Local Audit and Accountability Bill [HL]

Lord Tope Excerpts

Monday 15th July 2013 Lords Chamber

Moved by

[Lord Tope]

25: Clause 38, page 23, leave out line 38 and insert “where the Secretary of State is satisfied that a local authority has failed to comply with the code under section 4”

[Lord Tope]

My Lords, I shall also speak to Amendments 28, 30, 33, 35, 36 and 37. Before doing so, I must, for the first time in your Lordships’ House, declare my interest as a vice-president of the Local Government Association, now for very nearly two weeks. It gives me great pleasure to do so, and to begin by not doing what the LGA will not wish me to do. The LGA remains resolutely opposed to Clause 38; we will have an opportunity very shortly to look at that. The preferred position of the LGA—and, I think I am right in saying, of all the political groups in that body; it most certainly is the position of my own Liberal Democrat group there—is that it would prefer to see the deletion of the clause entirely.

I have tabled this collection of amendments because I recognise that the Government will not be able to agree to do so because the terms of the coalition agreement state:

“We will impose tougher rules to stop unfair competition by local authority newspapers”.

That is what is in the coalition agreement, and the Bill is the vehicle that the Government have chosen to implement that part of the agreement. I accept that I, too, am bound by that agreement. My clutch of amendments is therefore an attempt to meet the terms of the agreement which I personally signed up to, as did my party. However, it is targeted, rather than the broad-brush approach that the Government seem to have at present.

The problem with Clause 38 is that it is rather more than a catch-all, although it does apply to all local authorities. It gives the Secretary of State power to intervene, regardless of whether the local authority is complying with the code or not. That is not in accordance with the coalition agreement which is quite specific about dealing with unfair competition. In reality, it means that those authorities—if there is more than one—which are producing a weekly newspaper, paid for by commercial advertising that arguably might have gone to a local commercial newspaper, are in competition with that local newspaper. That part of the agreement attempts to give some protection to local newspapers going through a difficult—probably terminal—period. Whether that is a correct analysis of the situation for local newspapers—and it certainly is not a complete analysis, nor is it a subject for debate today—that is the position we are in.

Amendments 25 and 28 seek to limit the rather wide-ranging power that the clause currently gives to the Secretary of State and to target it on those authorities deemed to be in breach of what is, at the moment, a voluntary code. That gives the Secretary of State the power—which he feels is insufficient at the moment—to deal with a real problem and not just the threat of a possible problem. We all accept—and the Minister has said many times that she accepts—that the overwhelming majority of local authorities, regardless of their political complexion, are complying with the code, have shown no signs of not doing so and are certainly not coming under the terms of the coalition agreement.

Amendment 25 and Amendment 28 are the targeted approach. Amendment 30 and Amendment 36 simply extend the period in which the Secretary of State has to give notice of a direction from a very short 14 days, which includes non-working as well as working days, to 28 days. This is in accordance with best practice; it is certainly in accordance with common practice. It gives a local authority a reasonable, though not a long, time to make its case if it feels that the direction is misplaced—as any local authority in that position is very likely to do; otherwise it would not have put itself in that position in the first place.

Amendment 33 and Amendment 35 state the method by which the Secretary of State has to inform an authority. At the moment the clause is silent on how this is to happen. I have a horror that it is likely to be done via a press release from the Secretary of State—something for which he is quite well known. The first the local authority might know of the fact that it is the target would be if it were to receive something through the media in the language that the current Secretary of State is renowned for using. So these amendments state how the Secretary of State must issue that direction.

--- Later in debate ---

[Baroness Hanham]

My Lords, I am probably in danger of saying the same thing three times as there is no doubt that these amendments stray into each other. We have heard some pretty wide comments on the code as it stands, which probably go slightly wider than the intention behind the noble Lord’s amendments. None the less, we should be very clear that we are talking about the publicity code. I think that guidance is given to local authorities on seven aspects of the publicity code, their behaviour in relation to it and what it involves. It is a statutory code but compliance is voluntary at the moment. If the Secretary of State had to intervene, it would become mandatory only as regards the aspects on which he gave directions, if that was done across the board. If the Secretary of State gave an individual direction, that would be mandatory only for the relevant local authority. This is not a case of putting the whole code on a mandatory basis but of directing local authorities where they are seriously breaching the current code. We are interested only in those local authorities—and there are some—which are giving rise to concern about their publicity because they are producing far too many weekly or fortnightly publications—the terms of the code are three monthly—or are going beyond the reaches of propaganda or stepping outside what they should be doing and producing publicity which is too political. Those are the areas we are dealing with. As I have said several times, I totally accept that the majority of local authorities comply with the code without thinking about it. It is part of their lives, as it were, and they do not set out to breach it. However, some do and this Bill gives us an opportunity to make sure that they are put under some constraint.

Amendment 25 would require the Secretary of State to be satisfied that a local authority had failed to comply with the code under Section 4. The amendment is not necessary and inappropriate. It would needlessly complicate and risk delaying the exercise of the power of direction, which, as I have explained, needs to be quick. Having the making of a direction formally conditional on this simply opens the door to even more debate, argument and delay. That is not compatible with our aim of rapid, targeted action.

Amendment 28 would remove the power for the Secretary of State to give a direction to an authority whether or not he thinks that authority is complying with the code to which it relates. This would remove the Secretary of State’s power to issue a direction where there was doubt over compliance with the code in the future. It is right, when legislating for a new provision, to ensure that as far as possible the provisions cater for different eventualities so that you do not have to keep coming back to the various aspects but cover them so that they do not need to be followed up.

Amendment 30 would lengthen the period a local authority might continue not to comply with the publicity code. The noble Earl, Lord Lytton, agreed with my noble friend Lord Tope that the 14-day period was too short. Local authorities will know perfectly well when they are breaching the publicity code, so a two-week notice period is perfectly reasonable under those circumstances. The notice must be given in writing. A text message or an e-mail will not do. A formal notification must be given, marking the start of the 14 days’ notice. I am sure that the local authority concerned would have plenty of time to raise its concerns.

I return to the important point made by the noble Lord, Lord Beecham, on the form of the code. The Secretary of State cannot just change the code any old how. Any changes to the code would have to be approved by both Houses of Parliament, and any revision to it can be made only through the negative resolution procedure, so it would have to come before this House. The noble Lord shakes his head but a negative resolution can be turned into a proper debate in this House, as he knows as well as I do. The revision must be laid in draft before each House of Parliament and cannot be laid until after 40 days. This is the norm. If you laid the changes before 40 days, the noble Lord, Lord Beecham, who keeps an eye on these things, would leap on it after day three. If either House votes against the proposed change, it cannot go ahead. I think that is more or less the situation with any such proposal.

Amendment 35 is similar to the amendment on the notification. I think it is intended to require the Secretary of State to write to individual local authorities—I have already indicated that he will—modifying or withdrawing a direction. Any notification between the Secretary of State and a local authority would have to be in writing.

Our amendment, which makes provision that the exercise of the power by the Secretary of State to ensure compliance with the code in relation to all local authorities in England of a specified description, or to all local authorities in England, should be made by an affirmative statutory instrument, removes the need for these amendments. It would be highly unusual for an order-making power to be subject to a requirement for the Secretary of State to bring it to the attention of relevant authorities. To make special provision for the publicity code in this instance would bring confusion to other order-making powers, and is unnecessary.

Amendment 36 would build on Amendment 30 which, as I have said, would lengthen the period a local authority might continue not to comply with the publicity code. For the reasons I have set out and because we wish to move swiftly where there is an abuse of taxpayers’ money, I see no reason to extend the 14-day period.

Finally, Amendment 37 would require that a direction must take into account whether the authority has demonstrated to the external auditor that acting outside the code is in the financial interests of the authority to whom a possible direction may apply. This amendment would, I am afraid, once again delay the process. Local authorities know when they are spending too much money. In some circumstances, local authorities can act outside the code and issue notices, leaflets and newsletters as long as they are straightforward. I think that we will discuss that later.

This is also unnecessary. The provisions already allow local authorities to make representations before a direction is made requiring them to comply with the code. The 14 days does give them an opportunity to comply. Those representations could include a view from the auditor if the local authority wants it, but we would not require it. Taken as a whole, we do not consider the amendments necessary. I do not suppose that the noble Lord will be entirely reassured by what I have said but we have other amendments and we will no doubt consider them even further. I hope that from what I have said so far, the noble Lord will be happy to withdraw his amendment.

[Lord Tope]

My Lords, I am grateful to the noble Earl, Lord Lytton, for clearly supporting my amendments and putting his name to them. I am not entirely clear whether the noble Lord, Lord Beecham, was supporting them, grudgingly or not, but I am grateful to him for at least recognising my high wire act. I shall endeavour to remain on the wire. I am grateful to the Minister for at least a detailed reply on the amendments. To say that I am disappointed would imply that I had higher expectations in the first place. I am sad to say that I probably did not.

I was surprised at the Minister’s dismissal of the issue of the 14 days to 28 days notice, as 28 days is normal, good practice. It is hard to understand what is to be of such urgency that it can be dealt with under the 14-day notice but is so urgent that it cannot be dealt with in 28 days. I am surprised more than disappointed. The Minister will know that these provisions are causing widespread alarm, much of which I believe to be understandable but misplaced. I hope that in her further replies, which she herself said she will have to make, she will give greater reassurance on a number of the examples that I gave in moving the amendment—whether they are of the more standard publicity-type notices that local authorities issue, such as bank holiday recycling arrangements or notices about public health, or the rather more difficult ones concerning the third runway or HS2. I hope that we can get some reassurance on that.

A great majority of authorities cope within the voluntary code but we know that most local authorities are risk averse. They need to be and should be risk averse. They are advised by lawyers who are by nature risk averse. I fear that the consequences of what we are doing here will be far greater than even the Secretary of State intends. We will continue with this issue. I am quite certain that it will continue throughout the passage of the Bill. I hope that the Government will be willing not to dig in their heels but to look at how they can better and more specifically achieve their objectives than is currently the case. I beg leave to withdraw the amendment.

Amendment 25 withdrawn.