That this House do agree with the Commons in their Amendment 1.

My Lords, this amendment introduces a new clause relating to local freedoms. It was introduced in the other place by the honourable Member for Newcastle upon Tyne Central to, as he put it,

“correct a significant inequality. It would also correct an anomaly that undermines freemen, where they remain, when exercising functions on behalf of their communities, and that undermines a significant part of our constitutional heritage”.—[Official Report, Commons, 13/10/09; col. 222.]

The amendment will mean that the daughter of a freeman can claim to be admitted as a freeman on the same terms as the son of a freeman. It also provides that the son or daughter of a freeman can request that they are admitted to a guild whether or not their parent had been admitted as a freeman at the time of their birth and whether or not they were born in the town or city in which the guild exists. Traditional activities need to reflect the modern world. In this day and age it is right that there should be equality of treatment between men and women. This amendment ensures that this occurs in relation to freedoms granted for an area.

When accepting that Clause 27 should be inserted in the Bill, my noble friend Lady Andrews stated that traditions needed to work in a non-discriminatory way and we attach great importance to seeking equality between men and women. As I have said, it is not acceptable in this day and age to treat women differently. There is also a need to make the guilds more relevant to today and ensure that they do not die out. Women must be allowed to become freewomen if they wish; that can only be to the advantage of guilds.

I understand that my noble friend Lord Graham may feel that the Commons amendment was unnecessary, given the provisions he introduced in Committee in this House, which were entirely permissive and so allowed guilds to decide among other things whether or not they wished to allow women to claim the freedom. However, in the other place it has been argued that providing equality should be a requirement rather than a choice and the Government have accepted that argument. We agree with the central argument that women should be afforded the same rights as men, particularly in relation to freedoms granted for an area.

I know that my noble friend Lord Graham has worked tirelessly on this issue and the freemen of our towns and cities have much to thank him for. Without his efforts many guilds would be facing real difficulties in bringing their admission rights up to date and in some cases even surviving. For our part, we believe that the amendment laid by my noble friend strengthens the Bill by allowing admission rights to be changed more easily and flexibility for the guilds to amend their rules to meet any challenges that may arise in the future. Importantly, it provides a considered framework to make changes consequential to allow daughters to become freemen and amend other admission rights.

The daughters of freemen can become freemen on the same terms as sons of freemen as a result of the Commons amendment—the rights and benefits equally apply—but admission to a guild can also grant benefits and rights to the spouses and widows of freemen and Clause 27 will allow the guilds to consider and amend such rights—those consequential on permitting women freemen. In some cases I understand that the widows of freemen have certain benefits, such as charitable payments or the right to certain accommodation in retirement. The freemen guilds, using Clause 27 and the new schedule to the Local Government Act 1972, introduced by my noble friend, will be able to amend their admission rights more easily so that these benefits can also be granted to widowers or, indeed, civil partners of freemen and freewomen.

Clause 27 will also allow guilds to consider widening their admission rights to individuals other than simply a son or daughter of a freeman. This might, for example, include permitting sons-in-law, daughters-in-law, nephews and nieces of freemen or freewomen to be eligible to seek admission. Of course, Clause 27 will also allow, as a result of the admission of daughters, that they might be called freewomen if the guild so resolves.

Clause 27 will also enable guilds to amend other admission rights, such as amending, perhaps, the terms of servitude as an apprentice to a freeman, or widening the rights of apprentices serving in the town generally. In addition, the framework introduced by Clause 27 will allow changes to be made more easily to other admission rights contained in the royal charter. It will enable guilds to change admission rights operated by custom by a simple resolution and provides an easier route for changes to rights contained in Acts of Parliament.

In summary, these two clauses work together. My noble friend’s hard work has not been in vain—indeed, far from it. I am aware that concerns have been expressed about difficulties that guilds may have in adopting these new admission requirements. However, as I have said, the new schedule to the Local Government Act 1972 will ensure that consequential changes can be made to the rights and privileges of the freedom as a result of daughters gaining admission and the other changes made by the new clause introduced in the Commons. It will enable freemen to consider the implications of admitting daughters and change any of their rights accordingly if there is a need or desire to do so.

Moreover, I understand that several guilds have, over the years, made the same changes to their admission rights as those provided by the Commons amendment, and have been able to deal with any difficulties that arose. I am sure that all other guilds are capable of doing the same, especially now that there is a clear framework in place to make such amendments. There is time to prepare for the change, given that the relevant clauses are not commenced until two months after Royal Assent. Together with Clause 27, this amendment updates and helps to preserve one of our most ancient traditions, while providing equality of opportunity for men and women, a principle to which I know this House attaches great importance. I commend it to the House. I beg to move.

