed to argue that there was no difference between "economically most advantageous" and "cheapest"; on the other hand, he implied that the economically most advantageous had been protected through the quality threshold and thereafter one could go on to the cheapest. In bringing the double envelope together one has value for money.

Earl Howe

My Lords, perhaps I may just clarify that point. We regard the double envelope procedure as a single tendering process. It is one process with part one and part two as its stages. There are not two tendering procedures. It is simply one procedure.

Baroness Hollis of Heigham

My Lords, I hope that noble Lords will indulge me if I infringe the procedures of the House, but perhaps I may ask the noble Earl a direct question. Is he saying that local authorities need not take the cheapest tender or the lowest price if they regard that—and have good reason for believing it—as not the most economically advantageous route for their local taxpayers?

Earl Howe

Yes, my Lords.

Baroness Hollis of Heigham

My Lords, in the light of that assurance, I am happy to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 13 [Duty to conduct reviews and make recommendations]:

Baroness Nicol moved Amendment No. 13:

Page 11, line 21, at end insert: (" (iii) that he should make no structural, boundary or electoral changes, but that he should make arrangements for joint working among authorities in coastal or estuarine areas for the purposes of development planning functions as are specified in the recommendations.").

The noble Baroness said: My Lords, in moving this amendment, with the leave of the House I shall speak also to Amendment No. 20. These two amendments highlight the need for local authorities in coastal and estuarine areas to adopt joint working practices in respect of development planning in the coastal zone. We touched on this matter at Report stage but at that point the response from the Minister was not very satisfactory. The Minister appeared not to make a distinction between land and marine areas. Obviously many people feel that there is a distinction to be made between them and that special arrangements are necessary for marine areas.

Amendment No. 13 is an enabling provision which broadens the function of the Local Government Commission. As drafted, Clause 13 allows the commission to do one of two things: it can recommend either structural, boundary or electoral changes or that there should be no changes at all. The amendment creates a third option which would enable the commission to consider whether development planning functions may best be served under a joint working arrangement which does not require a boundary change. The amendment is constructed in relation to coastal and estuarine authorities only since, as I said, a special case can be made for joint arrangements in those areas.

The second amendment is also an enabling provision which would allow the Secretary of State to make an order which requires local authorities to work jointly with neighbouring authorities in carrying out development planning functions. Again, this provision relates only to coastal and estuarine authorities.

The two amendments do not seek to create joint authorities. The creation of joint authorities is already provided for in Clause 21. The purpose in promoting the new provisions is rather to encourage co-operation between coastal authorities and to establish joint working arrangements. As I said, we feel that there is a special need in marine areas. The amendments are supported by the RSPB which points to the value of our estuaries for wildlife and particularly bird life. I beg to move.

Viscount Mills

My Lords, I support the amendment. It seems sensible, at least to me, that our coasts should be managed rather differently from inland areas.

On Amendment No. 13, in many cases the coastal zone needs to be considered on a resource basis and not, as at present, on a sectoral basis. Such considerations are reflected more accurately by geography and economy than simply by administrative boundaries. Clearly a more holistic approach is needed for coastal planning. Development pressures and natural processes do not respect artificial boundaries made by man.

Those views are shared by the National Coast and Estuaries Advisory Group. In its recent memorandum of evidence to the House of Commons Select Committee on the Environment on Coastal Zone Protection and Planning, the group stressed, the urgency of providing a framework through which policies for the coastal zones can be integrated". It also specifically identified, the lack of co-ordination between the various bodies with power and interests in the coast zone". There is clearly a need for planning along our coasts and estuaries to take place in a cohesive and integrated manner, a need which is not satisfied by present legislation but which could be provided for within the Bill. Without requiring joint authorities or creating boundary changes, the amendment enables the Local Government Commission to consider whether development planning functions could best be served by joint working arrangements between local authorities. As such, it would improve the present planning arrangements and is therefore a measure that I support. If the amendment is not accepted, will the Minister confirm whether or not the Local Government Commission will have any powers to administer joint working arrangements between local authorities in coastal areas?

On Amendment No. 20, many local authorities in estuarine areas have one small part of an estuary's shoreline within its jurisdiction. That may well lead to a lack of co-ordination in development planning matters resulting in both the development of fragmented or even isolated policies and inconsistency and duplication of planning efforts along the estuary.

I accept that in some cases voluntary arrangements for coastal and estuarine areas have been created between local authorities—for example, the Ribble Estuary Liaison Group in Lancashire. The group discusses matters affecting the Ribble estuary which lies within a single county but has five district councils along its length.

However, such voluntary arrangements do not provide the necessary forum for specialised land use planning and lack the powers associated with formal development plans. Other areas of estuary and coast in the UK have no liaison arrangements. As a consequence, in those areas our estuaries are vulnerable to piecemeal development which, although it may affect only small areas of land, will eventually lead to habitat fragmentation and loss.

Our coastline and estuaries are vitally important areas and are used for a wide variety of activities of great economic value. However, many of those activities are potentially damaging not only to the environment but to each other. It is therefore essential to reconcile the diverse interests of those who need to exploit, construct, defend or dump with those whose objective is to conserve or recreate environmental harmony.

Such reconciliation can be made possible only if joint arrangements exist for proper strategic planning in coastal and estuarine areas—a measure which I believe this amendment would help to bring about. In its absence I should be grateful if the Minister would tell me what arrangements the Secretary of State will be able to make to ensure that co-operation and joint working takes place between local authorities in coastal and estuarine areas.

Perhaps I may make one final point that relates to the amendments but is not necessarily covered by them. It is the issue of seaward planning control. Local authority control extends only so far as the low water mark. Beyond that point the Government view procedure operates. Those two sets of planning controls need to be brought together if true integrated planning of the entire coastal zone is to be achieved. There is a real need to address that issue as well as those covered by Amendments Nos. 13 and 20.

The Earl of Balfour

My Lords, I am fascinated by this discussion. Many of the coastal functions are surely now managed by the river purification boards under the environmental protection legislation. In the old days many English local authorities were involved in tremendous expense with coastal defence and the problems of coastal protection and pollution. A vast amount of that responsibility has now been taken over by the National Rivers Authority.

Earl Howe

My Lords, many noble Lords will recall that we discussed this topic during the passage of the Planning and Compensation Bill. These amendments, as the noble Baroness explained, seek to amend this Bill to ensure that the Local Government Commission can make recommendations to the Secretary of State relating to the development planning functions of authorities in coastal or estuarine areas. Let me first confirm to your Lordships that, even without Amendment No. 13, the commission may do so. The geography of the coast or estuary will be one of the factors the commission will consider.

Amendment No. 20, however, goes on to suggest that the Secretary of State might have a power to impose joint arrangements on certain coastal or estuarine authorities to prepare development plans in respect of the coastal, or estuary parts of their areas. These amendments would reintroduce the concept of the subject plan for the coast.

We do not deny that in some areas coastal subject plans have served a useful purpose. But they have done so against the background of very patchy local plan coverage. Under the new system introduced by the 1991 Act, the situation will be quite different. All the planning authorities will have to prepare comprehensive, district-wide plans, setting out policies for the whole of their areas. Given such comprehensive coverage, the case for coastal subject plans is much less compelling.

We do not accept the need for separate coastal zone plans. Planning policies for the coast can and should be incorporated in structure and local plans. Separate plans would tend to destroy the clarity of the framework of development plans for which the 1991 Act provides. They would in effect reintroduce the notion of the "subject" plan dealing separately with a specific topic. There is in our view a great deal to be said for sticking to a clear and simple planning framework.

That is not to say that we do not expect local authorities to get together, as a means of achieving coherence and consistency in the treatment of a particular area. That is a subject that my noble friend Lord Mills raised. County and district authorities concerned might work together to produce a joint statement of planning policy for a coastal or estuarine area. Such a statement would itself be non-statutory, but would form the basis for policies in the relevant structure and local plans and would help to secure the consistency of those plans. Such joint working by agreement is a possibility which may deserve further consideration in particular areas. It is an approach which may need to be used sparingly, and would need to be supplementary to the statutory development plan framework. But that, we believe, is as far as we should go on the face of the legislation.

However, before closing today, perhaps I may lift the veil on our new planning policy guidance on development plans, PPG12, which is to be published on 10th February. That will contain two references of particular relevance to coastal planning. The first will encourage local authorities to consult other authorities which may be affected by development plan proposals, even though they are not directly adjacent to the authority producing the plan. In this way, where structure plan policies would affect an authority across an estuary, we would expect that authority to be consulted by the plan-making authority.

