§ 3.18 p.m.
§ THE PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD KENNET)
My Lords I beg to move that the House do now resolve itself into Committee on this Bill.
§ Moved, That the House do now resolve itself into Committee.—(Lord Kennet.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The Earl of Listowel in the Chair.]
§ 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: This is a paving Amendment, and I think it would be for the convenience of your Lordships if we were to discuss with it Amendments Nos. 3 and 4. Under Clause l(2)(a), a local authority is specifically prevented from constructing any new buildings or works for a public body, and is therefore limited, so far as the building and civil engineering industries are concerned, to carrying out works of maintenance. That is the obvious intention of the Bill. But as there is nothing in the Bill to prevent the local authority from supplying the body with all the building materials that are necessary, with vehicles, plant and apparatus and with administrative, professional and technical services needed for the construction of 897 new buildings and works, it is only necessary for the public body itself to employ the actual labour for this deliberate exclusion to be avoided. This first group of Amendments overcomes this defect in the Bill by limiting the supply of equipment, vehicles and building materials to use in connection with repairs and maintenance.
§ When I spoke on the Second Reading of the Bill I expressed two reservations to my general welcome to its provisions. The first was that a local authority should not be enabled by it to use its hidden advantages—transfer of losses to the general rate fund; free use of council facilities, such as office space, storage space, administrative services, light and heat; and freedom from selective employment tax—to undercut commercial companies and thereby achieve a position of near-monopoly. The second reservation was that the local authority should make use of this provision only if the financial advantages to itself and its ratepayers were real, and should not be encouraged to embark on enterprises that might turn out to their detriment.
§ Every big local authority has to keep a certain amount of building and civil engineering equipment for its own purposes, and it is only fair that it should be enabled to make use of any surplus capacity of this equipment by hiring it out elsewhere. But what would be un-fair, in view of their advantageous position, is for local authorities to buy extra equipment specially in order to hire it out. For instance, if a local authority has too much internal work for one crane but not enough for two, it would probably need to possess two cranes. It would then be right that the local authority should be enabled to make full use of its assets by hiring out the second crane when it was not using it itself. What would be wrong, in our view, is for the local authority to buy a third crane purely to increase its out-side contracting business. This Amendment would allow a local authority to buy and store equipment for use under this Bill only if that equipment was to be used for maintenance. The local authority would still be able to use the surplus capacity of equipment that it had to keep for its own commitments by leasing out for new building and works.898
§ We feel that this Amendment is perhaps even more important with regard to building materials. This is a very specialised business indeed, covering between 30,000 and 50,000 different items. The supply of these is at the moment being very adequately administered by some 1,300 merchants. In order to run such a business, they must have knowledge acquired after much experience as to which items to stock, what quantity to keep in stock and how each item should be stacked and stored. Without that knowledge it is only too easy to make a loss, through tying up too much capital in items that are not very much in demand, through deterioration, through over-ordering or through break-age due to inadequate stacking.
§ In this trade, above all others, the profits come from a comparatively small number of items which are in regular demand and in which there is a quick turnover. But there are a vast number of specialist items which, although they are not often called for, are vital to builders when they are requested. Keeping those items is a service that is not very profitable, even when great skill is used in the management, and that service is paid for out of the profits of the more regular trade, In a region, different merchants would each specialise in a group of materials which are not in everyday demand, and this would be known to all the other merchants. Therefore, if one merchant does not stock a particular item he very often knows another merchant who does stock it as a matter of course. These interchange arrangements are important in providing a comprehensive and speedy supply of materials.
§ If a local authority is going to act as a complete builders' merchant under this Bill, stocking all the items that it might know, it is unlikely to achieve much saving over ordering from a commercial builders' merchant. If it succeeds it will be using its advantageous position, which I have already mentioned, to take the plum jobs from the commercial trade, but if it fails it will be wasting the ratepayers' money. The danger in this trade is that the local authority will take the cream of the business only, by purchasing and storing the profitable materials in which there is a quick and regular turnover and on which, by themselves, there would be 899 a saving, while relying on builders' merchants to supply the more specialised and less profitable items. The builders' merchants would then be left with only the dirty end of the stick, being allowed to supply only a service for a large proportion of the building done without the more profitable end to pay for it.
§ It is with this in mind that a Select Committee of your Lordships amended what is now the Monmouthshire County Council Act 1956, to prohibit the supply by that Council of such goods for the purpose of the erection of houses or other buildings. It is for this reason also that the Select Committee of this House which considered the London County Council (General Powers) Act limited the supply of these goods to works within the administrative County of London. That limitation was still kept to the Greater London Area by the London Government Act 1963. By a coincidence, I happened to sit on your Lordships' Select Committee on the London County Council Bill, and listened to the great number of arguments produced by counsel, the enormous amount of evidence and the discussion in the Committee itself. Over two days that Committee came to the conclusion that builders' merchants are the right people to do this business in that one small area.
§ I cannot take more than a certain amount of your Lordships' time, but I am discussing a Bill which covers the whole of the country, so I do not think we should lightly turn down the decision that has been made by that and other Select Committees. In fact, every time that a local authority has applied in a Private Bill for powers similar to these, the building trade has had its case allowed and building materials have been exempted. Building materials being used for maintenance only are, of course, a different matter, because it is much easier to select and store building materials for that purpose. The local authority will know the materials required for the purpose and will not have to consider the whole range of items. It is fair for the local authority to be enabled to do that, and it does not deprive the trade of so devastating a slice of business.
