Local Government Bill [H.L.]

HL Deb 17 December 1991 vol 533 cc1194-263

3.14 p.m.

Report received.

Lord McIntosh of Haringey moved Amendment No. 1:

Before Clause 1, insert the following new clause:

("Code of practice on performance indicators

.—(1) The Secretary of State shall within three months of the date of Royal Assent lay before both Houses of Parliament for approval by resolution a Code of Practice on Performance Indicators with respect to the area of each Commission to which duties are given under section 1 below.

(2) The Codes referred to in subsection (1) above shall specify the manner in which the Audit Commission and the Scottish Accounts Commission shall each carry out their functions under sections 1–4 below.

(3) The Secretary of State shall undertake a review of the operation of each Code not less than bi-annually from the date on which it comes into effect, and may lay before Parliament for approval any revisions he considers appropriate.

(4) The continuation in force of any Code shall be subject to its being approved by resolution of each House of Parliament at intervals of not more than five years.

(5) Before preparing any Code or making any alteration in it, the Secretary of State shall consult such associations of local authorities, and such other persons, as appear to him to be concerned.").

The noble Lord said: My Lords, I believe that on this occasion noble Lords have had adequate opportunity to escape the abstract and tedious debate which I am sure they are convinced will take place on the Bill. I shall try to make the debate a little less abstract on this amendment than on some occasions in the past.

The amendment concerns the responsibilities of the Audit Commission in carrying out the wishes of the Government on the Citizen's Charter. It is not in any sense a wrecking amendment; it seeks to improve the way in which the commission considers the performance indicators and suggests that it would be appropriate for the commission to establish a code of practice on performance indicators comparable with the one it has on the conduct of local authority audits.

The 1982 Local Government Finance Act provided that the Audit Commission which it established should have a code of practice on the actions of auditors to local authorities. It provided that that code of practice should be published and widely discussed. Section 14 of the 1982 Act provided that it should, embody what appears to the Commission to be the best professional practice with respect to the standards, procedures and techniques, to be adopted by auditors".

The section also stated: The code shall not come into force until approved by a resolution of each House of Parliament, and its continuation in force shall be subject to its being so approved at intervals of not more than five years". I know that many noble Lords are understandably cynical about some of the order-making procedures to which this House is subjected. Many orders—for example, those simply uprating amounts of money chargeable under the legislation—are presented to us to which there can be no possible objection. They are dealt with rapidly in a dinner interval and do not add much to parliamentary control of legislation.

I suggest that the order which the Audit Commission has to have approved every five years for the code of practice for local authority audit does not fall into that category. We read that code of practice carefully. When there are significant changes—and the Bill provides that there can be such changes during the five year interval—we examine them and on occasion there can be a sensible debate.

This is a good example of parliamentary control and one which could well be applied in the case of performance indicators. The real danger about performance indicators, as the Bill provides for them, is that they will be abstract, ill thought out and over-simplified. They will not be subject to adequate consideration by those who know about the performance of local authorities; that is, the providers and above all the users of local authority services.

At the last moment of the Committee stage, that is at one minute past midnight on 5th December this year, the Audit Commission published a useful paper on performance indicators. I welcome a number of the provisions in that paper. The Audit Commission reiterated what the Government have said on a number of occasions: that it is not the commission's role to set the standards. That is the role of local authorities. The Audit Commission acknowledged the difficulty of the task. It acknowledged the justice of many of the comments we had made in Committee only a day or two before the commission published its paper. The Audit Commission's paper refers to the difficulty of reconciling a number of potentially conflicting objectives. I shall illustrate what that means in practice in a minute.

The Audit Commission's paper recognises the need to involve local government, local government associations, individual authorities and other organisations—notably those representing consumers—in the process of establishing performance indicators. There is a welcome recognition in the paper that it is necessary to obtain pragmatic evidence; in other words, to assemble a body of performance indicators which are used by local authorities rather than simply dealing with the matter as a theoretical exercise. However, there are worries about the way in which the Audit Commission is going about this process and, given the remit it has, the way it inevitably has to tackle the process. The Audit Commission has said that there are likely to be 200 separate indicators, of which perhaps 100 would apply to the shire counties.

The Audit Commission has referred to a phenomenon known as a bellwether indicator. Noble Lords who know more about sheep farming than I—that must be nearly every noble Lord present—will know that a bellwether sheep is the sheep who wears a bell that indicates the whereabouts of the whole flock. That phenomenon applied to performance indicators means the single measure, or one or two measures, which summarise a large number of measures which make up the performance indicators; in other words it is a recipe for oversimplification.

I do not believe that there is enough recognition in the Audit Commission's document of the weakness of the statistics of the Chartered Institute of Public Finance and Accountancy and of the Audit Commission's own profiles and its own quality exchange. That weakness is acknowledged by those who produce the statistics. I shall try to indicate how the process may work by referring to an example that the Audit Commission has included in its documentation. I refer to the measures for sports centres and pools which are mentioned on the sheet entitled Leisure 4. This is a large document and contains a wide variety of measures.

I shall start with the good news first. The measures proposed by the Audit Commission properly recognise the need for outreach; in other words, the need for a local authority to seek new customers for its leisure centres and its pools and the need to make them accessible to people who would not otherwise have access to them. It is good that the Audit Commission discusses surveying users and developing a marketing strategy: that is, promotion, targeting and charging for sports facilities and activities.

There has not always been enough recognition—not least by local authorities—of the need to find out what users want before entering into grandiose plans to supply what councillors think users might want. There are real difficulties here, however, as there are 23 different measures of measurable performance. There are measures of usage, numbers of attendances, numbers of users whether regular or occasional, numbers of passport holders and other such measures. In summary, there are 23 of these measures, none of which is really identified as being measures of cost, efficiency, economy or quality. I do not understand what is meant by the term, "management costs per square metre, wet/dry".

Is that a measure of cost, or has it something to do with the extent of the measurement which has to be provided for a particular configuration of sports facilities? I can think of all kinds of unfortunate interpretations, but I must avoid doing so. There are real difficulties as regards the complexity of these measures. What will be the bellwether measure? Which is the measure that will stand out and be used in the national performance indicators? Will it be expenditure per thousand of population or expenditure per usage of item of service?

The next item in the Audit Commission's list is cemeteries. Each burial costs £210 in Kensington & Chelsea whereas in Hillingdon it costs £80. Does that mean that one area is more efficient than the other? I doubt that that is the case. I am sure other factors enter into the matter such as the cost of land and the accessibility of land. Those factors are much more likely to affect the cost of burials.

Recently the Sunday Times produced an elaborate and absurd article on the costs of libraries. It was suggested in the article that some libraries were much more cost effective than others. However, no attention was paid to the need or the desire of some library authorities to provide good mobile libraries or libraries for children and hospitals. If such facilities are provided, the cost per book issued is bound to increase. However, that does not mean that the effectiveness of the service provided is decreasing.

The difficulties involved with this matter are great and some of those difficulties are recognised by the Audit Commission. The closer one gets to considering individual services, the more one realises the difficulty associated with proposals of this kind. No one is against Citizen's Charters and no one is against attempting to set standards. However, to attempt to do so on a national basis without taking into account the evidence which is available from those who provide the services and those who use them, would be an act of folly. In proposing that there should be a code of practice on performance indicators, the amendment seeks to ensure we have more realistic standards and more local standards, and that they are properly considered and approved by Parliament. I beg to move.

The Earl of Balfour

My Lords, I wish to make one small remark in respect of the noble Lord's comments on burial grounds. I have always been rather fascinated by the fact that my local authority has passed the management of burial grounds, and everything connected with them, to its leisure and recreation department.

Baroness Hamwee

My Lords, that was not a point that I expected to hear made. Perhaps that illustrates the different ways that different local authorities organise their services. That matter is at the heart of what the noble Lord, Lord McIntosh, proposes in this amendment. However, I depart from him somewhat in the route he uses to get there. In Committee we spent a great deal of time talking about the need to identify locally agreed performance indicators. While I well understand the anxiety felt about this matter having attended that debate and having read what has been published since our debate occurred, I believe we should do everything possible to assist those indicators to be determined locally.

If there is to be a code of practice which is to be approved by both Houses of Parliament that is more likely to bring about a degree of uniformity than if we allow the diversity that exists in different local authorities to emerge. I know the noble Lord is aiming to achieve that diversity.

I put my name to Amendments Nos. 2 and 3. I believe that the noble Lord, Lord McIntosh, spoke to those amendments, which are grouped with Amendment No. 1. Clearly, if there is to be a code approved by Parliament then the directions should be in accordance with that code, as set out in Amendment No. 2. In particular, Amendment No. 3 proposes that the word "information" be omitted and replaced with "performance indicators" so that what is published is the performance indicators.

We have used that terminology to such an extent that to leave the broad term "information" in the Bill—which has much wider implications than what we have been discussing and what is defined later in the Bill—is misleading and may require rather more of local authorities than we have previously expected of them.

3.30 p.m.

Baroness Blatch

My Lords, Amendments Nos. 1 and 2 place some specific new duties on the Secretary of State. I have the highest respect for my right honourable friend, but I do not believe that he would claim to have the expertise to guide the Audit Commission or the Scottish Accounts Commission in these decidedly technical matters. That is why the Bill gives the task to the commissions to carry out according to their expert judgment.

On a number of occasions noble Lords have suggested inserting amendments into the Bill with the intention of requiring the Audit Commission or, although not specifically mentioned by name, the Scottish Accounts Commission, to do or not to do certain things. I have in mind such tasks as to consult specific bodies, to take particular matters into account, to publish or not to publish certain items of information and so on. The amendments would specify how the two commissions are to carry out their performance indicator functions.

I venture to suggest that that approach of closely circumscribing the work of the commissions is misguided in this particular case, and more generally. Your Lordships may recall that the Audit Commission's revised Code of Audit Practice was brought before this House in November 1990. On that occasion there was no question of party Whips and there was all round support for the work of the commission. I believe that the commissions have earned a high level of respect for their work and their manner of setting about it. They have consistently shown themselves both responsible and responsive. I believe that it is misguided to try to nanny them and spell out in detail how they should set about their business. They know their business very well and we should leave them to get on with it.

Your Lordships will be aware that the Audit Commission is obliged to seek the approval of Parliament for its Code of Audit Practice at intervals not exceeding five years but can alter its code between times without reference to Parliament. It is an indication of the Audit Commission's responsible attitude to its duties that it came to Parliament in November 1990, less that three years after the previous occasion (in February 1988), because it considered that its new code, incorporating its duties in respect of the National Health Service, should have the blessing of Parliament.

The Audit Commission has already published a paper setting out in broad terms how it will approach the job of setting performance indicators if the Bill is enacted, and the noble Lord, Lord McIntosh, referred to that paper. I shall arrange for copies of the paper to be laid in the Libraries of both Houses. In that paper the commission again demonstrates how responsibly and how sensibly it does its job. The paper underlines my point that we should trust the commission.

The noble Lord, Lord McIntosh, made some interesting points and I hope that he will make those points to the Audit Commission because the commission's paper is a consultative paper. However, the noble Lord's points do not amount to an argument for a code of practice. He referred to complexity. If the commission's initial ideas are too complex the noble Lord, Lord McIntosh, should say so. However, again, that is not an argument for a code of practice.

Authorities and the commission will not necessarily publish performance indicators. They will publish the information which is essential—basic factual information. Therefore, why is there a need for a code of practice?

In speaking to the amendment the noble Lord, Lord McIntosh, made a number of references to the commission setting standards. That conflicted with something that he said earlier. It is well established in this House that the Audit Commission will not set standards. It will be for local authorities to do that. The information which is published will relate to what actually happens.

Amendment No. 3 would mean that instead of requiring authorities to publish information the commissions would require them to publish performance indicators. That suggests a change, from requiring hard information for public consumption—in other words, the facts—to some kind of processed information.

I do not want to suggest that that is necessarily, and in all cases, wrong. There may be times when some processing of raw data is necessary in order for meaningful comparisons to be made or useful conclusions drawn. The Bill as it stands would permit that approach when it was appropriate, but that, I suggest, is something for the Audit Commission to judge. There may also be occasions when it is right to publish the raw information—the basic facts—without dressing them up to make them into "performance indicators". For one thing, with the basic factual information we know we are on solid ground. As soon as any processing is carried out that ground may start to shift below our feet.

The amendments are unduly prescriptive. It is my view that we should trust the Audit Commission to do its work. The amendments imply a lack of confidence in the Audit Commission and Scottish Accounts Commission which is quite uncalled for; and they would entail limiting the commissions' independent judgment in ways which we believe are quite inappropriate. I invite your Lordships to reject the amendments.

Lord McIntosh of Haringey

My Lords, the Minister will not drive a wedge between me and the Audit Commission that easily. With one breath she suggested that I should submit evidence to the Audit Commission. With another she suggested that the amendment shows a distrust of the Audit Commission. I shall not be trapped in that way. I thought that I had set out—perhaps rather too fully but certainly clearly—the extent to which I welcomed much of what the Audit Commission had to say. I do not welcome its timing, however. It is extremely unfortunate that the Audit Commission's paper on performance indicators should appear after we had completed the Committee stage of the Bill. Nevertheless, there are many valuable points in that paper.

The Minister also failed to convince me that the code of practice is a bad idea. The code of practice is used by the Audit Commission, in slightly different circumstances, as a means of setting standards for audits of local authority finances. It does not set out in detail what the audit shall contain. It is not prescriptive in that way. It seeks to ensure standards of audit. With the amendment we suggest that the Audit Commission should seek to ensure standards of performance indication—if that is the correct noun. The important point is that those standards should be set by the Audit Commission, as an independent body, rather than by the Secretary of State. That is the important distinction.

The difficulty with such issues and with setting performance indicators is the conflict between complexity and understandability. It is a genuine problem which will not be removed simply by saying that we shall let someone else handle it. We seek to ensure that there is parliamentary accountability for the process as well as adequate consultation.

Baroness Blatch

My Lords, I am grateful to the noble Lord for giving way. With the leave of the House I should like to say that the noble Lord appeared to refer again to the Audit Commission setting standards and to be worried that the Secretary of State might have a hand in that. The Audit Commission will set yardsticks against which standards are measured. It will be for local authorities to set standards.

Lord McIntosh of Haringey

My Lords, I accept that entirely. My reference to setting standards related to the Audit Commission's code of practice for local authority audits. It is true that it is the Government's intention that local authorities should set standards. My difficulty with the way in which the Government seek to implement that is highlighted by the fact that the Minister appears to think that there are such things as hard facts which can be contrasted with what she calls processed facts.

The difficulty here is a universal difficulty. If you have simple facts without any explanation they could no doubt be called hard facts, but they are not very useful. As soon as you try to relate them to each other—that is the significant point; it is the ratios that matter—you start to get into what the Minister calls processed facts and what I would call analysis to make them useful. That is when you get back to the problem that we have always had; namely, the temptation in those circumstances to look for the coin that you have dropped under the nearest lamppost rather than where you dropped it on the grounds that the light is better. That is the temptation with which the Audit Commission will find itself faced and, with the best will in the world, it will find it difficult to get away from that with the remit given to it by the Government.

On this occasion, to satisfy the noble Baroness, Lady Hamwee, I am prepared to say that we should not pursue the code of practice as a way of pursuing this matter, but the issue that we have raised about performance indicators is so important that although I shall seek leave to withdraw Amendment No. 1, and do not intend to move Amendment No. 2, I shall ask the House for its opinion on Amendment No. 3. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 [Publication of information as to standards of performance]:

[Amendment No. 2 not moved.]

Lord McIntosh of Haringey moved Amendment No. 3:

Page 1, line 10, leave out ("information") and insert ("performance indicators").

3.41 p.m.

On Question, Whether the said amendment (No. 3) shall be agreed to?

Their Lordships divided: Contents, 89; Not-Contents, 134.

Division No. 1
CONTENTS
Allen of Abbeydale, L.	Beaumont of Whitley, L.
Aylestone, L.	Birk, B.
Banks, L.	Blackstone, B.

Bonham-Carter, L.	Jay, L.
Boston of Faversham, L.	Jenkins of Putney, L.
Bottomley, L.	John-Mackie, L.
Brooks of Tremorfa, L.	Kennet, L.
Callaghan of Cardiff, L.	Kilbracken, L.
Campbell of Eskan, L.	Kirkhill, L.
Cledwyn of Penrhos, L.	Kirkwood, L.
Clinton-Davis, L.	Listowel, E.
Cocks of Hartcliffe, L.	Llewelyn-Davies of Hastoe, B.
Crook, L.	Lockwood, B.
David, B.	McIntosh of Haringey, L.
Dean of Beswick, L.	Mackie of Benshie, L.
Desai, L.	McNair, L.
Donaldson of Kingsbridge, L.	Mallalieu, B.
Donoughue, L.	Masham of Ilton, B.
Dormand of Easington, L.	Mason of Barnsley, L.
Ennals, L.	Milner of Leeds, L.
Ewart-Biggs, B.	Mishcon, L.
Ezra, L.	Molloy, L.
Falkland, V.	Morris of Castle Morris, L.
Foot, L.	Murray of Epping Forest, L.
Gallacher, L.	Nicol, B.
Galpern, L.	Ogmore, L.
Gladwyn, L.	Rea, L.
Glenamara, L.	Richard, L.
Graham of Edmonton, L. [Teller.]	Robson of Kiddington, B.
	Rochester, L.
Gregson, L.	Sainsbury, L.
Grimond, L.	Scanlon, L.
Hampton, L.	Serota, B.
Hamwee, B. [Teller.]	Shackleton, L.
Harris of Greenwich, L.	Shaughnessy, L.
Hatch of Lusby, L.	Stallard, L.
Hilton of Eggardon, B.	Stoddart of Swindon, L.
Hirshfield, L.	Strabolgi, L.
Hollis of Heigham, B.	Taylor of Gryfe, L.
Hooson, L.	Turner of Camden, B.
Howie of Troon, L.	Underhill, L.
Hughes, L.	Whaddon, L.
Hunt, L.	Williams of Elvel, L.
Irvine of Lairg, L.	Willis, L.
Jacques, L.	Winstanley, L.

NOT-CONTENTS
Ailesbury, M.	Dundee, E.
Aldington, L.	Effingham, E.
Alexander of Tunis, E.	Ellenborough, L.
Alport, L.	Elton, L.
Amwell, L.	Erroll of Hale, L.
Arran, E.	Faithfull, B.
Astor, V.	Fanshawe of Richmond, L.
Auckland, L.	Ferrers, E.
Balfour, E.	Flather, B.
Beloff, L.	Fraser of Carmyllie, L.
Blatch, B.	Fraser of Kilmorack, L.
Boardman, L.	Geddes, L.
Borthwick, L.	Gisborough, L.
Boyd-Carpenter, L.	Grimthorpe, L.
Brabazon of Tara, L.	Hailsham of Saint Marylebone, L.
Bridgeman, V.
Brigstocke, B.	Harmar-Nicholls, L.
Bristol, Bp.	Harrowby, E.
Butterworth, L.	Henley, L.
Campbell of Alloway, L.	Hives, L.
Campbell of Croy, L.	Hood, V.
Carnegy of Lour, B.	Hooper, B.
Carnock, L.	Howe, E.
Cavendish of Furness, L.	Hunter of Newington, L.
Chalfont, L.	Hylton-Foster, B.
Charteris of Amisfield, L.	Ilchester, E.
Clanwilliam, E.	Jenkin of Roding, L.
Clitheroe, L.	Johnston of Rockport, L.
Colnbrook, L.	Kinloss, Ly.
Constantine of Stanmore, L.	Knollys, V.
Cottesloe, L.	Lauderdale, E.
Cox, B.	Lawrence, L.
Cumberlege, B.	Layton, L.
Davidson, V. [Teller.]	Lindsey and Abingdon, E.
Denton of Wakefield, B.	Liverpool, Bp.
Digby, L.	Lloyd of Hampstead, L.

