Grand Committee Report of 10 May 1999

Official Report of the Grand Committee on the Local Government Bill
Monday, 10th May 1999.
The Committee met at half past three of the clock.
[The Deputy Chairman of Committees (Lord Strabolgi) in the Chair.]
The Deputy Chairman of Committees (Lord Strabolgi): Before I put the Question that the Title be postponed, it may be helpful to remind your Lordships of the procedure for today's Committee stage. Except in one important respect, our proceedings will be exactly as in a normal Committee of the Whole House. We shall go through the Bill clause by clause; noble Lords will speak standing; all noble Lords are free to attend and participate; and the proceedings will be recorded in Hansard.
The one difference is that the House has agreed that there shall be no Divisions in the Grand Committee. Any issue on which agreement cannot be reached should be considered again at the Report stage when, if necessary, a Division may be called. Unless, therefore, an amendment is likely to be agreed to, it should be withdrawn.
I should explain what will happen if there is a Division in the Chamber while we are sitting. The Committee will adjourn as soon as the Division bells are rung and will then resume after 10 minutes.
Title postponed.
Clause 1[Best value authorities]:
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No.1:
Page 1, line 9, at e-id insert ("so long as budgets to spend a sum exceeding £500.000 per year for the year commencing 1st April 2000")
The noble Lord said: In rising to move this amendment I should confess to some hesitation about doing so knowing that this subject was debated fairly thoroughly in the other place, and knowing also that the Government intend, by regulation perhaps, to do something along the lines of my amendment. The Minister, however, will by now understand me sufficiently well to know that I do not like proceeding by regulation when it is possible to proceed on the face of the Bill. That is the reason I have put down the amendment.
The duty of best value imposes some really sophisticated and administrative procedures which will of themselves be quite expensive on best value authorities. With regard to the list of authorities that are to be best value authorities, Clause 1(2) states,
"In relation to England local authority in subsection (1)(a) means—
(a) a county council"
County councils comprise vast organisations so there is no problem there. District councils, again, generally speaking, comprise big organisations. However, as regards a parish council, we are getting down to the building blocks of democracy. That is even more the case as regards a parish which does not have a separate parish council. At the moment under the Bill those are best value authorities and subject to all the administrative rigours of best value procedure unless under Clause 2 the Secretary of State exercises his power by order to disapply.
My amendment may not be quite adequate to persuade the Minister that he ought to include it on the face of the Bill, because, on thinking about the matter further, I realise that I have not provided for the fact that he might wish at some point in the future to extend his power to disapply. It seems to me that is the only reason one would wish to exercise a power to disapply in this regard. In the light of experience, for instance, it might be revealed that the duty of best value is too expensive and too complex for authorities spending £1 million, or possibly even greater sums than that at some point in the future. Certainly the concept would not apply as regards a new category of authority because I believe that if a new category of best value authority were to be created that would of itself require primary legislation anyway. Therefore the only debating point concerns the question of what is a reasonable sum. If we were in a position to make some provision for adjustment in the future—although no amendment to that effect appears on the Marshalled List—the Minister might well be able to accept the amendment. On that basis, I beg to move.
Baroness Hamwee: Perhaps I may support the noble Lord, with possibly less hesitation than he showed, as this was a point on which my colleagues in another place tabled amendments during the proceedings on the Bill there. At that time, the Minister told my honourable friend the Member for Taunton that the Government were still having meetings and were discussing the problem with the National Association of Local Councils and others. She said that there would he later opportunities for further amendment. I hope that the Minister can use this opportunity to bring the Committee up to date as to the outcome of those discussions, which would obviously help us to consider whether an amendment might be made at a later stage in this House.
The solution suggested by the noble Lord, Lord Dixon-Smith, of a minimum sum written onto the face of the Bill with the opportunity for that to be increased seemed to be an appropriate way of dealing with the matter. The noble Lord explained the strains and problems for small authorities. I share the feeling of all noble Lords that it might not be good use of public money for a small local authority to have to go through the procedures provided by the Bill.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty): I am grateful for the way in which the amendment has been proposed. However, the noble Lord, Lord Dixon-Smith, made clear what was likely to be one of my objections to it.

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It is true that the Local Government White Paper published last summer suggested a figure of £500,000 as a possible de minimis level for best value authorities. That is because, as both noble Lords have indicated, a statutory duty applied to every parish council and town council would be onerous. Only a very small number of town and parish councils would be over that £500,000 mark. We are considering whether this is indeed the appropriate level. We have consulted with the National Association of Local Councils and others on the matter, and our general view is that this level would indeed strike the appropriate balance.
As proposed in the White Paper Local Voices, issued by the Welsh Office in July last year, the National Assembly for Wales will, following discussions with local authorities, determine the level at which the duty of best value will not apply to best value authorities in the Welsh context.
The amendment places a figure on the face of the Bill without allowing for it to be amended. There could be a different situation in Wales from in England. It is not normal in legislation to provide a figure which is not alterable in changing circumstances. As the noble Lord's amendment stands, it would remove the capacity to change that de minimis level in the future. Setting the figure by order, as we do at present, would provide us with that flexibility and, taken together with the Government's declared intention in the White Paper and since, would meet the point of removing the burden of best value in total from the smaller authorities. The noble Lord has recognised that, in its present form, that would not be appropriate. I therefore ask him to withdraw the amendment.
Lord Dixon-Smith: I am grateful to the Minister for his reply, albeit that it was a somewhat disappointing one, given my instinct that we should put as much as we can on the face of Bills and not leave matters to chance.
Perhaps I may first get rid of one canard in his remarks. He implied that Wales might do something different from England and that, implicitly, that might be a bad thing. I am interpreting, but it is implicit in what has happened both in Wales and in Scotland that differences should arise. That has to be accepted, and therefore any debate as to what might or might not happen in Wales has, it seems to me, no relevance to this specific discussion. I would have preferred a more direct answer to what the Minister has had to say, and I wonder if he could perhaps answer the question as to whether, in the light of the consultations that the Government have had, they are considering the possibility of putting down an amendment. I should like to have some definite conclusion before I decide exactly what I wish to do in the future. But in the meantime I shall obviously consider what the Minister has said.
Lord Whitty: I wish to make it absolutely clear that, in so far as the devolution settlement allows the Welsh Assembly to come to a different conclusion in conjunction with its own local authorities, that is fine by me. The point I was making was that if they were, then providing a single figure on the face of the Bill would
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not be appropriate. In response to the noble Lord's main question, it is his general view that such figures should be on the face of the Bill. It is not, however, the general practice in legislation where it is known that the figure could change simply through the matter of inflation. I am sorry to disappoint the noble Lord, but it is not our intention therefore to come forward with a later amendment.
Lord Thomas of Gresford: The exchange that has taken place has been very helpful because it has illustrated at the very beginning the point that I wish to make with regard to the powers of the Welsh Assembly. By the way the Bill is drafted, from time to time caveats and cautions will be registered about what happens in Wales. It seems to me that the whole structure of the Bill ought to have been considered more carefully.
This is the very first Bill which has been brought forward where the Welsh Assembly's powers are to be taken into account. We have, for example, the noble Lord, Lord Dixon-Smith, saying,"The differences as to what happens in Wales do not concern me". However, they concern Wales. A very simple and sensible way to do it, as the Government have reserved to Westminster primary legislative powers for Wales, is to have a separate Bill for Wales. As it is, we find what I regard almost as an insult in Clause 28 of the Bill, where at each reference to the Secretary of State there should be substituted a reference to the National Assembly for Wales. There are exclusions and limitations in the Bill. For example, Clauses 15 to 17 and Clause 26 are excluded. Some of the items we are discussing in Clause 1—namely, subsections (1)(d) and (e)—are excluded and other items in that list are not excluded from Wales, such as the London Fire and Emergency Planning Authority which obviously have nothing to do with Wales. It is a complete mix-up of the primary legislative powers which concern the Welsh Assembly and those powers which concern English authorities only.
There is even a difference in Clause 1 about which authorities are concerned. And if I can be a little relevant to the subject of the amendment, the local authorities referred to in relation to Wales,
"a county council, a county borough council or a community council"
are clearly organisations for which one would expect to have a budget in excess of £500,000, but that limitation would exclude the parish meetings to which the noble Lord, Lord Dixon-Smith, referred.
Right at the very beginning of the detailed consideration of this Bill, this conflict between the considerations that relate to Wales and those which relate to English local government and other authorities emerges. I shall be making this point at a later stage of the Bill.
Lord Dixon-Smith: After that debate I will consider what the Minister has said, and for the moment withdraw the matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
3.45 p.m.
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No.2:
Page 1, line 20, at end insert—
("(k) a Regional Development Agency")
The noble Lord Kid: We are immediately into another very dangerous field because this is the point at which this particular Bill impacts on yet another Bill which has only just arrived before this House. I suppose that consideration of that Bill will take a great deal more time than consideration of this one. In fact, we have here three amendments. The first is a matter of consistency. If we include the London development agency here, I have some difficulty in understanding why we do not include the regional development agencies in this particular category. I have tried to understand whether the regional development agencies were precursors for the London development agency, or whether it was the other way round and it just happened that the legislative programme went in a different direction.
I accept that, unusually, the London development agency is going to be part of the Greater London Authority, whereas of course the regional development agencies are established on a rather separate basis. It seems to me that the concept and principles of best value, if they have validity, have validity in rather wider spheres than purely those of local government. Therefore, I have no hesitation in moving the first amendment in this particular group.
Is it appropriate! that I speak to the other two amendments in the group at this time?
The Deputy Chairman of Committees: Yes.
Lord Dixon-Smith: The second one in fact seeks to establish the Greater London Authority in its entirety as a best value authority. Subsection (2)(d) has a peculiar way of expressing the aspect of London that is subject to the duty of best value. It states,
"the Greater London Authority so far as it exercises its functions through the Mayor".
One way out of this would appear to be for the mayor to decide not to exercise any functions, unless it is those as defined in the Bill. If he can delegate. he can delegate the duty of best value out of existence.
I have some difficulty, therefore, with that particular proposal. Again, if best value has a genuine reason for being, there seems no reason why it should not apply across the Greater London Authority. After all, if one looks down the list of authorities which are included, among which are the London Fire and Emergency Planning Authority, Transport for London, the London Development Agency and police authority, there is precious little of the Greater London Authority remaining that is not already in the Bill. I find this annotation in subsection (2)(d), therefore, rather strange.
The third amendment in the group simply removes Clause 2(4), which provides that,
"The Secretary of State may by order provide for the Greater London Authority to he a best value authority for the purposes of this Part in relation to".
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Therefore, what I am proposing is on the face of the Bill already, but written in a rather longer format. My amendment would merely simplify matters somewhat. I beg to move.
Baroness Hamwee: I, too, was perplexed by the reference to the London development agency, but not regional development agencies, until I read the proceedings in another place and realised that this is because of the status in the health scheme of the local government finance system. I understand that the difference is that the London development agency will be a precepting authority. I dare say that some noble Lords will have comments to make about that when we debate that Bill.
I noted, too, that the comment was made by the Government in another place that NDPBs funded by central government and subject to audit arrangements are subject to what they described as satisfactory arrangements to safeguard probity and value for money. The Minister there was right to refer to quangos and how they deliver their functions. However, local authorities, too, are subject to audit; they are also subject to the ballot box, as we have seen in the past few days.
I would hope that so far as concerns the Greater London Authority, there might be a possibility of finding a more straightforward way to express this remarkably convoluted concept. I am aware that the Government want the Bill to be flexibly drawn to allow for the different ways in which the GLA is to deliver its functions but I do not believe that this clause would pass the plain English test. It has taken me—and others, I know—many readings to try to understand it and I am not entirely sure that I understand it yet.
Lord Bridges: I support Amendment No.2 moved by the noble Lord, Lord Dixon-Smith, which seeks to include regional development agencies in the list in Clause 1. These agencies were set up under a recent statute. They are not supported, as was originally intended, by elected members in a separate council. The requirements that are set out in the Title of the Bill relating to economy, efficiency and effectiveness could appropriately be applied to the regional development agencies. I support the amendment.
Lord Harris of Haringey: I would have some sympathy with the objectives of the amendments in relation to regional development agencies if that were part of a general approach considering the involvement of all public authorities in best value. However, regional development agencies outside London in many ways constitute "unfinished business" in that they do not relate to an elected authority, whereas the regional development agency in London, the London development agency, will be accountable to a directly elected mayor. That is a distinction which I believe is important and one of the reasons the Bill is placing the London development agency within the ambit of best value, because the London development agency will be acting as part of an authority, an authority which will be precepting from council tax payers across London. The same principles therefore ought to apply to the

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activities of the London development agency as would apply to any other service for which Londoners are paying through council tax. For that reason I believe that the amendment as drafted is not particularly helpful.
I will not pass judgment on the other amendments because I shall be interested, too, in hearing the precise definition that the Minister is about to give in relation to the responsibilities of the Greater London Authority. It may well be that no functions whatsoever in respect of the delivery of services will be delivered other than under the aegis of the mayor, or the agencies accountable to the mayor. In that case, while I accept that this is not perhaps the simplest way of expressing the concept, it none the less covers all the points that might need to be made.
Lord Whitty: The noble Lord and others have described the complexities of a Bill which has just finished its proceedings in another place and will not be with us until next week. This Bill is attempting to make provision for it. Whether in my reply now I can reduce all of that to standard, plain English I am not entirely sure; I will make an attempt.
As far as regional development agencies outside London are concerned, they are not part of the local authority structure, and the Bill deals with the local authority structure. The Committee will understand that the London development agency is a different case. It has been identified as a best value authority because it will, as the noble Baroness said, be a precepting authority on the Greater London Authority and will be within the total ambit of the local government finance system and therefore within the scope of the best value provisions of the Bill.
Other regional development agencies are not in that position. They are the equivalent of non-departmental public bodies. They will be funded by central government grant-in-aid, and they are accountable to the Secretary of State and then to Parliament. Moreover, their financial arrangements will be set out in financial memoranda and they will be audited by the National Audit Office.
Like other non-departmental public bodies, RDAs will be subject to periodic financial management and policy reviews. Arrangements are therefore already in place to safeguard probity and value-for-money considerations in respect of the non-London RDAs. Those powers are contained in the Regional Development Agencies Act 1998. I hope that explains why we cannot accept Amendment No.2.
Amendments Nos.5 and 6 relate to the position of the Greater London Authority under the best value regime. Amendment No.5 would have the effect of subjecting all the functions of the GLA to the general duty of best value and not just those corporate functions that are exercised through the mayor.
Noble Lords will have noted the particular way in which the Bill provides for the duty of best value to be applied to the GLA. In Clause 1 the GLA is identified as a best value authority
"so far as it exercises its functions through the Mayor".
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Subsection (4) of Clause 2 provides for the duty to be applied to functions not exercised through the mayor, and functions of another best value authority.
The Government believe that the GLA should be subjected to the duty of best value throughout; but the way in which the duty of best value is applied needs to be flexibly drawn in order to take account of the different ways in which the GLA exercises its functions and its relationship with the four functional bodies that will deliver the main London-wide services, namely, the London Fire and Emergency Planning Authority, Transport for London, the London Development Agency and the Metropolitan Police Authority.
The Bill needs to be sufficiently flexible to cater for different internal working arrangements and to ensure that as much of the GLA's normal work as possible is subject to the duty of best value. Clause 2(4) achieves that by allowing the Secretary of State to provide by order the duty of best value, to be applied to any function exercised by the GLA other than through the mayor, and to any role it plays in respect of the functions of other best value authorities; for example, setting the strategy for Transport for London, which is itself a best value authority.
This approach to creating a duty of best value for the GLA takes specific account of the range of different relationships that will exist between its constituent parts. They will ensure as far as possible that accountability for delivering best value will attach to the bodies responsible for carrying out the various functions. Those bodies specified in the Bill are separately audited and separately accountable.
Accountability for the duty of best value needs to be equally clearly drawn, so that there is no doubt where responsibility lies for delivering it. The combination of provisions included in the Bill allows us to ensure that that will be the case. We shall, of course, be prepared to assist the GLA and its various functional bodies by means of guidance should that prove necessary.
A simple application of best duty to the GLA corporately, as is the intention of Amendment No.5, would prevent those aims from being achieved satisfactorily. We run the risk of blurring the lines of accountability if the application of the duty of best value is not clearly prescribed. The Bill as drafted gives us the ability clearly to identify the separate roles of the mayor, the assembly and the functional bodies. A simple corporate application of the duty would not allow us to do so; it would detract from the lines of responsibility and the transparency that we seek.
I hope that that is a clear enough explanation for the noble Baroness, and I hope that the noble Lord will not feel the need to press these amendments.
Baroness Miller of Chilthorne Domer: I am sorry that the Bill will confirm the regions as "second-class citizens". I accept the fact that they will not have assemblies at present to which their RDAs will be accountable. But the Bill seems to confirm the position of the RDAs as even less accountable, as no duty of best value will be applied to them.