§ I therefore ask your Lordships to accept these Amendments for two reasons: first, that local authorities should not be 900 tempted to embark on a trade in which they are not fitted to deal and on which they might well make a severe loss; and. secondly, that even unprofitable trading in building materials by local authorities could adversely affect this very specialised trade and could even put many people out of business, to the detriment of everyone, not least the local authorities. I beg to move.
§ LORD PARGITER
In so far as this is a general discussion on this group of Amendments, I should like to refer to Amendment No. 2. Will that be in order?
§ LORD DENHAM
The debate is taking place on Amendment No. 1, but I have asked your Lordships' leave to discuss with it Amendments Nos. 3 and 4. Those three hang very much together, but Amendment No. 2 is separate.
§ LORD POPPLEWELL
I have listened very attentively to the arguments put forward in support of these Amendments, but although they have been put forward very persuasively indeed it seems to me that this is a continuation of an old political argument which has been going on between both Parties for a considerable period of time. 1 cannot for the life of me understand why Members opposite are always so keen to place embargoes on any development that a local authority might undertake. It is always said that this is interference with private business by central Government. Local government is indeed very big business. If local authorities decide, in their wisdom or otherwise, that they would like to extend on the lines indicated in the Bill, surely it is up to them to be allowed to do so. The question whether it is wise or not rests with the electors when the elections eventually take place.
The noble Lord, Lord Denham, referred to what has happened in the case of Private Bills. This is the type of thing which takes place and has taken place over a considerable period of time: that local authorities have asked for a broad pattern of powers and certain facilities in order to stop argument in advance, chiefly by the Conservative Party, that it is not wise to grant such powers under a Private Bill to a given local authority but that it is much better to deal with the matter on a national scale. That argument has developed on Private Bill after Private Bill; and very 901 often, because of it, the particular clause has been thrown out, as indicated by the noble Lord, Lord Denham, in his argument here.
I should have thought that it was much better to give general powers in a Bill of this description for local authorities to act as they determine, rather than for each authority to have to promote a Private Bill in order to secure them. As I indicated earlier, local government is very big business, and if the authorities feel it necessary to do this in the interests of their business—whether it be for housing, or for any other project, or whether it be for the distribution of this or that particular article—I think they should be allowed to, especially when purchase in bulk, as they will probably do, results in a considerable saving. Lord Denham has indicated that they ought not to be allowed to do this in the case of specialised building equipment or anything of that description, but should hire it from the builders' merchants in the normal way of business. I cannot understand that argument if the general desire is that local government should be efficient. If it is felt necessary that they should be allowed to do this in the interests of their ratepayers, surely it is equally essential that they should have the maximum amount of elbow room to work in accordance with those business methods which they think best.
The noble Lord, Lord Denham—and this seems to be an attitude frequently adopted by the other side—pays lip service to local government but is inclined to throw a doubt on whether local government is efficient. We know that there are many weaknesses but, by and large, in the big local authorities one can find some of the most efficient methods, which are equal to those in big business out-side. The position to-day is that local government cannot continue unless it is allowed to operate with the same methods to ensure efficiency as outside business has. Therefore on those grounds I hope that my noble friend and the Government will resist completely this series of Amendments; because, surely, if we continue to pay tribute (as we have clone in the recent two-day debate) to our good system of local government, it is wise and right to leave it to those who are managing our local government affairs, with their experts in every possible direc- 902 tion, and to allow them the maximum amount of elbow room which we expect and require private enterprise to have.
§ 3.34 p.m.
§ LORD KENNET
The Amendment before the Committee would, as the noble Lord, Lord Denham, has said, prevent one local authority from supplying building materials or hiring out plant and equipment for building and civil engineering purposes to another local authority or to the other public bodies which may be prescribed by the Minister under the Bill.
§ LORD DENHAM
It would not prevent them from hiring out all equipment. It would only prevent them from buying equipment particularly for that purpose. It would not prevent them from hiring out the equipment which they normally use for their own purposes.
§ LORD KENNET
I accept the noble Lord's correction. I was unpardonably trying to telescope the argument. It is as the noble Lord has stated it. I am going to advise the Committee that this Amendment should not be accepted, and I hope that the noble Lord will agree to withdraw it. The reasons against it are, first, the general one that to the Government there seems to be no logical reason why one should differentiate between building materials and any other goods and materials which may be supplied by one local authority to another under the powers we are seeking to give them in this Bill. Equally, it is difficult to see any logical reason for permitting a local authority to hire out to another, say, its computer or its gardening machinery, but forbidding it to lend its bulldozer or its scaffolding.
Again, the Bill will not enable local authorities to compete with the builders' merchants and plant hirers in the open market. I know that Lord Denham understands that, and I hope that the whole Committee will realise that this power is only for the passing around of goods and services among local authorities and between local authorities and public bodies. It has nothing to do with the open market at all. On the other hand, the Bill will enable them to supply materials or hire plant and vehicles only to the bodies specified in it. That is not a complete break with the past, because there is already a good deal of co-operation between local 903 authorities in the purchase of building materials, through consortia. Although there is a good deal of it, it is because it is not entirely satisfactory and is a rather cumbersome way of doing it that the Government propose to confer on local authorities the powers in this Bill. There are also the powers which exist under various local Acts for a given single local authority to do that which Lord Denham now seeks to prevent all from doing.
