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Local Authorities (Overview and Scrutiny) Bill

Volume 505: debated on Friday 5 February 2010

Second Reading

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

My Bill will strengthen the scrutiny powers already available to local authorities, and extend the range of public service providers that can be subject to the scrutiny process. It is designed to improve accountability in order to improve outcomes and thereby drive up the standards of local public services.

I express my thanks to all those who have helped with the drafting and preparation of the Bill. I thank those local councillors and officials in both central and local government who have given me the benefit of their experience of the way in which scrutiny is working now. I thank all those people who have written to me about the Bill with very constructive suggestions, demonstrating the increasing interest of local authorities in the scrutiny process and the seriousness with which they take it. Hundreds of people from across the country have written letters or sent e-mails urging me to adopt their preferred Bill, and I hope that they will understand why it has not been possible for me to reply to them individually. I hope that they appreciate the reasons for my choice of Bill.

I recognise the work of the Local Government Association in providing extremely valuable guidance on scrutiny processes and in submitting a detailed response to the Bill. I express my gratitude for the assistance provided by the Centre for Public Scrutiny, both in terms of the professional expertise and advice generously made available to me and the wealth of excellent material available on the centre’s website. Finally, I commend the staff of the Library for their excellent research paper on the Bill.

Before coming to the Bill and the increase in powers that it proposes, I want to say a few words more generally about local democracy and the power and role of scrutiny. For much of the second half of the last century, local councils saw their powers to influence the growth, shape and future development of the communities that they serve gradually weakened. Many of the services that councils had traditionally provided directly were centralised or privatised. Councils became increasingly dependent on central Government for their financial base. They were subject to intense political and financial pressures, locally and nationally, as the demand for quality public services grew, but taxpayers’ willingness to pay for them declined. As a result, the provision of services was gradually fragmented; the quality of many services declined; the lines of accountability and responsibility became confused; and the perception grew that the provider of the service was frequently more important than the consumer.

Not surprisingly, the electorate gradually also became confused as to who was responsible, and with that growing confusion about the lines of accountability came increasing dissatisfaction with the quality of service. Voters were unsure as to who was to blame when things went wrong, and they lost confidence in the capacity of the council to put things right. Of course, as we all recognise, that was gradually reflected in declining levels of interest and turnout at local elections.

The last 10 years have given all local authorities a much more secure financial base, a much clearer view of their role and the capacity to invest heavily to improve local services and infrastructure. Yet the levels of public engagement with local democracy and public support for local authorities are still frequently far too low. That is in spite of gradual improvements in performance, as evidenced by the inspection reports, and the gradual increase in the number of four-star councils that are now performing at a very high level.

There will always be differences between the main parties about the structure and financing of local government. However, the good news is that there is now a stronger, cross-party consensus about the need for greater accountability, greater transparency and more decentralisation of decision making than has existed for many years. That was evident in the debate on the local government finance settlement earlier this week. All the major parties now agree that if local democracy is to be revived, the direction of travel has to be towards further decentralisation, increasing localism and increasing personalisation of public services. There is also growing recognition of the importance of local public service providers working in partnership on common objectives. Isolation and fragmentation of the delivery of services is ineffective and highly expensive, which is where the scrutiny function of local authorities becomes of central importance.

Today, people are used to accessing high-quality services from the private sector 24 hours a day, seven days a week. Expectations of high-quality services tailored to individual need, delivered at a time convenient for the service user, are rising continually. People also want more from the public sector—from central and local government. There is growing demand for more information on local services. I must refer to an enormously important development: the launch of the data.gov.uk website, which enables everyone in Britain to access a potentially infinite amount of information on all local public services. It is the beginning of a remarkable transformation in the availability of information to the public. There is also demand for greater consultation on how local services are provided, and for greater public involvement in the shape of those services. There are also demands for action and proper complaints systems when the public feel that things do not work properly.

As almost all public services are delivered locally, the efficiency and effectiveness of local government is crucial, and in recent years much has already been done to bring that about. The past decade has seen many improvements. We now have greater financial stability, with three-year financial settlements enabling local authorities to plan ahead in a more stable manner. There is a reduction in the number of central targets and inspection regimes, and associated greater flexibility locally. There is greater financial flexibility through a more prudential borrowing scheme, too.

One of my concerns about my hon. Friend’s Bill is that there is no provision that addresses the question, “quis custodiet ipsos custodes?” or “who will guard the guardians?” To take up his point about flexibility, my local authority has decided to axe the sheltered housing warden service. As a result of all the local opposition and the High Court decision, it is now revisiting the issue. There seems to be no way to hold the local authority to account. Is there any way, in his Bill, of holding the local authority to account in those circumstances?

My hon. Friend raises a very important point. In the Bill there is no such way, but through the ballot box there is. Another answer to his question is that increasing emphasis is being given to the power of the public to influence and pressurise local authorities, through the community call for action, the councils’ call for action, and the new emphasis on petitions. All those were introduced in recent local government legislation. That, in addition to the normal power through the ballot box, gives the public more power to influence local authorities’ decisions.

