§ '.—(1) In arranging for or carrying out—
- (a) inspections of best value authorities, or
- (b) inquiries or investigations in relation to best value authorities,
§ (2) This section applies to—
- (a) the Audit Commission;
- (b) an inspector, assistant inspector or other officer appointed under section 24(1) of the Fire Services Act 1947 (inspectors of fire brigades);
- (c) Her Majesty's Chief Inspector of Schools in England;
- (d) Her Majesty's Chief Inspector of Schools in Wales;
- (e) a person carrying out an inquiry under section 7C of the Local Authority Social Services Act 1970 (inquiries);
- (f) a person carrying out an inspection under section 48 of the National Health Service and Community Care Act 1990 (inspection of premises used for provision of community care services);
- (g) a person conducting an inspection under section 80 of the Children Act 1989 (inspection of children's homes, &c.) or an inquiry under section 81 of that Act (inquiries in relation to children);
- (h) a person authorised under section 139A(1) of the Social Security Administration Act 1992 (reports on administration of housing benefit and council tax benefit);
- (i) an inspector appointed under section 54 of the Police Act 1996 (inspectors of constabulary).
§ (3) The Secretary of State may by order provide for this section to apply to a person or body specified in the order.'.—[Mr. Jon Owen Jones.]
§ Brought up, and read the First time.5.33 pm
The Parliamentary Under-Secretary of State for Wales (Mr. Jon Owen Jones)
I beg to move, That the clause be read a Second time.
§ Mr. Deputy Speaker (Sir Alan Haselhurst)
With this, it will be convenient to discuss the following amendments: No. 95, in clause 12, page 9, line 11, after '(2)' insert'except that if larger, any excess shall be limited to 10 per cent. of the appropriate scale fee.'.Government amendments Nos. 7, 19 to 24, 10, 11, 25 and 12.
This group contains Government amendments, with the exception of amendment No. 95. New clause 4 and amendments Nos. 95 and 7 relate to the inspection side of best value. Inspection will be an important tool in ensuring that authorities meet their duty of best value.
194 The Bill gives the Audit Commission new powers to cover areas for which there is no inspection function at present. The commission will work alongside the existing specialist inspectorates—the office of Her Majesty's Chief Inspector of Schools, Wales and the Office for Standards in Education, its English counterpart; Her Majesty's inspectorate of fire services; Her Majesty's inspectorate of constabulary, the social services inspectorate and the benefit fraud inspectorate. All those bodies will need to work with one another, and with the commission, to ensure that the overall inspection system operates smoothly and efficiently. The new clause will ensure that that happens.
Our preferred approach is to build on the voluntary and professional co-operation that already exists between inspectorates. A new inspectorate forum in England and a separate one in Wales will be established, with all the relevant inspectorates as members. The forums will discuss matters of common interest such as methodologies for joint working and, where relevant, programming of inspections. They will facilitate the inspection of cross-cutting themes to respond to the way in which an authority carries out its fundamental performance reviews to meet local priorities. They will also provide a channel of communication between both inspectorates and other interested parties, including the inspected bodies and central Government. A central objective will be to seek to avoid unnecessary duplication of effort and additional burdens on authorities.
In cases where the two forums are unable to provide a clear solution, new clause 4 will enable Ministers in England or the Assembly in Wales to issue guidance to ensure the smooth and efficient operation of the inspection function. Any guidance issued under the new clause will be restricted to ensuring co-ordination such as the programming of inspections of authorities, or how to approach cross-cutting performance reviews.
§ Mr. David Curry (Skipton and Ripon)
Under best value, it is up to local authorities to decide what services they inspect and in what order, so there is no prescription about that. The Minister is now saying that there will be a co-ordinating body to bring together the various inspectorates. What does he intend to do to ensure that there is effective co-ordination between what the authorities are doing and the work of the forums? Otherwise, all local authorities could decide to do education to begin with, for example, and there would be a tremendous irregularity, which would mean that many people with little to do for a large part of the time were inundated for the rest of the time. The initiative lies with the local authorities. How does that work?
The purpose of the new clause is in part to ensure that we do not get some of the difficulties to which the right hon. Gentleman refers. It would not make sense to end up with a local authority having many inspections at the same time, and another local authority not having any inspections. It would be rather like all the buses turning up at once, rather than being spread over a sensible time. The new clause will help to ensure that we get reasonable co-ordination, so that that unco-ordinated approach does not occur.
§ Mr. Curry
I shall persist. I agree with what the Minister is trying to do. It makes sense, but the initiative 195 on what to inspect lies with the local authorities. At county level, for example, they may decide to inspect the education services first. Ofsted inspects the schools, but it does not inspect the way in which the service is delivered at county level. If all the local authorities decide that they want to do education on day one, as it were—I am reminded of my famous question: what do they do at 9 o'clock on Monday morning? —will they not place demands on those services that cannot be met? Will there be some discussion with the local authorities to get some timetabling of the order in which they inspect, so that everyone is busy all the time?
We will ask local authorities to deal first with the issues where they believe the greatest difficulty lies. We are trying to ensure that we have a reasonably co-ordinated policy that looks at local authorities sensibly. Because the right hon. Gentleman has taken a constructive part in the Committee, I cannot believe that his question is malevolent. Nevertheless, he is postulating a fairly ridiculous example, which is not likely to occur.
No, because I want to make some progress. I am sure that the hon. Gentleman will have ample opportunities to interrupt later.
New clause 4 also provides an order-making power to ensure that any new inspectorate bodies that may be created can be included in the co-ordination arrangements. The new clause will ensure that inspection of best-value authorities is carried out effectively, so that inspectors' comments can lead to good local services for stakeholders.
Amendment No. 7 is concerned with an important objective of inspection: ensuring that stakeholders are fully informed of the progress of their authorities and that best value authorities can learn from each other's experiences. We think that it will be useful to give the Audit Commission the power to publish not only its own inspection reports, but relevant additional information. The amendment gives the commission flexibility in deciding what to publish, whether that is a full report, part of a report or some of the supporting documentation. That flexibility should ensure that relevant information can be published and aimed at specific audiences. We believe that there is a wider public interest in allowing the commission to publish such best value information, and the amendment would achieve that.
I shall now deal with some of the practical implications of best value. Amendment No. 19 is designed to give the Audit Commission the operational flexibilities that it will need to discharge its best value functions as effectively as possible. The Bill gives the commission important new powers and responsibilities. It is in everyone's interest for the commission to be able to discharge those functions flexibly, making proper use of management structures and the skills of staff. Amendment No. 19, which creates freedom to delegate best value functions, is designed to promote such flexibility. It provides certainty and clarity, so that the commission can ensure that work is done by the right people at the appropriate level.
§ Sir Paul Beresford
The Minister has partly dealt with the point that my right hon. Friend the Member for 196 Skipton and Ripon (Mr. Curry) was trying to make about flexibility; but, having asked for a committee, we should perhaps also ask for a specific example. In fact, I can give an example. Let us assume that an incompetent authority such as Islington is being inspected for best value, and that—as has happened in the past, before the invention of best value—there is a sudden outcry about a paedophile ring in homes run by social services. Where will flexibility come in? Who will lead? How will the process be integrated? Who will respond? Will the Secretary of State make the ultimate decision about whether to reshuffle the order?
I know. The hon. Gentleman was helpful in Committee from time to time—and I must take the word of the hon. Member for North Essex (Mr. Jenkin), who said in Committee that he wished to be constructive, and to see best value working for the maximum benefit of local authority services. No doubt we shall see more of that constructive approach this evening.
During the earlier stages of the Bill's progress, we consistently said that we would table amendments giving key players such as the Audit Commission the tools that they need to do their job. Amendment No. 20 is an example. It gives the Audit Commission power to inspect best value authorities, and housing is one of the areas that it will scrutinise. We expect the staff employed by the commission to include specialists, but the commission ought to be able to draw on expertise in other organisations so that it can take a rounded view of authorities' performance.
§ Mr. Clive Efford (Eltham)
I tabled an amendment on the subject dealt with in Amendment No. 20, but it was not selected for today's debate. However, I should like to draw a comparison between my amendment and Government amendment No. 20—which recognises that local authorities do not operate in a vacuum, but that they have to work with other agencies. I have been attempting to improve the performance of best value authorities, in energy efficiency, by improving their relationships with the Housing Corporation and—
Nevertheless, my hon. Friend the Member for Eltham (Mr. Efford) can be assured that the Government support his Energy Conservation (Housing) Bill and his Energy Efficiency Bill. However, we cannot debate that in our consideration of the Local Government Bill.
The Government have provided the Audit Commission with the power to inspect best value authorities. It is important that, when appropriate, those authorities are able to utilise the best expert advice. Amendment No. 20 will facilitate such an approach. It will allow, for example, the Housing Corporation in England, at the request of the Audit Commission, to provide advice and assistance to 197 the commission in relation to the commission's best value functions. In Wales, the Secretary of State performs the functions of the Housing Corporation, and he will be able to provide similar advice and assistance to the commission. That will, when appropriate, enable the commission to supplement its own expertise and knowledge of the housing functions with advice and support from the corporation.
There is, however, no question of Housing Corporation staff being involved in the conduct of inspections, which will remain the function of the Audit Commission. The amendment also makes proper provision for the Housing Corporation to be remunerated for any advice and assistance that it provides.
I am sure that the right hon. Gentleman wishes to take an active part in the debate, and, later in the debate, he will have an opportunity to speak to the amendments.
