HL Deb 28 February 1992 vol 536 cc524-33

Lord Belstead rose to move, That the draft order laid before the House on 14th January be approved.

The noble Lord said: My Lords, this is an important piece of legislation. It extends to Northern Ireland many of the provisions which already apply to local authorities in Great Britain. It covers three important areas which the Government are confident will result in major improvements to the methods of operation of district councils.

The first area dealt with is competitive tendering. That is being introduced under Parts II and III of the order for a range of council services and will result in greater value for the ratepayers' money. That does not mean that all services will end up in the private sector and it is not a measure designed to reduce council powers. Councils retain responsibility under the order for the service and their direct service organisation will be able to tender for the work. Another important point is that councils will be required to specify the standard of service they require whether or not that service is provided in-house or by contractors. There will be, therefore, no lessening of standards. Indeed, standards should improve since the wider choice which competition will achieve will inevitably mean clearer and more efficient work practices.

Article IV of the order defines the services which are the subject of compulsory competitive tendering. However, councils will not have to seek competition for all the services listed in the order. Competition will be limited to contracts above an annual running cost of £100,000. The contracts we plan will be introduced gradually by regulations and councils will be fully consulted about the timing of these.

Finally, before leaving competitive tendering, I assure noble Lords that the Government are very conscious of the potential for paramilitary exploitation in this field. Every step will be taken to eliminate that risk in whatever form it takes. In Article 21 of the order we are taking additional powers, over and above those introduced in Great Britain, to enable councils to ask non-commercial questions in order to allow the department to specify certain information which a contractor must provide if he wishes to tender. That will act as a filter and should thwart attempts to win contracts by the para-militaries posing as bona fide contractors.

There will, of course, be difficulties in preventing exploitation by the paramilitaries and those difficulties are very real. However, the Government are determined that they will not be allowed to muscle in; and because it is difficult to deal with the problem by way of primary legislation the order also includes, in Article 25, a general power of direction over councils. I know that the House does not like a general power of direction, but this is supposed to be an additional safeguard. It will be used to take additional steps to combat the para-military threat, should it arise, purely as a help to district councils and for no other reason.

The second important area is the proposal in Article 28 in Part IV of the order to allow councils to spend the product of a twopenny rate on the promotion of economic development. This additional power will allow councils to expand their involvement in promoting the economic development of their areas and is being introduced at the request of councils wishing to have a more active role in this field. The Government are delighted to see that positive approach by councils in Northern Ireland and we are glad to be able to recognise their enthusiasm in a positive way in the order.

The third area is dealt with in Part V of the order and sets out standards of behaviour and conduct for councillors. An updated code of local government conduct will be introduced under Article 29 in Part V. That will set out the standards of behaviour and conduct expected of councillors. Each councillor will be required, on accepting office, to sign a formal declaration that he or she will be guided by the code. The code will be introduced only after full consultation with district councils.

It is also important for councils to have clear and effective working arrangements for the despatch of business. The arrangements are contained in standing orders but not all councils have these arrangements. Of those that do, some of the standing orders have fallen into disuse and are no longer effective. Therefore, Article 33 of the order will allow the Department of the Environment to introduce a model set of standing orders for the dispatch of council business, which will allow for a statutory core for councils to follow. That should allow business to be carried out fairly and reasonably and in a manner which properly reflects the interests of all members of the Council. Again, that provision will not be introduced until there has been full consultation with district councils.

Article 38 gives the local government auditor power to prevent district councils from incurring any unlawful expenditure. This will help to ensure that ratepayers' money and interests are protected.

Finally, Article 41 will prevent district councils from spending money on publicity which is designed to attract support for one particular political party. Money which has been spent in this manner in the past has led to division in the council chamber and among local ratepayers.

I remind your Lordships that ratepayers are entitled to expect high standards of service and value for money. They also expect their elected representatives to be accountable for their actions and to conduct business in a way that is fair and reasonable. I am confident that this order will help provide a better framework within which the business of local government in Northern Ireland can be conducted. I beg to move.

