SUPPLY OF GOODS AND SERVICES BY LOCAL AUTHORITIES

HC Deb 20 January 1970 vol 794 cc459-72

The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Arthur Skeffington)

I beg to move Amendment No. 1 in page 1, line 5, at beginning insert: Subject to the provisions of this section,'. It would, Mr. Deputy Speaker, be convenient to take Government Amendment No. 2, in page 1, line 6, at end insert: 'all or any of the following purposes, that is to say—'. No. 3, in page 1, line 16, leave out 'and'. and No. 9, in page 2, line 38, at end add: (6) An order under the preceding subsection may contain such provisions as the person making it considers appropriate—

1. (a) for restricting the agreements which may by virtue of the order be entered into by a public body;
2. (b) without prejudice to the preceding paragraph, for securing the inclusion in any agreement made by virtue of the order of terms imposing restrictions.

and the Opposition Amendment to No. 9, in line 6, at end add— 'such an order shall contain provisions for securing the inclusion in any agreement made by virtue of the order of terms prohibiting the retailing to the public of the goods, materials and services to be supplied under the agreement'. Amendments Nos. 1, 2 and 3 are all drafting Amendments. Amendment No. 1 makes it clear that the power in subsection (1) of the Clause to enter into agreements is subject to the provisions of the rest of Clause 1 and, in particular, paves the way for the new subsection (6) proposed to be added by Amendment No. 9.

Amendments Nos. 2 and 3 make it crystal clear, if it was not already clear, that when an order is proposed by the Minister, it does not have to cater for every one of the four purposes referred to in subsection (1)(a) to (d). It is a matter entirely for the parties concerned. They can take these paragraphs separately or together.

Amendment No. 9 is more important. As the Clause stands, subsection (5) will enable Ministers to prescribe by Order public bodies other than those specifically mentioned in subsection (4) as bodies entitled to enter into agreements with local authorities. If Parliament approves this Order these public bodies will then be able to receive any or all of the goods or services set out in subsection (1)(a) to (d) without restriction.

Some anxiety was expressed on Second Reading and in Committee about whether this was an extension of municipal trading or of direct sales to the public, although I had given a categorical assurance that it was not. We considered this point because we do not want to breach our undertaking. An example quoted in Committee was that of the National Coal Board, which has a considerable builders' merchants retail organisation which sells direct to the public. It was suggested that there might be cases where a local authority supplied services or material to the board which would reach the public through the board's retail organisation. In order securely to prevent that sort of situation, Amendment No. 9 was tabled. However, in fact it is unlikely that the building organisation can be considered part of the N.C.B.

But let us assume for a moment that that were so. Amendment No. 9 enables the Minister in an appropriate case to limit the activities to certain functions. While it might be highly desirable in other respects to prevent resale to the public, it would be absurd if a training establishment of the National Coal Board were not allowed to obtain text books from a local education authority. The Amendment enables the Minister, at his discretion, first, to limit the powers and, secondly, to insist on some limitation in the agreement between the partners.

If it were known that a public body were supplying direct to the public, the Minister could ensure that there was a covenant in the agreement against these goods and services being supplied to the public body for the particular function of that public body. That goes a long way to meet objections raised by some hon. Members opposite. The covenant expressly prohibiting sales to the public would go a good deal further than the proposal by the hon. Member for Crosby, and I hope that our method will be accepted.

2.30 a.m.

Mr. Graham Page

The power in Clause 1(5) to designate almost any kind or body as a public body and, therefore, to authorise a local authority to sell almost anything to that body or to do any work or service for which it was obviously much too wide, and when it was criticised on Second Reading the Joint Parliamentary Secretary generously admitted that there might be ground for criticism. Wisely, in Amendment No. 9 the Minister seeks authority to limit the purchasing power of that public body and, therefore, the supplying power of the local authority. It is a most ingenious way of meeting the anxieties—either by prohibiting an agreement as a whole or by insisting on certain restrictions being put in the agreement.

Amendment No. 9 is permissive to the Minister. He may forbid an agreement or restrict it or he may put conditions in the agreement. But he is not obliged to do so. I submit that in one respect the action should be mandatory on the Minister—and that appears in the Amendment to Amendment No. 9 in the names of my hon. Friend the Member for Worcester (Mr. Peter Walker) and others and myself. In that respect we should like an obligation to be placed on the Minister to prohibit the retailing of the goods or services which the local authority supplies to a public body. I do not want to see a local authority supplying goods and services for re-sale. The Joint Parliamentary Secretary told us that it is not the Government's intention that the local authority should supply goods to public bodies for re-sale.

