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Local Government Bill [HL]

Volume 719: debated on Wednesday 30 June 2010

Second Reading

Moved By

My Lords, this is our second attempt at a Second Reading debate on this short, single-issue Local Government Bill. The first was put on hold by the intervention of the noble Lord, Lord Howarth—I understand that he is unable to be in his place today—and the noble Baroness, Lady Hollis. Despite a ruling from the Public Bill Office that the Bill was not prima facie hybrid, and using the fact that they had obtained two opposing legal opinions on the matter, they persuaded the House that there was a case for the Bill to be deemed hybrid.

As a result of the success of that Motion, the Bill was referred to the Examiners for adjudication. This has taken place. I understand that the hearing was very short; no one from the Opposition attended to speak. After a very short deliberation by the Examiners, it was found that the Bill was, as expected, not hybrid. In effect, the Examiners put an end to a somewhat dubious delaying tactic. By their decision, they also vindicated the original decision of the Public Bill Office. That is important, as it is a strong convention that the House accepts the expertise of the Public Bill Office in these matters.

The purpose of the Bill is to give effect to the statement in the coalition agreement that:

“We will stop the restructuring of councils in Norfolk, Suffolk and Devon”.

Noble Lords may be aware that the previous Secretary of State decided, after much debate, to implement unitary councils in Norwich and Exeter. His decision was taken late in the Parliament and made despite the fact that those authorities did not fulfil the five criteria for becoming unitary. The Secretary of State cited “compelling reasons” why those authorities should be an exception to the rules.

The decision was also made against the background of considerable controversy, since there was a general lack of evidence for the “compelling reasons” and a lack of public support. Concerns were raised by noble Lords during debate on the orders about the cost and the lack of support, while questions were asked about the manner in which the decision of the Secretary of State was taken. A Motion of Regret tabled by the noble and learned Baroness, Lady Butler-Sloss, underscoring these concerns, was passed overwhelmingly.

On 24 March, Parliament approved the orders that established unitary councils in Exeter and Norwich. Since then, an appeal against the orders has been made to the High Court, which has recently declared that the then Secretary of State’s decision on the proposals for a unitary Exeter and a unitary Norwich was unlawful and that the Norwich and Exeter structural change orders should be quashed. We expect the court next week—provisionally on 5 July—to decide the precise details of the quashing of the orders, in particular whether the quashing will also end the deferral of elections for one-third of city councillors in Exeter and Norwich from May 2010 to May 2011.

Lastly in this saga, the previous Government took no decision on the proposals to create unitaries in Suffolk, instead proposing a county constitutional convention. This was a pie-in-the-sky invention of the previous Secretary of State, which was meant to bring together the principal authorities in Suffolk and their MPs to reach a consensus on a possible unitary solution within that county. The convention has never met and the proposals, therefore, have not been pursued. The Bill will put an end to any possibility of this matter being taken further.

That brings me to the reasons why we are introducing this legislation. In short, our case for doing so is one of non-compliance with the five criteria and, more generally, lack of any evidence of value for money. The arguments in favour of the restructuring in Devon and Norfolk were, in truth, never made out and should never have been pursued. The surprising thing, given the problems identified, is that they were pursued. It is also of considerable significance that the department’s accounting officer had such concerns about the value for money of the unitary proposals for Exeter and Norwich that he requested that he should receive a written instruction from the then Secretary of State to implement them. Having noted the accounting officer’s concerns, the then Secretary of State still gave a direction to implement these unaffordable unitary proposals. He also made a statutory decision to take no action on the Boundary Committee proposals for unitary authorities in Devon and Norfolk, thereby putting an end to those proposals.

This Bill does more than just put a stop to the structural change orders for Exeter and Norwich. It will put an end to all uncompleted plans for unitary restructuring including Suffolk, thereby giving these councils certainty on their future and a clear position for them to regroup and work with others to structure their services. They will also not have to bear the significant costs of reorganisation, which it has been estimated would have cost their taxpayers in the region of £40 million.

I shall now briefly discuss what the Bill does. Clause 1 revokes the orders creating unitary structures in Exeter and Norwich. It will also prevent the Secretary of State from making an order to implement a unitary proposal that he received before the coming into force of the Bill and so will put a stop to the implementation of any Suffolk unitary proposals that remain on the table.

Clause 2 makes consequential electoral provisions in relation to the deferral of elections of one-third of councillors in Exeter and Norwich city councils. It may be that after the court hearing next week, when the precise details of what is quashed will be decided, this clause will no longer be needed. If that is the case, consideration will be given to removing it from the Bill by amendment in Committee.

Clause 3 provides for the short title and the commencement of the Bill.

In the gracious Speech, it was emphasised that this parliamentary Session will focus on freedom, fairness and responsibility. This Bill is the embodiment of that message, as it brings freedom from an imposed restructuring; restores fairness by redirecting the councils’ focus to serving communities and the people who elect them; encapsulates financial responsibility by putting a stop to wasteful public spending on restructuring; and opens up opportunities for the councils to seek efficiencies without the distraction of reorganisation. It will prevent the wasting of public money on unnecessary reorganisations. I recognise that it was forecast that reorganisation might have led to savings, in the case of Exeter and Norwich, of some £6.5 million per year, and possibly larger savings from some of the proposals in Suffolk, but there were clear financial risks to those estimates.

The previous Government were determined to impose restructuring, whether viable or not, which was expensive and destructive and would not have served well the cities and communities of Exeter, Norwich or Suffolk. It would have created uncertainty and controversy and, through the acceptance of a flawed case for reorganisation, the authorities’ attention would have been taken away from the needs of rapidly changing service provision.

I recognise that both city councils will be disappointed by this move. Exeter and Norwich are dynamic cities. However, a controversial restructuring of services is not the way to achieve efficient delivery. There are excellent examples of councils of all sizes coming together to benefit from joint working, such as the sharing of chief executives, back-office pooling and co-procurement. Councils are free now to decide on sensible co-operation in the interests of their citizens, without restructuring. I believe that this approach will be made even more beneficial under the Government’s plans, which were announced in the Queen’s Speech on 25 May, to devolve more power to local authorities and fully focus on the power of localism.

I am confident that the council leaders of these authorities will want to commit to sensible co-operation and effective collaborative partnership with all the councils in their county areas. I make it clear that my department will help in any way that it can, while recognising that decisions should be made by local councils at a local level and that the age of centralisation is over.

In conclusion, this Bill puts a stop to all these uncompleted plans. It saves the taxpayer £40 million in restructuring costs. It releases the councils to focus on the services for their communities and the local people who have elected them. Above all, I stress that, with this legislation, Exeter and Norwich will be able to continue to be the powerhouses for their counties. They will be able to continue to be cities whose historical status can be, and always is, truly recognised. They will be able to continue their work without distraction and be impressive economic forces for their cities and the wider counties. I commend the Bill to the House and I beg to move.

I wonder whether the noble Baroness can help me, because I am a little confused by one or two remarks that she made, particularly that we will find out on 5 July what is going to be quashed. As I understand it, the High Court has made an order quashing the original orders, which were enacted and went through this House. What are the alternatives as far as quashing is concerned? What else is there to quash?

My Lords, the court made a decision only on the first clause—that is, to stop the reorganisation. It did not make a decision on the second clause, which relates to the election of the councillors. One-third of the councillors had their elections postponed until 2011. As things stand, they would have to have their elections immediately if this was not quashed or if we did not make a change in the Bill.

My Lords, I thank the noble Baroness, Lady Hanham, for explaining this short Bill. Although I believe it is not her first excursion to the Dispatch Box as a Minister, it is my first opportunity to welcome her, which I do—even if I do not welcome what she has said.

As we have heard, the Bill purports to put a stop to existing proposals for restructuring the councils of Norfolk, Suffolk and Devon and revokes the orders creating unitary structures in Exeter and Norwich. It makes consequential provision for the holding of elections that were due to be held on 6 May 2010 and which were deferred as a result of these orders. This avoids the necessity of interim by-elections and the expense related thereto and, as we have heard, the policy is to extend until 2011 the term of office of councillors who would have retired in 2010, but for the Norwich and Exeter orders. To get back into the normal cycle, one councillor or the only councillor elected to a ward in 2011 will serve a three-year rather than a four-year term. The restriction will fall on the councillor with the fewest votes and where there is an equality of votes or an uncontested election, the councillor to serve for three years will be drawn by lot. Given that the two-tier structures will remain in Devon and Norfolk, we can support this proposition. However, it would appear that should the quashing of the March orders precede the passing of the Bill, amendments will be necessary, as we have heard, to make the proposition effective.

The terms on which we consider the Bill have undoubtedly been changed by the decision of Mr Justice Ouseley to quash the orders which provided for unitary status for Exeter and Norwich. For a High Court judge, sitting alone and seemingly possessed of no additional information to that considered by Parliament, to overrule the democratically expressed will, especially of the elected Chamber, is a highly unusual step. I am told it is possibly unique. This was even in circumstances where the High Court was clear that the Secretary of State was entitled to reach the view he did on the merits of the proposal and that it was not irrational. Further, it was accepted that the final approach to decision-making adopted by the Secretary of State was properly within the scope of the 2007 Act.

In these times of economic stringency, with savage cuts to be imposed on local authorities by the coalition Government, the risks of incurring irrecoverable legal costs making it even more difficult to sustain vital services mean that an appeal cannot be contemplated. For now it is accepted that Norwich and Exeter will be denied the early opportunity to attain unitary status—an opportunity which has seen other local authorities of all political persuasions flourish under both Conservative and Labour Governments.

We note the decision of the Examiners that the Bill is not hybrid, but this was neither a spurious concern nor a delaying tactic. It is right that due process has been followed, even though the two councils withdrew their memorials before the hearing. Perhaps the Minister would say something more, particularly following the exchange with my noble friend Lord Richard about the structure of the Bill, and the decision of Mr Justice Ouseley to quash the orders. Does this mean that the orders under consideration are not relevant orders for the purpose of the Bill; that their revocation can therefore have no consequence; and that no councillor remains in office under Article 11 of the orders?

The Bill does not repeal the relevant provisions of the Local Government and Public Involvement in Health Act 2007, but prevents the Secretary of State making any orders which implement proposals for unitary authorities received before the coming into force of the Bill. Therefore, I ask the Minister whether it is envisaged that the Secretary of State will issue any further invitations for proposals for unitary status during the term of this Government, or whether the Bill signifies the denial of such possibilities. Has the Liberal Democrat wing of the coalition Government acquiesced to this?

