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Local Government Bill

Volume 328: debated on Wednesday 24 March 1999

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As amended in the Standing Committee, further considered.

New Clause 6

>Endorsement Of Council Tax By Referendum


(1) Schedule 1 shall not apply when the council tax proposals of a relevant local authority have been endorsed in a referendum of electors registered within the local authority area.
(2) A proposal shall be deemed to have been endorsed if it is supported by a simple majority of voters where at least 50 per cent. of the electorate have voted.'—[Sir Paul Beresford.]

Brought up, and read the First time.

4.23 pm

I beg to move, That the clause be read a Second time.

With this, it will be convenient to discuss the following amendments: No. 98, in clause 28, page 15, line 37, after 'regulation', insert 'and limitation (capping)'.

No. 1, in page 15, line 38, at end add
'but shall cease to apply on 1st April 2005.'.

No. 101, in clause 29, page 16, line 14, leave out `authorities or'.

No. 102, in page 16, line 15, after 'authority', insert
`and the Greater London Authority'.

No. 103, in page 16, line 17, at end add
`provided that any criterion referring to an authority's budget requirement for the financial year beginning on 1st April 1998 shall be deemed to refer to the greater of the budget requirement and the amount of the authority's Standard Spending Assessment for that financial year.'.

No. 105, in page 16, line 37, leave out 'authorities or'.

No. 106, in page 16, line 37, after 'authority', insert
`and the Greater London Authority.'.

No. 84, in page 16, line 39, leave out subsection (7).

No. 85, in page 17, line 8, leave out subsection (11).

No. 42, in schedule 1, page 19, line 26, at end insert—
`() must include the principle that if the budget requirement is set below the total Standard Spending Assessment for an authority, it shall not be regarded as excessive.'.

No. 43, in page 19, line 26, at end insert—
`() must include the principle that if the budget requirement is set within twelve and one half per cent. in excess of an authority's total Standard Spending Assessment, it shall not be regarded as excessive.'.

No. 108, in page 19, line 33, at end insert—
'(c) it is between the Council Tax Band D for the authority and for the other authorities in its category of authority'.

No. 113, in page 19, line 34, leave out subsection 5.

No. 109, in page 19, line 34, leave out 'If'.

No. 111, in page 19, line 34, after 'State', insert 'will determine'.

No. 110, in page 19, line 34, leave out 'determines'.

No. 114, in page 19, line 43, leave out
`If he does not determine such categories,'.

No. 115, in page 20, line 2, after 'relevant', insert 'and is reasonable'.'

No. 117, in title, title, line 3, after 'regulation', insert `and limitation (capping)'.

Unusually perhaps, I shall start by speaking to the amendments, because they set the scene for the new clause. They all relate to two different forms of capping in the Bill—the crude and universal council tax benefit subsidy capping and the subjective, or selective, capping that was so proudly introduced by the Secretary of State earlier this year.

On Second Reading, I pointed out that the Bill, as far as it has been decorated for Labour Back Benchers, has a sugar coating of best value and removal of compulsory competitive tendering, but its core is an extremely bitter and unpleasant pill. The capping rules and regulations in the Bill are more unpleasant, more manipulative and more vicious than anything ever proposed by a Conservative Secretary of State, but, as Liberal Democrat Members have pointed out, they may be in the hands of a Conservative Secretary of State post-election.

I am tempted to suspect that the restriction of discussion on the Bill by the guillotine motion may be seen as a plus point for the Labour Whips because I am convinced that not only people in local government but many Labour Back Benchers are opposed to this double form of capping—or they would be, given half a chance. They recognise the measure as a manifesto about-turn—their manifesto, their about-turn.

No amount of scurrying and huffing and puffing by the Minister for Local Government and Housing in Committee covered the fact that the council tax benefit subsidy limitation is a crude, universal form of capping. Worse than that is the capping of a number of local authorities at a point below the standard spending assessment level. The secondary capping is selective capping; the powers have been renamed reserve powers.

The Department's own explanatory note makes clear just how extensive those powers are in comparison with the current arrangements. There are four such powers. First, the Secretary of State
"may designate the authority in-year"—
meaning the current financial year. Secondly—this is an additional power—the Secretary of State
"may designate the authority for the following year".
Thirdly—this is another additional power—he
"may set a notional budget requirement to be used for the purposes of comparisons instead of the actual budget requirement to decide if budget requirements are excessive".
Fourthly—another additional power—he
"may designate the authority over a number of years, starting in-year or the following year."

Those powers are more excessive than any that have ever been considered, which is why amendments Nos. 98 and 115 were tabled. The amendments make it clear that the Bill provides for a very heavy-handed form of double capping. No doubt, for spin-doctoring reasons, amendments Nos. 98 and 117 will be rejected, but I can see no reason for rejecting them other than the fear of losing face.

Is there anything in the Bill to prevent a recurrence of what happened in Derbyshire this year? The county was capped for £1 million on a budget of £470 million, and it cost £320,000 to change that. It was the tightest cap ever imposed on a local authority.

I thank my hon. Friend for reminding us of that ludicrous situation, which raised a smile, although it was expensive for the people to whom it applied. Under the Bill, however, they could experience three further versions.

Amendment No. 103 refers to council tax benefit subsidy capping, but to only one aspect of it—perhaps the most insidious aspect. A number of local authorities will be capped at a level set below SSA. They are the authorities that set their budgets for 1998–99 below SSA. I realise that the SSA for 1999–2000 has come to mean what Ministers wish it to mean. The local government finance report states that
"the calculation makes use of information reflecting demographic, physical and social characteristics of each area."
That means whatever Ministers wish it to mean at the time. However, for the year 1998–99 the same report defined the SSA as
"representing an appropriate level of budget requirements to provide a standard level".
That means that, having set an SSA that indicates the level of services that they expect and by setting a capping level for council tax benefit subsidy below the SSA, the Government are forcing local authorities to provide substandard services.

For many years the SSA has been accepted as a floor below which various Secretaries of State have sought not to push local government. Now this Labour Government have done precisely that in the case of a number of authorities, including some quite poor ones, such as Brent, Newham and Ealing.

As I made clear in Committee, I oppose the regulations, but I am particularly opposed to the Government's outrageous attempt to hit local authorities by fixing their benefit subsidy level below SSA. Not only will the subsidy limitation mean that the nearly poor are paying for the poor; in the case of some local authorities, the setting of the level below SSA may well impinge to a small degree on the financing of the services that people require and expect. The amendment is designed to bring back the floor below which the Government cannot go—the floor that has always been there, and ought to be there.

4.30 pm

I now refer to amendments Nos. 102, 101, 105, 106, 109, 110, 111 and 114. As I have said, perhaps the most dubious aspect of the capping under schedule 1 is that it allows the Secretary of State to be extensively selective. By that, I mean that the Secretary of State may, if he or she wishes, choose every local authority for capping, or just one.

Careful perusal of the schedule will reveal that the justification for the selection could be genuine, arbitrary or even political. It is also possible for the Secretary of State to pick addictively on a particular authority, or a number of particular authorities, over one or a number of years.

The intention of the amendments, which may be technically flawed, is to impress on the Secretary of State and the House the subjectivity of the schedule. I suspect that the Minister will tear the amendments apart on technical grounds, but, if the House is aware of the subjectivity, it is possible for changes or amendments at a later stage—in another place, presumably—to return some reasonableness to these exceptionally heavy-handed and subjective capping rules.

Amendment No. 108 would require the Secretary of State, when considering whether to impose capping on a local authority, to compare that authority with other authorities in the same category. The intention is to bring some sense to a potentially unfair approach to specific local authorities.

The response of the Minister of State to the Liberal Democrat-inspired debate on council tax increases on Monday added to my concern. The right hon. Lady was on full bellowing form—her voice was raised and she thumped the Table to emphasise her points.

I specifically refer to column 45 of the Official Report of 22 March. The Minister of State selectively attacked three Conservative councils in London. She explained that the top three increases, in percentage terms, in council tax in London were in Conservative Kensington and Chelsea, Conservative Westminster and Conservative Wandsworth. In percentage terms, she was right. She went on to contrast them with other councils, specifically naming Labour Islington, Greenwich, Hackney and Lambeth, and to say that they were cutting council tax.

If that deceitful approach to the reality of council tax bills as they land on the doormats of London residents is an indication of the way in which the Minister of State proposes to select councils for capping, we will definitely need some realistic changes in the Bill.

It is worth putting the matter into perspective. In mentioning the council tax increases of those three Conservative authorities in percentage terms, the Minister of State paid no regard to the reality of the bills as they were handed out. In pure money terms, at band D, the increases in those three authorities' council tax were average or below average in London, but if one lists the actual council taxes at band D, the four lowest in London are in those three Conservative authorities, plus the City of London.

What is more, in terms of the average council tax paid by residents, Wandsworth council continues the trend of the past 20 years—for two decades, it has had the lowest average council tax not only in London in the country—and that despite the manipulation of the SSA, which has meant that the council has had its centrally distributed funds for the financial year cut by £3 million.

I am bearing in mind the best value aspects of the Bill when I say that Wandsworth council has a reputation for quality services, as shown by the fact that, between 1996 and 1998, it collected the greatest number of charter marks. The council always does well in the Audit Commission performance indicator charts, which will be used for best value.

Perhaps the final accolade is the fact that Wandsworth is a Conservative council in an inner-city area and has a strong majority. It has been backed year after year by popular vote—a popular vote that is given to it because of the combination of its ability to produce quality services, best value services and value for money.

In Monday's debate, the Minister added to her iniquitous attacks by singling out for praise Islington, Greenwich and Hackney. Curiously, she praised them because they had reduced council tax. The reality is that, using her—percentage—terms, they reduced council tax by less than 1 per cent. The situation is even more appalling when one realises that band D council tax for Conservative Westminster and Wandsworth is £230 and £250 respectively, whereas it is £670 for Hackney, £763 for Greenwich and a staggering £792 for Islington. All that those councils could manage was a tax reduction of less than 1 per cent. on taxes that are three times higher than those of the councils that the right hon. Lady chose to criticise.

The point of amendment No. 108 is quite clear. If a Labour Secretary of State decides to pick on Westminster or Wandsworth—as the Minister did on Monday—or on any other local authority, he or she will be required to compare the bills on the doorsteps of residents of that authority with those of other similar authorities. Specifically, Westminster and Wandsworth compare well with other authorities on quality of services, and on the fact that they managed to produce those services at low cost to their residents.

Amendment No. 115 would add the words "and is reasonable" to subsection 52B(7)—which, currently and quite astoundingly, states:
"In determining categories of authorities for the year under consideration the Secretary of State shall take into account any information he thinks is relevant."
The subsection must be brought back within reason; hence, the amendment to add the words "and is reasonable".

Hon. Members will see that that catch-all subsection would enable the Secretary of State to be selective, if he or she wishes, in an extreme and unreasonable manner. It would be quite possible, for example—to develop the point that I was making on the previous amendment—for the Secretary of State to select any authority whose name began with "D" and ended in "ty", or began with "W" and ended in "th".

Amendments Nos. 108 and 103 were tabled specifically to be helpful amendments, and are intended to bring a little fairness and a tiny bit of reasonableness to a Bill which currently would enable the Secretary of State unreasonably to savage individual local authorities as he or she saw fit.

In Committee, the hon. Member for Milton Keynes, North-East (Mr. White) described an interesting situation in which his local authority decided to set council tax by reference to a referendum of local people. I realise that such an approach could be heavily flawed, according to the nature of the question and the composition of the electorate—whether it comprises those who pay and receive, only those who pay, or only those who receive.

Such referendums, however, offer an interesting prospect. If the Secretary of State came blundering in, treading on the sensibilities of local people—who might want and could then vote for specific services, at a specific price, performed in a specific manner, and, therefore, at a specific cost—the Secretary of State would have to leave that local authority alone. In essence, assuming that it was a fair and above-board referendum in which the cases for and against were quite clearly put and more than 50 per cent. of the potential electorate voted, the electorate's wishes would have to be heeded, over and above the Secretary of State's desire to step in and apply capping. I am sure that most hon. Members would think that such a suggestion is not unreasonable, subject to the establishment of various standards.

Has my hon. Friend noticed that, such is the Labour party's commitment to local government and interest in the Bill, that there is not one Labour Back Bencher in the Chamber?

Yes, I had noticed that. I hope that they are watching the debate on television. Much of what we are saying today hurts them. It relates to the very substance of the belief of most Labour Back Benchers. I hope that they are watching so that they can ponder on that when they come to vote.

In summary, this group of proposals, including new clause 6, seeks, in a generally helpful way, to bring some reasonableness and reality to the vicious and bitter core of the Bill.

I shall speak to amendments Nos. 1, 84 and 85. I shall also deal briefly with amendments Nos. 84 and 85.

Amendment No. 84 removes the subsection on commencement. It appears to have the same effect as our amendment No. 39, tabled in Committee, in that it delays for a year the implementation of council tax benefit subsidy limitation. Amendment No. 85 seeks to remove the Government's amendment, also tabled in Committee, introducing modifications for the financial year 1999–2000. Both amendments concern the iniquitous council tax benefit clawback proposals.

The council tax benefit subsidy limitation scheme is designed to limit the amount of council tax benefit subsidy paid to local authorities if they levy a council tax increase that the Government regard as excessive, irrespective of whether the increase was due to the local authority or to adverse changes in Government grant. The penalty works on a sliding scale: a council that increases its bill by 5 per cent. will have to find one eighth of the additional benefit bill, while one that increases its bill by 8 per cent. will have to find the entire additional amount. As a result, bills will have to rise still further, bringing more people into the benefit system. Councils with a very low proportion of people on council tax benefit will experience minimal effects, but for those with a large number of people on council tax benefit the impact will be extensive, forcing them to impose high council tax increases or to cut services or both. It will result in the poorest areas being hit the hardest and in council tax payers meeting the cost of national welfare benefits.

The scheme may result in an authority paying at or even below the standard spending assessment—which is what the Government consider it needs to spend to provide a standard level of service—and still losing council tax benefit subsidy. Although parish and town councils are not included in the scheme, the effects of their decisions may lead to districts losing council tax benefit subsidy. Another effect is that council tax collection and the collection of poll tax arrears in one year may affect an authority's council tax benefit subsidy limitation threshold in a subsequent year.

My hon. Friend referred to the fact that the precepts that parishes might set can affect district councils. Does he know whether the Government have made further progress in tracking down the parish councils, as I understand that in Committee they were unable to supply a list?

I hope that the Minister will be able to respond to the important question posed by my hon. Friend.

The view of the Labour-dominated Local Government Association is that even if, despite the effects that I have mentioned, the Government still go ahead with the scheme, it should be postponed for a year. That is the purpose of amendments Nos. 84 and 85.

Is the hon. Gentleman aware that the chairman of the Local Government Association, the former Labour leader of Newcastle city council, Sir Jeremy Beecham, commented that the council tax benefit subsidy regime would

"mean the nearly poor paying for the really poor"?

As I have already explained, that is precisely what will happen.

Amendment No. 1 is identical to amendment No. 195, tabled in Committee, although it affects a different line in the Bill. The previous amendment was tabled by the hon. Member for Southampton, Test (Dr. Whitehead), who is in his place. The arguments advanced were that local government had suffered under 18 years of Conservative Government; that the new Government were attempting to rebuild a relationship of trust between local government and central Government; and that although the Government still needed certain reserve powers, they would not need them indefinitely.

4.45 pm

The Liberal Democrats believe that local government suffered under the previous Government. Even some of those from the previous Government admit that. We happily concede that the new Government genuinely believe that they are attempting to rebuild a relationship of trust with local government, but they need to give a date for the phasing-out of capping if they want to establish such a reputation.

Capping should have ended the day after the general election. That is what local councillors expected. Labour councillors thought that it was going to happen, but it has not. We believe that capping should end as soon as possible. Amendment No. 1 would end capping by 2005. Many would say that that is too late. I hope that those who choose to vote against the amendment will do so because they believe that capping should be phased out earlier. Sadly for Labour Members, I do not think that the Government Whips will allow them to put that spin on their vote.

We know what the Minister is likely to say. The Government view has been that capping is needed to defend the national interest. Ministers have argued that they have a responsibility to retain reserve powers to protect local council tax payers. That is a strange argument, because it contradicts what Labour Members said in the House and outside before the election. Labour won many friends in local government for defending local democracy against the Conservative Government's capping rules.

That leads to the second argument for the claimed central Government responsibility to protect local council tax payers. We elect local councillors to run local councils, but, like the previous Government, this Government do not trust the voters to make the right choices—and nor do they trust their councillors to protect council tax payers. Of course, they are right not to trust the electoral system to facilitate a truly democratic result, but the lack of a proportional electoral system is not a good enough argument for retaining the reserve power to cap.

The amendments go to the heart of the relationship between central and local government. Is it to be based on trust in local people and local democracy, or on suspicion and fear of the cap? If the Government are sure that their best value policies for local government will be so successful that capping will fall by the wayside naturally, why not set a date for phasing it out? Even the Conservatives have seen the light on capping. Their leader sees the restoration of the power and independence of local government as an important part of the platform for renewing his party's popularity. I hope that Conservative Members will support our amendments.

Amendment No. 1 would set a deadline of 2005 for the end of capping. It is a sunset clause first proposed by a Labour Member. By accepting the amendment, the Government could demonstrate that they are genuine when they claim to be rebuilding trust between central and local government. It would show that they were confident that best value and other proposals were likely to work as they have claimed. To do otherwise would be to admit that the previous Government were right, even though the Conservatives have changed their views on capping since the election. The politics may be topsy-turvy, but the principle of local people using the ballot box to determine local needs is important, and I urge hon. Members to support it.

I am pleased to follow the hon. Member for Torbay (Mr. Sanders). I was grateful for his interest in the renewal of my party during this brief period of opposition. He was right to draw attention to capping. He referred to the recent comments of my right hon. Friend the Leader of the Opposition to the effect that our policy is to move away from capping. The hon. Gentleman said that the situation was topsy-turvy. It is ironic that while my party is moving away from capping, the Labour party in government is moving to embrace it.

I pay tribute to the excellent and authoritative manner in which my hon. Friend the Member for Mole Valley (Sir P. Beresford) dealt with the amendments, and particularly new clause 6. He was right to talk about a heavy-handed and subjective set of capping rules. From his vast experience, he was able to demonstrate the perverse results of the proposals in relation to individual authorities. He put up a spirited and effective defence of those Conservative-controlled councils which, year after year, have delivered good services at reasonable prices, and are continuing to do so—despite suffering under the new regime.

New clause 6 is a novel and exciting concept; I suppose we must call it the Milton Keynes clause. I am not saying that I necessarily endorse the Milton Keynes experiment, but it has attractive features that should make all of us take stock of how we approach council tax, local government spending and finance and—above all—capping. From that point of view, it has some attractive features.

We cannot allow local councillors or any elected people to abdicate responsibility entirely. Why elect local councillors at all if they are not there to make the big decisions? Surely local people should have a voice; whether through their elected representatives every year—as tends to be the case in local authorities such as mine—or slightly less often, or possibly through the limited use of local referendums, as happens in Milton Keynes.

Does my hon. Friend agree that the point about the Milton Keynes experiment was that it was a matter not of the council and the people, but of the Secretary of State and the people? The people of Milton Keynes decided to allow their council tax to rise by more than the Secretary of State would have allowed it to rise under the capping regulations—thereby fundamentally undermining the capping regulations.

My hon. Friend is correct. The hon. Member for Torbay said that if the measure is not to have a sunset provision, it is equally valid to argue for another way of ameliorating the effect—in this case, by letting local people have a voice. I hope that my hon. Friend the Member for North Wiltshire (Mr. Gray) will have the chance to develop that point in the debate.

There are wider issues—not least the promises made not just to local government, but to the British people before the election. In its 1997 manifesto, Labour promised the abolition of "crude and universal capping". It is fair to say that that was met with almost universal approbation throughout local government. When the Government announced their provisional caps for 1998–99 in December 1997—and subsequently capped Derbyshire county council—they confirmed that 1998–99 would be the last year of universal capping.

It is a feature of the Government that not everything in the manifesto comes to pass, and that not everything that comes to pass was in the manifesto. In Committee, the Minister conceded that the proposals were not in the manifesto.

If the Minister wants to correct what I have said, I will happily give way.

It was clear in the manifesto that in abolishing crude and universal capping, a Labour Government, if elected, would retain reserve powers. We have done that. Council tax benefit subsidy limitation is not capping.

I do not necessarily disagree, save to say that to describe the powers as reserve capping powers is to stretch the word "reserve" significantly.

In Committee, the hon. Member for Taunton (Jackie Ballard) put it to the Minister that the proposal to have council tax benefit subsidy limitation was not in the Labour manifesto. When my hon. Friend the Member for North Essex (Mr. Jenkin) pressed the point, the Minister rightly—it is a subtly different point, and it is important to get it right—said:
"No, it was not. However,"
she continued, ever the mistress of understatement,
"the Government are doing several things that go beyond manifesto commitments."—[Official Report, Standing Committee B, 23 February 1999; c. 465.]
I think, however, that she has claimed public support for the measure in the run-up to the general election, which cannot be right.

The Minister is right about the reserve powers, which relate specifically to the provisions on subjective capping, but my hon. Friend is right when he talks about crude and universal capping, which applies to the council tax benefit subsidy limitation—or capping, by any other name.

I am sure that the Minister and I will both be relieved to be right, but on different subjects.

It is worth repeating the powerful comment of the hon. Member for Normanton (Mr. O'Brien). It expresses in words that I could not find the extent of the sense of betrayal felt not only in local government but in Labour-controlled local government. He said:
"If a council in the poorer group of local authorities tried to increase its council tax over its budget requirements to sustain services, the application of the council tax benefit subsidy limitation scheme would be devastating because of the clawback of the rate support grant."—[Official Report, 4 February 1999; Vol. 324, c. 1152.]
That is absolutely right. As my hon. Friend the Member for Mole Valley said, the nearly poor would be subsidising the poor in some areas.

Before, we had crude and universal capping, which was bad—there is an element of "Animal Farm" about this—and now we have what some of the boffins call refined capping, which is good. It is really a question of what one calls it. Capping is the policy that dare not speak its name. The word "capping" does not even appear in the title or in other parts of the Bill, as has been pointed out in an amendment.

I did not have the pleasure and privilege of serving in Committee on the Bill, but I appeared for the official Opposition in the Second Standing Committee on Delegated Legislation when we considered the crucial statutory instrument that underpins the Bill. Any casual observer reading the title of the instrument would not immediately recognise it as an attempt to bring back a form of capping. It is the Local Authorities (Alteration of Requisite Calculations) (England) Regulations 1999. The title does not give much away.

That measure, along with the part of the Bill that relates to it, does not have a friend in the world. I put it to the Minister in Committee that not one authority or organisation connected with local government had a good word to say about the proposals. At the last count—the Minister is welcome to correct me if the figure has gone up—129 councils and groups of councils had expressed their opposition to it.

The point was well made by my hon. Friend the Member for Mole Valley and other right hon. and hon. Friends in Committee that the proposals act in a perverse fashion. Why? Because the highly geared local authorities are those most affected. For example, Mole Valley would be affected 10 times less by the regulations than Liverpool, Hackney or Newham. Indeed, it is a pity that Labour Members who represent the areas that will be seriously affected cannot even be bothered to come to the Chamber to listen to the debate. I have given up hope of their seeking to participate, but they could make the effort, on behalf of those who send them here, to listen to the problems that they are likely to have to face.

5 pm

My hon. Friend may be right. It was pointed out in the Committee considering the regulations that 19 of the 22 poorest councils would be hit the hardest and the hon. Member for Sutton and Cheam (Mr. Burstow) said that the main burden will fall on people in property bands A and B.

I will not detain the House today with a detailed discussion of the formulae and the calculations—

I am open to persuasion. Suffice it to say that the Local Government Association got it right when it said:

"The scheme will impact unfairly on different parts of the country … the worst hit being those with the highest proportion of low value property and the highest percentage of benefit recipients … It will be felt hardly at all in prosperous areas of the South East. It will have much more of an impact in inner London and on Merseyside."
In that sense, I am not speaking on behalf of my constituents in Eastbourne or for my hon. Friends' constituents in other parts of the south-east: we are speaking for the constituents of hon. Members who represent the worst affected areas. It is worth listing them because they include Liverpool, Hackney, Tower Hamlets, Manchester, Newham, Islington, Lambeth, Waltham Forest, Knowsley and Southwark.

As my hon. Friend says, those authorities have one thing in common: they are controlled by the Labour party or return Labour Members of Parliament. Where are their representatives during this debate?

If the Minister wishes to intervene, she knows that I am generous about giving way, but she must not keep up a running commentary during my speech.

