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Defined Authorities

Volume 124: debated on Tuesday 15 December 1987

The text on this page has been created from Hansard archive content, it may contain typographical errors.
The Parliamentary Under-Secretary of State for the Environment
(Mr. Christopher Chope)

I beg to move amendment No. 2, in page 2, line 21, at end insert

`a parish council, a community council'.
I expect that many Opposition Members will be concerned that the Government are proposing to impose compulsory competition upon the only level of local government not already covered by the Bill. We are proposing the amendment because not all parish or community councils are any longer the very small-scale operations which people commonly believe them to be. Some large parish councils operate certain services on a similar scale to smaller districts, and could benefit from competition in the same way as other local authorities. For example, the extent of some ground maintenance work undertaken by parish councils can be considerable, including parks, picnic areas and open spaces.

There would be little logic in obliging a small district to go out to competition for such activities, while not applying the duty to a parish or community council which was in fact operating them on a larger scale. Most parish councils will be unaffected by this provision if the £100,000 de minimis threshold which we have proposed is implemented, as I expect it to be. Even if we are talking about no more than a few dozen councils being affected, the amendment will ensure that there is a common approach to all local authorities. I hope that hon. Members will agree that the amendment is fully justified and will support it.

The Minister is right: Opposition Members are opposed to the inclusion of parish and community councils in the provisions of the Bill. We consider that parish and community councils are unsuitable for inclusion. As we are opposed to all local athorities and all bodies being included, we are opposed to the inclusion of community and parish councils in competitive tendering, but there are special reasons which apply to community and parish councils.

We thought that the Government were being logical in leaving such councils out of the provisions of the Bill. We thought that the Government had recognised the bureaucracy that would be imposed on small community and parish councils. Whatever the Minister says about their size, parish and community councils are small compared with most local authorities and district councils. The bureaucracy imposed on local government by the procedure of competitive tendering and the need to submit all the necessary forms to the Secretary of State were such that, in view of the size and the budgets of community and parish councils, we thought that the Government had reasonably decided to leave them out of the legislation, but obviously they were left out as an oversight. The Government are so doctrinaire that they want to include everything, even though it will cost ratepayers more money than it will save.

Most community councils are either in the north of England or in Scotland; there are few elsewhere. The Local Government (Scotland) Act 1973 defines the function of community councils as follows:
"In addition to any other purpose which a community council may pursue, the general purpose of a community council shall be to ascertain, co-ordinate and express to the local authorities for its area, and to public authorities, the views of the community which it represents, in relation to matters for which those authorities are responsible, and to take such action in the interests of that community as appears to it to be expedient and practicable."
Not many of those functions need to go out to competitive tendering. It is nonsense for the Government to put out to competitive tendering consultation and representation to the local authorities in whose areas the community councils operate.

The Local Government (Scotland) Act 1973 provides about the financing of community councils:
"islands and district councils may make such contribution as they think fit towards the expenses of community councils within their areas, may make loans to those councils, and may, at the request of such community councils, provide them with staff, services, accommodation, furniture, vehicles and equipment, on such terms as to payment or otherwise as may be agreed between the councils concerned."
In other words, many parish and community councils have no major functions, no revenue-raising powers and no money, but they must still go out to competitive tender. That is nonsense. The Minister is right about the de minimis threshold of £100,000. "De minimis" means that any contract below that threshold does not have to go out to competitive tender because the amount of money that the Government suppose might be saved by competitive tendering—and there are many examples of money being lost through competitive tender—would be less than the bureaucracy of going out to competitive tender. We believe that the threshold is too low. However, 90 per cent. of any function that any parish or community council may have to put out to competitive tender would be below that de minimis level. There is no doubt about that.

The Government's doctrinaire attitude means that they will not let anybody or anything escape; they must impose their free market philosophy on even the smallest community or parish council, even if that is bureaucratic and will cost the ratepayers more money, just for the sake of making sure that the private sector can take any pickings from community and parish councils. Opposition Members oppose the amendment.

My hon. Friends and I also oppose the amendment strongly — as do the organisations representing the parish and community councils. They feel aggrieved not least because the Government expressly said—this year—that they would not be included.

Let me deal with the history of the measure. In the original 1985 Green Paper on competition in the provision of public services, the Government said explicitly that parish and community councils would not be included in the legislation to make competitive tendering compulsory. That statement was repeated in a letter, I think, from the Under-Secretary of State for the Environment—

6.30 pm

The hon. Gentleman confirms that.

The Minister wrote to the chairman of the National Association of Local Councils in March 1987 to confirm that parish and community councils would be left out of the provisions. The proposals went out in November for consultation. The Government left one week for consultation; the parish and community councils, of which there are 8,500, had one week to consider the matter. The consultations resulted in a mass of objections in principle. Subsequently the Government changed their mind.

Even more surprising and appalling is the fact that the Government's reason, which was given by an official of the Department of the Environment to an official of the National Association of Local Councils on 10 December —I shall quote it almost verbatim—was that they had not been aware of the extent to which individual parish councils spend substantial sums on activities covered by the Bill. The Department of the Environment, which runs local government in England, and to an extent elsewhere, was not aware of what the parish and community councils were doing.

The regular refrain is heard from the opposition parties that it is not a good thing that the Government have centralised powers and taken them away from local government. We argue regularly, vociferously, forcefully and, I believe, convincingly that it is impossible for a relatively few officials in Marsham street to know what is going on at county, metropolitan district, London borough and district level — let alone at parish, town and community level. That assertion is explicitly confirmed in the Government's response.

The first and most substantial argument against the amendment is that the Government are being thoroughly dishonest and are indulging in thoroughly bad practice. They are going against everything that democratic government should be about. They are rushing in at the last moment contrary to their express word, and they deserve to have the book thrown at them, and worse.

We always try to anticipate what Ministers will say. The Minister may say, "If we are to include district, borough and county councils, it is illogical not to include parish and community councils." That is one argument. However, the Government are taking a sledgehammer to crack a nut. I am advised that 70 out of 8,500 parish councils provide services costing more than the 100,000 de minimis sum to which the hon. Member for Bootle (Mr. Roberts) referred. The argument may come back, "If there are only 70 councils in that category, why worry?" There are many reasons for worry and I shall address them now.

First, the Government's real motivation may not be that it is not logical to exclude parish and community councils. The real motivation may have arisen from the consultations on sports and leisure facilities, which revealed, as they were bound to reveal, that many parish and community councils have parish, village or community halls which could fall within the provisions on competitive tendering.