When the orders to introduce unitary status for Exeter and Norwich were debated in your Lordships’ House in March, it is fair to say that they were hotly contested. The effect of the Motion agreed at that time was to call on the Government, notwithstanding the extensive consultation undertaken previously, including that by the Boundary Committee, to conduct further consultation. This was particularly in light of the fact that we consider there to be compelling reasons to depart from the presumption that the previously established five criteria should be the only basis for proceeding with unitary arrangements. The other place accepted that compelling reasons had been established.

However, if that was the view of noble Lords two and a half months ago, how can we view a situation where, within a couple of days of taking office and without any consultation or new data or information being provided, the Secretary of State decreed that Norwich and Exeter should be denied unitary status—as should Suffolk, which fulfilled the criteria? What democratic legitimacy underpins the Bill? As far as I can tell, the Liberal Democrat general election manifesto was silent on the matter. It proclaimed a commitment to giving more power to local people, saying that “local people” should,

“have the power and funding to deliver what they want for their communities”,

but seemingly not if they wish to do this as a unitary council. True, the Conservative manifesto had a commitment to scrap uncompleted plans to impose—

I apologise for intervening but the noble Lord’s remarks are very provocative given that all the way through our discussion, and previously, the opposition Benches have forgotten about the community of Devon. They always think about one community, not all communities. In the south-west, the community of Devon as a whole is very important. The noble Lord mentioned the success of unitary authorities. Frankly, Torbay unitary authority was a huge mistake and is not considered successful. Plymouth unitary authority, the establishment of which everyone supported, has also struggled hugely within historic Devon. That needs to be remembered.

My Lords, I can cite a number of flourishing unitary authorities, particularly my own, Luton, and those created in Bedfordshire under the previous Government’s legislation but with Conservative-controlled councils. What I am trying to discover is the democratic legitimacy of the Bill before us. The Conservative manifesto contained a commitment to scrap uncompleted plans to impose,

“unwieldy and expensive unitary councils”.

However, no one is supporting unwieldy and expensive unitary councils. I shall come in a moment to the impact assessment, but perhaps the Minister can tell us whether she views the unitary councils which came into existence some 15 months ago—some of them Conservative controlled—as unwieldy and expensive? Why could not the significant service improvements already being delivered by these councils be delivered by Exeter and Norwich?

The coalition document—the post-election manifesto—looks in both directions. It supports the,

“radical devolution of power and greater autonomy to local government”,

but not, it seems, if you are a citizen of Norwich or Exeter.

The Government cannot possibly argue that they have a democratic mandate from the general election for this measure. Halting the creation of a unitary Norwich and Exeter is totally incompatible with the expressed policy of devolving power to local government and local areas. It runs directly contrary to Conservative manifesto rhetoric around leadership and the promotion of,

“single municipal leadership injecting dynamism and ambition into their communities”.

The Government’s argument for this Bill rests on the assertion that the unitary council proposals do not represent value for money, but this is a somewhat selective reading of the components of the impact assessment, which show that if unitary status were to proceed it would involve gross restructuring costs of some £40 million but gross savings of £39.4 million over the transition period—a broad equivalence but with ongoing savings after this of some £6 million per year; and this is before factoring in the benefits which would flow from the spur to economic development which unitary status would bring to Exeter and Norwich. The impact assessment asserts that the scale of efficiency savings forecast from unitary status could be achieved by other means. Perhaps the Minister in replying to the debate could give us more detail about these other means. What detailed work underpins that assessment and has it been verified independently? What consultation is planned around the proposition?

Much has been made in the past—we have heard it again this afternoon—of the direction that the previous accounting officer required of the then Secretary of State. But the core of the accounting officer’s concern was the lost opportunity of the savings from the Boundary Committee proposals—which of course had little support from anyone—essentially involving unitary counties. However, these opportunities are being rejected by this Government also.

Our starting point in considering proposals for unitary authorities was the five criteria of: affordability; whether there is a broad section of support; strategic leadership; neighbourhood empowerment; and value-for-money services. In the case of Exeter, each of the criteria was satisfied with the sole exception of one component of affordability—the payback period for transitional costs was six years rather than five. Taking account of the accepted ongoing savings, the opportunities for enhanced economic development and the development of Total Place, there were and remain powerful reasons to grant unitary status to Exeter. Similar considerations apply to Norwich where the payback period was originally a little longer than five years but with clear ongoing savings—the House will hear more about this from my noble friend Lady Hollis—and with the Total Place approach enabling the delivery of value-for-money services.

We might have understood if, in the circumstances, the new Government had said that they wanted more detail on these additional issues and indeed, as the House determined, and even Mr Justice Ouseley suggested, some more consultation. But what this Bill does in an arrogant, dictatorial and brutal way is to shut out Exeter and Norwich from the opportunity to become unitary councils—an outcome for which there is genuine local appetite, which in Exeter has cross-party support and in Norwich has the support of the Lib Dems, the Greens and Labour Party members. It is the desired outcome, not dictated or imposed by government but proposed by the democratically elected councils of these cities.

The benefits of unitary city councils are widely recognised. They reinforce a city’s distinctive identity and sense of place. They provide the basis for clear leadership to drive dynamism and ambition into their communities. This opportunity would not be new to Norwich or Exeter. The latter governed itself for nearly 800 years and provided all services for the city until county borough status was removed in 1974. Norwich ruled itself for almost 600 years. In neither case did that undermine the surrounding counties.

A two-tier structure of local government has not served either city well. Both are potential engines of economic growth within their own boundaries and more widely within their counties and sub-regions. The strategic leadership coming with unitary status can provide a powerful thrust to the regeneration and development of the economy in a local area, facilitating councils which are focused, innovative and entrepreneurial, and helping to deliver jobs, economic growth and prosperity at a time when the country most needs them.

Anyone who has served as a councillor in a two-tier system—as I did in Luton, mostly under a Tory-controlled council—will recognise the confusion over who is responsible for which services, which councillor covers which council, and indeed which local election is under-way. More importantly, there are the challenges of keeping a focus on an urban area and its needs within a larger rural county—especially an urban area with pockets of deprivation and diversity. In those days, Luton used to be referred to, not with any particular affection, as the urban bottom of the county. Its needs were neither fully understood nor provided for. What sticks in the memory is the meals-on-wheels service organised from County Hall without any recognition of the cultural needs of our diverse population. I have seen how liberating unitary status can be for a local authority—in particular, the tremendous boost that it can give to regeneration efforts and the concentrated way in which it can meet adversity, in our case the closure of the car plant. This did not harm our relationships with the rest of the county. It strengthened them. Anyway, they have now followed suit and are unitary councils.

Why should Norwich and Exeter be denied the opportunities we have in Luton, opportunities provided by a Conservative Government? The cities have addressed their value-for-money and service-delivery issues. They want to deliver a clear and focused place-shaping for their cities. They want to tackle deprivation and raise educational attainment, skills and aspirations. They want to deliver economic prosperity for all.

I am grateful to the noble Lord for giving way. He has dealt at great length and very helpfully with the underlying merits of the argument on both sides. Has he taken sufficient account of the fact that the orders in question have been, or will be, quashed by Mr Justice Ouseley—a decision which he is perfectly entitled to take?

Yes, indeed, my Lords. I thought I had recognised at the start of my presentation that that had changed the basis on which we are debating the Bill. I am simply reiterating why unitary status for Exeter and Norwich should be supported.

This Bill will deny those two cities that chance. It will do this without clear manifesto cover, with unsubstantiated assertions of alternative savings, and there is no desire that unitary status should be at the expense of the rest of Norfolk and Devon. Unitary status does not change the position of the remaining district councils. It opens up opportunities to co-operate in the shaping of upper-tier services and enables the county councils to provide a greater focus on addressing rural issues. There remains much to scrutinise in this short Bill and we intend to do this thoroughly.

However indirect the mandate that this coalition Government have secured, they are entitled to a fair wind for the thrust of their programme. However, this is an unworthy measure—a grubby little Bill with a cobbled-together parliamentary majority to crush the legitimate aspirations of two proud cities. We will continue to support Exeter and Norwich in holding fast to their ambitions for unitary status and help them to achieve this at the earliest opportunity.

My Lords, I remind the noble Lord, Lord McKenzie, that Luton is not Devon—nor is it Exeter. I remind him also that the previous Government were warned by me, and by others including my noble friend Lord Tope, that their legislation was not lawful. That has proved to be the case. I congratulate the Minister on persisting with this Bill. I believe that I speak for the people of Devon and Exeter. The previous Government’s plans would have resulted in the loss of economies of scale, in transitional arrangements that would have subjected the people of Exeter and Devon to chaos for years, in no improvement in services, in further expenses and in a monumental waste of taxpayers’ money. Already the system works very well. Devon County Council is excellent and the people of Devon and Exeter do not want to be burdened with this unnecessary and expensive change.

My Lords, in supporting the Bill, many of us feel that it should not have been necessary to introduce it. On 22 March, this House considered the previous Government’s decision to proceed with the orders for the creation of the two unitary authorities on the basis of the existing boundaries of the Norwich and Exeter city councils. Many of us argued that the then Government were acting improperly in ignoring the criteria that they themselves had set for considering how decisions should be taken in relation to unitary status. When the orders were tabled, I attempted to put down an amendment to say that they should not proceed until the conclusion of the action for judicial review launched by Norfolk and Devon county councils. However, I was told that such an amendment, if carried, would not have the status of a fatal amendment that would stop the Government proceeding as they did; so my noble friend Lord Tope tabled a fatal amendment. He and others effectively demolished the case for the Government proceeding as they did—but sadly, the fatal amendment was not carried.

However, the position that we took was vindicated in the High Court last week. Mr Justice Ouseley, referring to the actions of the previous Government, concluded:

“On the face of it, the decisions taken by the Secretary of State and Minister simply made a mockery of the consultation process”.

Of the way in which the Government proceeded, he said:

“It was so unfair that his decisions were unlawful”.

The judgment of the court was damning. It described how the Secretary of State set out repeatedly the basis on which he would refuse proposals and, without any warning, adopted a wholly different approach and reached decisions that on the original approach he would not have reached. The way in which the target was moved was criticised by the court because it could have been signalled, and an opportunity to respond provided, without any—or at worst any great—delay. While the unfairness may not have been intended, it was described as “real, plain and unlawful”.

We should not be where we are today. Unnecessary cost to the public purse and a great deal of stress to many employees of the councils concerned have been caused. The House may not have carried the fatal amendment of my noble friend Lord Tope, but it did call for further consultation to be undertaken before steps were taken to proceed with the reorganisation. Perhaps the Minister will tell us if any consultation, which the High Court clearly considered necessary, followed this call, or whether no notice was taken of the request.