As I said in the Committee considering the regulations, the disparities will get worse in future. The LGA put it graphically:
"the scheme could become the thin end of a very unpleasant wedge."
A well-behaved authority that tries to do well under the regulations will not get any benefit. From the Government's point of view, it is a win-win situation. An authority cannot prise more money out of the Government by doing better than expected under the regulations.

Does the hon. Gentleman agree that this is another example of a stealth tax that will shift the burden of taxation on to council tax payers?

I am delighted that the hon. Gentleman has caught up with the fact that this Government like to do things by stealth. Perhaps one of his more elevated colleagues would care to raise that in one of the Cabinet Committees in which they are involved.

An article in the Local Government Chronicle stated:
"One of the starkest examples of how the scheme has a different impact across the country, despite built-in safeguards, is that of Liverpool City Council and Wokingham DC."
It goes on:
"Based on each council exceeding the guideline amount for subsidy limitation by 1 per cent. of their Standard Spending Assessments, Liverpool would lose £926,000 and Wokingham would lose just £29,000."
That is incredible.

The hon. Gentleman is right to raise council tax benefit subsidy limitation. However, does he accept that the regulations that the Government used to introduce it were based on powers established in the Local Government Finance Act 1992, which was enacted by a Conservative Administration? They also built on the principle of council housing benefit clawback established by the previous Government.

The hon. Gentleman demonstrates the enormous benefit of never having been in power and of having no hope of it. It is always someone else's fault. It would perhaps be kinder to say that the hon. Gentleman implies the benefit of sunset provisions in regulations. If there had been such a provision in 1992, we would not be here today. Of course, we would not be here today, either, if the Government had not pulled stumps last night.

The Bill has the effect of reintroducing capping, although we may not breathe that word. The handful of Labour Members who are here, and any watching on television, must realise that it introduces capping in all but name. I hope that those whose constituencies are most seriously affected will say something, if not to the House, at least to their constituents, to justify their support for the Bill. I hope that some of them will—despite the pressure of the Whips—think twice about supporting the Bill.

My hon. Friend the Member for Mole Valley gave a good summary of the intent and purport of several amendments. Amendments Nos. 98 and 117 would insert the true name of the Bill and its real effects by referring to limitation and capping. The statutory instrument intimately associated with the Bill could not, as I have said, have had a more misleading title. One has to search for clues as to what the regulations mean.

Amendment No. 1 was tabled by the Liberal Democrats. Bizarrely, though this is not untypical of that party, it suggests that it is all right to have the regulations for a period—say, five years—but equally all right not to have them afterwards. I cannot see the logic of that. Either the system is fair and useful, or it is not.

Amendment No. 1 is identical to one tabled by the hon. Member for North Essex (Mr. Jenkin) in Committee.

I have not said that we would not vote with the Liberal Democrats on that amendment. Anything, however strange, that waters down the effects or the time scale of the regulations must be worth supporting.

Amendments Nos. 101 to 103 would remove the power to distinguish between individual authorities rather than categories of authority. My hon. Friend the Member for Mole Valley was right to say that it is invidious to pick on individual authorities. Perhaps that will happen if their names begin with W and they are successfully run by Conservatives in London. Amendment No. 105 is the same.

Adding the Greater London authority to the provisions was debated, if not in the Standing Committee on the Bill, then in another Standing Committee. My hon. Friend the Member for Mole Valley dealt extremely well with a bizarre result of the regulations, which is that authorities that set budgets below SSA can be caught in the net. We have said before that that is something that Ministers should look at again.

We feel sufficiently strongly about amendment No. 84 wish to press it to a Division at a convenient moment. Amendments Nos. 84 and 85 would take out of clause 29 subsections (7) and (11). That would remove the commencement provision affecting the financial year 1999–2000. In other words, it postpones the provisions, which is entirely right. I agree with what the Liberal Democrat spokesman had to say on that. Apart from anything else, the Local Government Association has been strong and persuasive from the start on the point that these measures are not only wrong and ill thought out but are being introduced far too quickly. It believes that time should be set aside to consult further and consider whether there are other, more sensible ways of achieving the same results in a fairer and more effective way.

Amendments Nos. 42 and 43 seek to limit the scope of the Secretary of State's powers, as so many of the amendments do. The Bill allows him to cap authorities even if they are spending below the SSA set by the Government. That goes beyond what is fair: it is nonsensical. Our amendments seek to restore the more sensible principles that have hitherto underpinned capping. Councils would be allowed to spend up to one eighth more than SSA before being capped. While local taxpayers would be afforded protection, councils would be allowed to increase spending year on year, but would not be given an incentive to do so in order to protect their base for future increases. Again, that is a sensible attempt to amend the Bill.

Amendment No. 108 would oblige the Secretary of State to take into account the council tax levels of authorities in the same category, as my hon. Friend the Member for Mole Valley explained. Thus London boroughs would be compared with London boroughs shire districts with shire districts, and so on.

Amendments Nos. 113, 109, 111, 110, 114, 115 and 117 would ensure that local authorities were treated equally by the capping system. They would require the Secretary of State to determine categories of authority to which various capping criteria would apply and oblige him to announce those criteria in advance. The amendments are intended to reduce the arbitrary nature of the Secretary of State's powers under the Bill, and to provide local authorities with greater certainty that they will not be singled out for special treatment by the Government.

Nothing that the Government have done in their time in office or that Ministers have said during debates on the Bill gives us any confidence that they will be above singling out authorities whose record or complexion they disapprove of and penalising them under the provisions in the Bill. We think that it is too much of a temptation for Ministers in this or any Government to have such powers. The powers should therefore be reduced or watered down.

The LGA speaks for all political complexions across local government. It argued long and hard for a time limit on the capping scheme, which was rejected by the Government. In its latest briefing, it has said that it remains opposed to the present council tax benefit limitation proposals for the reasons that it spells out. It says that the scheme will
"hit the poorest areas hardest.
It is Government's responsibility to meet the cost of welfare benefits.
The public's understanding of council tax increases will be further diminished rather than enhanced."
That must have a knock-on effect on local democracy. The LGA brief continues:
"The guideline increases could be seen as a direct substitute for crude and universal capping.
The scheme is not justified on grounds of administrative efficiency".

So no one who knows anything about local government at any level has a kind word to say about the proposals. Not only that, but the Bill is being rushed through. The debate is being guillotined today, as we have discussed—it is not a proper matter to return to. How typical of the Government's attitude not only to the Bill but to Parliament in general.

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The LGA, optimistic to the last, is still talking about continuing discussions with the Government as to how the scheme will work, with a view to persuading the Government to drop or modify the scheme in future years. I wish it well, but on the basis of performance to date, I have to say, "Fat chance." It concludes by saying:
"Although we recognise that they will most probably now pass into law … the Association will continue to oppose the provisions in clauses 28 and 29 to retain capping powers and to localise part of the cost of council tax benefit."

In conclusion, it seems to me from reading the debates in Committee and in the statutory instrument Committee, and all the discussions inside and outside this place, that the Government have comprehensively lost the argument every single time. Why cannot they be big enough, with their vast majority and all the panoply of new Labour and spin doctors, to say, "Yes, we got it wrong. We want to do it differently. We have heard what people say. We have heard the united voice of local government. We are going to look at this again."

It is a pleasure to participate in a debate opened by my hon. Friend the Member for Mole Valley (Sir P. Beresford), who followed me as leader of Wandsworth council. It is appropriate that we should both be able to point out to the Minister the absurd fallacy of the percentages argument in relation to the weightwatcher. If a weightwatcher weighs 10 stone and increases his weight by 10 per cent., that is an increase of 1 stone. Has he done better or worse than someone of 20 stone who increases his weight by 1 stone, an increase of only 5 per cent? The Minister suggests that someone who is already 20 stone and increases his weight by 1 stone is doing better than someone who is 10 stone and increases his weight by 1 stone. That is absolute nonsense.

My hon. Friend the Member for Mole Valley referred to Wandsworth's 20-year record of achievement. It is appropriate to remind the House of the catalyst that gave the Conservatives in Wandsworth the opportunity to control the council. In its last year in office, the Labour party in Wandsworth moved a guillotine motion to restrict debate in the council chamber. There was such outrage in the borough at the fact that, in an authority of 55 councillors and aldermen, the Labour party had chosen to use the guillotine against 15 Conservatives in opposition that, a few months later, the Conservatives were swept into office. The Labour party lost and, as we know, it is still in opposition in Wandsworth more than 21 years later. Those of my hon. Friends who are concerned about the way in which the Labour Government have promoted the guillotine motion today may take some consolation from the fact that a guillotine gave Conservatives in Wandsworth the opportunity to ensure 20 years or more of successful Conservative control.

Wandsworth never had to resort to referendums because the councillors kept in touch with their electors. They listened and responded and provided quality core services at affordable prices.

Schedule 1, tucked away at the back of the Bill, is a provision of 15 pages which enables the Secretary of State to introduce what is not described as crude and universal capping. In my submission, instead of being crude, it is complex. Instead of being universal, it is arbitrary. Complex and arbitrary capping is even worse than crude and universal capping.

Am I alone in thinking that crude capping was at least predictable? It was clear when the Secretary of State was going to cap, whereas I am mystified as to what the criteria will be under the schedule.

My hon. Friend is right. The criteria seem to be that whatever the Minister decides goes. That is an arbitrary use of power; through the ages, dictators have always wanted to take such power to themselves and that is what the Government are taking to themselves in the Bill.

The Government are obsessed with second-guessing councils on whether they are responding to the wishes of the electorate. An experiment being carried out in Dorset is relevant to the proposal in new clause 6 that would prevent Governments from imposing a cap on a council that had carried out a referendum on its council tax proposals and had won the endorsement of its electors. This year, there are extremely large council tax increases in Dorset. Dorset county council has chosen to increase the council tax by 7.9 per cent and the Dorset police authority is increasing its precept by 9.2 per cent.—the third highest amount among county police authorities. In part of my constituency—the East Dorset district council area—the consequence of those two decisions and the council tax imposed by the district council is that the average council tax payer in East Dorset will pay a massive £858 in the coming year. That will be the 11th highest council tax bill for householders anywhere in the country.

That is the consequence of having a county council, district council and police authority that are all Liberal controlled. The sad thing is that the county council had the idea of seeking the endorsement of the electorate for the 7.9 per cent. increase in council tax. One cannot criticise the council for holding consultations but, when it did so, it did not get the answer that it wanted; it ignored the result and went ahead with the 7.9 per cent. increase that it had intended to impose on the people of Dorset all along. Fortunately, new clause 6 does not introduce such a system. It would make it incumbent on an authority to accept the verdict of any referendum, if it wanted to impose a substantial council tax increase.

In Dorset, the council decided to consult a few focus groups, comprising individuals who had been carefully selected—mainly, but not exclusively, by Liberal Democrats. The groups included many people who worked for the council, but who did not live in the area that was to be affected by the increases. It was only after pressure from Conservatives in local government in Dorset that the county council expanded the consultation process to include people who were readers of local newspapers. It was even accepted that people who wrote to county hall would have their views taken into account.

Having gathered all that information, the council then had the gall to reject the verdict on the basis that a large number of those who responded were pensioners. Those people are on fixed incomes and resented the fact that they would have to pay an increase in their council tax that was substantially above the rate of inflation, as a result of which they would have to cut back on other items of household expenditure. At its meeting, the Liberal-controlled county council dismissed those representations from pensioners on the grounds that they did not really count. That was the most appalling snub and insult to a key group in Dorset; they are people who have worked hard throughout their lives and have chosen to spend their twilight years in the county, where they make a major contribution to the community. Why should their views count for less than the views of others?

New clause 6 commends itself to me because it makes it clear that referendums would have to be held on a universal basis, reinforcing democracy in those council areas where the local authority does not keep in regular contact with the wishes of the people. I support the new clause and condemn the way in which the Government are imposing a new capping regime on local authorities. Before the election, the Labour party suggested that it was in favour of expanding local democracy, but in practice the Government are doing the reverse.

I shall speak on new clause 6. If the doctrine espoused at a late stage of yesterday evening by probably the most impressive Member on the Labour Benches, the right hon. Member for Birkenhead (Mr. Field)—that there is no point in sitting in the Chamber for a long time because the Government will get their business through anyway—were carried to its conclusion, it would be entirely footling to make speeches in this place. Indeed, the right hon. Gentleman came to that conclusion and suggested that the Opposition should restrict themselves to engaging in what he called a five-year election campaign.

Speaking from a sedentary position—as she has often done throughout these debates—the Minister said that the right hon. Gentleman did not say that. As a matter of fact, the record shows that he did, and, as he is a deep thinker, he may have expressed a view that is widely held by Labour Members. Nevertheless, I retain a touching faith in the parliamentary process. I hope that it is not naive and that it may become more important if the House comes to its senses and realises that it needs to adjust its proceedings, so that it has an impact on Bills rather than merely discussing them.

New clause 6 is a vital clause and the whole House—indeed posterity—will owe a great debt to my hon. Friends who introduced it. I hope, too, that the Conservative party will realise that it owes them a debt, because I hope that the essence of the clause, if not the detail, will be accepted in due time as party policy. The reason lies in the origins of capping. I freely admitted last night, and continue to admit, that capping was a mistaken policy from the start. The then Prime Minister my right hon. and noble Friend Baroness Thatcher and others justified the policy on the grounds that it was impossible to leave to local democracy decisions about the level of expenditure, which could have a macro-economic impact, when most of the people in an area did not even bother to turn up at the polls, and when many people could be hugely disadvantaged by high rates of the then domestic rate because they were among the few people who paid it. My right hon. and noble Friend adduced examples of councils such as Hackney, which had relatively few inhabitants who actually paid any domestic rate after various subsidies were taken into account, and which could raise its domestic rate, more or less without limit, affecting only those voters who never voted for it anyway.

It is important that the Government should realise that the initial argument for capping was a democratic deficit. The new clause would reverse that democratic deficit and ensure that there would not be capping if the majority of the population turned up at the polls and made it clear that they favoured the level of expenditure proposed by the council. In other words, new clause 6 undermines the only logic—although they have never expressed any—that the Government could be using.

I hope that, even if it has no impact on the Government, who obviously do not intend to pay the slightest attention to the debate, the profound significance of the new clause will register on the minds of my hon. Friends on the Opposition Front Bench, because it might form the basis of a highly productive train of thought about local government policy and the relationship between local government and central Government. If the Conservatives became the party that reasserted the need to allow councils, where there is a genuine democratic desire on the part of their population to raise taxes, to do so, we would be using democracy to overcome the inherent deficiencies that were in the system when we first introduced capping.

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I am fascinated to see the new Conservative doctrine on local government unfolding before our eyes. Is the hon. Gentleman suggesting—judging by his analysis so far, he is—that the referendum principle should apply to anything a council might want to do, regardless of the initial policy of central Government?

No. I shall not dwell on the matter in detail, save to say that there is a specific point that differs from that which applies in respect of anything else that local government does. We are talking about central Government interfering grossly with the actions of a democratically elected authority. Our view is that, where local democracy is shown on a wide scale to yield a certain result, such intervention should not occur.

I: am delighted to be able to respond to a debate on the Bill, and I welcome hon. Members who were not members of the Standing Committee to these deliberations. I was interested in the remarks of the hon. Member for West Dorset (Mr. Letwin). I welcome his conversion to democracy that is not limited to four-yearly elections, and his recognition of the ideas that the Government set out in our White Paper to encourage far more public consultation, which are at the centre of all our proposals. Indeed, the draft Bill presented today includes specific proposals on referendums on the form of governance used in localities.

New clause 6 would impose limitations on the use of the reserve powers so that they could not be used following a referendum in which a simple majority had endorsed the council tax and at least 50 per cent. of the electorate had voted. The endorsement by local people of an authority's budget would be consistent with our modernising agenda and our drive to encourage local authorities to engage the local community more effectively; and such consultation or endorsement may influence any decision on whether to use our reserve power. However, a referendum is only one form of consultation that a local government body might choose to undertake, so we do not think it appropriate to put referendums into the Bill as the sole form of consultation to be used.

This morning, I met members of a citizens panel that is used effectively by the local authority. They were adamant about the importance of their ability to debate issues and to form an understanding of the complexities with which councils frequently have to deal. They are considering ways of ensuring that other people in their area do the same. Although they welcomed our proposals on referendums, they wanted to maintain the use of other forms of consultation.

The Bill already allows the Secretary of State or the National Assembly for Wales to determine categories of authorities taking into account any information considered relevant. The extent to which a local authority has taken steps to consult and involve its local community may well be considered relevant information for that purpose, and I hope that it will be. Conservative Members have referred to the referendum in Milton Keynes. I saw my hon. Friend the Member for Milton Keynes, North-East (Mr. White) in the Chamber a short while ago, but he has gone now. The Bill allows deliberations such as that to have an influence on the Government, whereas existing legislation passed under the Conservative Government, does not allow us to take into account such consultation, because it cuts out any such considerations. It is precisely because we want such considerations to be part of the process to decide whether or not capping takes place that we have introduced the Bill in its current form.

Does the Minister accept that an expensive full referendum of all of the people is not the only way in which a local authority could go about public consultation, and that focus groups might suffice to test the public's views on what was needed?

I have spent about five minutes saying that other forms of consultation are important and that central Government should not, in the Bill, restrict an authority's choice of the form of public consultation it wants to employ. Consultation should be thorough, but different methods or even a combination of methods may be appropriate at certain times.

Over the next few years, wide-ranging reform and modernisation of local government will take place, so it is impossible to predict how central Government will use their reserve powers in future. We hope that we do not have to use them—indeed, we have constructed the powers with that hope in mind—but we need the flexibility to respond to changing circumstances in future years.

The hon. Gentleman was not a member of the Standing Committee, so it is right that he, as a Member of Parliament, should attend these debates on the Bill. As was spelled out clearly in the White Paper, we are trying to provide for a more flexible relationship between central and local government, so that local government has greater control. Only when a local authority is clearly out of step with local people's interests and flouting the national interest shall we intervene, but we need the flexibility provided by the Bill to do so. Having explained that, I am happy to give way to the hon. Gentleman.

Will the right hon. Lady acknowledge that, precisely because of the lack of predictability that she describes, it is proper to insert in the Bill the use of a referendum as a decision-making mechanism—not as a means of consultation, but as a proper means of making a decision and holding the Government to account?

The idea is to hold the council to account through a referendum, but I shall let that pass.

To return to the question of different forms of consultation, we welcome the Government's openness on the range of methods of consultation that could be used. However, in considering what is relevant, will the Secretary of State adopt different views on the various forms of consultation and give different weighting to each? Will he give different weighting from one year to another? We need to know that, and so do local authorities. If the Secretary of State can accept as relevant one local authority having consulted a focus group or held a referendum, but completely disregard the same actions taken by another local authority, the system of consultation will fall into disrepute.

We have to make sure that the consultations carried out are those that have enabled the widest group of people to make representations, and that they have been carried out in a clear, straightforward and honest way. The hon. Member for Torbay (Mr. Sanders) will know that I made it clear in Standing Committee that the Government would have to take into account, for example, the nature of the questions asked and the turnout in a referendum. Those are matters to which we would have regard in considering whether there had been a genuine attempt to engage with local people in coming to the decisions that were taken. We would want to see that there had been that full engagement and that the council had taken an honest approach to consultation and any more direct decision taking that it was offering to the public.

I want to facilitate debate, but I do not want to be accused of taking up too much time.

I appreciate the Minister giving way again. We are dealing with an important point. Is she saying that it is not the quantitative but the qualitative value of the consultation that will be taken into consideration?

I think that I have expressed our approach as fully as possible. I would not accept one focus group. Someone may tell me, "This is a very high-quality focus group," but I would not think that that was the basis for a high-quality consultation exercise. However, I do not want to be pushed into being so rigid as to say that, for example, a rural area that had developed a good devolved system of involving local people had to proceed in a certain way. Clearly, such an area would want to act in some respects in a different manner from an inner-city authority.

I do not want to be pushed into a position where we in central Government determine the method and local government feels that it has to get through our hoops. I want local government itself to be serious about how it consults and engages the public on one of the most important decisions that it has to take, which is the level of council tax that it will be setting. That is inevitably closely linked to the best value aspects of the Bill.

We want the flexibility to be able to respond to changing circumstances. We do not wish to restrict the principles that could be implemented. The hon. Member for West Derbyshire (Mr. McLoughlin), who is also not in his place, pressed the hon. Member for Eastbourne (Mr. Waterson) on what would happen to Derbyshire. Had the Bill been in place, we could have brought in representatives of Derbyshire county council, talked to them and made it clear that in our view what they had done was excessive, but that we did not want to subject the authority to re-billing. We could have made it clear that we were giving them notice that if they did not take account of our position in the following year, the council would be designated and that council tax capping would be implemented.

That, to me, seems to be the right sort of flexibility between central and local government. Far from being more draconian, it involves engaging in mature debate with local government on the basis of clear criteria and recognising that local government is grown up. It would be giving local government the chance to amend what it is doing in future budget setting so that it can come within the national criteria of which it should be taking account.

I move on to amendments No. 98 and No. 117, which seek to change the heading of clause 28 and the heading of part 2 of schedule 2 so that they read:
"Regulation and Limitation (Capping) of Council Tax and Precepts".
It is sometimes helpful for Opposition Members to suggest amendments to improve Parliamentary Counsel's drafting. However, we take the view that the regulation of council tax that is referred to in the heading includes the new reserve powers and the limitation of council tax benefit subsidy. As one word is to be preferred to four, we prefer to leave the drafting as it is.

5.45 pm

As I have said before, council tax benefit subsidy limitation is not capping through the back door. Authorities can set budgets above the guidelines if they wish, provided that they do not set budgets that are considered excessive and would require the use of the reserve power. In fact, four out of five councils in this budgetary round have set increases that are different from their guidelines. I believe that they should be able to continue to do that. The confusion of Opposition Members about capping and council tax benefit subsidy limitation is not helpful to councils when they are seeking to set their budgets. I believe that the restrictions that are identified in the amendments are unnecessary and I hope that the Opposition will not press them.

Amendment No. 1 would put a time limit on the use of the new reserve powers to limit council tax increases, ending their use after 1 April 2005. Official Opposition Members made it clear in Committee that they would re-table their amendment so that it might be debated on the Floor of the House. Liberal Democrat Members made it clear in Committee that they opposed any capping of local authorities' budgets. The official Opposition are still somewhat unsure about where they are going in this instance. However, I welcome the confessional conservatism on the Opposition Benches. I often feel that we should be here as members of the cloth taking the real confessions of Conservative Members. I have a deep respect for confession.

On confessions, I would like the Minister to be selective and subjective.

I accept that the hon. Gentleman does not want to see the end of capping and is not one of the confessional Conservatives.

The Liberal Democrats made it clear this week that they think the Government have no role to play in protecting local taxpayers from irresponsible increases in taxes. I happen to disagree. The Government disagree, and we made that clear in the Labour party's manifesto. We are putting our money where our mouth is on the basis of that manifesto. The Government have a role to play and we cannot shirk our responsibilities. I made it clear in Committee—I think Opposition Members listened but did not agree—that these are reserve powers and we will hold them in reserve.

As I have been at pains to emphasise, we are working in partnership with local government to improve and modernise it. We therefore hope and expect that we will use the reserve powers increasingly rarely, and not at all by the year 2005, if not earlier. However, we cannot rule out the possibility that some local authorities may decide to act irresponsibly. If they do, we need to be able to protect their local taxpayers. For that, we need to retain the reserve powers. I ask Opposition Members to withdraw the amendment.

Amendments No. 101, 102, 105 and 106 would provide that the factors referred to by the criteria used to decide whether the budget requirement is excessive for the council tax benefit limitation scheme must apply to categories of authorities and not to different authorities. I acknowledge that the hon. Member for Mole Valley (Sir P. Beresford) is rather frightened that we would be partisan. I hope that that is not because of his experience of exercising powers in the past. I can assure him that we wish to be anything but partisan. Indeed, the list that was read out by the hon. Member for Eastbourne (Mr. Waterson) demonstrated clearly that we are not partisan. I would say to Opposition Members that the subsidy limitation kicks in only as a result of a local council's decision, not a Government decision. Many of the councils that the hon. Member for Eastbourne identified have taken decisions that bring them in well below the guideline. They have taken that decision and, therefore, their council tax payers will not suffer in the way that he mentioned because they have taken decisions that keep them outside the guideline.

The right hon. Lady correctly makes the point that councils can make individual decisions to try to protect themselves from those provisions, but that is a separate matter. Given that we are all in confessional mode, is she now admitting that the 10 councils whose names I read out, most of which are Labour controlled, are most likely to be affected on the basis of the calculations?

We are getting into difficult territory. I am not of the Catholic faith and confession is not part of my good Methodist tradition. I am trying to tell the truth, which is that it is up to the council to decide its council tax levels. If it exceeds a guideline level, we expect it to share with national taxpayers the burden of council tax benefit. The councils in the list that the hon. Gentleman read out have overwhelmingly decided not to exceed the guideline.

