§ Mr. JenkinI beg to move amendment No. 50, in page 3, line 5, leave out
`way in which its functions are exercised'and insert'value for money of its provision of services,'.
Mr. Deputy SpeakerWith this, it will be convenient to discuss the following amendments: No. 57, in page 3, leave out line 6 and insert
`having equal regard to economy, efficiency and effectiveness.'.No. 29, in page 3, line 9, after `(a)', insert 'elected'.No. 30, in page 3, line 11" after `(b)', insert 'elected'.
No. 33, in page 3" leave out lines 17 to 19.
No. 63, in clause 4, page 3, line 38, leave out
`having regard to a combination of'and insert 'having equal regard to'.No. 51, in clause 5, page 4, line 12, leave out
`way in which its functions are exercised'and insert`value for money of its provision of services,'.No. 66, page 4, line 13, leave out
`having regard to a combination of'and insert 'having equal regard to'.
§ Mr. JenkinThe importance of this part of the Bill cannot be overestimated. The amendments relate to clause 3, which covers the fundamental duty of best value. We spent considerable time in Committee discussing its definition. Clause 3(1) states:
A best value authority must make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy efficiency and effectiveness.451 Considerable effort must have been applied to the drafting of those words to tighten the meaning. The Bill puts an obligation on an authority to achieve specific aims, but if someone wanted to sue a council for failure to fulfil the best value duties, the court could well have difficulty deciding what the duties mean.7 pm
Everything hangs on the duty of best value. We wondered whether the definition could be improved. We spent a lot of time in Committee considering possible expansions or enlargements of the definition. The purpose of this group of amendments is to establish the meaning. We think that it means value for money. That may be rather like going into a drawing room and saying a rude word to the Government. They may regard value for money as a mean-spirited, bad-tempered and narrow-minded phrase that does not reflect people's wider aspirations for their local authority, but in its broadest sense it means securing the finest and best-quality services at the best available cost.
Clause 3(1) seems to be part of the packaging of the Bill. It is designed to be all things to all men. It is attractive to Labour authorities because it does not mean competitive tendering and to Conservative authorities because they may understand it as a duty to secure value for money. The disciplines of competition are extended to all the activities of local authorities later in the Bill, with clause 5 all but putting in place a competitive tendering regime.
The Bill uses all kinds of language in place of the ultimate truth: if best value is to mean anything, the fundamental duty must be to achieve value for money. That is not the same as the cheapest option, which the Government have endlessly caricatured as our position; it means getting best value.
To inform the concept of value for money. we suggest that, rather than having regard to a combination of economy, efficiency and effectiveness, authorities should have regard to those three in equal measure, because they are equally important. We are suggesting a more specific way of expressing the combination, because we are asking not for a bit of economy, a lot of efficiency and a lot of effectiveness, but for an equal consideration of all three. Amendments Nos. 50 and 51 to clause 5, and amendments Nos. 57, 63 and 66, which deal with the need to have equal regard to the combination of economy, efficiency and effectiveness, cover those points.
My right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) has tabled further amendments, but he is not present tonight. The Government changed the business of the House at very short notice, which may explain why he is unable to be with us for this debate. He had expected to be able to debate the amendments last night. Indeed, if the Government had not pulled stumps he would have been able to do so.
My right hon. Friend's amendments clarify who should be the
representatives of persons liable to pay any tax, precept of levy to or in respect of an authorityand therepresentatives of persons liable to pay non-domestic rates in respect of any area452 He says that they should be elected, which is a good principle. We heard earlier this evening that it might be all right to consult a focus group to find out how popular the Government's capping policies are. It may be implicit in the Bill that a focus group would be enough to deal with the requirement to consult. We are suggesting that elected representatives are the right people to consult. Amendment No. 33 would delete subsection (3) of clause 3. If the representatives to be consulted under subsections (2)(a) and (2)(b) are elected, subsection (3) becomes unnecessary.The amendments are useful and are designed to promote discussion about what best value means. We think that value for money in the provision of an authority's services is a clearer definition of best value than
the way in which its functions are exercised".We commend the amendments to the House.
