Local Government and Public Involvement in Health Bill

Public Bill Committee, 6 February 2007.

Alistair Burt (Conservative, North East Bedfordshire)

On a point of order, Mr. Benton. I have looked carefully at the amendment paper, but I can find neither an amendment nor a new clause tabled by the Government in relation to the limitation of their powers to direct, which was a central part of our previous discussions in Committee leading up to the debate on clause 2. It is a vital part of the Bill and I am extremely surprised that, after all the promises and offers to limit the power, nothing has been tabled to deal with it. Will the Minister consider our adjourning until such an amendment is tabled, so that we can debate the matter and get on with the job?

Joe Benton (Labour, Bootle)

Strictly speaking, that is not a point of order for me. It is something for the Opposition to sort out with the Government.

Clause 2

Andrew Stunell (Liberal Democrat, Hazel Grove)

I beg to move amendment No. 92, in clause 2, page 2, line 5, after ‘invite’, insert ‘on or before 31st March 2007’.

I am delighted to be opening the batting after the swift passing of clause 1. First, to respond briefly to the point of order raised by the hon. Member for North-East Bedfordshire, let me say that most of the debate on clause 2 centres on three fundamental queries about the Government’s proposals. The first relates to the time—the Minister referred to “the window” when he gave evidence to the Committee. The second relates to geography and which councils can or cannot produce proposals and what limitations there should be; and the third relates to the power of direction to which the hon. Gentleman referred. Amendment No. 92 relates to the time; no doubt, there will be opportunities for discussions on geography and the powers of direction on a separate occasion.

We can see from the number of the amendment that it was tabled after several other amendments, which in some ways are more central to the concerns that have been expressed, had been tabled. However, the trick of parliamentary selection means that amendment No. 92 comes. It gives us the opportunity to look at the process that the Government are launching under clause 2, its limitations and what amendments might be necessary.

The Liberal Democrats do not seek to stop the process. It is right that there should be an opportunity for local government to take a look how it organises itself and, when there is clear consent, for it to be enabled to make changes to be more efficient, more effective and, most important, more representative of local communities and better able to deliver what they need. I must declare a personal historical interest in the sense that I do not have an axe to grind, having served on a lower-tier authority, an upper-tier authority and a unitary authority in my time. I have seen pluses and minuses to each of those types and I do not come with any baggage about what should happen next. We therefore welcome the intention behind clause 2. The purpose of the amendment is certainly not to derail the clause or thwart that intention.

As the Minister has said, it is absolutely right that there should be a window. There is no doubt that the actual process of considering such matters is a painful one for local authorities of all sorts and often takes their eye off the ball of providing services and representing their local communities. I would not mind betting that with, one or two exceptions—we heard from the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) on Second Reading—there is a pronounced lack of engagement in the process by the local communities concerned. It is very much an insider’s issue—I might even venture to say that it is an anorak’s issue. The time that an executive spends on a proposal cannot be spent on issues more fundamental to the communities that local government serves.

We think that the process should be permitted, and we agree with the Minister that there should be a limited window of opportunity but, bearing that in mind, we are surprised that that view is not incorporated the Bill. That brings us to amendment No. 92, which proposes that the Secretary of State only be able to extend an invitation on or before 31 March 2007. The Minister would be right to say that that is in the Bill; however, what is not stated on the face of the Bill is when the Secretary of State will lose that right to extend an invitation. The wording of the amendment is such that we will support the Opposition amendments in another group to remove the power of direction.

We believe that there should be a power of invitation and we are happy that clause 2 will permit the Secretary of State to exercise such a right, but the power should be limited in time. The purpose of amendment No. 92 is to limit the time in which the Secretary of State can extend an invitation to 31 March this year. In other words, the power of invitation would lapse at the end of this financial year and would not be available to him or his successor in primary legislation next year, or in five years, or 10. A Secretary of State would have to return to the House and explain that circumstances had changed such that there should be another opportunity for local councils to make proposals.

The limitation in time is necessary for the protection of local government and local communities, and in particular so that the disruption and confusion, and the diversion of resources and effort that the process of coming together to make a bid involves, can be avoided. I hope that the Government will accept the amendment in the spirit in which it was tabled, and to hear what the Minister meant when he said:

“We are working on parliamentary counsel instruction to have a power of direction that is defined in both geography and time to the satisfaction of the LGA.”——[Official Report, Local Government and Public Involvement in Health Public Bill Committee, 1 February 2007; c. 87.]

The Minister is still waiting for parliamentary counsel, so we thought we would do him a favour and save him some hefty fees by tabling an amendment about time. I am looking forward to hearing what he has to say to this simple and straightforward amendment, which has a clear purpose and which matches exactly his own intentions.

Phil Woolas (Labour, Oldham East and Saddleworth)

I think it is right to say that, although we have had sittings in the other room, it now feels as though we are back in more familiar territory. I look forward to serving under you, Mr. Benton, and under Mr. Chope. I wish to put on record my thanks to the Committee for the sensible way in which the evidence session was approached. The Government found it useful, if at some times awkward, but that is the purpose of the new Committee procedures. I also note that the tone of consensus lasted approximately two and a half seconds before the hon. Member for North-East Bedfordshire reverted to his role of opposing the Government by raising a point of order. I was pleased that you commented on that, Mr. Benton.

Let me try to explain what the Government are trying to do, because the hon. Member for Hazel Grove has made a reasonable point about the time, geography and powers. I will also try to expand upon the point made by the hon. Member for North-East Bedfordshire, even though it was not a point of order. Three groups of amendments are coming up on that point, so perhaps in the round we shall see the outcome.

Both the Secretary of State and I have made clear on several occasions our view that restructuring should be off the table after the current window of opportunity. That was my right hon. Friend’s commitment to local councils and Parliament. I am therefore happy to reassure the Committee that we have no plans to launch a further round of reorganisation following consideration of the Bill. On the face of it, amendment No. 92 would do no more than make an absolute reality of that assurance. It would perhaps be reasonable of him to expect me just to accept the amendment, but there is a good reason why I shall have to disappoint him. None the less, but the intent of his amendment is accepted.

We believe that we need to retain the ability to invite councils to make proposals for structural change, not because we as the Government want such change in itself, but because in certain circumstances councils might want and need a structural change to make sense of a boundary change. Clauses 8 to 10 provide a mechanism for changes to be made to local authorities’ boundaries. As members of the Committee are aware, there are certain places where local authority boundaries are no longer sensible—for example, where the pattern of development around towns or urban areas means that boundaries are simply out of date and where some change would result in boundaries that better reflect community identities and provide a more sensible basis for the effective and cost-efficient delivery of local services.

Following her statement on the White Paper, my right hon. Friend the Secretary of State said in response to a question from my hon. Friend the Member for Leicester, South that she recognised that the option of a boundary review should always be available for dealing with too tightly drawn boundaries of urban areas. However, without the continuing ability to make structural change, that option would not always be available. Let me explain and give some reassurance. That issue would be before us were it not for the debate that has been prompted by the amendment.

The provisions in clause 8 to 10, to which I have already referred, allow the independent boundary committee for England to recommend a boundary change following a review. However, without safeguards, a simple power to make boundary changes could also enable structural change to be made by the back door. For example, the boundary of a unitary authority could be altered to such an extent that it swallowed entirely a neighbouring two-tier district. That would not be right. We firmly believe that structural change should be a bottom-up process, built on the proposals that authorities themselves make. That is why clause 8 contains safeguards that ensure that structural change cannot be made by the back door. Those safeguards take the form of restrictionson the kind of recommendation that the boundary committee can make. In particular, they preventthe committee from recommending expanding the boundaries of a unitary council to the extent that the residual neighbouring two-tier area was no longer viable and hence should be abolished.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I thank the Minister for givingway and I appreciate his thorough briefing on clauses 8 and 9. However, those clauses refer to a process that is triggered. Clause 8 (1) says:

The Boundary Committee may, either on its own initiative or at the request of the Secretary of State or a local authority, conduct a review”.

That is entirely different in concept and outcome than the proposal in clause 2 (1) that

“The Secretary of State may invite or direct any principal authority to make one of the following proposals”.

We are not proposing an amendment to clause 8 or 9, although those clauses will no doubt be discussed in due course. We are proposing something that goes to the heart of the Secretary of State’s power to invite, and indeed the Minister’s and the Minister’s successors’ power to invite. I have not done the homework on how many Local Government Ministers there have been in the past 10 years, but they come and go. I should like the Minister to address clause 2, not clause 8.

Phil Woolas (Labour, Oldham East and Saddleworth)

To say that the number of recent local government Ministers is related to the clause might be stretching things. There have been three, with a longer tenure so far than chief executives of local councils—a point that I shall be making at the SOLACE dinner that I am attending this evening, before swiftly leaving to return to the House. After that remark, however, I am not sure how my own tenure will affect the average.

The hon. Gentleman’s point is sensible. Irrespective of the present debate, however, the Government’s intentions remain the same. If a boundary committee makes a recommendation to the Secretary of State, the Secretary of State has three options under the current legislation: to reject it, to accept it, or to modify it—but the definition of the word “modify” is such that it is not possible to change the substance of the recommendation; any such change could be challenged. In plain English, that means that if the a boundary committee recommended that a boundary be moved to take into account, say, a housing estate or a school building, the Secretary of State could make a modification in relation to such small matters, but could not do so in relation to substantial matters. In particular, the viability of the neighbouring area—in practice it would most likely be a district but it could also be a metropolitan or a unitary authority—could not be threatened.

I ask the Committee to be patient, because the jigsaw puzzle will become clear as we continue, and I believe that I will be able to answer the hon. Gentleman’s point.

Robert Syms (Conservative, Poole)

The building blocks for the new structures are the existing districts or counties. There could also be cross-boundary structures. The Minister’s remarks about the boundary committee probably refer to existing unitary authorities, such as Leicester or Poole, expanding their boundaries if those boundaries are too tightly drawn. Presumably, therefore, the Minister wants to leave in the Bill the ability to annex adjoining areas.

Phil Woolas (Labour, Oldham East and Saddleworth)

I am wary of the word “annex”; I do not think that Bournemouth would annex Poole in any circumstances. Some people in Bournemouth might like to, to get hold of the—I will go no further.

Let me briefly explain the Government’s policy. The process that I am describing in response to comments of the mover of the amendment, the hon. Member for Hazel Grove, is designed to retain the ability of the Government and local authorities to allow for slight changes—tinkering with boundaries—through the independent boundary committee process. The process of the invitation to propose a change to unitary status, however, makes it clear that that will be on the basis of existing boundaries. Invitations to bid are based on the possibility of abolishing boundaries if, for example, two or three districts join together or if there is a county unitary proposal, but not on proposals to move boundaries, although a number of authorities asked whether the latter might be possible under the process. The issues are related, but the processes are separate. It is because we are proposing the replacement of legislation that I am making these caveats, but if the Committee bears with me I think that I can answer the point.

We recognise that there might be circumstances in which redrawing a unitary area boundary might be right for that area even though it cast doubt on the viability of the residual neighbouring two-tier area. In such circumstances, the sensible option might be to provide that the remaining area should be abolished and merged with either a neighbouring unitary or a two-tier area. In such a situation we would want to be able to invite the authorities to say what they thought should happen and make proposals for change.Hence, we would need to issue an invitation under clause 2—the process that is underway—but that option would not be available if the amendment were made.

In summary, we have no plans for a further round of restructuring, but, as I say, there may be circumstances in future where a limited structural change is necessary to enable a sensible boundary change. In such circumstances, we need the power of invitation under clause 2 to allow that change.

Tom Levitt (Labour, High Peak)

I am grateful to my hon. Friend for making it clear that another wholesale round of structural change—indeed, another window for invitations—is not intended. He has now said that on the record and can be quoted. That statement will be welcomed, particularly in Derbyshire, where there is a two-tier system, which we believe works and can work even better. All the district councils in the county have agreements to make it work better. Does he agree that that process is healthy and indicates the healthy environment in which the debate about restructuring has gone on over the last few months, in contrast to the enforced but failed move to unitary status under the Banham procedure that the previous Government attempted several years ago?

Phil Woolas (Labour, Oldham East and Saddleworth)

I thank my hon. Friend for his intervention. Our discussions with Derbyshire county council and the districts within Derby show that two-tier working has improved, that services have got better and that the council tax payer is the beneficiary. I should make it clear that when the Government talk about the status quo not being an option for two-tier areas, that does not relate to the structural relationships, but to our wish to see movement towards even better working together. Our pledge is to remove legal and other obstacles to two-tier working where they can be identified. I hope that we will, in a later sitting, get the opportunity to explain the pathfinder projects in more detail.

I do not want to detain the Committee with discussions about the Banham process, but its fundamental problem was that it linked boundary movement with boundary abolition, so the procedure took a long time. As I tried to explain in the evidence session, that is a serious, worrying prospect for local councils, trade unions and the recipients of services.

I hope that I have persuaded the Committee that the limited procedure set out in the clause is required, not as a procedure for restructuring, but as a sensible procedure for boundary changes, which is in current legislation. I ask the hon. Member for Hazel Grove to withdraw his amendment, which is unnecessary.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I thank the Minister for an elegant explanation, some of which made sense and some of which was more elegant than sensible. It is good to hear that he has no further territorial ambitions in Europe. That is great.

Our problem is that, in building in a power that can be exercised long after the Minister has become, presumably, the occupant of No. 10 and then moved on to some yet higher sphere, his successor will be able to exercise the power as they see fit and not necessarily with the same motives in mind as the current Minister. Although I understand his point about clauses 8 and 9, he has tempted me to table some amendments to those. He obviously envisages a process of growth and expansion of urban areas, taking out neighbouring district councils and perhaps making them unviable, resulting in further reorganisation being needed. Although that would no doubt be popular in some areas, I am quite sure that it would be controversial in others.

I should perhaps say to the Committee that my own constituency of Hazel Grove is in Greater Manchester and is neatly jammed in the corner between Derbyshire and Cheshire. Those of us with long memories will remember Poynton’s long fight to stay in Cheshire; it was successful and was therefore not incorporated into my own borough of Stockport. The hon. Member for High Peak intervened; there are certainly covetous eyes cast on part of his constituency in New Mills in Derbyshire—[Interruption.] Did the hon. Gentleman say I could have it?

Tom Levitt (Labour, High Peak)

No, I said “Hands off!”

Andrew Stunell (Liberal Democrat, Hazel Grove)

I am well aware of the issue that the hon. Gentleman described. Perhaps from what I might call the point of view of personal territorial aggrandisement, I should be thoroughly in favour of what he is saying. If I could take Poynton and New Mills, that might be good news for me.

We should be very careful in giving Ministers an enduring power to meddle in these matters. It would be far better to have a provision whereby, if subsequent change is needed, there is a requirement to come back to Parliament. Therefore, much as I enjoyed the Minister’s reasoning, I am going to ask that we test it in a Division.

Alistair Burt (Conservative, North East Bedfordshire)

I beg to move amendment No. 1, in clause 2, page 2, line 5, leave out ‘or direct’.

Joe Benton (Labour, Bootle)

With this it will be convenient to discuss the following amendments: No. 2, in clause 2, page 2, line 37, leave out ‘or direction’.

No. 3, in clause 2, page 2, line 40, leave out from ‘invited’ to the end of line 41.

No. 26, in clause 3, page 3, line 2, leave out subsection (1).

No. 27, in clause 3, page 3, line 5, leave out subsection (2).

No. 5, in clause 3, page 3, line 12, leave out from ‘2’ to ‘an’ in line 13.

No. 29, in clause 3, page 3, line 17, leave out ‘or directions’.

No. 6, in clause 3, page 3, line 18, leave out ‘or direction’.

No. 7, in clause 3, page 3, line 19, leave out

‘or comply with the direction’.

No. 8, in clause 3, page 3, line 20, leave out ‘or direction’.

No. 9, in clause 3, page 3, line 22, leave out ‘or direction’.

No. 10, in clause 3, page 3, line 24, leave out ‘or direction’.

No. 11, in clause 4, page 3, line 27, leave out ‘or directions’.

Alistair Burt (Conservative, North East Bedfordshire)

I echo the comments made both by the hon. Member for Hazel Grove and the Minister in welcoming you, Mr. Benton, to the more familiar surroundings of Committee progress in Committee Room 12. Having safely got a vote under our belt, we already feel that we are in much more familiar territory, including a hostile intervention from the hon. Member for High Peak. Therefore, we feel like we are up and running, and that is a great start to this phase of the Committee.

I would like to begin the discussion on this set of major amendments by referring back to the point of order that I raised earlier. This is a central part of the Bill. A certain amount of our discussion of amendment No. 92 concerned what is left on the face of the Bill in an attempt to understand what effect the Government are looking for. Our central concern is that the Bill provides the Government with significant, unlimited power to make directions to local authorities to merge and change shape, and effectively to redraw the local government map of England and Wales.

The fact that that power to direct was not mentioned in the White Paper—everything was to be by invitation only—came as a surprise to the local government world when the Bill was published.

Robert Syms (Conservative, Poole)

A shock.

Alistair Burt (Conservative, North East Bedfordshire)

As my hon. Friend says from a sedentary position, it came as a shock. Ever since then, in a series of statements, the Government have backtracked to a degree and suggested that the power would be limited in some manner. We have now had a great deal of time to see evidence of that, however, and we have not seen it. The evidence that the Committee, the House and, ultimately, the public will be able to trust is what is written in the Bill, not good intentions. I should mention two or three reasons to back up our concerns and to show why we feel so strongly that the reassurances and explanations for the power of direction that have been given are not enough. The power of direction ought to be removed altogether.

Why are we suspicious of this process and the Government? We cannot disregard the way in which we have got to where we are: the work done on the White Paper to build up the pressure to go for unitaries. Most hon. Members are aware of a lengthy process conducted by Ministers, who approached not the elected politicians in local authorities, but the senior officers, to explain the plans for restructuring local government. That process was entirely designed to encourage progress towards unitary government. It would have been far better if the Government had said that that is what they wanted to do. However, they went to authorities, building up hopes and expectations, saying that, if the authority covered a small area, that was just about the right size for a unitary authority and, if there were many hundreds of thousands of people more in a borough, that too would be the right size for a unitary authority. The former Secretary of State was skilful in delivering a series of expectations and hopes to senior officers in local government, all of whom—not just some—stood to benefit through the reorganisation process and could be relied on to sell the process to their politicians.

Roberta Blackman-Woods (Labour, City of Durham)

From my experience in Durham, I do not recognise the process that the hon. Gentleman is outlining. We had a referendum some time ago in which local people said that they wanted a unitary county. A lot of the pressure came from local people: because of the confusion experienced in some two-tier areas, they were not sure which council did what and were convinced by arguments for the greater efficiency of unitary status. There is not necessarily a top-down approach everywhere; certainly not in Durham.

Alistair Burt (Conservative, North East Bedfordshire)

I am grateful for those observations. I bow to the hon. Lady’s superior knowledge of her own area, which has had the benefit of a public referendum to give effect to the wishes of the people. It is almost unique in that regard. There are not many authorities in those circumstances. If her officers were not sweet-talked by the Department, they missed out on an interesting part of the process. In plenty of other areas, local authorities and Members of Parliament can testify that, in the early stages of the process, the Department talked to officers to convince them about the process long before it got to elected members. That softening-up process was designed to produce a certain amount of pressure and encourage certain areas to consider the possibility of unitary authority status.

We have heard from a number of witnesses and hon. Members and we know about the disruption caused by local government reorganisation. My party certainly understands that; the Conservative Government were part of that process. We understand the pain and difficulty that that can cause, which is why we have tended to learn the lessons of history and do not wish to repeat them. We know about the problems and difficulties that can be caused, the amount of anxiety that there is and the huge sums spent on the possibility of change. That is why we, as a party of caution about the whole business, believe that the reorganisation of local government at this time is a distraction from the other things that local authorities need to be getting on with. It is an expensive distraction and the Government know exactly what they are doing.