Moved, That the draft order laid before the House on 14th January be approved.—(Lord Belstead.)

Lord Prys-Davies

My Lords, I thank the noble Lord, Lord Belstead, for explaining the provisions of this order. We do well to remind ourselves that the functions of local government in Northern Ireland are very few. Nevertheless, local government is still important to all members of the Northern Ireland community. This order, although it is a miscellaneous provisions order, introduces the most important changes in local government in Northern Ireland since 1973. Some parts of the order have been welcomed as worthwhile reform. However, there has also been criticism of some of the concepts outlined in it.

The order therefore merits at least a full debate even if it cannot, under present arrangements, be given the Bill procedure treatment. Therefore, it is very much to be regretted that it had only about two hours of debate in another place. Within that limited timetable only four Northern Ireland Members were able to make a substantial contribution to the discussion. Bearing in mind that Northern Ireland Members of Parliament, unlike those from England, Wales and Scotland, usually have an unrivalled experience of local government, it therefore seems to me that the arrangement for discussing this important order is extremely difficult to defend.

The present Government lay great stress upon compulsory competitive tendering. It is therefore not surprising that CCT is one of the main strands of this order; it dominates Part II in Schedule 1. The Labour Party fears that CCT will weaken even further the limited role of the local authorities in Northern Ireland when more outlets should be created for skills, ideas and enterprise to flourish in local government. Furthermore, we are not convinced from the evidence that CCT will lead inevitably to higher standards of service. We believe the evidence is mixed.

As CCT will be a part of the Northern Ireland local government landscape, I should like to ask three questions. First, to what extent will there be a level playing field for all the contenders for a contract? Is it envisaged that the detailed specifications to be drawn up by the councils will contain minimum standards and minimum conditions in certain key areas such as skills, level of wages, holidays and sickness entitlement of the labour force? Secondly, if a contract has been awarded in good faith, but performance during its currency is unsatisfactory, what remedy, if any, is immediately available to the council? Real problems can arise in the real world. Thus, in a cleaning contract the cleaning may be less thorough and less frequent, or the contractor may go bankrupt. What remedies are available to the council in those circumstances? Who will undertake the services in the interval between termination of the contract and the appointment of a new contractor?

I have asked those two questions because they were raised by a Back-Bencher in the debate in another place. As the time which was available to the Minister was so limited it appears that the position has not been fully explained.

The third point about CCT is that it is not clear what remedies are available to an unsuccessful applicant who has grounds for believing that his tender was not properly considered in accordance with the terms of this order. I believe that also to be a matter of concern for the Government because under Article 21(6) (a) he has locus standi to take judicial review proceedings. But your Lordships will know that a judicial review challenge will in general succeed only if the council's decision was perverse. Moreover, assuming such proceedings to be successful, would it be practicable in the real world for that decision to be reconsidered? I therefore ask the Minister whether there will be another remedy? In passing, I also ask whether the department would also have locus standi to institute judicial review proceedings.

The Labour Party welcomes this part of the order. Article 26 should be useful. That article allows a council to apply for a scheme authorising it to give financial assistance in an emergency. By definition an emergency emerges without prior notice and the scheme under Article 26 should therefore be available without endless delay. I ask the Minister how long it will take to obtain such a scheme. I should also like to know what will be the criteria for granting or withholding such approval.

Another helpful provision is to be found in Article 28 which allows a local authority to spend at a rate of 2p in the pound on the promotion of economic development. Can the Minister give us an indication of what would be the product of a rate of 2p in the pound on the rateable value? Here again the question of criteria arises and we should like to know on what grounds consent will be given or withheld.

I have considerable sympathy with Article 29 which introduces a code of local government conduct in Northern Ireland; but I appreciate that opinions differ on that.

