Lords Sitting of 15 February 1988

Preamble
The House met at half-past two of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Ely.

The National Heritage Memorial Fund
Lord Gainford: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how many properties of national importance have been bought by the heritage memorial fund since it was established in 1980.
The Minister of State, Department of the Environment (The Earl of Caithness): My Lords, the National Heritage Memorial Fund does not make outright purchases on other than a temporary basis but assists other bodies to acquire, maintain or preserve items of importance to the national heritage. From its inception in 1980 to the end of the last financial year the fund assisted some 430 projects with funds totalling about £82 million.
Lord Gainford: My Lords, I thank my noble friend for that Answer, which will encourage those involved in the preservation of historic buildings. Can he also say whether the fund assists those who may find objects of archaeological interest on such sites while engaged in this work?
The Earl of Caithness: My Lords, yes. Indeed, I can confirm to my noble friend that the fund is active in that sphere. It has just included and aided work with regard to a medieval coin find in Aberdeen.
Baroness Gardner of Parkes: My Lords, can the Minister assure me that the department casts a careful eye on those buildings to be preserved? Having preserved most of the buildings in London which need it, I hope that it does not just look for buildings that are not worthy of the support of the heritage fund.
The Earl of Caithness: My Lords, the fund has trustees nobly led by the noble Lord, Lord Charteris of Amisfield, and it does an exceptionally good job without interference from the Government.

London's Hospitals: Waiting Lists
2.38 p.m.
Lord Molloy: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what efforts are being made to reduce the waiting lists of London's hospitals.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Skelmersdale): My Lords, this year we made an additional £7·08 million available to the four Thames regions from our special £25 million waiting list fund, £3·75 million of this specifically for projects in the Greater London area. As a result, 15,000 extra patients will have been treated in London hospitals by the end of March. We are now looking at bids for the £30 million available for 1988–89.
Lord Molloy: My Lords, I thank the Minister for that reply. The fact that 15,000 more patients will be treated in the next 12 months in Greater London is almost trivial to the problem that exists. Is he aware that there is grave concern at all levels in the medical profession in Greater London? The GP must first examine the patient. Is the noble Lord aware that that takes time? The GP must recommend the patient to a consultant or a specialist. Is the noble Lord aware that that takes time? People have to go to hospital and wait in queues as a consequence. The consultants or specialists say, "We shall see you in a month's time because we cannot fit you in yet." This matter is going round and round. Despite the Minister's slightly encouraging reply, this matter is still causing grave concern right through the entire medical profession as well as among the ordinary people who need the services of our great medical profession.
Lord Skelmersdale: My Lords, I recognise the feeling aroused by this subject. I said that 15,000 extra cases will be treated; and I point out that in 1986 in London there were 4 per cent. more in-patient treatments than in 1978.
Lord Peston: My Lords, I ask the Minister whether his department has done the calculation the other way round; namely, whether he has worked out what the cost would be to reduce the waiting list by 25 per cent., 50 per cent., and 75 per cent.?
Lord Skelmersdale: My Lords, I am not sure that I quite follow the drift of the noble Lord's question. However, I suspect that he is asking generally rather than specifically with regard to London.
Lord Peston: My Lords, I am asking specifically with regard to London. The right way is to take the length of the waiting list and to work out what it would cost to reduce it by given amounts. If we knew the answer to that question then we would have a perspective of the nature of the problem.
Lord Skelmersdale: My Lords, the Question on the Order Paper is about reducing waiting lists.
Lord Ennals: My Lords, following the figures given by the Minister, may I ask whether he can give the House a figure for the current waiting lists for the four Thames regions and say whether the trend is up or down?
Lord Skelmersdale: My Lords, the trend is fractionally up. I confirm that the four Thames regions between them account for 31 per cent. of the

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total waiting lists. The average waiting time of more than one year in the four regions is rather higher than the national average. I cannot readily find the information on details of actual numbers. However, I point out that the concern of patients is not so much regarding the waiting lists for treatment, but the period of time that is involved.
Lord Ennals: My Lords, can I therefore ask the Minister whether he is saying that the trend is still up? And is it up compared with a year ago, or compared with which previous statistic?
Lord Skelmersdale: My Lords, the trend, as in the national trend, is marginally up.
Lord Molloy: My Lords, is the Minister aware of the frustration of the long waiting period for people to go into hospital? The GP says that the patient should go into hospital quickly, and the consultant says, "I wish there was somewhere we could put you because the problem is serious". I have raised this matter before. Is the noble Lord not aware that some hospitals like Northwick Park Hospital have worked out a scheme to increase efficiency and reduce waiting lists? The thanks from the DHSS was that the hospital was compelled to close a ward. Is that not abysmally absurd?
Lord Skelmersdale: My Lords, the two matters simply do not go together. I have explained to the noble Lord that we have spent extra money through our waiting list fund. There is no possible correlation between that and regional health authorities and in this case in particular. London district health authorities keeping within their budgets.
Lord Gridley: My Lords, with respect to the numbers of people on the waiting list, may I ask the Minister whether or not it is a fact that in recent years the National Health Service has treated a greater number of patients than it ever has in the past?
Lord Skelmersdale: My Lords, yes. My noble friend is absolutely right; and that has happened especially in London. Not only are London patients treated, but patients come in from outside the four London regions.
Lord Mellish: My Lords, is the Minister aware that during the past 10 or 15 years operations have been carried out the like of which has never before been heard of, such as hole-in-the-heart operations, heart transplants and so on? The result is that the NHS is suffering through trying to manage under a system which was not designed to cater for that situation. The inquiry now being conducted is fully justified and the sooner it is completed the better.
Lord Skelmersdale: Yes, my Lords. I would only add to that very helpful supplementary question that the problems in the acute service that the NHS faces are indeed problems of success.
Baroness Blatch: My Lords, is it not true that almost daily we have indignant criticism from noble
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Lords on the Opposition Benches but from 1974 to 1979, when Labour was in power, the decrease in nurses' pay in real terms was 21 per cent.? Were those policies pertaining today not only would the situation in London be acute but the crisis in the NHS would be incomparable.
Lord Skelmersdale: My Lords, my noble friend is absolutely right. Overall nurses' pay has risen by 30 per cent. in real terms since 1979. In contrast, as she points out, there was a fall in their pay to the value of 21 per cent. in real terms in the five years to 1979.
Lord Molloy: My Lords, is not the noble Lord aware——
Noble Lords: No!
Lord Molloy: My Lords, this is an important point. Is not the noble Lord aware that the increase in the number of people going into hospital can in no way be an excuse. If more people happened to be ill in the past seven or eight years than in the past that is not necessarily their fault. The duty of the Government is not to see how many people can receive hospitalisation at any one time but to ensure, as the original Act says, that everyone is treated at the point of requirement. That is what they should aim for.
Lord Skelmersdale: My Lords, everybody is concerned about waiting lists, whether in London or anywhere else in the country. That is why the Government produced money for the waiting list fund, which is having the effect that I have just described to the House.

Storm Damage and Ancient Woodlands
2.45 p.m.
Baroness Nicol: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government following the storm of 16th October 1987—

(1) what importance they attach to ancient woodlands;

(2) what protection is given currently to the remaining trees and, in particular, ancient woodlands outside SSSIs; and

(3) whether they will prepare further guidelines or legislation to protect the remaining trees and ancient woodlands.

The Earl of Caithness: My Lords, the storm of 16th October 1987 damaged a number of pre-1600 woodlands. For the future, we believe satisfactory protection against damage by man is provided, not only through designation where appropriate as sites of special scientific interest or national nature reserves, but also by the Forestry Commission's felling controls and planting grants, with its associated consultation procedures, and by tree preservation orders. In administering these arrangements, full use is made of an inventory of ancient woodlands being compiled by the Nature

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Conservancy Council and this will be completed next year.
Baroness Nicol: My Lords, I am grateful to the Minister for that very comprehensive Answer to my rather long Question. Is he aware of the extra costs involved in clearing ancient woodlands?— for example, a pollarded beech can cost four times as much as a normal tree to remove. Therefore, can he say whether his inter-departmental committee on storm damage which is at the moment sitting will be able to make recommendations specifically about ancient woodlands? Is the committee considering them?
The Earl of Caithness: My Lords, as the noble Baroness rightly said, the committee is at present sitting and therefore it would be wrong for me to prejudge what it will say. However, I shall draw the committee's attention to her comments.
Baroness White: My Lords, does the noble Earl agree that the problem of clearing trees is as important as planting? While grants for planting trees in the immediate future seem to be reasonably generous, as I understood the answer given by the noble Earl in a recent debate, the assistance which is absolutely essential for preliminary clearance is nothing like as satisfactory. Has further consideration been given to that?
The Earl of Caithness: My Lords, that is one of the aspects we are considering. However, our initial belief is that the general principle must be that clearance is the responsibility of the individual owner. As regards ancient woodlands, as the noble Baroness knows well there are many benefits to nature by not clearing them too quickly.
Baroness Nicol: My Lords, I have one final brief question. Can the Minister say when the report is expected?
The Earl of Caithness: My Lords, not at the moment.

Business
2.48 p.m.
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend the Leader of the House will, with the leave of the House, repeat a Statement that is to be made in another place on the European Council in Brussels.
It may be for the convenience of the House if I announce that the Report stage of the Local Government Bill will be adjourned at approximately 7 p.m. for approximately one hour and that during this adjournment the Report stage of the Norfolk and Suffolk Broads Bill will be taken.

Business of the House
The Minister of State, Home Office (Earl Ferrers): My Lords, on behalf of my noble friend the Lord
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Privy Seal, I beg to move the Motion standing in his name on the Order Paper.
Moved, That Standing Order 44 (No two stages of a Bill to be taken on one day) be dispensed with for the purpose of taking the Welsh Development Agency Bill through all its remaining stages on Thursday, 3rd March.—(Earl Ferrers.)
On Question, Motion agreed to.

Copyright, Designs and Patents Bill [H.L.]
Lord Denham: My Lords, on behalf of my noble friend Lord Beaverbrook, I beg to move the Motion standing in his name on the Order Paper.
Moved, That the amendments for the Report stage be marshalled and considered in the following order:

Clauses 1 to 162,

Schedule 1,

Clauses 163 to 191,

Schedule 2,

Clauses 192 to 249,

Schedules 3 and 4,

Clauses 250 to 268,

Schedule 5,

Clauses 269 to 277,

Schedules 6 and 7. —(Lord Denham.)

On Question, Motion agreed to.

Local Government Bill
2.49 p.m.
Report received.
Clause 1 [Defined authorities]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 1:
Page 2, leave out line 16.
The noble Earl said: My Lords, at the same time I shall speak to Amendments Nos. 30, 35 and 103.
Amendment No. 1 removes the Development Board for Rural Wales from the list of defined authorities in Clause 1(1) of the Bill. The development board is established to operate as a development agency with economic and social functions in rural Wales. The body is more akin to the Highlands and Islands Development Board in Scotland and the Development Commission in England than to a local authority and the other defined authorities listed in Clause 1(1) of the Bill.
My right honourable friend the Secretary of State for Wales is able to ensure that the board exposes its activities to competition and uses private contractors wherever that is possible and reasonable. We have therefore concluded that there is no need to include the board in Clause 1(1). Similarly, there is no need for the legislation governing building and maintenance direct labour organisations to apply to the board. Therefore the consequential amendment deletes it from the list of bodies in that legislation. The other amendments are consequential. I beg to move.
On Question, amendment agreed to.
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 2:
Page 2, line 27, leave out ("islands").
The noble Lord said: My Lords, it is perhaps to the advantage of the Committee if we deal with Amendments Nos. 2, 7 and 9 together. I see that the noble Lord, Lord Campbell of Croy, is here. This amendment is the same as the one which was tabled at Committee stage. It is to emphasise the importance we place on the fact that the islands of Scotland—the Orkneys, the Shetlands and the Western Isles—are unique. It is perhaps understandable to apply the rigours of the Bill to the larger islands. But there are many small islands, as the Minister knows very well. I recognise that he has been concerned about the way in which the Bill will work on the ground when consideration is given to some of the smaller islands. There may be difficulty, for example, in getting a contractor or in getting any competition at all. In some cases, even with the de minimis rule it may still be better to leave it to the local people who have been responsible for a very long time.
I am grateful to the Minister for having met the noble Lord, Lord Campbell of Croy, and myself to discuss this point. As the Minister well knows, we agreed to table amendments to obtain his preliminary thoughts, although we still have another chance later. We wish to have his thoughts on how this all-embracing clause will apply to the very special circumstances of the islands. I hope the Minister will be able to reassure us as he did to some extent when we had an audience with him the other day. I beg to move.
Lord Campbell of Croy: My Lords, the two amendments in my name, Amendments Nos. 7 and 9, are to be discussed at the same time as the amendment moved by the noble Lord, Lord Carmichael. I feel some responsibility for any special problems which arise for the three islands' councils, Orkney, Shetland and the Western Isles, because I brought them into existence in the Act of 1973 when I was Secretary of State. The history is that the Wheatley Royal Commission reported in October 1969 and recommended that the islands should all be part of the mainland local authorities. In the only debate which took place in the other place in early 1970, I indicated, as a member of the shadow Cabinet, that the Conservatives favoured separate local authorities for Orkney and Shetland, contrary to the proposals of the Royal Commission.
After coming to office in 1970 I confirmed, as Secretary of State, that this was our position and added the Western Isles as a third group. The amendments in my name apply only to the three islands' councils. There are no comparable local authorities in the United Kingdom. Each is a single tier of local government possessing most of the functions of local government. Having heard their views at Committee stage, I realise that the Government are not prepared to exempt the three islands' councils from competitive tendering under Part I of the Bill.
I understand that the Government will find it too much to accept Amendment No. 2 which has just been moved. In the circumstances of isolated islands
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with very small populations, ridiculous situations can arise unless there is some flexibility in the application of Part I. I am sure that the Government will also wish to avoid excessive and unnecessary expenditure and the creation of bureaucracies.
In Committee on 26th January my noble friend Lord Stodart of Leaston, who chaired a committee of investigation five years after the reorganisation of local government, commented that the efficiency of the three islands' councils was good. Without being immodest about decisions I took in 1970 and 1971, the creation of the three councils has been widely regarded in Scotland as a success. In carrying out the duties concerning the services in Part I of the Bill—for example, refuse collection, street cleaning and school meals—the councils are pragmatic in their approach. They arrange what is possible. In some remote islands there is not much option. They arrange what in their view is most cost-effective. The result is that at present some services are performed by the islands' own workforces and others by contractors.
My amendments are similar to two which were discussed at Committee stage. One deals with the application of the de minimis provision which, according to the consultative paper, at present is contemplated as £100,000. The other amendment deals with the situation where clearly the cost of embarking on the tendering procedure is unlikely to be worth the benefits that can be achieved. I described these amendments at Committee stage. I also pointed out the geographical problems. These are very different to those of a town or city, or rural area on the mainland. The equivalent of moving from one neighbourhood to another in a town, meaning perhaps a three-minute drive by motor car, in these island areas is a sea journey of a mile or several miles in unhelpful weather, possibly a gale.
At the Committee stage, my noble friend Lord Dundee invited the noble Lord, Lord Carmichael, and myself to a meeting between the two stages and following the consultation stage. When we were discussing this proposal on 26th January the local authorities and others still had until 31st January in which to submit their views. I understand from the meeting which we had that the Government consider that the necessary flexibility can be provided under Clause 15(6) of the Bill. That was not mentioned in the earlier debate.
I shall read that subsection because its wording is important:
"Regulations under any of sections 4 to 8 above may make different provision for different cases or descriptions of case (whether for different areas, different defined authorities or kinds of authority, different defined activities, different kinds of work falling within same activity, or otherwise.".
That provides a very wide degree of discretion for the Government if they are prepared to use it.
I shall listen very carefully to my noble friend replying to this debate. I know that the three councils themselves would prefer something more definite and to have it written into the primary legislation in this Bill. Nonetheless, if the Government can give a reassurance that they will use the subsection which I have just read out, then I believe that the two

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problems which I have pinpointed in my two amendments can be dealt with.
Timing is important, and I hope the Government can give a reassurance on this. I understand that the three councils should be able to consider situations in their areas and put special cases to the Scottish Office well before the dates when the Bill requires the first round of tendering. Your Lordships will recall that different services are to be phased in at six-monthly intervals. Such special cases can then be considered and regulations made by the Government on the matters which arise in my amendments. I refer, first, to the grouping of operations for the application of the de minimis criterion; and, secondly, to the inordinate cost of the tendering process in relation to likely benefits. In general the Government can, it seems, make regulations to avoid island anomalies or ridiculous expenditure, and I look forward to hearing what their intentions are. I beg to move.
3 p.m.
Baroness Carnegy of Lour: My Lords, before my noble friend replies. I should like to back up what my noble friend Lord Campbell of Croy has just said. At Committee stage I explained why I feel that the total exemption of the islands would be a great mistake; and I hope that the House will not accept Amendment No. 1. I gave reasons at that time—and I shall not repeat them—as to why I thought the benefit of tendering should be available to people in the islands, because although up to a point tendering has been tested in certain places in the islands, it has not been fully tested as yet. Under the Bill that could be done.
I do not know whether the Government are of a mind to accept my noble friend's amendments. If they are not, I hope that perhaps they have listened carefully to the alternative type of flexibility that he has described. In the islands it will only be possible to discover by trying it out what tendering can do for people in remoter areas. If in some places it is found possible to tender in new ways, to break up the areas for tendering and to use procedures that are new and work, that may be helpful to other parts of the islands. We do not want it ruled out completely. At the same time if tendering costs far more than is saved then it is a rather idiotic line of approach.
It is a matter for exploration and for trying out what is possible. The more I have thought about it and the more I have talked to people in small communities and in smaller areas, the more I have come to believe that there are ways forward under the Bill which will be helpful in remote areas. At the same time, flexibility is necessary and it is absolutely essential that it is made clear to councils how they should proceed once the Bill becomes law.
The Minister of State, Scottish Office (Lord Sanderson of Bowden): My Lords, I have listened with great care to the points which my noble friends Lord Campbell of Croy, with his special knowledge of the islands, and Lady Carnegy of Lour and the noble Lord, Lord Carmichael of Kelvingrove, have made on the application of the provisions of Part I of the Bill to the three Scottish island authorities.
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Let me say at the outset that I am absolutely convinced of the need to include Scottish island authorities in the scope of the Bill. Local authorities, including the island authorities, are already required to go out to competitive tender for a substantial proportion of their building and maintenance work. There is no doubt that the competition requirements under the 1980 Act have sharpened the cost effectiveness of in-house provision with the introduction by local authorities of improved management and organisational systems. Significantly we are not aware of any difficulties experienced by the island authorities in their operation of the competitive regime under that Act, and this is legislation which has been in operation now for more than five years.
The island authorities have responded quite well to the present competition requirements and indeed have shown that private contractors can provide a satisfactory service in these remote areas. Orkney Islands Council, for example, uses private contractors in the provision of a refuse collection service for six of the 11 islands on which it provides a service, and the Western Isles Islands Council has put its roads maintenance work out to private contractors. I was pleased to hear my noble friend Lord Campbell of Croy say that he accepted the principle that the islands councils should not be excluded from the Bill.
Both my noble friend and the noble Lord, Lord Carmichael of Kelvingrove, are concerned about the implementation of the Bill in these areas. They have asked that, when the competition provisions are implemented, account should be taken of the special circumstances of the islands. We had that need very much in mind when drawing up the Bill. Clause 6(3) of the Bill, taken together with Clause 15(6), which has already been referred to by my noble friend Lord Campbell, gives the Secretary of State for Scotland power to make regulations applying competition to such authorities and with such exceptions as he may determine. The power is therefore already provided which would enable the Secretary of State to structure any regulations he makes in an extremely flexible way. I can assure your Lordships that it would be possible using these powers for the Secretary of State for Scotland to achieve the objectives underlying my noble friend's amendments.
We now have responses from the three island councils to the Scottish consultation paper on implementation of the competition provisions of the Bill. We are looking closely at these responses before coming to a decision about the application of the competitive regime to these authorities. So that we know precisely what the circumstances of the island councils are, I have asked the Scottish Development Department to meet with the three island authorities to discuss with them fully the precise circumstances of the operation of their services and the particular difficulties they anticipate should these services be subject to the compulsory tendering process. I can assure your Lordships that the specific points raised today will be carefully discussed, along with the points raised with me last week by the noble Lord, Lord Carmichael of Kelvingrove, and my noble friend Lord Campbell. When, in the light of these

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discussions, my right honourable and learned friend comes to make regulations on implementation, he will, of course, wish to keep in mind the objective of these provisions in the Bill.
The Government's firm view is that opening up services to competition can bring substantial savings as well as improvements in the standard of service. Competition should not, however, be introduced regardless of the circumstances. When the costs of complying with the Bill's provisions look like offsetting the potential competitive gains, there is a case for exemption. This is the purpose of our proposal for a de minimis level to exempt activities that are carried out on a very small scale. While I cannot anticipate the decisions of my right honourable and learned friend, we shall look carefully at the application of the aim underlying the de minimis provision to the islands.
The island councils themselves will have flexibility in the application of the Bill's provisions to their areas. They will need to adjust the specifications of the work to be done to the services they wish to provide on both the large and small islands in their areas. They will need to be satisfied that potential contractors can provide a satisfactory service. There is a further safeguard for the island authorities. If, after seeking tenders, they take the view that a potential contractor offering the lowest price does not have the capacity to provide the service, they are not required to accept that tender.
The action which I have described will be taken before the regulations are made. It is difficult to be certain about the effects of the Bill in areas such as the islands. For this reason and to measure the impact of the competition provision of the Bill in Scotland, the Scottish Office Central Research Unit is to undertake a research project to monitor and evaluate, for Scotland only, the effects of the new competitive regime on those local authority activities listed in the Bill.
To help isolate the effects of legislation from other factors influencing the outcome, it will be necessary to obtain measures before and after the Bill is implemented and the phasing of the introduction of increased competition around which the evaluation would be framed means that the results of the work will also be phased in their delivery. First results from the early experience of increased competition would be available for those services in authorities which will be required to subject their services to competition from April 1989.
The noble Lord, Lord Carmichael of Kelvingrove, mentioned the small islands and one person doing many jobs. It is true that on some of the more remote islands one contractor performs a number of services for the local authority; for example, a contractor could be undertaking both road maintenance work and refuse collection. To maintain such an arrangement it would merely be a matter of the authority drawing up the necessary contract documentation.
Following this debate, it is clear that we in the Scottish Office will pay particular attention to the decision that we have arrived at. We shall study most especially the effect of this legislation on the islands.
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In conclusion, I should like to reinforce the Government's commitment to establishing, through detailed discussion with the island authorities, the practical difficulties and special circumstances that they consider they will encounter when faced with the Bill's competition requirements. It will then be a matter for the Secretary of State, exercising the extremely flexible regulation-making powers available to him. It will also be possible, through the research project to which I have already referred, to monitor the effects of the competitive process on the islands council and to respond thereto where it is considered necessary.
My noble friend Lord Campbell of Croy has asked that we give high priority to an examination of the special circumstances faced by the island authorities, and the noble Lord, Lord Carmichael of Kelvingrove, asked that we recognise the uniqueness of these authorities. I hope that what I have said makes clear the Government's commitment to a careful examination of the island authorities' circumstances. I hope that in the light of what I have said noble Lords will consider withdrawing their amendments.
Lord Campbell of Croy: My Lords, before my noble friend sits down, there is one point to which he may not have replied and that was in regard to timing. I listened carefully to his last few sentences. Is it possible for him to indicate that special cases could be considered before the tendering process starts for the first service, which is expected at about the end of 1989? It would be of great assistance to the islands councils if they knew that they could put forward cases and that they would be considered and that regulations could be made before the first tendering starts.
Baroness Phillips: My Lords, before the Minister sits down and before my noble friend replies to the amendment, I should like to ask him at the outset whether we are going to hear every time and at great length the argument that competitive tendering is accompanied by increased efficiency. In my experience, competitive tendering is certainly accompanied by a reduction in costs, because the labour is not paid as much as the people who previously worked for the authority. I challenge that there is increased efficiency. Before we hear any more of this from the Government—we will get it on other amendments—I ask them to bring supporting evidence to show that when there has been a change of system they have noted increased efficiency.
Lord Sanderson of Bowden: My Lords, with permission, I shall reply to the two points that have been raised. First, in relation to the remarks of my noble friend Lord Campbell of Croy about phasing in, we have a programme for that. We have to consult quickly with the island authorities before we reach the period of tendering. We hope that we shall learn the immediate responses quickly and that we shall be able to work within the framework of the phasing to obtain the right answers on each of the denominated subjects for tender.
As regards the much wider question raised by the noble Baroness, there is no doubt about the

