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?

Further to that point of order—

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?

I am grateful to the hon. Gentleman for his point of order. I will look into it and come back to him on the matter.

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.

Ordered,

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).

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)—

Very good!

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.

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.

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

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

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

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

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

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

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

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

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

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

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

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

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

Question put and agreed to.

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

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

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

New Clause 19

Mutual insurance

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

(a) become a member of a body corporate—

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

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

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

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

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

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

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

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

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

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

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

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

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

(b) to agree to make any such payments;

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

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

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

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

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

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

Brought up, and read the First time.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“general duty to devolve”,

and criticised

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.