The Minister is carefully glossing over the fact that a council's decision on the level of its council tax for a particular year may be related to its SSA and revenue support grant, which are in the Government's hands.

Of course I acknowledge that. However, given that this year, all councils received at least as much as they did last year, and that the increase in the overall Government grant to local authorities through RSG and the uniform business rate was higher than the hon. Gentleman was ever able to deliver, his point is a little bogus.

We used the same criteria and factors for all authorities. However, some authorities thought that we should have used different criteria and factors for different authorities, and they made representations to us to that effect. Some district authorities, for example, thought that they should be treated differently from counties because districts are responsible for collecting arrears of community charge, and that affects the level of council tax set in districts but not in counties. Other authorities argued that particular individual circumstances applied to them and that those should be taken into account.

It is possible that in future years there might be good reasons for differentiating. There may be an argument for treating an individual authority differently because of its particular circumstances. We discussed that in Committee. In accordance with normal principles, the Secretary of State would be required to act fairly, but fairness may require different treatment. That is one of the problems with the working of the current law. We need to have the ability to act accordingly and respond to particular needs in exceptional cases. We would not be able to do that if we accepted the amendments, so I ask hon. Members not to press them.

Amendment No. 103 seeks to give local authorities that budget below SSA protection from the council tax benefit subsidy limitation scheme, where the criteria refer, as they do for 1999–2000, to the budget for the year beginning in 1998. Conservative Members seem to have forgotten the principle underlying that scheme. Perhaps I should remind them of it.

When council tax rises, so do the costs of council tax benefit, and that cost is borne by the local taxpayer. Where there is a large increase in council tax, we do not believe that the national taxpayer should pay for the costs arising from those local decisions, and that is the aim of the scheme. The national taxpayer will continue to bear significant costs, but the scheme would limit them.

That provokes a significant question about the application of that principle. The Secretary of State for Education and Employment has been writing to local authorities, urging them fully to spend their education SSAs. In doing so, some authorities, at least in principle, could exceed the guideline and, as a consequence, face the Minister's wrath and have benefit clawed back. Surely that is wrong because it sends the wrong signal to councils that the Government want to spend on education.

I am afraid that the hon. Gentleman is wrong. This year's criteria allow an increase of either 4.5 per cent. or an amount commensurate with the increase in SSA. An increase in SSA that is higher than 4.5 per cent. is accounted for.

No. The hon. Gentleman is just enjoying himself again.

I assume that the purpose of amendments Nos. 84 and 85 is to prevent the scheme applying for 1999–2000. As I have already explained several times, the clause simply provides for regulations that will require major participating authorities exceeding the guideline to make payments to billing authorities. It does not affect the establishment of the scheme as a whole.

We have already made regulations to change the tax-setting equation so that the local authority contribution to council tax benefit costs is raised from council tax. Councils took that into account when setting their council tax for 1999–2000. The amendments would therefore have little effect, and I ask that hon. Members not to press them.

Amendment No. 42 seeks to exempt from capping councils that budget below their standard spending assessment. We made it clear in the White Paper that we would be taking reserve powers that allowed us to cap in those circumstances.

The new reserve capping powers in the Bill are designed to enable the Government to step in and protect council tax payers if a local authority increases its council tax unreasonably. Standard spending assessments are a simple measure that the Government use as a basis for distributing the revenue support grant. They have no more significance than that. It follows that the relationship between a council's budget and its standard spending assessment has no bearing on whether a particular year's increase is deemed to be excessive.

We need only consider some councils' behaviour in setting council tax rates for 1999–2000 to realise that. South Cambridgeshire has increased its council tax by 175 per cent.; Tewkesbury's increase is 49 per cent.; and Wandsworth, which Conservative Members have mentioned, has made a 21.5 per cent. increase. All those councils are budgeting below SSA, but making large increases in council tax.

The Minister has touched on a point on which I should like clarification. The significance of council tax increases must lie in the increase in money rather than the percentage increase. When the Minister considers her restrictions, will she examine percentages or money?

I am interested that the hon. Gentleman intervenes on that point. Perhaps he would have a word with the hon. Member for Christchurch (Mr. Chope), who was complaining that Dorset council did not take account of people on fixed incomes who are affected year on year by the percentage increase. That is why we seek to have the power to impose restrictions.

I am not pre-empting any decisions that will be made this year, but it is reasonable that the Government should have the power to intervene if the level of increase makes it necessary. People would think that we were strange if we did not seek such a power. It is important that the Government take seriously their responsibility to local taxpayers, and we shall continue to do so. I hope, given those explanations, that hon. Members will withdraw that amendment.

Amendment No. 43 is designed to exempt from capping any council that spends less than 12.5 per cent. above its standard spending assessment. The Conservatives seem to be trying to reintroduce their policy of capping councils that budget at more than 12.5 per cent. over SSA. This is another amendment that demonstrates the schizophrenia of the official Opposition, with some Opposition Members being confessional and some not. However, there is a slightly different twist—no authority budgeting below that level will be capped. That is a change from the situation when the Conservatives were in power, but I suspect that that is where they got the figure of 12.5 per cent. Most of the authorities that they capped would have been exempt under this principle.

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Standard spending assessments are no more than a measure that the Government use to distribute revenue support grant. Our new reserve capping powers are designed to protect council tax payers. We are not prepared to shirk our responsibility. The amendment would remove from two thirds of councils the possibility of Government intervention. That is not what people want.

I assume that amendment No. 108 is intended to make it difficult for the Secretary of State to apply the reserve powers to local authorities with a low band D council tax, and to limit him to using his reserve powers in relation to those authorities with the highest band D council tax within a category. We have had this debate before. I do not understand what Opposition Members are trying to achieve. Would they be happy for such authorities to make massive increases in their council tax, to the detriment of the council tax payers in their area? We are not prepared to accept that. Again, I ask hon. Members not to press the amendment.

Amendments Nos. 113 and 114 would prevent the Secretary of State from determining categories of authorities, and thus from applying different sets of principles to each category. We have discussed this on several occasions. I used the basis of the argument in response to a previous amendment, so the House understands the Government's view. We want to make sure that we move at the pace of the best, and that we are not held back by the worst, which would have been the effect of the sunset clause that the Opposition moved yesterday. We want to give powers and opportunities to the best. We do not want to go down the rigid path towards which the Opposition are pushing us through these amendments.

Amendments Nos. 109, 111 and 110 would require the Secretary of State to determine categories of authorities. That rather contradicts some of the arguments that we have heard. I do not believe that the amendments would be helpful. The Secretary of State may not need to determine categories. It may be appropriate to apply the same principle to all authorities. We have heard many examples today in which that would not be appropriate. That is why we need flexibility. I hope that hon. Members will not press the amendments.

Amendment No. 115 would limit the information that the Secretary of State may take into account in determining categories of authorities—

On a point of order, Mr. Deputy Speaker. I cannot help noticing that the Minister has been speaking longer—32 minutes—than any Back Bencher during last night's debate, about which she complained so much. She said that that was a filibuster. Is she filibustering her own Bill?

I am trying to get through the notes. This is a large group of amendments, and I have taken a substantial number of interventions. I have been responding to the debate. Opposition Members know that they were offered negotiations through the usual channels, but they refused to come and talk about what would be possible. They have created the problem.

Amendment No. 115 is unnecessary. Every Secretary of State must consider the reasonableness of his use of powers granted by statute. 1 cannot think of circumstances in which information that was relevant would not also be reasonable. The amendment adds nothing of substance to the intention of the Bill. It is not needed, and I ask hon. Members not to press it.

The Government are adopting the same approach as in Committee—nice words, then comes the crunch. New clause 6 and the amendments were intended not to stop capping, but to ease the pain. I shall therefore press the motion to a Division.

Question put, That the clause be read a Second time:—

The House divided: Ayes 170, Noes 335.

Division No. 130]

[6.5 pm


Ainsworth, Peter (E Surrey)Collins, Tim
Allan, RichardColvin, Michael
Ancram, Rt Hon MichaelCorrnack, Sir Patrick
Arbuthnot, Rt Hon JamesCotter, Brian
Ashdown, Rt Hon PaddyCran, James
Atkinson, David (Bour'mth E)Dafis, Cynog
Atkinson, Peter (Hexham)Davey, Edward (Kingston)
Baker, NormanDavis, Rt Hon David (Haltemprice & Howden)
Baldry, Tony
Ballard, JackieDay, Stephen
Beggs, RoyDonaldson, Jeffrey
Beith, Rt Hon A JDuncan Smith, Iain
Beresford, Sir PaulEvans, Nigel
Blunt, CrispinFaber, David
Body, Sir RichardFabricant, Michael
Boswell, TimFearn, Ronnie
Bottomley, Peter (Worthing W)Flight, Howard
Bottomley, Rt Hon Mrs VirginiaForsythe, Clifford
Brady, GrahamForth, Rt Hon Eric
Brake, TomFoster, Don (Bath)
Brand, Dr PeterFowler, Rt Hon Sir Norman
Brazier, JulianFox, Dr Liam
Brooke, Rt Hon PeterFraser, Christopher
Browning, Mrs AngelaGarnier, Edward
Bruce, Ian (S Dorset)George, Andrew (St Ives)
Bruce, Malcolm (Gordon)Gibb, Nick
Burnett, JohnGill, Christopher
Burns, SimonGray, James
Cable, Dr VincentGreenway, John
Campbell, Rt Hon MenziesGrieve, Dominic

(NE Fife)

Hague, Rt Hon William
Chapman, Sir SydneyHamilton, Rt Hon Sir Archie

(Chipping Barnet)

Hammond, Philip
Chope, ChristopherHancock, Mike
Clappison, JamesHarris, Dr Evan
Clark, Dr Michael (Rayleigh)Hawkins, Nick
Clifton-Brown, GeoffreyHayes, John

Heald, OliverRobathan, Andrew
Heathcoat-Amory, Rt Hon DavidRobertson, Laurence (Tewk'b'ry)
Hogg, Rt Hon DouglasRoe, Mrs Marion (Broxbourne)
Horam, JohnRoss, William (E Lond'y)
Howard, Rt Hon MichaelRowe, Andrew (Faversham)
Howarth, Gerald (Aldershot)Ruffley, David
Hughes, Simon (Southwark N)Russell, Bob (Colchester)
Hunter, AndrewSt Aubyn, Nick
Jack, Rt Hon MichaelSanders, Adrian
Jenkin, BernardSayeed, Jonathan
Johnson Smith,Shephard, Rt Hon Mrs Gillian
Rt Hon Sir GeoffreyShepherd, Richard
Jones, leuan Wyn (Ynys MÔn)Simpson, Keith (Mid-Norfolk)
Jones, Nigel (Cheltenham)Smyth, Rev Martin (Belfast S)
Kennedy, Charles (Ross Skye)Soames, Nicholas
Key, RobertSpicer, Sir Michael
Kirkbride, Miss JulieSpring, Richard
Kirkwood, ArchyStanley, Rt Hon Sir John
Laing, Mrs EleanorSteen, Anthony
Lait, Mrs JacquiStreeter, Gary
Lansley, AndrewStunell, Andrew
Leigh, EdwardSwayne, Desmond
Letwin, OliverTapsell, Sir Peter
Lewis, Dr Julian (New Forest E)Taylor, Ian (Esher & Walton)
Lidington, DavidTaylor, John M (Solihull)
Lilley, Rt Hon PeterTaylor, Matthew (Truro)
Livsey, RichardTonge, Dr Jenny
Loughton, TimTownend, John
Luff, PeterTrend, Michael
Lyell, Rt Hon Sir NicholasTyler, Paul
MacGregor, Rt Hon JohnTyrie, Andrew
MacKay, Rt Hon AndrewViggers, Peter
McLoughlin, PatrickWallace, James
Malins, HumfreyWalter, Robert
Maples, JohnWardle, Charles
Mates, MichaelWaterson, Nigel
Maude, Rt Hon FrancisWebb, Steve
Mawhinney, Rt Hon Sir BrianWells, Bowen
May, Mrs TheresaWhitney, Sir Raymond
Michie, Mrs Ray (Argyll & Bute)Whittingdale, John
Moore, MichaelWiddecombe, Rt Hon Miss Ann
Moss, MalcolmWilkinson, John
Norman, ArchieWillis, Phil
Oaten, MarkWilshire, David
Ottaway, RichardWinterton, Nicholas (Macclesfield)
Page, RichardWoodward, Shaun
Paterson, OwenYen, Tim
Pickles, ErinYoung, Rt Hon Sir George
Prior, David
Randall, John

Tellers for the Ayes:

Redwood, Rt Hon John

Mrs. Caroline Spelman and

Rendel, David

Sri David Madel.


Ainger, NickBetts, Clive
Ainsworth, Robert (Covtry NE)Blackman, Liz
Allen, GrahamBlizzard, Bob
Anderson, Donald (Swansea E)Blunkett, Rt Hon David
Anderson, Janet (Rossendale)Boateng, Paul
Armstrong, Ms HilaryBorrow, David
Atkins, CharlotteBradley, Keith (Withington)
Austin, JohnBradley, Peter (The Wrekin)
Banks, TonyBradshaw, Ben
Barnes, HarryBrinton, Mrs Helen
Barron, KevinBrown, Rt Hon Nick (Newcastle E)
Battle, JohnBrown, Russell (Dumfries)
Bayley, HughBrowne, Desmond
Beard, NigelBuck, Ms Karen
Beckett, Rt Hon Mrs MargaretBurden, Richard
Begg, Miss AnneBurgon, Colin
Bell, Stuart (Middlesbrough)Butler, Mrs Christine
Benn, Rt Hon TonyByers, Rt Hon Stephen
Bennett, Andrew FCampbell, Alan (Tynemouth)
Benton, JoeCampbell, Mrs Anne (C'bridge)
Bermingham, GeraldCampbell, Ronnie (Blyth V)
Best, HaroldCampbell-Savours, Dale

Cann, JamieGibson, Dr Ian
Caplin, IvorGilroy, Mrs Linda
Casale, RogerGoggins, Paul
Chapman, Ben (Wirral S)Golding, Mrs Llin
Chaytor, DavidGordon, Mrs Eileen
Church, Ms JudithGriffiths, Jane (Reading E)
Clapham, MichaelGriffiths, Nigel (Edinburgh S)
Clark, Rt Hon Dr David (S Shields)Griffiths, Win (Bridgend)
Clark, Dr Lynda (Edinburgh Pentlands)Grocott, Bruce
Grogan, John
Clark, Paul (Gillingham)Hain, Peter
Clarke, Charles (Norwich S)Hall, Patrick (Bedford)
Clarke, Eric (Midlothian)Hamilton, Fabian (Leeds NE)
Clarke, Rt Hon Tom (Coatbridge)Hanson, David
Clarke, Tony (Northampton S)Heal, Mrs Sylvia
Clelland, DavidHealey, John
Clwyd, AnnHenderson, Doug (Newcastle N)
Coaker, VernonHenderson, Ivan (Harwich)
Coffey, Ms AnnHeppell, John
Cohen, HarryHesford, Stephen
Coleman, IainHewitt, Ms Patricia
Colman, TonyHinchliffe, David
Connarty, MichaelHodge, Ms Margaret
Cook, Frank (Stockton N)Hoey, Kate
Cooper, YvetteHood, Jimmy
Corbett, RobinHoon, Geoffrey
Corbyn, JeremyHope, Phil
Corston, Ms JeanHopkins, Kelvin
Cousins, JimHowarth, Alan (Newport E)
Cranston, RossHowarth, George (Knowsley N)
Crausby, DavidHowells, Dr Kim
Cryer, Mrs Ann (Keighley)Hughes, Kevin (Doncaster N)
Cryer, John (Hornchurch)Humble, Mrs Joan
Cummings, JohnHutton, John
Cunningham, Rt Hon Dr Jack (Copeland)Iddon, Dr Brian
Illsley, Eric
Curtis-Thomas, Mrs ClaireIngram, Rt Hon Adam
Dalyell, TamJackson, Ms Glenda (Hampstead)
Darling, Rt Hon AlistairJackson, Helen (Hillsborough)
Darvill, KeithJamieson, David
Davey, Valerie (Bristol W)Jenkins, Brian
Davidson, IanJohnson, Alan (Hull W & Hessle)
Davies, Rt Hon Denzil (Llanelli)Johnson, Miss Melanie (Welwyn Hatfield)
Davies, Geraint (Croydon C)
Dean, Mrs JanetJones, Barry (Alyn & Deeside)
Denham, JohnJones, Helen (Warrington N)
Dismore, AndrewJones, Ms Jenny (Wolverh'ton SW)
Dobbin, Jim
Donohoe, Brian HJones, Jon Owen (Cardiff C)
Doran, FrankJones, Dr Lynne (Selly Oak)
Dowd, JimJones, Martyn (Clwyd S)
Drew, DavidJowell, Rt Hon Ms Tessa
Drown, Ms JuliaKaufman, Rt Hon Gerald
Dunwoody, Mrs GwynethKeeble, Ms Sally
Edwards, HuwKeen, Alan (Feltham & Heston)
Efford, CliveKeen, Ann (Brentford & Isleworth)
Ellman, Mrs LouiseKelly, Ms Ruth
Ennis, JeffKemp, Fraser
Fatchett, Rt Hon DerekKennedy, Jane (Wavertree)
Field, Rt Hon FrankKhabra, Piara S
Fisher, MarkKidney, David
Fitzpatrick, JimKilfoyle, Peter
Fitzsimons, LornaKing, Andy (Rugby & Kenilworth)
Flint, CarolineKing, Ms Oona (Bethnal Green)
Flynn, PaulKingham, Ms Tess
Follett, BarbaraKumar, Dr Ashok
Foster, Rt Hon DerekLadyman, Dr Stephen
Foster, Michael Jabez (Hastings)Lawrence, Ms Jackie
Foster, Michael J (Worcester)Lepper, David
Foulkes, GeorgeLeslie, Christopher
Fyfe, MariaLevitt, Tom
Galloway, GeorgeLewis, Ivan (Bury S)
Gapes, MikeLewis, Terry (Worsley)
Gardiner, BarryLinton, Martin
George, Bruce (Walsall S)Lloyd, Tony (Manchester C)
Gerrard, NeilLock, David

Love, AndrewRowlands, Ted
McAvoy, ThomasRoy, Frank
McCabe, SteveRuane, Chris
McCafferty, Ms ChrisRuddock, Joan
McDonagh, SiobhainRusset, Ms Christine (Chester)
McDonnell, JohnRyan, Ms Joan
McFall, JohnSavidge, Malcolm
McGuire, Mrs AnneSedgemore, Brian
McIsaac, ShonaShaw, Jonathan
Mackinlay, AndrewSheldon, Rt Hon Robert
McNamara, KevinShipley, Ms Debra
McNulty, TonySimpson, Alan (Nottingham S)
MacShane, DenisSingh, Marsha
Mactaggart, FionaSkinner, Dennis
McWalter, TonySmith, Rt Hon Andrew (Oxford E)
McWilliam, JohnSmith, Angela (Basildon)
Mahon, Mrs AliceSmith, Rt Hon Chris (Islington S)
Mallaber, JudySmith, Miss Geraldine
Mandelson, Rt Hon Peter

(Morecambe & Lunesdale)

Marsden, Gordon (Blackpool S)Smith, Jacqui (Redditch)
Marshall, David (Shettleston)Smith, John (Glamorgan)
Marshall, Jim (Leicester S)Smith, Llew (Blaenau Gwent)
Marshall-Andrews, RobertSnape, Peter
Martlew, EricSoley, Clive
Maxton, JohnSpellar, John
Meacher, Rt Hon MichaelSquire, Ms Rachel
Meale, AlanStarkey, Dr Phyllis
Merron, GillianSteinberg, Gerry
Michie, Bill (Shefld Heeley)Stevenson, George
Miller, AndrewStewart, Ian (Eccles)
Mitchell, AustinStinchcombe, Paul
Moffatt, LauraStoate, Dr Howard
Moonie, Dr LewisStott, Roger
Moran, Ms MargaretStrang, Rt Hon Dr Gavin
Morgan, Ms Julie (Cardiff N)Straw, Rt Hon Jack
Morgan, Rhodri (Cardiff W)Stringer, Graham
Morley, ElliotStuart, Ms Gisela
Morris, Ms Estelle (B'ham Yardley)Sutcliffe, Gerry
Mountford, KaliTaylor, Rt Hon Mrs Ann (Dewsbury)
Mudie, George
Mullin, ChrisTaylor, Ms Dart (Stockton S)
Murphy, Denis (Wansbeck)Taylor, David (NW Leics)
Murphy, Jim (Eastwood)Temple-Morris, Peter
Naysmith, Dr DougThomas, Gareth (Clwyd W)
O'Brien, Mike (N Warks)Thomas, Gareth R (Harrow W)
O'Hara, EddieTipping, Paddy
Olner, BillTodd, Mark
Osborne, Ms SandraTouhig, Don
Palmer: Dr NickTrickett, Jon
Pendry, TomTruswell, Paul
Pike, Peter LTurner, Dennis (Wolverh?ton SE)
Plaskitt, JamesTurner, Dr Desmond (Kemptown)
Pollard, KerryTwigg, Derek (Halton)
Pond, ChrisTwigg, Stephen (Enfield)
Pope, GregVaz, Keith
Pound, StephenWalley, Ms Joan
Prentice, Ms Bridget (Lewisham E)Wareing, Robert N
Prentice, Gordon (Pendle)Watts, David
Prescott, R Hon JohnWhite, Brian
Primarolo, DawnWhitehead, Dr Alan
Prosser, GwynWicks, Malcolm
Purchase, KenWilliams, Rt Hon Alan
Quinn, Lawrie

(Swansea W)

Radice, GilesWilliams, Alan W (E Carmarthen)
Rammell, BillWinnick, David
Rapson, SydWinterton, Ms Rosie (Doncaster C)
Raynsford, NickWise, Audrey
Reid, Rt Hon Dr John (Hamilton N)Woolas, Phil
Robertson, Rt Hon George (Hamilton S)Wright, Anthony D (Gt Yarmouth)
Wright, Dr Tony (Cannock)
Robinson, Geoffrey (Cov'try NW)Wyatt, Derek
Roche, Mrs Barbara
Rogers, Allan

Tellers for the Noes:

Rooker, Jeff

Mr. Mike Hall and

Ross, Emie (Dundee W)

Mr. Keith Hill.

Question accordingly negatived.

Clause 1

Best Value Authorities

I beg to move amendment No. 54, in page 1, line 8, at beginning insert

?Subject to subsection (4A) below'.

With this, it will be convenient to discuss the following amendments: No. 26, in page 2, line 4, leave out from 'Authority' to end of line 5.

No. 55, in page 2, line 12, at end insert—
'(4A) This section shall not apply to police authorities in respect of their oversight of any of the following police functions:
  • (a) any issues relating to national security;
  • (b) any relating to any matter whose public disclosure might compromise current or future police operations;
  • (c) any which is a statutory duty of police forces;
  • (d) the provision of any support service that may be specified by order of the Secretary of State.'.
  • No. 27, in clause 2, page 2, line 44, at end insert—
    '(5A) The Secretary of State shall consult with—
  • (a) the authority or body concerned, and
  • (b) all other relevant bodies
  • before making an order within this provision.'.

    No. 58, in clause 3, page 3, line 6, at end insert—
    `(1)(A) In the case of police authorities, the general duty in this section shall be without prejudice to section 10 of the Police Act 1996 ("General functions of chief constables").'.

    No. 72, in clause 6, page 6, line 3, at end add—
    ?() In preparing a best value performance plan, a police authority must also have regard to section 8 of the Police Act 1996 ("local policing plans").'.

    No. 73, in page 6, line 3, at end insert—
    '(5) In the case of a police authority, a draft of the best value performance plan shall be prepared by the chief constable for the area and submitted by him to the police authority for it to consider.
    (6) Before issuing a best value performance plan which differs from the draft submitted by the chief constable under subsection (5), a police authority shall consult the chief constable.'.

    I am delighted to speak to the amendments, but I have no wish to delay the House unduly. Far be it from me to lay myself open to the charge of filibustering, whether justified or not. I have never filibustered on this Bill—at least, not deliberately—and I have no intention of doing so this evening

    . The amendments address an issue which is at the heart of the Bill, and which was debated a number of times in Committee: the inappropriate application of the Bill to police authorities. The application is inappropriate not just because police authorities have been shoehorned into a Bill that was in essence designed to deal with local authorities, but because the premise of necessity on which the Bill rests simply does not apply to police authorities. The amendments go some way towards solving the problem, although we would prefer the Bill not to apply to police authorities at all.