My second point is an important one and I should be grateful if the Minister would go further than he did in Committee. We do not yet know the exact nature of the relative cost-benefit advantage that the Government say requires them to legislate.

The Minister will remember that in Committee Ministers commented a couple of times that if the costs to local authorities of complying with competitive tendering requirements were greater than the benefits that would result, there would be a case for exemptions. Clearly, that was a statement only of outline, because we did not receive any further information on it. Is the Minister yet in a position to say what the exemptions will be? If he is serious in arguing this complete about-turn, I hope that he will say that the Government will grant exemptions in cases in which the cost-benefit is negative or doubtful and that, although in theory and in law parish and community councils are to be brought within the terms of the legislation, the Government propose to exempt them because they can see the strong economic arguments against their inclusion.

I ask the Minister to repeat the statement that he made in Committee, so that the whole House can hear it, that exemptions will be considered and that the Government support the idea of exemptions if the cost of competitive tendering is less than the benefit. Will he tell us what that will mean in practice? Why have not the Government introduced an amendment to that effect at this stage? Will the Government at least tell us that we shall get such an amendment in the other place and tell us its import?

The expenditure of parish and community councils on services will very rarely exceed £100,000. In almost every instance it will cost more to put services out to competitive tender—tender specifications will have to be prepared, bids assessed and additional staff employed — than competitive tendering can possibly save. Do the Government accept the assertion that, even when parish and community councils come within the remit because the sums that they spend do not fall below the £100,000 cut-off point, they are ripe for exemption because of that cost-benefit disadvantage?

There will not be many private companies to do the work of tending open spaces in villages and remote rural communities. The experts will be the employees of the parish and community councils, who know the local area. They will tender for the work and win the contracts. Therefore, the tendering process will be a frightful waste of money. The Government say that they want to reduce the burden of taxation — whether through local government in the form of rates or otherwise, yet they now propose to impose an additional burden on this much-respected, much-loved tier of local government, which for many people is the closest to home.

The National Association of Local Councils and the Association for Neighbourhood Councils oppose the amendment. I hope that it will be in order, Madam Deputy Speaker, for this debate to continue, if necessary—albeit for a relatively short time—so that we can hear what the Government have to say to justify their complete U-turn on this matter. This is the one provision on which there has been a complete U-turn within a matter of months. With your permission, Madam Deputy Speaker, we can perhaps respond before the end of the debate. Like this lowest and most community-based tier of local government, my hon. Friends and I will strongly oppose the extension of the provision. The Government should be embarrassed to be making this proposal.

First, let me deal with the point raised by the hon. Member for Bootle (Mr. Roberts). We are referring to community councils in Wales. If we were not doing so, the hon. Gentleman would have a point because the community councils in England would certainly not come within the scope of the Bill. The hon. Gentleman will see that the amendment applies not to Scotland, but only to England and Wales.

Where does it say that? The amendment states:

"Page 2, line 21 (Clause 1), at end insert 'a parish council, a community council'."
It does not say Wales, Scotland or England.

If the hon. Gentleman looks at clause 1, and particularly at lines 19 and 20 on page 2 of the Bill, he will see that it states:

"In the application of this Part to England and Wales, `local authority' in subsection (1) above means—".
The amendment relates to subsection (1) in clause 1. I hope that I have been able to allay the hon. Gentleman's concerns.

With regard to the points raised by the hon. Member for Southwark and Bermondsey (Mr. Hughes), it is true that the Government have taken a different opinion following information about the extent to which some parishes are spending on services that are subject to the competitive tendering provisions in the Bill. Many councils have expenditure in excess of £100,000. For example, Swanage had expenditure last year of £657,000. That is a large sum of money. Similarly, Stratford had expenditure in excess of £500,000. Several other authorities have many hundreds of thousands of pounds worth of expenditure. We believe that it is reasonable and logical that the same provisions should apply to those councils as to other district councils.

Why on earth, then, did the Minister and the Government say explicitly twice this year that they would not apply what they are now going to apply? Did the Government not know what parish and community councils did when they went to consultation and when the Minister wrote to the officer at the National Association of Local Councils? Did the Government have no idea at all about that?

As the letter of 10 December to which the hon. Gentleman referred makes clear, the Government were not aware of the extent to which individual parish councils are spending quite considerable sums of money on activities covered by the Bill. The hon. Gentleman criticises the Government for not having that information. However, once we received the information, we reached what I hope hon. Members will believe is the logical conclusion—that the provisions of the Bill should be extended to apply to parish councils with larger amounts of expenditure.

With regard to the hon. Gentleman's point about extending the provisions of the Bill, I must state that village halls, to which the hon. Gentleman referred, do not come within the list of facilities that we have proposed should be covered if we add sport and leisure management to the provisions in the Bill. The proposed exemption of £100,000 has been put forward in a consultation paper on implementation. We did not say that we would amend the Bill generally. However, we said that we would consult about implementation and that is what we are doing now. We are still considering how we should propose implementation for parish councils.

The Minister neglected to deal with one point. Why was the matter subject to one week's consultation?

I am not sure of the exact length of time for consultation. My department wrote to the National Association of Local Councils on 6 November and it replied in a letter dated 9 December. The time span is considerably longer than one week. If the National Association of Local Councils had not replied within one week and the Government had said that it was too late and they would not allow any reply to be taken into account, that would have been unreasonable. We waited for more than four weeks for a reply. Having received the letter we considered the arguments in it. Of course, it was not the first time that we had heard those arguments because a number of individual parish councils had responded to our letter of 6 November.

I am grateful for that reply and at least that is now on the record. The Minister did not say that any council was in favour of the proposal so we are entitled to presume that no local authority responded by saying that it supported the Government's proposal. That would still have been the case had the consultation period been longer or shorter.

In June this year, when a smaller percentage of the population than ever before voted for the Conservatives, the Government moved rapidly to the Right. They moved rapidly away from supporting local government. They moved to a position where they will be able to interfere more in local government at a lower level. To repeat a metaphor that was used earlier, the Government found themselves "grasping entrails further down". The amendment is evidence of that.

6.45 pm

It is a sad day when the Government have to get their maulers on local parish and community government and insist that it must have the morality of Ministers in the Department of the Environment and in 10 Downing street. The local parish and community councils have done a good and well respected job. They resist and oppose the Government's proposal. If the Government insist on arguing for the amendment, I hope that the clause will be rejected in another place.