The Minister said in his opening remarks that he had no plans to launch a new round of restructuring. Well, I thought that the whole purpose of the measure was to give effect to grass-roots opinion—people coming forward to the Government and clamouring for such an opportunity—not, as the hon. Member for City of Durham rightly pointed out, to launch a new round of local government restructuring through some top-down operation. However, that is what has covertly happened. A new round has been launched by the invitation set out in the White Paper and repeated under the Bill.

We doubt that there is financial benefit to the exercise. That issue came up a lot during our previous discussion when we asked various witnesses about the financial benefits. Last Thursday, I asked the Minister

“Do you think that we would be right to be wary of those who wave cost savings at their electors as the potential good news behind a restructuring, going by all our collective experience?”

The hon. Gentleman had the decency and good grace to say with a smile in response:

“The answer to that is yes.”—[Official Report, Local Government and Public Involvement in Health Bill Committee, 1 February 2007; c. 88.]

Of course it is. When I asked the chairman of the Conservative district councils whether in all his experience of local councils he had come across savings in local government reorganisation, he said, in what I thought was a remarkably cogent and objective performance before witnesses, “No, none whatsoever”. Yet, the Minister is saying from his considerable experience that we should all be wary about such matters. There are no financial benefits.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I think that the hon. Gentleman needs to pause after making such a breathtaking claim. I support a great deal of what he is saying, but while it is true that the witness gave that evidence, he also said that he lived in a two-tier area that had not been subject to reorganisation anyway.

Alistair Burt (Conservative, North East Bedfordshire)

The witness said that he lived in a two-tier area where discussions had taken place and that he had decided not to put forward any bids. It is not an enforced process. It is a process that has been encouraged in the manner in which I described. It is clear from authorities that have decided not to take the bait or be sucked into the reorganisation trap that that can still happen. The Government have set the limit themselves by encouraging a relatively small number of bids to come forward. My point about how the process has been carried through is still valid.

Let us consider the written evidence on the cost of restructuring. Professor Malcolm Chisholm of Cambridge university put forward a series of concerns in his paper when he said:

“There is no reason to suppose that the conversion of districts to unitary status would be particularly relevant in raising the performance of councils in the discharge of their current district functions...Reorganisation costs will be in the range of £121 per head...In financial terms, however, the evidence shows that it is unrealistic to suppose that the creation of a single unitary council in an otherwise two-tier county area would generate financial savings, and that there is every prospect that on-going costs would in fact be increased”.

We are left puzzled about the financial benefit from the process that has been encouraged and kicked off by the Government.

John Pugh (Liberal Democrat, Southport)

Is the hon. Gentleman against reorganisation in principle? He seemed to say that there were never any benefits from it. Alternatively, is he against this particular mould of reorganisation?

Alistair Burt (Conservative, North East Bedfordshire)

We believe strongly that the reorganisation of local government at the present time is the wrong thing in the wrong place. The Government can claim that local government is outperforming virtually every other part of their empire in delivering efficiency and the results that they have been looking for. We cannot see that at the Home Office or in the health service, but we can see it in local government, in which councils have made tremendous efforts working under a very tight financial regime. Councils have been delivering. The hon. Member for High Peak spoke about the success of his local two-tier councils in delivering performance improvements and in working hard under the Government’s regime. But at present there is no evidence that local authorities should have to go through what they are being asked to go through.

Peter Soulsby (Labour, Leicester South)

Does the hon. Gentleman accept that, for all the failings of the Banham process and the previous reorganisation rounds that have been mentioned, the unitary authorities that they created have demonstrated significant economies as a result of the change to unitary status? That applies to some unitary authorities in shire districts of precisely the type that he referred to, and the economies have been broadly welcomed by members of all parties in those authorities.

Alistair Burt (Conservative, North East Bedfordshire)

I hear what the hon. Gentleman says, but that is not a universal view. There is plenty of evidence that the financial pressures of restructuring do not of themselves produce economies. There have been economies across the board because the Government control the purse strings to an extraordinary extent. The hon. Gentleman will remember that Mid-Bedfordshire district council was rate-capped last year because its band D council tax went up by £1 per month. In percentage terms that was deemed to be above the limit, so controls were imposed. If one is working under that degree of financial control it is no wonder that economies are happening across the board.

The question is whether restructuring of itself achieves the job that it is meant to achieve, and on that the jury is well and truly out. There is no current reason to go down the road that the Government want to go down, and we are wary of the consequences to which savings will lead. The Minister has confirmed that all of us would be right to be wary of those who back up their plans for reorganisation with claims of savings. I presume that he is right in that proposition, and that the hon. Member for Bedford is rising to support him in making it.

Patrick Hall (Labour, Bedford)

I am rising to deal with the hon. Gentleman’s argument that there is no need for the process because existing councils are super-efficient. I suggest that he listen to his own constituents and to mine. He knows well that in Bedfordshire there is a bottom-up view that the county council is performing not at all well, and that there is general support for reform. I am happy for my view on the matter to be put to the test. The hon. Gentleman and I keep in touch with local people and he must surely be aware of the dissatisfaction with the performance of Bedfordshire county council and of the general wish of businesses and residents that we take advantage of the opportunity to restructure.

Alistair Burt (Conservative, North East Bedfordshire)

The hon. Gentleman makes an interesting point, which raises the question of how on earth we are to determine what constitutes a broad cross-section of support in relation to a particular proposal. He has his view, but Bedfordshire county council is fast improving, as the recent Audit Commission results have shown, and I do not think that there is evidence to support his proposition. It would be interesting if there were a referendum on the best form of local government for Bedfordshire. The Minister is aware that there is a plethora of proposals on the table. We can have any form or configuration of local government we want in Bedfordshire, as far as I can see—from three unitaries, if we include Luton, to one large unitary. The Minister has powers to direct and could create two unitaries—one based on Luton and one on Bedford.

There is no provision, however, for taking into account the views of the public and for obtaining support in the manner that the hon. Member for Bedford would plainly like. We agree that that, too, is a missing ingredient. There is no public limitation on the power to direct, and no suggestion that where it is applied it should be underpinned, as he suggested, on a grass-roots, bottom-up basis, by seeking the public’s views on the power to direct and on the creation of a particular geographical area.

The Minister could bring forward a proposal that none of the relevant councils in the county or shire and the districts and boroughs had made. That is what the Bill says. We do not know what will be done and there is no limitation on that, for instance, through a power to call a referendum.

Tom Levitt (Labour, High Peak)

The hon. Gentleman described my earlier intervention as hostile. I thought that I was being forensic, but let me try again.

I was interested in the hon. Gentleman’s comments about public opinion, and about learning from history. Will he take this opportunity to say categorically and on the record that the Conservative Government were wrong to direct the abolition of the metropolitan county councils and the Greater London council without any public consultation whatever?

Alistair Burt (Conservative, North East Bedfordshire)

Absolutely not. There are things one has to do. At the time, I was a Member of Parliament for a seat in the Greater Manchester council area, a council which was much unloved. The council never achieved a base of public support or anything like that. Its abolition was warmly welcomed by my constituents and has done little harm since. I stand by that reform, but the hon. Gentleman is right to raise the issue of the doubt in the minds of people about the powers of government when there is no underpinning public support, or evidence of public support through referendum or anything like that. I take that on board as a warning to Governments who seek to exercise power in the manner in which we were required to do by circumstances. Therefore, he makes a fair point. However, as I say, there is learning from history and that is what I am putting to the Minister in an effort to prevent him from falling into some of the same traps and difficulties.

Bob Neill (Conservative, Bromley and Chislehurst)

I have only a short point to make. Does my hon. Friend not agree that learning from the recent history of this Government reinforces his argument? On the one occasion when the Government have sought to change the structure in relation to the number of tiers of government anywhere in the United Kingdom, they had a referendum as to whether there should be a Greater London authority and a Mayor of London. If that was good enough in the London context, why should it not be elsewhere?

Alistair Burt (Conservative, North East Bedfordshire)

My hon. Friend speaks well. He makes the point extremely well about the underpinning of public support, of which we see a complete absence in the Bill and in the Government’s failure to bring forward an appropriate amendment at this stage.

I now turn to the assurances that have previously been given because I think that they are important. I have described why we are suspicious, our concern about the process, the dubious benefits that may come from it and the worry about taking too strong a directive power. That worry would appear to be shared by the Secretary of State and by the Minister himself.

On Second Reading, in answer to my hon. Friend, the shadow Secretary of State’s concerns, the Secretary of State said that

“we have already given a commitment to the LGA that we will narrow the scope of the power to direct, but that it may be necessary in the short term, as a result of the current invitation, to deal with residual areas to make the unitarisation proposal work. There is no intention to force any council down aroute that it does not want to go down.”—[Official Report,22 January 2007; Vol. 455, c. 1159.]

During the course of our witness sessions, I asked the witnesses from the Local Government Association when this commitment was made. Sir Jeremy Beecham said:

“The chairman of the association and I, together with the chief executive, met the Secretary of State about a month ago”,

so that would put it at the very end of December.Sir Jeremy Beecham added:

“The Secretary of State indicated that intention in clear terms, and the Minister for Local Government, present in this Committee, gave a similar assurance at the LGA’s assembly meeting in December. We have not yet seen any definitive wording, so we wanted to stake out our position in theclearest possible terms.”——[Official Report, Local Government and Public Involvement in Health Bill Public Bill Committee, 30 January 2007; c. 14]

Further, because the LGA has not seen any definitive wording, the briefing that it has given to this Committee stated very clearly:

“We are, however, resolutely opposed to impose restructuring and consequently opposed to the proposed Secretary of State powers to direct.”

There was nothing in a brief written shortly before this Committee convened about that limitation. Neither was there anything to suggest that it had been given these reassurances and therefore it was qualifying our objection. However, the LGA stated very clearly, because of the words in the Bill, that it cannot give its support and is resolutely opposed to the proposal.

Plenty of suggestions have been made that some limitation will be made, but we see nothing. The Bill was introduced weeks and weeks ago and, as my hon. Friend the Member for Poole said, there was shock because of the power to direct. Why has it taken so long? Why is there nothing there to give effect to the words of both the Minister and the Secretary of State that there would be some limiting power. Because of the absence of that, we are left with assurances.

Michael Fabricant (Conservative, Lichfield)

Would my hon. Friend like to speculate that perhaps the reason why the Government have not tabled an amendment is that the time between the evidence stage and the scrutiny stage is too short? Incidentally, it might be good advice to suggest that there is a longer gap between the two stages in future proceedings. Would it satisfy my hon. Friend if, in answer to his arguments, the Minister were to say, “Yes, it is our intention not to direct in the way that the hon. Gentleman suspects that we might and, on Report, the Government will table an amendment”?

Alistair Burt (Conservative, North East Bedfordshire)

My hon. Friend is exceptionally generous to the Government and has provided an explanation that may not be in the Minister’s written brief. I would be interested to hear what the Minister has to say about the amendments.

Phil Woolas (Labour, Oldham East and Saddleworth)

Resist.

Alistair Burt (Conservative, North East Bedfordshire)

It says there in his brief.

The time scale has been short, and that may be an issue, but I think that there is enough time. If the Government have the will and the barrage of criticism makes them uncomfortable, they have the opportunity to do something about it and get something on the record. They can say to the Committee and the House that they have taken the strictures seriously, and that, “We can understand where you are coming from. This is how we intend to go about it.” However, there is nothing at all in the Bill. It has been weeks and, in all fairness, it should be there. The Minister and his hon. Friends could have done better and avoided the concern by limiting the powers in the manner in which they have been discussed. However, they have taken no physical steps to do anything about it.

We are left with the Minister’s assurance and with his word. As the hon. Member for Hazel Grove said, for us that is no problem. The Minister’s word is his bond. There is no difficulty whatever with this particular Minister. He says that he will do something, and I accept it. His word is like a gold bar in a sea of Government bankruptcy. [Laughter.] His word is so good that I would dress it up in shirt and coat and take it down Biggleswade high street because I would be so confident that his word is an attractive proposition.

However, we live in difficult times; we live in changing times. Who knows what is circling around the Government at the moment that might propel the Minister from the position he holds so admirably into something else? It is beyond our ken. It may even be beyond the ken of the Metropolitan Police Commissioner, but things can happen quickly that can change the Government, and Minister and his right hon. Friend the Secretary of State may no longer find themselves in their present roles. Where would the assurance be then?

That is why, over the centuries, we have rightly come to rely on what is written down in a Bill and amendments as giving us more of a clue than the good intentions of honourable and well intentioned Ministers. I say to the Minister that, despite his assurances, there is nothing about the issue in the Bill, and because of that, the directions ought to go. He either adjourns the Committee now and makes a limiting proposal or we will have to press the matter to a Division.

I am grateful to have had this opportunity in Committee, and I think that the Minister can understand why we are concerned. I hope to receive an immediate concession on this most important point for the benefit of the Committee and the House as a whole.

Andrew Stunell (Liberal Democrat, Hazel Grove)

The Committee will note that the amendments were also submitted in our name. I want to hear the Minister say quite a lot more about what he intends to do with this power than he did when he was giving evidence on such an important matter. In replying to the earlier debate, he acknowledged that that power was one of the key points arising from the clause. As I outlined earlier, the Liberal Democrats do not wish to derail the process. We do not take the view that the hon. Member for North-East Bedfordshire put to the Committee a few minutes ago that the whole process should be abandoned.

Patrick Hall (Labour, Bedford)

I want to clarify the point about the Liberal Democrats’ position. The hon. Gentleman is adopting a constructive attitude to the matter, so why did the Liberal Democrats vote against the Bill on Second Reading?

Andrew Stunell (Liberal Democrat, Hazel Grove)

I refer the hon. Gentleman to Hansard. There are 100 and goodness knows how many clauses and 15 schedules in the Bill. The principle of a window as outlined by the Minister is in the Bill. With so many clauses, there are bound to be one or two with which the Liberal Democrats agree. We are not objecting to the process, although some of the mechanics of it are mistaken or have not been properly defined.

We are not against the process, but the power to direct is a serious problem. The Minister acknowledged that in what he said in discussions with the LGA and others about finding more appropriate ways in which to express the Government’s intention in the Bill. We are helping him to do that by providing him with the amendments necessary to restrict the powers of future Local Government Ministers and Secretaries of State to interfere with the local government structure.

We can look at the matter on several different levels. The 26 bids that have come in relate to 16 different geographical areas. I understand why the hon. Members for Bedford and for North-East Bedfordshire would get into a bit of a tizz about the process, because three separate applications have been made to the Minister by the people of Bedfordshire. Those members of the Committee are presented with a nightmare situation, and the hon. Member for North-East Bedfordshire has chosen to wake up from the nightmare and has said, “Let’s not do this at all” while the hon. Member for Bedford wants to be set free from the terrible Conservative-controlled county council. We do not have anyone in the Committee from the other authority that has put in a bid. It might have been more interesting had the Committee been more representative of the hon. Members from Bedfordshire.

The more serious point is that the Secretary of State will be required to take account of various criteria when judging a submission. In his evidence, the Minister made the point that the overall cost of proposals will be important, as will evidence of consent at local level. I am pretty sure that the Government, and in particular the Treasury, will take the cost argument very seriously. In fact, cost might well be an issue on which to veto a proposal, and I presume that if the Secretary of State for Communities and Local Government really wanted to, she would approve a proposal even if the arithmetic looked a little dodgy. Cost is therefore not an absolute criterion, however important it is.

The second criterion is consent. There is a conflict between the power to direct and the obligation to take account of consent. Let us suppose that the Secretary of State determined that there would be structural change in Bedfordshire. Whatever she decided, there would be some dissent in some part or other of Bedfordshire, or in all of Bedfordshire. That being the case, what exactly is the implication of the power to direct?

The Minister recognises that that is a problem, and that amendments to the Bill are required. The Liberal Democrats, through the proposal to remove the word “direct” from the Bill, are making it clear that the balance of the argument over proposals should switch to local consent rather than state direction. That is the right way to approach the matter.

The hon. Member for North-East Bedfordshire argued that it was some kind of deliberate Government ploy to distract local government from the real job of providing services. Machiavellian as this Government are, that is, perhaps, going a little too far. I recognise that people in parts of the country believe strongly that there is a need to reorganise their local government structures to provide a better service. I respect their right to hold that view and to promote it. The Secretary of State is right to provide a limited opportunity for them to put that case and for it to be judged.

Alistair Burt (Conservative, North East Bedfordshire)

Does the hon. Gentleman not feel that the Government’s relentless pressure about costs and the way they went about the process of encouraging councils to take a particular line—because it suited them and the Treasury—puts tremendous pressure on local authorities to do what the Government want? Everything in their assessment process is designed to please regional offices and the Department, as opposed to listening what their local electors are saying. My concern about the Machiavellian skills of the Government, if that is what they are, is well founded.

Andrew Stunell (Liberal Democrat, Hazel Grove)

Dearly though I love my local government colleagues, it is more like children being let out into the yard after a lesson, playing a game that is, in many cases, not constructive. I would not want to get into a competition with the hon. Gentleman about assessing how Machiavellian the Government are, but local government in some parts has been a willing contributor to what has happened since. It would be naive of us to pretend otherwise.

It is important to ensure that the Government, in exercising the powers that they will eventually get under the Bill, do so with proper regard not just to securing the cost element on any proposals that are advanced, but the consent element. They should also leave in a power of direction, so that if a Secretary of State gets fed up with the row in Bedfordshire he may decide, with the wisdom of Solomon, to cut it in two. If I remember right, it was at that point that the mothers came to their senses. Whether we shall see the same thing in Bedfordshire, I should not like to say.

We support the group of amendments, not entirely for the same reasons as the Conservatives, but because it is important to limit the Minister’s power to override local views and opinions when exercising his functions on the reorganisation of local authorities.

Phil Woolas (Labour, Oldham East and Saddleworth)

I found that a useful exchange to clarify the views of hon. Members. I particularly welcome the support of the hon. Member for Hazel Grove for the principle, which we are trying to achieve, of creating a permissive, bottom-up regime whereby the invitation to propose is exactly that. A number of authorities have chosen to accept that invitation. As has been mentioned, the proposals are not always compatible. Therefore, one must have objective criteria against which to judge them. Would that it were the case that there was consensus in each area. I suspect that the Secretary of State, my colleagues and I would be grateful for that.

The hon. Member for Hazel Grove also mentioned territorial ambitions and gave examples from his area. I should imagine that his constituents still say strongly that they live in Cheshire, as hon. Members in that part of the world will know. I warn him against territorial ambitions, because a major impact of such a takeover, if that is the right word, would be a direct effect on the council tax base, which he ought to study carefully if he wants to go down that route. On the surface there might be a positive effect, but there would be a negative effect on the revenue support grant.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I do not want the Minister to think that a point made by way of illustration in debate constituted a 27th application to him. That was far from my intention.

Phil Woolas (Labour, Oldham East and Saddleworth)

I am sure that the hon. Gentleman’s constituents will be grateful for that clarification.

The hon. Member for North-East Bedfordshire seemed not to accept that the invitation process is a permissive one. Given their record on previous local government restructuring and reorganisation, Conservative Members such as the hon. Gentleman seem unable to believe that the Government will not behave as they did. It is interesting to debate the failings of earlier reorganisations under previous Governments, so I shall do so.

The hon. Member for Bromley and Chislehurst referred to the creation of the Greater London authority and of the role of Mayor of London, but he failed to point out that Conservative Members voted against the proposal for a devolutionary process. My hon. Friends in the Committee referred to the abolition of the metropolitan counties and of the GLC, which took place without a word of leave from the good people of Greater Manchester and of other parts of the country. I could also point to Scotland—I have not forgotten Wales—where unitary councils were imposed without consultation.