The second point is that we shall be making clear in the planning policy guidance that authorities should ensure that interactions between key policies to be included in structure plans are fully considered. Their policies need to form an integrated whole; for example, by forming an overall strategy for the coast. In this way each authority should consider the special development plan policies that its coastal area requires. It should prepare them only after consulting all those authorities with an interest.

I hope that at least the latter part of my remarks will have assured the noble Baroness, and that on the basis of my assurances she will be able to withdraw the amendment.

Baroness Nicol

My Lords, I am grateful to the noble Viscount, Lord Mills, for his support. I am also grateful to the Minister for his careful reply. Indeed, I found the second half of his reply most interesting. I should like time to study it, although there is no way in which we can discuss the matter again in this House in this context. However, I am sure that we shall return to the subject in the future.

I am grateful for the care with which the Minister replied. I am a little disappointed that I am still unable to persuade the Government that there is a special case to be made for marine areas. I shall read the Minister's remarks carefully and in the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Morris

moved Amendment No. 14: Page 11, line 34, leave out from beginning to ("regard") in line 36 and insert ("In recommending any structural, boundary or electoral change the Local Government Commission shall have"). The noble Lord said: My Lords, the wording of the amendment is in precisely the same terms as that which appeared in Committee. I make no apology for raising the matter again. That is strictly within the rules of your Lordships' House because this is purely a drafting amendment.

I raise the matter again on Third Reading as a result of the way in which it was greeted on Report. My noble friend Lady Blatch then stated: the effect of the amendment will be to lay a duty on the commission to have regard to the terms of reference in recommending any structural boundary or electoral change". That is absolutely correct and is precisely what I said in arguing for the amendment. My noble friend also stated: This change would make no practical difference to the way in which the commission goes about its work". Again, that is precisely what I said in arguing for the amendment, although I put the matter in a different way. I said that I did not believe that it made a substantive change to the Bill. My noble friend further stated: I can assure the noble Earl that the commission will be required to have regard to the matters specified in Clause 13(5) (a) and (b) in carrying out its reviews". That is absolutely right, and my amendment provides for that also. My noble friend went on to say: The drafting of the Bill does not leave that in doubt". -[Official Report, 19/12/91; col. 1483.] It is on that point that we differ slightly. I believe that the drafting of the Bill leaves the matter in doubt. The virtue of my amendment is that it makes the matter a great deal clearer for the simple reason that it states in 17 words what the Bill states in 31 words. It makes no substantive change to the Bill. Because I am worshipping at the altar of brevity and clarity I commend the amendment to your Lordships. I am puzzled about the reason why it was not accepted in the first place.

If my noble friend Lady Blatch were to answer my amendment —but I know that she will not do so—I might have appealed to her ever kindly and gentle nature. I might have reminded her that there is nothing more hurtful to an ardent suitor than to have his gifts, however humble, spurned, however politely. As my noble friend will not be answering the amendment I shall not raise that fact. I beg to move.

5.45 p.m.

Earl Howe

My Lords, my noble friend Lord Morris has raised a principle about brevity and clarity in legal drafting with which all noble Lords will concur. He has drawn attention to an apparent growth of Plato's beard on the face of this part of the Bill to which he is inclined to apply Occam's razor.

We are sympathetic to the general point made by my noble friend in Amendment No. 14. However, we have not yet ascertained whether his suggested wording will make any substantive difference to the legal meaning or force of the clause. It may, but if we are advised by parliamentary counsel that it does not, I can give my noble friend an assurance that the points he has raised will be looked at again when the Bill reaches its Committee stage in another place.

I hope that my noble friend will understand that I can go no further today. I thank him for his remarks and assure him that the point is firmly lodged. I turn to his second amendment—

Lord Morris

My Lords, Amendment No. 15 presents a different point. It should not have been grouped with Amendment No. 14 as it deals with a totally different issue. I wish to deal with that amendment separately.

Earl Howe

My Lords, I am content.

Lord Morris

My Lords, I am grateful to my noble friend for the assurances that he has given. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Morris moved Amendment No. 15:

Page 11, line 38, leave out ("and convenient").

The noble Lord said: My Lords, I have tabled the second drafting amendment because I have considerable doubt about whether the inclusion of the words "and convenient" add anything to the clause. I am convinced that: to secure effective … local government",

if it were inconvenient, would not be effective local government.

Secondly, I have serious doubts about whether the word "convenient" is capable of juridcal test. For that reason I believe that my amendment is an improvement to the Bill. I beg to move.

Earl Howe

My Lords, I understand the point that my noble friend has made. Nevertheless, I believe that the inclusion of the word "convenient" is more than merely an adherence to a traditional form of words. The term "convenient" has a good pedigree. It formed part of the terms of reference of the Local Government Boundary Commission established by the Local Government Act 1972. It applied to the recommendations of the previous Local Government Commission under Part II of the Local Government Act 1958. In the light of that reason we see no reason why the term should be changed for the new commission—

Lord Peyton of Yeovil

My Lords, I thank my noble friend for giving way. Has the term "convenient" ever been applied to government? It appears to me to be almost a contradiction in terms.

Earl Howe

My Lords, not to my knowledge. A point of emphasis also arises. The terms of reference which the commission will be given will include a requirement to have regard to the interests and identities of local communities. The underlying aim in that requirement is to create local government that is both close at hand and accessible, without defining those terms too closely.

I believe that there is a value in having the word "convenient" alongside the word "effective". It draws the spirit of the aim clearly on the face of the Bill. I hope that with that explanation my noble friend will feel comfortable about withdrawing his amendment.

Lord Morris

My Lords, I am grateful to my noble friend for that full explanation. It is not an issue about which I would go to the wall, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 14 [Changes that may be recommended]:

Lord Norrie moved Amendment No. 16:

Page 13, line 42, after ("plans") insert:

(" (ia) be required individually to prepare a separate structure plan and local plans;").

The noble Lord said: My Lords, Amendment No. 16 seeks to provide the Local Government Commission with greater flexibility in respect of land use planning. Clause 14 (5) (d) was introduced by the Government on Report in response to anxiety about the special implications of the Bill for planning. At that stage I expressed my anxieties about the extension of unitary development plans for shires. This is one of the options allowed for by the Government's amendment. The Government's amendment also allows for the continuance of structure and local plans. However, there are a number of ways in which that can he achieved with a new system of unitary authorities. In my view some of the options are likely to be more effective than others. My reason for moving this amendment is that I am not sure that the Government's amendment will allow the Local Government Commission the scope to address all available options and be sufficiently specific in its recommendations.

It seems to me there are two clear options for strategic planning within a unitary system of local authorities: structure plans prepared jointly by neighbouring authorities; and structure plans prepared individually without joint arrangements.

I shall not rehearse the arguments against the first option now, but I remain of the view that this would be an unsatisfactory outcome. Unitary authorities need to be large enough to carry out separate strategic planning effectively.

I believe the Local Government Commission should be able to distinguish between each of these approaches in making its recommendations. I am not sure, however, whether under the clause as it now stands it would be possible for the commission to recommend that unitary authorities should prepare their own separate structure plans.

I wrote to my noble friend the Minister on this matter before the Recess and I am grateful for her recent reply. She said: the powers in this Bill are sufficient to empower the Secretary of State to amend the planning Acts so that where a large unitary authority is responsible for both structure and local plan preparation, the local plans may be drawn up for areas within that of the unitary authority …

That answers my questions in part. It does not, however, make it clear how far the Local Government Commission will be able to recommend that new unitary authorities should be responsible for preparing their own separate structure plan as opposed to being party to the preparation of joint structure plans. Perhaps the Minister can clarify that for me.

It is unclear also what procedure will be followed to help a unitary authority decide how to draw up local plans on an area-by-area basis. I should like to know also how the Government consider the planning Acts might need to be amended to allow for all options that I have mentioned.

I make no apology for pressing this issue. These are important questions which my amendment aims to clarify. I beg to move.

Baroness Faithfull

My Lords, my noble friend Lord Norrie has spoken of a structure plan in relation to planning. I support the amendment in relation to other services within the local authority. In particular I speak of social services, housing, and, in some cases, roads.

First, as one who has been a chief officer, I submit a view for the consideration of the commission; that is, that unitary authorities provide a more effective and less costly structure than is provided by any structure which has divided responsibility.

Secondly, I consider that a county structure supplies the most satisfactory and wisest structure. Within the local authority it is worrying for any chief officer to have to consult with an enormous number of other authorities whereas if all the services are within one authority covering one wide area—preferably a county area—much time is saved.