I want to draw attention to an important change in recent years: local authorities now have a general power of well-being, after calling for it for many years. They are no longer shackled by central Government restrictions on how they interpret the long-term needs of their areas. Of course, the role of councillors and councils, with their unique democratic mandate, is absolutely critical to making sure that local services respond to the needs of local communities, although I fully accept that, as my hon. Friend has mentioned, decisions by local authorities do not always reflect the needs of their communities.

Councils must be given the powers that they need to act decisively and effectively on behalf of their citizens, and the powers and capacity to scrutinise, influence and shape all public services, including those delivered by other providers, which may be in the private sector or the third sector, or that may be agents of central Government. That is a new, much stronger role for local government, placing it firmly at the centre of decision making in the community. It is central to the long-term process of rebuilding public confidence in the democratic process overall.

I want to say a word about the role of scrutiny and how it has developed in recent years. Although the separation of local authorities’ powers into executive and scrutiny functions has been in place for barely 10 years, enormous progress has been made in many local authorities, where the power of scrutiny is clearly understood. In some parts of the country, oversight and scrutiny panels have started to shape the local delivery of health and crime prevention policies. In the more successful authorities, the panels have already led to an increase in public engagement and a greater recognition by service providers of the need to respond to public concerns.

It would be naive to assume that every local authority has fully grasped the potential of the new scrutiny function, but I think that it is generally recognised that understanding is increasing, and the number of people calling for a return to the old system is dramatically reducing. Now is the time to move forward and ensure that scrutiny is an outward-looking process that considers the wider impact of how effectively public money is spent across all public services in a local area.

The growth of local strategic partnerships and the establishment of comprehensive area assessments mean that councils must now take responsibility for the effective use of public funds across their whole area, and they should be able to hold all public service providers to account on behalf of the communities that they represent. At a time of rising public aspirations and increased aversion to higher levels of taxation, councils and other public service providers need to find ways to deliver ever more personalised and flexible public services with the same level of resource. Effective scrutiny processes can help them to find ways of doing more with less.

My hon. Friend has a very good Bill, and there are some important points raised by it. I have a question to ask him about designation, which will be done by the Secretary of State. I assume that it is not intended that Parliament, or Members of Parliament, should be among those who can be designated, because that could raise important issues relating to privilege.

My hon. Friend raises a really important point. From my point of view, the groups that he mentions will not be subject to the regulations that will be published. It is a matter for the Government which organisations and individuals they include, but in all the discussions about the Bill to which I have been party, there was no suggestion that Parliament should be designated in the regulations.

On that point, I am never particularly in favour of giving Ministers all sorts of discretionary powers; one never knows who the Minister will be at any given time. I am not quite sure why the hon. Gentleman has taken the approach of handing over the designation of the bodies that will be scrutinised to Ministers, because the definition in the Bill could cover a very wide range of organisations that are in receipt of some sort of public funding, including charities and others; all sorts of such organisations deliver services in my constituency in that way. There might be concern about how widely the definition is drawn in practice.

That is an important point, and that concern has been raised by a number of organisations. However, given that the measure is a radical step forward in giving local authorities powers to scrutinise a wide range of organisations, there probably does need to be more time to build up consensus about the range of organisations included. The hon. Gentleman will recall that the Local Government and Public Involvement in Health Act 2007 lists, I think, 20 public agencies that can now be scrutinised as part of the local area agreement process. That list could well be specified in regulations under my Bill, but there are other agencies and providers that could be specified, too, not least the utility companies and public transport providers. Further debate is probably needed before the regulations are issued, rather than specifying in the Bill which bodies should be included.

Since the development of scrutiny in the Local Government Act 2000, enormous progress has been made. Initially, councils had to set up at least one scrutiny committee to examine decision making across the council, acting as a check and balance on the powerful council executives. Those committees had Select Committee-style powers, and were able to call in officers and members to give evidence. They could also require information to be given, but only in relation to council executive decisions.

Scrutiny committees were also provided with wide ranging powers to examine any issue of importance in a council’s area and make recommendations to the council, but in such reviews the scrutiny committees did not enjoy the same Select Committee-style powers as they did when looking at executive decisions. The co-operation of external bodies in these circumstances was entirely voluntary, and frequently it was difficult to find that co-operation.

The Health and Social Care Act 2001 provided upper-tier local authorities with the power to review the planning, provision and operation of health services in the area and to make reports and recommendations to local NHS bodies. Scrutiny committees may require NHS bodies to provide information, attend scrutiny meetings, answer questions and respond to recommendations made by the scrutiny committee. Under the 2001 Act, NHS bodies must also consult the relevant local authority scrutiny committee about proposals for substantial service changes. If the committee is unhappy with the proposed changes, the issue can be referred up to the independent regulator.

A further step forward was made when the Police and Justice Act 2006 required every local authority to have a crime and disorder committee with powers to scrutinise decisions made or actions taken by the crime and disorder reduction partnership. As with the health scrutiny regime, crime and disorder scrutiny committees can require information, require officers to attend meetings to answer questions, and require a response to the recommendations that they make.

The Local Government and Public Involvement in Health Act 2007 extended the Select Committee-style powers. The new arrangements have made scrutiny more outward-looking, and it can focus on the activities of public sector partners such as Jobcentre Plus, joint waste authorities and the Highways Agency in respect of agreed local priorities.

