§ Mr. Kenneth Baker
On 24 July last my right hon. Friend the Secretary of State announced his intention to seek powers in the Local Government Bill requiring his consent to be obtained to the provision of financial assistance by the GLC-MCCs to other local authorities. That provision is now in clause 89 of the Bill, and it supplements the controls in the Local Government (Interim Provisions) Act 1984 over section 137 expenditure, major contracts and property disposals. At the same time, my right hon. Friend said that he would not hesitate to take further steps, where necessary, to prevent continuing activity designed to frustrate the Government's abolition proposals.
The Bill provides that rights and liabilities of the GLC-MCCs existing at abolition will pass to successor authorities. It has been brought to my notice that some of 542W the abolition authorities will seek to exploit this provision with the intention of perpetuating their policies long after they are abolished and thereby putting at risk the savings that will result from abolition. They would achieve this by creating continuing liabilities for successor authorities. The most notable example of such arrangements concerns legally enforceable undertakings to provide, or to guarantee, financial assistance to third parties.
My right hon. Friend has therefore tabled an amendment to the Local Government Bill which will have the effect of requiring the Secretary of State's consent to any enforceable agreement or arrangement proposed to be made by the GLC or an MCC under which a liability would pass, on abolition, to successor authorities.
The control over contracts in section 9 of the Interim Provisions Act contains a disaggregation provision designed to prevent large contracts from being broken up into separate units, each below the relevant value thresholds. I am aware that this provision is being interpreted narrowly by some of the authorities. I therefore propose to amend the Act to reduce the minimum value above which consent is required to £15,000.
I have given careful consideration to the sanctions that should be applied for a failure to obtain consent in the case of both the existing controls over land disposals and contracts, and those now proposed over other enforceable agreements and arrangements. I am proposing that the existing sanction of a liability to disqualification by the High Court from local government office should also apply to a failure to comply with the new provisions. The right to apply to the court will, in addition, extend to a successor authority.
I am concerned, however, that in the face of the continuing threats of grossly irresponsible activity by some of the abolition authorities, this sanction will not by itself prove to be a sufficient deterrent. I am proposing that the court should also be empowered in each case to order the member responsible to be the subject of a financial penalty, in the terms defined in the relevant clauses. And in order to protect successor authorities absolutely from damaging actions, I am proposing that where the Secretary of State's consent under the provisions is not obtained, any disposal of any interest in land would be totally void, and that any contract, or any other enforceable agreement or arrangement, capable of surviving beyond abolition, would be unenforceable against a successor authority.
I am aware that an abolition authority's failure to obtain consent under the provisions would affect the interests of third parties. I am therefore taking steps to give publicity to the proposals in order to ensure that their potential effect is widely understood.
In the light of past experience of the authorities' willingness to evade the consequences of new legislation before it takes effect, and continuing threats of irresponsible activity, the amendments which my right hon. Friend has tabled to the Local Government Bill will, with Parliament's consent, take effect from midnight tonight.
In principle, I would propose that the general consents issued under sections 7, 8 and 9 of the Local Government (Interim Provisions) Act 1984 should be extended to activities covered by the proposed new controls over enforceable arrangements. I shall also be considering the issue of further general consents for activities which leave no scope for obstructive action. These might include, for example, commitments by ILEA to voluntary schools and 543W grants to individual students, together with grants by the GLC under the homes insulation scheme, and certain grants for home improvement. Letters have today been sent to the GLC and metropolitan county councils notifying them of these proposals and inviting suggestions for general consents.