There is another point which is rarely considered; that is, the attitude of the authorities as regards services outside the local authority. If there are a large number of small district authorities, then each authority has to consult with, for example, the police and regional and district health boards. A county authority is able to formulate a policy to cover its area with the police and health authorities. I know that that makes for greater efficiency.

I believe that the noble Baroness, Lady Hollis, suggested that district authorities should be set up with an "overlord" of regional authorities. From a local point of view it is difficult to be loyal or to have a feeling for the regions. One has a feeling and a sense of loyalty for one's county but a region is quite a different matter.

Therefore, I support the idea of a county structure to be considered by the commission, taking into account the services within the authority and the services outside the authority with which it is necessary to work.

Earl Howe

My Lords, my noble friend Lord Norrie has once again returned to the subject of planning, after the long and detailed debates which we have had on this subject on Report and in Committee. I hope that what I have to say will be reassuring to him. He seeks clarification of the position in relation to the preparation of structure and local plans. As my noble friend Lady Blatch mentioned when we discussed our amendments to this clause at Report stage, the Local Government Commission will have the flexibility to recommend either that the present system of separate structure and local plans outside the metropolitan areas should continue, adjusted as appropriate to unitary authorities, or that the new unitary authorities should prepare unitary development plans, as the London borough and metropolitan district councils do at present. The power to recommend the transfer of functions of both county and district councils, including the preparation of structure and local plans, to a single authority is covered by Clause 14(2) (b). Where a large unitary authority is responsible for both structure and local plan preparation, the local plans may be drawn up for areas within that of a unitary authority, where to do otherwise would cause disproportionate administrative difficulties, due to the size of the plan or some other factor. Such provision would be made under Clause 17(4). We share the objective that development planning should be properly catered for by the commission in its recommendations.

My noble friend Lord Norrie asked how we intend to amend the planning Acts, for example, in the case of large unitary authorities. That will depend on the recommendations of the commission and the Secretary of State's response. We may also need to give guidance on how area-based plans should be drawn up, if they are justified, within a large unitary authority.

The commission will look at what should happen to particular functions including planning. It will be able to look at whether there should be joint arrangements under Clause 14(5) (c). I hope that, in the light of what I have said, my noble friend will withdraw the amendment.

Lord Norrie

My Lords, I am grateful to the Minister for his long and detailed reply. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 15 [Procedure on a review]:

Lord Norrie moved Amendment No. 17:

Page 15, line 3, at end insert: ("(aa) submit to him a statement which shows that its recommendations do not prejudice the constitution of an authority independent of any other tier of local government in any National Park.").

The noble Lord said: My Lords, we were all hoping that the Government's response to the National Parks Review Panel would be known in time for this Third Reading debate. It is disappointing that that is not so.

As matters stand we have a Bill whose impact on national parks is not neutral. It risks undermining national parks' administration and it cannot fulfil the Government's intention that each national park should be administered by an authority independent of any other tier of local government.

I remind the House that on Report there was clear agreement that, if it were not possible to create independent authorities for parks in the Bill, then it was vital that the Local Government Commission should say nothing which might inadvertently disrupt the Government's wish to create independent authorities as soon as possible. There was a strong feeling that a safeguard to that effect should be secured on the face of the Bill. Amendment No. 17 seeks to achieve that. At the point of reporting to the Secretary of State, the Local Government Commission would be required to submit to him a statement showing that its recommendations for any area, including a national park, would not affect the creation of an independent authority for that park. I hope that the Government will consider introducing something along those lines. I beg to move.

6 p.m.

Baroness Nicol

My Lords, the reason we had to return once again with this amendment is that the promised response from the Government to the report, Fit for the Future, has not materialised. I do not know whether, when she replies, the Minister will be able to tell us that the response is imminent and, if so, what it contains. In the absence of that, our worries remain regarding the possible difficulties faced in the interim by the national parks.

We have gone over many times the chaos that may ensue if we are not clear about the Government's intentions and I do not wish to weary the House by doing so again. But if the Government are saying that there must be separate legislation and nothing can be done within the Bill, it is clear that there is obviously not time before the end of this Session of Parliament to bring in that separate legislation. If the Government do not intend to accept the amendment, the Minister must reassure us about what they intend to do to prevent the chaos occurring between now and the establishment of a new government. It is a serious matter. I support Amendment No. 17, moved by the noble Lord, Lord Norrie, and I hope that we obtain a positive response.

Baroness White

My Lords, I strongly support the noble Lord, Lord Norrie, and my noble friend Lady Nicol. This matter was discussed at some length at an earlier stage of the Bill. I was recently in communication with the chairman of the National Parks Review Panel, who is greatly disappointed at the delay in the publishing of the official response to what all those who are familiar with the matter considered to be a well thought out and valuable report. We do not know why the Government are taking such a long time to produce their official response. I hope that the noble Baroness will be able to give us some definite reassurance in that regard.

In the meantime, as my noble friend Lady Nicol pointed out, we have no confidence that there is likely to be other substantive legislation on the matter in the life of this Parliament. It is extremely important to have something on the face of the Bill which will secure the situation. I do not wish to elaborate further. At an earlier stage I mentioned that one of the problems is that three national parks are within the principality of Wales. Its arrangements for local government reform and the timetable are different. Unless we can obtain something in the nature of the amendment proposed by the noble Lord, Lord Norrie, we shall encounter further difficulties in regard to ensuring the compatibility of the position in the national parks.

All those with any real knowledge of the situation in the national parks feel strongly that their administration in the two countries must remain compatible. Therefore I hope that the noble Baroness will be able to assure us that we shall receive that official response quickly—why it has not been secured already I do not understand—and that we are given the kind of safeguard covered by Amendment No. 17.

Baroness Blatch

My Lords, in response to my noble friend and the noble Baronesses, Lady Nicol and Lady White, and I am sure if he was in his place we would be joined by the noble Lord, Lord Hunt, I can say that I am told that the response to the report is imminent. I sympathise with much that has been said and I can promise that I shall continue to press for that response on behalf of the House.

Perhaps I may remind all those who have spoken so far, and indeed my noble friend Lord Norrie, that to take the road of the Local Government Commission in these matters would be a much slower track than it will be to acquire independent status for the national parks. It will not be possible simply to take national parks areas; if taken area by area one would need to wait bit by bit for that work to be completed. It is therefore important that, once the response is determined and the Government's public commitment to the independent status of national parks fulfilled, it should be fulfilled as quickly as possible.

The House will recall that in answer to earlier amendments during Report stage I said that there was no reason to believe that the work of the Local Government Commission will in any way affect the establishment of independent national park authorities. I went on to explain that the Government will be issuing guidance to the commission to make it clear that we are committed to the establishment of independent park authorities. A draft of that guidance is already out to consultation, but we shall amend the document before it is issued to the commission to ensure that the commission carries out its reviews with that commitment in mind.

I believe that that is the right way to proceed and that the future of the national parks will be fully secured by that means. The proposed amendment would require the commission to submit a statement to the Secretary of State to the effect that its recommendations do not prejudice the constitution of independent national parks.

Such an amendment is unnecessary. The first point to make is that the commission will be obliged to follow the Secretary of State's guidance, and it is quite simply inconceivable that the commission would ignore it on a matter of this kind. But if, for the sake of argument, we think the unthinkable and assume for a moment that the commission do make recommendations which conflict with the Government's policy towards national parks, the second point is that the Secretary of State will simply not implement them.

With that answer and my assurance that I shall do all I can to ensure that the response is put into the public arena as soon as possible, I hope that the amendment will be withdrawn.

Lord Norrie

My Lords, I am grateful to my noble friend for her reply. Perhaps I can say that the only way that this House will be satisfied is for the Government to introduce a national parks Bill at the earliest opportunity. However, at the moment I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Norrie moved Amendment No. 18:

Page 15, line 9, at end insert: (" (4A) When making recommendations under subsection (3) or (4) above the Local Government Commission shall prepare a statement which shows how its recommendations will secure the effective performance of strategic functions in the wider public interest.").

The noble Lord said: My Lords, Amendment No. 18 seeks to ensure that strategic services such as strategic planning, transport, waste disposal and mineral workings are properly addressed by the Local Government Commission. Rightly, I believe, we spent a considerable time on the issue of the strategic role of local government. That issue is intimately bound up with the issue of joint arrangements, many shortcomings of which have been referred to by noble Lords on both sides of the House.