It seems to the Government, therefore, that the impact of this Bill, if unamended, upon builders' merchants and plant hirers is not likely to be at all serious. I noticed that in the noble Lord's speech he was saying that the business which the builders' merchants feared would be unfavourably affected by this Bill was in itself of an unusually unprofitable nature, and it may be that the Committee will agree with me that a very slight impact on a business which is of its nature not very profitable is not something which should allow us to retreat from the general principle of this Bill.
In any event, this is a case where the interests of the ratepayers at large have to be balanced against commercial interests. Nobody would think of suggesting that local authorities should not co-operate by sharing in the use of a computer, which is the example I gave, because there are comparatively few local authorities who could, on their own, find a job for a big, modern computer. It would, in short, be nonsense to suggest that each local authority should have its own computer, although if we did suggest that it would certainly be to the advantage of the computer industry.
It would be just as unreasonable, I believe, to prevent a county council, say, from making optimum use of its building equipment—I am coming on to the noble Lord's point under the Amendment in a moment—by making it available to district councils within that county. The noble Lord gave us the example of a crane. He said that if a county council had work for one and a half cranes it was quite all right for it to possess two cranes and hire the second crane out for half the time to somebody else, perhaps to its district councils. But what if there are four district councils under that county who have work for one crane? 904 Is it not reasonable that the county should buy a third crane and hire it out to each of them in rotation, to do the work they need done? And, if so, would that not be a reason for that county council possessing three cranes? I do not think there is any particular logical break at the half a crane, which you have anyhow, being allowed and the other crane, which you do not have but can buy and can use to the general good of public authorities in the locality.
The noble Lord, Lord Denham, made the point that local Act provisions relating to the supply of goods and materials sometimes contain a saving clause to exclude building materials, so that to this extent Parliament has already made its position clear in this matter. I do not think that the Committee should accept this argument because I am informed—1 hesitate to cross swords with the noble Lord for he was on the Monmouthshire Bill Committee and I was not—
§ LORD KENNET
I beg the noble Lord's pardon. I was addressing myself at the moment to the point he made about the Monmouthshire Bill. As I say, I hesitate to cross swords with him, but our records show that these clauses excluding building materials have not been inserted on the instructions of a Parliamentary Committee but have usually—and, speaking subject to correction, I would say always—been included by the Promoters of the Bill themselves to meet Petitions or representations made by the organisations representing the builders' merchants. It is a fact of life that Promotors often prefer in their Private Bills to include saving provisions for particular interests, simply to avoid opposition and committal of the Bill to a Select Committee, and for the sake of getting it through Parliament one way or another. The fact that this has been the practice is not, in my submission, a reason for accepting a general saving in Government legislation introduced to cover the entire country. Having said that, I hope that the noble Lord will agree that there is not too much for the trade to fear from the Bill as it stands unamended and that the reasons I have given for resisting this Amendment are sound enough for him to withdraw it.
§ LORD BEAUMONT OF WHITLEY
As has already been said this afternoon this principle has been argued between the two sides of the House on a number of occasions, and it is one on which we on these Benches usually find ourselves siding with the Conservative Party. On the whole this is because we think that public authorities, Government and local government, are so powerful, or potentially powerful, that it is only fair that the individual or the individual firm, whether it be small or large, should have some protection from any possibility of unfair competition. But in this particular case the fact that the Bill is limited to the public sector and to dealings with other public bodies, and—unlike the somewhat similar situation in the Transport Bill—does not in any way touch on the general and open market, makes me believe that the Amendment is not justified. In those circumstances, I hope that the noble Lord, Lord Denham, will withdraw it.
§ LORD DENHAM
I find considerable difficulty about withdrawing this Amendment, because I do not feel that the noble Lord, Lord Kennet, has answered my case at all. He has asked, "Why should we differentiate in this Bill between building materials and the other things that are covered by this Bill?" I have been at some pains to explain the reason. It is because this particular trade is very specialised, and it is very easy for a council that lacks experience to think that it is going to be able to make a profit out of it. The noble Lord, Lord Popplewell, said that we on this side of the House always doubted the efficiency of the local authorities. We do not doubt the efficiency of local authorities in doing the things local authorities do. What we doubt is the ability of the local authorities to run absolutely any business, of any kind whatsoever, no matter how complicated it is or how many years' experience it may take private traders to get the efficiency they need.
We mean no disrespect at all to the local authorities; but this is a very difficult and a very specialised trade, and we do not believe that local authorities would be able to cope with it. We feel that they might go into it and do one of two things: either try to keep in stock every item of equipment that they might need, in which case they would be very 906 likely (I put it no higher) not having the expertise and experience to make a loss.
§ LORD POPPLEWELL
The noble Lord is doubting the efficiency of the kind of very skilled person that a council employs.
§ Lord DENHAM
Skilled, yes; but not necessarily skilled in one particular and very specialised trade.
§ LORD PARGITER
Will the noble Lord forgive me? Often the local authorities do not do these things; but they hire the equipment for time to time. They go to the private trade when some specialised equipment they need can be got from a private contractor. They are not so silly as to keep a lot of dead stock. It is belittling the local authorities to suggest that they would want to do that.
§ LORD DENHAM
This is in fact the point I was coming to. Either the local authorities will try to keep everything they need, as a builders' merchant would do, or they will skim off the cream. They will, say, keep what they think they are going to need—and here they will make a saving—but they will be forced to go to the builders' merchant for the many bits of equipment for which there is not a great demand and for the keeping and administering of which the builder's merchant relies on his standard trade to pay. This is why we feel that there should be differentiation between these particular things—builders' materials, plumbers' goods, et cetera, of which there are these vast numbers of items—first, for the sake of the local authorities themselves and secondly, for the sake of the trade itself.