The purpose of the Bill is mutual trading rather than municipal or public trading. It may be gilding the lily to ask for the Amendment to Amendment 9 but I feel that it should be set out in the Bill. The idea of the Bill can be set out in this way: let us say that Blankshire County Council says: We buy a lot of tape machines for our typists, and you, Puddlecombe Development Corporation, use tape machines for your typists. If we buy ten times as many tape machines as we really want we shall get them at 25 per cent. less and we can supply you. I understand that to be the sort of purpose of the Bill and not that the Puddlecombe Development Corporation should set up in business selling tape machines. This is what we ought to say definitely in the Bill. For that reason we placed the Amendment to Amendment 9 on the Order Paper. With that Amendment, Amendment 9 would he extremely satisfactory and meet the anxiety which has been expressed.

Mr. Emery

The method of operation in Amendment 9 is a clever way the Minister's officials have found to ensure that he can take certain action which he gave us an assurance in Committee he wanted to take, but about which we were not really clear. If he would look at column 67 in the Committee proceedings he will see that he confirmed that it was not his intention, with the Clause requiring public authorities to be designated for purchasing, to allow a nationalised industry to be designated to become a chief buyer for other public bodies.

I would like the Minister to repeat that assurance now. We were concerned in Committee about the possible situation whereby an authority which, by the powers given by the Chancellor, was able to avoid S.E.T., and certain matters within its jurisdiction, should be designated an authority to purchase for other bodies which did not get this exclusion. I have gone through the Committee proceedings and am not really clear of the answer. This was a bit of a "stumer" and we fully understand that the Minister was in some doubt. He said that he did not wish to allow tax evasion. It seems that the powers he is taking here would allow him to ensure that tax concessions applying to one organisation should not apply to a second body which might be designated the purchasing authority unless the receiving body already received these concessions.

Because of their limiting factor, these powers would ensure that the Minister was able to deal with that matter. Will he, even at this pleasantly early hour in these salubrious surroundings, help the House on that point, because it is important? It might save it having to be raised in another place if the Minister can give the kind of assurances which I think he can, because these proposals are fairly reasonable.

I turn now to the Amendment to Amendment No. 9. I understand and go along with the points in the Amendment. In most instances I cannot see why the Government should not accept it. There is nothing in it which is objectionable, other than the dispersal and sale of redundant stock. Whatever situation arises —and it is likely to arise with decimal coinage or something like that—there will be some redundant stock. In many cases the easiest way to dispose of it is to sell it to somebody else who will be able to use it. This could be described as retailing.

I do not believe that it is my hon. Friend's view that there ought to be a limitation on any local authority getting the best possible price for any redundant stock or material which it might have. I am not suggesting that there should be over-purchasing in order to obtain stock redundancy, which some suspicious people might suggest. I do not believe that this would happen. If the Amendment was accepted it might preclude genuinely redundant or old stock having to be sold to another public body when it might be sold to other consumers at a better price and be termed as retailing.

I hope that the Minister will feel inclined to accept the Amendment to the Amendment—this is not a political matter—because the point about redundant stock is of material importance.

Mr. Skeffington

The hon. Member for Crosby (Mr. Graham Page) would like to make the power mandatory in connection with direct sales to the public. I resisted this proposal before, and I resist it now on two grounds.

First, there may be an enormous number of variations of agreements. An organisation which is already by definition not capable of being a "public body" has to be prescribed in an Order which must come before the House, and the House can decline to approve the Order if it thinks it ought to contain some restrictions on the agreements which should be made with that body. We believe that this matter must be left flexible and not made mandatory because of the variety of bodies involved.

2.45 a.m.

There is, however, a second point. If the hon. Gentleman's proposal was rigidly applied, we might inflict considerable harm on bodies which might benefit from these arrangements. It would be unfortunate if hospital management committees or hospital organisations which provide some kind of service to the public or to relatives who visit patients for payment were precluded from making arrangements for bulk purchase, or for the supply of services, which is what would happen if the hon. Gentleman's Amendment were accepted. One can think of innumerable cases of this kind. One example is a workshop for the blind, run by a public statutory body. It would be unfortunate if, because such a body tried to sell some of the products of these unfortunate people to pay for their welfare, it was precluded from enjoying the economic advantages of the arrangements set out in the Bill. The same considerations apply to proposed arrangements for spastics, mentally handicapped people and so on.

