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Shropshire (Structural Change) Order 2008

Volume 699: debated on Thursday 21 February 2008

rose to move, That the Grand Committee do report to the House that it has considered the Shropshire (Structural Change) Order 2008.

The noble Baroness said: We now come—reluctantly, I feel—to the final order, which is very much the same set of propositions. The order establishes the new unitary Shropshire Council. It implements a proposal which Shropshire County Council submitted to us in response to our invitation to councils issued in October 2006 in parallel with our White Paper.

We have judged its proposal against the same five criteria set out in our invitations to councils, against which, as we have already discussed, we assessed all 26 of the proposals that we originally received. As I informed the House on 5 December, our judgment is that if the proposal for the single unitary Shropshire Council were to be implemented, there is a reasonable likelihood that it would achieve the outcomes specified by all five criteria in the invitation; that is, we believe that the proposal will achieve the outcomes on strategic leadership, neighbourhood flexibility and empowerment, and delivery of value for money and efficiency in public services specified in the criteria. Equally, we believe that the change, if implemented, will be affordable and supported by a broad cross-section of partners and stakeholders.

On the basis of the proposal, and having regard to all the information and representations that we received, including the advice of our independent financial experts, it is expected that the change in Shropshire will lead to savings of more than £9 million and therefore meets the affordability criteria. It also meets the support criteria.

Consultation last spring revealed that opinion was divided about the unitary proposal. Significantly, the proposal was originally supported by two district councils, Oswestry and South Shropshire. South Shropshire withdrew its support following the May 2007 local elections; Oswestry is still in support. However, there was strong opposition from some other districts. Three of the districts commissioned local polls, by post, which showed that the majority of those who responded opposed the proposal. A critique of the postal polls in Shropshire was made by Professors Rallings and Thrasher, noting that the tone and content of the information provided was likely to have had some impact on the poll results, that there could be no guarantee that they were true one- person, one-vote polls, and that the relatively low turnout meant that only a small minority of the electorate supported either position. But overall, in spite of the district poll results suggesting that the majority of the public opposed the unitary proposal, the county council’s own telephone survey of 1,000 residents in June 2007 showed that 78 per cent wanted more information about it before making their mind up about a single council.

In addition, the majority of the public who wrote in during the consultation also supported the unitary proposal, as did some town and parish councils. In addition, the majority of representations from the public stakeholders, such as the Shropshire county primary care trust, the Shrewsbury and Telford Hospital NHS trust and the Shropshire and Wrekin Fire Authority, expressed support for the proposals, along with almost all voluntary and community sector organisations, some town and parish councils and the Shropshire enterprise partnership, representing part of the business community. Overall, we concluded that there was a reasonable likelihood of the proposal achieving the outcomes specified by this criterion.

In common with all the orders being discussed today, we have prepared this order following consultation and full discussion with the councils concerned. As with the others, this order provides that from 1 April 2009 there will be a single tier of local government for Shropshire, and that the existing district councils will be dissolved, and the county council transformed into a new unitary council, having both district and county functions. It makes provisions for the key transitional arrangements and provides for the establishment of an implementation executive, to be led by the county council, whose membership will be drawn from the county and all the district councils. We discussed the membership of the implementation executive in detail with all the affected councils, and reached a consensus on that which is reflected in the order. It also provides that the county council will have the function of preparing for and facilitating the economic, effective, efficient and timely transfer of the district councils’ functions, property, rights and liabilities to the new council, and requires that these transitional functions be discharged by the implementation executive until April 2009. It provides for the creation of a team of officers in each area, again drawn from the county and all the district councils to provide the necessary support to the implementation executive.

Where this order differs from those for Northumberland and Durham is that in Shropshire, as in Cornwall and Wiltshire, elections to the new unitary Shropshire Council will take place in line with the usual county cycle in May 2009. That was on the basis of a consensus that has been reached. Again, that will enable the Electoral Commission to undertake an appropriate electoral review and put in place appropriate electoral arrangements before the first elections. In common with the order for Cornwall, this order also provides for the cancellation of district council elections that would otherwise have taken place in May 2008. In Shropshire, that applies to Shrewsbury and Atcham alone, where one-third of its members would normally have become due for re-election.

The proposal that has now been further developed by all councils in Shropshire envisages the council having a convening role, developing a cross-sector vision for the county. The leader will sit on the regional assembly, chair the public service board and be vice-chair of the local strategic partnership. The public service board would be set up with representatives from key stakeholders. Thematic partnerships will represent the four blocks of the local area agreement. Area partnerships will meet quarterly, have a budget of up to £500,000 for each area and will co-ordinate the work of local area agreements and the development of the sustainable community strategy.

The new council will very much bed its arrangements into local area agreements, as it should. That will be supported by local joint committees, made up of the various partners, including town and parish councillors with delegated budgets, which is being piloted already in five areas. I do not want to repeat anything I have said about the postponing of elections and the JCSI. I hope we have had a good debate on that.