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enormous savings that can be achieved by exposing a wide range of services to competition. That fact is beyond doubt. The noble Baroness asked whether competition was or was not efficient. In my experience outside the House and before I came here, I have never had any doubt that competition is a spur to efficiency.
3.15 p.m.
Lord Carmichael of Kelvingrove: My Lords, I gain the impression from what the Minister said that he is slowly beginning to realise that there is not a great deal of logic in including some of the islands, because he is giving so many assurances that there will be examination and consultations with the islands before anything is done. He said that the islands already use private contractors and that that makes one sure that there is no ideological objection in the islands to using such contractors.
My noble friend Lady Phillips spoke about efficiency. We have never managed to work out exactly what we mean by efficiency. There has been no study. The Minister could ask the SDD to undertake to work out what the total efficiency is; that is, including the service to the people and how the people react to it, as well as any savings that are made.
The Minister spoke about enormous savings. Whatever else he was talking about, he was not talking about the islands. He was talking about the mainland, whereas the amendment talks about the islands. On the smaller outer isles there is little possibility of benefiting from any economies of scale. Even on the main island of Orkney the volume of some services is too small to achieve any noticeable economies of scale. The services which will be subject to competition do not involve high cost and consequently the thought of making big savings is ludicrous.
On the smaller outer isles, the services are organised to ensure that there is a minimum of management and supervisory input. The way that I read the Bill or the way that I think local authorities——
Lord Harmar-Nicholls: My Lords, are we not going against the agreement that we made on a previous occasion when we interpreted our Standing Orders and decided that on Report, after the Minister had replied, there would be no more detailed debate? If we are going to have that, we shall never get through the Bill. I think that we ought to have some self-discipline.
Lord Carmichael of Kelvingrove: My Lords, I do not know whether the noble Lord was in the Chamber when I moved the amendment, but I was most economical with time. I moved it in about two minutes so that we could deal with the matter. We had a discussion with the Minister which was very satisfactory. The noble Lord, Lord Campbell of Croy, and I wanted to get on the record what the Minister said. I think that is fair enough. Now that it is on the record, I am entitled in view of what I said to ask the Minister to expand a little more on what he will consider when he makes his regulations.
Lord Harmar-Nicholls: My Lords, at the beginning of the Report stage can we know where we stand? There should be no question of saying anything which would cause the Minister to reply again. Advice was taken and the agreement (accepted on all sides) was that on Report after the Minister had spoken there should be no detailed debate.
Lord Underhill: My Lords, surely the mover of an amendment must be given the right to reply. That is a democratic right which every noble Lord accepts.
Lord Carmichael of Kelvingrove: My Lords, perhaps I may briefly expand upon that point. The Minister's reply was substantially what he had previously told us. However, if he had not been such an honourable Member of this place, his reply today could have been quite different. Surely I should then be entitled, as I think I am on a couple of points, to emphasise the importance of the amendment. One of the important points I made was that the islands already use private contractors. Therefore they have no ideological objection to competitive tendering. Indeed, the Minister made a point of saying that such authorities sent much of their work out for tender. I thought that that reflected on his earlier insistence that there must be tendering for all services unless they fall into one of the many categories mentioned.
I am legitimately trying to extend the categories at which the Minister will be looking. That is why I gave the example of some of the work that is done on the smaller islands off the mainland of Orkney. I am sure that the Minister has gained considerably from the general discussion that the House has had on the subject.
I shall look at what he has said very carefully and get advice on it. I do not want to press the matter any further at this point. Unlike the other place, we have another stage—a Third Reading—when we can still discuss things. I beg leave to withdraw this amendment.
Amendment, by leave, withdrawn.
Clause 2 [Defined activities]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 3:
Page 2, line 37, at end insert ("which shall be implemented in relation to any defined activity specified in this section in accordance with the need for the orderly and efficient provision of services to meet the requirements of the community.").
The noble Lord said: My Lords, in moving this amendment, I should like to speak also to Amendment No. 12. It will be impossible for me to avoid referring to some of the more detailed amendments which are down in the names of myself, my noble friends and the noble Lord, Lord Ross of Newport, for debate this afternoon.
The reason why the amendment has been put forward in this form now is that we are reluctant to detain the House with a series of detailed exceptions and alterations to the structure of competitive tendering which is proposed by the Bill. Perhaps we can find some moderate and reasonable way of putting into the hands of the Secretary of State rather more flexibility in dealing with local authorities and

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local authority services than he has given himself so far in the Bill as drafted. I must emphasise that nothing in this amendment would force the Secretary of State to do anything other than that which he, in the full maturity of his judgment, would wish to do. There is no compulsion on the Secretary of State to make exemptions either to the timetable or to the content of competitive tendering, or indeed to any of the structure of the competitive tendering work.
What these two amendments do is give the Secretary of State the power which I should have thought every reasonable Secretary of State would wish to have: to listen to local authorities, to the particular circumstances which arise in many different parts of the country, and not just those in the Scottish islands. There are, after all, variations in other parts of the country between one region and another and between one authority and another. The amendment would give those differences and any special problems which may arise due effect in the way in which the Secretary of State implements the provisions of the legislation.
Let me deal first of all with the issue of timing. We have had from the department a most elaborate timetable which sets out a matrix of services and of authorities deliberately geographically scattered, with the intention of ensuring that different local authorities put out to tender different services at different times in the forthcoming months. One of the most immediate effects of that is that there is no possibility of effective pooling of services between adjacent local authorities. I do not know whether the Government have taken that into account; but I should have thought that there was no ideological objection to such pooling. But since neighbouring authorities will be putting different services out to tender at the same time and therefore the same services out to tender at different times, there will not be the opportunity for that degree of economy. But the situation is worse than that. The actual dates which are proposed for tendering are quite illogical and irrational. In most cases the date is 1st October. That does not correspond with local authority financial years, and does not even correspond effectively with the school year for the education services. All schools will have started before 1st October, and clearly to change a tender for cleaning or maintenance work in schools within the first few weeks of a school year is totally irrational and could be extremely damaging.
However, there are exceptions. There are dates such as 1st April (which is in the middle of the school year) and which is equally irrational. There is no possibility of local authorities saying to the Secretary of State, "Of course it is your decision; of course we accept the basic provisions of the Bill. But is there any reason why we should not set a starting date which suits the service which we provide and which after all we know rather more about than you do? Why should we not set starting dates which meet the objectives of the Bill and more adequately meet the demands of local services and local residents?" That is the first issue raised by the amendments; the implementation dates and the timings.
The second question, perhaps of even greater importance, is the limited exception of a particular area of work. This was raised by my noble friends at Committee stage in a rather different form and it was brought back on the basis that the original amendments could have been thought to be more threatening to the Government's intentions than these amendments. I suggest to the House that they are in no way threatening to the Government's intentions. There is nothing here which need give any reasonable Secretary of State any pause or hesitation, nor feeling that the Bill is being damaged in any way. To retain a certain proportion of a service, perhaps 10 per cent. (it could on some occasions be more) is not a serious departure from the intention of the Bill, and it has precedents and very clear advantages.
The particular precedent to which I wish to refer is the provision under the Local Government, Planning and Land Act 1980 for building construction and highway work. It was accepted by this Government in that Act that it is appropriate for a local authority to retain one part of these services for direct labour, for internal implementation, and to put the rest out to tender. So far as I know, this has not caused any difficulty. It has not been suggested by the Government that it is causing any difficulties and it seems to us that the precedent is a good reason why this very modest part of the amendment should be welcomed by the Government.
There are specific reasons, in addition to precedents, why 100 per cent. of a service is not necessarily the appropriate amount to put out. That was raised in more detail on specific services in Committee. In many cases, a local authority needs to maintain a certain mimimum workforce for disaster purposes for civil emergencies—I suppose even for more serious emergencies in war time. There are many occasions when it is easier and more effective to call out an employed workforce than to get hold of a contractor and persuade him to call out his workforce. For the safety of our people, I suggest that this power of greater flexibility for the Secretary of State is worth having.
Then there is the question which unfortunately arises—and it is not really any good the Government denying that it arises—where contractors are in default of their obligations. There have been examples of that in many councils, Conservative as well as others. It is no good saying that when a contractor defaults the contract can be put out to tender again. In the meantime, the work is not being done, and unless the local authority has some sort of reserve labour force available to do the work, then there will be a gap in the provision of services which cannot be to the benefit of local people and cannot be financially or operationally justifiable by local authorities.
Another consideration which should be taken into account is the need to avoid tendering cartels. All too often that happens in the building trade, the electrical trade and in trades for many local authority and other services. We find that tenderers feel it is more convenient to get together and make sure that nobody is undercutting than to put forward genuine competitive tendering. If there is the possibility of some small part of the tender remaining under local

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authority control, the local authority has direct understanding of the costs of the service and is enabled to monitor whether the costs as declared by the tenderer and as charged by him are actually reasonable. For all those reasons, the limited exception of a particular area of work is beneficial to the operation of local authority services without in any way being damaging to the principle of the Bill.
Finally, there is the question of the effective implementation of the provisions of the legislation in relation to new or existing statutory responsibilities of defined authorities. In another place two major Bills are now in Committee, both of which affect in great detail the operations of local authority services. The Education Reform Bill will, if it pursues its course unchecked and without substantial amendment, mean that there will be a whole new financial relationship between schools, governing bodies and the education authorities. How can an education authority on the one hand be deeply involved in decentralising the financial management of its schools and on the other hand try to abide by a rigid timetable of competitive tendering as proposed in this Bill? That just does not make sense.
We already know from the Scottish experience what will happen if the Local Government Finance Bill pursues its course unchecked and without substantial amendment. Scottish local authorities are already finding that they have to put very substantial effort into planning for the community charge. They know very well that they are having to set up totally new systems for registering individuals and for checking on eligibility for the community charge. This is having a great effect not only on their relationships with their electors but also on the financial background to the services they are providing. That also is in deep conflict with the very precise timetables which are proposed in this Bill.
If these three major pieces of legislation are to go through at the same time, local authorities will have an intolerable burden of change and restriction put upon them all at very much the same time. I suggest that the provisions of flexibility for the Secretary of State to adapt to local conditions, to listen to local authorities and to listen to the people who are actually there and who know about the services can only be of benefit. They cannot be threatening to the Government. They cannot take anything away from the intention behind the Bill. They do not remove even the element of compulsion which we find so objectionable but they do seriously improve the possibility of this Bill being implemented without damage to local services. I beg to move.
3.30 p.m.
Lord Ross of Newport: My Lords, I rise with some diffidence as this is my first attempt to speak on a Bill on Report. However I should like very much to follow the noble Lord, Lord McIntosh of Haringey, whose experience in local government as a former member of the late lamented GLC is rather greater than mine as a former leader of the smallest county council in England, on the Isle of Wight. But from my experience as leader of that council in the years 1973,
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1974, 1975 and later in 1981 to 1983 I know of the problems that we are likely to face with this legislation.
During the first period of time that I mentioned it was extremely difficult to get outside contractors to come to the Isle of Wight and to quote for many tasks. There was certainly strong evidence of collaboration in the tenders that were put in. We went out of our way to encourage contractors to come from the mainland to bid for major construction jobs on the island. Some of them who came wished that they never had as they went bust in the process.
I do not deny that the position today is rather different. There is, thank goodness, rather more competition in my part of the world than there was 15 years ago. I welcome that situation and long may it continue. Nevertheless it is a problem. In this amendment we are asking for flexibility and understanding on the part of the Government of the particular conditions that apply. I am sure that in other parts of the country, possibly in Wales where there are smaller authorities, these things apply just as much as they do with my authority.
It costs contractors about 8 per cent. of the overall cost of operations to bring across materials such as bricks and gravel to the Isle of Wight. We have a total monopoly in the supply of gravel, as there is only one supplier. That fact adds to the cost of operations there. Therefore there must be an understanding when a local authority is trying to meet the requirements which undoubtedly will fall upon it under this Bill. Our county architect is the man at present in charge of trying to bring this legislation into effect.
The numbers in our direct labour organisations are now as low as they could possibly be. On road operations the figure is as low as 70 and on work maintenance, under 40. It would be wrong if we allowed that position to get worse. We must try to keep the DLO going. Certainly 15 years ago it was essential that it was there to compete with the only other main contractor, who was having a field day on his own. I question whether that day may well not return. Therefore it is important that local authorities are able to maintain their DLOs even if only at a fairly low level.
I support very much of what has been said. I do not know where we would have been without our DLOs during the gales of last autumn. They did a magnificent job. If local authorities had had to try to enlist private contractors who might have been committed elsewhere, with all their vehicles in the wrong places, I do not know what would have happened. Who would have removed trees blocking the roads, for instance? That is why it is so important to retain the DLOs. They did a magnificent job at the time.
Emergency provisions were mentioned by the noble Lord, Lord McIntosh of Haringey. I support absolutely what he said on that. Here we are encouraging local authorities to put their act in order for emergencies, yet that may be in jeopardy if there is too much pressure on them to allow for flexibility. That is the plea we are making, and I support it entirely.
Baroness Blatch: My Lords, the amendments have been described as giving the Secretary of State powers to listen. I suggest that he may be listening for a very long time and local authorities may be talking for a very long time. The phrasing suggested in the complicated document—the matrix that was referred to by the noble Lord, Lord McIntosh of Haringey—is to bring about an ordered implementation of these proposals. Therefore no local authority in the country is required to do more than put out one of the suggested headings to competitive tendering in the course of a little over a year from now.
Some local authorities will already have done that. The more enlightened will have done. The possibility is that, if one considers all six headings, there will be the odd local authority that has no work left to do. Others which are pre-empting this legislation are already busy preparing the way for competitive tendering. Consequently it will not come as a culture shock to those authorities. We really cannot abandon this timetable. I do not at all believe that it is unachievable.
Fears have been expressed during the debate both by the noble Lords, Lord McIntosh of Haringey and Lord Ross of Newport, about the difficulties of keeping a reserve labour force and the effect that that might have on DLOs. If the DLOs are so magnificent—and certainly they are in many parts of the country; in my own authority the transportation department wins contracts against the private sector time and time again, and long may it continue—they will win the work. The compulsion in this legislation lies not in compelling local authorities to put their work out to contract but to test their services against an open market. If their services are better, more cost-effective and more operationally effective than the private sector, they will continue to win the work and to perform it.
As regards tendering cartels, again if the service that an authority receives from an outside contractor is more cost-effective and more operationally effective, that contractor will win the work. I wish to deal in a moment with the point that the noble Baroness, Lady Phillips, made about quality as well as cost. I agree that we should do what we can to eliminate the cartel aspect of tendering but if the service that is provided is more cost-effective and more operationally effective the authority concerned benefits and also the people for whom the service is provided.
On the question of quality I said on Second Reading and again in Committee that quality control is probably the area of skill where local authorities have most to learn. The authority that has done more than any other in the whole country in that respect is Wandsworth. Time and time again at seminar after seminar the amount of work that local authorities have to put in in knowing what services are being provided in their area at present is emphasised. I certainly know this from my experience in Cambridgeshire.
I am sorry to say that there is a lamentable lack of knowledge on the part of local authorities about exactly what is being done and at what cost. That will
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have to be known. There must also be hard work done in preparing proper specifications. The specifications must include the work to be done and the standard at which it must be done. The greatest skill of all lies in managing monetary quality and contractors. Those will be new skills for local authorities. I believe they are skills that can be learned.
I have always been very depressed by how ready people are to criticise, evaluate and comment on quality when private companies are doing the work and the decided reluctance on the part of the same people to comment on quality when the work is being done by direct labour. That must change. The greatest significance and benefit of this legislation, which I absolutely support, is that the issue will cease to be a political football as it has been in local authorities in the past. We will no longer have situations in which Labour-controlled authorities kick out any kind of private contractor and when a Conservative authority then comes in and says that services will go out to competitive tendering. All local authorities will be required, irrespective of their politics, to test their services against the private contractor.
Another matter I find depressing—I have no doubt that this theme will run through much of what we shall talk about today and on Tuesday and Thursday—is the suspicion that noble Lords opposite have of the private sector and the almost total and unreserved confidence they have in direct labour. I am sorry to say that. However, it concerns what has been said. I believe that it is important to note that there are good, bad and indifferent practices both within local authority control and in the private sector.
The important point is that local authorities should know what they want from services and make sure that they get it. If, in the process, they free up money and resources, then it is important that those resources should benefit the service, if that is the decision of the local authority. That was the case in Cambridgeshire when £3 to £4 million saved on one contract went directly into books, equipment and teachers in the classroom. I think that if the electorate had to choose where the money should go, they would opt to use it on the chalkface of a service, whether that service was education, caring for the elderly or caring for the young.
I do not believe that the legislation is a threat to DLOs. I think it is almost the reverse. The good, sound DLOs will be as competitive as the sharpest of the service providers in the private sector. The statutory responsibility for making plans for emergency cover will be there. I take the illustration used by the noble Lord, Lord Ross of Newport, concerning emergency cover. If the local authority keeps a reserve cleaning force which is working perhaps in a quarter of the authority, and if there is a sudden emergency in the other threequarters, that labour force cannot properly cover for the emergency. The authority will have to bring in other labour. The idea of having large banks of very highly paid staff sitting around waiting for an emergency simply is not true.
Lord Ross of Newport: With the greatest respect to the noble Baroness, I was pointing out that the direct labour organisations in my particular part of the country are at such a low ebb that they could disappear altogether.
Baroness Blatch: I do not believe that that is the case. I think we have to consider the jobs which are to be done and make sure that the mechanisms are there to see that the jobs are done, whether that is an emergency or whether it is not. Certainly our statutory obligations must be addressed.
Baroness Seear: Is the noble Baroness saying that my noble friend Lord Ross is telling an untruth? He is very experienced in local government and a former Member of Parliament. I assure your Lordships that what he says will be accurate.
3.45 p.m.
Baroness Blatch: I was not suggesting that the noble Lord was telling untruths. I was suggesting that he has misinterpreted the legislation and the effect it will have. As regards his competence in local government, he has been the local councillor for a number of members of my own family. I know of his competence in the local authority on the Isle of Wight. I meant to cast no aspersions whatsoever on that competence.
I hope that I do not have to return to this matter too many times today. However, I believe that noble Lords opposite will continue to come back to their blanket criticism and will say that the only people who can provide good services are those in the direct labour forces of local authorities. The compulsion is that we should subject our services to the market. If we get that operationally and financially right, the benefits will go to the people for whom we provide services and to those who pay for them. I do not believe that we should be inhibited in seeing the legislation on its way.
As for phasing, which is the main concern of the amendment, that requires each local authority to be mindful of producing one service in a year's time. I do not believe that that is beyond the wit of any local authority.
As regards the grouping of local authorities, there is nothing in the legislation which prevents local authorities from actually going out on all six of the headings as soon as they wish. The phasing allows authorities to do that in a more orderly and measured form. However, if a neighbouring local authority wishes to go in concert with another local authority, there is nothing in the legislation to prevent that.
Baroness Phillips: My Lords, before we return to Scotland, which is the subject that we should be discussing——
Noble Lords: No!
Baroness Phillips: Have we passed that? Oh, good! The arguments are the same. Perhaps I may say to the noble Baroness that no one has suggested that there should be no tendering. My comment was a different one. Each time the Government mention tendering,
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they say that it brings greater efficiency. That is where I challenge the Government.
I have the misfortune to have an office in the borough of Westminster. The authority is hardly a socialist authority. It has introduced private contracting for street cleaning. For some curious reason, those street cleaners are followed by street cleaners employed by the borough. Therefore, all the people who have offices must pay twice; first, they pay through their rates and, secondly, they pay individually. They have no option. As an exercise in cost-effectiveness, I find that an extraordinary illustration of the system we are discussing.
Lord McCarthy: My Lords, I support the amendment. We have a problem in that I understand from the noble Lord, Lord Harmar-Nicholls, that under our rules of procedure we cannot say much after hearing the Minister. Since we do not know what arguments the Minister will be using, we must attempt to anticipate his arguments.
After reading the amendment, it is difficult to anticipate what objections there can be. It is an extremely reasonable amendment. I cannot imagine that the Minister will say that he actually wishes local authorities to start on inconvenient dates which are also inefficient and that that is the policy of the Government. I cannot imagine that the Minister will say that he wishes to deprive authorities of small and efficient emergency services. I believe that that is the answer to the points raised by the noble Baroness, Lady Blatch. The provisions in the amendment are extremely modest. I cannot imagine that the Government wish to say that a local authority should not be in a position to discharge its obligations.
The Government might say, as they frequently do, that the amendment is unnecessary because that is what they will do in any case. The answer to that point has always been: "If you are so certain of that, why can you not accept the amendment and reassure us?". Surely, the critical aspect of Amendment No. 12 is not that it seeks to control the Secretary of State but that it merely says that he should exercise his powers under the various subsections, have regard to the ordinary and efficient provision of services and give due consideration to any representations received. If he gives due consideration and decides that the case is not made out under paragraphs (a), (b) or (c), he can state his conclusion. I cannot see what the Minister can possibly say against the amendment.
The Earl of Caithness: My Lords, our discussion gives me a nice opportunity to welcome the noble Lord, Lord Ross of Newport. We look forward to hearing him take part. I hope that we may persuade him, before we conclude the Report stage, that he is sitting on the wrong side of the House and that the charges concerning errors of judgment about the Bill are totally unfounded.
I have little quarrel with the sentiments lying behind Amendment No. 3 although I think value for money and the ratepayer deserved a mention alongside "the requirements of the community". The Government will certainly take account of the need for the orderly and efficient provision of services in