§ Jackie Ballard (Taunton)The definition of best value is central to the Bill. The Liberal Democrats have no problem with having equal regard to the three Es, although we moved amendments in Committee to add other Es—equality, environmental sustainability and equity—because the Audit Commission's three Es of economy, effectiveness and efficiency provide too narrow a focus and do not encompass all the issues that local authorities should consider when providing or contracting for services. Amendments Nos. 50 and 51, which would narrow even further the focus of best value to make it just a value-for-money exercise, should be rejected.
The amendments of the right hon. Member for Bromley and Chislehurst (Mr. Forth) look attractive on the surface.
§ Mr. JenkinWhen the hon. Lady goes shopping and buys herself a nice new dress, does she believe that she does not get value for money unless she buys the cheapest dress? That is not how normal people make purchasing decisions. They judge value for money on the relationship between the quality of what they are buying and what they are spending. That is what we are focusing on. The hon. Lady is falling into the trap of believing that value for money means the cheapest. That is silly. We are looking for the best value for money.
§ Jackie BallardI am so pleased that the hon. Member for North Essex (Mr. Jenkin)—or wherever it is—holds me in such high regard. Under compulsory competitive tendering, people shopping for trousers would have had to look for the cheapest.
§ Ms ArmstrongWhat about dresses?
§ Jackie BallardPerhaps the hon. Gentleman buys dresses, too. When I go shopping, I might be looking at more than just the cost or the quality of the article. If I were looking at just those two aspects, value for money might be my main consideration, but I might be interested in whether the article was made by people in a sweat-shop in the Philippines or by people somewhere else who were paid a decent wage. Many people take into account equity, decency and opportunity when looking for goods and services. The purpose of our amendments in Committee was to widen the definition from the Audit Commission's narrow three Es.
453 The amendments of the right hon. Member for Bromley and Chislehurst look attractive on the surface, because most of us have a positive knee-jerk reaction to the word "elected", but I am confused about who the right hon. Gentleman thinks the elected representatives of taxpayers are. Councillors are their direct representatives. I wonder whether he is thinking of having more elections to choose people to be consulted on best value. I should be surprised if that was his plan, because it would be bureaucratic nonsense.
However, that argument does not apply to amendment No. 30, which would be an improvement. It would be useful for the business community to elect representatives for consultation purposes. That could refer to representative organisations that already exist—for example, chambers of commerce and industry. We support the requirement for local authorities to consult local people on how to fulfil their duties under best value; any good local authority should be doing that already.
Consultation would show that most people with an interest in service delivery would want other issues above and beyond the three Es to be taken into account. In Committee, the Minister said that, although only the three Es would be in the Bill, local authorities would, for example, be expected to take equality issues into account. Local authorities should act as leaders of their communities, and ensure that services are provided in accordance with the needs and wishes of local people.
Without policies to address disadvantage, there is a danger that majoritarianism may rule in consultation responses, and that would further disadvantage minorities who are excluded by economic, social, physical or geographical conditions. I repeat my concern that employees are not included on the list of those to be consulted about the duty of best value.
§ Mr. LansleyI wish to respond to two points made by the hon. Member for Taunton (Jackie Ballard). First, I do not think that it is necessary for additional Es—be they equality, equity or environmental sustainability—to be added to the list of those considerations to be taken into account. The word "effectiveness" in this context is a compelling word; and includes the taking into account of all those purposes for which the authority exercises its functions.
If the authority, rightly, believes that equity in the administration of its functions or environmental sustainability is an appropriate purpose, it is perfectly reasonable for the authority to seek to carry that out effectively—and it will come to its best value duty by that route.
Secondly, amendment No. 50 deals with the hon. Lady' s caricature of what value for money means in this context. My hon. Friend the Member for North Essex (Mr. Jenkin) made it clear that he thought that value for money would be an improvement. However, it is not simply that the amendment would improve the drafting, but that it would radically change the way in which authorities had to think about their best value duty.
My fear is this: The Government's rhetoric in relation to the best value duty is that the concept of continuous improvement embraces—naturally and spontaneously in all authorities that exercise the best value duty—continuous improvement in value for money. However, that is not necessarily the case. An authority that said that 454 it had regard to economy, efficiency and effectiveness in the context of seeking continuously to improve its services may not necessarily continuously improve value for money.
