House of Commons
Tuesday 13 October 2009
The House met at half-past Two o’clock
[Mr. Speaker in the Chair]
Oral Answers to Questions
The Secretary of State was asked—
Through our national awareness and early diagnosis initiative, we are working to improve awareness of the signs and symptoms of cancer, including prostate cancer, among the public and health care professionals in England. As part of this initiative, we are investing in a number of prostate cancer awareness campaigns.
I thank my hon. Friend for her answer. She will be aware that of the 35,000 men who get prostate cancer each year, 10,000 are unlikely to live. Men are seen as being particularly loth to go to hospital or to the doctor with problems relating to intimate parts of the body. What does my hon. Friend intend to do to allay men’s fears and get them to go to their GP or to hospital, to ensure that 10,000 more people do not die next year?
My hon. Friend raises an important point. We know that men tend to put off going to see their GP, which can result in devastating effects following later diagnosis and treatment. We are investing in schemes such as the Football Foundation’s Ahead of the Game campaign, which uses the appeal of football to raise awareness of prostate, lung and bowel cancers in men over 55. We are also working with a number of prostate cancer charities and patients to raise awareness of that cancer and to get the message out: “Don’t wait—check it out.”
Research carried out by the Prostate Cancer Charter for Action shows that, in at least 96 of England’s 529 constituencies, the death rate from prostate cancer is well above England’s average. Does the Minister accept that this reflects inequalities in NHS prostate cancer services? What is being done to remedy this?
We have done much to narrow the gap in relation to the inequality of cancer services. The introduction of the two-week maximum wait from GP referral to seeing a specialist and the recent announcement of a diagnostic result one week after being referred will also be extremely welcome. There are differences around the country, and it is difficult to give a definitive answer, but we have ensured that doctors are educated and supported to provide the right kind of understanding. As I have said, we are also working to raise awareness of the signs and symptoms, because the main thing is the need for men to present earlier.
My hon. Friend will be aware of how successful women have been in coming together to campaign on breast cancer. Indeed, I am wearing pink today to support that campaign. What does she think can be done to get more men to campaign on the important issue of prostate cancer, and to persuade them not to ignore it? She will be aware that my own father went to the doctor too late, and consequently died of the disease. Can we not get men to do more?
My hon. Friend has sad and poignant personal experience in this respect, and I thank her for sharing it with the House. Prostate cancer represents a different challenge for all of us, not least because the signs and symptoms are not always as clear as we might want. Research needs to be encouraged and supported to develop effective screening, which we do not have at the moment. We are, however, providing high-quality services tailored to the individual patient, and I am sure that men across the country will have heard my hon. Friend’s encouragement and will rally to take action, which I would certainly welcome.
Maternity Services (Rochdale)
The North West strategic health authority reports that work is progressing as planned on the Making it Better reconfiguration, which aims to improve the quality of maternity services across Greater Manchester.
Does the Minister accept that in the current economic climate, closing two maternity units—at Rochdale infirmary and Bury Fairfield hospital—that are less than 10 years old and spending £15 million on a brand new unit at the Royal Oldham hospital does not represent best value for money? Does she agree that the money could be better used elsewhere?
I am sure that the hon. Gentleman is aware that the Manchester proposals are overwhelmingly supported by local clinicians and backed by a clinical and quality-based case for change. Making it Better will provide safer, higher-quality care for the residents of Greater Manchester, and the nearby Royal Oldham site will become a centre of excellence for maternity and neonatal care.
The Minister may recall that I made it clear during Health questions in May that the birth rate in Greater Manchester was rising, contrary to the predictions on which the reconfiguration proposals were based. We now know that something like 5,000 more babies were born in Greater Manchester than had been predicted. If the assumptions on which the plan was based are no longer true, will she act on the evidence and reconsider the plans to shut obstetrics services at the Fairfield hospital in Bury and at Rochdale infirmary? Otherwise, 5,000-plus mothers living north of the M62 simply will not have the choice to access obstetrics services close to home.
It is for local commissioners to keep that always under review. As the hon. Gentleman said, the birth rate has risen, but local commissioners are in touch with their clinicians. During the consultation, which was extended over four months, the matter was examined in detail and it was decided that it was safe practice to reconfigure services as has been done.
The Minister will be aware that one of the biggest challenges facing maternity services in Rochdale and elsewhere is the enormous shortage of midwives. All the signs are that the Government will miss their target of recruiting 3,400 more midwives by 2012, so will the Minister support the Lib Dem plan to scrap the health and maternity grant, which is completely untargeted, and invest the money instead in recruiting 3,000 more midwives and health visitors to give every woman the support she needs during pregnancy?
I am saddened that the hon. Gentleman raised the issue in that particular way, because we are on target. We have checked with the strategic health authorities—[Interruption.] I must contradict the hon. Gentleman. After checking with the strategic health authorities in England, we know that the target for 4,000 extra midwives by 2012 will be met. We are working closely with the Royal College of Midwives and very positively with the Royal College of Obstetricians and Gynaecologists: the target will be met. As for the comment about the grant, I am sad that the hon. Gentleman feels that way, because I believe every woman is entitled to be healthy through pregnancy, and to have a safe pregnancy.
Independent pharmacies play an enormously important part in providing pharmaceutical services to the UK. However, the NHS (Pharmaceutical Services) Regulations treat all providers equally, and we do not intend to change that to discriminate against a particular sector.
The Minister will be aware from the representations of colleagues throughout the House that small pharmacists are an invaluable part of the local community. They are often the cement that keeps a local parade of shops going, for example, in deprived communities such as mine in Nottingham, North. The giant supermarkets are usually most welcome in communities, but does the Minister accept that they also have a tendency to suck in other services, particularly pharmacies, and not to provide the sort of intimate and local service that reaches out into the community? Will he take every possible step to ensure that local pharmacies are encouraged to survive and thrive?
