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Local Government Bill [HL]

Volume 720: debated on Wednesday 28 July 2010


Clause 1 : Prevention of implementation of certain proposals for single tier of local government

Amendment 1

Moved by

1: Clause 1, page 1, line 3, at beginning insert “Subject to the proviso in subsection (1A)”

My Lords, I shall speak also to Amendment 2. These two amendments provide that a relevant order may be made after the commencement of the Act and that the Secretary of State must, within three years, publish criteria that will apply for a replacement order to be made. Noble Lords will recognise that this is a narrowly drawn amendment in that a relevant order is one in respect of which proposals have been received by the Secretary of State before the commencement of the Act.

It might be helpful if I explain that our intent to have a broader requirement imposed on the Secretary of State to report within a period of time on whether any further proposals for unitary status will be considered, and on what basis, is sadly outside the scope of the Bill. However, we consider that the Secretary of State should have a positive duty to report, after a period, on whether he will entertain any further unitary proposals and on what basis. This is not about going over old ground and seeking to reopen the quashing of the Exeter and Norwich orders, and it is not about challenging the constitutional propriety of what has ensued. We accept that we are where we are on these matters. However, it is about keeping alive the prospect of revisiting opportunities for a single tier of government generally and specifically for Norwich, Exeter and Suffolk. It is also not about requiring the Secretary of State to invite any proposals, but about causing him at some point in the future to publish the basis on which, if at all, he might invite proposals.

As we have discussed at earlier stages of our deliberations on this Bill, the 2007 Act continues to give the Secretary of State the power to invite proposals for a single tier of government. This amendment neither seeks to expand nor curtail that power. We have heard from the Minister before that it is unlikely that the Secretary of State will wish to invite further proposals during the course of this Parliament. It is that absolute, dogmatic position which this amendment seeks to qualify. It would require him to justify continuing with that stance throughout the Parliament.

We know that these are going to be exceptionally tough times for local authorities, made worse by the macroeconomic policy of the Government, who are intent on cutting public expenditure deeper and faster than is necessary to address the challenges of the public finances. Some principal authorities will face those challenges as unitary authorities, and some under a two-tier system. The need to find new ways of working, embracing area-based budgeting—Total Place, if you will—and developing broader partnerships, will be essential. The Government’s position seems to accept that the current configuration of local authorities is the best way to move forward on these issues. In the case of Exeter and Norwich, the Minister asserts in her letter of 22 July that savings that could be achieved under unitary status can be achieved, and indeed exceeded, by collaborative working between the two tiers of local government, although no detailed analysis or independent review underpins that assertion. Even if it is right—we do not necessarily accept that it is—what work has been undertaken to say that the same runs true for what we might describe as the extra challenges engendered by the cuts coming down the track from the public expenditure review? If there is a requirement for new thinking, new ways of working and different models of commissioning, is it not reasonable that along the way there is the opportunity for an update on the current divide between unitary and two-tier status?

In essence, that is what this amendment seeks, specifically in the cases of Norwich, Exeter and Suffolk because those are the constraints of the Bill, but the same runs generally. At a point in the future not more than three years away, the Secretary of State should report on whether he plans to consider further proposals for single-tier local government. He will be able to do that with the knowledge of what has happened in the interim, how local authorities are coping with the new environment, and whether the structure of local government—unitary or two-tier—is a significant factor in driving better outcomes. He should hear the voice of local authorities and communities in undertaking that analysis.

The amendment should not be difficult for the Government to accept. It is about looking to the future, and about a medium-term opportunity for local councils to get an update on whether structural change—if it is in the interests of their communities—is available or off the agenda for the remainder of the Parliament. Given the huge uncertainties of the economic landscape, made much worse by this coalition Government, that is not an unreasonable proposition.

If the Minister cannot support the amendment, what alternative arrangements does her department have or will it put in place to keep under review the availability and potential use of the powers in Chapter 1 of the 2007 Act? What plans are there for reporting to Parliament on these matters? If we may not have provisions in the Bill, I hope that she can at least give us some assurance on the subject.

My Lords, I wish to speak in support of Amendments 1 and 2. These amendments invite the Government to reintroduce principle into their consideration of local government restructuring. The Secretary of State would be obliged by 2013 to consider whether further unitary reorganisations might in principle be permitted, and to state his criteria for deciding for or against such reorganisations. I will, if I may, explain some of the principles to which I believe the Government at that time should have regard. I will illustrate them by reference to Norwich and Exeter, as it is those cities with which the Bill is concerned. The principles illustrated in relation to Norwich and Exeter should be taken, however, as models for general application as and when the Government abandon their present unreasoning hostility towards creating new unitary local authorities.

There is, of course, a very strong case in principle for unitary local authorities. Unitary local government can be expected to lead to better provision of services in terms of quality, efficiency and economy, arising from closer local knowledge and responsiveness and better adapted service models. In the case of Norwich, a local authority dedicated to serving Norwich, its members all local people, would have intimate knowledge of the issues and needs in Norwich which, in a complex and sizeable urban community, are very different from those of rural Norfolk. Cities such as Norwich and Exeter need their own distinct policies and distinct administration if their distinctive problems and opportunities are to be addressed to best effect, and to enable such cities to realise their full potential, economically, culturally and socially. Unitary local government that enabled Norwich and Exeter to maximise their economic and cultural success would of course be to the great benefit of Norfolk and Devon.

It is plain common sense that unitary government will be more economical, having no duplication of staff, no fragmentation of functions, no complex procedures for co-ordination and no opacity in accountability. Unitary local government is also good for democratic culture. It provides for clear and accountable local political leadership. Norwich councillors and Exeter councillors would be straightforwardly answerable to Norwich people and Exeter people.

In a two-tier system, there are two councils, two sets of councillors, two sets of policies and two sets of service delivery arrangements. County and district are conflicted and confused between the competing demands of rural and urban needs. Some responsibilities are split; for example, housing and social services. Some overlap; for example, planning, with businesses having to negotiate two overlapping bureaucracies. In a two-tier structure, there can be no clear focus in policy-making, no clear strategic direction, no clear political leadership and no clear political responsibility.

The Conservative Party used to understand that local government was the seedbed of our democratic culture—a culture that has become all too withered. One cannot overstate the importance of reviving our democracy from its local base. It is a consideration of principle that should recommend itself to the Conservative Party, if it still has a sense of history, that the structure of local government should enable communities to be proud communities. Many of the cities that have become unitary authorities within the past 20 years were historically proudly self-governing county boroughs independent of their surrounding counties—some of them, like Norwich and Exeter, with charters going back many hundreds of years. For them, the 1974 reorganisation was an historical aberration.

No one recently has better described the importance of place than the noble Baroness, Lady Eaton, whom I am very pleased to see in her place. She comes from Bradford, like Mr Pickles. She has been chair of the Local Government Association. In a SOLACE Foundation pamphlet in January 2009, she wrote about,

“the more difficult agenda—the holistic agenda of growing a place’s unique character. This is where the true genius of local government really lies. Not just being the deliverer of a Whitehall agenda but by being the champion of a locality … Pride in place is not just about good services and sound finances, critical thought these are, but it is also about being the guardian of an area’s character, knowing and reflecting its personality and preserving its identity. It is to protect and enhance its story and this is best achieved by those who, day by day, walk local streets, suffering with the electorate their traumas and sharing in their achievements”.

The noble Baroness expressed it extremely well.

I ask noble Lords on the Benches opposite to understand just how demeaning it is when, without any consultation whatever, the county, none of whose cabinet members represent Norwich wards, decrees that the street lights in Norwich should be switched off at night, when it seeks to impose closure of cherished daycare centres, when it imposes a restructuring of children's services, or when it refuses to permit the locally desired pedestrianisation of an historic street. A two-tier structure invites that kind of arrogant and improper behaviour by the county.

The Conservative Party in truth has no objection in principle to unitary local government. Indeed, the previous Conservative Government created unitary local authorities wholesale. That Government were in deep difficulty, as was the whole of local government, as a result of the crass misjudgments of the 1974 reorganisation, the anomalies left by the abolition in 1986 of the metropolitan counties, the chaos created by the poll tax and the progressive erosion in the 1980s of local government powers. The noble Lord, Lord Heseltine, as Secretary of State for the Environment, trying to recoup something from this crisis of local government, decided to review not just the financing of local government, but its structure and management. A consultation paper in 1991 proposed,

“a move towards unitary authorities where these do not already exist”.

The Conservative Government set up a new quango—the Local Government Commission for England—to undertake a review and make recommendations. The criteria given to it for evaluation were not just those of financial costs and benefits, but to strengthen identity, accessibility, responsiveness and democracy.

In September 1993, the noble Lord, Lord Deben, then the right honourable John Gummer, Environment Secretary, strengthened the presumption in favour of unitary local authorities replacing two-tier structures. He said:

“Authorities must be big enough to do the job and small enough to know the people”.

On 1 October 1993, the Financial Times reported Mr Gummer as announcing that:

“England’s two-tier local government structure should be replaced with a series of unitary authorities, even if it costs more than the present system”.

On 20 October, he said in another place,

“we would expect the norm of local government to be unitary authorities … we point to the importance of unitary local government because it ensures that people know whom to hold to account when decisions are made. In two-tier local government, there is often a grave difficulty with that”.—[Official Report, Commons, 20/10/93; col. 261.]

