Orders of the Day — Local Government (Contracts) Bill
House of Commons, 8 July 1997.
FUNCTIONS TO INCLUDE POWER TO ENTER INTO CONTRACT
David Rendel (Liberal Democrat, Newbury)
I beg to move amendment No. 1, in page 1, line 10, at end insert— (1A) The power of a local authority to do any thing (whether or not involving the expenditure, borrowing or lending of money or the acquisition or disposal of any property or rights) which is calculated to facilitate, or is conducive or incidental to, the discharge of its functions, includes the power to enter into a contract with another person for the provision or making available of assets or services, or both (whether or not together with goods), for or in connection with those purposes.'. Mr. Deputy Speaker, I apologise for the confusion if you thought that my hon. Friend the Member for Sutton and Cheam (Mr. Burstow) intended to move the amendment. In Committee, my hon. Friend raised an issue somewhat similar to the one raised by amendment No. 1 and said that, if he was dissatisfied with the Minister's response, we might well table an amendment on Report. Having listened to the Minister's response on that occasion, and having had the opportunity to reflect on the matter again when it was reported in Hansard, I was not entirely satisfied with the Minister's response. Further reassurances are required before we feel it right to withdraw the amendment, because some sections of local government will continue to worry if the amendment is not passed and if further reassurances are not given. The amendment in no sense tries to expand the powers of local government, which is one of the confusions that arose in Committee. The Minister appeared to feel that we were trying to expand the powers of local government. That was not the point of the remarks made by my hon. Friend the Member for Sutton and Cheam at the time, and it is not the point of amendment No. 1. The amendment simply seeks to clarify the extent of the Bill and to ensure that it is wide enough to cover all those aspects of local government performance which I believe that the Government intend it to cover. In that sense, it is a helpful amendment, which tries to take out of the Bill that which might otherwise be a part of it and that leaves some of the potential contractors of local government in doubt whether local government really has the powers that it seems to think it has. In her reply, the Minister said: the word 'functions' in the Bill covers both duties and discretions."—[Official Report, Standing Committee B, 1 July 1997; c. 12.] That does not appear to be a normal definition of the word "functions," and it is unlikely that the Bill could be interpreted in exactly that way in plain English. I therefore ask for further clarification from the Minister. I believe it is fair to say that the Bill talks only of functions that are conferred or imposed by statutory provision, and if the amendment is to be withdrawn the Government must explain how the Bill can cover the potential use of some discretionary functions by local government—especially, perhaps, those new functions that may not yet have been thought about. New ideas are always emerging on what local government may wish to be involved in, as new technology comes into use, and the Bill should cover any such new functions in which local government may be involved in future. If the purpose of the Bill is as I understand it to be—to reassure potential contractors that they may go ahead with their contracts in the full assurance that they will be paid even if, on occasion, local government appears to have acted ultra vires—the amendment can only help the Bill to secure its true purpose. It will make it plain that the Bill does cover all the potential aspects of local government involvement, not only—as appears to be the case at present—those that are specifically laid down as the functions of local government directly in statute.
Eric Pickles (Conservative, Brentwood and Ongar)
I do not intend to detain the House long in considering the amendment, but as it is my first time at the Dispatch Box—
Nicholas Soames (Conservative, Mid Sussex)
First-class man.