    I say that the premise of necessity does not apply partly because of existing statutes. Hon. Members will be familiar with the Police and Magistrates' Courts Act 1994, which deals with issues of police management and efficiency, and with section 43 of the Police Act 1996, which gives the Home Secretary specific powers to require police authorities to report to him on matters connected with the discharge of their responsibilities. Moreover, section 106 of the Police and Criminal Evidence Act 1984—now section 96 of the Police Act 1996—makes specific arrangements for the obtaining of local people's views. Police forces also have a statutory responsibility to draw up local policing plans.

    Because of the existence of those Acts, there is no need for the Bill to apply to police authorities. The Home Secretary already has powers to scrutinise the drawing up of plans and the requirement to consult. If the Government are saying that the aim is simply to satisfy the requirements of existing legislation, and if the current arrangements are effective and efficient, why include police authorities?

    In addition, the Audit Commission publishes a series of performance indicators—measurements of police efficiency. I have a copy of the document relating to 1996–97, which all hon. Members doubtless regard as essential bedtime reading. [Interruption.] It appears that the Minister does not.

    The Audit Commission, however, acknowledges that
    "Police forces should be locally accountable"
    "must respond to the needs and expectations of their local community."
    As those needs and expectations vary in different parts of the country, additional performance indicators—benchmarking—will be of limited use. The need for different approaches in different parts of the country is one reason why the Association of Police Authorities has expressed reservations about the Bill. It does not want a uniform set of targets to be applied nationally.

    Hon. Members will be familiar with the work of the Policy Studies Institute. In a report on local policing plans, it says:
    "Although policing plans must include national objectives, we found no evidence that plans were becoming dominated by central concerns."
    National objectives that are included in those plans already give us an opportunity to judge police authorities according to some standard criteria, while allowing enough flexibility for the necessary discretion to be exercised locally.

    The questions currently asked by the Audit Commission strike me—and, indeed, chief constables and the Association of Police Authorities—as satisfactory. We do not think that additional legislation is needed. The police also come within the ambit of Her Majesty's inspectorate of constabulary, and there are questions to be asked about the relationship between it and the Audit Commission. Those questions were dealt with to an extent by a memorandum that was circulated in Committee. We were told that discussions were in progress, and that an accord was developing between the two bodies. As with other aspects of local government, however, we have a vision of finding a different inspector from a different organisation around every corner and in every corridor of police authorities. That, I think, is something of an insult to police authorities and chief constables, suggesting that they cannot manage their affairs properly.

    That brings me to the nub of the argument. As I have said, if the existing arrangements are satisfactory, it is surely unnecessary to include police authorities; but a more fundamental objection to the Bill is that it challenges the current governance of the police. The time-honoured tripartite arrangement is at least challenged, and arguably weakened, by the Bill. The Association of Police Authorities has made that point as well. The Bill, moreover, has three further weaknesses.

    First, there is the setting of additional national targets. We must assume that they are additional, because if they are not, they have no point. The setting of additional targets may endanger the independence of the constabularies, especially if the targets are uniform and based on the false goal of comparability. Comparability has some value, but it should not be worshipped like a god. Comparisons between a rural and an urban police force are of dubious merit: many aspects cannot be adequately or properly compared, and the comparison may be misleading rather than edifying.

    Secondly, if operational matters are to be included in the assessment of best value, the Bill will also impinge on the discretion of chief constables. Chief constables have always had discretion over operational matters, and police authorities have traditionally recognised that. Their relationship with chief constables has been founded on the division of responsibilities.

    Thirdly—and even worse—we must consider the Bill's possible impact on the style of policing and the character of police forces.

    That which is most measurable is not necessarily that which is most desirable, or even most desired. Of course the logistics involved in dealing with offences are important, and highly measurable. Many aspects of input are also measurable—questions such as "how many?", "how much?" and "how long?" On the contrary, the value of community policing—police visits to schools, for instance, and the preventive policies of local forces—is harder to measure, because its effects are less immediately tangible.

    Bobbies on the beat may not be particularly fashionable according to the accountants' view of policing that we seem to be adopting, but such non-adversarial policing is very popular in my constituency. Along with Gary Jenkins, editor of my local newspaper—I shall not waste this opportunity of naming it: it is the Spalding Post—I have been running a campaign to increase the number of bobbies on the beat. Some so-called experts have told us that is no longer seen as an important part of policing, because its value cannot be measured empirically, unlike other aspects of policing that relate easily to uniform targets and uniform methods of measurement.

    The amendments attempt to limit the excesses of the Bill—by exclusion, in the case of amendment No. 55; by clarification of the Bill's interface with existing statutes, in the case of amendments Nos. 58 and 72; and by defending the role of chief constables, in the case of amendment No. 73. Of course we want effective and efficient police forces, but we also want police forces that preserve the best traditions of impartiality, independence

    and local accountability. We are justly proud of those things. They are a result of the current system of governance of police forces, which the Bill seriously jeopardises.

    6.30 pm

    One of the amendments has been tabled by the right hon. Member for Bromley and Chislehurst (Mr. Forth), who is not in his place. It raises an issue that was touched on in the Committee that is considering the Greater London Authority Bill—the application of best value to the Greater London authority. Both the right hon. Gentleman and I have the pleasure—I think that that is the right word—of being members of that Committee, and have had the opportunity to explore a little further how best value will apply to the authority.

    In a number of written questions, I have sought to clarify—both for my benefit and, I hope, for the benefit of those who will have to operate the best value regime in the Greater London authority—how the duty of best value will apply. I want to go a little further and to seek further clarification.

    I have received a useful letter from the Under-Secretary, the hon. Member for Greenwich and Woolwich (Mr. Raynsford), which sets out the Government's thinking on the matter. There is still an issue around the order-making powers that the Bill provides. I seek some clarification from the hon. Gentleman's fellow Under-Secretary on the matter this evening.

    The letter, dated 16 March, says in respect of a duty of best value applied by order of the Secretary of State:
    "he could provide for the GLA to be a best value authority in relation to specified functions which are not functions of the Authority, but are functions of another best value authority."
    That sentence was hard to get to grips with. I hope that the Under-Secretary will be able to elucidate, because it is not explained later in the letter. Does it mean that the mayor can effectively act as the best value authority for a London borough? Does it mean that the mayor can act as the best value authority for other bodies from which he takes over functions? The Greater London Authority Bill provides for him to exercise other agencies' powers if they do not take them up themselves. We need to be clear what that means in respect of the application of best value.

    In Committee, the Minister of State expressed concern that an amendment that was moved by my hon. Friend the Member for Taunton (Jackie Ballard) on the application of best value corporately to the Greater London authority would blur the lines of accountability. I hope that the Under-Secretary of State for the Environment, Transport and the Regions will explain a little further how he thinks the lines of accountability will be blurred by applying corporately to the Greater London authority a duty to secure best value.

    Over time, that would be the better way to do it. If it is not possible to do that, it gives rise to the question whether the Department of the Environment, Transport and the Regions, which is responsible for drafting both the Local Government Bill and the Greater London Authority Bill, failed to exercise joined-up thinking in producing both Bills. It would have been easy to apply best value corporately if the drafting of the Greater London Authority Bill had allowed that to happen. However, it appears from the way in which the Bill has been put together that elaborate powers are needed, with the Secretary of State making things up as we go along.

    Therefore, I hope that the Under-Secretary will be able to give us some further explanation of how the best value regime will apply to the Greater London authority. I hope that it is clear, consistent and readily understandable to elected members, the mayor and officials who will have to operate the system

    . Other amendments deal with the police service. Again, I have had the opportunity to study the exchanges in the Standing Committee, which seemed to boil down to whether a police authority or the police force were responsible for discharging the duty of best value. Provided that the Bill applies a duty of best value on police authorities—from my reading of the Bill, that is what it does—Liberal Democrats do not have a problem in supporting the Government policy. However, the official Opposition are right to raise the concern that it might jeopardise operational matters. I should be grateful if the Under-Secretary could repeat the assurances that were given by the Minister of State during the deliberations in Committee.

    The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions
    (Mr. Alan Meale)

    I welcome the hon. Member for South Holland and The Deepings (Mr. Hayes) on his first appearance at the Dispatch Box. I know how much he cares about the police force and policing methods. As a Nottinghamshire Member, I am aware of his activities in that regard over a long time in the east midlands.

    I shall deal first with the amendments that have implications for police functions: amendments Nos. 54, 55, 58, 72 and 73.

    Amendments Nos. 54 and 55 would exclude from the best value provisions certain functions over which police authorities have oversight. The amendments are similar to one which Conservative Members tabled in Committee. It may be helpful if I reiterate what was said then—that the amendments would not be consistent with our objectives for the police service under best value, which are to ensure that the police are delivering high-quality services across the range of their activities.

    Matters of national security and operational effectiveness will always be key priorities for police authorities and chief constables, as they are for the Government. I reassure the hon. Member for South Holland and The Deepings again that nothing in the best value provisions will affect the ability of the police to discharge those functions.

    The checks and balances that exist now to protect sensitive areas of police work, such as that of the special branch and the anti-terrorist branch, will continue to exist under best value. It will be the responsibility of Her Majesty's inspectorate of constabulary which, with the Audit Commission, will have a joint role in the inspection and audit of police authorities under best value, to ensure, as they do now, that details of such matters are exempt from publication. However, we do not believe that the provision of those services where expenditure can be high should be exempt from best value rigours. any more than should the other services provided by the police.

    New subsection (4A)(c) would exclude from best value any function that is the statutory duty of a police force. That fails to recognise the shared responsibilities for policing within the tripartite structure, which the hon. Member for South Holland and The Deepings mentioned. It is the statutory duty of the police authority to maintain an efficient and effective police force for its area. The chief constable is responsible for the day-to-day direction and control of the force. To disapply best value from those duties would not be consistent with the objective to secure year-on-year improvements in services. However, as we recognised in last year's local government White Paper, it would not be appropriate to expose to competition certain core statutory activities that are carried out by the police.

    I am assuming that the reference in the amendment to "support services" means services such as administration, information technology and training. We see no valid argument for exempting any police support services from best value, whether they are provided nationally, or on a force-by-force basis. Indeed, such services, like others, should be critically reviewed and inspected regularly, so that we can be sure that they are being provided as efficiently and effectively as possible.

    Amendments Nos. 54 and 55 are both undesirable and unnecessary, and I ask the hon. Member for South Holland and The Deepings to withdraw amendment No. 54 at the appropriate moment.

    Amendment No. 58 would provide that nothing in the manner in which the duty of best value impacts on police authorities shall have effect on the functions of chief constables. Amendment No. 72 would require police authorities to have regard to section 8 of the Police Act 1996 in preparing a best value performance plan. Amendment No. 73 would put responsibility on the chief constable to draft the local performance plan for the police authority's agreement.

    Those amendments cover territory that has already been the subject of interesting debate in Committee. I hope that they have been tabled, as the hon. Member for South Holland and The Deepings indicated, to obtain reassurance, rather than to reopen old arguments.

    The Bill is very explicit about how it will impact on police. The duty of best value will apply to police authorities, but will not apply to police forces. As such, the Bill does not affect the tripartite structure of policing. However, that said, my right hon. Friend the Home Secretary is anxious that no opportunity should be missed to ensure that police forces are run as efficiently and effectively as possible. In achieving that end, close co-operation between chief constables and police authorities is very important.

    The Bill will strengthen that process of co-operation by virtue of the provision in clause 23(1)—which requires that the local policing plan, as provided for by section 8 of the Police Act 1996, shall give particulars of any action proposed for the purposes of complying with best value. As a matter of law, responsibility for production of the local policing plan is that of the police authority.

    In practice, however, the chief constable prepares the first draft of the policing plan. In doing so, he is thus required to have regard to the authority's statutory duties under best value, without being subject to a statutory obligation to achieve best value himself.

    Section 10 of the 1996 Act is entirely consistent with that approach. It provides that the chief constable, in discharging his functions, is to have regard to section 8—which I have just described—but does not apply the statutory duty of best value to the chief constable; nor is it the Government's intention to create such a duty. We believe that that is the best way of ensuring an integrated approach between police authorities and police forces under best value. The Association of Chief Police Officers and the Association of Police Authorities—both of which have been consulted about the amendment to the 1996 Act—fully support that approach.

    I therefore ask the Opposition Members who tabled amendments Nos. 58, 72 and 73 not to press them.

    I am not entirely clear on the matter, not having had the benefit of participating directly in the debates in Committee. However, as I understand it, the Association of Police Authorities took the view that it would be better if the best value aspects of police authorities' role were assessed by the Audit Commission rather than by Her Majesty's inspectorate of constabulary. The Minister seemed to be saying that the Government are proposing that HMIC should undertake the best value scrutiny of police authorities. Did I misunderstand him, or is he saying that the Association of Police Authorities is happy with all the provisions, including the one with which he is now dealing?

    The hon. Gentleman is right to mention that point. However, I am assured that I was right in what I said about the consultation process. Possibly the advice and information that he has received was misjudged.

    Amendment No. 26 would have the effect of subjecting all the functions of the Greater London authority to the general duty of best value, and not only those corporate functions exercised through the mayor.

    In Committee, we discussed at some length application to the Greater London authority of the duty of best value. Indeed, amendment No. 26 is identical to an amendment that was considered in Committee—as the Official Report will show, at columns 31–34 of the Standing Committee debates. Nevertheless, I appreciate that the right hon. Member for Bromley and Chislehurst (Mr. Forth)—who is not in the Chamber—was not a member of the Committee that considered this Bill. I am therefore prepared to explain—if not to him, to his colleagues—why the Bill was drafted as was. Subsequently—if the right hon. Gentleman comes into the Chamber by the end of the debate—I hope that he will not press his amendment.

    As I have said before, the Government believe that the Greater London authority should be subjected to the duty of best value. However, the way in which that duty is applied to the authority will have to be flexibly drawn to take account of the different ways in which the GLA itself exercises its functions and its relationship with the four functional bodies that will deliver the main Londonwide services—the London Fire and Emergency Planning Authority, Transport for London, the London Development Agency and the Metropolitan Police Authority.

    The Government believe that the Bill has to be sufficiently flexible to cater for different internal working arrangements, to ensure that as much of the GLA's normal work as possible is subjected to the duty of best value. Clause 2(4) will achieve that, by allowing the Secretary of State to provide, by order, for the duty of best value to be applied to any functions that the GLA exercises other than through the mayor, and to any role it plays in respect of functions of other best value authorities, such as setting a strategy for Transport for London.

    6.45 pm

    Our approach to creating a duty of best value for the GLA takes specific account of the range of different responsibilities that will exist between its constituent parts, and will ensure, as far as possible, that accountability for delivering best value will be attached to the bodies that are responsible for performing its various functions.

    I was not a member of the Standing Committee. I am also not sure that I am following the Minister's logic. Although he is stressing the importance of flexibility in dealing with the Greater London authority, he seemed to rule out such flexibility earlier in the debate, when he dismissed the flexibility that would have been afforded to police authorities by amendment No. 55.

    I assure the hon. Gentleman that there is no question of our using the Bill to allow the GLA to usurp the functions of any other body when it does not have a statutory basis for doing so. I assure him also that, if he will allow me to finish my speech, I shall answer any questions that he might have on our approach to the amendments. He will have clarity.

    A simple application of the duty of best value to the GLA corporately—which is what amendment No. 26 seems to be seeking to achieve—would prevent the objectives that I have described from being achieved satisfactorily. If the application of the duty of best value were not clearly specified, we should run the risk of blurred lines of accountability. The Bill as currently drafted will give us the ability to identify clearly the roles of the mayor, the assembly and the functional bodies. A simple corporate application of the duty would not allow us to do so, and would detract from the transparency that we wish to create.

    I hope that that has clarified for the Opposition the position regarding the GLA, and that the right hon. Member for Bromley and Chislehurst will agree not to press amendment No. 26—if he arrives in the Chamber in time to do so.

    Although the right hon. Member for Bromley and Chislehurst is not in the Chamber, I have raised the same issue as it affects the GLA. I am not the right hon. Gentleman's keeper and cannot account for his absence, but believe that it is an important issue, which my hon. Friends also have raised and are still concerned about.

    I am intervening on the Minister; it would be very difficult to take a further intervention.

    Will the confusion on the Government's proposals on local government more generally and on executive mayors require future amendments to the legislation?

    The simple answer to that—as my right hon. Friend the Minister is saying—is that the Bill does not deal with those proposals, which will be debated when they are proposed.

    Amendment No. 27 would require the Secretary of State to consult relevant bodies before making an order disapplying a best-value duty in specified authorities.

    I am grateful to the right hon. Member for Bromley and Chislehurst for his apparent concern over the way in which the power to disapply a best value duty might be exercised by the Secretary of State. His amendment has at least given the Government an opportunity to state our views. He will be aware—as he has followed the debate in Committee—that we recognise that the duty of best value could be onerous if applied in full to smaller town and parish councils. In recognition of that possibility, clause 2(5) will allow us to vary the duty as appropriate. If he gets around to listening to me, I should like to pay tribute to the hon. Member for North Essex (Mr. Jenkin), who led for the Opposition in Committee. In particular, he emphasised the need for a more sensible approach to town and parish councils.

    We also recognise the need for proper scrutiny of the exercise of the power. That is why clause 2(6) requires an order made under this provision to be subject to the affirmative resolution procedure in both Houses of Parliament.

    I am sure that I do not need to remind Opposition Members that it is simply a matter of good government to ensure that the views of interested parties are taken on board before proceeding with legislation. My Department has already had discussions with representatives of town and parish councils, as well as the Audit Commission, about the application of best value to those authorities.

    I am sure that Opposition Members cannot seriously believe that the Government would be so neglectful as to submit an order for parliamentary approval without first having had regard to the views of interested parties.

    Amendment No. 27 would require the Secretary of State only to consult relevant bodies and not to have regard to their views. It would not guarantee the quality, depth or extent of that consultation. Indeed, for the purposes of the amendment, consultation could be so meagre as to be worthless. Therefore, if the right hon. Member for Bromley and Chislehurst gets here on time, I shall ask him not to press the amendment.

    I shall not delay the House long, but I should like to pick up a couple of the points that the Minister made. He claimed that the tripartite system for the governance of the police remained intact. The tripartite system is essentially a separation of powers. Historically, the arrangements for accountability and inspection have similarly been separate. Her Majesty's inspectorate of constabulary has typically dealt with managing, inspecting and holding to account the operational functions of the police force. The notion that it will now have power to inspect police authorities is certainly contentious. As my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) said, there is clearly some disagreement about the attitude of the Association of Police Authorities in that regard. I have a document from the APA saying:

    "The Association is vigorously opposed to the proposal that HMIC, the professional adviser to the Home Secretary, should play any part in inspecting how police authorities go about fulfilling their best value duties."
    So at the very least there is some doubt as to the position of the APA. It may have changed its mind following further discussion. Perhaps the Minister can clarify that.

    I should like to make two points. First, on the different views on the matter, I can assure the hon. Gentleman that I have expressed the views that resulted from consultations conducted by officials in the Department. Secondly, I did not give the hon. Gentleman a complete answer on the effect of performance indicators on the style of policing. I understand his concern, bearing in mind his many years of involvement in these matters. Local authorities and police authorities will be free to put the national indicators into a local context. Auditors and inspectors will take full account of that.

    I am grateful for the Minister's kind words, particularly the hyperbole about my service in Nottinghamshire. I give credit for prompting him to the hon. Member for Nottingham, East (Mr. Heppell) who served with me for a number of years, and I am grateful. However, it seems to me that there is at least a question mark about the role of HMIC and the Audit Commission in terms of their particular responsibilities for ensuring the efficiency and effectiveness of the police forces. I shall not make further comment about the APA's view, but it is certainly my view that HMIC inspectors are not the best people to perform that function, whereas they clearly are the best people to carry out their current functions effectively.

    In respect of the style of policing, if we move to a system of comparable targets, there will have to be a degree of uniformity. Particularly if the funding mechanisms are based on that system, it will encourage a style of policing that is straightforward and easily measured. That is already occurring to some degree and it is why, for example, police forces find it hard to fund and implement a style of policing which, although it may be popular with the public, is hard to measure in tangible terms.

    I do not think that that affects the duty of best value. One reason why I paid tribute to the hon. Gentleman is that for a long time I have had sympathy with the views that he has expressed in the county that I represent. Those views are widely known. I take some comfort from the fact that such views are being expressed about policing. The hon. Gentleman will know that the police in my constituency of Mansfield have adopted that style.

    Order. I shall attempt to assist the Minister by reminding him that interventions must be brief.

    I apologise, Mr. Deputy Speaker. I do not think that the duty of best value will upset the process of decision making by local police.

    I said that I would be brief, but I am hesitant to draw the debate to a close, because if it continues any longer the Minister may say even nicer things about me, and the more of those that are recorded in Hansard, the better.

    I followed the Minister's logic when he appealed for flexibility in dismissing amendment No. 26, but it seemed to me that he was also dismissing that very flexibility in respect of police authorities when he dismissed amendment No.55. Am I alone in spotting that contradiction?

    My hon. Friend is absolutely right. As hon. Members will know, I am renowned for my generosity, whereas my hon. Friend the Member for New Forest, West (Mr. Swayne) is more hardhearted and never wastes an opportunity to draw attention to contradictions in a Minister's speech. There is certainly a fundamental issue of flexibility and independence of police forces that concerns the Opposition.

    Having said that, I am anxious to ensure that the House has the maximum time to discuss the other faults and failures of the Bill, so I shall not prolong matters further. I beg to ask leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    Clause 3

    The General Duty

    I beg to move amendment No. 50, in page 3, line 5, leave out

    `way in which its functions are exercised'
    and insert
    'value for money of its provision of services,'.

    With this, it will be convenient to discuss the following amendments: No. 57, in page 3, leave out line 6 and insert

    `having equal regard to economy, efficiency and effectiveness.'.
    No. 29, in page 3, line 9, after `(a)', insert 'elected'.

    No. 30, in page 3, line 11" after `(b)', insert 'elected'.

    No. 33, in page 3" leave out lines 17 to 19.

    No. 63, in clause 4, page 3, line 38, leave out
    `having regard to a combination of'
    and insert 'having equal regard to'.

    No. 51, in clause 5, page 4, line 12, leave out
    `way in which its functions are exercised'
    and insert
    `value for money of its provision of services,'.

    No. 66, page 4, line 13, leave out
    `having regard to a combination of'
    and insert 'having equal regard to'.

    The importance of this part of the Bill cannot be overestimated. The amendments relate to clause 3, which covers the fundamental duty of best value. We spent considerable time in Committee discussing its definition. Clause 3(1) states:

    "A best value authority must make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy efficiency and effectiveness."
    Considerable effort must have been applied to the drafting of those words to tighten the meaning. The Bill puts an obligation on an authority to achieve specific aims, but if someone wanted to sue a council for failure to fulfil the best value duties, the court could well have difficulty deciding what the duties mean.

    7 pm

    Everything hangs on the duty of best value. We wondered whether the definition could be improved. We spent a lot of time in Committee considering possible expansions or enlargements of the definition. The purpose of this group of amendments is to establish the meaning. We think that it means value for money. That may be rather like going into a drawing room and saying a rude word to the Government. They may regard value for money as a mean-spirited, bad-tempered and narrow-minded phrase that does not reflect people's wider aspirations for their local authority, but in its broadest sense it means securing the finest and best-quality services at the best available cost.

    Clause 3(1) seems to be part of the packaging of the Bill. It is designed to be all things to all men. It is attractive to Labour authorities because it does not mean competitive tendering and to Conservative authorities because they may understand it as a duty to secure value for money. The disciplines of competition are extended to all the activities of local authorities later in the Bill, with clause 5 all but putting in place a competitive tendering regime.

    The Bill uses all kinds of language in place of the ultimate truth: if best value is to mean anything, the fundamental duty must be to achieve value for money. That is not the same as the cheapest option, which the Government have endlessly caricatured as our position; it means getting best value.

    To inform the concept of value for money. we suggest that, rather than having regard to a combination of economy, efficiency and effectiveness, authorities should have regard to those three in equal measure, because they are equally important. We are suggesting a more specific way of expressing the combination, because we are asking not for a bit of economy, a lot of efficiency and a lot of effectiveness, but for an equal consideration of all three. Amendments Nos. 50 and 51 to clause 5, and amendments Nos. 57, 63 and 66, which deal with the need to have equal regard to the combination of economy, efficiency and effectiveness, cover those points.

    My right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) has tabled further amendments, but he is not present tonight. The Government changed the business of the House at very short notice, which may explain why he is unable to be with us for this debate. He had expected to be able to debate the amendments last night. Indeed, if the Government had not pulled stumps he would have been able to do so.

    My right hon. Friend's amendments clarify who should be the
    "representatives of persons liable to pay any tax, precept of levy to or in respect of an authority"
    and the
    "representatives of persons liable to pay non-domestic rates in respect of any area"
    He says that they should be elected, which is a good principle. We heard earlier this evening that it might be all right to consult a focus group to find out how popular the Government's capping policies are. It may be implicit in the Bill that a focus group would be enough to deal with the requirement to consult. We are suggesting that elected representatives are the right people to consult. Amendment No. 33 would delete subsection (3) of clause 3. If the representatives to be consulted under subsections (2)(a) and (2)(b) are elected, subsection (3) becomes unnecessary.