Lloyd-George of Dwyfor, E.	Quinton, L.
Long, V. [Teller.]	Reay, L.
Lucas of Chilworth, L.	Renton, L.
Lye11, L.	Renwick, L.
McAlpine of West Green, L.	Rodney, L.
Mackay of Ardbrecknish, L.	Saltoun of Abernethy, Ly.
Mackay of Clashfern, L.	Seccombe, B.
Macleod of Borve, B.	Selborne, E.
Mancroft, L.	Sharples, B.
Marlesford, L.	Simon of Glaisdale, L.
Merrivale, L.	Slim, V.
Mersey, V.	Soulsby of Swaffham Prior, L.
Monckton of Brenchley, V.	Strange, B.
Morris, L.	Strathcona and Mount Royal, L.
Mountevans, L.
Mountgarret, V.	Strathmore and Kinghorne, E.
Munster, E.	Strathspey, L.
Murton of Lindisfarne, L.	Sudeley, L.
Nelson, E.	Thomas of Gwydir, L.
Newall, L.	Thorneycroft, L.
Norfolk, D.	Trumpington, B.
Norrie, L.	Ullswater, V.
Orr-Ewing, L.	Vaux of Harrowden, L.
Oxfuird, V.	Vivian, L.
Palmer, L.	Waddington, L.
Park of Monmouth, B.	Wade of Chorlton, L.
Pearson of Rannoch, L.	Wharton, B.
Peel, E.	Whitelaw, V.
Pender, L.	Windlesham, L.
Peyton of Yeovil, L.	Wise, L.
Platt of Writtle, B.	Wynford, L.
Powis, E.
Prior, L.

Resolved in the negative, and amendment disagreed to accordingly.

3.49 p.m.

Baroness Hamwee moved Amendment No. 3A:

Page 1, line 12, after ("of") insert ("quality").

The noble Baroness said: My Lords, this amendment seeks to insert the word "quality" as a point of reference for comparisons in addition to the criteria of cost, economy, efficiency and effectiveness.

In the debate in Committee, considerable anxiety was expressed by Members on all sides that the question of quality should be properly considered at all appropriate stages. In referring to quality as a separate criterion, the Minister said that it was, a question of subjectivity versus objectivity". I agree with her when she went on to say: The judgments that will be made upon it at the end of the day will be whether the chosen level of service was delivered economically, efficiently and effectively. Therefore, there will have to be a judgment about the quality and level of service chosen by that authority.—[Official Report, 2½12½91; cols. 21–22.]

The terms cost, economy, efficiency and effectiveness are not the same as quality. We on these Benches believe in quality and in our electorate judging us on the quality that is achieved. As the Minister said, it is for local authorities to be judged by their electorates and not to be the sole arbiters of their own quality. It is in order to facilitate that that I move the insertion of this term. Quite simply it is to bring quality as a matter to be judged up to the same level as the other criteria and in particular to allow the local electorates to judge their own authorities on that basis. I beg to move.

Lord McIntosh of Haringey

My Lords, I rise to support this amendment. However, I think that noble Lords who come in from the Princes Chamber are very well aware of the reference to the standing order. I found great difficulty in hearing the noble Baroness because a considerable number of noble Lords were carrying on quite loud conversations in the Chamber. I feel that it is discourteous to a speaker, although I realise that we all do it from time to time when we have to. However, this was a particularly bad example when a number of conversations were being carried on in different parts of the Chamber.

The noble Baroness's amendment follows from points which she made very effectively at Committee stage. It is an economical and effective way to pursue the point and I hope that the Government will accede to the amendment.

Lord Howie of Troon

My Lords, noble Lords may like to know that in one of the debates at Committee stage I drew attention to a government circular which had been published a year or two ago in relation to buildings and such. The part of the circular which I quoted mentioned that quality was a paramount consideration. If the Government thought then that quality was a paramount consideration—judging by the comments of the noble Baroness, Lady Blatch, at Committee stage they still do—the word "quality" should be included in the Bill. I support the amendment.

Lord Stoddart of Swindon

My Lords, I too should like to support the amendment. In doing so I must say that we are in danger, through this Bill, of treating local authorities as if they were subordinate bodies to government instead of properly elected bodies in their own right. I suppose that it is reasonable to give local electorates some idea of the performance of their local authority, to be set against the performance of other local authorities. Nevertheless I believe that one can go too far down that road.

The fact is that local government is local government and there are local circumstances which make comparisons difficult in some cases. After all, in the last analysis, local government is elected in exactly the same way as are the national government, by universal suffrage. There seem to be no performance indicators in that case, particularly with the present Government.

As I said, I support the amendment. However, I do not want to go too far down the line of constraining local authorities by rules and regulations in such a way that they have no initiative or are not allowed to use their initiative in any way lest they provoke the ire of this or that body.

Baroness Blatch

My Lords, the Bill lists a number of criteria, by reference to which standards of performance will be compared. The amendment seeks the inclusion of another criterion, the criterion of quality. However, I must say to the noble Baroness, Lady Hamwee, that the addition is unnecessary because we shall be making comparisons between standards of performance and there cannot be different standards of performance without some reference to quality.

I am not sure whether the noble Lord, Lord Stoddart, will welcome my joining forces with him on some of the comments that he made just now. But it must be a matter for local authorities to determine the standard and quality of the services and then to be judged on those standards by their local electorates. Moreover, the criterion of effectiveness necessarily subsumes judgments of quality.

I hope that the noble Baroness, who made the important point that quality must be a consideration, will agree that in fact it is implicit in all that is written on the face of the Bill.

Baroness Hamwee

My Lords, the term "effectiveness" is one that we have considered at great length. I accept the Minister's assurance that, according to her reading, the reference subsumes quality. That is not how I understand it. I do not wish to impugn any of those who have been responsible for the drafting, but effectiveness means achieving something that one has set out to do without a reference to quality—it is hard to find synonyms for the word because after all quality is quality—but without the prior exercise of identifying and setting out the quality that is being aimed for.

However, I have no doubt that those responsible for the drafting and the Minister herself are convinced I do not wish to take issue with them on a matter of semantics, if that effectiveness includes the criterion of quality. It is on the record. On the basis that effectiveness includes quality, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4 p.m.

Lord McIntosh of Haringey moved Amendment No. 4:

Page 1, line 14, leave out from ("performance") to end of line and insert ("determined by different relevant bodies and achieved by such").

The noble Lord said: My Lords, in moving this amendment I shall speak also to Amendments Nos. 5 and 6. I shall base my remarks very much on the welcome words of the Minister at Committee stage and indeed the words of the Audit Commission in the performance indicators paper to which reference has already been made.

The Audit Commission says that it is not the commission's role to set standards but simply to specify how standards should be measured. That statement was repeated in Committee and again this afternoon by the Minister. We welcome it. The difficulty is that the Bill does not say it in those terms.

The Bill states that there will be a national definition and national publication of performance indicators and that it is up to local authorities to justify the standards that they have set in the light of those. Despite the measure of agreement between us on the objective, we still believe that that provision is the wrong way to go about it. We believe that inevitably in the public mind if one has this national prescription one will land up with a national prescription of standards.

I do not expect the Minister to interrupt me to say that standards will be set locally; I accept that. I am saying that the government proposals will result in standards being judged against the national performance indicator—that is entirely as it should be—but they will be judged only against the national performance indicators and the performance indicators will be taken as standards. If the Government insist on providing that the Audit Commission takes all the initiatives in the matter, that will be the result.

The Audit Commission's paper is very good in many respects. The problem is that it does not give examples. I spent some time on an earlier amendment talking about sports centres, pools and leisure services. I spent some time in Committee talking about refuse collection. Those are relatively simple matters to measure compared with more difficult local authority services such as education and housing.

Perhaps I may briefly recapitulate on what I said about refuse collection. It is no good having standards, even bellwether standards, which refer to the cost of collection per household unless those standards—I should say performance indicators; I must not get trapped into that again—indicate what frequency of collection has been agreed with local people. That is the critical point. They must indicate too whether it is to be kerbside collection or collection from somewhere on the premises; whether there is special provision for recycling of paper, glass or any other items and what provision is made for collection of special items; and whether there is any improvement on the minimum provision of a community amenity site, for example. Those are factors which will be a matter for public discussion between a local authority and the people electing the local authority and using its services. They will affect the cost per household covered by a refuse collection service.

Unless one understands what has been done and the way in which agreement has been reached on the standard of service, and unless that standard of service has been subjected to the democratic test of saying, "If we do not like your service we shall kick you out at the next election", however many performance indicators one has, one will not have a true reflection of the quality of service. That difficulty is not overcome by the repetition either by government or by the Audit Commission that they are not proposing to set standards.

In these amendments we propose to open up that debate again to emphasise that standards of performance should be determined locally and to ensure that those locally determined standards are achieved by public discussion in local areas with the users of the services. The Bill at present does not provide for that. It is still a matter of negotiation between central and local government rather than between local government and its own people. I beg to move.

Earl Howe

My Lords, the Government's intention in the Bill is that local authorities and other relevant bodies should be required to report on the standards of performance they have achieved. We intend that independent comparisons shall be made between bodies and between years so that their customers can judge whether value for money is being delivered.

Amendments Nos. 4 and 5 would additionally require the commission to publish details of the targets set by bodies for themselves and their performance against those targets. But if that means what it says, it is a meaningless exercise. The aspirations of a body can be couched at any level: if they are pitched low enough, the body will be able to claim that it has beaten its target; or the body may make high promises and deliver very little. We prefer the approach set out in the Bill as it stands whereby objective comparisons are made with other bodies and over time.

Amendment No. 6 presupposes what I have just urged your Lordships to reject; namely, that so-called determinations of what standards of performance a body intends to provide are to be part of the system for making comparisons. Let us go along with that presupposition for a moment.

I have to say that even on its own terms Amendment No. 6 is a curious amendment. Indeed it has no practical effect whatsoever. Being framed as a power, not a duty, it purports to allow a relevant body to ignore the very things that the amendment is concerned with.

I shall offer just one other comment on Amendment No. 6. Its effect, when taken together with the earlier amendments proposed by the noble Lord, would be that performance indicators published by authorities were potentially inconsistent. Bodies would be able under Amendment No. 6 to vary the content of the information published in order to match what they felt were their own local circumstances. That would clearly undermine the validity of the comparisons being made.

In these amendments we have what I can only describe as a mishmash of provisions which would require authorities to publish useless information, undermine the comparative information they provide and empower relevant bodies to do things that they can do already. I urge your Lordships to reject the amendments.

Lord McIntosh of Haringey

My Lords, that is an astonishing response. I did not expect these modest amendments to reveal that level of mistrust between central government and local government. The noble Earl says in his most gentle and courteous way that he really believes that local authorities will falsely determine the standards that they wish to achieve either by setting them so low that they can achieve them easily and cannot be caught out or by setting them so high that they cannot achieve them. I can only say that the noble Earl cannot know much about the way in which local authorities operate and he cannot have listened to much of the discussion which took place in Committee.

In Committee we produced a number of concrete examples of service agreements between local authorities and local people. I have not brought those examples back again because I did not consider it necessary. However, I remember very clearly the example of Stockton-on-Tees: a local authority which seeks to retain the confidence of its electors and users of its services sets out standards of service which it believes it can achieve but which reflect the aspirations of the people who will use the services.

No local authority will achieve confidence or gain re-election if it simply sets the standards too low in order always to achieve them or too high in order to con people into believing that a higher standard will be achieved. I do not believe that the noble Earl knows much about the way in which people effectively complain about local authority services if he considers that an authority will set the standards too high and run the risk of complaint when it cannot achieve them.

Earl Howe

My Lords, with the leave of the House, perhaps I may add something which may indicate that I have not misunderstood the noble Lord. Perhaps I may paraphrase the noble Lord. He said that comparisons on a national basis do not adequately reflect local circumstances. I believe that that was the thrust of what he said.

I accept of course that local circumstances are relevant. However, the amendments would throw the baby out with the bath water. They would remove any possibility of national comparisons because local data would be subject to prior local interpretations. That is the difficulty. I believe that it is better to produce information using national measures and after that to allow local interpretation.

Lord McIntosh of Haringey

My Lords, it is the Government who are throwing the baby out with the bath water because they have now admitted that they are talking about national measures and not about national standards. The noble Earl chose to make fun of local authorities which set their standards too high or too low. In effect he is urging local authorities to set their standards somewhere around the medium level. He is saying that the achievement of that medium standard—whether it is a 75 or 95 per cent. achievement or whatever—will be the way in which the local authorities are judged. We are coming perilously close to having national standards. Whatever the Government say about the matter their approach makes clear the fact that that will be the result of the provisions in the Bill.

As the noble Earl rightly said, the amendments make clear that the initial determination of the quality and level of service should be by the local authorities rather than by the Audit Commission and the Government. The noble Earl in his reply convinced me that I should take action that I had thought would not be necessary; that is, to test the opinion of the House.

4.12 p.m.

On Question, Whether the said amendment (No. 4) shall be agreed to?

Their Lordships divided: Contents, 87; Not-Contents, 124.

Division No. 2
CONTENTS
Airedale, L.	Broadbridge, L.
Aylestone, L.	Brooks of Tremorfa, L.
Banks, L.	Callaghan of Cardiff, L.
Birk, B.	Campbell of Eskan, L.
Bonham-Carter, L.	Cledwyn of Penrhos, L.
Boston of Faversham, L.	Clinton-Davis, L.

Cocks of Hartcliffe, L.	Kirkwood, L.
David, B.	Listowel, E.
Dean of Beswick, L.	Llewelyn-Davies of Hastoe, B.
Desai, L. [Teller.]	Lockwood, B.
Donaldson of Kingsbridge, L.	Longford, E.
Donoughue, L.	McIntosh of Haringey, L.
Dormand of Easington, L.	Mackie of Benshie, L.
Ennals, L.	McNair, L.
Ewart-Biggs, B.	Mallalieu, B.
Ezra, L.	Mar, C.
Falkland, V.	Mason of Barnsley, L.
Foot, L.	Milner of Leeds, L.
Gallacher, L [Teller.]	Molloy, L.
Galpern, L.	Monson, L.
Gladwyn, L.	Morris of Castle Morris, L.
Glenamara, L.	Murray of Epping Forest, L.
Graham of Edmonton, L.	Nicol, B.
Gregson, L.	Ogmore, L.
Hampton, L.	Prys-Davies, L.
Hamwee, B.	Rea, L.
Hilton of Eggardon, B.	Richard, L.
Hirshfield, L.	Robson of Kiddington, B.
Hollis of Heigham, B.	Rochester, L.
Holme of Cheltenham, L.	Sainsbury, L.
Hooson, L.	Scanlon, L.
Howie of Troon, L.	Shackleton, L.
Hughes, L.	Stallard, L.
Hunt, L.	Stoddart of Swindon, L.
Irvine of Lairg, L.	Strabolgi, L.
Jacques, L.	Taylor of Gryfe, L.
Jay, L.	Turner of Camden, B.
Jenkins of Hillhead, L.	Underhill, L.
Jenkins of Putney, L.	Whaddon, L.
John-Mackie, L.	Williams of Elvel, L.
Judd, L.	Willis, L.
Kennet, L.	Winchilsea and Nottingham, E.
Kilbracken, L.	Winstanley, L.
Kirkhill, L.

NOT-CONTENTS
Aldington, L.	Fraser of Carmyllie, L.
Alexander of Tunis, E.	Fraser of Kilmorack, L.
Alport, L.	Gainsborough, E.
Arran, E.	Gardner of Parkes, B.
Astor, V.	Geddes, L.
Balfour, E.	Gisborough, L.
Beloff, L.	Grimthorpe, L.
Bessborough. E.	Hailsham of Saint Marylebone, L.
Blatch, B.
Boardman, L.	Harmar-Nicholls, L.
Borthwick, L.	Harmsworth, L.
Boyd-Carpenter, L.	Harrowby, E.
Brabazon of Tara, L.	Henderson of Brompton, L.
Bridgeman, V.	Henley, L.
Brigstocke, B.	Hives, L.
Brougham and Vaux, L.	Hood, V.
Butterworth, L.	Hooper, B.
Campbell of Alloway, L.	Howe, E.
Campbell of Croy, L.	Hylton-Foster, B.
Carnegy of Lour, B.	Jeffreys, L.
Cavendish of Furness, L.	Jenkin of Roding, L.
Clitheroe, L.	Johnston of Rockport, L.
Colnbrook, L.	Killearn, L.
Constantine of Stanmore, L.	Kitchener, E.
Cottesloe, L.	Knollys, V.
Craigavon, V.	Lauderdale, E.
Craigmyle, L.	Lindsey and Abingdon, E.
Cullen of Aslibourne, L.	Lloyd of Hampstead, L.
Cumberlege, B.	Long, V. [Teller.]
Davidson, V. [Teller.]	Lucas of Chilworth, L.
Denton of Wakefield, B.	Lyell, L.
Digby, L.	McAlpine of West Green, L.
Elibank, L.	Mackay of Ardbrecknish, L.
Ellenborough, L.	Mackay of Clashfern, L.
Elton, L.	Macleod of Borve, B.
Erroll of Hale, L.	Mancroft, L.
Faithfull, B.	Marlesford, L.
Fanshawe of Richmond, L.	Merrivale, L.
Ferrers, E.	Mersey, V.
Flather, B.	Morris, L.

Mottistone, L.	Seccombe, B.
Mountevans, L.	Selborne, E.
Mountgarret, V.	Shannon, E.
Munster, E.	Sharples, B.
Murton of Lindisfarne, L.	Soulsby of Swaffham Prior, L.
Nelson, E.	Strathcona and Mount Royal, L.
Newall, L.
Norfolk, D.	Strathmore and Kinghorne, E.
Norrie, L.	Strathspey, L.
Orr-Ewing, L.	Sudeley, L.
Oxfuird, V.	Terrington, L.
Park of Monmouth, B.	Teviot, L.
Pearson of Rannoch, L.	Thomas of Gwydir, L.
Pender, L.	Thorneycroft, L.
Platt of Writtle, B.	Trumpington, B.
Porritt, L.	Ullswater, V.
Prior, L.	Vaux of Harrowden, L.
Quinton, L.	Vivian, L.
Reay, L.	Waddington, L.
Renton, L.	Wade of Chorlton, L.
Renwick, L.	Whitelaw, V.
Rodney, L.	Wynford, L.
Saltoun of Abernethy, Ly.	Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

4.20 p.m.

[Amendments Nos. 5 and 6 not moved.]

Baroness Hamwee moved Amendment No. 6A:

Page 1, line 17, at end insert:

("( ) In making any determination by a relevant body of local standards of performance for the purposes of subsection (1) above, such a body may have regard as it considers appropriate to policy objectives previously determined by such a body.").

The noble Baroness said: My Lords, this amendment has a similar but not identical thrust to Amendment No. 6, which we discussed although it was not moved.

It is not only during this debate that we have heard, quite rightly, from the Government that local authorities are to determine their own standards and levels. Similar points are made in the Green Paper on the internal management of local authorities in England. Its introduction states that the Government believe that the local authorities' role in the provision of services should be to assess the needs of their own area, plan for services and ensure that those services are delivered. It would be difficult to take issue with that.

In our discussions about quality, standards, consultations with users, voluntary organisations and so on, so far we seem to have rather lost sight of the need for the work that local authorities do to meet their own policy objectives. There is a great deal of talk these days about taking politics out of local government. That is a matter with which I cannot agree. It is a blind alley. Local government is highly political. It is about making choices and identifying priorities. Those are political activities. This amendment is designed to allow local choice as regards the mechanisms and means which will lead to the best locally determined ends.