Eric Pickles (Conservative, Brentwood and Ongar)
I thank my hon. Friend. I hope that I shall be here long enough to enjoy it. What the Liberals said on Second Reading and in Committee has changed a little; at first they talked about a general power of competence and now they say that they want to extend it because they want to be sure that it covers everything. I clearly recollect what happened in Committee. Several times I asked the Minister for Local Government and Housing whether discretionary powers were covered, and especially whether section 137 of the Local Government Act 1972 was covered. The hon. Lady was straightforward about that and unequivocal in her assurances that that would be covered. At a future date, there may be a case for examining the general competence of local government, but I do not believe that it should come about as a result of the amendment. It is true that, if it was decided to reconsider the way in which local authorities receive their powers, something like the amendment would need to be considered, but those with experience of local government and the way in which it approaches matters of general competence believe that what we need is a clear statement of powers and responsibility, and the Minister, in fairness to her, gave the Committee precisely that. We need to understand where responsibility lies in local government and in terms of the council tax payer. Local authorities have generally used the test that is set down in section 137 of the 1972 Act, which is one of direct benefit. There must be a clear demonstration that it is to the benefit of the local community or a substantial part of the local community or a substantial geographical part. It seems to me that, in ways of operating, powers are best left in terms of "must" or "may" take action, in recognition of the fact that there is always scope for ambiguity. That is why section 137 of the 1972 Act, and the previous section, section 111, came into existence. In Committee, the hon. Member for Newbury (Mr. Rendel) suggested that we might try to reverse the position and lay down several exceptions, so that local authorities have a wide power except in the case of the exceptions. I believe that that is the idea underlying the amendment. Arranging things in that way would only result in a long list of exceptions. Would we want a local authority to trade? Probably not. Would we want it to manufacture windows? Probably not. I can, however, think of examples when we might be disposed to allow local authorities such powers—when an authority was in charge of a disabled workshop, for instance. The Liberal Democrat approach will not, I believe, produce any great benefits. I cannot help agreeing with Professor Grant's feeling that this approach is more symbolic than real. That sums up the amendment, too, and the general attitude of the Liberal Democrats to local government.
Hilary Armstrong (Labour, North West Durham)
The Bill appears to enjoy the support of both Opposition parties, although they disagree about the amendment. I want to be helpful to both parties, if I can. The effects of the amendment are difficult to ascertain. It would insert new section (1A), lifting its words from section 111 of the Local Government Act 1972. That section empowers authorities to do anything that facilitates or is conducive or incidental to, the discharge of any of their functions. The amendment would enable authorities to enter into contracts for assets or services when relying on subsidiary powers under section 111, instead of primary powers. I wonder whether the hon. Member for Newbury (Mr. Rendel) realises that the amendment would have that impact. I fear that ingenious interpretation of the amendment might lure authorities into schemes in which their powers were at best highly ambiguous. The amendment would therefore seem to widen the effect of the Bill, which is not our intention. The Bill does not add to local authorities' powers. Clause 1 is designed merely to make explicit what is already implicit, so that authorities can more confidently enter into contracts in pursuance of their functions. Where entering into a contract is necessary to help an authority discharge a function, but it is not confident of being able to rely on the provision for the power to enter the contract, the authority could rely on section 111, on the basis that a contract is incidental to or conducive to the performance of the function. There were doubts in some quarters whether the main statutory provision, or section 111, empowered an authority to enter into contracts in all cases. The Bill removes that uncertainty. It does so by confirming, in clause 1, that the statutory provisions that confer functions also confer power to enter contracts for assets or services in connection with the discharge of those functions. The Bill makes this implicit power explicit. To that extent, inserting the words of section 111 is unnecessary. Indeed, such insertion could add an incidental power to an incidental power, thus augmenting local authorities' powers. I know that this is getting complex, so I shall provide some examples of what we think might happen. The first concerns an activity permitted under current legislation; clause 1(1) would confirm it. An authority can enter into a contract for the provision and servicing of computers and other office equipment required to discharge its primary functions—for instance, education or social services. The second example concerns an activity not permitted under current legislation or the Bill, but possibly permitted by the amendment. Under it, an authority might claim that it could enter into a contract connected with borrowing or lending money but unconnected with the discharge of its functions—the very problem identified in the swaps cases, for which section 111 alone could not be relied on to facilitate an authority's actions: there needed to be a primary function. I hope that that is now clear. We believe that the Bill meets the points made by the hon. Member for Newbury. We are anxious to give lawyers no more of a field day than they will already have with this type of activity. Because the amendment might be interpreted as providing another incidental power, I believe that it goes against what we are all aiming for. I therefore hope that the hon. Gentleman will be reassured enough to withdraw his amendment.
David Rendel (Liberal Democrat, Newbury)
I am grateful to the Minister. The hon. Member for Brentwood and Ongar (Mr. Pickles) appears to have missed the point of the amendment, which is not about a power of general competence. I thought that I had made that plain—good though it might be to introduce such a local government power, that is irrelevant to this amendment. The Minister said that the amendment would add a power to local authorities in some cases—she mentioned monetary transactions. It was certainly not my party's intention to add to local authorities' powers, and I accept that the Minister is worried about that. Instead of pushing on with the amendment at this stage, it may be sensible to withdraw it for the time being. I nevertheless hope that the hon. Lady will seriously look again at a possibility that she seems to discount. The legal advice of local government bodies is that there is still a problem in the Bill, in the sense that it may exclude some local authority contracting with external contractors. I am sure that we are at one in wanting to overcome such a problem, if there is one, and it would be wise of the Minister to examine it again. I beg to ask leave to withdraw the amendment.
