§ 5.48 p.m.
§ Lord FLETCHER
My Lords, I rise to move the Second Reading of the Tyne and Wear Bill. Your Lordships I think will be relieved to know that the Second Reading can be moved in a relatively short compass. The Bill is promoted by the Tyne and Wear County Council and each of the constituent districts of that county; namely, the City of Newcastle, and the boroughs of Gateshead, North Tyneside, South Tyneside and Sunderland. Your Lordships may wonder why it falls to me to move the Second Reading of this Bill. I should say at once that I have no special concern with any of those local authorities mentioned. I am moving this Second Reading in my capacity as one of the vice-presidents of the Association of Metropolitan Authorities.
As I understand it, my function is merely to indicate quite shortly why it is desirable that this House should give this Bill a Second Reading. The Bill will then go to a Committee for detailed consideration, in the course of which the Promoters of the Bill will be able to deal with the merits, and Objectors will be able to raise any criticisms or ask for any explanations. The necessity for the Bill arises from Section 262 of the Local Government Act 1972, which repeals a great many of the enactments previously giving powers to a number of then existing local 867 authorities. It obviously becomes necessary that the newly created local authorities should be able to carry out and continue the duties that were then entrusted to former authorities. Of prime importance and of urgency in this matter are the provisions of the Bill relating to the Tyne Tunnel and the six bridges over the rivers Tyne and Wear. Those are contained in the bulk of the Bill.
It has been thought desirable by the Promoters that the opportunity should be taken of adding to the Bill certain other provisions, none of which I propose to deal with except to say that at the Committee stage the Promoters will be anxious and willing to give all the explanations required. Your Lordships will have noticed from the Order Paper that the noble Baroness, Lady Young, is proposing to move that, in the event of the Bill being read a second time, an Instruction be given,to the Committee to whom it is committed that they should give special consideration to Clauses 48, 50, 102 and 103 [in order to] satisfy themselves that they do not constitute an undesirable extension of the powers and functions of local authorities to operate in competition with private industry and interests in the same field ".As I understand it, the major apprehension on this subject felt by the noble Baroness, Lady Young, and her friends relates to Clause 103. I am authorised by the Promoters to say that in view of the representations she has made the Promoters are prepared to make amendments in the Bill to limit the operation of Clause 103 and will do so by an Amendment to be filled out in due course. I should say that the Promoters do not intend that Clause 103 should extend their existing statutory powers in relation to their function. They will seek to amend the clause so that it merely makes available to them an alternative legal means of implementing their existing statutory powers and using to the full the specialist skills and knowledge available in the private sector in the interests of all parties.
My Lords, with that assurance—and I make it at this stage because it will save time and render a second speech unnecessary—I should like formally to move that this Bill be read a second time.
§ Moved, That the Bill be now read 2a. —(Lord Fletcher.)
§ 5.52 p.m.
§ Baroness YOUNG
My Lords, I should like to thank the noble Lord, Lord Fletcher, for explaining the provisions of this Bill and introducing it to the House. I think it would be helpful if I said immediately that I hope this Bill is given a Second Reading. I fully understand the reasons why the Tyne and Wear metropolitan county want to promote this piece of legislation and, as the noble Lord, Lord Fletcher, has already indicated, they are doing so because under Section 262 of the Local Government Act most local powers will lapse to the counties in 1979. It is therefore not my intention to debate most of the provisions of this Bill. There may well be matters in all the clauses to which I have not referred in my Instruction which will require amendment. If that is so I am sure that they should be so amended by the Opposed Bills Committee of the House.
I say this because I am deeply interested in local government. I speak, too, as a vice-president of the Association of Metropolitan Authorities, and I would not want anyone to think that I was trying today to use some extraordinary Parliamentary procedure to delay many important clauses of this Bill. Indeed, it is my view, and one which I think the whole House expressed when we debated the County of South Glamorgan Bill, that the Government ought to bring in a major piece of legislation on general powers for local authorities, otherwise all authorities will be forced to promote private Bills of this nature, and I cannot believe that this is in the best interests of Parliament or, indeed, of local government itself. I hope very much that the noble Baroness, Lady Stedman, will be able to say something about this matter. Perhaps I could say in passing that the Bill now going through another place does not really meet the requirements that local government needs, certainly before 1979.
My Lords, there are already five Petitions against the Tyne and Wear Bill and so, as I understand the procedure, it will go automatically to the Opposed Bills Committee of the House. Nearly all the Petitions against the Bill are against the clauses to which I wish to draw attention. 869 I hope therefore that this Bill has a Second Reading and that the House will accept my Instruction. It has been deliberately drawn in what I hope are moderate and conciliatary terms, for I believe that Clauses 48, 50, 102 and 103 as proposed are major extensions of the powers now held by local authorities and I think they are grounds for believing that these powers arc not necessary for what local authorities wish to do.
