§ The Parliamentary Under-Secretary of State for the Environment (Sir Paul Beresford)I beg to move,
That the draft Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) Order 1996, which was laid before this House on 20th June, be approved.
§ Madam Deputy Speaker (Dame Janet Fookes)I understand that, with this, it will be convenient to discuss the following motion:
That the draft Local Authorities (Contracting Out of Investment Functions) Order 1996, which was laid before this House on 25th June, be approved.
§ Sir Paul BeresfordThe orders will allow local authorities greater freedom to use the private sector for specific service provision, if they so wish. The Local Government Act 1972 allows an authority to delegate most of its functions to a committee or officer. However, without a specific power, functions may not be delegated further to any other person. As a result, this could exclude those functions from being exercised by a contractor.
The orders will help to address that situation in two ways. The first is concerned with the contracting out of local taxation billing, collection and enforcement functions and the second with local authority investment functions. The aim is to clarify for local authorities their discretion to use a contractor for service provision in those specific areas.
The Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) Order is intended to clarify an authority's powers to contract out its billing and its collection and enforcement functions on council tax, community charge and national non-domestic rates. The order will enable most of the statutory functions relating to billing and to the collection and enforcement of local taxes to be delegated to a contractor, if the authority so wishes.
There are, of course, some exceptions. Local authorities have certain powers to instigate firm action against those who do not meet their legal obligations. Those actions include applications for the committal of a debtor and the imposition of civil penalties—powers that should remain the exclusive territory of authorities. Therefore, the order does not allow the delegation of those powers to a third party. Decisions to reject an individual's appeal against council tax liability and to pass it to a valuation tribunal, and whether discretionary relief should be applied on non-domestic rating, will also remain the responsibility of the local authority.
The second order will clarify a local authority's powers to contract out functions relating to investment. The order will set in place some good practice principles. It relates to a range of investments, but they must be approved investments under the Local Government and Housing Act 1989. Approved investments have been used for the investment of local authority funds over the years, and they provide a sound basis for the order.
Contractors will have to be suitably qualified. They must follow proper investment and accounting practices and comply with local authority instructions. They will not be able directly to sub-delegate decisions on functions. While the order does not prohibit a contractor from 910 making an arrangement for the exercise of functions by another person, I have insisted that, where such an arrangement is made, the other person must be approved by the local authority directly. Contractors will be obliged to make three-monthly reports to the authority and to provide any information that the authority may request.
The orders will regularise and clarify the current situation and will provide a helpful addition to local authorities' existing powers. They are aimed at helping authorities achieve the very best and most efficient service provision and management of their resources on behalf of local taxpayers. I commend them to the House.
§ Ms Hilary Armstrong (North-West Durham)The Opposition do not oppose the orders, because they enable local authorities to contract out but do not force them to do so. With that level of discretion, authorities will be able to make decisions according to what they think will provide the best value to local taxpayers.
However, several issues arise out of the orders, which I ask the Minister to consider. We are anxious that the Government do not use them as a means to compulsion via the back door. Compulsion has not worked in local government, and the most effective relationships between local government and the private sector have been established when they have been entered into on a voluntary basis of partnership. That is how we think matters should proceed in future, so that local government's public ethos can operate alongside the private sector's efficiency and market-driven efforts.
I am not a sceptical person, Madam Deputy Speaker, as I am sure that you know. However, one wonders what relationship there is, in particular, between the contracting out of the tax billing, collection and enforcement functions and other proposals made by the Minister several weeks ago and a current consultation process. Those consultative proposals advocate the extension of the proportion of financial services that local authorities will be forced to put out to tender from 35 to 65 per cent. Some authorities would have no choice but to contract out the tax billing, collection and enforcement functions if those proposals are approved.
Those who are cynical or sceptical might regard the proposals as only appearing to be voluntary, whereas, in the long or medium term, the Minister might make them compulsory by means of the proposals that he announced several weeks ago, forcing local authorities to contract out those functions. The draft order was put out to consultation in 1994, and we are now in 1996. Perhaps something that will happen before 1997 may have caused the Government to lay the orders now.