Would my hon. Friend’s Bill extend to railway contractors? I have in mind the appalling record of First Capital Connect on the Thameslink line, which has affected so many of my constituents since the dispute, and its failure to restore proper services. Would my local authority be able to call the company to account through the scrutiny process?

Again, my hon. Friend makes an important point. As he knows, that would be the subject of future regulations, but railway contractors as well as the train operating companies, other public transport services and other public transport maintenance companies that are wholly or partly financed by public funds could potentially be listed in the regulations. My hon. Friend’s intervention reinforces the point that a further period of debate and discussion is probably needed about the individual organisations and providers that should be included in the future regulations.

The Local Democracy, Economic Development and Construction Act 2009 required local authorities for the first time to provide a dedicated scrutiny officer. That requirement should be in force by 1 April this year. Only this week, the Flood and Water Management Bill increased the powers of local authorities to scrutinise the various risk management authorities on the exercise of their flood and coastal erosion functions.

The Bill takes forward proposals in last year’s local government Green Paper, “Strengthening local democracy,” on which there was a substantial public consultation in the last few months of 2009. It extends councils’ scrutiny powers to the next logical stage. It will enable scrutiny powers to cover a wide range of external bodies from the public and private sector. It will be a matter for future debate and for the Government as to which bodies are designated in the regulations. It will designate bodies that carry out activities which impact heavily on the day-to-day lives of local people.

The Bill enables more effective scrutiny of local public services. It does so by establishing a framework for broadening their scrutiny powers and extending them to cover a wider range of organisations. That means that in future, when undertaking their scrutiny function, councils will be less reliant on the voluntary co-operation of external organisations. Under the new regime the external bodies subject to scrutiny may be required by a local authority’s overview and scrutiny committee to provide information to the committee and to attend scrutiny meetings to answer questions. Both measures will help council scrutiny committees to be fully and properly informed. The external bodies will be required to respond to the scrutiny committee’s reports and to have regard to the recommendations.

The framework established by my Bill provides that bodies subject to the regime will be specified in future regulations, so decisions will be a matter for the Government, as has been mentioned, but the Bill enables the maximum reach and scope. I hope that the Government will be ambitious and imaginative in deciding which organisations will be specified in the regulations.

It always important to consider the potential effect of the enhanced regime on the bodies to be brought within it, and it will be vital to strike the right balance between enabling constructive and challenging scrutiny, while avoiding the process becoming overly time consuming or burdensome to the new bodies brought into the regime. Measures will be needed to ensure that the burdens are minimised and that operational independence is not compromised. My Bill recognises this. There will be new provisions to minimise burdens, duplication and effort, and to maximise the efficiency, effectiveness and benefits of constructive scrutiny.

In addition to the framework for the enhanced regime, the Bill recognises the increased importance of scrutiny as a key council function. It will require the council’s scrutiny officers to be fully and sufficiently resourced. We know that councils are now required to have a designated scrutiny officer. Across the country the number of councils with a designated team is quite small. In most councils the scrutiny function tends to be shared between a number of officers. The average number of officers engaged in scrutiny is currently about three, though obviously there is a wide range, reflecting the size of local authorities. My Bill’s provision to ensure that the scrutiny officer is sufficiently resourced will make a significant improvement and lead to greater quality and thoroughness in the scrutiny process.

The impact assessment published alongside the Bill indicates that the total cost of compliance on the new providers brought within the regime is likely to be less than £300,000 per annum. The cost of ensuring that scrutiny officers are properly resourced to do the job will be less than £4.5 million per annum and will be fully funded by the Department.

I shall refer briefly to some of the scrutiny work that my local authority, Bury metropolitan district council, has done in recent years. It is an authority without a dedicated team of officers. Nevertheless, it has adjusted to the new regime and started to get to grips with serious issues affecting the borough. It has built strong relationships with its partner providers, and it has a good track record on work on, for example, domestic violence, hard to reach young people, town centre safety, the future of the music service, safeguarding children, alcohol misuse and residential care. As the lead authority for the joint committee for the Pennine Acute Hospitals NHS Trust, my authority has contributed to a much larger review of dementia services, stroke services and health care-acquired infections.

I draw the attention of the House to the annual awards made by the Centre for Public Scrutiny—the good scrutiny awards. There is an impressive list of authorities that have won awards under different headings—for the best team, for financial scrutiny, for community engagement, and for scrutiny of health policy. This is the best example, which is available on the website of the Centre for Public Scrutiny, showing the range, depth and growing innovation in scrutiny processes.

There are probably four characteristics of good scrutiny, and my Bill will enhance all four. It is important that the scrutiny role adopts the approach of a critical friend. Scrutiny should not be hostile, aggressive or designed to subvert or destroy; it should, as I have said, act as a critical friend. Scrutiny must respond to and reflect genuine and deep public concerns; it cannot be arbitrary. It must be owned by people with an independent mind who are not subject to predetermined thinking on the issue that they investigate and scrutinise, and the object of scrutiny must be to drive improvement in public services.

In conclusion, I again thank all those who have contributed to the development and preparation of the Bill. It is based on principles that are now supported in all parts of the House, and it makes provision for new powers that build on those that have been agreed to in previous legislation. Those new powers are designed to improve the quality of public services through greater accountability in order to help renew public confidence in the local democratic process. I commend the Bill to the House.

