Deregulation and Contracting Out Bill

HL Deb 21 July 1994 vol 557 cc367-93

3.32 p.m.

Lord Strathclyde

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.— (Lord Strathclyde.)

On Question, Motion agreed to.

House in Committee accordingly.

[The CHAIRMAN OF COMMITTEES in the Chair.]

Lord Williams of Elvel moved Amendment No. 205A: After Clause 59, insert the following new clause:

Functions in connection with National Parks

(".—(1) This section applies to any function in connection with a National Park—

1. (a) which is conferred by or under any enactment; and
2. (b) which, by virtue of any enactment or rule of law may be exercised by a Minister, office-holder, local authority or an existing authority for a National Park; and
3. (c) which is not excluded by section 60 below.

(2) If the Secretary of State by order so provides a function to which this section applies may be exercised by a National Park authority constituted in accordance with section (National Park authorities) of this Act.

(3) The Secretary of State shall not make an order under this section in relation to a local authority without first consulting such representatives of local government as he considers appropriate.

(4) The Secretary of State shall not make an order under this section without first consulting—

1. (a) in the case of a National Park in England, the Countryside Commission, and
2. (b) in the case of a National Park in Wales, the Countryside Council for Wales.

(5) The Secretary of State shall not make an order under this section in relation to an existing authority in relation to a National Park without first consulting that authority.

(6) Subject to subsection (9) below, an order under this section may provide that a function to which this section applies may be exercised—

1. (a) either wholly or to such extent as may be specified in the order or authorisation;
2. (b) either generally or in such cases or areas as may be specified; and
3. (c) either unconditionally or subject to the fulfilment of such conditions as may be so specified.

(7) An authorisation given by virtue of an order under this section shall be for such period, not exceeding 10 years, as is specified in the authorisation.

(8) For the avoidance of doubt it is hereby declared that the functions referred to in subsection (1) above shall include all functions conferred by or under the planning acts on a planning authority of any description (including the functions of a mineral planning authority under those Acts and under the Planning and Compensation Act 1991).

(9) In making an order under this section in relation to an existing National Park, the Secretary of State shall ensure that the functions contracted out to a National Park authority are not less than the functions carried out by an existing National Parks Committee or National Parks Board.").

The noble Lord said: Before I move this amendment, perhaps I may say how glad I am to see the Chief Whip, the noble Lord, Lord Strathclyde, who will be responding on the Bill. I should like to congratulate him on his new appointment. It may be for the convenience of the Committee if I speak not only to Amendment No. 205A but also to Amendments Nos. 205B to 205G, 208A to 208C, 208D, 215A, 216A, 217A, 217B, 217C and 217D.

In introducing this series of amendments, I emphasise that they are all consequential on the first amendment; in other words, if the first amendment is accepted by the Committee, the other amendments follow as a matter of course. The Committee will be aware that earlier in the Session the National Parks Bill was introduced by the noble Lord, Lord Norrie. That Bill was the result of discussions between the Government, the Council for National Parks and other interested parties. It was designed to fulfil, by means of a Private Member's Bill, the pledge made in the Conservative manifesto of April 1992. It is perhaps worth recalling the exact words in the manifesto: Some of our finest landscapes are designated as National Parks. All National Park authorities will become independent Boards, which will make it easier for them to carry out their tasks effectively. The New Forest will be given a statutory status which will give it as great a level of protection as any National Park". Nothing could be clearer than that. That was a minor piece in the Conservative manifesto which we supported. We still support that view. I am therefore very happy to be able to move a series of amendments which allows the Government to fulfil that passage in their manifesto.

The Bill introduced by the noble Lord, Lord Norrie, was discussed for seven and a half hours in total in your Lordships' House; when it left, it had the approval of the Government. Unfortunately, owing to procedures in another place with which I am not familiar, the Bill was killed. I have used the present Bill—if I may put it that way—to enable the Government to meet the commitment that they sought to meet through the introduction of the Bill brought forward by the noble Lord, Lord Norrie.

As we discussed this matter in this House for seven and a half hours, I do not intend to take the Committee through the details of all the amendments to which I now speak. Nevertheless, there are some differences between the present amendments and the text of the Bill from the noble Lord, Lord Norrie. Perhaps I may highlight them.

In Amendment No. 205A subsection (7) defines a period in which a contract can be let to a National Park authority under the contracting out procedures and puts a term on that contract. The National Park authority does not get unlimited time in which to operate. It would have to respond after 10 years—if that is the appropriate measure; the amendment states "not exceeding 10 years". It would have to report back and Parliament, if necessary, the Government or local authorities would be able to take a view on whether the relevant National Park authority had fulfilled its functions under the contract that had been let.

Subsection (8) of Amendment No. 205A draws attention to the planning functions of a future National Park authority. It has been inserted for the avoidance of doubt. When we considered these amendments, there was some doubt as to whether the planning functions would be suitably transferred under the contracting out provisions of the Bill.

Subsection (9) of Amendment No. 205A makes it absolutely plain that if a contract is let under the contracting out section of this Bill and under these amendments: the Secretary of State shall ensure that the functions contracted out to a National Park authority are not less than the functions carried out by an existing National Parks Committee or National Parks Board". In other words, there can be no diminution of the authority that is given at the moment to national parks committees or national parks boards.

In Amendment No. 205B, paragraph (3), there is a further difference between my amendment and the Bill of the noble Lord, Lord Norrie. The title "national park"—as I understand it from those with whom I consulted—poses certain problems for the New Forest. It is perfectly clear in the Conservative manifesto, from which I quoted to the Committee, that the New Forest has something of a special status. In giving the New Forest a "statutory" status, it is important to preserve the words "New Forest". On advice, I understand that to be the case, and paragraph (3) of Amendment No. 205B will achieve that.

Moving on from there, in Amendment No. 205E, paragraph (1) makes it perfectly plain that subject to the agreement of the Secretary of State on the budgets— that is normal procedure for national parks—the national parks, under, any contract between an authority whose functions are contracted out to a National Park authority … shall … make agreements … with respect to … income or expenses … financial relations between the parties". In other words, the national park authorities, by contract, will become financially independent once their budget has been agreed through the channels of the Secretary of State and the local authorities responsible.

The only other point I want to make in regard to the detail of the amendments is on Amendment No. 215A, which is the schedule which deals with the constitution and administration of national park authorities. The Committee will be aware—having studied the amendment in detail—that the amendment precisely reproduces the schedules involved in the National Parks Bill which failed in another place. I have not tried and do not intend to try to deviate from what the Government approved when the Bill of the noble Lord, Lord Norrie, was before your Lordships. I could have tried but decided that it was right to accept the government approved form and not to deviate from it.

Those are the details of the amendments. But I emphasise to the Committee that I am trying to give to national parks the status not only that was promised in the Conservative manifesto in 1992; not only that was approved by the Government in your Lordships' House when the noble Lord, Lord Norrie, moved his Bill; but also it is a cross-party agreement. There is no difference between the parties on this matter. The mechanism is different. The mechanism comes under contracting out. But it seems to me that contracting out in this manner gives all sorts of advantages that were not available—I am advised on this by those who know more than I— under the Bill of the noble Lord, Lord Norrie.

I hope that the Government will accept the amendments. As always, they are offered to be helpful to the Government. If a government make a commitment in a manifesto, it should be honoured. This is a perfectly sensible way of honouring that commitment. If Members opposite do not wish to honour their party's manifesto, that is their problem. But I am sure that when they look at the provisions they will see that the amendments achieve all the objectives of the Conservative manifesto, which we support in this instance, and also introduce new elements which—I am advised by those who know more than I—will be beneficial to the national parks. Some of our finest landscapes are designated as national parks. We want them to be independent boards; the Government want them to be independent boards; the Conservative Party wanted them to be independent boards. I beg to move.

