Local Government Bill [HL]
Lord McKenzie of Luton
Lord McKenzie of Luton
My Lords, I shall speak also to Amendment 3. Before addressing the detail of these amendments, I should register our concern at having reached Committee stage without having had sight of the transcript of Mr Justice Ouseley’s pronouncement at an oral hearing on 5 July. We take it from the communication that we have received from the Minister that the effect of the pronouncement was to quash the orders with effect from 5 July, nullifying from that date the full effect of the orders and, in particular, causing the term of office to come to an end of those councillors who remained in office as a result of Article 11 of the two orders. Should our understanding be changed by eventual access to the transcript, we reserve the right to return to certain matters on Report.
However much we deprecate the current situation, we have to accept for the purposes of the Bill that the quashing of the two orders obviates the need for Clause 1(3) and that the proposals for unitary government for Exeter and Norwich, which were the subject of the orders, are brought to an end. Furthermore, Clause 1(1) will, if enacted, preclude the current proposals for Exeter, Norwich and Suffolk from being taken forward at all.
However, as we have discussed previously, the provisions of the Local Government and Public Involvement in Health Act 2007 are being left intact by the Bill, so the opportunity for the Secretary of State to invite principal authorities, including Exeter, Norwich and Suffolk, to bring forward proposals in the future for unitary status remains. Of course, we can take no encouragement from what the noble Baroness said at Second Reading about the likelihood of that happening. She stated that,
“it would also be fair to say that the Government have no plans to issue further invitations for unitary authorities and, if there were applications, they would be viewed against the serious economic situation we are in at the moment and consideration would be given to whether they offered any value for money whatever”.—[Official Report, 30/6/10; col. 1832.]
Value for the money is, therefore, at the heart of the Government’s concerns.
The impact assessment for the Bill is essentially the mirror image of the impact assessment for the original orders. We are faced with three scenarios: the status quo; the value for money arising from unitary Norwich and Exeter; and value for money from the Boundary Committee proposals. The latter two have been the subject of detailed work and independent review. I believe that the Minister now accepts that the transition period costs and savings, for example, from Norwich and Exeter unitaries were broadly equivalent and that ongoing savings could amount to £6.5 million per year.
All that we have for justifying continuing with the current arrangements is the assertion that the savings achievable through restructuring could be made by the councils working more closely with each other. We do not know whether the savings that the Government have in mind reflect the level of savings that would flow from the Boundary Committee proposals or from the Exeter and Norwich proposals. The Minister might take the opportunity to say which. No detailed figures have been presented to us; no explanation of the basis on which the Government are making this judgment has been given; no independent verification of the judgment has been done; no assessment of what history tells us about the propensity of the councils to co-operate has been made—hence our amendments.
Amendment 1 would simply extend the reference to the 2007 Act to the whole Bill, not that there will be much of it left. Amendment 3 gives us an opportunity to test the Government’s assertion around the savings that they believe are possible without restructuring. It would require an independent report to be prepared to determine whether value for money is being delivered for each authority whose unitary proposals are stopped by this legislation.
What do we mean by “value for money”? Value for money is about offering efficient, effective and joined-up public services, delivered through maximising collaboration and technology. It is about services that are effective, responsive and best suited to meet the needs and preferences of local and business communities. It is ultimately about services that people use because they value them, not because they have no alternative. Those services should reflect consideration of demand and other factors in the area, including areas of deprivation, transport links and travel to work, and shopping and leisure patterns. They should involve communities playing an active role in influencing and shaping both their planning and delivery. The coalition Government’s programme proposes to abolish the comprehensive area assessment and to cut local government inspections, so whatever performance framework will be left intact or will be introduced to see what progress any council is making is a matter of uncertainty.
In light of this, the amendment represents an extremely modest proposal. It would give the principal authorities at least two years to make progress. It does not seek to direct the Secretary of State to any course of action should the review show the status quo not to be delivering value for money. However, it would provide an opportunity for some reflection on the decisions that prevent Exeter, Norwich and Suffolk from attaining unitary status—reflection that, regrettably, the impact assessments make clear is not otherwise to be done. I beg to move.
Lord Howarth of Newport
My Lords, before I speak to Amendment 3, perhaps I may apologise to the House for being unable to be present for the Second Reading debate and explain that I was chairing a trustees’ meeting and the annual general meeting of a charity in Brighton. I gave my apologies to the noble Baroness, Lady Hanham, but, until now, I have not had an opportunity to explain and apologise to the House.
The independent report that Amendment 3 would require the Secretary of State to lay before Parliament would hold both Norfolk and the Department for Communities and Local Government to account in a useful and appropriate way. In the past, certainly in the case of Norwich, whenever proposals for unitary local government have been made, Norfolk has promised to work in better partnership with Norwich City Council and to achieve economies, but in practice nothing effective has been done. These have been empty words intended to fend off the threat of unitary status. If we were to have the report proposed in this amendment, it would put the county on the spot.
CLG produced its impact statement of the costs and benefits of its policy to abort unitary status for Norwich and Exeter to accompany the Bill when it was introduced. As my noble friends explained at Second Reading, that was a shabby piece of work. The Government contended in the impact statement that the scale of efficiency savings that had been forecast to be achieved through unitary status could be achieved by other means and without the disruption of reorganisation. However, the evidence basis for that assertion has not been presented. On the first page of the impact assessment, the question is asked, in the format of these assessments:
“When will the policy be reviewed to establish its impact and the extent to which the policy objectives have been achieved?”.
The Government answered, in the box opposite that question:
“It will not be reviewed”.
Then this question follows:
“Are there arrangements in place that will allow a systematic collection of monitoring information for future policy review?”.
“Not applicable”, say the Government. It is clear that they do not want the cost-effectiveness or the value-for-money implications of their policy to be analysed and reviewed in the future.
A section of the impact statement provides a checklist of specific impact tests that the Government might have applied as they prepared the policy. However, they did not take the trouble to carry out any of these specific impact tests, whether on,
“Statutory equality duties … Economic impacts … Environmental impacts … Social impacts”,
or,
“Sustainable development”.
The Government simply put “No impact” in each of the boxes opposite those tests. It therefore appears that CLG might be rather embarrassed if there were to be any systematic audit of the value for money and the administrative and economic consequences of the policy of retaining the status quo as opposed to going to unitary status.
As the document continues, it asserts:
“Stopping these unitaries … is good value for money … there is no need for forced amalgamations to achieve efficiencies of scope and scale, and the way forward is to reform and improve local government from within”.
That begs the question. How do you reform and improve local government from within? One of the options would be a post-implementation review plan, the possibility of which is contemplated in Annexe 1 to the impact statement, but the Government have declined to bring one forward. In the box that inquires of the Government’s views about,
“Success criteria … Criteria showing achievement of the policy objectives as set out in the final impact assessment”,
the Government’s answer is, “Not applicable”. Then there is the question of what “Monitoring information arrangements” are to be provided; again, “Not applicable”.
Finally, the Government are invited to answer the question in the impact statement on reasons for not planning a post-implementation review. Their answer is:
“We are not proceeding with unitary councils in Exeter and Norwich. As these unitaries have not yet been created, the proposal is in effect remaining with the status quo of two-tier authorities in Exeter and Norwich. As such it is not appropriate to evaluate it”.
That seems to me the most extraordinary and irresponsible approach to the responsibilities of government. In the impact statement, the Government have concealed and conjured figures to disguise the fact that the preservation of the status quo with the two-tier system of local government is the most expensive of the three options before the Secretary of State. The other two options were a unitary Norwich and Exeter or unitary counties of Norfolk and Devon. Both those options would have been administratively cheaper than preserving the status quo.
Baroness Scott of Needham Market
Is there not a danger that, if this amendment were passed, the noble Lord would place a particular duty on these authorities that does not apply to any other authorities anywhere else in the country and that he would therefore be turning this Bill into a hybrid Bill?
Lord Howarth of Newport
We were at very particular pains to draft these amendments and have benefited very much from the advice of the Clerk of Public and Private Bills, who has ensured that these amendments are not hybrid—and of course I respect his opinion on that particularly important and sensitive matter. What we propose is a model for all principal authorities, for district and county councils throughout the land. I am simply illustrating the case by reference to what might occur in Norwich, Norfolk, Exeter and Devon, because those are the particular authorities that the Bill deals with.
Just as I would imagine that the Permanent Secretary as accounting officer would certainly want the kind of audit that this report would provide, so, too, I think that Parliament would. As has been extensively debated in your Lordships’ House in recent days, Parliament wants to undertake more post-legislative scrutiny. If there is to be post-legislative scrutiny, we will need the data about the performance of the policy that the legislation implements. Does the noble Baroness agree with this amendment and feel that there is a good case for improving transparency and accountability as the amendment proposes? If she does not, what are her reasons for opposing- it?
Baroness Butler-Sloss
My Lords, I speak to oppose these amendments. I first apologise for not attending the Second Reading debate. I was attending a session on why I should not speed, which, as it required me to attend and not to have three points on my licence, took priority over your Lordships’ House. I successfully completed that training. Secondly, although I am not sure whether I need to declare this as an interest, I should say that I live 10 miles from Exeter and initiated the Motion of Regret when the previous Government were in power.
I find it odd that the noble Lord, Lord Howarth, should talk about the irresponsibility of this Government when the previous Government were patently acting entirely irresponsibly in putting forward both Exeter and Norwich at a time when the Permanent Secretary, as the accounting officer, was pointing out that that was not good value for money and that the government department was likely to lose on the judicial review, as, indeed, it quite properly did.
The noble Lord is speaking to your Lordships as though this were a new event and nothing had happened before. I regret to tell your Lordships that I have come without all the documents, because I really did not think that it was necessary, but we had an enormous amount of information in the latter days of the previous Government setting out the irresponsibility of making Exeter and Norwich unitary authorities, the enormous cost that that would imply and, indeed, the damage that it would do to Devon and to Norfolk. The creation of unitary authorities at the pleasure of these two cities—big cities, I recognise—would do a great deal of damage to the counties. As a small example, the biggest town in Devon if Exeter were a unitary authority would be Exmouth, with 37,000 people. Devon would be expected to run a huge county—the second largest in England, with small towns and large rural areas— with very little money. As the Permanent Secretary said in relation to Exeter and Norwich, that would not be good value for money.
Listening to what the noble Lord, Lord Howarth, was saying, one would think that there was no past to this story, but there is a long past. I hope that your Lordships will not accept these amendments.
Lord Tope
My Lords, it is a pleasure to follow the noble and learned Baroness, Lady Butler-Sloss. If I recall, the first time that we debated this topic in this House a little over three months ago, the order was reversed, so I am particularly pleased to be able to follow on this occasion.
I was rather surprised that the noble Lord chose to begin the Committee by talking about value for money. It was only a little over three months ago that he had the duty—I accept that it was his job—to move orders in this House against all the advice that they did not represent value for money, and despite an acceptance by the then Government that the orders did not meet their value-for-money criteria. There was also strong legal advice that they would certainly be challenged in the courts and that such a challenge was likely to be successful—and lo, we know now that both of those things have happened; the orders have been quashed in the courts and the costs of those legal proceedings have been awarded against the Government. When the noble Lord speaks again on this amendment, he might like to explain to us how that represents value for money and why he chooses to start by discussing value for money. It seems to be a foolish way to begin.
The substance of Amendment 3 epitomises in so many ways the approach of the former Labour Government towards local government: this need always for local government to be answerable to central government—to Parliament, in this instance—and to be answerable upwards, to be telling the Government what it is doing, why it is doing it and so on. If there is to be an independent report in two or three years’ time, that report should be going to the councils concerned, particularly to the people who have elected them. It should not be going in the other direction, but that is what we in local government experienced for 13 long years from a Labour Government. I am just a little sad that already that party is showing that it learned no lessons at all from that.
The other thing that worries me about this is how little understanding there seems to be on the other side of the House about the financial climate into which we have all moved and what the next few years will bring. Are we seriously saying that local authorities should spend the next two or three years—a period in which we will all be required to find at least 25 per cent and possibly 30 per cent cuts in budgets which have been continuously squeezed year-on-year anyway—worrying about structures, mergers with other authorities, and so on? These matters are always emotionally difficult and often practically difficult, and they are always expensive at least in the short term, whatever long-term benefits may eventually come. In the short term, which means this very difficult financial period, such restructuring is always expensive. It is justified on the basis of longer-term savings.