We certainly want local pharmacies both to survive and to thrive. Indeed, the Health Bill, which was before the House yesterday, introduces pharmaceutical needs assessments, which will encourage primary care trusts to ensure that they consider the needs in their area. We know that different parts of the community have different needs. Young mothers who live at home with their children, and older people, sometimes like small locally based pharmacies, while younger men sometimes prefer the less intimate surroundings of a supermarket. There are all sorts of diverse needs to provide for. What we want is a broad range of services and pharmacies, ranging from small traders to multinationals.
I have a number of independent pharmacies in towns and villages in my constituency where there are no supermarkets, but supermarkets are not too far away. If those supermarkets suck in some of the customers of the independent pharmacies, we shall see death by a thousand cuts. Some of the ageing population will not be able to get into the major towns, so they will lose an essential place where they can get their medicines. If we do not want to see pharmacies going the same way as the post offices have gone over the past five years, the Government will have to take action now. What action is the Minister prepared to take?
I have just said that the Bill before the House yesterday provides action in the form of pharmaceutical needs assessments, so that primary care trusts are able to assess local needs and ensure that they respond to precisely the sort of circumstances that the hon. Gentleman raised.
First, I thank the Medicines and Healthcare products Regulatory Agency for publishing its new guidelines on the sale of codeine-containing products recently. However, will my right hon. and learned Friend admit that the person paying for codeine-containing products at the checkout would not get the same advice in a supermarket containing a pharmacy as they would in the sort of small pharmacy that my hon. Friend the Member for Nottingham, North (Mr. Allen) described?
I certainly agree that local pharmacies are enormously important. That is why we want to support them, and that is why we have introduced the Health Bill, which the House debated yesterday and which provides for pharmaceutical needs assessments for each area. We must ensure that there is diversity of supply so that precisely the sort of needs identified by my hon. Friend are met, and we must recognise that other parts of our community want that diversity as well.
Along with many others, we value the role of community pharmacists, but recognise that the most important challenge for small and single-handed pharmacies is presented by the Medicines (Pharmacies) (Responsible Pharmacist) Regulations 2008, which came into force last week. Can the Minister deal with the significant confusion and real concern among pharmacists regarding the regulations? Will he, for instance, clarify whether a small pharmacy that is open for the minimum 40 hours per week would be in breach of its NHS terms of service were a responsible pharmacist to be absent for two hours, and whether a responsible pharmacist failing to sign off and taken a rest break would be in breach both of professional requirements and of the European working time directive?
We certainly do not want a local pharmacist to be in breach of either the regulations or the working time directive. We want and intend to ensure that the regulations are applied flexibly so that we can continue to provide effective and good local services in the community.
The first annual report on the Cancer Reform Strategy, published in December 2008, is the most recent assessment of cancer service provision in England. The report showed that good progress is being made against the objectives of the strategy to improve cancer services further across England by 2012.
When considering that report, did the Minister examine the research conducted by Professor Karol Sikora at the university of Buckingham medical school? It shows that in NHS centres where complementary services are offered, 70 per cent. of women and 40 per cent. of men take them up, and that they are of great help with chemotherapy. However, there is a real problem. There is not enough knowledge about which therapies are working when they are used together. If I wrote to the Minister, would he please consider funding a little extra research?
I look forward to receiving the hon. Gentleman’s correspondence. I do not think that any Member has done more to champion the cause of complementary and alternative medicine across the national health service. As he will know, as a result of his efforts and those of others, the National Institute for Health and Clinical Excellence has included the role of complementary and alternative medicine in its service configuration guidance on supportive and palliative care for cancer patients—which is due to be implemented fully by December this year. Of course I would welcome a further letter from him, particularly one containing the views of such an eminent clinician as Karol Sikora.
In September, I had a breast cancer scare. Within five working days I was in the hospital and being screened—and everything was fine. I want the House to know that that was not because I am a Member of Parliament: when the staff contacted me by phone, they called me Mr. Taylor. I had to correct that quickly!
I raise the matter here today because I received excellent service from the University Hospital of North Tees; the breast cancer unit was excellent. My question to the Secretary of State is quite clear. When is it expected that all cancer services will be resourced to the same extent, so that it will be possible for everyone, within five working days, either to have their minds put at rest or to begin their treatment?
I thank my hon. Friend very much for her question, and I will relay what she has said to the NHS so that it will get her name right in future. It is important that she has shared her experience with the House, because it illustrates how far the NHS has travelled. It is a sad fact that breast cancer is the most common form of cancer in England. Some 38,000 new cases were diagnosed in 2006. I have seen the devastating effects of breast cancer in my own family, and I know only too well how quickly it can spread if it is not picked up early.
As my hon. Friend knows, we are extending the two-week guarantee to all suspected cases of breast cancer. She will have heard recently that we also want to extend GPs’ access to tests, so that although not every case may qualify for the urgent referral pathway, cases that do not can nevertheless be checked out by GPs. She is absolutely right: there can be no complacency. We will go still further to ensure that we give everyone in the country the best possible chance of surviving breast cancer.
The Secretary of State will recall that the Cancer Reform Strategy says:
“Sufficient finance will be made available to the NHS as part of their general capital allocations to fund investment in new cancer equipment.”
That was two years ago. Two weeks ago, the Prime Minister said that hospital building projects should have their resources taken away to fund new cancer equipment. Clearly that has not happened—or can the Secretary of State explain what additional diagnostic equipment is going to be paid for?
I do not think that it is possible for the shadow Secretary of State for Health to accuse the Government of not investing in cancer services. This Government made the change on day one of taking office, and we have invested in cancer services throughout our period in office. The facts are as follows. Cancer mortality among under-75s fell by almost 18 per cent. between 1996 and 2006. That is a record of which we are very proud. However, we must continue to invest in the equipment and capacity to give people as rapid access to tests as possible. As I said earlier, we want to give GPs the ability to refer people for non-obstetric ultrasound, for flexible sigmoidoscopy and other such tests, so that we can give people ready access to tests in the community, help to get early diagnosis and, in the vast majority of cases, put their minds at rest.
