Lords Sitting of 26 January 1988

Preamble
The House met at half-past two of the clock: The Lord CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Guildford.

Engineering Council's Education Proposals
Lord Taylor of Blackburn: 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 are their intentions towards the Engineering Council's proposals Radical Ideas on Educational Fronts.
The Parliamentary Under-Secretary of State, Department of Education and Science (Baroness Hooper): My Lords, the Engineering Council has recently published two documents, one titled Restructuring of Engineering Higher Education and the other, Continuing Education and Training—a national system for engineering. The Government welcome these initiatives and await the outcome of responses with interest.
Lord Taylor of Blackburn: My Lords, I thank the Minister for that reply. May I ask her this question? In view of the work that the Engineering Council is doing in the field of education, especially among young people in the engineering world, will she ask her right honourable friend to say thank you to the Engineering Council for the great work it is doing?
Baroness Hooper: My Lords, we have had occasion to say thank you already. Last week I was at the launch of a pilot project which is supported by the Department of Education and Science through a programme called Pickup which is based upon an initiative by the Engineering Council. It gave me a suitable forum for saying thank you on that particular front.
Baroness David: My Lords, is the Minister aware that in the discussion document Restructuring of Engineering Higher Education produced by the Engineering Council, one of the theme songs is the need to have more engineering students, particularly women? Is the Minister further aware that of 19,000 engineering students in 1986, only 2,000 of them were women? Are the Government going to respond in such a way that will encourage more students and more women?
Baroness Hooper: My Lords, I thank the noble Baroness for that question. On all fronts the Government are encouraging the easier access of women to the professions and to kinds of work which were not normally feminine occupations. The Government have taken action to increase the number of engineering and technology places in
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higher education through their engineering technology and HITECC programmes. The Government are concerned about a reported shortfall in the take-up of places on engineering courses; but we believe that our proposals on education reform will achieve a great deal to increase the awareness and ability of young people in the relevant subjects. They will also involve employers and industrialists.
Lord Molloy: My Lords, does the Minister agree that, like many other professions, engineers and those engaged in engineering technology are going to depend a great deal upon computers? It is engineers who train engineers and architects who train architects; therefore ought it not now to be the policy of the Government that computer experts should train computer students?
Baroness Hooper: My Lords, the various initiatives taken by the Government, particularly in terms of the proposals for a national curriculum, are intended to ensure that computer knowledge is widespread across all fields of education.
The Earl of Halsbury: My Lords, one situation that we do not want is more and more engineers with less and less ability to express themselves coherently in grammatical English.
Baroness Hooper: My Lords, I believe that not only the Government but the Engineering Council will subscribe to that.
Lord Cledwyn of Penrhos: My Lords, is the Minister aware—and I am sure the whole House will agree with this—there is a shortage of well-qualified engineers in this country, and that they are essential for the future of the country? It was good to hear the Minister say that the Government are aware of the shortfall. The following point has been brought out in a number of exchanges and debates in this House. Is it not the case that engineers are badly paid compared with other professions, and that the average wage of a qualified engineer compares very badly with lawyers, architects, the medical profession—and certainly with pop singers and other "show-biz" representatives? Would the noble Baroness say what the Government are doing to improve the conditions and pay of the engineering profession?
Baroness Hooper: My Lords, I am not sure what to say about that matter since my father was an engineer. It is for the engineering industry to be concerned about pay. The Government can do all that is possible for them to do in terms of ensuring that the engineering workforce is properly prepared and educated. It is then for the employers and the industry to ensure that they get the best possible people to perform the jobs by offering the best possible salaries.
Baroness Seear: My Lords, would the Minister agree with this view? If the Government are serious about wanting to get more women into engineering

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and back into the labour market, they have to make it far easier for women who wish to return to work to be encouraged and helped in a variety of ways. For example, the limitation put upon women going for training under the adult training scheme that they are not registered as unemployed and therefore are not eligible for training grant is a quite unnecessary obstacle.
Baroness Hooper: My Lords, all I can say is that the access courses which are being supported by the Government in various institutions are designed primarily to ensure that discrimination should not take place.
Baroness David: My Lords, as the Engineering Council has recognised that there must be some restructuring of higher education (because, it says, of lack or resources given by the Government) may I ask when the response will be given to the Engineering Council by the Government so that it can make its forward planning?
Baroness Hooper: My Lords, in the conclusions of the document published by the Engineering Council on restructuring of higher education, resources were not referred to at all. But I understand that the responses are expected to be finally in at the end of April, at which time we can assess the situation.
Baroness David: My Lords, lack of resources was mentioned in the document, if not in the conclusions.
Lord Annan: My Lords, would it not help if more universities followed the admirable example of those universities which were colleges of advanced technology and had sandwich courses for those in engineering departments? Is not this something which would bring the student earlier into contact with the realities of industrial life?
Baroness Hooper: My Lords, we recognise the many advantages of the type of course to which the noble Lord refers. Our aim is to start at a very early age in inspiring young people to find interest in occupations such as engineering by involvement with employers and industry in the education process in schools and colleges. However, it is for the higher education planning bodies, the UGC, and the National Advisory Board to advise the Government on what action should be appropriate as a consequence.
Lord Leatherland: My Lords, is the Minister aware that the University of Essex has a highly esteemed engineering department?
Baroness Hooper: My Lords, I am well aware that the University of Essex has many highly esteemed departments.

Statues: Codes of Practice
2.45 p.m.
Lord Henderson of Brompton: 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 whether, whenever a government Bill contains provisions for a code of practice, they will incorporate in the Explanatory and Financial Memorandum to the Bill an explanation of the legal effect, if any, of that code.
The Lord Advocate (Lord Cameron of Lochbroom): My Lords, as noble Lords will know, we have recently issued guidance to departments on the drafting of statutory provisions relating to codes of practice. The guidance is intended to ensure that the legal effect, if any, of a code should now be apparent from the provision under which it is made. While I would expect that the passage in the Explanatory and Financial Memorandum referring to that provision would normally refer briefly to the legal effect, I do not see any need for the memorandum to duplicate such an explanation.
Lord Henderson of Brompton: My Lords, I thank the noble and learned Lord for that positive Answer. I also thank him for his responsiveness to a debate in this House which called for clarification of the drafting of codes of practice. Might I ask the noble and learned Lord whether the paragraph in the Explanatory and Financial Memorandum on Clause 27 of the Local Government Bill now before this House should not be the model for the future? If he has been good enough to do that for this particular Bill, I cannot understand—and may I ask him why —he cannot do the same for future Bills as well. It would he a great help to legislators.
Lord Cameron of Lochbroom: My Lords, I am grateful for what the noble Lord said. I pay particular tribute to him and to other noble Lords who took part in that debate as being a spur to the provision of the guidance which is now in the Library of the House. I take the point that the noble Lord has just put to me, and indeed he has referred to the very Bill that we are looking at this afternoon.
The content of a memorandum is obviously the responsibility of the Minister who promotes the Bill. It may well be that the terms of the provision itself make quite clear what the legal effect is. This will be a matter for the Minister promoting the Bill to consider, but I shall certainly draw the attention of colleagues to the point that the noble Lord has made this afternoon.
Lord Paget of Northampton: My Lords, how does one draft an indictment for breach of a code of conduct, and who tries it?
Lord Cameron of Lochbroom: My Lords, I think I would be slow to give the noble Lord advice on the drafting of indictments. I can simply say that I should look to the offence provisions to find the means whereby any offence is to be set out.
Lord Elwyn-Jones: My Lords, is not one of the difficulties of this that codes of practice are somewhat indeterminate bits of the law? For instance, a breach of the code of practice under the Police and Criminal Evidence Act on the part of a police officer can result in disciplinary proceedings against him, but when one comes to recollect measures like the ancient highway code where this business of indeterminate bits of the law started, breaches of the highway code do not have the force of law but of course they can be taken into account in legal proceedings. It is not a very satisfactory position either for Parliament or for the citizen.
Lord Cameron of Lochbroom: My Lords, I think I would he slow to be drawn further than what I have said already this afternoon, despite the blandishments of the noble and learned Lord. What we are dealing with is what the trigger clause will say, and that will make quite clear what the legal effect, if any, is to be of the code of guidance or code of practice to be issued under it.

Social Fund Regulations: Funding
2.49 p.m.
Lord Moyne: 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 it is proposed under the new social fund regulations to assess the availability of other sources of funding whether from charities or relatives.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Skelmersdale): My Lords, other sources of funding as described in my noble friend's Question only arise in the case of crisis loans. The provision in the social fund manual is similar to the one under which the existing urgent needs payments are made. The social fund manual expressly says that applicants should only he directed to other sources of funding provided:
"that there is a realistic expectation that help would be available and available in time, if the applicant were to seek it".
Lord Moyne: My Lords, in thanking my noble friend for his Answer, may I ask whether he can assure the House that the new arrangements will not result in applicants, who may be neither very capable nor very mobile, having to hurry from pillar to post, from one charity to another, or to their relatives, before the social fund officer can consider their case?
Lord Skelmersdale: My Lords, I should like to make it clear to my noble friend and to the House that there is absolutely no question of applicants being pushed from pillar to post. The advice to people is to go to the social fund officer in the local social security office. He will make a crisis loan payment if appropriate. Only if a suitable local charity exists which, as I have said, has the money or service available would he advise the applicant to seek help there; for no other reason.
Baroness Jeger: My Lords, would it not be simpler if the Minister were to ask his right honourable friend the Chancellor of the Exchequer to put some more of his spare money into the social fund rather than expecting charities to subsidise the DHSS?
Lord Skelmersdale: My Lords, that is a possibility which is always in the forefront of the minds of noble Lords opposite. As I have made quite clear, there is no question of expecting charities to subsidise the state in this way. Only if a suitable local charity exists which has the money or service available will it be an appropriate source of help.
Lord Carter: My Lords, is it correct that the guidance manual for the social fund includes a recommendation that a claimant should be directed towards the use of credit cards? If that is the case, will the Minister comment on a recent report from the National Consumer Council which drew attention to the rapacity of the banks and credit card companies in the interest rates they charge?
Lord Skelmersdale: My Lords, this confusion probably exists because it is not generally realised that crisis loans are available to any member of the public, not just to those on benefit. It is therefore necessary to have regard to all possible methods of repayment. In some cases—I accept by no means all—a credit card may be appropriate.
Lord Carter: My Lords, if that is the case, have the Government given any consideration to the sources of finance which are more traditional for the poor; for example, the pawnbroker and the money lender?
Lord Skelmersdale: My Lords, I have already explained that we are talking not only about the poor and those on benefits. The loans are available to any Member of your Lordships' House and to any member of the public; therefore an appropriate means of repayment has to be ascertained in each case.
Baroness Seear: My Lords, the noble Lord did not answer the second point in his noble friend's question in relation to relatives. Is it intended that people should be encouraged to go to their aged aunts to ask for money before going to the social fund?
Lord Skelmersdale: My Lords, "relatives" means immediate relatives and certainly not aged aunts. What is important to realise is that when an application is made there will be an interview by the social fund officer of the applicant. One of the questions that will be asked at the interview is whether the applicant has access to other funds from his or her immediate relatives. If the answer is no—and only the applicant can answer that question—the subject will be dropped.
Baroness Jeger: My Lords, as an aged aunt I am anxious to know the degree of consanguinity which will give me responsibility for the excesses of all my nieces and nephews. How close is a close relative in this context?
Lord Skelmersdale: My Lords, it depends on how far away they live.
Lord Diamond: My Lords, has not the Minister made it very clear that what he is talking about are the rights of all citizens? Having regard to the rights of all citizens, how does he reconcile what he says with how the citizen in question will feel if directed to go to a particular charity and appeal in a Dickensian manner for assistance?
Lord Skelmersdale: My Lords, I do not think that "a Dickensian manner" would apply to organisations such as the Aberfan Disaster Fund. The charity involved would depend upon the circumstances. One obvious possibility is where a disaster fund is already in existence to meet claims arising from a particular tragedy. There are sometimes local charities which provide grants or services to people in need. For example, if there is a flood in Buckinghamshire and the local WRVS is providing blankets, there seems to be little point in the social fund making duplicate provision.

Persian Gulf: Naval Co-operation
2.55 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 whether they are satisfied with the degree of co-operation between naval forces in the Persian Gulf.
The Minister of State for Defence Procurement (Lord Trefgarne): My Lords, yes. Satisfactory arrangements have been developed both locally and between capitals for co-operation. Although the Royal Navy's Armilla patrol remains a wholly national operation, the United Kingdom remains committed to close and effective co-ordination with other friendly navies operating in the Gulf.
Lord Molloy: My Lords, I thank the Minister for that reply. Can he say whether the Government are satisfied with the level of intelligence co-operation in the Gulf between the various naval forces? Are they aware of the need to try to prevent the attacks made on military and civil shipping by rendering inoperable the bases from where they are made?
Lord Trefgarne: My Lords, as the noble Lord will be aware, we never discuss in detail our intelligence arrangements. However, the noble Lord may be assured that the more general answer that I have already given applies to the particular.
Lord Gladwyn: My Lords, may I ask the Minister whether in his view it is really out of the question for the Security Council to constitute some force under the auspices of the United Nations for patrolling the Gulf, which of course it is fully entitled to do under the United Nations Charter? If so, will they consider urging Sir Brian Urquhart to rejoin the United Nations for a period in order to preside over such an admirable operation?
Lord Trefgarne: My Lords, we have no difficulty in principle with the idea of a United Nations force. Indeed, we contribute to United Nations forces of other kinds around the world. However, we see very considerable practical difficulties in the way of a United Nations naval force of the kind that I think the noble Lord has in mind. There has never been such a force, as I am sure the noble Lord will be aware, and the difficulties of forming and operating one are formidable.
Lord Kennet: My Lords, is this not, then, the best opportunity to commence?
Lord Trefgarne: My Lords, there are powerful arguments against commencing something which is almost certain to prove impossible.
Lord Orr-Ewing: My Lords, is my noble friend aware that according to reports in the newspapers there appears to have been a lapse in the threat from mining and that, to some extent. the threat has now switched to fast patrol boats armed with surface-to-surface missiles? If this is true, are we co-ordinating activities between the various allied nations in that part of the world against this threat as well as we did against the mining threat?
Lord Trefgarne: My Lords, my noble friend is certainly right when he says that the threat faced by our forces and indeed by the other forces in the region is a continually changing one. My noble friend may be assured that we keep the changing threat under careful and continuous review and adjust our arrangements accordingly.
Lord Paget of Northampton: My Lords, is not the position in the Gulf that every single warship there is subject only to the commands of its own government and that its duty is to provide for its own security? In the circumstances, are we not astonishingly lucky, and have we not much on which to congratulate the command there, that ships have not sunk each other yet?
Lord Trefgarne: My Lords, as the noble Lord, Lord Molloy, pointed out, there is considerable interchange of information between the commanders on the spot to avoid just the eventuality that the noble Lord anticipates.
Lord Irving of Dartford: My Lords, can the noble Lord confirm that a decision has been taken to reduce the number of Royal Navy minesweepers in the Gulf and to co-ordinate the operations of those that remain with the Belgian and Dutch ships? Following the call from the commander of the French naval forces in the Gulf for his ships to protect merchant ships of all flags, can Her Majesty's Government say whether any plans to change the rules of engagement have been issued to our forces in the area?
Lord Trefgarne: My Lords, as the noble Lord will be aware, we do not discuss in detail the rules of engagement issued to our forces on the spot. But, so

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far as I am aware, there has been no recent change in those rules of engagement. As for the earlier part of the noble Lord's question, the answer is, no.
Lord Mayhew: My Lords, would the noble Lord not agree, however, that in the Gulf, as in Lebanon, the Americans take unilateral action and European governments are dragged in one by one without any apparent co-ordination of policy? Would he say whether the Government are satisfied with this? Have they raised questions of policy co-ordination early on, and did they do so in the Western European Union?
Lord Trefgarne: My Lords, I can assure the noble Lord that we have not been dragged in, as the noble Lord says, by anyone. We are there because we chose to be there to protect British shipping and other qualified vessels.
Lord Molloy: My Lords, further to the point made by the noble Lord, Lord Orr-Ewing—I understand that I cannot expect a detailed answer—might some consideration be given to rendering inoperable the bases from which these very venomous attacks are made on naval and civil shipping, causing so much damage?
Lord Trefgarne: My Lords, we are there to try to reduce the temperature, not to increase it. I am not sure that the course that the noble Lord proposes would necessarily contribute to that end. We are anxious to ensure, so far as we can, that British shipping and the other vessels that are qualified for the protection of British forces in the area get as much protection as we can provide. But we are not concerned to raise the temperature of the situation in the way that the noble Lord's action might.
Lord Kennet: My Lords, as the Soviet Union has been urging a United Nations force for the last six months, can the noble Lord state what are the reasons which make him think that it might be impossible to get one?
Lord Trefgarne: My Lords, that is, if I may say so, a very comprehensive question. The answer would be a somewhat lengthy one, perhaps unduly trespassing upon your Lordships' Question Time. But for example, co-ordinating rules of engagement would be a very difficult matter.

Business
Lord Denham: My Lords, it may be for your Lordships' convenience to know that the Committee stage of the Local Government Bill will be adjourned at approximately 7.30 p.m. for approximately one hour and that during this adjournment the Code of Local Government Audit Practice for England and Wales and the Food Protection (Emergency Prohibitions) Order 1988 will be taken.
Liverpool Exchange Bill [H.L.]
Read a third time, and passed, and sent to the Commons.
City of Westminster Bill
Read a second time, and committed to an Unopposed Bill Committee.

Local Government Bill
3.3 p.m.
The Minister of State, Department of the Environment (The Earl of Caithness): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(The Earl of Caithness.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clause 1 [Defined authorities]:
Lord Dean of Beswick Lord Dean of Beswick moved Amendment No. 1:
Page 1, line 9, at end insert ("or designated authority, as the case may be").
The noble Lord said: I understand that in the groupings Amendment No. 4 is coupled with Amendment No. 1, and with the Committee's permission I shall speak to both amendments at this point. The purpose of the amendments is to provide for some local flexibility instead of the blanket competition regime which the Bill imposes. It would permit some local variation in the competition. This would be entirely subject to the Secretary of State's approval.
We believe that the need for the amendments arises because the Bill does not recognise that local authorities are at different stages with competition—some already have experience of it—that it would be far more efficient if local authorities were given the chance to proceed on the basis of the current state of the art locally, and that where problems with competition arose, probably of a minor nature, the authority should be able to apply to the Secretary of State for a variation order to allow it to cope with the problem in the most practicable way.
Authorities will have to proceed with competition on a uniform basis. The consultation paper issued by the Department of the Environment on the phasing of competition under various defined activities made it clear that these would be phased in, not in relation to the local authorities' present position but simply by reference to alphabetical order, which I suggest is not the best way of proceeding. This could create some rather absurd situations. For example, authorities may well have a fully detailed specification and have measured items in respect of ground maintenance, but nevertheless will be

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required to implement competition on, say, catering before that. This amendment would allow them to put a scheme to the Secretary of State so that they could substitute one activity for the other.
In addition, the amendments allow for flexibility so that account could be taken of the views of the local contracting industry. Contractors may be geared up for a particular service, but may find that authorities have put out to tender another service simply because of the listing in alphabetical order. In addition, authorities may have some practical experience on tendering in some of the service areas. Often it is the case that local authorities will have engaged in competition on some parts of their service delivery, and surely it would make sense if they were allowed to enter further competition in this area rather than have to start new areas once again because of the alphabetical listing.
Another major consideration is the way in which local authorities are decentralising their services and attempting to go local on a corporate basis. If these amendments were agreed, authorities would be able to put a scheme to the Secretary of State whereby they could tender across a range of service areas on a neighbourhood or area basis, rather than have to arrange their tendering by function and completely foul up the development of a corporate local approach.
It is extremely worrying that the Bill as drafted does not provide for any formal system for local authorities to seek a variation in the competition arrangements in the light of subsequent experience. It is unlikely that it will be necessary for local authorities to apply for a complete exemption in respect of any service, but there may be minor parts of it where it proves very difficult to provide satisfactory competition: for example, in respect of police work.
The Bill provides for catering in police stations to be subject to competition. There are grave reservations about this, but should it prove to be satisfactory generally it is possible that in some higher risk areas an exemption will need to be sought because of conditions there. A similar situation could arise in respect of ground maintenance requirements. As many of the competition areas are entirely new it is impossible to anticipate what problems may arise. It is therefore wholly reasonable that there should be a formal scheme to seek variations in the light of practical experience.
The following provides some examples of potential problem areas. Sheltered workshops provide some service to local authorities but will almost certainly not be able to compete on commercial terms, and special exemption may need to be sought to allow these establishments to carry on. Some services are provided by local workers in specific instances. For example, on estates residents are employed to clean staircases and walkways. This has been done to improve tenants' identification with the estates and to reduce crime and vandalism. Those who have experience know that this particular type of activity works well.
Some co-operatives have been set up for social and commercial purposes and may not be able to compete upon normal commercial terms, especially in the early development years. A part of one of the services may have been traditionally reserved for disabled employees. They would not be able to compete on commercial terms. Those of us who have experience of this type of activity know that it is often used (not only as depicted in the Bill) for occupational therapy and is tremendously successful.
A caretaker's duties may be largely cleaning or related to some other defined activity and they are therefore not exempt. It is however important that their services should be retained for security purposes. That may arise in a village school, cemetery or park, or areas especially vulnerable to damage and vandalism. Having been an inner-city MP I can give some outstanding examples of schools with no resident caretaker where vandalism has taken place but where on the institution of a caretaker it has either been controlled or disappeared completely.
They are some of the points that I wish to make about those parts of the Bill. I think the amendments are worth while and I shall be interested to hear what the Minister says when he replies. I beg to move.
Lord Hylton: The Committee will be grateful to the noble Lord for moving the amendment. I should like to ask the Government whether there is any de minimis provision written into the Bill. I ask that question because I see that "parish councils" are included on page 2 at line 19. It so happens that the parish council where I live retains a footpath warden for the princely sum of about £20 a year. In return for that payment the individual concerned does work worth far more than £20. Is it seriously proposed that the parish council should put this work out to tender to see whether someone will do it completely free of charge? That is what I have in mind. I hope that the Government will have a helpful answer to the question.
3.15 p.m.
The Earl of Caithness: It may be helpful if I begin by explaining briefly the way in which the Government have proposed that the competition provisions in Part I of the Bill should be implemented. My department issued a consultation paper on the matter on 2nd November of last year, with a closing date for comments of 31st January. Similar papers were issued by the Scottish and Welsh Offices at much the same time.
Under the Government's proposals local authorities are split into groups on an alphabetical basis. Each group has to expose its different activities to competition by 1st April 1989. The groups then expose other activities to competition at six-monthly intervals, so that for all authorities the implementation process would be completed by 1st October 1991. The only exception to our proposed general phasing programme is in respect of ground maintenance. There we have to recognise that the capacity of the private sector is especially limited.
Therefore for ground maintenance we have proposed that all authorities should have to expose at

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least 10 per cent. to competition by 1st April 1989. That figure should be increased by 10 per cent. steps at six-monthly intervals so that all activities are exposed to competition by 1st October 1993.
The Government's proposals have been criticised because of the random way in which we have proposed grouping authorities and because the programme is laid down centrally. I should perhaps remind the Committee that before we published our proposals some people said that we would implement Part I in a way that favoured contractors, by picking and choosing between authorities so as to offer contractors what they regarded as the best pickings. The objectives of our proposals are to expose services to competition as quickly as possible but at a pace with which the authorities and contractors can cope. I am afraid that we can only achieve those objectives if we impose a programme from the centre. If each authority is allowed to draw up its own scheme, we cannot ensure that all the authorities in a particular area do not choose to expose the same service to competition at the same time. If that happens contractors will he swamped by invitations to tender and in many cases there will be little or no competition.
I appreciate that the amendment moved by the noble Lord, Lord Dean of Beswick, seeks to give the Secretary of State the power to modify the schemes that authorities draw up. But operating with such a system would be a nightmare. For example, if all the Labour-controlled boroughs in London put in the same local scheme, which is not inconceivable considering their opposition to competitive tendering, how would my right honourable friend proceed? On what criteria would he modify or reject the scheme? Would he not be wide open to challenge whenever he did so?
We shall of course consider carefully the comments made on our consultation paper on implementation. The closing date for those comments, as I said, is 31st January of this year. I should be misleading the Committee if I gave the impression that we see simple ways to provide significantly greater opportunities for local flexibility in the implementation of the programme.
The noble Lord, Lord Dean of Beswick, mentioned some areas which are to be contracted out. I think that he mentioned catering and ground maintenance. Similarly, he drew attention to those who might be employed by the local authority, such as the disabled. As the Committee will be aware, a great deal of what he said on those matters is subject to detailed discussion on amendments which are on the Marshalled List. Perhaps when we come to it, that stage will be the moment to go into such detail.
However, I should point out that in the case of functional work, which constitutes the vast majority of the work carried out by direct labour, the Bill would provide the Secretary of State with extremely flexible powers to decide where and at what rate competition is to be phased in.
Clause 15(6) permits regulations under Clause 6(3) to make,
"different provision for different cases or descriptions of case (whether for different areas, different defined authorities or kinds of
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authority, different defined activities, different kinds of work falling within the same activity or",
as the Bill puts it, "otherwise". I do not believe therefore that the amendments along the lines proposed are necessary.
What would be added by the amendments would be an invitation to the Secretary of State to consider a shoal of schemes for phasing in, put forward no doubt by every authority in the land. I remind the Committee that there are some 406 principal authorities in England alone. If the Secretary of State decided to proceed in that way, and the amendments, perhaps inconsistently, do not require him to, he would create a bureaucratic nightmare not known outside the central planning bureau of the Communist bloc. Of course my right honourable friend will consider what use should be made of Clause 15(6) in the light of responses to the consultation paper. However, we must ensure that the implementation scheme is simple, readily comprehensible and as certain as possible. That means, as I have already said, that the scope for local flexibility is bound to be a bit limited.
The overriding aim must be to deliver competition and the savings to ratepayers which will flow from it as soon as possible. That takes me onto the point raised by the noble Lord, Lord Hylton. We are concerned with savings to the ratepayers. He mentioned the case of a parish council with a small contract. He will I am sure be aware of the consultation paper where we propose a de minimis exemption of £100,000, so I am sure that a lot of his worries have now been allayed.
Lord Graham of Edmonton: The Minister has given a most disappointing reply. I shall try to summarise what he said. First, he said that the amendment is not necessary because there are other provisions in the Bill which will do what it seeks to do; that is, to take account of the variety of circumstances that apply to different authorities and the local availability of contractors, of which the Minister will take account if he is prevailed upon to do so. Nevertheless, he wishes to lay down blanket legislation. He speaks with some authority about the Communist Party and monolithic structures. What he is doing is to begin at the very beginning by laying this down.
It is very interesting that he said that everything was being done in order to create savings to the ratepayers. I have news for the noble Lord, and his ministerial colleagues beside him will nod their heads. What local government is about is services to the ratepayers as well as how much they cost. We on this side of the Committee are appalled when looking at the democracy of local government and the responsibilities of local councillors. From their experience they have a wide and deep knowledge, a caring knowledge, let me say, of the impact of what the Government are seeking to do in these matters.
I am sure that in this role the Minister will do as he has done in other roles he has filled with distinction in this Chamber. He will very quickly get to grips with the reality on the ground inside the 400 local authorities to which he referred. I can assure him that there is a great deal of difference between the briefs

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prepared for him in the Department of the Environment and the real world outside. I invite him to go there.
The noble Lord spoke specifically about the London local authorities or Labour authorities as likely in some way to take advantage of what this amendment seeks to do. If they are the only councillors who are concerned about their ability to fulfil the remit in this Bill, I should be very surprised indeed.
The amendment does not seek to drive a coach and horses through the Bill. It is not a wrecking amendment. It is an amendment in the spirit of the Bill. The Minister and his colleagues in both Houses have said, first of all, that they intend to open up local services to competition. There is nothing in the amendment which seeks to negative that view. It seeks to give to the Minister the benefit of hindsight. The system is monolithic and it is still laid down that local authorities must comply with the time-scale by a certain date on certain services. I can well envisage, as my noble friend Lord Dean of Beswick has illustrated, that from their own experience they will want to say to the Minister, "Will you please, in accordance with this amendment, exempt from this part of the Bill for such period as you may determine"—that is, the Minister may determine—"work defined within a defined activity or such proportion of such work as you may determine?"
We are saying to the Minister, "Please listen reasonably to a case which has been put by people who are facing desperate circumstances." I can assure the Minister that that is so. I am not talking just about inner city authorities. I am talking about every councillor in every authority who is faced with a nightmare, as the Minister said. It is a nightmare for a councillor on a local authority to try to do what his local people have elected him to do; that is, to deliver the services.
Speaking to the noble Lord, Lord Boyd-Carpenter, perhaps I may say that I am sure that in his own way he will be making a speech to which I shall listen, as I always do, with care and attention. Then I may be able to hear it!
The councillors and the local authority associations all recognise that they need some opportunity to make a case. If this amendment were carried it would certainly not have any executive authority because the powers the amendment seeks are powers which would be left in the hands of the Minister alone.
Perhaps I may give the Minister one practical illustration. About three of four weeks ago I went to visit a school in a neighbouring borough to mine, Waltham Forest. My borough is Enfield, on one side of the Lee Valley, and the school is on the other side of the Lee Valley. I went to a school in Chingford, Chase Lane school, to see how their school meals were operated. I am bound to say that I was very impressed both by the quality of the meal and also by the dedication, care and genuine concern principally but not exclusively of the women who work in that service.
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I do not know the time-scale, but they are faced with having to operate to a time-scale. I am absolutely certain that when that local authority has to get down to the nitty-gritty it could very well be that for its own good reasons it is jealous of the services it is providing to the children who are enjoying those school dinners and to their parents. Those dinners are certainly subsidised. The ratepayer interest could very well come in from the point of view of saying "If what you want is a meal that costs less we can get it but it will be of a much lower quality". That authority, those ladies, those parents and children are deeply affected by what this amendment calls flexibility, providing the Minister and local authorities with an opportunity to put into practice what the Government want.
When the Minister uses a phrase like "bureaucratic nightmare" he is really saying that it is a big problem, but "I can get rid of a big problem by having three or four lines in a Bill, by driving them through with a parliamentary majority; and that is the end of it." Local government in 1988 is a nightmare; it is a big problem. Outside in every council are groups of people of all political persuasions who recognise the political reality of the parliamentary arithmetic. It is not a question of throwing out the Bill or doing great damage to it in this amendment. We want the opportunity for the Minister to sit down and listen to people's cases. I very much hope that the Minister will take the further opportunity to listen to what we have to say, to listen to the associations and to come back with a better deal. Otherwise I can see that quite early on in this Bill there will be a clash of opinion.
Baroness Blatch: This amendment is no more than a licence for prevarication. There is no doubt in my mind that what is being asked for is an opportunity to use this time, not for getting a better service, but to thwart and prevaricate. For those authorities which are both philosophically and politically opposed to the idea of opening their services to more competition, it gives a greater opportunity to delay what we believe ought to be brought about.
I find it very interesting that the Minister is being invited to meddle even more in the affairs of local authorities. The noble Lord, Lord Graham of Edmonton, would argue strongly, if this had been a clause in the Bill, that the Minister had too many powers to interfere in day-to-day operational services. I find this a strange contradiction of intent on the part of the noble Lord.
There seems to be some confusion as to what the Bill is about. The requirements on local authorities are simply to prepare their services: first of all, to determine the priority of their services; secondly to determine the level of those services; thirdly, to draw up specifications requiring the level of services to be delivered; and then simply to put them out for open competition. If the school which was so well described by the noble Lord is producing a quality service at a cost which can be afforded by the ratepayer, it may well be that that tender will be won by the very people doing the job.
If the market is asked, "Here is the level of service we require. We wish it to be done at the best possible

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cost price", thereby liberating resources for those parts of the services where we want them to go—back to the classroom, back into care of the elderly, back into care for the young—then this Bill is to be welcomed and the amendment must be rejected.
I am also interested in something which has been said not only in this Committee but in my local authority and many local authorities across the land. It is that somehow workers who work for public authorities are more honest, that they do not vandalise and that they are more trusting and more caring. It has been said that people who work for private contractors are deemed for some reason to be dishonest or subject to vandalising their workplaces. That has been implied by much of what has been said. Whether it is people who work, people who cater, people who clean our schools or people who care for the elderly, it is people we are talking about. There are good, had and indifferent people both in public authorities and in private authorities.
If the Bill is to be enacted and to be effective, then local authorities need first of all to know what service they want and the standard they require before putting it out to open competition. More significantly, they need to make sure they receive that service. If they do that properly, the tools to make sure that that happens will be built into any contract that is made up between a local authority and a contractor. The tools are: withholding of payment if a service is not delivered, penalty clauses and a host of other tools that can he employed to make sure that a level of service is being delivered properly.
I am pleased about the phrasing of the Bill. The idea originally was that all local authorities should put all services that were named in the Bill out to tender at the same time. The phrasing of the Bill is absolutely right. It really does mean that a local authority at least concentrates on one particular service and is given six months to do that in order to determine the level of service, prepare the specifications and go out to tender.
If in the private sector companies are not ready to pick up that work, it will be the direct labour of each authority that will win the contract until the availability of labour is out in the private sector and it can compete favourably.
The Bill will not oblige all local authorities to put all their work out to the private sector. The Bill states that local authorities need to demonstrate more openly to local people that the best possible prescribed service is being obtained at the best possible price, thereby releasing resources which can be properly applied to more needy parts of the service.
3.30 p.m.
Lord Graham of Edmonton: Before the noble Baroness sits down, will she confirm that I heard her correctly when she said that this Bill will not compel local authorities to put all their services out to tender? If that is the case, I draw the attention of the noble Baroness to Clause 2(3) at the top of page 3, which states:
"The Secretary of State may by order provide for an activity to he a defined activity by adding a paragraph to those for the time being appearing in subsection (2)".
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Surely the noble Baroness is not so naive as to believe that it is not the Government's intention eventually to put out many more services to tender than those which are specified here?
Baroness Blatch: Of course it is the Government's intention to make sure that all local authority services are subject to competition, but what is important is the requirement on local authorities to make sure that the defined level of service is open to tender. It may well he, and I am sure will be, the case in many local authorities that direct labour will get the work. If that direct labour is not competent, efficient or effective both in terms of the cost and the operation of the service, the work may well go to the private sector.
We must not lose sight of the fact that we want to have the most cost-effective and operationally effective services; that is, we must care about the level of services as well as the cost of the services. The body that carries out the work should be the most appropriate one, whether it be public or private.
Lord Parry: Having listened very carefully to the progress of this amendment, I understood the noble Lord, Lord Dean of Beswick, to say that we were very carefully considering the balance between public and private contracting and making certain that those elements of the public service that were in competition were able to compete properly for the services. There is no intention on this side to question the concept of competition in order to ensure that people in a local area get the very best service.
I rise to speak at this time because some of us believe that in all parts of the country and in various local authorities of various political opinions there are local councils that are deeply concerned that the overall provision will go much further than that. They are concerned that it will create a situation where true competition between the private and the public sector will not be possible. That is why this amendment seems to attract the support that it does.
Baroness Phillips: I should like to follow what my noble friend has said. Unless things have changed, local authorities were bound to accept the lowest tender. Even if they do not do so they will still be attracted by the lowest tender. I wish to mention an example of contracted labour. I went to a conference in one of the universities quite recently; it shall be nameless. The meals were not good and the university was dirty. When I questioned that I was instructed by the person organising the conference to write to the vice-chancellor. I was told that the university was now obliged to use contract labour.
I am not criticising the people who work for the contractor, but today they will be working in the university or the town hall and tomorrow they will be working for Joe Bloggs down the road. They are paid appallingly. It is always worth checking how much contracted cleaners receive. How else can one save on this?
The noble Baroness appears to be living in a land that most of us do not know about. We are trying to protect adequate services. I was speaking to the people who provide services in schools the other day,

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as my noble friend on the Front Bench has mentioned. They are very worried indeed because they feel that they have given a good service; and they have given a good service. They are worried that on some given day they will all be told that this will now be a different service altogether. Will it be of the same quality? That is very doubtful.
Lord Bellwin: Should we not, right at the beginning of these deliberations, get a few of the basic facts clearly understood? As my noble friend Lady Blatch said, the Bill is really about a local authority itself specifying the level of service which it desires in a written form as a specification. It does not have to be higher or lower than the local authority feels is necessary, so long as it is borne in mind that somebody has to pay for it at the end of the day.
However, once the specification is made and the contract goes out to tender, it is open to everybody to be able to tender, including an in-house organisation. But the virtue of this is that with the specification clearly laid down the authority in a management sense then has the ability to monitor that level of provision and to make sure that it is carried out.
What exists at the present time? I need no lessons in the reality of what exists at the present time or in local government. At the present time in many authorities the in-house team carries out the work, and if there are complaints they are passed on to it. But if it does not carry out the work adequately, the sanctions upon those who do not carry out the work adequately are limited. If a private sector company contracts to provide the service and it does not carry it out, it is then for the authority to impose its own penalties either by way of a fine or indeed in the end by cancelling the contract and getting somebody else to do the work. That is an option which is not available to those who do not go out to tender.
I think the case for what the Bill sets out to do is overwhelming, because any authority whose only concern, as we are constantly told by Members of the Committee opposite, is to ensure that services of a good standard are provided should really not mind at all who actually provides those services. It should ensure that a good standard is provided. I submit that among other aspects of what the Bill entails local authorities will receive the chance to do just that in a way they have not been able to do in the past.
The noble Lord, Lord Graham of Edmonton, said that it is a nightmare to be a councillor trying to provide services in local government today. If local government concentrated on the role given to it by Parliament and was not sidetracked by so many of the other undertakings on which it has embarked, perhaps it would not be so much of a nightmare. Indeed, perhaps it would be rather more like it was—I say this with the Committee's forbearance—when I was trying to provide local services in the best way I could. My local authority did not get itself involved in the national issues of the day or try to take over and tell government what they should be doing and the way in which they should be doing it. That is somewhat of an aside, but I think that we shall get many such asides in the course of these deliberations.
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Finally, to return to the amendment, I think, as my noble friend Lady Blatch said, that it is totally impracticable. I remember standing at that Dispatch Box for some years through 26 Bills and being told by noble Lords opposite again and again that the intention that the Secretary of State should have the last word really was anathema to them and how wicked that was. The amendment asks for that same facility to be provided. It does not make sense. If we think carefully about what it would entail and what it would lead to, it does not—without putting it in too harsh a way—make very much sense. I hope that the Committee will not accept the amendment.
Lord Dean of Beswick: Perhaps I may first say to the noble Baroness, Lady Blatch, that speaking for this side of the Committee, and I am sure for the whole of the Committee, there is no suggestion in any of the amendments or in our minds that there is to be found less integrity, honesty and diligence in those who work in the private sector than in those who work in the public sector. If that has been said, we totally disown it.
I believe that the Minister implied that when the Bill becomes law the responsibilities will be phased in alphabetically. I assume that that means that if the name of a local authority begins with a "Z"—I do not believe we have one—that authority will be very lucky indeed.
A noble Lord: Zetland Council.
Lord Dean of Beswick: If the Minister is right in interpreting the Bill in that way, although it is not spelt out in the Bill, that is a very funny method. If you are at the back end of the queue alphabetically, you have a longer time to get your house in order. I do not believe that that is a good way of doing things.
I was surprised when the Minister dwelt substantially on the question of consultations. If I understood him correctly, the consultations must be completed by 31st January. I believe that we are being asked to enact legislation before the facts presented during consultation have been digested. That is a peculiar and silly way of carrying out our responsibilities. If the reason is that the Bill must meet a timetable, I suggest that the Government seriously consider slowing up some of their legislation in order to deal with the Bill in a tidy manner and so that it can be debated properly.
I am grateful for the courteous way in which the Minister replied to the amendment. It is what we have come to expect from him. However, I was surprised when he tried to draw the conclusion and create the impression in his reply that all local authorities are alike. Nothing could be further from the truth. Even local authorities of the same size and complexity sometimes need different approaches to their problems. The implication may be that only Labour-controlled authorities have problems, but so far as I am aware these amendments have the support of all local authority associations, whether Labour, Liberal or Conservative. There is great concern over what is taking place. I do not believe that the amendment is a recipe for prevarication or that it is designed to thwart the Government, as the noble Baroness, Lady Blatch, has said.