My Lords, I am grateful to the Minister for having taken care in dealing with this matter more fully than he might have done. I had made known to him the concerns that had been expressed to me outside the House.

This could have been a joyous moment in my parliamentary life. Having spent almost six years seeking to assist the guilds of freemen in bringing their procedures into the 21st century; having successfully piloted three times through this House a Private Member’s Bill with all-party support to do so; having seen it fall in the other place due to one voice shouting “Object!”; and then having the Minister and officials at the Department for Communities and Local Government draft a comprehensive Bill, only to have it handed out to a Member in another place—Derek Conway—who was unable to proceed with it, I was then able to present that department-drafted Bill as an amendment to this Bill. It had unanimous support from every Bench in this House. I took care to consult not only the freemen of England and Wales, but more widely. When the Bill left this place with good will all round, I considered that I had achieved a modest advance, especially for women in their desire to inherit rights enjoyed by their fathers within the guilds movement. It was not to be.

Sadly, a rift within the freemen has revealed that the Newcastle upon Tyne guild holds a different view from almost every other guild, to such an extent that when the Freemen of England and Wales embraced the comprehensive new clauses that I introduced, Newcastle asked its four MPs to table the amendment now before us. As I intend to show, what is put forward as a simple amendment, designed to bring equality for women, is seen by many freemen as running counter to a prime argument for my clauses, which was stressed by the noble Baroness, Lady Andrews, who took the Bill through the Lords. That is, my clauses were permissive and it was an enabling Bill—not compulsory, taking fully into account the fact that guilds throughout the land are not uniform; they are embedded in their own history and heritage. My new clause gave that degree of flexibility which the freemen wanted and which the amendment before us denies. It is mandatory and not permissive.

I have no argument with either Newcastle or my parliamentary friends in another place, but I ask the House to try to understand the following. When this amendment was before the Committee in another place, Dan Rogerson, a Member of the Committee, said:

“The new clause was tabled by the hon. Member for Newcastle upon Tyne Central (Jim Cousins), who is not a Member of the Committee. I was contacted this morning by Newcastle City Council and told that councillors wished to raise a crucial question by way of this new clause”.—[Official Report, Commons, 18/6/09; col. 273.]

The Minister of State then said:

“I very much hope that the hon. Member for North Cornwall welcomes Clause 27, which was introduced in the other place by Lord Graham. In our view, it meets the aims of the new clause in a more sustainable way”.

Later she said:

“As I said, I understand that the new clause’s aims were met by Clause 27”.

Even later in the same debate, the Minister said:

“Perhaps a discussion between the hon. Member for North Cornwall and my hon. Friend the Member for Newcastle upon Tyne Central would be helpful, because I am advised that Clause 27 meets many of the new clause’s aims and—crucially—in a more sustainable way”.—[Official Report, Commons, 18/6/09; col. 274.]

I have learnt from bitter experience that this is a complicated matter and the implications of accepting the Newcastle upon Tyne amendments may well not have been fully understood. Nor was the fact that Newcastle was isolated within the Guild of Freemen. Last week I received a copy of a letter addressed to my noble friend Lady Golding, herself a freeman of Newcastle under Lyme guild, from Derek Miller, clerk to the trustees. It read:

“However at the very end of the passage of the Bill through the Commons an amendment was tabled which, if I understand it correctly, would make it mandatory for the daughter of a Freeman to be admitted to the Freedom where her brother would have the right to be admitted”.

I ask the Minister a direct question. Can he confirm that this understanding is correct? The letter goes on:

“If my understanding of the position is correct on this particular point affecting admission procedures this completely undermines the concept of ENABLING as opposed to REQUIRING as set out in the amendment proposed by Lord Graham. The Trustees feel that such an amendment is not in the best interests of the Newcastle under Lyme Trustees insofar as it requires admission no matter what the circumstances of any Body of Freemen might be: do they see it right in principle.

Some Bodies, including Newcastle under Lyme, may have land or other assets or investments involved, and a compulsory admission of women in these circumstances is effectively an expropriation of existing historic rights … It is not that the Trustees feel that the admission of women is wrong in itself, but they believe it is appropriate for each body of Freemen to consider carefully the implications of such a move without it being imposed upon them in this way.

The amendment proposed by Lord Graham had the backing of the Freemen of England and Wales and I suspect virtually every other Body of Freemen apart from those in Newcastle on Tyne”.