That authority may be far more concerned with the continuous raising of the level of service provided—even to the point where there are, effectively, diseconomies of scale or inefficiencies in the service provided—or with the way in which the quality of service is provided, while having regard to things like efficiency and economy, but none the less seeing the continuous improvement criterion as the driving consideration.
Labour and Liberal Democrat authorities are prone to move on quickly from a debate about value for money to a debate about how additional money can be spent in ways that will deliver additional services to the public. They may well take the view—they may well be wrong—that the additional service that they wish to provide represents a continuous improvement in that service. However, that may not necessarily deliver value for money. Although an authority may think about whether it can provide a service economically, that does not mean that that level of service represents necessarily greater value for money than that provided the year before. The authority may have moved to a standard providing lower value for money than that which applied before.
The redrafting of the best value duty—so that continuous improvement is expressed in terms of value for money, and not simply the way in which functions are exercised—cements the duty in a context which the local taxpayer would regard as appropriate. Taxpayers should not be at the mercy of an authority that is using the best value duty, and which says that it can continue to take the service to levels that are not justified by the value for money of what is delivered.
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My hon. Friend the Member for North Essex expressed the need to have regard not just to the three Es, but to ensure that each is given its due weight. "Having equal regard" would be the appropriate wording. If that does not happen, it seems perfectly legitimate—if not satisfactory—for an authority to have regard to economy in the delivery of its service, but to override economy in the interests of what it regards as effectiveness.
Amendments Nos. 50 and 57 deal with the same purposes, but the amendments tabled by my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) give effect to a different purpose, to which I am quite sympathetic. The hon. Member for Taunton seemed not to appreciate the circumstances in which the measure could apply. Happily, my district authority and county council routinely consult me, as a Member of Parliament, about the manner in which they exercise their functions before they set budgets. It is not necessary for them to do so—it is certainly not their duty.
Equally, county councillors are not necessarily consulted by district authorities before budgets are set, and district councillors are not routinely consulted by county councillors before budgets are set. Likewise, the "elected representatives" could well include representatives elected to parish councils who, in my experience, could offer an effective means by which the service that a district council provided to the people in its area could be assessed and consulted upon before a district authority set its budget.
455 In truth, elected representatives from parish councils would probably deliver a far more meaningful set of consultations to a district authority about how it should set its budget and balance its demands upon the taxpayer with the service that it provides than would a focus group or a representative sample of the electorate, who may well have a less complete understanding than parish councillors of the manner in which the district council relates to the local area.
The hon. Member for Taunton asked who would be the representatives of persons who were liable to pay non-domestic rates. Under the clause, that is left entirely in the hands of a best value authority to choose for itself. I was the representative of the British chambers of commerce at the time of the Local Government Act 1989, and it was largely at our instigation that we secured a statutory duty for local authorities to consult representatives of the business community—effectively, non-domestic ratepayers—in relation to the framing of local economic development plans. That is sometimes honoured more in the breach than in the observance, but it is still there, 10 years later, on the statute book.
This is an opportunity for the Minister to say who she thinks the representatives of persons liable to pay non-domestic rates would be, in any context. For my part, I hope that chambers of commerce and industry would be pre-eminent among those representatives. In practice, they are often the elected representatives of such persons—even though not every non-domestic ratepayer, by any means, in any given area would be a member of a chamber of commerce and industry. In almost every case, a non-domestic ratepayer can be a member of a chamber of commerce and industry. The articles of association of such chambers are designed to give local representation in relation to that class of person.
It would be helpful if the Minister made it clear that, if the Secretary of State is to issue guidance to best value authorities, that guidance may well direct those authorities to consultations with chambers of commerce and industry.
§ Dr. WhiteheadHon. Members have been a little kind about amendments Nos. 29, 30 and 33, which give an interesting insight into the mind of the right hon. Member for Bromley and Chislehurst (Mr. Forth) and, to some extent, that of the previous Government. It appears that he wants to nail everything down and have everything precisely defined but, as in the famous parable of the sorcerer's apprentice, everything goes haywire when one examines the detail.