The Opposition very much appreciate the Bill’s intention, which is to give councils much greater powers to scrutinise local public services. We all recognise that the delivery of those local public services has changed over time, and a variety of providers not just in the private sector but increasingly in the third sector now provide essential public services for local communities throughout the country. A local authority’s scrutiny functions are therefore a vital tool in promoting accountability and ensuring transparency in local decision making, and that allows local communities to become involved in the decisions that affect their daily lives. Given the importance of the powers that the Bill confers, and the Government’s previous commitments to introduce them, we are slightly concerned that the actual legislation before us is a private Member’s Bill. It appears to all intents and purposes to be a Government Bill.

Having said that, I turn to the broad sweep of the Bill, the intention behind which we support. We have some concerns about the wording of certain clauses, and before the Bill goes into Committee we would like to flag up those concerns so that Ministers and the hon. Member for Bury, North (Mr. Chaytor) take them on board and we have a more constructive debate in Committee.

Overview and scrutiny committees perform an important function, reviewing policy and performance and holding local public service providers to account. Currently, those committees have the power to require information from a range of organisations including councils, NHS bodies, law and order bodies and partner authorities that are involved in local area agreements. The committees can also summon representatives of most of those bodies to appear before them, and they can require such officials to respond to reports and recommendations that have been issued to them. However, that does not happen with all bodies—for example, partners that are involved in delivering local area agreement objectives. Indeed, many other local bodies are not required to submit to the same level of scrutiny by local authorities, so their voluntary participation in scrutiny is not guaranteed.

There is a growing recognition that overview and scrutiny committees need to have powers over a wider range of external organisations as they become more involved in local public services, and that councils should provide sufficient resources and support to those committees so that they can undertake more scrutiny.

The Bill seeks to address a number of issues, and we welcome its intention to increase local scrutiny powers. However, I want to flag up a number of concerns about how the Bill, as currently worded, will work in practice, so that in Committee we can have a proper debate about the range of challenges that the Bill poses. I shall quickly go through the Bill, clause by clause.

One of the most important measures in the Bill is the power to scrutinise a “designated person or authority”, and there are questions about how that designation will be defined. It would therefore be helpful if the Minister could either set out his views on the organisations that could come under the Bill’s designation or state whether he intends to publish a draft list of such bodies. That would be helpful, because many Members would then have a better idea of the Bill’s sweep.

The hon. Member for Hendon (Mr. Dismore) rightly raised not concern but his interest in understanding how broad the designation will be, because clause 1 is vague. Subsection (2) defines a matter “‘of local concern’”, but it does so relatively, stating:

“A matter is ‘of local concern’ in relation to a local authority only if it affects the authority’s area or the inhabitants of that area to a greater degree than it affects the areas of other local authorities or the inhabitants of other such areas.”

I am not clear about how that definition will work in practice, or about whether we actually want that provision.

First Capital Connect—my example—has seriously affected not only my constituents but those of all MPs all the way along the line, from Bedford down to the south coast. On that basis, the test to which the hon. Lady refers might not be met. However, that example would clearly meet the test of a matter of great local concern.

The hon. Gentleman raises an important practical example, demonstrating why we want the Bill to be improved and more tightly worded. The other obvious example is the post office closure programme, which was incredibly controversial in many local communities. It affected all local communities, including my own, but, based on clause 1 as drafted, it would not fall within the scope of an overview and scrutiny committee. The committee would not be able to question Post Office managers about the way its service proposals might affect local communities and businesses, and we have some concerns about that.

Clause 1 also includes the power to designate

“(a) generally, or

(b) in respect of services”.

Does the Minister feel that there is a danger of the designation becoming broader than necessary? We want to ensure that the Bill is effective, but that it does not become so broad that it ends up being cumbersome for all concerned. More clarity from the Minister would help our understanding of the clause’s breadth. Specifically, will regional development agencies be included? The hon. Member for Hendon is clearly concerned about transport providers, and many London MPs regard them as bodies providing public services that their local councillors may well want to scrutinise.

Once we have agreed which public service providers come under the designation, the next question is, what activities will be scrutinised? The Bill’s definition of a matter “of local concern” is vague, so will the issues that it covers be consistent with those that were outlined in the Department’s 2009 Green Paper, “Strengthening Local Democracy”? That document mentioned police strategies, fire and rescue authority plans, council delivery of education and wider issues that were not related to local area agreement targets. Given that the Bill follows on from that Green Paper, will it be consistent, to all intents and purposes, with that document’s list of issues?

The Department’s press notice on 1 February stated that the scrutiny arrangements “could” mean that service providers were held to account on issues “like” energy companies leaving repairs unfinished, station safety and facilities and the availability of rural bus services. Will the remit extend to local matters that have not occurred but might do, such as a potential post office closure, or a potential change? People are often concerned about such change before it occurs. Many local authorities will want to scrutinise decisions before they are taken, but the Bill restricts them to scrutinising decisions that have already been taken.

I shall move on, as I do not want to detain the House for too long. The Bill also covers the information that scrutiny committees can require from the relevant bodies and services. An appropriate representative can be required to appear before the committee to answer questions and the organisation can be required to reply to reports or recommendations. We see the merit in that.

