Public Bodies Bill [HL]

Lord Taylor of Holbeach Excerpts

Monday 7th March 2011 Lords Chamber

[Baroness Royall of Blaisdon]

My Lords, I think my noble friend has said it all. I am grateful to him for raising the proposed merger of these two bodies. Here we have two small but very important organisations that deal with related areas of law but are distinct in their functions. As my noble friend said, one is a regulator and one is an arbitrator. It is fair to say that everybody who knows the two organisations, the people involved and their work is bemused about why they are being merged. They wonder whether it is just a paper exercise in order simply to decrease the number of quangos. The cost savings are potentially very small. I will be grateful if the Minister will tell me what costs will be saved. My noble friend made a point about the separation that must exist between the two functions. It is extremely important that there should be walls, be they Chinese or otherwise, and we need to know that they will exist if the two bodies are merged.

[Lord Taylor of Holbeach]

I thank the noble Lord for moving this amendment. He very effectively described the functions of both bodies. They have both existed for many years, and both operate in the sensitive area of trade union and industrial relations law. I stress that the Government value their roles. They are both expert in their respective fields, and they both enjoy solid reputations for impartiality. The similarities do not end there. They both undertake judicial functions, they have a shared understanding of judicial procedures, their officeholders and support staff both possess detailed knowledge of trade unions and of industrial relations more broadly. Both bodies are relatively small and are both housed in the same building. They both receive administrative support from ACAS—the Advisory, Conciliation and Arbitration Service. There is therefore already significant linkage between the two bodies, and the Bill will take that process a stage further by merging them. Some efficiency savings will be produced as a result, but I have to say to the noble Baroness, Lady Royall, that they are not likely to be huge. The total budget costs for both organisations are about £1.25 million, so the efficiency savings will not be huge, but there will be some. In particular, their support staff could be deployed more flexibly to meet the peaks and troughs of case loads.

A merger would also simplify the institutional landscape and avoid any potential confusion in the eyes of users about their respective roles. Therefore, the Government consider that a merger is advantageous to all concerned. A merger will not affect the underlying law which these bodies help to enforce. I should add that the Government have no plans as a consequence of this merger to change the various rights and duties embodied in trade union law. Our intention is to ensure that the merger will not affect the experience of persons, be they individuals, unions or employer groups, who currently use the services of these bodies. In particular, we want to maintain the same procedures which the CAC and the CO currently apply when considering their respective cases. BIS, which has a lead responsibility for these two bodies, has already discussed the potential merger with the CAC, the CO and ACAS, and has sought the views of the TUC and the CBI. We believe that we have reached an understanding on how a workable merger can be achieved.

In summary, there is a strong case for these two small bodies to be merged. We believe that this can be achieved without prejudicing in any way the performance of their important and sensitive duties, and I hope that the noble Lord will feel able to withdraw his amendment.

[Lord Whitty]

Well, my Lords, that was a bit thin. The Government are keeping the functions of the two organisations, which they recognise are distinct. The organisations already have good administrative support and operate quite sensibly, and there is virtually no cost saving, if any. The one point that he made with which I disagree is that the users of those organisations know perfectly well what they are for, and they are distinct. If a member has a complaint about his trade union, he does not want an arbitrator, he wants someone to tell that trade union that it has been acting against its own rules in the way in which it has dealt with him, whereas the CAC is in essence an arbitrator. The Government wish to make this tidier, and BIS wants to cross another organisation off the list. I am not going to make a big point about this, but the reality is that there is no rationalisation, no overlap and no administrative saving. There is, however, a lingering doubt that there might be some conflict of interest when the noble Lord talks about rationalising the role of the two secretariats. That might come back and bite us, although the probability of that happening is fairly low. Nevertheless, it is still there, and the appearance of a Chinese wall will at least be necessary, in which case any administrative rationalisation will be even less. I will not press this amendment tonight and I will not press it again, although I do think that the Government’s argument is a bit thin. I beg leave to withdraw the amendment.

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One would be more reassured if the noble Lord, Lord Taylor, were able to give some comfort about the general architecture of the Bill. I refer him to two points. First, it will be interesting at some stage to have the Government’s view on what have come to be known as sunset clauses. In other words, if this provision related to an individual body for a limited length of time and then ceased to apply to that body, I would be much more relaxed about the provisions. Equally, we will debate on Wednesday the issue of another order-making power. The noble Lord will have seen the latest report of the appropriate Select Committee in relation to his amendments, but at this stage I would like to give him an opportunity to explain why this schedule is in the Bill. He will understand that my attitude towards it will be shaped by the eventual architecture of the rest of the Bill.