3.45 p.m.

Lord Hunt

My Lords, the amendments moved by the noble Lord, Lord Williams of Elvel, are welcome to those of us who sit on these Benches, and if I may presume to say so, are particularly welcome to me. The Government's promise to upgrade the status of all those national park authorities which are committees of county councils to the status of boards as enjoyed by the Peak park and the Lake District park, has been lingering on throughout this Session of our Parliament. It is clear that it will not come to fruition without the inclusion of the amendments in the Bill.

In my view, the position has become urgent because of impending changes to the form of local government. As the noble Lord made clear, the amendments—apart from the new amendments to which he drew our attention—passed without any difficulty through your Lordships' House and only failed in another place through procedures and lack of time. I want to congratulate the noble Lord, Lord Williams, on his ingenious strategy, tactic or device—whichever word is appropriate—in seeking to include the whole of the Bill of the noble Lord, Lord Norrie, virtually unchanged, in this deregulation Bill. I support the amendment.

Lord Derwent

I too want to congratulate the noble Lord, Lord Williams, on bringing forward this matter in this form. I want to be practical. It is an amendment designed to speed up whatever legislation the Government may have in mind to bring forward. I want to explain briefly, having spent a great deal of time talking to national park officers in recent weeks, why time is now of the essence.

First, the staff of national parks are currently spending a great deal of time on practical housekeeping to allow for the transition to free-standing authorities, which is obviously necessary. The problem is that that takes them away from their normal work and is almost impossible to carry out except against a timetable. They must know whether they are likely to become a free-standing national park this year or in five years' time; before they can do any serious work. Therefore national park officers tell me that their day-to-day work is being greatly impeded by the uncertainty on timing.

The second point to which the noble Lord, Lord Hunt, referred relates to the question of local government reorganisation. I want to explain why, in practical terms, that is important. If local government reorganisation for some counties overtakes any national park legislation, then it will be necessary for the existing national parks to be handed over to the new authorities. However, the new—in many cases unitary—authorities will know that they will only be dealing with national park affairs for a limited period, because the Government promised legislation. I put it to the Committee that even the best councillors on the new authorities will put the matter low on their priorities because they will know that, though they may be on the national park committee today, in six months they may be off it.

The new unitary authorities, or whatever they may be, will be able to, or in practice will, virtually ignore their responsibilities for the national parks. The only point in favour of the noble Lord's amendments is the question of speed. If the Government were willing to say that they intend to introduce their own Bill early in the next Session, the need for the amendments would disappear. However, I would draw the Committee's attention to the very disappointing formula used by the noble Earl, Lord Arran, in answer to a Question on 23rd June when he merely said that the Government would introduce legislation as soon as possible at the appropriate time, which suggests that they do not consider the present the appropriate time. I therefore support the amendment.

Viscount Addison

I am grateful to the noble Lord, Lord Williams, for tabling these amendments and for allowing us once again the opportunity to discuss the important matter of national park legislation. The noble Lord, Lord Williams, has already referred to the National Parks Bill, steered through the House so successfully by my noble friend Lord Norrie. My noble friend would have liked to be here to speak today but unfortunately he is unavoidably detained by a long-standing commitment. My noble friend would echo and emphasise the urgent need for legislation for national parks and would agree that the next Queen's Speech would not be a moment too soon to introduce it and would be a popular move widely welcomed on all sides of the House.

The amendments tabled by the noble Lord, Lord Williams, seek to give effect to the measures set out in the Bill of my noble friend Lord Norrie within the limitations imposed by the context of the Deregulation and Contracting Out Bill. The Norrie Bill sought to fulfil the recommendations of the National Parks Review Panel and the Government's manifesto commitment to set up free-standing authorities for all the national parks. As a comprehensive stand-alone piece of legislation, it was perfectly suited to that purpose. We are now in the position where the Government have said that they will introduce not only measures to set up the new national park authorities but also the revision of the national park statutory purposes. They are also considering a duty on Ministers to further national park purposes. That is the comprehensive legislation which the national parks need. Time must be found in the next Session.

Local government reorganisation in England continues to press ahead without provision being made for new authorities to run the national parks. The future of these beautiful areas is being left to uncertainty, and that will not do. The 100 million people who visit the parks each year and the quarter of a million who live in them expect legislation to provide these areas with the best level of administration and protection. The onus is now on the Government to act. The great concern for the national parks from all sides of the Committee is quite clear.

Lord Dixon-Smith

We must all admire both the skill and indeed the craft of the noble Lord, Lord Williams of Elvel, in bringing forward this series of amendments. I regret to say that I do not have any idea what response my noble friend on the Front Bench will give to the amendments. I find it strange that we try to insert something completely novel into the Bill in this way. It is not as though there is a breakdown in the administration of the national parks as they exist at the present time. Local government is looking after them very responsibly. They are adequately funded and that work will continue. As to the national parks officers themselves finding a bit of a problem because they are indulging themselves already with transitional work, that is their decision. If that is taking them away from the routine work to which they ought properly to be devoting their attention, again there is an answer, and it lies within their own hands and within their own power. So there is not perhaps quite the urgency on that score that has been made out.

I accept that the pressure as a result of the work of the Local Government Commission and indeed as a result of the Local Government (Wales) Bill imposes a different imperative, but I am not sure that it is such a severe imperative as to require an insertion into this Bill. I shall look forward to hearing what is said from the Front Bench.

Finally, if there is a pretence that this is a contracting-out operation, I have always understood there to be an element of competition in contracting out. For the life of me I cannot see where the competition is involved in this exercise. It looks more to me as though it is a fix.

Lord Strathclyde

I join the noble Lord, Lord Hunt, and other noble Lords in congratulating the noble Lord, Lord Williams, on bringing forward these amendments in the way that he has. I should also like to thank the noble Lord, Lord Williams, for his kind words to me in his opening remarks. Since, after completing this Committee stage, I shall be effectively gagged—

Noble Lords

Oh!

Lord Strathclyde

—it is an opportunity for me to indulge myself now.

What is possibly not well known about the noble Lord, Lord Williams, is his undoubted concern for the countryside and the landscape. I remember well as a Minister in the Department of the Environment some years ago the noble Lord coming to me with an all-party delegation to discuss this matter. He has demonstrated characteristic ingenuity in seeking to reintroduce into this Bill some aspects of the proposals made earlier this Session by my noble friend Lord Norrie for a National Parks Bill which the Government supported. The noble Lord is also at the sharp end of legislators continuing the fashion of this Session of Parliament of tacking on to other government Bills Private Members' Bills which have otherwise failed; for instance, those on tobacco, disability and now national parks.

I have to point out with some disappointment that the amendments before the Committee sit uncomfortably in Part II of the Bill and indeed in the Bill at all. As my noble friend said a moment ago, it is hard to understand how the amendments would contribute to the policy of exposing public services to competition so as to achieve efficiency savings. By creating new public sector organisations the amendments are certainly not deregulatory in effect. I put it to the noble Lord and indeed to the Committee that it may not be the most appropriate Bill to deal with this question.

The amendments do not offer a terribly workable approach to securing the future of the national parks. The noble Lord, Lord Williams, is right when he says that he has followed my noble friend's Bill. But in seeking to shoehorn the provisions of the earlier Bill into these amendments to Part II of the Bill, I have to say that the noble Lord is able to propose only an emasculated version of the earlier proposals.