I hope that the hon. Gentleman will not press his Amendment, but we shall have to resist it if he does. There is the assurance that the matter will have to come before the House. The terms of the arrangements will be known. The Minister can be pressed to add to the Order if that is thought necessary. By leaving the Bill flexible we shall not harm a large number of public bodies who will be able to take advantage of the provisions cf the Bill.

My answer to the first point raised by the hon. Member for Honiton (Mr. Emery) is that I thought I had given a firm assurance that the operation was not reversible. The supply comes from the bodies listed in the first part of the Bill, and the junior partners cannot act in a reverse way.

On the question of S.E.T., I am not sure whether this could be the subject of a covenant or agreement, but I shall consider this and ensure that a suitable announcement is made. This is an extremely small factor of cost, but in the normal way some public bodies do not pay S.E.T., but I shall investigate this. One has to be careful when dealing with tax matters, and I should not like to say that these bodies will be covered. I should like to be assured about that.

Mr. Emery

What we need from the Minister is an assurance that when a body comes before him to be designated a public body it shall not be so designated unless the tax benefits it receives are equal to the benefits already enjoyed when it does any purchasing. In other words, they must be treated in the same way, and those who are so designated must not get extra tax concessions. I am sure that that is right in principle, and I hope that we may have that assurance.

Mr. Skeffington

I am sure that that is right in principle. My understanding is that any public body performing public functions under the Bill will be exempted, and, therefore, the point is covered. I shall, however, consider this again, because I should not want to mislead the House.

Amendment agreed to.

Further Amendments made: No. 2, in page I, line 6, at end insert: all or any of the following purposes, that is to say—

No. 3, line 16, leave out 'and'—[Mr. Skeffington.

Mrs. White

I beg to move Amendment No. 12, in page 2, line 1, leave out from 'in' to end of line 4 and insert: paragraphs (a) to (c) of the preceding subsection authorises a local authority—

1. (a) to construct any buildings or works; or
2. (b) to be supplied with any property or provided with any service except for the purposes of functions conferred on the authority otherwise than by this Act '.

Mr. Deputy Speaker

With this we can discuss Amendments No. 4, in page 1, line 17, leave out paragraph (d).

No. 5, in page 2, leave out lines 1 to 4 and insert:

(2) Nothing in subsection (1) of this section shall authorize—

1. (a) any local authority to carry out any building operations or works of civil engineering construction on behalf of a public body, or
2. (b) a public body, which has been supplied by a local authority with any of the goods, materials, services, vehicles, plant, apparatus or persons employed in connection therewith to use any of the aforesaid goods, materials, services, vehicles, plant, apparatus or persons for the purpose of carrying out building operations or works of civil engineering construction on its own behalf and involving the use of persons directly employed by the public body whether or not such persons are normally employed by the public body wholly, mainly or partly for building or civil engineering work.

No. 10, in line 39, at end insert:

1. (a) authorising any local authority to supply goods, materials or services of a kind which would not be required in the exercise of the statutory functions of that local authority apart from that section;
2. (b) authorising any local authority or any public body to acquire, goods, materials or services which are not required for the purpose of the statutory functions of that local authority or public body (as the case may be) apart from that section; or
3. (c).

Mrs. White

Our Amendment is in two parts. The first, to construct any buildings or works", we have put down to meet a difficulty which arose in Committee and was of particular concern to the hon. Member for Poole (Mr. Murton).I gave an undertaking at that time that, while we could not accept the Amendment the hon. Member moved, we would try to meet his point because it was not the intention that civil engineering should be included in the Bill any more than ordinary building.

I pointed out then that there are various difficulties of definition, and we are advised that by far the simplest way of meeting this genuine point is to use the words in our Amendment. I am assured that they are in common currency and are understood and accepted by all concerned, and that, if anything, they go a little wider than the Amendment suggested by the hon. Member for Poole. I believe they cover the Amendment of the hon. Member for Maidstone (Mr. John Wells) about major landscaping and works of that kind. It is certainly intended to meet the point on which we gave the assurance.