[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.

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[Baroness Royall of Blaisdon]

My Lords, I rise for two minutes. I was going to say that this was going to be an interesting discussion, but actually I found it a deeply shocking discussion. I am shocked by some of the allegations that have been made this evening. I think that the church has got a very difficult tightrope to walk at this very difficult economic time. Of course it has to care for our heritage, and I am sure that it does care for it deeply, as the right reverend Prelates have said, but its first responsibility at any time should be towards the flock and the people for whom it cares. In doing that, of course, it must also take into account the heritage that we all cherish. I am going to sit down now, but I think that this debate has been perhaps more inflamed than it should be. It perhaps demonstrates the need for greater scrutiny of the Church Commissioners, and I think that perhaps that is something that the Government and the church itself could look at because clearly there is a demand for perhaps more conversations and discussions about things that are going on. However, I am pretty much appalled by some of the things that have been said this evening.

[Lord Taylor of Holbeach]

My Lords, I have enjoyed listening to the debate, but I share some of the noble Baroness’s observations on it. Perhaps it is the lateness of the hour. There is scarcely enough time to consider a topic as significant as this. I think I would have enjoyed the debate more if it had not been in the Public Bodies Bill, but it is clearly not an appropriate topic for this Bill, so I am going to address my remarks purely on those grounds. I think the House may well discuss methods whereby the scrutiny of church affairs could be brought back to this House in some way, but that is a matter for the House authorities. It is certainly not a matter for the Public Bodies Bill.

There are three reasons why the Government cannot accept this amendment, and they have been said. The first is that the Church Commissioners fall outside the scope of the Bill. They are not a non-departmental public body but essentially a non-governmental body and a charity under the scrutiny of the Charity Commissioners.

The second reason is the historic relationship between Parliament, government and the Church of England—perhaps we have seen why this separation of the estates is so important in the nature of the debate that we have had this evening. Since the enabling Act 1919 set up the Church Assembly, now the General Synod, it has been accepted that Parliament does not in practice legislate on the internal affairs of the Church of England without its consent. The mechanism laid down in that Act for legislating on the Church of England included the constitution of the Church Commissioners through synodical measure. There are, of course, methods by which Parliament can put pressure on the church to act, but the noble Lord’s amendment seeks to return to a position in which Ministers would have a direct power to intervene in the governance of the commissioners.

The third reason is that the commissioners’ board of governors, of which the right reverend Prelate is chairman, as trustees of a charity, are under a fiduciary duty to manage their assets in the way that best enables them to achieve their charitable purposes. It is therefore for them to determine how best to do so, including by deciding whether to dispose of particular assets. It is not a matter for Ministers to regulate in the case of this or any other charity. I therefore urge the noble Lord to withdraw his amendment.

[Lord Inglewood]

My Lords, I thank all noble Lords who have taken part in this debate. I must say that when I moved the amendment I had no idea what direction the debate would take, but I did not anticipate that it would move in the way in which it did. I particularly thank the right reverend Prelate the Bishop of Leicester for arguing the case that he did in the way in which he did, and I thank my noble friend Lord Deben for his counter point. In a way, it drew a lot of the argument into the open and made it clear that these issues are perhaps not as clear as we all like to think they are at first blush. The right reverend Prelate the Bishop of Chester asked me whether I would withdraw the use of the words “money laundering”. I shall do so, although what I actually said was “a form of money laundering”, and I bracket those words with “the philosopher’s stone that turns base metal into gold”.

I will make one technical point and then one more general point. The technical point is that the Church Commissioners are not completely charitable. The point of the 1943 measure is that they hold certain funds that include the bishops’ palaces, which are not held charitably—and I base that not on my own inadequate legal knowledge but on Halsbury’s Laws of England in the Library of the House. The relationship between the Charity Commissioners, the Church of England and its assets is perhaps not as straightforward as any of us quite think.