Obviously, granting councils a full range of scrutiny powers over local bodies is a step in the right direction, but we need to be careful that the regulations brought in by the Secretary of State do not impose an excessive burden on organisations affected by the Bill. It would help if the Minister told us a little more about the breadth and formulation of those regulations. What criteria might the Secretary of State and the Minister use to determine any limits on these powers? Clause 3(1) talks about committees having information that they “reasonably” require; in Committee, it will be important to talk in more depth about what, in practice, that reasonableness test might be.

The impact assessment accompanying the Bill estimates that the private and public sectors could face an extra £285,000 and £35,000 respectively in compliance costs. Ministers must have made some sort of detailed assessment to come up with such figures, and I should like to know about that assessment in a bit more detail.

I deal now with the issue of having executive council members on the committee. I want to flag up a concern about that, as it seems to go against what Ministers were saying back in 2000, when they brought forward the more dramatic changes to the management of councils. The Bill starts to go back on the distinction between councillors involved in delivering policy and those involved in scrutiny. It would be helpful to hear a bit more about why the hon. Member for Bury, North and the Minister—the Government support the Bill—feel that that is a good move and is worth doing. Will it not undermine the overall structure of accountability, which has proved useful to many local councils? The Centre for Policy Studies was previously concerned that the involvement of executive councils in the scrutiny process would blur the lines between the two functions.

I want to mention scrutiny within councils and the cost to local authorities. Clause 9 requires that officers should be provided with

“such staff, accommodation and other resources”

as are determined by the officer to be sufficient to discharge their functions. The Local Government Association has said that it wants to be left with the ability to make local decisions about how to ensure that scrutiny is well supported within its local authorities. The explanatory notes said that the new powers could cost local authorities £4.5 million, and I am sure that the Minister will confirm that that will come out of their existing budgets.

Given the constraints on local authority budgets at the moment, it is particularly important that local authorities be able to make their own decisions about how they want to ensure that councillors involved in scrutiny can scrutinise well. For many councils, that may well mean more of a focus on developing the councillors’ skill sets rather than having support for them. To my mind, that would be no bad thing at all, although it would not necessarily mean the approach to scrutiny and its resourcing that is set out in the Bill, which is too prescriptive in many respects.

The 2008 Centre for Policy Studies survey of local government scrutiny found that there was a slight negative trend in the size of allocated discretionary budgets for scrutiny. Clearly, there is a change of approach among local authorities in respect of resourcing scrutiny. It is important that we work with them to find out how they feel it can best be delivered.

My last point is about joint committees, and I want to issue a challenge to the Minister. The Bill talks about joint overview and scrutiny committees. As I am sure the Minister is aware, those were enacted, as it were, in January this year, but the regulations to enable them to come into being with the powers given by last year’s Bill have not gone through Parliament. Given that, technically, the committees do not yet exist, it seems a bit presumptuous that this Bill should extend their powers further. Will the Minister enlighten the House on when those regulations will pass through Parliament, so that joint overview and scrutiny committees can be properly established?

Broadly, we believe that the Bill could move the quality of scrutiny at the local level in the right direction, so we shall not stand in its way. We have some concerns, which I have begun to outline, about the wording and breadth of clauses and how effective they may prove. However, we look forward to working with the Government and the hon. Member for Bury, North in Committee. I look forward to hearing the Minister’s response.

At the outset, I should declare a non-remunerated interest: I am the chairman of the Centre for Public Scrutiny. I am grateful to my hon. Friend the Member for Bury, North (Mr. Chaytor) for his kind remarks about the centre’s work and the support that it has given him in preparing the Bill.

I very much welcome the Bill and congratulate my hon. Friend on his choice of subject. All of us in the House are aware of the importance of scrutiny in achieving a range of different objectives. First, it advances good government, on the simple principle that an executive is always kept more on its toes if its activities are properly scrutinised, whether in local government, here or anywhere else. Secondly, scrutiny is a way of identifying opportunities for doing things better—finding innovative ways of tackling problems or saving money by achieving objectives in a more cost-effective way. That has been demonstrated across a range of different scrutiny activities at both central and local government levels. Thirdly, scrutiny can help to identify areas where we could ensure better co-ordination between different agencies, all of which have a role in the delivery of public services. That, of course, is very much the focus of the Bill.

As we all know, we have a long tradition of scrutiny here, but the tradition in local government is much shorter. My hon. Friend has highlighted the progress since the Local Government Act 2000 in the extension of scrutiny and scrutiny powers in local government, including the extension to cover other functions such as policing and health, which has been enacted by subsequent legislation. The Bill is an important further step along the route of extending and embedding the principle of good scrutiny at a local level. I very much welcome it.

The extension of the powers to require evidence and to require people in certain circumstances to appear in front of a scrutiny committee is important. There is anecdotal evidence that in some cases local authorities seeking to scrutinise have found it difficult to secure the attendance of partners or other local authorities with a significant role in the delivery of public services; they have been reluctant to submit themselves to local authority scrutiny. In my view, it is absolutely right that the additional powers should be provided.

At the same time, it is right that the way the legislation is drafted should not seek to impose too prescriptive an approach. One of the strengths of the way scrutiny has developed in local government has been the capacity of individual authorities to be innovative and try approaches slightly different from those of their neighbours. We should continue to encourage that; we should allow the greatest possible flexibility and freedom for authorities to develop not only their own scrutiny functions, but joint scrutiny activities with other authorities and the scrutiny of their partners in innovative ways.

