PROMOTION OF WELL-BEING (Hansard, 4 July 2000)

§ Mr. Don Foster
I beg to move amendment No. 95, in page 1, line 18, after "anything", insert— 'including, subject to section 3(2), the raising of money.'.

§ Mr. Deputy Speaker (Mr. Michael J. Martin)
With this it will be convenient to discuss the following amendments: No. 8, in page 2, line 6, leave out "or present". No. 9, in page 2, line 8, at end insert— '( ) A charge may be imposed in respect of anything which is done in the course of exercising the power under section 2(1).'. No. 55, in page 2, line 21, at end insert— '( ) Action taken by a local authority outside its own boundaries shall only be undertaken with the consent of the authority within whose boundaries the action is proposed to be taken.'. No. 11, in page 2, line 23, at end insert— '(7) Nothing in this part shall empower a local authority to engage in trade otherwise than is provided for by the Local Authority (Goods and Services) Act 1970'. No. 10, in clause 3, page 2, line 28, leave out subsection 2 and insert— '( ) The expenditure of a local authority under this Part in any financial year shall not exceed the amount obtained by applying the relevant provisions of subsections (4), (4AA), (4AB), (4A), (4B) and (4C) of section 137 of the Local Government Act 1972. 213 ( ) All expenditure under this Part shall be subject to the accounting and inspection requirements set out in subsection (7) of section 137 of the Local Government Act 1972.'. No. 212, in page 2, line 28, leave out subsection (2).
No. 96, in page 2, line 29, leave out "or otherwise".
No. 15, in clause 4, page 3, line 17, at end insert— '(4) A local authority may require other public bodies, whether statutory or voluntary, in its area to comply with and to participate in its strategy for promoting or improving the economic social or environmental well-being of their area.'. No. 97, in page 3, line 20, at end insert— '( ) No requirement imposed by this section restricts the exercise of the power under section 2.'.

§ Mr. Foster
I said earlier that Liberal Democrat Members, at least, welcome the new power to promote well-being which the Bill gives councils. There is, however, concern in many quarters about the financial arrangements for exercising that new power. The Government, rightly, are anxious to ensure that councils cannot, under the power, introduce new forms of taxation or other ways of raising money. That is covered explicitly in clause 3(2).
That subsection says, however: The power under section 2(1) does not enable a local authority to raise money (whether by precepts, borrowing or otherwise). There is concern that the words "or otherwise" provide the Government with a catch-all arrangement whereby any possible means of raising funds to pay for activities introduced under the power of well-being may be proscribed.
The general view is that it would be far better if the Government stated explicitly in the Bill which fund-raising activities they wish to proscribe and allowed local councils to use any other approach that they may deem appropriate. The problem is compounded by the fact that the Government are undertaking a major review of local government finance. At present, there is still considerable uncertainty about the outcome of that review and widespread concern that, although local authorities may be given a new power of well-being, they may find it difficult to raise the funds needed to carry out some of the activities that they believe are important.
Local councils might engage in activities in partnership with other bodies in their areas. Indeed, the Government rightly wish to encourage such activities, but there is confusion about the financial implications if such a partnership were to raise money and produce a surplus. Perhaps the Minister will consider the specific example of a partnership involving a local authority and other bodies that chose to establish a shop in a rural community. Would that shop be permitted to generate a surplus under the phrase "or otherwise" in clause 3(2)?
The purpose of amendments Nos. 95 and 96 is allow the Minister to provide greater clarification of the arrangements. She drew the Committee's attention to the powers under section 150 of the Local Government and Housing Act 1989 and suggested that section could represent the vehicle by which councils could use such powers. It is important that she clarify precisely how she believes that section could be used to deal with the problem.
Amendment No. 97 raises a separate point. Under the Bill, councils will be required to develop community strategies and to have regard to them subsequently in any 214 activity that they undertake. That makes perfect sense. However, the concern, which is best illustrated by the problems that occurred at the Rover plant in Birmingham, is that a council may wish to propose several activities that it believes are the right ones to undertake in response to a particularly difficult problem, but that they might not be covered in the strategy that the council has developed. Will the council have acted correctly if it develops activities that are not contained in the community strategy? Such activities may lead to legal challenges.
The purpose, therefore, of amendment No. 97 is to provide some comfort to councils that propose activities that are outside the community strategy, but which they believe are in the best interests of the people whom they serve. The Minister gave an assurance in Committee that it is perfectly legitimate for one to deal with an issue in a way not outlined in the community strategy. She accepted that the Government had to create legislation that deals with the real world and the way in which people act…—[Official Report, Standing Committee A, 11 May 2000; c. 96.] The problem is that councils may act in the best interests of the local community, but legal action may be taken against them for so doing. Amendment No. 97 would therefore provide some comfort for councils that attempt to act in the best interests of the people whom they serve.