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I am mindful of the intervention of the noble Lord, Lord Bellwin. We are old opponents in the best spirit. At Second Reading he said that it was open to local authorities, if the private sector failed to perform, to take the offending private contractor to task and recoup their losses. In the Second Reading debate I quoted some outstanding cases in which local authorities have had to find huge sums of money to rescue contracts when a private contractor was not able to deliver and where it would have cost inestimable sums of money to go to court, recoup the losses and still do the job. It is therefore not true to say that there is an open door to court which the local authority may use to get full recompense. There are dozens of cases which show that that is untrue.
The noble Lord, Lord Bellwin, told the Committee that when he was a Minister—he is entitled to fall back on his experience; one would expect nothing less of him—the Opposition in another place said that the Secretary of State was taking too much power to himself. I believe that the amendments would give the Secretary of State power to digress from the rigid approach which the Bill would force on him. We are of the opinion that that is necessary because of the complexity and variety of local authorities.
The noble Baroness, Lady Blatch, spoke of her experiences on the council in Cambridge. With all the good will in the world—no one would deny that Cambridge has its problems—can one say that a councillor living in Cambridge will be familiar with the problems of an inner-city area such as those found in Camden, Manchester, Leeds or Birmingham? I found when I came to another place from Manchester that there is almost what one would call a big fence around local authorities. They are not particularly aware of the problems of other areas because they do not have to live with them. I do not believe that a councillor on Cambridgeshire County Council would be dealing with the same problems as are to be found in, say. Waltham Forest, Birmingham or Sheffield.
I do not believe that councillors would go in for spurious applications to the Secretary of State so that he had to deal with them individually. I am disappointed that the Minister cannot give a bit more in this case.
3.45 p.m.
The Earl of Caithness: I am grateful to the noble Lord for allowing me to say another word. As he and the noble Lord, Lord Graham of Edmonton, fully appreciate, authorities will be able to take account of local circumstances in drawing up the specifications which we have been discussing and deciding how the work should be packaged provided that they do not prevent or distort competition. That is one of the purposes of the Bill.
As I said, they will have to do so within the implementation programme which we have set. It is consultation on the implementation of the Bill that lies at the moment with the local authorities. Consultations about the Bill started three years ago, in 1985. The consultations which are being considered at the moment do not in any way
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prejudice what is before Parliament at the moment. That overrides the consultation document, and rightly so.
From what I have heard about the phasing of the proposed contracting-out, some of the replies have been extremely favourable. Local authorities are saying that, rather than the situation appertaining under the amendments where there would be a series of schemes put forward to the Secretary of State, they will at least know where they stand. They will know that they have a set timetable. They will know what they have to do by certain dates. That is much the best way to proceed.
The noble Lord, Lord Graham, was right to say that services matter. If the school which he mentioned at Waltham Forest produces good school meals efficiently and cost-effectively, it has nothing to fear from competition. However, looking at Ealing, one sees that it has contracted out its meal service and that it has much better value for money. It has saved £500,000 and produced a much better service. Is that not right for the taxpayer and the ratepayer?
I suggest that there are lots of examples like those. They do not come from low pay, as the noble Baroness, Lady Phillips, said. All the evidence—independent evidence—that we have on refuse collection shows that the majority of savings are coming from better efficiency, better utilisation of the working day and better utilisation of the machinery employed by the contractors. So there is lots of scope. I hope that all sides of the House agree that it is right that the taxpayer and the ratepayer should receive a good service which is laid down and controlled by the local authority but which has been put out to tender in order to achieve the best value for money.
I was extremely grateful for the contribution of my noble friend Lord Bellwin, with his great experience. The Committee realises that in relation to local government his experience in Leeds is considerably greater than my experience. I urge the Committee to bear in mind his argument that the provisions in the Bill are superior to those in the amendment.
Lord Dean of Beswick: I thought I was giving way, but before the Minister sits down would he care to deal with the point that I made as to whether the provisions are to be introduced alphabetically? I think that is very important.
The Earl of Caithness: Alas I do not think I have the consultation document with me, though I certainly had it this morning. The authorities are divided up alphabetically, but that does not necessarily mean that Z will have to contract out all its works after A. It will be phased between the two, so that A will be contracting out some services, as will Z, but they will not necessarily be the same services. However, by October 1991 all the services will be contracted out throughout local authorities.
Lord Graham of Edmonton: Let us suppose that the service that a local authority is invited to deal with is not the one which to its knowledge it believes it would be preferable to deal with first. The Minister has outlined a scheme—which I can understand—which means that not all authorities will put out tenders for

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all services at the same time. I can appreciate the mischief that might be made of such phasing. The London Borough of Enfield or of Haringey might be told that it has to contract out a service which is not the one that it is best able to contract out among a totality of six services.
This amendment seeks the flexibility to allow a variation between the categories of service which the Minister wishes local authorities to have contracted out by the due date. The amendment is asking for the Minister to listen to the case for flexibility.
Baroness Fisher of Rednal: There are perhaps two relevant points which have not been made this afternoon and which are giving great concern to local authorities. Under privatization—or whatever one likes to call it; the services being taken away from local councils—there is a problem concerning the superannuation of many employees who have worked in the services for a great many years. Before they start thinking about privatisation, councils have seriously to consider that aspect and the recompense that they must pay to those employees. That is a very serious problem with which most large local authorities are confronted. In addition, there is the unemployment that will arise from those departments which close down. In those circumstances do the employees get redundancy pay and their subsequent pension?
Another important point is that many local authorities recognise that there will be privatisation—some have already introduced it—and feel that there needs to be a safety net if the privatisation scheme falls down, which could happen. For example, there was a large contract for school cleaning in Birmingham which was failing miserably. Not only teachers but school inspectors and parents were complaining. What happened was that all the school cleaning staff employed by the local authority had previously been dismissed and the contractor was now saying "Let me pay my penalty price and get out of this contract". This was a difficult situation for a local authority which had discharged all its employees in that area of the city but had to make facilities available very quickly. Such a safety net is an important provision for a local authority when for some reason or other a private contractor fails to honour the contract.
Those are two very valid points which a local authority has to consider seriously when it embarks upon privatisation. As other speakers have said, there is plenty of privatisation already taking place in local authorities without compulsion and without the provisions contained in this Bill.
The Earl of Caithness: Perhaps I may just clarify the matter for the Committee. The word "privatisation" takes the discussion into a different sphere. We are not talking about privatisation but about getting a competitive tender. If the direct labour authority happens to produce the lowest tender because it is the most efficient provider of the service—or indeed not necessarily the lowest because it is not incumbent upon the local authority to accept the lowest tender under the provisions of the Bill,
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although they have to say why they do not do so—that is quite right from the point of view of the taxpayer and the ratepayer. We are talking about putting services out to tender to make sure that we are getting value for money for the services specified by the local authority. I do not think that that can be classed as privatisation.
To answer specifically the point made by the noble Baroness, Lady Fisher of Rednal, about the possibility of redundancy, of course there are redundancy costs as a result of an authority losing work that has been done in-house because it can be done more efficiently outside. These costs will have to be taken into account by the local authority.
With regard to her second point about a safety net, I think we are straying slightly from the amendment before us. Further down the list of amendments we come to the matters raised by the noble Baroness, which we shall be discussing in much more detail later on.
Lord Lloyd of Kilgerran: It may help the Minster to come back to Amendment No. 1. with which we are now dealing. The question is whether at the end of line 9 on page 1 we agree to appointing a designated authority as well as the defined authority—a local authority is defined later on in the same clause of the Bill. The amendment asks whether we should appoint a
"designated authority, as the case may be."
What I found attractive about the speech of the noble Lord, Lord Graham of Edmonton, was his emphasis on the necessity of getting to grips with realities. That seems to me to be a very commonplace phrase, but what went through my mind was the circumstances in which we would deal with the realities. Then the noble Lord, Lord Bellwin, with his great experience, mentioned the world "realities". After he had spoken I wondered whether the Minister had in mind the reality of the effect of this amendment on my own country of Wales. Many Members of the Committee may want to know why I should have been inspired at this time of the afternoon to speak about Wales after the noble Lord, Lord Bellwin, had done so. The noble Lord is smiling so sweetly at me that I must refer to another time when this Chamber dealt with a subject concerning Wales. At that time he was not supportive and I expressed my surprise that a noble Lord who had a double "1" in his name should not have been supportive of something of concern to Wales.
I have considerable experience of local government in Wales in a general sense. I have a relative who is the borough surveyor for three great counties in Wales. What consultation has there been with regard to Wales, and what has been the effect of it on the realities of Welsh local government?
Lord Dean of Beswick: I have raised the question of the alphabetical introduction of the provisions of the Bill. However, the answer that the noble Earl gave me was not in accord with the information that I have received from various sources. Am I therefore to understand that no decision has been made? Is it correct to assume that if one's local authority is

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Aldershot one is unlucky and if it is Yarmouth one will be very lucky indeed. It is a very peculiar way to introduce legislation prior to the final consultation and proposals.
I have listened with great care to the various points that the Minister has made. We shall be discussing some of the points made by my colleague in a previous speech much more thoroughly at a later stage in the Bill. However, my noble friend Lord Graham in his second intervention touched on the nub of the matter we are considering. If the Bill becomes an Act, the authority will be required to provide a specification for its services. It may well be that the authority is at almost the final stage of presenting specifications for an extensive service that it is carryng out. But under the Bill it can be deemed to have to provide a specification for a service in which it may not even have been involved. I find that a complete contradiction.
The amendment allows the authority to make an approach to the Secretary of State for the Environment to ask for an exemption from particular clauses in the Bill. I do not know whether we shall return to the subject at a later stage in some form, but on the basis of what the Minister has said I am prepared to test the opinion of the Committee.
The Earl of Caithness: Before the noble Lord does that—that is of course up to him—perhaps I may answer the noble Lord, Lord Lloyd of Kilgerran. Of course my noble friend Lord Bellwin, with two "1"s in his name, is concerned about Wales. I, with two "s"s in my name, am concerned about Scotland. My noble friend Lord Hesketh has two "e"s; that covers England as well. The consultation exercise for Wales, Scotland and indeed England was carried out in 1985 and the consultation paper on implementation which is before local authorities now is also in all three countries.
4.3 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 106; Not-Contents, 157.

DIVISION NO. 1

CONTENTS

Airedale, L.

Diamond, L.

Amherst, E.

Donaldson of Kingsbridge, L.

Ardwick, L.

Dormand of Easington, L.

Attlee, E.

Elwyn-Jones, L.

Aylestone, L.

Ewart-Biggs, B.

Banks, L.

Ezra, L.

Basnett, L.

Falkland, V.

Blease, L.

Fisher of Rednal, B.

Bottomley, L.

Gallacher, L.

Briginshaw, L.

Galpern, L.

Brooks of Tremorfa, L.

Gifford, L.

Bruce of Donington, L.

Glenamara, L.

Callaghan of Cardiff, L.

Graham of Edmonton, L.

Carmichael of Kelvingrove, L.

Grey, E.

Carter, L.

Grimond, L.

Chitnis, L.

Hampton, L.

Cledwyn of Penrhos, L.

Hanworth, V.

Cocks of Hartcliffe, L.

Harris of Greenwich, L.

Davies of Penrhys, L.

Hatch of Lusby, L.

Dean of Beswick, L.

Heycock, L.

514

Hirshfield, L.

Nicol, B. [Teller.]

Hooson, L.

Oram, L.

Houghton of Sowerby, L.

Parry, L.

Hughes, L.

Phillips, B.

Hunt, L.

Pitt of Hampstead, L.

Hutchinson of Lullington, L.

Ponsonby of Shulbrede, L. [Teller.]

Hylton, L.

Irving of Dartford, L.

Prys-Davies, L.

Jacques, L.

Ritchie of Dundee, L.

Jay, L.

Robson of Kiddington, B.

Jeger, B.

Ross of Marnock, L.

Jenkins of Putney, L.

Seear, B.

John-Mackie, L.

Seebohm, L.

Kennet, L.

Shepherd, L.

Kilbracken, L.

Simon, V.

Kilmarnock, L.

Somers, L.

Kinloss, Ly.

Stallard, L.

Lawrence, L.

Stedman, B.

Leatherland, L.

Stoddart of Swindon, L.

Listowel, E.

Strabolgi, L.

Llewelyn-Davies of Hastoe, B.

Taylor of Blackburn, L.

Lloyd of Kilgerran, L.

Taylor of Gryfe, L.

Lockwood, B.

Taylor of Mansfield, L.

Lovell-Davis, L.

Turner of Camden, B.

McCarthy, L.

Underhill, L.

McGregor of Durris, L.

Wallace of Coslany, L.

McNair, L.

Wedderburn of Charlton, L.

Mar, C.

Wells-Pestell, L.

Mason of Barnsley, L.

Whaddon, L.

Mayhew, L.

Williams of Elvel, L.

Milford, L.

Willis, L.

Mishcon, L.

Winchilsea and Nottingham, E.

Molloy, L.

Mulley, L.

Winstanley, L.

NOT-CONTENTS

Allenby of Megiddo, V.

Dickinson, L.

Allerton, L.

Dowding, L.

Ampthill, L.

Dundee, E.

Arran, E.

Eden of Winton, L.

Auckland, L.

Effingham, E.

Balfour, E.

Ellenborough, L.

Bauer, L.

Elles, B.

Beaverbrook, L.

Elliot of Harwood, B.

Belhaven and Stenton, L.

Elliott of Morpeth, L.

Bellwin, L.

Erne, E.

Beloff, L.

Erroll of Hale, L.

Belstead, L.

Faithfull, B.

Bessborough, E.

Fanshawe of Richmond, L.

Blake, L.

Ferrers, E.

Blatch, B.

Ferrier, L.

Blyth, L.

Fortescue, E.

Borthwick, L.

Fraser of Kilmorack, L.

Boyd-Carpenter, L.

Gainsborough, E.

Brabazon of Tara, L.

Gisborough, L.

Brookeborough, V.

Glenarthur, L.

Brougham and Vaux, L.

Gridley, L.

Broxbourne, L.

Halsbury, E.

Bruce-Gardyne, L.

Harmar-Nicholls, L.

Butterworth, L.

Harrowby, E.

Caccia, L.

Harvington, L.

Caithness, E.

Havers, L.

Cameron of Lochbroom, L.

Hayter, L.

Campbell of Croy, L.

Henderson of Brompton, L.

Carnegy of Lour, B.

Hesketh, L.

Carnock, L.

Hives, L.

Chelwood, L.

Home of the Hirsel, L.

Coleraine, L.

Hood, V.

Colwyn, L.

Hooper, B.

Constantine of Stanmore, L.

Ilchester, E.

Cottesloe, L.

Jenkin of Roding, L.

Cowley, E.

Johnston of Rockport, L.

Cox, B.

Kaberry of Adel, L.

Craigavon, V.

Killearn, L.

Cullen of Ashbourne, L.

Kimball, L.

Dacre of Glanton, L.

Knutsford, V.

Davidson, V. [Teller.]

Lane-Fox, B.

De Freyne, L.

Lauderdale, E.

Denham, L. [Teller.]

Lloyd of Hampstead, L.

Denning, L.

Long, V.

Derwent, L.

Lucas of Chilworth, L.

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Luke, L.

Porritt, L.

Lurgan, L.

Prior, L.

McAlpine of Moffat, L.

Pym, L.

MacFadzean, L.

Rankeillour, L.

Mackay of Clashfern, L.

Ryder of Warsaw, B.

MacLchose of Beoch, L.

St. Davids, V.

Maclcod of Borve, B.

St. John of Fawsley, L.

Malmesbury, E.

Saltoun of Abernethy, Ly.

Margadale, L.

Sanderson of Bowden, L.

Marley, L.

Sandford, L.

Massereene and Ferrard, V.

Savile, L.

Merrivale, L.

Selkirk, E.

Mersey, V.

Stanley of Alderley, L.

Milverton, L.

Stockton, E.

Minto, E.

Stodart of Leaston, L.

Montgomery of Alamein, V.

Strathcona and Mount Royal, L.

Mottistone, L.

Mowbray and Stourton, L.

Strathspey, L.

Moyne, L.

Sudeley, L.

Munster, E.

Swansea, L.

Murton of Lindisfarne, L.

Terrington, L.

Nelson, E.

Teynham, L.

Norfolk, D.

Thomas of Gwydir, L.

Norrie, L.

Thorneycroft, L.

Nugent of Guildford, L.

Thurlow, L.

O'Brien of Lothbury, L.

Trafford, L.

Onslow, E.

Trefgarne, L.

Orkney, E.

Trumpington, B.

Orr-Ewing, L.

Vaux of Harrowden, L.

Oxfuird, V.

Ward of Witley, V.

Pender, L.

Wise, L.

Pennock, L.

Wolfson, L.

Perth, E.

Young, B.

Peyton of Yeovil, L.

Young of Graffham, L.

Resolved in the negative, and amendment disagreed to accordingly.
4.12 p.m.
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 2:
Page 2, line 24, leave out ("islands").
The noble Lord said: It would perhaps be for the convenience of the Committee if we also dealt with amendments which have a bearing on the matter, that is, Amendments Nos. 11, 14, 16, 17, 24, 52 and 53.
From the Scottish point of view this is an extremely important amendment. We are dealing with something that is unique to Scotland—groups of islands which have their own local government. If the Minister has the consultation paper available he will see in paragraph 3 the reasoning of the Government that small authorities are in general just as capable of benefiting from competition as large authorities. That was the argument used by Ministers in Committee in another place. They used the unfortunate example of the Isles of Scilly in trying to make a comparison with the Scottish islands. I am sure they do not need to be reminded that the Isles of Scilly are quite different from the Scottish islands. The Scottish islands are more remote. There are more of them. And they are substantially larger in terms of geographic extent, population, and the range of functions for which they are responsible. I do not believe that direct comparison is valid.
I am very grateful to the Shetland Islands Council and the Western Isles Council for the help they have given me on this series of amendments. They are extremely worried about the difficulties that the Bill would bring to their islands. I have visited Shetland, the Orkneys and the Western Isles on a number of occasions, although not in connection with the Bill. I
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know roughly the geography of the islands. I have observed the size of some of the services that are necessary in those islands. One dust cart may easily be enough for an entire island. In some Scottish islands, unlike some of our cities, one individual can keep the streets remarkably clean.
Island services, such as those of the Shetland Islands Council or the Western Isles Council, are dispersed of necessity. They are organised separately for each island unit and, for compelling geographic and other reasons, for disparate units in the larger islands. The terrain, the climate and the dispersal of the communities dictate this pattern. There is no means by which an island council can organise its defined activities other than as a series of low volume, low value units. The economies of scale open to even quite small mainland councils are not open to an island council because of distance and transport difficulties.
An example given in another place, using that of Shetland again, concerned the problems of trying to combine a service between Fair Isle, Fetlar, Foula and Papa Stour. I am sure that the noble Earl who is to reply will be familiar with these islands and will realise the impossibility of dealing with them as one could perhaps deal with even small units on a mainland basis. Refuse collection is an obvious example. These activities can best be undertaken by local contractors without whom the service could not function effectively. But it does not require legislation for this machinery to be used. Many local authorities have one or several local contractors making an estimate every year and putting in a bid for doing the job. They are able to assess fairly accurately what is competitive and what is not.
Compliance with the existing terms of the Bill will make it much more difficult for local authorities to handle very small quantities of work. I wish this had been left out of the whole debate, but the de minimis definition that the Western Isles, Shetland and the Orkneys will need to look at all their services as one, and that they will not be able to split up into little areas will make it extremely difficult for such local authorities to comply with the Government's requirements, however stupid they may be in those cases.
The nub of this issue resides in the effect that these laborious procedures will have on the council departments concerned. The Member for the Western Isles in another place put the matter very succinctly. Islands councils have the widest range of duties in local government, but they are all undertaken on a small scale by small departments. To require within each department the separation of the client function from the contractor function, and to set up the machinery for the contractor to carry out his duties quite independently of those of the client colleagues can only be done by damaging greatly departmental cohesion and all that goes with an efficient, well run, and, if you like, happy local authority.
It is almost certain to be more costly than the present method of working. It is well known that the current Shetland estimate for street cleansing is £104,000. If this activity were to be taken alone it

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would exceed the current proposed de minimis level and would need to be subjected to competitive tender. For the purposes of this example—I have tried to find an example that perhaps the noble Earl and the Committee will appreciate—Shetland's cleansing activities cost it £104,000. A contractor may come in and offer to do the job for £90,000. What will be the effect of that? Without elaborating on the effect of the council contracts department needing to give up its machinery, perhaps having to make redundancy payments to its staff and losing the cohesion, there are other costs. If the Committee will bear with me I shall quickly try to go through them. The equivalent of two to three persons at a fairly low AP 4/5, currently about £10,000 to £12,000 a year, plus distant island allowance of about £8,200—which is all part of the argument when one is considering the islands—should be appointed to oversee the client function in relation to this activity. Somebody must surely be designated to see whether the contractor is doing his job properly.
With overheads and administrative costs, which have all been carefully examined subject to district audit, and nominal other costs at £3,500, all the advantages of the savings are lost. That would be a contractor coming in at more than 10 per cent. less than the present cost of the job, which would suggest great inefficiency in the local authority at present. I am sure the Minister does not believe that, if any efficiency does exist, it is as low as that.
I am sure that the case for the islands being excluded is very strong. I hope that the Minister will consider this group of amendments with a little more flexibility than they were viewed in the other place. I believe that other noble Lords have put their names to the same type of amendment as this. I look forward to hearing from them and the Minister's reply. I beg to move.
Lord Campbell of Croy: Half of the amendments being discussed in this debate are in my name. They have different purposes, but I agree that by grouping all the amendments together we are able to have one debate, on the three island groups, which may be convenient for the Committee.
One of the main reasons that I have put down these amendments is, as some Members of the Committee will remember, that I brought these three island groups into existence when local government was being reformed in Scotland in the 1970s. The Royal Commission, the Wheatley Commission, had not recommended that they should be separate, but that they be part of the local authorities based on the mainland. Before coming into government in 1970 I had indicated in another place that that was the way the then Conservative Opposition were thinking concerning the Wheatley report.
These three island groups—Orkney, Shetland and the Western Isles—are separate communities, considerable sea journeys distant from mainland Britain. All four of my amendments refer to those three island groups and not to other islands off the Scottish coast. As a result of the decisions taken by me in the early 1970s, these three authorities became a single tier of local government. They carry out most
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functions performed by regional and district councils in Scotland and county and district councils in England and Wales. I recognise that Amendment No. 24 may not be necessary. It explains what "islands area" means in the legislation. This is a technical term. For those who are not familiar with Scottish local government legislation, I thought that I should make it clear that it refers to islands in the three island groups only.
I should make it clear that I fully support the principle in the Bill of competitive tendering open to contractors as well as to local authorities' own work units and employees. My amendments are concerned with the way in which the principle is to be applied in cases where local authorities, in an unusual combination of circumstances, are situated entirely in islands and have many functions, remoteness and small populations.
The Government have recognised the special situation of these three island councils and the problems that can arise with them. The Government commissioned the Montgomery Committee, which reported in 1984. Most of its recommendations were accepted by the Government, especially recommendation 4 which suggested that there may be circumstances in which provisions in legislation should allow for the application of Acts of Parliament in islands' areas to be varied. In the Government's response the Secretary of State at the time—I have his document in my hand—stated:
"I accept recommendation 4, and will consider for future legislation whether it would be appropriate to ask Parliament to approve a power to vary the application of particular provisions in specified areas".
The simplest option for the Government is to make such a variation or variations and that is the purpose of my Amendment No. 52 to Clause 6. One advantage of the amendment is that there would be no question of making the Bill hybrid. Governments dislike hybridity in Bills because it holds them up. The three councils are in a category of their own and can be dealt with generally as falling within a distinct class of local authorities. That is one option for the Government and it has the benefit of simplicity.
I realise that the Government may not wish to relieve the three councils of a duty to test the market in appropriate services. Other local authorities administering remote areas and other islands might feel aggrieved and left out. My other amendments therefore offer other options.
Let us consider first what is the present practice of the three island councils concerned. They use their own squads and equipment for some of the services. They use private contractors also for other services depending on what is available and appropriate. Some islands have fewer than 100 residents and in some cases school meals have to be provided on islands with fewer than 10 children. Each group of islands consists of a number of inhabited islands, some very small and distant from the larger islands. Here is an example of some of the special circumstances where the island councils are concerned. If a contract were put out to tender for refuse collection or street cleaning, a private contractor might be successful with a very low bid. If

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the local authority had previously been responsible it would be expected to dispose of the vehicles and equipment which had been used.
Three or four years later the contractor, if he was not as scrupulous as he ought to be, could put up the charges to a great extent. He would then have little competition, unless there was another contractor—and in the island groups there are few—because the local authority would have been expected to dispose of its plant, vehicles and equipment, and in some cases it has specialised vehicles. It would be very expensive not only to provide them again, but because of the cost of sea transport, when one considers that Shetland is 150 miles by sea from its supplying port, Aberdeen. In those circumstances it would be difficult for the local authority to tender again later.
The problem does not arise in the same way in other local authorities in the United Kingdom, even though they may be in remote areas or have islands within their areas. That is because they have part of the mainland in their areas and it is not so difficult to provide healthy competition for bids from private contractors from sources near at hand. The noble Lord, Lord Carmichael, mentioned the fact that the islands councils have a wider range of functions than any other in Britain but that they have small departments. I hope that they will continue to be small and I am sure that my noble friend would not wish to see the expansion of bureaucracy.
Amendment No. 11 deals with the de minimis point. In their consultation paper the Government have indicated that at present they are considering £100,000 as the de minimis figure. I should like to say in passing that I hope there will be index-linking to provide for future inflation if and when a figure is included in the legislation.
The islands councils are seldom able to carry out a service for the whole of their area as a single operation. Usually a number of separate operations must be undertaken. On an isolated island it may be an operation for a small handful of people; for example, collecting rubbish, school meals or cleaning. Private contractors exist and where they are willing and available they should be given opportunities. On one of the small islands in one of the groups two private contractors were available and competed for a contract. They were road haulage firms. There are a few road haulage firms based in the islands because of the need for that kind of transport and the roll-on roll-off facilities. However, I hope that I have indicated the fact that it is impossible to generalise. The point of my amendment is that where there are separate operations for parts of the area, the different parts should be considered for the de minimis provision and should not be added together and included in the council's entire area.
Amendment No. 17, in the name of the noble Lord, Lord Carmichael, is similar to my Amendment No. 11. However, my amendment provides for the inclusion of the opinion of the Secretary of State, whereas the noble Lord's amendment provides for the opinion of the local authority only. I believe that it would be better if the local authority were not the
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sole judge of its case and that the Government should also agree as to what is a separate operation and falls within the de minimis rule.
In an earlier version of the amendments the noble Lord, Lord Carmichael, spelt out the fact that the Secretary of State should be the Secretary of State for Scotland. However, I believe that it has now disappeared from the amendments. In my drafting the words "Secretary of State" are used in the usual, accepted, conventional way as applying to any Secretary of State, but the appropriate Secretary of State acts in the circumstances. Therefore the amendment does not require to have "Secretary of State for Scotland" spelt out.
Amendment No. 14 provides for an exemption where the costs of procedure for tendering will be heavier than any benefits which can be gained. I should like to quote the Minister, Lord James Douglas-Hamilton, speaking in another place during the Report stage. He said:
"If the cost of compliance with competition outweighs the benefits of the competitive process, that will be taken into account".—[Official Report, Commons 15/12/87; col. 982.]
I am glad to note that assurance. The Scottish consultation paper invited representations and views by 31st January, a few days ahead. That does not give the Government much time to consider the replies to the consultation document and then to formulate a view. I hope that the Government will arrange the timetable for the Report stage and Third Reading of the Bill to fit in with their thoughts on the matter and will give high priority to deciding the action that must be taken after receiving the views and representations. In this amendment I have included the provision for the opinion of the Secretary of State, as well as that of the local authority, in order that it is not the sole judge of its case.
I hope that no Member of the Committee suffers from sea-sickness. If anyone does, I give warning of what I am about to say. It is important to realise that ordinary communication and movement between the groups of islands must be carried out by sea; there are very few facilities for air travel. Sometimes the sea is like a mill pond. I know all three groups of islands quite well and I can assure Members of the Committee that one is often on choppy seas with squalls and sometimes horizontal sleet and snow. It is the equivalent of moving from one ward to another in a town or city or moving from one village to another nearby in the country. I hope that everything I have said will be remembered in the light of the conditions that I have described and of the difficulties which the islands councils will probably meet unless some variation is made in their case.
The Earl of Balfour: In the case of the island authorities, will the Minister consider making a special provision that they have the choice of at least two contractors who tender for the work. I sympathise with what has been said. If there is only one contractor who, for example, successfully carries out the cleansing for some of the islands, the authority may then dispose of its refuse collection vehicles. If in four years' time the contractor doubles his price the authority will be left in an unpleasant position. I should like to be certain therefore that

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where an island authority goes out to tender for any work, at least two private bodies will submit an estimate for the work involved.
At the time of the reorganisation of local government in 1973 I had a meeting with my noble friend Lord Campbell of Croy in the Scottish Office. His officials pointed out to me that one of the reasons for opting for larger authorities in Scotland was to create a reasonable career structure for the local authority officials employed at the time. One of the faults with the old type of local government was that in many cases the small boroughs had part-time officials. I am sure that most Members of the Committee will agree that that situation is unsatisfactory.
I do not necessarily support the amendments that have been tabled but I believe that we must be certain that if the islands councils accept a contract, the contractor will not be in a position to hold them to ransom in a few years' time. In addition, they should not be placed in a position where part-time officials are carrying out important duties, as happened in many of the small boroughs before the reorganisation of local government.
Lord Ross of Marnock: It is a great pity that three authorities particularly three councils in Scotland which are unique in being single-tier authorities—should be delaying the Committee at this, the prime time of the day. Would it not have been better to do what we should have done before? If a proposal is made that applies to Scotland, it should be covered in an Act of Parliament for Scotland. I seem to remember that in the last Session a point was raised in the Chamber as to the manner in which Scotland is woven into English legislation. Often there is no application to England and Wales at all. There are no such authorities in England and Wales.
We have heard a former Secretary of State pleading for the uniqueness of Orkney, Shetland and the Western Isles authorities. Would it not have been better to have a Scottish Bill based purely on the knowledge of Scotland? Would it not have been better if this had been dealt with in Edinburgh where there is probably a little more interest in such matters than there is in the great measures of principle that will apply to London, Manchester, Liverpool, and so on?
I know that there are difficulties in another place. The Members there do not want Scottish legislation—they cannot even man a Scottish Committee. There are only five Back-Benchers in another place. There are more than that in this Chamber.
Lord Hughes: Especially when one of them will not work.
Lord Ross of Marnock: I am not concerned about whether they are prepared to work or whether they have fallen out with the establishment. The fact is that there are only five Back-Benchers in another place, and the result is the worst of all worlds. Scottish legislation is tied into English legislation
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because this does away with the need for a Scottish Committee and because the English majority existed from the very start.
I am sure that this measure could be torn up as far as the islands are concerned. I heard some reference to a bureaucratic nightmare. This is a bureaucratic nightmare. The question has arisen of the £104,000—which is just over the limit—which is applied to Strathclyde, but Strathclyde contains half the population of Scotland. It does not make sense even when it is applied to the islands. In fact, the whole thing is a bureaucratic nonsense; it is just dogma.
As the noble Lord, Lord Campbell of Croy, said, in many islands this is being done. Where possible, things are being put out to tender. They are glad to get anyone to do the job. The Post Office is carrying both parcels and passengers because of the difficulty in getting people to run buses.
The noble Earl, Lord Balfour, made the very good point that there should be at least two or three competitors. I can think of many islands in Scotland where there will be not even one competitor and they are in great need of services. Some services that have been mentioned will probably never be carried out. Would it not be better to leave out reference to the islands altogether?
4.45 p.m.
A further point was made by the noble Lord, Lord Campbell of Croy, and by the noble Earl, Lord Balfour. Suppose that the service is being carried out by the local authority and it loses out in competition. I like the word "exposed" that has been used in regard to competition. It is a good word. I think that it is the dogmas of the Government that are being exposed. If the local authority does lose out, when the contract comes up for renewal after three years the real competition will have disappeared because the local authority service has gone. I do not know what will happen to the capital investment, the cleaning material and so on, but I imagine that the competitor will have bought it up. The competition will have gone and one will be back to a private monopoly. What will be provided will have no relation to what the contract was first awarded for. One might think that local authorities in Scotland and those in the authorities had no sense. They have been contracting out all their lives. There is a lack of trust here, and it is no wonder that the people of Scotland have turned against the Government. No wonder that, of the 73 Members, they have only 10. If the Government continue like this, they will have none.
Common sense is needed. There is no reason why other councils in Scotland should be included and no justification to include the Highlands and Islands, the Western Isles, Shetland or Orkney. I remember the first thing that the Government did in about 1956, having fought the election on anti-nationalisation. They introduced a Bill to nationalise the shipping services in the northern isles of Scotland. There was no competition but, as the services were essential, they had to be nationalised. Let us recognise the uniqueness of the islands. The noble Lord, Lord