Bob Neill (Conservative, Bromley and Chislehurst)

I am grateful to the Minister for not forgetting the good people of Chislehurst. I speak as someone who was in a minority in my party in opposing the abolition of the GLC a long time ago. However, if the Minister thinks that he is right to take me and my hon. Friends to task on the basis of our stance on the GLA Bill, and if it was right that there should have been a referendum on changing the number of tiers of government in London, as perhaps in retrospect there should have been, why is it not right to have a referendum on that issue in one of our historic shire counties?

Phil Woolas (Labour, Oldham East and Saddleworth)

The hon. Gentleman is at least consistent. I did not say only that it was right to criticise the Conservative Front Bench; I said that it was good fun as well, and the hon. Gentleman will see that there is consistency in my argument too. The hon. Gentleman criticised the Government in relation to the north-east assembly referendum, but I recall that the Deputy Prime Minister accepted the result of that referendum, despite the Government’s known preference, so I do not see how we can be accused of inconsistency.

The Banham review created local authorities without consultative processes, and was again a top-down exercise, rather than a bottom-up one as proposed in the Bill. The former Deputy Prime Minister, Lord Heseltine, admitted in the “Local Government Chronicle” last summer that the eventual decisions on boundary reorganisation were taken after he had hired a helicopter to fly around England with some ordnance survey maps to point out where the boundaries might be. The right hon. Gentleman was admired for his cavalier attitude in many respects, but in my constituency the ancient boundaries of Yorkshire and Lancashire are still contested today, which is why I live at County End.

Alistair Burt (Conservative, North East Bedfordshire)

Although this is good fun and entertaining, I do not want us to move away from the central point made by my hon. Friend the Member for Bromley and Chislehurst, which has not been answered. This may be a learning process for me, and my hon. Friend may be consistent in his view about how to ensure the support of the people, but it comes back to the same thing: finding some measurable form of consultation, such as a referendum, to guarantee support for the proposals. Surely, after the litany that the Minister has produced, he is not suggesting that the Government should deal with the problems in areas where more than one solution is being advanced by using a Government decision and nothing else. We want to hear how he will underpin this provision through the mechanism of a referendum, unless the experience of his right hon. Friend the Deputy Prime Minister in the north-east has been so galling that he does not intend to allow the people to have their say again.

Phil Woolas (Labour, Oldham East and Saddleworth)

The hon. Gentleman makes an important point. Of course, the invitation to bid contains the criterion on public support. The point made by the hon. Member for Hazel Grove, quite reasonably, was that there can be contradictory views within a county area. It is because of that that the power is required, in a limited way, to ensure that a solution for one area of a county is not detrimental to another. Again, under the previous Banham process, it could be argued that that point was not taken into account.

Let me deal with the comment by the hon. Member for North-East Bedfordshire about consultation with officials, rather than with elected leaders, because that was made publicly and it is important to address it. The Secretary of State for Environment, Food and Rural Affairs, my right hon. Friend the Member for South Shields (David Miliband), and I undertook a large number of meetings and consulted local authority leaders at that time to gather their views and try to find the best way forward. Perhaps I can explain about the cost, because the cost argument is central and I gave evidence on that. Let me emphasise, for the record, that the small number of authorities that we expect to be able to move forward on is based on the impact on local government assets and borrowing. It is a macro figure. That point is not contradictory to the one also contained in the criteria, which is that proposals advanced for a unitary authority must be self-financing within the five-year period and must not be detrimental on the council tax payer. That means an equalisation down, not up, in those areas.

I temper my view on this matter, as I said in my evidence. One has to be wary about local councils claiming benefits that could meet with the response, “Well, they would say that, wouldn’t they?” I hope that the hon. Members for North-East Bedfordshire and for Hazel Grove remember that principle when we are debating new burdens implications in other areas of legislation.

Alistair Burt (Conservative, North East Bedfordshire)

What ties the hon. Member for Hazel Grove and me together is that our experience of the impact of new regulatory burdens is pretty consistent: they put up costs. The impact on potential savings is much more mixed and lends credence to our view, which is that they do not materialise at all. They would say that about the regulatory burden, wouldn’t they? But they have good reason for saying so, because it usually ends up with the Government imposing larger council tax bills.

Phil Woolas (Labour, Oldham East and Saddleworth)

It usually ends up with local authorities saying so. My point about new burdens is that one has to consider net new burdens of cost, not the gross costs of new regulations. I receive many letters from council leaders, but I have never had one saying, “Dear Minister, due to the requirement no longer to practise archery on a Sunday, I send a cheque for £200.” I could give more serious examples.

Alistair Burt (Conservative, North East Bedfordshire)

Can the Minister just remind us what the average rise in band D council tax has been since his party came to office?

Phil Woolas (Labour, Oldham East and Saddleworth)

I can certainly re-emphasise that council tax is set by local councils. The hon. Gentleman makes a point about the rises in council tax when he is in the Chamber and claims credit for local Conservative councils when he is out on the stump. He cannot have it both ways.

The hon. Gentleman said that there was no evidence of why we should offer the invitation to propose. The evidence is in the proposals from councils. It is an invitation. Proposals have come forward, and they are not top-down proposals. It is up to councils to show public support, not for me to dictate to them how they should do so. The hon. Gentleman was kind—in fact, he was too kind—in his description of my intentions, but he said that the Opposition were suspicious. I repeat that that suspicion is based on their own behaviour under previous Governments. There is no evidence whatever that there is top-down direction to councils from Ministers and the Government.

It has been said that the Government are seeking a consensus with the Local Government Association. We share the view of Sir Jeremy Beecham that was put to the Committee last week that

“the power of direction should not extend beyond the current round of consideration of reorganisation.”—[Official Report, Standing Committee Local Government and Public Involvement in Health Bill, 30 January 2007; c. 13.]

That view was expressly supported by Richard Kemp, the leader of the LGA Liberal Democrat group when he gave evidence, and by Sir Simon Milton, the leader of the Conservative group of the LGA. I know it to be the view of the leader of the LGA, Lord Bruce-Lockhart. Indeed, Sir Simon confirmed that the view was that of the LGA and was a cross-party view.

As I made clear on Second Reading and when giving oral evidence in Committee last week, we are committed to clarifying this direction-making power. Our aim is to make clear that the purpose of the power is to enable action to be taken in the immediate follow-up to the current invitation process to deal with residual areas to make a unitarisation proposal work. We are clear that restructuring should be off the table after this current window of opportunity. However, the proposals that we have received may result in a situation when we need to use the narrow direction-making power that I have described.

If, for example, in a county area, we receive proposals that would have the effect of creating one or more unitary authorities for most of the existing county area, but left part of the area unaccounted for, we may need to use the direction-making power. We have made it clear in the invitation document that, when judging such a proposal against the criteria, our consideration must include that residual area, and quite rightly so.

It may be that the proposed new unitary and the residual area stand up against the criteria only if that residual area was unitary as well. Rather than simply rejecting the whole package, we may direct the council for the residual area to put forward a unitary proposal so the way would be open to our resolving the issue by creating unitary structures for the whole area.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I am trying to follow the Minister’s argument. Let us consider a situation in which Bedfordshire has been called into account, and all but one of the districts were to be in a unitary authority and one district left over. Is he saying that that remaining district would be directed to join the unitary or would be it directed to form a separate unitary on its own? Or would it be either of those things?

Phil Woolas (Labour, Oldham East and Saddleworth)

I thank the hon. Gentleman, because that is the crux of the matter. The requirement to direct within the limited scope has support among some local authority areas and councils. It is important to recognise that support for such a power exists now and has existed in the past. It is precisely because of his point that we need to clarify matters and to have such a power. The answer is that a residual area would be required to put forward its preferred option, accounting for the potential of the proposal being accepted by neighbouring areas—one might describe it as a least-worst option, but it will ensure that there is fairness.

I cannot refer to individual proposals because I suspect that my words will be used, but one can imagine circumstances similar to those experienced in the 1990s in Lancashire, when the unitary authorities of Blackburn and Darwen, and Blackpool, were created out of the county area. Under the Bill, consideration would have to have been given to the residual area of the county of Lancashire. If there was no power of direction, the danger would be that the Government would have an over-powerful lever, which is what the hon. Member for North-East Bedfordshire fears. In such circumstances, a decision could be made for one area within a county, regardless of the effect that it would have on the rest of that county. I do not think that Opposition Members would want the Government to have such power, and I do not think that we will.

Robert Syms (Conservative, Poole)

There was an example when London county council was extended via the Greater London council and Middlesex was included. One part of Middlesex—Staines, Spelthorne—did not want to go into the GLC, and eventually found itself in Surrey, where it is today. Presumably, that is the sort of instance in which one would use the power to direct. There might be one area that does not want to go in the direction of others and, given public consent, it would have the option of going into another authority.

Phil Woolas (Labour, Oldham East and Saddleworth)

My knowledge of the geography of Staines leads to me to conclude that the answer is yes. Members of the Committee may understand that the rateable business rate valuation in that part of Greater London is a highly contested issue. I think that Hounslow and Hillingdon had a boundary change on that basis. As I said, the answer to the question is yes. The Government have a responsibility to ensure the well-being of the whole area, as opposed to absolute consent, which is desirable but not always possible.

Alistair Burt (Conservative, North East Bedfordshire)

I am grateful to the Minister because for some local authorities this is the absolute meat of the issue. Is he saying that the Secretary of State will have powers to give a direction that would produce a solution that no authority has actually proposed? A solution for an area may not, in the view of the Secretary of State, bring about effective local government. Is the Minister saying that the Secretary of State would have the power to propose a solution that was not already on the table? In other words, will a response to an invitation produce an opportunity for the withdrawal of an area at the Secretary of State’s power of direction?

Phil Woolas (Labour, Oldham East and Saddleworth)

The hon. Gentleman pushes a very important point. It is the Government’s intention that the process should be permissive. There is potential for decisions to create a situation in which everybody is unhappy, rather than half of an area being happy. To be honest, it is partly for that reason that the drafting of the Government’s amendment and discussions with the LGA have not yet appeared before the Committee, as was requested by the hon. Member for Lichfield. He very skilfully brought up the point about the two-weekends’ gap, and I congratulate him on getting that into Hansard. We intend to table amendments to limit the scope of the power to direct, along the criteria that the hon. Member for Hazel Grove requested.

Andrew Stunell (Liberal Democrat, Hazel Grove)

This is the crux of a very important point, and I appreciate the frankness with which the Minister is dealing with it. Will he confirm that under the Bill a direction does not have to follow an invitation? In other words, there is an invitation but somebody else, who has not put in a bid, might be directed to do something notwithstanding all that.

Phil Woolas (Labour, Oldham East and Saddleworth)

The hon. Gentleman is describing a jigsaw puzzle. If one were to take a unitary proposal for a certain area in a county, another district geographically distant from the proposal might reconsider its own position. As the hon. Member for Poole mentioned, it could do that across a county boundary. The intention of the Government is to limit the power of direction to those areas directly affected and not to allow areas that have not come forward with proposals to have a second bite at the cherry. We are keen to avoid such a potential disturbance to local government. Remember our policy on the three-year stable funding period.

The Local Government Association’s anxiety—it was a concern rather than a shock, although I understand that people would say such things in order to force a point—is about the unintended consequence of Government policy. Again, that is why I am cautious about ensuring that my reassurances to the Committee and the LGA are delivered by the Government’s proposed amendments. I explain why they had not yet been introduced in response to a point raised by the hon. Member for Lichfield.

John Pugh (Liberal Democrat, Southport)

Will the Minister give way?

Phil Woolas (Labour, Oldham East and Saddleworth)

I shall just set out our position and then give way to the hon. Gentleman.

We are in discussion with the LGA on that point. Following that and, to be frank, this Committee debate, we intend to introduce amendments. We want to hear from the Committee so that we can carefully consider the best way forward. One possible approach would be to provide that the power be available for one year after 25 January 2007—the date by which proposals in response to the invitation had to be received. Of course, that date has now passed. That amendment could be combined with a formal undertaking to the House that, in that period, we would use the direction power only to deal with residual areas in order to ensure that a proposal received last month works properly.

John Pugh (Liberal Democrat, Southport)

I understand the Minister’s caution, but the point made by my hon. Friend the Member for Hazel Grove, which was not responded to directly, was perfectly clear. Under the Bill, as it now reads, it seems logical that there could be a direction in the absence of an invitation. A direction should be given only if there is an outfall from invitations, but the Bill actually allows for more than that. Is the Minister saying that he will bring forward amendments that will preclude the possibility of such a direction being made in the absence of invitation?

Phil Woolas (Labour, Oldham East and Saddleworth)

Yes. This Government are not a centralising one and so I can answer that question in the affirmative. [Interruption.] Opposition Members seem incapable of believing that our motives are not the same as theirs.

Patrick Hall (Labour, Bedford)

The point that the Minister has just made underscores the necessity of time limiting the power of direction. The honesty of the hon. Member for North-East Bedfordshire has warned us that, should there ever be a change of Government, a centralising direction would return. Conservatives thoroughly enjoyed moving in that direction when they were in power.

Phil Woolas (Labour, Oldham East and Saddleworth)

For 10 years I have believed that one of the major failings of the Conservative party is precisely that it ascribes its motives to us. I accept the flattering remarks about my own assurances made by the hon. Member for North-East Bedfordshire, but there is a record, over decades, of central imposition of local government restructuring. For all the fine words and criticism about letting go, the statement of the right hon. Member for Witney (Mr. Cameron) to the LGA that there would be no ring-fenced budgets for local government is breathtaking in either its naivety or its disingenuousness. However, I can see you getting nervous, Mr. Benton—although not as nervous as any potential future local government would be under a Government with such a policy.

The Government’s approach is devolutionary. It is for local authorities to tell us the best solution for their area. The reason for that, apart from what is apparent, is that the geographies and economies of local areas are very different. It is precisely because the Government want to give, through the Bill, greater powers to influence areas’ economy and cultural and social well-being, that we must take a devolutionary approach; it is a consequence of the policy.

The local authorities are the ones that understand their areas best. It should therefore be for them to present more coherent proposals before the Government involve the boundary committee. I am sure, or at least I hope, that the Committee will agree that allowing local authorities to be in control of their future is more desirable than leaving it to the boundary committee to make a recommendation for an area. For those reasons I believe that a narrow direction-making power is the most sensible solution. The Committee will also be aware that the boundary committee’s advice cannot be sought until after the Bill receives Royal Assent, should that be the will of the House.

I hope that, with those assurances and explanations, the hon. Gentleman will feel able to withdraw the amendment, and move on to further discussion.

Alistair Burt (Conservative, North East Bedfordshire)

I am grateful to the Minister for setting things out so clearly and straightforwardly, as he tends to do. We still resile slightly from the gibes about centralism. Unlock Democracy, which gave evidence to us, states on the second page of its briefing:

“The Government have made much of their belief in devolving power but seem unwilling in the last instance to actually let go.”

That last phrase is one that we have heard more than once around this place, and if the Minister believes that the Government are seen by the world outside as a non-centralising Government and that the Chancellor is seen as the great devolver of power, I suspect that the powers of self-delusion are alive and well, and that Unlock Democracy has got it right.

It is precisely because the Conservative party has learned some lessons about the changing nature of the relationship between central and local government—something that we discussed at the beginning of the open witness sitting last week—that we have accepted that some past approaches did not create a basis for the right relationship between them. That is why we have moved on. It will be interesting to note the Government response to the challenges in the Sustainable Communities Bill, and how they will vote on it in due course, to discover how devolving of power they want to be.

I hear what the Minister says about local authorities coming forward with proposals to show how consent should be measured, but virtually everything else that local authorities do is prescribed by statute, and I do not know why that matter should have been left so open, beyond the fact that the Government did not want to prescribe a referendum or anything of that kind, so they have tossed it back to local authorities. Asking them to come forward with the ideas now, when authorities have already decided to make their bids, without having the chance to consult people, suggests, again, a concentration of time scale that has not been good for the process as a whole. I note that there is no suggestion that anything can be put in the Bill now. Given where the Minister was going, I was slightly worried about whether he wanted either to retain all the powers and just give the general direction that he has given in the Committee or to prescribe them, but from what he has said I assume that something will come forward.

In view of that, and on the assumption that an amendment or a limiting power will be put to the Committee before Report, we are happy to withdraw the amendment. It is our intention to leave the debate open until Report stage if we believe that the circumstances will allow. I do not know whether the hon. Member for Hazel Grove feels the same, but I beg to ask leave to withdraw the amendment.

Robert Syms (Conservative, Poole)

I beg to move amendment No. 12, in clause 2, page 2, leave out line 9.

Joe Benton (Labour, Bootle)

With this it will be convenient to discuss the following amendments: No. 13, in clause 2, page 2, line 18, leave out subsection (4).

No. 14, in clause 2, page 2, leave out lines 25 and 26.

No. 15, in clause 2, page 2, line 27, leave out ‘or C’.

No. 16, in clause 2, page 2, line 39, leave out ‘Type C’.

No. 17, in clause 5, page 4, line 14, leave out ‘Type C’.

No. 51, in clause 23, page 14, line 18, leave out ‘Type C’.

No. 18, in clause 23, page 14, line 29, leave out ‘Type C’.

Robert Syms (Conservative, Poole)

It is a pleasure to serve in a Committee that you are chairing yet again, Mr. Benton.

I had 15 years in local government in the great city, and at one stage county, of Bristol, and I went to school there as a boy. I remember clearly the local government reorganisations of the early 1970s. A lot of them were logical, but they crossed county boundaries and caused problems as a result of that, simply because local communities felt ill at ease in the local authorities that had been created, even though Parliament had proposed them. When I was at school, there was a “Back to Somerset” campaign for parts of north Somerset. Some people wished to be in Gloucester, while Bristol regretted the loss of its status as a city and county. In later years, when I was leader of a district council, the Association of District Councils was bedevilled with arguments from the larger district councils, many of which had been county boroughs, about the return of their status.

The Government’s type C proposal, which may include a unitary authority that crosses county boundaries, is extremely brave. Although it is sometimes perfectly possible to construct a logical structure for local government, all sorts of consequences come from crossing county boundaries.

Michael Fabricant (Conservative, Lichfield)

On the very question of consequences, it was revealing that when we asked that the boundary committee for England to give evidence orally, we were refused. I wonder whether my hon. Friend would care to comment on whether one consequence of crossing county boundaries might be the forced redrawing of parliamentary boundaries, which is a particularly poignant issue, seeing as we have only just gone through a boundary review.

Robert Syms (Conservative, Poole)

To pick up my hon. Friend’s point, parliamentary boundaries are often adjusted to local government boundaries, so if they were changed, there would be no immediate effect. However, if we create the building blocks—which are the local authorities for parliamentary seats—that might be relevant in the longer term to how people are represented, if we maintain the first-past-the-post system, as I hope we do.

The type C proposal, which crosses county boundaries, will probably cause more grief than the Government would like, simply because people do not like it. The Minister mentioned the difficulties in the changes of the ’70s for those who considered themselves as Lancastrian or from Yorkshire, but there are still those feelings even today, 30 or 40 years after the reorganisation, and there probably will be for many decades ahead.

Phil Woolas (Labour, Oldham East and Saddleworth)

For centuries ahead.

Robert Syms (Conservative, Poole)

Indeed. We have been political point scoring about which Governments have done what to local government, but all Governments have form in how they have dealt with local government. If one believes in local government, there are strong arguments for giving local authorities much more power to resist some of the things that central Government want to do to them.

The Banham proposals unpicked some of the proposals from the early 1970s that did not stick because they did not have public consent. Humberside is logical, but people did not feel part of Humberside. Avon is logical, but people still feel that they are Bristolians or from Somerset or Gloucestershire. That is what forced the Government to reconsider the issue, whether or not there were referendums. Many of the Banham proposals had more public consent than those that were imposed in the early 1970s and nobody argued with that.