Like the noble Lord, Lord Williams, I shall not go into any great detail. However, we have problems with the fact that the proposals do not provide a permanent system for the administration of the parks. They propose a 10-year time limit for the new authorities. We do not believe that the new authorities should be time limited and of course the Government's intention is that the new arrangements for the national parks should be sound, secure and above all permanent. I hope that that will give a great deal of comfort to my noble friends Lord Derwent and Lord Addison.

Secondly, it is not clear in the provisions proposed by the noble Lord, Lord Williams, how the new authorities would be guaranteed independent finance. Subsection (3) (b) of the new clause on financial arrangements is unworkable since it could well be impossible to implement and could lead to arguments about what an authority would have spent on a function it no longer has, especially after some years had elapsed. It is not clear where the Secretary of State's grant would fit into the scheme or the status of what could emerge as a three-way relationship between local authorities, the Secretary of State and the new bodies. If functions are supposed to have been contracted out by a local authority, why does the Secretary of State have to make additional grant payments to the national park authority in respect of the contracted-out functions? If there are in effect two parties to the "contract" with the national parks authorities, the local authority and the Secretary of State, who is responsible for ensuring that the services are being delivered satisfactorily? There are no provisions in the amendments for winding up the existing authorities, which would have the effect of leaving us with two sets of organisations running the parks. That is by way of criticism of the amendments.

But my purpose today is not to criticise but to thank: the noble Lord, Lord Williams. I am grateful to him for reminding the Committee of our manifesto commitments. I only wish that he would be equally obliging in dispatching the rest of them. The Government are strongly committed to the objective of establishing independent national park authorities and to taking forward the other commitments to legislation which were set out in our 1992 policy statement on the future of the national parks.

I can confirm to the Committee that it is the Government's very firm intention to introduce national parks legislation. We intend to do so as soon as there is a suitable opportunity. At this stage I cannot go further than that. It is a firm guarantee in principle. It is certainly one of the commitments that we made in our manifesto. I am very pleased to have had the opportunity of repeating the commitments which have been made in the past and of listening to this subject being aired again in the Chamber. I hope that the noble Lord, Lord Williams, will accept the criticisms which I have made of these amendments and at the same time accept my gratitude for proposing them in the way he did.

4 p.m.

Lord Williams of Elvel

I am very grateful to those noble Lords who have taken part in this debate. I am also very grateful for the support of the noble Lord, Lord Hunt, who is very experienced in this area, and indeed the noble Viscount, Lord Addison. I am sure that if the noble Lord, Lord Norrie, had been here he would have added his voice. The noble Lord, Lord Derwent, quite rightly pointed out that time is of the essence. I take issue with the noble Lord, Lord Dixon-Smith, who I do not believe quite understood the problem which the noble Lord, Lord Derwent, was trying to explain about the importance, under the shadow of legislation and local government reorganisation—indeed, we have had this situation as regards Wales—of something being done quite quickly.

The noble Lords, Lord Dixon-Smith and Lord Strathclyde, accused me of "tacking something on". That was the expression which the noble Lord, Lord Strathclyde, used. The Committee is presented with a Bill which has a Long Title. Amendments, from whatever side of the Committee, may come and they will be judged by this Chamber in the end to be either relevant to the Bill or not. As the noble Lord, Lord Strathclyde, will be aware, I have taken advice which is that the amendments I am moving are relevant to the Bill. In the interpretation clause, which is Clause 68, there is no definition of contracting out. There is nothing which says that contracting out should increase competition in any way. If there is no definition of contracting out, it is perfectly proper for these matters to be put into the Bill if the Committee seeks to do so or if your Lordships seek to do so at a later stage.

As regards the detailed criticisms of my amendments by the noble Lord, Lord Strathclyde, I personally—and I speak for these Benches too—feel that it is not necessarily desirable to have a permanent system of national parks authorities. That may be something which we could discuss. I am not necessarily hooked on the principle that there should be a review after 10 years of how the authorities have got on, but that would be perfectly reasonable. But if the Minister says that he would like these contracts to be permanent, there is nothing to stop them being permanent. If that is what the Government wish, that is what I would accept.

As regards independent finance, Members of the Committee will be aware that I have gone to a great deal of trouble to make sure that the new national parks authorities which I am proposing should be set up under the amendments are financially independent. It may be that my drafting is not as good as the Government would like, but that is a matter which we can settle between us before we come to the next stage of the Bill.

As to there being no winding up of the existing authorities, the comment of the noble Lord, Lord Derwent, is very pertinent. The existing authorities could easily be changed as a result of local government reorganisation. As far as Wales is concerned, they will be changed when the Local Government (Wales) Bill receives Royal Assent. What I am suggesting is much more stable in terms of a contract to a new authority than what the Government were originally suggesting in terms of the Bill introduced by the noble Lord, Lord Norrie.

Since I referred to the manifesto of the Conservative Party, the Minister invited me to help him with other aspects of it. I am delighted to do so. I can help him on common land and on hedgerows. I shall be very happy to help him with the implementation of Conservative manifestos not just of 1992 but of 1987 as well. Those parts of the Conservative manifesto which we agree will receive my full co-operation in implementing them in your Lordships' House.

The noble Lord then said that the Government were committed to legislation on national parks. That is true, and it is in the manifesto. But we do not know when the Government will produce legislation on that subject. That is the point which the noble Lord, Lord Derwent, made. It is a matter of urgency.

I understand from press releases from the Department of the Environment which I find piled on my desk each morning—and I am grateful for the intervention of the noble Lord, Lord Strathclyde—that Mr. Gummer has announced that he will be circulating a draft Bill on the Environmental Protection Agency before the end of the Recess. If that is the case, what is to prevent the Department of the Environment circulating a draft Bill on national parks before the end of the Recess? I perfectly understand that the convention is that no Minister shall pre-empt what will be in the gracious Speech. Nevertheless, it appears that draft Bills are being circulated, and the clear intention is to legislate. If the noble Lord can tell me that in the next Session the Government will legislate on national parks, we shall have advanced a little further. I wait to hear what the noble Lord has to say.

Lord Strathclyde

In replying to the noble Lord, Lord Williams, I took some care with the form of words that I used. I said that it was our firm intention to legislate in this matter. I used that form of words because it is not a convention or good practice to seek to pre-empt the gracious Speech. Therefore, I can go no further than what I have already said. If there is a draft Bill to be circulated, that is a matter for the Secretary of State for the Environment. Again, since that event has not yet occurred, I cannot comment on whether that Bill may include some or all of the amendments and objectives of the noble Lord, Lord Williams. I do not think that anything can be furthered by asking me to expand on what I have said. The form of words is a fixed form of words and there is not a great deal more that I can say.

Lord Rodgers of Quarry Bank

Before the Minister sits down, he referred to a convention that details of the Queen's Speech should not be revealed in advance; but that is a slightly false convention. As the Minister will well recall, a very full statement of intention was given at the Conservative Party conference last year by the Home Secretary about legislation that was planned for the parliamentary session which is now coming to an end. I know of precedents where a Minister would say that subject to final decisions on the Queen's Speech, it is the hope of Her Majesty's Government to introduce a Bill to such and such effect in the next Session of Parliament. I am sure that that has been said before. If the Minister says that now, it would do a great deal to relieve the anxiety of the Committee. If the Minister fails to say that, I think that it is a pretty plain indication of the fact that in the discussions on the Queen's Speech, which, as he knows, have already taken place, no provision has been made for such a Bill.