I received another letter from Alan Fallows, a past president of the Freemen of England and Wales, writing on behalf of the Guild of Freemen of Shrewsbury. He wrote:

“All concerned are well-versed in the history of the failure of the previous ‘Family Succession Bill’ after being deemed ‘unfit for purpose’ so we are dismayed to see that Clause 4 effectively mirrors the terms of that failed Bill and is equally prescriptive. Our first point is that we see absolutely no reason or necessity in the new clause. The original clause perfectly conveyed the essence of the fact that the Freedom is differently constructed and operated in each place and is restricted there by differing customs and legal constraints by either charter or statute. The situation requires that an ‘enabling Bill’ is utilised to facilitate different amendments to admission criteria in each place without the imposition of a limited national ruling. Your clause covers not only the admission of women but also the problem of location of birth, date of birth, stepchildren and children-in-law. These facts were recognised and supported by the Parliamentary Under-Secretary and the Minister of State when they argued against the necessity for inclusion of the new clause in Committee”.

Where do we go from there? If what I am being told by guilds of freemen is along the lines of the above, I sense that there is a storm brewing which bodes ill for good relations with the Government. I despair when I think of the enormous amount of time spent on this by people within the department and by Ministers. I pay full tribute to the noble Baroness, Lady Andrews, who tirelessly sought to draft an amendment that would achieve not what Parliament wanted but what the freemen themselves wanted. I am dismayed at the turn of events.

By virtue of the parliamentary timetable, with this Session concluding in three days’ time, I cannot see that my seeking recourse to normal means of objecting would be practical or successful. However, it must still be within the Minister’s power to withdraw this clause so that meaningful discussions can take place within the totality of the freemen of England and Wales to try to produce a change that will satisfy all parties. Clause 27 can still be used in the interim. Will the Minister consider my suggestion? If he does not wish to do that, I forecast that the department will hear from many puzzled and angry guilds and that all the good work done by officials will be set at naught.

My Lords, I thank my noble friend Lord Graham for all the work he has done on behalf of freemen. I correct him in that I am an honorary freeman of England and Wales. In fact, I was proposed by the freemen of York, not by the freemen of Newcastle-under-Lyme, who are called burgesses, not freemen, which complicates things even further.

The clerk to the trustees of the burgesses of Newcastle-under-Lyme wrote to me and I have passed the letter to my noble friend Lord Graham. I received a further letter from them, explaining where they have difficulty with the Bill, although they have no difficulty with the principle of the Bill or with the enabling Bill of my noble friend Lord Graham. The clerk to the trustees wrote that he had,

“difficulty with the wording of what is proposed. In Newcastle-under-Lyme the status of freedom is conferred on birth. On coming of age, a young man presents himself to the Mayor of the Borough for confirmation of that status. As such, he does not ‘claim to be admitted’ in that the Mayor does not ‘admit’ a man to Freedom but simply acknowledges that he has held status which he has claims from birth. Accordingly, if the Bill is enacted in its present form, I should be left with a very difficult problem of construction. Sub-clause (2)(1)(A) clearly addresses the case where a man claims ‘to be admitted as a Freeman’ i.e. it speaks to a future state of affairs which lies in the gift of a third party. Those words are not, as I say, apt to cover the situation in Newcastle-under-Lyme and on balance I would feel compelled to advise the Trustees that the amendment now proposed, if enacted, would have no application within this borough”.

That adds a further complication to what my noble friend Lord Graham has said. It is obvious that rules for many of these guilds of freemen vary from area to area. This matter has to be tackled constructively through discussion with the freemen, who know their own rules, and it has to be agreed. The freemen are not in principle against women being adopted as freemen but they believe that the clause is so flawed that it will not apply to some of them but may apply to others. Therefore, I ask that these fresh clauses be reconsidered, we have a general discussion on them and that, if necessary, we include the measure proposed by my noble friend Lord Graham. I believe that his proposal, which allowed each guild of freemen to deal with the matter as they saw fit, would be the best way to proceed.

My Lords, I wish to comment on the new clause. I thank the Minister and his team for setting out its purpose so clearly and I register the apologies of my noble friend Lady Warsi, who is unable to take part in this important debate.

This measure draws to everybody’s attention the difficulties that arise when we open up these ancient bodies to scrutiny in the modern day. We find that some strange things are happening that would not occur if these bodies were set up today. None the less, these bodies are important. Like the noble Lord, Lord Graham, I am from the north-east of England—from Tyneside. When we talk about the freemen of the City of Newcastle, a reverence is displayed that is not displayed when we talk about any other body, because these people are the custodians of that most hallowed turf of St James’ Park and comprise the landowners and guardians of huge tranches of central Newcastle.