Our anxiety about the type C proposal is that reorganisation across county boundaries risks undermining public consent because people feel an affinity with and a loyalty to counties or larger cities. I am doubtful that any proposal would get public support across the county boundary—I see that a number of hon. Members are nodding at what I say.

I should like the Minister to flesh out the proposal. Where would a type C proposal be made? Does he have any examples? I am trying to tempt the hon. Gentleman because some of the boundaries were drawn by the Victorians and the Edwardians. Places have grown and things have moved on since then, but nevertheless people feel loyalty to their local community, which may create difficulties.

The amendment was designed to test why the proposal is in the Bill and to have a decent debate on the clause. Has the Minister thought of the longer-term consequences? I should be surprised if there were any type C proposals; there were none in the first tranche. If no one proposes anything that goes across county boundaries it may be better to debate the type As and type Bs. The recent history of local government reorganisation has proved that crossing county boundaries creates more grief, and in the longer term the issue has to be revisited because there is no public consent.

Andrew Stunell (Liberal Democrat, Hazel Grove)

These are interesting amendments because they are irrelevant if the Minister’s proposals are limited by time as none of them cross county boundaries. If the Minister loses his power of direction or it is limited along the lines of our previous debate the proposals lose their force. However, while there is no time limit and we do not know what the direction restriction will be, the amendments are relevant and they need to be tested. We will support the amendments on the basis that without the time and the power restriction, the geography restriction is needed as a fallback.

The Minister said that he lived at County End but he did not say which side of the line he lived; perhaps he does not want to disclose it to the Committee. The example of Middlesex was given and I gave the example of Poynton. The Minister rightly said that many of my constituents like to say that they live in Cheshire; others like to say that they live in Derbyshire.

Those historic boundaries have had great force and meaning for people for a very long time. Removing type C in the current context is neither here nor there, but the proposal is another prod to the Minister to ensure that he gets the time and the powers sorted out so that he does not have to fuss about the geography.

Phil Woolas (Labour, Oldham East and Saddleworth)

The hon. Gentlemen have again made reasonable points. It is straightforward in debates to talk about county affiliations, but the issue is important, as they said. It is 35 years since the legislation that changed the county boundaries went through Parliament, and it is still debated in many parts of the country—often with a passion that some of us do not appreciate.

I shall, if I may, indulge the Committee with the story of the Austerlands cricket club, which is on the boundary of Yorkshire and Lancashire. It is the second highest cricket club above sea level in the country. The groundsman invited the local borough surveyor to ascertain whether the club remained in Lancashire or had been moved to Yorkshire. One can imagine the passion that that debate excited. The surveyor pointed out that the stream to the east of the club was the boundary, and he assured him that the club remained in Lancashire. The groundsman replied that he was very relieved, because he had heard that they had very bad winters in Yorkshire and he did not want his pitch to be ruined.

One proposal in the current round following the invitation crosses county boundaries. It is the proposal from the East Riding authority in respect of the Selby district, which is the county of North Yorkshire. From memory, I do not think that the people of Selby think that they are in North Yorkshire. East Riding itself was created by the process that the hon. Member for Poole described: an unpicking of the 1972 Act, when Humberside was created. That left the city of Hull, north-east Lincolnshire, East Lindsay and Scunthorpe, I think, but I shall check the latter. There is therefore a type C proposal in the current proposals, and precisely because the legislation is devolutionary, we wish to see type C proposals. It is not for the Government to judge whether proposals should be restricted. Indeed, in some areas of the country, some of the best two-tier working runs across county boundaries with counties and districts co-operating.

I recently visited Breckland, where three districts—one in Norfolk, one in Suffolk and one in Cambridgeshire—co-operate on revenue and benefits. They have, by all accounts, one of the if not the most efficient revenue and benefits departments in the country, precisely because the geography of that part of East Anglia makes it more sensible for them to co-operate. They have not made a proposal to go unitary; they do not see the requirement for it. However, as we encourage co-operation across boundaries, particularly on commissioning policy, there are circumstances in which closer co-operation across county boundaries makes sense. Authorities in such areas may wish to put forward proposals, but it is for them to judge and, consequently, for them rather than for central Government to take the blame.

The Bill is drafted to enable us to respond to the proposals made by the councils themselves. They will have the opportunity to tell Government, and through Government Parliament, the best solution for their area. They are best placed to understand their areas, and it is therefore right that they should be the ones who come forward with coherent proposals. To support that approach, we have drafted the Bill so that local authorities have the flexibility they need to frame any potential unitary proposals, provided only that they use existing district boundaries as the building blocks. That provision refers to the points that the hon. Members for Hazel Grove and for North-East Bedfordshire made on shifting and abolition of boundaries.

If the amendment were agreed to, it would limit the options available to local authorities to make the proposals that in their—not our—judgment would provide the best structure to deliver effective and convenient local government. The Bill will allow authorities a wide range of options to make proposals for unitary government. Crucially, local councils will not be constrained when they consider how best to administer local government functions in their areas.

As I said, among the 26 proposals that have been referred to is one from East Riding to merge with the neighbouring district of Selby. The permissive devolutionary approach recognises the configuration of counties and the affiliation that the public have with their areas. I concur with the wise words of the hon. Member for Poole in that respect. It is a central tenet of the Bill to create sustainable communities.

Michael Fabricant (Conservative, Lichfield)

I am interested in the Minister’s explanation, but I am still curious about the parliamentary boundary question. Am I right in saying that a parliamentary constituency boundary cannot cross county boundaries? If another district were brought into a county, dividing an existing parliamentary constituency between more than one county, would that necessitate a change?

Phil Woolas (Labour, Oldham East and Saddleworth)

I have been honest with the Committee this morning, and I will be honest again—I do not know. I hope that that reassures the hon. Gentleman that there is no Machiavellian plot. However, immediately after the sitting, I will go to the Library, get a map and find Lichfield.

The hon. Member for Poole answered that point. My understanding is that in the long term, that could be the case. In the instance of Selby and East Riding, one would have a very strong argument for asking not which county but which Riding one was in. Hon. Members who know the county of Yorkshire will know that that largely determines many people’s affiliation.

Michael Fabricant (Conservative, Lichfield)

I would be grateful if the Minister could come back in the next sitting with clarification.

Phil Woolas (Labour, Oldham East and Saddleworth)

I will do as the hon. Gentleman asks.I hope that my explanation and the information that I have given about bids means that we can move on. I hope that the debate has served to explain the purpose of the provision. I therefore invite the hon. Member for Poole to withdraw his amendment.

Robert Syms (Conservative, Poole)

I would like to pick up the point about the boundary commission. I think that I am right in saying that the boundaries are drawn on county boundaries, but if county boundaries change, it does not invalidate the constituency until the next redrawing. For example, Leominster, which is now in Worcestershire, and Hereford, which is now in Herefordshire, were in one county. There is an adjustment of boundaries in the current review: some 8,000 electors will go from Worcestershire into Herefordshire simply to realign the boundaries with changes resulting from the Banham review, so the question is a slight red herring. However, if new county boundaries are fixed, it will change things the next time the building blocks are revised.

To be honest, I have had so much paper that the Minister should forgive me for missing proposal No. 10 on East Riding. Of course, it does not invalidate some of the things that I was saying. East Riding is an area that has had rather more local government reform and change than most others in the UK, what with Humberside and a unitary Selby losing its northern bit into a York unitary, creating a very small Selby authority covering 50,000-odd people. The proposal may therefore be logical. I was sceptical at first, but the Minister has convinced me that that type C proposal is sensible. Specifically in that particular area of the country, there may be arguments of local support and loyalty—that is essentially the argument that I was making—that fit into that particular proposal.

Phil Woolas (Labour, Oldham East and Saddleworth)

I am sorry to delay the Committee, but I would like to clarify what the hon. Gentleman said about the boundary commissions. Parliamentary boundaries would not change initially. The parliamentary boundary commission could conduct interim reviews; otherwise, changes could be made as part of the sixth general review. The hon. Gentleman is correct.

Robert Syms (Conservative, Poole)

I thank the Minister for reinforcing my comments. Having heard the explanation and looked at that specific example concerning questions of interest, I beg to ask leave to withdraw the amendment.

Joe Benton (Labour, Bootle)

We come now to amendmentsNos. 23 and 24. I call Andrew Stunell to move the lead amendment.

Andrew Stunell (Liberal Democrat, Hazel Grove)

Mr. Benton, the Clerks usually do an excellent job, but the amendments are two strays that belong to the second group of amendments. The issue has been debated as far as we are concerned, and we do not wish to proceed with the amendments.

Clause 3

Alistair Burt (Conservative, North East Bedfordshire)

I should be grateful if the Minister bent his mind to a couple of issues arising fromclause 3. I draw attention to subsection (1), which states that

“The Secretary of State may give a direction under section 2 only where he believes that it would be in the interests of effective and convenient local government to do so”

and to subsection (7), which states:

“An invitation or direction under section 2 may be varied or revoked.”

Will the Minister clarify what he means by effective and convenient local government? The powers are broad ranging and sweeping. I ask because we have determined that although he might be constrained to limit his power of direction in terms of geography and time, he has not given a clear sense whether his power of direction will be coupled with any locally derived consent that he will prescribe should be measured by a referendum or in any other way. We are still left with a Bill that gives him very wide powers. Phrases such as

“effective and convenient local government”

lead us to think how controlling and centralising the Government have been of local government, and of the sense out there about the Government’s powers and local authorities’ relationship with his Department and the wider electorate.

In recent years, in conversations with local government representatives, it has become increasingly clear that the power of the assessment and audit process and the number of targets and quotas that local government must meet have become so onerous that local authorities are no longer looking outward to the electorate. Instead, they are looking upward to the Departments and the bodies that regulate and inspect them. Individual chief executives will complain, but the evidence is plain from the inspection regime, some of which the Minister intends to cull using the Bill. There has been an incredibly damaging effect on the relationship between central Government and local government, and between local government, its electors and councillors. The overwhelming sense now is that local government exists to further central Government’s agenda—it is there to deliver what the Government want to see happen at local level.

Part of that relates to the financing of local government, which returns us to a theme of our discussions with the witnesses who came before the Committee, and indeed with some who did not come before the Committee. Because the relationship between local and central Government is so intimately tied up with financing, it would have benefited us to listen to what Michael Lyons has in mind for the future financing of local government.

We contend that if the definition of effective and convenient local government still means essentially that local government delivers what central Government want, with considerable pain for local government if it does not, there is a risk that the Government will not find the support that they are seeking for their proposals because public suspicion that everything is controlled from Whitehall will not be diminished.

If individual officers are asked to do work that is not prescribed in the assessment process, or if things need to be done by the local authority that have no particular tick box and will not be looked for in the comprehensive assessment process, they know that the time that they spend on it will be time wasted from dealing with the things that the Government have asked them to do. Individual officers know that they are rated as much on how their department has delivered what the Government wanted from it as on their service to the public. In the event of a conflict, they know where their duties and loyalties lie—with the people who are paying the bills, and those assessing their careers and how they are delivering. The whole notion of

“effective and convenient local government”

leads one to ask, “effective for whom?” and “convenient to whom?” We are seriously concerned that, without any limiting powers or the matter being considered during our deliberations on the power of direction, the phrase reinforces that sense of the centralism of local government and its power.

I return to the briefing that we had from Unlock Democracy, which, if I may remind the Committee, is the coming together of Charter 88 and New Politics Network. I know that certain of my colleagues have moved quite a long way in their politics in recent years—a matter of some delight and joy to me—but associating the Conservative party with Charter 88 is probably a little far-fetched. That group cannot in any way be suggested to be a form of Tory stooge body, or anything like that. When Unlock Democracy says in its briefing that,

“The UK is the second most centralised country”

in the EU, as

“94 per cent. of all tax revenue in this country goes through central government; the average in the European Union is... about 50 per cent... In the long run as long as central government raises the overwhelming majority of the money spent by local authorities then Councils will be beholden to central government... Central government will want to direct how money is spent, or, in the words of an old saying, ‘He who pays the piper calls the tune’”

it reveals the sense out there that local government has to respond to the demands of central Government and that their relationship is breaking down. That relationship, in which strong-minded local councils have a degree of autonomy, with the ability to say no to Government, to be backed up by their local electors and, sometimes, to be wrong in their judgment, has been seriously circumscribed in recent years. We have played our part in that—we understand that. But before we hear the rigmarole about the power of central Government, let me state clearly that we have learned from this process about the dangerous breakdown in relationships between councillors and their electorate and between councils and central Government. That is why we are so concerned about this issue now.

Patrick Hall (Labour, Bedford)

I am following the hon. Gentleman’s speech closely. Is he indicating that the Conservative party is now ready to support the relocalisation of the business rate?

Alistair Burt (Conservative, North East Bedfordshire)

I am grateful—

Joe Benton (Labour, Bootle)

Order. I am sorry, but business rates have nothing to do with the clause. I have to rule that out of order.

Alistair Burt (Conservative, North East Bedfordshire)

You are correct, Mr. Benton. Of course, had Michael Lyons come before us, the business rate might well have been before the Committee, but we will never know. The hon. Gentleman will have to wait a little longer to find out the views of my colleagues on that.

I am sure that the point that I am making—the picture that I am building—is not unfamiliar to any member of the Committee. There is a sense that local government is now terribly prescribed by central Government, so that when we see a phrase in the Bill saying that the Minister is able to take action in what he believes is in the best interests of

“effective and convenient local government”,

we conclude that it can only mean that, yet again, the decision-making process is moved far away from what local people may think—even if they might be wrong—and transferred to his office.

I would like to hear the Minister’s comments because we have begun a dialogue about those concerns. The Minister believes that the Bill is a seriously devolving measure and many of his comments and the briefings about the Bill suggest that the Government believe that, but there is a degree of hesitation in the wider world about whether that is truly the case. I am giving the Minister another opportunity to say now, in this debate on clause 3 stand part, why he thinks that the measure is rather more devolving of power than people outside think it is, and why we should not be as afraid of that phrase as it stands.

My second point is on subsection (7), which states:

“An invitation or direction under section 2 may be varied or revoked.”

Again, our concern is with the Minister’s power to make adjustments to the bids that he has been receiving, which could allow him to invent virtually any pattern of local government in an area that he wants. That question has not been fully tied up. I asked him whether it was possible for a proposal to come forward under his direction for a solution to local government in a geographical area that had not been brought forward by one of the parties involved, because he found that the proposals were all mutually contradictory and his own view of what constituted effective and convenient local government conflicted with theirs, with the result that he issued a direction and varied an order to the extent that he wished in order to create a geographical area and structure different from any of those that were previously proposed. As far as I can see, the Minister is able to do that. That power is very wide and I would like him to spell out how he sees it being constrained. How will he make sure that there is a way of ensuring that there is a degree of public support for his proposal?

On behalf of those of us who live in Bedfordshire, I have to say that it is currently the most exciting area for local government in the entire country. I am sure that the hon. Member for Bedford will confirm that it has every prospect of being so for several months to come as we head not only towards local government elections, but to mayoral elections in Bedford borough. It could turn out to be the case study on the remodelling of local government for our generation. The fact that there are some voices saying, “Leave it all alone, Minister. There is a perfectly decent two-tier structure,” as so determinedly championed by the hon. Member for High Peak earlier, only adds to the mix. However, it is possible for the Minister to draw out from all the proposals that have come forward a determination simply to leave things as they are.

The Committee would like to hear from the Minister what factors he will take into account when making decisions in which he has such widespread discretion. What does he consider to be effective and convenient local government? What sort of reasons would make him use his powers to vary or revoke an order? Until those are spelled out in more detail, we cannot give a clean bill of health to clause 3.

Phil Woolas (Labour, Oldham East and Saddleworth)

I am happy to try to answer thehon. Gentleman’s questions. He commented on centralisation and alleged over-burdensome regulation. I wish to come to those points in the part of the Bill that deals with performance assessment but will briefly make one comment, namely that legislative measures have been taken to devolve such powers.

A case in point is the Licensing Act 2003, the heart of which gave local authorities greater freedoms from central Government agencies and others to provide for a more joined-up licensing regime in their areas. As part of that process, the proposal to allow flexibility in licensing times for premises selling alcohol was a devolutionary measure. However, it would not have been recognised as such from the Opposition’s response and the public debate that ensued, which went along the lines that the Government were going to force people to drink for 24 hours.

Alistair Burt (Conservative, North East Bedfordshire)

They want something to do before the casinos open.

Phil Woolas (Labour, Oldham East and Saddleworth)

Again, the hon. Gentleman intervenes from a sedentary position. I find it remarkable that his party should be—how can I describe it—in favour of such a nanny state.

Nevertheless, the serious point is that these proposals bear some relation to the relationships with central and local government. It is precisely because of the point that the hon. Gentleman makes that I have difficulty with that part of the Sustainable Communities Bill that deals with the national plan and the division of finances. I believe that that would be a centralising measure, not the devolutionary one that this Bill helps us create. However, I can see, Mr. Benton, that you do not want me to go down that route.

Clause 3 limits the Secretary of State’s power to direct authorities to come forward with proposals for unitary government. The Secretary of State may only direct an authority under clause 2 when she believes that it would be in the interests of effective and convenient local government, ensuring that whatever arrangements are put in place are fit for purpose, deliver cost-efficient and effective services and democratic accountability.

The hon. Gentleman asked why we had included in the Bill the reference to “effective and convenient” local government. The concept of something being in the interests of effective and convenient local government is of long standing in legislation. For example, under the Local Government Act 1972, that test had to be met by any boundary changes. It also underpinned the restructuring following the Banham reviews under the Local Government Act 1992. The concept has been understood in the context of a local authority’s ability to deliver quality local services economically, efficiently and effectively, and in order to give local people a democratic voice in the decisions that affect them. The reason for including the words “effective and convenient” is to bring this long-understood concept into any decision on restructuring.

Alistair Burt (Conservative, North East Bedfordshire)

I am perfectly comfortable with the phrase and I understand where it comes from. My point was to ask the Minister whether he feels that its meaning has changed over the years as a result of the concerns that I raised on behalf of local government. The feeling in local government is that “effective and convenient” now means what is effective and convenient to his Department, not necessarily to the people whom local authorities serve.

Phil Woolas (Labour, Oldham East and Saddleworth)

The hon. Gentleman is trying to tempt me into a debate on performance assessment and the local target regime. I am happy to discuss that later. I do not accept the point that he makes on this clause.

The clause provides that the Secretary of State can set a deadline for the receipt of proposals, and it provides that any proposal made as a result of an invitation or direction, as defined under clause 2, must contain an area that is currently two-tier. The chapter provides a framework for structural change, so it would not make sense for proposals to be submitted from existing unitary areas. In addition, it would not be appropriate for an authority that is currently single-tier to submit a proposal through which it would seek to merge with an adjoining area that is also unitary and thus expand its boundaries, which was the point made by the hon. Member for Hazel Grove. I do not know whether my hon. Friend the Member for Denton and Reddish would agree with that point in respect of Stockport, but perhaps we should not go down that road.

Subsection (5) provides that when submitting a proposal, an authority must have regard to any guidance issued by the Secretary of State as to what the proposal seeks to achieve and matters that should be taken into account. This chapter provides the broad framework for structural change, and the guidance issued by the Secretary of State is essential in supporting that. The guidance for the invitations, for example, sets out the criteria against which proposals would be judged, such as affordability and the ability of the new structure to provide strong, effective and accountable strategic leadership for the local authority area. It is perfectly reasonable and appropriate for such matters to be included within guidance.

A proposal can be submitted by a single authority or jointly by a number of authorities. That will allow for circumstances in which there may be a number of authorities in an area that wish to merge and would like to submit one joint proposal. The hon. Member for North-East Bedfordshire drew attention to clause 3(7) and the power to vary or revoke an invitation or direction, and again I can give him assurances as to why an invitation could be changed in such a way. It could be the case that an invitation has been made to two councils and, after discussions, it becomes apparent that a third council should be involved with the potential restructuring. We may also want to vary the deadline for submission of proposals as a result of such conversations.

