HL Deb 07 April 1970 vol 309 cc9-22

2.52 p.m.

THE PARLIAMENTARY SECRE-TARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD KEN-NET)

My Lords, I beg to move that this Bill be read a third time.

Moved, That the Bill be now read 3a. —(Lord Kennel.)

On Question, Bill read 3a.

Clause 1 [Supply of goods and services by local authorities]:

LORD DENHAM moved Amendment No. 1: Page 2, line 3, leave out ("or").

The noble Lord said: My Lords, when I moved a similar Amendment at Committee stage, the noble Lord, Lord Ken-net, persuaded me to withdraw the Amendment so that further consideration could be given to it. I spoke at great length on the Amendment at Committee stage. It was a rather wider one and covered a little more ground than the Amendment we are discussing this after-noon. I do not think it is necessary to repeat all the arguments I deployed then, but if I speak more shortly I hope the noble Lord will not assume that I am less resolute over this Amendment than I was over the previous one.

The general principle of the Bill, which we agreed at Second Reading, is that a local authority should be able to supply goods and services to a public body, but with a specific exception made in the Bill, under Clause 1(2)(a), that no local authority may construct new buildings or works for a public body, although they may carry out works of maintenance for that body. In moving the first two Amendments I would suggest to your Lordships that there is an equally good case for excepting from the general enabling powers of this Bill the purchasing and storing of building materials for supply to a public body for the construction of new buildings and works, although under my Amendment this would not prohibit their supply for works of maintenance.

At the Committee stage I explained the enormous range of goods dealt in by builders' merchants—between 30,000 and 50,000 different items, any of which might be called for in a construction work undertaken by a public body. While I am asking your Lordships to make a particular exception in this particular trade, I would say that I cannot think of any other trade that has comparable complexity in the matter of numbers of items, storage and different types of materials. Some of these goods are in constant demand and have a quick turnover; some are very specialised items which are called for only rarely but when they are needed they are essential; and of course there are many grades between the two extremes. But in any list of a builders' merchant's stock placed in order of the extent of demand of each item, one could draw a line at some place on the list above which the items show a profit and below which they do not show a profit but are kept as a service. The builders' merchant is not a user of his own goods, so if he concentrates too much on the profitable end he loses customers by not giving the service; if he concentrates too much on the rarer items he risks making a loss. He must use his skill and experience to balance his business.

When we consider whether local authorities should be enabled to act as builders' merchants, two questions arise. First, can they do it properly? And, secondly, will they do it fairly? When I cast doubt on the first question at Committee stage, the noble Lord, Lord Kennet, ridiculed the suggestion. He said that I had not put down an Amendment to deprive councils of the right to share a computer, and if I thought that maintaining a stock of building materials was a more specialised skill than running a large computer, I would think anything. He was even more lyrical when dealing with an Amendment of mine about the meat trade. But surely the noble Lord must realise that this argument just does not hold water. A computer is infinitely more complicated than, for instance, an internal combustion engine. Yet I know of men who are skilled in programming a computer who have no idea what to do when their cars come to a juddering halt. Some of them do not know even how to open the bonnet. The fact that one has one highly specialised skill does not mean that one automatically possesses all lesser skills, particularly when the skill in question is acquired only with years of experience. While I cast doubt then, and still do, on a local authority's being able profitably to set up as a builders' merchant, I have no doubt that they would be able to show a profit to their rate-payers by dealing in a few of the more profitable items.

That brings me to the second question: Will they do it fairly? If local authorities supply the bulk of the profitable materials for a large proportion of the new buildings and works, and rely on builders' merchants to supply the un-profitable ones, some builders' merchants may go out of business; more will have to cut down on the service they offer. This will be to the detriment of the building trade, the general public, and eventually local authorities themselves and their ratepayers. The noble Lord said at Committee stage: "Give these powers to local authorities, and if they think it is to the advantage of their ratepayers it is right that they should be able to use them." But this is the crux of the matter. Local authorities have only their ratepayers to consider; and it may well be to their short-term advantage that they should have and use these powers so far as building materials are concerned. But your Lordships have to consider not only the short term but also the long term, not only the ratepayers of individual councils but the public as a whole. This is the responsibility that I believe it would be inappropriate to pass on and leave to the local authorities. My Lords, I beg to move.