I seek clarification on the following point. I defer to the knowledge and extensive interest displayed by the noble Lord, Lord Graham, and the noble Baroness, Lady Golding. It seems to me that the guild in Newcastle has the opportunity to appoint females and males to the position of honorary freeman. When I looked on the City of Newcastle’s website, I found that Councillor Margaret Collins is an honorary freeman, as are Harriet Dunlop, Daisy Clark, Joan Silcox, Rachel Somerville and a number of others, so clearly there is an ability at present for males and females to be appointed to this position. Therefore, it cannot be argued that this is a male fraternity, because clearly it is not, although the stewards appear to be exclusively male.

It was interesting for me as a Conservative to note the remarks made in another place by Jim Cousins as he leapt to the defence of the hereditary principle. However, this is a serious matter on which people have strong feelings. I offer the following principles and thoughts from this side of the House. These local guilds and associations are part of our history and culture and are important to our sense of belonging and our sense of history. They also have some significant modern-day powers in their custodianship of assets, property and land in many of our urban areas. We want to see that land and those green spaces preserved.

I very much agree with the noble Baroness, Lady Golding: using general legislation to tackle particular problems in particular guilds constitutes a slightly heavy hammer. Our policy is one of localism. We approve of the idea of local people determining the terms of their area and we would very much like to see maximum flexibility given to local guilds—and, indeed, to the freemen of the City of Newcastle—to determine the composition and the order of succession of hereditary freemen in a way that they would see fit.

My Lords, when this debate started 24 and a bit minutes ago, I thought that it would be sufficient from these Benches to say that we welcome equality. I am not sure whether I can say much more than that, although I will confess to being a little puzzled. Although I listened to what the noble Lord, Lord Graham of Edmonton, was arguing, I am not clear whether it was for this new clause not to be included. As I read it, his original Clause 27 stays in the Bill; it is not as if we are knocking out what we did at the previous stage. I am also a bit confused by the terminology, because the term “admitted”, to which the noble Baroness referred, is in the clause that is in the Bill. I accept that it is not “claim to be admitted”, and that it may be the claim that is relevant rather than the admission. Having displayed such a wealth of ignorance, however, I shall go back to my point of principle: the greater the equality for women, the better.

My Lords, I thank all noble Lords who have contributed to this debate. Perhaps I might start by addressing the concerns raised by my noble friends Lord Graham and Lady Golding. On the question that they posed to me, I do not propose to withdraw this clause. I have no authority to do that and I do not believe that it would be appropriate. My noble friend was possibly anticipating this as a joyous moment after six years of effort. I know that he has made a lot of effort, but he should not feel let down. His achievements in respect of that six years’ work are embodied in the Bill; they remain there and contribute to supporting the guilds going forward.

Yes, it is a permissive regime that is encompassed within the amendment that your Lordships previously accepted, but that sits together with those particular areas that have been carved out where there is a mandatory requirement. My noble friend asked whether it was correct that it would be mandatory for daughters to be admitted if sons could be admitted. It would not be mandatory, but the amendment says that, if the daughter should seek admission, it is mandatory to allow her to become a freeman. That is absolutely what this amendment enshrines.

My noble friend also referred to the expropriation of rights. If the concern is that of having a dilution of assets if a greater number of members joined the guild, I am sure that there would be ways to address that. However, I am also sure that one way not to address that would be by a gender cut-off, which seems to me to be quite the wrong principle to adopt here. My noble friend is quite right that the new clause goes further than the permissive regime that he introduced through his amendments, but that regime still remains in place and it is an important part of the Bill. When I moved the amendment, I outlined some of the circumstances where it will be brought to bear. I think that my noble friend Lady Golding—and, indeed, the noble Lord, Lord Bates—referred to honorary freemen. We should be clear that we are not talking about honorary freemen here; they are a separate issue. We are dealing with hereditary freemen. It is those guilds and individuals to whom this clause and my noble friend’s amendment are addressed.

The noble Lord, Lord Bates, said that it is always difficult when you are opening up parts of ancient history. Part of what we are trying to do in this Bill is to help the guilds to ensure that they have a future as well as a past and to facilitate their moving forward by addressing their rights and responsibilities. The noble Lord, Lord Bates, outlined some of those. To be clear, again, I think that the noble Lord referred to Newcastle freemen as being honorary freemen. However, they are hereditary freeman. There are different arrangements for honorary freemen. Those will, in fact, be covered by Clause 28, not the provisions that we are addressing tonight.