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Should the Government proceed—as I hope they will, particularly in those regions that are making progress towards elected assemblies—how can the duty of best value then be added to apply to RDAs should there be elected assemblies in the regions?
Lord Whitty: The Bill does nothing to change the status of the regional development agencies as they were taken through the House a few months ago. As my noble friend Lord Harris indicated, and as the noble Baroness, Lady Miller, is implying, some of this may well be unfinished business. However, for the moment the RDAs are non-departmental public bodies and have no other form of democratic accountability, except through the Secretary of State and to Parliament. That will remain the situation unless and until we create a form of accountability via regional assemblies on a more democratic basis than currently.
That may well be desirable in the long run. However, it is not the subject of the Bill and the form of accountability and best value which would apply to such regional authorities, were they to be established, would be a matter for subsequent legislation not currently in the programme.
All that is to play for at a much later stage. The London Development Agency, however, is part of the general structure for the Greater London Authority Bill, which will be with as shortly. It needs to be identified separately in the Bill as regards, for example, the Metropolitan Police. Authority and the Fire and Emergency Authority in London, which we have done. We believe that, despite the initial reaction to seeing those authorities and agencies listed separately, it is much clearer in terms of management responsibility in applying best value in practice.
4 p.m.
Baroness Hamwee: Am I right in thinking that as regards the relationship between RDAs and regional assemblies, if we have them, best value duties should await that legislation? I am not a particular fan of order-making powers, but it might be possible to provide for an order-making power for regional development agencies within the Bill, which would save some primary legislation. However, with regard to the GLA, oddly there is an order-making power in the Greater London Authority Bill for the best value duties. Have I analysed that correctly?
Lord Whitty: Not entirely. The Greater London Authority Bill will deal with the whole structure and financial control of local government within London, including all the separate agencies and their separate responsibilities. This Bill deals with applying best value throughout local authorities in England and Wales, including the GLA and its various manifestations. It is, therefore, sensible that best value in relation to local government is prescribed within the Bill.
The Government have a wider agenda. In our recent publication, Modernising Local Government, we have indicated that we would expect best value to apply throughout the public sector. There are already auditing and performance requirements for the RDAs as there are
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for other non-departmental public bodies, but their line of responsibility for delivering goes via the Secretary of State to Parliament, not via a local authority, and the Bill deals with local authorities.
Lord Dixon-Smith: I am grateful to the Minister for his reply which went into the subject with very great care and in considerable detail. I accept that we still have this massive Bill to come before us and, to a certain extent, what we are discussing here today is peripheral.
Although the Minister's reply was helpful, I shall need to study it with some care before I am absolutely certain of that fact. If we have somewhat obscure lines of communication within the Greater London Authority, the Bill must take account of that. With the opportunity to study what the Minister has said, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Maddock Baroness Maddock: moved Amendment No.3:
Page 1, line 20, at end insert—
("() an energy conservation authority, as defined in section 1(1)(a) of the Home Energy Conservation Act 1995")
The noble Baroness said: In moving Amendment No.3 I shall speak also to the three amendments grouped with it. The purpose of the amendment is to ensure that matters are included on the face of the Bill which are the responsibility of energy conservation authorities as defined under Section 1(1)(a) of the Home Energy Conservation Act 1995 and also that other public bodies concerned with the provision of and standards in housing—the Housing Corporation and Housing for Wales—are also included. Having listened to the discussion on previous amendments, I suspect that the Minister will make some similar points about the Housing Corporation and Housing for Wales as he has made in relation to regional development agencies. I await the Minister's reply.
Perhaps at this point I should declare an interest. I was the sponsor of the Bill which became the Home Energy Conservation Act 1995 and also, through the Energy Saving Trust, I have chaired a committee ever since, which has distributed grants under the Home Energy Conservation Act.
With regard to Amendments Nos.2 and 3, it may be helpful if I refer to the duties for local authorities set out in the Home Energy Conservation Act. I have explained Amendments Nos.3 and 4, but amendments to Clause 15 seek to ensure that, for energy conservation authorities and for the Housing Corporation and Housing for Wales, when the Secretary of State puts forward any orders to modify enactments and confer new powers, these bodies are included. If I now explain the duties under the Home Energy Conservation Act, it will be clear to Members of the Committee that this is very relevant.
Briefly, under the Home Energy Conservation Act, energy conservation authorities are required to consider all practical, cost effective and likely measures that will result in significant improvements in energy efficiency in residential accommodation. That is very important when we are talking about best value, because they have

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to ensure that they include an assessment for the cost of any of these measures. They also have to include statements of policy related to looking after people's circumstances—this concerns fuel poverty and those who find it difficult to pay their bills.
There are also other duties. Energy conservation bodies have to publish reports and send reports to the Secretary of State to say how they are progressing with the implementation of measures in their area and they have to have regard to any guidance by the Secretary of State. The Secretary of State also has duties under the Bill. The one that is most relevant to our debate today is that he has to take such steps as he considers desirable in order to assist with, and to encourage others to assist with, measures set out in such a report of energy conservation issues. Everything in the Bill regarding best value is highly relevant.
The Government recently published a report of this fact, the conclusion and summary of which give a very good back-up argument to the amendments before us today. In the light of that report, they are very helpful amendments to the Government in carrying out what should happen after three years of the Act being in force.
In their conclusion, the Government confirm that the Home Energy Conservation Act is an important piece of legislation. In conjunction with other energy efficiency policies in the United Kingdom, it will bring about real financial savings, improvements in conditions and affordable warmth for all householders and the community as a whole.
The Government recognise that the potential for the Home Energy Conservation Act is wide-ranging and considerable. Further, they say that it should not be unduly expensive for authorities to take forward at a local level if tackled in an appropriate way through partnerships—again, that is very relevant to the Bill before us today. However—and this is another important point—it is unfortunate that evidence suggests that the potential has not yet been realised. That is why it is important that in this legislation the Government provide for the Home Energy Conservation Act to encourage authorities in some good work. Although enthusiasm and activity among many authorities has gone a long way, there is much more to be done. I believe that by having these amendments on the face of the Bill we could back that up.
The Government have said that they are committed to energy efficiency and to the Act. They have put a good deal of money into it in recent years and there are promises of more to back up the work of energy conservation authorities. I hope that the Minister will find these amendments helpful. If he cannot accept them today, perhaps when we reach the later stage of the Bill he can bring forward an acceptable amendment to back up what I believe was great commitment in the report published last month. I beg to move.
Baroness Farrington of Ribbleton: I fear that Amendment No.3 and the other amendments grouped with it are based on a misunderstanding of how best value authorities have been defined, and how far the
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powers and duties of the best value regime extend. However, I hope to clarify the position in order to reassure the noble Baroness, Lady Maddock.
Amendment No.3 seeks to extend the list of best value authorities set out in Clause 1 to include energy conservation authorities as defined in Section 1(1)(a) of the Home Energy Conservation Act 1995. This is not necessary because these energy conservation authorities have already been identified as best value authorities, albeit under another name. For the purposes of Section 1(1)(a) of the 1995 Act, an energy conservation authority is defined as "a local housing authority". That means a district council, a London borough council, the Common Council of the City of London or the Council of the Isles of Scilly. All these authorities are already identified as best value authorities in Clause 1.
It is important to recognise that the duty of best value will apply to all the functions of best value authorities. It will not override the existing statutory duties of those authorities. Rather, it will raise standards generally and will bring improvements to the way those duties are carried out.
Amendment No.73 would consequently enable the Secretary of State to make orders under Clause 15 requiring any person to provide information to energy conservation authorities, where such authorities are best value authorities. The Bill gives the Secretary of State and, where appropriate, the National Assembly for Wales, wide powers to remove obstacles to the achievement of best value authorities. This is done by the Bill acting as a framework, through which these powers can be exercised. However, acceptance of Amendment No.73 would give the Secretary of State powers to make orders laying burdens on third parties not subject to the duty of best value, to supply information to energy conservation authorities.
We can understand the noble Baroness's wish to ensure that energy conservation authorities receive all the information they need to fulfil their duties. However, Amendment No.73 would lay duties on other parties and it would be inappropriate to include references to them in this Bill.
The noble Lord, Lord Thomas of Gresford, may wish to note that I shall return to the subject of Housing for Wales in a moment, but implementing Amendment No.4 would subject the Housing Corporation and Housing for Wales to the provisions of Clause 3 (the general duty) and Clause 15 (power to modify enactments and confer new powers). Amendment No.74 would enable the Secretary of State to make orders under Clause 15, conferring on the Housing Corporation and Housing for Wales, powers to issue guidance advising registered social landlords about energy efficiency standards. Taken together, Amendments Nos.4 and 74 would mean that the Secretary of State would be able to give the Housing Corporation and Housing for Wales powers to issue guidance to registered social landlords.
While I can appreciate that the noble Baroness would want the duty of best value to be drawn as widely as possible, we must resist Amendment No.4 because it goes beyond what we are seeking to achieve through the

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Bill. The purpose of the Bill is to apply the duty of best value to local authorities and other bodies within the local government finance system. This does not include the Housing Corporation or Housing for Wales.
I return to the issue of Housing for Wales and hope that Members of the Committee will forgive me for using the term as a kind of shorthand. It is necessary to point out that Housing for Wales no longer exists as an organisation. The functions transferred to the Secretary of State for Wales last November and will thus become the responsibility of the National Assembly from 1st July. The Housing Corporation is of course a non-departmental public body, sponsored by the Department of the Environment, Transport and the Regions. It is subject to the control disciplines common to all such bodies anti its activities are scrutinised by the department. its auditors, the National Audit Office and by Parliament.
The corporation is committed to promoting best value for registered social landlords and issued challenging and comprehensive best value guidance to housing associations in February. This complements the work of the department in promoting best value in the local authority sector. Amendment No.74 attempts to give the Housing Corporation and Housing for Wales powers which will impinge on third parties; namely, registered social landlords. I can understand the noble Baroness's wish to ensure there is the widest possible dissemination of information about energy efficiency issues, especially to landlords. However, such persons are not subject to the duty of best value and I must stress again that it would he inappropriate to include references to them in the Bill.
I take this opportunity to assure your Lordships that the Government are committed to energy efficiency and recognise the extremely important role of local authorities in promoting energy efficiency to their communities. I apologise for the length of the explanation. I hope that the noble Baroness will feel able to accept my assurance and will withdraw the amendment.
4.15 p.m.
Baroness Hamwee: The Minister said that challenging aims were issued. I am not sure whether she said,"by way of guidance"; I may have missed precisely the status of what was issued to housing associations earlier this year. Can she tell the Committee whether that is to make its way into legislation in any form? These amendments are an attempt to even up the situation between loyal authorities, in their capacity as housing authorities, and registered social landlords, who are increasingly taking over the responsibilities. The issues are not necessarily different, though I accept that the route to reaching them may be so.
Baroness Farrington of Ribbleton: The ways in which they are different are probably most clearly defined as dividing those that are bodies coming within the ambit of the local government finance system and those outside it. It is guidance to a non-best value authority and there are no current plans to legislate on that.
Baroness Maddock: I thank the Minister for her comments. I recognise that I was possibly pushing my luck to say something on energy efficiency. But it is a matter dear to my heart, as I am sure the Minister will understand.
I am slightly concerned, as is my noble friend, about the situation regarding registered social landlords and best value in housing. The Minister will he aware that in some cases housing associations, under the Housing Corporation, are providing services to tenants in social housing; in some cases they are doing so on behalf of the local authority. Whether that happens on a wider scale depends on future developments, but it is happening at present and there is great concern on the Opposition Benches about the muddle surrounding that.
If a local authority has its own housing and will no longer apply CCT but best value, that is fine. However, if the local authority employs someone else—a registered social landlord—to run its housing, as happens, for example, in Mendip, the situation is different. Although I accept what the Minister has said about the categories of body included in the Local Government Bill, there is still a big question to be answered. It is not satisfactory merely to refer to "different bodies". We need to know from the Government how they intend to deal with this matter. There will be different situations in different authorities.
I am grateful to the Minister for clarifying the situation in Wales. As my noble friend Lord Thomas of Gresford said earlier, the Bill is slightly confused as regards the role of Wales. We now know exactly where we are in relation to housing in Wales. We very much welcome the fact that it will be people in Wales who will make that decision about what happens and not ourselves.
In the light of those comments—
Baroness Farrington of Ribbleton: I wonder whether it would be helpful to the noble Baroness. Lady Maddock, if I offered to write to her regarding the specific point about direct responsibility for services and the use of an agent in service provision. I apologise yet again: Wales is on the cusp at present in terms of the way in which legislation is dealt with and decisions are taken. No one could be more delighted than I am that the Welsh are achieving their Assembly.
Baroness Maddock: I thank the Minister for those further comments and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos.4 and 5 not moved.]
On Question, Whether Clause 1 shall stand part of the Bill?
Lord Thomas of Gresford: Perhaps I may take this opportunity to make my point again—but finally, in case I am accused of whingeing for Wales. Let us look at the Assembly that has just come into being. All 60 members are gathering together; in a week or two, all vi ill be sweetness and light, and partnership politics will have taken over from adversarial politics—so we are told. When the members have sorted all that out, they will

