Public Bodies Bill [HL]

Lord Hunt of Kings Heath Excerpts

Monday 7th March 2011 Lords Chamber

Moved by

[Lord Hunt of Kings Heath]

68: Clause 3, page 2, line 11, at beginning insert “Subject to section (Restrictions on ministerial powers),”

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Debate on whether Clause 3 should stand part of the Bill.

[Lord Hunt of Kings Heath]

My Lords, this debate relates to the order-making power given to Ministers in relation to the constitutional arrangements of the bodies listed in Schedule 3. I am concerned that very considerable power is given to Ministers in this Bill, and this is an example of that.

Perhaps I may reiterate a point that I made when we started scrutinising this Bill some few weeks ago: we have no objection in principle to a proper review of the public bodies contained in the Bill and to their abolition if they have reached the end of their useful life. Nor do I doubt the need for such bodies to be appropriately accountable to Ministers. However, there also has to be some distance and independence. There is clearly no point in having a public if it does not feel that it has independence. That is why I am worried about the effect of the power in Clause 3. It has the potential for a chilling impact on the behaviour of boards. If boards are aware that, on a whim, a minister can get rid of the chair and members through an order-making power, that would have an undue influence on their behaviour. We will come later to a similar amendment to Schedule 4 in relation to the financial arrangements.

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[Lord Taylor of Holbeach]

My Lords, I thank the noble Lord for this opportunity. We are making progress in a direction with which he will be content and with which I am content. Perhaps I can bring together the various changes that have been made as a result of our amendments.

As the noble Lord rightly points out, this group of amendments deals with Clauses 3 and 4. Clause 3 gives a Minister the power to make provision, by order, to alter the constitutional arrangements of any body or any office listed in Schedule 3—but only those listed in Schedule 3. Of course, now that Schedule 7 has gone, the list is finite. For example, in the case of the Theatres Trust, we intend to do away with the Secretary of State’s role in the appointments process, which will increase the body’s independence as it moves towards charitable status.

The noble Lord referred to Clause 4, which is a parallel clause with different purposes—it concerns funding arrangements—but is structured in the same way. Clause 4 confers on the Minister the power to make an order modifying the funding arrangements of a body or office listed in Schedule 4. In this regard—I am giving examples which I hope demonstrate the purpose to which these clauses will be put—the Government intend to reform the Drinking Water Inspectorate by allowing it to recover its costs from the water industry, bringing this body into line with the existing principle that it is the businesses which benefit from regulation, not the taxpayer, who should bear the cost of the regulation. The previous Government concurred with this approach.

In considering these clauses as a whole, I understand that the noble Lord is primarily concerned that these powers could be used to restrict the independence of bodies. Indeed, the noble Lord said that one of his anxieties was that, by granting Ministers the power to amend the governance or funding arrangements of bodies, the Bill would enable Ministers to threaten the position of chairs or board members who have displeased the Government, or constrain the ability of a body to carry out its work by squeezing its functions. While I seek to reassure the House that the Government have no intention of acting in such a manner, I understand the sentiment behind these concerns. However, the appropriate way to deal with them is to place appropriate limits on the power of Ministers to act, both within the Bill and elsewhere, rather than to abandon the powers altogether.

As with all the principal order making powers in the Bill, the uses of Clauses 3 and 4 are restricted by the conditions described in Clause 8 and elsewhere. Under the proposed government amendments, Ministers would be required to set out the rationale for an order in an explanatory memorandum when laying a draft order before Parliament. I explained that in a previous debate on an amendment tabled by the noble Lord, Lord Whitty. Ministers would thus be held accountable for the use of the power in relation to the particular considerations in the Bill, including the effectiveness of public functions. A change in funding which, for example, would leave a body unable to carry out its public functions properly would be unlikely to meet this objective. I cannot envisage a situation in which a Minister would wish to make such an order. I can further assure the House that in light in particular of today’s third report from the Delegated Powers Committee, the Government are considering whether it is necessary to clarify Clause 8 further. I hope that that provides some reassurance to the noble Lord, Lord Whitty, in light of his previous amendments.