Most particularly, it shows that we cannot move on from this. The election was fought by two parties, now in coalition government, which were very clear in this House and elsewhere about what would happened if they won the election. It could not have been clearer that, should the election be won, the unitary restructuring would not go ahead. I understand that the party which favoured it in the first place has not changed its mind. That is fair enough—of course it has not. That is perfectly reasonable. However, the action that the Government are taking, and were committed to taking, is very clear. What is the purpose of having a report in two or three years’ time other than to continue this argument and debate which has already been so debilitating for two or three years; and then to reopen it all again when that report is produced in three years’ time? How does that move anyone on? How does that help the people of Norfolk and Devon, Norwich and Exeter? They and we need to concentrate our efforts over the next two or three years not on restructuring but on how local authorities will work together and, where appropriate, share services. If this House should be sending any message to the counties and cities concerned, it should be: please try to put the very divisive past behind you and look forward to how you can work together in the best interests of all the people that you represent.
Baroness Hollis of Heigham
This amendment calls for what this House, when it suits it, has called for on numerous occasions: post-legislative scrutiny. I suspect that there is not a person in this House who would vote against post-legislative scrutiny until it comes to this particular Bill, these particular cities and these particular amendments, where it is inconvenient to look back to see whether the decisions taken were wise, prudent and represented value for money, which I insist they did not. Many of the remarks of the noble and learned Baroness, Lady Butler-Sloss, and the noble Lord are effectively Second Reading points. I will stay with the substance of the amendment, which is that what the Government are proposing does not—I repeat, not—represent value for money.
Baroness Shephard of Northwold
My Lords, I would like to declare an interest: I am a lifelong resident of Norfolk. I have also been a Norfolk county councillor, a Norfolk county councillor representing a part of Norwich, and I am a deputy lieutenant for the county.
The words of the noble Lord, Lord Tope, struck a great chord with me. He said that it was time for us to move on from the wrangles and arguments about unitary status for Norwich and Exeter. He also said that the Bill is the result of a manifesto commitment by the Conservative and the Liberal Democratic Parties, not an honour accorded to the legislation brought forward by the previous Government. I often chided them in this Chamber for omitting from their 2005 manifesto something that was obviously so very important to them. What an omission.
However, we do need to move on. The people of Norfolk and Norwich, and doubtless of Exeter and Devon, have been in organisational uncertainty for far too long—for four and a half years, I think. They have many pressing concerns. While the Committee will of course wish to give full and careful attention to the amendments before us today, it should be our aim to end the uncertainty and make progress with the Bill.
I also had sympathy for another comment from a noble colleague on the Liberal Democrat Benches—which was, given that the orders brought forward by the previous Government have been quashed, the position in both counties and both cities is as it was before. Therefore, why pick them out for special treatment and ask them to produce special reports on their financial arrangements?
Of course, it is pretty ironic that we should be asking for any kind of financial information involving Norwich City Council. After all, Hazel Blears, when she was Secretary of State, rejected its case for becoming a unitary authority on financial grounds. She said that she had concerns about the reliability of the financial data submitted in the proposal. Not only that, the proposal was rejected a second time by the Government’s own—
Baroness Hollis of Heigham
The information submitted to Hazel Blears came from a Lib-Dem minority council.
Baroness Shephard of Northwold
That is as may be, but the Government’s own Boundary Committee produced another report on the Norwich proposal. It said:
“While we have given Norwich City Council every opportunity to demonstrate to us the affordability of the two-unitary pattern, we consider that there remain a number of significant risks to the financial case set out by the Council”.
I am not sure, on a number of grounds, that there is any purpose at all in supporting the amendment. I repeat that it is regrettable that there should be at this stage yet another attempt to prolong the organisational uncertainty caused by the previous Government in Norfolk and Devon.
Lord Burnett
My Lords, I should declare that I live in Devon, I have a farm in Devon, and I own property also in Exeter. The noble Lord, Lord McKenzie, opened by asserting that value for money is at the heart of the Bill. It is certainly a major factor. I hope that my noble friend the Minister can give us a breakdown of the costs to Exeter and Norwich of becoming unitary authorities. It would be extremely helpful to have some sort of validation for what we believe would be extravagant and reckless costs incurred if the previous Government’s legislation were to be implemented.
There would be a loss of economies of scale by establishing new offices, new IT systems and new directors of numerous departments for highways, social services, education and children—all with support staff, all of whom would have pensions, and with all the attendant bureaucracy. I hope that my noble friend can give details of those costs. The country is facing huge debts, as the previous Government knew full well in February and March. Today the Independent sets out what the Office for National Statistics says our underlying debt is. This endeavour for unitary status for Exeter and Norwich is an act of financial recklessness, and I hope the Minister can explain the fundamental flaw in the previous Government’s legislation.
Lord MacGregor of Pulham Market
My Lords, I, too, declare an interest as a resident of Norfolk for many years. We have had debates on the wider issues affecting this Bill for some time already in this House and I will not repeat the arguments. I will make three points in relation to this amendment—I very much agree with my noble friends Lord Tope and Lady Shephard.
First, it is important to remember that there were reasons other than financial ones—although I stress the importance of them—why many of us resisted the unlawful attempt by the previous Government to carry through the unitary authorities. It was very unpopular in most of Norfolk, where other councils were going to be severely affected. The county council and most district councils were opposed to this. In the only poll taken of the people of Norfolk, only 3 per cent voted for the proposal. There are other arguments apart from financial ones: there would have been considerable effects on the other authorities if the proposal had gone through.
Secondly, I wonder what the point of the amendment is. Within two or three years, we will not have seen the full six-year evaluation of the costs and so on, and in any case I very much doubt whether, with the coalition Government still in existence, it will make any difference to policy.
My final point is about costs. All the up-front costs will come in the early years and the savings, if they come in the way that is intended—and very often these calculations made at the outset are wrong—will come much later. Of course, it is in the two or three years when the costs would be incurred that the particularly severe effects of financial constraints on public expenditure will apply. This would be an additional cost at a time when we would least want it. That is why I, too, do not support the amendment.
Baroness Hanham
My Lords, I thank everybody who has spoken in this short debate on what I considered a slightly strange amendment to be brought forward at this stage. It is worth reminding the House that the orders have been quashed—they are null, void and gone. With them have gone the alterations and changes to any thought of unitary authorities in those areas. They have been quashed not only in terms of not going forward as unitaries but also in terms of the other processes that we will come to, such as elections.
The judge was clear. In the original judgment, he said that the proposals were unlawful because the previous Government had not followed their own guidelines and criteria in coming to decisions, and had changed their mind from time to time. They had started off being very opposed to unitary status for Norwich and Exeter and then, by dint of a few squirls and whirls as time went on, they decided that there were compelling reasons why these two orders should go through.
That is the background. We are finishing off a process that was started—as my noble friend Lady Shephard said—with our commitment to getting rid of these orders when they were first put through the House, against the strong advice of both of the opposition parties, who said then that if and when they were in government, they would alter that. The Bills started, but in the mean time the judicial review was put in hand and came up with the view that the orders should be quashed.
We are not in a position to be talking or bothering about reports for the future. The fact is that we are now back to having two city councils in county council areas. It would be patently absurd to have a report on these two proposals and authorities when they are not going to be doing anything different to what they were doing—and nobody has even thought about having reports on the other unitary authorities and how they differ from other authorities. Therefore, I completely reject the arguments about the need for a report. This is not about post-legislative scrutiny; it is about trying to tie up matters and ensure that at some stage Norwich and Exeter can bring forth another application for a unitary authority. The amendment is trying to bring about information that will not be available to any other authority.
There have been a number of questions and a number of criticisms, and I should like to start with the noble Lord, Lord Burnett, who asked specific questions about costs. He asked how much it would cost for Exeter to go unitary. The answer is £19.9 million. In addition, the combined cost of restructuring the two unitaries would be more than £40 million. I think that local authorities have other things to do than waste £40 million on restructuring at present.
Baroness Hollis of Heigham
My Lords, is the noble Baroness also going to tell the House about her own impact analysis of the savings of £39.4 million that would occur during the same six years? Offset against the £40 million, there would be a net cost of £300,000 per authority.
Baroness Hanham
My Lords, I am not going to go any further into the impact assessment; it is there for noble Lords to read. Our view was that, although there ultimately would be savings, they would not come about for at least another six years.
Baroness Hollis of Heigham
No, my Lords; that is not what the impact assessment said.
Baroness Hanham
It looks as though it would be about six years before the savings came about. There have indeed been references to ongoing savings of £6.5 million being forgone in 2015 and 2016. We have never said that those savings would arise from the unitary solution, but we believe that savings on a greater scale are possible from sensible collaboration between the county and the cities—something that every other authority is beginning to have to do. All across the country, local authorities are having to begin to co-operate with each other. They are having to make reductions in costs and they are not spending money on restructuring.
I do not see any point at all in bringing forward such a report, as it would have no virtue. If it were brought forth in three or four years’ time, I am not sure whether it would have the slightest effect on the coalition Government, if they were still here, and I do not think that it would be of benefit to anyone other than perhaps the proponents of unitary status in both these areas.
The noble Lord, Lord McKenzie, asked about Mr Justice Ouseley’s transcript. It is not available, as I believe the noble Lord knows. I do not know whether he was trying to put me on the spot but I do not have it. He does not have it and my understanding is that no one has it, although I am sure that it will be available at some stage. However, it is absolutely clear that his judgment quashed the orders in their entirety. That is the message that we have and that is where we are at the moment.
In all this, we do not want to lose sight of the fact that the path started on by the previous Government was unwise, illegal and totally flawed. If anyone now tried to shore up and perpetuate the proposals, that would be very unwise and would not get anywhere.
Earl Cathcart
My Lords, I was not intending to speak on this amendment but I think that I have Mr Justice Ouseley’s judgment, and I believe that one or two other noble Lords have all 106 paragraphs of it as well.
Earl Cathcart
The final paragraph, number 106, says:
“However, for the reasons which I have given”—
those are his words—
“the orders are quashed”.
Therefore, the judgment is available.
Lord McKenzie of Luton
Perhaps I can help the noble Lord. We have a copy of the judgment but what we do not have is a copy of the transcript of the oral evidence that was given on 5 July. I was not trying to score a point when I said that. Our understanding is based on the information that we have received via the Minister. We have not had a chance to look at it at source. That was the only point I was making.
Baroness Hanham
That backs up exactly what I said which was that the orders were quashed. I do not have much more to add. The noble and learned Baroness, Lady Butler-Sloss, made a very powerful speech, as did the noble Lord, Lord Tope. It is time for this to be put aside, so that the two authorities can get back to business, working as they should with their counties and other local authorities to ensure that they provide the best service possible. I reject the amendments.
Lord McKenzie of Luton
This has been an interesting debate. Not much of it has been focused on the specifics of the amendment before us. The amendment calls for a report at a stage in the future on whether value for money is being delivered by the status quo. Implicit in that—we have accepted that the orders have been quashed—is that the Bill, in its amended form, will undoubtedly pass and that the arrangements proposed in respect of Exeter, Norwich and Suffolk indeed will not proceed. We have accepted that; we do not like it and do not think it is the right judgment, but that is quite different from what we are seeking through this amendment.
We are seeking to understand and to validate, effectively, the proposition from the Government, which is that you do not need restructuring to get value for money as you can do it via a range of other means. My noble friends Lord Howarth and Lady Hollis have stressed that. That is the assertion of the Government and it is an integral part of the basis on which they have made their decision to go ahead as they have. The noble Baroness, Lady Hanham, asked why there would be a report in respect of only these two unitary authorities. She said that they would do nothing different from what they do at the moment. If that is the case, we would be extremely worried. If they simply proceed as they do at the moment, the comparison, which has been made by my noble friend, between the status quo—without any of the changes to which the noble Baroness made some broad reference—and the undoubted net present value benefits that could come from unitary status for Exeter and Norwich and, frankly, the even greater benefits that would flow from county unitary status, would be very significant indeed. Therefore, it seems to me that the Government, on the basis of the proposition of the noble Baroness, would not achieve the value for money that could come from one of the alternatives.