15
say,"Well, what do we do next? Let's look at the first Bill that has gone through Westminster that refers to both Welsh and English interests." They will pick up that Bill and, with the greatest respect to very experienced legislators who are present, the noble Lord, Lord Dixon-Smith, and my noble friend Baroness Hamwee will have caused them difficulty. They cause us all difficulty on Clause 1. It is simply not possible to analyse Clause 1 distinctly to determine the matters to which the Assembly will turn its attention.
A separate White Paper has been published by the Welsh Office on this issue, so separate consideration has been given to Wales. That advice will be available to the Welsh Assembly in due course. Why can that not be followed by a separate Bill? Instead of having puzzled legislators in Cardiff examining this dog's dinner, why can there not be a Welsh Bill to give the Assembly a flying start? If it is to be said that no legislative time is available in Westminster for primary legislation for a separate Welsh Bill, the answer is quite simple: give primary legislative powers to the Welsh Assembly similar to those that exist in Scotland.
Lord Whitty: I join the noble Lord, Lord Thomas, in welcoming the new era in Welsh politics—the end of adversarial politics in Wales, at least between parties. I am not entirely sure within parties, but certainly between them. As my noble friend Lady Farrington has said, Wales is on the cusp. It might well be that in a year's time we would provide separate legislation for future developments within Wales.
Nevertheless, the English and Welsh local authority systems have been dealt with in parallel legislation for many decades and they are very similar in structure. The only question is who should carry out the powers in relation to those local authorities. Both the White Paper for Wales and our own White Paper give a commitment to best value.
The question then of who carries out the powers of the Secretary of State is different in England from Wales. The Secretary of State clearly carries them out in England; the Secretary of State and the Assembly carry them out in Wales. It is fairly clear that in so far as they relate to delegated legislation, the National Assembly will have the authority.
Lord Thomas of Gresford: Perhaps I may interrupt the noble Lord for a moment to ask a question about a point which puzzles me. Clauses 15 to 17 are reserved, and the matter of the Assembly does not deal with that. Is the Secretary of State there the Secretary of State for Wales in relation to Welsh matters, or is it the Secretary of State for local government?
Lord Whitty: As in so many other areas, the Secretary of State is provided depending on the structure of government in future. In normal circumstances, as of now, it is the Secretary of State for Wales, I think in relation to all those provisions. If I need to clarify that further I will write to the noble Lord. The fact of the matter is that this legislation is enabling legislation, and
16
it therefore does require a degree of flexibility. There will be different practices growing up no doubt in Wales from those in England.
The structure with which we are dealing is an equivalent structure of local government and the relativity between the local authorities and the national authorities is the same. In Wales the way in which those national responsibilities are conducted will now be divided between the Secretary of State and the Assembly. As I say, it may well be that were we legislating in five years' time we would have separate legislation.
I hope we do not have to legislate again, not on this part of local authority reform, and I suspect that much of what we legislate for the local authorities in England will apply equally to Wales. If there is further clarification needed in future legislation no doubt we will provide for that. I hope that none of what I have said takes away from both the importance of the Bill for the conduct of local government in Wales, and our good wishes for the Welsh Assembly, and indeed the Secretary of State for Wales, in carrying out their functions under this Bill.
Lord Dixon-Smith: Before the Minister sits down, I wonder if I could press him slightly further. I have some sympathy with the dilemma noble Lord, Lord Thomas of Gresford. I wonder if the Minister would apply his mind to the question of what happens if, as a result of the Bill, and then in the light of experience, there is a hiatus. How is that hiatus to be resolved? Are we envisaging that this might be resolved through the courts, which can be a very long and expensive process, in which case who is to bear the cost? Or are we envisaging that the hiatus would remain until such time as further legislation was passed?
We are coming back to the problem that it is not the case that England and Wales have been legislated for in the past in parallel; they have been legislated for more or less in unison. But now, as the noble Lord, Lord Thomas of Gresford, has said, there is a parting of the ways. I do not see what the problem is because I am not a lawyer but the noble Lord clearly does. However, if there is a hiatus I would be interested to hear how that is to be resolved.
4.30 p.m.
Lord Whitty: I am not sure what the noble Lord means by a hiatus; there is not a hiatus. We have a structure of local government and a relationship between it and national government which, in England, will continue. The function of local government will continue to be the same in England as it is in Wales. However, the national function will henceforth be exercised through a combination of the Secretary of State and the Assembly for Wales in Wales. In England it will continue to be conducted by the Secretary of State for the Environment, Transport and the Regions. I therefore do not see that there is a hiatus. We are not awaiting new legislation. This legislation will apply to Welsh local government as it applies to English local government. It is only the national responsibility which will be differentiated.
Clause 1 agreed to.
Clause 2 [Power lo extend or disapply]:
[Amendment No.6 not moved.]
Baroness Hamwee Baroness Hamwee moved Amendment No.7:
Page 2, line 40, leave out subsection (5)
The noble Baroness said: Amendment No.7 seeks to delete from the Bill Clause 2(5). This is a provision to which reference has already been made this afternoon in connection with the de minimis provisions which were the subject of the first amendment.
I have tabled this amendment in order to ask the Minister to give us some explanation of the basis on which individual authorities may be exempt from the provisions we are discussing, and to explain to us which authorities comprise authorities of a particular description. The term "description" seems to me to be quite wide. I am aware that there are provisions in the Bill to deal with authorities which fall within particular categories. Amendments which we shall discuss later seek to insert the word "category" at a number of points in the Bill. However, the word "description" to my mind seems to imply something more than a category. I take an absurd example; namely, that authorities which are on sufficiently obsequious terms with the Secretary of State may fall within a particular description. I hardly believe that the Government intend that that is the standard to be aimed for. However, the matter is not clear from the way in which this provision is drafted.
I have made this point frivolously but there is a serious point behind it; namely, there is a natural anxiety within local government that we may be moving towards a premier league and other divisions of local authorities. Beacon councils which wish understandably to he given the opportunity to show what good local government can do could too easily fall into what I have described as the premier league in terms of favourable treatment. This is a move which has to be viewed with considerable care and sensitivity. I do not suggest that particular authorities should be reined back; quite the contrary. However, I express the concern that those authorities which have not managed early on to achieve the high standard that we hope to see right across local government may be treated less favourably. Therefore I hope that the Minister can explain what is intended by this subsection. Will it allow exemption in respect of specified functions, which seems to be what is intended? I find that a little puzzling as it appears to allow preferential treatment. In terms of providing for best value that seems a little odd as those which achieve a high standard should not have a problem with the best value duty. I beg to move.
Baroness Farrington of Ribbleton: I hope to be able to reassure the noble Baroness, Lady Hamwee, on one point at least. I have met few people in my political career who would recognise, and not have high regard for, obsequiousness more readily than my right honourable friend the Deputy Prime Minister. By removing Clause 2(5), Amendment No.7 would remove the capacity within the Bill to allow the Secretary of State to vary the duty of best value in respect of individual authorities and categories of authority.
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I must make it quite clear that the Government's intention is that the duty of best value will in general apply to all local authority functions. Clause 2(5) does not detract from that general principle. However we believe that it is important that the duty can be applied in an appropriate and sensible fashion and not as a straitjacket. This means that, if necessary, it should be possible to make different arrangements to reflect different circumstances. The point is that the full duty of best value may prove to be too onerous or impractical in certain circumstances. For example, it might be sensible to make different arrangements in respect of certain services provided by town and parish councils or the emergency planning functions of other authorities. Clause 2(5) allows us to deal with such cases in a flexible and appropriate manner; for example, to set a threshold so that the framework takes account of the circumstances of the smaller town and parish councils. I hope that this reassurance is satisfactory and that the noble Baroness will feel able to withdraw her amendment.
Baroness Hamwee: Can the Minister answer the short and direct point as to whether there is a difference between the term best value authorities "of a description specified" and best value authorities falling within a particular category?
Baroness Farrington of Ribbleton: I understand that it covers both. If one looks at the issue of functions and types of authorities providing those functions—for example, emergency planning functions—that would apply to categories of authorities as well as to their functions, and to individual authorities in the example of the very small parish councils.
Baroness Hamwee: I shall read that reply carefully. I do not believe I am convinced that it need be a different term in this clause from terminology we may want to use later, and which I have heard the Minister use on other occasions outside this Committee.
Baroness Farrington of Ribbleton: It covers both. A description may be of a particular category of authority. I do not know whether that is helpful.
Baroness Hamwee: I shall think about that. Certainly, at this stage I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No.7 not moved.]
Clause 2 agreed to.
Clause 3 [The general duty]:
Baroness Hamwee Baroness Hamwee moved Amendment No.8:
Page 3, line 6, leave out ("and")
The noble Baroness said: In moving Amendment No.7, I shall speak also to Amendments Nos.9, 11, 12, 30, 31, 40 and 41. I can deal with Amendments Nos.30, 31, 40 and 41 quickly by saying that they are consequential on the earlier amendments in the group. Amendment No.9 is the first substantive amendment in the group. It seeks to add to the list in Clause 3(1) of the matters to which best value authorities must have

19
regard. The clause as drafted provides for authorities to have regard to a combination of economy, efficiency and effectiveness. Those three "Es" which I said at Second Reading had a slightly 1980s ring about them, are important and remain important. However, I do not believe that they cover everything.
In particular, I do not believe that they necessarily preclude inequality of access— access to services, for instance, because of the distance which the user may have to travel, or inequality of access because of disability on the part of the user. The term "effectiveness" should include and require an equitable approach, but I am not confident that that is how it would be interpreted. What is the harm in including equity? I would not even propose that it takes priority over economy, efficiency and effectiveness, but simply that best value authorities should have regard to it in combination with those other matters.
Amendments Nos.11 and 12 refer to other best value criteria. The Government will be giving guidance, and the economy, efficiency and effectiveness criteria relate to financial performance. I am therefore concerned to be assured that guidance on other matters—sustainability, for instance, which is dealt with in a subsequent amendment, innovation and so on—can over-ride or even be given equal status with economy, efficiency and effectiveness. Will a court be able to have regard to equity—if equity is a criterion included in guidance—if there is a challenge, perhaps, by a group of council ratepayers who are concerned only with the rigour of value for money in its narrowest sense?
In another place, the Minister said that it is not the responsibility of national government to define everything that local government should do and to legislate for that. She said that is why we argue for flexibility. Amendment No.11 is intended to allow for that flexibility. I have mentioned sustainability and I have also mentioned innovation, and this is perhaps the moment to pay tribute to the group of authorities in East Sussex. I am glad that the noble Lord, Lord Bassam, is here, because what they have been doing in connection with council tax collection is innovative; it is precisely what the Government want to encourage and what many of us would like to see.
Amendment No.12 is almost consequential because it is so obvious. It provides that,
"Before specifying matters which are to be permitted pursuant to subsection (1) the Secretary of State shall consult",
in the terminology that legislation uses,
"such persons as he thinks fit".
That is on the basis that Secretaries of State always have a sensible idea of whom it is fit to consult. Consultation would be a prerequisite. I beg to move.
Baroness Miller of Chilthorne Domer: These amendments go to the heart of what takes this Bill beyond simply being a replacement for CCT and indicate where we should be in examining best value. This weekend, I was interested to read Pollution Injustice by the Friends of the Earth, which makes the point about the links between economic development,
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social exclusion and environmental quality. It makes the point that you cannot categorise services, one from another. Certainly, all of those authorities which have worked on issues such as social exclusion, see that the measure of equity is very crucial. If the Bill goes through without these amendments, we will find that local authorities are forced into a position where they will follow the effectiveness and economic route as regards, for example, the question of equity.
Working on matters of social exclusion frequently means that you need to take a long-term approach. It frequently means that councils which were taking a very conscientious line in this would probably fail to reach some of the national performance indicators which were taking only the first of the three "Es" into account. The amendment to include equity in Clause 3 and in the performance indicators is crucial. I cannot conceive of performance indicators that will move the way that local authorities deliver their services onwards excluding something as basic as equity. That is one of the reasons why for too long we have had ghettos of inequality.
One of the points missed in the Bill is that as one has a bigger duty to consult people it becomes more crucial that those who are able to respond to consultation—middle-class people with word processors and those who are happy standing up in public and responding to questions that councils ask—will always be at the forefront of those consulted. Now a duty of equity puts a duty more plainly on the councils to make sure that they are consulting the people who are rarely heard.
Although I am sure the Minister will say that this will be addressed in guidance, it is not nearly a strong enough message. I believe that the amendments bring the Bill much more in line with what the Government were hoping for when they published In Touch with the People.
I should very much like to see those words included in both places. I cannot believe that we can move towards what we are calling "best value" while excluding such a basic idea as equity.
4.45 p.m.
Lord Hunt of Tanworth: I, too, would have liked to see the words relating to equity and sustainable development included on the face of the Bill. However, if the Government intend to maintain the position that they should not be, will the Minister tell us when the guidance on that question will be available? It raises those questions which the noble Baroness, Lady Hamwee, has raised about the relative priorities of the different objectives. Before the Bill completes its stages it would be helpful to see what guidance is being produced.
I hope that it is appropriate to raise an issue in respect of Clause 3 which has been omitted. Clause 3 relates to making arrangements to secure continuous improvement in the way in which local authorities' functions are exercised, and it refers to their current functions. Your Lordships will remember that in the In Touch with the People White Paper it was said that the Government proposed to introduce a new duty to promote the

21
wellbeing of the community. That does not figure in the Bill and it is regrettable because, as paragraph 8.9 of the White Paper said,
"This new duty will provide an over-arching framework for local government".
I have tabled an Unstarred Question, which I hope will be debated before the end of June or early July, and it may be that the Minister can add nothing at this stage. The proposed new duty does seem to me extremely relevant to best value legislation and it should form a central part of it. I hope that at some stage before the present Bill has completed its passage through the House we shall know a little more clearly what the Government's intentions are about the new duty.
Lord Harris of Haringey: I, too, wish to place on record my belief that considerations of equity must be seen as integral to the duty of best value. I could easily be persuaded of the importance of it being sufficient for the definition of best value and for the issues around equity to be covered in guidance, but I should like to support the suggestion made by the noble Lord, Lord Hunt of Tanworth, that it would be helpful for us to see that guidance, or draft guidance, prior to the conclusion of our considerations of the Bill.
I certainly believe that equity must be a critical part of local government responsibilities. We have had the Macpherson Report into the death of Stephen Lawrence, which raises very wide issues for all public authorities, including local government, about the way in which it delivers services and about issues of institutional racism. We have to make sure that our services are delivered fairly and equally to all of our local citizens. That must be an essential prerequisite for tackling issues of social exclusion and a fundamental part of the work of local government. I hope that the Minister will be able to indicate that the guidance will be published before we complete our consideration of the Bill so that we can see exactly how that is expressed and satisfy ourselves that that duty is being enforced by all local authorities without it needing to be on the face of the Bill.
Lord Dixon-Smith: I, too, express the hope that the Minister can be helpful on this particular matter. I am old-fashioned and have always believed that promoting the wellbeing of the community was the only reason for being involved in a local authority in the first instance. If you do not have that as a primary ambition you should never have started down that particular road. Whether you translate that into the modern, single word "equity" is entirely another matter, but this is an important issue.
Although those who are also old-fashioned might regret that we have to express more of such detail in Bills, they are becoming more specific. Therefore such detail has to go in. It would be a serious omission from the Bill, given its particular impact on the way in which local authorities are to function, if it was not included in instead of included out.
Lord Whitty: Perhaps I may deal with some general issues before turning to the amendments themselves. I take the point from the noble Lord, Lord Hunt of Tanworth. that wellbeing is of great importance in our whole approach to local government reform. It was a
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significant issue within the White Paper. The Bill is not, however, the totality of our approach to local government reform. You will already he aware that there is another draft Bill dealing with aspects of the reform agenda not covered here. Furthermore, aspects which were covered by the White Paper on which legislation or other measures to deliver the objectives, will at some point be necessary.
I would very much welcome a general discussion on the issue of wellbeing. However, we have not thought it appropriate to write in wellbeing provisions into the Bill because it is primarily about the way in which local government conducts its management and delivers its services, and to some extent its financial control, rather than the broader objectives of local government. That will come later in the reform programme, and will probably require some considerable discussion in this House in various forms. I would certainly welcome an opportunity to discuss that, as the noble Lord suggests.
In relation to the provision of guidance under these clauses, last month we issued some preliminary guidance which I have made available to your Lordships. However, I cannot give the guarantee I think the noble Lord is requesting; that we will finalise our guidance before the Bill passes through its various stages in this House. Having set down preliminary guidance, the intention is to consult in June and to issue the statutory guidance after the Bill has been passed. This is of course the case with most guidance under statute. Nevertheless, the preliminary guidance, and what has been said by my colleagues and myself in the course of these deliberations, will give a clear indication as to the way in which we are approaching the final guidance.
The amendments focus on the issue of equity. Amendment No.9 would directly add equity to the list of functions. Amendment No.30 and following amendments would correspondingly add equity to the list of factors to be taken into account in setting performance indicators and carrying out best value reviews.
I have great sympathy with the noble Baronesses, Lady Hamwee and Lady Miller, on the Liberal Democrat Benches. Nevertheless, it would not be appropriate to write equity into the Bill in this form. The Government consider it essential that as a result of introducing best value, our local authorities concentrate on service outputs and outcomes. Thus, those responsible for audits—and local people generally—can assess local authority performance against outputs and outcomes.
We have defined the process of best value in terms of economy efficiency and effectiveness, backed up by a set of national indicators relating to output. Those indicators would not be drawn narrowly. For example, we are looking at a series of indicators under the "effectiveness" banner, which reflect fair access to services, as referred to by the noble Baroness, Lady Miller. Fair access could be regarded as being equity under another name. There will certainly he key indicators against which best value will be assessed and which will include fairness. I can confirm that the

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statutory guidance on the three Es will indeed make clear that effectiveness includes equitable access to services and fairness. Our approach to performance indicators, therefore, will reinforce this and there will be indicators of fair access to services. Fairness, however, will not be the only one. Local authorities will themselves be free, of course, to develop their own indicators to reflect the priorities of their own electorates.
It should also be remembered that our approach to consultation under this Bill is designed to ensure that all sections of the community have a voice in determining the priorities of service delivery. The noble Baroness, Lady Miller, expressed concerns with which I sympathise. I can reassure her that the duty of consultation will be framed as widely as possible in order to include all of those who have an interest, whether or not they have access to e-mailing and whether or not they are organised in direct bodies who would normally be consulted. That will be made clear in our guidance.
There is a problem, however, with writing equity as such into these criteria, as distinct from ensuring that equity—or at least fairness, the term I would prefer—is a criterion under the effectiveness banner. I recognise, incidentally, that Amendment No.31 also refers to sustainability but perhaps the noble Lords would not mind if we deal with that under Amendment No.10.
Consideration of factors such as equity will indeed be an intrinsic part of delivering effective services and local authorities could not sustain their position, were they not to pursue fairness in that sense. However, there is difficulty with what equity actually means and whether the local authority could be challenged for not delivery equity. There was indeed some slippage in certain things said by the noble Baroness, Lady Miller, between the terms "equity" and "equality". If that is the case with the noble Baroness, then it will certainly be the case with many of the people who respond to the way in which local authorities deliver services.
A group of ratepayers objecting to the way in which a local authority conducts its business may well say that they were created equally and therefore were contravening the determination of the Act relating to equity as an overriding provision. Because there is this public confusion between equity and equality— and, frankly, to meet the kind of problems to which the noble Baroness herself was referring in terms of current inequalities—it may be that inequality of output may be a desirable and fair objective. However, as there is confusion between equality and equity, there is a problem in writing equity on the face of the Bill. The term "effectiveness" will incorporate fairness. Authorities individually will need to take a strategic approach as to how they interpret best value and how best they meet it. They need to prioritise their functions for review, based upon an objective assessment of how well they are performing against clearly understood and consistently-based criteria. Those criteria may well have an equity element built into them but they have little
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chance of doing so if it is unclear what exactly makes up their duty and if there is some lack of clarity as to what the term "equity" means in this context.
The best way to ensure that the duty is comprehensive in scope is to encourage joint working by means of proper use of performance measurement and its framework and statutory guidance. That statutory guidance will ensure that fairness of access in particular is a major criteria for the delivery of services.
There are a number of points lying behind the concerns that have been expressed. I hope my objection to the inclusion of "equity" in this context cannot in any sense be interpreted as saying we object to the objectives behind the moving of these amendments. Nevertheless, we do not believe that the inclusion of "equity" at this point and in these forms would be appropriate in the Bill.
5 p.m.
Baroness Hamwee: The Minister tempts me to think of another way of approaching this issue on Report and I am not going to resist that temptation. However, it is worth making some further points now because the Minister may care to come back at this point.
The noble Lords, Lord Hunt of Tanworth and Lord Harris of Haringey, referred to guidance and the material which has gone round to local authorities does not go very far at all in talking about the criteria which are to be applied. So I share their concern to see something more substantive.
There are at least two problems in relying on guidance. Guidance can be altered by the same Secretary of State or, indeed, by a subsequent Secretary of State, so that whatever is in guidance may not last the course of the best value duty. Secondly, can the Minister assist the Committee on the status of guidance when it comes to the courts interpreting the criteria? It seems to me that an explanation in guidance as to what will satisfy the test of effectiveness will not even get into the Pepper v. Hart arena of material on which the interpretation of the statute can be based. As I understand it, Hansard is only referred to if the statute is not clear and effectiveness seems to me to be a pretty clear term. Even if it were not a clear term and the courts had regard to what this House and the other place have to say on the term "effectiveness", having the explanation in guidance will not be of any assistance unless we get draft guidance early enough for us to have a debate on what it has to say, so that we can get into Hansard a ministerial assurance as to what it means.
On the point of whether "equity" is the right term, I will not be the only one who will be open to suggestions of synonyms. I was glad to have the Minister's confirmation that "effectiveness" will include fairness. However, before that he said that the Bill is about how local government conducts its management and delivers services as if best value is pretty much confined to value for money. I would much prefer to rely on the second part of what he said to the first part. However, I am sure this will be a matter to which we will need to return