My noble friend Lady Golding referred to seeing how the amendment that we are discussing fits with the requirements in some of the guilds’ rules at the moment. This, again, goes back to the amendments brought forward by my noble friend Lord Graham in the schedule that was introduced in your Lordships’ House. I stress that that is what gives the wherewithal to make the consequential changes, so that the mandatory provisions of this amendment can be encompassed and made whole within the context of the guilds’ rules. The noble Baroness, Lady Hamwee, said that she welcomed equality; there is an extra component of that in these circumstances. I readily accept that it could be achieved under a permissive regime, but this amendment makes it mandatory and puts daughters in the same position as sons. Surely in the 21st century we should welcome that. I hope that that has addressed the concerns of noble Lords.

Does the Minister take on board the dismay that must be felt throughout the guild of freemen movement? The Freemen of England and Wales had, almost unanimously, accepted the thrust and principle behind what I would clumsily call my amendments. All but one of them were embraced. At the end of the day, the Bill will show that that one view prevailed. I simply fear for the fact that, after six years of my time, the department and its officials—for whom I have the highest respect in seeking to do that which I and others conveyed to them—will find that they have insufficient time for the next period, until the explanations that the Minister has given are worked through. It is not that they cannot work them through; indeed, they might do so. However, they were wrong-footed, as I was, in that, having passed my amendment, we did not conceive that the Newcastle view, which will be well known, would be accepted on its own. We were heartened by the Minister stating in the Commons three times that there was no need for it. Well, you pays your money and you takes your choice.

My Lords, I take the point that my noble friend is making. I think that he is absolutely right to say that this amendment came fairly late in the process, possibly without the opportunity of more detailed discussion. If the guilds are concerned about this and if there is a potential storm brewing, clearly we have to engage to work through it and to ensure that we can move forward with these provisions.

I should say to my noble friend that the respect that I know that he has had, in all the work that he has done over those six years, is still enshrined in the amendment that will form part of this important piece of legislation. It will be part of the way in which one can implement the so-called Newcastle upon Tyne amendment with the other opportunities that his permissive regime presents to the guilds.

That the House do agree with the Commons in their Amendments 2 and 3.

My Lords, with the leave of the House, I shall move that the House do agree with the Commons in their Amendments 2 and 3 en bloc and speak to Commons Amendments 7 and 10. This group of amendments brings forward amendments agreed in the other place to give powers to local authorities and other best-value authorities in relation to mutual insurance.

In July, the Secretary of State for Communities and Local Government published the consultation paper Strengthening Local Democracy. This sought views on the scope of local authority powers, in particular around their powers to undertake mutual insurance arrangements. The consultation attracted 96 responses to the specific question on mutual insurance, with 82 per cent agreeing with the proposed power.

The amendment adds a new clause to provide permissive powers for named authorities to enter into mutual insurance arrangements should they wish to do so. These authorities, which are described as “qualifying authorities”, are local authorities—other than parish and community councils—fire and rescue authorities, police authorities and other best-value authorities in England and Wales. 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 qualifying authorities will wish to establish or participate in an insurance mutual, clear and specific legal powers will be available for those for whom it makes good business sense to do so.

The amendment provides that best-value authorities may establish and become members of a corporate body whose objectives are to provide insurance to those authorities who are members of the mutual. Other qualifying authorities may be members of the mutual and the mutual may also provide insurance to other bodies, which will be prescribed by regulation and which I will call affiliates. Affiliates will be those which have some association with qualifying authorities; for example, in the case of local authorities, arm’s length management organisations (ALMOs), 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 already arrange insurance cover for ALMOs and some schools. However, affiliates will not be able to become members of the mutual.

The qualifying authorities are provided with a power to pay premiums and other payments to the mutual insurance body and can agree to make any such payments as may be necessary in future. They can also assume financial obligations in respect of their affiliates.

The Secretary of State in relation to England and Welsh Ministers in relation to Wales may, by regulation subject to the affirmative procedure, amend the list of authorities that are qualifying authorities. They may also impose restrictions or conditions on the use of the power by regulations subject to the negative resolution procedure. We intend to consult on the content of such regulations. However, we are of the view that the following may be required. First, the mutual insurance body should be registered with the FSA so that it will be a body authorised to carry out the activity of providing insurance, which is regulated by the Financial Services and Markets Act 2000. Secondly, a mutual insurance company will not be able to reinsure risk with another qualifying authority mutual, although it will, if course, be able to reinsure in the market. This is to avoid a potential spiral of risk were a number of different qualifying authority mutuals to reinsure each other, with the danger of the risk effectively ending up where it began. Thirdly, qualifying authority mutual insurance bodies are unlikely to be allowed to have offshore captive insurance subsidiaries. Our view is that providing powers to local authorities which could facilitate avoidance of UK tax, or would enable the avoidance of appropriate levels of regulation which are needed to protect public money, is not something appropriate for local authority mutual insurance companies.

