Local Government Bill

HL Deb 26 January 1988 vol 492 cc580-621

House again in Committee on Clause 2.

[Amendments Nos. 16 to 19 not moved.]

Lord Dean of Beswick moved Amendment No. 20: Page 3, line 31 at end insert— ("( ) Notwithstanding the provisions of section 2(2) above, a defined activity shall not be treated as a defined activity if the net expenditure by a defined authority on the direct discharge of the defined activity was, in the previous year, less than £250,000 (or such higher figure as the Secretary of State may determine upon special application of the authority) which said figure shall be adjusted annually by the Secretary of State having due regard to the rate of inflation then current.").

The noble Lord said: In moving Amendment No. 20 I should like to link it with Amendments Nos. 22 and 23.

The justification for the amendments and the effect of Clause 2(9) as it stands would be to allow the Secretary of State to exempt certain activities from the definition of a defined activity as set out in Clause 2(2) and Schedule 1. The Government have proposed that, Defined authorities would be exempt from competition for a defined activity if the amount they spent on the direct discharge of an activity—including all relevant overhead costs—was less than £100.000 a year …. The Government propose, therefore, that an authority should he exempt in any year if its estimated gross expenditure in carrying out the activity in the previous year is less than £100,000.

It is important to note here that the intention of the Government is not to exempt an authority because it is small. Small authorities are in general just as capable of benefiting from competition as are large authorities. Therefore, it seems to be the case that the Government can envisage certain situations where an exemption would be appropriate, but the size of the authority would not form the main reason for that exemption but rather would be incidental. The question is rather, where the level of activity is very small, is it appropriate to impose the full statutory accounting and reporting requirements?

Further, it is the Government's clear intention that any such exemption shall be so narrow as to benefit very few authorities. Clearly, a de minimis level must be set at a low level of expenditure if it is not to cease to have any rationale.

Two major areas of concern have arisen in connection with Clause 2(9). Secondary legislation: the Bill in general and with particular relevance to Clause 2(9) is a skeleton which, after passing into statute, remains to be fleshed out by way of secondary legislation and ministerial order. Delegated legislation, while allowing for flexibility in response to complicated issues, prevents full public scrutiny in that what would have been subjected to the full parliamentary process becomes the subject of government proposals and assurances. However well intentioned such proposals and assurances are, and however well consultation is carried through, it cannot—nor is it designed to—have the public scrutiny of primary legislation. Any proposed de minimis exemption should therefore be set forth in the Bill itself, thereby ending the doubts and uncertainties for many local authorities.

As to the basis of the exemption, concern has also been expressed regarding the expenditure limit of £100,000, primarily because it is set too low. The following examples are typical responses to the Government's proposals. This Council notes that defined authorities would be exempt from competition for a defined activity if the amount they spend on the direct discharge of it is less than £100,000 per year. With regard to this council, refuse collection appears to be the only defined activity which would require to be exposed to competition. The other two defined activities, 'other cleaning' and 'cleaning of buildings' by this Council, do appear to fall beneath the £100,000 'de minimis' level. However, by 1st April 1990 it may be that all of the defined activities carried out by this Council would be well in excess of £100,000. On this basis and hearing in mind that private tenders are very unlikely to be received the Council recommends that the 'de minimis' level be raised to £250,000.

There are further examples by councils, Badenoch and Strathspey and the Association of Highland District Councils, which make the same point that the £100,000 is too low anyway and would become an historical nonsense. On that basis of that, I beg to move the amendments.

The Earl of Caithness

Amendments Nos. 20, 22 and 23 would raise the threshold below which work is exempt from the Bill's provisions very considerably. Amendment No. 22, couched in terms of 20 employees, probably translates into gross expenditure of the order of between £300,000 and £400,000. It might be more appropriate to describe such a threshold not as a de minimis but as a de maximus level.

I have to say that I cannot agree that it is not worth exposing such large sums to competition. They may not he large relative to typical expenditure levels on the Bill's services, but in absolute terms they are nevertheless very large. How many of the members of this Committee, in spending their own funds on something costing these orders of magnitude, let alone something considerably less, would do so without in some way testing the market? We must hear in mind that since it is an on-going provision that is at issue, any contracts are likely to last for several years. A service costing £250,000 per year would lead to a five-year contract worth £1,250,000 and yet still not be subject to the pressures for efficiency which the competitive process would otherwise bring to bear. We do not think that that is sensible.

The fact that the £100,000 limit proposed by the Secretary of State would exempt very few authorities' services is not really relevant to our proposals. Its aim is not to affect some target proportion of authorities but simply to exempt work where there really is a strong case for fearing that tendering and other administrative costs may outweigh competitive gains. The argument has been put forward that the Secretary of State has erred considerably on the high side, and that if there is any case at all for such a threshold it should be set far lower than £100,000. Indeed, I am sure Members of the Committee have read the argument for a £25,000 de minimis level in the papers recently. I would suggest that that view is held by a respectable number of people and is a view that we should take into account in considering the level in our consultations which, as the Committee knows, are still continuing.

The fact the Secretary of State has consulted on the basis of a £100,000 limit does not in any sense mean that this figure is set in concrete. First of all, it is only a proposal. A large number of responses to it have been received and these will be studied very carefully before any final decision is made. Secondly, the Secretary of State will be able to vary the initial limit or set different limits for different sorts of work if, in the light of experience, there is a case for doing so. Nor does it seem to me that there is thus any case for automatic indexing of any initial level.

I am sure that the Committee will agree that the right thing to do is to review it from time to time without prejudice to whether it should move up or down or stay the same in real terms. I come back to the suggestion that £100,000 is subject to consultation which is going on at the moment. There are a number of responses which we should like to consider very carefully.

Lord Dean of Beswick

I thank the noble Earl for that reply. What comes across more ominously than ever is the tremendous amount of consultation that is taking place to which people such as myself and other noble Lords interested in the Bill are not privy. We have to be a little careful that there is not so much consultation that it will end in legislative constipation, because so much is being pumped through at once quite blindly.

I wonder whether the Minister and the Government should not consider the disparity in size between authorities that will, if I heard him correctly, be covered by a blanket approach. I am sure that £100,000 for some of the very small authorities will prove more than adequate. I hope it will. But to limit that for the large county, city and borough authorities is a futile exercise. I do not think it would be a realistic figure.

Having heard the Minister tell us that consultations are still taking place, it is possible, first, to read what the Minister has said and understand what the consultations are saying, and then perhaps at a later stage the Minister may be able to give us a more definitive sum. I hope that he will listen to what we have said regarding the disparity of sizes that will be encompassed by the same figure of £100,000 and that he will think it may be worth considering an extension based on the larger and more involved authorities.

Having said that, I have no wish to press the amendment at this stage and I beg leave to withdraw it.

Amendment, by leave, withdrawn.

[Amendments Nos. 21 to 24 not moved.]

Clause 2 agreed to.

9 p.m.

Lord Dean of Beswick moved Amendment No. 25: After Clause 2, insert the following new clause:

("Definition of Secretary of State.

("For the avoidance of doubt, any reference in this Act to "the Secretary of State" shall be interpreted as refering in England to the Secretary of State for the Environment; in Scotland to the Secretary of State for Scotland; and in Wales to the Secretary of State for Wales.")

The noble Lord said: This new clause has been recommended by the Law Society of Scotland. The Bill is designed to apply both in England and Wales and in Scotland. As such, it is drafted on the basis of English legislation with amendment to make the Bill apply to Scotland. In general terms it is unsatisfactory that legislation applying to Scottish local government should be dealt with in this way, rather than by primary legislation in respect of this country alone.

A consequence of promoting legislation in this form is that the Bill uniformly refers throughout to the Secretary of State, without specifying which Secretary of State is meant. While there is a parliamentary convention that the Secretary of State will be respectively the Secretary of State for the Environment in England, the Secretary of State for Scotland and the Secretary of State for Wales, such conventions do not have legal force and may be overlooked. It is important that the Scottish Office participates fully in the drafting of the subsidiary legislation for Scotland, and to protect this position the inclusion of a new clause is recommended.

I think this goes very much to the heart of some of the amendments we are debating. I believe our Scots colleagues from all parts of the Chamber have a justified grumble or gripe. They are being slotted conveniently into a Bill for England and Wales when they have full justification for a Bill for Scotland alone which they could debate in full. However, it is not for me to argue that case tonight. I am sure that Scottish Members will ensure that it does not go away. I beg to move.

The Earl of Dundee

I am grateful to the noble Lord, Lord Dean, who has moved this amendment on behalf of his noble friend. I am also very glad to see him taking a great part in a Scottish matter.

The duties of Secretaries of State are legally interchangeable and independent of any distinction on account of the departments over which they preside. This stems from the constitutional doctrine of the unity of office of a Secretary of State. In practice, however, each Secretary of State limits his function to those matters which have been allocated to him by the normal machinery of government. References to a particular Secretary of State are included occasionally in legislation which applies throughout Great Britain, where it is the intention that duty should fall upon or powers be exercised under that legislation by that particular Secretary of State and no other, and where there might otherwise be doubt. There may also be references to a particular Secretary of State where property is being transferred.

It follows that it is not necessary to make specific provision for other cases; for example, where it is intended that duties should fall on or powers be exercised by the territorial Secretaries of State in respect of matters which in Scotland, England or Wales are clearly within their responsibility. In such circumstances there can or should be no doubt that a reference to the Secretary of State means any of the Secretaries of State having relevant responsibility.

Since local government matters in Scotland, England and Wales are matters for which the Secretaries of State for Scotland, for the Environment and for Wales have separate responsibilities, there is no doubt that any reference in local government legislation to the Secretary of State means all three, each being charged with whatever duty is imposed or power conferred in respect only of that part of Britain in which his responsibilities lie. This convention is well tried and understood. It has been extensively used by governments. If this amendment were to be accepted, doubt would be cast on the terms of much previous legislation—the Mobile Homes Act 1975, the Race Relations Act 1976, the Transport Act 1978, to name but a few—let alone future Bills where references to the Secretary of State occur. For those reasons I hope that the noble Lord will feel able to withdraw his amendment.

Lord Carmichael of Kelvingrove

I am sorry that I missed the beginning of the debate on this amendment. The Committee will be aware that the House was late in finishing the last item. I was pleased to hear the noble Earl's definition of "Secretary of State". The amendment is inspired by the Law Society of Scotland. I agree with its opinion that it was all very well when 50, 60, or 100 years ago the job of Secretary of State was not onerous and one Secretary of State could cover all the tasks. I do not expect the Government to concede this tonight, but the point has been reached when the issue should be looked at again in a constitutional manner. There is no longer one Secretary of State. People become confused when they realise that the Secretary of State is, in essence, one person with a multiplicity of heads. I hope that the Minister will reconsider this matter and that it may be included in a separate Bill at some future date. The idea of there being only one Secretary of State is becoming antiquated. However, I have heard the noble Earl's explanation and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 1 [Competition]:

Baroness Nicol moved Amendment No. 26: Page 32, line 8, at end insert ("; but an activity does not fall within section 2(2) (a) above if it involves the separate collection of recyclable materials for the purpose of waste recycling").

The noble Baroness said: I should like to move Amendment No. 26. It may be for the convenience of the Committee if I also speak to Amendments Nos. 27 and 28, and make a passing reference to Amendment No. 29, which again is a Scottish affair.