I believe that the case put against those orders, and therefore the case for this Bill, remains very strong. We considered it in March, and the Minister has referred again today to the fact that it is an extremely rare and very serious step for a Permanent Secretary to request a written instruction from a Secretary of State to implement orders because of deep concerns about the value for money to the public purse involved in a government plan. However, that is what the Permanent Secretary for the Department for Communities and Local Government—the department’s accounting officer—had to do when the previous Government decided to proceed in the way that they did.

It is also strange that the previous Government’s decision to make the orders for Exeter and Norwich was contrary to the expert recommendations of the independent Boundary Committee, which had carried out an exhaustive review of local government arrangements in Devon, Norfolk and Suffolk at the Government’s request. The Boundary Committee warned that the proposed—

Can the noble Lord tell us of anyone in the county of Norfolk—in the district council, county council or city council—who supported the Boundary Committee’s recommendation?

My Lords, I have not argued the case for the Boundary Committee’s proposals and am not doing so today. I am simply pointing out that the Boundary Committee, having been commissioned and given a remit by the Government, decided that the proposals which the Government subsequently put forward were simply not right. It said that they were unaffordable and it confirmed a previous rejection of exactly the same proposals by a previous Secretary of State in the same Government. The Boundary Committee also warned that there would be serious questions over the ability of the rest of Devon to function effectively as a unit of local government if Exeter alone became a unitary local authority.

The House of Lords Merits Committee drew the House’s special attention to the two orders. The committee found that the unitary proposals did not meet the Government’s five strict criteria for implementation. It said that the Government had failed to provide sufficient information to explain their departure from the criteria, and the Joint Committee on Statutory Instruments expressed doubt about whether the orders could be lawfully made. These are all reasons why we approved in this House Motions of regret tabled by the noble and learned Baroness, Lady Butler-Sloss, calling on the Government not to proceed with the orders without further consultation. There is no change in the logic of the arguments that were supported in this House on 22 March, and the same logic therefore dictates support for the Bill today.

My Lords, I apologise to the noble Lord, Lord Rennard, but, looking at the speakers list, I thought that the Liberal Democrats had changed their spokesman and that is why I rose. I want to follow the noble Lord but shall speak largely for Norfolk.

When this is all over, the issue that the Bill involves will be a very good subject for a thesis in some university’s political or constitutional department as an example of how not to handle issues in government. Frankly, it has been a shambles throughout and an expensive and lengthy one too—a classic example of how not to proceed on issues such as this, including political gerrymandering as a last desperate throw.

At the outset—and I talk about the outset of the Boundary Committee’s approach to all this—many of us stressed to the committee the importance of affordability and value for money as key tests. We proved to be right, and more on that later. As my noble friend on the Front Bench reminded us, unitary applications had to meet all five tests. Early on, the Boundary Committee found that the Norwich unitary authority, which eventually emerged from the Government but which they did not recommend then, failed the key tests of both affordability and value for money. Incidentally, I say in passing that Norwich City Council was found wanting by the local government audit process on these grounds, and in four of the past five years its accounts have not been approved. The then Secretary of State therefore turned down the proposal for a Norwich unitary authority on that basis.

When a later Secretary of State, John Denham, revived the issue of a unitary authority on these boundaries, the Boundary Committee warned that this was unaffordable but was ignored. As has already been stressed, the Permanent Secretary and accounting officer for the department laid out his concerns about affordability and value for money and added feasibility, asking for a written instruction. As I said in the debate on 22 March, during my long time in government, I cannot recall ever having received a written instruction, and I can hardly recall any of my colleagues doing so. That was a very rare step to take, but it was taken. The subsequent published correspondence revealed that the Department for Transport also raised serious doubts on transport grounds and expected the Treasury to do so too on financial grounds. I shall return to that later.

As the noble Lord, Lord Rennard, has already commented, our Merits of Statutory Instruments Committee produced what I thought was a quite devastating report. I do not often study that committee’s reports, but I am sure that this was one of the largest it has produced. Page after page tore the proposal to shreds. We now know that the High Court ruled that the orders should be quashed. The noble Lord, Lord Rennard, has already quoted from remarks made by Mr Justice Ouseley in that regard. I want to pick out one or two comments from his judgment. He said,

“On the face of it, the decisions taken by the Secretary of State and the Minister simply made a mockery of the consultation process”.

He continued:

“I am satisfied that this change in approach”—

the change of approach which the then Minister took—

“was unfair and deprived the county councils of the opportunity to make their case in the consultation process”.

He was particularly devastating in commenting on the last-minute change in the way in which the then Secretary of State looked at the criteria. He said:

“He alerted no one, and none were able to address the principle of changing the role of the criteria or his two specific reasons for now allowing a proposal to proceed despite not meeting all of the criteria. On the face of it, it appears that something has gone very wrong”.

That is a pretty devastating criticism of the process that was followed, at the last minute, by the previous Government. The fact is that the Labour Government’s deathbed action was a political fix, which was rushed through at the last minute, flew in the face of all previous work and evidence, ignored all the compelling criticism and opposition and gave the majority of local authorities in Norfolk, and pretty well all of the public, no time to be consulted or to respond. Indeed, I think that the Government’s decision was the worst possible one, as our debate on 22 March demonstrated.

I was always in favour of the status quo in Norfolk, but we were originally asked by the Boundary Committee to put forward a second choice if our first choice was rejected. My second best, but far behind the status quo, would have been a Norwich unitary authority which would have been based on new boundaries, although against that was the upheaval and the cost, so I did not recommend it, but that would have been a choice. At least that would have reflected the changed nature of Norwich. What made no sense at all was to base the unitary authority on existing boundaries when only 14 per cent of the planned housing and economic growth for the Norwich policy area—the long-standing definition of structure planning for Norfolk as a whole—would have fallen inside the boundaries of the unitary authority then proposed by the Government.

The noble Lord, Lord McKenzie, has made much reference to democracy and to local reactions and has talked about the people of Norwich. I have one or two points to make on that. There are many other local authorities in Norfolk. The population that would have been affected by the then Government’s unitary proposal was much smaller than the overall population; in other words, those who opposed the unitary authority were much greater in number, by local authority, than the population of Norwich City Council itself. Besides, when the department conducted a poll of reactions in Norfolk as a whole, only 3 per cent of the respondents were in favour of the proposal that the Government then put forward. I do not think the noble Lord can argue, in any sense, that the feelings of the people of Norfolk were properly reflected.

During the general election, that was quite a considerable issue in most of Norfolk. Of course, the general election result was decided on other things, but it is not insignificant that Norfolk had a very substantial positive Conservative response in the general election and Norwich itself returned a Conservative MP who supported our general line on the unitary authority. But above all, it is the costs in the current climate that matter to me. For some time, I argued that affordability and value-for-money grounds should be in the forefront. I was doing so even three to four years ago when this issue was first debated. It was clear then that we were entering an exceptionally difficult financial climate of fiscal deficit and soaring public expenditure.

I have to say that it is even more compelling today in the current climate and the impact assessment makes the point. There will be a huge up-front cost, before any benefits run through, of the order of £40 million. It is that cost that matters in the next two years, when local authorities will be under great pressure. The letter from the Permanent Secretary at the Department for Transport referred to Treasury officials being likely to advise their Minister against accepting the proposals, and I understand only too well why. In our debate on 22 March, the then Minister refused to confirm that that was the Treasury’s position, but I am pretty sure that it would have been. How could we possibly justify additional expenditure now on a political fix when we all know that we are entering a period of severe financial constraint and cut-backs? With all the pressures now facing local authorities, how could we possibly justify expenditure on this political exercise which most local authorities in Norfolk opposed?

I understand why my noble friend Lady Hanham cannot tell us what the Treasury reaction was before the election, but I would be interested in knowing what its assessment is now. I suspect that to a considerable extent it influenced the impact assessment. Will she confirm today that all expenditure on the planning process by the consultative committee in Norfolk will be stopped? Surely it is an abortive expenditure and should not be allowed.

I want to say a word or two about the process. I believe that we in the Conservative Party have behaved perfectly properly on this issue. We made our case at the local level and were vindicated in that the unitary proposal was rejected by the Boundary Committee on the evidence and supported subsequently by the Permanent Secretary and accounting officer in the relevant department. We took much stick in Norfolk for observing the strict convention in this House relating to statutory instruments by the decision not to vote on 22 March. We did that because we thought it right to obey and follow the convention in this House. Locally, it was very difficult to explain the situation after that vote, and very difficult at times during the general election.

It would have been so easy to win that vote because, like the Lib Dems and Cross- Benchers, we would have voted in favour. But we observed the rules and instead made clear our intentions in our party’s election manifesto. We have been true to our word, and are bringing forward this legislation to fulfil that manifesto commitment. I have to say to the noble Lord, Lord McKenzie, that democratic legitimacy, about which he spoke, is what we have observed all the way through. We observe the conventions in this House; we have not relied on the High Court decision; we have carried through our manifesto commitment and brought the legislation forward here; and we have reflected the feelings of a vast majority of people who expressed their views in Norfolk as a whole.

The Government have been true to their word. I congratulate my noble friends on the speed with which the Government have acted and I hope that we shall be able to continue with due speed.

My Lords, I declare an interest as former leader of Norwich City Council, and also a former Norfolk county councillor. Perhaps I may add that nothing I will say in any way casts aspersions on the integrity of my fellow Norfolk Peers or indeed on the Minister herself, whom I hold in high regard.

I fully accept that the judicial review has cut across this Bill, which means that we did not pursue the issue of hybridity and we did not argue the case before the Examiners. Not surprisingly, therefore, the examination was exceedingly short. We also accept that, together with the Minister, we need to clarify the electoral situation of councillors. However, the Bill is before us and that is what we are debating, so I want to say something about local government reorganisation more generally, and then analyse the reasons for what I regard as a spiteful little Bill.

In 1974, Norwich and Exeter had been unitary councils for more than 600 years. They had ratepayer democracy half a century before county councils were even invented. By the 1930s, Norwich County Borough not only exercised all of today's district and county council functions, including the police, but ran the massive non-voluntary hospitals and public health chunk of the future NHS, all of today's Anglia water authority and the major utilities, as well as a large part of the social security system. Norwich's budget would have been between £1.5 billion and £2 billion, I calculate in today's prices, compared with our current non-housing budget of £50 million.

With that record, it is insulting when Eric Pickles of unitary Bradford, a mere village when Norwich was the second city of England, or the Minister, from the unitary London Borough of Kensington and Chelsea, invented only in the 1960s, tell us that unitary status is fine for them but not for us. From 1888, when Norfolk County Council was invented, until 1974, almost every initiative of note in the county was pioneered by the city. That is what cities do.