LORD KENNET

My Lords, with the permission of the House I will follow the noble Lord in discussing, as I think he was discussing, the first two Amendments together. The first is purely a paving Amendment for the second. I promised at an earlier stage to think again about this matter, and this I have done. I find that the four main arguments that have been advanced at different stages for excluding building materials from the powers that the Bill will give are, first, the interests of the builders' and plumbers' merchants; second, that the merchants will face unfair competition from local authorities who can subsidise their activities from the rates, a point that the noble Lord made explicitly last time but which I think he has omitted to-day; and third, that local authorities are unlikely to be able to do the job efficiently because of the specialised skills entailed. The fourth argument, although the noble Lord did not mention it again to-day, was that Parliament has already decided, during the passage of Private Bills, that supply should be left to the private merchants. I think the noble Lord did not lean on the fourth argument, so with his agreement I will omit that one and address myself to the first three.

I would remind the House that the Bill does not empower local authorities to sell to the general public and our experience suggests that, even if authorities combine their purchasing arrangements, they will continue to buy the majority of the goods and materials they need for their building operations through builders' merchants. Our inquiries show that the authorities who already have local Act powers to supply building materials buy the majority of those materials from merchants. The discounts obtainable by direct purchase from the manufacturers are usually insufficient to offset the cost of storage, including administrative costs, breakages, thefts and losses, and so on. Moreover, the merchants offer advantages in the way of quick deliveries and service.

The Bill may indeed benefit the merchants to some extent by enabling local authorities to combine their purchasing and thus place large standing contracts with them, which at the moment they may not be able to do. A standing con-tract enables the merchant concerned to negotiate larger discounts from the manufacturers. It stabilises his trade and reduces the variety of items that he has to carry in stock. The West Riding of Yorkshire has already provided examples of such arrangements. On the other hand, there are some goods used in construction and maintenance work on which large savings can be made by purchasing directly from the manufacturers. The outstanding example is paint, where savings of up to 25 per cent. can be made in this way.

I turn now to the question of rate-supported competition. I do not really understand the fears that have been ex-pressed on this point. An authority which makes a practice of running its purchasing activities at a loss would soon be in trouble with the district auditor. But what authority is going to subsidise a trading activity from its own rate fund for the sake of keeping down the rates of another? That is what we are dealing with in this part of the Bill. In any case, the provision in Clause 2 of the Bill which requires a separate account to be kept of transactions under the Bill and to be made available for inspection was introduced by the Government in Commons Committee precisely to meet fears of this sort, and I think that should take care of the point.

Thirdly, there is the question of the efficiency of local government purchasing. If the Bill were proposing that local authorities should set up as retail builders' merchants trading with the public, the argument that they could not do the job efficiently might be valid. But the Bill does nothing of the sort. It simply enables one local authority to enter into an agreement with another local authority to supply goods and materials.

The reason why the trade of a retail builders' merchant is complex is that he has to keep up with changing fashions and stock vast quantities of different pat-terns of so many items simply because so many customers demand something different. His expertise lies in part in anticipating changes in the market and buying accordingly. But under this Bill the local authority will "enter into an agreement to supply" another authority. That is the phraseology of the Bill. In practice, as has already happened in counties which have local Act powers, the county supply organisation can be expected to use its expertise to buy for the district councils those supplies which it had agreed in advance to provide them with, and all the indications available to me are that this can be done efficiently and economically.

Lastly, with regard to the noble Lord's jeu d'esprit about the computer and the motor car which stopped, it is of course true that the computer technician or scientist may not know how to mend the motor car. But I was not suggesting that it was the same genius who ran the computer who would be able to run the store of building materials, but rather that the same authority that could attract, pay, keep and manage men skilled in running computers could probably pay, keep and attract men skilled in running yards of building materials.

All that being so, my Lords, I hope that at least I have convinced the noble Lord, Lord Denham, and noble Lords opposite that I have been into this matter again thoroughly. I hope I may even have convinced them—and I hope the noble Lord may agree with me in this—that the Bill will not be any danger to any-body if it is left unamended.

3.6 p.m.

LORD DENHAM

My Lords, I have enjoyed the noble Lord's speech very much, but I regret to say he has not convinced me in the slightest. Indeed, I felt that many of the things he said about the complexity of the builders' merchants' trade, and particularly the fact that even with these powers the local authorities would still have to use them—and most who have these powers already do—are a very good argument for putting my Amendment into the Bill. What I am worried about is not the local authority that continues to use the builders' merchant, who will make good use of these powers, but the local authority that will try to skim the cream off the supply of building materials, and to my mind this will be a severe detriment to the country.