The services which are to be provided should be in the context of an agreed framework of local democracy, efficient local services and the rights of citizens. However, to forget that each authority must make its own choices about what is important loses the fundamental purpose for which local authorities should aim. I beg to move.

Baroness Blatch

My Lords, the noble Baroness appears to see constraints in the freedom of local authorities where none exist. The underlying idea of the amendment is that relevant bodies should make determinations of their intentions and that those determinations should be the subject of comparisons in the same way as comparisons of achievement. The inconsistency lies in the phrases that qualify the underlying idea. The relevant body is not required to have regard to policy objectives but is merely allowed to do so. Surely if a body has set objectives it should have regard to them. Again, one is to have regard only to the extent that the relevant body considers appropriate—a less than full-hearted commitment.

We believe that there is no point in making analyses of good intentions. Our policy is to arrange for an analysis of the outcome and to let the facts speak for themselves. I ask the noble Baroness to withdraw the amendment.

Baroness Hamwee

My Lords, that was an interesting response. I was not suggesting that we should analyse only good intentions. Whatever its final form, I hope that the Bill will be about hard local political decisions and good local government and not just about motherhood and apple pie. I am not endeavouring to achieve that.

I raise this issue because I hope that it may provoke some discussion about just what is the purpose of local government. I believe that that matter needs to be debated and put on record from these Benches, but I am sure I am not alone in that.

Lord McIntosh of Haringey

Hear, hear!

Baroness Hamwee

My Lords, I thank the noble Lord, Lord McIntosh. There should be more than a mere bureaucratic exercise of performance indicators in the rather dry way in which we talk about them. Local government is about something real and is important to people.

Baroness Blatch

My Lords, I am grateful to the noble Baroness for giving way. I hope that she does not imply from my response that we do not believe that there is an important role for local government. Under the Bill as drafted local authorities are free to determine their own policies, are free to have regard to them—indeed, one would expect them to do that—and are free to determine the standards which they wish to provide. They should be prepared to have those standards measured against a yardstick to be determined by the Audit Commission.

Baroness Hamwee

My Lords, I thank the Minister for that intervention. I am content to have raised the issue and to have put it on the record. I do not wish to put the matter to a Division. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 [Directions under s.1]:

Lord McIntosh of Haringey moved Amendment No. 7.

Page 3, line 19, at end insert: ("in order to secure that the information to be published will enable appropriate comparisons to be made as required by section 1(1) above, including comparisons concerning—

1. (a) standards of service;
2. (b) standards of performance; and
3. (c) value for money.").

The noble Lord said: My Lords, Amendment No. 7 falls within Clause 2 which is concerned with directions given by the Audit Commission to relevant bodies under Clause 1; that is, directions to local authorities in order to secure the information required to achieve the standards of performance which are required under this part of the Bill.

Clause 2(3) provides—we do not disagree with it or seek to take it out of the Bill—that the Audit Commission or the Scottish Accounts Commission shall consult the associations of relevant bodies, or other such persons as it thinks fit, before issuing directions to impose new requirements. This amendment seeks to bring out into the open the standards of service, performance and value for money which have been made by local choice and which have been made on the basis of the identification of local need.

The danger of all the processes is that they will provide a centralised summary of performance indicators against which local standards should be set—I cannot avoid repeating myself on these matters but the amendment is not a repetition of earlier amendments—without paying adequate recognition on the face of the Bill to the need for local authorities to identify their local needs and to make the necessary plans to provide services in response to them.

Clearly, comparisons of performance and service delivery are meaningless unless related to local choice. Unless the publicity is given to that local choice in the way suggested by the amendment we greatly fear that the process will be a centralised process. It will be a process for bringing local authorities to account to local government rather than doing what the Citizen's Charter should do; namely, to bring local authorities to account to their electors and the users of their services. I beg to move.

Earl Howe

My Lords, this amendment is another example of the desire, which I fear is prevalent among noble Lords opposite, to seek to prescribe how the Audit Commission and the Scottish Accounts Commission are to carry out their duties. That aside, I hope that I can convince the noble Lord that the amendment is totally unnecessary.

Clause 1 already specifies that the purpose of publishing the information is to enable comparisons of performance to be made. As standards of performance include standards of service a specific reference to either is not needed. Comparisons of value for money will also be possible without the amendment as Clause 1 specifies that comparisons of performance should be by reference to the criteria of cost, economy, efficiency and effectiveness. Those concepts clearly subsume value for money.

There is a thread which links a number of amendments tabled this afternoon; that is, that the commissions should have it spelled out to them at every turn on the face of the Bill what their job should comprise. We must give the commissions credit for some professionalism and let them get on with their task which the Bill already sets out with a good deal of clarity. This amendment is unnecessary and I hope that the noble Lord will withdraw it.

4.30 p.m.

Lord McIntosh of Haringey

My Lords, the noble Earl once again has been given a provocative brief. He is trying 10 tempt me into dividing the House. Of course the amendment seeks to set out on the face of the Bill the way in which the Audit Commission should carry out the wishes of Parliament. It does not indicate any distrust in the Audit Commission.

Let us consider the alternative. The alternative is not that the Audit Commission will have complete freedom to do what it likes but that the Secretary of State shall prescribe exactly what the Audit Commission is to do. I remind the House, as was made clear in Committee, that the Secretary of State may issue a direction to the Audit Commission on the performance of any part of its duties and the Audit Commission shall give effect to any such direction. That is the provision of the Act under which the Audit Commission was established.

Therefore, when the noble Earl seeks to characterise my amendment, which seeks to set out more clearly what the Audit Commission should do, as being an attack on the Audit Commission he thinks I have the wrong target. No, my target as always is the Government and the Secretary of State. The amendments are concerned with the lack of clarity on the directions the Audit Commission will give to local authorities. Its entire thrust is to provide for the expression of local choice and to ensure that the local element is not overlooked when the Government draw comparisons between local authorities.

Let us not kid ourselves. The purpose of the Citizen's Charter is for government to show up local authorities—preferably Labour local authorities—if they can possibly do so. The purpose of a large section of the drafting of this part of the Bill is to make it possible for the Government to do so without fear of contradiction. Our purpose in seeking to amend the drafting of this part of the Bill is to make it more difficult for the Government to carry out part of its political attack on the independence and responsibility of local government in this country. We wish also to make it clear that what is important is the relationship between local authorities and their electors.

The noble Earl may think that value for money is subsumed in the other categories or criteria; and he may technically be right. But I can assure him that what people expect out of local authorities and central government administration is value for money. That is the way they think and that is what they will look for. That is what they will be convinced they are receiving only when they are invited to take part in setting standards and then to make a judgment on whether or not the standards that they set have been achieved. That is what this part of the Bill does not achieve.

I resist the temptation to seek the opinion of the House and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hamwee moved Amendment No. 7A:

Page 3, line 22, leave out ("31st December") and insert ("30th November").

The noble Baroness said: Amendment No. 7A moves away from the immediate grounds of quality effectiveness, and so on, that we were discussing. I was provoked into tabling the amendment after seeing the Audit Commission paper, already referred to this afternoon, which was published as we were completing the last round on the Bill.

The timetable set out in the paper states that notification of performance indicators should be given to local authorities in December and by March they are to have prepared their measurement systems. I do not quarrel with the sequence of events. My anxiety is that a consultation period from September, as is suggested, until December could mean that that first date in September slips. One sees only too often that the good intentions exist but that the early date somehow is not met. It goes late into the month and a comparatively long time out of a short period is lost.

It is essential that the local authorities possess the information that they need by the time they set their budgets in order to take on board the decisions made during that earlier period. Therefore, the amendment suggests that the date of 31st December he brought forward to the 30th November. That will ensure that decisions will have been made before local authorities are deep into budget making. I mentioned the consultation starting in September. I believe if we bring forward the December date to November it will put pressure on everyone concerned to ensure that the September date, which is not written on the face of the Bill, is met.

The amendment seeks to raise the practical problems that local authorities will experience; to bring to the attention of the House the need not to set dates because they appear to be nice and neat but rather because they address the realities of life at the sharp end. I beg to move.

Earl Howe

My Lords, the amendment seeks to extend the minimum time that local authorities have to prepare for complying with new directions from three months to four. A similar amendment was tabled at Committee stage. It may appear to be only a modest change but three months should normally be sufficient to prepare for collecting and recording such information, contrary to what the noble Baroness indicated. The three-month period contained in the Bill—and I stress this—is only a minimum. The Audit Commission will be able to give a longer time if it feels it is necessary and it is quite possible that it will do so on some occasions.

Once again we must give the Audit Commission credit for acting in a reasonable manner. Scope for flexibility is there. On those grounds I urge the noble Baroness to withdraw the amendment.

Baroness Hamwee

My Lords, I thank the noble Earl for that response. My amendment was not simply to provide sufficient time for local authorities to collect information. It was intended to provide sufficient opportunity for them, in setting their budgets in the following year, to take account of what information must be collected in that year.

Lord McIntosh of Haringey

My Lords, I am grateful to the noble Baroness for giving way. Something the Minister said in his reply struck a chord with me. He said that the three-month period would be the minimum period and that the Audit Commission would often be able to give longer periods for the work to be done by local authorities.

I draw the noble Earl's attention to the paper on performance indicators published after our Committee stage on this part of the Bill, where, in the section on the legislative framework, the Audit Commission sets out a timetable for each year. The timetable says that the performance indicators should be notified in December, not the month running up to it. It says December and then allows for local authorities between December and March to prepare their measurement systems and between June and March the following year to measure and record performance.

There is no indication in the Audit Commission's thinking that it is planning anything beyond a December deadline. Therefore, the noble Baroness has a point which was not adequately answered by the noble Earl.

Earl Howe

My Lords, with the leave of the House, I repeat an invitation made earlier by my noble friend Lady Blatch. Perhaps it is a point that the noble Lord should make to the commission. However, nothing that he said contradicts my point. The flexibility for the Audit Commission to prescribe a longer period of notice still exists.

The Audit Commission paper makes clear first, that this is only the first set of indicators; and, secondly, that the formal consultation from September will follow detailed work with the best qualified people drawing on the experience of local authorities. That is a direct quote. I hope that that provides the reassurance that the noble Baroness is seeking.

Lord McIntosh of Haringey

My Lords, before the noble Earl sits down, that is really a quite unacceptable response. He is suggesting that instead of raising the matter in Parliament I should be writing to the Audit Commission about its timetable. I should remind him that the date of 31st December is provided on the face of the Bill. In other words, the Government are establishing the timetable, not the Audit Commission. Therefore, any discussion of the timetable comes properly in this House and not in communications from individual members to the Audit Commission.

Earl Howe

My Lords, with the leave of the House, it is a minimum of three months. It cannot be less than three months. That is the point.

Lord McIntosh of Haringey

My Lords, that is not what the Audit Commission is saying in its timetable.

Baroness Hamwee

My Lords, I think that that exchange has been useful. I thank the noble Lord, Lord McIntosh, for intervening. He got to the point more cogently than I would have done. That is precisely what I was driving at.

The noble Earl, Lord Howe, said that a similar amendment was tabled at Committee stage. That was a quite radical shift from December back to June. All that is being sought here is a very modest movement from December back to November. I accept that there are points to be made to the Audit Commission. Given that the date of December is in the Bill I am tempted to divide the House, but that is a temptation that I ought to resist.

However, the Audit Commission will certainly have drawn to its attention the repeated use of the term "flexibility" in order that it may—and I hope that it will—take serious note of what underlies this amendment, which is not simply playing with words. It is a very practical point made by people who understand the difficulties that very often exist in implementing new arrangements at local authority level and bringing everything together at the right point when the budget has to be fixed in the spring of each year. Having let off that bit of steam, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.45 p.m.

Lord McIntosh of Haringey moved Amendment No. 8:

After Clause 2, insert the following new clause:

("Internal management of local authorities

.—(1) This section has effect for the purposes of assisting local authorities to—

1. (a) maximise the economy, efficiency and effectiveness of their services, and to achieve the highest standards of performance in accordance with the needs of their areas as required to be published under section 1(1) above;
2. (b) fulfil the requirements of sections 5 and 6 below;
3. (c) fulfil any requirements arising from orders or regulations made under sections 8 and 9, or from section 10 or Schedule 1 below, in the most appropriate and effective manner in the interests of their areas;
4. (d) fulfil any requirements or activities, whether arising from paragraph 4 of Schedule 2 or otherwise, arising from the provisions of Part II to this Act.

(2) The Commissions to which functions are assigned by section 1 above shall each appoint a designated officer, who shall be a legally qualified person, for the purposes of subsection (4) below.

(3) The Commissions shall, after consultation with such local authority associations and other persons as appear to them to be concerned, publish and from time to time revise guidelines for local authorities in relation to applications under subsection (4) below.

(4) The person appointed under subsection (2) above shall consider and advise the Commission as to any application from a local authority made under this subsection and the relevant Commission may exempt such an authority from the application of any enactment relating to its internal management, provided that the Commission is satisfied that such exemption—

1. (a) would be conducive to the development of local democracy;
2. (b) would promote the provision of efficient local services; and
1217
3. (c) would not curtail the rights of any citizen or extend they obligations of any such citizen in relation to the authority.

(5) For the purposes of this section, the internal management of a local authority shall be taken to include the structure of decision-making within an authority, and arrangements for support to the work of elected councillors.

(6) The relevant Commission shall not less than two years after the coming into force of this section review the effectiveness of any arrangements made in accordance with subsection (4) above.").

The noble Lord said: I readily admit at the beginning that Amendment No. 8 is not in the ideal place. It is not framed in the way we should like it to be. We are seeking in this amendment to ensure that the Secretary of State is not able, by direction to the Audit Commission or the Audit Commission by direction to local authorities, to inhibit full consideration by local authorities of the best way to achieve the efficiency and effectiveness of the service they provide in terms of the Citizen's Charter.

This amendment ought not to be necessary. It ought to be the case that the internal management of local authorities is not subject to central government control. It ought not to appear on the face of the Bill at all. Unfortunately, in the absence of any indication to the contrary we have to look at the way in which Ministers are in practice thinking about the internal management of local authorities. The indications are all too clear. Ministers have formed their own views about the way in which local authorities are going to run their services. If they get the opportunity to do so they are fully prepared to impose those views on local authorities. This Bill provides an opportunity for a Secretary of State to do just that. A Secretary of State who can give any direction he thinks fit to the Audit Commission can then require the Audit Commission to set standards to a local authority that are suitable to the Secretary of State.

It will not be enough for me to be told that the Government have no intention whatever of intervening in the internal management of local authorities. It is quite clear that individual Ministers in this Government long to get their hands on the internal management of local authorities and long to restrict their ability to organise themselves in the best way possible to achieve efficiency and effectiveness of services.

The Government have published a Green Paper on the internal management of local authorities in England which appears to open the door to experimentation. That is all very well; but it is when we come to what would happen as a result of the Green Paper that we begin to get worried. It is quite clear from the Green Paper that they will, of course, listen to consultation. They will then go away and do their own thing. In other words, the Secretary of State will decide according to such criteria as seem suitable to him—which he will or will not specify, as he thinks fit—whether a particular proposal is acceptable.

It is all in the hands of the Secretary of State. That is what we find so unacceptable. Much as we wish to have no control of internal management, we think it is better to provide on the face of the Bill for the Audit Commission and the Scottish Accounts Commission to have responsibility for this and for them to appoint a legally qualified person who would evaluate applications from individual authorities against specified criteria.

The range of alternative ways of organising local authorities is, I am glad to say, opening up. Examples were given at Committee stage of many local authorities that are seeking to decentralise a very large part of their powers to neighbourhood committees.

The Bill contains the provision that there could be parish councils in urban areas in England if the Local Government Commission thinks fit. There are all sorts of stirrings towards decentralisation of services, with or without the activities of the Local Government Commission, which authorities ought to be free to develop as long as they maintain certain basic minimum standards.

Other authorities may be moving towards a strengthened executive; to having greater powers for a more limited number of councillors who might be paid. I am not sure that I am keen on that. However, if that is the way that they want to go then surely they ought to be able to move in that direction and seek to persuade their electors that that is the right thing to do.

We are extraordinarily slow in experimenting in this country. We are also extraordinarily slow in making it possible to experiment. Compare, for example, this country with Sweden and Norway. For at least five years Sweden and Norway have been developing what they call "free communes"—in Norway they call it "free local government". At present their experiments apply only to a limited number of communes but they provide that these communes—these small local authorities—shall have a degree of freedom including a power of general competence. That was taken away from local authorities in this country many years ago.

There are, of course, protections which are put into the Swedish legislation. There are fundamental considerations of fair distribution of social services and protection of the lives and health of the general public. There are legal safeguards and safeguards in regard to the preservation of the local economy. Those are protections against the misuse of powers by the free communes. Why on earth can we not open up a little? Why can we not give ourselves an opportunity to try new ways of providing local services? I am sure there are local authorities throughout the country who long to do that, given the ability to do so.

I repeat, this is not the ideal way of presenting thoughts of this kind. As we take the words themselves it appears that this is a restriction on local authorities' internal management because it makes any significant changes in internal management dependent on the approval of the Audit Commission under certain circumstances. The alternative is not freedom for local authorities. The alternative is unfettered power for the Secretary of State. It is that unfettered power which we oppose by putting forward this amendment. I beg to move.

Baroness Hamwee

My Lords, though my name is not attached to this amendment I should like to support it. There is an increasing tendency in this country for local government to be seen as local administration. That may be denied—I hope that it will be denied—but it is precisely because of my fear in that regard that I support the amendment. My first reaction was that it was unnecessarily restrictive, but given the constraints on local authorities, perhaps it is necessary to raise the issue in this way.

It is explicit in much of what was said in Committee by the noble Baroness, Lady Blatch, that locally determined internal arrangements are a good thing. Legislation, therefore, should be permissive of local authorities and not restrictive. We should be looking to allow the richness of our different local communities to be reflected in the diversity of their own arrangements, provided that those arrangements are not inappropriate. How local authorities govern themselves should reflect their own local circumstances, though I would go perhaps a little further than the noble Lord, Lord McIntosh, and mention devolution, rather than just decentralisation, as something that should be striven for. Though it may appear to be an awkward place in the Bill to raise this issue, it is a current issue and one that is appropriately raised in the context of other aspects of the Bill.

Lord Stoddart of Swindon

My Lords, it is most unfortunate that an amendment of this kind should have to be placed on the Marshalled List. Twenty-five years ago it would have been unthinkable that we should need such an amendment on the Marshalled List. Twenty-five years ago local authorities were considered to be highly responsible bodies, which discharged their functions extremely well and to the satisfaction of most of their people. Over the past 25 years, and particularly through the Local Government Act 1972, local authorities, because they are organised in such a way as to take them further away from the people, have become in some senses less responsible to their electorates. When people are made less responsible to their electorates they do not always behave in the manner in which government or other authorities may expect them to.

The whole raison d'être for the Bill and therefore for this amendment is that local authorities over a long period of time—certainly since 1974—have not been allowed to discharge the functions which local authorities should properly be there to discharge. Over the past 12 years the Government have shown such an antipathy towards local authorities that any move by the Government is seen by local authorities and certainly by noble Lords on this side of the House as a further move to restrict what local authorities can do. That is not good enough.

If we believe in local democracy, local authorities should have responsibilities which they discharge independently and according to the decisions made in their area. The Government appear to be trying to force local councillors out of administration. What they are seeking to do—I may be wrong, and if I am wrong I hope the noble Baroness will be able to tell me that I am wrong—is to make local authorities advisory boards to a town manager. I have never seen local authorities in those terms. I see local authorities as lively bodies, representative of the communities which they serve, capable of making serious and important decisions and able to experiment over the field of their responsibility. That is how I have always seen local authorities. But now local authorities are a mere shadow of what they were when I served on one. The restrictions placed on local authorities make it necessary for amendments of this kind to be put down to protect them from government attempts to take away their powers and duties.

