Mr. Deputy-SpeakerThe next Amendment is No. 11, with which we can discuss the four Amendments there to. In line 2, after 'provide ', insert 'or to receive'.
In line 3, after ' do ' insert:
'or have done for them'.In line 4, leave out `the agreements' and insert:'each class of agreement as classified by paragraphs (a) to (d) of section 1(1) of this Act;'.In line 4, after ' agreements ', insert' and there shall be noted upon each such account the estimated liability to selective employment tax which the local authority would have incurred as a result of the activities shown in that account had the local authority not been entitled to relief from that tax '.
§ Mr. SkeffingtonI beg to move, Amendment No. 11, in page 2, line 41, at end insert:
473 This covers an important point which in Committee I undertook to bring before the House on Report, largely as a result of some very interesting and constructive proposals by the hon. Member for Honiton (Mr. Emery). What he and other Members of the Committee were seeking at that stage to do were three things: first, to ensure that there should be a proper system of accounting so that local authorities would not operate at a loss; second, to ensure that proper accounts are kept; and, third, to ensure that the public should know what is going on.
For a number of reasons which were fairly obvious, we did not accept the hon. Members solution but undertook to see whether, as under the Local Government (Financial Provisions) Act, 1963, whereby special accounts have to be kept of activities of what is sometimes called the "free penny", we could meet the points raised. The special accounts have to be kept for the benefit of the in-habitants of the area, and that is what we have done by this Amendment. It is in fairly broad terms, but for the reason; I have given one cannot in a Bill of this kind tie up the keeping of accounts in too tight a fashion technically, even if it were desirable to do so. On the whole we do not do that in regard to the activities of local authorities, although we do provide in various ways that there should be available proper checks on what they are doing, and largely operative at the instance of the ratepayers.
We therefore have sought to secure, and I think we have satisfactorily secured, the virtue of what we wanted —proper accounting and greater availability to the public of the accounting.
I am bound to warn the House, though, tint, even so, those whom we have consulted, particularly the Institute of Municipal Treasurers and Accountants, were not at all happy with this proposal. They said it would be bound to add to their work. In view of the principle of the public interest, we have been able to persuade them that it is vital to have something of this kind in the Bill, and they are now not raising any objections, but, in connection with Amendments proposed to the Amendment, I am bound to warn that if we go much further we shall be in great difficulty with them, 474 apart from technical difficulties involved in precise accounting definitions in a Statute.
There is the other point which also has to be guarded against. The hon. Member for Honiton referred to this earlier. It would be quite wrong in the Act to tie local authorities too much so that in disposing of stock which they may wish to sell off they could not sell below the original purchase price. I saw an instance last week—old school furniture being disposed of at less than was paid for it; but it was useless material for modern educational purposes.
In relation to guidance to local authorities about accounting, we propose to take advice from all the technical bodies, and I hope that in a circular we shall be able to give guidance about keeping these accounts.
I hope we have provided an Amendment which will meet the wishes of all hon. Members.
§ 3.15 a.m.
§ Mr. EmeryI thank the Minister for meeting an obligation which he undertook in Committee, and I congratulate him on having overcome one of the most conservative bodies, the Institute of Municipal Treasurers. I was warned early on in the proceedings that we did not stand a chance of getting such a provision, and I therefore congratulate the Minister on having been able to go as far as he has gone in this matter.
The Amendment will be beneficial in that it will ensure that where a supply department is set up and structured, a proper accounting procedure will, by Statute, be part of the ordinary structure. However, while the Parliamentary Secretary claims that his Amendment meets our wishes, I remind him that the Amendment which I moved in Committee read:
…and where a public body enters into an agreement the authority shall ensure that all appropriate costs and overheads arising from the purchase, storage, distribution, or supply of the goods, materials or services shall be properly allocated and accounted, and the accounts shall be made public at least once a year".That would have been easily understood. The Government Amendment, however, leaves one completely in the dark about the objects because of its references to earlier Measures. Nevertheless, I accept that this form of words is necessary. It 475 is a pity that simple English cannot more frequently be used.I urge the Parliamentary Secretary to consider the proposed Amendments to lines 2 and 3 of the Amendment, which are designed to ensure that the accounting will be done at both ends; in other words, at both the supply and receiving ends. I see no reason why the receiving authorities should not also keep accounts of what they receive or of what has been done on their behalf. In different circumstances I would urge my hon. Friends to vote on this issue, when we might have the support of some hon. Gentlemen opposite. The Committee and this House have been much too reasonable over the Bill to wish to go to such lengths. There is every advantage in attempting to see that the object of the first two Amendments to the proposed Amendment is carried out. I hope that the Minister will agree that that makes sense.