Question put, That the amendment be made:—

The House divided: Ayes 276, Noes 200.

Division No. 115]

[6.45 pm

AYES

Alison, Rt Hon MichaelDavies, Q. (Stamf'd & Spald'g)
Allason, RupertDavis, David (Boothferry)
Amess, DavidDay, Stephen
Amos, AlanDevlin, Tim
Arbuthnot, JamesDicks, Terry
Arnold, Jacques (Gravesham)Dorrell, Stephen
Arnold, Tom (Hazel Grove)Douglas-Hamilton, Lord James
Ashby, DavidDover, Den
Aspinwall, JackDunn, Bob
Atkins, RobertDurant, Tony
Atkinson, DavidEmery, Sir Peter
Baker, Rt Hon K. (Mole Valley)Evans, David (Welwyn Hatf'd)
Baker, Nicholas (Dorset N)Fallon, Michael
Baldry, TonyFarr, Sir John
Banks, Robert (Harrogate)Fenner, Dame Peggy
Batiste, SpencerFinsberg, Sir Geoffrey
Beaumont-Dark, AnthonyFookes, Miss Janet
Bendall, VivianForman, Nigel
Bennett, Nicholas (Pembroke)Forth, Eric
Bevan, David GilroyFowler, Rt Hon Norman
Biffen, Rt Hon JohnFox, Sir Marcus
Blackburn, Dr John G.Freeman, Roger
Blaker, Rt Hon Sir PeterFrench, Douglas
Body, Sir RichardFry, Peter
Bonsor, Sir NicholasGale, Roger
Boscawen, Hon RobertGardiner, George
Bos well, TimGill, Christopher
Bottomley, PeterGlyn, Dr Alan
Bottomley, Mrs VirginiaGoodhart, Sir Philip
Bowden, A (Brighton K'pto'n)Goodson-Wickes, Dr Charles
Bowis, JohnGow, Ian
Boyson, Rt Hon Dr Sir RhodesGower, Sir Raymond
Brandon-Bravo, MartinGrant, Sir Anthony (CambsSW)
Brazier, JulianGreenway, Harry (Ealing N)
Bright, GrahamGreenway, John (Rydale)
Brooke, Hon PeterGregory, Conal
Brown, Michael (Brigg & Cl't's)Griffiths, Peter (Portsmouth N)
Bruce, Ian (Dorset South)Grist, Ian
Buchanan-Smith, Rt Hon AlickHamilton, Hon A. (Epsom)
Budgen, NicholasHamilton, Neil (Tatton)
Burns, SimonHampson, Dr Keith
Burt, AlistairHanley, Jeremy
Butler, ChrisHannam, John
Butterfill, JohnHargreaves, A. (B'ham H'll Gr')
Carlisle, Kenneth (Lincoln)Hargreaves, Ken (Hyndburn)
Carrington, MatthewHarris, David
Carttiss, MichaelHawkins, Christopher
Cash, WilliamHayes, Jerry
Channon, Rt Hon PaulHayward, Robert
Chapman, SydneyHeathcoat-Amory, David
Chope, ChristopherHeddle, John
Clark, Dr Michael (Rochford)Hicks, Robert (Cornwall SE)
Clark, Sir W. (Croydon S)Higgins, Rt Hon Terence L.
Clarke, Rt Hon K. (Rushcliffe)Hill, James
Colvin, MichaelHind, Kenneth
Conway, DerekHogg, Hon Douglas (Gr'th'm)
Coombs, Anthony (Wyre F'rest)Holt, Richard
Coombs, Simon (Swindon)Hordern, Sir Peter
Cormack, PatrickHoward, Michael
Couchman, JamesHowarth, G. (Cannock & B'wd)
Cran, JamesHowell, Rt Hon David (G'dford)
Critchley, JulianHughes, Robert G. (Harrow W)
Currie, Mrs EdwinaHunt, John (Ravensbourne)

Hurd, Rt Hon DouglasRenton, Tim
Irvine, MichaelRhodes James, Robert
Irving, CharlesRhys Williams, Sir Brandon
Jack, MichaelRiddick, Graham
Jackson, RobertRidley, Rt Hon Nicholas
Janman, TimothyRidsdale, Sir Julian
Jessel, TobyRoberts, Wyn (Conwy)
Johnson Smith, Sir GeoffreyRossi, Sir Hugh
Jones, Gwilym (Cardiff N)Rost, Peter
Jones, Robert B (Herts W)Rowe, Andrew
Kellett-Bowman, Mrs ElaineRumbold, Mrs Angela
Key, RobertRyder, Richard
King, Roger (B'ham N'thfield)Sackville, Hon Tom
Kirkhope, TimothySainsbury, Hon Tim
Knapman, RogerScott, Nicholas
Knight, Greg (Derby North)Shaw, David (Dover)
Knowles, MichaelShaw, Sir Giles (Pudsey)
Knox, DavidShelton, William (Streatham)
Lamont, Rt Hon NormanShephard, Mrs G. (Norfolk SW)
Lang, IanShepherd, Colin (Hereford)
Latham, MichaelShersby, Michael
Lee, John (Pendle)Sims, Roger
Lennox-Boyd, Hon MarkSkeet, Sir Trevor
Lester, Jim (Broxtowe)Smith, Sir Dudley (Warwick)
Lightbown, DavidSmith, Tim (Beaconsfield)
Lloyd, Sir Ian (Havant)Soames, Hon Nicholas
Lloyd, Peter (Fareham)Speed, Keith
Luce, Rt Hon RichardSpeller, Tony
Macfarlane, NeilSpicer, Jim (Dorset W)
MacKay, Andrew (E Berkshire)Spicer, Michael (S Worcs)
Maclean, DavidSquire, Robin
McLoughlin, PatrickStanbrook, Ivor
McNair-Wilson, M. (Newbury)Steen, Anthony
McNair-Wilson, P. (New Forest)Stern, Michael
Malins, HumfreyStevens, Lewis
Mans, KeithStewart, Andrew (Sherwood)
Maples, JohnStradling Thomas, Sir John
Marland, PaulSummerson, Hugo
Marlow, TonyTapsell, Sir Peter
Marshall, Michael (Arundel)Taylor, Ian (Esher)
Martin, David (Portsmouth S)Taylor, John M (Solihull)
Maude, Hon FrancisTemple-Morris, Peter
Maxwell-Hyslop, RobinThompson, Patrick (Norwich N)
Mellor, DavidThornton, Malcolm
Meyer, Sir AnthonyThurnham, Peter
Miller, HalTownend, John (Bridlington)
Mills, IainTownsend, Cyril D. (B'heath)
Mitchell, Andrew (Gedling)Tracey, Richard
Monro, Sir HectorTredinnick, David
Montgomery, Sir FergusTrotter, Neville
Morris, M (N'hampton S)Twinn, Dr Ian
Morrison, Hon C. (Devizes)Waddington, Rt Hon David
Moss, MalcolmWakeham, Rt Hon John
Moynihan, Hon C.Waldegrave, Hon William
Mudd, DavidWalden, George
Neale, GerrardWalker, Bill (T'side North)
Nelson, AnthonyWaller, Gary
Neubert, MichaelWalters, Dennis
Nicholson, David (Taunton)Ward, John
Nicholson, Miss E. (Devon W)Wardle, C. (Bexhill)
Onslow, CranleyWarren, Kenneth
Oppenheim, PhillipWatts, John
Page, RichardWells, Bowen
Paice, JamesWheeler, John
Patnick, IrvineWhitney, Ray
Patten, Chris (Bath)Widdecombe, Miss Ann
Pawsey, JamesWiggin, Jerry
Peacock, Mrs ElizabethWilshire, David
Porter, Barry (Wirral S)Winterton, Mrs Ann
Porter, David (Waveney)Wolfson, Mark
Portillo, MichaelWood, Timothy
Powell, William (Corby)Woodcock, Mike
Price, Sir DavidYoung, Sir George (Acton)
Raffan, Keith
Raison, Rt Hon TimothyTellers for the Ayes:
Rathbone, TimMr. Tristan Garel-Jones and
Redwood, JohnMr. Alan Howarth.