I regret that I did not really get an answer to my question. Since the Secretary of State wants to talk about cancer mortality, will he explain why, in the decade after Labour came to office, the gap in cancer mortality between this country and the European average widened? On the other point that he made, surely he must know that the issue in the NHS now is not primarily about the capital resources for additional diagnostics, but the staffing to support them. Diagnostic equipment could be better used if there were more radiographers and sonographers.
I can answer the hon. Gentleman on both points. As I said, cancer mortality fell over the decade in question. Cancer survival rates have been steadily improving. We accept that there is more to be done to close the gap between us and comparable countries, but that is precisely why I have taken steps on early diagnosis, which is the new frontier in taking on the battle against cancer.
The hon. Gentleman mentioned the work force. The cancer work force has increased considerably in that period. We have been investing not just in equipment, but in people. He mentioned radiographers. There were some 12,500 radiographers in 2000. In 2006 there were 14,500, and the plan is to have 17,500 by 2012. That is a genuine commitment to invest in the work force and the equipment that gives people in this country the best possible chance of surviving cancer. He cannot look me in the eye and say that his party in government did the same thing.
Does my right hon. Friend agree that he cannot say often enough that the real reason why we have been able to reduce the problems with cancer and many other illnesses, particularly heart disease, is the money that we invested in 2001 and the 1 per cent. increase in national insurance contributions, every penny of which went straight to the NHS? That had never been done before in any Budget. Conservative Members walked into the No Lobby and voted against that money. As someone who has had cancer and open-heart surgery, I cannot thank the NHS enough. I thank my colleagues for walking through the Aye Lobby and providing the extra money to find the people to do the job.
I could not have put it better. The Conservatives had the nerve to stand up in Manchester last week and proclaim themselves the party of the NHS. But as my hon. Friend rightly says, a few years before that they walked though the No Lobby to vote against the money that Wanless said was crucial to put our NHS back on its feet. That money has paid for the figures that I have been reading out in the House this afternoon.
In 2007, the National Radiotherapy Advisory Group highlighted the 63 per cent. gap between current activity levels and optimal treatment levels. That position will worsen as cancer increases in an ageing population. The Secretary of State has mentioned the projected staff increases, but what will he do about the equipment which, although it was replaced under this Government, is coming to the end of its useful life? What plans are there to ensure that the equipment and staff are there in the future?
The hon. Lady is right to say that this is not a case of one or the other: we need both together. As well as radiographers, some 1,800 extra cancer consultants have joined the NHS since 1997. We need both, and I recognise that we have to invest in the most up-to-date equipment to give people the very best cancer care. That is our commitment, and that is what we are doing by reprioritising our spending plans to get the funding into that equipment, switching away from the hospital-building programme.
“Shaping the future of care together”
The Secretary of State wrote to Ministers in Wales, Scotland and Northern Ireland with the full text of the Green Paper before publication. Officials have been in regular contact with their counterparts in the devolved Administrations, and a further series of meetings is planned.
I am grateful to the Minister for that reply. In border constituencies such as mine, many constituents—such as those who live in Sedbury and Beachley in my constituency, whose nearest town is Chepstow in Wales—will be very concerned about how this plan would work across borders. In May 2008 Ministers said in the forerunner to this document that they were thinking very carefully about how it would work across devolved borders, so can the Minister give us any idea about any proposals he has come up with—or has the last year and half just passed with no concrete action at all?
The hon. Gentleman is right to say that the system of care and support that we want to create—it will be the first ever national care service of its kind—covers a mix of devolved and reserved policy areas, because care is devolved and the benefit system is reserved. We are therefore working closely with the devolved Administrations to ensure that any changes we make to any of the systems provide the best possible outcomes for people in the UK. I cannot pre-empt the consultation in which we are currently engaged to achieve that outcome, but I can assure the hon. Gentleman that we are working closely with the devolved Administrations to get the best possible outcome for everyone’s constituents.
Will the Minister think about how to get agreement with devolved Administrations so that the portability of benefits can extend beyond England, and can in due course, by agreement, be extended to people from England moving to Scotland or Wales, or vice versa, at some future stage?
My hon. Friend has highlighted a key feature of the new national care service that we want to develop: the idea that people’s care assessments should be portable. At present in England different people get different assessments depending on where they live. The proposals in the national care service will ensure that there is a single care assessment, so that people are not identified with different needs according to where in the country they happen to live. That is the kind of discussion about how the system would operate that we are having with counterparts in the devolved Administrations, including Scotland. If there are features of the national care service that have particular merit and benefits, and which the devolved Administrations, for whom this is a devolved matter, wish to replicate, I will be more than happy to enter into discussions with colleagues in those devolved Administrations.
As a prelude to the Green Paper, on 11 June the Minister said here that each MP had to ensure that the money from the carers strategy announced by the Prime Minister actually went to carers. The Princess Royal Trust for Carers reports that of this year’s £50 million, £40 million has gone missing, including in the Minister’s own Northamptonshire primary care trust. Where has the money gone? Does it surprise him that carers feel so let down?
I guess that carers will feel most let down when they hear that the Conservatives are opposing a national care service that will provide a fair, affordable and simple system. [Interruption.] I am talking about the question that the hon. Member for Forest of Dean (Mr. Harper) asked me earlier, about the national care service. That national care service will provide much more help for people both in their own homes and in residential care, unlike any of the proposals that have come forward from the Conservative party. In terms of the allocation of the carers money, I am delighted that the Government—again, the Conservatives voted against this—committed a sum of £150 million to be paid in to the national health service, to be provided by local primary care trusts. It is for PCTs to identify the priorities in their area. We are encouraging organisations, and we will be issuing guidance on how that carers’ support money can be provided, but it is this—
Alcohol-related Mental Health Services
The North East strategic health authority has advised me that NHS North of Tyne undertook an assessment during 2007 to map the service provision against best practice guidance. Following that, the trust is now working with local partners on developing services in the local community for people with alcohol and mental health problems.