In short, the order will establish a new unitary Shropshire Council that will have the form of local governance that local people should expect and demand. In common with the others we have debated today, it will empower local communities and promote prosperity so that Shropshire will be one of the flagship councils for the future for the rest of the county. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Shropshire (Structural Change) Order 2008. 8th Report from the Joint Committee on Statutory Instruments, 7th Report from the Merits Committee.—(Baroness Andrews.)

I hope the Minister will forgive me if I introduce another topic that I ought to have introduced much earlier, but I am still picking up the threads of local government. Local finance is a subject that has always interested me intensely. I have always said that if you control the finance and manpower in a local authority you control everything and do not need to be on all the other service committees. For a long time, I did precisely that. Partly as a result of what the Minister said, and partly because we need to be clear on this for the sake of the new authorities, we ought to press the issue of the financial arrangements under which these new authorities are to operate.

They have all been created on the presumption that there will be an efficiency gain from a financial point of view. In the case of Shropshire, £9 million per annum will be saved. The key question is how that £9 million is to be treated, given that so much of the money now comes from central government. Will the £9 million be deducted from the assessed expenditure level of the authorities within Shropshire so that when the new authority comes into being it will effectively have to be working to a lower budget? If one was highly optimistic, one would ask the question the other way round and ask whether the assessment of financial resources for the first year of the new authority will be on the basis of the existing level of expenditure, which would give the new authority a wonderful opportunity to show what could be done with the little bit of extra resource that it has saved because it is its proposal. Or is there going to be some other compromise arrangement? One is very advantageous for the Government—and given the financial situation of the Government, I can see the temptation for them to go for it, but that would not be a very honourable way to proceed. I suppose one could accept a compromise because the Government could rationally argue that they have given the new authority the opportunity to do this and therefore can claim part of the gain. The really wonderful thing to do would be to say that they will calculate the financial resources on the historical basis of what has been spent there and will see what use the new authority makes of the extra resources—which it still has to make as a result of rationalisation. I know this question is introducing a new topic, and I know it is late, but psychologically what the Minister says in response to it will be very important for all these new authorities.

I had one or two questions on finance that I was going to raise in the opening speech, but I decided not to in the interests of brevity. I am slightly less optimistic than the noble Lord, Lord Dixon-Smith. My worry is not about what happens with the savings but about what happens if the savings are not as high as we think they will be. I do not think that need necessarily be down to bad planning or anything of that nature. It is simply that when estimating how much is likely to be saved it is very difficult to be accurate. All sorts of things might occur. What bothers me is what will happen to local authorities if the costs, through no fault of their own, begin to escalate beyond those that they expected. Would expenditure on transitional arrangements be counted as part of the overall expenditure and therefore be capped, or would it be treated separately? I have absolute confidence that in the long run there will be savings, but the transition bothers me. My fear is that if in the short term the costs are high and authorities are capped, we will have restructured at the cost of public services.

These are important questions and I am grateful that they have been raised. On the question raised by the noble Lord, Lord Dixon-Smith, I can do no better than to quote what my honourable friend said in the other place. He was asked a very similar question and gave a very clear answer, as expected. The question was whether there can be an assurance that,

“any efficiency savings will not be top-sliced off any subsequent revenue support grant in 2009, if the order is passed”.

The answer was:

“Yes, if that is the hon. Gentleman’s concern I can say that over the next three years—a period for which we have made decisions about the distribution of the core grant from central Government to local authorities—efficiency savings, which we expect from all councils, will be entirely available to those councils that make them. Nothing will be clawed back to the centre and there will be no penalty incurred in any reduction of the core revenue support grant for councils that make efficiency savings. Those savings will be available for councils to use to improve services or to keep council tax pressures down”.—[Official Report, Commons, 19/2/08; col. 302.]

I think that covers the range of references.

On capping, we always anticipated that there would be short-term costs which would lead to long-term gains. It is interesting that the gains range from £9 million to £18 million in those councils. The invitation made it clear that councils should ensure that all costs incurred were to be met locally without increasing council tax. That was always central to the entire analytical work that they had done and on which we evaluated them. We have also said that we cannot bail out councils if they go beyond that, if they find that their initial costings were not quite accurate. I am confident, having regard to the rigour put in by everyone, that they should find themselves within the scope of the savings that they have anticipated.

I am very grateful to the noble Baroness for that reply. It will be encouraging to everyone on the implementation committee to work extremely hard to try to ensure that what they have estimated ought to happen in fact happens. Had the response been anything else there might have been a disheartened reaction in implementation committees and the temptation would then have been not to make the economies at all, which would not be what the whole exercise is about. I look forward to seeing the results in due course.

On Question, Motion agreed to.

The Committee adjourned at 4.58 pm.