Lord Strathclyde

We are still some way off the final decisions that have to be taken before the gracious Speech is finalised; and between now and then, we have various party conferences to go through. Furthermore, I do not think that the convention of not pre-empting the Queen's Speech was broken by the Home Secretary last year. I do not wish to sound overly pedantic, but I really do not think that I can help the Committee very much more than I have already done. I had hoped by coming here today that the Committee would see that the Government's position was helpful.

Lord Renton

I am very much impressed by what my noble friend has just said about the Queen's Speech. It is a very well established convention that Ministers do not announce in advance what might or might not be in the Queen's Speech even when firm decisions about it have been taken.

Lord Strathclyde

I am immensely grateful to my noble friend Lord Renton. Given his vast experience and knowledge of dealing with legislation over a great many years, I think that his advice should be taken by the Committee.

Lord Tordoff

In that case, can we have an assurance from the Minister one way or another? Is it the intention to announce these matters at the Conservative Party conference or not?

Lord Strathclyde

No, I shall certainly not be making any announcements at the Conservative Party conference.

Lord Williams of Elvel

I am sorry that the Minister cannot commit his right honourable friend to a speech at the Tory Party conference. I suspect that the noble Lord, Lord Rodgers of Quarry Bank, is right in what he said about the Home Secretary's firm indications that, subject to this, that or the other, legislation would be introduced. I very much hope that the Minister will be able to go a little further when we come to the next stage of the Bill because, as the noble Lord will undoubtedly be aware, although he will be "gagged" at that point, to use his own expression, I understand that we shall be meeting again on this Bill on Report during the Conservative Party conference. I shall make sure that we shall get one answer or another out of the Minister at that time. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 205B to 205F not moved.]

Clause 60 [Functions excluded from sections 58 and 59]:

[Amendment No. 205G not moved.]

4.15 p.m.

Baroness Hollis of Heigham moved Amendment No. 205H:

Page 54, line 33, at end insert: ("( ) its exercise includes the exercise of a discretion; or").

The noble Baroness said: In moving Amendment No. 205H, I should like to speak also to Amendments Nos. 205K to 205M which stand in the names of my noble friend Lord Williams and myself.

In this Bill the Government are right to exclude certain local authority functions from voluntary competitive tendering in Clause 60(1). I refer, for example, to matters affecting the liberty of the individual, the right of entry to someone's home and the power to make subordinate legislation. In this amendment, we are seeking to add another category of activity which should also be excluded from VCT—that is, those activities which involve a substantial element of discretion. I refer to where local people have elected councillors and the staff whom they employ to deal with confidential and sensitive issues such as resource allocation, prioritising need and making judgments. All those are activities involving discretion which we believe should not be contracted out to private contractors who have no such corporate view, no such culture, no such training, no such responsibility and no such accountability for them. We argue that those functions of discretion are at the core of local authority activity and should not be off-loaded. Local authorities cannot and must not contract out their judgment.

Therefore, this is a probing amendment to ascertain the extent to which we and the Government share a common understanding of what may or may not be removed from direct local authority in-house decision-making. What we are not talking about in this amendment is what I may describe as routine or mechanical functions, such as the payment of salaries and wages, information technology, most superannuation administration and internal audit. All of those functions have been, and will continue to be, contracted out if the local authority so decides. The issuing of rent books and other such housing matters should be treated similarly.

However, it is when we move on to those administrative functions which involve a mixture of the routine and the discretionary that we begin to have problems. The Government may believe that deciding whether somebody is entitled to a single person discount on their council tax is a mechanical matter and should be contracted out. However, deciding whether someone is entitled to a council tax rebate involves handling confidential material about income, the circumstances of non-dependent adults, and joint and several liability. Situations where judgments have to be made about the sexual and economic dependency of one adult upon another to determine whether or not one is dealing with a household are sensitive matters that should not be contracted out.

Similarly, the collection of housing or council tax arrears may sound routine and mechanical until one considers that debt collection involves options. It may involve attachment of earnings, top slicing for those on income support, or the introduction of bailiffs. It may mean having recourse to eviction. Again, sensitive knowledge of the family situation is needed to check whether it is getting its full entitlement to benefit. The possibility of debt counselling should also be considered. It cannot be right to suggest that private contractors are appropriate to handle such matters, particularly where that may involve negotiating with the Benefits Agency.

Over and beyond that are those functions which we would all accept as involving significant discretion. Some are mentioned in the subsequent amendments, Amendments Nos. 205K to 205M. They include development control, the enforcement of building regulations, listed building consent, traffic regulations, noise abatement notices, the inspection and prosecution of food premises, health and safety at work, consumer protection legislation, school admissions, assessing special educational needs, the granting of special discretionary awards for education, giving clothing grants, inspecting and registering residential homes, drawing up housing investment programmes, inspecting private rented accommodation for overcrowding, and notices of fitness. All of those are core local authority activities involving discretion which we believe cannot be contracted out.

So what do those functions of discretion have in common? First, they involve exercising a judgment between individuals' competing claims to scarce resources such as two families claiming a discretionary grant for a child in higher education. That cannot be privatised. Secondly, we believe that such functions may involve prosecution; functions significantly affecting a person's business or livelihood—for example, the licensing of taxis, and the inspection of restaurants, and perhaps closing them down—which may lay an authority open to judicial review. Such a power of prosecution cannot now be contracted out.

Thirdly, they are functions, as I hope is clear, which often involve a corporate review of policy—for example, housing investment programmes—over which, again, a contractor involved in a single service or quango, cannot have an overview. Fourthly, such functions may be involved with the development of land or planning consents, giving rise to high financial considerations bringing high financial rewards.

Officers and members of a local authority operate, rightly, within tight codes of probity. A declaration of interest, which when declared, unlike both Houses of Parliament, means that a member may neither speak nor vote on such an issue. But a private organisation making such decisions, and giving itself and its friends planning permission, can be an invitation to corruption.

Finally, those are all functions in which a local authority may act also as guardian of the public interest. Planning is an obvious function: trying to adjudicate between where a road should go and the rights and views of private residents. No contractor can act as a guardian of public interest. For a start, most of them do not know what the public interest is. If they do, it is usually in their private interest to subvert it.

I repeat, local authorities cannot contract out their judgment or the exercise of discretion. If they think that they can, they should not be elected to local government in the first place. I hope that the Minister shares our view, and if he indicates that, we may be able to come back on Report with an amendment which has all-party support. I beg to move.

Lord Strathclyde

I thank the noble Baroness for moving this important amendment. Clause 60 excludes from the scope of the order-making powers in Clauses 58 and 59 functions whose exercise would necessarily interfere with or affect the liberty of an individual or—

Baroness Hollis of Heigham

Forgive me, that is an amendment that I did not move.

Lord Strathclyde

Which amendment did the noble Baroness not move?

Lord Peston

Perhaps I may help. I assume that the amendment relating to Clause 60 is Amendment No. 205J which we have not yet reached.

Baroness Hollis of Heigham

I was speaking to Amendment No. 205H.

Lord Peston

I am looking forward to Amendment No. 205J, but I think that we should do things in order.

Baroness Hollis of Heigham

Perhaps I may help the Committee. I was speaking to Amendment No. 205H which inserts: its exercise includes the exercise of a discretion". I spoke also to Amendments Nos. 205K to 205M which are subsets, as it were, of Amendment No. 205H. Given the pressure on time, I was not proposing to move Amendment No. 205J.

Lord Strathclyde

I am grateful to the noble Baroness. Amendments Nos. 205H to 205M are on the grouping list. I am sorry if there is some confusion. I am dealing with page 54, line 33, which I believe comes under Clause 60.