I should like to make a general comment about the use of a statutory code. According to my count this order provides for at least three statutory codes. In addition to Article 29 there is a code in Article 35(1) and Article 41, together with regulation-making powers in Articles 7, 9, 21 and 33. Are the codes and regulations available in draft form? If so, have they been fully discussed with the local authorities and the professional and voluntary organisations whose interests will be affected? We certainly accept that there is an important place for a code of practice, with statutory authority, to provide a detailed guidance which would otherwise clutter up the statute book and is sufficiently flexible to be changed in the light of experience. It is desirable that a copy of the proposed code or regulations should be available in draft form before the legislation leaves Parliament. That is what we ought to be aiming at.

Part V contains other important provisions. We completely share the Government's concern about the important need to prohibit a council from using its resources or its position in a way that is designed to give public support for a political party. But does the first amendment, in Article 41, achieve this end? Perhaps I may give an example. If a council publishes a leaflet setting out the perceived merits of the Anglo-Irish Agreement—that being the policy of the SDLP and of the three main parties in Great Britain —or if it sets out the perceived demerits of the agreement—that being the policy of the two Unionist parties—would such a publication be in breach of the proposed Section 115A? Would it make a difference if a council produced a leaflet balancing the merits and demerits, provided it did not attempt to draw a conclusion? Would a council's contribution towards the costs of carriage of this leaflet to distribution points in Northern Ireland be banned by subsection (3)?

My final point relates to the role of the auditor under the proposed Sections 82A and 82D. What exactly is the precise relationship between those two sections? I am in some difficulty in grasping the full implications of those two sections and their relationship, though I readily concede that the fault is probably mine. However, it would be helpful if the Minister could briefly clarify or explain the relationship. Is it envisaged that in practice the auditor will proceed to issue a prohibition order if he believes that he has firm grounds for issuing such an order but may seek judicial review proceedings when he believes that he has less firm grounds?

One could say a good deal more about this important order but I shall not burden the House with any more questions or detailed Committee points. Your Lordships will know that this is the only opportunity we have to raise issues which we believe require clarification and on which people in Northern Ireland have written to us seeking clarification. I end by saying that, notwithstanding the CCT provisions, this order will introduce many necessary changes which will go some way to enhance local government in Northern Ireland. On that basis, I support it on behalf of the Labour Party.

Lord Holme of Cheltenham

My Lords, from these Benches I thank the Minister most warmly for his, as always, clear and helpful exposition of the order. I am afraid that we have to give it a somewhat mixed welcome. We support the principle of competitive tendering but I wonder whether the Government are wise to insist on compulsory competitive tendering. We are now beginning to see some of the results of experience in the rest of Great Britain. We have seen, for instance, local authorities being forced to tender for the sale of tiny plots of land with little market value. Although competitive tendering is welcome, the principle of compulsion is not necessarily wise. However, having said that, we warmly welcome the code of conduct and the model standing orders which I think will make a great contribution to local government in Northern Ireland. We also welcome the decision to include fair employment considerations in the factors that can be taken into account when agreeing contracts. Would it not be better if local authorities had a statutory duty to take fair employment into consideration when they decide those contracts?

I have one or two other points. First, I very much welcome what the Minister said about the possibility of paramilitary exploitation of tenders for contracts, for instance, by posing as bona fide contractors for refuse collection or street cleaning. I take his point that Article 21 deals with that. I also take his point that it is something of which the Government are aware. However, I cannot urge on the Government too strongly that this is an area of risk and an area where a good idea could actually become extremely dangerous.

My second specific point concerns the people who were at one time employed by the public service being then taken on by private companies to do the same job. The Minister's honourable friend in another place reported that 80 per cent. of the services contracted out in the rest of the United Kingdom have stayed in-house. Yet presumably the problem is presumably that when workers are re-employed they do not necessarily have the minimum standards or clear wage policies which they had when they were in the public service.