I was reassured by the response to amendments I moved at earlier stages that the Government are in no doubt as to the importance of strategic functions and the need to avoid a proliferation of joint arrangements. At Report stage my noble friend the Minister said that it would be inconceivable that the Local Government Commission should ignore the effective and efficient delivery of strategic services. Prior to that, at Committee stage, she said that it would have to be shown that strategic planning issues are satisfactorily covered.

Given the degree of unanimity on the issue, it is remarkable that the Bill provides no safeguards. There is no mechanism on the face of the Bill which will ensure that the Government's intentions are fulfilled. Amendment No. 18 provides such a mechanism. It will require the commission to prepare a statement, both when preparing draft and final recommendations, which specifically addresses how the effective provision of those strategic services will be secured. I beg to move.

Lord Peyton of Yeovil

My Lords, perhaps I can say briefly that I applaud the Government's proposals to set up the Local Government Commission. I applaud also the contents of the clause which lays down how the review shall be conducted and the considerations that the commission shall have in mind. I share the view of my noble friend that a gap exists which his clear amendment reasonably sets out to fill. For the life of me I cannot see any reason why the Government should not welcome this addition to their thinking. It seems to me to be entirely complementary to the ideas contained in the clause.

The Earl of Carnarvon

My Lords, as chairman of a regional planning council I represent both counties and districts. I have toured the whole of my region and spoken to many county and district members. I am sure that the noble Baroness will agree that the Government appreciate the work of the regional councils as does, I believe, the Opposition. My worry is that the lack of understanding by some people of the amount of work done by specialist officers which is provided by the counties to the regional councils would make it extremely difficult for districts or small unitary authorities to be able to supply those very special services. I am sure that the noble Baroness is aware of the large airport study that is going on at the moment with very specialised staff involved.

That is a matter about which I am very worried. In my tour of the South East (I am meeting the other regional chairmen very shortly) the districts have been unable to satisfy me that they will be able to supply the kind of expertise and joint authority which will enable regional councils to carry out their duties. In addition to their duties as regards this country, I am sure that in future they will be responsible for regional liaison in Europe. That is another very important factor which must not be overlooked by the Local Government Commission when bringing forward its recommendations. I am pleased to support the amendment.

Baroness Blatch

My Lords, again this is a very important subject revisited in the course of this debate. I have assured the House that the Government fully recognise the importance of the strategic functions of local authorities. All that has been said here today and at all stages of this Bill cannot be overstated. I have made it clear that before any changes to local government structure can be made it must be shown that all strategic functions are satisfactorily covered.

The Local Government Commission will certainly be in no doubt about the importance of the strategic functions of local authorities. It will be well aware that recommendations which do not cover these functions properly will not be acceptable and will not be brought before Parliament for approval. This amendment would require the commission to prepare a statement showing how its recommendations would secure the effective performance of strategic functions in the wider public interest.

The need to secure the effective performance of strategic functions in the wider public interest will be an important factor which will be central to the commission's work. It is set out clearly in the guidance to which the commission will be required to have regard. Draft and final recommendations will be available for public scrutiny and there will be ample opportunity for comment on the crucial matter of strategic functions. We do not believe that it will be useful to require the commission to prepare a separate statement to demonstrate how its recommendations will secure the effective performance of strategic functions in the wider public interest.

That requirement will be an essential part—indeed, it will be a central part—of the recommendations themselves. The proper coverage of strategic functions should be an integral part of the recommendations not covered in a separate statement. Anyone who considered that strategic issues had not been properly covered in any particular recommendation would have the opportunity to say so.

My right honourable friend the Secretary of State will also need to be satisfied that strategic functions are properly covered before bringing before Parliament for approval an order to give effect to the commission's recommendations. I cannot emphasise too strongly just how important the strategic functions will be in this context. It will not be possible for the commission to dip into some functions and not others and to make recommendations to Parliament. In the first place it will have to convince the Secretary of State that all the functions will be properly delivered and that there will be proper arrangements for their efficient and effective delivery. It will be for Parliament itself to consider those matters.

I appreciate the concern of my noble friend Lord Norrie and that of all other noble Lords about the strategic functions, and my noble friend's intention in tabling this amendment. I do not believe the amendment to be appropriate. In view of the assurances that I have given about the central nature of strategic functions in the work of the Local Government Commission—

Lord Peyton of Yeovil

My Lords, if the commission is to be obliged, as I understand it will be, to give its reasons in its report to the Secretary of State, for the life of me I cannot understand why the reasons should not be published.

Baroness Blatch

My Lords, in the first instance the report to the Secretary of State will be considered by him. A draft report of the commission's work will have gone out for public consultation. The recommendations that come before Parliament will also be public documents. This amendment is asking for a separate report stating what will be a central and an essential part of the recommendations of the commission to the Secretary of State. There will be a gap of at least six weeks between the Secretary of State receiving the recommendations and them being presented before Parliament.

Lord Norrie

My Lords, I am very grateful for the Minister's reply. This is a matter that we should follow up either by a meeting or by letters. I hope that the commission's final guidance will be an improvement on the draft which I do not believe to be satisfactory at the moment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 17 [Implementation of recommendations by order]:

6.15 p.m.

Baroness Hamwee moved Amendment No. 19:

Page 16, line 2, after ("report") insert ("or where modifications are proposed, before the Secretary of State has published his proposals and allowed sufficient time for interested persons to make representations and for him to take them into account").

The noble Baroness said: My Lords, this is an amendment in the context of the implementation of the commission's recommendations to allow for comment if the Secretary of State proposes to modify the commission's recommendations. The Bill gives the Secretary of State powers to ignore or to amend the recommendations of the Local Government Commission as he sees fit without, as it stands, an opportunity written into the legislation for public comment. That is a very considerable degree of discretion. It could mean that decisions may be taken which do not have widespread public support.

I am sure that the Minister will tell us that a Secretary of State would not do any such thing. Perhaps the way to counter that is to say that the Secretary of State concerned may not be a Secretary of State of the same political party as the present Minister. Sometimes that helps us to put these matters into context.

The amendment provides for statutory consultation on modifications, but still allows the Secretary of State the ability to exercise his judgment. At Committee stage the Minister assured us that if there were to be substantial modifications the Secretary of State could direct the commission to conduct a further review. That still leaves him or her with considerable discretion on various counts—that is to say, whether or not to pursue the original recommendations; to decide what is a substantial modification; and if he or she does not believe that the modification is substantial, the discretion not to direct the commission to conduct a further review.

This amendment is seeking to clarify those points and to allow for adequate publicity and the opportunity to comment. I also anticipate that the Minister may say that consultation can go on forever, but there are times when a decision has to be made. I suggest that this amendment strikes the right balance. I beg to move.

Earl Howe

My Lords, I understood the noble Baroness to accept that we have taken great care to build into the commission's review procedure substantial opportunities for public comment. The commission will be required to make available for public inspection copies of its final recommendations to the Secretary of State. It will be required to take such steps as it considers sufficient to secure that persons who may be interested in the recommendations are informed of them and of the period within which they may be inspected.

Further, the Secretary of State will be required to wait for at least six weeks after receiving the commission's final recommendations before making an order implementing them, to allow time for further representations to be made. Any modifications to the commission's recommendations which the Secretary of State recommends to Parliament will take account of views expressed during this period about the commission's recommendations. If the Secretary of State considers that the commission's recommendations need to be modified substantially, he will have the power to direct the commission to conduct a further review and to make further recommendations. The commission will be required to publish any revised recommendations and make them available for public comment following the procedures set out in Clause 15.

The noble Baroness, Lady Hamwee, anticipated that I would say—and I do indeed feel—that there comes a point where consultation must cease and decisions have to be made. In moving the amendment, the noble Baroness is not contesting the idea that the Secretary of State should exercise his judgment. His decisions will be made having full regard to both the commission's recommendations and to representations made to him by interested parties. I hope that with the substance as well as the tone of those remarks, she will feel able to withdraw her amendment.

Baroness Hamwee

My Lords, I entirely accept the tone. But I am afraid that I do not feel that the substance has taken us any further because we are told again that the opportunity for public comment is at the earlier stage. However, it would be churlish to press the amendment at this point. I hope it may be something that will be taken up at a later stage.

Amendment, by leave, withdrawn.

Clause 20 [Agreements as to incidental matters]:

[Amendment No. 20 not moved.]

Clause 26 [Orders, regulations and directions under Part II]:

Lord Simon of Glaisdale moved Amendment No. 21:

Page 22, line 22, leave out from ("areas") to end of line 23.