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implementing Part I of the Bill. As I have argued in previous discussions of the Bill, the best way of securing the efficient provision of services is by exposing those services to competition.
But there is no need to add the words in Amendment No. 3 in order to achieve this. My right honourable friend the Secretary of State is not only a reasonable man, but in case there were any doubts on that score he is obliged to behave reasonably. If he did not take account of the kind of factors mentioned in the amendment he would be open to challenge.
Amendment No. 12, to which the noble Lord also spoke, seeks to impose much the same kind of duty as Amendment No. 3, and also requires the Secretary of State to give due consideration to representations from defined authorities relating in essence to the case for local variations in implementation. We discussed this topic at some length in Committee.
As I said then, the three departments concerned issued separate consultation papers on implementation last November, with a closing date for comments of 31st January. The objective of our proposals is to expose services to competition as quickly as possible but at a pace with which authorities and contractors can cope. We have received a large number of comments on the paper and where the authors have agreed those comments will be placed in the Library. We are now considering those comments, and will announce firm proposals as soon as possible.
A common theme in many of the comments was that authorities should be given a degree of flexibility to match implementation to local needs. We are considering whether there are ways in which we could achieve this without opening up scope for abuse. The risk is that if we allow flexibility some groups of authorities will exploit that and put the same activity out to competition at the same time, thereby swamping contractors.
A number of authorities have also suggested that we should exempt a certain amount of work from competition to enable them to cope with particular local needs. As your Lordships will know, the approach that we have adopted so far is that if there is a case for exemption of a particular part of an activity, that should be provided either on the face of the Bill or in regulations and orders rather than by providing that every authority can carry out a proportion of each activity competition-free. The proposal in our consultation paper was therefore that authorities would be obliged to expose to competition all the work falling within each activity. I believe that proposal was the right one but we will of course be considering the comments made, including those made by your Lordships, before coming to a final decision.
The noble Lord, Lord McCarthy, said that he was perplexed to work out how I should reply to these amendments. Only an Oxford don who had not read the discussion at Committee stage would come up with such a comment because I did go into the matter in some detail at that earlier stage. I am sure that your Lordships will agree that consistency is a very good motto when dealing with this point.
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The noble Lord, Lord McIntosh of Haringey, asked a number of questions some of which pertain to future amendments. Perhaps I could leave detailed comment until those amendments come up for discussion rather than have a debate on Part I. I should like to say a word about pooling. It is not true that the dates we have proposed are the last dates by which authorities would have to expose services to competition. Neighbouring authorities could agree a joint date if they so wished, providing that it was before the date set for either of them.
I very much support my noble friend Lady Blatch concerning the efficiency, or lack of it, of direct labour organisations. I think that she made a very valid point which is entirely relevant to our discussions.
The noble Baroness, Lady Phillips, again raised a point she made on an earlier amendment about efficiency. The Government's view on the efficiency of competition received strong backing in an Audit Commission occasional paper last year which concluded that lack of sufficient effective competition was costing authorities some £510 million a year on the three services it examined: house maintenance, refuse collection and vehicle maintenance. It also ventured the opinion that on average DLOs are more expensive to ratepayers than are private suppliers.
Therefore, the savings that can be made are not just on the reduction of wages, as alleged by the noble Baroness. Important recent research shows that most savings brought about by competition and contracting-out do not stem from lower wages. Papers by the Institute of Fiscal Studies concluded that over three-quarters of the savings resulted not from lower wages and fringe benefits but from improvements in technical efficiency; that is to say, in the physical productivity of men and vehicles.
Finally, I turn to the point raised by the noble Lord, Lord McIntosh of Haringey, about other statutory responsibilities resulting from other Bills now in another place which your Lordships will shortly be discussing. Of course when that legislation comes before us it will have to take account of the effects of this Bill as is the case with all subsequent legislation. For example, following the break-up of ILEA, when the inner London boroughs become educational authorities, the legislation will have to give the boroughs time to enable any school meal services that they take over to be exposed to competition.
In conclusion, we believe that the flexibility provided in the Bill covers the main thrust of Amendment No. 3. I suggest that the right thing to do is to support the Government on this point.
Lord Lloyd of Kilgerran: My Lords, before the Minister sits down perhaps I may ask him a question arising out of his strong support for the speech of the noble Baroness, Lady Blatch. He said that her speech was entirely relevant to the discussion. The noble Baroness referred to the desirability of eliminating cartels. I understood from her speech, with her great experience of Cambridgeshire——
Lord Harmar-Nicholls: My Lords, I think that the noble Lord's remarks are in breach of our decision as

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to how we conduct the Report stage. Last week, when I adopted a similar approach, thinking that it was right, I was told in no uncertain terms by all sides of the Chamber—and I understand that it will be reinforced by the Procedure Committee—that the Bill having had a Second Reading and a Committee stage, at the Report stage when the Minister has replied that should end the debate; otherwise the discussions could go on forever.
Lord Lloyd of Kilgerran: My Lords, perhaps I may have leave to speak. Having regard to the speech of the noble Lord, Lord Harmar-Nicholls, for whom I have great respect, I was present on that occasion, and it was in entirely different circumstances to those in which I now find myself. At this stage I do not propose merely to ask a question of the Minister before he sits down. I shall take the opportunity of addressing the Minister in writing about the matter that I wish to raise, having regard to the speech of the noble Baroness, Lady Blatch, in which she referred to cartels. I should like her to disclose the cartels in Cambridgeshire she wishes to dispose of.
Lord McIntosh of Haringey: My Lords, I, too, should like to welcome the noble Lord, Lord Ross, to our deliberations at Report stage. He will already have learned two lessons. First of all, he will have learned that those who speak from the Government Back Benches to Conservative Central Office briefs do not always find that the briefs are particularly relevant to the amendments which are before the House. His second lesson will have been that some noble Lords on the Conservative Back Benches do not like debate and want to find ways of curtailing it, even at the expense of not allowing the Minister to reply to specific points which have been raised in the course of debate and which deserve specific answers.
A large part of the debate from the Benches opposite has taken place as if the amendment said something totally different. Indeed, the noble Earl himself said that he largely supported the objectives of Amendment No. 3, perhaps with the desirability of the addition of the words "value for money". That is something to which we certainly would not object, in addition to "requirements of the community".
The Minister praised himself for showing consistency both at Committee stage and now. I suggest that although consistency is a virtue, in the face of a different argument—and one which has been put forward reasonably from these Benches—it becomes obstinacy rather than a virtue. If there are different amendments put forward that would have a different effect, then the Government ought to give the wording of those amendments the consideration it deserves. That has not been the case.
I reiterate that this amendment does not attack in any way the principle of the Bill. It does not take away from the Secretary of State the authority it is proposed that he should have under regulations and under several sections of the Bill to provide for the time-tabling, scope and definition of services. The amendment only says that in making those regulations the Secretary of State shall give due consideration to any representations from the defined authorities on certain specific matters. Is that
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so unreasonable? Is that in any sense an amendment that would damage the Government's objectives? It would actually salvage the Government from some of the difficulties they might otherwise face, rather than tending to wreck the obligations of the Bill.
My noble friend Lord McCarthy had a good point when he observed that the small emergency force that a local authority might wish to maintain for emergency planning purposes would still be possible but that it could not actually do anything. If it were already providing a service, so that it was not sitting on the sidelines waiting for an emergency to occur, then it would conflict with the conditions of the Bill because it would conflict with the tendering and contracting process. That is turning local authority responsibility on its head; it does not make any sense The Government's response is not in fact a response to the amendment tabled. I suggest that it is desirable for the opinion of the House to be taken.
4.2 p.m.
On Question, Whether the said amendment (No. 3) shall be agreed to?
Their Lordships divided: Contents, 86; Not-Contents, 122.

DIVISION NO. 1

CONTENTS

Amherst, E.

Kearton, L.

Ardwick, L.

Kilbracken, L.

Attlee, E.

Kilmarnock, L.

Aylestone, L.

Leatherland, L.

Banks, L.

Listowel, E.

Basnett, L.

Llewelyn-Davies of Hastoe, B.

Blackstone, B.

Lloyd of Kilgerran, L.

Bonham-Carter, L.

Lockwood, B.

Boston of Faversham, L.

Longford, E.

Bottomley, L.

McCarthy, L.

Briginshaw, L.

McIntosh of Haringey, L

Bruce of Donington, L.

McNair, L.

Carmichael of Kelvingrove, L.

Mais, L.

Carter, L.

Mason of Barnsley, L.

Cledwyn of Penrhos, L.

Milford, L.

Cocks of Hartcliffe, L.

Molloy, L.

David, B.

Mountevans, L.

Davies of Penrhys, L.

Nicol, B.

Dean of Beswick, L.

Northfield, L.

Denington, B.

Phillips, B.

Diamond, L.

Pitt of Hampstead, L.

Donaldson of Kingsbridge, L.

Ponsonby of Shulbrede, L.

Elwyn-Jones, L.

[Teller.]

Ewart-Biggs, B.

Rea, L.

Ezra, L.

Ritchie of Dundee, L.

Falkland, V.

Ross of Newport, L.

Fisher of Rednal, B.

Seear, B.

Fitt, L.

Serota, B.

Foot, L.

Shackleton, L.

Gallacher, L.

Shepherd, L.

Galpern, L.

Somers, L.

Gladwyn, L.

Stewart of Fulham, L.

Graham of Edmonton, L.

Stoddart of Swindon, L.

Hampton, L.

Strabolgi, L.

Hanworth, V.

Taylor of Blackburn, L.

Harris of Greenwich, L.

Taylor of Mansfield, L.

Hayter, L.

Tordoff, L. [Tetter.]

Heycock, L.

Underhill, L.

Hirshfield, L.

Wallace of Coslany, L.

Houghton of Sowerby, L.

Wigoder, L.

Hughes, L.

Williams of Elvel, L.

Irving of Dartford, L.

Willis, L.

Jeger, B.

Wilson of Rievaulx, L.

Jenkins of Hillhead, L.

427

NOT-CONTENTS

Airey of Abingdon, B.

Holderness, L.

Allerton, L.

Hood, V.

Alport, L.

Hylton-Foster, B.

Ampthill, L.

Ilchester, E.

Arran, E.

Johnston of Rockport, L.

Atholl, D.

Killearn, L.

Barber, L.

Kimball, L.

Beaverbrook, L.

Kinloss, Ly.

Belhaven and Stenton, L.

Kinnaird, L.

Beloff, L.

Lane-Fox, B.

Belstead, L.

Lauderdale, E.

Bessborough, E.

Long, V.

Bethell, L.

McAlpine of Moffat, L.

Birdwood, L.

MacLehose of Beoch, L.

Blatch, B.

Macleod of Borve, B.

Blyth, L.

Malmesbury, E.

Borthwick, L.

Margadale, L.

Boyd-Carpenter, L.

Marley, L.

Brain, L.

Masham of Ilton, B.

Bramall, L.

Maude of Stratford-upon-

Brougham and Vaux, L.

Avon, L.

Bruce-Gardyne, L.

Merrivale, L.

Butterworth, L.

Mersey, V.

Caithness, E.

Milverton, L.

Cameron of Lochbroom, L.

Morris, L.

Campbell of Alloway, L.

Mountgarret, V.

Campbell of Croy, L.

Mowbray and Stourton, L.

Carnegy of Lour, B.

Munster, E.

Carnock, L.

Nelson, E.

Carr of Hadley, L.

Newall, L.

Chelmer, L.

Nugent of Guildford, L.

Chelwood, L.

Orkney, E.

Cottesloe, L.

Oxfuird, V.

Crickhowell, L.

Pender, L.

Croft, L.

Peyton of Yeovil, L.

Cullen of Ashbourne, L.

Platt of Writtle, B.

Davidson, V. [Teller.]

Plummer of St Marylebone, L.

De Freyne, L.

Porritt, L.

Denham, L. [Teller.]

Rankeillour, L.

Dundee, E.

Reay, L.

Eccles, V.

Renton, L.

Effingham, E.

Rodney, L.

Elles, B.

Romney, E.

Elliot of Harwood, B.

Sanderson of Bowden, L.

Erroll of Hale, L.

Sandford, L.

Faithfull, B.

Shannon, E.

Ferrers, E.

Shaughnessy, L.

Fortescue, E.

Skelmersdale, L.

Fraser of Kilmorack, L.

Stockton, E.

Gainford, L.

Strange, B.

Gardner of Parkes, B.

Strathspey, L.

Glenarthur, L.

Sudeley, L.

Gray of Contin, L.

Swinton, E.

Gridley, L.

Terrington, L.

Haddington, E.

Teviot, L.

Hailsham of Saint

Thomas of Gwydir, L.

Marylebone, L.

Thurlow, L.

Halsbury, E.

Tranmire, L.

Harmar-Nicholls, L.

Trefgarne, L.

Havers, L.

Ward of Witley, V.

Hesketh, L.

Westbury, L.

Hives, L.

Wolfson, L.

Resolved in the negative, and amendment disagreed to accordingly.

European Council Meeting, 11th–13th February
4.10 p.m.
The Lord Privy Seal (Lord Belstead): My Lords, with the leave of the House I should like to repeat a Statement on the European Council that is being made in another place by my right honourable friend the Prime Minister. The Statement is as follows:
"With permission Mr. Speaker, I shall make a Statement about the European Council held in Brussels on llth–13th February, which I attended
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together with my right honourable and learned friend the Secretary of State for Foreign and Commonwealth Affairs.
"The Council's detailed conclusions are being placed in the Library.
"Mr. Speaker, this meeting concluded a major and far-reaching review of the Community's finances and policies. At the outset, the United Kingdom made clear: first, that any further increase in Community resources must be accompanied by effective and legally binding controls on expenditure; secondly, that there would have to be effective measures to reduce agricultural surpluses to bring supply and demand much more into balance and that automatic price penalties on individual commodities would be the principal weapon; thirdly, there should be no oils and fats tax; fourthly, that we were determined to preserve in full the system of abating Britain's budgetary contribution agreed at Fontainebleau in 1984 which has saved us some £3,000 million in the last three years. All of these objectives have been achieved.
"I shall summarise the main elements of what has been agreed. First, agriculture; we are now setting in place what have become known as stabiliser measures necessary to control both output and spending. The detailed arrangements vary from commodity to commodity. But the central concept is an automatic price penalty if an agreed quantity of production is exceeded.
"For cereals this will mean that, if production exceeds a threshold set for the next four years at 160 million tonnes—that is 8 million tonnes below the expected 1988 harvest—there will be price cuts of 3 per cent. a year; and the full 3 per cent. cut will apply to the whole crop if production exceeds the threshold by a single tonne. These cuts will be cumulative so that if harvests continue to exceed the threshold there will be a 12 per cent. price cut by the fourth year. In addition there is provision for an increase of up to 3 per cent. in the co-responsibility levy.
"For oilseeds, where in the last three years there has been a colossal increase in Community production, even more severe measures have been adopted. The forecast harvest for rapeseed for this year, for example, is 6·3 million tonnes. Nevertheless, the guarantee threshold for rapeseed has been set much lower at 4·5 million tonnes. If the harvest is as forecast, it will mean a price cut of 8 per cent. this year, on top of 10 per cent. in 1987. The price cuts become even larger in following years if production nonetheless continues to rise.
"The Council had also expected to confirm agreement on stabilisers for eight further commodities—including olive oil, wine, tobacco, fruit and vegetables, milk products and sheepmeat—on which we had decided in principle at our Copenhagen meeting. This agreement has been delayed by France until the meeting of the Foreign Affairs Council on 22nd and 23rd February. The Dutch Prime Minister and I made clear that our agreement to all the measures before the European Council last week was conditional on the adoption of these eight stabilisers as they are.

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"In the light of past experience we have insisted that all these controls should be in legally binding form. This is provided in paragraph 19 of the detailed conclusions adopted by the Council, which reads:
'All the elements set out above are legally binding decisions on the general principles of budgetary discipline. Corresponding legal texts will be adopted to replace the 1984 decision and will remain in force for the duration of the Own Resources Decision.
The stabilisers will be incorporated into the agricultural market regulations'.
"To complement the stabiliser arrangements and further discourage overproduction, the Council has agreed to the general principles of a set-aside scheme to take agricultural land out of production. In order to qualify a farmer must set aside at least 20 per cent. of his arable land for at least five years. Detailed agreement was reached on the maximum premium payable and the level of Community contribution.
"To improve overall control of the common agricultural policy we have also tightened the discipline of the financial guideline for agricultural spending. The guideline base for 1988 has been set at a figure of 27·5 billion ecu (about £19 billion) and its application has been reinforced in four separate ways. First, it is agreed that the Commission's price proposals must in future always be consistent with the guideline.
"Secondly, we have eliminated the general provision for expenditure in so-called exceptional circumstances. In future a specific and limited financial reserve will be established to take account of one factor only, namely substantial in-year changes in the dollar/ecu exchange rate, with a budget effect of more than 400 million ecu. If the dollar goes up in value by more than this, there will be an automatic reduction in the amount spent on agriculture.
"Thirdly, it has been agreed that the cost of depreciating and disposing of existing surplus stocks will be financed outside the guideline but within the budget and that new stocks will be systematically depreciated as they are established.
"Fourthly, it has been agreed that the guideline itself will in future rise at a rate significantly lower than the total resources available for Community expenditure. The new rate will be three-quarters of the rate of growth of Community GNP. Over time this will reduce the proportion of Community expenditure taken by agriculture, so reversing the trend of the past.
"Next, the Council completed the review of the level and objectives of the Community's structural funds—the regional, social and agricultural structures funds. The Council concluded that commitments on the structural funds should increase annually over the period 1989 to 1992 by 1·3 billion ecu a year. This is equivalent to a total real increase over 1987 of some 80 per cent. and will permit doubling for less developed regions. Particular provision is being made within these funds for a programme of industrial modernisation in Portugal.
"Next, we have secured a tightening of arrangements for budgetary management. This
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will limit the use of carry-over provisions and creative accounting devices, such as what are euphemistically called negative reserves, to which there has in the past been excessive recourse and which have been particularly unwelcome to us.
"Next, we decided on an increase in the resources available to the Community. These will in future be expressed in terms of Community GNP rather than, as now, VAT.
"The Commission originally proposed that the own resources ceiling should be raised from 1·4 per cent. of VAT to 1·4 per cent. of GNP, equivalent to 2·3 per cent. VAT, in other words a 50 per cent. increase. The Council rejected this proposal. We decided instead that the Community's own resource ceiling for the Twelve should be 1·2 per cent. GNP, which is an increase of some 25 per cent. over the current figure and is realistic in the light of recent trends. This ceiling will last until 1992 at least. In future the cost to other member countries of the United Kingdom's abatement will be outside the agreed own resources ceiling.
"Lastly, as the House knows, a key United Kingdom objective throughout these negotiations has been to retain our Fontainebleau abatement in full. The need for it and its scale were challenged on various grounds, not least the recent rapid growth of the United Kingdom economy; and proposals were made to confine the correction in future to the gap between our share of Community GNP and our share of agricultural expenditure and progressively to reduce it.
"I made it clear that I was not prepared to contemplate any reduction in the benefit we receive as a result of the Fontainebleau mechanism. I am glad to tell the House that the Council agreed to this. The Fontainebleau mechanism will therefore remain totally intact, and it will once again last as long as the new own resources arrangements. In practice, thanks to the abatement, Britain's gross contribution should remain a little over 1 per cent. of GNP—well below that of other member states.
"The decisions reached will now be translated into firm and legally binding texts. Only when those texts have been agreed will the Government recommend to the House the new level of own resources.
"Our achievement in securing more effective control of farm spending should benefit consumers, through lower prices, and farmers, through greater certainty about future market conditions. The share of agriculture in the Community's budget will decline. The British taxpayer will continue to get the full benefit of the Fontainebleau abatement. The way is now clear for the Community to concentrate on its most important goal: the creation of a genuine single market by 1992. I commend these substantial results to the House."
My Lords, that concludes my right honourable friend's Statement.
Lord Cledwyn of Penrhos: My Lords, we are grateful to the noble Lord for repeating that long Statement. The agreement reached at Brussels will

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need a more careful analysis than we shall be able to give it in this comparatively short exchange. Furthermore I believe that it is right to recognise that the Prime Minister and her colleagues had a complex and difficult task to perform. The Prime Minister's stated objective—this is summarised in the Statement—was to achieve an effective farm spending policy which would control surpluses: the acknowledged central weakness of the common agricultural policy. One gathers that the Prime Minister's negotiating technique was not universally popular and that the language around the conference table was sometimes colourful. But what in fact was achieved? Let us begin with one achievement, namely that Britain's budget rebate was secured. Of course we welcome that. After that, I am not sure that much was gained. The Statement is, I fear, overconfident. First, is it not the case that the cereal quota of 155 million tonnes, which the Prime Minister herself had insisted was the right and fair production ceiling, was at the end abandoned for a ceiling of 160 million which she had described as totally unjustifiable. It will certainly cost us a great deal more.
Secondly, on the question of the guideline base, which the Statement again deals with in some detail, did the Prime Minister not concede a higher base line for farm spending? The Statement mentions £19 billion. In fact I understand that it was 19·3 billion, rather than 18·9 billion and a higher rate of growth, both of which had been described earlier by the Prime Minister as impossible.
Thirdly, does the Minister not further agree that the modest cuts of 3 per cent. will not in fact control the planting of cereals? If they fail to do so, the Community will be in very real trouble again very soon. That is unlikely to reverse the trend, as the Statement describes it. Can the Minister say a further word about the regional and social funds? Is it again not the case that Her Majesty's Government had set a target of 50 per cent.? The plain aim when the Prime Minister and the right honourable and learned gentleman set out for Brussels was a target of 50 per cent., the final agreement was 80 per cent. by 1992. That detail is not mentioned in the Statement. But this is a case of compromise going rather far. Is it thus not the case that the Prime Minister has agreed to very substantial compromises, very much beyond what appear to have been her own personal judgments when she set out for Brussels?
Finally, does the noble Lord not agree that the procedures whereby these crucial matters affecting over 300 million people in Western Europe are discussed in a short space of time in an acrimonious atmosphere into the early hours of the morning are in need of urgent and radical reform? Will the Lord Privy Seal give very careful attention to that question?
Is it, lastly, not the case that sadly it will be another four years before Ministers and heads of government can have the opportunity to discuss a possible radical reform of the common agricultural policy?
Lord Diamond: My Lords, we on these Benches also wish to offer our thanks to the Leader of the
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House for repeating this Statement, to which we can generally give a warm welcome. However, we do not believe that we can welcome it as warmly as the Statement itself welcomes the achievements of the Prime Minister. We think that the Statement has been set forward in terms which make it really quite surprising that it took more than two minutes for everybody to agree. Reading the Statement, we cannot understand why there were all these all-night sittings and so on. However, we understand from other sources which are not, as they should be, fairly put forward in the Statement, that there were other targets which the Government were attempting to achieve but which they felt on balance that they ought to compromise on in order to achieve the greater objective of being in a position to move forward without difficulty, without irritation and in happy co-operation to a common market.
I want to say one word about that. In a matter of this kind it is always easy to evaluate those matters which are capable of measurement and very difficult to evaluate those matters which are not. What are capable of measurement are all the detailed figures that have been given here. Some of them, like the increase from 55 to 60 million tonnes are unwelcome, but what has not been attempted is the evaluation of something which we on these Benches think is of value and importance—that is, the ability to negotiate harmoniously and constructively towards a common market, which was one of the main purposes of setting up the European Economic Community. We think that is a very important step indeed which we welcome very much.
My task is more difficult than usual today because there are so few matters on which I could offer constructive criticism and ask the Government questions. There are many issues which we should like to welcome. In particular we welcome the comment in the Statement that any further increase in Community resources must be accompanied by effective and legally binding controls. Indeed it was astonishing that so much was agreed previously which, when an attempt was made to bring it to reality, vanished into thin air. We are glad that we can place reliance on what has been agreed now on the basis that it will not only be agreed but achieved. We welcome the reversal of the trend also referred to in the Statement of the proportion of Community expenditure taken up by agriculture. I should like to ask the Government why this has been expressed only in the form of a minimum instead of both a minimum and a maximum. It appears that on this basis we are committed, no matter what unknown circumstances arise, to a percentage which, albeit less than had previously been the case, will put a minimum figure on our contribution.
We welcome, of course, the Statement that the Fontainebleu arrangements are intact. We note particularly that none of the things which we are attempting to welcome can be counted on for certain until the agreement with France has been reached and the whole of this can be given effect to.
Having said that, I come back to the main point of our response to this Statement. We are very glad indeed that we can now look forward to the energies