§ Mr. Waterson
I shall of course speak to amendments Nos. 8, 9, 55, 11, 10, 212 and 15. My hon. Friends and I welcome the new power, as does local government in general. However, as we argued in Committee, we think that the Government's proposal is a smoke-and-mirrors exercise because no new money attaches to the new power. Ministers have made it abundantly clear that councils will be given no extra money to exercise the new powers and that, if any of them tries to use existing methods of raising money, it could get into difficulties with the capping regime. We have serious doubts about how effective or helpful local authorities will find the new power.
In the brief time left for this debate, I shall quickly speak to our amendments. Amendment No. 8 would remove the words "or present". As we argued in Committee, we think that councils are primarily elected to look after their local residents and council tax payers and that, under this extremely wide provision, councils would be allowed to use the power for the benefit of many different people and groups of people who happen to be in a council area at any given time.
In Committee, the Minister made the fair point that, every day, many thousands of people travel in and out of the constituency of my right hon. Friend the Member for Cities of London and Westminster (Mr. Brooke). However, in more typical council areas, there may be concerns about whether such powers will extend to asylum seekers, travellers and tourists and about how they tie in with the council's other responsibilities. Commuters are one thing, but travellers may bring a series of other concerns.
Amendments Nos. 9 and 10 deal with the vexed matter of charging. There is a strong feeling across local government that there should be greater freedom to charge for services, especially discretionary services that councils are not obliged to provide. The Minister was broadly 215 constructive in Committee and talked about consulting widely and drawing the matter into the process surrounding the Green Paper on local government finance. Although we are happy with that up to a point, some issues should be addressed sooner rather than later, because councils face the problem now. Both sides of the Committee accepted that it would be some time before the Government could produce proposals, consult on them and put them into law.
A ray of sunshine is the possibility, which the Minister mentioned in Committee, of using powers under section 150 of the Local Government and Housing Act 1989, to which the hon. Member for Bath (Mr. Foster) referred. The Local Government Association's latest briefing on the Bill states: We would welcome assurance from the Minister that, if necessary, the Section 150 powers will be used to provide a temporary solution during the interim period while we await a Local Government Finance Bill. It would be helpful if the Minister gave such an assurance today.
One of the councils that has been proactive on the issue is City of Westminster. In one of its briefings, it states that there is a compelling and powerful argument that if a local authority is not obliged to provide a service, then it should be entitled to charge for it if it does. We take the view that that is a fair approach. Lest it be thought that it represents a sectional view held only by Conservative-controlled authorities, in its helpful briefing to the Committee the Local Government Information Unit said: The recovery of costs, or making a charge for services, will be important issues. We have concerns about the impact of this clause… We believe that councils need the assurance that they will be able to adopt suitable means of recovering their costs. 6.30 pm
Amendment No. 55 is self-explanatory: Action taken by a local authority outside its own boundaries shall only be undertaken with the consent of the other authority. That strikes me as perfectly unexceptional, so I was surprised that the Under-Secretary of State for Wales, in an otherwise courteous and friendly reply, came up with no conclusive answer. He certainly did not say in Committee that the Government would do something about that matter, which is odd, because the Minister in the House of Lords said that he was happy to go away and look at it. Perhaps the Government's thinking has moved on.
Although time does not permit a detailed debate now, we also touched on whether councils will be allowed to trade under the new power. The Minister's answer seemed to be that they will, but will not be able to charge for doing so. She said that local authorities will be able to supply goods and services to other bodies, provided that they are satisfied that that comes within the terms of the promotion of well-being. However, they will not be able to charge for them.—[Official Report, Standing Committee A, 9 May 2000; c. 76.] Amendment No. 212, which would leave out clause 3(2), is one of the most significant of our amendments. Again, it is important to recognise that the Minister in the Lords and Ministers in Committee made 216 it clear that there is no question of extra money being provided for the new power or, indeed, of allowing councils to raise more money through the council tax. There is still a question mark over charging. I shall not quote what the Minister said in Committee at length; in a nutshell, the answer is that councils that want to take advantage of the new power will be required to strip the money out of other budgets for other purposes.
Amendment No. 15 makes it abundantly clear that councils will be the leaders in their communities in taking advantage of the new power and that other bodies will have to co-operate with them and comply with their plans. Councils across the country—of all political persuasions—want that important issue to be clarified in the Bill. I hope that the Minister can give us that assurance in the time available.

§ The Minister for Local Government and the Regions (Ms Hilary Armstrong)
We remain firmly opposed to the idea that central Government should dictate what authorities can spend on community well-being. That is a judgment for authorities and their communities, to which they are accountable. For that reason, we recommend that the House oppose amendment No. 10, which would impose spending limits similar to those that currently apply under section 137 of the Local Government Act 1972.
The hon. Members for Bath (Mr. Foster) and for Eastbourne (Mr. Waterson) suggested that the power will be effectively limited because it will not of itself allow authorities to raise finance. I can assure the House that the prohibition on raising finance in clause 3(2) is not intended to limit what authorities can do for the well-being of their areas. Local authorities will be able to finance activity under the well-being power from council tax resources, redistributive non-domestic rates, borrowing charges and revenue support grant. In other words, any legitimate income can be spent on the power, but it will not be possible for the power to be used of itself to raise new taxes. That is what we are dealing with here.
We have already accepted that local authorities should have greater scope to charge for discretionary services, but that needs to be looked at carefully. At present, authorities cannot trade, except under the terms of the Local Authorities (Goods and Services) Act 1970.