As I said, I am not a cynical person, and I am sure that an impending general election has nothing whatever to do with the Minister's decision. However, while we are not opposing the order, because we believe that local authorities should be able to secure the best value for local people by using the mechanisms that are most appropriate to local circumstances, we oppose the extension of compulsion for the reasons that I have mentioned. Local governments must be able to bring together the important stakeholders in any area to ensure that they are working effectively in response to the needs and aspirations of local people. Compulsion does not enable that close working relationship. Local government wants to develop 911 real partnerships and the means of working with the private and voluntary sectors. Compulsion is stopping good, healthy relationships developing.
As to confidentiality and public responsibility, vast amounts of information will be available to the contractors who bill council tax and bring enforcement proceedings in the case of non-payment—and it offers the potential for abuse. It is crucial that the Government make it clear that that activity must be kept separate from any others of a company bidding for a contract. Large utility companies are already seeking mergers with others, and may want to know whether an individual is a good payer. They could obtain that information from council tax collection, which could affect their decision to make other services available to the individual in question.
Such a practice would not be legal or proper; nor would it uphold the standards that we expect of publicly accountable local government officers. I hope that the Government will take steps to ensure that confidential financial information obtained by a contractor will not be used for any other purpose without the individual clearly giving permission.
What comments has the Minister sought from organisations interested in confidentiality and related matters? Has he received advice from the Office of Data Protection? We must be confident that the public's right to privacy is properly protected.
Contractors should be expected to comply with a national code of practice. The public are vulnerable, and we want an assurance that any organisation performing the functions in question will respect the sensitivities that will be involved and will use its powers responsibly. That means the provision of appropriate and accessible collection points, methods of payment most appropriate to the individual and giving advice on meeting payments to people on low incomes. I note from the order that a contractor will be responsible for collecting the liabilities of a deceased person. When such a duty is not performed carefully, incredible offence and distress can be caused to the bereaved family of the deceased from whose estate the council tax is sought. How will the Government ensure that the sensitivity for which a public body can be held accountable will be observed?
The contracting out of investment functions is a slightly different matter. Local authorities have been asking for such a measure for some time. Four to five years ago, the Government questioned whether local authorities had the power to delegate investment management on superannuation funds. They subsequently legislated to clarify local authority powers in relation to the delegation of investment management on superannuation funds but did not do anything about the delegation of everyday general fund cash management. Many local authorities assumed that they had such general powers already, but it became clear that some people questioned it. Local authorities have therefore been asking for some time for the matter to be clarified and for specific powers to delegate cash management. In many senses, it is therefore welcome that the Department is now responding to such requests.
Having issued the draft order, the Government found that some authorities that they assumed would be covered by it, such as joint police, fire and passenger transport 912 authorities, were not because of the definition of a local authority in the Deregulation and Contracting Out Act 1994. The Government will have to address that omission at some stage. It seems somewhat perverse that, having worked out that those authorities were not covered by the order, the Government have not subsequently sought a means to ensure that they will be. I understand that the Department has stated that it has no intention of changing the legislation any further unless another opportunity comes along. I would have thought that the Government could have found a way in which to ensure that the order covered joint bodies as well as local authorities as defined under the Act.
I hope that the Government are able to give some assurances, especially on the confidentiality of tax billing and the fact they will not be able to introduce the white collar proposals this side of a general election, which is how I read the situation. I also hope that they are prepared to consider the case for contracting out investment functions that is being made by the joint authorities that cover police, fire and transport.
§ Mr. David Wilshire (Spelthorne)I shall not detain the House for long, because I am only too well aware that doing so late at night when the Opposition have said that they will not divide the House is the best way in which to make oneself deeply unpopular in this place.
The orders warrant a small amount of comment because they would allow councils to choose who is best able to carry out two more functions. Indeed, the orders could be used by some councils to invite competitive bids to test the market. My 11 years as a councillor persuaded me that choice, market testing and the use of contractors ensure the best possible service for local people and the lowest cost for local taxpayers—if the activity is fair and honest. That is a big if.
Events in my county of Surrey, which represent at best sloppy management and at worst criminal conspiracies, make me want to speak in this debate. I have studied the orders with particular care because of what has happened, and I shall briefly explain what bothers me about those events. Those who saw "Panorama" last week will have seen how a council can use powers such as those that we are being asked to grant tonight to cook the books. For example, Surrey was obliged by order to put a number of services out to contract. In respect of highway maintenance, the contractors were informed that the roads were longer than they actually were. Therefore, the council received high bids. It then bid for the right length of road and, not surprisingly, won the contracts.
