HC Deb 11 November 1980 vol 992 cc263-74

Lords amendment: No. 12, after clause 8, in page 10, line 33, at end insert: C.—(1) Subsection (1) of section 8 above does not require a local authority or development body to keep—

  1. (a) in respect of any description of construction or maintenance work specified in subsection (2) of that section; or
  2. (b) in respect of any description of such work specified in regulations under subsection (4) of that section,
accounts for any financial year separate from accounts kept for that year in respect of any other description of construction or maintenance work, if the local authority or development body did not at any one time in the previous financial year employ more than thirty persons, other than persons excluded by subsection (2) below, who were engaged (whether wholly or partly) in carrying out construction or maintenance work of that description. (2) The persons excluded by this subsection are persons engaged wholly or mainly upon the design, development or control of construction or maintenance work. (3) The Secretary of State may by order specify for the purposes of subsection (1) above a number of persons less than thirty. (4) The power to make an order conferred by subsection (3) above shall be exercisable by statutory instrument. (5) A statutory instrument containing any such order shall be subject to annulment in pursuance of a resolution of either House of Parliament.

Mr. Fox

I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker

With this we may take Lords amendment No. 19.

Mr. Fox

The new clause in Lords amendment No. 19 honours the commitment that we gave in Committee to put down amendments to exempt authorities with the smallest direct labour organisations from the provisions of this part of the Bill. The new clause in Lords amendment No. 12 extends the principle to the accounts as well.

I believe that the idea of a de minimis exemption is generally welcome, but that exemption must be genuinely de minimis. Only the very smallest can be allowed to escape. The figure of 30 operatives is still large by the standards of the construction industry, in which the overwhelming majority of firms employ fewer than 10 men. It will still allow 30 or so councils to avoid the provisions of this part of the Bill, some of them with an annual output of about £ ¼ million each; so the concession is not negligible.

The new clauses are drafted with a view to simplicity of operation. There would be no point in obliging authorities to make elaborate arrangements, simply to determine whether they were in or out of the scope of this part of the Bill. Authorities will, therefore, merely have to ask themselves at the beginning of each financial year whether in the previous financial year they ever had 30 or more DLO manual workers on their books. They will not have to delve into questions of part-time working or overtime working, so the answer should be easily found.

The authorities' professional and technical staff engaged on building work will not be included in their count. They would probably be needed to design and supervise work, whether it was carried out by direct labour or by private contracting. Nor should fear of losing their de minimis status inhibit authorities in dealing with genuine emergencies, such as flooding, storms and major accidents, as the Secretary of State will be able to direct that any extra hands put to that sort of work are not to count in the reckoning of their labour force for the purpose of the clause.

We believe that the new clauses represent a fair and sensible relaxation. They will save the smallest authorities some work and ensure that safeguards are maintained in all the more significant direct labour organisations. I therefore invite the House to agree to them.

6.45 pm
Mr. Gordon Oakes (Widnes)

It is said that one should be grateful for small mercies, it is, indeed, a small mercy that the Government have provided. When the Under-Secretary says "de minimis", he really means it when he is talking about 30 employees. I think he will agree that primarily it is a matter for district councils; it does not apply to county councils or metropolitan districts. How many district councils would have been exempt from the provision if the figure had been not the 30 that the hon. Gentleman magically plucked from the air, but, say, 50?

The Association of District Councils, although it is grateful for this small concession, wanted the figure to be considerably higher than the 30 that the Government have proposed. That is my first quarrel with the Government on the amendment—that they have not gone far enough and they have unnecessarily burdened a number of district councils that have just a few more than 30 employees. They will have to undertake all the paperwork, accounts and so on, and employ staff to do so, because the Government have set such a low number.

The Minister may say "Whatever number we chose, you would have said 'We object to it; it is not big enough'", but I assure the hon. Gentleman, who has known me long enough to believe me, that I should not have taken that attitude. I think that 50 would have been a far more appropriate number. Do the Government know how many more councils would have been exempted from this burden of work had the figure been 50?

The provisions of the clause will not be as smooth to operate as the Minister has suggested. It will not be simple for a local authority to abide by the clause and to know whether it has erred in straying over 30. I can understand why, under subsection (2) of both clauses, the Government have excluded persons engaged wholly or mainly upon the design, development or control of construction or maintenance work and have confined the provision to people engaged (whether wholly or partly) in carrying out construction or maintenance work". It will not be easy for local authorities. Where do they draw the line? For example, would the foreman be counted? Is he not supervising, and not actually working? Where does the teaboy come in? He is not building anything but is making tea for the workers.