The amendment is fairly limited but it is important in its implication. The output of solid wastes (I am not referring to sewage but to household, commercial and industrial waste) in this country is approximately 15 to 20 million tonnes of household waste and approximately 36 million tonnes of industrial and commercial waste. We are therefore talking about very large quantities. Overall, approximately 15 million tonnes of waste is reclaimed or recycled so there is still a long way to go. Approximately 50 per cent. of household waste is recycled and industry and commerce are becoming increasingly alive to the commercial sense of recycling. Increasing concern for the environment, which is reflected in community legislation, is an added incentive. I notice that on several recent occasions the CBI has exhorted its members to pay more attention to the reclamation and recycling of waste.

However, the fluctuating markets for the products of some recycled wastes, and the practical difficulties of organising domestic waste recycling, mean that there must be an organising force which can, to some extent, level out the peaks and troughs of demand. I am sure that the Committee is aware that the variations in the graph indicating the market value of household waste recycling are enormous. For example, waste paper can be valuable or it can be worth nothing at all, and the same applies to other materials.

The role may have to be filled by local authorities, backed by the Government where appropriate. By excluding recycling from the statutory requirement of Clause 2(2), local authorities would have a useful degree of flexibility which would not preclude their seeking competitive tenders if local conditions and circumstances made that feasible. I should like to remind the Committee of the recommendation of the Royal Commission on Environmental Pollution at paragraph 13.26 on page 165 of its 11th report. It is relevant to this discussion and it states: We consider that the Departments of Trade and Industry and of the Environment should continue to encourage recycling and resource recovery as a means of reducing pollution, including litter.

This is the important point: The fact that opportunities are not exploited as vigorously in the UK as they might be is due at least in part to the absence of a clear lead from the Government".

I maintain that although that recommendation was written in 1984 it is still relevant. As far as I am aware the Government have not acted upon it. The proposals in the Bill will move even further away from the recommendation of the Royal Commission. Therefore I hope that the Minister will look kindly on the amendment, which is limited in its scope. It will not stop those local authorities who wish to do so from contracting out of recycling. It will mean that in the light of local circumstances, which might make it difficult to contract out, they will have the option to continue with their recycling plans.

I should now like to deal with the other similar amendments, beginning with Amendment No. 27. The purpose of the amendment is to discover when the provisions of the Control of Pollution Act 1974—in particular Sections 12 and 30—are to be implemented. I know that this was raised in another place, and the reply there given makes me feel that there may be a constructive answer. I quote again from the 11th report of the Royal Commission, which states that it found the definitions of the 1974 Act "helpful and practical". That part of the Act has not yet been implemented. Thus the definition therein is not available to us with any force, however helpful and practical we may think that it is.

The Minister's right honourable friend said in Committee in another place at col. 258, that: those provisions are not yet in force, but we are consulting on the implementation of sections 12 and 14 of that Act prior to the Bill's receiving Royal Assent. If it becomes clear that there is any danger of that not happening, we shall bring forward an amendment to create a free-standing definition of waste for the purposes of this legislation.

That would seem to indicate that the Minister then thought it was important that there should be an acceptable definition of waste. I maintain that it is very important before meaningful discussions can take place within the Bill or without it.

Can the Minister tell us when we can expect implementation of the Act and whether he has any plans for a free-standing definition? The subject of Amendment No. 29 is, I believe, the Scottish equivalent. I think that my noble friends will probably support the amendments for that reason. I beg to move.

9.15 p.m.

The Earl of Balfour

It may be for the convenience of the Committee if I speak to Amendment No. 29. It deals with rather a different point.

I am grateful for what the noble Baroness has said. I should like to add that, according to the Scottish current law legislation citator of 1986, Section 124 of the Civic Government (Scotland) Act 1982 has been repealed by Section 126 of that Act because Sections 12 and 15 of the Control of Pollution Act 1974, Chapter 40, have now come into force. This is a complicated and technical point and I trust that I have it right. On further study, I think that I should have referred to Section 12, not Section 15, of the Act. According to the current law legislation citator, Sections 12 and 15 of the 1974 Act are in full force as regards Scotland.

The Earl of Caithness

I am afraid that I was totally floored by the amendments and misinterpreted them completely. I am therefore extremely grateful for the clear way in which the noble Baroness explained them, and I tell her that there is some good news to come.

I deal with Amendment No. 26 first. I find it difficult to understand. We have heard arguments to the effect that private contractors are unsuitable for work involving sensitive relationships of care with client groups. Even if one sympathises with that view, it is surely very difficult to draw any analogy with the handling of recyclable waste. In short, there seems no obvious reason why authorities, if they want such waste handled separately, should not simply say so in their contract documents.

The noble Baroness referred to the report of the Royal Commission. I should have thought that here we have an excellent opportunity for local authorities to show the way and encourage recycled waste by setting out the definitions carefully in the documents. I take the noble Baroness's point about the graph. I should like to look at that. At present we have an opportunity rather than a disincentive to continue the good work to which she referred.

Perhaps I may move to Amendments Nos. 27 and 28. The date for which the noble Baroness is looking is 5th April this year when we shall be implementing Sections 12 to 14 of the Control of Pollution Act 1974. As she knows, that will repeal Sections 72 to 76 of the Public Health Act 1936.

The effect of the amendment of my noble friend Lord Balfour would be to insert in the Bill a reference to a provision neither currently in force nor expected to come into operation in the foreseeable future, and to delete a reference to a current statutory provision under which local authorities are operating satisfactorily. The legislative arrangements for the collection and disposal of waste in Scotland differ significantly from those applying in England and Wales. In England and Wales the relevant provisions are at present contained in the Public Health Act 1936, to which I have referred. These will be overtaken on 5th April by Sections 12 to 14 of the Control of Pollution Act. In Scotland local authorities operate under a more modern Act, the Civic Government (Scotland) Act 1982. My right honourable friend the Secretary of State, after carefully considering whether there were substantial reasons for bringing into effect Section 15 of the 1974 Act—that is the Scottish equivalent to Section 14—concluded that there were not.

The current provisions under Sections 124 and 125 of the Civic Government (Scotland) Act 1982 are working well and contain the powers and duties necessary to enable district and island councils to collect and dispose of household and trade waste as they see fit. It is for that reason that the Government see no reason for replacing them as proposed in my noble friend's amendment.

Baroness Nicol

I am glad to hear that quite soon we are to have a definition of "waste" which will be acceptable to everyone. With the greatest respect, I do not believe that the Minister's reply will be very useful in that local authorities can define "waste" in their contracts for the purposes of recycling. I do not believe it to be a good idea to have 450 different definitions of "waste" operating up and down the country. However, I am very pleased with the reply on the later amendments. So far as concerns Amendment No. 26, I wish to think a little more about what has been said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 27, 28 and 29 not moved.]

Lord Graham of Edmonton moved Amendment No. 30: Page 32. line 31, after first ("establishment") insert ("excepted school").

The noble Lord said: I beg to move the amendment standing in our names on the Marshalled List. I believe it is in order for Amendment No. 36 to be taken with No. 30.

The Earl of Caithness

I apologise to the noble Lord but I thought that we were dealing with Amendments Nos. 30 to 36 together.

Lord Graham of Edmonton

Now I have two pieces of paper instead of one.

As the Minister has pointed out, these amendments are related and they deal with the position of an excepted school. The Minister will recall that in another place and in the general philosophy of the Bill, in accepting that certain types of institutions should be exempted from the defined activities, the Government have argued that in these cases the grounds for exemption are that the staff perform a caring function in addition to their normal role. The Minister will recall that this has happened, for example, in the case of the cleaning of residential homes. The Government have also agreed to exempt the school catering activity in exempted schools on the same basis.

Excepted schools cater for children with special educational needs and those who are handicapped. These amendments seek the exemption of the cleaning activity in these schools on the grounds that the caring role of all staff, including cleaners, is an essential aspect of their work.

There is no doubt that the Government are trying to provide that the maximum amount of work currently carried on by councils should he tendered for competitively. We can honestly see no need to go to those lengths. This is one of those cases in which the Minister should say something helpful. I have in mind the Waverley School in Windmill Hill, Enfield. One needs to have an ambiance and a raison d'être in a school of that kind. I am thinking in terms of Westlea School, which is a school that I know in Hazelbury Road, Edmonton.

It is very difficult to look at some elements of the unity of a school when some are going to be in and some are going to be out. The Minister and his colleagues in another place have taken care to point out the special reasons why some of those who will be employed in those establishments are exempted. We want to do exactly the same. The Bill, as we see it, does not provide for that.

When we look at the other amendments, Amendments Nos. 31 and 34, we have introduced besides the excepted school nexus the day centre, and the Minister and his advisers will have seen that we tried to take in a special group of individuals and circumstances. Daycare centres will include the adult training centres for mentally handicapped adults. I can bring immediately to my mind the adult training centre on the Clavering estate in Montague Road in Edmonton. I can think of the establishment in Alma Road in Enfield. Everyone here who has a genuine knowledge of and affection for their own area can think of establishments of that kind.

I bring to my mind illustrations to try to understand what this Bill is all about, and I think of day centres and adult training centres for mentally handicapped adults. I appreciate that in many of these instances they are a new concept. To this Government's credit, as well as to the credit of many councils, there has been a general move over the past 20 to 30 years to make special provisions for those members of our community who need to have special provisions made for them. They are a new concept, especially day centres for the elderly. There are not only the physical needs but also the emotional needs of elderly people, who, to use a kind word, are frail and need to lean not merely on those who advise them and take them to the centres but also on other people.

We believe that those who carry out domestic work in these places are every bit as much a part of the little enclave into which the elderly, the mentally handicapped and others go as those who have perhaps a more superior post or role. Of course there are those who are specially qualified. There are those who will have been well trained. There are those who are qualified by experience. What we say is that there are other people as well, and those are the domestic workers. We think that the domestic staff will be involved in the caring programme through meeting and talking to the clients, encouraging them to participate in the life of the centre, and helping them with personal issues.

I have walked round a dozen of these homes a hundred times in the past 15 years, and one does not separate those who may have a badge and those who may wear a different uniform. Everybody inside these establishments is part of the rescue service that the people who use them need. What we say to the Committee is that we want the cleaning staff and the domestic staff also to be exempted, and indeed others too. When one talks in terms of adult training centres, the one I remember best in the Clavering estate in Edmonton carried out not merely the function of providing work or a place for these people to go to in order to be assisted, but also carried out laundry work and other outwork. Everyone who is involved in these places ought to be treated equally. I hope that the Minister will see the sense of what I am saying, but, more important, will make it unnecessary for me to press this amendment to a Division. It is up to the noble Earl.

9.30 p.m.

The Earl of Caithness

It is entirely up to the noble Lord, not to me.

The Government accept that some jobs falling within the defined activities are involved so closely with the care and welfare of certain client groups that it would not be appropriate to subject them to normal commercial disciplines. We have made provision accordingly, and the Bill therefore already exempts cleaning work in residential homes of various kinds.

I realise that there can be no hard and fast line between jobs which clearly ought to be exempt and jobs which clearly ought not to be, and indeed the case for exemptions might plausibly be argued to vary from home to home according to their individual nature. However, we believe that a line has to be drawn and we have taken the view that the case for exemption in the establishments mentioned in the amendments is not strong enough to justify further exemptions. In residential schools, for instance, cleaning work is likely to be done precisely when the residents are not there to get in the way of the cleaners. It is hard to imagine being involved in the welfare of someone you have not met or do not meet on a regular basis.