THE CERTIFICATION REQUIREMENTS
Paul Burstow (Liberal Democrat, Sutton and Cheam)
I beg to move amendment No. 2, in page 3, line 16, at end insert— '(3A) A person signing the certificate on behalf of the local authority shall in doing so be under no duty to any party other than the local authority on behalf of which he has signed.'. I have read and reflected on the discussions that took place in Committee, in particular the comments of the Minister in this respect. I still believe that the case law to which I referred in Committee—the case of Burgoine and Cooke v. London borough of Waltham Forest—raises serious questions. The Minister reassured us in Committee that there would be a serious problem with negligence only if officers could be regarded as having acted in bad faith. My reading of the Waltham Forest case is that the officers who were held to be liable in negligence were in no way acting in bad faith. I fear that that judgment may impinge on the working of the Bill once it becomes an Act. I tabled the amendment to make it clear in the Bill that the officers who certify these contracts are responsible only to their local authority and to no one else. That is the best way to offer legitimate protection to local government officers in carrying out their role as advisers to, and servants of, local authorities. If the wording of the amendment is imperfect but the point is valid, I hope that the Minister will find some appropriate wording to reassure officers who will sign those certificates.
Nick Raynsford (Labour, Greenwich and Woolwich)
I hope that I can persuade the hon. Member for Sutton and Cheam (Mr. Burstow), who moved the amendment in a constructive and sensible way, that in practice his fears are groundless and the amendment is not required. The amendment appears to be based on the misapprehension that the Bill can somehow increase the potential vulnerability or exposure of council officers to legal action. The Bill does not do that. Local council officers who carry out their normal duties in good faith are not liable to third parties for the acts of a local authority, even where those acts turn out to be ultra vires. The Bill does nothing to add further burdens. Officers will be no more liable in signing a certificate than in putting their name to the contract to which it relates. I am sure that they will exercise the same care in signing certificates as they do at present in binding the authority under any contract or other transaction. There are no real grounds for concern, in connection either with the kind of contract for which the certificate might be given or with other contracts. We would not want to throw misplaced doubt on officers' positions in the generality of their activities by making a provision—in the form of the amendment—affecting the certifying of some contracts. The hon. Gentleman raised the case of Burgoine and Cooke v. London borough of Waltham Forest. The problems in that case were of a very different nature and flowed from the authority's lack of capacity to set up a particular company and appoint its officers as company directors. It was not concerned with the day-to-day activities of an officer, of which certification would naturally form a part. The officers in that case were acting not as local authority officers but as company directors, and that difference created the problems. I hope that the hon. Gentleman accepts that we have given this matter serious consideration. We do not wish to create a situation where council officers are exposed to the risk of litigation or liabilities simply through exercising their normal functions in good faith and in a proper way. We are satisfied that there is no risk of that. I hope that the hon. Gentleman will therefore not press the amendment.
Paul Burstow (Liberal Democrat, Sutton and Cheam)
I am grateful to the Minister for his response. It is important to put such a matter clearly on the record. If, in the unlikely event that the courts look into this matter, the fact that it is set out in Hansard will undoubtedly be of great benefit to judges in deciding what we legislators were attempting to achieve through the Bill. I beg to ask leave to withdraw the amendment.