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Campbell of Croy, has made the position perfectly plain. Let us leave out the islands and trust to the good sense of the councillors in the areas.
Lord Stodart of Leaston: I understand that the noble Lord, Lord Ross of Marnock, has been not too fit for the last few weeks. I am bound to say that at my age I do not have the energy to join him in his chase of the hare of devolution, which he has attempted today.
I agree—this has been stated twice in the debate—that these authorities are unique in their powers. Five years after the passing of the Local Government Act I was invited to examine the functions in order to elucidate some of the grey areas. The impression of the Commitee, which I chaired, and indeed my own impression, of the activities of these island councils with their virtually all-purpose operations, was that their efficiency was very good. We had no criticism to make, although of course we did not go into the details, which were examined later by the Montgomery Committee.
From my understanding of what has been said, the time has not yet passed when consultations can take place. There is a very strong case for making no decision today on the proposal as outlined in the Bill. It is extraordinary to attempt to apply a blanket operation of this kind throughout the country from the City of London to the island authorities.
Baroness Carnegy of Lour: It has been a pleasure to see the noble Lord, Lord Ross, again. The greatest pleasure was to hear him complaining about a Bill as important as this is to Scotland being discussed in prime time in Committee. How we deal with the Bill is very important to the remoter areas of Scotland. At the moment we are discussing the islands. I have been to the islands and comparatively recently I was involved in the operation of putting out services to tender in remote areas of the Scottish glens—not unlike the islands although the situation is somewhat different because there is not the problem of having to cross the sea between the various communities.
It is true—and I believe the island authorities are right in their concern—that services have to be broken up into low-volume units, as the noble Lord, Lord Carmichael, said. There has to be one small service here and one small service there. Some services have to be co-ordinated while others, on a remote island, do not. Nevertheless the three islands councils are very considerable concerns. They spend a great deal of taxpayers' and ratepayers' money on services broken up into small units.
The advantage at the heart of this Bill—the need for a council to specify precisely the work that has to be done and the cost—is as important for the people of the islands as it is for anyone else in the country. What we are really discussing is how this should be done. I believe it quite wrong simply to say that the islands should be left out. Before agreeing to that, I would need it proved to me that there was no way of making it possible for the proposals at the heart of the Bill to be applied in the islands to the advantage of the people there.
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Representatives of the Shetland Islands have said to a number of us that they are concerned to employ someone who is capable of specifying very precisely what the work should be and of costing it. They wish to ensure that what a contractor is asked to do is precise and that the bids which are put in can be compared. To employ such a person might cost more than was saved by putting the work out to competitive tender.
That may be so, and the Government need to look at it very carefully. I am sure that my noble friend Lord Campbell is right when he says it has to be the Secretary of State who decides at the end of the day whether that provision is to be in the Bill. It will have to he the Secretary of State who decides whether it is correct that the cost of employing someone, or perhaps two or three people, to do the work would be greater than the amount that was saved.
When a service is put out to tender in a remote area, all kinds of things may happen. It has been suggested that there may be one person capable of doing the work in the area. That person has a monopoly and can very often, as we say in Scotland, take the council to the cleaners. There may be three people who can do the work. If it is window cleaning or cutting grass, that is quite possible. It is possible for those people to form a ring and to agree that only one person should hid and so create a monopoly. That has been known to happen quite often in the remoter areas.
The procedures which are at the heart of the Bill would help very much the islands authorities to specify, to cost and to know exactly what it is they are comparing. They know then what it should be costing and how far a contractor can be negotiated downwards. The main problem is how it is to be done. The correct line for the Committee to take this afternoon is to say to the Government that when their consultations are complete, they should look at the facts and see what is possible to enable the advantages of the Bill to be available to the people in the islands and to potential contractors in the islands. The Government can then decide whether any special arrangements need to be prescribed for these three islands authorities. That is the line to take. I do not believe at this time we should take the islands out of the Bill.
The Earl of Dundee: I am very grateful to all Members of the Committee for their contributions. With the leave of the Committee I should like to speak together to Amendments Nos. 2, 11, 14, 16, 17, 24, 52 and 53. All seek varying degrees of exemption from the competitive process in respect of the islands and the Scottish islands authorities. I know that the Committee would wish to join with me in congratulating these authorities on the useful work they have always done and which they continue to do. As the Committee will be aware, the authorities might well not exist to do this work had my noble friend Lord Campbell not taken the helpful initiative that he did earlier on.
I am convinced of the need to include all local authorities in the scope of the Bill, including the Scottish islands authorities. There is of course a

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strong case for exemption in certain circumstances; for example, when the cost of compliance with the competition requirements outweighs the possible benefits from the competitive process. That is the purpose of the de minimis level which the Scottish consultation paper suggested should be set at £100,000 of expenditure in a year on any given service. The Government will be looking closely at the responses to this paper, due by the end of January. In my view it is perfectly reasonable to stipulate that any service involving expenditure above a given exemption level should be exposed to the competitive process wherever that service is provided. There is no need for competition to be confined to urban areas.
Having said that, we arc aware of the special circumstances in which the island councils operate. Yet private enterprise in the islands has to operate in the same circumstances. There is really no case for exemption for the islands authorities alone on the grounds that it is more difficult or expensive to provide services in remote and isolated areas. All of us concerned about public expenditure must ensure that the services provided by local authorities are provided as efficiently as possible. Our view is that opening services to competition can bring substantial savings as well as improvements in the standard of service.
This policy is certainly not enforced privatisation. All the legislation will do is impose fair competition between local authorities' own work forces and the private sector. If an authority, including any of the three islands authorities, can themselves provide the best and cheapest service, then it should continue to do so. If the private sector can offer a better deal to the ratepayers and consumers of the service then that is the option that the local authority should choose. Whether or not the private sector can compete can only be established by testing the market. Without this test the authorities cannot be sure that their present operation is the best available.
Competition ensures that value for money is obtained whether the successful tenderers come from a local authority or the private sector. It does not matter how small the population of any one island is; the purpose of the Bill is to subject those local authority activities defined in the Bill to the competitive process. As I have said the proposal is that there is only a case for exemption in respect of any de minimis provision applied to the whole of any local authority activity. However, I have listened carefully to the arguments put forward by my noble friend Lord Campbell and by the noble Lord, Lord Carmichael, in support of selective exemption within the authority for particular islands, and I should certainly be happy to discuss with them their concerns on this matter between now and the next stage of the Bill.
Without the test of competition it cannot be demonstrated that there is no competition forthcoming from the private sector. Even if it does prove to be the case in more remote areas like the Scottish island authorities that the competitive process produces no bids from the private sector, that is not a reason to forgo competition. The very
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drawing up of the work specification and the necessary contract documentation concentrates the mind properly and forces local authorities to look critically at the most effective, efficient and economical way of discharging their services, whether it be by contractor or, in the event of no competition, by their own direct labour force.
Neither is it the case that the initial absence of competition means that the private sector will never respond. Given the opportunity, the private sector will normally respond to the challenge, and it should be given the opportunity to do so. Nor is there any need for a power which would enable the Secretary of State to choose not to apply the competitive process to any particular island. The Secretary of State already has the power under Clauses 6(3) and 15(6) of the Bill to make regulations applying competition to such authorities and with such exemptions as he may determine, and that is quite sufficient. Nevertheless, the existence of this power does not mean of course that competition will not extend to the Scottish islands other than any exemption they may gain by way of the de minimis provision.
The noble Lord, Lord Carmichael, from some of his remarks gave me the impression that he may not be quite sure of the proposed timing of the procedure for putting out to competitive tender. The trigger for putting out to tender is the cost of the service in the preceding year. My noble friend Lord Campbell raised the point about how local authorities may need to dispose of their plant and equipment if they lose a contract to a private contractor. The local authority, in drawing up the specification document, could invite the private contractor to use the local authority's equipment, thus safeguarding the equipment for future use by the local authority. I hope that that may give some reassurance to my noble friend.
My noble friend Lord Balfour referred to the need to have more than one contractor for the sake of efficiency. I should say to my noble friend that the Government cannot be responsible for drumming up contractors to hid for contracts, but there is of course precedent for work being taken back in-house by the local authority in the light of a contractor holding the local authority to ransom or failing to deliver a service satisfactorily.
The noble Lord, Lord Ross, queried in general the wisdom that legislation here should be on a United Kingdom basis rather than on a special Scottish footing. There are many precedents, of which the noble Lord will be aware, of previous administrations enacting legislation for Scotland within a United Kingdom Act. However, I can assure the noble Lord that there will be an opportunity to debate this point in another amendment.
I appreciate fully how concerned the island authorities are about the possible effects of the provisions of this Bill. As I have said, I am prepared to talk with noble Lords on their concerns regarding how the de minimis level should relate to single islands. And regarding the broader issue of competition within island authorities we shall certainly examine the experience of the workings of the Bill with considerable care. The Bill gives power

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to the Secretary of State to make changes in the light of circumstances as relevant. Meanwhile, I think we have sufficient protection through the de minimis provision, and in view of their comments I hope that the noble Lords will feel able to withdraw the amendment.
5 p.m
Lord Campbell of Croy: It may be better if I speak at this stage, before the noble Lord who moved the amendment, and speak to my four amendments which were discussed with his. First, as others have done, I should like to welcome the noble Lord, Lord Ross, back to health, and in what seems from his contribution robust health after a period of restricting illness.
The Government seem clearly not to be prepared to accept Amendment No. 2 at this stage. The consultations with the local authorities, including the three island councils, are still continuing. I can see that the Government may not wish to exempt completely these three councils, Orkney, Shetland and the Western Isles. I emphasise that it is simply the islands in those three groups which are the subject of these amendments.
I can see also that other local authorities in remote areas may feel that it was unfair to them if there were total exemption from testing the availability of competition. But I hope that the Government will consider carefully the other amendments which would temper the provisions of the Bill to the unusual conditions of these three island authorities.
If I may remind the Committee, the amendments in my name would, first of all, enable the Government to make use of the variations recommended by the Montgomery Committee for this category of local authority, islands councils. Secondly, the application of the de minimis provision would apply to individual operations carried out either on a single island or a group of islands which were only part of a local authority's area but which nonetheless required a completely separate operation. Thirdly—and this is where my noble friend's honourable friend in another place definitely agreed—there should be arrangements where the cost of the procedures for opening a contract to outside tenders weighed heavily against any possible benefits which could be gained.
These points all having been discussed and the special circumstances pointed out, we await the Government's further consideration and decisions, because the time for consultations does not end until 31st January. I hope that the Government will then, with priority, get down to their own consideration and decision.
I should also like to accept what I think I heard as an offer by my noble friend to the noble Lord, Lord Carmichael, and myself and others interested to be able ourselves to have discussions before the next stage of the Bill with my noble friend and his other friends in the Scottish Office. I gladly accept that. I am not proposing at this stage, particularly as the consultation period is still going on, to move my
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amendments when they are reached later during this Committee stage, and I hope that the noble Lord, Lord Carmichael, will not press his either at this stage.
Lord Carmichael of Kelvingrove: I too am grateful for the Minister's suggestion that he discuss the matter with the Members of the Committee. I hope he will take to the Secretary of State for Scotland, before he comes to discuss it, the firm opinion that came from all sides of the Committee, and quite powerfully, that there is something special about the islands, and not just in sentimental terms but in factual terms. The idea of trying to impose a Bill upon, as the noble Earl, Lord Balfour, suggested, London, the Shetlands and Stornoway at the same time does not seem to balance at all.
With great respect to the noble Earl, if he does not take advice and make a clear statement to the Secretary of State about this Bill and the feeling in the Committee, a meeting would not be of any great value. I hope he will go there first, then come to us, and then go back. We know how government works, and we hope he will do that.
Everybody who spoke except the noble Baroness, Lady Carnegy, felt that the Bill was really a nonsense for Scotland and for the islands. At this point I should like to say how much I appreciate the fact that my noble friend Lord Ross is back with, as someone said, a typically robust speech. It was also a highly political speech, but it is important that this should have been discussed in Scotland as a Scottish Bill. Because of the uniqueness of Scotland's position, and because it is the only area with these island authorities, there should have been a separate Bill for Scotland.
When the noble Baroness, Lady Carnegy, spoke about competition in the islands she mentioned grass cutting and window cleaning. No great capitalisation is needed either for grass cutting or for window cleaning. What will happen to a local authority if it has bought, or has in existence with a long life ahead of it, some fairly important capital equipment? It will have to be left for scrap if the new contractor decides not to buy it, or sold on the mainland second-hand market or left to rot.
The noble Earl said that if a contractor was falling down on the job the work could be taken back in-house. He has heard arguments from both sides of the Committee about the difficulty of taking work back in-house if there was no equipment to do it or the equipment had disappeared. How often could this happen? If a small island authority decided that the contractor had let it down completely, would it need to take the work back in-house, do the job itself and then perhaps two years later put the work out to contract again?
How often would it need to do that? Would the Secretary of State then give that one part of the island authority exemption? It might apply to only one part of the island authority. A large number of questions must be answered. I hope that the Minister will discuss the matter much more widely with his colleagues, and in particular with the Secretary of State. On that basis, I beg leave to withdraw the amendment.
Lord Hughes: Before the noble Lord sits down, perhaps I may say a few words. I must apologise to the Minister. I was out seeking information when he rose to speak. In the light of one of the remarks he made I do not think that I am being unfair in coming into the debate at this stage.
On the question of competition, a point was raised about local authorities disposing of their plant in the cleansing department and at the end of a contract being placed in an impossible position when the contractor increased his prices substantially because the competition from the local authority had been removed. The Minister dealt with that point rather simply and on the face of it very logically by saying that the local authority could put into its contract the need for the contractor to use its equipment, which presumably would be made available on leasing terms. This is one of the points I was inquiring about when I was outside. The information I was given is that this opens up a most extraordinary situation.
I asked on what basis would the leasing price be determined. If an authority had written it down at half its original value, would it be leased to the contractor on the basis of that written-down value or would the price for the leasing take into account the replacement value of the plant? The answer I was given is that nobody knows. If the local authority did it one way, it could be regarded as unfair competition by its own department. If it did it another way, the contractor could take it to court on the basis that this was unfair competition.
Have the Government any idea of how they wish this to go ahead? On what basis would they regard a lease price to a contractor as unfair competition? Have the Government any idea? It may well be that the Minister knows the answer to the question. If he does not, it is certainly one of a whole number of similar points which we would expect to be answered during the consultations. What is quite certain is that there is no easy way out of this problem in the islands. The problem of the leasing or selling of plant to a successful contractor will not be confined to the islands. The problem will arise in every local authority in the country. It could be one kind of a mess.
The Earl of Dundee: I am grateful to the noble Lord, Lord Hughes, for drawing to my attention the problem of the arrangements for leasing. I cannot give him an answer now. As he will be aware, we await the proposals for detailed implementation. However, it is useful that he comments on the matter now. I trust that if the point has not already been taken on board it will be resolved satisfactorily in due course.
Lord Carmichael of Kelvingrove: My noble friend interrupted me most profitably while I was trying to withdraw the amendment. I beg leave to withdraw it.
Amendment, by leave, withdrawn.
5.15 p.m.
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 3:
Page 2, line 26, after ("1973") insert ("except where the regional or islands council is acting as a water authority in terms of the Water (Scotland) Act 1980").
The noble Lord said: This is another example of the fact that it would have been better to have a Scottish Bill. The Bill before us is designed for the legal system and the local government system of England. It is quite inappropriate in this instance for Scotland.
The amendment says:
"except where the regional or islands council is acting as a water authority in terms of the Water (Scotland) Act 1980".
The Bill as it stands includes all local authorities. As in Scotland regional and island councils are also water authorities, this means that the water undertakings will be caught by the Bill. They will need to behave in the same way as local authorities although the English ones will not. In England, water boards are independent bodies and are not covered by the Bill. There seems to be no good reason for that. If English water boards are excluded, perhaps because of the essential services they provide, councils in Scotland should be exempted when acting as water authorities.
During the debates in Standing Committee in another place the reply of the Under-Secretary of State to the amendment did not answer the points properly. He said that water authorities in England and Wales were not included in Clause 1,
"because water authorities are separate entities in those countries".
That is tautology. That is what we have been saying all the time. If water authorities in England are excluded, why should water authorities in Scotland doing exactly the same job not be excluded as well? That is an obvious point and I look forward to the Minister accepting the amendment. I beg to move.
The Earl of Dundee: This amendment would, if accepted, isolate an integral part of local authority activity in Scotland from the scope of the Bill. It would also create an anomalous situation between Scotland and England and Wales. Water services in Scotland are organised on a different basis from those in England and Wales, but the provisions of the Bill have a common effect throughout Great Britain.
The Committee will be aware that the Bill is limited to certain defined activities which a local authority undertakes in the provision of its services. It would of course make no sense to exclude, for example, the repair and maintenance of vehicles used in the water services function of a regional or islands council. This amendment would single out an integral local authority function which properly and logically falls within the scope of the Bill. It therefore creates an anomaly, and for that reason I would ask the noble Lord to withdraw the amendment.
Baroness Carnegy of Lour: Can my noble friend tell us why it is that English water authorities are not included in the Bill?
The Earl of Dundee: Yes. It is because English water authorities are not under the control of local government, whereas they are north of the Border in Scotland.
Lord Carmichael of Kelvingrove: I have a feeling that that reply does not really satisfy the noble Baroness. The whole history is so different. The

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Minister suggested that if this amendment were accepted there would be an anomalous situation as between Scotland and England. But the whole purpose of the amendment is to correct what we believe to be a glaring anomaly if the Bill goes through, in that water authorities in England will not be involved in the Bill while water authorities in Scotland will be involved.
This seems to us to be a much larger anomaly than appears from the explanation given by the noble Earl. We may come back to this point later. Perhaps it is something else that we can talk about when we are discussing the islands with the noble Earl at a future date. At present, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 4 not moved.]
On Question, Whether Clause 1 shall stand part of the Bill?
Lord Pitt of Hampstead: I was expecting something to be said about the fire brigade in the debate on Clause 1 and I have not heard anything. Is there another amendment?
Lord Dean of Beswick: Later.
Clause 1 agreed to.
Clause 2 [Defined activities]:
Lord Dean of Beswick Lord Dean of Beswick moved Amendment No. 5:
Page 2, line 35. at end insert ("except when carried out in a particular location by persons more than half of whom are disabled or handicapped").
The noble Lord said: Very briefly, before I move this amendment, perhaps I may say that the last discourse between various Members of the Committee gave me thought about the different treatment that is being accorded to various regions of the United Kingdom. I think that the Government are in danger, if they are not very careful, of treading on the question of hybridity. The differences are becoming very manifest.
Amendment No. 5 seeks to protect from the competitive tender provisions existing arrangements whereby work falling within a defined activity is carried out by a group of people who are handicapped or disabled in some way. It is put forward in terms of specific exemptions and merits consideration on the same welfare grounds as the exemptions already recognised in the Bill, such as the excepted day centres and other establishments specifically excluded in Schedule 1.
It is not aimed at exempting work carried out by any employee or other person who is disabled, but only where organised collective arrangements obtain to provide a substantial number of handicapped people with employment. This is effected by reference to "the greater part"—that is, a majority of people carrying out that particular work in a particular location.
The amendment is to exempt groups of disabled and handicapped persons. There is a considerable amount of work which falls within the defined activities which is currently carried out by adult
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training centre trainees and similar establishments. For example, Norfolk County Council uses ATC trainees to provide a grounds maintenance service for some of its old people's homes. In Nottinghamshire, some school meals are prepared in a sheltered workshop for delivery to schools. There are arrangements in conjunction with the Manpower Services Commission whereby employees whose disability is mainly mental handicap are engaged in grounds maintenance. And there are schemes—for example, under the Nottinghamshire sheltered placement scheme—whereby people whose disability is mainly epilepsy are engaged in street cleaning.
These are the kinds of arrangements which serve two very useful purposes—getting the work done and providing training, useful employment and a kind of independence to people handicapped by a disability—which could be severely jeopardised by the Bill as it stands, for the activities to put out to competitive tender are actually those in which many such disabled people are engaged.
It seems that the actual terms under which handicapped people carry out cleaning, catering, and so forth, can range widely. In some circumstances, they may be paid directly by the authority and definitely have the status of employees; in others, there may be a contract or agreement with the training centre, or whatever, and the person receives some payment through the mechanism of the linking organisation or establishments.
It could be argued that, as the test for whether the work is carried out by the local authority appears to be whether or not the work is carried out by a council employee—for example, work carried out by a defined authority through an employee—many existing arrangements with sheltered schemes, adult training centres, and so on, would in any case be exempt from the Bill since the workers are not council employees and the arrangement or contract is between the authority and the scheme.
However, there are three snags in this argument. The first is that people within a number of schemes would probably nevertheless be, or fall, within the definition of an employee and they would not be exempt. The second is that it is still not clear whether not having the technical status of council employee definitely exempts from the Bill any person carrying out the council's work.
For example, is the work carried out by YTS trainees included in the Bill? They are not technically employees of the council, but they may carry out on work experience both work for the authority and additional tasks to give them appropriate training and experience. Their status of trainee should suffice to exempt them from the tender provisions, but there is apparently some doubt about this. A clarifying statement on how YTS trainees are regarded in relation to Part I of the Bill would be useful. It clearly has relevance for the position of handicapped workers who are not technically council employees. This uncertainty about the position of workers who are not employees in the usual sense is the reason for the wording "persons" rather than "employees" in the amendment.
The third argument against any view that in practice most current arrangements for handicapped workers can co-exist reasonably well with Part I of the Bill concerns the complications if it is ultimately decided that the only way of safeguarding such arrangements is for a local authority to treat a sheltered workshop, adult training centre, or whatever, as if it were part of the contracting process.
Such an approach would assume, first, that workers under such special schemes were not exempt from Part I even if they were not council employees within the scope of the usual pay and national insurance arrangements, etc. Presumably an authority asking for a tender to carry out work from an establishment which itself forms part of local authority provision, such as an adult training centre, would count as in-house work. What then of the workload of preparing for separate tenders for every such parcel of work within the restrictions set down in Part I? Would the justification of accepting the ATC tender on welfare grounds be acceptable, even if it is not the lowest tender and the value of it relates as much to the workers as to the consumers of the service—those who eat the meals or live in the old people's homes, etc? Would it not be a farce to undertake the elaborate process of tendering when all parties concerned intend the contract or arrangement to continue because it is very much to the benefit of those handicapped people as well as getting the work done? I beg to move.
5.30 p.m.
Lord Hylton: This is a most important amendment. Surely it is of the greatest importance that disabled and handicapped people should be able to do positive, meaningful jobs and have the satisfaction of doing a day's work. I wonder whether part of the difficulty could be circumnavigated by using de minimis provisions in some form, so that the individual establishment that is providing the service can have a ceiling which is clearly much higher than the amount of work it will do in any given year. I throw that in as a suggestion.
The Earl of Caithness: I believe that we are talking to Amendments Nos. 5 and 6 at the same time. Both amendments have as their laudable objective that of protecting the jobs of handicapped employees. It is an objective with which I, and I am sure all the Committee, have considerable sympathy.
I have to put it to the Committee, however, that there never can be any absolute guarantee of job security even for the disabled. One major reason is that they are usually distributed throughout an otherwise able-bodied workforce; in other words, in sheltered placement schemes rather than in sheltered workshops. I am sure that the Committee agrees that it would be quite unacceptable to protect an entire workforce from competition just because a few of its members were disabled, but I fear that might be the effect of the second of the two amendments. Nor, of course, do all of the disabled register as such. That may seem surprising to some Members of the Committee. It is nevertheless the case that only a minority are thought to do so, as registration is voluntary. Any amendment referring to sheltered
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schemes or workshops therefore fails to deal with the majority of the disabled because only the registered disabled are employed under these schemes.
The first of the amendments, on the other hand, deals only with the very rare case where more than half the workforce is disabled or handicapped. I am aware of only one case, in the field covered by this Bill where that would be effectual—a sheltered kitchen in Nottingham, referred to by the noble Lord, Lord Dean of Beswick—although there may be some others.
The noble Lord, Lord Dean of Beswick, makes a fundamental point which concerns us all. That is why we have considered it carefully. We have concluded that the most comprehensive way to deal with it is to give authorities an assurance that in considering whether to act against failure by them to meet their financial objectives, the Secretary of State will take into account the extent to which any failure is due to the extra costs of employing the disabled. I confirm that I am talking about any disabled employees whether or not they are registered; therefore, our proposals are wider than those proposed in the amendment. The effect is that the local authority would be able to discount the additional costs of employing the disabled when preparing bids. That covers the point made by the noble Lord, Lord Hylton, when he asked for something on the de minimis lines. It will enable the local authorities to say, "This would be our normal contract price. However, because of the number of disabled or handicapped people we employ there are extra costs." It will allow the local authorities and the Secretary of State to take into account the extra costs and discount them.
When one looks at the problem I wonder what the extra costs of employing the disabled will be. I do not think that those costs will frequently be a decisive factor in tilting the balance between financial failure and success, because the issue is generally more clear cut than that. I hope that the Committee will agree that an assurance on those lines strikes a better balance than either of the amendments and that in the light of that the Bill can be accepted as it stands.
Lord Dean of Beswick: I am grateful to the Minister for his comments about handicapped and disabled people. However, I think that the issue goes a little wider than the narrow confines to which he has chosen to keep. As one who was heavily involved in local government and in the employment of the disabled and handicapped, I know that it is a sad fact that society as a whole—we are all to blame—has never reached anywhere near (even in government and local authority establishments) gainfully employing the number of people we should like to see taken from the disabled list.
Some people are aware of establishments that cater extensively for the employment of disabled people. Some of those people have been highly skilled and have unfortunately suffered partial strokes and other such handicaps. They are given dignity by being taken back into work. It may not be the same job; but their talents are used to the benefit of the community. What I and the supporters of the amendment are trying to achieve in this and the following two

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amendments is that there should be nothing in the Bill when it is enacted that can be seen to deny work to a handicapped or disabled person who is gainfully employed at present or that would result in their being thrown on the scrap heap.
I should like to look at what the Minister has said, as, I am sure, will the people involved in the care of the less fortunate members of our society. If necessary, I may come back and press him a little harder on the subject in the later stages of the Bill. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Dean of Beswick Lord Dean of Beswick had given notice of his intention to move Amendment No. 6:
Page 2, line 35, at end insert ("except when carried out by sheltered workshops and sheltered placement schemes'").
The noble Lord said: Having already spoken to the amendment, I think there is no need to waste time. Therefore, I will not move the amendment.
[Amendment No. 6 not moved.]
The Countess of Mar The Countess of Mar moved Amendment No. 7:
Page 2, line 35, at end insert ("except where the premises are provided by a local social services authority under section 21(1) and Schedule 8, paragraph 2(1)(a) and (b) of the National Health Service Act 1977, where residential or day-care facilities are provided for habilitation or rehabilitation.").
The noble Countess said: This amendment, although similar to those that have just been spoken to, is slightly different in that it is aimed at protecting an aspect of community care about which the Government are so keen.
Local authorities are empowered under the National Health Service Act 1977 to provide residential and day-care accommodation for people who are likely to be ill, are ill, or have been ill. In many cases they use the premises for the rehabilitation or habilitation of former patients. For example, in my locality, there is a home which takes former psychiatric patients. They are encouraged to cook for their fellow residents and to clean not only their own rooms but the common parts of the house in which they live. Another place habilitates mentally handicapped people and teaches them how to cook, garden and do various other things. It is important that we defend that aspect of community care. I ask the Committee to consider that the amendment is worthwhile. I beg to move.
The Earl of Caithness: I totally agree with the noble Countess that the work in these fields is important. She referred specifically to cooking and cleaning. I draw her attention to paragraphs 2(4)(b)4(4) of Schedule 1 where she will find, as I have, that it exempts precisely what she is trying to exempt.
The Countess of Mar: I am most grateful to the Minister. The matter did not seem clear to me in the Bill. However, I am grateful to him for clarifying that point, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Chairman of Committees (Baroness Cox): I should point out that if Amendment No. 8 is agreed to, I cannot call Amendment No. 9.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 8:
Page 3, line 4, leave out subsection (3).
The noble Lord said: I am very happy to settle for Amendment No 8 and forget Amendments Nos. 9 and 10 if enough points have been made.
The Earl of Caithness: Are we discussing Amendments 8, 9 and 10 together?
Lord Graham of Edmonton: Yes. As the Minister is aware, his advisers have suggested that Amendments Nos. 8, 9 and 10 can perfectly properly be debated together, so my remarks will include those three. But I acknowledge that when the matter is resolved, if it has to go to a vote, the vote will be taken on Amendment No. 8. As the Deputy Chairman of the Committee pointed out, that will negative the other amendments.
On this side of the Committee we consider this a very important group of amendments. In moving them, I am speaking particularly to Amendment No. 8. I think it would be helpful if I were simply to read into the record that part of the Bill which we wish to delete. It is Clause 2, page 3, line 4, subsection (3):
"The Secretary of State may by order provide for an activity to be a defined activity by adding a paragraph to those for the time being appearing in subsection (2) above".
Amendments Nos. 9 and 10 go a little further, referring to subsection (4) on page 3 where first of all we are being specific. We are saying that nothing more shall be added before April 1993. The case for that quite simply is that one needs a period of digestion in order to absorb, as in many councils, all the activities which are defined.
The other amendment, simply to get it onto the record, is that in subsection (4):
"the Secretary of State shall consult such representatives of local government as appear to him to be appropriate".
We are trying to be helpful to him by pointing out that in our view the representatives who could be appropriate are the local authority associations and such other local authorities, bodies or individuals as may appear to him to be concerned. We are saying to the Minister very kindly that we have every good faith that the ADC, the ACC, the AMA and the ALA are very proper bodies collectively to represent the views of their members. If any consultations are to take place, they ought to be the prime bodies concerned. But there may be other individuals, authorities who the Minister feels ought to be brought in. In particular, there may be other associations representing sports bodies.
We are very concerned at what has already been said by the Minister's colleagues in another place. Indeed, there have been consultations in respect of a further service which could be added to the Bill: sport and leisure. The Minister knows that there has been a consultation process and a document has been circulated. He is undoubtedly in the process of receiving those observations.

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However, the Committee ought to be aware, at the beginning, of representations from non-political bodies. That is not councils; that is not bodies about which the Minister or his colleagues from time to time say, "Well, they would say that, wouldn't they, to anything this Government say". I should like to report what the Amateur Swimming Association has said about the possibility of another activity (sport and leisure) being added to the Bill. The Amateur Swimming Association has told us:
"The Committee of the ASA are deeply concerned about the possible repercussions of swimming pools being run by commercial operators. Swimming relies almost entirely on facilities provided by local authorities, and we as an Association do not relish the prospect of being at the mercy of operators intent on achieving financial targets, at the expense of facilities available to the sport or indeed as as service to the community at large".
No doubt the Minister can put their minds at rest that the commercial operator will not have his profits uppermost in his mind but service to the community and the sport at large! That is what the Amateur Swimming Association feels at the moment.
Then the All-England Netball Association says:
"It will be exceedingly difficult to retain the philanthropic aims of the local authority centres with a commercial operator standing to reap the rewards of a more commercial approach".
I suppose that operator will be looking for a net return in respect of netball. I think that is very good, too!
On the same theme, the English Basketball Association says:
"We are naturally concerned that the recreation services of local authorities should be efficient and effective but feel that the proposed measures could be counter-productive…The less affluent and disadvantaged sectors of our community who wish to lake part in sport and recreation must be protected".
There is a great deal more in a similar vein from other sports.
I am certain that the Minister will be trying to be helpful to them and to assuage their concern. However, we on this side of the Committee ask the Minister why he needs to be bothered with this at all. There is a large tranche of local services which are at present non-competitively tendered for and which are in the gift of a local authority. If the Minister has his way and this Bill becomes an Act and is then proceeded with, certainly for a period estimated at five years, there will be a great deal of information to take on board.
Never mind the people on whose behalf the Minister and his colleagues feel they are acting in this Bill that is, the ratepayers. I am talking here about the people who are the users of the service, the ratepayers and in particular their children who may not be paying rates or the future community charge but who are benefiting from the services.
Quite frankly, we are concerned indeed about some of the implications. If we look at the problems which might occur, the Minister has sought in his consultation document on sport and leisure to point out that certain dual-user facilities may very well be capable of being exempted if it is possible to prove that the majority of the use or the "principal" use (which is the word used) is by pupils and students. But there are other sports facilities provided in a local authority used by people other than pupils and students. For instance, there are the joint provision
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schemes with health authorities, education, social services and the private sector; sports facilities whose site is a long distance from the educational establishment (that is, rugby and athletics grounds); facilities provided principally for the youth service or those for the police. All those are not adequately clarified as being excluded. If they are included, then I strongly suggest to the Minister that there will be many problems.
We are talking here about the following facilities being put out to be managed by outside contractors. Bear in mind that it is not, as the noble Baroness, Lady Blatch, pointed out, just a question of laying down the specification and the service. It is a question of giving to a private contractor control over how long the service will be available, how much will be charged and a great many other things. These are: leisure centres, swimming pools, golf courses, bowling greens, putting greens, tennis courts, athletics tracks, pitches, cycle tracks, water sports facilities, artificial ski slopes, skating rinks, indoor bowling arenas and beaches. I think the noble Lord should help the Committee by explaining what he and his colleagues have in mind in seeking to give to some private contractor control over the use of and the charge for the use of beaches in the context of the Bill. I am sure the committee will be very interested indeed.
Local authorities have invested a considerable amount of money in local sports facilities which have been provided for their local community. They should not be forced to hand over those facilities and the control over admission policy to private sector managers who could transform the facility for new activities. They could determine the financial criteria and a great many other things. Local authorities will very often include many things in the use of a sports complex. The sports complex I know best is Picketts Lock in the Lee Valley Regional Park. It could very well have a range of activities which are extended and which will provide a comprehensive, satisfactory community facility. But if in one way or another facilities like Picketts Lock or those which are managed wholly by an authority are to be put out to tender, then it is at the whim of the private contractor. That really means: is there money to be made in it or not? That is the criterion as to whether he includes some facilities which need to be put in in order to encourage its use. I am thinking of sports like judo, for instance—a growing sport which may very often have a limited financial attraction to an individual. Yet in the totality of the provision one would need that.
One kind of activity to which I should like to draw the attention of the Minister and obtain some observations on is the following: a number of local authorities have sought to ensure that the needs of different communities are properly addressed; for example, through the provision of women-only swimming sessions with female attendants. That allows some Asian and other ethnic minority women to use the swimming facilities, as their culture prevents unclothed association with men.
Some councils provide information on their services in different languages, particularly in areas where English is not spoken. Authorities have also