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because, as the noble Lord, Lord Harris, has said, it will be integral to the new duty. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No.9 not moved.]
Baroness Miller of Chilthorne Domer Baroness Miller of Chilthorne Domer moved Amendment No.10:
Page 3, line 6, at end insert ("and sustainability")
The noble Baroness said: We seek to include the concept of "sustainability" in this clause although it is sometimes hard to separate it from the other concepts we spoke of when speaking to the previous amendment.
Ever since the Rio summit the concept of sustainability has too often been paid a huge amount of lip service but little is actually done to implement it. Local authorities were a key element in the Local Agenda 21 initiative. They sought to offer community leadership. They have to deliver the services and they have to initiate practical action locally and encourage the communities they serve to do so too.
If we leave sustainability out of this Bill we shall have said many nice things about it but we shall just have tinkered around the edges of it. It will not be put at the heart of service delivery and community plans. As regards trying to initiate the Local Agenda 21 proposals, sustainability must be at the heart of that process. When we discussed informally in this room the question of why sustainability might not be included in this Bill the noble Lord, Lord Whitty, said that was because this Bill is about the conceit of process and not the concept of outcome. However. sustainability must be part of the process. If you prevent it from being part of the process, it is most unlikely to be part of the outcome. That is certainly something which I have discovered as a councillor considering how to include the concept of sustainability in everything that the authority in question addresses. It has to be there from start to finish. To exclude it from the concept of best value is to relegate it to the status of something to which we pay lip service hut do little to implement.
We have to take account of the fact that there are sometimes crucial conflicts between value for money and sustainability. We must at least give sustainability an equal status with other measures when we assess what a local authority is expected to do. I come back to the performance indicators; sustainability has to be included as one of the crucial indicators. If that is not done, there will be conflict and a balancing act will have to be undertaken as between economy, efficiency and sustainability. That conflict exists because economy and efficiency will often be easier objectives to achieve in the short term while sustainability is frequently a long-term objective. Performance indicators of short-term objectives will simply not be relevant to those matters which ought to be considered as longer term objectives. I beg to move.
Baroness Hamwee: I warmly support my noble friend's remarks. I was disturbed to read a Written Answer in the House of Commons' Hansard on the
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subject of environmental appraisals undertaken by the Minister's department on various Bills, including this Bill. The Written Answer stated,
"No environmental appraisal was undertaken of the Local Government Bill as its content has no direct implications for the environment. The Bill deals with local management and financial issues."—[Official Report, Commons, 4/5/99; cols. WA 308 and 309.]
I need hardly say more!
Lord Whitty: Perhaps I may correct an impression that the noble Baroness clearly has of my previous remarks. I was trying to make an intellectual distinction between process and outcome. At the end of the day this Bill is very much about outcomes as we wish to improve outcomes for local authority services, including those in the sustainable development area. It is the way of getting there that best value describes. I have no quarrel at all with the importance that the noble Baroness through this amendment attaches to sustainable development. This is probably the most significant challenge to the current generation of politicians which is why in the Local Agenda 21 strategy we have asked all local authorities to mainstream sustainable development principles within all of their policies and programmes. This is neither simple nor easy to deliver on the ground, hut we expect authorities to give expression to those principles, primarily through the process of community planning, in engagement with the other players in that arena. We are engaged in a reassessment of planning and we will want local authorities to play a major role in that process as leaders of their communities. That new duty will place sustainable development at the centre of community planning, and in that arena we remain committed to bringing forward such legislation as soon as parliamentary time allows.
That is an outcome. Best value on the other hand is about delivering those sustainable policies and outcomes in the most efficient and effective manner. We need to be clear about this. We intend to legislate in due course to give local authorities a duty to promote economic, social and environmental well-being, and the powers to deliver that. Once that is clearly established, the duty of best value will apply to that as well. Sustainable policies will lead to the desired outcome, which will have to be delivered efficiently and effectively in accordance with the principles of best value. In that timescale we would expect to see indicators develop which enable progress of sustainable development to be assessed, both in relation to local authorities' activities as a whole and in relation to particular areas.
It is therefore important that we make this distinction. Sustainability runs through our whole approach to the strategies which we expect local authorities to develop and the outcomes which we wish to see them achieve. The criteria for best value include ways of best meeting those outcomes, but they are criteria related to the way of delivering those outcomes and not the outcomes themselves. I seek to reassure the noble Baroness that sustainable outcomes and sustainable developments are central to our whole strategy in what local authorities should be delivering for their communities.
Baroness Miller of Chilthorne Domer: I thank the Minister for his reply. I feel most strongly about this

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subject, as do we all on our Benches, as in spirit do the Government. But I say again that we will want to press this matter further given the fact that, unless it is included as a fundamental duty on local authorities, I feel that it will always be the poor relation when conflicts arise as to where their first duty should lie. beg to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos.11 and 12 not moved]
Baroness Hamwee Baroness Hamwee moved Amendment No.13:
Page 3, line 6, at end insert—
("() For the purposes of subsection (1) public authorities working in partnership with a best value authority shall be subject to the duty under this section.")
The noble Baroness said: Amendment No.13 proposes that, for the purposes of the general best value duty, public authorities which work in partnership with a best value authority will be subject to the same duty. I appreciate that the Bill is designed for bodies which are within the local government finance system, which is not just local authorities, but I am concerned to know how such functions as are carried out by best value authorities in partnership with other bodies will be affected by the legislation. I realised last night that perhaps I should have made it clear that the amendment was limited to the occasions when public authorities work in partnership and did not provide a general duty extending beyond that partnership. But I am sure the Minister will understand that that was the thrust of the amendment.
We could all list a number of occasions when best value authorities will work with other public bodies; for example, health services working with hospitals and others; the requirement for health services and social services to be provided in a co-ordinated and sensible fashion; local authorities working with regional development agencies; the whole matter of economic regeneration; or local authorities working with the Home Office in relation to provision for refugees. They will discuss particular types of service delivery, the field of community safety, and environmental sustainability.
Clause 5 requires best value authorities to consult with "commercial and other businesses". That may provide an opportunity to ask whether those include quangos. In any event, the duty of consultation on best value authorities does not place a duty on other bodies. I am aware that it is the Government's longer-term ambition that all public sector bodies should comply with best value principles. This amendment would help to make collaboration through public sector partnerships an explicit part of best value. It must be sensible to attempt to achieve consistency of approach in setting out community objectives for best value and in progress reports; my noble friend has twice referred to performance indicators; and accountability for the eventual outcome.
Finally, perhaps I may offer a concrete example. What will happen if the policy and performance indicators of the Probation Service on youth crime prevention are not aligned with those of social services
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and health services on closely allied subjects. This may not be precisely the amendment to achieve what we seek, but consistency across service delivery, notwithstanding the identity of the partners, is a very important matter.
I beg to move.
5.15 p.m.
Baroness Thomas of Walliswood: I support my noble friend in this amendment. While serving at the same time on a local authority and a hospital trust board, I became very aware of the different approaches, even to financial management, that were incorporated in those two bodies.
Under the health Act that we took through this House some while ago, we discussed the matter of collaboration between NHS bodies and local authorities. At that time I raised my worry that there were considerable difficulties in the culture and approach of the two organisations. Collaboration must take place at two levels: first, at the planning level, when health services for a whole area are jointly planned; and secondly, at the delivery level.
Perhaps I may refer briefly to the Minister's reply to Amendment No.8 as regards fairness. Fairness could be a very important criterion in determining the best way to organise services. In the field of long-term care, for example, in many places it is presently extremely difficult for those in residential care homes to receive any kind of medical services except those provided by their local GP. They cannot receive physiotherapy, for example, as they would be able to if they were living in their own home and physiotherapists were available. It is a question of resources. There are very few physiotherapists, because physiotherapists, indeed therapists in general, are not high on the list of priorities for national health bodies. But when considering long-term care for disabled or elderly people, they become very important elements in their care package. We are in danger of not assisting in bridging the gap unless the Bill makes some effort to encourage those authorities that are not covered by local government finance provisions to take the same kind of approach as their partners in local government will adopt.
Lord Harris of Haringey: Best value is important for public authorities. I should like to see us moving towards a situation in which public authorities are required to fulfil the principles of best value. I suspect that that may be the "back door" effect of the amendment tabled by the noble Baroness, Lady Hamwee, but probably not what she intended.
Having said that, the intention behind the amendment raises some important issues. It is quite clear that increasingly, local government will be working in partnership with other bodies. Partnership structures will be set up to deliver services or to make things happen. I can envisage all kinds of anomalies as to whether the principles of best value have to operate under those various sets of circumstances. Reference has been made to the health provision and, increasingly, health trusts are working jointly with local social services departments to provide services. Sometimes these are

29
notionally under the aegis of the health trust, sometimes that of the local authority. That practice is increasing. It is often a matter of convenience as to which is the lead authority. I would hate the situation to arise in which the structures going through the best value process would determine which became the lead authority, rather than what made sense for other, practical reasons in the area.
There are, however, also community safety partnerships in relation to the tackling of crime and disorder. There are regeneration partnerships. Again, in all of these there needs to be clarity about the extent to which best value applies to them. This amendment does not quite achieve that, but we need to have better information on the issue. Otherwise, there will be all kinds of problems on the ground within local government.
Lord Whitty: This debate has raised some interesting points about the delivery on the ground. Although it may not surprise you that I am not minded to accept the amendment, it does seem to address a very important issue. This Bill is about best value in local government within the local government finance system. It does not deal with public bodies which are outside the local government finance system. The scope is clearly defined in Clause I, as we have indicated already. It can be extended by Clause 2, but it has to be consistent with the approach in relation to local government finance. We are, of course, intent that best value should apply in other parts of the public sector. We made it clear that we would want the principles of best value to be applied to those bodies which work alongside, or in partnership with, best value local authorities.
We are making significant progress in other contexts in realising that aim. For example, as indicated earlier, the principles of best value have been endorsed and applied by the Housing Corporation in its work with registered social landlords. Your Lordships may also be aware of the approach set out in Better Quality Services, which deals with central government departments and agencies which work together in the National Health Service—again, best value being delivered within the financial regime that operates there. As regards the particular example raised by the noble Baroness, Lady Hamwee, in relation to the Probation Service, the Home Office is working on how best value would operate within that service. It will be consulting on whether new legislation will be needed in respect of all or some of those requirements. However, the issue is actively under consideration within the Home Office.
More generally, I have already referred to the White Paper, Modern Local Government: In Touch with the People, which places best value at the heart of those improvements. This Bill, however, deals with how we achieve it through local government and the financial system which applies within local government, while trying to ensure that best value principles are more widely applied. A key purpose of the powers in Clause 15, to which we shall turn later, is to facilitate the operation of partnerships between individual local authorities and Between local authorities and other public sector bodies and beyond. Hence, there are proposals to pool budgets and other areas on which we
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are consulting. There may be other areas, of course, which would be open to partnership where we could therefore apply the principles of best value in the different financial contexts in which the various public sector bodies operate.
However, I repeat that the Bill deals with the local authority financial regime. That may not be the best part for other areas—for example, the bodies with which local government operates in partnership, where there are different systems of public accountability, different systems of audit and different systems of review. We want to learn from the local government experience and from other best value initiatives that are taking place in other parts of the public sector. We would want to keep those under review and to try to make them as compatible as possible. However, to stipulate in the present Bill that parts of the public sector which are covered by financial regimes under different legislation would be difficult, if not impossible.
We understand the motivation behind Amendment No.13 and we are taking steps with other parts of the public sector, particularly those which are most likely to form partnerships with local authorities. It will be their financial regimes through which the best value can be achieved. We hope that they will be as compatible as possible but this provision deals solely with the local authority financial structure.
With those assurances that we are moving on other fronts and that we are moving to facilitate partnerships within the Bill, I hope that the noble Baroness will feel able not to pursue her amendment.
Baroness Hamwee: I thank the Minister for that reply, though I have to say that from listening to him—I shall read what he has said—he has rather more restated the problem than given the solution. I accept that it may not be possible to deal with the solution within the Bill. As the noble Lord, Lord Harris of Haringey, said, it is very important that we have clarity. It had not occurred to me that there might be a fight to concede the leadership on a project but one sees that that situation might come about. That would not he to anyone's best advantage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No.14:
Page 3, line 11, leave out paragraph (b)
The noble Lord said: In moving Amendment No.14, I wish to speak also to Amendments No.15 and 16. It is all too easy to say that consultation is a good thing. These three amendments deal with the issue of consultation. As the Bill is drafted, I have one or two small problems.
The first is that there is an element of what I can only describe as class distinction in the Bill. We are here dealing with the duty to consult that is being imposed on best value authorities. A little further down the page is the class distinction:
"the Secretary of State shall consult such persons as he thinks fit".
I shall be accused of inconsistency because I and other noble Lords have tabled amendments to alter that situation. However, by the way the Bill is drafted, two classes of consultation are one more than is really necessary.
My amendments propose the removal of Clause 3(2)(b) and (d). That leaves on the face of the Bill,
"representatives of persons liable to pay any tax, precept or levy to or in respect of the authority",
and indeed,
"representatives of persons"—
which is a fairly wide phrase—
"who use or are likely to use services provided by the authority"."
When one considers the two categories that are left, I have had some difficulty in thinking of anyone else anyway. For a start I would suggest that paragraphs (b) and (d), which I have suggested be removed, are not essential to the sense of this clause. The second reason is that, paradoxically, the more classes of people who are defined, the more people are left out. By defining specific groups on the list many more specific groups will be left off. Therefore, I suggest that it would be better to keep the categories of people involved down to the smallest possible number.
Having said that, my final amendment of the three, Amendment No.16, deals with the one essential group of people who are intimately involved both with the delivery of best value and its impact and all too often in the way in which they work and run their lives. The people who are most directly concerned, apart from those who use the service, are the people who provide it. I have tabled an amendment to suggest that they should be consulted.
This is a fairly straightforward and simple issue, but quite an important one. Although some might say that I am arguing against the concept of full consultation, I argue very seriously that that is not so. I want proper consultation, but consultation which is achievable and meaningful and not with the net spread so widely that people can feel left out if they are not specifically caught. I believe that is the way the Bill is heading. I beg to move.
5.30 p.m.
Baroness Hamwee: I have two amendments in this group; Amendments No.17 and 18. First, I should like to comment on the amendments to which the noble Lord has just spoken. Tact requires that I first deal with Amendment No.16 with which I agree; to include employees in the group of consultees. I accept that the best value duty is a duty to the public, and that employees will help to fulfil that duty. However staff have a great deal to contribute to the operation of a service. They are often at the sharp end, and it is not necessarily only the senior staff who have a great deal to say. Any authority which fails not only to listen to what its employees have to say but fails to ask them to make their views known is failing in a serious regard.
Despite what the noble Lord said about extending consultation, the first two amendments rather surprise me. The amendment requiring that business rate payers
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are not consulted reminds us that at present the only statutory consultation required for council tax is with business rate payers.
Lord Dixon-Smith: Does the noble Baroness consider that anybody who is paying business rates in a particular local authority area must by definition be a person either who uses or is likely to use services provided by the authority?
Baroness Hamwee: They do of course, which is one of the reasons why many of us would like to see business rates returned to a more local base. However the services which they use are sometimes different from those used by others who may or may not pay council tax. As a group, they deserve recognition. The representatives of people who appear to have an interest in an area in which the authority functions rather suggests that it is only people who pay council tax or preceptual levy who deserve to be heard. I cannot believe that that is, or should be, the case.
Lord Dixon-Smith: I must protest: the term "users of services" in local authority areas includes almost everyone by definition. There is no distinction in sub-paragraph (c) regarding that use. When you merely walk down the road, you are using a local authority service; if you send a child to school, you are using a local authority service; if you have drains with an outlet anywhere, you are using a local authority service. I submit that the definitions I have advanced are perfectly adequate and that the arguments advanced against me are somewhat specious.
Baroness Hamwee: It is precisely because someone is using the services that he or she should be fully consulted. Incidentally, these amendments do not address the issue of people who move across boroughs and have interests in different boroughs.
Turning to Amendments Nos.17 and 18, I have no doubt that the noble Lord, Lord Dixon-Smith, will not like the requirement in Amendment No.17 for consultation with representatives of those who have an interest in a function exercised by an authority. That could form part of a consultation under one of the other headings, but it is worth distinguishing geographical interests from interests in particular services. After all, it is the essence of politics to set priorities; a local authority has to set priorities between its services, however they are delivered. That is an area for one kind of consultation; how a particular service is delivered, possibly as part of a reorganisation of priorities, is another.
To take an example, the recipients of domiciliary care and other care services, and the carers for those people, are likely to hold views on the delivery of those services. I partly have in mind the consultation that my own borough undertook with regard to this subject. It was not an entirely happy process. We heard things that we might not have wanted to hear. However, it was better that we heard them and that they did not remain unspoken.
The amendment would also require consultation with those who have a particular concern, such as voluntary environmental groups, possibly even the Government's