These are not facetious points. Someone, somewhere, in a local authority must spend time and money—the ratepayers' money—on working out these matters for a particular year. He will have to decide whether a particular workman is included in the category. It can be very important to a member of a small district council that is near the marginal figure of 30. Many district councils will be worried about that, and they have expressed their fears to the association. The provision is unduly complex.

The amendment specifically provides: The Secretary of State may by order specify for the purposes of subsection (1) … a number of persons less than thirty. It would have been prudent of the Government to make that much wider and allow the Secretary of State to increase the figure if he thought it just and proper to do so. Instead by merely giving the Secretary of State the power to reduce the figure below 30, the amendment makes matters even worse.

The difficulty is that local authorities feel uncertain. They have to establish a labour force. They have to establish their direct works departments. If the Secretary of State subsequently reduces the number below 30, they have all sorts of problems over whether they declare certain people redundant in order to escape the provisions of the clause or do the necessary paperwork. Again, there is uncertainty for them.

The last part of Lords amendment No. 19 deals with the "all hands on deck situation", which can arise frequently for local authorities. The difficulty is that under the wording of subsection (6) the Secretary of State determines whether he exempts the authority, it having gone over 30, on the basis that it was necessary to exceed that number in order to carry out urgent construction or maintenance work whose necessity could not reasonably have been foreseen by the authority or body. Again, local authorities will find themselves in some difficulty. If there were a breach in a sea wall and a local authority put the whole of its labour force to work to prevent a flood, as it probably would, that would be an occasion on which the Secretary of State would intervene to say that it was necessary, as the breaking of the sea wall was unexpected.

On the old vexed question of snow, snow clearance and inclement weather, would not a prudent authority expect cold weather in winter and realise that there might be frost and snow? If, in an emergency, an authority brought out its whole force to clear its streets, would the Secretary of State say "But you knew, or ought to have known, that it sometimes snows in winter"?

My hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) is in the Chamber. In most authorities it would be highly unusual for there to be earthquakes, but that would not necessarily be so in Stoke-on-Trent, because one hears of earth tremors in that area. Therefore, ought not a prudent engineer in Stoke-on-Trent make provisions for that eventuality? Were there to be an earthquake in Stoke-on-Trent, God forbid, would the Secretary of State say "You ought to have known about that factor"?

These points worry many small district councils. The matter is not as simple as was outlined by the Under-Secretary of State. There are many problems of definition in the wording of the clause inserted by the other place. We do not propose to oppose it, but I wish that the figure were more than 30. I should prefer that it were 50. I wish that the Secretary of State would take the power to "up" as well as to "down" the limit.

Mr. Charles Morrison (Devizes)

I think that Lords amendment No. 12 is a useful addition to the Bill. As the right hon. Member for Widnes (Mr. Oakes) said, it would make life easier for district councils, and perhaps for some county councils, if the number were extended to 50. On the other hand, if that were done, it could undermine part of the purpose of clause 8 because it would in a sense allow too much freedom.

Has my hon. Friend the Under-Secretary of State given any further consideration to the possibility that clause 8 should not be implemented until 1 April 1982? I ask that not because I am against the clause but because, if this provision is implemented forthwith, it will allow very little time for local authorities—particularly county councils—to set up the accounting machinery. This is important because, from a preliminary consideration, it seems likely that, for example, the implementation of clause 8 could give rise to a direct increase in staff of up to 330 in the highways departments of county councils. The county councils do not want to increase staff and the Secretary of State does not want to increase staff. However, it is possible that such an increase, or a lesser increase, can be avoided if the local authorities have reasonable time to consider how to implement this provision without adding to their bureaucracy.

This matter was referred to in another place. It would be helpful if my hon. Friend could indicate how far his thinking or that of the Secretary of State has got on this matter.

Mr. Cant

I support the observations made by the hon. Member for Devizes (Mr. Morrison). As a member of a county council, I fully appreciate the difficulties to which he referred.

The figure of between 300 and 400 extra staff with which local authorities will be burdened to carry out some of these changes relating to direct labour organisations contrasts vividly with the experiences that some members of county councils are facing. A week or so ago a member of the Staffordshire education committee had to sit for six hours—to some extent, this was a self-inflicted ordeal—paring the education budget by £10 million. Every possible economy was insisted upon by the draconian chairman of the education committee who, for some unknown reason, has a pathological loyalty to the Government. At the same time, to say that any additional work must be taken on by local authorities in consequence of new legislation will produce what often happens in local government—namely, a situation in which financial constraints seem to go along pari passu with extra responsibilities.