If we look at the Scottish hostels referred to, there are about 25 of them which cater for a wide range of different groups. These include people housed under the Homeless Persons Act, students, young single people, women who have suffered from domestic violence, handicapped people and incoming workers to a new town. Cleaners in these establishments do not have a major caring element in their work. Indeed, in most cases the cleaning of the establishment will, again, usually be done during the middle of the day when residents are not in the hostel.

There is no sense in which the residents of these hostels have to be involved in undertaking the cleaning work themselves as part of any personal rehabilitation or skills development training. There is therefore no reason why cleaning services in housing authority hostels should be excluded from competition. The vast majority of sheltered housing is more akin to normal dwellings than to residential homes, and distinctions which attempted to differentiate between sub-types of sheltered housing would be extremely difficult and probably unworkable.

Quite apart from those specific points, I draw the Committee's attention once more to the fact that cleaning carried out by, say, a warden or any other member of staff as a minor adjunct to other work not listed in the Bill does not have to be competed for. In the case of any remaining cleaning work done by people employed only as cleaners, I must put it to the Committee that they will not be so substantially involved in a caring role that the possibility of their being replaced by a contractor's employees is just not significant. Directly employed staff do not have a monopoly of ordinary kindness, a point made by my noble friend Lady Blatch earlier this afternoon; nor do they have a monopoly of decency. Indeed, when contractors take over it is common for them to re-employ many of the people already carrying out the work.

I now turn to Amendment No. 33, tabled in my name. This merely puts right an unintended ambiguity in the reference to residential homes which can be provided under the National Health Service Act 1977. The original reference to Section 21 of that Act, by failing to specify which subsection, had the effect of referring not only to homes for the chronically ill but also to homes for the authority's staff, which are referred to in subsection (3). In fact, there is no need to refer to anything but Schedule 8 itself, and that is the effect of my amendment.

Lord Graham of Edmonton

I am staggered at the amount of time and argument that the Minister has used to justify his unwillingness to include in the categories of exemption the minuscule numbers involved. The Minister spoke in terms of the people I am trying to include in the exemptions for competitive tendering not being as prominent in the caring role. I have news for him. As my noble friend Lord Dean said, someone who is looked upon as a functionary—the caretaker—in the eyes of a child assumes major significance. The people those in excepted schools, day centres and institutions for the adult mentally handicapped see year in and year out could well be the cleaning staff. They are part of their life. They are part of their empire. The people who perform a more important role may come and may go.

I am trying to persuade the Minister and his colleagues to understand that there are special circumstances. Continuity is very important in the lives of people who have already had a difficult and unfortunate blow dealt to them. For whatever reason, they are in a residential home or a day centre, or they may be elderly people, who ought to have the satisfaction and assurance that there are people about them who are just as much a part of care in the community as others. I intend to press this amendment to a Division.

9.36 p.m.

On Question, Whether the said amendment (No. 30) shall be agreed to?

Their Lordships divided: Contents, 29; Not-Contents, 48.

DIVISION NO. 4
CONTENTS
Airedale, L.	Mulley, L.
Attlee, E.	Nicol, B. [Teller.]
Carmichael of Kelvingrove, L.	Perry of Walton, L.
Cledwyn of Penrhos, L.	Ponsonby of Shulbrede, L [Teller.]
Dean of Beswick, L.
Elwyn-Jones, L.	Ritchie of Dundee, L.
Ewart-Biggs, B.	Seear, B.
Gallacher, L.	Sheffield, Bp.
Gifford, L.	Simon, V.
Graham of Edmonton, L.	Stedman, B.
Houghton of Sowerby, L.	Strauss, L.
McCarthy, L.	Taylor of Blackburn, L.
McNair, L.	Underhill, L.
Mason of Barnsley, L.	Whaddon, L.
Molloy, L.	Willis, L.

NOT-CONTENTS
Allerton, L.	Fortescue, E.
Arran, E.	Gainsborough, L.
Balfour, E.	Gisborough, L.
Barber, L.	Goold, L.
Bauer, L.	Hesketh, L.
Beaverbrook, L.	Hives, L.
Beloff, L.	Hooper, B.
Blatch, B.	Jenkin of Roding, L.
Borthwick, L.	Johnston of Rockport, L.
Brabazon of Tara, L.	Joseph, L.
Brougham and Vaux, L.	Killearn, L.
Butterworth, L.	Long, V.
Caithness, E.	Margadale, L.
Carlisle, E.	Mersey, V.
Carnegy of Lour, B.	Minto, E.
Cork and Orrery, E.	Munster, E.
Craigavon, V.	Rippon of Hexham, L.
Craigmyle, L.	Sanderson of Bowden, L.
Crathorne, L.	Selborne, E.
Cross. V.	Skelmersdale, L.
Davidson, V. [Teller.]	Thomas of Gwydir, L.
Denham, L. [Teller.]	Trafford, L.
Dundee, E.	Trumpington, B.
Ferrier, L.	Vinson, L.

Resolved in the negative, and amendment disagreed to accordingly.

9.43 p.m.

[Amendments Nos. 31 and 32 not moved.]

The Earl of Caithness moved Amendment No. 33: Page 32, line 40, leave out ("section 21 of or").

On Question, amendment agreed to.

[Amendment No. 34 not moved.]

Lord Carmichael of Kelvingrove moved Amendment No. 35: Page 32. line 43, at end insert ("and includes a hostel provided under section 2 of the Housing (Scotland) Act 1987.").

The noble Lord said: I think that the Minister referred to the contents of Amendment No. 35 earlier. The amendment would have the effect of exempting hostels provided by housing authorities from the requirement to put cleaning and catering out to competitive tenders. I want to emphasise to the Minister that we are talking about long-term not short-term residential accommodation. Before I make the decision to withdraw this amendment —that is what I intend to do—I would ask the Minister to pay attention to the fact that there is a difference. My noble friend Lord Graham of Edmonton spoke about the continuity of staff in local authority places as against contract staff. I am sure that if the Minister looks at the figures he will find that the turnover of contract staff is far greater than that of normal local government staff. I hope he will take that into consideration. It was discussed in the Scottish Committee in another place, and if this amendment is not accepted now or given some consideration we shall certainly bring it back on Report. I beg leave to withdraw the amendment.

The Chairman of Committees (Lord Aberdare)

You have not moved it; you cannot withdraw it yet.

Lord Carmichael of Kelvingrove

I beg to move the Amendment.

The Earl of Caithness

Of course I can give the assurance which the noble Lord is seeking from me that I will read very carefully the points made by the noble Lord and discuss them with my right honourable friend.

Lord Carmichael of Kelvingrove

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 36 to 39 not moved.]

Baroness Nicol moved Amendment No. 40: Page 34, line 43. at end insert ("; but the work referred to in sub-paragraphs (a), (b) and (c) above shall not fall within section 2(2)(f) above if it is carried out in connection with a national plant collection, a site of special scientific interest, a botanic garden, an arboretum, a horticultural collection, or any woodland or forest").

The noble Baroness said: This is a very narrow exemption for specialists who will be included in the provisions of the Bill unless we specifically exclude them. The activities with which we are concerned require a long timetable and a continuity of approach. It is difficult to see how it could be worked into tender requirements.

We are concerned to protect plant collections. For example, Leeds City Council has seven national plant collections in its care, and also sites of special scientific interest. We feel that an exemption could be made for all national plant collections, for sites of special scientific interest and for botanic gardens within the care of local authorities, without giving anything other than a small exemption. For these and for some woodlands the labour force is very small and it has to be flexible in the way work is undertaken. Much of the work is seasonal and subject to on-the-spot decisions. It would be almost impossible to draw up meaningful tender specifications, and the man hours involved in trying to sort out the tender processes would in many cases be equal to or even greater than the work on the ground.

I know that the Minister has sympathy for this kind of work and I hope that he will be able to give us an encouraging answer this evening. It seems to me that we may be doing quite a lot of damage if we do not give this exemption. I beg to move.

The Earl of Selborne

I should like to commend this amendment to my noble friend on the Front Bench. I speak as chairman of an advisory committee for an arboretum in Hampshire administered by Hampshire County Council. I assure my noble friend that there would be grave risk to an extremely important collection of over 30,000 trees—10,000 different species—if it were to go out to competitive tendering.

If one thinks about the charge which Hampshire County Council has taken on, on behalf of the trust, it is to maintain and if possible increase one of the largest collections of temperate plants in the country; to make them available for scientific study and for conservation; and to help the public at large to appreciate and understand just what the collection is. The idea of putting such a collection in the hands of competitive tendering is unfortunate when there is no job which could be called unskilled—certainly not propagation and the maintenance of this collection nor the ability to prune and look after it on a day-to-day basis. I am sure my noble friend on the Front Bench will look at this very carefully. I agree entirely with the noble Baroness, Lady Nicol, that in this case it would be quite impractical to allow unskilled and unsupervised labour, which was not under the direct control of management, to be let loose on such collections.

The Earl of Caithness

I assure the noble Baroness and my noble friend that the Government have sympathy with the suggestion that ground maintenance work which is scientific in nature should be exempt from competition. There is an outstanding commitment to consider whether an appropriate amendment should be brought forward, and I apologise for not having brought forward an amendment by this stage. Therefore, I am almost tempted to accept this amendment as it stands. However, it does seem to stray a little too far in the work that it would exempt. There is no obvious reason, I would suggest, why work in woodlands and forests should not be exposed to competition.

I hope I can persuade the Committee that the right course is to await the amendment which the Government have, as I say, committed themselves to and will be bringing forward at another stage which will meet the fundamental principle which the noble Baroness and my noble friend are driving at.

Baroness Nicol

I am very pleased indeed with the Minister's reply. I note what he says about woodland. But there are areas of ancient woodland and woods which are also SSSIs where perhaps there would need to be an exclusion. I am sure that if the Minister is approaching the amendment in the spirit in which he has suggested, the answer that will come will be acceptable. Therefore, I am very happy to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Viscount Mersey moved Amendment No. 41: Page 35, line 6. after ("vehicle") insert ("or of a fire authority vehicle").

The noble Viscount said: I believe we have grouped here Amendments Nos. 41, 42, 44 to 46 and 48. The two amendments in my name and that of the noble Lord, Lord Underhill, are Amendments Nos. 41 and 44. I shall speak to those, but the others, to be moved by the noble Baroness, Lady Stedman, are, I think she will agree, pretty well identical, at least in effect.

The amendment I am moving will, I hope, find favour with Government as it is an amendment of life and death. It seeks to exempt fire brigades from enforced competitive tendering on vehicle maintenance in much the same way as police vehicles are exempted in the Bill.

I make the vital point that lives can be lost if there is a delay not so much of minutes but of seconds in the arrival of the correct fire appliance at the scene of the crisis. Fire brigade vehicles are peculiarly complicated. They tend to be quite old. And they tend to be hybrids; perhaps one company making the engine, another the chassis, another the pump take off point and yet more, possibly foreign companies, making turntable ladders, hoses, emergency lights and other parts.

The amendment originates from the London Fire Brigade and it also has the support of the Chief and Assistant Chief Fire Officers' Association. The London Fire Brigade at present maintains in-house a fleet of 700 appliances, the biggest in the country, I believe.

The maintenance crew consists only of 82 skilled men with 14 apprentices which is, I should have thought, a good use of labour. It has very specialised repair shops which I believe my noble friend has seen. They are large, complex and costly; the two biggest are at Lambeth and West Ruislip. All this—real estate, plant and indeed manpower—would be wasted should the brigade be forced to tender out.