No, I shall not give way now. In my brief speech on this group of amendments, I have already given way twice to the right hon. Gentleman.
Amendment No. 20 will provide the Audit Commission with added flexibility in the manner in which it exercises its best value functions, with particular regard to the housing function.
Amendments Nos. 21 to 23 are designed primarily to improve the Bill's drafting, and to ensure that the general provisions in clause 24 properly reflect the powers of guidance afforded to the Secretary of State elsewhere in part I of the Bill. That guidance will not always be aimed directly at best value authorities. In certain cases, although dealing with the application of best value to those authorities, the guidance will be aimed at others. An example of that is the Secretary of State's guidance power provided in clause 10, which is a power to issue guidance to the Audit Commission on the way in which it inspects best value authorities. It is an example of guidance that will be issued in respect of best value authorities, rather than to them. The guidance powers provided in new clause 4, on collaboration between inspectorates, is a further example of how the power may be used.
Amendments Nos. 21 to 23 will improve the Bill's drafting and ensure that the scope for guidance, as stated in clause 24, properly reflects the powers of guidance provided elsewhere in the Bill.
I therefore beg to move the amendments.
§ Mr. Michael Fallon (Sevenoaks)
On a point of order, Mr. Deputy Speaker. The Minister said that he begged to move the amendments. I do not think that he can move them now.
§ Mr. Deputy Speaker
Order. Technically speaking, that is correct; the Minister had only to move new clause 4. However, he is still speaking to the amendments, so I am sure that it was only a slip of the tongue.
My apologies, Mr. Deputy Speaker.
We believe that there is a wider public interest in allowing the commission to publish best value information. The amendment would achieve that.
Government amendment No. 24 is designed to ensure that the approach to consultation on guidance is consistent throughout the Bill, regardless of the subject matter that it deals with or the status of the bodies to which it is addressed. Clause 24(2)(c) already provides that before issuing guidance to best value authorities, the Secretary of State or the Assembly must consult them or persons appearing to represent them. Subsection (3) makes similar provisions for consultation with the Audit Commission before guidance is issued in respect of its inspection functions.
Amendment No. 24 is consistent with such an approach. It provides that when the Secretary of State or the Assembly uses the guidance powers under new clause 4 in respect of securing co-ordination of different kinds of inspection, they are to be under a duty to consult first with the persons or bodies that carry out those functions. The amendment gives inspectorate bodies an opportunity to make representations about statutory guidance and its contents before it is issued, similar to that enjoyed by best value authorities.
In Committee, the Government explained in detail their approach to the commencement of the various provisions that introduce elements of the best value framework. Amendments Nos. 10, 11 and 25 are technical amendments to ensure that the clauses that were added in Committee are taken into account.
The inspection of services provided by best value authorities is one of the key ways in which the authorities will receive feedback on their performance and in which central Government will be able to monitor the application of the policy. The Bill gives the Audit Commission the power to set a scale of fees for inspection, but to provide flexibility we shall need to pay the commission grants from central funds. The split between grants and fees, like the overall cost, is still under discussion with the commission. Amendment No. 12 makes such payments possible, ensuring that inspection can go ahead.
§ Sir Paul Beresford
I want to focus briefly on amendment No. 95. As ever, we have tabled it in a helpful frame of mind. I did not realise how helpful we were going to have to be when we recognised the extrapolations governing expenditure under the Bill.
The first half of the Bill is the sweetness and sugar for local authorities. However, the more I looked at the Bill, the more concerned I became—and so did many local authorities—about the expenditure that they were going to pick up. We referred to the problem at length in Committee and deep concerns were expressed. Some of those concerns were supposed to be alleviated by what was new clause 5 and is now clause 12, to which the amendment applies.
When my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) questioned the Minister, the answers were muddled and disconcerting. This evening's debate has enlarged the possibilities. When we were 199 debating the money resolution, the Minister said that she had no idea of the expenditure or the balance between money given by central Government to the Audit Commission and fees charged to local authorities. Local authorities are not sure how much of the Bill they are going to have to pay for.
Having listened to the Minister's comments on the new clauses and amendments, I am even more concerned, because it looks as though there will be an army of individuals so large that it will cause a bump on the unemployment statistics. I have visions of local authority inspectors, co-ordinators and specialists in the housing commission dotted throughout the country, all of whom will have to be paid. If I were a finance director or the chairman of a local authority finance committee, I would be very concerned about that.
Clause 12 says that there will be a scale of fees for inspection. That seems well and good as far as it goes, but the commission may decide to set that scale of fees to one side, or to increase the fees or decrease them. All local authorities would be delighted if the fees were reduced, but they could go up. In Westminster and many other local authorities, the auditor, on behalf of the Audit Commission, has imposed substantial fees without any check—up to £3 million or £4 million.
Clause 12(4) says:Before prescribing a scale of fees under this section the Commission shall consult—That is a figleaf gesture towards local authorities. The commission will think about the issue, but there is no hold over it. When we were debating the money resolution I asked the Minister whether there was a ceiling. We heard some nice phrases, but she said that she could not give us any idea of the total costs. The same applies in this case. We have no idea whether there is a ceiling on the scale of fees for inspections under clause 10.
- (a) the Secretary of State, and
- (b) persons appearing to the Commission to represent best value authorities."
I raised the issue in Committee, but we have heard nothing about how the expenditure will be held down. We were not told in Committee whether subsection (4) applied to subsection (3). My right hon. Friend the Member for Skipton and Ripon went to great lengths to ascertain whether the Government had any idea about that and whether there would be an opportunity to restrict the open cheque book approach given to the commission. The answer was so inadequate that I was reminded of an Australian phrase—the Minister did not know whether he was Arthur or Martha on the issue.
We have got no further forward. The Government new clauses and amendments have not helped. I hope that the Government are going to rely on amendment No. 95, which would restrict the ability of the commission to top-load the costs to local authorities. As a ballpark figure, I have suggested an upper ceiling of 10 per cent. Without such a hold on expenditure, it will be open to the commission to go way beyond that. The fees will be unpredictable and could be applied retrospectively. The size of the fees could be exceptionally damaging to small local authorities.
The latter half of the Bill also includes two forms of capping: broad capping and specific capping, which can be subjective.
200 6 pm
Yesterday, we debated a Liberal Democrat motion on council tax increases. The Minister of State spent a considerable time talking about percentage increases, but she presented her case in a fallacious way. If subjective capping can be applied to a small local authority on the basis of large percentage increases, the scale of fees could get out of hand. I know that it is hypothetical and perhaps greatly exaggerated, but the potential exists. Under the Bill—and particularly clause 12—there is no ceiling.
I hope that the Government accept that amendment No. 95 was tabled in a helpful manner. If the Minister is not prepared to accept it, will he explain in his reply to the debate how he intends to alter the Bill—perhaps in another place—so that there will be a ceiling?
I suspect that one approach to the matter may be through secondary legislation. That would be a mistake, as secondary legislation can easily be altered. The Government have made a habit of using secondary legislation behind closed doors to deal with difficult pieces of legislation. If such secondary legislation is brought to the notice of the House, it is prayed against, if that is appropriate.
We need something in the Bill to reassure local authorities that they are not facing an open cheque book arrangement with the Audit Commission which, for the best possible reasons and possibly in the best possible taste, would be able write a cheque on the banks of local authorities.
§ Mr. Bernard Jenkin (North Essex)
Part of the temptation on Report is to agree to every Government new clause and amendment as an admission of guilt that they have strayed and have grievously omitted vital provisions. We do not intend to treat today's debate in that way. We recognise that it is a complex Bill and that some of the issues on which we did not receive satisfactory answers in Committee are addressed in the Government amendments. By the same token, it is also legitimate for the Opposition to raise new issues.
My hon. Friend the Member for Mole Valley (Sir P. Beresford) spoke to amendment No. 95, which is a case in point. In Committee, we discussed at some length how fees to the Audit Commission should be determined and controlled. As with much of the Bill, the fate of local councils is in the hands of the Secretary of State as guidance issued by the Secretary of State will determine the fee scales.
My hon. Friend expressed a simple concern—that the Audit Commission does not provide a service that local authorities can choose to buy, but one similar to that of the liquidator of a business. On the dissolution of a business, the liquidator charges his fees, come what may. It is a monopolistic situation, as most local councils will not have the option of looking for a cheaper quote elsewhere. In most circumstances, my hon. Friend is quite right to insist that the Bill should not write blank cheques to bureaucrats—and that is what they are—allowing them to go about their business at somebody else's expense without any heed to the consequences. That is a great danger.
My hon. Friend's amendment is entirely justified: as soon as the fees hit a certain level, the Audit Commission would effectively be making a loss on the services 201 provided to a local council and would not recoup their full cost. That dovetails with the Minister's proposal that the Audit Commission should receive a grant from central Government to cover some of the costs. Central Government would then have a role in limiting the activities of the Audit Commission so that it could not do what it wanted willy-nilly, but would be under an obligation to carry out its function efficiently and effectively and to do no more than was required by the Bill.
§ Sir Paul Beresford
I accept what my hon. Friend is saying, which is interesting. The difficulty is that the taxpayer would fund a central Government grant. During our debate on the money resolution, the Minister of State gave us no indication as to whether there was a ceiling. She said that there would be discussions, but at the end of the day there may need to be a ceiling. We are considering only the local government aspect of the issue, but there is more to come.
§ Mr. Jenkin
I am sure that the Minister who will be replying to the debate heard my hon. Friend's point; I hope that he will address it.