    The amendments are useful and are designed to promote discussion about what best value means. We think that value for money in the provision of an authority's services is a clearer definition of best value than
    "the way in which its functions are exercised".
    We commend the amendments to the House.

    The definition of best value is central to the Bill. The Liberal Democrats have no problem with having equal regard to the three Es, although we moved amendments in Committee to add other Es—equality, environmental sustainability and equity—because the Audit Commission's three Es of economy, effectiveness and efficiency provide too narrow a focus and do not encompass all the issues that local authorities should consider when providing or contracting for services. Amendments Nos. 50 and 51, which would narrow even further the focus of best value to make it just a value-for-money exercise, should be rejected.

    The amendments of the right hon. Member for Bromley and Chislehurst (Mr. Forth) look attractive on the surface.

    When the hon. Lady goes shopping and buys herself a nice new dress, does she believe that she does not get value for money unless she buys the cheapest dress? That is not how normal people make purchasing decisions. They judge value for money on the relationship between the quality of what they are buying and what they are spending. That is what we are focusing on. The hon. Lady is falling into the trap of believing that value for money means the cheapest. That is silly. We are looking for the best value for money.

    I am so pleased that the hon. Member for North Essex (Mr. Jenkin)—or wherever it is—holds me in such high regard. Under compulsory competitive tendering, people shopping for trousers would have had to look for the cheapest.

    Perhaps the hon. Gentleman buys dresses, too. When I go shopping, I might be looking at more than just the cost or the quality of the article. If I were looking at just those two aspects, value for money might be my main consideration, but I might be interested in whether the article was made by people in a sweat-shop in the Philippines or by people somewhere else who were paid a decent wage. Many people take into account equity, decency and opportunity when looking for goods and services. The purpose of our amendments in Committee was to widen the definition from the Audit Commission's narrow three Es.

    The amendments of the right hon. Member for Bromley and Chislehurst look attractive on the surface, because most of us have a positive knee-jerk reaction to the word "elected", but I am confused about who the right hon. Gentleman thinks the elected representatives of taxpayers are. Councillors are their direct representatives. I wonder whether he is thinking of having more elections to choose people to be consulted on best value. I should be surprised if that was his plan, because it would be bureaucratic nonsense.

    However, that argument does not apply to amendment No. 30, which would be an improvement. It would be useful for the business community to elect representatives for consultation purposes. That could refer to representative organisations that already exist—for example, chambers of commerce and industry. We support the requirement for local authorities to consult local people on how to fulfil their duties under best value; any good local authority should be doing that already.

    Consultation would show that most people with an interest in service delivery would want other issues above and beyond the three Es to be taken into account. In Committee, the Minister said that, although only the three Es would be in the Bill, local authorities would, for example, be expected to take equality issues into account. Local authorities should act as leaders of their communities, and ensure that services are provided in accordance with the needs and wishes of local people.

    Without policies to address disadvantage, there is a danger that majoritarianism may rule in consultation responses, and that would further disadvantage minorities who are excluded by economic, social, physical or geographical conditions. I repeat my concern that employees are not included on the list of those to be consulted about the duty of best value.

    I wish to respond to two points made by the hon. Member for Taunton (Jackie Ballard). First, I do not think that it is necessary for additional Es—be they equality, equity or environmental sustainability—to be added to the list of those considerations to be taken into account. The word "effectiveness" in this context is a compelling word; and includes the taking into account of all those purposes for which the authority exercises its functions.

    If the authority, rightly, believes that equity in the administration of its functions or environmental sustainability is an appropriate purpose, it is perfectly reasonable for the authority to seek to carry that out effectively—and it will come to its best value duty by that route.

    Secondly, amendment No. 50 deals with the hon. Lady' s caricature of what value for money means in this context. My hon. Friend the Member for North Essex (Mr. Jenkin) made it clear that he thought that value for money would be an improvement. However, it is not simply that the amendment would improve the drafting, but that it would radically change the way in which authorities had to think about their best value duty.

    My fear is this: The Government's rhetoric in relation to the best value duty is that the concept of continuous improvement embraces—naturally and spontaneously in all authorities that exercise the best value duty—continuous improvement in value for money. However, that is not necessarily the case. An authority that said that it had regard to economy, efficiency and effectiveness in the context of seeking continuously to improve its services may not necessarily continuously improve value for money.

    That authority may be far more concerned with the continuous raising of the level of service provided—even to the point where there are, effectively, diseconomies of scale or inefficiencies in the service provided—or with the way in which the quality of service is provided, while having regard to things like efficiency and economy, but none the less seeing the continuous improvement criterion as the driving consideration.

    Labour and Liberal Democrat authorities are prone to move on quickly from a debate about value for money to a debate about how additional money can be spent in ways that will deliver additional services to the public. They may well take the view—they may well be wrong—that the additional service that they wish to provide represents a continuous improvement in that service. However, that may not necessarily deliver value for money. Although an authority may think about whether it can provide a service economically, that does not mean that that level of service represents necessarily greater value for money than that provided the year before. The authority may have moved to a standard providing lower value for money than that which applied before.

    The redrafting of the best value duty—so that continuous improvement is expressed in terms of value for money, and not simply the way in which functions are exercised—cements the duty in a context which the local taxpayer would regard as appropriate. Taxpayers should not be at the mercy of an authority that is using the best value duty, and which says that it can continue to take the service to levels that are not justified by the value for money of what is delivered.

    7.15 pm

    My hon. Friend the Member for North Essex expressed the need to have regard not just to the three Es, but to ensure that each is given its due weight. "Having equal regard" would be the appropriate wording. If that does not happen, it seems perfectly legitimate—if not satisfactory—for an authority to have regard to economy in the delivery of its service, but to override economy in the interests of what it regards as effectiveness.

    Amendments Nos. 50 and 57 deal with the same purposes, but the amendments tabled by my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) give effect to a different purpose, to which I am quite sympathetic. The hon. Member for Taunton seemed not to appreciate the circumstances in which the measure could apply. Happily, my district authority and county council routinely consult me, as a Member of Parliament, about the manner in which they exercise their functions before they set budgets. It is not necessary for them to do so—it is certainly not their duty.

    Equally, county councillors are not necessarily consulted by district authorities before budgets are set, and district councillors are not routinely consulted by county councillors before budgets are set. Likewise, the "elected representatives" could well include representatives elected to parish councils who, in my experience, could offer an effective means by which the service that a district council provided to the people in its area could be assessed and consulted upon before a district authority set its budget.

    In truth, elected representatives from parish councils would probably deliver a far more meaningful set of consultations to a district authority about how it should set its budget and balance its demands upon the taxpayer with the service that it provides than would a focus group or a representative sample of the electorate, who may well have a less complete understanding than parish councillors of the manner in which the district council relates to the local area.

    The hon. Member for Taunton asked who would be the representatives of persons who were liable to pay non-domestic rates. Under the clause, that is left entirely in the hands of a best value authority to choose for itself. I was the representative of the British chambers of commerce at the time of the Local Government Act 1989, and it was largely at our instigation that we secured a statutory duty for local authorities to consult representatives of the business community—effectively, non-domestic ratepayers—in relation to the framing of local economic development plans. That is sometimes honoured more in the breach than in the observance, but it is still there, 10 years later, on the statute book.

    This is an opportunity for the Minister to say who she thinks the representatives of persons liable to pay non-domestic rates would be, in any context. For my part, I hope that chambers of commerce and industry would be pre-eminent among those representatives. In practice, they are often the elected representatives of such persons—even though not every non-domestic ratepayer, by any means, in any given area would be a member of a chamber of commerce and industry. In almost every case, a non-domestic ratepayer can be a member of a chamber of commerce and industry. The articles of association of such chambers are designed to give local representation in relation to that class of person.

    It would be helpful if the Minister made it clear that, if the Secretary of State is to issue guidance to best value authorities, that guidance may well direct those authorities to consultations with chambers of commerce and industry.

    Hon. Members have been a little kind about amendments Nos. 29, 30 and 33, which give an interesting insight into the mind of the right hon. Member for Bromley and Chislehurst (Mr. Forth) and, to some extent, that of the previous Government. It appears that he wants to nail everything down and have everything precisely defined but, as in the famous parable of the sorcerer's apprentice, everything goes haywire when one examines the detail.

    As the hon. Member for Taunton (Jackie Ballard) pointed out, the amendments would leave the words
    "in respect of the authority"
    in subsection (2)(a) of clause 3, so the people referred to must be the councillors, and not other people as suggested by the hon. Member for South Cambridgeshire (Mr. Lansley), who has put a kind and sweeping interpretation on the intentions of the right hon. Member for Bromley and Chislehurst.

    Amendment No. 30 would have subsection (2)(b) refer to
    "elected representatives of persons liable to pay non-domestic rates in respect of any area"
    but since the provision requiring that the local authority takes account of
    "persons who appear to the authority to be representative of that group"
    would be deleted by amendment No. 33, the authority would appear to have to consult anyone who pays non-domestic rates and is elected in any capacity whatever.

    Presumably, then, the local chamber of commerce, the Confederation of British Industry, the Federation of Small Businesses, the local ironmongers and anyone else who could claim to have elected anyone to anything should be exhaustively consulted. That is a nice ideal picture, but in my experience of local government the reality of the proper exercise of consultation has always been that people who appear to be representative of the various groups are invited to take part.

    It would be perverse if, under subsection (3), the chamber of commerce, with its elected officers, did not appear to the authority to be representative. The local authority would be in some trouble if it did not accept that a local chamber of commerce was representative, but by trying to nail everything down exactly, the amendments would achieve precisely the opposite of what was in the mind of the right hon. Member for Bromley and Chislehurst, although, as I systematically fail to read his mind, perhaps that was not his intention after all.

    It is interesting to note the boundaries of what the right hon. Gentleman thinks is appropriate. He does not appear to be interested in consumers, who are the subject of subsection (2)(c) and (d). Under the amendments, anybody could represent himself and no one would have to be elected. As amendment No. 33 would delete subsection (3), anyone could turn up and say whatever they wanted. The same applies to any amenity society or local group interested in the parks and commons, the old town or local history.

    In the amendments, the right hon. Member for Bromley and Chislehurst has given us a little cameo of what happened under the previous Government, who tried to nail everything down so that authorities could not move at all, with such toxic side effects that relations between central Government and local authorities were widely poisoned.

    The clause is designed to inject some flexibility into the relationship between the local authority and the groups representing those who pay the local taxes, which should properly be consulted about what the authority does. If the authority acts responsibly, that should be the end of the matter. It is a sad reflection on the quality of the Opposition's attempts to amend the Bill that the amendments, if accepted, would completely reverse that intention.

    As my hon. Friend the Member for Southampton, Test (Dr. Whitehead) said, all the amendments would narrow the issue of best value. I appreciate the fact that the hon. Member for North Essex (Mr. Jenkin) moved the amendment in a probing manner, and I intend to respond in that spirit.

    On amendments Nos. 50 and 51, we have consistently said that the duty of best value needs to tackle both the cost and the quality of public service provision. The amendments are clearly designed to improve auditability but they seem to betray a fixation with cost to the detriment of other equally relevant considerations, such as quality.

    I understand that Opposition Members might want to base the duty on value for money, given the Audit Commission's skill in assessing it, as has been demonstrated over recent years, but value for money is not in itself as easily demonstrated as continuous improvement against consistently set performance indicators. The question is begged, value for whom? Simple, measurable improvement is what local people expect and is the yardstick against which best value should be judged. Alongside that will go what local people are prepared to pay.

    Amendments Nos.50 and 51 betray a narrow focus because they are couched in terms of services, not functions, as the clause currently provides. We have deliberately chosen to define the duty of best value in those terms, as the definition of functions goes far wider than that implied by the use of the word "services". It means that internal support functions, not normally delivered to the public, but nevertheless part of the overall cost of functions, and a contributory factor in their efficiency, will be subject to the duty of best value.

    The amendments would run the risk of removing such functions from the scope of the duty altogether and recreating the "us and them" mentality in authorities that so bedevilled compulsory competitive tendering. The duty of best value will very often be measured against the quality and cost of front-line services, but the way in which it is defined in the clause allows us also to consider internal functions and the manner in which an authority is managed generally. That is the best and most comprehensive way in which to ensure that authorities improve their performance and make themselves more responsive to their community generally. I hope that the amendments will not be pressed to a vote.

    As my hon. Friend the Member for Test dealt effectively with the problems arising from amendments Nos.29, 30 and 33, I will not dwell on them, especially as the right hon.Member for Bromley and Chislehurst (Mr. Forth) is not here.

    Amendments Nos.57, 63 and 66 would alter the nature of the duty of best value by requiring authorities to have equal regard to each of the elements of economy, efficiency and effectiveness, rather than a combination of them. The hon.Member for Taunton (Jackie Ballard) supported that.

    7.30 pm

    I ask Opposition Members to consider carefully what the amendments would mean. Do they seriously believe that an authority that is already demonstrating a high level of effectiveness in a function, based on a comparison with others, should not be able in the future to concentrate its efforts on delivering a similar level of performance in the economy with which it delivers that function? We seek to maintain flexibility so that councils can make sensible decisions that arise from the information they get from performance reviews and audit reports about what they do reasonably well and what they might improve. We expect them to pay particular attention to areas that could be improved. That is common sense and, on reflection, I am sure that Opposition Members would agree.

    Opposition Members seem to forget that we are dealing with many different authorities of different types. We want to celebrate those differences. None of them is likely to have exactly the same priorities and none of them will start from exactly the same level of performance. It is nonsense to expect that they would wish to adopt exactly the same approach to improving economy, efficiency and effectiveness, and nor should they be made to do so. The amendments would impose uniformity across the board and would remove local flexibility at a stroke. They fly in the face of what the duty of best value is designed to be about, which is making best value authorities more accountable to their communities. They are restrictive and rigid in the same way that CCT was and I urge Opposition Members to withdraw them.

    I raised one particular question that the Minister has not addressed—what do the Government believe is the best mechanism for best value authorities to consult representatives of non-domestic rate payers?

    The White Paper makes that clear. We have set out ideas for consultation on the non-domestic rate that are not simply mechanical but which obtain the support of the business community. We want to lock that community into a process that it feels gives it real consultation.Local authorities have a statutory duty to consult on their budgets. In some, the process works well and the business community is satisfied. However, in too many authorities, that is not the case. We want a clear process to be adopted in every area so that the business community is part of determining the process and agreement is achieved between the social partners—business and the local authority—about the precise mechanism to be employed. I hope that the Opposition will not feel the need to press the amendments to a Division.

    I feel like Hamlet trying to persuade Polonius that a cloud has adopted a particular shape. I am pleased that we have had this debate, because we have exposed this part of the Bill as packaging and little more. I hope that the Minister will consider what she has said. She said that amendment No.57 would remove flexibility at a stroke and destroy the accountability at the heart of the Bill. That is the most ridiculous language to use about three lines of text. She said that the amendments were strict and rigid.

    We have exposed the fact that this part of the Bill is gobbledegook. The real guts of the Bill are not contained in these airy-fairy objectives but come later in the provisions for powers of supervision, control and, ultimately, intervention. That is the purpose of the Bill and the airy-fairy language at the front is merely to persuade people that it is a good Bill. The Minister said, absurdly, that to talk of value for money is narrow minded, but most electors, when they vote in elections, regard value for money as the most important issue, although they may express that differently. For example, I am a cyclist and I regard good provision for cyclists by local authorities as good value for money, but other people have different views of what is good value for money. What is crucial is that the performance of local authorities, when they undertake functions, should be measured so that we know whether they are getting value for money.

    Does my hon. Friend agree that, in our culture of continuous improvement, there comes a point in every type of business where the marginal cost of improving the service offered no longer yields value for money? The acid test of whether the duty in this part of the Bill will deliver value for money will be when a local authority seeks constantly to improve its service but gets diminishing returns. I suspect that that is what will happen.

    I agree with my hon. Friend, but the point that he has neglected is that the Government want local authorities, as the providers of services, to aspire to best value, but the ultimate control comes from the council tax capping powers and the council tax benefit subsidy limitation. The control on cost ultimately comes from the other provisions in the Bill. I find it extraordinary that the Minister can use such extravagant language when to talk about which approach is better—a combination of economy and efficiency, or the need for an equal regard for economy, efficiency and economy—is to count the angels on a pin head.

    We have exposed this part of the Bill as complete nonsense and the Minister, in her heart of hearts, knows that. The important provisions in the Bill are the powers of intervention that the Secretary of State will exercise over local authorities.Unfortunately, the Bill lacks any prescription over how the Secretary of State should exercise those powers, which is why it is such a dangerous Bill. I beg to ask leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    Clause 4

    Performance Indicators And Standards

    With this, it will be convenient to discuss the following amendments: No.61, in page 3, line 31, leave out 'or standards'.

    Government amendment No.6.

    No.62, in page 3, line 35, leave out 'and standards'.

    No.46, in page 3, line 39, leave out from 'and' to end of line 41 and insert
    'shall do so in the terms recommended to him by the Audit Commission.'

    No.64, in page 3, line 41, after 'Commission', insert
    'and any other statutory body specified by order.'

    No.47, in page 3, line 41, at end insert —
    '() in any instance when he specifies a performance indicator or standard in terms contrary to any recommendations made to him by the Audit Commission, shall publish with the order an explanation of his reasons for doing so.'.

    No.77, in clause 14, page 9, line 37, leave out from 'if to end of line 39 and insert
    'a report under section 13 recommends that the Secretary of State give a direction under this section.'.

    No.78, in page 10, line 3, after 'opinion', insert
    ', having regard to the report issued under section 13 and any recommendations therein,'.

    No.79, in page 10, line 5, after 'Part', insert
    'and is proportionate to the degree of failure identified in the report issued under section 13.'.

    No.80, in page 10, line 17, leave out
    'or for so long as the Secretary of State considers appropriate'.

    No.48, in page 10, line 22, at end insert—
    '() where the Secretary of State exercises any function of the authority, he shall publish a statement of the way in which he will exercise that function, how this will remedy any failings set out in the Audit Commission's report, and the period of time over which he expects to exercise this function.'.

    No.81, in page 10, line 26, leave out '(if any)'.

    No.5, in page 10, leave out lines 33 to 43 and insert—
    '(8) No direction under this section shall be given unless a resolution in support has been approved by the Select Committee on the Environment, Transport and Regional Affairs.'.

    No.49, in page 10, line 33, leave out subsections (8) and (9) and insert—
    `() The Secretary of State may give a direction before the expiry of one month as specified in (7) above, if he considers the direction sufficiently urgent.'.

    No.86, in page 10, line 33, leave out subsection (8).

    No.87, in page 10, line 34, leave out 'he' and insert
    'the report issued under section 13'.

    No.88, in page 10, line 39, at end insert—
    'c) representatives as required under section 3(2).'.

    The first amendments in this important group alter clause 4. Amendments 60 to 62 would reduce the Secretary of State's discretionary power to set standards for local authorities. The key theme of the Bill is the Secretary of State's gathering to himself of some extraordinary powers over whose exercise there will be little control. Clause 4 is another example of that.

    Performance indicators should be set centrally, but performance standards could profitably and sensibly be decided by local people, through their elected representatives. The amendments provide a litmus test of whether the Government mean what their rhetoric says about returning power to, and trying to rejuvenate, local government, and of whether they are willing to trust local government to make such decisions.

    If local government is to mean anything, it must recognise that different people in different parts of the country have different needs, aspirations and approaches. We want a looser rein than the Bill allows, and an explanation from the Minister of why the Secretary of State needs such tight controls. Why do the Government not trust local government?

    Government amendment No.6 relates to consultation by the Secretary of State on performance standards and indicators. The reference to consultation is a welcome gesture from the Government, but imposes no terribly heavy burden on the Secretary of State, mentioning
    "such persons as he thinks fit."
    He may choose as few or as many as he wishes. It is a pretty puny requirement, which bears comparison—although there is no direct read-across—with how clause 3 sets out in graphic detail the sort of people that best value authorities must consult. Clause 3 creates detailed obligations for authorities setting out who they must consult, and, perhaps, implying those they should not or need not consult.Pill the Minister explain the philosophy behind the rather wishy-washy consultation requirement? If the Government really believe in consultation, why do they not spell out that belief in the Bill?

    Amendments Nos.46, 64 and 47 would limit the Secretary of State's discretionary power to vary the performance indicators that he will set for local authorities from those recommended by the Audit Commission. The Bill requires him to have regard to the recommendations, but in practice gives him carte blanche to act as he sees fit. We could usefully tweak those powers, circumscribing them somewhat.

    7.45 pm

    Clause 14 deals with the Secretary of State's powers. There can be few precedents, at least in peacetime, for the panoply of powers that the Secretary of State seeks in order to enforce his will on local government. Amendment Nos.77 to 79 would remove from the Secretary of State the decision as to whether the local authority is failing to comply with the best value regime.Pe say that the criteria should be measured and established by the Audit Commission, which would remove the temptation for political interference and make sure that the best value regime operated objectively.

    No one will argue with the proposition that a lot of faith and confidence from both sides of the House reposes in the Audit Commission because of the expertise that it has built up over many years. It seems sensible to have the commission monitor that part of the Bill.

    Clause 14(5) allows the Secretary of State to take over the running of a local authority service, an extraordinary power to be proposed by a Government who pose as the champion of local democracy and accountability. The Government want the power, and they will certainly be able to drive the measure through under the guillotine and by use of their majority. However, amendments Nos.80 and 42 would oblige the Secretary of State to announce in advance a time limit to his function, or to seek a new order before he continues in this role. They would also require him to say in advance how he would go about remedying the failure that he felt had required his intervention.

    That is no more than the Secretary of State requires of the authorities under the Bill. If they must show that they are tackling issues in a clear and structured way, it is much more necessary for central Government, who are not accountable in quite the same way to local people, to do precisely the same.

    The Bill would allow the Secretary of State to issue a direction without having received a report from the Audit Commission to the effect that remedial action was necessary. He would require no external evidence or sanction before intervening in a draconian fashion in local affairs. Amendment No.81 would prevent such arbitrary action.

    I shall deal only briefly with amendment No.5, as it was tabled by the Liberal Democrats, one of whom may wish to deal with it in detail. It appears to make the Secretary of State accountable to the Select Committee on the Environment, Transport and Regional Affairs.

    Clause 14(8) enables the Secretary of State to issue direction without reference to the constraints imposed by earlier subsections. That would give him unprecedented power to intervene in matters that are properly the affair of local authorities without reference to Parliament or the Audit Commission as impartial arbiters of best value. Amendments Nos.49, 86 and 87 rein in the Secretary of State to ensure that he is guided by the Audit Commission.

    Finally, amendment No.88 would oblige the Secretary of State to consult with the same bodies that local authorities must consult when they draw up best value strategies. As with amendment No.48, it imposes on the Secretary of State the same conditions that he imposes on local authorities. If he is to be directly responsible for the functions of a best value authority, he should prove that he has a plan that will satisfy the local community in whose name he intends to act.

    This large group of amendments covers two clauses. The Opposition's guiding light throughout the Bill's progress has been that the powers demanded by the Secretary of State are extensive and sometimes draconian.Limits should be set on them. There should be a tighter rein on the Secretary of State' s powers and on how and when he can exercise them.

    Order. There is no need for the hon. Gentleman to move his amendment.Pe group all the amendments together. The only amendment that has been moved is the first amendment in the group, in the name of the hon.Member for Eastbourne (Mr.Paterson). The hon. Gentleman may wish to say simply that he supports the amendment, to avoid confusion.

    Thank you, Mr. Deputy Speaker.Of course we support the amendment that the hon.Member for Eastbourne (Mr.Paterson) has just moved.

    Amendment No.5 leaves out lines 33 to 43 and removes the power of the Secretary of State to operate by order of mandamus. It would replace that power with a process of resolution approved by the Select Committee on the Environment, Transport and Regional Affairs.Yesterday, we received the latest version of the protocol between central and local government. The existence of the protocol implies some consultation and agreement on the way forward, but clause 14(8), (9) and (10) are the ultimate coercive powers that the Secretary of State would have if this part of the Bill were not amended. He would have the power to determine urgency and need for action without reference to the House. The only reference to the local authority required is that he has to inform it of what action he has taken—he does not have to consult it.

    The Minister referred to referendums. They are a form of consultation. Any Minister in the new regime would not look kindly on a local authority that simply informed its local residents of its council tax rather than consulting them. What is supposedly good for local government does not seem to be replicated for central Government in the Bill. The LGA still has concerns about the protocol, especially on the use of urgency powers, of which notice does not even need to be given to local authorities.