The London Fire Brigade lists eight reasons why competitive tendering is not realistic. I shall give four of them, possibly saving the other four, which are just as good, for Report stage. The first is: There is a requirement (Fire Service Circular No. 4/85) to maintain standards of fire cover throughout London. This involves a specified response time for specified appliances in particular areas. It is vital to retain control over the resources which make the maintenance of fire cover possible. The Fire Service is unique among emergency services in having its response time imposed by Central Government.

The second reason is: The LFCDA has a statutory duty to make plans for the rescue of persons under the Civil Defence (General Local Authority Functions) Regulations 1983. Paragraph 5, Schedule 2, requires the LFCDA to provide and maintain a service in the Local Authority areas for the rescue of persons. Paragraph 11 requires the LFCDA to maintain other services to safeguard life in the community. This would cover services other than rescuing people such as pumping drinking water from one place to another. 3. By virtue of the size and complexity of the fleet, a number of prime and sub-contractors would inevitably be involved in maintaining fire appliances. This leads to an appreciable risk of a contractor defaulting in the performance of the contract. Although financial guarantees and penalties are possible, this does not help as fire appliances cannot be obtained in the marketplace if they are delayed by the contractor. 4. The risk of default and the loss of flexibility could only be covered by the contingency of a Jarge reserve fleet. This would be very expensive".

Those are four of the eight reasons.

I hope that I am pushing against an open door. I have those hopes because the fire brigades were originally exempt from tendering, along with police vehicles, in the Green Paper which preceded the Bill. Police vehicles are still exempt but fire brigade vehicles have been taken out of the exemption. After my peroration it is hoped that they may go back in. I hope that the Minister will be able to help us and I look forward to his reply with measured optimism.

Lord Underhill

I should like to support the noble Viscount, Lord Mersey. After the excellent way in which he has introduced the amendment, there should be little else to say. I am surprised that the Government have not excluded fire service vehicles and equipment. Police vehicles are excluded, and rightly so. It is not a question of jealousy; it is right that police vehicles should be excluded. However, I can remember enough about my fire service duties during the war, when I was in the National Fire Service for five years, to realise how important it is that emergency vehicles should be up to scratch for the time when they are wanted. That is true of the equipment as well.

There are a number of amendments allied to the one which the noble Viscount has moved. I do not care which definition of a fire service vehicle is accepted, so long as the Government agree to accept one. I also do not care whether the amendments are accepted in the form in which they are printed on the Marshalled List, so long as the Minister says that those vehicles and equipment shall be excluded from compulsory tendering. That has nothing to do with the principle of tendering. We are discussing emergency work and I think that all Members of the Committee will be aware that it is necessary for the vehicles to be up to scratch so that they can perform their jobs. The speed and type of work requires that they should be in tip-top condition.

With excellent workshops not only in London but elsewhere, it is criminal that they cannot be used for the purpose for which they are intended. To ask one contractor not only to look after the vehicles and workshops but also to look after turn-table ladders, hydraulic equipment and all the other important equipment of a fire service seems absolutely ridiculous. There would have to be a number of contractors to cope with the job.

The important point is that in an emergency in which vehicles require urgent treatment, most fire services have workshops and men are on the spot to do those jobs immediately. We are talking about emergency appliances, the safety of the public and the safety of fire crews. I hope that the Minister will see the number of amendments which have been put down in the names of a number of Members of the Committee and will say that he accepts the principle, even if that requires the Government to come back with an amendment of their own.

Baroness Stedman

I should like to support the group of amendments. This is not an old comrades' association of the National Fire Service; it is purely fortuitous that the noble Lord, Lord Underhill, and I were both in the service at the same time. I also have a slight connection with the service now through its benevolent fund. It is important that fire service vehicles should be exempt in the same way as are police vehicles.

When I first joined the fire service there were still some police fire brigades available. They have always tried, as time has gone by, to maintain parity with the police in everything that they have done. While I do not want to return to police fire brigades, I should like to see the fire service vehicles treated in exactly the same way as police vehicles. I spent my years in the fire service as a member and chairman of the fire service committee. Indeed, at one time I was a member of the central fire brigade's advisory council. That was in one of the counties and not in London, which was the situation to which the noble Viscount, Lord Mersey, referred.

It is particularly difficult when one is trying to cover rural areas to get one's appliances out within the time laid down by the Home Office. One has to be absolutely certain that the appliances are in first class condition and will do what is required of them. They are subject to the most demanding reliability requirements and at times are driven to extreme limits. They have to start from cold and are expected to get up to their maximum speed very quickly, to ensure the quickest possible attendance time when lives and property are at stake.

The design specification for the operational appliances is issued under the authority of the Home Office Fire Department and is above that required of normal commercial vehicles. The appliances are really specialist vehicles and the repair and maintenance applies not only to the vehicle itself but also to the fire engineering which that vehicle carries—the pneumatic and hydraulic rescue equipment, the pumps, the generators and compressors, and so on. The operational availability of the fire appliances is vital. It is often necessary because the operational requirements for urgent work have to be carried out at short notice, or routine maintenance has to be rescheduled because of the calls on those appliances. This is much more easily achieved in self-managed workshops where there is a flexible programme of work that can meet the operational needs. The commercial contractors, we believe, are unable to comply with the rapidly changing priorities and create difficulties in maintaining the necessary availability of the fire appliances.

It is also unlikely in emergency circumstances that the fire services would be able speedily to gain access to a contractor's premises out of normal working hours to recover a vehicle which was needed for a particular job. It is important that these vehicles are exempted in the same way as are police vehicles.

The fire brigade mechanics all have to attend operational incidents for emergency repair or for the maintenance of their vehicles. They are trained in basic operational techniques to ensure their own safety and the safety of others under the Health and Safety at Work Act. All the contractors' personnel likely to provide emergency availability ought to be trained by the brigades anyway on an initial course, and on a refresher course as time goes by, so that they know the brigade procedures, the operational procedures, and the operation of the equipment and all the various specialist items that are carried on the vehicle. This is not just an ordinary case of sending out a car for maintenance: this is specialist equipment. The vehicles cost a great deal of money. They need to be looked after. They need to be ready when they are wanted. I hope that the Minister will accede to our requests.

10 p.m.

Baroness Carnegy of Lour

I shall not detain the Committee. The noble Baroness, Lady Stedman, has put all the facts into perspective. I should just like to add that I too was a part-time firewoman in the war. It is my recollection that it was an absolute disaster when an appliance was out of operation because of insufficient crew. It was absolutely never out of operation because the machinery did not work. It was always in working order, and it was 100 per cent. important that it should be. All noble Lords I am sure will know of someone who has had reason at some time to benefit from the instant reaction of the fire service. The speed of reaction is crucial and it is always an emergency. I hope that my noble friend is listening hard.

Lord Gisborough

I come from the County of Cleveland which has the highest fire risk in the whole country. I think that 16 per cent. of our county is designated as a very high fire risk. We have equipment which has to deal not only with all the ordinary types of fires about which one knows, but also those from chemicals of all kinds. We therefore have extremely well-trained men and complicated equipment. There are times when those fire appliances are at full stretch. For example, three or four years ago a tank fire was lit by arsonists. Every fire engine was needed. At the same time, there were two or three forest fires. Any vehicles on maintenance at that moment obviously had to be pulled out. As they were maintained by the county, there was little problem in so doing.

The case has been very well put by my noble friend and others. I should like to support it.

The Earl of Minto

Perhaps I may be allowed to speak as a member of a fire board in Scotland. Outside a fire board, I cannot remember ever having been in the company of so many distinguished firemen. Be that as it may, there is a very strong feeling in Scotland about this matter. To try to follow what has been said by the professionals would be absurd. However, there is one item that I should like to stress.

The fire board of which I am a member covers the Lothians and the Borders, from the south coast of the Firth of Forth and through the refineries of Grangemouth down the coast to the nuclear power units at Torness, to the city of Edinburgh, through an urban and rural countryside. I have to inform Members of this Committee that at the present moment the firemen are genuinely worried. Their worries can be divided into two issues. On the first the points have all been mentioned. On the second the point has not. It is the personal relationship between the firemen and the persons who work in the workshop.

I take my mind back to 1944. I was speaking to my then brother-in-law, who was an outstanding fighter pilot. He had joined the Royal Air Force in 1940 in the Eagle Squadron since he was a citizen of the United States. In 1945, he was leading every fighter that lifted off the ground with the USAF from the United Kingdom. As a 16 year-old I thought that he was a hero—as indeed I am sure he was. I asked him "Of your aircraft, your armaments, or your sheer ability to fly, what would your priorities be?" His reply was very simple. He said, "You have missed out the most important one of all: that is my ground crew. If we take the ground crew away from our pilots they fly with a lack of confidence".

And so it is. If we take the workshops away from our front-line firemen they will fight with a lack of the confidence that we know they have at present. Therefore in whatever order these amendments are numbered or are taken, I consider that it is not simply a privilege but a duty to support whichever amendment is moved.

Lord McNair

Perhaps I may mention very quickly one practical point that, oddly enough, I do not think has been raised. I hope that I am not depriving the noble Viscount, Lord Mersey, of one of those issues that he was saving up for Report stage. These fire engines are allowed to exceed the speed limit. Thus it is obvious that firemen must have confidence in the man who maintains the braking system.

The Earl of Caithness

I cannot claim to have been a firefighter in the war, but, as Members of the Committee know, I have had considerable experience of the fire service, having had the privilege of working with it when I was in my former position in the Home Office.

I would endorse the comments praising the fire service which have been expressed all round the Chamber this evening, and particularly the words of the noble Earl, Lord Minto, concerning the relationship. When I went to fire brigades I always noticed the tremendous ésprit de corps, and that they all depended on one another. When the bell went the back-up had to be there; otherwise they did not function as a unit. If they did not function as a unit they would not satisfy the strict criteria which my right honourable friend the Home Secretary laid down in the standards of fire cover to which my noble friend Lord Mersey referred in one of his four points.

We know that fire vehicles are complex. In two visits that I made I was especially interested in looking at the workshops. I learnt the details of how they worked and how they could be made more efficient, if possible, without breaking the relationship that currently exists. I know that Her Majesty's Inspectors of Fire Service, and, indeed, the chief fire officers are looking for efficiency as well as the maintenance of a service at this stage.

Of course, one must look now at the private sector. The fire service has very complex machines, but so does the private sector. Heavy cranes, cargo handling equipment, hydraulic platforms and earthmoving equipment are all maintained on a considerable scale by private concerns, so there is undoubtedly expertise in the private sector. Whether that is available for the fire service is something that I should like to look into. I hope the Committee will agree that I should take this away, give it further consideration, and discuss it with my right honourable friend the Home Secretary between now and another stage.

Lord Dean of Beswick

Will the Minister bear in mind during his considerations that when a fire engine goes out it is not just a simple engine; it is a complicated piece of self-propelled machinery mounted on wheels; it is very different from the original concept of a fire engine a few years ago. In an overwhelming number of cases when fire engines go out it is in order to save life, which may depend upon the speed with which they can get to a fire. This was drawn to our attention when the amendment was moved. Think of the horrendous loss of life there would have been in the fire at King's Cross if the engine had arrived three or four minutes later because of some lack of delivery. When the fire chief of a particular station knows that an engine is going out, it is essential that his men have confidence that it will perform at the maximum 100 per cent. and not just at 98 per cent. It has to be a 100 per cent. performance. I hope that that is a point which the Minister will bear in mind during his considerations.