Today, it is accepted that what we want will not happen. All the amendment is saying is that we should have a chance to review, in the future, whether the Government’s assertion is borne out in practice. The noble Lord, Lord Tope, made the point that the report would be made upwards to Government and, of course, it would be available to the local authorities as well. There is no difficulty in that.
Many of the comments have gone back over the debates that we have had. I do not think my noble friends propose to reopen them this afternoon in respect of some of the other amendments. I have heard no coherent case from Members opposite about why we should reject the proposition of a report, after two years, to test the assertion which is fundamental to the Government’s position that value for money is being delivered under the current structures—not only change-over structures. That seems to me a reasonable and modest proposition. As I said when I introduced the amendment, should the report show that value-for-money has not been delivered, it does not seek to impose on the Secretary of State any particular course of action to try to open up the opportunities of further proposals for unitary status. It simply seeks information that all of us should be pleased to receive.
If the outcome of the report were that value-for-money has not been delivered, if the Government’s assertion were wrong, it is clear that the law is in place—the Government have not amended it—to enable the Secretary of State to come forward with invitations to get further proposals for unitary status. The current Secretary of State may never be minded to do that—it may be ideological and political rather than based on an analysis of value for money and other factors. I accept that value for money is only one of the factors in which noble Lords are involved in making their judgment on this.
With the leave of the House, I propose to withdraw the amendment today. However, it is important to state that we wish to return to the matter on Report. I urge noble Lords to look at the substance of the amendment and draw back from some of the broader debate that we have revisited today. I beg leave to withdraw the amendment.
Baroness Hanham
Baroness Hanham
My Lords, I shall speak also to Amendment 7 and to my intention to oppose the Question that Clause 2 shall stand part of the Bill.
As we have discussed, on Monday 5 July, the High Court decided to quash, in their entirety, the structural change orders creating unitary councils for the cities of Exeter and Norwich. As a result, the terms of offices for one-third of the members of Exeter and Norwich city councils, which had been extended by the orders, ended on 5 July and the cities will need to arrange by-elections to fill those vacancies. Moreover, the decisions taken in March to implement the unitary proposals for Norwich and Exeter by the then Secretary of State are now overturned.
Amendment 2 seeks to remove Clause 1(3) from the Bill. This subsection currently revokes the structural change orders for Exeter and Norwich which have just been quashed by the court. Consequently, the Bill no longer needs to revoke these orders and this subsection is no longer required.
I have also made clear my intention to oppose the Question that Clause 2 stand part of the Bill. Clause 2 makes consequential electoral arrangements that would have deferred the elections of one-third of councillors from May 2010 to May 2011 on the revocation of the structural change orders. As the orders have been quashed by the court, they will no longer be revoked by the Bill and these consequential provisions will never be invoked and are no longer required.
As I have explained, because of the quashing, these one-third of councillors are no longer councillors and have not been since 5 July when the orders were quashed.
Amendment 7 will make consequential changes to the Long Title of the Bill, reflecting the removal of Clause 1(3) and Clause 2 from the Bill.
The purpose of these amendments is to ensure that the Bill does not include unnecessary legislation, and correspondingly to ensure that parliamentary time is not taken up on debating legislation that is not required.
For this reason, I would ask the Committee to support these amendments.
Lord Howarth of Newport
My Lords, I should have declared my interest as a resident of Norwich at the beginning of my contribution to the previous debate. I do so now.
Government Amendment 2, to strike out Clause 1(3), raises important constitutional issues—they were raised by the judgment in the High Court—and I want to offer some remarks about them. The noble Baroness’s amendment provides that it should not be Parliament that revokes the structural change orders because, she says, it is unnecessary, given that the judge in the High Court has already quashed them. However, perhaps we could just think about the implications of this constitutional situation. Is it not in fact rather remarkable?
Is my understanding of the British constitution so old-fashioned as to be obsolete? I thought that Parliament was the sovereign law-making body in Britain. Thirty years ago, I do not think that that would have been disputed. When Parliament took the decision that we should join the European Community, Parliament knowingly and deliberately subordinated Westminster legislation to the authority of the European Court of Justice, but Parliament retained and retains the power to undo our membership of the European Union. When we incorporated the European Convention on Human Rights into our domestic law, Parliament specified that judges should be entitled to point out any inconsistencies between legislation passed by Parliament and the provisions of the European Convention on Human Rights, but specifically did not give the judges power to set aside Acts of Parliament that they deemed to be incompatible with the European Convention on Human Rights.
Meanwhile, however, over the past 40 years of judicial activism, the scope of judicial review has grown enormously. Many of us have welcomed that. Many of us, time and again, have been grateful to the judges for acting to strike down acts of an overweening and incompetent Executive. We accept the power of the judiciary to quash administrative acts by the Executive when they are in breach of the law or when procedures have not been properly followed. That is one thing. Although his arguments are debatable, I can understand why Mr Justice Ouseley found grounds to criticise the Department for Communities and Local Government and the previous Secretary of State. However, it is surely an entirely different matter when a judge takes upon himself to quash orders that have been formally approved by Parliament. The structural change orders were extensively debated in both Houses, with both Houses, thanks to the report of the Merits Committee and numerous speeches made by noble Lords, including by the noble and learned Baroness, Lady Butler-Sloss, being fully aware of the facts and the issues that exercised Mr Justice Ouseley. Being aware of those issues, both Houses voted to approve the orders.
I am told that there are precedents for the quashing of secondary legislation. Indeed, the Minister cited one to us in one of her letters. I am also told that the precedents have all been at the level of the House of Lords, the Judicial Committee of the Privy Council, now the Supreme Court. I stand ready to be corrected if my information is wrong, but I understand that, for the first time, a High Court judge has arrogated to himself the power to overthrow legislative decisions properly made by Parliament.
Baroness Butler-Sloss
Does the noble Lord see any difference in a judicial decision at whichever level? As I understand it, the previous Government did not appeal the decision of the High Court judge, so that is as good a decision as that of the Supreme Court. If there was an appeal pending, that would be a different matter, but the noble Lord is not entitled to say that a decision of the High Court is not as good as a decision of the Supreme Court if the loser chooses not to take it to a higher court.
Lord Howarth of Newport
Technically, the noble and learned Baroness is of course right. I just make two points in response. I see this as part of the creep, the continuing extension of judicial authority to supersede parliamentary authority. The other point is that the district councils, Norwich and Exeter, did not have the money to appeal against the judgment. They could not afford to do so. There is no legal aid for local authorities which suffer rulings hostile to their interests. I do not think that CLG was going to pay for the cost of their appeal. So there has never been an appeal to test that point.
Baroness Butler-Sloss
Forgive me for rising again, but was not the decision made against the government department?
Lord Howarth of Newport
The decision was made against the government department. Again, I gently point out to the noble and learned Baroness that it would be very unlikely that the government department headed by Mr Eric Pickles, who spent most of the election campaign denouncing the iniquities of unitary status for Norwich and Exeter, would appeal against the judgment by Mr Justice Ouseley. I think that is a rather fanciful objection.
We are witnessing a constitutional development that we need to ponder and that we should deliberate on very seriously. It seems to me—this perhaps reflects my old-fashioned view of the British constitution—an improper and dangerous development. I read with enormous interest, admiration and pleasure the recently published book by the noble and learned Lord, Lord Bingham, The Rule of Law. In that book, he counselled judges to walk delicately, like Agag in the Old Testament, and to proceed with very great caution when tempted to usurp the authority of Parliament. When the noble Baroness, Lady Neville-Jones, last Thursday repeated the Government’s Statement on their response to the ruling of the European Court of Human Rights on Section 44 of the Terrorism Act 2000, I asked whether the Government still accept that Parliament is the sovereign law-making body. She replied:
“As for the supremacy of Parliament, yes, of course it is supreme”.—[Official Report, 8/7/10; col. 385.]
That was, to a degree, comforting, but there seems to be an inconsistency between her outlook upon this and the outlook of CLG because the noble Baroness, Lady Hanham, made what seemed to me a very peculiar statement, coming from a Minister, in the debate at Second Reading:
“Judicial review became possible because they were orders, so it was a judgment not on a parliamentary decision, but on secondary legislation that arose from primary legislation”.—[Official Report, 30/6/10; col. 1833.]
I think that is a curious statement. Does the noble Baroness really believe that the votes in Parliament to approve the structural change orders were not decisions made by Parliament? If not, what is the status of statutory instruments? Why does Parliament spend all these hours considering secondary legislation? There are thousands of statutory instruments every year.
In proposing to delete Clause 1(3), why are the Government hiding behind the High Court? Why do they not want Parliament to use its authority to cancel the laws that Parliament has made? Do this Government, or do they not, believe that Parliament and not the High Court is sovereign? Can the noble Baroness persuade us that this Government respect Parliament? The noble Baroness urged the House not to follow the procedure approved by the Speaker to refer a Bill to the Examiners where a reasonable case is made that it is hybrid. When the noble Baroness spoke at Second Reading, she described the moving of that Motion as,
“a somewhat dubious delaying tactic”.—[Official Report, 30/6/10; col. 1798.]
I simply observe to the noble Baroness that among those who took a different view and voted in favour of the reference were two former heads of the Civil Service, three other Permanent Secretaries, four bishops, three very senior and distinguished judges, including the noble and learned Baroness, Lady Butler-Sloss—and I pay tribute to her because I thought it was an honourable vote on her part—and other extremely distinguished Cross-Benchers. They listened to the argument and took the view that the Government were misbehaving in opposing the reference to the Examiners. Whatever the noble Baroness thinks of my motives, I hope she will be respectful of their view.
Viscount Eccles
I am grateful to the noble Lord for giving way. Is his argument that once Parliament has made a decision—let us accept for a minute that he is right that the affirmative instruments were approved—it is in no position to change its mind and reverse its decision?
Lord Howarth of Newport
On the contrary, that is exactly my argument. I have asked the noble Baroness why she is simply relying on the High Court to quash the decisions of Parliament rather than having Parliament exercise its own authority to quash the decisions that it previously took. That is precisely the point at issue. I suggest that this is part of a pattern that we are beginning to see emerge in this coalition Government of an habitual disrespect for Parliament. If I may, I shall give one other instance.
Earl Cathcart
I thought that it was for Parliament to make the laws and for the judiciary to judge on them. In this instance, the judge said that what the Secretary of State did in coming to his decision was illegal and so he quashed it.
Lord Howarth of Newport
I understand that that is what the judge said, but my question is whether it is within the competence of a judge, whether a Supreme Court or a High Court judge, to overthrow orders that have been duly made by Parliament. Parliament was fully aware of all the arguments that moved Mr Justice Ouseley to arrive at his judgment, but the fact is that if Parliament is the sovereign law-making body in this country, its authority ought to prevail. That is my opinion.
I will briefly illustrate what I take to be part of an emerging pattern of disrespect on the part of the Government to Parliament. On 29 June, this House voted to approve a Motion, tabled by the noble Lord, Lord Steel, that called on the Government to table Motions to enable the House to approve or disapprove of four specific reforms that would enable this House to be more credible and effective. However, a week ago, on 7 July, the Leader of the House informed the House in a Written Statement that the Government do not intend to respect the will of the House in this regard and,
“do not consider it appropriate to table Motions”,—[Official Report, 7/7/10; col. WS 13.]
that the House has called upon them to table. He cited as justification the irrelevant fact that the Deputy Prime Minister has set in hand work on a draft Bill for an elected second Chamber. Why are the Leader of the House and the Government treating the House with this contempt?
The Deputy Prime Minister arrogantly breezes around declaring that our parliamentary institutions are not fit for purpose. This arrogance is particularly unbecoming in a Government with no mandate from the people and in a coalition that has been cobbled together and is tempted to use its majority to bulldoze this House in ways that this House has not tolerated and not expected from Governments for many years. The vote yesterday in this House on the Academies Bill on which the Government were defeated is a very salutary indication to them that they cannot simply take it for granted that they now have a majority in the House of Lords that entitles them to treat this House of Parliament with the same contumely with which Governments habitually treat the House of Commons.
We see this attitude in the big declarations and the small actions, and here in this amendment, which casually endorses the subordination of considered decisions of both Houses to an adventurous decision by a High Court judge that happens to suit the Government’s self-indulgent political agenda. How does the noble Baroness defend it?