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own statutory environmental advisers such as English Nature and the Environment Agency—unless, of course, the Minister can tell me that those are covered by Clause 3(2)(d). Who will be covered by Clause 3(2)(d), and will there be any guidance on that?
Amendment No.18 proposes that, for the purposes of consultation,
"an authority shall not confine its consultations to representatives of formally constituted groups".
There was a reference to this issue in the debate we had earlier on "equity''. Noble Lords will recognise that good consultation requires a good deal of imagination. It may require the, body consulting to facilitate that consultation, to assist those from whom it wants to hear to make their views known, perhaps even to articulate their views. It is hard work. I fear that those who are regarded as representatives may themselves quickly become regarded as a part of the establishment. The very fact that they are representatives to whom a best value authority will turn for a view, places them in a position that is not necessarily helpful to this process. I do not, of course, suggest that those who are good at responding to local authorities seeking views should be excluded. However, I make the serious point that though in a sense they may he representative, almost by virtue of that fact they may begin to become unrepresentative.
Lord Whitty: I am not quite sure whether the amendments put down achieve any of the objectives to which the Members of the Committee opposite have been so committed. I did think for a moment that we were about to see a little genuine non-adversarial discussion between the Opposition parties. The noble Lord's amendments on the one hand take people out who, as the noble Baroness has said, probably should he in, and then add to the list. It does not seem a particularly consistent approach. The intention of the noble Baroness, on the other hand, is to add specific additional groups, but in a way which in some sense narrows the authority's ability to consult on the wide basis I think she intended.
I am not attracted to these amendments but I am in sympathy with what lies behind them. Clause 3(2)(d) is important because it explicitly requires all best value authorities to consult with their local business community, for example in deciding how to fulfil their duty of best value. I do not regard that as a problem. I do not say that simply because businesses pay the non-domestic rate. It is not just a matter of businesses paying funds into authorities; they are also providers and users of those services.
We have consistently said that best value will involve authorities working in partnership with others, identifying new and better ways of fulfilling their functions, and ensuring objectives reflect local priorities. They are only able to do that if they have consulted the business community, for example, and the other groups to which these clauses apply. Categories do not readily accommodate other interested parties. For example, some businesses carry out work in the area but are based elsewhere.
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Categories do not readily accommodate professional bodies who often have a valuable perspective on local service delivery and, of course, there are the less well organised categories of person to whom the noble Baroness refers. That is why under Clause 3(2)(d) we have left it to local authorities to ensure that other interested parties are consulted. I refer in particular to the socially disadvantaged but also to others who are not covered by the earlier clauses. The duty of consultation needs to reflect the need to broaden partnership.
I now need to comment on Amendment No.16 which relates to the consultation of employees. Of course we expect local authorities to consult their employees over the way in which they operate their services and the context in which they do so. Well motivated, well trained and involved employees are vital to the provision of best value services, and they are often best placed to suggest improvements. In the interim guidance we stressed the importance of the role that the staff of local authorities can play in reflecting customer perception and the areas for improvement.
The duty of best value is not owed to the employees and managers within local authorities, it is owed to local people. One of the fundamental tenets when reviewing these functions must be generally to challenge the status quo, which may mean provision by a local authority's own staff. It may also mean provision by contractors to local authorities but both have to be considered. I have to phrase this delicately because I have on occasion been on the other side of the fence on these arguments. All noble Lords who have had any dealings with local authorities will be familiar with situations where consultation has turned out to be consultation with representatives of your own employees. This perhaps applies particularly in education, but it also applies in other fields too. The duty to one's employees of involving and informing them and of learning from them is a different duty from the duty to consult over the users and others who will be affected by the provision of those services. The first is essentially an employer's duty and a good manager's duty; the second is a political and democratic duty. I therefore cannot accept Amendment No.16 in the terms in which it is put forward.
Amendment No.17 relates to Clause 3(2)(d). As the clause stands, it is deliberately very wide, which means that an authority would have to make arrangements to consult with representatives who have an interest in the area where the authority carries out its functions. That is a very wide requirement. Amendment No.17 would qualify that and narrow the authority's ability to consult.
Amendment No.18, on the other hand, seeks to widen the range of consultees to include representatives from non-formal groups. The subsection, as drafted, will already allow the Secretary of State and the National Assembly to consult with a broad range of persons representing the different interests of the community.
Subsection 3(3) goes on to define the meaning of the term "representatives" and does not confine the representatives of people to only those from formally constituted groups. Indeed, the specified categories of representatives in subsection 3(2) would suggest a very wide body of groups, some of which may be formally

35
incorporated and others who will be informally set up as circumstances require. I therefore believe that those subsections, taken together, already achieve the aim of Amendment No.13, and would therefore not consider it necessary to spell it out in the way the noble Baroness suggests. The subsection, as already drafted, provides for that wide range of consultees.
5.45 p.m.
Baroness Hamwee: Before the noble Lord, Lord Dixon-Smith, responds, perhaps I might have a further word on some of these amendments.
Taking the last point, I accept that Clause 3(4) allows for wide consultation, but I am concerned about requiring wide consultation. As to whether subsection 3(3) deals with the point I have made, I am not immediately convinced that it does since it defines representatives in relation to a group of persons. It may be worth coming back to that point.
As regards Amendment No.17, which is intended to be additional, and therefore not to restrict what is already in the Bill, am I correct in understanding from one of the things the Minister said that the term "area" in Clause 3(2)(d) means more than the geographical area? In other words, is my concern about an interest in a particular service covered by the term "area"? Perhaps this is a matter the Minister would like to return to.
Lord Whitty: Further clarification is probably best left to correspondence in that respect. Clause 3(2)(d) indicates a requirement for the local authority to identify consultees with an interest in any of the services which it delivers. Whether I can define "area" as a precisely geographical area, I will have to let the noble Baroness know and she can perhaps act accordingly at a later stage.
Baroness Hamwee: I hope this is not simply a geographical area— that is the point of my question.
Lord Dixon-Smith: I am genuinely grateful to everyone who has contributed to this discussion and I am grateful to the Minister for his reply. In an era of non-confrontational politics, if different people approach the same object from different positions and all meet at the same point at the same time, it is inevitable that they will hit one another.
We have had a very good discussion on the nature of public consultation and it was with that at the back of my mind that I moved the amendment. I shall study the debate with great interest and in the mean time I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos.15 to 18 not moved.]
Clause 3 agreed to.
Clause 4 [Performance indicators and standards]:
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No.19:
Page 3, leave out line 25 and insert ("Guidance issued by the Secretary of State under section 3 may include—")
The noble Lord said: We now come to what is really the core of the Bill, the Minister's power over local authorities. I am afraid the amendment does not make much sense because when I drafted it I allowed my eye to drift upwards. When one's eye drifts upwards from Clause 4 one sees immediately above:
"an authority must have regard to any guidance issued by the Secretary of State".
That should have been read upwards rather than downwards, of course, so that the amendment strictly will not achieve what I wish it to achieve. Nonetheless, I wish to discuss it.
At the present time, Clause 4(1) says:
"The Secretary of State may by order specify—

(a) factors ("performance indicators") by reference to which a best value authority's performance in exercising functions can be measured;

(b) standards ("performance standards") to be met by best value authorities".

I have the greatest difficulty with that as a proposition. It seems to me that while it is perfectly appropriate for the Secretary of State to issue guidance to local authorities, local authorities are elected bodies. They are supposed to be independent; they are supposed to be responsible—they certainly always were in my day; and they are supposed to be able to take rational and sensible decisions. They are also supposed to be able to handle resources sensibly and adequately. Yet, the Bill provides that:
"The Secretary of State may by order specify".
In other words, he can tell them in intimate detail what to do in operating their authority.
The purpose of Amendment No.19 is really very simple, although I must admit I have missed the target because I allowed my eye to drift. It is to delete the words,
"The Secretary of State may by order specify",
and insert the words,
"Guidance issued by the Secretary of State may include".
I went further beyond that because, again, I am afraid that I am old fashioned and I still believe in local authorities actually having some authority. I went on to remove the question of performance standards. I am happy that the Secretary of State should issue guidance and I am glad that local authorities should have to work with performance indicators. But it seems to me that if local authorities are in fact to be local authorities they should, for example, have some discretion in schools. Head teachers should be able to adjust class sizes where they have staff available in order to take care of a slightly less advantaged group, perhaps slightly at the expense of those who are more gifted. I am referring specifically to the issue of class size.
In my part of the country, a number of schools were running classes of 32, 33 or 34, but they did so specifically to take out smaller groups of 10, 12, 14 or fewer to give those in need additional assistance. They

37
no longer have that flexibility. I do not believe that it is the function of a Secretary of State to intervene at that level in the way a local authority carries out its functions.
From my point of view therefore there is here a deep and fundamental point, probably one on which at the end of the day we may have to agree to differ. It may be that ultimately we shall have to find out what is stronger in another climate. That is the purpose of putting down this amendment. I admit that I have missed the target in the way I have worded it but it is in fact a fundamental issue.
I believe in local government. The attitude that this clause reveals to local government is—at the very least—over paternalistic. If one wishes to go beyond that one could even say that it reveals the attitude of a busybody and someone who interferes. That, surely, is not the function of government. The role of government should be to facilitate local government, just as the role of local government is to facilitate the provision of services as local circumstances demand which happens to be something that central government cannot do. That is the reason local government exists. I beg to move.
Baroness Hamwee: I do not believe this clause is paternalistic or interfering in the sense of a busybody; it is really rather worse than that. I refer to the Secretary of State's intervention powers. However, performance indicators and performance standards have perhaps a greater significance than the word "busybody" suggests.
My next remark may apply more to standards than to indicators but I want to follow directly on from what the noble Lord has said. Having to meet centrally set standards simply means that it is not possible to establish local priority setting. There are certain standards which I am sure all noble Lords would view as being important to meet. I refer to such matters as ensuring that there is no abuse of children in children's homes. There are, however, many standards, and many indicators relating to them, which are of a much lesser, quite different, order. The noble Lord referred to class sizes, which was the example that occurred to me too. One cannot simply consider the number of children in a class without also considering the number of assistants who are available, other provision that is being made, what is happening in other schools around the area, as well as matters such as travel distance and so on.
Much is made by the Government of the best value duty that is owed to local people rather than to the Secretary of State. I agree with that. The best way of reinforcing that would seem to be to allow local flexibility and not to have this highly centralising—or at any rate potentially centralising—measure with regard to which I share the fears that have been expressed.
Baroness Miller of Chilthorne Domer: One of the difficulties with this section of the Bill concerns the mixing up of performance indicators and performance standards in one clause. A process must be established if you want local authorities to relate to their local people—whom we have just discussed at length—and their local community and to relate their services to their
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community plans. As regards local indicators, you would have to establish the following cycle: consult, set indicators, perform, measure, and then report. There is only one point in that cycle where national standards should apply; namely, when you are measuring what has been done. At that point it is useful to measure your local indicators against a set of national standards. That, however, is just one part of the process. It would then be for a local community to decide whether or not its local authority's indicators were appropriate. If the community decided they were not, no doubt it would like to ask the authority to do something about that. As the measure is drafted here, we have a great lack of definition between what should happen locally and what should happen nationally. It does not allow for local discretion. Although subsection (2) allows the Secretary of State to specify different performance indicators or standards, the spirit of the provision will simply mean that when he sees a reason to vary it he will do so, without allowing for any local discretion. I should have preferred to see that what happened to local councils was meaningful when it came to community planning, and that those national standards were simply a measure against which the local indicators were viewed and which then informed the way that a local authority would "re-set".
I can see why the Government have arrived at this provision. It is an effort to drag up the worst-performing local authorities. However it does not provide an appropriate incentive for the authorities that are performing well; although beacon status will no doubt mean that they are allowed different performance indicators and standards, it will also mean that those authorities that are not too bad, but are not brilliant, as beacon authorities will be allowed very little discretion locally. It will therefore be harder for them to become better authorities.
6 p.m.
Lord Bassam of Brighton: I am reluctant to enter into this debate, but reading the clause, looking at the notes and listening to the remarks of noble Lords opposite, I find the words at line 25,
"The Secretary of State may be order specify",
somewhat familiar. I am sure I have read those words in Bills in the past, and no doubt the noble Lord, Lord Dixon-Smith, will be familiar with them. He will no doubt have read them in local government legislation historically and perhaps in recent times too.
As a local government leader I see this clause as rather useful. It is not, as has been suggested, about centralising and putting the heavy hand of the centre on the shoulder of local government, but enables local authorities to raise standards in common, so that we can all reasonably expect a service from our local authority to hit a particular target, level or quality. In that light the clause should be welcomed. While I can understand any local government member or anyone with a history of local government involvement being horrified that the "big boss" of the centre will descend upon them and dictate how things should be done, it is not unreasonable that members of the public should expect a particular quality and standard of service. Looking back, I

39
remember that when Margaret Thatcher was Prime Minister she demanded of local government a minimum quality threshold. I see reasonable cause to support that notion. If that is what this provision attempts to achieve, I am sure that the Secretary of State will use his or her powers sparingly to that end.
There is much reference to the Audit Commission, and one has to pay tribute to the work that it has done in specifying standards and setting out indicators, which are not always easy to define in legislation. Here we have a practical way of doing it. The provision is not overly centralising; and as the clause later specifies, there are important opportunities for the Secretary of State to consult with such persons as he or she sees fit to determine how indicators might be defined.
We should try to see this as a measure of the centre saying,"This is what we should aspire to; if we fail and fall below that, it is not unreasonable that we should express a view and try to help the local authority to work to that standard". Given the initiatives that are being undertaken by local government through the IDA, that natural co-operation and spirit of help from the centre will be welcomed by many local authorities.
Lord Whitty: Like my noble friend Lord Bassam, I was slightly taken aback by the strength of the feeling that these were new, centralising powers never employed by previous governments. We all welcome conversion, but not only has my noble friend Lord Bassam quoted Margaret Thatcher, but the noble Lord, Lord Dixon-Smith, although he was at the other end of the "telescope" at that point, must recognise that this provision replaces a very prescriptive and interventionist regime. After all, the Bill removes CCT and universal capping. We all believe in local government and our intention is to give greater power back to local government. Best value provides a new context in which local government can take initiatives and operate in new ways to deliver to its people. However, there is also a national interest to be represented, and we make no bones about the fact that there are situations where the Secretary of State has to intervene to improve the performance of local government, to the benefit of local people.
The noble Baroness, Lady Miller, referred to the "mixing up" of terms. It may be helpful if I briefly set out where the various terms arise. These clauses allow the Secretary of State to specify, by means of an order, a number of different factors: performance indicators—by which we mean indicators against which the performance of best value authorities will be measured; the standards that those authorities will meet when exercising their functions; and key elements of their best value performance plans. Therefore, there are three separate approaches.
As to how the Secretary of State achieves the improvements in performance, there are a number of different ways in which he or she can intervene. In drafting this provision, we have considered carefully what is the right balance between secondary legislation and departmental guidance.
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In cases where there is a national interest or an overarching need for consistency, we have opted for an approach based on orders. We shall therefore use orders when setting out the performance indicators, the standards against which a best value authority must report, and the key elements which must be in a best value performance plan. Even the noble Baroness, Lady Miller, indicated that we need some yardsticks against which to judge that performance.
Where, on the other hand, we are seeking to promote a diversity and flexibility of approach which is related very much to local circumstances, we are of course approaching that via guidance—for example, when setting performance targets.
There is a national interest which we are recognising in the Bill. We need comparisons set down by order so as to measure comparisons between the performance of local authorities, but that is one key factor only. In other areas, we shall rely on guidance and promote flexibility and diversity within local authorities. There are, of course, already performance indicators. The Audit Commission uses them already, and we are building on the work that it has done. When intervention occurs as a result of Clause 14, it will be based on the current levels of performance as compared with other authorities. It is in the interest of authorities that those comparisons are consistent and that, if there is any question of intervention, they are based on a common approach and common criteria.
That has identified what lies behind the clause as drafted. Amendments Nos.55, 56 and 57 relate to those changes in the draft Bill. I have already made it clear that the Government believe it appropriate to provide the Secretary of State with order-making powers. Those powers will be supplemented by powers to issue guidance. A power merely to issue guidance, which is the purport of the noble Lord's initial amendment, is not sufficient to ensure consistency and transparency, and that local authorities know what performance they are expected to achieve. Orders would be subject to parliamentary scrutiny, whereas guidance is not. Therefore, intervention based on orders would relate to criteria which had been passed through parliamentary procedures.
Comparability in this area is one of the cornerstones of our approach to local government: uniformity, however, is not. We want consistency of performance and higher targets, but it is up to local authorities as to how they achieve those targets and the better value regime gives them the opportunity to do that. At the end of the day, local authorities will be judged both by their own electorates, and by the Audit Commission and the Secretary of State as to whether they have met the performance targets set.
Although much of the improvement can be achieved through guidance, I fear that if we remove the references to orders, we remove from the Secretary of State one of the major levers to achieve a genuinely best value regime. I fear that if these amendments were passed those provisions would be seriously diluted.
Lord Dixon-Smith: Shortly after I was asked, or told, to deal with local government in this House, I met the