New clause 4 gives the Secretary of State another new power. The Bill already provides a huge number of new powers—on Second Reading we counted 27. The 28th is to issue guidance to co-ordinatedifferent kinds of inspection, inquiry and investigation".We welcome the new clause. The Minister said that it would cover matters that are not currently inspected. I would be grateful for examples. In my opinion, the new clause has more to do with the collision between various inspecting bodies that would occur under best value. Until now, the different inspection bodies have had fairly segmented tasks. However the all-embracing scope of best value gives the Audit Commission itself all-embracing scope.
In Committee, we explored the danger that the Audit Commission would be inspecting the same matters as the benefit fraud inspectorate, Ofsted or other bodies involved in inspecting various aspects of local government. Although there are already memorandums of understanding between, for example, the Audit Commission and the benefit fraud inspectorate on how local authorities deal with council tax benefit and housing benefit, we always thought it a little optimistic to expect that system to suffice across the board for eight or nine bodies dealing with complex issues. We drew attention to the risk that authorities could indulge in what might be described as inspectorate arbitrage—similar to regulatory arbitrage—whereby different authorities would play off various inspectorates against each other rather than ensure that there was a seamless web.
§ Mr. John Hayes (South Holland and The Deepings)
My hon. Friend the Member for Mole Valley
(Sir P. Beresford) drew attention to the costs involved. Will my hon. Friend comment on the effect on the confidence and morale of those in local government who will find a new inspector in every corridor? That is hardly in the spirit of local democracy.
§ Mr. Jenkin
I entirely agree with my hon. Friend about the all-embracing nature of the intervention powers in 202 the Bill. New clause 4 underlines how penetrating the inspection regime in local authorities will now be. The new clause is designed to ensure that every single nook and cranny of local government is covered by one inspectorate or another. No stone will be left unturned by the men from Whitehall. The Bill is taking us in that direction.
§ Mr. Andrew Hunter (Basingstoke)
My hon. Friend has been a little over-generous, even in his qualified welcome for the new clause. Surely it undermines, and is incompatible with, the Government's objective of breathing new life into local government.
§ Mr. Jenkin
That remains one of our fundamental objections to the Bill. However, the Bill is likely to become law, and we are in favour of the objectives of best value; it is the methods about which we have expressed distaste. If the Bill becomes law and the all-embracing methodology of inspection, audit and control is to be imposed on local authorities, there must be a framework.
In Committee, we were assured that there would not be a risk of different inspectorates playing off each other. The inspectorate forum, which the Minister mentioned, is meant to ensure reasonable co-operation. The Government have admitted despair about the capabilities of such a forum on its own, and they recognise that some guidance will be necessary.
Mr. Jon Owen Jones
I am grateful to the hon. Gentleman for trying to address the Bill constructively. However, when he and some of his colleagues criticise the amount of inspection under the Bill, their criticism must be of other parts of the Bill. New clause 4 does not increase inspection; it simply attempts to co-ordinate that inspection so that it proceeds sensibly. I cannot see why Opposition Members would wish to have an unco-ordinated series of inspections, rather than a co-ordinated one.
§ Mr. Jenkin
The Minister's sensitivity speaks volumes about what he might feel in his heart about the intrusive nature of the Bill. However, I accept what he says. If we are not to have different inspectorates overlapping or missing things out—which is not the intention of the Bill—some co-ordination will be necessary. What was envisaged in Committee was clearly inadequate, so we give the new clause a qualified welcome.
What does the Minister expect the guidance to say? Will it be voluminous, or general? Will it be particular to particular authorities? Another Government amendment widens the scope of the guidance that the Secretary of State can issue in other circumstances. Is that guidance intended to be for different authorities in different circumstances, or is it purely general guidance to deal with all kinds of local authority in all circumstances?
Does the new clause treat the Secretary of State as meaning also the National Assembly for Wales?
§ Mr. Jenkin
That point has been dealt with, then, but I hope that the Minister will address the previous point.
203 Government amendment No. 7 does not require the Audit Commission to publish a report—and that is the burden of my complaint. Clause 13(3) says that the Commissionshall send a copy of the report to the authority concerned.The amendment proposes to add that itmay publish a report and any information in respect of a reports.The Minister was expansive about the flexibility that the measure would give to the Audit Commission. However, I have a rather different point from that raised by my hon. Friend the Member for Mole Valley. Obviously, there must be some way of protecting confidential information, particularly that which relates to personal or distressing circumstances.
One can imagine circumstances in which there might be pressure on the Audit Commission—possibly from the Secretary of State in a political capacity, or possibly from an affected council. We know plenty of councils that might want to hide things that the Audit Commission might want to put in a report. I am worried that the Audit Commission might come under pressure and that, in cases of real corruption, individuals within it might be caught up in underworld pressure involving threats to life and limb.
Would it not be safer to specify an obligation to publish, but to provide for the specific circumstances and material that should not be published? A general enabling provision, so that the Audit Commission may publish what it considers to be appropriate, could leave the Audit Commission holding a rather hot coal. It would also put it in a political situation—something we should not ask of public servants. The amendment, as tabled, is not satisfactory.
Government amendment No. 19 caused me surprise. It concerns the ability of the Audit Commission to do its job. If it is to carry out its functions, I am staggered that the draftsman took until this point to discover that the Audit Commission itself would not be able to carry out all the functions and might need to delegate to a committee or sub-committee, or to an officer or servant.
If such an amendment has been tabled on Report, it underlines our concern that there are likely to be many other issues in the Bill that are not dealt with. The Government would not claim perfection for the Bill, just as we would not claim perfection for the Opposition. However, for the Minister to take until now to decide that the Audit Commission might require a little outside help is distressing.
§ Sir Paul Beresford
My hon. Friend talks about "a little help". However, I am concerned that the more we look at the Bill, the bigger the "little help" becomes. There is the prospect of an army of helpers, as more than 600 local authorities will all have inspections. An army is waiting to be born.
§ Mr. Jenkin
My hon. Friend leads me to my next point; who might the helpers be? If the Audit Commission were to delegate to a committee or sub-committee, would it be comprised of employees and/or officers of the Audit 204 Commission, or would it be an outside body? What about a "servant" of the Audit Commission? Could a servant be a sub-contractor?
It seems to me that the Audit Commission has come to the Secretary of State with a plea for help. He has been given considerable obligations, powers and responsibilities, and he will have to expand his already considerable empire to enable himself to be more efficient. It adds to the impression that the Government are feeling their way down the path of inspection, rather than having a clear view of the way ahead.
§ Mr. Andrew Lansley (South Cambridgeshire)
Amendment No. 19 would allow the Audit Commission to delegate any of its functions under this part of the Bill, including making recommendations to the Secretary of State that he make a direction, under clause 14, removing a specific function from a local authority. Does my hon. Friend consider it appropriate for the Audit Commission to delegate that specific function?
§ Mr. Jenkin
It may be worth exploring that excellent point. I do not doubt the bona fide of the Audit Commission, in that it will supervise its functions effectively, but circumstances have arisen in which independent people who have been appointed have taken their own line on individual issues and, as my hon. Friend the Member for Mole Valley suggested, have run up huge costs. Perhaps in another place it could be considered whether it is appropriate to have that power in the Bill.
Amendment No. 20 probably arose out of the drafting of new clause 4. It is about filling in the gaps and providing for the cost of additional advice for the Audit Commission. The odd thing about it is that, if I have understood it correctly, it also provides for additional fee generation for the Audit Commission. It is a complex amendment, and one on which my more experienced colleagues may want to question the Minister.
We accept that amendments Nos. 21 to 23 are broadly technical, but they widen the Secretary of State's power to issue guidance under clause 24. It is one thing for the Secretary of State to have the power to issue guidanceto best value authorities…or to one or more particular authorities",but quite another to issue it to other bodies "in respect of those authorities.
I am not sure that the Minister gave us a full explanation why that additional power is strictly necessary. Any guidance issued to the Audit Commission or any other inspectorate is provided for under another part of the Bill. We thought that this part was purely about local authorities.
What are the "bodies concerned" in amendment No. 24? Are they the bodies to which guidance is being issued? If so, why does not the amendment say so? The Minister referred to the bodies that carry out the functions, but "bodies concerned" is a vague and unsatisfactory formulation. Are we talking about bodies to which the guidance might refer or bodies to which the guidance is directed?
The Minister for Local Government and Housing accused us of disruptive tactics when we discussed the 205 money resolution, but I regarded her answers as unhelpful. We are still all at sea about the Bill's exact money implications. In Committee, she said:We anticipate that the annual costs…will be in the order of an additional £50 million a year".We do not understand whether that is to come from fee generation or from Government grant. The Minister also took it upon herself to say:We negotiated this through the comprehensive spending review.She cannot have it both ways. Either the Government are all at sea as to the money consequences, or they are not. Amendment No. 12 does not clarify any of the issues, but it provides the power for the Secretary of State to provide the grant in aid to the Audit Commission to cover unspecified costs. That is entirely unsatisfactory.
§ Mr. Lansley
The Minister chided me for not looking for answers that were supposedly in the Official Report of the Standing Committee, but the answers to my points were not there. The most charitable account of what happened is that, in Committee, the Minister was saying that the increased cost of the best value audit and inspection framework would be about £50 million a year, which would be money well spent if it generated savings through greater efficiency; but she was talking about costs that would be met through the revenue support grant or local authority expenditure, within the comprehensive spending review, whereas now Ministers are seeking to take powers, under amendment No. 12, to make grants to the Audit Commission, which was not contemplated in Committee.