Baroness Butler-Sloss
My Lords, perhaps I might be allowed to speak before the Minister replies. I start by bringing us back to what we are actually doing today, and by reminding the House that I am a Cross-Bencher. I do not support the Government or the Opposition; I support the belief that Exeter should not be a unitary authority. I have three or four points to make. I proposed a regret Motion under the previous Government that was overwhelmingly supported by this House by a large majority. The previous Government deliberately and arrogantly—I cannot resist using the word “arrogant” because the noble Lord, Lord Howarth of Newport, has used it of this Government—went ahead and ignored the will of this House, knowing that their Permanent Secretary to the relevant Ministry had said that the government department would be likely to lose when the judge took his decision. This House was in effect misled, because of course we did not have the judge’s decision; we had the facts. Most of us thought that what the Permanent Secretary said was right, but had to wait for a judicial decision. The Government decided to go ahead despite a judicial review and quite rightly lost. So it was that Government who insisted on putting through illegal orders, and that is what the judge found.
There is nothing adventurous about a High Court judge sitting in the Administrative Court deciding that local government or national government are actually acting illegally. That is the work of the Administrative Court at three levels—the High Court, the Appeal Court and the Supreme Court—and the order and decision of a judge in the High Court is as good as the decision of any court until it is reversed. So there is nothing adventurous about a High Court judge holding a government department to account. That has been happening for years and years. For the noble Lord, Lord Howarth of Newport, to talk about it being adventurous and to cast aspersions on the High Court is not what I, as a former judge, would have expected to hear in this House and I am saddened by it.
What is particularly important to remember is that this all started because the previous Government insisted on putting the orders before this House when they knew they were likely to lose before the judge, and that is what the situation has created. I am not a constitutional lawyer, but I cannot see anything wrong in orders of this House which should never have been presented because they were in fact illegal, having then been found by a judge to be so, being revoked. When the Minister said that it is not necessary for the Government to have this House revoke them because they could not stand, that was the point. They were illegal from the beginning, even though the announcement was not made until after this House was required, despite the vote against the Government, to accept that the Government would insist on going ahead.
Baroness Hollis of Heigham
Before I address the substance of Amendment 2, which is what I really want to speak on, I want to challenge the noble and learned Baroness, Lady Butler-Sloss, and the wider arguments she has made. I do not think she has been involved in all of the orders that have come before your Lordships since 2006, of which to my knowledge there have been at least half a dozen. Nearly all have been accompanied by judicial reviews. No one knew at that stage what the outcome of those judicial reviews would be. They were carried through by my noble friend Lady Andrews and on many occasions I tried to give her some support to that effect.
On the argument of the noble and learned Baroness, the fact that there was a judicial review suggests, before we know the outcome, that by definition it must have been illegal. With the benefit of hindsight with regard to the judge’s ruling, the noble and learned Baroness has said that the orders were illegal.
Baroness Butler-Sloss
I said that only in relation to these orders were they illegal, and they were found to be illegal after the judge made the order. But they were illegal from the moment that the Minister insisted on presenting them to the House.
Baroness Hollis of Heigham
I understand that perfectly well, but as we did not have the outcome of the judicial review at the time the orders were being made, we were in no different a situation than that of all the previous debates, in which I think the noble and learned Baroness did not take part, where a judicial review was running alongside a debate about particular orders. If she is alleging that we should have known the outcome of the judicial review before the judge made his determination, in that case none of the previous orders would equally have proceeded until the judge had made his determination. Had the noble and learned Baroness been involved in those previous procedures, she might be aware of that fact.
So the judicial review ran simultaneously, as it did with all the other orders. As a result, because we could not and did not know the outcome of the judicial review before the orders were laid before Parliament, Parliament made its decision in the full light of information and after something like seven hours of debate. The judge then chose to overturn those orders. We could have argued it, but when the noble and learned Baroness says we could have gone to appeal, I should say that the costs of such an appeal would probably have been £500,000 or more, which would have had to be shared between two authorities. Such a sum would have represented between 5 per cent and 8 per cent on the district council tax. That is not something we can ask the citizens and ratepayers of Norwich to pay.
As for the Department for Communities and Local Government, against which those judicial orders were made, with a change of government it is clearly impossible or at least unlikely that it is going to appeal. To that extent, I hope that the noble and learned Baroness will accept that her argument that these orders were always illegal is simply wrong. You only know them to be illegal when the judgment is made—and Parliament was making its decision before any such judgment was made.
Lord Howarth of Newport
Is there not a distinction between conduct by the Minister in his capacity as head of a Whitehall department which the court judges to be illegal, and a decision taken by Parliament? This is a qualitatively different decision.
Baroness Hollis of Heigham
I entirely accept that. In the same way that if any Minister—myself in a former capacity, my noble friend or the noble Baroness opposite—were to make an administrative decision within their department—in my case it might have been about the Child Support Agency or whatever—which did not go through parliamentary scrutiny, it would be perfectly proper, and occasionally happens, that there should be a JR. At that point a judge might well say, “Minister, you have exceeded your administrative power”, and that would be fine. That is exactly what judges should do—they do it all the time—both for central government Ministers and for local government councillors. No one is challenging that. Of course there is an important key role for JR to ensure propriety of behaviour by people in official positions who carry official responsibilities.
However, that is a completely different situation from the one described by my noble friend. Parliament had seven hours of debate on these orders and—knowing all the facts alleged by Members opposite and ourselves and what they entailed—decided to support them. One judge, 1,000 parliamentarians, seven hours of debate. You can see why some of us feel that this was perhaps an intrusion on parliamentary sovereignty too far. I do not recede from that line.
Baroness Butler-Sloss
The noble Baroness said that the House decided to support the orders. The point is that the House did not support them; it followed me into the No Lobby and opposed them by a considerable majority. The Government overruled the decision of the House of Lords not to accept these orders.
Baroness Hollis of Heigham
My Lords, if I may put it delicately, the noble and learned Baroness misunderstands the import of her own amendment. She tabled a Motion of regret, but the orders went through. Had Members opposite chosen to do so they could have put down a Motion opposing them, as the Lib Dems did. The House chose not to support the Lib Dems. I understand why the Lib Dems opposed the Motion—it is a convention that we have established—but, none the less, when the House chose not to support the Lib Dems’ Motion it did not say, “We do not support these”; instead, it called on the Government to consider and review their position—which they did—and then to proceed, as the Government are perfectly entitled to do. Noble Lords had a choice between two Motions: one to nullify, the other to regret. They chose not to nullify, only to regret. Therefore, I say to the noble and learned Baroness, Lady Butler-Sloss, that this House supported through that mechanism the Government’s intent, as did the other place. I am sure that, on reflection, she will accept that that is a proper interpretation of what happened on that night.
In bringing forward Amendment 2, the noble Baroness, Lady Hanham, seeks essentially to strike out the orders for Norwich and Exeter over and beyond the impact of the JR. I do not want to talk about the election issue, which is part of the subsequent clause—I shall come back to that on Amendment 4—but to refer to the arguments made by the Minister at Second Reading, together with her follow-up letter of 8 July. At Second Reading the Minister said that her position and this debate was not about the,
“value or virtue of unitary government: it is about the mismanagement and mishandling of two applications for unitary government”.—[Official Report, 30/6/10; col. 1831.]
So it was not about the virtues of unitary government but about the process. She said—rightly—that this was because two additional criteria were added late and were not consulted on. This was because, as we know, an ineffably incompetent Boundary Committee delayed its final report by some nine months.
The Minister may also know that her officials in DCLG, as the judge states in his conclusions, could have met the judge’s concerns by sending out a letter on behalf of the Secretary of State in the December or January preceding the introduction of the orders. The judge made it very clear that DCLG officials could have asked the Secretary of State to do so—the Secretary of State may have refused to follow their advice, of course. Had such a letter gone out in December or January, the transcript of the judge’s conclusion makes it clear that that would have satisfied his concerns and that he would not have squashed the orders—although I do not doubt that he might still have had serious concerns about the process. Why that letter, telling the relevant four authorities of Norfolk, Devon, Norwich and Exeter that there were compelling reasons—that is, the issue of economic development in a period of economic recession on the one hand and the concern with Total Place on the other—was not sent out, I do not know. I can only assume that it was cock-up and not conspiracy.
If the Minister’s opposition is on grounds not of principle but of process, as she said on 30 June, then why not allow Norwich and Exeter to follow any or all of the due processes that she thinks were cut short and resubmit their bids? Why cancel this clause? The courts have JR’d the original orders and therefore squashed them, but if the Minister agrees with what she said on 30 June—that she was opposed not to the virtues of unitary authorities but merely to the process—we could make a fresh start.
We cannot know the outcome of further consultation, which was short cut because of the inexcusable behaviour of the Boundary Committee, until it happens. So I presume that we go back to what the Minister said on the previous amendment, that her residual reason for objecting to the orders was not the issue but cost. We debated that on the previous amendment, when the noble Baroness—I really do not want to be personal about this; I am sure that it was not intentional—was again in danger of misleading the Committee by telling us that the cost of transition would be £40 million. She was not going to go on to the second part of her own impact analysis, which showed that the savings over the six years would be £39.4 million—funny, that. The net cost, therefore, would not be £40 million but £600,000—£300,000 per authority, £50,000 a year. Moreover, the Minister was unwilling to commit again to say what she said in her letter and in the impact analysis: that, after those first six years, the net savings between the two authorities would be more than £6 million a year, or more than £3 million per authority per year. I repeat: on any cost/value-for-money argument, the net costs—which is what matters despite what the noble Lord, Lord Tope, and others have argued—for the first six years are £50,000 a year and the savings thereafter per authority are £3 million per year. That £300,000 over the first six years would be recovered in the first six weeks of the seventh year. If the Minister thinks that that is bad value for money, I find it hard to understand what will ever meet with her approval for being good value for money.
What is for sure is that the option that she is arguing for today, the status quo, is the most expensive option of the three. It costs far more than unitary Norwich and Exeter and far more than unitary counties, which is what the Permanent Secretary argued for. On the previous amendment, however, the Minister was not giving the Committee the full picture. I assume that most of your Lordships will have read the impact analysis and know the stats for themselves; they will know that what I am saying is accurate. Is a net cost of £50,000 a year for six years and £3 million of savings per authority thereafter really bad value for money?
Baroness Hanham
My Lords, we have strayed a long way from where we started. We have had a constitutional debate or a debate on the constitution. I have been called spiteful by the noble Baroness opposite, which I regret—
Baroness Hollis of Heigham
I repeat that it was not personal. I said that the Bill was spiteful.
Baroness Hanham
There was spite and it was associated with me. None the less, there we are.
This was about the constitution. The noble Lord, Lord Howarth, was trying to make a great deal out of the fact that the judge made a decision and should not have done. As I understand it, these were draft orders, which were put through this House and had to be signed off by the Secretary of State, who is then judicially reviewable under those circumstances. The noble Lord may want to go and have the constitution changed and do all that, but that is not in our power. The fact that, as he said, Parliament had a good debate on it and came to a view on a number of amendments was not the end of the story. Its end was when the Secretary of State’s decision was challenged. The noble and learned Baroness, Lady Butler-Sloss, with her experience, put it much better than I could: there is nothing to prevent a decision from being made at any level of the High Court. It was not this Parliament and not a Member of Parliament that went for judicial review; it was those cities that were being affected. I do not think that we can spend an awful lot of time wandering around on the constitutional issues. That may be a debate for another day, if somebody wants to see them changed, but we cannot do that.
As I said, the appeal was brought by Norwich and Exeter. The fact of the matter is that they lost, because the previous Government were seen not to have performed correctly against their own criteria. The noble Baroness drew our attention to the fact that the judge said that, if the Secretary of State had taken a different course of action and had undertaken a second consultation, as it would have been, on the other aspects that he was now going to take into account away from the original criteria—he was going to add other criteria—that would have been a different matter. He did not, so the situation remained as it was when the judicial review was undertaken—the decision had been taken by the Secretary of State on the back of a flawed consultation and flawed criteria.
There is no argument about that and no argument about the fact that these orders were debated, that the debates were controversial and that the Opposition at the time said that they did not support the orders. In fact, they made it clear that, if the orders were brought forward and they were in government, they would not support them. There has been absolutely nothing about this that anybody could have been in any doubt about—once this Government were formed, the orders would be set aside. This Bill was brought forward days after the election. Its purpose is to reflect precisely what happened in the High Court, which is to stop these unitaries going ahead. There have been two arms to this—the judicial arm and the government arm—which both came to the same conclusion. In reality, most of this Bill, which we are spending an awful lot of time on, is virtually obsolete because of the court’s decision, but we need to take it through its formalities to ensure that it is completed.