The noble Lord said that I did not use my argument about the Private Bills, which I put to your Lordships at great length at Committee stage. In fact, I tried to cut down my speech to-day because I felt I had been over-long on the previous occasion, but I do not depart in the slightest from that argument. These powers have been denied to local authorities, in many cases after a great deal of evidence about the sort of complexities that exist in this trade have been heard and after the arguments have been deployed by learned counsel.

My Lords, the noble Lord said that a local authority that is running a particular scheme under this Bill at a loss will soon be in trouble with its ratepayers. Of course this is true—when it is found out. But it will not stop, say, a local authority which feels that it will be able to run it at a profit from embarking on a scheme, and doing a certain amount of harm before discovering that the scheme is not profitable. Equally—and this is the more important point—it will not stop the local authority from making a profit for its ratepayers by dealing in only those goods which are the most profitable. I do not want to say anything more to the noble Lord, because I could talk for a long time without winning him over on this point; but I do not feel that I can with-draw the Amendment.

LORD KENNET

My Lords, since the noble Lord has leaned also upon his fourth point at this stage, perhaps I may give him and the House some answer on this point which will no doubt influence your Lordships in the way you intend to vote on this Amendment. The claim that Parliament had already decided in favour of the merchants during the progress of Private Bills does not hold water. Between 1936 and 1954 seven county councils, including London, were given power to supply goods and materials, without restriction, to their district councils. When, in 1956, the Monmouth-shire County Council sought similar powers there was vigorous opposition from the building interests, but the proposal for a saving clause for building materials came from the Promoters themselves, and the issue was not decided by the Committee of either House of Parliament. Subsequent local Acts have all carried similar provisos excluding

building materials, but on each occasion it has been inserted by the Promoters and not by a Parliamentary Committee. This is a common practice where the Promoters are anxious to accommodate the opposition rather than to fight an issue which they do not consider important.

The aim of the London County Council (General Powers) Bill 1957, to which the noble Lord, Lord Denham, referred at an earlier stage, was to extend the list of bodies included in the L.C.C.'s 1936 Act to whom they could supply goods and materials of all kinds. A number of industries, including building, petitioned against the extension and they were successful in preventing the extension of the power to supply goods and materials to bodies outside the L.C.C. area; but there was no provision to exclude building materials from the scope of that Bill, and it was never suggested that there should be. So although that is an interesting precedent, it is not an interesting precedent for the Amendment at present before the House. This was reaffirmed in 1963 when the London Government Act gave similar powers to the Greater London Council. So your Lordships will see that, at least on this point, the claim that Parliament had already decided that building materials should be exempted from provisions analogous to those in the Bill as unamended will not stand up. And I verily believe that the other three points on which Lord Denham has based his case on behalf of the Opposition will not stand up either.

3.11 p.m.

On Question, Whether the said Amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 73; Not-Contents, 58.

