Localism Bill

Debate between Lord Shutt of Greetland and Baroness Hamwee

Monday 10th October 2011 Lords Chamber

[Baroness Hamwee]

I shall not speak at much length. This amendment was tabled at the last stage as well. It would provide for a relevant authority being able to require whatever information it thinks desirable. I dare say my noble friend will confirm that it is not necessary to state this because it is implicit or provided for elsewhere. The reason I am moving it is because I want to quickly comment on some of the things he said in response to the last group. As it was Report stage I could not come back on them then. He said, “It’s all about community”. But what my noble friend and I are saying is that we fear that it is not. I very much welcomed his comment that guidance might well say, “Make your own minds up”. That is exactly what one would want to see. But I wonder if I could suggest to him that guidance might include some sort of flow chart which would assist authorities to understand what they can do and what they cannot do, and what direction they have got to be thinking in. I also say that my noble friend Lord Greaves’s point about how a procurement exercise allows for a tender from the authority—from the in-house service—is very serious. It may be one of those things where the answer is so obvious that none of us can see it because it is blindingly obvious. If it is not obvious, and if it is not answered in a way in which the Minister will understand we would regard as satisfactory, then it is so serious that we must not lose sight of it. We should not discard it now and we should return to it at Third Reading to ensure that it is entirely clear. I hope that will not be necessary. I beg to move.

[Lord Shutt of Greetland]

These matters are grouped together. I thank the noble Baroness. There are four amendments in the group and two have not been moved. This is the third one and I take it that the fourth will not be moved. On that basis I respond to my noble friend Lady Hamwee.

Amendment 197FC would enable a relevant authority to ask a relevant body for any information it considered desirable in deciding whether to accept or reject an expression of interest. The amendment is unnecessary. Clause 69(1) already enables the Secretary of State to specify in regulations the information to be included in an expression of interest. The majority of respondents to the consultation broadly agreed with our proposals on this and the policy statement placed in the Library of the House sets out the information we intend to specify be included in an expression of interest. This information will enable the authority to decide whether there is one or more grounds for rejection. If expressions of interest do not include any of the required information, we would expect relevant authorities to take a common-sense approach and simply ask for it.

This amendment would enable authorities to place additional requirements, and potentially a disproportionate burden, on relevant bodies, and treat expressions of interest from different relevant bodies differently, which would be unfair and could potentially leave authorities open to challenge. If the experience of implementing the community right to challenge shows that a relevant body may need to provide further information to enable authorities to take a decision on an expression of interest, then we can consider whether we need to amend the regulations to allow for this.

In the circumstances, I trust that my noble friend will feel she does not need to press this amendment. Following her other comments about guidance, I am sure that the resources of the department will provide guidance, flow charts and material in any form that clearly gets over to authorities the information that they need. As I have indicated all along, I believe that all these proposals are right, but, in the event, it is about trust and it is about communities; it is not about exposing big contracts to organisations under the umbrella of something which has been done for communities. I trust that everyone has got that trust and that it will work in this way.

[Baroness Hamwee]

I thank my noble friend for that response. Of course, I shall not press the matter, but I note that he talked in terms of the Secretary of State making regulations which will allow for certain information to be requested. I am looking for a little more individuality than that. However, I shall use this opportunity to add a coda to my point about the in-house service and procurement. I am not asking for an answer now, but I shall put the question on record. In order to take part in it, would the in-house service have to form a separate, new entity in order to be able to bid? That would seem to involve a lot of extra bureaucracy and work, which I do not think any of us would want to see. I shall put my noble friend out of his agony and beg leave to withdraw the amendment.

Localism Bill

Debate between Lord Shutt of Greetland and Baroness Hamwee

Tuesday 5th July 2011 Lords Chamber

[Baroness Hamwee]

But do they read the plain English guide to the Localism Bill? That says, on the community right to challenge, that many local authorities,

“recognise the potential of social enterprises”.

I hope that my noble friend Lord Shutt of Greetland, who I think will respond to the debate, will be able to say a word about whether in the Government’s mind social enterprises are something different from community groups. Many social enterprises are in fact businesses. That is not a criticism, but they are very different from community groups. The application of these provisions to social enterprises is interesting. The guide refers to them providing,

“high-quality services at good value”,

and delivering services “with”—that is, with local authorities—“and through them”. I was interested in the “with”, which, in the legislation, finds its manifestation in,

“assisting in providing a relevant service”.