The noble Baroness made a big point about the savings, but I draw attention to the fact that the cost of restructuring, even if it was £50,000 a year at the end of six or 10 years, would be of the order of £40 million. That is a lot of money at this stage of our great financial crisis to do something that was by and large not welcomed—
Baroness Hollis of Heigham
Can the Minister talk about the net costs as opposed to the gross costs, which she persists in presenting to the Committee?
Baroness Hanham
I refer to gross costs because that is what we are talking about.
Baroness Hollis of Heigham
But we should be talking about the net costs. It is not fair to talk about costs without talking about the offsetting savings. Nobody in any balance sheet would do that. I respectfully urge the Minister to give the Committee a clear indication of net costs, not gross costs—or, if she is going to talk about gross costs, also to talk about the savings.
Baroness Hanham
My Lords, I have made it clear that the gross costs are those that would have to be paid at the moment to set up the structural changes. I agree that there would be savings, but they are a long way down the road and they might never be achieved. It is the capital sum now—
Lord McKenzie of Luton
I apologise for further intervening, but it is important that we have clarity on this point. Yes, there were gross costs of £40 million, but there were also savings over the transitional period of almost an equivalent amount. There was a separate issue about ongoing savings of £6.5 million thereafter. Over the transitional period, looked at on net-present-value basis, the gap between costs and savings was very small indeed. As my noble friend says, it is important that we have that clearly on the record.
Baroness Hanham
My Lords, I shall write to the Opposition with those costs.
Lord Rennard
Does the Minister agree that many of the potential savings that could have been made had the reorganisation gone ahead could be achieved by better and greater co-operation between the councils in any event? Therefore, many of the savings identified in the impact assessment could be achieved without the reorganisation. However, if we had had the reorganisation, we would still have had the massive costs identified in the impact assessment.
Lord McKenzie of Luton
If that is the noble Lord’s view, why on earth would he reject an amendment that calls for a report to establish just that?
Baroness Hanham
As I have said, the position is that the gross cost would be £40 million and the gross savings would be £6 million a year. If you tide that over seven or eight years and there is a consistent £6 million saving a year, I think that after eight years you would get up to the figures that the noble Baroness was talking about. I think that we will leave that.
Baroness Hollis of Heigham
The Minister’s statement is inconsistent with her letter of 8 July. I will write to her to that effect. I expect that she has her letter with her today. She says—these are her words, not mine—that over the transition period costs incurred in the implementation of the two unitary cities would be around £40 million while over the same period the savings would be in the order of £39.4 million. Forty million pounds, £39 million—those were the Minister’s figures to me.
Baroness Hanham
My Lords, I think that I just said that. The savings would be about £6 million. However, savings can also be made by organising services in a different way and by co-ordination and co-operation between the various tiers of government. I am sure that that is what the local authorities will want to do now, rather than spending any more time on this matter. I cannot offer any further advice on this.
Lord McKenzie of Luton
Will the Minister comment on the point that my noble friend Lady Hollis was pursuing about unhappiness with the process? If there is a will to take forward unitary status for Exeter and Norwich, that could be done under the Bill; I do not think that that would have to rely on Clause 1(3), because those orders are in fact dead, but the structure of the rest of the Bill, leaving intact the provisions of the 2007 Act, would enable it to happen. If the main gripe is about process, once the Bill is enacted there will be nothing in it, in its amended form, to prevent future proposals from coming forward.
Baroness Hanham
My Lords, it was the process that was wrong. It was judicially reviewed and it was found to be flawed. As well as the process, the problem related to the criteria and the fact that the previous Government were not accurate in what they were doing.
My understanding of the Bill is that it stops the creation of unitary authorities in Exeter, Norwich and Suffolk—none of those can go ahead—but that, if there is an application in future, it will be considered. I do not say that it would be considered just against the background of process, though; there would be a whole other raft of considerations at that stage.
It is worth saying that the Boundary Committee concluded that unitary Exeter and Norwich did not meet the affordability criteria and recommended that those proposals should not be implemented. It is equally wrong to speak of massive savings that the unitaries would have yielded. At most, the savings would have been £6 million each year. We have been through that again and again; it gets you up to the figures that we were first talking about.
In my letter, I said that the costs would be around £40 million and that there would be savings in the order of £39.4 million. We have come to that; I have already said that we acknowledge that there would likely be savings in the region of £6.4 million, so six years would take us to £39 million. However, the point is not savings over a number of years; those will have to be made by whatever form of government is in these counties, otherwise the counties will find themselves in very straitened circumstances.
Lord Rosser
“Report on costs
(1) The Secretary of State must lay before Parliament a report on the costs incurred by city councils in holding elections for councillors from the vacancies originally created as a consequence of the Exeter and Devon (Structural Changes) Order 2010 (S.I. 2010/998) and the Norwich and Norfolk (Structural Changes) Order 2010 (S.I. 2010/997)
(2) The Secretary of State must lay the report before Parliament within three months of the coming into force of this Act.”
Lord Rosser
My Lords, amendments in this House should not relate to the issue of who should be paying for what and how much, hence the wording of the amendment, which calls for a report. I hope that the noble Baroness will, when she responds, talk about who should be paying the costs of the elections for a number of councillors in Exeter and Norwich. These are due to take place shortly, following the decision in the High Court on Monday 5 July to quash in their entirety the structural change orders creating unitary councils for the cities of Exeter and Norwich. I use those words to describe what happened in the High Court because those are the words used by the Minister in her letter to me of 8 July. As we know, we do not know exactly what happened and was said in the High Court on 5 July since, certainly as of lunch time today, a transcript of the proceedings was not available. This is not entirely satisfactory when we are considering the Bill more than a week after the hearing on 5 July.
In her letter of 8 July, the Minister states that, as a result of the decision in the High Court,
“the terms of office of one third of the members of Exeter and Norwich City Councils, which had been extended by the Orders, ended on 5 July and there will be by-elections to fill these vacancies within 35 days as required by statute”.
I should be very grateful if the Minister could say which Act of Parliament and which section of that Act the Government believe require these elections to be held within 35 days. If the Minister is referring to Section 89 of the 1972 Act, does that not in fact refer to elections to fill casual vacancies being held within 35 days? If the Minister regards these as casual—as opposed to ordinary—vacancies, under which of the circumstances giving rise to casual vacancies set out in the 1972 Act is she saying that these elections for one-third of the two councils fall?
I understand that the Minister’s view does not appear to be a universally held view of the law in legal circles, but if her interpretation of when these elections must be held is right, it also means elections for one-third of each council in the height of the holiday season when many people will be away. That is not ideal. Has the Minister heard from either Exeter or Norwich councils about when they intend to hold these elections? Has she had any representations from either of them on this issue?
Does the Minister not take the view that the quashing orders were not declarations by the High Court that the offices of the councillors concerned were now vacant within the meaning of Section 89 of the Local Government Act 1972, but rather that the order of the court quashed the structural change orders creating unitary councils for the cities of Exeter and Norwich, as indeed the noble Baroness said in her letter to me of 8 July? Does the Minister not take the view that the event which caused the vacancies was nothing specific to any of the councillors concerned, as is surely the case when giving rise to a casual vacancy as opposed to an ordinary vacancy, but rather that the vacancies arose because—for reasons we all know—the ordinary elections were not held on 6 May 2010?
In her letter the Minister also said:
“We recognise that any by-elections will involve the councils in additional costs”.
She then went on to repeat the coalition Government’s stock line, which I paraphrase, about this all being the fault of the previous Government, of whom she does not seem to be the greatest fan. Once again, it would be very helpful if, when the Minister replies, she could say what additional costs the Government have apparently decided that Exeter and Norwich councils should bear. Presumably, if the council elections had taken place on the same day as the general election in May, there would have been some cost to Exeter and Norwich councils of running their elections in tandem with the parliamentary election. However, the cost of the council elections to come, for one-third of the seats, will be somewhat greater than would have been the case had they been held on the day of the general election because they will be being run separately from any parliamentary election, and thus the councils will bear all the costs.
When the Minister refers in her letter to additional costs for the councils, is she referring to their having to contribute the expenditure they would have incurred had the council elections been held on the day of the general election, or is she seeking to say that the councils will have to pay all the surely much higher costs of running the elections this summer for one-third of the members of the two city councils? Bearing in mind that in her letter of 8 July, the Minister puts the responsibility for what has happened on what she views as the big, bad previous Government, will she confirm that she is not therefore proposing that Exeter and Norwich councils should pay, at the most, any more towards the costs of the imminent elections than they would have paid had the council elections been held on the same day as the general election?
The judicial review, which led to the quashing of the orders, was against the Government in the form of the CLG, not the two authorities. I understand that the cost for each authority of the forthcoming elections will be in the region of £80,000 to £100,000 of unbudgeted expenditure, equivalent, I am told, to a 1.8 per cent increase in council tax in the case of Exeter. There is no suggestion in the Minister’s letter that either council has acted in a way that has incurred her wrath—this in a letter where, as early as the third paragraph, the Minister is extremely eager to tell me where she lays the finger of blame. Surely, coming at it from her stance, the Minister will not say that what she regards as additional costs incurred by two local authorities as a result of a previous decision by central government should now be paid for not by central government but by those local authorities, which have not acted in a way that she regards as unacceptable. In the light of the Minister’s trenchant views in the third paragraph of her letter of 8 July, I suggest that she cannot now in all fairness expect the two local councils—rather than central government—to bear the additional costs to which she referred.
This amendment calls for a report to establish exactly what costs are incurred by the two councils in holding the forthcoming elections in order to assist the Minister, as I hope she will say that central government will, at the very least, bear the bulk of the costs of these elections. I beg to move.
Baroness Hollis of Heigham
My Lords, I support my noble friend’s amendment on electoral provision. Norwich and Exeter have behaved lawfully and impeccably throughout these proceedings. At each stage they have followed parliamentary law, unlike some Ministers in DCLG, such as Mr Neill, who instructed us to do not what Parliament said but what he wished us to do. If a Labour Minister had issued such a letter, there would be fulminations on the Benches opposite.
Councillors have been unseated not because of any sin. There is no question of ultra vires, personal bad behaviour or of betraying their fiduciary duty. They have at each stage done what the law required them to do. Now, because of JR, reinforced by this Bill, a third of councillors in Norwich and Exeter have been removed. In Norwich, the leaders of the Tory Party, the Green Party and the Liberal Democrat Party on the city council have been unseated, as well as the deputy leader of the Labour group. In Exeter, the leader of the Labour group, among others, has been unseated. There has been a serious loss of experience across all parties. Your Lordships will remember that the JR was not against the cities, which have behaved lawfully throughout every day and month of the process, but against DCLG.
Lord Rennard
Does the noble Baroness accept that the High Court decided that the previous Government had behaved unlawfully, and that no blame was attached to Norwich and Exeter councils? The previous Government clearly did act unlawfully, according to the High Court. Therefore, the previous Government, of whom she was a member and supporter, should accept responsibility for this.
Baroness Hollis of Heigham
My Lords, I certainly accept that the High Court judge has ruled that the proceedings of the Secretary of State, as advised by DCLG, were to be quashed. I do not challenge that for a moment. However, I remind the noble Lord, if he looks at the judgment, although we do not have the full transcript, that on appropriate advice—I expect that such advice to a Minister would come only from the department—a letter in December or January would have met the judge’s concerns and the orders would not have been quashed. Alternatively, if the Boundary Committee had reported on time, which it failed to do, there would have been enough time for a quick consultation which, again, the judge says would have met his concerns and the orders would not have been quashed.
So let us not suggest that my right honourable friend in the other place, Mr John Denham, was somehow acting in an inappropriate way. He followed the appropriate procedures which were then held by the judge not to have properly taken into account the need to advise the four authorities of the additional criteria of economic recession and Total Place of which they should have been aware before the Secretary of State proceeded with his orders. That is all. He did not do that. The department failed to send out a letter and he failed to have time for that consultation. That is what happened and therefore there is no—I repeat, no—moral or legal impropriety to be associated with my right honourable friend in the other House.