Lord Peston

So far, so good.

Lord Strathclyde

I shall try to explain how I see the amendments in the context of the clause to which they relate. I do not want to go into any great detail, but the noble Baroness raised some important points, about some of which she is possibly right, and has understood what we are trying to do. I think I have explained what Clause 60 is all about. Members opposite know what it is all about so I shall just say that the clause has its place in the Bill because it is the Government's view that if a function affects fundamental freedom of the citizen of the sort detailed in subsection (1) and it is proposed to make it possible to contract out that function, then as a general rule it would not be appropriate to use a general order-making power alone to achieve that. But that is not to say that such functions should not be exposed to competition.

The statute book already provides many examples which allow contractors to be used in carrying out functions of that type. For example, the Customs and Excise Commissioners already have the power to appoint people who are not civil servants. Use of order-making powers for a similar purpose is also precedented in the Consumer Protection Act 1987. Here Section 27(1) places a duty of enforcement on the local weights and measures authority, but Section 27(2) enables the Secretary of State to make an order transferring that duty to "another person" who agrees to the transfer.

The point is that there is already a great deal of precedent for dealing with the kind of problems raised by the noble Baroness. The amendments would preclude the possibility of using the order-making powers in respect of various functions, particularly those involving discretion. The noble Baroness mentioned impartiality and probity in the exercise of discretion by contractors. I can assure the Committee that the Government recognise that as a legitimate anxiety. Where there is a statutory discretion available, then the exercise of that discretion in reaching a decision must be, and must be seen to be, free from any real danger of bias. Otherwise, the rule in law against bias, and the appearance of bias, will render the decision liable to challenge and reversal in the courts.

That would require Ministers, local authorities and office holders to consider very carefully before making any decision to introduce competition to the delivery of a decision-making function. They would have to take appropriate steps to ensure a professional approach to the task and that any sources of conflict could be eliminated. If that cannot be achieved in any given case, then that decision-making function could not properly be exercised by contractors.

That may mean that in some circumstances some functions might not be suitable for contracting out. We have always accepted that. But each case must be treated on its own merits, taking all relevant factors into account. Even where decision making itself is not contracted out, it may be possible to consider market testing the administrative support element of such functions, although that too must be treated with considerable care. It would therefore be wrong to exclude such functions on the face of the Bill.

Furthermore, the Minister, the office holder or the local authority would remain responsible for the process in the same way as they are at present as a result of the provisions in Clause 61. That includes a responsibility to ensure impartiality and due probity in the exercise of the function. For those reasons, I hope that the noble Baroness will be reassured that the powers of the Bill would not be used to undermine impartiality and probity in the exercise of functions which affect the interests of citizens.

As to Amendment No. 205K, which was spoken to by the noble Baroness, the scope for discretion in the function of determining entitlement to council tax and housing benefits, for example, forms a small part of the benefit determination function. Generally speaking, mere are set criteria by which individuals qualify for those benefits and there is little or no discretion available which affects the determination of individual entitlements. I am unclear as to what is meant by major educational awards; but I accept the broad thrust of what the noble Baroness said.

Baroness Hollis of Heigham

Discretionary awards.

Lord Strathclyde

The Government have no plans to make use of the order-making powers in the area mentioned, though should local authorities come forward with proposals for using contractors in those and other areas, we should want to consider them. For that reason, it would be difficult for me to accept the amendments proposed by the noble Baroness.

Amendment No. 205L would prevent the use of contractors to undertake any licensing function. I suspect mat in practice the interpretation of this phrase would mean that no licensing function could be considered as a candidate for competition and possible exercise by duly authorised contractors.

Impartiality is of course vital in the exercise of a decision-making function where the decisions taken could affect the interests of third parties, be they individuals or companies, and the Government would recognise that in some circumstances some licensing functions could not be undertaken by contractors. However, this does not mean that no such function can be. Each case must be treated on its own merits. Even where decision making itself is not contracted out the same point applies about the administrative support element. I assure the Committee that the Bill would not and could not be used to undermine impartiality and probity in the exercise of licensing functions.

Amendment No. 205M proposes to remove from the scope of the order-making power any function which might affect the use or development of land. I understand the anxieties but we must be clear about the matter. If an order concerning the contracting out of land-related functions was laid by Ministers and approved by Parliament there would be no compulsion on local authorities to take action. It would simply free individual local authorities to employ contractors where that seemed appropriate and sensible.

That is particularly important to bear in mind when one realises that the exclusion proposed by this amendment would range far wider than just the determination of planning applications. It would in fact impact on the economic development and other land-related activities of local authorities. It might be entirely appropriate to introduce an element of competition into the exercise of those activities. That may not have been the intention of the noble Baroness and I accept that these are probing amendments.

We believe that the broad approach taken in the Bill as it stands is the right one. It will be for the Minister to consider each case on its merits—consulting the local authority associations in respect of local authority functions—before deciding on whether to lay an order before Parliament. I suggest that that will be the proper time to consider whether or not a particular function should proceed. The amendment would preclude that option. That, in my view, narrows and limits the Bill in a way which I do not believe is in the interests of contracting out in general.

For these reasons, and in the light of the considerable assurances which I have given, I hope that the noble Baroness will withdraw her amendments.

Lord Peston

I became a little lost at the beginning of the Minister's reply. Was he relying partly on Clause 60 (1) (a), which deals with the liberty of the individual? Did he regard that as a safeguard that he wished to draw to our attention? Is it right that if we want to know what that subsection means, we shall have to discuss the next amendment?

Lord Strathclyde

Perhaps the noble Lord wants me to pre-empt the amendment. I was not using that as a defence—

Lord Peston

I would find it convenient if the Minister would pre-empt the next amendment if he can say something. I raised the matter yesterday because it appeared to me that that subsection says nothing or it prevents all forms of contracting out. I am interested to know whether someone can go to court in respect of any of these functions and say, "You cannot do it because it affects the liberty of the individual". Can the Minister be persuaded to comment on that now?

Lord Strathclyde

I was interested in what the noble Lord said yesterday about the word "liberty" in Clause 60(1) (a). He took the word to mean something far wider than is intended—

Lord Hailsham of Saint Marylebone

Hear, hear!

Lord Strathclyde

I hear my noble and learned friend agreeing with me. The reference to "liberty" means physical liberty. That is the consistent use of the word throughout the statute book—

Lord Hailsham of Saint Marylebone

Hear, hear!

Lord Strathclyde

The reference to an individual makes it clear that only the physical liberty of natural persons, and not a legal body such as a company, is the subject of the paragraph. The whole clause embodies the important principle that if a function affects the fundamental freedom of citizens of the kind detailed in the subsection, and it is proposed to make it possible to contract out that function, as a general rule it would not be appropriate to use a general order-making power alone to achieve it. I hope that that explains the well precedented legal meaning of the word "liberty".

Lord Peston

I thank the Minister for that reply. It is another example of that which was emphasised only the other week by the noble and learned Lord, Lord Hailsham. I take it that we do not use the word "liberty" to mean what it means in the English language but that we go to the peculiar sub-language called "the law" to find the meaning. It never occurred to me that it meant physical liberty; I thought that it meant liberty. I deeply thank the noble Lord for that explanation because it clarifies the Bill in an important way.

Baroness Hollis of Heigham

I am grateful for the Minister's thoughtful reply. I was pleased to see the measure of agreement between us on the broader issue; that is the need to protect the integrity and probity of local authority decision making. There is no gap between us on that. However, unless at a later stage the Government accept a version of this amendment, or bring forward one of their own, I have no confidence that Clause 60 will ensure that protection. I am sure that it is a goal for which we all aim.