The noble Lord, Lord Kennet, asked why we should differentiate between a piece of building equipment and, say, a computer. It is for exactly the same reason that the Bill itself places certain limitations on local authorities. The Bill itself says that local authorities may not undertake any new building, new construction, new works. It is for the same reason that we feel that building equipment should be limited to that needed for new buildings, new construction and new works. The noble Lord, Lord Kennet, said that the local authorities were not going to compete in the open market with the private traders. This is true; they are not. But if they do what 907 they are allowed to do under this Bill— though of course they may decide not to do so—they are going to take a vast amount of the most paying part of the trade. And this may make it very difficult for some builders' merchants to survive.
The noble Lord, Lord Kennet, also said that the interests of the ratepayers should be looked after. Part of the reason why we want this Amendment in the Bill is because of the ratepayers. As the noble Lord, Lord Popplewell, said, the rate-payers can show at an election their approval of the way the council has administered their affairs. But it is easy for a local authority to go into a particular branch of business and run it at a loss. Perhaps this has been done, and by the time it is discovered and stopped one or two commercial opponents may have been cut out. The noble Lord, Lord Kennet, said that in some of the Private Bills which I have been quoting the limitation as to supplying materials was inserted not by a Select Committee but by the Promoters, following agreement outside, in order to meet an objection. I do not think that is any argument at all, because that is the way in which a great many changes are made in Private Bills. If the Promoters of a Bill can agree with objectors out of court, they do not have to fight the objection in a Select Committee. The fact that the Promoters and objectors have agreed is just as telling on this argument, I think, as the fact that a Select Committee have inserted something. I notice that the noble Lord, Lord Kennet, is shaking his head, but in what way is it not the same?
§ LORD KENNET
The noble Lord will be aware that it costs a local authority a certain amount of money to get a Bill through Parliament; it does not cost the Government any money, which is the great difference. Therefore Governments are able to stand out and give clearly the reason why they think they are right, and local authorities are not always so able because they have to go to a Committee and defend their Bill.
§ LORD DENHAM
I agree with what the noble Lord has said, but I do not think it is particularly relevant in this case. If the noble Lord cannot meet my argument in favour of this Amendment 908 more fully, I do not think that I can withdraw it.
§ LORD KENNET
I do not think that I do the noble Lord, Lord Denham, an injustice if I say that his case is based on one point; that it is extremely difficult to maintain a stock of building materials and machinery and handle it in such a way that money will not be lost. This is an art of which, he has told the Committee, there are 1,300 masters in the country. But, of course, we are dealing here with the larger local authorities. I would say, first, that the purchasing officers of big local authorities are experts in buying. They are as good at it as any firm in the country, and they know perfectly well when to trust their own judgment and experience in the practices of stock maintenance, and when to seek skilled advice from outside.
The noble Lord has said that, this being a very specialised trade, the councils must not be allowed to lose the rats-payers' money on it—something which. he said, they undoubtedly would do if they engaged in it in a limited sector. He has not put down an Amendment to the Bill to deprive councils of the right to share a computer, and if he thinks that maintaining a stock of building material is a more specialised skill than running a large computer, he will think anything. I would also point out that the noble Lord, Lord Denham, is perfectly happy to allow a large local authority to maintain a stock of building materials for its own use, and does not suspect that it will incur a loss of public funds in doing so. But he feels that as soon as it begins to maintain a stock partly for its own use and partly for the use of other people there is bound to be a loss of ratepayers' money.
These things being so, I do not believe that the Amendment is well conceived. Incidentally, although I have laid no stress on this, it is also not technically effective. I have been addressing myself only to the purpose which, obviously, it is sought to achieve by the Amendment; but it is clear that the Amendment would not in fact achieve it. Since the Amendment is not technically effective, and since the noble Lord intends to make a fight of it, I would ask whether he would agree to withdraw his Amendment now (and perhaps he would care to look again at the technicalities of the drafting), and in the meantime I will study the Report in 909 Hansard of what he has said. Maybe we can return to the battle another day, though obviously I cannot undertake that there will be any change in the Government's attitude on the point.
May I ask the noble Lord, Lord Kennet, one question? If a local authority is going to maintain ware-houses, does it pay itself rates on the warehouse space?
§ LORD KENNET
All buildings maintained for this purpose would be under the rating law and in the same position as all local authority premises. Buildings maintained for the purpose of executing the powers which the Government seek to confer on local authorities would be in the same position, as regards rates, as other buildings now used by local authorities for analogous purposes.
Would it be the same with this merchant who has to maintain a large warehouse for these things?
§ LORD LINDGREN
I do not want to take over the function of the Parliamentary Secretary, but the Rating Acts apply to premises of a local authority in exactly the same way as they apply to any private individual or private commercial undertaking. They are on the same basis and have the same rateable value applied to them, and the local authority pays rates on them.
§ LORD DENHAM
I am most grateful to the noble Lord, Lord Kennet, for saying that he will examine closely what I have said. At the moment I do not detect very much hope in his attitude, but when he has looked into the thing a little more closely possibly we may get somewhere. I was prepared to hear that the Amendment was not drafted quite rightly, and in those circumstances, and with no commitment not to bring the Amendment forward again in a revised form, I am only too happy to ask permission to withdraw it this afternoon.
§ Amendment, by leave, withdrawn.