I do not know whether my noble friend is able at this stage—we may need to wait for the regulations, which I, like the noble Lord, Lord Greaves, hope to see before too long—to explain what that assistance might look like.

[Lord Shutt of Greetland]

My Lords, I thank those who have contributed to this series of amendments. We have a fresh start here, in that the community right to challenge will hand the initiative to voluntary and community bodies with good ideas about how services can be run better, and more cost-effectively, ensuring these ideas get a fair hearing, and will give them the time to organise themselves to bid to run these services.

In making my preparations for the day, I spotted the word “regulation” more than once. I thought the best thing to do is to take this head on. Much of the detail of how the community right to challenge will work is to be included in regulations. In response to amendments from noble Lords which touch on this detail, I will often have to explain that we are currently carefully considering issues that have been raised in our recent consultation. It is important that we get the details right. I would like to reassure noble Lords that, on various issues on which we have consulted, we propose to set out the way forward prior to the Report stage of the Bill. I am not promising, but if we can, we will see if we can get some draft regulations. That may not be possible in all cases but we will endeavour to do so.

I understand what my noble friend Lord Greaves said. I had not thought of “jolly wheeze” as featuring in his vocabulary. However, community organisations are part of the Liberal Democrats’ vocabulary. Therefore, this measure may have been suggested by one part of the coalition but I readily embrace it as a means of giving communities an opportunity to come forward with better ways of delivering local services. However, we need to see what is in the regulations, on which consultation is still taking place.

[Lord Shutt of Greetland]

My Lords, the Government are considering those recommendations. I will not make any promises on that but I believe that they are very likely to take serious account of the committee’s views. It would be very unusual if they did not.

Amendment 129V would remove the Secretary of State’s powers to specify requirements for expressions of interest in regulations. We have taken this power to ensure that power really is pushed down into the hands of communities. The majority of relevant authorities will act within the spirit of the right but this power would prevent a recalcitrant authority requiring an unnecessarily burdensome amount of information that would stymie a relevant body wishing to use the right.

Amendment 130ZB would remove the Secretary of State’s power to exempt services from challenge. Taken with Amendment 133ZK, which would remove the power for the Secretary of State to specify the grounds for rejecting an expression of interest, which we will consider later, this amendment would give relevant authorities discretion to reject a challenge to any of their services. As I have already explained, we have taken these powers to ensure that power really is pushed down into the hands of communities. The majority of relevant authorities will act within the spirit of the right, but this power would prevent a recalcitrant authority rejecting expressions of interest out of hand.

Amendments 130ZA, 131ZA, 131G, 131H, 131E, 131F and 131DA would remove the Secretary of State’s powers to make changes to the right in regulations. Amendments 130ZA and 131ZA would remove the power to add relevant authorities and bodies. Amendments 131E and 131F concern the power to amend the definition of a relevant body and voluntary and community bodies. Amendments 131G and 131H concern the power to make any amendments to this chapter of the Bill that are necessary as a consequence of adding relevant bodies and authorities, including making changes to regulation-making powers. Amendment 131DA would remove Clause 68(9), which contains many of these powers.

We have taken these powers to enable us to keep pace with change and appetite for extension of the right. For example, the powers to add, amend and repeal relevant bodies and amend the definitions of voluntary and community bodies enable us to ensure that these definitions continue to reflect the types of organisation representing communities.

Amendment 130ZBA would require the Secretary of State to consult representatives of relevant authorities and other public bodies affected by an extension of the right. We have recently concluded a consultation on our proposals to use the various powers with all those with an interest in the right and we will consider the need for consultation on future changes. Before extending the right, we would need to have detailed discussions with key interested parties, in particular to understand whether additional services might need to be excluded from the challenge.

I should respond to the noble Baroness, Lady Hamwee, who mentioned one type of social enterprise. I have certainly seen in my life numerous names representing organisations that are not a sole trader or public limited company but which have some social, community, environmental or other involvement. It seems that it does not stop. I think that the important thing is that other forms of enterprise might appear but that we are yet to hear from. The way that the script is written covers anything that might happen in the future. In those circumstances, I trust that the amendments will not be pressed.