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of the Government being devoted to the wholly important priority of securing a comon market.
4.30 p.m.
Lord Belstead: My Lords, I am grateful to the noble Lords, Lord Cledwyn and Lord Diamond for their reception of my right honourable friend's Statement in another place.
The noble Lord, Lord Cledwyn, mentioned what has been achieved and suggested that the maximum guaranteed quantity for cereals was a great deal higher than the United Kingdom had wanted. It is the case that my right honourable friend argued for a threshold of 155 million tonnes with a price cut reaching 3 per cent. when output would exceed 159·65 million tonnes (155 million tonnes plus 3 per cent.) and that my right honourable friend, along with all the other colleagues, settled for 160 million tonnes with a 3 per cent. price cut when output exceeds that figure by any amount at all. However, let us be quite clear about this. This is for four years instead of three; an extra year's price cut in exchange for what amounts to only 0·2 per cent. on the quantity. It is hardly, I think, a concession. I should have thought that it was a very reasonable result.
The noble Lord said that he felt that the guideline at about £19 billion/27½, billion ecu, was a great deal higher than we had wanted, and that the increase in subsequent years at three-quarters of what would be GNP of Community resources was again something which the United Kingdom had not wanted. Once again, it is an agreement which we have which is legally binding. I think it is fair to assume that not only is it legally binding but that it will stick, because the Commission's agricultural price proposals are going to have to be consistent with the guideline. Exceptional circumstances which have been called in aid by some countries in the past two or three years, and have really very often driven a coach and horses through the guideline, are now going to have to only take account of dollar/ecu exchange rate mechanisms. They must be what is called "symmetrical" in Community jargon. In other words, if the ecu/dollar changes mean that they are beneficial to the Community, you will find money being paid into that reserve and not out. Disposal of surplus stocks must be financed outside the guideline but within the budget and the guideline must increase at three-quarters of the rate of growth in GNP, so reducing the percentage of expenditure on agriculture.There were two sides to this coin. The very important side is the fact that it was legally binding—and I believe will stick.
The noble Lord also said that he felt that the price cuts at 3 per cent. were too modest. I have to say that farmers have to expect a price cut in this year probably of 2 per cent., followed by 3 per cent. price cuts for four years, plus an extra 3 per cent. co-responsibility levy if the maximum guranteed quantities are exceeded. I do not think that the farming community will be overjoyed at the prospect of a 17 per cent. drop in support, especially on top of significant cuts in each of the last two years. It is absolutely clear that the heads of state at this Council had in mind not only the need for absolute financial
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probity but also the future of agriculture in the Community.
The noble Lord questioned the increase in the size of structural funds. Once again the noble Lord is quite right: an increase of 80 per cent. is a high increase, but the funds have an important role in helping poorer regions of the Community—for instance, Portugal. Let us not forget that the United Kingdom will also benefit. I expect that our receipts from these funds will increase. We have been the second largest recipient from the social fund in the past. Our receipts from the three structural funds totalled £750 million in 1987. I think we can expect these to increase to some £1,000 million in 1992 at current prices as a result of the agreement which was reached.
Finally, the noble Lord said that perhaps the Community ought to look at its procedures. I take great comfort from the fact that this agreement is legally binding and that it is going to stick for at least the next four years.
The noble Lord, Lord Diamond, in effect said that he was pleased that agreement had been reached, that it was agreement which was legally binding and that it was indeed agreement which could give us some degree of stability in the foreseeable future. The noble Lord asked me about the figure for the guideline. It is of course the maximum for expenditure. It could, however, be less.
I think that that answers the questions which were put to me by the two noble Lords.
Lord Bruce-Gardyne: My Lords, my noble friend referred to the essential purpose of curtailing agricultural surpluses. Since the growing consumption of the Community runs at about 135 million tonnes a year and the price cuts, if and when they materialise, do not begin to apply until 160 million tonnes a year or over. is my noble friend anticipating a very large increase in cereal consumption in the Community? If he is not, there is the prospect that the cereal surplus will continue to grow dramatically. Since it is apparently proposed that the disposal of these surpluses will be insulated against any deterioration in the dollar rate against the ecu, what sort of impact is this going to have on the pressures for protectionism in the United States?
Lord Belstead: My Lords, perhaps I may take the last point first. I should have thought that the United States would look with some approval on agreement which has been reached by the member states of the Community for something which is legally binding and which is going to last for the next four years. If I may say so, my noble friend very rarely forgets anything when he is making any mathematical computation, but I think that in this case he may perhaps have forgotten exports. The community heads of state have taken into account in the figures which the noble Lord has just given to the House the fact that there will be up to about 25 million tonnes of exports of cereals. That, I think, puts in context the agreement for the 160 million tonnes maximum guaranteed quantity.
Lord Carter: My Lords, I wonder whether the noble Lord the Leader of the House can explain whether, if the harvest in Europe this year exceeds 160 million tonnes, the 3 per cent. price cut and increase in the co-responsibility levy are to be applied from harvest 1988 on the 1988 crop? If so, presumably that will be on the price levels which are agreed at the price review which is about to take place. Will the noble Lord also confirm that, since the set-aside proposals and the stabilisers are linked, there will have to be a set-aside scheme in force in this country for harvest 1989?
Finally, if in the future a member country decides to try to cushion its farmers from the effect of these measures—for exampl,e, in the past the Germans have adjusted the VAT arrangements and the social security taxes on farmers—will it be prevented from doing so?
Lord Belstead: My Lords, I think the answer to the second and third questions of the noble Lord, Lord Carter and the point about set-aside are matters to be thrashed out over the next few months so far as the details are concered. I do not deny that the noble Lord, like all farmers, wants to see certainty, but there are details which still have to be fixed, and although the amount of Community contribution to set-aside and the amount of premium which farmers can expect has been settled over the last weekend by the Council there are to be settled details of set-aside and details of the last question which the noble Lord asked me.
With regard to the first question about price cuts coming into effect so far as concerns this harvest year, those will come into effect in the next marketing year.
Lord Bruce of Donington: My Lords, will the noble Lord confirm—notwithstanding his reply to the noble Lord, Lord Bruce-Gardyne—that European farmers under these arrangements will continue to overproduce cereals? Secondly, will he not agree that notwithstanding the generality of this Statement and its very careful wording, total expenditure on agriculture under the CAP will go up? Thirdly, will he also confirm that whatever happens to Britain's gross contributions, Britain's net contributions over the next four years to the European budget, after taking into account any receipts from the regional funds and rebates, will continue to rise?
Will he further confirm that the British consumer will continue to pay in terms of at least £10 per week more per household—as per the Treasury's own economic progress report of 1st February last year—for food than would be otherwise necessary if the CAP did not exist? When the noble Lord talks of legality, will he bear in mind that it is one thing to make laws—even at Community level —but it is another thing to ensure that the laws are obeyed? Is the noble Lord aware that on a recent EC Commission estimate, at least one-tenth of agriculatural expenditure under the CAP is dissipated by fraud?
Lord Belstead: My Lords, if your Lordships will forgive me, I must stick with what I said to my noble friend. If one takes a maximum guaranteed quantity
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of 160-million tonnes and deducts from that the fact that the Community will be exporting, I believe it is a fairly balanced question as to how much effect this new agreement will have. However, I do not go along with the contention of the noble Lord that that will mean that the size of the cereal stocks will increase. Indeed, embedded in my right honourable friend's Statement is the intention of the Community heads of state that there should be stock disposal outside the financial guidelines of the Community, which again is good for expenditure and financial probity.
The second question that the noble Lord asked was whether or not it is the case that total expenditure will go up and therefore we will all be paying more. It is perfectly true that expenditure will rise, but expenditure on agriculture will be of a declining amount compared with total Community expenditure. That is the first advantage and, indeed, is legally binding. The second advantage is that the new ceiling will be 1.2 per cent. of GNP, which is just under 1.9 per cent. of VAT. Thanks to our abatement, our contribution will remain at the level of the present ceiling. I must say that I believe that that was a remarkable piece of negotiation by my right honourable friend in the interests of this country.
The third question which the noble Lord asked was whether or not it is the case that the public in this country are paying a great deal for their food. I believe the figures which the noble Lord read out were computed before last weekend's meeting.
Lord Bruce-Gardyne: My Lords, I apologise for pressing my noble friend, but he has referred on several occasions to food exports. Surely, food exports are normally goods which are traded at a price which produces a commercial return. In this case we are not talking about exports but about dumping, and dumping which is gravely damaging to international markets.
Lord Belstead: My Lords, the noble Lord opposite and also, I believe, my noble friend were both talking about the increase in size of Community stocks. The answer to that is the one which I gave to the noble Lord opposite.
4.45 p.m.
Lord Bruce of Donington: My Lords, my question said "overproducing" and did not refer to stocks, although that obviously carries implications. Will the noble Lord please reply to my third question, which unfortunately and inadvertently he omitted to answer? I asked him whether he will confirm that Britain's net contribution to the European budget, after taking into account abatements and receipts in the regional and social funds will continue to increase.
Lord Belstead: My Lords, it will go up as a result of this agreement over the weekend but it will remain below the level of the present ceiling. I repeat that I believe that that is a remarkable piece of negotiation on behalf of this country. I also remind the noble Lord opposite—and I believe it is a reasonable point to be made in view of his remarks about stocks going

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up—that I believe that in his computations about what will happen to stocks and cereals he has also forgotten that agreement was reached in principle and on some of the details of set-aside; and this in turn will also have its effect on levels of productions of cereals in the Community.
Baroness Elles: My Lords, does not the noble Lord agree that the figure of £10 a week has now been admitted by the Treasury to be totally inaccurate and is one which was produced two years ago by the Australian Government? In fact, the document, which I read most carefully, excluded the farming community of the European Community and therefore bore no relationship to reality.
Secondly, does not my noble friend agree that food is the one item on the retail prices index which has not increased as much as any other item on that index? Thirdly, will my noble friend agree that we owe an enormous debt of gratitude to my right honourable friend the Prime Minister not only for coming back from Brussels with United Kingdom abatement intact but also because for the first time there will now be legally binding controls to prevent surpluses generating in the Community, which is something we have all wanted?
Lord Belstead: My Lords, I am grateful to my noble friend. It is indeed the case that the increase in prices of food has historically gone up below the rate of the retail prices index. I am glad that my noble friend made that point, which is fairly familiar but which has not been made before this afternoon and is an important one. With regard to the first point, I never criticise the Treasury but I am glad that my noble friend put in context the statistics which the noble Lord opposite put to the House.
Lord Gladwyn: My Lords, does not the admittedly virtuoso performance of the Prime Minister in Brussels prove the point that the Council of Ministers of the Community are condemned to agree since failure to agree on any very important matter would clearly be worse for all of them than acceptance of some of the features with which they for their part disagree; as, for example, the acceptance by Mrs. Thatcher of 160 million tonnes for agriculture, the possible disadvantages of which have been so well brought forward this afternoon by the noble Lord, Lord Bruce-Gardyne?
Does not the recent meeting at Brussels also show that a gradual extension of the areas in which qualified majority voting will, in spite of the Prime Minister's instinctive opposition, now be essential if the Community is to avoid disruption in the progress that will be made for a common market in 1992? Since this is a very brief discussion on a very important matter, I ask the noble Lord whether he will draw the Prime Minister's attention to a really admirable book by Sir Michael Butler—our representative in Brussels—entitled Europe is more than a Continent which has just been awarded the Bentinck prize. In that book he shows the way whereby a non-federal but in some cases largely supranational system could be made operable to the benefit of' all concerned.
Lord Belstead: My Lords, the noble Lord, Lord Gladwyn, knows almost better than anyone in your Lordships' House the ways of Europe and of the Community and the difficulties particularly in the situation which the heads of state found themselves, some of them facing elections in their own countries and all of them facing difficult decisions which had to be taken for the good of Europe in reaching agreement.
For the record, because the noble Lord picked up points which have been made this afternoon, let me almost in parenthesis say that we should remember that for the first time we have as a result of these negotiations a legally binding ceiling for agricultural spending; guaranteed price cuts for cereals of 3 per cent. a year for four years once the threshold is triggered; that the threshold agreed is 5 per cent. below the expected level of the harvest for this year and the price cuts will be cumulative with a maximum of 12 per cent. by the fourth year; that we have double digit price cuts in the arable sector over the next three years compared with price rises of 350 per cent. over the past three years; and that all this will be in legally binding regulations.
To pick up one of the later points made by the noble Lord, I believe that this agreement opens the way, as I think the noble Lord, Lord Diamond, hinted, to some stability and the ability now to work for the single European market.
Lord Carter: My Lords, I apologise for rising to my feet again, but in an earlier answer to me the Leader of the House revealed a further concession made by the Prime Minister which was not apparent in the original Statement. My understanding was that the stabilisers were intended to work in the same marketing year; for example, if the harvest this year exceeded 160 million tonnes the price cut would have been applied this autumn, but the noble Lord replied to me earlier that it will be in the next marketable year. That is much more sensible but it is a concession.
Lord Belstead: My Lords, if I am wrong I shall write to the noble Lord, but on coming into the House my understanding was that the effect will be on this year's market but coming into effect as regards prices in the next marketing year. If I am wrong about that I shall immediately write to the noble Lord and place a copy of the letter in the Library.

Local Government Bill
4.52 p.m.
Consideration of amendments on Report resumed on Clause 2.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 4:
Page 3, line 5, at end insert—
("( ) The powers of the Secretary of State in relation to Schedule I under subsections (3) and (9) below, and sections 6(3) and 15(6), shall be exercised having regard to the planning responsibilities of defined authorities in relation to civil defence and peacetime emergency planning.").
The noble Lord said: My Lords, this amendment covers the important topic of civil defence and emergency planning. Its purpose is to obtain a government reaction to what is seen as an apparent difficulty facing authorities seeking to implement their plans and responsibilities for emergency planning and civil defence.
The noble Lord will certainly know that in many cases these plans have to be drawn up to a timetable which overlaps with that for compulsory tendering. I am certain that he will seek, and may very well be successful, to allay some of the fears expressed to us and I am sure to him through the more formal channels. However, I am told that the provision will lead to a number of practical difficulties in plan-making and identifying staff and resources for designation for emergency purposes.
The Minister can serve good purposes both inside and outside the House if he is able to give a detailed statement of the way in which the Government, who in this instance besides the DoE include the Home Office, expect local authorities to adapt their preparations for peacetime emergencies to a situation where a varying proportion of staff and resources in any given service area may for a period no longer be maintained in-house.
I should like to make my case by asking the Minister a number of questions. Will staff working for a private contractor in an area subject to designation under a local authority plan be subject to designation in the same way as the local authority staff? The Minister, certainly from his previous manifestation where he was responsible for prisons, will know very well that sometimes problems are caused in the prison service by what we both understand are auxiliary staff; in other words, not wholly full-time trained personnel but nevertheless people who can do jobs that are otherwise done by full-time staff.
People outside this House are concerned to hear from the Minister on this point. In relation to civil defence and in an emergency an authority has a very tight grip on the rest of its staff. It can literally dispose of and disperse its staff all round its area. To that extent the staff represent a pool which in an emergency can be directed. I live in Enfield and in that area there could be a flood disaster in the Lea Valley or an emergency on the M.25, at the Enfield Small Arms Factory or at Stansted Airport. As one of the biggest employers in the area the local authority could immediately say to everyone concerned, "We as your employer want you to do this, that and the other". If a service is privatised, to what extent in an emergency would the local authority be able to get the staff of a private company, which is doing a proper job and not falling down on it, to respond? If there is no such authority, or a disinclination or inability to respond, the community will be the weaker in such an emergency.
What arrangements do the Government envisage for negotiation between the contractor and local authority to provide for such designations? In other words, is this to be a case of the private contractor saying, "If I am your private contractor to provide 440
cleaning or cooking and you want to pull all of my people off the service in an emergency, what kind of arrangement—that is, financial arrangement—can we enter into to make sure that I do not lose and that you do not lose either?".
Do the Government agree that if contract terms are to be subject to negotiation over the designation of the resources of the contractor and his workforce, that will tend to lead to an increase in the tender price? That spells out what I have just explained. If the contractor says that the contract is above and beyond simply providing meals, cutting the grass or collecting refuse. is that a factor to be taken into account?
We know that the ministerial colleagues of the noble Lord have already addressed shire county and fire and civil defence authorities and that they are working to a Home Office framework of deadlines for the production of civil defence plans known as the Planned Programme of Implementation. In the statement it sent out the Home office used the phrase,
"Authorities have to be prepared to address hard practical questions".
The timetable for compulsory tendering begins in April 1989 and runs to October 1991. However, the civil defence plans have to be completed in the period April 1988 to October 1989. I give the House the benefit of an example in one emergency planning area of the interaction of the activities specified in the Bill. The plans show that all but one of the 12 plans inside the area involve at least two of the service areas identified in the Bill and six of the plans involve all six of those service areas.
I refer to the metropolitan districts in South Yorkshire. The South Yorkshire fire and civil defence authority has responsibility for emergency planning for the metropolitan county as a whole. The districts comprising the authority's area will have to contract out the six services affected by the Bill at different times over the two-and-a-half years of implementation.
I give a practical example. In October 1988 the emergency planning authority will be expected to finalise its plans for emergency feeding, including the distribution, conservation and control of food. The plans can be expected to rely heavily on the school catering service. To some degree civic catering will be provided by the metropolitan districts in the area. From various dates beginning in October 1989 the four districts in the area will begin compulsory tendering in relation to school catering, starting with Doncaster and Rotherham. Tendering for other catering begins, also with Doncaster and Rotherham, from April 1990. Barnsley will put school catering out to tender on that date followed by Sheffield in October 1990.
I am told that the practical effect will be that within a year of submitting its emergency feeding plan South Yorkshire will find that the plan requires revision for half of the county and that it will be totally out of date within two years. Those outside the House who know better than I may be told by the Minister that he knows better than they and that what they believe is wrong. On the other hand, if they are right they are anxious to be told by the Minister how they are to

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keep to their duty under the Home Office civil authority plan, preparation and implementation schedule. If at the same time, they are caught by a timetable under the compulsory tendering process, how are they to reconcile their responsibilities? I shall be interested to hear what the Minister has to say. I beg to move.
5 p.m.
Lord Ross of Newport: My Lords, I shall speak very briefly. I pay tribute to the noble Lord, Lord Renton, who played quite a part in civil defence work in the other place. It would be a pity, if, after all the effort of the noble Lord and others—including, I must say, myself—the compliance of local authorities (which is quite hard to get in some cases) in the whole area of emergency planning and civil defence was to be put in some disarray by the procedures under the Bill. I await the reply of the Minister with some interest. I am sure he will agree that having achieved what we have on civil defence and emergency planning, it is important to keep the goodwill of local authorities in this respect.
Baroness Blatch: My Lords, perhaps I may be allowed to ask a question before the Minister replies. Is there any reason at all why, for example, the statutory requirements upon an authority should not be built into a catering contract? It should be a requirement of putting contracts out to tender. I would welcome the reply of the Minister. In passing, I cannot resist saying how much I welcome the response of Sheffield and other local authorities mentioned by the noble Lord which are now taking such an interest in emergency planning. It is something of a turn-up for the books.
Lord Graham of Edmonton: My Lords, it is a turn-up for the books for the noble Baroness but not for those who know of Sheffield and others. They have deep concern for their responsibilities in responding to emergencies in peacetime. If the Minister takes on board the comments of the noble Baroness about the need to build into the cost structure of the tendering document, that will solve some of the questions that have been asked. However, that poses the question that the cost of the tender will be inevitably higher than otherwise.
The Earl of Caithness: My Lords, as the noble Lord, Lord Graham of Edmonton, said in moving his amendment, its purpose is to ensure that in exercising a number of the order and regulation-making powers under the Bill my right honourable friend takes account of authorities' civil defence and emergency planning responsibilities.
As I said in the debate on the previous amendment, in implementing Part I of the Bill, my right honourable friend will take into account all local authorities' service responsibilities including civil defence and emergency planning. There is no need to add a specific provision to require him to do so or to add a reference to any particular responsibility such as civil defence. Incidentally, the department has received no formal representations about civil defence planning in peacetime and emergency interactions.
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It must be clear to your Lordships by now that the Government do not accept that the only way in which authorities can ensure that they are able to respond to emergencies is to retain a sizeable in-house workforce. Those authorities which have contracted out services like house maintenance have found no difficulty in requiring contractors to provide emergency cover. The noble Lord, Lord Graham of Edmonton, mentioned some hypothetical situations at Enfield. I believe it may help the House if we look at a natural example. I refer to the storms of last autumn. There was a magnificent response to the effects of the storms which the Government acknowledged at the time. Many of the workers who put in long hours in gruelling circumstances were local authority employees. The response from the staff of contractors was just as good.
Wandsworth is an obvious case as it has contracted out more services than any other authority. On the day of the storm, Wandsworth was able to call on the services of several contractors who turned out at very short notice despite there being no prior agreement. I understand that their work was highly satisfactory. It seems to me that the argument about emergencies is based upon a misconception. The people who empty dustbins or clean streets will not disappear if their work is contracted out. For elucidation I should say that they are the people who might be called upon in an emergency to help tackle a crisis. The resources available in the public sector to deal with emergencies may decline; but that means that the resources available in the private sector increase.
Clearly, any plans that local authorities have drawn up will need to be considered in the light of changes such as the contracting-out process. We have no objection to authorities including conditions in their specifications of contract which mean that whoever wins the competition has to provide whatever emergency cover is needed provided that the DLOs and the contractor bid on the same basis and that the competition is fair.
I believe it is a myth that the private sector cannot or will not respond to emergencies. It is the private sector which directly owns and operates many services such as gas and telephones where rapid response to emergencies is called for. Most people call out a private sector plumber when their pipes burst and no one argues that the AA or RAC are unable to respond rapidly to emergencies. I am in no doubt that if the effect of the Bill is a major increase in the proportion of work that authorities contract out, that will simply lead to an increase in the contractor's capacity and willingness to respond to emergencies.
I hope I have satisfied some of the worries of the noble Lord, Lord Graham. He asked a number of questions, and perhaps I may write to him on the detail of those.
Lord Graham of Edmonton: My Lords, I am grateful to the Minister for his promise to write if in fact any points were not covered. I am satisfied that a perusal of the record will be sufficient. He has answered a number of the points I made. I understand that the department assumes or expects

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that any tender document will have built into it the responsibility of that authority for civil defence.
There is no myth on this side that private contractors would be less responsible per se in a real emergency. The point I was making is that because of the cohesiveness of the workforce of a council and because of the fact that there is a unity of command through the chief executive, the town clerk, or the housing manager they are better. The last thing I wish to do is to cast aspersions on a range of people, who are employees of nationalised industries in the main, private plumbers and others who, in a real emergency will drop everything in order to respond.
The Minister has been very fair. What he has said should go a long way to allay some of the fears that have been expressed. People outside the House will read what the noble Lord has said. I hope that they will write more formally to the Minister if they have real worries about these matters. Those outside the House should take note that the noble Earl has drawn my attention to the fact that no formal representations of any kind have been raised. It says a great deal for confidence in myself; I do not know what it says about confidence in the Minister. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 5:
Page 3. line 8, at end insert ("except in respect of sport and leisure activities.")
The noble Lord said: My Lords, we return to an amendment moved at the previous stage concerning what is almost a constitutional point. I recall my noble friend Lord McIntosh raising the matter at Second Reading. In addition to our concern at the impact of competitive tendering for the service of recreation and leisure, we are also concerned about proposals which, if not sharp practice and not by design, could lead to curtailment of proper discussion.
To use Clause 2(3) of the Bill to add sports and leisure management to the list of activities, and to use Clause 15(1) to do it by an affirmative order of both Houses, would be, in my experience (which is not as extensive as that of many noble Lords sitting in the Chamber at the present time) a poorer democratic means of achieving the Goverment's purpose. If the Government intend to add these services to the Bill, they should do so. By delaying the matter in this way they will not only prolong the agony of those who are affected but they will deny this House and the other place the opportunity to deal with it properly.
The Minister knows that if we proceed in the way that he and his colleagues intend to do there will be less debate on the issue. I am not talking about the timescale. I am talking about the proper procedure by which we ought to be able to raise these matters. I want the Minister to deal with what I think is a crucial point. Why do the Government prefer the procedure which they are adopting to the one which we in this House and in another place have put forward?
In our view the extension to this service of compulsory tendering is fraught with a number of other blemishes. I know that the noble Baroness, Lady Blatch, who is assiduous in these matters, asked at a previous sitting why we were so concerned about the difference. The Minister knows the difference. As we understand it, responsibility for the level of prices, the hours of opening and the range of what, for shorthand purposes, I shall call the concessionary groups, will be taken away from the authority and will be placed in the hands of the private contractor. The private contractor who is given properly and legally the remit to provide the services will be able to decide the opening times to suit the profitability of his service and the groups to whom concessionary facilities will be given. If they happen to be what one might call less popular services or sports—I give as an example judo or perhaps an up and coming sport—an authority may say, "Let's have a go; let's provide it; let's see what goes on", whereas a private contractor will be more likely to restrict the range of services in that way.
Not only the Oppostion but the friends of the Government in authorities are deeply concerned. One of the best briefs against what the Government are going to do comes from the Association of District Councils. It is deeply concerned not about competitive tendering but about the compulsory nature of it. The association has pointed out that many authorities put out to competitive tender the provision of services. It points out that authorities that want to do this are already doing it. I want the Minister to say why in regard to these particular services the Government want to do it in this way.
The Minister must answer another point. As he well knows, once a service goes away from an authority it is not likely to go back unless there have been major disasters. In the provision of recreation and sport one of the great elements is the capital cost. If one looks at the provision in 1990–91 of a swimming pool, a large complex or an outdoor arena one is talking in terms of massive sums of money. It is my advice that the private contractor route is less likely to come up with the capital to ensure that sports, leisure and recreation are provided.
When I made some inquiries I was told that some services which do not appear on the face of it to come within the ambit of leisure and recreation departments are run by those departments. Municipal markets are managed within recreational committees. The Minister will be aware that there is no monolithic framework governing how councils organise their different departments. Can the Minister address himself to the problems that will be presented to local authorities which have a mix or a mesh of services? If the Minister says that in the fullness of time activities such as municipal markets could find themselves up for competitive tender, people outside will be interested to hear that. I want the Minister to tell us that when he talks about sport and recreational management he is saying not that the department will be up for grabs but that the activity will be up for grabs.
If that is the position the council will have a problem because it will have to shift what is left of