Baroness Phillips

And pension rights, my Lords.

Lord Holme of Cheltenham

My Lords, the noble Baroness mentions their pension entitlements too. The Government need to consider, given that they are talking about the worst paid section of the community, what they can do to put some floor under them in terms of minimum standards in the new situation with which they will be confronted.

The final specific point that I wish to put to the Minister and on which I ask him to comment briefly concerns how he will ensure that, when tendering is done on the basis of relatively small local community areas, it is not done on sectarian lines. A particular local authority may largely be of one community or the other. What will the Government do to ensure that these quite lucrative private contracts do not fall into the hands of contractors aligned in a sectarian way?

In conclusion, one of the problems that the Government have in this piece of legislation—it is a problem that has been accumulating in Northern Ireland—is that, because there is such a lack of any real power at local authority level in Northern Ireland, many responsible members of society are not seeking election. Health, education, social security and planning are already taken out of the hands of local authorities. Is it not possible that, if we begin to remove the only remaining duties of local councillors, we will not get good people who are in touch with their local communities? It is because we somewhat fear the further erosion of the contribution that local government can make in Northern Ireland that our welcome for this order can be only a qualified one.

Lord Belstead

My Lords, I am grateful to the noble Lords, Lord Prys-Davies and Lord Holme of Cheltenham, for speaking in some detail—although I know we have been brief because we are discussing an order—about such an important local government order. The part about which we have all spoken and to which we have given the most attention is that which concerns compulsory competitive tendering. That is a parity measure in the sense that it is, more or less, putting into effect the provisions of the Local Government Act 1988. However, there are other important matters in the order. Both noble Lords have said a few words about them.

The noble Lord, Lord Prys-Davies, was kind enough to give me notice of about five questions that he wished to ask. Perhaps I may reply to each of them in the order in which they were asked. The noble Lord first asked whether there would be a level playing field so far as concerns the tenderers in compulsory competitive tendering. Of course, I cannot anticipate what councils will put into their specifications. But there are safeguards built into the legislation to ensure that the private sector and the councils' direct service organisations (as they are called in Northern Ireland) are treated on a fair, level playing-field basis.

The noble Lord, Lord Holme of Cheltenham, asked the very important question as to whether in certain circumstances—and he identified a situation where the council area is a smaller one—the spectre of sectarianism could come stalking onto the scene in tendering. It is important to note that, under the order, councils will be prohibited from doing anything which has the effect of restricting, distorting or preventing competition. The Department of the Environment will be monitoring councils' behaviour to ensure that that is complied with. All the time in Northern Ireland we have in the front of our minds the desirability to prevent precisely the point upon which the noble Lord, Lord Holme, put his finger.

The second question posed by the noble Lord, Lord Prys-Davies, was what would happen when something goes wrong in mid-contract. He said that problems can occur and spoke cogently about the matter. I appreciate that it is a difficult area. However, it is essential that councils get specifications right and that, in opening up a select list of tenderers, careful consideration is given to the financial standing of those companies applying for the contract.

If the noble Lord will forgive me for saying so, I believe that his question begins to move into the area of contract law. I know perfectly well that he knows a great deal more than I on the subject. If the noble Lord will forgive me for saying so, I do not think that it would be appropriate on this order to seek to cover matters which are properly covered in contract law. I say that, bearing in mind—and in the simplest possible way for my own benefit—that, as I understand it, if a contractor is not performing, then the council, under contract law, will be able to go to arbitration in the first instance. However, I must not move into contract law about which I know little. I shall just say to the noble Lord that I believe that there are safeguards for good practice written into the order. So far as concerns the rest of his question, I believe that contract law applies.

The noble Lord's third question was to ask what the remedy would be for a tendering party who believes that his or her tender has not been properly considered. In addition to any damages which could be awarded as a result of a judicial review in such a case, district councils are subject to sanctions and direction from the department to ensure that they award contracts on a commercially fair basis. I believe it is fair to say that Articles 14, 15 and indeed 19 and 20 are relevant in the matter.