SPECIAL PROVISION FOR JUDICIAL. REVIEWS AND AUDIT REVIEWS
Paul Burstow (Liberal Democrat, Sutton and Cheam)
I beg to move amendment No. 3, in page 4, line 15, at end insert— '(3A) Before making a determination under subsection (3), a court shall have regard to the consequences for the parties to the contract of such a determination arising from provision made in any relevant discharge terms relating to the contract.'. I shall be even more brief on this amendment, but I look forward to hearing the Minister's detailed response. I raised this matter in Committee in the clause stand part debate, and I remain concerned about it. It concerns a court's power, and what the court will take into account, when considering contracts and whether they are ultra vires, and the consequences for local authorities and therefore council tax payers if the discharge clause comes into effect. The discharge clause in the Bill could place on local authorities a heavy burden, which would be passed on to council tax payers. The amendment would include in the Bill a provision requiring judges to take the impact on council tax payers into account when assessing whether a contract should be allowed to continue to operate. Although I listened to, and later read, the Minister's comments in Committee, I am not yet convinced that judges will be able to act as I hope. I want an assurance that the amendment is not necessary, but I believe that it is.
Hilary Armstrong (Labour, North West Durham)
As the hon. Gentleman noted, the Bill deals with the possibility that, in the unlikely event of a contract being subject to audit review because it has been successfully challenged, a heavy burden will be placed on council tax payers. It is precisely for that reason that the Bill has been drafted as it has. The Bill makes it clear that, before entering into a contract, a local authority must have assured itself that it will be acting within its powers. The Bill is constructed so as to ensure that that happens. I appreciate that the hon. Gentleman wants to be helpful and that he seeks to ensure that, in the unlikely event of a certificated contract being subject to audit review, a court, when considering the setting aside of a contract, is required to act as on judicial review and therefore take full account of all the circumstances. Clause 5(3) already requires a court to act as it would on judicial review and the court will take account of all circumstances and arguments that can be presented to it about the contract and its effect on the parties if it is set aside. There is a danger that, if one factor, such as that emphasised in the amendment, is stated in the Bill, it will have the opposite effect and raise doubts about what the court should consider in the contract. We are trying to ensure that the court properly considers what the contract contains and what, in the context of the case, is proper for the court to consider. We therefore want to ensure that the Bill properly addresses that. We shall continue to listen to and hear representations, but the hon. Gentleman's intention is accounted for in the Bill. The amendment could make matters more difficult rather than ease the path. I wish to be helpful to the hon. Gentleman. Had I been assured that the amendment would improve the Bill, I would have been much more sympathetic. We cannot accept the amendment because it would probably make matters much worse. The judge would have to address that specific issue rather than the context within which the contract had proceeded, and therefore the common-sense view of what the contract sought to do and what was in the best interests of the council tax payer.
Hilary Armstrong (Labour, North West Durham)
I beg to move, That the Bill be now read the Third time. It is with great pleasure that we come to the Third Reading of what I admit is an exceptionally complex Bill. None of us is certain that what we want from the Bill is what we will end up with. Unfortunately, that is the nature of such legislation. The previous Government had much experience of that with a Bill on the national health service and the private finance initiative. In the week in which the election was called, they admitted that that Bill did not meet the needs that they had intended it to meet. We are now considering a further Bill relating to that. It is important to restate what the Bill does and what it does not do. Its purpose is to remove an obstacle to successful local authority public-private partnerships. The Bill does not change the fundamentals of the law. It does not add to local authorities' existing powers. Equally, there can be no question of it rendering ultra vires transactions that have always been within authorities' powers. It merely makes explicit what was already implicit: that local authorities can enter into contracts in pursuance of their functions.
Tony Colman (Labour, Putney)
May I declare an interest as chair of 4 Ps—the Public Private Partnerships Programme—and ask my hon. Friend whether she would support an experiment, a pathfinder project, for the use of PFI in HRA housing. I believe that that could lead to best value, and 4 Ps has established that there is support from financial institutions. Would my hon. Friend support such an experiment?
