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Local Democracy, Economic Development and Construction Bill [Lords]

Volume 497: debated on Tuesday 13 October 2009

Consideration of Bill, as amended in the Public Bill Committee

New Clause 12

Application of construction contracts legislation

‘(1) The Housing Grants, Construction and Regeneration Act 1996 (c. 53) is amended as follows.

(2) In section 106 (provisions not applicable to contract with residential occupiers), in subsection (1), omit paragraph (b) and the preceding “or”.

(3) After that section insert—

“106A Power to disapply provisions of this Part

(1) The Secretary of State may by order provide that any or all of the provisions of this Part, so far as extending to England and Wales, shall not apply to any description of construction contract relating to the carrying out of construction operations (not being operations in Wales) which is specified in the order.

(2) The Welsh Ministers may by order provide that any or all of the provisions of this Part, so far as extending to England and Wales, shall not apply to any description of construction contract relating to the carrying out of construction operations in Wales which is specified in the order.

(3) The Scottish Ministers may by order provide that any or all of the provisions of this Part, so far as extending to Scotland, shall not apply to any description of construction contract which is specified in the order.

(4) An order under this section shall not be made unless a draft of it has been laid before and approved by resolution of—

(a) in the case of an order under subsection (1), each House of Parliament;

(b) in the case of an order under subsection (2), the National Assembly for Wales;

(c) in the case of an order under subsection (3), the Scottish Parliament.”

(4) In section 146 (orders etc)—

(a) in subsection (2), for “Secretary of State” substitute “the authority making them”;

(b) in subsection (3)(a), after “106(4)” insert “, 106A”.’.—(Ms Winterton.)

Brought up, and read the First time.

With this it will be convenient to discuss the following:

New clause 3—Insolvency protection—

‘(1) The Housing Grants, Construction and Regeneration Act 1996 (c.53) is amended as follows.

(2) After section 113 insert—

“113A Insolvency protection

(1) A party to a construction contract may at any time request the other party to provide adequate security including bank guarantees and bonds in respect of payments of the contract price, including the price of any varied or additional works.

(2) Where a party fails to provide the adequate security as requested under subsection (1), the party making the request has the right to suspend any or all of his obligations under the construction contract with the party in default.

(3) The right may not be exercised without first giving to the party in default at least seven days’ notice of intention to suspend performance, stating that performance will be suspended unless, in the meantime, the security requested under subsection (1) is provided.

(4) The right to suspend performance ceases when the party in the default makes available the security requested under subsection (1).

(5) The consequences of the exercise of the right of the suspension under subsection (2) are as set out in subsections (3A) and (4) in section 112.”’.

New clause 5—Prohibition of conditional payment provisions—

‘(1) The Housing Grants, Construction and Regeneration Act 1996 (c. 53) is amended as follows.

(2) Section 113 is omitted.’.

New clause 7—Right to refer disputes to adjudication and conduct of the adjudication—

‘In the Housing Grants, Construction and Regeneration Act 1996 (c. 53), for section 108 (right to refer disputes to adjudication) substitute—

“108 Right to refer disputes to adjudication and conduct of the adjudication

(1) A party to a construction contract has the right to refer a dispute arising under the contract for adjudication.

(2) For this purpose “disputes” includes any difference.

(3) The adjudication shall be conducted solely in accordance with the adjudication provisions of the Scheme for Construction Contracts.

(4) Any contractual provision between the parties to a construction contract which adds to, omits, varies or excludes the provisions of the Scheme is ineffective.

(5) It is immaterial whether or not the contractual provision is contained in the construction contract.’.

Government amendments 21 and 22.

Amendment 1, in clause 137, page 82, line 13, at end insert—

‘( ) In the absence of an agreement under subsection (1) the adjudicator shall be entitled to the payment of such reasonable amount as he may determine by way of fees and expenses reasonably incurred by him.

( ) The parties shall be jointly and severally liable for any sum which remains outstanding following the making of any determination on how the payment shall be apportioned.’.

Amendment 5, in clause 138, page 82, line 24, at end insert—

‘(c) the issue of any notice, certificate, the making of any decision or on the occurrence of any event under another contract.’.

Amendment 6, page 82, line 25], leave out ‘do not’.

Amendment 7, page 82, line 26, leave out ‘(but see section 113)’.

Amendment 20, in clause 139, page 83, leave out line 8 to 10.

Amendment 9, in page 83, leave out lines 14 to 30 and insert—

‘(2) A notice complies with this subsection if it specifies—

(a) the sum that the payee considers to be or to have been due at the payment due date in respect of the payment, and

(b) the basis on which that sum is calculated.’.

Amendment 10, in page 83, leave out from line 41 to line 23 on page 84.

Amendment 11, in clause 140, page 84, line 31, leave out from beginning to line 46 on page 85 and insert—

‘(2) For the purposes of this section , the “notified sum” in relation to any payment provided for by a construction contract means the amount specified in the notice complying with section 110A(2).

(3) Not later than 14 days after the payment due date the payer or a specified person may in accordance with this section give to the payee a notice of the payer’s intention to pay less than notified sum.

(4) A notice under subsection (3) must specify—

(a) the sum that the payer considers to be due on the date the notice is served, and

(b) the basis on which that sum is calculated, and

(c) the precise reasons that justify the difference between the notified sum referred to in subsection (1) and the sum in a notice issued under subsection (3).

(5) A notice under subsection (3) may not be given before the notice by reference to which the notified sum is determined.

(6) Where a notice is given under subsection (3), subsection (1) applies only in respect of the sum specified pursuant to subsection (4)(a).

(7) Subsection (8) applies where in respect of a payment a notice under subsection (3) is given in accordance with this section, but on the matter being referred to adjudication the adjudicator decides that more than the sum specified in the notice should be paid.

(8) In a case where this subsection applies, the decision of the adjudicator referred to in subsection (7) shall be construed as requiring payment of the additional amount not later than—

(a) seven days from the date of the decision, or

(b) the date which, apart from the notice, would have been the final date for payment,

whichever is the later.

(9) Any contractual provision between the parties to a construction contract which seeks to exclude or oust the provisions of this section is ineffective. It is immaterial whether or not the contractual provision is contained in the construction contract.’.

Amendment 16, in page 85, leave out lines 39 and 40.

Government amendment 23.

New clause 12 addresses the Secretary of State’s power to disapply the operation of part 2 of the Housing Grants, Construction and Regeneration Act 1996 from certain types of construction contracts. I am grateful to the Opposition, who have had discussions about the need for the amendments, for which I thank them. While the Bill has been going through Parliament, we have been approached by a number of stakeholders from the industry and its customers concerned about the nature of the Secretary of State’s power to exclude contracts from the provisions of the 1996 Act. At the moment, that Act contains an all-or-nothing power—in other words, the Secretary of State can disapply from certain types of contract all the provisions in part 2 of that Act. We would like to substitute a new power enabling the Secretary of State to disapply any—not necessarily all—of the provisions in part 2. That approach would allow us to ensure that many of the valuable features of the 1996 Act, as amended by this Bill, continue to apply—for instance, the right to stage payments, the right to adjudication and the right to suspend performance in cases of non-payment—while giving us the flexibility to deal with specific issues of direct concern. The legislation could also respond proportionately to future contractual innovation. Amendment 23 simply references the repeal of the existing disapplication power, because we are replacing it with this provision.

Amendments 21 and 22 concern pre-dispute agreements regarding adjudication costs. As alluded to in Committee, we reconsidered that issue. Clause 137 inserts new section 108A into the 1996 Act, preventing parties to construction contracts from entering into agreements before a dispute has arisen about who should pick up the costs of an adjudication. As a consequence of this broad and simple prohibition, pre-dispute agreements between parties, to the effect that an adjudicator can allocate fees and expenses as part of his decision, will also be caught. Allowing the parties to agree in their construction contract that the adjudicator has this power is current good practice, which we would like to preserve. Amendment 22 achieves that by carving out such agreements from the general prohibition.

Hon. Members raised a number of issues and tabled further amendments concerning the construction contract provision that directly reflect the points raised during previous stages of the Bill. The first issue concerned the statutory payment notice framework and is the subject of amendments 9, 10, 20 and 11. The hon. Members for North Cornwall (Dan Rogerson) and for Falmouth and Camborne (Julia Goldsworthy) seek to introduce two changes, creating a situation in which only a payee can issue the statutory payment notice, and introducing a statutory period within which a notice amending the amount in the payment notice can be issued.

It might help if I set out what changes the Bill makes to the 1996 Act statutory payment framework. The framework is of particular interest to small firms in construction supply chains and has been a matter of much correspondence and debate. The Bill takes a number of steps to tighten up the statutory payment framework to ensure greater clarity and certainty of cash flow, and requires that the amount in the payment notice as, and if, revised, be paid on, or before, the final payment date—in other words, pay now and argue later. The 1996 Act did not achieve that.

If the parties agree in contract, the payee is allowed to issue the statutory payment notice under the 1996 Act. Under that Act, only the payer could issue the statutory notice. When the parties agree that the payer should issue the statutory notice and he fails to do so, we give the payee the right to issue the notice. The 1996 Act was silent on what might happen when the notice was not issued.

The changes address the failure of the 1996 Act’s payment notice framework to determine what will be paid. There is broad agreement in the industry that the amendments have the effect of crystallising what will either be paid or in dispute at the final date for payment, which we think is an important step forward. However, today’s amendments take that a step further. Under the 1996 Act only the payer can issue the statutory payment notice. The Bill removes that restriction and allows the payer, the payee or a third party to issue the notice. The change is permissive, allowing a broad range of commercial practices to continue unburdened by legislation, rather than adopting the more restrictive approach proposed in amendments 9, 10, 11 and 20.

Currently, some forms of contract provide, for instance, for an architect to certify the value of the work and issue the payment notice. It is wholly reasonable for an inexperienced customer of the industry who is commissioning a complex construction project—a large factory extension on a difficult site, for example—to require his or her architect to value the work and issue the statutory payment notice, rather than handing that right to his contractor.

Amendment 11 seeks the introduction of a statutory period within which a counter-notice can be issued. We considered that proposal and asked about it more widely around the industry. The general conclusion was that although the proposal might provide the payee with greater certainty about what would be paid, it would do so at the expense of extending payment periods and reducing the amount of cash flowing.

A number of issues have been raised in connection with insolvency and new clauses 3 and 5, as well as amendments 5, 6, 7 and 16. New clause 3 would enable firms working under construction contracts to demand security of the payments due to them. New clause 5 and amendments 5, 6 and 7 would remove the 1996 Act’s insolvency exception to the prohibition of pay-when-paid clauses. Another effect of amendment 11 would be to remove the provision that we have included to deal with any uncertainty surrounding the Melville Dundas court decision.

All the proposals rest against the same core principle. That principle is simple and clear: the insolvency regime applies to all businesses, regardless of the sector in which they operate. Without that consistency across business, it is hard to see how the insolvency regime can operate in an equitable way. In their own way, each of the amendments seeks to create a different position for firms covered by the 1996 Act from those that are not. We feel that it would be wrong for legislation to distinguish between business sectors where there is an insolvency.

New clause 7, tabled by the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski), applies to single mandatory adjudication schemes and would ensure that the statutory adjudication provisions applied to all construction contracts offered under the 1996 Act. The Act intentionally covers a wide range of contracts between very many types of organisations in construction supply chains. Whatever we introduce must work in a broad range of commercial relationships—for instance, a client’s relationship with his or her architect or with the main contractor, as well as the main contractor’s relationship with his or her subcontractor. Given this, we continue to believe that the flexibility for adjudication procedures inherent in the 1996 Act represents the right approach. I therefore ask hon. Members to withdraw their amendments, and to accept new clause 12 and amendments 21, 22 and 23.

I congratulate the Minister on wading into the construction contracts in part 8 of the Bill. As we know, there was quite a merry-go-round of Ministers when we considered these matters in Committee in June. The hon. Member for Portsmouth, North (Sarah McCarthy-Fry) was a game trouper in that regard—she had about two days to prepare for this complex and difficult subject. The Minister for Regional Economic Development and Co-ordination has perhaps had a little longer over the summer break.

We would do well to consider the wider issues that the new clauses and amendments are seeking to address, including the fact that late and disputed payments are a recurring problem in the construction industry. Anecdotally, we know that main contractors are known to hold money back, to the detriment of the small and medium-sized enterprises that are their subcontractors. We believe that the 1996 Act needs updating to tackle the continuing problem of late and unreasonably disputed payments in the sector, and we welcome the decision to legislate on this.

We also support the strengthening of the adjudication system. Indeed, the Minister will know that we have consistently lobbied for that system to be overhauled over the past few years. It is a matter of regret that we are still not in a position, in the dying days of this Government, to meet the undertaking made by previous Ministers to introduce a stand-alone construction Bill that would be subject to a proper debate, rather than having this spatchcock addition to a Bill on local democracy and regional issues. Let us not be too churlish, however; we are debating the issue now.

We support the aims of the clauses on payments, but we want to ensure that they are as simple and fair in their operation as they can reasonably be. There is not a consensus on this matter. Many of the trade organisations and associations—to be fair, the vast majority of them—have supported the changes in the Bill, but a number still have concerns, including the Construction Confederation. However, the specialist engineering contractors have consistently supported the proposals during the Public Bill Committee and Report stages.

We have no opposition in principle to new clause 12, which will place on a more formal footing and a statutory basis the provision for adjudicators in the devolved nations to take corrective action in respect of material inaccuracies and irregularities in contracts. We see that as more of a tidying-up exercise, although I would add the slight caveat that the issue should have been addressed before Report stage. It could have been discussed in Committee, for example. Wales and Scotland have had devolved Governments for quite some time now, but someone obviously did not spot that. Having said that, we had a debate on clause 136 in Committee in June.

There is much merit in new clause 3, tabled by the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd)—

I am not a fluent Welsh speaker, but I do my best.

I think the new clause is important for this reason. Of course we do not want to see undue bureaucracy and paperwork in the contractual relationship between smaller contractors and larger developers, but the situation is pretty critical in respect of how the economic downturn and recession have hit small and medium-sized enterprises. In those circumstances, it is well worth looking at any legislative measures to assist small building firms and contractors to stay in business and to have the peace of mind and security to safeguard their financial viability. I note that the Government did not dismiss the matter out of hand in Committee.

It is well for us to look at the facts. Barclays bank believes that small and medium-sized enterprises have lost more than £1.16 billion in the past year because of non-payment. Over the past year, there has been a more than 50 per cent. increase in insolvencies in the industry—more than double the same figures for the manufacturing sector—and according to PricewaterhouseCoopers, nine construction industry firms a day are going into insolvency.

I am glad to hear my hon. Friend speaking in this way. Is he also aware that subcontractors often find it difficult to get credit insurance against that eventuality, so they are subject to the market strength exerted by the superior contractor? When the ultimate client goes bust, being subject to pay-when-paid contracts puts them in a very difficult position in what is already a recession. Will my hon. Friend lead on to some policy changes that he might support, perhaps when in government, in order to remedy the situation?

My right hon. Friend pre-empts my remarks intended for later when the hon. Member for Falmouth and Camborne (Julia Goldsworthy) speaks to her amendments that deal with the pay-when-paid arrangements. No doubt the Minister will also make some comments about them. If we are talking about “real help now”, to use a hackneyed phrase of this Government, we certainly need it now to secure the future of these small companies.

We do not want to fetter the discretion of either party to the contract, as we want them to have a mutually beneficial and trusting contractual relationship to get the job done and get paid. We know that in the real world—with cash-flow problems and our friendly bank managers on the case—that does not always happen, which is why we need to safeguard the vital contribution of SMEs to the industry. I do not generally pray in aid the right hon. Member for Salford (Hazel Blears), but she did say on Second Reading:

“I think that it is very important that small businesses in the construction supply chain, in particular, have as much protection as they can.”—[Official Report, 1 June 2009; Vol. 493, c. 37.]

I think that we would all agree with that.

I shall not detain my hon. Friend long. He is absolutely right to suggest that, in addition to the Bill, we need a clear sense of purpose and direction from the Minister—my hon. Friend has just quoted a previous Minister. That is crucial if we are to get the right collaborative and positive approach that the industry needs after going through such a difficult period last year. Does my hon. Friend agree that drawing that out of the Minister—we hope that she will respond—is perhaps as important as the details of the legislation before us?

As usual, my hon. Friend, the shadow construction Minister, makes an apposite point. There was a good degree of consensus in Committee, under the present and previous Ministers, but as they say, kind words butter no parsnips. We shall find out the Government’s intentions today and discover whether they are keen to assist in a practical way when it comes to new clause 3. No doubt the hon. Member for Meirionnydd Nant Conwy will make his case in his usual cogent and powerful way.

Let us move on to new clause 7, which was tabled by my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) over the summer. The then Minister made some pertinent points about single statutory adjudication, and seemed minded to accept the strong case for it. She said:

“On the wider point about a single statutory adjudication scheme, it would introduce greater clarity and simplicity but it would also represent a much more significant intervention into freedom of contract”.––[Official Report, Local Democracy, Economic Development and Construction Public Bill Committee, 18 June 2009; c. 237.]

I am not sure that that case was made very strongly with evidence, and I do not think that the Minister convinced the Committee as a whole or her own side in particular.

As I mentioned on that occasion, on 3 March, in the Grand Committee—which was specifically discussing a single scheme for adjudication—Lord Brett said:

“That would not be unreasonable. Therefore, we have made an offer to the industry that we will conduct a thorough review of the existing adjudication scheme set out in secondary legislation when we make amendments”.—[Official Report, House of Lords, 3 March 2009; Vol. 708, c. GC293.]

That leads me to press the Minister on the specific subject of single statutory adjudication. When will the review take place, and what are its terms of reference? Given that we are in a crisis period involving disputes between larger and smaller parties in the construction industry, when will we see the results of the review? Will it feed through into—possibly—secondary legislation? If the Minister is not minded to assuage my concerns and those of my hon. Friend the Member for Shrewsbury and Atcham today, will she at least tell us whether the review is forthcoming, and what it will say?

I will be brief, because other Members wish to speak and important aspects of other clauses require proper debate. We applaud the changes that the Government have made in amendments 21 and 22: they have listened to the views expressed, across a wide spectrum, in Committee in June. I will not steal the thunder of the hon. Members for North Cornwall (Dan Rogerson) and for Falmouth and Camborne, but their amendments have considerable merit. We are inclined to support them at this stage, but the Minister may well surprise us and accept them, and we look forward with interest to hearing what she will have to say.

The construction sector is in crisis. The Government must do all they can to assist an industry which has probably been hit harder than any other industry in the country as a result of the recession. We look to the Minister to give the necessary leadership, to note the consensus across all parties and out there in the construction world, and to accept the amendments.

I commend the Minister on the way in which she has handled being dropped into this compost heap of a Bill at short notice, and probably into the most complicated part of it. We have no particular problem with the Government amendments, the purpose of which is largely to tidy up and to deal with the devolution question. However, we do not think that the Government have approached this issue with the right perspective.

It is important to remember that 90 per cent. of the work force employed in the construction sector are employees of businesses consisting of six or fewer people. At present, the larger organisations have the whip hand. We fear that the views of the much smaller businesses that constitute the majority of the industry are not being heard, and are not being reflected in the Bill. That is why we have raised the issue of the balance of power between payee and payer in amendment 20 and consequential amendments 9, 10, 11 and 16, and the whole subject of conditional payments. The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) will raise similar issues involving insolvency. Although we agree that there is a wrong to right in the existing system, and I understand the Minister when she says that we need a tightening of the provisions, clarity and certainty, we feel that our amendments would achieve greater fairness, reduce complexity and minimise the amount of regulation that will be necessary.

Our amendments would reduce the verbiage in clauses 139 and 140 by more than 50 per cent. They are supported by the Federation of Small Businesses, the Specialist Engineering Contractors Group and Unite, the union. Although the Government proposals try to redress the balance and to create equality between the payee and payer, we are saying that, in effect, it is always the payer who has the greater power and that the arrangements will still leave the payer with the greater power, because the bargaining power of the payee is unequal. Our proposal is based on contracts legislation in New Zealand and other legislation in Australia, and we think that there is a precedent for pursuing that line. I hope that the Minister will heed the words of the hon. Member for Peterborough (Mr. Jackson), which are echoed on the Liberal Democrat Benches. We feel that there is consensus on the issue and that there is a need to move forward.

Is the hon. Lady aware that a number of Ministers over the past few years have promised to look specifically at international experience of the scheme, particularly single adjudication, and that that does not seem to appear in the Bill or in secondary legislation?

I was aware of that, and it leads me to another concern. Although there has been consultation on all issues, it is much easier for the very large organisations to engage in that consultation and very difficult for the smaller organisations, which make up the majority of the industry. We are also concerned that a lot of the consultation took place before the catastrophe that has hit the construction industry. The world has moved on dramatically and the Government’s approach has not reflected those changes.

On the conditional payments provisions and the so-called “pay when paid” clauses, I listened carefully to the Minister, and I have heard her say on more than one occasion that she is taking that position because insolvency provision has to apply equally across all business, but she has not explained how banning pay-when-paid clauses on the insolvency of a third party is in conflict with insolvency laws. My understanding is that the original purpose of the legislation was to ban all pay- when-paid clauses, without exemptions. I understand that that has been adopted in New Zealand, Australia and Singapore. We have not had a decent explanation of exactly why the provision crept in. The conclusion that Liberal Democrats draw is that it had to do with some major lobbying, rather than inconsistency in law. I bring the Minister back to the issue of perspective. We are worried that insolvencies further up the line could generate more insolvencies down the line. There is a danger of a domino effect in the current economic situation.

A number of smaller firms sometimes find that they are working perfectly satisfactorily and are then hit by a large bad debt. Their security of payment has completely gone. They then have to lay off people who have been working jolly hard, because something further up the line has been visited upon them and they do not have the capacity to sustain it. We will lose a lot of jobs in the construction industry in very small firms, not because they have not been trying to work properly, but because people up the line who have owed them substantial sums have failed. That domino effect will have a major impact on small businesses.

My hon. Friend makes an important point. We have to remember that, in the construction industry in particular, so many of the costs are sunk: once the companies have built the building, they cannot recover the costs. It is difficult enough for them to manage the potential insolvency of their payer, let alone a third party. If we look at it from their point of view, how on earth are they supposed to get credit insurance to deal with such issues? They are being placed in an impossible position. It is an important issue that needs to be addressed. It ties into the point raised by the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd).

A precedent has been established by the House of Lords. It raises concerns and encourages businesses to go against the provisions set out in the Bill. Basically, it encourages them to withhold payment in order to hedge against the risk that they will then become insolvent. It is important that the proposal is incorporated into the Bill. I am minded to support the hon. Gentleman, but we are also minded to press some of our amendments to a vote should the Minister feel that it is not appropriate for the Government to co-operate.

First, may I draw attention to my interests as declared in the Register of Members’ Interests?

The Housing Grants, Construction and Regeneration Act 1996, which was the basis of the provisions being amended by part 8 of the Bill, was an important measure that addressed real concerns within the construction industry about the litigious characteristics of the industry, the tendency for different parties to fight each other, and the considerable problems of payment that existed within the industry as it operated in the 1980s and 1990s.