NOES

Abbott, Ms DianeHarman, Ms Harriet
Adams, Allen (Paisley N)Haynes, Frank
Allen, GrahamHeffer, Eric S,
Alton, DavidHenderson, Douglas
Armstrong, Ms HilaryHinchliffe, David
Ashdown, PaddyHogg, N. (C'nauld & Kilsyth)
Ashley, Rt Hon JackHome Robertson, John
Ashton, JoeHowarth, George (Knowsley)
Banks, Tony (Newham NW)Howell, Rt Hon D. (S'heath)
Barnes, Harry (Derbyshire NE)Hoyle, Doug
Barron, KevinHughes, Robert (Aberdeen N)
Battle, JohnHughes, Roy (Newport E)
Beckett, MargaretHughes, Sean (Knowsley S)
Beggs, RoyHughes, Simon (Southwark)
Benn, Rt Hon TonyIllsley, Eric
Bennett, A. F. (D'nt'n & R'dish)Ingram, Adam
Bermingham, GeraldJohn, Brynmor
Blair, TonyJones, Barry (Alyn & Deeside)
Boateng, PaulJones, Ieuan (Ynys Môn)
Bradley, KeithJones, Martyn (Clwyd S W)
Bray, Dr JeremyKennedy, Charles
Brown, Gordon (D'mline E)Kinnock, Rt Hon Neil
Brown, Nicholas (Newcastle E)Kirkwood, Archy
Bruce, Malcolm (Gordon)Lambie, David
Buchan, NormanLamond, James
Buckley, GeorgeLeighton, Ron
Caborn, RichardLestor, Miss Joan (Eccles)
Callaghan, JimLewis, Terry
Campbell-Savours, D. N.Litherland, Robert
Clark, Dr David (S Shields)Livingstone, Ken
Clarke, Tom (Monklands W)Livsey, Richard
Clay, BobLloyd, Tony (Stretford)
Clelland, DavidLofthouse, Geoffrey
Clwyd, Mrs AnnLoyden, Eddie
Cohen, HarryMcAllion, John
Coleman, DonaldMcAvoy, Tom
Cook, Robin (Livingston)McCartney, Ian
Corbett, RobinMacdonald, Calum
Corbyn, JeremyMcFall, John
Cousins, JimMcKay, Allen (Penistone)
Cox, TomMcKelvey, William
Cryer, BobMcLeish, Henry
Cunliffe, LawrenceMcTaggart, Bob
Cunningham, Dr JohnMadden, Max
Dalyell, TarnMahon, Mrs Alice
Darling, AlastairMarek, Dr John
Davies, Ron (Caerphilly)Marshall, David (Shettleston)
Davis, Terry (B'ham Hodge H'I)Marshall, Jim (Leicester S)
Dewar, DonaldMartin, Michael (Springburn)
Dixon, DonMartlew, Eric
Dobson, FrankMaxton, John
Doran, FrankMeacher, Michael
Dunwoody, Hon Mrs GwynethMichael, Alun
Eadie, AlexanderMichie, Bill (Sheffield Heeley)
Eastham, KenMillan, Rt Hon Bruce
Evans, John (St Helens N)Molyneaux, Rt Hon James
Ewing, Harry (Falkirk E)Moonie, Dr Lewis
Fatchett, DerekMorgan, Rhodri
Fearn, RonaldMorley, Elliott
Field, Frank (Birkenhead)Morris, Rt Hon A (W'shawe)
Fields, Terry (L'pool B G'n)Mowlam, Mrs Marjorie
Flannery, MartinMullin, Chris
Flynn, PaulMurphy, Paul
Foster, DerekNellist, Dave
Foulkes, GeorgeOakes, Rt Hon Gordon
Fyfe, Mrs MariaO'Brien, William
Galbraith, SamuelO'Neill, Martin
Galloway, GeorgeOrme, Rt Hon Stanley
Garrett, John (Norwich South)Parry, Robert
Garrett, Ted (Wallsend)Patchett, Terry
George, BrucePike, Peter
Godman, Dr Norman A.Primarolo, Ms Dawn
Gordon, Ms MildredQuin, Ms Joyce
Gould, BryanRadice, Giles
Grant, Bernie (Tottenham)Randall, Stuart
Griffiths, Nigel (Edinburgh S)Redmond, Martin
Griffiths, Win (Bridgend)Rees, Rt Hon Merlyn
Grocott, BruceReid, John
Hardy, PeterRichardson, Ms Jo