We are the largest non-unitary authority in the country. We are already considerably larger than many existing unitary authorities. Our population will be 160,000 in eight years’ time. We have two cathedrals, two universities, a major FE college, an international airport, a thriving theatre and the greatest collection of medieval churches in western Europe. What are we lacking—apart, obviously, from the fact that Mr Pickles is not our MP? We have recently been shortlisted alongside Birmingham, Sheffield and Derry/Londonderry for the title of City of Culture. Disinterested observers might think that Norwich was up there with the major cities rather than down there with the rural district councils.

Into that respectful and complementary partnership between county borough and county council—at the time, I was a city councillor—came 1974. Peter Walker wanted unitary counties. I was a member of the AMA. We fought for, but failed to save, most of the county boroughs. The history of local government reorganisation since then has been that of remedying the folly of Peter Walker's policies by both parties. In the early 1980s, the Conservatives got rid of the met counties and made Mr Pickles' Bradford unitary. Whoopee! In the mid-1990s, as my noble friend said, the Conservatives, under David Curry and John Gummer, to whom I pay tribute, made a whole swathe of cities unitary: Leicester, Derby, Nottingham, York—all former county boroughs, like Norwich and Exeter—Milton Keynes, Peterborough and Basildon, which do not have such a history or track record. Norwich and Exeter were on that list. Norfolk should have come under the wire then, as the noble Lord, Lord Bowness, has agreed and admitted, but the county Tories in Norfolk fought it off.

That drive to unitary status as the most effective local government structure for cities continued under the Labour Government. My noble friend made this point very well: do your Lordships know of any counties that would now wish to turn the clock back to district councils for their cities? Does Derbyshire want to do that to Derby, Nottinghamshire to Nottingham, Leicestershire to Leicester, Buckinghamshire to Milton Keynes? No, they value and support their cities, recognising how much they bring to their county’s economy and growth. Why, by contrast, is Norfolk so bellicose and so fearful? I will come back to that.

Following the 2006 White Paper, 26 cities and large towns made their bid. The Boundary Committee was requested to consider Norwich’s and Exeter's proposals, and twice, with unerring instinct, produced the only solution that none of the local authorities, including the county council in Norfolk, wanted: a return to a Peter Walker unitary county. However, the Boundary Committee would not listen, so JRs followed. As Paul Rowsell, the senior civil servant responsible, said in his court witness statement of 22 March this year, had the Boundary Committee reported on time, not nine months late, implementation would have already happened and this spiteful little Bill would not have seen the light of day. Had the Boundary Committee reported on time, the Secretary of State could, as the judge suggested, have consulted on the additional criteria, the JR would not have succeeded and, again, this spiteful little Bill would not have seen the light of day. Max Caller and his Boundary Committee team have wasted a lot of time and money and have served local government very badly indeed.

So what are the professed reasons for this spiteful little Bill? Page 7 of the impact assessment—I had to request extra copies, but the Minister was good enough to put them into the Printed Paper Office—is headed “Rationale for Change” and is personally signed by the Minister as a fair and reasonable view of costs, benefits and impact. It gives four reasons for the rationale for the Bill. First, she says, it is in the coalition programme. So what? That programme was negotiated after the election by two minority parties and has no electoral mandate. In any case, as the noble Lord, Lord Low, pointed out in the Queen’s Speech debate, it is utterly at odds with the rest of the localism programme in the coalition programme.

Secondly, the Minister states that these two cities becoming unitary would be expensive and poor value for money, a point hammered home by the noble Lord, Lord MacGregor. For the first six years of transition, the total net non-discounted cost of Norwich and Exeter going unitary comes to around £300,000 per authority, or £50,000 per year per authority. The impact assessment allows, grudgingly, that there should be savings thereafter but, oddly, it does not estimate them. Funny, that. Your Lordships might just think it relevant that over the following six years those savings would equate to at least £20 million or upwards and would grow each year thereafter. These figures are certified by Deloitte and, for what it is worth, they have been crawled over by me. Will the Minister tell me how an expenditure of £300,000 in the first six years to generate savings of £20 million or more the next six years is expensive and poor value for money? For the impact assessment to give costs, but not savings over time, means these statistics are not worth while.

Thirdly, the Minister buttresses her case, which was much quoted by the noble Lord, Lord MacGregor, by quoting the Permanent Secretary as saying that a unitary Norwich and a unitary Exeter represent poor value for money, and that “therefore” stopping these unitaries is good value for money, but compared with what? What the Minister does not say, and did not say in her impact analysis or in her speech today, what the impact assessment should have said and what the House is entitled to know is that the Permanent Secretary, when arguing that city unitaries were poor value for money, was comparing them not with the status quo of the Bill, as you might expect, given that it is supposed to be an impact analysis, but with unitary counties, which are not introduced by the Bill, which were indeed the cheapest option, but which nobody but the Boundary Committee and the Permanent Secretary appear to want.

The Permanent Secretary’s comparison is completely invalid. Indeed, it is worse than that because what the Minister does not tell us, which again the House should surely know, is that her solution—the status quo—is the most expensive of the three options. It is far more expensive than unitary Norwich and Exeter, as I have shown. On costs versus benefits, it is far more expensive than the Permanent Secretary’s unitary Norfolk. Her version of value for money is to save £300,000 for each authority over six years and forego savings of £20 million over the next six years. That is not mentioned—funny, that.

As Ministers, many of us have signed impact analyses. We know what we are talking about, so I say with the utmost seriousness that this impact analysis is greatly misleading, makes false comparisons and suppresses relevant information. I am sad that the Minister, whom I respect most profoundly, could put her name to it. It really will not do.

The fourth of the Minister’s arguments is in the rationale on page 7 of the impact statement. She argues that the 2006 non-statutory criteria were not followed. As we argued at that time, additional criteria were added: that is, a sensible response to the recession. The High Court judge, Mr Justice Ouseley, has nullified the orders because the DCLG failed to indicate in December 2009 that “compelling reasons” such as the recession might lead to a proposal being accepted that did not meet all the 2006 proposals. The Boundary Committee’s tardiness has meant there was no time for further consultation.

We, the city of Norwich, have been urged to appeal on constitutional grounds that such action—striking down not just the actions of the Secretary of the State, which can happen, although infrequently, but the will of Parliament itself—has not been taken, and I may be wrong, but I have been told this, by any judge hitherto below the level of the Law Lords and now the Supreme Court. At £200,000 or so, Norwich cannot afford the risks of challenge. Of course, the JR reviews the decisions of a Minister, but one High Court judge striking down the express will of Parliament over seven hours of debate is somewhat unsettling.

In consequence, we did not pursue the issue of hybridity: that Norwich and Exeter were being singled out for unfavourable treatment compared with the other authorities that had gone through. That argument has also gone by default. Why, then, are the Government so determined that Norwich and Exeter in particular should not be unitary? Clearly, the four arguments in the impact analysis are a work of constructive fiction.

Some years ago, when I fought a Norfolk seat with a large rural hinterland, a farm worker rang me from a public phone box. I said that I would drive over, but he said, “No, no. I will come on my bike”. I said, “But it’s eight miles”. He said, “It’s more than my job or my cottage is worth to be seen speaking to you”. That was the Norfolk I experienced as a county councillor. People were decent and public spirited but with an unshakeable belief in a right to rule over pheasants, farm workers and Norwich. The city was gifted to them in 1974 and what they have they hold.

Over and beyond property rights, money is the second reason why Norfolk county councillors—two-thirds of whom are also rural district councillors—have fought us. Urban Norwich subsidises the rural county at a severe cost to its own services. Even the Boundary Committee acknowledges that Norwich has been poorly served. In 1974, we handed over six comprehensives, from four of which you could go to good universities, as did my two sons who went through the state system. On Norfolk’s watch, one comprehensive has been closed and four of the remaining five have been taken into special measures. Why? Rather than raise the rates to keep open small rural schools, which I support, Norwich schools have been run down instead. Poorer Norwich council tenants see their services run down to ensure that the rates on affluent Broadland homes are kept low.

The third reason for the Tory county opposition is because cities, especially unitaries as my noble friend argued, generate jobs and growth. Half of Norfolk’s jobs are in Norwich, but, as I was told on the county council by one Norfolk county councillor who was also a farmer, no local employer wanted the competition from more new jobs because that would push up wages.

The final reason is of course politics. Norwich is a left-of-centre city. It celebrated the French Revolution with a maypole in the market square. It has been the home of dissenters, Chartists, Liberals—at least until now—and now Greens. A unitary Norwich would be stronger not only economically but politically, and I am not sure which is the greater offence.

My dismay is particularly with the Lib Dems. Norman Lamb is the MP for North Norfolk. With no formal connection to Norwich, he and the national party of the Lib Dems have overruled the local Lib Dems on the city council, who initiated the move to unitary status and who have fought heroically for unitary status. They view the actions of their London party with utter fury. Norman Lamb’s position is also at odds with the position of the new Lib Dem MP for Norwich South, Simon Wright, who is also committed to a unitary Norwich. On 9 March, Norman Lamb told the other place that he wants progressive city councillors to remain on the county council—that is why he does not want Norwich to be a unitary—so that, in his words, one party, a Tory party, does not,

“rule for the rest of Norfolk for ever and a day”.

That, he said, would be,

“an outrage”.—[Official Report, Commons, 9/3/10; col. 252.]

For Norman Lamb, a Tory county would be an outrage—before he joined the Tory coalition, of course—so he supports the Tories nationally to block Norwich’s unitary status in order to better fight the Tories locally. How twisted, and how cynical, is that?

This remains unfinished business. Be in absolutely no doubt that Norwich will become a unitary authority, although it may take us several years longer than we had hoped. In the mean time, the people who will pay the real bill are the people of Norwich and the county of Norfolk. They will be denied a strong, focused, unitary city that could bring them the jobs and growth they so desperately need.

My Lords, when I retrieved the notes that I had written for the original Second Reading debate in this House, I saw that they start by saying, “Congratulate Baroness Hanham”. I had intended at the time to congratulate her on her new job, but time has moved on, so perhaps I should congratulate her on getting so far with the Bill.

I was the party’s Front-Bench spokesman when the Government of the day brought out their White Paper introducing this round of unitary government. At the time, I was prepared to give the Government a fair wind because I am someone who was and remains quite open to the idea of unitary authorities. I can see their benefits in many cases, but only if it is a matter of well informed local choice and following clear processes.