41
Minister in the Prince's Chamber and warned him that I had spent a long time fighting the Government. I found it very difficult when I came to this place because I was then publicly very much more on the same side as my Government and I had to shut up. However, I would find it very easy to continue a battle that I had been fighting for a very long time. Although not always in public, I certainly fought the previous government for many years over the issue of whether it was good to have local government centralised in the way it has been going on.
If one looks at public attitudes to local government, and at the concern felt because of the electorate's lack of interest in matters local governmental—there was the less than 30 per cent poll last week—and if one wonders why, one can say that it is precisely for such reason. The public are very sophisticated—they are not bored and they are not dull and they are not uninterested—but they realise that all the major decisions are taken here, and that what happens at local level is, all too often, on the margins. They think that is a proper measure of their attention to local government. That is why I see this as such a fundamental issue.
I accept that there is a major problem at present, given the huge predominance in local government funding from the centre. Indeed, there will be no solution to the problem of public interest until that issue is resolved. It would certainly stimulate public interest if the electorate had a clear feeling that councillors could genuinely take decisions and that they were genuinely in authority. That view is not widely held at the present time.
I do not apologise for the way I introduced this particular issue today. When we come to the issue of the national interest and indicators, the Minister himself has said they already exist.
As regards ministerial intervention, there is an immense amount already and there will be in the future. However, even if we took it out of this particular clause, it seems that there is sufficient opportunity in other parts of the Bill for the Minister to get back in if he is feeling deserted an left out. I do not really have any concern about that, but I take on board the very serious point that parliamentary orders have parliamentary scrutiny, while guidance does not. I will consider that very carefully before we go any further down this particular road. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
6.15 p.m.
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No.20:
Page 3, line 28, leave out paragraph (b)
The noble Lord said: This amendment flows from what we have just been discussing. In this series of amendments we are simply setting out to remove standards and to retain indicators. It is part of the process of getting back local authority discretion and the ability for local authorities to control properly the provision of services in their own areas. I beg to move.
Lord Whitty: I am grateful for the noble Lord's brevity; it caught me by surprise after his eloquent speech in the previous debate, with which I have some
42
sympathy. He is suggesting in this amendment that effectively we should remove the provision for the Secretary of State to specify performance standards. We have felt that we need a number of different measures: performance standards, performance indicators and performance targets. During the previous debate I started to try to define the difference between these and the reason that we need all of them. Perhaps for the record I should say this slightly more fully.
Performance indicators are a measure of an authority's performance, for example the number of hours a particular service is available to users in each day. The Audit Commission has long—as the noble Lord indicated—set such indicators. Where appropriate, performance standards would set out the minimum acceptable level of service provision. For example, a standard might state that a particular service should be available to users for a minimum of eight hours a day. The Government do not intend to specify a large number of new standards, but there are some areas where we consider it is necessary to do so.
A performance target will set out what level of performance the authority needs to achieve within a specified time frame against the performance indicator, for example to increase in the next year the number of hours each day a particular service is available to users from eight hours to nine hours a day. Authorities will set their own targets against the performance indicators in any case.
We need all such measures, although the Secretary of State—or indeed the Welsh Assembly—will specify a relatively small number of performance indicators in order that we can achieve some degree of comparison between the performance of authorities on a number of key issues. At present the Audit Commission specifies over 200 indicators, and we are aiming to specify say 80–100 indicators, which may be supplemented by the Audit Commission. We are not aiming therefore to increase the burden on local authorities as compared with the current regime.
We may also specify a number of performance standards. Those standards would specify the minimum standards which authorities must meet if they are to achieve best value for that service.
The third element is target setting. Clause 4 which we are debating at the moment does not deal with targets, but I thought it was important to place on the record the distinction between those approaches.
These amendments would remove the provision to specify performance standards, and consequently would alter provisions subsequently in Clauses 5 and 6 regarding the carrying out of best value reviews and the preparation of best value performance plans. Where there is a clear national requirement it is our intention that the Secretary of State or the Welsh Assembly will specify the performance standards an authority must meet.
The White Papers indicated that the Government would take a clear lead on this matter, and the Bill makes provision for doing so in relation to standards. The aim is to specify a minimum acceptable level of service in areas where the achievement of particular

43
standards is clearly in the national interest. The ability to set and change standards over time will, in our view, be a key driver of improvements. This power will be used only where there is a clear national interest to do so. For example, if the Government set a target for all local authorities to achieve by, say, 2003, the intention is that by 2003 all authorities should be performing at that level. At that point that level of performance may become a minimum standard to ensure that performances do not fall below that level. Future targets would then seek to improve on that standard. In other words, there is a dynamism within this regime continually to improve the performance of local authorities in delivering their services. If one element were to be taken out, which is what the amendments seek to do, that regime would fall and the consequent improvement in standards generated by the new regime would also fail to materialise.
We do not believe that the amendments to delete the provision relating to performance standards would help the objectives of best value or indeed the broader objectives of helping local authorities to deliver services to local people.
Lord Dixon-Smith: I am grateful to the Minister for his reply. I shall study it very carefully to see how much further forward I wish to take the matter. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No.21 not moved.]
Baroness Hamwee Baroness Hamwee moved Amendment No.22:
Page 3, line 33, leave out ("authorities") and insert ("categories of authority")
The noble Baroness said: I shall speak also to Amendments Nos.38 and 72 which deal with the same issue. For the record, grouped with these amendments are Amendments Nos.80, 81 and 82 in the name of the noble Lord, Lord Dixon-Smith.
My three amendments deal with the wording of three different clauses. Under Clause 4 the Secretary of State is able, by order, to specify different performance indicators or standards for different functions and for different authorities, which is the issue, and to apply at different times. He has similar abilities under Clause 5 with a review of functions. Under Clause 15, which deals with the modification of enactments and the conferring of new powers, the Secretary of State can similarly make an order making different provision for different cases.
I said earlier this afternoon that it is important that the Government should dispel any whiff of an idea that authorities might be preferred on an improper basis. I am aware that the Government have indicated that, where the Bill refers at a number of points to different authorities, what is meant is different categories of authorities, such as, for example, island authorities, authorities with the functions of, say, a unitary authority, or county authorities, or police authorities, and so on.
With this group of amendments I am inviting the Government to confirm what they mean when they refer to different authorities in the various clauses. I beg to move.
Lord Dixon-Smith: Amendments Nos.80, 81 and 82 are grouped with these amendments. Amendment No.80 refers to page 14, line 36, Amendment No.81 refers to page 16, line 18 and Amendment No.82 refers to page 16, line 19. Amendments Nos.81 and 82 both deal with the question of whether one should be describing single authorities or categories of authorities. That is why we have the grouping.
I was somewhat careless to leave Amendment No.80 in the same grouping because it might seem to deal with the same issue but in fact it does not. What it actually deals with is accounting standards. Clause 22 deals with accounts. Subsection (1) provides that:
"The Secretary of State may make regulations about the keeping of accounts by best value authorities".
That is fine. However, subsection (2) provides that:
"The regulations may—

(a) require accounts and statements of accounts to be prepared, kept and certified in such form or manner as the regulations may specify".

They may also,
"require accounts to be deposited",
and
"require the publication of information about accounts".
However, we then come on to,
"make provision (which may include provision requiring payment)".
Subsection (3), which my amendment is dealing with, provides that:
"The regulations may—

(a) make provision in relation to best value authorities generally or in relation to one or more particular authorities;

(b) make different provision for different cases".

We are dealing with public authorities' accounting
standards. They are already, and rightly, fairly heavily prescribed so that the accounts are transparent and open and there is a reasonably common standard. In this way, anybody accustomed to looking at local authorities' accounts can look at one set and have some hope of comparing them with another set. Here, however, we have a power to make provision in relation to one or more particular authorities with regard to accounts, or to make different provisions in different cases. I confess to being extremely puzzled about that. I tabled the amendment in order to give the Minister the opportunity to explain why that should be necessary, as I must admit that I am unable to understand it.
Lord Whitty: There is a difference of approach in that the various amendments substantially limit the ability of the Secretary of State to designate particular groups of councils in different ways, except possibly by their normal categorisation as district authorities, county authorities and so forth.
Of course, it is important that all best value authorities should be subject to the same criteria, subject to the same review cycle and subject to reviewing all of their functions over a five-year period as we intend. It is also

45
vital, in order that the best value regime can operate effectively, to make, provision for authorities to be treated differently. This could be either by different category, as is clearly necessary, because different categories carry out different functions; or by different function, because different levels of authority carry out the same function; or by performance, in that underperforming councils may require particular attention; or by finances, when high spending councils may require particular attention; or by particular circumstances such as island authorities or areas of particular social need.
In my view, it is important that the Secretary of State does retain powers to discriminate in this way. However, that does not mean that the Secretary has open-ended power to pick and choose. There would have to be criteria and a consistency of approach. In relation to the designation of different authorities, authorities can be either categories of individual authorities.
Intervention powers under Clause 15 relate to cases which would include classes of authority. A class may be a category. In this case it would be very difficult to use the clause in relation to an individual authority unless such an authority is genuinely a singular case. In case that explanation is not clear I will convey it in writing.
The effect of Amendment No.72 would be to restrict the way in which the Secretary of State makes orders under Clause 15. The Bill envisages that the Secretary of State will be able to modify or exclude the application of existing legislation in relation to best value authorities, or confer new power; on those authorities. Those changes would be made through secondary legislation. We think it essential for the Secretary of State to be able to enact legislation which recognises that there are distinct types of authorities and that for each type particular provision would have to be made. That is not picking and choosing; it is defining categories of authority by consistent criteria.
Amendment No.80, to which the noble Lord referred, relates to accounting. Again, different accounting regimes may be appropriate for different types of best value authorities. Some best value authorities are unique, such as the GLA, the Broads Authority, and there may be others. If Amendment No.80 were to be accepted on its face value, the same accountancy regulations would apply either to all authorities or to none. On the face of it that would mean that a: own council or a parish council would have the same accounting requirements as the GLA. Clearly that is not the intention of the noble Lord and would not be a sensible outcome.
Amendments Nos.81 and 82 restrict the flexibility of any Secretary of State to issue guidance to different authorities. The Government have to recognise that different authorities carry out different functions at different times. Clause 25(2)(a) allows the Secretary of State to issue guidance to one or more authorities. This means that from time to time he may issue guidance which is addressed to a particular authority. That provision would also allow the Secretary of State to issue guidance to a particular category of authority. The legislation would also allow the Secretary of State to issue a different guidance to different authorities, thereby allowing the degree of flexibility that we consider necessary.
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The acceptance of Amendments Nos.81 and 82 would ensure that the guidance could not go to an individual authority but only to a category. That is unnecessary technically as the requirement for categories of authority is inherent in the term "one or more particular authorities", and the term "different authorities" would be unnecessarily restrictive in its effect. If a specific authority, or a group of authorities smaller than a category would benefit from additional guidance, it would not be helpful to prevent that guidance being issued.
These amendments therefore greatly restrict the flexibility of the Secretary of State to address particular issues which arise in certain contexts. It would not help the best value regime if guidance and accounting requirements, for example, cannot be differentiated as between massive authorities or authorities carrying out one function and those carrying out others, or indeed, by other criteria.
We would not be happy if any of these amendments were carried. They go to the heart of what is required to improve the performance of particular authorities and categories of authority up to the best standard which is the whole objective of the best value regime. To dilute the Secretary of State's powers in this respect would in our view be a serious dilution of the regime itself.
6.30 p.m.
Lord Dixon-Smith: Before the Minister sits down, I hear what he has to say which interests me greatly. However, I have not ascertained—he can correct me if necessary—whether the Bill makes all existing accountancy practices and regulations redundant and passé. If it does, then I accept what he says; if it does not, I admit that I still have some difficulty.
Lord Whitty: The answer is, no, it does not, but if the noble Lord's amendment were accepted, all future amendments to those regimes would have to be consistent across all authorities.
Baroness Hamwee: The Minister referred to the intervention powers. Clause 14 is one of the few clauses that this group of amendments does not seek to alter. So I, too, will read the noble Lord's remarks with interest. I thought that he had referred to intervention, as well as to Clause 15. I may have been mistaken.
Turning to the amendments that I have tabled, it seemed to me that the classes of authorities could be described in each case as a category. Different spending authorities and authorities with different levels of budget would fall within a particular category. The noble Lord mentioned under-performing authorities. In that case it is particularly important to have an even-handed approach. However, I am to some extent reassured by the noble Lord's remarks about consistency. I shall read the detail of this proposal with interest. I accept that there is perhaps more to it than there may first appear. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No.23 not moved.]
Baroness Hamwee Baroness Hamwee moved Amendment No.24:
Page 3, line 36, after ("consult") insert ("the local Government Association and")
The noble Baroness said: In moving this amendment, I shall speak also to Amendments Nos.25 and 27 in my name and to Amendments Nos.26 and 28 in the name of the noble Lord, Lord Dixon-Smith.
Amendment No.24 deals with the subject of consultation on performance indicators and standards and proposes consultation with the Local Government Association. I accept that Amendment No.28, which provides for consultation with the representatives of best value authorities, is probably a better amendment. It is wider both in regard to the authorities whose representatives would be concerned—best value authorities comprise more than just local authorities—and I also accept that not every local authority is represented by the Local Government Association. However, the thrust of the two amendments is much the same. The Minister has already said that there will be consultation as to both indicators and standards. I am happy to hear that. Indeed, it is what I should have expected. I therefore ask the possibly simplistic question: if that is the case, why not say so?
Amendment No.25 is consequential. Amendment No.27 again relates to the Secretary of State taking account of the representations of best value authorities in setting standards and indicators. I am particularly concerned to ensure that authorities are not so overburdened with national standards and indicators that they have no scope to reflect the needs and wishes of local people. This point has been drawn to my attention not only by local authorities, but by the Association of Police Authorities, which is concerned about this issue. Police authorities already have national objectives, set annually by the Home Secretary, which I understand are known as "ministerial priorities", with their associated performance indicators. Police authorities are also required to set local objectives and performance indicators and targets reflecting local needs. The association's main concern is to ensure that authorities are not so overburdened by national matters that they cannot reflect what is going on locally. I beg to move.
Lord Dixon-Smith: I have tabled two amendments which seek to amend precisely the same provision in the Bill. Amendment No.26 represents what I can only call my first thoughts. As regards Amendment No.28, I realised that if we were going to impose additional duties of consultation on the Secretary of State we ought to get it right. The Bill is about best value authorities and not exclusively about local authorities. With that thought I tabled Amendment No.28 in my name. While it is nice for the Secretary of State, under the terms of the Bill, to,
"consult such persons as he thinks fit",
he would be guilty of dereliction of duty if he did not consult best value authorities in this particular instance. I hope the Minister might feel able to accept that this is not an unreasonable imposition and possibly accept that amendment.
Lord Hunt of Tanworth: I support Amendment No.28. I see that the Secretary of State has to preserve the discretion to consult more widely as he thinks fit. However, not to have a reference on the face of the Bill to the representatives of best value authorities seems quite wrong. I support the amendment.
Lord Whitty: As a result of pressure in the other place I thought we had met the Liberal Democrats' point on this matter, but evidently that is not the case.
There have been many assurances that we would consult those who are specified in these amendments. That consultation would clearly include representatives of local government in England and Wales, and representatives of other best value authorities. That has always been the Government's intention and it is a commitment I am pleased to repeat. We must make sure that that consultation is as wide-ranging and as open as possible and that it includes not only the best value authorities but also the private sector, the voluntary sector, consumer organisations, trade unions and others. That is why the scope for consultation is designated as widely as it is within the clauses.
It is quite clear that our consultation will involve, for example, the Local Government Association in England and Wales and other appropriate bodies, both from local government and elsewhere. If we need to repeat that, we will do so as often as necessary.
In response to pressure in another place we have purposely used the precedent in Section 46 of the Audit Commission Act 1998, with which noble Lords pronounced themselves, broadly speaking, happy. That concerns the commission's existing powers to specify performance indicators and it clearly involves consultation with the kind of bodies referred to in these amendments. Those powers are generally recognised as comprehensive, and they enable as wide a range of views to be canvassed as possible. We do not therefore consider it necessary to specify on the face of the Bill what ought to be obvious, and what noble Lords have indeed indicated would be a severe dereliction of duty were the Secretary of State to fail to consult these bodies. We therefore regard these amendments as unnecessary and hope they do not need to be pursued.
Baroness Miller of Chilthorne Domer: This seems to be a matter on which there is general agreement. In another place the Minister gave definite assurances that it would be included in the provision. Nevertheless the Local Government Association still feels strongly that it should be explicit on the face of the Bill. The Minister has given no reason why it should not be on the face of the Bill. The whole thrust behind the setting up of the Improvement and Development Agency is that the best local authorities help everyone else to improve. I am afraid to say that I can still see no reason why this measure should not be explicit on the face of the Bill.
Lord Whitty: If one follows through that logic, one would also have to follow through other associations of representatives of other best value authorities and all the other groups I specified, from the private sector through to consumers and so on. Clearly a process of consultation does involve a large number of people. It would be absurd