The second part of the Amendment deals with a different matter which also caused some concern, and which is referred to in Amendment 10. We believe that our Amendment is a full and adequate safeguard against any sort of abuse or extension of powers which have apparently caused some apprehension to hon. Members of the Opposition.

I was much surprised to see on the Order Paper Amendment No. 10 in the name of the hon. Member for Crosby (Mr. Graham Page) and others, because when one looks at what the hon. Member said in Committee, he conceded the point that it is desirous —I think that should be "desirable"— that the supplying party should be able to supply without any restriction on its powers whereas Amendment No. 10 tries to impose some restriction.

In any case, we want to make it abundantly clear by our Amendment that it is not the intention of the Bill to enable authorities to do anything they do not already have the power to do. We feel that this meets the situation perfectly adequately. The local authority is in any case bound, and, if it went beyond its proper powers, would find itself in trouble over its audit.

Amendment No. 9 should cover any possible difficulty which might otherwise have existed for a designated body which is not a local authority, and which is, therefore, not hound by Statute as to what it can do. It gives the Minister powers if it appears that any objectionable use might be made of the possibilities in this Bill. It does not appear to us that anything further is needed than this Amendment.

The points touched on in the other Amendments are dealt with quite satisfactorily in subsection (2) of Clause 1 as it would be amended, and nothing further is required.

Mr. Graham Page

As originally drafted, the Bill excluded what were termed "building operations ", and we had some discussion in Committee as to what this meant. It obviously did not exclude civil engineering works or—a subject which we discussed at some length —landscaping works. It did not exclude the provision of building materials and labour by one local authority for another so that that local authority might do the building in place of the first.

The Amendment partially meets those cases. I hope that civil engineering works are excluded by the word "works". The Oxford Dictionary contains enormous numbers of definitions of this word, including "needlework" and "knittingwork". I hope that the Government have been doing their knitting. The word is frequently used to mean construction works, including building but including something far more. So that word has met our anxiety about exclusions.

Second. Amendment No. 12 excludes supply of materials and labour for purposes ultra vires of the receiving local authority. That is so that the Bill does not give the receiving authority powers which it does not already have. That also is satisfactory as far as it goes. When I suggested in Committee that some such provision was necessary, I was thought to be a bit of an ass, but evidently advice has been received since then and I am no longer such an ass. Even so, the Amendment leaves gaps.

First, it applies to a receiving local authority but not to a receiving public authority. If it was necessary to provide that the former should act within its statutory powers, I should have thought that the same provision was necessary for a receiving public authority. The very mention of the one case throws doubt on the position in the other.

Mrs. White

If an authority has statutory powers, it cannot be beyond them, and that is made quite clear. It arises only in the case of bodies which are not regulated by Statute.

Mr. Page

But the local authority has only statutory powers, yet the Minister has been advised, rightly I think, to include paragraph (b) in the Amendment. This could have been made as certain in the case of receiving public authorities with statutory powers, which are in no different position from that of a local authority which cannot act otherwise than within statutory powers. I would have filled this gap with Amendment No. 10, paragraph (b) of which deals with that very point.

3.0 a.m.

The other gap is that Amendment No. 12 deals with a receiving authority but not with a supplying authority. Again, I do not understand why it is necessary to mention here the case of the receiving authority but not the supplying authority. Whatever I may have said in Committee —I do not recall the context in which I used the words which the Minister quoted —it seems to me now that it is just as import ant to mention the supplying authority acting intra vires as to say that the receiving authority should act infra vires. Perhaps it is even more important to ensure that the supplying authority does not act outside its powers in collecting goods and services and passing them on to other authorities.

One can think of occasions when a supplying authority acquires goods which it would not acquire in the ordinary way far its own purposes and then supplies those goods to another local authority or public body. I think that that is not the intention of the Bill. The intention is that where one large local authority is purchasing goods for its own purpose, if it purchases them in greater quantity it may then provide them at an economic figure to other local authorities or public bodies. I am sure that it is not the intention of the Bill that a local authority should deliberately go into the business of acquiring goods which it does not need for itself at all but which it wishes to pass on.