Admittedly, the Banham review as it developed was pretty chaotic, and Howard Davis of INLOGOV afterwards described the review as,

“an object lesson in how not to do things”.

None the less, the outcome of the process driven through by the Conservative Government was the creation in England of no fewer than 46 new unitary local authorities, 19 of which finally came into being shortly after the 1997 election.

The litany of unitary authorities newly created or recreated in England in that period includes Hartlepool, Hull, Middlesbrough, Stockton on Tees, Bournemouth, Brighton and Hove—of which my noble friend Lord Bassam was a distinguished leader—Darlington, Derby, Leicester, Luton—of which my noble friend Lord McKenzie was another distinguished leader—Milton Keynes, Poole, Portsmouth, Southampton, Stoke on Trent, Swindon, Reading, Slough, Wokingham, Peterborough, Halton, Warrington, Plymouth, Torbay, Southend, Thurrock, Blackpool, Nottingham and Telford and Wrekin. How can it reasonably be contended that the two cities of Norwich and Exeter should not be included in such company and, indeed, in the company of the further unitaries subsequently created by the Labour Government?

In Scotland and Wales, the Conservative Government went further and simply replaced the inherited structures of two-tiered local government with a consistent pattern of unitary local authorities everywhere. There are 32 in Scotland and 22 in Wales. The previous Conservative Government created in all, for very good reasons, 100 new unitary local authorities. That is even better than Don Bradman’s test batting average of 99.6.

It is striking that no local authority has ever applied to be allowed to revert to being part of a two-tier structure. The noble Baroness, Lady Hanham, never, so far as I know, but maybe she will tell the House that I am incorrect on this, when she was a distinguished leader of the Royal Borough of Kensington and Chelsea—I know she was because I was one of the contented people who enjoyed living in the borough under her leadership—proposed that matters should be restored so that the proudly Royal Borough of Kensington and Chelsea could be placed once again under the GLC and ILEA to jog her elbow and take the big decisions for her community. Never did she express nostalgia for that. As one of Newport’s MPs from 1997, I witnessed how Newport County Borough Council, later Newport City Council, responded most positively and effectively under the leadership of Councillor Sir Harry Jones to the opportunity created by unitary status. The noble Baroness and I both know from our different responsibilities as elected representatives how unitary status challenges and allows communities to thrive on the basis of local self-government.

The new coalition makes grand professions about localism. The Secretary of State said in his statement on the Queen’s Speech on 10 June:

“if you want to restore faith in politics, you make sure that local government is properly accountable to the voters … If you want people to feel connected to their communities, proud of their communities, then you give people a real say over what happens in their communities. And the power to make a difference … Everything we've done”—

said Mr Pickles—

“has been about giving up control”.

Tell that to the people of Norwich and Exeter. The Minister for Decentralisation, Mr Greg Clark, in his speech to the Local Government Association conference on 8 July, said:

“we will put people back in charge of their lives. Put businesses and councils back in charge of economic growth. Put town halls back in charge of local affairs”.

Unfortunately, the professions of coalition Ministers have not been matched by their actions and their policies. All the signs are that the new localism will be about bypassing elective local government and recklessly creating excessive dependence on unaccountable community groups. Most flagrantly so far, the one tangible policy for local government that the coalition has introduced is this Bill, which denies Norwich and Exeter the local self-government that the coalition’s professed principles should have caused it to endorse. It is a policy that is nakedly driven by calculations of party political interests: no more and no less.

At no point in any of our debates have the opponents of unitary status for Norwich and Exeter, whether on the Front Benches or the Back Benches, provided any argument of principle in support of their position. Their arguments have all been splutter, irrationality and irrelevance. We have heard from them unfounded and offensive assertions that Norwich is not competent in its financial management, bogus points about costs and the tangential accusation that the Secretary of State in the previous Government had not proceeded in accordance with criteria that he had published three years before in very different circumstances. They have produced no arguments against the merits of the case for unitary reorganisation, which is the proper heart of the matter.

The coalition’s policy in this Bill may or may not be hybrid. The case for hybridity was in the event not fully tested by the Examiners, because Norwich and Exeter withdrew their memorial, not having the resources to pay for an appeal against the judicial review. What it certainly is, is discriminatory.

Eric Pickles seems to have forgotten that he is no longer chairman of the Conservative Party. I have known him for many years, and I hold him in affection. I know him to be a tough, opportunistic party politician, and no one will drum him out of the Carlton Club for that, but bullying is another matter. In this policy and this Bill, he is bullying the people of Norwich and Exeter and their elected representatives, particularly the local Liberal Democrats. He is also bullying his officials. He is on record as saying that he intends,

“to keep a … pearl-handled revolver in my drawer, and the first civil servant who suggests local government reorganisation will be shot”—

spoken humorously, of course, but unmistakably threatening and not an appropriate tone. No Minister should set out to scare his officials from offering him their honest advice. Eric Pickles is Secretary of State now—“Bottom, how art thou translated”—and he should behave like a proper Secretary of State. He has wider responsibilities than just to his own party. His bluster, of course, is the product of some embarrassment that he is repudiating the principled position in support of unitary local government that his party espoused a few years ago and which he cannot find rational arguments to disavow.

I should like to ask the Minister why, in preparing the Bill and giving instructions to Treasury counsel, the Government did not repeal Part 1 of the Local Government and Public Involvement in Health Act 2007. Is it that the Secretary of State and CLG officials are not after all opposed to unitary local authorities in all circumstances? Have they deliberately kept the door ajar for new unitary counties in the future? If they want to see new elected mayors in major cities, as they say they do, that surely implies unitary cities. Their objection to unitary status for Norwich and Exeter is based not on principle but on blatant political opportunism, including on the part of Mr Cameron in Norfolk during the election campaign. There remains an ancien régime attitude among the Norfolk Tories, courteous and elegant as they are, that the little people—the plebs of Norwich—should be bent to their will and made to suit their convenience. Mr Cameron’s Conservative Party still, in the 21st century, considers that humbler folk should tug their forelocks. It is a selfish state of mind: “what we have we hold”. It is a primitive state of mind: territorial primitivism. Their objection to local self-government for Norwich has nothing to do with principle.

In not repealing the 2007 legislation, the Government make it clear that they do envisage further unitary reorganisations. These amendments would oblige them to revisit the issue of unitary reorganisation by 2013—a reasonable timescale—and to articulate the principles on which they base their policy in regard to the structure and functions of local government, as well as their criteria for individual decisions on applications for unitary status. The amendments would provide a further opportunity for local authorities which have been victims of this Government’s discrimination—Norwich, Exeter and Ipswich and the Suffolk authorities—once again to make their case to be allowed the same opportunities as so many other comparable authorities. By then, Mr Pickles and his pearl-handled revolver will be no more than a distant folk memory in CLG or what remains of it. Indeed, it is probable that the coalition will equally have melted into thin air. If there is anything left by then of local government itself, we must hope for a fairer and more principled approach by Whitehall to local government restructuring. These amendments point in that direction.

I scarcely know where to begin. I listened with absolute fascination to the delightfully inaccurate, inappropriate and, in places, offensive comments made by the noble Lord, Lord Howarth of Newport. I am not a politician. I am a pleb of Devon. I am proud to be so and I am proud not to be a politician. But, on 22 March this year, I moved a regret Motion in which I set out in some detail a large number of reasons why Exeter should not be a unitary authority. Equally, the points were made why Norwich should not be a unitary authority. That regret Motion, asking the Government to look again, was overwhelmingly supported by this House. One of the reasons was that the Permanent Secretary to the then Secretary of State in the previous Government advised against the two orders as the accounting officer as well as his concerns.

May I ask the noble and learned Baroness what what she is saying has to do with the amendments we are debating?

I hope your Lordships will appreciate that I would not have dreamt of standing up on this amendment if we had not had this tour de force of recrimination about the failure to get these two orders through because the judge found against them. I thought that we were talking about the amendments. I also thought that I was entitled, as a Member of this House, to answer what has been said. But I will now move to the fact that the purpose and clear intention of these two amendments is to sabotage this Bill because it would be the status quo ante. It would bring the whole thing back. It would prevent a closure of Exeter and Norwich.

Turning specifically to some of the points made very briefly—perhaps unlike the noble Lord—I was going to point out that Exeter is well looked after by Devon. The culture of Exeter is understood by Devon and I will give two examples. Councillor Vanessa Newcombe is a twin-hat councillor for Exeter and for Devon. Councillor Andrew Leadbetter has been, with the agreement of Devon and of Exeter councils, made in the Cabinet of Devon a councillor specially responsible for Exeter. He lives in Exeter and has done so for 35 years. His loyalties are as much to Exeter as they are to Devon, as indeed are the loyalties of Councillor Vanessa Newcombe. To suggest that Exeter is in some way in a difficult position because it is not understood and is not taken account of, from someone who is concerned with Norwich and does not know what goes on in Exeter and Devon, I find absolutely astonishing. The relationship between Exeter and Devon means that Exeter has gained from payments made by the county relating to matters such as the new shopping centre at Princesshay, the building of five secondary schools and two primary schools in Exeter and, indeed, the proposal to have an eco-neutral school which is about to be built somewhere near St. Thomas. A waste energy plant is also about to be built by Devon County Council and, interestingly, Councillor Vanessa Newcombe, with her two hats, says in an e-mail of which I have a copy here that she views Exeter and Devon as, “not being able to survive without each other”.