As the hon. Member for Taunton (Jackie Ballard) pointed out, the amendments would leave the words
in respect of the authorityin subsection (2)(a) of clause 3, so the people referred to must be the councillors, and not other people as suggested by the hon. Member for South Cambridgeshire (Mr. Lansley), who has put a kind and sweeping interpretation on the intentions of the right hon. Member for Bromley and Chislehurst.Amendment No. 30 would have subsection (2)(b) refer to
elected representatives of persons liable to pay non-domestic rates in respect of any area456 but since the provision requiring that the local authority takes account ofpersons who appear to the authority to be representative of that groupwould be deleted by amendment No. 33, the authority would appear to have to consult anyone who pays non-domestic rates and is elected in any capacity whatever.Presumably, then, the local chamber of commerce, the Confederation of British Industry, the Federation of Small Businesses, the local ironmongers and anyone else who could claim to have elected anyone to anything should be exhaustively consulted. That is a nice ideal picture, but in my experience of local government the reality of the proper exercise of consultation has always been that people who appear to be representative of the various groups are invited to take part.
It would be perverse if, under subsection (3), the chamber of commerce, with its elected officers, did not appear to the authority to be representative. The local authority would be in some trouble if it did not accept that a local chamber of commerce was representative, but by trying to nail everything down exactly, the amendments would achieve precisely the opposite of what was in the mind of the right hon. Member for Bromley and Chislehurst, although, as I systematically fail to read his mind, perhaps that was not his intention after all.
It is interesting to note the boundaries of what the right hon. Gentleman thinks is appropriate. He does not appear to be interested in consumers, who are the subject of subsection (2)(c) and (d). Under the amendments, anybody could represent himself and no one would have to be elected. As amendment No. 33 would delete subsection (3), anyone could turn up and say whatever they wanted. The same applies to any amenity society or local group interested in the parks and commons, the old town or local history.
In the amendments, the right hon. Member for Bromley and Chislehurst has given us a little cameo of what happened under the previous Government, who tried to nail everything down so that authorities could not move at all, with such toxic side effects that relations between central Government and local authorities were widely poisoned.
The clause is designed to inject some flexibility into the relationship between the local authority and the groups representing those who pay the local taxes, which should properly be consulted about what the authority does. If the authority acts responsibly, that should be the end of the matter. It is a sad reflection on the quality of the Opposition's attempts to amend the Bill that the amendments, if accepted, would completely reverse that intention.
§ Ms ArmstrongAs my hon. Friend the Member for Southampton, Test (Dr. Whitehead) said, all the amendments would narrow the issue of best value. I appreciate the fact that the hon. Member for North Essex (Mr. Jenkin) moved the amendment in a probing manner, and I intend to respond in that spirit.
On amendments Nos. 50 and 51, we have consistently said that the duty of best value needs to tackle both the cost and the quality of public service provision. The amendments are clearly designed to improve auditability 457 but they seem to betray a fixation with cost to the detriment of other equally relevant considerations, such as quality.
I understand that Opposition Members might want to base the duty on value for money, given the Audit Commission's skill in assessing it, as has been demonstrated over recent years, but value for money is not in itself as easily demonstrated as continuous improvement against consistently set performance indicators. The question is begged, value for whom? Simple, measurable improvement is what local people expect and is the yardstick against which best value should be judged. Alongside that will go what local people are prepared to pay.
Amendments Nos.50 and 51 betray a narrow focus because they are couched in terms of services, not functions, as the clause currently provides. We have deliberately chosen to define the duty of best value in those terms, as the definition of functions goes far wider than that implied by the use of the word "services". It means that internal support functions, not normally delivered to the public, but nevertheless part of the overall cost of functions, and a contributory factor in their efficiency, will be subject to the duty of best value.
The amendments would run the risk of removing such functions from the scope of the duty altogether and recreating the "us and them" mentality in authorities that so bedevilled compulsory competitive tendering. The duty of best value will very often be measured against the quality and cost of front-line services, but the way in which it is defined in the clause allows us also to consider internal functions and the manner in which an authority is managed generally. That is the best and most comprehensive way in which to ensure that authorities improve their performance and make themselves more responsive to their community generally. I hope that the amendments will not be pressed to a vote.
As my hon. Friend the Member for Test dealt effectively with the problems arising from amendments Nos.29, 30 and 33, I will not dwell on them, especially as the right hon.Member for Bromley and Chislehurst (Mr. Forth) is not here.