The noble and learned Lord said: My Lords, this is a modification of an amendment which I moved at Committee stage. If your Lordships will look at the strange structure of Clause 26, subsection (1) provides that regulations shall be subject to the negative procedure with the three exceptions paragraphs (a), (b) and (c). Paragraphs (a) and (b) are picked up in subsection (2) and made subject to the affirmative resolution procedure. Paragraph (c) is not dealt with at all with the result that there is no parliamentary control over the regulation in question which relates to electoral changes and parishes—hardly matters to be dismissed as of absolute inconsequence.

At Committee stage, I moved that paragraph (c) should be subject to the affirmative resolution procedure. But in an attempt to come to a compromise with the noble Baroness, as I said earlier, I was prepared to concede two-and-a-half of the four points where we differed, in exchange for one-and-a-half points on which I wished her, if she could, to meet me. This is the half point. What I now propose is that paragraph (c) being deleted, regulations effecting electoral changes or relating to parishes, shall be subject to the negative procedure because they fall under subsection (1).

This is no time to deal with a matter, even of constitutional importance, at any great length. It was after half past eleven that I moved the amendments in Committee. I did not table them for Report stage because if I had done so, they would have been discussed at about five o'clock on the day that your Lordships rose before Christmas. I felt that such would be complicity in a devaluation of your Lordships' House. What I do now is to ask your Lordships to say that these regulations (which, as I say, are not to be dismissed as of no consequence) should be subject to the negative procedure.

This matter cannot be dealt with except in the context of the current surge in bureaucracy to the detriment of Parliament, to the detriment of the law and to the detriment, as we saw in the Child Support Act of the last session, of private individual rights and interests. I shall not enlarge on that, but that is the immediate context.

There is an historical context because the last time we had a bureaucratic surge of this sort, it culminated in the disaster of Crichel Down—a traumatic experience for the party to which the noble Baroness belongs. It ended with the resignation of an able, popular and competent Minister, Sir Thomas Dugdale, and the moving sideways of two senior civil servants—rightly a move seen only as sideways because although they had behaved badly, they had behaved no worse than many of their colleagues in similar situations in the previous five years. Therefore I ask the noble Baroness to take account of this, not only in its immediate context, but also lest she and the Government may be drifting into another Crichel Down situation.

When your Lordships considered this late at night in Committee, the noble Baroness advanced two arguments. The first was that most of the orders in question are of a local nature. But she said "most", not "all". Some will be of a greater importance if she puts it like that. The second was that the commission would consult widely.

However, consultation is not a substitute for parliamentary consideration. Wide consultation was consistently offered in the proceedings before Crichel Down. The consultation proved purely nugatory. Objections were dismissed. Anybody complaining was regarded as a trouble maker. It is all there in the report of Sir Andrew Clark.

So one comes back to the two arguments. The first is that most of them are of a trivial and local nature, but not all. The second is that even then all that is offered is consultation. The negative procedure is the minimum that can be considered here. In fact, the negative procedure in the other place is very rarely efficacious at all because the orders are not reached in time before time has effluxed.

In your Lordships' House, the great advantage to the Government of the negative procedure is that only those matters that are considered by your Lordships as of importance come before your Lordships at all. There is no question here, under the negative procedure, of Parliament being flooded with a whole number of trivialities under this provision. Nor would the department be harassed by having its orders discussed. One cannot avoid the general background that at the moment the department is understandably anxious to emancipate itself as far as possible from parliamentary and judicial control. I have been both sides of the baize curtain and I know how maddening it is to officials to have every word of a Bill scrutinised and every clause considered. The great advantage of regulations from their point of view is that there can be no amendment at all.

As the noble Lord, Lord McIntosh of Haringey, reminded us at an earlier stage, it is a convention, although I think a weak convention, that your Lordships do not vote against a body of regulations even under the affirmative regulation procedure. As this is a matter of constitutional moment—namely, parliamentary control over law-making powers—I beg to move.

6.30 p.m.

Lord McIntosh of Haringey

My Lords, as I missed the first half of the noble and learned Lord's speech I intervene only to say that, from what I heard, I agree very much with him. The noble and learned Lord described it as a weak convention that we do not divide against statutory instruments, even affirmative instruments. I suspect that what he means by a weak convention is that the Labour Party does not do it but the Conservative Party does so on occasion.

Lord Simon of Glaisdale

My Lords, I meant that it is the kind of convention that can be quite easily revoked on a change of circumstances.

Lord McIntosh of Haringey

My Lords, the reason that we do not divide against statutory instruments is clear. There is a permanent Conservative majority in this House. If we did so divide, it would be done to us all the time.

Baroness Blatch

My Lords, I feel at a distinct disadvantage when it comes to pitting my wits against the eloquence of the noble and learned Lord, Lord Simon of Glaisdale. The noble and learned Lord seeks to ensure that proper parliamentary scrutiny is exercised over the actions of the Executive. But these orders relate to very minor matters, and I do not believe that the noble and learned Lord can want Parliament to concern itself with every single executive action. My understanding is that virtually all the decisions that are subject to these orders are minor. If Parliament were to attempt to do so, I think your Lordships would find yourselves facing many more late nights. Effective parliamentary scrutiny is surely about concentrating on matters of more substance.

Your Lordships will appreciate that the orders which would be affected by this amendment are concerned with council electoral arrangements and parish councils. The electoral orders are virtually all about minor changes to the boundaries of council wards. Parish orders can establish new parish councils or they may alter the boundaries of a parish. For example, where a new housing estate was built which straddled an existing parish boundary, a typical order might move the boundary so that the whole of the estate was in one parish.

I should like to emphasise to the House that the Government are not proposing a change to the arrangements for the scrutiny of these orders. Such orders are currently made following recommendations by the Local Government Boundary Commission. That commission's responsibilities will pass, by virtue of provisions in the Bill, to the new Local Government Commission. Therefore it seems to me entirely reasonable for the Bill to repeat the arrangements for the making of the relevant orders. That is just what the Bill does. It repeats exactly the procedures that have been in operation since at least 1974. None of these orders has previously been subject to parliamentary scrutiny.

I am not aware of any complaints or indeed any difficulties that have arisen by virtue of the fact that these orders have not in the past been subject to parliamentary scrutiny. I think it is worth noting that any decision that comes forward to the Secretary of State, and hence to Parliament, arising from the work of the Local Government Commission as it relates to the structural changes will be subject to the affirmative procedure. I am always diffident when appealing to the noble and learned Lord to withdraw his amendments but I hope that he will feel able to do so on this occasion.

Lord Simon of Glaisdale

My Lords, the noble Baroness will not expect me to be very happy with her reply. She yielded to the blandishments of the noble Lords, Lord Airedale and Lord Morris, so I cannot help asking what it is about myself that leads her to set her face so stonily against anything that I suggest. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Simon of Glaisdale moved Amendment No. 22:

Page 22, line 27, leave out from ("Parliament") to end of line 31.

The noble and learned Lord said: My Lords, this amendment seeks to leave out the last three words of line 27 and the rest of the subsection. The words desired to be left out exclude the hybrid regulations procedure. As your Lordships are well aware, Bills coming before Parliament are public, private or hybrid. The public Bill is one introduced by a Member of Parliament and dealing with the public generally. A private Bill is introduced by someone outside Parliament seeking some advantage for himself. It is generally a local authority or a public undertaking. Individuals who are adversely affected, as they are probably likely to be when a particular petitioner is seeking an advantage for himself, can themselves petition against the private Bill. The hybrid Bill is a public Bill which adversely affects a private interest.

Your Lordships' House alone has a procedure whereby the private interest which is prejudiced is considered initially by the Hybrid Instruments Committee and possibly further. A Minister can avoid the nuisance of the hybrid investigation by merely taking a regulation-making power and can adversely affect the private interest in the regulations and not in the Bill. So Parliament stipulated a long time ago—more than 60 years ago—that where a regulation adversely affected a private interest, notwithstanding that it was under a public Bill, it should be subject to the scrutiny of the Hybrid Instruments Committee in exactly the same way as a hybrid Bill. In other words, it ensured that private interests were not overridden without being considered.

The procedure does not stipulate that the private interest must be vindicated in all circumstances. It is exactly the same as under a Private Bill; that is to say, Parliament will weigh the public good against the detriment of the private interest. That is an extremely important parliamentary safeguard of private rights and private interests: the liberty of the individual as against the omnipotent state. It was considered by the Joint Select Committee on Delegated Legislation of 1972–1973 and considered at very great length.