The motive for the 1996 Act was the Latham report. It was the work of Sir Michael Latham, a distinguished former Member of this House, and it commanded all-party support. I was very pleased, as Opposition spokesman on construction at that time, to give full support to Sir Michael’s proposals and to the legislation that flowed from them. I was even more fortunate, as a Minister in the early days of the current Government, to be in a position to introduce in the late 1990s the provisions of the 1996 Act, together with the scheme for construction contracts which was developed under the powers in that Act. That was a further reinforcement of the bipartisan approach towards improvements in the culture of payment and the reduction in litigation in the construction industry.

Those proposals were not, of course, a total panacea. There remain problems and weaknesses in procedures that have not yet been tackled. There is obvious unhappiness on the part of some parties to construction contracts that payment is not always made when it should be, and that the stronger party can often use its muscle to try to impose unreasonable conditions, but for all that there has been an advance. The amount of litigation has been reduced, and the use of the adjudication procedure is now much more widespread. There is general agreement that the provisions of the 1996 Act have been beneficial.

However, there is still a need for further improvement, and this Bill carries forward proposals that were the subject of intense debate within the construction industry over several years but which should add further improvements to the provisions of the 1996 Act. Inevitably, this is a compromise. There is a range of different points of view within the industry. It is highly fragmented and it is almost impossible to anticipate a situation where a package of reforms would satisfy all parties and be unanimously agreed. However, the compromise the Government have proposed is a sensible and practical one that achieves significant improvements, both in terms of the adjudication procedure and some of the elements relating to payment procedures, and I welcome its provisions.

There will still be problems, and issues of cash flow affecting smaller firms—particularly small and specialist constructors—will remain very difficult. In the current economic climate cash flow for smaller firms down the supply chain remains a critical issue.

One problem banks now have is the provision of much needed cash flow support through overdrafts and loans. Because of the weaknesses in the system, there is a feeling that if they support small firms they could end up being owed an awful lot of money by a failed company.

There are of course a number of different aspects to the issue of cash flow, and the hon. Gentleman rightly identifies one of them as the availability of finance from the banks, which remains a difficulty. There is also the problem of cash flow resulting from payment by a contractor to a subcontractor down the supply chain. That causes a lot of concern among smaller and specialist contractors, and the payment and adjudication provisions in the Bill may help to improve it in some respects.

I understand the concerns of those who do not believe that the Bill goes far enough, but I believe it is an important, progressive step building on what has been achieved so far, and that its introduction will be helpful. Nevertheless, when we debated these particular provisions in Committee, I expressed concern that one change in the adjudication procedure could have an unintended and malign effect. The changes proposed by the Government were designed to outlaw the imposition by the more powerful party in a contractual arrangement of unfair terms requiring the other party to meet all the costs of adjudication, thereby deterring that other party from seeking adjudication in the first place. The sensible provision was to make null any contractual term that had that effect, in which case the scheme for construction contracts, which is the default provision, would come into force, and it, of course, would not include any such restrictive provision.

That provision was sensible, but when looking at how it was due to work, I was advised by a number of people in the construction industry—this was reinforced by the Royal Institution of Chartered Surveyors in its representations on the subject—that it could have the malign and unintended consequence of preventing the adjudicator from getting any payment. That would be a serious deterrent to anyone taking on an adjudication. Clearly that was a proper and reasonable concern, so I aired it in Committee and subsequently tabled amendment 1 to remedy it.

The purpose of amendment 1 was simply to say that in the absence of any specific agreement the adjudicator would be entitled to the payment of

“such reasonable amount as he may determine by way of fees and expenses”.

That seemed a fairly straightforward way to address the matter. The Government have come back with amendments 21 and 22, which address it in a different way but have the same effect. Amendment 22 specifically says:

“The contractual provision referred to…is ineffective unless—

(a) it is made in writing, is contained in the construction contract and confers power on the adjudicator to allocate…fees and expenses as between the parties”.

On the surface, that seems to achieve the desired effect and I welcome it. I have heard some representations made that it could still leave a lacuna whereby a contract could be devised that included exactly such a provision for the adjudicator to be entitled to payment of reasonable expenses but that might separately seek to impose a condition about other costs, including the legal costs of the parties—if they incurred such costs—being met by one party. I am assured that that is not the case, but I would welcome reassurance from the Minister that there is no scope for such a lacuna in the provisions which would allow the good intentions of the Government’s provisions to be bypassed. I hope that she will be able to give me that assurance. If she can do so, I will be happy not to press my amendment and to favour Government amendments 21 and 22.

In speaking to new clause 3, I must acknowledge the huge assistance that I have received from Professor Rudi Klein, who is chief executive of the Specialist Engineering Contractors Group. I should also mention that the Unite union is fully in favour of the contents of the new clause. The point of the provision is to address the gross inequality, to which reference has been made in several speeches, between the main contractor and a small or medium-sized enterprise further down the line. The hon. Member for Falmouth and Camborne (Julia Goldsworthy) referred to the fact that those building firms typically have five or six employees, and having to lose out on several hundred thousand pounds without any redress is often a death knell to them. As has been made clear, the building industry has probably been the worst hit industry in this recession. That is no surprise, because it is always the first to be hit, but it has been particularly badly hit. The Governments in this place and in Cardiff—I am sure the same is happening in Scotland—are bringing forward Government contracts to try to perk things up, and that is all to the good.

New clause 3 seeks to make a slight variation on the whole issue of insolvency protection. It states:

“A party to a construction contract may at any time request the other party to provide adequate security including bank guarantees and bonds in respect of payments of the contract price, including the price of any varied or additional works…Where a party fails to provide the adequate security as requested…the party making the request has the right to suspend any or all of his obligations under the construction contract with the party in default…The right may not be exercised without first giving to the party in default at least seven days’ notice of intention to suspend performance, stating that performance will be suspended unless, in the meantime, the security requested…is provided…The right to suspend performance ceases when the party in the default makes available the security requested under subsection (1)”—

and so on.

We all know of various tales of woe of smaller small and medium-sized enterprises in the building industry hitting the wall not because of anything that they have done but because of the inequality between themselves and the main contractor, which I would describe as the inequality of arms par excellence. Let me cite one example. Two sister companies—Pierse Contracting and Pierse Contracting Southern Ltd—recently went into insolvency. Both continued to commission construction work and engage subcontractors over the past 12 months, when they were clearly insolvent. Just over a year ago, the net worth of each company was between minus £400,000 and minus £500,000. In the past year, the former company had 29 unsatisfied county court judgments against it and the latter had 43. Companies in Pierse Group—the holding company—regularly moved whatever assets they had between themselves and businesses in Ireland.

Both Pierse Contracting and Pierse Contracting Southern Ltd were engaged by public sector bodies as main contractors. Such bodies included authorities in Wales and in England, and one was the Cheshire police authority. Pierse Contracting was the main contractor for the tactical training centre at Winsford in Cheshire—a project to the value of £10.7 million. As a result of Pierse Contracting’s insolvency, a number of subcontractors have been put in peril, including one that has lost more than £600,000. This situation, I regret to say, is not unusual within the industry—nor is it new. Firms are engaging supply chains to carry out work when their liabilities exceed their assets—in other words, when they are insolvent. Often work is commissioned by developers that are £100 companies with no assets to speak of.

Of course, another issue is important. Why are public sector bodies engaging insolvent main contractors and therefore putting them in a position to inflict substantial financial damage on the rest of the industry? In a letter dated 17 May 2004, the then Chief Secretary to the Treasury said that

“the primary problem facing suppliers is the uncertainty over when and indeed if payments are made”.

He went on to say that

“the difficulties caused to suppliers”—

in the construction industry—

“in the event of insolvency higher up the supply chain requires analysis. Regardless of the payment or contractual arrangements in place, it is important that suppliers receive fair treatment.”

Given the fact that insolvencies up the supply chain are now causing severe distress to many small and medium-sized enterprises, which do not have the ability to protect themselves against insolvency risk or even to manage the risk through credit insurance or bank borrowing, it is now time for the House to legislate on the matter. Construction SMEs are now losing almost £1.16 million a year because of non-payment, according to the recent Barclays local business annual late payments report. The incidence of insolvencies in the construction industry is four times greater than in other industries.

During the Bill’s passage through the other place, no less an expert than Lord Borrie QC introduced an amendment to help firms faced with the Pierse Contracting scenario. In effect, my new clause 3 reintroduces those amendments, and I believe that it is straightforward and self-evident. Firms in the construction industry already have a statutory right to suspend contracts for non-payment, and the proposal is that that right should be extended to cover circumstances in which a procurer of construction works is unable, on request, to provide security such as a bank guarantee or payment bond. Where such security cannot be provided, and there is evidence of the payer’s inability to pay, the payee would be able to suspend the contract.

Let me dispose of some of the arguments against the new clause. First, if the payer were to fail, fewer assets would be available to satisfy other creditors. As I have said, the subcontractor already has a statutory right to suspend a contract for non-payment. If that happened and then the payer subsequently discharged the payment, there would still be fewer assets left for creditors in the event of the payer becoming insolvent. Failure by the payer to provide a bank guarantee or payment bond indicates that he does not have the funds to discharge payment when it falls due.

Moreover, why should the payee continue to provide valuable work and materials when he knows that he is unlikely to be paid for them? New clause 3 would simply extend the use of the statutory right of suspension as a pre-emptive strike, as it were. Non-construction creditors are likely to have more effective ways—such as the retention of title clauses, for example—to deal with insolvency risk: why should construction firms be expected to continue working to benefit their creditors? If the new clause were to help 1,000 small and medium-sized enterprises in the construction supply chains from going into insolvency, thereby saving a substantial number of jobs, it would have served its purpose.

Moreover, payment security would help small firms seeking funding from their banks. The new clause would help to address the problem posed by the banks’ current reluctance to lend to SMEs. It has been said that compelling the payer to provide security would be expensive, and that ring-fencing any of the payer’s funds could increase the risk of the payer’s insolvency. However, if the payer cannot provide a form of security that shows his ability to pay, he should not commission the work.

It is extremely expensive for the payee to finance the provision of plant, equipment, work and materials over the lengthy credit periods that are now common in the industry. A period of 60 to 90 days is becoming the norm, and the fact that the payee—usually an SME—is expected to finance such a long period increases the risk that he will become insolvent. That risk is further increased by the possibility that the payer could also become insolvent.

In some sectors of the industry, such as lift installation and structural steel work, 80 per cent. of the value of a contract—that is, for lifts or steel—is supplied to a site without any payment being made. The payment process does not begin until the goods are on site, and there is no deposit on order. In addition, the payee is normally expected to provide security for performance, through instruments such as performance bonds and retentions—the practice by which 5 per cent. of payment is withheld until work is completed.

The Government believe that, in contrast with other industries, construction firms should get preferential treatment over unsecured creditors, but that argument is relevant only if the payer becomes insolvent and the security mechanism kicks in. On the other hand, if the payee goes into insolvency, the payer is likely to have at least eight weeks of the payee’s moneys in the amount withheld in retentions, the performance bond and a parent company guarantee. Therefore, other unsecured creditors currently get preferential treatment over construction creditors, as they can take advantage of the funds intended for the insolvent’s supply chain. An administrator for the main contractor is usually called in when that contractor has been put in funds for onward transmission to the supply chain. It is widely accepted that payees in the construction industry do not have the ability to protect themselves against payer insolvency—for example, retention of title clauses are of little use. Once goods and materials have been used in a construction, title is lost. Furthermore, because of the current economic crisis, credit insurance has been withdrawn from thousands of firms.

In the 1994 report, “Constructing the Team”—referred to by the right hon. Member for Greenwich and Woolwich (Mr. Raynsford)—which led to the Construction Act 1996, Sir Michael Latham fully acknowledged the problem of lack of protection against payer insolvency. He recommended statutory trust funds, but that proposal was not carried through in the Act. He repeated his recommendation in a report in September 2004 and the then Minister agreed to look at the problem.

Throughout Europe, north America and Australia, the problem is acknowledged in construction-specific legislation, offering payee protection against payer insolvency. The Miller Acts in the United States, which apply at federal, state and local authority level, require main contractors to give payment bonds to their subcontractors. Canada and the States have a system of liens, or charges, that can be placed on the building by those who are owed money.

France has legislation to require payers to provide bank guarantees and to pay subcontractors directly if a middleman goes into insolvency. German legislation requires all procurers of construction work to provide adequate security. Swiss legislation enables construction firms to place a charge on the property within three months of the date that payment became due.

At present, millions of pounds-worth of construction works is being procured by firms with few or no assets—as I said, £100 development companies often procure multi-million pound projects. The majority of main contracting companies do not have the wherewithal to pay their supply chains unless or until they receive cash from their employers or clients. Once the cash is received they hold on to it for as long as they can, until they themselves go into insolvency and the cash is instead handed over to the secured creditors. It is, therefore, not surprising that the number of insolvencies in the construction industry is far greater than in other industries.

There is concern that the new clause would mean that the construction industry was treated differently in respect of creditors, but as I have explained they are already treated differently, to their detriment. Section 159 of the Companies Act 1989 provides an exemption from the rules for distribution of an insolvent’s assets. The exemption applies to schemes operated by investment exchanges and finance clearing houses in relation to the settlement of debts arising under market contracts. That appears to be an exception.

Our new clause reinforces the provisions in part 8. There is little point in improving cash flow arrangements for the construction industry unless the cash is there in the first place. Over the long term, the proposal would bring about a better resourced and, therefore, a more efficient industry. The construction industry is key to efforts to recover from our current financial problems.

I have some further notes, but time is pressing and I think I have made my case. I hope to press new clause 3 to a Division in due course.

This has been a wide-ranging debate, which is a reflection of its importance to hon. Members. Obviously, many of us are concerned about the construction industry at the moment, and the Government have certainly tried to introduce a number of measures to give it assistance in what are inevitably difficult times.

The debate has demonstrated that, as my right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford) has said, this is a difficult area, and different parts of the industry inevitably hold strong views about the provisions before us and those in the 1996 Act. As a result, in the course of discussion with parties in the House and with parts of the industry, the Government have looked at the different sides of the argument and put forward elements of compromise in the Bill.

The debate has shown that there can be a polarisation of ideas—for example, between smaller and larger firms—and the different and complex types of contract. We are trying to make the system simpler and to ensure that protections are in place, because of the importance of the industry and those who work in it, and because of the importance to national, regional and local economies of making sure that we get the legislation right.

Surely the right hon. Lady accepts that it would have been better to introduce these proposals in less difficult and more economically benign times. The right hon. Member for Greenwich and Woolwich (Mr. Raynsford) has mentioned the Latham review. We have had two substantive and detailed public consultations, detailed papers by the then Department of Trade and Industry, and the policy of the Welsh Assembly, yet only now, years after the Latham review, are the Government bringing forward the proposals, tacked on to another Bill and not as part of a substantive construction Bill. Is that not a fair point?

What is important is that we get this right, and there have been a number of discussions about how to do that. We should look on the bright side and say, “Here we are, debating these proposals today.” I am pleased that a number of proposals have support from Opposition parties, even though there is a desire on the part of some right hon. and hon. Members to go further than we have and to put forward different ideas. The important thing is that we have the Bill before us today, and I hope that means the Opposition will support the overall direction of the Bill on Third Reading.

Having addressed the importance of the debate and the attempt to find a solution to some of the issues that have been raised, I shall move on to some of the points that have been made in the debate. The hon. Member for Peterborough (Mr. Jackson) asked about the single statutory adjudication review. I assure him that the secondary legislation will be reviewed in the light of the responses to the consultation. We hope to consult early in the new year. Of course, the statutory scheme will continue to apply where parties make inadequate provision in their contract for adjudication. We will deal with that in secondary legislation.

Only this morning, I was discussing with officials the fact that the ideas advanced by my right hon. Friend the Member for Greenwich and Woolwich were the inspiration for amendment 22. But, I want to assure him that there will not be a lacuna. We will allow a particular type of pre-dispute agreement, regarding costs—a clause in the parties’ construction contract to the effect that an adjudicator will be able to allocate his own costs as part of his decision.

I shall now address new clause 3. As the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) has said, the new clause would introduce to the 1996 Act a provision enabling firms to request security regarding payments from the payer. That would give the payee under a construction contract the statutory right to demand adequate security from the payer in the form of a charge or a bank guarantee in respect of the payer’s payments under the contract. If no security were forthcoming, the payee would be entitled to suspend performance until it was. Moreover, the payer would have to pay the payee an additional sum reflecting the extra costs that the payee incurred in stopping work.

Consequently, if the main contractor were to fail, his other creditors—quite possibly not construction firms—would be in a much weaker position. Depending on the type of security, there would be fewer assets available to satisfy claims. Any trading partner of the contractor would be able to request such security during the normal course of business, but that partner would not be able to demand it. The ability to demand security would put the construction subcontractor in an unjustifiably stronger position.

Surely the point is that the subcontractor would have delivered materials to the site, used employees to build a building and done everything that he could, up to a point. The subcontractor would not be able to recover all that, so they would be in a very weak position—far weaker than any normal party to any normal contract. That is the point, with respect.

As I have said, the case that the hon. Gentleman highlights would put other creditors in a weaker position. Other trading partners of the contractor would be able to request such security during the normal course of business, but they would not be able to demand it, which is why the new clause would not be the right approach. In addition and practically, compelling the payer to provide security would be expensive—perhaps prohibitively so. For example, a bank would charge for a guarantee, and, if the nature of any security were such that funds had to be ring-fenced so that the payer was unable to use them for day-to-day operations, the payer would be more likely to fail anyway.

New clause 5 would repeal section 113 of the Housing Grants, Construction and Regeneration Act 1996. The new clause would, it appears, allow the parties to a construction contract to rely on all types of pay-when-paid clause. However, amendments 5, 6, 7 and 16 would continue to prevent the parties from relying on pay-when-paid clauses, and because of that new clause 5 would remove the insolvency exceptions. We need to be careful that we do not create a situation for construction insolvencies different from those involving other businesses, and preventing construction firms from using pay-when-paid clauses in insolvency cases would clearly do that.

I thank the Opposition for their support for the Government amendments. I again emphasise that the Bill must provide a balance between the needs of all parts of the construction industry. For that reason, I ask Opposition Members to withdraw their amendments and to support the Government amendments.

Question put and agreed to.

New clause 12 accordingly read a Second time, and added to the Bill.

On a point of order, Mr. Deputy Speaker. I apologise for interrupting, but I indicated that I wanted to press new clause 3 to a vote.

I will invite the hon. Gentleman to do that at the appropriate time, when we reach it—it will not be forgotten.

New Clause 19

Mutual insurance

‘(1) Subject as follows, a qualifying authority may —

(a) become a member of a body corporate—

(i) all of whose objects fall within the objects specified in subsection (2), and

(ii) all of whose members are qualifying authorities, and

(b) do anything that is required by, or is conducive or incidental to, membership of any such body.

(2) The objects referred to in subsection (1)(a)(i) are—

(a) to provide insurance, in relation to risks of any description, to—

(i) qualifying authorities who are members of the body corporate, and

(ii) persons prescribed in regulations made by the appropriate national authority,

(b) to enter into arrangements under which such insurance is provided to—

(i) qualifying authorities who are members of the body corporate, and

(ii) persons prescribed in regulations made by the appropriate national authority, and

(c) to do anything that is required by, or is conducive or incidental to, the provision of any such insurance or entering into any such arrangements.

(3) The power of a qualifying authority under subsection (1)(b) includes in particular power—

(a) to pay premiums and make other payments to the body corporate;

(b) to agree to make any such payments;

(c) to assume financial obligations in relation to persons prescribed for the purposes of subsection (2)(a)(ii) or (b)(ii).

(4) The appropriate national authority may by regulations impose restrictions or conditions on the exercise of any power conferred on a qualifying authority by subsection (1).

(5) A qualifying authority must, in exercising the powers conferred by subsection (1), have regard to—

(a) any guidance issued by the appropriate national authority, and

(b) any guidance or document specified in regulations made by the appropriate national authority.

(6) The appropriate national authority may by regulations amend this Chapter for the purposes of changing the authorities which are for the time being qualifying authorities for the purposes of this section.’.—(Ms Rosie Winterton.)

Brought up, and read the First time.

With this it will be convenient to discuss the following: Government new clause 20 —Mutual insurance: supplementary.

New clause 1—Building targets

‘No local authority which has a responsibility to plan for building a target number of homes may promote an area for housing allocation within the area of another local authority nor count such an allocation towards its housing target without the agreement of that authority.’.

New clause 9—Duty to draw up a strategy for public toilet provision

‘(1) A lower-tier local authority must make a strategy for the provision of public toilet facilities in their area.

(2) Before drawing up its strategy, the authority shall take whatever steps it deems necessary to consult the public in its area.

(3) The authority shall have regard to the results of the consultation when drawing up its strategy.

(4) A lower-tier local authority must—

(a) review its strategy at least once a year;

(b) take whatever steps it deems necessary to consult the public in its area as part of its review;

(c) have regard to the results of the consultation when reviewing its strategy; and

(d) publish its strategy and information relating to its consultation on its authority’s website.

(5) An authority may delegate to a town or parish council its responsibilities under this section in respect of any area covered by that town or parish council.’.

New clause 15—Delegation by regional development agencies—

‘(1) The Regional Development Agencies Act 1998 (c. 45) is amended as follows.

(2) After section 6A (delegation of functions to the Mayor of London and the London Development Agency) insert—

“6B Delegation of functions and funding by regional development agencies

(1) The Secretary of State shall make proposals in consultation with the regional development agencies within six months of the coming into force of this section for a scheme of delegation for the discharge of their functions to a local authority within their area, or jointly by a group of local authorities within their area.

(2) For the purposes of this section, a “function” shall include—

(a) part of a function or any function which is exercisable only in relation to part of the area of a local authority;

(b) the determination and allocation of funding or any expenditure programme to other persons or bodies, whether by grant, loan or other means;

(c) the transfer to one or more local authorities, or to a partnership of one or more such authorities with one or more other persons or bodies of funds for the purposes of implementing a programme of investment in pursuance of the social, economic and environmental wellbeing of the area.

(3) The scheme of delegation shall apply to the functions of all or any of the regional development agencies as the Secretary of State considers appropriate following consultation with relevant local authorities in the area.

(4) The scheme shall be implemented no later than two years from the coming into force of this section.

(5) Two or more local authorities to which any function has been delegated under this section may arrange for it to be discharged by them jointly or in accordance with any executive arrangements agreed by them from time to time.”’.

New clause 16—Power of general competence

‘(1) The Local Government Act 2000 (c. 29) is amended as follows.

(2) For subsection 2(1) substitute—

“2 (1) Every local authority has full powers and capacity to carry on or undertake any activity or business, do any act, or enter into any transaction with full rights, powers and privileges for so doing.”.

(3) For subsection 2(2) substitute—

“(2) Subsection (1) applies subject to—

(a) this Act;

(b) any other enactment; and

(c) the general law.”.

(4) For subsection 2(5) substitute—

“(5) The powers under subsection (1) may be exercised in relation to or for the benefit of—

(a) the whole or any part of the local authority area; or

(b) all or any persons resident or present in a local authority’s area; or

(c) any person or area situated outside the local authority’s area if they consider that it is likely to benefit their area or persons resident there.”’.

Government amendments 28 and 29.

New clause 19, together with new clause 20 and amendments 28 and 29, relates to mutual insurance arrangements. I thank Opposition Members from both parties for their assistance with bringing forward the amendments. They may well have issues that they wish to raise, but it is generally recognised on both sides of the House that this has been a matter of some concern for local authorities since the Court of Appeal handed down its judgment in the LAML—London Authorities Mutual Ltd—case in June 2009.