I have been trying to tease out what the Minister was saying. Was he saying that the functions that I have indicated, including those listed in Amendment No. 205K, do not require the exercise of discretion? I have to tell him that of course they do. Housing benefit, for example, regularly involves the local authority exercising a discretion as to whether to top up the reasonable rent of the rent officer to that being charged by the landlord. That is an entirely discretionary item, as is, for example, whether one regards or disregards a war widow's pension. A discretionary education grant is also a discretionary item at further and higher education.

First, is the Minister saying that they are not discretionary items? I must assure him that they are. Secondly, is he saying that some items are discretionary and others are not? Is he saying that decisions will be made on a case-by-case basis but where discretion is involved they may not be contracted out? Thirdly, is he saying that many areas involve discretion but provided that they are contracted out to a body which has professional standards and can be trusted to act impartially, that is acceptable? Which of those three positions was the Minister's answer steering the Committee towards?

Lord Strathclyde

The noble Baroness has put a gloss on my reply. I said that there is little discretion available in many of these matters. Like many social security benefits, housing and council tax benefits involve the application of laid-down rules, as the noble Baroness knows very well. The point is that any claimant meeting the test so laid down is legally entitled to benefit. In that respect, there is little discretion; it is a question of establishing the facts and applying the rules to them.

I do not believe that it will be particularly helpful to have a long and tiresome debate about the application of social security rules. I certainly do not wish to have that and I am more than happy to look again at the issue to see whether I can be helpful on Report.

Lord Monkswell

I am sorry to introduce this subject but the Minister mentioned it in his earlier reply and I had hoped for clarification. He said that the Government did not have a mind to contract out these various areas of local authority activity and that it would be up to individual local authorities to come forward with proposals. He said that the Government would then listen to those proposals and act. The implication was that they would act in favour of the local authority coming forward with proposals.

Will the Minister clarify the position? The answer implies that it is acceptable for some local authorities to choose not to use their powers and effectively to say, "We are not prepared to look at individual cases. We are happy to abide by the basic minimum rules and we will contract that out". Some people may take the view that some local authorities may be prepared to abrogate their responsibilities. Is that effectively what the Government are saying? Would they go along with an individual local authority abrogating its responsibility as regards discretion in the areas that my noble friend on the Front Bench detailed?

Lord Strathclyde

The situation is laid out quite clearly in the Bill. If the Government decide to lay an order, there is no compulsion on local authorities to contract out particular functions. I was referring to the fact that where a local authority felt that it might be useful to contact out a statutory function, it could make representations to government. We should discuss them and if we decided that it was appropriate, we should bring an order before Parliament.

Baroness Hollis of Heigham

There are many issues involved here. The Minister must accept from me that there are many areas—housing and council tax—which involve discretion. He must take my word on that. We need to tease those out at much greater length. It may be that some of that can be done by way of correspondence during the summer so that we can see where we agree and where we disagree. Clearly, we must return to that matter because the proper function of a local authority is a key issue in the Bill. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 205J to 206A not moved.]

The Deputy Chairman of Committees (Lord Broadbridge)

I must warn the Committee that if Amendment No. 207 is agreed to, I cannot call Amendment No. 207A.

Lord Peston moved Amendment No. 207: Page 54, leave out lines 39 and 40.

The noble Lord said: In moving this amendment, I shall speak also to Amendment No. 212A. Before I do so, I should say that it was most remiss of me not to congratulate the noble Lord, Lord Strathclyde, on his rise to his new and very important position. He knows that I shall miss him in his present guise. I thought that he did an excellent job representing the Department of Trade and Industry. I suppose that his achievements there have partly led to his present promotion. Of course, in that position, I shall not be able to argue with him, but he receives the sincere congratulations of myself and my colleagues. But as I still have an opportunity to argue with him today, I shall do so.

I believe that the official receiver and the insolvency service do an excellent job. Therefore, I am puzzled as to why, in the middle of the Bill, almost apropos of nothing, there is reference at Clause 60(2) to the official receiver. It states: shall not exclude any function of the official receiver". On the next page of the Bill, it is emphasised that the office-holders to whom the clause applies includes the official receiver, which I assume includes the insolvency service.

I do not understand why the Government are remotely considering that to be a suitable function to contract out, especially as large numbers of other regulatory services are not even considered for that purpose on the face of the Bill. I wish to ask why that is so.

I am informed that the Government have hired the firm Stoy Hayward to look into possible options. I believe that it is either just about to prepare a report or possible options, or has already done so. I should rather debate the matter on the basis of what the report says.

My purpose in moving the amendment is to ask the noble Lord, as soon as the report is given to his right honourable friend the President of the Board of Trade, to place copies in the Library of your Lordships' House or, for my part more importantly, perhaps he will arrange for me to see it as I do not see how I can possibly approach this part of the Bill without seeing the main empirical underpinning of the Government's proposals.

If the Minister cannot give me the answer today, I am willing that he should write to me on the subject. I believe that he understands the point that I make. I am concerned as to why the official receiver and, implicitly, the insolvency service, is referred to in the Bill. More importantly, if a report is available, I should like to see it. I beg to move.

4.45 p.m.

Lord Strathclyde

Of course I thank the noble Lord, Lord Peston, for his kind words. He may not hear me for very much longer, but he will still see me across the Floor of the Chamber. I recognise the anxieties which underline his remarks. The contracting out of the official receiver's functions is obviously a difficult but interesting matter. As the noble Lord rightly noted, the Government have asked consultants to examine the extent to which the private sector could undertake the routine work involved in the administration of compulsory insolvencies, bankruptcies, liquidations and so on.

I shall accept the invitation extended to me by the noble Lord to write to him. I am not aware that the report has been received or even, when it is received, what its status will be. I believe in open government but decisions will have to be taken in the light of the report. Therefore, I shall write to the noble Lord on that matter.

Our objective is to explore the possible involvement of the private sector in two ways: first, the possibility of achieving greater gains in efficiency and effectiveness in the carrying out of functions by employing private-sector contractors; and, secondly, to look at the investigatory role of official receivers.

The contracting out of routine support work offers the possibility of releasing official receivers from the burden of such tasks to enable them to concentrate on their investigative work. In pursuit of those objectives, the provisions in Clause 60(2), which Amendment No. 207 seeks to remove, will ensure that Ministers are able to consider the widest range of options for contracting out.

The exemption to the general exclusion is needed to bring the full range of the official receiver's functions within the scope of the order-making power. Functions which might be affected would typically relate to the official receiver requiring bankrupts and directors to attend on him and answer questions; to his power to seize or require the surrender of property which he considers forms part of the insolvent's estate; and to the exercise of his discretion relating to the holding of public examinations or the suspension of a bankrupt's discharge. Clearly the exercise of those functions is directed principally at those who are concerned as individuals in bankruptcy proceedings or as directors of companies which have become insolvent. In each case, there may well be routine elements which would be entirely appropriate for contracting out.

I hope that that explains the background against which we are operating. I hope that the noble Lord will bear with me in relation to the report and that he will withdraw the amendment.

Lord Peston

I thank the noble Lord. There may or may not be routine elements for contracting out. The matter must be examined. I accept what the Minister said and I have always accepted his bona fides. I hope that he will agree with me that if consultants produce a report, it is only fair that that information should be made available to us all. Without that, we cannot really discuss the matter rationally because, while the Minister may have seen relevant information, the rest of us will not have done so.

I am quite happy for the Minister to write to me on the matter. I wish to return to it and I hope that we can do so on the basis of open government. Having said that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 207A and 208 not moved.]