§ 3.57 p.m.
§ LORD DENHAM moved Amendment No. 2:
Page 2, line 4, after ("works;") insert—
(" () to engage in the selling to the body of food for human consumption; ")
§ The noble Lord said: I beg to move the second Amendment which stands in my name. This Amendment excludes the dealing in food from the powers conferred under the Bill. This is another case where we feel that the circumstances surrounding this particular trade justify an exception. We consider that, by this Amendment and the previous one, two necessary exemptions to the provisions in the Bill will be made.
§ All food is perishable, and meat is particularly perishable. I think I should say at once that the case I am making for this Amendment is concerned particularly with the meat trade. That trade demands a great deal of skill and experience and it is only too easy for people engaged in it to make a loss. I am not for a moment suggesting that local authorities do not possess a great amount of skill and experience, which may even enable them to run a computer, but I maintain that they may not necessarily have sufficient experience of the type which would enable them successfully to go into the meat trade.
§ Under this Bill, any local authority agreeing to supply food to a public body will be undertaking a considerable risk. A wrong judgment, a lack of experience, will quickly lead to a large loss of public money. Here again we are worried over the possibility of a local authority using its particular advantages to achieve a monopoly position. I am not going into the details again; we all know what are the advantages, and I do not think there can be any denial of the fact that a local authority which is competing with private trade has a special advantage in certain things. I have mentioned the more general ones, and, regarding the food trade, there are special aspects to be taken into consideration. Commercial food traders are, quite rightly, subjected to close scrutiny from the public health inspectors and have to observe very complicated codes of hygiene. They are also subjected to scrutiny from the weights and measures authority, and again this is quite right. They must also take particular care in regard to the Trade Descriptions Act. The local authority which deals in food will often be the public health authority and the weights and measures authority.
§ LORD KENNET
My Lords, is the noble Lord suggesting that for that 911 reason a local authority would defraud the public?
§ LORD DENHAM
Certainly not, my Lords; not in the least. The noble Lord is putting words into my mouth. What I am saying is that in this case the local authority is going to be the judge of itself and of its competitors. I am not saying that it will defraud the public— of course it will not. But I think people will wonder, if the local authority is inspecting something of its own and something belonging to other people, whether that is the right body to do it. It is a small point I am making, and I hope that the noble Lord will not suggest that I am saying that the local authority is not to be trusted and liable to defraud people. But in the interests of fairness, where there is inspection, the man who is doing the inspecting should not be biased in one particular way, if only not to give apprehension to other people. Will a local authority—and again I am not talking disrespectfully of the local authorities— be put to the same risk under the Trade Descriptions Act as its commercial competitors? In future dealers will have to watch this closely. Again, this is a minor point, but it is an advantage that a local authority would have over its competitors.
The only experience we have in trading of this sort by which we can assess the future effects of this Bill on the food and meat trade is what has happened in regard to abattoirs. I understand that municipal slaughterhouses up and down the country are now closing because of high costs, leaving a serious void because private slaughterhouses have earlier been forced out of business by the competition of the local authority. I should like to quote one case. I cannot give your Lordships chapter and verse because the case is, so to speak, sub judice. Fifteen years ago, the local authority in one area started a municipal abattoir, and possibly by fair trade competition, possibly with the various advantages I have been talking about, it obtained the monopoly in that area. The abattoir is now losing money to such a degree that the local authority is seeking to sell it off to a private company and the monopolistic position that the local authority has achieved will be handed over to a private company. As I say, I cannot give details, 912 but I will tell the noble Lord in private the abattoir about which I am talking. This sort of thing could happen. If meat is not excluded from the Bill the same thing could happen as has happened to the slaughterhouses.
Whenever in the past a local authority —and I am afraid this argument will not impress the noble Lord very much—has included provisions similar to these in its private Bills and where the meat traders have protested, either an Amendment has been made to meet their case or an assurance has been given that the local authority would never deal in meat. Since this Bill has been brought forward, three local authorities have included trading provisions in their Bills and have not excluded meat and food, but they have refused to make any comment as to their future actions in this line of business. I feel that this is a complete reversal of policy, as has been shown by the attitude to private legislation in the past, and I think that this Amendment should be accepted. I beg to move.
§ Amendment moved—
Page 2, line 4, after ("works;") insert—
("( ) to engage in the selling to the body of food for human consumption;").—(Lord Denham.)
§ LORD ROYLE
My Lords, I had no sympathy whatever with the earlier Amendment of the noble Lord, Lord Denham, and had he carried it to a Division I should have voted against it, but I have a great deal of sympathy with the Amendment which he has now moved. Your Lordships may remember that I referred to this question of food during the Second Reading debate. Where I divide on this issue is between the hardware and the perishable goods. I think there is a big distinction here between perishable goods being moved around, maybe purchased by one authority and ultimately sold to another authority, and the provision of hardware, however large or small it may be.
May I relate my own experience in this regard? I have mentioned to your Lordships on more than one occasion that my background is the meat trade and I have had experience of being a contractor to local authorities. In those days (it was long ago) the hospitals were involved as well as other institutions. 913 The hospitals employed their own butchers for cutting down bodies of beef, sheep and pigs. All that has gone, now that the hospitals are in the National Health Service, and they are not involved in a Bill of this description. All that remains is the provision of meat to schools and canteens run by the local authorities and, as my noble friend Lord Lindgren reminds me, for Meals-on-Wheels.