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to assume that consultation excluded the Local Government Association and other equivalent representatives. If one starts specifying, the list of those specified will grow.
I understand that the noble Baroness is reflecting to some extent the views of the Local Government Association, and clearly we do have to bear that in mind. At this stage, I consider that if we were to specify them, we would have to specify others. I am happy to take further advice on that matter, but nevertheless that would seem to be the consequence at the moment.
6.45 p.m.
Lord Hunt of Tanworth: I seek to ask one question. I quite see that the Secretary of State will want to consult widely and will have to retain his discretion to consult who he wishes. But surely the people who are directly affected and to whom the best value is going to be applied are in a slightly different position, and you could specify them without having to specify everyone else.
Lord Whitty: Within the context of representatives of best value authorities there are other associations—the Association of Chief Police Officers, for example—you would have to specify as well, even within that limited specification, so it is not as straightforward as all that.
Lord Dixon-Smith: The Minister will forgive me for saying that the words he was using a few moments ago sounded very much like words I was using somewhat earlier when we were discussing the duty of consultation placed upon local authorities. He made, in slightly different words, almost precisely the point I was making. I find his reply disappointing. I think we will need to consider this one very, very carefully.
Baroness Hamwee: The noble Lord, Lord Hunt of Tanworth, has made what, if I may say so, is precisely the right point. I do not think any of your Lordships would go to the stake for the reference being to the Local Government Association. It is the representatives of best value authorities, and that might well include the Local Government Association, since local authorities or many of them would choose to be represented through that route.
As has been said, this is an important point. I do think the authorities which are directly in the frame have something to say which is of quite a different nature from consumer organisations and so on, to which the Minister has referred. I realise that parliamentary drafting is not the same as other types of drafting, but I was always taught to believe that when you start on a list you get yourself into trouble if you say "and others", because the others then would have to be of the same type as the list. Having one group referred to would not, in my view, mean that the Secretary of State would not be able, or indeed not have a duty, to consult more widely.
We may well need to return to this matter. I am not sure whether the Minister wants to speak again before I withdraw.
Lord Whitty: I have noted noble Lords' intention to return to this matter.
Baroness Hamwee: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos.25 to 31 not moved.]
Baroness Hamwee Baroness Hamwee moved Amendment No.32:
Page 3, line 41, at end insert—
("()shall aim to enable each authority to set its own objectives in relation to the exercise of its functions, and")
The noble Baroness said: Clause 4(4)(a) does not permit much variation. This amendment proposes adding an objective that the Secretary of State,
"shall aim to enable each authority to set its own objectives in relation to the exercise of its functions".
Clearly, the Secretary of State must have regard to the promotion of improvement because if continuous improvement is to be achieved that will be central. However, Clause 4(4)(a) does not on the face of it permit much local variation. I have said already this afternoon that, in my view, it is always necessary for an authority to set priorities in what it does because that is part of the political function. But the centralisation that is inherent here, or at least is in danger of applying—if I can be less pessimistic about it—could well be stilling. We have talked before about promoting local innovation or in any event activities which may not justify quite such a grand term as "innovation" but take forward new ways of doing things. It must be recognised that authorities should have the right occasionally to make mistakes, because they will not move forward unless they are able to make the occasional mistake. That is a fact of life.
I hope that we can have an acknowledgement from the Government that the specifications referred to in the clause do not mean uniformity. I beg to move.
Lord Whitty: I agree with most of what the noble Baroness has said, but I do not regard the amendment as necessary. The Government will specify where it is in the national interest to do so, but that should not inhibit local authorities setting their own performance targets and objectives. Nothing in the legislation restricts them from doing so. We will consult on national targets but local authorities can set their own targets. The amendment is therefore unnecessary.
Baroness Hamwee: I shall have to be content with that, which is not to impugn the Minister at all. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No.33 not moved.]
Baroness Hamwee Baroness Hamwee moved Amendment No.34:
Page 4, line 3, leave out ("must") and insert ("shall substantially")
The noble Baroness said: I shall speak also to Amendment No.35. We are dealing with Clause 4. Subsection (5) provides:
"In exercising a function a best value authority must meet any applicable performance standard specified".
The first of my amendments proposes that the authority must "substantially" meet the applicable performance standard. The amendment enables me to ask the Minister what are the consequences if an authority falls short by a small amount and, in particular, whether that shortfall would give a right of action to a member of the public—no doubt a council taxpayer—against the authority. That is the question asked on the back of Amendment No.34.
Amendment No.35 proposes that the authority's duty is to meet a performance standard
"so far as it is reasonably able".
There will be a range of factors which could make meeting a standard reasonable or which might indeed lead to failure to meet another standard. I do not have in mind only, or even particularly, having the funds available to reach a particular standard. Possibly the availability of staff qualified in different areas would be an issue. There might be a difficulty in recruiting at a certain time. Or a contractor contracted by the authority might itself fail; for instance, a refuse collection company might breach its contract with the authority or it might go bust. There would be a period in which the authority would be seeking to retrieve the situation and, as between the authority and the contractor, would be addressing the consequences of the breach of contract. If this is a series of minor breaches, the authority would require the contractor to remedy them in the usual way of a contract. Such a remedy, or retrieving the situation, cannot be applied similarly vis-á-vis the public and I am concerned, again, as to what the implications are for the authority if it behaves entirely sensibly in the sort of situation which I have outlined. It is a serious point to understand precisely what are the implications of Clause 4(5). I beg to move.
Lord Whitty: As regards the question raised by the noble Baroness as to whether an individual could take action, our legal advice is that it would be difficult, though not absolutely impossible, for an individual challenge to succeed. The applicant would have to demonstrate individual harm to himself or herself over and above that to anyone else, which may be a difficult proof to establish.
The example was raised of reacting substantively to failure, and, in terms of qualifying the requirement of local authorities to meet the standard, whether we could say that such a case should downgrade the effect of that requirement. I have spelt out previously the need for continuously setting targets for standards in order to improve the performance of local government. If we were to provide reasons for local authorities to argue that they should not be able to meet those standards, the effectiveness of those standards would decline.
I indicated earlier that we would have only a minimal number of minimum standards and that we would not be setting national standards right across the board but that we would expect local authorities to achieve various standards. Performance standards when specified would need to be met by all authorities and, without that requirement, performance standards would have significantly less potential to improve the delivery of
52
key services to local people. Therefore, I do not accept the arguments advanced by the noble Baroness that we should dilute the effect of those standards.
Baroness Hamwee: I did not seek to dilute the effect of the standards but to protect authorities from possibly frivolous, time-consuming, expensive and difficult actions. I should like to consider the matter further and perhaps take advice on it, having heard the Minister say that it would be difficult, but not impossible, for an individual to take action. In saying that, I am not suggesting that individuals should not have proper rights to take action against an authority, but there is a balance to be struck here. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No.35 not moved.]
Clause 4 agreed to.
Clause 5 [Best value reviews]:
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No.36:
Page 4, line 8, at beginning insert ("Where the Secretary of State is satisfied that a best value authority is failing to fulfil its duty to obtain best value,")
The noble Lord said: The amendment seeks to change Clause 5 from being a general clause, whereby the Secretary of State can make orders that will affect all or some authorities, to one which might affect one authority at a time. The amendment to Clause 5(2) provides that:
"Where the Secretary of State is satisfied that a best value authority is failing to fulfil its duty to obtain best value".
I accept that best value is a new duty and it will indeed impose restraints on local authorities. Local authorities have been reviewing their services for years. When I was involved in local government, large parts of the authority were always under review to see how those services could be improved. It would appear to be extremely doubtful, however, whether any one order in this instance could fit either one authority or one group of authorities, let alone local authorities generally, to require them to review all their services, if that job is to be done properly.
If best value is genuinely to be extracted, these studies take a considerable amount of time. They require a great deal of detailed work on what is already happening. One needs to refer to what is going on elsewhere, to see where and how improvements might be achieved and this, in itself, is a burden that already exists. When I read this clause I thought that dealing with the matter in a somewhat general way was possibly a little over the top. I have already admitted to being old-fashioned and my view of local authorities is that local government, certainly—and I suspect best value authorities, because police and fire authorities are also already doing it—are entirely familiar with this business of reviewing services to see how they can be better fulfilled. They do not, therefore, need to be told specifically or directed to do this.
On the other hand, there is the occasional authority which does slip up. It seems entirely appropriate that, if an authority does slip up, the Secretary of State should

53
have power to tell it to move and do what it ought to be doing. That would be the effect of the amendment that I have proposed. I beg to move.
7 p.m.
Baroness Farrington of Ribbleton: Amendment No.36 seeks, as the noble Lord says, to restrict the powers of the Secretary of State to specify a time period within which best value authorities have to review all their functions to cover only those best value authorities that he judges to be failing in their duty to obtain best value. This amendment would undermine the policy objectives of best value. All authorities must have regard to the general nature of the duty of best value as described in Clause 3. This contains an important element, namely to make arrangements to secure continuous improvement. Whether or not the Secretary of State is satisfied that a best value authority is currently meeting its duty to obtain best value is, therefore, something of a red herring. Best value reviews are a vital part of the process of securing continuous improvement, identifying the improvements we are seeking from local authorities. They will involve challenging the ways in which, and the level at which, the function is being exercised; comparing performance with other authorities and bodies; consulting local communities and assessing competitiveness. Such rigorous reviews should allow an authority to secure efficiencies through such means as greater economies of scale, partnerships in service delivery, reorganisation and better processes.
It is our intention that best value authorities should fundamentally review all their functions over a certain period—probably five years—to ensure continuous improvements are made, not just where there are serious shortcomings. This will enable targets for improving performance to be set and improvements brought about at an early stage. We can do this only if proper comparisons are made between authorities on a common basis. If a requirement is laid down on local government generally as to the period in which reviews are required to be completed, we do not want to wait for best value authorities to fail before they undertake such a review. We rather intend the review to be part of the process which, I quite genuinely admit, is a system which is adopted internally within many good local authorities now. We intend to prevent failure among those authorities whose performance can be improved.
We also made it clear in the interim guidance published in April, and elsewhere, that local authorities will be expected to explore the extent to which reviews can tackle a number of related services with a common customer focus or theme. Very often, some of those services will not be failing and the constraints which Amendment No.36 would impose would prevent that kind of holistic approach. The noble Lord is from the party which, in government, introduced CCT. It is still occasionally argued that the Government, in introducing best value, are not being stringent enough in terms of the interests of the consumer.
In the light of my assurance and explanation, I hope that the noble Lord will feel able to withdraw his amendment. Early evidence is that authorities need to
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be part of a process that will enable them to make valid comparisons with other authorities and to work co-operatively with government.
Lord Dixon-Smith: We are back in the business of whether we treat authorities as responsible and adult, or as children in nursery school. That is how I see this aspect of it. I regret it. I shall study the Minister's reply. She and I have debated matters of this type over many years and she will know and completely understand if I take no responsibility for what has gone before—from any government. I have been involved in local government for a very long time. I shall study what has been said. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Chairman of Committees (Lord Skelmersdale): In calling Amendment No.37, I should advise the Committee that, if agreed to, I cannot call Amendment No.38.
Lord Dixon-Smith Lord Dixon-Smith had given notice of his intention to move Amendment No.37:
Page 4, line 10, leave out paragraphs (a) and (b)
The noble Lord said: This amendment follows on from the previous one. If the previous amendment were accepted, then this would become necessary to make sense of what is written there. It is in that sense that it was advanced.
[Amendment No.37 not moved.]
[Amendment No.38 not moved.]
Baroness Hamwee Baroness Hamwee moved Amendment No.39:
Page 4, line 12, leave out paragraph (c)
The noble Baroness said: I shall be brief on this amendment. It seeks to leave out Clause 5(2)(c) which allows the Secretary of State, in specifying a period within which an authority is to undertake the review, also to require specified functions to he reviewed in specified financial years. It seemed to me that this was more detailed than was likely to be required. In the introductory words, specifying a period within which an authority is to review all its functions, the Secretary of State has wide powers. I accept that that may mean that a particular function may be reviewed in year five rather than in year one. Again, under a provision so detailed and prescriptive, the authority itself is given very little scope to take its own decisions as to how to go about fulfilling its duties. I beg to move.
Baroness Farrington of Ribbleton: As the noble Baroness said, the amendment would remove the flexibility and discretion that the Secretary of State needs to be able to specify functions to be reviewed in particular financial years as circumstances warrant. For example, if a best value authority should attempt to delay or avoid conducting the reviews of some of its services, or face a particular crisis in its method of providing services, it is essential that the Secretary of State has powers to direct that they are carried out quickly and effectively. I therefore urge the noble Baroness not to press the amendment.

55
In seeking to ensure the retention of this power, we believe it would be local communities that would be most disadvantaged if either this or the previous amendment were agreed. We believe it is essential to have these powers. I stress that they are powers, rather than a provision that would be used automatically.
Baroness Hamwee: I note that. I am glad to hear that these powers would not be used automatically. But this is possibly an area where we must agree to differ. We are not tainted by the history of compulsive competitive tendering, so I feel entirely confident in protesting about centralisation. I am disappointed that the Government feel it necessary to provide scope for so much central direction. I understand the point that the best value duty is owed to local people, not to the Secretary of State. The difficulty is that when one reads the words of the Bill, it is hard to fit them with that concept. However, I note the Minister's remarks.
I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos.40 and 41 not moved.]
Baroness Hamwee Baroness Hamwee moved Amendment No.42:
Page 4, line 19, leave out from ("may") to end of line 21 and insert ("issue guidance as to matters for inclusion by an authority in reviewing a function under this section; and in particular guidance may guide an authority—")
The noble Baroness said: I shall also speak to Amendments Nos.47 and 48. The amendments deal with the subject of order or guidance in the context of best value reviews. Amendment No.42 substitutes, in slightly clumsy words, a requirement for guidance in place of an order-making power. I say "clumsy" because I was uninspired as to what verb could be used at the end of this provision without having to amend sub-paragraphs (a) to (i) in Clause 5(4)."Guidance may guide" is not very elegant; however, I am sure noble Lords understand what I seek to do in this amendment. It asks whether it is necessary for the Secretary of State to order the matters to be included in a best value review.
Amendment No.47 seeks to provide guidance making,
"different provision for different categories of authority",
in Clause 5(5). Elsewhere the Bill allows different provision for different cases, but I am not clear whether that is the case here. Again, I ask whether there is to be uniformity or variety.
Amendment No.48 requires consultation before guidance. I would say that before an order as well, but I have chosen to go the guidance route. The amendment states:
"Before issuing guidance … the Secretary of State shall consult representatives of best value authorities".
That enables me, I hope, to ask what consultation the Secretary of State will undertake. The Government have spelt out that the best value authorities themselves are to undertake consultation. This is a mirror image of that provision. I beg to move.
7.15 p.m.
Lord Whitty: An earlier group of amendments tabled by the noble Lord, Lord Dixon-Smith, sought to remove provisions for the Secretary of State to make orders and replace them with guidance. In the event Amendment No.42 would have the same effect and I would prefer not to have to repeat my arguments at this hour.
As far as consultation is concerned and the burden of Amendment No.48, that seeks to ensure that consultation takes place with representatives of best value authorities before the Secretary of State issues any guidance. I remind the Committee that Clause 25, which deals with any guidance issued by the Secretary of State, already provides that before issuing any relevant guidance the Secretary of State must consult the authorities concerned, or persons appearing to him to represent them. I think therefore our provision as regards in the requirement for consultation is clear.
Baroness Hamwee: I shall read what was said on the earlier amendments with regard to order making powers rather than guidance. I am not immediately convinced that the same arguments apply, but nevertheless I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hamwee Baroness Hamwee moved Amendment No.43:
Page 4, line 32, at end insert ("and by the voluntary sector")
The noble Baroness said: I shall speak also to Amendment No.44. These two amendments refer to the voluntary sector and seek to add a requirement that it should be included as regards the assessment of competitiveness and as regards the consultation process. The Minister may tell me that this is unnecessary because the voluntary sector is included in "other businesses" which are referred to in this paragraph.
I would like to be assured that the voluntary sector does have a role in these areas. It is now responsible for some functions and matters that are closely allied with functions of local authorities, which otherwise local authorities might themselves have to carry out. It certainly has close links with local authorities in many areas and will hold views on these matters.
We are all aware of the work done by the citizens advice bureaux in the area of housing. Registered social landlords and the providers of specialised accommodation—who certainly in my mind come within the area we are discussing—will also have views on these matters. To take one last example, organisations looking after the needs of refugees will have ideas as to how best a local authority may carry out its functions, and again would want to have a formal role in commenting on that. I beg to move.
Baroness Miller of Chilthorne Domer: I do not believe that the voluntary sector would include itself in the category of other businesses. I have certainly never heard it refer to itself in that way. This matter is particularly important given the growing awareness of what the voluntary sector can deliver. I refer to what has happened in the south-west recently. Because of the way that Objective three funding is changing the voluntary sector is reorganising itself, probably in a quite different