As we moved through the first tranches of authorities to go through this process, I became increasingly concerned about a lack of clarity on the desired outcome, particularly on how the five tests would be assessed and measured. It became clear that there was an absence of impartial information to the public in the areas affected and that there was no objective method for determining the state of local public opinion. All these defects led to protracted processes, many going as far as judicial review, and we ended up with Parliament taking decisions close to electoral deadlines, along with all the uncertainty that that brought with it. Despite that, I did not oppose any of those orders because I believed that the Government were acting in good faith.

By the time that we came to this tranche of orders, relating to Norfolk and Devon—and, in parentheses, my home county of Suffolk—I had lost all faith in a process that by then had taken three years, during which time the Government had constantly moved the goalposts. Not only has that led to the problem of uncertainty for staff, highlighted by my noble friend Lord Rennard, but it has made recruitment difficult, it has undermined partnerships between the local authorities and other bodies and it has had a hugely detrimental effect on good governance for all the councils concerned.

The counties of Norfolk, Suffolk and Devon are similar in character, yet they were treated very differently by the Labour Government. In Norfolk and Devon, the county towns were to be given unitary status. As we heard from the noble Baroness, there may be good reasons why this is desirable, but the supporters of this option have never given me a clear understanding of how we will deal with the impact on the rest of these counties, which will have the heart ripped out of their governance when the county town is taken away.

Concerns about the financial case led to a direction from the Permanent Secretary. The noble Lord, Lord MacGregor, has highlighted what an unusual step that is, although we find now that there was a rash of these in the dying days of the previous Government.

If you understood the rules that the previous Government were working by, you would have known why Norwich and Exeter were to be given unitary status and therefore you would have assumed that, using the same criteria, Ipswich, too, would have been given unitary status. However, it was not: Suffolk was told to go away, have a citizens’ convention and then report back. That could have been done three years ago, which would have saved everyone time and money. In fact, local authorities in Suffolk are now working well together and sharing services—in some cases, they are sharing chief executives, while two district councils are looking at merging all their shared functions.

There is only one reason why Ipswich was treated differently. It was in the Labour Party’s direct political interests to have unitary councils in Norwich and in Exeter, but Labour did not care about Ipswich because it had lost so much ground there. The decision was pushed through in the dying days of the previous Parliament for purely political reasons. We hear today from the Benches opposite that the coalition Government have no mandate to do this, that the Permanent Secretary was wrong, that the Boundary Committee was wrong and that the High Court was wrong. Indeed, the report of the Merits Committee and the vote in this House have been glossed over. It would appear to the Benches opposite that everyone is wrong except them.

People in these counties deserve the right to have clarity about the way forward. To keep going in this way is grossly irresponsible of the Members opposite. It is time to get behind the people of all these counties, to support them in the services that they want and to leave behind these divisive, unpleasant and, in many cases, outdated arguments. I have heard arguments from the Benches opposite that are 20 years old. Councils and counties have moved on—they are no longer backwaters—so, please, let us get on, get the Bill through and give the people in these areas the certainty that they deserve in their local government.

My Lords, I declare an interest in this matter as an elected member of the Borough Council of King’s Lynn and West Norfolk.

It gives me great pleasure to support this timely legislation. Although I did not speak when the orders were debated on 22 March, I attended the debate. I am afraid to say that I even defied my own party Whip and voted against the order for Norwich and Norfolk by supporting the amendment tabled by my noble friend Lord Tope. The orders were as wrong then as the Bill before your Lordships’ House is right today.

It would be senseless to rehearse in detail the arguments given before the orders were made in March—in fact, they have been rehearsed—as they are all in Hansard. Suffice it to say that the consultation found that almost everyone was against the orders; the Government’s own criterion of affordability was not met; the Permanent Secretary of the Department for Communities and Local Government sought a political direction because he did not believe that the proposals represented value for money; and the Permanent Secretary warned that the orders would provoke a judicial review that would be likely to succeed. That review has taken place; indeed, the High Court ruled on 21 June that the decision to make the orders was unlawful. There was also a devastatingly critical report from the Merits of Statutory Instruments Committee of your Lordships’ House, as mentioned by my noble friend Lord MacGregor.

The list is longer, of course, but given an opportunity and a little time to reflect on the passing of the orders, it is right and proper for the new Government to keep their word and the promise made before the election and to move swiftly with the Bill to annul these orders. Even the attempt by the noble Lord, Lord Howarth, to delay the Bill by persuading the House that it could be hybrid has now been firmly quashed by the report from the Examiners that was published yesterday.

On a point of information, it was not contested. We withdrew from that examination and therefore the arguments were not aired and fully debated, because we knew about the situation with the judicial review.

My Lords, all I would say is that the Examiners have examined it. Their report has been published and the Bill is not hybrid.

For all those reasons, I am delighted to support my noble friend Lady Hanham, who introduced this Bill.

My Lords, whatever I say about the Bill, it is only fair to say at the outset that I welcome the noble Baroness, Lady Hanham, to the Front Bench. She has been an effective speaker for her party in the past and I am sure that she will be a good Minister, but I do not think that she will look back on this Bill with any pride. In truth I doubt whether the Conservative-Liberal coalition, when it looks back on its “accomplishments”, as I am sure it will describe them as being, will see the Bill as one about which they can feel proud.

With the exception of my noble friend, everyone seems to be lost in the technicalities of the arguments here. In essence, the Bill is actually saying to the two great cities of Norwich and Exeter, “We do not think that it is right that you should govern yourselves”. That is what it is doing; it is preventing that happening by law. That should not be a source of pride. It is at variance with the framework of the manifestos of the Tory party, the Liberal Democrats and the coalition, which repeat almost ad nauseam the importance of localism and of local people making their own decisions and having their own powers and authorities. I will not quote all the manifestos; it would almost be embarrassing.

The noble Baroness, Lady Hanham, is quite right: it is true that the Conservative manifesto said that in respect of the Bill that we have now they would be,

“scrapping Labour’s uncompleted plans to impose unwieldy and expensive unitary councils”.

I have heard unitary councils being described with all sorts of adjectives, but never “unwieldy”. The unwieldy bit is the two-tier system; it is far more unwieldy than any unitary proposal.

I am particularly surprised because this is so much at variance with the performance of the previous Conservative Government, whom I freely pay tribute to for the orders that they brought in establishing unitary local government. It gave me a great trip down memory lane to read the report from July 1996 when I had the pleasure of standing up and supporting the order brought in by John Gummer—I am pleased to say that he is now in this House—which provided for Telford to become a unitary authority. Maybe some of your Lordships have not yet had the opportunity of reading my speech on that occasion, but I was strongly in favour of the order.

My main gist today is: let us not look into a crystal ball when we can read the history books. I want to share with the House a bit of our experience in Telford. The theory of unitary local government, rehearsed by my noble friend Lord McKenzie on the Front Bench, is, to me, pretty well unarguable: that it is so much better to have local government functions contained within one local authority. No one starting with a blank sheet of paper would dream of having two-tier local government. The boundary between the two authorities is complicated at best. I have with me a quotation from a Local Government Commission report about the distinction between transport functions in district and county councils. It states that county councils’ transport functions included for example, public transport, highways and parking, traffic management, footpaths and bridleways, and transport planning; and that district councils’ transport functions include unclassified roads, off-street car parking, footpaths and bridleways, and street lighting. Who on earth knew that? I did not until I read it. Certainly, the electorate do not know it. It is that kind of absurd distinction in planning and other parts of local government services that makes a two-tier system almost unintelligible. Many people in this House who have been MPs, the noble Lord, Lord MacGregor, among them, will know that when people come to their surgery, they are not remotely interested in—they never necessarily know—whether a problem is a county or a district function. It is so much better for them and for the structure of local government and its overall intelligibility if services are provided by one local authority.

I should mention also, in the light of yesterday’s debate on Lords reform, that we are in severe danger of voter fatigue if we have elections at parish, district, county, House of Commons and House of Lords levels. We shall have them for police authorities before long—or some variation of that—not to mention for the European Parliament. Anything which takes out one level has something, at least in principle, to commend it.

What we learned in Telford would be just as applicable to Norwich and to Exeter, should they have the benefit, as I unarguably believe it is, of unitary local government. We achieved it in 1998—we have been running for 12 years. Inevitably, there was opposition; there was profound hostility. As the sitting MP, it was very difficult to find myself with a Labour-controlled district council and a Labour-controlled county council. Predictably, they were at war with one another on this issue. I am not in the least surprised that Norfolk and Devon mounted a massive campaign against any change. We had a lot of opposition from teachers. “Why are you breaking up the education authority?”, I was asked—“You must be ready for opposition”. However, I also found that it was a very unifying operation. We received tremendous support, as I understand has been the case both in Norwich and Exeter, from a huge swathe of people across the community, and from all political parties. We were supported by the Labour and the Conservative parties—I was told that all four parties were supportive in Exeter and three in Norwich. Other bodies, too, such as the churches—even Telford Football Club—supported what we were doing. It is very invigorating when you get that level of support.

However, let us not consider what might be; let us consider what has actually happened in the county of Shropshire and in Telford since Telford came of age—that is how I would describe it. It is not “breaking away”; it is not “wrecking”; it is a big town coming of age. The change has not badly affected the relationship between Telford and the rest of the county; relations have been extremely good. The council has won many awards. I shall not dictate them—it is up to the MPs for the area to do that kind of thing these days—but it is significant that, in July 2006, Telford, then only eight years old, received the Municipal Journal award for the best unitary authority. Best of the lot is that the remaining county of Shropshire, many of whose councils had fiercely opposed Telford gaining unitary status, showed that imitation is the sincerest form of flattery by becoming a unitary authority. They obviously see the benefits of what is happening, just as it was clear to us in Telford.

I am really at a loss as to why the Government have decided to proceed with this. Much as I admire the noble Baroness, Lady Hanham, when I looked in her speech for a real, convincing case for saying to Exeter and Norwich that they cannot have their own system of local government, she simply said that we need this Bill because of non-compliance with the five criteria. We are not going to sing hymns about non-compliance with the five criteria. We need to answer the question about what is best for the citizens of Norwich and Exeter. What is the best structure for local government and what are the people asking for? Surely that is the question that should be asked. The basic values of both parties in the coalition are very much in support of localism—so why are they doing this, often in the teeth of local opposition and in the face of the evidence, with so many examples of unitary authorities being established? I would be very grateful if the Minister could refer to that when she winds up. Are any of those authorities looking to revert to their previous status? Are any single-tier authorities saying that they should be a two-tier authority? Has it not been a success? It was, I must say, a triumph of the previous Conservative Government that they had the sense to do this and to recognise that populations change, as well as previous Labour Governments.