It is also important to remind the House that we are continuing to engage with the noble Lord, Lord Lester, and other noble Lords in relation to his Amendment 175, with the intention of ensuring that the safeguards applying to the order-making powers in the Bill include appropriate protection for the necessary independence of public functions. Furthermore, as I have said, the removal of Schedule 7 from the Bill will ensure that no body or office can be listed in Schedules 3 and 4 and be subject to the powers there unless its inclusion has been approved by Parliament through primary legislation. I hope that this change to the structure of the Bill provides the House with a strong reassurance that full parliamentary scrutiny will be central to the operation of these powers.

In addition to the protections present and planned for the Bill itself, there are safeguards which rightly limit the power of Ministers. First, in terms of appointments and governance, chairs and board members are in most cases appointed in line with rules issued by the independent Commissioner for Public Appointments. This ensures that appointments are made on merit following an open and transparent process. The Government are further committed to strengthening the role of Select Committees to scrutinise major appointments, giving Parliament an effective voice in the process. In addition, for certain appointees who must be demonstrably independent of Ministers, the terms and conditions or relevant statute will provide safeguards to reinforce the officeholder. This might include pre-appointment scrutiny by Parliament or appointing certain officeholders on a single, non-renewable term so that the decisions and actions of those officeholders are not, and are not perceived to be, motivated by a desire to be reappointed. Examples of office holders listed within the Public Bodies Bill that fall within these categories include the chair of the Equality and Human Rights Commission and the chairs of regulatory bodies such as Ofcom.

I wish to emphasis the Government’s position that it is right for Ministers to have a role in public appointments and the governance of public bodies. The Commissioner for Public Appointments code of practice clearly states that the ultimate responsibility for making public appointments rests with Ministers. Ministers should remain answerable and accountable for the overall performance of public bodies and have the ability and authority to intervene if a body is failing. This must include the ability, in extreme cases, to remove board members. The balance that the Government must strike, met by the safeguards I have described, is to retain this principle of accountability while ensuring that public bodies are able to act independently of ministerial influence where required.

That is also the case in relation to the powers in Clause 4, which relates to funding mechanisms. The Government’s position is that ultimate decisions on the allocation of funding must rest with Ministers, who are ultimately accountable for the delivery of public service by central government and for public expenditure within their spending review settlements. It is for precisely that reason that it is against Cabinet Office rules, for example, for public bodies to use public funds to employ PR or marketing consultants to lobby government or Parliament for more funding. We could not support amendments to Clause 4 which would risk undermining that principle. It is also right that Ministers have the assurance that public money is being spent appropriately. In the case of most NDPBs, Ministers and departments must be consulted by public bodies before they exercise certain financial powers such as borrowing or capital expenditure. We believe that the powers that Clause 4 would confer on Ministers are entirely in keeping with this position; they do not establish a new status quo but rather reaffirm ministerial accountability for public expenditure.

It is taxpayers who ultimately fund public bodies in most cases, and I am confident in suggesting that the citizens of this country expect government to account for its use of their money, no matter by whom it is eventually spent. On this basis, I believe that the removal of Clause 3 or 4 from the Bill would be a disproportionate measure, as it would remove Ministers’ ability to take forward the type of changes that I described earlier and instead require primary legislation for such changes, regardless of their nature. As well as preventing or delaying sensible reforms, the removal of Clauses 3 and 4 would run contrary to the principle of ministerial accountability for the performance of public bodies and their use of taxpayers’ money. While I agree with noble Lords who have highlighted the need to safeguard the independent delivery of some public functions, I believe that this can and should be achieved through other means, such as the safeguards within the Bill and outside it.

I am sorry to have taken some time over this, but this explanation probably goes to the heart of many of the concerns that noble Lords have expressed about how the Bill empowers Ministers and the balances that we seek to set within the architecture of the Bill to ensure that this is not abused. On this basis, I contend that both clauses should stand part of the Bill. In the light of the reassurance that I have supplied, I seek the noble Lord’s support on this. Furthermore, I ask the noble Lord, Lord Whitty, whose amendment is I think included in this grouping, not to press his amendment.