Lord Strathclyde moved Amendment No. 208ZA: Page 55, line 10, leave out ("and").

The noble Lord said: These are technical amendments to take account of the changes which will be introduced by the Local Government (Scotland) Bill, which is currently before your Lordships, and by the Local Government (Wales) Act which recently received Royal Assent. Amendments Nos. 217CA, 217CB, 217CC and 217E amend the definition of "local authority". I beg to move.

On Question, amendment agreed to.

Lord Strathclyde moved Amendment No. 208ZB:

Page 55, line 13, at end insert: ("; and (h) paragraph 2 of Schedule 10 to the Local Government etc. (Scotland) Act 1994 (enforcement of water and sewerage charges)").

On Question, amendment agreed to.

Clause 60, as amended, agreed to.

Clause 61 [Effect of contracting out]:

[Amendments Nos. 208A to 208C not moved. ]

Lord Strathclyde moved Amendments Nos. 208CA to 208CC:

Page 55, line 18, after ("by") insert ("or in relation to").

Page 55, line 21, after ("by") insert ("or in relation to").

Page 55, line 23, after ("by") insert ("or in relation to").

On Question, amendments agreed to.

[Amendment No. 208D not moved.]

Baroness Hollis of Heigham moved Amendment No. 208E:

Page 55, line 23, at end insert: ("(2A) In the case of a function of a local authority Part III of the Local Government Finance Act 1982, Part III of the Local Government Act 1974 and section 100 and Schedule 12A to Local Government Act 1972 shall apply to the authorised person as they apply to the local authority. (2B) In any case where there is no relevant contractor to whom any provision referred to in subsection (2A) above applies, that provision shall apply to the local authority. (2C) For the purposes of subsection (2A) above, a local authority shall be entitled to make compliance with those requirements an express provision of the contract made between the authorised person and the local authority.").

The noble Baroness said: The amendment seeks to ensure that the rights of citizens to probity, transparency and accountability in local government are not lost or avoided if authorities contract out those functions voluntarily which hitherto Parliament has decided should be carried out by the local authority. What are we talking about? Subsection (2A) of the amendment refers to the continued role of the district auditor. He must, of course, be able to check, inspect and audit contractors' books when discharging a local function, as he can and does do as regards the local authority. After all, the contract is spending public money. The recent evidence from certain London local authorities shows just how vital that role of audit is. We do not want local authorities sheltering behind a sham VCT activity to avoid proper probity in financial affairs. The district auditor can surcharge and disqualify a councillor, but what is his power with regard to contractors? What happens to them?

Subsection (2B) of the amendment deals with the second set of controls within which local authorities operate—those of the local government ombudsman. As the noble Lord made clear yesterday, the local authority will remain accountable and legally liable for the exercise of its functions. But, for example, will an ombudsman be able to investigate a contract on receipt of a complaint as he would now investigate a local authority in a case where he believes that the procedures laid down by a local authority were either not reasonable or properly observed? Can the ombudsman find a contractor, and not just a local authority, guilty of maladministration?

That is obviously less of a problem when you are contracting out blue collar and outdoor services such as grounds maintenance. However, it would be infinitely more of a problem in regard to the use of VCT for in-house and professional services which may, as mentioned in the previous amendment, involve discretion—that is, a discretion for which senior management and councillors have hitherto taken responsibility. Where will responsibility for exercising that discretion lie? For example, what recourse will the aggrieved citizen have if, say, he loses the right to light because of a planning mistake; or if, for example, in social services he is unreasonably refused the right to be a potential doctor because of judgments made about the suitability of that family? Similarly, what would happen about the refusal of a special school place by a child exhibiting challenging behaviour? Where does the buck stop? At present it stops with councillors and senior management, but what about a contractor? Further, subsection (2C) refers to the continued right of the public and the press to information as laid down by the Widdicombe rules, and so on, to see relevant documents and not to be told that they may not see such documents because they may be regarded as commercially sensitive.

All three aspects of the amendment seek to ensure that, when a function is contracted out, members of the public—that is, council tax payers and the users of services—do not find their rights to that service curtailed and that they continue to enjoy the same citizens' rights to probity as they do now. In other words, if the local authority has contracted out the exercise of functions, it is to ensure that it has not similarly, and at the same time, offloaded citizens' rights. I beg to move.

Lord Strathclyde

I can assure the Committee that we do not want the provisions in the Bill to prevent a local authority auditor from carrying out his duty; nor do we want the role of the local government ombudsman to be in any way diminished. I am pleased to be able to tell noble Lords that those activities would not be undermined by the existing provisions in the Bill as currently drafted.

Under Section 16 of the Local Government Finance Act 1982, it is already the case that an auditor of a local authority's accounts has access to all the documents that he needs for the audit, whether they are held by the authority, the contractor, or, indeed, by anyone else. He is also entitled to demand explanations of any such documents from the person who is holding them or who is accountable for them. We have consulted the Audit Commission, and it is satisfied that no further amendment is needed for the purpose.

Clause 61 of the Bill provides that a function contracted out under an order shall be treated for all purposes as having been done or omitted by the local authority. That means, so far as the ombudsman is concerned, that the authority remains accountable and legally liable for the exercise of the function in question, with the result that the ombudsman's powers are not changed or diminished in any way.

The ombudsman can investigate a complaint of maladministration against a local authority when in fact it was the act of its contractor. If the ombudsman recommends that compensation be paid, the local authority will be responsible for that payment. But no doubt the contract will enable the local authority to recover the cost from the contractor.

The noble Baroness asked where the buck stops. That is an entirely appropriate question to ask when dealing with the issue of contracting out functions, not just of governments but also of local authorities. In any contracting out under the order-making powers of Clause 59 the buck stops with the local authority by virtue of Clause 61. My reading of that clause is that it is pretty unequivocal.

I am not sure whether the noble Baroness raised the question of the right of access of the public to local authority meetings—

Baroness Hollis of Heigham

I just talked about access to information.

Lord Strathclyde

Nevertheless, I am more than happy to deal with the point that I know is pertinent to the amendment.

Those authorised to carry out functions as a result of the contracting-out orders will not be public bodies and, therefore, they will not have the same or even similar structures as those of local authorities. For that reason, it would not be appropriate to apply the provisions of the Local Government Act 1972 to a body which is not a local authority. However, through the use of conditions of contract, local authorities will be able to require contractors to make available specified information to the public. Indeed, as a result of their implementation of CCT for defined activities, local government has already developed a body of expertise in preparing the specifications which require contractors to be responsive to their customers and to involve those customers in the improvement and monitoring of performance.

Further, there is the point that I made concerning the position with regard to accountability and liability which is also relevant to the question. I hope that my response will give the noble Baroness some comfort in dealing with such issues and that she will feel able to withdraw the amendment.

Baroness Hollis of Heigham

I thank the Minister for his reply. He has, indeed, met our concerns about the ombudsman, for which I am grateful. However, I do not believe that he fully met our questions about the auditor and the surcharge. If a contractor has been found guilty of misappropriating funds or inappropriately handling funds according to the district auditor, in vocabulary that we would normally apply as regards not protecting the fiduciary interests of the council tax payer, whom does the auditor surcharge—the contractor or the council? If the matter is of sufficient severity that, if it were a function exercised directly by the local authority, the councillors would be liable to disqualification, what would happen?

Lord Strathclyde

I am not trying to avoid the question, but the answers to such hypothetical questions very much depend on the circumstances of the case; for example, the amount of money involved, the kind of contract and so on. I would not want to venture into a great legal argument. The general principle underlying this though, as I suspect the noble Baroness is aware, is that councillors are in the front line of being surcharged. They are the responsible people for ensuring that the contractors know what their duties are.