In July, my right hon. Friend the Secretary of State for Communities and Local Government published the consultation paper “Strengthening local democracy”, which sought views on the scope of local authority powers, particularly as regards their powers to undertake mutual insurance arrangements. The consultation response attracted 96 responses to the specific question on mutual insurance, with 82 per cent. agreeing with the proposed power. New clause 19 provides permissive powers for authorities to enter into mutual insurance arrangements, if they wish to do so. Authorities exercising the power will need to ensure that any proposed arrangement meets the duty of best value as laid down in legislation. While it seems unlikely that all local authorities will wish to establish or participate in an insurance mutual, for those for which it makes good business sense to do so, clear and specific legal powers will be available to them for that purpose.

The amendment provides that best value authorities, which are described as “qualifying authorities”, may establish and become members of a corporate body—for example, a company—the object of which is to provide insurance in relation to insurance risks to authorities that are members of the mutual. Only qualifying authorities may be members of the mutual.

The mutual may also provide insurance to other bodies, which may be prescribed by regulation and which I will call “affiliates”. They will be bodies that have some association with qualifying authorities—for example, arm’s length management organisations, academy schools or wholly owned subsidiaries. Broadly, the intention is for a qualifying authority to be able to sponsor an affiliate to bring it within the mutual’s insurance cover, as we understand that many local authorities arrange insurance cover for ALMOs and some schools. However, affiliates will not be able to become members of the mutual.

The qualifying authorities are to be provided with a power to pay premiums and other payments to the mutual insurance body, and can agree to make any such payments as may be necessary in future. They can also assume financial obligations in relation to affiliates. The Secretary of State in relation to England, and Welsh Ministers in relation to Wales, may by regulation subject to the affirmative procedure amend the list of qualifying authorities. They may also impose restrictions or conditions on the use of the power by regulation subject to the negative resolution procedure. We intend to consult on the content of such regulations. Qualifying authorities are required to have regard to any guidance issued by the Secretary of State or Welsh Ministers and to any documents specified in regulations, such as guidance from the Chartered Institute of Public Finance and Accountancy. Again, we want to consult on that.

New clause 20 lists the qualifying authorities that are to be provided with the power to become members of a mutual insurance body. It also sets out the appropriate parliamentary and Welsh Assembly procedures for regulations. Amendment 28 provides for commencement of the new clauses, which will be brought into force when commenced by order, and amendment 29 is a consequential amendment to add a reference to insurance to the long title of the Bill. I commend those amendments to the House.

New clause 16, tabled by the hon. Members for Wycombe (Mr. Goodman), for Peterborough (Mr. Jackson) and for Ludlow (Mr. Dunne), would amend the current well-being power, a power that local authorities have to promote or improve the economic, social and environmental well-being of their area. It would remove the link to well-being, giving authorities the power to

“undertake any activity or business, do any act, or enter into any transaction”

for the benefit of their area or its inhabitants.

The Government have long been committed to ensuring that councils have a wide range of powers and providing them with the freedom to be innovative and act in the local interest. Indeed, we introduced the well-being power in 2000 as a broad power of first resort to enable local authorities to act for the benefit of their local community. In 2003, we introduced new freedoms and flexibilities for capital finance, including prudential borrowing powers. At the same time, we provided powers for best value authorities to charge for discretionary services and enabled new trading powers to be conferred on authorities.

We are aware that the decision in the LAML case raised concerns about the scope of local authority powers, and through the “Strengthening local democracy” consultation we have sought to better understand them. We have acted speedily to answer the immediate concerns raised by the case, so as to ensure that best value authorities can take part in insurance mutuals.

As part of our commitment in the consultation, we are considering whether there are other cases in which existing local authority powers are not sufficient to enable them to improve services and achieve efficiencies. However, they are complex issues that need careful consideration. I assure the House that we are committed to such consideration following the recent consultation, but I am concerned that “power”, as it is expressed in the amendment, would not give councils the certainty that they need if they are to take part in mutual insurance. Indeed, the Court of Appeal judgment, which in a sense is at the root of the Government amendments, indicated that any general power would be unlikely to provide local authorities with the necessary confidence to engage in mutual insurance and similar arrangements. We are introducing our amendments today to address that problem, but, as I have said, we are committed to considering other ideas that came forward in the consultation.

New clause 15 would provide for the Secretary of State

“in consultation with the regional development agencies”


“make proposals…for a scheme of delegation for the discharge of”

the RDA’s “functions” by

“a local authority…or…a group of local authorities”

in its region. However, new legislation is not necessary to achieve what we all want, which is interventions delivered at the right level that will align with and strengthen effective partnership working between all parties in a region. The Bill already has a very clear focus on enhancing the role of local authorities in economic development through the introduction of economic prosperity boards and local economic assessment duties and by providing a statutory basis for multi-area agreements.

The economic assessment duty, for example, will provide a shared and agreed understanding of local economic conditions and will form a key part of the evidence base that will inform priorities for regional strategies and their implementation plans to ensure that local circumstances and perspectives are properly reflected. In that context, the focus should be on the principle and practice of joint investment planning, which can be achieved within the existing legislative framework, rather than on delegation of RDA functions. The key is closer working between RDAs and local authorities in planning the implementation of the regional strategy, which will deliver the optimum outcomes at local level.

Certainly, we propose a joint approach to planning and investment in the region, which will enable local authorities to take on a large degree of responsibility for delivering agreed programmes and projects in their areas. However, RDAs should retain final accountability for funds passed through them.

I may have had this discussion with my right hon. Friend and others before, but will she tell the House why non-elected people should have power over elected people?

The new arrangements that we are introducing—the RDA and leaders boards—will address some of the issues raised by the question whether RDAs have an input from local government when they are drawing up regional strategies. The new changes in the sub-national review will achieve that. As my hon. Friend knows, I was a great supporter of regional government, but we have moved on. We have therefore looked at how to ensure that RDA boards work closely with the leaders boards from local authorities. In many instances, they are drawing up joint boards to consider particular aspects such as planning and transport. This brings together local authority colleagues with the regional development agency boards in a joint approach, which will be very important.

Accountability is necessary to ensure that money is strongly focused on economic development activity that is of strategic value to the region as a whole and is therefore good value for money. Obviously, this is even more important in an environment of tightening resources. Secondly, it is important that the RDAs maintain flexibility in their budgets.

The key point is that RDAs and local authorities will jointly agree what programmes of intervention will be undertaken in particular areas, but the RDAs will retain the responsibility to make the final decisions. Any funding from RDAs to local authorities would have to follow the usual rules that apply to the RDAs, and would have to be used within the same overall financial framework. RDAs and local authorities will jointly agree how projects within the programme will be appraised, monitored and evaluated.

The virtues of investment-led planning include a focus on what will work, with flexibility, but without bureaucracy. The Government have been working with colleagues from the LGA, local authorities and RDAs to develop guidance for joint investment planning. The principles that we are following mean that that should be light touch and partnership based.

New clause 9 was tabled by several of my hon. Friends, including my hon. Friend the Member for Milton Keynes, South-West (Dr. Starkey) in her key position as the Chairman of the Select Committee on Communities and Local Government. It calls for the Government to place a duty on local authorities to develop, in consultation with members of the public, a strategy for the provision of public toilets in their area, and to review this on an annual basis. The Government believe that decisions about the provision of local services and amenities such as public toilets are best made at local level, so we want to devolve the powers, resources and flexibility to local authority partnerships. We have therefore taken concerted action to empower communities, so that people have more influence over local decisions. We believe that that is the right way to bring about the changes that people want to see in their areas and is a better and more sustainable approach than always providing direction from the centre on how particular public services should work, which can constrain the ability of councils to respond in the ways that best meet the range of local needs and priorities.

As in other parts of the Bill, we have tried to introduce ways in which people, through petitions and requests to which councils must respond, can raise the needs of their community. In 2007, we undertook to consult all relevant bodies about the issue of public toilets. As a result, we published our strategic guide on improving access to better quality toilets in March 2008. It highlighted the range of powers and approaches available to local authorities and their partners that can help them to improve publicly accessible toilets in their area. That included further guidance on the community toilet schemes, under which members of the public can use toilet facilities, free of charge, in local businesses such as cafés, restaurants, pubs and public buildings.

We believe that the right approach is for parts of the Bill to be used by local councils to influence such provision. Rather than imposing a duty from the centre—in many ways, we have tried to pull back from that—we want local people to have means of raising such issues and making councils more accessible and responsible. We would rather do that than always say from the centre, “This is how you need to address your toilet issues.”

New clause 1, tabled by the right hon. Member for Hitchin and Harpenden (Mr. Lilley), is similar to his proposal in Committee, where he explained that he wished to close a loophole that he thought would allow councils to meet their housing targets by applying for planning permission in another local authority area. I wrote to him on 25 July and explained—I hope—that houses built in a particular area can count only towards the planned housing supply for that area. His new clause is therefore unnecessary. It proposes that no local authority should be able to meet its housing target by promoting

“an area for housing allocation within the area of another local authority nor count such an allocation towards its housing target without the agreement of that authority.”

I reiterate that local authorities can express their opinions on proposals in a neighbouring authority’s area. Indeed, they are required by law to consult each other. However, local authorities have no powers to require another local authority to accommodate housing numbers allocated to them. Our policy is that local authorities should accommodate the level of housing identified for their area in the regional spatial strategy or regional strategy. We support councils working together so that they can decide between them how best to accommodate their respective housing needs across a sub-region area. However, they cannot simply require another local authority to accommodate the number of houses allocated to them.

Is it not a concern that, at an examination in public, Luton council, for example, could say, “Oh no, it is mad to do it in our area. The best way of doing it is to put it in Hertfordshire.”? If the inspector nods in that direction, it becomes a way for a council to bounce a neighbouring authority and get out of its own obligations. That is not something to be encouraged.

As I have said, we try to encourage joint working. If local authorities disagree, an independent inspector has a role in making a decision on the proposals based on the evidence available and the policy set out in the regional strategy and by the Government. Again, I stress that in setting out the regional strategy, the local authorities will have to come together and agree on such matters. It is not possible simply to impose a proposal; we encourage joint working. Furthermore, an independent inspector will have a role, if overall there is a disagreement.

I have gone into some detail, but I hope that my explanations of the reasons for bringing forward the Government’s amendments have been convincing. I hope, too, that I have given enough reassurance in my explanations about the other amendments to persuade right hon. and hon. Members not to press them.

I rise to speak to our new clause 16, which would give local councils a power of general competence, as the Minister said, and our new clause 15, which seeks to delegate power to local authorities. As new clause 16 is related to Government new clauses 19 and 20 and Government amendments 28 and 29, as the Minister observed, I shall turn to them before dealing with our new clause 16, which goes wider.

Before I do that, however, let me pause to say, following the Minister’s remarks, that we will listen carefully to the debate on new clauses 1 and 9. I am familiar with the arguments put by my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) in Committee. Our Front-Bench colleague, my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), is looking closely at the matter raised by new clause 9. The Minister made a reasonable point about the undesirability of putting new burdens on local authorities on to the statute book, but our view is not carved in stone and we will listen carefully to what she has to say. Like my hon. Friend the Member for Peterborough (Mr. Jackson), I welcome back the Minister. She is the one fixed point in the turning world of the Government Front Bench. Since Committee we sadly seem to have lost the hon. Member for Portsmouth, North (Sarah McCarthy-Fry), but it is good to see the right hon. Lady in her place.

The Minister went through the background to Government new clauses 19 and 20 in some detail, and there is no need for me to repeat what she said in taking us through the LAML case and what happened in court. However, it may be worth pointing out that LAML is an all-party body, in that Conservative-controlled councils such as Croydon, Hammersmith and Fulham, and Harrow are members. Also, both the Local Government Association and Chris Leslie, the director of the New Local Government Network and a former and—who knows?—perhaps future Member of this House, were disappointed with the judgment. It is also worth pointing out that in response to the Government’s consultation paper on strengthening local democracy—of which more later—the LGA said that the

“CLG’s proposals in response to the LAML case…are quite unsatisfactory. Specific legislation on mutual insurance would do nothing to tackle the wider limitations of the existing well-being power which the case has highlighted.”

Let me pause at this point and say to the Minister that we are inclined to give her new clauses a fair wind. She made much of the fact that our new clause to introduce a new power of a general competence would not do the trick on mutual insurance. Our answer is that we are not seeking—at least not at this stage—to delete her provisions on mutual insurance, so they would stand. However, we have a couple of questions and concerns that are worth raising. We are curious to know whether the Department has made any assessment, as it should have, of any risks to local authorities. We have received indications from some sources of that possibility, so we are curious to know what the Minister thinks about that. Also, new clause 19(5) refers to guidance. If the Minister has not already told the House when she intends to issue that guidance, it would be welcome if she did so.

An examination of the clauses on mutual insurance naturally leads us to the wider subject of the power of general competence. I am afraid that that leads me to quote the LGA—and, indeed, Chris Leslie—again. It said that the LAML judgment demonstrated “weaknesses” in

“the scope of the ‘well-being’ power. This adds to the need for legislation to create a power of general competence for local government. This is essential in order to regain the flexible power it was believed the Local Government Act 2000 had created”.

In its response to the consultation that I mentioned a moment ago, the LGA expressed its support for a

“general duty to devolve”,

and criticised

“the weak approach taken to the flaws in the power of well-being, where both we and the CLG Select Committee have advocated a new power of general competence.”

The LGA went on to repeat that point in its briefing on the Bill.

I am sorry to quote Chris Leslie again, but he has said:

“There is an apparent consensus in Parliament across all parties in favour of a ‘power of general competence’ for local authorities.”

That is certainly true among the Conservatives. We have set out the desirability of such a power in our document “Control Shift”. That was also the view of the Liberal Democrats when we debated these matters in Committee, although that seems a very long time ago.

I am not sure that the Government have joined that consensus, however. Their view as stated in Committee was that

“more needs to be done to encourage local authorities to use the well-being power”.––[Official Report, Local Democracy, Economic Development and Construction Public Bill Committee, 18 June 2009; c. 253.]

The Minister also said in Committee that she was interested in having discussions with local authorities about powers, and she essentially gave the same answer today. Our judgment is that, given the views of the LGA and the New Local Government Network, and the consensus that is emerging, if there is no good reason not to put a power of general competence on the statute book, simply having further ministerial discussions between the Department and the local authorities does not seem to justify postponing a vote on the matter.

We tabled a number of probing amendments in Committee, and we took the view that, if the Minister could persuade us that they were deficient and would have an effect other than the one that we sought, we would not press them to a vote. We did not do so. She did not suggest today that our proposal was deficient in any way. As I have said, we are not proposing to block her proposals on mutual insurance. I therefore give notice that we might seek to press our new clause 16 to a vote.

Speaking of pressing matters to a vote brings me to new clause 15, which deals with the delegation of powers to local authorities. The Minister spoke about that earlier, and I want to put it into the context of the structure established by the Bill, which was debated on Second Reading and which we considered in Committee. Part 5 of the Bill sets out a regional strategy, and it is worth examining it in the context of the Department’s own view of the representations that it received in response to the sub-national review. Its response stated that the Government

“expect the RDAs to delegate responsibility for spending to local authorities or sub-regions wherever possible unless there is a clear case for returning spending to the regional level”.

It is in that spirit that we have tabled new clause 15, which would enable Ministers to exercise precisely the kind of delegating power that the Secretary of State might think necessary. It would require the Secretary of State to make proposals with RDAs for a scheme of delegation for the discharge of their functions—such as housing or planning—to a local authority or a group of local authorities.

If I am a bit hesitant about these functions, it is because—as my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) pointed out in Committee—the Department’s own policy document on regional strategies states, as early as paragraph 2.2 that the Bill

“does not specify what the regional strategy should contain.”

At any rate, our new clause would give the Secretary of State the power to discharge functions, having consulted two local authorities.

The Minister frequently argued in Committee that the powers of Westminster and Whitehall should be given due weight. She really cannot complain today that our new clause 15 does not do that. Ultimately, it gives the Secretary of State the power to make the proposals for the delegation of responsibility, as the Department’s response to the sub-national review indicated that it wants to. The Local Government Association said in a further comment on the consultation paper that

“partnerships of local authorities have far more direct accountability than the plethora of national and regional quangos that currently make decisions that affect local people.”

I think that the LGA has the balance of that judgment right, which is why I give notice that we may well press the new clause to the vote.

As is traditional on these occasions, I end by quoting the hon. Member for Thurrock (Andrew Mackinlay), who always puts things more bluntly and directly than I could. What he said on Second Reading has gone down in the annals of Hansard and the House should be reminded of it:

“Most people have had enough of this. Why can we not cut away this plethora of bodies and focus on democratically elected authorities… That is why I say to her”—

not the present Minister but the right hon. Member for Salford (Hazel Blears), when she was Secretary of State—

“that this is complete nonsense and that we have had enough… of… all these buzzwords. I say take it back.”—[Official Report, 1 June 2009; Vol. 493, c. 35.]

On the Conservative Benches, we can do no more than echo that blunt and direct language. As I said, unless the Minister has any further revelations for us, we intend to press our new clauses to the vote.

I rise to speak in favour of new clause 9, which was tabled by me and a number of other members of the Communities and Local Government Committee. I say in parenthesis that I also support the various ideas around for allowing Select Committees to put forward amendments in a more direct way than has been possible on this occasion.

The new clause arises from one of the recommendations in the Select Committee’s report on the provision of public toilets, published in October 2008. For the record and for the benefit of Members who may not have read through the report, which I commend as an interesting piece of bedtime reading, I shall briefly explain why the inquiry was undertaken and why it excited such enormous public interest. I have not been involved in a Communities and Local Government inquiry that has excited as much public interest as that one on the provision of public toilets. I shall also explain why we thought it necessary for councillors to have a duty to draw up a strategy. Towards the end of my remarks, I shall explore the assurances that the Minister sought to give and see whether I can tease out some more enthusiastic ones, which might lead me not to press the new clause to the vote.

The Select Committee looked into the provision of public toilets because there was ample evidence across the country of a decline and because an increasing number of councils had come to the view that the direct provision of public toilets by councils was too expensive—allowing their toilets to fall into disrepair, or, in many cases, to be completely demolished. There is nevertheless a huge public interest in ensuring an adequate supply of public toilets in every area of the country and that any such provision should be of high quality.

Although this is clearly an issue for every single member of the public, there are certain groups among the population who feel particularly deeply about it. One of those groups is, obviously, the elderly. I think it is a biological fact that as they get older, both men and women tend to have a more frequent need to use public toilets, and those needs become considerably more pressing.

These things are often not spoken of publicly, but I think it is extremely important for us to do so. The ability of elderly people to have a nice day out, to go shopping or to visit the public library is often constrained by the fact that they are not absolutely certain that, should they need to use a public toilet, one will be conveniently available, and they fear that if one is available, it will not necessarily be very clean or a pleasant place and they will feel slight concern about using it. That is why many of the organisations representing elderly people, such as Age Concern, have been so active in raising the issue of the need for adequate public toilet provision, and why they have been so supportive of our report. In fact, they have subsequently used it as a campaigning tool with local groups in an attempt to raise the profile of the issue with their local councils.

The issue also affects families with young children. As we all know, young children often have pressing and urgent needs to use public toilet facilities. They tend not to look ahead, so to speak, and go to the loo before they leave home. They swear blind that they do not need to use a loo, and then suddenly and very urgently need to use one. Although the public tend to turn a blind eye to small persons using the natural greenery of the landscape to camouflage these vital activities, it would clearly be much more satisfactory if there were an adequate supply of toilets so that families out with young children could use the proper facilities when they require them, rather than being forced to rush into the nearest bank—should one be open—to ask whether they can use the staff facilities.

I have a lot of sympathy with what the hon. Lady is saying, but why does she think that we need a national strategy? Why can we not simply rely on responsible local councils to make such provision? An example is Christchurch borough council, which has won the loo of the year award on many occasions.

The hon. Gentleman may not have noticed that the Committee was not asking for a national strategy. It was asking for local authorities to be given a duty to draw up their own local strategies in consultation with their local populations. The best councils are already doing that, but not all councils are. That is why we suggested that every council should have a duty to draw up its own strategy. We are not asking for councils to be given a duty to provide public toilets directly—I shall say more about that in a second—but we are suggesting that they should have a duty to draw up a strategy. I note what the Minister said about the balance between central and local government and whether we should be imposing a duty, and I am susceptible to that argument myself. I think that it is a question of where we place the balance, and I shall say more about that shortly as well.

I have mentioned elderly people and families with children, but, for rather obvious reasons, women in general have an additional need to gain access to high-quality, clean public conveniences during certain periods in their lives. That is another issue that is not often spoken of publicly.

Another group affected consists of people with severe disabilities, and, in particular, the families of children and adults with such disabilities, who need to be able to gain access to good disabled toilets, especially the excellent ones promulgated by the Changing Places campaign. Let me at this point put in a good word for my own constituency—well, not my constituency, but Milton Keynes council, which was one of the first to provide a Changing Places toilet in the Milton Keynes shopping centre. The shopping centre is not in my constituency, but in the adjacent constituency of the hon. Member for North-East Milton Keynes (Mr. Lancaster).

For families caring for severely disabled young people or adults, the ability to gain access to a Changing Places toilet is even more important. Our Committee heard evidence from one family who had been unable to enjoy a day out as a family until Changing Places toilets were provided. If their disabled family member had an accident, they had to give up their whole day and all go home because there was no way in which they could gain access to suitable facilities. If there is not decent public toilet provision, those groups do not have the freedom of movement that everyone expects in order to use leisure and shopping facilities. That is not to mention issues about tourism and the need for resort towns, for example, to ensure that visitors have adequate public toilet provision.

There is a public hygiene aspect. We had strong evidence from those representing residents associations, which are particularly concerned about the public nuisance that is caused in some city centres where there is inadequate public toilet provision, where there are lots of pubs and clubs and where lots of young people drink a great deal, come out on to the streets and often cause extreme nuisance in public places and in front gardens. Therefore, a huge range of people think that this is an important issue to which not enough attention has been given, either locally or nationally, and they were very supportive of the Committee’s inquiry. Many were keen that councils should have a duty to provide public conveniences. We did not go as far as many of the groups that made representations to our Committee wanted us to go. We did not think that it was necessary for local authorities to have a duty to provide public conveniences. The Minister raised points about the need for local authorities to be able to take decisions on the way in which they use their resources and provide for local needs. However, although some councils have been excellent, many councils have not been, so we thought that there should be a duty to draw up a strategy in consultation with the local community.

All the examples that the hon. Lady has given show considerable local concern, and I am lucky to have two local authorities that provide extremely well in this area: Suffolk Coastal district council and Waveney district council. However, surely it is up to local authorities to decide; it is not for us to tell them that they have to do such things. If provision is needed, they will provide it. If they do not think that it is needed but it is needed, the local electorate will soon demand it. We must give local authorities the power to decide what their priorities are.