§ Mr. Jenkin
With the greatest respect, I must correct my hon. Friend. I do not know why the Minister finds it so amusing, but she drew attention to the deficiency when she said:Additional funding to meet the cost of inspections will come from the revenue support grant or from a direct grant to the commission, and we intend to table a Government amendment to make provision for it."—[Official Report, Standing Committee B, 9 February 1999; c. 238–43.]I do not regard it as satisfactory that we were left in that position in Committee and that we are only now discussing that amendment.
We were told that the overall cost of inspection would be about £50 million a year—a suspiciously round figure—but the Government are absolutely no nearer to working out the public expenditure consequences for the Exchequer. Will 10 per cent. or 90 per cent. have to be provided centrally? They will not or cannot say. I do not think that they have the foggiest idea, which suggests that the whole process of best value is still very much an unknown quantity.
§ Sir Paul Beresford
When we discussed the money resolution, we had a vague response from the Minister about the fact that money would be paid to the Audit Commission and some would go through local authorities. There was no clear explanation of how the grant would be worked out, whether the standard spending assessment applied or whether the process would be as subjective as 206 many of the Government's other actions in relation to local authorities. Favoured local authorities do well, but others get artificially lambasted, as some were last night.
§ Mr. Jenkin
I entirely agree. That underlines how the Bill is very much an enabling Bill. The Government want to take powers without being specific about how they intend they should be exercised, or what the cost will be. We find that entirely unsatisfactory.
The Minister confirmed that, for the purposes of new clause 4, the Secretary of State is equivalent to the National Assembly for Wales. Why, therefore, does amendment No. 12 make specific and separate provision for the Secretary of State and for the National Assembly for Wales?
§ Jackie Ballard (Taunton)
I shall be somewhat briefer than the hon. Member for North Essex (Mr. Jenkin). We Liberal Democrats are surprised at the level of Conservative concern for local democracy this evening. I am sure that we shall have plenty of time tonight in which to write a dissertation on whether that concern would remain if ever the Conservatives returned to central Government.
We welcome new clause 4 and its recognition of the need to avoid unnecessary duplication of effort. It is, if I may use the term, a more joined-up approach to inspection. I hope that the Minister may elaborate a little more on progress towards establishing the inspectorate forum.
Government amendment No. 24 is especially welcome as it extends consultation on guidance.
We accept much of the Conservative argument about the extra cost of audit inspections for local authorities and about how the authorities feel powerless to control or influence charges. That is also a problem for small parish councils for which the audit process charges can be quite out of proportion to budgets. If there is a Division, we shall support amendment No. 95.
Government amendment No. 20 requires the Housing Corporation to assist the Audit Commission, establishing the precedent of placing duties on the Housing Corporation in the Bill's long title. I welcome that, but I feel that the amendment would have been more useful if it had also required the Housing Corporation to issue energy efficiency guidance to its members. To place such a duty would clearly be in order, and I hope that the Minister will confirm that such an amendment would be looked on sympathetically in another place.
§ Mr. Curry
The trouble with the Liberal Democrats is that they have never taken part in central Government. Coming exclusively from local government, they do not appreciate the need for a sensible balance between the two. They tend to say that whatever local government wants is right, and whatever central Government want is wrong. The world does not work that way. We must seek a sensible relationship between the two that recognises the overriding obligations of central Government while still allowing meaningful freedom for local government. The Bill does not take us towards that objective.
§ Mr. Jenkin
Does my right hon. Friend agree that if the hon. Member for Taunton (Jackie Ballard) wanted the 207 Bill to deal with energy efficiency, she was capable of tabling an amendment? To plead with the Government for such an amendment when she has not tabled one seems an extraordinary way in which to scrutinise the Bill.
§ Jackie Ballard
For information, let me tell the right hon. Gentleman and the hon. Member for North Essex that if they examine the amendments tabled, they will find that such an amendment was tabled, although it was not, for technical reasons, in my name. It was tabled, but it was not accepted for debate.
§ Mr. Curry
The amendment was not selected. No doubt it was outside the Bill's scope, or had been thoroughly debated in Committee.
New clause 4 is welcome because we sought effective co-ordination between inspections. The trouble is that it illustrates two things: first how extensive the inspections are, and, secondly, the practical difficulty of co-ordination and the burden that it will place on the co-ordinator. New clause 4 lists the inspections to take place, including the classics such as Ofsted, the police service, the fire service and the social services. It also includes the inspectorates dealing with community care, the Children Act 1989 and benefit fraud. It further includes the Audit Commission itself.
May I suggest a future candidate for the list? Under the Government's food standards legislation, the Food Standards Agency will have powers to inspect local authority health monitoring, and will be able to take over its running, put it out to tender or ask another local authority to do it. That is highly analogous to what happens in the Bill.
§ Ms Sally Keeble (Northampton, North)
Does the right hon. Gentleman concede that many inspection functions were created by the Government in whom he was a Minister? Presumably, he could have sought greater co-ordination. Why did he not do so then, instead of complaining about the Government now?
§ Mr. Curry
Some inspections are being set up by the Government. It is not my purpose to say that inspection functions are not necessary. However, there comes a time to take stock of how functions can be discharged and the costs of providing a local authority interface with the functions.
My concern is the practical working of inspections. The Secretary of State will issue guidance, and the Minister has hinted that it will put responsibility on the Audit Commission as the co-ordinating body. I understood the Minister to say that it would be light in its operation. It is not intended to be institutional, to set up committees, or to need a headquarters or a chief executive. It will all be done by some gentlemen's agreement, on the basis of common sense.
However, the sheer number of inspectorates involved raises the fear that the Audit Commission, which has a specific role involving the health service and local authorities, will find the task of controlling, monitoring 208 and co-ordinating inspectors to be increasingly time consuming. Its own important functions have contributed enormously to local government's measurement of services. The Government rely on the commission as the linchpin of those services.
§ Sir Paul Beresford
The other aspect raised by the Minister was flexibility. My right hon. Friend is questioning how the organisation will operate. Flexibility must be taken into account. Inspections may be co-ordinated and organised before it is revealed—as in the example of Islington—that there is a paedophile ring in children's homes. Will all the inspections be dropped in such a case? Where does flexibility come in? Who pays?
§ Ms Armstrong
For the record, let me say that the local authority will be responsible for promulgating the review programme, not the inspection programme, which is external. The internal responsibility of the authority will be to review both through and across service functions within a five-year period.
§ Mr. Curry
The Minister is right, but she demonstrates the problem rather than resolving it. If the local authority's job is to identify which areas it wishes to be inspected, the danger is that many local authorities will seek to make inspections of the same services at the same time. A county council's main functions are education, social services and roads. If all county councils decide—as I suspect many will—that they want to start with the education services, especially after the settlement this year which has left them severely underfunded—[Interruption.] That is no longer in dispute, despite the fact that Ministers giggle whenever the council tax is mentioned in the House.
§ Mr. Lansley
Given that authorities themselves will undertake performance review activities and inspectorates of various kinds will make inspections, does my right hon. Friend agree that the interrelationship between them is important for those who are trying to manage the services? It is, therefore, curious that the local authorities will not be included in the co-ordination function in new clause 4, in the same way that the inspectorates have to agree between themselves.
§ Mr. Curry
I agree with my hon. Friend that there is a real danger that the two ships will pass in the night—the inspectors on their way to the local authorities and the local authorities on their way to the inspectors. I do not minimise the problems of the co-ordination that the Audit Commission will be asked to perform. I am a great fan of the commission. The Conservative Government set it up, and the Labour Opposition of the time voted against it, but it has now become one of the central figures in the Labour Government's firmament. However, I do not wish the commission's central functions to be disfigured, clouded or overwhelmed by a co-ordinating function. It is dangerous for any organisation to ask people to co-ordinate things rather than to do things. Many people find that the job of co-ordinator turns out to be the biggest 209 non-job in any organisation, because the people one wishes to co-ordinate are busy doing what they have to do and often resent co-ordination that is thrust upon them.
§ Mr. Hunter
Would it not be better if the energy of Government was directed at improving the effectiveness and efficiency of the autonomous inspection bodies rather than the creation of an overseeing, co-ordinating apparatus, which may not improve the performance of those autonomous bodies?
§ Mr. Curry
I have to tell my hon. Friend that, in Committee, it was the Opposition who spotted the dangers of the absence of co-ordination and the difficulties that local authorities would have in coping with it. We need to be assured that local authorities will be involved in the process of co-ordination, so that they are not being co-ordinated at, but co-ordinated with; otherwise, the system will not work.
§ Ms Keeble
The right hon. Gentleman is ridiculing a process that is very important to local government. For example, proper co-ordination between those inspecting children's services—the social services inspectorate, the police and the Audit Commission—might have detected the problem of paedophile rings in children's homes, which the hon. Member for Mole Valley (Sir P. Beresford) mentioned.
§ Mr. Curry
I was not aware that I was ridiculing the process at any stage, especially as it was the Opposition who raised the problem in Committee. My concern is that if the Audit Commission is given those powers, its functions will be at risk because it will have to devote so much time to the co-ordinating function. I wish to ensure that the local authorities are involved in the co-ordination so that they are able to timetable what they want to do, and the Secretary of State is aware of that. In that way, the system could work effectively. I shall be interested to see the guidance that the Secretary of State issues on that point and, in a few years' time, what resources the Audit Commission has received to devote to the task.