CONTENTS
Aberdare, L. Brooke of Cumnor, L. Effingham, E.
Aberdeen and Temair, M. Brooke of Ystradfellte, Bs. Elliot of Harwood, Bs.
Albemarle, E. Burton, L. Emmet of Amberley, Bs.
Alexander of Tunis, E. Byers, L. Falkland, V.
Alport, L. Conesford, L. Ferrier, L.
Amherst, E. Cottesloe, L. Fortescue, E.
Ashbourne, L. Cowley, E. Fraser of Lonsdale, L.
Auckland, L. Craigavon, V. Gladwyn, L.
Balerno, L. Cromartie, E. Goschen, V.[Teller.]
Barnby, L. Daventry, V. Grenfell. L.
Berkeley, Bs. Denham, L. Gridley, L.
Bessborough, E. Drumalbyn, L. Grimston of Westbury, L.
Blackford, L. Dundee, E. Hawke, L.
Boyd of Merton, V. Ebbisham, L. Henley, L.
Bridgeman, V. Eccles, V. Ilford, L.
Jellicoe, E. Ogmore, L. Strange of Knokin, Bs.
Jessel, L. Poltimore, L. Strathclyde, L.
Kilmany, L. Rankeillour, L. Stratheden and Campbell, L.
Kinnoull, E. Rathcavan, L. Swinton, E.
Lauderdale, E. St. Aldwyn, E. Teynham, L.
Liverpool, E. Salter, L. Thurlow, L.
Merrivale, L. Sanderson of Ayot, L. Trefgarne, L.
Milverton, L. Sandford, L. [Teller.] Vivian, L.
Mowbray and Stourton, L. Stonehaven, V. Wade, L.
Nugent of Guildford, L.
NOT-CONTENTS
Archibald, L. Garnsworthy, L. Raglan, L.
Ardwick, L. Hanworth, V. Rhodes, L.
Arwyn, L. Henderson, L. Ritchie-Calder, L.
Aylestone, L. Heycock, L. Robertson of Oakridge, L.
Beswick, L. Hilton of Upton, L. [Teller.] Royle, L.
Blackett, L. Hughes, L. Rusholme, L.
Blyton, L. Hylton-Foster, Bs. Segal, L.
Bourne, L. Kennet, L. Serota, Bs.
Brockway, L. Kilbracken, L. Shackleton, L.(L. Privy Seal.)
Buckinghamshire, E. Leatherland, L. Shannon, E.
Burden, L. Lindgren, L. Sorensen, L.
Champion, L. Loudoun, C. Stocks, Bs.
Clwyd, L. Lucas of Chilworth, L. Stonham, L.
Collison, L. McLeavy, L. Strabolgi, L.
Crook, L. MacLeod of Fuinary, L. Summerskill, Bs.
Delacourt-Smith, L. Moyle, L. Taylor, L.
Fiske, L. Peddie, L. Taylor of Mansfield, L.
Fulton, L. Phillips, Bs.[Teller.] Willis, L.
Gaitskell, Bs. Platt, L. Winterbottom, L.
Gardiner, L. (L. Chancellor.)

On Question, Amendment agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.

LORD DENHAM moved Amendment No. 2:

Page 2, line 6, at end insert— ("or (c) to purchase or store building materials for supply to any public body for the construction of any new buildings or works.")

The noble Lord said: My Lords, this Amendment, too, is slightly different from the equivalent one that I moved at Committee stage. At that lime the noble Lord, Lord Kennet, said that he had the greatest possible sympathy with my Amendment and undertook to give the matter further consideration. I hope that he will now feel able to accept this Amendment with what I hope is slightly improved drafting. It has actually been drafted the same as a similar provision in the Water Bill. The object of the Amendment is to enable those who want to keep themselves informed on orders made under this Bill to do so without the expense and time consumption involved in searching through every Order printed—

THE LORD CHANCELLOR

My Lords, I think the noble Lord is speaking to Amendment No. 3. I called Amendment No. 2.

LORD DENHAM

My Lords. I apologise. I beg to move Amendment No. 2.

3.22 p.m.

LORD DENHAM moved Amendment No. 3:

Page 3, line 3, at end insert— (" (7) The said Ministers or the Secretary of State shall publish in the London Gazette and (if the order is to relate to Scotland) in the Edinburgh Gazette a notice—

  1. (a) stating that at the expiration of a period of twenty-eight days an order made by virtue of subsection (5) of this section will be laid before Parliament;
  2. (b) stating the general effect of the proposals contained in the order to be laid before Parliament; and
  3. (c) stating a place in London and (if the order is to relate to Scotland) in Edinburgh where a copy of the order may be inspected free of charge at all reasonable hours and copies may be obtained on payment of a reasonable sum for each copy.")

The noble Lord said: My Lords, I must again apologise. As I said on the previous Amendment, the noble Lord, Lord Kennet, undertook to look at this point again. The object of the Amendment is to enable those who want to keep themselves informed of Orders made under this Bill to do so without the expense and time consumption involved in going through every Order that is printed by the Stationery Office; and I quoted precedents for this procedure in previous Bills. The reservations expressed on Commit-tee stage by the noble Lord, Lord Kennet, were that the precedents I quoted referred to Orders about which objections could be made to the Minister responsible, who then had the duty to look into the matter. But, he said, even if you objected to the Minister about an Order made under this Bill, He cannot send an inspector clown to hear your complaint, because although they may be local matters, they may also be national ones.

The noble Lord added: It seems to me that the right course, if you object to the making of an Order, is to get hold of a Member of either House of Parlia-ment and get him to raise a debate on the matter when the Order is laid before the House, as it must be under the Bill."— [OFFICIAL REPORT, 12/3/70; col. 920.]