I am interested in this matter from the point of view of district councils. Without doubt, all direct labour organisations—or the city works department in Stoke-on-Trent—are going through a terrible ordeal. This is a consequence of the recession that is afflicting the country. Shortage of finance, the ending of agency arrangements with county councils in the next year or so and the housing moratorium are, for the first time, causing redundancies in the Stoke-on-Trent city works department. In this trauma through which the direct labour organisations are passing, it is an excess of bureaucratic zeal to insist that changes in the accountancy procedures and so on must be carried out by 1 April 1981.

The Minister must appreciate that what might have been the timetable for this legislation is certainly not being carried out in practice. Royal Assent will be a good deal later, even at mid-November, than was originally anticipated. Therefore, the Minister will presumably issue his various regulations and directions in January 1981. I find it difficult to believe that even the most efficient direct labour organisation will be able to come to grips with the essential changes when this legislation comes into effect. The Association of District Councils places great emphasis on this point. In the brief that the association has issued to hon. Members it states that the Chartered Institute of Public Finance and Accountancy is producing some guidance on revamping costing systems and so forth in the context of the inevitable computer operations.

The association also states: The Chartered Institute are also producing a code of guidance for use by authorities setting out the appropriate accountancy practice that authorities should follow to implement the legislation. This, again, is not yet available.

7 pm

I cannot understand why, with so many problems on their hands, this Government, and Ministers in the Department of the Environment in particular, are demonstrating such indecent haste in trying to rush through all these changes as though change was wholly a virtue and carried no disadvantages.

Mr. Don Dixon (Jarrow)

The other point about direct labour organisations is that many of them are tied by central purchasing. By their standing orders, various councils must have central purchasing departments. For councils to alter that, they have to alter their constitutions. That means going through the entire council procedure, and it will be virtually impossible to do this by the date decided by the Government. Many people know why local authorities have to be careful about central purchasing and tendering after the problem some years ago in local government. If direct labour departments are not free to do their own ordering and tendering, they are competing with private contractors with their hands tied behind their backs.

Mr. Cant

My hon. Friend has raised a very important matter, and obviously he has a great deal more practical experience in these matters than I do. However, I should have thought that the Government would have taken my hon. Friend's point into account. Unfortunately, however, they seem to be imbued by some sort of philosophy which leaves aside such practical details. It may be that the CBI, consisting of industrialists and so forth, takes such a poor view of the Cabinet because it has so little industrial experience.

This is just another facet of the problem. I know that the Under-Secretary of State has experience of local government. We do not have the good fortune to have the Secretary of State present in order that we might make inquiries of him, but it is doubtful whether the hon. Gentleman's two colleagues in the Department have that experience. I hope that, as he has so often demonstrated, he will be willing to listen to the arguments of the Association of County Councils, the Association of District Councils and other local government bodies about the practical difficulties of implementation.

The Government can pass their legislation, of course, and the local authorities, being law-abiding institutions, will accept their new role. But, for the sake of a year, it would seem so much more sensible to have this legislation implemented a great deal more efficiently. If, over the period between April 1981 and April 1982, these direct labour organisations—assuming that there are many left as a result of the policies which this Government are pursuing—are given time to set out their stores properly in terms of accounting procedures and so forth, this legislation will be capable of being measured more effectively in the following year.

What would be lost by giving this suggested transitional period in which these changes could be introduced more effectively? Sometimes one is driven almost to the conclusion that this Government feel that they have a much more limited period of time in which to exercise their malevolent influence over the country's affairs than the constitutional period of five years and that they are determined to do their worst within that limited period.

I plead with the Minister. I hope that he will exercise some personal initiative whilst his colleagues are out of the Chamber and say that he has been persuaded by speeches based on practical experience of local Government and that he is prepared to concede that the operative date shall be I April 1982 and not 1981.

Mr. Fox

With the leave of the House, shall reply briefly to the debate.

The right hon. Member for Widnes (Mr. Oakes) conceded in his usual fair manner that in Committee we said that we would look carefully at this proposal following representations made to us. After the fullest discussion with my hon. Friend the Minister for Housing and Construction, we came to the conclusion that the biggest concession that we could make was this upper limit of 30 work-people. The right hon. Gentleman asked me why we had not gone further, to 50. He put his finger on the problem, because we found that, had we gone to 50, the number of exclusions would have been considerable. Speaking from memory, I think that it would have taken more than 100 authorities out of any accounting. We felt that that would have been far too big a move, bearing in mind that originally there were to be no exemp- tions. It is not a matter that we did not consider. We felt that in no sense could we go as far as the right hon. Gentleman wanted because, as my hon. Friend the Member for Devizes (Mr. Morrison) pointed out, it would have had a major effect on our intentions.