As I have said, I am in two minds about that argument. The right hon. Gentleman will be aware that the Committee has just published a report on the balance of power between central and local government, where we argued strongly for local government to be given considerably more powers. I am in two minds because of the evidence that we received from individuals and organisations. Although there has been significant public pressure from individuals and groups in many localities to get their local council to take the issue seriously and to look at the best practice of councils that are providing good toilet provision, often through community toilet schemes, where they have worked with local businesses, pubs and cafés to ensure that a range of provision is available—much of it is provided by the private sector, primarily for its customers, but also for public use—regrettably, quite a lot of councils still do not seem to be susceptible to pressures from such groups. They seem to be locked into the idea that the provision of public toilets is extremely expensive, cannot be done these days and is beyond them. They do not seem to be looking at the good practice of other councils and thinking imaginatively about the way in which they could provide such facilities. That is why we put forward the recommendation that councils should have a duty to draw up a strategy in consultation with the local community. That would give more weight to the local groups that want such facilities and are pushing councils into activity.

The Minister provided a pre-emptive response to my proposal in which she reiterated the Government response to our original recommendation. I have some sympathy with the notion that we should not at this time be putting additional constraints on local authorities. In her response however, the Minister gave the impression that this was about councils directly providing facilities, whereas in fact it is about councils drawing up a strategy. I accept that even drawing up a strategy and having a public consultation is not cost free; there is of course a certain financial cost to the council in doing that, but drawing up a strategy is not quite the same as the council directly providing public toilets. Therefore, I hope that the Minister might reconsider some of the emphasis in the original Government response to the report and recognise that this is not about direct provision but about strategy.

I accept that the Government strategy providing guidance to local authorities is excellent, and if all councils followed it there would not be a problem or a need to put any additional pressure on councils. However, before I definitively decide that I am not going to pursue this matter, I shall need the Minister to give me a bit more reassurance, such as on how the additional powers in the Bill could be used by local groups to push recalcitrant councils into at least having a strategy. If she were to state that on the record, it would at least be a further campaigning tool that all those organisations could use against recalcitrant councils in order to get them to be more active.

I also seek reassurance that the Department recognises that this is an extremely serious issue in respect of equalities of opportunity, particularly for disadvantaged groups. If there is not decent local provision of high-quality public loos, those groups are not able to enjoy all the facilities within localities and they find that their lives are constrained as a result.

Therefore, I ask the Minister to say that the Department might consider at least monitoring the situation. Also, she has given assurances that there are other ways for the public to exert pressure on their councils on this matter. If they do not arise and we are left with inadequate provision of public toilets in certain parts of the country, I would like the Department to consider being more active, not just leaving things to run their course and councils to do their own thing in response to the national strategy.

The hon. Member for Milton Keynes, South-West (Dr. Starkey) has raised an important issue that we have not discussed previously in proceedings on this Bill. It is important to pay tribute to the Changing Places campaign that has done so much to draw attention to this issue and to put pressure on local authorities to improve their standard of provision. I can understand why the hon. Lady is in two minds as to whether there should be some kind of statutory duty. The way the process works at present in many areas of local government is that national guidelines tend to set a lowest common denominator which councils then feel they have to reach as a minimum level. We do not currently have a system with a highest common denominator whereby the excellent work of some councils—which some Conservative Members have raised—sets the standards that other councils have to try to achieve. I wonder whether a way of dealing with this might be to set up a system whereby the impetus is on local authorities to reach the highest common denominator rather than on their being beaten into trying to attain the lowest common denominator.

I find the Minister’s response on this whole issue rather bizarre, because she says there is no way this should be within the remit of central Government and that it should be a matter entirely for local government, yet we are discussing a piece of primary legislation that sets out in minute detail and thousands of words and pages how councils should respond to petitions. There is therefore double-think in the Minister’s response in that she can take one view on the provision of public toilets but a very different view on the minutiae of much of the other work that local government undertakes. Perhaps she could square that in her response—I will be impressed if she manages to achieve that.

I turn now to the initial Government new clauses relating to the Court of Appeal ruling on local authorities and mutual insurance. The Liberal Democrats are not going to oppose them, because they deal specifically with the problem that the ruling identified, but they are necessary to although not sufficient for the needs of local government. The new clauses do not address a much more general issue relating to how the well-being power could be applied. The Minister’s remarks seemed to indicate that she was prepared to take a piecemeal approach, addressing other issues that might arise from the way the well-being power was exercised. Such an approach is unnecessarily complicated, because introducing a much more general power of competence would address the matter far more effectively. The Liberal Democrats are inclined to support the Conservatives in what they are saying about the general power of competence, because such a power would make things explicit and deal with them in a simple way, rather than saying, “We’ll deal with each issue as it arises, depending on what rulings may or may not be made.” Like the hon. Member for Wycombe (Mr. Goodman), I understood that this was not an either/or approach, because we could adopt it in addition to matters relating to the LAML case.

I shall keep my remarks brief, because I know that many hon. Members want to raise specific points today and I wish to give them the opportunity to do so. On the Conservatives’ new clause 15, Liberal Democrats are broadly supportive of the need to push down to a more local level power and resources from any level further up the line, be it central or regional. I was slightly concerned about the language that was used, because I would much rather see a push to devolve funding and decision making, rather than simply to delegate it. One of the problems that I have with the regional organisations, which seem to have so much power, is that they are not actually responsible for decisions; they see themselves purely as making delegated decisions and they are delivery arms of central Government. In a sense, where someone is undertaking and executing delegated powers, it does not matter whether that is being done at a national, regional, sub-regional or parish level, because ultimately they are doing only what is being required of them by the central Government guidance. I would much rather there were devolved powers than delegated ones.

I have a lot of sympathy with the point that the hon. Lady is making. Our intention was simply to dangle in front of Ministers a proposal that, as it would leave a power in the hands of Ministers, they might accept. Unfortunately, our offer is likely to be rejected.

I suspect that it might be rejected, but I was pleased to see that new clause 15 refers specifically to resources. My real concern is that powers and responsibilities are easy to hand down, but unfortunately the resources that should go with them never seem to make the full journey. What the Minister was saying was bizarre. She was saying that the Government have an excellent track record on pushing these responsibilities down to regional level and that they want to focus on getting councils to push responsibilities down to communities—I do not have a problem with any of that. My problem is that the bit in the middle is missing: why can regional bodies not have a duty to push down responsibilities to the local authority level too? The Government’s approach is strange and the thinking is certainly not joined up, particularly in respect of the group of provisions that we are dealing with today.

The issue raised by new clause 15 is a theme to which we will return, if we get the opportunity to do so, because a number of other amendments that are to be considered further down the line deal with the powers of regional development agencies. RDAs still exercise a huge number of reserve powers, and concerns have been raised about the number of decisions being taken by people who have not been elected and who have power over people who have been elected. It is not just one narrow area that is being raised here, because there are much broader concerns about the priorities of RDAs and where their powers go back to—ultimately they go back to the Secretary of State. I hope that we get the opportunity to return to this issue.

The Liberal Democrats have no problem with the very narrow new clauses that the Government have tabled, but we feel that if this really is a Bill about local democracy it is very disappointing that the Government are not prepared to be more wide ranging in the powers that they are explicitly prepared to pass down to the local authority level.

That is precisely the point, is it not? The title of the Bill is a misnomer. It is yet another Bill that should be entitled “Interfering with local government”, rather than having its title suggest that it is about local democracy. The hon. Member for Falmouth and Camborne (Julia Goldsworthy) was right to ask what the difference is between leaving the determination of a policy on toilets to local authorities and telling them how to deal with petitions, with informing people about councils and with many more important issues. That explains why I wish to speak to new clauses 16 and 15.

New clause 16 deals with a general competence power, about which there has always been a debate. I recall serving on a national executive sub-committee in the 1980s and discussing what a new Labour Government would do for local democracy—we were doing that because the huge rows about rate capping and the abolition of the county councils had taken place. My right hon. Friend the Member for Blackburn (Mr. Straw) was on the same working party. Many of us thought then that a general competence power should be given to local authorities—I still think that—but he came up with this stunning argument: if there were such a power, what would there be to prevent Islington from making an atom bomb? I do not know why he chose to use Islington in that absurd example, but if seriously intelligent and respected people such as he come out with absurd arguments such as that, there really is no argument against giving a general competence power to local authorities.

Unless local authorities have the ability to do things unless they are specifically prohibited from doing them, the converse of that will occur and there will be regular interference in very important local matters—beyond those relating to public conveniences—that are better determined locally. I could give three quick examples that apply to my constituency. It is blighted by appalling private landlords, whom we have fought for a long time. We now have a scheme that regulates them, but because the Department does not like it we suffer terrific interference from the centre in the detail of the regulation. It is completely unnecessary because the scheme is beginning to work and the local authority should be left to decide the best areas for the scheme to operate in and how to implement it.

The product of interference is always inefficiency and extra cost. When the Select Committee on Transport examined local transport plans, it found that the Department for Transport was getting into the detail and interfering in the definition and placement of puffin crossings. That is not something that central Government should be doing. We have had big rows in Manchester about the tram system. The Department for Transport examines the number of seats on trams, but that is not what central Government should be about. Until central Government they stop doing such things, local government will not achieve what it is capable of achieving.

I know that the hon. Gentleman and I do not have quite the same view about the private sector, but has he noticed that most big companies have given up trying to manipulate every local branch, and find that by giving independence and freedom they get a very much better response? Why are civil servants so reluctant to allow local authorities to make their own decisions and, indeed, their own mistakes?

The right hon. Gentleman makes a perfectly valid and excellent point. Long ago, almost every large private company gave up trying to control everything from the centre, because such an approach is inefficient and ineffective.

My second point—let me move on to new clause 15 —concerns my right hon. Friend the Minister’s answer to my question about why non-elected people on RDAs should be taking decisions over and above those taken by elected people on local councils, in some ways distorting what might be national priorities. In a subsequent statement, she gave the real answer: the Government are still wedded to the idea of regional government, which the people in the north-east threw out completely. I do not understand why the Government are still wedded to the non-democratic and inefficient part of that process, when the electorate—in a part of the country that was chosen because it was most likely to support regional government—threw it out.

I can base the argument around a statement made by the newly appointed chairman of the Northwest Regional Development Agency, a man called Robert Hough, whom I would class as a friend. He has done excellent work on the Commonwealth games in Manchester and I was a colleague of his on the Manchester ship canal. As a capitalist, he has put a great deal of effort into the community. On his appointment to the board, he said, “We have to be the referee between local government and central Government.” That is completely silly. He is an excellent man, but I think he was looking for justification for a job and position that have no justification. People who are elected do not need someone to referee between them and Government. As a leader of a council, I was quite capable of agreeing or disagreeing with the right hon. Member for Suffolk, Coastal (Mr. Gummer). That is the way it should be. Local government should speak directly to central Government, because both have a mandate from the people. It might be a different mandate, but that is part of the glory of democracy.

I am not simply making an artificial argument. In the north-west, the RDA has produced policies that are economically indefensible and I do not believe that a Government of any political colour would have followed them, and neither would local government in the north-west. They are capricious policies that are damaging the economy of the north-west. That is a simplification—in detail, it is worse. Rather than putting money where it is most likely to generate most jobs—the economic hub of the north-west is Manchester, the second economic hub is Liverpool and the third is probably Preston and Chester—the greatest amount of money per head of population has gone to Cumbria. There is another justification for spending money, and that is the relief of poverty, but that has not been the justification that has been given.

I do not want to make a Third Reading speech; I just wanted to talk about the two new clauses, but the Bill does not do what it says on the tin. It is not about improving local democracy. Increasingly, as the debate goes on, it is clear that there is no proper justification for RDAs to continue. For this country to function at its best, local government needs to be set free. Giving it a general power of competence would be one way of doing that.

I shall try to be brief and to stick strictly to new clause 1, which seeks to close a loophole in planning law that allows one council to try to meet its housing targets by designating areas within the boundaries of another council as its preferred area for development.

The Opposition do not like top-down housing targets at all: we want to sweep them away and replace them with responsibility devolved to local authorities, which will be given freedom and proper incentives to meet the needs of their local areas. They will do that much better than the present system does. However, while the present system exists, we need to tackle this pernicious loophole, which is, I understand, being exploited by councils in several parts of the country. It came to my attention as a result of a chain of events in my area.

Luton and South Bedfordshire councils were obliged to meet the housing targets imposed on them within the Milton Keynes and South Midlands sub-regional spatial strategy. Initially, the councils designated as their preferred areas for development locations within their boundaries. Then, as occasionally happens, they met local resistance, but they discovered the loophole and decided that they would overcome that local resistance by proposing an area in my constituency—as it happens, it is named Lilley Bottom and is one of the most beautiful features of my constituency—as their preferred area for development, thereby escaping any retribution from their voters and leaving the voters in the threatened area powerless to oppose them.

One can understand the outrage that followed. One thing that unites the people of Luton and Hitchin is a desire to retain the green belt that separates them from each other. The proposal is unpopular in Luton as well as in north Hertfordshire. However, it is a double outrage for the people of north Hertfordshire that it has been imposed on them from outside.

The Minister said that in her letter she had said councils would not be able to meet their housing targets by doing such things, but that is not how I read it at all. It seemed to me that she was saying that they were in some way meeting sub-regional spatial strategy housing targets. Certainly, the only reason why the councils are proposing to build in north Hertfordshire is that they believe it will help them to meet their housing targets. I shall look very closely at what she said, and if they are acting on a misapprehension I shall draw that to their attention and they will promptly stop. However, I fear that that is not the case. My analysis—and therefore the need for the new clause—has been endorsed by the Campaign to Protect Rural England as well as most local conservation bodies that want this beautiful area of the country protected and want to prevent a precedent from being created that would undoubtedly be followed in many other areas of the country.

This Bill is called the “Local Democracy Bill”. It aims to promote local democracy. I submit that we cannot have democracy without accountability. If one council can build in another council’s area and therefore not be responsible to those affected by its action, that is a negation and denial of democracy. I hope that the Minister will think again and will recognise that the new clause would strengthen the democratic nature of her Bill as well as ending an unsustainable loophole in the law. I hope that we will have an opportunity to vote on the new clause in due course.

I want to speak briefly to support my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley). Planning should be about good planning. If we consider what is happening in our area—my constituency neighbours that of my right hon. Friend to the east—we can see that good planning is not what is happening. The Government have said that they want Luton to expand and they also want Stevenage to expand. These towns are very close to one another. They are not big cities with great hinterlands or anything like that. If that is to happen—although I think it is a grave mistake—it has to be done in the most careful way.

There are proposals for a massive development west of Stevenage, and Luton council has said, “Yes, let’s have a massive development east of Luton.” Our part of Hertfordshire could become like the west midlands—each community will blend with the next, and we will end up with a complete sprawl. The Government should be ashamed of what is happening to a wonderful county like Hertfordshire when they have had all these years to produce a good planning system.

My right hon. Friend the Member for Hitchin and Harpenden is bringing forward a sensible proposal that would stop a council like Luton doing something as foolish as closing the gaps between itself, the Stevenage conurbation and the town of Hitchin. Why should it be able to do that, especially as no proper consultation has been undertaken? I spoke to the chief executive of North Hertfordshire district council about this only recently. The council has had to complain to Luton about the fact that it has not been involved in any sensible discussion. It is an example of terribly poor planning, and I therefore support new clause 1.

I also support new clause 1, even though the seat that I represent is not under threat at the moment. My right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) has pointed out that the Bill sets a precedent that could be used by councils unable to meet the housing targets imposed on them from outside. In principle, therefore, I want the new clause to be accepted, but I am sorry that he did not take his argument one stage further.

My right hon. Friend argued that the lack of democratic accountability means that it is not proper for a local council to build in another council’s area. I want to go further and say that the problem with our current housing arrangements is that that democratic accountability has been removed, with the result that the number of houses to be built in any given place is decided centrally. That figure is then sent through bodies that somehow purport to be representative, as the hon. Member for Manchester, Blackley (Graham Stringer) noted, and then imposed on the duly elected local authority in a way that is unacceptable.

We must seriously consider returning to local authorities the power to ensure that other authorities do not interfere with them in that way, which would mean abolishing the undemocratic planning committees at regional level. Regions do not exist. I live in east Suffolk, which has no connection at all with Luton, and yet we are included in the same eastern region. That is madness. We even have a Select Committee to discuss a region that does not exist, and we also have a Minister: she represents Stevenage, whose location in the eastern region is merely a figment of the Government’s imagination.

The idea that the regions set up by the Government do any good at all is wholly fictitious. The only set-up more stupid involves the strategic health authorities of the NHS, which do nothing but blame the Government or the local primary care trust.

Another problem with the regions is that there is an inevitable tension between the need for growth and development on the one hand, and the need for the protection and defence of the environment on the other. The local electorate must be able to defend their turf but, equally, a council that finds the right place in its area for development must be able to get some benefit from that development.

This Bill is meant to be about local democracy, but I am sorry that it does not provide that local authorities should retain for 10 years the business rates and council tax accruing from any new development, in addition to their normal central Government grant. That would give local authorities a reason to benefit from development decisions. At present, they face significant disadvantages, as it is always true that residents of an area already have votes, while those who might wish to live there do not.

As new clause 1 suggests, a sensible development system would require that a local authority that has no place, standing or position in an area could not impose its housing obligations on that area. I am only sorry that the new clause does not cover the circumstances that arise when the local authority that does control an area makes a choice in favour of development. Our system does not allow a council in that position to benefit from that choice, and so such matters are not debated properly with local electorates.

I agree with much of what my right hon. Friend says, just as I agreed with much of what my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) said earlier, but is there not a slight danger with the path that he is going down? I am talking about the risk of overdevelopment. Especially in these troubled economic times, is there not a great incentive for a local authority that owns land to get a lot of money and, going forward, income from rates? Could not that be detrimental to the character of some of the towns that my hon. Friends here represent?

I disagree fundamentally with my hon. Friend. First, when development does take place, the problem in our society is underdevelopment rather than overdevelopment. The most dense housing area in Britain is the Royal Crescent in Bath. Our problem is bad development, not overdevelopment or underdevelopment. Bath and Monte Carlo are two examples of places where people want to live, and both areas have been built in a dense way, but sensibly. When that happens, it is possible to meet the density requirements, but unfortunately we have not insisted on a quality standard for local development.

I feel strongly about what my hon. Friend said for a second reason, which is that I believe in local democracy. I am fed up with people at the centre telling local authorities what is good for them. If local authorities are given powers, they will often make mistakes—of course they will, but central Government usually do. In my experience, it is important to spread decision making around, as people who are close to decisions make fewer mistakes than those at the centre who always think that they know best.

It is time for us at the centre to begin to recognise again that if the authority in Manchester wants to carry through a series of policies that we disapprove of—as long as it is paying for those policies itself, and I am suggesting that there should be some areas of additional payment—it should make the decision and put the case to its electorate. That is better than having a lot of faceless bureaucrats at regional or Government level who believe that they know how many seats there ought to be on a bus in Manchester—a matter of supreme unimportance to them but of great importance to the people of Manchester.

Like my hon. Friend the Member for Manchester, Blackley (Graham Stringer), I, too, was the leader of a local authority—although a much smaller one—when the right hon. Gentleman was a Minister. I feel moved to welcome his Pauline conversion to local democracy, which is all the more unexpected for not having been expressed in the directions that he gave as a Minister, of which I was on the receiving end. However, I welcome his conversion and I hope that, in the unlikely circumstance that he becomes a Minister again, he does not revert to his old dirigiste tendencies.

As so often, the hon. Lady has a partial memory of history. She forgets that local authorities did not use their own money to do what they wanted, but precepted on national taxation. We had to stop situations whereby Newcastle, for example, charged John Lewis rates that were four times per square foot more than in London—

Order. I am sure that the right hon. Gentleman and the hon. Lady who provoked him will appreciate that we are now straying away from the matter before the House.

Indeed, Mr. Deputy Speaker, so I shall explain that my view of local government democracy—as put forward in the new clause proposed by my right hon. Friend the Member for Hitchin and Harpenden, to which I am addressing my remarks—is that local government should have the right to develop in its own area, using its own resources. I want to extend those resources. However, local government does not have the right to make a decision and demand that somebody centrally—without consideration—should pay for that decision, outwith the normal sums of money that come to a locality. That is why the hon. Member for Milton Keynes, South-West (Dr. Starkey) and I may not have got on well in those days. However, I shall not carry on down that route, Mr. Deputy Speaker.

Local democratic choice demands the willingness of central Government to give powers away. I find that my colleagues are very keen on subsidiarity from Brussels to Westminster, but they are less keen on subsidiarity from Westminster to the town hall or county hall. People in the town hall or county hall are very keen on subsidiarity from Government to them, but if one suggests subsidiarity from them to the parish council they get extremely annoyed.

I hope that this Parliament can be the first Parliament for a long time to believe in real subsidiarity. We should do in Brussels the things that we can do only in Brussels—there are many of them and they are valuable. We should do in Westminster the things that we can do only in Westminster, and we should insist on doing the things we do not need to do in Brussels. But we in Westminster have to believe in subsidiarity and this “Local Democracy etc.” Bill has little to do with local democracy, for in the end, as the hon. Member for Manchester, Blackley rightly says, it does not give local authorities power to make their own decisions—indeed, the hon. Member for Milton Keynes, South-West is even suggesting that we should guide them in the provision of public lavatories. If they cannot deal with their own public lavatories, we cannot trust them to deal with anything.

We have covered a vast number of issues in the debate on this group of amendments. I shall start by addressing the last issue raised by the right hon. Member for Hitchin and Harpenden (Mr. Lilley) and I will reiterate what I said to him in my letter of 25 June. I think I may have said “July” previously, for which I apologise. [Interruption.] I hope the right hon. Gentleman will not disappear at this point.

Order. The Minister is replying directly to the right hon. Gentleman and it would be helpful if the Whips did not interfere for a few moments.

Thank you, Mr. Deputy Speaker.

In my letter, I said:

“You asked for reassurance that if particular Councils were to apply for planning permission for housing development in another district and permission were to be granted, the houses that they built in that other district area would not count towards the target, which has been set for their own area or areas.

I can certainly assure you that any houses permitted and built in a particular area can only count towards the planned housing supply for that particular area as set out in the Regional Spatial Strategy…and Local Development Framework relevant to that area.”

I should like to offer the right hon. Gentleman a meeting with me and officials to discuss the particular issues that he has raised. I know that those issues have been causing him ongoing concern, so if he feels it would be helpful for us to explain the processes in a little more detail, I am happy to do so.

On the public toilet provision amendment, the Select Committee report was extremely helpful and I was glad that it congratulated the Government on some of the actions that have been taken so far, although I realise that my hon. Friend the Member for Milton Keynes, South-West (Dr. Starkey) would like them to go further.

To pick up on the issue raised by the hon. Member for Falmouth and Camborne (Julia Goldsworthy), I shall describe in a little more detail how the Bill will help to reinforce the duty on councils to consult. There are also mechanisms, such as petitions, whereby people can raise local issues. That goes to the heart of some of the debate on the role of central Government in setting strategic direction and on how we expect local councils to respond to issues raised by the community. I venture to suggest that the public toilet provision falls into the category of central Government trying to work with organisations and local authorities—as in our strategic guide—to say, “This is how you can have good provision.”

We have also issued further guidance on how to set up community toilet schemes. Given that the Government have shown how that can be done by working in partnership with local authorities, it would be possible under the Bill for local people to say, “We do not think the provision of public toilets is adequate,” and if a petition was presented to the council, it would have a duty to respond.