The Minister referred to Government amendment No. 20. He said that the Government intended to permit the Audit Commission to draw on the expertise of the Housing Corporation, but not to have people seconded to help with inspections. I agree that local authority housing services should be inspected as they have been some of the most chronically inefficient services, partly because many councillors have always liked the patronage that running a large housing estate has brought with it. When we were in government, we experienced resistance to the transfer proposals, and I am delighted that this Government are pressing ahead with those proposals. Indeed, the present transfer proposals are the most extensive we have seen. The age of social housing is passing, not least because fewer and fewer people want to live in social housing—a fact that the Government have registered.
Mr. Jon Owen Jones
Simply because housing stock is transferred and is no longer under the direct control of local authorities, it does not cease to be social housing.
§ Mr. Curry
That is true; it depends to whom the transfer is made. An increasing number of transfers are 210 made to local housing companies, in which the local authority retains a stake. However, the classic transfer is to housing associations. Why cannot the Audit Commission draw on the expertise of the housing association movement? It may be able to, but that is not clear. The Housing Corporation, however good it is—and it is very good—does not actually run any stock, although its equivalent in Scotland does. The Government should draw on the expertise of the housing associations, especially as the largest of them have volumes of stock exceeded only by some four local authorities in England. Some of the big northern housing associations have far more stock than the majority of local authorities and, given that the inspections are about the management on the ground, including their expertise would be a useful innovation. I hope that the Minister, when he winds up, will say that the Audit Commission, as well as drawing on Housing Corporation expertise, will be able to reach out to the housing association sector—which is part of the private sector in its legal and financial status, but in practice is part of the social housing movement—to draw on its expertise.
I welcome new clause 4. Co-ordination is important, but it should be understood that saying, "We are going to co-ordinate", does not necessarily achieve what we want. The actual burden may be considerable and it is important that it does not blur the key functions and blunt the point of the Audit Commission's activities. I hope that the Minister will review the situation from time to time to see how co-ordination works in practice, so that co-ordination does not get in the way of the inspection process.
§ Mr. Fallon
This group of amendments typifies the tack-handed approach of the Government to local government. First, they overlay the councils with the best value framework in the most bureaucratic way possible, and then they have to come back to the House after realising all the implications for staffing, resources and co-ordination. I agree with my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) that co-ordination is important, but it is the Government who created the mess and who now want to claim the credit for amendments that will help to co-ordinate the process.
I wish to speak specifically to Government amendment No.19, which caught my eye when it was first tabled, and I wondered whether there was a precedent for it. Can the Minister tell us whether the Audit Commission is empowered in exercising any of its other functions to recruit people who are not members of it? With respect to my hon. Friend the Member for North Essex (Mr. Jenkin), that is the key point. The amendment will allow people to participate in the work of the Audit Commission who are not commissioners, officers or servants of the commission. Before we agree to the amendment, we must be clear about who those people would be, how they would be selected, what role they would perform and how they would be trained.
I am grateful to the Minister for lifting the veil a little. He spoke about management and flexibility of staff, and referred to the staff of the commission. However, we are discussing people who will not be on the staff of the commission: amendment No. 19 provides for people to work for the commission who will not be on its staff. What role will they have? Will it be an executive role? Will they be part of the administrative audit arrangements? Will they have a supervisory role? 211 Will they be delegates of the commission, or will they be merely advisers, as the Minister seemed to imply when he referred to the need for specialist advice, using the Housing Corporation as an example? Obviously, specialist audit advice can be brought in by the commission for any of its functions, but, in respect of the amendment, we need to clarify the function of those who are not members of the Audit Commission. Will they have full administrative functions and work alongside the usual staff, or will they simply be advisers?
Will the Minister tell us how those people will be employed? Will they be paid? Will they be temporarily recruited from other audit bodies, or will they be people with local government experience, such as former local government officers? Will they be trained? As I understand it, when they begin their work, they will have all the authority of the Audit Commission, so we need to know a little more about the terms, conditions and status of their employment.
The Bill seems to be an inspectors' charter. I am worried about its effect not only on local councils—explained so eloquently by my hon. Friend the Member for Mole Valley (Sir P. Beresford)—but on the inspectors themselves. As my right hon. Friend the Member for Skipton and Ripon reminded us, the Audit Commission was set up by the Conservative Government. He pointed out that the commission's work should not be sidetracked into work of co-ordination, but under the amendment, its work would be dissipated and subcontracted to other people. It is important for the morale and direction of the commission that its functions should not be scattered among a host of advisory committees or supervisory boards that include some people from the commission and others recruited only for specific tasks. When the Minister winds up, I hope that he will go a little further on amendment No. 19 than he did in his opening remarks.
§ Mr. Hunter
I regret that I was not a member of the Standing Committee, but I have carefully studied the reports of its 15 sittings and believe that I understand the main arguments that were deployed.
I want to restrict my comments to new clause 4. I hope that my hon. Friend the Member for North Essex (Mr. Jenkin) will not consider me to be too off-message if my view is slightly less generous than his. The Minister urged us to welcome the new clause, but we should do no such thing. Its inclusion in the Bill at this late stage may be regarded as an acknowledgement that the Government were wrong in the first place, although I acknowledge that my hon. Friend the Member for North Essex would not want us to emphasise that point too strongly.
Mr. Jon Owen Jones
Will the hon. Member explain to the House what he believes to be the purpose of the Committee stage of a Bill? Does he think it deplorable for a Government to introduce amendments as a result of discussions in Committee?
§ Mr. Hunter
That intervention does not amount to much. All hon. Members are aware of the integral importance of the Committee and Report stages of a Bill. My argument is that a provision so essential to the co-ordination of the Government's strategy was omitted and that we have had to wait until this late stage for it to 212 be introduced. That is the only point I wanted to make. As for the wider argument, I shall not detain the House for long and shall summarise my position on the matter.
In so far as new clause 4 gives the Secretary of State the power to give guidance on the manner in which the Audit Commission and others carry out their inspection of local authority services, including the schools inspectorate, the social services inspectorate, inspectors of constabulary appointed under section 54 of the Police Act 1996 and others, it confirms some of my worst fears about the Bill. I believe that those fears are shared by some of my hon. Friends. The Bill's origin forms the criterion by which I judge it. The Labour party's pre-election commitment was that it would breathe new life into local government and that is the sole criterion by which the new clause and the Bill as a whole should be judged. That is a laudable objective and one to which Conservative Members would subscribe, but the tragedy is that the Bill in general and new clause 4 in particular will have precisely the opposite effect.
I acknowledge that new clause 4 defines that which previously lacked definition and clarifies that which was previously unclear in the Bill, but that does not make it any more acceptable. The need for greater definition and clarification was convincingly illustrated in Committee by my right hon. and hon. Friends, and although I admit that the new clause removes some of the Bill's original ambiguity, in reality it focuses attention on the fact that a tranche of new powers will be handed to the Secretary of State, and that an onerous and bureaucratic inspection regime will be created by the Bill. To quote from the new clause, that is whatsecuring the coordination of different kinds of inspection, inquiry and investigationwill mean in practice.
New clause 4 extends the Secretary of State's powers to intervene and underlines the powers already given to the Secretary of State by the Bill. The Government have moved a long way from the 1997 general election manifesto commitment thatLocal decision-making should be less constrained by central government, and also more accountable to local people.The reverse will be true under the Bill in general and the new clause in particular. Local decision making will become more, not less, constrained by central Government and local government will become more, not less, accountable to central Government and less accountable to local people. Not one iota of the Bill—and certainly nothing in new clause 4—honours the Labour party's pre-election commitment to the decentralisation of power.
The horrific reality—I believe that it is horrific—is that new clause 4 extends the power and influence of the Secretary of State into the inspection of areas of local administration that are best left clear of his ad hoc guidance. The Audit Commission, the fire services inspectorate, Ofsted, the social services inspectorate, persons carrying out inspections under the National Health Service and Community Care Act 1990, housing benefit and council tax benefit administrators, and inspectors of constabulary will all be required to respond to the interventionist diktat of the Secretary of State. The Secretary of State's scope for intervention will not be 213 limited to only those bodies listed in new clause 4; he will have the power to extend his influence to other named bodies. My hon. Friend the Member for North Essex opened his speech on Second Reading with the words:If the Bill promotes light, truth and harmony in local government, consensus, partnership and a better community spirit, we will be right behind it."—[Official Report, 12 January 1999; Vol. 323, c. 133.]I would argue that new clause 4 will help to achieve none of those desirable objectives.
The Bill was bad enough prior to the appearance of new clause 4. The draconian powers the Bill already gives the Secretary of State will mean that the best run councils will live in fear of a Secretary of State exercising those new, wide-ranging, discretionary powers sanctioned elsewhere in the Bill. However, the addition of new clause 4, which obliges the various inspecting bodies and persons to have regard to the Secretary of State's guidance, means that the Secretary of State will, of his own volition, make up the rules by which the authorities shall be judged; and he will have the power selectively and subjectively to judge those authorities, to intervene and, in the last resort, to take over. So much for the principled manifesto declaration that is the starting point of the Bill:Local decision-making should be less constrained by central government, and also more accountable to local people.