Qualifying authorities are required to have regard to any guidance issued by the Secretary of State or Welsh Ministers and to any document specified in regulations, such as CIPFA guidance. Again, we will want to consult further on this.

Commons Amendment 3 adds a further new clause to provide a list qualifying authorities which are being provided with the power to become members of a mutual insurance body. It also sets out the appropriate parliamentary and Welsh Assembly procedures for regulations.

Commons Amendment 7 amends Clause 144 to provide commencement for these clauses which will be brought into force by order. Commons Amendment 10 is a consequential amendment to add a reference to insurance in the Long Title of the Bill. I beg to move.

My Lords, I have a couple of brief points, although we are basically on the same page and we support this enabling measure.

The Government are fond of consulting extensively, and we approve of that. However, the Minister said that there were 96 responses to the consultation. What consideration has been given to them? We were offered a headline figure of 82 per cent which agreed with the proposed power. I have seen only one of the responses—by Zurich Municipal—which was forwarded to us and other Members who participated in the earlier debate. There did not seem to be just a binary question—are you in favour or not? Zurich’s response amounted to some 11 pages. Its perspective from being a municipal insurer in the UK since 1903 was that there were significant pros and potential disadvantages to allowing local authorities to set up mutual insurance companies—not least relating to the residue of underwriting risk and how that might impact on local authorities’ primary responsibility to deliver local services in the event of claims.

Can the Minister comment a little further on the substance of the responses? What consideration has been given to the thoughtful and reasoned responses of companies such as Zurich, which display a level of expertise way beyond that which I can offer in this area? How was that distilled in such a short period? The consultation closed on 2 October and the results were presented on 13 October. That does not seem to be much time in which to absorb the comments.

My second point relates to the role of the RDAs. The RDA leaders’ boards will have a role in overseeing or offering some assessment of the appropriateness of municipal insurance schemes. That may be appropriate at this time, but I am hesitant because the regional development agencies are in the vanguard of trying to claw our way out of recession. They have huge responsibilities. One of our criticisms of the RDAs throughout has been that although their primary duty is to promote business and enterprise in a region, they are often drawn into intensely bureaucratic areas that are non-core to their activities. They become involved in producing regional spatial strategies, regional economic strategies, regional waste strategies, regional cultural strategies and regional transport strategies. The RDAs have to bring all of these together. Can the Minister provide an assessment of the RDAs’ involvement in fulfilling their role as regards municipal insurance schemes. For example, if they are the bodies that will license or assess whether a municipal insurance company should be established, will they carry a residue liability if that insurance arrangement were to go wrong?

I should like some reassurance on that. My primary point is not the pedantic one regarding where residual liability may reside, but a more substantive one. These bodies are supposed to be there to help in the midst of a recession and to focus on enterprise and business regeneration in their areas. Are they being given another responsibility which they do not need and which will distract them from their core responsibility?

My Lords, my comments go back a stage earlier than the points that the noble Lord has just raised. These amendments, which were added to the Bill in response to the London Authorities Mutual Ltd case, seem to address a symptom, not the underlying disease. The analogy that occurred to me this morning was that the Government have just managed to fling one parcel on to a train as it is leaving a station headed for the destination of Royal Assent, but they have left what matters on the platform.

I had a go at amendments in lieu of these amendments. I understand that the Public Bill Office said, “Good try, but not within the scope”, as these amendments are limited to mutual insurance. The Minister will not be surprised that I had tried to give the Government a legislative base on which to build either a power of general competence, although I knew what response that would get, or—this is particularly important—a base for any other discrete power that may turn out to be needed because the power of well-being does not cover it. Legislative opportunities for this sort of thing are not that frequent. It is a matter of chance that this Bill was available at the time when we had the judgment in that case.

I cannot say that insurance would have been my first choice of activity, but that is not the point. Local authorities should be free to undertake activities that they judge to be appropriate. Like others, I thought that the well-being powers were sufficient and felt a considerable sense of dismay at the judgment in this case.

Looking for the judgment was a case of, “Be careful what you wish for”. I asked the Library to find it for me and it turned out to be 91 pages. We find that we have not escaped the fine analysis of local authority powers or the line of cases arising, starting with the interest rate swaps and so on. Also, what is “incidental to the incidental”?

The leading judgment in the case—to pick out a couple of short comments—said:

“Promotion of well-being is not an expression one would normally associate with a somewhat complex arrangement to save money, such as the LAML arrangement, rather than with action directly to promote or improve a healthy or prosperous condition”.

The judge said later that,

“taking steps to improve the authority’s general financial position is not to be treated as something that will of itself promote or improve the wellbeing of its area”.