I have always believed that if we want a truly democratic local government system the doctrine of ultra vires should be dispensed with. We should have a system of general competence. That may be a large step for the Government to take but in my experience—I have had reasonably wide experience not only in local authorities and Parliament but in business and nationalised industries—the more responsibility one gives the people the better able they are to discharge it. The more responsibility you take away from people and institutions the less responsible they become. My view—I know that the Minister will not agree—is that we should remove ultra vires and give this duty of general competence. I do not know what my noble friend Lord McIntosh will say to me but that is the kind of policy that a Labour Government would wish to introduce.

Lord McIntosh of Haringey

My Lords, my noble friend is correctly expressing Labour Party policy.

Lord Stoddart of Swindon

My Lords, that is a relief. I have to say that I am delighted that my noble friend has been able to give that assurance. I only wish that the Minister could give a similar one.

Baroness Blatch

My Lords, I wonder whether I inhabit the same world as noble Lords who have spoken in the debate. I came into local government under a Labour Government. The then Secretary of State for the Environment, acting under the constraints of the IMF, cut very drastically local authority budgets. My authority was no exception. Although I did not like what happened at the time, nevertheless—

Lord McIntosh of Haringey

My Lords, if the noble Baroness will permit me, the Secretary of State had no power to cut local authority budgets or expenditure. What Mr. Crosland did was to cut central government grants to local authorities, which is very different.

Baroness Blatch

My Lords, the noble Lord is absolutely right. It was local authority grants—it was not Mr. Crosland; it was in fact Peter Shore. Nevertheless, it was for national governments to be concerned about macro-economics. It was the national government at that time who decided seriously to curtail grants to local authorities. Having said that, powers of general competence would not have been compatible with the Labour Government of that day. The amendment relates to internal management. I suggest that the words of the noble Lord, Lord McIntosh, and those of the noble Baroness, Lady Hamwee, do not do justice to the considerable enterprise which is actually present in local authorities.

I was a member of a local authority which piloted—I prefer to use the word "piloted" instead of "experienced"—a number of very new ideas in local government. For example, way back before it was fashionable, we piloted a system of local financial management in schools. We devolved as much as possible to the unit of operational management; in other words, we devolved management down as far as was possible. We also established a very effective non-executive and executive way of arriving at decisions and thereby streamlined decision-making. All of that was piloted. During the passage of the Bill, the noble Baroness, Lady Hamwee, has talked about Tower Hamlets and the enterprising way in which it arranges its internal affairs.

The amendment before the House is similar to one which was considered in Committee. However, the present amendment seeks to give a role to the Audit Commission and to the Scottish Accounts Commission in approving changes to the internal management arrangements in local authorities.

I share the noble Lord's view that it is important to ensure that local authorities have the right management structures and flexibilities to enable them to operate effectively in the interests of the public that they serve. Our consultation paper on the internal management of local authorities spelt out our commitment to seeking more effective decision-making, enhanced scrutiny of decisions, increased public interest in local government and an enhanced constituency role for councillors.

Noble Lords will recall that in Committee I said that I thought it was premature to put forward amendments on the subject. I have to tell the House that I have not changed my view. I have given an assurance that the Government will come forward with the results of the consultation exercise and their proposals for taking the issue forward as soon as possible.

I ought perhaps to make the point that I am doubtful that it would be right to give the Audit Commission and the Scottish Accounts Commission the role that the amendment envisages. However, I have taken note of the remarks made by all speakers in the debate. We shall certainly take such issues into account in considering how we should proceed. I should like to stress that the Government regard this as an important subject which needs careful consideration before any legislative changes are introduced. In the light of all that has been said in the debate, I hope that the amendment will be withdrawn.

5 p.m.

Lord McIntosh of Haringey

My Lords, I am grateful for the Minister's last few words. I have been trying to write them down. I hope that I will have understood them by the time I finish my remarks so that I may respond appropriately.

I was fascinated by the Minister's references to her early years: in local government. I was glad to have her confirmation that Labour Governments of that time, although they did not support the power of general competence—the noble Baroness is quite right about that—never sought to control the budgets of local authorities. They sought, quite properly, to ensure that central government money for which they were responsible was allocated in the way that they and the taxpayers thought fit. Throughout Labour government, the power of local authorities to raise what money they and their electors thought appropriate for local services was never criticised. That is still the case. That is still the position of the Labour Party. We are still opposed to the capping of local authority budgets.

I notice that Cambridgeshire is in some disagreement with the Secretary of State for Education and Science about the level of spending on its education budget. It will be interesting to see, although I know that the Minister is in no position to answer, whether Cambridgeshire will end up being capped this year as a result of that disagreement.

In other respects the Minister's reply confirmed my worst fears. Anyone who thinks that we would fall for the indecisive nature of a Green Paper on internal management must think that we were born yesterday. But why have the Government introduced a Green Paper on the internal management of local authorities? They have done so not to say, "You are all good chaps and these are all good ideas; go ahead and do it". No, that is not the case. They have introduced a Green Paper so that at the end of the consultation period, and after hearing the views of all the people concerned, they will lay down those forms of internal management which are considered acceptable.

The present Secretary of State has strong ideas on such matters. Indeed, he expresses them quite frequently to the press, to local authority audiences and in Parliament. Some of those ideas I agree with, while others I disagree with. Some of them were set out by the Minister in her response. However, the point is that governments do not issue Green Papers unless they are proposing to do something. They are proposing to restrict the powers of local authorities to manage their own internal affairs as they think fit in response to the needs of their electors and in relation to the services that they must provide.

Up to that point, I find myself having no sympathy at all for the Minister's reply. She went on to say that the views expressed would be taken into account, in considering how we should proceed". Perhaps the Minister would be good enough, within the rules of debate at Report stage, to tell us what she means by those words. Is she considering that there should be amendments to the Bill which would give local authorities the freedom to manage their internal affairs as they think fit? Is she proposing to us that the conclusion from the consultation after the Green Paper will be that the Government will not be prescribing which forms of internal management are acceptable and which are not? In other words, is she really proposing that the Government's intentions are explicitly to make this amendment unnecessary?

Baroness Blatch

My Lords, with the leave of the House, I should like to help the noble Lord. It is very unlikely, and decidedly improbable, that changes will be made to this Bill. However, when all considerations are taken into account as a result of the consultation exercise, and should it be necessary to legislate, it will be Parliament that decides the matter. Government can make recommendations but at the end of the day it will be for Parliament to make the decision.

Lord McIntosh of Haringey

My Lords, I am glad to hear that the Minister does not think that her party will have a majority in another place. But the reality is a little different. Perhaps I may ask the question in another way. Is it the Government's intention to introduce legislation at any stage following the consultation period? Further, is it a possibility that such legislation may prescribe which forms of internal management are acceptable and which are not?

Baroness Blatch

My Lords, again, with the leave of the House, I must point out that it would be quite wrong for me to pre-empt the outcome of consultation; that is, whether legislation is required or whether what comes out of it will be prescriptive. We know that there has been a great deal of feedback to the department that local authorities would like to determine internal management for themselves. That may well be the outcome. However, as I said, it would be quite inappropriate for me to pre-empt the outcome of that debate.

Lord McIntosh of Haringey

My Lords, I understand. That has confirmed me in my view that the answer given is unsatisfactory. The Minister is quite understandably refusing to rule out the possibility of prescriptive legislation that will determine which forms of internal management are acceptable and which are not. The noble Baroness generously referred to the response to the Green Paper. I have some of those responses in front of me. However, what she did not say is that the amendment is unnecessary. She said that it would go against some of the things which government might want to do in the future.

The amendment would take out of the hands of the Secretary of State and put into the hands of a responsible officer of the Audit Commission the power to approve under certain circumstances forms of internal management by local authorities which, would be conducive to the development of local democracy; would promote provision of efficient local services; and would not curtail the rights of any citizen or extend the obligations of any such citizen in relation to the authority". The important point about that in relation to the amendment is that subsection (4) provides that, the relevant Commission may exempt such an authority from the application of any enactment relating to its internal management"— provided that the commission is satisfied in the terms that I mentioned. In other words, in the amendment we are providing protection against future encroachment by the Secretary of State which the Minister is, understandably, unable to assure us will not happen. It is necessary that we make the point; that we pursue it; and that the House take a view upon the amendment.

5.10 p.m.

On Question, Whether the said amendment (No. 8) shall be agreed to?

Their Lordships divided: Contents, 85; Not-Contents, 125.

Division No. 3
CONTENTS
Airedale, L.	Jenkins of Putney, L.
Aylestone, L.	Judd, L.
Birk, B.	Kennet, L.
Blackstone, B.	Kilbracken, L.
Bonham-Carter, L.	Kilmarnock, L.
Boston of Faversham, L.	Kinloss, Ly.
Broadbridge, L.	Kirkhill, L.
Brooks of Tremorfa, L.	Listowel, E.
Buckmaster, V.	Llewelyn-Davies of Hastoe, B.
Callaghan of Cardiff, L.	Lockwood, B.
Campbell of Eskan, L.	Longford, E.
Cledwyn of Penrhos, L.	McIntosh of Haringey, L.
Clinton-Davis, L.	Mackie of Benshie, L.
Cocks of Hartcliffe, L.	McNair, L.
David, B.	Mallalieu, B.
Dean of Beswick, L.	Mar, C.
Desai, L.	Mason of Barnsley, L.
Donaldson of Kingsbridge, L.	Milner of Leeds, L.
Dormand of Easington, L.	Molloy, L.
Ennals, L.	Morris of Castle Morris, L.
Ezra, L.	Mulley, L.
Falkland, V.	Murray of Epping Forest, L.
Foot, L.	Nicol, B.
Gallacher, L.	Ogmore, L.
Galpern, L.	Pitt of Hampstead, L.
Glenamara, L.	Rea, L.
Graham of Edmonton, L. [Teller.]	Redesdale, L.
	Richard, L.
Grey, E.	Robson of Kiddington, B.
Hamwee, B.	Rochester, L.
Hatch of Lusby, L.	Sefton of Garston, L.
Hilton of Eggardon, B. [Teller.]	Shackleton, L.
Hirshfield, L.	Stedman, B.
Hollis of Heigham, B.	Stoddart of Swindon, L.
Holme of Cheltenham, L.	Strabolgi, L.
Hooson, L.	Taylor of Gryfe, L.
Houghton of Sowerby, L.	Tordoff, L.
Howie of Troon, L.	Turner of Camden, B.
Irvine of Lairg, L.	Underhill, L.
Jacques, L.	Wedderburn of Charlton, L.
Jay, L.	Whaddon, L.
Jeger, B.	Willis, L.
Jenkins of Hillhead, L.	Winstanley, L.

NOT-CONTENTS
Aldington, L.	Colnbrook, L.
Allen of Abbeydale, L.	Colwyn, L.
Allenby of Megiddo, V.	Constantine of Stanmore, L.
Alport, L.	Cork and Orrery, E.
Arran, E.	Cox, B.
Astor, V.	Craigavon, V.
Astor of Hever, L.	Craigmyle, L.
Balfour, E.	Cullen of Ashbourne, L.
Birdwood, L.	Cumberlege, B.
Blatch, B.	Davidson, V. [Teller.]
Boardman, L.	Denton of Wakefield, B.
Borthwick, L.	Digby, L.
Brabazon of Tara, L.	Elibank, L.
Bridgeman, V.	Ellenborough, L.
Brigstocke, B.	Elton, L.
Brookeborough, V.	Faithfull, B.
Brougham and Vaux, L.	Ferrers, E.
Butterworth, L.	Flather, B.
Caldecote, V.	Fraser of Carmyllie, L.
Campbell of Alloway, L.	Fraser of Kilmorack, L.
Campbell of Croy, L.	Gainford, L.
Carnegy of Lour, B.	Gainsborough, E.
Cavendish of Furness, L.	Gardner of Parkes, B.
Charteris of Amisfield, L.	Geddes, L.
Clanwilliam, E.	Gisborough, L.
Clitheroe, L.	Glenarthur, L.

Gray of Contin, L.	Norrie, L.
Hailsham of Saint Marylebone, L.	Orr-Ewing, L.
	Oxfuird, V.
Harmsworth, L.	Park of Monmouth, B.
Harrowby E.	Pearson of Rannoch, L.
Henley, L.	Pender, L.
Hives, L.	Platt of Writtle, B.
Holderness, L.	Reay, L.
Hooper, B.	Renton, L.
Howe, E.	Renwick, L.
Hylton-Foster, B.	Rodney, L.
Jeffreys, L.	St. John of Bletso, L.
Jenkin of Roding, L.	Saltoun of Abernethy, Ly.
Johnston of Rockport, L.	Sandys, L.
Kitchener, E.	Seccombe, B.
Knollys, V.	Selborne, E.
Lauderdale, E.	Shannon, E.
Lawrence, L.	Sharpies, B.
Lindsey and Abingdon, E.	Shrewsbury, E.
Lloyd of Hampstead, L.	Skelmersdale, L.
Long, V. [Teller.]	Stodart of Leaston, L.
Lucas of Chilworth, L.	Strathcona and Mount Royal, L.
Mackay of Ardbrecknish, L.
Mackay of Clashfern, L.	Strathmore and Kinghorne, E.
MacLehose of Beoch, L.	Sudeley, L.
Macleod of Borve, B.	Swansea, L.
Mancroft, L.	Thomas of Gwydir, L.
Marlesford, L.	Trumpington, B.
Merrivale, L.	Ullswater, V.
Mersey, V.	Vaux of Harrowden, L.
Mottistone, L.	Vinson, L.
Mountevans, L.	Vivian, L.
Mountgarret, V.	Waddington, L.
Munster, E.	Whitelaw, V.
Murton of Lindisfarne, L.	Wise, L.
Nelson, E.	Wynford, L.
Newall, L.	Young, B.
Norfolk, D.

Resolved in the negative, and amendment disagreed to accordingly.

5.18 p.m.

Clause 3 [Functions of auditor and studies by the Commissions]:

Lord McIntosh of Haringey moved Amendment No. 9:

Page 4, line 28, at end insert:

("(4) Before undertaking or promoting a study falling within paragraph (a) or (b) of subsection (3) above, the Commission shall consult such persons representative of users and of voluntary organisations as may be concerned as to the impact of any comparisons made in accordance with section 1 above on—

1. (a) the determination by relevant bodies in consultation with users and other persons representative of their local communities of levels of service;
2. (b) the ability of relevant bodies to meet the different needs of their areas, having regard to the social composition of any such area and the resources available to it;
3. (c) the development of regional patterns of provision;
4. (d) the ability of relevant bodies to respond to any requirements arising from provisions of the European Community.").

The noble Lord said: My Lords, I draw attention to the wording of the amendment. It is an amendment which does not refer to local authorities. It refers only to users of services and of voluntary organisations. The amendment is concerned to establish that when the Audit Commission is promoting a study which falls within subsection (3) (a) and (b), which I shall explain in a minute, it, shall consult such persons representative of users and of voluntary organisations as may be concerned as to the impact of any comparisons made".

The studies referred to in subsection (3), are, studies designed to enable the Audit Commission or … the Scottish Accounts Commission to determine what directions it should give under section 1"— that is, the whole range of activities of the Audit Commission under the Citizen's Charter provisions, and— studies of information published in pursuance of directions … which are designed to enable the Commission in question to determine, in relation to each financial year, what comparative information to publish itself about the standards of performance achieved by relevant bodies"; that is, by local authorities. Then curiously, subsection (3) states: but neither Commission shall be required by section 26(4) of the 1982 Act or section 97A(3) of the 1973 Act— that is, the Scottish Act— to consult any person before undertaking or promoting a study falling within paragraph (a) or (b) above". My memory is notoriously poor on these matters but I cannot remember a provision in legislation on the face of a Bill which says that anyone is not required to consult. There are plenty of provisions for commissions or Secretaries of State or local authorities or whoever it may be to consult.

However, to put on the face of the Bill that they are not required to consult seems interesting. It raises in my mind the possibility that would no doubt occur to the noble Lord, Lord Renton, were he in his place, that if on this occasion the Audit Commission is not required to consult, perhaps the absence of the provision means that the Audit Commission is required to consult in other cases: exclusio unius, est inclusio alterius, is the way to put it on this occasion.

If I could only receive an answer to that question as to what lines 25 to 28 on page 4 mean, I should consider my time well spent, even though other noble Lords may feel that their time is not well spent.

There is, however, a serious purpose to these amendments. The Audit Commission takes account in its paper of the need to involve representatives of consumers in drawing up the performance indicators. I have already paid tribute to it for that. In its own publication on the effectiveness of the Audit Commission it has indicated that local authorities should do this when they make decisions about the provision of services.

In this amendment we propose simply that the Audit Commission should consult users and voluntary organisations who are extremely well informed about the provision of local services when they are carrying out studies. It is not always the case that from the centre—whether the centre be Buckingham Gate (the headquarters of the Audit Commission) or Marsham Street (the headquarters of the Secretary of State)—conditions which apply locally are well known or can be assumed to be well known. There are major differences between one local authority area and another in terms of their social composition and need for services. It seems not unreasonable to suggest that the Audit Commission might humbly seek the views of those who use the services of voluntary organisations before embarking on studies of this kind. After all, the studies are critical to the effective enactment of this part of the Bill. I beg to move.

Baroness Blatch

My Lords, the noble Lord has baffled me with the amendment. The effect, as I see it, is obscure because a very convoluted proposition has been strung together. Under Clause 1, the commissions are required to give directions as to the information to be provided on the basis of which the commissions and others are to make comparisons; under Clause 3, the commissions may undertake studies to determine what directions to give and what information themselves to publish. But the amendment requires the commissions to consult about the impact of comparisons on a range of matters, in advance of the studies, that is to say, in advance of all the foregoing. The persons to be consulted are to be representatives of users and of voluntary organisations and the range of matters on which the commissions are to be required to consult are, as I understand it, the determinations made by relevant bodies of their intended standards in accordance with Amendments Nos. 4 and 5; the ability of bodies to meet the needs of their area with the available resources; I assume that that is the validity of the SSAs; the development of regional patterns of provision; and the ability to respond to EC requirements.

Before the Audit Commission can even start work on a study which is designed to lead to the development of performance yardsticks, it must consult users about the impact of any comparisons which might occur if information were ever to be published in accordance with those yardsticks. What exactly would be the purpose of consultations? Is it intended that if the information could have had an undesirable impact, it would be suppressed? The word "impact" has been used by the noble Lord in the amendment; it is not a word I am using.

I cannot see what this undesirable impact is expected to be. If there is such an impact, is the noble Lord saying that we should suppress the information to avoid the impact? Whatever happened to freedom of information? If that is not what the noble Lord means, I return to the word "impact". What then is the purpose of the amendment? If it is simply to require consultations, then I have to say that first it is worded very oddly. Secondly, in so far as the matters mentioned in the amendment are relevant, consultation is already provided for in Clause 2(3). Again, it is a case of nannying the commission.

The amendment moves on from the requirement to make well intentioned statements of the service that bodies hope to deliver to a quite ridiculous level of guesswork about the future. This is an extraordinary amendment. It seeks to require the commissions to consult various interests about the impact of comparisons made on the basis of information which is to be provided in the future by relevant bodies in accordance with directions to be given about how to report the information. Those directions are based on studies and it is before those studies that the consultation is to take place about the impact of comparisons.

I am wholly confused by the wording of the amendment. Far from having to give explanations to the noble Lord, I wonder whether he will give explanations to the House as to its meaning.