It might be helpful if I turn in detail to the four clauses. In regard to Clause 48, it may be thought that there are possible parallels with the County of South Glamorgan Bill, but I do not believe this to be the case. Clause 48(1)(ii) is not to be found in the South Glamorgan Bill, nor is proviso (i) of subsection (2); and in subsection (3) only paragraph (c) has a direct parallel in the South Glamorgan Bill. The Petitioners against the Bill have made the point, quite rightly, I believe, that the local authorities, that is the metropolitan county of Tyne and Wear and the five district authorities, are seeking major extensions of their powers under this clause.
As I understand it, at present these local authorities have the power to provide services—largely those of repairs and maintenance work—to a large number of authorities besides the local authorities themselves, which include the universities, the Regional Hospital Boards and even the citizens' advice bureaux. To these existing powers would now be added the power to construct buildings on land which the authorities do not own and in direct competition with local industry and commerce. I believe it to be true that it is not intended that these new powers should be used often, but it seems to me that the Committee must satisfy itself by finding out practical examples of the way in which the local authority would intend to use these powers, in what way it cannot at present carry out this work or, indeed, in what way at present this work cannot be carried out by existing local industries or firms. I know it will be argued that in every case there must be a competitive tender between the local authority works department and a private firm, but there is room for a great deal of doubt as to whether these two compete fairly and whether the system of accounting is similar between a direct 870 works department and a local authority direct labour force.
I have read with great interest the report produced by the Chartered Institute of Public Finance and Accountancy which makes a series of proposals as to how direct labour works department accounting and that of private firms might be brought more into line. It seems to me that we need some necessary thought on this subject otherwise an aggrieved ratepayer, who might feel that he has been left to foot the bill as a result of some activity by a direct labour force, has no chance to object because he has not got the full facts before him. As a last resort he would be unable to object at the district audit because once again, he would not have the full facts before him. Furthermore, it seems to me that in the serious financial situation in which the country finds itself at the present time, and with the publication last week of the White Paper on Government expenditure, this is not a time when it is advisable to ask ratepayers or local authorities to take any further risks with public money. For all these reasons I believe that this clause ought to be looked at with great care.
Clause 50 is another clear extension of local authority powers. I understand that the intention behind the clause is to find a way of helping industries over their problems of cash flow, and specifically to provide employment in the inner areas of the cities within the metropolitan county of Tyne and Wear. There is a precedent for such a clause in the Industry Act 1972, but it seems to me that if these powers are necessary this should be a matter for central Government rather than for local government. Again I think there must be accountability to ratepayers, and I believe that the Opposed Bills Committee must satisfy itself that these powers are really necessary. Furthermore, I think it would be helpful to know what is the view of the Department of Industry on this extension of powers which local authorities have at present.
As I understand it, Clause 102 extends the geographical area over which direct labour departments could operate. At present, direct labour departments have generally only one client; namely, the local authority, and they can operate only at district level in the areas of the former county boroughs. The power under this clause would enable them 871 to tender for any work and to operate over much wider geographical areas.
There are, I think, four difficulties here. First, there are adequate construction resources in the private sector within the metropolitan county of Tyne and Wear which are currently underemployed. Secondly, as 1 have already indicated, the system of financial reporting currently applied by direct labour departments, and which is in no way revised by this Bill, is incapable of showing whether an economic return on the resources employed is being achieved. Thirdly, there would be an involuntary risk to ratepayers' money, as it would be invested in a commercial operation to provide a service of construction already available to the community from private contractors, and at no risk. Lastly, but I think very important, there could be a potential conflict of interests, placing the private contractor at a competitive disadvantage, because the local authority exercises powers to grant planning permission as well as offering competing services to construct the buildings concerned.
I was very grateful to hear what the noble Lord, Lord Fletcher, said about Clause 103. It seems to me that as it stands it would have the effect of creating a kind of local enterprise board by the Tyne and Wear metropolitan council. I am not at all convinced that this is a proper use of ratepayers' money, and I am, therefore, very glad to hear that the Promoters of the Bill would be glad to see an Amendment of this clause. I think it is important that the Opposed Bills Committee should look very carefully at the proposed Amendment, because, as I understand the wish of the Promoters, they have in mind a particular case which they hope will be covered by this clause. If this is so, it seems to me only right and proper that the clause should be so redrafted that the particular case might be covered and not couched in these very wide terms, as it stands at present.
My Lords, in putting down this Instruction, I do not want it to be thought that I am in any way trying to tell the Opposed Bills Committee its job. That would not be my wish, and I am certain that I would not succeed in that aim if it were. But I care very much about good local government, and that it must 872 not only be good, but must be seen to be good. It seems that in the case of the very extensive new powers contained in the four clauses to which I have drawn attention it would not be right to agree to accept them as part of the Bill until the case for them has been conclusively made out beyond a shadow of doubt. As it stands, I am glad to support the Second Reading of the Bill, but I am bound to say that I do not think that a case has been made out for the inclusion of these four clauses as at present drafted.
§ 6.4 p.m.
§ Baroness STEDMAN
My Lords, I intervene at this time because it may be helpful to give the House a brief indication of the Government's views on this Bill, which is a Private Bill. We recognise that many of the provisions should assist the local authorities to cope more effectively with some of their very real problems. The renewal and the updating of the provisions relating to the various undertakings, such as the Tyne Tunnel, should make the law applying to these undertakings more easily ascertainable, and enable the authorities to repeal earlier local Acts that have become obsolete.