57
way than it has in the past. Local authorities will come to have ever-increasing service level agreements, for example, with the various members of the voluntary sector. Indeed, my noble friend has mentioned the CAB, but the CBS in various areas runs social car schemes which, in terms of the DETR's ambitions about integrated transport and so on for rural areas, is another example of a particularly crucial area of work. Therefore, given the fact that very' few people in the sector and certainly those outside do not regard the voluntary sector as coming under "commercial and other businesses", I see no reason why it could not be included in its own right as it is a particularly important sector and one that we would all want to encourage.
Baroness Farrington of Ribbleton: I am grateful to the noble Baroness for raising this issue. Amendment No.43 is designed to add a specific reference to the voluntary sector to the bodies already listed in Clause 5(4)(e) against which the Secretary of State may by order require best value authorities to assess their competitiveness. Amendment No.44. would add a specific reference to the voluntary sector to Clause 5(4)(f), which provides for consultation with,
"other best value authorities and commercial and other businesses".
Consultation is one of the key elements listed as a particular matter that the Secretary of State may specify by order for inclusion in best value reviews. The existing provisions refer to,
"best value authorities and to commercial and other businesses"
and I am clear that the voluntary sector will have an important role to play in their best value.
However, I consider that neither amendment is necessary. The word "businesses" is construed as including non-profitable organisations so there does not, therefore, need to be a specific reference to the voluntary sector. Indeed, our interim guidance made it clear that the Government welcome the development of partnerships for service delivery which span and combine the public, private and voluntary sectors.
This is something which we would be willing to undertake to elaborate in guidance under the provisions of the Bill or, to be more specific, in the order which sets out the elements of the review.
I hope that in light of this explanation the noble Baroness will agree to withdraw the amendment.
Baroness Hamwee: That reply is very helpful and I am glad to note the Minister's proposal made at the end of her response to make this clear in guidance or in an order. The drafting of it is something which is occasionally quite difficult and I appreciate that non-profit organisations may well be businesses but I agree with the Minister that it is important that the voluntary sector understands that it is not being edged out by this provision. Either of those solutions would be extremely helpful. I put it that way because I can see that, in making. it clear in the order that "other businesses" includes the voluntary sector, it might suggest that there are other places where the voluntary sector is not included in the term. So there could be
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some difficulties of drafting there and it might be one place where the reference in guidance might be more acceptable. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos.44 to 48 not moved.]
Clause 5 agreed to.
Clause 6 [Best value performance plans]:
[Amendments Nos.49 to 53 not moved.]
Baroness Hamwee Baroness Hamwee moved Amendment No.54:
Page 6, line 5, at end insert ("and the extent to which an authority's duties under this section may be met by its compliance with any other enactment")
The noble Baroness said: This amendment raises the issue of compliance by best value authorities with other enactments and most specifically seeks to request the Secretary of State in his guidance on the form and content of the best value performance plans and the manner of their publication to include the extent to which an authority's duties may be met by compliance with another enactment.
There is now a variety of statutory plans and requirements that local authorities must meet. Education development plans seem particularly to be referred to in this context. By contrast, annual policing plans under the Police Act 1996 are the subject of a specific provision for co-ordination with other plans. I have tabled the amendment in order to ask the Government how the other existing strategy plans tie in with performance plans.
The Government have recognised the need for co-ordination in the case of inspection with the clause which was added to the Bill in another place. It seems to me that there is an argument for recognising the co-ordination of plans as well. I understand that more than 35 statutory planning requirements have been identified. We need some guidance here to ensure that there are the proper connections between the various plans and local performance plans. For various obvious reasons, one of which is that the local performance plan must be readable, it must be accessible in every sense of the word. To have a variety of parallel but apparently unconnected plans would be confusing and could even be counterproductive to the aims of the Bill. I beg to move.
Baroness Farrington of Ribbleton: This amendment is not necessary. Its effect would be to extend the scope of guidance which the Secretary of State may issue on the form and content of best value performance plans and the manner in which they should be published. It seeks to add a specific reference to the extent to which an authority's duties in relation to a plan may be met by compliance with any other enactment.
Perhaps I may reassure the Committee that the statutory duty of best value will apply to all local authority functions and services. The best value performance plan will be the principal means by which authorities are held accountable to local people for their performance in delivering local services and its

59
proposals to improve. I note the noble Baroness's reference to the need for plain English to be one of the performance targets.
We recognise that both other statutory requirements and other statutory plans, while serving as free standing requirements, will also underpin best value. Where targets are set under these other arrangements we would expect them to reflect a best value dimension. Local authorities should be able to view the existing plans as forming the production of the best value performance plan rather than as an additional burden. Where statutory plans are already in existence, it would be sensible for these documents to support the best value performance plan.
As the annual plan will need to report on the full range of services provided by the authority and the plans for meeting targets for improvement, it is implicit that this will embrace actions being undertaken on all fronts by the authority, under whatever enactment those are pursued. The various plans will report directly on compliance with specific legislative measures and the performance plan can reflect this information.
We recognise the point made by the noble Baroness, Lady Hamwee, that the various statutory plans need to complement one another. Our interim guidance made it clear that we have already had helpful discussions with the LGA about how this may be achieved and unnecessary duplication avoided. At the same time, the best value performance plan will play a valuable role in pulling together information from various sources which are of corporate relevance. As the interim guidance also points out, that is vital if local people are to have a rounded picture of their authority's performance.
There is therefore no need for this specific provision. I hope that the noble Baroness will feel able to withdraw her amendment.
7.30 p.m.
Baroness Hamwee: I thank the Minister for that reply because she seemed to be saying that the guidance would deal with the point about which I expressed concern—and she is nodding at that! On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 6 agreed to.
Clause 7 [Audit]:
[Amendments Nos.55 to 57 not moved.]
Clause 7 agreed to.
Clause 8 agreed to.
Clause 9 [Response to audit]:
On Question, Whether Clause 9 shall stand part of the Bill?
Baroness Hamwee: Perhaps I may take this opportunity to ask the Minister what is meant by the term "publish" in Clause 9? The extent of publication may be a matter of concern to a best value authority. I am not now seeking to protect an authority which has something it might wish to hide. On the contrary, if a
60
report is favourable a best value authority would be very glad to publish in the sense of informing the public that it has had a favourable report, but it may not want to be put to a lot of expense. Will publication in an authority's agenda and meeting papers be adequate to meet the requirements of Clause 9(1)?
Lord Whitty: I doubt it, but I would need to take advice on this matter. If the noble Baroness would bear with me, I should be grateful if she would accept a written reply to that question.
Baroness Hamwee: I will bear with the noble Lord and I am sure he will take on board the point that I have made. I do not suppose the Government, any more than particular authorities, will want money to be spent where it is not necessary to do so.
Clause 9 agreed to.
Clause 10 [Inspections]:
Lord Dixon-Smith Lord Dixon-Smith moved Amendment No.58:
Page 8, line 27, at end insert ("and appoint an inspector to carry out the inspection.")
The noble Lord said: In moving this amendment, which is grouped with Amendments Nos.59 and 64, I should say that Amendments Nos.58 and 64 are very directly related. This is a point of drafting convenience and the Minister does not have to accept it, but in my view it would make the Bill somewhat tidier. In Clause 10(2), the Secretary of State can direct the Audit Commission to carry out an inspection and,
"the Commission shall comply with the direction".
Then you are left out in the cold.
At the start of Clause 11, an inspector appears out of the air and his duties and functions are all set out. But in fact it is not until the end of Clause 11 that you find that this inspector has any relationship with Clause 10(2)! I find that drafting slightly odd, so I have suggested in Amendment No.58 that the inspector should be appointed in compliance by the commission with the Minister's direction and then I have deleted Clause 11(7), which becomes redundant.
My other amendment in the group is to Clause 10(3), which provides that:
"Before giving a direction under subsection (2) the Secretary of State shall consult the Commission".
It would not seem unreasonable under the circumstances that he should also consult the authority concerned. At this time of night, I do not propose to say any more. Two of them stand on their own and the other is for consideration. I beg to move.
Baroness Hamwee: My Amendment No.60 is grouped with these amendments. It seeks to provide in Clause 10 that the Audit Commission shall have regard to recommendations under Clause 7(4) and the Secretary of State's guidance and shall have regard to any conducted by the best value authority and its own performance plan. By tabling this amendment, I make the point that the starting point for an inspection should be the authority's own best value review and its own

61
performance plan. In particular, it should not be an opportunity for the Audit Commission to challenge the authority's policies, made properly, openly and on a democratic basis.
The Bill quite properly starts the best value process by having the authority examine itself. Those documents and that work should have a very significant place in the commission's own inspection.
Lord Whitty: I am grateful to the noble Lord, Lord Dixon-Smith, for trying to tidy up the drafting for me. I had not completely understood the motivation behind this clause and, if he will bear with me, I shall need to take account of what he has said about Amendments Nos.58 and 64. As I read the amendment, it seems slightly to misunderstand the situation because the Audit Commission will obviously secure a supply of inspectors. It will employ them in the same way as it employs auditors and they will therefore already be employees of the Audit Commission or agents of it. There will not therefore be an appointment. I shall, however, consider the points that the noble Lord has made.
Amendment No.59 is undesirable in particular circumstances as it would place constraints upon the ability of the Secretary of State to act swiftly to investigate poorly performing authorities. For routine inspections, it would be sensible for the authority about to be inspected to be consulted, and that is understood. There will be cases. where there has been serious failure or possible fraudulent or criminal activity, where it is clear that inspectors may need to act quickly. That would be constrained by Amendment No.59 as drafted. I therefore wish to resist that amendment.
I understand the objective of Amendment No.60 and I am sympathetic to it, but I do not consider it necessary. The clause already provides for inspectorates to have regard to guidance and that guidance already provides us with a mechanism to ensure that the audit will take on all relevant considerations, including the provision of the local authority's own pre-existing plan. Indeed, the notion of building On an authority's own review and on other relevant work by the authority will be reflected in a document to be published later this week by the Audit Commission. In view of that practice, Amendment No.60 would achieve very little and, in certain respects, could be counter-productive in that it would set the local authority's review against requirements set by the Secretary of State or the National Assembly.
I hope that, with the assurance that the normal course of events would take into account existing reviews from the local authority, the noble Baroness will feel that she does not need to press her amendment.
Baroness Hamwee: Before the noble Lord, Lord Dixon-Smith, responds on his amendments, am I right in understanding: hat guidance issued under Clause 10(4)(b) will include the requirement to have appropriate regard to the best value review and the
62
performance plan? The Minister said that it would give the opportunity for it. Is it intended that the guidance will do that?
Lord Whitty: Yes.
Lord Dixon-Smith: I heard what the Minister said about my amendments and I shall await his consideration on Amendments Nos.58 and 64 with some interest and, possibly, trepidation. On Amendment No.59, his response might prompt me to table a slightly different amendment next time because it seems to me that if this is going on, the authority concerned at the very least should be informed.
I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos.59 and 60 not moved.]
Clause 10 agreed to.
Clause 11 [Inspectors' powers and duties]:
Baroness Hamwee Baroness Hamwee moved Amendment No.61:
Page 9, line 7, leave out ("three clear") and insert ("ten clear working")
The noble Baroness said: In moving this amendment. I wish to speak to Amendments Nos.62 and 63. With these amendments we move to the subject of inspectors' powers.
The first amendment relates to Clause 11(4) and seeks to understand why it is necessary for the minimum notice given by an inspector to be as little as three clear days. My amendment proposes 10 clear working days.
This is not a criminal investigation to be undertaken by the inspector. If there is a concern that an authority which is to be inspected might destroy the evidence, there should be stronger powers to allow an inspector to walk straight in. I am not proposing 10 days to allow the authority to do such things as shredding its documents, but I seek to make the point that the authority will have to continue to work while it prepares for the inspection. I have no doubt that I shall be told that three days is the minimum notice, and I make the point in anticipation of that.
I am sure that many Members of the Committee will have witnessed what happens when an Ofsted inspection is due in a school. I do not put that forward as a model, but it is very clear that most schools make huge efforts and put in considerable time in preparing for that inspection. That is an issue which needs to be dealt with, but the fact is that the prospect of an inspection tends to provoke such a reaction. I am concerned that an authority shall not be distracted from its day-to-day work in serving the public by having too short notice.
Amendments Nos.61 and 62 seek to amplify 10 clear working days by defining the working day in the same way as in Clause 9(7). I tabled that, noting that the three clear days in Clause 11(4) may not be three clear working days since working days are not referred to. A few times a year could mean that the three days are Saturday. Sunday and a Bank Holiday Monday. That would clearly be absurd, but we should not even allow for the absurd.
Amendment No.63 seeks to leave out Clause 11(5). That clause makes it a criminal offence for someone without reasonable excuse to fail to comply with the requirement of an inspector, and to make that person liable to a fine on conviction.
If an employee fails to comply with an inspector's requirement, I dare say that failure will follow him or her throughout their careers. At a time when the Neill Committee has recommended the end of surcharge and so on, is it really appropriate to import a criminal offence into the Bill? I feel this is particularly heavy-handed. I beg to move Amendment No.61.
7.45 p.m.
Baroness Farrington of Ribbleton: Clause 11 is intended to give statutory weight to requests for information and assistance where an authority being inspected is not co-operating fully with the inspector. We know from existing statutory inspectorates that most inspections take place in a spirit of co-operation. We therefore expect that the clause will be used only as a last resort where that co-operation is not forthcoming.
In the vast majority of programmed inspections, notice will be given to authorities well in advance in order that documents can be made available and arrangements made so that key personnel are on hand. This will merely confirm and extend current practice. Best value authorities will be given advance notice of inspection and the requirements thereof, and it is anticipated that the period of such notice will normally be greater not only than the three days set out in Clause 11 but also than the 10 days proposed by Amendment No.61.
However, where there is a cause for concern there may well be a need for an urgent ad hoc inspection. For example, evidence of fraud may have come to light. In such an eventuality three days is adequate notice for an authority to arrange access to a building, document or person. These provisions mirror the conditions for extraordinary audit found in Section 25(4) of the Audit Commission Act 1998.
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I note that the amendment proposes that "clear days" should be replaced by "clear working days". The phrase "clear days" is also found in the Audit Commission Act 1998 and has presented no difficulties in that context. We therefore do not consider it necessary to change the requirement here.
Clause 11(5) creates a criminal offence in cases where a person without reasonable excuse fails to co-operate. This specification is entirely consistent with the approach outlined in Section 6(6) of the Audit Commission Act in respect of non-co-operation with auditors. Amendment No.63 would remove that provision.
As I have explained to the Committee, we regard this kind of provision as very much a last resort measure. Such an assumption reflects the current experience of inspectorates. However, the threat of prosecution resulting in a fine is a vital element in the enforcement of an effective inspection regime where authorities or individuals are not co-operative. The inspectors must have the powers to do their job effectively. Clause 11 achieves that as drafted.
I hope that the noble Baroness will be reassured by my explanation and will thus be content not to press the amendment.
Baroness Hamwee: I recognise that the criminal provision must be a matter of last resort. Otherwise there is the awful prospect of magistrates' courts being clogged up. However, I would have hoped that it would have been a matter of no resort at all. I note what the Minister has said. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos.62 to 64 not moved.]
Clause 11 agreed to.
Clauses 12 and 13 agreed to.
Baroness Farrington of Ribbleton: This may be a convenient time for the Committee to adjourn until Wednesday 12th May at 3.30 p.m.
The Committee adjourned at twelve minutes before eight o'clock.