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

Lord Stevenson of Balmacara Excerpts

Monday 24th October 2016 Lords Chamber

Moved by

[Lord Stevenson of Balmacara]

At end insert “but this House regrets that the Government have not sought or gained public support for the draft Order, that they have failed to carry out an effective consultation with the staff affected and that they have failed to explain how the body proposed by the draft Order would meet greater financial commitments while not destroying the balance between protecting the historic environment of the parks and maintaining their security and allowing commercial activities in the parks.”

[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.

--- Later in debate ---

[Lord Stevenson of Balmacara]

I thank all noble Lords for their contributions. I think that we have all had our eyes opened and learned things that perhaps we might not have done had we not put forward the amendment. I will have to go and look up the Addison rules—I am sure that I need a tutorial on that as well. They clearly curtailed much of what we could have heard from the noble Lord, Lord True. I am sorry about that, but if that is the rule, it is the rule.

If government has a function in doing something, it surely should not just will the ends and not provide the means. It should think more carefully about how such things can be run. I gather from the Minister that the reason for what is proposed is essentially that the present arrangement under which executive agencies operate cannot provide the sort of funding, support and operational freedoms that are judged to be in the best interest of the Royal Parks. That seems to be a sad reflection on government’s ability to do the sort of things it wants. It is not that I am against this; I just think that it is important that we understand some of the motivations around it. I take it that that is really what is happening, because there are opportunities to work differently, to fund differently and to retain funding in a way that is simply not possible under the government system. One could perhaps take from this debate that there is a bit of a problem if government as a whole cannot do this. What could be more interesting than to discover that my rather winged shot on tax should have revealed a Budget secret so early in the season, if indeed the Budget is going to contain measures for the way in which executive bodies are dealt with in the tax system under a new set of constitutional arrangements? I suspect that local authorities and others might be interested in how that has happened and that the smile on the face of the noble Lord, Lord True, is redolent of the fact that he is going to go off and check what is going to happen—I jest slightly. If that is what is required to achieve something which the Government think is necessary, again my point is made.

On the points that I raised and were picked up by other noble Lords, I do not think that the consultation reached the standards that we want. That the Minister was able to say that 80% of people supported Winter Wonderland and to cite other high percentages shows that some consultation is taking place on specific issues. It is a bit odd that it was not done here. Simply putting up notices for casual visitors walking their dogs is not quite what I had in mind. I am glad that the staff were consulted—indeed, I had a helpful meeting with senior staff from the agency, who persuaded me that I was wrong to assert that that was not the case, so I accept what the Minister said about that.

The issue of the Charity Commission as regulator to which the Minister referred is of course a problem for all bodies that are in receipt of public funds; it is not specific just to the Royal Parks. The public good that is done with the funds that come from government often has to be supplemented by funds raised in a commercial operation—when I was at the British Film Institute, it was an issue that we had to balance all the time. We received about £15 million in public funding then—it is about the same now—but we raised nearly £10 million through ticket sales and by selling books, magazines and videos. We always had to be careful that the commercial imperative did not drive the onus in the statutes of the body. In this case, it would be the new charity. It is not unreasonable for Parliament to be assured that this will be a transition within which such verities are retained.

I hope that I did not give the impression that I was against what is being done. What I want is brilliant public parks, fantastic public spaces and for London to be enhanced and supported by them. I do not object to the commercial activities around that—although they are not all commercial; they are fun, enjoyable and have added a new dimension. It would be wrong for that to get out of proportion. One way in which that could be prevented would be for the Minister to go through some of the points that have been made today and write to us, and perhaps put a note in the Library about some of the issues that he was not able to cover. I think that we would then feel reasonably satisfied that we had given this matter good scrutiny and that the arrangements in place were not so awful as to be resisted at this stage.

I am supported by thousands of people on my Back Benches here who want me to press for a vote on the order and to take it down, but on this occasion I have been persuaded by the arguments. I beg leave to withdraw the amendment.

Amendment withdrawn.