§ (".—(1) An authorisation given by virtue of an order under section 70 of the Deregulation and Contracting Out Act 1994 (authorisation by local authority of exercise by another person of functions of authority for period not exceeding ten years) may specify that it is to be for a period exceeding ten years if it is given in connection with a certified contract.
§ (2) But an authorisation given in connection with a certified contract may not by virtue of subsection (1) specify that it is to be for a period exceeding the shorter of—
- (a) the period for which the contract is to operate, and
- (b) forty years.
§ (3) For the purposes of this section an authorisation is given in connection with a certified contract if—
- (a) the authority by which it is given is a local authority for the purposes of this Act,
- (b) the authority and the authorised person are parties to the contract, and
- (c) the authorisation is given to enable the authorised person to perform or better perform his obligations under the contract.").
§ The noble Baroness said: In moving Amendment No. 16 I shall speak also to Amendments Nos. 18, 19 and 20. It is a basic principle of public law that a public authority cannot delegate to someone else the exercise of a function conferred on it by Parliament. However, under Part II of the Deregulation and Contracting Out Act 1994 a Minister is empowered to make an order which allows local authorities to contract out the exercise of their functions; that is, of functions specified in the order. It is anticipated that many contracts certified under this Bill will be contracts for public-private partnership projects and that in some cases functions may need to be delegated to ensure the success of these projects. One area of local authority business where an order is to be made is in relation to highways functions, and it is important to ensure that an authority wishing to rely on the order will be able to contract out relevant functions for the whole period of the contract. I shall explain why these amendments are needed to achieve this.
§ The 1994 Act provides that a local authority may not authorise a contractor to exercise any function which it is allowed to contract out for a period of more than 10 years. This restriction is likely to hinder public-private partnership projects which rely on the authority delegating a function, because, for commercial 633 reasons, these will generally need to be for a period exceeding 10 years. As I have indicated, at present the projects most likely to come up against this obstacle are projects for the construction and maintenance of highways. But the same difficulty may arise in other cases where the success of the partnership depends on the contractor being authorised to exercise a function without obtaining continual instructions from the authority.
§ It is likely that many public-private partnership contracts will run for 20 years or more. It is important that we look at any obstacle to the success of partnership schemes. The effect of the amendment is that where a local authority is to enter into a certified contract it may authorise the contractor to exercise any function which it is permitted to contract out by an order under the 1994 Act for the period for which the contract is to operate. But a contractor cannot be authorised to exercise any function for a period of more than 40 years.
§ It is important to recognise that the extended period for contracting out will only apply where a function is delegated so that a contractor can perform or better perform his obligations under a certified contract. It is also important to understand that a local authority which delegates a function to a contractor retains full responsibility for the exercise of the function concerned. So, for example, if a member of the public is adversely affected by a decision made by a contractor in the exercise of a local authority function, he will complain to the local authority—and be able to take any proceedings against it—as if the authority itself had made the decision.
§ Amendments Nos. 18 and 19 are consequential amendments. The effect of these is that the new clause will be treated in the same way as Clauses 2 to 8. It will come into force at the same time as those clauses—on a day to be appointed by the Secretary of State—and it will apply to any contract entered into after 12th June 1997.
§ Amendment No. 20, which slightly modifies the Title of the Bill, is required to reflect the subject matter of the new clause. I beg to move.
§ On Question, amendment agreed to.
§ Clause 9 [Power to treat expenditure as not being capital expenditure]:
§ Baroness Hayman moved Amendment No. 17:
§ Page 6, line 22, leave out ("55(7)") and insert ("55(3) or (7)").
§ The noble Baroness said: This amendment refines the amendment to Section 57 of the Justices of the Peace Act 1997 proposed in Clause 9 of the Bill, and further extends the opportunity to enter into partnership contracts.
§ Under the Justices of the Peace Act, local authorities are responsible for providing the accommodation, goods and services required by magistrates courts' committees. The original clause facilitates partnership contracts for magistrates' courts by allowing such contracts to be redefined as current expenditure for the purpose of providing grant support. They would be entered into by the paying authority.
§ Under Section 55(2) of the Act, a magistrates courts' committee is, however, able to procure any goods and services which are current expenditure items direct from suppliers rather than through the paying authority. 634 Section 55(3) defines current items as items which, if they were procured by the paying authority, would not be capital expenditure. The amendment, by including Section 55(3) in the regulation-making power conferred by Clause 9, will enable expenditure under certain partnership contracts to be treated as "not capital" for the purpose of allowing magistrates courts' committees to procure direct. The effect of this will he to allow magistrates courts' committees to enter into specified contracts direct with suppliers.
§ The intention is to make regulations which will allow magistrates courts' committees to enter into partnership contracts for the provision of IT services. It is not intended that this be extended to contracts for the provision of serviced accommodation, which will remain the responsibility of the paying authority. I beg to move.
§ On Question, amendment agreed to.
§ Clause 9, as amended, agreed to.
§ Clause 10 agreed to.
§ Clause 1 1 [Short title, commencement and extent]:
§ Baroness Hayman moved Amendment No 18:
§ Page 6, line 40, leave out ("8") and insert ("(Contracting out of functions in connection with certified contracts)").
§ The noble Baroness said: I spoke to this amendment when moving Amendment No. 16. I beg to move.
§ On Question, amendment agreed to.
§ Baroness Hayman moved Amendment No. 19:
§ Page 6, line 43, leave out ("8") and insert ("(Contracting out of functions in connection with certified contracts)").
§ The noble Baroness said: I spoke to this amendment when moving Amendment No. 16. I beg to move.
§ On Question, amendment agreed to.
§ Clause 11, as amended, agreed to.
§ In the Title:
§ Baroness Hayman moved Amendment No. 20:
§ Line 6, at end insert ("; and for connected purposes.").
§ The noble Baroness said: I spoke to this amendment with Amendment No. 16. I therefore move it formally. I beg to move.
§ On Question, amendment agreed to.
§ House resumed: Bill reported with amendments.