My right honourable friend the Secretary of State has, however, raised a number of points with the Promoters and has suggested modification of several provisions, including the powers to assist industry. We hope shortly to be discussing the provisions with the Promoters, and in fact my right honourable friend's officials will be meeting them on 5th March and will report to the Select Committee on the Bill in due course.
The Local Government (Miscellaneous Provisions) Bill, which is in another place at the present time, is only part of our attempts to provide general powers for local authorities between 1979 and 1984. We are considering suggestions from the local authority associations for other powers and how best to carry the Bill, or the suggestions, forward. So I hope the House will decide to give the Bill a Second Reading and will send it to the Committee. It will be in a very much better position than we are to examine the details of the issues involved, and it will have the added advantage of hearing expert advice.
§ 6.6 p.m.
§ The Earl of SHANNON
My Lords, I had intended to make a very short intervention in this debate, which has now been made even shorter by the undertaking given by the noble Lord, Lord Fletcher, who moved this Bill on behalf of the Promoters, that they would be happy to see amendment of the clauses under discussion. I have no quarrel with the bulk of this admirable Bill, but I think your Lordships should be very grateful to the noble Baroness, Lady Young, for drawing attention to these particular clauses. Before I go any further, I should make it clear that I have absolutely no interest whatever to declare. It is now nearly 10 years since I ceased to be a practising architectural metalworker, or, more simply, an ornamental blacksmith, and in my experience no sane local authority would every dream of trying to get involved in that particular side of the industry.
Like the noble Baroness, I was very worried when I saw these permissive provisions to which she has drawn your Lordships' attention. In many areas there seems to be a popular fallacy that because a contractor makes a profit, if one can then dispense with the contractor, the job must be done cheaper. This do-it-yourself approach is all very well for the private householder, who buys materials often specially packed for him more expensively than they would be for the trade. He rolls up his sleeves and gets on with the job. It is cheaper only because he provides his own free labour. Local councils, however, purchase materials and employ labour in the same way as the trade. They, therefore, do not get this large reduction in cost which comes to the private householder who does a do-it-yourself job. The popular fallacy tends to fall down because it does not acknowledge that the contractor makes a profit, not by being a contractor, but merely because he learned his job in the hard, but only successful, way of using his own finance. If he makes a mess of his job, it is his own money that he loses. It is only because of this hard-earned expertise that he makes a profit, and deprived of the strict control of financial incentive he can only land himself and others in trouble.
In the past I referred in your Lordships' House to occasions when one was 874 worried when Governments, local government, or Government agencies have gone, one might put it, into competition with private industry. One is always worried that inconvenient overheads somehow, by some tortuous system of accounting, get allocated elsewhere and do not really show up on the accounts, as the noble Baroness, Lady Young, suggested. She referred, quite rightly, to the recent report of the Chartered Institute of Public Finance and Accountancy with regard to direct works undertakings accounting. But even so, were this to be entirely implemented, I would still not be completely happy. I am not supporting local industry. I am merely asking, along with the noble Baroness, Lady Young, that the Committee on Opposed Bills of your Lordships' House looks carefully and satisfies itself that it is not leaving a way open for future ratepayers of the Tyne and Wear Authority to pick up the bill for extra costs of works done with a mass of good will and enthusiasm, but lacking the hard financial discipline. I support the Second Reading of this Bill, and look forward to hearing what Amendments the proposers are suggesting to the Committee on Opposed Bills to amend the clauses which we have asked be looked at rather carefully.
§ 6.10 p.m.
§ The Earl of LISTOWEL
My Lords, I think it might be for the convenience of the House if I were to say a few words about the Instruction that is to be moved by the noble Baroness. Lady Young. I can see no procedural objection to the acceptance by the House of this Instruction. It does no more than draw the attention of the Select Committee to which this Bill, as the noble Baroness rightly said, will be referred if your Lordships give it a Second Reading, to points which will also be made by the Petitioners against the Bill; namely, the National Federation of Building Trades Employers, and the Federation of Civil Engineering Contractors.
I mention the Petition because even if the Instruction had not been moved by the noble Baroness, the Select Committee will have to consider the clauses she mentioned—Clauses 48, 50, 102 and 103—because they are complained of in the Petition. The Select Committee would, of course, require to be satisfied by 875 the Promoters that there was a need for the powers asked for in the Bill. I would add that it is the usual practice of a Select Committee to make a special report in cases where the House has agreed an Instruction. This, of course, is a matter for the Committee to decide.
§ On Question, Bill read 2a, and committed to a Select Committee.
§ Moved, That it be an Instruction to the Committee to whom it is committed that they should give special consideration to Clauses 48, 50, 102 and 103 to satisfy themselves that they do not constitute an undesirable extension of the powers and functions of local authorities to operate in competition with private industry and interests in the same field.—[Baroness Young.]
§ On Question, Motion agreed to.