Lord McIntosh of Haringey

My Lords, the Minister did not use the word "impact", and I did not use the word "desirable", so we are quits on that. She seems to think that the reference to Clause 2(3) provides adequately for consultation. I remind her or the House that Clause 2(3) provides quite properly that the Audit Commission should consult, such associations of relevant bodies and such other persons as it thinks fit". What the clause does not do is what the Audit Commission now realises. It does not recognise the necessity to consult users of services. Voluntary organisations are also users of services—more than that, they are also providers of services. The noble Baroness is surprised that we suggest that there should be consultation before a study is carried out. I carry out many studies on behalf of government and of private clients. I can assure the Minister that the most significant part of the study is not the reporting, it is the consultation, the exploratory work which is carried out in advance, before fieldwork is conducted. Unless the questions are right, the study will be worthless. The questions will not be right unless one has gone out into the field and found out the anxieties of people and the way in which they wish those anxieties to be expressed. That is the purpose of the consultation at a time before the study has been undertaken or promoted.

I do not believe that anything that is suggested in the amendment in any way restricts the ability of the Audit Commission to carry out a study. We wholeheartedly agree with carrying out studies of this kind. Nor does it restrict the ability of the Audit Commission or the Scottish Accounts Commission to act on the study. It makes sure that the study is as broadly based and effectively researched as possible before it is carried out.

Baroness Blatch

My Lords, perhaps I may speak with the leave of the House. I am grateful to the noble Lord for giving way. I need to make it clear that we are not requiring consultation before the study is undertaken. What is required is that there should be consultation before directions are issued. That is surely when the impact can be considered.

5.30 p.m.

Lord McIntosh of Haringey

My Lords, we are not proposing to remove the requirement that there should be consultation before the direction is issued. We seek to involve users and voluntary organisations at an earlier stage to improve the quality of the studies provided under Clause 3. I believe the two points are complementary rather than conflicting. However, the Minster may well have identified defects in the drafting of the amendment. I cannot perceive those defects at the moment. I think the intention is clear and that it is clearly expressed in the amendments. However, I shall read with care what the Minister has said. In the meantime, without prejudice to whether we return with this matter at a later stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 [Duty to consider auditor's report or recommendation]:

Baroness Hollis of Heigham moved Amendment No. 10:

Page 6, line 7, after ("above") insert:

("(aa) to any magistrates' court committee).

The noble Baroness said: My Lords, in moving Amendment No. 10, I wish to speak also to Amendments Nos. 11 and 12. Amendment No. 10 seeks to follow up the Government's undertaking to consider" extending the Audit Commission's remit in this area. That undertaking was given in Committee. At that stage I believe the Minister accepted it was difficult to see why magistrates' courts committees were treated differently to, for example, probation committees which fall within the value for money remit of the Audit Commission. Amendment No. 10 is a way of inviting the Minister to report progress made during discussions with the Home Secretary on extending the Audit Commission's remit in this area.

Amendment No. 11 picks up the same principle. It seeks to ensure that, where relevant, school or college governors see an auditor's reports that are submitted to a local authority. In Committee we raised this issue. Money that is spent by school or college governors under the local management of their organisations is public money and we felt it was appropriate that where an auditor's report reflected that expenditure, the governors should consider it. In response, the Minister said at the time that local management of schools instead allowed the chief finance officer of the local authority access to those institutions and that information. The Minister also said the governors were already answerable through annual reports for quality of service delivery and that the right way forward was to make the local authority answerable for these matters in open meetings. We entirely agree with the Minister on those matters. This modest amendment simply tries to ensure that a copy of the auditor's report goes to the school governors so they can take it into account. I hope the Minister can support the amendment.

Amendment No. 12 again refers to the auditor's reports and how they are addressed by bodies that are affected by them. The Bill, as constituted, proposes that the auditor's reports be discussed in full council. However, the 1944 Education Act and the 1970 Local Authority Social Services Act respectively require that in the case of education committees and social services committees the full council should not discuss items affecting; those committees without having first consulted the relevant committee. In other words, any matter affecting those committees should first be discussed with those committees. There are many highly sensitive matters that may affect both those committees such as child abuse, welfare reports and reports on nursing homes. The latter reports affect social services. Detailed consideration of sensitive matters such as school reorganisation may take place. Therefore it is right and proper that those matters should receive careful and prior consideration by the committees involved.

As regards Amendment No. 12, I have two questions for the Minister. First, is this Bill's requirement that the full council should discuss the auditor's reports in addition to existing committee responsibilities on education and social services, or is it in place of them? In other words, does the Bill add to or override the existing formal structures? Secondly, as these matters are either confidential, quasi-confidential—I am sure everyone would accept that—sensitive, delicate or technical, and therefore should clearly be considered by a committee, would it not be sensible to allow the appropriate committee, rather than the council as a whole, to receive and to respond to the auditor's reports? In this regard I think of the example of a housing committee considering improvement grants. That is a sensitive matter.

I hope the Minister will clarify that point. We believe we are speaking to the spirit of the Minister's response in Committee. We hope to extend in appropriate and proper ways the information that the auditor's report generates and have that discussed in the proper fora whether those be magistrates' courts committees or the committees of a local authority. I beg to move.

Earl Howe

My Lords, I shall respond to Amendment No. 10 first. On 2nd December the noble Baroness, Lady Hollis, moved an amendment that would have brought magistrates' courts committees within the scope of Clause 5. This was withdrawn by the noble Baroness on the understanding that we would consider the possibility of a government amendment on the general issue of extending the Audit Commission's responsibilities to include magistrates' courts committees. We have carefully considered the issue but in doing so it has become clear that this would not be consistent with the thrust of this Bill. That is not just an excuse for the Government to do nothing.

Bringing magistrates' courts committees within the scope of Clause 5 is not as simple as it might sound. The existing powers of the Audit Commission in relation to local authorities could not be applied simply as they stand to magistrates' courts committees. It would be necessary to take account of the different status of magistrates as members of committees compared with members of local authorities and other public bodies which are subject to audit by the Audit Commission. In some areas there is a different division of responsibility from area to area between magistrates' courts committee staff and those employed by the paying authority which may affect the situation. The question of whether existing provisions relating to public access, accounts regulations and consultation could be extended to magistrates' courts committees, or would require modification, would have to be considered.

I will not elaborate further on these or other such matters now, because they are complex and not strictly relevant to the Bill now under discussion, but I hope noble Lords will accept that the matter is not as straightforward as it might appear. I am sorry that our conclusion is that it will not be possible to take this matter further at present. I have drawn the question of whether the Audit Commission should be given a role to play in relation to the magistrates' courts service to the attention of my right honourable friend the Home Secretary and we have this point firmly lodged. I can assure the House that now the extension of the Audit Commission's role to magistrates' courts committees has been raised, this is something that the Home Secretary will keep under review.

Baroness Hollis of Heigham

My Lords, I am grateful to the noble Earl for giving way. I hope he can take us one stage further in the discussion. Is he willing formally to ensure that magistrates' courts committees receive the auditor's reports, given that magistrates' courts are funded in part by local authority money?

Earl Howe

My Lords, I am not in a position to give an undertaking of that kind at the moment. I repeat, however, that we are in sympathy with the idea behind the amendment. I shall write to the noble Baroness on this matter.

I shall now deal with Amendment No. 11. This would introduce a requirement for auditors to send copies of their reports and recommendations, where it referred to a school or college, to the governing body concerned. I shall explain why we feel this is an unnecessary measure. To begin with, action arising from an auditor's report or recommendation will remain a matter for the local authority. The authority is of course able to forward a copy of the report to the governing body if it thinks it appropriate to do so. Indeed it is inconceivable that a local authority would not inform the school's governing body where an auditor criticised the management of a school. Not only that, where an auditor has prepared a report or recommendation which needs to be brought to the attention of the governors of a school or college, he can be relied upon to copy it to them. It is certainly not necessary to introduce a statutory requirement for him to do so, no matter how insignificant the reference might be. This is another case of proposing legislation to require an auditor to do something which he would be doing in any case.

Governing bodies frequently complain at the amount of paperwork they receive and make pleas for it to be reduced. It has to be borne in mind that governors are volunteers, many of whom have a limited amount of time at their disposal. We must do all we can to reduce not increase the amount of paper they receive. The amendment would require every auditor's report or recommendation which made any reference to a school or college to be copied to the governors concerned. That is clearly unnecessary.

Amendment No. 12 is, I believe, with great respect to the noble Baroness, misconceived. The provision referred to in the Education Act 1944 ensures that before an authority exercises any of its education functions it must first consider a report from its education committee. Similarly, Section 3 of the Local Authority Social Services Act 1970 is concerned with the matters which should be dealt with by a social services committee. That has nothing to do with Clause 5(7) of the Bill, which is designed merely to make it clear that the whole of Clause 5 does not override provisions in any other legislation in so far as they relate to auditors' reports or recommendations. Any obligations presently contained in the Education Act or the social services Act must be complied with. The Bill does not affect those obligations or reduce them.

For the reasons I have given I hope that the noble Baroness will see fit to withdraw the amendment.

Baroness Hollis of Heigham

My Lords, in relation to Amendment No. 10 I can do no other than to accept that the Minister acknowledges the significance or thrust of the amendment. If there is a more useful way of ensuring that public moneys are properly considered and scrutinised by the bodies spending them I am sure that we can mutually find a way forward, either at Third Reading or in another place.

I should like to read in Hansard what the Minister had to say on Amendment No. 12 to see whether we share the same interpretation of the legislation. The noble Earl may well be right.

I should like to return to what I considered a rather flabby response to Amendment No. 11, which relates to school governors. The Minister spoke of governors being volunteers and being snowed under by paperwork—and not having the energy, intellect, understanding, interest or commitment to take on board an auditor's report which affects how they spend money. Such is the Minister's view of the impoverished quality of school governors. Yet at the same time they are to be endowed with the rights, duties and responsibilities of locally maintained status. Which view does the Minister hold: that they are competent to run schools, including very large budgets, sometimes of over £1 million, with 70 teachers and 1,000 children; or that they are so amateur that it is unreasonable to expect them to read an auditor's report which just happens to explore their competence and matters affecting the local authority's competence to run the financial affairs within which their school operates? Perhaps the Minister would care to indicate which view of governors he holds.

Earl Howe

My Lords, with the leave of the House, perhaps I may say, with respect, that the noble Baroness wilfully misrepresented what I said. I did not cast any aspersions on the competence of school governors. I said that one would not be doing school governors a favour if one required them to receive a thick dossier of paper to wade through every time their school was mentioned in a report, however insignificant the reference. Of course, if the report refers to matters of real relevance to their school they should receive that report. However, I see no need to place an obligation to that effect on the face of the Bill. It happens anyway and it is right that it should happen, but it need not happen every time the school is mentioned in some report or other.

Baroness Hollis of Heigham

My Lords, is the Minister saying that it will happen, that it does not need to happen or that it ought not to happen?

Earl Howe

My Lords, it is good practice that it does happen. It should happen in that sense but I see no need for that stipulation to be included on the face of the Bill.

Baroness Hollis of Heigham

My Lords, then is the Minister saying that school governors who are spending substantial sums of public money should not receive, as of right, even an edited version of auditors' comments on the financial arrangements affecting their school?

Earl Howe

My Lords, I can add nothing more to what I have already said. Where it is appropriate the governors receive such reports and should receive them.

Baroness Hollis of Heigham

My Lords, in that case why will the Minister not join with us in ensuring that they receive them?

Earl Howe

My Lords, because the amendment refers to: any report or recommendation which refers to any school or college of further education". That is a very broad statement. The noble Baroness knows full well that reports can include references to a school which are of no pith or moment whatever. It is bombardment with such papers that we seek to avoid.

Baroness Hollis of Heigham

My Lords, I do not want to delay the House, but I find that a singularly unpersuasive response to the amendment. However, if the Minister shares our view that reports of relevance affecting a school should be incorporated on the face of the Bill perhaps we may return to the matter at Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 11 and 12 not moved.]

5.45 p.m.

Baroness Hamwee moved Amendment No. 13:

Before Clause 8, insert the following new clause:

(" Effect of competition on architectural services

.—(1) No order shall be made under section 2(3) of the 1988 Act by virtue of which work falling within a defined activity for the purposes of Part I of that Act includes the provision of architectural services.

(2) Before making any order under section 2(3) of the 1988 Act the Secretary of State shall consult such associations of local authorities, and such other persons as appear to him to be concerned with respect to any effect on the quality of provision of architectural services by local authorities of any such order.").

The noble Baroness said: My Lords, Amendment No. 13 is the first of a clutch—although perhaps "clutch" suggests too small a number—of amendments which are designed to remove a wide range of services from the threat of compulsory competitive tendering. I use the word "threat" advisedly. The number and range of services which are the subject of the amendments show the level of anxiety among many Members of this House concerning the damage that would be caused should compulsory competitive tendering be extended to that list of services. We in the Liberal Democrats believe that competition can be very useful and healthy and that on occasions it can be appropriate. It is the compulsion which we find distasteful.

In speaking to Amendment No. 13 I shall speak also to Amendment No. 14, relating to architectural advice and to Amendments Nos. 27, 39 and 40 dealing with engineering, the preparation of feasibility studies and project management. I know that other noble Lords will spend longer on those topics than I shall. I shall refer in particular to the question of architectural services.

It is significant that the architects' own professional organisation, which looks after the interests of both public and private sector architects, is anxious that architectural services might become the subject of CCT. One might think that that professional organisation would approve of extending the possibility of work in this area to those in the private sector. However, the RIBA is prominent among those who have drawn attention to the problems which might arise.

It has already been said in the context of the Bill that value for money is not determined by cost alone. Value for money is not just a matter for those of us who do our weekly shopping in the supermarket; it applies to many areas. It certainly applies to architecture. We have also spent a good deal of time on the subject of quality and we shall do so again with these amendments. The importance of quality has been rightly recognised by the Government. There are outstanding examples of architecture which are the result of the Government choosing architects on the basis of quality rather than cost. There are two such buildings very near to where we are now: Richmond House is one of the newest examples. The courts at Truro are another example. Why should local authorities be subject to a regime which central Government do not choose for themselves?

The White Paper Competing for Quality considers that an initial quality threshold for architectural services might be appropriate. Some might say that that concedes the principle which is at stake. It has also been said before and it does no harm to repeat it that at issue here are professional fees which in relation to the cost of a new building represent a very small proportion of the whole. Even on the narrow basis of what is most cost-efficient in terms of initial outlay, what could be saved would therefore be relatively little. Measured against the risks to the built environment from decisions being taken because cost is the prime factor, while not suggesting that the public purse should be squandered, I am sure that many people would think that the criteria applied were wide of the mark.

It is not just the Government who do not apply tendering to architectural services. Major private sector commercial organisations do not use competitive tendering. Like many local authorities, they have in-house architects' departments which help to commission the best architects for the job. It would be sad if we denied local authorities the opportunity to act as clients in the same way as everyone else in the world acts as clients—in going out and choosing their own professionals. Private sector developers are moving in the opposite direction. They are prepared to commission architects to design better buildings. Again, not just for aesthetic reasons but for reasons of cost, better buildings will let at higher rents, they will satisfy people better, they will have a longer life and they are likely to be more energy-efficient and, over the longer term, to create savings.

The question of choice comes into the debate here. Many of our good public buildings have been built as a result of design competitions. Again, it would be sad if provisions were introduced that would restrict or outlaw competitions which encourage innovation and which allow choice. The Government rightly support schemes that assist the introduction of art in public buildings—the Per Cent for Art scheme and the DoE scheme which is administered by the RSA for art for new buildings. That too supports the argument that the bare minimum or the cheapest is not enough for buildings.

What are we most aware of when we think of our heritage? On a day-to-day basis, it is our built environment. Do the Government want to be known as a Government who allow creativity to flourish? I hope that they do and that they do not want to be known as the promoter of the ordinary. I beg to move.

Baroness Hollis of Heigham

My Lords, I should like to second Amendment No. 13 and speak to Amendments Nos. 14, 27 (on civil engineering), 39 (on feasibility studies) and 40 (on the management of construction projects).

Perhaps I may start with some general points before, like the noble Baroness, Lady Hamwee, speaking particularly to architecture. The first feature that all the services have in common—this is the basis of our argument that they should not go out to CCT even under the existing 1988 legislation—is that, where appropriate, local authorities already use private firms. For example, in structural engineering, about 10 per cent. of such services already go out to private firms. That includes structural engineers and heating engineers in my authorities. It is precisely those areas in which modest-sized local authorities cannot reasonably be expected to have in-house expertise, so they go out, not for cheapness, but to acquire expertise. Engineering is an obvious example. When we come to the question of law, seeking counsel's opinion will be another such example. They go out in order to enrich the quality of their expertise, not for reasons of cheapness.

Secondly, local authorities almost never go out on grounds of financial savings. As the noble Baroness, Lady Hamwee, rightly said, the hourly rates for those professional services are invariably higher, between a third and sometimes a half as high again as local authority rates. Furthermore, private firms which are not particularly specialist may require extensive briefing and supervision by in-house staff, an expense that is often not easily costed. I remember as a housing chair having to train up a number of private architects as regards the fine print of housing cost yardsticks in order that they, as private architects, might build houses for the local authority. That was expensive in staff and committee time. Equally, when you go out, you also lack the ability, unless you pay a heavy price, to have the informal telephone call and the ad hoc contact to discuss the minor works. Therefore, not only do private firms cost you more by hourly rates, but they fail to give you much of that value for money which is part of the on-going running of a professional service.

Thirdly, by going out by CCT as opposed to going out voluntarily, there may be real damage to the corporate policy that the local authority wishes to advocate because those services—architecture, engineering and the like—are intricately connected not only with each other, but with other services such as planning, housing, building control and law. For example, a road building scheme will involve traffic and highway engineers, planning authorities, the housing manager and the environmental health officer. It may well also involve the legal officers and the property estates officer. Clearly, that concept of corporate management is damaged when parts of the services are arbitrarily hived off to a private firm that has no on-going, day-to-day contact with the array of local authority services that underpin a corporate approach.

Finally, the public are inconvenienced. They are not sure who is responsible for delivery, whether it is the local authority as client or the local authority trying to gee up the contractor on their behalf, if I may put it that way. Many of those schemes—for example, road widening involving traffic engineers or a major modernisation scheme involving an architect—require constant accessibility to the public who are worried about the implications for the properties in which they live. That accessibility is by definition damaged when you rely on private firms.

I wish now to move on to Amendments Nos. 13 and 14 concerning architectural services. The consultation paper accepts that the architects' services have a pivotal role to play in the development and management of local authorities' capital programmes, a core service which it may not be appropriate to expose to CCT. It suggests some of the other items that may go out to tender. As I emphasised, first, local authorities already employ private architects where appropriate. Secondly, most architects' departments run practice accounts. Thirdly, architects' departments have real experience and know that it does not save money. However, there is a further issue that architects share in common with engineers and the like and I know that the Minister shares this concern. It is the question of the quality of the built environment.

In the case of many professional services, if a mistake has been made, it can be remedied. For example, if a housing estate has become run down or if it is too large, you may open a local office and seek to reverse that trend. The local authority may change its library stock or its peripatetic library routes. A school may abandon or reinstate streaming. A picture may be turned to a wall. However, in architecture, not just the architect but all of us have to live with that work for ever. In architecture almost more than any other profession, none of us, least of all the architect, can afford mistakes. We need well-managed buildings, sympathetic to the streetscape, indicative of the local sense of place, functional to the present purpose, yet which may lend themselves to purposes not yet considered and which enhance our built environment. CCT, with its emphasis on cheapness, is the deepest folly.