However, before I deal with that aspect, I hope that the noble Baroness will not state in her reply that there are precedents for what is proposed in the Bill. I know very well that there are such precedents, but in this matter a precedent from the past is not an excuse for supineness in the present; it is a call for vigilance in the future.

Having said that, I turn now to two short passages from the report of the Joint Select Committee. I should point out that the report was accepted by both Houses of Parliament. The first passage at page XXV reads: Your Committee conclude that this procedure has for nearly 50 years provided valuable safeguards for private interests affected by delegated legislation, and should be retained".

The other passage, which appears slightly later at page XXXI, says: Parliament should, however, be vigilant to ensure, in every case of exclusion from the hybrid procedure by statute or by Standing Order, that such exclusion is genuinely justified".

Further down on the same page, when studying the considerations which should be weighed by the Hybrid Instruments Committee, the report refers to, whether the matters complained of in the petition have already been adequately inquired into",

and states that that point must be covered.

When the noble Baroness dealt with the matter in Committee, she did not say for a moment that any of those matters had been inquired into adequately or otherwise; she merely said that the commission, and indeed the Minister, consults widely. That is by no means the same thing and by no means adequate. I beg to move.

6.45 p.m.

Baroness Blatch

My Lords, the noble and learned Lord implores me not to make references to other examples. However, I have to point out that the Local Government Act 1972 also disapplied the procedures relating to hybrid instruments in respect of orders which were not dissimilar to those covered by Clause 26(2) of the Bill. I refer the House to paragraph 1(3) of Schedule 3 to the Local Government Act 1972 under which the Secretary of State gave effect, by order, to the recommendations of the Local Government Boundary Commission for the creation of the non-metropolitan district councils. The words used in that provision are rather different from those used in this Bill, but I am advised that they have exactly the same effect. Under that provision, as here, the orders concerned were likely to be hybrid principally because they were essentially local in character.

The disapplication of the procedure is, therefore, well precedented. I am not aware of any claims that individuals have been disadvantaged as a result of the 1972 Act provisions. There is no evidence that it was wrong to disapply the hybridity procedures. The hybrid instruments procedures exist to ensure that the private interests of people affected by orders are taken into account. Your Lordships should have no fears that any interests will not be taken into account as a result of the disapplication of these procedures. Before the Secretary of State makes an order, the Local Government Commission will have conducted a review which will have involved extensive public consultation. Those whose interests will be affected as a result of structural changes or the establishment of joint authorities will have at least three opportunities to make their views known. There will be the initial period of the review, before the commission has published its draft recommendations. The commission will then invite comments on its draft recommendations. Thereafter, the commission will submit its recommendations to the Secretary of State who will wait at least six weeks before making an order.

In considering whether to accept the amendment, I have also had to take into account the view expressed by noble Lords on all sides of the House about the proposed timescale for making structural changes. The House has urged me to make changes to the Bill which would have required the changes to be implemented more speedily. Noble Lords were particularly concerned about the uncertainty that would be caused by prolonged delay. I had to resist those amendments on the grounds of practicability; indeed, on the grounds that the noble and learned Lord referred to today—namely, to give room for full and proper consultation. But I have to tell the House that the amendment would have the opposite effect. If the noble Lord the Chairman of Committees ruled that an order was hybrid—and my information is that this almost certainly would be the case—and subsequently the Hybrid Instruments Committee found that the petitioners had locus standi, the implementation of orders could be delayed by many months.

I do not believe that that potential delay would be justified, given that the disapplication of these procedures is well precedented. Moreover, given also that there will be ample other opportunity for views to be taken into account before orders are made, I hope that the noble and learned Lord, Lord Simon, will feel able to withdraw his amendment.

Lord Simon of Glaisdale

My Lords, whether I coo like a dove or roar like a lion, it seems to have no effect at all on the noble Baroness; indeed, she did what I begged her not to do and said that there was a precedent. Your Lordships all know by now that there is a precedent. However, what the noble Baroness did not do was to meet the criteria of the Joint Select Committee. For example, have the Government shown that the exclusion is really justified or merely convenient? Further, if the hybrid instruments procedure is denied to a private individual whose interests have been adversely affected, have the Government shown that his grievance has been "inquired into"? Neither of those criteria have been met. In conclusion I only desire to say that, in taking this bureaucratic line to try to exclude Parliament from normal traditional processes for the defence of the individual citizen, the Government are making a very hard rod for their own back should another party come to power. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

An amendment (privilege) made.

Baroness Blatch

My Lords, I beg to move that this Bill do now pass.

At the outset I should like to take this opportunity to place on record a formal apology to noble Lords opposite and in particular to the noble Baroness, Lady Hollis of Heigham. A straight question was put by the noble Baroness to my colleague and noble friend Lord Howe, as to whether it would be open to local authorities to reject the lowest tender following consideration of the second envelope in the double envelope tender procedures. The answer given to the noble Baroness was, yes. However, the answer that should have been given was, no. I have written to the noble Baroness offering profuse apologies for the wrong answer. I know that, while it is no excuse, my noble friend misheard the question and answered it incorrectly. I understand that he also has written to the noble Baroness.

The point that we sought to make at the time was that this approach was nevertheless consistent with the criteria in the European Community directive producing the economically most advantageous tender, rather than the alternative of lowest price only. That is so because the first stage of consideration of bids could incorporate quality, technical competence and the other matters noted in the directive under the economically most advantageous option. It would be for local authorities to set the threshold used in the first stage, subject to any regulations or guidance defining anti-competitive behaviour which the Government made or issued. However, under the proposal they would not have discretion to reject the lowest tender passing the quality threshold in favour of their own in-house teams.

I repeat our profuse apologies for what I believe was a difficulty for the noble Baroness. Had she been given the correct answer, it is just possible that she may well have pressed the amendment. For the record, I hope that that will be noted by another place along with the points made by the noble Baroness in the course of that debate as well as the answer given. I hope that the apology will also be noted and that there will be an opportunity for the debate to be continued in another place.

Nevertheless, I believe that the Bill promotes healthy competition and value for money in local government services. It will place the customer or citizen at the heart of local government activity and it provides for structural changes within local government which will command greater community support and will result in more effective and efficient local government service.

Clauses 1 to 7 of the Bill deal with performance standards of local authorities and other bodies, auditors' reports and recommendations and with publication of information by the Audit Commission and the Scottish Accounts Commission. There have been differences of opinion between us on such ideas as customer contracts but there has been general support for the roles of the commissions. The Bill sets a framework in which the commissions will operate; noble Lords have accepted that the commissions can be relied upon to get on with the job within that framework.

I am pleased that the provisions on auditors' reports and recommendations which require bodies to make a prompt, formal and public response and the provisions allowing publication of certain information relating to contraventions and public interest reports commended themselves to your Lordships.

Clauses 8 to 11 of the Bill dealt with compulsory competitive tendering and have given rise to the liveliest debate. Research indicates that savings of around 6 per cent. on average have been achieved. However, CCT is not just aimed at maximising value for money. Too often in the past local services were run by some authorities more on behalf of their workforce than on behalf of the local communities that they were supposed to serve. CCT has begun to change that. Local authorities are now able to take a clearer view of their proper role, and to think more carefully about the services provided for their communities. Many have responded to the challenge in a positive way. As the chief executive of a Labour-controlled authority put it: There is much greater information and knowledge of particular service areas. It exposes an awful lot of inefficiencies formerly taken for granted. We are a more efficient, slimmer organisation. It's had real and definite benefits". Those benefits should not be confined to the existing services for which CCT is required. The Secretary of State already has the power, under the Local Government Act 1988, to extend CCT to new local authority activities. That power is not affected by this Bill. What the Bill, as originally drafted, would have done was to enable the Secretary of State to take account, in extending CCT to professional and technical services, of the particular demands of those services, where quality is more difficult to judge in a straightforward and demonstrably fair way. That flexibility has been removed by the amendment passed in Committee, and I should make it clear that the Government intend to return to this issue in another place.

The other provisions of this part of the Bill are aimed at following through the commitments in the Citizen's Charter to ensure that private firms have a fair chance to compete for local authority work, and to promote greater openness about the way in which local services are delivered. They provide for the Secretary of State to clarify in regulations the framework for CCT, and set down what is or is not to be considered anti-competitive. The greater clarity this will bring to the process will be widely welcomed.