In Committee, we had what almost became the classic instance, the county council supplying dust carts. I greatly sympathise with the Parliamentary Secretary. When one starts on an example like that, on one's feet, one is only too likely to run into confusion over it. We even got down eventually to the parts of the dust cart, not the whole dust cart. But no county council has a duty to collect rubbish. We do not expect a county council to buy a lot of dust carts in order to sell them to urban district councils which have the job of collecting refuse.

That is why I say that we should mention, as I do in Amendment No. 10, that the supplying authority should act infra vires its existing powers, apart from the Bill, and we should, therefore, mention all three. Not only should the receiving authority not act ultra vires but the public body and the supplying authority must act within their existing powers.

Mr. Emery

May I mention one matter on which I said that I would try to obtain information for the Committee or the House? It concerns the purchasing of, perhaps, unusual items. The example of the dust cart has been brought up again. I have been informed that where local authorities are purchasing motor vehicles, and have powers so to do, they would find no difficulty in increased costings in being able to apply their specialist dealings in the procurement of motor vehicles to the obtaining of a specialised vehicle for another authority, in much the same way as they would be able to obtain extra types of ambulance or some other normally procured item. I have had this matter looked into. I gather that it would not be ultra vires in a number of instances where powers have been given under present local authority or county Acts under which central purchasing establishments have been provided for. While local authorities should not engage in purchases about which they know nothing and when they know nothing about surrounding circumstances, a local authority which has special knowledge should be able to supply another local authority when to do so makes for more efficient buying than would result from one authority making a one-off purchase.

Mrs. White

I am grateful to the hon. Member for Honiton (Mr. Emery), who has put his finger exactly on the point of the distinction between a supplying and a receiving authority. I was somewhat surprised by the hon. Member for Crosby (Mr. Graham Page) who appeared to appreciate the difference in Committee, but now seems to have forgotten that he did so. The receiving authority tries to obtain the expertise and knowledge of the conditions of buying which the supplying authority possesses. That is the object of the whole exercise.

Although it will often be infra vices for the supplying authority, if it is not covered by existing private Acts it should not be precluded from assisting what will probably he a minor authority or organisation. That is why we could not advise the House to accept the hon. Gentleman's suggestion. I do not want to elaborate, but I think that on reflection the hon. Gentleman will appreciate the distinction between the supplying and the receiving authority.

Amendment agreed to.

Mr. Skeffington

I beg to move Amendment No. 7, in page 2, leave out lines 18 and 19.

Mr. Deputy Speaker

With this it will be convenient to discuss Amendment No. 8.

Mr. Skeffington

Both are drafting Amendments. We thought that the words "works of maintenance" were a better form of drafting than "maintenance".

Mr. Emery

These drafting Amendments are probably necessary only because in Committee the Government accepted my understanding of the term "minor", for which I am grateful to them. However, in Committee the hon. Gentleman said that he would consider whether the word "minor "could be better defined. This might be a good opportunity for him to tell the House of the outcome of his researches.

5

(2) The accounts of a local authority by whom agreements in pursuance of the said section 1 are entered into under which the authority are to provide any such property or service or do such work as is mentioned in subsection (1) of that section shall include a separate account in respect of the agreements; and subsections (4), (6) and (7) of section 283 of the Local Government Act 1933 and sections 199 and 200 of the Local

10

Government (Scotland) Act 1947 (which relate to the inspection and taking of copies of the abstract of accounts of authorities) shall have effect as if any reference to an abstract of the accounts of an authority included a reference to such a separate account as aforesaid and, in relation to such a separate account, as if the words from' which shall' to 'may prescribe' in subsection (1) of the said section 200 were omitted.

Mr. Skeffington

We investigated whether we could define "minor" further, but it is impossible. To impose financial limits would be absurd, and it cannot be done by size. We have to leave it to ordinary, reasonable common sense.

Amendment agreed to.

Further Amendments made: No. 8, in page 2, line 24, at end insert: '; and "works of maintenance"include minor renewals, minor improvements and minor extensions '.

No. 9, in page 2, line 38, at end add: (6) An order under the preceding subsection may contain such provisions as the person making it considers appropriate—

1. (a) for restricting the agreements which may by virtue of the order be entered into by a private body;
2. (b) Without prejudice to the preceding paragraph, for securing the inclusion in any agreement made by virtue of the order of terms imposing restrictions.—[Mr. Skeffington]