[Lord Hunt of Kings Heath]

My Lords, I thank the noble Lord, Lord Taylor, for a full response to the issues raised. He went a very long way to reassuring me about how this will operate. I do not disagree with him when he says that ultimately Ministers must be accountable. I very much agree with that, but it is also my contention that there is very little point in setting up these bodies unless they, too, have a degree of independence of judgment. The concern has always been that some of the clauses in the Bill will hang like a sword of Damocles over those bodies and inhibit their independence. I take very much the point that the Minister raised that one critical issue here is Clause 8 and the matters to be considered by Ministers when making an order under Clauses 1 to 6. I know that there is a lot of discussion taking place about this, and I hope that there will be a positive outcome. It also takes place in the context of Clause 10 and the order-making procedure. We will come to that in a couple of days’ time. But the Minister has reassured me to a very great extent tonight on this particular matter.

Clause 3, as amended, agreed.

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Moved by

[Lord Hunt of Kings Heath]

73: Schedule 3, page 18, line 25, leave out “Joint Nature Conservation Committee.”

[Lord Hunt of Kings Heath]

My Lords, I rise to move Amendment 73 in the name of my noble friend Lord Whitty and speak to his Amendment 79, which refers to the Chief Inspector of Drinking Water, my Amendment 80, which relates to the Marine Management Organisation, to which Amendment 155 in the name of the noble Lord, Lord Berkeley, also refers, and to Amendment 81 in the name of the noble Lord, Lord Greaves, which relates to Natural England. All these bodies have a very significant responsibility in terms of sustaining and protecting the environment. Will the Minister explain why these bodies are covered in the Bill? The noble Lord has sat very patiently through much of our deliberations on the Bill. He will know that part of the concern felt about the Bill is that the independence of organisations listed in a number of the schedules is called into question, given the ability of Ministers to intervene, change their governance structure and finance and merge or abolish them simply through an order-making power. There is therefore a general concern about the architecture of the Bill, and one is concerned when one sees these organisations listed, because in terms of protecting the environment it is important that they can discharge their responsibilities independently, without undue interference or influence from a government body.

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[Lord Hunt of Kings Heath]

I am very grateful to the noble Lord, Lord Henley, for his comprehensive response to the amendments in the group. He explained very clearly that these are minor changes which should help to improve efficiency: the JNCC fully supports the aim; the amendment for the Drinking Water Inspectorate is to improve the charging regime. I cannot accept that there is a shortcoming in the 2009 Act. It took six months to go through your Lordships' House; it cannot possibly have a shortcoming.

The Minister explained that the amendment on Natural England was to remove ambiguity; and that government Amendment 79A was to respect the wishes of the Welsh Assembly Government. This is a good opportunity to acknowledge the referendum success last week, which I am glad to do. The answers of the noble Lord, Lord Henley, seem entirely reasonable. The problem is that a new Minister could come on the scene and use the Bill to make draconian changes to those bodies because they are listed in the schedules. That is why, in the end, we come back to the architecture of the Bill.

My worry is that, for instance, Natural England is not always the most favoured of organisations sponsored by the department. The very fact that it appears in one of the schedules is a kind of sword of Damocles, which the department and the Minister’s officials can hold over Natural England. Although his response tonight has been entirely reasonable, I remain concerned about the fundamental architecture of the Bill. Of course, in the light of his response, I beg leave to withdraw the amendment.

Amendment 73 withdrawn.

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Moved by

[Lord Hunt of Kings Heath]

76: Clause 4, page 2, line 39, at beginning insert “Subject to section (Restrictions on ministerial powers),”

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Debate on whether Clause 4, as amended, should stand part of the Bill.

[Lord Hunt of Kings Heath]

The noble Lord, Lord Taylor, responded to the question that we raised about Clause 4 when we debated Clause 3 stand part. I appreciated his response. We look forward to further debate on Wednesday on this matter, but the response he made very much applies to this part of the Bill as well.

Clause 4, as amended, agreed.

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Moved by

[Lord Hunt of Kings Heath]

82: Schedule 4, page 19, line 8, leave out “Office of Communications (“Ofcom”).”