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that department to another department or it will be left to administer that smaller department which may not be an economical or a practical proposition.
I look forward to hearing what the Minister has to say on this important aspect of leisure and recreation. I must tell him that the opposition of the ADC is to compulsory competitive tendering. Many authorities have put services out to tender but they also have a great many arrangements with voluntary bodies. I refer to Sports Council activities and so on. The Minister may tell me that there is nothing to stop those bodies, which at the moment help the local authority to keep going, doing the same with private contractors. I am not so certain. I am not dogmatic but I am not so certain that voluntary bodies will be just as willing to keep the rates down and to keep the community going if the manager of the service is not the council or the ratepayer but is a private company. The amendment needs a good answer or we may be in some difficulty. I beg to move.
5.15 p.m.
Lord Boyd-Carpenter: My Lords, this is an odd amendment. I fully understand that noble Lords opposite do not like the compulsory putting out to tender of activities at present undertaken by a local authority. One fully understands that doctrinally they do not like it. But what is difficult to understand is why sport and leisure should be singled out as activities which could not through the process of affirmative resolution and so on be included in the category of defined activities. A much better case was made out on the previous amendment where we dealt with serious responsibilities such as a local authority's responsibility for civil defence.
Lord Graham of Edmonton: My Lords, as I understand it, an affirmative order is not capable of amendment. The earlier six provisions which are part of the Bill, are capable of amendment. Therefore to that extent there is a narrowing of the opportunity to change the intention.
Lord Boyd-Carpenter: My Lords, that is a point of procedure with which, I can assure noble Lords, I have been familiar for many years. I do not think that that is an answer because the decision would be a simple one, not giving rise to amendment. Either an order is presented to take these activities and make them into "defined activities", with all the consequences with respect to putting out to tender, or it is not. Therefore, it would be a straight issue as to whether this House and another place thought fit to approve the order. As I see it, there could be no useful purpose served by fussing about with amendments. It still seems most peculiar that these two activities—sports and leisure—should be picked out specially to be made into a category which cannot be turned into defined activity, while for the purposes of discussing the amendment all the other activities of a local authority can be.
The only argument that I thought I detected—it took some detection—in the noble Lord's speech for specifying those activities for exclusion was that an independent contractor might not be so amenable to public demand in respect of opening hours and such
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facilities. I know that he has studied the Bill, and he will know perfectly well that if something is put out to tender by a local authority there is a contract. It is obvious that any contract drawn up by any sensible local authority with any outside contractor would specify the facilities, the hours and so forth which were to be maintained as part of the sports and leisure activities. It would indeed be very odd to contract out those activities and not to lay down in such a contract what facilities were to be provided and the hours during which they were to be provided, which as your Lordships know well are a major part of the activity.
Once again it seems peculiar to pick out those two activities. I have no idea—I do not know whether the Minister has—whether the Government are likely to want to do that at some stage. I should have thought that they might well wish to do so. It is a fact that sport and leisure activities are catered for in the private sector on a large scale in this country and with a high degree of efficiency. Many major companies provide magnificent facilities of one sort or another and collaborate particularly with the tourist industry in so providing. They have far larger resources and on the whole far greater experience in providing such facilities than almost any local authority would claim to have. Therefore it might be sensible in particular cases to make those into a defined activity.
However, we need not jump that particular fence until we reach it. If we do come to it, we shall have the pleasure of hearing the speech on the affirmative order by the noble Lord opposite. That is always a prospect to which your Lordships look forward with peculiar pleasure. But, apart from that, it may be sensible to make those activities defined activities. The Government are right not to take all those activities from local authorities at this stage and make them into defined activities. We probably need to have experience as to how this change in arrangements works. But if as I confidently believe it works well, the Government may well wish to extend such activities. if they extend them, I should have thought that sport and leisure were natural candidates. I hope therefore that your Lordships will reject the amendment.
Baroness Fisher of Rednal: My Lords, I support the amendment so ably moved by my noble friend. I come from Birmingham, which is the home of the Chamberlain family. Joseph Chamberlain was, I suppose, the innovator, the pioneer, of municipalisation. We even have a street called Corporation Street, where he bought the entire freehold.
Lord Graham of Edmonton: My Lords, he is turning in his grave now.
Baroness Fisher of Rednal: My Lords, yes of course he is, because the Tories took control of the council just as the 99-year leases were up. They were all sold to multiples—Lewis's, C & A Modes and so forth—instead of to the ratepayers' benefit. It was, as everyone knows, due to Joseph Chamberlain, the innovator of municipalisation, that gas, electricity and water came to Birmingham. Nevertheless, times change. I am worried, because when we talk about

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sport and leisure activities we should remember that they are not all in the big complexes that the noble Lord, Lord Boyd-Carpenter, mentioned.
In Birmingham there are some large schools which in the main are called "community schools". Large gymnasia, large playing fields and swimming baths were put in and it was felt that it was not right that such facilities should be used only during school hours. Therefore we introduced dual purpose. The schools are open in the evenings for all the people who want to use them, under proper supervision. They are also used during the school holidays; in other words, they are cost-effective. I suppose if we were looking at it objectively we should say that they were paying their way. I am sure that no member of the Government could criticise a local authority for using its services in that way—having to provide them for school children and then making use of them for the general public.
There are other forms of leisure activities of which I am well aware. In Birmingham we have very good community centres which cater for many different activities. For example, various clubs meet, such as Women's Institutes, co-operative women's guilds, old-age pensioners. They also have leisure facilities. Judo is practised in many of the community centres and many of them have chess clubs. There is also old-time dancing, which again is what one calls a leisure activity. I suppose one could also call judo a sport. The community centres have their own local people running them and receive grants from the local authority. Can the Minister say whether all those facilities would disappear in the future if such activities were taken out of the control of the local authority?
I speak only on matters about which I know and in particular those relating to Birmingham. We have three municipal golf courses on the periphery of the city. They enable people to play golf in the same way as other people who belong to clubs but who would not be able to join clubs because all the golf clubs—and I understand there are some very large ones in the city—have very long waiting lists for membership. However, it is not only getting membership; there are the membership fees. Are we going to deprive those people who can now play golf on municipal courses of doing so in the future?
Those are the three points I should like to raise because they concern an area I know very well where literally thousands of citizens have been able to benefit from these activities.
5.30 p.m.
Baroness Carnegy of Lour: My Lords, we are discussing this amendment, it seems, as if sport and lesiure were going to be included in the list, and as if the noble Lord, Lord Graham, were moving an amendment to say that they should not be able to be included in the list. However, my understanding from earlier stages of the Bill is that the whole subject of whether this area of local authority activity should be included in the list is at the moment out for consultation with local authorities and others interested.
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I now have the document with a green cover, indicating that it is consultative. I have looked to see exactly what it says and it is a comfort to me, in view of the remarks of the noble Baroness, Lady Fisher, to see that paragraph 6 says that it is not intended to apply to sports facilities which form an integral part of educational establishments and which are provided principally for the use of pupils and students of those establishments. My understanding is that we are not discussing sport and leisure facilities in educational establishments. I am very glad that this consultation is going on because, with the greatest respect to my noble friend Lord Boyd-Carpenter, it is a slightly different subject from the other areas of activity which are included in the Bill, although it is no less susceptible to competition and the advantages of the Bill in a different way.
The questions which are being asked in this consultative paper show the kinds of matters which local authorities need to be asked about and with which the Government need to familiarise themselves before they determine whether they want to recommend that this area of activity should be included in the list. It is absolutely right that there are different arrangements in different parts of the country and in different local authorities for how sporting provision is made. In Scotland, it is somewhat different because we have the concept of community education which includes or overlaps very much with sporting facilities and leisure facilities. Yet those are educational establishments. My understanding is that in Scotland it has been clarified that where it is an educational establishment this Bill will not apply. I think that is an important point.
The Minister may not be equipped to answer the question in relation to Scotland, but I expect he is in a more general way equipped to answer in relation to cases like Birmingham where habits are rather the same. I do not know whether the Minister will give us news of the result of the consultation or whether it is still going on, but I am very glad that it is happening. I think there are various issues which need to be clarified.
Nevertheless, I can see no reason whatever why there should not be some scope within the kinds of sports centres and leisure centres, swimming pools, golf courses, bowling greens, putting greens and so on which are listed in the consultative paper. It will therefore be very interesting to see how this can be worked out. I do not think that at this point it would be at all a good idea to accept an amendment which precludes the possibility of the advantage of tendering being applied to sport and leisure.
Lord Underhill: My Lords, I think the noble Baroness, Lady Carnegy, has given part of the answer to the noble Lord. Lord Boyd-Carpenter. Why did the Government or the department—which is really the Government—consider that these two items, sport and leisure, should be sent out for consultation? They obviously had in mind that these were two possibilities to come under compulsory tendering.
My noble friend Lady Fisher referred to three golf courses in Birmingham. I happen to play on what

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used to be the GLC courses at Hainault Forest which are now under the control of Redbridge council. There is a five-day season ticket for pensioners which I cannot use because I am here, and therefore I have to have an expensive seven-day ticket which I can use only on Sunday mornings. We require assurances that those kinds of things will not be dealt with in the Bill, because the facilities given to pensioners in the Hainault Forest courses are possibly the best anywhere in the country. We can see the dangers which might occur if they were sent out for management. The next-door borough to mine, Waltham Forest, has established one of the best athletics stadiums in the London area. Essex ladies have made regular use of that course. Essex Ladies Athletics Club has been selected twice running as the best team in Britain to represent the country in international club events.
How are we going to handle that, if it is to be dealt with on a commercial basis? Surely we want to encourage the maximum number of athletes to participate in any sport. If the suggestion is that all we are going to send out is a contract for grass-growing, we must think again on that point. I happen to know someone nearby who is very knowledgeable on horticulture. If people are merely going to cut the grass, all right, but it is very doubtful whether any local authority would wish to send all its horticultural development out to private enterprise. I do not think private enterprise would be at all interested in it.
Again, coming back to the position of Hainault Forest, there is a combination of three leisure activities: first, the two golf courses; secondly, a big recreation area; and thirdly, a wild forest. What are we going to do about tendering for those? I dare say the golf will help to pay for the wild forest, but I do not know.
The difficulty in this is so immense that either people who wanted to use good sporting facilities cheaply, such as pensioners, could find themselves in difficulties or we could find a diminution in the number of people who would take part in sporting activities. I know that it will be argued that there are professional, full-time sports centres. I agree, but we also have civic centres and quite a number of special recreational centres. These are the ones which we want to ensure will be devoted to use by ordinary people at prices which they can afford. To put these under management would be difficult.
I think that if the noble Lord, Lord Boyd-Carpenter, looked at the matter very carefully he would recognise that apart from certain small aspects of management of leisure centres, the general management—the hours, the opening times, the admission charges—is something we would want to leave solely for the local authorities to determine.
The Earl of Caithness: My Lords, I am grateful to my noble friend Lady Carnegy of Lour for raising a point which seems to have been overlooked. It is that my right honourable friends the Secretaries of State for the Environment, for Scotland and for Wales issued a consultation paper on this matter on 28th September 1987 on proposals which dealt with the applying of the competitive tendering provisions of the Bill to the management of local authority sport
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and leisure facilities. A decision on whether or not to proceed with the proposals should properly await the outcome of their detailed consideration of the 352 responses which we received. I should say to the noble Lord, Lord Graham, that that cannot in any way be called a curtailment of the discussion or consultation. It would be wrong to circumvent this process, which would be the effect of the noble Lord's amendment.
I acknowledge, as the noble Lord, Lord Graham, pointed out previously, that the House can only accept or reject an order. Noble Lords cannot seek to amend an order in the way they can seek to amend provisions on the face of a Bill. I am afraid, however, that the volume and nature of the comments which we have received make it impossible to reach a considered decision, which is what I am sure all the consultees would wish before the Bill receives Royal Assent. But we have discussed the principle of what we are doing at some considerable length, both at the Committee stage and at this stage. It is good for the ratepayer and the taxpayer that the principles still remain intact. I should emphasise, however, that if it is decided to proceed with the proposals Clause 2(4) would now require my right honourable friend the Secretary of State to undertake appropriate further consultation before the necessary affirmative resolution order could be made. There does not seem to be a major reason, unless it is revealed in consultations, why work cannot be contracted out provided that it is subject to fair competition.
We are looking at many of the points raised by the noble Lord, Lord Graham. That is one of the reasons why we have not yet been able to reach a decision. The noble Lord, Lord Underhill, raised a point on golf courses. In the consultation paper we raised questions about the extent to which authorities should be able to ensure access to facilities for special groups. We have recognised that authorities wish to enable people from all sectors of society to participate in their facilities.
My noble friend Lady Carnegy of Lour was absolutely right to point out to the noble Baroness, Lady Fisher of Rednal, that in the consultation paper school sports facilities should be exempted from compulsory competition.
Baroness Fisher of Rednal: My Lords, perhaps the Minister will correct me if I am wrong but I thought that the consultation paper referred to Scotland and Wales.
The Earl of Caithness: My Lords, unusually for the noble Baroness she is incorrect. There was a consultation document for England and I know that Birmingham received it.
The noble Lord, Lord Graham of Edmonton, raised the question of municipal markets. I must admit that I had not considered exploring the possibility of contracting out municipal markets. But given the noble Lord's suggestion I must hurry down the corridor to my right honourable friend and discuss it with him. However, the noble Lord is correct in that the mix and the mesh of activities change within local authorities from time to time. Authorities can make structural changes and those

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employees who once worked for a local authority often find themselves working beneficially for contractors if that work is contracted out.
I apologise that we are unable to let your Lordships know the result of our considerations on the responses but as there have been 352 we cannot give the answers today. We shall give that information as soon as it is available and I would hazard a guess that that would be in about the late spring. But I reiterate that Clause 2(4) will then bite and that further consultations will be necessary.
Lord Graham of Edmonton: My Lords, I am grateful to the Minister for the care that he has taken in trying to allay the fears of many outside the House. The noble Lord, Lord Boyd-Carpenter, seemed to feel that it was possible for a local authority to build into any contract tendering procedure the specific groups in the community it wished either to benefit or to protect. But I am sure that he will not mind if I draw to his attention the crucial part of the document for consultation that went out to local authorities. In that document there are two options. The first is that:
"Local authorities should retain their present discretionary powers under Sections 91 and 92 of the Local Government (Miscellaneous Provisions) Act 1976 and Section 16(1) of the Local Government and Planning (Scotland) Act 1982 and therefore remain in control of policy decisions on charges to users [etc.] Under these powers such decisions may of course be delegated to private sector management if local authorities prefer to do so".
Then there is the second option:
"The present discretionary powers should be amended to target more specifically on those members of the community who may not be able to pay the full market rate to use sport and leisure facilities but who clearly should retain the opportunity to make use of such facilities, for example the unemployed, the elderly and school groups. This would give the private sector managers the freedom to decide their own policies on pricing, admittance and opening hours for most users of facilities but would allow local authorities if they so wished to control those policies in respect of certain disadvantaged groups".
The point that I wished to make was that the policy in respect of such matters as charges, opening hours and the freedom to bring in new groups under the second option would remain with the private contractor. This matter has been put out to consultation and it would be nice to think that had most of the 352 responses preferred the first option somebody in the ministry would have agreed that they had won by a majority. But I do not think that that would happen. I believe that the ministry has a certain view on these matters and that regardless of what local authorities say it will choose the second option.
Lord Boyd-Carpenter: My Lords, where in those two options or variants on them to which the noble Lord refers is there any inhibition on a local authority which wishes to put these services out to contract specifying in the contract to be signed by the other party that specific provision shall be made for particular categories of people, for particular opening hours or for particular sports? If one puts a service out to contract it is a matter of what one negotiates into the contract.
Lord Graham of Edmonton: My Lords, that is a very fair question. I should like to know the answer
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to that and so would those outside the House. Will local authorities be free to include in a contract precisely what they want it to supply and to lay down the groups affected and opening hours? The Minister may not be able to give me the answer to that question tonight but I should be grateful if he would ensure that a direct answer is given. If it is possible for authorities to specify any exclusions they wish, that drives a coach and horses through the intention of the Bill. I should be very happy if that effect was achieved but I do not think it will be.
To be fair to the Minister and his colleagues, the consultation document specifies three particular groups: the unemployed, the elderly and school groups. Those groups are stated as an example. They may only be an example and others may be affected also. But if there were no limit on the groups affected, my argument against the Government is that it is quite clear that they are intending to introduce this facility as number seven of the six services. Even though consultation has taken place I am concerned about the people outside. I am equally concerned about our ability to represent the people outside. Those people have satisfied me that the intention here is bad and detrimental to the interests not just of ratepayers and of users of facilities but of the whole community. I intend to press this amendment to a Division.
5.48 p.m.
On Question, Whether the said amendment (No. 5) shall be agreed to?
Their Lordships divided: Contents, 67; Not-Contents, 131.

DIVISION NO. 2

CONTENTS

Airedale, L.

Hughes, L.

Alport, L.

Jeger, B.

Ardwick, L.

John-Mackie, L.

Barnett, L.

Kilbracken, L.

Blackstone, B.

Kirkhill, L.

Blease, L.

Kissin, L.

Bonham-Carter, L.

Listowel, E.

Briginshaw, L.

Llewelyn-Davies of Hastoe, B.

Brooks of Tremorfa, L.

Lloyd of Kilgerran, L.

Bruce of Donington, L.

Lockwood, B.

Callaghan of Cardiff, L.

Lovell-Davis, L.

Carmichael of Kelvingrove, L.

McCarthy, L.

Carter, L.

Mason of Barnsley, L.

Cledwyn of Penrhos, L.

Molloy, L.

Cocks of Hartcliffe, L.

Mulley, L.

David, B.

Nicol, B. [Teller.]

Davies of Penrhys, L.

Northfield, L.

Dean of Beswick, L.

Paget of Northampton, L.

Donoughue, L.

Phillips, B.

Elwyn-Jones, L.

Pitt of Hampstead, L.

Ewart-Biggs, B.

Ponsonby of Shulbrede, L.

Ezra, L.

Rea, L.

Fisher of Rednal, B.

Seear, B.

Foot, L.

Shackleton, L.

Gallacher, L.

Shepherd, L.

Galpern, L.

Stewart of Fulham, L.

Graham of Edmonton, L.

Stoddart of Swindon, L.

[Teller.]

Taylor of Blackburn, L.

Gregson, L.

Taylor of Mansfield, L.

Grimond, L.

Turner of Camden, B.

Hatch of Lusby, L.

Underhill, L.

Heycock, L.

Wallace of Coslany, L.

Hirshfield, L.

Williams of Elvel, L.

Houghton of Sowerby, L.

Willis, L.

453

NOT-CONTENTS

Abinger, L.

Hood, V.

Alexander of Tunis, E.

Hooper, B.

Allerton, L.

Hylton-Foster, B.

Ampthill, L.

Johnston of Rockport, L.

Arran, E.

Joseph, L.

Atholl, D.

Kimball, L.

Auckland, L.

Lane-Fox, B.

Barber, L.

Lindsey and Abingdon, E.

Beaverbrook, L.

Long, V.

Belhaven and Stenton, L.

Lucas of Chilworth, L.

Beloff, L.

Lyell, L.

Belstead, L.

Mackay of Clashfern, L.

Bessborough, E.

MacLehose of Beoch, L.

Birdwood, L.

Macleod of Borve, B.

Blatch, B.

Malmesbury, E.

Blyth, L.

Margadale, L.

Boardman, L.

Marley, L.

Borthwick, L.

Marshall of Leeds, L.

Boyd-Carpenter, L.

Masham of Ilton, B.

Brougham and Vaux, L.

Maude of Stratford-upon-

Bruce-Gardyne, L.

Avon, L.

Butterworth, L.

Merrivale, L.

Caccia, L.

Mersey, V.

Caithness, E.

Milverton, L.

Cameron of Lochbroom, L.

Morris, L.

Campbell of Alloway, L.

Mottistone, L.

Campbell of Croy, L.

Mountgarret, V.

Carlisle of Bucklow, L.

Mowbray and Stourton, L.

Carnegy of Lour, B.

Munster, E.

Carnock, L.

Nelson, E.

Carr of Hadley, L.

Newall, L.

Chelmer, L.

Norrie, L.

Colville of Culross, V.

Orkney, E.

Cork and Orrery, E.

Oxfuird, V.

Cottesloe, L.

Pender, L.

Craigavon, V.

Peyton of Yeovil, L.

Craigmyle, L.

Platt of Writtle, B.

Crickhowell, L.

Plummer of St Marylebone, L.

Croft, L.

Prior, L.

Cullen of Ashbourne, L.

Rankeillour, L.

Dacre of Glanton, L.

Reay, L.

Davidson, V. [Teller.]

Renton, L.

Deedes, L.

Rodney, L.

Denham, L. [Teller.]

Romney, E.

Derwent, L.

St. John of Fawsley, L.

Dilhorne, V.

Sanderson of Bowden, L.

Dundee, E.

Sandford, L.

Elles, B.

Shannon, E.

Elliot of Harwood, B.

Sherfield, L.

Faithfull, B.

Skelmersdale, L.

Ferrers, E.

Somers, L.

Fortescue E.

Stockton, E.

Fraser of Kilmorack, L.

Strange, B.

Gainford, L.

Strathspey, L.

Glenarthur, L.

Sudeley, L.

Gray of Contin, L.

Swansea, L.

Greenway, L.

Swinton, E.

Gridley, L.

Teynham, L.

Haddington, E.

Thomas of Gwydir, L.

Hailsham of Saint

Tranmire, L.

Marylebone, L.

Trefgarne, L.

Halsbury, E.

Tryon, L.

Harmar-Nicholls, L.

Ward of Witley, V.

Havers, L.

Westbury, L.

Hesketh, L.

Windlesham, L.

Hives, L.

Wolfson, L.

Holderness, L.