The noble Lord was good enough to welcome Article 26 which is about emergency assistance to councils; for example, in a flood situation. However, he asked how long it would take to set up a scheme of emergency assistance—a very relevant question under the circumstances—and what the criteria would be. There are no plans to introduce a formal set-piece scheme. The power will only be used following an emergency or a disaster. That will enable the department to take into consideration the particular circumstances of the case. By adopting that flexible approach, we believe that the department can respond as sympathetically as possible to councils' requests. It is important that I underline the fact that there is nothing in the order to prevent a scheme being adopted quickly.

It is worth adding—I shall be honest with the noble Lord —that there is no precedent for this in Northern Ireland. I do not think that anything of this kind has ever been produced hitherto. The reason for that is not an overemphasis on caution; it is that usually when there is a natural disaster, the main expenditure is found to fall on the statutory organisations, such as the police, the fire service or the Housing Executive. Help is therefore brought to the community through expenditure on the statutory services. Nonetheless, Article 26 is in the order and I am grateful to the noble Lord for welcoming it.

The noble Lord asked me, fifthly, about the criteria for making the twopenny rate payments and what the product of that twopenny rate would be in Northern Ireland. Specific criteria have not been drawn up on what the twopenny rate payments can be put to because it is very much a council-led initiative. The department will be sympathetic to any council proposals, provided that they do not conflict with the work of the statutory bodies, such as the Industrial Development Board and the small business firms' organisation, LEDU—the Local Enterprise Development Unit. The expenditure of twopence in the pound will allow councils to spend, on average, about £100,000 in Northern Ireland, with the larger councils able to spend about £150,000 and the smaller ones about £50,000. Belfast city council will be able to spend about £800,000 on this new provision.

The noble Lord also asked me about the codes in the regulations and about whether they are available now. I must apologise: they are not. The reason is that we are going out to consultation with the district councils before any of the codes or regulations can be introduced. It is important that the department is drafting the codes and regulations with which to take into account the views and the comments of the district councils in Northern Ireland. This is no different from the procedure that we often follow with Westminster legislation. I am thinking of the emergency provisions legislation that we considered last summer, under Section 61 of which we said that there would be an important code of conduct, to which we are sticking, relating to the way in which matters are conducted at the holding centres.

I do not believe that the noble Lord expressed a demand to see the drafting before we introduced the legislation. Therefore, I hope that he will not think that I am being unreasonable when I say that I take his point, but that it is because we are going out to consultation in Northern Ireland, where some changes will undoubtedly be made to the original draft, that I am not able to put drafts before your Lordships before the order is, I hope, agreed to.

The noble Lord fully supports the intention of Article 41, but asked how it will work. The intention of the proposal in Article 41 is to stop councils using council funds to promote a particular party line or dogma for purely party political reasons. In the circumstances described by the noble Lord—he gave an example—it would be for the auditor and/or the court to decide whether such expenditure was legitimate. I would apprehend that that would depend upon the content of the leaflet concerned.

Finally, the noble Lord said that he had difficulty with the role of the auditor under Sections 82A and 82D of Article 38. The two sections that the noble Lord is talking about empower the local government auditor to take immediate steps as soon as he becomes aware of a council's course of action that may result in unlawful expenditure. Therefore, in answer to the noble Lord's question, "Does the first section mean that the auditor can go straight for a prohibition order?", my answer is "Yes". When the noble Lord asked, "Does Section 82D refer more to judicial review?", I should put it slightly differently. That section would be used where the auditor discovers, in the normal course of his audit work, that the council has acted unlawfully. The auditor has always had that power. The new power is to be found in Section 82A. With those replies to the points that have been put to me, perhaps I may thank both noble Lords who have spoken and, once again, I beg to move.

On Question, Motion agreed to.