I am absolutely convinced that it is right that where supplies, purchasing or procurement departments are set up the inhabitants of the area should be informed how efficient the department is, what the costs are, how the costings have been distributed and be certain that the thing has been done properly. It should be open to inspection. I am delighted that the Minister will ensure this.
§ Mr. Graham PageI join my hon. Friend the Member for Honiton (Mr. Emery) in expressing delight that Amendment No. 11 is on the Notice Paper. It is there in response to an Amendment put forward by the Opposition in Committee. I appreciate the difficulty the Parliamentary Secretary has had in persuading those who will have to do the work that this should be carried out.
Nevertheless, the Amendment falls short of what I would have hoped to see, in three respects, one of which has been mentioned by my hon. Friend. That is dealt with in the first two Amendments to the proposed Amendment. We would like the Amendment to be corrected so that the receiving authority would keep separate accounts as well as the supplying authority. The second gap is referred to in the Amendment to line 4, that the accounts of all sorts of contracts can be lumped together. The third point is in 476 regard to S.E.T. This appears in the last Amendment to the proposed Amendment. The advantage over other traders by relief from S.E.T. should be shown in the accounts.
I recognise that it is important that the supplying authority should be seen to be operating these contracts so that they are not making a loss for the ratepayers and the authority is acting efficiently as a middle man between manufacturers and the ultimate consuming authority. The public should see what the purchase costs of the goods have been, the overheads, the storage costs, distribution costs and so on. It is just as important that the receiving authority, which is the spending authority, should show its accounts to the public. It should show that it is not paying more for the goods and services it gets from another local authority than if it went to the open market. Of course we hope there will be these economies, but it is right if the supplying authority has to bring its accounts that the receiving authority should do the same.
In moving Amendments Nos. 2 and 3, the Parliamentary Secretary pointed out that a local authority need not take all the four powers set out in paragraphs (a), (b), (c) and (d) of subsection (1) of Clause 1. It could take one, two, three or four powers. This shows the distinction between the several powers. I do not think that the accounts will be very enlightening to the public if all the contracts are lumped together. For example, it may be that a contract to provide services subsidises a contract to provide goods, or vice versa. That can be seen only if separate accounts are maintained. I do not think this will cause any further trouble. The figures must be obtained for the consolidated account, and it is no great labour to set the figures out in separate accounts.
The third point is that the accounts would not be true trading accounts without showing tax benefits. That is brought out in the last sub-Amendment, which would require a mention of S.E.T. benefits in the accounts. They will probably have to be shown, because for local authorities S.E.T. is a payment and then a recovery of that money; so it must appear in the accounts as a payment and as a receipt. I therefore presume that it will be traceable in the accounts in 477 some form. These are sub-Amendments which would not give the municipal treasurers any great trouble.[HON. MEMBERS: "oh"] They have the figures already. It is a mere matter of a different form of setting them out. I hope that we shall at least have an assurance that the sub-Amendments will tie dealt with in some way so that the public has clear accounts set before it.
If on this Amendment, as on others, I and my colleagues have been a little verbose, I hope that it is recognised that some benefit derives from that, in that we have avoided the necessity for a debate on Third Reading. The absence of a debate on Third Reading deprives us of the usual opportunity at the end of the proceedings on a Bill of this sort—I shall take the opportunity now quickly, before you call me to order, Mr. Deputy Speaker—to say how gratified we on this side are for the co-operation we have had in the proposals we have put forward and for the fact that they have been carefully studied by the Minister of State and the Parliamentary Secretary.