The whole of what is being suggested here would put us back to a position that your Lordships felt was not tenable on 22 March and, I respectfully suggest, is not tenable today.

My Lords, again I have the pleasure of following the noble and learned Baroness, Lady Butler-Sloss, as I seem to be doing permanently on this Bill, and again, as previously, we are in full agreement. I could not have put any better what she has just said. In moving the amendment, the noble Lord, Lord McKenzie of Luton, said he accepts that we are where we are and that the amendment is about the future and not the past. But he was followed immediately by his noble friend Lord Howarth, who spent a considerable time telling us that it is all about the past and that he far from accepts that we are where we are. I think that the noble Lord on the Front Bench must be wishing that he could hide from his noble friend sitting two Benches behind him.

I understand very well why noble Lords on the Benches opposite, particularly the noble Lord, Lord Howarth, and others, believe that the previous proposals were right. I understand therefore why they believe that the Government are wrong to carry out the manifesto commitments of both parties in the coalition to get rid of them as soon as possible, but what I do not understand is why he cannot accept that we are where we are. That is simply not going to happen.

I listened with great interest and some sympathy to all that the noble Lord said about the benefits of unitary government. As I declare almost every time I speak on this issue, I have been a member of a unitary council—as I still am—for many years, and there are benefits to it. But, as I also seem to have to keep saying, the future that lies before all local government and before the country over the next few years means that this really is not the time for us to be distracted into what is almost always, and certainly has been in the case of Norfolk and Devon, enormously time-consuming, expensive and perhaps above all emotionally draining exercises in this sort of boundary restructuring. What we need to concentrate on now is how councils, whether in two-tier or unitary areas, can work together by sharing services and, in some cases where appropriate, by sharing offices. They should not be arguing about expensive boundary changes and unitary restructuring. That is simply off the agenda.

Should there ever be a time when this comes back on to the agenda, whether that is in the lifetime of this coalition Government, which I must say seems unlikely, or—

Perhaps I may finish the sentence and then I will give way to the noble Lord. I have nearly forgotten the sentence. If this comes back on to the agenda in the lifetime of this coalition Government or in the lifetime of any future Government, it does not need an amendment to this Bill to enable it to do so.

I am grateful to the noble Lord. In view of his opposition to what he has described as expensive boundary changes, I wonder whether he will join us on this side of the House in opposing the expensive parliamentary boundary changes that have been proposed in the Government’s most recent legislation.

Unless something much more revolutionary than I expect is taking place, a change of parliamentary boundaries, which happens fairly regularly, does not entail the wholesale restructuring of the local authorities in an area, and that is where the expense arises. So the answer is no.

I have said it before and I want to say it again because we keep going over the same ground. If there is any message coming from this House—personally, I believe strongly that local government actually knows best and should be left to get on without messages from this House or anywhere else—it should be this. If noble Lords opposite have any influence, particularly with the city councils concerned, they should use that influence to urge these councils and councillors to try to put the difficult and emotional past few years behind them and to build new and constructive relationships so that they can work together co-operatively in the way we have talked about.

There is already evidence that that is happening in both Exeter and Norwich and Devon and Norfolk. We should encourage that; noble Lords opposite should spend their time and energy encouraging that to happen. We on this side of the House should do the same, particularly in relation to the counties. Where we have friends and influence, we too should recognise that the cities believe that they have grievances. Whether or not we accept that they are justified, let us accept that they are truly felt and work together to try to overcome that and to build a positive and constructive relationship between authorities of whatever nature, better to serve their people in what will be an extremely difficult, three, four or five years to come.

My Lords, I will be brief. Fairly obviously, I support these amendments. Does anyone in this Chamber doubt that unitary government, especially for cities, is the most effective form of local government and offers the best value for money? I was a Norwich city councillor when we were unitary before 1974 and know what it has meant for the city of Norwich.

Basically, unitary structures offer at least four gains for the people who local councillors seek to represent. First, they offer better integrated services. This is because services are all on one tier and you can make decisions out of the box, so to speak, and across the lines—particularly, for example, in housing and social services. When I was a very young councillor and chair of Norwich’s housing committee, my vice-chair was the chair of what was then called, in those pre-Seebohm days—the noble Baroness, Lady Shephard, will recall this—the welfare committee. The result was that we could produce halfway houses for battered wives and supported accommodation for those with severe learning difficulties because we ran housing and social services as one semi-common service. That is no longer possible. Now services are fractured and, frankly, it is a full-time job being poor and vulnerable.

The second gain from unitary structures for cities is better value for money—I shall in a moment engage with the comments made by the noble Lord, Lord Tope—because it avoids duplication, for example, on economic development, and the toing and froing on planning applications between two tiers. As I have told the House on previous occasions, when I was leader of Norwich City Council, development opportunities that would have brought 600 to 800 jobs to the city of Norwich were lost when the developers walked away after they learnt that they would have to work with two tiers. I do not doubt that the county would have been supportive—I have no reason to think it would have blocked it—but the point is that for those seeking to come to the city the structure of local government was seen as an impediment to what they wanted—which was quick, easy, simple, transparent and responsive comments to their proposals.

Not only is unitary better for value for money in terms of avoiding duplication, it is also cheaper—and here I shall tackle the points made by both the noble and learned Baroness, Lady Butler-Sloss, and the noble Lord, Lord Tope. For I think the third time, the noble and learned Baroness, Lady Butler-Sloss, has quoted the Permanent Secretary as the auditing officer saying that this did not represent best value for the money; and for the third time I shall attempt to appropriately correct her understanding of what the Permanent Secretary was saying. He was indeed saying that unitary Norwich and unitary Exeter were not best value for money—but compared with what? It was compared with a unitary county of Norfolk and a unitary county of Devon which wiped out the rest of local government—an outcome that no one except the Permanent Secretary and the Boundary Committee supported. Indeed, the county of Norfolk, I understand, would have taken out a JR against the recommendation of the Permanent Secretary. It is simply misleading and fallacious to quote the Permanent Secretary, as the noble and learned Baroness has done on several occasions—

My Lords, two separate Labour Secretaries of State said on three separate occasions that a unitary Norwich would not give value for money. Is the noble Baroness saying that they were wrong?

No, my Lords. We were then in a very different economic situation. What is more, when this process was started, with a Liberal Democrat minority administration running the city of Norwich, the financial figures were incomplete. The revised financial figures, which have been accepted by the department and embedded in its impact analysis—it is available to the noble Earl and I am sure that he has studied it—show that the original figures have been overtaken by events. I shall proceed to give the revised figures in a moment.

Perhaps I may continue my response to the noble and learned Baroness, Lady Butler-Sloss. In the hierarchy of value, the cheapest option is a unitary county of Devon and a unitary county of Norfolk, which nobody wants. The second-cheapest option is unitary Norwich and unitary Exeter. The most expensive option, which neither the Permanent Secretary nor the noble and learned Baroness mentioned, is the status quo, which is exactly what the Minister is proposing in the Bill. Therefore, I hope that if we revert again, for the fourth time perhaps at Third Reading, to the Permanent Secretary as the chief auditing officer, it will be with all three options in mind and not just the two.

The Minister’s own figures in her recent letter of 22 July, which have already been quoted by my noble friend Lord McKenzie, show just how substantial would be the cost savings and value for money resulting from unitary structures. This is where, I suggest, the noble Lord, Lord Tope, is wrong. The Minister’s letter—I am sure that he has it to hand, so that he can confirm the statistics that I am about to quote—shows that, from year 2, the savings will exceed costs. To deny local authorities the opportunity to achieve those savings is to add to the costs and council tax of local citizens at just the same time as the Government are requiring cuts of 25 per cent or more. The Minister’s letter shows that, by year 2 of the transition period, savings will exceed the cost of transition and that, by year 4 and thereon, the savings will be nearly £4 million a year for the city of Norwich. Norwich has around 40,000 properties and the savings from unitary structure will be £4 million. In other words, there would be savings to every household in Norwich of £100 a year on the Minister’s own figures if Norwich were to be unitary. That £100 a year has been denied the people of Norwich and similarly, I presume, the people of Exeter, either through their being better off or the authority being better able to provide appropriate services. I therefore hope that when the noble Lord, Lord Tope, says that we cannot afford the cost of reorganisation, he is respectful of the Minister’s own figures, from her own letter of 22 July, which show exactly the opposite.

The third argument for unitary status, over and beyond better services for our citizens and better value for money, is greater citizenship, accountability and transparency. City hall becomes a one-stop shop. I always knew when someone was about to complain, because they stopped talking about the “city council” of Norwich and started talking about the “city corporation” before letting fly. People in the Norwich area have something like four local authorities providing their services. Of course, they do not know who does what, to what standard, at what value for money or with what outcome. We are then surprised by low voter turnouts for elections to authorities whose very structures and very responsibilities baffle most citizens. After all, under some of our existing two-tier structures, local authorities are increasingly run by the few people who can be bothered to stand, elected by the few people who can be bothered to vote. Voting turnout is, usually, significantly higher in unitary authorities and significantly lower in two-tier structures precisely because there is not the democratic deficit in unitary government that there inevitably is in two-tier structures.