539
targeted work with disabled groups and encouraged positive staff attitudes and a willingness to assist these groups who, for example, may not be able to move equipment about.
I plead with the Minister to listen to the voices of those who have not been part of his political process in this matter. I am referring to the voice of the Institute of Leisure and Amenity Management which has said:
"There will be many facilities that are of no interest to the private sector. Given the range of facilities listed in the consultation paper there is no universal financial target that could possibly be applied to them all without the implication that some services would be closed down."
Therefore this key amendment aims to take out of the Bill the possibility of the Government adding to the Bill services which are not already covered by the Bill. Amendment No. 9 further asks that nothing further be added—I am not saying that nothing more should be added—until at least 1993. I beg to move.
The Earl of Caithness: I am sure that the Committee will agree that the first two of these amendments (Nos. 8 and 9), would in practice have a similar effect. The first would omit entirely the power to add further activities without recourse to primary legislation; the second would delay its use until so far into the future as to make it rather academic.
Perhaps at this stage I should remind the Committee of the power that we are talking about. It can be found in Clause 2(3). I shall quote the words of my right honourable friend the Secretary of State, who said in another place on 6th July on Second Reading at col. 81 of the Official Report:
"This power is necessary so that we may add further services later once authorities have coped with the initial list. We shall certainly not use the power to add core services such as teaching, policing, planning control and the like. Use of the power will be subject to affirmative resolution of both Houses."
That sums up extremely well why we consider the power to be necessary. We do think that it is right that the local authority should have time to consider and implement what is at the moment subject to consultation and what we discussed on the first amendment.
The Government do not, despite much putting about of rumours to the contrary, have any plans to use Clause 2(3) immediately following Royal Assent to add a further raft of activities to those already on the face of the Bill, except for one matter. It may well be that the power is used to add sport and leisure management, but that has already been thoroughly foreshadowed and subject to a full consultation exercise.
I think that it would be wrong (because that consultation exercise has only just finished) for me to comment in detail on the points made by the noble Lord, Lord Graham of Edmonton, because those are exactly the kind of points that we are considering. However, I do not think that it would be wrong for me to say to those who are concerned that, should one proceed down the road of using the order—that is what the Committee agrees—to include sport and leisure management in due course, of course that service and the strictures on it can be laid down by the
540
local authority. I have absolutely no doubt that the local authority, where it is using such leisure facilities for the handicapped, the disabled or for women, will specify that in the contract. It will be part of the tender document that within certain hours and at a certain price those facilities must be provided.
All that tender document is doing is setting out the service that the local authority wants. Then it will be for the local authority's in-house workforce to decide at what price it can perform that service as set down by the local authority. The same will apply to contractors. I have no doubt that the efficient and well-managed local authority labour forces will compete very fairly on that basis. Otherwise the fact is that there are no current plans for further additions.
But is it not entirely reasonable that the power to add by order should be provided for? It would be a wrong use of scarce parliamentary time if, whenever it did appear that there was a good case for adding an activity whose addition raised essentially the same issues as were raised by the services currently on the face of the Bill, the whole legislative process had to be gone through yet again. We are very much debating the principle; what the order does is to allow us to add other services which might be considered suitable.
The power is subject not only to mandatory consultation, as a result of an amendment accepted in another place, but also to debate in both Houses. Therefore I hope that my noble friends will join me in agreeing that these are amply sufficient safeguards against the abuse or misuse of this power.
I turn to Amendment No. 10 which concerns the wording of the duty to consult. I can assure the noble Lord, Lord Graham of Edmonton that the local authority associations and all authorities, bodies, and individuals who appeared to be concerned would most certainly be consulted. I do not, in fact, believe that the amendment proposed would add substantively to the form of the duty already contained in Clause 2(4). This Government are in the habit of consulting widely on virtually every significant policy initiative, with or without statutory duty. For instance, the consultation paper of 2nd November, which set out the proposed de minimis level and phasing-in scheme, was sent out not only to the local authority associations but also to every single authority as well as to a wide range of other interested parties. There could be no fuller consultation than that.
The present wording does not, therefore, conceal the remotest hint of an intention to narrow the scope of consultation. Therefore I hope that I can assuage the noble Lord's fears on that point.
Lord Hughes: I do not know what my noble friend thinks about what the Minister has said on the assurances given about consultation, but I should be very surprised if he is in any way satisfied with the answer given by the Minister to the first amendment we were discussing which was to leave a subsection out of the Bill.
The Minister has said that the procedure for an order to be placed and to be subject to the affirmative resolution gives ample opportunity for both Houses

541
to discuss the matter and debate it at whatever length may be decided. If an order is being put forward for one particular addition, then obviously both Houses have the opportunity of expressing their views for or against that particular one. But there is a difference between the Houses because of the conventions which now apply.
The other place can vote against an order. Convention prevents us from voting against an order particularly if it has already been passed in another place. That would be bad enough if an order was being placed for one simple addition, but it would be more likely that the order to be presented would be adding two or more facilities to the procedure. It may well be that in either House Members would be quite happy about one of the additions but dislike intensely another. The provisions for dealing with orders do not allow an order to be amended. It has either to be accepted or rejected so there is no opportunity, particularly for this House, to give discriminating consideration to different aspects of the order.
The Minister said that if that subsection were taken out it would require primary legislation for other facilities to be added to the procedure. I suggest that that is not a major obstacle. It requires merely a very simple piece of legislation to add to Clause 2 the additional facilities and to add them to Schedule 1. I hesitate to say that it would be a one-clause Bill but it could quite easily be a one-page Bill. In that case the facilities would be available to both Houses to consider the matter in detail. I do not know how my noble friend feels on the matter. However, I feel that the answer to the question of relying on the affirmative procedure on the resolution is totally unsatisfactory. I hope that my noble friend will proceed to test the will of the Committee on that matter.
6 p.m.
Lord McCarthy: I should like to ask the Minister a question about what he said concerning consultation. He said that sport and leisure as a possible subject for compulsory tendering was subject to consultation. However, when it has been made subject to consultation, will the Government be influenced by the consequences of the consultation? My noble friend Lord Graham mentioned what he thought people in the sport and leisure industry thought of the idea of compulsory tendering. He said that they do not like it.
Will the Government be influenced by the consultation and will they tell us what the results of the consultation are before they come to extend the results of the Bill? They will not tell us the results of the consultations which they have had on refuse, cleaning, catering and maintenance. They say that they cannot tell us because that information is confidential. Therefore, they cannot tell us when it is confidential and they cannot tell us now. All they can tell us is that they will probably add it to the Bill. I think that is not reasonable, although the Minister says that he does not want to be unreasonable.
Lord Dean of Beswick: What is worrying many people who are involved in sport and like to watch
542
sport is the fear that the Bill, if it becomes an Act, and if orders were to be introduced later, could involve a substantial diminution of facilities in areas where they are most needed. Members of the Committee from all parts of the Chamber have noticed that in the field of sport (with the possible exception of soccer and cricket) and particularly in the more competitive sports which are done on a personal basis, in order for people to participate they need basic facilities to be provided for training, as they are in all parts of the world for their competitors. Other countries seem to be able to provide—I believe from public funds—those competitors with far more extensive training than we are able to give in this country.
I think that it is true to say that the one large swimming pool in the north of England—it is, I believe, just short of Olympic standard—is in Leeds. It is not in Manchester and it is not in Sheffield. It is the only swimming pool which can cater for international competitions. Some years ago there were plans afoot when Leeds was under the control of Conservatives to sell the pool to private enterprise because it was deemed to be a drain on the rates. That apparently meant that it was a commercial drain on the rates, without taking into account the good that the provision of a swimming facility of that standard was doing for the city of Leeds. It is no accident that some of the champion swimmers of this country are from that city. I am thinking of people such as Mr. Adrian Moorhouse.
Before I came to this Chamber I represented a part of Leeds which had contrasting areas, but one segment of it was the inner city area which included Armley. The local baths were almost falling down. The city council decided that a complete renovation of the baths was necessary and it built a sports complex around that. I was in Armley the other week, and it has completely and totally built up its facilities. Many of those facilities are used by young boys and girls who have the misfortune to be unemployed. My worry is that if that sort of facility is given to the private sector, we may be inflicting on some of our young people damage that we shall live to regret.
I for one should like to see, where athletes are training and starting to blossom, that we try to give them facilities which are comparable to those enjoyed by their counterparts in international competitions. It is no accident that one of the smallest countries in the world—East Germany—produces some of the best athletes. I am not suggesting that I like that system, but the fact is that their young people get better support in every sport in which they participate.
I feel it has been necessary to make those comments because some of us are frightened that if the Minister is allowed to include that type of matter by means of an order, it will be to the long-term detriment of the young people of this country who wish to participate in sport.
Baroness Blatch: Perhaps I may ask the noble Lord, Lord Dean of Beswick, a question. There is nothing in the Bill as proposed that does not allow a local authority to determine services for its people. Therefore, if it has a view that it should subsidise

543
substantially access to sports facilities, it is a matter for the local authority to say that that is what it wants to do and to build that into any basis for open competition.
It is important to distinguish between the management and actual running of some complexes and the level to which the local authority wishes to subsidise the facilities for its people. By that method either the local authority will retain—having specified the level of service and the degree to which it wishes to subsidise the facility—the contract for itself because what it is doing is the best possible and most cost-effective operation, or it will allow the actual management to go to an outside contractor.
In any case, it will expose to the local people who pay for the service, and who have been little talked about in the debate, two things. The first is the cost of efficiently running an establishment and the second is the degree to which the local authority subsidises the facilities for its local people. I believe that there is nothing wrong with the local people understanding the level of subsidy.
If the local people support such a subsidy, and in particular if the people who are paying the bill support that procedure, is there any reason why that should not be exposed? At the moment, it is little known at what cost facilities are maintained for local people paying for the services. I do not see that as a threat to local people. If any local authority wishes to have free access or subsidised access to facilities, or even selectively reduced subsidised access, then it is a matter for the local authority to continue to do that.
Concerning consultation, which was a subject raised by another noble Lord, I believe that the Government have consulted more than any previous government in history. However, it is interesting to note the comment which was made. People who are concerned with leisure facilities should be asked what they think, and clearly they have a very direct vested interest in the future of the industry. However, there is a host of other interests to be consulted. Not least of those are the people who have to foot the bill for the facilities. They are also part of the consultation procedure. I think that there is nothing wrong in exposing the real cost of the facilities so that local people can make real choices about what they want and local authorities can then, with hand on heart, produce it.
Lord Dean of Beswick: Perhaps I may briefly reply to the point made by the noble Baroness. I think we see here a clear indication of the dangers of treating particular areas of the country as one and saying that they are all the same. They are not the same. I spent my childhood in an area of Manchester where I paid a penny a week at a working men's club. Facilities in those days were hard to come by. However, we produced the champion gymnast of this country, who captained our team in Berlin at the first Olympic Games after the war.
If we say that our main basis is simply to let the local authority underpin the expense and decide the level of subvention that it will pay, what is the point, when it is already doing the job, of going through an
544
exercise of letting the contract and deciding subsequently how much the charging rate will be for the subsidy on a contract which it is doing itself?
In my opinion, that is a perfect example of Parkinson's Law.
My main concern is that this will not make any contribution whatever even if the present standard is maintained, to helping people to participate in sport. As for the future, where does the question of innovation come in? Who will provide any new facilities? I cannot see the contractors who are taking the public contract and managing or administrating it providing sports facilities at the level that I would want for the people for whom I think we ought to be providing them, namely those who cannot pay for them because of their social situation. That is a particular danger which is worrying not only Members of the Committee but also people who themselves participate in sport. Those facilities have already suffered because of the way in which the Government have cut rate support grant. I think that it can only exacerbate the situation.
Lord Beloff: I should like to express my sympathy with the point made by the noble Lord, Lord Dean of Beswick, about the importance to this country of having more and more widespread facilities in a number of sports for which we cater less well than do some other countries. In this connection I should like to ask the Minister whether, supposing that sport and leisure were added to the Bill in the way that is being suggested, it would be possible for a local authority to make it a condition of a contract to run a sports centre or similar installation that the contractor must also put in a capital sum and add to the facilities available? If such a condition were imposed and if it could be made into a profitable concern, there is no reason why capital should not be invested from the private sector. If this were to be a possible item in a contract, it seems to me that some of the anxieties of the noble Lord, Lord Dean, may be met.
The Earl of Caithness: I hope that the Committee will forgive me if I do not give the noble Lord, Lord Beloff, an answer at the moment because this treads on Treasury rules and the annual budgets of local authorities. As I am very new to the job, I hope that the Committee will allow me to find out the answer and write to my noble friend on that particular point, putting copies in the Library as usual.
I am sure that the pessimistic view of the noble Lord, Lord Dean of Beswick, on these proposals will not come to fruition. I must declare an interest in that both my children go to the local authority swimming baths at weekends. I should hate to see that facility reduced or diminished in any way. In fact I am certain that, given the Bill, it will not be diminished. I am sure that the local authority will lay down sensible conditions in the tender document.
I believe that it comes down to a basic difference between us: noble Lords opposite feel that what we are doing will diminish the service; the Government believe that the necessary safeguards can be laid down within the contract and tender documents. Moreover, we believe that if sufficiently good and cogent reasons are put forward for further local

545
authority activities, other than the core activities to which I have referred, to be put out to tender in due course, then those should be added by order.
6.15 p.m.
Lord Graham of Edmonton: The Minister's response is far from satisfactory. Perhaps it is only he and I who have the benefit of having studied the consultation document, which is the key to what I believe is a misunderstanding. The Minister understands the matter very well because he has read the document, and so have I. However, I fear that the noble Baroness, Lady Blatch, could not have done so because she persists in putting forward the argument that it is wholly within the gift of the local authority to determine its pricing policy, to establish its criteria and to go out to tender. It then says to those who are tendering, "These are the charges to be applied and you must manage the situation". In other words it is perfectly clear that in all other tenders cleaning, catering and matters of that kind the authority will be able to lay down its standard and then invite people to meet that standard. But that is not so with leisure and sports. I believe that it may be helpful to the noble Baroness to read out the appropriate part of the consultation paper. The Government have invited local authorities to comment on which alternative they prefer—there is no question that if there is a majority in favour of one or the other they will get it. The options are either:
"(a) Local authorities should retain their present discretionary powers under Section 19(1) and (2) 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 so delegate; or
(b) 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, 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 Government see only two options. One is that the local authority determines social as well as financial policies in the use of sports facilities. Then there is the instance of old-age pensioners—there must be a lot of old-age pensioners who use sports facilities—school groups and the unemployed.
What about the generality of the community? If a local authority follows the second route—and I repeat what I said in my opening remarks—the private contractor will decide, with his pocket as the sole criterion, whether it is in his interest to have a sports centre open at certain hours, how much to charge and what sports facilities it will contain. I think that that is very dangerous. I shall certainly give way to the noble Baroness.
Baroness Blatch: In fact the noble Lord misquoted me. I did not say that local authorities would have the power to determine charging policy. I said that the local authority would have the power to determine its degree of subsidy, which is a very different matter.
546
Therefore if the local authority itself wanted general access, it could determine general access by a wider subsidy. If it wanted selective access by choosing old and young people and certain disadvantaged groups, it could determine that too. So it is a matter of a local authority determining the degree to which it wishes to subsidise the facilities for the users.
Perhaps I may make just one other point while I am on my feet. It is very much in the interests of whoever manages a facility, be it the private contractor or the public contractor, to see that the facility is used. It will receive maximum use when the charging policy is right. If the charges are exorbitant, the facility will not be used to capacity, which is bad management whoever is managing it—be it a private or public contractor.
Lord Graham of Edmonton: The swimming pools and sports complex having been handed over, if it turns out that the policy was wrong, one will find that many facilities for community use that have been handed over will be closed.
The sole criterion of the private contractor must be his pocket. He may be interested in what is happening within the community; but if a facility is provided at a loss then, even though it may be beneficial to the local community, one of the criteria that he will have to consider is that it is costing him money.
The noble Baroness said that it was within the gift of a local authority to determine its level of subsidy for sports facilities. However, I doubt whether the noble Baroness is right in saying that. I realise that the Minister may not be able to respond immediately to that point. That would drive a coach and horses through the legislation in which the Government intend to save the ratepayers' money because quite clearly at times there will be a conflict between the council making a general subsidy that will have an impact on the rates, and otherwise.
I take the Minister head-on on the point made by my noble friend Lord Hughes. My noble friend Lord McIntosh at Second Reading was very quick to consider this crucial difference. As the Minister says, if something is added, then it will be the subject of an order. That is wholly different because an order is either accepted or rejected. One does not have the opportunity of a big debate. The Minister's parliamentary colleague, Mr. Christopher Chope, stated in another place that a second batch of services will be added well before 1993 because authorities should be able to cope with the second tranche of activities well before then.
The Minister tells me that he did not have specific ideas of the additional services, and I accept that. But it is the intention to come forward with a second tranche—which may be a further five, six or seven—well before 1993.1 believe that the Minister's response has been wholly unsatisfactory. I intend to test the opinion of the Committee and very much hope that Members of the Committee opposite will recognise that this clause, and this amendment, are seeking to maintain the principle that English, Scottish and Welsh local authorities make sport and leisure available to a wide range of people who deserve them.
The Earl of Caithness: With respect, the noble Lord has slightly misled the Committee on that last point. We are not talking solely about sport and leisure. We are discussing the right of adding other items by order to the Bill.
Lord Campbell of Alloway: Perhaps I may say this before any Division takes place. Quite apart from the question of subsidy, if the suggestion that the contractors should provide investment was implemented, that would be wholly contrary to the principle of free tendering and could ensure only that the contractors for the most part would be able to secure the contract. That would be totally wrong, as I hope the Committee will agree.
On Question, Whether the said amendment (No. 8) shall be agreed to?
6.20 p.m.
Their Lordships divided: Contents, 105; Not-Contents, 143.

DIVISION NO. 2

CONTENTS

Airedale, L.

Kissin, L.

Amherst, E.

Lawrence, L.

Ardwick, L.

Llewelyn-Davies of Hastoe, B.

Attlee, E.

Lockwood, B.

Aylestone, L.

Lovell-Davis, L.

Barnett, L.

McCarthy, L.

Basnett, L.

McGregor of Durris, L.

Blease, L.

McNair, L.

Bledisloe, V.

Mar, C.

Bottomley, L.

Mason of Barnsley, L.

Brain, L.

Meston, L.

Broadbridge, L.

Milford, L.

Brockway, L.

Milner of Leeds, L.

Brooks of Tremorfa, L.

Molloy, L.

Bruce of Donington, L.

Monson, L.

Carmichael of Kelvingrove, L.

Mountevans, L.

Carter, L.

Mulley, L.

Chitnis, L.

Nicol, B. [Teller.]

Cledwyn of Penrhos, L.

Ogmore, L.

Cocks of Hartcliffe, L.

Parry, L.

Craigavon, V.

Perry of Walton, L.

David, B.

Phillips, B.

Davies of Penrhys, L.

Pitt of Hampstead, L.

Dean of Beswick, L.

Ponsonby of Shulbrede, L. [Teller.]

Diamond, L.

Donaldson of Kingsbridge, L.

Prys-Davies, L.

Dormand of Easington, L.

Ritchie of Dundee, L.

Elwyn-Jones, L.

Robson of Kiddington, B.

Ennals, L.

Ross of Marnock, L.

Evans of Claughton, L.

Seear, B.

Ewart-Biggs, B.

Shackleton, L.

Fisher of Rednal, B.

Shannon, E.

Foot, L.

Sheffield, Bp.

Gallacher, L.

Shepherd, L.

Galpern, L.

Simon, V.

Gifford, L.

Stedman, B.

Graham of Edmonton, L.

Stoddart of Swindon, L.

Grey, E.

Strabolgi, L.

Hampton, L.

Taylor of Blackburn, L.

Hanworth, V.

Taylor of Gryfe, L.

Harris of Greenwich, L.

Taylor of Mansfield, L.

Heycock, L.

Underhill, L.

Howie of Troon, L.

Wallace of Coslany, L.

Hughes, L.

Wells-Pestell, L.

Hunt, L.

Whaddon, L.

Hylton, L.

Wigoder, L.

Jacques, L.

Williams of Elvel, L.

Jay, L.

Willis, L.

Jeger, B.

Winchilsea and Nottingham, E.

Jenkins of Putney, L.

John-Mackie, L.

Winstanley, L.

Kennet, L.

Winterbottom, L.

Kilbracken, L.

Ypres, E.

Kilmarnock, L.

548

NOT-CONTENTS

Alexander of Tunis, E.

Johnston of Rockport, L.

Allenby of Megiddo, V.

Joseph, L.

Allerton, L.

Killearn, L.

Ampthill, L.

Kimball, L.

Arran, E.

King of Wartnaby, L.

Balfour, E.

Knutsford, V.

Barber, L.

Lane-Fox, B.

Bauer, L.

Lauderdale, E.

Beaverbrook, L.

Long, V.

Belhaven and Stenton, L.

Lurgan, L.

Beloff, L.

Lyell, L.

Belstead, L.

McAlpine of Moffat, L.

Bessborough, E.

Mackay of Clashfern, L.

Birdwood, L.

Macleod of Borve, B.

Blake, L.

Malmesbury, E.

Blatch, B.

Margadale, L.

Blyth, L.

Marley, L.

Borthwick, L.

Marshall of Leeds, L.

Boyd-Carpenter, L.

Massereene and Ferrard, V.

Brabazon of Tara, L.

Merrivale, L.

Bramall, L.

Mersey, V.

Brookeborough, V.

Milverton, L.

Brougham and Vaux, L.

Minto, E.

Broxbourne, L.

Montagu of Beaulieu, L.

Caccia, L.

Montgomery of Alamein, V.

Caithness, E.

Mottistone, L.

Cameron of Lochbroom, L.

Mowbray and Stourton, L.

Campbell of Alloway, L.

Munster, E.

Campbell of Croy, L.

Murton of Lindisfarne, L.

Carlisle of Bucklow, L.

Nelson, E.

Carnegy of Lour, B.

Norrie, L.

Carnock, L.

Nugent of Guildford, L.

Chelwood, L.

Onslow, E.

Coleraine, L.

Orkney, E.

Colville of Culross, V.

Orr-Ewing, L.

Constantine of Stanmore, L.

Oxfuird, V.

Cork and Orrery, E.

Pender, L.

Cottesloe, L.

Peyton of Yeovil, L.

Crathorne, L.

Portsmouth, E.

Croft, L.

Prior, L.

Cross, V.

Pym, L.

Cullen of Ashbourne, L.

Quinton, L.

Davidson, V. [Teller.]

Rankeillour, L.

Denham, L. [Teller.]

Reay, L.

Denning, L.

Rippon of Hexham, L.

Derwent, L.

St. Aldwyn, E.

Dilhorne, V.

Salisbury, M.

Dundee, E.

Saltoun of Abernethy, Ly.

Eden of Winton, L.

Sanderson of Bowden, L.

Ellenborough, L.

Sandford, L.

Elliot of Harwood, B.

Savile, L.

Elliott of Morpeth, L.

Selkirk, E.

Faithfull, B.

Sherfield, L.

Fanshawe of Richmond, L.

Stanley of Alderley, L.

Ferrers, E.

Stockton, E.

Ferrier, L.

Strathclyde, L.

Fortescuc, E.

Strathcona and Mount Royal, L.

Fraser of Kilmorack, L.

Gisborough, L.

Swansea, L.

Goold, L.

Teviot, L.

Gray of Contin, L.

Thomas of Gwydir, L.

Greenway, L.

Thorneycroft, L.

Gridley, L.

Thurlow, L.

Grimston of Westbury, L.

Trafford, L.

Halsbury, E.

Trefgarne, L.

Havers, L.

Trumpington, B.

Hesketh, L.

Tryon, L.

Hives, L.

Vaux of Harrowden, L.

Home of the Hirsel, L.

Vinson, L.

Hood, V.

Ward of Witley, V.

Hooper, B.

Wolfson, L.

Hylton-Foster, B.

Wyatt of Weeford, L.

Resolved in the negative, and amendment disagreed to accordingly.
6.31 p.m.
[Amendment No. 9 not moved.]
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 10:
Page 3, line 8, leave out from ("consult") to end of line 9 and insert ("the local authority associations and such other local authorities, bodies or individuals as may appear to him to be concerned").
The noble Lord said: This has already been spoken to, and I intend to press it to a Division.
On Question, Whether the said amendment (No. 10) shall be agreed to?
Their Lordships divided: Contents, 94; Not-Contents, 126.

DIVISION NO. 3

CONTENTS

Airedale, L.

Kilbracken, L.

Amherst, E.

Kilmarnock, L.

Ardwick, L.

Kissin, L.

Attlee, E.

Llewelyn-Davies of Hastoe, B.

Aylestone, L.

Lockwood, B.

Banks, L.

Lovell-Davis, L.

Basnett, L.

McCarthy, L.

Blease, L.

McGregor of Durris, L.

Brain, L.

McNair, L.

Brockway, L.

Mar, C.

Brooks of Tremorfa, L.

Mason of Barnsley, L.

Bruce of Donington, L.

Meston, L.

Carmichael of Kelvingrove, L.

Milner of Leeds, L.

Carter, L.

Minto, E.

Chitnis, L.

Molloy, L.

Cledwyn of Penrhos, L.

Monson, L.

Cocks of Hartcliffe, L.

Mulley, L.

Craigavon, V.

Nicol, B. [Teller.]

David, B.

Ogmore, L.

Davies of Penrhys, L.

Parry, L.

Dean of Beswick, L.

Perry of Walton, L.

Diamond, L.

Pitt of Hampstead, L.

Dormand of Easington, L.

Ponsonby of Shulbrede, L. [Teller.]

Elwyn-Jones, L.

Ennals, L.

Prys-Davies, L.

Evans of Claughton, L.

Ritchie of Dundee, L.

Ewart-Biggs, B.

Robson of Kiddington, B.

Fisher of Rednal, B.

Ross of Marnock, L.

Foot, L.

Seear, B.

Gallacher, L.

Shackleton, L.

Galpern, L.

Shannon, E.

Gifford, L.

Shepherd, L.

Glenamara, L.

Simon, V.

Graham of Edmonton, L.

Stedman, B.

Grey, E.

Stoddart of Swindon, L.

Hampton, L.

Strabolgi, L.

Hanworth, V.

Taylor of Gryfe, L.

Heycock, L.

Taylor of Mansfield, L.

Houghton of Sowerby, L.

Underhill, L.

Howie of Tryon, L.

Wells-Pestell, L.

Hughes, ughes, L.

Whaddon, L.

Hunt, L.

Williams of Elvel, L.

Hylton, L.

Willis, L.

Jay, L.

Winchilsea and Nottingham, E.

Jeger, B.

Jenkins of Putney, L.

Winstanley, L.

John-Mackie, L.

Winterbottom, L.

Kennet, L.

Ypres, E.

NOT-CONTENTS

Alexander of Tunis, E.

Birdwood, L.

Allenby of Megiddo, V.

Blake, L.

Allerton, L.

Blatch, B.

Arran, E.

Bledisloe, V.

Balfour, E.

Blyth, L.

Barber, L.

Borthwick, L.

Bauer, L.

Boyd-Carpenter, L.

Beaverbrook, L.

Brabazon of Tara, L.

Belhaven and Stenton, L.

Brookeborough, V.

Beloff, L.

Broxbourne, L.

Belstead, L.

Caccia, L.

Bessborough, E.

Caithness, E.

550

Cameron of Lochbroom, L.

Macleod of Borve, B.

Campbell of Alloway, L.

Margadale, L.

Campbell of Croy, L.

Marley, L.

Carlisle of Bucklow, L.

Marshall of Leeds, L.

Carnegy of Lour, B.

Massereene and Ferrard, V.

Carnock, L.

Merrivale, L.

Chelwood, L.

Mersey, V.

Coleraine, L.

Milverton, L.

Colville of Culross, V.

Montagu of Beaulieu, L.

Constantine of Stanmore, L.

Montgomery of Alamein, V.

Cork and Orrery, E.

Mottistone, L.

Cottesloe, L.

Mowbray and Stourton, L.

Crathorne, L.

Munster, E.

Croft, L.

Murton of Lindisfarne, L.

Cross, V.

Nelson, E.

Davidson, V. [Teller.]

Nugent of Guildford, L.

Denham, L. [Teller.]

Onslow, E.

Derwent, L.

Orkney, E.

Dilhorne, V.

Oxfuird, V.

Dundee, E.

Peyton of Yeovil, L.

Eden of Winton, L.

Portsmouth, E.

Ellenborough, L.

Prior, L.

Elliot of Harwood, B.

Pym, L.

Elliott of Morpeth, L.

Quinton, L.

Ferrers, E.

Rankeillour, L.

Ferrier, L.

Reay, L.

Fortescue, E.

Rippon of Hexham, L.

Fraser of Kilmorack, L.

St. Aldwyn, E.

Gisborough, L.

Saltoun of Abernethy, Ly.

Goold, L.

Sanderson of Bowden, L.

Greenway, L.

Sandford, L.

Grimston of Westbury, L.

Savile, L.

Halsbury, E.

Skelmersdale, L.

Hesketh, L.

Stanley of Alderley, L.

Hives, L.

Stockton, E.

Home of the Hirsel, L.

Stodart of Leaston, L.

Hood, V.

Strathcylde, L.

Hooper, B.

Strathcona and Mount Royal, L.

Hylton-Foster, B.

Johnston of Rockport, L.

Swansea, L.

Joseph, L.

Thomas of Gwydir, L.

Killearn, L.

Thorneycroft, L.

Kimball, L.

Thurlow, L.

King of Wartnaby, L.

Trafford, L.

Knutsford, V.

Trefgarne, L.

Lane-Fox, B.

Trumpington, B.

Lauderdale, E.

Tryon, L.

Long, V.

Vaux of Harrowden, L.

Lurgan, L.

Vinson, L.

Lyell, L.

Ward of Witley, V.

McAlpine of Moffat, L.

Wolfson, L.

Mackay of Clashfern, L.

Resolved in the negative, and amendment disagreed to accordingly.
6.42 p.m.
[Amendment No. 11 not moved.]
Lord Dean of Beswick Lord Dean of Beswick moved Amendment No. 12:
Page 3, line 17, at end insert ("or if it is work carried out by the employee who is responsible for the security of any building").
The noble Lord said: I was thinking that the way we are going on, if we stay here a long time, we might even threaten the Government! We are doing a little better than Mr. Scargill.
This is a practical and specific amendment, designed to meet the concern expressed by very many authorities about the effects that the Bill as drafted would have on the role and supply of caretakers and wardens in schools, sheltered housing and similar establishments.
The effect of the amendment, if approved, would be to exempt from the competitive tendering provisions, caretakers and wardens in small establishments, whose job contains defined activities

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such as cleaning which cannot be described as incidental and quantitatively small, and thus would not be exempt under Clause 2(6) as currently drafted, yet whose exemption is vital to the proper continuance of the caretaking and security functions, most particularly in rural and primary schools. The problem is basically one where the important element of the job may nevertheless quantitatively be the lesser part.
The Bill currently sets out in Clause 2(6) a very stringent and rigid test for exempting any "defined activity" work from competitive tendering. It means that work will only be exempt if it is incidental to the greater part of the employee's work and such greater part does not constitute a defined activity.
Although the Bill does not include caretaking or janitorial duties as defined activities, the fact remains that it will require local education authorities to include caretaking of many of their schools in the competitive tender provisions. This is because in the small schools the only practical and economic way of organising the coverage of cleaning, caretaking and security, and similar functions, is to employ one person to do all these things, sometimes on a part-time basis.
The Bill poses two solutions, both equally poor: to ask for tenders for the complete range of work under Clause 2(7), or to try to restructure the work in such a way that the caretaking function is split off from the cleaning and the latter only is put out to tender. This is an expensive, uneconomic and probably unworkable solution in many cases, resulting in the security function for a group of schools being carried out at a distance, remote from the community, with consequent difficulties of access and supervision; that is, assuming that the recruitment of such staff remains possible. Because cleaning is a defined activity and usually constitutes more than 50 per cent. of the caretaker's work in small establishments, the Bill's provisions will nevertheless apply.
I have various examples from a number of major local authorities such as Surrey County Council, Warwickshire County Council, Kent County Council and Gwynedd County Council that have submitted their views on this matter. I shall not go through the four because of the time factor, but I think it would be as well to quote the Surrey County Council's comments as it generalises the experience of most of them:
"Surrey County Council is an example of an authority very concerned about the impact of competitive tendering on their school caretakers and cleaners in charge. While the caretakers at most of their secondary schools have responsibility for a wide range of tasks and cleaning is a lesser part of their work, so that they would fall outside the Bill's provisions, the position is very different in their primary and special schools.
In very many of them—Surrey estimate 339 out of a total of 379 primary schools—the caretaking functions would be affected by the proposed legislation. These are schools where cleaning is currently 50 per cent. plus of the caretaker's work. If the cleaning contracts go to outside contractors, the implications for schools are considered by the authority to be very serious.
The presence of a caretaker is necessary for a whole variety of purposes which are not suitable for a private contractor to undertake. Such purposes include:

1. responsibility for the security of the premises;

2. unlocking and locking the school (both for school use and community and adult education, evening and weekend use):

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3. receiving deliveries of supplies and services;

4. checking on the heating installation and operation and in general to be on site for a whole variety of things which might crop up each day.

