Lord McKenzie of Luton
Main Page: Lord McKenzie of Luton (Labour - Life peer)Local Government Bill [HL]
Lord McKenzie of Luton Excerpts
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.
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.
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
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 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 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.