Finally, unitary structures work because they are simpler and clearer for other bodies, agencies and outside organisations to work with. That is whether they are businesses seeking to expand or relocate, voluntary organisations wanting support for their hunt for capital for premises or revenue for staff, or public agencies such as health authorities, sports bodies, tourism agencies and the like. I repeat the question asked by my noble friend Lord Howarth—after all, Mr Pickles comes from Bradford and the Minister also comes from an area with a good, strong, competent unitary authority, to which I pay all credit. Would the Minister welcome, say, the adult or children’s services in her former authority going to Boris or the GLA, and if not, why not? After all, there is far more sense in that proposal for a densely populated London area, where the boundaries between boroughs are perhaps more artificial than in some existing two-tier structures.

No one doubts that unitary local government is where we will be; it is only how long it takes us to get there. Enlightened Conservatives, led by the noble Lord, Lord Deben, who was then John Selwyn Gummer, and Mr David Curry—I pay credit to them, as they were always collaborative, open and accessible—made strong strides in that direction in the mid-1990s, resulting in the Conservatives sponsoring 100 or so new unitary authorities. That was party blind. Labour councils, Lib Dem councils, as they came to be, and Conservative councils all benefited from two Ministers who were committed to the principles and values of local government, as Labour Secretaries of State were. The unitary authorities introduced in the past few years under Labour have gone, too, to authorities that will be Conservative, Lib Dem and Labour. In other words, the history of the move towards unitary local government has been party-politically blind in accepting the value of unitaries, particularly for cities and in terms of clarity, accountability and better value for money. As a result, it has had all-party support. It is this Government who have chosen that the two cases of Norwich and Exeter, both county boroughs for centuries, are not to regain that status or to be able to offer their citizens those same values of transparency, accountability and value for money.

This amendment lays open the possibility that, down the line, future bids for unitary status may be considered with an open mind and in a non-party way by the Secretary of State and it asks that those criteria be published. If we choose, we can rebuild that party-blind consensus to support the localism of local government to which the coalition gave such support in their post-election manifesto. However, you cannot do that while supporting a Bill like this and rejecting an amendment like this. That is to refuse to accept unitary structures in the future for cities such as Norwich and Exeter, which on every count—value for money, clarity of services and accountability to the electorate—offer cheaper and better services for residents. You cannot do that and then refuse these amendments.

My Lords, I had not intended to participate in this debate, but I am moved by the eloquence of the Howarth-Hollis panegyric in favour of county unitary status, as that seems to be the sheer thread of their argument: unitary authorities—county unitary authorities, rather than city unitary authorities—avoid the duplication that has been referred to at such length.

My Lords, let me clarify one point. I spoke of unitary authorities, especially for cities. I do not have a particular commitment to what may happen in very large rural counties. I repeatedly made the point that I was talking about city services.

But the argument advanced by the noble Baroness and the noble Lord was much more applicable to counties.

I was a member of Devon County Council in the long-distant past, when I was very young—I was 22. I then had the experience of seeing the County Borough of Torbay taken out of Devon. It was disastrous both for Torbay and for Devon. More recent experience that I have had would be more applicable and relevant to this debate. As a member of the board of the Devon and Cornwall Business Council until relatively recently, I was struck by the extent to which businesspeople in Exeter saw the value in the long term of a unitary authority for the whole county of Devon because Exeter is the county town of Devon. It is the natural centre, culturally, socially and economically, and has an amazing effect on the whole network of relationships in Devon. I speak not from personal experience of Norwich, but I think that my noble friends from that area would agree that it is similar in terms of being the county town of Norfolk. That may not be the case with other unitary authorities in other parts of the country.

What I am absolutely clear about is that, in the terms set out by the noble Lord, Lord McKenzie, we are where we are. To reopen the issue at this stage as the duet have encouraged us to do would be absurd, entirely inappropriate and against the decision taken by this House just a few weeks ago. Certainly, it would be against the mandate given to both parties in the coalition just a few short weeks ago.

There is a case for more unitary authorities. It was advanced extensively and deliberately for the county of Cornwall in recent months and I think that it will prove a success, but that was in different economic circumstances. To reopen this issue in the terms that the noble two over the way have suggested, at this stage, with this particular amendment, seems to me totally irrelevant and to show disrespect for the procedures of this House. It may be that in future there will be another case for looking again at local government in Devon and Norfolk. If so, we would need to look at the relative economics of a unitary authority for the whole of those counties—I am sure that this applies for the business communities in both counties—rather than simply reopening the issue of the status of Norwich and Exeter. But that is for the future. As far as today, this Bill and these amendments are concerned, I think that we should move on.

My Lords, I am delighted to follow my noble friend Lord Tyler, who was a very distinguished Member of Parliament for North Cornwall. It was a state secret, which I can now reveal, that in fact he was born in Devon, albeit very close to the River Tamar. I declare that I live in Devon and own residential and agricultural property in Devon and residential property in Exeter, where my law firm has an office. Most of us agree with the principle of unitary councils, but we do not agree with the proposals that are now being debated. We do not agree with a unitary Exeter. It is not only people from this side that are saying that; every independent outfit that has looked at the matter has said the same. The Boundary Committee, some years ago, during the tenure of office of the previous Government, made it quite clear that a unitary Exeter was unaffordable and did not meet the Government’s criteria. The courts have thrown out the previous Government’s proposals. This is a huge distraction and it is time to let matters proceed and let this Bill through as fast as reasonably possible.

Does the noble Lord regard it as significant that in no fewer than four opinion polls held in Exeter, by majorities of two to one the people of Exeter said that they wanted a unitary Exeter. Is that of no account to him?

What is most of account to me is the result of the last general election, in which the majority of the Member of Parliament for Exeter, having had the benefit of a Boundary Commission change and a far more favourable electorate, went down very considerably indeed. If my memory serves me right, the people of Norwich actually threw out their two Labour Members of Parliament. That is—

No, I am not giving way any more—the noble Lord has had his say. This is a distraction and a huge waste of money. We know the duplication that will occur and we know that economies of scale will be lost. Let us proceed with the Bill.

My Lords, having listened carefully to this debate, I am struck by two things. The first is that no one on the opposite Benches, especially not the three Lib Dem speakers, have in any sense argued in principle for a two-tier system. They have all said in varying ways that they support unitary local government but not at this moment, in these particular local authorities or at this time in the development of our economy. In principle, though, they all seem to be in favour of unitary local government; if they are not, no doubt they will intervene on me. I think that that is also the Minister’s position, although she will be speaking in a moment or two. The arguments against are ones of pragmatism, relevant to the details of the moment.

The other thing that has been striking is that this has been a theoretical debate. There has been no reference whatever to what has actually happened to those local authorities that took advantage of the changes made by the Conservative Government prior to 1997. I pay tribute to that Government again, as I did at Second Reading. I am enormously grateful to them for giving Telford unitary local government. That was done properly through consultation. Ministers discussed it with local MPs, as Ministers should. This is why I say—I did not think that I would get the opportunity to quote Nye Bevan in relation to this amendment, but it is the obvious piece of advice—“Don’t look in the crystal ball when you can read the history book”. That Conservative Government, to their credit, gave unitary local government to a large number of towns and cities, including Telford, as I said, which did not have the benefit that my noble friend referred to of having been a unitary local authority in the past. In that respect, it was a much bigger experiment in Telford than anywhere else and it has been a resounding success.

If the door is now being closed to future applications for unitary local government, I appeal to the Government to look at the record to check those local authorities that were given unitary status by the previous Government to find out where in fact costs have escalated, a risk that a number of speakers have suggested, and to see whether people there now regret the decision that was made. The noble Lord, Lord Tyler, referred to Torbay. Obviously I do not know that area, so I am not trying to contest his evidence, but I would be interested to know, given that he described Torbay unitary authority as a failure, whether the people of Torbay are now petitioning to re-establish a two-tier system in Torbay.

In my experience, all the evidence—from one town in one particular part of the country—is that, while there was strong opposition from the county to the establishment of unitary local government, as you would expect, the experience has been successful. The people of Telford are proud of the local authority, which has had both parties in control of it—there have been both Labour and Conservative administrations, so I am not being partisan when I say this—and there was all-party support for the application in the first place. This, together with all the other local authorities that have achieved unitary status, is valuable evidence that should be looked at before the Government shut the door on the possibility of any other local authority that wants the benefit of unitary local government achieving it.

I appeal to the Government. I can see no reason why they would want to object to the amendment; it simply leaves doors open for the future. Even if they are determined to object to it, surely it is reasonable for me and others to ask them not to. It was, after all, a Conservative Government who established these local authorities. I, a dyed-in-the-wool several-generation supporter of the Labour Party, am saying that that was a good decision. What is more, I am saying that the evidence of the past 12 or 15 years is that it was a good decision and the Conservative Government were right to do it, as we were right to petition for it. Please do not close the door and please look in the history books.

My Lords, we have had one hour’s consideration of a matter which is nothing to do with this Bill. We have spent one hour listening to the noble Lord, Lord Howarth, and others giving us a treatise on local government organisation. That is not what this Bill is about. We have had one hour hearing about the merits of Exeter and Norwich. That is what this Bill is about.