I welcome the flurry of activity since I tabled that question some time ago, but will the Minister take a personal interest in a matter that is worrying general practitioners throughout north Northumberland: the fact that there is no facility to which they can refer people with alcohol problems and alcohol-related mental health problems? Will she help and encourage all the relevant NHS trusts to fill that gap urgently?
I can indeed confirm a personal interest, as I spoke with the primary care trust this morning. It is aware of the challenge to provide better services and is in the process of completing a review of all alcohol services, including those for people who also have mental illness. I have asked the local director of public health to meet the right hon. Gentleman to discuss the review’s findings and he is happy to do so. I am also assured that the PCT is prioritising alcohol reduction services and, within that, has identified new investment for community-based alcohol services, which is particularly important for those with a lower-level mental health problem.
The Department of Health’s policy guideline on dual diagnosis talks of teams with specific expertise in dual diagnosis being developed and better co-ordinated. That was produced seven years ago, but anecdotal evidence from Northumberland and elsewhere suggests that little improvement has been made; indeed, people with schizophrenia have a 10 per cent. higher than average risk of having an alcohol problem. What action is the Minister taking to ensure that people with a dual diagnosis receive the right support?
We all know that providing the services for those who have both mental illness and an alcohol problem is an increasing challenge. There are many examples of good practice, but the truth is that, of course, we can do better. That is why we will publish, before the end of the year, good practice guidance on the development of integrated care pathways. That will give specific guidance for those who are working with people with co-existing alcohol and mental health problems. In other words, we seek to get the right people doing the right thing at the right time in the right way.
Better Healthcare Closer to Home
South-west London’s NHS tells me that good progress is being made on the Better Healthcare Closer to Home programme.
I thank the Minister for his reply. He may be interested to know that more than 800 people wrote to Sir Richard Sykes, the chairman of NHS London, asking that there be no further undue delays in the Better Healthcare Closer to Home programme. We have received reassurances from Sir Richard that there will be no such delays from his end, so I now seek the Minister’s reassurances. Can he confirm that no block on that programme will be caused either by a south-west London review or by a pan-London review that is under way? Will he confirm when the Department—
First, I can confirm that the case in respect of St. Helier looks to be good, and we hope to be able to announce some progress on that in the near future. On the Better Healthcare Closer to Home programme, the primary care trust has already developed the Shotfield health centre—a new £13 million centre—in Wallington; the Robin Hood Lane health centre in Sutton officially opened in May 2008; and the PCT is also developing a GP-led health centre on the Wilson site in Mitcham, which will open in spring 2010. That is good progress.
It is important that we ensure that the quality of delivery of care in the NHS is not compromised by staff who are overtired and unable to make the difficult judgments that we often call on them to make. We have to ensure that the working time directive is delivered appropriately and that staff comply with it.
We have held 28 “Big Care Debate” events in nine regions in England, which were attended by about 1,000 people. In addition, there have been more than 10,000 responses to the public consultation. I have also received 29 written parliamentary questions and 141 letters and e-mails about the care and support Green Paper.
I thank the Secretary of State for that response. A number of my constituents have contacted me about the Green Paper. Typical of their responses was one from a lady who said:
“I am deeply concerned about the proposals in the green paper to hand disability benefits over to the local authorities…It has taken me a long time to get the DLA Lifetime Award which is a tremendous help to me and has enabled me to go out and get a job and actually live my life a lot easier and I am also less dependent on people to do things for me.”
Will the Secretary of State take this opportunity to reassure my constituent that the Government will not take away awards such as the disability living allowance and the carer’s allowance, which allow people to live independently and with dignity?
We think that there is an argument for combining some disability benefits with the funding that goes towards social care to create a better system for care and support. I also want to reassure the hon. Gentleman’s constituent that no decisions have been taken on this matter. Obviously, we are consulting on it through the Green Paper. The main point that I want to put across is that whatever changes we make, we want to ensure that under a new and better care system people can still get an equivalent level of support to that which they are used to. We would want to replicate the level of control that his constituent describes under the new national care service that was described by the Minister of State, my hon. Friend the Member for Corby (Phil Hope).
I would say to the Chairman of the Select Committee on Health that we have to be careful to ensure that it is fair across the generations. To say that the cost of social care should be fully funded by the taxpayer raises a genuine question about whether that is fair to today’s working-age population, who obviously face their own pressures. The proposal at the heart of the Green Paper, in all the scenarios, is a partnership between the state and the individual. We think that that will be the fairest way to proceed, but obviously there are different ways in which that partnership could be constructed.
The pilot allergy network in NHS North West started in February 2009. The project team is beginning to work with the clinical evaluation unit at the university of Liverpool on “An Analysis of North West Services” to review data about current activity and measure improvements and outcomes.
I thank the Minister for that reply. The pilot for specialist allergy services is very important. I hope that she agrees that the active co-operation of primary care trusts is essential. What are her Government doing now and in the future to get PCTs to buy in to the allergy pilot?
First, may I congratulate the hon. Lady on her gallant fundraising efforts, through which she has achieved so much for the Anaphylaxis Campaign? The direct answer to her question is that it is, again, about commissioning. That is why the pilot and the evaluation of it are so important to us. We are meeting the national allergy strategy group on Thursday and we hope to discuss some of those issues, and in particular that raised by the hon. Lady. Until we have seen the evaluation of the pilot in north-west Manchester, it is more difficult to highlight best practice, which is what those involved are so keen to do.