There needs to be a direct connection for the powers of well-being in the earlier legislation to be sufficient. We are left with local authorities not being clear about the boundaries of their autonomy and with a rich seam to be mined by particular third-party interests that oppose a proposed activity by the local authority.

The Government talk a lot about local autonomy and every so often one finds passages that make clear the philosophy that underlies what they say. I will refer to two. The first is in their response to the Communities and Local Government Select Committee report, The Balance of Power: Central and Local Government. The Government, at paragraph 27, talk about holding constructive dialogues on the need for extra powers. They say:

“Where specific evidence is provided to us, we will consider this on its merits”.

I emphasise the words “on its merits”.

Secondly, in the recent paper Strengthening Local Democracy, question 8 asks:

“How best should any reduction in numbers of LAA targets ensure that services are responsive to”—

and again I stress the following words—

“the most important local needs as well as national entitlements”.

All that begs the question: who is doing that assessment. I could go on, but those two extracts display a philosophy that we on these Benches do not share.

As I said, I have not been able to table the amendments that I would have liked concerning not just the power of general competence but giving the Government the opportunity to respond to a problem such as the local authorities’ mutual problem. Of course, we do not oppose the amendments, but we would have liked to be able to move from the particular to the general and turn the Bill into something much more worth having.

My Lords, I thank the noble Lord, Lord Bates, and the noble Baroness, Lady Hamwee, for their contributions to our short debate. I start with the point made by the noble Lord, Lord Bates, about the consultation. We will of course be publishing its results. On his mention of Zurich, I imagine that that is in the “against” box concerning the data, but we will be publishing that in due course.

The provision is not mandatory. These are opportunities for local authorities to enter into mutual insurance arrangements if it is in their interests to do so.

I thank the Minister for his courtesy in, as always, giving way. The more general point is that it was not an opinion poll as to whether authorities were in favour or against; the Government went out to consultation when detailed responses were given about Zurich. Can he explain how that information given by very busy people in organisations who have put a lot of time and thought into it has influenced the amendments before us now?

Let me say generally on consultation that it is the Government’s policy, as the noble Lord will be aware, to distil the results and publish them. We do not typically publish all the responses verbatim, but seek faithfully to represent the spread of views. Clearly the time between the conclusion of the consultation and the need to make progress on the amendments has been relatively short. I acknowledge that, but I hang on to my point, which is that nothing here requires local authorities to enter into mutual insurance arrangements. This is an enabling, permissive provision that provides the framework within which they can do it. It is important that that framework is provided, in part for the reasons touched on by the noble Baroness. The judgment in the LAML case was that local authorities, notwithstanding the well-being power, did not have the vires to enter into the arrangements that they did. We know that mutual insurance arrangements, properly conducted, can be very beneficial to local authorities. If they have a chance of getting better value from their insurance arrangements—often, mutual insurance arrangements also drive good risk management behaviour—that seems to me to be all to the good.

As for the role of the RDAs, I do not fully understand the noble Lord’s point. RDAs will not be qualifying authorities able to enter into mutual insurance arrangements. The point that I made when moving the amendment was that we would envisage that mutual insurance arrangements would be regulated by the FSA, as are all other insurance companies. That is the quality and regulatory issue about which we should be concerned.

The noble Baroness referred to the judgment in the LAML case, which had to be addressed. Of course there are wider, serious issues around competence, although it could be labelled in another way. We have been clear in our support for councils that want to undertake innovative activity to drive efficiency and to act in their interests and the interests of local communities. The aim is something that we share. We have taken seriously the LAML judgment that suggests the existence of a general power, but it would not have altered the findings. This is why in this case to ensure that local authorities are able to undertake mutual insurance, a specific enabling power is needed, and we have used the opportunity of the Bill to drive that forward.

In our recent consultation, we asked councils to identify where there are similar complex arrangements, other than mutual insurance, which are potentially out of the scope of the existing powers, and we are committed to following up on any issues raised. We will consider if there are cases in which a general power may provide reassurance for local government. I am sure that the debate about the general power of competence will not go away, but it is better that this debate is on wider issues rather than specifically mutual insurance.

Does the Minister accept that the local government world probably will not know whether to be worried about something until somebody takes it to court?

There is always a risk, particularly for local authorities that are trying to do innovative things. That is why we need to use the opportunity of the consultation fully to understand the types of arrangements and situations that local authorities are facing to make sure that they have the vires to undertake them. The noble Baroness makes a reasonable point. Everyone will have assumed that the powers that local authorities have would have been sufficient to undertake those mutual insurance arrangements but, at the very least in the timeframe available to us in the Bill, we can rectify that issue.