This Bill was introduced to stop Exeter and Norwich becoming unitary authorities. It was introduced because the previous Government went back on what they originally believed, which was that these unitary authorities were neither value for money nor would they be able to manage. Until a very late hour in December 2009—merely months before the election—the Government held that position. The Boundary Commission held the position that this was not value for money. The Merits Committee, chaired by the noble Lord, Lord Rosser—he has been very quiet about this today and on other occasions—drew attention to the fact that it was rotten value for money. Everybody who looked at these proposals up till the 99th hour said this was not value for money, and therefore should not be allowed until, amazingly, some compelling reasons arose. Those compelling reasons were not able to go out to consultation, which is what had been suggested that the judge said in his winding-up, because, clearly, there was not time before the election.

I draw attention to the fact that this Bill has been superseded by the judgment of the court. The court has stopped these orders. No restructuring of Norwich or Exeter is allowed. It has been stopped and we have spent a whole hour discussing the situation. I would accuse the Opposition of filibustering if I did not know them so well. I know that the noble Lord, Lord Howarth, and the noble Baroness, Lady Hollis, like to give us the benefit of their full experience.

We need to move on. This Bill is not about, and does not attempt to consider, the organisation of local government in general. The amendments try to interpose a possibility of that. If this Government decided on a reorganisation at any stage, I assure the House that they would not do it on the back of an amendment to this Bill which asks them to bring forward proposals within three years. I can tell the House that they would have a lot more authority than that if they ever wanted to do it. However, we still have the local government legislation of 2007 and it is perfectly right that those provisions have not been repealed. It is perfectly clear from the Bill we are considering that what is being stopped is any consideration of a reorganisation of a unitary authority, which encompasses Suffolk and Norwich and Exeter. The Bill is not about the reorganisation of local government; it is not a treatise on unitary authorities; and it does not discuss whether there should be two-tier or other government. I have lived in a unitary authority but there is no question of my unitary authority or any other unitary authority being worried about this Bill. Let us be clear: the previous Government reneged on what they believed, which was that those two unitaries were not viable or value for money. I do not know what made them go back on what they said—you may—but these amendments do not do anything for the Bill, they do not do anything for the organisation of local government, and they do not in any way persuade me to say that they are of any benefit at all, have any merit or have anything to do with the Bill.

I have been asked a lot of questions and a lot of people have been quoted. The noble Baroness, Lady Eaton, is unable to respond at present because she has not made her maiden speech. She is extremely welcome as a Member of this House and it is unfortunate that someone should call into question something that she has said, when she cannot rise to speak for herself. Eric Pickles is not in this House, either.

So I am responding for the Government when I say: stick to this legislation only, and let us not go into the wider field. If we are going to have reorganisation, then this Government will have the courage of their convictions and come back. At the moment, they have no intention of doing that, as far as I know; at the moment, they have no intention of allowing Norwich and Exeter to proceed; and they have no intention of accepting these amendments.

My Lords, it goes without saying that I am disappointed by the response of the Minister. As has been the case on previous occasions, an amendment has engendered a debate far beyond its particulars. Let me say to the noble Lord, Lord Tope, that I greatly appreciated the contributions of my noble friends Lord Howarth and Lady Hollis about their experience. I very much share their views, although I accept that they went somewhat wider than the specifics of the amendment. I ask the noble Lord, whose argument is that we should not now be distracted by reorganisations, given the economic climate, to tell us how that fits in with his plans for the health service, the police service, education and much else.

I say to the noble and learned Baroness, Lady Butler-Sloss, that this was genuinely not intended to be a wrecking amendment. It makes a straightforward proposition. The Minister has accepted that the 2007 provisions remain on the statute book and give an ongoing opportunity for the Secretary of State to invite proposals. That is good and we support it. All that this amendment sought was to put on the statute book a requirement on the Secretary of State to come back within a period of time during the course of the Parliament to say whether further proposals for unitary status are to be considered. The amendment does not require him to consider them, nor does it set out the criteria that he would have to adopt if he wished to go down that path. As I explained when I moved the amendment, we had to tie it to Norwich and Exeter in particular because the Bill was confined to them, but there is a broad principle here.

At the moment, the Government’s basic proposition is: no more unitary authorities during the course of this Parliament. That is despite what the Minister heard from around this Chamber about the benefits that unitary authorities can bring. However, we are entering almost a new era for local authorities—given the economic constraints and whatever our arguments and views on how those came about—which will have to be even more innovative by embracing new partnerships and new ways of commissioning. Is it therefore not right that the starting point for any particular local authority, whether it happens to be two-tier or unitary, is its place in the queue, and which could have a significant impact on its ability to deal with the challenges that will arise this year, next year and for some years to come?

All that we are seeking here is to give the Secretary of State an opportunity to revisit the current judgment that he has made—that there will be no more unitary authorities—in light of actual experience on the ground and how those different types of authorities are coping with the new and constrained environment. We are not requiring him to change or to make any particular judgment, but are asking him simply to report back to Parliament to say whether the judgment that he has made now holds good in light of experience, not just in Norwich and Exeter but elsewhere. That would seem to be a very straightforward and simple request, which is not intended to wreck the Bill at all. It is just to give an opportunity for local authorities to have this revisited. Currently, if they are on the wrong end of what they perceive to be the right structure, they are stuck with that for perhaps five years, depending on how long the coalition lasts. This was an interim opportunity to get the Secretary of State to report to Parliament on these matters.

Clearly, the noble Baroness does not want to accept the precise terms of this amendment—or accept it at all—but I was hoping that at least she would give some undertaking of an interim report to Parliament. That assurance might have been helpful: again, it was not an unreasonable request. However, I am conscious of the time and of the other matters that we have yet to discuss. I am genuinely disappointed by the Government's response, but I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

Amendment 2 not moved.

Amendment 3

Moved by

3: Clause 1, insert the following new Clause—


There shall be paid out of money provided by Parliament any expenditure incurred by the Cities of Norwich and Exeter in connection with by-elections arising from the quashing by the Court of the Norwich and Norfolk (Structural Changes) Order 2010 and the Exeter and Devon (Structural Changes) Order 2010.”

My Lords, I will speak to Amendment 3 now that it has been accepted, following further representations, that it is possible to table an amendment to the Bill that calls on central government to provide the money to cover the cost of the by-elections, likely to be £80,000 to £100,000 for each authority, which are due to take place in Norwich and Exeter in September following the quashing of the two orders.

Holding the elections in September is of some significance, since it is a direct challenge to the Minister, who told me categorically in her letter of 8 July that:

“the terms of office of one-third of the members of Exeter and Norwich city councils, which had been extended by the Orders, ended on 5 July and there will be by-elections to fill the vacancies within 35 days as required by statute”.

I asked the Minister in Committee which section of which Act of Parliament the Government were saying required these elections—which are for ordinary, not casual, vacancies—to be held within 35 days. I received no answer then, or in a subsequent letter from the Minister. I have received no indication from the Minister that she has reconsidered her statement of the law that,

“there will be by-elections to fill the vacancies within 35 days as required by statute”.

Therefore, I assume that that is still her position.

In Committee, the Minister said the following on the timing of the elections:

“I understand that we have received no representations about it from the authorities and that they are taking their own legal advice”.—[Official Report, 14/7/10; col. 720.]

I will not comment on the accuracy of that statement since the Minister said that it was what she had been given to understand. However, my understanding is that, in response to the ministerial statement that they had 35 days in which to hold the elections, the local authorities asked the department to confirm the statutory basis that was referred to in the statement. I am told that after a few days, the department came back to say that the Minister stood by the statement and had nothing further to add. Some might think that a rather arrogant response. It was certainly unacceptable to the local authorities. On application by the two councils, following clear and emphatic advice from a QC, two judges in the Queen's Bench Division of the High Court confirmed that the local authorities' understanding of the law was correct and that the 35-day rule for casual vacancies did not apply. Accordingly, a date in September has now been fixed for the by-elections.

In her letter to me of 8 July, the Minister also said that,

“we recognise that any by-elections will involve the councils in additional costs”.

I asked the Minister in Committee what additional costs the Government had apparently decided that Exeter and Norwich councils should bear, and whether she was referring to their having to contribute the expenditure that they would have incurred had the council elections been held on the day of the general election, or whether she was saying that the councils would have to pay that much higher cost of running the elections this summer. In her response, the Minister stated that the local authorities must bear the cost of what had happened but she did not directly answer the question that I asked about what those additional costs were; nor, so far as I can see, was the issue addressed in her subsequent letter. However, her reply in Committee included the following very interesting statement referring to the forthcoming elections:

“This is now a matter for the authorities. They now have to hold elections and if they do not know when to do so, they must seek their own legal advice”.—[Official Report, 14/7/10; col. 720.]

Perhaps I may point out to the Minister, and in particular to her Secretary of State, that it would appear that it is not the local authorities in Exeter and Norwich that do not know the law on when these elections should be held; rather, it is Mr Eric Pickles, who, despite his local government experience, does not know what he is talking about. It is really quite something to have a Secretary of State for Communities and Local Government who presides over a department that writes letters at his behest with statements about the law on the timetables for by-elections that local authorities must follow which are just plain wrong.