§ Mr. Eric Forth (Bromley and Chislehurst)
I confess that, at this stage in the debate, my sympathies lie more with my hon. Friend the Member for Basingstoke (Mr. Hunter) than with my hon. Friend the Member for North Essex (Mr. Jenkin). Even at this early stage in what promises to be lengthy deliberation, I have heard more than once and understand full well that it was my right hon. and hon. Friends who raised these issues in Standing Committee and persuaded the Government to table their own new clause on Report—so far, so good, one might think. However, I share the reservations expressed by my hon. Friend the Member for Basingstoke, although for different and what some might call more mechanistic reasons.
§ Sir Paul Beresford
As one of the few hon. Members present who was a member of the Standing Committee, I should emphasise that our having made a request for co-ordination on which the Government have acted was a last-gasp stand. We pointed out to the Government that, if they were going to implement their proposals, there was a plethora—an army—of organisations that needed either to be dealt with or co-ordinated with. It was not a case of having a choice, because the original choice was a bad one.
§ Sir Paul Beresford
I note my right hon. Friend's point. If I had a choice, I would choose to hope that the Government would take the hint, reduce the numbers and try to pull everything together. That is the point that we tried to get across to the Minister when we asked him how 214 he, the Secretary of State and the plethora would be likely to react. If my right hon. Friend were to suggest that we reduce the number of inspectorates and co-ordinate their armies by pulling them together, I would certainly support him.
§ Mr. Forth
That may be an argument worth pursuing, although it is difficult to see how we could do so at this stage in our proceedings without going out of order. Perhaps it is a matter for another place to consider.
My first concern arises from that part of new clause 4 which states:a person or body to whom this section applies shall have regard to any guidance issued by the Secretary of State for the purposes of securing the coordination of different kinds of inspection, inquiry and investigation.Here is our old friend, guidance; immediately in my mind arises uncertainty about whether that will genuinely be guidance, or whether it will in some way be mandatory or binding on the bodies concerned. Real guidance may be given and even received in good faith, but then not followed to any great extent. The core dilemma at the heart of this group of amendments is that if the legislation is to be effective, the "guidance" will have to be mandatory, but if it is merely guidance in its true sense, the legislation might not be effective at all. That is an unresolved difficulty that lies at the heart of the proposals.
§ Mr. Fallon
If the guidance is mandatory, that cuts clean across the independence of some of the bodies listed in new clause 4 which were set up to be independent not only of local government, but of the Secretary of State.
§ Mr. Forth
My hon. Friend has anticipated my next point, so I am grateful to him for leading me naturally to it. Looking at the list of the bodies covered by new clause 4, which were helpfully listed by the Minister in his opening speech and are even more helpfully listed in the new clause, I wonder how far bodies so different in their nature and mission—a ghastly word—will be subject to being brought together in a co-ordinated fashion, given their independence and their integrity, which we should respect at all times, and, more importantly, given the differences in the work that they do.
One need only consider the work carried out by the range of bodies covered, from inspectors of fire services, through Ofsted—a body with which I am more familiar—to inspectors of social services, children's homes and social security fraud. Each of those bodies is so different from the others in its objectives, the way in which it works and the responsibilities it discharges that I wonder to what extent any mechanism could draw all of them together and co-ordinate them in the way that both the Government and my right hon. and hon. Friends want.
§ Mr. Dominic Grieve (Beaconsfield)
Was it not the Prime Minister himself who said that he wanted to replace what he regarded as a feudal system of government in this country with a Napoleonic system, which implies administrative tutelage? Is not what appears in the new clause a serious matter, in that it suggests that there will be administrative tutelage through bodies that were previously thought to be independent?
§ Mr. Forth
I wonder whether that is the case and I hope that my hon. Friend, who has a better grasp of 215 history than I, will explore that argument later—I certainly could not do it justice. My own points to some extent reflect the reverse side of his argument.
Having made it clear that all of the bodies listed in new clause 4 are extremely different in nature, I now turn to the aspirations the Minister expressed in his opening remarks. He spoke about voluntary and professional co-operation, which is all good stuff. I am amazed that he did not say "partnership", as it is about the only buzzword that he did not use—oh no, he did not mention "boom and bust", which might have been too difficult for him to get into that speech; nevertheless, I am sure that we shall hear the phrase later.
The Minister talked about voluntary and professional co-operation and, crucially, about an inspectorate forum, which he said would examine the methodologies, programmes and cross-cutting themes—another ghastly modern phrase that I do not fully understand. We are beginning to see a picture emerging of how the Government imagine the process will work. A forum will bring together very different bodies—the fire people, education people, children's home people and the benefit fraud people—that will sit around and discuss their methodologies, programmes and cross-cutting themes.
An optimist might imagine that that process could result in a co-ordinated approach or unified thrust. However, a pessimist—which I tend to be; after nearly nine years in Government, how could I be anything else—might worry about what would happen if the bodies could not agree about methodologies, programmes and cross-cutting themes. As my hon. Friend the Member for Sevenoaks (Mr. Fallon) said, given their independence and integrity and the very different nature of their work and experiences, what will happen if those bodies cannot agree about methodologies, programmes and cross-cutting themes? Are we still talking about a framework of guidance or about the Napoleonic approach that my hon. Friend the Member for Beaconsfield (Mr. Grieve) mentioned?
§ Mr. Fallon
New clause 4(1) makes clear what must happen: the bodies must have regard to the guidance. My right hon. Friend said that there might be confusion. However, the Secretary of State might simply say that there should be no inspection of school services in London boroughs in the year leading up to the borough council elections.
I hesitate to intervene because the right hon. Gentleman is enjoying himself in his usual manner. I ask him to try to be serious for a moment and to consider 216 the important issues that Governments of all colours must consider. If we are trying to ensure that less children are abused—
The hon. Gentleman corrects my grammar. The important point is that fewer children should be abused. It is extremely important to co-ordinate the work of various inspection bodies so that they can co-operate and attain a common theme rather than work alone.
§ Mr. Forth
I do not see how fewer children will be abused if the fire service is included in the discussions of the inspectorate forum. That is my point. Unless we can identify a common approach—[Interruption.] The Minister thinks that, because he comes to the Dispatch Box and mentions the protection of children, that is the end of the argument. That is not good enough. I am trying to make a different point: will the inspectors of children's homes and the fire service have a sufficient commonality of purpose to be useful in forum discussions? I have my doubts about that.
I can go further than that. Even if there were a degree of commonality, what would happen if the bodies disagreed? We know what will not happen because the Minister has told us. So an element of doubt remains as to whether the forum will be of any positive use or value.
§ Mr. Fallon
My right hon. Friend has been extremely generous in giving way. It is not simply a question of confusion. The Minister revealed in his intervention that he is seeking a common theme for the forum. He wants to impose on behalf of the Secretary of State, a common theme on bodies that are independent of the Secretary of State and that have been set up as independent bodies by the House.
§ Mr. Forth
That is the more sinister interpretation that could be made of Ministers' motives. Although the Minister tried in his opening remarks, he has not provided a sufficient level of detail of his thinking or of the motivation behind the new clause to enable us to understand how the process will work. I made notes, as best I could, of the Minister's speech. I paid close attention to him—even though he is not paying close attention to me—in an attempt to understand what was in his mind. It would appear that I have failed, as has my hon. Friend. There is an unresolved problem with the inspectorate forum as to how effective it will be and whether it can realistically achieve the objectives that the Minister has set for it.
We then come to the vexed question of the involvement of local authorities. My right hon. Friend the Member for Skipton and Ripon (Mr. Curry) and other hon. Friends raised that issue, which remains unresolved. Perhaps the Minister will tell us in his reply that local authorities will be subsumed in new clause 4(3), which states:The Secretary of State may by order provide for this section to apply to a person or body specified in the order.That sounds very much like our old friend the all-embracing, sweeping-up provision that says, "If we haven't already thought of it in new clause 4(2), 217 paragraphs (a) to (i), we will put it in subsection 3, into which we can insert almost anything". That might be where local authorities will be addressed because the Bill does not mention them anywhere else that I can see. That matter has already concerned my hon. Friends and I hope that the Minister will provide comprehensive reassurances in that regard.
Will the Minister also explain how he views the relationship between inspecting bodies, which are listed helpfully in new clause 4, and local authorities, which are in a completely different category? If they are to sit around the table at the inspectorate forum—we do not yet know whether they will—it will add another complication to the methodology of that forum that may undermine its possible unity of purpose even more than I have suggested.
The Minister also introduced our old friends, who I thought had long since departed the political scene but who have been resuscitated for the purposes of this debate—the stakeholders. They have made a dramatic reappearance and will apparently form a key part of the process that new clause 4 will introduce. The Minister said that the stakeholders would learn from each other's experiences, which develops an earlier theme involving methodologies, programmes and cross-cutting themes. One must assume that the fire service will learn from the experience of the inspectors of children's homes and that the benefit fraud inspectors will learn from the experience of Ofsted; otherwise the exercise has no point. I am at a loss to understand quite how that will happen and what the value will be for the different bodies.
A new bureaucracy will be created—albeit in response to my right hon. and hon. Friends' requests in Committee. I hope that they are beginning to regret those requests because there will be an additional army to supervise the existing army to which my hon. Friend the Member for Mole Valley (Sir P. Beresford) referred. I hope that my right hon. and hon. Friends are thoroughly ashamed of themselves because they have let a bureaucratic genie out of the bureaucratic bottle. I shudder to think what the cost will be.