Resolved in the negative, and amendment disagreed to accordingly.
5.57 p.m.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 6:
Page 3, line 8, at end insert ("provided that the date in the order shall be not less than 18 months from the date of commencement of consultation under subsection (3) below")
The noble Lord said: My Lords, the amendment seeks to ensure that no new services are added to the list of defined activities until 18 months after the date of commencment of consultation. The Minister has kindly given the House an up-date on the consultation process in regard to recreational and leisure services. However, the more we look at the raft of activities which must be undertaken inside local authorities in order to comply not only with what the Ministry expects of them but also with what authorities, in fairness to those who are going to tender, must do, the more we must blanch at the amount of work that will land on their shoulders. Local authorities are literally down to the bare bones on a great many matters, not least the matter of staff. For the last eight years the Government have been involved in a manpower-watch exercise designed to make sure that the number of staff is cut as far as It possibly can be.
The Bill as presently drafted allows the Secretary of State to add other services. The list which I have been given includes the possibility of markets. However, perhaps I may say to the Minister that I am not in favour of that and it is only included with other possibilities. My list includes printing, computing and architectural services. The Minister knows that a number of pamphlets and documents have been written concerning the range of services which might be looked at. I do not think that there is anything fresh or new about the possibilities.
The amendment does not seek to inhibit the Ministry from proposing that some new service should be added. It is saying that there ought to be sufficient time for authorities to look at each proposal and all aspects of it. Local authorities face a complex organisational challenge to meet the demands of compulsory competitive tendering. I am told that already resources have had to be diverted from central services to cope with that process. All councils have taken steps to set up what might be called a tendering unit to make sure that they do not fall foul of the guidelines which have been laid down by the Ministry and also that things are done properly from their own point of view.
We believe that no new service should be added until 18 months after the consultation period has started. For the next period, 1989–90 and into 1991, authorities will be engaged in assessing the impact of competitive tendering on the original activities. We think that it would be wiser for the Government to monitor the operations covered by Part I of the Bill before embarking on further services.
In the Explanatory and Financial Memorandum to the Bill the Government state:
"Part I of the Bill may initially lead to a small increase in defined authorities' revenue expenditure, in the cost of preparing specifications and other tender documents.".
I am told that that is far from the truth. Local authorities are having to spend money on preparing specifications which they should be spending on services to their ratepaying public. Will central government refund that expenditure? In this House we are all familiar with the glib phrases in the financial memorandum which is attached to a Bill: they cannot be proved at the time but turn out in the event to be wildly inaccurate. For instance, the

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Association of Metropolitan Authorities found that operating the Local Government, Planning and Land Act 1980 added an extra 7 per cent. to the price of contracts for local authorities. The extra 7 per cent. was spent on additional staff, supervision, etc. Furthermore, the Department of Transport recently found that tendering for highway maintenance resulted in local authorities needing to take on 1,100 additional staff to cope with the problems of supervision, new accounting procedures, etc. The Government simply have not realised the cost to local authorities of operating that legislation.
With six services already open to competitive tendering, local authorities already face substantial upheaval. In the interests of good service, standards and the avoidance of unnecessary dislocation, the introduction of tendering in any other area should not take place until the first round is at least substantially under way—not less than 18 months from the date of commencement of consultation. The Minister and his advisers are sympathetic to what we are saying but are not prepared to say that a breathing space should be written in. We are asking that it should be written in as a period of 18 months.
I think that the Minister can help those outside the House by saying that he understands the problems that the legislation will create. Although he is not expected to give a commitment, if 18 months is not acceptable, then something less than 18 months would be helpful —a period of 12 months or between 12 and 18 months is envisaged as a likely period before which consultation would take place and after which the obligation to implement would be carried out. The Minister will be well aware that with the best will in the world there will be teething troubles. Everything does not always run smoothly. One can provide illustrations—and some will probably be paraded during the debate—of authorities which are Conservative controlled but which have nightmares in respect of the consequences of the tendering procedure. They have been unfortunate—I use that word kindly—in those to whom tenders have been awarded.
We are talking of the necessity of pacing the legislation. I say to the Minister as frankly as I can that, if he is able to have six services digested in the period outlined (beginning March—April 1989 and running through to 1991) then he ought to make sure that they are all functioning well; not just in one or two—or 21 or 22—authorities but, as is the intention, in all 400 local government administrative areas.
The Bill represents a major shift not only for the chief executive and the professionals but in the orientation of the councillors. If we believe in democracy then we believe that the elected councillors have to grapple with the problems and some of those worries. From my experience of councillors I believe that they will not flinch from their responsibilities. The purpose of this amendment is to ask the Minister to take on board the fact that one is dealing with councillors who are lay people, and in many instances with professionals who in many areas will be coming to the nexus of management of the affairs of their community in a completely new way.
There will be very few authorities that have not dabbled in some form of competitive tendering, certainly in relation to housing, and in other areas. This is a whole new ball game. Therefore I hope that the Minister, if he is not prepared to accept the amendment (and I cannot anticipate what he will say) will understand the problems that have caused this amendment to be framed. If so, I shall be very grateful. I beg to move.
6 p.m.
Lord Ross of Newport: My Lords, I should like to speak very briefly in support of this amendment. I wonder whether the Minister appreciates the situation now pertaining in quite a large number of authorities round the country. Frankly, they are punch-drunk with the new requirements that are being placed upon them. There are many more to come with rating legislation, education changes and so on.
I read in the newspapers recently of the big turnover of staff in the city of Westminster; and in Medina Borough Council, which is no longer controlled by Liberals but by the government party, 27 senior staff have left since May. Indeed, the number may be higher because that was the figure given to me in late August. Staff are leaving local government—senior staff at that. Therefore the problems become more and more complicated. When I was in local government, the council always tried to carry out government requirements and legislation, whether Labour or Conservative. At that time the council was Independent-controlled, and more recently was Liberal-controlled. We tried to follow government requirements because that is right in local government, which should follow the instructions of the government of the day.
The situation in local government is becoming critical. I do not believe that many people see local government now as a career. I think that many senior officials are free-wheeling and looking forward to the day of retirement. The situation is getting worse. This is a most sensible amendment and I beg the Government to take it on board.
The Earl of Caithness: My Lords, the Government accept that we must allow sufficient time for consultations before we bring forward orders to add new activities to the list in Clause 2. Indeed, since consultation is provided for by statute, my right honourable friend would be open to challenge if he did not do so. However, this amendment seems to mean that we would have to allow at least 18 months for consultations. We believe that to be excessive. I should have thought that allowing three months for comments would be perfectly adequate in most cases, and it should not take the Government many months to consider those comments, reach a decision and bring forward an order.
However, I wonder whether the amendment is based on a misunderstanding of the way activities will be added. Once we have considered the responses to consultations, an order must be made to include new areas of activity in the legislation but authorities will not then have to expose any activity to competition straight away. As with the initial list of activities,

457
regulations will have to be made under Clause 6(3) to phase in competition for any additional activities in a way with which both local authorities and private contractors can cope. Clearly those regulations will have to allow time for authorities to draw up specifications, advertise for tenders, and so on.
We have proposed that authorities will have some 12 months from Royal Assent before they have to expose their activities to competition. If we add more services, we should envisage allowing roughly the same sort of time for those new services. That 12 months would run from the date that the order was approved.
I hope that with that explanation the noble Lord will see that the timescale is not quite as tight as he may have envisaged.
He mentioned the difficulties for local authorities in implementing the provisions of the Bill. Yes, I think that there will be some difficulties for some local authorities, but the Bill has been before Parliament for some considerable time. No local authority should be caught napping by these provisions. If local authorities have been awake to what has been going on, there should be no difficulties at all for them.
Lord Graham of Edmonton: My Lords, first of all, I thank the Minister. In order to be clear about it, did the Minister say that in effect, from day one, now, until the successful tenderer operates there will be a 12-month timescale'? Can the Minister help me with that?
The Earl of Caithness: My Lords, will the noble Lord repeat that question, please?
Lord Graham of Edmonton: My Lords, we are asking for 18 months from the first day of consultation. I made the point, however, that I would understand if the Minister, because of his political imperatives, felt that that was a delaying tactic. I said that those outside would want longer. He was careful in the remarks he made, and therefore one must read them very carefully to get their full meaning. Am I right in thinking he said that without the amendment there would be 12 months available for consultation until implementation? That is my understanding and I want to be clear that it is right.
The Earl of Caithness: My Lords, I said that there would be more than 12 months. I said that instead of the 18 months allowed for comments by the noble Lord, we thought three months would be about right. But there would then be a period during which my department would look at the matter and consider comments made during the consultation period before reaching a decision and bringing forward an order.
I said also that the 12 months would run from the date that the order was approved. So if one adds together the consultation and decision-making process and then the order going through both Houses, there will be a further 12-month period, roughly speaking, before implementation. That gives local authorities considerable time. I hope that that clarifies matters for the noble Lord.
Lord Graham of Edmonton: My Lords, as I understand it, the Minister is saying that once it is decided to add a new service, which is a decision to which no one will be privy except the Minister and his colleagues before it is announced, there will be a three-month consultation period on the document that sets out the arguments. For example, there was a document issued last November on sport and leisure with a consultation closing date at the end of January.
The Minister says there will be additional procedures, so that in effect there will be a period in excess of 12 months from the first moment of consultation until implementation of the service. It may even be as long as 18 months; he did not say that but he certainly said it would take in excess of 12 months. In that case, we are getting somewhere. I am trying to represent the views of those outside who are at the sharp end and who wish us to make these points. I take the Minister's point.
Privatisation of every conceivable service is on the cards—we know that nothing is sacred—and in the fullness of time the Government are likely to add to the list. We know that the Minister's colleague, Mr. Christopher Chope, said he could see every possibility of an additional tranche of six being added to the original six before 1991. We know that the Minister and his friends are working towards further additions and so nothing should come as a complete surprise.
It is all very well having a political agenda and a political timetable but the Minister must have due regard to the impact on the people who are at the sharp end. Never mind the ratepayers and the consumers; I am thinking in terms of the councillors and the council officers. The noble Lord, Lord Ross of Newport, with his experience, may blanch at this. I know there are noble Lords opposite who do not blanch as much as we do at the likely impact, but nevertheless they are aware of it. It would be very sad if an order to achieve a political imperative also caused further doom and despair in local authorities, not at the privatisation itself but at the sheer weight of work and worry that it will put on to the shoulders of councillors and council officers.
The Minister knows that if he wants to do something and if he has a parliamentary majority (and we know all about those) he will get his way, but at what cost? Those outside the House will read what he has said, and if there is still dissatisfaction there remains a further stage in this House at which we can raise the matter again. In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 7 not moved.]
6.15 p.m.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 8:
Page 3, line 19, at end insert ("or if it is work carried out by the employee who is responsible for security of the building, at a primary school or village school.").
The noble Lord said: We cantered over this course at an earlier stage of the Bill. Our advisers in this matter are the Association of County Councils,

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whereas on the earlier occasion we had the advice of the Association of District Councils. Together with the Association of London Authorities, all local authority associations hold a unanimous view about the blemishes in the Bill.
The Association of County Councils asks us to bring to the attention of the Minister the impact on security of a primary or village school building. The ACC is concerned that the Bill's compulsory tendering provisions will have severe and detrimental consequences for the role and supply of caretakers in small schools. The Minister undertook to consider the points we made at Committee stage on 26th January. We are, bluntly, seeking an exemption from Schedule 1 in respect of the cleaning function in primary schools where the caretaker is the only member of staff employed on caretaking and cleaning duties.
The problem is simply put. The Bill as currently drafted will catch the work of caretakers in most primary schools although caretaking is not itself a defined activity. That is because caretaker-cleaners in small village schools by and large spend more hours cleaning than caretaking, although caretaking is the most important part of the job. Because they quantitatively spend more hours cleaning, their work is not exempt from the compulsory tender provisions.
In our debate on 26th January, the noble Earl said he thought many caretakers spent only a small amount of time cleaning, in which case they would be exempt. He seemed to suggest that the problem would affect only a small number of primary schools. I am told that is not the case in, for example, rural areas. In Warwickshire a caretaker-cleaner in a primary school will typically spend five hours caretaking and 12½ hours cleaning, making 17½ hours in total; or five hours caretaking and six hours cleaning, making 11 hours in total.
In Norfolk three-quarters of rural village schools have a caretaker-cleaner who spends around 50 per cent. of his time cleaning and 50 per cent. caretaking. Kent says that 234 of its primary schools will have their caretaker-cleaners caught by competitive tendering. In Devon only one of its 448 primary schools has a caretaker spending more than 50 per cent. of his time on caretaking—so all but one of that county's primary schools will have a caretaker-cleaner caught by competitive tendering. In 151 schools the caretaker is the sole employee on the site involved in caretaking and cleaning duties.
A great deal more can be said. The Society of Education Officers, which is the professional body for education officers, says:
"It is essential that in small primary schools the roles of caretaker and cleaner are combined in one individual. In a small school the regular presence of the cleaner in charge to deal with emergencies, accidents and other more routine day-to-day functions is critical. If cleaning is removed, the position and role of that individual would certainly be significantly diminished and service to pupils and parents badly damaged. There is therefore a particularly strong case to exempt small schools from the defined cleaning activities—a fact of life already acknowledged in authorities already operating private school cleaning contracts".
In this amendment we should like an exemption from the cleaning provisions for all caretakers in primary
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schools. If this is not possible we want an exemption for primary schools where the caretaker-cleaner is the only person performing cleaning and caretaking duties.
We are arguing a principle but we are looking at what the principle in practice means in counties such as Devon, Warwickshire, Kent and Norfolk. These authorities are saying that it is an aggravation to an authority that is already hard pressed if the Minister will not yield, make a special exemption, or do something to help them. We have not trawled. We have not said, "Give us some ammunition or sticks with which to beat the Government." They have put forward this argument of their own volition. I hope that they have drawn to the Minister's attention in a more formal way that which they have drawn to our attention. It is all very well for us to stand here and raise these points but, if the Minister replies that no one has told him about it, we are less able to argue well. The Minister and his colleagues may have considered the issue before the Bill was drafted. But every now and again those at the sharp end of the provisions of a Bill may, because they are close to it, draw some matter to the attention of the House.
I raise these issues in a benign sense. In no way am I angry. I can understand that the Minister and his colleagues may not have foreseen the effect of the clause. The issue is very small in the context of what the Bill seeks to achieve. However, it becomes very large when local authorities are trying to make sure that the educational service is functioning properly, securely and comfortably. I beg to move the amendment.
Baroness Carnegy of Lour: My Lords, I do not know what my noble friend is thinking on this matter. However, the problem is the same in Scotland as in the various counties to which the noble Lord, Lord Graham, has referred. I do not think that this amendment will suffice, because the wording does not make sense. It refers to "at a primary school or village school". In the Scottish context village schools are nearly always primary schools. I do not know whether the amendment refers to all primary schools which have someone who is responsible for the security of the building, or all schools in villages, whether secondary or primary schools. I draw attention to that fact. However, I shall listen with great interest to what my noble friend says, because this is a matter that has also been raised in Scotland.
Lord Foot: My Lords, perhaps I may add a few sentences to what has already been said. One of the advantages of following the noble Lord, Lord Graham of Edmonton, in any debate is that he has usually said everything there is to be said before one rises to one's feet. However, I intervene very briefly. The Minister will remember that in Committee the noble Lord, Lord Dean of Beswick, quoted some figures which had been provided to him by the Surrey County Council. They were the number of primary schools in Surrey which were likely to be affected by this part of the clause. In no less than 339 out of a total of 379 primary schools there was a caretaker-cleaner, the major part of whose duties was cleaning and not caretaking. Therefore, those were all

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employees whose jobs would have to be contracted out under the Bill.
I was impressed by those figures because I thought that, if they were general throughout the country, in particular in the rural areas, the impact of this clause would indeed be enormous. I therefore took the opportunity to refer the matter back to my native county of Devon. I was then given the figures that the noble Lord, Lord Graham, has already quoted. In Devon, there is only one caretaker out of all the county's 448 primary schools whose duties as caretaker take up more time than his duties as a cleaner. That is a dramatic illustration of the extent of this problem. I have no doubt whatever that those figures must be reproduced throughout the kingdom, in particular throughout the rural areas.
I therefore hope that the Minister will be able to give some comfort to us today. He was good enough to indicate in Committee that he would look at the point again. He will have noticed that—subject to the criticism of the terms of the amendment from the noble Baroness, Lady Carnegy of Lour, about which I do not wish to say anything because I do not know what the technicalities are—this amendment is in stricter and more limited terms than the amendment proposed on the last occasion. It is limited to primary schools, assuming that "village school" is omitted. I hope that we may receive some comfort when the Minister replies.
Lord Dean of Beswick: My Lords, I wish to speak briefly to this amendment because I was responsible for raising this matter at the earlier stages of the Bill. The original amendment referred to schools as a whole. As the noble Lord, Lord Foot, said, this amendment narrows it down to primary schools. In the earlier proceedings on this Bill in your Lordships' House I was talking of primary schools when I referred to the fact that the caretaker was an indentifiable figure within those establishments whom children came to recognise as part of the establishment where they were beginning their education. They were very often on friendly terms with their caretaker. I have taken the trouble to read what the Minister said on that occasion. Although very often the issues that divide us are not profound, I have to disagree quite forcefully with what he said then and with the reasons he gave for the Government wishing to pursue the course that they are pursuing.
To illustrate what I mean, I shall, with your Lordships' leave, briefly quote what the Minister said:
"The Government's view is that in those cases there is no reason why the whole of the employee's work—including security and any other responsibilities—should not be subject to competition and should not be awarded to a contractor if a contractor puts in the lowest competent bid.
"Contractors already carry out the vast majority of security work generally in this country, apart from police work itself, and so there is no reason to believe that they could not cope perfectly well with these kinds of jobs. Much of the Ministry of Defence security work is contracted out, as is that of my department. And it is working satisfactorily."—[0fficial Report, 26/1/88; col. 554.]
One cannot seriously compare a primary school with a Ministry of Defence establishment. I do not think that there is any relevance between the two.
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The point we are trying to make once again is the personal and human approach of caretakers in the primary schools they serve. What would be the situation? I have spoken of my experience of primary schools in Leeds. We were lucky enough to have a programme of new primary schools in the part of Leeds I had the privilege for quite a while to represent. Unfortunately, because of the cost exercise at the time—local authorities are always faced with the fact that they can never do ideally what they want —those primary schools were built without caretakers' houses; so the caretakers were not on site. The vandalism was very profound and serious damage was being done. Leeds, in its wisdom—I believe one could transfer the argument to many other authorities—decided that it would find the money by hook or by crook to build caretakers' houses in the curtilage of those primary schools. It was significant that once the caretakers moved in, the vandalism decreased and almost disappeared apart from the odd window being broken by someone throwing a stone. Previously, the vandalism had been so severe that sometimes the school could not function the following day due to the appalling mess that was made. That kind of thing disappeared.
Is the Minister saying that a local authority would be better served by Securicor or one of the other private security firms, entailing people going round in a car now and again? Children are some of the best readers of where the police are and where they will be when they want to get up to mischief. They do not wait for panda cars to visit the estate; they wait until they have gone. Only a caretaker's house on the site will provide the optimum protection.
It is nonsense for local education authorities providing a caretaker on site to be told that the caretaker will be supplanted by private security forces, just for the sake of proving or forcing through ideology. That is not the best way to proceed. In some respects we are trying to amend the Bill. We are asking for a small concession. I hope the Minister can give us some assurance, if he responds, that will not be a reply based on that he sadly gave the last time we discussed this subject.
6.30 p.m.
Baroness Blatch: My Lords, some of us on this side are sympathetic towards the amendment. But the noble Lord, Lord Dean of Beswick, is making it rather difficult for us to remain sympathetic. There was a pretty wild interpretation of what is envisaged by the clause that it is wished to amend. I do not believe there is any suggestion—I certainly should not support it—of Securicor making a kind of panda car trip round the schools. That is certainly not what the noble Lord read from Hansard pertaining to what the Minister said at a previous stage.
Lord Dean of Beswick: My Lords, with the leave of the House, I am sorry to come back. I was actually reading verbatim—not giving my views—what the Minister had said. He referrerd to the security of primary schools being privatised. If that means anything other than security forces being employed to guard primary schools, I do not know what it means. It may mean something different in

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Cambridge, but that is what it means to me and to everybody else, as the Minister said it.
Baroness Blatch: My Lords, it still says nothing about people making security trips round primary schools when the children are not there. What the Minister, I believe, was saying when he replied on the previous occasion is that technically there is no reason why the job of a caretaker, who also does cleaning, in precisely that form should not be managed by somebody else. It is a matter of who employs that person to do precisely that job properly prescribed. What is absolutely essential is that the management and accountability line between the person who is responsible for security and responsible for cleaning the school should go to the head of that school. That is very important.
I have sympathy with the idea of the caretaker-cleaner in very small schools, but I agreed with my noble friend Lady Carnegy of Lour when she referred to the technicality of the description of schools. Technically, there is no such thing as a village school. There are schools in villages, but not village schools, if one is defining the category of schools. If it is a question of rural and small schools, we should be talking about junior/infant/primary schools which would cover that age range wherever the school was situated—on the fringe of a city, in a town or in a village. There should also be some reference to the size of the school. Where a caretaker is doing cleaning work as well, clearly we are talking about small schools.
Lord Ross of Newport: My Lords, the Bill is supposed to be saving ratepayers' money, although it will do so not quite so much in some places as in others. Here, however, we have an obvious case where it would be a nonsense to put cleaning out to tender and yet still keep the caretaker. In many cases, the caretaker is in residence and has been appointed to that job. I agree with the noble Baroness that we are considering a village school with a maximum of 100 pupils. I do not think we ought to write that in. It is the one job where an appointment has been made of a caretaker-cleaner and it would be daft.
I am faced with this in my own office. I am being forced by the company that employs me to go out to contract cleaning. We employ a local lady. I know that it will cost at least £10 a week more to go out to contract cleaning. I believe it is absolutely daft, but I cannot change the company's mind. I am being forced to carry it out. Surely the Government should not go down that path. They should accept that there are vast numbers of village schools—there are 30 or 40 on the Isle of Wight—where the kind of person who does this sort of job is part of the community. If they are not living on the spot they live next door and know the school intimately inside out. It would be absolutely maniacal to change. I beg the Government to accept the amendment or to produce something similar.
The Earl of Caithness: My Lords, since we last debated this point I have looked carefully at what was said on that occasion and taken into account
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further representations on the subject. But having done so, I find that I still cannot see why, where an employee's work consists mostly of a defined activity, he or she should be less subject to pressure for greater efficiency than where an employee's work consists entirely of a defined activity. That is the effect of the Bill as drafted. If the greater part of an employee's work consists of activities which are not made subject to competition—defined activities, to use the Bill's jargon—then all his or her work is exempt from competition. Thus, caretakers who do some cleaning, firemen who cook their own meals, park-keepers who do some ground maintenance, are all exempt.
But if the greater part of the employee's job consists of work falling within defined activities, that work must be subject to competition. I am glad that the noble Lord, Lord Dean of Beswick, took part in the debate; it was the noble Lord who said in Committee that authorities have two choices. They can either expose all their employees' work to competition or they can restructure the work in such a way that only the defined activity work has to be exposed to competition.
I believe this principle applies equally to caretakers at primary schools and village schools whose jobs consist mostly of cleaning but include important security work, as elsewhere. I would not claim that it would make sense to split up such caretakers' jobs and expose part of them to competition. But the security aspects of caretaking work at a primary and village school are capable of being specified along with the cleaning work, so there is no reason why such work should not be competed for, nor why private contractors should not carry it out perfectly successfully if they win.
There is, however, one aspect of this case with which I have some sympathy. In many cases school caretakers are required as part of their job to live in tied accommodation. If their work is exposed to competition they face a potential loss of both job and home. In many cases of course contractors are keen to take on existing employees, and so this is not really a threat even if the work is contracted out.
Nevertheless, I have concluded that the strength of feeling and weight of argument in this case cannot be ignored. We therefore propose to exempt from competition work carried out by people who are required as a condition of their employment to live in particular accommodation. This will be achieved by use of the order-making power in Clause 2(9).
We will go further. This exemption will apply not just to primary schools and village schools but to all cases where this type of employment condition arises; for example, resident caretakers on housing estates. Of course I shall look at the points that some of my noble friends raised with regard to the precise wording and definition of village schools.
I believe this concession that I have offered to the House will go a long way to helping with the issue that this amendment seeks to address. I refer to the extract from the Surrey County Council letter that the noble Lord, Lord Dean of Beswick, read out in Committee, the points that he raised about his experience at Leeds and indeed the concerns of the noble Lord, Lord Foot, with regard to Devon. I commend it to the House.
6.45 p.m.
Lord Graham of Edmonton: My Lords, to say that I am surprised would be an overstatement. The weight of evidence that the noble Earl heard at the last meeting was very powerful. The supporting evidence which we have quoted here underlines the case. First let me say on behalf of my colleagues and many outside the House that we are very grateful indeed for what quite clearly is a concession, the size of which will vary according to the authority and the individuals.
The Minister will appreciate the relief felt by any individual in a tied property who had become worried because of the uncertainty that existed until two minutes ago. Those outside the House still need to study with care the impact of the statement on the examples that we gave during this debate. Where there are nonsensical and inexplicable situations with regard to safety and security, I hope that the Minister even at this stage will look at them again. He has obviously been impressed by the quality of the evidence and the advocacy at a previous stage. I hope that he and his colleagues can reflect upon what has been said on this amendment. I repeat that we are grateful for the concession, which I am sure will be seen outside as a significant achievement for the case that we have been allowed to present.
We shall consider what the noble Earl has said as it impacts upon the other circumstances that we have outlined. We will consult those that advise us outside, not least the Association of County Councils. We may come back at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 9 not moved.]
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 10:
Page 3, line 33, at end insert ("and shall adjust annually any de minimis expenditure threshold established by order under this subsection for the purposes of Part I, having regard to the estimated rate of inflation for the period of that financial year.").
The noble Lord said: My Lords, it would be beneficial to the House if we were to take Amendment No. 13 at the same time.
Amendment No. 10 has been mentioned by a number of noble Lords in the course of moving other amendments. The matter was even mentioned at Second Reading. The noble Lord, Lord Campbell of Croy, spoke about this very point. The de minimis expenditure threshold established should be tied in some way to the rate of inflation for the period of the financial year. This seems to be common sense. I should be surprised if the Minister was not willing at least to look at this and consider the possibility of inserting a provision to allow that to happen.
I now come to Amendment No. 13. The effect of Clause 2(9) as it stands would be to allow the Secretary of State to exempt certain activities from the category of a defined activity as set out in Clause 2(2) and Schedule 1. The Government have proposed that certain authorities should be exempt from competition for a defined activity if the amount they spend as a direct charge for that activity, including all relevant overhead costs, is less than £100,000 a year.
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This was in the Scottish Office consultation paper, Competition in the Provision of Local Authority Services, of November 1987. The Minister will be familiar with it. The Government propose therefore that an authority should be exempt in any year if its estimated gross expenditure in carrying out the activity in the previous year is less than £100,000.
It is important to note that we are not talking about the size of the authority; we are talking specifically about the cost. The Government's intention is not to exempt an authority because it is small but because the actual function that it would be undertaking would cost less than the figure which the White Paper gave as £100,000. Small authorities are in general just as capable of benefiting from competition as large authorities. Here again I refer to the White Paper I mentioned earlier.
It therefore appears to be the case that the Government can envisage certain situations where an exemption would be appropriate but the size of authority would not be the main reason but would be incidental. The consultation paper of September 1987 stated that where the level of activity is very small, the question is whether it is appropriate to impose the full statutory account and reporting requirements.
The Bill in general and with particular reference to Clause 2(9) is in effect a skeleton which after passing into statute remains to be fleshed out by way of secondary legislation and ministerial order. Delegated legislation, while allowing for flexibility in response to complicated issues, prevents full public scrutiny, in that what would have been subject to the full parliamentary process becomes subject to government proposals and assurances. However well intentioned such proposals and assurances are and however successfully consultation is carried through, it cannot have, nor is it designed to have, the public scrutiny of primary legislation. Any proposed de minimis exemption should therefore be set forth in the Bill itself, thereby ending doubt and uncertainty for many local authorities. If this amendment were incorporated in the Bill, I would hope that the Minister would realise the importance of incorporating Amendment 10 also. I hope that he will give this matter his full consideration.
I have had replies from a large number of local authorities stating that the figure of £100,000 is too low to start with. The District Audit Service believes that that is the case and that it will have the effect of including many comparatively small blocks of work. This will maximise the effort which has to be put into arranging the competition both for local authorities and contractors.
We sometimes forget that it may seem a very low figure for contractors also. They need to be considered too. With a relatively low figure, a large contractor may not think it is worth becoming involved. It will be involved for only a small gain. The district auditors suggest, as a means of overcoming the problem, a substantially higher threshold—perhaps £250,000, although the amendment proposes £200,000—to be used the first time round. By the time the cycle was completed, there would be general understanding and agreement about the technology needed so that it would be