I conclude, as did my noble friend Lady Hollis, although I do not say this in a triumphalist way, that I have no doubt whatever that sooner or later these two cities will be allowed to govern themselves. It is inconceivable that this blocking mechanism can go on indefinitely. It is not only that I pray and hope that there will be a Labour Government again before too long, although I do. But the inexorable logic of the case and the power of the argument of the people in these two cities will sooner or later deliver it, and I wish that the Government would acknowledge that by withdrawing the Bill.

My Lords, I begin, as I always do, and as I did when we debated the orders on 22 March, by declaring my personal interest as a councillor in a unitary authority, which is a role that I have had for more than 35 years. On 22 March I said—and I am very happy to repeat it—that I am a very strong believer in the benefits of unitary government. I need no convincing of that. That is the position from which I started when I moved the fatal Motion on 22 March and it is the position that I continue to hold. The noble Lord, Lord McKenzie, asked whether the Liberal Democrats support this Bill wholeheartedly. My answer, as our spokesperson, is an unequivocal yes.

Most of the debate today has been a rehearsal of the debate that we had on 22 March. The argument has been almost entirely confined to Norwich and Exeter and the perceived benefits there; very little has been said about the effects on the wider communities in Norfolk and Devon. That was part of the argument that we had three months ago, which is still relevant. Noble Lords will be relieved to know that I am not going to repeat all the arguments that I set out on why we felt it necessary to move the fatal Motion and why we so strongly opposed those orders. In summary, I understand very well why some but not all of the councillors in Norwich and Exeter wanted unitary status. I know that they believed that what was on offer was not as good as they hoped, but it was all that was on offer, and they took a view that it was better than nothing. I understand that, but we have to take a wider perspective and consider the effects on the wider communities, which is exactly what we did.

I shall summarise why we were opposed to these things. First, with my much more limited knowledge of Norwich and Exeter—but still some knowledge, as I was born and partly grew up in Devon—that they were the wrong boundaries and the wrong proposals. I do not believe that it is in anybody’s interests to have something that is supposedly better than nothing. If you make that sort of mistake—and I believe very strongly that those proposals were a mistake—then you live with its consequences for years and years.

That takes me to the next reason why I felt that they were wrong; the timing was completely wrong. I do not just mean the appalling way in which it was brought in within days of a general election. I mean the slightly longer timing, to which I think I referred on 22 March, of what was clearly then the financial climate into which we were heading. I think I said, and certainly believed, that the recession in the public sector had not then started. It has started now. That is no surprise to anyone; we all knew that, in local government and elsewhere, we were going to be facing a very hard financial climate for the next three or four years, at least. That was emphatically not the time to be going into what would inevitably be, at least in the short term, the very expensive, emotionally draining, challenging and uncertain times of a comprehensive structural reorganisation. The timing really could not have been worse.

I understand why the timing of the proposal came so late, with all the long process that had been going on. Nevertheless, we got to where we got to and within days of the Dissolution of Parliament and the calling of a general election the Government came forward with these proposals, to which others have referred in detail. Of all the many warnings given to the Government about why they were wrong—from this House, the Civil Service and all sorts of quarters—let us remind ourselves that one was a statement from the Permanent Secretary to the Minister, in seeking that written direction, that the Minister had already had strong and clear advice of the very strong probability that the legal challenge, which was known to be coming, would be successful—and so it has proved to be. None of this should come as any surprise.

I apologise for interrupting the noble Lord, but he referred to the question that I posed in my presentation of whether the Lib Dems were supporting this. In fact, the question that I posed to the Minister was whether, because the 2007 Act is not amended by this provision, it leaves open the possibility of future invitations for unitary authorities. My question was whether those invitations are likely to be forthcoming within the course of this Parliament, and if the answer to that was no, whether that was something which had Lib Dem support. Given the noble Lord’s comments about these being the wrong boundaries and the timing being wrong, I should be interested in his view on that.

It is probably inappropriate for me to comment on the Minister’s answer before she has given it. I may well have another opportunity to do that. Perhaps I may answer the noble Lord indirectly. As a believer in unitary government, I really believe and would expect the Minister herself, having been a London borough councillor and council leader for many years, to believe that this is absolutely not the time for local authorities of whatever structure to be distracted into what is almost always the very expensive, energy-sapping distraction of worrying about what I call their democratic structure—where their ward and council boundaries are, and all that sort of thing.

The concentration for local authorities now needs to be on what services they should be delivering, how and with whom they should be delivering them and their relationship with other local authorities, whether in a two-tier structure or with neighbouring authorities in a single-tier structure. Their concentration should and must be on many more shared services and much more co-operative working. If I may give a sort of answer to the noble Lord, Lord McKenzie, before I have heard the Minister’s answer, my advice to all my colleagues in local government will be: that is where to concentrate, not on having rather difficult and fruitless arguments on possible restructurings which may or may not happen, and probably will not. That is the wrong priority.

The other point made by the noble Lord, Lord McKenzie, which I really did not follow, was about democratic legitimacy. I understand entirely why, having moved those orders in the first place, he may at least be sad about the Bill. He may well disagree, as he obviously does, with the view of the two government parties. However, I simply could not follow the democratic legitimacy argument. The Conservative Party made very clear before the election that it would not proceed with unitary proposals and, in particular, would revoke these orders as soon as possible if it was successful in the general election. That was repeated in the debate in this House. It could not have been a clearer commitment.

I led, somewhat controversially, a fatal Motion. Not everyone felt able to support it. I understand that. However, we could not have made our position much clearer before the general election. I should have thought we would be much more open to criticism, as a coalition Government of two parties so committed, had we not acted quickly to implement what we were saying—had we allowed that uncertainty to go on, and the implementation committees and so on to meet and continue as though nothing had happened. If that criticism was being made it would be wholly legitimate, but to suggest that we do not have a democratic mandate for doing this is somewhat bizarre. In saying that, I remind the noble Lord, Lord MacGregor, that, yes, Norwich elected a Conservative MP but it also elected a Liberal Democrat MP.

I have made my point. Only 40 per cent of the Conservative MP’s constituency is in Norwich. The Norwich South MP is Simon Wright, whose wife is, I understand, a Liberal Democrat city councillor. The Lib Dems on the city council have been ardently in favour of these proposals. They are bitterly angry and feel betrayed by the actions of the noble Lord and his colleagues.

As the noble Baroness, Lady Hollis, has intervened, I will comment on her quoting, at some length, Norman Lamb, MP for North Norfolk. She forgot to mention that Norman Lamb is a former leader of Norwich City Council and, I believe, still lives in Norwich, and so has some interest.

My Lords, he is a solicitor in Norwich but is the MP for North Norfolk and has no formal connection at all to the city.

I do not want to detain your Lordships’ House. This has distracted us but I think the main arguments have been clear.

Most of this debate has dwelt on the past. I have been guilty of that, too. We now need to look to the future. I do not think anyone questions that the Bill is necessary. Some welcome it, some may regret it, but it is necessary. We now need to pass the Bill as quickly as possible to end such uncertainty as remains so that, whether people welcome it or otherwise, people in the counties and cities are clear about what the position is. They can then concentrate all their efforts on the considerable task that lies ahead of them—as it does ahead of all of us—of looking to cut budgets by up to 25 per cent, while still trying to deliver the essential services in the most effective and efficient way. I wish the Bill a speedy success. I hope that when it is passed, the councils and councillors—county and city—will put the past behind them and work positively and constructively together on the very challenging task that lies ahead. If they do that, I believe—speaking as a city councillor—that much of what has been said would be won for Norwich and Exeter can be delivered within the present structure. We support the Bill.

My Lords, this is the first time that I have spoken on this issue. I must admit that it is difficult to find something to say that has not already been said. Both sides of the argument are polarised—entrenched in their view. No amount of argument, however good, will change those views. I live in Norfolk, have been a district councillor for more than 10 years and am chairman of my parish. Although I was brought up overlooking the River Dart in Devon, most of what I say will concern Norfolk.

It will come as no surprise to the House to hear that I am firmly entrenched in the camp that believes that a unitary Norwich and Exeter is not the right answer. The noble Baroness, Lady Hollis, and her friend Charles Clarke—MP at the time for Norwich South—have both pushed hard for a unitary Norwich. In thinking of what to say today, I have tried hard to understand the arguments of the opposing side and what their compelling reasons for a unitary Norwich are. But like the Merits Committee chaired by the noble Lord, Lord Rosser, I, too, have found, “little supporting evidence”. Indeed, I look forward to listening to the noble Lord’s contribution in winding up for Her Majesty’s Opposition. Has he now miraculously found the “supporting evidence” for the Opposition’s “compelling reasons” for unitaries? Has it suddenly become clear to him,

“how unitary status is expected to solve the problems identified in relation to each city, without creating unacceptable consequences elsewhere”?.

Has he now found the,

“clear, evidence-backed case for the proposal”?

These quotes come from the Merits Committee’s summary, which he chaired, so I will listen to his speech with great interest.

The noble Baroness, Lady Hollis, argued on 22 March that a new business looking to settle in Norwich walked away because it was frustrated by the current two-tier system. She said that,

“it did not want the hassle. Because Norwich was not unitary, I lost 600 jobs”.—[Official Report, 22/3/10; col. 800.]

Unfortunately, the noble Baroness’s argument does not sit comfortably with what the noble Lord, Lord McKenzie of Luton, said earlier that day, when moving the order. He said:

“I am sure noble Lords here today will recognise that Exeter and Norwich are the engines of economic activity and potential in their sub-regions. Their pull already draws in investors, businesses, employers and wealth. There are numerous examples of how these cities have been successful in attracting businesses—for example, the Met Office or EDF Customer Services relocating to Exeter, or the fact that Norwich ranks as a top 10 UK retail centre and one of the top 10 cities in the UK for employment in knowledge-intensive businesses”.—[Official Report, 22/3/10; col. 787.]

The noble Lord clearly does not share the view of the noble Baroness, Lady Hollis, that Norwich has been hampered by the two-tier system.

Every time I have thought round this issue, I come back to the same point—to my mind, the kernel of the issue—and that is, does the proposed change to a unitary Norwich satisfy the five criteria set out by the Labour Government? I believe that the party opposite has missed a trick here in that there is perhaps a sixth criterion; that is, will the proposed change improve the services supplied? But we are where we are. We have five. The first two—a future unitary structure must be affordable and must deliver value for money—provoked that letter from the Permanent Secretary to the Secretary of State, seeking a ministerial direction because these proposals did not meet the affordability test or the value for money test. The Permanent Secretary, also the accounting officer, who is legally responsible to Parliament to account for money, sought a direction and required the Secretary of State to give him a direct order to implement proposals that ignored the very rules laid down by the Labour Government.