Baroness Shephard of Northwold
Does the noble Baroness accept that the former Government were very well warned about the implications for local elections of the way that they were handling these orders and the timetable adopted? Part of the report of the Merits Committee—chaired, I believe, by the noble Lord, Lord Rosser—pointed out with considerable seriousness that the timing of the orders would put candidates in a difficult position, and such uncertainty is generally undesirable. I am sure that the noble Lord will remember the exact wording.
There were similar strictures from the JCSI, which also said that the “unexpected use of power” was the cancelling of the city council elections due to be held on 6 May. The committee’s report stated:
“If the court decides that the decisions to implement the unitary proposals were flawed, it will be too late to restore the elections which will have been cancelled”.
Does the noble Baroness accept that even for the previous Government that was warning enough?
Baroness Hollis of Heigham
My Lords, such warnings had effectively occurred on all the previous JRs—I should note that the noble Baroness did not take part in those debates. We have had something like six or eight rounds of councils becoming unitary authorities, which for the most part had the full support of Members of this House, and at each stage—
Baroness Butler-Sloss
The noble Baroness rightly reminded me that I was not in the House during the period covering all eight previous JRs, but I have been here long enough to have learnt a little—although not as much as the noble Baroness. In all previous JRs, did the Permanent Secretary ask for the letter exonerating him as the accounting officer from the cost of all of this, because it was inappropriate for the Minister to be doing what he was doing? My understanding was that that was an unusual process for a Permanent Secretary.
Baroness Hollis of Heigham
The noble and learned Baroness is absolutely right that the Permanent Secretary followed this unusual, though not unprecedented, process. As I tried to suggest in an earlier amendment—though clearly I did not make myself clear—the Permanent Secretary wanted best value for money, which meant a unitary Devon and a unitary Norfolk, as opposed to a unitary Norwich and a unitary Exeter, which represented second-best value for money, let alone the status quo, which was the worst value for money. The Permanent Secretary’s letter therefore called for an organisation of local government which only the Permanent Secretary and the Boundary Committee supported, and which even the county councils would have had judicially reviewed against themselves. That is the nature of the Permanent Secretary’s request for a direction. Therefore, given that we are not debating unitary counties—I am afraid that now it is past that point—the issue is status quo versus unitary, not status quo versus unitary versus unitary county. Had that been the case, the Permanent Secretary's advice would have been correct and we would have had a very different outcome.
I go back to the electoral point. It is the DCLG, not Norwich or Exeter, that lost the JR, and the department should take responsibility for its actions. With appropriate behaviour—a letter, for example—it could have abated this problem and the orders would not have been quashed. It is not reasonable that two cities that have acted lawfully on every day and at every stage of the process should pay the bill because the DCLG failed to act prudently. The costs of £100,000 in Norwich and perhaps another £80,000 in Exeter, with additional costs for all the local parties, will be incurred not because of what the cities did but because of the failures of the department.
Therefore, first there is the issue of costs. Secondly, as far as concerns these elections, there is the issue of timing, which my noble friend explored. I understand that the DCLG has advised Mr Pickles that the elections should take place within 35 days. This comes into the same category as the weak advice from the department, or its failure to act appropriately, that we have seen throughout this saga. On the opinion of a counsel specialising in electoral law, the DCLG is wrong. The Minister, Mr Pickles, is assuming that these are casual vacancies to which 35 days would apply. Casual vacancies are defined in Sections 83 to 87 of the Local Government Act 1972, which was Mr Peter Walker's disastrous attempt to impose unitary counties across the country—and, belatedly, some district functions. However, these are not casual vacancies. I am sure that the noble Baroness has checked the legislation. Section 83, for example, tells us what counts as a casual vacancy: it is when there has been a failure to make a declaration of office. Section 84 deals with the resignation of an office holder, Section 85 covers the case of a councillor who has failed to attend meetings, Section 86 deals with councillors who are no longer living or working in the area or who have been disqualified for a personal offence that has resulted in imprisonment, and Section 87 covers death. In all cases, the casual vacancies relate to a particular councillor. None of the sections applies to what has happened here, which was the inadvertent failure of returning officers to hold the ordinary elections in May 2010 because they were following the existing orders that were in place until Parliament or a JR struck them down.
If we are right—and we are confident that we are—this means that elections are not necessary within 35 days because the vacancies are not casual. As 35 days would take us into August, that produces major democratic issues. We are not challenging—because we cannot—the need to hold by-elections. We are challenging, first, where the costs should fall, and secondly, whether the elections should occur within the 35-day deadline, which they clearly should not. A date in September, a couple of weeks later, after the school holidays, might make the difference between a 15 or 20 per cent turnout and a 40 per cent turnout.
To ask local authorities to spend £100,000 on local elections because of the failure of the department, and then to order that they must occur in August when a large proportion of the electorate will be away, compounds a democratic deficit on to departmental negligence. The law, which I have gone through, does not require it. Therefore, I hope that the noble and learned Baroness will accept that by-elections can take place in September, for example as soon as the school holidays are over, and that there should be an appropriate recognition of the department's responsibility for their cost.
Lord Howarth of Newport
My Lords, I add my support to the arguments made by my noble friends Lord Rosser and Lady Hollis on Amendment 4. Significant and unbudgeted additional costs would be created by these by-elections, if they occurred. I refer not just to the cost to the authorities—£80,000 for Exeter and no less for Norwich—but to the costs for the parties and candidates. This would come at a time of severe financial pressure on the local authorities.
This situation has been brought about through no fault of either Norwich or Exeter. The judicial review was taken out by the counties against the CLG and not against Norwich and Exeter, and it seems unjust that council tax payers in Norwich and Exeter should have to foot the bill for it. In Exeter, the cost has already been computed at no less than a 1.8 per cent increase in council tax, which is a significant burden to land on local people.
It would be open to the Government to amend the Bill to reinstate the councillors who were unseated by the High Court on 5 July and to defer the elections on the original plan until next May. That would save money and would restore an orderly situation. As it is, if Section 2 is simply deleted, the leaders of all the opposition groups in Norwich will be unseated.
Viscount Eccles
My Lords, I am grateful to the noble Lord for giving way. The amendment does not go to the point of how elections should be held; it goes only to the point of a report being prepared. Surely the proposers of the amendment are simply suggesting an ex post facto report, and the statutory obligations of Exeter and Norwich to deal with the matters that arise from the High Court judgment is being left to them. We are not being asked, either in the Bill or by the amendment, to interfere in those statutory arrangements.
Lord Howarth of Newport
My Lords, my noble friend Lord Rosser has explained the statutory situation fairly compellingly. The reality is that a mess—a chaotic situation—is being created by a combination of this legislation and the judgment in the judicial review. In looking at the predicament of these authorities, it is our responsibility as parliamentarians to consider what can best be done to help them. After all, if all the opposition leaders in Norwich are unseated and in Exeter the leader of the Labour group is unseated, a third of the seats on the city council are vacant and 13 by-elections are required to be held at short notice in the summer holiday period, that is not good for local democracy, although the Government profess to be interested in improving the quality of local democracy.
Baroness Butler-Sloss
Following on from the noble Viscount, Lord Eccles, perhaps I may ask what the point of this amendment is. Everything that is being said by the noble Lord, Lord Rosser, and the noble Baroness, Lady Hollis, we have heard before, but the amendment does not help on any of the points that are currently being made. I wonder why that is and why other, useful amendments were not put forward.
Lord Howarth of Newport
Because we are trying to deal with the wreckage left behind by Mr Justice Ouseley. The judges can interpret the law regardless of the practical consequences, but it is open to government and Parliament to repair this judicial damage.
Baroness O'Cathain
I thank the noble Lord for giving way. From listening to a lot of this debate, I rather understood that the wreckage was caused by the previous Government in the first place.
Lord Howarth of Newport
The noble Baroness is entitled to her view. If the Government, who could do so, will not restore order to the chaos that the court has left behind, will they at least pay the costs which CLG policy has imposed on Norwich and Exeter? They are authorities with very small budgets—so small that they cannot afford to appeal against the judicial review—and the Government are driving them into deeper poverty by their decision to freeze council tax.
Baroness Shephard of Northwold
I apologise to the noble Lord for intervening again—he has accepted interventions with great grace—but I ask him to consider how the mess was made. I ask him to consider also that Members opposite were warned what might happen if the orders were quashed. I quote from the debate in this House on 22 March when his noble friend Lord McKenzie was asked whether it would result in electoral chaos if the orders were quashed. The noble Lord replied:
“In relation to the elections that did not take place, the councillors would cease to hold office as a result and vacancies would have to be filled in the normal course of events”.—[Official Report, 22/3/10; col. 827.]
That could, of course, have been prevented. I do not recall and Hansard does not record the noble Lord or the noble Baroness protesting about the nature of that response from the noble Lord, Lord McKenzie, on that day.
Lord Howarth of Newport
It is always a pleasure to take an intervention from the noble Baroness. She has held elected office in Norfolk for many years and I am sure that she is concerned that the people of Norfolk should be extricated as best they can be from the mess in which they find themselves. Whether the mess was caused by the previous Government or this Government or the High Court has been debated up hill and down dale. It is not particularly profitable to return to that. We are faced with the practical problem of how to restore order to this chaotic situation in the best interests of local democracy.
Lord Rennard
In our debate on the orders put forward on 22 March, I pointed out that the only effect of approving those orders may well be to deny people in Exeter and Norwich the right to elect their councillors in May, when they would normally have done so, when many other local authorities did so and when they were also voting in the general election. Of course, it would have been much cheaper to have held those elections together on that day. That is why I continue to think that it would have been better if those orders had not been approved and the fatal amendment tabled by my noble friend Lord Tope had been carried. However, because those orders were not blocked and because, as so many people predicted, they were struck down by the High Court, additional costs and additional stresses are now being unnecessarily incurred.
I would be interested to see what a report on costs incurred would show. It does not seem right to me to legislate for the Secretary of State to lay such a report before Parliament. No doubt the issue of costs will be raised in the future and there will be many attempts to apportion blame for them. My conscience is clear on the matter of costs. We need to move on and this is an unnecessary amendment. The sort of information that such a report would lay before Parliament should be available to all of us anyway, but in relation to costs and having listened to the recent contributions, I feel that some apology should be forthcoming from those who were responsible in the Department of Communities and Local Government, who got us into this mess at the time.
Earl Cathcart
So far, I have intervened twice without declaring my interests. I live in Norfolk, I have been a district councillor for more than 10 years and I am chairman of my parish. Although I was brought up overlooking the River Dart in Devon, most of what I say will concern Norfolk.
I have a letter from the leader of Norwich City Council saying:
“It had been our desire to have the Judicial Review hearing heard before the draft Orders were debated in Parliament; however Norwich, Exeter and the Treasury Solicitors argued against this on the basis that they would have insufficient time to prepare their case”.
When it was pointed out to them that this might lead to complications with the elections, they replied that it did not concern them. Their main concern was to prepare their case. I find this a curious amendment—that the Secretary of State must lay before Parliament a report on the costs incurred. That is all it says. Norwich City Council holds an election for one-third of its members each year. It knows only too well how much each election costs and would have budgeted for it. So if the noble Lords, Lord McKenzie and Lord Rosser, wish to find out the cost, no doubt a quick telephone call would do the trick, rather than bothering the Secretary of State.
Baroness Hollis of Heigham
As this is Committee stage, not Report, perhaps the noble Earl would allow me to intervene. The point was that the election took place on general election day, therefore the costs would have been subsumed in the votes for a general election and, therefore, a negligible additional cost would have fallen on the local authority for the councillors then standing. When those elections did not take place, we had not heard either the judge’s JR nor the verdict of the electorate, resulting in the coalition Government.
Earl Cathcart
The noble Baroness makes a good point, but that is not what the amendment says. It says only that the Secretary of State has to lay before Parliament a report as to the costs. It says nothing about repaying costs or additional costs because this and that has happened. It just says that the Secretary of State has to lay before Parliament a report as to the costs. That is all it is saying and that is all I am speaking to. The noble Baroness has indeed been making many other points, but I am trying to talk to this amendment.
As I was saying, I suggest that the noble Lord, Lord Rosser, picks up his telephone. In any event, these elections will, I believe, be no more onerous than the elections that Labour postponed until 2011. Any additional cost could have been avoided had the then Labour Government not forced their orders through against all their own rules and advice. Therefore, I find it a bit rich to cry now about costs that could and should have been avoided.