    We believe that clause 14 is crucial. Although our amendment would not remove as many of the new centralising powers given to the Secretary of State as we would like, it at least provides a solid mechanism for parliamentary scrutiny of those powers.

    I am grateful for this opportunity briefly to speak to four amendments within the group. Amendments Nos.46 and 47 are not complementary but competitive. For reasons on which I will not elaborate because my hon. Friend the Member for Eastbourne (Mr.Paterson) referred to them, there is everything to be said for tweaking the powers of the Secretary of State. There will naturally be some creative tension between local authorities and the Government about the manner in which performance indicators or standards are to be set.Local authorities might well take reassurance from the fact that the indicators would be set in terms recommended by the Audit Commission. Fortunately, the reputation of the Audit Commission is such that hon.Members on both sides of the House ought to be happy that its history and knowledge of local authorities well equip it to recommend satisfactorily to the Secretary of State the basis on which the standards should be set.

    I recognise that Ministers are normally not minded to circumscribe themselves, so if they are not minded to go as far as accepting amendment No.46, I commend amendment No.47 to them. If the Audit Commission takes the trouble to recommend performance indicators or standards to the Secretary of State and he chooses not to follow them, local authorities will find it helpful if any order published is accompanied by reasons why the Secretary of State has gone down a different path. That will remove any sense that the indicators or standards are arbitrary.Of course, Ministers never behave arbitrarily.

    Amendments Nos.48 and 49 also relate to clause 14. Amendment No.49 has the purpose of removing those subsections that allow the Secretary of State to act urgently without consulting and simply to notify the relevant authority and such persons as the Secretary of State sees fit of what he has chosen to do and why he has chosen to do it urgently. The amendment would replace those subsections with a different mechanism, the purpose of which would not be to constrain the Secretary of State in acting in an urgent manner, but would require him to go through a consultation period, although obviously on a highly accelerated basis, without observing the one-month period that would otherwise apply for consultation.

    I admit that amendment No.49 would not enable the Secretary of State to act quite as swiftly as the Bill presupposes, but local authorities would find it a great deal more satisfactory procedurally if the Secretary of State consulted—albeit in the space of hours rather than days or weeks—and then acted, rather than acted and then notified. There is a big difference between those two things.

    For my money, amendment No.48 is the most important in the group, and I hope that Ministers will take it on board. If a report from the Audit Commission deemed an authority to be failing to exercise its functions, and the Secretary of State took it over, it would be incumbent on him to say how he proposed to exercise that function, how he would remedy the failings set out in the report, and the period during which he expected to exercise the function. The amendment does not bind the Secretary of State to exercise that function for any specific period or in a specific way, but at least in this culture of measurement the Secretary of State will be measured at the outset as to the manner in which he takes over a function, how he exercises it and for how long.

    I commend amendments No.48 and 47 to the Government and hope that, even at this late stage, they are willing to take them on board.

    This is a rather large group of amendments so I will get through them as quickly as I can. I shall start with Government amendment No.6. In Committee, we gave a commitment to the hon.Member for Taunton (Jackie Ballard) —I am sorry that she is not here, because this is her moment of triumph—to table an amendment to require the Secretary of State to consult widely before he issues an order specifying performance indicators and standards. Amendment No.6 fulfils that commitment. It is a commitment that we gladly give, as it has always been the Government's intention to undertake wide and inclusive consultation on the likely suite of national performance indicators and standards for best value. It is a commitment that we freely gave in both local government White Papers that we published last year.

    I reiterate what was said in Committee.Performance indicators cannot and will not be developed in isolation or without the interest of those in the field, including the best value pilots and any successors. The consultation will be wide-ranging and open. It will include best value authorities, representative bodies of the private and voluntary sectors, of consumer organisations, trade unions and other bodies that the Secretary of State considers will usefully contribute to the debate. Such consultation will take place before we initially specify national performance indicators and standards for best value and subsequently when we propose any changes to the order. I hope that the amendment, and the commitments given in the White Papers, in Committee and today will reassure Liberal Democrat Members of our commitment to consult on national performance indicators and standards for best value. I urge hon.Members to accept the amendment.

    8 pm

    Amendment No.46 would give the Audit Commission an effective veto over what the suite of performance indicators and standards specified by the Secretary of State would contain. It would cut across much of the purpose of clause 4 and undermine the wider consultation process that the Government will undertake before specifying performance indicators and standards. I urge hon.Members not to press the amendment to a vote.

    Amendment No.64 would give the Secretary of State power to specify those bodies whose views he will have regard to when specifying performance indicators and standards. The Bill, as it currently stands, provides for the Secretary of State to have regard only to recommendations made to him by the Audit Commission. It is because of the commission's unique role in best value and its experience in monitoring local authority performance that it is included in clause 4(3)(b).Under best value, it will be responsible for auditing best value performance plans and undertaking best value inspections. It will retain a power, under the Audit Commission Act 1998, to set performance indicators. It will also have had considerable experience of setting performance indicators to monitor the performance of local authorities. The requirement for the Secretary of State to consult other organisations has been catered for by amendment No.6, and I hope that hon.Members will not see the necessity to press amendment No.64.

    Amendment No.47 would require the Secretary of State to publish the reasons for his specifying any performance indicators or standard in a manner contrary to a recommendation received from the Audit Commission. We are considering the best way to publish the conclusions of the consultation process that we will undertake before the Secretary of State specifies national performance indicators and standards. However, I hope that hon.Members will understand why I do not warm to the amendment. The Government should say how they have reacted to the views of consultees, but that should not be limited to explaining their reaction solely to the Audit Commission's recommendations; it should also include the conclusions of other consultees. The Government will consider how best to put that into effect, and the debate will help us in those considerations.

    With regard to amendments Nos.60, 61 and 62, we discussed performance standards at great length and in great detail in Committee. I hope that I can again reassure hon.Members about how performance standards will be applied and why they are important not only in driving up the performance of best value authorities, but also in providing the high-quality service that the public expect and deserve. The Government are committed to improving local services and ensuring that all people, no matter where they live, have access to, and receive, quality services. Standards and targets will be the key to achieving continuous improvements in service delivery.

    The hon.Member for South Cambridgeshire (Mr.Lansley) suggested that we cannot maintain continuous improvement without sacrificing value for money. I invite him to discuss that idea with, for example, the British Retail Consortium, whose members know that unless they improve their service year on year and give value for money, they will go out of business. Standards and targets will drive up the performance of local authorities, and put most pressure on those authorities that are performing poorly.

    Where there is a clear national requirement, such as new standards for educational attainment for different age groups, the Secretary of State or the National Assembly for Wales will specify the performance standards that an authority must meet. The White Papers on local government in England and Wales set out that the Government will take a clear lead in setting standards, and the Bill makes provision for that.

    The Government do not intend to impose a large number of new standards.Our aim is to specify minimum acceptable levels of service provision in areas where the achievement of particular standards is clearly in the national interest. The Government will consult widely with local government and other interested parties on those areas in which standards will be set, and on what form they will take. The ability to set and change standards over time will be a key driver of improvement. That power will be used only where there is a clear national interest in setting standards. Standards will be relevant, necessary and appropriate for best value.

    In some cases, they will arise from Government targets; for example, if the Government set a target that all authorities should achieve by 2003, all authorities should be performing at that level in 2003. That target might then become a standard to ensure that performance did not subsequently fall below that level. Future targets would ask for improvement above that standard. Standards and targets provide a mechanism for pegging existing levels of performance and ensuring the drive for continuous improvement in service delivery. For those reasons I urge hon.Members not to press the amendments to a vote.

    Amendments to clause 14 are also included in the group. Clause 14 is an important part of the Bill and is vital to underpin the success of the best value framework. We realise that these provisions are powerful, but make no apology for that. We want to see all best value authorities making real progress towards continuous improvement and believe that the majority will do so. The enhanced system of audit and inspection will act as an early warning system and help to put best value authorities back on the right track in most cases where problems are starting. However, we need to ensure that we can tackle failure when it occurs. We structured the best value framework carefully to ensure that we will minimise the need for intervention, but there will be times when the Secretary of State or the National Assembly need to act, and there are plenty of precedents in existing local government and other legislation for such action being delegated to the Secretary of State.

    Amendment No.5 would require that any direction issued under clause 14 must have secured the approval of the Select Committee on the Environment, Transport and Regional Affairs. That proposal is unacceptable; it would impose unnecessary time constraints on the process of intervention and would not enrich or enhance the process. It is not usual for Select Committees to scrutinise individual cases, and that would represent a significant extension of the Select Committee's current remit. It would be particularly inappropriate, and an overreaction, for the Secretary of State to need the Select Committee's consent to issue a direction under clause 14(2)(a) to (c), where the Secretary of State directs an authority to undertake a particular action, such as to prepare or amend a performance plan.

    By deleting clause 14(8) and (9), amendment No.5 would also remove the provision, which we inserted by Government amendment in Committee, for the Secretary of State to intervene in urgent cases. As we said then, the Government believe that fast-track intervention is necessary to protect vulnerable groups or individuals.Yesterday, I was pressed by the hon.Member for Mole Valley (Sir P. Beresford) to say what we would do when, for example, there were serious problems in children's services and the process was not swift enough to protect children. Fast-track intervention will only occur in exceptional cases, where the severity or persistence—

    The right hon.Lady talks about fast-tracking.Pill she explain why it has taken two years and two months for her Department to determine a footpath appeal involving St.Leonards and St. Ives parish council?

    Order. The right hon.Lady will not answer that question. It has nothing to do with the amendments before us.

    I was trying to respond to the debate, Mr. Deputy Speaker, but as the hon. Gentleman had just walked into the Chamber, I probably should not have given way to him. I am trying to be fair, but that was not fair to other hon.Members; I apologise to them.

    As I said, fast-track intervention is necessary to protect vulnerable groups or individuals. It will occur only in exceptional cases, where the severity or persistence of failure, or the continuing risk of harm or financial loss, show that urgent intervention is necessary. If those circumstances prevail and an authority could reasonably be expected to be aware of the problems but fails to take action to address them, the Bill provides the Secretary of State with the discretion to intervene without giving the authority concerned the opportunity to make representations about the report as a result of which intervention is proposed, or about the direction proposed. When intervening in that way the Secretary of State need not have regard to any statement of action produced under clause 9(2) but he will have to inform both the authority and its representatives of the intervention that is necessary, and give his reasons for using fast-track procedures.

    Whatever the form of intervention, the Secretary of State will act according to the protocol on intervention, which, as the hon.Member for Torbay (Mr. Sanders) mentioned, is currently being discussed with the Local Government Association under the framework for central-local partnership. I am pleased to be able to report that we were able to proceed with this morning's meeting of the central-local partnership. That exercise will set out agreed principles and procedures underpinning intervention.

    The Government believe that local democracy and accountability are important and that is why clause 14(3) gives the Secretary of State the power to direct the holding of a local inquiry in which the views of local people can be ascertained, where he believes that to be appropriate. Given that explanation and Opposition Members' comments yesterday on various aspects of the Bill, I hope that they will not feel it necessary to press the amendment. Amendment No.86 would delete the provisions in clause 14 relating to fast-track intervention. For the reasons that I have already given, I ask that it, too, should not be pressed.

    Amendment No.49 would alter the fast-track provisions in clause 14 to allow the Secretary of State—or in Pales the National Assembly—to issue a direction under the clause before one month had expired, if he considered the direction sufficiently urgent.Unlike the existing fast-track provisions, which provide the Secretary of State with the discretion to issue a direction without complying with subsections (6) and (7) if he believes the case is sufficiently urgent, the amendment would allow authorities to retain the right to make representations about the report as a result of which the direction is proposed, and about the direction proposed. That could cause difficulties in extremely urgent cases.

    The Government believe that it is important to work with authorities and to provide them with the opportunity to comment on the report and the direction proposed before intervention takes place. I made it absolutely clear in Committee that authorities will have the opportunity at each stage of best value to put their own house in order, and if they do so intervention will never be necessary. However, in cases of severe or persistent failure, where an authority is unwilling or unable to take action to address the failure, there may be a need to intervene very quickly. In such cases, there may not be time to allow authorities to comment on the report and direction proposed. The removal of clause 14(9), would mean that, when the Secretary of State took urgent action, he would not be required to inform the authority and its representatives of his reasons for doing so. I therefore request that hon.Members do not press the amendment.

    8.15 pm

    In respect of amendment No.88, we agree that, however urgent the case, it is important for interested parties to be kept informed. However, fast-track intervention could lead to a direction from the full range of possibilities, either where the responsibility for the function remained with the authority, or where it was taken over by the Secretary of State. The circumstances of the case would dictate who was best placed to ensure that interested parties were informed and, indeed, consulted as appropriate. In some cases, that might even be included in the direction itself. However, there would always be an immediate and practical need for the authority and its representatives to be kept informed and that is what the Bill provides for. I therefore consider amendment No.88 to be unnecessary.

    If I understand correctly the reasons underlying amendment No.79 and it is indeed designed to ensure that only appropriate action is taken, I am sympathetic to its purpose. However, I do not accept that it is necessary. The powers in clause 14 to act in cases of failure are powerful and clearly need to be exercised with care. That is why we are in the process of agreeing with the Local Government Association and the Association of Police Authorities draft protocols that will govern the use of the powers in clause 14 in England. The Welsh Office will be developing a similar protocol with the Welsh LGA. The National Assembly will have responsibility for intervention in Wales and will want to discuss the draft in due course.

    The draft protocol recognises that the form and extent of intervention should reflect the type and seriousness of failure and the need for effective improvement. It also recognises other important principles for example, that except in cases of urgency, the authority will normally be given the opportunity to make the necessary improvements itself. I cannot overemphasise the importance of that. However, I do not believe that it is necessary or desirable to make the amendment. In the first place, although I blame no one for it, the amendment is flawed in that it covers only those powers contained in clause 14(2), unlike the protocol, which will cover all the powers contained in the clause. Secondly, it is unnecessary, because the Secretary of State is bound to exercise his powers in a reasonable way and such decisions could be tested by judicial review. Again, I ask hon.Members not to press the amendment.

    Clause 14(5) contains powerful provisions giving the Secretary of State the fullest means possible to ensure that serious and persistent cases of failure can be addressed to meet the needs of local people. As we have discussed already, any action taken would be in keeping with the nature and degree of failure. We expect that cases in which the Secretary of State takes over responsibility for exercising a function on behalf of an authority will be rare. In cases of persistent failure, it is likely that a range of measures will have already been tried. We recognise that, in the event of such powers being exercised, a range of parties would have an interest. We are giving consideration to the best way of ensuring that those with an interest are kept informed in the event of such intervention. Naturally, interested parties would include not only the authority itself and its representatives, but—crucially—employees, local people and users of the service.

    Amendment No.48 is unnecessary, because there is no need for an additional provision on the face of the Bill to achieve its aim; the Bill already includes a provision for the Secretary of State to direct an inquiry to be held under section 250 of the Local Government Act 1972. Although we do not accept that amendment of the Bill is necessary, we recognise that, as the hon.Member for South Cambridgeshire said, amendment No.48 raises an important issue. I am happy to consider the matter further and the Government will report back at a later stage of the passage of the Bill.

    In respect of amendment No.80, it is an extension of the principle of proportionality that the Secretary of State should not take over a function of an authority for longer than is necessary. That is recognised in the draft protocol, which describes the way in which the Secretary of State will monitor the function and consider whether the authority is in a position to resume and sustain effective responsibility for it.

    It may be that the date by which the intervention will be terminated can be reasonably estimated from the outset. That is why subsection (5)(a) provides for a date to be specified in the direction. However, it must be recognised that intervention under subsection (5) is likely to be in the most serious circumstances. Although there must be a diagnosis of how the proposed intervention will help to address the failure, it may not be possible to determine how long it will take to put things right.

    If there were a constraint on the Secretary of State to include a date in the direction, it would have no practical effect. It might merely lead to an artificial date being included. Nothing would prevent a further direction or series of directions being issued. It is better for all concerned for considered and timely monitoring to take place in accordance with the principles in the draft protocol.1 therefore urge hon.Members not to move amendment No.80.

    Amendment No.77 would severely limit the circumstances in which intervention could take place. Not only would the Secretary of State's discretion to determine the circumstances in which intervention may take place be removed, but a requirement that intervention must be based on an Audit Commission report produced under clause 13 would be introduced.

    By limiting the trigger for intervention to Audit Commission reports and excluding reports produced by other inspectorates, such as Ofsted or the social services inspectorate, the amendment undermines the work of these inspectorates and precludes their reports from having a major role in informing the process of enforcing best value policy.

    The amendment would also remove the possibility of intervention being triggered by evidence which has emerged from other sources, such as public complaints. We envisage that intervention will in most cases be triggered by a report, but in some instances other evidence may be critical and might provide the basis for intervention. For example, evidence of serious public harm or risks to vulnerable groups may emerge from public complaints or a prominent event. In these cases it may not be desirable for the Secretary of State to wait for an inspection report to be produced before any action can be taken. Examples were given last night that exemplified the points that I am making. I therefore recommend that amendment No.77 should not be pressed.

    Amendment No.78 presumes that all intervention under clause 14 will be based on an Audit Commission report, as proposed in amendment No.77. I have already explained why I think that is unacceptable. It is important that the authority concerned has the opportunity to make representations about any report as a result of which intervention is proposed. The Bill already provides for this under subsection (6)(a) in all but the most urgent of cases. I have explained why that provision is not appropriate in urgent cases. I therefore recommend that amendment No.78 is not pressed.

    The aim of amendment No.81 is to require that a direction issued under clause 14 must always be based on a report and not on evidence that has emerged from other sources. However, the amendment would not have that effect. Instead, its effect would be that in cases where intervention is based on an inspection report, the authority would retain the right to make representations about the report. In cases where there is no such report, the Secretary of State or the National Assembly for Wales would still be able to issue a direction under clause 14, but would not need to allow the authority to make representations about this direction.

    As I have mentioned, the Government believe that the Secretary of State should retain the ability to issue directions based on evidence emerging from sources other than reports and welcome the fact that the amendment does not secure that effect. It is a principle of the draft protocol that such evidence should always be clear. I hope that Opposition Members will withdraw amendment No.81.

    It is important that the Secretary of State retains the discretion to determine when urgent intervention may be justified. As I mentioned earlier, the triggers for intervention may be reports from other inspectorates or evidence that has emerged from other sources. When the Government intervene in urgent cases, it will be to protect the interests of local people. By precluding certain sources from providing evidence which could justify fast-track intervention, amendment No.87 would limit the Secretary of State's ability to protect vulnerable groups from harm. I am sure that that is not the intention. I therefore hope that the amendment, along with the others which have been discussed in this complex and extensive group, will not be pressed. I will move Government amendment No.6 at the appropriate stage.

    As the Minister has rightly said, this is quite a complex set of amendments. I am grateful to her for taking such trouble to deal with the amendments one by one. I am sure that the right hon.Lady will agree that some interesting points have been raised during the debate. I am especially grateful to my hon. Friend the Member for South Cambridgeshire (Mr.Lansley), who made several valid points on the amendments with which he was particularly concerned.

    I was pleased that the Minister at least recognised that clause 14 provides strong powers for the Secretary of State. There can be no disagreement about that. We still feel strongly that there is much nannying of local authorities inherent in the powers set out in clause 14 and in the Bill generally. I am disappointed that the right hon.Lady has not been able to accept our amendments, although I appreciate, as is always the way with these quite technical issues, that some of our amendments may not have had the effect that we intended. In some instances they may have had almost the opposite effect.

    I am grateful for the right hon.Lady's specific assurances on Government amendment No.6. We intend to hold her and the Government to them in practice. If we are not to have more tightly drawn protections in the Bill, her assurances will stand proxy for them. We shall want to see how they work out in practice.

    I was pleased with the right hon.Lady's undertaking on amendment No.48. That was very helpful. We look forward to hearing more about that in due course.

    The Minister touched on the draft protocol. We have not had a major discussion of it, but it is in many ways an extraordinary document. As I understand it, the protocol attempts to set out how the powers will be exercised, and that it is in no sense legally binding. In the event of a dispute between central and local government, it will be interesting to see to what extent the courts will take it into account in coming to a conclusion. Again, as I understand it, there is no formal scope for parliamentary scrutiny of such a protocol. It is probably comparable with the concordats that are being established between Government Departments and the Scottish Parliament and the Welsh Assembly. It is similar to what I believe are called executive agreements in the United States. I think that it can be fairly described as a new form of executive action that is immune from democratic control.

    I hope that the hon. Gentleman will not pursue that point. If he did, he would be saying that local government should have more say over what happens to it. The protocol is being established with the Local Government Association and not between Government agencies. The association, too, has democratic accountability. The hon. Gentleman and his colleagues are responsible for holding the Government to account, but we want to move forward with local government. It was our intention anyway, but local government pushed for a protocol to be established. I hope that the hon. Gentleman will not associate himself with opposition to the principle of a protocol prevailing in these circumstances.

    8.30 pm

    I am grateful for the Minister's intervention, although I did not particularly want to develop a substantial argument at this stage of our debate. The Minister said nothing contrary to my assertion that if there is a legal dispute, the protocol may or may not have any effect. I appreciate that we are in uncharted waters.Protocols and concordats are a relatively foreign import into our system and we must, perhaps, build up a body of experience and law before we can take a black and white view of them.

    We can legitimately complain that the protocol was not made available earlier and more widely. However, it is an interesting concept.

    If what was set out in the draft protocol is important and if, as I understand the Minister to be saying, it is necessary to define the Secretary of State's powers and, more precisely, how they are to be exercised, there is no reason not to specify in the Bill those restrictions on the Secretary of State's power and discretion. I shall not labour the point now—I suspect that we shall return to it in future.

    I shall end on a happier note and repeat my gratitude to the Minister for dealing in such detail with all our points. We are sorry that she has not accepted our amendments, but we are grateful for the assurances and undertakings that she has given.On the strength of those, I beg to ask leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    Amendment made: No.6, in page 3, line 34, at end insert—
    ?() Before specifying performance indicators or standards the Secretary of State shall consult such persons as he thinks fit.'.— [Mr.Robert Ainsworth.)

    Clause 5

    Best Value Reviews

    I beg to move amendment No.35, in page 4, line 5, after 'section', insert

    'unless it can satisfy the Secretary of State that there is a reason why this should not be done.'.

    With this, it will be convenient to discuss the following amendments: No.65, in page 4, leave out line 10.

    No.37, in page 4, line 43, at end insert—
    '(e) the upper cost limit of conducting a review.'.

    No.38, in clause 6, page 5, line 43, at end insert—
    `(m) to provide details of the cost of completing the plan.'.

    No.94, in clause 7, page 6, line 27, at end insert—
    '(g) indicating clearly the financial savings (if any) and quality improvements (if any) achieved from past plans, and to be delivered from the current plan.'.

    Amendment No.35 is in the name of my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth), but he has not been able to attend the Chamber for most of this afternoon's proceedings owing to the rather late date on which this business was fixed. I am sure that the House will forgive him for that. The amendment concerns the obligation in clause 5 on best value authorities to conduct best value reviews

    "in accordance with the provisions of any order made under this section."
    The amendment would add the caveat that there should be an obligation to conduct a best value review unless there is agreement between the authority and the Secretary of State that such a review should not be conducted. I understand that the amendment would make a substantive change to the Bill, and I shall be interested to hear what the Minister has to say about that and the other amendments.

    Amendment No.65 would delete clause 5(2)(c), which requires
    "specified functions to be reviewed in specified financial years."
    We are discussing only what the Secretary of State may put into an order about a best value plan. We are testing whether specified functions should be prescribed in that way. A function should be considered in the round, not in specified financial years. I should like the Minister to deal with amendments Nos.65 and 94 in his comments.

    Clause 5(4)(e) refers to
    "other best value authorities and…commercial and other businesses".
    They must be considered when a best value plan for reviewing a function is being drawn up. Subsection (4) says:
    "The Secretary of State may by order specify matters which an authority must include in a review of a function under this section; and in particular an order may require an authority…to assess the competitiveness"
    of its functions with regard to how similar functions are exercised by those other bodies. I would be grateful if the Minister addressed that point.

    I shall not take up too much time because I am also interested in the Minister's response to the amendments, particularly amendment No.35, which would have the added value of tipping the balance back towards the local authority. That would be welcome because clause 5 on best value reviews, which the amendment seeks to alter, and other clauses in this part of the Bill place in the hands of the Secretary of State disproportionate power relating to how best value reviews are to be conducted.

    We welcome also amendment No.65, which would remove the requirement for specific functions to be reviewed in specified financial years. That is unnecessarily prescriptive about the way in which best value reviews are to be undertaken. Given the partnerships, protocols and concordats that the Minister described in Committee and again in today's proceedings, it seems to us that clause 5 goes to the heart of the prescriptive nature of the Government's approach.