A third criterion is that the proposal must be supported by a broad cross-section of partners and stakeholders. What does “broad cross-section” mean? It is probably not as much as 50 per cent, but maybe 30 per cent would be a good cross-section. If one stretched it, one might argue that 20 per cent was sufficient support. Anything smaller would be skating on thin ice. With this in mind, the Government, or rather the DCLG, did a limited consultation and you would have thought that the electorate were very much stakeholders, as they, after all, pay the council tax. However, the electorate and the parish councils were not consulted—indeed, they were specifically excluded from the consultation.

There were about 1,400 responses to this rather limited consultation. An overwhelming 85 per cent wanted the status quo, only 10 per cent wanted a unitary council for the whole of Norfolk, and a paltry 3 per cent wanted Norwich City to become a unitary. If the noble Baroness, Lady Hollis, and her friend Charles Clarke both sat down on a bench and took their shoes and socks off, they would just about be able to count the support for their proposal on their fingers and toes. That is hardly overwhelming.

The fourth criterion is that any future structure must provide strong, effective and strategic leadership. Now let us look at this. This year, Norwich City Council charges £226 for band D council tax. My council, Breckland, charges only £64 for band D, which is, I believe, the lowest in the country. In a recent survey, the electorate rated the provision of services from Breckland good and above average. Given that Norwich City Council charges 3.5 times more than Breckland for council tax, one might expect the provision of its services to be even better.

Both Norfolk and Devon County Councils have been granted beacon status, which means that not only have they been considered excellent but that they act as a beacon or example to other councils on how to provide services. What about Norwich City Council? Has it been granted beacon status and are its services above average or excellent? Sadly, they are not. If you ask Norfolk people for their views on Norwich City Council, their response is one of despair and frustration. The city council is an example of local government incompetence. They say that it is dysfunctional, financially incontinent, and has effectively been put in special measures. A new chief executive has had to be drafted in, the Audit Commission has described Norwich City Council’s financial management as not fit for purpose and, to cap it all, the director of housing was sacked last year because of a housing scam.

It is these people that Her Majesty’s Opposition want to run the unitary Norwich, with far greater responsibilities. Some argue that they cannot even run a whelk stall. Therefore, I do not buy the argument of the noble Lord, Lord Howarth—I am sorry that he is not in his seat—when he stated that,

“Norwich has been poorly served by Norfolk”.—[Official Report, 22/3/10; col. 820.]

If anything, Norwich has been poorly served by Norwich City Council.

The fifth and final criterion is that the proposal must deliver opportunities for neighbourhood empowerment. What on earth does that mean? One might expect that it means that neighbourhoods, the people, would have a greater say in decision-making. I hardly think that not allowing the electorate or members of parish councils—who, after all, are the elected representatives of the neighbourhoods—a say in this proposal is neighbourhood empowerment.

I have concentrated my remarks on the five criteria because I believe that they are the kernel of the argument. They are, after all, the five conditions that must all be met when considering a new structure for local government. The noble Baroness, Lady Hollis, argued that they were only,

“guidance … from which the Secretary of State was entitled to depart”.—[Official Report, 22/3/10; col. 801.]

Surely the Secretary of State was not entitled to depart from all five criteria. I am not alone in believing that none of the conditions has been met.

That is why I support this Bill revoking the setting up of the city unitaries, which was pushed—or rather, forced—through by the previous Government. Since this issue was previously debated, as has already been said, the High Court has ruled that the Labour Government’s decision was unlawful. This whole process has already cost the councils millions of pounds and, if it is allowed to continue, will no doubt cost millions more in restructuring costs—money that would be better spent on improving front-line services. This process has been, as my noble friend Lord MacGregor said, a shambles. Even Charles Clarke last month conceded that,

“the process has been incompetent”.

I agree, and I support the Bill.

My Lords, we have had an interesting and at times passionate debate. Before I go further, I will again welcome the Minister to her new role and endorse the comments made about her by my noble friend Lady Hollis of Heigham. We have heard contributions from different sides of the argument. The contributions from the noble Baroness, Lady Hanham, the noble Lords, Lord Rennard and Lord MacGregor of Pulham Market, the noble Baroness, Lady Scott of Needham Market, the noble Viscount, Lord Ullswater, the noble Lord, Lord Tope, and the noble Earl, Lord Cathcart, were in support of the Bill and of the arguments advanced by the noble Baroness, Lady Hanham. The contributions from my noble friends Lord McKenzie of Luton, Lady Hollis of Heigham and Lord Grocott were in opposition to a Bill that seeks to deny unitary authority status to Norwich and Exeter and to stop any further progress in Suffolk. We also heard an unexpected intervention by the noble Lord, Lord Burnett, which was perhaps the most passionate, as well as being the briefest.

However much some might like to dress it up, this is a political issue to be determined by Parliament. The coalition Government do not like the decision made in March this year in Parliament, and in particular in the House of Commons, that Norwich and Exeter could have unitary authority status. These were decisions made by Parliament, not by the then Secretary of State under delegated powers. Nor do the coalition Government like the earlier decision that could have resulted in one or more unitary authorities separate and distinct from Suffolk County Council. The coalition Government are now seeking to go down the same parliamentary road, this time to reverse the decision with another Bill. They were a bit slap-happy on the serious question of whether the Bill was a hybrid. Your Lordships’ House made sure that further evidence on that issue was properly considered.

Since Parliament made its decision, we have also had a court judgment. It said that the stance of the previous Secretary of State on Norwich and Exeter having unitary authority status was not irrational and that he was entitled to reach the view that he did on the merits of the proposals. The judgment went against him largely on the basis of process. All the issues about the stance of the previous Secretary of State, including issues about process, consultation and criteria, as well as the arguments for and against by supporters and opponents of the change to unitary authority status for Norwich and Exeter, were set out, as the noble Earl, Lord Cathcart, said, in the report of the Merits of Statutory Instruments Committee of this House. The content of that report, which could hardly have been music to the ears of the then Secretary of State, was widely quoted both in the debates in this House and in the debate in the other place. It must therefore be a matter for reflection that a court has made a ruling that could be regarded as seeking to negative not a recent decision of the previous Secretary of State but a very recent decision of Parliament on an issue of this kind, when it appears that all the arguments were before Parliament when it made its decision only a few months ago. It would suggest that, on occasions, the division of powers between the legislature and the judiciary is not quite as clear-cut as some would have us believe.

There is no criticism of the coalition Government over the principle of seeking to change or rescind legislation with which they do not agree by inviting Parliament to make a different decision. That is how an issue such as this, which has been the subject of a very recent decision by Parliament, should be addressed. However, the reality is that the move by the coalition Government to deny unitary authority status to Norwich and Exeter, and to ensure that no further progress is made in Suffolk that might lead to a unitary authority, is unfair and perverse. Indeed, the decision to quash any further moves that might lead to a unitary authority in Suffolk shows that the coalition Government’s decision is not based on looking at the merits of each case but is an objection in principle, to put it at its most polite, or, to be rather nearer the mark, an objection weak on logic but strong on ideology. The Secretary of State clearly did not go through all the papers and information available with any degree of thoroughness, as he made his decisions almost before he got his feet under the table in his new office.

The case for single-tier authorities is strong. The then Secretary of State for the Environment, Michael Heseltine, said in the other place in 1991 that,

“unitary authorities are more clearly responsible for the delivery of services, and more clearly accountable for the bill local people are expected to pay ... two tiers may lead to excessive bureaucracy and duplication of effort”.

He added that single-tier authorities would enable the Government,

“to increase the momentum of their existing policies to enable decision-making and responsibility to be more directly in the hands of the people”.—[Official Report, Commons, 23/4/91; col. 901.]

Certainly, in the case of Norwich and Exeter, value for money can hardly be a concern, as my noble friend Lady Hollis of Heigham powerfully argued. Even the then Permanent Secretary at the DCLG stated that, while the proposals would involve estimated net costs of £400,000 over the period to 2014-15, annual ongoing savings thereafter were estimated at £6.6 million. He acknowledged that, if the proposed approach of a unitary Norwich and Exeter achieved the economic gains envisaged, there might be offsetting benefits to the public purse from an increase in jobs, extra local and national tax revenues and reduced benefit payments.

Between 1995 and 1998, 46 new unitary authorities came into existence covering over a quarter of the population in non-metropolitan England. Only four of the 39 former county councils disappeared entirely, which does not suggest that an efficiently run county council cannot survive and prosper where unitary authorities have been established.

I do not know whether the new coalition Government have now taken a decision that unitary authorities act as a brake on progress rather than as an engine for economic progress both within their own area and the surrounding areas, and whether they now intend to abolish them. That is not an unreasonable question to ask, as it was the Conservative Government’s Local Government Act 1972 that established a two-tier structure for the whole of England and showed their then dislike, which appears to be resurfacing with this Bill this afternoon, of single-tier authorities for cities such as Norwich.

The Liberal Democrats, of course, used to believe that there should be a single principal tier of local government—and I think that the noble Lord, Lord Tope, is still in favour of it in his own area—unless the local community preferred other arrangements. However, that is clearly not their policy if it is Norwich—the largest non-unitary authority in the country—or Exeter that wants unitary status.

The principle of unitary authorities is not new, including in county council areas. For example, Devon already has two established unitary authorities; Wiltshire, I believe, has Swindon; and Bedfordshire had Luton. Why, then, should Norwich and Exeter not also be given the unitary authority status that they, and not the previous Government, have sought? Other county councils prosper alongside unitary city authorities, so why not Norfolk and Devon? We have had no plausible answer to that question from either wing of the coalition Government, and that is the question that the noble Earl, Lord Cathcart, should be raising not with me but with his own Front Bench.

I thank the Minister—I am sorry, not the Minister; I am out of date. I thank the noble Lord for giving way. I answered that question. I said that in historic Devon there are two unitary authorities: Torbay, which has not been successful, and Plymouth, which struggles hugely. There are others that are good, but those are the facts.

My Lords, I note that that is the noble Lord’s view, but I doubt that it is universally held. I accept that he is entitled to his view, as I am entitled to my view and this side is entitled to its view on these issues.

The situation is that Norfolk County Council and Devon County Council object to Norwich and Exeter respectively being given the much greater freedom to manage their affairs that unitary authority status would provide, apparently on the basis that it would make life more difficult for them. If other county councils, such as Wiltshire County Council, can prosper with separate unitary authorities in their major urban areas, why not Norfolk County Council and Devon County Council? As the judge said, the decision by the previous Secretary of State was not irrational; he was entitled to reach the view that he did on the merits of the proposals. However, it is irrational for a coalition Government who preach the language of devolving power and moving away from big centralised government to deny the right of Norwich and Exeter to break free from what they obviously feel are the shackles of Norfolk County Council and Devon County Council respectively, both of which on this issue seem to have a adopted an attitude more akin to that of a colonial power, resisting to the end the desire for independence of those whom they currently rule.