I will also make a point that no one else has made this evening but which I feel has something to do with this. In religious matters, enthusiasms gain prominence from time to time—we have seen this in a number of areas, such as the Reformation and the iconoclasm of Byzantium—in which so enthusiastic do people become about a particular way of looking at things that they perhaps feel that they can ignore everything else in the pursuit of it. My sense as an individual, as one of the foot-soldiers in the Church of England, is that there is currently a great movement against the kind of things that I was talking about. I hasten to add that I hope your Lordships noticed that I never said that bishops should live in bishops’ palaces; I said that if bishops ceased to live in bishops’ palaces, proper and legitimate steps should be taken to look after the heritage interest that they represent. I added in parenthesis that I had a personal preference in that direction, but that is quite different. I am concerned that, if we have a kind of cultural revolution, as we have seen from time to time in churches, the Red Guards should not destroy all the things that matter in effecting the changes that they want to see.

It is ultimately for the Church of England to decide what it wants to do but I believe that we all have a legitimate interest in the assets of the Church of England and that society as a whole has a legitimate interest in what happens to them. After all, these particular buildings are listed and the civil authority is not simply decoupled from them.

It is late. We have had a lot to think about, and I hope that we shall continue to think about it. I beg leave to withdraw the amendment.

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[Lord Taylor of Holbeach]

I thank the noble Baroness for tabling these amendments and for the productive meeting that we had earlier today. This will, I hope, be a fairly brief debate, but it has certainly been productive, because this is one of the key bodies within the Bill. It is emblematic of the desire of all noble Lords to have a facility to reform public bodies while retaining their essential core activities and their independence.

The inclusion of the Equality and Human Rights Commission in each of these schedules was not an afterthought. The Government made it clear in their announcement of 14 October that they intend to retain but substantially reform the commission, refocusing it on its core functions of regulating equality and anti-discrimination law in Great Britain, fulfilling EU equality requirements and being a national human rights institution under the United Nations. We also intend that it should provide better value for the taxpayers’ money spent on it—something that it has so far failed to do.

The Government intend to set out their proposals for the commission in a consultation document shortly. I hope that this will be available on Report. However, I can assure your Lordships that the combination of needing to focus the commission on its core functions and at the same time improving its value for money means that our consultation exercise will include proposals relevant to all three schedules mentioned in this group of amendments.

The noble Baronesses, Lady Thornton and Lady Royall, raised a point about what happens to bodies having had a process of reform within the schedule. Do they remain in a permanent state of anxiety and is there a case for sunsetting? We are actively considering proposals similar to that which the noble Baronesses suggested. Above that, any statutory instrument can include a proposal for a body or office to be removed from the schedule in which it appears. It can be done in that way, but I appreciate the concerns of the noble Baroness. I extend an invitation to her to talk further about this because it is a mechanism that would make the Bill much more effective, if we can find ways of closing the schedules after the period of reform.

I know that this is a matter of concern to a number of noble Lords, so I can assure the Committee that we recognise the importance of the commission being able to independently administer its core regulatory functions as well as those founded on international and EU obligations. In particular, the Lord Chancellor recently made it clear when giving evidence to the Joint Committee on Human Rights that the commission’s independence as a national human rights institution would remain untouched. I am happy to repeat his assurance and hope that the noble Baroness, Lady Royall, can accept it.

It is appropriate that I pay tribute to the work being done by my noble friend Lord Lester of Herne Hill and indeed by other noble friends, such as my noble and learned friend Lord Mackay of Clashfern and my noble friend Lord Maclennan, who in the early days pointed out a number of deficiencies that he felt needed to be addressed. I am grateful to join in the tributes paid by my noble friend Lord Lester to the Bill team, which has worked extremely hard in trying to find a way through on this matter. I hope that my noble friend Lord Boswell can feel content that we are achieving what we would seek to do in reforming this institution without changing its independence from government. Therefore, I ask noble Lords to accept the inclusion of the EHRC in each of these schedules as a necessary measure. It is properly safeguarded and narrowed in scope by the removal of Schedule 7. I urge the noble Baroness to withdraw her amendment.

[Baroness Thornton]

I thank the Minister for that reply and thank the noble Lords, Lord Lester and Lord Boswell, and my noble sister. It is actually International Women’s Day now—we are 21 minutes into it—so I thank my noble friend Lady Royall for her remarks.

We are now at the point when there is nothing much more that we can say in this Chamber, so we now need to continue our discussions. I accept the invitation to continue talking to the Minister. I beg leave to withdraw.

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Moved by

[Lord Taylor of Holbeach]

72A: Schedule 3, page 18, line 24, at end insert “for areas wholly or mainly in England”

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Moved by

[Lord Taylor of Holbeach]

79A: Schedule 4, page 19, line 4, leave out from beginning to “under” and insert “Inspectors appointed by the Secretary of State”