    I want to take this opportunity to say that I have had the chance to read the report of the Committee proceedings on this clause and others, and I was struck by the number of contributions made by my hon. Friends the Members for Torbay (Mr. Sanders) and for Taunton (Jackie Ballard).Unfortunately, I was unable to serve on the Committee because I was serving on another Committee. I want to express my gratitude to my hon. Friends for their hard work.

    I look forward to hearing what the Minister has to say about the amendments. I hope that the Government will be encouraging and say that they will support amendment No.35 in particular, as it tilts the balance back to local authorities and away from central Government prescription.

    I am afraid that I shall have to disappoint the hon. Gentleman. Amendment No.35 is designed to add an additional factor by which a best value authority could satisfy the Secretary of State that it should not carry out a best value review of its functions.

    Hon.Members will be aware that one of the fundamental requirements of the duty of best value is that authorities will have to carry out fundamental performance reviews of all their functions over a period, probably five years, so that we ensure that continuous improvements are made to all services, not just to those where there are serious shortcomings. That should apply to all local authorities across the board, so that a proper comparison of performance is made between authorities on a common basis. Neither local people nor the Government would be prepared to accept any exceptions.

    The amendment has the potential to create a bureaucratic machinery for the Secretary of State, who would need to evaluate all cases made by local authorities, to satisfy himself that the reasons given for not carrying out the review were valid. We could not rule out some local authorities using that as a means of delaying or avoiding reviews, at least in the short term. That would be unacceptable to all concerned, not least to the local community, who would lose out.

    Amendment No.65 would remove the flexibility and discretion that the Secretary of State needs to specify functions to be reviewed in specified financial years, as circumstances may warrant. If, for instance, a local authority should try to delay or avoid conducting the reviews of some of its services, or should face some particular crisis in the way that it provides its services, it is essential for the Secretary of State to have powers to direct the local authority to carry out those services quickly and effectively. It would be the local communities who would be most disadvantaged if the amendment were allowed to stand.

    Amendments Nos.37 and 38 relate to the costs of best value performance reviews and local performance plans. The amendments recognise that some compliance costs are likely to be involved in best value reviews and local performance plans. However, the drive for continuous improvement will deliver efficiency gains of around 2 per cent, which would far outweigh those costs.

    I have been asked to comment particularly on amendment No.94, which would add to the work of the auditor in his audit of performance plans. In auditing a performance plan, the auditor is required to state whether the plan has been prepared and published in accordance with legislation and guidance.

    Clause 6 sets out clearly that, in preparing plans, authorities must summarise their past performance with regard to performance indicators; compare their performance with previous financial years; summarise their success in meeting performance standards; and summarise their progress towards performance targets.

    An authority that has met the requirements of the Bill will have indicated the financial savings and the quality improvements that it achieved as a result of past plans, and those delivered by current plans. If the auditor is prepared to state that the plan has been prepared in such a way that it meets the requirements of clause 6, he will have ensured, by default, that financial savings and quality improvements are indicated.

    The amendments are, therefore, unnecessary and I ask hon.Members to withdraw them.

    I am not entirely convinced that amendment No.94 does not add anything to the Bill. By specifying that savings might be made, it might encourage best value performance plans to produce savings, which would improve value for money—or best value, as the Minister prefers to call it. However, in the interests of brevity, I beg to ask leave to withdraw the amendment.

    Amendment, by leave withdrawn.

    I beg to move amendment No.68, in page 4, line 29, leave out from 'other' to end of line 30 and insert 'parties'.

    With this it will be convenient to discuss amendment No.69, in page 4, line 31, leave out from 'other' to 'about' in line 32 and insert 'parties'.

    The amendments refer to clause 5, under which best value authorities must conduct best value reviews, and subsection (4) under which

    "The Secretary of State may by order specify matters which an authority must include in a review of a function".
    The order that the Secretary of State may draw up must include the requirement to assess the competitiveness of performance against various other parties. Those parties are specified in the Bill as
    "other best value authorities and commercial and other businesses".

    We suggest that an authority's performance should be measured against that of other parties, without those being specified. Similarly, in clause 5(4)(f), which sets out the obligation
    "to consult other best value authorities and commercial and other businesses",
    we believe that the word "parties" should replace the word "businesses". I should be grateful for the right hon.Lady's comments.

    Amendments Nos.68 and 69 betray a misunderstanding by Opposition Members. It was never our intention to make an exhaustive list of all the bodies that the Secretary of State may require best value authorities to consult, or against which they should assess their competitiveness. Any future order may go wider if there is a case for it to do so. However, to be useful and sensible, consultation must be meaningful. It may not be appropriate for it to include a wide range of bodies. There needs to be a link to those that can most usefully assist best value authorities in discharging the general duty.

    In clause 5(4)(e) and (f) we have listed the most obvious bodies against which a best value authority should compare its performance in exercising a function. Naturally, those bodies are other best value authorities and private sector bodies. Best value authorities should consult with such bodies and make comparisons in respect of their competitiveness.

    It is difficult to see how the current description omits anything of substance. The term "parties", which is the subject of the amendment and a substitute for our definition, defines nothing in particular. I am told that it is not helpful in achieving what the hon.Member for North Essex (Mr.Jenkin) is looking for.Using that term could send the wrong message about the breadth of consultation and mean that the essential link to those who can input most value to the process is lost.

    The House will remember that, yesterday, hon.Members pressed the point that consultation, if undertaken too loosely, could be expensive. We are concerned that the consultation should be appropriate and that the authority should consult the appropriate people—those who need to be consulted—during the process. It is important that we restrict the duty to such people.

    We would expect the existing definition to cover organisations such as chambers of commerce, about which the hon.Member for South Cambridgeshire (Mr.Lansley) was concerned.

    It being five hours after the commencement of proceedings, MR. DEPUTY SPEAKER, pursuant to the Order [24 March], put forthwith the Question already proposed from the Chair.

    Amendment negatived.

    MR. DEPUTY SPEAKER then put the remaining Questions required to be put at that hour.

    Clause 9

    Response To Audit

    Amendments made: No.16, in page 7, line 40, leave out 'as soon as practicable'.

    No.17, in page 7, line 42, at end insert—

    ?()A statement required by subsection (3) shall be prepared—
  • (a) before the end of the period of 30 working days starting with the day on which the authority receives the report,or
  • (b) if the report specifies a shorter period starting with that day, before the end of that period.'.
  • No.18, in page 8, line 5, leave out 'as soon as practicable' and insert—

  • '(a) before the end of the period of 30 working days starting with the day on which the authority receives the report, or
  • (b) if the report specifies a shorter period starting with that day, before the end of that period.
  • () For the purposes of this section a working day is a day other that—
  • (a) a Saturday or a Sunday,
  • (b) Christmas Day or Good Friday, or
  • (c) a day which is a bank holiday under the Banking and Financial Dealings Act 1971 in England and Wales.'— [Mr.Meale.]
  • Clause 13


    Amendment made: No.7, in page 9, line 26, at end insert

    (b) may publish a report and any information in respect of a report.'—[Mr.Meale.]

    Clause 18

    Contracts: Exclusion Of Non-Commercial Considerations

    Amendments made: No.8, in page 12, line 17, at end insert—

    ()provide for a matter to cease to be a non-commercial matter for specified purposes or to a specified extent;'.

    No.9, in page 12, line 25, leave out

    ?,by virtue of an order under this section, not a noncommercial matter,'

    and insert

    'the subject of an order under this section'. —[Mr.Meale.]

    Clause 21

    Audit Commission

    Amendments made: No.19, in page 13, line 12, at end insert—

    () The Audit Commission may delegate any of its functions under this Part to—
  • (a) a committee or sub-committee established by the Commission (including a committee or sub-committee including persons who are not members of the Commission), or
  • (b) an officer or servant of the Commission.'.
  • No.20, in page 13, line 29, at end insert—

    () After section 75(1)(e) of the Housing Associations Act 1985 (Housing Corporation and, in relation to Wales, Secretary of State: general functions) there shall be added—
    "(f) to provide on request, to such extent as the Relevant Authority considers appropriate, advice and assistance to the Audit Commission for Local Authorities and the National Health Service in England and Wales in relation to the Commission's functions under Part I of the Local Government Act 1999 (best value)"
    () The Audit Commission may make payments to the Housing Corporation or the Secretary of State in respect of advice and assistance provided under section 75(1)(f) of the Housing Associations Act 1985.'—[[Mr Meale.]

    Clause 24


    Amendments made: No.21, in page 14, line 38, after first `to' insert 'or in respect of.

    No.22, in page 14, line 38, after second `to' insert 'or in respect of.

    No.23, in page 14, line 40, after 'to' insert 'or in respect of.

    No.24, in page 15, line 4, at end insert—

    () Before issuing guidance under section (Coordination of inspections, &c) the Secretary of State shall, in addition to the consultation required by subsection (2)(c) above, consult the persons or bodies concerned.'—[Mr Meale.]

    Clause 25


    Amendment made: No.10, in page 15, line 5, leave out `18 and 21' and insert

    `19 and 21 to 24'. — [Mr Meale]

    Clause 26


    Amendments made: No.11, in page 15, line 16, after `order', insert `or regulations'.

    No.25, in page 15, line 20, leave out 'or 7' and insert

    , 7 or (Coordination of inspections, &c), and regulations under section 22,'—[Mr.Meale.]

    Clause 31


    Amendment made: No.12, in page 17, line 33, at end insert—

    () The Secretary of State may make grants to the Audit Commission, out of money provided by Parliament, in respect of expenditure incurred or to be incurred by the Commission under this Act
    () The National Assembly for Wales may make grants to the Audit Commission in respect of expenditure incurred or to be incurred by the Commission under this Act—'[Mr.Meale.]

    Bill reported, with amendments.

    Order for Third Reading read.

    Motion made, and Question put forthwith, pursuant to the Order [24 March], That the Bill be now read the Third time. —[Mr.Robert Ainsworth.]

    The House divided: Ayes 319, Noes 170

    Division No.131]

    [8.48 pm


    Ainger, NickBrown, Russell (Dumfries)
    Ainsworth, Robert (Cov'try NE)Browne, Desmond
    Allen, GrahamBuck, Ms Karen
    Anderson, Donald (Swansea E)Burden, Richard
    Anderson, Janet (Rossendale)Burgon, Colin
    Armstrong, Ms HilaryButler, Mrs Christine
    Atkins, CharlotteByers, Rt Hon Stephen
    Austin, JohnCaborn, Richard
    Banks, TonyCampbell, Alan (Tynemouth)
    Barnes, HarryCampbell, Mrs Anne (C'bridge)
    Barron, KevinCampbell, Ronnie (Blyth V)
    Battle, JohnCampbell-Savours, Dale
    Bayley, HughCann, Jamie
    Beard, NigelCaplin, Ivor
    Beckett, Rt Hon Mrs MargaretCasale, Roger
    Begg, Miss AnneCaton, Martin
    Benn, Rt Hon TonyChapman, Ben (Wirral S)
    Bennett, Andrew FChaytor, David
    Benton, JoeClapham, Michael
    Bermingham, GeraldClark, Rt Hon Dr David (S Shields)
    Best, HaroldClark, Paul (Gillingham)
    Betts, CliveClarke, Charles (Norwich S)
    Blackman, LizClarke, Eric (Midlothian)
    Blizzard, BobClarke, Rt Hon Tom (Coatbndge)
    Boateng, PaulClarke, Tony (Northampton S)
    Borrow, DavidClelland, David
    Bradley, Keith (Withington)Clwyd, Ann
    Bradley, Peter (The Wrekin)Coaker, Vernon
    Bradshaw, BenCoffey, Ms Ann
    Brinton, Mrs HelenCohen, Harry
    Brown, Rt Hon Nick (Newcastle E)Coleman, lain

    Colman, TonyHinchliffe, David
    Cook, Frank (Stockton N)Hodge, Ms Margaret
    Corbett, RobinHoey, Kate
    Corbyn, JeremyHoon, Geoffrey
    Corston, Ms JeanHope, Phil
    Cousins, JimHopkins, Kelvin
    Cranston, RossHowarth, Alan (Newport E)
    Crausby, DavidHowarth, George (Knowsley N)
    Cryer, Mrs Ann (Keighley)Howells, Dr Kim
    Cryer, John (Homchurch)Hughes, Kevin (Doncaster N)
    Cummings, JohnHumble, Mrs Joan
    Cunningham, Rt Hon Dr JackHutton, John


    Iddon, Dr Brian
    Curtis-Thomas, Mrs ClaireIllsley, Eric
    Dafis, CynogJackson, Ms Glenda (Hampstead)
    Dalyell, TamJackson, Helen (Hillsborough)
    Darling, Rt Hon AlistairJamieson, David
    Darvill, KeithJenkins, Brian
    Davey, Valerie (Bristol W)Johnson, Alan (Hull W & Hessle)
    Davidson, IanJohnson, Miss Melanie
    Davies, Rt Hon Denzil (Llanelli)

    (Welwyn Hatfield)

    Davies, Geraint (Croydon C)Jones, Barry (Alyn & Deeside)
    Dean, Mrs JanetJones, Helen (Warrington N)
    Denham, JohnJones, Ms Jenny
    Dismore, Andrew

    (Wolverh'ton SW)

    Dobbin, JimJones, Jon Owen (Cardiff C)
    Donohoe, Brian HJones, Dr Lynne (Selly Oak)
    Doran, FrankJones, Martyn (Clwyd S)
    Dowd, JimJowell, Rt Hon Ms Tessa
    Drew, DavidKaufman, Rt Hon Gerald
    Drown, Ms JuliaKeeble, Ms Sally
    Dunwoody, Mrs GwynethKeen, Alan (Feltham & Heston)
    Eagle, Angela (Wallasey)Keen, Ann (Brentford & Isleworth)
    Edwards, HuwKemp, Fraser
    Efford, CliveKhabra, Piara S
    Ellman, Mrs LouiseKidney, David
    Ennis, JeffKilfoyle, Peter
    Field, Rt Hon FrankKing, Andy (Rugby & Kenilworth)
    Fisher, MarkKing, Ms Oona (Bethnal Green)
    Fitzsimons, LornaKingham, Ms Tess
    Flynn, PaulKumar, Dr Ashok
    Follett, BarbaraLadyman, Dr Stephen
    Foster, Rt Hon DerekLawrence, Ms Jackie
    Foster, Michael Jabez (Hastings)Lepper, David
    Foster, Michael J (Worcester)Leslie, Christopher
    Fyfe, MariaLevitt, Tom
    Galloway, GeorgeLewis, Ivan (Bury S)
    Gapes, MikeLewis, Terry (Worsley)
    Gardiner, BarryLinton, Martin
    George, Bruce (Walsall S)Livingstone, Ken
    Gerrard, NeilLloyd, Tony (Manchester C)
    Gibson, Dr IanLock, David
    Gilroy, Mrs LindaLove, Andrew
    Godsiff, RogerMcAvoy, Thomas
    Goggins, PaulMcCabe, Steve
    Golding, Mrs LlinMcCafferty, Ms Chris
    Gordon, Mrs EileenMacdonald, Calum
    Griffiths, Jane (Reading E)McDonnell, John
    Griffiths, Nigel (Edinburgh S)McIsaac, Shona
    Griffiths, Win (Bridgend)Mackinlay, Andrew
    Grocott, BruceMcNamara, Kevin
    Grogan, JohnMcNulty, Tony
    Hain, PeterMacShane, Denis
    Hall, Mike (Weaver Vale)Mactaggad, Fiona
    Hall, Patrick (Bedford)McWalter, Tony
    Hamilton, Fabian (Leeds NE)Mahon, Mrs Alice
    Hanson, DavidMallaber, Judy
    Harman, Rt Hon Ms HarrietMendelson, Rt Hon Peter
    Heal, Mrs SylviaMarsden, Gordon (Blackpool S)
    Healey, JohnMarshall, David (Shettleston)
    Henderson, Doug (Newcastle N)Marshall, Jim (Leicester S)
    Henderson, Ivan (Harwich)Marshall—Andrews, Robert
    Heppell, JohnMartlew, Eric
    Hesford, StephenMaxton, John
    Hewitt, Ms PatriciaMeacher, Rt Hon Michael
    Hill, KeithMeale, Alan

    Merron, GillianSmith, Rt Hon Chris (Islington S)
    Michie, Bill (Shefld Heeley)Smith, Miss Geraldine
    Milbum, Rt Hon Alan

    (Morecambe & Lunesdale)

    Miller, AndrewSmith, Jacqui (Redditch)
    Moffatt, LauraSmith, John (Glamorgan)
    Moonie, Dr LewisSmith, Llew (Blaenau Gwent)
    Morgan, Ms Julie (Cardiff N)Soley, Clive
    Morgan, Rhodri (Cardiff W)Spellar, John
    Morley, ElliotSquire, Ms Rachel
    Morris, Ms Estelle (B'ham Yardley)Starkey, Dr Phyllis
    Mounttord, KaliSteinberg, Gerry
    Mudie, GeorgeStevenson, George
    Mullin, ChrisStewart, Ian (Eccles)
    Murphy, Denis (Wansbeck)Stinchcombe, Paul
    Naysmith, Dr DougStoate, Dr Howard
    O'Brien, Mike (N Warks)Stott, Roger
    O'Hara, EddieStrang, Rt Hon Dr Gavin
    Olner, BillStraw, Rt Hon Jack
    Osborne, Ms SandraStringer, Graham
    Palmer, Dr NickStuart, Ms Gisela
    Pearson, Ian Sutcliffe, Gerry
    Pendry, TomTaylor, Ms Dan (Stockton S)
    Pike, Peter LTaylor, David (NW Leics)
    Plaskitt, JamesTemple-Morris, Peter
    Pollard KerryThomas, Gareth (Clwyd W)
    Pond, ChrisThomas, Gareth R (Harrow W)
    Powell, Sir RaymondTipping, Paddy
    Prentice, Ms Bridget (Lewisham E)Todd, Mark
    Prentice, Gordon (Pendle)Touhig, Don
    Prosser, GwynTrickett, Jon
    Purchase KenTruswell, Paul
    Quinn LawrieTurner, Dennis (Wolverh'ton SE)
    Radice GilesTurner, Dr Desmond (Kemptown)
    Twigg, Derek (Halton)
    Rammell, BillTwigg, Stephen (Enfield)
    Rapson Syd, Vaz Keith
    Reid, Rt Hon Dr John (Hamilton N)Wall ley, Ms Joan
    Robertson, Rt Hon GeorgeWareing, Robert N

    (Hamilton S)

    Watts, David
    Roche, Mrs BarbaraWhite, Brian
    Rogers, AllanWhitehead, Dr Alan
    Rooker, JeffWicks, Malcolm
    Ross, Ernie (Dundee W)Williams, Rt Hon Alan
    Rowlands, Ted

    (Swansea W)

    Roy, FrankWilliams, Alan W (E Carmarthen)
    Ruane, ChrisWills, Michael
    Ruddock, JoanWilson, Brian
    Russell, Ms Christine (Chester)Winnick, David
    Savidge, MalcolmWinterton, Ms Rosie (Doncaster C)
    Sedgemore, BrianWise, Audrey
    Shaw, JonathanWoolas, Phil
    Sheldon, Rt Hon RobertWright, Anthony D (Gt Yarmouth)
    Shipley, Ms DebraWright, Dr Tony (Cannock)
    Simpson, Alan (Nottingham S)Wyatt, Derek
    Singh, Marsha
    Skinner, Dennis

    Tellers for the Ayes:

    Smith, Rt Hon Andrew (Oxford E)

    Mr. Greg Pope and Jane Kennedy.

    Smith, Angela (Basildon)


    Ainsworth, Peter (E Surrey)Bottomley, Rt Hon Mrs Virginia
    Allan, RichardBrady, Graham
    Ancram, Rt Hon MichaelBrand, Dr Peter
    Arbuthnot, Rt Hon JamesBrazier, Julian
    Atkinson, David (Bour'mth E)Breed, Colin
    Atkinson, Peter (Hexham)Brooke, Rt Hon Peter
    Baker, NormanBrowning, Mrs Angela
    Baldry, TonyBruce, Ian (S Dorset)
    Ballard, JackieBruce, Malcolm (Gordon)
    Beggs, RoyBurnett, John
    Beith, Rt Hon A JBurns, Simon
    Beresford, Sir PaulBurstow, Paul
    Blunt, CrispinCable, Dr Vincent
    Body, Sir RichardCampbell, Rt Hon Menzies (NE Fife)
    Boswell, Tim
    Bottomley, Peter (Worthing VI)Cash, William

    Chapman, Sir Sydney (Chipping Barnet)Hammond, Philip
    Hancock, Mike
    Chope, ChristopherHarris, Dr Evan
    Clappison, JamesHarvey, Nick
    Clark, Dr Michael (Rayleigh)Hawkins, Nick
    Clifton-Brown, GeoffreyHayes, John
    Collins, TimHeald, Oliver
    Colvin, MichaelHeathcoat-Amory, Rt Hon David
    Cormack, Sir PatrickHogg, Rt Hon Douglas
    Cotter, BrianHoram, John
    Gran, JamesHoward, Rt Hon Michael
    Davey, Edward (Kingston)Howarth, Gerald (Aldershot)
    Davis, Rt Hon David (Haltemprice & Howden)Hughes, Simon (Southwark N)
    Hunter, Andrew
    Day, StephenJack, Rt Hon Michael
    Donaldson, JeffreyJackson, Robert (Wantage)
    Duncan, AlanJenkin, Bernard
    Duncan Smith, IainJohnson Smith,
    Evans, NigelRt Hon Sir Geoffrey
    Faber, DavidKeetch, Paul
    Fabricant, MichaelKey, Robert
    Fallon, MichaelKing, Rt Hon Tom (Bridgwater)
    Fearn, RonnieLaing, Mrs Eleanor
    Flight, HowardLait, Mrs Jacqui
    Forsythe, CliffordLansley, Andrew
    Forth, Rt Hon EricLeigh, Edward
    Foster, Don (Bath)Letwin, Oliver
    Fowler, Rt Hon Sir NormanLewis, Dr Julian (New Forest E)
    Fox, Dr LiamLidington, David
    Fraser, ChristopherLilley, Rt Hon Peter
    Garnier, EdwardLloyd. Rt Hon Sir Peter (Fareham)
    George, Andrew (St Ives)Loughton, Tim
    Gibb, NickLuff, Peter
    Gill, ChristopherLyell, Rt Hon Sir Nicholas
    Gorman, Mrs TeresaMacGregor, Rt Hon John
    Gray, JamesMacKay, Rt Hon Andrew
    Greenway, JohnMcLoughlin, Patrick
    Grieve, DominicMalins, Humfrey
    Hamilton, Rt Hon Sir ArchieMates, Michael

    Mawhinney, Rt Hon Sir BrianStreeter, Gary
    May, Mrs TheresaStunell, Andrew
    Michie, Mrs Ray (Argyll & Bute)Swayne, Desmond
    Moore, MichaelTapsell, Sir Peter
    Moss, MalcolmTaylor, Ian (Esher & Walton)
    Norman, ArchieTaylor, John M (Solihull)
    Öpik, LembitTaylor, Matthew (Truro)
    Ottaway, RichardThompson, William
    Page, RichardTonge, Dr Jenny
    Paterson, OwenTownend, John
    Pickles, EricTredinnick, David
    Prior, DavidTrend, Michael
    Randall, JohnTyrie, Andrew
    Redwood, Rt Hon JohnViggers, Peter
    Bendel, DavidWallace, James
    Robathan, AndrewWalter, Robert
    Robertson, Laurence (Tewk'b'ry)Wardle, Charles
    Roe, Mrs Marion (Broxboume)Waterson, Nigel
    Ross, William (E Lond'y)Webb, Steve
    Rowe, Andrew (Faversham)Wells, Bowen
    Ruffley, DavidWhittingdale, John
    Russell, Bob (Colchester)Widdecombe, Rt Hon Miss Ann
    St Aubyn, NickWilkinson, John
    Sanders, AdrianWilletts, David
    Sayeed, JonathanWillis, Phil
    Shephard, Rt Hon Mrs GillianWilshire, David
    Shepherd, RichardWinterton, Nicholas (Macclesfield)
    Simpson, Keith (Mid-Norfolk)Woodward, Shaun
    Smyth, Rev Martin (Belfast S)Yeo, Tim
    Soames, NicholasYoung, Rt Hon Sir George
    Spicer, Sir Michael
    Spring, Richard

    Tellers for the Noes:

    Stanley, Rt Hon Sir John

    Mrs. Caroline Spelman and Sir David Madel.

    Steen, Anthony

    Question accordingly agreed to.

    Bill read Third time and passed.


    9.5 pm

    Earlier this evening, four British aircraft, together with missiles from the submarine HMS Splendid, attacked targets in the Federal Republic of Yugoslavia as part of a co-ordinated NATO air strike. Two other aircraft flew supporting missions.