On the other point, there may be particular local circumstances, such as avian flu, or foot and mouth might be a better example, where, if an area were involved in discussions about changes in structure, it would be inappropriate for those to continue. It is with that intent that we have drafted the clause.

The clause allows, therefore, the Secretary of State and local authorities to act in respect of an invitation or direction. We are creating a framework for a permissive structure to allow proposals to come from the bottom up. The hon. Gentleman is reasonably questioning their remit, but I hope that I have reassured him of the good intention behind the clause. Therefore I commend it to the Committee.

Clause 4

Robert Syms (Conservative, Poole)

Will the Minister say a little more about consultation, because we live in an age of consultation but people do not always pay attention to what they are consulting on? We have already raised the issue of referendums. Would he rule out the use of referendums as part of the consultation process, or rule it in? Would it be appropriate in certain circumstances? At the moment, we can consult till the cows come home but if we do not pay attention to what people want locally, it does not make much difference.

Phil Woolas (Labour, Oldham East and Saddleworth)

I thank the hon. Gentleman for his remarks and their brevity, because it is a simple and important point. Let me outline what the clause is intended to achieve and then answer the specific question on referendums. The clause sets out the procedure for the Secretary of State to follow on receipt of a proposal for a single tier. If a proposal has been submitted jointly by all the authorities covered by the proposal, the Secretary of State may choose whether to consult any other person she believes to have an interest in the proposal. Otherwise, the Secretary of State must consult every authority whose area is covered by the proposal, other than the authority or authorities that submitted the proposal; and any other person she believes to have an interest. This consultation is to allow other interested local authorities and interested parties to have a formal opportunity to comment on proposals. However, one of the criteria on which proposals in this round of restructuring will be judged is

“a broad cross section of support”.

Proposals will therefore have to demonstrate support from a range of key partners, stakeholders and service users, namely the citizens.

Subsection (5) provides that the Secretary of State may request advice from the boundary committee on any matter relating to the proposal. This is to allowher to gain independent advice on any matter inthe proposal or a matter that is perhaps missing from the proposal. For example, she may ask for advice on the suggested boundaries set out in the proposal. She may set a date for the receipt of advice from the boundary committee and she may change that date later on. This may be necessary, for example, if it becomes apparent that the boundary committee needs more time to advise fully on the point raised or needs time to consult on an alternative proposal before submitting it to the Secretary of State under clause 6(4).

We are trying to create a framework that allows a bottom-up proposal and it is for the council to provide evidence of public support for the proposals rather than for the Government and the House, were it to accept the Government’s proposals, to dictate to local areas how that should be achieved. That is consistent with the approach taken. Where there are local referendums—we heard on Second Reading an excited dispatch from Shrewsbury in Shropshire—they are one of the factors to which we will have to have regard. The weight we give to any result will depend on other issues.

Patrick Hall (Labour, Bedford)

This clause places the onus of consultation on the Secretary of State, so would my hon. Friend elaborate a little on what form that consultation might take? He has just said, helpfully, that he also hopes that local councils will take the initiative to contribute in parallel to that process, but the Bill puts the onus on the Secretary of State. Will he settle that point for me?

Phil Woolas (Labour, Oldham East and Saddleworth)

The Bill provides, through the invitation procedure and the relevant criteria, for the council making the proposal to demonstrate that it has broad public support. How it does so is a matter for the council. That is one of the criteria that the Secretary of State must use to judge those proposals, but it is up to a council to decide whether to hold a referendum and the Secretary of State will take that into account. The weight given to any result in relation to such a proposal will depend on the views of surrounding areas when there are conflicting proposals and also on the question asked in any such referendum.

Local authorities have powers to run referendums under existing legislation—as part of a devolutionary approach from this Government—decide on the information available to the electorate and the arrangements for conducting the poll. It is up to councils to provide details of public support in their proposals. During the stakeholder consultation on the proposals, which we are preliminarily minded to implement, it will be open to anyone to make representations about them. Perhaps I can just explain what that means.

The intention is to consider the proposals that have been submitted, judge them against the criteria that have been outlined and consult more widely with interested parties, where there is a case against the criteria, between the end of March and the end of June 2007. Committee members should bear in mind two points. First, proposals in response to the invitation can only have come from local authorities by resolution of the council, which means that opposition council groups and other interested parties have not been allowed to advance a proposal. It is quite right and proper that they and many others should have their say. Secondly, the timetable that I have outlined deliberately coincides with the local election period, so that the public can have their say. To reassure the Committee of my good will in respect of that intention, I should say that, of the proposals that have been advanced, as any of us would have anticipated, some have cross-party support in some areas and conflicting support from the same parties at county and district level, on both sides, and from all parties in the House.

Our sensible approach reaffirms our commitment that this should be a bottom-up process. I emphasise that the Government’s policy is to say, on this and other matters, that it is up to councils to decide and justify their position and, as I mentioned before, to be accountable for those decisions.

Patrick Hall (Labour, Bedford)

This is an important point and I am grateful for the detail that my hon. Friend the Minister is providing. But, just to avoid doubt, let us deal with proposals that get over the first hurdle and are therefore considered in greater detail by the Government. Is he saying that the consultation mentioned in the clause, which must be carried out by the Secretary of State, is also expected to be complemented by action on the ground, at grass-roots level, by local councils that have made the bids that have got over the first hurdle?

Phil Woolas (Labour, Oldham East and Saddleworth)

We expect that the consultation with wider interested parties other than the local authority, which would include the interested parties that I mentioned, would either support or not support the criteria that were used to judge the original proposal. Putting it in crude terms, if a council made a unitary proposal that claimed to demonstrate widespread public support and a prima facie case, it would be incumbent on the Secretary of State to take into account any contrary consultation evidence submitted by interested parties from the local area. A wise local authority would want to take part in that consultation.

Robert Syms (Conservative, Poole)

As I understand it, local authorities have to make their case, as do the people in the area, and the case then goes before the Secretary of State, who decides who else to consult. I presume that, in order to obtain people’s views, it would be necessary to publish the case made by the local authority or by the group of local authorities. Are the details of bids going to be published? If not, how can people challenge the proposals, and argue and debate them? If they are not fully published, what will be published and what will not be? We need to know.

Phil Woolas (Labour, Oldham East and Saddleworth)

The hon. Gentleman makes a reasonable point. In practice, however, council proposals will have been put through the local authority’s decision-making procedures, and I have no reason to think that the relevant documents would be anything other than publicly available. I am trying to convey to the hon. Gentleman that I have not actually read the proposals yet, and the reason is that I have to maintain an objective stance on them.

We expect that local authorities will have consulted with local stakeholders before responding to the invitation to bid, and the judgment to be made will provide the proof of the pudding on that.

Alistair Burt (Conservative, North East Bedfordshire)

We have had incredibly little time on these matters. Given the date of publication of the White Paper and the deadline of 25 January for the submission of bids, what sort of serious consultation did the Minister expect local authorities to be able to make on such a significant decision?

Phil Woolas (Labour, Oldham East and Saddleworth)

It was for precisely that reason that meetings were held more than a year ago—meetings that the hon. Gentleman criticised in our earlier debate.

Alistair Burt (Conservative, North East Bedfordshire)

With respect, the Minister cannot get away with that. Those meetings involved councils, but they were not concerned with obtaining any sort of wide public support. That was not possible at the time he mentioned; it has had to happen since the publication of the White Paper.

Phil Woolas (Labour, Oldham East and Saddleworth)

The hon. Gentleman makes a good point on paper, but in practice it is not a real one.

Dr. Blackman-Woods rose—

Phil Woolas (Labour, Oldham East and Saddleworth)

I give way to my hon. Friend, who has experience of this issue.

Roberta Blackman-Woods (Labour, City of Durham)

Does my hon. Friend accept that local authorities such as Durham county council used the available time very efficiently and effectively, and consulted a range of stakeholders? That is reflected in the bid.

Phil Woolas (Labour, Oldham East and Saddleworth)

I make no comment on specific proposals, but the White Paper consultation process took some two years. The details of the invitation to propose were not known until the White Paper was published but, in many instances, local authorities had already considered the relevant issues. My central point, however, is that it is not for the Government to dictate the form of consultation, nor the evidence in relation to public support.

Phil Woolas (Labour, Oldham East and Saddleworth)

Thank you, Mr. Benton. At the end of this morning’s sitting, I was referring to the timetable for consultation with the public and saying how the Government’s position under the Bill is that it is up to local councils to determine how they will ascertain the broad support from the public that is one of the criteria asked for in the invitation to bid.

Alistair Burt (Conservative, North East Bedfordshire)

The Minister has made much of the fact that some authorities may have been thinking about the process for up to two years, and thus have had plenty of time to consult the public and give a sense of broad-based consent and so on. What about the situation that is not uncommon in some authorities that have submitted bids? Their bids have been brought forward at a late stage because of a bid made by another authority.

A borough that is thinking of going unitary may have done a lot of work and spoken to people within its area, but one of the knock-on consequences of the Bedford borough bid, for example, put a question mark over what would happen to the rest of the area. That prompted a response from Mid Beds and South Bedfordshire district councils that they could not reasonably have been expected to plan or pay for by way of preparation until they knew what Bedford borough would do. What about the time for public consultation in districts that have been placed in such a position?

Phil Woolas (Labour, Oldham East and Saddleworth)

For the benefit of the Committee, it may be worth noting that the bids or the proposals that have been made are all public documents. It is incumbent on us to put all the material on the website and publish it for the House.

The point of the hon. Member for North-East Bedfordshire was well made. An authority has to show that there is broad public support for its proposal. He asked whether there was enough time for an affected district or authority to respond and show that it has public support. The Government will judge such proposals across the whole of the affected area, not only within the area that is proposed. It will be incumbent on the proposing authority, as well as the responding authority, to show the size of public support. That is a fair point because it reflects the top-down approach.

There is a balance between having a window of opportunity that is adequate for due consideration and a period that would be destabilising in the extreme for local authorities. I reassure the hon. Gentleman that public support for the proposal—both from the authority that is putting it in and the affected authorities—is a criterion that we shall use.

Patrick Hall (Labour, Bedford)

As for the pre-invitation to bid process or the period to which the hon. Member for North-East Bedfordshire alluded, Bedford borough asked its citizens panel. However, I do not regard that as constituting a sufficient measure of public interest, although it has demonstratedpublic support for the idea of a Bedford unitary. Surely the most important opportunity to go to town on demonstrating widespread public support from residents, businesses and voluntary organisations would occur after a bid has passed the initial hurdle, if indeed it does. I would expect councils to take such action in April, May and June, whether or not they were preparing beforehand, as the hon. Gentleman said. That is when the work needs to be done and when the real demonstration of public support will have to be obtained.

Phil Woolas (Labour, Oldham East and Saddleworth)

To emphasise the criteria, I must explain that the period until 25 January past was, of course, the deadline for the submission of proposals. We intend that, by the end of March, those proposals will be subject to judgment against the criteria established. Then the wider interests will be consulted, including affected authorities. That period of consultation will include local elections in those areas.

Alistair Burt (Conservative, North East Bedfordshire)

We are at a difficult point, and I return to the difficulty of the time scale. The hon. Member for Bedford made his point well, but surely the period in which a bidding authority had to show some degree of public support was the period up to the submission of the bid. That is one of the criteria. My point is that some bidding authorities had very little time to put their bid together. They will have spent serious money on getting the bid together at a late stage, because it would have been prompted by a proposal by a neighbouring authority. That means that trying to gauge public consent or support will be practically impossible.

Councils have had to go on a wing and a prayer. They have spent money and put in their bids because they think that that is the best defence mechanism against the other proposals on the table. I do not think that the time scale has been adequate to demonstrate any serious public consultation, notwithstanding that the process will consider that from now on. If the Minister finds that there is no public support or backing, authorities will have spent money putting together a bid unnecessarily.

Phil Woolas (Labour, Oldham East and Saddleworth)

The hon. Gentleman makes his point fairly, but the second period of consultation does not exclude the authorities from putting in their point of view, developing on proposals that might have been made or—

Alistair Burt (Conservative, North East Bedfordshire)

But it was a criterion in the first place.

Phil Woolas (Labour, Oldham East and Saddleworth)

The hon. Gentleman says that it is possible that an authority might have got wind of a neighbouring authority’s bid and then had a short period in which to prepare its proposals. I acknowledge that point, but it would be a strong point only if that authority were then excluded from further consultation. For the record, it might be worth referring the Committee to paragraph 5.10 of the invitation to councils in England to bid. It says:

“At stage 2, the Government will consult widely with partners/stakeholders in the areas affected by the proposals. Partners/stakeholders will thus have an opportunity to make representations about proposals that potentially will affect them. For these purposes, partners/stakeholders include all local authorities, the wider public sector...business community, voluntary and community sector. It is intended that this consultation would be launched at the end of March with a 12-week consultation period.”

Those interested groups include the affected councils. He has pressed his point quite well, and I acknowledge that.

Alistair Burt (Conservative, North East Bedfordshire)

On a final point, if that wider consultation in March shows that there was in fact no public support for a proposal, what the council has done, in extremis, is to spend a lot of council tax payers’ money to put together an unnecessary bid. The criterion that the proposals should be

“supported by a broad cross section of partners and stakeholders”

could not have been tested in the time required. Provided that the Minister is prepared to concede that money may well have been wasted in the process because of the urgency of the timetable, I take his point.

Phil Woolas (Labour, Oldham East and Saddleworth)

The hon. Gentleman is tempting me to say that devolution might mean spending money. I argue that inviting councils to put forward proposals for improving their local services and financial efficiency could be money well spent, but I am determined to remain neutral.

Patrick Hall (Labour, Bedford)

Let me point out that the complaint of the hon. Member for North-East Bedfordshire is that some councils might not have had time to spend enough money consulting a vast number of people, so they will have spent less.

Phil Woolas (Labour, Oldham East and Saddleworth)

My hon. Friend’s logic is normally impeccable. I was going to say “always”, but he might put amendments down, and then I would be in a difficulty. I am not sure what the local paper in Bedford and Bedfordshire is called, although I am sure that I will find out at some point in the next 12 weeks. I will resist the temptation to rename the Bill, “The Local Government and Public Involvement in Health in Bedfordshire Bill”, but his point was well made.

Clause 4 is much narrower in scope than people reading a report of the debate might believe. It sets out the procedure that the Secretary of State is to followon receipt of a proposal, and I commend it to the Committee.

Philip Dunne (Conservative, Ludlow)

I apologise to you, Mr. Benton, and to the Committee because this is the first sitting that I have attended—I had other commitments to fulfil.

I wish to ask the Minister a couple of questions for clarification, particularly on clause 4(2)(b), and to press him a little further on the issue of the extent of public consultation. Authorities that cover an area in which a proposal was made before 25 January, and which anticipated for some months in advance of the publication of the White Paper that such a proposal might be forthcoming, have had an opportunity to organise widespread public consultation. That is true in the case of Shropshire, as the Minister knows well, where three out of five districts have done so. The consultations took the form of a public ballot, which was well responded to, with a turnout of more than41 per cent. More than 60,000 people took the trouble to respond to a postal ballot. That response will, I hope, be taken into due consideration by the Minister.

The thrust of my question is that clause 4(2) states that

“the Secretary of State must consult the following about the proposal...

(b) any other person he believes to have an interest.”

Will the Minister confirm that the definition contained in clause 4(2)(b) would mean that the Secretary of State will be obliged to take into due consideration the results of a public ballot?

Phil Woolas (Labour, Oldham East and Saddleworth)

The hon. Gentleman makes a point about the extent of consultation. Clause 4(2)(b) says that “any other person” the Secretary of State believes to have an interest must be consulted. Government policy is that it is up to councils to determine how they consult on, or show a broad range of support for, a proposal. Clearly, members of the public are included within the definition of clause 4(2)(b). The Secretary of State would then have to balance the various competing claims, and it would be up to the councils affected to demonstrate what public support for proposals there was. As is laid out in the invitation, that criterion is to be given due regard in the consideration.

Philip Dunne (Conservative, Ludlow)

May I take it from that helpful response that the Minister will not only rely on partners and stakeholders that have a particular understanding within local authorities, but other persons, such as members of the public and the electorate that the authorities are there to serve?

Phil Woolas (Labour, Oldham East and Saddleworth)

That is a fair point. One has to judge on the criteria. Given those, public support will be an important part of the considerations.

Clause 5

Robert Syms (Conservative, Poole)

We are about to discuss several interrelated clauses. It would help if the Minister would give an explanation of how he thinks the boundary committee will work under the Bill. We have heard that it will have two essential tasks, the first of which is to deal with the bids that have been submitted should the Secretary of State refer matters to it. The second is to deal with the boundaries of authorities, some of which will not be part of the initial process. Clearly the committee will deal with any further bids that come along.

On the issue of boundary committee referral, the provisions clearly state that there may be a referral by the Secretary of State, but will the Minister say when there would not be a referral to the boundary committee? Probably the only case that I can think of is that of a county becoming a unitary authority, with clear boundaries and clarity on governance and on the number of councillors.

The next provision says that guidance must be given. It would be helpful if the Department’s guidance were published before we reach the end of the Bill. I should also like to know whether the guidance will be general guidance for all situations, or guidance that is specific to a bid, such as if there is a cross-county issue or a particular conglomeration when the Secretary of State will require information on item X or item Y.

Essentially, are we saying that there will be broad-brush guidance, with certain issues that may need to be returned to, or will the guidance be specific to particular proposals? We could have a situation in which the Secretary of State made a referral, and said, “I am interested in this bid, but I want to know X, Y and Z.” She would then give guidance to the boundary committee specifically to research and consider those issues. There is not too much more that I want to mention, but I shall probably have further questions as we examine later clauses.

Phil Woolas (Labour, Oldham East and Saddleworth)

That was a helpful intervention in allowing me to provide clarification. The answer is that the guidance will be broad-brush.

The clause will apply when the boundary committee receives a request for advice on a proposal. The boundary committee may provide advice. When it does, it may also do one of three things. First, it may recommend that the Secretary of State should implement the received proposal, with or without modification. Secondly, it can recommend that the Secretary of State should not implement the proposal—full stop. Thirdly, it can make an alternative proposal to the Secretary of State.

If the committee makes an alternative proposal, that proposal must deal with the whole or part of the area that the submitting authority or authorities could have included in their original proposal to the Secretary of State. However, unlike proposals submitted by local authorities, the boundary committee’s alternative proposal does not have to follow existing county or district boundaries. So the alternative proposal procedure is the way for the boundary committee to recommend boundary change for the relevant area. I refer the Committee to page six of the explanatory memorandum, which explains the point.

Subsection (6) provides that an alternative proposal from the boundary committee may not cover an area that includes part or all of the City of London or the Temples. Had I not just clarified that point, the power would have existed—so I hope that Members are paying attention. Proposals additionally may not extend to Wales. That might be of wider interest.

The clause allows the boundary committee for England to provide advice to the Secretary of State, make recommendations on received proposals, and make alternative proposals. The Government will be able to refer proposals to the boundary committee only after Royal Assent—if the Bill is approved by the House. We can ask the boundary committee for advice on any matter relating to the proposal, including looking at the electoral arrangements for that proposal. Again, it is an extraordinarily devolutionary and permissive framework that we are trying to create. I hope the Committee will see fit to support the clause.

Clause 6

Robert Syms (Conservative, Poole)

I beg to move amendment No. 19, in clause 6, page 5, line 17, leave out ‘four weeks’ and insert ‘three months’.