Roberts, Allan (Bootle)Taylor, Mrs Ann (Dewsbury)
Robinson, GeoffreyTaylor, Matthew (Truro)
Rogers, AllanThomas, Dafydd Elis
Rooker, JeffThompson, Jack (Wansbeck)
Ross, Ernie (Dundee W)Turner, Dennis
Rowlands, TedVaz, Keith
Ruddock, Ms JoanWall, Pat
Sedgemore, BrianWallace, James
Sheerman, BarryWalley, Ms Joan
Sheldon, Rt Hon RobertWarden, Gareth (Gower)
Shore, Rt Hon PeterWareing, Robert N.
Short, ClareWelsh, Michael (Doncaster N)
Skinner, DennisWigley, Dafydd
Smith, Andrew (Oxford E)Williams, Rt Hon A. J.
Smith, C. (Isl'ton & F'bury)Williams, Alan W. (Csrm'then)
Smith, Rt Hon J. (Monk'ds E)Wilson, Brian
Smyth, Rev Martin (Belfast S)Winnick, David
Snape, PeterWise, Mrs Audrey
Soley, CliveYoung, David (Bolton SE)
Spearing, Nigel
Steinberg, GeraldTellers for the Noes:
Strang, GavinMr. Frank Cook and
Straw, JackMrs. Llin Golding.

Question accordingly agreed to.

I beg to move amendment No. 3, in page 2, line 26, leave out `islands'.

With this we may take the following amendments: No. 5, in clause 2, page 3, line 26, at end insert—

'(7A) Work which would (apart from this subsection) fall within a defined activity shall not do so if it is carried out on or in connection with the carrying out of a defined activity on an island in relation to which the number of persons for the time being registered as being entitled to vote at a local government election by virtue of being resident therein shall be less than 1000.'.
No. 6, in clause 6, page 5, line 30, at end insert—
'(6) The Secretary of State may by order provide that a local authority may carry out functional work which falls within a defined activity without the conditions mentioned in subsection (1) above having been fulfilled if it appears to him that the functional work will only be carried out on or in connection with the carrying out of a defined activity on an island situated within an islands area in Scotland.'.

I know that my hon. Friend the Member for Western Isles (Mr. Macdonald) is acutely concerned about the impact that the legislation is likely to have on the services provided by his local authority for his constituents. No doubt he will be seeking to catch your eye presently, Madam Deputy Speaker.

The Bill will require local authorities to go through an elaborate set of procedures, designed by the Government to enable private contractors to muscle in on local authority services. It will be a wasteful and harmful exercise in many respects, but it will be downright absurd in its application to remote rural areas, particularly Scotland's three island areas. The islands councils will be required to advertise contracts, invite contractors to submit tenders and maintain a whole range of detailed records of those procedures. For a range of services on the islands it would be a waste of time. There is not the remotest likelihood of more than one contractor offering to do the work, and in many cases no contractor will tender, so the islands council will be compelled to go through procedures laid down in the Bill before continuing to provide the services that it has in the past.

7 pm

It might be helpful to give the House one or two illustrations of the sheer idiocy of the Government's proposals for these areas. For example, the Scottish Office proposes to require the Shetland islands council to put its school and welfare catering out to competitive tender by October 1989. That will include the provision of 10 meals a day on the island of Fair Isle, nine on Fetlar, seven on Foula and four on the island of Papa Stour. Does anyone seriously think that a catering contractor will parachute four hot dinners a day on to the island of Papa Stour?

Does the hon. Gentleman agree that, as Papa Stour does not have a proper landing strip, those meals will have to be parachuted in and that in adverse weather conditions that may be impossible?

I am worried about the hon. Gentleman's constituents on Papa Stour because they could go hungry for days on end as a consequence of this legislation.

The hon. Member for Welwyn Hatfield (Mr. Evans) has an interest in refuse collection. Will Pritchards want to take over the islands' five refuse vehicles that operate in the massive area between Sumburgh Head in the south and the north of Unst in the north? I am glad to see the hon. Member for Welwyn Hatfield in his place. Will he want to take over the tractors and trailers that serve as refuse collection vehicles on the islands of Bressay, Foula, Fair Isle, the Skerries and Papa Stour?

The Orkney islands council will apparently have to put its refuse collection service out to competitive tender by April 1989. Interestingly, it has developed a refuse disposal service on some of its smaller islands in partnership with private contractors, without being compelled to do so by this silly legislation. That is how the service has been extended to the 74 households on Eday, 28 households on Flotta, 52 on North Ronaldsay and 39 on Papa Westray.

Does anyone seriously believe that Pritchards or any other contractor will bid to bring their refuse collection vehicles over from the mainland on ferries to those small islands and communities? I rather doubt that it will.

As I understand it, Orkney council has private refuse collection on the island of Westray while Skye and Lochalsh district council has contracted out its refuse collection on the island of Raasay and street cleaning at Glenelg. Is the hon. Gentleman aware that some small places in Scotland are contracting out services?

Not only am I aware of that—I mentioned it a moment ago. It is absurd that small contractors operating in those areas are to be confronted with competitive tendering. Does the hon. Gentleman seriously believe that anyone on those small islands will tender for those operations? This legislation does not make sense for the areas that we are considering.

Does my hon. Friend agree that the natives of Glenelg will be fascinated to hear that its street cleaning arrangements have been the subject of earnest debate in the great mother of Parliaments? Does he agree that, since time immemorial, local authorities have made common-sense arrangements, whether with the public or private sector, and operated in a non-doctrinaire way? The idiocy of this legislation is that it will introduce a doctrinaire factor, and non-political councils in places such as Glenelg or Raasay will be forced to make arrangements that are unsuitable for their needs.

My hon. Friend has considerable experience in communicating with people in those areas. If we are talking about the same Glenelg, I suspect that it may come as a surprise to its residents that the hon. Member for Sheffield, Hallam (Mr. Patnick) thinks that Glenelg is an island. —[Interruption.] It is always a pleasure to have the hon. Member for Dumfries (Sir H. Monro) present during these debates.

I move now to the experiences of the Western Isles islands council following the 1982 legislation on competitive tendering for road maintenance and gritting. I understand that on the island of Barra no contractor was willing to undertake this work. However reliable the Caledonian-MacBrayne ferries may be, I suspect that the people of Barra would not have been too happy about having to wait for a road gritter to come from Oban to clear the ice, so the council still provides that service.