[Lord Hunt of Kings Heath]

My Lords, this amendment is on the Marshalled List in the name of my noble friend Lord Whitty. We listened carefully to the arguments of the noble Lord, Lord Taylor, earlier this evening concerning the protections that will be in place for the economic regulators listed in this Bill. The changes proposed to Ofcom obviously fall into this category. I was very much persuaded by the arguments made earlier by my noble friend Lord Whitty that, by allowing these changes to remain part of the Bill, Parliament is giving up the right to revisit their wider strategic and ongoing role through the medium of primary legislation. There are some concerns about the detailed changes proposed for Ofcom under the powers of this Bill but, more importantly, we are keen to secure a powerful and meaningful role for Ofcom as an independent regulator in the future.

Last week, this House had what can only be described as a spirited debate about the Government’s proposal to allow Mr Murdoch to take over the remaining shares in BSkyB. It is fair to say that considerable concerns were expressed about this from around the Chamber. If anything, the mood of that debate would have supported a stronger and more interventionist role for Ofcom in ensuring media plurality in the future. In this final debate tonight, can the Minister reassure me that the overarching responsibility for Ofcom to maintain a diverse media and prevent a narrowing and damaging spread of ownership will be maintained if the proposals in this Bill go ahead? What guarantees is she able to give that Ofcom’s independence will not be compromised by an overreliance on being asked to report only at the discretion of the Secretary of State?

These are important issues, which have already been touched on during earlier debates, but I take this opportunity to say that it is important that we are satisfied that the proposals in the Bill do not weaken Ofcom’s independent status. I beg to move.

[Baroness Rawlings]

My Lords, Ofcom is a highly respected organisation that, since its creation by the Office of Communications Act 2002, has successfully regulated one of the most dynamic and diverse sectors. The media and communications market has developed significantly since Ofcom was created and it is only appropriate that eight years later we take the opportunity to make some small changes to how it operates.

Amendment 82 would prevent changes to Ofcom’s funding arrangements. We believe that in the current environment it is only right that Ofcom should have the ability to charge for certain services to alleviate the effect of cuts. Under the Communications Act 2003, Ofcom is not currently permitted to charge operators for this work and, at present, meets the £400,000 per annum cost of the work out of a grant in aid from the Department for Business, Innovation and Skills. Most other countries currently charge for this work, so we would be bringing Ofcom into line with international practice by allowing it to charge for this service.

Amendment 96 would mean that we could not change the way in which Ofcom carries out its functions. In the Communications Act 2003, the structure of Ofcom’s committees was set out in a disproportionately prescriptive and detailed manner. It makes sense to allow Ofcom the flexibility to streamline the structure to meet the requirement and to reflect the diverse needs of the people involved as it best sees fit. This should not compromise its independence. The ability to reshape the structure of the various advisory committees, panels and boards should also lead to a reduction in bureaucracy and could save Ofcom around £100,000 a year.

Following the Government’s decision to table an amendment to remove Clause 11 and Schedule 7 from the Bill, Ofcom will not appear as previously tabled, so Amendment 158 has been withdrawn from the Marshalled List. I ask the noble Lord to withdraw Amendment 96.

[Lord Hunt of Kings Heath]

My Lords, I am most grateful to the noble Baroness and of course I shall not press my amendment to a vote. I would say only that the arguments about Ofcom are very similar to the arguments put forward in our debate on the previous group of amendments. The problem is the very appearance of such a body in this Bill, notwithstanding the commitments given at the Dispatch Box by Ministers. This also relates to whether we will reach some sort of agreement on sunset clauses and on the extent to which a body lives on in this Bill for a long time. A time limit would provide great reassurance.

The noble Baroness has said that Ofcom is in the Bill for eminently sensible reasons. Our problem is that, in a couple of years’ time, Ministers might take against Ofcom and use their powers to make much more radical changes. The context is what we have described as the architecture of the Bill. I am hopeful that in the next few weeks we will be able to decide a sensible way forward that enables the Government to undertake reviews of these bodies. I fully accept that they have every right to do so, but they should do so in a way that secures their independence as far as that is appropriate and with proper parliamentary scrutiny. I am grateful to the noble Baroness and I beg leave to withdraw the amendment.

Amendment 82 withdrawn.