We recognise that, but it is important that PCTs get the extra funding to provide support for specialist allergy services and for referrals, as well as for the provision of extra knowledge within the PCTs. A hospital such as that in Chorley could be a centre for specialist allergy services, too.
As always, my hon. Friend has raised his constituency and praised it—and rightly so. It is important that we get our GP training packages in place so that there is a first point of call for a patient who suffers an allergy that is not always as well known as some other conditions. We need to look at the training of GPs and of the work force in general.
Mid Essex Hospital Services NHS Trust
The trust’s finances were classified as “performance under review” in September by the director general of NHS finances. The East of England strategic health authority is working with the trust to ensure that it brings its finances into balance by the end of the year.
How would the Minister respond if he were to receive a complaint from an ancillary worker or nurse at the Mid Essex Hospital Services NHS Trust that the trust’s financial performance over the past two years had been affected by the income garnered in staff car park fees? That income has risen from £90,000 to £250,000, and the effect is felt most especially by those members of staff who find it hardest to pay the charges.
The trust has to determine how to raise finance, but I do find such a large rise in car park charges a little excessive. The trust has had a number of good financial years, and it was supposed to go into surplus at the end of this financial year. The result of the Department’s intervention is that we know that the trust is working on a programme to bring itself back into surplus, but I do not expect that to be at the expense of staff.
NHS Gloucestershire has identified the Littlecombe south site at Dursley for the relocation of Berkeley hospital. Heads of terms for the site are to be agreed by the end of October and the project is expected to be completed in 2011-12, with services transferring to the new hospital in spring 2012. It has been suggested in initial discussions that the existing site should be used for mixed residential and retail purposes.
I thank my right hon. and learned Friend for that response, and it is good to hear that a site has been identified. Does he agree that we need to make rapid progress on this excellent project, and that it is essential to ring-fence its funding to make sure that it goes forward? Will he allow me to discuss with local people how the existing Berkeley site could be used most appropriately?
Obviously, the use of the existing site is a matter for local decision, and I have no doubt that my hon. Friend will be involved in that. As for the project’s funding, it has been allocated from the community hospitals programme already and I understand that it is secure.
NHS Work Force
The most recent NHS work force census was published in March this year, and it shows that, as at 30 September 2008, there were 1,368,186 staff employed by the NHS in England. That is equivalent to 1,124,818 staff working full time.
I acknowledge the huge increase in expenditure on the NHS, but does the Minister accept that many non-clinical staff have been needed because of the service’s top-down style of management and bureaucracy, as well as what I would call its “tick-box” culture? In these straitened economic times, will she ensure that front-line clinical services and staff will be protected—not least in maternity services, given the increasing birth rate due to immigration—
I can assure the hon. Lady that front-line clinical staff will be protected at all times, as quality and safety are this Government’s priorities. Managerial staff are of course always required to run an efficient and progressive health service, but the front-line clinical staff will be there to provide the quality service that we have grown to respect and need.
The Royal College of Surgeons conducted a large-scale survey of its members this summer, and it found that two thirds of surgeons felt that the quality of care given to patients had been reduced because of the European working time regulations. Will the Minister say whether there are enough surgeons to cope? Should we not have rather more in the NHS work force?
Our overriding priority will always be to continue to ensure that patients experience high-quality, safe and effective care in the NHS, which of course we have provided by our surgeons. Hospitals such as Homerton in London have been working a 48-hour week for more than two years, and have produced evidence that the change has decreased hospital mortality. There is no evidence of harm being caused to patients. I think we all want our surgeons to be rested and to have had a night’s sleep, to be well equipped for the job ahead.
Hospital Services (London)
Clearly, it is for the local NHS to determine the best way to reconfigure services to meet the needs of local people, but changes to existing service provision should be initiated only where there is a clear and strong clinical case for doing so in the best interests of patients.
I welcome news from the Imperial College trust that the new hyper-acute stroke unit is to be based at Charing Cross hospital in my constituency. However, hidden in the small print of the consultation document there is already a proposal to move those new facilities to St. Mary’s in Paddington. Does the Minister share my concern about the continual transfer of services from Charing Cross hospital to others, including renal, obstetrics, gynaecology and now vascular surgery, and the detrimental impact that will have on my constituents and those across west London?
That is a somewhat churlish way of welcoming the fact that the hon. Gentleman is having a new facility located in his constituency at Charing Cross. I should have thought he would welcome that. As far as Charing Cross hospital is concerned, the aim is to retain a full range of health services for the people of Hammersmith and Fulham, including 24-hour full accident and emergency and maternity services. The trust will continue to provide neurology and stroke services at Charing Cross. That is the long-term programme, but we want to have a project at St. Mary’s as well, so I do not think the hon. Gentleman needs to get overly worried—there will continue to be stroke services at his hospital.
On Thursday, the Care Quality Commission will publish its NHS performance ratings for 2009. On the same day, the chief medical officer will give an update on swine flu, including further details about the vaccination programme. Following last night’s vote on the Health Bill, the Government are assessing how best to take that important policy forward and will make a further statement in due course.
The Secretary of State will be aware that the out-of-hours service is becoming increasingly dependent, particularly at night-time, on non-British doctors. As he will be aware, the UK is unique in the European Union in having a general practice provision. What precautions is he taking to ensure that non-British doctors coming from other countries are suitably qualified to perform the out-of-hours service, and are fully acquainted with the level of drugs that should be issued to patients in their care?
The hon. Lady raises a very important point. It is important that primary care trusts ensure that the providers of out-of-hours services are conducting a proper, full assessment of those who carry out those services, that they understand the way the NHS works and how drugs are allocated and prescribed in this country, and that they can speak adequate English.
I thank my hon. Friend for his very important question. First, autism is actually mentioned in the GP curriculum statements on mental health and on children and young people, so we already expect all GPs to have a general understanding of first principles, but I fully agree that more professional training is a key area for development. It is one of the features of our recent consultation on the first-ever national strategy for adults with autism, which focused on a range of areas, including health and training. That will have a direct impact on GPs and their training, and that national strategy will be backed in law.