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practical and constructive to lower the threshold for a second cycle. That would also accord with the likely growth in the capacity of contractors. We do not think—the district auditors support the view—that a starting level of £250,000 will slow down the rate at which competition will be effective.
The Minister will no doubt have received many replies from local authorities and will have seen the letter from the District Audit Service. He will realise that there is a great deal of worry—even accepting all the principles—in the purely practical sense that £100,000 is far too low a figure, at least in the first instance, to set the de minimis target. I hope that the Minister will give some consideration to the two amendments. I beg to move.
The Earl of Caithness: My Lords, these amendments indicate a feeling that the £100,000 gross expenditure level proposed in my department's consultation paper has already been decided upon and that, now it has supposedly been set, it will remain at the same level for years to come, irrespective of inflation or of experience of the Bill's operation.
This assumption is manifestly not the case. Firstly, the proposed level is still only a proposal. The Government have yet to take a final decision. In making that decision, account will be taken of the many variant views expressed in the responses to consultation. Not surprisingly, many local authorities wish the level to be set higher. Other respondents, including some local authorities, agree with our proposal; some wish the level to be lowered and others wish the idea of a de minimis level to be discarded completely. Likewise the nature of the threshold: whether it should be expressed in terms of gross expenditure, net expenditure or manpower levels has been the subject of a wide variety of responses. These will all be considered carefully before a de minimis level is finally decided upon. It is too early to make any such decisions at this stage because the last local authority association comment only reached us on 11 th February. I should say, however, that I do not think that an exemption based on net expenditure would make sense. What matters is the overall level of in-house activity, not the extent to which the cost of that activity is met by income from charges. If the activity can be carried out more efficiently as a result of competition, ratepayers should get the benefits.
We said in the consultation paper that once set, the level would be kept under review. One factor in any such review would obviously be the extent of inflation since the level was set, but it would be erroneous to think that inflation is the only factor that would need to be taken into account. For example, it may become obvious that the level originally set was too high or too low or other factors may come to light once authorities have actually had experience of competition. I would not wish any future review to be tied to inflation alone.
The de minimis level will, of course, be set out in regulations which will be laid as soon as possible after Royal Assent so that authorities know where they
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stand quickly. We see no case for de minimis levels to vary between authorities and therefore no need for the kind of appeal mechanism that is built into Amendment No. 13. Each authority has already had the opportunity of expressing views on the appropriate level in the consultation exercise that we have carried out. That is what the Government are considering at the moment and the noble Lord's amendments would prejudge our consideration of the matter.
Lord Carmichael of Kelvingrove: My Lords, I thank the Minister for that statement. It is perhaps the best statement we have had to date about the way in which the Government intend to operate the de minimis level. I do not believe there was any suggestion in Amendment No. 13— although perhaps I have not read my amendment very carefully—that there would be different figures for different areas unless perhaps there is a long stop for the Highland areas. The Association of Highland District Councils is quite concerned about the fact that those areas are in a special category.
The Minister will be aware that services provided by district councils in the Highlands in many cases cover extremely large geographical areas. He will be familiar with the fact that in some instances the area relative to the population is extremely large. The view of the Highland district councils association is that this itself will involve the preparation of proportionately longer and more detailed tender specifications and pro rata substantially greater costs than a tender specification for a well defined urban area. Similarly, it feels that the costs of preparation for setting up competition machinery will be pro rata greater for smaller authorities and arguably higher than the savings from contracts of a value of only —100,000.
We will give great attention to what the Minister said. I hope, however, he will look again at the question of smaller authorities where the cost of preparation will be disproportionate to any saving. I hope too, he will consider the view of the district auditors who believe it would be a good thing to start with a much higher figure until the machinery is smoothed out and running properly. At that stage, once the experience had been obtained such areas as Badenoch and Strathspey district councils and the Association of Highland District Councils, would be brought in. This is not a question of principle. It is a straight question of local authorities being concerned about the mechanism and machinery of carrying out the job. I believe there is much to be said for the very experienced district auditors' view and I hope the Minister will look into it. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Hesketh: My Lords, we have nearly reached seven o'clock. I beg to move that consideration on Report be now adjourned until 8 p.m.
Moved accordingly, and, on Question, Motion agreed to.

Norfolk and Suffolk Broads Bill
6.59 p.m.
Considered on Report.
Lord Hesketh: My Lords, I beg to move that the House do now adjourn during pleasure until 8 p.m.
Moved accordingly, and on Question, Motion agreed to.
[The Sitting was suspended from 7 until 8 p.m.]

Local Government Bill
Consideration of amendments on Report resumed on Clause 2.
[Amendments Nos. 11 to 13 not moved.]
Schedule 1 [Competition]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 14:
Page 34, leave out lines 14 and 15.
The noble Earl said: My Lords, this is a drafting amendment. I beg to move.
On Question, amendment agreed to.
Baroness Nicol Baroness Nicol moved Amendment No. 15:
Page 35, line 38, at beginning insert ("subject to sub-paragraph (2) below").
The noble Baroness said: My Lords, in moving this amendment, it may be convenient for the House if I speak also to Amendment No. 16, as the two amendments go together.
This is a successor to an amendment moved in Committee which the Minister was kind enough to say he was minded to accept, though he did not approve of the wording. I hope that the present wording is acceptable. However, perhaps I should first explain what we hope the present wording will cover. For example, we wish to ensure that the phrase "other plants" includes trees. Your Lordships may remember that in Committee we discussed the need to protect arboreta and to ensure that specialist maintenance staff employed by local authorities could be retained to do that particular job.
I quote from a letter from Hampshire County Council. The council is concerned that the Government could suggest that,
"grass cutting around the trees should go out to competition, leaving the work on the trees themselves to be handled by the direct labour force without competition. This would be administratively expensive and would fail to provide the security which the Management Committee desire".
I hope that the wording now before the House will prevent that situation arising and that it will secure the protection of specialist teams, as we said in Committee, for the care of plant collections and for sites of special scientific interest. I beg to move.
The Earl of Caithness: My Lords, I am grateful to the noble Baroness for moving this amendment, which, as she said, introduces the substantive amendment, Amendment No. 16, which would exempt work whose primary purpose was research or plant preservation from the definition of ground maintenance work, which will be subject to competition. As the noble Baroness reminded me, I promised in Committee that the Government would
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consider an amendment along these lines. I am therefore pleased to advise your Lordships that the Government are willing to accept these amendments.
The amendment will mean that plant research work, and work connected with national plant collections, arboreta—to which my noble friend Lord Selborne drew particular attention in Committee—other horticultural collections and botanical gardens will not have to be exposed to competition. That covers the point raised by the noble Baroness which concerns the Hampshire County Council.
I should say, however, that the fact that we have accepted that it would be wrong to force authorities to expose this work to competition does not mean that we accept that the work must, in all cases, be carried out in-house. The majority of national plant collections are not in local authority hands and there are obviously many private contractors who could carry out scientific ground maintenance work to at least as high a standard as local authorities. So we should still urge local authorities to consider exposing this work to competition voluntarily, so as to see whether the in-house operation represents best value for money.
In that connection perhaps I may mention the work of the Nature Conservancy Council, which my department sponsors. A good deal of the work on national nature reserves is carried out by contract workers and volunteers, and we are encouraging the council to explore the scope for more of its work to be contracted out. Earlier this month the council published a very creditable practical guide to preparing site management plans for nature conservation, designed to help other bodies carry out practical work within a scientific framework. I am sure that, provided local authorities draw up such plans properly, they should explore all the options for getting the work done—volunteers, contractors' employees and so on.
Meanwhile, I am happy to accept these amendments and I confirm to the noble Baroness that, although there is no definition of "plant" in the Bill, I understand that it includes trees.
Baroness Nicol: My Lords, I am grateful to the Minister for that reply. Perhaps I may remind the House that it was never our intention to insist that local authorities should do this work themselves. We merely wish to give them flexibility so that, where it would cost more to go out to tender than to maintain the collection, or whatever it be, they would be given the option. That is all we sought and I am grateful to the Minister for his acceptance of the amendments.
On Question, amendment agreed to.
Baroness Nicol Baroness Nicol moved Amendment No. 16:
Page 35, line 43, at end insert—
("(2) An activity does not fall within section 2(2)(f) above if its primary purpose is research or securing the survival of any kind of plant.").
On Question, amendment agreed to.
Viscount Mersey Viscount Mersey moved Amendment No. 17:
Page 36, line 6, after ("vehicle") insert ("or of a fire authority vehicle").
The noble Viscount said: My Lords, in moving this amendment, I must stress once more that it is an amendment of life and death. It seeks to exclude fire brigades from enforced competitive tendering on vehicle maintenance just as police vehicles are already exempted in the Bill. The rapidity with which the fire at King's Cross spread is now daily before our eyes as we read the evidence given at the inquiry. No noble Lord would dispute the fact that had the fire appliances arrived even 20 seconds later many more lives would have been lost.
Fire brigades are unique. They are required by law to be at an accident within a specified time. Fire brigades have their own highly specialised, capital-intensive workshops which have a faultless track record and which, I believe, no private competitor could hope to match. Even if they did manage to match it, there would be a learning period in which the government would literally be putting people's lives at risk while the private contractors learned the new craft of fire engine maintenance.
In Committee I listed the main reasons for keeping our fire brigade vehicle maintenance in-house and I certainly do not want to weary your Lordships by repeating them. They can be found in the Official Report of 25th January, col. 595. Many other Members gave yet more excellent reasons from every side of the Committee, including, from this side, my noble friends Lady Carnegy of Lour, Lady Blatch and Lord Gisborough. There was also the formidable voice of my noble friend Lord Renton, who may or may not be back in time for this amendment.
So strong was the feeling that my noble friend Lord Caithness said that he would take away my amendment to consider it, and we are grateful to him for that. I have now heard from him on what the Government propose in lieu of our amendment. With his permission I refer to the letter that he wrote to me. In it my noble friend undertakes to use the power in Clause 2(9) to exclude the maintenance of fire service vehicles from the general provisions of Part I. That is a major concession and it is very good news. He continues by saying that he wishes the Government to be free to alter that decision at a later stage after consultation with the interested parties, debate in either House and after experience of competitive tendering for the maintenance of other local authority vehicles.
Perhaps I may pick up those last three points. First this phrase:
"once we have some experience of competitive tendering for the maintenance of other local authority vehicles."
As I have said, other local authority vehicles are not comparable to fire authority vehicles. Granted they can be very complex—for instance, hydraulic platforms or earth-moving equipment—as my noble friend mentioned at Committee stage, but their repair is not so urgent. Should a contractor fail to deliver he would be fined, yet to fine a contractor for the failure of a fire engine when lives will be lost will be no consolation to the bereaved. Indeed it would add insult to injury.
Second, I wonder what "consulting interested parties" means. Suppose the Government told the London Fire Brigade that it must go out to tender at
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some future date and the brigade said no. I take it that there would be consultation but I also take it that the Government would hold all the trump cards and would "win" that consulation.
Thirdly, he writes:
"the order could of course be subject to debate, as provided by Clause 15(2)."
Perhaps my noble friend can tell me exactly what this means. Is it a Prayer? If it is a Prayer, does he recall our Prayer about the building which was called "Son of Green Giant", which some years back was to be built at Nine Elms, I believe? We were informed that we were going against precedent when we voted on that Prayer. So is not the debate to which he refers of similar power perhaps only to an Unstarred Question?
My noble friend concludes his letter by saying that he hopes we will accept his revision as a "sensible compromise". I do. It is not as good, as clear or as simple as our original amendment but, having said that, the Government have gone a long way to meet my concern and I am very grateful for that. Subject to what other noble Lords have to say—if there are any comments—it is on the cards that I will drop this amendment in favour of the government reassurances given in the letter from the Department of the Environment dated 12th February and which will be probably spelt out in greater detail shortly by my noble friend the Minister.
The Earl of Caithness: My Lords, I have listened carefully to all that has been said on this difficult and sensitive subject and I have re-read carefully the points previously made in Committee. I am grateful to my noble friend for having raised the matter again at this stage of the Bill. I remain unconvinced by the view that it is impossible to involve private contractors in fire vehicle maintenance in a satisfactory way. From my own experience I think that if fire authorities were less wedded to their existing ways of carrying out their functions they might well find scope for substantial cost savings through competition without any loss of service quality. The Government take very seriously the pursuit of greater efficiency and value for money in the fire service.
During his recent inspections of brigades, Her Majesty's Inspector of Fire Services looked critically at all aspects of administration including the arrangements made for the maintenance of vehicles. The inspectorate is concerned not only that the arrangements meet the operational requirements but also that they are cost-effective and efficient. Fire is an emotive issue and it can conjure up images which can all too easily make us lose sight of the practical implementation of what we all desire. Perhaps I should emphasise, as I have done on many occasions during the proceedings on the Bill, that Part I will not mean that the authorities are forced to contract out services to any contractor who puts in a bid. Authorities will be under a duty to specify exactly what service they require. They will want to check that contractors putting in tenders have the capacity to carry out the work satisfactorily and they will be wise to set up contractual arrangements which impose penalties on failure in order to ensure that

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contractors perform well. That would apply in the field of fire vehicle maintenance as much as in any other field.
The logic of the amendment means that the private sector is considered incapable of carrying out maintenance of any fire service vehicle from the officer's car to the hydraulic platform. We all know that the private sector services vehicles and machinery quite similar to those used in the fire service—for example, the plant and vehicles used in the construction industry. The private sector also services other emergency vehicles, for example some NHS ambulances.
Nevertheless, I recognise the strength of feeling that has been shown in the contributions to the debate which have been made so eloquently by your Lordships, particularly at an earlier stage. Should my noble friend withdraw his amendment (he has indicated that he may), I confirm that I am willing to give a commitment that we will use the power in Clause 2(9) of the Bill to exclude the maintenance of fire service vehicles from the provisions of Part I when we make the first set of regulations and orders under the Bill.
I acknowledge that this proposal would not preclude us from making this work subject to competition by an amending order at a later stage once we have some experience of competitive tendering for the maintenance of vehicles belonging to other local authorities. For example, if that experience showed that contractors can carry out fire vehicle maintenance perfectly adequately, as the Government believe, it would be wrong to have fresh legislation. I agree that other local authority vehicles are different from vehicles of the fire service. If the private sector proves, as I am sure it can, that it can do other repairs and maintenance satisfactorily, then it would be wrong to rule out the fire service altogether.
8.15 p.m.
Lord Elwyn-Jones: Would the noble Lord be good enough to give way? Have the Government consulted the Chief and Assistant Chief Fire Officers' Association, which has written a most deeply worried and anxious letter to me and other noble Lords? Has this association been consulted?
The Earl of Caithness: My Lords, of course they have been consulted. I spoke at length with CAFO on a regular basis when I was at the Home Office. I visited workshops to look at service vehicles. I am sure that the noble and learned Lord will be pleased at the concession I have given to my noble friend following the moving of the amendment. I am willing to give the commitment to use the exemption in Clause 2(9).
Lord Dean of Beswick: My Lords, is it not a fact that although the Minister has indicated some movement—I believe I am drawing the right conclusion from what he has said—when the Bill becomes an Act it will still have reserve powers to enforce this particular function on a reassessment? In other words the Secretary of State is still keeping the bullet in the gun and, if he chooses to pull the trigger,
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the measure will be carried through without recourse to this House and without it having any influence on the decision. It is really very little which is being offered.
The Earl of Caithness: My Lords, I am sorry the noble Lord, Lord Dean of Beswick, takes that attitude. I believed that I was approaching this problem in a most constructive way. I tried to help in the discussions which have taken place on this matter. If in the light of experience it appears that this work can be contracted out, then that will remain an option. As the noble Lord knows, because he has read the Bill and taken part in the debate, under Clause 2(4) consultations with interested parties will of course include CAFO. The noble and learned Lord knows only too well that that must take place.
Perhaps I may also point out that such an order would be subject to annulment in pursuance of a resolution of either House as provided by Clause 15(1). In that case the very point which the noble Lord, Lord Dean of Beswick, was making is that your Lordships would have another opportunity to consider the matter afresh and to make your views known.
I hope that my noble friend will withdraw the amendment in view of what I believe is a very considerable effort by the Government to try to meet these legitimate concerns.
Viscount Mersey: My Lords, I thank my noble friend for that reply. Perhaps I may first of all convey the apologies of my noble friend Lord Renton to my noble friend the Minister. What happened was that as soon as he heard I was on my feet he started running towards this Chamber but he was then told that he was not going to make it anyway. I believe he was stopped in his tracks by my noble friend Lady Blatch.
I believe that the Government amendment is a pretty generous one. With due respect to the noble Lord, Lord Dean of Beswick, I believe that he has not appreciated the extent of the concession which is being offered. I have a letter in my pocket which I believe will put his fears at rest. Perhaps I may show that to him afterwards. Rather than risk the loss of these quite considerable concessions by pressing my amendment, I shall settle for the amendment of my noble friend the Minister. Therefore I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 18 to 21 not moved.]
Clause 3 [Other definitions]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 22:
Page 3, line 40, leave out ("a parish or community council").
The noble Earl said: My Lords, this is a purely drafting amendment. I beg to move.
On Question, amendment agreed to.
Clause 4 [Works contracts: restrictions]:
[Amendment No. 23 not moved.]
Clause 6 [Functional work: restrictions]:
[Amendments Nos. 24 to 27 not moved.]
Lord Dean of Beswick Lord Dean of Beswick moved Amendment No. 28:
Page 6, line 33, at end insert ("and if less than two persons who are not defined authorities submitted a tender, the authority may determine that the service should continue to be provided directly.").
The noble Lord said: My Lords, under the Bill as it is drafted work remains automatically in-house only if there are no tenderers for a service. The amendment suggests that an authority should have a discretion where there is only one tenderer other than itself in relation to a given area of work. The issue behind the amendment was briefly discussed in Committee in the context of the tender position facing Scottish island authorities. There must be some doubt whether more than one private tenderer would be available in a number of areas; for example, refuse collection or office cleaning.
By extension the same principle could apply in a number of remote areas of the country, or even where, because of the rather artificial way in which the tendering timetable has been drawn up by the Government, local private contractors are simply unable or unwilling to put in a tender for a piece of work. The noble Earl, Lord Balfour, referred to this possibility in respect of Scottish islands at cols. 520 to 521 of the Official Report of 26th January 1988 and expressed the hope that, where an island authority was required to go out to tender for a given service, at least two private bodies would be in a position to submit an estimate for the work involved.
His concern stemmed from the possibility that a single contractor could hold a small local authority to ransom at the point where the contract was due to be renewed. This is clearly a widespread danger since authorities will in all likelihood be forced to dispense with staff and equipment relating to an area for which they have lost the in-house bid, leaving them in a difficult position in relation to a further tender in subsequent years.
The amendment proposes a simple safeguard whereby, unless there are two tenderers able to take part in the first tendering process under the Bill, the local authority should retain discretion to keep the service in-house to avoid the possibility that neither it nor any other contractor would be able to respond to emergencies or to fill the place of the single tenderer in the event of a breach of the contract.
The operation of the discretion would of course be subject in the normal way to requirements of reasonableness in relation to decisions by local authorities, and there is no intention or danger that this would be used as a back-door method of evading competitive tendering. If, however, the Government are willing to consider the principle of the amendment it would clearly be appropriate for them to give further consideration to the form of drafting and whether additional safeguards as to the operation of the discretion may in their view be necessary.
It is stressed that the amendment would produce no automatic reversion to an in-house service but might create the opportunity for the local authority to plan for the best interests of its area. We believe that the amendment could serve to stimulate competition in the sense that a private monopoly would be prevented and other contractors would be encouraged to submit bids in the future in the area concerned. I beg to move.
The Earl of Caithness: My Lords, this amendment would either have no effect at all, or it would have an effect that I believe is totally unjustified, depending on how one interprets the word "may". Under the provisions governing competition for functional work authorities must invite tenders from at least three contractors who are not defined authorities, unless fewer than three contractors respond to the advertisement inviting contractors to register their interest.
If no contractors submit tenders, then the authority is obviously free to carry out the work in-house. If one contractor submits a tender, the authority can decide that the work should remain in-house if that represents better value for money. But it has to make that judgment. If "may" in the amendment means "can, if it is justified", then that is the effect of the Bill, and the amendment is unnecessary. But if "may" is supposed to mean "can", irrespective of the other bid, then that is in direct contradiction with the spirit of the Bill.
I realise that, for a variety of reasons and particularly in the early stages of extending competition, the responses to authorities' invitations to tender will vary between different areas and for different defined activities., and that in some circumstances there may well only be one tender submitted for work by a person other than a defined authority. However, I see no reason why that other tender should automatically be disregarded, and the authority determine to continue providing the service directly, without even going through the process of tender appraisal. The fact is that competition against one other service provider is better than no competition at all. If that one person can provide the service in question to the required standard, at a lower cost to the ratepayer than an authority's direct workforce, he should be given that opportunity to do SO.
I therefore do not accept the argument that if an authority contracts out work in these circumstances the contractor will have the authority over a barrel when the time for renewing the contract comes round. That argument presupposes that it is impossible to re-establish a DLO once it has been closed down. The experience of authorities like Eastbourne, which brought its refuse collection back in-house recently despite the fact that this involved acquiring new depots and vehicles, and Ealing, which brought its street cleansing back in-house, shows that that is not true. It also presupposes that the market will not respond to the new opportunities that the Bill will create, and new contractors thereby emerge.
The only possible reasons for local authorities to decide to continue providing these services directly are if, after tender appraisal, their own employees have shown that their bid provides ratepayers with the best value for money available or if there were no other tenderers at all. If the possibility of testing the market exists, even on a small scale, local authorities should take advantage of it.
8.30 p.m.
Lord Dean of Beswick: My Lords, I am sorry that the noble Earl could not be a little more sympathetic and have regard to the arguments that were made by