5 p.m.

Baroness Hollis of Heigham

I thank the noble Lord, but I must say that he is really inviting local authorities to enter into a minefield where they contract out discretion—as we saw from the previous measure—and then render themselves liable to surcharge and disqualification if that discretion is abused by a contractor who is protected on other than financial grounds. I think that that is an extraordinarily worrying area that we shall need to come back to.

The further area that the Minister addressed concerned right of access both to information and to meetings. He said that as contractors are not public bodies, the public would not have access to those meetings. That means that key decisions in development control which affect the public, which the Government now require are taken in public, could in future be taken in private. That cannot be right. It cannot be right that decisions involving discretion such as development control could be taken in private without the proper attention of publicity, press and the public. That really is unacceptable. The Minister gave it away. He has; talked about customers and the satisfaction of customers. However, we are not talking about customers, we are talking about citizens' rights here. That is the gap between us. Unless the Minister can understand the nature of that concern, we will have to come back to that on Report. With the leave of the Committee, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees

I have to inform the Committee that if Amendment No. 209 is agreed to, I cannot call Amendments Nos. 209A, 209B or 209C. I now call Amendment No. 209.

Lord Williams of Elvel moved Amendment No. 209: Page 55, line 24, leave out subsection (3).

The noble Lord said: I beg to move Amendment No. 209 standing in my name. It may be for the convenience of the Committee if I also talk to Amendments Nos. 209A, 209B and 212. The purpose of this amendment is probing. It is simply to find out the meaning of Clause 61. I understood from our discussions yesterday in Committee that it was clear that, where a function was contracted out, the legal responsibility for the effects of that contracting out would remain with the contractor; in other words, whether it be a Minister, or an office-holder, and not with the contractee. I hope very much that the Minister will be able to help me on this. I think he did explain, but I would like to have it very clear that that is in fact the case. I beg to move.

Lord Strathclyde

The clause establishes an important principle in respect of contracting out. It establishes, as the noble Lord, Lord Williams, correctly understands, that the Minister, office-holder or local authority will be accountable and legally liable for the acts and omissions of the contractor, when they are employed to undertake one of their functions, just as they are accountable and legally liable for acts and omissions of their officials.

Our policy is that the public interest in general, and the interests of third parties in particular should not be affected by virtue of a function being carried out by a contractor. Lines of accountability and means of redress will remain the same. Third parties will continue to have redress in respect of the exercise of the function.

I understand that the amendments are probing and I shall not deal with them in detail. However, I hope that the point that I have made as regards the explanation of Clause 61 and of the principle gives the noble Lord some satisfaction.

Lord Hailsham of Saint Marylebone

Is this a real point? I just wonder whether it is. Before the noble Lord, Lord Williams, replies, I want to put my difficulty. Clause 61 basically states in subsection (2) that if something is contracted out and done through a sub-contractor, the act which is done, being a function of the Minister, the local authority or whatever, is in fact to be treated by the outside world as if the Minister had done it himself. Subsection (3) makes an exception to that. Subsection (3) states that as between the two parties to the contract, the law of contract applies and the reality has to be looked at; and subsection (3) (b) states that this does not affect liability for criminal offences. I think it is plain myself, but if I have it wrong I hope that someone will tell me.

Lord Williams of Elvel

I am most grateful to the noble and learned Lord who is much more expert than I am. It may not be a real point. In my probing amendment I was trying to elicit exactly the sort of answer that I think the noble and learned Lord has given. My only worry about that is that in the contract— if we look at subsection (3) (a)—there may be laid on the contractor the legal obligation to do certain things which are properly the responsibility of the Minister or office-holder subject to paragraph (b) below on criminal proceedings.

I was just hoping that the Minister would confirm that it is in all respects the duty of the Minister or office-holder to ensure legally—who do I sue when things go wrong?—that, when things go wrong, I sue the Minister or the office-holder. I believe the noble and learned Lord has given me the answer and I hope that the Minister will confirm that that is right in which case—

Lord Strathclyde

Yes, that is absolutely right. The exceptions are obviously there to deal with problems, for instance of criminal liability where obviously the Minister could not be held responsible. For example if a contractor killed someone when driving while drunk, one would not pursue the Minister. My noble and learned friend is absolutely right.

Lord Williams of Elvel

I am very grateful. I do not wish to waste the time of the Committee, but I think it is perfectly proper that we should try to explore these matters. If the Opposition in its innocence cannot understand quite what the Government are doing, I think it is right to explore. As I understand it, that is the function of your Lordships' House. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 209A and 209B not moved. ]

Lord Strathclyde moved Amendment No. 209C: Page 55, line 29, leave out ("as mentioned in that subsection") and insert ("by the authorised person (or an employee of his)").

On Question, amendment agreed to.

Clause 61, as amended, agreed to.

Clause 62 [Termination of contracting out]:

Clause 62 agreed to.

Clause 63 [Powers of certain office-holders]:

[Amendments Nos. 210 to 212B not moved. ]

Clause 63 agreed to.

Lord Strathclyde moved Amendment No. 212C: After Clause 63, insert the following new clause:

Restrictions on disclosure of information

(". Schedule (Restrictions on disclosure of information) to this Act (which contains provisions modifying certain restrictions on the disclosure of information where functions of Ministers, office-holders or local authorities are contracted out) shall have effect.").

The noble Lord said: In moving Amendment No. 212C, I wish to speak also to the other amendments grouped with it. This group deletes Clause 64 which deals with the disclosure of information restricted by statute or an obligation of confidentiality—that is restricted information—and replaces it with a new Schedule 13A. Amendments Nos. 213, 213A, 214 and 215 are grouped with this amendment.

New Schedule 13A thus addresses the second of the main statutory obstacles to market testing and contracting out which we have found. We have already debated the restrictions imposed by the Carltona principle which are addressed by Clauses 59 to 63. This schedule deals with the extension of restrictions on information, first, to enable such information to be passed to contractors where necessary, and, secondly, to ensure that the restrictions bite thereafter on the contractors too.

Let me give you some examples. Some information is restricted by statute, for example the Statistics of Trade Act 1947, which is used by government departments to compile indicators such as the index of industrial production. It is clearly absurd that virtually no part of the operation of collecting trade statistics can be undertaken by contractors because of the need to access names and addresses of respondents. A contractor would have to have access to such information, for example, to address envelopes. Other information is restricted by obligations of confidentiality where information has been provided on the understanding that it would be disclosed only to certain groups of people. New Schedule 13A would allow for contractors to have access to that information.

The amendments provide welcome safeguards. I hope that they will be welcomed by the Committee. I beg to move.

On Question, amendment agreed to.

[Amendment No. 212D not moved. ]

Clause 64 [Restrictions on disclosure of information]:

[Amendments Nos. 213 to 215 not moved. ]

On Question, Whether Clause 64 shall stand part of the Bill?

Lord Williams of Elvel

As I understood it, the noble Lord, Lord Strathclyde, had given notice of his intention to oppose the Question that Clause 64 stand part of the Bill. I do not know whether he wishes to pursue that intention.

Lord Strathclyde

I spoke to this Question with the other rather large group of amendments; I apologise to the Committee for it being such a large group of amendments. I wish to oppose that this clause stand part of the Bill.

Clause 64 negatived.

Clause 65 agreed to.

Lord Strathclyde moved Amendment No. 215ZA: Before Schedule 14, insert the following new schedule: