Contracting Out (Functions relating to the Royal Parks) Order 2016

Lord Clement-Jones Excerpts

Monday 24th October 2016 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, I am grateful to the Minister for setting out the rather slim rationale for the proposal to contract out the management of the Royal Parks, replacing the Royal Parks Agency, by setting up a company limited by the guarantee of the Secretary of State. The 8th Report of the Secondary Legislation Scrutiny Committee, chaired by the noble Lord, Lord Trefgarne, is the proximate reason for this evening’s debate, although I think we would have had some questions to ask had this gone through the normal process.

I have four main areas of concern. The first of these is the company. The DCMS proposes to contract with a new organisation which will be a company limited by guarantee of the Secretary of State, and which will apply for charitable status. All the parks are in London. Was consideration not given to whether it would be more appropriate to transfer responsibility to the Mayor of London on this occasion? If not, why not? There is very little information in the statutory instrument or the Explanatory Memorandum about the company itself, although we gathered a little bit more when the Minister was speaking. What type of company is it? Was consideration given to setting it up as a community interest company, because this would have been one area which would have avoided some of the problems it is likely to have with the Charity Commission?·

There was mention of the board, but we do not have any details of its size, whether there will be a good gender balance, or diversity issues. There was talk of statutory appointments being made from local authorities and the mayor’s office. This is good, but it would be interesting to know who the chair is to be and whether any other appointments have been announced. I note that it is a company limited by guarantee. In this case, there must be formal documentation and I would be grateful if the Minister could make that available, perhaps through the Library.

The Minister said that it is hoped to start the arrangements on 1 March, although the statutory instrument states that the order comes into force on the day after the day on which it is made. I note, in passing, that that is not one of the common commencement dates, which is to be regretted. More seriously, what happens if there is a delay in the establishment of the charity? After all, the company is not just applying for charitable status, albeit that can take time; it is merging with an existing charity as well, which is often rather a tricky operation, as I am sure the Minister is aware. If there is a delay, will the transfer happen on 1 March? If not, what are the standby arrangements? What are the tax implications of the change? No mention was made of this. In particular, what is the VAT position after the transfer? As a government agency, the Royal Parks Agency is not liable for VAT, but surely as an independent company it will be? Who is going to compensate the new organisation for that considerable loss?

The Minister tried to give a very full account of what has happened on consultation, but there has not been a formal consultation exercise and the Secondary Legislation Scrutiny Committee was quite scathing about that. It is true that DCMS has responded that,

“engagement with key stakeholders and the wider public has shown broad support for the proposal”.

This apparently involved the proposal being discussed “over many months” at a series of meetings attended by friends’ groups of the Royal Parks and other visitor representatives, concessionaires, elected representatives and the police. The DCMS also says that local authorities bordering the estate that are represented on the Royal Parks advisory board, and the Greater London Authority, “are fully supportive”. I think I heard the Minister say that local MPs had been invited to attend these meetings. Given that large numbers of London residents and visitors from elsewhere use the Royal Parks, does the Minster not agree that failure to consult properly on this rather radical proposal does not match the high standards we should expect on such matters from all government departments? The lack of a proper public consultation process also means that an opportunity to spread the word about this change has been missed, with the result that there can be no certainty that these major changes will be welcomed by many current and future users of the parks.

I turn to commercial pressures. In the Explanatory Memorandum, the DCMS says that it is not the intention to permit the Royal Parks to become “overly commercialised”. Can the Minister explain what those words mean? For instance, will Parliament see the contract, so that we can properly assess whether the new organisation will have the obligation to maintain and enhance the quality of the parks? Can he assure us that the new organisation will continue to be subject to all the existing statutory designations relating to environmental protection and management?· Will the by-laws and charging regime continue to be approved through secondary legislation? If that is the case, has he considered that, given that we are losing direct control through the Secretary of State of the Royal Parks, it might be appropriate to change this from negative approval to affirmative approval in future.

In the Explanatory Memorandum, the DCMS states that the Royal Parks Agency currently generates almost 70% of its own income—most of which is from Winter Wonderland, which the Minister talked about—with the balance covered by grant-in-aid from HM Treasury. It says that, under the proposed contracting-out arrangements, the Government will provide resource funding and capital investment to the new organisation—that will be welcome—but it will also be able to raise funds, perhaps through sponsorship and commercial activities. It expects that, in the longer term, this will reduce the burden on the public purse—no surprises there. So what capital and revenue commitments have been made and over what period? What are the targets that have been set? Are we expecting these bodies to move to 100% self-funding within a reasonable time? If so, will Parliament be consulted about that?

Finally, I turn to staff. It is very good that there have been no compulsory redundancies in the transfer. I gather that all but a few staff will be transferred under the TUPE regulations and will retain their pension arrangements and pay scales. What will happen to new joiners after the transfer? It is not always the case that the existing arrangements are offered to them and that would be unfortunate. The staff work in a very high-security area. We are all aware of the incidents that have taken place in the Royal Parks. In some cases, such as the garden of Downing Street, which is serviced by the current arrangements, there will need to be high-security clearance. How will this be arranged in future when the company is independent? Will we be given some details on that?

In introducing the order, the Minister asked what I am sure was a rhetorical question—namely, if all was going so well, why change it? In my view, he comprehensively failed to answer that question. I beg to move.