The contractors do not send quarters of beef or lamb to every individual school. They are expected to do much more than that in their service to the schools and canteens. They have to cut a lamb up into chops for individual consumption, and steak into small pieces, and send them to the schools or canteens in trays. Would it not be ludicrous to suggest that the authority which is doing the bulk buying and ultimately sending the meat to another authority should perform that service for the individual schools and canteens? I feel that it is so impracticable that the Government could not possibly have looked at this side of the situation when they did not exempt food from this Bill. It seems to be very important that this service should be maintained.
Another point is that this is a great opportunity for the local butcher, who is a ratepayer in his town, to tender for a contract for supplying the local authority schools and canteens. This is his chance of some different trade from his normal shop trade, and he appreciates it. I assure your Lordships that the competition in this respect is very keen, with one butcher tendering against another. In these circumstances, I feel that every trader in each area should have the opportunity of supplying the schools canteens in that area.
The noble Lord, Lord Denham, made a point with regard to hygiene which is of great importance. The meat trade particularly is hedged around with stringent regulations, and rightly so when it is a question of meat for human consumption. Your Lordships can imagine that when it is a question of one authority passing on to another authority, and ultimately to individual institutions, with the meat going round and round, there is a greater risk so far as hygiene is concerned than there is with the direct supply from the butchers to the schools in the way that I 914 have indicated. As I have said, I think this is an important point, and it would not help the matter of hygiene if there was a greater degree of movement so far as the meat is concerned. Finally, I do not believe that it was ever the intention of the Bill that things like food should be included in the objectives of the Bill. I do not know what the noble Lord, Lord Denham, feels about carrying this Amendment to a Division. I hope that, without the Committee dividing on what is not, after all, a major matter, the Government will look at this point again with a view to the arguments that have been adduced being considered and food being exempted from the Bill.
I suggest that after the moving speech of the noble Lord the Government might look at this matter again, and perhaps by the next stage of the Bill we might have a builders' merchant on the Benches opposite.
§ LORD PARGITER
It seems to me that the case that has been deployed bears little relation to the words of the Amendment. The argument is centred on meat, but the Amendment saysto engage in the selling to the body of food for human consumption".That covers the whole range. It would cover the bulk buying of flour, sugar, tea and any other commodity, because in effect one authority would place the order and would be responsible for the payment of the goods, which would be distributed to different points. Therefore, technically, the receiving body would have to pay the other body for the goods received, and the bulk buying body would be responsible for selling to the other body. This would make nonsense of the whole procedure of bulk buying as it is at the present time.
At the same time, it seems to me that the argument is misconceived even in regard to meat—and I have some experience of this matter. If we take school canteens, and things of that kind, we shall find that it is usually the larger authority which is the buyer, and it will not be buying on behalf of the smaller authority but on behalf of itself. True, the meat would be widely distributed. The authority might buy locally, or buy in bulk—that would be a matter for the authority. But there will not be a lot of transfer between one body and 915 another. The problem will arise in the distribution. So far as distribution of meat to schools is concerned there is nothing here which will stop a large authority from buying. Let us take another example, of a county council which has an efficient central canteen system from which it supplies to the local authority meals-on-wheels. This Amendment would prevent that from being done. Surely that cannot be the intention. Sometimes the people may be supplying meals-on-wheels to a local council, as distinct from a county council which is running a large central canteen for the supply of school meals, and so on. The wording of this Amendment would most certainly stop that. I am not against the most stringent application of regulations with regard to the supply and distribution of food; and I am sometimes concerned that the quality supplied by some of the larger organisations is not as good as it ought to be. But that is the fault of the bulk buying body, in so far as its inspection system is concerned.
§ LORD ROYLE
Who prosecutes whom in circumstances like that? Does the local authority prosecute itself?
§ LORD PARGITER
The local authority would prosecute the person doing the supplying. In effect, in the majority of these cases where the larger authority is buying on behalf of another authority it will be most unusual (this is different from the building trade argument) for them to store. There will be an arrangement by which the authority enter into a bulk buying contract with a contractor for the supply to different points, direct to schools and institutions generally. Here an entirely different procedure is suggested. In the old days a large amount of warehousing was done by large local authorities for other local authorities. The amount of warehousing to-day is relatively small because of the competition between the wholesalers, who are willing to break down the supply and deliver it to the point where it is used. That, in practice, is what happens. It seems to me that the restrictive effect of this Amendment would go far beyond the intentions of its supporters. I accept the good intention of preventing the mishandling of food and things of that kind, but the 916 effect of the Amendment, as drafted, would be virtually to destroy the whole of the argument for bulk buying embodied in the Bill.
§ LORD KENNET
We have it at last from the lips of a noble Lord that a local authority may have the skill to run a computer, but not enough skill to go into the meat trade; it may have the skill to plan and build 1,000 houses and ten tower blocks a year, but not enough skill to go into the meat trade; it may have the skill to run 50 schools and institutions of higher education, but not have the skill to go into the meat trade; it may have the skill to devise and lay down and execute and enforce planning policies affecting the lives of 2 or 3 million people, but it has not the skill to go into the meat trade, let alone, as my noble friend said, to cut up into chops.
The Government are not introducing this provision for fun. It seems to me that there is no case for excluding food any more than other classes of goods which come into the Bill. It will be remembered that when the local authority buys it, the food will come from the trade. It does now. Where do councils buy their meat from?—from the meat trade. Where will they buy their meat from where they are entitled to supply it to another local council?—from the meat trade. Of what are they depriving the meat trade? —the right to supply the meat to a lesser local authority. If this particular group were excluded on the representations of a particular interest there would be no good reason for not going on to all the other exclusions which might be expected by particular interests and that would destroy the effect of the Bill.