Viscount Mersey

I am gratified that my noble friend is prepared to take away my two amendments and that of the noble Lord, Lord Underhill, and have a look at them. In that case I beg leave to withdraw Amendment No. 41.

Amendment, by leave, withdrawn.

[Amendment No. 42 not moved.]

Lord Dean of Beswick moved Amendment No. 43: Page 35, line 6, after ("vehicle") insert ("or of a specialist winter maintenance vehicle").

The noble Lord said: This is linked with Amendment No. 47. It is a similar amendment and would have the same effect, but it would relate to specialised equipment such as winter maintenance vehicles. We have been asked to hurry along with the Bill because of two issues which will arise later in the Bill. The noble Earl will understand if I do not speak at length on this subject, although I could. Will he give an undertaking that the Government will be prepared to consider these amendments, and no more, at this time?

10.15 p.m.

The Earl of Caithness

I shall look at this matter without commitment. I do not think it has nearly the strength of the argument of the fire service. The machinery that we are concerned with is considerably more simple. I remember from my days in Aberdeenshire when the farmers did much of the snow clearing and gritting of the roads quite happily for the local authorities. Perhaps, if the noble Lord is content, we shall return to this between now and another stage when we can discuss it informally.

The Earl of Minto

Before the noble Lord withdraws his amendment on those conditions, I put on a third hat as the chairman or vice-chairman of a highways authority for far too many years. I do not think that this matter should be underestimated by the Minister. It is indeed late, but the fact is that here too lies life and death. If you live in the North, as I do—and I have no reason to suppose that it is any different in the South—you may well be without railways, as we are; you may be without airports, as indeed we are; and you may rely entirely on your road network to get people to and from hospital, to and from the necessary health services that they require and to and from every sort of really important function in life.

While I welcome the fact that the noble Earl has said that he will think again, I should warn him that it is nothing like as far away from the last amendments as he has perhaps made out. The case to be made for the winter maintenance vehicles is very formidable indeed.

Baroness Blatch

I think the similarity between this amendment and the previous one is only in so far as these vehicles are about preventing accidents or making life safer for people who move about on our roads. Where the similarity ends is in the complexity of the vehicles. Almost every speaker on the previous amendment concentrated on two things: the complexity and the history of the vehicles and the necessity for them to be absolutely on the dot for responding to an emergency.

That cannot be said for this amendment. We are talking here about tractors, heavy-axle vehicles and snow-moving vehicles which are very much akin to other run-of-the-mill vehicles that are on our roads all day and every day. I think we are in danger of saying something fairly disparaging about those people in the private sector who maintain our vehicles.

The Minister has already agreed to take this matter back and look at it again, but I think the case for saying that somehow or other public authorities can maintain these vehicles to a high standard but the private sector cannot is a very weak one. I suggest that we must not go so far with this argument that we weaken the case for the fire brigade. I support the case for the fire brigade, but we are in danger of watering it down so much that it will be only a matter of time before all vehicles are exempt. The case for these vehicles being maintained either inside or outside the public sector, depending on the most appropriate response to the tenders, is a proposition I support. I should not support exemption on any other grounds.

Lord Dean of Beswick

I said that I would try to be brief, but the noble Baroness has once again elicited something that needs a reply. I said that I would not speak at length tonight, because though in principle it was the same as the argument for the fire brigade it was slightly different.

As a Member of Parliament for Leeds who was at the time resident in Manchester, I travelled regularly on the M.62. I had the experience of doing a 360 degree turn on an icy motorway. I am not a fast driver and have never had the ability to drive fast. On another occasion my car was turned upside down on a stretch of road on Saddleworth Moor. I was lucky on both occasions; others are not so lucky. When my car turned 360 degrees the car behind did the same. I got out of my car but the young girl in the other car got out only as a corpse. This is an important issue and life is at stake.

I hope that when the Minister looks at the issue he will consider all the angles. I have never said that the private sector cannot perform but I believe that these vehicles are part of a public service. I have highlighted two experiences. Basically I am a city dweller but I can imagine the area from which the noble Earl on the Cross-Benches comes. I can also imagine the ability of such vehicles to perform during certain circumstances in inclement weather.

I hope that the Minister will give the matter serious consideration. I beg leave to withdraw the amendment.

The Earl of Caithness

I think it is right that I should respond to the amendment in a little more detail. I said that I would look at the matter again without commitment because the noble Lord was willing to speed up the proceedings and I think that I can do so. However, I stress to the noble Earl, Lord Minto, that I see a great difference between the request in the Bill for the contracting out to tender of the maintenance and repair of fire vehicles as opposed to winter maintenance vehicles. I disagree strongly with the noble Earl and I believe that local authorities will be able to produce a contract which will be sufficiently clear to enable the private sector to do exactly what is being done at the moment by the direct labour force should it come forward with a more economical price for the same service. That is the difference, and I think that the Committee lost that point in the argument.

I support my noble friend Lady Blatch. This is a separate matter. It is also important and if it were not I should not take it away to reconsider. However, I think that there is sufficient difference although I cannot hold out major hope to the noble Lord.

Having said that I shall look at the amendment again. I shall do so.

Amendment, by leave, withdrawn.

[Amendments Nos. 44 to 48 not moved.]

Schedule 1, as amended, agreed to.

Clause 3 agreed to.

Clause 4 [Works contracts: restrictions]:

The Earl of Balfour moved Amendment No. 49: Page 4, line 6, leave out subsections (1) to (6) and insert— ("(1) A person or party inviting tenders shall not accept a bid for a works contract offering to carry out work falling within a defined activity from a defined authority (a bidding authority) unless—

1. (a) the first or second alternative of the first condition is fulfilled, and
2. (b) the second condition is fulfilled.

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

1. (a) the contract is made by acceptance of the bidding authority's offer to carry out the work,
2. (b) the bidding authority made the offer in response to an invitation to tender for the proposed contract; and
3. (c) the invitation to tender was made to at least three other tenderers who are willing to carry out work of the kind concerned, and who are not defined authorities or include at least three other tenderers who are not defined authorities.

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

1. (a) the number of tenderers to whom an invitation to tender must be made under subsection (2)(c) above; and
2. (b) the minimum number of those tenderers who are not to be defined authorities.

(4) The second alternative of the first condition is that before entering into the contract, the person or party inviting tenders, published, in at least one newspaper circulating in the locality in which the work is to be carried out and at least one publication circulating among tenderers who carry out work of the kind concerned, a notice inviting tenderers to submit offers to carry out the work. (5) The second condition is that the person or party inviting tenders, in entering into the contract and in doing anything else (whether or not required by this Part) in connection with the contract before entering into it, did not act in a manner having the effect or intended or likely to have the effect of restricting, distorting or preventing competition.").

The noble Earl said: I believe that the intended purpose of Clause 4 as printed is to prevent an authority, as defined in Clause 1, from entering into a works contract, as described in Clause 3, falling within a defined activity, as described in Clause 2, unless the tender for that contract was advertised to the local press and that at least three other firms had an equal opportunity to submit tenders for that contract. However, the responsibility for seeing that the tenderer for the contract does not act in a manner which has the effect of restricting, distorting or preventing competition under subsection (5) falls on the bidding authority and not on the party issuing the tender. Persons being invited to tender for a contract should not be in the position where they necessarily know who else is likely to tender; yet the clause states that the responsibility for seeing that the contract has fulfilled all the conditions falls on the bidding authority, not on the other party. I doubt whether a bidding authority could be penalised in law for any failure under the clause as printed because an authority or contractor cannot be held to a contract in which there are conditions over which they have no control. The suggested Clause 4 is designed to place the responsibility for fair competition on the person, party or authority for that matter issuing the tender. I beg to move.

The Earl of Caithness

I am grateful to my noble friend for moving the amendment. It provides an opportunity to explain the distinction drawn by the Bill between works contracts and functional work and the way in which the controls on work contracts imposed by Clause 4 will operate.

Authorities will in the main carry out activities covered by Part I of the Bill in fulfilment of functions either given to them in legislation or taken on by them under agency agreements. In either case Clause 3 of the Bill defines such work as functional work. In the case of agency agreements the specific provision is in Clause 3(3).

The in-house organisation wishing to carry out the work is simply part of the authority that decides who should carry out the work. If the work is carried out in-house there is no actual contract. There will be cases, however, where authorities carry out work for other authorities or, indeed, other people under contract. These arise, for example, through the powers given to authorities to carry out work for other authorities and public bodies under the Local Authorities (Goods and Services) Act 1970. Thus district councils might enter into contracts to cut grass in county-maintained schools or on the verges of country roads. There are many cases where one authority takes on small jobs for another.

It is much less common but nevertheless possible for one authority to enter into a contract to provide a complete service for another. One London borough could enter into a contract to empty the dustbins in a neighbouring borough's area. The Government have no objection to authorities entering into such contracts providing that they represent value for money for the ratepayers of the authorities concerned.

In order to ensure this, Clause 4 will mean that authorities can enter into contracts to carry out defined activities only if they win those contracts in competition with private contractors. To achieve this, Clause 4 effectively imposes duties on the body awarding the contract by providing that the authority bidding for the work may not enter into the contract unless the body awarding the contract has satisfied various conditions.

As my noble friend said, this involves complex provisions. I should point out that the same distinction between works contracts and functional work is made in Part III of the Local Government, Planning and Land Act 1980, which imposes competition on local authority building and maintenance direct labour organisations and has not led to any real difficulty in practice.

Clause 4(6) provides a defence for authorities that enter into contracts in good faith if they later discover that the body awarding the contract has not complied with the conditions in Clause 4. To take an example closer to my noble friend's area, if a district council in Lothian region enters into a contract to cut the grass in Lothian schools in the area, it should ask Lothian whether it has invited tenders from three contractors or advertised generally for tenderers. The district does not need to know the identity of those contractors. If Lothian tells the district that it has done so but it later emerges that it has not, Clause 4(6) provides that the district will not be vulnerable to challenge since it will be able to show that it did not know this at the time that it entered into the contract. Lothian region may, of course, be open to challenge on audit if there are complaints about the way in which it has awarded the contract. That is a specific answer to my noble friend's point about the authority giving the contract rather than the bidding authority.

The effect of Clause 4(6) is that authorities entering into contracts to carry out defined activities will be liable to the sanctions contained in Clauses 13 and 14 of the Bill only if there has been collusion with the body offering the contract aimed at avoiding fair competition.

I am afraid that it has been necessary to speak at some length on this complicated matter, but the way in which we aim to secure competition for works contracts is not simple. I thought that the Committee would welcome an explanation, albeit at this late hour.

The Earl of Balfour

With that assurance I believe that I am beginning to understand a little better. I wish to withdraw the amendment, but I should like to ask a brief question on Clause 4 stand part of the Bill.

Amendment, by leave, withdrawn.

10.30 p.m.

Lord Graham of Edmonton moved Amendment No. 50: Page 4, line 44, leave out ("enter into") and insert ("decide who is to carry out work under").

The noble Lord said: I think that it would be convenient to deal with Amendment No. 51 at the same time; like many Members of this Committee they hang together.

I should like the Minister to help me understand what has happened recently. At the bottom of page 4 of the Bill we are dealing with Clause 4(7) which says: This section applies where it is proposed to enter into the works contract on or after 1st April 1989.