[Lord Clement-Jones (LD)]

My Lords, I too thank the Minister for introducing the new proposals. I am pleased that we have the opportunity to debate them. We on these Benches are not opposed in principle to contracting out to a new charity formed for the purpose, rather in the way that the creation of English Heritage seems to have become a success. I think we are all pleased that Loyd Grossman, with his profile and experience, has been appointed as its first chair. That is considerable cause for pleasure. Moreover, I understand that, broadly, friends’ groups across the Royal Parks support the change and see it as bringing the following benefits—greater financial freedom and escape from government restriction, for example, on the carrying over of end-of-year surpluses, and on procurement rules, both of which can lead to higher costs. It also gives them rather more flexibility on pay rates—upwards, as it happens—in order to attract staff. The change means that it is easier to raise money, especially through local philanthropy, and the new objectives provide—they say—more focus on protection and conservation and less on government objectives for higher visitor numbers.

I understand that the new draft objectives submitted to the Charity Commission are principally to promote the use and enjoyment of the Royal Parks, to protect, conserve, maintain and care for them, to maintain and develop the biodiversity of the Royal Parks and to support the advancement of education and promote the national heritage. All those objectives have considerable importance and benefit. However, it would be good to see the entire draft constitution of the new charity. There is remarkably little information available about the new structure, especially given that it is to be merged with the Royal Parks Foundation. The noble Lord, Lord Stevenson, talked about how the board will be appointed. I understand that there will be 14 board members, half of whom will be appointed by government. It is not clear whom the other half will be appointed by. We need a much more plural form of appointment and there needs to be considerable local input into those appointments. An ability for the Government to appoint 50% of the trustees of the new charity seems well over the top. In the way that the Government retreated over the BBC, I hope that they will likewise retreat over the appointment of trustees to this charity.

I hope that these new arrangements will also mean that detailed plans are drawn up for each of the individual Royal Parks. I think we all know which Royal Parks we are referring to but it is not so well known that other open spaces such as Brompton Cemetery, Victoria Tower Gardens, just along the way, and the gardens at Nos. 10, 11 and 12 Downing Street are all currently managed by the Royal Parks Agency. I assume that they will continue to be managed by the new charity.

I was only partially reassured by the Minister’s statements about consultations that have taken place. As the noble Lord, Lord Stevenson, pointed out, they were very local consultations. The Royal Parks are an asset to not only the whole of London but also the nation. Therefore, it sounds to me as if the consultations have been extremely limited. On what basis were the consultations held? Was a draft constitution of the new charity available? Is there a new draft corporate plan? That kind of detail is very important when one is consulting on a dramatically new way of managing the Royal Parks.

Where is the draft contract? As a lawyer, I always like to see a draft contract, lots of red ink and so on, but we have not seen anything to do with the future management of the Royal Parks. That was referred to by the Minister. What are the key performance indicators in terms of the management of the parks? What specific targets are to be set for the management? On future strategy, will there be a new corporate plan? The Royal Parks Agency has carried on a very detailed way of planning for some considerable time, which includes separate management and operating plans for each Royal Park and, in addition, a sustainability strategy. In the light of the new objectives of the charity, that is extremely important.

The noble Lord, Lord Stevenson, rightly referred to finances. The parks are now expected to make nearly 70% of their own income, but more than 30% still comes from government grant. All the statements coming out of government in this regard seem rather ominous. The stated aim in the Explanatory Notes is to reduce the burden on the public purse in the longer-term. Will that level of finance continue? After all, the latest annual report of the Royal Parks Agency states:

“The new charity will be increasingly self-sustaining”.

The advertisement for the new chairman states that the new body will apparently seek to,

“generate substantial annual revenue from more events, concessions and licences”.

I heard what the Minister said about events, and that seems to contradict it. What does all this mean for government support and over what period? In the way that the finances for English Heritage have tapered, do the Government plan a tapering of the finance for the new charitable body? Or will they essentially oblige the new body—as the Royal Parks tried to do previously—to impose fees for use of its football pitches? I have another very large question: who will pay for the £56 million maintenance backlog detailed in the most recent annual accounts?

The Minister gave several assurances about events. I suppose we should be pleased that there is no Summertime Wonderland but it seems that even the existing events—Winter Wonderland and the British Summer Time Concerts alone, including the time for setting up and reinstating the grass—put 13% of Hyde Park out of bounds for much of the year. Therefore, frankly, I do not think there is much leeway for more events. Will there be more open-air cinema screenings? I know that that causes problems for local wildlife in Richmond Park. What will the financial pressures be if the Government taper their support?

There are many questions and not enough transparency about these proposals. I hope that the Minister has all the answers.

[The Earl of Clancarty (CB)]

My Lords, I thank the Minister, and the noble Lord, Lord Stevenson, for tabling his amendment. This has been quite a technical debate so far but I want to raise how this measure will affect the public, and take a longer-term view.

In March it was reported in the Guardian that the Royal Parks Agency said that the move to a new body followed decreased government funding that had made,

“maintaining high standards increasingly challenging”.

The Friends of Richmond Park note that public funding as a proportion of all income has fallen from 95% in 1961 to under 50% today. Therefore, the fundamental question I want to ask the Government—I think the Minister has already answered it—is: how is a separate body going to supply that much-needed funding, with diminishing support from the Government, other than through commercialising the parks themselves? Why is the move necessary other than to further cut ties to state funding? I therefore echo the noble Lords, Lord Stevenson and Lord Clement-Jones, who asked whether we are heading for a 100% funding cut from the Government. It certainly looks that way. This is surely what “broadening opportunities” means.