We have reached this happy conclusion on the Bill with a great number of compromises. We have not got all we wanted, but we never do. The Parliamentary Secretary and the Minister of State on the Government side and myself on this side have had to act a little diplomatically throughout the debates on these Amendments, because we have both had back-seat drivers. I am sure that it will be a tonic to the hon. Member for Bethnal Green (Mr. Hilton) to hear that the Bill has gone through its final stage, as I know it is a tonic to my hon. Friend the Member for Honiton.
§ 3.30 a.m.
§ Mr. SkeffingtonMy hon. Friend the Minister of State and I greatly appreciate what the hon. Member for Crosby (Mr. Graham Page) has just said. We welcome the help which has been given to us. Nearly all the proposals have been constructive. The Bill is a better Bill as a result. I thank hon. Members opposite for all the work they have done and for the manner in which they have done it. I am sure that the hon. Member for Honiton (Mr. Emery) and my hon. Friend the Member for Bethnal Green (Mr. Hilton) will heave sighs of relief in a very few minutes.
478 I am glad that on the whole the Amendment has been well received. We have tried to do what was required of us. We have secured general agreement on it. It goes a very long way to providing the kind of check and information that every hon. Member wanted.
I must make it absolutely clear that the Institute of Municipal Treasurers and Accountants did not object to Amendment 11 because it wants to conceal anything. It is very anxious to have the fullest public accounts. I have had personal assurances about that.
There are two general points about the Amendments I must make again. First. we cannot in the main body of the Bill —even if it were desirable, and for certain reasons I do not think that it is—attempt to include all the accounting requirements that some hon. Gentlemen may desire.
Second, we must bear in mind all the time that we are dealing with local authorities which on the whole are very responsible. We cannot tie up the accounting Clause so tightly that people will either not want to use the provisions of the Bill or will be put under very heavy work loads as a result of using them.
We are not unsympathetic to the point of view that the receiving authorities should keep accounts in the same way, but cannot see any purpose. The local authorities supplying them will be merely alternative sources of supply, and they would list the prices which they paid. One might have to decide all sorts of ways in which this could best be done. Having looked very carefully at the matter, we could see no advantage. We realise that there would be considerable resistance by those upon whom the work load would fall, and for that reason the first two Opposition Amendments to the Amendment do not appeal to us. Very often the accounting might be quite complex in the case of a receiving authority in a way I need not go into now.
We have looked at the third Opposition Amendment very carefully, but most treasurers and accountants would be pretty horrified by the proposal that accounts be kept in relation to the four types of activities mentioned. For example, the hiring out of computer equipment would presumably have to be shown under paragraph (c), but if this 479 required someone to work from the computer which would be a normal sensible thing to do, that would presumably have to be shown under paragraph (b). Maintenance is one of the activities involved. The paint would be shown under paragraph (a) and the staff under the appropriate other paragraph. Bearing in mind that one does not want to tie the Measure up in such a way that authorities will not bother to use it, we have come to the conclusion that in many cases this would be impracticable.
The fourth Amendment concerns S.E.T. The hon. Gentleman probably does not realise the full picture. What we would have to do would be to work out the hypothetical estimate of S.E.T. in relation to that proportion of staff involved in this work. I have been advised by accountants that one could get almost any result one wanted if one applied that formula hypothetically in that way. If we adopted the Amendment I do not think that we would necessarily have a clear answer as a result.
The other point which makes the hon. Gentleman's Amendment less significant is that the amount of the S.E.T. as a factor in total cost is very small. The operations of the G.L.C. are running at about £34 million a year and the S.E.T. payments are estimated at about 480 £140,000 a year, or about ½ per cent. of the total. That is not a very significant figure. For the other reasons I have given, we should only get an imprecise answer dependent on the way in which the accountants wanted to present it and the information would not be of great value. I hope that the Amendment will not be pressed.
§ Amendment agreed to.
§ Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 55 (Third Reading), and agreed to.
§ Bill accordingly read the Third time and passed.