Many of these caretakers are at present resident in a caretaker's house which presumably would then have to be vacated.
The security and caretaking function is not suitable for inclusion in private contracts, but the alternative—to adjust downwards the amount of time a caretaker spent on cleaning and restructure so that a caretaker's work was not exposed to competitive tendering—poses great problems. The cost implications would be substantial because extra cleaning hours would have to be allocated to each school".
It is contended by Surrey County Council that it is far more sensible not to have to split the work into two.
Such arguments also apply to the position of other employees such as sheltered housing wardens, and estate caretakers whose jobs contain a sufficient cleaning element to bring them within the Bill, but whose other responsibilities are not suitable for contracting out, yet it would be uneconomic and impractical to disaggregate the cleaning element from the other part of the job.
Those of us who have worn local authority hats have dealt with the question of primary schools and caretakers. Such people become a fundamental part, in a human sense, in the establishment. That was my experience in the area of Leeds which I was privileged to represent for nine years. When we were lucky enough to have a very necessary rebuilding programme of primary schools in the three that I was lucky to help to programme in West Leeds (where they were very badly needed) we did not at first cater for caretakers on-site. Very soon we had to correct that. We found that with the presence of the caretaker on-site in employment the financial advantages that accrued to Leeds from that decision could not be measured. Certainly the balance was well on the plus side because they became identified: they were at the schools, their presence restricted vandalism that was a serious problem; they became known to the staff, the children and the parents. The case is made. It would be a tragedy and counter-productive in the cost sense in the long-term to disrupt those type of arrangements that have stood the test of time so well in these schools and other types of buildings. I beg to move.
Lord Foot: The noble Lord, Lord Dean of Beswick, has enumerated a number of important authorities which support the amendment. I should like to add Devon County Council which shares the concern so admirably expressed by Surrey County Council. The problem is particularly acute in Devon. It is a large area mostly of rural character and has a large number of small schools. It would be in great difficulty if it were obliged to contract out the functions which are at present performed by caretakers carrying out both caretaking and security duties.
I hope the Minister will look favourably upon the matter. Nothing in the amendment conflicts with the principle behind the Bill. It has already been acknowledged that there must be exceptions to the general rule. The amendment simply adds one further exception to those already contained in the Bill.
Baroness Carnegy of Lour: I do not know whether the amendment meets the problem because I have not been involved in its drafting nor in the discussions. If

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in his reply, the Minister says that such people should be included, he should explain how he sees the principle of the Bill applying. In the area I represented for eight years, and all over Scotland, one often has someone responsible for the cleaning and security of small schools. If he or she does not live in a caretaker's house there will be someone living close by in the village who will provide a key for community groups wishing to use the school in the evening. It is a personal procedure and it is widespread. We, in Tayside, did not usually provide tied houses for such people. They lived in the locality and constantly went to and fro during the day and the evening.
I cannot picture how the tendering process will work for such people. I believe that there must be continuity in this function. The noble Lord, Lord Dean of Beswick, pointed out a problem which had not previously occurred to me. The amendment does not deal with the essence, the principle or the advantage of the Bill; it makes sure that the Bill works for small primary schools, particularly in villages.
Baroness Stedman: I should like to support the amendment. A problem also arises in respect of retained fire stations in remote rural areas such as parts of Bedfordshire, Suffolk, Cambridgeshire, Devon, Cumbria and Yorkshire. There are many retained stations and the authorities are dependent on their manning for the maintenance of fire cover in the area. At such stations the duties of caretaker are usually performed by a local person at a time mutually agreed with the station's chief officer. Most of the stations are unmanned except on a drill night or during a fire call. The stations are therefore kept locked and the cleaners must have a key in order to obtain access. In most cases there is not a great deal of cleaning to be done. However, the question of security arises because at the station are kept the fire service vehicles containing various equipment and security devices. I think that such counties would be helped if they could continue to use locally based labour. Therefore, the issue falls into the same category as village schools.
The Earl of Minto: I should like to say a few words as an elected regional councillor in Scotland. I support everything that has been said by the noble Baroness, Lady Carnegy of Lour. I should like to hear the Minister's answer to the question posed. I have a great deal of sympathy for the amendment as it stands. We, in the Border region of Scotland, will suffer greatly unless the cookie crumbles—I hope the expression may be used in the Committee—in the correct way. The only way one will discover that is in the answer given by the Minister.
The Earl of Caithness: I should start my response by emphasising that the Government have recognised from the outset that it would be nonsense to require authorities to expose to competition minor bits of cleaning or other work carried out by people whose main job will not be subject to competition.
Clause 2(6) of the Bill provides that work which would otherwise have been subject to
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competition—that is, it would have been part of a "defined activity", to use the words of the Bill—will not be so if it is incidental to the greater part of an employee's work, and the greater part is not subject to competition. This provision provides the answer in many of the cases to which these amendments seem to be addressed and which have been mentioned this evening.
Many caretakers spend only a small amount of their time on cleaning. The same is true of wardens of sheltered housing schemes. So these amendments are concerned only with cases where the greater part of an employee's work consists of a defined activity. 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.
Clause 2(7) makes specific provision for authorities to subject work to competition in this way, although I should emphasise that it will be for individual authorities to decide whether they want to or not. The Bill will not stop them from redrawing responsibilities so that only work falling within a defined activity is subjected to competition if they decide that that makes most sense locally.
I should perhaps also draw to the Committee's attention the fact that the amendments seem to contain the seeds of an enormous loophole. An authority could give large numbers of employees nominal security duties and thus exempt them wholesale from competition. None of us would wish to see such an element.
I should like to point out that Wandsworth council, after contracting out caretaking on its housing estates, had a saving of approximately £640,000. The caretakers also had security and other responsibilities similar to those of' school caretakers. I hope that my noble friend Lady Carnegy of Lour will be satisfied that such things have been proven to be possible. I take her point that it may be more difficult, and I also acknowlege the point made by the noble Earl, Lord Minto, as regards more rural areas. The noble Lord, Lord Foot, mentioned the same difficulty as regards Devon.
From memories of my childhood in Aberdeenshire, I do not recall any difficulty about local villagers helping on a contract basis. That would satisfy the terms of the Bill and also provide the necessary security, cleaning and other operations about which Members of the Committee are concerned.
I hope that I have answered satisfactorily the points that have been raised. Between now and another stage. I should like to look at what Members of the Committee have said. I did not fully

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understand some of the points made by the noble Lord, Lord Dean, and I should like to consider them in discussion with members of my department between now and another stage.
Baroness Seear: I may not have understood the Minister properly. If in the caretaker's duties more time is spent predominantly on cleaning than on caretaking, because cleaning is to be a defined activity, it has to be contracted out. If it is a large, dirty school, no doubt with high security, it has to be contracted out. If it is a small, clean school, it does not have to be contracted out. Is that what we are being told?
7 p.m.
The Earl of Caithness: The philosophy behind what we seek to do is as follows. If over 50 per cent. of the activities carried out is comprised of cleaning, for instance, as suggested by the noble Baroness, those should be put out to tender in the way that we all think is right, as we believe that this can be done satisfactorily without impinging on security. The noble Baroness produced an example of a swing of the pendulum at one end and compared it with one at the other end. It is for this kind of reason that I should like to have another look at the proposal.
Viscount Simon: It is suggested that the school caretaker has more caretaking than cleaning to do and that the cleaning should therefore be done by the contractors. Is it recognised that the school caretaker will have to be there because the cleaners will be unable to get into the school without the caretaker opening and shutting it and ensuring that everything is all right?
The Earl of Caithness: Such problems can be overcome. If there is more caretaking than cleaning, one must consider that in the terms of the Bill.
The Countess of Mar: What would happen if there were two activities? In some schools the caretaker not only cleans the school but looks after the grounds.
The Earl of Caithness: It may be that the local authority would wish to redraw the responsibilities to take account of the provisions in the Bill. In regard to the suggestion of the noble Countess, the local authority may wish to consider who was doing what before putting out any tender.
Lord Dean of Beswick: I am grateful to the Minister for his reply. I am saddened by his reference to driving a horse and cart through the Bill. That is not our intention.
The Earl of Caithness: I did not make that assertion; I was exposing the fact that a loophole exists.
Lord Dean of Beswick: Given that we have been considering the Bill for only part of today, I think that the discussions have taken place in a reasonable, convivial and constructive manner. This will be soured a little if it is asserted that we represent people
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who are attempting to pull a fast one on the Government. The sole purpose of the amendment is to write into the Bill protection that we think should be included and subsequently enacted. I would not want—nor do I believe that we would see—local authorities starting to redesignate the hours worked by their caretakers if the Government accepted the amendment.
I do not think that it is correct to attempt to compare caretakers of private schools with caretakers in Ministry of Defence departments. Caretakers in Ministry of Defence departments are surely known to their immediate workmates in the work vicinity. The point that I tried to make, perhaps not adequately, is that the caretaker as I know him—in the main we are speaking of primary schools—is an essential and identifiable part of the establishment. The first person whom the child of five years of age starting school comes to know by name is the caretaker. In the main—there are odd exceptions—caretakers provide a very personal service which I think society has been unable to measure financially in the fullest terms.
There are good caretakers and, one might say, some who are not so good. It is rare to find a caretaker who is not almost wholly respected and accepted not only by the headmaster or headmistress and the teaching staff but by the children and parents concerned. They sometimes do a great deal more in an establishment than one could put on paper.
I have no desire to press the amendment to a Division. I should like to study what the Minister has said. That may necessitate raising the matter at a later stage again and, if one is not satisfied with the Minister's reply, coming to a conclusion in a Division. That is not my intention tonight. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Dean of Beswick Lord Dean of Beswick had given notice of his intention to move Amendment No. 13:
Page 3, line 17, at the end insert ("except where in the previous year the authority did not at any one time employ more than a single employee (or the equivalent of more than one full-time employee) at the point of performance for the purpose of carrying out the following work—

(a) security duties where the duties of the employee or employees also include responsibility for interior cleaning or the cleaning of the common parts of any establishment;

(b) duties of wardenship at an estate of sheltered housing.").

The noble Lord said: This amendment has been covered largely by earlier debates.
[Amendment No. 14 not moved.]
Lord Dean of Beswick Lord Dean of Beswick moved Amendment No. 15:
Page 3. line 27, at end insert ("or if it is necessitated by the failure of a contractor to a defined authority to fulfil the terms of that contract and the consequences of the failure would, in the opinion of the authority, result in failure by the authority to exercise its functions, provided that the authority will as soon as reasonably possible, take the necessary steps to remedy the contractor's breach.").
The noble Lord said: Clause 2(8) seeks to deal with an emergency situation by allowing works to be carried out in the circumstances broadly specified in Section 84 of the 1973 Act without being put out to tender. Examples of such emergency situations are

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the recent hurricane in the South of England and the Bearsden flooding in Glasgow earlier that year. However, it does not deal with the situation where a contractor simply fails to supply an essential service such as school meals or the collection of refuse.
The purpose of the amendment is to allow the authority to make short-term arrangements for the failure of a school meals supplier pending recontracting or remedying of the breach. It is submitted that this is essential if the council has no power to make temporary arrangements. Crucial supplies such as meals for the elderly and for school children may not take place. Although they could not be defined as emergencies in terms of the existing Clause 2(8) in the sense that they are likely to involve danger to life or health, no doubt the consequences would be unpleasant.
In reply to a like amendment in Standing Committee of another place, the Minister for Local Government said:
"As for the suggestion that envisages authorities being unable to fulfil their urgent duties in the event of contractor failure, I cannot support an amendment that hinges on contractor failure. The worst that can happen in the unlikely event of contractor failure is that the authority may have to wait a few weeks without grass being cut, for example, while competition is being arranged. That is the worst case scenario because in practice it will he usually possible to appoint another contractor on an interim basis.".
That reply does not address the real issue. What if meals are not delivered to a school or home, or refuse is not collected? An authority cannot wait a few weeks as it would be in breach of its statutory duty. The assumption that it would take only a few weeks to make interim arrangements with another contractor is realistic only if there is a contractor able and willing to respond in such circumstances. This is unlikely to be the situation in the more rural and remote areas. Can anyone suggest as regards private sector contractors that if there was a default there would be someone waiting who could be called upon and who had the necessary capital equipment stock ready to fill the breach in a situation like this? I do not know of many companies that would have this type of equipment on standby. It would be far too expensive not to have to put it to use.
Dare I suggest that if a private company involved in this activity was without contracts one of its first duties to the shareholders would be to unload that particular equipment and to sell it in the market. My own worry is that it is almost impossible or very unlikely to envisage a situation where there would be a company waiting in the wings, hoping that the contractor did not fulfil the contract and who would be called on in an emergency. I beg to move.
Baroness Blatch: I am prompted by the way in which that particular amendment was put forward to pose one question. Who or what steps into the breach when direct labour downs tools? For example, it may shut off the heating; fail to provide school meals; lock up the school gates so the children cannot actually come into school. What arrangements are to be made then and what recourse do parents have in that situation?
The Earl of Balfour: Perhaps I may ask a further question in respect of what has been said by the noble
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Lord, Lord Dean. What happens if a contractor goes bankrupt? One of the matters that concerns me here is that of a contractor who has dealt with the contract very satisfactorily for two years. Everything is going fine and then suddenly he goes to the wall. I am wondering whether there could be some provision whereby the local authority could have its own insurance to cover such an eventuality.
I was recently dealing with a private legislation order in Glasgow in which one of the things the authority wished to do was to extend the insurance policy that it had to cover certain other fields. The hearing was under the excellent chairmanship of the noble Lord, Lord Hughes. Some authorities like Glasgow have their own insurance. I understand that Edinburgh is seeking similar powers. I believe that Strathclyde may also have some form of insurance to cover such eventualities. I doubt whether most local authorities have insurance—certainly not private insurance—to cover this situation. I have a horrible feeling that if they go into the market to get insurance the premium might be fairly high.
I do not know whether this amendment will meet the points. I believe that some provision should be made whereby a local authority is not going to be overspending its funds if it takes out insurance where it has put work out to tender. It should not be suddenly left holding the baby because the tenderer has gone bankrupt.
The Countess of Mar: One of the points that worries me about this amendment is that once all the local authorities have put these defined activities out to tender they will have got rid of all the staff and the equipment they need. If there is an emergency I wonder how on earth they are going to be able to replace the services. The noble Baroness, Lady Blatch, has said what happens at present if people go on strike. In the present circumstances, I believe that people are far more likely to go bankrupt than they are to go on strike.
Lord Graham of Edmonton: I hope the Minister will appreciate that these concerns are genuine. They are not merely restricted to what is the hitherto known major disaster of a contractor going bankrupt. The remarks by the noble Earl, Lord Balfour, need reading and answering here tonight. We are into a new ball game. There are going to be many more private contractors for cleaning, catering, sports facilities and other activities. In this amendment we are not concerned with dealing with what one might call a normal management situation. Bankruptcy and failure to deliver the service is better known in private rather than in public facilities.
We believe that once you have bound an authority in the manner in which the Bill envisages—that is that it will have ceased to be the providers of a service—the requirement to make sure that the ratepayers are in receipt of a service will inevitably be wholly in the gift of the private contractor. What happens if particular statutory obligations are not

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carried out? What powers will the authority have to take emergency action? The amendment is perfectly clear,
"provided that the authority will as soon as reasonably possible, take the necessary steps to remedy the contractor's breach".
We are talking about an emergency. The noble Lord, Lord Dean, made reference to existing powers under current legislation. Can the Minister tell us in the circumstances that have been outlined—and the noble Baroness has also given an illustration—what powers has an authority to take action of an emergency kind?
Later on there will be an amendment to be moved by the noble Baroness, Lady Stedman, which will seek to prevail upon the Minister to allow a certain proportion of the totality of the council's work to be retained. Percentages will be talked about. At least the authority will retain some workforce. The great danger is that if these provisions are carried through then a community will be at the mercy of the private contractor. I do not paint the picture as wholly black. I believe that the contractors intend to do a good job of work; but an emergency is one of the elements which any organisation needs to weigh up very carefully before it puts all its eggs into one basket. The intention of some noble Lords on the other side is to put as many eggs as possible into the privatisation basket. At the end of the day it is the council which has the responsibility. I hope the Minister can help us to assuage those fears.
7.15 p.m.
Viscount Massereene and Ferrard: What if the community is put at a great disadvantage because of local authority workers striking? It is a long time ago now, but I remember a case where I believe Bristol City built the most wonderful swimming bath out of ratepayers' money. It was the only swimming bath in the country at that time where our Olympic team could train. One morning one of the Olympic team—I expect this was just an excuse by the attendant—did not say "good morning" to one of the bath attendants so the staff went on strike. I understand that the strike spread and the local authority could not do anything about it. Here was a situation with a swimming bath costing millions and millions of pounds of the ratepayers' money and the local authority could not do anything about it.
Baroness Stedman: I understand that we are discussing Amendments Nos. 18 and 19 with this particular amendment, according to the groupings list. I believe it is important that the authorities should have a residual capacity to undertake work in an emergency. As a noble Lord said on an earlier amendment, how can an authority discharge its statutory responsibilities and deal with a situation of emergency such as a civil disaster, flood, bad weather, a contractor defaulting or one who reaches the position of a local monopoly? No one else can do anything about it. As the Bill stands at present, any authority which fails to win any tenders within the defined activity will no longer have any residual labour to use in this kind of emergency. The Government think—and they may be right—that the private sector is capable of responding to this kind of emergency; and that emergency response
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requirements ought to be built into the contract. But that is really at this stage only wishful and hopeful thinking. I would question the ability or the willingness of the private contractors to drop everything on receipt of a telephone call and respond to these emergencies. Council staff know that the council has the power to direct them, even during unsocial hours, to provide such emergency services as are necessary, but how many of the independent contractors can comply with, or deliver, such a service? That we shall not know until this Bill has been in operation for a while.
It is ridiculous for the Government to believe that this kind of undertaking can be taken care of in a tendering contract. It takes no account at all of what happens in real life. The local authorities can deliver the service, and many of the contractors may not be able to do so. I believe that an authority has to be left in a position to make short-term arrangements in emergencies. They must have their own staff to call on where a contractor defaults—or where it cannot supply an essential service such as meals for the elderly, school meals, or even the maintenance of emergency vehicles—until such time as the contract can be drawn up again with another contractor. It is ridiculous to take all the labour away from the local authorities. They must be allowed to have a certain percentage of it in order to have this residual force of labour for emergencies.
Baroness Carnegy of Lour: I would not go along with the noble Baroness, Lady Stedman, that the solution is to say that the local authority has to retain the labour. As one noble Lord opposite said, we are in a completely new ball game where we may have a situation where all the people working in these various areas of activity in a locality are working for private employers. We need to be assured by the Minister that if, for whatever reason, a service breaks down the Bill does not prevent the local authority finding someone else to do it by whatever means.
I do not take the point that the noble Countess made when she said that there may not be any equipment to do it with. Local authorities have to think about this. It may well be that the contract is to use equipment which belongs to the local authority; for example, wheeled bins for rubbish, or whatever it is. These are things local authorities will have to think about when they make their contract and specifications.
We need to know that when the service breaks down—and in rural areas you get this happening quite often—swift action can be taken to get another contractor to do it. To go through the whole process might be all right while the grass is growing. I did not think that that was a particularly good example when I heard it. The grass can certainly grow for a bit while a new contractor is found, but there are other things which cannot wait. We need to be sure that the Bill does not preclude the finding of another contractor, if that is how the local authority is going to do it quickly. Perhaps the Minister can tell us that now or later because it is an important point.
Lord McCarthy: The noble Baroness said that in the interests of emergency services she believes that

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the local authority should be allowed to keep the equipment. However, in order to perform the service you have to have the labour force, and some of the labour force is quite skilled. Will she agree that they can keep both the equipment and labour force? Otherwise it would not be much use.
Baroness Carnegy of Lour: The whole thing is complex and one has to try to imagine all the situations that could arise. In granting a contract, from my understanding of the Bill, I should have thought that an arrangement could be made in the contract to ensure that equipment that could not come from anywhere else was available for anyone else to use. For example, if the collection of refuse is contracted out and the authority owns thousands of expensive wheeled-bins which they have just bought, presumably the contract will be to use those wheeled-bins. They will not all be put in a cocoon or thrown away. If in that situation the service broke down—say the firm went bust—the wheeled-bins would still be there. That will all need to be thought about by the local authority when it makes the original contract.
Baroness Stedman: The noble Baroness is right when she says that it does not matter if the grass is left for two or three weeks. It may take a little longer to cut it when you get back to it, but at least that is not doing harm to anyone. It is the same if a contractor defaults on a building. If eventually the building is a month late being delivered to the authority, so be it, hut if the meals-on-wheels service breaks down, or the delivery breaks down, you cannot ask elderly people to wait a month until somebody brings them their dinner.
The Countess of Mar: We talk about the whole purpose of this Bill being business efficiency and saving money, but is the local authority, once it has contracted out certain activities, going to keep capital equipment? Is it not going to sell it?
Lord Trafford: I have some sympathy with the intention expressed in this amendment but I am a bit worried about the wording. It seems to me that the crises which are likely to arise once tenders have been put forth and accepted are not altogether dissimilar to the sort of crises which are likely to arise now. If these crises arise at the present time they will not arise because of natural disasters which occur, and where special arrangements are made. Presumably in every contract for tender this type of thing will be taken into account.
I think of things like the unsocial hours during which, for example, local authority workers clear snow, or clear roads after a storm, and that type of thing, which are not normally within the social or usual hours of somebody in a direct labour situation. But if this occasion arises, there is not much difference—and the amendment does not take account of this—whether or not the workforce is a privately tendered workforce under contract.
It does not occur, for example, because the contractor may go bankrupt. There are all sorts of other, different disasters. I agree that the local
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authority is unlikely to have its labour withdrawn for that reason, but it may have its labour withdrawn for other reasons. Clearly the biggest single risk in the case of a private contractor is that he does not deliver the service, in which case presumably under the terms of the contract the contract can be terminated and he can be replaced; time would allow that, and it is only the emergency situation to which this refers. But emergency situations of a different type still arise under present circumstances.
Many of us have seen the cases—we do not need necessarily to quote Olympic baths in the South-West—which have occurred in various places where, for various reasons, the direct labour force which is now employed has either not delivered the goods on time or has failed to deliver them altogether. This is bound to arise in both circumstances.
The most classic example I can think of in recent years was the failure in one or two areas of the clearance of refuse. As has been pointed out by the noble Lord, Lord Dean, this gives rise to certain statutory obligations under health Acts, but the same situation arises under private tendering as it does under public sector working, although the origin of the crisis may be different.
We do not have a very good mechanism for resolving the crisis with direct labour, although I accept that we have not yet heard—although I am sure we are about to—the systems by which it would be resolved with private tendering. Although the situation may arise from a different cause, the same situation is inherent in the delivery of any such service.
Lord Dean of Beswick: What disturbs me is the feeling from the Government Back-Benches, which has been running through this debate, of a criticism—I hate to use the word "attack"—solely of direct labour. The noble Baroness, Lady Blatch, asked what would happen if direct labour went on strike and they did not open doors, and lifts did not work. I can bounce the question the other way: what happens if the private sector goes on strike? They do go on strike, and in some cases far more often than direct labour.
The theme was pursued by the noble Viscount, Lord Massereene and Ferrard, who has now left the Chamber, and it was referred to by the previous speaker although perhaps not quite in the same terms. The noble Baroness, Lady Blatch, has risen on three occasions and each time she has implied that everything that is wrong is in the public sector, and that there is nothing wrong in the private sector.
In October last year I attended the conference in Blackpool of the Institute of Maintenance and Building Managers whose members manage and operate local authority building and service departments. On the last day of the conference the hurricane hit the South of England. There were officers at the conference from all over the country; from the North, the South and from Scotland. They went immediately to the telephones to find out what had to be done and it was dealt with. I ask the Minister and noble Lords opposite who have spoken on the amendment to have regard to what one of their colleagues in the Cabinet, Mr. Parkinson, said after

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that emergency. On more than one occasion during the emergency he rebutted any criticism of the performance of the electrical engineers in their attempts to restore power lines and bring back the electricity supply. I think I am correct in saying that the Secretary of State for the Environment (who is not known for his support for public works departments) is on the record as saying the same thing. He paid tribute to the reaction and response of local authority workpeople in the areas of devastation.
The noble Lord, Lord Trafford, asked what would happen if certain things closed down. I do not know what would happen. If it was an emergency service and the private contractor supposedly dealing with it was bankrupt the local authority could not refer to what has been said on the Benches opposite and take the matter to court. If a huge tree has fallen on a house it is not much use for somebody to say that there should have been a contractor here. The contractor is bankrupt. It is no use saying that the local authority, in order to deal with it on that person's behalf, will take him to court. What kind of answer is that to people who want services? It is undeniable that unless there is a small but mobile residue of a workforce in a local authority area there will be a gap which, the private sector will not be able to fill, however willing it is to do so.
7.30 p.m.
Lord Trafford: With due respect to the noble Lord, I think he has misinterpreted, at least in part, what was said. First, there was no criticism of direct labour in anything I said. I would expect contracts frequently to go to the in-house labour force. There was no criticism, implied or otherwise, of the labour that was involved following the hurricane. In that respect, I entirely endorse every remark the noble Lord made. I referred to snow clearance, and I think it was slightly unfair of him to make those points.
However, that was not the reason I spoke. I made the point because there are different causes for emergencies but they arise irrespective of whether there is a public sector direct labour contract or a private sector contract. Situations arise and emergencies occur. In some cases there would be plenty of time to deal with the problem whether through the courts or whether by some other means; for example, by issuing a further tender contract. However, emergencies can arise at present—and I started by saying that I have sympathy with the noble Lord's point—when there is no question of private tendering.
How does one build in something to prevent the problem happening? The suggestion put forward of a residual labour force or of keeping equipment does not seem to be the answer for two reasons. First, everybody knows what happens to stored equipment that is rarely used. Secondly, it is extremely expensive to keep a great deal of back-up labour for emergencies that may never arise, However, I do not want to go off on a tangent about the number of times point clearing equipment on railways is used, and arguments of that kind. The usual answer put
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forward is that it is far too expensive to keep a force that has no function and does nothing. However, the point that brought me back to my feet was that the noble Lord unkindly misinterpreted some remarks which were intended to be helpful to the debate.
Baroness Stedman: I was not suggesting that members of the reserve force would be sitting on their backsides doing nothing. We were suggesting that 25 per cent. of the work that is to be put out to tender by the local authorities should be retained by their own direct labour organisations, and not that those men should be sitting there doing nothing and waiting for an emergency.
Lord Trafford: The noble Baroness has put it far more elegantly than I did when I suggested that they might be idle. I take the point. However, it would seem to be an extremely expensive way of doing it. A pluralistic approach (which is what this amendment really advocates) is nearly always more expensive.
Baroness Blatch: I rise to endorse the comments of my noble friend Lord Trafford and also to say that it is not my intention in any way to deprecate the work of direct labour organisations. I believe that direct labour will win much of the work across the country. I think it is important to put on record that the tenor of the amendments before the Committee today implies, at least to me, that noble Lords opposite believe that the public sector has the monopoly of good service.
Lord Dean of Beswick: I have not said that.
Baroness Blatch: I have no vested interest in terms of whether the work remains with local authorities or goes to private contractors. The responsibility of local authorities is to ensure that services are well provided, at a cost that can be afforded and at a standard predetermined by the local authority itself. We should not fear that. The best local authorities should not fear that and the worst should be worried, and rightly so.
Emergencies can arise whether the workforce is private or public. It is always possible to build into the contract of an employer—and certainly in the event of an employer going bankrupt, which is one of the instances that has been stated already—that the equipment used by the workforce, in our schools, our old people's homes and in our local authority buildings, will be requisitioned by the local authority. It can be a condition of contract that that should happen in the event of bankruptcy. I know that if the snow is too deep for people to get through to provide the services, people will stay at home, our children will not get to school or if they get to school there will be no heating or they will not get a hot meal. Such emergencies can be coped with, and as my noble friend Lord Trafford has pointed out, such emergencies happen whether the workforce is private or public. It is for the local authority at that time to determine what it will do.
I have one other point on the issue of public versus direct labour. The opportunity for a local authority to rise to the occasion in an emergency if the work is contracted out is rather greater than if it is its own workforce that down tools. That is not an anti-direct

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labour statement. If local authority caretakers, cleaners or caterers decide not to work, as they have in the past, it is very difficult for the local authority to bring in another workforce. It is more costly than it would be the other way round.
So I think it is a matter for the local authority to work its way through in an emergency, for it to build into the contracts it lets and to pre-empt the possibility of bankruptcy on the part of the company. I am sorry that the noble Lord, Lord Dean of Beswick, has taken that view. I think that we should be concerned about effective services, whoever provides them— public or private. That should he our concern and local authorities' responsibility.
The Earl of Caithness: I think we have had an extremely useful debate on what I call the safety net amendments, Nos. 15, 18 and 19. They are all related to the same point, as the noble Baroness, Lady Stedman, said. I am of course as concerned as anyone that local authorities should be able to carry out their functions unimpeded by contractor failure, but I really do believe that noble Lords opposite have very considerably exaggerated the extent to which this Bill will create any serious danger of functions not being fulfilled.
I draw to your Lordships' attention Clause 2(8), whose purpose is to exempt from the Bill's provisions any work requiring to be done in an emergency; that is, in a situation where there is danger to life or health or serious danger to property. This exemption already covers a very wide range of circumstances of the sort which I suspect these amendments also attempt to deal with. If refuse collection, for instance, is not dealt with, it rapidly becomes a health hazard. Vehicle maintenance also must be done properly or danger to lift obviously occurs. The same can be true even of some elements of building cleaning. Floors allowed to remain so slippery that they are unsafe to walk on are clearly a health hazard.
It follows that in order to find instances where contractor failure would result in functions not being properly discharged and where Clause 2(8) would not allow the authority to carry out the work itself, one has to look to examples such as grass remaining uncut for a few weeks or a very few months while a fresh competition is arranged. But of course that is absolutely the worst case scenario because in practice it will usually be possible to appoint another contractor on an interim basis.
At this stage perhaps I may come to the point of the noble Lord, Lord Dean of Beswick, about capital assets. Authorities can write conditions into their contracts, so that if a contractor fails the assets revert to the authority, or they can lease assets to the contractor so that they will not need to find a contractor with his own capital assets in the unlikely event of a contractor failing. It takes care of the point that the noble Lord, Lord McCarthy, made: when a contractor goes bankrupt, what will the labour force do? The labour force can then be hired because it will be looking for work, looking for payment, and the authorities will have the machinery on a lease within the condition, as an example of getting round that problem. If there are no other contractors available, that will he reflected in a nil response to the
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notice—referred to in Clause 7(1) —inviting interested parties to put their names forward. When that occurs the authority is immediately free to carry out the work itself.
Any failure that has a life-threatening effect or would cause serious damage to property is, I emphasise again, already catered for by the emergency exemption. Like my noble friend, I am not slanging the DLO work, because in many cases it is of very high quality. But like some of my noble friends, particularly my noble friends Lady Blatch and Lord Trafford, I cannot resist pausing at this point to reflect on the numerous instances where extremely important tasks such as refuse collection fail to be carried out simply because the binmen arc on strike. One would think that any authority seriously worried about its failure to carry out its functions would then immediately call in private companies. Their reluctance to do so, I suggest, provides an interesting contrast with the importance attached by noble Lords opposite to this amendment.
Indeed, I have just suffered at home in Oxfordshire, where the binmen are on strike. The paper advertised that they were coming at a certain time on a certain day. We put out all the dustbins. Did they come? No. So I took the dustbins round to the tip and found that closed. So we have all experienced this problem, but it is just one example of where difficulties occur in the public sector.
I was very nearly persuaded by the noble Baroness, Lady Stedman, in her support of her Amendment No. 19. Then I suddenly thought to myself: what about those authorities that have voluntarily contracted out work now? Have they contracted out 75 per cent? Have they retained 25 per cent. in-house in case of emergency? No, they have found that it is not necessary. They have not kept any work in-house or kept a small in-house operation in case the contractor fails. Indeed, surely it would be a nonsense for them to keep a couple of dustcarts just in case of failure, as some of my noble friends have said.
My noble friend Lady Carnegy said: let us look at the situation. What is going to happen in the unlikely event of a DLO or a private contractor not being able to fulfil its work? Are there going to be other people in the market ready to take up the work? It would have been found out at the tender stage whether there was competition. If there was not, the DLO would still be doing the work. I think that some of the concerns of noble Lords opposite are fears based on a possible privatisation monopoly, and I believe that is misplaced.
The private sector, as we all know, is a dynamic. everchanging phenomenon and the barriers to entry of new firms in the activities covered by the Bill are easily surmountable. Moreover, one of the most potent ongoing sources of potential competition for a contractor which has been awarded work in one authority may well be DLOs in neighbouring authorities. Local government seems to have rather a blind spot about this source of competition, but in the fullness of time I have no doubt that many DLOs will themselves emerge as potent forces in these areas of activity outside their own boundaries. I thought this was something which the noble Countess might have mentioned. She may like to think about that and the possible advantage.

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I turn to my noble friend Lord Balfour, who raised the very important point about the risks that local authorities take at the moment and the risks that contractors have to take. Many authorities carry their own risks rather than insure. As I recall, when I was in private sector practice working with a local authority which put some work out to contract, my company was lucky enough to make the right offer to the local authority in open competition. The local authority quite rightly turned round to me and asked, "What happens when you go bankrupt?" So I said, "We are not going to go bankrupt"; to which they replied, "Fine, we will take your word for it, but that is not good commercial management. We will need a bond or form of insurance". That is quite legitimate commercial practice and I am sure, as my noble friend pointed out, that would be the common way in which local authorities seek to minimise any risk in contracting out work.
I turn finally to the noble Baroness's amendment, Amendment No. 19. I have given this a lot of careful thought and I really do not think that that provides a satisfactory solution to what is obviously of concern to the Committee. I believe that the Bill and the market place, together with the obvious commercial care that local authorities will take in putting anything out to tender, as my noble friend Lord Balfour mentioned, is by far the better way of dealing with any fears that the Committee may have.
7.45 p.m.
Lord Dean of Beswick: First, if I misheard or misread the intention of the noble Lord opposite in his first remarks in Committee, I apologise. But the fact is that he used the words "direct labour", "direct works" and "strikes". Even the noble Baroness in her reply to me fell into the trap, and when talking about a strike she only used the words "direct labour".
I was interested in the points made and in the Minister's reply, but he does not remove from me, and I am sure he does not remove from the people who will have the responsibility, the view that the Bill as drafted, if it goes through, could leave tremendous gaps in the service. The Minister talked about substantial success by the private sector in tendering and providing services in local government. I do not want to compare lists, but I have here a list of public bodies that have put out contracts to private tender and have then been badly let down. Sometimes quite substantial sums of money were involved—in excess of £500,000. But, as I say, it is not the time or place to start bandying those types of figures around.
The Minister has not convinced me by any means that the Bill as it stands is the best way to deal with the situation. I should like to read more carefully what the Minister has said. I do not know whether he has any other examples to give to me. I am not minded to accept that what he said will happen. I beg leave to withdraw the amendment. I shall perhaps come back to the subject in some form or other at a later stage.
Amendment, by leave, withdrawn.
Lord Hesketh: My Lords, I beg to move that the House do now resume and that we do not return to this Bill until 8.50 p.m.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Code of Local Government Audit Practice for England and Wales
7.51 p.m.
Lord Hesketh Lord Hesketh rose to move, That the code laid before the House on 26th November 1987 be approved [9th Report from the Joint Committee].
The noble Lord said: My Lords, Section 14 of the Local Government Finance Act 1982 requires the Audit Commission to prepare, and keep under review, a code of audit practice prescribing the way in which auditors are to carry out their functions under Part III of the Act. The code must receive parliamentary approval at intervals of not more than five years. The present code was approved by the House on 24th October 1983. The Audit Commission has now prepared this revised code which is before your Lordships' House.
The code, as I have said, is the commission's code. It has been prepared by the commission, the members of which represent a wide range of interests in the public and private sectors and reflect wide experience of financial management relevant to the audit of local government accounts. It has been the subject of consultation, as required by the 1982 Act, with the bodies most directly concerned—local authority associations and the accountancy profession. It has also been the subject of consultation with the commission's auditors, the district audit service and the private accountancy firms.
My role in this matter is limited to bringing the code to your Lordships for consideration and, I hope, approval. As time is short, I believe that noble Lords would not wish me to trespass on the time available for debate by describing the changes from the original code. These have been helpfully summarised by the commission in the attachment which follows page 23. The effect of the changes is principally to update the code to reflect developments in accounting and auditing practice since 1983 and to clarify certain matters in the light of practical experience.
The further attachment summarises the major matters raised during the commission's consultation on the draft and the commission's response to those points. I hope that your Lordships will agree that the commission has produced a well-considered and practical code which will provide a sound framework for the work of auditors in local government. I therefore commend the code to your Lordships' House.
Moved, That the code laid before the House on 26th November 1987 be approved [9th Report From the Joint Committee].— (Lord Hesketh.)
Lord Bruce of Donington: My Lords, I am most grateful to the noble Lord for having given a short

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introduction to the Motion to approve the code of conduct in relation to local authority audits in England and Wales. I have already been in touch with the Minister about certain questions that I think it would be wise to clear up. I did so in the hope that instead of eliciting the reply often heard in your Lordships' House that the Minister would write to the person asking the question. I would receive answers this evening.
The first question that I ask arises from remarks that fell from the lips of the noble Lord, Lord Henderson of Brompton, at Question Time this afternoon. It is whether the code referred to and authorised under Section 14 of the Act has the force of law or whether it is purely a consultative document, although the auditors by contract have undertaken to comply with it. Is there any legal enforceability or not? This is a matter of some importance. I shall give way to the noble Lord if he can answer the question straightaway.
Lord Hesketh: My Lords, the noble Lord, Lord Bruce of Donington, asked about the legality of the code. The code has already received approval in another place and once your Lordships' House has approved it, compliance will become mandatory on all auditors appointed by the commission, whether for the district audit service or private firms. Section 15(2) of the 1982 Act makes that a requirement. With regard to private sector auditors, compliance with the code will form part of their contract with the commission.
Lord Bruce of Donington: My Lords, I am not sure whether that answers the pertinent question put forward by the noble Lord, Lord Henderson of Brompton. I shall have to examine it. If the code now before the House, which is largely the same as the original, with one or two minor modifications, is legally enforceable, then firms of private auditors should consider seriously their position in relation to the performance of their duties. In any event, they should look at their professional indemnity policies because the detailed requirements to the code of practice, if followed meticulously, as the Act requires, would place (as unsatisfactory performance today places) such a burden on auditors that considerable expense, far beyond the scale of fees authorised by the Audit Commission, would be needed to cover them satisfactorily.
I suspect that some portions of the code of practice, although stated in precise and commanding terms, are such that in the normal way they lie outside the realm of the auditing profession and should have no place in the code. I do not know, nor is it for me to say, how the leading accountancy bodies, with which I understand the Audit Commission arrived at an agreement, can possibly agree to the adoption of a code of this character. It has so much scope as to almost usurp the whole function of management in local authorities.
If the noble Lord looks at the examples of the form and opinion certificate on the statement of accounts as reproduced at pages 20, 21, 22, 23 and so forth, he will find that the certificates relate in every case to the audit of the authority's accounts for the year
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ended—whatever it may be—in accordance with Part III of the Local Government Finance Act 1982 and the code of audit practice. It is quite true that parts of the code of practice specifically refer to the procedure to be followed and the considerations to be taken into account in the audit of the accounts. There can be no doubt about that and I do not query its validity. I am surprised at the continued inclusion in the code of practice of matters which are not required to be certified so far as the accounts are concerned. Those are comprised principally in paragraphs 35, 36, 37 and so on in the code of practice. Perhaps I may give one example. Paragraph 36 says:
"The achievement of economy, efficiency and effectiveness depends upon the existence of sound arrangements for the planning, appraisal, authorisation and control of the use of resources."
In other words, the auditors have to be satisfied as to the entire work of the local authority. The local authorities' responsibilities are precisely encapsulated in the phrase "planning, appraisal, authorisation and control of the use of resources". What does that mean in practice? In addition to accounting matters, an auditor has to satisfy himself as to the management of the entire undertaking, the management of the entire local authority. As one who has had some experience in management work, I can tell the noble Lord that if this were to be done thoroughly as the code requires, it would involve an examination of every individual employee's job specification as incorporated in the proper procedure manual and that each specification would accurately describe the functions of the employee. It would have to define to whom the employee was responsible, first, for authorisation and for accountability; and, secondly, the sideways responsibilities which the employee had for informing people either in an equivalent category or those in a lower or higher category.
Then the auditor would have to define who was responsible to him or her and for what. He would outline the facilities to be afforded to the employee or the staff to enable the functions as described in the job specification to be carried out. Then, following the examination of each job specification, it would be the responsibility of the auditor to make quite sure that these interlocked with other specifications within a proper procedural manual. There would then have to be the allocation of responsibility for defects, either to the local authority or to central government themselves.
Since the passing of the original Act in 1982 there has been progressive intrusion by central government into the realms of local government. Local governments no longer accept or feel that they have the final responsibility for the conduct of their functions. Then in order to assess the precise matters which are set out in paragraph 36 which I have read, the auditor would have to satisfy himself that there are proper arrangements to get the best out of staff. That is because of course management involves managing people and getting the best out of them. Under paragraph 36 the auditor would have to satisfy himself as to that.
What has happened is that the Government themselves, although intervening more and more in local authority work, circumscribing their own