The noble Baroness asked where this leaves the well-being power. In the Local Government Act 2000 the power of well-being was introduced which allows councils to do anything with the exception of raising money or things expressly prohibited by legislation that would have an impact on the social, economic and environmental well-being of their area. The breadth of this power is such that it can be regarded as a power of first resort when seeking to improve such outcomes for communities, but we recognise that many local authorities will be concerned about the implications of the LAML case. However, every court case on the well-being power has upheld the breadth of that power, and this one is no different. The court case ruled mutual insurance services out of scope of the well-being power and changing the well-being power or introducing another form of general power would not be certain to ensure that local authorities could engage in mutual insurance arrangements. I know that that debate will go on, but before us tonight are these amendments relating to mutual insurance. I am grateful to have the support of both noble Lords.

Motion agreed.

Motion on Amendments 4 to 6

That this House do agree with the Commons in their Amendments 4 to 6.

I shall speak also to Amendment 9. Amendment 4 addresses the Secretary of State’s power to disapply the operation of Part 2 of the Housing Grants, Construction and Regeneration Act 1996 from types of construction contract. While the Bill has been going through Parliament, we have been approached by a number of stakeholders from within the industry and also its customers who are concerned about the nature of the Secretary of State’s power to exclude contracts from the provisions of the 1996 Act.

Currently the 1996 Act contains an “all or nothing” power so that the Secretary of State can disapply all the provisions of Part 2 of the 1996 Act from types of contract. We would like to substitute a new power enabling the Secretary of State to disapply any, not necessarily all, of the provisions of Part 2 of the 1996 Act. The current power in the 1996 Act is a blunt one. Amendment 4 will allow the Secretary of State to exercise the disapplication power in a proportionate manner.

This approach will give us the flexibility to deal with specific issues of direct concern with particular types of contract. Importantly, it will allow us to ensure that as 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 as appropriate. The legislation will also be able to respond proportionately to future contractual innovations. The current order-making power is subject to the affirmative procedure, and that will be the case with the new power.

The next amendments in this group are Commons Amendments 5 and 6, which are minor amendments to Clause 137, concerning pre-dispute agreements regarding adjudication costs. The 1996 Act was silent on the costs of adjudication and this has led to a practice in the industry whereby the party with the most bargaining power can insert a clause into the construction contract requiring that if the weaker party wants to go to adjudication to determine a dispute, they would have to pay all the superior party’s legal and other costs, and all the fees and expenses of the adjudicator. Clearly, such practices are unacceptable and are directly intended to work against the intent of the 1996 Act.

Clause 137 therefore inserts new Section 108A into the 1996 Act, and this prevents parties to construction contracts from entering into agreements before a dispute has arisen as to who should pick up the costs of an adjudication. A consequence of this broad and simple prohibition is that pre-dispute agreements between the parties to the effect that an adjudicator can allocate his fees and expenses as part of his decision are also 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. This amendment achieves this by carving out such agreements from the general prohibition. This is wholly in line with the amendment suggested by my noble friend Lord Brett during report on 22 April. I beg to move.

My Lords, as was said in the other place when this was debated, we strongly support this clause and the amendments which have been put forward. They are essential protection, particularly for the sub-contractors, who are often the people we read about in our newspapers day after day, going out of business as a result of funds not being passed on to them at an appropriate speed by main contractors. Anything that can be done to strengthen their position will be welcome, and this certainly does that.

We also support the strengthening of the adjudication system, and I echo the comments made by my honourable friend Stewart Jackson in another place. He said that this area was so complex and detailed that perhaps it merited a stand-alone construction Bill in order to deal with all that. I think, however—trying to be charitable—that we are quickly running out of time in this Session, so there is not likely to be such a Bill soon. But a specific Bill focused on construction, to draw in all of the areas in which they operate, particularly in relation to requirements on credit insurance, would be widely welcomed. Even in their present form, the new provisions are a significant step forward, and will provide welcome relief when implemented to many essential small and medium-sized businesses up and down the country.

My Lords, this part of the Bill seems to attract a lot of comments, not necessarily consistent with one another. It seems to us that the Government have managed, at any rate, to satisfy one area of concern which was expressed to us during the earlier stages of the Bill, so we support the amendments.

My Lords, I am grateful to both noble Lords for supporting these provisions.

That the House do agree with the Commons in their Amendment 7.

My Lords, I spoke to this amendment with Amendment 2.

That the House do agree with the Commons in their Amendment 8.

My Lords, this is the privilege amendment.

That the House do agree with the Commons in their Amendments 9 and 10.

My Lords, I spoke to these amendments with earlier amendments.