We need to think much more about how to disseminate good practice. My hon. Friend was kind enough to refer to the Centre for Public Scrutiny’s annual scrutiny awards and the focus that they are intended to give to spreading good practice and highlighting examples of innovative work by local authorities, on the basis that others should learn from that.

I support all that, but there is a curious gap in the process as far as we in the House are concerned. For all the talk of better scrutiny, I can see no evidence whatever of any Select Committees entering into joint scrutiny functions with local scrutiny committees or seeing the scope for using the evidence that emerges from local scrutiny to support or underpin their work. It is surprising that we operate in two separate silos—central and local government. We are not exploring the scope for better joint working to the extent that we should. Although Select Committees are not covered by the Bill, I hope that in our consideration of the principle of bringing together different public authorities responsible for delivering services and of the impact they have on a particular area, which is very much part of the Bill, we will also consider how we can bring together the scrutiny functions of our Select Committees and those of local authority scrutiny committees and learn from each other’s good practice.

Both my hon. Friend and the hon. Member for Putney (Justine Greening) mentioned resources for scrutiny, and I endorse the view that the scrutiny function has to be properly resourced. That is clearly a difficult ask at a time when public funding is under considerable pressure, but it is a false economy to believe that we can cut back on that function, which is a very small part of total local authority budgets, and not have adverse consequences. The potential loss from less efficient scrutiny will be felt over time through less efficient services, as old and perhaps outmoded practices are allowed to continue longer than they should because they are not challenged, as the scope for making savings by doing things better is not identified and as the scope for different public authorities to work better together to make savings in public expenditure is not picked up. It would be a wholly false economy to cut back on scrutiny expenditure at the present time as a way of saving money, because it represents a very small proportion of total local government spending and it is important that the scrutiny function is handled well.

The context of Total Place, an important current initiative, makes that all the more important. Through it we are beginning to understand the scale of total public investment in individual areas. If there is good scrutiny in parallel with that, it will surely help to ensure that we indentify areas in which resources could be better used and those in which there is scope for savings. That seems to me a fertile area for good scrutiny in future.

I welcome the Bill, and there are only two elements of it that I have reservations about, which I shall highlight before I conclude. The first is the exclusion of district councils in two-tier areas. The Local Government Association has raised this issue. I can understand the argument about the need to avoid unnecessary duplication, but excluding district councils entirely is using a sledgehammer to crack a nut. Surely it would be better to have a protocol arrangement to ensure that there was no duplication. If a district council in a two-tier area intended to set up scrutiny of a wider range of other authorities, it should first be required to consult the county council and other district councils. There should also be an obligation to set up a joint scrutiny committee or to work in collaboration to avoid the problem of duplication. That seems to me a much better approach than simply debarring district councils from being involved in the scrutiny in question in two-tier areas.

Secondly, clause 8(3) raises a difficult constitutional issue. Proposed new section 21(9A)(a) of the Local Government Act 2000 would allow executive members to be members of scrutiny committees, provided that they were not scrutinising the executive itself. The hon. Member for Putney raised that concern. I believe that when she looks at the Hansard reference, she will see that she referred to the Centre for Policy Studies. I guess that her brief said “CPS”—I think she meant the Centre for Public Scrutiny.

I am grateful for her kind reference to it. It is concerned about the matter, as am I, because there is a slippery slope and an erosion of the principle of the separation of powers between scrutiny and executive. If that is damaged, it could have serious consequences for the integrity of the scrutiny function. It could well also create a difficult relationship between executive members and people in outside bodies if the latter were talking to them as partners one day and subject to scrutiny by them the next. The partners themselves would not have the option of scrutinising the working of the executive. It is unfair to outside bodies that need to work in partnership with executive members of local authorities to be subject to scrutiny by them as well. For that reason, as well as that of the separation of powers, I do not believe that we should go down that route. I ask my hon. Friend the Member for Bury, North, and the Minister to have a further look at that.

My final observation is that we frequently hear from local government the complaint that back-bench members of local authorities, whose role is essentially scrutiny, are not accorded the same status and standing as executive members. Frankly, anything that we can do to boost the morale and status of back-bench and scrutiny members is good, and we certainly should not erode it by stating that executive members can sit on scrutiny committees as well. I hope that that will be reconsidered.

With those few reservations, I give my strong support to the Bill. It will help to take forward the process of scrutiny in local government and the search for more effective delivery of public services when a range of bodies are involved. I wish it every success and support its principles.

First, I welcome the comments of the right hon. Member for Greenwich and Woolwich (Mr. Raynsford) and endorse pretty much everything that he said. I will not repeat it, because he put it extremely effectively and has a great deal of knowledge in this area.

My broad position is that I very much welcome the Bill. It makes real some of the issues covered by Total Place, which the hon. Member for Bury, North (Mr. Chaytor) referred to. It seems to me that a core function of local council representatives is to raise issues of concern to their community. The scrutiny process is a very effective way of doing that, and the Bill will provide them with some real authority in that process. For those reasons, I wish it well and the Liberal Democrats will support it.