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initiatives, their own responses to local people, are progressively becoming more and more involved in the management of authorities themselves. As I see it, under the Act and under the code auditors would be required to make a report upon these matters.
The intrusion of auditors into what must be a management function is entirely unwarranted. Either the political chiefs of the local authority trust their managements or they do not. But to make the auditors in effect responsible for what may be defects in the organisation itself, whether or not these arise from the defects of central government, is in my opinion a responsibility which auditors to whom this code applies ought not to have thrust upon them. If it is thrust upon them and if they exercise it thoroughly, unless they are prepared to make colossal losses on the expenditure of staff and subordinates to undertake all this investigative work into management and to assess it, they cannot possibly, within the confines of the code, comply with it in the detail which has been set out. I therefore wonder why these clauses remain within the code of audit practice.
I now pass to the concept, which again remains in the code of practice. In the debate which took place in this House on the original code I drew attention to the question of why the concept should be included. I am amazed to find that one of the principal responsibilities of the auditors, who are normally there to see that the accounts reflect a true and fair view and that the accounts are a proper record of the authority's activities, is the concept of value for money. "Value for money" is a term which has tripped off the tongues of government spokesmen for a long time now. It originated with the noble Lord, Lord Bellwin, who waxed very eloquent on the subject in the course of the original Bill itself.
We on this side of the House tend to take the view that the Government know the cost of everything but the value of nothing. How is value for money to be determined by an auditor? The auditor is bound to look at the quantity of the goods and/or services delivered for the money, the quality of the goods and/or services which are provided in return for the money and the utility of the goods and/or services which are provided for the authority. How on earth can an auditor, in respect of a myriad of transactions, or even by representative sampling, satisfy himself as to value for money?
However, endeavours have been made. I do not want to trivialise this issue, I want to deal with the important aspects of it, but let us take the case of bed-and-breakfast payments by local authorities. Does the noble Lord think and do the Government think that the exorbitant sums charged by private hotels and other institutions in London for bed and breakfast provide value for money, even within the quite generous definition which I have given? Mind you, the local authorities or Government can share the views of the noble Lord, Lord Young of Graffham, that there is something very praiseworthy about the efforts of these providers of bed and breakfast. Are they not creating wealth for themselves? Perhaps the Government are prepared to condone this bed and breakfast provision.
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I am interested in what observations the auditors have made to the local authorities concerned or in turn the Audit Commission. What observations have they made to the Government and to the public on the economy, efficiency and effectiveness of these particular arrangements? I should be interested to know whether under this Act there have been any reports by auditors to local authorities about value for money in connection with bed and breakfast, or alternatively whether there have been any reports by the commission to the Government and to the public on the efficiency, economy and effectiveness of these measures.
What therefore is the auditor required to do? If he draws attention, which he might, to these inefficiencies and lack of effectiveness within the terms of the code, is he to content himself with an observation on this? Or is he entitled to say on an objective examination of the facts that two of the reasons that the local authority is driven, on reduced funds, to spend vast sums of money on bed and breakfast for the homeless is the refusal by the Government to permit sufficient funds to be made available for the repair and bringing into use of empty property, and the refusal of the Government to allow local authorities to spend capital receipts from the sale of houses? Is the auditor entitled or expected to make observations of that kind?
If he does not make those observations is he failing in his duty? I should not wish to prejudice either any appointed district auditor or a firm of private auditors who are unfortunately afflicted with the task of investigating the accounts of local authorities who pay out vast sums in bed and breakfast payments, but what are they expected to do? What attention will be paid either by the Audit Commission or by the Government if they report these gross examples of Government-induced inefficiency, waste and lack of effectiveness? I should be glad if the noble Lord will reply to that point.
Now we come to a matter which is not within the code at all. The code mentions "value for money" but it does not mention money for value. I should have thought that that would have been one of the matters to which the attention of auditors and the public should be drawn. There is no mention of what happens to receivables. There is no mention of what happens in the case of somewhat odd disposals of assets. I give the noble Lord a specific example of which I gave him notice so that he could reply. In January 1987, it should have been round about the 15th, there should appear an entry in the books or on the computer—whichever records it uses—of the Westminster City Council recording a receipt of 15 pence from a firm called Growise Limited. That was the proceeds of sale of three cemeteries at Hanwell, Mill Hill and East Finchley.
I do not know, because I have not seen the books, whether that money would be too small to be recorded. Some local authorities keep their accounts to the nearest pound. Perhaps it did not appear at all, but was an investigation made into the circumstances of a disposal for 15 pence for three cemeteries which a fortnight before had been valued at £1·25 million and which were later put on offer by those who ultimately bought them for £2·5 million? Then the

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Westminster City Council, after having sold three cemeteries at five pence a piece, incurred a further bill of some £70,000 in order to secure for the purchaser vacant possession of the lodging places situated in the cemetery itself.
There has been some political talk, very often in Government circles, about the "Loony Left". What about the Loony Right? Those who were responsible for this kind of sale, for whatever reason, want their brains examined. It is no good blaming the officials of the local authority for this. I can assure the noble Lord that I have seen the extracts from the minutes of the council so I know who is responsible.
The questions I have to ask concern the concept that there should be money for value as well as value for money. What action was taken by the auditors as regards this item of 15 pence receipts from Growise for the property and the payment of £70,000 to secure vacant possession? What observations, if any, were attached to the accounts of the authority for the year 1986 to 1987, or do these items feature in the accounts for the year 1987 to 1988, which have still not been compiled?
My second question is: what action has been taken by the commission under Section 22(1)(a) of the Act following notification of this most extraordinary and bizarre event which has involved the ratepayers of the City of Westminster in such a colossal loss? What report has been called for by them and what action has been taken by the Secretary of State under Section 22(2) of the Act? For convenience, and as I have not quoted from any part of the Act so far, I shall quote from Section 22(2):
"If it appears to the Secretary of State that it is desirable in the public interest that there should be an extraordinary audit of the accounts of any such body as aforesaid he may require the Commission to direct such an audit by an auditor or auditors appointed by it."
What action has been taken by the Secretary of State?
What rights have the individual electors under Section 24 of the Act in regard to the accounts for the year 1986–87 now that these extraordinary events have come to light? What rights have they got? What rights will they have for an examination of the accounts and the questioning of the auditors in relation to the 1987–88 accounts?
My final question is: in the light of this extraordinary event, what action does the Secretary of State propose to take to ensure amendment to the code of practice so that it includes a regard that the auditors should have to ensure that money-for-value provisions are inserted in it in order to prevent a repetition of matters of this kind?
I am sorry to have to detain the House so long on those points. However, they have to be raised. They are derived essentially from the columns of the Evening Standard for 1st December 1987, 3rd December 1987, 4th December 1987 and 12th January 1988. I do not put myself behind the allegations that are made. I could not do that unless I had audited the accounts myself and observed the documents. I am very reluctant to think, however, that the features in that newspaper can be without foundation. I should like to ask the noble Lord what action he proposes to take upon them for the protection of the interests of the individual electors of
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the Westminster City Council and the Westminster constituency, and also to protect the staff of the council and the auditors that are employed at present.
Baroness Stedman: My Lords, I am grateful to the Minister for his introduction of the code. I do not have the expertise or the accounting qualifications of the noble Lord, Lord Bruce. I can only look at the matter from the point of view of one who has spent almost a lifetime as an elected member of local government.
As I understand it, this is the review of the code which has been in existence since 1983. I was interested to see, at the end of the copy which we have, the points which were raised with the Audit Commission by the various commentators and also the commission's response to them. I believe that the commission either explained why it was doing what it was doing or it made the necessary alterations or amendments which proved that it took note of the comments that had been sent to it.
I know that the Association of Metropolitan Authorities has shown some concern about the question of the report in the public interest and also the phrase "lack of prudence". However, I have had no representations from the other local authority associations, and indeed I understand that the Association of County Councils, of which I am the vice-president, has not raised any serious objections.
It seems to me that it has been very difficult for the commission to try to define the boundaries within which auditors should operate. I think that they have made an honourable attempt at it. I think that we accept that that will be a matter for the auditor to decide and that he may not always please all of us in the decision which he takes. However, I am sure that with good will and a good relationship between the local authorities and the Audit Commission—that should not be beyond the wit of either the local authorities, their associations or the Audit Commission—we shall have no more problems with the code until we come to review it again in another five years.
Lord Hesketh: My Lords, I am most grateful to those who have contributed to this useful and interesting discussion. Like the noble Baroness, Lady Stedman, I am also not an accountant. I should like to thank the noble Lord, Lord Bruce, for his thoughtful observations on a rather complex subject and also for his courtesy in having communicated with me in advance of the debate.
As I said earlier in introducing the code, it is the commission's code. The commission, as your Lordships will know, is an independent body. Although the Secretary of State appoints its chairman and members, the commission's powers and duties are prescribed by Parliament rather than in ministerial guidelines. It is funded entirely from audit fees paid by local authorities and receives no government money. Your Lordships will also know that the commission has robustly demonstrated its independence of the Government on many occasions and especially in the reports it has produced looking at the impact of central government policies on value

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for money in local authority service delivery. My role in the matter is therefore limited to bringing the code before your Lordships' House. I should, however, like to try to deal with some of the points which have been raised during the debate.
Both the noble Lord, Lord Bruce of Donington, and the noble Baroness, Lady Stedman, mentioned the relationship of the auditor and local government. The noble Lord remains concerned, as he feels that there is an intrusion of auditors into local government. The question of whether auditors should examine the management arrangements of local authorities is that it is a requirement of the primary legislation that auditors should satisfy themselves that authorities have made proper arrangements for the achievement of value for money. It is not a management function of the auditor; rather the auditor reviews whether the management arrangements are in place and are effective. It used to be commonly thought that it was no part of an auditor's duty to concern himself with value for money. The 1982 Act (followed by the 1983 Act governing the National Audit Office) made it clear that value for money is an essential element of public sector auditoring. Increasingly it is, I understand, also regarded as part of good practice in commercial auditing.
I was therefore surprised that the noble Lord. Lord Bruce, should raise the question again in view of the substantial and widely acknowledged impact which the commission and its auditors have made in demonstrating the scope for improvement in value for money even in the better managed authorities. In its last annual report the commission recorded that a total of £490 million of value improvements had been identified as achievable in the service areas studied, of which around £80 million per annum had already been fulfilled. Those are figures of annual savings and the totals are increasing year by year. Even on the basis of savings achieved so far, the commission's value for money efforts have already paid for themselves many times over.
It is the commission's role to point the way to improved value for money and best practice. But it is for authorities themselves to make the decisions. Paragraph 38 of the code makes it clear that:
"It is not the auditor's function to question policy. It is., however, his responsibility both to consider the effects of policy and to examine the arrangements by which policy decisions are reached".
I believe that that is the right distinction to make and the one which quite properly separates the role of auditor from that of policy maker.
The noble Lord, Lord Bruce, also made a number of points concerning Westminster City Council cemetery transactions. He asked about the applicability of the code in dealing with certain transactions which the council are reported to have made in disposing of a number of cemeteries. Each local authority property transaction is subject to the normal processes of audit. I understand that those cases have been raised with the auditor by a Westminster elector. The code makes appropriate provision for dealing with such matters. If the auditor feels that a report in the public interest is called for, he is required to make such a report. Paragraphs 40
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to 46 of the code prescribe the way in which he should proceed. If the matter raises questions of illegality or loss due to wilful misconduct, the code, supporting the legislation, will direct the auditor to take action using his special powers under Sections 19 and 20 of the 1982 Act.
The noble Lord, Lord Bruce, asked me whether the Secretary of State has directed the commission to order an extraordinary audit. The Secretary of State has not directed an extraordinary audit of the accounts of Westminster City Council. Such a direction would serve no useful purpose as the matter is already under consideration by the auditors.
The noble Lord also raised the question of the applicability of the code in respect of accounting for payments for bed and breakfast accommodation. I understand that it was audit inquiries which revealed the irregularities in the bed and breakfast payments made by one authority to which the noble Lord has drawn attention. The commission has, as a result, compiled a guide for auditors in dealing with such payments and is also considering a special study. I believe that that provides a good example of a matter which raises questions about the arrangements for securing economy, efficiency and effectiveness in the use of an authority's resources and which is properly within the auditor's purview.
At the start of the debate, the noble Lord, Lord Bruce, drew my attention to what he described as the burden on firms employed by the commission. The noble Lord is quite correct in saying that the code places significant burdens on the auditor. However, it is proper to say that the firms appointed by the commission are perfectly happy to endure that burden and to comply with the code before us.
Finally, the deputy controller of the Audit Commission, who has been listening to the debate, will, I am sure, take note of the points that have been made. The commission has done a thorough and highly professional job in revising the code. I believe that it will provide a sound framework for guiding the work of the auditors in local government. I hope that your Lordships will be able to accept the Motion. I certainly commend it to the House.
Lord Bruce of Donington: My Lords, I am most grateful to the noble Lord for his reply. I should be glad if he would convey my felicitations to the deputy controller in his examination of the proceedings that have taken place this evening.
On Question, Motion agreed to.

Food Protection (Emergency Prohibitions) Order 1988
8.30 p.m.
The Minister of State, Scottish Office (Lord Sanderson of Bowden)The Minister of State, Scottish Office (Lord Sanderson of Bowden) rose to move, That the order laid before the House on 11th January be approved [12th Report from the Joint Committee].
The noble Lord said: My Lords, this order revokes and re-enacts with amendments the provisions of the Food Protection (Emergency Prohibitions) (No. 3) Order 1987 and the Food Protection (Emergency

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Prohibitions) (No. 4) Order 1987. The emergency prohibitions imposed by those orders remain in force. They restrict various activities and prevent consumption of food rendered unsuitable for that purpose as a result of the Chernobyl radioactivity leak in 1986.
The areas in Scotland affected by the escape, from which the movement of sheep and in which the slaughter of sheep are prohibited, are designated again and are described in the order. As your Lordships are aware, the restrictions on the slaughter of sheep from the designated areas and the supply of meat derived from such sheep extend throughout the United Kingdom.
The Government, as your Lordships are aware, announced on 13th August 1986 the introduction of a mark and release scheme to allow sheep which failed a monitoring test for radioactivity to be moved from an area where the movement and slaughter of sheep had been restricted by order but not slaughtered. Their heads were painted with a distinctive paint mark to indicate that they came from a restricted area and to signify that they could not be slaughtered until they had passed a further monitoring test when they would be ear-tagged to show that they had passed. The only other way these sheep could legitimately be sent for slaughter would be after comprehensive monitoring had shown that the levels of radioactivity in sheep marked that colour had decreased to a level at which their consumption would not threaten health.
The colours green, blue and apricot are used in rotation for this marking. From Monday 11th January, the order lifts slaughter controls on green-marked sheep which were originally marked in the post-Chernobyl restricted areas. This follows a substantial fall in radioactivity levels in such sheep which were all marked on or before 27th September 1987.
The colour mark used to identify sheep which have not been marked up until now and which are to leave a restricted area having failed a live-monitoring test for radioactivity is changed from blue to apricot by the order—again from Monday 11th January. This change has been made so that newly marked animals can be distinguished from sheep which have moved earlier out of a restricted area on to clean pasture. In this way the eventual release from controls of the blue-marked sheep, once the readings for radioactivity permit this, will be able to be made.
Sheep marked blue on or after 28th September 1987 and sheep marked apricot on or after 11th January 1988 may not be slaughtered until they are successfully monitored and ear-tagged. These periodic changes in colour enable central control over the slaughter and movement of sheep from the restricted areas to be continued. They also provide a mechanism for releasing for slaughter sheep once unacceptably highly contaminated but now with decreased and acceptable levels of radioactivity.
The measures I have outlined, and which are supplemented by our slaughterhouse monitoring programme have been designed to protect the food
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chain and to disrupt normal business as little as possible in achieving that aim. I commend the order to your Lordships. I beg to move.
Moved, That the order laid before the House on 11th January be approved [12th Report from the Joint Committee].—(Lord Sanderson of Bowden.)
Lord Carmichael of Kelvingrove: My Lords, I am grateful to the Minister for that explanation which makes it easier to understand what is inevitably a complicated order. We all laugh or make fun of bureaucracy but this is an example of exactly the sort of situation in which the value of bureaucracy is apparent. When the noble Lord described the details of the colour changes and all the rest of it, it showed how important it is to have a system which we laughingly call bureaucracy.
I am glad that there has been some reduction in radioactivity, if that is the correct phrase for it. There are only two questions that I should like to ask the Minister, one of which struck me while he was speaking: why only sheep? Are cattle in a different category? In the debate in another place all sorts extraneous foods such as fish, trout and rabbits—chickens as well, I believe—were mentioned. It seems to me that beef cattle are much more likely to be associated with sheep. I may be wrong. Perhaps sheep tend to go higher in the hills than cattle, and the higher they are in the hills the more likely they are to be contaminated.
The other point—it is a technical one and may be too expensive to consider in an order such as this—concerns the format. Reading through the order becomes slightly tedious after a while. Going into the detail that it does, I thought how incredibly helpful it would be if even a small and quite rough map could be included. I know that in terms of law there must be included an accurate description of the area. But it would be a great help to see even a fairly small-scale map. It would make matters more intelligible.
We would all agree that the Government have acted quickly on this problem. There is no point in asking the Minister when the provision will cease to be necessary. The answer was given by the Minister in another place when he said that he did not have second vision. We can thank the Minister for bringing the order before us today.
Lord Borthwick: My Lords, before the Minister rises, perhaps I may mention that the other day I was listening to a conversation between a couple of farmers who were arguing about the measures that were being taken. One farmer was quite keen; the other rather doubted them. I doubt them myself. One claimed that the energy being measured in the hill country, in the Highlands, had been there for a long time. I doubt that from what I have heard. I believe that the later tests carried out for acid rain show quite definitely that that was the time when the measures rose to a dangerous level.
Has any record been made of the actual levels of radiation earlier, before the catastrophe occurred? Are there any records which show that at all? I am led to believe that in the granite areas a greater level of

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radiation is given off than in lowland areas where there is no granite. Is that correct?
Lord Sanderson of Bowden: My Lords, I thank the noble Lord, Lord Carmichael, very much for the welcome that he has given the order placed before your Lordships' House this evening. So far as concerns animals affected by the Chernobyl disaster, we are dealing with sheep in the main. Cattle do not enter into the question, partly for the reason that he mentioned concerning their grazing habits. It is important to realise that sheep have been the most affected animal as regards this particular disaster—and it is a disaster—through their cropping of the grass.
Perhaps I may help the noble Lord with regard to the map. The most affected area which worried us in the first year—and we did tests across the whole of Scotland—was in the south-west of Scotland. That was the area that concerned us most. There were other areas such as Benbecula, and some areas as we worked north into the central region of Scotland. This year we were able to do far more monitoring than was possible in the first year. Noble Lords will know that 69 farms were designated this year—a total of 124,000 sheep out of a total sheep population of 8·8 million. That puts the matter into perspective.
The first designations that my department had to make were in Dumfriesshire. Latterly, in the second lot of designations, it was still prevalent in farms in the central region in a line from south Ayrshire through to west Stirlingshire.
In answer to my noble friend Lord Borthwick, we are dealing with the Chernobyl disaster. It is quite clear from the evidence we have that the tests and the problems relate entirely to that disaster. We are dealing with this order in relation to Chernobyl; and I wish to make that quite clear.
The noble Lord, Lord Carmichael, referred to the length of time that this may continue. As he says, I cannot help him. Obviously we shall have to continue with restrictions as long as the monitoring proves that it is essential. It is not possible to predict when levels of radioactivity will have dropped sufficiently to enable restrictions to be lifted completely. But—and this is important—the government scientists are conducting laboratory experiments on the uptake of caesium from different types of soil. At this stage it is premature to anticipate the results of those experiments. With those few remarks, I commend this order to the House.
Lord Borthwick: My Lords, I thank the noble Lord for what he has told us. If it is decreasing and the danger will soon pass, I am very glad to hear that. I was not acquainted with the position, not being in the area. What I have heard was very comforting.
On Question, Motion agreed to.
The Earl of Dundee: My Lords, I beg to move that the House do now adjourn during pleasure until ten minutes to nine.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.43 to 8.50 p.m.]

Local Government Bill
House again in Committee on Clause 2.
[Amendments Nos. 16 to 19 not moved.]
Lord Dean of Beswick Lord Dean of Beswick moved Amendment No. 20:
Page 3, line 31 at end insert—
("( ) Notwithstanding the provisions of section 2(2) above, a defined activity shall not be treated as a defined activity if the net expenditure by a defined authority on the direct discharge of the defined activity was, in the previous year, less than £250,000 (or such higher figure as the Secretary of State may determine upon special application of the authority) which said figure shall be adjusted annually by the Secretary of State having due regard to the rate of inflation then current.").
The noble Lord said: In moving Amendment No. 20 I should like to link it with Amendments Nos. 22 and 23.
The justification for the amendments and the effect of Clause 2(9) as it stands would be to allow the Secretary of State to exempt certain activities from the definition of a defined activity as set out in Clause 2(2) and Schedule 1. The Government have proposed that,
"Defined authorities would be exempt from competition for a defined activity if the amount they spent on the direct discharge of an activity—including all relevant overhead costs—was less than £100.000 a year …. The Government propose, therefore, that an authority should he 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 here that the intention of the Government is not to exempt an authority because it is small.
"Small authorities are in general just as capable of benefiting from competition as are large authorities."
Therefore, it seems to be the case that the Government can envisage certain situations where an exemption would be appropriate, but the size of the authority would not form the main reason for that exemption but rather would be incidental.
"The question is rather, where the level of activity is very small, is it appropriate to impose the full statutory accounting and reporting requirements?"
Further, it is the Government's clear intention that any such exemption shall be so narrow as to benefit very few authorities.
"Clearly, a de minimis level must be set at a low level of expenditure if it is not to cease to have any rationale."
Two major areas of concern have arisen in connection with Clause 2(9). Secondary legislation: the Bill in general and with particular relevance to Clause 2(9) is 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 subjected to the full parliamentary process becomes the subject of government proposals and assurances. However well intentioned such proposals and assurances are, and however well consultation is carried through, it cannot—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 the doubts and uncertainties for many local authorities.
As to the basis of the exemption, concern has also been expressed regarding the expenditure limit of £100,000, primarily because it is set too low. The following examples are typical responses to the Government's proposals.
"This Council notes that defined authorities would be exempt from competition for a defined activity if the amount they spend on the direct discharge of it is less than £100,000 per year. With regard to this council, refuse collection appears to be the only defined activity which would require to be exposed to competition. The other two defined activities, 'other cleaning' and 'cleaning of buildings' by this Council, do appear to fall beneath the £100,000 'de minimis' level. However, by 1st April 1990 it may be that all of the defined activities carried out by this Council would be well in excess of £100,000. On this basis and hearing in mind that private tenders are very unlikely to be received the Council recommends that the 'de minimis' level be raised to £250,000."
There are further examples by councils, Badenoch and Strathspey and the Association of Highland District Councils, which make the same point that the £100,000 is too low anyway and would become an historical nonsense. On that basis of that, I beg to move the amendments.
The Earl of Caithness: Amendments Nos. 20, 22 and 23 would raise the threshold below which work is exempt from the Bill's provisions very considerably. Amendment No. 22, couched in terms of 20 employees, probably translates into gross expenditure of the order of between £300,000 and £400,000. It might be more appropriate to describe such a threshold not as a de minimis but as a de maximus level.
I have to say that I cannot agree that it is not worth exposing such large sums to competition. They may not he large relative to typical expenditure levels on the Bill's services, but in absolute terms they are nevertheless very large. How many of the members of this Committee, in spending their own funds on something costing these orders of magnitude, let alone something considerably less, would do so without in some way testing the market? We must hear in mind that since it is an on-going provision that is at issue, any contracts are likely to last for several years. A service costing £250,000 per year would lead to a five-year contract worth £1,250,000 and yet still not be subject to the pressures for efficiency which the competitive process would otherwise bring to bear. We do not think that that is sensible.
The fact that the £100,000 limit proposed by the Secretary of State would exempt very few authorities' services is not really relevant to our proposals. Its aim is not to affect some target proportion of authorities but simply to exempt work where there really is a strong case for fearing that tendering and other administrative costs may outweigh competitive gains. The argument has been put forward that the Secretary of State has erred considerably on the high side, and that if there is any case at all for such a threshold it should be set far lower than £100,000. Indeed, I am sure Members of the Committee have read the argument for a £25,000 de minimis level in the papers recently. I would suggest that that view is held by a respectable number of people and is a view that we should take into account in considering the level in our consultations which, as the Committee knows, are still continuing.
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The fact the Secretary of State has consulted on the basis of a £100,000 limit does not in any sense mean that this figure is set in concrete. First of all, it is only a proposal. A large number of responses to it have been received and these will be studied very carefully before any final decision is made. Secondly, the Secretary of State will be able to vary the initial limit or set different limits for different sorts of work if, in the light of experience, there is a case for doing so. Nor does it seem to me that there is thus any case for automatic indexing of any initial level.
I am sure that the Committee will agree that the right thing to do is to review it from time to time without prejudice to whether it should move up or down or stay the same in real terms. I come back to the suggestion that £100,000 is subject to consultation which is going on at the moment. There are a number of responses which we should like to consider very carefully.
Lord Dean of Beswick: I thank the noble Earl for that reply. What comes across more ominously than ever is the tremendous amount of consultation that is taking place to which people such as myself and other noble Lords interested in the Bill are not privy. We have to be a little careful that there is not so much consultation that it will end in legislative constipation, because so much is being pumped through at once quite blindly.
I wonder whether the Minister and the Government should not consider the disparity in size between authorities that will, if I heard him correctly, be covered by a blanket approach. I am sure that £100,000 for some of the very small authorities will prove more than adequate. I hope it will. But to limit that for the large county, city and borough authorities is a futile exercise. I do not think it would be a realistic figure.
Having heard the Minister tell us that consultations are still taking place, it is possible, first, to read what the Minister has said and understand what the consultations are saying, and then perhaps at a later stage the Minister may be able to give us a more definitive sum. I hope that he will listen to what we have said regarding the disparity of sizes that will be encompassed by the same figure of £100,000 and that he will think it may be worth considering an extension based on the larger and more involved authorities.
Having said that, I have no wish to press the amendment at this stage and I beg leave to withdraw it.
Amendment, by leave, withdrawn.
[Amendments Nos. 21 to 24 not moved.]
Clause 2 agreed to.
9 p.m.
Lord Dean of Beswick Lord Dean of Beswick moved Amendment No. 25:
After Clause 2, insert the following new clause:
("Definition of Secretary of State.
("For the avoidance of doubt, any reference in this Act to "the Secretary of State" shall be interpreted as refering in England to the Secretary of State for the Environment; in Scotland to the Secretary of State for Scotland; and in Wales to the Secretary of State for Wales.")
The noble Lord said: This new clause has been recommended by the Law Society of Scotland. The Bill is designed to apply both in England and Wales and in Scotland. As such, it is drafted on the basis of English legislation with amendment to make the Bill apply to Scotland. In general terms it is unsatisfactory that legislation applying to Scottish local government should be dealt with in this way, rather than by primary legislation in respect of this country alone.
A consequence of promoting legislation in this form is that the Bill uniformly refers throughout to the Secretary of State, without specifying which Secretary of State is meant. While there is a parliamentary convention that the Secretary of State will be respectively the Secretary of State for the Environment in England, the Secretary of State for Scotland and the Secretary of State for Wales, such conventions do not have legal force and may be overlooked. It is important that the Scottish Office participates fully in the drafting of the subsidiary legislation for Scotland, and to protect this position the inclusion of a new clause is recommended.
I think this goes very much to the heart of some of the amendments we are debating. I believe our Scots colleagues from all parts of the Chamber have a justified grumble or gripe. They are being slotted conveniently into a Bill for England and Wales when they have full justification for a Bill for Scotland alone which they could debate in full. However, it is not for me to argue that case tonight. I am sure that Scottish Members will ensure that it does not go away. I beg to move.
The Earl of Dundee: I am grateful to the noble Lord, Lord Dean, who has moved this amendment on behalf of his noble friend. I am also very glad to see him taking a great part in a Scottish matter.
The duties of Secretaries of State are legally interchangeable and independent of any distinction on account of the departments over which they preside. This stems from the constitutional doctrine of the unity of office of a Secretary of State. In practice, however, each Secretary of State limits his function to those matters which have been allocated to him by the normal machinery of government. References to a particular Secretary of State are included occasionally in legislation which applies throughout Great Britain, where it is the intention that duty should fall upon or powers be exercised under that legislation by that particular Secretary of State and no other, and where there might otherwise be doubt. There may also be references to a particular Secretary of State where property is being transferred.
It follows that it is not necessary to make specific provision for other cases; for example, where it is intended that duties should fall on or powers be exercised by the territorial Secretaries of State in respect of matters which in Scotland, England or Wales are clearly within their responsibility. In such circumstances there can or should be no doubt that a reference to the Secretary of State means any of the Secretaries of State having relevant responsibility.
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Since local government matters in Scotland, England and Wales are matters for which the Secretaries of State for Scotland, for the Environment and for Wales have separate responsibilities, there is no doubt that any reference in local government legislation to the Secretary of State means all three, each being charged with whatever duty is imposed or power conferred in respect only of that part of Britain in which his responsibilities lie. This convention is well tried and understood. It has been extensively used by governments. If this amendment were to be accepted, doubt would be cast on the terms of much previous legislation—the Mobile Homes Act 1975, the Race Relations Act 1976, the Transport Act 1978, to name but a few—let alone future Bills where references to the Secretary of State occur. For those reasons I hope that the noble Lord will feel able to withdraw his amendment.
Lord Carmichael of Kelvingrove: I am sorry that I missed the beginning of the debate on this amendment. The Committee will be aware that the House was late in finishing the last item. I was pleased to hear the noble Earl's definition of "Secretary of State". The amendment is inspired by the Law Society of Scotland. I agree with its opinion that it was all very well when 50, 60, or 100 years ago the job of Secretary of State was not onerous and one Secretary of State could cover all the tasks. I do not expect the Government to concede this tonight, but the point has been reached when the issue should be looked at again in a constitutional manner. There is no longer one Secretary of State. People become confused when they realise that the Secretary of State is, in essence, one person with a multiplicity of heads. I hope that the Minister will reconsider this matter and that it may be included in a separate Bill at some future date. The idea of there being only one Secretary of State is becoming antiquated. However, I have heard the noble Earl's explanation and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 1 [Competition]:
Baroness Nicol Baroness Nicol moved Amendment No. 26:
Page 32, line 8, at end insert ("; but an activity does not fall within section 2(2) (a) above if it involves the separate collection of recyclable materials for the purpose of waste recycling").
The noble Baroness said: I should like to move Amendment No. 26. It may be for the convenience of the Committee if I also speak to Amendments Nos. 27 and 28, and make a passing reference to Amendment No. 29, which again is a Scottish affair.
The amendment is fairly limited but it is important in its implication. The output of solid wastes (I am not referring to sewage but to household, commercial and industrial waste) in this country is approximately 15 to 20 million tonnes of household waste and approximately 36 million tonnes of industrial and commercial waste. We are therefore talking about very large quantities. Overall, approximately 15 million tonnes of waste is reclaimed or recycled so there is still a long way to go. Approximately 50 per cent. of household waste is recycled and industry and

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commerce are becoming increasingly alive to the commercial sense of recycling. Increasing concern for the environment, which is reflected in community legislation, is an added incentive. I notice that on several recent occasions the CBI has exhorted its members to pay more attention to the reclamation and recycling of waste.
However, the fluctuating markets for the products of some recycled wastes, and the practical difficulties of organising domestic waste recycling, mean that there must be an organising force which can, to some extent, level out the peaks and troughs of demand. I am sure that the Committee is aware that the variations in the graph indicating the market value of household waste recycling are enormous. For example, waste paper can be valuable or it can be worth nothing at all, and the same applies to other materials.
The role may have to be filled by local authorities, backed by the Government where appropriate. By excluding recycling from the statutory requirement of Clause 2(2), local authorities would have a useful degree of flexibility which would not preclude their seeking competitive tenders if local conditions and circumstances made that feasible. I should like to remind the Committee of the recommendation of the Royal Commission on Environmental Pollution at paragraph 13.26 on page 165 of its 11th report. It is relevant to this discussion and it states:
"We consider that the Departments of Trade and Industry and of the Environment should continue to encourage recycling and resource recovery as a means of reducing pollution, including litter."
This is the important point:
"The fact that opportunities are not exploited as vigorously in the UK as they might be is due at least in part to the absence of a clear lead from the Government".
I maintain that although that recommendation was written in 1984 it is still relevant. As far as I am aware the Government have not acted upon it. The proposals in the Bill will move even further away from the recommendation of the Royal Commission. Therefore I hope that the Minister will look kindly on the amendment, which is limited in its scope. It will not stop those local authorities who wish to do so from contracting out of recycling. It will mean that in the light of local circumstances, which might make it difficult to contract out, they will have the option to continue with their recycling plans.
I should now like to deal with the other similar amendments, beginning with Amendment No. 27. The purpose of the amendment is to discover when the provisions of the Control of Pollution Act 1974—in particular Sections 12 and 30—are to be implemented. I know that this was raised in another place, and the reply there given makes me feel that there may be a constructive answer. I quote again from the 11th report of the Royal Commission, which states that it found the definitions of the 1974 Act "helpful and practical". That part of the Act has not yet been implemented. Thus the definition therein is not available to us with any force, however helpful and practical we may think that it is.
The Minister's right honourable friend said in Committee in another place at col. 258, that:
"those provisions are not yet in force, but we are consulting on the implementation of sections 12 and 14 of that Act prior to the Bill's
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receiving Royal Assent. If it becomes clear that there is any danger of that not happening, we shall bring forward an amendment to create a free-standing definition of waste for the purposes of this legislation."
That would seem to indicate that the Minister then thought it was important that there should be an acceptable definition of waste. I maintain that it is very important before meaningful discussions can take place within the Bill or without it.
Can the Minister tell us when we can expect implementation of the Act and whether he has any plans for a free-standing definition? The subject of Amendment No. 29 is, I believe, the Scottish equivalent. I think that my noble friends will probably support the amendments for that reason. I beg to move.
9.15 p.m.
The Earl of Balfour: It may be for the convenience of the Committee if I speak to Amendment No. 29. It deals with rather a different point.
I am grateful for what the noble Baroness has said. I should like to add that, according to the Scottish current law legislation citator of 1986, Section 124 of the Civic Government (Scotland) Act 1982 has been repealed by Section 126 of that Act because Sections 12 and 15 of the Control of Pollution Act 1974, Chapter 40, have now come into force. This is a complicated and technical point and I trust that I have it right. On further study, I think that I should have referred to Section 12, not Section 15, of the Act. According to the current law legislation citator, Sections 12 and 15 of the 1974 Act are in full force as regards Scotland.
The Earl of Caithness: I am afraid that I was totally floored by the amendments and misinterpreted them completely. I am therefore extremely grateful for the clear way in which the noble Baroness explained them, and I tell her that there is some good news to come.
I deal with Amendment No. 26 first. I find it difficult to understand. We have heard arguments to the effect that private contractors are unsuitable for work involving sensitive relationships of care with client groups. Even if one sympathises with that view, it is surely very difficult to draw any analogy with the handling of recyclable waste. In short, there seems no obvious reason why authorities, if they want such waste handled separately, should not simply say so in their contract documents.
The noble Baroness referred to the report of the Royal Commission. I should have thought that here we have an excellent opportunity for local authorities to show the way and encourage recycled waste by setting out the definitions carefully in the documents. I take the noble Baroness's point about the graph. I should like to look at that. At present we have an opportunity rather than a disincentive to continue the good work to which she referred.
Perhaps I may move to Amendments Nos. 27 and 28. The date for which the noble Baroness is looking is 5th April this year when we shall be implementing Sections 12 to 14 of the Control of Pollution Act