If we look around, there are, as the noble Baroness, Lady Hamwee, said, plenty of good buildings built under private patronage. I can think of the Sainsbury Centre at UEA; plenty of splendid buildings that resulted from architectural competitions where cost was only a subsidiary consideration; plenty of sensitive buildings that resulted from negotiated fee structures; plenty of attractive and humane buildings provided by in-house local authority departments, such as Hampshire schools and Norwich council housing. Can the Minister name me five good buildings that have resulted from competitive tendering? I do not mean distinguished buildings that she might wish to open, or outstanding buildings that she might wish to list in the future—just good buildings. I cannot think of any. If she cannot, I suggest that the Government should be wary of temporary, ideological obsessions warping our built heritage. If CCT in the field of architecture and related services does not generate cost savings—as clearly it does not—and if it threatens quality and blurs accountability, I hope that the Minister will concede that the argument has been won on this side of the House. I beg to move.

6 p.m.

Lord Howie of Troon

My Lords, I had intended to put my name to all five amendments but I see from the Marshalled List that I neglected to do so for Amendment No. 14. However, I support all five. During the Second Reading of the Bill I drew the attention of the House to the example of a building in Canada which suffered collapse about three years ago, luckily without any loss of life. In the inquiry which followed, the collapse was described as having been caused by inadequate design which was the direct result of price cutting under a regime of fee competition. The inquiry by the Government of British Columbia eventually decided that the minimum fee should be 6 per cent., which was rather more than the price cutting, successful engineers had achieved.

I remind the House of that example to illustrate the dangers of price cutting and to ask whether it could happen here. It could happen here and does already happen here. Fee competition already exists to some extent among local authorities, although it is not compulsory.

A letter sent to me the other day by a consulting engineer refers to a local council choosing by rigorous fee competition a checking engineer some two years ago from a list of six names. The engineer says: It [fee competition] is used by Local Authorities for the appointment of 'period contracts' Checking Engineers and some ridiculous rates are being quoted. £12/hour for a C.Eng."— that is a fully qualified professional engineer— hardly covers his salary let alone Employers National Insurance, contribution to rent, rates, Professional Indemnity and secretarial staff. A recent fee tender for a £3.5m public building scheme attracted bids ranging from 0.7% to about 1.4%". One should consider that against the 6 per cent. which the Government of British Columbia decided should be the minimum. I remind the Minister that 0.7 per cent. of £3.5 million is rather less than £25,000 and 1.4 per cent. would represent rather less than £50,000. One cannot obtain good quality work at that kind of price. One cannot have the kind of work which my noble friend Lady Hollis asked for a moment ago for a £25,000 consultant's fee. It is totally out of the question. That is a real example and not an imaginary one. It shows where fee competition can lead us.

During the Committee stage of the Bill I asked the Minister whether there would be a competition for the brief which led to the competition for the fee. He undertook to write to me and has done so. I am grateful for his letter which I found extremely interesting. I expected him to reply that the cost of the brief would be small and therefore would fall below some arbitrary cost threshold so that fee competition would not arise. Surprisingly his reply did not say that. It said that the sort of technical brief which I had in mind could in fact come under competition. It added: The detail, however, has yet to be decided". That tempts me to ask the Minister a further question. What about the competition for the brief before the fee competition itself is reached? Is there a situation rather like that seen in the Russian dolls that we bring back from holiday, with Mr. Yeltsin on the outside and inside a number of former Soviet leaders, diminishing in size, until there is a very small Lenin in the middle? I imagine that the answer to my question must be no. There must come a time when the fee competition comes to a stop. I suspect that the right answer was in the letter which I did not receive.

To pick up the points raised by my noble friend Lady Hollis about continuity, it must be remembered that, whereas capital projects are one-off items and require little, if any, pre-knowledge of an authority or its area, the service maintenance work, particularly in matters such as traffic engineering, require detailed local knowledge of installations and layouts and an on-going involvement in such matters on site and in the locality. Discontinuity of personnel would certainly follow if there were a series of fee competitions with different consultants appointed from time to time. That would surely be counter-productive. Quite honestly, the idea of three-year or four-year contracts for work of that nature with no continuity of personnel would be absurd. I agree very strongly with my noble friend in that respect.

I turn now to the amendments themselves. I should like some clarification from the noble Baroness, Lady Hamwee, about the term "such other persons" in line 3 of subsection (2) in Amendment No. 14. I take "such other persons" to include the professional institutions. I would not describe them as "other persons". I should prefer them to be described as professional institutions. I have in mind in particular such bodies as the Institution of Civil Engineers, the Institution of Mechanical Engineers, the Institution of Electrical Engineers, the Institution of Structural Engineers, the RIBA and, probably most important of all, the Association of Municipal Engineers, which is right at the heart of this matter. If any body is to be consulted, it should be that one.

Lastly, once or twice today value for money has been mentioned. In this area value for money should be the aim of the Government rather than cheapness. I am not at all against competition in this field, but it must be competition based upon the value of the work—the quality of the work that is being offered. That must be the criterion on which the consultant is chosen and not the lowness of the fee. Competition on quality is how to get value for money. The Government can forget entirely their fee tendering propositions.

Baroness Carnegy of Lour

My Lords, before my noble friend replies perhaps I may say that I believe that on this matter there is a good deal of misunderstanding. When the Bill reached Committee stage I initially had problems with it. I was anxious about legal services. I discussed the matter with my noble friend Lady Blatch, who wrote to me and explained that there were core services which definitely must be excluded in order for the local authority to work.

A couple of weeks ago I was at a gathering attended by several hundred Scottish architects. The subject which they met to discuss was the quality of what is referred to as the built environment and the problems that arose in improving matters. They realised the value of a presence when the Bill was under discussion and a number of them came to talk to me about it. I found that their great concern was the same as that of the noble Lord, Lord Howie. They felt that it was very difficult to, as they called it, tender for quality. That was their problem: they felt that in order to obtain a job with a local authority they would have to price themselves out of quality and they were not prepared to do that. We continued to talk about it; I understood their problem.

The noble Baroness, Lady Hollis, speaks with deep knowledge of local authority work and of the problems of getting a good built environment through local authority work. I missed the first two minutes of the speech of the noble Baroness, Lady Hamwee; I apologise to her. However, having listened to her, it seems unlikely that architects will obtain any work from local authorities unless the Bill is enacted. The noble Baroness, Lady Hollis, said that only local authority architects can get it right. She and I live in different parts of the country. We may have greater problems in Scotland, but I do not believe that most people in Scotland regard the success of local authority architects as all that great when looking at the built environment. Many architects would like to take part but do not have a chance to do so. The Bill is about obtaining all the talent available for local authorities.

Having read the Bill and the supporting material, I do not believe that local authorities are unable to obtain quality through tendering. It is simply a matter of getting the specification right, bringing other people in, considering what they wish to do and deciding where value for money lies. The noble Lord, Lord Howie of Troon, referred to that aspect.

I hope that the amendments will not be passed if there is a Division. I believe that local architects will have no chance of working for many local authorities unless we have a measure such as the Bill provides.

Lord Howie of Troon

My Lords, before the noble Baroness sits down perhaps I may point out that competition for quality is the norm. It has been going on for a long time, ever since the roles of consulting engineers and architects were invented. The quality is demonstrable in the track record of the tenderer. It is also enshrined in the body of people the tenderer says will be doing the work. The architect or engineer gives a list of qualified persons who will be engaged in the work. Because of their quality, experience and so on, those persons define the quality that will be achieved. There is also the factor called quality assurance.

Baroness Carnegy of Lour

My Lords, I had not quite finished. Of course I realise that the noble Lord has been involved in relation to local government work as I was myself some time ago. However, in a number of areas of Scotland the feeling in local authorities is much as the noble Baroness, Lady Hollis, expressed. I believe that there is not much chance for architects if such a feeling is overwhelming.

Baroness Blatch

My Lords, I absolutely agree with my noble friend Lady Carnegy of Lour when she says that there is a good deal of misunderstanding about the issue. The noble Baroness, Lady Hollis, asked some direct questions. She asked me whether I could name buildings that had been built as a result of competitive tendering. I have seen many up and down the country. Many of the development corporations—indeed one on which I served for many years in Peterborough—used the competitive tendering process. Some fine buildings were preserved—she would be pleased to support that aspect—and good, listed buildings were preserved and refurbished as a result of competitive tendering. Indeed new buildings have been built also.

Perhaps I may give her an example of direct labour designing a poor building. I refer to 2 Marsham Street. Need I say more? It speaks volumes. There are good, bad and indifferent categories in direct labour forces, as indeed there are in the private sector. What is absolutely essential and an absolutely key factor so far as concerns this debate is that it is local authorities which have to learn the new skill: that is, to know what they want, properly to specify it and to make sure that they have an effective and efficient service. If it is a building that they wish to have built, it is important that they select on the basis of cost-effectiveness and operational effectiveness.

6.15 p.m.

Baroness Hollis of Heigham

My Lords, how do those words apply to quality when one speaks of architecture?

Baroness Blatch

My Lords, it is for local authorities to make judgments about quality. We have had a long debate. The noble Baroness will know that for the moment she has tied the Secretary of State's hands to deal specifically, sensitively and sensibly with quality when it relates to professional services. However, as the noble Baroness knows, temporarily Members opposite have won a reprieve from allowing the Secretary of State to behave in that way. I can say without hesitation that the Government are still fully committed to the extension of CCT, and that the power for the Government to extend CCT is entirely intact—even accepting the successful pressing of the amendment by the noble Baroness opposite and her colleagues. The flexibility that the Secretary of State requires will indeed be addressed before the Bill has completed its progress through both Houses.

The noble Baroness, Lady Hollis, also said that no local authority ever opts for architectural services for reasons of economy. It is precisely for that reason that many local authorities do not have large architectural departments. To have a large architectural department within the local authority has become an expensive option. Therefore by buying in services—very often when the particular service may be more expensive—the cost to the local authority over time is infinitely less expensive. Much has been said by the noble Baroness, Lady Hamwee, about cheapness and about disregarding quality. I have spent a great deal of my time at this Dispatch Box arguing for the Secretary of State to have the ability and flexibility to ensure that quality is a constituent part of making a judgment about professional services. It goes without saying that in any legislation that has been enacted to date no local authority is bound to take the lowest tender. What is important when it does not take the lowest tender is that it gives a full explanation to its local community as to why it did not.

My noble friend Lady Carnegy again referred to the issue of quality. It is almost as though the only way in which one can protect and safeguard the built environment in some way is by having a direct labour workforce operating. Again it is for the local authority to have a view about the quality of buildings that it wants and about the quality of design of building. It is for the local authority to specify that and to make sure that such requirements are secured whether from the DSO or from the private sector.

Perhaps I may clarify another point to the noble Baronesses, Lady Hamwee and Lady Hollis. The competitive tendering procedures apply only when there is an in-house workforce. In other words, if there is an in-house workforce it goes out to competition but if there is no in-house workforce then it is up to the local authority to choose its own way of architectural services. For example, that could be by means of a design competition, which is a popular way to secure a design, or through choosing a preferred private architect.

The noble Lord, Lord Howie, was anxious about competition leading to price cutting, which he said leads to dangerous buildings. I cannot understand why that should be so. The suggestion that CCT will mean an epidemic—

Lord Howie of Troon

My Lords, I thought that I had given an example from Canada which demonstrated my point fairly convincingly. Perhaps I did not explain the issue clearly enough.

Baroness Blatch

My Lords, the noble Lord explained the issue very clearly. However, 2 Marsham Street is not the best example of a very good building; it was built by direct labour force. The noble Lord, Lord Howie of Troon, inferred that the appointment of private architects under the competitive tendering rules will somehow lead to poor and shoddy buildings.

Lord Howie of Troon

My Lords, obviously I was far from clear in my explanation. I hold no brief for 2 Marsham Street, outside or inside, and I never mentioned the building. I was not talking about direct labour. I do not believe that these things have to be done by direct labour. What I said, and it was a simple point to understand, was that if fee competition were the major criterion on which a consultant was chosen, it could lead to price cutting and inevitably price cutting would lead to shoddy work. That was all that I said. I said nothing about direct labour.

Baroness Blatch

My Lords, I believe that I have given an adequate explanation of why such action need not necessarily lead to price cutting. It is for local authorities to make judgments about price and quality. However, they must make sure that the information about how and what they choose is in the public arena.

The principle of extension of the CCT regime to further local government activities through subordinate legislation was accepted when the 1988 Act was passed. These amendments do not address that principle. Noble Lords opposite could do so if they wished by seeking to repeal the sections of the 1988 Act which enable the extension of CCT. The amendments simply place restrictions on its operation in practice. Many of them prevent the Secretary of State from extending CCT to the very services for which a case for competition has been set out in our consultation paper. We believe that CCT has proved its worth in the services in which it operates. It would be quite wrong now, after CCT's success in the manual services, to remove from the Secretary of State the right to extend it, subject to the safeguards of the 1988 Act.

Section 15(1) of the 1988 Act provides that any order made under Section 2(3) by the Secretary of State is subject to affirmative resolution of each House of Parliament. That means that Parliament has the opportunity to consider, and if so minded to reject, any proposed addition to the list of defined activities. Moreover, the Secretary of State is obliged by the Act to consult on the details of any proposed extension with representatives of local government before bringing an order before Parliament.

If there are particular concerns relating to particular local authority activities they should be expressed now in response to the current consultation paper. That paper sets out the Government's proposals clearly and we shall be considering carefully the responses that we receive. In subsequently bringing forward any proposal to extend CCT to any individual activity, we shall carry out further consultation on the details of the order which the Secretary of State would need to make in each case under Section 2(3) of the 1988 Act before placing such an order before Parliament. That would provide a further opportunity to voice any anxieties about individual services. We should undertake a similar exercise if an order under Clause 8 were in prospect. Existing legislation allows this House and another place the opportunity for detailed discussion of individual activities.

Finally, I wish to reiterate the point that the requirement for the detailed procedures under CCT legislation applies only where the local authority intends to use its own workforce on a defined activity. Where an authority intends to put work out to a private supplier, as would be the case in much architectural work, for example, the detailed requirements of CCT legislation do not bite.

By virtue of subsection (2) the amendments tabled would also have the effect of obliging the Secretary of State to consult with the local authority associations and such other persons as appeared to him to be concerned on the effect which any extension of CCT would have on the service. It would require detailed consultation with, in this case, architects' interests on an order adding some other activity to the list of those subject to CCT, presumably to prevent any hidden or unforeseen effect on the quality of architecture. Given that the first part of each amendment would already have removed the service in question from the scope of any such extension this seems to me to be an unnecessary refinement.

The noble Baroness, Lady Hamwee, referred to the RIBA's anxiety which we have noted. My officials have met with its president and have noted the anxieties at first hand. I believe that my officials were able to allay some of the fears. In particular, my officials made it clear that CCT will operate only if an authority's in-house workforce is involved.

Restricting the application of the power in Section 2(3) of the 1988 Act is wholly inappropriate given the separate parliamentary scrutiny which would have to take place before any use of that power. I hope, therefore, that with that explanation and clarification of some of the misunderstandings about quality, cost, control and the power that local authorities have as regards securing services for themselves, the amendment can be withdrawn.

Baroness Hamwee

My Lords, I thank the Minister for that long reply. The noble Lord, Lord Howie of Troon, asked what was meant by "persons". He suggested that they should be the professional institutions. I understand that in this context a person is a legal entity. Institutions include people and they are persons. There is nothing of substance that divides us.

It was important and appropriate to have had the debate. I suggest that not only misunderstandings but real fears exist among those both inside and outside the profession about services of this type. I was glad to hear the Minister say that representatives of the RIBA have had some of their fears allayed. However, she used the word "some". I have no doubt that on another occasion we must consider the fears that were not allayed.

The Minister said that it is for local authorities to learn the new skill, to know what they want and properly to specify it for cost effectiveness and operational effectiveness. I do not argue with that comment; I argue with the element of compulsion. I do not argue that there should always and only be a direct labour organisation; I argue with the dogma that is inherent in the whole extension of compulsory competitive tendering to services which are so fundamental to the quality of life in this country.

The subject has been well aired and will continue to be aired through the consultation that is taking place. I do not apologise to the House for having taken time to discuss the issue because it was right to do so. However, it is also right to await the results of the consultation. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 14 not moved.]

Baroness Hollis of Heigham moved Amendment No. 15:

Before Clause 8, insert the following new clause:

("Effect of competition on home-to-school transport

.—(1) No order shall be made under section 2(3) of the 1988 Act by virtue of which work falling within a defined activity for the purposes of Part I of that Act includes the provision of home-to-school transport services.

(2) Before making any order under section 2(3) of the 1988 Act the Secretary of State shall consult such associations of local authorities, and such other persons as appear to him to be concerned with respect to any effect on the quality of provision of home-to-school transport services by local authorities of any such order.").

The noble Baroness said: My Lords, in 1971 approximately 70 per cent. of seven year-olds went to school unaccompanied. In 1990 the figure was less than 7 per cent. In other words, the company of a trusted adult had become essential. That is the issue behind the amendment on home-to-school transport and the request of your Lordships to exclude that from the 1988 Act.

The Education Act 1944 required local authorities to provide school transport where journeys were above a certain distance or where they were unsafe. That provision affects approximately 900,000 children and accounts for about 2 per cent. of the budget of local education authorities. Without such a provision it is clear that there will be severe limitation on parental choice. It will be confined to the nearest school, particularly in rural areas given the decline in public transport or for denominational schools where children are dependent on transport. Secondly, there will be increased use of the parental car, which we already see. That generates congestion. It has been estimated that school car journeys add something like 30 per cent. to peak morning traffic hour movements. Therefore, this is not a small matter. Equally, that accounts for something like a quarter of all accidents to children under the age of 16. Therefore, young children, on grounds of safety, secondary school children, given the distances involved, and children with special needs—a category to which I wish to return—all need access to local authority-provided school transport.

As the recent Audit Commission report urges, home-to-school transport needs to be expanded. It needs to be reliable, inexpensive and, above all, safe. Have local authorities met that need under the Education Act 1944? First, about half of all children using home-to-school transport travel in contract vehicles. It is clear that where the local authority thinks it appropriate it will use the private sector to meet that need. Secondly, 45 per cent. of children, mainly older children attending secondary schools and FE colleges, have help with fares through travel passes. Therefore, this amendment addresses the 5 per cent. of children using local education authority vehicles. I ask your Lordships to say that that 5 per cent. of children should not travel in vehicles exposed to CCT.

Why is that? It is clear that local authorities already use the private sector where it is unproblematic. They already use and subsidise public transport where it is unproblematic. Who uses the other 5 per cent? It may be used by those children in rural communities where there is little alternative competition but, above all, local authority vehicles are used by children with special needs who attend special schools. Eighty per cent. of special needs children need home-to-school transport. For example, in London that absorbs nearly three-quarters of the educational transport budget.

When we speak of special needs children we are talking about children with physical disabilities who may need first-aid or who may need to be lifted. Trained local authority drivers on secure and permanent contracts may remove the need for escorts. If private firms are used, almost invariably schools must provide escorts. Equally, the children may need specially adapted vehicles for their comfort, safety or health. Those are rare in the private sector. Mentally handicapped or disturbed children may exhibit bizarre behaviour; for example, as regards dressing or undressing in public or acting in physically or sexually provocative or abusive ways.

No local education authority will willingly spend more on transport than it needs to because it knows that the cost of transport will be at the expense of books, nursery education or the ratio of teachers. For 95 per cent. of children local authorities use private transport or make subsidies through travel passes and so on. For the remaining 5 per cent. that is not done because the local authorities know that considerations other than cost considerations apply; for example, considerations of child safety and the training of staff. Under CCT questions about staff cannot be asked. There is also the matter of criminal convictions which is important when dealing with disturbed young girls who, as I say, may use sexually provocative behaviour. Questions about that cannot be asked under CCT.