I have one issue to raise, which I have touched on, and it is one of principle. We are discussing scrutiny, and the role of the House is to scrutinise the Bill. The fundamental question is which bodies are to be scrutinised, and it does not specify that. We can examine the Government’s consultation, which lists the type of organisations that it believes may be subject to scrutiny, but we have no confirmation that they will. Nor do we have any real idea of whether that is the final list or whether it is to be extended much further.

Even if the current Minister were to outline his intentions in relation to which bodies will be covered, a future Minister might come to a different view. The matter would have to come back to the House and be subject to debate, but we all know that the processes of resolution here are brief, that not many Members are involved and that generally speaking, whatever the Government want goes through. That is the reality of the process. It is a real shame that we have not been given that information for today’s debate, and I hope that it can be brought to us in Committee. When legislation is brought before the House, it helps when Ministers talk about what they believe will fall within its scope, because that gives direction on what might happen in future and arms any future colleagues—not me, but there might be others—who challenge exemptions in the regulations or elements that might be missing, by giving them a clear steer at this stage in the legislative process. The hon. Member for Bury, North has done a great job in bringing the Bill forward, but I hope that he will seek clarity from the Minister and the Department on that point, and that the Minister will give it—if not today, then in Committee.

I should also apologise, because I have a brief engagement that I have not been able to get out of, so I shall be escaping in a moment. I might not be here for the reply to this debate, but my hon. Friend the Member for Mid-Dorset and North Poole (Annette Brooke) will be. That is a discourtesy to the House, but I am afraid that it is not one that I can avoid.

I congratulate my hon. Friend the Member for Bury, North (Mr. Chaytor) on his success in the ballot and on all the effort that he has put into bringing forward his proposals.

I also thank all the other Members who have taken part in this debate. My right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford) is an acknowledged expert on the issue, as he is on so many other local government matters, and not just because of his distinguished ministerial career, but because of his career before he entered the House and his work with the Centre for Public Scrutiny, for example. I thank the hon. Members for Putney (Justine Greening) and for Truro and St. Austell (Matthew Taylor) for the constructive, detailed and expert analysis that they have brought to bear on the issue. I also thank the hon. Lady for her constructive and non-partisan tone in discussing the proposals.

I am pleased to confirm that the Government support the Local Authorities (Overview and Scrutiny) Bill, which my hon. Friend the Member for Bury, North has introduced. His proposals are in line with some of those set out by my right hon. Friend the Secretary of State for Communities and Local Government in the “Strengthening local democracy” consultation, published in July last year. The Bill provides the framework to extend the reach and influence of local authority scrutiny further. My hon. Friend set out what the Bill does in practical terms. I do not intend to repeat what he said, but I shall try to respond to some of the points made in the debate.

As my hon. Friend said, there is an increasing appetite for more localised and personalised services, greater transparency and more accountability. Consumers know more about the services that they want to be provided with. They expect greater responsiveness and higher quality, and they have every right to do so. My hon. Friend’s proposals attempt to answer the increased demand for accountability, and ensure probity over the use of public resources and equity in access and opportunity. Local government is a major route through which the voice and interests of local people, through their elected representatives, can be brought to bear on the national and local institutions that provide local services.

People expect their council to be at the heart of decision making in the area—the one place that they ought to be able to go for information on the full range of services provided, and the place to which they can look to influence decisions on how those services are delivered. When people vote, they should be confident that they are electing someone who will take a real interest in those issues locally and act on their behalf. The council’s scrutiny function is one way of delivering that accountability locally.

The new powers will extend scrutiny to a wider range of bodies to address cross-cutting issues locally to best effect, and will provide local authorities with greater expertise and more information. In the first instance we intend to apply the new framework to existing local area agreement partner bodies. That will remove the current limitation on the scrutiny of activities related to LAA matters only, recognising that the local contribution and activities of partner bodies—such as Jobcentre Plus, and fire and rescue authorities, to name just two—cut across the full range of local issues that arise, and are not limited to the delivery of priority targets in the LAA. We also intend to extend scrutiny to two new sectors: energy and transport.

We recognise, as we did when scrutiny was first extended to cover LAA partners, that those who will become subject to scrutiny for the first time might have concerns about what that will mean for them in practice. They will want to know how much time it will take up, how much it will cost and whether they will be required to attend hundreds of scrutiny hearings across the country. We understand those concerns, and that is why we intend to use the regulation-making powers in the Bill to put in place safeguards and procedures to ensure that the exercise of the new powers by councils does not impose a disproportionate burden on bodies that are subject to scrutiny.

My experience as a councillor in Dudley in the 1990s left me with firm views on the vital role that well-informed, fully engaged councillors can play as champions of their community and the residents they serve. At their best, councillors are out and about in the communities that they represent; local, available and in touch; talking to local people; engaged with community groups and voluntary organisations; understanding in detail the services provided in their wards—truly in touch with local people. That is the sort of councillor that local communities need if greater scrutiny is to work effectively, because local scrutiny will be at its best when led by councillors who have their finger firmly on the local pulse and when driven by local people to examine the issues that matter to them. For those councillors sitting on scrutiny committees, the new powers are therefore significant.