Hilary Armstrong (Labour, North West Durham)
I am grateful to my hon. Friend, who probably has more experience than any other hon. Member of the matters covered by the Bill. I should be happy for the Government to work with 4 Ps on a pathfinder project for housing. We are always looking for ways in which we can draw in private sector money to increase housing capacity. I thank my hon. Friend for his constructive suggestion. The Bill deals with a certification procedure, which does not permit authorities to act ultra vires. It does not give them immunity from challenge in public law by a taxpayer for entering into deals that are outside their powers. It does not restrict the auditors' right of challenge. The certification procedure enables authorities to say to contractors, and to financiers who are backing deals, that, to the best of the authority's knowledge and belief, the deal in question is within powers. The Bill also provides contractors and financiers with the assurance that if, at some later stage, there are proceedings to enforce the contract, the authority will not then be able to claim that the deal is ultra vires. However, should the deal none the less be found to be ultra vires, the authority will have to recompense the other parties to the contract. For those reasons, the Bill has been welcomed by the finance community. The other partners are also extremely important. What is in the Bill for local authorities? First, it provides a valuable clarification that statutory powers carry with them a power to enter into associated contracts for assets or services, or both. Secondly, the Bill means that authorities will be able to give assurance to potential partners in innovative partnership schemes that if, after certification of a scheme and in the unlikely event of the scheme nevertheless being found to be ultra vires as a result of a challenge in public law, the provider and the bank will be protected. The local authorities understand that. They know that they will have the responsibility to ensure that schemes that they enter into are within their powers. It has been suggested that certification will be too burdensome, and will entail additional requirements. We do not believe that it will be complicated or burdensome. It should reflect the process of considered assessment that an authority will have to go through in any case, and which an authority should undertake before entering any partnership agreement. The certification process will focus specifically on powers. For that reason, it is not the appropriate vehicle for giving assurance about other matters, important though those may be. It need not be cluttered up with details of risk transfer, procurement processes, planning matters and so on. The authorities should address those issues, but in another context. We do not believe that certification adds to officers' liability. I know that that has been a particular concern of local government officers and of Liberal Democrat Members. On the contrary, by clarifying authorities' powers, the Bill is likely to reduce the risk that officers entering into contracts, especially innovative partnership deals, might inadvertently act ultra vires. Signing the certificate carries no more liability than signing the contract to which it relates. There is every reason why local authority officers will act in good faith in going about their business. If they act in good faith, honestly and without malice, they will have nothing to worry about. I welcome the hon. Member for Brentwood and Ongar (Mr. Pickles) to the Dispatch Box, and apologise for not doing so earlier. It is one of the better innovations of the new Conservative party that Back Benchers are being encouraged to join Front-Bench teams on appropriate occasions. This is such an occasion. It is a pity that the hon. Gentleman has been left on his own—no, I see the that hon. Member for Eastbourne (Mr. Waterson) is also present, and I welcome him. I am sure that his support is of great encouragement to the hon. Member for Brentwood and Ongar. It might seem entirely reasonable for parties to contracts to agree not only to the issue of certificates, but to their content. However, any amendment along those lines, although apparently innocuous, would destroy the Bill's good effect. If contractors and banks had to agree that schemes were intra vires, rather than just relying on the authority's opinion, they would be tied into the decision-making process. They would have to form a view, when they would prefer not to do so. Not only would contractors and banks not be well placed to form an opinion, but they would have to exercise due diligence in expressing a view. The Bill aims to protect financiers and contractors in the unlikely event of authorities' making a mistake about whether contracts fall within their powers. I believe that the Bill will achieve the stated aims of all hon. Members. We want to engender confidence in the contracts that local government will sign with the private sector. This is a very important development for local government, because it is about the future of local services to local taxpayers. I commend the Bill to the House.