There is also a particular justification for regarding food as being of special importance under this Bill. Local authorities are being forced to rationalise their food purchasing in the face of certain changes in the wholesale market. We are all familiar with the emergence of chain stores and the gradual disappearance of the small retailer. There has been a similar threat to the small wholesaler, and larger firms have been developing. The experience of local authorities is that these firms are less willing to make the deliveries that local authorities need than the smaller firms that preceded them. Local authorities buy food for school meals (by far the 917 largest single need), for children's homes, for old people's homes, and day centres and so on. They require quite small quantities to be delivered quite frequently to a large number of places. Over recent years it has become increasingly difficult for them to find wholesalers who will do this, and the problem is now growing increasingly acute. Only the other day one of the larger wholesalers announced that it was no longer prepared to make deliveries of less than £30 in value to London borough councils. Even large authorities, who have a well-developed supply system, find this a problem. With the smaller authorities the difficulties are now becoming quite serious. Such authorities must be able to combine together in order to buy in quantity, as the Bill permits them to do, or by seeking their supplies through a larger authority, as the Bill would again permit them.
The second reason why there is a good case for not excluding food from this Bill is the very point of maintaining quality control. The noble Lord has asked, "Is the local authority going to prosecute itself?" I hope that it never comes to that point, but the authority is going to be in better and more constant touch with the inspectorate than anybody else is, and I should have thought this was an argument for supposing that higher standards of hygiene would be enforced than is practicable in the case of private enterprise outside. It is strictly analogous, surely, to the imposition of smoke control areas on council estates. Do we imagine that local authorities turn a blind eye to black smoke simply because it is that of their tenants'? It is analogous, is it not, to the enforcement of parking regulations outside council premises? Do we suppose that the "lovely Ritas" turn a blind eye just because they know that a certain vehicle is a councillors' car? They are probably even more punctilious in the execution of their duties in that case.
To revert to food, many supply officers of local authorities consider this question of quality control as the most important aspect of food purchasing. The larger authorities may have a turnover on food of £1½ or £2 million a year, and they may employ as many as two or three food inspectors. With the purchasing expertise of these authorities strict con- 918 trol is automatically maintained, so that the quality of the food is kept high and value for money is ensured. Smaller authorities, who want to develop proper quality control, but cannot do so at present, must be allowed to rationalise their food purchasing in the way the Bill would allow, by precisely this "device of allowing one authority to supply another with food.
The noble Lord, Lord Denham, referred to municipal slaughterhouses. This has no reference to the Bill or to any operations which are likely to be undertaken under the Bill. Slaughter-houses are controlled under the Food and Drugs Acts 1955, and the Bill does not touch this.
§ LORD KENNET
The Committee will permit me to insist on the analogies that I have drawn, with all the things that local authorities undoubtedly do extremely well, and always have done and always will do extremely well. It is not a case of the local authorities' wilfully barging into a situation which is going perfectly all right. There are complaints about the quality provided by the present distributors from whom the local authorities have to buy their food. Therefore the local authorities want to be freer to do a little more of it themselves. There are complaints about the details in which the trade is prepared to fulfil the needs of the local authorities towards children and old people. Therefore they want to be able to do it themselves, and they are able to do it themselves; and they want to be able to do it in a more rational way. I hope that what I have said may convince the noble Lord that this is one Amendment that he need not insist upon this afternoon.
§ LORD DENHAM
I should like to look very carefully at what the noble Lord has said, as well as at what the noble Lord, Lord Pargiter, said. In view of the fact that I am not going to press this Amendment, and this Committee stage has already taken rather a long time I will leave it at that. I should like to thank the noble Lord, Lord Royle, for his support, and for the moment I beg leave to withdraw my Amendment.
§ Amendment, by leave, withdrawn.919
§ 4.26 p.m.
§ LORD DENHAM moved Amendment No. 5:
Page 3, line 3, at end insert—
(" (7) The said Ministers or the Secretary of State shall, twenty-eight days prior to laying before Parliament any order made by virtue of subsection (5) of this section, publish a notice in the London Gazette and (if the order is to relate to Scotland) in the Edinburgh Gazette—
§ The noble Lord said: Under this Bill the Minister or Ministers, or the Secretary of State, will no doubt be making orders which will fall into two categories. They will either make a general order for prescribing a body to be a public body for the purposes of the Bill, or an order prescribing a body which operates only in a certain locality to be a public body for certain local authorities. When one considers the activities that large local authorities with a progressive outlook indulge in to-day, your Lordships will appreciate that a very large number of trade associations will be affected and may desire to keep a watch on what is happening under this Bill.
§ The Bill, as at present drafted, requires the order of the Minister to be subject to a Negative Resolution, and we fore-see a great deal of difficulty for an individual who wants to keep an eye on what is happening under this Bill, or for a trade association in finding out when these orders are made. A regular order could be placed with the Stationery Office, but there is a precedent for a notice to be published in the London Gazette, where this order is laid. It is only fair that that should be done in this case. The precedents I should like to quote to the noble Lord are Section 9 of the Water Act of 1945; the Local Employment Act 1970, and the Town and Country Planning Acts 1962 and 1968, to mention only three. I hope the noble Lord will accept this very simple and just Amendment.