[Baroness Hamwee]

Before my noble friend responds, I wonder if I may just say a word about that last point on social enterprises. A community body is defined in Clause 68(8) as a body carrying on activities,

“primarily for the benefit of the community”.

No one would quarrel with that, but the distinction between a community and a voluntary body as defined, is a reference—or, in the case of a community body, lack of reference—to profit, to it not being carried on for profit, or to what happens to the profit. Reading the words,

“primarily for the benefit of the community”,

I wondered whether that was to be read as including how profit is dealt with, whether it is to be ploughed back for the benefit of the community. Perhaps this is another matter for regulations. However, the distinction might be relevant in giving us a flavour of how the Government expect this new arrangement to work. Maybe it is a question of letting 1,000 flowers bloom, and so on.

[Lord Shutt of Greetland]

Letting many flowers bloom is the position. Clause 68(5) refers to a “voluntary or community body”, and the noble Baroness has mentioned the differences there; to a body “established for charitable purposes”; to the parish council; and then to “two or more employees”, and “more” could be considerably more. How that “more” then establishes itself is another way forward. There are clearly two features here: the elements of “voluntary”, “community” or “charitable”; and the way in which employees choose to organise themselves. They are lumped together, but in many minds—in my mind at any rate—they are two distinct ways forward.

--- Later in debate ---

[Baroness Hamwee]

My Lords, I wish to ask one question, which has occurred to me only while listening to the debate—otherwise, it would have been down as an amendment. Does clause 73 extend to the Secretary of State giving directions to a local authority to provide financial assistance in this connection? The Minister can take it as my view that it should not.

[Lord Shutt of Greetland]

My Lords, Amendment 131D seeks to confirm that bodies which carry out activities for profit cannot be relevant bodies. Amendment 133ZP would prevent bodies which are carrying out profit-making activities from receiving advice and assistance in using the right to challenge.

The definitions of voluntary and community body have been designed to enable a range of civil society organisations to use the right. This supports the Government’s commitment to enable these groups to have greater involvement in running public services. This includes social enterprises and co-operatives, where not all profits may be reinvested in their activities or the community provided that their activities are for the benefit of the community. This requirement will ensure that any profits are indirectly focused on their activities. It will also ensure that large, multinational companies and big conglomerates cannot use the right to challenge. I am aware that that is a concern.

No decision has been made yet on the form that any assistance will take, but one would expect it to focus on those who need it most. This is most likely to mean smaller, newer voluntary and community bodies; but it is sensible that we have the powers to provide assistance to any relevant body that might need it. In answer the noble Lord, Lord Greaves, when I referred to the “power of stoppage”, that was my own phrase. I think that we have to look at regulations because it is not clear to me yet exactly how a local authority will cope when it encounters the whole business of people taking advantage of the right to challenge—whether it can just say “buzz off”, or whether, in the regulations, it cannot say “buzz off” unreasonably. I believe that this is something that has to be worked through in regulations. He referred to the figure of £156,000; that is the threshold figure in terms of the Public Contracts Regulations 2006. However, as well as the £156,000 threshold figure, there is a list of services in Part B of Schedule 3 to those regulations which is quite lengthy, to which that figure is not relevant. This includes education, health and so forth. There are a large number of things which would fall outside that.

It is important to understand that there is nothing in the Localism Bill which addresses procurement. Procurement is up to local authorities. Local authorities have worked out how they do that.

--- Later in debate ---

[Baroness Hamwee]

My Lords, I am relieved to hear the Minister say that, as the noble Lord, Lord Newton, seemed to be referring to competitive tendering, which we have experienced in different forms over the years. I want to pick up on a point that my noble friend made earlier. This is an observation rather than a question. The Minister said that the assistance would be given to whichever organisations needed it. I hope that the regulations will be written with a view to benefiting the community rather than the provider of the service. Those two things may be the same in the long run, but the benefit to the community should be the lens, as it were, through which one looks at the arrangements.

[Lord Shutt of Greetland]

My Lords, I understand the point that the noble Baroness is making. I will bear it in mind and take it back to the department.