As with the extension of CCT to new services, we shall be considering carefully the responses we receive to the consultation document Competing for Quality, and will bring forward our final proposals for the content of regulations when that consideration is complete. It is important, if CCT is to continue to be successful in ensuring greater efficiency in the delivery of local services, that private sector bidders should be able to feel confident that they will not be unfairly discriminated against. The powers under Clause 9 will be used to ensure that a clear and fair framework is put in place.

The second part of the Bill is concerned with the structure of local government in England. We are committed to an accountable and effective structure of local government based on authorities which reflect more closely the communities with which people identify. Local authorities based on real communities will be stronger local authorities, better able to voice local views, more accountable to local people, and better placed to respond sensitively to local needs and priorities. Part II of the Bill will provide the framework which will enable that commitment to be put into effect.

We are not prescribing what local government structure people should have. Instead, the new Local Government Commission for England will make recommendations, area by area, for improving the structure of local government in the shire counties, with a view to moving to unitary authorities.

We have discussed at some length the factors which the Local Government Commission will need to take into account, and the way it will carry out its review. The identities and interests of local communities will be central to the commission's reviews, as will the need to secure effective and convenient local government.

I have assured the House that nothing in this Bill will inhibit our plans to establish independent authorities for national parks. I have also assured the House that the commission's recommendations for changes to local government structure will take account of the need for effective delivery of local government services, including particularly strategic services. I have also made it clear that the commission will not recommend changes unless they are worthwhile and cost effective.

These issues will be covered in more detail in the guidance which my right honourable friend the Secretary of State intends to issue to the commission, and to which it will be required to have regard, about the factors it should take into account in carrying out reviews. We welcome comments on the draft of this guidance and we shall consider them carefully.

This House has also scrutinised the framework set out in the Bill for the procedures the commission will follow in conducting its reviews, including the arrangements for consultation with local authorities, local people and other interested organisations. We have promised to issue guidance on these procedures. There will be consultation about this guidance.

I must not let this opportunity pass without paying my own tribute to all who have contributed to the debate. The noble Lord, Lord McIntosh, and the noble Baroness, Lady Hollis, combine to bring an enormous wealth of experience to these debates. The work that I had to do in order to make sure that at least I understood what they were saying and was able to make an intelligent response is testimony to the skills that they have deployed, always courteously and to the point. They certainly make the presence of the Opposition felt in this House. They have been ably supported by the noble Lords, Lord Desai and Lord Stoddart, and the noble Baroness, Lady Nicol.

The noble Baroness, Lady Hamwee, and the noble Lord, Lord Ross, who is not in his place, again bring an expertise to the House which has been thoroughly welcomed. I believe that any government of any persuasion should be put on their mettle when producing legislation. Indeed the combination of the noble Lord, Lord McIntosh, the noble Baronesses, Lady Hamwee and Lady Hollis, and the noble Lord, Lord Ross, has certainly put me and my noble friend Lord Howe on our mettle as we have had to field a plethora of amendments. The noble Baroness, Lady Hamwee, has been supported by the noble Lords, Lord Hunt and Lord Airedale.

I must also refer to the right reverend Prelates the Bishops of Guildford and Exeter. They are not present in the Chamber but I must acknowledge that they not only spoke in general to the Bill but also in specific terms as regards their historic cities. Their points were well made and well taken.

My noble friends on these Benches who have contributed to our debates on this Bill are far too many to mention. However, I hope I may be forgiven for singling out a few of my noble friends as regards the subjects covered in the course of our debates. The strategic matters in the debate have been supported on all sides of the House. My noble friend Lady Cumberlege has made contributions. My noble friend Lady Carnegy has held the flag for Scotland but she has also represented her interests in the rest of the country in terms of ensuring that the part of the Bill referring to structure is correct and will stand the test of time.

I also pay tribute to the contributions of my noble friend Lord Skelmersdale. My noble friend Lady Faithfull could be relied upon to pick up important points as the Bill proceeded. I am grateful to her for her support. My noble friend Lord Norrie has contributed to a number of aspects of our debates. He has spoken particularly on all matters concerning the countryside and the national parks. He has tried to ensure that the planning aspects of local authorities are not neglected in the work of the Local Government Commission. My noble friend has been ably supported by noble Lords on all sides of the House. I thank him for his diligence. I hope I have been able to satisfy many of his concerns raised during the course of the Bill.

Finally I wish to pay the highest possible tribute to my Whip on this Bill, my noble friend Lord Howe. This has been his first parliamentary Bill and I have received the best possible service from him. It is a great relief to have someone on whom one can rely when one is in the front line. I believe all noble Lords will join with me in thanking him for his courtesy and for his skill at the Dispatch Box. His one slight indiscretion at the Dispatch Box was a result of a genuine misunderstanding on his part. I accept that we cannot excuse ourselves by saying that and we must all take responsibility for our remarks but, that incident apart, my noble friend has done a sterling job. He has faithfully served these Benches with his diligence, expertise and great courtesy.

Moved, That the Bill do now pass.—(Baroness Blatch.)

Lord McIntosh of Haringey

My Lords, when I introduced our contributions—

Baroness Blatch

My Lords, I am sure it is unforgiveable of me to speak again at this stage. However, I intended to refer especially to the noble and learned Lord, Lord Simon of Glaisdale. I hope the House will allow me to rectify that unpardonable omission. The noble and learned Lord, Lord Simon, has implored me and appealed to me on this Bill. He has visited me in my office and he has outwitted me and charmed me.

Noble Lords

That got him nowhere!

Baroness Blatch

My Lords, I claim no credit for his having got nowhere. At all times the noble and learned Lord has been most courteous and he has been extremely effective in pressing his points. Due to my ignorance and his expertise I have always been the subject of advice. I do not hide behind the advice. I hope I may say that in the back room I have been a good devil's advocate on his behalf. However, I have been defeated too. I am most grateful to noble Lords for allowing me to rectify a naughty omission.

Lord McIntosh of Haringey

My Lords, when we started our consideration of this Bill I said it was a Bill we would like to support. The best I can say now after lengthy consideration is this is a Bill we would have liked to support more of. As noble Lords will know, it is a Bill which contains much with which we agree. After all, the Citizen's Charter is not an invention of the present Prime Minister. The phrase was coined by Herbert Morrison in 1920 and it has been a theme of the socialist approach to local government for many years. The difference between us on the Citizen's Charter is not that we merely want to protect the interests of local electors and ratepayers, but that we believe that can best be done by collaboration between local authorities and their own people rather than by means of orders or instructions given from on high by central government. We think that the charter as envisaged by the Government as regards local authority services is misconceived. We are sorry that the Government have not recognised the doubts we have in their response to our amendments.

We also believe the Government seriously underestimate the complexity that will arise in setting standards for local authority services and ensuring that those standards are practicable. We believe there is far too great a tendency on the part of the Government, not just in this area but in education and other spheres, to rely on league tables as a substitute for judgment. We find that regrettable.

The worst part of the Bill, as we made clear from the outset, has been the compulsory competitive tendering provisions in Clauses 8 to 11. The amendment that was carried on 2nd December made these provisions a good deal less offensive than they would otherwise be. Nevertheless we believe that this part of the Bill was misconceived both in terms of procedure and respect to Parliament and in terms of the factual and intellectual argument behind it. It was misconceived with respect to procedure because, if it had been their intention, the Government should have issued consultation, allowed for a response to it and responded to the response to consultation before placing legislation before the House. The effect of the consideration in Parliament being concurrent with the consultation procedure means that in effect Clauses 8 to 11 do not mean much. They do not tell us much. They simply provide that the Secretary of State has the power to extend compulsory competitive tendering as he thinks fit. At least, that is presumably the power which the Government will restore when they seek to overturn our amendments in another place.

I hope when they seek to overturn our amendments, they will not seek to restore one of the most offensive aspects of the Bill which was corrected by our amendments. I refer to the Henry VIII procedures. I hope the Government will understand that they will face renewed opposition if the Bill returns from another place repeating the errors of the Henry VIII procedures and the error of insisting that the Secretary of State has the power by order to overturn primary legislation. I am sure they will face renewed opposition from the noble and learned Lord, Lord Simon of Glaisdale. I heartily echo the tributes that have been paid to the noble and learned Lord. The Government will also face renewed opposition from all sides of the House.

Even with the amendment, this part of the Bill is thoroughly unsatisfactory. We had to winkle out the consultants' report on which the consultation document was based. We found both the consultants' report and the connections between the consultants' report and the consultation document wanting. We shudder to think what will come out of the whole process. It certainly will not be a process that has been adequately scrutinised by Parliament.