We need to get the balance right, and I should not like my hon. Friend to think that we have been sitting on our hands—so to speak—in relation to public toilet provision. We have been supporting the Changing Places campaign and we are working with the Changing Places Consortium to review the British standard and consider the needs of people with complex and multiple disabilities, to which she referred. On 13 January, Baroness Andrews, then a Minister, met representatives from the consortium on 13 January to discuss the progress of the campaign and investigate how we could help to highlight the consortium’s work, building on the review of the British standard relating to the design of sanitary facilities to meet the needs of disabled people.

In June, the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Dudley, North (Mr. Austin), attended the learning disability week parliamentary reception to celebrate this year’s theme, “Changing Places, Changing Lives”. We have also made a commitment to review the guidance that supports part M of the building regulations and to consider whether it needs to be updated to include improved guidance on specialised facilities.

I hope I can reassure my hon. Friend the Member for Milton Keynes, South-West that we have looked at the issue very closely. Indeed, I was discussing her report with officials only this morning and we went into some detail about the bits where she had endorsed and praised the Government and the bits where we needed to go further.

The hon. Member for Christchurch (Mr. Chope) spoke about the loo of the year award, which was won by—I apologise for not being able to remember.

Indeed. The British Toilet Association’s awards are a good way of highlighting best practice in this important area.

I hope that with those reassurances, my hon. Friend the Member for Milton Keynes, South-West will withdraw her new clause.

I return to some of the questions raised by the hon. Member for Wycombe (Mr. Goodman) about risk assessment in the context of mutual assurance. We undertook an assessment of risk as part of the impact assessment, which has been published today. The mutual will need to be authorised, supervised and regulated by the Financial Services Authority, like any other insurer. It will also need to operate in accordance with the FSA handbook and meet all FSA, Government, risk management and reporting requirements. I emphasise that these are enabling powers. Local authorities will need to ensure that any proposed arrangement meets the duty of best value and improved services for their communities.

It is unlikely, as I am sure that the hon. Gentleman appreciates, that all local authorities will wish to establish or participate in an insurance mutual. We carried out research in the Department which suggested that potential take-up is influenced by the scale of authorities’ perceived risks and their prior claim record. The research suggested that fire and rescue authorities were and still are keen to implement a mutual insurance approach.

The hon. Gentleman asked me when guidance will be issued. I confess that in the course of this fascinating debate, I have forgotten which new clause he was referring to. However, I assure him that the guidance will be a matter for regulations. I suspect that he was referring to guidance in relation to mutual insurance. We will be consulting on it, and qualifying authorities will have to have regard to any guidance issued and to any documents specified in regulations, such as Chartered Institute of Public Finance and Accountancy guidance.

On the wider issues related to the power of general competence, as I said in the debate, we committed to considering local authority powers following the recent consultation. The issues are complex and need careful consideration. The Opposition amendments may still preclude speculative activities that are aimed at the financial well-being of the authority. This is important, as the Court of Appeal ruled that such activities did not

“readily obtain sanction by use of a general expression, the wording of which does not easily bear upon such activities”.

We want to consider those issues, and we have consulted on the matter. In the Bill we want to correct the issue of mutual insurance, and at a later date we will deal with some of the other issues that have been raised.

On the points made by my hon. Friend the Member for Manchester, Blackley (Graham Stringer) and by the right hon. Member for Suffolk, Coastal (Mr. Gummer), it is interesting that the right hon. Gentleman made such a strong point about regional development agencies. I know that my hon. Friend has been sceptical about RDAs for some time. I hope that I have been able to reassure him that the new arrangements for the RDA board and the leaders board will inject the democratic accountability that he has discussed.

It has been interesting to hear the official Opposition’s various pronouncements on regional development agencies. The right hon. Member for Witney (Mr. Cameron) said that they would be abolished if a Conservative Government were elected, and the right hon. Member for Suffolk, Coastal endorses that view, I think. Since then, other comments have been made to the effect that the regional development agencies would be considered on a piecemeal basis.

From the work that I do in the Yorkshire and Humber region and the visits that I made around the country during the summer recess visiting the RDAs and local authorities and meeting a number of businesses, I know that the help and assistance given through regional development agencies has been invaluable in the economic circumstances that we face. It would be extremely unwise for the Opposition to destabilise the situation by indicating that if, by any unfortunate chance, they were elected, regional development agencies would be abolished. That would cause huge problems for businesses. I invite the right hon. Gentleman to have more discussions with representatives of businesses in his area.

I have had those discussions, and business representatives are quite clear. They do not think that they have anything to do with Luton, and they want those powers to go back to the county council, because that is where they should be. Suffolk is one of the largest counties in Britain and has always run such matters very well. Why on earth do we have to think about places that are nothing to do with the region or any kind of regional development that affects us?

The more that the right hon. Gentleman denies the help that is going out there, the more worried local businesses will become about the idea that anybody is talking about the abolition of regional development agencies.

I always listen carefully to my right hon. Friend’s argument, but that is the nonsense of it, is it not? The natural extension of what she is saying is that local authorities would not be able to use exactly the same money to help exactly the same businesses and exactly the same people. That is not the case. Local authorities could use that money at least as effectively.

And the whole point of the Bill is to enable multi-area agreements and economic prosperity boards, so that local authorities can work together, but in a regional context. That is why it is important to take forward the changes introduced through the sub-national review, which bring together RDA boards and leaders boards represented by local authorities to look at the overall strategy for the region. This has been incredibly important in looking at big strategic investment proposals. I know through my work as regional Minister, as do colleagues who are regional Ministers, that that is endorsed by business organisations and local businesses in our areas.

Will the Minister explain why we do not therefore have a coherent policy in our part of Hertfordshire? Is she really content for all those towns just to join up and become one enormous conurbation called something like “Lutonage”?

Or “Steventon”. Is the Minister not prepared to say anything, so that we can tell people in Hertfordshire, “Look, the Government aren’t going to join up all these communities into one massive city.”? What reassurance is there? Where in the Bill is there any hope?

The whole point of the Bill is that it does what a number of authorities, including Conservative-led authorities, have asked us to do, which is to give a statutory underpinning to measures such as multi-area agreements. They allow councils to co-operate, and councils have been asking for that power. The Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Dudley, North and I signed with local authorities in the west midlands an agreement that has all-party support and does exactly what I am talking about—it allows local authorities to work together. The hon. Member for North-East Hertfordshire ought to look at examples of how the measure is working effectively. The Bill will enhance it.

I once again thank the Opposition parties for their support for the insurance amendments. I hope that, with my reassurances, the House will vote for all the Government amendments and oppose all the Opposition new clauses and, I am afraid, the new clause tabled by my hon. Friend the Member for Milton Keynes, South-West. I hope that I have reassured her, and that she feels able not to press it to a vote.

Question put and agreed to.

New clause 19 accordingly read a Second time, and added to the Bill.

New Clause 20

Mutual insurance: supplementary

‘(1) This section applies for the purposes of section [Mutual insurance].

(2) A qualifying authority is—

(a) a county council in England;

(b) a district council in England;

(c) a London borough council;

(d) the Common Council of the City of London in its capacity as a local authority;

(e) the Greater London Authority so far as it exercises its functions through the Mayor;

(f) the Council of the Isles of Scilly;

(g) a county council in Wales;

(h) a county borough council in Wales;

(i) a National Park authority;

(j) the Broads Authority;

(k) a police authority;

(l) a fire and rescue authority not falling within paragraphs (a) to (h);

(m) a joint waste authority established under section 207(1) of the Local Government and Public Involvement in Health Act 2007 (c. 28);

(n) a waste disposal authority established under section 10 of the Local Government Act 1985 (c. 51);

(o) an Integrated Transport Authority;

(p) Transport for London;

(q) the London Development Agency;

(r) an economic prosperity board established under section 85 or a combined authority established under section 100.

(3) The “appropriate national authority” means—

(a) the Secretary of State, in relation to England;

(b) the Welsh Ministers, in relation to Wales.

(4) Regulations under section [Mutual insurance] are to be made by statutory instrument.

(5) A statutory instrument containing regulations under subsection (2), (4) or (5)(b) of that section is subject to annulment in pursuance of a resolution of—

(a) either House of Parliament (in the case of regulations made by the Secretary of State);

(b) the National Assembly for Wales (in the case of regulations made by the Welsh Ministers).

(6) A statutory instrument containing regulations under subsection (6) of that section may not be made unless a draft of the instrument has been laid before, and approved by a resolution of—

(a) each House of Parliament (in the case of regulations made by the Secretary of State);

(b) the National Assembly for Wales (in the case of regulations made by the Welsh Ministers).’.—(Ms Rosie Winterton.)

Brought up, read the First and Second time, and added to the Bill.

New Clause 2

Parish polls

‘(1) Paragraph 18(4), Schedule 12 of the Local Government Act 1972 (c. 70) is substituted as follows:

“(2) A poll may be demanded before the conclusion of a parish meeting on any question arising at the meeting; but no poll shall be taken unless either the person presiding at the meeting consents or the poll is demanded by not less than thirty, or one-third, of the local government electors present at the meeting, whichever is the greater.”’.—(Mr. Drew.)

Brought up, and read the First time.

With this it will be convenient to discuss the following:

New clause 4—Local freedoms

‘(1) The Local Government Act 1972 (c. 70) is amended as follows.

(2) In section 248 (freemen and inhabitants of existing boroughs), after subsection (1) there is inserted—

“(1A) Where the son of a freeman of a city or town may claim to be admitted as a freeman of that place, the daughter of a freeman may likewise claim to be so admitted.

(1B) The son or daughter of a freeman of a city or town shall be admitted as a freeman whether born before or after the admission, as a freeman, of his or her freeman parent and wherever he or she was born.

(1C) In subsections (1A) and (1B) ‘freeman’ excludes a freeman of the City of London.”’.

New clause 8—Committee system

‘(1) Section 31 of the Local Government Act 2000 (c. 22) is amended as follows.

(2) Subsection (2), there is substituted—

“(2) A local authority falls within this subsection if the resident population of the authority’s areas on 30 June 1999 was less than 1,000,000.”’.

New clause 10—Referendums

‘(1) A principal local authority must provide a facility for the holding of referendums—

(a) in electronic form, or

(b) in such other manner as the authority considers appropriate.

(2) A principal local authority must give reasons for not granting a request to use the facility provided by it under this section for the holding of a referendum.

(3) A principal local authority must make a scheme (a “referendum scheme”) for the holding of a referendum.

(4) A referendum scheme must be approved at a meeting of the authority before it comes into force.

(5) A principal local authority must publish its referendum scheme—

(a) on its website, and

(b) in such other manner as the authority considers appropriate for bringing the scheme to the attention of persons who live, work or study in its area.

(6) A principal local authority may at any time revise its referendum scheme (and subsections (3) and (4) apply in relation to any scheme which is revised under this subsection).

(7) A principal local authority must comply with its referendum scheme.

(8) Subject to that, nothing in this Chapter affects the powers or duties of a principal local authority in relation to any referendum held.’.

New clause 11—Penalties

‘(1) A principal local authority commits an offence by failing to comply with a duty imposed on it by virtue of Chapter 1 or 2 of Part 1.

(2) A principal local authority found guilty of an offence under subsection (1) is liable on summary conviction to a fine not exceeding £100,000.’.

New clause 17—Abolition of the Standards Board for England and the Adjudication Panel for England

‘(1) The Standards Board for England and the Adjudication Panel for England shall be abolished.

(2) Sections 57, 57D, 58, 59, 60, 61, 62, 63, 64, 65, 65A, 66A, 66B, 66C, 67(1), 75(1), (3), (4), (7), (9), (11), 78A, 78B and Schedule 4 of the Local Government Act 2000 (c. 22) shall cease to have effect.

(3) The Secretary of State may also by order make transitional or consequential provisions (including by amendment of the Local Government Act 2000) as are necessary due to the abolition of the Standards Board for England and the Adjudication Panel for England.

(4) Any order under subsection (3) must be made by statutory instrument.

(5) A statutory instrument containing an order under this section may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.’.

New clause 18—Abolition of comprehensive area assessments

‘(1) Sections 99 and 100 of the Local Government Act 2003 (c. 26) shall cease to have effect.’.

Amendment 24, in clause 1, page 2, line 19, at end insert—

‘(4) This Chapter shall not come into force until 1 July 2011.’.

Amendment 25, in clause 10, page 7, line 10, at end insert—

‘(5) This Chapter shall not come into force until 1 July 2011.’.

Amendment 26, in clause 23, page 16, line 9, at end insert—

‘(9) This Chapter shall not come into force until 1 July 2011.’.

I am delighted to discuss this important issue. I immediately disclose an interest: I am a town councillor of some 23 years’ standing. I suppose that that is why the National Association of Local Councils came to me to seek to clarify the issue of parish polls. The very reason why we are in this place is to pursue democracy in all its forms, and there is no more democratic a form than what those of us who have been involved in it for a long time would refer to as the first level of representative government, never the lowest. I have been, and still am, proud to represent my community, even if I make it to fewer meetings than I used to. I think that fellow attendees are more grateful for that than I am, but, when I do get to such meetings, they always seem to take twice as long, as one would expect with me. However, I shall not take up a great deal of time now; I shall move on and look at the arguments.

The problem with parish polls is that they are subject to abuse. The most recent and well known case is the parish—my memory deceives me, but I believe that it was in either Wiltshire or Hampshire—that decided to call a poll on the Lisbon treaty. As a staunch opponent of the treaty, I might say that that decision was absolutely right and that where that parish went yesterday, perhaps Parliament and the country should go tomorrow. However, I think that I would be quickly ruled out of order, so I shall say only that, as much as I sympathise, the debate was not appropriate at parish level. The great thing about parish polls is that they can be both divisive and, more particularly, very expensive.

The real issue is that parish polls are an important element of the way in which parishes function, but the power to call a poll has not been amended for a long period. I could wax lyrical about what would happen if every parish were to carry out a poll on an issue of great importance to them, but polls are not used widely. When they are used, however, they can be abused, so my new clause asks the Government to update an old-fashioned approach. The new clause refers to section 9 of the Local Government Act 1972, which allows a parish poll to be proposed at a parish meeting. The problem is that such parish meetings can involve a very small number of people, so the new clause would increase the number of people and the seriousness that determines when such an issue should be progressed.

It is easy to say, “Why would you retain the power within the chairman of the parish?” The fact is that that is how the law is constituted, and I intend not to rewrite the law completely, but to update it. That is the essence of my new clause. I would like to go further, because the conduct of parish polls is another issue, and I shall ask the Minister to respond to that point. Polls are limited to the hours between 4 pm and 9 pm, and, if a parish poll is held at the same time as a local government election, it seems rather silly for them not to keep the same hours. If the Government want to look into that issue, they could find a way to introduce similar times for elections and polls. If they take place at different times, we should limit the time for a parish poll. I have not moved such a proposal, but it should be dealt with if we update this vital part of our democracy. The poll’s use is limited. Indeed, I am in a sense trying to limit it further, so that we use polls for their intended purpose, because they have been abused by people who have tried to bring before the parish a completely irrelevant issue as a way of publicising some other issue.

That is my point, and I hope that the Minister will immediately see the value of my new clause and cheer up every parish councillor in the land. I remind her that there are many more parish councillors than anything else—there are 80,000 of us. If she wants to curry favour with all those wonderful people, she should accept my new clause.

I shall be very brief, Mr. Deputy Speaker, because I believe that I am able to speak not to the other new clauses and amendments in this group, but simply to new clause 2 alone. That is correct, is it not?

The hon. Gentleman is entitled to address as he sees fit any of the new clauses or amendments in the group.

In which case, I shall begin by responding to the hon. Member for Stroud (Mr. Drew) and new clause 2. In essence, he said that he wanted to update what happens at such polls in order to discourage any frivolous debate or vote. When wanting to update a proposal it is always worth asking the Minister about the law of unexpected consequences to see whether there would be any side-effect that could somehow result in ensuring that such legitimate debate does not take place. That is the reassurance that we would look for, as would the whole House, with regard to new clause 2.

We have not yet had a chance to hear the case that the hon. Member for Newcastle upon Tyne, Central (Jim Cousins) will make on new clause 4. I want to listen to that carefully. We have received representations presenting the proposal that he wants to advocate as an equality issue. We will want to be sure that on the other side of the balance there is no question of unnecessarily restricting without very good cause what an independent body can do. I therefore look forward to hearing his remarks—almost as much as those of the hon. Member for Thurrock (Andrew Mackinlay) on local authority areas, and those of the hon. Member for Manchester, Blackley (Graham Stringer), who I thought at one point would serve on the Committee. Sadly, that did not happen; I do not know whether that was connected with the Government Whips.

My main purpose is to speak to our amendments 24, 25 and 26 and new clauses 17 and 18. We have already been able to touch on some of the main themes that we explored in Committee, one of which is very simple. We do not see why it is necessary to write on to the statute book things that any decent local authority should be doing anyway—promoting democracy, responding to petitions, and securing the involvement of people in their local area. That seems likely to bring about the very opposite of the result that Ministers claim. We believe that the Government’s mission, whereby everything and everyone must be micro-managed by Ministers and officials from Westminster and Whitehall, serves only to depress local government turnout and to demoralise local councillors. In Committee, we could scarcely find one person on the Government Benches other than the Minister who would defend in principle those three aspects of the Bill. The right hon. Member for Greenwich and Woolwich (Mr. Raynsford) is not here, so I will not embarrass him by quoting directly what he said on Second Reading, but even he, doughty defender of the Government though he was, made it clear that the petitions element, in particular, was merely micro-management.

The Government, in their wisdom, chose to reject that consensus view, which we have already heard expressed in the debate on general competence. However, in July, just after the Bill came out of Committee, they took the notable decision to publish a consultation paper called “Strengthening local democracy”, which announced:

“This consultation explores whether local government has the powers it needs to meet today’s challenges…It sets out a range of proposals to promote local democratic renewal.”

When we read it, we found that some of the things in it are in the Bill before us today, as they were in Committee. For example, question 11 asks:

“How can Councils best reverse the decline in confidence?”

Question 19 asks:

“Should the duty to respond to petitions”—

a duty in the Bill—

“be extended to sub-regional bodies?”

Section 162 suggests that the duty should apply to leaders boards:

“Applying a duty to respond to petitions would also make these structures more directly responsive to citizens.”

This is all the wrong way round. It might have been better had consultation on these matters preceded the Bill instead of the Government’s having yet another consultation right in the middle of the Bill’s going through the House—hence our amendments, which I hope the Minister will take in a spirit of due gratitude. They seek to give the Government time to look at the results of the consultation, which is not yet complete, and to consider whether Ministers want to amend any part of the Bill in the light of its findings. Then, after the election victory for the Minister’s party that I know she is anticipating, she will have time to consider what the consultation has said and to produce any changes that she wants to produce by 1 July next year. We will be interested to hear her response to this moderate suggestion, which seeks not to obviate the provisions but to give her time to consider them in the light of the consultation that her own Department has issued.

As an inducement for the Minister to consider the amendments seriously, I will deal with the Government’s record in responding to petitions, which has been raised by the hon. Member for Falmouth and Camborne (Julia Goldsworthy). This morning, I conducted an experiment by going to every Government Department website and punching in the word “petitions” to see what was the response. Only in a very few cases—the Downing street website is one exception to the rule; the Department for Communities and Local Government may be another—is there any indication that the Department is organising a response to the petitions that it receives. Surely, before laying down this duty on local authorities, the Government should put their own house in order so that when one types “petitions” into the website of the Foreign Office or the Ministry of Justice one is not referred to petitions that apparently have nothing to do with what that Department does.

I understand the hon. Gentleman’s going through the failure of all Departments to address this issue. However, the consultation specifically refers to regional bodies. I am sure that a lot of people would be frustrated to find that the petition of 30,000 signatories against the south-west regional spatial strategy has had no formal response. Should not the Government have considered that whole process and could they not have dealt with it without the need for any legislation?

The hon. Lady makes a perfectly valid point and reminds me not to go through all the Departments’ responses, which would take up a great deal of time. However, it is remarkable that if one types the word “petitions” into the website of, say, the Ministry of Justice, which must receive petitions, all one gets is references on to company windings-up and bankruptcy petition statistics, not a response from the Department itself.

Our amendments propose yet again the idea of abolishing the Standards Board. In Committee, we argued that most right hon. and hon. Members will have known of cases involving a complaint about a councillor to the Standards Board where that councillor may not have known the name of the person bringing the charges against them. Such situations are clearly unjust and have an effect on the willingness of new councillors to stand and of old councillors to remain.

In her interesting response to the debate in Committee, the Minister conceded a great deal of our case by emphasising that the conduct regime was devolved last year and saying that the board’s role has changed to that of a strategic regulator providing local authorities with the tools, training and guidance that they need to reinforce the often robust conduct regime in local authorities. I put it to you, Mr. Deputy Speaker, and to the House that if phrases such as “strategic regulator” are hurled around into the atmosphere, one must examine them very carefully.

It became evident in Committee that the change in the nature of the Standards Board that was brought about last year leaves it with little to do that could not be done elsewhere. After all, if it is guidance that local authorities need, the Local Government Association can provide that, as my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) said at one point in Committee. If financial impropriety is the problem, the local government ombudsman is there to investigate it as district auditor. If there is a case of libel or slander, that is covered by the civil law, and breaches of the criminal law are of course eligible to be investigated and prosecuted by the police, the Crown Prosecution Service and the courts. Everyone is casting around for a reason why the Standards Board should be in place, but there really does not seem to be any substantial reason on offer. As we say in our paper “Control Shift”, the Standards Board should be abolished. If the Minister does not commit tonight to doing that, that is the commitment that we have made if we are elected to Government.

New clause 18 refers to comprehensive area assessments. Again, we had a telling debate about that in Committee, during which two principal fascinating points emerged. The first was that there is no clear evidence yet that the CAA process has resulted in a net gain. Were there such evidence, the Minister or the right hon. Member for Greenwich and Woolwich would have produced it. The second was that it is hard to find a comprehensive figure for how much it costs. The Lyons review, using an estimate prepared by the National Audit Office, not a figure that the Department has produced, estimated the cost at £2 billion. Michael Frater, the original head of the Lifting the Burdens Task Force, said that 80 per cent. of the costs were those of reporting to central Government, rather than to the local communities that councils are there to serve.

In her response in Committee, the Minister did not claim that the regime was working in the sense of producing any kind of tangible result. For that reason, we have tabled new clause 18. Unless she gives us some very good reason to do the contrary, we intend to press it to the vote if we possibly can, along with our new clause on the Standards Board.

I wish to speak to new clauses 10 and 11. As we discussed in the previous debate, the Bill is in a very real sense a lost opportunity to deal with the relationship between local, regional and central Government and to allow local government to deal with many of the problems that it faces. It surprises me, given that the Bill deals with petitions and consultations, some of which I believe are best left to local choice, that it misses out a matter that has become increasingly demanded by local people when there are difficult issues: the regulation of referendums.

Referendums are difficult matters. It is difficult to know where they should begin and end in a democracy that, at both local and national level, has been predominantly representative for its whole history. In parts of the world, referendums have been used by extreme right-wing Governments. They have been used to death in California so that local or state democracy fails to work, because referendums can come to opposite conclusions. They can both reduce expenditure and increase the demands on it at the same time. They are therefore particularly difficult issues.

What is clear, however, is that all parties have now accepted referendums in principle. All three parties had in their manifesto a commitment to a referendum on the Lisbon treaty, or the European constitution as it then was. My party had in its 1997 manifesto a commitment to referendums on devolution, which it carried through with a positive result. There was also a commitment to referendums on elected mayors, which have been used in a number of districts, and there have been referendums on a regional assembly in the north-east and congestion charges in Edinburgh and Manchester.