Eric Pickles (Conservative, Brentwood and Ongar)
I thank the Minister for her kind remarks. I forgive her for not making them earlier—no doubt she was struck dumb by the sight of me at the Dispatch Box. I also thank the hon. Lady and the Minister for London and Construction for the courteous way in which they conducted business in Committee. I agree with my hon. Friend the Member for Christchurch (Mr. Chope): it is a great pity that we have not heard much from Government Back Benchers in this debate. It is also a pity that the hon. Member for Putney (Mr. Colman) did not serve on the Committee. Committees are often stuffed to the gills with people who know nothing, and care even less, about the subject under consideration. The hon. Gentleman is an expert on whom we could have leaned. We could have listened to his advice, and probably concluded our deliberations much sooner. I hope that he will speak on this subject in the future—in fact, I look forward to hearing from him in a few moments. This is an uncontroversial Bill, and we shall not divide the House on it this evening—although it is not terribly wise to send Labour Members home just yet. The debate on the Bill was quite exciting. At times, I expected to see great shafts of light issuing from the ceiling and cherubim and seraphim dancing in it, because this is the stuff of the road to Damascus. The Government have a new enthusiasm for private finance initiative projects. In the past few years, I have listened to Labour Members of Parliament and parliamentary candidates describing the wickedness of the PFI, which they called a waste of taxpayers' money. However, there is now a new enthusiasm for the PFI. PFI projects worth about £7 billion are in the pipeline, thanks to the Conservative Government. I recall Labour Members' cynicism about the PFI and the vitriol that they aimed at it—but that was then, and this is now. The Government have embraced existing legislation that was prepared for a Conservative Government, which complements perfectly the 1997 local government capital finance regulations. Hon. Members referred to several high-profile court cases that sent a shiver down the back of the banks and financial institutions. Partnership agreements were found to be unenforceable and banks suffered losses, seriously harming confidence in local authorities as serious risks. We have heard a little about the Waltham Forest and Allerdale cases. Contracts that had been entered into were found to be null and void because the local authority lacked the necessary credits. The repercussions were quite serious. The company had no recourse to legal action, and was saddled with considerable bad debts. The company in the Allerdale case is pursuing individual councillors as company directors. I have some sympathy—as do Labour Members—for those councillors who sought professional advice and were badly let down by their advisers. The Bill provides clarity where there was doubt, and parties now know where they stand. The public will know where they stand, thanks to a concession secured by my hon. Friend the Member for Christchurch that will ensure that documents are open for inspection. I have referred to the road to Damascus, but perhaps it might be better to regard the legislation as the manifestation of a crate culture in the Labour party. Hon. Members will recall that, during the second world war, the American air force parachuted crates on to remote Pacific islands in order to look after their fliers who might be stranded there. The islanders created a new religion from that activity, and the same sort of thing is happening with the PFI. The PFI is being bandied around the Chamber as the solution to every problem: if we need a new hospital, call for PFI; if we need a new tube network or a new school, call for PFI. The scheme seems to have no limitations. However, the PFI has limits. It transfers the risks, and offers the opportunity of new finances for public services. That risk transfer allows the release of provisions that were needed in order to deal with that risk. However, although the PFI brings new finance, it certainly does not bring new funds for local authorities. It is simply a rescheduling of debt. New funds can be created only through the release of real resources—and the PFI does not do that. During the recent debate on the future of the London underground, I likened the PFI process to that of a person buying a home: the building society provides the finance, but the purchaser provides the funds. Companies that enter into contracts with local councils will be seen to enjoy a special relationship. We must consider carefully the way in which the Bill will operate in practice. We must be absolutely certain that no special favours are shown to those who enter into contracts with local authorities. When that issue was considered in Committee, the hon. Lady referred to local authorities as having the powers of planning authorities and of those who enter into contracts. She seemed to suggest that that situation was well established. However, she has since retreated from that position. In her winding-up speech today, she said that there was no need to consider the situation, as it was well established. I have read her remarks in Hansard, and I believe that we will have to re-examine the matter in another place by way of certification and through greater openness because of problems with planning gain. The situation is slightly different from that suggested by the hon. Lady. Earlier this year, the Department of the Environment issued a circular, which made it clear that, To retain public confidence, such arrangements must be operated in accordance with the fundamental principle that planning permission may not be bought or sold. This principle is best served when negotiations are conducted in a way which is seen to be fair, open and reasonable". What better way to achieve to achieve that than in the process of certification? I have the smallest criticism of the previous Government, because one point was left open on planning problems. I am sure that the Minister would like me to mention it. When an important company cosies up to a local authority, officers from the council and the company will inevitably get to know one another, and in many ways the arrangement almost becomes an extension of the council. The recent case of Tesco v. the Secretary of State for the Environment shows that, if an authority decides not to follow the guidance, and the application is not called in, the local authority does not have to follow Government guidelines. Perhaps we shall have to come back to the important—
Hilary Armstrong (Labour, North West Durham)
I should like to help the hon. Gentleman. He may know that Lord Nolan has today published his third report on local government. He makes recommendations about how planning decisions are made and handled. We shall consult widely on that in the light of the report, and will therefore be able to return to some of the issues that we discussed in Committee. I do not believe that those issues need detain us at the moment, but we shall take any recommendations seriously and consult on them.
Eric Pickles (Conservative, Brentwood and Ongar)
That is most helpful. In Committee, the hon. Lady said that the issue was one of certification, and had nothing to do with planning. If she is moving from that position, that is marvelous.