The reason I say that the Ministers in this department do not know what they are talking about is that the legal opinion which Norwich and Exeter felt compelled to seek in the light of the Secretary of State’s dogmatic assertions stated quite bluntly that the Secretary of State was wrong. This would appear to be the position of the High Court, which determined that 9 September—which by any reckoning is somewhat more than 35 days after 5 July—should be the date for the elections, as the local authorities requested.

Frankly, what has happened seems to fit the new culture that Mr Pickles has brought to the Department for Communities and Local Government. In an interview in the latest edition of Total Politics, he said:

“The last thing you want … is if you marched folk up the hill and somebody ‘coughs’ and you have to march down again ... I needed to be absolutely certain that when I said something, it was never going to be contradicted”.

Mr Pickles’ statement about these by-elections having to be held by statute within 35 days has apparently just been contradicted—and contradicted through a judicial decision. However, perhaps the judges concerned should be wary, particularly if cigar-smoking is their favourite pastime, as Mr Pickles also stated in the interview:

“The cigar-chomping Commies are not going to take over on my watch”.

Exeter and Norwich have incurred additional costs as a result of the dogmatic and incorrect statements of the law on the timescale for these elections by the Secretary of State, who has made it clear that, so far as he is concerned, once he has said something, it will never be contradicted. I feel for the noble Baroness, Lady Hanham, who I suspect is the ministerial voice of reason in the department. I hope only that the Secretary of State does not come to look on her as a potential cigar-chomping Commie.

So far as I can make out, Exeter and Norwich appear to believe that the additional costs they have incurred are some £5,000 each as a result of having to seek a legal opinion and go through court proceedings to establish a legally watertight date for the by-elections in the light of the Secretary of State’s intimidating and incorrect statement that by statute they had to be held within 35 days, which would have been at the height of the holiday season. What is the Minister’s reaction to that? The local authorities in Norwich and Exeter have been in no way at fault. To them and to everyone else central government does not become some new or different body or organisation simply because there is a change in political control, any more than a local authority becomes some new or different body when there is a change in political control at that level. Indeed, Mr Justice Ouseley said in the High Court—and perhaps he said it with a twinkle in his eye—that the local authorities are,

“not themselves to blame for the pickle”,

in which they find themselves”.

Now that he has been the direct cause of the two local authorities incurring additional expenditure over these by-elections, just as he has argued the previous Government were, is the Secretary of State, Mr Pickles, now prepared to accept that, central government having got it wrong and the local authorities, as Mr Justice Ouseley said, being in no way at fault, central government should pay the costs associated with the holding of these by-elections?

I hope that the Minister will accept this amendment, which is about fairness to the two local authorities in question, and fairness is what the coalition Government say they stand for. I beg to move.

My Lords, I support the amendment moved by my noble friend Lord Rosser. Time after time in this saga, we have had erroneous or misleading or missing advice from the Department for Communities and Local Government. Not only has that contributed to the mess we are in; it has also contributed enormously to the cost to Norwich and Exeter—which, I emphasise, have behaved impeccably, legally and lawfully every step of the way. They are the innocent parties in this. They responded to an invitation, which was approved, and then found themselves in this quagmire. As my noble friend has quoted, on 5 July, when talking about the by-elections, Mr Justice Ouseley referred to the,

“preferred option of the interested parties”—

Norwich and Exeter—

“who are not themselves to blame for the pickle in which they find themselves”.

I repeat, as did my noble friend, that the judge was quite clear that Norwich and Exeter were not to blame.

By implication, therefore, much if not all of the responsibility lay at the door of the department—which has continuously given faulty, erroneous, misleading or missing advice. According to the judge, in December 2009 and January 2010, the department could and should have sent out a letter notifying the four interested parties that there were additional considerations to be taken into account. That, says the judge, would have met his concerns and there would have been no quashing of the orders. That letter did not come. I cannot believe that my right honourable friend in the other place would have refused to send out such a letter had he been advised of its prudence.

We then had a Bill that was so loosely drafted by the DCLG that it was arguably hybrid. However, as that was never argued before the examiners, for by then we had the court ruling, the argument that it was hybrid went effectively by default. Given the court’s judgment, councillors who had legally not stood for re-election last May now found themselves unseated. However, the court action was taken by Devon and Norfolk against the DCLG, not against Norwich and Exeter. Norwich and Exeter were, if you like, interested parties. The action was taken by the two county councils against DCLG. If, as the judge says, Norwich and Exeter are in no way to blame for this and they have been innocent parties throughout, why should they pick up the bill?

It seems profoundly unfair that Norwich and Exeter—which have behaved impeccably and legally throughout, as the judge has confirmed—should pick up the bill for the DCLG’s mistakes. I cannot believe that any of your Lordships would think that that is right, fair or proper.

With such a litany, I should hope that the Minister will take this back and ask her department to think again about the moral propriety of shrugging their shoulders and saying, “Tough, Norwich. Tough, Exeter. You’ve behaved legally, properly and innocently throughout but you’ll have to pick up the bill for our mistakes”. I have never known such a casual attitude in government to the assumption of responsibility. I very much hope that the noble Baroness will respond to my noble friend’s amendment.

My Lords, I have one point to make on this. At the preliminary hearing, Devon and Norfolk asked for an expedited hearing so that these matters could be dealt with before the election. The two cities said that they would prefer the risk of by-elections to an early hearing by the court. So much if not all of this has been brought upon Exeter and Norwich by asking the judge for the case to be delayed until after the hearing.

Perhaps I may assist the House. This is Report. If the noble Baroness, Lady Hollis, wishes to keep to the rules of Report laid down in the Companion, I suggest that she ask the noble and learned Baroness, Lady Butler-Sloss—before the noble and learned Baroness sits down—to make a clarification, but that the noble Baroness does not ask further questions or make any further statement on her own behalf or on behalf of others.

My Lords, I remind the House that I still live in Norfolk, have been a district councillor for more than 10 years and am chairman of my parish.

The audacity of this amendment is breathtaking. It requires this Government to pay 100 per cent of the costs of the impending by-elections arising from the judge declaring that the orders forced through by the previous, Labour Government were illegal. Why should this Government pay 100 per cent of the costs? Indeed, why should they pay anything at all? If the amendment were accepted, Exeter and Norwich would be making a profit as, within the grant that local authorities receive, an amount is already paid to them to defray the costs of their local elections. Had the elections taken place when they should have on 5 May, Exeter and Norwich could have piggybacked on to the general election, and would have been charged only their fair share of the total cost—about half. In any event, the city councils should have built the costs into their budget and set aside the money, as they could not possibly have known when the general election was to be held.

Why should this Government be responsible for the illegality of the previous, Labour Government? It is not as though the election costs come out of the blue. There was plenty of warning, and both city councils were fully aware for months of the risks if the orders were quashed and that by-elections would be needed. In forcing the orders through, a calculated gamble has been taken, even though the clearest of warnings had been given that the odds were stacked against them. First, as was said by the noble and learned Baroness, Lady Butler-Sloss, both Norfolk and Devon county councils asked for an expedited hearing in the High Court, so that a judgment could be made one way or another before the planned elections were cancelled. However, Norwich, Exeter and the Treasury Solicitor argued against that on the basis that they would have insufficient time to prepare their case, and that it would not be problematical to have by-elections anyway.

Secondly, several Members of this House raised this problem repeatedly, urging the Labour Government to delay the orders until after the judicial review, to avoid depriving the electorate of their vote and avoid any unnecessary additional costs. Thirdly, the Permanent Secretary, in uniquely seeking a ministerial direction, warned that the judicial review against the orders had a high likelihood of success.

Fourthly, even the Merits Committee, chaired by the noble Lord, Lord Rosser, warned of the problems. The summary of the committee's report stated:

“We also draw the House's attention to the intention to cancel forthcoming council elections in each area”.

The report continues:

“The House may also wish to give serious consideration to a number of questions about the decision-making process … The Orders have been laid very close to the date of the council elections: will the timing affect local democracy in those areas?”.

That was the Merits Committee report.

Fifthly, at the preliminary hearing in February this year, I understand that the courts brought the problem to the attention of the city councils, four weeks before the orders were passed. Sixthly, the Joint Committee on Statutory Instruments report concluded that if the orders were approved,

“there will be a doubt as to whether they would be lawfully made; that in one respect in particular they would represent an unexpected use of the power conferred by the enabling Act; that in one respect their purport requires elucidation; and that in one respect they fail to accord with proper legislative practice”.

The unexpected use of the power conferred by the enabling Act, to which the Joint Committee refers, is the cancelling of the city council elections due to be held on 6 May. As the committee pointed out:

“If the court decides that the decisions to implement the unitary proposals were flawed … it will be too late to restore the elections which will have been cancelled”.

Seventhly, and finally, just weeks away from the general election, the Labour Government were only too well aware of the manifesto commitment from both opposition parties that they would overturn the orders.

Despite all those warnings, the party opposite forced through the orders, orders that were subsequently held to be illegal. The two city councils are not the victims in all this. Indeed, they were complicit in the whole shoddy business. They were prepared to take the gamble, even though they knew that the cards were stacked against them and knew the consequences if they lost. They had been clearly spelt out to them on several occasions, and they must now pay the price.