The purpose of these two amendments is to elicit some information from the Minister in respect of what I understand to be a change of effective dates. I am here genuinely seeking information. If, since this Bill came before us, the words are at variance with those of the Minister and his colleagues regarding what they are carrying out or intend to carry out, then I think Members of the Committee ought to be made aware of it so that we may examine it. I move these two amendments in order to provide the Minister with the opportunity to come clean.

The Earl of Caithness

I do not think that there is a necessity for me to come clean. The Committee will probably be aware by now that until very recently the view taken in my department was that correct interpretation of the dates as regards functional work already had the effect which the noble Lords opposite, by their amendment, are now suggesting. For instance, by 1st April 1989, an authority should have gone through the process of competition and be in a position to decide who, as a result, was to be awarded the work. The contract could then start at some convenient time shortly thereafter and a DLO could continue to do the work until then even if it had not been successful in competition.

In response to the authorities' queries about this we have taken a fresh look and have been advised that as regards functional work this is not so; and that since Clause 7(8) requires authorities to comply with detailed specifications which themselves have to contain dates setting out the period during which the work is to be carried out, they will have no authority at all to carry out work after the set dates unless they have won it in competition.

We recognise that as compared with our original view this effectively brings forward the whole timetable, since decisions on award of work will have to be taken in advance of the set dates. But authorities have been informed about this change of view in letters sent to each of them individually and will be able to take it fully into account in deciding how to respond to the implementation proposals set out in the paper which we circulated on 2nd November to which I have referred on numerous occasions. The consultations are continuing and the conclusions will be received by the end of the month.

I can say at this stage that some of them have correctly interpreted the provisions of the Bill so what I have said will be of no surprise to them. I hope that that clarifies the position for the noble Lord.

Lord Graham of Edmonton

The Minister was right in saying that they would not be surprised. The Minister is telling us that the earlier position was capable of misinterpretation or different interpretation, otherwise he would not have taken his recent action. I believe it is breath-taking that, although the intentions of the Government have been made clear for some time, the actual documentation that triggers the request or the remit has to wait. The Minister tells us that not only do they have to start doing things on 1st April 1989 but they must have actually completed the preparations in order to begin to do things then. If they continue to do that which has not gone out to competitive tender after that, then they are in default of the Bill.

I may have got it wrong. I listened to what the Minister said. What he said was that it effectively brings forward the timetable. For those who misinterpreted what the Minister originally thought—whether it was through ignorance or deliberate clouding of the issue—this must come as a terrible shock. Can the Minister tell us precisely for how many of the services which fall within the ambit of this Bill will authorities have had to have gone through the tendering process by April? Does it mean all of them or some of them? If it means all of them, and some of the authorities had genuinely, wishfully, or hopefully misinterpreted it, can the Minister tell us what each authority has to be in possession of by 31 st March in order to be legal for what they will have to do on 1st April?

The Earl of Caithness

As the consultation process is continuing—a point to which I referred earlier—it is something that my right honourable friend the Secretary of State will bear in mind. The correct interpretation will play an important part when finally deciding on a phasing-in competition. As that has not been decided, I cannot answer the hypothetical question that the noble Lord, Lord Graham of Edmonton, posed to me because it is part of the consultation process.

Bearing in mind what I have said, and that my right honourable friend can take this into account, the point at which it will strike is the initial process of complying with the provisions, and it will not recur at a later date. But of course if the consultation process shows that this is of concern to local authorities, it is something that we shall discuss with them because that is the flexibility we have built in.

Lord Graham of Edmonton

I am grateful to the Minister. He talks about built-in flexibility, taking into account, and consultation processes that have yet to be completed. But the only specific thing we have is that 31st March and 1st April are something like eight or nine weeks away. I am trying to assess the weight of the work.

The Earl of Caithness

It is 1989. It is not eight weeks.

Lord Graham of Edmonton

One year and eight weeks. My noble friends on the other Benches are smiling at what they obviously think was a mistake. I shall make their smiles even bigger—it was. But I count carefully, and there are very few people here who heard me say that. No doubt they will read Hansard tomorrow.

What the Minister has told the Committee is that the actions in the past few weeks have significantly speeded up the process. With the timescale of Parliament, with the majority that the Government have in both Houses, and not with the compliance but with the recognition of local government that these things are going to come about, the Minister is not prepared to listen. The noble Earl may have told me that he is prepared to listen and that this is part of the flexibility; but the value of this short debate is that those outside the Committee will read with care what the Minister has said and will interpret it. I hope that they may be asking those of us on this side of the Committee, or the Minister, to take some action at a future stage in the Bill. I am grateful to the Minister for putting me correct on one point, and I beg leave to withdraw the amendment.

The Earl of Caithness

Before the noble Lord sits down, perhaps I may add one word to give a clearer picture. In our proposals, the authorities will have had to deal with only one activity and one-tenth of ground maintenance by 1st April next year.

Amendment, by leave, withdrawn.

On Question, Whether Clause 4 shall stand part of the Bill?

The Earl of Balfour

I should just like to ask about one point on the Question whether Clause 4 stand part of the Bill. If a defined authority offered the best terms in the tender, all the conditions of the clause had been fulfilled, and the other party was also a defined authority, am I correct in assuming that a defined authority could then enter into a works contract with another defined authority to carry out work of a defined activity described in Clause 2; or does such a contract then become functional work under Clause 6?

The Earl of Caithness

I believe that it becomes functional work under Clause 6.

The Earl of Balfour

Thank you.

Clause 4 agreed to.

Clause 5 agreed to.

Clause 6 [Functional work: restrictions]:

[Amendments Nos. 51 to 53 not moved.]

Clause 6 agreed to.

Clause 7 [The conditions]:

Lord Dean of Beswick moved Amendment No. 54: Page 6, line 11, after ("notice") insert— ("( ) the detailed specification includes such particulars as to the performance and quality of the work as the authority may consider appropriate,").

The noble Lord said: In moving this amendment, I express the concern mainly of the National Consumer Council. While it has no view on the principle of contracting out, it is concerned that the introduction of new procedures for securing the delivery of key public services should not lead to a reduction in the effectiveness of any service provided.

The introduction of competitive arrangements may yield value for money improvements for consumers and ratepayers in the local government sector. However, such improvements are by no means a necessary consequence of competition. If attention is not given to quality of service but only to price competition, this can lead to the forcing down of standards of service delivery and thus reduce effectiveness. The National Consumer Council has devoted considerable thought to the issue of performance measurement in the local government sector. Its main study was published in 1986 under the title Measuring up. Last September the council also hosted a conference to discuss these issues, and a number of important papers were presented and have subsequently been published under the title Performance Measurement and the Consumer.

Our central argument is that it is essential that service providers set targets for the effectiveness of their services as well as for their economy and efficiency in delivery. We want to encourage local authorities to think about value as well as money, and quality of service is part of the value for money equation. By extension this argument clearly applies to any services which have been contracted-out by a given authority.

The Bill as presently drafted says nothing about quality of servicee delivery. The effect of this amendment is that local authorities would be required to have regard to quality and performance considerations in drawing up detailed work specifications though it would be up to individual authorities to specify precise standards for the delivery of each service at their discretion. The amendment is consistent with the remarks made by Ministers both on the importance of quality of service in the delivery of local services and on the need to preserve some freedom of determination for local authorities in addressing these matters. I beg to move.

10.45 p.m.

The Earl of Caithness

I am grateful to the noble Lord opposite for moving this amendment. He is absolutely right to say that it is consistent with the remarks that I have been making this afternoon, and indeed that have been made by my noble friends. In particular, my noble friend Lady Blatch has been saying precisely this.

The fact is that there is nothing whatever in the Bill to prevent authorities from specifying precisely what performance and work quality they will demand from those competing for contracts. They would be very foolish if they did not pay close attention to these vital matters. However, we believe there is no need to write this into the Bill, because the range of contracts and performance specification will vary so much. But we believe that in any case this will be taken into account by local authorities.

Lord Dean of Beswick

I am grateful to the Minister for that rather helpful reply, but in that case I do not believe that the National Consumer Council would have submitted this amendment, expressing its somewhat tentative misgivings about the Bill if it goes through as it is. It may well be that it will want to look at what the Minister has said. But having heard what the Minister has said, which I should like to read to see what are the implications, and on the basis that we may need to come back to try to get something more definitive written into the Bill at a later stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 7 agreed to.

Clause 8 agreed to.

Clause 9 [Accounts to be kept]:

Lord Graham of Edmonton moved Amendment No. 55: Page 8, line 11, alter ("authority") insert ("or private contractor").

The noble Lord said: I beg to move Amendment No. 55 and, if it is for the convenience of the Committee, I shall speak also to Amendments Nos. 56 to 59 because they all do the same job. That job is to put local authorities on the same footing as a private contractor. The amendment would make the clause read: This section applies where a defined authority or private contractor carry out, in the financial year beginning".

The case, which I am sure the Committee will realise is very reasonable, is that it will be grossly unfair if there are two suppliers of a service—that is, a local authority and a private contractor—and the private contractor does not have to submit to the disciplines contained in Clauses 10, 11 and 12, while the local authority does.

We shall be coming on to Clauses 10 and 11 in some detail later this evening, but we are talking here about what the Government feel is right and proper to ensure that ratepayers get value for money by exposing—I think that is the word that has been used at least a dozen times tonight—to competition and to other matters the services of local authorities.

We have some interesting experience over the past year or two of the practices of private contractors and of the lengths to which they go in order, in the first instance, to obtain what appears to be a very good deal for the ratepayers by putting in what is the most competitive tender.

The industrial performance analyses of 1986 and 1987 showed that the rate of return on capital of contract cleaners declined sharply over a period coinciding with the commencement of compulsory tendering in the National Health Service, and they made a loss in 1985 and 1986. For this labour-intensive sector, contract cleaners were also shown to be losing £5 per employee in 1984 and 1985. There will be voices round the Committee which say, "Well, they are not likely to last very long if they make a loss"; and many of them do not last very long. They go out of business, and many small contract cleaners are merged into one of the two or three big contract cleaners, which changes the position.

It is not beyond the experience of Members of the Committee, here and in the other place, that there are loss leaders and that contractors tender at prices deliberately calculated to undercut other bids to establish their market position. Other tenders have been pitched at unrealistically low levels through apparent incompetence. I am sure that the whole Committee is with me when I say that ratepayers ought to be protected from such practices.

This series of amendments invites the Government to satisfy the Committee that the disciplines which they want to apply in the public sector are not necessary in the private sector: "Keep your fingers crossed; do not ask too many questions; do not be concerned about their employment practices and their philosophy but simply obtain them because they are the cheapest and rue the day for a long time afterwards".

If the Minister wants to be consistent and to be seen outside this place to be fair, reasonable and balanced in his application of those measures, in view of the local authorities' exposure to them, he should find the amendments eminently reasonable. I beg to move.

Lord Hesketh

My reaction to these amendments is quite simply that they are aimed at bringing about a situation which already exists. What I mean by that is that they appear to assume that private contractors are not subject to the disciplines which this Bill would apply to direct labour organisations, and thus that for fairness they must be brought within a similar regime.