The amendment is part of a theme, namely the speed of the timetable, that has been developed throughout this Bill and may last some weeks. Under clause 6, the relevant period for consultation back to the boundary commission is defined as four weeks. The amendment would clearly make it 12 weeks, and three months and is designed to tease out why the timetable is so tight. At this stage, the Minister usually gets up and says that this follows the Conservative legislation of 1992. However, I would be interested to know why four weeks is specified and why a little more time cannot be left for people to make further representations.

Phil Woolas (Labour, Oldham East and Saddleworth)

I was hoping to be able to say that it follows the Conservative precedent in 1972. I will attempt to explain why we think the amendment is not necessary. Where the boundary committee is asked for advice on an alternative proposal for a single tier of local government, the procedure already provides for significant opportunities for interested parties to make their representations. Where the committee is minded to make an alternative proposal, it must first publish a draft of its proposal and must also ensure that those who have an interest are informed of the proposaland the deadline for making representations to the committee on that matter. The boundary committee must take account of those representations.

Where the boundary committee subsequently, as a result of that consultation, makes a proposal to the Secretary of State, we provide for a further opportunity for interested parties to make representations. The committee must inform anybody who previously made representations on a particular proposal that it has made a subsequent proposal to the Secretary of State. It must also inform those people that they have a further four weeks to make representations to the Secretary of State. That will be four weeks from the date, unless revised, set by the Secretary of State for advice from the committee. In essence, that means that Parliament has its boundary committee to consult and look at the proposals and the four further weeks is then another opportunity to comment on the proposal coming from the boundary committee.

Given that deep and broad consultation by the independent boundary committee, we believe that four weeks is an adequate period to comment on the proposals that arise from the consultation. A further extension of the period—I think that the hon. Member for Poole’s amendment refers to three months—would have no other purpose than to replicate the role of the boundary committee, which is, of course, independent. That would, I argue, be an inappropriate period of time. The reference to the Secretary of State’s time period is a further one on which to comment on the boundary committee’s proposals, having already had the substantial consultation by the boundary committee itself.

Robert Syms (Conservative, Poole)

Essentially what happens is that boundary committee publishes a proposal, there is normally an inquiry, it considers the inquiry, gives a month for people to come back with further comments and usually goes with whatever the inquiry has decided. Under this proposal, there does not seem to be any inquiry. That means that if the boundary committee makes a proposal, having carried out consultations, there are four weeks for people to respond to it. But what happens during that four-week consultation, or with the three months under our amendment, which would give people more time? Does the boundary committee have to consider that and add it to the representations from the Secretary of State, or does the Secretary of State have to consider those further representations when she gets the main boundary committee submission?

Phil Woolas (Labour, Oldham East and Saddleworth)

The Secretary of State is obliged to consider those representations, but the purpose of the procedure is that those would have been made prior to the ones from the boundary committee. I suspect that the hon. Gentleman is wary of the boundary committee making an alternative proposal outsidethe expected remit of the proposals that have been consulted on. The boundary committee, in its consultation period, has to pay regard to the representations that are made. The idea of the further four weeks is to give interested parties time to comment on the tidying up of loose ends in areas that may have not been foreseen by the boundary committee—the unintended consequences, rather than the substance, of the proposals that it is obliged to take into account in its consultation period.

Bob Neill (Conservative, Bromley and Chislehurst)

Mr. Benton, it is a pleasure to serve under your chairmanship in these more familiar surroundings.

I was interested in what the Minister said, because it seems to confirm my hon. Friend’s concern that there will not be public inquiries under this procedure. If that is so, it would be as well if that were spelled out specifically. Is that intended to be a departure from the norm, purely for the circumstances of this small tranche of changes, or does this presage a broader thought that the Government would in future not propose to use public inquiries if local authority boundaries are to be changed? What is the thinking behind that?

Phil Woolas (Labour, Oldham East and Saddleworth)

On the face of it, the hon. Gentleman makes a reasonable point, because there are not public inquiries in such instances. We are not taking about the sort of procedure that is undergone in relation to parliamentary changes, but about tweaking boundaries. Indeed, public inquiries do not take place in such circumstances, so we are not envisaging that that should change. This is an open and liberal—if I can use that word without too much criticism from behind me or in front of me—measure and a reassurance to local authorities. It will put into the legislative framework, if the House accepts it, a sensible framework to fit the proposed new arrangement that reflects the principles that are already in place.

Robert Syms (Conservative, Poole)

This has been a useful debate. Public inquiries after local government reorganisation have not been a feature in the past, but we have not had authorities making sometimes competitive bids, leading to a ripple effect, with one borough making a bid and another at the other end of the county making another to move things forward. As the Minister acknowledged earlier in respect of Bedfordshire and a number of other authorities, the multiple proposals will lead to a slight headache in respect of what one ends up with. I wonder whether it might be appropriate sometimes to put such matters to a public inquiry. My other concern is that the provision diminishes the work for barristers within our system, and that must be a concern for us all.

We have had a useful debate. I still think that the period should be slightly longer than four weeks. That would be better, given that there is not to be a public inquiry. I beg to ask leave to withdraw the amendment.

Robert Syms (Conservative, Poole)

I asked earlier whether guidance wouldbe published. Does the guidance need parliamentary approval under either the negative or affirmative procedure, or will the Department just publish it and put it on the website?

Phil Woolas (Labour, Oldham East and Saddleworth)

I anticipated, from my experience of the hon. Gentleman on previous Committees, that he would ask whether the guidance should be published before the Committee has debated the relevant clause. The guidance will be produced before the end of the proceedings of the Bill. It is not subject to either the negative or the affirmative procedure because it is guidance that backs up the clauses, but he will have sight of it.

Robert Syms (Conservative, Poole)

Thank you.

Clause 7

Alistair Burt (Conservative, North East Bedfordshire)

I am intrigued by subsection (1)(c), whereby the Secretary of State could,

“decide to take no action”.

That would be at the end of a process where the boundary committee’s views have been sought, consultation has taken place and the boundary committee has made its recommendations. Will the Minister enlighten us as to what in particular is likely to lead him to a decision not to respond to the consultation and to take no action? I would like him in the context of the clause to set out what may induce him to take no action.

Phil Woolas (Labour, Oldham East and Saddleworth)

The short answer to that is common sense. If I explain what the clause is trying to do, that may help the Committee.

The clause allows the Secretary of State to implement proposals for a single tier of local government, as the Committee is aware. Those may be the proposals received from local authorities, or alternative proposals made by the boundary committee. Proposals may be implemented as I said before with or without modification. That is to allow the Secretary of State to implement the proposals with changes—for example, following advice from the boundary commission she may wish to amend the boundary of the proposed area. Any order for structural change will be subject to the affirmative procedure, as we will debate under clause 173, if the hon. Member for Lichfield wishes to make a note. Any such order will therefore be subject to further scrutiny by the House.

If a proposal that the Secretary of State has decided to implement has not been submitted jointly by all the authorities affected by it, she may not implement it unless she has first consulted on the proposal as required by clause 4. If she has asked the boundary committee for advice by a certain date, she may implement a proposal or an alternative proposal submitted only once six weeks have passed from that date.

The clause also specifies that the Secretary of State may decide to take no action on a proposal, as the hon. Member for North-East Bedfordshire said. She may decide to do that where she considers that the case for a single tier of local government for a particular area has not been made. The clause therefore specifies that the Secretary of State “may” implement proposals that she receives for a single tier of local government. The provision to which the hon. Member for North-East Bedfordshire has drawn attention simply points out the face that the Secretary of State may decide that the case has not been made—that even though the alternative route has been used, the case is not there. I would have thought that he would welcome that option.

Alistair Burt (Conservative, North East Bedfordshire)

I thank the Minister for the clarification. I presume that the same will apply if the Secretary of State finds that there is not a broad measure of public support for a proposal?

Phil Woolas (Labour, Oldham East and Saddleworth)

Indeed. The proposal must pass all the criteria. This is not a cherry-picking exercise. One has to weigh up the strengths and weaknesses of the proposals, but proposals must pass the criteria. As I said in evidence to the Committee in Portcullis House, the value for money criterion is particularly important.

Robert Syms (Conservative, Poole)

We have so far had 26 proposals, of which the Government intend to run with eight, as I read somewhere—it might be fewer, or it might be more. However, as I understand the Government’s intention, they will go forward with a proportion, so inevitably, no further action will be taken on some. At that point, presumably, the proposals on which no action has been taken are dead—gone. What I mean is that the Government are not going to go forward with eight and have another eight later. When someone has worked everything out, spent the money and put the proposal together, it is either success or failure.

Phil Woolas (Labour, Oldham East and Saddleworth)

The hon. Gentleman, quite reasonably, is probing for an answer to that question. The suspicion of Opposition Members knows no bounds.

First, the figure of about eight proposals, as I said in evidence, comes from the fact that reorganisation to unitary carries up-front costs, and those costs can be met only from the reserves of or efficiency savings by the local authority concerned. In either instance, most obviously in the first—where the reserves are affected—that would have an effect on local government in its totality’s assets and therefore its borrowing capacity. The figure of about eight is a macro-figure to fit in with the Government’s wider economic policy.

Secondly, a proposal would be given the go-ahead only if it could show that there were cost savings to the council tax payer in the form of the council tax not being at a higher level than it currently is. That raises the thorny question, if it is a district moving into a county unitary or districts coming together, whether the lower or the higher council tax would apply. The answer is that it would be the lower council tax. An authority would have to show that it was able to keep those costs down, so whether or not eight turns out to be the correct figure, and whether or not consequential proposals in neighbouring areas, districts or, in one case, unitaries take place, one would have to take those wider costs into account. There is a wider financial judgment to be made, as well as the specific judgement on each of the proposals or consequential proposals.

Robert Syms (Conservative, Poole)

This is a slightly tangential point but, however one looks at it, additional work is going to have to be undertaken by the boundary committee, which I suspect is not a heavily funded organisation. Who is going to pay for that? When the boundary committee gets involved in the process of consultation or in questions of local governance in relation to the bids that go forward, there will be some cost. My central question is: will the Secretary of State pay? Will committee’s current budget cover it, or will the cost have to be recouped from the good taxpayers of Bedfordshire, Shropshire, or elsewhere?

Phil Woolas (Labour, Oldham East and Saddleworth)

I commend the hon. Gentleman on an ingenious question. The answer is that the boundary committee is funded by the taxpayer and would be charged with the duties of commenting on those proposals. Of course, in the real world of government, that is another reason why one has to take decisions efficiently. I do not suppose that the Conservative party’s leaflets in Bedfordshire—no, I must not comment on Bedfordshire. However, it is a fair question, and the answer is that the boundary committee would pay.

It might be helpful if I comment on the 26 proposals that have come forward in the present stage of the procedure. The Government’s initial view on which bids will proceed to stage 2 of the consultation will be based on assessment against the invitation criteria, including affordability, and will be announced in March. The invitation acknowledges that decisions on restructuring will be taken in the light of overall public expenditure, and the difficulty for any Government is that one has to set down that overall cost envelope. However, without knowing which proposals fulfil the criteria, it is not possible to say how many will proceed. I believe that that is evidence of the Government’s good faith and of our genuinely open attitude and devolutionary approach.

The invitation adds that if the number of proposals meeting the criteria exceeds overall affordability, the Government will prioritise proposals on the basis of a range of factors that include delivery of desired outcomes by the proposal—benefits in services and so on—as well as use of reserves and value for moneyand efficiency. Affordability is thereby locked in as a priority consideration should we have to choose between proposals.

I genuinely believe that the provision is a common-sense one and I commend it to the Committee.

Philip Dunne (Conservative, Ludlow)

Having helpfully outlined the aggregate affordability envelope, will the Minister help us further by saying how much it is? What is the value of the affordability envelope?

Phil Woolas (Labour, Oldham East and Saddleworth)

It is not possible to do that. The envelope relates to the overall local government borrowing requirement, which is influenced by a number of factors. The level of assets—of debts and credits at any one time—is affected by many criteria, so the answer depends on the extent of the call on reserves by the aggregate proposals. That will determine the number of proposals that could proceed.

That approach is the responsible one to take, and I am sure that the hon. Gentleman will support it given that he wants inflationary pressures to be kept down, not least in relation to local government.

Andrew Stunell (Liberal Democrat, Hazel Grove)

The Minister was initially positive in responding on the clause, but then he wandered off. He said that if a proposal fails, it fails—that is the end of it. That probably satisfied the hon. Member for North-East Bedfordshire, but the Minister then said some other things and I should like to test him on them. He said that certain members of the Opposition were unduly suspicious.

Phil Woolas (Labour, Oldham East and Saddleworth)

The Conservatives are.

Andrew Stunell (Liberal Democrat, Hazel Grove)

Well, both they and we are paid to be suspicious—that is our job and I make no bones about it. Our suspicion is born from the experience of being given assurances that are often not 100 per cent. robust. I hope that the Minister does not mind, therefore, if I push him further.

We know that 26 bids have been submitted. However, if we look carefully at the list, we know also that 10 of them are bound to fail because they conflict directly with others. Without prejudice to which ones are successful, we know that there are 16 places where things can happen, so we know that 10 bids will fail. The Minister is to some extent a prisoner of the public statements that have been made in the past 18 months by Ministers in his Department. Ministers initially suggested that unitary authorities were the total solution, but they gradually, and quite properly, stepped back from that and have taken a much more permissive and—as the Minister himself sought to claim—devolutionary approach. We welcome that.

At the same time, we continue to hear language outside the Committee about the absolute necessity of those areas that do not change to a unitary structure developing an enhanced two-tier structure. Clause 7 is the provision that gives cause for suspicion that the Minister, in implementing

“an alternative proposal from the Boundary Committee...with or without modification”,

might, in turning down a bid, say, “Yes, but we are going to impose other kinds of change on the way that you work and organise yourselves.” I want the Minister to say just how far those alternative proposals might go, how far the boundary committee might takethose proposals but the Minister will accept them,and how far that might leave a situation that is somewhere between the present circumstances and the circumstances following a bid, but much to the disadvantage of the local community.

Phil Woolas (Labour, Oldham East and Saddleworth)

I accept, of course, that it is the hon. Gentleman’s job to be suspicious. To tease out clarification, which local authorities can look at, is helpful. The situation with the 26 proposals does not contradict what Ministers have said in the period before the last election and since. There were a number of reports that credited Ministers with remarks that went further in terms of the Government’s desire to have more unitary councils. Indeed, some specialist press reports said that the whole of England would be covered by unitary arrangements. The Government have never said that. As we all know, there has been a strong debate inside local government itself as to what the desirable procedure is. Both those reports and that debate reflected the lobbying—if I can use that word—within local government. I remember one newspaper headline saying that we were going to abolish all the counties. In the same week, another newspaper covering local government said that we were going to abolish all the districts. I kept those two headlines on my desk for reference when journalists called up.

Michael Fabricant (Conservative, Lichfield)

Perhaps you are going to do both?

Phil Woolas (Labour, Oldham East and Saddleworth)

I can assure the hon. Member for Lichfield that we have no intention to do both. Once one has decided that a permissive approach is the right one, one does not control what those proposals will be. Political parties may have their views, which are then accepted or not by their supporters. I suppose I just have to accept that. However, by definition, that means the Government could not prescribe in advance how many, or what type of, proposals should come forward.

My right hon. Friend the Member for South Shields (David Miliband) went out of his way to explain to authorities during the discussions that that was why it was not logically possible to limit the size, either minimum or maximum, of population or geography that a successful proposal should be, which had been the case in previous reorganisations. Once one has accepted that there are different solutions for different areas—which might mean a large rural county area is treated differently from an urban area—one cannot prescribe the configuration. Therefore, the debate has rendered the Government a victim of their own permissiveness and genuine desire to be devolutionary.

Andrew Stunell (Liberal Democrat, Hazel Grove)

Again, that was eloquently put, but the Minister did not answer the question regarding clause 7, namely that when a bid is not accepted and the boundary committee brings forward some alterations or modifications, how far does the clause permit the Minister to impose on a geographical area a form of government that is neither in the bid nor the status quo, but suits the Minister?

Phil Woolas (Labour, Oldham East and Saddleworth)

I can only commend the hon. Gentleman for pushing the point. This clause and the previous one sets that out. An alternative proposal that the boundary committee makes can include only the whole or a part of the authority that put forward the proposal in the first place. The hon. Gentleman’s premise is that the boundary committee could put a Machiavellian Government bid in. It cannot. I understand why he is pushing that suspicion, but it could not be the case.

We debated earlier the timing, the geography andthe remit of the power to direct and I hope that I responded to that as clearly as possible. I am grateful to the hon. Gentleman for his statement about an elegant reply. I hope that he accepts its honesty, too.

Alistair Burt (Conservative, North East Bedfordshire)

We come back to our debate on whether or not it was possible within a geographical area for a solution to be devised by the Minister that was not one of the proposals put to him by any of the parties that had responded to the invitation. The clause seems to confirm that that is the case. By varying the order, the hon. Gentleman can produce an answer that no one had thought of previously because, in his mind, that is the most convenient and effective system for local government in respect of the proposals that have been put to him.

Phil Woolas (Labour, Oldham East and Saddleworth)

We are repeating our previous debate, which takes us directly to clause 2 and the requirement to direct. It is not intended that the power should give the Secretary of State the opportunity to put forward a bid that has not either been first proposed by a local authority or subsequently, following the direction, been put forward by a local authority as the best way forward for the area. The reason for that, as I said before, is that the Government cannot allow a situation whereby a solution for part of an area is not viable in another part of the county, as would happen in the case that we are discussing.

A Minister cannot impose his or her ideas anywhere. He can implement a modification of a proposal ifthe boundary committee were to be involved, or a modification of the proposal from the councils. As hon. Gentlemen are questioning such matters, a Minister could not put forward a proposal that did not have the support of the local authority in the area concerned. It is possible that neighbouring authorities would not have that ultimate proposal as their first choice. Were that not the case, we would be able to move forward on a consensus.

Clause 8

Robert Syms (Conservative, Poole)

The clause deals with changes to boundaries. There have always been modest changes to local government boundaries, usually because of a growing housing estate, the sides of a road straddling a boundary, or a rural parish being added to a borough or a town simply because it made sense in respect of emptying the dustbins and other basic services. During debate on the Bill, the issue was raised occasionally of extending the boundaries of towns or cities from where they might have been drawn in mediaeval or Victorian times because the communities had expanded since then.

Clause 9 covers a number of constraints. Will the Minister set out in a little more detail how the process would operate? If Leicester wanted to expand into neighbouring boroughs, could it do so? Normally, the boundary committee would undertake a review of all local authority boundaries. I can understand a local authority asking the boundary committee to review a particular boundary issue, but the Bill states that the boundary committee may “on its own initiative” undertake an inquiry. I wonder what that means. Will the boundary committee go marauding round, trying to expand our cities and annex suburban communities? Am I making a more sinister interpretation of the Bill? I hope that the Minister can give an elegant reply on the subject.

Andrew Stunell (Liberal Democrat, Hazel Grove)

My comments are addressed first to subsection (2)(b), which refers to

“the need to reflect the identities and interests of local communities.”

That seems to me to be the heart of the proposal. I hope that the Minister will assert that that factor must be given due weight when boundary changes are considered. Certainly in my local authority, Stockport, there have been such changes between us and the Tameside authority and between us and the Derbyshire authority. Those were common-sense changes to boundaries that were no longer relevant. They were not particularly difficult or contentious changes; they made common sense and were at quite a low level.

However, in the context of the Bill, it is only right that we hear from the Minister that he does not see clauses 8, 9 and 10 as changing existing practice to any substantial degree. That brings me back to some of the remarks that he made in responding to a debate on clause 2, when he referred to this provision as though it somehow absolved him from dealing with the point about clause 2. We are now dealing with a completely different set of propositions, which is not directly connected, as far as one can tell, with the proposals in clause 2. I seek the Minister’s confirmation of that point and that the extent of the provision is not being taken beyond what one might call the common law practice of present procedures in terms of tidying things up. Clause 8(4) contains a list of four things that cannot be done, which is on the whole very encouraging. Perhaps the Minister would like to underline again the fact that there is no intention to stretch current practice in the direction that the Opposition are concerned about.