Of course, what the noble Lord said is perfectly right in this case. But whether you are making an objection to the Minister, as under the Town and Country Planning Act and the Water Act, or whether you are trying to persuade a Member of either House of Parliament to raise the matter, as under this Bill, you still must first have the means of finding out that the Order has been, or is being, laid. In either case the procedure suggested in my Amendment gives more chance to interested parties. In view of that I hope that the noble Lord will accept my Amendment.

LORD KENNET

Well, my Lords, I cannot, and it is not for lack of sympathy with the purpose behind the Amendment, which I think is an extremely good one. There is no dispute about the principle, which is that of public participation in administrative decision. In that I think both Front Benches are at one. But advance notice in the Press or in the London Gazette is not the right way in which to do it; it is not necessary, and would lead to certain confusions and complications which I shall try to outline to the House. The purpose of a statutory notice in the Press, as we know it under planning law. under water law and so on, is to publicise a fact or a decision because it is in the general interest that it should be given a measure of publicity, or to publicise proposals which are still subject to confirmation so that citizens who may be affected can express their views and the relevant Minister can take account of those views before coming to his decision whether or not to confirm the proposal. The first type of case—for example, the publicising of a fact or a decision— might arise in regard to receiving orders under the Bankruptcy Act. The second, and more common, type of case usually arises where there is a statutory procedure for hearing objections or appeals.

Here I come to the point of the diffi-culty—this is the Water Act 1945 and the Town and Country Planning Act 1962. This Bill does not provide any procedure for objections, or any procedure for the hearing of appeals against what it is proposed to do. If the noble Lord had thought it should, he could have put down an Amendment providing that it did; but he did not put down such an Amendment, and we have not been able to discuss that larger possibility. What he did was simply to put down an Amendment saying "Let us have announcements in the Press as if we were going to have appeals and objections procedure". But announcements in the Press without an appeals and objections procedure seem to me to be hanging out on a limb, because what is the poor Minister to do? There is nothing special he can do about it. He has still to go right ahead with his Order. Let us imagine that he puts a statutory notice in the Press; somebody objects and writes him a long letter giving reasons for the objection, and the Minister thinks that those are not good reasons. He has already taken them into account. He cannot send down an inspector to find out, because it is not in the Bill. So all he can do is exactly what he would have done if he had not put a notice in the Press in the first place; namely, lay the thing before Parliament and wait to see what Parliament says. This, in my submission, is still the correct way to go about it.

I do not think that in practice there is any problem here, because the trade associations and other groups who will be interested in this type of draft Order can find out what is being proposed just as easily from a Parliamentary Order Paper as they can from the London Gazette. Neither of them is precisely everyday reading in the train. In general, you do not see citizens reading either the Parliamentary Order Paper or the London Gazette. These are the reading typically of interested groups or associations representing certain people. They will pick it up just as quickly; and then during the 40 sitting days in which the Order has to lie unconfirmed before Parliament, they have plenty of time to make their views known to Members of both Houses, and those Members will have plenty of time to raise the matter. These arrangements by which Orders are subject to annulment follow long and well-established Parliamentary practice and will provide ample time. I hope that the noble Lord will think that what has been good enough for a great many other classes of Order will be good enough to provide for this class of Order as well.

LORD DENHAM

My Lords, from what the noble Lord has said I do not quite see how the method of approach that the man has to take if he objects to the Order affects the ease with which he can find out about the Order. I cannot quite see, from what the noble Lord has said, why, if somebody who objects under the Water Act has the advantage of read-ing about the Order in the London Gazette, the man who objects under this Bill has not got the same advantage. Admittedly what he does, if he does object is different (the one appeals to the Minister, the other gets hold of his M.P.), but to my mind the action he takes has no relevance to the ease with which he can learn about the Order.

LORD KENNET

My Lords, I accept there is a genuine point of information here. Under the Water Act the objector does read about it in the London Gazette but he cannot read about it on the Order Paper because the Order does not lie before Parliament.

LORD DENHAM

My Lords, I take the noble Lord's point about that, and I do not wish to press this Amendment. I am not sure that I am entirely convinced by the noble Lord's argument, but, with your Lordships' permission, I should like to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD KENNET

My Lords, I beg to move that the Bill do now pass.

Moved, That the Bill do now pass.— (Lord Kennet.)

On Question, Bill passed, and returned to the Commons.