Private contractors, farmers and similar people in places such as Sheffield, which the hon. Gentleman disparaged, contract out to the council for snow clearing and other services. When we discussed this matter in Committee, I gained the impression that Labour Members were saying that no services in Scotland could be privatised and that firms would not compete. The hon. Member for Glasgow, Cathcart (Mr. Maxton), who joined the Committee and then left it, said that these proposals were rubbish and typical of the Conservative party and that people in Scotland were not interested, yet my research has revealed that some small services in Scotland are contracted out.

I do not know how many times I must say this to make it clear to the hon. Gentleman. He served on the Committee and listened to these points being made over and over again. It has been traditional in remote rural areas of Scotland to operate services on a pragmatic basis. Where there are private contractors who can do the job well, they are doing so, and where it is necessary for local authorities to do the job they are doing so. It is absurd to require local authorities to go through the rigmarole of contracting out and advertising when it will not add to the sum total of human knowledge or provision of services.

The Montgomery committee, which the Government appointed to report on the government of the island areas of Scotland, specifically recommended that legislation should be subject to variation to take account of the special circumstances of island areas. This legislation is obviously not appropriate to the island areas, so why have the Government not paid any heed to the committee's recommendations?

There is an interesting precedent. In 1984 the Western Isles health board was exempted from a requirement to tender for domestic and catering services because it was considered unrealistic to do so.

The procedures in this part of the Bill represent a pointless and wasteful bureaucratic imposition on remote local authorities areas. Amendment No. 3 would exempt islands councils altogether; amendment No. 5 would exempt services on all islands with a population of less than 1,000 — I understand that that would cover a number of islands in the Strathclyde and Highland region, in addition to the Western Isles, the Orkney islands and the Shetland islands — and amendment No. 6 would allow the Secretary of State to exempt certain services on certain islands in the islands councils areas. I must confess that I do not have confidence in that degree of rationality on the part of the Secretary of State for Scotland.

The three amendments make broadly the same point to avoid the most absurd implications of this irrelevant legislation in the island areas of Scotland. I hope that the Minister will at least undertake to give this matter further consideration before the Bill is dealt with in the House of Lords. I hope also that we shall have some sensible legislation for our rural and island areas.

The hon. Member for East Lothian (Mr. Home Robertson) has forcefully illustrated the nonsense that could result if the Bill were enacted in its present form and applied without exemption to the islands areas of Scotland. As he stated, my amendments are somewhat different, but aim to tackle the same situation. Amendment No. 5 tackles the definition of defined activities and would take out of part I activities that are carried out in islands that have fewer than 1,000 local government electors. That is narrower in detail than the hon. Gentleman's amendment, although wider in that it would cover islands in Strathclyde, in the constituency of my hon. Friend the Member for Argyll and Bute (Mrs. Michie) and in the Highland region. However, my amendment would not include the mainlands of Orkney and Shetland.

I have no doubt that when the Minister replies—it is always useful to try to anticipate his reply—he will refer to the de minimis provisions. As I understand it, £100,000 is to be proposed as the gross sum. One assumes that that will be the gross sum for, for example, the provision of school meals throughout particular local authority areas. Therefore, it would not make allowances for the individual islands that must be served. As the hon. Member for East Lothian pointed out, in the case of the Shetland islands council, a small number of school meals have to be provided for each of a large number of islands. Therefore, it does not make sense to have competitive tender provisions as are now envisaged. The hon. Gentleman thought that the provision of four school meals on Papa Stour was perhaps a record. He overlooked the two pupils in the school of Graemsay on Orkney, which would also have to come under the provisions.

The hon. Gentleman has missed out the island of Papa Stronsay, which, if I remember rightly, has one person. The main vehicle back and forth in my day used to be the Government boat.

I know of the hon. Gentleman's native knowledge of my constituency. There is not a school on Papa Stronsay, but I confirm that if it has a population of one it will fall within the definition of amendment No. 5.

Obviously, we are dealing with services that are widely dispersed but delivered in small volume. In Shetland, although the cost of building cleaning for education and social work is not insignificant, being £450,000 and £250,000 respectively, the cost of the remainder, which is spread over 22 locations, amounts to only £89,500. If the Government do not accept any of the amendments that have been tabled, or any that may be put forward in another place, we will be asked to build up an enormous administration, which would place an enormous burden on the local authorities which prepare the detailed specifications. Inevitably, that administration will be more expensive in island and rural areas, as we must also consider the costs of transport and supervision.

We are being asked to do something which runs counter to what the Government are trying to achieve in the Bill, which is more efficient local administration. If we are to achieve that, some exceptions must be made. Again I am trying to anticipate arguments, but it could be argued that there should be one detailed specification, which could cover all the work in one islands council area. If that were proposed by the islands councils, I imagine that it would not be long before some contractor or potential tenderer suggested that the councils were making it more difficult for a contractor to put in a tender. Clause 7, after all, refers to
"the effect of restricting, distorting or preventing competition."
Amendment No. 6, which relates to clause 6, is of fundamental importance. In some respects it could be argued that it duplicates clause 2(8), which gives a general exempting power to the Secretary of State. Together with the islands councils, to which the hon. Member for East Lothian referred, I am anxious that there should be such a clause because of the recommendations of the committee that sat under the chairmanship of Sir David Montgomery. Although I am sure that the Minister will have heard the recommendations before, I repeat that the committee reported:
"We conclude that there may be circumstances in which Acts of Parliament should include a provision to allow the Secretary of State to vary their application to the island areas, and we recommend that such provisions should in future be considered in relation to all Scottish legislation at an early stage in its preparation."
7.15 pm

The Committee reported in April 1984. We waited a long time for the reply of the then Secretary of State for Scotland, the right hon. Member for Ayr (Mr. Younger), but in response to that recommendation he stated:
"I accept recommendation 4, and will consider for future legislation whether it would be appropriate to ask Parliament to approve a power to vary the application of particular provisions in specified areas."
We are asking that the present Secretary of State practise what his predecessor preached.

There is a case for treating the island areas differently because of the cost and administrative burden and the possible expansion of the labour force. If a council is, within its administration, to encompass the client as well as the provider of services, the islands authorities feel strongly that an unreasonable burden will be placed on them. When the Minister replies, I shall be grateful if he will advise the House on what consideration has been given to the recommendations of the Montgomery report.