Although I start from a moderately sceptical point of view on referendums, having participated in the debates on both regional assemblies and the congestion charge in Manchester, it seems to me that done properly, they can involve a lot of people and bring about an outcome that people accept, whichever way it goes. At some times and in some areas, referendums are the right path to take. How strange, when we have had all that experience of them, that there is not a specific responsibility in local government Acts to allow them to take place and to regulate them.

When the congestion charge referendum was agreed to in Manchester, it was not clear whether it would be held under section 45 of the Local Government Act 2000, section 116 of the Local Government Act 2003 or section 170 of the Transport Act 2000, all of which were introduced for different reasons but were not satisfactory. Although it was called a referendum and everybody recognised it as such, it was not technically a referendum within the legal meaning. That meant that the promoters of both the congestion charge itself and the referendum were one and the same person, which is not satisfactory. Although that experience turned out to have no bad consequences, it was wrong in principle, and it is the reason why I have tabled the new clauses. I shall not press them, but I am interested to hear what my right hon. Friend the Minister says in response.

What happened in Manchester, apart from the fact that people made it clear that they did not want the congestion charge, was that the promoters of the scheme appointed the person who ran the referendum. He was given an office in Manchester town hall next to the people who had done the detailed work on the congestion charge and the transport innovation fund bid. During that period, he accepted undisclosed hospitality from the promoters of the scheme. When I put in a request, I found that that was not part of the declared expenses.

When it came to determining the question to be put on the form, the only people who were talked to were the promoters of the scheme. Most bizarrely, although again with no actual consequences, when it came to the result of the referendum on the congestion charge the only people allowed to speak were the losers, the promoters of the scheme. Those of us who had been on the other side were not allowed to speak. It was as though there had been an election for a Member of this House and the only person allowed to speak was the loser. It was the most extraordinary circumstance.

In that particular case, the issues involved and the bias of the returning officer were so clear that they probably helped the no campaign, but it would not always be that way. In a much closer referendum, a biased returning officer, such as the one we had in Manchester, could affect the result. I therefore think that when there is an increasing appetite in our democracy for referendums on difficult issues, the Government need to find the right space in the legislative programme to regulate them, first so that people can ask for them and, secondly, so that there is a clear framework so that people cannot try to fiddle the system. I will be very interested in my right hon. Friend’s response to that point.

While listening to the contributions of the hon. Members for Manchester, Blackley (Graham Stringer) and for Stroud (Mr. Drew)—I am sure that other hon. Members will make similar contributions—it struck me that we should have had measures such as their proposals in the Bill. We should have had an opportunity to remove hurdles in primary legislation, including unintended hurdles, that are effectively blocking the effective function of local democracy. The Bill should have been an opportunity for a bottom-up process, whereby the blocks could have been presented to the Government, who could then have addressed them. It is unfortunate that the discussion of this group of new clauses and amendments has been the only time that such a process has worked.

Before the hon. Member for Manchester, Blackley spoke on referendums I was sceptical, as I was regarding the points made by the hon. Member for Stroud. My concern was that referendums could be hijacked and that they could be irrelevant. Why place a duty on local authorities when perhaps what we need is enabling legislation to allow the process to go forward? However, there is clearly a problem that needs to be addressed, and the hon. Gentleman did a great job in raising it.

It is disappointing that there has not been a proper process to allow for such a discussion, and that we are now tacking it on to the end of a lengthy debate. We may get some leeway from the Minister, but in most cases hon. Members’ efforts will be frustrated.

The hon. Member for Stroud made a valid point about how the system of parish polls is being abused, but I am not entirely sure that his proposal would adequately deal with the problem. The hurdle might have been raised, but perhaps by only a very small amount. I remain concerned that the system is open to abuse, although I understand the need to address the problem that he identified.

After speaking to the leader of Newcastle council, John Shipley, I understand that the issue raised by the proposal made by the hon. Member for Newcastle upon Tyne, Central (Jim Cousins) is important. Although his proposal concerns an historical tradition, it would be a great to be able to introduce some equality to it.

I understand that the hon. Member for Thurrock (Andrew Mackinlay) is going to talk about giving councils the option of reverting to a committee system if they feel they could benefit from it. I have absolutely no problem with supporting that principle.

On the measures proposed by the Conservatives, amendments 24 to 26 are effectively wrecking amendments, and I think we could vote against the Bill if we considered it to be so unsatisfactory. I do not understand why the Government do not understand that the way to deal with a rubbish local authority is not to require more of it through primary legislation, but to vote it out. It is simple. A lot of the issues could be dealt with through a best practice manual.

On the Conservatives’ proposed new clauses, we share the scepticism about the Standards Board. In practice, it has not proved to be very efficient or effective in tackling concerns about the conduct of councillors. The system has also been vulnerable to vexatious complaints. Those are two of many reasons why it is not fit for purpose, and why there are no arguments for sustaining it.

Although more efforts are being made to engage the public in the comprehensive area assessment process, it is still difficult for people to understand. It is all about allowing councils to compare themselves with each other, but the public want to see how their councils compare in terms of things that they understand. They do not just want to know that their local council is as good as any other at delivering a service; they want to know that it is good in absolute terms. I am not sure that the existing system of inspection has addressed that.

I have some sympathy with some of the issues raised by Conservative Front Benchers, but I am also sympathetic to other proposals. As I said, the greatest pity of all is that the Bill does not set up a better mechanism for having such discussions regularly.

Order. May I just say to the House that the hon. Gentleman is actually going to speak to his new clause? For the benefit of all the House, we do not “move” new clauses when we are discussing a whole group from the beginning. We are debating the lead new clause—that is the one that has been moved. Other clauses and amendments will be moved as and when we come to them on the selection paper.

I am, as always, grateful for your clarification, Mr. Deputy Speaker.

New clause 4 would give the daughters of freemen the right to become freemen in their turn. The present situation is that only sons have that opportunity. The proposal would thus correct a significant inequality. It would also correct an anomaly that undermines freemen, where they remain, when exercising functions on behalf of their communities, and that undermines a significant part of our constitutional heritage.

It is important to explain that I am not talking about honorary freemen. They are a common part of the work of every local authority, and we are entirely familiar with their situation. Nor am I talking about the statutory position of freemen of the City of London, which is excluded in the proposed new clause.

The Municipal Corporations Act 1835 swept away the historic position of freemen who, through the guilds, had been the original governors of local communities up and down the country. In a significant number of places, freemen continued to exercise functions, usually charitable, whereby they used certain property and land for certain statutory purposes. That is the case in York, Chester, Coventry, Northampton, Durham, Beverley, a number of other places and, most significantly from my point of view, the city of Newcastle.

I can best explain the new clause and its importance with reference to the city of Newcastle, which has already been referred to today by the right hon. Member for Suffolk, Coastal (Mr. Gummer). I suspect hon. Members will be pleased that I am not going to accompany my references to Newcastle with references to John Lewis—a splendid store of which perhaps all in this House have learned rather too much in the recent past.

The freemen of the city of Newcastle continued to exercise functions after the 1835 Act. Their responsibility was to safeguard the Newcastle town moor and to use the benefits of grazing cattle on it for the benefit of the poor citizens of the city. The town moor therefore survived in a way that it probably would not have survived if it had simply been left in the hands of the council of the day. If that had happened, the moor probably would have been physically developed, but it has not. The moor remains, at the heart of the city of Newcastle, an area of open space that is protected by the right of the freemen of the city to graze their cattle. Importantly, the freemen do not control the freehold rights over the moor; they control only the right of herbage, but that safeguards the use of the land.

I can best explain the significance of this by saying that over the years the freemen have supplemented the income that they get from the grazing of cattle by allowing areas of town moor to be taken in for certain specific purposes. For instance, Newcastle United football club is one of the town moor intakes. The club is almost unique among city football clubs these days in being in the centre of the city. It exists because the freemen of the day agreed that the football club could use that land. If successive owners of the football club had been careful enough about due diligence, they would have discovered that it does not own the freehold of the land on which it stands. It is allowed to exercise its functions because the freemen of the city have agreed that it may do so. A small fee is paid to the freemen of the city each year by the football club to recognise the fact that the freemen choose not to exercise their right to graze their cattle on the football ground. Over recent years, that point has been the subject of many ironic references by my constituents. The fee tops up the income of the freemen and enables them to exercise their charitable functions. The same applies in other areas where the stewardship of the freemen survives, including York, Beverley and Chester.

In Newcastle, because of the large area of land in the city centre and the intakes, the system is of great significance to the people of the area. But the only people who can become freemen are the sons of the freemen, who have a right of hereditary succession. I am no great defender of the right of hereditary succession, but it is anomalous that only sons, and not daughters, may exercise the right to become freemen. That anomaly is gradually undermining the freemen system, because it depends on the male line, and if that dies out there is no replacement and it becomes an ever more limited group. New clause 4 would confer a right on daughters to become freemen, alongside sons.

I accept the point made by the hon. Member for Wycombe (Mr. Goodman) that this is an issue of equality, and this is the right time to put it right. I have for some years, in various ways, attempted to do that, with the support of the stewards of the freemen of Newcastle. I have been given assurances that the Government would give this issue a fair wind or would deal with it in various pieces of legislation. Sadly, that has not been possible. With the help of Lord Graham of Edmonton, I have attempted to introduce legislation to correct this anomaly, but without success. I hope that today, at a time when the House is taking equality issues seriously, we can put right this anomaly and allow daughters of freemen, as well as sons, to exercise this important aspect of our constitutional heritage reflected by freemen in those areas where they continue to exist. The city of Newcastle would then know that the future of the town moor was safe in the hands of a significant body of people who would protect it and its heritage in the interests and for the benefit of the citizens of the city as a whole.

The hon. Member for Newcastle upon Tyne, Central (Jim Cousins) should be thankful for small mercies: at least the freemen of the city of Newcastle are not dependent on the Rural Payments Agency to support the cattle grazing on the common. If he had ever dealt with the paperwork necessary to sort out such payments, he would settle for what he has. I note that his football team is top of the Championship, so we all live in hope.

I wish to reflect on the remarks on referendums made by the hon. Member for Manchester, Blackley (Graham Stringer) and to agree with what he said. This Bill is like a gigantic ice cream cone: there are a few tasty things at the top, a thin framework and nothing in the middle. Instead of all this nonsense about petitions—90 per cent. of this Bill could be disposed of without any loss—we should put in something of substance and actually give local people a voice in some of these decisions. The hon. Gentleman listed the areas in which referendums had been held—on congestion charging, devolution, an assembly in the north-east and elected mayors. There are other examples of what might be called mini-referendums. For example, the only ever vote on the future of grammar schools was held in Ripon, although the previous Prime Minister rigged the electorate to ensure that the vote was “No”. It could be said that housing transfers are still subject to vote by the tenants, so in a sense that is a referendum. Occasionally, councils have also consulted on options for the level of council tax, so the referendum idea has a good pedigree.

I am passionately hostile to referendums at the national level. Such referendums are the nearest thing to a political landfill tip—everybody dumps into it all the rubbish they cannot sort out in any other manner. However, local referendums are much more specific. People cram into school halls if the council proposes closing a school or is considering a house building proposal. If people are really concerned, they will seek to have a say, but at the moment the means that they have for expressing their opinion are too limited. There is therefore a good case for saying that, in specific circumstances when the question can be closely defined, people should be genuinely empowered to decide—in contrast to the froth of phoney empowerment in the Bill.

The hon. Gentleman said that he would not press the issue to a vote, and I respect that, but I hope that this and future Administrations will revisit it so that we can clarify what we mean by “decentralisation” and “localism”. Very few people have any idea what is meant by those concepts. The best instrument of empowerment is to give people a vote on specific issues that affect their lives, and we should make that option much more available.

I am pleased to catch your eye, Mr. Deputy Speaker, in this general debate on several new clauses and amendments. I tabled new clause 8, but anyone reading it would be at a loss to understand what it means. It is an attempt to right the wrong perpetrated when in 2000 the House removed an important discretion from all local authorities, and I shall explain further.

It was the tradition of English local government, and of other parts of the UK, that councils deliberated business and reached conclusions through a series of committees. Sometimes those committees fed all their recommendations up to a full plenary council; other committees had delegated powers. The important point was that there was flexibility and discretion in the exercise of that decision-making process.

However, under the Local Government Act 2000—section 31, I think—we said, “You can no longer do this. You can opt for a directly elected mayor and this new-fangled cabinet system, but you cannot reach your decisions by a series of committees, unless you are a local authority below a population of about 85,000.” There is neither logic nor fairness in Parliament telling councils that they cannot make their decisions in a particular way. That way had endured for 100, and perhaps even 200, years—certainly since the great local government legislation of 1888 and 1889—and still endures in Wales, Scotland and Northern Ireland, where councils can so choose how they reach their decisions. If the House is mindful to support my new clause, it will not be saying to councils, “You will do your deliberations in this way,” but, “You may”—I repeat “may”—“decide to do your business in this way.”

I would like to say how much I agree with the hon. Gentleman. He is making a case that many of us made before the 2000 Act, when we said that local government should have the devolved power to decide how it wishes to make up its mind. That is all that we are asking, and I fully agree with him.

Actually, I feel a little ashamed for not appreciating this matter at the time of the 2000 Act. I regret not having made an issue of it in the House at the time; no doubt I was distracted by other things. However, that Act has diminished local authorities’ decision-making options and freedoms to decide how they reach their conclusions.

I emphasise to the House that, if it agrees to my new clause, it would simply restore those options to local authorities. However, I cannot disguise my bias in favour of the committee system, which worked well in so many ways. Even in councils with pretty strong and rigorous party political operations, that system allowed a degree of involvement and—dare I say it—power sharing with those not of the persuasion of the majority party. I look to my hon. Friend the Member for Manchester, Blackley (Graham Stringer), who, for many years, was a member of Manchester city council. It was one of the greatest local authorities. Under a previous distinguished leader—I forget his name; it was Bob—

Bob Thomas! He was the prime minister of Manchester. He was the big man of Manchester, and people deferred to him. The chairpersons of the committees of Manchester city council had a quasi-ministerial—cabinet, as we now call it—role. Nevertheless, there was some decision sharing. Some councils were without a particularly strong party political tradition, with residents, independents and a smattering of people representing political parties serving on them. A committee system certainly worked in those instances.

I draw upon my experience as a young man, as a local government officer working for Surrey county council, where I observed, and served, the committee system as a committee clerk. There were a lot of very good people. We laughed at them at the time. They were all Colonel this, Wing Commander that and Squadron Leader this—because this was in the 1960s. We thought that they were Colonel Blimps, but actually, looking back, they were not bad people to have in local government. They had run regiments and believed in getting the biggest bang for their buck. They were also quite accommodating. Although they were clearly of a conservative tradition, they readily accommodated the few Labour, Liberal and independent members in the decision-making process. There was a degree of contentment.

I have further relevant experience from my time as a minority council member in the Royal Borough of Kingston upon Thames. I look back, even now, and remember occasions when I was able to persuade, in committee, the Conservative majority about the prudence of a particular course, decision or project. I would not have achieved those successes had there been this hard-and-fast, miniature mirroring of proceedings in Westminster. I have concluded that Westminster proceedings are very sterile and synthetic. Day after day, Members stick their tongues out—basically—at those on the other side of the House. There is no mature decision making. The committee system in local government gave and promoted a degree of collegiality, and gave people with a particularly good case the opportunity to advance it and persuade others, despite party politics. Frankly, that brought with it better decision making. I would like that option to be restored to local government.

The cabinet system, which councils are now basically obliged to follow, unless they go through the tortuous process of a referendum on a directly elected mayor, is unhealthy. It has all the chemistry for arbitrary decision making and government. It also means—much more so even than in this House, where it is bad enough—that if someone is not a member of the so-called cabinet, they are an also-ran; they are not on the inside. It has always surprised me that we pay councillors lots of money to attend meetings at which fewer decisions are taken. There is less of a feeling of ownership and commitment, and of that natural progression by which people can gain experience, become municipal fathers and mothers and emulate Bob Thomas and others such as Jeremy Beecham, who I think had a distinguished period in Newcastle. No doubt those on the Conservative and Liberal Benches can think of their own distinguished municipal leaders.

I ask hon. Members to pause and reflect that this is an opportunity to remedy a wrong that we enacted in 2000. I echo the sentiments of a number of hon. Members on both sides of the House who feel that this is a lost legislative opportunity. Instead of setting local government free and encouraging it to exercise and enjoy general competence powers, in so many cases the Bill is prescriptive and restrictive—and a big mistake. It has created more buzz words and meaningless titles, and a plethora of additional bodies, all of which have the hallmarks and fingerprints of the previous Secretary of State, my right hon. Friend the Member for Salford (Hazel Blears), who incidentally is notable by her absence this evening. She should have been here, because she is the architect of this legislation.

I suspect that my right hon. Friend the Minister, sitting on the Treasury Bench, would never have concocted this vast telephone book of odd pieces of legislation, much of which, as has been said, need not be on the statute book; it clutters it in a very unhealthy way. My little new clause, at least to some degree, would push back some of the restrictions and rules with which we have tied the arms of local government and those, across the political spectrum, who are great practitioners, enthusiasts and lovers of local government and who believe that it is extremely important. I invite anyone who wishes to help me as a Teller, or to join me in the Division Lobby, to do so. I would very much welcome that, because I think that we ought to test this matter in the House.

I rise to support the excellent contribution by the hon. Member for Thurrock (Andrew Mackinlay), in the spirit of cross-party co-operation in which he spoke to the new clause.

I love the image of England in the 1960s, when I grew up, when independent and civically minded people were in local government and there were fewer representatives of political parties. I am sure that there were, indeed, people who could harness the good will of people of all parties and of none in solving problems. Local government now is much more politicised, although I do not think that we are about to reverse that.

All the main political parties want to test their strength in local government elections. They also wish to propose, in an understandable way, a national and local programme combined. Some voters agree with that. Some say that they do not, although I suspect from how they vote that in practice they think that there is something to be said for a party platform. However, I would argue that the hon. Gentleman’s proposal works equally well in the more modern world, where party political groups are likely to predominate in councils, because the most important thing is the role of the average councillor.

The enforced cabinet system in local government has given back-bench councillors a reduced role and made a lot of them rather unhappy. Not only do they not have a proper role in the decision making of the authority to which they were elected with strength equal to that of to those who do, but they do not even have the same ability to hold the administration—the executive—to account for the people whom they represent in their wards and divisions, because we all know that the officers do not take them as seriously if they do not have executive power and are not members of the cabinet. I have known councillors who cannot even get information out of their council, but surely a councillor should have a privileged position and expect to see the business of the council, if necessary on terms of privacy, if it relates to individuals or sensitive matters.

We need to devolve power properly to local government. I would hope, as the hon. Gentleman does, that if we could do that, more local authorities would choose a committee structure and return to the idea that the important decisions should be thrashed out in common in the political groups, so when the political groups presented their views to the council, not only would the group leaders know that they spoke for their group and know what the balance of opinion and forces was within it, but each back bencher would feel that they mattered, because they would have an equal vote in the group. If they are powerful speakers, if they feel passionately about something, if they have a good case or if they are on the popular side, they will have the joy of knowing that they will help to form the group proposal. All that would become possible again if the hon. Gentleman’s new clause 8 were passed.

My right hon. Friend makes a powerful point. Perhaps his experience of the committee system is reinforced by mine when I was a committee chairman in local government. In effect, the committee chairman and the leader formed a cabinet and gave officers a steer. However, once the policy was agreed, my job as a committee chairman was to take the members of my committee with me. At the very least, that meant taking the back-bench members of my side and sometimes, if I wanted an easier ride, taking members of the opposition as well. Is that not a much healthier situation?

I am grateful to my hon. Friend for that comment, and I hope that that means that those on the Opposition Front Bench will support new clause 8, should there be an opportunity to vote on it.

When I was a county councillor in Oxfordshire in my younger political days, I, too, was privileged to be a committee chairman. I therefore had some executive authority. However, I always felt that that authority came from and was vested in the majority group. I was always pleased to take what I wanted to do to the group. I thought that I was doing the right thing, but it was a lot stronger if I could take it to those in the group and persuade them, because then I knew that they would vote for it willingly, unlike under the current system, where things are worked out in private, often on the advice of the officers and without a lot of political sense involved. Then things have to be driven through against the unwillingness and the voting patterns of the majority councillors, with all sorts of arm twisting of the kind that people sometimes experience even in this place, in a way that gets in the way of good government and common sense.

People elect councillors because they think that they have talents and skills, so surely all those talents and skills should be deployed. Not all councillors can have executive posts, so let them be involved in the big decisions. Indeed, perhaps we could learn a bit from that in this place. Of course we need a Cabinet—we all understand the importance of Cabinet government—but successful Cabinet Ministers in this place are Ministers who consult, consider and listen to colleagues before they go snap on a policy. Successful Cabinet Ministers not only understand their policy and know how to pilot it through this place, but are people who have tested it out in advance and do not think that everything has to be secret. Then they know that they have a constituency for change. I hope that we can vote on new clause 8 and free local government to have that option.

I apologise for not being here earlier, but I was tied up with several things at the same time, as we are so often in the House. I came specifically to support the hon. Member for Thurrock (Andrew Mackinlay), although I was delighted to listen to the speech by the right hon. Member for Wokingham (Mr. Redwood).

I speak as an executive member on a large local authority and somebody who has been in local government for 38 years. I have never seen local government as weakened as it is now, simply because of the breakdown of the committee system. There is no longer any genuine ownership of the issues that are important to people. The old committee structure allowed a group of members—perhaps as few as eight or nine on small committees, although when I was leader of Hampshire county council we had committees with 40-odd members—at least to have some ownership of the issues, because we could have more than one debate on important issues.

When I led Hampshire, it was interesting that there were very few opposition votes when we finally took things to the plenary of the council, because the committee structure had drawn out the arguments and brought people together. We had many votes for and against in the committee stage, but things would be amended properly; it was a bit like how we like to think that we work in Committee here.

The setting up of the executive is a bizarre concept in itself. Indeed, I can describe my last executive meeting. I sat there alone, the only member with a vote. First, I had to declare whether I had any interest. I welcomed the members of the public who had come along, said hello to the officers and then invited the two opposition spokesmen—Conservative and Labour—to sit at the table with me. I tried to bring them in, but at the end of the day, they could not have what they really wanted, which was to be able to move something or to vote on the issue. The situation is depressing. In the end, some of my meetings have lasted no more than five or 10 minutes. Why would they last any longer? Who do I talk to? Myself? Should I go through something with the officers that I have already gone through with them?

I then went to my group meeting and told my colleagues what we did at the executive meeting. My colleagues raised some very interesting points, which is relevant to the point made by the right hon. Member for Wokingham about his experience of trying to talk the thing through beforehand. The current system does not really allow that to happen, because the executive member is smothered by information. The executive member spends all their time trying to absorb the information given to them, but in the committee structure the information was shared. The committee chair, the vice-chair and the opposition spokesmen all felt that they would play a part and be able to move something.

What we have now is the worst of all possible worlds. To deny local government the option to choose what is best for itself was the biggest mistake of all. If there were a vote today in the local authority that I represent in the city of Portsmouth, all 42 members would, without a shadow of doubt, vote unanimously for a return to the committee structure. Why? Because that would give a genuine sense of belonging. It would give the back benchers a chance to play a part, rather than being bit players in something in which many of them get involved only half a dozen times a year.