However, with additional power comes greater responsibility, because scrutiny is not about confrontation or criticism for the sake of it, but about constructive debate and challenge where necessary. It is not about taking over all local services or being a substitute decision taker for external bodies, but about influencing the decision-making process and ensuring that decisions are properly informed and properly taken. Scrutiny is about contributing positively to policy development across the full range of services, bringing partners from all sectors together to ensure that residents are getting the best deal. In recent years the council scrutiny function has taken on a higher profile, and is now used not just to increase openness and transparency, but to improve the services that residents receive. Councillors and scrutiny committees should engage with local people to ensure that scrutiny looks at the issues that matter and to select topics for review so as to ensure that they scrutinise the subjects that local people are concerned about.

The hon. Member for Putney raised issues of cost, as did all right hon. and hon. Members who spoke. Let me try to deal with some of those. An impact assessment has been prepared on the basis of local authorities continuing to work within their existing budgets and therefore continuing, as at present, to prioritise issues of local concern for scrutiny and review. We therefore do not consider part 1 of the Bill to have any major financial implications for local authorities. Any increased cost arising from part 1 will instead be limited to the additional compliance costs on external bodies undergoing scrutiny, in providing information to committees or attending meetings, for example. The Government estimate that the increased annual compliance costs could be up to £480,000 each year, with up to £427,000 falling on private sector bodies and up to £53,000 falling on public sector bodies.

The Bill also includes provision for scrutiny resources. Section 21ZA of the Local Government Act 2000 requires local authorities to designate one of their officers as scrutiny officer. That officer’s functions are to promote the role of the authority’s overview and scrutiny committee or committees; provide support to such committees; and provide guidance and support to members and officers of the authority, and members of the authority’s executive, in relation to the functions of overview and scrutiny committees.

The Bill will require local authorities to provide their designated scrutiny officers with such staff, accommodation and other resources as they consider sufficient to discharge their functions. That mirrors the provision for monitoring officers in the Local Government and Housing Act 1989. The new requirement might result in additional costs for some authorities—costs that the Government estimate will amount to no more than £4.5 million each year. The Government are committed to ensuring that any new burden falling on local authorities is funded. The cost will therefore be fully and properly funded by the Government, so that no additional pressure is placed on council tax bills.

As I said earlier, my right hon. Friend the Secretary of State believes that the Bill takes forward key proposals of the “Strengthening local democracy” consultation and will provide a flexible framework to enable councillors to scrutinise a wider range of bodies and improve the services that residents receive.

I thank all right hon. and hon. Members for their contributions to this debate. When I spoke about the all-party consensus on the need for more decentralisation and localism, and more transparency and accountability, I could not have imagined that that would be so perfectly reflected in the various contributions that have been made. Things have moved on significantly in recent years, in terms of the main parties’ attitudes towards local government and their agreement on certain key principles.

I thank the Minister for clarifying so many points of detail and for giving an honest and direct indication of the Government’s thinking on how certain regulations might be implemented.

The hon. Member for Truro and St. Austell (Matthew Taylor) was exercised by the issue of the list of new bodies and agencies not being included in the Bill. A large number of bodies and agencies were mentioned during the debate, and there would not necessarily be consensus at this stage that all of them should be included in the list of designated bodies. That provides the best case for leaving this matter to be set out in regulations. I accept fully, however, that that would place the matter completely in the hands of this Government or a future Government. I hope, therefore, that the Minister will take on board the suggestion by the hon. Member for Putney (Justine Greening) that a draft list be published in advance of the regulations. That would provide time for further debate and consultation, and for the building of consensus.

Let me make it clear that I was not necessarily suggesting that the list should appear on the face of the Bill. I accept that consultation needs to take place and that the timing might not work in that regard. I also accept that such a list could be over-restrictive. I hope that the Minister will listen to what the hon. Gentleman has just said on this point. A draft list put out to consultation would allow proper scrutiny and a debate on what was appropriate.

The hon. Gentleman makes his point extremely well. I am sure that the Minister will have listened carefully to it.

The hon. Member for Putney made a number of detailed points. She called for further clarification and raised questions about definition, all of which were important and many of which can be discussed further in Committee. My right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford) drew two important points to the attention of the House. He mentioned the potential conflict of interest involved in dismantling the separation of powers, and the implications for the role of executive members. Parliament is not in a position to insist on an absolute separation of powers in local government because we ourselves do not have, and have never had, an absolute separation of powers. There is a case, however, in specific instances involving certain subjects of inquiry, for allowing executive members to be members of the scrutiny panels.

Furthermore, many local authorities are now revising the original model of scrutiny panels, which involved one executive committee and any number of scrutiny panels. They are setting up special sub-committees, special working parties and special task and finish groups. The expertise of an executive member on a specific task and finish group, which bears no relationship to his executive functions, could prove to be extremely useful. I accept completely, however, that this matter needs to be explored further. The question of district councils in two-tier areas was raised. I believe that there is ample scope for those smaller district councils to work co-operatively with their county councils and to set up joint structures of one kind or another.

I thank all right hon. and hon. Members for their contributions to the debate, and I am grateful that the House has achieved this consensus. I look forward to the Bill’s progress into Committee.

Question put and agreed to.

Bill accordingly read a Second time; to stand committed to a Public Bill Committee (Standing Order No. 63).