The right hon. Member for Widnes asked about the ease of deciding the definition of the 30 people. I thought that, by my fairly generous description of manual workers, excluding design teams and people of that sort, the right hon. Gentleman would have seen that we were not being rigid about this. He asked about the foreman. Of course, foremen involved in this sort of work would count. Given a figure as low as this, I hope that the tea boy would not spend all his time making tea. If I am wrong, the state of British industry is worse than I thought, and the state of the construction industry is even worse than that in those circumstances. But, again. I expected the right hon Gentleman to welcome the Government's concessions.

As for the idea that the Secretary of State should be allowed to increase the number, I have to tell the right hon. Gentleman that in no circumstances do we see these de minimis figures being increased. Hence our reason for being emphatic that this is the upper limit and that any movement can only be downwards. I realise that the right hon. Gentleman will not like this because, if anything, he would prefer to have the limit set higher than 50.

The right hon. Gentleman went on to suggest that there might be an earthquake in Stoke-on-Trent. I find that a formidable thought. I gather that there have been one or two tremors in that part of the United Kingdom. At one stage. I nearly had my boots on to go there. Strangely enough, whenever there is an emergency, it always seems to be me who is sent to the scene. With that in mind, in no circumstances would I want to face an accident or tragedy of this kind on the basis that the number of people available to assist would be accountable under the DLO accounting or under the de minimis principle.

I reinforce what I said. In the event of serious flooding or a major accident of any kind, the Secretary of State would ensure that it was excluded from the standards which we have been discussing.

My hon. Friend the Member for Devizes is right about clause 8 and our concern to see that it is not undermined. I have to disappoint him, as I have to disappoint the hon. Member for Stoke-on-Trent, Central (Mr. Cant). In Committee we rehearsed the argument about the date of operation. We emphasised that we hoped that local authorities followed our deliberations in Committee very carefully and that, as a result, they knew that we intended to introduce these reforms on 1 April 1981 and that, despite the pleas made to us, we were determined to hold to that. Nothing that I have heard since has changed my mind that this is possible.

I cannot believe that direct labour organisations—or, in Stoke, the central works department, which I am told is very efficient—will find that it takes long to adapt to the very simple procedures that we intend to introduce. I am not certain that they will be as complicated as CIPFA has suggested, although we shall look carefully at its proposals. I understand that it would make the transition easier if we were to allow the slippage of a year, but we are determined to press on with this new regime as soon as we can, and on that basis I must disappoint hon. Members.

Mr. Oakes

With the leave of the House, I should like to reply to two Freudian slips which indicate the Government's thinking. The hon. Member for Devizes (Mr. Morrison) said that he could well understand why the Government did not want the figure of 50. The words that he used—remarkable, coming from him—were that they would allow too much freedom for local authorities. But, according to the Bill's long title, the Government are supposed to be giving freedom to local authorities.

The Minister said that he had had discussions with his hon. Friend the Minister for Housing and Construction. It is significant that he was the fellow Minister with whom the Under-Secretary held the discussions. It is my feeling that the Government are thinking only in terms of direct works departments which are building departments. Many authorities do not have a building department at all, although they employ more than 30 people, for example, in the maintenance department in respect of highways. Surely it would have been prudent for the Minister also to have had discussions with his hon. and learned Friend the Parliamentary Secretary to the Ministry of Transport.

As my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) said, the debate has revealed the Government's complete lack of understanding of the workings of local government. Those are the sort of authorities among the small district councils which have direct works, although in many cases they are highways departments rather than building departments. Even if 100 or so authorities were set free from these provisions because they employ between 30 and 50 people, it does not represent a massive public works programme, yet that is what is being suggested by the Government.

Mr. Charles Morrison

Perhaps I can clarify the point that I tried to make. I did not mean that I thought that local authorities would have too much freedom. I meant that, in the context of clause 8, it was clear that the Government might think that local authorities would have too much freedom.

7.15 pm.

Mr. Oakes

I appreciate that correction by the hon. Gentleman. He has a great deal of local Government knowledge, particularly in county councils, and he gives the benefit of that knowledge to the House and to his hon. Friends. I only wish that his hon. Friends on the Front Bench would take notice of what he said.

We do not propose to oppose the amendment because it would be nonsense to oppose a consession. However, I wish that the consession had been a greater one.

Mr. Fox

Perhaps I can make it quite clear that the reason I mentioned my hon. Friend the Minister for Housing and Construction was that it is his responsibility to look after direct labour organisations. That is within his remit. I assure the House that they were not the only discussions that took place. Throughout the course of this part of the Bill, as the right hon. Gentleman rightly suggested, we consulted closely with our colleagues in the Department of Transport.

Question put and agreed to.

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