My Lords, I am not an expert on local government, or even on all the issues at stake in this case, so I do not want to get embroiled in the merits or otherwise of unitary authorities. However, I have observed, sitting here listening to the debate, that the matter is highly contentious, highly politicised and gives rise to considerable passion. I just want to make one point to the Minister which is perhaps appropriate to make from the Cross Benches, which she may feel that it would be the course of wisdom and statesmanship to listen to.

The Government have won this battle. Perhaps they should not press their advantage to the point where they are seen to be simply riding roughshod over the Opposition. The Minister may feel that it would be the course of statesmanship to help to create an environment in which passions could be allowed to cool and a legacy of bitterness was not built up. In order to do that, she might feel that it was the course of prudence to accept the amendment.

My Lords, in responding to the comments of the noble Lord, Lord Low, I simply point out that the arguments about the costs of by-elections now to be held in September illustrate one of the many reasons why it would have been far better to have approved the fatal amendment tabled by my noble friend Lord Tope in March than to have proceeded in the way that we have. Had that amendment been approved that night, it would have stopped the orders then. The subsequent unnecessary costs, which are still being incurred, could have been avoided.

Central to the whole debate are the claims made about the so-called compelling reasons that led the previous Government suddenly to change the criteria for considering these issues—and to act unlawfully by failing to give notice of their change, thereby avoiding consultation on the new criteria—and to try in the last few days in office to steamroller through proposals that they themselves had previously rejected. The only compelling reasons why the previous Secretary of State acted as he did was the certainty that his Government were about to lose office and the urging of the Norwich and Exeter local councils. The then Secretary of State ignored the clearest possible warnings that his course of action was illegal.

As the noble and learned Baroness, Lady Butler-Sloss, has pointed out, when Norfolk and Devon county councils asked for an expedited hearing in the High Court so that the issue could be resolved before the local elections and before we got to this problem, this was opposed by the Department for Communities and Local Government and by both city councils. It is clear to me—I attempted to table a further amendment during consideration of the orders—that the orders should not have proceeded without the judicial review having first been properly considered, because they were very different from other orders; they were the only orders for which the department’s senior civil servant had to write to the Minister to say that the judicial review was very likely to succeed.

As the noble Earl, Lord Cathcart, has pointed out, the Merits Committee and the Joint Committee on Statutory Instruments both warned strongly about the dangers of proceeding, but the advocates of the proposed Norwich and Exeter unitary authorities, including Norwich and Exeter councils, chose to ignore all this and must therefore accept responsibility for the way in which they behaved.

My Lords, I can say simply that I will not accept this amendment. I have heard once again all the arguments in favour, and I have listened to the noble Lord, Lord Low, very carefully. Statute is for interpretation. The fact is that these two authorities have landed themselves in a situation in which elections are needed. They have known from the outset that if things went this way, a third of their councillors would be disbarred from the moment the decision was made and elections would have to follow. They chose to seek legal advice on whether those elections should be held, and I understand that it has now been agreed that they will be held on 9 September. They will form a normal part of proceedings. The only additional expense will, I understand, be in the manning of the polling stations, which they would have to do in any event when elections are held. It is not for the Government to pick up this bill. The local authorities, even in these difficult circumstances, have the money to do so, so I do not accept the amendment.

My Lords, I thank all noble Lords who have contributed to this debate. I am sorry that the Minister has felt unable to move on this, particularly in the light of the comments made by the noble Lord, Lord Low of Dalston.

As I mentioned earlier, the Minister said in Committee that she had been given to understand that no representations on the timing of the by-elections had been received from Exeter and Norwich councils. My understanding, as I said, is different. I notice in her response that she did not comment on that issue. I hope that she will make further inquiries on this point, particularly in the light of the response, which I am informed was given in reply as a ministerial stance and which once again reaffirmed the Minister’s position. So far as I am concerned—and the Minister did not seek to refute this from the Dispatch Box just now—the statement of the law on the timing of these by-elections was incorrect. The facts, including the recent High Court judgment, also indicate that the Secretary of State’s ruling on the law was wrong and that it has led to additional costs as far as Exeter and Norwich councils are concerned.

I simply repeat that the local authorities in Norwich and Exeter have been in no way at fault, as Mr Justice Ouseley said in the recent decision of the High Court. He said that the local authorities,

“are not themselves to blame for the pickle”, in which they find themselves.”

As I have said previously, to Norwich and Exeter, and to everyone else, central government does not become some new or different body or organisation simply because of a change in political control. The same of course applies to local authorities.

I hope that the Minister might be prepared during the next few weeks to reflect further on this issue and on the stance, which I suspect the Secretary of State in reality is taking rather than the Minister, and that she might be at least prepared to indicate to the two local authorities concerned that, without any commitment to change her stance, she would nevertheless, if they so wished, be willing to meet them to hear what they wanted to say to her on costs.

It will be up to others to decide whether to pursue this issue further when the Bill reaches the other place, but as far as the proceedings in your Lordships’ House are concerned, I beg leave to withdraw the amendment.

Amendment 3 withdrawn.

Clause 2 : Extent, commencement and short title

Amendment 4

Moved by

4: Clause 2, page 1, line 14, leave out subsection (2) and insert—

“(2) Subject to subsection (2A) this Act comes into force on such day as the Secretary of State may by order appoint.

(2A) No order may be made under subsection (2) until the Secretary of State has made, in respect of each area for which a relevant order had been made under section 7 of the 2007 Act, a budgetary and financial planning order.

(2B) A budgetary and financial planning order made under subsection (2A) shall require the County council in the area concerned to provide the district council periodically with budgetary and financial planning information including—

(a) disaggregated expenditure and income data for the services it provides and the activities it undertakes with the district council,(b) a fully disaggregated medium term financial plan for all its services and activities within the district council.(2C) A budgetary and financial planning order under subsection (2A) shall specify the date by which the first information must be provided, and the frequency of subsequent provision of information.

(2D) A budgetary and financial planning order under subsection (2A) shall be made by statutory instrument.”

My Lords, the Minister has kindly written to those of us who participated in Committee and challenged her assessment of the costs and savings of Norwich and Exeter going unitary, and we are grateful. This amendment seeks to build on her information and take it forward to build the partnership that she in previous discussions and, today, the noble Lord, Lord Tope, have called for. In the impact assessment, at Second Reading and in Committee, the Minister regularly referred to the £40 million of transition costs and how these were unaffordable. That has been repeated again today.

When intervened on because the £40 million took no account of savings, the Minister said:

“I refer to gross costs because that is what we are talking about”.—[Official Report, 14/7/10; col. 709.]

It was of course what the Minister was talking about. It was not what we are talking about and in public policy terms makes no sense whatever. What matters is not gross costs, but net costs.

Let me give a simple example. Someone’s water rates are, say, £100 a year. A meter costs £100 but would reduce the bill by half to £50 a year. After two years there would be a continuous saving if you went from being on the rates to having a meter. Would the Minister really say that the only figure that mattered was the gross cost—the £100 cost of the meter—say that it was unaffordable and refuse to fit the meter to reduce costs even though she could recover the cost in savings, the payback time, in just over two years? Of course she would not; nor would anyone in this House. If necessary, she would spread the cost of the savings over the two years. She certainly would not tell us to share the house with another family so that in partnership we split the full water rates bill between us. The decision surely to fit the water meter we would all think is a no-brainer.

I ask noble Lords to forgive the analogy, but essentially that is what the Minister is doing here. She is not going for the straightforward option of calculating net savings with the purchase of a water meter, but suggesting that house sharing might possibly achieve the same effect. That is the position of the two authorities.

The Minister said in her letter of 22 July that the cost of creating a unitary Norwich during the transition period to 2014 would be £20.1 million and that savings for the same transitional period would be £22 million. From year two onwards, the Minister has identified savings, by full rollout, of almost £4 million a year. So there would be net savings over the first four to five years of nearly £2 million, and thereafter annual savings of nearly £4 million a year to be achieved by a unitary Norwich. In other words, the savings made by fitting a water meter would kick in at year two and it would have more than paid for itself by year three or four. Frankly, in all my time as a Minister, that is as good a return on capital in terms of investment to savings that I can recall. On the Minister’s own figures set out in her letter, savings would outpace costs after year two and thereafter would produce annual savings of £4 million a year.

Going for the water meter does more that. It would encourage people to save water by putting a brick in the loo cistern, by taking showers, by keeping a water tub, and by avoiding watering the lawn. In the same way, having a unitary authority with clear accountability and transparency so that everyone in Exeter and Norwich knows who is doing what to which price and a known standard under the pressure of full democratic accountability, increases effectiveness and value for money. That is something we all want. But what is the Minister proposing instead? It is not the water meter, the sure way of ensuring value-for-money services—that is, structural reorganisation—but what is effectively house sharing in order to halve the water rates. Or, as she says in her letter, the £40 million upfront costs can be avoided and the savings, which so far outpace the costs, can be made not by going unitary but by house sharing; that is, by “having good, co-operative partnerships”. I shall quote from her letter again:

“Our clear case is that savings of this magnitude and more are achievable by effective collaborative working between the city council and the county in each case. Hence, by stopping the unitary councils, the net result is simply to save £40 million”.