We have to look at all ways of reducing the harm caused to children by addictive substances, including drugs. Our campaign under the tag FRANK is one of the ways. We are also increasing access to services across the country, but we are tailoring them to ensure that we meet the needs of all groups.
I understand that my right hon. Friend the present Home Secretary visited not long ago when he was in the post that I now hold. I am not sure whether my hon. Friend the Member for Chorley (Mr. Hoyle) got something new on the occasion of that visit, or whether he wants something new on the occasion of another visit, but as he knows, I am not far down the M6, so I will bear his kind invitation in mind.
I understand and fully appreciate the concern that carers organisations have about the fact that the Government have put £150 million over two years into PCT budgets to pay for respite care and other support for carers. The Government have played their part in responding to the needs that we recognise among carers. The question is how that money is spent by local PCTs. The hon. Gentleman knows that those primary care trusts make these decisions based on an assessment of their own areas. He knows, too, that the Department is producing a document to assist primary trusts and local authority commissioners to understand how the needs of carers may be effectively identified, and that we will seek to publicise that guidance as widely as possible. That, I think, will have an impact on the primary care trusts delivering the money that we provided to meet the needs of carers and those for whom they are caring.
I welcome my right hon. Friend’s question because it gives me the opportunity to congratulate the health service on the achievement of the national target for MRSA, which has reduced by 50 per cent. the number of MRSA bloodstream infections, in comparison with the number in 2003-04. The latest data for April show that MRSA bloodstream infections are down 74 per cent., but we can never be complacent in relation to these infections. We are tremendously pleased with the progress that has been made. While constantly keeping our eye on those figures, we are reinvesting money in the knowledge that we already acquired because knowing how to reduce infection rates is so important. I welcome all the improvements that have been made and look forward to discussing them in my right hon. Friend’s constituency.
I hear the hon. Gentleman, but of course the policy has to be affordable, and I think it fair to say that when a family has somebody in hospital, particularly if that person is in for a long time, we should make it easy for the family to visit as much as possible. To go further still and provide free parking for everybody would be a difficult policy to introduce, because it would provide an incentive for everybody in the locality to park for free at the hospital. We think it right to prioritise in-patients, but, if the hon. Gentleman is making a spending bid to go further, perhaps he should direct it to his Front-Bench team.
Monitor produced early this year a damning report on the governance of Heatherwood and Wexham Park Hospitals NHS Foundation Trust in my constituency. This week, at last, the chairman of the trust resigned. What can the Department do to ensure that when there is a failure of governance, the consequences of the past poor actions by the board and by executive officers are not taken out on staff, who may face redundancy now?
As my hon. Friend knows, in the Health Bill yesterday we made some amendments that will enable de-authorisation to occur in particular circumstances, with the consent of Monitor. We need to ensure that when trusts are not foundation trusts, we are able to act quickly to ensure that people who are responsible for ineffective administration of the health service are dealt with; and that the strategic health authority bears in mind that there might be financial implications that it would have to consider as part of the overall regional budget.
My right hon. Friend the Secretary of State has announced that the Care Quality Commission will be reporting in due course. He will not be surprised to hear that in a meeting with Charnwood carers group, I found that the quality of care in the community and in care homes is high on people’s agenda. In fact, many were in tears at their own experiences, despite the tick-box reality of the commission’s work. Will Ministers ensure that there is genuine personal care in such places? That is what people really want, for the dignity of their elderly relatives.
My hon. Friend is right to highlight issues of concern about the quality of care, whether it is care of people in their own home or in residential care homes. The Care Quality Commission plays an essential role in monitoring and inspecting care homes to ensure that standards are sufficient. We need to go further and ensure that all care, whether in a care home or in a person’s own home, is personal and tailored to meet individual needs. The Prime Minister’s announcement of free personal care for everybody who is looked after in their own home and has the highest level of critical need is a major step forward and—
Of course, the case of the 24-year-old woman, who did not live directly in my constituency but in Tyldesley, which is nearby and, as the hon. Gentleman knows, not so far from his constituency, was incredibly sad. I am led to understand that, in that case, the clinicians did not think it possible for the patient to travel. However, a decision was taken recently to expand ECMO provision in Leicester. The clinical advisory group advised that it was right to concentrate provision in that area, given the huge amount of training and intensive support that the unit needs. The decision has been taken, we recognise that such technology has a very important role to play and I hope that the hon. Gentleman welcomes that decision.
Some of the big pharmacy wholesalers, such as Phoenix Healthcare and Alliance Healthcare, are also retailers and so refuse to supply wholesale to small, new and independent pharmacy retailers. Will the Minister look into that apparent restraint of trade, please?
The answer is yes, I am doing that. There are concerns about the way in which wholesalers are now using, in effect, funnels to restrict the ability of some of the pharmacy retailers to get access to drugs, thereby driving up the price. I am concerned about this, and we need to watch it very carefully.
NHS dentistry provision has improved in the past few months in most areas of the country. PCTs are given the priority to secure access to such provision for all who seek it. All 10 SHAs have now set themselves the aim of achieving that by March 2011 at the very latest.
Many cancer patients complain of feeling isolated during their treatments, citing lack of appropriate information and support. The Department’s “Cancer Reform Strategy” promised the introduction of cancer patient experience surveys to help to monitor better-quality care that is given to cancer patients. Could the Minister explain why this measure still has not been introduced, two years after it was first promised, and what is he going to do about it?
I agree that it is very important to help people to live with cancer. In this financial year, we are providing some £1.6 million to Macmillan for precisely that purpose—to help people to get on with their lives and deal with the effects of living with cancer. On the specific issue that the hon. Gentleman raised, I will write to him.