§ LORD KENNET
I have, this time, the greatest possible sympathy with the purpose of the noble Lord's Amendment. 920 The Government entirely agree that the public must know what is going on when the orders are made, as indeed it must know what is going on about everything. The noble Lord's precedents highlight the difficulty that I am in. He quoted the Town and Country Planning Act and the Water Act as Acts where orders deriving from them must be advertised in the London Gazette and local papers. Under both those Acts, if you read in your local paper that a draft order has been made, if you do not like it you can do some-thing about it; namely, you can make an objection to the Minister. Then the Minister sends an inspector to hear your objection, and that is the purpose of the advertisement in the local paper and the London Gazette.
But suppose, on the other hand, you read in your local paper that the Minister proposes to make an order specifying somebody as a public body for the purpose of the sale of these things to it by the local authority, and supposing you do not like it, what are you supposed to do? You can write and tell the Minister that you do not like it, but if you do that there is nothing very much the Minister can do about it. He cannot send an inspector down to hear your complaint because, although they may be local matters, they may also be national ones. 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 Parliament 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.
Having said that, I am not sure what is the right course to take here. I should like to go into this further, and pursue these analogies. I should like to examine further the precedents there are about the advertisement of draft orders against which there is no statutory right of appeal to the Minister, but against which only Parliament can act. Then perhaps we could discuss the matter another day. In view of the spirit of what I have said, I hope the noble Lord will agree to withdraw his Amendment.
§ LORD DENHAM
I am most grateful to the noble Lord and am only too pleased to beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 1 agreed to.921
§ Clause 2 [Supplemental]:
LORD DENHAM moved Amendment No. 6:
Page 3, line 12, after ("subsections") insert ("(1) to").
§ The noble Lord said: Subsection (2) of Clause 2 applies to this Bill the various sections of the Local Government Act 1933 and the Local Government (Scotland) Act 1947. Section 283(4) of the former Act provides that the abstract of the accounts shall be open to the inspection of any local government elector at any time. Subsections (6) and (7) are supporting provisions requiring the documents to be open for inspection at all reasonable hours and without payment, and making it an offence for any person having custody of a document to obstruct inspection, et cetera. The abstract of accounts referred to in subsection (4) is a document prepared annually which summarises the general financial position of the local authority but does not show in detail the entries in each of the accounts. The contents are a summary of various ledger accounts, et cetera, and a précis of the books kept by the treasurer.
My Amendment would also make applicable subsections (1), (2) and (3) of Section 283; and the one I am particularly concerned about is subsection (3). Subsection (1) states:
The minutes of proceedings of a local authority shall be open to … inspection".
Under subsection (2):
A local government elector … may inspect and make a copy of or extract from an order for the payment of money made by the local authority.
Subsection (3) provides that:
The accounts of a local authority … shall be open to the inspection of any member of the authority … ".
§ The traders fear that overheads incurred in connection with the storage of goods, and the other items which a person in business has to take into account, will be lost in the accounting system of a large local authority. It will be important to a private trader to offer the goods on the same financial terms to the local authority, and it is therefore essential that independent persons are able to discover whether the correct liabilities are being allocated to the storage of goods. In addition, it is important for 922 a private trader to know the discount which the local authority is obtaining as a result of bulk buying. For these reasons, it seems fair that subsections (1) to (3) should also apply. I think there is a precedent—in fact I believe there are several precedents—for requiring that the accounts as a whole shall be open to inspection, rather than merely the abstract; and I think it should be so in this case. I beg to move.
§ LORD KENNET
The Government are against this Amendment for one reason only: that it is not necessary. The noble Lord thought it was necessary, and therefore I imagine that there must be quite a few people in the country who think it is necessary. Therefore, if the Committee will bear with me, I should like to put on the Record the reasons why it is not necessary. The purpose of the Amendment, as the noble Lord has said, is to ensure, first, that the minutes of proceedings of a local authority relating to anything done under this Bill shall be open to the inspection of any local government elector; second, that a local government elector may inspect and make a copy or extract from any order for the payment of money which arises in the exercise of the powers under this Bill; and, third, that the accounts of a local authority shall be open to inspection by any member of the authority.
As a matter of law, it is unnecessary to make any express provision for these things in this Bill. Subsections (1), (2) and (3) of Section 283 of the Local Government Act 1933, which deal with these matters, are drafted in such a way that they apply automatically to any minutes and accounts dealing with activities under this Bill. It is perfectly true that the Bill applies subsections (4), (6) and (7) of Section 283 of the 1933 Act to the separate account which is required to be kept by Clause 2(2) of the present Bill. This is necessary because subsection (4) of Section 283 opens with the words:The abstract of the accounts of a local authority … shall be open to the inspection of any local government elector …",but does not require, in terms, that the abstract shall give details of the separate account. It would thus be technically possible, even if highly unlikely, for a treasurer to conceal details of this particular account when compiling his abstract by, say, including the figures in a miscellaneous account. That is the 923 reason why we have expressly applied subsection (4) of Section 283 (and subsections (6) and (7), which go with it) to the separate account which has to be kept. But there is no need to apply the rest of Section 283 because, as I have said, it applies automatically. Precisely the same considerations apply to Sections 196 and 198 of the Local Government (Scotland) Act 1947.
§ LORD DENHAM
I am most grateful to the noble Lord for that long explanation. If he will allow me, I will read it in Hansard rather than comment on it now. I beg leave to withdraw my Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 2 agreed to.
§ Remaining clause agreed to.
§ House resumed: Bill reported without amendment; Report received.