The committee structure, with committees meeting monthly and in some instances more regularly, meant that back benchers could play a significant role. They built reputations because of their role on a committee. Somebody who was passionately interested in housing became one of the leading housing experts in the city of Portsmouth. They built a truly great reputation in local government, not through their ability to be the chairman of the housing authority, but through their ability to be an opposition member who became an expert and was listened to by those on all sides.

The same goes for education. On a subject as big as education, it is irrational to believe that one member should not only run things and be politically responsible for the service, but be honour-bound to listen to the wider group voice and the public as well. That is a horrendous task in local government. There is very little sharing of knowledge or ability, and it frustrates people. It is interesting to analyse how many people serve only one term on local authorities nowadays. They do not stay the course because they feel unfulfilled and let down by the concept, which they thought that they could bring something to. How inappropriate is it that good people who came into local government because they have something to offer are unable to deliver it? They leave very quickly, for that reason. If I were the Government Minister responsible for this, I would cherish those people, cultivate them and make them think that they had a future in local government.

How many of us came to this House because of the time that we spent in local government? We learned that we could contribute there, but we all contributed to a system in which committees played a part, and in which we became a junior member of a committee and then, with more expertise, moved on to become a committee chairman or an opposition spokesman. The system no longer works like that, however. Now, only a small group has control of the policy. Even that group—unless it is exceptionally lucky—does not have the ability to co-operate easily with the rest of the council. The opportunities are not there. Members do not want to meet every week as a full council, but many of them would love to meet once a fortnight or once a month as a committee to deal with important matters such as housing, social services and education.

I hope that the hon. Member for Thurrock will press his new clause to a vote. He is not saying, “Make it change.” He is saying, “At least give local authorities the chance.” I hope that the Government will recognise this opportunity to right a grievous error of judgment on their part by supporting the hon. Gentleman tonight and by giving local authorities what they want. The Government continually say, “Let people choose.” Well, for goodness’ sake, let local government choose the best way for it to govern itself.

I recall that, in his early days in local government, the hon. Gentleman was a notable Labour councillor for many years. He steadily went to pot in the years that followed. I hope that we are good friends now, however. Does he agree that the approach that we have seen over more than a decade of trying to turn almost all local authorities into pale, tiny shadows of Parliament is clearly not working? If the new clause tabled by my hon. Friend the Member for Thurrock (Andrew Mackinlay) were to be incorporated in the Bill, does the hon. Gentleman believe that any large local authorities would want to return to the committee system? Clearly, many of the small ones would, but does he think the large ones would as well?

I think that they would rush to seize the opportunity. Hon. Members would not believe the enthusiasm that exists in local government to return to that system. I do not meet many local councillors who believe that the current system offers satisfaction or an opportunity to play a part, or that there is a future for them in local authorities. That is just not the case.

I remember when, long ago, Michael Heseltine was Secretary of State for the Environment. He said that he wanted to see local authorities run on the American system, in which people turn up once a year to agree and sign the contracts, after which the authority is left to run itself. What a mistake that would have been! Yet we have gone halfway towards that here, and it is a mistake.

I had hoped that this Government, with their roots in local authorities, would have wanted to see a return to the previous system, and to give people the opportunity to feel that they can really play a part in their local community. The present system does nothing but turn people off and turn people away, and that is to be regretted. I hope that, when the Minister responds, she will not be apologetic for the past. I hope that she will instead say, “Okay, hands up, we made a mistake. Now we will try to get it right. We will give local authorities a chance.” The hon. Member for Thurrock is offering that opportunity tonight, and if I were the Minister, I would grab it with both hands.

This group of amendments focuses on the local democracy section of the Bill, and we can tell from the lively nature of the debate just how passionately right hon. and hon. Members feel about the issue.

Speaking of passion, I shall start with new clause 10, tabled by my hon. Friend the Member for Manchester, Blackley (Graham Stringer), which deals with referendums. It is identical to an amendment that we debated in Committee. As I explained during that debate, the principal local authorities in England currently enjoy considerable flexibility to hold advisory referendums and local polls using their powers under section 116 of the Local Government Act 2003. That power is widely drawn, and it gives councils maximum freedom and flexibility to hold referendums on any issue relating to their functions or their powers of well-being, as set out in the Local Government Act 2000.

The existing power to hold referendums has been used many times by councils to seek the views of their communities on matters of local interest. For example, the London borough of Sutton council is currently holding a local poll on whether to keep a piece of graffiti that was produced by a well-known graffiti artist. I am not sure whether the referendum on the Manchester congestion charge was held under that legislation, but my hon. Friend discussed that matter. The use of this power could increase as a result of the petitions clauses in this Bill. Through our proposed petition scheme in part 1 of the Bill, councils might well decide to hold a local poll as part of their substantive response, as required by clause 14, to a petition with the specified number of signatures. We would welcome such a development as an appropriate means of involving local communities in a council’s decision-making process. That is, of course, if councils choose to make greater use of the power as part of their response to petitions.

At the heart of these debates lies the issue of local democratically elected bodies having the power to choose whether they want to hold referendums. While the petitions provided for in chapter 2 of part 1 of the Bill, and the existing powers in section 116 of the Local Government Act 2003, permit councils to hold such referendums, the new clause would require them to set up a facility and agree a scheme for holding them. Councils would also be required to hold a referendum in circumstances set out in their referendum schemes. The new clause would therefore impose an additional uncosted burden on councils. As I made clear in Committee, we believe that accepting the new clause as it stands would be a step too far.

Yes, we require councils to carry out certain actions in relation to petitions, but we do not adopt the same approach to the holding of referendums. Some might say that that is contradictory, but I say that the two issues are very different. Our approach to petitions in chapter 2 rightly addresses the issues identified by the Local Government Association survey, which found that only 28 per cent. of the 102 councils that responded guarantee an automatic response to petitions submitted by the public.

Is the Minister saying that her only reason for objecting to the proposal is the possible cost implications for council tax payers, or is she going further than that? As I understand it, the only reason she gave for not supporting the proposal is that an unknown cost would be associated with it.

No, I did not say that; I said that there were two reasons. The first is that councils have the power to hold referendums, if they choose to do so, whereas the new clause requires them to hold them. We have had a number of discussions about the fact that in some cases we place a duty on councils to do certain things, whereas in others we say that the councils may do so, if they want to. That was the first and major reason I gave for rejecting the new clause. The second reason is that the proposal is uncosted and would impose a new burden on councils, which would have to set up facilities to carry out the duty.

I know that my hon. Friend the Member for Manchester, Blackley—he is no longer in his place—has expressed concern about how the referendum in Greater Manchester was conducted, but we are not aware that current arrangements for holding local referendums are failing to work well in the majority of cases or that councils are failing to meet calls for local referendums. What I am saying is that in the Government’s view, without the necessary evidence, it would not be appropriate to impose another burden on local authorities. We are well aware of the wider debate about democratic renewal, and local referendums may well become part of it. If there are any issues about local polls, we want to hear about them in that context.

With new clause 11, my hon. Friend the Member for Manchester, Blackley seeks to impose penalties on local authorities for non-compliance with the duty to promote democracy as set out in chapter 1 or with petitions duties as set out in chapter 2. I am delighted that my hon. Friend is keen to see a strong local authority response to both sets of duties, and I view it as essential that those duties are actively and effectively taken forward by local authorities.

We discussed the issue at length in Committee, but in view of the current debate, it is worth reminding right hon. and hon. Members why we want local authorities to assume these duties. We want to see local democracy reinvigorated and all people encouraged to play their part. People have a right to know how local government and other local public services are run and what decisions are taken on their behalf. They should also know how they can take part in making those decisions, including the possibility of becoming a councillor. Raising awareness is a necessity.

We have taken the route of establishing a duty for councils, based on solid evidence. There is a strong commitment to establishing councils as the hub for local democratic activity and to embedding the promotion of local democracy within their DNA. The duty addresses the lack of awareness of local democracy. As many of us know, a lack of awareness of councillors’ roles was identified by the Councillors Commission and others, including the deeply respected all-party parliamentary local government group. To illustrate the point, an Ipsos MORI survey for the Local Government Association showed that fewer than a third of people know even a fair amount about what their council does. That lack of awareness is certainly a major barrier to civil and civic participation, and it contributes to the lack of diversity among councillors and others with civic roles.

We all know that we are not making the most of the potential talent among communities, including women, people from black and ethnic minority communities and people of working age, who are currently under-represented as councillors and in other civic roles. We want to ensure that people feel that local democracy is relevant to their everyday lives and that local authorities become the hub of local democracy. If we do that, local people will have a single, easily accessible port of call for information about how they can participate in decision-making at the local level, including as or through a councillor.

We all agree about the importance of the aim behind those duties and the importance of raising awareness and of looking at the evidence for the fact that only 28 per cent. of councils guarantee an automatic response to petitions. We know that there is good evidence for requiring councils to respond to petitions and to publicise their petition schemes, which will help people to feel that they can influence local decisions.

If we all agree on the importance of these duties, how do we ensure that they are achieved? Do we really want the coercive and, might I suggest, distrustful approach proposed in the new clauses? We have to ask ourselves how that would be received by the local government sector. We need to trust local authorities to respond effectively and imaginatively to the new duties. The duties are subject to parliamentary scrutiny and have been imposed because Parliament recognises that these are activities that councils should add to their functions in order to make real improvements for local people.

We intend to set money aside to enable councils to carry out the duties, and we will provide them with full support through guidance and a sector-led best-practice approach. There are already legal remedies for enforcement, but we do not rely on them to ensure compliance in this case any more than we do in relation to most other legal duties that apply to local authorities. There is no direct enforcement mechanism in the provisions, and we do not think it appropriate that there should be one. In conclusion, there is already an intention to ensure that local authorities involve people and to look at the petitions system, but as many hon. Members have said, we do not want a more coercive approach.

New clause 2, tabled by my hon. Friend the Member for Stroud (Mr. Drew), relates to parish polls—I know that he is a long-standing supporter of the first tier of local government. One of the most interesting and informative conferences that I have attended recently was that of the National Association of Local Councils. I learned a lot about parish councils and invited them to enter the debate about what we can do to help to ensure that they have the support that they need from their local communities. We talked about powers and so forth. I know that my hon. Friend’s continued service to the community as a town councillor—as well, obviously, as his work here—demonstrates that commitment very clearly.

New clause 2 would increase the number of local government electors required to trigger a parish poll, which is essentially a non-binding referendum on local issues, so that no poll would be undertaken

“unless either the person presiding at the meeting consents or the poll is demanded by not less than 30, or one-third, of the local government electors present at the meeting, whichever is the greater.”

Parish polls are a very useful way of gauging local opinion on matters that are important to local people, but we are aware that the issue has been the subject of previous debate. I assure my hon. Friend that the ease with which a parish poll can be triggered has caused concern in the past.

We are also aware of other issues around parish polls, which my hon. Friend did not necessarily mention, such as their scope and conduct. That is why we recognised in the “Communities in control” White Paper that we need to make the rules governing parish polls more accessible and better understood and to define their scope more clearly. That is why my Department is taking work on parish polls forward.

We will want to consult the parish sector and others—and, obviously, my hon. Friend—on how the provisions for polls can be reformed. We will want to examine not only the methods for triggering a poll, but the scope and conduct of polls. We might, for example, consider modernising the full range of rules governing parish polls, which could involve—my hon. Friend mentioned this—an extension of the hours during which they can be held. We entirely agree that there should be robust and effective parish poll provisions, and I am grateful to my hon. Friend for raising the matter. However, for the reasons that I have given, I hope that he will join in our debates on this important issue but not press his new clause.

New clause 8, tabled by my hon. Friend the Member for Thurrock (Andrew Mackinlay), gave rise to a great deal of debate and very strong feelings. As my hon. Friend made clear, he knows that the Local Government Act 2000 allowed smaller councils in two-tier areas to operate a streamlined committee system. As he said, at the time when the changes were made, it was decided that local authorities with fewer than 85,000 electors could retain the committee structure to which he referred. As it happens, a fair number of the councils involved have moved on to the new system. I think it has been recognised that the executive arrangements have delivered more in terms of effective, transparent decision making and clearer accountability, and I think there is a general consensus that it represents a better approach.

Will my right hon. Friend allow me to put on record the fact that, all along, we in Stoke-on-Trent had serious concerns about the changes that she seeks to make retrospectively, and that we do not feel that they were in the best interests of governance in Stoke-on-Trent?

I hear what my hon. Friend says, but we are not aware of any significant interest among local authorities in moving from the executive governance model to a streamlined committee system.

Will the Minister tell us what evidence exists to suggest that the change has been for the betterment of local government, and will she explain what she thought was wrong with the old system, which allowed people to choose whether or not to have a committee?

Many Members have described the way in which they thought the old system worked. I believe that although having a very powerful committee chairman involved a similar number of very powerful figures, that system did not provide the accountability and transparency that a cabinet system allows, and the Bill is intended to improve it.

The proposal from the hon. Member for Thurrock (Andrew Mackinlay) does not require any single council to return to a committee system. It merely gives councils a choice. If the Minister is right and the trend is in the opposite direction, what harm would be done by the hon. Gentleman’s measure? He would be proved wrong and the Minister would be proved right. This is not about prescription; it is all about choice.

It is also important for us in this place when we, too, are legislating to have as far as possible a system enabling us to know the structure for which we are legislating. That is why I believe that the new system will be better.

I am grateful to the Minister, for giving way to be, but I simply will not let her get away with this nonsense. All that I wish to interest this House of Commons in is giving local authorities an option. Why on earth is the Minister saying “We know best, and you must not—must not—have a committee system”? Where is the logic and fairness in that? As for the arbitrary provision for a population of 85,000, why is 87,000 unacceptable? It is just rubbish.

I am sure my hon. Friend does not really mean that. [Hon. Members: “He does!”] Perhaps I can clarify one of the issues. We believe that allowing different structures to evolve would create confusion in the legislation. I realise that my hon. Friend feels strongly about the issue, but I am afraid I must tell him that we do not agree with his new clause.

How on earth can giving people choice and allowing them to make sensible decisions create confusion in legislation? Is the Minister saying that the Government are completely incompetent, and could not handle choice in any kind of legislation?

What I am saying is that the new structures are well bedded in. We generally legislate in ways that accord with existing structures, and if we start to unwind that arrangement, complications will ensue.

New clause 17 proposes abolition of the Standards Board for England and the Adjudication Panel for England, which are two important and effective bodies. If that were to happen, councillors and members of local authority standards committees who look to the Standards Board for advice, guidance, training and direction about the conduct regime for local authority members would be cut adrift.

In 2008 we devolved the conduct regime for local authority members to local authorities, and in doing so we created a new role for the Standards Board for England. The board is still there to investigate the most serious allegations of misconduct by local authority members, but since 2008, when we devolved the conduct regime for local authority members to local authorities, it has also functioned in its new role as strategic regulator for local authority standards committees.

The regime that we have introduced accords with the recommendations of the Committee on Standards in Public Life, including its recommendation for the establishment of a more locally based decision-making regime for the investigation and determination of all but the most serious misconduct allegations, but with the Standards Board at the centre of the revised regime with its new strategic, regulatory role to ensure the consistency of standards. If Conservative Members are challenging that, they are obviously challenging the recommendations of the Committee on Standards in Public Life, which recently approached the Standards Board for England for advice on how a successful, robust and transparent conduct regime should operate.

The Standards Board for England is now fully equipped to perform its new role. Legislation came into force this summer that allows the board to become directly involved with local authority standards committees if its scrutiny of the way in which the conduct regime is operating in an authority causes it concern, or if it is invited to do so by the authority itself. The board has restructured, and has shed staff. Its budget has fallen from just over £8 million in 2008-2009 to £7.4 million in 2009-2010, and it is planned for it to fall further in future years as ongoing efficiency savings are made.

Today is the second day of the Standards Board for England's eighth annual assembly of standards committees—[Interruption.] I think that I have sent them a video recording of my speeches, so that should cheer them up. More than 800 delegates, councillors, local authority monitoring officers and standards committee members are meeting in Birmingham to discuss all aspects of the conduct regime, to share best practice and to attend training and question and answer sessions. They will be discussing, among other things, the role of standards in parish councils— I am sure that my hon. Friend the Member for Stroud will be pleased to know that—how to engage council leaders, embedding standards and how to communicate the standards regime to the public. They will also be discussing how standards regime practitioners can support councillors who serve on licensing and planning committees.

The Adjudication Panel for England performs vital functions. It considers appeals made by councillors against the decisions of local authority standards committees and makes decisions about the most serious breaches of the code of conduct, deciding what sanctions are appropriate in cases where a breach is found to have taken place. That is a serious obligation. Where a serious breach of the code of conduct is found to have occurred, the consequences are, rightly, serious, too. The Adjudication Panel for England has the power to ban a person from being a councillor for up to five years. It is right that it should have that power. Actions that result in a breach of the code such as bullying can have a profound effect on the victim of the actions that led to the breach. We consider it appropriate for a national body to have such powers, but we question the alternative, which is the abolition of the Adjudication Panel, giving a local authority standards committee the power to stop a person being a councillor in any other authority for up to five years.

The vast majority of local authority members observe the high standards of behaviour that the electorate rightly expect of them, but we have seen that a robust conduct regime is essential to provide redress when the code of conduct is not observed. The Standards Board for England is needed not just to provide regulation for local authority standards committees that are enforcing the code of conduct, but to supply advice, support and training to local authority members to ensure that they work within the conduct regime. The abolition of the Standards Board and the Adjudication Panel would be a blow to high standards of conduct in the democratic process. Moreover, it would send a message that, far from building a fair, transparent and robust conduct regime, Parliament is intent on removing bodies whose purpose is to support the conduct regime.

The amendments tabled by the hon. Members for Wycombe (Mr. Goodman), for Peterborough (Mr. Jackson) and for Ludlow (Mr. Dunne)—amendments 24, 25 and 26—seek to ensure that the duty to promote democracy, the petitions duty and the extension of the duty to involve, do not come into force until July 2011. I have listened carefully to the concerns that they have raised, a number of which were raised in Committee. I can confirm that no final decision has been taken about the commencement of these provisions. We have been working to ensure that everything is in place to allow the duty to be commenced at the earliest possible date, but we are keeping all options open at this point and are considering the best way forward in the wider context of the Government's work on strengthening local democracy, including responses to the consultation on the subject, which has just come to a close, and in light of the current economic climate. The amendments would limit our flexibility to decide the most appropriate time to commence these duties. However, let me be clear that, in order to keep all options open, including the option of bringing the provisions into force in April 2010, prompt action may need to be taken to allow the appropriate stages to be taken, such as issuing draft statutory guidance for consultation.

It sounds as though the Minister may have made a rather important announcement. Can she confirm that, in effect, she is withdrawing parts 1, 2 and 3 of the Bill? Can she remind the House whether there was a commencement date for those parts and whether she is proposing to alter that date if it was in the Bill?

The provision will be by order. We have said that we want to aim to bring in the provisions in 2010, but obviously we have not taken a final decision. We do not want to be restricted, as would happen under the hon. Gentleman's amendments.

If I could turn finally—[Hon. Members: “Hooray!”] Are you enjoying this? On new clause 4, I can certainly see how strongly my hon. Friend the Member for Newcastle upon Tyne, Central (Jim Cousins) feels about the issue. It did not escape my notice that the Parliamentary Secretary to the Treasury, my right hon. Friend the Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown), was present during his contribution, which shows what an important issue this is in the Newcastle area.

I agree with my hon. Friend’s central argument that women should be afforded the same rights as men, particularly in relation to freedoms granted for an area. He talked about the town moor in Newcastle. I happen to live on the town moor in Doncaster. Opposite we have the town fields, which are covered by similar provisions for freemen. People can take their sheep on there if they want. The Bill already makes provision allowing guilds to admit women.

There is one other thing that I need to deal with. I will keep hon. Members in suspense on that one. Could someone find new clause 18? [Interruption.] As I was saying, the Bill makes provision allowing guilds to admit women. The provisions in clause 27 were inserted through an amendment tabled by Lord Graham.

May I invite the Minister to consider this point? The provision in the Bill does not confer a right other than if the freemen of that particular body choose to confer a right. New clause 4 confers the right untrammelled. There is no brokerage. The right is conferred directly to the daughters of freemen. It does not depend on the brokerage of another body to achieve that.

Yes. As I was saying, the provisions of clause 27 were inserted through an amendment tabled by Lord Graham and received cross-party support in the other place. We continue to believe that clause 27 strengthens the Bill by allowing admission rights to be changed more easily. Clause 27 provides for guilds to change their admission rights, including allowing women to become freewomen. However, my hon. Friend has put forward a powerful argument that it should not be discretionary, but that women should be afforded the same rights as men in such circumstances. Indeed, when accepting that the provisions of clause 27 should be inserted in the Bill, my noble Friend Baroness Andrews stated that we attach great importance to seeking equality between men and women and that

“traditions need to work in a way that is non-discriminatory”—[Official Report, House of Lords, 3 February 2009; Vol. 707, c. GC167.]

I can tell my hon. Friend the Member for Newcastle upon Tyne, Central that on that basis the Government support the inclusion of new clause 4 in the Bill. That is the good news. The bad news is that we cannot accept new clause 18 because it abolishes the comprehensive area assessment system, which is proving to be extremely successful and is generally recognised to be raising standards. However, we can certainly accept new clause 4, and I congratulate my hon. Friend on the success of his long campaign for the provision to be included in legislation.

I hope that I have answered all the questions that have been raised and that I have given reassurances in respect of the amendments that we cannot accept. I also hope that the House will be delighted that we are to accept new clause 4.

Because of the nice things that my right hon. Friend has had to say about parish councils and how the Government will move forward on parish polls, I beg to ask leave to withdraw the clause.

Clause, by leave, withdrawn.

New Clause 3

Insolvency protection

‘(1) The Housing Grants, Construction and Regeneration Act 1996 (c.53) is amended as follows.

(2) After section 113 insert—

“113A Insolvency protection

(1) A party to a construction contract may at any time request the other party to provide adequate security including bank guarantees and bonds in respect of payments of the contract price, including the price of any varied or additional works.

(2) Where a party fails to provide the adequate security as requested under subsection (1), the party making the request has the right to suspend any or all of his obligations under the construction contract with the party in default.

(3) The right may not be exercised without first giving to the party in default at least seven days’ notice of intention to suspend performance, stating that performance will be suspended unless, in the meantime, the security requested under subsection (1) is provided.

(4) The right to suspend performance ceases when the party in the default makes available the security requested under subsection (1).

(5) The consequences of the exercise of the right of the suspension under subsection (2) are as set out in subsections (3A) and (4) in section 112.”’.—(Mr. Llwyd.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

The House proceeded to a Division.

New Clause 4

Local freedoms

‘(1) The Local Government Act 1972 (c. 70) is amended as follows.

(2) In section 248 (freemen and inhabitants of existing boroughs), after subsection (1) there is inserted—

“(1A) Where the son of a freeman of a city or town may claim to be admitted as a freeman of that place, the daughter of a freeman may likewise claim to be so admitted.

(1B) The son or daughter of a freeman of a city or town shall be admitted as a freeman whether born before or after the admission, as a freeman, of his or her freeman parent and wherever he or she was born.