Yesterday was world arthritis day. What is being done to ensure earlier diagnosis of rheumatoid arthritis, which is a very painful and disabling condition if it is not detected early, often leading to people being unable to work?
That is a very important point in relation to rheumatoid arthritis. As has been stated, this week is world arthritis week. We are having a discussion with Dame Carol Black on how we can enable the health work force, particularly GPs and others, to be aware of the early detection of this painful crippling, which obviously has many implications for the patient’s quality of life.
Points of Order
On a point of order, Mr. Speaker. I want to raise a chain of events that may be of some concern to the House. Today The Guardian reported that it had been prevented from reporting a written question tabled by a Member of Parliament. This morning I telephoned The Guardian to ask whether that MP was myself. The question was printed on the Order Paper yesterday and relates to the activities of Trafigura, an international oil trader at the centre of a controversy concerning toxic waste dumping on the Ivory Coast. The question also relates to the role of its solicitors, Carter-Ruck. I understand that yesterday Carter-Ruck, quite astonishingly, warned The Guardian of legal action if the newspaper reported my question. In view of the seriousness of this, Mr. Speaker, will you accept representations from me over this matter and consider whether Carter-Ruck’s behaviour constitutes potential contempt of Parliament?
In a moment.
Let me first say to the hon. Member for Newcastle-under-Lyme (Paul Farrelly) that I think that he has just made representations. I am grateful to him for his point of order and for courteously giving me advance notice of it. A written question has indeed been tabled, as he said, by the hon. Gentleman himself. It is not sub judice under the House’s rules. It has already been published on the notices of questions, and it is also available on the Order Paper and, indeed, on the parliamentary website. There is no question of our own proceedings being in any way inhibited. If the hon. Gentleman wants to pursue this as a matter of privilege, there is of course, as he will doubtless know, an established procedure for raising it with me in writing. Furthermore, I now understand that an injunction is no longer being sought. I hope that that reply is helpful both to the hon. Gentleman and to the House.
I also wish to speak about the matter raised by the hon. Member for Newcastle-under-Lyme (Paul Farrelly), because it seems to me that a fundamental principle of this House is now being threatened by the legal proceedings for an injunction and the consequent proceedings for contempt of court in respect of injuncted material. As you know, we have enjoyed in this House since 1688 the privilege of being able to speak freely. We have also developed the right of British citizens to know what we say in this House and have it reported freely. Is there an opportunity for a wider debate on what I think is a very substantial matter, either through a consideration of privilege or on the Floor of the Chamber?
There are usually further opportunities, as the hon. Gentleman, as an experienced parliamentarian, can testify. I hope that he will not mind if I point out that one suitable opportunity to raise the matter might be at business questions, in relation to which he himself enjoys a privileged position.
You, Mr. Speaker, are the defender of our rights and privileges in this place. This is a new class of injunction, a so-called super injunction, in which the press are not even allowed to report the injunction itself and the existence of the case. That is how Parliament’s reporting has been stopped by it. Could you undertake to the House to do two things? First, will you take legal advice to see whether the courts can be instructed not to grant injunctions that close down reporting of this place? Secondly, will you seek a meeting with the Secretary of State for Justice, who I know is sympathetic to this—it is not a party matter—to see whether the Government can act to achieve that same aim?
I am not sure that I can accommodate the right hon. Gentleman in relation to his first question. I am not sure that it would be right to interfere with a legal process in the way that I think his question would invite me to do. I would like to reflect further upon the second point that he has very reasonably put to me.
On the same point of order, Mr. Speaker. While you are reflecting on that point, may I ask you also to reflect on whether the increasing habit of solicitors of seeking injunctions in advance of publication, not only in this case but in others, might regularly prevent newspapers from reporting such questions? Given that the efforts of John Wilkes MP in the 18th century to provide for the reporting of parliamentary proceedings were such an important breakthrough, and indeed led to the disuse of sedition laws against this House, would it be possible for you to reflect on that and see whether something urgently needs to be done to control the habit of law firms of seeking to prevent the reporting of this House?
It has always been my pleasure to reflect on any observations put to me by the hon. Gentleman, but I fear that he is seeking to inveigle me into a wider debate than I should enter this afternoon. I think it is fair simply to reiterate the point that the proceedings of the House have been, and will be, in no way inhibited. For today, I would like to leave it at that.
On a point of order on an entirely separate subject, Mr. Speaker. In a spirit of optimism, when the House rose in July, I put down an extremely short question for named day answer to the Secretary of State for Defence, simply asking
“what discussions he has held with his US counterpart on vulnerability to electromagnetic pulse attacks; and if he will make a statement.”
I am tempted to say that that is hardly rocket science, but maybe it is. Nevertheless, I tabled that question at the end of July, and yesterday I had my named day answer: “I will answer shortly.” Surely to put down a named day question in July and get a holding answer in October is utterly unacceptable, even with the Ministry of Defence?
I am grateful to the hon. Gentleman for his point of order. As he will know, the content of answers is of course not a matter for me, and answers must be handled by the relevant Minister, but he makes his point with his customary force and alacrity. Who could disagree that the delay that he has experienced is frankly unacceptable? I hope that Members on the Treasury Bench will have heard the point. I did exhort Ministers to respond in a timely way to questions, and I do believe that I emphasised in exchanges just before the recess that simply to respond with a holding answer several weeks later, along the lines of “I will respond shortly,” does not meet the spirit of what I have said and is frankly resented by Members in all parts of the House.
On a different and somewhat more restricted point of order, Mr. Speaker. You rightly take to task Ministers who let material go into the public domain in advance of a report to Parliament. Would you consider the position of statutory bodies that have an obligation to report to Parliament? I ask that question because the Committee on Climate Change, published an excellent report yesterday in Parliament. The full report including full documentation was released at one minute past midnight yesterday and was presented to the House later that day. Should other bodies that report to Parliament also ensure that they do not release material of any substance until Parliament has had a chance to receive the report in question?