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1974. As she knows, that will repeal Sections 72 to 76 of the Public Health Act 1936.
The effect of the amendment of my noble friend Lord Balfour would be to insert in the Bill a reference to a provision neither currently in force nor expected to come into operation in the foreseeable future, and to delete a reference to a current statutory provision under which local authorities are operating satisfactorily. The legislative arrangements for the collection and disposal of waste in Scotland differ significantly from those applying in England and Wales. In England and Wales the relevant provisions are at present contained in the Public Health Act 1936, to which I have referred. These will be overtaken on 5th April by Sections 12 to 14 of the Control of Pollution Act. In Scotland local authorities operate under a more modern Act, the Civic Government (Scotland) Act 1982. My right honourable friend the Secretary of State, after carefully considering whether there were substantial reasons for bringing into effect Section 15 of the 1974 Act—that is the Scottish equivalent to Section 14—concluded that there were not.
The current provisions under Sections 124 and 125 of the Civic Government (Scotland) Act 1982 are working well and contain the powers and duties necessary to enable district and island councils to collect and dispose of household and trade waste as they see fit. It is for that reason that the Government see no reason for replacing them as proposed in my noble friend's amendment.
Baroness Nicol: I am glad to hear that quite soon we are to have a definition of "waste" which will be acceptable to everyone. With the greatest respect, I do not believe that the Minister's reply will be very useful in that local authorities can define "waste" in their contracts for the purposes of recycling. I do not believe it to be a good idea to have 450 different definitions of "waste" operating up and down the country. However, I am very pleased with the reply on the later amendments. So far as concerns Amendment No. 26, I wish to think a little more about what has been said. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 27, 28 and 29 not moved.]
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 30:
Page 32. line 31, after first ("establishment") insert ("excepted school").
The noble Lord said: I beg to move the amendment standing in our names on the Marshalled List. I believe it is in order for Amendment No. 36 to be taken with No. 30.
The Earl of Caithness: I apologise to the noble Lord but I thought that we were dealing with Amendments Nos. 30 to 36 together.
Lord Graham of Edmonton: Now I have two pieces of paper instead of one.
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As the Minister has pointed out, these amendments are related and they deal with the position of an excepted school. The Minister will recall that in another place and in the general philosophy of the Bill, in accepting that certain types of institutions should be exempted from the defined activities, the Government have argued that in these cases the grounds for exemption are that the staff perform a caring function in addition to their normal role. The Minister will recall that this has happened, for example, in the case of the cleaning of residential homes. The Government have also agreed to exempt the school catering activity in exempted schools on the same basis.
Excepted schools cater for children with special educational needs and those who are handicapped. These amendments seek the exemption of the cleaning activity in these schools on the grounds that the caring role of all staff, including cleaners, is an essential aspect of their work.
There is no doubt that the Government are trying to provide that the maximum amount of work currently carried on by councils should he tendered for competitively. We can honestly see no need to go to those lengths. This is one of those cases in which the Minister should say something helpful. I have in mind the Waverley School in Windmill Hill, Enfield. One needs to have an ambiance and a raison d'être in a school of that kind. I am thinking in terms of Westlea School, which is a school that I know in Hazelbury Road, Edmonton.
It is very difficult to look at some elements of the unity of a school when some are going to be in and some are going to be out. The Minister and his colleagues in another place have taken care to point out the special reasons why some of those who will be employed in those establishments are exempted. We want to do exactly the same. The Bill, as we see it, does not provide for that.
When we look at the other amendments, Amendments Nos. 31 and 34, we have introduced besides the excepted school nexus the day centre, and the Minister and his advisers will have seen that we tried to take in a special group of individuals and circumstances. Daycare centres will include the adult training centres for mentally handicapped adults. I can bring immediately to my mind the adult training centre on the Clavering estate in Montague Road in Edmonton. I can think of the establishment in Alma Road in Enfield. Everyone here who has a genuine knowledge of and affection for their own area can think of establishments of that kind.
I bring to my mind illustrations to try to understand what this Bill is all about, and I think of day centres and adult training centres for mentally handicapped adults. I appreciate that in many of these instances they are a new concept. To this Government's credit, as well as to the credit of many councils, there has been a general move over the past 20 to 30 years to make special provisions for those members of our community who need to have special provisions made for them. They are a new concept, especially day centres for the elderly. There are not only the physical needs but also the emotional needs of elderly people, who, to use a kind word, are frail

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and need to lean not merely on those who advise them and take them to the centres but also on other people.
We believe that those who carry out domestic work in these places are every bit as much a part of the little enclave into which the elderly, the mentally handicapped and others go as those who have perhaps a more superior post or role. Of course there are those who are specially qualified. There are those who will have been well trained. There are those who are qualified by experience. What we say is that there are other people as well, and those are the domestic workers. We think that the domestic staff will be involved in the caring programme through meeting and talking to the clients, encouraging them to participate in the life of the centre, and helping them with personal issues.
I have walked round a dozen of these homes a hundred times in the past 15 years, and one does not separate those who may have a badge and those who may wear a different uniform. Everybody inside these establishments is part of the rescue service that the people who use them need. What we say to the Committee is that we want the cleaning staff and the domestic staff also to be exempted, and indeed others too. When one talks in terms of adult training centres, the one I remember best in the Clavering estate in Edmonton carried out not merely the function of providing work or a place for these people to go to in order to be assisted, but also carried out laundry work and other outwork. Everyone who is involved in these places ought to be treated equally. I hope that the Minister will see the sense of what I am saying, but, more important, will make it unnecessary for me to press this amendment to a Division. It is up to the noble Earl.
9.30 p.m.
The Earl of Caithness: It is entirely up to the noble Lord, not to me.
The Government accept that some jobs falling within the defined activities are involved so closely with the care and welfare of certain client groups that it would not be appropriate to subject them to normal commercial disciplines. We have made provision accordingly, and the Bill therefore already exempts cleaning work in residential homes of various kinds.
I realise that there can be no hard and fast line between jobs which clearly ought to be exempt and jobs which clearly ought not to be, and indeed the case for exemptions might plausibly be argued to vary from home to home according to their individual nature. However, we believe that a line has to be drawn and we have taken the view that the case for exemption in the establishments mentioned in the amendments is not strong enough to justify further exemptions. In residential schools, for instance, cleaning work is likely to be done precisely when the residents are not there to get in the way of the cleaners. It is hard to imagine being involved in the welfare of someone you have not met or do not meet on a regular basis.
If we look at the Scottish hostels referred to, there are about 25 of them which cater for a wide range of different groups. These include people housed under
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the Homeless Persons Act, students, young single people, women who have suffered from domestic violence, handicapped people and incoming workers to a new town. Cleaners in these establishments do not have a major caring element in their work. Indeed, in most cases the cleaning of the establishment will, again, usually be done during the middle of the day when residents are not in the hostel.
There is no sense in which the residents of these hostels have to be involved in undertaking the cleaning work themselves as part of any personal rehabilitation or skills development training. There is therefore no reason why cleaning services in housing authority hostels should be excluded from competition. The vast majority of sheltered housing is more akin to normal dwellings than to residential homes, and distinctions which attempted to differentiate between sub-types of sheltered housing would be extremely difficult and probably unworkable.
Quite apart from those specific points, I draw the Committee's attention once more to the fact that cleaning carried out by, say, a warden or any other member of staff as a minor adjunct to other work not listed in the Bill does not have to be competed for. In the case of any remaining cleaning work done by people employed only as cleaners, I must put it to the Committee that they will not be so substantially involved in a caring role that the possibility of their being replaced by a contractor's employees is just not significant. Directly employed staff do not have a monopoly of ordinary kindness, a point made by my noble friend Lady Blatch earlier this afternoon; nor do they have a monopoly of decency. Indeed, when contractors take over it is common for them to re-employ many of the people already carrying out the work.
I now turn to Amendment No. 33, tabled in my name. This merely puts right an unintended ambiguity in the reference to residential homes which can be provided under the National Health Service Act 1977. The original reference to Section 21 of that Act, by failing to specify which subsection, had the effect of referring not only to homes for the chronically ill but also to homes for the authority's staff, which are referred to in subsection (3). In fact, there is no need to refer to anything but Schedule 8 itself, and that is the effect of my amendment.
Lord Graham of Edmonton: I am staggered at the amount of time and argument that the Minister has used to justify his unwillingness to include in the categories of exemption the minuscule numbers involved. The Minister spoke in terms of the people I am trying to include in the exemptions for competitive tendering not being as prominent in the caring role. I have news for him. As my noble friend Lord Dean said, someone who is looked upon as a functionary—the caretaker—in the eyes of a child assumes major significance. The people those in excepted schools, day centres and institutions for the adult mentally handicapped see year in and year out could well be the cleaning staff. They are part of their life. They are part of their empire. The people who perform a more important role may come and may go.

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I am trying to persuade the Minister and his colleagues to understand that there are special circumstances. Continuity is very important in the lives of people who have already had a difficult and unfortunate blow dealt to them. For whatever reason, they are in a residential home or a day centre, or they may be elderly people, who ought to have the satisfaction and assurance that there are people about them who are just as much a part of care in the community as others. I intend to press this amendment to a Division.
9.36 p.m.
On Question, Whether the said amendment (No. 30) shall be agreed to?
Their Lordships divided: Contents, 29; Not-Contents, 48.

DIVISION NO. 4

CONTENTS

Airedale, L.

Mulley, L.

Attlee, E.

Nicol, B. [Teller.]

Carmichael of Kelvingrove, L.

Perry of Walton, L.

Cledwyn of Penrhos, L.

Ponsonby of Shulbrede, L [Teller.]

Dean of Beswick, L.

Elwyn-Jones, L.

Ritchie of Dundee, L.

Ewart-Biggs, B.

Seear, B.

Gallacher, L.

Sheffield, Bp.

Gifford, L.

Simon, V.

Graham of Edmonton, L.

Stedman, B.

Houghton of Sowerby, L.

Strauss, L.

McCarthy, L.

Taylor of Blackburn, L.

McNair, L.

Underhill, L.

Mason of Barnsley, L.

Whaddon, L.

Molloy, L.

Willis, L.

592

NOT-CONTENTS

Allerton, L.

Fortescue, E.

Arran, E.

Gainsborough, L.

Balfour, E.

Gisborough, L.

Barber, L.

Goold, L.

Bauer, L.

Hesketh, L.

Beaverbrook, L.

Hives, L.

Beloff, L.

Hooper, B.

Blatch, B.

Jenkin of Roding, L.

Borthwick, L.

Johnston of Rockport, L.

Brabazon of Tara, L.

Joseph, L.

Brougham and Vaux, L.

Killearn, L.

Butterworth, L.

Long, V.

Caithness, E.

Margadale, L.

Carlisle, E.

Mersey, V.

Carnegy of Lour, B.

Minto, E.

Cork and Orrery, E.

Munster, E.

Craigavon, V.

Rippon of Hexham, L.

Craigmyle, L.

Sanderson of Bowden, L.

Crathorne, L.

Selborne, E.

Cross. V.

Skelmersdale, L.

Davidson, V. [Teller.]

Thomas of Gwydir, L.

Denham, L. [Teller.]

Trafford, L.

Dundee, E.

Trumpington, B.

Ferrier, L.

Vinson, L.

Resolved in the negative, and amendment disagreed to accordingly.
9.43 p.m.
[Amendments Nos. 31 and 32 not moved.]
The Earl of Caithness The Earl of Caithness moved Amendment No. 33:
Page 32, line 40, leave out ("section 21 of or").
On Question, amendment agreed to.
[Amendment No. 34 not moved.]
Lord Carmichael of Kelvingrove Lord Carmichael of Kelvingrove moved Amendment No. 35:
Page 32. line 43, at end insert ("and includes a hostel provided under section 2 of the Housing (Scotland) Act 1987.").
The noble Lord said: I think that the Minister referred to the contents of Amendment No. 35 earlier. The amendment would have the effect of exempting hostels provided by housing authorities from the requirement to put cleaning and catering out to competitive tenders. I want to emphasise to the Minister that we are talking about long-term not short-term residential accommodation. Before I make the decision to withdraw this amendment —that is what I intend to do—I would ask the Minister to pay attention to the fact that there is a difference. My noble friend Lord Graham of Edmonton spoke about the continuity of staff in local authority places as against contract staff. I am sure that if the Minister looks at the figures he will find that the turnover of contract staff is far greater than that of normal local government staff. I hope he will take that into consideration. It was discussed in the Scottish Committee in another place, and if this amendment is not accepted now or given some consideration we shall certainly bring it back on Report. I beg leave to withdraw the amendment.
The Chairman of Committees (Lord Aberdare): You have not moved it; you cannot withdraw it yet.
Lord Carmichael of Kelvingrove: I beg to move the Amendment.
The Earl of Caithness: Of course I can give the assurance which the noble Lord is seeking from me that I will read very carefully the points made by the noble Lord and discuss them with my right honourable friend.
Lord Carmichael of Kelvingrove: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 36 to 39 not moved.]
Baroness Nicol Baroness Nicol moved Amendment No. 40:
Page 34, line 43. at end insert ("; but the work referred to in sub-paragraphs (a), (b) and (c) above shall not fall within section 2(2)(f) above if it is carried out in connection with a national plant collection, a site of special scientific interest, a botanic garden, an arboretum, a horticultural collection, or any woodland or forest").
The noble Baroness said: This is a very narrow exemption for specialists who will be included in the provisions of the Bill unless we specifically exclude them. The activities with which we are concerned require a long timetable and a continuity of approach. It is difficult to see how it could be worked into tender requirements.
We are concerned to protect plant collections. For example, Leeds City Council has seven national plant collections in its care, and also sites of special scientific interest. We feel that an exemption could be made for all national plant collections, for sites of special scientific interest and for botanic gardens within the care of local authorities, without giving
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anything other than a small exemption. For these and for some woodlands the labour force is very small and it has to be flexible in the way work is undertaken. Much of the work is seasonal and subject to on-the-spot decisions. It would be almost impossible to draw up meaningful tender specifications, and the man hours involved in trying to sort out the tender processes would in many cases be equal to or even greater than the work on the ground.
I know that the Minister has sympathy for this kind of work and I hope that he will be able to give us an encouraging answer this evening. It seems to me that we may be doing quite a lot of damage if we do not give this exemption. I beg to move.
The Earl of Selborne: I should like to commend this amendment to my noble friend on the Front Bench. I speak as chairman of an advisory committee for an arboretum in Hampshire administered by Hampshire County Council. I assure my noble friend that there would be grave risk to an extremely important collection of over 30,000 trees—10,000 different species—if it were to go out to competitive tendering.
If one thinks about the charge which Hampshire County Council has taken on, on behalf of the trust, it is to maintain and if possible increase one of the largest collections of temperate plants in the country; to make them available for scientific study and for conservation; and to help the public at large to appreciate and understand just what the collection is. The idea of putting such a collection in the hands of competitive tendering is unfortunate when there is no job which could be called unskilled—certainly not propagation and the maintenance of this collection nor the ability to prune and look after it on a day-to-day basis. I am sure my noble friend on the Front Bench will look at this very carefully. I agree entirely with the noble Baroness, Lady Nicol, that in this case it would be quite impractical to allow unskilled and unsupervised labour, which was not under the direct control of management, to be let loose on such collections.
The Earl of Caithness: I assure the noble Baroness and my noble friend that the Government have sympathy with the suggestion that ground maintenance work which is scientific in nature should be exempt from competition. There is an outstanding commitment to consider whether an appropriate amendment should be brought forward, and I apologise for not having brought forward an amendment by this stage. Therefore, I am almost tempted to accept this amendment as it stands. However, it does seem to stray a little too far in the work that it would exempt. There is no obvious reason, I would suggest, why work in woodlands and forests should not be exposed to competition.
I hope I can persuade the Committee that the right course is to await the amendment which the Government have, as I say, committed themselves to and will be bringing forward at another stage which will meet the fundamental principle which the noble Baroness and my noble friend are driving at.
Baroness Nicol: I am very pleased indeed with the Minister's reply. I note what he says about woodland. But there are areas of ancient woodland and woods which are also SSSIs where perhaps there would need to be an exclusion. I am sure that if the Minister is approaching the amendment in the spirit in which he has suggested, the answer that will come will be acceptable. Therefore, I am very happy to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Viscount Mersey Viscount Mersey moved Amendment No. 41:
Page 35, line 6. after ("vehicle") insert ("or of a fire authority vehicle").
The noble Viscount said: I believe we have grouped here Amendments Nos. 41, 42, 44 to 46 and 48. The two amendments in my name and that of the noble Lord, Lord Underhill, are Amendments Nos. 41 and 44. I shall speak to those, but the others, to be moved by the noble Baroness, Lady Stedman, are, I think she will agree, pretty well identical, at least in effect.
The amendment I am moving will, I hope, find favour with Government as it is an amendment of life and death. It seeks to exempt fire brigades from enforced competitive tendering on vehicle maintenance in much the same way as police vehicles are exempted in the Bill.
I make the vital point that lives can be lost if there is a delay not so much of minutes but of seconds in the arrival of the correct fire appliance at the scene of the crisis. Fire brigade vehicles are peculiarly complicated. They tend to be quite old. And they tend to be hybrids; perhaps one company making the engine, another the chassis, another the pump take off point and yet more, possibly foreign companies, making turntable ladders, hoses, emergency lights and other parts.
The amendment originates from the London Fire Brigade and it also has the support of the Chief and Assistant Chief Fire Officers' Association. The London Fire Brigade at present maintains in-house a fleet of 700 appliances, the biggest in the country, I believe.
The maintenance crew consists only of 82 skilled men with 14 apprentices which is, I should have thought, a good use of labour. It has very specialised repair shops which I believe my noble friend has seen. They are large, complex and costly; the two biggest are at Lambeth and West Ruislip. All this—real estate, plant and indeed manpower—would be wasted should the brigade be forced to tender out.
The London Fire Brigade lists eight reasons why competitive tendering is not realistic. I shall give four of them, possibly saving the other four, which are just as good, for Report stage. The first is:
"There is a requirement (Fire Service Circular No. 4/85) to maintain standards of fire cover throughout London. This involves a specified response time for specified appliances in particular areas. It is vital to retain control over the resources which make the maintenance of fire cover possible. The Fire Service is unique among emergency services in having its response time imposed by Central Government."
The second reason is:
"The LFCDA has a statutory duty to make plans for the rescue of persons under the Civil Defence (General Local Authority Functions) Regulations 1983. Paragraph 5, Schedule 2, requires the LFCDA to
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provide and maintain a service in the Local Authority areas for the rescue of persons. Paragraph 11 requires the LFCDA to maintain other services to safeguard life in the community. This would cover services other than rescuing people such as pumping drinking water from one place to another.
3. By virtue of the size and complexity of the fleet, a number of prime and sub-contractors would inevitably be involved in maintaining fire appliances. This leads to an appreciable risk of a contractor defaulting in the performance of the contract. Although financial guarantees and penalties are possible, this does not help as fire appliances cannot be obtained in the marketplace if they are delayed by the contractor.
4. The risk of default and the loss of flexibility could only be covered by the contingency of a Jarge reserve fleet. This would be very expensive".
Those are four of the eight reasons.
I hope that I am pushing against an open door. I have those hopes because the fire brigades were originally exempt from tendering, along with police vehicles, in the Green Paper which preceded the Bill. Police vehicles are still exempt but fire brigade vehicles have been taken out of the exemption. After my peroration it is hoped that they may go back in. I hope that the Minister will be able to help us and I look forward to his reply with measured optimism.
Lord Underhill: I should like to support the noble Viscount, Lord Mersey. After the excellent way in which he has introduced the amendment, there should be little else to say. I am surprised that the Government have not excluded fire service vehicles and equipment. Police vehicles are excluded, and rightly so. It is not a question of jealousy; it is right that police vehicles should be excluded. However, I can remember enough about my fire service duties during the war, when I was in the National Fire Service for five years, to realise how important it is that emergency vehicles should be up to scratch for the time when they are wanted. That is true of the equipment as well.
There are a number of amendments allied to the one which the noble Viscount has moved. I do not care which definition of a fire service vehicle is accepted, so long as the Government agree to accept one. I also do not care whether the amendments are accepted in the form in which they are printed on the Marshalled List, so long as the Minister says that those vehicles and equipment shall be excluded from compulsory tendering. That has nothing to do with the principle of tendering. We are discussing emergency work and I think that all Members of the Committee will be aware that it is necessary for the vehicles to be up to scratch so that they can perform their jobs. The speed and type of work requires that they should be in tip-top condition.
With excellent workshops not only in London but elsewhere, it is criminal that they cannot be used for the purpose for which they are intended. To ask one contractor not only to look after the vehicles and workshops but also to look after turn-table ladders, hydraulic equipment and all the other important equipment of a fire service seems absolutely ridiculous. There would have to be a number of contractors to cope with the job.
The important point is that in an emergency in which vehicles require urgent treatment, most fire services have workshops and men are on the spot to

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do those jobs immediately. We are talking about emergency appliances, the safety of the public and the safety of fire crews. I hope that the Minister will see the number of amendments which have been put down in the names of a number of Members of the Committee and will say that he accepts the principle, even if that requires the Government to come back with an amendment of their own.
Baroness Stedman: I should like to support the group of amendments. This is not an old comrades' association of the National Fire Service; it is purely fortuitous that the noble Lord, Lord Underhill, and I were both in the service at the same time. I also have a slight connection with the service now through its benevolent fund. It is important that fire service vehicles should be exempt in the same way as are police vehicles.
When I first joined the fire service there were still some police fire brigades available. They have always tried, as time has gone by, to maintain parity with the police in everything that they have done. While I do not want to return to police fire brigades, I should like to see the fire service vehicles treated in exactly the same way as police vehicles. I spent my years in the fire service as a member and chairman of the fire service committee. Indeed, at one time I was a member of the central fire brigade's advisory council. That was in one of the counties and not in London, which was the situation to which the noble Viscount, Lord Mersey, referred.
It is particularly difficult when one is trying to cover rural areas to get one's appliances out within the time laid down by the Home Office. One has to be absolutely certain that the appliances are in first class condition and will do what is required of them. They are subject to the most demanding reliability requirements and at times are driven to extreme limits. They have to start from cold and are expected to get up to their maximum speed very quickly, to ensure the quickest possible attendance time when lives and property are at stake.
The design specification for the operational appliances is issued under the authority of the Home Office Fire Department and is above that required of normal commercial vehicles. The appliances are really specialist vehicles and the repair and maintenance applies not only to the vehicle itself but also to the fire engineering which that vehicle carries—the pneumatic and hydraulic rescue equipment, the pumps, the generators and compressors, and so on. The operational availability of the fire appliances is vital. It is often necessary because the operational requirements for urgent work have to be carried out at short notice, or routine maintenance has to be rescheduled because of the calls on those appliances. This is much more easily achieved in self-managed workshops where there is a flexible programme of work that can meet the operational needs. The commercial contractors, we believe, are unable to comply with the rapidly changing priorities and create difficulties in maintaining the necessary availability of the fire appliances.
It is also unlikely in emergency circumstances that the fire services would be able speedily to gain access
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to a contractor's premises out of normal working hours to recover a vehicle which was needed for a particular job. It is important that these vehicles are exempted in the same way as are police vehicles.
The fire brigade mechanics all have to attend operational incidents for emergency repair or for the maintenance of their vehicles. They are trained in basic operational techniques to ensure their own safety and the safety of others under the Health and Safety at Work Act. All the contractors' personnel likely to provide emergency availability ought to be trained by the brigades anyway on an initial course, and on a refresher course as time goes by, so that they know the brigade procedures, the operational procedures, and the operation of the equipment and all the various specialist items that are carried on the vehicle. This is not just an ordinary case of sending out a car for maintenance: this is specialist equipment. The vehicles cost a great deal of money. They need to be looked after. They need to be ready when they are wanted. I hope that the Minister will accede to our requests.
10 p.m.
Baroness Carnegy of Lour: I shall not detain the Committee. The noble Baroness, Lady Stedman, has put all the facts into perspective. I should just like to add that I too was a part-time firewoman in the war. It is my recollection that it was an absolute disaster when an appliance was out of operation because of insufficient crew. It was absolutely never out of operation because the machinery did not work. It was always in working order, and it was 100 per cent. important that it should be. All noble Lords I am sure will know of someone who has had reason at some time to benefit from the instant reaction of the fire service. The speed of reaction is crucial and it is always an emergency. I hope that my noble friend is listening hard.
Lord Gisborough: I come from the County of Cleveland which has the highest fire risk in the whole country. I think that 16 per cent. of our county is designated as a very high fire risk. We have equipment which has to deal not only with all the ordinary types of fires about which one knows, but also those from chemicals of all kinds. We therefore have extremely well-trained men and complicated equipment. There are times when those fire appliances are at full stretch. For example, three or four years ago a tank fire was lit by arsonists. Every fire engine was needed. At the same time, there were two or three forest fires. Any vehicles on maintenance at that moment obviously had to be pulled out. As they were maintained by the county, there was little problem in so doing.
The case has been very well put by my noble friend and others. I should like to support it.
The Earl of Minto: Perhaps I may be allowed to speak as a member of a fire board in Scotland. Outside a fire board, I cannot remember ever having been in the company of so many distinguished firemen. Be that as it may, there is a very strong

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feeling in Scotland about this matter. To try to follow what has been said by the professionals would be absurd. However, there is one item that I should like to stress.
The fire board of which I am a member covers the Lothians and the Borders, from the south coast of the Firth of Forth and through the refineries of Grangemouth down the coast to the nuclear power units at Torness, to the city of Edinburgh, through an urban and rural countryside. I have to inform Members of this Committee that at the present moment the firemen are genuinely worried. Their worries can be divided into two issues. On the first the points have all been mentioned. On the second the point has not. It is the personal relationship between the firemen and the persons who work in the workshop.
I take my mind back to 1944. I was speaking to my then brother-in-law, who was an outstanding fighter pilot. He had joined the Royal Air Force in 1940 in the Eagle Squadron since he was a citizen of the United States. In 1945, he was leading every fighter that lifted off the ground with the USAF from the United Kingdom. As a 16 year-old I thought that he was a hero—as indeed I am sure he was. I asked him "Of your aircraft, your armaments, or your sheer ability to fly, what would your priorities be?" His reply was very simple. He said, "You have missed out the most important one of all: that is my ground crew. If we take the ground crew away from our pilots they fly with a lack of confidence".
And so it is. If we take the workshops away from our front-line firemen they will fight with a lack of the confidence that we know they have at present. Therefore in whatever order these amendments are numbered or are taken, I consider that it is not simply a privilege but a duty to support whichever amendment is moved.
Lord McNair: Perhaps I may mention very quickly one practical point that, oddly enough, I do not think has been raised. I hope that I am not depriving the noble Viscount, Lord Mersey, of one of those issues that he was saving up for Report stage. These fire engines are allowed to exceed the speed limit. Thus it is obvious that firemen must have confidence in the man who maintains the braking system.
The Earl of Caithness: I cannot claim to have been a firefighter in the war, but, as Members of the Committee know, I have had considerable experience of the fire service, having had the privilege of working with it when I was in my former position in the Home Office.
I would endorse the comments praising the fire service which have been expressed all round the Chamber this evening, and particularly the words of the noble Earl, Lord Minto, concerning the relationship. When I went to fire brigades I always noticed the tremendous ésprit de corps, and that they all depended on one another. When the bell went the back-up had to be there; otherwise they did not function as a unit. If they did not function as a unit
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they would not satisfy the strict criteria which my right honourable friend the Home Secretary laid down in the standards of fire cover to which my noble friend Lord Mersey referred in one of his four points.
We know that fire vehicles are complex. In two visits that I made I was especially interested in looking at the workshops. I learnt the details of how they worked and how they could be made more efficient, if possible, without breaking the relationship that currently exists. I know that Her Majesty's Inspectors of Fire Service, and, indeed, the chief fire officers are looking for efficiency as well as the maintenance of a service at this stage.
Of course, one must look now at the private sector. The fire service has very complex machines, but so does the private sector. Heavy cranes, cargo handling equipment, hydraulic platforms and earthmoving equipment are all maintained on a considerable scale by private concerns, so there is undoubtedly expertise in the private sector. Whether that is available for the fire service is something that I should like to look into. I hope the Committee will agree that I should take this away, give it further consideration, and discuss it with my right honourable friend the Home Secretary between now and another stage.
Lord Dean of Beswick: Will the Minister bear in mind during his considerations that when a fire engine goes out it is not just a simple engine; it is a complicated piece of self-propelled machinery mounted on wheels; it is very different from the original concept of a fire engine a few years ago. In an overwhelming number of cases when fire engines go out it is in order to save life, which may depend upon the speed with which they can get to a fire. This was drawn to our attention when the amendment was moved. Think of the horrendous loss of life there would have been in the fire at King's Cross if the engine had arrived three or four minutes later because of some lack of delivery. When the fire chief of a particular station knows that an engine is going out, it is essential that his men have confidence that it will perform at the maximum 100 per cent. and not just at 98 per cent. It has to be a 100 per cent. performance. I hope that that is a point which the Minister will bear in mind during his considerations.
Viscount Mersey: I am gratified that my noble friend is prepared to take away my two amendments and that of the noble Lord, Lord Underhill, and have a look at them. In that case I beg leave to withdraw Amendment No. 41.
Amendment, by leave, withdrawn.
[Amendment No. 42 not moved.]
Lord Dean of Beswick Lord Dean of Beswick moved Amendment No. 43:
Page 35, line 6, after ("vehicle") insert ("or of a specialist winter maintenance vehicle").
The noble Lord said: This is linked with Amendment No. 47. It is a similar amendment and would have the same effect, but it would relate to specialised equipment such as winter maintenance vehicles. We have been asked to hurry along with the Bill because of two issues which will arise later in the

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Bill. The noble Earl will understand if I do not speak at length on this subject, although I could. Will he give an undertaking that the Government will be prepared to consider these amendments, and no more, at this time?
10.15 p.m.
The Earl of Caithness: I shall look at this matter without commitment. I do not think it has nearly the strength of the argument of the fire service. The machinery that we are concerned with is considerably more simple. I remember from my days in Aberdeenshire when the farmers did much of the snow clearing and gritting of the roads quite happily for the local authorities. Perhaps, if the noble Lord is content, we shall return to this between now and another stage when we can discuss it informally.
The Earl of Minto: Before the noble Lord withdraws his amendment on those conditions, I put on a third hat as the chairman or vice-chairman of a highways authority for far too many years. I do not think that this matter should be underestimated by the Minister. It is indeed late, but the fact is that here too lies life and death. If you live in the North, as I do—and I have no reason to suppose that it is any different in the South—you may well be without railways, as we are; you may be without airports, as indeed we are; and you may rely entirely on your road network to get people to and from hospital, to and from the necessary health services that they require and to and from every sort of really important function in life.
While I welcome the fact that the noble Earl has said that he will think again, I should warn him that it is nothing like as far away from the last amendments as he has perhaps made out. The case to be made for the winter maintenance vehicles is very formidable indeed.
Baroness Blatch: I think the similarity between this amendment and the previous one is only in so far as these vehicles are about preventing accidents or making life safer for people who move about on our roads. Where the similarity ends is in the complexity of the vehicles. Almost every speaker on the previous amendment concentrated on two things: the complexity and the history of the vehicles and the necessity for them to be absolutely on the dot for responding to an emergency.
That cannot be said for this amendment. We are talking here about tractors, heavy-axle vehicles and snow-moving vehicles which are very much akin to other run-of-the-mill vehicles that are on our roads all day and every day. I think we are in danger of saying something fairly disparaging about those people in the private sector who maintain our vehicles.
The Minister has already agreed to take this matter back and look at it again, but I think the case for saying that somehow or other public authorities can maintain these vehicles to a high standard but the private sector cannot is a very weak one. I suggest that we must not go so far with this argument that we weaken the case for the fire brigade. I support the
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case for the fire brigade, but we are in danger of watering it down so much that it will be only a matter of time before all vehicles are exempt. The case for these vehicles being maintained either inside or outside the public sector, depending on the most appropriate response to the tenders, is a proposition I support. I should not support exemption on any other grounds.
Lord Dean of Beswick: I said that I would try to be brief, but the noble Baroness has once again elicited something that needs a reply. I said that I would not speak at length tonight, because though in principle it was the same as the argument for the fire brigade it was slightly different.
As a Member of Parliament for Leeds who was at the time resident in Manchester, I travelled regularly on the M.62. I had the experience of doing a 360 degree turn on an icy motorway. I am not a fast driver and have never had the ability to drive fast. On another occasion my car was turned upside down on a stretch of road on Saddleworth Moor. I was lucky on both occasions; others are not so lucky. When my car turned 360 degrees the car behind did the same. I got out of my car but the young girl in the other car got out only as a corpse. This is an important issue and life is at stake.
I hope that when the Minister looks at the issue he will consider all the angles. I have never said that the private sector cannot perform but I believe that these vehicles are part of a public service. I have highlighted two experiences. Basically I am a city dweller but I can imagine the area from which the noble Earl on the Cross-Benches comes. I can also imagine the ability of such vehicles to perform during certain circumstances in inclement weather.
I hope that the Minister will give the matter serious consideration. I beg leave to withdraw the amendment.
The Earl of Caithness: I think it is right that I should respond to the amendment in a little more detail. I said that I would look at the matter again without commitment because the noble Lord was willing to speed up the proceedings and I think that I can do so. However, I stress to the noble Earl, Lord Minto, that I see a great difference between the request in the Bill for the contracting out to tender of the maintenance and repair of fire vehicles as opposed to winter maintenance vehicles. I disagree strongly with the noble Earl and I believe that local authorities will be able to produce a contract which will be sufficiently clear to enable the private sector to do exactly what is being done at the moment by the direct labour force should it come forward with a more economical price for the same service. That is the difference, and I think that the Committee lost that point in the argument.
I support my noble friend Lady Blatch. This is a separate matter. It is also important and if it were not I should not take it away to reconsider. However, I think that there is sufficient difference although I cannot hold out major hope to the noble Lord.

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Having said that I shall look at the amendment again. I shall do so.
Amendment, by leave, withdrawn.
[Amendments Nos. 44 to 48 not moved.]
Schedule 1, as amended, agreed to.
Clause 3 agreed to.
Clause 4 [Works contracts: restrictions]:
The Earl of Balfour The Earl of Balfour moved Amendment No. 49:
Page 4, line 6, leave out subsections (1) to (6) and insert—
("(1) A person or party inviting tenders shall not accept a bid for a works contract offering to carry out work falling within a defined activity from a defined authority (a bidding authority) unless—

(a) the first or second alternative of the first condition is fulfilled, and

(b) the second condition is fulfilled.

(2) The first alternative of the first condition is that—

(a) the contract is made by acceptance of the bidding authority's offer to carry out the work,

(b) the bidding authority made the offer in response to an invitation to tender for the proposed contract; and

(c) the invitation to tender was made to at least three other tenderers who are willing to carry out work of the kind concerned, and who are not defined authorities or include at least three other tenderers who are not defined authorities.

(3) The Secretary of State may by regulations vary—

(a) the number of tenderers to whom an invitation to tender must be made under subsection (2)(c) above; and

(b) the minimum number of those tenderers who are not to be defined authorities.