To allow matters to proceed apace—I sense that several of my hon. Friends are itching to contribute—I shall refer briefly to amendment No. 19, which my hon. Friend the Member for Sevenoaks also mentioned. I referred to that amendment briefly in my comments on the money resolution, but it is appropriate to return to the matter now. The amendment demonstrates what might—again, we seek the Minister's guidance—be a radical new departure for the Audit Commission. The amendment says:The Audit Commission may delegate any of its functions under this Part to … a committee or sub-committee established by the Commission (including a committee or sub-committee including persons who are not members of the Commission)".My hon. Friend the Member for Sevenoaks raised that point, and he was right to do so.
The amendment goes on to refer toan officer or servant of the Commission",but I am not too worried about that. However, when we start referring topersons who are not members of the Commission".I wonder if we are breaking new ground. How confident is the Minister that moving in that direction will enable us to ensure the continuing high quality and integrity of the Audit Commission's work, with which we have all become familiar over the years?
218 The amendment would "delegate" functions to committees or sub-committees—we are already talking about one or two removes from the commission—and, further, to persons who are not members of the commission. That provides the potential for a dilution of the quality of the Audit Commission's work which may begin to endanger the whole process. I tentatively suggest that we are entitled to have that worry.
I hope that I have said enough to demonstrate that there are sufficient questions and anxieties about the group of amendments to explain why I have not yet been able to join my right hon. and hon. Friends in welcoming it. I remain to be convinced by the Minister about the additional or best value, or whatever phrase one wants to use, that the amendments would bring to the Bill. I shall, as ever, listen carefully to the Minister's reply. However, my hon. Friend the Member for Basingstoke and I share the same unhappiness and reservations about the amendments, and unless the Minister does a lot better than he did when he spoke to the amendments, I shall remain unconvinced of their merits.
§ Mr. Lansley
I am grateful for the opportunity to add a few words on subjects that have not so far been fully addressed in the debate on this group of amendments.
I am grateful to my hon. Friend the Member for North Essex (Mr. Jenkin) for correcting me on amendment No. 12, which relates to the making of grants to the Audit Commission. My hon. Friend will correct me again if I am wrong, but I think that I am correct in saying that two questions were raised in the debate on the money resolution which also arise on amendment No. 12 and to which satisfactory answers have not been given. The first, which has been mentioned by several of my hon. Friends, is what proportion of the increased cost of the inspection and audit framework—which has been estimated at £50 million—will be defrayed through grants to the Audit Commission and what proportion will be met through the normal mechanisms for funding local government activity, and then, presumably, recovered by the Audit Commission through fees that are charged.
The second question is my own and I may have missed an answer being given on this point. It is still not clear whether the Secretary of State will accept costs by making a direction under clause 14 to take over an authority's specific functions or whether those costs or those of any nominated person under that clause will wholly be defrayed by the local authority to which such a direction refers. I would be grateful if the Minister could answer that point.
I want first to deal with new clause 4 and then with amendment No. 19. I agree with my hon. Friend the Member for North Essex that it is helpful that in Committee Ministers took note of a lacuna that was identified in the Bill, in that it does not contain an mechanism for adequate co-ordination between inspection authorities, and they have dealt with that in new clause 4. However, it will be useful if we examine for a moment the position not only from the standpoint of the inspection authorities, but on the basis of the exchange, to which I contributed, that took place between the Minister and my right hon. Friend the Member for Skipton and Ripon
(Mr. Curry). That exchange concerned the standpoint of the local authority, the services that it provides and the manner in which it tries to keep to the spirit of the best 219 value framework. It is generally accepted on both sides of the House that we are trying to make a success of that concept.
The starting point for an authority trying to manage its services effectively is that, increasingly, it is having to manage its cycle of activity under the best value framework in relation to other cycles. For example, the local performance plan is to be produced on an annual basis in co-ordination with a consultation cycle—part of the best value concept is that services should be provided on the basis of adequate consultation—a budget cycle and an audit cycle. It must also be co-ordinated with data collection and publication of performance indicators. The local performance plan must therefore orientate itself around a series of annual cycles. Such co-ordination is difficult to achieve and will pose management and other challenges for the services concerned.
In addition, the authority will have to consider how it undertakes adequately its best value programme of reviews. It is intended that over five years, each part of the authority's services should be reviewed, starting with the weakest. That is not simple. It is clear to me, not least from reading the document, "Better By Far: Preparing for Best Value", which was helpfully produced by the Audit Commission last December, that an authority that conducts that programme conscientiously will have to tackle rather difficult issues. In the best value pilots that have been conducted so far, the mechanism of a service-based review has conventionally been used. That is to say that the education service, social services department or housing service was reviewed.
My right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) referred to cross-cutting themes, which are another way of conducting such a review. For example, a local authority might ask itself, "By what mechanism are we setting out to comply with the duties placed on us to maximise community safety?" That cuts across a number of services, hence the concept of cross-cutting themes in trying to review services to find out whether they provide best value.
Equally, one could approach the review on an area basis. One could examine all the services provided by an authority in a particular area and find out how they interact. That might be useful. I remember that in the debate on unitary authorities, when county councils were defending their right to exist rather than be broken up, they were conscious of their increased need in future to review the management of their services and to provide a better service for a given area. An area-based review might be peculiarly appropriate for authorities that have had that debate in the past.
I have fixed on customer focus as a particularly useful method of review. It has been one of the lesser-used methods in best value pilots and in the past when local authorities have tried to meet best value objectives. Such a review would, for example, deal with children in local authority homes. I remember participating in the report of the Select Committee on Health about children looked after by local authorities. In such cases, the customer focus review is terribly important; otherwise, as we know, the failings of local authorities—I shall not elaborate on them—in accurately co-ordinating the relationship 220 between their education service and their social services may lie at the heart of their failure to provide best value to those customers.
Local authorities are wrestling with the problem of what method to use to conduct best value reviews. Those may include area-based reviews, service-based reviews, cross-cutting themes where those apply, but particularly, reviews based on customer focus.
If best value has a purpose additional to the competitiveness and efficiencies that were gained in the past and could be gained in the future through the application of compulsory competitive tendering, it is peculiarly apt that local authorities should pursue their activities not on the service basis of review, but on some other basis, alongside the normal regime of service reviews.
That will lead local authorities away from the service basis of review, and will mean that they are often conducting reviews that are not congruent with the service basis of inspection that occurs under the various inspection authorities detailed in new clause 4. If we increasingly bring together inspection by those authorities, and the best value activity of local authorities, we may find that we begin to force local authorities back into the straitjacket of service-based review, rather than the other models of review that are helpfully referred to by the Audit Commission and which I have just described.
On balance, I think it would be inappropriate to oppose new clause 4, but perhaps Ministers might consider for another place a further improvement to it. The responsibility of the Audit Commission and the other authorities to receive guidance from the Secretary of State in relation to their inspection activities must be related to the Audit Commission's responsibility to audit the performance review plans of local authorities.
That will allow the performance reviews in the various forms that I outlined to begin to mesh better with the inspection programme of the various authorities; otherwise, there will be a great heaping up of different review timetables—the annual cycles to which I referred, the review programmes set up in the local authority, some on a service basis and some on another basis, and the programme of inspections on a service basis.
§ Mr. Forth
My hon. Friend has been much more generous to the proposal than I was. He is implying some sort of leading role for the Audit Commission, which is not the way that I read new clause 4. I understand the Audit Commission to be one of many bodies, including all the other inspection bodies and possibly the local authorities—we do not know that yet. Is my hon. Friend saying that he would be happy with the proposal only if the Audit Commission were given that leading co-ordinating role, or is he content with the new clause as drafted?
§ Mr. Lansley
I am grateful to my right hon. Friend. The manner in which he asks the question crystallises the point that I am trying to make. I shall try to answer him.
At present, the Audit Commission has a leading role only in relation to the question of when inspections should occur. It should be explicit in new clause 4 that the Audit 221 Commission has a responsibility to liaise in the performance review activity of local authorities, in which the local authorities should play an integral part in showing the Audit Commission on what basis they are conducting their review, why they are doing so and according to what timetable.
The Audit Commission will also have a connection with the various inspection authorities and will be able to link the two, so that the inspections conducted by the various inspection authorities, including the Audit Commission itself, do not begin their assessment at an inappropriate moment—for example, if a given service in a local authority is about to be the subject of fundamental review.
None of that means that the local authority can determine when the inspections should take place by the social services or any other body. Sometimes it will be in the nature of an inspection authority that the local authority cannot defer or influence the timing of inspection, because the inspections should be entirely independent of the local authority. The Audit Commission has the status and ability to liaise between the two types of activities and try to make sure that they work together effectively, rather than cutting across one another.
It is clear that in the past, some inspection activities have occurred with a focus on compliance with the statutory responsibility of local authority services, but with no recognition of the intimate relationship between that and the management of a service, so that the service can be delivered more effectively. The example that I have in mind, which may be familiar to some hon. Members, is the management of child protection services in Cambridgeshire.
It was clear at an early stage that the social services inspectorate was engaged in examining what was happening in Cambridgeshire because it had fallen down on its statutory responsibilities to children, but that the main reason for that was the poor management of the activity in the service. The professional activity was not wholly deficient—many of the professionals worked well—but the management was poor.
To achieve best value in services, we must bring together review of management, which is essentially an Audit Commission responsibility, and the review of professional practice, which was the social services responsibility. It follows that that must be managed together with the best value and performance review activity of local authorities. For all its merits in respect of the points raised by my hon. Friend the Member for North Essex, new clause 4 could go further in linking the aspects that I have highlighted.