Tom Levitt (Labour, High Peak)

I rise to make a brief contribution, having read clause 8 in some depth. I apologise to my hon. Friend the Minister for not giving him notice of this question, but he will appreciate why it might be particularly relevant to his constituency and mine. Do the words “local government” in the clause refer to national park boundaries, given that national parks are arms of local government? My hon. Friend and I both have an interest in the boundaries of a particular national park, because we have adjacent constituencies, albeit with no road passing over the boundary between us.

Bob Neill (Conservative, Bromley and Chislehurst)

My point follows on from those made by my hon. Friend the Member for Poole and the hon. Member for Hazel Grove. I would like some reassurance about the position of London boroughs because, unlike in the previous portion of the Bill, the definition of local authority and local government area in this portion—by virtue of clause 11, I think—includes London boroughs. I appreciate that it was not intended that they should form part of the unitary changes and the associated tinkerings, but I am interested to know for what purpose London boroughs are included in this portion of the Bill, other than perhaps for the occasional sensible adjustment where it is found that the odd piece of housing development strays over the boundary between two boroughs, as I said.

I do not want to be unduly suspicious but, asthe Minister knows, some people in London government—I am sure that such people are a great minority, even in the Labour party—would favour and have occasionally advocated wholesale change to the boundaries of the London boroughs. As the Minister knows, the Commission on London Governance, which we referred to earlier in our proceedings, completely and on a cross-party basis rejected any significant change of that kind. None of the boroughs wants it.

Can I have some reassurance that the measure will not be misused by someone not a million miles away from here at City hall to set in train a reorganisation of the London boroughs, which will make all that we have discussed in earlier clauses on unitary authority bids look minuscule by comparison? It is clear that the boroughs do not want such changes. The measure should be used simply to tidy up the odd borough anomaly that we see from time to time.

Philip Dunne (Conservative, Ludlow)

In common with Members on both sides of the Committee, I would like the Minister to clarify a point about the definition of local government areas in relation to city regions. The exclusions in subsection (4) suggest that it would be possible for a future Secretary of State to decide that he or she wished to introduce an additional tier of elected government using the city region device. Such a decision would not infringe any of the exemptions in subsection (4) because existing authorities could continue. I would appreciate clarification on whether that will be extended for city regions.

Phil Woolas (Labour, Oldham East and Saddleworth)

The point that the hon. Member for Hazel Grove made to try to get clarification has been validated by the three interventions that we just had.

Subsection (4) is designed to avoid the possibility of boundary changes effecting structural change by the back door. The procedures would be required in any event, irrespective of the invitation to propose changes.

I shall answer some of the specific questions that have been raised. The measures do not include the national parks, which are covered by separate legislation. Of course, the authorities that have to be consulted on, or involved in, proposals could change. It may be helpful to my hon. Friend the Member for High Peak if I point out that the boundary committee has a duty to take account of national parks and areas of outstanding natural beauty when conducting its work. That is part of the definition contained in subsection (2)(b), which mentions

“the need to reflect the identities and interests of local communities”

and is part of our sustainable communities strategy, although, interestingly, it is in this and not the Sustainable Communities Bill, as I recall from my reading.

On the question raised about London, the answer is yes. The proposals laid out in the Bill would be required irrespective of clause 2, and are indeed about tidying up. The assurances are in clause 8(4) to help to clarify matters for the hon. Member for Bromley and Chislehurst and other members of the Committee.

On city regions, there is nothing in the Bill that allows for the idea of super-local authority areas. Again, the issue is not subject to the measure, which is about the common-sense tidying up of boundaries. A review can be instigated by a request from the Secretary of State, a local authority, or on the initiative of the boundary committee, which has the power to do so under existing procedures and legislation. It is part of its duty to consider such matters, and the hon. Member for Poole will agree that it has a good record ofdoing so.

Subsection (2) provides that the boundary committee may make only recommendations for boundary change that seem desirable to it,

“having regard to the need to secure effective and convenient local government”

under the 1972 definition, as we discussed earlier, and

“the need to reflect the identities and interests of local communities.”

That is very important. As elected representatives, we all know that the identity and interests of a local community cannot be determined in all cases by simple arithmetic. If the hon. Member for Isle of Wight (Mr. Turner), to whom I wish a speedy recovery from illness—I understand that he is doing well—were on the Committee, he would be the first to make the point that one would not want an administrative boundary for the Isle of Wight that was not the coastline—it would not make sense. I think that Banham did that. [Hon. Members: “Yes.”] It chopped the island in two. I rest my case.

The provision is consistent with the boundary committee’s current approach when undertaking boundary reviews. It may recommend a boundary change, the abolition of a local government area and/or the constitution of a new local government area. However, it cannot make recommendations for boundary change that would permit structural change through the back door. That is why the Bill provides that the boundary committee may not recommend the alteration of a boundary of a single-tier area or a London borough that would result in the abolition of a two-tier area—to look at the point about the edge, which I think that the London commission looked at—or the alteration of the boundary of a two-tier area that would result in the abolition of a single-tier area or a London borough. That refers to the point made about Heathrow airport in reverse.

Finally, the boundary committee may not alter the constitution of a new local government area that results in the abolition of an existing local government area, where the new area includes a combination of a single-tier area and a two-tier area. For example, the boundary committee could not recommend that the London borough of Harrow should be merged with Watford borough council. Furthermore, the boundary committee may not recommend the alteration of a local government area or the creation of a new local government area that would extend into Wales, the City of London or the Temples.

Robert Syms (Conservative, Poole)

The Minister ruled out the London borough of Harrow being merged with an area outside the Greater London boundary. However, my hon. Friend the Member for Bromley and Chislehurst would be concerned if Harrow were merged with Hillingdon or another borough.

Phil Woolas (Labour, Oldham East and Saddleworth)

The hon. Gentleman makes a slightly different point. It is possible for a proposal to be made to that effect. It is already possible for that proposal to be made. That is not affected by our restructuring proposals.

Robert Syms (Conservative, Poole)

So is it theoretically possible that the Mayor of London could request the boundary committee to review the boundaries of London boroughs to reduce the number of boroughs—even halve the number—under these proposals?

Phil Woolas (Labour, Oldham East and Saddleworth)

If the Mayor of London were to use that power, I suspect that he would want to create one London borough. The request for such a review—[Interruption.]

Joe Benton (Labour, Bootle)

Order. The background noise is getting a bit too high. I am trying to hear what the Minister is saying.

Phil Woolas (Labour, Oldham East and Saddleworth)

Such a request can come from the Secretary of State, a local authority or the boundary committee. What the hon. Gentleman is suggesting is not the case. A request could only come from a borough or boroughs, or from the Secretary of State or the boundary committee.

Bob Neill (Conservative, Bromley and Chislehurst)

May I take it, just for the sake of clarity, because it is important to my constituents, that that is because the definition of “local authority” in the definitions clause—clause 23—excludes the Mayor of London but includes London boroughs? My only fear is what happens if the Mayor of London nobbles the Secretary of State.

Phil Woolas (Labour, Oldham East and Saddleworth)

Hon. Members who took part in discussions on the original Greater London Authority Bill will remember that the point about whether the GLA is defined as a local authority for these purposes was debated at length. It is not. In some circumstances, such as capping, it is defined as a local authority.

Subsection (5) provides that the boundary committee must have regard to any guidance that the Secretary of State issues in connection with boundary review. That guidance may include, for example, clarification of the legislative powers of the boundary committee—what it can and cannot recommend—or relate to a specific proposal, to the economic coherence of the area or to transport patterns in the area.

Subsection (6) provides that a local authority must provide information to the boundary committee that it requests in connection with its role in undertaking a boundary review. That is to ensure that the boundary committee has all the information that it requires to make its recommendation to the Secretary of State. The clause provides for the independent boundary committee to review the administrative boundariesof principal authorities. For its common sense, I commend it to the Committee.

Clause 11

Alistair Burt (Conservative, North East Bedfordshire)

I would like a brief run around the course on clause 11, which contains rather sweeping Government powers to deal with the implications of orders made and the ability to name new local government areas and authorities. That is where Kellyshire comes within the bounds of possibility, assuming some mental aberration on the part of the Secretary of State, which I am sure will not occur.

On the face of it, these are wide and sweeping opportunities. How on earth will the Minister exercise such extraordinary powers? I refer to subsections (3) and (4), which confer a whole series of powers. Subsection (4)(g) in particular refers to

“the boundary of any police area in England”.

We have just been through what must have been a bruising experience, even for the present Home Office, in dealing with the boundaries of police areas. Attempts were made to rearrange the police areas in fairly short order, and they all fell foul. How does the clause relate to the boundaries of police areas? There would be widespread concern if the creation of new local authorities under the Bill caused any disruption to existing police areas.

Michael Fabricant (Conservative, Lichfield)

Does my hon. Friend recall that we also asked for witnesses from the Association of Police Authorities? They could have given us interesting evidence.

Jonathan R Shaw (Labour, Chatham and Aylesford)

We could have had a whole busload of them.

Alistair Burt (Conservative, North East Bedfordshire)

You know, Mr. Benton, that could have been me talking. The hon. Gentleman took the words right out of my mouth. Had the witness procedure only been that little bit more extended, we could have thought ahead to these clauses and seen who might have been able to accompany Sir Michael Lyons to give us advice on them.

The boundary of a police area in England is mentioned specifically. What is the Minister’s consideration on that? There is a series of quite substantial powers, including powers over parish boundaries, the names of local government areas and the names of local authorities. He will be aware of the difficulties and debates that have raged throughout this country following any suggestion that traditional names should be changed or that local authorities should be named differently. Where is the indication that there will be public consultation and a degree of public consent to any changes made as a result of the powers in the clause?

I think that the Minister has got the drift of our concerns about this wide-ranging clause. If he could enlighten us to some degree, we might be able to come to a reasonable arrangement.

Philip Dunne (Conservative, Ludlow)

I rise to elaborate briefly on another provision to back up my hon. Friend’s point. Subsection (4)(e) refers to

“the establishment or membership of public bodies in any area affected”.

I draw the Minister’s attention to clause 23, where the definition of a public body includes

“a joint board, or joint committee, on which a local authority is represented”.

In many local authorities, representation by local councils extends to a vast array of bodies that would constitute public bodies under that definition. Many of them include bodies such as charities, in which a local authority is represented, housing associations and a host of other bodies that, by my reading of this definition, would be caught under the directive. It is not just a matter of the police authorities. The definition extends across the whole gamut of the public sector representation on bodies whether public, voluntary or private.

Phil Woolas (Labour, Oldham East and Saddleworth)

The answer to the hon. Gentlemen’s questions, both from the Front and Back Benches, is that the clause essentially translates the powers from the structural change process as laid out in the Local Government Act 1992. There is nothing new, therefore, in what is being proposed. What the clause relates to, which members of the Committee have picked up, is the definition of a local authority—whether it be police or parishes is laid out in the Bill.

The clause sets out the matters that the Secretary of State may include in an order implementing structural or boundary change. Those matters are necessary to achieve structural or boundary change and include, for example, the constitution of a new local government area, the abolition of an existing local government area, the winding up and dissolution of an existing local authority, the establishment of an authorityas a county council or as a district council, and consequential matters, such as the name of a local government area, electoral matters that are covered under clause 12 and the boundary of a parish.

As hon. Members have commented, subsection (5) defines the establishment of an authority, which also includes increasing the remit of an existing authority; for example, where a county council takes over the functions of a district council.

Subsection (6) makes it clear that the Secretaryof State’s power to implement a proposal with modifications includes the implementation of a proposal for an area with boundaries different from those proposed. The Secretary of State can implement a proposal for any area. She can change boundaries so that they do not run along existing county or district boundaries under the procedure, as we have said before. However, I would like to reassure the Committee that we intend to use that power only following advice from the independent boundary committee.

For example, if we received a proposal for a single tier of local government for an area and quite separately we received a recommendation from the boundary committee relating to the area but with an alternative boundary, the clause would enable us to implement the proposal but with the boundaryas recommended by the independent boundary committee. That is the extent of my permissive review, and I hope that members of the Committee will recognise that it is prudent to include that power in the clause.

Subsection (7), however, clarifies that the Secretary of State may not implement a proposal that extends an area into one that is not currently under local government control; for example, Wales, the City of London or the Temples. The clause is translating the powers that exist under the 1992 Act.

In answer to the question of the hon. Member for North-East Bedfordshire about police authorities and other such public bodies, the provision would allow a consequential change to a boundary—to, say, a police authority or parish—to follow from a local authority boundary. That is particularly important in combined police authority areas in which we would want public representation through the elected councillors—nominated by the principal local authorities—who sit on such bodies to ensure that there is coterminosity with the relevant public bodies that are listed in subsection (4). It would, therefore, be necessary to amend the membership of such a public body if changes such as those that I have outlined had taken place.

I hope that that answers the questions that have legitimately been asked regarding clause 11. The provisions are rooted in the 1992 Act. The clause specifies what the Secretary of State may include in an order that implements proposed structural or boundary changes. It is not our desire that we should be held responsible for the names of local council areas, which my experience shows is often more controversial than the extent of the boundary, the structure or anything else. I scratch my head at some of those matters just as much as other hon. Members. I assure the Committee that we would prefer to reach consensus on such a matter in the local area.

Clause 12

Alistair Burt (Conservative, North East Bedfordshire)

Without going over the short debate that we have just had, given that this is an extensive provision will the Minister confirm that the aim of the clause is to restate the existing structures of any bodies that he will have rearranged through the reorganisation process that we have discussed? He is to have powers to deal with

“the total number of members of”

local authorities,

“the number of councillors to be returned”

and

“the name of any electoral area”.

Those are extensive and it would be interesting to hear how they are to be exercised. A number of areas may face a reduction in the number of councillors. How might that be handled?

Phil Woolas (Labour, Oldham East and Saddleworth)

The hon. Gentleman is right to raise that matter. It is slightly more extensive than the simple requirement to ensure proper change, because it covers the transitional period of change from one authority structure to another.

The clause defines the “electoral matters” in respect of the councillors, in clause 11(4)(c), including the total number of councillors of any local authority and

“the number of councillors to be returned”

in any particular ward, division or electoral area. It mentions appointing existing councillors as councillors to the new authorities for a transitional period until the first elections for those authorities are held. Obviously, they would be the councillors for that electoral area. The clause also makes provision for elections to the new authority, in case the Electoral Commission is not able to carry out a review and put in place electoral arrangements for the new authority before it is established. I do not believe that that has ever happened, but the clause could, hypothetically, do so. To be fair to the hon. Gentleman, the measure is slightly more extensive in that it covers the transitional period.

Alistair Burt (Conservative, North East Bedfordshire)

Will the Minister confirm that district and borough elections this year will take place in all those areas that currently have bids going forward and that no decision is anticipated as to whether it makes sense for them to take place? Will they definitely take place?

Phil Woolas (Labour, Oldham East and Saddleworth)

I am grateful for the opportunity to put this on the record once again. I recall being woken early one morning, last summer, to respond to a Conservative party press release that the BBC read at 6.30 in the morning. “Thanks,” was my response. Of course, under any circumstances, the elections will take place this year. It is a serious point—apart from being a point-scoring one—because in previous reviews there has been uncertainty about whether elections would be necessary or desirable and people were then saying, “What’s the point?” That is unfair to the public and particularly unfair to the people who may be standing. I am grateful to the hon. Gentleman for giving me the opportunity to explain that—and for reminding me of that summer morning.

Clause 17

Robert Syms (Conservative, Poole)

There are a few items that I wish to raise. Clearly, much can go on with residuary bodies. Commitments can be entered into by local authorities for the long term. For all their benefits, private finance initiatives can sometimes land authorities with considerable costs in the long term, committing them to office buildings and other matters such as computer contracts. Will the Minister reassure us about how residuary bodies will operate and confirm that the consequence of reorganisation will be that the successor authority does not inherit more longer term, higher cost contracts than need be the case?

Under the clause, the residuary bodies will turn over most of the assets but, as we know, a lot of local government is tied up with ancient charities, gifts of land or school buildings which the authority is not sure whether it owns. Things might be vested into a charitable or residuary body for some years to come. I want reassurance from the Minister about how the process will operate. Will the costs of running residuary bodies dealing with the loose ends of reorganisation be taken into account for what was described earlier as the aggregate financial envelope?

Andrew Stunell (Liberal Democrat, Hazel Grove)

A lot of local government mythology is backed up by some pretty clear-cut anecdotes, if not evidence that could be put before a court, of circumstances in which councils going out of existence have left poisoned pills for their successors in one form or another. A notable case in my constituency goes back to 1973-74, so such cases can be enduring. With all the attention of the Minister and the Government on the performance of local authorities and their regulation, will he say something about how that will be prevented from happening in this round? What role will the residuary bodies play when dealing with it? What will happen to the finances of the new receiving authority if such an event takes place? The financial predictions on which the original decision was made could easily be blown out of the water. I should be interested to hear what the hon. Gentleman hasto say.

Phil Woolas (Labour, Oldham East and Saddleworth)

The hon. Gentleman has made an entirely fair and reasonable point about residuary bodies. Indeed, I remember representing an employee of a local authority that had been abolished under the previous process. He had been employed to count the number of oak trees in the area and had then been employed subsequently by the residuary body. It took some seven years to unwind the contract, during which time the number of trees had not changed. That is the stuff of employment tribunals.

Clause 24 deals with the contracts that local authorities may enter into during the period. A probing amendment has been tabled to the provision, which hopefully we shall debate. The clause under discussion enables the Secretary of State to establish one or more corporate bodies to take over property, rights, liabilities and the functions of those local authorities that cease to exist as a result of either structural or boundary changes. They are the residuary bodies to which the hon. Gentleman refers.

The use of residuary bodies is not, in fact, common. We do not expect that there will be a requirement for residuary bodies in this round of restructuring. However, it is prudent to allow a power to the Secretary of State to provide for them until the precise implementation arrangements for each new authority are known. I am sure that members of the Committee will wish to ask questions about such matters when we reach that stage in the Bill.

A residuary body could be used, for example, to take responsibility for any property, liabilities or functions not transferred to the new authorities because we do not expect that they will be required within the configuration. For example, following a reorganisation, if there is property surplus to the requirements of the new authority, it might be more appropriate to transfer it to a residuary body responsible for the property’s maintenance until it is disposed of. The residuary body would meet the costs out of its assets, and the net proceeds would be returned at the end of that period to the new authority. That approach was taken in the 1980s when the metropolitan counties were abolished. There were residuary assets, and the Committee can probably guess by now where the tree counter was employed.

Subsection (2) will allow the Secretary of State to make provision relating to a residuary body, including provision for its constitution, membership and power to borrow and lend money. It will also allow the Secretary of State to require such a body to submit to him or her a scheme for its own dissolution, because by definition residuary bodies are intended to have ashelf life.

Subsection (3) provides for the Secretary of State to transfer any property rights, liabilities or functions of a residuary body to any other body and provides for him or her to give effect to a scheme for the dissolution of that residuary body. Subsection (4) provides that the Secretary of State may make any incidental, consequential, transitional or supplementary provision, in particular those mentioned in clause 15, which relate to the modification and so on of an enactment.

The clause therefore provides for the Secretary of State to establish residuary bodies as the result of an order for structural and/or boundary change under clause 7 or 10, whichever contains the relevant procedure. That is the intention. As I said, it is not envisaged that that will be required under the window of opportunity, but it might come up through that route or through boundary changes resulting in structural change. I therefore think it sensible for the Committee to adopt the clause.