Hilary Armstrong (Labour, North West Durham)
rose—
Eric Pickles (Conservative, Brentwood and Ongar)
I hope that the hon. Lady is not going to disappoint me by retracting.
Hilary Armstrong (Labour, North West Durham)
I am trying to be helpful. What I have just said does not interfere with what I said about certification. We shall deal with any concerns about planning issues through consultation and our response to the Nolan committee. I do not want the hon. Gentleman to run away with the thought that we are not serious about that, but nor do I want him to think that we shall have to come back to the Bill with subsequent amendments. The Bill deals adequately with the situation. Planning issues will have to be dealt with in the other way.
Eric Pickles (Conservative, Brentwood and Ongar)
I cannot imagine the hon. Lady being anything other than helpful. She claims that what she has just said does not interfere with what she said in Committee, but it slightly contradicts some of what she said before. The public would expect to know about the state of planning in certification. I cannot put that better than Mr. Charles Kirkman did. He is quoted in the Nolan report, setting out the problem that we are asking the Minister to address. He said: I appreciate that this is a difficult problem to solve but it does appear in principle wrong, that councils should determine planning applications, in which they themselves have a strong financial interest. Even if a theoretical division of development and planning functions were introduced, it would be difficult to implement under a single Chief Executive. I share that view. I recognise that the hon. Lady will want to return to the Nolan recommendations, but we must consider the issue. We all felt deep shame when we read this morning about the problems of Doncaster council. The problem is not just the level of corruption in Doncaster, but the apparently cosy relationships between developers and councils. I repeat that we do not intend to press for a Division, but we expect the Government to look carefully at the difficult issues of conflicts of interest.
Tony Colman (Labour, Putney)
I congratulate the Government on the speed with which they have brought the Bill forward. We must remind ourselves that it is still only 68 days since the general election. As chairman of 4 Ps, I know that there was no Bill ready to inherit. For some time, 4 Ps had been asking for one, representing local authorities and the private companies working on PFI projects. Bringing the Bill forward so rapidly shows the Government's determination to do business and to ensure that public-private partnerships flourish between local authorities and the private sector. I was surprised to hear the hon. Member for Brentwood and Ongar (Mr. Pickles) talk about a Damascene conversion. That conversion has really been on the other side. My right hon. Friend the Member for Hull, East (Mr. Prescott) started down the road towards the private finance initiative back in 1991. It is important to remember that it is a Labour party idea. We are now going to demonstrate properly how it can be carried into local government and other areas. I am pleased that the Opposition do not want to press for a Division, and that they support the Bill. I hope that the slight threats issued by the hon. Member for Brentwood and Ongar do not presage possible changes in another place. I am concerned, because the private sector and local government want to get on with the projects. We want to give local government and the private sector the assurances in the Bill. Credit is due to officials at the Department of the Environment, Transport and the Regions and at the Treasury, as well as to the 4 Ps legal forum. In particular, I pay tribute to the work of Paul Bryans and Peter Fanning, the new chief executive of 4 Ps, for their work in preparing the Bill. We have had to concertina the consultation, but local government and private sector lawyers were fully involved. There were 24 Government amendments in Committee, showing how those views were taken into account. As a humble Back Bencher in the Government party, I take pride in the Bill, which I believe will be acceptable to those to whom it will apply. Clifford Chance—one of the largest legal practices in the United Kingdom and a member of the 4 Ps legal forum—has welcomed the Bill, calling it a quick fix response to current uncertainties about local authority powers and an improvement on the present position. Many other legal practices, including Evershed, have echoed that strong endorsement of the Bill as a way forward. The Bill has clear, limited objectives, addressing the concerns of private companies wishing to do business with local authorities. Those objectives were drafted against an extremely complex framework of local authority legislation and regulation. As a former leader of a local authority, I can vouch for the difficulties that the Bill has had to confront to fit in with that legislation. Some Opposition amendments could not be taken on board. The Bill appears to meet its limited objectives admirably. However, the private finance initiative is a new and developing approach for local government. It would be imprudent to rule out the possibility of further legislation being needed should gaps emerge as ideas for public-private partnerships develop. I have every confidence that the Government will be ready to act if the need arises.