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his colleague, the noble Earl, Lord Balfour, when we dealt with this matter in Committee. The point was referred to earlier by the noble Lord, Lord Ross of Newport, who spoke from the Liberal Benches. Both the noble Earl and the noble Lord, at different stages of the Bill, drew attention to the difficulty that could be experienced by island authorities where there may be a dearth of established companies to deal with these services.
The Minister did not give a good example when he referred to the re-establishment of DLO services after the failure of the private sector. He was of course dealing with Ealing. The other borough he mentioned was also, I think, a London borough. We are talking of an average population of approximately 3,000. That is possibly the population of each of those authorities. It is, of course, possible to re-establish the organisation. I should not be surprised, even if they were to readvertise, if they ended up with one tenderer for each contract. However, I do not think that the amendment is aimed strictly at that point.
There is fear in some small or far-flung areas where there is not a large population. They are not substantial catchment areas and only two or three companies can sustain themselves on the existing market in any event. That is the reality. If there is an area with only enough work at the best of times to enable one private company to keep its head above water, there would be one tenderer only because no other people will come forward. They are not there.
With the amount of finance involved in bringing in someone else, I do not think that the tender would be lower than that of the direct works organisation. I am not prepared to press the amendment. I should be surprised, if this particular part of the Bill goes through as it is, whether some of the smaller local authorities in outlying areas, and the island authorities, were not in extreme difficulty as a result. The Secretary of State may have to look at this matter in the not too distant future when the evidence becomes available. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 10 [Financial objectives to be met]:
Lord Dean of Beswick Lord Dean of Beswick moved Amendment No. 29:
Page 9, line 21, leave out ("may") and insert ("shall be made having regard to any additional costs demonstrated by an authority arising from the employment of disabled or handicapped persons and may otherwise").
The noble Lord said: My Lords, the purpose of the amendment is to insert a requirement into Clause 10(4) for the Secretary of State to make allowance, in setting financial targets for authorities, for the additional cost of employing disabled or handicapped people. Clause 10 gives power to the Secretary of State to set a financial target; for example, 5 per cent. of turnover where a local authority's own direct labour organisation wins the tender for any of the services covered by the Bill. In effect, the clause proposes an additional hurdle over which local authorities must jump before services remain in-house on a secure basis.
The amendment proposes that in setting those targets the Secretary of State should make a specific allowance (in practice on the application of the
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authority) for any additional cost arising from disabled employment. The amendment is extremely limited and would create, in practice, a small exception only to the overall target applied to any service. The origin of the proposal is a commitment given by the noble Earl, Lord Caithness, on 26th January, at col. 534, responding in Committee to Amendment No. 5, which called for exemption for work produced predominantly by disabled people. The Minister said that the Secretary of State would take into account the extra cost of employing disabled people in considering whether to act against any failure by an authority to meet its financial objectives. That was a welcome statement. But the amendment, it is suggested, proposes a more reliable way of safeguarding employment in that area without involving the possibility of retrospective action.
Rather than take any extra costs into account at the stage where a target has not been met and where the Secretary of State is considering whether to commence the process by which ultimately a service can be removed from local authorities, it is suggested that it would be more sensible to build in an allowance at the point where the in-house service bids against the financial target. The effect would be to remove any possible uncertainty on the part of a direct labour organisation as to whether that area of marginal cost would produce any competitive disadvantage. The amount of money is likely to be small but could provide a welcome safeguard for a limited but disadvantaged group of people.
Without the amendment, despite government assurances, there can be no guarantee that a direct labour organisation would feel entirely secure in bidding on behalf of the members of its workforce suffering from a disability or handicap. No doubt the Minister will agree that anything which can be done to increase the security of disabled employees, without cutting across the tendering process, would be a welcome concession.
I have some experience of the employment of disabled and handicapped people in a large and—can your Lordships believe it?—successful direct labour organisation. That organisation successfully stood the test of economic examination by city treasurers and private auditors. I am referring to the time when Manchester had a direct labour force of 4,500 people. We had a substantial percentage of registered disabled people—not severely disabled people—who we were able to employ because we had bought a large factory to produce building components when the public sector building industry activity was probably at its highest. There is no question but that we were successful in our tendering.
I hate to use the word "burden" because I do not think that it is a burden to look after disabled people. We took on that social responsibility. Some of the people were skilled men who had deteriorated through illness and would have been found wanting for work in the private sector. However, we were able to accommodate them in the factory. However, it placed a financial burden on the department that as a council we were prepared to accept. In the amendment we ask for a guarantee that where disabled or handicapped people can be gainfully employed, an allowance could be given. If not there

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will be damaging discouragement for those people who every Member of your Lordships' House wishes to protect to the utmost. I beg to move.
The Earl of Caithness: My Lords, although I sympathise with the intentions of the amendment, as I am sure the noble Lord, Lord Dean of Beswick, will understand, I believe that its aim of not penalising local authorities for employing disabled or handicapped persons is best achieved by other means.
The method proposed in the amendment of taking into account the additional costs of employing such people is an extremely bureaucratic and time-consuming one. The intention appears to be that the Secretary of State will set individual financial objectives for each local authority, taking into account each authority's own such costs. Therein lie all sorts of problems of estimating how many disabled or handicapped people will be employed in a certain year in a certain activity, and what type of additional costs that will entail. This would be a hefty task for both local authorities and the Secretary of State and one which could result in much room for disagreement and misunderstandings.
For these reasons I return to what I said on this subject in Committee only three weeks ago. I am grateful to the noble Lord, Lord Dean, for mentioning it. I confirm that we have already given this matter very careful consideration. We believe that the most effective way of dealing with it is to give authorities an assurance that in considering whether to act against the failure by them to meet their financial objectives, the Secretary of State will take into account the extent to which any failure is up to the extra costs of employing disabled people. This method will allow the Secretary of State to set financial objectives to cover all defined authorities and then take into account individually any relevant actual additional costs, if they are significant in relation to financial failures.
This would allow the Secretary of State to take into account the very point which the noble Lord, Lord Dean, made about Manchester, because running the good authority which he did, or being involved with that authority, he would be able to assess the additional costs of handicapped or disabled people. Therefore he would be able to put that additional cost to the Secretary of State as a special factor to be taken into account. I hope therefore that noble Lords will agree that the method in the Bill is the right way of tackling this difficult and sensitive problem.
Lord Dean of Beswick: My Lords, I am grateful to the noble Earl for that reply, but I do not think the Government quite understand what would happen if such a policy were implemented. I think the Minister is saying that with any contract where disabled or handicapped people would be or might be deemed to be involved, they would have the right to submit the contract to the Secretary of State, on the basis of what he said within the Government's present proposals. Am I correct in assuming that? Perhaps the Minister could answer that before I go any further.
The Earl of Caithness: My Lords, will the noble Lord repeat his question?
Lord Dean of Beswick: My Lords, I understood what the Minister said to be that with the employment or the expense or the additional expenditure on a contract above what one would consider the norm for the employment of disabled or handicapped people, the local authority concerned could apply to the Secretary of State for that to be taken into consideration. Am I correct?
The Earl of Caithness: My Lords, yes.
Lord Dean of Beswick: My Lords, I am grateful for that. I thought I had heard it correctly but I could only see that as a recipe for clogging the sausage machine. I do not know the number of local authorities involved in this, but suppose there were 300 or 400 applications by local authorities which are already employing handicapped and disabled people. If they wanted that taken into account, are we really saying that the Secretary of State has the resources, the facilities, to study each one in depth; or will he give carte blanche? I do not think it is an exercise which the Secretary of State could carry out, even in conjunction with his ministerial team.
I have here some correspondence from the Institute of Maintenance and Building Management, whose officers in the main are in control of or administer or manage the direct labour building departments in the country. Those are not the only types of people who are members of this institute; it has members from the health service and the water boards. Nevertheless, it says:
"Special consideration for disabled and handicapped staff: we note the Government have said that whilst the additional costs of such staff must be shown, there can be stated reasons for acceptance of other than the lowest tender. In our experience, there are many local authorities who will wish to follow the letter of the law and not make such allowances. These considerations apply to apprentice training costs already but, as we know, only a few local authorities have sought to use them and numbers of apprentices have been drastically reduced as a result".
We maintain that there would be the same outcome for the disabled; that type of local authority would probably behave in that manner. What we are trying to do with this amendment is to give not a copper-bottomed guarantee to disabled and handicapped people, because I do not think that you can provide that scenario in any society. But as regards the Government's way of dealing with this subject, on the basis of what the Minister has said, if it would work I should be delighted. But I cannot see the resources of the Secretary of State being sufficient to provide for the practicalities.
On that basis, I have no wish to press the amendment. I am trying to be objective. I hope that the Minister and his colleagues will have a look at this matter.
8.45 p.m.
Baroness Seear: My Lords, genuinely seeking information, I would ask the Minister if he could explain to us what the process would be for doing this. If we want to make allowances, if the Secretary of State has the right to say that the additional expenditure is justified or is not justified, for that to

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be done properly needs very detailed inquiry. You cannot just take the numbers of disabled people. Some of the disabled employed may not be any financial handicap at all. If they are doing a job where they do not need to hear anything then the fact that they are deaf is no financial handicap whatever. On the other hand, somebody else with what on paper looks like a slight handicap may be a considerable financial burden.
I was trying to think out the process of how this could be done, and I find myself very confused. I wonder whether it has been thought out. The Minister spoke about the previous suggestion involving a great deal of bureaucracy. At first sight, it seems to me that the Minsiter's proposal will involve an enormous amount of bureaucracy, unless it is completely rule-of-thumb and, as a consequence, wrong.
Lord McCarthy: My Lords, perhaps I may ask the Minister a question on the same point. Surely the thrust of the amendment is to say that the local authority itself will be able to have regard to any additional costs, and if it does, it will be within the law. It will make the estimates and if it says, "We're not going to go out to tender because when we take into account additional costs as a result of disabled and handicapped persons, we are still under the price of the external tender" then it will keep it in-house and it will be within the law. There will be no bureaucracy; it will be up to the local authority.
If the Secretary of State has reason to believe that an authority is not properly taking into account the costs of employing disabled people, that is for him. But under the amendment there would be no bureaucracy at all.
The Earl of Caithness: My Lords, with the leave of the House. perhaps I may say another word on this matter. I should like to make it clear that the local authorities do not have to submit the contracts to the Secrtary of State. What this part of the Bill is doing is to define the financial objectives concerned by reference to such factors as the Secretary of' State thinks fit. If the local authorities fail to make the financial return required, they can explain why. At that point, they can tell the Secretary of' State about the disabled costs. But that is in relation to carrying out the activity and not in relation to contract letting.
The effect of what we have said is that when a DLO bids, it can discount the extra costs of employing disabled people. Therefore the noble Lord's amendment could mean a separate financial objective for each activity and each authority. Far from the Government's position making it difficult, I suggest to the noble Baroness that perhaps it is the noble Lord's amendment that could make it more difficult. That is because if one has, say, six activities and 400-plus authorities, by the noble Lord's amendment that could be something like 2,400 different financial objectives; whereas what we are looking for is something very much simpler than that.
Lord Dean of Beswick: My Lords, I rise to say very briefly that I think we must look more closely at what the Minister has said in relation to my comments. I
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am not too convinced that he is right, any more than he is convinced that I am right. Having said that, I should like to look at what he has said and perhaps come back on this issue later. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 12 [Information]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 30:
Page 11, line 13, leave out ("or the Development Board for Rural Wales").
The noble Earl said: My Lords, I beg to move.
On Question, amendment agreed to.
Clause 15 [Orders, regulations, specifications and directions]:
[Amendments Nos. 31 and 32 not moved.]
Clause 16 [Supplementary]:
Lord Dean of Beswick Lord Dean of Beswick moved Amendment No. 33:
Page 14, line 14, at end insert—
("( ) A City Technology College shall for the purposes of the Local Authorities (Goods and Services) Act 1970 be deemed to be a public body and the Secretary of State shall so provide in regulations if any such establishment would not otherwise fall within this definition.").
The noble Lord said: My Lords, the purpose of this amendment is to return to an aspect of the issue of wider competitive involvement by local authorities which was raised in Committee and the Minister undertook to provide further details of the position in relation to city technology colleges.
In reply to Amendment No. 80 in Committee the noble Earl gave a useful statement of the Government's position as to the opportunities for local authorities to supply goods and services to other local authorities and public bodies. The governing legislation is the Local Authorities (Goods and Services) Act 1970, which defines the limits of such competitive activities by authorities. The practical effect of the Act is that local authorities are not able to provide supplies to the private sector. The amendment moved in Committee sought to establish that grant maintained schools and polytechnics, which will shortly move out of local authority control if the provisions of the Education Reform Bill are implemented in their present form, will remain public bodies for the purposes of the 1970 Act and therefore bodies capable of being supplied by a local authority.
The Minister replied that provisions in the Education Reform Bill, currently before the House of Commons, would achieve this effect in relation to grant maintained schools and polytechnics. He undertook to check the position with regard to city technology colleges and this amendment proposes that those colleges should also be public bodies for this purpose.
Although the analogy is not exactly similar with a grant maintained school in that a city technology college will be a new institution rather than one that is transferred from local authority control, the CTCs will to a very large degree be designed to draw on pupils, teaching resources and even premises which would otherwise have fallen within the state school sector.
The stated purpose of the new colleges is to provide an alternative to existing secondary schools and to that extent could be seen as being derived from the local authority sector. More to the point, city technology colleges will be funded directly by central government and for this reason alone should be seen as public bodies. It is hoped that the Minister will be able to provide a positive answer on this issue if the matter is not already being covered by correspondence between us.
The opportunity to undertake to supply to CTCs would obviously be a useful additional outlet for local authority tenders in an area where many local authorities have shown themselves able to provide a highly cost-effective and reliable service providing central supplies to a number of smaller bodies and authorities. I beg to move.
The Earl of Caithness: My Lords, I happily make an apology to the noble Lord, because I did promise to write to him. But there I was poised with pen in hand, when lo! and behold I saw the amendment. At that point I thought that I would not write to him, that I would save the stamp, as that would be very cost-effective, and that I would supply that information when he moved the amendment. So here I am to answer the noble Lord and to inform the House that the amendment is superfluous.
Under the terms of the Local Authorities (Goods and Services) (Public Bodies) Order 1975:
"the managers, governors, or other body responsible for the management of an independent school which operates otherwise than for profit",
is designated as a public body for the purposes of the Local Authority (Goods and Services) Act 1970. Such a definition, I am assured, covers a city technology college. Therefore there is no need for separate provision.
Lord Dean of Beswick: My Lords, that is somewhat belated good news, but on that basis I beg leave to withdraw the amendment
Amendment, by leave, withdrawn.
The Earl of Caithness The Earl of Caithness moved Amendment No. 34:
After Clause 32 insert the following new clause:
("Local authority companies.
.—(1) A local authority or relevant public body shall not enter into a contract under which a company which is associated with the authority or body is to carry out work falling within a defined activity, unless, before entering into that contract, the authority or body has taken reasonable steps for the purpose of securing competition for the carrying out of that work.
(2) For the purpose of this section a company is associated with a local authority or relevant public body if, by virtue of any decision of the authority or body (including that of any committee or subcommittee thereof in the course of discharging any function conferred upon them by virtue of section 101 of the Local Government Act 1972, or, in relation to Scotland, section 56 of the Local Government (Scotland) Act 1973)—

(a) the authority or body, or

(b) any member or officer of the authority or body, or

(c) any nominee of the authority or body,

is a member either of the company or of another company which, in accordance with section 736 of the Companies Act 1985, is the company's subsidiary or holding company.
(3) In this section—

(a) "defined activity" has the meaning assigned by section 2 above;

(b) "local authority" has the meaning assigned by subsection (2) or, as the case may be, subsection (3) of section 1 above; and

(c) "relevant public body" means any authority or committee falling within paragraphs (e) to (j) of subsection ( 1 ) of section 1 above.

(4) This section (and, so far as is relevant for the purposes of the definitions in subsection (3) above, sections 1 and 2 above) shall be deemed to have come into force on 11th February 1988 and, accordingly, has effect in relation to contracts entered into on or after that day.")
The noble Earl said: My Lords, I beg to move Amendment No. 34, which would add the new clause on local authority companies after Clause 32.
It has come to the Government's attention recently that a significant number of local authorities are considering turning their direct labour organisations into companies. In some cases this is doubtless being done as a way of helping those organisations to be effective and efficient, and able to compete on as equal a basis as possible with private contractors. Where that is the reason, the Government can have no objection—it is to some extent the logical outcome of the competitive tendering system that Part I of the Bill will introduce. Once those companies are established, we would hope that authorities would consider carefully the scope for selling their interests in them, so that they become genuinely independent entities.
In other cases, however, it seems that the principal reason for establishing companies would be to avoid the competition provisions in the Bill. Under the present law—Section 135 of the Local Government Act 1972 (before the noble Lord, Lord Carmichael of Kelvingrove, picks me up, that is Section 81 of the Local Government (Scotland) Act 1973)—local authorities are normally, except in emergencies, under a specific duty to secure competition before they award contracts for the supply of goods or materials or the execution of works. That is not true, however, of contracts for services which is the subject of this part of the Bill.
For those contracts there is little to stop an authority awarding a contract for the supply of services without competition. Authorities could, therefore, turn their direct labour organisations into companies and award them long-term contracts for the supply of services such as refuse collection or building cleaning without competition. This would be a relatively easy way of avoiding the effects of Part I of the Bill, as that only applies where authorities are carrying out work in-house, not in cases where the work is carried out by companies which they control. But authorities could control such companies to an extent which made them little different from in-house organisations.
As I have said many times in relation to other aspects of this Bill, we accept that this kind of abuse would never be practised by the majority of councils. But we cannot leave the loophole available for exploitation by the minority who are determined to do all they can to keep services in-house, irrespective of the cost to their ratepayers and taxpayers.
This new clause therefore provides that, if an authority wishes to award a contract for work falling

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within a defined activity to a company associated with it, it must take reasonable steps for the purpose of securing competition for the contract before it does so. This will ensure that, wherever possible, alternative bids are received and the authority, its ratepayers and its auditor are able to judge whether awarding the work to the associated company represents the best value for money.
The provisions in the clause will apply to contracts entered into on or after 11th February—the day after my right honourable friend announced the provisions and we tabled the new clause.
I would remind the House that I brought that to the attention of noble Lords by answering a written parliamentary Question which was contained in the Official Report. My department wrote to every major authority covered by the provisions on the day the amendment was tabled, to ensure that they were aware of them as quickly as possible. We have adopted a wide definition of an associated company because of the wide range of ways in which authorities might seek to exert some control over companies.
I should emphasise that the clause will not stop authorities turning in-house organisations into companies, or awarding them contracts. As I have indicated, provided this is done for the right reasons and not simply to avoid competition, we have no objection.
I hope that I have said enough to persuade your Lordships that this new clause represents a sensible way of closing a potential loophole, in a way which will not adversely affect the vast majority of authorities. I beg to move.
9 p.m.
Lord Dean of Beswick: My Lords, I do not think that your Lordships will be surprised if I question the appearance of this clause at such a late stage in the Bill. I respect and am grateful for the way that the Minister moved it. I think that he was in a trap that was not of his own making in having to do it this way. The Government—in the main I am talking about the Secretary of State—appear to be in some respect chasing shadows which have not really appeared.
The Minister said in moving the new clause that he had made the Government's intention available or he had given notice of it when answering a Written Question. I do not know when that Question was put down and when it was answered but it would be interesting if your Lordships knew that. We spend a lot of time at this Dispatch Box trying to persuade the Government to change some parts of the Bill. We have not been very successful at all on some issues where the Government could have been a little more generous. Again I am not blaming the Minister who is at the Dispatch Box.
We know full well when we come to the Dispatch Box that if a vote is taken we have little chance of winning, however persuasive our argument. But we expect to be treated in a manner which gives us the fullest opportunity to look at the Government's intentions. I think that this is not the most courteous way for the Government to treat the Opposition as regards a clause such as the one that we are considering.
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It may well be that what the Minister has said on behalf of the Government will prove to be right. I do not yet know because it needs to be examined and looked at in depth by the people whom it will affect. It is regrettable to have such a clause at this stage. On that note of pessimism, I should like to reserve judgment on the clause to see exactly what has been said. However, I make it clear that I think it is regrettable that a clause which is as long, intricate and complicated as this one, with such far-reaching effects on local government, should be introduced at this stage of the Bill. I have no doubt that we shall return to the matter in the final stages of the Bill.
The Earl of Caithness: My Lords, the noble Lord, Lord Dean of Beswick, has said that it is to be regretted that the Government have had to put down an amendment at this stage of the Bill. To some extent I agree with him. But I must reiterate that had it not been for a small minority of local authorities which saw a loophole, it would not have been necessary to put the amendment down.
Lord Dean of Beswick: My Lords, what evidence has the Minister given us that a small number of local authorities saw a loophole? Does he say that the Secretary of State, by some poltergeist exercise, implanted himself in certain local authorities and predicted what people there were thinking? He has been very clever, if that is the case. I remind the Minister that on three occasions the present Secretary of State has had to go before a court and on one occasion introduce retrospective legislation in order to put himself right with the laws that he thought had been passed. That is why I say that we view the proposal with very great care. I think that I am entitled to ask the Minister once again when the Written Question was put down and when it was answered.
The Earl of Caithness: My Lords, I was coming to that point when I gave way to the noble Lord. It is true that we only heard very recently that some local authorities were considering setting up such companies, and not through a poltergeist experience by my right honourable friend. The noble Lord knows better than I do the formal and informal contacts between the department and the local authorities. Therefore we felt it right, when such a loophole was clearly going to be exploited, that it should be closed before the event rather than after some authorities had used it to avoid the responsibilities to be laid on them by this part of the Bill.
I confirm to the noble Lord that I answered the Written Question on the same day that my right honourable friend announced what would be done in terms of the amendment. The date was 10th February. I commend the amendment to your Lordships.
Lord McCarthy: My Lords, before the noble Lord sits down, can he tell the House when the Government received that information? Presumably it must have been received since the Committee stage of the Bill in this House, since the amendment was not put down at that time. It must have been in the

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last 10 days. Can he tell us what his evidence is? Which local authorities are threatening to do those things?
On Question, amendment agreed to.
Schedule 6 [Direct labour organisations]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 35:
Page 50. line 9, at end insert—
("( ) In subsection (1), in paragraph (a) of the definition of "development body", sub-paragraph (iii) and the word "and" at the end of sub-paragraph (ii) shall be omitted.").
The noble Earl said: My Lords, I beg to move the amendment.
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 36:
Page 50, line 18, at end insert—
("( ) In subsection (4)—

(a) after the word "Commission", in both places where it occurs, there shall be inserted "or the Secretary of State"; and

(b) after the word "which", in the first place where it occurs, there shall be inserted "is an agreement made by virtue of any provision of the Employment and Training Act 1973, which".").

The noble Earl said: My Lords, Amendment No. 36 is a technical amendment relating to the provisions in Part III of the Local Government, Planning and Land Act 1980 which impose competition on local authority building and maintenance direct labour organisations. I beg to move.
On Question, amendment agreed to.
Lord Hesketh: I beg to move that further consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.

Eastbourne Harbour Bill [H.L.]
Committed to an Unopposed Bill Committee.
House adjourned at six minutes past nine o'clock.