    Hon.Members may have heard the Prime Minister's remarks from Berlin earlier this evening, when he said:
    "I want to pay tribute, at the outset, to our forces. We owe a huge debt to them for their courage, and their professionalism. Tonight, there are families in Britain who will be feeling a real sense of anxiety. They can feel too a real sense of pride at the contribution their loved ones make to peace and stability in Europe."
    I am sure that the House will wish to join me in echoing those sentiments.

    The UK Harriers operated out of Gioia del Colle in Italy. In addition, attacks were mounted by seven United States Air Force B52 bombers from Fairford in Gloucestershire.

    The strike in which they participated was a very significant one, involving both air-launched and sea-launched cruise missiles and manned aircraft from the United States, the United Kingdom, France, Canada and Spain. A number of other allied air forces flew supporting missions.

    The targets being attacked in this first phase were mainly elements of the Yugoslavian air defence system, but also included a number of Serbian military facilities related to the repression in Kosovo.

    The NATO military action, which has the full support of all 19 member states, is intended to support the political aims of the international community. It is justified as an exceptional measure to prevent an overwhelming humanitarian catastrophe.

    It is, and will continue to be, directed towards disrupting the violent attacks being committed by the Yugoslav army and the Serbian special police force and weakening their ability to continue their repressive strategy.

    Two United Nations Security Council resolutions, 1199 and 1203, underpin our actions. Both demanded that the Serbs cease all actions against the civilian population and withdraw the security units used for civilian repression.Milosevic has been in breach of every single part of those UN resolutions.

    As the Prime Minister said yesterday, a quarter of a million Kosovars, more than 10 per cent.of the population, are now homeless as a result of repression by Serb forces. Sixty-five thousand people have been forced from their homes in the past month, and no fewer than 25,000 in the days since the peace talks broke down. Families are being uprooted and driven from their homes. There are disturbing reports of the destruction of whole villages.

    Over the past few days, we have all seen harrowing and unforgettable images on the television and in newspapers. The scenes are more reminiscent of the middle ages than of Europe on the eve of the 21st century.

    I would remind the House that the decision to initiate air strikes was taken last night only after it became clear that the final diplomatic effort in Belgrade had not met with success and that all efforts to achieve a negotiated political solution to the Kosovo crisis had failed.

    Over the past year the international community, with Britain at the forefront, has made intensive efforts to seek a peaceful solution.Milosevic has either rejected these approaches or entered into undertakings on which he has subsequently reneged, notably his blatant failure to observe the limits on army and special police numbers in Kosovo.Military force is now the only option.

    NATO's position is clear, and was set out in its statement of 30 January. We seek to bring an end to the violence in order to avert a humanitarian catastrophe and support the completion of negotiations on an interim political settlement.

    Three demands were made at the time, all of which Mr.Milosevic has so far rejected: he has not ended his use of excessive and disproportionate force in Kosovo; he has broken the undertaking that he gave last October to reduce Serb forces in Kosovo to pre-February 1998 levels; and he has so far refused to accept the interim political settlement that was negotiated at the peace talks in France earlier this year.

    Tonight the NATO alliance—19 nations of which 13 flew their aircraft tonight—has backed its words with action. It has hit hard and it will continue to hit hard until its military objectives are achieved.

    What happens next is up to Mr.Milosevic. It remains open to him to show at any time that he is ready to meet the demands of the international community. The demands are reasonable: they are an autonomous Kosovo within Serbia and an international military force to underpin the settlement. We hope that the Yugoslav people will understand that this is the only practical basis on which to move forward without further bloodshed.

    I take this opportunity tonight to address a warning to those in the Yugoslav army and other forces who may be in receipt of orders to repress the Albanians in Kosovo: "Do not assume that you can carry out such activity with impunity.You have a personal responsibility not to exceed the bounds of international law.You run the risk of being prosecuted by the International Criminal Tribunal for the former Yugoslavia at The Hague if you do so."

    I also address the Kosovar Albanians: "You have had the courage to commit yourselves to the path of peace. It is imperative that you remain committed to that approach and refrain from provocative actions in the days to come."

    Neither NATO nor the United Kingdom is waging war against the people of Yugoslavia. We will make every effort to avoid civilian casualties.Our objective is to reduce the human suffering and violence against the civilian population of Kosovo. We seek to bring to an end the human tragedy now unfolding.

    We know the risks of action and we salute the bravery of our service men and women who are undertaking these operations on our behalf. To the families of the brave men and women of our armed forces involved in this action—and indeed to the British people as a whole—I say this: we should remind ourselves that history has proved time and time again that standing up to aggression is the only way to stop such brutal leaders.

    As my right hon. Friend the Prime Minister said to the House yesterday:
    "If Kosovo was left to the mercy of Serbian repression, there is not merely a risk, but the probability of re-igniting unrest in Albania, of a destabilised Macedonia, of almost certain knock-on effects in Bosnia, and of further tension between Greece and Turkey. Strategic interests for the whole of Europe are at stake." —[Official Report, 23 March 1999; Vol.328, c.161.]
    We, as fellow Europeans, cannot contemplate, on our own doorstep, a disintegration into chaos and disorder.

    This is indeed a grave moment. Those who have doubted NATO's resolve have been shown to be wrong. We are prepared to see this through. We do not expect that air attacks will lead to an instant end to the brutality in Kosovo-Yugoslavia has a substantial military machine and is under the control of a ruthless man. But our attacks will make it clear to the president and his security forces that if they continue to use excessive force in Kosovo, they will pay a very high price indeed.

    I thank the Deputy Prime Minister for his statement. As he says, this is a grave moment and our forces are engaged in a perilous mission. We join him in giving our armed forces our full support and we have total confidence in their skill, courage and ability. We share with their families and loved ones the combination of pride and anxiety that they must be feeling.

    As my right hon. Friend the Leader of the Opposition said yesterday, we support the Government in the action that they have taken. We also entirely support and endorse the warning that the Prime Minister has given to those who may contemplate using disproportionate and inhumane methods in the province of Kosovo.

    Will the Deputy Prime Minister confirm that the action is aimed at military targets and that every effort will be made to avoid civilian casualties?

    Will the right hon. Gentleman confirm—even if it is not appropriate to spell them out in public—that NATO has clear criteria by which it will judge the success of its action? In view of the accusation by Russia that this is an act of aggression, will he take the opportunity to set out clearly for the House the legal basis for NATO's action? In view of the massive movements of refugees to which the Prime Minister referred yesterday, can the right hon. Gentleman tell the House what action the Government are taking to help the Governments of Albania and Macedonia cope with the consequences of this tide of human misery?

    Tomorrow's debate will allow the Foreign Secretary and the Secretary of State for Defence to update the House, and will allow Members to discuss this matter in more detail. However, can the right hon. Gentleman give an assurance that he will keep the House fully informed as developments unfold?

    I am grateful for the support offered by the right hon. Gentleman—which is shared on both sides of the House—for the Government's action. I can confirm that our targets are totally military, and not civilian. I understand the concern of the Russians about the legal justification—to which the right hon. Gentleman referred—but the use of force is justified under international law to prevent an overwhelming humanitarian disaster. We believe that what is happening in Kosovo could be such a disaster, and that is the legal justification for our action on this occasion. We will review what we can do to help Macedonia and Albania, and perhaps in the debate tomorrow we can give further information to the right hon. Gentleman. The House can be assured that we will continue to keep it informed, as we have tried to do this evening by reporting to it on the very first occasion when we could make a statement.

    President Milosevic is a loser. He was a loser in Bosnia, when he could have emerged with a much better deal, and an excellent deal was available to him at Rambouillet.Ultimately, he will lose. What lines of communication are still open to him? Is the deal that was on the table at Rambouillet still available to him?

    Yes, I assure my hon. Friend that the deal is still available, and everybody would want to see it pursued and achieved. At the moment, we are trying to prevent a humanitarian tragedy in Kosovo.Our lines of communication are the normal ones through the various UN bodies and organisations. We will be available to be informed if there is any change of mind but, at the moment, the NATO action clearly is to prevent such a tragedy and to prevent the Yugoslav authorities from deploying their military might, as they are at the moment.

    This is clearly not the occasion upon which to probe the Government on the precise nature of the operations that have been undertaken, or which may be undertaken in future. Does the Deputy Prime Minister agree that it is right for us to express our support for our military, and to express the hope for the safe return of all the aircraft and aircrew involved in the operations this evening? Does he agree that other, wider issues can be left until the debate tomorrow? Is it not right that the House should be in sombre mood, because to ask our young men and women to risk their lives in aid of political objectives is a sombre and anxious request to make of them?

    The Deputy Prime Minister said that the scenes had been reminiscent of the middle ages. Have they not also been reminiscent of the second world war, which we believed had been fought to put an end to that kind of repression? Finally, will he confirm that, at any time, Mr.Milosevic has it within his power to bring an end to the operations by bringing an end to his own opposition to the political settlement which remains on the table?

    I am grateful for the right hon. And learned Gentleman's expression of support and for his understanding of the difficulty concerning how much information can be given on these occasions, which I am sure the House fully appreciates. We hope for the safe return of our aircraft, and if that happens in the latter minutes of this discussion, I shall of course inform the House. Everyone would want that to be the case and will bear in mind the great contribution of our soldiers and aircrew.

    This is indeed a sombre moment and, on reflection, there are comparisons with the lead-up to the second world war, but we would do best to keep those memories in the back of our mind and learn the lesson that if we appease dictators they go on to create even greater mayhem and repression. We must say to Mr.Milosevic, "You started it, and you have the chance to end it. We have to make it clear that we consider your actions repressive and offensive. We want to stop them, and that is what we are doing with our NATO forces."

    Is the Deputy Prime Minister aware that the only body in the world that can deal with an humanitarian crisis is the United Nations itself, by organising a peace conference without the threat or the use of force and providing aid on the necessary scale? Is he also aware that NATO does not act on behalf of the international community, and never has done?

    People of my generation, who lived through the 1930s and the 1940s, feel a sense of utter shame and disgust that the British Government should be breaking its solemn commitments to the United Nations and launching air attacks on Serbia, which was praised to the skies during the war, because it was the Serbian resistance to Hitler that gave us the opportunity of the victory that we secured. To demonise Serbia now, when Yugoslavia was deliberately broken up by western policy makers, is to mislead the public into a crusade that does not exist.

    The right hon. Gentleman should bear it in mind that, regardless of whether they were allies many years ago, the Serbs today are murdering an awful lot of people in Kosovo. I understand that he is talking of 50 years ago and the concerns of the 1930s and 1940s, but there were great debates in our movement at that time about Hitler and about hawking one's conscience about. I am bound to say that we were wrong not to have dealt with appeasement at that time, and I hope that we have learned our lesson. That is why we are doing what we are doing today.

    The whole House is united in condemning repression, from wherever it comes, and pays tribute to our troops. Is the Deputy Prime Minister aware that, despite the constraints that we are naturally under, there is genuine concern about the effect of bombing a sovereign, independent nation, about the innocents who may lose their lives and about what will happen if the bombing fails to shake the dictator's resolve?

    Will the Deputy Prime Minister confirm that there can and will be no question of sending in ground troops, and will he inform the House of his plan for the future if bombing fails to achieve its object?

    I think the whole House shares concerns about what may happen, but I have made it clear that the targets are military, not civilian. As for innocent people losing their lives, that is happening to many thousands in Kosovo and was happening throughout the time of negotiations, when the repression of innocent people, many of whom were driven out of their homes, was continuing as we tried to find an agreement.One has to make a judgment.

    The Prime Minister made it clear yesterday that we have no intention of sending in ground forces to fight a war in Kosovo.Our forces are in the region to support a settlement, if agreed, and not to fight their way in, which would require more than 100,000 troops and risk high casualties. There is not general agreement in favour of such action.Our targets are specific. They are basically military and we are clear about what we intend to achieve.

    Does my right hon. Friend agree that the bombing did not start tonight and that bombing has been going on for some considerable time against the Kosovar Albanians? Does he agree that appeals for dialogue, although they have been heeded and continued, are somewhat futile when one party believes that the only useful dialogue is through the barrel of a gun? Does my right hon. Friend agree with the school of thought that Milosevic needed that armed intervention to protect himself from a backlash among his electorate if he made any concessions on Kosovo? In the fervent hope that that proves to be correct as quickly as possible, will my right hon. Friend tell us what measures might be in train quickly to restore normal relations between ourselves and Russia, which may have been adversely affected in the continuing negotiations?

    I think the House will agree with my hon. Friend's comments that a great deal of repression was going on in Kosovo before the bombing and during the negotiation of the UN resolutions that made it clear that the Serbs should desist—they failed to do so.Of course we are concerned about relationships with countries such as Russia. We shall maintain those contacts, and those countries have made it clear, both in the UN and other councils, that they deplore the actions that have been taken. While there may be disagreement with the actions that have been taken by NATO today, there is no doubt that those countries do not support the position put forward by Milosevic and his Government.

    I have considerable support for the statement made by the right hon. Gentleman. Compassion for the humanitarian difficulties that have been faced, including massacres, in the past months—almost years—is worthy of our support on humanitarian grounds. When the Deputy Prime Minister says that military installations are being bombed, does that include the ground forces of the Serbian nation? That is the area that causes us great concern. If we are to intervene and the war is to finish, we want to be certain that not only radar installations and airports are destroyed but that Serbian ground forces are rendered useless and cannot intervene.

    I think that the right hon. Gentleman will be aware that on such occasions one does not detail the military targets. That is normal practice. I understand the reasons for his question, but he can be assured that the targets are military ones.

    Will my right hon. Friend relay to those pilots who are out there tonight in darkness over Yugoslavia a simple message from the House of Commons? That is that we overwhelmingly support them in their endeavours. They are acting for Britain and we are proud of them.

    My hon. Friend has made it clear in a powerful way that that is exactly what the House feels. It has shown in its expressions that we fully support them in the pilots endeavours and admire the courage that they use to achieve them.

    Does the right hon. Gentleman understand the great sense of dismay that many in the House feel? Does he agree that we have gone to war without there being a sufficient national interest, without there being a clear understanding of the strategic and political objectives, without there being a proper exit strategy and without the authority of the House? The right hon. Gentleman and the Government will have the support of the House because the credibility of NATO has been put at issue and because our service men are in action, but we should not have been brought to this pass.

    I should have thought that the right hon. And learned Gentleman would be from his experience of Bosnia at the Foreign and Commonwealth Office that these matters are extremely difficult and that our justifications for taking the actions were the ones that I outlined. The national interest is in upholding international law. We act within that international law and the use of force is justified under that law to prevent an overwhelming humanitarian disaster. There is no doubt that that was about to take place and, indeed, has been taking place for some time. Frankly, one must make a judgment: do we want to sit in front of the television, observe what is happening and say, "Is this in the national interest?" I think that the overwhelming majority of the public will see those events and want this Government to do something and, along with other NATO countries, go in to try to stop it. That is what we are doing.

    I hope that my right hon. Friend accepts that we recognise the difficulties that we all face in this grave situation. Will he reiterate to those who need to be told that the House overwhelmingly supports the Government and British and NATO forces? Will he ask doubters what consolation it would be to a Kosovan running away from being killed to be able to say that the British Government did not act, but were upholding a precise, legalistic definition of international law? We can be proud of what we are doing.

    As my hon. Friend has made clear, the House overwhelmingly supports our forces in this action. We offer our consideration and sympathy to the families of our soldiers, airmen and airwomen. We are proud to be involved in these matters, we have a right to be involved, and our action is based fully on international law. It will help people who are being brutally repressed, and that is the job of a democratic nation. I am proud to belong to a country that is part of an alliance trying to stop that repression.

    The Deputy Prime Minister should know that there comes a moment at which taking action on humanitarian issues is necessary, whatever doubts we have. The Government have done absolutely the right thing.

    Will the right hon. Gentleman remind the right hon.Member for Chesterfield (Mr. Bean) that his views are much more like those that pertained at the time of the League of Nations than those that currently exist? Will he take note of the fact that all 19 members of NATO—not just America and Britain—are involved in this exercise? Will he consider whether all 19 members have understood the full implications of launching an aerial bombardment on military targets, which may have to be protracted and which may require other measures if political objectives are to be achieved?

    I want to take this opportunity to inform the House that all the Harriers have returned safely. We shall all be pleased about that.

    I must tell the hon.Member for Esher and Walton (Mr. Taylor) that the House of Commons should reflect all points of view. No one can be absolutely sure in his or her judgments, and my right hon. Friend the Member for Chesterfield (Mr. Bean) is entitled to express his view. That is what democracy is about. Differences of opinion are the nature of democracy.

    I believe that the 19 nations fully understand the consequences of this action. We shall maintain consensus throughout the action.

    Can we return to the subject of the Russians, which I raised yesterday with the Prime Minister? Hon.Members who sat in the previous Parliament will remember our Russian-speaking colleague Harold Elletson. He rang me tonight from Moscow to say that the Duma had passed a resolution not discouraging Russians from going to fight for the Serbs. That is alarming.

    Even more alarming, however, are suggestions that Russia is prepared to provide Serbia with a supply of arms. Can we be told, factually, what contact there has been with the Russians, what they have said and how contacts might be maintained?

    My hon. Friend will be well aware that Russia agreed with the Security Council resolution that made it clear that Serbia should desist from its terrible actions. The Russians made it absolutely clear that they thought that Yugoslavia was in breach, and was causing a humanitarian catastrophe. While they have made it clear that they do not agree with bombing, I do not believe that they will support the actions of some of their own people to join the Serb forces. We are doing what we believe to be right.Others must make their judgment. Normal contacts will be maintained with other countries through diplomatic channels, as we would wish.

    Can the Deputy Prime Minister assure the House that the actions that have begun have in no way compromised the security of British troops already serving in Bosnia and Macedonia?

    We have already made it clear that all necessary measures have been taken to protect NATO troops in neighbouring countries from a possible attack by Yugoslav forces. The Yugoslav Government should understand that any attack on those troops would lead to the most serious consequences. That has been made clear by our military commanders. I hope that the Yugoslays understand fully.

    Will my right hon. Friend confirm that this House is united in wishing that the action had not been necessary? We all hope that there will be no civilian casualties, but the simple fact is that civilians were dying in Kosovo as a result of the actions of Milosevic. It is therefore clear that the solution to the problem is for Milosevic to sit down and talk now. The sooner he does that, the sooner the action can cease. We would all welcome his decision to do so.

    The House will recognise that a real humanitarian catastrophe is evolving in Kosovo. It is estimated that more than 25,000 people have fled their homes since Sunday 21 March and that there are 420,000 refugees in and outside Kosovo. I think that the Yugoslav authorities understand all too well exactly the position that we have taken. We should like to see peace. We should like to see them accept the agreements that were negotiated in France. If they did so, the military action could end, but in the meantime we are not prepared to step aside and let them commit atrocities.

    Everyone in this House acknowledges the seriousness of the situation and the heavy burden of responsibility on the shoulders of Her Majesty's Government. At a time when our armed forces are putting their lives at risk, it is necessary to demonstrate solidarity. We wish them well, notwithstanding the reservations that many of us have about this operation. There will be plenty of time to express those reservations tomorrow afternoon during the debate. What will constitute a success in this operation? What will happen if Milosevic does not return to the negotiating table as a result of the air strikes?

    I am grateful for the hon. Gentleman's expression of solidarity and support.Of course, these matters are day-to-day judgments, but the objectives of the bombing are clear. They are to curb the ability to attack the people of Kosovo and to disrupt the armed forces of Yugoslavia involved in the violence in Kosovo. We have made it clear that that is the intention of the action that we are taking and we hope that it will have some effect.

    In the interests of balance, will the Deputy Prime Minister acknowledge that one of the reasons for the tremendous suffering and bloodshed in Kosovo in the recent past has been the armed separatist rebellion in the country, and that that is a two-sided, not a one-sided, fight? Given his knowledge and sense of history, will he comment on what the impact on the psyche of the Yugoslav army and people is likely to be of the knowledge that this evening the Luftwaffe, the German air force, is in action over Yugoslav skies — [Interruption.] Hon.Members tut, but hundreds of thousands of Yugoslavs were massacred by the Wehrmacht and the Luftwaffe within the lifetime of Members of this House.

    Lastly, with that sense of history and with reference to previous wars that the Deputy Prime Minister has made —and given the widespread unease in the House that this action was easier to start than it will be to finish —would he like to predict whether this will all be over by Christmas?

    The House will have heard the comments made by the hon.Member. Some of this inflammatory remarks are not helpful. He refers to history in a limited way. There is a new democratic Germany and it is offering its troops to help save lives in Kosovo. That is a proper democratic objective. I am proud that the Germans have joined in. Nineteen NATO nations have agreed the action and 13 of them, especially Germany, have air forces involved. The House will welcome that. The hon. Gentleman talks of massacres, but many people were being massacred in Kosovo.President Milosevic is the person responsible for those massacres and he is the one who denied autonomy to the people of the area. That is the history of today, not 50 years ago, and the one to which we have to address ourselves.

    We understand the concerns expressed in the House, and I believe that I speak for many people, if not all, in Northern Ireland when I say that we are in sympathy with what has happened.Our prayers are with the naval and air forces that are in action. We trust that there will be no need to engage the Army in any action in future, but when the Secretary of State is giving warnings to Milosevic, will he bear in mind what might happen if Milosevic does not listen? Perhaps, the President is saying the same things in Serbia tonight to rally his people. From our experience during the second world war and recently in Northern Ireland, we all know that bombing does not detract from the courage of the people, but strengthens their endeavour.

    I welcome the expression of support given by the hon. Gentleman, as I welcome it from all quarters of the House. Whatever concerns there might be that bombing adds to people's resolve, we shall continue to try to achieve agreement and dialogue between disagreeing parties —as we have done for a long time. Indeed, one party had signed up to the agreement in France, but the other decided not to do so. Whenever there is disagreement, one seeks agreement, and in this case we are not prepared to stand aside and observe the tragic consequences that are unfolding in Kosovo. I think that our action is right and, in the main, that is shown by the consensus among the 19 NATO countries.

    Does my right hon. Friend agree that, desirable as the suggested United Nations peace conference might be, it would offer nothing to those helpless people who at this very moment are running ahead of the Serbian tank tracks and trying to hide from their death squads? Although we acknowledge and respect the consciences of our hon. Friends who feel that they cannot support what NATO is doing today, most Members of this House could not live with our consciences if we did not support it.

    Again, my right hon. Friend is referring to the point I made earlier about diversity of opinion in the House. All of us who have watched these tragic circumstances evolve —especially when we see those events on television —are often asked to find a balance between practical realities and conscience. The Government have decided to join the other 18 NATO nations to prevent such events from taking place. That is a proper balance and we are right to support it.

    Do not our service men over and around Yugoslavia tonight deserve our confidence and our faith rather than our speculations? Will Her Majesty's Government assure the House that they will have the courage to see this matter through until the mission is fully accomplished, namely, that the poor, suffering, oppressed people of Kosovo are granted the opportunity to decide their own political destiny in freedom and in peace?

    I agree very much with the political objective expressed by the hon. Gentleman, as will most Members of the House. However, we are discussing the military objectives that we have set. Those objectives are clear —they are to curb Milosevic ability to attack the people of Kosovo, and to disrupt the armed forces of Yugoslavia and their violence in Kosovo. That is a proper military objective which it is to be hoped may lead to the political results described by the hon. Gentleman.

    Does my right hon. Friend agree that, although it is important for hon.Members to express their opinions freely, what is important tonight is that a message expressing the full support of this House goes to the service men and women in our armed forces? Is it not a consequence of doing nothing that the slaughter will continue and the pictures on television to which my right hon. Friend refers will get worse and will be shown more frequently? Will there not be dire consequences for the whole region if we do nothing? I assure my right hon. Friend of my full support, and that of most Members of this House, for the actions that have been taken by the Government.

    What has been notable and unsurprising is that the fullest support has been expressed on both sides of the House. There is solidarity for our purpose and unity in support of service people. As my hon. Friend says, watching pictures of slaughter on television leads us to think deeply about the actions that we must take. As he rightly points out, history teaches us that there are consequences for the whole region.Perhaps certain historical lessons are clearly in our minds. This action is right; the military objectives are clear and we shall seek to achieve them.

    The Deputy Prime Minister will be aware that there are hon.Members on both sides of the House who have serious reservations about the current strategy's potential for success. However, it is undoubtedly true that the best outcome for all is that the current strategy is a success, so now that our armed forces are in action I hope that the right hon. Gentleman understands that he, as the representative of our Government, and our armed forces and those of our allies have our full support in making a success of the strategy on which the Government have embarked.

    Once again, I am grateful for that expression of support. As the hon. Gentleman rightly points out, everyone, whatever view they hold on the matter, feels great concern at this time. We need to give our fullest support, and that support has been offered by hon.Members on both sides of the House. We shall work extremely hard and our armed forces will seek to achieve success in the targets and aims we have set for ourselves.