Baroness Hollis of Heigham
My Lords, perhaps I may comment on what the noble Earl has said. I ask the indulgence of the House, but it is Committee stage—it is not Report stage procedure—and there is ample opportunity for discussion.
On the elections, the noble Earl is of course right. However, the point was that if the orders had not been quashed by the High Court, and had the Bill not followed as the result of a general election, this tranche of councillors would have stood for election or re-election next May, when the other year’s worth would have done, too. There would have been two years’ worth of elections in the one year, so again no additional costs would have fallen.
Either, as we had expected and hoped, there would have been elections associated with the general election, in which case there would have been no additional costs, or there would have been elections after 12 months, in which case there would have been no additional costs because elections would have taken place in any event. The additional costs that we are talking about occur because these by-elections are being called in the middle of the electoral year.
Baroness Hanham
My Lords, we had quite a round robin of a debate on this amendment. I agree with my noble friends that it did not seem to lend itself to anything very much around which the debate centred.
It has been said that some things are a bit rich, but I actually do believe that it is a bit rich to try to lay at the door of the department the fact that the Secretary of State made a decision against advice from the Permanent Secretary of the department and did not follow the procedures that he himself had set down. It seems to me to be quite rich to start saying that that is all to be laid at the door of the DCLG.
This was a political move towards the election and it was clear that the decision was taken by the Secretary of State for compelling reasons, which were never quite laid out. Some of it was to do with Total Place, but there was not a great deal of information about that at the time. Total Place was an extra that was put in on the combining of budgets.
This is now a matter for the authorities. They now have to hold elections and if they do not know when to do so, they must seek their own legal advice. They must also bear the cost of what has happened. This is what would happen normally. Any UK council would have to bear them for any by-election. I understand that we have received no representations about it from the authorities and that they are taking their own legal advice.
The amendment does not seem to get us anywhere. It has been the base for a long wander around this whole issue, trying to lay the blame where the blame is not due. This situation has arisen, as I have said ad nauseam, because the Secretary of State did not follow advice or his own criteria. As a result, we have ended up with what other people have described as a total mess. It is still there, my Lords.
Lord Rosser
My Lords, issues have been raised about the wording of the amendment. I said at the beginning of my contribution that of course amendments in this House should not relate to the issue of who should be paying for what and how much—hence, the wording of the amendment, which calls for a report. Amendments are not meant to be tabled in this House relating to the paying of moneys or to financial affairs, in that sense of the word.
We want to see these elections held shortly. One of the issues concerned, and why it is perfectly relevant despite the constraints affecting the wording of the amendment, is the reference to costs. Obviously, if we are going to end up with a significant difference of opinion between the department and the local authorities over the timescale within which these elections could occur, that could affect the costs. The Minister has been abundantly clear in her view of what the law says. I simply refer again to the letter that she sent to me on 8 July, stating that as a result,
“the terms of office of one-third of the members of Exeter and Norwich city councils, which had been extended by the Orders, ended on the 5 July and there will be by-elections to fill these vacancies within 35 days as required by statute”.
There are no ifs and no buts; instead,
“there will be by-elections to fill these vacancies within 35 days as required by statute”.
Obviously, I asked the Minister whether she stood by that very clear legal opinion—there were no ifs or buts in what she said. I put to her that there were, apparently, in legal circles people who held a different view. I asked her about her interpretation as to whether these were casual vacancies or whether they were ordinary vacancies. That, it seems to me, affects the question of whether they have to be held within 35 days. I can only note with regret that although the Minister, in her letter of 8 July, was quite willing to offer a very specific view of what the law says, when challenged here today about what she said, she dodges the question, to put it bluntly, and declines to answer. That is the first point.
The second point relates to costs. Unless I have not been listening properly, the Minister has given no indication of who should pay the costs. I simply reiterate that the Minister, in her letter to me, was quite clear that the issue that had arisen at the elections was as a result of the decisions taken by the previous Government—that is, central government. One would therefore have thought that, if that was her view, she would then say that it was not the responsibility of the local authorities to pick up the bill but the responsibility of central government. Once again, we do not seem to have had a clear response, or any response at all, to a clear question.
However, I will carefully read the Minister’s reply in Hansard to ensure that I have not misinterpreted it. In the mean time, I beg leave to withdraw the amendment.
The Lord Speaker (Baroness Hayman)
The Question is that Clause 2 stand part of the Bill. It was spoken to in an earlier group. As many as are of that opinion will say Content.
The Lord Speaker
I remind the House that the noble Baroness, Lady Hanham, has given notice of her intention to oppose the Question that Clause 2 stand part of the Bill. The Question is that Clause 2 stand part of the Bill. As many as are of that opinion will say Content. The contrary Not Content.
“(2) Subject to subsection (2A) this Act comes into force on such day as the Secretary of State may by order appoint.”
Baroness Hollis of Heigham
We come to the final pair of amendments today, Amendments 5 and 6. That brings us back to the issue raised by various noble Lords, including the noble Baroness and the noble Lord, Lord Rennard, which is that there are alternative ways to proceed through partnership arrangements which would have the same effect. The Bill states that it comes into force on the day that it is passed. Amendment 5 would instead allow the Secretary of State to determine when that should happen, and Amendment 6 specifies some requirements that we believe should be in place before he does so.
Why are we suggesting that those pre-requirements should be in place? Back in 1994-95, as the noble Lord, Lord Deben, will well remember, when Norwich narrowly failed to become a unitary authority, a strong argument was then put by Norfolk County Council that partnership arrangements could do all that was required to bridge services and increase scrutiny and accountability. That was the argument in 1994-95. Lots of promises were made. As far as I am aware, not one of those promises has been delivered. Those promises of collaborative partnership and structural arrangements were empty air. The sense of betrayal in the city was profound.
Now, we read on page 1 of the summary of the impact analysis:
“It will be for councils themselves across England to work together, as many already are, to benefit from e.g. joint working … This approach, driven by the councils themselves, will help to reduce costs and improve coordination between different tiers of local government”.
In her letter of 8 July, the Minister says that the savings envisaged by unitary status should be achievable,
“through the working together more closely with the other councils in their areas”.
In other words, the Minister is essentially recommending partnerships in lieu of structural reform, a point made several times by the noble Lord, Lord Rennard. Fine words repeated twice. How will the Minister ensure that? She argues that joint working is an appropriate alternative to unitary status. We were told that in 1994-95, but nothing happened. The Minister has argued strongly that despite the fact that the status quo is poorer value for money than making Norwich and Exeter unitary, none the less, partnership arrangements can achieve the value for money she wants. How will she ensure that this time around? In particular, how will she ensure that the two county councils are required to provide the essential information about services, costs and clients that the two district councils need, when those same county councils have refused to divulge much of the necessary information required under previous orders?
If the Minister really means what she says about joint working—I am sure that she does—she will take seriously the push for detail in Amendment 6, because if she does not, as in the previous round in 1994-95, we are back to empty platitudes, which the Minister and the department are willing to utter but not deliver.
What is called for in Amendment 6? In all three examples which I have given, it calls for arrangements for intelligent partnership between county and city, but it is a partnership that must be informed. That means that the relevant information that the county holds must be available to the district councils on the effect on their services. Without that information about the cost of the services as carried out in those two district councils as measured against service delivery, those words about joint working are worthless. To say that it is up to the good will of the local authorities will not do. That was said in 1994-95, but nothing happened. If the Minister means what she says—and I am sure that she does—she needs to come in behind that request to ensure that the county is required to engage with the district councils of, respectively, Exeter and Norwich, to establish constructive partnerships. She cannot use the localism argument to deny the city’s unitary status, on the one hand and, on the other, to refuse to help us to construct intelligent partnerships, which the counties do not particularly want.
The first proposition in Amendment 6 is that district councils should be able to scrutinise the county’s spending plans and financial statements. That information is not difficult to disaggregate from county totals on a district basis. It cannot be unreasonable to have that information made publicly available to sit alongside parallel information from the city councils, so that, for the first time, the residents and council tax payers, as well as the local authorities, can have a coherent and holistic analysis of combined local authority policies, priorities and expenditure. As it stands, the counties are under no obligation whatever to tell the city what they propose to do in the city, even when it affects the delivery of the services that the city, as district authority, is responsible for.
Baroness Butler-Sloss
In opposing these amendments, I shall give a slightly different perspective. I am not in a position to say what happens in Norwich and Norfolk, but I have just been taking some advice from a senior representative of Devon County Council who has been listening with great interest to this debate. I am told that for the past 10 years, Exeter, in joint stewardship with Devon County Council, has outperformed the national average in a very successful way. There has been a fruitful partnership between Devon and Exeter. The relationship between them, despite all of this, is good, and as soon as the inconveniences that have arisen because of the order in relation to Exeter have finally been put to rest, it is the intention of Devon County Council and Exeter City Council to look to go further and better on economic development in a way that has already been successful, and they expect to be even more successful in future.
There are three areas to which I shall refer in particular. The first is economic development, which I have already mentioned. The second is highways—there has been very close co-operation between both councils on highways—and the third is cultural activities, which have also been very successful. These proposed amendments are bureaucratic and, in my view, unnecessary. They are undoubtedly unnecessary for Devon and Exeter, and I very much hope that the Committee will not wish to support them.
Lord Howarth of Newport
I shall speak in support of Amendments 5 and 6. They must surely meet with the Government’s approval, making, as they do, for transparency, accountability, equity and localism. Mr David Cameron, setting out Conservative Party policy in November 2009—before he was Prime Minister—said:
“We will require the people and organisations acting for the state to be directly accountable to the people they are supposed to serve ... Through decentralisation, transparency and accountability we can give people power over the services they use, over the way their tax money is spent, over how their local area is run”.
It is surely self-evidently right that people in Exeter, Norwich, King’s Lynn and Yarmouth and people across the whole of Devon and Norfolk should have the right to know how the county council’s resources are being spent, district council by district council, across the range of service areas: social care, children’s services, highways maintenance, culture and libraries.
I have a report from Exeter that is rather different from the report that the noble and learned Baroness, Lady Butler-Sloss, has just received from her friend on Devon County Council. I am advised by a very senior person in Exeter that, as in Norwich, they simply cannot establish with any accuracy or confidence how much the county council spends on services in Exeter or what its performance in delivering them is.
We recommend from Norwich that, by 30 September each year, Norfolk County Council should be obliged to provide a detailed analysis of the money that it has spent and the services that it has delivered in each district council area in the previous financial year. Moreover, I propose that, when the county makes its budget for the year to come, it should equally set out in detail what money it proposes to spend on what services in each district council area. It would not be difficult for the authority to produce the financial information in that form. If it were to do so, that would cast light on whether Norfolk or Devon has been in good faith in claiming to be equally committed to the good of all the communities in the county, with their greatly varying needs, and how effective these counties have been in addressing those needs. We will see, for example, what progress the counties have made in tackling inequalities in educational attainment and in ameliorating social deprivation. Such issues are enormously important in themselves but are particularly so in this context because, in rejecting the case for unitary authorities in Norwich and Exeter, the counties, supported by the Government, claimed that they could deal with these problems better. Taxpayers and citizens are entitled to see the evidence on that as it emerges.
This clarity of accounting would also better enable productive partnerships between the districts and the counties. We believe that there should be a Norwich City Council scrutiny committee with the responsibility of scrutinising Norfolk County Council’s policies and spending in the area of the city. It is remarkable, as has been mentioned before in our debates, that not one member of Norfolk County Council’s cabinet lives in or represents any part of the Norwich City area, yet that cabinet routinely takes decisions that have major impacts on the lives of people in the city. My noble friend Lady Hollis explained to the House just now the fatuity of the Norwich area committee. Does the noble Baroness, Lady Hanham, defend this lack of accountability? Having unitary authorities would have dealt with this problem. These are the last amendment of the afternoon and this is her last chance to accept at least these amendments.
Earl Cathcart
My Lords, I will try to stick to the amendments rather than be tempted into going off at tangents. Amendment 5 says that,
“this Act comes into force on such day as the Secretary of State may by order appoint”.
That is unnecessary, because Clause 3(2) already says:
“This Act comes into force on the date on which it is passed”.
The Secretary of State has already decided that the Act will come into force when it is passed.