Amendments Nos.57, 63 and 66 would alter the nature of the duty of best value by requiring authorities to have equal regard to each of the elements of economy, efficiency and effectiveness, rather than a combination of them. The hon.Member for Taunton (Jackie Ballard) supported that.
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I ask Opposition Members to consider carefully what the amendments would mean. Do they seriously believe that an authority that is already demonstrating a high level of effectiveness in a function, based on a comparison with others, should not be able in the future to concentrate its efforts on delivering a similar level of performance in the economy with which it delivers that function? We seek to maintain flexibility so that councils can make sensible decisions that arise from the information they get from performance reviews and audit reports about what they do reasonably well and what they might improve. We expect them to pay particular attention to areas that could be improved. That is common sense and, on reflection, I am sure that Opposition Members would agree.
458 Opposition Members seem to forget that we are dealing with many different authorities of different types. We want to celebrate those differences. None of them is likely to have exactly the same priorities and none of them will start from exactly the same level of performance. It is nonsense to expect that they would wish to adopt exactly the same approach to improving economy, efficiency and effectiveness, and nor should they be made to do so. The amendments would impose uniformity across the board and would remove local flexibility at a stroke. They fly in the face of what the duty of best value is designed to be about, which is making best value authorities more accountable to their communities. They are restrictive and rigid in the same way that CCT was and I urge Opposition Members to withdraw them.
§ Mr.LansleyI raised one particular question that the Minister has not addressed—what do the Government believe is the best mechanism for best value authorities to consult representatives of non-domestic rate payers?
§ Ms ArmstrongThe White Paper makes that clear. We have set out ideas for consultation on the non-domestic rate that are not simply mechanical but which obtain the support of the business community. We want to lock that community into a process that it feels gives it real consultation.Local authorities have a statutory duty to consult on their budgets. In some, the process works well and the business community is satisfied. However, in too many authorities, that is not the case. We want a clear process to be adopted in every area so that the business community is part of determining the process and agreement is achieved between the social partners—business and the local authority—about the precise mechanism to be employed. I hope that the Opposition will not feel the need to press the amendments to a Division.
§ Mr.JenkinI feel like Hamlet trying to persuade Polonius that a cloud has adopted a particular shape. I am pleased that we have had this debate, because we have exposed this part of the Bill as packaging and little more. I hope that the Minister will consider what she has said. She said that amendment No.57 would remove flexibility at a stroke and destroy the accountability at the heart of the Bill. That is the most ridiculous language to use about three lines of text. She said that the amendments were strict and rigid.
We have exposed the fact that this part of the Bill is gobbledegook. The real guts of the Bill are not contained in these airy-fairy objectives but come later in the provisions for powers of supervision, control and, ultimately, intervention. That is the purpose of the Bill and the airy-fairy language at the front is merely to persuade people that it is a good Bill. The Minister said, absurdly, that to talk of value for money is narrow minded, but most electors, when they vote in elections, regard value for money as the most important issue, although they may express that differently. For example, I am a cyclist and I regard good provision for cyclists by local authorities as good value for money, but other people have different views of what is good value for money. What is crucial is that the performance of local 459 authorities, when they undertake functions, should be measured so that we know whether they are getting value for money.
§ Mr.LansleyDoes my hon. Friend agree that, in our culture of continuous improvement, there comes a point in every type of business where the marginal cost of improving the service offered no longer yields value for money? The acid test of whether the duty in this part of the Bill will deliver value for money will be when a local authority seeks constantly to improve its service but gets diminishing returns. I suspect that that is what will happen.
§ Mr.JenkinI agree with my hon. Friend, but the point that he has neglected is that the Government want local authorities, as the providers of services, to aspire to best value, but the ultimate control comes from the council tax capping powers and the council tax benefit subsidy limitation. The control on cost ultimately comes from the other provisions in the Bill. I find it extraordinary that the Minister can use such extravagant language when to talk about which approach is better—a combination of economy and efficiency, or the need for an equal regard for economy, efficiency and economy—is to count the angels on a pin head.
We have exposed this part of the Bill as complete nonsense and the Minister, in her heart of hearts, knows that. The important provisions in the Bill are the powers of intervention that the Secretary of State will exercise over local authorities.Unfortunately, the Bill lacks any prescription over how the Secretary of State should exercise those powers, which is why it is such a dangerous Bill. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.