(4) The second alternative of the first condition is that before entering into the contract, the person or party inviting tenders, published, in at least one newspaper circulating in the locality in which the work is to be carried out and at least one publication circulating among tenderers who carry out work of the kind concerned, a notice inviting tenderers to submit offers to carry out the work.
(5) The second condition is that the person or party inviting tenders, in entering into the contract and in doing anything else (whether or not required by this Part) in connection with the contract before entering into it, did not act in a manner having the effect or intended or likely to have the effect of restricting, distorting or preventing competition.").
The noble Earl said: I believe that the intended purpose of Clause 4 as printed is to prevent an authority, as defined in Clause 1, from entering into a works contract, as described in Clause 3, falling within a defined activity, as described in Clause 2, unless the tender for that contract was advertised to the local press and that at least three other firms had an equal opportunity to submit tenders for that contract. However, the responsibility for seeing that the tenderer for the contract does not act in a manner which has the effect of restricting, distorting or preventing competition under subsection (5) falls on the bidding authority and not on the party issuing the tender. Persons being invited to tender for a contract should not be in the position where they necessarily know who else is likely to tender; yet the clause states that the responsibility for seeing that the contract has fulfilled all the conditions falls on the bidding authority, not on the other party. I doubt whether a bidding authority could be penalised in law for any failure under the clause as printed because an authority or contractor cannot be held to a contract in which there are conditions over which they have no control. The suggested Clause 4 is designed to place
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the responsibility for fair competition on the person, party or authority for that matter issuing the tender. I beg to move.
The Earl of Caithness: I am grateful to my noble friend for moving the amendment. It provides an opportunity to explain the distinction drawn by the Bill between works contracts and functional work and the way in which the controls on work contracts imposed by Clause 4 will operate.
Authorities will in the main carry out activities covered by Part I of the Bill in fulfilment of functions either given to them in legislation or taken on by them under agency agreements. In either case Clause 3 of the Bill defines such work as functional work. In the case of agency agreements the specific provision is in Clause 3(3).
The in-house organisation wishing to carry out the work is simply part of the authority that decides who should carry out the work. If the work is carried out in-house there is no actual contract. There will be cases, however, where authorities carry out work for other authorities or, indeed, other people under contract. These arise, for example, through the powers given to authorities to carry out work for other authorities and public bodies under the Local Authorities (Goods and Services) Act 1970. Thus district councils might enter into contracts to cut grass in county-maintained schools or on the verges of country roads. There are many cases where one authority takes on small jobs for another.
It is much less common but nevertheless possible for one authority to enter into a contract to provide a complete service for another. One London borough could enter into a contract to empty the dustbins in a neighbouring borough's area. The Government have no objection to authorities entering into such contracts providing that they represent value for money for the ratepayers of the authorities concerned.
In order to ensure this, Clause 4 will mean that authorities can enter into contracts to carry out defined activities only if they win those contracts in competition with private contractors. To achieve this, Clause 4 effectively imposes duties on the body awarding the contract by providing that the authority bidding for the work may not enter into the contract unless the body awarding the contract has satisfied various conditions.
As my noble friend said, this involves complex provisions. I should point out that the same distinction between works contracts and functional work is made in Part III of the Local Government, Planning and Land Act 1980, which imposes competition on local authority building and maintenance direct labour organisations and has not led to any real difficulty in practice.
Clause 4(6) provides a defence for authorities that enter into contracts in good faith if they later discover that the body awarding the contract has not complied with the conditions in Clause 4. To take an example closer to my noble friend's area, if a district council in Lothian region enters into a contract to cut the grass in Lothian schools in the area, it should ask Lothian whether it has invited tenders from three

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contractors or advertised generally for tenderers. The district does not need to know the identity of those contractors. If Lothian tells the district that it has done so but it later emerges that it has not, Clause 4(6) provides that the district will not be vulnerable to challenge since it will be able to show that it did not know this at the time that it entered into the contract. Lothian region may, of course, be open to challenge on audit if there are complaints about the way in which it has awarded the contract. That is a specific answer to my noble friend's point about the authority giving the contract rather than the bidding authority.
The effect of Clause 4(6) is that authorities entering into contracts to carry out defined activities will be liable to the sanctions contained in Clauses 13 and 14 of the Bill only if there has been collusion with the body offering the contract aimed at avoiding fair competition.
I am afraid that it has been necessary to speak at some length on this complicated matter, but the way in which we aim to secure competition for works contracts is not simple. I thought that the Committee would welcome an explanation, albeit at this late hour.
The Earl of Balfour: With that assurance I believe that I am beginning to understand a little better. I wish to withdraw the amendment, but I should like to ask a brief question on Clause 4 stand part of the Bill.
Amendment, by leave, withdrawn.
10.30 p.m.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 50:
Page 4, line 44, leave out ("enter into") and insert ("decide who is to carry out work under").
The noble Lord said: I think that it would be convenient to deal with Amendment No. 51 at the same time; like many Members of this Committee they hang together.
I should like the Minister to help me understand what has happened recently. At the bottom of page 4 of the Bill we are dealing with Clause 4(7) which says:
"This section applies where it is proposed to enter into the works contract on or after 1st April 1989."
The purpose of these two amendments is to elicit some information from the Minister in respect of what I understand to be a change of effective dates. I am here genuinely seeking information. If, since this Bill came before us, the words are at variance with those of the Minister and his colleagues regarding what they are carrying out or intend to carry out, then I think Members of the Committee ought to be made aware of it so that we may examine it. I move these two amendments in order to provide the Minister with the opportunity to come clean.
The Earl of Caithness: I do not think that there is a necessity for me to come clean. The Committee will probably be aware by now that until very recently the view taken in my department was that correct interpretation of the dates as regards functional work already had the effect which the noble Lords opposite, by their amendment, are now suggesting.
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For instance, by 1st April 1989, an authority should have gone through the process of competition and be in a position to decide who, as a result, was to be awarded the work. The contract could then start at some convenient time shortly thereafter and a DLO could continue to do the work until then even if it had not been successful in competition.
In response to the authorities' queries about this we have taken a fresh look and have been advised that as regards functional work this is not so; and that since Clause 7(8) requires authorities to comply with detailed specifications which themselves have to contain dates setting out the period during which the work is to be carried out, they will have no authority at all to carry out work after the set dates unless they have won it in competition.
We recognise that as compared with our original view this effectively brings forward the whole timetable, since decisions on award of work will have to be taken in advance of the set dates. But authorities have been informed about this change of view in letters sent to each of them individually and will be able to take it fully into account in deciding how to respond to the implementation proposals set out in the paper which we circulated on 2nd November to which I have referred on numerous occasions. The consultations are continuing and the conclusions will be received by the end of the month.
I can say at this stage that some of them have correctly interpreted the provisions of the Bill so what I have said will be of no surprise to them. I hope that that clarifies the position for the noble Lord.
Lord Graham of Edmonton: The Minister was right in saying that they would not be surprised. The Minister is telling us that the earlier position was capable of misinterpretation or different interpretation, otherwise he would not have taken his recent action. I believe it is breath-taking that, although the intentions of the Government have been made clear for some time, the actual documentation that triggers the request or the remit has to wait. The Minister tells us that not only do they have to start doing things on 1st April 1989 but they must have actually completed the preparations in order to begin to do things then. If they continue to do that which has not gone out to competitive tender after that, then they are in default of the Bill.
I may have got it wrong. I listened to what the Minister said. What he said was that it effectively brings forward the timetable. For those who misinterpreted what the Minister originally thought—whether it was through ignorance or deliberate clouding of the issue—this must come as a terrible shock. Can the Minister tell us precisely for how many of the services which fall within the ambit of this Bill will authorities have had to have gone through the tendering process by April? Does it mean all of them or some of them? If it means all of them, and some of the authorities had genuinely, wishfully, or hopefully misinterpreted it, can the Minister tell us what each authority has to be in possession of by 31 st March in order to be legal for what they will have to do on 1st April?
The Earl of Caithness: As the consultation process is continuing—a point to which I referred earlier—it is something that my right honourable friend the Secretary of State will bear in mind. The correct interpretation will play an important part when finally deciding on a phasing-in competition. As that has not been decided, I cannot answer the hypothetical question that the noble Lord, Lord Graham of Edmonton, posed to me because it is part of the consultation process.
Bearing in mind what I have said, and that my right honourable friend can take this into account, the point at which it will strike is the initial process of complying with the provisions, and it will not recur at a later date. But of course if the consultation process shows that this is of concern to local authorities, it is something that we shall discuss with them because that is the flexibility we have built in.
Lord Graham of Edmonton: I am grateful to the Minister. He talks about built-in flexibility, taking into account, and consultation processes that have yet to be completed. But the only specific thing we have is that 31st March and 1st April are something like eight or nine weeks away. I am trying to assess the weight of the work.
The Earl of Caithness: It is 1989. It is not eight weeks.
Lord Graham of Edmonton: One year and eight weeks. My noble friends on the other Benches are smiling at what they obviously think was a mistake. I shall make their smiles even bigger—it was. But I count carefully, and there are very few people here who heard me say that. No doubt they will read Hansard tomorrow.
What the Minister has told the Committee is that the actions in the past few weeks have significantly speeded up the process. With the timescale of Parliament, with the majority that the Government have in both Houses, and not with the compliance but with the recognition of local government that these things are going to come about, the Minister is not prepared to listen. The noble Earl may have told me that he is prepared to listen and that this is part of the flexibility; but the value of this short debate is that those outside the Committee will read with care what the Minister has said and will interpret it. I hope that they may be asking those of us on this side of the Committee, or the Minister, to take some action at a future stage in the Bill. I am grateful to the Minister for putting me correct on one point, and I beg leave to withdraw the amendment.
The Earl of Caithness: Before the noble Lord sits down, perhaps I may add one word to give a clearer picture. In our proposals, the authorities will have had to deal with only one activity and one-tenth of ground maintenance by 1st April next year.
Amendment, by leave, withdrawn.
On Question, Whether Clause 4 shall stand part of the Bill?
The Earl of Balfour: I should just like to ask about one point on the Question whether Clause 4 stand
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part of the Bill. If a defined authority offered the best terms in the tender, all the conditions of the clause had been fulfilled, and the other party was also a defined authority, am I correct in assuming that a defined authority could then enter into a works contract with another defined authority to carry out work of a defined activity described in Clause 2; or does such a contract then become functional work under Clause 6?
The Earl of Caithness: I believe that it becomes functional work under Clause 6.
The Earl of Balfour: Thank you.
Clause 4 agreed to.
Clause 5 agreed to.
Clause 6 [Functional work: restrictions]:
[Amendments Nos. 51 to 53 not moved.]
Clause 6 agreed to.
Clause 7 [The conditions]:
Lord Dean of Beswick Lord Dean of Beswick moved Amendment No. 54:
Page 6, line 11, after ("notice") insert—
("( ) the detailed specification includes such particulars as to the performance and quality of the work as the authority may consider appropriate,").
The noble Lord said: In moving this amendment, I express the concern mainly of the National Consumer Council. While it has no view on the principle of contracting out, it is concerned that the introduction of new procedures for securing the delivery of key public services should not lead to a reduction in the effectiveness of any service provided.
The introduction of competitive arrangements may yield value for money improvements for consumers and ratepayers in the local government sector. However, such improvements are by no means a necessary consequence of competition. If attention is not given to quality of service but only to price competition, this can lead to the forcing down of standards of service delivery and thus reduce effectiveness. The National Consumer Council has devoted considerable thought to the issue of performance measurement in the local government sector. Its main study was published in 1986 under the title Measuring up. Last September the council also hosted a conference to discuss these issues, and a number of important papers were presented and have subsequently been published under the title Performance Measurement and the Consumer.
Our central argument is that it is essential that service providers set targets for the effectiveness of their services as well as for their economy and efficiency in delivery. We want to encourage local authorities to think about value as well as money, and quality of service is part of the value for money equation. By extension this argument clearly applies to any services which have been contracted-out by a given authority.
The Bill as presently drafted says nothing about quality of servicee delivery. The effect of this

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amendment is that local authorities would be required to have regard to quality and performance considerations in drawing up detailed work specifications though it would be up to individual authorities to specify precise standards for the delivery of each service at their discretion. The amendment is consistent with the remarks made by Ministers both on the importance of quality of service in the delivery of local services and on the need to preserve some freedom of determination for local authorities in addressing these matters. I beg to move.
10.45 p.m.
The Earl of Caithness: I am grateful to the noble Lord opposite for moving this amendment. He is absolutely right to say that it is consistent with the remarks that I have been making this afternoon, and indeed that have been made by my noble friends. In particular, my noble friend Lady Blatch has been saying precisely this.
The fact is that there is nothing whatever in the Bill to prevent authorities from specifying precisely what performance and work quality they will demand from those competing for contracts. They would be very foolish if they did not pay close attention to these vital matters. However, we believe there is no need to write this into the Bill, because the range of contracts and performance specification will vary so much. But we believe that in any case this will be taken into account by local authorities.
Lord Dean of Beswick: I am grateful to the Minister for that rather helpful reply, but in that case I do not believe that the National Consumer Council would have submitted this amendment, expressing its somewhat tentative misgivings about the Bill if it goes through as it is. It may well be that it will want to look at what the Minister has said. But having heard what the Minister has said, which I should like to read to see what are the implications, and on the basis that we may need to come back to try to get something more definitive written into the Bill at a later stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 7 agreed to.
Clause 8 agreed to.
Clause 9 [Accounts to be kept]:
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 55:
Page 8, line 11, alter ("authority") insert ("or private contractor").
The noble Lord said: I beg to move Amendment No. 55 and, if it is for the convenience of the Committee, I shall speak also to Amendments Nos. 56 to 59 because they all do the same job. That job is to put local authorities on the same footing as a private contractor. The amendment would make the clause read:
"This section applies where a defined authority or private contractor carry out, in the financial year beginning".
The case, which I am sure the Committee will realise is very reasonable, is that it will be grossly unfair if there are two suppliers of a service—that is,
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a local authority and a private contractor—and the private contractor does not have to submit to the disciplines contained in Clauses 10, 11 and 12, while the local authority does.
We shall be coming on to Clauses 10 and 11 in some detail later this evening, but we are talking here about what the Government feel is right and proper to ensure that ratepayers get value for money by exposing—I think that is the word that has been used at least a dozen times tonight—to competition and to other matters the services of local authorities.
We have some interesting experience over the past year or two of the practices of private contractors and of the lengths to which they go in order, in the first instance, to obtain what appears to be a very good deal for the ratepayers by putting in what is the most competitive tender.
The industrial performance analyses of 1986 and 1987 showed that the rate of return on capital of contract cleaners declined sharply over a period coinciding with the commencement of compulsory tendering in the National Health Service, and they made a loss in 1985 and 1986. For this labour-intensive sector, contract cleaners were also shown to be losing £5 per employee in 1984 and 1985. There will be voices round the Committee which say, "Well, they are not likely to last very long if they make a loss"; and many of them do not last very long. They go out of business, and many small contract cleaners are merged into one of the two or three big contract cleaners, which changes the position.
It is not beyond the experience of Members of the Committee, here and in the other place, that there are loss leaders and that contractors tender at prices deliberately calculated to undercut other bids to establish their market position. Other tenders have been pitched at unrealistically low levels through apparent incompetence. I am sure that the whole Committee is with me when I say that ratepayers ought to be protected from such practices.
This series of amendments invites the Government to satisfy the Committee that the disciplines which they want to apply in the public sector are not necessary in the private sector: "Keep your fingers crossed; do not ask too many questions; do not be concerned about their employment practices and their philosophy but simply obtain them because they are the cheapest and rue the day for a long time afterwards".
If the Minister wants to be consistent and to be seen outside this place to be fair, reasonable and balanced in his application of those measures, in view of the local authorities' exposure to them, he should find the amendments eminently reasonable. I beg to move.
Lord Hesketh: My reaction to these amendments is quite simply that they are aimed at bringing about a situation which already exists. What I mean by that is that they appear to assume that private contractors are not subject to the disciplines which this Bill would apply to direct labour organisations, and thus that for fairness they must be brought within a similar regime.

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I really find it hard to resist the conclusion that this stands logic on its head. The Bill is required precisely because DLOs are not subject to the commercial disciplines that already apply fully to the contractors with whom they will be competing. Contractors may not report to the Secretary of State, but they have to produce annual reports and accounts. They may not have to meet financial objectives laid down by the Secretary of State but they most certainly have to meet market tests which are at least as stringent. The existing checks on financial losses by DLOs are slow, if they even exist at all, whereas a contractor who starts losing money will rapidly go out of business.
There is little further to say about these amendments except that they must clearly be rejected.
Lord Graham of Edmonton: It is a great pleasure for me to respond to the noble Lord, because as I understand it these are the first amendments to a Bill to which he has had the doubtful privilege and pleasure of replying, and he has done so most ably.
I am puzzled at the brief which the Minister has been given for this auspicious occasion because he is inviting the Committee to say that what is happening to local authorities under Clauses 10, 11 and 12 is no different from that which occurs in the private sector. If the private sector were subject, for instance, to Clause 10(2), which provides,
"The authority shall secure that such financial objective as the Secretary of State may specify".
I wonder what kind of financial objective the Secretary of State would set for the private contractor.
He will not do anything of that nature. The Secretary of State will be told by the local authority that the contracts have gone out to tender. He will be given the details, and told that the tender, although not necessarily the lowest, but invariably the lowest, has been accepted. He will merely say, "That is my job done. I have exposed the local authority to the winds of competition and it has carried it out". That local contractor will be free, as we all know, to carry out the contract and operate with profit always as his prime objective. I am not satisfied with the Minister's reply and I intend to divide the Committee.
Lord Borthwick: I should like to ask a question about the amendment. I am a little mixed up, but I think that this is where the point comes in. Some years ago I had a lot of trouble. I was snowed up badly. At that time the local authority arranged for various farmers with tractors and lifters to help out. They were not contractors. They were chosen because they were in a strategic position and able to open up the roads. They did so and they also opened up a lot of fences and dykes as well. One part of the country has been suffering from that ever since. I believe there is some method of insuring people if that happens to them, but it has not appeared so far.
Once these contractors contract, they do not seem to be responsible for any damage done. That is accepted by some authorities, but not by others. I have an idea that it should be more general.
Lord Graham of Edmonton: I can perhaps help the Minister. How a contractor will comply with his responsibilities will first be part of the terms of the contract. Secondly, it will be up to the authority to make sure that it gets the best contractor to apply. The sad thing, I believe, is that some contractors are irresponsible; they will do a great deal in order to get the contract. Once they have got it, they will not be too careful as to how they fulfil it.
Lord Borthwick: In this case, it will hardly come under the contractors being paid money. The contractors are selected because of the key position which they hold, so that they can keep the roads open. The authority says, "You've got that, now get on with the job." It is a bit difficult, but it gets things moving. I can quite see the point about that; it helps tremendously. It comes under the legal definition.
10.55 p.m.
On Question, Whether the said amendment (No. 55) shall be agreed to?
Their Lordships divided: Contents, 8; Not-Contents, 29.

DIVISION NO. 5

CONTENTS

Carmichael of Kelvingrove, L.

Pitt of Hampstead, L.

Dean of Beswick, L.

Ponsonby of Shulbrede, L.[Teller.]

Graham of Edmonton, L.

McNair, L.

Seear, B.

Nicol, B. [Teller.]

NOT-CONTENTS

Arran, E.

Dundee, E.

Balfour, E.

Gisborough, L.

Beloff, L.

Goold, L.

Blatch, B.

Hesketh, L.

Borthwick, L.

Hives, L.

Brabazon of Tara, L.

Hooper, B.

Caithness, E.

Long, V.

Cameron of Lochbroom, L.

Lyell, L.

Carlisle, E.

Munster, E.

Carnegy of Lour, B.

Saltoun of Abernethy, Ly.

Carnock, L.

Sheffield, Bp.

Cork and Orrery, E.

Skelmersdale, L.

Craigmyle, L.

Trafford, L.

Davidson, V. [Teller.]

Trumpington, B.

Denham, L. [Teller.]

Resolved in the negative, and amendment disagreed to accordingly.
11.3 p.m.
[Amendments Nos. 56 to 59 not moved.]
Clause 9 agreed to.
Clause 10 [Financial objectives to be met]:
[Amendments Nos. 60 to 65 not moved.]
Clause 10 agreed to.
Clause 11 [Report .for financial year]:
[Amendments Nos. 66 to 69 not moved.]
The Earl of Dundee The Earl of Dundee moved Amendment No. 70:
Page 10, line 11, leave out ("the first relevant date") and insert ("30th September").
The noble Earl said: I ask the leave of the Committee to speak also to Amendments Nos. 71, 72, 81, 82 and 83. The amendments place report dates on a uniform basis by bringing the Scottish dates into line with those applicable to England and Wales. The Bill now makes provision for local authorities to submit reports by 31st October for England and Wales and 31st December for Scotland and for their auditors to check the statement on the rate of return. The activities covered include those in the Local Government, Planning and Land Act 1980, as well as those covered by the Bill.
The Commission for Local Authority Accounts in Scotland takes the view that it is no longer necessary to put back the date for preparation and submission of reports for Scotland. Auditors checking the statements of rate of return will highlight any discrepancies in reports and thereby ensure that the reports received in the department are subject to scrutiny based on audited figures. What was a practical suggestion by the accounts commission has therefore simply been rendered redundant by the introduction into the Bill of a further refinement in the audit process which now applies to all local authority activities subject to competition. That provides a welcome consistency of approach north and south of the Border, and I am sure that the Committee will agree that those are uncontentious points which raise no new issues. I beg to move.
On Question, amendment agreed to.
The Earl of Dundee The Earl of Dundee moved Amendment No. 71:
Page 10, line 14, leave out ("the second relevant date") and insert ("31st October").
On Question, amendment agreed to.
The Earl of Dundee The Earl of Dundee moved Amendment No. 72:
Page 10, leave out lines 21 to 25.
On Question, amendment agreed to.
Clause 11, as amended, agreed to.
Clause 12 [Information]:
[Amendments Nos. 73 and 74 not moved.]
Clause 12 agreed to.
Clause 13 agreed to.
Clause 14 [Power to give directions]:
Lord Dean of Beswick Lord Dean of Beswick moved Amendment No. 75:
Page 13, line 7, leave out subsection (4).
The noble Lord said: Clause 14(4) of the Bill says that a direction of the Secretary of State to the effect that a defined authority shall cease to have power to carry out a specific function will take precedence over any enactment authorising or compelling the authority to do that work. It is considered that the clause, which allows the Secretary of State to over-rule primary legislation, should be resisted. The Law Society of Scotland is of the view that any direction made by the Secretary of State under the clause should be made on a negative resolution procedure in order that a degree of parliamentay control is retained in the matter. I beg to move.
The Earl of Caithness: We believe that Clause 14(4) is a sensible and important provision aimed at putting beyond doubt that closure notices issued under the Bill are to prevail over any other statutory provisions requiring or enabling authorities to carry out work.
All that means is that authorities will have to find contractors to carry out the work in question. It does not mean that the work will go undone, as has been claimed by some. In issuing closure notices, the Secretary of State will of course have to satisfy himself that there are sufficient contractors available to do the work in question. It is not easy to envisage circumstances in which action is likely to be initiated under Clause 13 if there are no competing contractors. I hope that that explanation satisfies the concern of the noble Lord.
Lord Dean of Beswick: I am partially satisfied. Once again, that provision bypasses the question of primary legislation. I do not think that we can carry on in that vein. I think that the whole Bill implies that primary legislation can be dispensed with if the Secretary of State so wishes. On that basis, I think that I should perhaps press the amendment.
On Question, amendment negatived.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 76:
Page 13, line 12, at end insert—
("( ) On the default or liquidation of a contractor undertaking a defined activity, the Secretary of State shall, on the production of evidence of expense incurred by a defined authority as a result of that default or liquidation, make provision to meet that additional expense.
( ) The Secretary of State shall, by statutory instrument, prescribe the conditions to be satisfied and the method by which such reimbursement of expenditure shall be made.").
The noble Lord said: With this amendment we seek to persuade the Minister that, as a result of having gone out to competitive tender and having had a service, such as the collection of refuse, taken out of its hands by virtue of competition, the local authority has to consider the consequences. It is within the knowledge of every Member of this Committee that circumstances can arise whereby a contractor defaults, goes bankrupt and is unable to provide a service. This amendment says that:
"On the default or liquidation of a contractor undertaking a defined activity, the Secretary of State shall, on the production of evidence of expense incurred by a defined authority as a result of that default or liquidation, make provision to meet that additional expense".
I imagine that the Minister would consider that to be reasonable and not simply say, "Hard lines; this is the harsh, competitive world. Although it is somebody else who has caused you to incur public expenditure, you have to carry it because that is the reality".
The Minister must understand that as a result of competition and privatisation by some authorities who have not been so persuaded—certainly in the health service—there is a range of circumstances in which the carrying out of a contract by a private contractor can often mean that the local authority and particularly environmenal health officers, are

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called in in order to put right a situation that is undoubtedly not in the best interests of the authority. Often they have to incur expenses. I am not talking about carrying out the service; I am talking about the cost to the authority of fulfilling its statutory functions in respect of public health and hygiene when they are forced to do so as a result of the inability of a private contractor to comply.
The argument may very well be that one should get rid of the contractor. Sometimes that is not the easiest solution; sometimes it is better to try to improve the quality of the defaulting service, in which case it will cost the authority money.
With this amendment and others which are related to it we request the Minister to take on board the fact that these are days of ratecapping and of circumstances in which every penny counts. We ask him to say something kind in respect of what we are trying to do, which is to relieve a local authority of the expense of ensuring that a contractor fulfils his obligations; and moreover that if there is a bankruptcy—as can very often happen—expenses which are incurred by the authority as a result can be reimbursed by the Secretary of State. I appreciate that criteria will have to be laid down and it is not just a question of the council saying, "It has cost us £10,000 to get out of trouble and keep the service going. Will you give it to us"? There has to be some definition and some criteria. I beg to move.
The Earl of Caithness: It is of course possible to argue to the general proposition that whoever is responsible for the imposition of a burden should pay for it, though in fact that is of course not a general rule by any means. Householders have to pay for the cost of complying with building regulations, for instance, and there are many similar examples.
However, it is not necessary to pursue this line of argument, because the fact is that if an authority as client lands in court because of the failure of a contractor, that authority is itself able to take the contractor to court. There is no need for compensation from the Secretary of State. Normal contract law is designed to cater for these problems.
I think we are in any case in danger of losing sight of the overall rationale for these provisions. They are intended to and they will save local authorities and the other defined bodies very large sums of money—sums which will in all probability run into hundreds of millions of pounds a year eventually. Even if a small minority of authorities is unfortunate enough to get into a situation where net expense is occurred, the logic of then requiring compensation from public funds would—and I take the argument of the noble Lord, Lord Graham, if we extend it further—require savings to be paid to the Exchequer.
I am sure that my right honourable friend the Chancellor of the Exchequer would welcome that idea, but I do not think that it would go down particularly well with local authorities. We are saying that the provisions in this Bill are designed to save the local authority considerable sums of money. The tendering and contract work that has been put out on a voluntary basis so far under the provisions of the
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1980 Act have shown that considerable sums of money—many hundreds of millions of pounds at the end of the day—are the likely target. There may possibly be a small minority of authorities who get into a net expense situation, but of course there is the normal contract law to take care of situations of that kind.
Lord Graham of Edmonton: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
11.15 p.m.
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 77:
Page 13, line 14, at end insert—
("( ) A defined authority shall not be prosecuted for any offence arising from failure to carry out any duty nor shall a defined authority be liable at civil law for any injury, loss or damage arising from failure to carry out any duty, other than in respect of negligence, in the following circumstances—

(a) a direction by the Secretary of State under that section that the authority shall cease to have the power to carry out a defined activity, or

(b) the failure by a contractor, for whatever reason, to fulfil obligations under a contract to undertake a defined activity.").

The noble Lord said: Amendment No. 77 inserts a subsection that:
"A defined authority shall not be prosecuted for any offence arising from failure to carry out any duty nor shall a defined authority be liable at civil law for any injury, loss or damage arising from failure to carry out any duty, other than in respect of negligence, in the following circumstances".
Then the circumstances are listed under paragraphs (a) and (b). We are arguing that the defined authority should be protected for a reasonable period from legal liability, whether civil or criminal, in the event either that the Secretary of State directs that an authority may not carry out a defined activity, or if a contractor defaults on a contract by failing to meet the required specification or by ceasing to undertake the contract as a result of liquidation, or for any other reason.
We are asking the Minister to bear in mind that we are breaking new ground. We shall certainly find many new contractors who will be awarded contracts. The responsibility in these matters will be bound up in the tender contracts. Nevertheless, there are circumstances such as those outlined in these amendments where the additional protection could be given by the Secretary of State without being too burdensome on the local authority. I beg to move.
The Earl of Caithness: The second part of this amendment would apply to the consequences of contractor failure resulting from the provisions of this Bill, a legal doctrine that quite rightly does not apply to the consequences of any other sort of contractor failure.
If a paving stone is badly laid and injures a pedestrian, that pedestrian's complaint is not against the contractor who laid it but against the authority who ordered it to be laid. The authority itself then has redress against the contractor. That is how the law functions in respect of all such instances and I can see no reason why it should be any different just because the events leading up to the authority's failure to carry out its functions properly included compulsory competition.

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Indeed, I can see at least one very good reason why it should not. If authorities thought that they were immune from prosecution they might well select their contractors with less than due care. They might even welcome one or more failures in order to be able, without fear of prosecution, to say that it was all the Secretary of State's fault.
The first part, in effect, also invites an authority on whom a Clause 14 order has been served to manufacture breakdowns in services so as to put pressure on the Secretary of State. If the Secretary of State has misjudged the situation to the extent that an authority cannot find competent contractors—which is a very unlikely situation indeed—then he is no doubt liable to judicial review if he fails to rescind the order. It seems clear that these amendments have their origins more in distaste for the Bill than in a real desire to protect the legal position of defined authorities. That position is already secured both by contract law and by administrative law. We therefore feel that the amendments are unnecessary.
Lord Graham of Edmonton: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 14 agreed to.
Clause 15 [Orders, regulations, specifications and directions]:
Lord Graham of Edmonton Lord Graham of Edmonton moved Amendment No. 78:
Page 13, line 16, leave out ("section 2(3)") and insert ("sections 2(3) and 10(2)").
The noble Lord said: Amendment No. 78 goes to the heart of Clause 15. This clause empowers the Secretary of State to specify the financial objectives to be met, and more importantly to define the financial objective concerned by reference to such factors as he thinks fit.
We think that this needs some substantiation because we understand that the financial objective will be a fixed rate of return on capital, and what concerns those of us on this side of the Committee who take an interest in these matters is that there is a lack of control over the actions of the Secretary of State to alter financial objectives. In other words, the phrase "moving the goalposts" and deciding from time to time different criteria upon which he will compel authorities to operate is not, in our view, a very good means of maintaining good relationships with local authorities, nor of helping them with their financial prudence.
These amendments are designed to ensure that there is much greater control over the ability of the Secretary of State to alter the criteria at any given moment to suit his own financial objectives. I beg to move.
The Earl of Caithness: I was rather surprised to hear the noble Lord, Lord Graham of Edmonton, moving these amendments as I thought that they were all grouped with Amendments Nos. 62, 63, 64 and 65 which he did not move. Because they are so hound up, this has come as a surprise. Therefore, I
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should like to read what he has said carefully between now and another stage.
Lord Graham of Edmonton: In that case, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 79 not moved.]
Clause 15 agreed to.
Clause 16 [Supplementary]:
Lord Dean of Beswick Lord Dean of Beswick moved Amendment No. 80:
Page 14, line 14, at end insert—
("( ) All establishments which have been maintained by a local authority in the last five years shall for the purposes of the Local Authorities (Goods and Services) Act 1970 be deemed to be public bodies and the Secretary of State shall make a statutory instrument to that effect if any such establishments at any time do not fall within the definition of public body for the purposes of that Act.").
The noble Lord said: I think it is true to say that we approach the benediction now. I do so with some relief, but I regret that the final prayer has to be rather longer than I would have wished. The amendment is to provide the right for local authorities to compete to supply goods and services to polytechnics, colleges and any schools who opt out of local authority control.
This new subsection has the specific and limited objective of still enabling local authorities to supply goods and services to education establishments who would go out of the local authority sector if the provisions of the current education Bill are enacted. These would be all the advanced further education institutions, city technology colleges and those grant-maintained schools which opt out of the local authority framework. Only the right to compete is asked for, not an automatic continuation of the current arrangements. It would of course still be open for the college or school to choose another contractor, but at least there would not be an automatic barrier to the local authority's ability to tender.
The proposed legislation will open local government to competition from the private sector. However, local government's ability to compete to supply goods and services to other bodies is very circumscribed. A local authority's ability to undertake work for other organisations is limited by the Local Authorities (Goods and Sevices) Act 1970 which empowers local authorities to supply certain goods and services (subject to certain restrictions) only to other local authorities and public bodies. Public bodies are defined by statutory instrument and include health authorities and organisations which exercise functions of a public nature—for example, local authority associations—but central government are excluded. Unless the polytechnics, colleges of higher education and so forth, are designated specifically as "public bodies", the consequence of the Government's proposals for change (as set out in the education Bill) will be that institutions will no longer come within the list of public bodies; local authorities will be barred from supplying them with any goods and services, even by competitive tender,

619
and another barrier to the ability of local government to compete on equal terms will have been erected.
What the amendment therefore seeks is an assurance from the Government that they will make a statutory instrument adding colleges and grant-maintained opt-out schools to the list of approved public bodies at the appropriate time so that local authorities can at least tender to continue to supply goods and services to these institutions. The ability to compete is all that is asked for. As a further sign of realism and moderation, the amendment does not seek to extend the list of approved public bodies beyond the current status quo, although the restrictiveness and anomalous nature of the list has long been apparent. For example, local government is not allowed to compete for central government business in, for example, purchasing contracts. But other organisations such as Crown Suppliers and Her Majesty's Stationery Office are allowed to supply local authorities and the private sector.
The Local Authorities (Goods and Services) Act 1970 permits local authorities to enter into agreements for the supply of goods and materials or the provision of administrative, professional or technical services. Astonishingly little in the debates on the Local Government Bill so far has been said about the virtues of economies of scale and cost-effectiveness particularly in the area of purchasing, although much attention was directed to this some years ago. It can make good economic sense and be very cost-effective for local authorities to be able to supply central support services such as participation in purchasing contracts, finance and computer services, etc., to appropriate other bodies broadly within the public sector. The local authority will continue to need these central support services in respect of its work, regardless of where the contracts go for the defined activities in the Bill, although these central functions will undoubtedly undergo changes as a result of the Bill. Polytechnics and local education authority schools currently rest clearly within the public sector and are legitimately served by central departments. But if they transfer out of local government and are considered to fall outside the definition of "public body", then by definition central departments in a local authority will lose the opportunity of bidding for or providing support services to these institutions regardless of the cost effectiveness and the benefits to both parties.
Oxfordshire County Council feels that it should be allowed to compete in the open market place generally and not asked to compete with one hand tied behind its back, which situation would leave councils ultimately to provide services which are unattractive to the private sector and not cost-effective to the rate payer. It therefore urges the provision for the continuing inclusion of polytechnics and grant maintained schools within the definition of "public body" as a small step towards fair competition.
The proposed amendment has particular relevance for the purchasing function. In 1987 the Audit Commission in its report Improving Supply Management in Local Authorities, recommended that
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local authorities should be allowed to compete to provide supplies to central government and the private sector. This Audit Commission report stresses the need for a co-ordinated policy within a local authority if its purchasing is to be properly effective. But at a moment when greater professional-ism and consideration in local authority purchasing is advocated, it is unfortunate if the effect of the Government's legislative programme would be to bring about fragmentation of activity and thus undermine the degree of co-ordination and purpose which exists in well-managed local authority procurement operations. Although the Audit Commission report is critical of some authorities, it acknowledges that the policies and practices of the leading authorities are on a par with the best, in industry and elsewhere.
The Institute of Purchasing and Supply is the largest professional purchasing and supply organisation in Europe. Its 18,000 members hold appointments in most sections of industry and commerce and throughout the public sector.
The IPS wants an assurance that local authorities will not be debarred from supplying any education establishments currently within LEA control. It says:
"On the removal of certain establishments from local authority control the Institute would not wish to advocate sterile protectionism for local authority purchasing organisations. Competitiveness is central to the thinking of the purchasing and supply profession. It may well be to the advantage of the new free standing institutions however that they should have access to the expertise of a local authority's professional procurement manager and the benefits to be derived from co-ordinated purchasing".
It goes on to press for such access to be granted.
The right to compete to supply goods and services to institutions which are currently part of local government is what is sought—surely a modest enough proposal.
I have taken a little longer than I should have liked at this time of night, but I think that it is only fair to those involved to put the case properly because it is an important subject. It has been accepted that the Committee is now further on with the Bill than was expected. In those circumstances, I thought it reasonable to deal with the last amendment in extenso. I beg to move.
11.30 p.m.
The Earl of Caithness: A local authority can do only those things necessary for the discharge of its functions, and the Local Authorities (Goods and Services) Act 1970 is a minor empowering Act which makes it legitimate for local authorities to supply goods or services to other local authorities, or to public bodies designated under the Act. The designated public bodies must be exercising functions of a public nature with the result that local authorities cannot supply the private sector. I am grateful to the noble Lord for the concern that he showed in respect of this matter and for explaining it so fully to the Committee.
I hope that I am able to reassure the noble Lord that legitimate local authorities have no need of this amendment. Local authorities are public bodies for the purposes of the 1970 Act and can supply goods

621
and services to each other. We have announced that polytechnic and grant-maintained schools will be made public bodies under the 1970 Act, and this will be achieved by provisions in the Education Reform Bill currently before another place. With regard to the city technical colleges referred to by the noble Lord, I should like to check on the current position that my right honourable friend has taken on the provision provided by local authorities. I shall write to the noble Lord in detail about the matter.
Lord Dean of Beswick: I am grateful to the Minister for that reply. He did not use the word "sympathetic", but some aspects are still under review. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 16 agreed to.
Clause 31 agreed to.
Schedule 5 [Direct labour organisations]:
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 81,82 and 83:
Page 43, leave out lines 41 to 43.
Page 44, leave out lines 12 and 13.
Page 44, line 17, leave out ("or (in Scotland) 31st December").
The noble Earl said: I beg to move Amendments Nos. 81, 82 and 83. They are consequential on Amendment No. 70, which has already been spoken to.
On Question, amendments agreed to.
Schedule 5, as amended, agreed to.
Lord Hesketh: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
House adjourned at twenty-five minutes before midnight.