There is a decisive majority on Norwich council and either unanimity or near unanimity on Exeter council, which goes across parties, in favour of unitary authority status. However, their views seem to count for nothing with this coalition Government, which is a clear message that, despite the rhetoric to the contrary, the wishes of locally elected representatives will be ignored by them.

We often hear it claimed that those who live in urban areas do not understand the culture and needs of those in rural areas. This issue with Norwich and Exeter is the reverse: there is a feeling that the rural-dominated county councils do not understand the culture and needs of the urban area. Frankly, at a time when the Secretary of State has so demonstrably failed to stand up for local government in England, which faces cuts in funding in the current financial year of £1.165 billion, there will be an inevitable feeling in Norwich and Exeter, which will no doubt prove justified, that their respective county councils will not exactly fall over themselves to ensure that the brunt of any coalition government cuts will not be borne by the two major cities within their areas.

It is Norwich and Exeter that seek unitary authority status.

My Lords, the noble Lord seems to be arguing so passionately for their cause that I wonder whether he feels that the Merits Committee got it wrong.

My Lords, my recollection is that the Merits Committee said that it did not come to a definitive view on the arguments relating to unitary authority status for either Norwich or Exeter. It is not the role of the Merits Committee to make that view. The Merits Committee put certain issues in front of the House for the House to decide whether it wished to take them into consideration.

There was no attempted imposition by the previous Government. The imposition is coming from the new Conservative-Liberal Democrat coalition Government, who, contrary to the overwhelming wishes of locally elected representatives from different parties, have decided to ride roughshod over their views and deny them what cities of comparable size in other parts of the country already have—unitary authority status. That is what the coalition Government call “freedom, fairness and responsibility”.

I hope that the Government will think again and move away from the “central government knows best and will decide” stance that they are adopting on this issue and on a number of other issues in the short time that they have been in office. If the coalition Government are not prepared to think again, Norwich and Exeter will, unfortunately, have to be patient for a little longer, but at least the cross-party support for a unitary authority in those two fine cities will know where support can be found—and it is not on the Benches opposite.

My Lords, I thank all those who have taken part in this debate for their contributions. I have been struck by the fact that we have been discussing different issues. The winding up of the noble Lord, Lord Rosser, has confirmed to me either that we are discussing different issues or that there is some determination to see that those issues are not the same.

We are discussing the decision by the previous Government to agree to applications by two councils for unitary status. Those were made late on in the Parliament. The applications were considered by the Government on at least three occasions. On two of those, Ministers said that the criteria—the criteria that have been quoted around the House today—were not met and that therefore they would not proceed. However, a sort of magical moment took place just before the election. Quite suddenly, a third decision was made, saying that all was well. The Government said that they did not mind that the criteria had not been met and that there were now compelling reasons—not stated—for why the councils should be allowed to go forward for unitary status.

This is not an argument about the value or the virtue of unitary government: it is about the mismanagement and mishandling of two applications for unitary government. That is why we are here today. We are here today because there was much opposition to what was going on. There was opposition not only on the basis of unitary authorities being formed, but on the basis of how the decision was being made. So concerned was this House, that the orders put forward were voted down on a Motion tabled by the noble and learned Baroness, Lady Butler-Sloss. The issue was taken up by the political parties before the election, and my party said that in the light of the orders being agreed we would stop them going ahead.

That was a manifesto commitment. When the coalition Government was formed, we agreed that it would be fulfilled. As the noble Lord, Lord Tope, has so carefully reminded us, it was abundantly clear that the Liberal Party was also against this, witnessed in the fatal Motion that he moved to stop these orders. Let us settle down and be sure what we are talking about here. We are talking about why the previous Government made their decision and the background against which it was made.

My Government are not against unitary authorities—plenty of them are working extremely well. There may be some that are not so good, but the existence of such authorities is recognised. However, we are against them being invoked and formed when the criteria that every other authority has had to satisfy have not been met.

There was also the issue of the last-minute compelling reasons, which were never laid out. Here, the noble Lord, Lord Rosser, finds himself in a very difficult position. He has got around the situation about as well as he could have done, but it is not comfortable. He was chairman of the Merits Committee when it produced one of the most withering reports that I have read on the process for these unitary authorities. The report drew attention to the compelling reasons and asked what they were. It never, as far as I know, had a reply and nor did anyone else. It drew attention to the fact that the criteria were not being met. It drew the House’s attention to the fact that these orders were progressing and being put forward on a false basis. I am sorry for the noble Lord, Lord Rosser, and believe that he took a very brave stand when he was chairman of the Merits Committee because he spoke strongly against his own Government. However, I think that today he has failed to back up that brave stand. We are therefore moving forward on the basis of the criteria not being met.

My Lords, before she went on to the issue of the Merits Committee, the noble Baroness was clear that she in particular, and the Government and the coalition more generally, were not opposed to unitary authorities as such. Her main criticism was of the process by which decisions were arrived at by the previous Secretary of State. Given that, as my noble friend Lord McKenzie said, Part 1 of the 2007 Act, which, as I understand it, permits future bids for unitary status to come forward, has not been repealed, may I have an assurance from the noble Baroness today, in the light of what she has just said, that any future bids from Norwich, Ipswich or Exeter will be properly considered in the light of that Act. If she says no, the Bill is hybrid.

My Lords, if the noble Baroness had continued to sit for a bit longer, she would have heard me get to her point. It is correct that the Bill does not repeal the Local Government and Public Involvement in Health Act 2007, but it would also be fair to say that the Government have no plans to issue further invitations for unitary authorities and, if there were applications, they would be viewed against the serious economic situation we are in at the moment and consideration would be given to whether they offered any value for money whatever, which these applications have proved not to have. I should have thought that any local government worth its salt would think twice about putting forward an application under those circumstances.

The noble Baroness raised the issue of the Merits Committee report. I stand by what I said in response to the intervention from the noble Earl, Lord Cathcart. The report states:

“The Committee emphasises that it is not our role to reach a view on whether some form of unitary status is right in these circumstances, but to draw to the special attention of the House issues which it may wish to take into account when reaching its decision on the specific proposals in these Orders”.

That is the role of the Merits Committee. As the report states, it is not the role of the Merits Committee to reach a view on whether some form of unitary status is right in these particular circumstances.

My Lords, I am sure the noble Lord will forgive me for saying that I did not say that the Merits Committee report supported or not unitary status. I said precisely what he said: that the Merits Committee drew the attention of the House to certain aspects with which it was deeply unhappy. I am certain that that is what I said; it is certainly what I meant to say; I do not believe that the noble Lord can draw any inference from what I said that I thought that the Merits Committee was either supporting or not supporting unitary authority status.

Is it not the case that the Merits Committee raised an enormous number of questions about whether the evidence was satisfactory and left the House to decide? I have never known a Merits Committee raise so many questions and doubts about a statutory instrument, and the House took a very clear view.

I thank my noble friend for his intervention. He is correct. A large number of questions were raised. As I said at the beginning, it was one of the most withering reports that I have read. I think that we should let it rest at that for the moment.

The question of judicial review was originally raised as a possibility by the Permanent Secretary when he was demanding categoric instructions to allow the unitaries to go forward. Judicial review became possible because they were orders, so it was a judgment not on a parliamentary decision, but on secondary legislation that arose from primary legislation. The judge was quite clear in what he said and has quashed the first article of the orders. The second article, which relates to the elections, has yet to be decided, and presumably will be so decided at the next hearing of the court on 5 July. How much of the Bill proceeds depends on what happens there, and we will move amendments accordingly.

Do I understand that the Minister accepts that if the orders are quashed, Clause 1(3), which revokes the orders, will be otiose? It may also be that Clause 2 will not be required, so one wonders how the Bill will have any real impact.

The noble and learned Lord has raised a point that I knew I ought to have cleared up before. There is one aspect of Clause 1 that would still proceed. Clause 2 would become otiose and we would have to see how much was left to proceed with. I have been advised that, whatever happens, the Bill will have to proceed to the end now that it has started.

I know that we are getting into detail that is probably Committee stuff, but if Clause 2 effectively falls, does that not create a problem with what the Bill provides for the changes in electoral arrangements? As it lays them out, they are predicated on somebody immediately before the commencement of the Bill remaining in office under an article of something that would have been quashed.

My Lords, that was the bit I had forgotten. Clause 2 moves the elections from 2010 to 2011. If it is quashed, we go back to 2010 being the defining moment for the elections. In that case, by-elections would have to take place within the next six weeks, and it may be decided that it would be more helpful to move them on.

I have been asked a number of questions. I have probably answered those asked by the noble Lord, Lord McKenzie, but I shall make one point. I am not surprised that the noble Baroness, Lady Hollis, made a very passionate speech, as it is clear that this is something that she feels very strongly about. However, I am just a little bit perturbed by the fact that she said that once the judgment appeared to be taken against the councils, that was the reason why they did not pursue or give evidence to the Examiners on hybridity. This action to challenge hybridity caused a lot of difficulties and trouble and brought into question the decision of the Public Bill Office of this House. It was a well argued trap the last time—

It was not a trap. It took place in the full presence of the House at prime time. A trap is something that happens as an ambush late at night. It was very clear to a number of people, including former MPs who are much more experienced in matters such as this, that there was an arguable case that the Bill was hybrid. The Speaker of the House of Commons had ruled that if there was any possibility that a Bill was hybrid, it should be referred. That was the decision. It was a very low hurdle, and the House agreed that that low-hurdle test had been met. There was very substantial support from the Cross Benches. There was no trap. If the Government had wanted to avoid that situation, they might have been better advised to have produced a more watertight Bill.

Trap or not, we ended up with an examination to which no further evidence was given. The two memorials were laid. They were withdrawn, but because they had been there, they were considered. Effectively, the hearing took place without the arguments that had been put forward by the noble Baroness. We are where we are. We know the Bill is not hybrid. We are proceeding with it and will carry it through as far as we can to the end.

The noble Baroness also asked questions about the impact assessment. We should not forget that the unitary proposals for Exeter and Norwich failed to meet the affordability criterion and that the previous Government accepted that. The independent financial consultants supported that view. In short, the proposals were not value for money. The impact assessment reflects that, as it can be interpreted.

I thought that I might have one or two further questions to answer, but I believe that I have finished what I need to say. I am grateful for the contributions made by Members of the House. I beg to move.

Bill read a second time and committed to a Committee of the Whole House.