Parliamentary Elections (Recall and Primaries)
Motion for leave to introduce a Bill (Standing Order No. 23)
I beg to move,
That leave be given to bring in a Bill to make provision for the recall of Members of the House of Commons in specified circumstances; to provide for the holding of primary elections in such circumstances; and for connected purposes.
It is not easy in the current climate to recall the emotions that we felt as new MPs or that mingled sense of pride and awesome responsibility when we heard the returning officer read out our names. Most hon. Members felt in their bones that entering the House was one of the greatest and most exalted moments in their lives, yet today we find ourselves scorned.
The standing of the House has never been lower. In a reversal of 300 years of democratic development, the very fact of being elected to public office is sometimes, it seems, regarded as a disqualification. We all know that this issue is not just about allowances. It is true that a thorough overhaul of the system is essential—I think everyone accepts that now—but what we have come across in our constituencies is more than a sense of anger about specific and identified expense claims. Rather, it is a more generalised rage against politicians as a class: a sense that MPs have become remote and self-serving, and that we have become spokesmen for our parties in our constituencies instead of the other way around.
We have all heard, on doorstep after doorstep, “You’re all the same. It doesn’t make any difference how I vote, nothing ever changes.” My Bill aims to address those concerns. I want to restore dignity to this House and independence to its Members. I want to shift power from the Executive to the legislature, from parties to Back Benchers, and from Government to people.
Our constituents have a point when they complain that it does not matter how they vote. At four of the last five general elections, fewer than one in 10 parliamentary constituencies changed hands. The fifth of those was, of course, the Labour landslide of 1997, but even then, more than 70 per cent. of seats were held by the parties that already controlled them. In other words, most of us represent pocket boroughs. As long as we retain the right to stand under the colours of our parties, we have tenure. Our incentives are thus twisted. Instead of answering outwards to their voters, MPs in safe seats are encouraged by the system to answer upwards to their Whips.
My Bill would abolish the concept of a safe seat, eliminate pocket boroughs and open candidate selection to the wider public through open primaries. It would allow local people to have a direct say over who gets to be their MP in the first place, and give local people and local parties the right to petition their returning officer to organise open primary ballots. It is right that that should remain a matter of choice—this is not about legislating for political parties in a free society.
Two months ago in Totnes, we saw how enthusiastic voters are about having a say in party nominations. More than 26 per cent. of registered voters—more than 16,000 people—took part. That gives the winner of that primary a head start in the general election and, for that reason, I hope that it will be adopted by other parties. Indeed, Members on both sides of the House have since indicated that they, too, favour the democratisation of the selection process.
One serious objection levelled against open primaries since then is the cost. The Totnes primary cost the Conservative Party somewhere in the region of £40,000, mainly in postage, yet my Bill is specifically designed to deal with that problem, and at zero additional cost to the taxpayer. Under my Bill, local people—supported by one or more parties—could petition their returning officer to organise a primary contest at the same time as a pre-existing local or European ballot. The primary election would be piggy-backed on to an election already due to take place. The returning officer would have to include an extra ballot paper with the names of those on the shortlist. Each party that chose to take part would have to pay the marginal additional cost for having its ballot paper included, but it would be a cost of hundreds not thousands of pounds.
At the same time, my Bill would provide for a recall mechanism—that is, a way to trigger a by-election where a Member of this House was guilty of serious wrongdoing. Plainly such a measure would need safeguards. We would need to ensure that it could not be triggered frivolously or on partisan grounds. We would need to guarantee that charges could not be levelled against MPs simply because they had voted with their conscience. A recall vote should be entered into—as the Book of Common Prayer says of matrimony—“reverently, discreetly, advisedly, soberly”. Triggering a primary would require the backing of a significant number of local people, and it would also require confirmation of serious wrongdoing by the Committee on Standards and Privileges.
If we trust the people, we must trust their judgment in being able to spot vexatious attempts at recall. Let us remember what happened in Winchester in 1997. It was the closest we have ever come to a recall ballot in this country. The seat having been lost by two votes, the result was challenged by the loser in the courts. In what was in effect a judicially sanctioned recall election, a majority of two was turned into a majority of more than 10,000. Anyone looking to trigger vexatious recall ballots against a good MP would quickly learn why recall ballots are rare, even in California. It is the knowledge that they are possible that makes recall ballots so effective.
I was delighted to hear the Prime Minister say in Brighton that he backed the idea of recall elections. I gather that the Secretary of State for Justice told “The World at One” today that he would like to see recall ballots included in a future party manifesto. Here is his opportunity to make good on those words and back this Bill.
Our party invented and developed the idea that laws ought to be passed by elected representatives. Parliamentary democracy is Britain’s greatest export, our supreme contribution to the happiness of mankind. It shames me—as I know it does you, Mr. Speaker, and other honourable Members—that in this country, the home of the mother of Parliaments, we see the democratic process held in contempt, its practitioners despised. For the truth is that no one has yet come up with a better alternative. If we do not have parliamentary democracy, we are left with anarchy or fascism.
So I urge hon. Members to support my Bill today, as a first step towards restoring the authority, legitimacy and standing of this House Let today mark the nadir of the expenses crisis, the moment at which things began to improve. We can still turn that catastrophe into a victory if we use it to reform and strengthen the mechanisms of democratic accountability. My Bill would restore purpose to the ballot box, dignity to the legislature and honour to the political process, and I commend it to the House.
Question put and agreed to.
That Mr. Douglas Carswell, Mr. Graham Allen, Mr. David Drew, Norman Lamb, Jo Swinson and Norman Baker present the Bill.
Mr. Douglas Carswell accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 16 October and to be printed (Bill 148).
Local Democracy, Economic Development and Construction Bill [Lords]
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.
I beg to move, That the clause be read a Second 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.
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
‘(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.
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”,
“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.