Clause 18

Alistair Burt (Conservative, North East Bedfordshire)

I would be grateful for some clarification from the Minister on staff issues. Subsection (5) says in italics:

“Any expenses incurred by a staff commission under this section and not recovered from a relevant authority shall be paid by the Secretary of State out of money provided by Parliament.”

Can he give us any indication of where and when he expects that provision to be triggered? Is it an indication of concern that the costs of winding up an authority might not or should not be met by that authority, and that the money will therefore have to come from Parliament? If so, what provision has been made for it? What sums are anticipated? It would be appreciated if he said something about that.

I would also like clarification on how the staff commission would deal with some of the practical problems arising from reorganisation. It is a disorienting time. During the transition, some workers may choose to leave the authorities in transition and go to more settled neighbouring authorities, depriving the area of key skills. In all the areas on the fringe of London, it is easy to transfer to neighbouring areas, take skills elsewhere and not be caught up in transition. Would the measures involve the payment of bonuses to retain key staff during the transition? Might short-term contracts be involved to bring in specialised skills to cover the transition period? Who will meet the costs?

Where will pension costs lie under transition? Which authorities can be expected to make provision for them? It is likely that authorities with very different financial situations will be brought together. Some will have been prudent and have significant reserves, but others will have very few. That will affect the payment of costs and pensions and, ultimately, the amount of council tax being paid by taxpayers. Who is picking up the bill for the transitional process? I would be very grateful if the Minister could enlighten us on that matter. In particular, when does he expect the provisions in subsection (5) to be triggered?

Phil Woolas (Labour, Oldham East and Saddleworth)

I shall try and answer the hon. Gentleman’s questions, which once again are quite reasonable—they have been asked by trade unions, on behalf of employees, and by staff associations during this and previous rounds of consultation.

The employer of local authority employees is, of course, the relevant local authority and not the Government. The hon. Gentleman made the point about parliamentary accounts. Furthermore, on the 89 funds that make up the local government pension scheme, the local council or councils—they are combined for the purposes of the pension fund—are the employer. In that case, the Government are the regulator, given that it is a funded scheme. Of course, the points about potential redundancy pensions under such arrangements are very important indeed. It might be worth while for the Committee to note that the new regulations for the local government pension scheme are currently subject to consultation in a process that is coincidental to the proposal before the Committee.

The clause will try to deal, therefore, with transitionary periods and is similar to the proposal that has been put forward in previous reorganisations. I imagine that the new unitary authorities created through the process will want to take a fresh look at their management and staffing structures. Indeed, in large part, proposals for savings and efficiencies would probably look at staffing costs, given that those account for about 50 per cent. of local government’s total expenditure—80 per cent. if one includes the commissioned or contracted sector. Nevertheless, the Government obviously recognise that staff will be anxious about the restructuring and, therefore, we will be holding discussions with those involved in local government and groups such as the local government employers body and public sector trade unions in preparing for implementation—should any go ahead through the current window of opportunity.

The clause, therefore, allows the Secretary of State to establish one or more staff commissions to consider staffing arrangements, transfers and problems that might arise as a result of orders for structural or boundary changes—the two procedures that might lead to such situations. Staff commissions may also be established to advise the Secretary of State on the steps necessary to safeguard the interests of staff affected by such an order. That provision is broadly consistent with previous legislation. In the reorganisations of the 1990s, staff commissions were established with the remit to advise the Secretary of State on the transfer of staff and to ensure that transfer schemes established by local authorities complied with regulations made by the Secretary of State.

As I said, staff anxieties are high on our agenda. Subsection (2) provides that a staff

“commission can be established for the whole or any part of England.”

That will give us flexibility depending on the proposals that come forward and will allow the Secretary of State to establish a staff commission to consider matters relating to an individual area, or number of areas, depending on the circumstances. Subsection (3) provides that the Secretary of State may direct the

“staff commission with respect to their procedure.”

Subsection (4) will enable the Secretary of State to direct an authority or a residuary body, relating back to clause 17, to provide the information requested, implement any advice given by the staff commission, and to pay the staff commission any expenses it incurs as a result of work requested by the authority so, again, it is not a cost on the council tax payer. Under subsection (6), the Secretary of State may wind up a staff commission.

We do not anticipate that funding from central sources will be required, to address the question of the hon. Member for North-East Bedfordshire. However, as happens often in local government, a local authority could undertake functions and is responsible for pay and rations, as it were, even when the functions are undertaken on behalf of the wider community, the national Government or other agencies. Such instances are many and varied. Clause 18 gives the Secretary of State some flexibility to ensure that the burdens that rightfully fall on central Government are met by them and not by local government.

I am confident that the clause reflects previous practice and gives a wide flexibility for staffing arrangements. However, I emphasise that the specific concerns of individual local authorities and the public sector unions will be subject to discussion between those bodies as the measure is rolled out.

Clause 24

Robert Syms (Conservative, Poole)

I beg to move amendment No. 52, in clause 24, page 15, line 28, at end insert—

‘(5) Nothing in this Chapter or in any direction from the Secretary of State shall restrict a relevant authority from utilising its financial reserves to reduce its budget requirement for council tax purposes’.

This is a very good amendment. We have started to test some of the propositions to do with the financial implications of dealing with the winding up and merging of authorities. I have a few general questions on the matter, and I tabled the amendment because I am sure that the Minister has a very good explanation to offer to the Committee.

Some authorities will have large reserves, and some will have small reserves. There is an argument that large reserves are inefficient because they result from overtaxing people. My hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) told the House about the reserves of the authority in his area on Second Reading. What will be the practice when an authority with large reserves comes together with an authority with small reserves? Will a number be put together by simple aggregate? Will an attempt be made to return what some might argue to be the proceeds of overtaxing to the people whose council holds large reserves? There are other issues: some authorities have large insurance funds, others may not. In other words, there will be financial imbalances when two authorities meet. How does one deal with those imbalances?

The Minister did not have the opportunity the other day—one talks about staffing—to address the single status issue, which some authorities have dealt with more speedily than others. If two authorities are put together, that will lead to financial imbalances. Under clause 24, we are trying to find out how we will proceed in dealing with financial imbalances between authorities. Will it just be a case of hard luck? An area comes together, everything is aggregated and, as the Minister said, people go for the lowest common denominator in terms of council tax.

Amendment No. 52 is concerned about financially irresponsible authorities doing what I suggested a moment ago. We were thinking of a situation in which an authority has reserves and just returns the money in the last year before it is merged with another authority. That is why we tabled the amendment, which states:

“Nothing in this Chapter or in any direction from the Secretary of State shall restrict a relevant authority from utilising its financial reserves to reduce its budget requirement for council tax purposes.”

That would deal with the Shrewsbury issue. It would allow Shrewsbury simply to give the money back, if it wished to do that, before it was merged against its will with another authority.

We have discussed staff imbalances. We want the Government to say what happens with financial imbalances. As part of the overall submission, have authorities to discuss how they will deal with such imbalances in arriving at the new arrangements with the consent of the people?

Andrew Stunell (Liberal Democrat, Hazel Grove)

I want to take the point made by the hon. Member for Poole a step further. As I understand it, one of the criteria that the Secretary of State will have in mind is the council tax levels that will arise in the combined authority. I think that I heard the Minister say that the Government would expect that not to exceed the lower of the levels that might be in force in the eight or more unitary authorities. Perhaps he could underline that or not, as the case may be. It is clearly relevant to the disposal of any reserves that might be held by one or other of the authorities. It might well be that, to achieve what has been described, the reserves held by one authority would of necessity be applied to reduce the charges in another authority or what was previously another authority area.

I may not be expressing myself clearly, but I hope that the Minister can understand the points that I am making. Clearly, that could be an aggravating feature, if I can put it that way, of the circumstances that arose post merger. I would be interested and grateful if the Minister gave us a response to that as well as to the issues raised by the hon. Member for Poole.

Philip Dunne (Conservative, Ludlow)

I support the amendment moved by my hon. Friend the Member for Poole, which has my name attached to it. I would like to elaborate a little on the issue, as he was kind enough to refer to my neighbouring authority and it does illustrate the importance of the amendment and the difficulties posed by the clause as drafted.

As we all know, councils have assets of very variable amount and quality. That is not a criticism of any individual council administration. Those assets tend to have been built up, accumulated or spent over years, decades and, in some cases, probably even longer than that. That is a result of the practice and stewardship of successive councils and successive Government policies, so this is not a party political point at all; it is just a fact of life. Some councils are well run; some are not so well run. Some retain substantial assets deliberately for a rainy day, and those assets may be, as my hon. Friend said, large cash balances—for example, from the sale of housing stock where they have not as yet spent the receipts. I am sure that, had my hon. Friend the Member for Shrewsbury and Atcham been lucky enough to serve on the Committee, he would be making the point more forcefully in the case of Shrewsbury and Atcham than I could.

Phil Woolas (Labour, Oldham East and Saddleworth)

And probably at greater length.

Philip Dunne (Conservative, Ludlow)

I could not possibly comment on the Minister’s sedentary intervention, but I am sure that any contribution made by my hon. Friend would be an impressive one.

Other councils have land—indeed, Shrewsbury and Atcham borough council still has farms on its books. Some of the ceremonial assets that might be up for sale as a result of having a unitary authority might also have value.

Other councils have significant debts. If the Minister will bear with me, I shall illustrate that some councils in Shropshire have significant debts. The county council has substantial debts, which are in the hundreds of millions of pounds—they total at least £100 million. That situation compares with the assets of the other councils. The debts might not be purely financial ones, because councils may have commitments and liabilities.

Irresponsible administrations might enter into liabilities ahead of elections for party political advantage. Again, I do not regard that as a party political point, and I am sure that none of us approve of such an approach. I represent Ludlow, as I am sure the Minister knows. There is an interesting contrast within Shropshire between the financial circumstances of those who are proponents of unitary authorities and those councils that are opposed to unitary authorities. As I have mentioned, the county council, which is the primary advocate, has significant debts.

I should perhaps have declared at the outset that I still serve on South Shropshire district council, which is an advocate of having a unitary authority. It has sold its housing stock and has invested the proceeds, so its receipts have now been depleted to the point where it is operating at the minimum level of prudent reserves without entering into debt. In the past year or so, it has been spending its reserves to fund its priorities. It would be coming into a unitary authority with neither assets nor liabilities and would broadly be in balance. That contrasts with some of the councils that are opposed to having a unitary authority.

I have already referred to Shrewsbury and Atcham borough council, which has significant cash, although it has some commitments because of how it plans to spend that. One of its primary concerns about having a unitary authority is that those plans might be taken over by a different authority with different objectives and that much of the money instead of being spent in Shrewsbury will be spent elsewhere in the unitary authority area. That is one of the strongest reasonsfor concern about the proposals in the town of Shrewsbury.

Patrick Hall (Labour, Bedford)

Is the hon. Gentleman suggesting that a council that is not in favour of the situation into which it is getting bound might prefer to make a huge one-off reduction in council tax as a way of getting rid of reserves rather than to favour investment in the longer term, albeit in a wider area?

Philip Dunne (Conservative, Ludlow)

I am grateful for that intervention, because I shall go on to explain the ramifications of the different asset positions, if the Committee will bear with me.

As the hon. Gentleman rightly says, the amendment is concerned with the use of reserves for a potential annual council tax adjustment. I am not, for one moment, suggesting that substantial reserves should be used to wipe out the council tax bill so that residents can be told that they can have a free ride for a year. Such an approach would be irresponsible.

These decisions are critical at the margin. This illustrates the fundamental problem: different balances of assets will give rise to significant problems in determining how the assets will be deployed in a new authority. The individual councils that are responsible for the assets at present will not be responsible for them in the future, and nor will the residents, whose assets in the broadest sense have given rise to that capital account. They might not bear the benefit in the future.

Bridgnorth district council is opposed to having a unitary authority. It retains its housing stock and therefore has a substantial capital asset, which is not cashable—it could not be used, as the hon. Gentleman suggests, to adjust council tax. It is an asset, and the council has decided not to cash it in at this point. In a future council environment, a decision on whether to release the value in the housing stock would be taken not by Bridgnorth residents, but by a unitary authority. That is another strong reason why residents in that district are concerned about the possibility of a unitary authority imposing the sale of council housing.

There are a number of areas in which I seek reassurance from the Minister. One is whether residents of an area could gain any comfort in relation to asset disposal upon change to unitary status. If the unitary authority decided to dispose of assets—for whatever purpose, whether reductions in council tax, as the amendment suggests, or other purposes—could reinvestment and deployment of those assets be ring-fenced to the relevant area?

In Shropshire, we have just decriminalised parking offences, and each town is introducing a residents parking scheme, which is having an impact on the revenues from the off-street car parks that are owned by the district councils. Revenues from off-street car parking charges—a locally derived source of income—are at present used to serve the district. If the districts were subsumed into a unitary authority, would those revenues be used to subsidise parking schemes elsewhere in the county? Such issues are very live to the debate in Shropshire. They come down to the question of who makes decision about assets as one makes the transition from one local authority to another.

On the issue of transition, I think that we all have some sympathy with the intent of clause 24, which I shall address, if I may, Mr. Benton, when we reach the clause stand part debate. Nevertheless, if the clause remains unfettered by the amendment that has sensibly been suggested by Opposition Members, there are a great many issues as to how the powers in the clause will be exercised. I hope that the amendment will be supported. If it is not, the Secretary of State’s power to direct will effectively emasculate the ability of councils that have reserves to use them—quite properly—for their local area.

Michael Fabricant (Conservative, Lichfield)

I am motivated to speak in the debate partly because I am so fed up with hearing about Shropshire and Bedfordshire. It is about time we heard about Lichfield.

I am far too young to recall the last substantial boundary changes in 1973. I am told, however, that there was a major fight, because there was a Lichfield urban council and a Lichfield rural council. My hon. Friend the Member for Ludlow mentioned ceremonial objects. If you were to visit Lichfield now, Mr. Benton, you would find, in the small museum in the St. Mary’s centre, a huge amount of gold and other ceremonial objects that came from Lichfield urban district council. Incidentally, whereas the House of Commons has a so-called gold Mace that is actually just silver gilt,and pretty cheap, Lichfield has two solid gold maces—one from King James, and one, I believe, from King Charles II.

That was a digression. As my hon. Friend the Member for Ludlow said, we must consider how assets will be distributed, but I want to make a point that has not been made so far. There may, just may, conceivably be a time when it is in an area’s interest to have a unitary authority—not in Shropshire, we know that, but in some other area, though I can hardly imagine it.

I hope that the Minister can reassure people here. It would be very wrong if a local referendum were to say that we did not want a merger, because our assets—be they two gold maces in Lichfield or assets held in reserve—would be distributed among a whole series of spendthrift councils. A referendum could well end up with a nay vote, if the Minister cannot now with his golden tongue—if not golden mace—reassure the Committee that assets will not be distributed in a way that prevents the prudent council from benefiting from such a merger.

Alistair Burt (Conservative, North East Bedfordshire)

Before the Minister replies, could I nominate that as today’s champagne moment?

Phil Woolas (Labour, Oldham East and Saddleworth)

This is one of those occasions, Mr. Benton, when the brief from one’s officials is not adequate. Quite why we did not anticipate the intervention will be the subject of a discussion in the Department tomorrow morning. That the Lichfield mace would be an asset is perfectly obvious. [Hon. Members: “Maces.”] If the plural of mace is maces, I will accept the justice of that. Had I known about it, I would have had my beady eyes on it for reduction of council tax purposes. Now that I do, I may re-examine the direction order and look at what powers theremay be.

My difficulty is compounded by the fact that I can give the reassurances that the hon. Members for Lichfield and for Ludlow are seeking, but their amendment would not do what they say. I commend the hon. Gentlemen for the amendment, which raises an important point and is quite ingenious. However, it would allow the very bingeing of councils with reserves and assets which the hon. Gentlemen wished to avoid. I will accept it at face value, because it gives me the opportunity to explain the Government’s purpose. My third difficulty is that it may be more helpful to the Committee if I can just briefly explain the purpose of the clause and then refer to the amendment.

The clause allows the Secretary of State to make a direction requiring an authority that may be dissolved as a result of these procedures to obtain consent from herself or from such authority or person as she may specify before it can dispose of land over £100,000 in value, enter into contracts or include an amount of financial reserves when calculating its budget requirement for council tax purposes. I refer the Committee to pages 9 and 14 of the document “Invitations to councils in England” on making proposals for future unitary structures, where the policy on the treatment of assets is dealt with. The intention of the clause and the reason that I think it sensible to recognise the point of the amendment, but to resist it, is precisely to ensure that those authorities with reserves are not plundered in a circumstance where a unitary authority is to be created.

Paragraph 3(2), on affordability, states clearly that in each year of the new authority

“transitional costs incurred are to be financed through a combination of the following—...in year revenue savings arising as a result of restructuring;...other in year specified revenue savings that are additional to annual efficiencies...which local authorities are expected to make”—

in other words, Gershon efficiencies cannot be taken into account—and, crucially and thirdly,

“drawing on available revenue reserves, subject to ensuring that satisfactory amounts remain to meet unforeseen pressures or other potential calls on reserves.”

which means being prudent and having some money just in case. It goes on to say:

“Use of revenue reserves should be the final option considered, both because of the need to preserve a contingency to meet future pressures and because use of reserves adversely affects the fiscal aggregates in a given year, increasing spending but not receipts and so placing further pressure on the Government’s fiscal rules”.

The intention behind the amendment is to allow the use of reserves to reduce budget requirements for council tax purposes. It strikes at the point made by my hon. Friend the Member for Bedford and other hon. Members that the more prudent position is to safeguard in the medium and long term rather than in the short term.

I turn briefly to contracts, as opposed to reserves. Consent must be sought under the clause for any capital contract under which consideration exceeds£1 million or which includes a term allowing the consideration payable to be varied. That means that an authority may not enter without consent into a capital contract for less than £1 million if provision in the contract means that its price can go up. That will ensure that an authority cannot tie the hands of a future authority.

Andrew Gwynne (Labour, Denton and Reddish)

As I believe my hon. Friend the Minister is coming on to say, the opposite of using reserves is building up debts. That is where he has perhaps learned lessons from the past. It is no surprise that a number of municipal facilities date from between 1970 and 1974. Indeed, in my constituency the former Denton urban district council decided after almost 80 years to build the swimming pool that it had been campaigning for, knowing that it would never have to repay the money that it borrowed and that that would be a problem for the new Tameside metropolitan borough council. That decision might have been right for Denton but it was certainly wrong for the new council. Does my hon. Friend agree that the clause will set that situation right for the future?

Phil Woolas (Labour, Oldham East and Saddleworth)

That is a real example of exactly the sort of decision making that the Government are keen to avoid. We do not want to restrict local authorities’ freedom unreasonably, but we want to act in the long-term interests of the council tax payer.

The proposals on assets and contracts must be taken in the context of the requirement, highlighted by the hon. Member for Hazel Grove, that the council tax payer should not suffer as a result and should only benefit from the requirement to equalise to the lower level. The invitation proposals require authorities to put forward figures and plans to do that. They may not therefore enter into a contract that is not a capital contract without consent if the consideration exceeds £100,000 and the contract would run beyond a date specified in the direction or if, under the terms of the contract, its period could be extended beyond that date.

There are many examples from previous restructuring rounds of authorities that were to be dissolved acting irresponsibly in relation to assets, disposals and contracts. The clause is designed to ensure that that does not happen again and that old authorities do not dispose of valuable land, enter into long-term contracts or apply financial reserves above a specified limit to reduce council tax in the short term. Such actions could have a negative effect on the new authority.

Of course, the Secretary of State or other person specified in a direction may consent to the disposal, to the authority entering into a contract or to the use of reserves. The Secretary of State may specify that consent must be sought from the new authority if it has already been established, which would be appropriate as such decisions would affect the new authority. The assets and liabilities of the old authority will of course be transferred to the new, as has been the case in previous restructuring.

The rest of the debate is in Hansard.