(1C) In subsections (1A) and (1B) ‘freeman’ excludes a freeman of the City of London.”’.—(Jim Cousins.)

Brought up, read the First and Second time, and added to the Bill.

New Clause 6

Purposes of regional development agencies

‘Section 4 of the Regional Development Agencies Act 1998 (c. 45) is amended as follows—

(a) in paragraph (a) of subsection (1) after first “the”, insert “sustainable”, and

(b) in paragraph (e) of subsection (1) after “Kingdom”, leave out to end of line.’.—(Julia Goldsworthy.)

Brought up, and read the First time.

With this it will be convenient to discuss the following:

New clause 13—Local Spending Reports

‘(1) The Secretary of State must as soon as practicable but not less than 12 months after the passing of this Act produce and publish a Local Spending Report.

(2) The reports must cover—

(a) all government departments, and

(b) any other person exercising public functions.

(3) The reports must include—

(a) all public expenditure for each local authority area in so far as it is possible to define it, and

(b) both current and proposed future spending.

(4) Local spending reports shall be updated as frequently as is reasonably practicable but in any event at least once every two years.

(5) The first report under this section must be laid before Parliament no later than 12 months after this Act is passed.

(6) In this section the term “Local Spending Report” has the same meaning as in the Sustainable Communities Act 2007 (c. 23).’.

New clause 14—Democratic arrangements within sustainable communities

‘(1) The Sustainable Communities Act 2007 (c. 23) (“the Act of 2007”) is amended as follows.

(2) After section 3 insert—

“3A Proposals made by the selector

(1) The first short list of proposals drawn up by the selector subsequent to the passing of this Act may contain as many proposals as the selector thinks it is reasonably practicable to deal with provided that he has sufficient proposals from local authorities.

(2) After that first short list of proposals has been submitted the selector may submit such further proposals as in his opinion it is reasonably practicable to deal with.

(3) The selector must, provided that he has sufficient proposals from local authorities, ensure that there is always a rolling set of proposals being considered by the Secretary of State.

(4) The selector must publish his reasons for rejecting any proposals from local authorities.”.

(3) In section 5 (proposals: regulations) after paragraph (4)(a) insert—

“(b) the panel must, subject to subsection (4)(c), include representatives of parish councils in a local authority’s area,

(c) a local authority that has established or recognised such a panel shall select representatives of parish councils to be members of any such panel unless—

(i) the parish councils within its area have selected at least two members to serve on the panel within six months of the coming into force of this Act; or

(ii) there are no parish councils within the authority’s area.”.

(4) In section 2 (proposals by local authorities) after subsection (1) insert—

“(2) For the purpose of making proposals to the Secretary of State where there is in the opinion of the Secretary of State a viable county association of parish councils then he must recognise that association for that purpose.

(3) Where the Secretary of State has recognised a county association pursuant to subsection (2) he must invite that association to make proposals which it considers would contribute to promoting the sustainability of local communities and, in such a case, sections 2-5 shall apply.

(4) Before it makes any proposals a recognised county association must consult and try to reach agreement with parish councils in its area about those proposals.

(5) Where a local authority has not decided to make proposals to the Secretary of State then provided that at least five per cent. of electors in its area have signed and delivered a petition to the offices of the authority specifying that the authority must make proposals then the authority shall organise a referendum of all electors on the matter in that petition.

(6) If in that referendum a majority of those voting support the petition then the authority must within 12 months make proposals and in such a case the provisions of this Act or the Act of 2007 shall apply.

(7) The Secretary of State must within 12 months of the passing of this Act make regulations about the drawing up and presentation of petitions and the holding of referendums under this Act..”’.

Amendment 27, in clause 66, page 50, line 8, at end insert—

‘( ) When conducting an assessment under this part, a principal local authority must consider the impact on the social, environmental and economic wellbeing of the authority’s area, including in particular where applicable (but not limited to) the effect on ports, caused by non-domestic rating revaluations.’.

Amendment 12, in clause 67, page 50, line 15, leave out ‘economic’.

Amendment 13, page 50, line 20, at end insert

‘and policies that seek to protect and enhance the environment, including biodiversity, natural resources and landscape.’.

Amendment 14, page 50, line 35, at end add—

‘(9) In subsection (2)(a) “sustainable growth” means economic growth that can be sustained and is within environmental limits but also enhances the environment and social welfare and avoids greater extremes in future economic cycles.’.

Amendment 2, in clause 70, page 52, line 11, at end insert—

‘(3) The responsible regional authorities shall establish and support a body whose purpose shall be to promote and scrutinise the achievement of sustainable development in their region.

(4) For the purpose of subsection (1) the responsible regional authorities in relation to a region and the Secretary of State must have regard to the advice of the body established under subsection (3).’.

Amendment 3, in clause 72, page 53, line 2, at end insert—

‘(4) The public shall be given an early and effective opportunity within appropriate timeframes to express their opinion on—

(a) the key issues and options for the regional strategy, and

(b) the draft regional strategy.

(5) The responsible regional authorities shall establish and support a stakeholder body which shall include social, environmental and economic partners, and whose purpose shall be to provide advice on—

(a) the revision of the regional strategy, including its project management and the vision of the strategy;

(b) the statement of community involvement prepared under subsection (1);

(c) arrangements for, and the report of the findings of, the appraisal of sustainability prepared under section 74(2);

(d) the plan for implementing the regional strategy prepared under section 78(1);

(e) the report prepared under section 78(2).’.

Amendment 4, in clause 78, page 56, line 14, at end insert—

‘(d) must use a full range of social, environmental and economic indicators.’.

New clause 6 has a number of similarities with other amendments in this group, which raise concerns and questions about the proposals to extend the powers and remit of the regional development agencies. It goes back to the original remit of the RDAs, and highlights our concern that the economy will remain the key and most prominent driver, despite claims made in earlier debates on this Bill that the agencies’ role would be broadened to include wider sustainability issues.

If the Government are serious about those claims, they need to go back and amend the original legislation outlining the powers and remit of the RDAs.

Does the hon. Lady agree that it is a disgrace that the Government have in effect prevented a serious discussion of the local spending reports? She and I, and other hon. Members from all parties, received an assurance about that from Ministers, but they have utterly failed to fulfil it.

I agree, but unfortunately that is only the latest in a long line of disappointments on this issue. The Government like to talk a good game about wanting to give people real information about the public money being spent in this area, but they seem to try to prevent that debate at every opportunity. The result is that they do not have to deliver the commitment that they promised in earlier legislation.

I shall not spend long on the new clauses in this group, as I hope that we will have an opportunity to vote on them. The Government have the opportunity to address their tarnished reputation on sustainability—an issue dear to my heart, as I have outlined already.

New clause 13 would compel the Government to publish local spending reports. That is a cornerstone of engaging people in local democracy and decision making, because it gives them an opportunity to see how public money is being spent. When they know that, the next step is that they will want to have a say about where it could be better spent. The Government have not delivered spending reports in the way they promised when we debated the Sustainable Communities Act 2007.

New clause 14 would make a series of improvements to the 2007 Act. It would ensure that people would have more than just a one-off opportunity—it proposes a rolling programme that would allow communities to have a real say about the changes needed to make a real difference to their lives. In addition, the new clause would allow local authorities to submit proposals on a rolling basis and involve town and parish councils—a serious omission from the 2007 Act.

I hope that the Minister will address these issues of sustainability, for which there is a real need and appetite at local level. What amazed me the most about the 2007 Act was that it was a local campaign that turned into a legislative programme. If the Government are serious about involving people and re-engaging them in politics, these are the sorts of provisions they should be supporting rather than trying to run away from.

I too shall be brief. I concur with my right hon. Friend the Member for West Dorset (Mr. Letwin): it is a disgrace that the House should have been detained by the nonsense and ephemera of the Minister’s 35-minute filibuster when there are important issues to discuss in respect of the Sustainable Communities Act 2007.

I turn now to a subject to which far too little attention has been paid over the past few months and years—the economic assessment of ports. It is totally appropriate for us to debate that subject now, albeit briefly.

The Government’s policy is that retrospective taxation should take place only when it is fair, proportionate, necessary to protect revenue and in the public interest. The tax on ports is a clear breach of those tests. When they introduced that retrospective tax, the Government disregarded their own rules. No impact assessment was made, no consultation exercise was carried out with those affected—

The Minister says, “We’ve been over this”, but the Home Secretary does not agree and is masquerading as a constituency MP on this issue and going against the policy of the Government. We may have gone over the issue, but we certainly have not resolved it.

The Government’s policy also contravenes the Treasury’s guidance on retrospective taxation. The Treasury Committee concluded that consideration should be given to the proposal to maintain the rating system in statutory docks and harbours at the levels published in the April 2005 rating lists until the new lists are published in April 2010. Those new taxes will hit the wider economy as a range of companies, such as those in the car and road haulage industries, are based in ports. The Prime Minister has failed to realise that his policies will lead to jobs being lost.

As we have seen tonight, Ministers are in denial about the harmful effects of those unfair, retrospective taxes. For instance, GEFCO, Peugeot’s and Citroen’s main distributor in Britain, is being hit with a retrospective £3 million rates bill. It makes a mockery of Lord Mandelson’s claims that the Government are trying to help the car industry. Those taxes are a kick in the teeth for local firms in the depths of recession.

The retrospective tax fiasco highlights the joint incompetence of the Valuation Office Agency and Ministers. It is resulting in firms being pushed into insolvency and needlessly laying off workers. Indeed, the Government were forced to accept the principle that the retrospective charges were undesirable in the Business Rate Supplements Act 2009, via Conservative amendments during the Bill’s passage through the other place. Should that principle not have wider implications for business rates in general? The effect on business is acute. The Humber docks rating revaluation group estimates that 600 businesses could be affected. Some firms have already started to lay off workers.

I turn briefly to the comments of the Home Secretary, the right hon. Member for Kingston upon Hull, West and Hessle (Alan Johnson), who was quite happy to vote with his party but was keen locally to “reopen” the issue of retrospective bills, which are to hit port companies with a tax bill of more than £200 million in Hull.

The proposals are at the heart of economic assessment. The Government have done everything they can to fail to face the issue and debate it in the House in a proper and meaningful way, as the Minister for Housing knows full well. For the avoidance of doubt, Conservatives believe, and have said, that the current 2005 rating list system should remain in force for ports, and that any new system should be introduced only in the 2010-15 rating cycle, following appropriate consultation with industry with proper advance warning—as has failed to take place thus far.

On the basis of the case I have made this evening about the ports tax and the damage it will do to our industry and ports, I ask the House to support our amendment.

Given my long-standing interest in the whole issue of sustainability, and the length of time I have sat here hoping for an opportunity to speak to the amendments, I want to impress on my right hon. Friend the Minister the importance of putting a definition of sustainable growth in the Bill—an explicit reference to make sure that the regional strategies that the Government are now introducing include—

I am very well aware of the interest my hon. Friend has shown in the issue—as has my hon. Friend the Member for Stroud (Mr. Drew)—and I think there is a way to ensure that the regional strategies and local spending reports take into account many of the concerns they have raised. I invite them both to a meeting with the Secretary of State and me to look at how we can take forward some of those important issues.

I am most grateful. I look forward to an urgent meeting with great interest. I should like the Campaign to Protect Rural England to be involved as well. Like many voluntary organisations, the CPRE has impressed on us the importance of making sure that we do not repeat the mistakes that were made when the Government set up the regional development agencies without giving proper powers on environmental sustainability. Some RDAs have made a lot of progress, but if we are now to have regional strategies, it is really important that we get the guidance right. On that basis, I look forward to my right hon. Friend’s meeting.

I shall speak to amendment 3, tabled by my hon. Friend the Member for Stroud (Mr. Drew). It is important to stress that the amendment would not reward nimbyism. Rather, it would facilitate the truly democratic sustainable development that the Government appear to seek, given the stirring title of the White Paper on which the Bill is partly based—“Communities in control: real people, real power”.

The amendment would require local authorities to conduct meaningful consultation with local communities, and would go some way to countering the cynicism with which many of our constituents regard the planning process at a local level, not to mention the decision-making process in local and central Government. I urge colleagues to support this progressive amendment, and I take the opportunity to move it—

Debate interrupted (Programme Order, 1 June).

The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83E), That the clause be read a Second time.

Question negatived.

The Deputy Speaker then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).

New Clause 8

Committee system

‘(1) Section 31 of the Local Government Act 2000 (c. 22) is amended as follows.

(2) Subsection (2), there is substituted—

“(2) A local authority falls within this subsection if the resident population of the authority’s areas on 30 June 1999 was less than 1,000,000.”’.—(Andrew Mackinlay.)

Brought up.

Question put, That the clause be added to the Bill.

The House proceeded to a Division.

New Clause 13

Local Spending Reports

‘(1) The Secretary of State must as soon as practicable but not less than 12 months after the passing of this Act produce and publish a Local Spending Report.

(2) The reports must cover—

(a) all government departments, and

(b) any other person exercising public functions.

(3) The reports must include—

(a) all public expenditure for each local authority area in so far as it is possible to define it, and

(b) both current and proposed future spending.

(4) Local spending reports shall be updated as frequently as is reasonably practicable but in any event at least once every two years.

(5) The first report under this section must be laid before Parliament no later than 12 months after this Act is passed.

(6) In this section the term “Local Spending Report” has the same meaning as in the Sustainable Communities Act 2007 (c. 23).’.—(Mr. Drew.)

Brought up.

Question put, That the clause be added to the Bill.

Clause 66

Local authority economic assessment

Amendment proposed: 27, page 50, line 8, at end insert—

‘( ) When conducting an assessment under this part, a principal local authority must consider the impact on the social, environmental and economic wellbeing of the authority’s area, including in particular where applicable (but not limited to) the effect on ports, caused by non-domestic rating revaluations.’.—(Mr. Stewart Jackson.)

Question put, That the amendment be made.

Clause 137

Adjudication costs

Amendments made: 21, page 82, line 3, after ‘applies’ insert ‘in relation’.

Amendment 22, page 82, line 7, leave out from beginning to end of line 13 and insert—

‘(2) The contractual provision referred to in subsection (1) is ineffective unless—

(a) it is made in writing, is contained in the construction contract and confers power on the adjudicator to allocate his fees and expenses as between the parties, or

(b) it is made in writing after the giving of notice of intention to refer the dispute to adjudication.”’.—(Ms Rosie Winterton.)

Clause 144

Commencement: general

Amendment made: 28, page 87, line 17, leave out ‘Chapter 2 comes’ and insert

‘Sections [Mutual insurance] and [Mutual insurance: supplementary] and Chapter 2 come’.—(Ms Rosie Winterton.)

Schedule 7


Amendment made: 23, page 137, line 40, second column, at beginning insert—

‘Section 106(1)(b) and the preceding “or”.’.

—(Ms Rosie Winterton.)


Amendment made: 29, line 5, after ‘authorities’ insert

‘, their powers relating to insurance’.—(Ms Rosie Winterton.)

Third Reading

Queen’s and Prince of Wales’s consent signified.

I beg to move, That the Bill be now read the Third time.

I am aware that we do not have a great deal of time for Third Reading, but I would like to thank right hon. and hon. Members, especially those who participated in Committee, for their deep consideration of the clauses. The Bill has been carefully scrutinised in the House, in Committee and in the other place. I express my particular gratitude to the Minister for Housing, in whose capable hands the Bill started off before descending into mine. I also thank the Exchequer Secretary to the Treasury, who was briefly a member of our Public Bill Committee and who dealt admirably with the clauses on construction.

This is an important Bill with two key aims. It is about strengthening local democracy and giving people a stronger voice in their communities, and it empowers local authorities and partners to promote economic recovery and growth. In the difficult economic times that we have faced in recent months, the role of local authorities, playing an important economic part in their local economies, has come to the fore. I am sure that all hon. Members agree that in many instances local authorities can work with local partners to give support to individuals and local businesses. Local authorities have worked to get immediate help out there—I am thinking of the housing changes made by the Minister for Housing—and have helped in planning for the future by looking at skills provision and local economic needs. That is why I believe that the Bill is so important, particularly in respect of the role that local authorities can play in promoting local economic development. The Bill gives local authorities and regional development agencies powerful tools with which to promote economic recovery.

Other issues debated this evening stem from the review of sub-national economic development and regeneration, where the Minister for Housing again made such a vital contribution. Local authorities can work together to promote economic development in the regional context, which is incredibly important.

I repeat that Conservative Members want to dismantle many of the structures put in place to deliver real help during difficult economic times, which is the completely wrong approach. In my experience—not only as Minister for Regional Economic Development and Co-ordination, but as regional Minister for Yorkshire and the Humber—individuals and businesses appreciate the help given and want local authorities and regional development agencies, working with the new leaders board, to play a greater, not lesser, role.

I commend the Bill to the House. It has been well scrutinised and it makes some key changes, which we should all be pleased to welcome in respect of economic development and strengthening local democracy.

I want to record our thanks to all those who have devoted so many hours to debating the Bill, but it also falls to me to point out to the Secretary of State, who has kindly graced us with his presence for the final 10 minutes of the debate, that the Minister for Regional Economic Development and Co-ordination undoubtedly shouldered most of the load, and I commend her on that. However, although she announced to the House that she was thoroughly enjoying doing it—at length—I have to say that, at certain points, some of us found the experience less than enjoyable.

I particularly thank Lord Bates of Langbaurgh, who shouldered the load for us in another place, and my hon. Friends the Members for Peterborough (Mr. Jackson) and for Wycombe (Mr. Goodman), who led for us so admirably from the Front Bench on this lengthy Bill. I think it right also to record the contributions to the Committee stage of experienced former Ministers—my right hon. Friends the Members for Hitchin and Harpenden (Mr. Lilley) and for Skipton and Ripon (Mr. Curry)—as well as the valuable role played by my hon. Friend the Member for Ludlow (Mr. Dunne).

It is disappointing that, as a result of lengthy discussions on earlier amendments, we failed to reach what is probably the most important clause in the Bill—the one that enables planning powers to reside in the hands of unelected and unaccountable officials in the regional development agencies. My strong objection to the Bill throughout has been that removing powers from the hands of democratically elected representatives and placing them in the hands of bureaucrats and quangos is fundamentally undemocratic and at odds with the very title of the Bill. If the Bill had any pretence of living up to its description as a local democracy Bill, it would scrap regional planning and return those powers to local government, where they truly belong.

However, it is not just the centralising nature of the Bill that is so at odds with public demand. The powers are being transferred to RDAs at a time when we are experiencing one of the worst recessions ever. We shall have to use every weapon in our arsenal in competing with other countries to pull ourselves out of recession. Is it not folly of the first order to divert RDAs from their original purpose of dealing with planning and house building at this time?

The Bill contains a rag-bag of measures. I think it right, in his absence, to record that it was the hon. Member for Thurrock (Andrew Mackinlay) who described it as nonsense. At least he put his money where his mouth was this evening by tabling an amendment that garnered considerable support. It might have brought a bit more sense to a Bill which is indeed, in large part, nonsense. So much of it is either duplication or plainly unnecessary. I must ask the Minister whether she understands that the things that she is pressing local authorities to do by means of statute are things that they have been doing for years as a matter of course. For example, the requirement to promote democracy is part of the essence of what a local authority does most of the time.

The Bill emerged to fill a vacuum in legislation after the “Communities in Control” Bill was quietly dropped by the Government. It bears all the hallmarks of legislation that has been scratched together in the absence of any real direction or leadership. It is a landmark in missed opportunities. People are crying out for their elected local representatives to have real power over decision making, but the Bill provides for the opposite. It is prescriptive where it should simply be permissive, and it codifies in tiny detail matters that are best left for councils to decide.

Where is the action to help people who are struggling to pay their council tax bills, and businesses that are struggling to stay afloat and facing an onslaught of tax increases? Where is the route map for getting more homes built? We want to stimulate house building, but nothing in the Bill will achieve that. In fact, the Bill does nothing to address any of the most pressing issues that people face. It shows more than ever the extent to which the Government have simply run out of road. When our country is crying out for bold and radical change, all Ministers offer is more of the same.

It is not the place of anyone in the House to predict the outcome of the next election. Nor should a new Government seek to scrap every piece of legislation put through the Commons by the previous one. None the less, we have made it crystal clear from the start that the Bill is fundamentally flawed. Therefore, today I am putting local authorities on notice that, if elected, we will take remedial action by scrapping large parts of the Bill and all the other bureaucratic burdens that write on to the statute book what local authorities already do in any event. We are also going to abolish the entire regional strategy chapter of the Bill. Whether we get that opportunity is a matter for the electorate and can never be taken for granted, but this Bill, almost more than any other, painfully demonstrates that the electorate need to be given the opportunity sooner rather than later.

I shall keep my remarks fairly brief. I have had the privilege, in the brief time that I have been in the House during this Parliament, to serve on a number of Public Bill Committees. On those occasions, I may not have agreed with what was happening when we reached Third Reading, but at least there was a feeling that something would change the world in some way.

We have reached Third Reading with this Bill. We have devoted a lot of time to debating it, and we have attempted to improve it and to give it some meaning. Even this evening, there have been a few last-ditch attempts to do that. What we have ended up with is nonsense, as the hon. Member for Thurrock (Andrew Mackinlay) has said. The Bill will not offer anything at all, when people need support. They need some of the control that central Government have put on local government—the previous Government as well as the current one—to be released to allow local authorities to come up with solutions that are appropriate to their areas.

The Bill does nothing appreciable to improve conditions so that local democracy can flourish. Many of those in the construction industry remain unhappy with the elements of the Bill on construction. The Bill’s attempts to improve economic prosperity and its tinkering will not unlock the potential in the regions to develop an economy that will see us through into recovery. It is a huge missed opportunity.

I join in the Minister's tribute to all hon. Members, both in the House today and in Committee, for their contributions, but it is with a sense of genuine disappointment that I find us here on Third Reading discussing a Bill that offers nothing, for all the effort that has been put into dealing with it. I pay tribute to the work that my hon. Friend the Member for Falmouth and Camborne (Julia Goldsworthy) has put into the Bill. I also thank Steve McAuley and Beth Warmington, who have put in a lot of work in doing research and conducting discussions.

A lot of people watching our debate will feel let down, particularly on the construction elements of the Bill. There was an opportunity to put the matter right, but that has not happened. With great sadness, I have to say that the Bill fails to achieve any of its objectives.

The Bill faces in absolutely the wrong direction. The core of the Bill is to give more powers to the regional development agencies, which are unaccountable bodies. It sets up leaders panels, heavily chaperoned by the Secretary of State, as was said in Committee, to manage the consultation process. The situation should be exactly the other way round—those powers should go to local government. Local government works well together. The multi-area agreements work and the leaders panels have something to be said for them, but they should be bidding for the powers that are presently vested in the regional bodies, along with private sector partners and the third sector, because they are ultimately accountable and those regional bodies are not.

If we take the combined effect of the Planning Act 2008, the Infrastructure Planning Commission and the powers given to the regional development agencies, there is a huge retreat from accountability with the Bill, which is very bad for democracy. The title of the Bill is a parody of what its impact will be in practice. Perhaps before the Government implement this, they should read Tristram Hunt’s book “Building Jerusalem: The Rise and Fall of the Victorian City” and contemplate how much they, and perhaps all of us, have at times contributed to its fall. It is about time that we engineered its rise again.

Question put, That the Bill be now read the Third time.

Bill read the Third time and passed, with amendments.