For the Minister, the gross costs and the net costs are the same because the likely savings can be achieved another way, so the water meter is not necessary. The Minister’s entire value-for-money case, repeated today by the noble Lord, Lord Tope, rests not on savings that would come from a unitary Norwich, but from a collaboration between two polar opposite authorities: one a tightly drawn city council and the other a very large rural county council.

One is left of centre and the other is right of centre. The city has problems of density and the rural county has problems of sparsity. One has urban service needs such as street lighting, litter, refuse collection, policing and late night rowdiness, homelessness and the deprivation of large council estates. It is also the city’s duty to maintain its heritage buildings and amenities, as well as supporting its business heart which provides half the jobs in Norfolk. Let us compare those pressures with the pressures faced by Norfolk, and I speak as a former Norfolk county councillor. The county has a huge road network which is expensive to maintain. There are small rural schools which are uneconomic because in order to offer teaching of a good enough quality they need considerable subsidies, but without which villages might die. Norfolk needs to support rural transport, shops, pubs and post offices, and must provide peripatetic services for the elderly, the disabled, the housebound, the car-less, women, children and the fragile. Norfolk’s rural needs are as real and as proper as those of the city of Norwich, but they are totally different. How does the Minister think we can share services sensibly and reduce costs by intelligent collaboration when, rightly and properly, the focus of the county is on rural needs and the focus of the city is on urban needs? That is what local government is about: the distinctiveness of place.

It would be hard enough for such a partnership, with legitimate differences in perspective, if it was forthcoming and willing, even though the priorities might well be different. But what happens to the alleged £40 million in savings that the noble Baroness and the noble Lord, Lord Tope, have insisted are available when that partnership is not forthcoming; when the house sharing of a water meter is not on the table? The Minister knows—we have told her—that during the process of following the earlier orders to construct unitary authorities, the counties refused to co-operate and withheld the information we needed. They refused then to do what the Minister says they should do now. We asked for information but answer came there none.

The entire case of the Minister and the noble Lord, Lord Tope, is based on the assertion that sufficient savings can be made by voluntary partnership as would occur under unitary reorganisation. When I pressed the Minister in Committee on how we could deliver that partnership if we were denied the information—as we have been so far—on which intelligent co-operation was built, the Minister said, metaphorically, that that was our problem, not hers; that it was not for her to interfere. I think she would agree that she said that. Yet it is the Minister—not us—and no one else who is saying that we could get similar savings to reorganisation by collaboration. The Minister’s letter makes it clear what the savings would have been if Norwich and Exeter were to be unitary and she insists that those savings could be found by voluntary partnership. Our experience so far is that voluntary partnership is not available to us because the information is withheld and the Minister has said, “Not my problem”—and yet this is the Minister’s strategy to us which she is failing or refusing to back up with an ability to deliver.

I take it that the Minister wants to make those savings, as we all do, but how are we going to achieve them if the information is withheld and the Minister will do nothing to ensure that that information flows? If that information is not forthcoming through partnership, the Minister will have denied the public purse and the local taxpayers the proper savings which, as I said on an earlier amendment, would have come to every household in Norwich of around £100 a year. When local authorities are facing cuts in services and a possible rise in council taxes, if the Minister is going to deny the residents of Norwich those savings, she must be in a position to help us to achieve the alternative route she has offered of collaboration and partnership. If the two cities, Norwich and Exeter, do not get, as the amendment calls for, disaggregated financial statistics on which to build partnerships, the Minister will have cost Norwich and Exeter citizens each some £3 million to £4 million a year. She will have refused the certain savings coming from unitary status and have replaced them with hypothetical savings coming from partnership, and then walked away when even those hypothetical savings were not delivered because the information base on which the partnership rests was not shared. Hence the amendment.

I understand that the Minister cannot impose willing partnership on reluctant conscripts. She does not have that authority and cannot therefore do so in legislation. However, she can require the counties to divulge the financial information. These are public statistics, held in a neutral way by the county council, which the citizens of that county and city are entitled to know; we are talking about public information. She could require the counties to divulge the financial information on which joint arrangements can be built.

Essentially, the amendment seeks to put words in the Bill to reflect the sentiments that the Minister and the noble Lord, Lord Tope, have uttered today. It requires the county council to break down financial statistics by district and to share that information so that the activities the county undertakes within and with that district council are known and transparent. That is the way in which we get decent services between housing and social services for the elderly and frail people who wish to remain in their own homes; that is the way in which we avoid duplication on economic development and seek to continue to attract jobs to Norfolk.

The amendment requires publication of information that the county must already hold. With it, we may be able to attempt constructive partnership; without it, we do not have a chance. What objections should there be to making such information available? Why should those figures—public information about money—not be in the light, rather than be kept in the shadows? Why are the council tax payers of the city not entitled to know how their money is being spent?

I hope that the Minister will accept the amendment. If she means what she says, and I have no doubt about her integrity on this point, and the savings of £40 million and more—£4 million a year—can be achieved by voluntary partnership rather than reorganisation, which was the point made by the noble Lord, Lord Tope, she must ensure that both authorities have the relevant financial information on which to construct those partnerships. If that information is withheld, all that we have heard today from the Minister and the noble Lord, Lord Tope, will be pious platitudes. If they mean what they say, and the citizens of Norwich and Exeter can be spared an extra £100 or so a year in council tax, they will support the amendment. I beg to move.

My Lords, I declare an interest as a lifelong citizen of the county of Norfolk, as a former Norfolk county councillor who on one occasion represented a city division, and as a former Norfolk Member of Parliament. I shall be very brief.

The thrust of the amendment was extensively debated in Committee. On that occasion, we were given by the noble Baroness, Lady Hollis, a very bleak picture of the lack of co-operation between Norfolk and Norwich. I recognise her passion for an independent Norwich. It is not new, and it has been sincerely held for a very long time. I believe that co-operation between the city and the county has been difficult, not least because of the four-and-a-half years of protracted administrative chaos and uncertainty that have arisen from this whole unitary business introduced by the previous Government.

There have been profound disagreements on each side of the city ring-road, also affecting other districts in the county. However, there are 13 city councillors and 13 county councillors who represent divisions in Norwich, as I once did. There are nine, 10 or possibly more committees and bodies which require co-operation between city and county. Indeed, the work of the Greater Norwich Development Partnership, where the city and the county work together with two other district councils, has been commended by the Audit Commission as providing an extremely good example of joint working.

It is a mistake to ask government to legislate for people to get on with one another. It should surely be in the interests of those who elect councils that those councils are accountable to their voters and not to other councils. I accept the responsibility that perhaps I have within the county of Norfolk to persuade this co-operation to continue in the interests of everyone in Norfolk and Norwich. I hope very much that the noble Baroness and the noble Lord will accept the same responsibility and not try to shift it on to the Government.

My Lords, I thank the noble Baroness, Lady Shephard, for her contribution, because she has summed up very clearly what the attitude ought to be about this. It is not government business to try to ensure that counties and districts get on together; nor is it government business to ensure that just one or two authorities are required to provide financial information. Public information is public information; if it cannot be obtained under normal freedom of information rules, there are ways of making sure that you get it. What worries me about how the noble Baroness, Lady Hollis, has put this forward is that she seems to be suggesting that there are such desperate animosities between the city and the county that it is absolutely impossible for this to work. I do not believe that in democratic government it is impossible for authorities to work together in a common cause.

The noble Baroness also said that I have said that savings must come now rather than through a reorganisation. Indeed I have, and that is not confined to Norfolk and Norwich. It is going to be a general view and a general situation across the country that serious savings will have to come. If we are talking about £6 million a year—I think those are the savings that it was suggested would be made—within that confine, the amount that has to be provided may be within those regions and it may not. Yet savings will surely have to be made in co-operation with Norfolk to ensure the preservation of services and the local community.

I am not going to accept the amendment. As I said on another amendment, the Government do not have any role in this. I hope only that people will hear what we say: that there will be have to be good co-operation at all levels of government over the coming months and years to ensure that, one way or another, we scramble out of this terrible financial situation in which the previous Government left us.

My Lords, we have had two contributions from the noble Baroness, Lady Shephard, and the Minister, who both make the same point—that government cannot legislate for local authorities to get on with each other. I completely agree, but that is not what this amendment does. They have answered a wider point about city and county relationships but not addressed the substance of the amendment, which asks for disaggregated financial information so that the city has the same information as the county has about the network of services that the county provides within the city—and, if the county wishes it, vice versa. That is all.

No one is legislating for good will. That is impossible—of course it is—but I am not even calling for that. I am calling for the financial information that local authorities and their citizens are entitled to have in order to review and provide effective delivery of services. If we do not have information, we cannot make the savings that we want. I agree with almost everything that the noble Baroness, Lady Shephard, said, but it was beside the point. I agree with most of what the Minister said—except that she will not accept the amendment—but that was beside the point. The amendment says that the county must provide this information. What does the Minister suggest? FOI. I suppose that we could down 150 requests for freedom of information to drag out of the county information that should be brought to light for the city. That is what we are talking about—financial information. It is right that you cannot legislate for goodwill partnerships, but how can we build effective value for money and make the savings that the Minister insists can be made this way, rather than by reorganisation, if we do not have that information? Can I please be told how we can do it? We cannot. We have had no answer from the Minister or the noble Baroness, Lady Shephard, although I agree with every word that she said. Therefore, I want to test the opinion of the House.