I really find it hard to resist the conclusion that this stands logic on its head. The Bill is required precisely because DLOs are not subject to the commercial disciplines that already apply fully to the contractors with whom they will be competing. Contractors may not report to the Secretary of State, but they have to produce annual reports and accounts. They may not have to meet financial objectives laid down by the Secretary of State but they most certainly have to meet market tests which are at least as stringent. The existing checks on financial losses by DLOs are slow, if they even exist at all, whereas a contractor who starts losing money will rapidly go out of business.

There is little further to say about these amendments except that they must clearly be rejected.

Lord Graham of Edmonton

It is a great pleasure for me to respond to the noble Lord, because as I understand it these are the first amendments to a Bill to which he has had the doubtful privilege and pleasure of replying, and he has done so most ably.

I am puzzled at the brief which the Minister has been given for this auspicious occasion because he is inviting the Committee to say that what is happening to local authorities under Clauses 10, 11 and 12 is no different from that which occurs in the private sector. If the private sector were subject, for instance, to Clause 10(2), which provides, The authority shall secure that such financial objective as the Secretary of State may specify". I wonder what kind of financial objective the Secretary of State would set for the private contractor.

He will not do anything of that nature. The Secretary of State will be told by the local authority that the contracts have gone out to tender. He will be given the details, and told that the tender, although not necessarily the lowest, but invariably the lowest, has been accepted. He will merely say, "That is my job done. I have exposed the local authority to the winds of competition and it has carried it out". That local contractor will be free, as we all know, to carry out the contract and operate with profit always as his prime objective. I am not satisfied with the Minister's reply and I intend to divide the Committee.

Lord Borthwick

I should like to ask a question about the amendment. I am a little mixed up, but I think that this is where the point comes in. Some years ago I had a lot of trouble. I was snowed up badly. At that time the local authority arranged for various farmers with tractors and lifters to help out. They were not contractors. They were chosen because they were in a strategic position and able to open up the roads. They did so and they also opened up a lot of fences and dykes as well. One part of the country has been suffering from that ever since. I believe there is some method of insuring people if that happens to them, but it has not appeared so far.

Once these contractors contract, they do not seem to be responsible for any damage done. That is accepted by some authorities, but not by others. I have an idea that it should be more general.

Lord Graham of Edmonton

I can perhaps help the Minister. How a contractor will comply with his responsibilities will first be part of the terms of the contract. Secondly, it will be up to the authority to make sure that it gets the best contractor to apply. The sad thing, I believe, is that some contractors are irresponsible; they will do a great deal in order to get the contract. Once they have got it, they will not be too careful as to how they fulfil it.

Lord Borthwick

In this case, it will hardly come under the contractors being paid money. The contractors are selected because of the key position which they hold, so that they can keep the roads open. The authority says, "You've got that, now get on with the job." It is a bit difficult, but it gets things moving. I can quite see the point about that; it helps tremendously. It comes under the legal definition.

10.55 p.m.

On Question, Whether the said amendment (No. 55) shall be agreed to?

Their Lordships divided: Contents, 8; Not-Contents, 29.

DIVISION NO. 5
CONTENTS
Carmichael of Kelvingrove, L.	Pitt of Hampstead, L.
Dean of Beswick, L.	Ponsonby of Shulbrede, L.[Teller.]
Graham of Edmonton, L.
McNair, L.	Seear, B.
Nicol, B. [Teller.]

NOT-CONTENTS
Arran, E.	Dundee, E.
Balfour, E.	Gisborough, L.
Beloff, L.	Goold, L.
Blatch, B.	Hesketh, L.
Borthwick, L.	Hives, L.
Brabazon of Tara, L.	Hooper, B.
Caithness, E.	Long, V.
Cameron of Lochbroom, L.	Lyell, L.
Carlisle, E.	Munster, E.
Carnegy of Lour, B.	Saltoun of Abernethy, Ly.
Carnock, L.	Sheffield, Bp.
Cork and Orrery, E.	Skelmersdale, L.
Craigmyle, L.	Trafford, L.
Davidson, V. [Teller.]	Trumpington, B.
Denham, L. [Teller.]

Resolved in the negative, and amendment disagreed to accordingly.

11.3 p.m.

[Amendments Nos. 56 to 59 not moved.]

Clause 9 agreed to.

Clause 10 [Financial objectives to be met]:

[Amendments Nos. 60 to 65 not moved.]

Clause 10 agreed to.

Clause 11 [Report .for financial year]:

[Amendments Nos. 66 to 69 not moved.]

The Earl of Dundee moved Amendment No. 70: Page 10, line 11, leave out ("the first relevant date") and insert ("30th September").

The noble Earl said: I ask the leave of the Committee to speak also to Amendments Nos. 71, 72, 81, 82 and 83. The amendments place report dates on a uniform basis by bringing the Scottish dates into line with those applicable to England and Wales. The Bill now makes provision for local authorities to submit reports by 31st October for England and Wales and 31st December for Scotland and for their auditors to check the statement on the rate of return. The activities covered include those in the Local Government, Planning and Land Act 1980, as well as those covered by the Bill.

The Commission for Local Authority Accounts in Scotland takes the view that it is no longer necessary to put back the date for preparation and submission of reports for Scotland. Auditors checking the statements of rate of return will highlight any discrepancies in reports and thereby ensure that the reports received in the department are subject to scrutiny based on audited figures. What was a practical suggestion by the accounts commission has therefore simply been rendered redundant by the introduction into the Bill of a further refinement in the audit process which now applies to all local authority activities subject to competition. That provides a welcome consistency of approach north and south of the Border, and I am sure that the Committee will agree that those are uncontentious points which raise no new issues. I beg to move.

On Question, amendment agreed to.

The Earl of Dundee moved Amendment No. 71: Page 10, line 14, leave out ("the second relevant date") and insert ("31st October").

On Question, amendment agreed to.

The Earl of Dundee moved Amendment No. 72: Page 10, leave out lines 21 to 25.

On Question, amendment agreed to.

Clause 11, as amended, agreed to.

Clause 12 [Information]:

[Amendments Nos. 73 and 74 not moved.]

Clause 12 agreed to.

Clause 13 agreed to.

Clause 14 [Power to give directions]:

Lord Dean of Beswick moved Amendment No. 75: Page 13, line 7, leave out subsection (4).

The noble Lord said: Clause 14(4) of the Bill says that a direction of the Secretary of State to the effect that a defined authority shall cease to have power to carry out a specific function will take precedence over any enactment authorising or compelling the authority to do that work. It is considered that the clause, which allows the Secretary of State to over-rule primary legislation, should be resisted. The Law Society of Scotland is of the view that any direction made by the Secretary of State under the clause should be made on a negative resolution procedure in order that a degree of parliamentay control is retained in the matter. I beg to move.

The Earl of Caithness

We believe that Clause 14(4) is a sensible and important provision aimed at putting beyond doubt that closure notices issued under the Bill are to prevail over any other statutory provisions requiring or enabling authorities to carry out work.

All that means is that authorities will have to find contractors to carry out the work in question. It does not mean that the work will go undone, as has been claimed by some. In issuing closure notices, the Secretary of State will of course have to satisfy himself that there are sufficient contractors available to do the work in question. It is not easy to envisage circumstances in which action is likely to be initiated under Clause 13 if there are no competing contractors. I hope that that explanation satisfies the concern of the noble Lord.

Lord Dean of Beswick

I am partially satisfied. Once again, that provision bypasses the question of primary legislation. I do not think that we can carry on in that vein. I think that the whole Bill implies that primary legislation can be dispensed with if the Secretary of State so wishes. On that basis, I think that I should perhaps press the amendment.

On Question, amendment negatived.

Lord Graham of Edmonton moved Amendment No. 76: Page 13, line 12, at end insert— ("( ) On the default or liquidation of a contractor undertaking a defined activity, the Secretary of State shall, on the production of evidence of expense incurred by a defined authority as a result of that default or liquidation, make provision to meet that additional expense. ( ) The Secretary of State shall, by statutory instrument, prescribe the conditions to be satisfied and the method by which such reimbursement of expenditure shall be made.").

The noble Lord said: With this amendment we seek to persuade the Minister that, as a result of having gone out to competitive tender and having had a service, such as the collection of refuse, taken out of its hands by virtue of competition, the local authority has to consider the consequences. It is within the knowledge of every Member of this Committee that circumstances can arise whereby a contractor defaults, goes bankrupt and is unable to provide a service. This amendment says that: On the default or liquidation of a contractor undertaking a defined activity, the Secretary of State shall, on the production of evidence of expense incurred by a defined authority as a result of that default or liquidation, make provision to meet that additional expense".

I imagine that the Minister would consider that to be reasonable and not simply say, "Hard lines; this is the harsh, competitive world. Although it is somebody else who has caused you to incur public expenditure, you have to carry it because that is the reality".

The Minister must understand that as a result of competition and privatisation by some authorities who have not been so persuaded—certainly in the health service—there is a range of circumstances in which the carrying out of a contract by a private contractor can often mean that the local authority and particularly environmenal health officers, are called in in order to put right a situation that is undoubtedly not in the best interests of the authority. Often they have to incur expenses. I am not talking about carrying out the service; I am talking about the cost to the authority of fulfilling its statutory functions in respect of public health and hygiene when they are forced to do so as a result of the inability of a private contractor to comply.

The argument may very well be that one should get rid of the contractor. Sometimes that is not the easiest solution; sometimes it is better to try to improve the quality of the defaulting service, in which case it will cost the authority money.

With this amendment and others which are related to it we request the Minister to take on board the fact that these are days of ratecapping and of circumstances in which every penny counts. We ask him to say something kind in respect of what we are trying to do, which is to relieve a local authority of the expense of ensuring that a contractor fulfils his obligations; and moreover that if there is a bankruptcy—as can very often happen—expenses which are incurred by the authority as a result can be reimbursed by the Secretary of State. I appreciate that criteria will have to be laid down and it is not just a question of the council saying, "It has cost us £10,000 to get out of trouble and keep the service going. Will you give it to us"? There has to be some definition and some criteria. I beg to move.

The Earl of Caithness

It is of course possible to argue to the general proposition that whoever is responsible for the imposition of a burden should pay for it, though in fact that is of course not a general rule by any means. Householders have to pay for the cost of complying with building regulations, for instance, and there are many similar examples.

However, it is not necessary to pursue this line of argument, because the fact is that if an authority as client lands in court because of the failure of a contractor, that authority is itself able to take the contractor to court. There is no need for compensation from the Secretary of State. Normal contract law is designed to cater for these problems.

I think we are in any case in danger of losing sight of the overall rationale for these provisions. They are intended to and they will save local authorities and the other defined bodies very large sums of money—sums which will in all probability run into hundreds of millions of pounds a year eventually. Even if a small minority of authorities is unfortunate enough to get into a situation where net expense is occurred, the logic of then requiring compensation from public funds would—and I take the argument of the noble Lord, Lord Graham, if we extend it further—require savings to be paid to the Exchequer.

I am sure that my right honourable friend the Chancellor of the Exchequer would welcome that idea, but I do not think that it would go down particularly well with local authorities. We are saying that the provisions in this Bill are designed to save the local authority considerable sums of money. The tendering and contract work that has been put out on a voluntary basis so far under the provisions of the 1980 Act have shown that considerable sums of money—many hundreds of millions of pounds at the end of the day—are the likely target. There may possibly be a small minority of authorities who get into a net expense situation, but of course there is the normal contract law to take care of situations of that kind.

Lord Graham of Edmonton

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

11.15 p.m.