The power would be permissive. Under my amendment, the islands councils would have to justify the case for each island and each activity. As has already been stated, refuse collection on the six Orkney islands of E day, North Ronaldsay, Papa Westray, Stronsay, Westray and Flotta is already performed privately. In those cases, the local authority maintains that it has used good, sound common sense. The authority has considered each island, its circumstances and the activity or function to be performed and has used common sense. Where it has been appropriate and sensible to use a private operator, it has done so. Where it is far more sensible for the local authority to carry out the function, it has done so. There have not been any ideological barriers to introducing private contractors if that has made sense.

If the Government do not make any concessions, they will be saying that we should create a huge bureaucracy to achieve what common sense could achieve far more practically. I hope that the Minister will make a constructive response and be prepared to move an amendment, possibly in another place, or at least meet representatives of the island authorities to discuss such matters before the Bill goes to another place.

As the House is to consider many amendments tonight, I shall try to make my remarks as brief as possible. In this amendment opposition Members do not oppose the general principle of the Bill which, as we understand it, aims to force local authorities to put out to tender various defined activities so that the result is a more cost-effective provision of those activities. However, in amendment No. 3 we seek to raise the question whether that principle can sensibly be applied to an area such as that covered by the islands authorities in Scotland.

I draw the Government's attention to the fact that the Audit Commission's occasional paper No. 3, published in February 1987, and entitled "Competitiveness and the Contracting out of Local Authorities' Services", stated:
"the assessment of long-run competitiveness will need to be faced on the facts of the local situation rather than on generalized assertions about the relative advantages of the private sector and direct labour".
In other words, the Audit Commission emphasised the importance of the local situation in assessing the value of the general principle that the Bill seeks to promote. The importance of the local situation is nowhere more apparent than in the case of the islands authorities.

The Montgomery report, which has already been mentioned, emphasised the need for a special and specific islands council perspective in local authority matters. My hon. Friend the Member for East Lothian (Mr. Home Robertson) said that that point seemed to be implicitly recognised by the Government in 1984 when they specifically excepted the islands authorities from the provisions of the National Health Service circular in 1983 which required domestic and catering services in the NHS to be put out to tender. That seemed to be an implicit recognition of the unique situation of the islands authorities and of the fact that that principle is not applicable to them.

The islands authorities are unique because they provide a complete range of local government services for a relatively small population over a relatively large geographical area. My constituency corresponds to the boundaries of the islands' authority for the Western Isles. It has a population of over 30,000 and an area of some 300,000 hectares. To provide the complete range of services for a small population over such a large geographical area, local authorities have developed a unique structure which, above all, emphasises the virtues of integration and flexibility.

Many of the defined activities contained in the Bill are indistinguishable from other local authority activities. For example, the department of environmental health and consumer protection deals with an entire range of cleansing services — not only the defined activities contained in the Bill, but items such as derelict vehicle disposal, waste disposal, looking after the abattoir at Stornoway, public conveniences, and so on. In doing that, it eliminates lines of demarcation within the department, allowing those various activities to share management supervision, personnel, and even, in some cases, plant and office space. By doing that, it achieves efficiency and low costs across the board. Despite the immense geographical difficulties in providing a service such as cleansing in an area such as the Western Isles, the cost of cleansing per head is one of the lowest in the country; that testifies to the success of the local authority's methods in providing those services.

What will happen if, as a result of the Bill, artificial divisions are introduced between defined and non-defined activities? As has been pointed out, there will be a loss of administrative efficiency and the introduction of artificial lines of demarcation. If the council, as a result of tendering, lost control over some defined activities, the remaining activities would be less cost-effective because of the fixed costs of plant, buildings, manpower and so on. Costs presently shared between all those activities would then be shared between fewer activities, so that costs per unit of work would increase.

On the other hand, if the council were successful in the tendering process and the defined activities remained in-house, there would be an even more ridiculous situation. Within the present tightly integrated streamlined structure, internal trading organisations would be set up, with vertical splits and demarcations being created, not only between the defined and other activities, but within the defined activities. The staff involved in the preparation, submission and operation of tenders would have to be separated from the staff in charge of the specification and the appraisal and supervision of contracts. That would lead to a grave loss in efficiency.

A further loss would be the virtue of flexibility, which presently pertains to the way in which the islands council operates in tackling the specific problems of the area. One problem is not moving workers around from job to job, but rather moving them around a large geographical area. That has been tackled by having great flexibility within the work force so that when problems arise workers can be easily shifted around to tackle them. Such flexibility is of the essence in providing good services in a small, multipurpose authority.

When those services are in-house, such flexibility is easy because staff who are directly under one command can respond immediately to new instructions to meet new problems and can be redirected. That ease of solving problems would fall by the wayside if the defined activities were contracted out and there would be a much less flexible system. Even small unexpected problems would cause communications problems and larger problems might mean that contracts would have to be renegotiated.

That highly prized virtue of flexibility within the councils will be lost. For example, the Western Isles council prizes the fact that its repair and maintenance section has sufficient flexibility to respond immediately, particularly in emergencies, and need maintain only a minimum physical fleet. The loss of that flexibility will mean the inevitable increase of its fleet, which, in turn, will lead to higher costs for the local authority.

Further costs will accrue because, given the present streamlined nature of the islands authorities, drawing up detailed specifications for the proposed defined activities which are to be contracted out will involve the employment of new personnel. They will either have to be hired or perhaps even contracted out. They will give rise to the absurd situation whereby the drawing up of contracts will have to be contracted out simply because the authority runs such an efficient and streamlined ship at present. The supervision of contracts will almost inevitably require more personnel, which will also be inefficient.

Because of the peculiar circumstances of the islands, the council employs some specialised equipment — a point not mentioned so far — which has been obtained at considerable cost and is intended to suit the particular needs of the islands. One humble example is the rubbish bins in the Western Isles. So many of the households are set so far back from the main road that it would be inefficient for the local authority to take its rubbish trucks up every small private road. Special bins are provided at considerable expense to every householder on the island. They are equipped with wheels so that householders can wheel them down to the main road, thus providing a more efficient collection of rubbish. The system has been highly successful. Other examples of such specialised equipment abound.

What will happen to such specialised equipment as part of the tendering process? If the council has to dispose of such equipment, it will be a grave financial loss to the ratepayers who have sunk capital into the purchase of that equipment. If it is retained, but ends up being under-utilised because of the tendering process, it will again be a grave loss.