The Government—and in his absence I compliment the Minister in the Department of Transport as well as the Minister in the Home Office—accepted the force of that argument when on another occasion noble Lords on both sides of the House argued that minicabs should be licensed. Many minicabs are used for this purpose outside London. That was in order to ensure the safety of the users of those quasi-public vehicles. However, that provision does not apply to private coach operators and minibus drivers.

I repeat that local authorities already keep in-house barely 5 per cent. of home to school transport. That is done either because either it involves rural communities which need to be kept alive, to avoid split villages and to protect denominational schools or, alternatively, to protect the very vulnerable handicapped children with special needs. To force such services out to CCT on the grounds that that will be cheaper may endanger children's safety, health and well-being. I beg to move.

6.30 p.m.

Baroness Blatch

My Lords, the Secretary of State will consider the importance and extent of competitive tendering both for professional and technical services. He intends also to have flexibility to ensure that in appropriate cases quality—and I know that this is a point about which the noble Lord, Lord Howie of Troon, is anxious—can be considered separately from cost so that it is established separately from cost. In some cases it is appropriate that those matters should be dealt with together and in others it is appropriate that they should be dealt with separately. Moreover, both Houses of Parliament must give their approval to the exercise of the Secretary of State's power to extend CCT. All the anxieties of the noble Baroness will be considered at that time. For those reasons I ask the House to reject this amendment and all amendments up to Amendment No. 48.

Baroness Hollis of Heigham

My Lords, I am sorry but I fail to understand the Minister's response. I can see that in certain areas there may well be ideological differences which divide the House as to which services are appropriate for CCT. The case which I put forward applies to only 5 per cent. of children who need home-to-school transport. They are the most vulnerable children for which the education authorities ever care. Those children will not be protected under CCT provisions. Those arguments, on grounds of safety, were conceded by other members of Her Majesty's Government when dealing with minicabs. I believe that the Minister should have made the concession that that group of children should be excluded from CCT. Otherwise that transport will be brought in on the cheap and heaven help the safety of those children.

Baroness Blatch

My Lords, these amendments relate not only to this service but also to legal services, housing management, fire vehicles, libraries, electoral registration, personnel management, computing services, PR services, secretarial research services, parking services, property management, vehicle fleet management, trading standards, police vehicle maintenance and so on. The principal point which I wish to make is that the particular circumstances surrounding each of those services will be considered in their entirety. I do not intend to go into detail because this will be a matter, first, for consultation and, secondly, for both Houses to consider at the appropriate time.

The Viscount of Oxfuird

My Lords, does my noble friend agree with me that the simple process of tendering requires a specification? If there is to be a specification, it should accommodate 1 per cent., 2 per cent., 5 per cent. or 20 per cent. of those involved. Surely it is for the local authorities to establish a proper quality specification in the first place.

Baroness Hollis of Heigham

My Lords, that was a helpful comment. I should like to use it to lead on to ask the Minister a direct question. Is the noble Baroness saying that the quality envelope will be applied when we consider this service? Home-to-school transport is not a professional service. The consultative paper does not mention that the quality threshold will apply. This matter comes under the 1988 Act which so far only takes into account cheapness. If the noble Baroness is saying that the quality threshold applies, she is effectively accepting the amendment.

Baroness Faithfull

My Lords, I ask the noble Baroness whether her information is based on fact. I ask her to give figures for the number of children who have suffered injury because I was responsible for arranging much of this work. People were chosen extremely carefully and I do not believe that at any time there were any accidents.

Baroness Hollis of Heigham

My Lords, yes. The information I gave comes from detailed research. Like the noble Baroness, I share an interest in the question of safety of vehicles used for public purposes. At the moment around 900,000 children have access to school transport under the 1944 Act, of which 5 per cent.—in other words, 45,000 to 47,000—use home to school transport provided by local authorities. A substantial majority of those are children with special needs whose safety, in my view, will remain unprotected unless the Minister assures us that there will be a quality threshold as indicated previously by the noble Viscount.

Baroness Blatch

My Lords, my noble friend was indeed helpful with his intervention. The one matter that he addressed was quality. There is a serious misunderstanding in the debate that somehow, because the Secretary of State required flexibility, quality only applied to professional services. That is simply not true.

If the local authority wishes to specify a service—this applies to any service, whether school transport or any of the others on the long list of services in our possession—as my noble friend pointed out, it can also specify safety; safety of the vehicles; the competence of people driving those vehicles. It can specify anything it wishes in regard to that contract which then goes out for tender and which will be responded to by local companies.

With regard to the specific rather complicated business of quality thresholds required for professional services, the answer is no. But in regard to the detailed and real anxieties of the noble Baroness, to which my noble friend Lady Faithfull referred a moment ago, competent, efficient operators can be secured when the specification is being drawn up and, more importantly, when the contract is being let.

Lord McIntosh of Haringey

My Lords, before the Minister sits down, I believe that we are now coming to the heart of the matter. The Minister assures the House that under the 1988 Act there is adequate provision for quality to apply to all that part of compulsory competitive tendering which comes under that Act and not under this legislation. If that is so, why are the Government seeking to impose new and different rules for new services to be brought in under compulsory competitive tendering in the 1991 Act? If the provisions in the 1988 Act were adequate, then why are they not adequate now?

Baroness Blatch

My Lords, I shall soon need to be advised by the Clerk of the House. We are probably breaking many of the rules of Report stage. I rise once more with the leave of the House to say that quality is something that can be secured in the specification; in other words, when the specification is drawn up.

The noble Baroness, Lady Hollis, is aware of that. She has been involved in drawing up specifications for work. All I can say is that specifications should not be drawn up without reference to efficient and effective delivery of service which subsumes quality, as I said earlier. The only reason I made specific reference to flexibility is that in the case of professional and technical services, establishing quality is something that may need to be done separately. However, we are breaking many of the rules of the House at Report stage and I hope that the matter can be determined. If it has to be pressed, so be it.

Baroness Hollis of Heigham

My Lords, I thank the Minister for that reply. I am still unpersuaded by her response. Clearly much of the debate at Committee stage on the whole of compulsory competitive tendering was about the so-called level playing field. It was the fact that consideration after consideration that Members on our side pressed were about quality, whether of training, employment practices or whatever; it was quality, quality, quality. That was excluded by the Minister as being unfair to the private contractor; it was said that what should dominate is the question of price.

In those circumstances (this is in no sense a reflection on the Minister's integrity) and because I am not confident that only through specification can one achieve the quality one wants—because many of the amendments moved at Committee stage on our side were deemed to be uncompetitive by the Minister—I have no choice but to seek the opinion of the House.

6.44 p.m.

On Question, Whether the said amendment (No. 15) shall be agreed to?

Their Lordships divided: Contents, 49; Not-Contents, 90.

Division No. 4
CONTENTS
Beaumont of Whitley, L.	Kirkhill, L.
Birk, B.	Listowel, E.
Boston of Faversham, L.	Lockwood, B.
Bristol, Bp.	Macaulay of Bragar, L.
Buckmaster, V.	McIntosh of Haringey, L.
Clinton-Davis, L.	McNair, L.
Cocks of Hartcliffe, L.	Mallalieu, B.
David, B.	Molloy, L.
Dean of Beswick, L.	Morris of Castle Morris, L. [Teller.]
Desai, L.
Dormand of Easington, L.	Nicol, B.
Ewart-Biggs, B.	Peston, L.
Gallacher, L. [Teller.]	Pitt of Hampstead, L.
Galpern, L.	Prys-Davies, L.
Grey, E.	Richard, L.
Hampton, L.	Rochester, L.
Hamwee, B.	Sefton of Garston, L.
Hilton of Eggardon, B.	Shackleton, L.
Hollis of Heigham, B.	Stoddart of Swindon, L.
Howie of Troon, L.	Taylor of Blackburn, L.
Jay, L.	Taylor of Gryfe, L.
Jeger, B.	Underhill, L.
Jenkins of Hillhead, L.	Wedderburn of Charlton, L.
Jenkins of Putney, L.	Whaddon, L.
Kilbracken, L.	Winstanley, L.

NOT-CONTENTS
Aldington, L.	Jenkin of Roding, L.
Alport, L.	Johnston of Rockport, L.
Ashbourne, L.	Kinloss, Ly.
Astor, V.	Kitchener, E.
Balfour, E.	Lane of Horsell, L.
Bessborough, E.	Lauderdale, E.
Blatch, B.	Long, V. [Teller.]
Boardman, L.	Lyell, L.
Borthwick, L.	McColl of Dulwich, L.
Brabazon of Tara, L.	Mackay of Ardbrecknish, L.
Bridgeman, V.	Mackay of Clashfern, L.
Brougham and Vaux, L.	Macleod of Borve, B.
Caithness, E.	Mancroft, L.
Caldecote, V.	Marlesford, L.
Carnegy of Lour, B.	Mottistone, L.
Carnock, L.	Mountevans, L.
Cavendish of Furness, L.	Munster, E.
Colnbrook, L.	Murton of Lindisfarne, L.
Colville of Culross, V.	Nelson, E.
Colwyn, L.	Norrie, L.
Constantine of Stanmore, L.	Oxfuird, V.
Craigavon, V.	Palmer, L.
Craigmyle, L.	Park of Monmouth, B.
Cumberlege, B.	Pender, L.
Davidson, V. [Teller.]	Platt of Writtle, B.
Denton of Wakefield, B.	Plumb, L.
Digby, L.	Reay, L.
Elton, L.	Rees, L.
Faithfull, B.	Renton, L.
Flather, B.	Sandys, L.
Fraser of Carmyllie, L.	Seccombe, B.
Gainsborough, E.	Selborne, E.
Gardner of Parkes, B.	Shrewsbury, E.
Gisborough, L.	Stodart of Leaston, L.
Greenway, L.	Strathmore and Kinghorne, E.
Grimston of Westbury, L.	Thomas of Gwydir, L.
Hailsham of Saint Marylebone, L.	Trumpington, B.
	Ullswater, V.
Harmar-Nicholls, L.	Vaux of Harrowden, L.
Harmsworth, L.	Vinson, L.
Henley, L.	Vivian, L.
Hives, L.	Waddington, L.
Holderness, L.	Wise, L.
Hooper, B.	Wynford, L.
Howe, E.	Young, B.
Jellicoe, E.

Resolved in the negative, and amendment disagreed to accordingly.

6.53 p.m.

Baroness Hollis of Heigham moved Amendment No. 16:

Before Clause 8, insert the following new clause:

("Effect of competition on legal advocacy and litigation

.—(1) No order shall be made under section 2(3) of the 1988 Act by virtue of which work falling within a defined activity for the purposes of Part I of that Act includes the provision of legal advocacy and litigation services.

(2) Before making any order under section 2(3) of the 1988 Act the Secretary of State shall consult such associations of local authorities, and such other persons as appear to him to be concerned with respect to any effect on the quality of provision of legal advocacy and litigation services by local authorities of any such order").

The noble Baroness said: My Lords, in moving Amendment No. 16 I shall speak also to Amendment No. 17. I realise from what the Minister said that she is not going to respond to these services in detail, and I expect the same answer will be offered on each. We on this side of the House believe that we would be less than fair to local authority services if we did not spell out for public consideration the reasons why we believe those services should not be brought within CCT. It is in that context that I should like to speak to the amendments affecting law and legal services.

Local authorities currently buy in about 10 per cent. of their lawyers, particularly during peak periods—for example, when they have a great deal of conveyancing or when they want to buy specialist legal services such as counsel. The consultative document follows the Audit Commission report on competitive councils in identifying three main legal functions: corporate policy and giving advice to members and committees; the propriety role (ensuring that council business is conducted with financial and legal integrity); and legal services (litigation, advocacy, conveyancing and commercial contracts).

The consultative document appears to agree with the Audit Commission that the first two of those functions should not lend themselves to CCT. However, the third does, following the second stage of internal trading accounts. I repeat that local authorities regularly use the private sector to aid them in routine work, such as conveyancing, or highly specialist work. However, is it sensible to draw the line with legal services as the consultative document does? Careful reading of the Audit Commission report suggests serious reservations, even about legal services. It states that: For most purposes and in most authorities an all-purpose legal department is the most effective means of meeting the regular needs of service providers". With the exceptions I have mentioned it clearly doubts that it is as cost effective to go outside. The report goes on: The overall cost of going outside may be less than that of maintaining an in-house resource which is inefficiently managed or inefficiently used". Even then it recognises that given the in-house cost of supervision it is indeed doubtful.

The Audit Commission report goes on to identify other and serious problems—not just that of cost effectiveness. It states that in many smaller towns there will not be private firms with the breadth and expertise necessary to provide appropriate legal services unless those legal firms use golden handcuffs to keep their qualified staff with them on the basis of which they won the tender in the first place.

Next—and this is the mirror opposite problem—where firms are large enough to cope with local authority work by definition they are likely to have a portfolio which includes local landowners and potential developers so there is a real risk of conflict of interest. In such a situation it is just as likely that a private solicitor will withdraw from local authority work, leaving the local authority stranded, because the private sector is better paid. Indeed, whatever the Chinese walls—a point we shall no doubt come back to on planning and property management and other services—there is no way that staff cannot make use, to their clients' commercial advantage, of the internal knowledge of local government that they have acquired.

One can add further anxieties. How cleanly is the line drawn in the consultation document? A lawyer advising a planning committee on a Section 106 planning agreement—the sort of enterprise which kept many of us busy for many hours last winter—is clearly giving corporate policy advice. But is the drafting of that agreement corporate or operational? Are the negotiations with the developer corporate or operational, or will those roles be splintered? I hope the Minister can clarify the position.

Again, some legal services have a predictable load. Conveyancing there may be, but what about child abuse? Is the social services department to be limited in the legal prosecuting services it can afford because it has not anticipated those in the tender, or alternatively face very heavy additional charges—three times the in-house cost—to provide private lawyers at the end of the financial year? It is intolerable that services like education and social services should feel constrained about the quantity and quality of legal advice they should seek because it is towards the end of the financial year and their budget arrangement for legal advice has been spent.

No local authority can predict how many prosecutions it may need to conduct or how many children it may need to take into care. Indeed, if they have to draw up a detailed specification, as under the 1988 Act, two years in advance, for a contract that will run for three years they have to anticipate how much legal work they will need to take children into care five years hence.

On top of that there is a legal dimension to other services. The city treasurer's staff may take poll tax defaulters to court, or car parking staff may handle prosecutions. The trading standards officer or the housing department may help private tenants with bad landlords. Is all that work vulnerable to CCT? In other words, legal services can very often be a dimension of other service work and we need to know how they are going to be affected by CCT. Therefore, even if one excludes corporate advice from CCT it is, I suggest, clearly not sensible to expose even legal-centred services on a compulsory basis to CCT.

Noble Lords do not have to take my word for this or even register the hesitations of the Audit Commission. Incidentally, all of this work, as I understand it, is done in-house. Let us take instead the advice given to the Government by the Andrew Report of 1988–89 when the Government pursued this very same question of whether their legal services should go out to CCT; but every time the Andrew Report uses the word "government" I ask your Lordships to substitute the words "local authority".

In advising the Government not to pursue CCT the Andrew Report said, first, that it emphasised the need for an in-house legal service throughout government (or local authority) departments. Secondly, on the basis of research it insisted that in-house services were far more cost effective. The report cited cases where, by going outside, private solicitors cost three to four times more than the Treasury solicitor estimated that he would have charged for the same service. The Andrew Report consulted widely and found that with the exception of one bank all the commercial and industrial companies that it consulted kept their legal services in-house because, as the Andrew Report noted to the Government it was, more responsive at lower cost". Such a finding is consistent with everything we know abroad, as in the United States.

The Andrew Report also urged government (read "local authority") that for certain legal services such as prosecutions it was self-evidently inappropriate—as I hope to have persuaded your Lordships on questions of child abuse. It warned that the speedy responsive nature of legal services would deteriorate and it feared for the confidentiality of legal advice when more than one client was involved, however scrupulous private solicitors might be.

In summary, on page 28, the Andrew Report said to the Government: It is desirable that a substantial in-house capability should be maintained in both litigation and conveyancing to preserve expertise, to provide a reservoir of legal manpower which can be drawn on to meet urgent demands elsewhere, and to serve as a training ground for young lawyers who may in due course move on to advisory posts". Quite so, my Lords, and every word applies to local government. It said that the greater part of the Government's legal work should be done in-house and that it should go outside only where the necessary expertise did not exist in-house; where government did not have the resources; or where to go outside was more cost effective. I agree.

That was the advice to the Government in the Andrew Report—independent advice and expert advice. Local government would endorse every word of that. Does the Minister not accept the Andrew Report or will she argue that local government's need for legal services is qualitatively different from that of central government? What the Andrew Report emphasised and what local authority lawyers provide is an unambiguous commitment to the public service and undivided loyalty to the public client, whether that be a Minister, a committee chairman or a councillor. Following the Andrew Report I understand that the Government were persuaded to keep their legal services in-house. I understand that the Audit Commission keeps its legal services in-house. Why should not local government have precisely that same choice? I beg to move.

7 p.m.

Baroness Denton of Wakefield

My Lords, I listened with some amazement to what the noble Baroness said on these amendments. My noble friend the Minister correctly identified development corporations as evidence that competitive tendering has been successful in many of the areas under discussion, including legal services. Officers in development corporations call on outside legal services according to their needs, according to the expertise required and according to the situation in hand. I doubt whether many local authority legal services see more than one major development a year—the expertise will come from other areas—or deal with one multinational every month. They use the expertise. They do not, as the noble Baroness, Lady Hollis, suggested, stay with the small town solicitor. They go to where the legal advice that they need is available.

I am sorry that the noble Lord, Lord Dormand, is no longer in his place because I suspect that his experience is the same as mine, that the majority of officers in development corporations come from local authorities. I fail to understand why, if they administer the system so effectively and efficiently in development corporations, noble Lords opposite believe that they should find it impossible to do so if employed by local authorities.

Baroness Hamwee

My Lords, I am glad to respond to what I think lies at the heart of what the noble Baroness, Lady Denton, has just said—that there is no defence in regard to local authorities' refusal to go out to the private sector where that is appropriate. It is the element of compulsion weighing heavily on them that is objected to.

As a professional on the other end of such a process, I welcome the spreading of work, as all professionals do, so that it is done where it can best be done. However, I would be very fearful of auditioning, as we have to do these days and rightly so, for much of the work that is done by local authorities. It was put very well in a legal magazine earlier this year. Anticipating the extension of CCT to legal services—I use the term broadly—the writer said that no doubt the private sector would welcome this source of new work, but went on: It may not be that easy. City firms should quell their euphoria until they have thoroughly examined what might be expected of them by local government". The writer went on to refer to the general ignorance of what goes on within local authorities in regard to the complexity and the technical aspects of much of the work that has to be covered by local authority lawyers. The writer commented: This experience can often be gained principally by performing the work on a regular basis over a long period". The difficulty with these services is that one cannot conveniently separate out legal advice, legal services, advocacy and litigation. As the noble Baroness, Lady Hollis, said, so much work undertaken by a local authority moves seamlessly from advice to consideration by committee and on to the stage of litigation. That may be planning advice, which results in enforcement action or dealing with an appeal; it may be looking after the interests of children in local authority care. It would be almost impossible to separate out those parts of a local authority lawyer's responsibilities.

The most effective way for a lawyer to fulfil his role is by being involved right from the start of consideration of an issue. It saves everyone a great deal of time if the lawyer is centrally involved when decisions are taken that a matter should be dealt with in a court—there are many different types of court proceedings—and if the lawyer knows what is going on and does not have to be briefed extensively, lengthily and at great cost—I am talking about the private sector. It is much better for that lawyer in many instances to have been involved right from the start.