I shall comment briefly on Government amendment No. 19. I raised the matter with my hon. Friend the Member for North Essex and have been thinking about it further. Again, it is not sufficient to oppose the amendment. It should be further studied by Ministers and in another place. The question is whether it is appropriate for the Audit Commission to be given the power under amendment No. 19 to delegate all its functions under this part of the Bill toa committee or sub-committee including persons who are not members of the Commission, or…an officer or servant of the Commission".The particular point that I have in mind is the ability of the Audit Commission, if it finds that a service is failing, to make a recommendation to the Secretary of State that 222 he should make a direction under clause 14, which could go as far as to transfer a function from the authority to the Secretary of State. That is a pretty potent power and a pretty important recommendation for the Audit Commission to make.
Under those circumstances, it would be reasonable to reconstruct that part of the Bill, if it is so amended, so that although the Audit Commission can delegate its functions, if it is minded to make a recommendation of the kind that would lead to a direction under clause 14, that should be decided by the commission, rather than by any committee, sub-committee or person acting on a delegated function.
On balance, I agree with my hon. Friend that new clause 4 should receive our support, but with the substantial reservations expressed by my right hon. and hon. Friends and me.
§ Mr. Grieve
I shall be brief and focus on new clause 4 and amendment No. 95.
New clause 4 should not be allowed to pass without further comment. I said earlier, not entirely tongue in cheek, when I intervened on my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) that in the Bill, the Government were going down the road of administrative tutelage. That expression is well known on the continent and refers to a total system of government which is under central elite control through a bureaucracy which is run and politically directed. It is a system of government that does not commend itself to me.
Best value does commend itself to me. I perfectly understand the concept. If the Government say that they want local authorities to provide best value, I shall not stand in their way and would welcome it. Various Governments have tried to secure best value. Indeed, the pedigree of a best value project is a Conservative one. We should applaud the Government for wanting to go down that road. But central to Britain's administrative system is the independence of those organisations which exist to determine whether best value is being provided. That is what the Audit Commission and the various inspectorates listed in new clause 4 are all about. That is what they are designed and supposed to do. Yet new clause 4 suggests that the Government intend that, in future, the power of such bodies to control the way in which local authorities function will go way beyond the sort of remit that I would have expected them to have.
I am mindful that the Secretary of State can already give guidance under existing regulations, but when it comes to reform, I view the Government's project as a package. Therefore, I am even more deeply suspicious because I cannot divorce what new clause 4 is trying to do from a host of other Government legislation which is about administrative centralisation. Most extraordinary is that that is from a Government who pride themselves on having sold devolution. However, as we know, having given with the one hand, they try to claw back with the other.
New clause 4 is a highly suspect project. It appears to give unfettered power to a Government, who are highly acquisitive of power, to direct local authorities by administrative means and to fetter the very independence which the Government said at the election they wished to enhance. That is contrary to what the Government promised, but in conformity with what the Government have delivered in their first two years in office.
223 The Bill has received its Second Reading and had a long Committee stage—in which, mercifully, given the long hours that were spent on it, I did not have to participate—but, as the pass has been sold, it is incumbent on us to try to save something from the wreckage. That is why amendment No. 95 so commended itself to me when my hon. Friend the Member for Mole Valley (Sir P. Beresford) asked me for my views on its drafting.
The impositions that will be placed on local authorities in respect of possible interventions by those various bodies are potentially extremely onerous. One of my hon. Friends referred to the extraordinary effect that such audits have on parish councils, accounting for the disappearance of between 50 and 75 per cent. of their budget.
But that is as things exist at present. Most extraordinary is that a series of measures are being introduced whereby the intervention of various bodies delegated by the Government under their guidance to carry out investigation will be non-stop. Under this project, the cost will fall entirely on the local authorities, with the Government setting the guidelines on how much it will all cost.
That is a manifest unfairness. Given the local Government settlement for last year and the previous year, when I had occasion to go to see Minister for Local Government and Housing at least once, the Minister knows well that, in the tension over Government expenditure, the tendency to pass over to local government expenditure for which the Government are not prepared to fork out, and to do it by sleight of hand, giving the impression that the fault for not providing the service lies entirely with local government, is a temptation for Governments of all political hue, but the Government are clearly going even further down that road.
Some limit must be placed on this. For once, I have some faith in local authorities, because most local authorities are not so inefficient and ineffective that they require the close tutelage which the Government intend to place upon them. If that is what the Government intend to do, they should limit the burden of cost on those local authorities.
If it were a question of local authorities committing some impropriety I would be the first to accept that the burden should fall on them. But this is a case of local authorities simply being told that they will have various inspections imposed on them for which they will pay. Therefore, amendment No. 95 seeks to ensure that, over a particular level, that cost is limited. I commend that to the House and I am grateful to note that the Liberal Democrats also think that there is merit in the amendment. I hope that, at the appropriate time, the amendment will be put to the vote.
The way in which Government amendments have been introduced on Report clearly signals the close control that the Government intend to exercise over local authorities. This is not the partnership that was proclaimed at the election. I frankly admit that one of the criticisms that I had of the 18 years of Conservative Government was that, in our drive for fiscal and economic efficiency, on 224 occasions we overrode the need for effective local government. What I find so extraordinary is that, far from wanting to reverse that, which is something which I would have at least tacitly supported and applauded on a selective basis, the Government are going much further and, instead of the tried and well tested system of allowing local government autonomy and interfering only where there is need, the autonomy will completely disappear, and the powers being taken by the Government in new clause 4 are all part of that. For those reasons, I oppose the new clause.
Mr. Jon Owen Jones
When I moved the new clause I welcomed the constructive approach adopted by the hon. Member for North Essex (Mr. Jenkin) in Committee and his determination to ensure that best value worked to good effect. However, in the past few hours, Opposition Members have made few constructive comments. Unfortunately, the Opposition's Janus-like view seems set to continue.
The hon. Member for Mole Valley (Sir P. Beresford) spoke of an army of inspectors. However, by enabling co-ordination and the co-opting of expert advice, the Government's new clause and amendments help to ensure effective and economic inspection.
The right hon. Member for Skipton and Ripon (Mr. Curry), who is no longer present, raised concerns about the number of inspections, a general theme among Opposition Members. Whether deliberately or otherwise, they seem to have misunderstood the nature of the inspection envisaged in the Bill.
In Committee, my right hon. Friend the Minister for Local Government and Housing referred on numerous occasions to the lightness of touch of inspections, saying that they would be triggered only by such things as the auditors' report or other serious causes for concern. It is not as though inspections will occur for no good reason, and will be the order of the day, occurring continuously. That is the impression that any member of the public listening would have got from Opposition Members, perhaps deliberately so.
No, I shall not give way. For three hours I have been listening to the repetitious comments of Opposition Members. Very few of them were meant for serious consideration, but I want to address the serious points that were made.
The hon. Member for North Essex asked a number of questions and I shall try to answer some of them. He gave some welcome to new clause 4 and its attempt to ensure co-ordination, but he asked for an example of what the guidance would be. The inspection forums should, first and foremost, undertake the co-ordination functions for the various inspectorate regimes. Guidance issued by the Secretary of State or the Welsh Assembly would be a last-resort power used only when the forums had failed to agree. The failures in the forums would serve as indicators of what should be included in the guidance and, therefore, I cannot be specific about what the guidance will say until we see what causes disagreement.
The hon. Gentleman also asked some questions about amendment No. 19, as did other hon. Members.
§ Mr. Jenkin
That pretty inadequate answer is an admission that the Government are applying for yet 225 another power for they know not what, because they are making it up as they go along. That absolutely characterises the nature of the Bill. The Minister criticises Conservative Members, who are raising legitimate concerns. [Interruption.] I can understand why he is not enjoying the experience, because his answers are so inadequate.
The hon. Gentleman knows that it is in his best interest to appeal to the Conservative Members sitting behind him, but he has my answer.
Amendment No. 19 deals with the Audit Commission's powers to delegate. The Audit Commission Act 1998 provides for such powers in the undertaking of the commission's present functions. The Bill extends the commission's functions and the amendment simply allows it the same power to delegate in respect of best value as it has in other areas.
The hon. Gentleman asked why amendment No. 12 specifically refers to the Welsh Assembly. It does so because that amendment relates to clause 31 which is in part III, where the substitution provided for in clause 27—the Bill's Welsh clause—does not operate. Clause 27 is in part I.
The one non-Government amendment is amendment No. 95, which would restrict the flexibility of the inspector to vary his fee in respect of an inspection where significantly more work was involved than he had originally envisaged. That variation has been deliberately built in to cater for exceptional circumstances. If an inspector were to uncover acute failure, the fee could easily be greatly exceeded. The drafting of the clause reflects that of the Audit Commission Act 1998. When carrying out an audit, it is usual for the auditor and the authority to agree the approximate cost in advance, with the authority being informed during the audit whether any significant variation is likely to be necessary.
No, I will not.
We expect that inspections will work in a similar way. In order to retain the flexibility to deal with situations in the most appropriate and cost-effective way, I ask Conservative Members to withdraw their amendment, although I have little confidence that their answer will be affirmative.
The hon. Member for Taunton (Jackie Ballard), who is not in the Chamber at the moment—
I shall try to be gallant; having sat through the past three hours, I can well understand why the hon. Lady is not present. She asked whether the amendment relating to energy conservation could be included in the Bill. That amendment has not been accepted because it was not in order; if another can be drafted which is in order, we will consider it.
§ Question put and agreed to.
§ Clause read a Second time, and added to the Bill.