What "Panorama" revealed last Monday was the tip of the iceberg. I invite my hon. Friend the Minister to join me in rooting out corruption in Surrey or anywhere else. If more information comes to light, will he join me in ensuring that all such matters are thoroughly investigated? I hope that what happened then cannot happen in respect of tonight's orders. I hope that my hon. Friend can reassure me that tonight's orders provide adequate powers of internal audit and external check, so that when we grant a local authority certain powers, they are transparent, and so that it is easy to ensure that not only the law, but the spirit of competition and contracting out is observed. Thus those of us who believe in that process can be sure that it operates fairly and honestly.
§ Mr. Chris Davies (Littleborough and Saddleworth)I shall be brief; perhaps my throat infection will ensure that my speech is even shorter than I intended.
The orders enable local authorities to contract out certain functions. The word "enable" shapes my approach, which would be different if they attempted to force local authorities to contract out their services. However, I share the concerns of the hon. Member for North-West Durham (Ms Armstrong) about the possibility of the orders becoming a precursor to compulsion.
The Liberal Democrats are deeply committed to the principle that decisions should be taken at the lowest practical level. We have always believed that locally elected representatives should ensure that the people whom they represent receive the services that they need and provide those services in the most appropriate circumstances.
I hope that all hon. Members agree that the vast majority of local authorities strive—and always have done—to ensure that services are delivered as efficiently and effectively as possible. That is why we object—and have done so in the past—to the imposition by the Government of compulsory competitive tendering, as it represents an unacceptable degree of control. It has proved a key element in the centralisation of power in the past two decades. Functions have been removed from local government, allowing central Government to dictate to local government and prevent it from exploring its own unique solutions.
Few hon. Members know better than I do that it is possible for a local authority to fall victim to a Frankenstein monster of its own creation. Some 15 years ago, I had the experience of inheriting a direct works department, where the employees and their trade union representatives put their own interests before those of the people and the council. The political circumstances at the time meant that I did not have the power to transform or to slay the monster.
That is why I believe that central Government should impose a general duty on local government to demonstrate publicly that services are provided in the most efficient and effective manner. However, we take a different approach from that of the Government. They are the only Government in Europe who force local authorities to undertake competitive tendering rather than giving them the freedom and the opportunity to do so.
914 The orders represent a welcome change, however, as they provide local authorities with opportunities and enabling powers without an element of compulsion. Therefore, in principle, we have no objection at all to the orders, but I hope that the Minister will address in his response the serious and detailed concerns that have been raised during the debate.
§ Sir Paul BeresfordI ought to touch first on the points made by my hon. Friend the Member for Spelthorne (Mr. Wilshire), who is soon to be a Surrey colleague. I have a keen interest in that matter being sorted out, and it has become a territorial interest. There are adequate police processes, and the fact that those people are being rooted out is a sign of that. Fraud occurs not just in the private sector—it occurs in-house. When one considers the vast amounts being spent by local authorities with or without contractors, the percentage that turns out to be fraudulent is very low. Incompetence is another story.
The hon. Members for Littleborough and Saddleworth (Mr. Davies) and for North-West Durham (Ms Armstrong) referred to compulsion, but there is none. The measure has been out for discussion for 18 months, and local authority response has been almost blank. I think that a total of 12 responses have been received over the whole 18 months, and local authorities are not concerned about it.
I accept the point that the hon. Lady made about confidentiality, which is vital, as the Government and the local authorities accept. Contractors will be covered by the requirements of the Data Protection Act 1988, exactly as local authorities are. Information obtained specifically for the purpose of local tax collection cannot be used for any other purpose, and contractors must observe the same strict regulations on local government taxation as local authorities. I hope that, with that assurance, the House will accept the orders.
§ Question put and agreed to.
§
Resolved,
That the draft Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) Order 1996, which was laid before this House on 20th June, be approved.
§
Resolved,
That the draft Local Authorities (Contracting Out of Investment Functions) Order 1996, which was laid before this House on 25th June, be approved.—[Mr. Brandreth.]