Local Government Bill

HL Deb 26 January 1988 vol 492 cc498-568

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 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 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 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 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 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.

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 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)". 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, 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.

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.

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 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 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, 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 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.

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.

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 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 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 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 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 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 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 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 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 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.

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 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 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 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 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 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 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 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 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 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 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 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 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 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.

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 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 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 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 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 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 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 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 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. 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.

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 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.

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 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 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. 1. responsibility for the security of the premises;
2. 2. unlocking and locking the school (both for school use and community and adult education, evening and weekend use):
552
3. 3. receiving deliveries of supplies and services;
4. 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 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 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 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 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 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—

1. (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;
2. (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 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 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 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 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 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 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 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 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 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 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 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.

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.