On the issue of local government structural reform —that arises in Part II of the Bill—there has been a good deal of agreement. However, proper anxieties have been expressed in all parts of the House about some of the implications for the environment and for planning and structure plans. A number of noble Lords have effectively pleaded that case. I hope, but rather doubt, that they have been satisfied by the answers they have been given.

In principle, what the Government propose—broadly, a move towards unitary authorities on an area-by-area basis—is something we would support. However, we are still very concerned about the composition and powers of the Local Government Commission. We are very concerned about the lack of a firm timetable, and we are particularly concerned about the fact that the Government intend that the recommendations of the Local Government Commission shall be implemented piecemeal rather than all at one time. We very much fear that that is a recipe for continued disturbance, unrest and insecurity in local government. We wanted to support the Bill. We supported those parts of the Bill which we could support, but I am afraid that there is a great deal which we were unable to support. The noble Baroness spoke of there having been a "plethora" of amendments. My dictionary says that a plethora is: a morbid condition marked by an excess of red corpuscles in the blood; (fig.) over-supply, glut If it is a matter of red corpuscles in the blood we shall shortly see a few more red corpuscles in the House —both Houses, indeed—and we shall be able to deal with these matters more effectively.

The debates on the Bill have sometimes been difficult but the Bill has been conducted, without exception, with courtesy. I must express my gratitude to the noble Baroness, Lady Blatch, for the way in which she has conducted the Bill, even the less defensible parts of the Bill. She has always been courteous and considerate and she has always listened carefully to the arguments.

I should like also to echo what the noble Baroness said about the noble Earl, Lord Howe. It is the first major Bill which he has dealt with at the Dispatch Box. He comes to it as one who has been doing that for many years and as a real expert, or one who manages to suggest expertise even if he does not have it. His conduct of that part of the Bill for which he took control was impeccable. We are very appreciative of that.

Of my noble friend Lady Hollis I can hardly say less than the Minister. She has been a tower of strength and has taken enormous responsibility to very great effect. I am most grateful to her. The contributions of my other noble friends who have taken part in the debates on the Bill—Lady Nicol, Lord Stoddart of Swindon, Lord Desai and Lord Howie of Troon, in his own particular area—have been greatly valued. It would have been a more boring but perhaps a shorter Bill without their contributions.

It has been very enjoyable to work with the noble Baroness, Lady Hamwee. We have found ourselves very close in our thinking on many aspects of the Bill, even though we have sometimes called in aid different examples of local government. She has shown her command of the subject matter and it has been a pleasure to work with her. I shall not name other noble Lords who have taken part in the debates: there have been many.

I am sorry that the Bill goes forward with so little amendment. I am sure that with goodwill and with a new Secretary of State many of the provisions of the Bill could be made to work to the advantage of local democracy. I hope that some of the invitations to a denial of local democracy which remain in the Bill will not be implemented.

7.15 p.m.

Baroness Hamwee

My Lords, I echo the words of the noble Lord, Lord McIntosh, that I wish that I could support more of the Bill, although there is a great deal of it which we on these Benches support. The Bill would have been improved by many of the additions which were proposed during the various stages. On the whole the changes proposed were additions rather than deletions. So far as concerns the performance standards—the charter provisions—everyone must welcome improvements in local authority services.

We wish the Local Government Commission well. It has a hard task ahead of it, not just in reconciling strategic considerations with government at the lowest possible local level and all the matters which we discussed, but also the very local and parochial interests which we have quite rightly tried to steer clear of in debates in this House. The commission will have its work cut out, but I hope that it will be able to get on with its work speedily because of the uncertainties which have been mentioned.

I am particularly sad that the opportunity was not taken with this Bill to deal with the question of London and the metropolitan authorities. I see that the noble Lord, Lord McIntosh, nods in agreement. I hope that when the heat of the next few months has passed the subject can be considered more calmly and more productively.

It is no surprise that feelings have run so high on the question of compulsory competitive tendering. We feel that the idea of compulsion is distasteful. It is rather sad that it is to be found in a Bill which in many ways is so well designed to improve what happens in local authorities. I hope that by the time the Bill reaches the statute book it will be more acceptable.

For my part I should like to thank all noble Lords who have taken part in the debate, from all of whom I have learnt a great deal. In particular, I should like to thank the noble Lord, Lord McIntosh, and the noble Baroness, Lady Hollis, who have helped me find my way through the maze. I should also like to thank the noble Earl, Lord Howe, who I believe answered his first Question from the Despatch Box on the day when I made my maiden speech, so we have shared a number of stressful occasions, and the noble Baroness, Lady Blatch, who gave me a very warm welcome. She has set an awesomely high standard for newcomers to emulate. I hope that that does not sound patronising because it is not meant in that way. I hope that I can start on that path.

Lord Simon of Glaisdale

My Lords, I intruded on your Lordships' deliberations because I wanted to draw attention to some drafting points and some constitutional aspects of the Bill. However, I very soon realised how much I was learning about a very important part of the constitution in a debate by great experts. I should like to express my thanks for that.

It would be invidious to refer individually to those of your Lordships from whom I have learnt so much, but I should like to mention three, and I hope that I can do so without impertinence. My first point relates to something which was said by the noble Lord, Lord Stoddart of Swindon. He warned us against considering local government as inferior government. It is subordinate in the sense that it yields to the directions of Parliament, but it is in no other sense subordinate. On the contrary, it has its own independent part to play in the Constitution.

That brings me to another point which I wished to make, which was made constantly by the noble Lord, Lord McIntosh; namely that local government is very much closer to the citizen and that closeness should be fostered at all price. We gird understandably against the bureaucracy of Brussels; subsidiarity is made an empty term and a concern for a level playing field seems to give entitlement to give directions about every wormcast on it.

Applying that principle to our own case and taking up the constant theme that fell from the lips of the noble Lord, Lord McIntosh, nothing should be decided by a parish council that cannot reasonably be decided by the parishioner himself. After all, a society is democratic in so far as its members can influence the decisions that affect them and the best way to do that is to give the decision to the citizen himself. Next to that, we should give it to the authority which is nearest to him and which he can influence. So nothing should be decided by a district council that cannot be decided by a parish council; nothing by a county council that cannot reasonably be decided by a district council; and, above all, nothing by Whitehall that cannot reasonably be decided by any of the local authorities. Only when we have vindicated that are we entitled to go on and say that nothing shall be decided in Brussels that cannot be decided in Westminster.

I should like to pay a particular tribute to the Front Bench speakers on whom so great a burden has fallen. I refer to both the noble Lords and the noble Baronesses, but above all we owe a great deal to the way that the noble Baroness, Lady Blatch, has conducted the debate from her side. As the noble Lord, Lord McIntosh, pointed out, cogency of argument on this Bill has been perfectly compatible with courtesy and good humour. The noble Baroness obviously comes to this subject with a profound knowledge, but that does not mean that the conduct of a Bill such as this does not involve an enormous amount of work in mastering a brief.

When the ancestor of my noble friend Lord Lytton returned from his vice-regal duties in India, his grandchildren put on a play to welcome him back. It was very suitably concerned with the return of a crusader from the East. The small girl who played the crusader's wife pointed to the array of dolls around the stage and said to him, "I too, my Lord, have not been idle". So may the noble Baroness, Lady Blatch, say, and we are greatly in her debt.

7.23 p.m.

Baroness Hollis of Heigham

My Lords, I would not normally rise to speak, but in the light of the Minister's opening comments perhaps I should do so. Obviously, I do not want to be unreasonable. As I think President Reagan once said, we all occasionally mis-speak. I am happy to acknowledge the graceful letters from both the noble Earl, Lord Howe, and the noble Baroness, Lady Blatch, but we have now had four differing versions from the Government in Committee, on Report, on Third Reading and at the Bill do now pass stage on an issue that we on this side believe lies at the heart of some of the debates over CCT; namely, the questions of cheapness and of quality and value for money. Where, for a little extra cost, a tender offers considerable additional quality and value for money, on the last ruling of the Government, after three previous attempts, it looks as though local authorities will be obliged to refuse it at the cost of good housekeeping and perhaps at the risk of fiduciary duty.

I regret that the House has lost the last opportunity to explore the issue still further. However, as the Minister rightly said, the matter will no doubt be pursued in another place, perhaps with less confusion and, from our point of view, even greater success, although I doubt with as much courtesy as we on this side have received from both Ministers opposite.

On Question, Bill passed, and sent to the Commons.