Paul Burstow (Liberal Democrat, Sutton and Cheam)
I shall try not to detain the House too long, but I should like to raise several points that were mentioned earlier but remain of concern. First, I should like to pick up one or two of the comments by the hon. Member for Brentwood and Ongar (Mr. Pickles). He remarked on the Government's Damascene change of attitude on the PFI. We seem to have witnessed two roads to Damascus this evening, as he made some refreshing and honest comments on the validity and value of the PFI as a significant way of levering private finance into local government. I was grateful to witness two Damascene changes of belief tonight. Secondly, the hon. Gentleman referred to our discussions in Committee about the need to be concerned about conflicts of interest that might arise in determining planning applications. I agreed with the Minister's comments in Committee, and raised concerns that accepting an amendment that would effectively put an obligation on an authority to have regard to its planning decisions in its contracting arrangements could be construed as fettering the discretion of elected members of local authorities in discharging their planning responsibilities. I would not wish that to be included in the Bill in any way, shape or form. The hon. Gentleman and the Minister referred to the third report of the Committee on Standards in Public Life, and particularly to the section dealing with potential conflicts of interest. I draw attention to the conclusion of that section of the report, which states: Our conclusion is that the balance struck at present between local autonomy and central guidance and supervision is broadly correct. The Department of the Environment must however be kept fully informed and show due diligence. It must not hesitate to step in if public disquiet is clear. Respect for local autonomy is a good principle, but it has led the Department to fail to respond to serious local concerns in the past. The report then makes two specific recommendations, to which I am sure the House will return. The question of autonomy goes to the heart of what the Bill should have been about. It has been our contention throughout its passage that an opportunity has been missed to pursue something in which we believe passionately, and which we thought, in a measured way, the Government also supported—the idea of extending to local authorities a power of local competence or, as the Labour party calls it, a power of local initiative. We were hoping that the Bill would provide an opportunity to engage with the Government on how we might achieve that end. We do not agree with the view advanced by Ministers and shadow Ministers that a power of general competence is an illusion, and is simply symbolic. In evidence for that belief, we point to the many examples of powers of general competence that operate in other European countries that cherish and protect their local government in a clearer constitutional framework than ours. I was grateful to the Minister for giving us on Report assurances in respect of the potential for exposing officers to liability for negligence. However, we regard the Bill as something of a red herring. That is not just because we believe that a power of general competence would address many of the issues that have caused concern in the business community in terms of the ability to enter into binding contracts with local authorities. We also believe that the Government have slipped into the same habit that the previous Government had, of imposing duties on local authorities rather than giving them discretions. We fear that, although the Minister has told us that the Bill imposes no new duties, we should have done one of two things tonight. Either we should have implemented a power of general competence, or we should have sought to clarify the law in respect of the powers and duties of local authorities. The Bill forces the obligation on to local authorities, and creates a cumbersome and bureaucratic procedure. Like the official Opposition, we have no intention of dividing the House as we believe strongly that although the Bill is imperfect, it provides some reassurance to the private sector and in that sense it represents a useful safeguard. However, if the Government are serious about building a new relationship with local government over the next few years, as I am sure they are, because they have many friends and colleagues in local government—they probably want that relationship to extend beyond the Labour party—they have to engage in a serious discussion about what a power of general competence might mean, as many in local government—not just from the Liberal Democrats but across all parties—believe that it is an appropriate next step.
Michael Martin (Deputy Speaker, Glasgow Springburn)
Order. The hon. Gentleman should not be discussing next steps. On Third Reading, he should discuss only what is in the Bill, and not what should be done in future.
Paul Burstow (Liberal Democrat, Sutton and Cheam)
I am still on a learning curve in respect of the procedures of the House, Mr. Deputy Speaker. Please forgive me for not being aware of that. In conclusion—[HON. MEMBERS: "Hear, hear"]—I thought that those words would be popular. We still regard the Bill as a rather crude and dirty measure. We do not believe that it achieves everything that is necessary, but we see it as a stop-gap that we hope will reassure the private sector. However, given the comments by Ministers that they are uncertain whether it will provide all the necessary assurances, we have our doubts. We remain to be convinced that we will not need to make further amendments to the legislation to provide further reassurance to business. That seems to be entirely the wrong approach.