At Second Reading I said that, although I regretted having to say it, I feared that if services within this sphere were put out to tender the result would be considerably higher costs than those that would result from their remaining within the public sector. That is not to resist the use of the public sector where appropriate. On major developments it very frequently is appropriate. It is the element of compulsion that is being complained about.

Baroness Faithfull

My Lords, in referring to these amendments I should like to give as an example children who are sexually abused. One should be able to go out to tender for legal experts who one knows have dealt with a number of these cases all over the country and have wide experience. No one local authority, unless it is a large authority—a metropolitan authority—has a sufficient number of cases of this kind to give the legal department enough experience. I was extraordinarily fortunate in the legal services of the authority for which I worked. Nevertheless in some cases it was in the child's interests to go out to tender for an advocate.

Baroness Blatch

My Lords, the noble Baroness, Lady Hamwee, is right. Local government should drive a hard bargain. The important point—and I keep repeating it—is that it should be in a position properly to specify what it is that it wants, taking into account all the safeguards mentioned by my noble friend Lady Faithfull, and it should certainly monitor and manage the contract well. But the idea that only local authorities deal with complex issues and that somehow or other the private sector does not exaggerates the case too much.

I say to the noble Baroness, Lady Hollis, that, in the light of the requirement to consult and the requirement to have parliamentary approval before my right honourable friend the Secretary of State can exercise his power to extend competitive tendering, I believe that the amendments should be rejected.

Baroness Hollis of Heigham

My Lords, I wish that I could thank the Minister for her reply. However, I am afraid that I cannot do so. I should like first to comment on the remarks made by the noble Baroness, Lady Denton. She is right to say that development corporations have to some degree an analogous role. But they are largely concerned with commercial and development issues. That is only a small portion of the work of local authorities. As the noble Baroness, Lady Hamwee, said, local authority work is indeed a seamless web which covers a wide array of services from social services to education and the like, with which a development corporation would simply not come into contact. Although it is a valid point, I suggest that the differences between the needs of development corporations and those of local authorities for legal services are very distinct. Indeed, some of the legal services that a development corporation buys in are those which local authorities buy in simply because of their degree of expertise.

I turn now to the points made by the noble Baroness, Lady Faithfull. I entirely agree with her. The issue that divides us is not that the local authority should never be permitted to use private lawyers. Of course local authorities do so. They do so where it is cost-effective, as with conveyancing where there is a sudden peak of work which cannot be coped with in house and where it would be absurd to take on permanent staff; or, more importantly, it is done by a smaller authority—perhaps a district authority—in areas such as housing rights where there is a need for specialist or experienced legal staff; or perhaps by a county council where such services cannot be obtained in house. Local authorities have always brought in and bought specialist skills.

Baroness Blatch

My Lords, with the leave of the House, can the noble Baroness tell me how a judgment can be made about whether something is cost-effective if the market has not been tested with the in-house service?

Baroness Hollis of Heigham

Local authorities regularly test the market. They buy in private lawyers for conveyancing under boom conditions. I did precisely that. It was judged to be financially more effective and better value for money to employ someone for a peak period of three or four months than to employ a permanent member of staff. As I said, I have done precisely that myself. I hope that the Minister will regard that as an appropriate answer. All of us have track records in buying in staff for those peak demands on service where it would be absurd to take on additional in-house staff.

As I said, what does not divide us is the Tightness and appropriateness of local authorities voluntarily to use the private sector where appropriate. The consultative paper makes clear that government are expecting some proportion—perhaps 20 per cent.—of legal services to go out to CCT whether the local authority wishes it or not or whether it is in the best interests of the local authority. We have tried to advocate that legal services are inextricably interlinked, as the Andrew Report argued, with a whole range of services from operational to committee, to policy, to corporate and through to advice. I hope that the amendment will be considered on those grounds. But in view of the lateness of the hour, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 17 not moved.]

7.15 p.m.

Lord Dean of Beswick moved Amendment No. 18:

Before Clause 8, insert the following new clause:

"(Effect of competition on work undertaken by a defined

authority under s.21 of Housing Act 1985

.—(1) No order shall be made under section 2(3) of the 1988 Act by virtue of which work falling within a defined activity for the purposes of Part I of that Act includes the provision of work undertaken by a defined authority in pursuance of powers under section 21 of the Housing Act 1985 (general powers of management), except for works of maintenance in connection with land or buildings held under Part II, of that Act.

(2) Before making any order under section 2(3) of the 1988 Act the Secretary of State shall consult such associations of local authorities, and such other persons as appear to him to be concerned with respect to any effect on the quality of provision of work undertaken by a defined authority in pursuance of powers under section 21 of the Housing Act 1985 (general powers of management), except for works of maintenance in connection with land or buildings held under Part II of that Act by local authorities of any such order.").

The noble Lord said: My Lords, the Minister will recall that during the debate on Second Reading I pursued the question of whether the Government had any intentions in the later stages of the Bill to introduce a clause concerning the housing management sections in local authorities. At that time the Minister said: However, I should point out that the Secretary of State already has wide powers to extend CCT to additional services under the Local Government Act, and of course any addition would have to come before your Lordships".—[Official Report, 18/11/91; col. 795.] That would be in the form of an order against which the House does not normally vote once it has been passed in another place. Therefore, we are actually faced with a fait accompli.

If the proposed new clause were accepted, it would prevent the Secretary of State taking any such action. Its purpose is to prevent the extension of CCT to housing management. The arguments are that the extension of CCT to housing management raises important issues of principle concerned with tenants' rights which do not arise with other services affected by the Bill. For example, first, tenants have rights to information, consultation and participation in matters affecting housing management; and, secondly, local authority housing management may be delegated to tenant management co-operatives or estate management boards. How would CCT affect those?

Under current legislation—Sections 27 and 27A of the Housing Act 1985—a local authority may contract out by agreement any or all of its housing management functions only after consulting tenants and obtaining the Secretary of State's consent both for the terms of the management agreement and the identity of the manager and management. The Secretary of State's consent shall not be given if it appears that a majority of tenants are opposed. That gives tenants a right of veto over contracting out by agreement.

The Government have accepted that housing management is different from the other services affected by the Bill. That has been shown, first, by the fact that housing management was not included in the scope of the report commissioned from PA consultants RCL and AC Baker PIEDA. They were appointed to carry out a separate study of the feasibility of extending CCT to housing management. It is understood that their draft report has only recently been submitted to the Department of the Environment. Secondly, Competing for Quality explicitly excludes any reference to housing management. I understand that a separate consultation paper is expected, but not before January of next year. Thirdly, the Citizen's Charter includes a commitment that the extension of CCT to housing management will be framed, to accommodate tenant participation". I sincerely hope that that means that a majority of the tenants affected by any proposals will be allowed the right to vote in respect of them if they so desire.

Although the Government accept that housing management is different, no proposals have yet been put forward for consultation on how CCT could be satisfactorily extended to housing management. No proposals for consultation are likely to be published before the Bill leaves this House. It is therefore impossible for this Chamber to give adequate consideration to the proposal. In our opinion, it should be excluded from the scope of the Bill.

Tenants' existing rights to consultation on matters of housing management (Section 105 of the Housing Act 1985) and to consultation and a vote on proposals to contract out management by agreement (Section 27 and 27A of the Housing Act 1985) were not drafted with CCT in mind. If the Government are serious about their intention to accommodate tenant participation in their plans to extend CCT to housing management, they must accept that amendments to primary legislation will be necessary to ensure that the existing rights to consultation and a ballot apply where housing management functions are contracted out compulsorily rather than by agreement. No such proposals are included in the Bill. Therefore, in our opinion the Government should agree that any proposal to extend the CCT principle to housing management should be the subject of separate primary legislation—that is, treated as a subject on its own—after their consultation paper has been published and adequate time allowed for representations to be made. I beg to move.

Baroness Blatch

My Lords, it is indeed true, as the noble Lord pointed out, that housing management has not been included in the general consultation paper Competing for Quality. Noble Lords may also have noticed that my right honourable friend the Secretary of State has promised that there will be a further consultation paper on the subject as soon as possible. In fact, it is likely to be issued early in the new year. Housing is being looked at separately because it is a complicated area of local authority activity covering a great many staff. The housing profession has generally welcomed the fact that it has been made the subject of separate treatment.

There are many ways in which competition could be introduced into the housing management field. My right honourable friend would not want to do this in a way that would jeopardise the promising developments which have taken place in recent years, especially as regards tenants' involvement in management. We gave an undertaking in the White Paper, The Citizen's Charter, to that effect. It would be quite wrong and inappropriate for me to pre-empt the outcome of any consultation, except to make two points. I am afraid that I shall again be repetitive. The first is that there will be consultations and nothing will happen until the end of that process; and, secondly, as I have said, it will be for both Houses of Parliament to give approval before the Secretary of State can exercise his power to extend CCT into that area. In the light of that explanation, I ask that the amendment be withdrawn.

Lord Dean of Beswick

My Lords, I am grateful to the Minister for giving that reply, although she did not give much away. I am puzzled by the Government's misuse of the word "consultation", because they have a record of producing papers, making decisions and then asking for consultations with the people affected by them. In other words, there is a fait accompli which is nothing but diktat. They have consultations on how to operate the decisions they have already made. That is not my idea of consultations. I hope that on this occasion the Government mean consultation in the making of the decision and not in its operation. They are two different things.

I accept the Minister's word that the widest possible consultation will take place. As a result of all the Government's efforts the number of council house tenants has decreased from 6 million families to 5 million. What has happened lately is a direct result of that policy.

I hope that the Minister and the Government will be able to tell us—perhaps at a later stage of the Bill—that they have no intention, as she said on Second Reading, of bringing forward any housing proposals in the Bill. My worry is that, if the Bill stays as it is, we could be faced with a Minister for Housing—they change more rapidly than Ministers in any other department—who may well persuade his Secretary of State that it is time to act. The Minister may say that the Government keep their word on housing. They did not keep their word on the sale of council houses and the assets from those sales. Local authorities were supposed to have free access to those assets so as to justify the sale of council houses.

The Minister said that the Government will have full consultations. I hope that they will be in the form that I have proposed and that they occur before the making of the decision and not just in its implementation. On the basis of that explanation, I should like, as the Minister suggested, to withdraw the amendment. But we might want to discuss the issue further at a later stage of the Bill. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hollis of Heigham moved Amendment No. 19:

Before Clause 8, insert the following new clause:

("Effect of competition on maintenance of fire vehicles

.—(1) No order shall be made under section 2(3) of the 1988 Act by virtue of which work falling within a defined activity for the purposes of Part 1 of that Act includes the provision of the maintenance of fire vehicles.

(2) Before making any order under section 2(3) of the 1988 Act the Secretary of State shall consult such associations of local authorities, and such other persons as appear to him to be concerned with respect to any effect on the quality of provision of the maintenance of fire vehicles by local authorities of any such order").

The noble Baroness said: My Lords, the amendment deals with the effect of competition on the maintenance of fire service vehicles. I wish to argue strongly that the emergency services generate special demands and cannot afford the risks attached to CCT. There are two reasons for that. The first relates to the complexity of the vehicles and appliances—the ladders, the turntables, the water pumps and the cutting and lifting gear. They are complex and sophisticated, and maintaining them is not just a job for a mechanic but for an engineer. They need a range of skills seldom found in the private sector.

Secondly, those vehicles are put under an extraordinary amount of stress in terms of speed, loading, braking and cornering. The maintenance of tyres and brakes has to be well above common commercial standards.

Thirdly, fire service vehicles are not just complicated and put under heavy stress; they form an emergency service. They must never break down, never be out of order, must always be available when needed and must not need to be moved from workshop to workshop for maintenance. Given that with the abolition of contract compliance under the 1988 Act—a point of some dispute between the Minister and this side of the House—local authorities may not ask questions about the training or turnover of staff. In that case, what confidence can local authorities have that private firms which tender and win the cheapest bid have the requisite dedicated staff who are always on call and are of the type that the fire service generates?

Maintenance staff within the fire service enjoy a level of wages set by national agreement which attracts and retains the skilled and committed. Cost-cutting contracts can offer no such guarantee. They need to be welders, electrical engineers, paint sprayers, body builders, carpenters, plumbers and pneumatic and hydraulic engineers. During a major incident maintenance staff have to be on location keeping appliances fit on the spot. If necessary, they have to drive and refuel vehicles and prepare equipment at a moment's notice. In other words, they are maintenance engineers acting as part of a disciplined emergency service with a strong commitment to the safety of us all.

That is a language which is worlds away from CCT, and so it should be. The Government proposed to include fire vehicles and their maintenance in the 1988 Bill, but after fierce public opposition they withdrew, conceding, I believe, the strength of the fire service case. There were worries about cost-effectiveness, but Her Majesty's Inspectorate seems to be assured on that point. Given that, and given that the Government were persuaded in 1988 that a risk was involved that none of us should be asked to accept in the name of cutting costs, I beg to move.

Baroness Blatch

My Lords, I have heard some strange things said today. It has been suggested that merely because there are turntable ladders, complicated machinery and vehicles which have an individual specification, somehow the only people who can maintain them are those who are directly employed within local authorities. That is not true. It does not stand up as a statement. It is not true to say that only engineers can service such vehicles. Many local authorities employ mechanics as well as some mechanical engineers. Local authorities do not have some special expertise that no one else has.

It is also true that the consultation paper states that the Government consider that it is now right to look again at the exemptions from CCT which currently apply to fire service vehicles. We do not, however, propose to re-examine existing arrangements for rural areas where maintenance staff have fire-fighting duties. My department, and my colleagues in the Home Office, look forward to receiving constructive comments in response to the consultation paper.

The noble Baroness referred to the fact that under contract compliance rules there were a number of questions that were not allowed to be asked. The competence of the employees comes very much within the scope of questions that can be asked. Let me read out what it is considered is not appropriate and would not be allowed: The terms and conditions of employment for the contractor's workforce, including its composition; promotions; transfers; training and other opportunities". That does not rule out asking about the competence and qualification of staff.

Baroness Hollis of Heigham

My Lords, what is the difference between training and competence?

Baroness Blatch

My Lords, there is a great deal of difference. If someone is qualified it is accepted that they must have trained; for example, if they are mechanics or mechanical engineers. The specification will have to determine the quality of the people required to do the work.

Baroness Hollis of Heigham

My Lords, I am sorry that I am continuing to interrupt, but how can a local authority be satisfied of the competence of the staff employed by a private contractor if it may not ask about training?

Baroness Blatch

My Lords, what I shall say, and what I said earlier, is that the specification can set out clearly that competent people will be considered for the servicing of those vehicles. Competence will have to be proved. If a contractor responds to the tender it will have to say whether the workforce would be competent. What is important is that the specification drawn up by the local authority is the same as that applied to the DSO and the private sector. The level playing field is the drafting of the specification which refers to qualifications and competence.

Baroness Hollis of Heigham

My Lords, I am sorry for interrupting the Minister again. If the same specification is drawn up for the DSO and the private sector, and vice versa, is the Minister happy to concede the argument that the local authorities put forward that contract compliance regulations should be applied to the DSO and the private contractor? That would meet our anxieties.

Baroness Blatch

No, my Lords, I agree with what we believe to be a number of factors that should not be considered or taken into account: the composition of the workforce, promotions, transfers and other opportunities for the workforce; (whether the person can do the job is what is important to local authorities) and the inclusion of lump labour; the involvement of contractors with irrelevant fields of government policy, for example CND activities; the conduct of contractors in relation to industrial disputes; the country or territory of origin of supplies to, or the location in any country or territory of the business activities of the contractors; any political, industrial or sectarian affiliations of contractors; financial support or lack of it from contractors for particular institutions, and the use or otherwise of professional services supplied by local authorities.

Clause 18 gives authorities the power to ask certain questions to be prescribed by the Secretary of State—the noble Baroness is aware of those—in pursuit of the duty to have regard to the need to eliminate unlawful racial discrimination and to promote equality of opportunity under the Race Relations Act 1976; and to include contract terms relevant to this purpose.

I could go on. I believe that the ability is set out for a local authority by a specification to secure an effective service. That applies right across all these subjects that we shall discuss tonight. However, I return to my normal response to these amendments. Consultation is assured and before CCT can be extended, it must be approved by both Houses of Parliament. I ask the House to reject the amendment.

Lord Dean of Beswick

My Lords, I was interested—

Baroness Blatch

My Lords, I have summed up and this is the Report stage.

Baroness Hollis of Heigham

My Lords, 1 have to say again that I am disappointed in the Minister's response. She asserted at the beginning that my arguments did not stand up as a statement. I do not think she told us why, she simply asserted that. Where an emergency discipline service is concerned, and where lives are at risk, we are entitled to have a fuller explanation than the Minister offered us.

The second point made by the noble Baroness was that we could assure ourselves of the quality through existing legislation. We could find out about competence without finding out about training, terms and conditions of employment, turnover of staff, recruitment patterns. All I can say is that my understanding of what the word "competence" entails when our lives are at risk is clearly different from that of the Minister. Her version of "competence" is presumably that staff have passed their City and Guilds qualification. Will the Minister tell us what test of competence she would apply to an engineer maintaining a high specification fire service vehicle which could be met without breaching contract compliance rules?

Baroness Blatch

My Lords, with the leave of the House, the specification must be utterly explicit in every detail on the job to be done. The job may be to maintain sometimes complicated fire service vehicles. If the specification is right and someone responds to the tender, they should respond in such a way that they state that they will deliver that specification at a price. It is for the local authority to make judgments as to whether they believe that the company can deliver.

Baroness Hollis of Heigham

My Lords, I am sorry but the Minister did not answer my question. I asked whether she would be so kind as to tell us in what way a local authority can be satisfied as to the competence—I emphasise the Minister's word—of the staff maintaining emergency vehicles when they specify the standards of service it requires. How can the local authority be sure of the competence of the staff? What questions can it legitimately ask? Can the Minister tell us what questions we may ask when putting down the specifications?

Baroness Blatch

My Lords, it is possible as part of the process not only to consider tenders but to interview contractors. It happens in all local authorities, it certainly happened in mine. There were questions about whether the people were qualified to do the work. Are they qualified mechanics? Are they qualified mechanical engineers, if that is what the specification asks for? If they say that they are, then it is up to the local authority, if it awards the contract, to monitor it and make sure that it receives a service. Penalties are built into the clause to take action if the service is not delivered.

Baroness Hollis of Heigham

My Lords, this is a very important point because it affects police vehicles, and so on. Is the Minister saying that local authorities may call in a contractor, interview him and ask for a list of employees, a list of their qualifications and evidence about turnover of staff, training patterns and the apprenticeship qualifications they seek and similar questions?

Baroness Blatch

My Lords, with the leave of the House, I believe that we are again in breach of the rules for Report stage. Once more, I repeat the point that it is for the local authority to secure, so far as is possible and practicable, that the company which has responded to the tender document—where the specification is explicit and in great detail, especially as it relates to a complicated piece of equipment—can assure the authority that the people who will do the work will be qualified and competent to do it. As happens in all services, it is for the local authority to monitor the contract and to exercise and invoke penalties for breach of contract if the work is not properly carried out.

Baroness Hollis of Heigham

My Lords, with the leave of the House, the Minister said that the local authorities may ask for and receive an assurance. However, we cannot establish what evidence they may have to ascertain whether the assurance is valid. I hope that lives are not put at risk as a result. With the leave of the House, I wish to withdraw the amendment.

Amendment, by leave, withdrawn.

Viscount Astor

My Lords, I beg to move that further consideration on Report be now adjourned. In moving this Motion, may I suggest that the Report stage begins again at twenty minutes to nine?

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