I find Amendment 6 strange, as the Secretary of State is not required to lay before Parliament a statement about arrangements for co-operation between district councils and county councils for any other two-tier system, so why now? In any event, the spending plans are a matter for local councils, not for Parliament. The leader of Norfolk County Council acknowledges in a letter to me:
“The economic climate is such that there is an even greater need for local councils to co-operate and share at this time, if we are collectively to protect vital public services in Norfolk”.
I have no doubt that the county council intends to co-operate fully with other councils.
Secondly, Norwich City Council already has two twin-hatters, by which I mean members of both the city council and the county council. Surely these twin-hatters can scrutinise the spending plans and financial statements and raise issues on behalf of their constituents. That is why they are there. The noble Lord, Lord Howarth, talked about decisions made by cabinet. However, those decisions have to be passed by a full council on which these two twin-hatters sit, so they should know what the arguments are and put the case for Norwich City if they think it appropriate.
As for the police authorities, the police are a county council responsibility and, as such, and quite rightly, the authorities comprise a number of county councillors—eight in all—and independent members: in other words, non-councillors. Of the eight councillors, one is from Bowthorpe, Norwich, to which the noble Baroness, Lady Hollis, referred, and one is from Thorpe St Andrew in greater Norwich. Having a quarter of the appointed councillors—
Baroness Hollis of Heigham
The Bowthorpe councillor speaks, basically, for the south Norfolk area, which is not the Norwich City area, on the police authority.
Earl Cathcart
We may be splitting hairs, but he lives in outer Norwich. In any case, I think that there is city council representation on the police authority. The amendment is extraordinary in that no other council is required to report in this way through the Secretary of State. It is also unnecessary, because all the things for which the noble Baroness, Lady Hollis, is calling already happen.
Baroness Shephard of Northwold
Does my noble friend not agree that the force of this amendment is to ask the Government to get Norwich City Council and Norfolk County Council to get on? Is that not rather overegging the power of the state? I hope that the opposition spokesman will bear that in mind when summing up.
Lord McKenzie of Luton
I will speak only briefly on this issue, given the time and the important business that is due to follow. I support the thrust of what my noble friends are trying to achieve by this amendment. We have heard of the specific issues and challenges that arise, the relationships between Norfolk and Norwich, and differing views of the relationships between Exeter and Devon. I am bound to say that I do not see twin-hatters as the way to solve all this, as they are subject to the vagaries of the electoral system; they are not a reliable or desirable way to do this.
The nub of what my noble friends are seeking is to recognise that if we truly support partnership working and if Total Place and area-based budgeting is to become a reality and a success—as it must, given the dramatic cuts that are coming down the line from central government—information, the role of councillors, the engagement of councillors between authorities and representation are absolutely central issues, as they are to the assertion made by the noble Baroness, Lady Hanham, and her party on the way forward for Norfolk and Devon. Even if she does not embrace the formulation in the amendment, will she follow up in writing if she cannot say so fully today quite what mechanisms are and should be available and which mechanisms will be introduced to ensure that all this partnership working, to which we all subscribe, can really become fruitful and deliver the outcomes that are wanted for local citizens and local taxpayers?
Lord Rennard
My Lords, these amendments contain worthy aims about co-operation between the councils concerned—something that obviously everyone should seek, although we may not have been a model of co-operation among politicians in our debate today.
The noble Lord, Lord Howarth, made some good points about the unfairness in the balance of representation in Norfolk. I must say from the Liberal Democrat Benches that there is an obvious answer to that unfairness and lack of balanced representation in many local authorities: proportional representation for local council elections. I am sure that that will be a subject for a debate in future.
I do not, as noble Lords will know, believe that the process of local government reorganisation in these areas, in particular the way in which the previous Government tried to railroad through new structural changes in their dying days, has been exactly conducive to the sort of co-operation that is now required. However, nor do I think that it is compatible with a localism agenda for the Secretary of State to have to report to Parliament on plans for co-operation between the councils in these areas. That must be agreed locally. It is something that I believe local people will want and vote for in the elections. It is not something that could practically be controlled from the centre. The uncertainty and the consequential divisions of the last few years, and the last few months in particular, need to be set aside. The councils concerned now need to do what many other councils are looking at in terms of proper co-operation without the need for structural reorganisation at this point.
Baroness Hanham
My Lords, I thank my noble friends Lord Rennard and Lord Cathcart for virtually winding up this debate for me, because they have said more or less all that I wanted to say. There are two main issues here. First, in order to produce the sort of report that is being asked for before the Act starts would mean more delay. Frankly, I think that there has been enough delay and chivvying around with these orders. As I said earlier, this is the end. We must stop this now and let everyone get on with working normally. The amendment would only delay that.
The second issue is that it is not up to Parliament to sort out how local authorities collaborate with each other. It is certainly up to Parliament to say that there is an expectation that local authorities will work together—that counties will work with their districts and districts will work with their parishes. They are going to have to do so because, as the noble Lord, Lord McKenzie, said, there is going to be far less money. If services are to be provided to a standard and in a way that all local authorities will want, there will have to be close relationships between all levels of authority.
I do not see that these amendments are for Parliament. The first one would certainly delay the issue, which would be an enormous mistake. We have many examples of where there is excellent co-operation in services in terms of procurement, transparency, social services, children’s services and waste collection. I have a long list of every single responsibility in local authority services of where co-operation is taking place, but I shall not weary the Committee with it. All of us know that there are good collaborative arrangements.
I think that Norwich’s miseries have had a good airing today. A lot of information has been given about how things take place and I am sure that that will be noted. I have no doubt at all that Norfolk and Norwich will read Hansard avidly and so will note the noble Baroness’s concerns about the difficulties and how things stand. I was going to say that I do not support these amendments. Indeed, I do not think that Amendment 6 in particular has anything to do with Parliament, so I hope very much that the noble Baroness will withdraw her amendment.
Baroness Hollis of Heigham
My Lords, I thank all noble Lords for contributing to the debate. Perhaps I may run briefly through the comments by individual contributors. The noble and learned Baroness, Lady Butler-Sloss, said that she represented the views of a senior county councillor in Devon. I am sure that is the case, but forgive me for noting that, as county councillors, they would say that, wouldn’t they? Of course they would say that the arrangements are fine. I have met senior—
Baroness Butler-Sloss
I am grateful to the noble Baroness for allowing me to interrupt. If I said “county councillor”, that was absolutely wrong. It was a senior executive working for Devon County Council.
Baroness Hollis of Heigham
Forgive me, but that does not affect my point. If I misheard the noble and learned Baroness, I apologise. I understood her to say that it was a senior county councillor, but if it was a senior county official, none the less it is from the county perspective. Like my noble friend Lord Howarth, I have met district councillors in Exeter from all the political parties, so far as I am aware—I am not sure whether the Conservatives were there, but the Liberal Democrats certainly were—who have given us a very different view and say that such co-operation as is being recommended and extolled by the noble and learned Baroness, Lady Butler-Sloss, is simply not happening on the ground.
Lord Burnett
My law firm has offices in Exeter. I know Exeter well and a lot of the time I work there. The noble Baroness should rest assured that the people whom I come across—those who live and work in Exeter—are entirely happy with the co-operative arrangements, which are now working very well indeed.
Baroness Hollis of Heigham
I can only say that that is not the view that I or my other friends have been given by senior members of the district council. Perhaps I may also say, for what it is worth, that if the noble Lord were to ask his noble friend Lord Tope whether that was the view that he was given when the delegation from Exeter came to see him, I think that in all honour the noble Lord, Lord Tope, would support the comments that I am making.
I come next to the noble Earl, Lord Cathcart. He asked, perfectly reasonably, “Why these two councils and not other councils?”. The reason why this amendment was tabled and the reason—I shall come on to this—why this should go through Parliament is precisely that, as a number of noble Lords have said, the benefits of unitary status that Norwich and Exeter have sought can be achieved by partnership arrangements. That is why we are talking about Norwich and Exeter. We are not talking about other places that are not seeking such arrangements. We are talking about two authorities that have been denied unitary status, which they believe would produce best value for money and the most effective delivery of services. In place of that, constructive partnership arrangements can have the same effect. That is why this amendment concentrates on those two authorities.
I would be delighted if other district councils in Norfolk, in Devon and across the country equally benefited from the ability to disaggregate county council statistics about the value for money, effectiveness and cost of the delivery of services in their district. That would be splendid. However, it is these two authorities that are being told that this is an effective, value-for-money alternative to unitary status—hence the amendment.
Why are we saying that this should go through the Secretary of State? The noble Baroness, Lady Shephard, the noble Lord, Lord Rennard, and I think the noble Baroness, Lady Hanham, said that this is not a matter for Parliament. My problem is this. If the Government are seriously arguing that collaborative partnership arrangements are, in the Government’s eyes, a proper and appropriate alternative to unitary status, that collaborative partnership arrangement depends on both parties—the county council and the district council—co-operating fully, which I am sure happens elsewhere in the country. If, for that co-operative arrangement, information about the costs and delivery of services is required by the cities involved so that they know what is happening in their cities as a result of county council services, but the county councils refuse to divulge the information, on which partnership must rest, what does the noble Baroness suggest can be done?
We cannot have unitary status because that has been denied to us. We cannot have collaborative partnership because the information is being withheld. What does she suggest we do? That is why I have moved this amendment: to focus Parliament’s attention. Warm words are nice—
Viscount Eccles
I thank the noble Baroness for giving way. I think that what she is suggesting is to pass an unenforceable law.
Baroness Hollis of Heigham
My Lords, no one has asked the Committee to make a judgment on this, so I think that the noble Viscount is being just a little premature.
The point of the amendment is to test the validity and the viability of the noble Baroness’s assertion, which has been reinforced by a number of noble Lords during the debate, that constructive partnership arrangements are a viable alternative to unitary status. We were promised that in 1994-95, but despite those promises it did not happen. Norfolk County Council has already promised some of this to the Boundary Committee, but so far it has not happened. For these arrangements to work, we must have the information, but so far the council has refused. The noble Baroness says in all conviction, I am sure, that these alternative partnership arrangements are a viable option in place of unitary councils, but how is she going to advise us to make it stick? What advice can she give Norwich when Norfolk refuses to give it the information that it needs to make those partnership arrangements work? Will she please tell me? I will give way to the noble Baroness, because I have run out of remedies.
Baroness Hanham
As I said, there has been a barrage of questions about Norwich today. Councils will be required, first, to be transparent and, secondly, to co-operate and co-ordinate with other parts of local government. Parliament will not be able to do anything if, as the noble Baroness suggests, there is a block between Norwich and Norfolk. However, I do not believe that that can be the situation. My advice is to get in touch with Norfolk and make sure that you all work together and co-operate. This is not a matter for Parliament.
Baroness Hollis of Heigham
Will the noble Baroness support us when we seek from the county council the information the city needs in order to build these partnership arrangements?
Baroness Hanham
The noble Baroness asks the question again. This is entirely a matter between Norwich and Norfolk County Council and arrangements should be made at that end. There is not a role for the Government in this unless there is complete obduracy—and I rather doubt that that will be the case after this debate has been read and understood.
Baroness Hollis of Heigham
I thank the noble Baroness for her response. I hope that she is right and that there will not be complete obduracy. She is resting her case for opposing Norwich and Exeter becoming unitary on the ability to construct partnership arrangements between the two authorities. However, if one of the parties refuses to give or disaggregate the necessary information on which the partnership is to be built—and as a district council we have no way of requiring them to give that information—and the Government will not impress upon it the need to give that information, in what way will her alternative recommendation of a partnership have any validity whatever? In one or two years’ time it will be exactly the same as it is now, and as it was in 1994, and as it was in 1988 for all I know.
That is not enough. We cannot build services for citizens who are paying their rates and their taxes by precept on ignorance, but that is what we are doing. No Government of any political complexion should expect councillors to go to their taxpayers and ratepayers and say, “These are the services, but we do not know whether we can do better than this because the information is being withheld from us”. How can we deliver, as we all want, effective, value-for-money, transparent and accountable services when that information is withheld?
We shall return to this on Report. I hope the noble Baroness will be able to help by impressing on the relevant county councils their possibly legal but certainly moral obligation to share information so that the citizens of the counties of Devon and Norfolk get the best possible services, which we all want them to have. I beg leave to withdraw the amendment.
Baroness Hanham