Lord Graham of Edmonton moved Amendment No. 77: Page 13, line 14, at end insert— ("( ) A defined authority shall not be prosecuted for any offence arising from failure to carry out any duty nor shall a defined authority be liable at civil law for any injury, loss or damage arising from failure to carry out any duty, other than in respect of negligence, in the following circumstances—

1. (a) a direction by the Secretary of State under that section that the authority shall cease to have the power to carry out a defined activity, or
2. (b) the failure by a contractor, for whatever reason, to fulfil obligations under a contract to undertake a defined activity.").

The noble Lord said: Amendment No. 77 inserts a subsection that: A defined authority shall not be prosecuted for any offence arising from failure to carry out any duty nor shall a defined authority be liable at civil law for any injury, loss or damage arising from failure to carry out any duty, other than in respect of negligence, in the following circumstances".

Then the circumstances are listed under paragraphs (a) and (b). We are arguing that the defined authority should be protected for a reasonable period from legal liability, whether civil or criminal, in the event either that the Secretary of State directs that an authority may not carry out a defined activity, or if a contractor defaults on a contract by failing to meet the required specification or by ceasing to undertake the contract as a result of liquidation, or for any other reason.

We are asking the Minister to bear in mind that we are breaking new ground. We shall certainly find many new contractors who will be awarded contracts. The responsibility in these matters will be bound up in the tender contracts. Nevertheless, there are circumstances such as those outlined in these amendments where the additional protection could be given by the Secretary of State without being too burdensome on the local authority. I beg to move.

The Earl of Caithness

The second part of this amendment would apply to the consequences of contractor failure resulting from the provisions of this Bill, a legal doctrine that quite rightly does not apply to the consequences of any other sort of contractor failure.

If a paving stone is badly laid and injures a pedestrian, that pedestrian's complaint is not against the contractor who laid it but against the authority who ordered it to be laid. The authority itself then has redress against the contractor. That is how the law functions in respect of all such instances and I can see no reason why it should be any different just because the events leading up to the authority's failure to carry out its functions properly included compulsory competition.

Indeed, I can see at least one very good reason why it should not. If authorities thought that they were immune from prosecution they might well select their contractors with less than due care. They might even welcome one or more failures in order to be able, without fear of prosecution, to say that it was all the Secretary of State's fault.

The first part, in effect, also invites an authority on whom a Clause 14 order has been served to manufacture breakdowns in services so as to put pressure on the Secretary of State. If the Secretary of State has misjudged the situation to the extent that an authority cannot find competent contractors—which is a very unlikely situation indeed—then he is no doubt liable to judicial review if he fails to rescind the order. It seems clear that these amendments have their origins more in distaste for the Bill than in a real desire to protect the legal position of defined authorities. That position is already secured both by contract law and by administrative law. We therefore feel that the amendments are unnecessary.

Lord Graham of Edmonton

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 14 agreed to.

Clause 15 [Orders, regulations, specifications and directions]:

Lord Graham of Edmonton moved Amendment No. 78: Page 13, line 16, leave out ("section 2(3)") and insert ("sections 2(3) and 10(2)").

The noble Lord said: Amendment No. 78 goes to the heart of Clause 15. This clause empowers the Secretary of State to specify the financial objectives to be met, and more importantly to define the financial objective concerned by reference to such factors as he thinks fit.

We think that this needs some substantiation because we understand that the financial objective will be a fixed rate of return on capital, and what concerns those of us on this side of the Committee who take an interest in these matters is that there is a lack of control over the actions of the Secretary of State to alter financial objectives. In other words, the phrase "moving the goalposts" and deciding from time to time different criteria upon which he will compel authorities to operate is not, in our view, a very good means of maintaining good relationships with local authorities, nor of helping them with their financial prudence.

These amendments are designed to ensure that there is much greater control over the ability of the Secretary of State to alter the criteria at any given moment to suit his own financial objectives. I beg to move.

The Earl of Caithness

I was rather surprised to hear the noble Lord, Lord Graham of Edmonton, moving these amendments as I thought that they were all grouped with Amendments Nos. 62, 63, 64 and 65 which he did not move. Because they are so hound up, this has come as a surprise. Therefore, I should like to read what he has said carefully between now and another stage.

Lord Graham of Edmonton

In that case, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 79 not moved.]

Clause 15 agreed to.

Clause 16 [Supplementary]:

Lord Dean of Beswick moved Amendment No. 80: Page 14, line 14, at end insert— ("( ) All establishments which have been maintained by a local authority in the last five years shall for the purposes of the Local Authorities (Goods and Services) Act 1970 be deemed to be public bodies and the Secretary of State shall make a statutory instrument to that effect if any such establishments at any time do not fall within the definition of public body for the purposes of that Act.").

The noble Lord said: I think it is true to say that we approach the benediction now. I do so with some relief, but I regret that the final prayer has to be rather longer than I would have wished. The amendment is to provide the right for local authorities to compete to supply goods and services to polytechnics, colleges and any schools who opt out of local authority control.

This new subsection has the specific and limited objective of still enabling local authorities to supply goods and services to education establishments who would go out of the local authority sector if the provisions of the current education Bill are enacted. These would be all the advanced further education institutions, city technology colleges and those grant-maintained schools which opt out of the local authority framework. Only the right to compete is asked for, not an automatic continuation of the current arrangements. It would of course still be open for the college or school to choose another contractor, but at least there would not be an automatic barrier to the local authority's ability to tender.

The proposed legislation will open local government to competition from the private sector. However, local government's ability to compete to supply goods and services to other bodies is very circumscribed. A local authority's ability to undertake work for other organisations is limited by the Local Authorities (Goods and Sevices) Act 1970 which empowers local authorities to supply certain goods and services (subject to certain restrictions) only to other local authorities and public bodies. Public bodies are defined by statutory instrument and include health authorities and organisations which exercise functions of a public nature—for example, local authority associations—but central government are excluded. Unless the polytechnics, colleges of higher education and so forth, are designated specifically as "public bodies", the consequence of the Government's proposals for change (as set out in the education Bill) will be that institutions will no longer come within the list of public bodies; local authorities will be barred from supplying them with any goods and services, even by competitive tender, and another barrier to the ability of local government to compete on equal terms will have been erected.

What the amendment therefore seeks is an assurance from the Government that they will make a statutory instrument adding colleges and grant-maintained opt-out schools to the list of approved public bodies at the appropriate time so that local authorities can at least tender to continue to supply goods and services to these institutions. The ability to compete is all that is asked for. As a further sign of realism and moderation, the amendment does not seek to extend the list of approved public bodies beyond the current status quo, although the restrictiveness and anomalous nature of the list has long been apparent. For example, local government is not allowed to compete for central government business in, for example, purchasing contracts. But other organisations such as Crown Suppliers and Her Majesty's Stationery Office are allowed to supply local authorities and the private sector.

The Local Authorities (Goods and Services) Act 1970 permits local authorities to enter into agreements for the supply of goods and materials or the provision of administrative, professional or technical services. Astonishingly little in the debates on the Local Government Bill so far has been said about the virtues of economies of scale and cost-effectiveness particularly in the area of purchasing, although much attention was directed to this some years ago. It can make good economic sense and be very cost-effective for local authorities to be able to supply central support services such as participation in purchasing contracts, finance and computer services, etc., to appropriate other bodies broadly within the public sector. The local authority will continue to need these central support services in respect of its work, regardless of where the contracts go for the defined activities in the Bill, although these central functions will undoubtedly undergo changes as a result of the Bill. Polytechnics and local education authority schools currently rest clearly within the public sector and are legitimately served by central departments. But if they transfer out of local government and are considered to fall outside the definition of "public body", then by definition central departments in a local authority will lose the opportunity of bidding for or providing support services to these institutions regardless of the cost effectiveness and the benefits to both parties.

Oxfordshire County Council feels that it should be allowed to compete in the open market place generally and not asked to compete with one hand tied behind its back, which situation would leave councils ultimately to provide services which are unattractive to the private sector and not cost-effective to the rate payer. It therefore urges the provision for the continuing inclusion of polytechnics and grant maintained schools within the definition of "public body" as a small step towards fair competition.

The proposed amendment has particular relevance for the purchasing function. In 1987 the Audit Commission in its report Improving Supply Management in Local Authorities, recommended that local authorities should be allowed to compete to provide supplies to central government and the private sector. This Audit Commission report stresses the need for a co-ordinated policy within a local authority if its purchasing is to be properly effective. But at a moment when greater professional-ism and consideration in local authority purchasing is advocated, it is unfortunate if the effect of the Government's legislative programme would be to bring about fragmentation of activity and thus undermine the degree of co-ordination and purpose which exists in well-managed local authority procurement operations. Although the Audit Commission report is critical of some authorities, it acknowledges that the policies and practices of the leading authorities are on a par with the best, in industry and elsewhere.

The Institute of Purchasing and Supply is the largest professional purchasing and supply organisation in Europe. Its 18,000 members hold appointments in most sections of industry and commerce and throughout the public sector.

The IPS wants an assurance that local authorities will not be debarred from supplying any education establishments currently within LEA control. It says: On the removal of certain establishments from local authority control the Institute would not wish to advocate sterile protectionism for local authority purchasing organisations. Competitiveness is central to the thinking of the purchasing and supply profession. It may well be to the advantage of the new free standing institutions however that they should have access to the expertise of a local authority's professional procurement manager and the benefits to be derived from co-ordinated purchasing".

It goes on to press for such access to be granted.

The right to compete to supply goods and services to institutions which are currently part of local government is what is sought—surely a modest enough proposal.

I have taken a little longer than I should have liked at this time of night, but I think that it is only fair to those involved to put the case properly because it is an important subject. It has been accepted that the Committee is now further on with the Bill than was expected. In those circumstances, I thought it reasonable to deal with the last amendment in extenso. I beg to move.

11.30 p.m.

The Earl of Caithness

A local authority can do only those things necessary for the discharge of its functions, and the Local Authorities (Goods and Services) Act 1970 is a minor empowering Act which makes it legitimate for local authorities to supply goods or services to other local authorities, or to public bodies designated under the Act. The designated public bodies must be exercising functions of a public nature with the result that local authorities cannot supply the private sector. I am grateful to the noble Lord for the concern that he showed in respect of this matter and for explaining it so fully to the Committee.

I hope that I am able to reassure the noble Lord that legitimate local authorities have no need of this amendment. Local authorities are public bodies for the purposes of the 1970 Act and can supply goods and services to each other. We have announced that polytechnic and grant-maintained schools will be made public bodies under the 1970 Act, and this will be achieved by provisions in the Education Reform Bill currently before another place. With regard to the city technical colleges referred to by the noble Lord, I should like to check on the current position that my right honourable friend has taken on the provision provided by local authorities. I shall write to the noble Lord in detail about the matter.

Lord Dean of Beswick

I am grateful to the Minister for that reply. He did not use the word "sympathetic", but some aspects are still under review. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 16 agreed to.

Clause 31 agreed to.

Schedule 5 [Direct labour organisations]:

The Earl of Caithness moved Amendments Nos. 81,82 and 83: Page 43, leave out lines 41 to 43. Page 44, leave out lines 12 and 13. Page 44, line 17, leave out ("or (in Scotland) 31st December").

The noble Earl said: I beg to move Amendments Nos. 81, 82 and 83. They are consequential on Amendment No. 70, which has already been spoken to.

On Question, amendments agreed to.

Schedule 5, as amended, agreed to.

Lord Hesketh

I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.

House adjourned at twenty-five minutes before midnight.