The final absurdity of imposing the provisions of the Bill on the islands authorities is that it is all likely to be for naught. It is likely to be a mere academic exercise because there are grave doubts about whether suppliers exist within such a confined market to provide the kind of services that are provided by the council.

After all the administrative work that has gone into the contracting-out process and the costs involved, there will be no change in the provision of services. It will end up being a gigantic waste of money. The islands authorities are in many ways model authorities, even according to the Government's own lights. They are non-political authorities. They have followed Government guidelines year after year. They are cost-efficient and have flexible and integrated work practices. The Bill will impose financial and administrative burdens, without any corresponding rewards, upon the authorities. It will increase their overheads and unit costs and will impair the efficient use of their manpower and physical resources. It will destroy the virtues of flexibility and integration that are so crucial in the islands context and will diminish their ability to deliver quality services.

I beg the Government, therefore, to listen to the arguments made by the Opposition, to change the Bill before it reaches another place, to follow the precedent set by the Scottish Home and Health Department in 1983, to stop the present nonsense and to exempt the islands authorities.

7.30 pm

The Parliamentary Under-Secretary of State for Scotland
(Lord James Douglas-Hamilton)

The hon. Members for the Western Isles (Mr. Macdonald) and for Orkney and Shetland (Mr. Wallace) have argued ably on behalf of their constituents. I wish to speak to three of the amendments, which seek varying degrees of exemption from the competitive process in respect of the islands and Scottish island authorities.

I am convinced of the need to include all local authorities in the scope of the Bill, including the Scottish islands authorities. The only good reason for any exemption is when the cost of compliance with the competition requirements outweighs the possible benefits from the competitive process. That is, however, the purpose of the de minimis level, which the Scottish consultation paper suggested should be set at £100,000 of expenditure a year on any given service. The hon. Member for Orkney and Shetland mentioned one service which, if I heard him correctly, has been worth £89,500. That would be excluded under the terms of the consultation document.

I think that the Minister misunderstood me. That figure was for building cleaning. If one excludes educational and social services buildings, the rest, which was spread over 22 locations, was worth £89,500. However, the global sum is far in excess of £100,000,

If the cost of compliance with competition outweighs the benefits of the competitive process, that will be taken into account. The representations made by hon. Members on behalf of their constituents and those sent in by the islands council will be considered carefully with all the other responses, which are due by 31 January. It is reasonable to stipulate that any service involving expenditure above a given exemption level should be exposed to the competitive process, wherever that service is provided.

Does the Minister have any estimate of the costs or the manpower burdens to be placed on the islands councils as a consequence of the Bill? Does he accept the arguments put forward by the hon. Member for the Western Isles (Mr. Macdonald) that this would add extra burdens to the islands councils?

That is why we put out a consultation document, and we shall weigh with the utmost care every representation sent in. They must be in by 31 January, so there is plenty of time. The facts speak for themselves and they will be considered with great care.

There is no need for competition to be confined to urban areas and examples can be found in remote parts of the country. Orkney islands council, for example, uses private contractors in the provision of a refuse collection service for its distant islands. The Government are fully aware of the special circumstances in which the islands councils operate, but private enterprise in the islands has to operate in the same circumstances and there is really no case for exemption for the islands authorities alone, on the grounds that it is more difficult or expensive to provide services in remote and isolated areas.

Are the refuse services in Orkney run by private contractors as a result of competitive tendering? The director of administration and legal services said in a recent letter to me:

"the council considers all the factors relating to each Island before choosing the best solution for each Island so that the most efficient service is provided to the ratepayers at the most economical cost."
Was there competitive tendering in the cases to which the hon. Gentleman has referred?

The direct labour organisation was not considered for refuse collection in the Orkneys. In almost all cases, the exception has been those islands with tiny populations; for example, in North Ronaldsay, which has 14 households, where there were more than two tenderers in the private sector. In each case the private contractor was a local licensed haulage contractor.

The hon. Member for the Western Isles made a point relating to mainland Orkney rather than to the distant islands. After the reorganisation of local government, the new islands council put its refuse collection out to tender. It advertised nationwide, but there were no suitable applicants and the contract was awarded to the DLO. What the hon. Gentleman said about the matter being academic may turn out to be right, but I give him an assurance that the representations sent in by the islands council will be considered with great care.

It is the Government's firm view that the opening up of services to competition can bring substantial savings and improvements in the standard of service, but the Government's policy is not enforced privatisation. The legislation will impose fair competition between local authorities' own work forces and the private sector. If an authority, including any of the three island authorities, can provide the best and cheapest service, it should continue to do so, but if the private sector can offer a better deal for the ratepayers and the consumers of the service, the local authorities should choose that option. The crux of the matter — whether the private sector can compete—can be established only by testing the market. Without that test, authorities cannot be sure that their present operation is the best available.

With regard to amendment No. 5, it does not matter how small the population of any one island is. The purpose of the Bill is to subject those local authority activities defined in the Bill to the competitive process. The proposal is, as I have said, that there is only a case for exemption in respect of any de minimis provision applied to the whole of any local authority's activity. There is no case in support of selective exemption within the authority for specific groups or islands.

With regard to amendment No. 6, nor is there any need for a power which would enable the Secretary of State to choose not to apply the competitive process to any particular island. This is the point about the Montgomery report. The Secretary of State already has the power under clauses 6(3) and 15(6) to make regulations applying competition to such authorities and with such exceptions as he may determine, and that is quite sufficient. The existence of the power does not mean that competition will not extend to the Scottish islands other than any exemption that they may gain by way of a de minimis provision. I assure Opposition Members that the representations from their constituency councils will be carefully considered.

The Minister has read that brief before. I do not think that he believed it then, and I do not think that he believes it now. Frankly, it is a load of rubbish. It is absurd to suggest that any useful purpose can be served by going through the competitive tendering exercise for running a tractor and trailer on the island of Papa Stour to clear the refuse from households in that area or to provide the four school meals that are provided every day on the island. I do not think that the Minister believes that nonsense. We recognise that he must go through the exercise to remain part of the ludicrous Government. This proposal is one of the sillier manifestations of the Conservative party's policy.

I shall not give way.

We are not satisfied with the Minister's explanation. I should like to hope that the Government will heed the representations that have been made to them by the Orkney, Shetland and Western Isles councils. I have no doubt that the islands councils will clearly explain how irrelevant this proposal is. I cannot say that we have much cause for confidence in the minority administration in the Scottish Office.

Amendment negatived.